INTEGRATED SAFEGUARDS DATA SHEET

APPRAISAL STAGE

Report No.: ISDSA4977

Date ISDS Prepared/Updated: 25 July, 2013

I. BASIC INFORMATION

1. Basic Project Data

Country: East Asia and Project ID: Pl23933Pacific

Project Name: Capturing Coral Reef Ecosystem Services (CCRES) (P123933)

Task Team Leader: Marea Eleni Hatziolos

Estimated Appraisal Date: 25 July, 2013 Estimated Board Date: 20 September, 2013

Managing Unit: EASER Lending Instrument: Technical AssistanceLoan

GEF Focal Area: International waters

Sector(s): General agriculture, fishing and forestry sector (50%), Agriculturalextension and research (50%)

Theme(s): Biodiversity (40%), Other environment and natural resourcesmanagement (40%), Climate change (20%)

Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 No(Rapid Response to Crises and Emergencies)?

Project Financing Data (in USD Million)

Total Project Cost: 6.5 Total Bank Financing: 0.0

Total Cofinancing: 2.0 Financing Gap: 0.0

Financing Source Amount

BORROWER/RECIPIENT 2.00

Global Environment Facility (GEF) 4.50

Total 6.50

Environmental Category: B

Is this a Repeater project? No

Is this a Transferred No

project?_________________________________

2. Project Development Objective(s)The Project~ Development Objective is to design and support the uptake of innovative models forvaluing mangrove, seagrass and coral reef ecosystem services with the potential to enhance the

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sustainability of marine-based enterprise and marine spatial planning in select coastalcommunities in Indonesia, the Philippines and the Pacific Islands.

3. Project Description

A. Project Context

1. Coastal and Marine Resources, and their associated ecosystem services in the region arelinked to globally important Marine Biodiversity, and underpin a huge part of the regionaleconomy. Although this wealth of natural capital has the potential to be a major driver ofinclusive green growth in East Asia and the Pacific, huge challenges will need to be overcome.These include resource governance regimes which allow open access and short termdevelopment planning, failure to account for environmental externalities and impacts on futuregenerations when calculating economic benefits, inadequate scientific information to informdecisions on tradeoffs-including how natural and social systems can interact to buildresilience or undermine it--and the relationship between ecosystems services, food security andlivelihoods in poverty alleviation strategies. Coral reefs and associated near-shoreecosystems (e.g., mangroves and seagrass beds) reach the height of their expression in an areacalled the Coral Triangle (which includes parts of Malaysia, Eastern Indonesia, the Philippines,East Timor, Papua New Guinea and the Solomon Islands), These icons of marine biodiversityand ecosystem productivity are under severe threat from overexploitation and destructive use.

2. Despite their unequivocal importance to human well-being and economic activity, theservices provided by these ecosystems are routinely taken for granted by communities, industryand policy makers alike. That the natural capital these ecosystems represent is not consideredin the same light as other economic resources, contributes to their ongoing demise andencourages ad hoc decision making that would not be acceptable in the management of othercapital resources.

3. Capturing the economic and cultural values of marine natural capital through valuationof Ecosystem Services, and quantifying the cost of lost services due to environmentaldegradation, has the potential to transform the development and stewardship of coastal areas bytranslating ecological value into intuitive and financial terms for local stakeholders as well aspolicy makers. This knowledge can be harnessed by decision support tools which can help tobuild the political rationale for change. Together with marketable goods and provisioningservices, marine and coastal ecosystems also provide a range of non-market goods and servicessuch as regulating global carbon and nitrogen cycles and protecting shorelines. Local andglobal drivers of change influence each of these services and it is imperative that managementand policy be suitably informed to ensure the continued supply of the ecosystem services onwhich human well-being and prosperity depend.

