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Implementation Completion Report (ICR) Review - Rural Poverty & Natural Resources

1. Project Data:   
ES Date Posted:
Project Name:
Rural Poverty & Natural Resources
Project Costs(US $M)
 39.0  41.0
Loan/Credit (US $M)
 22.5  22.0
Sector, Major Sect.:
General agriculture fishing and forestry sector, Central government administration, Other social services,
Agriculture fishing and forestry; Law and justice and public administration; Health and other social services
Cofinancing (US $M)
 0  0
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
06/30/2002 06/30/2004
Prepared by: Reviewed by: Group Manager: Group:  
Christopher D. Gerrard
Nalini B. Kumar Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
The project had two principal objectives and three specific operational goals. The objectives were as follows:

(1) To reduce rural poverty, the degradation of natural resources, and migration by applying, on a pilot basis, methodologies that would channel financial resources to rural communities to assist them in promoting sustainable productive systems;
(2) To promote the sustainable use and conservation of selected priority biodiversity areas.
Special emphasis would be placed on gender and indigenous aspects.
The specific operational goals were as follows:
(a) Creating capacity at the community level to organize, self-diagnose problems, plan activities through participatory means, seek out and negotiate assistance, and act in pursuit of resolving priority quality of life issues;
(b) Establishing a demand-driven financing mechanism that operates in high poverty areas and provides matching grants to communities for activities that help reduce rural poverty, improve the quality of life, and offer alternatives for sustainable natural resource management and livelihood;
(c) Promoting the long-term conservation and sustainable use of Panama's biodiversity resources, including the biological corridor that passes through the Atlantic watershed.
No revisions were made to the original objectives.

b. Components
The project had three components and four subcomponents, as follows:
(a) Sustainable rural development (SRD), with the following two subcomponents:
(i) Institutional and community training, organization, and planning (US$ 7.9 million at appraisal, $11.6 million actual)
(ii) Fund for Sustainable Agricultural and Rural Development (FUSARD) (US$ 15.7 million at appraisal, $15.4 million actual)
(b) Biodiversity conservation (BC), with the following two subcomponents:
(i) Pacific Zone Protected Area Management (US$ 0.9 million at appraisal; $2.0 million actual)
(ii) Atlantic Biological Corridor (US$ 10.8 at appraisal; 10.8 actual)
(c) Project coordination (US$ 3.7 million at appraisal: $1.2 million actual)
The Atlantic Biological Corridor (ABC) subcomponent became a separate stand-alone project financed by the GEF. Therefore, the ICR only assesses the outcome of the Pacific Zone Protected Area Management subcomponent of the biodiversity component.

c. Comments on Project Cost, Financing and Dates
FUSARD ended up financing subprojects from both the sustainable rural development (SRD) and biodiversity conservation (BC) components. Actual project costs of US$ 41.0 million were 5 percent more than appraisal estimates due to increased counterpart contributions from beneficiary communities, according to paragraph 5.4 of the ICR. However, from Annex 2 on project costs and financing, this amount still seems to include the costs of the ABC subcomponent which became part of the separate GEF project. Based on additional information provided by the region, the project was extended twice for a total of 24 months due to slow disbursements and a change of administration in the early years of the project. US$ 0.55 million of the loan, which was not committed by project closing, was cancelled.

3. Achievement of Relevant Objectives:

The project appears to have achieved its operational goals of piloting a demand-driven financing mechanism (FUSARD) to channel resources to communities and reportedly of empowering communities to handle these resources. However, it is difficult to say to what extent the broad objectives of sustainable rural development and biodiversity conservation were achieved or can be attributed to the project because monitoring and evaluation was problematic. The National Environmental Authority (ANAM), which implemented the BC component, collected accurate and timely monitoring data, but the Ministry of Agriculture (MIDA), which implemented the SRD component, did not. There were no baselines. And while the project design identified a set of subprojects and associated indicators, the indicators had to be adjusted when the beneficiaries selected different kinds of projects than expected. Confronted with these problems, the project adopted and improvised other methods and proxies to assess the outcomes.

After project completion, ERRs were calculated for a sample of 21 executed subprojects. While there was a wide variation in the calculated ERRs, the average ERR among the 21 subprojects was 17 percent, suggesting that resources were used efficiently in the aggregate.

According to a beneficiary assessment conducted in June 2004, communities indicated that their own labor productivity and income earning potential had improved through (1) the implementation of educational production farm systems, which have improved daily diets, (2) access to markets and health services, which has increased commerce, and (3) social infrastructure projects in schools, latrines, etc., which have assisted social capital formation.

The project facilitated the modernization and strengthening of the National Protected Areas System by (1) establishing legal mechanisms for decentralization and management of protected areas, (2) guidelines for developing management plans, (3) regulations on the use and conservation of Sylvester species, (4) training of park wardens, and (5) strengthening local capacities for shared park management.

