Revisions to the Project document per GEF Council Comments

on October 1998 Work Programme

Comment from Mr. Hans Peter Schipulle, Council Member Representing

Germany (10/29/98):

“It is not understandable why the "regional emergency response planning" should be limited to non-hydrocarbon spills. Are hydrocarbon spills left entirely to the discretion of the private sector?

Considering the enormously growing importance of the oil and gas sector in the area during the years ahead, the likelihood of oil spills will increase. Within the framework of the program, the oil industry should be talked into (co-?) financing a facility, the task of which would be the constant satellite surveillance of the Caspian Sea, in order to recognize possible oil spills as early as possible, to counteract as quickly as possible, and thus to minimize possibly disastrous effects in the case of an oil spill.”

Response: Taking this comment into consideration, and following discussions with the GEF Secretariat, the "regional emergency response planning" component of the project has been broadened to include the transboundary aspects and effects of oil spill emergencies, including both the exploration and extraction phases, as well as the transport phases.

Specifically, the UNDP-GEF project has expanded the activities of the Emergency Response theme to include regional assessment of contingency planning, emergency response, and sensitive area identification. The major activities include:

Activity 1. Evaluate regional capacities for effective emergency response, assess regional contingency plans and regional cooperation, including but not limited to oil and gas sector activities

Activity 2. Prepare risk assessments to identify potential high-risk sources that could represent a major transboundary threat, along with information on sensitive habitats that need to be protected near those sources.

In addition, recognizing that the private sector is an important stakeholder in the Caspian Environment Programme, their involvement has been sought in several components of the GEF project, including the area of Emergency Response. CEP personnel have already had several productive meetings with the Oil and Gas Sector working in the region, along with the international banking community which supports this sector, to secure their active involvement in and support of Emergency Response activities. Discussions are ongoing regarding co-funding, information sharing, and other cooperation between the Caspian Oil and Gas Sector and the CEP in the area of Emergency Response.

Implementation Arrangements:

The original project brief had specified the World Bank as Implementing Agency for the Priority Investment Portfolio (PIP) component. The Implementing Agency partners, in consultation with the participating governments, have decided to designate UNDP as the GEF Implementing Agency; the World Bank remains as the project Executing Agency for the PIP component.

The Caspian states, the Bank and UNDP all believe that this option will provide for cost effective implementation, enable the countries to draw on the Bank’s in-house expertise in investment preparation, and facilitate integration of the investments identified with the Bank’s assistance strategy for each country.

Budget:

The final budget request in the combined three project documents is $8,394,862, a 5% increase over the original request of $7,991,536 presented in the GEF project brief. The increase reflects final cost estimates for the various components of the programme.

UNITED NATIONS DEVELOPMENT PROGRAMME

Regional Project with participation from the governments of:

Azerbaijan, Iran, Kazakhstan, Russia, Turkmenistan

Classification Information:

ACC sector & sub-sector Primary type of intervention:

0400

0410

DCAS sector & sub-sector Secondary type of intervention:

Primary areas of focus/sub-focus Primary target beneficiaries:

Secondary areas of focus/sub-focus Secondary target beneficiaries:

Brief Description:

This project represents the GEF contribution to the Caspian Environment Programme (CEP), a regional programme funded by the five riparian countries, GEF, UNEP, UNDP, The World Bank, and other donors. The overall goal of the CEP is environmentally sustainable development and management of the Caspian environment, including living resources and water quality, so as to obtain the utmost long-term benefits for the human populations of the region, while protecting human health, ecological integrity and the region's economic and environmental sustainability for future generations.

The Caspian Environment Programme is being developed as a comprehensive response to the severe environmental problems facing the region, and is based on extensive consultations with professionals in the regional and international scientific and resource management communities. The CEP represents a partnership between the Caspian Riparian States, private sector (specifically the oil and gas industry), all three GEF implementing agencies (UNDP, UNEP, and The World Bank), and the EU/TACIS, inter alia.

The ultimate goals of the present GEF project are:

1) The development of a regional coordination mechanism to achieve sustainable development and management of the Caspian environment through institutional framework, capacity building, public awareness, and stakeholder involvement;

2. Completion of a Transboundary Diagnostic Analysis of priority water-related environmental issues for the Caspian ecosystem; and

3. Formulation and endorsement of a Strategic Action Programme (SAP) and National Caspian Action Plans (NCAPs) as the basis for prioritizing actions to be taken, both baseline and additional, on behalf of sustaining the Caspian and its associated natural resources.

This project document represents the UNDP contribution to the GEF project 'Addressing Transboundary Environmental Issues in the Caspian Environment Programme'. The total GEF project budget of $8,394,862 is allocated as follows: UNDP/UNOPS: $5,374,124; UNEP: $614,715; UNDP/PIPP with World Bank Execution: $2,406,023.

On Behalf of Signature Date Name/Title

Governments of:

Azerbaijan ____________________ _________ _______________

Islamic Republic of Iran ____________________ _________ _______________

Kazakhstan ____________________ _________ _______________

Russia ____________________ _________ _______________

Turkmenistan ____________________ _________ _______________

On behalf of:

UNDP ____________________ _________ _______________

UNOPS ____________________ _________ _______________

TABLE OF CONTENTS

I. CONTEXT 5

A. Description of the Region and the Subsector 5

B. Host Country Strategies 6

C. Prior and On-going Assistance Directed at the Same Subsector 7

D. Institutional Framework 8

II. PROJECT JUSTIFICATION 9

A. The Problem to be Addressed: The Present Situation 9

1. The Need for a Regional Environment Programme 9

2. The Framework for the Caspian Transboundary Diagnostic Analysis 12

a) Root Causes of Identified Problems 12

b) Priority Areas of Future Interventions 13

B. End of Project Situation 13

C. Target Beneficiaries 14

D. Project Strategy and Institutional Arrangements 15

1. Strategy 15

2. Sustainability 15

a) Private Sector Commitment 17

b) Financial Sustainability 18

5. Reasons for UNDP Assistance 18

6. Special Consideration 19

G. Counterpart Support Capacity 19

3. DEVELOPMENT OBJECTIVE 20

3. IMMEDIATE COMPONENTS, OBJECTIVES, OUTPUTS AND ACTIVITIES 20

Component I. Project Coordination 22

Objective IA. Programme Coordination Mechanism 22

Objective IB. Programmatic Support for Caspian Regional Thematic Centres 23

Objective IC. Intersectoral Coordination (including private sector) and Involvement in SAP,

NCAPs and TDA Formulation Process 24

Component II. Transboundary Diagnostic Analysis 25

Objective IIA. Effective Regional Assessment of Contaminant Levels 25

Objective IIB. Assessment of Transboundary Biodiversity Priorities 26

Objective IIC. Effective Regional Information and Data Management 28

Objective IID. Transboundary Diagnostic Analysis 29

Component III. The Legislative Framework and Convention (Component of the GEF project

Implemented by UNEP; refer to UNEP internal project document)

Objective III. Strengthened Institutional, Legal, Regulatory and Economic Frameworks

for SAP Implementation

Component IV. Priority Investment Portfolios (Component of GEF project implemented by

UNDP and executed by the World Bank; refer to UNDP-PIPP project document)

Objective IV. Priority Investment Portfolios for Transboundary Priorities

Component V. Formulation of the SAP and NCAPs 30

Objective VA. Strategies to Strengthen Contaminant Abatement and Control

Policies and Procedures 30

Objective VB. Strategies for Sustainable Management of Fish Resources and Other

Commercially Exploited Aquatic Bioresources 31

Objective VC. Strategies for Integrated Transboundary Coastal Area Planning

and Management 32

Objective VD. Strategies to Live with Water Level Fluctuations 33

Objective VE. Strategies for Combating Coastal Desertification and Land Degradation 34

Objective VF. Strategies for Sustainable Human Development and Health 35

Objective VG. Regional Emergency Response Actions 36

Objective VH. Public Awareness and Involvement in CEP, SAP and NCAPs 37

Objective VI. Formulation and Endorsement of Strategic Action Programme and

National Caspian Action Plans for Priority Transboundary Issues 38

V. INPUTS 40

A. Government Inputs 40

B. GEF Inputs 40

C. The World Bank Inputs 41

D. UNDP Inputs 41

5. UNEP Inputs 41

6. EU/TACIS Inputs 41

VI. RISKS 41

VII. PRIOR OBLIGATIONS AND PREREQUISITES 42

VIII. INSTITUTIONAL FRAMEWORK, COORDINATION AND ADMINISTRATION 42

A. Institutional Arrangements 42

1. Regional Institutions 42

2. National Institutions 43

3. Project Implementation 43

2. Coordination Arrangements 43

IX. PROJECT REVIEWS, REPORTING AND EVALUATION 44

X. LEGAL CONTEXT 44

XI. BUDGET 46

1. Budget Lines 46

2. Project Costs 48

3. Budget Description 49

4. Abbreviated Terms of Reference 50

5. Subcontracts 51

ANNEX I Terms of Reference CEP PCU and Job Descriptions for the PCU Staff 54

ANNEX II Proposed Structure for Governance, Coordination and Implementation 66

ANNEX III Terms of Reference Steering Committee and Intersectoral Coordinating Function 67

ANNEX IV Terms of Reference Caspian Regional Thematic Centres 69

ADDENDUM Framework for the TDA

Acronyms/ABBREVIATIONS 73

I. Context

A. Description of the Region and the Subsector

The Caspian Sea, surrounded by the five littoral countries, is the largest land-locked body of water on earth. Situated in a natural depression, below mean sea level, it receives water from the Volga, Ural and the Kura rivers and numerous other freshwater inputs, but has no outlet to the world oceans. Water-level fluctuations, a natural cyclic phenomenon, have nevertheless had serious consequences for the region, displacing thousands of persons, destroying investments in industry and infrastructure and causing severe pollution threats via inundation of nearshore waste sites. The isolation of the Caspian basin, its climatic and salinity gradients, have created a unique ecological system. Some 400 species are endemic to the Caspian waters, some of which, notably the sturgeon, are of major economic importance. Bird life is prolific with large populations during migration, when many birds rest and feed in the extensive deltas, shallows and other wetlands. Many Caspian biota are threatened by over-exploitation, habitat destruction and pollution.