4. As coastal development in the region is driving conversion of natural habitats, exposinglarge areas of marine space to climate related impacts, and outpacing the provision of keypublic sector services, Marine Spatial Planning (MSP) is being used increasingly by Local

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Government to rationalize the use of marine and coastal space within their jurisdiction, Ifproperly designed in consultation with local stakeholders, MSP can serve as an integrative toolto help strengthen resource management and biodiversity conservation by identifying the bestlocations for economic development compatible with conservation and sustainable use,enhance resilience to climate change impacts,and resolve user conflicts among competingeconomic sectors. . Similarly, within Marine Protected Areas, the majority of which aredesignated for multiple use, with only a small core area demarcated as "No Take", zoning of thesurrounding space for compatible, sustainable use and developing the criteria for effectivemanagement remains a challenge without adequate scientific information. The CCRES projectcan help fill this information gap by mapping and assessing the value of coastal natural capital(e.g., coral reefs, mangroves, seagrass beds) in terms of the flow of key ecosystem sevices tosurrounding communities. Identifying ways to enhance ES flows and to better capture thevalue from these services as inputs to sustainable economic development, climate resilience andthe delivery of other social and environmental benefits, are important objectives to whichCCRES will contribute.

5. CCRES will finance ecological and economic valuation studies, develop innovativetools and models to support decision-making and new opportunities for "eco-business"development, and communicate results through knowledge management to promote uptake.This will be achieved through CCRES's three integrated components: (i) Quantifying the valueand market potential of coral reef and mangrove ecosystem services; (ii) Forgingcommunity-led innovation in capturing and sustaining benefits from marine ecosystem servicesand enhancing resilience in the face of climate change, and (iii) Promoting behavioural changethrough outreach, decision support and regional learning from results in selected field sites. Afourth component, Project Management and Coordination, deals with Project administrations,Monitoring and Evaluation and due diligence regarding Project FM, Procurement and reportingto the Bank.

B. Project Components

Component I: Quantifying the value and market potential of coral reef and mangroveecosystem services (US$1.0 M).

Despite their value to human prosperity and well-being, the services provided by ecosystemstend to be taken for granted by communities, industries and policy makers alike. That naturalcapital resources are not considered in the same light as other economic resources contributes totheir ongoing demise and encourages ad hoc decision making that would not be acceptable inthe management of other capital resources. Economic valuation and systematic managementof ecosystem services (ES) have excellent potential to transform the development andstewardship of coastal areas. Translating ecological value into meaningful terms for localstakeholders as well as policy makers, Component I of CCRES aims to demonstrate howecosystem services can be accurately valued and systematically managed to deliver pro-poor,pro-environment outcomes, and to help build the political rationale for change.

Previous economic analyses have usually ignored the state or health of an ecosystem andessentially associated activities, such as tourism, with the existence of an ecosystem (implicitly

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assuming that it is either present or absent). However, the real challenge facing people intropical coastal areas is one of ecosystem decline; most ecosystems will not 'disappear'. Thus,economic analyses are needed that measure the marginal change in value as a function ofecosystem health. Valuing systems in this way is a substantial scientific challenge but CCRESintegrates the necessary disciplinary backgrounds within the natural sciences, social sciencesand economics.

Working at a number of pilot and demonstration sites in the Asia-Pacific region, Component Iof CCRES will first quantify the value of key coral and mangrove ecosystem services as afunction of system state. Services include reef fisheries, ornamental species (aquarium trade),island stability, prestige diving tourism, blue carbon, and cultural benefits. By making the linksbetween ecosystem state and ecosystem services explicit, stakeholders will gain greater insightinto how reef health affects them. This is an important step in building greater constituency forreef stewardship and management. Further, by estimating the real costs of allowing reefecosystems to degrade, a compelling case can be made at a governmental level on the threats tofood security and opportunities to mitigate costs through improved management.

The Component will also help operationalize the use of ecosystem services for marine spatialplanning. Existing tools for marine reserve design and modeling flows of services will betailored to the specific needs of people and eco-businesses in tropical coastal areas. Tools willallow stakeholders to visualize the production and flows of ecosystem services and thereforeevaluate the consequences of different scenarios for development and management. Examplesof questions that local stakeholders will be able to pose include: How should eco-businesses bedistributed to maximize potential synergies while ensuring that ecosystem function ismaintained at sufficiently high levels to sustain enterprise? Which coastal areas are best setaside for conservation purposes? Where might marine reserves have the greatest benefit tofisheries? Who would benefit from an improvement in watershed management?

