Document of The World Bank ESTONIA, LATVIA, LITHUANIA, POLAND AND THE RUSSIAN FEDERATION

Transcription

1 Public Disclsure Authrized Public Disclsure Authrized Public Disclsure Authrized Public Disclsure Authrized Dcument f The Wrld Bank PRujrt- ArrKi bal LUU;UMN i. ONA PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY IN THE AMOUNT OF SDR 4.40 MILLION US$5.5 MILLION EQUIVALENT TO Reprt N: ECA ESTONIA, LATVIA, LITHUANIA, POLAND AND THE RUSSIAN FEDERATION FOR A BALTIC SEA REGIONAL PROJECT - PHASE 1 JANUARY 31, 2003 invirnmentally and Scially Sustainable Develpment Sectr Unit, nentral Eurpe and Baltics Cuntry Unit and Russia Cuntry Unit :urpe and Central Asia Regin

2 CURRENCY EQUIVALENTS (Exchange Rate Effective Nvember 20, 2002) Currency Unit = EUR 1 EUR = US$0.98 US$1 = EUR 1.02 FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS AAS Agriculture Advisry Services AC Assistant Crdinatr BAAP Baltic Agriculture Run-ff Actin Prgram Baltic 21 Baltic 21 Prcess fr an Agenda 21 fr the Baltic Sea Regin BOOS Baltic Oceangraphic Observatin System BSLME Baltic Sea Large Marine Ecsystem BSRP Baltic Sea Reginal Prject BSSG Baltic Sea Steering Grup CIC Cmpnent I Crdinatr C2C Cmpnent 2 Crdinatr CPAR CAS Cuntry Prcurement Assessment Reprt Cuntry Assistance Strategy CBSS Cuncil f the Baltic Sea States CCB Calitin Clean Baltic COMBINE HELCOM-Cperative Mnitring in the Baltic Marine Envirmnent EEA Eurpean Unin Envirnmental Agency EIB Eurpean Investment Bank EMP Envirnmental Management Plan EQI Ecsystem Quality Indicatrs EU Eurpean Unin EU (Phar) Eurpean Unin Prgramme fr Assistance t the Cuntries f Central and Eastern Eurpe EU (Tacis) Eurpean Unin Prgram fr Assistance t the Cuntries f the Cmmnwealth f Independent States EU (Sapard) Special Accessin Prgramme fr Agriculture and Rural Develpment EUR Eur - Eurpean Mnetary Unin unit f currency FIO Farm Interest Organizatin FMR Financial Management Reprt FRR Financial Rate f Return GEF Glbal Envirnment Facility GIWA Glbal Internatinal Waters Assessment GOOS Glbal Ocean Observer System HELCOM Helsinki Cmmnissin - Baltic Marine Envirnment Prtectin Cmmissin HELCOM PITF MLW HELCOM-Wrking Grup n Management Plans fr Castal Lagns and Wetlands Helsinki Cnventin Cnventin n the Prtectin f the Marine Envirnment f the Baltic Sea (1974 and 1992) IBSFC Internatinal Baltic Sea Fisheries Cmmissin ICES Internatinal Cuncil fr the Explratin f the Sea ICR Implementatin Cmpletin Reprt JCP Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram (1992,

3 1998) LIL Leamning and Innvatin Lan LIU Lcal Implementatin Unit LME Large Marine Ecsystem LPM Lcal Prject Manager MARE MISTRA's Marine Research n Eutrphicatin MEP Ministry f Envirnmental Prtectin MISTRA Swedish Fundatin fr Strategic Envirnmental Research MIS Management Infrmatin System MLW HELCOM-PITF-Wrking Grup n Management Plans fr Castal Lagns and Wetlands MMED Multiple Marine Eclgical Disturbances MA Ministry f Agriculture ME Ministry f Envirnment MF Ministry f Finance NOAA Natinal Oceangraphic and Atmspheric Administratin (US) NEFCO Nrdic Envirnment Finance Crpratin NGO Nngvemnmental Organizatin Nitrates Directive Eurpean Unin - Cuncil Directive n the Prtectin f Waters Against Pllutin caused by Nitrates frm Agriculture (91/676/EEC) PIP/PPP Prject Implementatin Plan and Prject Prcurement Plan PIT Prject Implementatin Team (HELCOM) PITF HELCOM - Prgramme Implementatin Task Frce Prject Baltic Sea Reginal Prject PY Prject Year RWB Reginal Water Management Bards SAP Strategic Actin Prgram SLU Swedish University. f Agricultural Sciences SOE Statement f Expenses SMHI Swedish Meterlgical and Hydrlgical Institute STAP Scientific and Technical Advisry Panel f the Glbal Envirnment Facility TAC Ttal Allwable Catch UNDP United Natins Develpment Prgramrnme UN/ECE United Natins Ecnmic Cmmissin fr Eurpe VASAB 2010 Visins and Strategies Arund the Baltic 2010 WWF Wrld Wide Fund fr Nature Vice President: Cuntry Manager/Directr: Sectr Manager/Directr: Task Team Leader/Task Manager: Jhannes F. Linn Rger W. Grawe and Julian F. Schweitzer Laura Tuck Inesis Kiskis

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5 EUROPE AND CENTRAL ASIA BALTIC SEA REGIONAL PROJECT - PHASE 1 CONTENTS A. Prject Develpment Objective Page 1. Prject develpment bjective 3 2. Key perfrmance indicatrs 4 B. Strategic Cntext 1. Sectr-related Cuntry Assistance Strategy (CAS) gal supprted by the prject 5 2. Main sectr issues and Gvernment strategy 6 3. Sectr issues t be addressed by the prject and strategic chices 7 C. Prject Descriptin Summary 1. Prject cmpnents 7 2. Key plicy and institutinal refrms supprted by the prject Benefits and target ppulatin Institutinal and implementatin arrangements 11 D. Prject Ratinale 1. Prject altematives cnsidered and reasns fr rejectin Majr related prjects financed by the Bank and ther develpment agencies Lessns learned and reflected in the prject design Indicatins f bcrrwer cmmitment and wnership Value added f Bank supprt in this prject 17 E. Summary Prject Analysis 1. Ecnmic Financial Technical Institutinal Envirnmental Scial Safeguard Plicies 24

6 F. Sustainability and Risks 1. Sustainability Critical risks Pssible cntrversial aspects 27 G. Main Cnditins 1. Effectiveness Cnditin Other 28 H. Readiness fr Implementatin 28 L. Cmpliance with Bank Plicies 29 Annexes Annex 1: Prject Design Summary 30 Annex 2: Detailed Prject Descriptin 34 Annex 3: Estimated Prject Csts 57 Annex 4: Cst Benefit Analysis Summary, r Cst-Effectiveness Analysis Summary 58 Annex 5: Financial Summary fr Revenue-Earning Prject Entities, r Financial Summary 64 Annex 6: Prcurement and Disbursement Arrangements 65 Annex 7: Prject Prcessing Schedule 74 Annex 8: Dcuments in the Prject File 76 Annex 9: Statement f Lans and Credits 79 Annex 10: Cuntry at a Glance 85 Annex 11: Public Participatin Summary 95 Annex 12: Transbundary Analysis 98 Annex 13: Envirnmental Management Plan 103 Annex 14: STAP Technical Review 122 Annex 15: Letters f Endrsement 127 MAP(S) Map 1. Baltic Sea Sub-Regins (IBRD 31061) Map 2. Watershed and Off-Shre Sites (IBRD ) Map 3. Castal Zne Management Demnstratin Sites (IBRD 31063)

7 EUROPE AND CENTRAL ASIA BALTIC SEA REGIONAL PROJECT - PHASE I Prject Appraisal Dcument Eurpe and Central Asia Regin ECSSD Date: January 6, 2003 Team Leader: Inesis Kiskis Sectr Manager/Directr: Laura Tuck, Jane E. Hlt Sectr(s): Animal prductin (75%), General agriculture, Cuntry Manager/Directr: Julian F. Schweitzer, Rger fishing and frestry sectr (25%) W. Grawe Theme(s): Bidiversity (P), Envirnmental plicies and Prject ID: P institutins (P), Other envirmnent and natural resurces Fcal Area: I - Internatinal Waters management (S) [,Prject Financing Data. - - [ ] Lan [ Credit [X] Grant [ 3 Guarantee [ ] Other: Fr Lans/Credits/Others: Amunt (US$m): 5.50 Financing Plan (US$rM): Surce Lcal Freign Ttal BORROWER/RECIPIENT GLOBAL ENVIRONMENT FACILITY FINLAND, GOV. OF (EXCEPT FOR MIN.FOR FOREIGN AFFAIRS) US, GOV. OF NORWAY: MINISTRY OF FOREIGN AFFAIRS SWEDEN: SWEDISH INTL. DEV. COOPERATION AGENCY (SIDA) FOREIGN MULTILATERAL INSTITUTIONS (UNIDENTIFIED) Ttal:

8 Brrwer/Recipient: HELCOM Respnsible agency: ESTONIA, LATVIA, LITHUANIA, POLAND, RUSSIAN FEDERATION Crdinated by: The Wrld Bank, Lithuania Address: Jgails str. 4, LT-2601 Vilnius Lithuania Cntact Persn: Inesis Kiskis Tel: (370-5) Fax: (370-5) Other Agency(ies): HELCOM Address: Katajankanlaituri 6 B SF Helsinli, Finland Cntact Persn: Mieczyslaw Ostjski Tel: (358-9) Fax: (358-9) mstjskihelcnmfi Estimated Disbursements ( Bank FY/US$m): r 1> vx E l204 >2005, 2006 Annual Cumulative Prject Implementatin perid: March June 30, 2006 Expected effectiveness date: 03/15/2003 Expected clsing date: 06/30/

9 A. Prject Develpment Objective 1. Prject develpment bjective: (see Annex 1) Prject Develpment Objective: Prject Develpment Objective. The develpment bjective f the Baltic Sea Reginai Prject - Phase 1 is t create sme precnditins fr applicatin f the ecsystem apprach in managing the Baltic Sea Large Marine ecsystem in rder t achieve and maintain sustainable bilgical prductivity f the Baltic Sea. The prject activities wuld be undertaken in Estnia, Latvia, Lithuania, Pland and the Russian Federatin, alng their Baltic castal areas and in the adjacent castal and pen sea area. The Baltic Sea Reginal Prgram and Phased Apprach: Prgram Phasing. The Baltic Sea Reginal Prject - Phase 1 is a part f a brader Prgram designed t achieve the develpment bjectives described abve in a phased manner ver a 6-year perid. The Baltic Sea Reginal Prgram cnsists f 3 cmplementary prjects t be implemented in sequence as perfrmance targets f each phase are achieved. In February 2001, the verall prgram with an estimated cst f USD 40 millin and a prpsed GEF financing f USD 18 millin was presented t the GEF Cuncil. At that time, the GEF Cuncil apprved USD 5.5 millin t finance the first phase f the Prgram with the expectatin that apprval fr funding phases 2 and 3 wuld be granted at a later stage. The Prgram includes the fllwing phases: * Phase 1, (The current Prject). Intrductin f the Ecsystem Apprach ( ). US$5.5 millin. Establishment f the reginal framewrk fr intrductin f the ecsystem apprach in managing the Baltic Sea Large Marine Ecsystem (BSLME); mbilizatin f partners in management f castal and pen sea marine resurces; initial activities fr land and castal management; and initial investment t mitigate agricultural run-ff. * Phase 2. Demnstratin f the Ecsystem Apprach ( ). US$9.0 millin. Undertaking cperative activities fr assessment and management f castal and pen sea marine resurces; expansin f activities fr land and castal management; jint activities fr linkage f land, castal and pen sea management prgrams; and cntinuatin f investment prgram in the agricultural sectr. * Phase 3. Expanding Applicatin f the Ecsystem Apprach ( ). US$3.5 millin. Identificatin f next steps by the cperating parties fr expanded applicatin f the ecsystem apprach fr land, castal and pen sea management; cmpletin f field based management and demnstratin activities; and preparatin and evaluatin f assessment studies. As Phase I prgresses, the prject dcuments fr Phases 2 and 3 will be prepared and submitted fr endrsement by the GEF Cuncil and apprval by Bank's Bard f Directrs. Annex 1, the Prject lg-frame, prvides the key perfrmance indicatrs fr prgress twards achieving the prgram purpse, which will be tracked thrugh a mnitring and evaluatin system. This system is detailed in the Prject Implementatin Plan and Prject Prcurement Plan (P[P/PPP). Annex 2 prvides descriptin f the verall prject. -3-

10 Glbal Objective and GEF Operatinal Strategy: Glbal Envirnmental Gal. The Prject's glbal envirnmental bjective is t facilitate the restratin f ecsystems, imprve castal zne management and reduce agricultural nn-pint surce pllutin thrugh the intrductin f ecsystem-based appraches in selected lcalities fr land, castal and pen sea envirnmnental management in five recipient cuntries. Prject activities supprt implementatin f the Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram (JCP), develped by the Helsinki Cmmissin (1992, 1998). The JCP prvides the basis fr the Prject, which is fully cnsistent with GEF Operatinal Prgram Number 9 (OP-9), "Integrated Land and Water Multiple Fcal Area Operatinal Prgram"* The bjective f OP-9 is t supprt "better land and water resurce management practices n an area wide basis." The Prject prvides pprtunities fr the GEF t be a "catalyst fr actin t bring abut the successful integratin f imprved land and water resurce management practices n an area wide basis while prviding preventive measures t address threats rather than remedial measures." The Prject has a reginal fcus, invlving lcal cmmunities and stakehlders; its bidiversity cnsideratins fcus n "preventin f damage t threatened waters." As part f an integrated apprach, Prject activities will supprt linkages with activities f the cperating cuntries, internatinal financial institutins, Eurpean Unin, bilateral dnrs and NGOs. Remving Barriers fr Transbundary Management. Designed within the cntext f the Large Marine Ecsystem (LME) cncept, the Prject includes activities fr imprved ecsystem health and prductivity, scial and ecnmic develpment, and prvisin f ecsystem management tls fr decisin-makers t address transbundary issues identified in Annex 12. The mst imprtant aspects f the Prject are its linkages between land-based activities, castal znes and pen sea envirnments. The GEF funds, as incremental csts, will achieve glbal envirnmental benefits by remving barriers t transbundary management f land and pen sea resurces. Cperatin and Crdinatin. With the supprt f the Glbal Envirnment Facility (GEF), UNDP and the Wrld Bank, Prject activities will assist the recipient cuntries in implementing the Helsinki Cnventin, ther internatinal agreements, and natinal plicies and legislatin. T sme extent, it will als supprt Estnia, Latvia, Lithuania and Pland in meeting their bligatins under the Eurpean Unin accessin prcess. The Prject prvides the basis fr strengthening cperatin amng the three internatinal bdies - HELCOM, IBSFC, ICES; recipient cuntry cunterparts and ther cperating rganizatins. Preparatin f the Prject has been crdinated with the Rural Envirnmental Prtectin Prject in Pland and the Glbal Internatinal Waters Assessment (GIWA), which are bth supprted by GEF. UNDP has participated in the develpment f the Prject and will manage GEF funded activities during Phases 2 and 3. * Glbal Envirnment Facility (April 1997). GEF Operatinal Prgrams. 2. Key perfrmance indicatrs: (see Annex 1) The Prject will be implemented as an integrated activity, with HELCOM serving as the GEF executing agency, and wrking in crdinatin with IBSFC and ICES. Achievement f Prject bjectives will be judged by fllwing key indicatrs: * Institutinal arrangements are in place fr jint mnitring, assessment and evaluatin f living marine resurces; * A technical assessment and jint mnitring system develped t determine abundance dynamics f the key Baltic fish species, as well as the alien species; * Increasing number f farms and individual farmers (25-30 in Phase 1) participate in agri-envirnmental investment scheme; - 4 -

11 * Surface and grundwater mnitring statins established in demnstratin watersheds t track the nutrient levels; and * One wetland being restred * The Baltic Sea Steering Grup established and peratinal B. Strategic Cntext 1. Sectr-related Cuntry Assistance Strategy (CAS) gal supprted by the prject: (see Annex 1) Dcument number: Estnia - CAS dcument number EE, Latvia - CAS dcument number LV, Lithuania - CAS dcument number LT Pland - CAS dcument number POL Russian Federatin - CAS dcument number RU Date f latest CAS discussin: Estnia: Octber 18, Latvia: April 25, 2002 Lithuania: May 11, 1999 Pland: December 10, 2002 Russian Federatin: June 6, 2002 Sectr Related CAS Strategies. Fr all recipient cuntries, the Prject is cnsistent with CAS develpment bjectives pertaining t sustainable rural develpment, strengthening lcal institutins, prtectin f natural resurces and mitigating envirnmental decay. Estnia - CAS dcument number EE, Date f latest CAS discussin Octber 18, A primary CAS bjective is t prepare the agriculture sectr fr EU accessin, refrm prductin and imprve management practices; this is addressed within Cmpnent 2. Latvia - CAS dcument number LV, Date f latest CAS discussin April 25, Rural areas are sme f the mst ecnmically depressed areas in Latvia. T'he CAS gal is t stimulate the ecnmy in rural areas, and imprve envirnmental management t prmte reginal develpment and build sub-natinal gvermment capacity. The Rural Develpment Prject (Reprt N /FY99) supprts sustainable agricultural activities t lay the grundwrk fr increasing incme levels and imprving living standards f the rural ppulatin; this Prject builds n thse activities. Lithuania - CAS dcument number LT, Date f latest CAS discussin May 11, Tw CAS gals are t develp the rural ecnmy and meet the frmal EU accessin agenda in agriculture. This will require institutinal strengthening, imprvements in agricultural efficiency and prduct quality, and upgrades and maintenance f infrastructure and envirnmental management. The prpsed activities fr Cmpnent 2 fcus n these gals. Pland - CAS dcument number POL, Date f latest CAS discussin December 10, One f the CAS's verarching bjectives is t achieve envirnmental sustainability and meet the requirements f the EU envirnmental directives. Specifically the CAS describes the Bank's bjective t help the Gvernment reduce pllutin frm dispersed (r "nn-pint" surces) and mve twards - 5 -

12 cmpliance with EU directives and internatinal agreements in a cst-effective manner. The indirect lng-term bjective is managing the transfrmatin frm a state ecnmy t a market ecnmy and enhancing market institutins and prductivity in agriculture. This Prject supprts these bjectives and cmplements the current GEF supprted Rural Envirnmental Prtectin Prject (Reprt N ). Russian Federatin - CAS dcument number RU, date f latest CAS discussin June 6, The Russian Federatin faces several cnstraints n sustainable pverty reductin; a number f simultaneus actins are being taken t reduce pverty. The CAS bjective pertains t strengthening institutinal framewrks and enfrcing existing natinal and internatinal laws and regulatins; utilizing envirnmentally respnsible practices; and reducing widespread degradatin f land, fisheries, and frests. The Prject addresses this bjective by supprting practical actins t imprve management f fishery resurces, castal znes and agricultural prductin in the Kaliningrad Oblast, and ptentially in the Leningrad Oblast during the later phases. The Prject cmplements the recently apprved Municipal Water and Wastewater Prject (Reprt N RU) that will supprt investments in several municipalities in the Baltic Sea drainage basin. la. Glbal Operatinal strategy/prgram bjective addressed by the prject: Glbal and Reginal Strategies. The Prject is cnsistent with the gals f Bank's Envirnment Strategy t supprt sustainable develpment, reduce pverty, and imprve quality f life by remving the envirnmental cnstraints t ecnmic develpment, and empwering peple and scieties t manage their envirnmental resurces. At the ECA level, it is cnsistent with the reginal ECA Envirnment Strategy and the Reginal Natural Resurce Management Strategy. In additin, the Prject is cnsistent with the Bank's high-level cnmmitment since 1990 t wrk with HELCOM and its member cuntries t supprt implementatin f the JCP in rder t achieve the lng-term bjective f "[restring] the eclgical balance f the Baltic Sea." The prpsed Prject wuld be the first reginal prject undertaken by the Bank t supprt the JCP and wuld build upn successful experience with previus natinal level JCP related prjects in Estnia, Latvia, Lithuania, Pland and the Russian Federatin. 2. Main sectr issues and Gvernment strategy: Since the late 1980s, the status f the Baltic Sea marine envirnment has been a majr cncern f the riparian cuntry Gvernments. The Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram, which is crdinated by the Helsinki Cmmissin (HELCOM), als knwn as the JCP, was mandated by Heads f Gvernment meetings held in Rnneby, Sweden (1990); Visby, Sweden (1996); and Riga, Latvia (1998). The lng-terrn bjective f the JCP is t restre the eclgical balance f the Baltic Sea thrugh a series f cmplementary preventive and curative actins. It includes actins at ver 130 municipal, industrial and agricultural area "ht spts" that are significant surces f pllutin t the Baltic Sea. The JCP als includes actins fr management f the eclgically imprtant castal lagns and wetlands n the Baltic Sea. The first phase f the JCP addressed primarily municipal and industrial pllutin surces in all riparian cuntries. Wrld Bank played a visible rle in imnplementing the JCP in the three Baltic States and Pland, by supprting envirnmental prjects in Haapsalu-Matsalu Bays, Estnia; Daugavpils and Liepaja, Latvia; and Klaipeda and Siauliai in Lithuania. These prjects helped the recipient cuntries t imprve their water and wastewater services and t launch activities t reduce agricultural nn-pint pllutin. Als, intrductin f integrated castal zne management practices was an key part f the first phase JCP prjects. In the case f Pland, supprt was first prvided thrugh the Envirnmental Management Prject and lending peratins t supprt imprved municipal water and wastewater services. In the Russian Federatin, the Bank has wrked t rehabilitate and upgrade water and sanitatin -6 -

13 services in St. Petersburg. The Prgram entered a secnd phase f implementatin in March 1998, fllwing apprval by the Ministers f Envirnment f the regin f the JCP "Recmmendatins fr Updating and Strengthening," which reviewed prgress t date, identified pririties fr future actin and develped lessns learned t guide upcming effrts. Addressing the nn-pint surce pllutin remains high n the envirnmental agenda as it cntributes nearly half f the nutrient pllutin lad t the Baltic Sea. The Plish Rural Envirnment Prtectin Prject launched a series f "secnd generatin" prjects, which are jintly supprted by the GEF, NEFCO, and the Wrld Bank in cperatin with the EU, bilateral dnrs and peratinal NGOs. The Municipal Water and Wastewater prject in the Russian Federatin will supprt investments in several municipalities in the Baltic Sea drainage basin. The recipient cuntries, as cntracting parties f the Helsinki Cnventin, are bligated t reduce pint and nn-pint surce pllutin, imprve castal zne management, and supprt sustainable fishery practices, t restre ver the lng-term the eclgical balance f the Baltic Sea. T this end, they have established envirnmental plicies and pririties that supprt the Helsinki Cnventin and the JCP. Other than the Russian Federatin, the recipient cuntry gvermnents are cmmitted t mving int cmpliance with relevant EU directives as part f the accessin prcess.* The natinal gvernments recgnize this Prject as a critical mechanism fr supprting natinal prgrams and meeting the reginal bligatin f imprving envirnmental management f the Baltic Sea. * This includes the Eurpean Unin Nitrates Directive, Envirnment Directives, and the Water Framewrk Directive. 3. Sectr issues t be addressed by the prject and strategic chices The Prject represents a strategic chice t cncentrate human and financial resurces t strengthen reginal management within the fisheries and agriculture sectrs t achieve sustainable ecsystem management ver the medium and lng term. It als includes measures t supprt castal zne management, which is a critical link between land, castal and pen sea envirnments. Cmpnent I addresses the marine sectr and supprts a crdinated apprach t mnitring and assessment f castal and pen sea resurces, imprving fisheries management practices, and strengthening reginal management fr decisin-makers. Cmpnent 2 addresses the agriculture sectr, prmtes investing in envirnmentally respnsible agricultural practices, supprts mnitring and assessment f land-based inputs t the castal and pen sea ecsystem, and strengthens natinal and reginal capacity fr integrated management. Cmpnent 2 tgether with Cmpnent I will include targeted activities fr castal zne management that are in the areas influenced by the agricultural demnstratin sites. Cmpnent 3 in Phase I is financed by dnr cntributins, and prvides supprt fr institutinal strengthening and capacity building measures that are necessary fr implementatin f the ecsystem management apprach prmted by the Prject. C. Prject Descriptin Summary 1. Prject cmpnents (see Annex 2 fr a detailed descriptin and Annex 3 fr a detailed cst breakdwn): The Prject cmpnents are based n the Large Marine Ecsystem (LME) cncept and include integrated land, castal and pen sea activities t strengthen the lcal and reginal capacity t achieve sustainable ecsystem management f the Baltic Sea resurces. Sustainable management will imprve ecsystem health while prviding scial and ecnmic benefits t farmiing, castal and fishing cmmunities and sectrs such as businesses and turism. The Prject has fur cmplementary cmpnents described belw. Annex 2 prvides the Prject descriptin, identifies the management and implementatin - 7 -

14 respnsibilities, Annex 2, Figure 1 illustrates the prject design; the Prject's rganizatinal structure is represented in Figure 2, and Table C summarizes the Cmpnent activities, sub-activities and tasks, and the prpsed phases fr cmpnent activities. Cmpnent 1 - Large Marine Ecsystem Management Activities (US$5.62 millin, r 46.5 percent f the ttal cst). The prevailing castal and pen sea water management issues in the Baltic Sea are ecsystem impacts frm eutrphicatin and ver fishing. Successful management f these issues requires strengthened institutinal and technical crdinatin f infrmatin, resurces and management activities at the reginal and lcal levels. While threats t the system and ther transbundary issues have been identified, current resurce management plicies and practices are nt hlistic and ecsystem-based. T address these issues and meet natinal bligatins under the Helsinki Cnventin, the Cmpnent was designed within an LME cntext with an ecsystem-based apprach t mnitring, assessment, and management f the Baltic Sea resurces. The cmpnent's primary bjective is t intrduce the principles and demnstrate the applicatin f the LME cncept fr Baltic Sea castal and pen sea resurces. Cmpnent activities are interdependent and will be used jintly t vercme shrt-term sectr-by-sectr attempts t manage resurces and envirnments. Cmpnent 1 will intrduce jintly planned and implemented multi-natinal mnitring surveys that facilitate lcal cperatin and crdinatin and use f innvative methdlgies fr assessing the changing state f the ecsystem and develpment f effective strategies fr the management f these shared resurces. Cmpnent activities prvide the mechanisms t meet these bjectives thrugh imprving castal and pen sea mnitring and assessment practices, understanding the carrying capacity f the castal and pen sea ecsystem, prmting sustainable fishery practices, and supprting strengthened reginal management and lcal capacity. In crdinatin with the ther Prject cmpnents, Cmpnent I will: (i) establish lcal and reginal administrative and rganizatinal mechanisms, thrugh the Crdinatin Centers, fr cperative mnitring and assessment activities, (ii) develp management tls thrugh mdeling and assessment t prvide prpsals fr ecsystem-based management f land, castal znes and pen sea waters, and (iii) supprt cperating cuntries t mve tward cmpliance with internatinal agreements, reginal pririties and natinal plicies, including the Helsinki Cnventin, Baltic 21, and EU envirnmental and water management directives (Russian Federatin excluded). The Prject will supprt activities in the castal near shre envirnment f the Eastem Baltic Sea and in selected adjacent sectins f the pen sea envirnment. In general, the castal near shre activities and mnitring netwrk will crrelate with land-based castal and assciated demnstratin activities supprted under Cmpnent 2. Cmpnent 2 - Land and Castal Management Activities (US$4.99 millin, r 44.0 percent f the ttal cst). Addressing land-based agricultural inputs t castal and pen sea waters and imprving castal zne management are critical fr management f the Baltic Sea ecsystem. The JCP highlights. management f agriculture inputs and castal areas f the Baltic as pririty issues. The agricultural element f the Cmpnent will (i) test administrative and rganizatinal mechanisms (reginal and lcal) and prvide advice and supprt t the farming cmmunity; (ii) assess farmers' interest in and willingness t pay fr imprving their envirnmental management practices; (iii) assist farmers t lwer bth the risk and barriers that currently hinder adptin f new practices; and (iv) prvide supprt fr small-scale envirnmentally respnsible agricultural investments. The Prject will partially finance investment csts fr n-farm envirnmental facilities, perating expenses f lcal implementers, equipment recmmended by the farm management plans, and recurrent csts fr lcal capacity building. The castal zne management element f the Cmpnent will (i) fcus n the rle that can be played by lcal cmmunities in sustainable management f castal resurces; (ii) link activities in the demnstratin watershed t activities being taken n the cast; (iii) supprt implementatin f previusly prepared management plans; and (iv) assist lcal cmmunities t vercme barriers t adptin f new planning and management methds in these sensitive areas. The Prject will partially finance csts fr management activities, small-scale investments and demnstratin activities and selected csts fr lcal capacity - 8 -

15 building. Cmpnent 3 - Institutinal Strengthening and Reginal Capacity Building. (US$0.15 millin, r 1.2 percent f ttal cst). Durinig Phase 1, activities under Cmpnent 3 will be limited in scpe whereas they will expand significantly during Phases 2 and 3. The Cmpnent's primary bjective is t strengthen reginal and lcal capacity t successfully utilize utputs and recmmendatins frm Cmpnent 1 and Cmpnent 2 activities fr sustainable ecsystem-based management. It will include activities fr (i) reginal capacity building that will fcus n reginal administrative, sciecnmic, and technical rnatters as they pertain t management f Baltic Sea resurces; (ii) targeted activities t facilitate imprved reginal level crdinatin and cperatin between HELCOM, IBSFC, ICES and reginal stakehlders; (iii) supprt fr imprved valuatin f ecsystem gds and services thugh an evaluatin f the sciecnmic implicatins f reduced eutrphicatin n ecsystem resurces; (iv) a prgram t supprt training activities fr cmmunity-based grups and lcal NGOs; and (v) a reginal public utreach prgram. Cmpnent 4 - Prject Management (US$1.36 millin, r 11.2 percent f ttal cst). Cmpnent csts are, inter alia, fr lcal and reginal Prject management, cntracting prcurement services, and csts fr the scial assessment and required financial audits. Prvisins fr Reallcatin f Funds. If in the curse f implementing the verall BRSP, including Phase 1, it becmes necessary t reallcate funds within the prject the steps utlined in this sectin wuld be used cnsistent with existing prcedures. Reallcatins f funds culd be required due t either plitical/administrative issues arising with ne r mre cperating cuntries r fr technical reasns based n implementatin experience. If such a situatin arises, HELCOM in crdinatin with the Bank, wuld undertake the fllwing steps: (a) identify the need fr a ptential reallcatin and dcument its causes; (b) based n the technical aspects f prject design and the implementatin perfrmance recrd within prject supprted activities it wuld prpse hw the funds wuld be reallcated between the Cmpnents; and (c) as part f this prcess HELCOM wuld prvide a technical descriptin f the activities t be undertaken, assess their benefits with regard t achievement f the Prject bjectives, prvide an estimated budget and present an implementatin plan and schedule. This request fr reallcatin wuld be prvided t the Task Team Leader, wh review and apprve the prpsed reallcatins in cnsultatin with the GEF Reginal Crdinatr, Legal and Lan Departments, and when apprpriate, with GEF Secretariat. The activities supprted by the allcated funds wuld be integrated int the verall implementatin plan fr the BSRP and be subject t evaluatin as part f the regular prject supervisin and Implementatin Cmpletin Reprt (ICR) fr the BSRP. 2 Indicative Bank % f GEF. % f Cmpnent Csts %f financing Bank financlng. GEF,... (USSM) Ttal (USSM). financing (USSM) flnancing Cmpnent Large Marine Ecsystem Management Activities Cmpnent Land and Castal Management Activities Cmpnent Institutinal Strengthening and Capacity Building Cmpnent Prject Management I_I_I_I Ttal Prject Csts Ttal Financing Required Percentages add up t mre than 100% due t rundings f decimals. -9-

16 2. Key plicy and institutinal refrms supprted by the prject: Althugh the Prject des nt include plicy r institutinal refrms as a specific activity, it is inherent in the verall bjective t facilitate strengthening f reginal, natinal and lcal capacities t prmte, supprt and implement imprved ecsystem-based management. This Prject will prvide the recipient cuntries with pprtunities t develp mechanisms t implement and/r reinfrce existing reginal, natinal and lcal plicies. * Cmpnent I - Large Marine Ecsystem Management Activities. This Cmpnent will prvide pprtunities fr imprving current fisheries management practices and subsequent plicy refrms cmpatible with IBSFC and HELCOM recmmendatins fr fisheries and applicatin f EU directives in its member cuntries within the Baltic Sea regin. * Cmpnent 2 - Land and Castal Management Activities. Thrugh supprt fr agricultural rmn-ff demnstratin activities and farm level management actins and investments, this Cmpnent will assist in applicatin f the Cde f Gd Agricultural Practices, which will supprt natinal sustainable agriculture plicy refrms. Castal zne management activities will facilitate implementatin f demnstratin activities in areas that have benefited frm cperative planning and management studies prepared by natinal and lcal gvernments. This will allw fr peratinal experience with the castal zne management prcess. * Cmpnent 3- Institutinal Strengthening and Reginal Capacity Building. This Cmpnent will build lcal and reginal capacity and strengthen institutins, prviding them with experience in develpment and applicatin f ecsystem based management tls. The prpsed Baltic Sea Steering Grup (BSSG) will serve as a mechanism fr verall versight f prject implementatin, and its members will be instrumental in reslving the emerging issues and disseminate infrmatin and experiences thrughut the regin. * Cmpnent 4 - Prject Management. This Cmpnent will prvide an pprtunity fr expanded peratinal level cpemtin amng the three internatinal bdies - HELCOM, IBSFC and ICES - all f which have rles in management f the cmmn resurces f the Baltic Sea. 3. Benefits and target ppulatin: The primary reginal benefit lies in strengthening the decisin making prcess at the reginal, natinal and lcal level fr sustainable ecsystem-based management f the Baltic Sea resurces. This shuld result ver medium and lng-term in: * Strengthened reginal institutinal capacity fr crdinated decisin making and disseminatin f recmmendatins; * Empwerment f lcal cmmunities in the management f agricultural and castal resurces; * Demnstratin f an effective mechanism fr envirnmental management and n-farm envirnmental investments in agriculture; * Demnstratin f cmmunity based castal zne management activities; * Reductin f nitrate input t Baltic Sea castal and transbundary waters; * Sustainable use f fishery resurces at the reginal and natinal levels; * Imprved marine ecsystem health and related benefits assciated with fisheries, ther living resurces and castal ppulatins; and * Prgress twards meeting HELCOM's gal f restring the eclgical balance f the Baltic Sea. The Prject's target ppulatin and beneficiaries include:

17 * The Three Internatinal Bdies-HELCOM, IBSFC, and ICES: will benefit frm the effrts t facilitate reginal cperatin and crdinatin in the decisin-making prcess; * Recipient Cuntry Natinal and Lcal Gvernments: will have an pprtunity t imprve their technical capacities and participate as equal technical and plitical partners in the three internatinal bdies; * Farming Cmmunities: thrugh farm investments, farmers will save mney by nt using chemical fertilizers, increase revenues frm imprved prductivity, and reduce nxius impacts frm dr; * Castal Cmmunities: will be able t utilize resurces frm a better managed castal ecsystem, which will indirectly benefit the lcal businesses and emplyment thrugh an increase in turism; * Fishing Cmmunities: will be able t use mre efficient technlgies and methdlgies fr sustainable use f fishery resurces; and * Turism Interests: will benefit in the lng-term thrugh a rise in sustainable castal turism that emphasizes natural resurce and cultural values. 4. Institutinal and implementatin arrangements: Prject Crdinatin. HELCOM will serve as the executing agency fr the Prject and will undertake this wrk in full crdinatin with IBSFC and ICES. A Prject Implementatin Team (PrI) will be established in HELCOM headquarters in Helsinki. The PIT will be staffed by tw HELCOM Prfessinal Secretaries and the Administrative Officer f HELCOM. This staff will be assisted by a Financial Assistant and a Prcurement Cnsultant that will supprt prcurement and disbursement actins as well as by a Prject Assistant in c-peratin with the Cmpnent Crdinatrs (ClC and C2C). The Executive Secretary f HELCOM will supervise the wrk f PIT. The Baltic Sea Steering Grup (BSSG) will be established and will prvide brad-based supprt fr the implementatin prcess. The BSSG will cnsist f members frm HELCOM, IBSFC, and ICES, senir level representatives f the Baltic riparian cuntries, and NOAA. The PIP/PPP will prvide TORs and details f the administrative and Prject management arrangements. Management f the Cmpnents. The fllwing arrangements will be used fr management f the cmpnents included under the Prject: * Cmpnent 1 - Large Marine Ecsystem Management Activities. Cmpnent 1 will be implemented under the supervisin f ICES, wrking clsely with IBSFC and HELCOM. The Cmpnent I Crdinatr (CIC), statined in ICES, Cpenhagen, will be respnsible fr verall management f Cmpnent 1 and will supervise the implementatin f Prject-supprted activities. The ClC will be respnsible fr day-t-day Prject management and administratin, and will wrk directly with the Lcal Prject Managers (LPMs) at the Data Crdinatin Centers. The LPMs will be respnsible fr day-t-day implementatin in their respective cuntries. The PIP/PPP will prvide TORs fr the ClC and LPM/Crdinatin Centers. * Cmpnent 2 - Land and Castal Management Activities. Cmpnent 2 will be implemented under the supervisin f HELCOM, by the SLU and WWF. AgriculturalActivities. The Swedish University f Agricultural Sciences (SLU) will manage the agricultural activities under this cmpnent n behalf f HELCOM. The SLU will prvide a Cmpnent 2 Crdinatr (C2C), statined in Uppsala wh will be respnsible fr verall management f Cmpnent 2 and will wrk with existing field structures established under the Swedish supprted BAAP Prject and the Rural Envirnmental Prtectin Prject in Pland. An

18 LIU will perate in each cuntry and will be respnsible fr day-t-day Prject implementatin and administratin. The LIUs will be staffed with a unit manager, accuntant, technical specialists, and agricultural advisrs. The PIP/PPP will prvide TORs fr the C2C, and the LlUs. Agri-envirnmental Interventins. HELCOM will cntract the Nrdic Envirnmental Finance Crpratin (NEFCO) t jintly finance pilt scale investments in eligible farms. A ttal f USD 700,000 f GEF funds has been allcated t supprt agri-envirnmental interventins. The LIUs will market the investment scheme amng the farmers. Eligible farmers will be invited t attend special agri-envirnmental and ecnmic curses ffered thrugh the lcal Agricultural Advisry Services (AAS). As a result f these curses, the participating farmers will prepare a business plan which they will present t NEFCO fr financing. NEFCO may apprve the submitted plans r reject them. If apprved, the GEF mney will be used t sften the NEFCO lans s that farmers can repay it ver a 10 year perid. Ttal cst f a single sub-prject (NEFCO lan+gef grant) shuld nt exceed USD 200,000 equivalent, and the naximum amunt f a GEF grant fr each sub-prject shall nt exceed the equivalent f USD 30,000. All funds (GEF and NEFCO) will be paid t cntractrs/suppliers directly. The LIU staff will supervise implementatin prgress f subprjects and will reprt t NEFCO and HELCOM accrdingly. Mre details n the selectin f subprjects and practical arrangements fr implementatin f subprjects will be prvided in the PIP/PPP. HELCOM will transfer funds in several installments fr agri-envirnmental investmnents t a subaccunt held by NEFCO. The installments will nt exceed 15% f the ttal amunt eannarked fr agri-envirnmental investment. HELCOM will replenish the GEF fumds when 80% f the riginal installment have been spent fr subprjects. T justify replenishment, NEFCO will prvide HELCOM with prf f eligible expenditures and lan cmmittee decisins n allcatin f the grant prtin fr each specific prject, cntracts and invices frm cntractrs/suppliers, and reprts frm LIUs n prgress f wrks in the field. Castal Zne Management Activities. The castal zne management activities under Cmpnent 2 will be crdinated with Cmpnent I and managed by the WWF, wh will prvide a crdinatr t wrk with the Area Task Teams, established in the demnstratin areas during theearlier HELCOM PITF MLW supprted planning and management studies. The studies will serve as the basis fr implementatin f these activities, and will be crdinated by lcal gvernments, cmmunity based rganizatins and nngvernmental rganizatins. The PIP/PPP will prvide TORs fr the crdinatr and lcal cunterparts. * Cmpnent 3 -Institutinal Strengthening and Reginal Capacity Building Cmpnent 3 will be managed by HELCOM in cperatin with IBSFC and ICES. The BSSG will wrk with these three institutins t review and disseminate infrmatin and management tls develped under the Prject. * Cmpnent 4 - Prject Management. Cmpnent 4 will prvide supprt fr Prject management by HELCOM and the cperating parties. This includes supprt fr the PIT at HELCOM and the varius administrative services required fr Prject reprting, prcurement, disbursement and financial management. As nted abve, HELCOM will retain the services f qualified cnsultants, with significant experience in Bank prcedures, t assist with prcurement and disbursement actins. The cnsultants will undertake preparatin f the bidding dcuments and review f bids fr civil wrks and equipment, and preparatin f terms f reference fr services and facilitate evaluatins and supprt HELCOM in negtiatins. * Accunting, Auditing and Reprting Requirements. The Prject will cmply with the "Guidelines fr