The Volga River, the largest in Europe, drains 20% of the European land area and is the source of 80% of the Caspian’s freshwater inflow. Its overall contribution to the Caspian may have diminished somewhat over the years due to extensive dam construction and its lower reaches are heavily developed with numerous unregulated releases of chemical and biological pollutants. Although existing data is sparse and of questionable quality, there is ample evidence to suggest that the Volga is one of the principal sources of transboundary contaminants to the Caspian.

The Caspian basin is rich in commercially developable hydrocarbon deposits. Production of oil and gas is significant and new exploration activity is under way. Oil and oil products generate constant traffic that has been estimated to total approximately 10,000 shipping movements annually. The magnitude of oil and gas extraction and transport activity thus constitutes a risk to water quality. Underwater oil and gas pipelines have been constructed or proposed, increasing potential environmental threats. Commercial activity (fishing fleets, passenger, dry goods and other cargo traffic) utilizes the Caspian enroute to the Black Sea or the Baltic via the Volga-Don canal system. This combined traffic has a number of possible impacts on the Caspian’s environmental integrity. For example, the Volga-Don connection poses a threat in the form of introduction of exotic species through ballast waters inter alia, and stringent measures may be needed to prevent this threat. The traditional Caspian sturgeon fishery is well-known due to the economic value of Caspian-derived caviar. At its peak, the Caspian supplied more than 80% of the world’s sturgeon stock. In recent years, however, sturgeon landings have decreased dramatically: from 30,000 tons in 1985 to only 5,672 tons in 1995. A quota system, introduced together with a temporary ban on pelagic fishing, does not appear to have been effective in reviving the dwindling fish populations. While fishing methods have clearly become more efficient and overfishing has occurred, a severe impact on the sturgeon and other anadromous species is thought to arise from the construction of numerous dams on the Volga and Kura rivers. The latter structures effectively bar fish from their primary spawning areas. Point and non-point source pollution leads to bio-accumulation of metals and persistent organic pollutants in the sturgeon from these waters. Poaching, dramatically increased during recent years, is also a main cause of sturgeon decline.

According to UN data, an estimated human population of approximately 11 million is distributed around the Caspian shoreline. The main urban centres of population are concentrated on the western and southern shores. Coastal provinces in Iran and Azerbaijan, in particular, dominate the demography of the Caspian.

The current annual Gross National Products (GNP) per capita of the Caspian States are: Azerbaijan US$510; Iran US$1780; Kazakhstan US$1340; Russia US$2740; Turkmenistan US$630.

Principal economic activities in the Caspian basin include fisheries, agriculture, oil and gas production, and related downstream industries. At their peak, revenues to the riparian countries from sturgeon, including caviar, were as much as US$6 billion annually. Rice, vegetable cultivation and cattle and sheep husbandry are the prime agricultural activities in the catchment area. Oil exploration and production are increasing along all shelves of the Caspian by all countries, and are already well established in the Baku (onshore and offshore) and Tenghiz (onshore) regions. Oil production is expected to increase dramatically during the next few decades. Accompanying this oil production will be a significant increase in marine transport. Both crude and refined oil products, as well as goods and services associated with the oil and gas industry, will be transported both by surface routes and possibly by subsea pipelines.

B. Host Country Strategies

The Caspian Environment Programme (CEP) is a regional umbrella programme established by the Caspian littoral states and aided by the international agencies. Born out of a desire for regional cooperation, expressed through a number of regional agreements, including the Almaty Declaration on Environmental Cooperation of May, 1994, the CEP was agreed to in June 1995 during a joint mission by The World Bank, United Nations Environment Programme (UNEP), and United Nations Development Programme (UNDP). This mission marked the start of a close partnership between the region and the international community. The mission also cemented the collaborative mechanisms between the GEF implementing agencies.

As it now stands, the CEP is a regional programme that encompasses all Caspian States and numerous international agencies, including The World Bank, UNEP, UNDP, the European Union/TACIS (EU/TACIS), and many others. During meetings held at Ramsar, Islamic Republic of Iran, in May, 1998, the CEP was launched officially. A Steering Committee has been established, and the Caspian littoral states agreed that the Concept Paper produced during the previous year in collaboration with The World Bank will form the basis for the CEP. In addition, UNDP-led efforts towards a Global Environment Facility (GEF) project for the Caspian focusing on its priority transboundary issues was endorsed by the Caspian littoral states.

The countries are engaged in a number of national, donor and Implementing Agency (UNDP) financed activities that are directly or indirectly related to the Caspian; some of these activities represent ‘baselines’ in the context of the current project. These activities can be summarized as follows:

• All of the countries have or are developing National programmes which address the Caspian issues; some countries have some form of institutional framework for the protection of their own coastal and marine environments.

• Each country is elaborating National Environmental Action Plan, which will later produce the State of the Environment Report, in which a section on the Caspian will be present. These Action Programmes will specifically address domestic problems;

• With assistance from UNEP, all countries are actively involved in the preparation of the Caspian Framework Convention on the Protection and Sustainable Management of the Caspian Environment and its Resources;

• In each country a national data centre and a mechanism for data exchange exist in some form;

• In some countries, with donor support, modern equipped monitoring laboratories have been established, in other countries monitoring capacities are weak and poorly focused;

• Most of the countries are financing or planning to finance the development of nature reserves, protection of biodiversity, preparation (if not available) of Red Data books describing endangered species etc.

• In all the countries, national legislation on the exploitation of bioresources exist, but in most countries enforcement is lacking. All the countries are cooperating on the development of a regional legal mechanism.

• Each country is putting substantial efforts into the development of its coastal zone, special regulations have been developed in some countries, and are developing in others.

• Human health issues are of the first priority in most of the countries due to severe problems occurring in the region. The implementation of regulations and legislation is usually weak. Governments for the next three years will allocate substantial financing.

• The national emergency response capabilities are poorly reinforced, legislation exists but is inadequately implemented.

The explicit commitment by each of the five Caspian states and actions they have already undertaken, are the best indication of the sound foundation for this Programme and a guarantee that the activities and systems established by the Programme will endure beyond International funding support to it.

C. Prior and On-going Assistance Directed at the Same Subsector

A number of UN agencies have been active in the Caspian region mainly through fact-finding missions and generating project proposals. These include IAEA, IMO, WMO, UNESCO/IOC, FAO and WHO, April 1995 Joint Mission and the 1996 TACIS mission, through ongoing activities such as the preparations for a Framework Convention under UNEP auspices and the National Environmental Action Plan (NEAP) preparations underway in Azerbaijan and Kazakhstan, and through various national Programmes in the Caspian countries. To ensure full participation and ownership of the Programme by the Caspian countries, ongoing consultations through open forum meetings with Government representatives, district and local officials, and the public are strongly encouraged. In addition, direct dialogues and negotiations between private sector, non-governmental interests, and governmental representatives in the region will be an important aspect of the Programme, to generate undertakings with tangible results. This process can mobilize technical expertise and private capital, and stimulate cooperative action including contracts that address the key issues facing the Caspian.

During the 1995 Joint Mission, the three participating international organizations and the Caspian governments agreed that the institution building and strengthening aspect of the Programme would be developed by UNDP, while UNEP will handle monitoring and the development of a Caspian Ecological Framework Convention. Initially, The World Bank’s role in the proposed joint Programme was to identify an Urgent Investment Portfolio (UIP) that addresses short-term priorities connected to sea level rise. The World Bank has subsequently initiated measures to begin work on the Caspian Bio-Resources Network.

The Project Development Facility (PDF-B) phase of the Caspian Environment Programme was initiated in October 1997 with the following objectives:

1. To establish an effective Coordination Framework for the Caspian Environment Programme, at the regional, country-specific and donor agency levels;

2. To identify the elements of a Transboundary Diagnostic Analysis for the Caspian region (e.g., Framework TDA); and

3. To prepare a GEF Project Proposal for the further development and implementation of a Transboundary Diagnostic Analysis and a Strategic Action Programme for the Caspian Environment.

More specifically the PDF project was responsible for:

1. undertaking a comprehensive review, synthesis and analysis of existing data and information concerning the sources and fate of transboundary pollution as a building block on which to design appropriate actions;

2. identifying degraded and threatened habitats, point and non-point pollution sources, overexploited living marine resources, and exotic species of concern;

3. reviewing existing national and regional environmental legislation relating to the Caspian and its surrounding environment; and

4. providing a framework to strengthen the institutional, legal and regulatory structure in the Caspian region.

Financial support to-date has included GEF preparatory (PDF-B) funding of $349,920.

As part of the project development process, the countries prepared national reports on the status of the Caspian ecosystem. Data provided in these reports formed the basis for the preparation of the Framework Transboundary Diagnostic Analysis. During the PDF-B phase, UNDP consultants (through Contracts) coordinated the preparation of a Framework Transboundary Diagnostic Analysis (TDA) for the Caspian, as well as organized and coordinated political and technical meetings.

The Framework Transboundary Diagnostic Analysis (TDA) will serve as the basis for the development of the TDA and SAP in the full project.

The European Union’s Technical Assistance for the Commonwealth of Independent States (EU/TACIS) Programme has allocated resources for the Caspian environment. In the end of 1996, Lahmeyer International was selected as a major consultant for the CEP.

