Document ofThe World Bank

Report No: 19825 VN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SDR 23.1 MILLION (US$31.8 MILLION EQUIVALENT)

TO THE

SOCIALIST REPUBLIC OF VIETNAM

FORA

COASTAL WETLANDS PROTECTION AND DEVELOPMENT PROJECT

October 26, 1999

Rural Development and Natural Resources Sector UnitEast Asia and Pacific Region

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CURRENCY EQUIVALENTS(Exchange Rate Effective October 1999)Currency Unit: Vietnamese dong (VND)

VND 1,000 = US$0.071; US$1.00 = VND 14,000

FISCAL YEARGovernment: January 1 - December 31; IDA: July 1 - June 30

ABBREVIATIONS AND ACRONYMS

BZ Buffer ZoneCAP Commune Action PlanCF Communal FundCPC Commune People's CommitteeCPO Central Project OfficeCWG Commune Working GroupCWPDP Coastal Wetlands Protection and Development ProjectDANIDA Danish International Development AgencyDARD Department of Agriculture and Rural Development (Province)EMDF Ethnic Minority Development FundEMDP Ethnic Minority Development PlanESR Environmental and Social ReviewFFE Forestry/Fisheries EnterpriseFIPI Forest Inventory and Planning InstituteFPMB Forest Protection & Management Board/DepartmentFPZ Full Protection ZoneGIS Geographical Information SystemGOV Government of VietnamHCMC Ho Chi Minh CityICDP Integrated Coastal Development ProjectMARD Ministry of Agriculture and Rural DevelopmentMET Monitoring Extension TechnicianMOSTE Ministry of Science, Technology and EnvironmentMPI Ministry of Planning and InvestmentNPSC National Project Steering CommitteePAP Project Afflected PeoplePFCU Project Field Coordination Unit of the CPOPIR Project Implementation ReportPPC Provincial People's CommitteePPMU Provincial Project Management UnitPRA Participatory Rural AppraisalRAP Resettlement Action PlanRIA Research Institute for AquacultureRMFP Rehabilitation of Mangrove Forests Project (Netherlands)SBV State Bank of VietnamSSF Social Support FundSRG Stakeholders Representation GroupTAG Technical Advisory Group of the TDT programTDT Technology Development and TransferVAP Village Action PlanVBARD Vietnam Bank for Agriculture and Rural DevelopmentVNNEAP Vietnam National Environmental Action Plan

Regional Vice President: Jean-Michel Severino, EAPVPCountry Director: Andrew Steer, EACVQSector Director: Geoffrey B. Fox, EASRDTask Team Leader/Task Manager: Ronald Zweig, EASRD

VIETNAMCoastal Wetlands Protection and Development Project

Contents

A. Project Development Objective .............................................................. 21. Project Development Objective and Key Performance Indicators ................ ..................2

B. Strategic Context .............................................................. 21. Sector-related Country Assistance (CAS) Goal Supported by the Project ..................... 22. Main Sector Issues and Government Strategy .............................................................. 23. Sector Issues to be Addressed by the Project and Strategic Choices .............................. 4

C. Project Description Summary .............................................................. 61. Project Components ............................................................. 62. Key Policy and Institutional Reforms Supported by the Project .................................... 73. Benefits and Target Population .............................................................. 74. Institutional and Implementation Arrangements ............................................................ 8

D. Project Rationale ............................................................. 101. Project Alternatives Considered and Reasons for Rejection .................... ...................... 102. Major Related Projects Financed by the Bank and/or Development Agencies .............. 123. Lessons Learned and Reflected in the Project Design .................................................... 134. Indications of Borrower Commitment and Ownership .................................... .............. 145. Value added of Bank Support in this Project ............................................................. 14

E. Summary Project Analysis ............................................................. 151. Economic Assessment ............................................................. 152. Financial Assessment ............................................................. 153. Technical Assessment ............................................................. 164. Institutional Assessment ............................................................. 165. Social Assessment ............................................................. 186. Environmental Assessment ............................................................. 197. Participatory Approach ............................................................. 20

F. Sustainability and Risks ............................................................. 201. Sustainability ............................................................. 202. Critical Risks ............................................................. 213. Possible Controversial Aspects ............................................................. 22

G. Main Credit Conditions ............................................................. 221. Effectiveness Conditions ............................................................. 222. Dated Covenants ............................................................. 23

H. Readiness for Implementation ......................... 23

I. Compliance with Bank Policies ......................... 24

ANNEXES

Annex 1: Project Design Summary .25Annex 2: Project Description and Project Implementation Plan .29Annex 3: Estimated Project Costs .44Annex 4: Economic and Financial Analysis and Fiscal Impact .45Annex 5: Procurement, Disbursement and Financial Arrangements .58

Table A: Project Costs by Procurement Arrangements .68Table Al: Consultant Selection Arrangements .69Table B: Thresholds for Procurement Methods and Prior Review 70Table C: Allocation of IDA Credit and DANIDA Grant Proceeds .71Table D: Summary of Financial Management Action Plan .72Table E: Procurement Schedule .73Table F: Construction, Equipment and Vehicle Costs .74Table G: Total Quantity and Cost of Equipment and Vehicles by

Operational Unit .75Table H: Procurement Packages for Equipment and Vehicles .76Table I: Procurement Arrangements for Research Contracts, Surveys

and Special Studies .77Annex 6: Project Processing Budget and Schedule .78Annex 7: Documents in the Project File .79Annex 8: Statement of Loans and Credits .80Annex 9: Vietnam at a Glance .82Annex 10: Summary of Resettlement Action Plan .84Annex I 1: Environmental Assessment and Action Plan Summary .100

MAP IBRD No. 29899

VIETNAMCoastal Wetlands Protection and Development Project

Project Appraisal Document

East Asia and Pacific RegionRural Development and Natural Resources Sector Unit

Date: October 26, 1999 Task Team Leader/Task Manager: Ronald ZweigCountry Director: Andrew Steer Sector Director: Geoffrey B. FoxProject ID: VN-PE-42568 Sector: Natural Resources Program Objective Category: Environmentally Sustainable

Management DevelopmentLending Instrument: SpecificlInvestment Credit Program of TargetedlIntervention: [X] Yes []No

Project Financing Data [ Loan [X] Credit [ Guarantee [ OtherfSpecify1

For Loans/CreditslOthers:

Amount (US$ M/SDR M): Credit SDR 23.1 (US$31.8 equivalent)Proposed termns: [X] Multi-currency [ Single currency, specifyGrace period (years): 10 [ Standard Variable [ Fixed [ ] LIBOR-basedYears to maturity: 40Commitment fee: 0.5%Service charge: 0.75%

Financing Plan (US$ million):Source Local Foreign TotalGovernment 22.5 0.0 22.5DANIDA 5.3 6.0 11.3IDA 25.8 6.0 31.8Total 53.6 12.0 65.6

Borrower: Socialist Republic of VietnamGuarantor:Responsible agencies: Ministry of Agriculture and Rural Development , Peoples Committee of the Provinces of Ca Mau, Bac Lieu, SocTrang and Tra Vinh

Estimated disbursements (Bank FY/US$M): 2000 2001 2002 2003 2004 2005 2006Annual 0.0 8.1 6.8 8.1 4.5 3.4 0.9Cumulative 0.0 8.1 14.9 23.0 27.5 30.9 31.8

Project implementation period: 6 years Expected effectiveness date: 4/15/2000 Expected closing date: 9/30/2006

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A: Project Development Objective

1. Project Development Objective and Key Performance Indicators:

The objective of the project, which covers the Southern Mekong Delta provinces of Ca Mau, BacLieu, Soc Trang and Tra Vinh, is to reestablish the coastal mangrove wetland ecosystems and protectsustainably their aquatic nurturing and coastal protection functions. Progress towards this objectivewill be measured and monitored based on: (a) minimization of land losses to and maximization ofland gains from the sea through reduced erosion and increased accretion, (b) decline in the barrenareas in the protection zone (FPZ), and (c) increased coastal and near-shore marine productivity.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) Goal Supported by the Project:

CAS Progress Report dated: August 20, 1998. Date of latest CAS discussion: September 22, 1998.

The Country Assistance Strategy of the World Bank/IDA for Vietnam identifies five areas in whichthe Bank Group support needs to shift to: (a) a deeper focus on poverty and social issues; (b) clearerlinks between projects and policy dialogue; (c) broader partnerships and decentralizedimplementation; (d) redirection of lending towards rural development; and (e) better aid coordinationand a transition towards program financing. The Coastal Wetlands Protection and DevelopmentProject (CWPDP) contributes to this shift in all five areas: (a) it is targeted towards some of thepoorest districts in the Mekong Delta; (b) it will be implemented in a decentralized manner(provincial project management with participation from grass roots organizations, research institutesand private sector); (c) it focuses on rural development; (d) it has been prepared in closecollaboration with a bilateral donor, the Royal Danish Ministry of Foreign Affairs (DANIDA); and(e) it is engaged in policy dialogue on state enterprise restructuring, land use planning and how tohandle trade off between growth and environmental protection.

The Government of Vietnam (GOV) has recently announced a major new emphasis on ruraldevelopment that is targeted towards raising agricultural productivity, enhance investment inresearch, generating employment, reforming state-owned enterprises and improving the managementof natural resources (especially reforestation). This project supports this new emphasis, especiallywith respect to coastal resource management.

2. Main Sector Issues and Government Strategy:

Global Natural Resources and Environmental Issue:

Population pressure and national forest decline is the most important natural resource/ environmentalissue for Vietnam. Vietnam's population density of 0.13 ha of cultivated area per capita of ruralpopulation (which ranks, among the highest in the world) combined with a population growth ofabout 2%, puts a severe stress on the natural environment. This is perhaps the most importantenvironmental issue facing the country. As a consequence, forests were reduced at an estimated rateof 350,000 ha/year from about 40% of total-land area in 1965 to 25% in mid-1990s of total land area.Only 1.0 million hectares (3% of land area) contain medium to rich forests. These forests, however,contain a wealth of plant species, many of which are endemic, confined to small geographical ranges,

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and occur in low numbers. The remaining area of forests with high biodiversity has to be protected,vulnerable watersheds and wetland areas need to be stabilized and/or rehabilitated, and moreappropriate land use promoted.

Coastal Wetlands Issues:

The rapid decline of Vietnam's mangrove forests, both in terms of area and quality, and theunsustainable nature of shrimp aquaculture are key issues/problems to be addressed. Whereas400,000 ha of Vietnam's coastal area were covered with mangrove forests in 1950, only 252,000 haof mangrove forest area were left in 1983, despite substantial replanting of the war-ravagedmangrove forest areas after 1975. Since 1983, mangrove areas have further been subjected touncontrolled wood extraction, paddy area expansion, and uncontrolled settlement in the mangroveforests and shrimp farming. The integrity of old growth mangrove ecosystems (particularly the vastmangrove areas in the Southern Mekong Delta) has therefore been severely compromised -- as hasthe productivity of its coastal fishery. A recent study in the Mekong Delta found that for everyhectare of lost mangrove forest, then results an annual loss of about 0.7 tons of fish caught from thesea. If, as was found for two of the project provinces (Bac Lieu and Ca Mau), that total mangrovearea had declined by about 60% (from about 100,000 ha in 1984-86 to about 40,000 ha in 1993-94),the economic impact of mangrove destruction over these years has been tremendous.

Mangrove forests provide a variety of benefits to the economy. Their direct products includedifferent wood products and a variety of non-timber products like food and household items (roofthatching material, medicinal plants and honey). Since at least 80% of all marine fisheries productionin Vietnam comes from coastal waters up to a depth of 30 meters, mangrove forests also have aprime role for fish catches by providing breeding, feeding, and nursery grounds for commerciallyimportant aquatic organisms. Through their filtering function, mangroves also lessen the impact oftoxic substances on surface and ground water as well as soils. Furthermore, mangrove forests serveas buffer zones against typhoon/flood damages and salinity intrusion; and mangrove belts help toprevent sea dike breaching and coastal abrasion (which reaches 10-25 meters per year along roughly20% of Vietnam's vast coastline). The local population's low level of awareness of the importance ofthe coastal wetlands resources and its ecological value coupled with the limited resources of theprovincial authorities to address this problem are the key constraints to be overcome.

Extensive shrimp production is constrained by the declining availability of natural larvae in the seawater. Serious shrimp disease (1994 - 1996) had its start in areas of the southern delta which werevirtually devoid of mangroves and had recently inappropriately increased the intensity of use ofintroduced larvae and supplementary feeding. Without proper extension and credit support, farmershave not been able to adequately cope with or prevent the disaster -- attributed to poor managementarising from inappropriate intensification; and viral diseases transmitted through different sources,the foremost being the introduced larvae. However, some farmers have begun to develop strategies toimprove and stabilize shrimp yields as well as diversify their production income base; but successfulsupport and larger scale replication will depend on (a) a thorough review of the conditions thesesuccessful efforts are applicable to; and (b) a more active role from Government with bettercooperation from the private sector in developing the appropriate technologies and improve farmersupport services. The task has been made more difficult because the income losses due to the shrimpdisease have forced shrimp farmers to further cut the mangroves to subsist. Recent damage (late1997) from typhoon Linda has aggravated their livelihood situation. The shrimp disease has,however, led to abandonment of fish ponds, especially those in the coastal tidal zone - a respite toenvironmental stress. In any case, long term protection of the coastal wetlands will not be tenable

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without improving the livelihood of adjoining communities, especially for aquaculture production --which is often the only financially viable alternative for land use in the saline conditions on the farm.

Government Strategy:

The strategy of the Government of Vietnam (GOV) for natural resource management is embodied ina number of documents, legislation and programs. The most important is the Vietnam NationalEnvironment Action Plan (August 1995) which sets out a strategic framework for forest and eco-system conservation in both terrestrial and wetland areas and for watershed protection andmanagement based on IDA's environment study on "Environmental Program and Policy Prioritiesfor a Socialist Economy in transition." (June 1995). A Biodiversity Action Plan (1997) also sets out aranking of special use forests (parks and wild life sanctuaries) in terms of biodiversity values andextent of threat.

A number of laws and regulations on forest resource use and protection exist. The most important isthe 1991 Forestry Resource Protection and Development Act which established three categories offorest land (a) protection forest (critical watersheds and wetlands); (b) special use forests (protectedareas); and (c) production forests. A number of decrees to strengthen forest protection (national andprovincial) have also been issued. They broadly specify the management principles of each forestcategory; the separation of forest protection from production; disengagement of the role of forestenterprise; allocation of forest land to local users; and the nature of contractual arrangements withfarmers and punishment of illegal use of forests. Particularly, noteworthy is Decree 327, which setsout guidelines for a 10-year program (starting from 1993) aimed at protecting forests and developingdenuded or barren forest lands. It spent about US$45-50 million per annum between 1992-95. Aforest protection belt approach --designating full protection zones (FPZs) and buffer zones (BZs) --were piloted with some success. In 1996-1997, the 327 Program was replaced by Decree 556 whichtargeted assistance more effectively and narrowly to activities directly related to protected areas toexpand the success of the pilot initiatives. These activities now constitute an important component ofa newly launched "Five Million Hectare Reforestation Program." Another important program is theDecree 776 Program which provides infrastructure and planning support for allocating land toestablish new farm holdings adjoining the coastal full protection zones so that joint protection withthe forest protection institutions can be brought about. A number of other socio-economic programshave also been introduced since 1992. These include Program 120 for employment promotion; andprograms to fight hunger and poverty including nutrition, literacy, and subsidies for the provision ofbasic goods. However, these have mainly bypassed the more remote districts and have not beenimplemented in conjunction with forest protection. The latest initiative is the 1,715 Poorest Mountainand Remote Communes Program, of which 17 of the Project's communes are included in this list.