The key deliverables from the overall activities under Component I will be:* Three models will be developed relating to the valuation of eco-system services, e.g.,

supporting reef fisheries, eco-tourism, blue carbon, coastal defense, and water filtration.* Innovative, comprehensive decision support systems for marine reserve design which

help optimize management objectives will be developed* A planning framework that incorporates models of ecosystem functions and services

and decision support systems will be developed which can be tailored to stakeholderdemand

Component II: Using Ecosystem Services valuation to develop new markets andeco-business opportunities and inform development trade-offs (US $2.5 M).

Component II will draw on the results of Component I to build business models that support thehealth of marine and coastal ecosystem services. Component II will examine how investmentin marine and coastal ecosystem services and the strengthening of community livelihoods andresilience to climate variability might be operationalized using eco-business models.

Through the development of sustainable alternative enterprises and new income generating

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opportunities, communities can be empowered to move away from unsustainable coastalresource use practices and towards activities that support improved ecosystem health, increasedproduction outcomes, and greater resilience achieved through livelihood diversification.

A central feature of Component II is, therefore, to bring business thinking to scientists andconcurrently, an appreciation of the importance of ecosystem services to business.Component II will do this by using a modeling approach based on systems science,participatory management principles and value-chain analysis to develop and evaluate multiplesimulated eco-businesses scenarios. The model can be used to design profitable eco-businessoptions for alternative livelihood programs linked to beneficiary projects such as the PRDP orCOREMAP-CTI. Thus, the findings from Component II can inform these and other GEF andWorld Bank projects regarding a range of sustainable alternative livelihoods in coral reef areasin the region.

Key Activities and deliverables under this component include:

1. Development of systems maps for each site detailing interactions between specificecosystems services and social-economic sectors (direct and indirect).

2. Identifying the essential balancing and reinforcing loops impacting ecosystemservice-business linkages as well as key leverage points for affecting those loops.

3. Advice on development of self-managed, community-based business that offersproducts and services which give consumers clear value proposition while directly orindirectly benefiting from and contributing to coastal and marine ecosystems.

4. Toolkit development for use by business entrepreneurs

Component III: Promoting behavioral change through outreach, decision support andregional learning from results of demonstration pilots (US $0.6 M).

Critical to catalyzing behavior change is the expansion of the knowledge base withingovernment and management agencies, the general public and in other key stakeholdercommunities. Communication and outreach remains one of the critical elements for anycampaign to raise awareness and influence behaviors. Component III will develop theframeworks from which to move the science findings into policy and management uptake.

Component III will focus on the effective uptake of information generated from Components Iand II, through the development and dissemination of the resources. Key objectives willinclude: (i) catalyzing behavioral change through the effective interpretation of the Projectfindings into appropriate formats for the various stakeholder audiences and providingmechanisms to ensure the effective uptake of the information into policy and managementpractices, and (ii) Ensuring the Project results are incorporated into current GEF and WorldBank regional projects and future project design frameworks.

An important element in ensuring effective engagement and dissemination of information at theregional, national and local levels will be the establishment of an operational mechanism within each of the targeted regions to improve the level of engagement and building of knowledgeand understanding of coral reef resources and their values to communities. Partnerships will

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be established with project partners and regional networks (e.g. Non-GovernmentOrganizations, Coral Triangle Center, PEMSEA and COREMAP III) to preview findings andinformation and work with the Project to disseminate the results and information resourcesproduced.

The key deliverables for Component III will be:1. A stakeholder analysis clearly detailing who the key beneficiaries or stakeholders and

stakeholder groups the Project will be targeting.2. An understanding of the values, drivers, triggers and incentives at field sites for the key

beneficiaries or stakeholders which will link into the Project's broader engagement andoutreach strategy.

3. Information products e.g., models, frameworks, toolkits, etc. from the results fromComponents I and II.

4. Broader communication products e.g., website, policy briefs, technical manuals,information packages, etc.

Project partners such as the University of the Philippines; LIPI (the Indonesian ScienceFoundation and its Oceanography Department) and other research institutions will also play arole in working with the Global Change Institute in developing knowledge products,information and tools which are country specific and engage with stakeholders and audiences ineach country to ensure maximum uptake.