During the period from 16 March to 9 April 1998, the Consultants from Lahmeyer International conducted missions to the four Caspian NIS countries. The overall objective of the country missions was to assess the institutional basis for operating the Caspian Environment Programme. The intent of the mission was not limited to visiting only institutions that could potentially host activity centres, but rather sought to get a full picture of the stakeholders in the region who could contribute to the CEP, their capabilities and limitations and their view of the situation. Specific objectives of the each country visit were to:

• Update the littoral states regarding TACIS participation in the CEP as it relates to the overall coordination of the programme with other donors;

• Assess the institutional capabilities with respect to the implementation of the CEP, including the networking of the institutions;

• Discuss proposed structure of the CEP with the stakeholders;

• Assess the concepts and ideas of the institutions; and

• Meet with and update TACIS Coordination Units, UNDP and The World Bank representatives in each country.

D. Institutional Framework

During the May, 1998, Ramsar Interim Steering Committee Meeting, a structure was approved for the Caspian Environment Programme. Governance is provided by a Steering Committee of donors and recipient countries. Coordination and project management will take place through the Programme Coordination Unit (PCU). Implementation will take place through the National Intersectoral Coordinating Functions and the institutions and agencies contributing to the Caspian Regional Thematic Centres (CRTCs), which are distributed amongst the five Caspian littoral states.

The Steering Committee of the CEP will be ultimately responsible for overseeing the preparation of detailed workplans and their monitoring, as well as for overseeing overall project implementation. The Governments have been requested to ratify the membership in the Steering Committee. The Steering Committee will include National Focal Points (mostly Ministers or Deputy Ministers), respective UNDP-GEF and EU/TACIS Programme Coordinators, representatives of the GEF Partners and Donors, and, as observers, representatives of the NGOs, the cooperating UN Agencies, and the private sector. The Directors of the Thematic Centres will be invited to attend on an ad hoc basis. The Steering Committee will meet to review the previous year’s activities and to approve the workplan and activities.

The Programme Coordination Unit will have individuals housed within it who will work on behalf of the Steering Committee to coordinate and manage the activities of the CEP. In addition, the PCU may house project-specific personnel who will have oversight for specific projects funded by various donor agencies. An agreement taken by the countries in Ramsar has placed the PCU in Baku, Azerbaijan, for the first three years of the CEP. The PCU began operations under funding by EU/TACIS in July, 1998, in facilities provided by the Government of Azerbaijan. In July, 2001, the PCU location will be moved to the Islamic Republic of Iran.

The PCU will be supported by the International Agencies (primarily UNDP/GEF and EU/TACIS) for a period of three years, following which support will be shared by the Caspian littoral states and the international agencies as appropriate.

The Intersectoral Coordinating Functions will work to assure Interministerial and Intersectoral coordination within each country. These functions are well established in some Caspian littoral states, but new in others.

The Directors of the Caspian Regional Thematic Centres, in close coordination with the PCU, will convene the Working Parties of the CEP network, to achieve the goals and objectives laid out in the work plans. The overall work of the CRTCs will be guided by the documents prepared at Tehran and approved at Ramsar by the CEP Steering Committee in May, 1998. Each CRTC is responsible for coordination of their specific theme amongst the five Caspian Littoral States; however, as outlined in the Concept Paper for the CEP, activities within that theme will occur within all five littoral countries.

II. PROJECT JUSTIFICATION

A. The Problem to be Addressed: The Present Situation

1. The Need for a Regional Environment Programme

The Caspian occupies a deep continental depression within the largest catchment basin in Europe (about 3,100,000km²) and is the largest inland body of water on earth. It is situated where southeastern Europe meets the Asian continent between latitudes 47^o07’N and 36^o33’N and longitudes 45^o43’E and 54^o20’E. Its waters wash the shores of five independent states namely, the Republic of Azerbaijan, the Islamic Republic of Iran, the Republic of Kazakhstan, Russian Federation and the Republic of Turkmenistan. It is approximately 1,030km long and its width ranges from 435km to a minimum of 196km. It has no connection to the world’s oceans and its surface level is at the moment around –26.5m below MSL. At this level, its total coastline is some 7,000km in length, its surface area 386,400km² and its water volume about 78,700km³.

The Caspian can be considered as divided into three parts, the northern, middle and southern parts. The border between the northern and middle parts runs along the edge of the North Caspian shelf (the Mangyshlak threshold), between Chechen Island (near the Terek River mouth) and Cape Tiub-Karagan (at Fort Shevchenko). The border between the middle and southern parts runs from the Apsheron threshold connecting Zhiloi Island in the west with Cape Kuuli in the east (north of Turkmenbashi). The northern part covers about 25% of the total surface area, while the middle and southern parts cover around 37% each. However, water volumes in the northern part account for a mere 0.5%, volumes in the middle part make up 33.9%, while the southern part contains 65.6% of the Caspian waters. These volumes are a reflection of the bathymetry of the Caspian. As expected, the northern part is very shallow, with average depths of less than 5m. In the middle part, the main feature is the Derbent Depression with depths of over 500m. The southern part includes the South Caspian Depression with its deepest point being 1025m below the surface.

Approximately 130 large and small rivers flow into the Caspian, nearly all of which flow into the north or west coasts. The largest of these is the Volga River that drains an area of 1,400,000km² into the northern part of the Caspian. Over 90% of the inflowing freshwater is supplied by the 5 largest rivers: Volga – 241km³, Kura – 13km³, Terek – 8.5km³, Ural – 8.1km³ and Sulak 4km³. The rest is accounted for by the Iranian rivers and the smaller streams on the western shores, since there are no permanent inflows on the eastern side.

Apart from the extensive shallows of the northern part, the other two physical features that characterise the Caspian are the delta of the Volga and the Kara Bogaz Gol gulf. The Kara-Bogaz Gol is situated on the eastern coast of the Caspian Sea and bites deep into the hinterland. In its natural surroundings it can be considered to be the largest lagoon in the world, separated from the sea by send bars. Until 1980, one of the significant evaporative sinks for the Caspian Sea was outflow to Kara-Bogaz-Gol. Historical outflow for the period of 1900-1979 averaged 15 km³ per year (nearly 4 cm). At the beginning of the 20^th century when sea level was much higher, the strait between the Caspian Sea and Kara-Bogaz-Gol allowed a flow of 30 km³ of water per year to the smaller basin. During subsequent years, the flow consistently decreased due to reduced fluvial inflow and sea-level fall. In an attempt to retard any further drop in sea level, a solid dam was constructed across the strait in March of 1980. This dam effectively isolated Kara-Bogaz-Gol from the Caspian basin, thus preventing further outflow of water to the bay. This closure caused more than 40 km³ of water to be retained by the Caspian Sea that contributed an additional 11 cm to the rising water levels. Thus, the average yearly rate of sea-level rise increased by 2.5-2.7 cm because of the closure of the Gulf. In September 1984, a spillway was opened in the dam to permit some discharge of water to the Gulf; in June, 1992, the dam reportedly was completely removed. This episode reflects the difficulty of anticipating natural variations in the hydrologic cycle and creating engineering works to counter this natural variability effectively.

The Volga Delta is situated in the Prikaspiisk lowlands covering around 10,000km² and the apron has a width of about 200km. A feature of the delta region are the so-called Baer knolls which are hillocks, between 3m and 20m in height, formed by the action of onshore winds on the river sediments which are discharged into the delta at a rate of 8 million tonnes per year. Numerous small lakes can be found between the knolls and there is a complex system of channels with many islets. The Volga-Caspian shipping canal traverses the delta and is dredged to maintain a depth of not less than 2m.

The Caspian region lies in the centre of the Palaearctic zoogeographical realm and is comprised of two major biomes – cold, continental deserts and semi-deserts in the north and east and, warmer mixed mountain and highland systems with complex zonation in the southwest and south. There is also a small area around the Volga Delta in the west, where the temperate grasslands biome is represented. Caspian living resources reflect the range of climatic conditions that prevail around its perimeter resulting in a significant degree of biological diversity. This is further enhanced by the existence of extensive wetland systems such as the deltas of the Volga, the Ural and the Kura rivers and the hypersaline Kara Bogaz Gol.

The biodiversity of the Caspian aquatic environment is derived from the long history of the existence of the sea and its isolation, allowing ample time for speciation. The number of endemic aquatic taxa, which is over 400, is very impressive. There are 115 species of fish, of which a number are anadromous and migrate from the Caspian up the rivers to spawn. The best known of these are the seven species and subspecies of sturgeon which have provided a valuable economic resource for over a century. There is also a Caspian seal, one of only two freshwater seal species that occur worldwide; the other is found in Lake Baikal.

Recently, hybridization has occurred between sturgeon from the Black Sea and those in the Caspian. This phenomenon is possible because of the connection now possible via the Don-Volga Canal. While its precise effects are currently hard to evaluate, the potential loss of diversity among the sturgeon species is a cause of serious concern.

Coastal wetlands, including temporary and permanent shallow pans, many of which are saline, attract a variety of birdlife. Birds are prolific throughout the year in and around the Caspian and their numbers swell enormously during the migration seasons when many birds patronize the extensive deltas, shallows and other wetlands. It is at these times that ecologically-motivated visitors could be guided into carefully selected vantage points and allowed to experience the beauty and the bounty of protected ecological resources. Such ecotourism, carefully planned and managed, has tremendous potential both as an income earner and as an excellent mechanism to educate and inform the interested public, whether they are local or from overseas.

Undeniably, the Caspian environment attracts great interest for a variety of people the world over. Scientists and technical specialists have been challenged by its unique nature as the largest land-locked body of water on earth; the petroleum industry has been tapping its oil and gas wealth for decades; gourmets have extolled the virtues of its caviar throughout history; and, those concerned with ecological resources have recognized its valued biological diversity and its 400 or so endemic species.