3. Sector Issues to be Addressed by the Project and Strategic Choices:

Although the 327/556 and 776 programs have contributed to the overall strengthening of forestprotection, the current system for the protection and development of the coastal wetlands still entailsunnecessary ecological and economic losses due to: (a) the absence of well-drawn and consistentzoning/management plans to guide protection, management and use of the protection belt; (b) weakenforcement and inefficient use of staff; (c) inadequate investments, (d) over-exploitation of naturalresources by state-owned enterprises - the forestry/fishery enterprises (FFEs); and (e) limited co-management activities involving the local community. In addition, population growth and in-migration into the protection belt have increased the demands on its limited mangrove areas andcreated hardships for the existing poor population in the BZ. Balancing coastal wetlands protection

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and the need to improve the livelihood of the buffer zone population are the most important issues forthis project.

An important strategic choice was the extent of "integration" to be built into the project. Based onthe lessons learnt from the experience with other natural resource management projects in Vietnamand Southeast Asia (see Section D, 3 below), to include support for the protection agency alone isnot enough. The need to effectively improve the income status of the adjoining communities,particularly the more vulnerable (poorer) ones, require a combination of extension, credit and socialsupport tied in with environmental promotion, policy and contractual measures to ensure thatincentives exist for joint protection. Another strategic choice was the promotion of appropriatetechnology packages rather than just letting the market or the private sector be the only source ofdevelopment for these communities. Because of the devastating impact of the shrimp disease andTyphoon Linda, private credit sources have virtually dried up; credit institutions are also morereluctant to lend new money to farmers except under the Government's typhoon emergency program.They are faced with constraints in evaluating future creditworthiness of their borrowers, especially inrelation to shrimp farming risks. The relatively isolated nature of the project areas also means thatsuccessful approaches are less likely to be passed on to other farmers without the Government's help.Appropriate technology exists, but it takes a partnership among the extension agency, the creditagency, the private sector and the farmers themselves to replicate the favorable results. Essentially,the need is to take advantage of the Vietnamese farmers' innate capacity to learn from one another byensuring that (a) demonstrations for farmers groups are designed to facilitate technology transferappropriate to the risk conditions or constraints that the farmers actually face; and (b) targetdemonstration groups have the opportunity to observe how other successful farmers adopt thepromoted technologies.

A third strategic choice relates to the approach for project management and administration. Pastarrangements for natural resource management projects have been for central coordination andadministration through one project management unit (PMU) usually either in Hanoi or a regionalcapital like HCMC. These arrangements have faced difficulties in implementation (especiallyfinancial and procurement) except for small, simple (one sub-sector and one locality focus) activitiesundertaken by bilateral assistance. Because of the need to resolve a number of policy issues whichare provincial in nature and because valuable lessons have been learnt from multi-sectoralapproaches to forest protection and rural development tried under the 327/556 programs, projectimplementation will be decentralized to the provincial level with project management units (PPMUs)to be established in each province.

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C: Project Description Summary

1. Project Components (see Annex 2for description and Annex 3for Summary Cost):

Cost % of IDA Including Base Financing IDA

Component Category Contingencies Costs (US$M) Financing____ ___ ___ ____ ___ ___ ___ ___ ___ ____ ___ ___ (U S$M ) _ _ _

1. Mangrove Planting, Physical (seedlings, 13.9 21 10.6 76Rehabilitation, and Protection boundary markers, civil(a) forest planting on barren/degraded works, communicationsmangrove forest and new accretion equipment), training andland; project management(b) forest protection activities on (increment, salary, protectionnewly planted and existing forests; contracts! payments.(c) improved management and

protection of conservation forests andfish sanctuaries.2. Technology Development and Institution building 15.9 24 3.1 20Transfer (training). Physical (minor(a) technology development & civil works, laboratorytransfer (TDT) for productivity equipment, vehicles). Projectimprovement & farming risk management (increment staffreduction costs), credit.(b) improved provision of credit(VBARD) and extension throughgrass roots organizations and farmergroup demonstrations3. Social Support Grant Institution building (TA & 10.2 1 6 7.0 68(a) Development and Implementation training). Physical (minorof Commune Action Plans (CAPs) civil works, vehicles, inputs).(b) Communal Grant Credit and targeted grants.(c) Social Support Fund(d) Ethnic Minority DevelopmentFund__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _

4. Policy Development Institution building (TA and 2.1 3 1.1 5 1(a) land & water use zoning training). Physical (vehicles,(b) land use plan & allocation equipment, civil works).(c) selected enterprise restructuring ______________ __ ________________

5. Resettlement Physical (land allocation, 16.1 25 6.9 42(a) compensation; civil works, materials(b) rehabilitation; and supply). Cash compensation(c) implementation for project-affected people. ________

6. Monitoring and Evaluation Institution building (TA & 2.3 4 1.0 43(a) water quality monitoring; training).(b) monitoring of fishing productivity; Physical (small civil works,(c) coastal area and land use vehicles, equipment), Proj.monitoring; management (incremental(d) biodiversity monitoring; staff salaries).(e) socio-economic monitoring. ________ ______

7. Project Coordination Project Management (capital 4.9 8 2.1 42inv. - 29%. TA-60%, O&M

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~ ~ --11% )_ _ _ _ _ _ _

PROJECT TOTAL ____________65.6 100 31.8 48

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2. Key Policy and Institutional Reforms Supported by the Project:

The project will support a major policy change in the approach towards coastal wetlands protectionand management. It will establish a protected area management system that will integrate the needsfor planting, protection and management in the FPZ with the more "bottom up" approach ofpromoting communities to jointly undertake forest protection and co-management of the coastalwetlands resources in such a way as to specifically (a) take into account the priority needs of thevulnerable communities; and (b) address policy constraints to improving/diversifying farmers'incomes (land use/allocation policy, state enterprise restructuring). It will ensure a consistency inplanning (zoning) and extension support which will minimize the trade-off between agricultural andother income enhancement activities with environment (eco-system) protection activities. Finally, itwill ensure that extension support is affordable and relevant to the farmers conditions and is wellsupported by adaptive research and credit and is closely monitored for lessons learnt andenvironmental impact.

3. Benefits and Target Population:

Benefits:

(a) By replanting and protecting the formerly forested land in coastal areas withmangrove trees, the project will reestablish and improve the coastal ecosystems andtheir associated biodiversity. Through these activities: (i) increased nurturing groundsfor fish and shellfish in the newly planted mangrove areas will improve theproductivity of near shore fisheries; (ii) increased protection of coastal areas prone toerosion and storm floods will lower the risk of inundation of land and associatedcropping losses; (iii) planting along the accretion coast will ultimately contribute tomaximize land gains; and (iv) selected use of the increased mangrove resources andits by-products will benefit the livelihood of BZ households (especially the poorerones).

(b) The project will improve agriculture and aquaculture production (yield improvementand stabilization) and diversify the farmers production and income base) in the BZthrough expanded and more effective sub-regional coastal farming systems researchand extension stations and other improved farmer services (especially affordablecredit). This will both (i) increase and stabilize BZ household incomes and relievepressure on resources in the FPZ, and (ii) in conjunction with the protection efforts,provide environmentally-neutral economic development opportunities to relativelypoor landless and poorly educated families and communities.

(c) Through consultation and dialogue, the project will enhance cooperation among GOVagencies, Grass Roots Organizations (like Women's Unions and Farmers'Associations), and local communities for joint planning and implementation ofcoastal wetlands protection and technology transfer. Furthermore, the project willimprove ecosystem establishment and strengthen forest administration to enforceregulations and undertake joint protection with local communities for the protectionbelt.

(d) By supporting vulnerable communities with basic social services linked withenvironmental promotion activities and joint protection compacts through CommuneAction Plans, the project will support basic needs and more proactively relievepressures on protected area resources.

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Target population: While the primary aim of the project is mangrove reforestation, a substantialsegment of the people (about 600,000) living in the communes of the protection belt (FPZ and BZ) ofthe coastal areas and in some vulnerable communities in the Economic Zone adjacent to theprotection belt belong to the target population. The target group is characterized by generally lowincome levels, unsustainable economic activities and lack of access to basic social infrastructure. Theproject will provide a special program targeted on the needs of the very poor and ethnic minoritygroups.

4. Institutional and Implementation Arrangements:

Project oversight (policy guidance, etc.) will be the responsibility of an inter-ministerial NationalProject Steering Committee (NPSC) in Hanoi, chaired by a Vice-Minister from the Ministry ofAgriculture and Rural Development (MARD), comprising a secretariat, representatives of concernedMARD departments. Other relevant government ministries and organizations such as Ministry ofFisheries, Ministry of Finance, Ministry of Planning and Investment (MPI), Ministry of Science,Technology and Environment (MOSTE), Ministry of Education, State Bank of Vietnam (SBV),Committee on Ethnic Minorities and Mountainous Areas and the Vietnam Bank for Agriculture andRural Development, as well as chairmen/vice-chairmen of the concerned PPCs. This NPSC hasfunctioned effectively during the preparation/preappraisal process. Under the project, however, theSecretary of the NPSC will be the Project Director (PD) and head of the Central Project Office(CPO) responsible for (a) guiding the annual planning and budgeting process at the national level;(b) coordinating with national line agencies on substantive implementation and policy matters; and(c) provide oversight of provincial activities through the Project Field Coordination Unit (see below).PD will coordinate with Central Agencies on budget and policy matters.

Project coordination will be carried out by a Project Field Coordination Unit (PFCU),a Unit of CPO,with three sub-units (for forestry, social support and administration) in Ca Mau; and one sub-unit (fortechnology development and transfer or TDT) in Can Tho where the Can Tho University SystemsResearch Center is located. These sub-units would provide technical assistance to the ProvincialProject Management Units (PPMUs) and the corresponding departments that are responsible forproject execution at the provincial level. The Project Coordinator (head of the PFCU) will coordinatewith PD and in Hanoi; and with Provincial Project Directors (the heads of the PPMUs) on projectplanning and implementation.

Project implementation will essentially be through the PPMUs, appointed by the Provincial PeoplesCommittees headed by a Project Director, a full time support staff (including that for financialmanagement) with representation from the relevant provincial organizations with an active role in theproject. The Provinces already have a Provincial Project Steering Committee (chaired by a ViceChairman of the PPC) which has worked quite well during preparation/pre-appraisal but will need tobe formally appointed before project effectiveness. The project will be implemented over a period ofsix years (start-up will be in 1999, completion in 2005, and closure in 2006). Institutionalresponsibilities are as follows (description of components are in Annex 2):

Component 1: Mangrove planting, rehabilitation and protection will be implemented throughProvincial Forest Protection Management Boards (FPMBs) or Forest/Fishery Enterprises (FFEs) inconjunction with the PFCU forestry sub-unit.

Component 2: Technical Development and Transfer. Technical and economic support services willbe implemented as follows:

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(a) for technology development and transfer: through district extension centers and theirassociated farmer demonstration groups in conjunction with the TDT sub-unit of thePFCU;

(b) for applied/adaptive research: through the programs of the Southern AquacultureResearch Institutes (RIA-2), Can Tho University, the Minhai Wetland ForestResearch Center (WFRC) and other relevant research institutes and expertscomprising the Technology Advisory Group (TAG); and

(c) for commercial credit: through VBARD.

The TDT system essentially links item (b) with items (a) and (c) through monitoring and extensiontechnicians (METs) and grassroots organizations (e.g. Women's Union) under supervision from therelevant District Extension Centers and technical assistance (TA) from the TDT submit of the PFCU.

Component 3: Social supportfor vulnerable communities (including indigenous people) as follows:

(a) for establishing and implementing Commune Action Plans (CAPs) in 18 vulnerable(very poor) communes and commune villages receiving resettlers: PFCU SocialSupport and Resettlement Sub-unit (SSRSU) in conjunction with PPMU, DistrictPeoples Committee, and Commune Working Group or CWG (including ethnicminority and gender representatives, often through grass roots organizations) withfarming technical support from the TDT sub-unit; and

(b) for Social Support (Safety Net) Fund (SSF) and the Ethnic Minority DevelopmentFund (EMDF): CWGs and Village Committees represented by very poor residents.

Component 4: Policy development as follows: (a) for land zoning and allocation - PFCU inconjunction with PPMU and the Department of Land Administration; and (b) for fishery/forestenterprise (FFE) restructuring - PFCU in conjunction with PPMU and the selected FFEs.

Component 5: Implementation of the Resettlement Action Plan - through Provincial ResettlementOffices and Resettlement Committees at the district and commune levels.

Component 6: Monitoring and evaluation as follows: (a) for water quality - PFCU; Department ofScience, Technology and Environment (DOSTE) in coordination with Sub-Institute of WaterResources Planning (to be closely coordinated with IDA's Mekong Delta Water ResourcesDevelopment Project); (b) for fishery productivity and biodiversity - PFCU and DARD or therelevant FPMB; (c) coastal area and land use - PFCU and Department of Land Administration; and(d) Socio-economic monitoring - PFCU and PPMU.

Component 7: Project coordination and Management: Support and strengthening of the PO, PFCUand PPMUs.

Accounting, financial reporting and auditing arrangements: The financial arrangements and flow offunds for the project would follow the procedures being established for the Five Million HectareReforestation Program, where overseas development assistance is expected to be channeled throughthe relevant PPMUs. This system has evolved from lessons learnt in implementing the Decree327/556 program and bilateral aid funded projects over the past six years. With adequate training in

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World Bank disbursement procedures, which is being provided, provincial staff in all four provinceswould be able to manage separate special accounts (SAs), in line with the decentralization objective.A fifth SA will be established for the Project Field Coordination Unit (PFCU) and the Central ProjectOffice (CPO). Corresponding special accounts will be established for disbursing the DANIDAGrants.

Payments would follow standard Vietnamese government procedures, which currently require pre-audit by the PDDI. Under the project, however, both capital and operating accounts will be clearedby the GDDI. For both the IDA Credit-funded portion and the DANIDA grant-funded portions ofthe project, appropriate amounts would be released from the SAs after approval from the designatedDirectors. For the counterpart-funded portion funds will be directly released on approval of eachquarterly work plan and associated budget by the provincial treasury. The overall project accountwould be under the responsibility of CPO with assistance from the Administration sub-unit of thePFCU; and separate project accounts for each province would be maintained by each PPMU. Theproject accounts would reflect all financial transactions during project implementation period forIDA Credit, counterpart funding and bilateral (DANIDA) grants. PPMUs would be responsible forfiling reports every two months on the project's account to the PFCU to be sent on to the CPO. AllSpecial Accounts will be audited annually by independent auditors acceptable to IDA and DANIDA,with the audit to include separate opinions on the use of the SOEs and the status of audit compliance.

The detailed audit report would be submitted to IDA within four months of the closing of thegovernment's fiscal year.