A Technical Steering Committee will be established to provide technical direction on theproject's activities and research and ensure the linkages and synergies across the project'scomponents are strengthened. The Committee will oversee the quality of the research andsynthesize the results from each component's projects leading to interpretation of the findings.It will also make policy and management recommendations where appropriate.

Component IV: Project Coordination and Management (US $0.4 M).

A partnership arrangement whereby the University of Queensland (UQ), Australia, would serveas recipient of the GEF grant funds on behalf of project beneficiaries, and as Executing Agency,will be entered into with the GEF. This arrangement, in which the University's Global ChangeInstitute (GCI) would serve as the Project Executing Agency (PEA), has been determined tooffer the optimal combination of financial accountability, technical expertise, capacity buildingand long-term institutional commitment (including substantial co-financing). UQ also served asexecuting agency under the GEF global Coral Reef Targeted Research & Capacity Building forManagement Project, completed in 2010; its performance was rated Highly Satisfactory in thefinal ICR.

4. Project location and salient physical characteristics relevant to the safeguard analysis(if kn o wn)

Although the project will be working in pilot sites in Indonesia, Philippines, and a Pacific IslandCountry to develop the overall framework for valuation of eco-system services, preparation ofmarine reserve strategy, marine spatial planning, and a framework to generate and evaluate

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viable and sustainable eco-system based businesses, these sites have yet to be finalized. (It isexpected that sites in Indonesia and the Philippines will be determined early in Year 1.) Moreimportantly, this effort will be research-oriented and will involve working with thecommunities, business owners, and academics to generate data and develop models andframeworks.

These outputs are then to be used to support eco-system wealth accounting, marine reserveplanning, marine spatial planning, and eco-business proposals and feasibility studies in specificsites proposed by Bank and other government and donor-financed projects. It is important tonote that the implementation of the strategies and plans prepared by this project will not beundertaken under CCRES, but will be the domain of the beneficiary projects seeking theapplication of the models and frameworks to their project sites, e.g., COREMAP-CTI, ThePhilippines Rural Development Project, and other Government financed implementationactivities outside the realm of CCRES.

5. Environmental and Social Safeguards Specialists on the Team

Juan Martinez, Social Safeguards Specialist ( EASIS)

6. Safeguard Policies Triggered? Explanation (Optional)

Environmental Assessment OP/BP 4.01 Yes The project impacts are expected to beoverwhelmingly positive. The project isdesigned to improve the way communitiesinteract with the coastal resources on whichthey depend for essential ecosystemservices, by making these services moreexplicit and mapping flows to demonstratehow and by whom these benefits arecaptured. Through such studties the Projectcan inform coastal development planning,and promote new business opportunitiesbased on the benefits which can accrues toboth the natural environment and dependentcoastal communities from healthy marineecosystems. Optimizing marine spatial plansto help communities better capture thesebenefits results in incentives forconservation and better stewardship of themarine environment. This creates thepotential for a positive feedback loop or"virtual circle" of healthy ecosystems andcommunity welfare.

The project will not support implementationof the marine spatial plans and businessmodel it develops. Uptake, to the extent it

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happens, will be supported by thebeneficiary projects, i.e., PRDP andCOREMAP CTI, which include support foralternative livelihoods. CCRES would makeuse of the safeguard instruments developedunder the beneficiary projects, whereappropriate, to ensure that any unanticipatedimpacts are minimized. A separate safeguardinstrument for CCRES will not be necessarygiven the project interventions. Instead,measures have been incorporated as part ofthe project design. Under Component I, therisks associated with any application of themarine spatial planning framework aresafeguarded through peer-reviewedscientific findings. The project will beproviding the framework or processes toregional projects such as COREMAP forpossible uptake by local planningauthorities. Any application of theseplanning frameworks would be subject to thesafeguards instruments and mitigationmeasures established under the beneficiaryprojects. Likewise, for CCRES ComponentII, the activities will be driven by theparticipatory systems analysis, which willpick up on any potential risks and alsoidentify any pathways forward to avoid theserisks. There will also be a constantengagement process with country teammembers (from Indonesia and thePhilippines) and with stakeholder groups theproject is engaging with. Furthermore, theestablishment of the Country AdvisoryGroups consisting of government agencies,NGOs, businesses, research institutions,individuals, etc., is also designed for theProject to be made aware of any potential forfuture risks and the development ofmitigation strategies against these.