The five States bordering the Caspian also recognize the uniqueness and value of their environment. They have repeatedly expressed their commitment to protect and manage the vulnerable ecosystems. Furthermore, they are fully aware of the need for a collaborative regional approach. The Caspian States also accept that, in protecting the Caspian environment, they are fulfilling an obligation to the global community, since the unique features and biological resources of the Caspian place it in a world category.

However, in spite of their commitment and their genuine intentions, the Caspian States have limited resources. The highest per capita GNP in the region is no more than US$3,500 per year and the average for the region is US$2,118. In addition to this, some of the Caspian states are burdened with legacies from previous administrative systems that permitted industrial development, oil and gas production and export, and other economic activities that pose serious threats to environmental resources. The situation is exacerbated by the demands made on the States’ modest financial resources by the consequences of fluctuating water levels.

The Caspian region suffers from various contributions to environmental stress:

• human activities in or near the Caspian;

• human activities in the catchments of rivers draining into the Caspian; and

• fluctuations in water level, especially flooding problems due to the high water level and onshore winds.

The measures that will have to be taken to address the above problems can be either long-term, integrated and strategic approaches, or short-term emergency responses or a mixture of both approaches.

Long term, strategic measures are best implemented jointly and coordinated on a regional basis by the five Caspian littoral states. Short-term emergency measures can be undertaken by individual states as long as they do not have negative consequences for the other States or for the Caspian environment.

The need for protection and management of the Caspian environment and its resources has always preoccupied the Caspian States and since the dissolution of the former Soviet Union (1991), there has been heightened awareness of such a need. Important milestones in regional cooperation on the Caspian environment since 1991, include:

• A draft Convention on the Conservation and Utilisation of Bioresources of the Caspian;

• The Baku Resolution of June, 1991;

• The Tehran Communiqué of October 1992;

• The Astrakhan Communiqué of October 1993;

• The Declaration on Environmental Cooperation in the Caspian, Almaty, May 1994;

• The Protocol of the Meeting on Programmes for the Protection of the Environment in the Caspian Region, Almaty, 1994;

• The report of the joint meeting of the task force and TDA experts, Almaty, 1997;

• National reports on the state of the Caspian, 1998;

• Report of TDA Experts Meeting (including Framework TDA), Tehran, April, 1998; and

• The decisions of the First meeting of the Interim Steering Committee of the CEP, Ramsar, 1998.

2. The Framework for the Caspian Transboundary Diagnostic Analysis

During the project preparation phase, the Caspian countries, with GEF and other donor support, agreed on the priority transboundary issues that should be considered under the SAP. The final priority setting will be determined through the TDA formulation process. The final list is expected to include several of the following issues identified in the PDF-B phase:

• Degradation of biodiversity, loss of coastal habitats, loss or imminent loss of endangered species and their genomes;

• Possible accidental introduction of exotic species (e.g., via shipping through the Volga-Don Canal);

• Unsustainable use of commercial fish stocks (especially sturgeon);

• Degradation of landscape;

• Coastal desertification;

• Poor or unsatisfactory human health quality, unsanitary conditions in many beaches and bathing waters, unsafe drinking water, contaminated fish and fish products, poorly or untreated sewage and industrial discharges to coastal waters;

• Inadequate freshwater resources;

• Damage to coastal habitats and infrastructure from sea level fluctuations; and

• Contamination from point and non-point sources as well from offshore oil and gas exploration and marine transport.

a) Root Causes of the Identified Problems

1. Poor or ineffective legal framework at the national level and absence at the regional level, inadequate implementation of regulatory instruments

2. Inadequate planning and management practices

3. Poor or insufficient public involvement

4. Sea level fluctuation

5. Inadequate knowledge and infrastructure base

6. Inadequate funding base

7. Unemployment/lack of jobs

8. Inappropriate environmental regulatory infrastructure

9. Lack of regional legal instruments

b) Priority Areas of Future Interventions

1. Abatement of Contamination

2. Protection of Biodiversity

3. Sustainable Management of Fish Resources and other Bioresources

4. Integrated Transboundary Coastal Area Planning and Management (ITCAP&M)

5. Institutional and Human Development

6. Water Level Fluctuations

The National Reports prepared by each Caspian state will form a firm foundation for improving the Framework TDA. Recognizing the importance of the summary Reports, the National TDA Experts recommend strongly that UNDP and other International Partners assist in identifying financing for their editing and publication in the immediate future. The reports should be published in English and Russian at a minimum (as long as there are available funds).

B. End of Project Situation

The end of the project situation can be summarized as follows:

• Strong regional institutional framework to enhance stakeholders communication, cooperation and coordination to address transboundary environmental impacts;

• Regional Strategic Action Programme and National Caspian Action Plans with countries and donor commitments and incremental interventions identified;

• Increased public awareness and support for regional environmental issues. Enhanced overall effectiveness of environmental awareness programmes through the organisation of concerted region-wide activities, and exchange of lessons learned through an active regional network of NGOs and community groups;

• Caspian Framework convention ratified. Existing national and international laws and conventions surveyed;

• Regional Caspian Information System including data on Institutional capacities, scientists, environmental projects, environmental data sets in the region and GIS, accessible via Internet to the world community. High quality, reliable data on Caspian environmental issues. Improved regional capacity for data collection, integration, analysis and use in decision making;

• Network of monitoring centres throughout the region. Reduction of existing and prevention of new types of contamination;

• Conservation of habitats and species of global significance. Regional network of protected areas as a part of global one;

• Sustainable use of transboundary fish stocks building on sound stocks assessment, region-wide monitoring and management plans. Conservation of threatened and endangered species emphasising public awareness and participation;

• Adoption of common regional approaches to results in reduced environmental degradation and loss of coastal habitats for migratory species and global biodiversity; by catalysing the development and implementation of national ITCAMPthrough regional training, exchange of lessons learned and sustainable financing secured;

• Regional Environmental Health Action Plan as a part of the CEP Strategic Action Programme; and,

• Major reduction in risks of regional environmental degradation. Caspian Regional oil spill contingency planning; strong regional network for oil spill response.

Upon completion of the project the above mentioned results should create adequate conditions for the full implementation of the Caspian Strategic Action Programme (SAP) and the National Caspian Action Plans (NCAPs). The present project is not aimed at implementing the SAP, rather at creating the conditions that will facilitate its future implementation at a regional and national level with both national and donor financing.

After the completion of this project, the participating countries might decide to seek funding for the implementation of the SAP and for the investments to improve water quality, control land-based sources of pollution, and to conserve most important areas and habitats. The project will help to identify the baseline funding needs for projects yielding primarily domestic benefits, as well as the incremental costs of interventions needed to address primarily transboundary issues and therefore eligible for subsequent GEF financing.

It is anticipated that international financial support will be provided by multilateral, bilateral and private donors and non-governmental organizations.

C. Target Beneficiaries

The primary target beneficiary of this project is the population of all Caspian countries, in particular the population which lives in the coastal zone. The coastal zone population should benefit from each of the success criteria which are expected to be improved water quality, rehabilitation of the renewable natural resources of the Caspian, improved coastal zone management and development of NCAPs. Successful implementation of the CEP should have direct benefits in terms of the improvement and protection of public health and the general quality of the coastal zone and through these achievements tourists from the region will enjoy clean and aesthetically pleasing recreational facilities. In the short-term, governments and institutions will benefit from institutional strengthening as a result of networking, training programmes and the provision of key items of equipment and in particular from the development of NCAPs. Proper environmental assessments and pre-investment studies should facilitate the release of vital credits for improving waste management and for stimulating the development of key sectors.

The direct recipients of the project objectives will be:

• Governments of the region;

• National Focal Points;

• regional scientific and technical organizations concerned with Caspian water quality issues and management/rehabilitation of natural resources;

• national, local and municipal governments in cooperating countries;

• technical organizations, universities, research institutes and private sector organizations (tourism, agriculture, fisheries, oil and gas industry, environmental consultancy firms, etc. in coastal states; and

• non-governmental organizations concerned with environmental management and conservation of natural resources.

The target beneficiaries will be:

• the resident population of the Caspian Region who will benefit from improved water quality, enhanced fishery resources, recreational opportunities and strengthened protection and management of natural habitats;

• fishermen whose livelihoods will benefit from the improved environmental quality as the result of the reduced transport of pollutants to the sea following implementation of new policies and investments; in addition, they will benefit from the sustainable management of the Caspian fisheries.

• regional tourists who visit the Caspian coastal zone and adjacent areas for a wide range of purposes;

• future generations of the human population both within and beyond region who will benefit from the opportunities created by the conservation of biodiversity in the region - the present project enables the present generations to respect the rights of future ones instead of transferring the consequences of irrational development to them; and

• the world population at large will benefit through the direct contribution made to the improvement of an important international water body and the demonstration effect which this project will have for other regional seas.

D. Project Strategy and Institutional Arrangements

1. Strategy

The basic strategy of this project is to complete enabling activities for the implementation of key incremental cost objectives for the formulation of a Transboundary Diagnostic Analysis (TDA) and a Strategic Action Programme (SAP). The TDA will identify and prioritize the most critical transboundary threats to the Caspian system, and recommend actions to address the root causes of these threats. Based on the scientific and technical analysis conducted during the TDA, the SAP will delineate the legal, policy and institutional reforms and priority investments necessary to manage coastal resources and achieve sustainable development for the Caspian. Finally, preparation and adoption of National Caspian Action Plans (NCAPs) will serve to operationalize the SAP at the national level.

The project strategy will also include development of the legal and administrative framework; enhanced technical capacity for dealing with pollution and coastal management problems in each of the Caspian countries; effective regional network of Governmental representatives, scientific and other experts and non-governmental organizations; and willingness of the international community to assist in the efforts to rehabilitate and protect the Caspian.