Monitoring and evaluation arrangements: Periodic overall monitoring and evaluation (M&E) will becarried out by the CPO/PFCU with assistance from international and local short-term consultants.The M&E system will (a) ensure timely preparation and distribution of progress reports to the NPSC,participating agencies, beneficiary representatives, PPC and the Bank to provide early warning onpotential implementation problems; (b) provide for an independent measurement and analysis ofproject and TA activities on an annual basis; and (c) measure project progress against the keyperformance indicators, with special focus on water quality, fishing productivity, biodiversity andsocio-economic situation of BZ households. Agreement was obtained during negotiations that aproject monitoring and evaluation system that is satisfactory to IDA will be established by Crediteffectiveness.

D: Project Rationale

1. Project Alternatives Considered and Reasons For Rejection:

In arriving at the final design of the project jointly with the Government of Vietnam and the Projectprovinces, a number of models and options for the project were considered:

(a) One model that was rejected would have kept all activities related to forest plantingand protection in the FPZ solely under the control of the existing provincial forestadministration with local people to be hired as casual labor on a day-to-day basis. NoBZ development was envisaged. This model, which would be simple to manage, wasdropped because the main reason for the ongoing mangrove destruction - the pressurefrom the poor households in the area adjacent to the FPZ - would not have beenresolved and the sustainability of the whole project would have been at risk.

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(b) Several options were considered for the improvement of the economic activities inthe BZ. A strategy originally proposed by the project preparation consultants wasbased on costly improvements of the shrimp aquaculture infrastructure for moreintensive husbandry techniques. Detailed maps for comprehensive canal networkswere already designed for the pilot implementation sites, but it was judged that,despite this, the shrimp disease problem would not be easily resolved (as can be seenfrom the experience in other East-Asian countries). The task team, in redesigning theproject, focused instead on more affordable and less risky income generating andimprovement options by supporting improved extensive aquaculture and thediversification to other aquaculture production (finfish, crab) and agriculturalproduction activities which requires a role for both government and private sector.

(c) Debate on land use and zoning centered on the question of the need and extent ofresettlement of households; and the need for total prohibition of economic activitiesin the FPZ as proposed by some provincial authorities. As emphasized by theprovinces, the case can be made for moving people out of the FPZ with the largeextent of damage to the mangroves by poor farmers living in there (and consequentlythe contribution to the severe decline in coastal fishery productivity as a result).Furthermore, as the large exploiters have left and the incentive for new moreintensive shrimp pond development has substantially diminished (largely because ofthe disease devastation), the focus on improving the livelihoods of the remaininghouseholds are even more urgent today. But not everyone needs to be moved. Therewere already some de facto exemptions to the prohibition of residence in the FPZwhich did not undermine the nurturing function of the mangroves (e.g. growing ofhigh cash income shallots on higher ground not suitable for mangrove cultivation).All the project provinces are convinced that special exemptions to selectiveharvesting in the FPZ should be permitted as long as these activities are consistentwith the ecological objective (e.g. the permitting of limited harvesting) and are tied tojoint protection of the remaining FPZ.

(d) Consideration was given to additional coastal protection measures other thanmangrove planting (e.g. use of gabions) for areas where accelerated coastal erosionhas progressed too far inland and where wave action, changing currents and"suffocating" silt loads do not allow anchoring and survival of young mangrove rootsin foreshore mud flats. These measures were dropped because of very high costsrelative to the rather uncertain benefits. Instead, special pre-emptive vegetativemeasures will be attempted.

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2. Major Related Projects Financed by the Bank and/or Other Development Agencies:

Latest SupervisionSector issue Project (Form 590) Ratings

(Bank-financed projects only)Implementation DevelopmentProgress (IP) Objective (DO)

Bank-financedShortage of farmn credit, poor agricultural Agricultural Rehabilitation S Sextension and inadequately maintained (Cr.256 I -VN) FY 94 US$96rubber plantations. million.

Weak rural health services, high mortality National Health Support S Sand morbidity. (Cr.4838-VN) FY 96

US$101.2 million

Low rate of private sector investment in Rural Finance S Srural areas, weak interbank competition, (Cr.4847-VN) FY96 US$122and limited access of poor to formal million.finance.

Poor maintenance of rural roads, linkages Rural Transport S Snot complete, weak local contracting (Cr.2929-VN) FY 97 US$55capacity. million.

Incursion into high biodiversity value Forest Protection and Rural S Snational parks and wildlife sanctuaries; Development Cr.rural poverty in buffer zone.

Seawater intrusion/inundation Mekong Delta Water Launchconstraining agricultural production; lack Resources Developmentof adequate rural water supply and (MDWRP), FY 99US$149sanitation. million.

Waterways transport improvement and Inland Waterways and Port S Smodernization Modernization (IWPMP)

Project

Other development agencies

Replanting Mangrove Forest Project Netherlands Govt.

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory).

Of the above projects, the MDWRP and the IWPMP are being implemented in the proximity of theCWPDP area. All three projects were identified for development in the Mekong Delta Master Plan(MDMP). The implementation and operation of the IWPMP will have negligible impacts and theMDWRP will have beneficial impacts upon the implementation and operation of the CWPDP. In thecase of the latter, the sluice gates constructed upstream of the project areas would result in dailydischarge of water at low tide and resultant coastal dilution rather than a major release ofconcentrated pollutants and acid from canals at the beginning of the rainy season.

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3. Lessons Learned and Reflected in the Project Design:

The main lesson learned from other natural resources management projects in protected areas inAsia (and elsewhere) is that strengthening protection alone is insufficient and that there is a need toalso address underlying reasons for encroachment. Noteworthy lessons from other Bank Asia regionprojects being prepared and implemented that integrate protected area conservation withdevelopment [i.e. the Integrated Coastal Development Projects (ICDP)] were incorporated intoproject design. One set of prerequisites for successful project development concerns the need to havesubstantially developed a shared vision and 'objectives and the selection of appropriately focussedsites and beneficiaries. These prerequisites have been established for the project through theVNNEAP process, IDA's policy and project workshops for coastal wetlands and natural resourcemanagement, and the project preparation process which has involved local governments (arriving atprovincial consensus on critical issues like zoning restrictions, land use, resettlement policy) from thestart. Other lessons to be noted are the need for involvement of the local community in projectpreparation and implementation; for project preparation to be process driven; and for carrying outindicative planning exercises during preparation as a means of testing and validating project activitiesand approaches to community participation. These are reflected in this project's design, especially forthe vulnerable (poorer) communities where pilot PRA exercises in developing commune action plans(CAPs) have started.

Lessons from other East-Asian coastal resource management projects show that a lack of properplanning, regulations and enforcement, coupled with more or less free entry into the coastal zone byaquaculturists and sharply increasing intensification levels have led to severe outbreaks of diseasesfor the shrimp culture industry. Governments encouraged (or implicitly condoned) suchdevelopments as shrimp exports had become a major foreign exchange earner. However, the lack ofavailability of new land in most of these countries and the increasingly evident environmentaldamage caused by past investments have made aquaculture and coastal area development apolitically sensitive issue. Most donor organizations around the world, as well as many commercialbanks, have adopted a very cautious attitude towards the shrimp industry. It is for this reason that thetask team has adopted a number of changes in production methods and management practices toreduce farming risks as conditions for Pank support to the sector. These approaches have beenpiloted by existing bilateral support initiatives in Vietnam.

Lessons from Non-Bank ICDP Projects in Vietnam (the Netherlands funded Replanting of MangroveForest Project, RMFP) also indicate that first, it is not enough for programs aimed at communitiesliving adjacent to the protection belt to be predicated on the assumption that improving incomesalone will relieve the pressure on conservation forest incursion. They must include protection ofprotected areas as an explicit objective in the community programs and there must be strongsimultaneous demarcation and protection of the protected areas. Such a multi-faceted approach isneeded because the self interest of BZ villagers must be taken into account in the joint protectionprocess. Those that have been deriving benefits from the mangrove forest on their own account or onbehalf of others (e.g., as agents of shrimp pond owners and fuelwood traders) will not readily agreeto discontinue their past behavior unless (a) they are sufficiently compensated for it or (b) the cost ofcontinuing their activities are made prohibitive. Second, joint consultation and participation of theaffected villagers is necessary for successful joint forest protection and for sustainability in theprotection process. In Vietnam, pilot initiatives under the 327 Program in a number of provinces(e.g., Soc Trang and Tra Vinh) have demonstrated the viability of allocating protection parcels at thefringe of the protection belt to local people with priority being given to the poor and landless.

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From the perspective of IDA 's lending operations, recent implementation reviews (including that bythe Quality Assurance Group), found the loan portfolio to be performing satisfactorily consideringthat its lending program is still relatively young. However, some implementation problems haveemerged that are generic in nature and could become obstacles to the implementation of this project.An action plan is being put in place to address the identified obstacles and the third CountryPortfolio Performance Review (CPPR) has highlighted the following key issues/needs: (a) bettertraining on procurement and project management, especially for complex projects; (b) greaterdecentralization of project management with local authorities to be designated as project owners;(c) more careful review of disbursement projections to ensure adequate and timely provision ofcounterpart funds; and (d) monitoring and evaluation to be more reflective of impacts rather thanphysical targets. All these aspects will be addressed in this project.

4. Indications of Borrower Commitment and Ownership:

The Government of Vietnam (GOV) has been committed to a project to protect and develop coastalwetlands since its identification through the VNNEAP. The best indicator of GOV's earnestness inreforestation and protection are the high priority programs and the legislation it has introduced tofulfill this objective (see page 4 above). Specific to the project, GOV has taken ownership of theproject by creating: (a) a central project steering committee (NPSC) comprising of representatives ofkey ministries/government agencies to advise and guide project preparation and implementation;(b) a technical working group comprising of the counterpart staff of key implementing agencies atthe central level and the VBARD to liaise with the project preparation team; (c) Provincial ProjectSteering Committees (PPSC) comprising provincial and sub-provincial agencies equivalent to thoserepresented at the central level. These PPSCs are chaired by a Deputy Chairman of the respectivePPC and include representatives from the relevant branch of VBARD and representatives of variousstakeholders. GOV has also recently enacted a number of laws and regulations aimed at protectingconservation forests and mangrove areas (see page 4 above). As a result of the consensus buildingprocess of project preparation, each province has prepared provincial resettlement plans anddecisions on zoning, land use and harvesting access in the protection belt.

5. Value Added of Bank Support in this Project:

The preparation activities for the CWPDP (this project) have already sharpened the awareness of theprovincial forest administration for forest protection and have accelerated the dialogue regarding thebest strategy for the protection belt amongst the central and provincial Governments and non-governmental groups. The recently completed RMFP (in three of the four project provinces) hascontributed to this process and, in effect, has served as a pilot project for the CWPDP. The provincialDARD of Ca Mau province, for instance, designed its policy guidelines for forest production andprotection activities in accordance with the BZ and FPZ concept developed during the preparation ofthe CWPDP. The emphasis of the provincial forest policy has changed from that of focusing almostentirely on forest production to that of forest production with environmental protection. Continuedinvolvement of the Bank will strengthen this process and will help to promote better forestmanagement and protection systems and more appropriate aquaculture techniques in the provinces.The comparative advantage of IDA involvement in coastal wetlands protection and development liesin its comprehensive experience and its reputation for providing impartial and effective policy advicein the areas of environmental protection and natural resource management. While provincialgovernments have taken preliminary steps towards protection of the coastal mangrove forests, thisprocess requires assistance, especially in integrating the existing forest protection programs withproduction/income improvement programs (research/extension linked with credit) and coordinating

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the activities of the various institutions on a national, provincial, district and commune level. TheBank is the best equipped among its international partners to provide such assistance.

E: Summary Project Analysis(Detailed assessments are in the project file, see Annex 7)

1. Economic Assessment:

[x] Cost-Benefit Analysis: NPV = US$ 18.2 million; ERR = 14 %

The project would help to reclaim coastal land along a 470 km coastline in the Mekong Delta;enhance marine productivity; increase, stabilize and diversify farming incomes for an estimated25,000 households in the project area; improve storm protection; improve provincial environmentalmonitoring capacity; and develop applied research on sustainable brackish water aquaculture, whichhas significant potential benefits for coastal areas all over Vietnam.

The main quantified benefits are: (a) increased coastal land reclamation because of the coastalprotection function of mangroves; (b) increased income for the households in the buffer zone (BZ) ofthe protected area through improved and diversified farning techniques, including diversifiedaquaculture, agriculture, and small-scale livestock farming. The non-quantified benefits include:(a) increased marine productivity in canals, mud-flats, and coastal waters because of the nurturingfunction of mangroves; (b) the storm protection function of dense coastal mangrove forests and thepossible reduction of coastal erosion due to newly planted mangroves; (c) the indirect benefits fromapplied research on aquaculture, which accrue to areas outside the project area; and (d) socialbenefits such as improved education, drinking water supply and sanitation, reduced poverty, andemployment generated through rehabilitation and construction of basic infrastructure in the BZ, aswell as through training and grants as part of the proposed social safety net.

The project is targeted to the poorest areas in the Mekong Delta. Although the Mekong Delta as awhole is not the poorest region in Vietnam, in 5 among 13 project districts poverty is higher than theaverage for the country, and in 3 districts poverty is even significantly higher than the nationalaverage. The project will generate additional employment for an equivalent of about 14,000 person-years in aquaculture, agriculture and small-scale livestock farming at full production in 2003.Additional temporary employment will be generated through forest planting activities.

A sensitivity analysis shows that the rate of return is robust in the case of changes in key parameters.However, if only half of the expected number of farmers accepts the improved technology forimproved extensive aquaculture, agriculture, forestry and livestock holding, the rate of return woulddrop to 12%. Likewise, in the unlikely event that the farmgate prices for all outputs (shrimp, crabs,fish, livestock, wood, vegetables) would drop simultaneously by 20%1, the rate of return woulddecrease to 7%. The incidence of a shrimp disease every four years, wiping out 80% of theproduction from stocked shrimp, has already been accounted for in the base case.

2. Financial Assessment:

Currently aquaculture is the main source of income in the coastal area of the Mekong Delta. Theincome from the extensive type of aquaculture, which is common in the project area, is low andunstable due to the frequent outbreak of shrimp disease, exacerbated by the absence of significantincome from sources other than shrimp. The project would assist in introducing improved extensive,

IMarket demand for crabs, fish and pork in the Mekong Delta region, especially Ho Chi Minh City, are still largely unmetand increasing; and shrimp is an export product.

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diversified aquaculture, including fish, shrimp, and crabs. Due to the complexity and financial risksassociated with more intensive types of aquaculture, only gradual low-cost improvements areproposed under the project within the current credit limit by VBARD of VND1O million/ householdwithout full land rights (the "red books"). These improvements generate moderate yield increases,but nevertheless generate high rates of return. In addition, the project would support increasedproduction of vegetables, small-scale livestock farming, and the planting of mangroves in the vicinityof fish and shrimp ponds, both to improve aquaculture and for fuelwood and timber. For the purposeof estimating rates of return, six farm models have been compiled, each applicable to different agro-ecological zones in the project area. The financial rates of return of the models range from 37% to45%.

The project is expected to have a slight negative impact on local public finances. A total recurrentcosts of about US$0.8 million per annum have to be gradually taken over by the four projectprovinces during implementation and have to be fully borne after project completion. These recurrentcosts include, in the order of magnitude, payments for newly established forest protection contracts,incremental operation and maintenance costs for vehicles and boats, and incremental staffallowances. This corresponds to about 2% of expected total expenditures by the provinces at the endof the project. To offset these higher costs, the "shrimp tax" (levied on a per hectare basis) could beincreased, as soon as the expected benefits for farmers have materialized.