19 Financial Reprting and Auditing f Prjects Financed by the Wrld Bank" The Bank tgether with HELCOM will agree upn reprting requirements fr Financial Mnitring Reprts (FMR). Prject prgress will be reprted thrugh annual, semi-annual and quarterly Prject prgress reprts. An Implementatin Cmpletin Reprt (ICR) will be prepared within six mnths f Prject cmpletin. The Prject will be cnsistent with the prvisins f the Wrld Bank, updated financial management requirements. HELCOM's financial management capacity assessment and an up frnt agreement n accunting and auditing prcedures that are acceptable t the Bank were reached in May 2000 with HELCOM. These were reviewed nce again during the appraisal missin. This agreement includes a time-bund actin plan t address financial management issues and a reprting system that fully cmplies with the updated financial management requirements. The HELCOM entity accunts will be audited by Finnish State Auditr's ffice, based n HELCOM's Headquarter's Agreement with Finnish Gvermment. The Prject and Special Accunt will be audited by cmpetitively selected auditing firm with qualificatins acceptable t Bank and in accrdance with terms f reference acceptable t Bank. The PIP/PPP will detail the relevant Bank plicies and requirements. Prject Mnitring and Evaluatin. HELCOM will reprt t the Bank and be respnsible fr ensuring that all GEF funded activities are carried ut in cmpliance with Prject design and cntracts. The Prject will cmply with the required mnitring and evaluatin prcedures as required fr the Implementatin Cmpletin Reprt. The evaluatin will rely n bth qualitative and quantitative criteria using Bank guidelines, "Mnitring and Evaluatin f Prgram Impacts." Resurces have been set aside t supprt the cnduct f bth these evaluatins by independent reviewers. The ICR fr Phase I will prvide suggestins n pssible imprvement f the implementatin plan and steps that culd be taken t ensure achievement f Prject gals during Phases 2 and 3. The Inplementatin Cmpletin Reprt will be cmpleted n later than six mnths after the clsure f the Prject. The PIP/PPP will detail the prcess fr these reviews. D. Prject Ratinale 1. Prject alternatives cnsidered and reasns fr rejectin: In designing the Prject, several ptins were cnsidered. In terns f financing, the Prject was riginally planned and submitted t GEF as a traditinal Bank peratin. Hwever, due t cash-flw cncerns within the GEF, the Prject was restructured int three cmplementary, althugh separate, phases t match availability f GEF resurces. In terms f Prject design, the prpsed Prject was selected n the grunds that it prvides fr an integrated apprach t addressing the land, castal and pen sea issues while achieving JCP pririties. Cmpnent 1 is designed t prvide linkages with existing reginal prgrams and initiatives and t meet Helsinki Cnventin bligatins, while Cmpnent 2 builds n and expands the successful pilt demnstratins begun under the BAAP, and cmplements the GEF supprted Rural Envirnmental Prtectin Prject in Pland. It als supprts implementatin f the Castal Lagn and Management Plans develped by the HELCOM PITF MLW and builds upn earlier experience with castal management under Bank supprted prjects in Estnia, Latvia, and Lithuania. Cmpnent 3 is critical t facilitate the strengthening f reginal and lcal capacity. The ther design alternatives reviewed and cnsidered include: * Individual Natinal Prgrams: These wuld be cstly and likely result in duplicatin and incnsistencies. Individual prgrams culd nt address transbundary issues r the need fr systematic and crdinated mnitring and assessment fr reginal management f the Baltic Sea resurces. * Curative Investment Prgrars: These wuld respnd nly t prblems rather than practively

20 addressing the prblems' surce. Ultimately this type f prgram wuld be expensive with minimal sustainable results, and prvide little pprtunity fr crdinated reginal management. 0 Sectr Specific Prgrams - Agriculture, Castal r Open Sea Resurce Prgrams: These wuld have limited benefits, as they wuld address nly half f the ecsystem issues. Addressing nly the pen sea issues, fr example, ignres the predminant prblem f pllutin frm nn-pint surces. Again, sectr specific prgrams wuld nt prvide pprtunities fr reginal management. 2. Majr related prjects financed by the Bank and/r ther develpment agencies (cmpleted, nging and planned).the BSRP, builds n the lessns learned frm cmplementary prjects, and prvides linkages with nging prjects in the area. This Prject has been designed in cnjunctin with the Rural Envirnmental Prtectin Prject in Pland and has been crdinated with the wrk f GIWA, which is cnducting a pilt study n the Baltic Sea 4, Latest Supervisin Sectr Issue * Prject (PSR) Ratrigs (Bank-financed prjects nly). Implementatin Develpment Bank-financed Prgress (HP) Objective (DO) Estnia - envirnmental management Haapsalu and Matsalu Bays S S in castal areas Envirnment Prject (cmpleted) Estnia - strengthening agricultural Agricultural Develpment S S practices Prject (cmpleted) Latvia - envirnmental management in Liepaja Envirnment Prject HS HS castal areas (cmpleted) Latvia - strengthening agricultural Rural Develpment Prject HS HS management practices (cmpleted) Lithuania - watershed and water Siauliai Envirnment Prject S S quality management (cmpleted) Lithuania - water quality and Klaipeda Envirnment Prject S S envirnment management in castal areas Pland - GEF supprted develpment Rural Envirnmental HS S f envirnmentally respnsible Prtectin Prject agricultural practices Pland - strengthening envirnmental Envirnment Management HS HS management capacity Prject (cmpleted) Pland - strengthening agricultural Rural Develpment Prject S S management practices Other develpment agencies Reginal - Gvernment f Sweden Baltic Agricultural Run-ff Actin Prgram (BAAP) IP/DO Ratings: HS (Highly Satisfactry), S (Satisfactry), U (Unsatisfactry), HU (Highly Unsatisfactry) - 14-

21 3. Lessns learned and reflected in the prject design: Lessns learned in the regin, including thse frm GEF prjects* were cnsidered during Prject preparatin. A review f "lessns learned" prepared fr the first phase f the JCP and develpment f Baltic 21 identified three key measures as critical t the success f activities at the reginal, natinal and lcal level: (i) sustained plitical and public cmmitment t the lng-term bjectives f the prgram; (ii) a "shared visin" prvided thrugh a cmmnly prepared "strategic actin prgram" r similar dcument; and (iii) a brad based partnership t supprt implementatin f the agreed "preventive" and "curative" actins. It has been recgnized that the majr challenge facing all reginal envirnmental prgrams/prjects is translating plans int actin. At the peratin level, the key lessns learned by the dnrs and recipient cuntries that have wrked in the regin n agricultural and envirnment prjects include: * Lng-term cmmitment is requiredfrm the recipient cuntries t address the reginal issues. The recipient and cperating cuntries are members f HELCOM, and have a demnstrated recrd f taking actins t meet their cmmitments under the Helsinki Cnventin. * All participants must have a shared understanding f the gals necessary t address the issues. The three cperating internatinal bdies and representatives f the recipient cuntries have actively participated in the Prject preparatin prcess and in the previus activities related t implementatin f the JCP. * Linkages with ther nging activities are necessary t ptimize benefits fr the recipient cuntries. The Prject design builds n BAAP Prject activities, and links with GEF, EU, and Bank prjects where apprpriate. Special measures will be used fr crdinatin with the Rural Envirnmental Prtectin Prject in Pland and the Baltic Sea pilt study supprted by GIWA. * Capacity building is criticalfr innvative and effective decisin-making and management. The Prject bjective is t build reginal, natinal and lcal capacity t strengthen the decisin making prcess fr sustainable ecsystem-based management f the Baltic Sea resurces. * Cnsistent prcedures are needed t evaluate and mnitr transbundary issues. The Prject supprts upgrading f the quality f the systems used by HELCOM, IBSFC and ICES t evaluate, assess and mnitr transbundary envirnmental cnditins in the Baltic Sea. These systems will be used by reginal, natinal and lcal rganizatins fr mre effective envirnmental management. The PIP/PPP will detail the mnitring and evaluatin prcess, which addresses transbundary issues. * The prject design cnsiders the cst-effectiveness and affrdability fprject activities. The activities fr Cmpnent I fcus n streamlining current practices and ptimizing mre cst-effective mnitring and assessment prcesses. Experience frm BAAP activities fr agricultural management and previus Bank and WWF supprted castal zne management activities cnfirms that the prpsed activities are cst-effective. In additin, the Bank's experience in the regin has generated imprtant lessns fr Prject design and implementatin mechanisms. These include: * Prject design must cnsider and include lessns learnedfrm similar rural develpment and envirnmental management prjects in the regin. Design f the Prject has benefited frm the experience gained t date in implementatin f a series

22 f rural develpment and envirnmental management prjects that have been supprted by the Bank ver the last decade in the Baltic Sea regin. The design has als benefited frm lessns frm the Swedish funded BAAP Phase I that addressed management f agricultural run-ff at the reginal level, as well as related natinal level activities supprted by the Eurpean Unin, Denmark, Finland, the Netherlands, Nrway and United States. It als included examinatin f lessns learned in castal zne management frm previus Eurpean Unin, WWF and Bank supprted activities in the regin. * Mutual understanding and agreement is needed between the dnrs and lcal cunterparts n prject prcess and expectatins. The Prject Cre Grup has used a cnsultatin prcess invlving representatives frm the recipient cuntries and dnr cmmunity wh have been invlved in Prject design and preparatin, including participatin in reginal wrkshps. Prject preparatin included a reginal meeting t review transbundary water management issues in the regin, a reginal wrkshp n living marine resurces management, and a reginal wrkshp n management f nn-pint surce pllutin frm agriculture. A study tur was als made t Pland t review the experience and management f the Rural Envirnmental Prtectin Prject. * Prject gals and activities must be clearly defined in addressing the issues. The transbundary and pririty issues were identified in the JCP prcess, which helped in defining the Prject bjective and supprting cmpnent activities. The gals and activities have been develped thrugh an interactive prcess that has included extensive reginal wrkshps as well as meetings at the natinal and lcal level. The Prject builds upn earlier activities supprted by HELCOM in the cntext f implementatin f the JCP. * A clear prjectframewrk is necessaryfr successful implementatin. The Prject design supprts the current develpment fr ecsystem-based apprach t management and is cnsistent with the LME cncept fr sustainable ecsystem-based management and the activities under the cmpnents have been divided in a manner t allw fr effective management, supervisin and mnitring. The PIP/PPP will clearly utline the implementatin prcess fr successful implementatin. * The prcurement and disbursement prcedures are clearly understd by the reginal partners and recipient cuntries early in the prject prcess. The prcurement needs are clearly identified, and HELCOM will subcntract an independent cnsultant with experience in Bank prcurement and disbursement prcedures. Basic training n prcurement and disbursement prcedures will be prvided by the firm t Prject managers and lcal cunterparts early in and during the Prject implementatin prcess. Supplemental training will be prvided as necessary. * Capacity building, assessing cmmunity needs, and wrking with the cmmunity t raise public awareness can assure prduct quality. The fcus f the Prject is n building capacity fr the use f ecsystem based management fr the Baltic Sea at the reginal level and at the same time strengthening capacity at the natinal and lcal level t better manage envirnmental dimensins f agriculture, castal znes and fisheries. Previus wrk under the JCP, especially in agriculture and castal zne management, has been based n extensive cnsultatins with cmmunities t identify their gals and needs. Scial assessment wrk t be cnducted during the Prject will facilitate further cnsultatins and imprve the targeting f interventins. All Prject supprted activities will include specific prvisins fr public awareness

23 activities fr decisin makers as well as farmiing, castal and fishing cmmunities. * It is imprtant t have plitical supprt t establish a strng, functinal institutinal infrastructure. The recipient cuntries are all members f HELCOM and are cmmitted t meeting their bligatins under the Helsinki Cnventin. At the reginal, natinal and lcal level thrughut the regin, there is strng plitical and public supprt fr measures t imprve envirnmental management and t take actins t restre the eclgical balance f the Baltic Sea. The Prject builds upn the lng established institutinal infrastructure f HELCOM, IBSFC and ICES, which cmplements existing natinal and lcal institutins. All activities build upn existing netwrks established by the three cperating internatinal bdies in undertaking their wrk, as well as n the BAAP agricultural netwrk and the WWF castal zne management netwrk. * Sunnary Reprt - Study f GEF Prject Lessns, January 1998; HELCOM - Baltic Sea Jint Cmprehensive Envirnmental Actin Prgramme: Backgrund Dcument n Recmnmendatins fr Updating and Strengthening, December 1998; and Baltic 21 - "Financing The Baltic 21: An Overview." August Indicatins f brrwer and recipient cmmitment and wnership: All the recipient cuntries are cntracting parties t, and supprt implementatin f the Helsinki Cnventin; cntribute t the peratinal csts f HELCOM; and are active in undertaking pririty activities included in the JCP. The Prject design prmtes strengthened crdinatin between the three internatinal bdies respnsible fr reginal activities in the Baltic Sea and supprts pririty preventive and curative measures and institutinal develpment activities identified in the JCP. Preparatin f the Prject has been cnducted under the jint supervisin f HELCOM, IBSFC and ICES with the participatin f natinal and lcal level representatives f the recipient cuntries. This prcess has included the invlvement f natinal academic rganizatins, applied research institutes, farmer rganizatins and nn-gvernmental rganizatins. The cperating internatinal bdies have made a cmmitment thrugh frmal decisins f their executive bdies t supprt inmplementatin f the Prject and have prvided significant expertise in the preparatin prcess. At the natinal and lcal level, gvernment fficials and experts have participated in a large nurnber f reginal and natinal level wrkshps and meetings that have been cnducted in all cperating cuntries t supprt the design prcess. In this cntext, the cperating internatinal bdies and cuntries have made facilities available fr these cnsultatins, which have included brad based participatin. At the lcal level, significant cmnmnitment and wnership has been shwn fr activities cncerning agricultural and castal management by lcal cmmunities and residents that have wrked with the HELCOM/SLU, NEFCO and WWF in the preparatin prcess. Latvia hsted a reginal meeting t supprt preparatin f Cmpnent 1 in July 2000; Lithuania hsted a reginal meeting t supprt preparatin f Cmpnent 2 in June 1999; and Pland hsted a field visit prgram in May 2000 t review implementatin experience with activities supprted by the Rural Envirnment Prtectin Prject. In additin, a reginal wrkshp fr the verall prject was hsted by Latvia in June Value added f Bank and Glbal supprt in this prject: The GEF's added value is t prvide incentives fr sustained peratinal level cperatin amng the three internatinal bdies and financially supprt natinal and lcal gvernments and participating nn-gvernmental rganizatins t address pririty transbundary water prblems in the Baltic Sea ecsystem. The Prject's reginal apprach, with GEF supprt, cntains prvisins fr making available financial resurces t the recipient cuntries; t meet the "incremental csts" t address transbundary - 17-

24 issues n an accelerated basis by buying dwn the csts fr actins by the recipient cuntries. GEF funds will specifically assist in prviding linkages and harmnizing natinal and lcal actins with reginal envirnmental bjectives. The GEF is leveraging funds frm natinal and lcal gvernments, Eurpean Unin, bilateral dnrs, NEFCO, applied research fundatins and WWF that cntribute t mre effective reginal crdinatin and cperatin. Withut the cmbined reginal experience f the HELCOM, IBSFC, ICES, Bank, NEFCO and WWF, and the incremental resurces f the GEF, implementatin f the Prject wuld prceed at a slwer pace and wuld nt fully benefit frm integratin, crdinatin and management actins prmted by this Prject. In additin, the GEF will supprt small-scale investments in agriculture, castal zne management and fisheries management that may prvide a framewrk fr ptential future investments supprted by natinal and lcal gvernments in cperatin with the Eurpean Unin, bilateral dnrs and internatinal financial institutins. E. Summary Prject Analysis (Detailed assessments are in the prject file, see Annex 8) 1. Ecnmic (see Annex 4): Cst benefit NPV=US$ millin; ERR = % (see Annex 4) Cst effectiveness * hncremental Cst Other (specify) Cnsistent with GEF peratinal plicy, the requested GEF funds wuld nly be used t finance the incremental csts n a declining basis assciated with addressing transbundary csts in the Baltic Sea regin. The GEF Alternative Scenari has evaluated a series f critical measures fr transbundary management that require supprt frm GEF and ther internatinal surces t remve barriers t implementatin f key elements f the JCP. This Prject is cmpsed f a series f necessary activities t imprve transbundary management f freshwater, castal and pen sea ecsystems. Supprt frm GEF is necessary fr transactin csts fr,peratin t: (i) prvide linkages and develp cmmn appraches and standards fr marine ecsystem prtectin; (ii) crdinate effrts t clse gaps in spatial and tempral transbundary mnitring and assessment surveys; (iii) establish a practical framewrk fr sustainable fisheries management; (iv) assist lcal cmmunities in implementatin f castal zne management plans; (v) supprt measures t assist cuntries t reduce transbundary nn-pint surce pllutin frm agriculture; and (vi) facilitate strengthening f reginal, natinal and lcal capacities fr envirnmental management. The incremental cst f realizing the benefits f the Prject have been estimated at US$5.5 millin ver a 3-year perid, and are additinal t what each Gvernment culd be reasnably expected t finance if natinal benefits alne were included in the ecnmic analysis. These als cmplement GEF investments made fr the cmplementary Rural Envirnment Prtectin Prject under implementatin in Pland. 2. Financial (see Annex 4 and Annex 5): NPV=US$ millin; FRR = % (see Annex 4) The ttal cst fr the Phase 1 Prject is estimated at US$ millin f which GEF will finance US$5.5 millin (45.4 percent). The GEF will finance freign and lcal incremental csts and part f the recurrent csts n a declining basis. Lcal csts are US$1.79 millin (14.8 per cent), which will be prvided in kind by natinal and lcal gvernments and farmers thrugh their cntributins f labr and materials fr n-farm imprvements. Part f the natinal gvernment in-kind cst will be their cntributin t HELCOM. The freign cst is the remaining US$

25 millin (85.2 per cent). Currently c-financing has been cmmitted by Finland, NEFCO, Nrway, Sweden, and United States (NOAA). The WWF will be prviding technical services and ther cntributins in kind. The Prject cmplies with relevant Bank plicies (OP/BP 10.02), and the prcurement and financial management arrangements are details in Annex 6. The incremental csts frm GEF, lines f credit frm NEFCO, dnr cntributins and assistance frm WWF will supplement the recipient cuntry natinal and lcal gvernment cntributins t this Prject. The budgets will be revised at the cmpletin f negtiatins; supprt frm NEFCO will be subject t crss cnditinality f effectiveness with the GEF agreement signed with the Bank. The Prject has secured dnr supprt and c-financing frm the recipient cuntries; the GEF funds will nly be used t cver the incremental csts, minimizing the financial risks. Disbursement will be based n traditinal disbursement prcedures (SOE). FMRs cnfrning t updated financial management guidelines will be adpted fr this Prject. Audits f the Prject and Special Accunts will be cnducted by an independent auditr acceptable t Bank in accrdance with the Terms f Reference acceptable t Bank. Finnish State Auditrs wh undertake review f the HELCOM accunts as part f the Finnish cntributin t Headquarters Agreement. Fiscal Impact: N/A 3. Technical: The Prject will supprt the adptin f prven planning methds, management techniques and technlgies that have been used at ther lcatins in Nrth America and Eurpe. Cmpnent 1 will assist in the upgrading f technlgies, analytical appraches and decisin-making tls fr bilgical mnitring, eclgical assessments and fisheries management measures in castal and pen sea waters. Thrugh the Crdinatin Centers, this will include standardizatin f data cllectin methds; labratry equipment; and the techniques necessary fr quality assurance. Demnstratin activities will supprt castal habitat and stream restratin. The planning methds and technlgy used in Cmpnent 2 include develpment f envirnmental management and business plans fr farms that are used in many cuntries in the regin and simple, lw-cst, well-tested practices fr nutrient recycling structures, which have been extensively used in demnstratin prgrams in the recipient cuntries as well as in Pland. Mnitring equipment fr'in-stream measurements will be established in the demnstratin watersheds and crdinated with Cmpnent I castal waters mnitring and assessment activities. Field level investments will nt be supprted in Pland since these are already included in the GEF-funded Rural Envirnmental Prtectin Prject. The PIP/PPP will utline the technical specificatins fr equipment and small-scale civil wrks, and Termns f Reference fr cnsulting services, t reduce technical risks during Prject implementatin. 4. Institutinal: 4.1 Executing agencies: HELCOM, which became peratinal in 1980, will serve as the Executing Agency fr the Prject

26 4.2 Prject management: HELCOM will undertake implementatin activities in full cperatin with IBSFC and ICES. The Cmpnents will be managed as fllws: (i) Cmpnent 1 - HELCOM will have an agreement with ICES which will crdinate this cmpnent; (ii) Cmpnent 2 - HELCOM will have an agreement with SLU t crdinate agricultural activities and with WWF t crdinate castal zne management activities; (iii) Cmpnent 3 - will be crdinated by HELCOM in cperatin with IBSFC, ICES, SLU and WWF; and (iv) Cmpnent 4 - will be crdinated by HELCOM. The Wrld Bank will apprve staff appintments and any majr changes in staffing. The UNDP will becme increasingly invlved nly in Phases 2 and 3 f the prject and will supervise implementatin f Cmpnent Prcurement issues: HELCOM will, with agreement frm the Bank, cntract qualified cnsultants with significant experience in prcurement and disbursement t prvide these services fr GEF funds included under the Prject. This apprach will significantly reduce bth the csts t HELCOM and the risks assciated with prblems with Bank prcurement and disbursement prcedures. If apprpriate, the cnsultant may als prvide prcurement and disbursement services fr activities funded by ther parties. The institutinal arrangements and experience f the ptential reginal cnsultants are such that the institutinal arrangements are sufficient and create limited pssibility f prcurement risks. 4.4 Financial management issues: The financial management capacity assessment was cnducted in May 2000 and updated in February 2002 fllwing additinal review f HELCOM's financial management system. The assessment cncluded that HELCOM is an rganizatin with a high standard f accuntability that meets Bank standards. HELCOM can be anticipated t manage the GEF funds and crdinate effectively with cperating dnr rganizatins. HELCOM specialist staff have received frnal financial management, prcurement and disbursement training frm the Bank at headquarters and Prject funding will be prvided fr additinal training as required. In additin, infrmal linkages have been develped between HELCOM staff and the Bank cncerning these issues. 5. Envirnmental: Envirnmental Categry: B (Partial Assessment) 5.1 Summarize the steps undertaken fr envirnmental assessment and EMP preparatin (including cnsultatin and disclsure) and the significant issues and their treatment emerging frm this analysis. The Prject will supprt a series f cmplementary measures t imprve envirnmental management in agriculture, the castal zne and pen sea envirnment. It will fcus n supprting measures t reduce nn-pint surce pllutin frm agriculture; imprve castal zne management; and adpt an integrated apprach t the management f marine resurces. The verall envirnmental screening categry fr the Prject is "B" and an Envirnmental Management Plan (EMP) has been prepared and is attached as Annex 13. The EMP and PIP/PPP specify mitigatin and mnitring measures that will be in place t minimize impacts and include specific measures fr Cmpnent 1, which include applicatin f new mnitring, assessment and management measures; and fr Cmpnent 2, which include adptin f guidelines fr design cnstructin f manure pads, slurry tanks and the use f their cntents, and guidelines fr nutrient retentin and wetland restratin activities. Preparatin f the Prject has been based n reginal, natinal and lcal level cnsultatins that are reviewed in Annex 10. The EMP was made available in the InfShp, Bank Resident Missins, and recipient cuntries prir t the pre-appraisal in June

27 5.2 What are the main features f the EMP and are they adequate? The EMP includes specific design measures, cnstructin supervisin methds and mnitring actins t minimize and/r avid the lirmited ptential adverse impacts assciated with activities included in Cmpnents 1 and 2. The primary fcus f the EMP is n issues related t the cnstructin f small-scale civil wrks fr n-farm nutrient management and installatin f mnitring statins. T minimize impacts frm land disturbance during shrt-term cnstructin, mitigatin measures will be in place and include (i) adpting guidelines fr design and cnstructin f manure pads, slurry tanks, and ther nutrient recycling structures, and (ii) design and cnstructin f in-stream mnitring statins and mitigatin measures t reduce cnstructin impacts. Activities fr castal zne management and wetland restratin demnstratins will be subject t prper rnanagement plans that will require frmal review and apprval by natinal and/r lcal authrities as apprpriate. These prcedures are utlined in the EMP. 5.3 Fr Categry A and B prjects, timeline and status f EA: Date f receipt f final draft: February, 2002 An Envirnmental Management Plan has been prepared as part f the Prject design prcess. An updated versin f the EMP has been made available in the InfShp, at Bank Resident Missins, and recipient cuntries prir t the appraisal. 5.4 Hw have stakehlders been cnsulted at the stage f (a) envirnmental screening and (b) draft EA reprt n the envirnmental impacts and prpsed envirnment management plan? Describe mechanisms f cnsultatin that were used and which grups were cnsulted? Develpment f the Prject has invlved a brad based cnsultatin prcess that has included a reginal meeting t review transbundary water management issues in the Baltic Sea regin resulting in the Vilnius Recmmendatins, reginal wrkshps, and natinal and lcal level meetings during which the envirnmental aspects f the Prject have been reviewed. Fr Cmpnent I discussin with cunterpart stakehlders cncluded that there are nly limited envirnmental impacts assciated with the peratin and maintenance f scientific equipment, use f chemicals in certified labratries and a need t cllect live specimens fr certain types f bilgical mnitring. Fr Cmpnent 2, farmers and advisry rganizatins already invlved in the BAAP demnstratin prjects understand the envirnmental issues assciated with small-scale civil wrks fr n-farm imprvements and mnitring statins and already wrk clsely with lcal authrities and with the farm cmmunities. Develpment f the prpsed castal zne management activities has been dne with direct input frm lcal cmmunities as part f their planning prcess 5.5 What mechanisms have been established t mnitr and evaluate the impact f the prject n the envirnment? D the indicatrs reflect the bjectives and results f the EMP? The Prject supprts an extensive prgram f interventins t mnitr and evaluate its impacts in agricultural and castal znes and the pen sea envirnment. This infnnatin will be made available t the public thrugh HELCOM, IBSFC, ICES and natinal and lcal gvernments. As part f the mnitring and assessment activities, a full set f indicatrs will be develped fr the Prject t evaluate specific envirnmental trends. Specific actins are included in Cmpnents 1 and 2 t mnitr the implementatin f the EMP. 6. Scial:

28 6.1 Summarize key scial issues relevant t the prject bjectives, and specify the prject's scial develpment utcmes. Building n the apprach used in the Rural Envirnmental Prtectin Prject in Pland, the Prject includes a systematic scial assessment t evaluate the scial impacts frm the cmpnent activities and utreach prgramn, and t prvide ptential mdificatins t the Prject design as needed. This wrk will be crdinated by a scial scientist frm the Bank and will be undertaken by lcal scial scientists in rder t transfer skills in scial assessment t the cperating cuntries. The findings f these activities will allw natinal and lcal gvernments, as well as beneficiary cmmunities, t have an imprved understanding f the scial dimensins f these envirnmental management interventins. Terms f Reference (TOR) fr the scial assessment are included in the PIP/PPP. While there has been n systematic scial assessment during Prject preparatin, active engagement f lcal stakehlders during preparatin has been psitive. In preparing Cmpnent I a cnsensus amng the stakehlders cnfirmed that the Baltic Sea fisheries and water quality have deterirated. Any effrt fr sustainable fisheries will benefit the fisheries and castal cmmunities, and imprve businesses related t the fisheries sectr. The Prject will supprt effrts t find slutins t prblems and cnflicts between recreatinal and cmmercial fisheries, fisherman and fisheries managers, and fr transbundary issues. Fr Cmpnent 2, evaluatins during the pilt demnstratin prjects shwed psitive scial benefits. Participating farm families nted increases in farm prductivity, reductin f dr, and subsequent envirnmental imprvements frm imprved manure strage. The castal zne management activities are based n management plans that have been develped under the leadership f WWF as part f the HELCOM spnsred PITF Wrking Grup n Castal Lagns and Wetlands. The activities will directly invlve castal fishing cmmunities thrugh small-scale investments and build lcal cmmunity capacity fr sustainable envirnmental management. The cmmunity will benefit frm the Prject's effrts t imprve understanding f ecsystem value. Currently the scial welfare system in the recipient cuntries prvides little supprt t the farming, castal and fishing cmmunities, which have suffered significantly during the perid f ecnmic transitin. The Prject will supprt sustainable ecnmic grwth in agricultural, castal and fishing ppulatins by prviding them with pprtunities t increase their incmes directly thrugh mre efficient use f these resurces. In agriculture the new appraches supprted by the Prject will reduce the need fr use f fertilizers and increase prductivity f fields and imprve efficiency f water use. In castal areas, Prject supprted planning and management activities will reduce prblems caused by pr planning, increase efficiency f resurce use, create emplyment in small scale lcal enterprises and stimulate bth internatinal and dmestic turism. The activities fr fisheries management shuld diversify ecnmic pprtunities fr fishermen and allw fr mre stable incme frm mre stable fishery resurces. Castal zne management activities will strengthen cmmunity capacity by invlving lcal peple in cmmunity driven activities, and imprve the lcal standard f living fr the farmer and fishing cmmunities. The lng-term benefits, a sustainable ecsystem, will benefit the entire castal cmmunity and business sectr. 6.2 Participatry Apprach: Hw are key stakehlders participating in the prject? The Prject engages a range f stakehlders and beneficiaries in the preparatin and implementatin prcess. Many f these parties have previusly been invlved in a number f activities related t envirnmental management at the reginal level under the JCP and/r natinal level activities assciated with Gvernment prgrams. The parties include: * Cperating internatinal bdies-helcom, IBSFC, ICES;

29 * Natinal and lcal gvernments; * Natinal universities and research institutes; * Farning, castal and fishing cmmunities; * Agricultural extensin services; * Lcal cmmunity based rganizatins and nngvernmental rganizatins; * Public and private sectr enterprises; and * Internatinal partners. Lcal technical and fisheries institutins, which participate in HELCOM/IBSFC/ICES activities, are familiar with current living marine resurce management issues and these institutins have been actively engaged in defining Prject activities fr Cmpnent 1. Lcal rural cmmunities, wh have been invlved in the BAAP prject, prvided insights n lessns learned and recmmendatins n Prject mdificatins. Lcal BAAP extensin services are actively engaged in the farm cmmunities, and can prvide insights n Prject implementatin. These extensin services crdinate training prgrams, wrkshps and cmmunity utreach activities and prvide technical assistance fr envirnmental investments. The cmmunities have been receptive t the activities, and are willing participants when resurces are available. The castal cmmunities where the demnstratin activities are prpsed have already participated in lcally based castal zne planning and management studies undertaken in the cntext f the JCP. Representatives f NEFCO, Sweden, United States (NOAA) and WWF have been participated in the design f the Prject and varius preparatin missins. The team has cnsulted with experts frm the Eurpean Unin, Denmark, Finland, Germany, Nrway, Pland, Sweden, United States and Calitin Clean Baltic cncerning varius aspects f the Prject. 6.3 Hw des the prject invlve cnsultatins r cllabratin with NGOs r ther civil sciety rganizatins? Elements f the Prject will be implemented under the crdinatin f the WWF, which has been actively wrking in the recipient cuntries fr a number f years. It has successfully managed similar activities under Bank funded prjects in Estnia, Latvia and Lithuania. These activities have been designed and will be undertaken in cperatin with lcal cmmunities and nngvernmental rganizatins. In additin, the WWF will crdinate a capacity building activity fr these same lcal cunterpart grups as an element f Cmpnent 3. In Cmpnent 2, the Agricultural Advisry Services (AAS) and Farm Interest Organizatins (FIO) will wrk with the farming cmmunities during Prject implementatin and it is anticipated that these activities will cntinue after the Prject is cmpleted. The detailed design and implementatin f the majrity f the castal zne management activities included in Cmpnent 2 will be undertaken by and/r invlve castal cmmunities and lcal NGOs. 6.4 What institutinal arrangements have been prvided t ensure the prject achieves its scial develpment utcmes? The clse assciatin f the Prject activities with HELCOM, IBSFC and ICES prgrams, ensures that lcal stakehlders can make significant cntributins t meet Prject bjectives. Individually, each f these bdies prvides an institutinal framewrk within which the Prject can wrk, and mechanisms will be made available t prmte crdinatin and cperatin amng the institutins and lcal stakehlders. A reprting, mnitring and evaluatin system will be established under the supervisin f HELCOM. On a lcal level, fr Cmpnent I an institutinal netwrk will be established fr lcal stakehlders. Fr Cmpnent 2, the LIUs will wrk directly with the FIO, AAS, and farming cmmunity. In additin, the Prject includes a systematic scial assessment t evaluate scial impacts frm the

30 cmpnent activities and utreach prgram, t prvide ptential mdificatins t the Prject design as needed. Frm the effrts within Cmpnent 3, lcal and reginal capacity will be strengthened and the BSRP Steering Grup will cntinue t perate in its capacity after the Prject is cmpleted. 6.5 Hw will the prject mnitr perfrmance in terms f scial develpment utcmes? HELCOM is respnsible fr verall Prject implementatin and will mnitr Prject perfrmance in terms f scial develpment utcmes. The nging scial assessment prcess will als be used t mnitr perfrmance in terms f scial develpment utcmes and prvide a mechanism fr making adjustments particularly in Phase 3 t maximize these benefits. A mnitring and evaluatin plan will be included in the PIP/PPP. 7. Safeguard Plicies: 7.1 Are any f the fllwing safeguard plicies triggered by the pr ect? licy - TrigT eruedr> _., A.,,' _,,, '; pp, Envirnmental Assessment (OP 4.01, BP 4.01, GP 4.01) Natural Habitats (OP 4.04, BP 4.04, GP 4.04) Frestry (OP 4.36, GP 4.36) Pest Management (OP 4.09) Cultural Prperty (OPN 11.03) Indigenus Peples (OD 4.20) Invluntary Resettlement (OP/BP 4.12) Safety f Dams (OP 4.37, BP 4.37) Prjects in Internatinal Waters (OP 7.50, BP 7.50, GP 7.50) Prjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* * Yes U N ( Yes * N (9 Yes * N T( Yes * N (9 Yes * N (9 Yes * N ()Yes * N (9Yes * N U Yes * N (9 Yes * N 7.2 Describe prvisins made by the prject t ensure cmpliance with applicable safeguard plicies. The Prject requires preparatin f an Envirnmental Management Plan (EMP) cnsistent with the requirements f the OP 4.01, "Envirnmental Assessment." The EMP has been prepared and will be made available prir t appraisal at the ffices f the InfShp, in the cperating cuntries and at the Bank's Resident Missins in the five recipient cuntries. The ptential applicatin f OP 7.50 Intematinal Waters was reviewed with the Legal Cunsel fr safeguard plicies, wh has specific respnsibility fr the plicy, and it was deemed nt t be applicable t the Prject. T ensure cmpliance with the applicable safeguard plicies, an Envirnmental Management Plan has been prepared and implemented t address the irnpacts identified in the envirnment sectin (E.5. abve). The prvisins f the envirnmental management plan will be included in the PIP/PPP

31 F. Sustainability and Risks 1. Sustainability: The Prject will supprt a series f activities designed t prmte the sustainable use f land, castal and pen sea resurces thrugh an ecsystem based apprach t management. These activities supprt what is a lng-term prcess fr restratin f the eclgical balance f the Baltic Sea, which is the gal f the JCP. Since these actins are management fcused, with investments being used t supprt management bjectives, the sustainability f the Prject's interventins will rest upn the willingness and ability f parties at the reginal, natinal and lcal level t adpt new appraches t envirnmental management, which are mre preventive than curative in nature. The Prject has been designed t accelerate the rate at which new management appraches are adpted and put int use in the Baltic Sea regin; while the transitin csts fr these new appraches is significant, ver the medium and lng term these interventins shuld be institutinally, technically and fmancially sustainable by the three cperating intematinal bdies and the participating cuntries. In the case f the accessin cuntries, sme f these csts may be assumed by the varius prgrams f the Eurpean Unin. la. Replicability: 2. Critical Risks (reflecting the failure f critical assumptins fund in the furth clumn f Annex 1): ^ Risk. Risk Rating Risk Mitigatin Meaisure Frm Outputs t Objective Participating cuntries d nt reach N The cperating cuntries are all willing cnsensus in defining the key ecsystem indicatrs participants in the Prject and effrts will be made t fcus n a select number f key ecsystem indicatrs fr land-castal-pen sea issues Cmpletin and utput f initial Baltic M An element f this Prject is t upgrade the Sea carrying capacity mdel fr fishery mnitring and assessment capacity; all effrts yields is nt satisfactry will be made t define the right gal, mnitr the apprpriate data and select the ptimal mdels fr the Baltic Sea Cnsensus is nt reached t initiate and N Similar t the measure nted abve, apply ecsystem health indicatrs t fill cperating cuntries are all willing gaps fr HELCOM/ICES/IBSFC participants in the Prject and effrts will be made t fcus n the apprpriate ecsystem health indicatrs The Multiple Marine Envirnmental N Befre applying the mdel the necessary Disturbances (MMED) mdel is nt parameters and variables will be reviewed and applicable t the Baltic ecsystem a mdel adapted t the Baltic Sea cnditins Survey will nt fill present serius gaps N An element f this Prject is t upgrade the in spatial and tempral assessments f mnitring and assessment capacity; all effrts key fish stcks will be made t define the right gal and mnitr the apprpriate data

32 Supprt frm lcal and natinal N The recipient cuntries supprt HELCOM and gvernments (ME, MA, MF) its mandate discntinues After the technical assistance is finished, M Csts t farmers are very lw and almst the participating farmers will nt entirely ffset by direct immediate benefits. implement farm management plans and Technical assistance will pay specific attentin will nt use investments prperly t sustainability. There are inherent cst-effective measures t maintain sustainability. Within tw years after cmpleting the Prject, the scial assessment prcess will include a check t ensure that investments are sustainable and investigate reasns if they are nt sustainable The activities and utcmes are nt N The PIP will include a participatry prcess understd by the cmmunity and utreach prgram t infrm and cmmunicate with the fishing and farm cmmunity. Technical advisrs are invlved at the lcal levels, as are lcal gvernments, farmers, NGOs etc., t ensure the cmmunity is infrmed and educated abut the Prject Other gvernment prgrams cntradict N The newly established BSSG will include bjectives f this Prject members frm all relevant rganizatins and is explicitly charged with crdinating with ther gvemment prgrams. Mechanisms will be in place, especially thrugh utreach prgrams, t ensure that natinal and lcal gvernments, farmers' chambers, etc. receive public recgnitin fr their cntributins t the Prject HELCOM, IBSFC and ICES d nt N A majr bjective is t strengthen reginal and cntinue t cllabrate after Prject is lcal gvernance and management. The three cmpleted, in implementing reginal bdies will appreciate the added value ecsystem-based management apprach f cperating and integrating the decisin making prcess. In additin, the recipient cuntries requested this Prject and will have the strength and plitical will t ptimize this investment and supprt institutinal cperatin Frm Cmpnents t Outputs Lcal gvernments d nt remain M LlUs rganized under BAAP have been cmmitted and d nt cntinue successfully perating independent f lcal cntributing t the Prject (particularly t gvernment funding. Agreements and the LRU) cnditins fr participating will be established with lcal gvernments at the utset, specifying their cmmitment and cntributin t the Prject. Outreach activities will give public recgnitin t lcal gvernments' cntributins, -26 -

33 and they will reprt widely n direct benefits t the farmers. The Prject will invlve key stakehlders, such as farmers, extensin agents, and NGOs t braden supprt fr initiatives f this type Gvernments, Bank and c-financiers M Substantial effrts will be made in Prject cannt streamline prcedures fr Prject preparatin and the start-up phase t simplify implementatin prcedures included as key aspects in the PIP rather than grant agreement, s that they can be adapted during implementatin C-financing is nt available at N Dnrs have been engaged in the Prject apprpriate time preparatin prcess. If funds are nt available, then a search fr ther ptential c-financiers fr the Prject will be undertaken Prject incentives are nt sufficient t N Regular reviews during implementatin will be mtivate farmers t participate in the cnducted. If prblems ccur, it is pssible t Prject increase the prtin f the Prject dedicated t utreach and training. It is als pssible t increase the prprtin f investment csts cvered by the Prject Overall Risk Rating Risk Rating - H (High Risk), S (Substantial Risk), M (Mdest Risk), N(Negligible r Lw Risk) M The Prject is designed t minimize the technical, ecnmic, financial, scial, envirnmental and institutinal risks. Text in the "Risk" clumn is based n the Critical Assumptins frm the furth clumn f Annex Pssible Cntrversial Aspects: By minimizing the risks, it is anticipated that the Prject will nt have any scial, eclgical, institutinal, r ecnmic cntrversies. The prpsed activities have frmally been given high pririty by HELCOM, the Eurpean Unin, natinal authrities f the recipient cuntries, and by internatinal and lcal NGOs. Sme prpsals related t the management f fishery resurces culd ptentially be cntrversial at the natinal r lcal levels. This will be carefully mnitred by HELCOM, IBSFC and ICES t identify issues when and if they arise and actins will be taken t address these issues. Type f Risk: Rating: S M Types f Risk S (Scial), E (Eclgical), P (pllutin), G (Gvemance), M (Management capacity),

34 (ther) Risk Rating - H (High), S (Sustainable Risk), M (Mdest Risk), and N (Negligible r Lw Risk) G. Main Cnditins 1. Effectiveness Cnditin HELCOM will appint the PIT staff in accrdance with the terms f the PIP/PPP. HELCOM has appinted the cmpnent crdinatrs fr Part A, and a cmpnent crdinatr fr Part B, 2. Other [classify accrding t cvenant types used in the Legal Agreements.] A Prject Inplementatin and Prcurement Plan (PIP/PPP), including the Operatins Manual cvering the Financial Mnitring Reprts system, satisfactry t the Bank, has been adpted prir t Bard presentatin. HELCOM will carry ut the Prject in accrdance with the requirements f the Prject Implementatin and Prcurement Plan. HELCOM will maintain the PIT with staff and resurces under terms f reference satisfactry t the Bank until cmpletin f the Prject. HELCOM will maintain a financial management system, including recrds and accunts, and prepare financial statements, in a frmat, acceptable t the Bank, adequate t reflect the peratins, resurces and expenditures related t the Prject. HELCOM will prepare and fumish t the Bank a Financial Mnitring Reprt, in frn and substance satisfactry t the Bank HELCOM will be respnsible fr standard reprting and supervise the achievements f the cmpnent benchmarks and perfrmance triggers fr the three phases. HELCOM will implement the Envirnmental Management Plan and undertake scial assessment HELCOM will cnvene regular meetings f the BSSG until cmpletin f the Prject, with terms f reference and cmpsitin satisfactry t the Bank. H. Readiness fr Implementatin L] 1. a) The engineering design dcuments fr the first year's activities are cmplete and ready fr the start f prject implementatin. C 1. b) Nt applicable The prcurement dcuments fr the first year's activities are cmplete and ready fr the start f