This strategy could be successful only if all major players (Governments of the region, the Programme Coordination Unit, multilateral and bilateral donors and NGOs) work together in a concerted effort.

The strategy of the UNDP-GEF project is a key objective of the overall strategy of the Caspian Environment Programme to enable environmentally sustainable development and management of the Caspian environment through technical assistance, capacity building, enhanced regional cooperation, and the preparation of investments.

2. Sustainability

The explicit commitment made by each of the five Caspian littoral states and actions they have already undertaken, are the best indication of the sound foundation for this Programme. Implementation of the CEP is one step toward guaranteeing that the activities and systems established by the Programme will endure beyond the life of it.

In 1993, the five littoral states founded the Organization for the Cooperation of the Caspian Coastal Neighboring Countries. Environmental protection and wise use of resources were among the areas identified for cooperation. Difficulties regarding the Caspian's legal status and the extent of national sovereign territories delayed progress but there is a consensus that this issue could be set aside for the time being in order to achieve progress on those aspects which are not contentious. Some concern has been expressed regarding the prudence of the international community getting involved in the problems of the Caspian environment before the Caspian riparian countries have reached agreement on the management and use of the region’s vast oil resources. Other GEF projects (e.g. East Asian Seas) have enjoyed success in making rapid, substantive progress in addressing multi-country, transboundary marine environmental issues even in the absence of multi-national agreements on hydrocarbon resource management. This project was submitted with the expectation that multi-country collaborative projects such as the one proposed could in fact help facilitate a dialogue to reach agreement on larger and more divisive issues.

At Almaty in May 1994, the littoral states adopted the Declaration on Environmental Cooperation in the Caspian, through which they affirmed their desire to cooperate constructively in environmental management and their commitment to cooperate fully in the preparation and implementation of Programmes of joint activities for the protection of the Caspian environment, with the financial and technical assistance of the international community.

In response, UNDP, UNEP and The World Bank have indicated to the Governments of the littoral states their willingness to assist them in preparing a comprehensive, integrated environmental management Programme for the Caspian. The overall goal of the Caspian Environment Programme will be the environmentally sustainable development and management of the Caspian region, including living resources and water quality, so as to obtain the greatest possible benefits for the human populations of the region, while protecting human health, ecological integrity, and the region's sustainability for future generations. At the request of the littoral states, UNDP, UNEP and The World Bank (partly with the support of a PDF Block A), a preliminary concept paper was presented at a meeting of the littoral states in Tehran in April 1995, describing the main steps needed for establishing a regional environmental management plan for the Caspian.

A joint statement by the Caspian littoral states in April, 1995, reiterated their concern regarding the deterioration of the Caspian environment, renewed their commitment to work together on this issue, and renewed their invitation to the UN system to support regional and national Programmes for the protection and sustainable management of the Caspian.

As a further demonstration of the national commitment, the first meeting of the Interim Steering Committee of CEP, held in Ramsar (Iran) in May 1998, provided agreement on the following:

• The countries adopted the draft CEP Project Brief as the technical basis for the implementation of the CEP, which combines the contributions of EU/TACIS, GEF, The World Bank, and other sponsors.

• The countries adopted the structure proposed for governance, coordination and national implementation for the CEP (Annex II). In particular, the meeting noted the need for strong intersectoral and inter-donor coordination.

• The countries adopted the Terms of Reference and composition for the Steering Committee, the Intersectoral Coordinating Function, and the Caspian Regional Thematic Centres (Annexes III-IV).

• The countries agreed that the Steering Committee should determine its own procedures and modalities, with particular attention to involving the private sector and the NGO community. The Steering Committee will investigate the modality of a Trust Fund to assist with sustainability of the CEP.

• The countries requested UNDP work with the countries and donors to develop detailed rules and procedures for the Steering Committee for their consideration.

• The countries accepted the Framework for the Transboundary Diagnostic Analysis as agreed at the TDA Experts meeting.

• The countries agreed upon the locations of the PCU and Caspian Regional Thematic Centres.

The countries ownership of the project is also shown by the endorsement of the GEF Project Brief. All countries have committed significant financial resources in support of the project, including in-kind contributions (e.g., office space for hosting the Caspian Regional Thematic centres, Intersectoral coordination secretariats, salaries for their staff members). The governments will also provide necessary scientific expertise to the CEP from the national organizations, at-sea facilities for data collection, and meeting space as required. The countries have requested that the CEP achieve a fundamental level of activity in each country and on a regional basis, rather than merely an identification of the overall problems. The countries expect that the results and recommendations of the SAP and TDA process will be translated into real actions and responses on both a national and international basis. This is reflected in those objectives of the project which address programme coordination, intersectoral coordination and involvement in the SAP as well as SAP/NCAP formulation and endorsement (see Component I and Component V).

a) Private Sector Commitment

The private sector was closely involved in the CEP prior to its inception. The oil and gas sector assisted in early environmental activities in the region throughout the 1990s. The May, 1995 joint UNDP, UNEP and The World Bank mission to the Caspian region met with representatives from the private sector. Since that time, the UNDP and The World Bank have kept in constant contact with the oil and gas sector, including frequent briefings, and formal presentations at large industry gatherings, invited talks with various environmental subcommittees within the Caspian oil and gas industry, etc. Since the oil reserves are the most significant of the past few decades, oil and gas exploration and exploitation present potential environmental concerns. The participation of the industry is essential to the success of the CEP.

Though no single industry group speaks on behalf of the entire Caspian oil and gas sector, the UNDP and The World Bank have met with industry environmental consortia within Azerbaijan, Iran, Kazakhstan, and Turkmenistan. Industry participation is expected to include cash contributions, data sharing, training in specific areas of competence, participation in various objectives and activities of the CEP/GEF project, and other areas. The GEF/UNDP has begun discussions with the oil and gas industry regarding the feasibility of establishing an Environment Fund to provide sustainability of the CEP following completion of early phases of international agency activities.

In addition to the oil and gas sector, other major industries include the caviar industry and the marine transportation industry. In preliminary consultations with the caviar industry, they indicated their willingness to participate in the CEP activities. To date, the CEP has not approached the marine transport industry to solicit their participation, other than through discussions with the oil and gas sector which will be the major industry involved in marine transport. The PCU and CEP will initiate further discussions as the GEF project starts.

The degree of private sector activity in the Caspian region distinguishes the CEP from other regional programmes that have faced significant financial challenges as they attempted to evolve to sustainability (e.g., the BSEP). The CEP can take advantage of private sector revenue streams to assist in operating the CEP on a sustainable basis. In order to fully exploit this advantage, specific measures will be taken under Component I, Objective C, to develop an effective, two-way coordination between the CEP and the private sector.

b) Financial Sustainability

The comprehensive context that will be created by this Programme is expected to attract bilateral and other sponsors of discrete regional activities. Support to The World Bank has already been received in the form of a grant from the Japanese Government (PHRD) and further support has been promised from a number of other sources. The project is designed to identify and stimulate investments equitably for all Caspian littoral states, through feasibility studies and the Priority Investment Portfolio. The project will also evaluate the use of various financial instruments as mechanisms to generate revenue to sustain, inter alia, the regional coordination mechanisms developed during the project. The CEP Steering Committee has already begun investigation of an Environmental Fund, with UNDP assistance. Financial activities and modalities are being explored now. The Private Sector is expected to contribute to financial sustainability. The oil and gas industry could play a significant role in assuring sustainability of the CEP. Discussions have already begun with the private sector regarding their cash and in-kind contributions to the CEP, including participation in an Environmental Fund. In addition, the Framework Convention for the Protection and Sustainable Management of the Caspian Environment and its Resources facilitated by UNEP, is expected to incorporate concrete mechanisms for financial sustainability, upon adoption.

5. Reasons for UNDP Assistance

The transboundary transport and effects of contamination in the Caspian water body and transboundary nature of many of the Caspian’s valuable bioresources warrant GEF support. The CEP will help the littoral countries of the Caspian overcome institutional and other barriers to collaboration and help them to identify and resolve priority transboundary environmental concerns identified in the TDA and SAP and NCAP processes. The CEP coordinates among implementing agencies, countries, and other stakeholders, and generates programmatic benefits for the global environment that would not otherwise be achievable. This approach is fully in line with the GEF Operational Strategy for International Waters, as well as for the Waterbody Based Operational Programme (#8). Important characteristics of this Operational Programme are: “a) the focus on addressing a few high priority transboundary impairments of the water body such as reducing eutrophication or toxic substances; b) support for the learning process for countries to work cooperatively and collectively in addressing imminent threats to their transboundary water resources; and, c) identifying and implementing country-specific policy, legal and institutional reforms as well as priority investments to address the transboundary issues.”

Based on the experience of the GEF Black Sea Environmental Programme and other regional seas programmes, the Caspian countries consider the GEF to be a key donor for program initiation, focusing on institutional development and capacity building on the international level in an integrated, comprehensive manner and with the emphasis on the identification and implementation of policy and legal reforms. GEF funds will support the identification and ultimate mitigation of transboundary issues that would be neglected if addressed only from a national perspective. The TDA and SAP/NCAPs will focus on the Caspian ecosystem as a whole and will involve international donors, national and local governmental institutions, industries, and other key stakeholders that have important actions to take in restoring and protecting the Caspian environment.

The GEF International Waters Operational Programme referred to above emphasizes "institutional building ... and specific capacity-strengthening measures so that policy, legal and institutional reforms can be enacted in sectors contributing to transboundary environmental degradation.” This project supports institutional capacity building for long-term regional cooperation as well as helping to strengthen regional capacities in environmental management, monitoring of priority pollutants, public awareness and preservation of transboundary living resources.