The central government's contribution to the investments under the project is estimated to beUS$22.6 million. The bulk of that contribution (84%) is for resettlement compensation andresettlement allowances, which will partly be contributed in kind, and for credit through VBARD.The resources of VBARD are sufficient to cover the necessary contribution.

3. Technical Assessment:

The project is technically sound and draws on best practices in coastal management and aquaculturetechniques from Vietnam and other developing countries. Project components and performanceparameters were prepared on the basis of highest international expertise, taking into accountexperience from other East-Asian developing countries. The project will adopt an innovativeapproach under its technology development and transfer (TDT) component to pre-identify affordabletested technology transfer packages for extension to farmers starting initially with targeted groupdemonstrations based on the agro-ecological and socio-economic representatives of the targetcommunes/communities. Such an approach is expected to provide the necessary aquacultureproduction techniques needed for improving and stabilizing the incomes of BZ households. Theforest and aquaculture activities of the project have been successfully tested under the RMFP in threeof the four project provinces. Several workshops during project preparation, meshed in with a reviewof the activities of the RMFP, have sharpened the awareness of the urgency of coastal wetlandsprotection and strengthened the commitment among the provincial authorities to adopt technologiesappropriate to the local situation.

4. Institutional Assessment:

(a) Executing agencies. The central ministries and the MARD have demonstrated theirability to design and implement natural resource management and protection policiesduring project preparation. Experience from ongoing GOV projects (Decree 327/556and RMFP) have validated the capability of the relevant departments and People'sCommittees at the provincial level to manage mangrove planting and protectionprograms. Aquaculture research and policy institutions, with technical assistance

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through DANIDA, USAID and ADB are already involved in developing strategiestowards sustainable aquaculture production.

(b) Project management. MARD has some experience in managing large donor fundeddevelopment projects and, during preparation of this project and the appraisal of theBank's Forest Protection and Rural Development Project, MARD's InternationalCooperation Department, Planning Department and Forest protection Departmenthave acquired skills in the coordination of planning, budgeting and administration offunds for institution building and monitoring activities. However, the focus of thisproject is to support the provinces' objective of decentralizing support services to thedistrict and commune levels. The project will provide financial and technicalassistance to ensure that farmer group support from district extension centers andcommune extension posts will be provided in a co-coordinated, way (with agriculture,fishery and forestry staff working close together). Furthermore it will implementMARD Circular Letter No. 7, April 1996, which has assigned one member of theCommune Peoples Committee as a "commune agro-forestry coordinator" to organize,in coordination with DARD's Agro-Forestry extension staff or the FFE's technicalstaff, the implementation of agro-forestry protection/extension activities. Linked withthe innovative use of commune-level monitoring extension technicians or METs (tobe recruited from among the ranks of progressive farmers), proper training andequipment support, clear guidance on coordination mechanisms and use ofappropriate technology packages under the TDT programs, the chances for successfulimplementation at the project sites will be substantially improved.

(c) Financial Management. Overall, the financial management system has relativelystrong controls (particularly for civil works, labor costs and operating expenses) butrelatively weak accounting capacity (especially for Soc Trang and Tra Vinh). Thebasic accounting system is, however, sound (as the structure of account codes isflexible and will allow booking of project costs in adequate detail); but meaningfulfinancial reporting is virtually absent. This is understandable given the small amountof capital expenditure currently being incurred. The large increase in the budgets ofthese agencies from the project will, however, create the need for: (i) tighter controlsand /or standardization of procedures for forest planting activities and fordisbursement of resettlement compensation; (ii) strengthening of accounts staff,particularly in Soc Trang and Tra Vinh; (iii) initial (temporary) expatriate technicalassistance based in the PFCU to assist provinces in setting up an adequate projectfinancial reporting system; and (iv) improvements in certain other aspects of financialmanagement. These needs will be catered for under the project. During negotiations,a financial action plan, was approved by NPSC, which (i) sets out procedures forplanting activities and resettlement payments; (ii) establishes a standard accountcoding structure for the project and the formats and periodicity of financial reports;(iii) establishes a separate accounting unit as part of the PPMU in each of theprovinces with appropriate accounting staff; and (iv) finalizes the format for quarterlycertification (by PDDI) of the amount of counterpart funds released. These actionswill be part of the conditions to be fulfilled for project effectiveness. With regard toVBARD, external audits have been conducted and a detailed diagnosis of VBARD'sfinancial management systems completed. Proposed reforms are being pursued underthe IDA-financed Payment System & Bank Modernization Project (Cr. 2875-VN)and the Rural Finance Project (Cr. 2855-VN).

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5. Social Assessment:

A number of social assessments were carried out as part of project preparation: (a) for the BZ --(i) six pilot implementation sites (representing different typologies of aquaculture producers) in, mid-1996; (ii) four vulnerable communes (very poor and judged as most likely to destroy the protectionbelt forests) in 1997/98; and (iii) an update of the social and environmental assessment in 1999 and(b) for the FPZ -- a socio-economic census of all occupants in 1997/98. These assessments confirmthat the poverty status of these communities rather than large private shrimp fanning are the mainsources of destruction in the Coastal Wetland areas. They confirmed the following recurring priorityneeds: (a) better and more stable sources of income; (b) credit support; (c) basic needs infrastructureand associated social support services (especially primary schooling and health). The project, throughits Commune Action Planning approach is expected to have significant positive social impacts thatwill also reach the poorer segment of the population, including all commune villages receivingresettlers, as it focuses on securing the community members' land rights; low cost improvements inaquaculture production techniques; joint (group) liability support through grass roots organizationsand VBARD; community needs-determined social services. In addition, a Social Support (SafetyNet) Fund (SSF) will also be established as a revolving fund through a bilateral grant to assist thevery poor and disadvantaged segments of the communes. Priority will be accorded to thosecommunities within a commune that depends on access to the resources of the FPZ for subsistenceand whose livelihood might be jeopardized by restricted access to those resources. Additional socialassessment tasks noted above were carried out in July-August 1999 after the project was convertedfrom environmental Category B to Category A. This review led to a more precise definition ofcommune villages receiving resettlers and to a preliminary assessment of the impacts of theresettlement programs on the communities receiving resettlers. Following the review, theimplementation of the RAP was lengthened from three years to four years to allow completion ofdetailed resettlement site designs with community participation.

Ethnic Minorities. The Khmer has been identified in the project's Ethnic Minority DevelopmentPlan (EMDP) that is consistent with OD 4.20 on Indigenous Peoples. Khmer are the mostdisadvantaged group in the project area. In eleven communes (primarily in Bac Lieu and Soc Trang),for instance, Khmer people comprise more than 20% of their population. The Khmer's needsprimarily reflect the disadvantaged conditions which are largely independent of ethnicity (remotelocation, small holdings on poor quality land or even no farm holdings); and they would benefit fromthe socio-economic services provided under the Commune Action Plan and Communal Fund Sub-component. This project has additionally incorporated the safeguards, proposed under the EMDP toensure that the vulnerable ethnic groups will get their share of development benefits as follows:(a) Attention would be given to the eleven main Khmer communes noted above; (b) Khmer-focusedactivities identified in the EMDP (but not expected to be covered in the Commune Action Planningprocess) would be addressed using resources available under the Ethnic Minority Development Fund(EMDF) that is financed with bilateral Grant assistance; and (c) a study be undertaken to analyze theproblem of land disenfranchisement of the Khmer and other vulnerable groups. This study willrecommend needed improvements, including whether it is feasible to establish a Khmer Land Trust(to be funded through the EMDF). The project is, therefore, expected to have a positive impact onethnic minorities. Changes in RAP design would include giving careful consideration to ethniccharacteristics of resettlers and commune villages receiving resettlers.

Resettlement. Resettlement of households residing in the FPZ is envisaged under the project.However, every effort has been made to reduce unnecessary involuntary resettlement by(a) demarcating the boundary between the FPZ and BZ to minimize interference with existinghabitation and land use for aquaculture and agriculture; and (b) permitting the following groups of

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FPZ occupants to stay within the zone: (i) fishing families; (ii) families living in fast accretion areasother than the coastal areas of the Bai Boi Fish Sanctuary; and (iii) families farming on elevatedsandy soils, where mangrove planting would not be economic. Where human activities threatenvaluable biodiversity or where mangrove forest protection and planting would be significantlycompromised, resettlement would be needed. The number of families to be resettled is 2,149 of theestimated 3,741 families residing in the FPZ. According to estimates, the 30 commune villagesreceiving resettlers are inhabited by 13,944 households. To ensure that project affected persons(PAPs) will be adequately compensated for their losses and provided with rehabilitation andcompensation, the Resettlement Action Plan (RAP) has been prepared in accordance with OD 4.30on Involuntary Resettlement. The implementation of this plan is a specific component of the project.The RAP was found satisfactory to the Association and approved by the Prime Minister's DecisionNo. 367/CP-NN dated April 10, 1999 and the Decision No. 1336-BNN-HTQT/QD of the Borrower'sMinistry of Agriculture and Rural Development dated April 19, 1999.

6. Environmental Assessment:

IDA Environmental Category: A

The CWPDP is essentially an environmental mitigation project and the project was originallyassigned to environmental screening category B. Positive environmental impacts are expectedthrough improving management, planting and protection of mangrove forests in the protection belt(the primary objective of the project); and reduced pressure on the FPZ through the project's BZactivities. While the environmental benefits from mangrove forests (especially for coastal estuaries)have been demonstrated in a variety of technical studies, the BZ activities of the project wereevaluated in an Environmental (and social) Review conducted by a team of external and localconsultants in mid-1996. The Review found that, while the project will be substantially beneficialenvironmentally, some of the BZ activities proposed at that time could create environmental risks.For example, some of the proposed horticultural activities raised issues relating to potential overuseof agro-chemicals, while some pond rehabilitation activities could increase erosion/siltation risks. Itwas determined that the agro-chemical issue could be adequately addressed through IPM extensionactivities being promoted by the Plant Protection Department of MARD with technical assistanceprovided by the ongoing FAO Regional Inter-Country Programme for Integrated Pest Control inSoutheast Asia that has been under implementation since 1990. The erosion/siltation issue wasaddressed through subsequent project design changes which replaced the high cost pondrehabilitation activities with low cost extension approaches which would not only eliminate a sourceof environmental risk but also offered the prospect of a more financially and practically sustainablesolution. These strategies virtually eliminate the adverse environmental impact potentials of the BZactivities per se.

The Environmental Review also identified a significant indirect impact potential; the possibility thatproject support for the shrimp farmers could trigger substantial immigration to the protection beltresulting in renewed massive mangrove destruction (the "magnet effect); and the proliferation ofmore intensive unsustainable shrimp farming. However, it was concluded that the risk of such adevelopment would be minimal since: (a) the project design had already incorporated most of themitigating measures proposed by the Review 2; (b) zoning restrictions to be promulgated willprohibit new settlers into the BZ; (c) national fishery policy, which had been contributing to the

2 They include (a) measures that are key to improving and stabilizing farmers' incomes like (i) land tenure/allocation,enterprise restructuring and credit issues, (ii) improved extension, and (iii) reducing the risk of inappropriate input use(especially the use of diseased post larvae); and (b) tackling the problem of open access or common property resources.

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problem, was changed so that it now addresses more clearly the sustainability of brackish wateraquaculture (instead of just setting over-ambitious aquaculture farming expansion targets); and(d) the shrimp aquaculture sub-component support through the Vietnam Bank for Agriculture andRural Development will only be for low cost investment (improved extensive) measures.

The final environmental implication of the project only became apparent at a relatively late stage inproject design when the full dimensions of the resettlement program necessary to achieve projectobjectives became apparent; the resettlement plan presently incorporated in the project design willrequire relocation of 2,149 households from the area of mangrove rehabilitation inland to the definedbuffer zone. In view of the comparatively large scale of the program, it was determined that theresettlement program might itself be a source of adverse environmental impact and, accordingly, itwas agreed that: (a) the project should be reclassified into environmental screening category A toreflect the increased environmental risk potential; and (b) additional environmental assessment workshould be carried out to assess, in particular, the impact potentials of the resettlement program and, asrequired, specify environmental management and monitoring procedures to be incorporated intoproject design. This necessitated preparation of the Update of Environmental and Social Review ofBuffer Zone Component to Category A Environmental Assessment (GEC/ESSA, 1999), focusingparticularly on the implications of the Resettlement Action Plan (RAP) since the success of theproject as a whole is heavily dependent on the success of the RAP.

Potential impacts of the RAP arise directly from density effects of enlarged populations of communevillages receiving resettlers, and indirectly as a response to the ultimate socioeconomic well being ofthe integrated resettler commune villages receiving resettlers (dissatisfied resettlers will move backto the coastal zone, defeating the purpose of the project). The key direct density effects are surfaceand groundwater quality and availability, adequacy of available land resources to sustainably supportresettlers, and the adequacy of domestic sanitation arrangements. The environmental monitoring andmanagement plan was broadened to encompass these issues. Key potential environmental effects andproposed mitigation measures are discussed more fully in Annex 11 and summarized in Table Al 1.1.

7. Participatory Approach:

The process-oriented participatory approach has been able to involve provincial/local governmentand potential beneficiaries and affected persons in a highly consultative manner throughout the threeyears it took to prepare the project.

Identification/Preparation Implementation OperationBeneficiaries/community groups IS/CON IS/CON IS/CON/COLIntermediary NGOs IS IS/COL IS/COLAcademic & Govt. Research Institutes IS/CON/COL IS/CON/COL IS/CON/COLLocal government IS/CON IS/CON/COL IS/CON/COLOther donors (i.e., Netherlands, Denmark) IS/CON IS/CON/COL IS/CON/COL

NB. IS=information sharing; CON=consultation; COL=collaboration;

F: Sustainability and Risks

1. Sustainability:

The long-term sustainability of the protection belt will be enhanced by the following aspects ofproject design: (a) development of institutional and human resource capacity to implement theprograms for mangrove forest development/protection and technology development and transfer;(b) development of ownership and commitment (at commune and village levels) to the project'sprotection objective through the CAP process; (c) development of joint-protection contracts with

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households adjoining the FPZ; and (d) promotion of alternative livelihood opportunities forvulnerable communities so as to reduce pressure on the protection belt. Key to the success of theabove would be participatory planning, collaboration amongst key stakeholders; communityempowerment from the CAP exercise; and the assurance of appropriate financial and marketincentives in the protection contracts. The participatory approach will also serve to reduce the risk ofchoosing wrong investments under the project. Finally, to ensure implementation and financialsustainability after the end of the project, particular care has been taken to be cost effective and not toover-invest. For instance, overall costs are consistent with other such investments in Vietnam (e.g.,Netherlands's RMFP). Much of the costs are initial investments needed to establish basic protectioninfrastructure or research-extension facilities as well as the establishment of a monitoring andevaluation system. At project end, a significant part of operating costs would be transferred to thebeneficiary groups whose income would have improved. However, provision will be made for aminimum package of continuing operating costs by the Province (including a core TDT support,some continuation of CWG costs and remaining recurrent costs -- mostly salary and routineoperating expenses to maintain a lower level of management effort). This package (aboutUS$800,000/year) would be about 2% of the expected budget of the provinces. This amount couldalso be easily met by the existing 327/556/5 Million Ha Program (which is expected to continue pastproject completion) or through a small increase in the land/pond tax.

