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PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Project Name Region Sector Project ID Borrower(s) Implementing Agency Environment Category Safeguard Classification Date PID Prepared Estimated Date of Appraisal Authorization Estimated Date of Board Approval Report No.: AB1252 Marginal Fishing Communities Development Project EAST ASIA AND PACIFIC General agriculture, fishing and forestry sector (40%);Micro- and SME finance (20%);Vocational training (20%);Agricultural marketing and trade (20%) P090257 REPUBLIC OF INDONESIA Ministry for Marine Affairs and Fisheries (MMAF) and Districts [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) [ ] S1 [X] S2 [ ] S3 [ ] SF [ ] TBD (to be determined) December 2, 2004 September 9, 2005 March 1, 2006 1. Key development issues and rationale for Bank involvement There are four key development issues that set the context for Bank involvement in Indonesia’s coastal resource management: (i) fishery, the next forestry—It is well recognized globally that fishery is the next forestry in terms of a once abundant natural resource in serious decline due to a lack of governance, consensus, and competing interests over common property which come at the expense of the resource (coastal ecosystems and the fisheries they support) and resource users (poor fishers), and institutional weakness to appropriately deal with its sustainable use and management. At risk are coastal products accounting for approximately 25% of Indonesian GDP annually (according to FAO) coming from Indonesia’s 81,000 kilometers of coastline; (ii) poverty-coastal environment nexus—Approximately 5,500 rural coastal communities dependent on the coastal ecosystem for their livelihoods are spread across 1,129 rural sub-districts and due to their more remote geography are often neglected from the development process and development services. Estimates suggest that over 50 percent of rural coastal inhabitants are considered poor. Moreover, a lack of economic opportunities for these communities, and particularly the high number of unemployed youth, has contributed to increasing pressures on the depleting coastal resource base; (iii) co-management, a solution to address the institutional weaknesses and lack of governance—A legally defined partnership between local government and resource users in managing and defining sustainable use of coastal ecosystems sets the framework for institutional strengthening and capacity building, and has proven effective in reaching consensus among communities and multiple resource users with competing interests and objectives for a rational and sustainable use of the coastal ecosystems; the private sector’s role—by reducing impediments to growth and development of micro, small and medium size enterprises in coastal areas (as an alternative to fishing and unsustainable marine resource extraction), pressure on coastal ecosystems can be reduced and fisher incomes can increase. A package of targeted and cross-sectoral development interventions are needed to address the above issues, that include both community empowerment and local institution building for sustainable ecosystem and resource management, and private sector development and economic diversification to provide alternative and future opportunities outside of the current patterns of overexploitation of the coastal resource base. The Bank is in the position to assist the government to address these issues and support such a package of interventions, through the proposed Marginal Fishing Communities Development Project. This proposed project builds upon the lessons emerging from a $1.6m pilot of the same name currently under implementation, and seeks to practically broaden the government’s coastal resource management agenda from the existing, but more narrow focus on coral reef management through the Bank-GEF financed COREMAP. A. How would the proposed operation support the borrowers objectives, policies, and strategies in this sector? The Government of Indonesia (GOI) identified the economic development of rural coastal fishing communities and the management of the coastal ecosystems they depend on as a national priority in the mid-1990s and as a result, requested support from the donor community in this area. Because of the importance of coastal ecosystems to the development objectives of Indonesia, the Government’s current medium-term development strategy (PROPENAS) and the Guidelines of State Policy (1999-2004) support a coastal and marine sector policy which calls for (i) efficient and sustainable management of maritime resources, with collaborative management as the key approach, (ii) optimizing the sustainable utilization and management of marine resources and assets, (iii) local broad-based economic development in rural coastal areas, and (iv) the improvement of the socioeconomic conditions of coastal communities, and particularly youth, small fishers and other vulnerable peoples living across the archipelago. The proposed project is conceptualized around these four key themes (please see Section 3 for details). B. What is the evidence of the borrowers commitment to and ownership of the relevant policies? GOI has recently embarked on policy shifts towards decentralized coastal resource management focused on collaborative partnerships between communities and local government, and the use of marine reserves and larger marine protected areas to restock fishing grounds. Based on the evidence that such measures can help rejuvenate coral reef ecosystems, the Bank supported GOI’s COREMAP Phase II. Through the proposed project, GOI seeks to broaden the policy to include the wider number of rural communities throughout the country dependent on all types of coastal ecosystems, and focus on the broad economic development of these rural coastal fishing communities. Moreover, since rural youth unemployment and underemployment stand at 23 percent and 43 percent respectively, GOI seeks to specifically target youth in their broad economic development efforts. To address the country’s need for youth development, the newly elected SBY