In the Waterbody-Based OP, GEF will play a catalytic role in assisting a group of countries seeking to leverage co-financing in association with national funding, development financing, agency regular Programmes, and private sector action for necessary elements of a comprehensive approach for sustainably managing the waters environment. In accord with the GEF International Waters Operational Strategy, this project focuses on the transboundary threats to the Caspian ecosystem, a globally significant waterbody. The considerable transboundary threats seriously impair the functioning of the Caspian ecosystem and even human health.

The principal reason for UNDP involvement in this project is that this project falls under two of the key UNDP mandates i.e. regional cooperation and environmental protection. The project, involving Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan brings the countries closer together in achieving common goals. Currently there is a need to protect the environment in the Region since economic growth is bound to accelerate in the coming years, and there will be high possibility of environmental degradation if effective protective measures are not taken.

Another reason for UNDP assistance is the comprehensiveness and neutrality UNDP can play in the Region. UNDP has offices in all five countries, and as a multi-lateral organization, it can work disinterestedly for the benefit of the participating countries.

Considering UNDP’s mandates, its comprehensiveness and neutrality, and experience in the Caspian region, UNDP has a comparative advantage in supporting this project.

F. Special Consideration

For the sustainability of the project, special consideration will be given in following each country’s national practices. For example, when the project introduces new methodologies, the project will make sure that it is adapted to each country’s practices.

In addition, the project will also give special consideration to having broad coverage of people participating in meetings and workshops. In particular, the project encourages involvement of the private sector, NGOs, and women.

G. Counterpart Support Capacity

The countries of the region expressed their willingness to contribute to the protection of the Caspian through:

• Existing Soviet-Iran Agreements on the Caspian Sea from the Agreement between Russian Socialistic Federal Soviet Republic and Iran (Persia) (February, 1921)

• Existing Soviet-Iran Agreements on the Caspian Sea from the Agreement on Trade and Shipping between Union of Soviet Socialistic Republics and Iran (March, 1940)

• Final Resolution The First International Baku Conference on the problems of the Caspian Sea (June, 1991)

• Communique of Representatives of the Caspian States (Teheran Communique) (October, 1992)

• Communique of participants of the meeting on the problems of the Caspian Sea (October, 1993)

• Convention (Agreement) on Conservation and Utilization of Bioresources of the Caspian Sea (April, 1994) – Unsigned

• Declaration on Environmental cooperation in the Caspian Sea (Almaty) (May, 1994)

• Protocol of the meeting on programs for the protection of the environment in the Caspian Sea Region (Almaty) (May, 1994)

• Letters of country endorsement of the CEP (1997)

• National reports on the state of the Caspian, 1998

• The decisions of the First meeting of the Interim Steering Committee of the CEP, Ramsar, 1998

While the long-term commitment of the participating countries is strong enough to sustain the results of this Project special support will be required in the short-term to assure the successful development of TDA, SAP and NCAPs. This is due to the process of political, administrative and economic restructuring which is occurring in the region.

It is anticipated that national and local governments will support the activities of this Project through:

• National Focal Points who will serve as the representatives of the national governments for developing and coordinating implementation of project supported activities;

• coordination of activities for the development of NCAPs;

• provision of financial and other support to the activities of the Project, especially for all local currency expenditure;

• provision of free access to information required for the implementation of the Project; and

• authorization, subject to adequate prior notification and formal clearance, of non-site visits by technical experts to support the implementation of the project.

It can be expected that the cooperating governments will be able to provide office, meeting facilities, local logistical support and local salaries for government officials.

III. DEVELOPMENT OBJECTIVE

The Caspian Environment Programme (CEP) is being developed as a comprehensive response to the key environmental problems facing the region with GEF helping to address the priority transboundary issues. As defined in the Concept Paper, the overall goal of the CEP is: “Environmentally sustainable development and management of the Caspian environment, including living resources and water quality, so as to obtain the utmost long-term benefits for the human populations of the region, while protecting human health, ecological integrity and the region's sustainability for future generations.”

The CEP is designed to draw extensively on positive and negative lessons learned from other regional sea Programmes, such as the Baltic Sea Programme (BSP), the Black Sea Environmental Programme (BSEP), and the Mediterranean Environmental Technical Assistance Programme (METAP). These more mature Programmes have demonstrated that regional environmental Programmes can provide effective fora for regional cooperation among parties to relevant agreements or conventions. Certain features common to these Programmes will be emulated in the CEP while recognizing the unique regional needs and characteristics. The partners recognize that many of the important lessons learned from the more mature regional seas Programmes have resulted from the actual process of working through the Programme, and can be replicated in the Caspian region only by going through similar steps.

IV. IMMEDIATE COMPONENTS, OBJECTIVES, OUTPUTS AND ACTIVITIES

The immediate foci of the overall GEF Project are:

Component I: Development of a Caspian regional coordination and management mechanism for the sustainable development and management of the Caspian environment through the creation of regional, intersectoral and thematic institutional frameworks, including a regional framework convention;

Component II: Completion of a Transboundary Diagnostic Analysis (TDA) of priority water-related environmental concerns for the Caspian ecosystem;

Component III: Strengthened Institutional, Legal, Regulatory and Economic Frameworks for SAP implementation;

Component IV: Development of Priority Investment Portfolios for Transboundary Priorities; and

Component V: Formulation and Endorsement of a Regional Strategic Action Programme (SAP) and (5) National Caspian Action Plans (NCAPs) outlining priority actions, both baseline and additional, to be taken on behalf of sustaining the Caspian and its associated resources.

UNDP is the GEF Implementing Agency for Components I, II, III and V; UNEP is GEF Implementing Agency for Component III.

Consistent with the GEF Operational Strategy, such an initial strategic project is often necessary to gain agreement among cooperative countries in identifying priorities for future GEF funded activities. Following such an initial process, GEF would expect to support the agreed incremental costs of measures to address the priority transboundary issues.

In order to create a framework to begin to address these environmental issues, the following programmatic elements were identified by the countries:

• Effective Regional Intersectoral (public and private sector) Coordination and Environmental Management

• Public Awareness and Involvement in the CEP, SAP and NCAPs

• Effective Regional Information and Data Management Systems

• Effective Regional Assessment of Contaminant Levels

• Assessment of Transboundary Biodiversity Priorities

• Strategies for Sustainable Management of Fish Resources and Other Commercially Exploited Aquatic Bioresources

• Strategies for Integrated Transboundary Coastal Area Planning and Management

• Strategies to Live With Water Level Fluctuations

• Strategies for Combating Coastal Desertification and Land Degradation

• Strategies for Sustainable Human Development and Health

• Regional Emergency Response Actions

• Strengthened Institutional, Legal, Regulatory and Economic Frameworks for SAP implementation

• Strategies to Strengthen Contaminant Abatement and Control Policies and Procedures

• Priority Investment Portfolios for Transboundary Priorities

The GEF Project will support the agreed incremental costs of addressing the five primary project components, focusing on the priority transboundary issues identified during the TDA formulation process. It will share funding and implementation responsibilities for the GEF project objectives, particularly with EU/TACIS, UNEP and The World Bank. Other donors are expected to address national objectives, which are expected to contribute to the achievement of CEP basin-wide objectives.

COMPONENT I. PROJECT COORDINATION

Objective IA. Programme Coordination Mechanism (Activities led by GEF, supported by EU/TACIS)

The first step towards creating a regional management mechanism is to establish the implementation structure for governance, coordination and management of the CEP.

Objective IB. Programmatic Support for Caspian Regional Thematic Centres (Activities led by GEF and by EU/TACIS)

The Caspian Regional Thematic Centres will be responsible for development of a work plan and implementation of activities in respective thematic area, regional coordination within area of competency, development of relevant regional recommendations, guidance and strategy within area of competency, assistance in development of the TDA and PIP, assist in development and implementation of the National Caspian Action Plans (NCAPs) and Strategic Action Programme (SAP).

Objective IC. Intersectoral Coordination (including private sector) and Involvement in SAP, NCAP and TDA Formulation Process (Activities led by GEF).

The Intersectoral Coordinating Function in each of the Caspian littoral states will provide guidance and ensure coordination of a wide range of National institutions and organizations directly responsible for the implementation of the Programme at the National level. The Intersectoral Coordinating Function will have a full time, small secretariat (national and donor-supported) reporting to (under the direction of) the National Focal Point, and will serve as the national liaison with the PCU. Through the intersectoral Coordinating Function, both the Steering Committee and the PCU will act to advise national and sub-national public and private sector representatives on the relevant necessary actions required at the legal, institutional and policy level to reflect the findings of the SAP and the TDA. This will provide regional (SAP/TDA) feedback at the national and sub-national level (NCAP) to ensure continuity and complementarity in the decision-making process regarding CEP issues.

COMPONENT II. TRANSBOUNDARY DIAGNOSTIC ANALYSIS (TDA)

Objective IIA. Effective Regional Assessment of Contaminant Levels (Activities led by GEF)

A contaminant and ecological monitoring system will be essential to monitoring the long-term success of SAP and NCAP implementation. Data collected during special investigations to fill in the gaps for the regional assessment will help to set priorities for transboundary environmental issues in the region during the TDA process.

Objective IIB. Assessment of Transboundary Biodiversity Priorities (Activities led by GEF).

This assessment and recording of living resources, environmental characteristics, and human uses are needed on a comprehensive, regional basis, according to agreed, consistent and compatible procedures. It is also important to establish a biodiversity baseline against which the near-term and future CEP activities can be evaluated, particularly SAP and NCAP implementation. This effort centres on establishment and operation of a Caspian Bio-Resources Network as the primary tool for bioresources protection. Working with country Intersector Coordinating Function, the following tasks would comprise the biodiversity objective of the Caspian Environment Programme:

(Objective IIB - continued)

Objective IIC. Effective Regional Information and Data Management (Activities led by GEF and supported by EU/TACIS).