35 prject implementatin. [1 3. The Prject Implementatin Plan has been appraised and fund t be realistic and f satisfactry quality The fllwing items are lacking and are discussed under lan cnditins (Sectin G): Design dcuments will be prepared as part f Prject implementatin. 1. Cmpliance with Bank Plicies Z 1. This prject cmplies with all applicable Bank plicies. O 2. The fllwing exceptins t Bank plicies are recnmmended fr apprval. The prject cmplies with all ther applicable Bank plicies. W$S~ ge C,,&e h( Inesis Kiskis _. Jane E. Hlt Julian F. Schweitzer; Rger W. Grawe Team Leader Sectr Manager/Directr Cuntry Manager/Directr

36 Annex 1: Prject Design Summary EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Key Perfrmance Data Cllectin Str'tegy- Hierarchy Of Objectives Indicatrs H *, CriticaliAssumptins Sectr-related CAS Gal: Sectr Indicatrs: Sectr/ cuntry reprts: (frm Gal t Bank Missin) Imprve envirnmental The newly develped Sustained cmmitment f management capacity in dealing ecsystem management the recipient cuntry with transbundary issues tls are being tested n gvemments t ecsystem pilt basis n the Eastem based apprach in Cast f the Baltic Sea managing the Baltic marine resurces GEF Operatinal Prgram: Better land and water resurce management practices n an area wide basis Outcme / Impact Indicatrs: Glbal Objective: Outcme I Impact Indicatrs: Prject reprts: (frm Objective t Gal) Create sme precnditins fr Institutinal arrangements Reprts f the wrking BELCOM, IBSFC and applicatin f the ecsystem are in place fr jint grups ICES cperate and apprach in managing the Baltic mnitring, assessment and crdinate their respective Sea Large Marine Ecsystem and evaluatin f living marine wrk in implementing the achieving and maintaining resurces Prject sustainable bilgical prductivity f the Baltic Sea A technical assessment and jint mnitring system develped t deternine abundance dynamics f the key Baltic fish species, as well as the alien species

37 I H r'a,rchy f Objectives, Indicatrs, iiumptins, Output frm each Output Indicatrs: Prject reprts: (frm Outputs t Objective) Cmpnent: Cmpnent 1. Large Marine Ecsystem Management A system fr mnitring, * A netwrk f Crdinatin * Quarterly reprts frm * Participating cuntries assessing and evaluatin f the Centers and lead labratries Cmpnent I reach cnsensus n status f the Baltic Sea marine established Crdinatr cmmn resurces created and ready fr * A series fjint wrkshps/ * Annual reprts f the Envirnmnental Quality applicatin seminars cnducted Baltic Sea Steering Indicatrs * Jint mnitring prgrams Grup t Natinal * The Multiple Marine develped gvernments Eclgical * Data evaluatin and * Bank supervisin Disturbances assessment prtcls agreed missin reprts assessment mdel is upn by all cperating applicable t the parties Baltic Sea ecsystem * Selected Mnitring equipment prcured * Initial near shre and pen sea surveys cnducted * Ships f pprtunity cntracted * Frmats fr internatinal fisheries data bases created * Salmn river restratin actin plans prepared * Salmn river restratin at least in 3 rivers Cmpnent 2. Land and Castal Activities a) Envirnmentally sund * 50 farms/individual farmers * SLU reprts t HELCOM * The training packages are farming techniques resulting in have participated in * AAS reprts adequately marketed and reduced nutrient run ff pilted Envirnmental Management * Bank Supervisin missins farmers are interested t curses ffered by BSRP * Instream water quality participate * farms/individual reprts * The terms and cnditins fr farmers have participated in financing the investments are agri-envirnmental attractive end t farmers and investment scheme cmpetitive n market b) establish a system fr * Surface and grund water * Grundwater quality * Farmers are willing t mnitring and assessment f mnitring statins (including the drinking water participate in the mnitring nn-pint surce pllutin established in demnstratin well) mnitring reprts prgram riginating frm these farms watersheds * Nutrient balance calculatins * Baltic Agri-Envirnmental * Results f running the Assessment Netwrk watershed mdel Established c) cmmunity based castal zne * Semi-natural grasslands in * Prject prgress reprts * Lcal cmmunities are management activities are Vainameri maintained prepared by WWF willing t participate in the prmted * Small business incubat r in castal zne management Mersrags established prgram * One wetland restred in Kursiu lagn/kurshsky Zaliv Area Cmpnent 3. Institutinal Strengthening and Reginal

38 Capacity Building Increased awareness amng * A Baltic Sea Steering Grup * Minutes f the BSSG Gvernments and cperating stakehlders f the value f the established and peratinal meetings institutins delegate their Baltic Sea ecsystem gds and * A series f meetings n * Wrkshp reprts representatives t BSSG services at the reginal, natinal reginal administrative * Terms f reference fr the and lcal level sciecnmic and technical Reginal sciecnmic matters cnducted assessment prepared (t be cnducted in Phase 2 f the BSRP) Cmpnent 4. Prject Management An effective prject management PIT in HELCOM is peratinal * Quarterly Prgress reprts The parties t Helsinki structure created by effectiveness f the Grant * Bank Supervisin missin Cnventin and the HELCOM reprts Secretariat remain cmmitted t the Prject -32 -

39 _ Key Pernance -DataCllectin' Strategy ;Hiezr,aichy flobjectvs...indicatrs, CM4 t I Ms Prject Cmpnents I Inputs: (budget fr each Prject reprts: (frm Cmpnents t Sub-cmpnents: cmpnent) Outputs) Cmpnent 1. Large Marine Ecsystem Management * Strengthening institutinal US$5.62 millin, f which * Wrkshp and seminar A cmprehensive system and Technical Capacity US$2.6 millin are GEF funds reprts fr mnitring, assessing * Crdinated Mnitring * Technical Reprts f the and evaluatin f the status Surveys in the Eastern Baltic jint survey results f the Baltic Sea marine Sea * Technical Reprts f the resurces created and ready * Cperative Lcal and jint assessments fr applicatin Reginal Ecsystem * Field level inspectins, Evaluatins Cmpnent Crdinatr * Demnstratin activities reprts, Quarterly Prject Prgress Reprts, Financial Mnitring Reprts, Bank Supervisin missin Reprts Cmpnent 2. Land and Castal Management Activities * Agricultural Interventins US$4.99 millin, f which 2.5 * AAS reprts * Envirnmentally sund * Mnitring and Assessment millin are GEF funds * Quarterly Prject Prgress farming techniques f Nn-Pint Surce Reprts resulting in reduced Pllutin * Financial Mnitring nutrient run ff * Land Based Castal Zne Reprts intrduced Management * Bank Supervisin reprts * A system fr mnitring * Baltic Sea Reginal and assessment f Envirnmental Assessment Netwrk Cmpnent 3. Institutinal Strengthening and Reginal Capacity Building nn-pint surce pllutin riginating frm farms established * Cmmunity based castal zne management activities take place * Reginal capacity Building US$ 0. S millin f nn-gef * BSSG meeting minutes Basis fr crdinated * Reginal Sciecnmic funds * Quarterly Prject Prgress management f the Baltic Assessment Reprts * Bank Supervisin Missin Sea Large marine Ecsystem established reprts Cmpnent 4. Prject US$ 1.36 millin, f which US$ * Quarterly Prgress Reprts BSRP is achieving its Management 0.4 millin are GEF funds Bank, Financial Mnitring reprts bjective, a prject management structure is * Bank Supervisin missin created which will be able t reprts implement the Prject Phases 2 &3-33 -

40 Annex 2: Detailed Prject Descriptin EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I BALTIC SEA REGIONAL PROJECT - PHASE 1 A. OVERVIEW 1. Glbally Imprtant Regin. The Baltic Sea ecsystem is a semi-enclsed water bdy cnnected with the Nrth Sea by narrw and shallw sunds that limit water exchange. Natural fluctuatins are characteristic f the Baltic Sea ecsystem; the water is largely regulated by the spradic inflws f saline and xygen-rich Nrth Sea water and intermnediate stagnatin perids. Cntaminants and nutrients enter the Baltic Sea via river run-ff, thrugh atmspheric depsitin; and frm human activities at sea. It is estimated that renewal f the water f the Baltic Sea takes abut years. Althugh the Baltic Sea ecsystem prvides gds and services t 80 millin peple inhabiting its shres and drainage basin, its full scial and ecnmic benefits are nt currently being realized. Cntaminants, especially persistent chemicals and ther pllutants, remain in the Baltic Sea fr a lng time. Transbundary threats t sustainable ecnmic develpment include: (i) degradatin f water quality frm pint and nn-pint surces f pllutin; (ii) lcal degradatin f the castal zne frm pr planning and land use practices; (iii) reduced prductivity frm eutrphicatin and hanrful algal blms in castal and marine waters; (iv) unsustainable use f fisheries; and (v) diseases in marine life assciated with pllutin and emerging prblems with intrduced "alien" species. 2. Lng-Term Prgram. Since the late 1 960s, the status f the Baltic Sea marine envirnment remains a majr cncern f the riparian cuntry Gvemnments. The Baltic Sea Jint Cmprehensive Envirmnental Actin Prgram which is crdinated by the Helsinki Cmmissin (HELCOM), als knwn as the JCP, was mandated by Heads f Gvernment meetings held in Rnneby, Sweden (1990); Visby, Sweden (1996); and Riga, Latvia (1998). The bjective f the lng-term Prgram is t restre the eclgical balance f the Baltic Sea thrugh a series f cmplementary preventive and curative actins. It includes actins at ver 130 municipal, industrial and agricultural area "ht spts" that are significant surces f pllutin t the Baltic Sea. The JCP als includes actins fr management f the eclgically imprtant castal lagns and wetlands at the Baltic Sea. 3. First Phase f JCP. The first phase f the prgram addressed primarily municipal and industrial pllutin surces in all riparian cuntries. Wrld Bank played a visible rle in implementing JCP in three Baltic States and Pland by supprting Envirnmental prjects in Haapsalu-Matsalu Bays, Estnia, Daugavpils and Liepaja, Latvia, Klaipeda and Siauliai in Lithuania. These prjects helped the recipient cuntries t imprve their water and wastewater services and t launch activities t reduce the agricultural nn-pint pllutin. Als, intrductin f the integrated castal zne management practices was an integral part f the first phase prjects. In case f Pland, supprt was first prvided thrugh the Envirnmental Management Prject and lending peratins t supprt imprved municipal water and wastewater services. In the Russian Federatin, the Bank has wrked t rehabilitate and upgrade water and sanitatin services in St. Petersburg. 4. Secnd Phase f JCP. The Prgram entered a secnd phase f implementatin in March 1998, fllwing apprval by the Ministers f Envirnment f the regin f the JCP "Recmmendatins fr Updating and Strengthening," which reviewed prgress t date, identified pririties fr future actin and develped lessns learned t guide upcming effrts. Addressing the nn-pint surce pllutin remains high n envirnmental agenda as it cntributes nearly half f nutrient pllutin lad t the Baltic Sea. The Plish Rural Envirnment Prtectin Prject launched a series f the "secnd generatin" prjects which are jintly supprted by the GEF, NEFCO, Wrld Bank in cperatin with EU, bi-lateral dnrs

41 and peratinal NGOs. The Municipal Water and Wastewater prject in the Russian Federatin will supprt investments in several municipalities in the Baltic Sea drainage basin. 5. Implementatin f the JCP. The prpsed Baltic Sea Reginal Prject will supprt implementatin f the Jint Cmprehensive Envirnmental Actin Prgram fr the Baltic Sea (JCP), which was prepared under the crdinatin f the Helsinki Cmmissin by a high-level task frce cmprised f representatives f cperating cuntries, internatinal financial rganizatins and nn-gvernment rganizatins. The JCP, as adpted in 1992, and strengthened and updated in 1998, cnstitutes the "Strategic Actin Plan" fr the Baltic Sea regin. The prpsed Prject will intrduce ecsystem-based assessment and management f the envirmnent and resurces f the Baltic Sea. It will serve as a mechanism fr managing the cmmn resurces f the Baltic Sea ecsystem thrugh strengthened cperatin between three internatinal bdies - HELCOM, IBSFC, and ICES - and the recipient cuntries. The Prject will prvide linkages with nging prgrams in the regin and implement pririty actins that address transbundary envirnmental issues, t achieve sustainable prductin f bilgical resurces, cnservatin f living marine resurces, and cntrl f nn-pint surce pllutin frm agriculture and ther cntaminants threatening the health f the ecsystem. 6. Recipient Cuntries and Cperating Parties. The recipient cuntries include the eastern littral cuntries f the Baltic Sea drainage basin - Estnia, Latvia, Lithuania, Pland and the Russian Federatin. The cperating parties include three specialized institutins - HlELCOM, IB SFC and ICES - cmplemented by the Eurpean Unin (EU), Denmark, Finland, Germany, Nrway, Sweden, United States, NEFCO, Wrld Bank, and Wrld Wide Fund fr Nature (WWF). Preparatin f the Prject has been crdinated with tw GEF supprted activities, the Rural Envirnmental Prtectin Prject in Pland and the Glbal Internatinal Waters Assessment (GIWA). The Prject preparatin prcess has als invlved the participatin f the Secretariat f Baltic Prject Gals and Objectives. Prject design is based n the Large Marine Ecsystem Cncept (LME) and targets cperative management f land, castal and marine transbundary issues. Its bjective is t create sme precnditins fr applicatin f the ecsystem apprach in managing the Baltic Sea Large Marine Ecsystem in rder t achieve and maintain sustainable bilgical prductivity f the Baltic Sea The lng-term gal f the JCP is t supprt the "restratin f the eclgical balance" f the Baltic Sea thrugh a phased prgram f actins. Cnsistent with JCP pririties, measures will als be taken t imprve envirnmental management at the reginal, natinal and lcal level by strengthening assessment and mnitring, and by supprting envirnmentally sund agriculture, castal management, and fishery practices. 8. Apprach. The LME cncept i-cludes five interrelated mdules: prductivity related t carrying capacity, ecsystem health, fish and fisheries, sciecnmic, and management.' Cncept prvides a framewrk fr an ecsystem-based apprach fr sustainable management. T he ecsystem-based management apprach prvides an additinal tl t imprve degraded cnditins in the Baltic Sea. This apprach recgnizes civil sciety, ecnmics, and the land, castal and marine envirnments as an integrated system. Figure I illustrates the Prject design and integrated apprach. The Prject design is cmprehensive, addressing JCP bjectives, threats t the Baltic Sea and transbundary issues thrugh land, castal and marine-based activities (see Annex 12, Transbundary Analysis). 9. Prject Phases. The Baltic Sea Prgram, wuld be implemented ver a 6 year perid in three phases. The current prject cnstitutes Phase 1. Phases 2 and 3 will be implemented as stand alne' prjects and will be submitted fr apprval by GEF Cuncil and the Wrld Bank Bard f Directrs

42 separately. The three Phases are as fllws: * Phase 1. The Current Prject - Intrductin f the Ecsystem Apprach ( ). Establishment f the reginal framewrk fr intrductin f the ecsystem apprach; mbilizatin f partners in management f castal and pen sea marine resurces; and initial activities fr land and castal management. * Phase 2. Demnstratin f the Ecsystem Apprach ( ). Undertaking cperative activities fr assessment and management f castal and pen sea marine resurces; expansin f activities fr land and castal management; and jint activities fr linkage f land, castal and pen sea management prgrams. * Phase 3. Applicatin f the Ecsystem Apprach ( ). Identificatin f next steps by the cperating parties fr expanded applicatin f the ecsystem apprach fr land, castal and pen sea management; cmpletin f field based management and demnstratin activities; and preparatin f evaluatin and assessment studies. 10. Prject Cmpnents. Phase 1. The Prject has fur cmpnents (summarized in Table C f this Annex). The Prject has a ttal budget f US$ millin and will be implemented ver a three-year perid frm 2003 t The cmpnents and cmpnent activities include: * Cmpnent 1 - Large Marine Ecsystem Management Activities (US$5.62 millin) Activity 1 - Strengthening Institutinal and Technical Capacity, Activity 2 - Crdinated Mnitring Surveys in the Eastem Baltic Sea, Activity 3 - Cperative Lcal and Reginal Ecsystem Evaluatins and Assessments, and Activity 4 - Demnstratin Activities. * Cmpnent 2-Land and Castal ManagementActivities (US$4.99 millin) Activity 1 - Agricultural Interventins, Activity 2 - Mnitring and Assessment f Nn-Pint Surce Pllutin, Activity 3 - Land-Based Castal Zne Management, and Activity 4 - Baltic Sea Reginal Envirnmental Assessment Netwrk (RAN). * Cmpnent 3-Institutinal Strengthening and Reginal Capacity Building (US$ 0.15 millin) Activity 1 - Reginal Capacity Building Activity 2 - Reginal Sciecnmic Assessment. * Cmpnent 4- Prject Management (US$1.36 millin) Activity I - Prject Management. 11. Perfrmance Indicatrs. The perfrmance indicatrs are summarized in Annex 1. Perfrmance indicatrs f prgress twards achieving the prgram purpse, and perfrmance triggers t mve frm

43 ne phase t the next will be tracked thrugh a mnitring and evaluatin system. This system is detailed in the Prject Implementatin Plan and Prject Prcurement Plan (PIP/PPP). B. PROJECT MANAGEMENT Prject Management and Administratin 12. Cperating Internatinal Bdies. Respnsibility fr Prject management and implementatin will rest with HELCOM in crdinatin with IBSFC and ICES. Thugh each institutin has a distinct peratinal mandate, their statutes call fr cperatin and crdinatin with ther bdies. The primary rles f these three bdies are described briefly belw. * Helsinki Cmmissin (HELCOM). HELCOM, lcated in Helsinki, is the gverning bdy f the Helsinki Cnventin (1974, 1992), which has as its mandate t prtect the Baltic Sea marine envirnment. The Cmnmissin meets annually, with ministerial level representatin. Decisins taken by the Helsinki Cmmissin, which are reached unanimusly, are regarded as recmmendatins t the Gvernments cncerned. The implementatin f the JCP is crdinated by the HELCOM Prgram Implementatin Task Frce (PITF), which is cmprised f representatives f the EU, cuntries in the drainage basin, internatinal financial institutins, and nngvernmental rganizatins (NGOs). * Internatinal Baltic Sea Fishery Cmmissin (IBSFC). IBSFC, based in Warsaw, was established pursuant t Article V f the Cnventin n Fishing and Cnservatin f the Living Resurces in the Baltic Sea and the Belts (Gdansk Cnventin, 1973). IBSFC's primary respnsibilities are t crdinate management f the living resurces in the Cnventin area by cllecting, aggregating, analyzing and disseminating statistical data. It als recmmends regulatry measures and prmtes enfrcement schemes. Each year lbsfc establishes the "Ttal Allwable Catches (TACs)" fr cmmercial stcks in the Baltic and prvides the Cntracting Parties with recmmendatins t be implemented in their respective fishery znes during the next calendar year. * Internatinal Cuncilfr Explratin f the Sea (ICES). ICES, based in Cpenhagen, currently perates under the terms f its 1964 Cnventin. It is the ldest intergvernmental rganizatin in the wrld cncerned with marine and fisheries science. Since its establishment in Cpenhagen in 1902, ICES has been a leading scientific frum fr the exchange f infrmatin and ideas n the sea and its living resurces, and fr the prmtin and crdinatin f marine research by scientists within its member cuntries. Since the 1970s, a majr area f ICES wrk as an intergvernmental marine science rganizatin is t maintain an internatinal science prgram and t prvide infrmatin and advice cntracting parties and internatinal cmmissins (including the Eurpean Cmmissin, HELCOM, and IBSFC) fr the prtectin f the marine envirnment and fr fisheries cnservatin. 13. Each institutin has expanded its mandate t incrprate ecsystem cnsideratins in its wrk. The Prject's bjective f ecsystem-based management f Baltic Sea resurces prvides an pprtunity fr the three rganizatins t cperatively apply ecsystem-based management and assessment methdlgies fr the Baltic Sea. 14. Prject Management. The institutinal arrangements are based n a decentralized apprach that cmbines reginal and natinal level crdinatin with lcal level implementatin. Primary respnsibility fr Prject management will rest with HELCOM, which will serve as the executing agency

44 fr the Prject and will undertake this wrk in full crdinatin with IBSFC and ICES. Fr this purpse a Prject Implementatin Team (PIT) will be established in HELCOM headquarters in Helsinki, Finland. The PIT will be staffed by tw HELCOM Prfessinal Secretaries and the Administrative Officer f HELCOM. This staff will be assisted by a Financial Assistant and a Prcurement Cnsultant that will supprt prcurement and disbursement actins as well as by a Prject Assistant in c-peratin with the Cmpnent Crdinatrs (C IC and C2C). The Executive Secretary f HELCOM will supervise the wrk f PIT. The BSRP Cre Grup, which has supprted preparatin f the Prject, will be replaced by the Baltic Sea Steering Grup (BSSG) that will prvide brad-based supprt fr the implementatin prcess. The BSSG will cnsist f members frm HELCOM, IBSFC and ICES; senir level representatives f the Baltic riparian cuntries and NOAA. The BSSG will be jintly chaired by the Executive Secretary f HELCOM and Secretary General f ICES. It will nt cmpete with any f the existing HELCOM r ICES Reginal Wrking Grups, but cperate t facilitate reginal capacity building fr a crdinated ecsystem-based management apprach fr the Baltic Sea ecsystem. Figure 2 illustrates the Prject rganizatin and management structure. The PIP/PPP prvides TORs and details f the institutinal and Prject management arrangements. Table 2. Prject Administrative Structure Bilateral Dnr GE NFC Bankl l i l ~~~~~~~Wrld PrjerA hiernpeentatin Teamn Crnpnent I Financial Cnmpnent 2 Crdinatr Officer, Crdinatr and Assistant Prcurment Crdinatr Specialist Prject Assistant PIT F,stniia Latvia Lthuania_ Pland l l Russia l Cl: Crdinatin C IC: Crdinatin Cl: Crchnatin C: Crdinatin C l: Crdinabin Center Center Center Center Center C2: LIU C2: LIU C2: LIU C2: LIU 15. Cmpnent Management. The fllwing arrangements will be used fr management f the cmpnents included under the Prject: * Cmpnent 1 -Large Marine Ecsystem Management Activities. Cmpnent 1 will be implemented under the supervisin f ICES, wrking clsely with IBSFC and HELCOM. Cmpnent I Crdinatr (CIC), placed in ICES, will be respnsible fr verall management f Cmpnent 1 and will supervise the implementatin f Prject-supprted activities. The Assistant Crdinatr fr Cmpnent 1 (C lac) will supprt the wrk f the C IC; he r she will perate at the lcal level and be respnsible fr day-t-day Prject management and implementatin. The C lac will wrk directly with the Lcal Prject Managers (LPM) lcated at the Crdinatin Centers. The Crdinatin Centers and Lead Labratries will crdinate and supervise implementatin f cmpnent activities in terms f ecsystem health, prductivity and fisheries. The LPMs will be

45 cntracted frm established institutes in each recipient cuntry that engage in ICES activities. They will be respnsible fr day-t-day implementatin in their respective cuntries. The PIP/PPP prvides TORs fr the CIC and CIAC. 0 Cmpnent 2 - Land and Castal Management Activities. Cmpnent 2 will be implemented under the supervisin f HELCOM, Swedish University f Agricultural Sciences (SLU) and WWF. Agricultural Activities. The SLU will manage agricultural activities under this cmpnent n behalf f HELCOM. The Cmpnent 2 Crdinatr (C2C), lcated in SLU, will be respnsible fr verall management f Cmpnent 2 and will wrk with existing field structures established under the Swedish supprted BAAP prject and the Bank and GEF supprted Rural Envirnmental Prtectin Prject in Pland. Lcal Implementatin Units (LIUs) will perate in each cuntry, and will be respnsible fr day-t-day Prject management and implementatin. The LIUs will advise reginal grups and rganizatins, and will wrk clsely with lcal cunterparts and farmers. The LIUs will be staffed with a unit manager, accuntant, technical specialists, and agricultural advisrs. The PIP/PPP prvides TORs fr the C2C and the LIUs. Castal Zne Management Activities. The castal zne management activities under Cmpnent 2, in cperatin with Cmpnent 1, will be managed by the WWF, which will prvide a crdinatr t wrk with the Area Task Teams that were established in the demnstratin areas during the HELCOM Prject Implementatin Task Frce Wrking Grup n Lagns and Wetlands (PITF MLW) t supprt planning and management studies. The studies will serve as the basis fr implementatin f these activities, which will be crdinated by lcal gvernments, cmmunity-based rganizatins and NGOs. The PIP/PPP will prvide TORs fr the ICZM crdinatr. * Cmpnent 3 - Institutinal Strengthening and Reginal Capacity Building. This cmpnent will be managed by HELCOM in cperatin with IBSFC and ICES. The wrk f the BSSG, which will review and disseminate infrmatin and management tls develped under the Prject, will be an element f this cmpnent. Activities under this cmpnent will be expanded during Phases 2 and 3 f the Prject. * Cmpnent 4 - Prject Management Cmpnent 4 will prvide supprt fr Prject management by HELCOM and the cperating parties. This includes supprt fr the PIT at HELCOM and the varius administrative services required fr Prject reprting, prcurement, disbursement and financial management. HELCOM will retain the services f a qualified cnsultants, with significant experience in Bank prcedures, t assist with prcurement, disbursement and financial management actins. The prcurement cnsultant will undertake preparatin and review f bid dcuments fr civil wrks gds and cnsulting services; facilitate evaluatins; and supprt HELCOM in cntract negtiatins. The Financial Assistant and Prject Assistant will assist HELCOM's Administrative Officer in managing the Special Accunt, executing the payments t cnsultants, cntractrs and suppliers, and will run the BSRP's Financial Mnitring Reprting system. The scial assessment, referred t in Cmpnent 2 (see Activity 3 - Land-Based Castal Zne Management), will be funded ut f Cmpnent 4 prceeds, and will be used t btain guidance n ptimizing lcal cmmunity invlvement and benefits s that lcal cmmunities use natural and ecnmic resurces mre efficiently, imprve their livelihd, and cnserve bidiversity

46 16. Prject Implementatin Plan (PIP) and Prject Prcurement Plan (PPP). The PIP/PPP, prepared by HELCOM, IBSFC, ICES, and cperating cuntries, describes in detail the Prject implementatin and prcurement prcess. The PIP includes a descriptin f the majr activities, terms f reference and technical specificatins, prcurement plan, tgether with the mnitring and evaluatin plan. The PPP identifies the prcurement f gds, wrks and services in accrdance with "Guidelines fr Prcurement under IBRD Lans and IDA Credits". Prject activities nt financed by the GEF will be prcured in accrdance with regulatins f the cncemed Gvernments r c-financing institutins. Prcurement will fllw the Prject prcurement identified in the PIP/PPP and will be linked with the verall implementatin schedule. 17. Key Elements f the PIP/PPP. The PIP/PPP includes the fllwing key elements: * Fr Cmpnent 1, the PIP/PPP: Identifies the strategy fr establishing the technical Crdinatin Centers, Describes methds fr crdinating the mnitring and assessment prcess and upgrading mnitring and assessment capacity, Identifies equipment and gds needed fr mnitring and assessment, Outlines requirements fr demnstratin activities, and Includes TORs fr all technical assistance and services. * Fr Cmpnent 2, the PIP/PPP: Describes requirements fr eligible agricultural interventins and demnstratin activities, Outlines investment supprt needs and farm credit cnditins, Prvides a framewrk fr watershed mnitring and assessment netwrk, Describes the castal zne management activities, and Identifies equipment, gds and deliverables, TORs fr technical assistance and services. * Fr Cmpnent 3, the PIP/PPP: Prvides a framewrk fr institutinal strengthening and reginal capacity building activities, and Includes Terms f Reference fr services, training and deliverables. * Fr Cmpnent 4, the PIP/PPP: Includes TORs fr all levels f Prject management respnsibilities, and scial assessment, and Prvides technical specificatins fr equipment and gds required fr the PIT. * Fr the verall Prject, the PIP: Prvides an verview f prcedures that will be used fr prcurement,

47 Describes the applicable prcedures f the Wrld Bank, Where apprpriate, ntes the applicable prcedures f c-financiers, and Presents a prcurement plan fr the first phase ( ) f the Prject. 18. Changes in the PIP/PPP. The PIP/PPP can be mdified by HELCOM during Prject implementatin, in agreement with the Wrld Bank. In additin, during the life f the Prject, the cmpsitin and respnsibilities f the varius Prject management units may require adjustment. At any time, the PIP/PPP can be revised by HELCOM t reflect these administrative changes in agreement with the Wrld Bank 19. Prject Mnitring and Evaluatin. HELCOM will reprt t the Bank and be respnsible fr ensuring that all GEF funded activities are carried ut in cmpliance with Prject design and cntracts. The Prject will cmply with the required mnitring and evaluatin prcedures as required fr the Implementatin Cmpletin Reprt, which will be cmpleted n later than six mnths after the clsure f the Prject. The PIP/PPP will detail the prcess fr these reviews. By Cmpnent: Prject Cmpnent I - US$5.62 millin C. PROJECT COMPONENT 1: LARGE MARINE ECOSYSTEM MANAGEMENT ACTIVITIES 20. Intrductin. The prevailing castal and pen sea water management issues in the Baltic Sea are ecsystem impacts frm eutrphicatin and ver fishing. Successful management f these issues requires strengthened institutinal and technical crdinatin f infrmatin, resurces and management activities at the reginal and lcal levels. While threats t the system and ther transbundary issues have been identified, current resurce management plicies and practices are nt hlistic and ecsystem-based. As part f their cmmitment t HELCOM, the recipient cuntries, except Lithuania, participate in cllecting data thrugh the HELCOM-Cperative Mnitring in the Baltic Marine Envirnment (COMBINE) netwrk. Hwever, the recipient cuntries need t strengthen their institutinal and technical capacity, and imprve standards fr quality assurance t meet their cmmitments under the Helsinki Cnventin. Current mnitring and assessment practices are nt cmplete in the eastern Baltic Sea and prvide inadequate infrmatin fr cmprehensive ecsystem management f Baltic Sea resurces. 21. An Ecsystem-Based Apprach. T address these issues and meet natinal bligatins under the Helsinki Cnventin, Cmpnent I was designed within an LME cntext with an ecsystem-based apprach t mnitr, assess, and manage the Baltic Sea resurces. The cmpnent's primary bjective is t intrduce the principles and demnstrate the applicatin f the LME cncept t Baltic Sea castal and pen sea resurces. Cmpnent 1 activities are interdependent and will be used jintly t vercme shrt-term sectr-by-sectr attempts t manage resurces and envirnments. This apprach will increase the emphasis placed n the multiple interactins between resurce use, human interventins, and envirnmental variability. The cmpnent will intrduce jintly planned and implemented multi-natinal mnitring surveys that facilitate lcal cperatin and crdinatin and use f innvative methdlgies fr assessing the changing state f the ecsystem. It will supprt implementatin f actins that cnsider whle ecsystem effects and ptimize scial and ecnmic benefits fr the Baltic Sea cmmunity f stakehlders. 22. Phase 1 Activities. In crdinatin with the ther Prject cmpnents, Cmpnent 1, during the curse f the three year prject, will: (i) establish lcal and reginal administrative and rganizatinal

48 mechanisms, thrugh the Crdinatin Centers, fr cperative mnitring and assessment activities, (ii) develp management tls thrugh mdeling and assessment t prvide prpsals fr ecsystem-based management f land, castal znes and pen sea waters, and (iii) supprt cperating cuntries t mve tward cmpliance with internatinal agreements, reginal pririties and natinal plicies, including the Helsinli Cnventin, Baltic 21, and EU envirnmental and water management directives (Russian Federatin excluded). 23. Participating Institutins. The participating institutins in Cmpnent 1 generally include the technical institutes wh have been engaged in the wrk f ICES within the Baltic Sea Regin. They will serve as the natinal Crdinatin Centers and Lead Labratries fr this cmpnent. The participating lcal institutins include: (j) Estnia: Estnian Marine Institute, Tallinn; (ii) Latvia: Latvian Fisheries Research Institute, Riga; (iii) Lithuania: Klaipeda University, Institute f Eclgy, Klaipeda; (iv) Russian Federatin: AtlantNIRO, Kaliningrad; and (v) Pland: Sea Fisheries Institute, Gdynia. Other participating institutins in the regin include: (i) Denmark: Danish Institute fr Fisheries Research, Cpenhagen; (ii) Finland: Finnish Institute fr Fisheries Research, Helsinki; (iii) Germany: Baltic Fisheries Research Institute, Rstck; and (iv) Sweden: Swedish Institute fr Marine Fisheries Research, Lysekil. 24. Pnrmary Areas f Fcus. In general, the Baltic Sea is ne f the mst intensively mnitred; hwever, the cverage, the quality and reliability f data has remained uneven. Over the last decade, the Baltic Cuntries, Pland and Russian Federatin have had significant difficulties in meeting their reprting bligatins t HELCOM, IBSFC and ICES. Als, the labratry equipment has nt been fully intercalibrated between the labratries n the Eastern and Western casts f the Baltic Sea. The data assessment and evaluatin methdlgies have nt been unifrm. This applies bth t mnitring f the state f marine envirnment and t mnitring f agricultural run-ff. The mentined factrs have had a negative impact n quality f scientific advice t decisin makers and, subsequently, n quality f the decisins made. 25. The Prject will supprt activities in the castal near shre envirnment f the Eastern Baltic Sea and in selected adjacent sectins f the pen sea envirnment. In general, the castal near shre activities and mnitring netwrk will crrelate with land-based castal and assciated demnstratin activities supprted under Cmpnent 2, and nted n maps IBRD and IBRD The planned pen sea mnitring will include the current ICES netwrk; this invlves activities in ICES Subdivisins 25, 26, 28, 29S and 32. These areas include the Baltic Prper, the sea east f the island f Bmhlm, and the Gulf f Finland. The ecnmic znes f the recipient cuntries are part f these Subdivisins. 26. Cmpnent 1 - Management. Management f Cmpnent I will be as fllws: * Rle f ICES and C1C. As the crdinatr fr Cmpnent 1, ICES will be respnsible fr implementing, managing and reprting n cmpnent activities t HELCOM and the BSSG. ICES will supervise CIC and CIAC. The CIC tgether with the CIAC will be respnsible fr supervising cmpnent crdinatin and implementatin. The Crdinatr will wrk directly with HELCOM. The C IC will be a nn-vting member f the BSSG. * Rle f the CIAC The CIAC will wrk lcally and assist in day-t-day Prject management and supervise implementatin. The CIAC will serve as the LIU and wrk clsely with ICES, HELCOM and the LPMs at the Crdinatin Centers. In additin t daily respnsibilities, the C IAC will assist the LPMs in develping and preparing standardized analytical and mnitring reprts

49 * Rle f the LPMs and Crdinatin Centers. The LPM will be cntracted frm institutes in each recipient cuntry that engage in ICES activities. Depending upn specializatin, the institutes will becme technical Crdinatin Centers fr ecsystem health, prductivity, sciecnmics, and fisheries infrmatin. In additin, a GIS-Data Crdinatin Center will synthesize the data infrmatin fr assessment and mdeling purpses. The LPM will be respnsible fr day-t-day implementatin at the natinal level. In additin, the LPM will cmpile results frm Prject activities and reprt them t the ClC and ClAC. The ClAC will wrk clsely with the LPM and prcurement cnsultant in preparing bidding dcuments, carrying ut evaluatins, and drafting cntracts. Representatives frm the LPMs will als participate in selected ICES and HELCOM meetings relevant t the Prject. 27. Cmpnent 1 - Activities. Cmpnent I has a primary gal t develp technical and lcal capacity in the eastern Baltic cuntries, and thrugh jint mnitring and assessment effrts and demnstratin activities prvide incentives t imprve the sciecnmic well being f targeted cmmunities. The apprach t this cmpnent is t strengthen lcal institutinal and technical capacities, cmpile and evaluate infrmatin thrugh integrated assessments, and facilitate identificatin and applicatin f prpsed ecsystem-based management tls. Demnstratin activities will illustrate a range f pssible cst-effective measures t imprve management f the castal ecsystem while building capacity f castal cmmunities. The demnstratin activities and the cllectin and evaluatin f ecsystem parameters will prvide building blcks t better understand the Baltic Sea ecsystem prcess and impacts f human activities n the eastern regin f the sea. This prcess will als prvide prpsed strategies t prmte ecnmic incentives and imprve reginal land, castal and pen sea ecsystem management practices. * Activity I - Strengthen Institutinal and Technical Capacity. Activity I will establish the institutinal framewrk fr undertaking cmpnent supprted activities t strengthen institutinal and technical capacity. It will supprt the fllwing activities: Sub-activity 1 (a) Strengthened Institutinal Capacity f Crdinatin Centers. The Crdinatin Centers are fundamental t implementing Cmpnent I activities, and fr linkages with ther cmpnent activities. The Centers, rganized at technical institutes currently invlved in ICES effrts, will crdinate jint effrts and implement cmpnent activities and sub-activities. The Centers will include a Fisheries Crdinatin Center, Prductivity Parameters Crdinatin Center, Envirmnental Health Parameters Crdinatin Center, and a GIS-Data Crdinatin Center. Sub-activity I (b) Cnduct Reginal Training and Wrkshps t Strengthen Technical Capacity. Training and wrkshps will strengthen technical capacity and will crdinate and link the activities under the cmpnent with technical aspects f ther reginal prgrams. Sub-activity 1 (c) Crdinate Castal-Near Shre Activities. This will include planning and crdinatin f castal mnitring surveys in the eastern Baltic Sea t fill the gaps fr fisheries and envirnmental parameters, as mandated by wrk prgrams f HE,LCOM and ICES. This will include cllectin f data n additinal key ecsystem indicatrs including imprtant prductivity parameters (phyt- and zplanktn, phytbenths). Trawlers will be used t extend the surveys t shallwer castal waters where marine research vessels cannt g but whse infrmatin is needed fr a cmprehensive ecsystem-based management fr the regin. Sub-activity 1(d) Crdinate Open Sea Activities. This will include planning and crdinatin f -43 -

50 pen sea mnitring surveys that will calibrate between vessels (fr reginal efficiency and cst-benefits) and use existing research vessels fr multi-natinal jint scientific surveys, particularly fr the eastern Baltic Sea. This activity will expand the gegraphic cverage f pen sea activities in the eastern Baltic Sea t reinfrce the current ICES mnitring netwrk and fill gaps in bth fisheries and envirnmental parameters t include additinal ecsystem indicatrs and prductivity parameters (phyt- and zplanktn, phytbenths), as mandated by ICES and HELCOM. * Activity 2 - Operatnalize Mnitring and Assessment Surveys in the Eastern Baltic Sea. Activity 2 will be planned in Phase I and fully cmmence in Phase 2 f the BSRP prgram, t include prcurement f necessary technical equipment fr castal and pen sea mnitring surveys and executin f the surveys as crdinated and planned during Activity 1. It will include: Sub-activity 2(a) Cnduct Castal Near Shre Mnitring Surveys. Castal fish, prductivity and ecsystem health parameters will be mnitred and data cllected as required by the HELCOM/COMBINE mnitring prgram. Data will be cllected based n ICES standards. Sub-activity 2(b) Cnduct Jint Open Sea Mnitring Surveys. The jint pen sea surveys will parallel effrts in the castal waters, but will include a multi-natinal technical team t cnduct cmbined mnitring f fish, prductivity and ecsystem health parameters frm research vessels. The prpsed pen sea surveys will take place annually, as required and supervised by ICES. The surveys t be supprted by the cmpnent will include Abundance Surveys - BITS (Baltic Internatinal Trawl Survey) fr demersal (bttm) fish, in March-April, and Octber-Nvember, and the Baltic Internatinal Acustic Survey (BIAS) fr pelagic fish. Sub-activity 2(c) Ships f Opprtunity (SOOPs). Data frm ferries and cutters will be btained frm equipment leased n bard and the crew will be trained fr data cllectin. Data will be cllected based n ICES standards. Sub-activity 2(d) Data Cllectin frm Cmmercial Fishing Vessels. Data frm cnmmercial fishing vessels will be btained frm landings and lgbks, and landings statistics frm cmmercial fishing vessels will be cllected in accrdance with accepted technical standards. Data will be cllected based n ICES standards. * Activity 3 - Cperative Lcal and Reginal Ecsystem Evaluatins and Assessments. Activity 3 will cmmence in Phase l; hwever, mst f the activities will be carried ut in Phases 2 and 3. Emphasis will be n crdinating cllectin and use f infrmatin cllected frm Cmpnent I and Cmpnent 2 and n prviding pprtunities t expand beynd the current ICES assessment prcess fr jint crdinated assessments. This activity will enhance lcal assessment capabilities thrugh access t imprved technical resurces and capacity building measures. It will prvide a frum fr reginal crdinatin, cperatin and advice n applicatin f ecsystem-based management tls. O Sub-activity 3(a) Evaluatin and Assessment f Cmpnent I Infrmatin. This activity will evaluate and assess the data cllected in mnitring surveys under Cmpnent 1, Activity 2. The assessments will investigate innvative methdlgies and mdels t ptimize cst-effective strategies. The assessments will be used t frmulate advice fr IBSFC and HELCOM, and prpse ecsystem-based management tls. Sub-activity 3(b) Ecnmic Evaluatin f Cmpnent Activities (in crdinatin with Cmpnent -44 -