government reinstated the Ministry for Youth Affairs. C. How would this operation support the borrowers CAS objectives? The proposed project’s co-management objective draws squarely upon all three pillars of the CAS (Pillar 1: Improving the investment climate; Pillar 2: Improving services for the poor; and Pillar 3: Improving governance), as well as the general focus of the CAS on empowering the poor. Specifically, the proposed operation will support: Improving governance over management of the coastal resource base that supports the livelihoods and food security of coastal communities (Pillar 3); Strengthening local government agencies and institutions to provide improved services and support communities in co-management of the coastal ecosystems in order to reverse the current trend of resource depletion (Pillar 2); and Building capacity and linkages to commercial micro-finance and business development services in order to improve the investment climate and to encourage alternative economic opportunities that would help reduce the current pressures on the dwindling coastal resource base (Pillar 1). The CAS highlights the need for targeted interventions in rural coastal fishing communities and the institutions that support them, noting that “in coastal areas, the Bank will …support targeted poverty alleviation in poor coastal fishing communities, through the proposed Marginal Fishing Communities Development Project (Box 4, pp 21).” D. What are the main lessons from AAA, other projects, and partner activities? The environment-poverty nexus in the coastal and marine sector in Indonesia is well recognized by GOI and the donor community. What to do about it is only now beginning to converge. The main lessons from a broad range of GOI, donor, NGO, and Bank-financed initiatives are: (a) coastal management should be ecosystem based; (b) coastal ecosystem management is most likely to be successful when local governments form partnerships with coastal communities (i.e. collaborative management); (c) NGOs can play an important role in establishing the partnership between coastal communities and local governments; (d) as a result of the 1999 laws (laws 22 and 25) supporting decentralization, district governments should be charged with program implementation, with coordination and support from national government; (e) collaborative coastal ecosystem management is a process, and must be implemented as such, rather than in a compartmentalized or fragmented approach; (f) coastal communities, and particularly fishers are often excluded from development assistance due to their way of life, as well as geographic isolation; (g) the coastal resources and fisheries are overexploited in the majority of coastal rural areas, and any efforts to more sustainably manage these resources are likely to fail without simultaneously assisting communities to diversify their economies and pursue alternative livelihoods to resource extraction; (h) unemployment and underemployment amongst Indonesia's young people is at crisis levels, particularly in rural and coastal areas encouraging their active participants in destructive fishing practices, therefore directed interventions are needed to provide them with alternative opportunities; (i) one of the key obstacles to economic diversification in rural coastal areas is that the local business environment in coastal areas pose greater obstacles for micro, small, and medium size enterprises to grow as they generally lack access to capital, market information, technology, etc. By reducing these impediments, and facilitating access to sustainable and commercial micro-banking services, income opportunities will diversify with job creation outside of fishing; (j) increasing the productivity of non-threatened coastal resources by creating a sustainable supply of value-added coastal products (seaweed, coconut, etc) could increase fisher incomes, increase employment and reduce pressure from an overexploited fishery. E. What can the Bank's lending accomplish that cannot be accomplished by other means or other sources of funding? Rural coastal fishing communities in Indonesia have been traditionally marginalized from the development process, by way of both geographic isolation and the nature of fishing livelihoods. As such, targeted development assistance is needed. The World Bank has a comparative advantage in the coastal and marine sector. This advantage includes: (i) policy dialogue: to facilitate the needed reform in the management of coastal ecosystems; (ii) coordination: to enable collaboration between multiple donors to parallel and co-finance complementary activities; (iii) convening power: to bring together stakeholders from community, district, province and national levels to reach consensus for resolving competing demands on coastal ecosystem resources; (iv) sustained commitment: to promote sector adjustments and policy reforms over a period of time; (v) scale: the bank has the unique ability to scale-up activities that work for sustainable impact at scale; (vi) leveraged resources: to bring in grant co-financiers such as GEF and IDA resources to soften the IBRD terms and ultimately the country's debt burden as well as private philanthropy. F. What is the evidence of the borrowers (i) interest in borrowing for this operation, (ii) preparedness to work on project preparation? The borrower has indicated its commitment to the proposed operation through the following actions: (i) GOI first requested the Bank to solicit $1.6m in grant funds through the Japanese Social Development Fund window to develop the Marginal Fishing Communities Development PILOT, in order to pilot interventions that could be scaled up with bank assistance, based on lessons learned; (ii) GOI (MOF and BAPPENAS) has agreed in principle to a larger MFCDProject for FY'06; and (iii) the Ministry of Marine Affairs and Fisheries have begun discussions with BAPPENAS and MOF as well as the Bank on the procedures to formally establish a preparation team to design a scaled up project. Finally, the new Minister MMAF has intimated his support for the proposed operation during discussions with Bank Senior Management in early November. 