Although the rate of migration out of the Pacific Region has dropped marginally in comparison to the 1970s and 1980s, the current rate of emigration is still significant.

4. Significant Outcomes/Impacts:

The project supported the establishment and functioning of 75 Sustainable Rural Development Committees (SDCs) which facilitated the community execution of subprojects with the support of NGOs, as pilot interventions. The 75 SDCs comprised 8,496 members representing about 300,000 people in 60,000 families in the project area of 2,208 communities. As such, the project established a community participatory planning and investment model that may be replicated in the rest of the Panamanian rural sector. Good progress was also made in including women, youth, and indigenous peoples in this process.

Borrower implementation and Bank supervision of the SRD component were sufficiently flexible to allow community priorities to be expressed in the choice of subprojects. As a result, communities chose fewer subprojects characterized as "productive" or income-generating than had been anticipated at appraisal and more subprojects characterized as "basic economic and social infrastructure." The latter represented 73 percent of all investments financed by FUSARD.

The BC component was most successful in (1) strengthening the National Protected Areas System (SINAP), (2) establishing legal and planning instruments to elicit community participation in the decentralization process of protected areas management, and (3) environmental education, public awareness campaigns, and community outreach efforts. It was less successful in developing ecotourism.

5. Significant Shortcomings (include non-compliance with safeguard features):

Monitoring and evaluation was weak, particularly in MIDA. Supervision missions flagged poor M&E performance various times during project implementation and numerous attempts to install an M&E system did not produce adequate results.

There are questions regarding the sustainability of each of the projects three main outputs: (1) social capital building through SDCs, (2) social physical assets in infrastructure and productive subprojects, and (3) environmental conservation through education awareness and protected areas management mechanisms. It will be critical to establish a stable financial mechanism to sustain the project's investments in social and physical capital. Central government ministries (such as the Finance Ministry), sectoral ministries (such as public works, education , and health), and local government entities (which manage local fiscal resources) all need to play a role in sustaining the SDCs. The recent formation of a Confederation of SDCs (which was not a project objective) has improved the prospect for SDC sustainability in the future.

The ICR identified several weaknesses in the technical assistance provided to rural communities, which focused more on the production technology development aspects to the neglect of other aspects such as marketing, pricing policies, and the negotiation skills of farmers. (According to regional operations, support for the latter is now a significant component of the follow-on project.)

The development of the ecotourism potential of the protected areas was moderate. In the implementation of this activity, both promotion and advertisement activities received less focus, as well as limited coordination with the Panamanian Institute for Tourism.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Institutional Dev.:
LikelyNon-evaluableSee section 5. Likely sustainability depends on institutional arrangements still to be established. In addition, a change of government resulted in the loss of 30 person years of trained staff (ICR, p. 15).
Bank Performance:
SatisfactorySatisfactoryHowever, the ICR identified a number of issues relating to both quality at entry and supervision.
Borrower Perf.:
SatisfactorySatisfactoryHowever, the ICR identified a number of factors subject to government control that adversely affected project implementation.
Quality of ICR:

7. Lessons of Broad Applicablity:

(1) Creating the social and human capital needed for CDD projects to succeed is a long process that may require years of intensive support.
(2) A CDD project requires a dynamic monitoring and evaluation system (including baselines, targets, and indicators) that can be updated as new subprojects are introduced into project implementation.
(3) The respective roles of central ministries, sectoral ministries, local authorities, and the communities themselves in CDD projects need to be clear and institutionalized in order to provide the necessary support to the community-level institutions (in this case the SDCs).
(4) It is important to insulate project coordination units (in this case, in the Ministry of Agricultural Development and National Environmental Authority) as much as possible from political interference.

8. Audit Recommended?  Yes

          Why?  This was a pilot project, monitoring and evaluation was weak, and sustainability (rated non-evaluable on the basis of the evidence available at the time of the ICR) needs to be re-visited.

9. Comments on Quality of ICR:

The ICR is rated unsatisfactory overall, due to a number of shortcomings:
  • It did not explain where the five subcomponents of the BC component (listed on page 11) came from.
  • It did not explain why the project closing was extended by two years.
  • It should have done a better job of describing the participatory processes which formed the basis of the project at the community level, especially given the operational goal of creating organizational capacity at the community level.
  • It includes assertions that are unsubstantiated in the ICR, for instance, on page 10: "These works have been achieved at unit costs which are generally lower than those supported by other agencies in the same period and in the same areas and their future maintenance has been made more sustainable due to local communities involvement."
  • It did not explain why the average subproject cost almost doubled in size (p. 10). Based on additional information provided by the region, this occurred primarily because the project worked with a higher level of community (comprising more sub-communities) than had been envisaged at appraisal.
  • Not all the statements in section 8 are really lessons.
  • Notes appear at odd places in the ICR, for instance, in the last bullet on page 20.

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