51 2). This activity will use innvative methdlgies fr land, castal and pen sea sciecnmic assessments t prmte sustainable ecsystem-based management tls t imprve the ecnmic benefits frm living marine resurces. The crdinated jint assessment effrt will supprt lcal authrities' decisin-making capacity fr integrated castal resurce management. * Activity 4 - Demnstratin Activities. Demnstratin activities will illustrate a range f pssible cst-effective measures t imprve and restre the castal ecsystem while building lcal capacity f castal cmmunities. The demnstratin activities and cllectin and evaluatin f ecsystem parameters will prvide the building blcks fr better understanding the Baltic Sea ecsystem prcess and the impacts f human activities n the eastern regin f the sea. Preparatin fr demnstratin activities will begin during Phase 1 and the activities will cntinue thrugh Phases 2 and 3. O Sub-activity 4(a) Salmn River Restratin. In crdinatin with Cmpnent 2, sites will cincide with prpsed castal zne management activities and recmmendatins in the Salmn Actin Plan (SAP) f the IBSFC. Segments f selected rivers will be restred t prmte natural spawning and lng-term ecnmic sustainability f salmn recruitrnent. Sub-activity 4(b) Multple-Marine Eclgical Disturbances (MMED) Predictive Tls fr Management. Multiple eclgical disturbances are particularly imprtant in castal areas when they affect human health and certain ecnmic sectrs, such as fishery, turism, and recreatin. Existing infrnatin and data will be applied t the HEED (Health, Eclgical and Ecnmnic Dimensins f Glbal Change) mdel, a histrical time series analysis, which will recnstruct critical time-series suitable fr tracking changes in the health f the ecsystem and prvide a cst-effective predictive management tl fr ecsystem management. Sub-activity 4(c) Crdinate Jint Activities ICZM. This activity will supprt and link int the WWF-Castal Zne Management activities fr the in Cmpnent 2, ICZM sub-activities. Sub-activity 4(d) Prmte the Use f Baltic Herring and Sprat fr Human Cnsumptin. This activity will initiate analysis f sciecnmic benefits which are ffered by wider use f Baltic herring and sprat in human cnsumptin. 28. Summary f Expected Outcmes. Cmpnent utcmes will intrduce t HELCOM, IBSFC, ICES and their member cuntries the benefits and cst-effectiveness f a jint crdinated mnitring and assessment prcess fr the eastern Baltic Sea. The BSRP will prvide pprtunities fr the three internatinal bdies and the five recipient cuntries t clse infrmatin gaps, facilitate a better understanding f the need fr a sustained reginal mnitring and assessment prgram in the castal and pen sea waters, and allw fr initial implementatin f imprved management f the living marine resurces f the Baltic Sea. The cmpnent will strengthen the ability f participating parties t cperate and prvide linkages between science-based assessments and ecsystem-wide management practices fr imprving the health and lng term sustainability f the ecsystem and its renewable bilgical resurces, including fish and fisheries. Prject Cmpnent 2 - US$4.99 millin D. PROJECT COMPONENT 2: LAND AND COASTAL MANAGEMENT ACTIVITIES 29. Intrductin. Addressing land-based agricultural inputs t castal and pen sea waters and imprving castal zne management are critical fr management f the Baltic Sea ecsystem

52 The JCP highlights management f agricultural inputs and castal areas f the Baltic as pririty issues. Since 1992, a number f field-based demnstratin activities, thrugh the Swedish supprted BAAP prgram, have been undertaken in recipient cuntries alng the eastem and suthem prtin f the Baltic Sea drainage basin. These activities have been cmplemented by additinal activities at the natinal level, supprted by the EU, Denmark, Finland, Nrway, and the United States. The envirnmental and ecnmic benefits f these activities have prvided a basis fr preparing and implementing prjects that wuld eventually supprt lng-term measures t incrementally reduce nn-pint surce agricultural pllutin t the castal and marine envirnment. This cmpnent is intended t be a basis fr develping future natinal prgrams with envirnmentally respnsible practices. Cmpnent 2 activities will be crdinated with the Bank and GEF supprted Pland Rural Envirnmental Prtectin Prject. 30. The agricultural element f the cmpnent will (i) test administrative and rganizatinal mechanisms (reginal and lcal) and prvide advice and supprt t the farming cmmunity; (ii) assess farmers' interest in and willingness t pay fr imprving their envirnmental management practices; (iii) assist farmers t lwer bth the risk and barriers that currently hinder adptin f new practices; and (iv) prvide supprt fr small-scale envirnmentally respnsible agricultural investments. The castal zne management element f the cmpnent will (i) fcus n the rle that can be played by lcal cmmunities in sustainable management f castal resurces; (ii) link activities in the demnstratin watershed t measures being taken n the cast; (iii) supprt implementatin f previusly prepared management plans; and (iv) assist lcal cmnmunities t vercme barriers t adptin f new planning and management methds in these areas. 31. Cmpnent 2 - Management. Management f Cmpnent 2 will be as fllws: * Rle fhelcomislu and WWF. The Swedish Agricultural University (SLU), as the verall crdinatr fr Cmpnent 2, will be respnsible fr implementing, managing and reprting n cmpnent activities. HELCOM/SLU will cntract the Cmpnent Crdinatr (C2C), based in SLU. The C2C will als wrk clsely with and supervise the lcal LIUs. In additin, WWF will appint a specialist wh will wrk clsely with the C2C and lcal cunterparts and serve as crdinatr fr the castal zne management activities included in the cmpnent. * Rle f the LIU. The LIU is the n-site implementing grup in each recipient cuntry fr agriculture and envirnment activities. Prject activities will integrate the present BAAP implementing structure and ther existing rganizatins, such as natinal and lcal level Agricultural Advisry Services (AAS) and Farm Interest Organizatins (FIO). The LIU will benefit frm shrt-term internatinal and lcal technical expertise as necessary, particularly fr technical assistance and training. LIU staff will cmprise experts with a natinal perspective and agricultural extensin agents wrking in Prject areas. The LIU will wrk clsely with the C2C in preparing bidding dcuments, carrying ut evaluatins, and drafting cntracts. Interested farmers will present expressins f interest thrugh lcal extensin services t the LIU. Representatives frm the LIU will als participate in selected ICES and HELCOM meetings related t the Prject. * Castal Zne Management Activities. The activities will be implemented by representatives f the Area Task Teams established in the demnstratin areas during the HELCOM PITF MLW supprted planning and management studies. These studies will serve as the basis fr implementatin f the activities, which will be crdinated by lcal gvernments, cmmunity-based rganizatins and NGOs. In lcatins where Area Task Teams d nt currently exist, the WWF will wrk with natinal

53 and lcal authrities t facilitate their establishment. 32. Cmpnent 2 - Activities. Cmpnent 2 aims t significantly increase the prevalence f envirnmentally respnsible agricultural practices amng eligible farms and rganizatins in the targeted demnstratin watersheds and t undertake a series f demnstratin castal zne management activities in pririty areas linked with the activities fr agriculture. The field-level activities are based n River Basin Mdules including Agricultural Demnstratin Watersheds and Agr-Envirnmental Task Areas. The Agr-Envirnmental Task Areas are selected based n agricultural prductin intensity and risk t the envirnment. Agricultural prductin in these areas has a majr impact n lcal and/r distant water bdies and ecsystems (see Table A). Cmpnent activities will demnstrate effective mechanisms fr imprving recycling and retentin f nutrients in transbundary waters and strengthening decisin supprt fr water management frm inland agricultural areas t castal areas. The demnstratin activities fr integrated castal zne management in pririty areas are linked with the activities fr reductin f nn-pint surce pllutin frm agriculture (see Table B). 33. Sites fr Field Level Activities. Prpsed demnstratin watersheds have been selected, using criteria frm the BAAP demnstratin priects, in imprtant agricultural areas with substantial effects n castal and marine ecsystems. The demnstratin field level activities are within the pririty watersheds supprted by the lcal gvernments, and listed belw: Table A. Cm nent 2 - Name and Descri tin f the Demnstratin Watersheds Cuntry and Status Catchment Number f Name f Flws int the Baltic name area (km2) farms entering river Sea at: Estnia Kabala BAAP Pamu River Gulf f Parnu established Jandera New - BSRP Selja River Gulf f Finland Matsalu BAAP Ragina River Matsalu Bay established Latvla Mellupite BAAP Venta River Baltic Prper established Berze New -_BSRP Lielupe River Gulf f Riga Skriveri New - BSRP Daugava River Gulf f Riga Lithuania Graisupis BAAP Nemunas River Kursiu Lagn established Bariunai BAAP established Lelupe River Gulf f Riga Large-scale Silute New - BSRP family farm emunas River Kursiu Lagn I plder I Vardas BAAP Nemunas River ursiu Lagn Iestablished II Russian Federatin - Kaliningrad Oblast Pbedinske New BAAP One field I Nemunas River Kursiu Farm yard Large-scale Lagn/Kushsky Zaliv -47 -

54 Table B. Cmpnent 2 - Descriptin f Castal Zne Demnstratin Sites Cuntry/Site Status f Management Plan Related Watershed Area f Baltic Sea Demnstratin Area Estnia Vainameri Management Plan prepared under Matsalu Matsalu Bay Haapsalu and Matsalu Bays Envirnment Prject Kihnu Management Plan t be prepared under Kabala Gulf f Parnu Prject Latvia Engure/ Kemeri Management Plan prepared under Berze ulf f Riga BLCOM PITF MLF Phase IA and IB Lithuania and Russian Federatin Nemunas Management Plan prepared under Silute Kursiu Lagn Delta/ Kursiu Klaipeda Envirnment Prject Lagn Nemunas Delta/ Management Plan prepared under Pbedinske Kursiu Lagn Kursiu Lagn HELCOM PITF MLW Phase IA and IB Russian Federatin and Pland Vistula Management Plan prepared under Elblag Vistula Lagn/ Lagn/ BELCOM PITF MLW (included in Rural Kaliningrad Lagn Kaliningrad Envirnmental Prtectin Lagn Prject) 0 Activity 1 - Agricultural Interventins. This activity will expand upn BAAP supprted investments in envirnmentally respnsible practices and target the farming cmmunity, agricultural advisry rganizatins and lcal authrities, using natinal Cdes f Gd Agricultural Practices as the guiding tl. The Cdes are ne f the majr envirnmental cmmitments undertaken by the cuntries in their accessin t the envirnmentally respnsible agricultural practices (agr-envirnmental) schemes f the EU. This activity seeks t significantly increase envirnmental awareness and use f envirnmentally respnsible practices in agriculture and demnstrate effective mechanisms fr imprving recycling and retentin f nutrients. O Sub-activity 1 (a) Lcal Agri-Envirnmental Capacity Building. Farmers in the watersheds will be invited t participate in educatin and training activities t imprve sustainable farm management. Training activities will prvide farmers with ptential investment supprt thrugh GEF grants, cmbined with credits thrugh cperatin with NEFCO. This activity will prmte agricultural training prgrams, and train farmers in sustainable practices. Critical t this effrt is a cmmunicatin and public relatins utreach prgram. Sub-activity I (b) Demnstrating Cst-Effective Nutrient Recycling and Retentin Technlgies. A select number f n-farm, agr-envirnmental demnstratin practices will be established, including cnstructin and restratin f wetlands fr nutrient retentin, cnstructin f a naturally based purificatin systems, and manure retentin pnds. Sub-activity I (c)agri-envirnmental Credit Schemes (AgECS). Agr-envirnmental practices will be prmted, ptential n-farm envirnmental investments will be identified and farmer eligibility fr grants and/r lans will be assessed, and management plans prepared. Eligible n-farm investments will be permanently installed fr nutrient re-circulatin; such investments include manure pads and slurry strage, equipment fr manure and urine spreading and -48 -

55 technlgy fr seeding and sil preparatin. The GEF grant and/r NEFCO credit will be cmplemented by in-kind cntributins in materials and labr by the farmer r agricultural cmpany. The size f the GEF supprted grant is limited t a maximum f US$30,000 equivalent. The credit line by NEFCO, parallel t the BSRP, will supprt envirnmental investments up t US$200,000 equivalent. With the assistance f the LIU, this effrt will cmbine envirnmental cncerns and business develpment int a farm management plan that will frm the basis fr technical supprt, training and small-scale n-farm investments. The investments in envirnmentally respnsible practices will als assist in upgrading the respnsibilities f the extensin services and authrities n a natinwide scale t meet requirements f the EU Nitrate Directive. * Acdvity 2 - Mnitring and Assessment f Nn-Pint Surce Pllutin. This activity will investigate nutrient lads frm agriculture and aims t fill gaps in natinal mnitring prgrams and assist in meeting the cuntry's cmmitment t EU and Helsinki Cnventin bligatins. The activity is essential fr preparatin fjint ecsystem-based assessments f land-based and marine activities. It will prvide sustainable land and castal management tls t be incrprated in reginal management f the ecsystem. It will establish an in-stream netwrk t mnitr and assess utputs frm agricultural watersheds and assess innvative methdlgies fr nn-pint surce pllutin retentin. Design f the mnitring system will be crdinated with the Rural Envirnmental Prtectin Prject in Pland t ensure cmparability f data sets, quality assurance measures and planned applicatins fr management measures. Effrts will be linked with mnitring and assessment activities in Cmpnent 1. Sub-activity 2(a) Catchment Measurement Prgrams. The catchment measurement prgrams will measure lads f nutrients t surface waters frm representative agricultural areas, and leaching f nutrients t shallw grundwater in representative agricultural areas. The catchment measurement prgram will prvide backgrund data n nutrient lsses frm representative agricultural areas, in rder t supprt natinal authrities in their develpment f sustainable agricultural prductin systems and t meet the data requirement fr reprting t varius reginal and internatinal rganizatins, including the EU, HELCOM and OECD. Sub-activity 2(b) Effects f Specific Demnstratin Activities. Specific demnstratin activities will shw gvernments and farmers the efficiency f varius nutrient reductin measures. Effrts will include mnitring f plt demnstratin activities cncerning crp rtatin systems and ptimal fertilizer use, and mnitring f natural and cnstructed wetlands and ther hydrlgically manipulated systems that retain nutrient runff frm nn-pint surces. Sub-activity 2(c) Agricultural Ht-Spts and Cntaminatin f Drinking Water in Shallw Farm Wells. This sub-activity will assess, at selected sites, the extent and causes f cntaminatin f drinking water in farm wells. This will include mnitring cntaminatin f drinking water in farm wells and cntaminatin f surface and grundwater at lcal "ht spts" t determine the trends in the area. Sub-activity 2(d) Mdeling f Nutrient Lads in the Berze-Lielupe Basin. A cmprehensive series f actins fr training persnnel and upgrading mdeling capacity wuld be supprted under this sub-activity targeted in the Berze-Lielupe demnstratin watershed. These are cnsidered t be an imprtant cntributin t reginal capacity building in management f agricultural pllutin. The actins cmprise training curses, transfer f knwledge and methdlgy, cllectin f data, mdeling, and establishment f a multi-parameter data set t validate and test the mdeling

56 The mdeling apprach will be linked t nging activities at SLU and SMHI in Sweden, and will be carried ut under supervisin frm SLU. * Activity 3 - Land-Based Castal Zne Management. The integrated castal zne management (ICZM) activities will fcus n practical measures t assist lcal cmmunities in imprving their management f castal znes. Activities will include invlvement f lcal cmmunities, NGOs, lcal decisin-makers and businesses. WWF has acted as lead party respnsible fr elabrating ICZM plans fr the six target areas under the activities f the HELCOM Wrking Grup n the Management f Castal Lagns and Wetlands (HELCOM MLW). These management plans are the framewrk fr implementing this activity, and are the basis fr the sub-activities. The existing MLW netwrks are cmpsed f lcal authrities, lcal users f natural resurces (farmers, fishermen, etc.) as well as natinal experts. This activity will be crdinated with Cmpnent 1, t establish administrative structures fr castal zne management in the selected areas. The sub-activities will cntribute t balanced and sustainable develpment f the area by means f crss-sectr integratin. They will include envirnmentally based targeted effrts t build lcal capacity f the fishing cmmunities and supprt small-scale investments. Such effrts encmpass investigating feasible pprtunities fr recreatinal turism, cnstructing fish bypasses n rivers, and restring spawning habitats. A scial assessment prcess will be used t prvide guidance t ptimize lcal cmmunity invlvement and benefits s that lcal cmmunities use natural and ecnmic resurces mre efficiently, imprve their livelihd, and cnserve bidiversity. An utreach prgram will expand these activities t ther castal cmmunities. Sme preliminary activities will cmmence during Phase 1, and cntinue thrugh Phases 2 and 3. Sub-activity 3(a): ICZM Vainameri/Matsalu and Parnu Bay/Kihnu Island (Sites I and 2). In crdinatin with Cmpnent 1 and thrugh lcal capacity building and training, this will build and/r restre three small wastewater treatment systems using eclgical techniques n the island f Kihnu, restre Lake Prastevik-Vrmsi and prmte small-scale turism investments. A demnstratin prject and investments fr maintenance f semi-natural grassland will be initiated. Sub-activity 3(b) ICZMEngure/Kemeri(Lielupe-GulffRiga (Site 3). The activity will establish a lcal small business incubatr in Mersrags, develp and distribute a bi-annual lcal newsletter, and train fifteen lcal guides. In crdinatin with Cmpnent 1, a sciecnmic benefits prgram fr lcal farmers and fishermen will be develped and implemented. Sub activity 3(c) ICZMKursiu Lagn/Nemunas Delta (Site 4). The activity will supprt develpment f recreatinal facilities, wetland restratin and preparatin f meadw management plans, which will review divisin f respnsibilities fr nature management as they pertain t transbundary cncerns. A crss-brder prtected area is being established t ensure prtected status fr flded frest n the Russian side f the brder, fr which educatinal activities will include wrkshps at the lcal and natinal level, using the Lithuanian Visitr Center Facilities. Sub-activity 3(d) ICZM Vistula Lagn/Kaliningrad Lagn (Site 5). This will include measures t help restre the envirnmental balance f the Vistula Lagn/Kaliningrad Lagn and adjacent land areas. Activities will fcus n feasible lw cst effrts t strengthen stakehlder invlvement and ptimize use f resurces t meet the needs f the ppulatin in accrdance with principles f sustainable develpment. T this end, an indicatr-based system fr ICZM evaluatin will be develped. A pre-feasibility study f selected small catchment areas will

57 identify cst-effective measures t ensure clean up f plluted waters discharging t the Vistula Lagn, and a pilt river tributary will be restred. * Activity 4 - Baltic Sea Reginal Agri-Envirnment Assessment Netwrk (RAA). Agr-envirnmental and rural plicies are under develpment in the regin, and this activity will link lcal field-level activities f the BSRP with natinal authrities and decisin-makers. These activities will cmmence during Phase 2, and thrugh a series f wrkshps cmbine field-level activities under the Prject with develpment f agr-envirnment and rural plicies. T increase the exchange f experience between cuntries and individuals and achieve added value, a Reginal Netwrk will cmmunicate prgress and results thrugh an pen and participatry prcess. Reginal Netwrk activities will seek t increase cmmunicatin, thus increasing Prject sustainability. Several initiatives in this directin have been taken in the Baltic Sea regin and this activity will incrementally supprt these initiatives, imprving crdinatin and sustainability n a reginal basis. 34. Summary f Expected Outcmes. The main utcmes f Cmpnent 2 will lie in cuntry institutinal capacity t cntrl and manage nn-pint surce pllutin frm agriculture, imprve castal zne management practices at the lcal level, and reduce gaps in ternns f cmmitments t HELCOM and the EU. The utcmes will als address the farming cmmunity's need t imprve sciecnmic standards and prvide tls that cntribute t farm sustainability. Prject implementatin will achieve sectr-riented utcmes related t management f nn-pint surce pllutin n the farm, natinal and reginal level, and management f the castal zne in the demnstratin areas. At Prject cmpletin, cuntries will have upgraded their mnitring and demnstratin capacity fr catchment lads, adpted mre sustainable agricultural practices and imprved their capacity t manage the castal zne. Prject Cmpnent 3 - USS 0.15 millin E. PROJECT COMPONENT 3: INSTITUTIONAL STRENGTHENING AND REGIONAL CAPACITY BUILDING 35. Intrductin. Imprtant fr the Prject's success is strengthened lcal and reginal decisin-making and management capacity, bth t imprve management and t better understand and amelirate sciecnrnic cnditins in the eastem Baltic. The aim f Cmpnent 3 is t facilitate strengthening f reginal, natinal and lcal institutins thrugh capacity building effrts t enable these institutins t crdinate and apply a cmprehensive ecsystem-based management strategy t the Baltic Sea. 36. Cmpnent 3 - Management. This cmpnent will be managed and implemented by HELCOM in cperatin with IBSFC and ICES. BSSG review and dissemninatin f infrmatin and management tls develped under the Prject will be an element f this cmpnent. Phase 1 will supprt limited activities under this cmpnent which will be significantly expanded during Phases 2 and Cmpnent 3 - Activities. During Phase 1, will supprt the initial wrk under Activity 1 and detailed planning f Activity 2. The scpe f activities under Cmpnent 3 will be expanded during Phases 2 and 3 f the Prject. * Activity I - Reginal Capacity Building. This activity, thrugh institutinal capacity building effrts and participatry meetings, will address reginal administrative, sciecnmic, and technical matters as they pertain t mnanagement f Baltic Sea resurces, and will enable recipient cuntries t cntribute t strengthening lcal and reginal institutins. This will als include a special prgram t supprt training activities fr cmmunity-based grups and lcal NGOs. A reginal public utreach

58 prgram will increase awareness f the Prject's benefits thrugh multi-media infrmatin, including pamphlets, infrmatin guides, and lcal radi and TV bradcasts. This activity will cmmence under the prject (Phase 1) and cntinue thrugh the fllw-up prjects (Phases 2 and 3). O Sub activity I (a) Reginal Crdinatin. This activity will prepare a crdinatin strategy and infrmal netwrk and fcus n facilitating reginal crdinatin and cperatin between HELCOM, IBSFC, and ICES. In additin, effrts will be made t crdinate with natinal fficials frm the recipient cuntries, delegates f the EU and reginal and lcal stakehlders. Sub activity l(b) Baltic Sea Steering Grup. The BSSG will be established and peratinalized t facilitate strengthening f the reginal decisin-making capacity. This activity will supprt crdinatin and cperatin amng HELCOM, IBSFC and ICES and the reginal stakehlders t achieve a mre integrated apprach t ecsystem-based management. Sub-activity I (c) Reginal Public Infrmatin and Outreach. The reginal public infrmatin and utreach prgram, in cperatin with lcally based public awareness and utreach prgrams, will educate and infrm the public, stakehlders, and gvernment fficials n Prject prgress and utcmes. * Activity 2 - Reginal Sciecnmic Assessment. Sub-activity 2(a) Imprved Valuatin f Ecsystem Gds and Services. The assessment prcess will include evaluatin f the sciecnmic implicatins f reduced eutrphicatin n ecsystem resurces. The value f ecsystem gds and services will be determined frm utputs frm the scientific assessment, and varius mdeling effrts. Assessment utcmes and suggestins will be synthesized in a practical and realistic cntext s they can be understd by individual fishermen and farmers. The infrmatin will be used as a tl t infrm and educate the range f stakehlders n ecsystem values. The activity will link with similar sciecnmic and scientific assessments in the regin, t better understand the verall scial and ecnmic value f Baltic Sea resurces. 38. Summary f Expected Outcmes. The anticipated utcme frm this cmpnent is increased awareness amng all stakehlders f the value f the Baltic Sea ecsystem gds and services and the imprtance f apprpriate management tls fr ecsystem-based management at the reginal, natinal and lcal level. Prject Cmpnent 4 - US$1.36 millin F. PROJECT COMPONENT 4: PROJECT MANAGEMENT 39. Intrductin. The bjective f Cmpnent 4 is t successfully implement the BSRP t achieve the stated develpment bjective. Prject management includes administrative, management, and implementatin respnsibilities. Prject management structure and respnsibilities are detailed in the PIP/PPP. 40. Cmpnent 4 - Management. This cmpnent will be managed by HELCOM in cperatin with IBSFC and ICES. 41. Cmpnent 4 - Activities

59 * Activity I - Prject Management. Cmpnent 4 will prvide supprt fr Prject management by HELCOM and the cperating parties respnsible fr implementatin f the varius Cmnpnents and Activities. This includes supprt fr the PIT at HELCOM and the varius administrative and management services required fr Prject reprting, prcurement, disbursement, financial management, and peratinalizing the FMR. HELCOM will retain the services f a qualified cnsultants, with significant experience in Bank prcedures, t assist with prcurement, disbursement and financial management actins, and Prject Assistant. The prcurement cnsultant will undertake preparatin and review f bid dcuments fr wrks, gds and services; facilitate evaluatins; and supprt HELCOM in cntract negtiatins. The disbursement and financial management cnsultant will assist the HELCOM's Administrative Officer in managing the Special Accunt, executing the payments t cnsultants, cntractrs and suppliers, and will run the BSRP's Financial Mnitring Reprting system. 42. Summary f Expected Outcmes. The anticipated utcme frm this cmpnent is the develpment f an effective management structure that will be able t successfully supprt all stages f Prject implementatin. 43. Reprting and Auditing. The Prject will cmply with the "Guidelines fr Financial Reprting and Auditing f Prjects Financed by the Wrld Bank." The Bank tgether with HELCOM has agreed upn reprting requirements fr Financial Mnitring Reprts (FMR). Prject prgress will be reprted thrugh annual, semi-annual and quarterly Prject prgress reprts. An Implementatin Cmpletin Reprt (ICR) will be prepared within six mnths f Prject cmpletin. HELCOM's financial management capacity assessment and an up frnt agreement n accunting and auditing prcedures that are acceptable t the Bank were reached in May These were reviewed nce again during the appraisal missin. This agreement includes a time-bund actin plan t address financial management issues and a reprting system that fully cmplies with the updated financial management requirements. The HELCOM as an entity will be audited by Finnish State Auditr's ffice, based n HELCOM's Headquarter's Agreement with Gvernment f Finland. The Prject and Special Accunt will be audited by cmpetitively selected auditing firm with qualificatins acceptable t Bank and in accrdance with terms f reference acceptable t Bank. The PIP/PPP will detail the relevant Bank plicies and requirements. Table C Cmpnent Activities Sub-activities and Tasks Cmpnent 1 -Large Marine Ecsystem Activities Activity I Strengthening Institutinal and Technical Capacity Sub-activity l(a) Strengthened Institutinal Capacity f Crdinatin Centers and Lead Labratries * Task 1: Fisheries Crdinatin Center, Latvian Fisheries Research Institute Riga, Latvia * Task 2: Prductivity Crdinatin Center, Institute f Aquatic Eclgy, Riga, Latvia * Task 3: Ecsystem Health Parameters Crdinatin Center, Fisheries Research Institute, Gdynia, Pland * Task 4: GIS-Data Crdinatin Center, Lithuania Integrated Castal Zne Management Infrmatin Center, Vilnius, Lithuania * Task 5: Sci-Ecnmic Crdinatin Center, Estnia Marine Institute, Tallinn and Tartu University, Tartu, Estnia Sub-activity I (b) Reginal Training and Wrkshps t Strengthen Technical Capacity * Task 1: Training and Transfer f Knw-Hw fr BSRP-Key Persns and Team Leaders, * Task 2: Seminar Series: Integrated Castal Zne Management -Reginal Effrts in the Baltic Sea * Task 3: Participate in ICES Wrking Grup Activities Sub-activity I (c) Crdinate Castal-Near Shre Activities * Task 1: Cnduct Intrductry wrkshps

60 * Task 2: Prepare f castal mnitnng statins * Task 3: Organize and cnduct technical training and wrkshps * Task 4: Prvide Intematinal Technical Assistance fr Near Shre Activities * Task 5: Crdinate Lcal and Reginal Infrmatin and Institutins Sub-activity l(d) Crdinate Open Sea Activities * Task 1: Crdinate Jint Abundance Surveys * Task 2: Upgrade Landing Statistics Knwledge * Task 3: Prmte Awareness amng Cmmercial Fisherman n Lgbk Data Reprting * Task 4: Crdinate and Integrate Fish and Prductivity Mnitring Assessment * Task 5: Crdinate Observer Prgram fr Sampling Discards and Nn-target By-Catches Activity 2 - Operatinalize Mnitring and Assessment Surveys in the Eastern Baltic Sea Sub-activity 2(a) Cnduct Castal Near-shre Mnitring Surveys * Task 1: Prcure mnitring equipment * Task 2: Cntract cutter and trawl vessels fr the castal mnitring * Task 3: Engage the castal fishermen in mnitring activities * Task 4: Cnduct Integrated Mnitring and Assessment Surveys Sub-actvity 2(b) Cnduct Jint Integrated Open Sea Surveys * Task 1: Prcure necessary mnitring equipment * Task 2: Jint Baltic Internatinal Bttm Trawl Surveys (BITS) * Task 3: Jint Baltic Intematinal Acustic Surveys (BIAS) * Task 4: Prgress frm single species stck assessments t multi-species assessments Sub-activity 2(c) Imprve use f Ships f Opprtunity (SOOP) * Task 1: Extend the Present Spatial and Tempral Sampling f SOOP Vessels * Task 2: Prepare fr Establishment f a Rapid Infrmatin Exchange Netwrk t Prvide Cmprehensive Infrmatin n Planktn and the Envirnment: * Task 3: Develp, Update and Implement Operatinal Activities t Ensure Apprpriate Ecsystem Sampling and Timely Output f Assessment Results * Task 4: Reprt SOOP Results Sub-activity 2(d) Cllect Data Frm Cmmercial Fishing Vessels * Task I Cllect landing infrmatin * Task 2: Imprve cllectin f lgbk data * Task 3: Mnitr ecsystem effects n nn-target species * Task 4: Cllect fish landings stmach data Activity 3 Cperative Lcal and Reginal Evaluatins and Assessments Sub-activity 3(a) Evaluate and Assess Cmpnent I Infrmatin * Task I: Cmpile and prcess data * Task 2: Cnduct integrated assessment * Task 3: Review and apply fish stck assessment mdels * Task 4: Build intematinal fisheries databases * Task 5: Prvide ecsystem-based management recmmendatins and Tls Sub-activity 3(c) Ecnmic Evaluatin f Cmpnent I Activities Activity 4 Demnstratin Activities Sub-activity 4(a) Salmn River Restratin and Species Intrductin * Task 1: Prepare Salmn River restratin inventry * Task 2: Cnduct Hydrlgic and Eclgical Evaluatins f the Three Rivers * Task 3: Prepare Lcal Salmn River Restratin Actin Plan Sub-activity 4(c) Multplei-Marine Eclgical Disturbances (MMED) * Task 1: Organize the Principle Cmpnents f the Baltic MMED System * Task 2: Anrange a First Reginal Wrkshp * Task 3 Arrange a Secnd Reginal Wrkshp Sub-activity 4(d) Jint Castal Zne Management * Task 1: Crdinate and Evaluate Results f the Jint Cl/C2 Castal Zne Management Activities Sub-activity 4(e) Prmte Use f Baltic Herring and Spratfr Human Cnsumptin * Task 1: Fish Technlgy Wrkshp Cmpnent 2 - Land and Castal Management Activities

61 Activity 1 Agricultural Interventins Sub-activity I (a) Lcal Agri-envirnmental capacity building * Task 1: Marketing f the training prgrams and Outreach Activities * Task 2: Evaluate Training and Outreach Prgram Sub-activity l(b) Demnstrating cst-effective nutrient recycling and retentin technlgies * Task 1 :Cnstruct n -Farm Installatins t Demnstrate Envirnment Friendly Agricultural Practices * Task 2: Restre wetlands * Task 3: Cnstruct Naturally Based Purificatin System fr Nutrient Retentin Sub-activity I (c) Agri-Envirnmental Credit Scheme (AgECS) * Task 1: Establish an AAS Credit Facilitatr * Task 2: Cmplete Farm Envirnmental/Management Plans (Farm E/MP) * Task 3: Screening Farmers and Investment Eligibility * Task 4: Apply and Apprve the Grant and Lan * Task 5: Prepare Prject Descriptin * Task 6: Disburse Grant r Lan * Task 7: Quality Assurance f Manure Strage Cnstructins * Task 8: Prcure the Wrks fr Cnstructin f the Manure Strage and Equipment * Task 9: Mnitr the Prgress f Investment Prjects * Task 10: Strategy fr Sharing Experience frm the AgECS * Task 11: Internatinal Technical Assistance fr Cmpletnentary Training Activity 2 Mnitring and Assessment f Nn-Pint Surce Pllutin Sub-actvity 2(a) Catchment Mnitring Prgrams * Task 1: Estnia: Cntaminatin f Private Farm wells * Task 2: Latvia: Cntaririatin f Private Farm wells * Task 3: Lithuania: Cntaminatin f Private Farm wells * Task 4: Mnitring f Pesticide Residues in Water Sub-activity 2(b)Effects f Specific Demnstratin Activities * Task I Latvia: Mnitring the Effects f demnstratin Activities Sub-Activity 2(c) Mnitring fagricultural Ht-Spts and Cntaminatin f Drinking U'ater in Farm Wells * Task 1: Estnia: Cntaminatin f Drinking Water Private Farm wells * Task 2: Latvia: Cntaminatin f Drinking Water Private Farm wells * Task 3: Lithuania: Cntaminatin f Drinking Water Private Farm wells Sub-activity 2(d) Mdeling f Nutrient Lads in Berze Lidupe Basin, the Gulf f Riga and Selected Natinal Watersheds * Task 1: Establish a Mdel Expert Team (MET) * Task 2: Select Watershed-Castal Mdel * Task 3: Apply and Assess Watershed Mdel Activity 3 Land-Based Castal Zne Management Sub-activity 3(a): ICZM Vainameri/Matsalu and Parnu BaylKihnu Island ICZM Management (Sites I and 2) * Task 1: Cnstruct /Restre 3 WWTPs using eclgical techniques at the island f Kihnu * Task 2: Restratin f Lake Prastevik-Vrmsi and small-scale turism investments * Task 3: Mdel Prject and Investments fr maintenance f Semi-Natural Grassland * Task 3: Capacity building and training * Task 4: Linkages with Cmpnent I Sub-activity 3(b) ICZMEngure/ Kemeri ICZMManagement (Site 3) * Task 1: Establishment f lcal small business incubatr in Mersrags and installatin f ffice equipment * Task 2: Linkages with Cmpnent I Sub activity 3(c) Nemunas Delta and Kursiu LagnIKurshsky Zaliv ICZM Management (Site 4) * Task 1: Strengthen Lcal Stakehlders Invlvement * Task 2: Supprt fr recreatinal facilities * Task 3: Wetland restratin / preparatin/meadw management * Task 4: Ensure prtectin status fr flded frest n Russian side * Task 5: Educatin activities, wrkshps at lcal and natinal level using the Visitr Center Facilities

62 * Task 3: Develpment f an indicatr-based system fr ICZM-prcess evaluatin p Task 4: Pilt restratin activities t Task 5: Pre-feasibility study f selected small catchment area Activity 4 Bal)c Sea Agri-Envirnmental Assessment Netwrk * Task :Define CriticalIssuesand Tasksfr thec2-regina AssessmentNetwrk(RAN) * Task 2: Crdinate Assessment and Advice with Cmpnent I and Intesatinal Cperting Bdies * Task 3: Establish a Reginal Databasefr Mnitring and Mdeling Cmpnent 3-4nstitutinal Strengthenpg and Reginal Capacit Building Activity Reginal Capacit BuSlding Sub-activity 1(a) Reginal Crdinatin * Task 1: Facilitate crdinatin between HELCOM, IBSFC and ICES * Task 2: Engage Natinal, Reginal and Intergveramental Representatives * Task 3: Engage Stakehlders * Task 4: Cnduct Launch Wrkshp Sub-activity 2 ealtica (b) cisteering Grup * Task 1: Review and apprval f Baltic Sea Steering Grup By-laws * Task 2: Cnduct meetings as set frth in the Steering Grup Bylaws * Task 3: Execute Respnsibilities as identified in the Steering Grup Bylaws Sub-activity I (c) Reginal Public Infrmatin and Outreach * Task 4: Develp a reginal public utreach prgram strategy * Task 2: Apprve Public Awareness and Outreach Prgram Plan by Baltic Sea Steering Grup C Task 3: Implement the Reginal Public Awareness and Outreach Prgrat Activity 2 Reginal Sciecnmic Assessments Sub-activity 2 (a) Imprved Methdlgies and Management Mechanismsfr Assessing Ecsystem Gds and Services * Task 1: Research Principal Use f Ecsystem Resurces * Task 2:Cnduct First Wrkshp t Asses Level f LME related Activities * Task 3: Cnduct Secnd Wrkshp t Assess Sci-ecnnmic Imprtance f the Ecsystem Resurces * Task 4: Subdit Rec rmendatins t BSSG Cmpnent 4 - PrJect Management Activity 1 Prject Management Sub-activity I (a) Prject Management * Task 1: Manage and Admninister Cmpnent Implementatin * Task 2: Auditing and Reprting Sub-activity 1 (b) Scial Assessment * Task I Scial Assessment I K. Sherman and A. Duda, An ecsystem apprach t glbal assessment and management f castal waters, Marine Eclgy Series Vl. 190: , December

63 Annex 3: Estimated Prject Csts EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I g --x -,,,;, Lcal~,,--,~,, Frig, Ttal Prject cst Bj,Cmpnent US $milli6n US $millin US Large Marine Ecsystem Management Activities Land and Castal Management Activities Institutinal Strengthening and Reginal Capacity Building Prject Management Ttal Baseline Cst Physical Cntingencies Price CnUIngencIes Ttal Prject Csts' Ttal Financing Required F-reign Ttal Prject Cst By Categry.US $millin;,u US $millin Gds Wrks Services Training Operatinal Csts '' -~ sr L, hls - u] ',cal v ls Ttal Prject Csts Ttal Financing Required Identifiable taxes and duties are 0 (USSm) and the ttal prject cst, net f taxes, is (US$ni). TIherefre, the prject cst sharing rati is 45.4% f ttal prject cst net f taxes

64 Annex 4 Incremental Cst Analysis EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Overview 1. The prject develpment bjective is t create sme precnditins fr applicatin f the ecsystem apprach in managing the Baltic Sea Large Marine Ecsystem in rder t increase the bilgical prductivity f the Baltic Sea. The glbal envirnmental bjective f the prject is t facilitate the restratin f ecsystems, imprve castal zne management and reduce agricultural nn-pint surce pllutin thrugh the intrductin f ecsystem-based appraches in selected lcalities fr land, castal and pen sea envirnmental management in five recipient cuntries by integrating sund land and water resurce management tls. The GEF Alternative, in the first three year phase f the verarching actin prgram in the Baltic Sea regin, intends t achieve these bjectives at a ttal cst f USD 5.5 millin abve the Baseline. The prpsed GEF Alternative shuld be viewed as cmplementary t existing envirnmental cnservatin activities f glbal significance in the Baltic Sea regin. Cntext and Brad Develpment Objective 2. The Baltic Sea ecsystem is a semi-enclsed water bdy cnnected with the Nrth Sea by narrw and shallw sunds that limit water exchange. Natural fluctuatins are characteristic f this ecsystem: the water is largely regulated by the spradic inflws f saline and xygen-rich Nrth Sea water and intermediate stagnatin perids. Cntaminants and nutrients enter the Baltic Sea via river run-ff, thrugh atmspheric depsitin; and frm human activities at sea. It is estimated that renewal f the water f the Baltic Sea takes abut years. Althugh the Baltic Sea ecsystem prvides gds and services t 80 millin peple inhabiting its shres and drainage basin, its full scial and ecnmic benefits are nt currently being realized. 3. The prject area encmpasses the Baltic Sea watershed, and castal and marine waters. The land based and castal activities are cncentrated in targeted demnstratin sites in Lithuania, Latvia, Estnia and Russian Federatin (Kaliningrad Oblast and Leningrad Oblast). The land-based demnstratin sites build upn the Baltic Sea Agricultural Run-ff Prgram (BAAP) and target gegraphical areas vulnerable t pllutin frm nitrates; castal sites have been identified n the basis f earlier wrk by WWF; and the marine sites crrespnd t and supplement current HELCOM/ICES mnitring netwrk. 4. Despite previus reginal and natinal level effrts t reduce the pllutin levels and regulate fisheries, the Baltic Sea ecsystem is under serius threat. The majr transbundary threats t Baltic Sea ecsystem can be summarized as fllws: * Degradatin f water quality frm nn-pint surces f pllutin frm agricultural surces; * Degradatin f the castal zne frm pr planning and land use practices; * Reduced prductivity frm eutrphicatin and harmful algal blms in castal and marine waters; * Unsustainable use f fisheries; and * Diseases in marine life assciated with pllutin and emerging prblems with intrduced "alien" species. 5. In respnse t this situatin, the cuntries in the drainage basin initiated a Jint Cmprehensive Envirnmental Actin Prgram fr the Baltic Sea (JCP). The GEF Alternative will address all the threats abve by assisting the recipient cuntries in implementing elements f the JCP in rder t prtect