2. Critical Risks:

Risk Rating Risk Minimization Measure

Seedling requirement for planting M Survey seedling sources and obtain early contractualprogram is available commitment.

Commitment of FPMB and FFEs to M Establishment of nurseries for less popular mangroveplant species other than for Rhizophora species by government; or contract with private sector.not met because they may be less Also see below.remunerative.

FFEs or FPMBs fulfill their M Establish clear schedule for planting activities.commitment to protect and manage the Strong involvement and participation of FFEs andFPZ under their management. FPMBs in the preparation of the implementation plan for

this componentEnsure budget and allowances are available for projectstaff.

Immigration into the protection belt M Ensure implementation of zoning plan for the provinces;continues to worsen. strengthen patrolling of coastal area; and work out policy

framework for settlement of new accretion areas.

Sufficient commitment and credit H VBARD provides letter assuring a minimum of the VNavailability through VBARD. Dong equivalent to US$10.2 million be made available

for short and medium term commercial credit for theproject area

TDT demonstration groups may not M Demonstrations show financial and not just productionhave a sufficiently wide impact. feasibility. Special effort to bring farmers to

demonstration sites. Measure are also low cost

Weak participation from the ethnic M Ensure provisions under the project's Ethnic Minority

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Risk Rating Risk Minimization Measure

minorities and the very poor Development Plan (using EMDF) and Special Plan forthe very Poor (using SSF) are successfully implemented.

Delays with social support activities M Ensure viable activities identified by the CAP process tocould affect sustainability and timely be covered by the communal fund and VBARD.delivery of support services and Ensure that support services providers be part of thefunding available. team facilitating the CAP process.

Reversion back to centralized control M Ensure PPMU take pro-active role in preparation ofin project management and annual plans and the PFCU is run from project area, notimplementation. Hanoi

Resettlers are not welcomed and S A proportion of the resources allocated for the CAP andresented by commune villages the Communal funds would be targeted specifically toreceiving resettlers due increased the commune villages receiving resettlers to improvepressures upon their infrastructure and infrastructure such as new or expanded clinics, schools,services. and water supply systems.

Households who accept to be resettled S Ensure that allocated land allows for PAPs to be bettermay not remain in the new resettlement off and implementation of compensation andsites but return to their original homes. rehabilitation is effectively undertaken.

Overall Risk Rating MRisk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible Controversial Aspects: None

G: Main Credit Conditions

1. Effectiveness Conditions:

(a) Establishment of NPSC and appointment of the Project Director (Section C.4);

(b) Establishment of PFCU of the CPO and appointment of the Project Coordinator(Section C.4);

(c) Establishment of PPMU and appointment of Provincial Project Directors(Section C.4);

(d) Establishment of the Provincial Project Steering Committee (Section C.4);

(e) First Year Implementation Plan prepared jointly with Provinces and approvedby GOV;

(f) Adoption of the Project Implementation Manual by GOV;

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(g) Procedural guideline for forest planting activities prepared (Annex 5, Table D); and

(h) Procedural guidelines for resettlement payments prepared. (Annex 5, Table D);

2. Dated Covenants:

By June 30th and December 31st of each year, the CPO/PFCU will submit to IDA (based onsubmissions from the provinces and/or the PFCU sub-units) the following semi-annual progressreports on the status of (a) mangrove planting, rehabilitation and protection; (b) technologydevelopment and transfer (including applied research on aquaculture and coastal farming systems);(c) Commune Action Plans and the utilization of the Communal Fund; the Social Support Fund andthe Ethnic Minority Development Fund; (d) policy development; and (e) the RAP (Annex 1).

The Borrower shall ensure that PAPs in the FPZ shall be compensated, resettled and rehabilitated inaccordance with the project's RAP. To that end, the Borrower shall, and shall cause each of theProject Provincial People's Committees to, carry out the said RAP within their respectiveadministrative boundaries, in a manner satisfactory to the Association. By September 30 of everyyear, the CPO will submit to IDA detailed implementation plans for the following year (based onsubmissions from the provinces and/or the PFCU sub-units) for: (a) mangrove planting, rehabilitationand protection; (b) technology development and transfer; (c) Commune Action Plans and theutilization of the Social Funds; (d) policy and institutional development; and (e) the RAP. ForCY2000, the implementation plan for April 1, to December 31, 2000 will be furnished to theAssociation by March 31, 2000.

The Borrower shall ensure that the EMDP is implemented as agreed and shall ensure that the ZoningDecision is enforced in the FPZ.

The CPO/PFCU will submit by December 31, 2000 (with endorsement from the relevant Provinces)an action plan for the restructuring of FFEs chosen for study under the project (Annex 2, component4).

The project accounts will be audited annually by independent auditors acceptable to IDA and theaudit reports will be forwarded to IDA within six months of the end of each fiscal year (i.e., beforeJuly 1 of the following year).

A project completion report will be prepared within six months after Credit closing.

H. Readiness for Implementation

[ ] The engineering design documents for the first year's activities are complete and ready for thestart of project implementation. [X] Not applicable.

The procurement documents for the first year's activities will be completed and ready for the start ofproject implementation before effectiveness.

The draft Project Implementation Manual has been appraised.

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I. Compliance with Bank Policies

[x] This project complies with all applicable Bank policies.

Task Team Leader: Ronald Zweig

Sector Director: eoffrey B. Fox

Country Director: Andrwer

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ANNEX 1: PROJECT DESIGN SUMMARY

Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical AssumptionsSector-related CAS Goal: (Goal to Bank Mission)I) Nation's natural resource I) Regular policy discussions and I) Increased GOV

base (e.g. coastal resources) PFCUs project progress reports commitment to forest andimproved so that economic environmental policiesgains can be sustained overthe long term.

Project Development Objective: (all percentage changes refer to (Objective to Goal)changes compared to the base year)

1) Reestablish and stabilize 1) Increased coastal and near-shore 1) Project progress reports by Remark:the coastal wetland zone marine productivity, including PFCU at mid-term review and at I) Further increases arein the Southem Mekong 1.1 Quantity of aquatic indicator completion, based on monitoring expected after projectDelta species in canals in FPZ and BZ activities financed under the completion.

and in selected coastal waters projectincreased by 15 % by 2005; .

1.2 Average number of crabs inmudflats increased by 10% by2002 and by 30 % by 2005.

2) Minimization of coastal erosion and 2) Project progress reports by Assumptions:maximization of coastal land PFCU, based on monitoring 1) Silt load in Mekong does notreclamation activities financed under the decrease;2.1 Average annual coastal erosion project 2) Coastal currents systemsreduced by 15 % by 2005; and remain unchanged.2.2 Average annual coastalaccretion increased by 20 % by2005.

(Outputs to Objective)1) Coastal mangrove plantings 1.1) Illegal incursion into the FPZ FFEs and FPMBs Assumptions:

expanded and coastal reduced by 50 % in 2002 and by 1) Fishing and crabecosystem sustainably managed 80 % in 2005; collection do notand protected in the FPZ in the 1.2) All existing and newly planted significantly exceed theprovinces of Ca Mau, Bac Lieu, mangroves are maintained. natural carrying capacitySoc Trang and Tra Vinh 2) Natural disasters will not

significantly affect themangroves ecosystem.

3) Creating strongcommitment among theBZ households to theforest protection objectivesthrough joint protectioncontracts with individuals(green books) andcommunities (communeaction plan) is key topreventing illegalincursion.

Assumption:2) Income and livelihood of 2.1) Average rural household real District level statistics (for 2.1 and 2) Improved income and

coastal population improved income increased by 8 % in 2002 2.3); livelihood of the coastaland risk reduced through and by 20 % in 2005; socio-economic survey by PFCU (for population will decreasediversification in the BZ in 2.2) Percentage of shrimp pond surface 2.2) pressure on the ecosystemthe provinces of Ca Mau, Bac area to total land area reduced by by reducing the reliance ofLieu, Soc Trang and Tra Vinh 15 % by 2005; wood and aquatic products

2.3) Average incidence of absolute collected in the FPZ as apoverty in vulnerable communes source of income.reduced.

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Narrative Summary Key Performance Indicators Monitoring and Critical AssumptionsEvaluation

Components contributing to Output 1Component 1: Mangrove planting and protection in the FPZ and BZ1.1) Forest planting activities 1. 1. 1) 40 % of suitable land FPMBs and FFEs Risks:

planted with mangroves by I ) Seedling requirement is available.2002; 2) Commitment of FPMBs and FFEs to

1. 1.2) 1 00% of suitable land plant species other than Rhizophora,planted with mangroves by although they may be less2005. remunerative.

1.1.3) New planting to contain awider range of mangrovespecies.

1.2) Designing, implementing-and 1.2.1) Reports by local Project progress reports Risks:managing mangrove planting communities about by PPMU and site I) FFEs or FPMBs fulfill theirand protection activities incursions into the FPZ: Surveys (1.4.7) commitments to protect and managethrough forest institutions 1.2.2) Zoning of protection the FPZ under their management.

parcels finalized by the mid2002; 2) Illegal immigration into the

1.2.3) Forest protection contracts protection belt continues to worsen.issued by mid 2003;

1.2.4) staff of forest institutionstrained for forest protectiontask by the end of 2003;

1.2.5) Regular patrols conductedalong the FPZ.

1.2.6) Demarcation of FPZcompleted by the end of2002;

1.2.7) On-site stations built orupgraded by mid 2002;

1.2.8)Environmental awarenessincreased;

1.2.9) Planned number ofenvironmental awarenessprograms conducted;

1.3) Improving management and 1.3.1) Mangrove ecosystem in Progress reports byprotection of special use special use forests institutions managing(conservation) forests and fish restored; the special use forests;sanctuaries 1.3.2) Conversion of sample surveys of fish

mangrove to shrimp in Bai Boi sanctuary byponds in core area of PFCU.special use forestsceased; and

1.3.3) Number of fish andvariety of speciesspawning in fishsanctuary increased.

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Components contributing to Output 2:Component 2: Technical and economic support for households in the BZ and EZ

2.1) Technology Development 2.1.1) Improved farming tech- 2.1) Project progress Assumptions:and Transfer for affordable niques adopted by two- reports by TDT sub- I) Incidence of shrimp disease does notcoastal farming systems and thirds of the farmers in unit exceed 33 % of average productionsustainable shrimp the BZ by the end of 2) Farmers pursue crop diversificationproductivity improvements, 2003; when profitability is demonstratedrisk reduction and income 2.1.2) Survival rate of shrimp 2.2) Regular super- through group.stabilization and/or increased from 20 % to 35 vision through 3) VBARD staff participates in trainingdiversification for the % by the end of 2004; external aqua- courses for extension staffshrimp farming households. 2.1.3) Farm plans established for culture experts

75 % of the participating Risk:farmers in the BZ by the Sufficient commitment and creditend of 2002; availability through VBARD and with

2.1.4) 500 joint liability groups incentives for farmer to borrower.established;

2.1.5) Extension VBARD staff Risk:trained by the end of Demonstration groups have impact on2002; surrounding commune farmers.

2.1.6) Extension stationscommune posts anddemonstration groupsoperating by the end of2001.

2.2) Applied research on 2.2.1) New extension packages Project reports by TDT Assumption: sufficient resources providedaquaculture and coastal area for improved farming sub-unit for institutes involved.farming systems techniques developed at Risk:

the rate of at least two per Disease analysis measures may notyear; adequately detect and prevent potential

2.2.2) Applied research, ex- disease pandemics.tension and supportstations upgraded by theend of 2001.

Component 3: Social support for vulnerable (poor) communities including indigenous people

3.1) Participatory Rural Appraisal Participatory Rural Appraisal Project progress Risk:and Commune Action Plans conducted, development reports by Social sub- Weak participation from the very poor and

priorities identified by conimune unit of PFCU the ethnic minorities.villages receiving resettlers andvulnerable communities, andcommune action plans finalizedby the end of 2001

3.2) Communal Fund Communal Fund disbursed for Project progresseligible activities under the reports by Social sub-commune action plans for unit of PFCU.vulnerable and communevillages receiving resettlers

3.3) Social Support Fund and Social Support Fund designed as Project progressEthnic Minorities a revolving fund by end 2000 reports by PFCU.Development Fund (EMDF) and disbursed to local

communities and EMDFdisbursed as grants to supportcultural facilities.

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Components contributing to outputs 1 and 2:Component 4: Policy and Institutional Development4.1) Policy development for land 4.1.1) PrimeMinisterZoning Progress report by PFCU. Risk:

allocation and use. Decision in place by end Former "forest land" suitable for1999. agriculture and consistent with

4.1.2) Provincial Master Plans for environment protection will not beLand Use completed by readily issued with "red books."2003.

4.1.3) 50% pond land andagriculturally suitable landissued with red book by2004.

4.2) FFE restructuring 4.2.1) Workshops on proposed Risk:framework for Differences of view among stakeholdersrestructuring of three FFEs (PPC and MARD) on how restructuringcompleted end 1999. is to be implemented could undermine

4.2.2) Detailed implementation plan the process.finalized and approved byNPSC mid 2001.

4.2.3) Restructuringimplementation completedby mid 2003.

4.3) Project Coordination and 4.3.1) Office space and equipmentManagement through: available in Ca Mauestablishment of a Project Field (PFCU and some sub-Coordination Unit (PFCU) with units), Can Tho (for theassociated sub-units for the remaining sub-units) by themajor components; and end of 1999;Provincial. 4.3.2) Project management staffProject Management Units working by the end of Feb.(PPMUs). 2000;

4.3.3) Timely preparation of annualwork plans and budgets.(Work plan for 2000approved end 1999)

Component 5: Resettlement of FPZ occupants into the BZ5.1) Compensation and relocation 5.1.1) All sites prepared by mid- Project progress reports, Assumption: sufficient land available

2003; based on reports of the for distribution.5.1.2) Eligible households have CWPDP Resettlement

received the allocated land Board and the Provincial Risk:and allowances by the Resettlement Offices; Households who accept to be resettledmiddle of 2003. reports by monitoring and will not remain in the new resettlement

evaluation team and PFCU sites5.2) Rehabilitation and livelihood 5.2.1) Training completed by the Project progress reports,

restoration (training and end of 2004. based on reports of theextension) CWPDP Resettlement

Board and the ProvincialResettlement Officesreports by monitoring andevaluation team and PFCU

Component 6.:Monitoring and Evaluation6.1) Environmental and socio- 6.1.1) Baseline Data Collection Project progress reports by

economic impact monitoring completed and Baseline PPMU.and evaluation submitted by mid-2000.

6.1.2) Monitoring is established oncoastline and land use, waterquality, biodiversity, marinebiological productivity, andsocio-economic indicators.