2. Proposed objective(s) A. Project Development Objective The development objective for the proposed Indonesia Marginal Fishing Communities Development Project is the reduction of poverty in rural coastal communities in participating districts through sustainable utilization and collaborative management of coastal ecosystems. This will be accomplished by (i) assisting local governments and rural coastal communities (and particularly youth, indigenous people and women living in these communities) to sustainably co-manage the associated coastal ecosystems and fisheries resources, on which they are often dependent for their livelihood, and (ii) establishing public-private partnerships to promote economic diversification and sustainable growth in order to lift them out of poverty and provide economic alternatives to continued overexploitation of the depleted coastal resource base. The rationale behind this objective is that by the nature of their remote location, the approximately 5,500 rural coastal communities in Indonesia are often marginalized from the economic development process and they have few livelihood opportunities outside of a dwindling fisheries resource base. They often lack access to markets, appropriate technology, education, economic opportunities, and microfinance to improve their lives, and capacity to sustainably manage natural and coastal resources. The project will support participatory approaches that will protect the coastal ecosystems that support critical biodiversity, and promote public-private partnerships to stimulate sustainable economic growth in these same coastal areas, particularly in opportunities outside of the fisheries. One theme that will run across the entire project is its focus on the vulnerable members of rural coastal communities, including youth, women, and indigenous peoples. At a reduced scale, the above approach is currently being piloted through the Indonesia Marginal Fishing Communities Development Pilot, funded by a $1.6 million Japanese Social Development Fund grant to the Government of Indonesia. The Government has requested that the Bank assist in scaling-up this pilot. B. Global Objective The global objective of this project is to establish viable collaborative coastal ecosystem management in participating districts. The proposed areas under collaborative management are globally significant coastal and marine ecosystems (including key species) which contribute to the livelihood and food security of resource dependent users. This objective responds to the guidance provided by the first Conference of the Parties to the Convention on Biological Diversity, reflected in the GEF’s Operational Program 2: Coastal, Marine and Freshwater Ecosystems. OP2 prioritizes projects that promote the conservation and sustainable use of biological diversity of coastal and marine resources under threat. Throughout the rural coastal areas of Indonesia, communities are directly dependent on critical coastal ecosystems for the livelihood, the same ecosystems which support a wide array of globally significant biodiversity, such as sea grasses, mangroves, sea turtles). However, these critical ecosystems are under threat from the vary populations dependent on them. The project will promote an ecosystem-based approach (community-based marine protected areas). 3. Preliminary description A. What are the alternative development interventions or approaches being considered? If an approach is favored, what is the rationale for it? The alternatives to the proposed interventions, which utilize a CDD delivery mechanism for empowerment and service delivery, with a sectoral overlay and technical assistance to address the predominant common issue of sustainable use and management of the coastal resource base, include: A Sectoral program only to address the needs of coastal fishing communities, which would just be focused on the coastal resource base, the fisheries they support and sustainable resource management. However, past lessons from the first phase of the World Bank-financed Indonesia Coral Reef Rehabilitation and Management Program (COREMAP), as well as numerous other examples throughout the country and indeed the world, demonstrate that it is extremely difficult to address the sustainability of coastal resource use and the health of these resources, without also addressing the economic incentives driving the use of these resources, and the often limited opportunities for employment outside of fishing in many rural coastal fishing communities. A CDD project only to address the needs of coastal fishing communities, which would just be focused on empowerment for delivery of basic services, and potentially expanding economic opportunities. However, surveys and discussions with coastal communities revealed that the main source of livelihoods in many coastal fishing communities is the coastal resource base, so that without addressing the use and sustainability of that resource, CDD projects will not be able to prevent the continued overexploitation and decline of the resource base and the livelihoods that it supports. B. What lending instrument is being proposed and why; or what alternative instruments are being considered? A specific investment loan (SIL) is being proposed, as the simplest and most efficient instrument to deliver the proposed project’s objectives. C. If the proposed operation is to support a sector program, what would be the key elements of the program and how would the proposed project fit into it? The proposed project will support the Government of Indonesia’s coastal and fisheries sector: specifically the efficient and sustainable management of maritime resources, the rehabilitation of damaged coastal and marine ecosystems, and the improvement of socio-economic conditions of coastal communities as well as GOI’s regional development sector. Similarly, the proposed project supports the sectoral program outlined in the World Bank’s Fisheries Approach Paper: Saving Fish and Fishers (2004), which emphasizes assistance for improved governance of coastal and fisheries resources in