65 glbally and reginally imprtant envirnmental and bidiversity resurces. 6. Despite the current ecnmic hardships, the Gvernments f the recipient cuntries have remained cmmitted t prtectin f the Baltic Sea ecsystem and imprvement in quality f life fr the cmmunities wh inhabit its shres. The immediate develpment gals f the recipient cuntries are t stimulate ecnmic grwth in rural areas thrugh imnprved agricultural prductivity and t imprve living standards f the rural ppulatin. Other pririties include institutinal strengthening and sub-natinal gvernment capacity building; the EU accessin prcess and mving twards meeting the requirements f EU Envirnmental directives. Imprved management f envirnmental and natural resurces in the pilt prject areas, which will be realized thrugh this prject, will cntribute twards achieving the recipient cuntries' ecnmic develpment and cnservatin gals as identified in their CAS dcuments, and in varius natinal and internatinal envirnmental strategy and actin prgrams. Baseline Scenari 7. The recipient cuntries are undertaking a variety f dmestically funded envirnmental management prgrams and activities in the Baltic Sea regin. These activities include reductin f pllutin discharges frm pint and nn-pint surces, castal zne management, cnservatin f natural habitats f glbal and reginal imprtance; and mre sustainable management f natural resurces. The apprximate cst f dmestic funding fr these activities in the recipient cuntries during the prject perid is expected t be in the range f USD 6.0 millin. 8. A number f relevant envirnmental management and bidiversity cnservatin activities in the recipient cuntries are being financed by varius intematinal develpment agencies and dnrs. Nrdic bilateral grant assistance remains the main surce f external aid t the envirnment sectr in the Baltic Cuntries and Pland. In additin t increased Nrdic assistance t the Western Oblasts f the Russian Federatin, the EU TACIS prgram remains an active player. Activities funded by Sida supprt implementatin f the Baltic Agricultural Run-ff Actin prgram in recipient cuntries. 9. There are a number f nging Wrld Bank funded prjects in the prject regin that prmte envirnmental management and sustainable agricultural practices thrugh investments int prductive infrastructure, capacity building, and prductivity imprvement. The Estnia Agricultural Develpment Prject has prvided USD 10.0 millin fr imprved agricultural management practices and cnservatin f wetland habitats. Latvia Rural Develpment Prject has prvided a ttal f USD 8.6 millin in investments t stimulate ecnmic grwth in depressed rural areas. The Daugavpils Water and Wastewater Management cmpnent f the Latvia Municipal Develpmnent Prject aims t reduce pllutin discharges int the Baltic Sea drainage basin at the cst f USD 12.0 millin. The latter is als the main gal f the Siauliai and Klaipeda Envirnmental Management Prjects in Lithuania. The ttal cst f the water quality imprvement and castal zne management investments f these prjects is USD 54.0 millin. The Pland Rural Envirnmental Prtectin and Rural Develpment Prjects supprt develpment f envirnmentally respnsible agricultural practices and imprve prductivity f farm peratins at the cst f USD 3.3 millin. Finally, the prpsed prject wuld prvide funding fr varius pen sea ecsystem, castal zne management and nn-pint surce pllutin cntrl activities which generate direct dmestic benefits. The surces f funding that cntribute t the Baseline cst include the Eurpean Unin, Denmark, Finland, Sweden, United States, NEFCO and WWF. 10. The full Baseline Scenari is estimated t cst USD 6.6 millin, and cnsists f: (a) large marine ecsystem management activities - USD 3.02 millin; (b) land and castal management activities - USD 2.49 millin; (c) institutinal strengthening and reginal capacity building activities - USD 0.15 millin; and (d) prject management - USD 0.96 millin. It is based n a realistic assessment f available

66 resurces and is cnsistent with the existing institutinal capacity and natinal develpment gals. 11. The ecsystem cnservatin utcme f the Baseline Scenari is expected t be the fllwing: * The recipient cuntries will cntinue t wrk tward meeting their bligatins t the Helsinki Cnventin at the natinal level. While each cuntry has the basic capacity t meet these bligatins, the brader reginal envirnmental gals will be difficult t achieve. * The recipient cuntries wuld cntinue t manage cmmn resurces in a limited capacity, withut standardized prcedures fr cllecting data, mnitring and assessments. Lack f institutinal cperatin at the reginal level wuld limit effective addressing f critical transbundary issues. * Lack f crdinatin amng Baltic Sea cuntries wuld limit the effrts t stp ver fishing, which leads t reduced bidiversity and lss f ecnmically imprtant fish stck and genetic pl. * There wuld be an increasing impact frm agricultural nn-pint surce pllutin as the agriculture sectr has started t shw signs f recvery, cntributing t excessive lads f nutrients and widespread eutrphicatin in castal waters (which leads t cntinuing deteriratin f the pen sea ecsystem). * There wuld be cntinued degradatin f the sensitive castal wetlands and habitats due t pr castal zne planning and management practices at the natinal and lcal level. As a cnsequence f the current curse f actin, regarded as the Baseline Scenari, existing gvernment resurces and internatinal financing effrts will nt ensure adequate prtectin f the Baltic Sea shared pen sea and castal ecsystems and its assciated bidiversity f glbal and reginal significance. Glbal Envirnmental Objective 12. The Prject's glbal envirnmental bjective is t create sme precnditins fr applicatin f the ecsystem apprach in managing the Baltic Sea Large Marine Ecsystem in rder t increase the bilgical prductivity f the Baltic Sea. Prject activities supprt implementatin f the Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram (JCP), develped by the Helsinki Cmmissin (1992, 1998). GEF Alternative 13. The GEF Alternative wuld supplement the Baseline Scenari by establishing a crdinated reginal structure fr ecsystem-based management f living marine resurces, and funding activities at gegraphically targeted sites t address pririty transbundary issues, reduce nn-pint surce pllutin and imprve castal zne management by linking activities undertaken n land, in the castal zne and in the pen sea envirnment in a cmprehensive manner. The GEF Alternative wuld als prvide an pprtunity fr the recipient cuntries t strengthen management and technical capacity necessary fr managing the cmmn resurces f the Baltic Sea ecsystem. Finally, the GEF Alternative wuld accelerate disseminatin f innvative field-tested technlgies and appraches and link them with an infmiatin utreach prgram. The results f the prject culd be replicated, with adjustment fr lcal cnditins, in ther internatinal basins such as the Black Sea and Danube River Basin. The cst f implementing the GEF Alternative ver the 3-year prject perid is estimated t be USD 5.5 millin. The principal cmpnents f the GEF Alternative are: * Intrductin f ecsystem-based assessments and managementfr the Baltic Sea Large Marine Ecsystem castal and pen-sea resurces. This wuld include crdinatin and integratin f the

67 reginal mnitring and assessment capacity, which wuld imprve management and sustain fishery yields and bilgical prductivity f the Baltic Sea regin. In the lng term, this wuld imprve bth the marine ecsystem and the ecnmic benefits and standard f living f the fishing and castal cmmunities. USD 5.62 millin (GEF financing - USD 2.6 millin); * Mre sustainable management f land-based agricultural inputs t castal and pen sea water and imprving castal zne management. Prmting envirnmental awareness related t agriculture amngfarmers and cmmunities. Financial supprt will be prvided fr implementatin f envirnmentally respnsible farm management practices. In the lng term, this wuld imprve the ecnmic welfare and standard f living within the farming cmmunity while reducing nn-pint surce agricultural impacts. USD 4.99 millin (GEF financing - USD 2.5 millin); * Strengthening f lcal and reginal capacity building and institutinal develpment, which is critical fr successful implementatin and replicatin f the abve activities. Reginal capacity building will fcus n reginal administrative, sciecnmic, and technical matters as they pertain t management f Baltic Sea resurces. Supprt will be prvided fr imprved reginal level crdinatin and cperatin between HELCOM, IBSFC, ICES and reginal stakehlders. Training fr cmmunity-based grups and lcal NGOs and reginal public utreach prgram. USD 0.15 rnillin (GEF financing - USD 0.0 millin). * Supprtfr lcal and reginal Prject management. USD 1.36 millin (GEF financing - USD 0.4 millin). Incremental Csts 14. The prject's incremental cst is USD 5.5 millin, the difference between the Baseline Scenari (USD 6.62 millin) and the GEF Alternative (USD millin). Of this, the GEF is requested t fund USD 5.5 millin. The details f the Baseline and the GEF Alternative are presented in the attached Incremental Cst Matrix

68 Incremental Cst Matrix* Cmpnent Cst Categry Cst I Lcal Benefit Glbal Benefit I I USD Cmpnent I Large Marine Ecsystem Management Activities Strengthening Baseline 0.8 Increased technical level f natinal Institutinal and mnitring institutins, resulting in Technical Capacity imprved mnitring and assessment capacity fr Baltic Marine LME. With GEF 1.4 Scientific institutins cnducting Altemative mnitring are using the same equipment and prcedures while mnitring the Baltic Sea, which increases reliability and cmpatibility f data. Incremental 0.6 Operatinalize Baseline 1.6 Increased lcal capacity t Mnitring and assess and evaluate ecsystem Assessment Surveys interactins and cnduct in Eastem Baltic Sea multi-species assessment. With GEF 3.0 Increased use f unified Alternative mdeling techniques prmpts better assessments f the state f the Baltic Sea Large Marine Ecsystem, as well as frecasts f fish resurce develpment Incremental 1.4 Cperative Lcal Baseline 0.6 As a result f better scientific and Reginal advice, integrated and hlistic Evaluatins and apprach intrduced t Assessments reginal decisin making fr. ecsystem-based management. With GEF 1.2 Imprved capacity f the three Alternative internatinal institutins (HELCOM, IBSFC and ICES) t manage critical habitats fr bidiversity enhancement f the LME. Incremental 0.6 Cmpnent 2 Land and Castal Management Activities Agricultural Baseline 1.0 Reduced direct discharges f interventins nutrients t surface- and grundwater in vicinity f participating farms. With GEF 2.1 Further reductin f nutrient Alternatrive nm-ff due t prper applicatin f gd agricultural practices in retaining nutrients thrugh recycling. Pilt demnstratins will prvide tls fr ecnmically and envirnmentally sund management f nn-pint surce pllutin t internatinal transbundary waters. Incremental

69 Mnitring and Baseline 0.4 Imprved lcal capacity t Assessment f implement mnitring Nn-Pint Surce netwrk, and establish nutrient pllutin retentin practices. With GEF 1.1 Increased reginal awareness Altemative f the benefits f envirnmental investments and ability t measure impact f crdinated actin. Incremental 0.7 Land Based Castal Baseline 1.1 Imprved castal zne Zne Management management resulting in better use f resurces and increased incmes and emplyment pprtunities fr castal cmmunities. Cmmunity driven develpment appraches prmted in target castal areas. With GEF 1.8 Increased reginal Altemative understanding f significance f sund castal zne management practices; cmprehensive and cnsistent management practices intrduced in majr nesting and resting areas n the migratry bird Nrth Atlantic Flyway Incremental 0.7 Cmpnent 3 Institutinal Strengthening and Reginal Capacity Building Baseline 0.15 Strengthened lcal and reginal gvemance and ecsystem-based management capacity. Imprved lcal awareness f envirnmental issues and better management practices. With GEF 0.15 Increased intematinal Alternative awareness f the Baltic Sea. Incremental 0 Cmpnent 4 Pr ect Management Baseline 0.96 Imprved lcal prject implementatin capacity With GEF 1.33 Increased capacity f Altemative internatinal rganizatin t manage the reginal Baltic Sea resurces. Better knwledge f scial impacts f envirnmental prjects n castal and rural cmmunities Incremental 0.4 TOTALS Baseline 7.2. 'With GEF Altemative Ttals 5.5 * Surces f nn-gef funding that cntribute t the baseline cst include Recipient, Finland, Nrwiy, Sweden, United States, and NEFCO

70 Annex 5: Financial Summary EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Years Ending 0~$JSiWJ;"EMiENriT[TONtPERIOD f -, -, 4' ' Year.j )Y% la EM.1 T_ 1 Ntf.k..7- I Year 2 I Year 3 I Year 4 I Year 5 I Year 6 I Year7 Ttal Financing Required Prject Csts Investment Csts Recurrent Cts U.U Ttal Prject Csts Ttai Financing U.0 U Financing IBRD/IDA Gvemment Central Prvincial C-financiers User Fees/Beneficiaries Other Ttal Prject Financing gain assumptins: t is assumed that prject wuld becme effective withut delays, and prject activities wuld start mmediately after that. Hwever, given the relatively large number f participating agencies and due t fact hat they have had nly limnited prir experience in implementing the Bank financed prjects, the lisbursements during the first year f the prject are estimated t be at lwer levels than ver the tw emaining years

71 Annex 6: Prcurement and Disbursement Arrangements EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Prcurement A. Prcurement Methds (See Table A) 1. PrcurementArrangements. The Baltic Sea Reginal Prject is a stand alne Glbal Envirnment Facility (GEF) Prject. Prcurement f wrks and gds financed by the GEF Trust Fund will fllw the Wrld Bank's "Guidelines fr Prcurement under IBRD Lans and IDA Credits " dated January 1995, and revised January and August 1996, September 1997 and January Prcurement f services financed by the GEF Trust Fund will fllw the Wrld Bank's "Guidelines fr Selectin and Emplyment f Cnsultants by Wrld Bank Brrwers " dated January 1997 and revised September 1997, January 1999 and May The Wrld Bank's latest editins f standard bidding dcuments and cntracts will be used. All prcurement will be handled centrally by the Prject Implementatin Team (PIT) t be established at HELCOM, which is based in Helsinki, Finland, prir t the effectiveness f the Grant. Prcurement Capacity Assessment f HELCOM was cnducted in June It is recmmended that: a) HELCOM retains the services f a qualified individual prcurement specialist with significant experience in Bank prcedures, t assist with prcurement and disbursement actins. This specialist shuld have a gd knwledge f intematinal prcurement. If necessary, he/she shuld be sent t prcurement training in ILO Turin. b) Prir t effectiveness, a ne-day prcurement training sessin shuld be held fr the staff f the implementatin agencies and the cncemed beneficiary staff. Such training shuld be repeated during the prject launch wrkshp. c) A detailed prcurement manual cntaining the rles and respnsibilities f all the agencies invlved in the prject implementatin shuld be prepared. 2. Civil Wrks. Wrks estimated t cst less than US$300,000 equivalent per cntract will be prcured thrugh NCB.(Fr the purpses f this multi-cuntry prject, NCB is the cmpetitive bidding prcedure advertised in the cuntry where wrks are t be prvided using lcal language and payment in lcal currency. Cntractrs frm ther cuntries are nt restricted frm participatin.) Wrks cntracts estimated t cst less than US$ 50,000 each be subject t the prcedure applicable t minr wrks cntract, based n qutatins btained frm three qualified dmestic cntractrs in respnse t a written invitatin. The invitatin will include a detailed descriptin f the wrk, including basic specificatins, the required cmpletin date, a basic frm f agreement and relevant drawings, where applicable, and cntracts will be awarded t the cntractr wh ffers the lwest price qutatin fr the required wrk, and wh has the experience and resurces t successfully cmplete the cntract. 3. Gds and Equipment. Technical services, equipment and ther gds csting US$100,000 and mre per cntract will be subject t Internatinal Cmpetitive Bidding (ICB) requirements. Fr gds estimated t cst less than US$ 100,000 cntracts will be awarded n the basis f the Banks' Internatinal Shpping (IS) prcedure, where price qutatins will be btained frm at least three qualified suppliers frm at least tw eligible cuntries. Off-the-shelf gds, estimated t cst up t US$50,000 per cntract may be prcured thrugh Natinal Shpping (NS), based n cmparisn f qutatins btained frm at least three dmestic suppliers. 4. Cnsultants' Services. Cnsultants financed under the Prject will be selected in accrdance

72 with Bank cnsultant guidelines thrugh a quality and cst-based selectin (QCBS), and by using the Bank's Standard Request fr Prpsals. Specialized lcal cnsultant services, will be selected n individual basis as per Sectin V f Cnsultant Guidelines. Training under the prject will be implemented accrding t an annual training plan that the PIT will prepare and submit t the Bank fr apprval befre implementatin. Annual auditserevices will be prcured using the least cst selectin methd in accrdance with the prvisins f paragraphs 3.1 and 3.6 f the Cnsultant Guidelines. 5. Cntracting f AgriculturalAdvisry Services (AAS). It is intended t use the services f the AASs fr (i) cnducting the training curses fr farmers participating in the Prject, (ii) assisting them in preparing the business plans, and (iii) supervising the actual field wrk. It is prpsed t cntract the AASs n basis f single surce selectin. Justificatin fr Sle Surcing. The Estnian Agricultural Advisry Service in Janeda, Latvian Agricultural Advisry Service in Ozlnieki, Lithuanian Agricultural Advisry Service in Dtnuva and Institute fr Retraining f Specialists and Agribusiness in Kalinigrad Oblast, Russia, will be cntracted by HELCOM, the recipient f GEF funds. The AASs will prvide the Lcal Implementatin Unit (LI1) services t the Cmpnent 2 f the Baltic Sea Reginal Prject, which will be implemented in the territries f Estnia, Latvia, Lithuania and Russian Federatin. Given the unique rle f the AASs and given the fact that there are n ther neither private nr state-wned agricultural extensin services in the Baltic Cuntries and Kaliningrad blast, selectin f the AASs n sle surce basis is justified. The AASs are the nly agricultural extensin services in the each f fur states, and pssess cuntry-wide (in case f Kaliningrad Oblast - the Oblast wide) netwrk f lcal ffices and have adequate experience in dealing with farmers. The ttal amunt allcated fr single surce selectin is US$ millin. The AASs are public nn-prfit rganizatins which are partly wned by the state and partly by farmer rganizatins. In case f Estnia, the state wnership is exercised mre effectively as the directr f the service is appinted by the Ministry f Agriculture; in case f Latvia and Lithuania, the charters call the AASs the nn-prfit making agencies. The sharehlders (called participants) cnstitute the general meeting which establishes the supervisry bard and appints its chairpersn. The supervisry bard includes, amng thers, five nminees frm Ministry f Agriculture. The executive bard, members f which are elected by the general meeting, is the executive bdy. The members f the bard elect the chairman f the bard. The AASs have the right t engage the services f an auditing institu-.-i r certified auditrs t audit its accunts. The agencies appear t be financially and managerially independent f the gvernment. 6. Incremental Operating Csts. The GEF will finances sme f the incremental perating csts t supprt lcal mnitring and assessment effrts, and the incremental csts f general ffice maintenance and peratin f the, LIUs, Crdinatin Centers, labratries and field statins general perating csts. This includes salaries and perating csts fr the PIT, travel csts, peratins and maintenance csts, cnsumable ffice supplies, telecmmunicatin, and ther csts which wuld nt have been incurred in absence f the Prject. Evidence f actual expenses will be retained by the PIT and will be reviewed by Bank staff randmly during supervisin missins. These expenditures will vary accrding t annual budget that will be prepared by the PIT and submitted t the Bank fr the agreement befre any expenditures are incurred

73 7. Prir Review Threshlds (Table B). The Wrld Bank will cnduct a prir review f the fllwing prcurement dcurnentatin: a) Gds and Equipment: All ICB and NCB cntracts, as well as first IS and NS cntracts will be submitted fr prir review, as well as all cntracts estimated t cst mre than US$ 100,000. b) Wrks: First MW cntract in each HELCOM cuntry will be subject t prir review, and all cntracts estimated t cst mre than US$ 300,000. c) Cnsultants' Services: All cntracts with firms abve US$300,000, all sle surce cntracts, and all cntracts abve US$50,000 with individual cnsultants will be subject t prir review. d) The cntracts that wuld nt be subject t prir review wuld be subject t ex-pst review. Prcessing: All prcurement packages will be prepared by the Prcurement and Finance Specialist at the PIT fllwing the prcurement plan and prcedures agreed with the Bank. The PIT will frward these packages t the Bank fr prir review and 'n bjectin', as required Prcurement methds (Table A) Table A: Prject Csts by Prcurement Arrangements (US$ millin equivalent) Prcuremnt Methd. rexpenditure Categry, GICB fncb K t N.B.F.,,. Ttal Cst 1. Wrks (0.00) (0.00) (0.24) (0.00) (0.24) 2. Gds (0.61) (0.00) (1.11) (0.00) (1.72) 3. Services (0.00) (0.00) (1.67) (0.00) (1.67) 4. Sub-prjects under Part B (4) f the Prject (0.00) (0.24) (0.46) (0.00) (0.70) 5. Training (0.00) (0.00) (0.55) (0.00) (0.55) 6. Incremental Operatinal Csts (0.00) (0.00) (0.62) (0.00) (0.57) Ttal (0.61) (0.24) (4.65) (0.00) (5.50) " Figures in parenthesis are the amunts t be financed by the Bank Grant. All csts include cntingencies. 2 Includes civil wrks and gds t be prcured thrugh natinal shpping, cnsulting services, services f cntracted staff f the prject management ffice, training, technical assistance services, and incremental perating csts related t (i) managing the prject, and (ii) re-lending prject funds t lcal gvernment units

74 Prir review threshlds (Table B) Table B: Threshlds fr Prcurement Methds and Prir Review -Cntract Value, Cntracts Subject t' Threshld, - Prcurement Prir Review Expenditure Categry (US$ thusands) Methd (US$ millins), 1. Wrks <300,000 NCB All NCB Cntracts, <50,000 MW First MW cntract in each HELCOM cuntry Gds ICB All ICB cntracts, Specialized scientific <100,000 IS first IS cntract in each equipment HELCOM cuntry <50,000 NS first NS cntract in each HELCOM cuntry Services QCBS Abve US$100,000 - All cntracts; belw US$100,000 - nly TORs; Specialized agricultural 1ND Abve US$50,000 - All advisry services cntracts; belw any sss US$50,000 - nly TORs; All cntracts 0.8 Ttal value f cntracts subject t prir review: US$2,3 millin Overall Prcurement Risk Assessment Average Frequency f prcurement supervisin missins prpsed: One every 6 mnths (includes special prcurement supervisin fr pst-review/audits) Threshlds generally differ by cuntry and prject. Cnsult OD "Review f Prcurement Dcumentatin" and cntact the Reginal Prcurement Adviser fr guidance

75 Disbursement Allcatin f grant prceeds (Table C) Disbursements: The grant will be disbursed against 100% f eligible freign expenditures, 100% f lcal expenditures (ex-factry cst), 82% f lcal expenditures fr gds and equipment prcured lcally; 82% f lcal expenditures fr wrks; and 100% f eligible expenditures fr cnsultant services, perating csts and fees. Use f Statements f Expenses (SOEs): Disbursement will be made n the basis f Statement f Expenditures (SOEs) fr: (a) expenditures fr gds under cntracts belw US$100,000 equivalent; (b) fr cnsultant services and training under cntracts fr firms belw US$100,000 equivalent; (c) fr cnsultant services and training under cntracts fr individuals belw US$25,000 equivalent; and (d) travel and subsistence expenditures with respect t Cnsultants' services and training activities belw US$10,000 equivalent per persn. The apprpriate dcumentatin will be retained by the PIT and made available fr review by the auditrs and fr examinatin by Bank supervisin missins. Special Accunt: A Special Accunt denminated in Eur will be established by HELCOM in a bank acceptable t the Wrld Bank under terms and cnditins satisfactry t the Bank. The authrized allcatin f the Special Accunt is Eur 750,000 fr the equivalent f 4-5 mnths disbursements. The Special Accunt will be administered and replenished in accrdance with Bank guidelines, details f the disbursement prcedures will be included in the initial Disbursement Letters t be issued by the Wrld Bank. Table C: Allcatin f Grant Prceeds x 'Expenditure Categry Aniunt,inUS$millin, inancing PercentageL Cnsultants services % Gds % f freign expenditures, 100% f lcal expenditures (ex-factry cst) and 82% f lcal expenditures fr ther items prcured lcally Wrks % f freign expenditures, 82% f lcal expenditures Sub-prjects under Part B (4) f the % Prject. Incremental Operating Csts % Training % Ttal Prject Csts 5.50 Ttal 5.50 Financial Management Summary f the Financial management Assessment Summary f the Financial management Assessment HELCOM is an internatinal rganizatin and as such funding fr the peratin f its

76 activities are prvided by cntracting parties, including Finland. The annual budget fr the Cmmissin is just ver the equivalent f US dllars 1.5 millin. Ttal cst fr the prject is estimated at USD12.12 millin f which GEF will finance USD5.50 millin (45 percent); the balance will be prvided in kind by natinal and lcal gvernment farmers and frm c-financing cntributins. The Cmmissin will have respnsibility fr fimds prvided under the GEF and fr the financial reprting f the Prject as a whle. Accunting. The HELCOM has in place a very simple set f accunting prcedures based n the accrual mdel. Fr the Prject fund accunting, the cash methd will be used. The accunting recrds are cmputerized using a lcal sftware by the name f ARTS. Financial Mnitring Reprts, meeting Bank's requirements, will be prduced n cash basis in this sftware package. FMRs will be prduced fr each quarter with annual FMR cllecting infrmatin fr the year including fllwing financial reprts 1. Surces and Uses f Funds Statement 2. Uses f Funds by Prject Activity Statement 3. Special Accunt Statement FMRs will als include physical prgress reprts FMRs will include statement shwing fr the perid and cumulatively fr the prject life cash receipts by surces and expenditures by main expenditure classificatin; beginning and ending cash balances fr the Prject n SA. Actual figures will be shwn in cmparisn with budgeted n breakdwn as shwn in the Table C and variances will be derived and explained in Ntes. There will be n FMR based disbursement. Budgeting. The Prject budgeting will be prepared n an quarterly basis within the framewrk f the annual budgeting. Budgets will be prepared by Cmpnent Crdinatrs as a best estimate f the physical utput fllwed by measurement f the ut put in mney terms. The cnslidatin f the cmpnent budgets will be dne by HELCOM Financial Assistant. As far as HELCOM will crdinate it's wrk with NEFCO and ther participants, budgets will include best estimated data f the ther c-financiers and participants. All expenditures, which are ging t be cntracted will be verified with budgeted figures first. Cmparisn f actual and budgeted amunts will be dne as at the end f each quarter. The FMRs will cntain cmparisn actual and budgeted figures with explanatin f the variances between them. Internal Cntrl. The cre staff at HELCOM cnsist f 14 peple. This is made f seven technical experts and seven supprt staff. The Administrative Officer has verall respnsibility fr the accunting and financial reprting functin. While this is adequate t meet needs f the HELCOM, the additinal respnsibilities impsed by this Prject requires t appint additinal staff particularly fr the accunting and finance functin. The HELCOM has prpsed tw additinal staff: a prject accuntant (Financial Assistant) t wrk with the Administrative Officer and an additinal supprt staff t accmmdate the increased wrk lad brught n by the prject (Prject Assistant). The Prject Assistant will mainly help the Prject Implementatin Team (PIT) members with secretarial functins. The

77 Bank will be asked t give its n-bjectin t the appintment f the Financial Assistant. The remuneratin benefits fr this additinal staff will be prvided fr by the Prject. Due t small number f staff currently invlved in accunting, the segregatin f duties is minimal. Nevertheless, sme features will be implemented. Apprval f dcuments frm the technical side will be dne by Cmpnent Crdinatrs, then the Financial Assistant will screen all received invices and will sign them ff fr subsequent review by Administrative Officer and final apprval by Executive Secretary f HELCOM. Cmparisn with budgeted figure will be dne n a quarterly basis. The Prject Operatins Manual will describe in detail the invice prcessing and accunting prcedures. Audit Arrangements. The bks and recrds f accunts fr the HELCOM are audited annually. Under the Headquarters agreement with the Finnish Gvernment will be perfrmed by Finnish State Auditr's Office, the Supreme Audit Institutin f Finland. Bank will cnsider this Auditr as acceptable fr the certificatin f the HELCOM (entity) financial statements. Audit f the FMR will be carried ut by a cmpetitively selected private audit cmpany acceptable t Bank, under Terms f Reference apprved by Bank. The cntract fr the audit awarded during the first year f prject implementatin and thereafter extended frm year-t-year with the same auditr, subject t satisfactry perfrmance. Fiscal year f the HELCOM and the Prject is frm January 1 t December 3 1. Acceptable audit reprts shuld be submitted t Bank nt later than 6 mnths after the end f the fiscal year. Participatin f c-financiers. Prject will be c-financed by a number f dnr institutins and the Nrdic Envirnment Finance Crpratin, which will participate in implementing Cmpnent 2, namely finance small agr-envirnmental investments. All the c-financing, except that f NEFCO, will be dne in crdinatin with HELCOM, hwever independently and directly by respective dnr institutins. HELCOM will enter int cntractual agreements with Internatinal Cuncil fr Explratin f the Sea (ICES) fr implementatin f Cmpnent 1, and with Swvedish University f Agricultural Sciences (SLU) fr implementatin f Cmpnent 2. ICES will hst the Cmpnent I Crdinatr, while SLU will hst the Cmpnent 2 Crdinatr. In terms f financial management, the Cmpnent Crdinatrs will pre-apprve all invices t be paid by HELCOM frm the GEF Grand fund, thus cnfirming that gds and services had been delivered and were in accrdance with specificatins and/r Terms f Reference. HELCOM and NEFCO will enter int an cntractual agreement, acceptable t Bank, under which NEFCO will handle USD 700,000 equivalent t c-finance the NEFCO lans t farmers under the Cmpnent 2. The maximum amunt f the GEF grant prtin in the ttal financing package is limited t maximum f USD 30,000 equivalent in lcal currency f the respective beneficiary cuntry. HELCOM will pay NEFCO 3% cmmissin fr handling the GEF funds. The initial depsit f GEF funds transferred t NEFCO will nt exceed 15% f the ttal allcated sum.the larger amunt can be depsited nly against the bank guarantee. The GEF

78 funds at NEFCO will be replenished after submissin f SOE, supprted by relevant dcumentatin cnfirming payments t eligible recipients. Risk analysis: The fllwing table sumrnmarizes the estimatin f the financial management risks assciated with the prject: Risk Rating Risk Mitigatin Measures Inherent Risk Cuntry inherent risk L (i) use f existing PIU, (ii) use f Bank accepted auditrs fr the Prject Banking sectr L (i) SA are ging t be pened in Samp plc - a reputable Finnish cimrercial bank Changes in legislatin L i) Changes in legislatin in Finland will have n direct impact n financial management f the Prject (ii) Changes f cuntries legislatins will be bserved (ii) If after the EU expansin the HELCOM is rerganized by the cntracting parties t the Cnventin n the Prtectin f the Baltic Marine Envirnment, the bligatins will be nherited by the successr rganizatin. Lack f c-financing frm the H (i) HELCOM is respnsible fr GEF funds nly (ii) surces ther then GEF Annual audit f the Prject fllwed by review f the audit reprt by the Bank Prjects inherent risk M (i) Annual Prject supervisin, (ii) The Prject des nt ve risky financial management areas Overall Inherent Risk L Cntrl Risk 1. Implementing Entity L he implementing entity is Secretariat f an ntematinal Treaty (Cnventin supervised by an independent Supervisry Bdy - the Heads f Delegatins. 2. Funds Flw L (i)annual audit f the Prject fllwed by review f the audit eprt by the Bank (ii) Annual audit f the Entity fllwed by review f the audit reprt by the Bank (iii) Regular review f SOE withdrawal schedule by the Bank specialists (iv) Regular financial management supervisin 3. Staffing M There is financial management staff in the HELCOM. Additinal accuntant will be hired t supprt Prject needs 4. Accunting Plicies and M HELCOM wants t keep existing frmat f entity Prcedures reprting and accunting plicy. The Prject reprting

79 frmat is develped. HELCOM uses cash basis f accunting bth entity and Prject 5. Intemal Audit N/A There is nt internal audit functin in the HELCOM 6. External Audit L he HELCOM as an Entity will be audited by Finnish State Audit Office. Prject reprting will be audited by _rivate auditr acceptable fr the Bank. 7. Reprting and Mnitring M The Financial Mnitring Reprts, fr the different rjects and the Entity wuld include: Surces and Uses f Funds Statement Statement f the Expenditure Details Physical Output Reprt The Entity reprting includes: Balance Sheet Incme Statement Cash Flw Statement 8. Infrmatin Systems L HELCOM has already implemented infrmatin system t supprt entity reprting. The adjustment f the nfrmatin system t autmatically prduce FMR was als made. Cmparisn with budgets will be made in MS Excel. Overall Cntrl Risk M H - High S - SubstantialM - Mderate L - Negligible r Lw Summarizing the table abve verall residual Prject FM risk culd be estimated as being between mderate and lw. Training. The HELCOM Administrative Officer has undergne the frmal disbursement training prvided by the Wrld Bank Institute. In additin, during the preparatin stage, additinal guidance was prvided n the practical aspects f disbursements. This was a ne n ne sessin t reinfrce the material that was presented at the disbursement training. The Prject Financial Assistant t be recruited will require training in the Bank's disbursement and financial management prcedures and familiarizatin with the Bank's prcurement prcedures. Supervisin Plan. During prject implementatin, the Bank will supervise the prject's financial management arrangements in tw main ways: (i) review the financial part f prject's FMRs as well as the prject's annual audited financial statements and auditr's management letter; and (ii) during the Bank's supervisin missins, review the prject's financial management and disbursement arrangements (including a review f a sample f SOE Withdrawal Schedules tgether with the disbursement specialist and mvements n the Special Accunt) t ensure cmpliance with the Bank's minimum requirements. Bank-accredited Mscw-based Financial Management Specialist will visit the prject at least nce a year. The frequency f visits will be established n ECA Risk Mdel -73 -

80 Annex 7: Prject Prcessing Schedule EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Prject Schedule Planned - Actual Time taken t prepare the prject (mnths) First Bank missin (identificatin) 08/01/ /24/1999 Appraisal missin departure 09/11/ /04/2002 NegtUatins 12/05/ /05/2002 Planned Date f Effectiveness 03/15/2001 Prepared by: HELCOM, IBSFC, and ICES in cperatin with SLU, Jrdfrsk and WWF Preparatin assistance: BSRP Cre Grup Bank staff wh wrked n the prject included: Name Speciality Mhammed Bekhechi WB Legal Advisr Jhn Bryant Cllier WB Operatins Officer Henrik Dissing WWF Denmark Martin Fdr WB Envirnmental Specialist Tatyana Frlva WB Disbursement Specialist Andrina Ambrse-Gardiner WB Financial Management Specislist/Disbursement Officer Katherin Glitzen WB Prductin Crdinatr/Editr Lennart Gladh WWF Sweden Martha Jarsewich-Hlder WB Envirnmental Specialist Andrew Hudsn UNDP-Intematinal Waters Crdinatr Cliffrd Isaak WB Financial Management Specialist Richard Kenchingtn GEF-STAP Reviewer Naushad Khan WB Sr. Prcurement Specialist Inesis Kiskis WB Sr. Envirnmental Specialist/Task Team Leader Stephen F. Lintner WB Senir Technical Advisr Staffan Lund SLU-Swedish Agricultural University Carl Gustaf Lundin WB Peer Reviewer Slveig Nrdstr6m NEFCO Nrval Stan Peabdy WB Scial Scientist Rhan Selvaratnam Prgram Assistant Kristine KSchwebach WB Prject Assistant Alexandre Rukavichnikv WB Prcurement Specialist Mahesh Sharma WB Peer Reviewer Jitendra Srivastava Peer Reviewer Jan Thulin Chairman f the BSRP Cre Grup

81 Vladimir Tsirkunv Nils Vagstad WB Sr. Envirnmental Specialist Jrdfrsk Due t an autmbile accident in Estnia n August 24, 1999 invlving Jan Thhulin, Chainnan f the BSRP Cre Grup and Stephen Lintner, the Wrld Bank Task Team Leader, Prject preparatin was delayed fr ver 6 mnths

82 Annex 8: Dcuments in the Prject File* EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I A Prject Implementatin Plan HELCOM, 3IBSFC and ICES Baltic Sea Reginal Prject. Prject Prcurement Plan. Implementatin and B. Bank Staff Assessments C. Other 1. Key Reginal Dcuments Baltic 21 Secretariat An Agenda 21 fr the Baltic Sea Regin - Baltic 21, Baltic 21 Series N. 1/98. Envirnment fr Eurpe Cnventin n Access t Infrmatin, Public Participatin in Decisin-Making and Access t Justice in Envirnmnental Matters, June, Furth Ministerial Cnference "Envirnment fr Eurpe" in Aarhus, Denmarlc Eurpean Unin Cuncil Directive Cncerning the Prtectin f Waters against Pllutin caused by Nitrates frm Agricultural Surces (91/676/EEC f 12 December 1991). Eurpean Unin Cuncil Regulatin n Agricultural Prductin Methds Cmpatible with the Requirements f the Prtectin f the Envirnment and the Maintenance f the Cuntryside, EEC N 2078/92 f 30 June Gvernment f Gennany/Wrld Bank "Berlin Recmmendatins- Lessns Learned, Challenges and Issues fr the Future." Prceedings f the Internatinal Rund Table n Transbundary Management - Experience f Internatinal River and Lake Cmmissins, Berlin, Germany, September Gvernment f Germany/Wrld Bank "Vilnius Recmmendatins: Transbundary Water Management f the Baltic Sea Regin." Prceedings f the Internatinal Rund Table, Vilnius, Lithuania, June Helsinki Cmrnissin. 1974, updated Cnventin n the Prtectin f the Marine Envirnment f the Baltic Sea Area (Helsinki Cnventin). Helsinki Cmmissin. 1992, updated Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram (JCP), HELCOM, 1992, updated Helsinki Cmmissin Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram: Backgrund Dcument n Recmmendatins fr Strengthening and Updating. Internatinal Baltic Sea Fishery Cnmmissin Cnventin n Fishing and Cnservatin f the Living Resurces in the Baltic Sea and Belts (Gdansk Cnventin). 2. Technical Materials - Cmpnent 1 HELCOM and ICES Large Marine Ecsystem Wrkshp - Participant Prpsals, (Riga - Julyl 1-14, 2000). Sherman, K. and A. Duda "An Ecsystem Apprach t Glbal Assessment and Management f Castal Waters," Marine Eclgy Prgress Series, 190:

83 3. Technical Materials - Cmpnent 2 Lintner, Stephen F "Agriculture and Envirnment in the Baltic Sea Regin: An Agenda fr Actin" Ambi 26:7, Nvember. Natinal Fund fr Envirnmental Prtectin and Water Management (Pland) "Rural Envirnmental Prtectin Prject, Operatinal Handbk." Swedish University f Agricultural Sciences "Baltic Agricultural Run-ff Actin Prgram (BAAP) Cuntry Level Infrmatin Estnia Wrld Bank Estnia - Haapsalu and Matsalu Bays Envirnment Prject. (March 1995). Wrld Bank Estnia - Agriculture Prject. Wrld Bank. (February 6, 1996). Wrld Bank Estnia - Invlving Farmers: Scial Assessment in the Estnia Agriculture Prject. (Octber 1999). Wrld Bank Estnia - Haapsalu and Matsalu Bays Envirnment Prject - Implementatin Cmpletin Reprt (draft). Latvia Wrld Bank Latvia - Liepaja Envirnment Prject. (MOP) (Nvember 8, 1994) (Reprt N. P6402). Wrld Bank Latvia Agriculture Plicy Update. (August 15, 1996) (Reprt N ). Wrld Bank Latvia - Rural Develpment Prject. (June 30,1998) (Reprt N ). Wrld Bank Farmers and Other Agriculture Organizatins in Latvia.(Nvember 1999) (Prject ID ). Wrld Bank Latvia - Liepaja Envirnment Prject - Implementatin Cmpletin Reprt. Lithuania Wrld Bank Lithuania - Klaipeda Envirnment Prject. (Nvember 9, 1994) (Reprt N ). Wrld Bank Lithuania -Private Agriculture Develpment Prject.(March 7, 1996) (Reprt N., 14631). Xie, Jian, "1997. A Gd Practice f Envirnmental Perfrmance Indicatrs Used in Lithuania Siauliai Envirmnent Prject." Pland Wrld Bank Cuntry Prcurement Assessment Reprt. (March 15, 1996.) Wrld Bank Pland-Agriculture Develpmnent Prject - Inplementatin Cmpletin Reprt (Decembet 30, 1996). Wrld Bank Pland - Envirnment Management Prject, Inplementatin Cmpletin Reprt. (May 30, 1997) (Reprt N ). Wrld Bank Pland-Rural Envirnmental Prtectin Prject.(Nvember 4, 1999). (Reprt N ). SWECO COWI Cnsultants. Pre-Feasibility Study f the Vistula River Basin and the Baltic Cast f Pland, Reprts and Appendices. Wrld Bank, Russian Federatin Wrld Bank Russian Federatin - Land Refrm and Farm Restructuring in Russia. (February 1, 1994) (Reprt N. WDP233). Wrld Bank Agricultural Refrm in Russia: A View frm the Farm Level. (June 1, 1996) (Reprt

84 N.WDP327). Ministry f Agriculture and Fd f the Russian Federatin Reprt cncerning implementatin f a Swedish-Russian Envirnment Prject at Tlmachyv Farm, Kaliningrad. *Including electrnic files

85 Annex 9: Statement f Lans and Credits EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE 1 Estnia 01-Mar-2002 Difference between expected and actual Original Amunt in US$ Millins disbursernents Prject ID FY Purpse IBRD IDA Cancel. Undisb. Orig Ffn Revd P TRANSPORT P AGRICULTURE Ttal EUROPE AND CENTRAL ASIA STATEMENT OF IFC's Held and Disbursed Prtfli Estnia Jan In Millins US Dllars IFC Cmmitted IFC Disbursed FY Apprval Cmpany Lan Equity Quasi Partic Lan Equity Quasi Partic 1999 Baltic Htel EVR /99 Eesti Uhispank ElcteqTallinn /99 Hrizn Krenhlm Reval Htel Ttal Prtfli: Apprvals Pending Cmmitment FY Apprval Cmpany Lan Equity Quasi Partic Ttal Pending Cmmitmnent:

86 LATVIA 01-Mar-2002 Original Amunt in USS Millins Ditfferene between expected and actual disbursements Prject ID FY Purpse IBRD IDA GEF Cancel. Undisb Orig Frm Rev'd POSS LIEPAJAS.W MGMT P RIGA DIST HEAT P HEALTH P STATE REVENUESERVIC s P EDUC IMPROIMT P SOLID WASTE MGMT (GEF) P SOLID WASTE MGMT P WELFARE REFORM P MUN SERVICES DEVT S Ttal: EUROPE AND CENTRAL ASIA STATEMENT OF IFC's Held and Disbursed Prtfli Jan In Millins US Dllars Cmmitted IFC Disbursed IFC FY Apprval Cmpany Lan Equity Quasi Partic Lan Equity Quasi Partic 0/95 Lattelekm SIA Vika Wd Ttal Prtfli: Apprvals Pending Cmnitment FY Apprval Cmpany Lan Equity Quasi Partic 2001 Linstw Retail Ttal Pending Cmmitment:

87 LITHUANIA 01-Mar-2002 Original Amunt In US$ Millins bliference between expected and actual disbursements Prject ID FY Purpse IBRD IDA GEF Cancel. Undlsb. Orig Frm Rev'd P VILNUS DISTTRICT HEATING (BB) P SAL P D0 HEALTH P KLAWPEDA PORT P MUNICIPAL DEVr P SOC. POL. COMMSERV P03S KLAIPEDA GEOrHERMAL P KLAIPEDA ENVIRONMENT P POWER REHABILTATION Ttal: EUROPE AND CENTRAL ASIA STATEMENT OF IFC's Held and Disbursed Prtfli Jan In Millins US Dllars IFC Cmmitted IFFC Disbursed FY Apprval Cmpany Lan Equity Quasi Partic Lan Equity Quasi Partic 2000 Drbe Wl Ekranas Margarin /01 Vilniaus Bankas Ttal Prtfli: Apprvals Pending Cnmnitmnent FY Apprval Cmpany Lan Equity Quasi Partic Ttal Pending Crmmitment:

88 POLAND 01-Mar-2002 Original Amunt In US$ Millins Difference between expected and actual disbursements Prject ID FY Purpse IBRD IDA SF GEF Cancel Undisb Orig Frm Reid P KRAKOW ENRGY EFF P RAIL RESTRCT (PKP) P SEAWAY/PORT MOD. (SZCZECIN-SVANOUJSCIE) P c0 RURAL ENV PROT P GEOTHERMeAL & ENV (POODALE) (GEF) P RURAL DEVELOPMENT -PL P RURAL ENV PROT (GEF) P GEOTHERMAL AND ENVIRONMENT (PODHALE) P ROADS II P FLOOD EMERGENCYPL P PORTACCESS&MGMW P BIELSKO-86ALA WATER P POWER TRANSMISSION P COAL TO GAS CONV (GEF) P HEALTH Ttal: 1, as EUROPE AND CENTRAL ASIA STATEMENT OF IFC's Held and Disbursed Prtfli Jan In Millins US Dllars Cmmitted IFC Disbursed IFC FY Apprval Cmpany Lan Equity Quasi Partic Lan Equity Quasi Partic 1996 Baltic Malt CPF ESCO Plska /97 Gaspl Glbal Htels Huta Warszawa /97/98/00 Intercell Nrgips PEF-Pland Parc Plska Peters Sandglass Ttal Prtfli: C Apprvals Pending Cmmitment FY Apprval Cmpany Lan Equity Quasi Partic Ttal Pending Cmmitment:

89 RUSSIAN FEDERATION 01-Mar-2002 Original Amunt In US$ Millins Difference between expected and actual disbursements Prject ID FY Purpse IBRD IDA GEF Cancel. Undisb. Orig Fnm Revd P FISC FED & REG FISC REF P MUN WATER & WW P MOSC URB TRANS P EDUC REFORM P MUN HEATING P N RESTRUCT P SUSTFORESTRYPILOT-RU P REG FISC TA P0i STATE STATS SYST P SOC PROT IMPL P ST PETERSBURGREHAB P BUREAU OF ECON POL P HEALTH REFORM PILOT P EDUC INNOV P05O ELECSECTRREF P COALIAP P CAPMRKTDEV P BIODiVCONSV(GEF) P LEGALREFORM P ODS CONSMP PHASEOUT(GEF) P COMMUNITYSOCINF P BRIDGE REHAB , P ENT HOUSING DIVST T7 P URBAN TRANSPORT P EGY EFF 106.s P EMGOIL SPILL MMGAT1ON P ENVMG.MT P PORTFOLIO DEVT P HOUSING P LAND REF IMPL SUPPORT Pss ENTERPRISE SJPPORT a P FIN INSTS Ttal: 3, , ,

90 EUROPE AND CENTRAL ASIA STATEMENT OF IFC's Held and Disbursed Prtfli Jan In Millins US Dllars Cmmitted IFC Disbursed IFC FY Apprval Cmpany Lan Equity Quasi Partic Lan Equity Quasi Partic 1996/98 Alpha Cement /99 Aniinex Brstekl Brav Campina DCC DLV DepsnaZ.A.O DreV First NIS Fund Framlingtn Fund Ikea MOS Msenerg NBD NMC OMGC Pineer First Prbusiness Bank RTDC /01 Ramstre Russ Tech Fnd Russia Registry SCF Restructured Snic Du Tribank UNEXIM Bank ZAO Straens Ttal Prtfli: Apprvals Pending Cmmitment FY Apprval Cmpany Lan Equity Quasi Partic 2001 Bema Gld DLV Frd Russia Pakens - RI Ruscam Russ Stndard Bnk Snic Du Swedwd Tichvin Vlga-Dnepr Ttal Pending Cmmitment:

91 Annex 10: Cuntry at a Glance EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Estnia Eurpe & Upper- POVERTY and SOCIAL Central middle- Estnia Asia Incme Develpment dlamnd Ppulatin, mid-year (millins) Life expectancy GNI per capita (Atlas methd. US$) 3,530 2,010 4,620 GNI (Alas methd, US$ billins) ,986 Average annual grwth, Ppulatin (%) Labr frce (%) GNI per Grss primary Mst recent estimate (latest year avallable, ) capita enrllment Pverty (% f ppulatin belw natinal pverty line) 9 Urban ppulatin (% f ttal ppulatin) Life expectancy at birth (years) Infant mrtality (per 1,000 live births) Child malnutritin (% f children under 5).... Access t imprved water surce Access t an Imprved water surce (% f ppulatin) Illiteracy (% f ppulatin age 15+) Grss primary enrllment (% fschl-age ppulatin) Estnfe Male Upper-middle-incme grup Female KEY ECONOMIC RATIOS and LONG-TERM TRENDS Ecnmic ratis' GDP (US$ billins) Grss dmestic investment/gdp Exprts f gds and services/gdp Trede Grss dmesuc savings/gdp Grss natinal savings/gdp Cunent accunt balance/gdp Dmestic Investment Interest payments/gdp savings Ttal debt/gdp Ttal debt service/exprts Present value f debtlgdp Present value f debtlexprts Indebtedness (average annual grwth) GDP Estnia GDP per capita Upper-middle-incme grup Exprts f gds and services STRUCTURE f the ECONOMY Grwth f Investment and GOP 1%j (% f GOP) 40 Agriculture Industry Manufacturing Services Private cnsumptin General gvemment cnsumptin GDI O GDP Imprts f gds and services Grwth f exprts and Imprts (%) (average annual grwth) Agriculture Industry Manufacturing Services la Private cnsumptin General gvemment cnsumptin Grss dmestic investment Exprts loimprts Imprts f gds end services Nte: 2000 data are preliminary estmates. The diamnds shw fur key Indicatrm in the cuntry (in bld) cmpared with Its Incme-grup average. It data are missing, the diamnd will be Incmptete. -85-

92 Estnia PRICES and GOVERNMENT FINANCE Inflatin (%) Dmestic prices (% change) s Cnsumer prices Implicit GDP deflatr Gvernment finance 20 (% f GDP, includes current grants) Current revenue g Current budget balance GDP deflatr CPI Overall surplus/deficit TRADE (USS millins) Exprt and Imprt levels (USS mill.) Ttal exprts (fb) s Fd Minerals Manufactures.... 2,239 2,753 3,000 Ttal Imprts (cl).... 3,337 4, Fd Fuel and energy c Capttalgds ,110 0 Exprt price index (1995=100) w4 05 sr Imprt price Index (1995=100) *Exprts *imprts Tenms f trade (1995=100) BALANCE a PAYMENTS (USS milins) Current accunt balance t GDP (%) Exprts f gds and services.. 4,004 4,787 Imprts f gds and services... 4,262 5,035 Resurce balance Net incme Netcurrenttransfers * Current accunt balance Financing Items (net) Changes in net reserves Mem: Reserves Including gld (US$ millins) ,014 Cnversin rate (DEC, lcelluss) l l " EXTERNAL DEBT and RESOURCE FLOWS (USS millins) Cmpsitin f 2000 debt (USS mill.) Ttal debt utstanding and disbursed... 2,478 2,513 IBRD D:105 IDA E:32 Ttal debt service G 853 IBRD IDA Cmpsitin f net resurce flws Official grants 0 1 ' - ->X- Official creditrs I;.r.-. ' Private creditrs \,.. Freign direct Investment Prtfli equity Wrld Bank prgram Cmmitments A -18RD E -Bilateral Disbursements B-IDA D - Other multilateral F -Private Principal repayments C -IMF G -Shrt-tem Net flws Interest payments Net transfers Develpment Ecnmics 1019/

93 Latvia Eurpe & Lwer- POVERTY and SOCIAL Central middle- Latvla Asla Incme Develpment dlamnd' 2000 Ppulatin, mid-year (millins) ,046 Ltfe expectancy GNI per capita (Atlas methd, USS) 2,870 2,010 1,140 GNI (AUas methd, US$ billins) ,327 Average annual grwth, Ppulatin (%) Labr frce (IX) GNI 7 Grss per primary Mst recent eatimate (latest year available, ) capita enrllment Pverty (X f ppulatn belw natinal pverty line) Urban ppulatin (% f ttal ppulatin) Life expectancy at birth (years) Infant mrtality (per 1,000 live births) Child malnutritin (X f children under 5) Access t Imprved water surce Access t an Imprved water surce (% f ppulatin) Illiteracy (% f ppulatin age 15.) Latvia Grss primary enrllment (X f schl-age ppulaetn) Male Female, Lwer-middle-incme grup KEY ECONOMIC RATIOS and LONG-TERM TRENDS Ecnmic rtts GDP (US$ billins) Grss dmestic Investment/GDP Trade Exprts f gds and services/gdp Grss dmestic savings/gdp Grss natinal savings/gdp Current accunt balance/gdp Dmestic Ivte Interest payments/gdp sainvestment Ttal debt/gdp a Ttal debt servicelexprts Present value f debt/gdp Present value f debtuexprts Indebtedness (average annual grwth) GDP Letvia GDP per capita Lwer-mIddle-incme grup Exprts f gds end services STRUCTURE f the ECONOMY Grwth f Investment and GOP I%) (X f GDP) Agriculture Industry Manufacturing e + Services _ Private cnsumptin S s0 General gvemment cnsumptin G -GDP Imprts f gds and services Grwth f exprts and imprts (%) (average annual grwth) Agriculture Industry : Manufacturing Services sa Private cnsumptin a 95 GO 97 9.a 00 General gvemment cnsumptin Grss dmestic Investment Exprts OImprts Imprts f gds and services Nte: 2000 data are preliminary estimates. The diamnds shw fur key Indicatrs In the cuntry (In bld) cmpared withits Incme-grup average. itf data are missing, the diamnd w18 be Incmplete

94 Latvia PRICES and GOVERNMIENT FINANCE Inflatin (I) Dmestic prices (% change) 45 Cnsuimer prices s. Implicit GDP deflatr _ Gvernment finance _ (X f GDP, includes current grants) Current revenue es 97 Os 9g 00 Current budget balance GDP deflatr CPI Overall surplus/defldt TRADE Exprt and Imprt levels (USS mill.) (US$ millns) Ttal exprs (fb).... 1,724 1,869 4 na n.a....a. 3,000 Manufactures.... 1,582 1,711 Ttal imprts (cif).... 2, Fd * J Fuel and energy Capital gds Exprt price index ( ) ts g n Imprt price Index (1997v100) KExprts * Imprts Terms f trade (1997=100) BALANCE f PAYMENTS (USS millins) Current accunt balance t GDP I(%) Exprts f gds and services.... 2,914 3,271 0 Imprts f gds and services.... 3,605 3,876-2 Resurce balance I Net Incme Net current transters Current accunt balance * Financing Items (nt) Changes in net reserves Mem: Reserves including gld (USS millins).... 1,124 1,092 Cnversin rate (DEC, lceltus$) ' EXTERNAL DEBT and RESOURCE FLOWS (USS millins) Cmpsiln f 2000 debt (USS mill.) Ttal debt utstanding and disbursed.... 2,657 2,930 IBRD A. 242 IDA C' Ttal debt service E 55 IBRD IDA G Cmpsitin f net resurce flws Official grants Official creditrs Private creditrs _1282 Freign direct nvestrrnent Prtfli equity * Wrld Bank prgram Cmmitments A-IBRD E -Bilateral Disbursements IDA D- Other multilateral F -Private Principal repayments C-IMF G -Shrt-term Net flws Interest payments Nettransfers Develpment Ecnmics - 9/

95 Lithuania Eurpe a Lwer- POVERTY and SOCIAL Central middle- Lithuania Asia incme Develpment dlamnd' 2000 Ppulatin, mid-year (millins) ,046 Life expectancy GNI per capita (At/as methd, US$) 2,750 2,010 1,140 GNI (Atlas methd, USS billins) ,327 Average annual grwth, Ppulatin (%) Labr frce (%) GNI / Grss per >wiprlmary Mst recent estimate (lateat year avallable, ) capita er enrllment Pverty (% fppulalin belw natinal pverty line) 16 Urban ppulatin (% f ttal ppulatin) Llfe expectancy at birth (years) Infant mrtality (per 1,000 live births) Child malnutritin (% f children under 5). 11 Access t imprved water surce Access t an imprved water surce (% tppulatin) Illiteracy (% fppulatin age 15+) Grss primary enrllment (%f schl-age ppulatin) Lithuania Male Lwer-middle-lncme grup Female KEY ECONOMIC RATIOS and LONG-TERM TRENDS GDP (USS billins) Ecnmic ratts- Grss dmestic Investment/GDP Exprts f gds and services/gdp Trade Grss dmestic savings/gdp Grss natinal savings/gdp Current accunt balance/gdp Dmsi Interest payments/gdp Dmestc Investment Ttal debt/gdp savings Ttal debt service/exprts Present value f debt/gdp Present value f debtvexprts Indebtedness (average annual grwth) GDP Lmthuania GDP per capita Lwer-middle-Incme grup Exprts f gds and services STRUCTURE f the ECONOMY (X f GDP) Grwth f Investment and GOP (%) 14 Agriculture Industry Manufacturing Services Private cnsumptin By General gvemment cnsumptin Imprts f gds and services GDI - GP Grwth f sprts and imprs (%) (aiverage annual grwth) Agriculture t Indusbty Manufacturing Services Private cnsumptin s 9s a0 General gvemment cnsumptin Grss dmestic Investment Exprts m mprts Imprts f gds and servlces, Nte: 2000 data are preliminary estimates. The diamnds shw fur key Indicatrs In the cuntry (In bld) cmpared with Its Incme-grup average. If data are missing, the diamnd will be incmplete

96 Lithuania PRICES and GOVERNMENT FINANCE Inflatin Dmestic pricesintl(% (% change) 80- Cnsumer prices Implicit GDP deflatr Gvernment finance 20 (X f GDP, includes current grants) Current revenue sa g 0 Current budget balance GDP deflatr - 0 CPI Overall surplus/deficit TRADE (USS milhlns) Exprt and Imprt levels (USS mill.) Ttal exprts (fb).... 3,004 3,809,s Mineral prducts Agricultural and fd Manufactures. 1,391 1,621 Ttal imprts (cif) 4, Fd NM Fuel and energy ,185 Capital gds Exprt price index (1995=100) g 99 Imprt price index (1995=100) UExprts a*imprts Termsftrade(f995=100) BALANCE f PAYMENTS (USS millins) 198e Current accunt balance t GDP (%) Exprts f gds and services.... 4,238 5,109 0 Imprts f gds and services.... 5,338 5,833 Resurce balance... -1, Net incme Net current transfers I " I l l ' Current accunt balance... -1, Financing Items (net) Changes in net reserves s Mem: Reserves including gld (USS millins).... 1,242 1,359 Cnversin rate (DEC, lcalluss) EXTERNAL DEBT and RESOURCE FLOWS (US$ millins) Cmpsitin f 2000 debt (US$ mill.) Ttal debt utstanding and disbursed.. 4,528 4,857 IBRD A 253 IDA 0 0C 192 Ttal debt service , IBRD IDA... 0 E E.251 Cmpsitin f net resurce flws Official grants Official creditrs ,r Private creditrs Freign direct Investment,,, Prtfli equity F: Wrld Bank prgram Cmmitments A - IBRD E - Blarteral Disbursements B - IDA 0 -Other multilateral F -Private Principal repayments C- IMF G -Shrt-term Net flws Interest payments Net transfers Develpment Ecnmics 9/6/

97 Pland Eurpe & Upper- POVERTY and SOCIAL Central middle- Pland Asia Incme Develpment dlamnd' 2000 Ppulatin, mid-year (millins) Life expectancy GNI per capita (Atas methd, USS) ,010 4,620 GNI (Alias me0hd, USS billins) ,986 Average annual grwth Ppulatin (X) Labrfrce (%) GNI per Grss primary Mat recent estimate (latest year available, ) capita,, enrllment Pverty (5 fppula0n belw natinal pverty line) Urban ppulatin (% f ttal ppulatin) Life expectancy at birth (years) Infant mrtality (per 1,000 live births) Child malnutridn (X fchffdren under 5).. Accss t Imprved water surce Access t an Imprved water surce (56 fppulatin) Illiteracy (5 fppulatin age 15+) Grss primary enrllment (5 fschl-age ppulabn) 96 t Pland Male Upper-middle-incme grup Female KEY ECONOMIC RATIOS and LONG-TERM TRENDS Ecnmic ratis' GDP (USS billins) Grss dmestic lnvestmentugdp Trade Exprts f gds and serviceslgdp Grss dmestic savingalgdp Grss natinal savingslgdp Current accunt balance/gdp' Dmestic Investment Interest payments/gdp savings Ttal debtugdp svn Ttal debt servicelexprts Present value f debgdp Present value f debuexprts Indebtedness (average annual gnawth) GDP Pland GDP per capita Upper-middle4incme grup Exprts f gds and services STRUCTURE f the ECONOMY Grwth f Investment and GOP 1%) (% f GDP) 3 Agriculture Industry Manufacturing Services Private cnsumptin Ds De 97 g g 00 Generalgvemmentcnsumptin GDI 0 GDP Imprts f gds and services (average annual grwth) Grwth f exprts and Imprts (%) (aewrage annual gr7wth) Agriculture Industry Manufacturing......,. Services Private cnsumptin "i7 0; j General gvemment cnsumptin Grss dmestic Investment Exprts -- imprts Imprts f gds and services Nte: 2000 data are preliminary estmates. The dlemnds shw fur key Indicatrs In the cuntry (in bld) cmpared with Its Incme-grup average. If data are missing, the diamnd will be incmplete. 91 -

98 Pland PRICES and GOVERNMENT FINANCE Inflatinr(%) Dmestic prices 4 (% change) 40 Cnsumer prices Implicit GDP deflatr Gvernment fnnance 10 (% f GOP, includes current grants) Current revenue g g9 0 Current budget balance GDP deflatr z b CPI Overall suplus/deficit TRADE Exprt and Imprt levels (USS mill.) (US$ millins) Ttal exprts (fb) 14,322 27, Fd and live animals 2, Machinery and transprt equipment 8,305 10,858 45,000 * Manufactures 12, Ttal Imprts (cif) 9,528 45,911 48,940 _ Fd and live animals 2,534 2,561 is.u Mineral fuels, lubricants and related prducts 3,303 5,307 Capital gds, machinery, and transprt eq. - 17, _.0 10m * N Exprt price Index (1995=100) Oa g Imprt price Index (1995=100) *Exprts *Imprts Terms f trade (1995=100) BALANCE f PAYMENTS (UJS$ millins) Current accunt balance t GDP (%) Exprts f gds and services - 29,657 31,772 6 Imprts f gds and services 45,661 46,624 Resurce balance -16, Net Incme Net current transfers 1,604 1, Current accunt balance' -11, *I P Financing items (net) 11,726 10,621.s Changes In net reserves a Mem: Reserves including gld (USS millins) 25, Cnversin rate (DEC, lcalluss) EXTERNAL DEBT and RESOURCE FLOWS (USS millins) Cmpsitin f 2000 debt (USS mill.) Ttal debt utstanding and disbursed 49,366 64,890 68,198 IBRD 55 2,185 2,229 A 2,229 IDA _10 D Ttal debt service 966 8,374 9,955, IBRD IDA Cmpsibn f net resurce flws Official grants Official creditrs ,108 Private creditrs -18 2,461-2,755 - Freign direct investment 6,348 9,338 F: 32.- Prtfli equity 1, E 21,426 Wrld Bank prgram Cmmitments 1, A -IBRD E - Bilaterai Disbursements B IDA D -Other multilateral F - Private Principal repayments C -IMF G- Shrt-term Netflws ISO Interest payments Net transfers Develpment Ecnmics 9"13'

99 Russian Federatin Eurpe & Lwer- POVERTY and SOCIAL Russian Central middle- Federatin Asia Incme Develpment dlamnd' 2000 Ppulatin, mid-year (millins) ,046 Life expectancy GNI per capita (Atlas methd, US$) 1,660 2,010 1,140 GNI (Atlas methd, US$ billins) T Average annual grwth, Ppulatin I(%) '0 Labr frce (%) GNI per Grss primary Mst recent estimate (latest year available, ) capita. enrllment Pverty (% f ppulatin belw natinal pverty line) 30 Urban ppulatin (% f ttal ppulatn) Life expectancy at birth (years) Infant mrtality (per 1,000 live births) Child malnutrin (% f children under 5) 3. 1 Access t Imprved water surce Access t an Imprved water surce (% fppulatin) s Illiteracy (% fppulatin age 15+) Grss primary enrllment (% fschl-age ppulatin) RusslanFederatin Male Lwer-middle-incme grup Female KEY ECONOMIC RATIOS and LONG-TERM TRENDS GDP (USS billins).. 1, Ecnmic ratis' Grss dmestic Investment/GDP Exprts f gds and services/gdp Trade Grss dmestic savings/gdp Grss natinal savings/gdp Current accunt balancelgdp Dmestic Interest payments/gdp Investment Ttal debtlgdp Savings Ttal debt servicelexprts Present value f debt/gdp 67.7 Present value f debt/exprts Indebtedness (average annual grwth) GDP Russian Federatin GDP per capita Lwer-middle-Incme grup Exprts f gds end services STRUCTURE f the ECONOMY Grwth f Investment and GDP (%) (% f GDP) Agriculture Industry Manufacturing... X.. a 9 Services Private cnsumptin J0 Generalgvemmentcnsumptin GDI 0 GDP Imprts f gds and services Grwth f exprts and Imprts (%) (average annual grwth) Agriculture Industry Manufacturing _. Services s as 7 Private cnsumptin General gvemment cnsumptin J0 Grss dmestic Investment Exprt m Imprts Imprts f gds and services Nte: 2000 data are preliminary estimates. The diamnds shw fur key Indicatrs in the cuntry (in bld) cmpared with its Incme-grup average. If data are missing, the diamnd will be Incmplete

100 Russian Federatin PRICES and GOVERNMENT FINANCE tnflattn (%) Dmestic prices (% change) 40 T Cnsumer prices c Implicit GDP deflatr Gvernment finance 100 (% f GOP, Includes current grants) Current revenue Current budget balance GDP deflatr CPI Overall surplus/deficit TRADE (USS millins) Exprt and Imprt levels (USS mill.) Ttal exprts (fb) 75, , Crude il. 14,101 25,319 Natural gas 11,352 16,644 1 Manufactures a,8,500 10, Ttal imprts (cif) ,192 s0.900 Fd 8,100 7,400 Fuel and energy ,000 Capital gds 10,500 10,600 a Exprt price Index (1995=100) Imprt price Index (1995=100) *MExprts Utrprts Terms f trade (1995=100) BALANCE f PAYMENTS (USS millins) Current accunt balance t GDP (%) Exprts f gds and services 84, , Imprts f gds and services 52,970 62,290 Resurce balance 31,768 52,910 1s Net incme.. -11, Net current transfers Current accunt balance 20,410 41,846 si Financing items (net) -16,583-23,432 _ Changes In net reserves -3,827-18, Uem: Reserves Including gld (USS millins).. 12,456 27,972 Cnversin rate (Official, IcalUSS) EXTERNAL DEBT and RESOURCE FLOWS (US$ millins) Cmpsitin f 2000 debt (USS mill.) Ttal debt utstanding and disbursed ,023 IBRD 6,809 7,067 A 7067 IDA 0 0 G C 11_13 Ttal debt service paid 9,761 11,165 D 251 IBRD ; C IDA 0 0 Cmpsitin f net resurce flws Official grants I. Official creditrs F 6;0,239. ' ' E E4,900 Private cr-editrs Freign direct investment 1, Prtfli equity Wrld Bank prgram Cmmitments A -IBRD E -Bilateml Disbursements B -IDA D -Other multilateral F -Private Principal repayments C- IMF G- Shrt-term Net flws Interest payments Net transfers Develpment Ecnmics and Cuntry Team 9/6/

101 Additinal Annex 11: Public Participatin Summary EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I 1. Participatry Apprach. Experience frm a number f reginal GEF prjects has demnstrated the imprtance f brad based stakehlder participatin fr successful prject develpment and implementatin. This is especially critical given the Prject's lng-term gal fr reginal engagement fr ecsystem-based mnitring, assessment, and management. The Prject preparatin prcess engaged reginal, natinal and lcal stakehlders t identify the key issues within the cntext f the Prject, and design activities t supprt imprved scial, ecnmic and envirnmental cnditins in the Baltic Sea regin. 2. Scial Issues in the Baltic Sea Regin. There are tw majr scial issues inherently addressed in the Prject design. First, the current scial welfare system in the recipient cuntries prvides little supprt t the farming, castal and fishing cmmunities. The ecnmic welfare f these cmmunities has in turn suffered the greatest during the perid f ecnmic transitin. Subsequently, this affected ther sectrs such as lcal businesses and lcal labr. A secnd issue is attributed t the deterirated state f the Baltic Sea ecsystem. Impacts frm pllutin, degradatin f castal areas and ver fishing have increasing effects n the reginal ecnmy, including the ptential develpment f castal turism. Decreased quality f fish stck results in reduced incmes in the fishing cmmunity, while cnflicts between cmmercial fisheries and subsistence fishing and between fisherman and fisheries management have increased transbundary tensins between cuntries. 3. Prject Stakehlders. The primary stakehlders and beneficiaries include (i) natinal and lcal gvernments, and agricultural, castal and fishing cmmunities in the participating cuntries; (ii) lcal sectr interests (businesses, fisheries, agriculture, turism, shipping), and (iii) cmmunity based rganizatins and lcal nngvemmental rganizatins. Secndary stakehlders include (i) reginal partners and cperating bdies: HELCOM, IBSFC, ICES; and (ii) intematinal partners: EU, ther member gvemments f HELCOM, cperating internatinal financial institutins (NEFCO, Wrld Bank), and reginal nngvemmental rganizatins. The Prject reflects the lessns learned frm stakehlder engagement in the Baltic Sea in the wrk f HELCOM, as well as previus Bank supprted prjects, dnr supprted demnstratin prjects;* and technical assessments dne by the three cperating intematinal bdies. 4. The stakehlders have been actively invlved in the prject preparatin prcess. The Prject Crdinatr has engaged the recipient cuntry participants thrugh wrkshps and meetings, and individual cnsultatins. The Baltic Sea Reginal Prject Cre Grup has actively incrprated representatives frm reginal prgrams and initiatives in meetings, cllabrated with technical specialists frm the regin, helped integrate the land, castal and pen sea principles in the prject design. 5. Experience frm the JCP. The Prject builds n these lessns and the JCP pririty activities, which have a brad-based cmmitment frm the wide range f stakehlders in the regin. There have been numerus reginal meetings whse recmmendatins prvided the parameters and criteria fr transbundary cperatin. Ntewrthy amng these are the Vilnius Recmmendatins, which are the utcme f a Prject related reginal meeting n the management f transbundary waters. These recmmendatins have prvided the basis fr the Prject design that prmtes an integrated apprach twards watershed, castal and marine envirnments. They included an evaluatin f lessns learned frm reginal cperatin t date in the Baltic Sea regin, and nted the imprtance f a spirit f cperatin fr managing transbundary waters and frmatin f brad based reginal partnerships fr

102 successful prgrarn develpment and peratin. 6. Cmpnent I - Large Marine Ecsystem Management Activities - Participatin. During Prject preparatin, the Chairman f the Cre Grup individually met with recipient cuntry technical specialists wh are respnsible fr reprting t ICES and HELCOM. These specialists are familiar with the issues in the regin, and knwledgeable n fisheries matters in the Baltic Sea. During the Cmpnent I LME Wrkshp (Riga, July 11-14) the individual Cuntry Prpsals were transfrmed int an integrated reginal ecsystem-based apprach t castal and pen sea management. The prpsed activities will facilitate strengthened cperatin between the lcal and reginal decisin-makers n resurce management issues. WWF met with lcal castal and fishing cmmunities wh shared their views and cncerns abut the current state f castal management and fisheries and their effects n their livelihd and welfare. 7. Cmpnent 2 - Land and Castal Management Activities - Participatin. The Prject's agricultural activities build n the institutinal and technical wrk undertaken by the Swedish supprted BAAP prgram, and crdinate with the GEF supprted Rural Envirnmental Prtectin Prject in Pland. Farmers in the selected demnstratin watersheds have been cnsulted cncerning Prject activities that build upn thse demnstrated earlier under the first phase f BAAP. The apprach t be used in the Prject is based n the BAAP mdel and is interactive and very participatry with lcal farm cmmunities, authrities and the agricultural educatin system in the regin. Thrugh individual cnsultatin, participating farmers and the extensin services invlved in the BAAP prject prvided their perspective and their recmmendatins were incrprated int the Prject design. Lcal BAAP extensin services currently engaged in the farm cmmunities als prvided institutinal and implementatin recmmendatins. 8. Within the Prject design tw NGOs, the Agriculture Advisry Services (AAS), and Farmers Interest Organizatins (FIO)s, will interact directly with the farmers, and launch the educatinal prgrams n a natinal level with the purpse f disseminating the Prject message t a brader public. The prgrams will be interactive, prviding infrmatin t the farming cmmunity while gaining experience frm the lessns learned. This will be a participatry mnitring apprach as part f a scial assessment, t learn best methds and determiine impact. The AAS and FIOs will als prvide input fr the design f the credit line under develpment by NEFCO. The Prject will supprt lcal institutinal strengthening f the AAS and FIOs t cntinue prviding technical assistance after the Prject is cmplete. Farms lcated within the castal zne will be engaged in the castal zne management activities, implemented jintly with Cmpnent The WWF will crdinate a series f lcally based management demnstratin activities fr castal zne management. These activities will be based n previusly develped management plans that were prepared with the active participatin f natinal, cuntry and lcal gvemments, cmmunity rganizatins and lcal nngvernmental rganizatins. T address lcal scial and ecnmic issues, the Prject will prvide pprtunities fr agricultural, castal and fishing cmmunities t benefit frm small-scale investmnents, and strengthen the capacity f the lcal fishing assciatins t cntribute t the decisin-making prcess. The cmmunities' input has been cnsidered in the castal zne management activities and adapted t link with ther activities t meet Prject bjectives Pilt castal zne management activities will invlve stakehlder invlvement in sustainable cmmunity develpment and envirnmental cnservatin, and supprt small-scale investments t imprve the lcal standard f living fr these cmmunities. This effrt will include the invlvement f the lcal decisin makers, cmmunity rganizatins, lcal nngvernmental rganizatins, and the business cmmunity, with supprt frm -96 -

103 WWF. 10. Cmpnent 3- Institutinal Strengthening and Reginal Capacity Building - Participatin. Cmpnent 3 will facilitate the strengthening f lcal and reginal institutins and build capacity fr a hlistic apprach t ecsystem-based management f the Baltic Sea resurces. The valuatin f ecsystem gds and services will be a useful tl fr lcal and reginal decisin-makers, the business cmmunity, and ther stakehlders t understand the implicatins f management decisins and practices. The WWF will als be invlved in Prject implementatin and will cnduct a training prgram fr cmmunity stakehlders and lcal nngvemmental rganizatins. The Prject budget includes funds fr a systematic scial assessment t evaluate the scial impacts frm the cmpnent activities and utreach prgramn, t prvide ptential mdificatins t the Prject design as needed, the scial assessment is an activity with Cmpnent Institutinal Arrangements and Mnitring and Evaluatin. The WWF, a member f the BSRP Cre Grup, has been engaged in the regin and its interest and invlvement will ensure the Prject is successfully implemented and achieves the prjected scial benefits. Fr cmpnent specific activities, the activity Crdinatr, and Lcal Prject Managers will be invlved with the fishing and farming cmmunity. They will be respnsible fr daily implementatin and mnitring and evaluatin, and will reprt t the BSRP Steering Cmmittee. HELCOM will have verall mnitring respnsibility f the Prject. The scial assessment will be included as part f the mnitring and evaluatin prcess. 12. Outcmes and Indicatrs. While there has been n systematic scial assessment during Prject preparatin, active engagement f lcal stakehlders during preparatin has been psitive. A scial assessment prcess will be cnducted during Prject implementatin, at a time when it will be easier t gauge the prgress f implementatin and adapt activities fr ptimal results. The Prject will facilitate the strengthening f reginal, natinal and lcal capacity. It supprts effrts t find slutins t prblems and cnflicts between recreatin and cmmercial fisheries, fisherman and fisheries managers, and transbundary issues. Participating BAAP farm families nted increases in farm prductivity and incme, imprved drinldng water quality, and subsequent envirnmental imprvements frm imprved manure strage. Thugh the Prject's basic bjective is t create sme precnditins fr better management f the Baltic Sea ecsystem, it is implicit that this will imprve the scial and ecnmic welfare in the regin because it will be dne thrugh activities that directly engage and benefit peple in the area and help prtect their lng-term interests. A summary f the key scially riented perfrmance indicatrs, detailed in Annex 1. * Baltic 21 Prgramme, Phare supprted ICZM prject in the regin, USEPA-PAWQP agricultural management prject

104 Additinal Annex 12: Transbundary Analysis EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Intrductin Transbundary Analysis 1. Baltic Sea Envirnment. The Baltic Sea is the largest bdy f brackish water in the wrld. It has thirteen majr watersheds and a very narrw and shallw linkage with the Nrth Sea. This restricted linkage cntributes t infrequent flushing f the Baltic Sea's waters. During this century, majr inflws f replenishing saline water have ccurred apprximately every 11 years but have recently been less frequent. The last majr inflw f saline water tk place in The bttm water can remain stagnant fr lng perids. Thus there is a distinct layering f water characterized by surface waters f lw salinity and a warm tp layer and deep water with higher salinity. As late as 1950 the Baltic Sea was still regarded as envirnmentally "healthy;" its eclgical deteriratin has been caused in recent years by an increase f pint surce industrial and nn-pint surce agricultural pllutants, degradatin f the castal zne and nn-sustainable use f living marine resurces. The natural vulnerabilities have been seriusly aggravated by anthrpgenic causes f envirnmental change and degradatin. These prblems f the Baltic Sea are transbundary in nature, and difficult t address n an individual cuntry basis. 2. Strategic Actin Prgram. The need t address the management f agricultural inputs int internatinal waters, imprve castal zne management and adpt sustainable management f living marine resurces has been highlighted in the "Baltic Sea Jint Cmprehensive Envirnrnental Actin Prgram (JCP)" which was prepared under the crdinatin f the Helsinki Cmmissin by a brad based task frce. The JCP was adpted as the strategic actin prgram fr the regin by the Ministers f Envirnment in 1992 and was updated and strengthened in HELCOM prepares assessments f transbundary trends and impacts in the frm f Pllutin Lad Cmpilatins and Peridic Assessments which supprt implementatin f the JCP. The JCP recgnizes the need t use an ecsystem-based management apprach that recgnizes the freshwater, castal and marine resurces as a management cntinuum. This Prject respnds t the need t address.eginal transbundary issues and t establish a crdinated apprach t ecsystem-based management, in rder t alleviate burdens frm anthrpgenic impacts and meet the bjectives f the JCP. 3. Vilnius Recmmendatins. As a cntributin t the JCP and t supprt Prject preparatin, the Gvernment f Germany and Wrld Bank jintly spnsred an Internatinal Rund Table n "Transbundary Water Management f the Baltic Sea Regin" which resulted in the "Vilnius Recmmendatins." These recmmendatins-reflecting the views and experience f reginal rganizatins, natinal and lcal gvernments, internatinal financial institutins and nngvernmental rganizatins-emphasized the reed fr sustained preventive and curative actins t achieve envirnmental imprvements in bth the shrt and lng term. They nted the imprtance f cperating at the reginal, natinal and lcal levels t address the diversity f transbundary water management prblems in the Baltic Sea regin

105 Transbundary Issues 4. Living Marine Resurces Management. The Baltic Sea and its catchment area have a range f ecsystems and bilgical diversity. The brackish waters f the Baltic Sea cntain a mixture f marine and freshwater species. The castal areas serve as spawning, nursery, and feeding areas fr several species f fish. Baltic 21 statistics have indicated that the fishery industry cntributes significantly t reginal and lcal ecnmy, and sustenance fishing is critical t the scial and ecnmic welfare f the castal cmmunities in the eastern Baltic. Majr castal and marine transbundary issues prevail due t current land, castal and marine practices; they include: (i) changes in the prductivity f the near castal and ffshre waters frm eutrphicatin; (ii) unsustainable cnditin f fish stck yields; and (iii) degraded cnditin f castal water quality frm pllutin, harmful algal blms, multiple eclgical disturbances, and cntaminant lading. 5. Castal Zne Management. The castal zne f the Baltic Sea is physically diverse, f high ecnmic imprtance and is under a range f develpment pressures. These areas include a number f imprtant shared water bdies in the eastern Baltic Sea that include the Gulf f Finland, Gulf f Riga, Kursiu Lagn, Vistula Lagn/Kaliningrad Lagn and Oder/Odra Lagn. Studies by HELCOM, Baltic 21, natinal gvernments, VASAB 2010 and WWF have emphasized the imprtance f develpment and implementatin f integrated management plans fr these areas. Imprtant castal zne management issues include: (i) rapid changes in land use in urban and industrial areas assciated with ecnmic grwth and restructuring; (ii) pressure fr incremental develpment activities, especially related t turism and recreatin; (iii) direct and indirect degradatin f castal lagns and wetlands frm waterbme pllutin, filling, and drainage; and (iv) cnversin and destructin f fragile castal habitats. 6. Land Management. Agriculture is the largest anthrpgenic surce f nn-pint surce nutrient input t the Baltic Sea. HELCOM estimates that nn-pint surce pllutin frm agriculture cntributes percent f the current nitrgen, and percent f the current-phsphrus lading entering the Baltic Sea, as well as pesticide residues. Within the Baltic Sea catchment area, apprximately 40 percent f the land is in agriculture. In additin, the agricultural sectr is traditinally cnservative and it is ften difficult t intrduce innvative, envirnmentally respnsible practices if the benefit is nt immediately visible t the farmer. This has been a particular prblem in the cuntries in ecnmic transitin in the eastern and suthern prtins f the Baltic Sea drainage basin, where the restructured agriculture sectr has had t address a diversity f issues beynd envirnmental management. Reprts by HELCOM and Baltic 21 have identified and reprted n pririty areas where pr agriculttural practices have cntributed t envirnmental degradatin which include: (i) increased eutrphicatin frm imprper strage and applicatin f animal waste and pr agricultural land management practices cntributing t nn-pint surce nutrient mn-ff t lcal tributaries, and (ii) lack f understanding, resurces, and capacity t utilize envirnmentally respnsible agriculture practices. Table A identifies the reginal threats and issues frm nn-pint surce pllutin and a transbundary analysis. 7. Eutrphicatin. HELCOM has identified eutrphicatin frm nn-pint surce nutrients and rganic matter as a tp pririty transbundary water prblem. It is caused by excessive grwth f bimass stimulated by the large influx f nitrgen and phsphrus cmpunds. The cmmn symptms f eutrphicatin are increased plant bimass in the frm f algae, xygen deficiency in water bdies, frmatin f hydrgen sulfide and remineralizatin f the bimass. These prcesses disrupt the balance f freshwater, castal and pen sea ecsystems and cause changes in their structure and functin. Impacts assciated with eutrphicatin in Baltic castal and pen sea waters include: (i) a shift in the cmpsitin f marine vegetatin in many castal areas, (ii) repeated large scale algal blms, (iii) disrupted reprductive cycles f sme fish species, (iv) declines and shifts f the fish cmmunities-decreases in