Nevertheless, given that all the beneficiaryprojects to be supported by this project areCategory B and there might be some socialimpacts related to restriction to access ofnatural resources from the development ofmarine spatial plans, this project iscategorized as a B project.

Natural Habitats OP/BP 4.04 Yes The project will work in high biodiversityhabitats such as coral reefs and sea grass

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beds, many of them still in a natural state.But since the objectives of the project are toprotect these habitats and reduce the threatsto them from unplanned development orunsustainable business practices, theoutcomes are expected to be highly positive.

Likewise, the beneficiary projects to whichCCRES is linked aim to protect the coastalecosystem and to enhance its sustainablemanagement through improving themanagement effectiveness of MarineProtected Areas and supporting communitiesin the monitoring of their coral reefs toprotect against destructive fishing practicesand safeguard their natural capital.

Forests OP/BP 4.36 No Neither CCRES nor any of the beneficiaryprojects offering their sites for detailedstrategy/plan preparation under this projectare financing activities that would affectforests and forest-dependent communities.

Pest Management OP 4.09 No The project will not procure any pesticides,nor will it result in increased use ofpesticides.

Physical Cultural Resources OP/BP 4.11 No The project will not involve any civil worksthat would affect any PCR.

Indigenous Peoples OP/BP 4.10 Yes The pilot sites from the beneficiary projectswhere CCRES will be working will not bedetermined until early in the Year 1. If itturns out that there are indigenous people atthese sites, they would be among thebeneficiaries of the Project, and CCRESwould use the IP safeguard instrumentsprepared under those projects. CCRES willnot prepare a separate IP instrument, but willinstead incorporate the elements of thepolicy in the project design itself. Thesewould include consultations with andengagement of stakeholders in the collectionof relevant data that could feed into thedesign of business models arid marine spatialplans, and ensure that the views and broadcommunity support of Indigenous Peoplesare taken into account in anyrecommendations made with regard toMarine Spatial Plans, zoning or businesspractices that could affect them.

Involuntary Resettlement OP/BP 4.12 Yes The valuation studies, marine spatial plans

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and eco-business model that CCRESproduces are meant to benefit communities,by identifying ways to link investments inmaintaining or restoring ecosystem health toimproving community health and wellbeing.Any such plans would be developed inconsultation with beneficiaries and anyimplications regarding access restrictions,for instance through zoning, would be theresult of consensus, as was the case underCOREMAP II, the prior phase ofCOREMAP. In view of the possible accessrestriction, the policy is triggered. CCRESthough will not finance implementation ofthese plans. However, should therecommendations emerging from these plansbe supported under Beneficiary Projects, theResettlement Frameworks of those projectswill be applied.

To mitigate any economic displacementsthat might occur as a result of zoning themarine space and to help communitiestransition to more sustainable use practicesand governance regimes, an entirecomponent in COREMAP-CTI, forexample, has been designed to supportalternative livelihoods opportunities whichwould be accessible to affected populations.CCRES would help identify new businessenterprises and revenue streams through thedevelopment of innovative eco-businessmodels based on sustainable use of marinenatural capital and the ecosystem servicesthey provide.

Safety of Dams OP/BP 4.37 No This policy is not triggered as the Projectwill not finance construction orrehabilitation of any dams. None of the sitesunder the beneficiary projects offered forassistance in this project will fall in thiscategory.

Projects on International Waterways No There are no project components involvingOP/B3P 7.50 international waterways as defined under the

policy. None of the project sites under thebeneficiary projects offered for assistance inthis project will be located in theinternational water boundaries.

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Projects in Disputed Areas OP/BP 7.60 No None of the sites under any of thebeneficiary projects offered for assistance inthis project will be located in any knowndisputed areas as defined under the policy.