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ANNEX 2: PROJECT DESCRIPTION AND PROJECT IMPLEMENTATION PLAN

Component 1 - Mangrove Planting, Rehabilitation and Protection (US$13.9 million)

1. The area of mangrove forests along the coast of the greater Ca Mau peninsula hassubstantially declined over the last three decades as a result of illegal logging; over-harvesting byState Owned Enterprises; warfare (defoliation); and, most recently (since the mid-1980s), through anincrease in the conversion to shrimp ponds along the coastal belt. The loss and degradation ofmangrove forests has led to (a) a reduction of nurturing and coastal protection functions andbiodiversity provided by such forests; and (b) erosion of coastal areas and banks of rivers, canals andestuaries (important aquaculture nurturing sites). Forest planting and protection activities in the FPZare the core elements to achieve the project's objectives. Close cooperation between the FFEs orFPMBs and the Buffer Zone households in such activities will help to increase the sustainability ofthe component. This component will also draw upon the experience of, and coordinate with, theNetherlands-funded Rehabilitation of Mangrove Forests Project (RMFP) and others. Several areas inthe protection belt are already covered by RMFP, Oxfam-U.K., and provincial reforestationprograms.

2. This component consists of three sub-components: (a) replanting of forests in the fullprotection zone (FPZ) and buffer zone (BZ); (b) protecting existing and newly planted forests in theFPZ; and (c) protecting and managing key nature reserves/sanctuaries along the FPZ.

Sub-component (a): Reforestation in the Full Protection Zone and Buffer Zone

3. This sub-component supports planting and protection activities on approximately 17,600 haof barren land in the FPZ which is suitable for mangrove trees and 9,800 ha of barren land in the BZwhich is more suitable for trees than agriculture. The sub-component will support and improveongoing planting/replanting activities of the FPMB, and FFE sponsored by the Government's327/556/5 Mil. Ha programs under the following conditions: (a) planting will be based on the mostcost-effective methods and promote the use of a diversity of mangrove species; and (b) BZ will beplanted to forest where it is confirmned (through revisions of the current district land use plans) thatthere is very limited economic alternative to the use of the land.

4. The different hydro-geomorphic conditions along the coast (erosion versus accretion, landelevation, tidal regime, salinity, silt loading, etc.) require different approaches for planting. Plantingactivities (including detailed site planning, preparation and maintenance after planting) will bedeveloped for each suitable site by the relevant FPMBs or FFEs based on guidelines developed underthe RFMP. The ongoing reforestation activities which need to be changed include (a) the tendencytowards planting solely Rhizophora Apiaculata trees which are economically valuable but notsuitable for some other coastal lands (e.g., those formerly used as shrimp ponds or those under strongtidal stress) where alternative species are more appropriate from an ecological standpoint; and (b) theuse of expensive land leveling methods. Within the appropriate ecological environment, the projectwill establish plantations which consist of various indigenous species in addition to Rhizophora (e.g.Avicennia, Bruguiera, Excoecaria, Ceriops). This will support recovery of the diversity in plant andanimal life within the area. Furthermore, expensive land leveling will not be promoted. The mainactivities of this sub-component are summarized below.

Replanting on barren land: This activity will support the reforestation of formerly forested barrenland using the low costs methods developed by the RMFP for planting under different accretion anderosion coastal conditions, planting and replanting activities would take place during the first four

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years of the project. Only limited thinning and pruning would be allowed in the FPZ. BZ forests areexpected to be planted either as community forests and/or with specific portions allocated tohouseholds.

Additional planting on degraded forest: Some of the existing mangrove forests are partly degradedand will require either additional planting (enrichment planting) or natural regeneration to promotefull canopy cover. Planting models have been developed for accretion as well as erosion coast.

Planting on mudflats on accretion coast: Parts of the coast are expanding with average accretion inthe range of 20 to 25 m per year. Planting mangroves on those areas requires special measures (e.g.seedlings used for planting on mudflats must have a minimum height). Planting and replanting willbe done during the first four years of the project.

Planting on higher lands: Parts of the FPZ and BZ are on higher land that is not suitable formangroves. Because the risk of erosion depends not only on the tidal current but also on the winddynamics, non mangrove trees (e.g. Casuarina Equistiforlia) on higher land near the coast could stillbe important for coastal protection. Experience from ongoing planting activities supports theimportance of this measure, but only for a limited coastal band (about 50 meters) as alternativeagriculture (horticultural crops, derris root) can be developed inland of the band .

Providing seedlings: The project will support the production of seedlings by (a) strengthening theexisting nurseries/seed stands of the FFE and FMB; (b) establishing additional small-scale nurseriesin selected communes; (c) involving BZ farmers in the collection and growing out of seedlings; and(d) where possible, contract with private sector to purchase seedling requirements.

5. These activities will be managed by the FPMBs and FFEs through their extension staff. Theextension staff will (a) organize and support planting and replanting activities, (b) train the BZhouseholds in sustainable and environmentally-sound forest practices, and (c) monitor themanagement and protection of the FPZ forests. Planting and replanting activities will requirecoordination of activities of all parties involved. At each site, planting activities will be coordinatedby the on-site forestry extension staff. Selection of priority sites, choosing the optimal point of timefor planting, selection of suitable tree species, and coordination of seedling supply will be theresponsibility of the forestry extension staff with technical assistance from PFCU forestry sub-unit.

6. The current forest administration (FPMBs) does not have the capacity to fully provide theservices for this sub-component. This can, however, be tackled through remobilization of staff andimproved training. A constraint for implementing this sub-component by the FFEs is their currentweak financial position -- partly arising from unclear and contradictory policy (in terms of saddlingthem with unproductive functions and curtailing the right for them to sell the forest product) andpartly from inefficiency. Since shrimp farming was one important source of income for the FFEs, theshrimp disease epidemic of 1994-1995 had resulted in a sharp decline in cash inflow. By 1996, manyFFEs could not even pay the salaries for their staff and the fuel for their boat. Staff was, therefore,forced to look for other income generating activities instead of carrying out their protection tasks.While these and other key issues for the FFEs are being tackled through the Policy and InstitutionalDevelopment Component (see component 4 below), the focus of the FFEs' forestry work under theproject would be solely on protection activities and not on income earning activities for its staff.FFEs will, under the project, receive government support (in the form of extra field allowances andexpenses) in implementing its protection responsibilities in the FPZ under their jurisdiction.

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Sub-component (b): Protection of newly planted and existing forests in the FPZ

7. The project will support the sustainable protection of mangrove forests in the FPZ so that thenewly planted and existing mangrove forests can fulfill the nurturing and coastal protection functionin.the long term.

Finalization and Approval of the Coastal Belt Zonation Plan prepared in cooperation with theNetherlands-funded RMFP. This Zonation Plan defines the FPZ and BZ and the principles andregulations governing their associated land and resource use. It clearly defines the economicactivities to be allowed in the FPZ (such as extraction of minor forest products as well as eco-tourismand scientific research) and the responsibilities and rights of the BZ farm households, FPMB, andFFE.

Boundary demarcation. The project would support boundary demarcation activities. Experiencesfrom the RMFP show that local institutions as well as farmers do not fully understand the concept ofthe FPZ and BZ. Demarcation either with canals or signboards and markers at the border betweenBZ and FPZ have been effective tools to visualize the border line between FPZ and BZ for the localpeople as well as for people from outside. Signboards would also indicate the activities allowed andprohibited.

Issuance of Forest Protection Contracts. The project would support activities related to issuanceof forest protection contracts to BZ households to protect allocated parcels in the FPZ. Thesecontracts (also known as "Green Books") are land use certificates (normally 20 years) that define therights and responsibilities of the households in the protection and maintenance activities in exchangefor annual payments. Selection criteria of households include capability and necessary resources toassume responsibility for planting and protecting land parcels in the FPZ. Such households wouldneed sufficient labor to be able to fulfill the work in the FPZ. Priority would be given to householdswhich have neither additional income sources, e.g., fishery or agriculture, nor sufficient income fromaquaculture essentially the characteristics which predispose them to cut the mangroves in the FPZ asa source of income. The forest administration will identify protection parcels using detailed land usemaps based on information from the RMFP and other sources. The basic infrastructure for theprotection parcels (e.g. access road, main canal for shrimp farming), funded under the Government'sDecree 773 Program, are mostly in place.

8. After households as well as land parcels are selected, Green Books will be issued to the BZhouseholds by the Provincial People's Committee. The BZ households would then be responsible formaintenance and management of the land parcel in exchange for annual payments as provided forunder the Decree 327/556 programs. In addition, several activities will be allowed in the FPZ whichwould provide additional income to the BZ households. These activities include by-productcollection, including the pruning and "thinning" of trees/branches. Besides giving the farmers astake in their replanting and maintenance efforts, the opportunity to directly benefit from sound andsustainable management of these resources would serve to reduce farmers' dependence on paymentsfrom Government. Also, the project will help to prevent illegal wood cutting by people from outsidethe project area due to awareness and ownership building among the farm households for themangrove forests in the FPZ. The issuance of the Green Books will be linked to training workshopsfor the BZ households to provide them with the essential management skills and the understanding ofregulations and responsibilities for the FPZ.

9. Project funds are available for: (a) annual payments to BZ households; (b) boundarydemarcation; and (c) training. These activities will be managed by the FPMB and FFE depending on

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the location; and with the support of the provincial DARDs, PPMUs and the CPO/PFCU forestrysub-unit.

Sub-component (c): Protection and Management of Priority Nature Reserves/Sanctuaries in the FPZ

10. This sub-component would support activities to strengthen the protection of two naturereserves and one fish sanctuary located in the FPZ of the project area. Dat Mui Nature Reservecomprising 4,474 ha is listed in the Directory of Asian Wetlands as an area of national andinternational significance. This reserve is the remnant of the once large stretch of mangrove swampsand associated mudflats at the western tip of the Ca Mau peninsula. Unfortunately, much of the areahas been deforested and damaged by construction of shrimp ponds (now abandoned) and morerecently by Typhoon Linda. Ong Trang Nature Reserve was not included in the Directory becausethis area was just being formed through accretion of mud flats when it was compiled. Now itconsists of two uninhabited oblong islands with a total area of 1,540 ha. These islands are nowcovered with dense mangrove vegetation providing important nesting and foraging habitats to avariety of birds. Bai Boi Fish Sanctuary consists of the body of water adjacent to Dat Mui and OngTrang. It was gazetted as a Sanctuary by the Ministry of Fisheries in 1993 because of the richdiversity of fish species. Recent studies carried out by the Institute of Oceanography confirmed thesignificant biodiversity of this area.

11. Focus of activities for these three nature reserves/sanctuaries would be on low-cost measuresto strengthen the protection of these areas which would then allow natural regeneration of mangrovesand other vegetation and natural regeneration of fish stock (in the case of Bai Boi). Restoration ofmangroves would, in turn, attract birds and other wildlife (in the case of Dat Mui and Ong Trang).The development of major infrastructure (e.g., nature study center, museums, and so on) are notnecessary at this point since there is at present limited tourism to those areas.

12. Activities to be financed would be (i) boundary demarcation between the core zone andbuffer zone of the nature reserves and the sanctuary (see sub-component (a) above); (ii) developmentof a management plan including management objectives and regulations for each of the areas;(iii) habitat restoration of selected areas in Dat Mui which has little of its original habitat left;(iv) protection infrastructure such as guard stations/posts, communications equipment, and boats;(v) conservation education programs to raise awareness of the local populations to the importance ofthese areas for their livelihood; and (vi) training of staff. The relevant FPMB will implement thissub-component in conjunction with technical assistance from the PFCU Forestry sub-unit.

Component 2 -Technology Development and Transfer in the BZ (US$15.9 million)

13. The economic situation of households living adjacent to the FPZ (i.e. the BZ inhabitants)plays a very important role in determining the extent of pressures on the coastal wetland resources.The most important economic activity of the majority of BZ households is shrimp aquaculture.Recent declining trends in income from shrimp farming (especially the shrimp disease disaster of1994-95) are believed to have contributed to a resurgence in foraging behavior (i.e. mangrove-cuttingfor fuel-wood and collection of crabs, fish and mollusks in the near shore mud-flats). While shrimpproduction was nearly the only source of income in the past, during the last few years diversificationfrom shrimp aquaculture production has started to take place. Many farmners have, by necessity,found that some coastal wetlands do offer less risky livelihood opportunities, notably: land-basedagriculture, integrating crops with livestock, fruit trees, and salt making. In fact, indigenous farmingsystems innovations - largely unaided by public research and extension services - are quite prominent

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in the project area. Bilateral external assistance (Australia, Netherlands and Denmark), throughvarious research institutes and universities, have ongoing pilot initiatives which may now bereplicable over a larger area. In many areas farmers have seen the results of these promisingtechnologies and are ready to adopt, but the availability of credit has been the limiting constraint.This component will take advantage of that good work already done and the Vietnamese farmers'innate capacity to learn from one another by (a) implementing a technology development and transfer(TDT) program that is relevant to local farmer conditions; and (b) improve the provision of farmercredit through the Vietnam Bank for Agriculture and Rural Development (VBARD) in support of (a).

Sub-component (a):Implementing the Technology Development and Transfer (TDT)Program for the Southern Mekong Delta Coastal Areas

14. The project will adopt an integrated coastal farning systems approach, promoting cropdiversification in saline environments where extension support has been particularly deficient. Theproposed strategy focuses on participatory Technology Development and Transfer (TDT). Itcomprises:

(a) an ongoing mechanism to encourage and screen potentially appropriatetechnologies for use in the farner demonstration groups and/or further adaptiveresearch. A Technical Advisory (TAG), comprising eight permanent members andresource persons from contracted institutes and the project sub-centers, will conveneabout 2 -3 times a year, to screen technology proposals and award prizes for the mostreplicable submissions. Different generations of appropriate technology will bescreened for group demonstrations and farmer adoption. This process will befacilitated by the TDT sub-unit of the CPO/PFCU (located in Can Tho).

(b) adaptive research undertaken by two major farming systems sub-centers fortechnology development and demonstration for coastal areas: (i) the southernsubregional center -- comprising the station of the southern Research Institute forAquaculture (RIA-2) in Ca Mau (with a substation on the eastern Ca Mau coast) andthe Ca Mau forestry research station (which is collaborating with the MangroveEcology Research Center in Hanoi) ; and (ii) the northern subregional center --comprising the existing Can Tho University stations in Bac Lieu and Vinh Chau anda new station (essentially the upgrading of one of the district extension centers in TraVinh) in cooperation with the Tra Vinh DARD. These centers will work on theadaptive research topics proposed and screened by the TAG and demonstrate earlyprospects for visiting farmer extension groups. It will handle the demand drivenfeedback of farmer problems brought to their attention by the District ExtensionCenters and the commune level demonstrations and undertake the training of trainers(TOT) for the extension program summarized below. The TDT sub-unit will alsoprovide TA for these activities.

(c) a monitoring, extension and training system focused on commune leveldemonstrations through farmers groups in 43 communes (in 12 coastal districts of theproject's 4 provinces) adopting the first generation of appropriate technologyscreened by the TAG and adapted to the localized conditions of the farmer groups.The program will be facilitated by monitoring extension technicians (METs) speciallyrecruited and trained from among the ranks of progressive farmers in the area for theduration of the project. They will be supervised by extension staff from the respectivedistrict extension centers who have been assigned coverage of the coastal communes,

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who will in turn receive technical assistance from the TDT sub-unit and theProvincial Extension Service of DARD. Depending on accessibility, one districtextension officer will cover about three communes. Three METs will be recruited peraverage sized commune of about 8-10 villages -- with each MET covering an averageof three village demonstrations.

The METs will also work with grass roots organizations and VBARD (withassistance from the TDT sub-unit) to develop farm plans and review creditworthinessfor the demonstration groups.