106 abundance f cmmercially mre imprtant fish species in sme fish stcks and increases in thers, (v) an verall change in species cmpsitin, and (vi) a restrictin f the depth range fr the vegetatin zne. 8. Algal Blms. Txic algal blms have been fund in the entire Baltic Sea. The large-scale blms have been attributed t the high nutrient lad in the Baltic Sea, with exceptinally sunny weather serving as an effective catalyst fr starting the blms. Fr example, there were massive blue-green algal blms in the summer f 1997, and accrding t studies by the Finnish Institute fr Marine Research, the surface accumulatins f blue-green algae during this perid were the mst extensive ever recrded in the whle Baltic Sea area. Large amunts f blue-green algal bimass drifted ashre. In Helsinki, these blue-green algal blms frced the city t clse many f its beaches fr mst f the swimming seasn. Several cases f cyan-bacterial txicsis were reprted in humans and animals in Finland. This event caused widespread demands frm pliticians and the public fr intensified actin t reduce nutrient lading t the Baltic Sea frm all types f surces t avid such large-scale transbundary impacts. 9. Scial and Ecnmic Issues. There are a number f factrs that impact lcal and reginal scial and ecnmic cnditins due t changes in ecsystem health, prductivity, and bidiversity. The changing species cmpsitin, ver fishing and pr management f fish stcks are generally the main causes fr depleted viable fish stck in the Baltic Sea. This depletin, tgether with reduced market value fr fish caught impacts the fishing cmmunity, primarily in cuntries in ecnmic transitin, where fishery infrastructure is less develped, and fishing may be the sle surce f incme. Where recreatinal use f the sea is ppular, eutrphicatin and pr hygienic cnditins cause unpleasant cnsequences in castal waters and beaches. Summer algal blms have peridically necessitated the clsing f many bathing beaches thrughut the regin with an adverse affect n their recreatinal use and turist value. Transbundary Challenges 10. Adptin f an Integrated Apprach t Management. The bjective f the JCP is the restratin f the eclgical balance f the Baltic Sea. This requires undertaking n a lng-term basis a series f cmplementary actins t imprve the management f transbundary land, castal and pen sea resurces. The Prject addresses this cncem by supprting three cperating internatinal bdies-helcom, IBSFC and ICES-t wrk with the recipient cuntries t adpt and apply an ecsystem-based apprach t envirnmental management. This apprach invlves a range f interventins that address technical, sci-ecnmic and management issues that are central t imprving the management f shared resurces between cuntries. Table B evaluates these threats and issues within the cntext f the LME framewrk. 11. Challenges in Integrated Management f Castal and Open Sea Waters. The cuntries in the Baltic Sea regin vary in their ecnmic, technical and plitical capacities. There is a disparity in lcal reginal management f shared living marine resurces. Effective management regimes include a crdinated implementatin f castal and pen sea ecsystem-based management practices, and incentives fr respnsible fishing that maintain fishing at a level cnsistent with prductive fisheries. The prpsed Prject will upgrade lcal capacity by intrducing innvative methdlgies fr mnitring and assessment f living resurces in castal and pen sea waters. An utcme will be the intrductin and implementatin f ecsystem-based reginal, natinal and lcal management f these shared resurces. 12. Challenges in Castal Management Activities. The effective management f castal areas requires a cmmitment t cperatin by a wide range f stakehlders, recgnitin that management will ccur at varius levels and a willingness t use participatry appraches. Demnstratin activities prvide an pprtunity t make castal zne management an integral part f the planning prcess used by the cperating cuntries. All actins will be taken in areas that are shared transbundary waters and cmmn activities will be used t transfer experience between the demnstratin areas. The Prject will supprt

107 expanded cperatin between natinal and lcal gvernments, demnstrate lw cst activities that can be replicated elsewhere and invlve cmmunity based rganizatins and lcal nngvernmental rganizatins. 13. Challenges in Land Management Activities. As ppsed t pint surce pllutin, which can be targeted fr remediatin, nn-pint pllutin is caused by a large number f dispersed surces and requires a reginal apprach. The prpsed Prject, thrugh demnstratin activities, will test mechanisms and use lessns learned frm the BAAP pilt activities t prvide farners with incentives and the level f supprt needed t effectively implement envirnmentally respnsible practices t reduce nn-pint surce pllutin frm agriculture t the castal and pen sea waters f the Baltic Sea. Successful implementatin f the demnstratin activities can then be expanded t ther watersheds, and the Cde f Gd Agricultural Practices can be prmted n bth a lcal and natinal level. Table A: Threats frm Nn-Pint Surce Plluti n (HELCOM-JCP, 1998) Regins f the Salinity and Oxygen Nutrients Planktn and bttm fauna Baltic Sea _ Baltic Prper Eutrphicatin led t repeated resent estimates indicate that the ttal Data suggest that phytplanktn xygen depletin, areas f nutrient supply t the Baltic Sea (and primary prductin has dubled in the insufficient xygen* cnditins the Sund) is abut 730,000 tns last 25 years frm the Baltic Prper t fr macrfauna in the last 25 nitrgen and 50,000 tns f the Kattegat. years, in central Baltic Prper phsphrus per year. Phytplanktn prductin has increased Temperature increases in the deep igh cncentratins f nitrgen and the bimass and subsequent layers phsphrus affect xygen cnditins sedimentatin; decmpsed algae in deep sectins f central Baltic decreases xygen levels. prper _ Eastern Water stagnatin in deepest areas Gtland Basin have decreased xygen and lincreased hydrgen sulfide levels. Bthnian Sea In late summers f the 1980s, eutrphicatin led t repeated xygen depletin Gulf f Bthnia Water is exchanged thrugh High phsphate levels have remained and Bthnia Aland Sea; the inflws are the same since 1978 Bay lw-salinity and lw-density surface waters frm the Baltic Prper. Kattegat In the 1980s, eutrphicatin led Reginally high levels f phsphrus Intense algal blms indicate increasing Gulf f Riga Gulf f Finland rhe Sund Belt Sea t repeated xygen depletin and nitrgen eutrphicatin ccur mre frequently. eginally high levels f phsphrus and nitrgen * Lw xygen 100,000 km2 with less than 2ml/xygen/liter in bttm waters. Intense algal blms indicating increasing eutrphicatin ccur mre frequently ntense algal blms indicating increasing eutrphicatin ccur mre frequently tense algal blms indicating increasing eutrphicatin ccur mre frequently

108 Table B: Overview f Transbundary Issu in the Baltic Sea Ecsystem LME Mdule and Causes Impact Uncertain Risks Transbundary Slutins Transbundary Issues Issues Prductivity -Nutnent lading in -Public health cncems -Increase f incidences Agricultural -Develp a crdinated -Harmful eutrphicatin and castal waters frm Pisning and mrtality f algal blms watersheds crss mnitring, assessment algal blms anthrpgenic land and f human cnsumers f Cntinued impacts atinal bundaries and reprting system -Envirnmentally insensitive marine activities marine rganisms frm anthrpgenic Occurrence f algal -Imprve capacity t agriculture practices - Changes in living -Decreased recreatinal surces lms in castal and mnitr -Changing state f ecsystem resurce bidiversity use f manne and castal Expansin f extic pen sea waters -Imprve land-based - Intrductin f extic waters species Migratin f spccies management activities species acrss natinal bundaries Ecsystem Health - Inputs frm pint and Public health cncerns Cause-effect Impacts frm -Implement management - Deteriratin f castal and nn-pint surces -Ecsystem health and rlatinship ransbundary practices t reduce pen sea waters (agriculture, industry, resilience Cntinued degradatin llutants pllutin inputs - "Ht Spt" pllutin frm municipalities) -Changes in species f water quality Reduced ability t -Establish reginal pint and nn-pint surce - Lack f plicies and dminance Cntinued degradatin use water resurces netwrk fr assessment llutin enfrcement fr pint - Decreased area f f watersheds, castal uc t quality and reprting - Degradatin f castal surce discharges wetlands due t agns and wetlands rblems -Understand the impacts lagns and wetlands - Weak castal zne cnversin in watersheds Future stress caused by Decline in aquatic f pllutin n health planning and castal areas future demands fr land abitats and species in -Develp management - Reduced functining f and water watersheds, castal tls t reduce impacts castal lagns/wetlands and pen sea areas as filters Fish/iFisheries - Fishing ver capacity -Nn-ptimal harvesting f -Nn-sustainable -Ecsystem dynamic change - Inreversible ecsystem -Mst harvested pen -Agree n cperative change ea living resurces int surveys f castal and living resurces (e.g. ver atilizatin f living -High by-catch and Cllapse f xtend beynd natinal pen sea stck fishing, dumping f by-catch) resurces undersize catch mmereially imprtant rders -Establish a reginal -Reductin f ecnmically -Reductin f prey -Fisheries impacting tcks Crdinatin with frum fr ecsystem and valuable fish stck (cd) thrugh ver fishing prductivity cycle Stability f key U n fishery issues stck assessments - Threats t vulnerable -Cmpetitin fr space -Pressure n selected habitats and their ability Effectivc ways t -Develp tls fr species and prey habitats frm fishing respnd t stress share and manage ecsystem-based -Vulnerability f spawning -Lack f cllabrative practices Expansin f extic mmn resurces management f living pen habitats mnitring, assessment, -Threats t bidiversity species Cnservatin f key sea resurces and management - Opprtunities fr extic areas f castal and species pen sea habitat Sciecnmic -Cntinued ver fishing -Vanable and uncertain -Lss f natinal Reginal, natinal - Understand the value f -Cntinued exhaustive -Changes in pen sea market evenues and lcal impacts frm the ecsystem fishing practices prductivity -Lss f fish and shellfish Decrease in turism these prblems - Develp tls fr -Reduced used f castal and -Eutrphicatin and markets Unemplyment Reduced access t increasing farmer and pen sea waters, affecting pllutin impacts farming - Threats t recreatinal ncrease in the fishing resurces fisherman incmes lcal incme castal cmmunities, and fishing sectr Reduced - Strengthen lcal and living pen sea resurces - Decrease in castal Lwer standard f pprtunities fr reginal capacity fr turism living incme grwth and management cmplyment Management -The three intematinal -Incnsistent Degradatin f Infrmatin needs t -Strengthen institutinal -Lack f harmnized bdies have different management f Baltic watersheds, castal e crdinated capacities f the three cperatin between the three mandates resurces areas and manne etween cuntries in intematinal bdies internatinal bdies -Limited inter cuntry -Imbalances within the resurces due t the Baltic Sea regin -Organize training and (HELCOM/IBSFC/ICES) exchange regin ncnsistent Measures need t be partnerships -Unequal distributin f - Limited research and -Limited cperatin management taken t harmnize -Upgrade equipment and capacity in the Baltic Sea labratry capacity between institutins Cmmitment t nitring, mnitring and assessment regin -Lw salanes - Inadequately infrmed supprt ecsystem assessment and practices - Lack f lcal capacity t - Lack f knwledge f decisin makers management management between -Create institutinal mnitr and assess decisin makers -Limited public Level f plitical will reginal bdies, framewrk and netwrk fr envirnmental variability cnceming ecsystem understanding f issues t make changes in atinal gvemments cperatin and issues and management and cmplex chices resurce management and lcal gvemments management Uncertainty ver Partnerships are - Imprve infrmatin fr future ecnmic eeded t share plicy makers and the cnditins wledge and public Sxperience acrss rders

109 Additinal Annex 13: Envirnmental Management Plan EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I A. OVERVIEW 1. Intrductin. The develpment bjective f the Baltic Sea Reginal Prject (BSRP), a Glbal Envirnment Facility (GEF) supprted prject, is t facilitate the restratin f a sustainable ecsystem, imprve castal zne management and reduce agricultural nn-pint surce pllutin thrugh the intrductin f ecsystem-based appraches fr land, castal and pen sea envirnmental management. Prject activities supprt the lng-term prcess fr restratin f the eclgical balance f the Baltic Sea, which is the gal f the "Baltic Sea Jint Cmprehensive Envirnmental Actin Prgram" (JCP) (1992, 1998) prepared under the crdinatin f HELCOM by a brad based task frce. The prject will be implemented by the Helsinki Cmmissin (HELCOM) in cperatin with the Internatinal Baltic Sea Fisheries Cmmissin (IBSFC) and Internatinal Cuncil fr the Explratin f the Sea (ICES), and will supprt field based activities in Estnia, Latvia, Lithuania, Pland and Russian Federatin. The BSRP fcuses n envirnmental restratin and includes a series f cmplementary measures t imprve envirnmental management in agriculture, the castal zne and the pen sea envirnment. Prject activities will have psitive envirnmental impacts n the Baltic Sea and imprve scial cnditins in farming, fishing and castal cmmunities. The prject will assist participating cuntries t meet their cnmmitment t the Helsinki Cnventin and supprt Estnia, Latvia, Lithuaria, and Pland in meeting their bligatins under the Eurpean Unin accessin prcess. B. PROPOSED PROJECT 2. Three Phase Prject. The BSRP will be implemented in three cmplementary phases ver a perid f six years. The verall estimated cst fr the BSRP is US$36.00 millin, fr which the GEF Cuncil has apprved US$18.0 millin and the remaining cst will be cvered by supprt frm cperating gvernments, bilateral dnrs and internatinal NGOs. The Phase I Prject has a ttal budget f US$12.12 millin, including US$5.5 millin frm GEF, and will be implemented ver a three-year perid frm 2002 t The prject will ensure that, by year 2007, an ecsystem-based apprach fr sustainable use f Baltic Sea resurces has been demnstrated at the field level and is being adpted fr management actins by cperating internatinal bdies, natinal gvernments, lcal rganizatins and NGOs). These three phases are as fllws: * Phase 1. The Current Prject - Intrductin f the Ecsystem Apprach ( ). Establishment f the reginal frarnewrk fr intrductin f the ecsystem apprach; mbilizatin f partners in management f land, castal and pen sea marine resurces; and initial activities fr land and castal management. * Phase 2. Demnstratin f the Ecsystem Apprach ( ). Undertaking cperative activities fr assessment and management f castal and pen sea marine resurces; expansin f activities fr land and castal management; and jint activities fr linkage f land, castal and pen sea management prgrams. * Phase 3. Applicatin f the Ecsystem Apprach ( ). Identificatin f next steps by the cperating parties fr expanded applicatin f the ecsystem apprach fr land, castal and pen sea management; cmpletin f field based management and demnstratin activities; and preparatin f evaluatin and assessment studies. 3. Prject Cmpnents. The prject has fur cmpnents that include the fllwing activities: * Cmpnent 1-Large Marine Ecsystem Management Activities

110 Sea Activity 1 - Strengthening Institutinal and Technical Capacity Activity 2 - Operatinalize Mnitring and Assessment Surveys in the Eastern Baltic Activity 3 - Cperative Lcal and Reginal Ecsystem Evaluatins and Assessments Activity 4 - Demnstratin Activities. * Cmpnent 2-Land and Castal Management Activities Activity 1 - Agricultural Interventins Activity 2 - Mnitring and Assessment f Nn-Pint Surce Pllutin Activity 3 - Land-Based Castal Zne Management Activity 4 - Baltic Sea Reginal Envirnmental Assessment Netwrk (RAN). * Cmpnent 3-Institutinal Strengthening and Reginal Capacity Building Activity 1 - Reginal Capacity Building Activity 2 - Reginal Sciecnmic Assessment. * Cmpnent 4-Prject Management Activity I - Prject Management. Prjected expenditures, by cmpnent, during Phase 1 are planned as fllws: Cmpnent 1 - $5.62 millin, Cmpnent 2 - $4.99 millin, Cmpnent 3 - $0.15 millin and Cmpnent 4 - $1.36 millin. The scpe f activities under Cmpnent 3 will expand during the later phases f the verall BSRP. 4. Cmpnent 3 will supprt lcal and reginal capacity building and institutinal strengthening activities and Cmpnent 4 will supprt prject management activities. Neither f these cmpnents are anticipated t have any adverse envirnmental r scial impacts and are nt cvered by specific mitigatin r mnitring activities under the EMP. C. ENVIRONMENTAL AND SOCIAL REVIEW 5. Envirnmental and Safeguards Screening. The prject has been placed in envirnmental screening categry "B" under the prvisins f Wrld Bank Operatinal Plicy 4.01, "Envirnmental Assessment" and in safeguards classificatin categry "S2". The prject supprts a series f envirnmental management measures at the reginal, natinal and lcal levels in five cperating cuntries; it will have limited adverse impacts that can be addressed as part f the design, implementatin and peratinal prcess fr the cncerned activities. The applicability f Wrld Bank Operatinal Plicy 7.50, "Prjects n Internatinal Waterways" was reviewed with the Legal Department f the Wrld Bank, and it was deemed nt t be applicable t the prject. Building n the apprach used in the Rural Envirnmental Prtectin Prject in Pland, the prject prvides funds t include a systematic scial assessment prcess t evaluate the scial impacts frm cmpnent activities n a "rlling basis" during prject implementatin. This is cmplemented by an utreach prgram t btain input frm cperating parties and beneficiaries that can be used t develp ptential mdificatins t the prject design as needed. 6. Envirnmental Management Plan. The Envirnmental Management Plan (EMP) fr the BSRP summarizes the recmmended design measures, cnstructin supervisin methds and mnitring actins t minimize and/r avid the limited ptential shrt- and lng-term impacts f activities under Cmpnents 1 and 2. It identifies envirnmental impacts related t the management f labratry wastes,

111 salmn river restratin measures, cnstructin f small-scale civil wrks fr n-farm nutrient management, installatin f mnitring statins, and castal zne management activities. These ptential impacts and their assciated mitigatin and mnitring actins are described belw and sunmmarized in Table A, "Mitigatin, and Mnitring Actins." Attachment 1 cntains the Integrated Safeguards Data Sheet (ISDS) fr the prject. D. PROJECT SUPPORTED ACTIVITIES - PHASE 1 7. Backgrund. In general, the Baltic Sea is ne f the mst intensively mnitred; hwever, the cverage, quality and reliability f reginal, natinal and lcal level data has remained uneven. Over the last decade, Estnia, Latvia, Lithuania, Pland and Russian Federatin have had significant difficulties in meeting their reprting bligatins t HELCOM, IBSFC and ICES due t the ecnmic impacts f the prcess f mving t market ecnmies. As a result, labratry equipment has nt been standardized and/r fully intercalibrated between the labratries n the Eastern and Western casts f the Baltic Sea. Data assessment and evaluatin methdlgies have nt been unifrm. This applies t mnitring f the state f the marine envirnment as well as t mnitring f agricultural run-ff. These factrs have had a negative impact n the quality f scientific advice t decisin makers and, subsequently, n the quality f the decisins made. 8. The Prject will supprt activities in the castal near shre envirnment f the Eastern Baltic Sea and in selected adjacent sectins f the pen sea envirnment. In general, the castal near shre activities and mnitring netwrk will crrelate with land-based castal and assciated demnstratin activities supprted under Cmpnent 2. The planned pen sea mnitring will include the current ICES netwrk; this invlves activities in ICES Subdivisins 25, 26, 28, 29S and 32. These areas include the Baltic Prper, the sea east f the island f Bmhlm, and the Gulf f Finland. The ecnmic znes f the recipient cuntries are part f these Subdivisins. In the case f nn-pint surce pllutin frm agriculture, the pririty is t develp a netwrk f mnitring statins that will cllect and disseminate data and prepare technical reprts that will allw fr assessment f trends and the effectiveness f n-farm interventins. The design f the nn-pint surce pllutin mnitring system supprted by the prject will ensure that the small-catchment measurements and analysis are cnsistent with thse used at the reginal and natinal levels. 9. Cmpnent 1 - Large Marine Ecsystem Management Activities * Activity I - Strengthening Institutinal and Technical Capacity. This will supprt the fllwing: (a) Strengthened Institutinal Capacity f Crdinatin Centers. Supprt will be prvided t a series f specialized centers in the regin invlved in implementatin f prject activities: Fisheries Crdinatin Center, Prductivity Parameters Crdinatin Center, Envirnmental Health Parameters Crdinatin Center, and a GIS-Data Crdinatin Center; (b) Cnduct Reginal Training and Wrkshps t Strengthen Technical Capacity. Training and wrkshps will strengthen technical capacity and will crdinate and link the activities under the cmpnent with technical aspects f ther reginal prgrams; and (c) Crdinate Castal-Near Shre Activities. Planning and crdinatin f castal mnitring surveys in the eastern Baltic Sea will fill the gaps fr fisheries and envirnmental parameters, as mandated by wrk prgrams f HELCOM and ICES; and (d) Crdinate Open Sea Activities. Planning and crdinatin f pen sea mnitring surveys will calibrate between vessels fr reginal efficiency and csteffectiveness. This activity will expand the gegraphic cverage f pen sea activities in the eastern Baltic Sea t reinfrce the current ICES mnitring netwrk and fill gaps in bth fisheries and envirnmental data needed by ICES, HELCOM and their member cuntries. Activity 2 - Operatinalize Mnitring andassessment Surveys in the Eastern Baltic Sea

112 Activity 2 will be planned in Phase 1 and fully cmmence in Phase 2 f the BSRP, t include prcurement f necessary technical equipment fr castal and pen sea mnitring surveys and executin f the surveys as crdinated and planned during Activity 1. It will include: (a) Cnduct Castal Near Shre Mnitring Surveys. Castal fish, prductivity and ecsystem health parameters will be mnitred and data cllected as required by the HELCOM/COMBINE mnitring prgram. Data will be cllected based n ICES standards; (b) Cnduct Jint Open Sea Mnitring Survey. Jint pen sea surveys will parallel effrts in the castal waters, but will include a multi-natinal technical team t cnduct jint pen sea surveys that cmbine mnitring f fish, prductivity and ecsystem health parameters frm research vessels; (c) Ships f Opprtunity (SOOPs). Data frm ferries and cutters will be btained frm equipment leased n bard and the crew will be trained fr data cllectin. Data will be cllected based n ICES standards; and (d) Data Cllectin frm Cmmercial Fishing Vessels. Data frm cmmercial fishing vessels will be btained frm landings and lgbks, and landings statistics frm cmmercial fishing vessels in accrdance with ICES standards. * Activity 3 - Cperative Lcal and Reginal Ecsystem Evaluatins and Assessments. Activity 3 will cmmence in Phase 1, hwever, mst f the activities will be carried ut in Phases 2 and 3. Emphasis will be given t use f infrmatin cllected frm Cmpnent 1 and Cmpnent 2. It will enhance lcal assessment capabilities thrugh access t imprved technical resurces and capacity building measures: (a) Evaluatin and Assessment f Cmpnent I Infrmatin. Evaluatin and assessment f data cllected in mnitring surveys under Cmpnent 1 will be used t frmulate advice fr IBSFC and HELCOM, and prpse ecsystem-based management tls; and (b) Ecnmic Evaluatin f Cmpnent Activities (in crdinatin with Cmpnent 2). This will supprt sci-ecnmic assessments t prmte sustainable ecsystem-based management tls t imprve the ecnmic benefits frm living marine resurces. The crdinated jint assessment effrt will supprt lcal authrities' decisin-making capacity fr integrated castal resurce management. * Activity 4 - Demnstratin Activities. Demnstratin activities will illustrate a range f pssible cst-effective measures t imprve and restre the castal ecsystem while building lcal capacity f castal cmmunities. Preparatin fr demnstratin activities will begin during Phase I and the activities will cntinue thrugh Phases 2 and 3. Planned activities include: (a) Salmn River Restratin.- This will supprt recmmendatins in the Salmn Actin Plan (SAP) f the IBSFC by restring segments f selected rivers t restre natural spawning and lng-term sustainability f salmn recruitment; (b) Multiple-Marine Eclgical Disturbances (MMED) Predictive Tls fr Management. This activity will supprt applicatin f a predictive mdel t examine and understand multiple eclgical disturbances in the Baltic Sea t prvide a cst-effective management tl fr ecsystem management; and (c) Use f Ecsystem Based Assessments fr the Baltic Sea. This will imprve management practices t increase and sustain fishery yields and bilgical prductivity f the Baltic Sea Large Marine Ecsystem (LME). 10. Cmpnent 2 - Land and Castal Management Activities. This cmpnent will build n the Swedish funded Baltic Agricultural Run-ff Actin Prgram (BAAP) activities and thse f the HELCOM Wrking Grup n Castal Lagns and Wetlands (HELCOM - PITF MLW) that was crdinated by the Wrld Wide Fund fr Nature (WWF). Activities I and 2 will nt be undertaken in Pland, since similar measures are being supprted by the cmplementary Rural Envirnment Management Prject which is als funded by the GEF. The Cmpnent includes: * Activity I - Agricultural Interventins. This activity will supprt: (a) Lcal Agri-Envirnmental Capacity Building. The activity will target the farming cmmunity, agricultural advisry rganizatins and lcal authrities, using natinal Cdes f Gd Agricultural Practices as the

113 guiding tl that are ne f the majr envirnmental cmmitments undertaken by the cuntries in accessin t the envirnmentally respnsible agricultural practices (agri-envirnmental) schemes f the EU; (b) Lcal Agri-Envirnmental Capacity Building. Farmers in the watersheds will be invited t participate in educatin and training activities t imprve sustainable farm management. Training activities will prvide farmers with ptential investment supprt thrugh grants frm GEF funding cmbined with credits thrugh cperatin with NEFCO; (c) Demnstrating Cst-Effective Nutrient Recycling and Retentin Technlgies. A select number f n-farn, agri-envirnmental demnstratin practices will be established, including cnstructin and restratin f wetlands fr nutrient retentin; and (d) Agri-Envirnmental Credit Schemes (AgECS). Agri-envirnmental practices will be prmted and eligible n-farm investments will be installed fr nutrient re-circulatin; such investments include manure pads and slurry strage, equipment fr manure and urine spreading and technlgy fr seeding and sil preparatin. The GEF grant and/r Nrdic Envirnment Finance Crpratin (NEFCO) credit will be cmplemented by in-kind cntributins in materials and labr by the farmer r agricultural cmpany. Field based activities under this activity will be cncentrated n watersheds in the vicinity f Janeda, Kabala, Matsalu in Estnia, Mellupite and Berze in Latvia; Vardas, Graisupis, Silute in Lithuania, and Slavsk Regin f Kaliningrad Oblast in Russian Federatin. Activity 2 - Mnitring and Assessment f Nn-Pint Surce Pllutin. This activity will investigate nutrient lads frm agriculture and aims t fill gaps in natinal mnitring prgrams and assist in meeting the cuntry's cmmitment t EU and Helsinki Cnventin bligatins. Develpment f the mnitring system will be crdinated with the Rural Envirnmental Prtectin Prject in Pland. It will supprt: (a) Catchment Measurement Prgrams. These will evaluate lads f nutrients t surface waters frm representative agricultural areas, and leaching f nutrients t shallw grundwater in representative agricultural areas; (b) Effects f Specific Demnstratin Activities. Specific demnstratin activities will shw gvemments and farmers the efficiency f varius nutrient reductin measures and mnitring f plt demnstratin activities; (c) Agricultural Ht-Spts and Cntaminatin f Drinking Water in Shallw Farm Wells. This sub-activity will assess, at selected sites, the extent and causes f cntaminatin f drinking water in farm wells. This will include mnitring cntaminatin f drinking water in farm wells and cntaminatin f surface and grundwater; and (d) Mdeling f Nutrient Lads in the Berze-Lielupe Basin. A cmprehensive series f actins fr training persnnel and upgrading mdeling capacity will be supprted under this sub-activity targeted in the Berze-Lielupe demnstratin watershed. Activity 3 - Land-Based Castal Zne Management. The integrated castal zne management (ICZM) activities will assist lcal cmmunities in imprving their management f castal znes. Activities will include invlvement f lcal cmmunities, NGOs, lcal decisin-makers and businesses. WWF has acted as lead party respnsible fr elabrating ICZM plans fr the five pririty target as areas defined by HELCOM in under the activities f the HELCOM Wrking Grup n the Management f Castal Lagns and Wetlands (HELCOM MLW). These management plans are the framewrk fr implementing this activity, and are the basis fr the sub-activities. The BSRP scial assessment prcess will be used t prvide guidance t ptimize lcal cmmunity invlvement and benefits s that lcal cmmunities use natural and ecnmic resurces mre efficiently, imprve their livelihd, and cnserve bidiversity. An utreach prgram will expand these activities t ther castal cmmunities. Sme preliminary activities will cmmence during Phase 1, and cntinue thrugh Phases 2 and 3. Sites fr activities include: (a) ICZM Vainameri/Matsalu and Parnu Bay/Kihnu Island (Sites 1 and 2). In crdinatin with Cmpnent 1 and thrugh lcal capacity building and training, this

114 will build eclgically based village wastewater treatment systems n the island f Kihnu, restre Lake Prastevik-Vrmsi and prmte small-scale turism investments; (b) ICZiM Engure/Kemeri (Lielupe-GulffRiga (Site 3). The activity will establish a lcal small business incubatr in Mersrags, develp and distribute a bi-annual lcal newsletter, and train fifteen lcal guides. In crdinatin with Cmpnent 1, a sciecnmic benefits prgram fr lcal farmers and fishermen will be develped and implemented; (c) ICZMKursiu Lagn/Nemunas Delta (Site 4). The activity will supprt develpment f visitrs facilities, recreatinal facilities, wetland restratin and preparatin f meadw management plans; and (d) ICZMKaliningrad Lagn/Vistula Lagn (Site 5). Activities will fcus n lw cst effrts t strengthen stakehlder invlvement and ptimize use f resurces including a demnstratin clean-up f a small catchment and restratin f a pilt tributary river. Activity 4 -Baltic Sea Reginal Agri-Envirnment Assessment Netwrk (RAN). Agri-envirnmental and rural plicies are under develpment in the regin, and this activity will link lcal field-level activities f the BSRP with natinal authrities and decisin-makers. These activities will cmmence during Phase 2, and thrugh a series f wrkshps cmbine field-level activities under the prject with develpment f agri-envirnment and rural plicies. 11. Cmpnent 3 - Institutinal Strengthening and Reginal Capacity Building. This Cmpnent supprts lcal and reginal capacity building and institutinal strengthening with an emphasis n reginal/sub-reginal technical meetings and training activities. These activities will be expanded in Phases 2 and Cmpnent 4 - Prject Management. The Cmpnent includes the prject management activities and will cver expenses fr selected management csts. E. POTENTIAL IMPACTS 13. Backgrund. As late as 1950 the Baltic Sea was still regarded as envirnmentally "healthy," its eclgical deteriratin has been caused in recent years by an increase f pint surce industrial and nn-pint surce agricultural pllutants, degradatin f the castal zne and nn-sustainable use f living marine resurces. Its natural vulnerabilities have been seriusly aggravated by anthrpgenic causes f envirnmental change and degradatin. The prject will have sme limited shrt-term envirnmental impacts frm the dispsal f small amunts f chemical and bilgical wastes assciated with analysis cnducted by cperating labratries; undertaking stream restratin measures; cnstructin f small-scale civil wrks fr n-farm nutrient management and wetland restratin activities; cnstructin f water quality mnitring statins; and small-scale cnstructin activities t supprt castal zne management. Mitigatin and mnitring measures have been included as elements f the prject design t avid r minimize anticipated adverse envirnmnental impacts during prject implementatin. 14. Cmpnent 1 - Large Marine Ecsystem Management Activities. The ptential impacts frm activities supprted under Cmpnent 1 that will require mitigatin activities are: * Labratry Wastes. The Cmpnent will supprt mnitring activities and cllectin f samples and specimens under prtcls established by ICES fr such activities in the Nrth Atlantic, Baltic Sea and Nrth Sea. These samples and specimens will be cllected in the pen marine envirnment and frm near shre areas and transferred t participating labratries fr analysis and examinatin. The primary impact frm this Cmpnent will be the generatin f a limited amunt f chemical and bilgical wastes frm the labratries cnducting prject related analytical wrk. Ptential impacts frm these materials are limited and will be managed thrugh the use f prper waste cllectin and dispsal prcedures that will be verseen by the Cmpnent I Crdinatr. The prject preparatin prcess fund that there wuld be n significant impacts assciated with the peratin and maintenance f scientific equipment used

115 fr data cllectin and mnitring under the prject. Field equipment used fr data cllectin, such as trawls and fyke nets, will be discarded in accrdance with current ICES prcedures. * Salmn River Restratin. The Cmpnent will supprt the design and implementatin f demnstratin activities fr habitat restratin f castal rivers used by salmn fr spawning. Activities will fcus n a cmbinatin f management measures and imprvement f physical and bilgical cnditins in these areas thrugh small-scale mdificatins using eclgical engineering measures and bilgical imprvements such as plantings and site clean-up. Ptential adverse impacts assciated with these activities cncem physical and bilgical disturbances during the implementatin f the restratin measures. Impacts will include minimal shrt-term in stream bttm sediment disturbances frm stream restratin, channel clearing/cleaning and re-establishment f traditinal habitat cnditins. Activities will be undertaken cnsistent with management plans prepared under the prject and will be mnitred by the Cmpnent 1 Crdinatr and natinal and lcal authrities. The natinal and lcal level envirnmental and fisheries institutins that participate in the wrk f HELCOM, IBSFC and ICES are familiar with current living marine resurce management issues and these institutins have been actively engaged in defining prject activities fr Cmpnent 1. Discussins with natinal fisheries and aquatic bilgy scientific research institutes as well as natinal authrities respnsible fr management f the envirnment and living marine resurces, cncluded that there are nly limited envirnmental impacts assciated with the prpsed ecsystem restratin activities planned t be supprted by the prject. 15. Cmpnent 2. The ptential impacts frm activities supprted under Cmpnent 2 that will require mitigatin activities are: * Agricultural Interventins. The Cmpnent will supprt the design and implementatin f n-farm measures t reduce nn-pint surce pllutin frm agriculture. These activities will fcus n implementatin f Farm Envirnmental Management Plans that will include a series f cmplementary measures fr better land management practices such as imprved tillage, manure spreading and re-establishment f grassland, cmbined with selected investments t reduce run-ff including the cnstructin f manure pads, restratin f wetlands and establishment f vegetative buffer znes alng stream curses. Ptential adverse impacts assciated with these activities cncern physical and bilgical disturbances during the cnstructin perid fr the manure pads and wetland restratin activities. These impacts will be highly lcalized and primarily cncern the need t cntrl ersin and sedimentatin at the cnstructin site and areas immediately dwnstream. Activities will be undertaken cnsistent with management plans prepared under the prject and will be mnitred by the Cmpnent 2 Crdinatr, Lcal Implementatin Units (LIUs) and natinal and lcal authrities. The LIUs, which will be based in Agricultural Advisry Services, will be respnsible fr reviewing the ecnmic and envirnmental viability f the sub-grant and sub-lan applicatins and will ensure that applicable natinal laws and regulatins are fllwed fr cnstructin and n-farm management activities. The design and use f the manure pads and ther n-farm investments fr nutrient management will fllw the recmmendatins laid dwn in the Cdes f Gd Agricultural Practices which have been adpted in each f the Baltic States as part f the EU accessin prcess. While similar dcumentatin des nt exist in the Russian Federatin, the LIUs will ensure that cmparable measures are fllwed in investment prjects n Russian territry. In additin, the LIUs will assure that prper site selectin prcedures have been used fr small-scale civil wrks and that cnstructin cntracts include prvisins t cntrl ptential lcal impacts frm ersin and siltatin during cnstructin f these imprvements. * Mnitring and Assessment f Nn-Pint Surces. The Cmpnent will supprt the

116 implementatin f a water quality mnitring system fr nn-pint surces f pllutin. This will include the cnstructin and peratin f a series f small water quality mnitring statins lcated adjacent t watercurses in representative small watersheds. Ptential adverse impacts assciated with these activities cncern very small and highly lcalized physical and bilgical disturbances during the cnstructin perid f the mnitring statins. Ptential adverse impacts assciated with these activities cncern physical and bilgical disturbances during the cnstructin perid fr the manure pads and wetland restratin activities. These impacts primarily cncern the need t cntrl ersin and sedimentatin at the cnstructin site and areas immediately dwnstream. Prject supprted cnstructin cntracts will include measures t reduce ersin and siltatin. The Cmpnent 2 Crdinatr and the LIUs will undertake n-site mnitring during the cnstructin f prject supprted water quality mnitring statins. This will include site specific mnitring t verify cntractrs are fllwing mitigatin measures. Land-Based Castal Zne Management The Cmpnent will supprt the develpment and implementatin f management plans fr integrated castal zne management and wetland restratin. These activities will fcus n implementatin f management plans, prepared with the participatin f lcal cmmunities, t imprve land and water management practices, supprt small-scale civil wrks and restre wetlands. The prject will supprt applicatin f mdem management practices t enhance bidiversity and imprved lcal management f natural resurces. Ptential adverse impacts assciated with these activities cncern physical and bilgical disturbances during the cnstructin perid fr small-scale civil wrks and wetland restratin activities. These impacts will be lcalized and primarily cncern the need t cntrl ersin and sedimentatin at the cnstructin site and areas immediately dwnstream. T address these issues mitigatin measures will be included in the design and cnstructin cntracts and implementatin f these prvisins will be mnitred n a site specific basis. These activities will be undertaken cnsistent with management plans prepared under the prject and will be mnitred by the Cmpnent 2 Crdinatr, LIUs and natinal and lcal authrities. The management plans are subject t frmal review and apprval by natinal and/r lcal authrities as apprpriate. The Cmpnent will prvide supprt fr activities in sme lcatins that are frmally prtected areas: Matsalu State Nature Reserve, Estnia; Kihnu Strait Marine Park, Estnia; Engure/Kemeri Natinal Park, Latvia; and Nemunas Delta Reginal Park, Lithuania. Prpsed types f activities under the BSRP include the restratin f wetlands and cnstructin f small scale facilities fr wastewater treatment using eclgical engineering appraches. Other activities wuld invlve the develpment and renvatin f nature trails, and cnstructin f small scale recreatinal facilities including placement f trash bins, small cabins fr changing clthes and a limited number f tilets. All prject supprted activities will be cnsistent with the prtectin status f these areas and any actins will be part f management plans that have been reviewed, cleared by the authrities respnsible fr their management and jintly implemented with these management rganizatins. Sme f the castal cmmunities where the demnstratin activities are prpsed have already participated in lcally based castal zne planning and management studies undertaken in the cntext f the JCP with supprt frm the Wrld Wild Fund fr Nature (WWF) and ther parties including the Wrld Bank

117 F. SOCIAL ASPECTS 16. Scial Assessment. The prject includes a systematic scial assessment t evaluate psitive and negative scial impacts frm the cmpnent activities, supprt cmmunity utreach prgrams and t prvide a mechanism t identify ptential mdificatins t the prject design as needed. The scial assessment als will mnitr and evaluate the technical assistance prvided t lcal stakehlders and anticipated impacts frm turism develpment. This apprach, similar t that used fr the Rural Envirnment Prtectin Prject in Pland, prvides fr an n-ging apprach t scial aspects f the prject n a rlling basis, targeting f actins fr site specific needs and innvatin ver the curse f the prject. 17. Access t Emplyment The prject is anticipated t have a psitive impact n lcal pverty reductin thrugh lcal emplyment pprtunities and t imprve sciecnmic cnditins in the farming, fishing and castal cmmunities. Cnsultatins undertaken during the prject preparatin prcess identified lcal access t shrt- and lng-term emplyment by lcal residents as a key issue in the demnstratin activity areas. This issue has been included in the EMP t higedight its imprtance and t facilitate its integratin int the mitigatin measures and mnitring actins. It is anticipated, n the basis f previus experience with prject implementatin in the cperating cuntries, that as a result f the prject there will be increased - althugh limited - pprtunities fr lcal shrt- and lng-term emplyment. 18. The shrt-term emplyment will be generated by pprtunities t prvide skilled and semi-skilled labr t the lcal cnstructin cntractrs, undertaking land and vegetatin management activities and prviding services. Over the medium and lng-term the activities fr the management f living marine resurces and the salmn river restratin activities will increase the emplyment pprtunities assciated with cmmercial and recreatinal fishing. The cnstructin cntracts fr small-scale civil wrks fr n-farm imprvements will generate emplyment fr firms and wrkers with experience in excavatin and cnstructin f cncrete structures. The cmmunity based rientatin f the castal zne management prgrams will target the develpment f bth permanent and seasnal lcal emplyment frm small scale activities and develpment f services, especially related t natinal and reginal turisn. G. MITIGATION MEASURES 19. Overview. The mitigatin measures utlined in this sectin will be undertaken as part f the prject implementatin prcess t mitigate ptential impacts frm labratry activities, salmn river restratin measures, agricultural interventins, mnitring and assessment f nn-pint surces and land-based castal zne management activities. Mitigatin measures include: management f chemical and bilgical wastes frm data cllectin and analysis; preparatin f management plans with mitigatin measures t reduce envirnmental impacts, cntractr effrts t reduce envirnmental impacts, and use f archelgical "chance find" prcedures. The primary adverse impacts frm the prject are largely assciated implementatin f eclgical engineering measures fr the salmn river restratin activities and cnstructin f small-scale civil wrks fr n-farm imprvements, water quality mnitring statins and castal zne management. These impacts are very lcalized, limited in their scpe, shrt in duratin and can be addressed thrugh bth design and mnitring measures. Table A summarizes the activities, mitigatin issues and measures t be taken, and,the mnitring and supervisry respnsibilities. 20. Key Measures. The key mitigatin measures included in the prject are as fllws: Management f Labratry Wastes. Cperating labratries will use prper chemical and bilgical waste cllectin and dispsal measures that will be cnsistent with thse recmmended by ICES. Field equipment used fr data cllectin will be disps6d f in

118 accrdance with current ICES prcedures. A review will be cnducted by the Cmpnent 1 Crdinatr f prcedures used at each labratry t cnfirm their cnsistency with these prcedures and mdificatins will be made as apprpriate. The management f labratry wastes will be reviewed and reprted n as an element f prject implementatin activities by the Cmpnent 1 Crdinatr. Preparatin f Management Plans. As part f the implementatin prcess, the prject prvides supprt fr preparatin and implementatin f site specific envirnmental management plans. These include the preparatin f: Cmpnent I Cmpnent 2 Salmn River Restratin Actin Plans (SRRAP). The SRRAP will include the design f salmn river restratin measures and identify assciated mitigatin actins. The SRRAP will incrprate use f apprpriate ec-engineering appraches and management during stream restratin activities t reduce ersin and siltatin. It will cntain site specific guidelines cnceming the timing fr restratin and mitigatin measures t minimize in-steam disturbances, and recmmendatins fr actins t be taken during stream restratin activities t avid habitat disturbance and reduce ersin and siltatin. Farm Envirnmental Management Plans. The Farm Envirnmnental Management Plans will be prepared fr each participating farm. These will specify timing f cnstructin and ersin cntrl measures t reduce dwnstream impacts frm cnstructin f manure pads and ther structures. Cntracts will specify measures t be taken during cnstructin t reduce ersin and siltatin. Mnitring and Assessment f Nn-Pint Surces. A design has been prepared fr the water quality mnitring system and sites prpsed fr cnstructin f statins. Prject supprted cnstructin cntracts will include measures t reduce ersin and siltatin. Integrated Castal Zne Management Plans. Management Plans will be prepared fr each area included under this activity. These will prvide a framewrk fr management f castal resurces and an active rle fr lcal cmmunities in decisin making and benefit sharing. The management plans will specify timing f the actins t be taken fr these areas with regard t new management practices, small-scale civil wrks, measures fr mitigatin f impacts frm the develpment and use f visitr facilities, and change in land use practices. The management plans will be frmally reviewed and apprved by natinal and reginal authrities. Management plans will address ptential cnstructin impacts. Prject supprted cnstructin cntracts will include measures t reduce ersin, siltatin r damage t sensitive habitats. The plans will prvide a mechanism fr the prject implementatin rganizatins t cmmunicate effectively with cntractrs and resurce agency persnnel regarding issues pertaining t mitigatin measures and farm installatins, and identify training fr cntractrs respnsible fr cnstructin and maintenance f farm installatins and restratins. The Agricultural Advisry Services (AAS) will train cntractrs t take precautins during cnstructin activities under Cmpnent 2. Representative Mitigatn Actins. The mitigatin actins fr prject supprted activities will include, but nt be limited, t the fllwing: Minimizatin f Impacts. Particular emphasis will be placed n scheduling activities t