Full access to high quality, up-to-date CEP data and information, including the TDA, is essential to multi-sectoral participation in a cooperative regional programme and to decision-making at the national and regional levels. A comprehensive database and information management system will serve as a repository for relevant, available data, act as the technically sound basis for rational decision-making, and serve as a source of information and education for specialists, administrators, educators, and the general public.

Objective IID. Transboundary Diagnostic Analysis (TDA) (Activities led by GEF and supported by EU/TACIS)

The TDA represents a scientific process of setting priorities for transboundary environmental issues from the ecosystems standpoint. It is intended to build the capacity of each country’s Intersectoral Coordination Committee to understand the transboundary priorities and to consider those priorities together with neighboring countries as part of a regional assessment. The TDA provides the scientific and technical basis for consideration and evaluation of possible actions to be proposed in the SAP and NCAPs.

COMPONENT V. FORMULATION OF A STRATEGIC ACTION PROGRAMME (SAP) AND NATIONAL CASPIAN ACTION PLANS (NCAPs)

Objective VA. Strategies to Strengthen Contaminant Abatement and Control Policies and Procedures (Activities led primarily by EU/TACIS, supported by GEF and linked to Component III)

^{A strong abatement program to reduce contaminants at their source will be the most effective method to address coastal and transboundary contamination problems.}

Objective VB. Strategies for Sustainable Management of Fish Resources and Other Commercially Exploited Aquatic Bioresources (Activities led primarily by EU/TACIS and supported by GEF)

The most valuable economic fisheries resources by far are the seven species and subspecies of Caspian sturgeon. Restoring the regional sturgeon resource is a top priority from both a biological and economic perspective. To develop sustainable sturgeon yields, a regional approach that addresses the threats to all stages of the sturgeon's life cycle must be developed. This approach will directly affect numerous individuals and organizations now operating in the region and some mechanism to assist affected stakeholders needs to be adopted and implemented. Measures to reduce poaching and sustainably manage the remaining sturgeon fishery are most urgently needed.

Objective VC. Strategies for Integrated Transboundary Coastal Area Planning and Management (ITCAMP) (Activities led by GEF)

Adoption through SAP and country-specific NCAPs of common regional approaches to ITCAMPresults in reduced environmental degradation and loss of coastal habitats for migratory species and preservation of global biodiversity. This element intends to provide guidance for country focus on wetland habitat protections with transboundary implications.

Objective VD. Strategies to Live with Water Level Fluctuations (Activities led by EU/TACIS); GEF to support one element (Activity 3)

^{Development of a water-level change strategy will require better understanding of the causes of the water-level fluctuations, transboundary effects and global significance. This regional issue can only be addressed by a cooperative effort.}

Objective VE. Strategies for Combating Coastal Desertification and Land Degradation (Activities led by EU/TACIS and supported by GEF)

^{Upland land use in the Caspian watershed is closely linked to effects on coastal waters. This objective will help to better understand the problem of coastal desertification and to develop the Regional Strategy for Combating Desertification and Land Degradation as part of SAP.}

Objective VF. Strategies for Sustainable Human Development and Health (Activities supported in part by EU/TACIS and by GEF)

This objective will facilitate the compilation of a region-wide inventory of the environmental health hazards in the Caspian coastal area including climatic extremes and natural disasters, occupational health practices, solid and liquid waste hazards, food contamination, malnutrition, and access to safe drinking water. This objective will seek to strengthen the national environmental epidemiology capacity through regional training courses and information exchange.

Objective VG. Regional Emergency Response Actions (Activities led by GEF)

This objective will evaluate regional capacities for effective emergency response; prepare risk assessment to identify potential high-risk sources, along with information on sensitive habitats, working closely with the countries and the private sector.

Objective VH. Public Awareness and Involvement in CEP, SAP and NCAPs (Activities led by GEF and supported by EU/TACIS)

The CEP anticipates broad-based participation by the general public, private sector associations (especially oil and gas companies), academic and research institutions, non-governmental organizations and local community groups. The Programme will identify key stakeholders, particularly effective NGOs, bringing them together to strategize and discuss common issues, linking them together as appropriate for the enhanced exchange of information and strategies, and involving them in the SAP & NCAP formulation processes done on country-specific and regional bases.

Objective VI. Formulation and Endorsement of Strategic Action Programme (SAP) and National Caspian Action Plans (NCAP) for Priority Transboundary Issues (Activities led by UNDP and supported by EU/TACIS)

The intent of the SAP and NCAP processes are to obtain agreement regionally on priorities for transboundary issues. To determine harmonized approaches for policy, legal and institutional reforms for addressing those top priority transboundary issues (SAP) and to translate these reforms and priority investments into country-specific, expected baseline and additional actions in the NCAPs. The Intersectoral Coordination Committee in each country plays a key role in the implementation among countries at the regional level and with sub-national enties and stakeholders nationally to ensure policy reforms and priority investments are actually implemented. Close interaction with private sector involvement in oil and gas issues and the Convention and Legal Framework component is important to ensure that the stage is set for follow-up of this initial project through strong national commitments to specific reforms and investments.

(Objective VI - continued)

V. INPUTS

It is expected that inputs to the Caspian Environment Programme will come from following sources: (1) the Caspian country governments; (2) UNDP/GEF, (3) EU/TACIS, and (4) other donor countries/organizations.

Several activities under the Caspian Environment Programme will be jointly funded and carried out by GEF and by other multilateral and bilateral institutions. Thus, several activities in this project will receive inputs both from GEF and other sources.

A. Government Inputs

Government Inputs are of two kinds: baseline activities and in-kind contributions. As specified in the GEF Project Brief (Table in Annex IV of Project Brief), the contributions for national baseline activities for the region total approximately $161,000,000. Baseline funding includes activities that the governments implement nationally for Caspian-related issues, with primarily national benefits. In-kind contributions consist of government provision of office space, facilities, personnel, and other actions directly supporting the Caspian Environment Programme generally, and the GEF Project specifically. In-kind contributions from each country have been estimated as follows:

Azerbaijan $ 420,000

Islamic Republic of Iran $ 300,000

Kazakhstan $ 283,000

Russia $ 300,000

Turkmenistan $ 117,000

Total $1,420,000

B. GEF Inputs

The Global Environment Facility (GEF) has allocated a total of US$8,394,862 for the Caspian Environment Programme, for a three-year period from July 1999 to June 2002. UNDP (components I, II, IV, V) and UNEP (component III) are the GEF Implementing Agencies for the CEP, with UNOPS executing Components I, II and V, UNEP-ROE executing Component III, and the World Bank executing the Priority Investment Portfolio Project (PIPP) under Component IV.

Objectives of the Caspian Environment Programme implemented by UNDP through the GEF project and executed by UNOPS are:

Objective IA: Programme Coordination Mechanism (assisted by EU/TACIS)

Objective IB: Programmatic Support for CRTCs (assisted by EU/TACIS)

Objective IC: Intersectoral Coordination (including private sector) and Involvement in SAP, NCAPs and TDA Formulation Process (assisted by EU/TACIS)

Objective IIA: Effective Regional Assessment of Contaminant Levels

Objective IIB: Assessment of Transboundary Biodiversity Priorities

Objective IIC: Effective Regional Information and Data Management

Objective IID: Transboundary Diagnostic Analysis (assisted by Eu/TACIS)

Objective VC: Strategies for Sustainable Management of Fish Resources and Other Commercially Exploited Aquatic Bioresources (assisting EU/TACIS)

Objective VF: Strategies for Sustainable Human Development and Health (assisted by EU/TACIS)

Objective VG: Regional Emergency Response Actions (assisted by World Bank)

Objective VH: Public Awareness and Involvement in CEP, SAP and NCAPs

Objective VI: Formulation and Endorsement of SAP and NCAPs for Priority Transboundary Issues (assisted by EU/TACIS)

The Objective of the CEP implemented by UNDP and executed by the World Bank is:

Objective IV: Priority Investment Portfolios

The Objective of the CEP implemented by UNEP and executed by the UNEP Regional Office for Europe (ROE) is:

Objective III: Strengthened Institutional, Legal, Regulatory and Economic Frameworks for SAP Implementation

11. The World Bank Inputs

The World Bank will provide staff for professional back-stopping of the PIP Component (IV) of the GEF project, cooperate according to their possibilities and interest, particularly in the investment strategy. They will attend the Steering Committee as full participants.

11. UNDP Inputs

The UNDP will provide staff for professional back-stopping of the project. They will also provide services from the country offices, particularly through the active participation of the Sustainable Development Advisers (SDAs), where appointed. UNDP has already committed $100,000 to pre-implementation activities to maintain close coordination of the CEP prior to the GEF Project start-up. In addition, UNDP RBAP has contemplated providing additional monetary assistance to Iran, in order to raise the level of their participation in the CEP. Since Iran cannot be assisted by all international donors, UNDP has made a special effort to raise their level of participation to parity with the other littoral states.

11. UNEP Inputs

UNEP will provide staff for professional back-stopping of the UNEP component activities (such as through GRID-Geneva) and shall attend the project Steering Committee as full participants.