developing countries, and the promotion of alternative livelihoods to fishing. D. What project components are being considered? Can indicative costs be identified? Component A: Co-Management of Coastal Ecosystems and Fisheries Resources The objective of this component is to establish viable collaborative management partnerships for coastal ecosystems and fisheries resources between local governments and rural coastal communities and based on each partner’s comparative advantage to undertake various roles and responsibilities. This component would likely support: Strengthening government and local institutions in support of co-management; Support to rural coastal communities in support of co-management, such as (i) providing legal support in the form of access/use rights and/or management rights to the coastal ecosystems and fisheries resources, as well as technical and facilitation assistance to develop community-based resource management plans; (ii) providing scientific and monitoring support to obtain the information necessary for communities to make informed resource management decisions (e.g. monitoring and evaluation of the baseline resource situation and the impacts of co-management upon the resources); and (iii) providing participatory surveillance and enforcement support to help patrol and enforce community management plans. Critical habitat management and protection in rural coastal areas, in order to assist the intended beneficiaries to manage and protect the key ecosystems and habitats that support the natural resource base. These activities would include: (i) specific support for marine protected areas (e.g. identification, guidance on establishment, delineation, boundary markers, mapping, etc.); (ii) mapping of critical coastal habitats near intended beneficiaries; and (iii) specific critical habitat restoration activities (e.g. coral reef rehabilitation, mangrove reforestation, wetland restoration, etc.). Public awareness activities, to inform rural coastal fishing communities about the benefits and opportunities presented by the project, as well as the need for sustainable coastal resource use. Component B: Economic Diversification and Sustainable Growth The objective of this component is to promote economic diversification and sustainable growth in rural coastal communities, which would both ease current pressures on the depleting natural resource base and expand private sector investment in these areas. A special emphasis will be placed on the most marginal of coastal inhabitants (youth, women/widows, and indigenous people). This component would likely include the following activities: Public services and infrastructure in rural coastal fishing communities, through block grants identified and chosen by the communities as necessary to support economic diversification and sustainable growth. Support for small and medium-sized private sector enterprises in rural coastal areas, such as (i) technical assistance and pilots to help demonstrate innovative, cost-saving and sustainable technologies appropriate for specific communities; (ii) technical assistance and capacity-building for small to medium-size enterprise development (e.g. extension and technical assistance for better business management, business planning, accounting, cash flow management, etc.; (iii) assistance to enterprises to form production cooperatives and outgrower schemes with linkages to value-added processors and other potential markets; (iv) assistance to enterprises to improve the reliability, volume and quality of the product, etc.); and (v) promotion of linkages to local or venture capital finance for such enterprises. Facilitate access to microbanking services (credit and savings products) for rural coastal communities and small and medium-size enterprises in these areas. This may include capacity building to strengthen local banking and micro-credit institutions for transparent governance, financial accounting and reporting, that would increase their creditworthiness and facilitate capital flows from larger banks; investments to reduce impediments to extending existing commercial microbanking operations to rural coastal areas. Livelihood and Development for Vulnerable Groups (youth, women/widows, indigenous people). The objective of this component would be to reduce unemployment (23%), underemployment (43%) and increase employability of youth in rural coastal areas, and improve the lives of women/widows, indigenous peoples and other vulnerable people living in coastal areas. For example, the project will help create a new generation of successful young entrepreneurs in coastal areas by providing them with the educational opportunities, targeted financial resources, skills, training and business development services necessary to start youth-led micro-enterprises and small businesses, which will in turn, serve as engines of growth and job creation in their communities and as a result, reduce pressure on coastal ecosystems. Lessons from PEKKA and COREMAP will be used to design interventions to support women/widows and indigenous peoples. E. What issues are there at this stage, if any, regarding possible partnerships and co-financing with other international agencies? Because the proposed project would focus on establishing collaborative management partnerships between local governments and rural coastal communities in Indonesia to sustainably manage coastal ecosystems containing globally significant biodiversity, the Global Environment Facility (GEF) is expected to be a key partner. Likewise, the United Kingdom development agency (DFID) could be a potential co-financier, due to their interest in decentralization and focus on the global fishery crisis. However, support from both need confirmation. 4. Safeguard policies that might apply [Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?] 5. Tentative financing Source: BORROWER/RECIPIENT INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION GLOBAL ENVIRONMENT FACILITY ($m.) 10 40 Total 6. Contact point Contact: Pawan G. Patil Title: Sr. Economist Tel: (202) 458-4276 Fax: (202) 477-2733 Email: [email protected] 40 10 100