Proposed grant from the global environment facility trust fund

Annex 14: Country at a Glance

Annex 15: Incremental Cost Analysis

1. 
   Plantation forests are expanding quickly in Argentina, spurred by favorable conditions for growth and increasing demand for wood products. Plantation forests have the potential to serve as important habitats for globally and regionally significant biodiversity, while proper forest planning can preserve critical ecosystems and create buffer zones between productive zones and natural habitats. This is especially important in Argentina, which is home to numerous threatened or endangered species, where 8 of 18 ecoregions have been identified as among the highest priorities for conservation in the Neotropics by WWF, and which includes 2 conservation International “hotspots.”
   

2. 
   Unfortunately, to date efforts to mainstream biodiversity conservation into the plantation forestry sector are limited and uncoordinated at best. There are existing initiatives to stimulate dialog and conduct relevant research, but such efforts are most often disconnected and disjointed. The GEF Alternative Scenario would create cohesive national and provincial level plantation forest strategies which take into account biodiversity and ecosystem concerns, provide the tools necessary to implement such strategies, and stimulate an environment which fosters dialog and cooperation on this subject.
   

3. 
   Scope: Under the Baseline Scenario, the plantation forestry sector would continue to grow with little capacity by the government to plan and promote establishment of plantations in less environmentally-sensitive areas, or using biodiversity-friendly management techniques. Conservation planning will remain primarily in the realm of the environmental agencies like the APN and SADyS, with little connection to those agencies responsible for productive forestry. This conservation planning will not effectively influence the growth of the productive forestry sector, or will proceed very slowly in comparison with the planting.
   

4. 
   Provincial governments would continue to play a role in evaluating the environmental impact assessments prepared forestry projects established under the current legislation, and would continue to approve the environmental impact statements with few technical tools to help in decision-making. The provincial governments would have little or no recourse in cases where plantation owners choose to plant without the government economic incentives, as there are few other regulatory tools or incentives for producers to focus on areas less critical to biodiversity or increase efficiency to reduce the impact on native ecosystems.
   

5. 
   The private sector, including small, medium, and large producers, would have little incentive to incorporate biodiversity concerns and priority conservation areas into plantation planning and management beyond what is legally required. Extra costs of incorporating conservation activities beyond mitigation measures are presently not covered by government programs, nor are there incentives to find alternatives to the present regulatory process. Some large companies are beginning to monitor biodiversity as part of corporate responsibility programs; however they lack a vision of the overall conservation landscape, as well as sectoral strategies to guide the better location and management of their plantations. Any benefits of these initiatives will be localized, lacking landscape-level impacts and consideration of core conservation areas and corridors.
   

6. 
   Several NGOs and international donors would continue to support research and pilot projects related to biodiversity-friendly forestry. While these initiatives would have positive results for the level of knowledge and understanding in the country, there would continue to be little connection between the initiatives, no concerted plan for incorporating findings into national or provincial strategies, and relatively little installed capacity once individual projects end.
   

7. 
   In summary, the situation under the Baseline Scenario is expected to change little over the next five years. While the loss of biodiversity may slow slightly in specific areas, on a national level, and in the most critical areas, biodiversity will continue to be threatened by unplanned and unguided expansion of forest plantations in the order of an estimated 30,000 hectares per year.
   

8. 
   Costs ($12.01 million): Under the baseline scenario, over the next five years, it is expected that investments related to the establishment of more biodiversity-friendly plantation planning strategies and management techniques (largely mitigation) in Argentina will be in the range of US$12 million. This is primarily based on estimates of ongoing national and provincial government investments (in the 6 target provinces), as well as NGO, bilateral and multilateral donor projects relevant to mainstreaming and biodiversity conservation. These include the projects of the European Union, JICA, the Spanish AECI and INIA, as well as several smaller national NGOs. Estimated expenditures by large forest producers for biodiversity monitoring and associated activities are also included.
   

9. 
   The Baseline Scenario more specifically in regard to each of the project’s components is summarized below and in the table at the end of this section:
   

10. 
    Component 1: Institutional Capacities Strengthened ($0.56 million): Under the Baseline Scenario, investments would be limited to general capacity building of national and provincial decision-makers and stakeholders including some basic environmental training. However, specific biodiversity training would not be covered only in the most cursory way, and relatively few professionals are trained. The provincial-level professionals responsible for analyzing environmental impact assessments do so with limited tools and information, and without reference to a larger strategy incorporating biodiversity concerns.
    

11. 
    The National Science Research and Technology Agency (ANPCyT), through National Scientific Research and Technology Council (CONICET), provides some training for government officials, estimated at just over $68,000 for five years. Investments by provincial governments in for professionals dedicated to analyzing environmental impact assessments are estimated at $486,000 for five years. NGOs will spend approximately $8,000 during this time on related activities.
    