11. EU/TACIS Inputs

EU/TACIS is providing approximately US $6 million to assist the CEP. Close coordination between EU/TACIS and other donors has enabled partitioning of the funding for the CEP. EU/TACIS is supporting five thematic centres. In addition, it is establishing the PCU at present, which will later be run by the UNDP/GEF staff as the GEF project is initiated. Objectives of the CEP implemented by EU/TACIS include:

Objective VA: Strategies to Strengthen Contaminant Abatement and Control Policies and Procedures

Objective VB: Strategies for Sustainable Management of Fish Resources and Other Commercially Exploited Aquatic Bioresources

Objective VD: Strategies to Live with Water Level Fluctuations

Objective VE: Strategies for Combating Coastal Desertification and Land Degradation

11. RISKS

The long-term success of regional water body management Programmes such as the CEP depends, inter alia, on the political willingness of the Countries to cooperate and on the availability of national and international financial resources. The Caspian region presents several difficult issues that may hinder implementation of Programme objectives. The former Soviet Caspian states¹ are undergoing difficult political, social and economic transitions and may not uniformly rank environmental protection among their highest national priorities. Several have, however, evidenced sufficient concern about the health and economic impacts of continued environmental degradation to undertake significant national environmental programmes, often including projects financed externally as well as from national budgets. All of the littoral states have expressed a willingness to collaborate together and with international partners to address the Caspian environment. Ongoing negotiations regarding the legal status of the Caspian must be acknowledged as important, but the littoral states have consistently indicated a willingness to address the environmental problems of the region even in the absence of a broader agreement on the legal status. One of the constraints that Caspian littoral states face is lack of equitable financing and technical assistance provided by donors.

However, risks due to policy changes resulting from the turnover of key government officials can not be ignored. Impacts from economic changes and failures are much harder to predict; the four CIS countries are in the difficult process of shifting towards a market economy and the state of individual economies varies among the countries. Iran is also facing the daunting task of economic reconstruction as it recovers from the major economic and social dislocations posed by the imposed war and low global oil prices. In this regard, countries that are under economic stress during the transition period may focus their investment priorities away from environmental concerns to the potential detriment of achieving regional objectives. On the other hand, the expected growth in financial and economic linkages between the five countries due to both historical and geographic factors may help to diminish impacts from any short-term economic lapses experienced by individual countries during the project period.

The economic constraints and risks are much less predictable. Some countries in the region are facing increasing uncertainties concerning the rate at which they move towards a market economy. The shift appears inexorable, but the state of individual economies varies considerably and, in some cases, weak economies have forced governments to focus their priorities for investment into areas with a marginal or even negative environmental benefit. These shifts, occasionally demanded by external advisory bodies, have delayed the implementation of sectoral funding mechanisms such as national environmental funds. It is hoped that such constraints will not be imposed on the regional mechanism and the results of the preliminary workshops were positive in all cases. The project will however, include the evaluation of alternative funding mechanisms, in the case that the barriers prove insurmountable in the short term.

11. PRIOR OBLIGATIONS AND PREREQUISITES

The participating governments have taken a number of preparatory measures, including budgetary allocations for the government contribution in kind, and have designated a senior official as a CEP National Focal Point in each country. The remaining obligations and/or prerequisites for work to commence on the CEP are as follows:

• approval of the Project Document by the Governments of all participating countries;

• designation by the Coordinators of technical experts who will work on various aspects of the project, together with their responsibilities and reporting requirements (see relevant sectors of Section D); and

• provision of the in-kind contributions to activities as specified in this document and agreed by the GEF Council.

11. INSTITUTIONAL FRAMEWORK, COORDINATION AND ADMINISTRATION

11. Institutional Arrangements

11. Regional Institutions

The CEP Steering Committee was composed during the PDF-B phase of representatives from Caspian countries at the level of Deputy Ministers of Environment or equivalent rank, individuals and representatives of international organizations, bilateral programs, and other organizations that actively support the CEP.

The Regional Steering Committee for the Programme, as the supreme decision-making and supervisory body of the CEP, will be responsible for approving strategic decisions and annual workplans, setting program direction, reviewing CEP progress, and identifying new and additional funding related to implementation of projects under the Caspian Environment Programme. Representatives of private sector and other organizations that contribute to the CEP will be encouraged to participate in the Steering Committee. The Steering Committee will provide policy-level liaison to national governments, through Intersectoral Coordination in each country, regarding implementation of the program on the country level, and will provide direction to the Programme Coordination Unit (PCU) regarding preparation of the Caspian Regional Strategic Action Programme (SAP) and National Caspian Action Plans (NCAPs).

The Programme Coordination Unit, which is accountable to and reports to the Steering Committee, will provide a coordination and management structure for the development and implementation of the Caspian Environment Programme in accordance with the rules and procedures of GEF/UNDP and EU/TACIS based on directions provided by the Steering Committee. Specific attention will be given to the development of a regional intersectoral coordination initiative so as to fully involve different government ministries and the private sector in the Caspian Environment Programme. This regional intersectoral Coordinating Function will liaise closely with those national institutions and agencies that have been designated responsibility for such intersectoral coordination (see National Institutions below).

Caspian Regional Thematic Centres shall be based upon existing institutions with the best available regional expertise in selected thematic areas. They will be responsible for: development of a work plan and implementation of activities in respective thematic area, regional coordination within area of competency, relevant regional recommendation development, guidance and strategy within area of competency, assistance in development of the TDA and PIP, assist in development and implementation of the National Caspian Action Plans (NCAP) and Strategic Action Programme (SAP).

11. National Institutions

Intersectoral Coordinating Function in each of the Caspian littoral states will provide guidance and ensure coordination of a wide range of National institutions and organizations directly responsible for the development and implementation of the Programme at the National level. The Intersectoral Coordinating Function will have a full time, small secretariat (national and donor-supported) reporting to (under the direction of) the National Focal Point, and will serve as the national liaison with the PCU. Representation by the government will be expected at the deputy minister level.

As was done during the design of the framework TDA during the PDF-B, the governments of Caspian countries will nominate National TDA Experts for finalization of the Transboundary Diagnostic Analysis. These experts will assist the Intersectoral Coordinating Function in each country and advise the Programme on background information, transboundary environmental problem analysis, root causes, and needed sectoral and institutional changes for the successful management of Caspian resources.

11. Project Implementation

The UN Office for Project Services (UNOPS) served as Executing Agency during the PDF-B phase and will continue to serve as Executing Agency for this UNDP-implemented portion of the CEP (Components I-III).

11. Coordination Arrangements

In order to facilitate coordination, reporting and communications with the participating Governments, other Resident Representatives and donor agencies involved in the project, and in order to ensure proper project monitoring and evaluation, the Resident Representative, Azerbaijan, is designated the Principal Project Resident Representative (PPRR) for this project. In this role, the PPRR will assume the primary responsibility for ensuring that activities of this project are coordinated with initiatives being supported under other government or donor programmes of a similar nature, and that proper monitoring, reporting and evaluation of project activities are undertaken.

Activities to be supported under the CEP will be carefully reviewed with all parties involved to make certain they do not conflict with or duplicate activities being supported by participating governments or international institutions.

The PCU will play a crucial role in ensuring coordination of this project with other relevant activities in the region. To ensure donor coordination and cooperation, the lead international agencies (UNDP, The World Bank, UNEP and EU/TACIS) will meet regularly and keep each other fully informed of their respective activities. The Steering Committee will provide the forum through which national representatives, donors and other relevant actors will coordinate their activities. Intersectoral Coordinating Function in each of the Caspian littoral states will provide guidance and ensure coordination of a wide range of National institutions and organizations directly responsible for the implementation of the Programme at the National level.

11. PROJECT REVIEWS, REPORTING AND EVALUATION

In line with UNDP procedures, the project will be subject to tripartite review (TPR) once every twelve months. On these occasions, the CTA will prepare an updated workplan and Annual Project Report (APR) and formulate recommendations for eventual adjustments of strategies and activities. A draft APR shall be prepared at least two months in advance of the TPR to allow review by UNDP prior to the meeting. The project will also participate in the GEF Project Implementation Review (PIR) process.

Meetings can also be organized ad hoc at the request of the coordinator of the PCU and/or on request by one of the participating countries. The Steering Committee will approve the final results of such meetings.

Working in concert with appropriate scientific and technical institutions and government agencies in the region and in line with emerging GEF policies, the project will develop a set of “indicators” to track the short and long-term impacts of this project. Key indicators will include process (e.g., policy, legal, institutional, etc. reforms), stress reduction (e.g., reduced pollutant loads, fishing pressure, etc.), and environmental status (e.g., cleaner waters/sediments, restored habitats, sustainably managed fisheries, etc.).

Periodic Status Reports would be prepared at the request of the Steering Committee for presentation at key meetings associated with the Project.

The project will also participate in the UNDP-GEF International Water (IW) LEARN Project through information exchange and sharing lessons learned with GEF and other regional waters projects.

Towards the end of year 3, a final independent evaluation of the project will be carried out by project evaluation specialists selected by UNDP-GEF. The evaluation will include: an assessment of (a) the outputs generated, (b) the processes used to generate them, (c) project impacts using indicators included in the logical framework matrix and d) lessons learned.

11. LEGAL CONTEXT

For all five participating countries, Azerbaijan, Iran, Kazakhstan, Russian Federation and Turkmenistan, this Project Document shall be the instrument referred to as such in Article 1 of the Standard Basic Assistance Agreement (SBAA) between these governments and the United Nations Development Programme, signed by the parties previously. The host countries’ implementing agencies shall, for the purpose of the SBAA, refer to the governments’ cooperating agencies described in that Agreement.

The following types of revisions may be made to this Project Document with the signature of the Principal Project Resident Representative (PPRR) only, provided he or she is assured that the other signatures of the Project Document have no objection to the changes:

11. Revisions in, or addition of, any of the annexes of the Project Document.

11. Revisions that do not involve significant changes in the immediate components, objectives, outputs or activities of the project, but are caused by the rearrangement of the inputs already agreed to or by cost increases due to inflation.

11. Mandatory annual revisions that rephrase the delivery of agreed project inputs or increased expert or other costs due to inflation or take into account agency expenditure flexibility.

11. BUDGET

Project Number: RER/98/G32/A/1G/31

Project Title: Addressing Transboundary Environmental Issues in the Caspian Environment Programme

11. Budget Lines

Project Budget Covering UNDP Contribution (in U.S. Dollars)

B. CEP PROGRAMME COSTS (USD)