(d) a special program for shrimp disease diagnosis, management and control focusedon (i) producing disease resistant post larvae from captive broodstock that havesurvived the grow out period in the various research stations of the project's regionalsub-centers and in Nha Trang (under RIA-3 in the Central Region); (ii) diseasediagnosis and demonstrations capability at the same stations; (iii) development ofspecific pathogen free (SPF) broodstock domestically and/or from import of SPFpopulations from "clean" sources (e.g., Australia, Hawaii); and (iv) finfishbroodstock development for diversification and polyculture.

15. Details of the sub-component, participating institutions and implementing arrangements aregiven in the Project Implementation Plan. The project will finance civil works (stations and sub-centers demonstration ponds), laboratory equipment, vehicles and boats, inputs, special incrementalstaff allowances and technical assistance (including of field staff). The TA requirements [exceptpossibly for some segment of (d)] will be funded through DANIDA grants.

16. The above sub-component will enable the development of extension outreach packages thatare both technically and financially viable for each of the major aqua-ecological sub-zones of thecoastal belt. In this scenario, monitoring becomes pro-active. Information feedback from farmer toresearcher will promote both applied research and demand-driven problem solving. Appropriatesustainable technologies will be imparted to the extension services and demonstration sites willbecome the main vehicle for technology transfer and communication of environmental awareness tothe farmer. VBARD will have an explicit role in helping to develop the relevant technology packagesfor extension, as outlined below

Sub-component (b): Credit provision through VBARD

17. The short and medium term credit needs under the TDT program and the commerciallyviable components of the Social Support Program (see Component 3 below) will be provided byVBARD from its existing source of funds under applicable terms and conditions. While VBARDhas agreed to actively participate in the project, (a) restricted qualifications for VBARD loans and(b) bad debts arising from the shrimp disease epidemic and Typhoon Linda might prevent furtherloans from being given to affected farmers and thus end up seriously constraining project outreach.Assurances have been given by VBARD to overcome these constraints. First, eligible projectparticipants may borrow up to VND 10.0 million per household (the maximum without long termland rights or "red books"). Second, eligible farmers' down payment contribution will not exceed20% if they fulfill one of the following conditions: (a) they are part of joint liability groups; (b) theyreceive support from "loan guarantors" (e.g. through support from grass roots organizations likeWomen's Unions and Farmers' Associations); (c) they hold temporary land rights/protectionagreements or "green books" issued by the relevant Government agencies; and (d) their loanapplications are accompanied by the preparation of farm plans. Third, VBARD will not deny project

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beneficiaries from being eligible for VBARD loans because of lack of eligibility solely due to lossesdue to Typhoon Linda (since GOV has allocated VND 1,200 billion VBARD nationally to typhoonaffected households for such an eventuality). Fourth, as project beneficiaries would be supported byloans which require the preparation of farm plans, cash flow computations would include at leastpartial repayment of past debt sustained under both the shrimp disease as well as Typhoon Linda.Fifth, VBARD will provide district level staff to jointly assess how feasible and representative thefarm plans prepared for the technology packages developed at research sub-center level are.

18. The BZ farmers' lack of experience in credit management (especially for aquaculture) andthe lack of effectiveness of VBARD staff to assess farmer credit worthiness are potential constraintsto effectively implementing the credit sub-component. Therefore, training will be organized on howto implement a periodic loan repayment in accordance with the aquaculture product cycle and forVBARD staff and METs to prepare farm plans and assess client creditworthiness.

19. The project would provide technical assistance funds for the required training under the TDTprogram. The training activities will be managed by the district extension staff with technicalassistance from the TDT sub-unit and the provincial credit staff of VBARD .

Component 3 - Social Support Program for Vulnerable Communes and Commune VillagesReceiving Resettlers including Ethnic Minorities (US$ 10.2 million)

20. The current socio-economic environment affecting the population in the FPZ and BZ isdominated by economic crisis and by worsening living conditions. After late 1993, when the shrimpdisease set in, both rich and poor have been adversely affected. Many people have lost land and arein perpetual debt. The poorer households are relying on daily labor work (if they can find it); thecatching of shrimp, crab and other shellfish in the rivers, canals and seacoast; and the collection ofwild plants and cutting of mangrove forest for firewood, building materials and charcoal making.While many are aware of the beneficial role of mangroves and that cutting them would be harmfuland forbidden, the poor see no alternative to utilizing the forest to eke out their living. Thus it is thepoor who pose a threat to forest protection in the BZ and, unless they are involved in the protectionand assisted in generating alternative income, they will likely continue to do so. In general, thenearer towards the coast, the poorer or vulnerable segment of the population is likely to be found.Furthermore, the isolation and distance of parts of the coastal area from the provincial and districtcenters have resulted in insufficient social infrastructure for the local population. While theimprovement of the aquaculture production systems will be covered by several other components ofthe project, this component will improve basic socio-economic support for the vulnerable andcommune villages receiving resettlers - poor villages located in either the BZ or adjoining EZ witheasy access to illegally exploit the FPZ mangroves and those commune villages that receiveresettlers.

21. Social support under the project comprises two sub-components: (a) Development andimplementation of Commune Action Plans for vulnerable and commune villages receiving resettlers;and (b) Social Support Fund (safety net) and Ethnic Minorities Development Fund.

Sub-component (a) - Development and Implementation of Commune Action Plans

22. This sub-component will first support a Participatory Rural Appraisal (PRA) process todevelop Commune Action Plans (CAPs) which are vetted by the support service agencies or private"vendors" who can provide the services to the 18 selected vulnerable communes. The CAPs willalso include proposals for changing land use and land allocation (see Component 4 below). These

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communes have been initially identified by the Provincial People's Committees (PPCs) inconsultation with the extension staff and the provincial project coordinators. The economicallyviable needs of the community are expected to be catered for by the Vietnam Bank for Agricultureand Rural Development (VBARD). Other economic and social needs would be met through theestablishment of a Communal Fund which is similar to the Social Support Grant used in the WorldBank's Forest Protection and Rural Development Project and would also provide support to thecommune villages receiving resettlers.

23. Provisions for the Communal Fund (CF) allows for a low cost approach for reaching thetarget commune villages receiving resettlers and poor communities in the project Provinces.Depending on the specific needs of each community, community forestry activities in the BZ,construction of community deep well/handpumps, community based handpump operation andmaintenance training, expansion of classrooms and equipping primary schools, training of trainers(including local women) on credit loan management and distribution, training local women onprimary health care and environmental sanitation, and adult literacy training will be included. Of thetotal US$8.26 million about US$1.63 million would be allocated to the commune villages receivingresettlers that would receive the resettlers from the FPZ for the community needs described above.These funds would be allocated on a per household basis scaled based on the percentage increase thenumber of incoming households would add to the commune villages receiving resettlers. Thebalance of US$6.63 million would be allocated for the other selected poor communities in the projectprovinces.

24. Restrictions for use of the Communal Funds would be as follows: First, eachactivity/investment should not exceed US$20,000. Second, the investment proposal cannot includethe following list of activities/investments (some of which are covered by the TechnologyDevelopment and Transfer sub-component): (a) upgrading or construction of commune to district orinter commune roads; (b) grants for commercial processing or manufacturing activity; (c) paymentdirectly into another fund (e.g. community revolving fund) for unspecified activities; (d) secondaryeducation or secondary health facilities;(e) purchase of land or motorized vehicles; (f) any projectwhich may adversely impact on the FPZ; and (g) any illegal activity.

25. Application and Review Procedures. After the list of eligible activities have beentechnically evaluated, prioritized and agreed upon by the CWG, the CAP will include a briefdescription of each subproject to be funded through the CF, including (a) inputs to be provided byboth project implementers and beneficiaries; (b) implementation arrangements includingprocurement methods and schedule; (c) commitment to maintain project investments; and (d)identification of direct beneficiaries of the subproject. Beneficiaries are expected to pay acontribution in cash or in kind, equivalent to a minimum of 10 percent of the value of each subprojectinvestment. The CWG, with the help of the CAP team, will finalize a list of actions, including anagreement not to enter or exploit the core FPZ unsustainably, to be taken by the communities inexchange for the CAP. A "conservation agreement" including the CAP will then be submitted to thePPMU for review to ensure that all subprojects being proposed in the CAP meet the agreed eligibilitycriteria. At the same time, the following submissions will also be required to complete the CAP: (a) aland allocation plan (prepared with the assistance of the Land Administration Officer); and (b)allocations (i) from a separate Social Support Fund (SSF) to support a special program for the verypoor and (ii) a separate Ethnic Minority Development Fund to fund key elements of the EthnicMinority Development Plan [see Sub-component (b) below]. If any changes to the CAP componentsare to be proposed, these must be agreed with the CWG prior to signing. After final approval by thePPMU, the conservation agreement will be signed by the chairperson of the CWG on behalf of thebeneficiaries, representatives of mass organizations (if involved), the Project Director, and PPMU.

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26. Implementation Procedures. After signing of the conservation and land allocationagreement, annual work and financial plans will be developed by the PPMU based on the agreedCAPs and budgets allocated accordingly. CAP activities will be funded by the project throughPPMU as contracts either to communities directly or to specialist institutions, service agencies, andnon-governmental organizations. Where possible, organizations located within the commune ornearby will be used. However, where small-scale activities at commune level may involve engaginga community organization, contracting with the community organization may be delegated to theCWG on behalf of the PPMU. CAP activities will normally be implemented over a period of threeyears. Implementation of the CAP will be reviewed annually by PPMU. Continued disbursement forCAP activities will be subject to ongoing observance of the conservation agreement by beneficiaries.

27. Financial Management. IDA will finance no more than 90 percent of a CAP; the remainderwill be financed by local counterpart funding from local government or beneficiaries in cash or kind.GOV has indicated that cost recovery from beneficiaries of the Communal Fund could be paid into aspecial "revolving (livelihood) fund" [see component (b) below] at the village level (to beadministered by the villagers themselves) with the aim or improving the livelihood situation of thepoorer families.

28. Monitoring and Evaluation. The CWG will regularly supervise the implementation of theCAP, provide semi-annual progress reports to the PPMU, and review implementation performnancewith PPMU prior to preparation of annual work and financial plan. The PPMUs will be responsiblefor overall monitoring and supervision of the use of the Communal Funds in their respectiveprovinces and for verifying the accuracy of the information included in the commune progressreports with assistance from an independent Monitoring and Auditing team (MAT). The MAT willcarry out such reviews on an annual basis. MARD/PFCU will provide an evaluation report thatanalyzes the implementation experience of the overall CAP process for the Mid-Term Review of theproject.

Sub-component (b) - Social Support Fund and Ethnic Minority Development Fund

29. With the development of Action Plans at the Commune level, there is a risk that the needs ofthe very poor, especially the vulnerable ethnic minorities or indigenous people, will be left out. Toprotect these vulnerable groups from being bypassed, a Social Support (Safety Net) Fund (SSF) andan Ethnic Minority Development Fund (EMDF) will be established at the village level throughbilateral grant funding.

30. The SSF will be used to assist the very poor (including ethnic minorities) as given by thepoverty information of the Department of Labor, Invalids and Social Affairs and judged by a specialvillage or community-level Committee which has minority representation. During the PRA forpreparing the Commune Action Plan, the PRA team will undertake separate consultations with theresidents (or their representatives) listed as "very poor" in identified vulnerable communes andcommune villages receiving resettlers to define more clearly their needs so that a special "socialsupport plan for the very poor" can be prepared (funded by the SSF). The focus of the SSF (financedthrough DANIDA Grants) would be productive activities of the very poor in the form of payments todesignated beneficiaries (farmers and landless laborers) under the special plan. The cost recovery ofthese payments would be deposited into a "revolving fund" to be administered by a specialcommittee appointed by the village or local community. Payments for productive activities couldinclude those for agricultural production (e.g., inputs like planting materials, cultivation tools,fertilizer), non farm income activities (like advances for petty trading) and indirectly productive

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activities like livelihood support loans during the off-peak labor season to enable the very poorfarmer or landless to gain from getting the full peak labor rate.3

31. For 11 of the 18 vulnerable communes in the project area, the ethnic minority of Khmercomprise at least 20% of the population. While the project would not be targeted to the ethnicminorities, it will secure equal access to the project activities for the Khmer people as well as equalparticipation of Khmers in all stages of the project. Further, supplementary project activities will bedesigned to meet the special needs of the Khmer under an Ethnic Minority Development Plan(EMDP). The EMDP will be closely linked to the general project's activities and will only provideincremental and more narrowly targeted support. Some possible "earmarked" activities includetraining and extension programs for Khmer that are linked and coordinated with the activities ofPagodas (the cultural and religious center of the Khmer). Other activities include formation of KhmerSavings and Loan Associations, and a study to assess the feasibility of establishing a Khmer LandTrust. The EMDF will be the source of funds for these earmarked activities if they are not part ofthose covered by the CAPs. In addition, the project will provide limited funds for (a) various trainingprograms conducted by grass roots organizations, and (b) limited improvements of other social orphysical infrastructure to meet the needs of ethnic minorities not covered by the CAP.

32. The activities will be managed by the PPMUs but will be implemented by grass rootsorganizations, like the Women's Union in close cooperation with the on-site district and communeextension staff and the communities, including the People's Committee. Technical assistance on loanaccounting and establishment of savings and joint liability groups would be provided by VBARD, orif they are not represented in the village, the Vietnam Bank for the Poor. Backup will also beprovided by the Social sub-unit of the PFCU.

Component 4 - Policy and Institutional Development (US $ 2.1 million)

33. Key elements for the successful joint protection of the FPZ relate to: (a) the incentives andcontractual arrangements for farmers to undertake joint protection of their allocated protectionparcels of mangrove forests in the FPZ; and (b) the improvements in the income generating capacityof farmers, especially those from the vulnerable (poor) communities in the BZ.

34. For (a), the key incentives come from the incomes they can obtain from (i) limitedharvesting access rights to the FPZ (hand collection of mud crab seeds and other selected shellfish,and thinning of mangroves); and (ii) the land adjoining the FPZ that is allocated to the farmer for useas his own farm plot. For (b), the technology development and transfer (TDT) component of theproject will play an important part; but income improvements which require farm capital investmentswould need long term land rights (the "red books") to serve as collateral for medium term or largersized (more than VND 10 million/ha) short term loans from VBARD. Thus, increased issuance ofred books to agricultural land users is a top priority. As important is the reclassification ofagriculturally suitable "barren" land (denuded forest or shrub land presently classified as "forestland") to the agricultural land category and thus permit the subsequent issuance of red books.Furthermore, it is not clear that farmers in the existing state enterprise system (which includes theforest/fishery enterprises or FFEs) are as well off as under alternative arrangements. Given the highbudgetary burden of state-owned enterprises, the Government of Vietnam has formulated guidelines

3Otherwise when they take cash or food advances in the slack season from local landowners they are paid the off-seasonrate (which is a quarter of the peak season rate). Hence, when they repay the landowners in kind (providing labor services)during the peak season, their income forgone, by taking an advance payment for their labor during the slack season, isequivalent to a rate of interest of 300% over four months.

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for their reform and MARD has also proposed specific guidelines for FFEs in the June 10-12 1998National Forum on Forestry in Hanoi. The need for examining the restructuring options for FFEs inthe project area is now particularly timely. The success of land allocation is also closely linked to theissue of FFE restructuring.