II. Key Safeguard Policy Issues and Their Management

A. Summary of Key Safeguard Issues

1. Describe any safeguard issues and impacts associated with the Restructured project. Identifyand describe any potential large scale, significant and/or irreversible impacts:

CCRES is not envisaged to have any negative environmental impacts as there is no civil works norlivelihood activities that will be supported by the project. Impacts on natural habitats are largely positiveand beneficial. If at all, the only impact that could potentially happen is the restriction of access tonatural resources by communities in the pilot sites in the Philippines and Indonesia.

2. Describe any potential indirect and/or long term impacts due to anticipated future activities inthe project area:

The purpose of CCRES and linking the knowledge generated to various WB and GEF projects dealingwith management of coastal and marine resources in the region is to create a rationale for sustainabledevelopment planning in-the coastal zone, which includes conservation of natural capital essential to thedelivery of high value ecosystem services and the welfare of coastal communities. Marine spatialplanning and demarcation of zones suitable for development activities consistent with ecosystemcarrying capacity and best use of the resource base is part and parcel of good coastal management andthe ecosystem-based approach. Thus, it is anticipated that environmental sustainability and theresilience of linked ecological and social communities will be enhanced in areas which have had thebenefit of this marine spatial planning and its incorporation into long-term development plans at thelocal (district) level.

3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverseimpacts.

N/A

4. Describe measures taken by the borrower to address safeguard policy issues. Provide anassessment of borrower capacity to plan and implement the measures described.

The project has incorporated into its design measures to safeguard the environment andpeople/communities. These include stakeholder analysis and benefits mapping, communityconsultation, information and customized business models that can enhance economic opportunities forcommunities through marine spatial planning and markets linked to payments for ecosystem services.The University of Queensland has prior experience implementing WB projects and their reporting to theBank has been exceptional.

5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure onsafeguard policies, with an emphasis on potentially affected people.

The key stakeholders of the project are government agencies in the environment, coastal andmarine, and fisheries management sectors in the beneficiary countries as well as thecommunities and local officials in the pilot sites (e.g., in Indonesia, the Philippines and a Pacificcountry). Also expected to benefit are academic and research communities working onvaluation of marine ecosystem services and wealth accounting. Stakeholder analysis andconsultations are inherently part of the project design, and free flow of information will bepromoted among these groups.

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B. Disclosure Requirements

Technical Assistance Project

For a TA project which will finance the preparation of a specific safeguards instrument, please indicate type of documentdisclosed, if any.

N/A

If the project triggers the Pest Management and/or Physical Cultural Resources policies, therespective issues are to be addressed and disclosed as part of the EnvironmentalAssessment/Audit/or EMP.

If in-country disclosure of any of the above documents is not expected, please explain why:

This is a knowledge project will incorporates safeguards mitigation measures in the project design. Notseparate safeguards instruments are required to be prepared and so none are disclosed.

C Compliance Monitoring Indicators at the Corporate Level

The World Bank Policy on Disclosure of Information

Have relevant safeguard policies documents been sent to the World Yes I I No I I NA [X]Bank's Infoshop?

Have relevant documents been disclosed in-country in a public place Yes [ I No [ ] NA [ X]in a form and language that are understandable and accessible toproject-affected groups and local NGOs?

All Safeguard Policies

Have satisfactory calendar, budget and clear institutional Yes [ I No [ I NA [X Iresponsibilities been prepared for the implementation of measuresrelated to safeguard policies?

Have costs related to safeguard policy measures been included in the Yes I ] No [ I NA [X Iproject cost?

Does the Monitoring and Evaluation system of the project include Yes [X I No [ I NA [ Ithe monitoring of safeguard impacts and measures related tosafeguard policies?

Have satisfactory implementation arrangements been agreed with Yes [ X] No [ I NA [ Ithe borrower and the same been adequately reflected in the project

legal documents?

III. APPROVALS

Task Team Leader: Name: Marea Eleni Haziolosii

Approved By:*0

Regional Safeguards Advisor: Name: Peter Leonard t(k( Date: c 3Sector Manager: Name: Lain Shuker ( ~. Date