119 O minimize impacts n flra and fauna, specifically during the fish-spawning seasn and in sensitive habitats. Ersin cntrl mitigatin measures, prpsed ecsystem restratin and farm management plans will cmply with natinal envirnmental plicies (standards and permits) and are designed t cnfrm t accepted engineering and envirnmental standards. Design Specificatins. Design specificatins fr mitigatin measures will be prvided t cntractrs. The design specificatin will address required management practices fr installatin, inspectin, maintenance, ersin preventin and sediment cntrl, such as: Guidelines fr design and cnstructin (e.g. size, depth, sil prperties, drainage netwrk) f manure pads, slurry tanks, and ther nutrient recycling structures fr farm installatins. Guidelines and design specificatins fr cnstructin f in-stream mnitring statins t include apprpriate ersin and sediment cntrl measures t reduce cnstructin impacts (e.g. silt fences, drainage bypasses, bistabilizatin blankets and ec-techniques fr stream bank restratin). Design guidelines fr ecsystem and stream restratin t include ersin and silt cntrl mitigatin measures and ec-engineering techniques (e.g. ersin cntrl silt fences, drainage bypasses, and bi-stabilizatin blankets). * Cntractr Requirements t Minimize Envirnmental Impacts. The EMP supprts specific measures t mitigate ptential cnstructin and peratin perid impacts and t address safety issues. Individual management plans will prvide guidelines and actins t mitigate ptential envirnmental impacts, thrugh instructins t design engineers and cnstructin cntractrs t undertake certain actins n a site specific basis. Cntractrs will be required t prvide and maintain equipment with prper nise abatement cntrls. Specific prvisins shuld be included in cnstructin cntracts t mandate the use f health and safety measures t minimize accidents during the cnstructin and pst-cnstructin prcess. Apprpriate bidding dcuments fr cnstructin will be prepared t supprt the EMP. * Archelgical "Chance Find" Prcedures. All cperating cuntries have cultural heritage laws and well develped institutins in this area. Archaelgical and histrical site surveys exist at the cunty level fr many f the areas in which prject activities will be undertaken. The small-scale nature f the civil wrks and wetlands restratin activities supprted under the prject allw them t be sited in a flexible manner that can be used t avid sites f archaelgical r histrical value. Prvisins will be included in cntract dcuments t address archelgical "chance finds" shuld they be encuntered during the curse f cnstructin activities; these prvisins will fllw prcedures accepted by the natinal and/r lcal authrities respnsible fr archelgical and histrical sites and materials. 21. Prject Implementatin Mnitring. The fllwing prject implementatin mnitring actins will be taken: * Cmpnent 1- Activities I and 2. Management f Labratry Wastes. The Cmpnent 1 Crdinatr and team will mnitr the prper cllectin and dispsal f chemical and bilgical wastes frm cperating labratries. This will include the examinatin f labratry recrds and review f practices n-site and at the cperating labratries. These prcedures will als be mnitred as an element f Bank supervisin. * Cmpnent 1- Activity 4. Salmn River Restratin. The Cmpnent 1 Crdinatr and team will undertake n-site mnitring during the implementatin f prject supprted eclgical

120 engineering activities and channel clearing/cleaning activities. This will include site specific mnitring t verify cntractrs are fllwing mitigatin measures and spt checks in adjacent areas and in water bdies influenced by the management activities. Site specific mnitring will be cnducted fr standard water quality and eclgical parameters t evaluate shrt-term restratin impacts t stream habitats, submerged vegetatin and spawning areas. Standardized bservatins will be made cncerning stream mrphlgy and status f habitats befre, during and after cnstructin. Samples will be cllected t evaluate water quality, especially turbidity and suspended materials and selected bilgical parameters. This will be cmplemented by lnger-term mnitring, in cnjunctin with spawning and pst-spawning seasns, t evaluate benefits frm these interventins. The use f these prcedures will als be mnitred as an element f the Bank supervisin. * Cmpnent 2 - Activity 1. Agricultural Interventins. The Cmpnent 2 Crdinatr and the LrUs will undertake n-site mnitring during the cnstructin f prject supprted small-scale civil wrks and wetland restratin activities. This will include site specific mnitring t verify cntractrs are fllwing mitigatin measures and spt checks in adjacent areas and in water bdies influenced by the management activities. This will be cmplemented by baseline mnitring supprted under the prject t assess pre-and pst-prject envirnmental cnditins and benefits frm the interventins. This mnitring netwrk will be crdinated with the castal zne mnitring activities described belw. The use f these prcedures will als be mnitred as an element f Bank supervisin. * Cmpnent 2 - Activity 2. Mnitring and Assessment f Nn-Pint Surces. A design has been prepared fr the water quality mnitring system and sites prpsed fr cnstructin f statins. Prject supprted cnstructin cntracts will include measures t reduce ersin and siltatin. The Cmpnent 2 Crdinatr and the LIUs will undertake n-site mnitring during the cnstructin f prject supprted water quality mnitring statins. This will include site specific mnitring t verify cntractrs are fllwing mitigatin measures. The use f these prcedures will als be mnitred as an element f Bank supervisin. * Cmpnent 2 - Activity 3. Land-Based Castal Zne Management. The Cmpnent 2 Crdinatr and the LIUs will undertake n-site mnitring during the cnstructin f prject supprted small-scale civil wrks and wetland restratin activities. This will include site specific mnitring t verify cntractrs are fllwing mitigatin measures and spt checks in adjacent areas and in water bdies influenced by the management activities. This will be cmplemented by baseline mnitring supprted under the prject t assess pre-and pst-prject envirnmental cnditins and benefits frm these interventins. This mnitring netwrk will be crdinated with the agricultural mnitring activities described abve. The use f these prcedures will als be mnitred as an element f Bank supervisin. H. CONSULTATION AND DISCLOSURE OF INFORMATION 22. The prject preparatin prcess has included a variety f cnsultatins with a wide range f stakehlders, including nngvernmental rganizatins (NGOs), at the reginal, natinal and lcal level. This prcess will cntinue during the prject implementatin perid which will allw fr inputs frm stakehlders especially at the activity specific level. The EMP has been made available t the public thrugh the Inf-Shp at the Wrld Bank, at the crdinating institutins-helcom (Helsinki), IBSFC (Warsaw) and ICES (Cpenhagen) and thrugh the Ministries f Envirnment f the cperating natinal gvernments (Estnia, Latvia, Lithuania, Pland and the Russian Federatin). It is als available at the Wrld Bank ffices in the cperating cuntries. 23. The cnsultatin prcesses during prject preparatin were diverse and used a range f frmats

121 including reginal and natinal meetings with scientific and technical institutes, parties cncerned with marine resurces management, agricultural extensin agents and nngvernmental rganizatins. As part f this prcess a majr internatinal meeting was held in Lithuania t review the experience with transbundary water management in the Baltic Sea Regin and technical meetings were held in Latvia and Pland t review the marine resurce and castal management issues. Design f the activities fr cntrl f nn-pint surce pllutin and integrated castal zne management included wrkshps at the natinal and lcal level, which prvided agricultural extensin agents, cperating farmers, cmmunity based rganizatins and lcal nngvernmental rganizatins an pprtunity t prvide input t the prject design prcess based n their experience frm the earlier bilateral and Bank supprted demnstratin prjects at the field level. A field trip t Pland t visit the nging Rural Envirnment Management Prject was the ccasin fr a variety f stakehlders t meet Plish experts, cmmunity representatives and farmers t review their experience with n-farm activities t reduce agricultural pllutin. 24. These cnsultatins emphasized the need t maintain a balance between meeting reginal scientific and technical bjectives n the ne hand, and imprving envirnmental and scial cnditins at the lcal level n the ther. As nted in Sectin F abve n Scial Aspects, the key issue raised by fishing, fanming and castal cmmunities was their interest in the prject supprting, ver the shrt-, medium- and lng-term, expanded pprtunities fr permanent and/r seasnal emplyment. In this cntext, the prject will wrk with lcal cmmunities t maximize their direct and indirect emplyment pprtunities frm small-scale investment activities, participatin in varius types f management measures and t supprt develpment f lnger term emplyment pprtunities assciated with sustainable resurce management. In this cntext, it will build upn the experience frm Bank supprted envirnmental management prjects in Estnia, Latvia and Lithuania. I. INSTITUTIONAL STRENGTHENING 25. Institutinal Strengthening. Cmpnent 3 f the prject prvides supprt fr institutinal strengthening and capacity building measures necessary fr the implementatin f the ecsystem management apprach prmted by the prject. Successful implementatin f the prject requires the strengthening f reginal and lcal institutinal capacity t supervise the cnstructin and maintenance f the installatins and restratin activities. The Cmpnent's primary bjective is t strengthen reginal and lcal capacity t successfully utilize utputs and recmmendatins frm Cmpnent 1 and Cmpnent 2 activities fr sustainable ecsystem-based management. Under the three phase apprach adpted fr implementatin f the verall BSRP, Phase I will include a small number f institutinal strengthening activities; activities in this area will be expanded significantly during Phases 2 and 3 f the prject. In additin, the Cmpnent Crdinatrs will wrk with the lcal cunterparts at the technical Crdinatin Centers, the LIUs, and AASs t identify training needs and prvide practical training in labratry methds, assessment and management f agri-envirnmental issues and castal zne management. J. ESTIMATED COST 26. The csts fr implementatin f management and mnitring activities included in the EMP have been integrated int the estimated budgets fr the individual activities and management csts fr the Phase 1 prject. This apprach reflects the envirnmental management rientatin f the prject and the fact that mst mitigatin actins are assciated with prject supprted management plans, design appraches and specificatins in cnstructin cntracts. Mnitring f prject supprted implementatin is an element f the wrk prgram f the prject management team while baseline and lng-term envirnmental mnitring are included as specific activities within the peratinal cmpnents f the

122 prject. KI IMPLEMENTATION SCHEDULE 27. The prpsed mitigatin and mnitring activities during Phase 1 will be undertaken cnsistent with the fllwing schedule: Cmpnent Year I (quarters) lyear (quarters) l Cmpnent I - Labratry Waste Management Review Labratry Prcedures x x Establish Labratry Prcedures x x Mnitr Use f Prcedures X X X X X X X X X X X Cmpnent 1 - Salmn River Restratin Prepare Restratin Plans X X X Mnitr Implementatin X X x x x x x Cmpnent 2 - Agricultural Interventins Prepare On-Farm Management Plans X X X X X X X _ Mnitr Implementatin X X X X X X X X X X Cmpnent 2 - Mnitring and Assessment f Nn-Pint Surces Finalize Designs and Site Selectin X X Mnitr Implementatin x x x x X x x x X X Cmpnent 2 - Land-Based Castal Zne Management Prepare Management Plans X X X X x x x Mnitr Implementatin x 7 X x 7 X x x 7 X L. REPORTING AND SUPERVISION 28. Reprting. The Prject will cmply with the "Guidelines fr Financial Reprting and Auditing f Prjects- Financed by the Wrld Bank." The Bank tgether with HELCOM will agree upn reprting requirements fr Financial Mnitring Reprts (FMR). Prject prgress will be reprted thrugh annual, semi-annual and quarterly Prject prgress reprts. An Implementatin Cmpletin Reprt (ICR) will be prepared within six mnths f Prject cmpletin. 29. Supervisin. The Cmpnent Crdinatrs will supervise the mnitring f prject supprted activities n a rutine basis. This will be cmplemented by Bank supervisin f the prject. The prcess will include the participatin f Bank envirnmnental and scial staff in supervisin missins, as apprpriate, t review prgress in the implementatin f the EMP. The perfrmance f the Executing Agency in these prject activities will be a standard element f supervisin reprts and the Implementatin Cmpletin Reprt (ICR). Cmpnent Activities Phase Issue Mitigatin Measure Mnitring Respnsible I I I I I I Institutin COMPONENT 1- LARGE MARINE ECOSYSTEM ACTIVITIES 4ctivity I Strengthen Institutinal and Technical Capacity 4ctivity 2 Operadnalize Mnitrinj and Assessment Surveys in the Eastern Baltic Sea ctivity I Mnitr Mnitring Minimizatin f Cperating labratries WNat. The Cmpnent I Supervisin by Sub-activity (a) hemical and risks assciated with will use prper chemical Crdinatr and team will Cmpnent I Strengthened bilgical waste the dispsal f and bilgical waste mnitr chemical and bilgical Crdinatr Institutinal dispsal chemical and cllectin and dispsal waste cllectin and dispsal Capacilty f practices used by bilgical wastes measures that will be practices used in individual

123 Crdinatin cperating frm data cllectin cnsistent with thse labratries. Centers abratries. and analysis in recmmended by ICES. Where. At cperating Activity 2 cperating Field equipment used fr labratries participating in the Sub-activity (a) abratries. data cllectin will be BRSP. Cnduct Castal dispsed f in accrdance When. Data n the management Near Shre with current ICES f these materials will be nitring prcedures. maintained by cperating Surveys labratries and reviewed as an Sub-activity (b) element f the supervisin Cnduct Jint prcess. )pen Sea Mnitring Survey Hw. Examinatin f labratry recrds and n-site review f practices. Why. T avid risks assciated with imprper dispsal f chemical and bilgical wastes _frm labratries. ctivily 4 Demnstradn Activities Sub-activity 4 (b) Prepare Salmn Mitigatin Prepare a site 'Me SRRAP will include What: The Cmpnent I Supervisin by almn River River pecific Salmn design f salmn river Crdinatr and team will Cmpnent I Restratin Restratin River Restratin restratin and mitigatin undertake n-site mnitring rdinatr Actin Plan Actin Plan actins, which will during the implementatin f SRRAP). (SRRAP) fr each incrprate use f restratin activities and bth *ver selected fr a apprpriate aseline and lng-term emnstratin ec-engineering appraches mnitring data will be cllected ctivity. d management during t assess impacts frm stream restratin activities implementatin f the restratin t reduce ersin and prgrams. siltatin. Where: At the salmn river restratin sites, especially the lcatins f eclgical engineering measures and channel clearance/cleaning. When: During the implementatin prcess at the restratin sites and spt checks in areas adjacent t the restratin sites. Hw: Site specific mnitring will be dne during the restrati phase by the LIU t verify that cntractrs are fllwing mitigatin measures and that spt checks are carried ut in adjacent areas and in water bdies influenced by the restratin activities. Why: T avid unnecessary impacts t restratin sites frm rject supprted activities and t develp an adequate data base t understand the effects f the selected actins n envirnmental and sci-ecnmic cnditins. This will include an evaluatin f pre-and pst-restratin cnditins and assess benefits frm interventins. Restre Cnstructin inimal shrt-term The SRRAP will cntain egments f the n stream bttm site specific guidelines amu River in ediment cnceming the timing fr Estnia. isturbances frm restratin and mitigatin

124 stream restratin, measures t mnimize n lng-term in-steam disturbances. It disturbances. will prvide ecmmendatins fr ctins t be taken during stream restratin activities avid habitat disturbance and reduce ersin and siltatin. Restre Cnstructin Shrt-term in stream The SRRAP will cntain segments f a ttm sediment site specific guidelines selected river in disturbances frm nceming the timing fr Latvia. stream restratin, restratin and mitigatin lng-term measures t minimize disturbances. in-steam disturbances. It will prvide recmmendatins fr actins t be taken during stream restratin activities avid habitat disturbance and reduce ersin and siltatin. Restre Cnstructin Minimal shrt-term The SRRAP will cntain segments f in stream bttm site specific guidelines Minija River in sediment nceming the timing fr Lithuania. disturbances frm restratin and mitigatin stream restratin, measures t minimize lng-term in-steam disturbances. It disturbances. will prvide recmnmendatins fr ctins t be taken during stream restratin activities avid habitat disturbance and reduce ersin and. siltatin. Mnitr restred Mnitring Restred rivers The SRRAP will utline a rivers. shuld be mnitred shrt-term and lng-term y Reginal mnitring schedule Envirnmental evelped in cperatin Offices and Fisheries th envirnmental and Offices. fisheries authnties. OMPONENT 2 LAND AND COASTAL MANAGEMENT ACTIVITIES ctivity I Agricultural Interventins ub-activity 1 (b) Demnstrating Cnstructi Minimal shrt-term Farm Envirnmental What: The Cmpnent 2 Supervisin by emnstrating n-farm disturbances frm Management Plans will be Crdinatr and LIU Cmpnent 2 Cst-effective agri-envirnmeni cnstructin repared fr each representatives will undertake Crdinatr and Nutrient Recycling measures - activities at articipating farm. These n-site mnitring dunng the Lcal and Retentin cnstructin f articipating farms. will specify timing f cnstructin phase and bth Implementatin Technlgies small scale Will nt result in an cnstructin and ersin baseline and lng-term in-stream Units civil-wrks fr lng-term cntrl measures t reduce water quality data will be Sub-activity I (c) nutrient cntrl. disturbances. dwnstream impacts frm cllected t assess impacts and On-Farm cnstructin f manure trends frm interventins t Envirnmental ads and ther structures. reduce nutrient lading. Investments Cntracts will specify Where: On-farm at the measures t be taken during cnstructin sites and in-stream cnstructin t reduce belw the cnstructin sites. ersin and siltatin. When: During the cnstructin prcess at the cnstructin sites and spt checks in-stream belw the cnstructin sites. In-stream

125 baseline will be mnitred fr streams in fcus areas fr n-farm interventins. Hwv: Site specific mnitring will be dne during the cnstructin phase by the LIU t verify that cntractrs are fllwing mitigatin measures and that spt checks are being dne in-stream belw the cnstructin sites. In-stream mnitring netwrk with statinary equipment and field samples will be established as part f Cmpnent 2, Activity 2 (see belw). Why: T avid unnecessary impacts t stream channels, wetlands and water quality during cnstructin phases. In-stream mnitring will be used t evaluate pre-and pst-restratin cnditins and assess benefits frm interventins. Cnstructin and Cnstructin Minimal shrt-term Farm Envirnmental restratin f in-stream Management Plans will be wetlands. disturbances frm repared fr each wetland restratin articipating farm. These activities. Will nt will specify timing f result in any nstructin and ersin lng-term ntrl measures t reduce isturbances. dwnstream impacts frm nstructin and restratin f wetlands. Cntracts will specify measures t be taken during cnstructin reduce ersin and siltatin. _ Cnstructin f Cnstructin Minimal shrt-term Farm Envirnmental water in-stream Management Plans will be urificatin disturbances frm prepared fr each systems using water purificatin articipating farm. These xlgical activities. Will nt wil specify timing f gineering result in any nstructin and ersin nethds. ng-term cntrl measures t reduce dsturbances. dwnstream impacts frm nstructin f water purificatin systems. Cntracts will specify measures t be taken durin cnstructin t reduce ersin and siltatin. ctivity 2 Mnitring and Assessment f Nn-Pint Surce Pllutin Sub-activity 2 (a) Establish Mnitring/ evelpment f the A design has been prepared This sub-activity establishes the Supervisin by Catchment mnitring Cnstructin mnitring system fr the water quality in-stream watershed mnitring Cmpnent 2 Measurement netwrk in will require mnitring system and sites netwrk fr Cmpnent 2, Crdinatr and rgrams demnstratin cnstructin and prpsed fr cnstructin Activity 1 t supprt the Lcal watersheds. peratin f water f statins. Prject cnstructin f n-farm mplementatin quality mnitring supprted cnstructin investmnents fr cntrl f Units statins n selected cntracts will include nn-pint surce pllutin frm

126 watersheds. measures t reduce ersin agriculture. This mnitring and siltatin. netwrk will be crdinated with the castal mnitring activities under Activity 3 (belw). The Cmpnent 2 Crdinatr and the LIUs will undertake n-site mnitring during the cnstructin f prject supprted water quality mnitring statins. This will include site specific mnitring t verify cntractrs are fllwing mitigatin measures. Develp data Mnitring Refer t Mnitring Mnitring schedule fr cllectin clumn. data cllectin netwrk has prgram. been prepared. Cllect data. Mnitring Refer t Mnitring Mnitring schedule fr clumn. data cllectin netwrk has lbe_ ben prepared. 4ctivity 3 Land-Based Castal Zne Management Sub-activities 3(a), Demnstrating Mitigatin Management plans Management Plans will be W"at: LIU representatives will Supervisin by 3(b), 3(c), 3 (d) castal zne will result in prepared fr each area undertake n-site mnitring Cmpnent 2 management imprved included under this activity. during the cnstructin phase and Crdinatr and prgrams in management f These will prvide a bth baseline and lng-term Lcal cperatin with sensitive castal and framewrk fr management mnitring data will be cllected mplementatin cal wetland habitats. In f these castal resurces t assess impacts frm Units cmmunities. rder t achieve this, and an active rle fr lcal implementatin f management bjective measures cmmunities in decisin plans. will be taken t making and benefit sharing. Where: At the castal zne change land and The management plans will management site and at the water management specify timing f the lcatin f small-scale civil wrks ractices, supprt actins t be taken fr these and wetland restratin activities. small-scale civil areas with regard t new When: During the cnstructin wrks and t restre management practices, prcess at the cnstructin sites wetlands. small-scale civil wrks, and and spt checks in areas adjacent changes in land use t the cnstructin sites and in practices. Management water bdies influenced by the plans will be frmally cnstructin. reviewed and apprved by Hw: Site specific mnitring natinal and reginal will be dne during the authrities. cnstructin phase by the LIU t verify cntractrs are fllwing mitigatin measures and that spt checking is dne in adjacent areas and in water bdies influenced by the management activities. Why. T avid unnecessary impacts t castal zne management sites frm cnstructin activities and t develp an adequate data base t understand the effects f the selected mianagement n envirnmental and sci-ecnmic cnditins. This will include an evaluatin f pre-and pst-restratin cnditins and assess benefits frm interventins. [mplementatin Cnstructin inimal shrt-tenm Management plans will

127 f castal zne isturbances frm address ptential raagement cnstructin cnstnuctin impacts. lans including ctivities at castal Prject supprted in f new zne management cnstructin cntracts will appraches t sites. Will nt result include measures t reduce resurce n any lng-term ersin, siltatin r damage management, isturbances. sensitive habitats. cnstructin f small-scale civil wrks and measures fr wetlands restratin. Develp and Mnitring Ptential impacts Refer t Mnitring Crdinatin: This mnitring implement luring cnstructin Clumn (n previus page). netwrk will be crdinated with mnitring bhase shuld be the agricultural castal mnitring prgram. nnitred and activities under Activity 2 prgram established (abve). evaluate lng-tem virnmental trends areas supprted by the prject. _

128 Additinal Annex 14: STAP Technical Review EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Date: September 11, 2000 T: Frm: Subject: Stephen Lintner, Senir Envirnmental Advisr, ENV, Wrld Bank Richard Kenchingtn RAC Marine Pty Ltd, PO Bx 588, Jamisn, ACT 2614, Australia STAP Review: GEF-Baltic Reginal Prject. This review addresses the terms f reference set ut in yur Memrandum f 22 August I The prject directly addresses clearly defined needs in the cntext f the Intematinal Waters Cnventin. It addresses the urgency f reginal issues in a marine ecsystem that is shared by and impacted by the activities f several natins. It builds n existing capacity f HELCOM and ther reginal mechanisms fr cllabrative actin. It als builds n the critical pprtunity prvided by the need and ecnmic incentive t meet the requirements f EU directives. 2 The prject bjectives are valid, challenging and well fcused. The prpsed activities address very difficult and imprtant issues in the areas f fisheries, pllutin and catchment management and the develpment f lng term ecnmic pprtunities fr castal peple. The prject builds n a decade f wrk with HELCOM and it appears that the prpsed activities are likely t be bradly supprted and t be effective in addressing the issues. 3 The apprach f the prject is lgical and apprpriate. The greatest challenge in implementatin will lie in achieving nging integratin f the scientific and mnitring prgrams and utputs with the infrmatin inputs required t address the immediate and lnger-term needs f management. 4 The dcument prvides sufficient strategic infrmatin fr implementatin. The Annexes and the preparatin f table E indicate that the issues f detail and crdinatin have been cnsidered and are available fr the implementatin team. 5 I have little direct knwledge f reginal r cuntry pririties but the dcument has addressed and discussed pririties in a way that indicates that there has been substantial cnsideratin, which is reflected in the prpsal. 6 The dcument is well presented and well argued. It clearly articulates the reasns and the urgency fr the prject t be undertaken. The issue f incremental csts is particularly well addressed and present arguments that apply t many shared castal and shallw sea areas. It argues clearly and apprpriately that investment t halt and reverse therwise inevitable decline f envirnmental cnditins and ecsystem-based prductivity is as valid as technlgical investment t prevent future damage. 7 The activity descriptins present adequate infrmatin n what is intended t be accmplished

129 8 Again, my ability t cmment is limited by my lack f experience in the Baltic but the figures and relative allcatins appear reasnable, cnsistent and are clearly presented. 9 The prject invlves achieving scial, ecnmic and attitudinal changes in lng established practices f agricultural and fishing cmmunities. Such changes take time. This prject builds upn a decade f wrk between the Wrld Bank and HELCOM that has achieved significant and grwing cmmunity recgnitin f the prblems and f the need fr the changes prpsed. The prpsal as presented shuld advance the bjectives by delivering substance and results t address the needs and demnstrate benefits t participating cmnmunities. The ultimate demnstratin f success will be the demnstratin thrugh nging and subsequent lcal and reginal investment that the envirnmentally sustainable technlgies and practices demnstrated are being incrprated f int nrmal ecnmic activity in the catchments and castal areas f the Baltic. In the light f the reprts f attitudinal change in the past decade the prspects appear gd. 10 I cnsider this shuld be seen as a pririty issue fr GEF. This is clearly a prject that addresses internatinal waters and bidiversity pririties f the GEF, the pririty issues f Chapters 17 and 36 f Agenda 21. Als, having regard t the lng histry f human settlement and use f the castal and catchments f the Baltic, it addresses the issues f Chapter 26 f Agenda 21. This is nt nly an imprtant prject fr its Regin; it has imprtant implicatins fr addressing similar urgent needs in ther castal and shallw marine ecsystems in the wrld. 11 Sme cmments n the prfessinal challenges fr fisheries managers, scientists and cmmunity managers are attached separately. They reflect issues that may have been cnsidered in prject develpment and in my view need t be addressed in initiatin and thrughut implementatin f a prject that I recmmend urgently fr supprt. R A Kenchingtn

130 Attachment t STAP Review f GEF Baltic Sea Reginal Prject Issues fr implementatin 1) The prject is lgical, well described and achievable. Its implementatin presents several imprtant prfessinal style and disciplinary challenges f apprach and demands fr an nging high level f inter-disciplinary cllabratin between scientists, fisheries managers and cmmunity leaders and managers. 2) Frm the perspective f managing a large marine ecsystem the fllwing issues shuld be addressed in implementatin: a) The bjectives f, and infrmatin cllected in, research and mnitring prgrams must directly address the clearly identified cncems and time scales imprtant t managers as well f thse f eclgical research: i) Shrt and lng term management needs shuld be clearly identified and addressed issues include: (1) Recruitment variability f fisheries target species; (2) interactins f apparently 'natural' and apparently anthrpgenic causes f variatins; (3) impacts f fishing methds n nn-target species and the eclgical prcesses which sustain the ecsystem and fisheries f the Baltic; (4) understanding the interactin between investment cycles and fish stcks; (5) understanding the scial and ecnmic factrs and ptential t reslve cmpetitin between cmmercial and recreatinal cmpetitin fr fish stcks. b) It is imprtant t ensure the best pssible data is available n catch, effrt and lcatin f catch fr the fisheries. Given the cultural traditin f all fishers t bfuscate such infrmatin I wuld advcate a feasibility study f the use f vessel mnitring systems and audited cmmunity catch reprting. c) There is a disturbing lack, anywhere in the wrld, f fisheries management schemes capable f demnstrating sustainability with respect t stcks and t the envirnments and eclgical cmmunities that sustain them. I wuld advcate the adptin f a gal and the develpment f rbust perfmiance criteria that may be able t establish sustainability in ne r mre f the Baltic fisheries. d) In the absence f rbustly demnstrable sustainability f fisheries I wuld advcate the applicatin f the precautinary principle thrugh the establishment f reference sites, refugia r marine prtected areas t prvide area frm which it may be pssible fr recruitment and migratin t restre area damaged by ver fishing. e) In any case, I wuld advcate the pursuit f marine prtected areas representative f all majr habitat types in the Baltic large marine ecsystem as a matter f cnservatin imprtance. This issue is nt directly addressed in the prject prpsal. It is pssible that it is being addressed elsewhere but it is imprtant cnceptually t the cncept f sustainable management f the Baltic Sea

131 R A Kenchingtn Wrld Bank Respnse t STAP Review f GEF Baltic Sea Reginal Prject: The Prject preparatin team is pleased with the STAP Reviewer's psitive respnse t the prject bjective and prject design, and appreciates the issues the Reviewer identifies fr cnsideratin during Prject implementatin. The fllwing prvides an verview f the Prject apprach and hw the issues wuld be addressed. Reference is made t the Large Marine Ecsystem (LME) wrkshp was held July in Riga, Latvia, fr which the wrkshp reprts are available n file, r respnses refer t prpsed activities identified in Annex 2 Table C f the PAD dcument. 1) Issue: Recruitment variability f fisheries target species. Respnse: The Riga wrkshp reprt elabrates n the participants' discussins n fishery issues and identifies prpsed target species ranging frm sprat and herring t cd, and Cmpnent I Activity 1.2 (c) will prvide an pprtunity t address recruitment variability during the prpsed multi-species stck assessment activity. 2) Issue: Interactins f apparently 'natural' and apparently anthrpgenic causes f variatins: Respnse: This issue can be addressed within Cmpnent I Activity 1.1 elements, which include mdeling the carrying capacity mdeling effrts t assess and evaluate fishery ecsystem interactins and t better understand envirnmental effects int fish stck assessment. It is anticipated that this infrmatin will cntribute t a better understanding f the interactin f natural and/r anthrpgenic causes f species variatins. 3) Issue: Impacts f fishing methds n nn-target species and the eclgical prcesses which sustain the ecsystem and fisheries f the Baltic; Respnse: As part f the Riga wrkshp participants prvided a baseline review n the status f fishing vessels, data quality, and data needs. Thugh nt specifically articulated in the PAD dcument, the intent f Cmpnent 1 Activity 1.2 fishing methds will be evaluated and cst-effective methds t cllect sustainable and reliable fisheries statistics will be develped. 4) Issue: Understanding the interactin between investment cycles and fish stcks; Respnse: This issue can be addressed in an integrated apprach within Cmpnent 1 Activity 1.2, which will cnduct multi-fish stck assessments, and relevant data will be crdinated with Cmpnent 3 Activity 3.1 in assessing the value f ecsystem gds and services. 5) Issue: Understanding the scial and ecnmic factrs and ptential t reslve cmpetitin between cmmercial and recreatinal cmpetitin fr fish stcks. Respnse: This issue can be addressed in Cmpnent 1.2, which will target supprt fr imprvements in, and prvide recmmendatin fr natinal and internatinal ecsystem strategies fr prblems and cnflicts in transbundary castal fisheries, this includes cnflicts between cmmercial and recreatinal fisheries. Elements frm the utput f this effrt will be cnsidered in the prpsed sciecnmic assessment. General respnse t ther cmments: The prject design was develped within the cntext f LME and in develping the Prject Implementatin Plan this fall, there will be an pprtunity t further develp prject indicatrs and lng-term perfrmance criteria fr sustainable fisheries management practices. Thugh nt specifically stated in the PAD, an anticipated utcme frm the Prject activities will be

132 recmmendatins fr envirnmentally respnsible practices fr sustainable management f Baltic Sea resurces, and this wuld include recmmending sites fr cnservatin and prtectin f eclgically significant castal and marine waters

133 Additinal Annex 15: Lefters f Endrsement EUROPE AND CENTRAL ASIA: BALTIC SEA REGIONAL PROJECT - PHASE I Annex 15 includes GEF Natinal Fcal Pint letters f endrsement fim Estnia, Latvia, Lithuania, Pland and the Russian Federatin. FILE N.8SS 2I.08.'00 11:46 ID:VILIS AtLm.z. nliayisi. t:a i reuw4 rhc I ML,ISTRY OF ENVIRONMIENTAL PROTUCTION AND RBGIONAL DkWELOVMlT Or THE REPUBLUC OP LATVWA Dr. tphmu V2. JAntner Snir lnvirnnamcntal Adv!i*r LLm4rnmat I)par&mcnt Warld Bnk If Strt - t N,Wr Wuhingtn,.C. 20J433, USA itax ~~~~~~~=-0367 Ria~~~~~tign August tjio201tj Subjixu: cilal -Baitic Sea Ruglnal I'rjt - ltr fendrsmmnt Dear Dr. rirtnr, lhu Minitry tf 1invirnwrntal Prtecti and Ruglat Daulpmunt f r[ttvw inn hhitlr l the nvcrnmcnl is plsaud ta endritc thu rtpin"ad UNDIP/Waard lank (ni;u Baltic Sea RA%inni PrcjAcc. Trhis prujlat will ent,ihut up ralilatii,n f (h lllinki 01uuvanlnSu bjective u' restke the wilanglal itinwvc r th lialtic S%a, thrugh ita supprt l'r managcwmwt f livink marinc rencra nand cntrl f nn-ptlnr pilutin Jada. ith f which ac pririty isueas Izn th rgin. It will aiuin punide an pprtunity rr latita and th Cthr recipient cuxintrics ta strnlithn their inrttutinal and tuchnicaj capstay, uafisting them t managc the lilaltic Sca cnsystm In a utainabnu manner. The prpirml pmjct has behn deluvped Iu cil[txiratin with th IJNDP and th Wrld liank. Its activitics and glpahs atu in accardanc with lawias pririthim Fr rstratin nl' thu Battlc Sca *mnd Lhu (1vcrnnint f lawini, attaeclca gruatl mprutnc tu thu rcailzaitln.r Lth prqject's *jutivun, We arc piwiced t tacgnic that th Ialaimnkl L' nimlmiumn (1111.1AX)M) will ser as the xcwtninig Agunp in cuuprlatin withl the Intarnarnal Iladtic Sn li-shrics Ckmmisin (UISSFC) and th Interuadnnal Cuncil fr the lmplratkin fthu SA (ICEI). L' *ruvers lngrwa Apcfc puty Sutti Secretary CEl U1: Opentinmal 1cal Pint fr IMA Zi Pldu Srr.. l.v.ijlua, Rlp. Lavla: phnne tn. ram Zd e9s0!2l Z02 MN31 am Wd2;t ac

134 LETU0 S OS APLR4KOS?dNISl!RUA Dr. Stephtn P Lbitt Senir MmirmmeatW AdAvir Fnwrmarn Deputmn WWdd Bank t libi H Strect N W. WmshmUlrF 0 C 2043] 1-x IX :V,;';5'!" 0367 RCc GEF-Bartic Sea Regiil Prjicct - Letrc f E ndrt unenr Dewr Dc Lintner. ' he Viinisty f Eivirnmcrn t'lithuanis is pcemsed t suppt tihe prpsed t. 1 NfPDWrld Bank C;EF Daitic See Reginal Prtect cnncept. TItis prjecv wvil c nsibute tu mcelisatin r the elesinja Cfrvertin's annti'.c t restre thta cck-mscal balanea f thc Baltic Sea, thrugh its suppart fir managemen f Imaul marine m4iurcca end u ntl f nm-pnrtt pfltiun laids bth f whelh am pnnty iuas in the Tegin. 1n -ill als prvidc am 0dtuny far Lithauia nd tthe Othc recipsait cwvrjes c strenghthn htir infltt l end ruhmi capcity. asstmg thcm t marag the Bli. Sea e vyrem Ut a -^damdicbl m tcr. Tre Crpsed prscc he been devdcpc In chiabrat with tec L'NDP and the Wetid Bank Its actwtafs end gals we in wr4anm with Laftan4' pgftis*cs fr restaisi f the Selthc Sea and tht Oeymant cnldess prt= wpnca the reatiaun t the prjiecd. r.)ccesi We are pleasd rernise Oa e KHairbi C,ussi (IvLCDM) wil 3me rthe x Ai.xcCul A nevy tn ct-pef with the IMernahl D5i Ft ubes Cwinisan IBSFC) wed de Intenutl Cma1i ibr the Exptim f the See (ICES). We ai *,uld Skc t ird r tha the Cm%,cnt f 1.Itbulia can nt taime any inkial awd rqtnuaatw cmm _zmms at Udi stage e( tft prject. Tbtse rwca will be dismed nd npeed adet the Icnrm fre detm ftr mt vidual rwpncae are develped. SinA;creiy. Ac Endrsed by (FF Pcul Pleu Ms Jndre Vannltza y,ate 0'4A I'tah26414~ft% VIISTRY OF -r--i OF Th& FuDLu O CWU F Fa g UAMA -128-

135 VU/VW UU &6:Ua PAL +4J0 * OUA&UA&W. t7 VS c:l{4ae Eceum Sea-ehty PI*OM C'znmie*in 6 SepWeW2000 Mr. SWhefl Unbw The Wd Ban Envm1unnt DcWtnant 1018 H St tl N.W WNntddng D.C. 20M38 USA RGf Plads tndfm6e1it I* f fwi1t i B$StP C?J^ zepke,, Rdfenflr9 t yr teq zcwm * fi 1ttr d eralnt fmm Pland fr Di GEF BSRP tis is t rmm yw f my bvdmui diswna with Mr. Penf lds ihe des nt sm ay pdnclpel pmbluna In geftit alch an er4wsunen uta the 05awg1mflve pmeadua wil take t* t em. mnths a ft bterahhld lirst he fmiur seepted by the Piel GhiB*n CmiLttee. Tharuim. I wuld &awet yu e kiuch w I W. W. Pwa n vaii Is In NewYrk at m mmnt atedig the UN high lvnere. Kaajiaaainr6 pbi.,'258 0O) tbd=~df PE'N-006DHslslW. hftd fw +35() Imn,fwwwd B/E'd ~~~~~~~89SBULO 20 M'143I BM WdT2:t70 08, ilo

136 5-E S6 ne Dep dcs EamSpl.0C <4 22 g97 P.2 blinitry flrelpnaffafrm f thie Republc f Pland wmnaw, a. iearu 2091 DqtnintbdNrUNa Ecnatnic md Scia AMha Al.a Sn, 00-5 Wusuwa, Pblnd Td.: (4822) fix (48Z) DRSONZA434-O1 Deaw r. Llnte. In my CapaY as GEF Plls Fcal Pint I wld like t nds the prject prpsal titied "Baltc Sea Reginal Prject". The prcjec wil ctitribme t theeductin f pllutin frm ladased sute imo the Baldc Sea and t the imprvet t f the casul zne mmag=enti tugh igaductin f csystm-based appracha fr land and marine envirnental m emnt Tlwh Prjclt wida0 iamprve cpatin f hurgvmamenal instutins f the Baltic :tiparu smta dealg with vadus ae f the Baltic sea maine resurces. The prject is cnsisent with the bjectves f the Natial Envirnmental Plicy acd enjys spprt f the Plis GverneL Yu sinceely, Wjctech Pkiewsld GE Plitical Fcal Pint Mr. Slephen F. Lintaer Senir Advie The Wrld Bank TOFL. P.f

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145 BALTIC SEA WATERSHED AND OFF-SHORE SITES A ILLUSTRATIVE MONITORING SITES * PROPOSED DEMONSTRATION SITES RURAL ENVIRONMENT PROTECTION PROJECT AREAS * SELECTED CrITES NATIONAL CAPITALS --INTERNATIONAL 1 Ik IBRD COMPONENT I1al S RUSSIAN lcde. H F E TI COMPONENT 2 Lake FEDE ATIO BOUNDARIESPs. b - I sl r ibath the caastal and a -are waters, a crrespnd with the HELCOM -COMBINE mnitring9 netwrk. I Kahn RUSSIA r f\~~~~~~~~~~~~~~~~~~~~~~~~~u X X. ~~A Simue s i u i P a n U N e i y s \l GLAisUpS1S zecin (under impeenai n MinsG / _ 9 j ~~~~~~~~~~~~~~~~~Bi*ystk \)1 > \> ~~OSTROLfK 0 0 PznnPO L AlD.J / t / fh~~~~~~~~~~~~~~~~~~arsaw _ St - 9 ( tdzl S j _. - _. W I f 8 <+ 1 1 > $< ~7;~~ JKRAINE > Imtr X.} S V I I X ~~~~~~I I fi I I iii Mi.~ it: ~~~~~~~~~~~~~~~~~~~~~~~~~~~0 CZ - \ Krk6 aep'-- / 2 23-,b 6 b d P-b.U, J. \ \0 JANUARY 271