12. 
    Component 2: Development and dissemination of biodiversity-friendly plantation practices and technology transfer ($1.16 million): Plantation methods that are beneficial to biodiversity or that incorporate native species will continue to have limited support and investment at national and provincial levels. Some research into biodiversity-friendly techniques that can be incorporated into plantation forests will be supported by the national government, and by several national NGOs. The ANPCyT, its Fund for Scientific Research and Technology (FONCyT), and CONICET will continue to fund research into topics such as fragmentation and the genetic composition of plantation-apt species. The Fundación Temaikén, Fundación Félix de Azara and ACEN/Proyecto Ciervo de los Pantanos are expected to continue with small-scale research on similar themes. However, as technology transfer is limited such research will continue to have little linkage to forestry operations except in the most forward thinking firms, and there is little implication for large-scale planning.
    

13. 
    It is estimated that the national government agencies conducting research on subjects that could effect biodiversity conservation in plantation forests will spend $1.16 million on such research over the next five years. NGOs will spend just over $98,000 on research and technology transfer activities during the same time period.
    

14. 
    Component 3: Support for adoption of biodiversity-friendly plantation forestry practices ($10.29 million): Investments in forestry and agro-forestry production focused on native species or involving biodiversity- and ecosystem-friendly are relatively limited in Argentina, but have been growing recently and are expected to do so over the next five years. Much of the investment at the national level will come from the Secretariat of the Environment and Sustainable Development’s (SADS) Social Forests Project (which focuses on themes such as seedling nurseries and reforestation) and from SAGPyA’s expected assumption of the Forestry Development Program activities. The provinces will continue to provide in-kind assistance in forestry materials for small producers. National NGOs, including Fundación Vida Silvestre Argentina, the Asociación Civil Conservación Argentina, and Fundación ECOS will continue their work on subjects such as certification and planning with native species. Donors, including AECI, JICA, and the European Union are expected to continue financing projects in areas such as FSC certification and sustainable production techniques. Large private sector forestry operators will continue individual biodiversity monitoring programs as part of their progress towards FSC certification. While the overall level of investment is respectable, there is again little coordination between programs, few attempts to connect the results of research activities or monitoring with extension, and no overall coordinated strategy connecting all the interested actors with sectoral objectives.
    

15. 
    It is estimated that the national government will spend $1.23 million, largely on activities that were covered under the Forestry Development Program. The provinces are expected to fund $ $5.47 million in in-kind assistance for small producers over the next 5 years. Estimates of NGO expenditures on similar related activities total slightly over $290,000, while funding for donor-supported projects could reach $2.90 million. Large forest producers would spend approximately $400,000 on biodiversity monitoring over the next 5 years under the Baseline Scenario.
    

16. 
    Benefits: The baseline scenario would largely maintain the status-quo regarding benefits to native biodiversity vulnerable ecosystems in plantation forestry areas. There would continue to be isolated investments for research into biodiversity-friendly plantation methods and efforts to incorporate lower-impact practices into plantations, but these initiatives would be largely uncoordinated, not comprehensive, and lacking the necessary tools for effective large-scale planning. Some benefits for biodiversity would be seen in the plantations of the more progressive large firms, or on the land of small producers reached by a few trained extension agents or donor-funded projects, but the strategic planning necessary to ensure gains at a landscape scale, and including the most important areas and species, would be missing. The total baseline investments are estimated at $12.01 million over the next five years.
    

17. 
    Scope: The GEF alternative will increase the capacity for and focus on biodiversity conservation in plantation forestry in Argentina beyond what is expected under the baseline scenario, and thus have a far greater impact on biodiversity and critical ecosystems in forest plantations and areas vulnerable to plantation expansion. It will strengthen institutions, policies, and stakeholders in the sectors that are focused on plantation forestry in globally important ecoregions of Argentina. Under the GEF Alternative Scenario, supported activities will increase technical capacity, provide tools needed for rational planning, support outreach and extension, and improve the framework which shapes the plantation forestry sector. This will allow the government institutions responsible for overseeing plantation forestry to better develop strategies which take into account critical ecosystems and habitats, and promote biodiversity-friendly practices. It will also enable producers, large and small, to incorporate new techniques into their planning and management practices, and to contribute to shaping the national dialog on biodiversity mainstreaming.
    

18. 
    More specifically, the investments made under the GEF Alternative Scenario will support the development of capacity building, advanced education, training programs for government officials who work directly with plantation forests, researchers who generate the knowledge necessary for technological advancement, and extension agents who bring these advances to the producers. It will allow for environmental education activities designed to sensitize producers to the need for, and benefits of, conserving biodiversity and ecosystems. The investments will support the pilot testing of new techniques and management methods, and the dissemination of results. It will also facilitate the creation of protected areas and buffer zones to conserve critical areas and species in zones with high pressure for conversion. The GEF Alternative will work to improve the legal, policy, and economic frameworks which influence the establishment and management of plantations, and work to increase the dialog on issues critical to conservation in plantation forests. By working on the national, provincial, and local scales, involving all associated actors, focusing on resolving current problems and providing new tools, and facilitating the adoption of improved practices on the ground, the GEF Alternative Scenario will have benefits far above those expected under the Baseline Scenario.
    

19. 
    Costs: The total cost of the GEF Alternative Scenario is $26.24 million. Of this sum, $14.22 million are incremental costs above the baseline scenario. Only $7 million of this amount is being requested from the GEF. The remaining funds required for the GEF Alternative Scenario will be covered by the government of Argentina and through cofinancing from the partially-blended IBRD loan. These incremental costs will allow the proposed project to secure the global benefits anticipated under the proposed project. The ratio of incremental cost to expected incremental benefits under the GEF Alternative Scenario is extremely high.
    

20. 
    Following is a description of incremental costs and components in detail in addition to a summary table:
    

21. 
    Component 1: Institutional Capacities Strengthened (US$3.55 million total, GEF US$1.94 million): This component of the proposed GEF alternative aims to provide capacity building for forestry sector institutions at national and subnational levels of government, as well as for researchers and extension agents. It will also review the legal, policy, and economic frameworks which influence plantation planning and establishment, and invest in tools critical to biodiversity-friendly plantation location and design. Under the partially-blended IBRD project, forestry training programs will be developed at national universities and technical schools, and satellite imagery and other forest resource information will be provided for the provinces.
    

22. 
    The incremental costs related to this component of the GEF Alternative Scenario would be financed by $1.94 million from the GEF grant, in addition to $570,000 in cofinancing from the IBRD loan and approximately $480,000 in government counterpart financing.
    

23. 
    Component 2: Development and dissemination of biodiversity-friendly plantation practices and technology transfer (US$$3.17 million total, GEF US$1.09 million): The objective of this component will document and disseminate improved forestry practices that generate greater productivity in addition to conserving biodiversity. A special focus will be placed on practices for establishing native plantations, as well as the economic implications of these practices. Native seed banks and nurseries will be supported, and field trials carried out to analyze different management approaches. Dialog on these issues will be stimulated at a series of workshops, the adoption of voluntary standards promoted, and best practices disseminated at a major regional workshop. Through IBRD cofinancing, training for national, provincial, and local level extension agents and service providers for the forestry sector will be financed in order to reach a greater number of small, medium, and large producers.
    

24. 
    The incremental activities proposed under this component of the GEF Alternative Scenario would be financed by $1.09 from the GEF, as well as just under $650,000 from the associated IBRD lending project and slightly more than $270,000 from the government of Argentina.
    

25. 
    Component 3: Support for adoption of biodiversity-friendly plantation forestry practices (US$18.71 million total, GEF US$3.34 million):: Under this component of the GEF alternative, investments will focus on generating income while conserving biodiversity at the plantation level through the promotion of alternatives to current production paradigms. As both small- and large-scale producers are critical for biodiversity conservation in forest landscapes, yet have very different needs and resources, two sets of complimentary activities will be implemented. A demand-driven program of subprojects for small producers, complimented by environmental education and monitoring, will support the inclusion of biodiversity-friendly practices in production landscapes. The component will also facilitate dialog with large producers on practices, standards, and certification, and provide technical assistance needed to improve biodiversity-friendly techniques. The establishment of buffer and transition zones in areas of high biodiversity will also be supported. Cofinancing from the IBRD loan will support demand-driven grant program for small producers with topics including agroforestry, native species and alternative management techniques, as well as support to researchers conducting applied research in subjects related to sustainable forestry.
    

26. 
    The activities financed under the GEF Alternative Scenario, above the baseline activities, would be funded by US$3.34 million from the GEF grant, as well as US$1.25 million from the associated IBRD loan and nearly US$835,000 in government co-financing and US$3.0 million in beneficiary co-financing.
    

27. 
    Component 4: Project Implementation, Monitoring and Evaluation (US0.71 million total, GEF US$0.57 million): This component will ensure the effective implementation, administration, and monitoring of the project, as well financial management, procurement, baseline information collection, mid-term evaluation, and final evaluation-related activities.
    

28. 
    These activities would be financed by just over US$565,000 in GEF funds, as well as the approximately US$140,000 provided by the government as counterpart financing.
    

29. 
    The incremental costs are those that would not have existed in the absence of the GEF Alternative and are above and beyond what was estimated under the Baseline Scenario.
    

30. 
    The incremental cost, the difference in cost between the Baseline Scenario (US$12.01 million) and the GEF Alternative (US$23.24 million), is US$11.22 million. In addition to global biodiversity benefits, the project will generate national and local benefits. Of the incremental expenditures (costs) of US$11.22 million, the GEF is requested to fund only US$7.0 million; the balance of US$4.22 million will be funded by the IBRD investments and the national and provincial governments.