35. From above, three activities are key to the Policy Development Component: (a) land andwater use zoning and regulation; (b) improving the security and allocation of long term land rights;and (c) restructuring of FFEs.

36. Land and water use zoning. An important step towards a uniform, legally binding andenforceable zoning law on the preservation and protection of the coastal protection belt has beentaken with the acceptance by the project provinces of the zoning regulations. These regulations werejointly developed and negotiated over the past two years with the Netherlands-funded Rehabilitatingof Mangroves (RMFP) Project. The provinces' agreements of the zoning regulations are now in theform of draft Provincial and MARD Decisions. Under the project, a Prime Minister's Decreeformalizing the above decisions, will be promulgated. The preparation of a draft decree is a conditionfor negotiations of this project. The project will provide technical assistance to assist the provincesin: (a) ensuring consistency in the definition of the buffer zones; (b) establishing the procedures toimplement the permitted activities in the FPZ and yet ensure that the limited harvesting permittedthere will not compromise the environmental objectives of the project; and (c) defining clear roles forthe involvement of various agencies in the zoning process.

37. To improve the security and allocation of land rights in the BZ, the project will providetechnical assistance, training and equipment support to: (a) improve forestry and land use planningwith emphasis on the use of participatory approaches (through the preparation of the CAPs), startingwith the 18 vulnerable communes; (b) develop or revise each province's Master Plan for Land Useto ensure that agriculturally suitable barren "forest land" in the BZ communes would be reclassifiedas "agricultural land" and later converted to "red books"-- useable as bank collateral; and (c) improvethe efficiency in the documentation and issuance of land rights through district land allocation teams.

38. Technical assistance and funding support will be provided by the project to assist the relevantproject provinces in completing the study of relevant FFE experiences and undertaking appropriaterestructuring of FFEs. Four FFEs were selected for pilot restructuring and study: Tam Giang IFFE; Dom Doi FFE; April 30 FFE and May 10 FFE. Tam Giang 1 and Dom Doi FFEs are in CaMau province; while April 30 and May 10 FFEs are in Soc Trang province. Under the mandate andfunding of the RMFP Project, and through supplementary support from the World Bank ConsultantTrust Funds, an initial framework for the restructuring of Tam Giang 1, Dom Doi and April 30 FFEsis expected to be prepared by September, 1999. At the same time, a study will be made on thelessons to be learnt from the break-up of May 10 FFE, undertaken about five years ago, which led tothe distribution of the FFE land to farmers.

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39. The project will fund: (a) workshops to discuss the framework for FFE restructuringproposed for Tam Giang 1, Dom Doi and April 30; and the implications of the lessons learnt from thebreak-up of May 10; (b) the cost of technical assistance to (i) revise the framework based on theoutcome of (a); and (ii) set out the detailed plan of action for its implementation; and (c) the cost ofimplementing the restructuring process that is finally agreed upon by the relevant provincialgovernment, the Central Government and IDA. Activities to be financed include training (of FE staffand farmers), land allocation and social infrastructure.

40. Account will be taken of the close link among the policy development sub-components,including taxation and subsidy policies.

Component 5 - Resettlement of FPZ Occupants (US$ 16.2 million)

41. Habitation in the FPZ would largely not be compatible with the protection objectives of theproject. This component will provide an important input for the success of the whole project. Aslong as migration to the FPZ is continuing and the number of families settling in the FPZ increases,the results of the project's replanting activities are jeopardized. The total number of families residingin the FPZ as of August 1998, along the 467 km coastline covered by the project, was 3,961households. This group includes 561 landless families engaged in river and marine fisheries. Areason for the continuing migration towards the FPZ is, among others, profits expected to be made inshrimp farming. Some settlers in the FPZ, however, are considered not harmful to the environmentand will, therefore, be excluded from the involuntary resettlement activities. Except in the FPZbordering the Bai Boi Fish Sanctuary near Ca Mau cape, the group of settlers who would be allowedto stay in the FPZ includes (i) "landless" fishermen, most of whom, according to their ownpreference, will be relocated to clustered communities at major river mouths, with easy access to thesea, (ii) settlers living at coastal erosion areas suitable for agriculture where replanting of mangrovesis difficult or uneconomic; and (iii) settlers living at fast accretion coastal areas where the presentFPZ could be quickly turned into BZ. On the basis of these exemption criteria, total number offamilies to be relocated has been established at 2149.

42. A detailed Socio-Economic Assessment of FPZ Occupants was carried out in April 1997(with updates in May 1998) for the provinces of Ca Mau, Bac Lieu and Tra Vinh; and, inAugust 1998, for Soc Trang Province. They confirmed the large extent of poverty in the FPZ and thedamage to the mangroves by poor farmers living there. Other analyses have also documented thesevere decline in coastal fishery productivity linked with mangrove destruction. Based on thesesurveys and on-site consultations linked with them, a resettlement action plan (RAP) has beenprepared by the Government and approved by IDA (see Annex 7, Documents in the Project File).The RAP confirms the number of households to be resettled in the BZ, and identifies suitableresettlement sites. RAP is designed to ensure that the affected households reestablish or improve theirlivelihood and income without adverse environmental impacts on the mangrove forest. The linkageto the BZ development component is thus critical, especially since the resettlement sites selected areoften in the same location as the key vulnerable communities. commune villages receiving resettlerswere assessed twice. Once during RAP preparation and the other time during the EnvironmentalAssessment update which followed the conversion of the project's environmental category tocategory A.

43. The survey defined Project Affected Household (PAP) as people, families, firms orinstitutions who, at the time of the relevant socio-economic survey, were residing in the FPZ or hadland in the FPZ and who will have their income, productive assets and standard of living adverselyaffected by the project.

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44. The preparation of the RAP was built on the substantive work already undertaken by theProvinces, and includes agreement on the costing and financing of the following sub-components.

Sub-component (a): Compensation

45. Vietnam Decrees 45/CP and 22/CP mandating that all PAPs which are both without landregistration papers and have settled in project affected lands after October 15, 1993 are not entitled tocompensation have been waived by GOV, concerning the resettlement-rehabilitation programs of theproject. This allows the full application of WB O.D. 4.30 that requires the full compensation of allPAP regardless the tenure status of their lands and houses. The only PAPs that will not be entitled tocompensation are those who settled on project affected areas after the cut-off-date (March 15, 1997for Ca Mau, Bac Lieu and Tra Vinh, and August 31, 1997 for Soc Trang.) These PAPs will receiveonly a 100 m2 residential land plot with secure land certificate. All other PAPs will be entitled tocompensation for lost land and houses in kind (of equal productive value) or in cash at replacementcost (land, structures); and for crops (at market value) as prescribed under the RAP. Fishermen whowant to continue in the occupation will not receive agricultural land.

Sub-component (b): Rehabilitation

46.. All PAPs, regardless of legal status, will be entitled to stabilization and rehabilitationmeasures, consisting of allocation of land or pond area (initial productive asset grant), six month foodsupport, assistance in transport, vocational training, support in obtaining credit and extensionservices, and community services and infrastructure (access roads, water supply, access to schoolsand health facilities).

Sub-component (c): Implementation

47. The organizational responsibilities for implementation of the RAP lies with the PPMU and inparticular with the Project Resettlement Board, consisting of the directors of the ProvincialResettlement Offices of the four provinces, supported by a full time administrator. The ProvincialResettlement Offices will coordinate all tasks involved at the provincial level with relevant agencies,and consist of representatives of the People's Committee, the Provincial Land Administration Office,Departments of Agriculture and Rural Development, Construction, Education and Health and Laborand Social Affairs. In provinces, where the FFE have jurisdiction in the project area, they will berepresented on the board.

48. Information to PAPs, consultation on preferred options, an easy accessible grievanceprocedure, and external monitoring and evaluation are prominent features of the RAP. The RAP isplanned to be implemented during the first four years of the project.

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Component 6 - Project monitoring and evaluation (US$2.3 million)

49. This component consists of five sub-components: (a) water quality monitoring, (b) aquaticproductivity monitoring (c) coastal area and land use monitoring, (d) biodiversity monitoring, and(e) socioeconomic monitoring. An environmental monitoring program for the project area will beestablished, essentially drawing upon the results of (a) - (d). An important purpose of this componentis to predict cumulative pollution loads so that an "early warning system" can be established forpotential environmental threats to the wetlands and especially their fishery.

50. Environmentally, this project is classified as a category "A" project. By and large, positiveenvironment impacts are expected through improving the management and protection of the reservesand protection belts and the introduction of environmentally neutral small-scale livelihood activitiesin the BZ. Any potential negative impacts would likely be small and scattered. In vulnerable BZcommunities, the magnet effect of development activities, attracting increased settlement aroundprotected areas, however, needs to be assessed more carefully, especially where there is a significantpresence of indigenous peoples.

51. Socio-economic surveys and rapid rural appraisals will be carried out as part of the base linesurveys and will take into account ethnic minority groups and gender dimensions. This will providebaseline data to measure and monitor project impacts. In terms of poverty category, this operationmay be considered to be under IDA's Program of Targeted Interventions. Although two (Soc Trangand Tra Vinh) of the three provinces are classified as poor, protected parcel allocation would givepriority to the poor and landless (with the appropriate qualifications) in all three provinces.

The coverage of each survey is as follows:

52. Water Quality Monitoring. Destruction of mangroves, excavation in acid sulfate soils,domestic and industrial pollution, changes in hydrology and pesticides are believed to havecontributed to a deteriorating aquatic environment. In as much as this affects aquaculture farmers inthe BZ and EZ, the Mission proposes that project's sub-centers should support the provincial anddistrict extension centers to establish a network of monitoring sites to ensure that water quality issuitable for aquacultural and agricultural uses.

53. Aquatic Productivity. The restoration of the wetland environment could be measured interms of the nurturing benefit to the near-shore fishery. Relevant parameters/indicators (finalized inconsultation with local agencies) would be monitored as part of the project and on-farm monitoringwould be undertaken through the METs. The project's district extension centers will also assume thefollowing monitoring functions: (a) the water quality sites should double as routine time-sequencedmeasurement of shrimp, crab and fin-fish larvae and juveniles in the canals in the project area; (b) thecatches by fishing gear in the canals (i.e. bag nets) and near-shore (i.e. mangrove and mudflats)should be routinely monitored.

54. Biodiversity Monitoring. The contribution of the project interventions to the enhancementof biodiversity in the aquatic environment will be recorded as a feature of 7b. Similar M&E stationsshould be established under the Forest Component and Special Use Forest Component.

55. Coastal Area and Land use Monitoring. The project's contribution to increasing the ratesof accretion and reducing the pace of erosion would be monitored through periodic satellite imageryassessments and ground truthing. Similarly, changes in land use in the BZ and EZ would bemonitored with the assistance of FIPI -2 and using existing information (including GIS results)

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available through existing projects like those under Netherlands Government assistance and theUNDP Disaster Relief Program.

56. Socio-Economic Monitoring. The project benefits to the community shall be included aspart of the Community Development Component. Data sets could be collected by the METs for theproject target groups. National institutes could be subcontracted to (a) establish the monitoringframework and templates; and (b) promote the adoption of PRA as part of the monitoring process.

The monitoring will be undertaken by the following entities:

(a) for water quality - PFCU, DOSTEs and SIWRR;

(b) for fishery productivity and biodiversity - PFCU/DARD and WFRC/CRES;

(c) coastal area and land use - PFCU/Provincial Department of Planning and Investmentand FIPI-2; and

(d) Socio-economic monitoring - PFCU and PPMU/DARD/PRA studies.

Component 7 - Project Coordination and Management (US$4.9 million)

57. Government agreement had been obtained on the institutional structure of the project with aNational Project Steering Committee (NPSC) in Hanoi and the establishment of a Central ProjectOffice (CPO) which will also serve as a secretariat for the NPSC. The director of the CPO (theProject Director) will serve as the Secretary of NPSC. The project will also decentralizeimplementation down to the provincial level. Provincial Project Management Units (PPMUs) willimplement the project on behalf of the People's Committee of each project province. The PPMUswould comprise a Provincial Project Director (probably an existing Vice-Director of the Planningand Investment Department) and the requisite staff to manage the project. A Project FieldCoordination Unit (PFCU), based in Ca Mau, will assist the four provinces in implementing theproject. The project will (a) fund the establishment and operation of the CPO/PFCU and its sub-unitsfor forestry, TDT, Social Support and Administration as part of a technical assistance grant fromDANIDA, and (b) the cost of establishing the CPO.

58. The Project will also fund the technical assistance needed to improve its financialmanagement system as follows (details are included in the Project Implementation Manual):

(a) tighter controls and /or standardization of procedures for forest planting activities andfor disbursement of resettlement compensation according to the RAP;

(b) strengthening of accounts staff, particularly in Soc Trang and Tra Vinh;

(c) initial (temporary) expatriate technical assistance based in the PFCU to assistprovinces in setting up an adequate project financial reporting system;

(d) improvements in project management reporting.

ANNEX 3: ESTIMATED PROJECT COSTS

Components Project Cost Summary

%/O % Total(US 5 '000) Foreign Base

Local Foreign Total Exchange Costs

A. Mangrove Planting, Rehabilitation and Protection1. Forest Planting 7,271 701 7,271 9 142. Forest Protection 2,934 750 3,684 20 63. Nature Reserves & Sanctuaries 343 290 633 46 1

Subtotal Mangrove Planting, Rehabilitation and Protection 10,548 1,741 12,289 14 21B. Technology Development and Transfer 11,620 1,943 13,563 14 23C. Social Support for Vulnerable Communities

1. Commune Action Plans and the Communal Fund 6,324 1,448 7,773 19 132. Social Support Fund 1,062 118 1,180 10 23. Ethnic Minority Development Fund 605 67 672 10 1

Subtotal Social Support for Vulnerable Communities 7,992 1,634 9,625 17 16D. Policy and Institutional Development 1,008 971 1,979 49 3 (E. Resettlement of FPZ Occupants 13,156 1,369 14,525 9 25 tF. Monitoring and Evaluation 1,272 886 2,158 41 4G. Project Coordination 1,955 2,612 4,567 57 8

47,550 11,157 58,707 19 100Physical Contingencies 2,750 370 3,120 12 5Price Contingencies 3,266 539 3,805 14 6

53,566 12,067 65,632 18 112

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ANNEX 4: ECONOMIC AND FINANCIAL ANALYSIS AND FISCALIMPACT

Project Benefits

1. The project would help to reclaim coastal land along a 470 km coastline in the MekongDelta; enhance marine productivity; increase, stabilize and diversify farming incomes for asubstantial share of the more than 100,000 households in the project area; improve storm protection;and develop applied research on sustainable brackish water aquaculture, which has significantpotential benefits for coastal areas all over Vietnam.

2. The main quantified benefits are: (a) increased coastal land reclamation because of thecoastal protection function of mangroves; (b) increased income for the households in the buffer zone(BZ) of the protected area through improved and diversified farming techniques, includingdiversified aquaculture, agriculture, and small-scale livestock farming. The non-quantified benefitsinclude: (a) increased marine productivity in canals, mud-flats, and coastal waters because of thenurturing function of mangroves; (b) the storm protection function of dense coastal mangrove forestsand the possible reduction of coastal erosion due to newly planted mangroves; (c) the indirectbenefits from applied research on aquaculture, which accrue to areas outside the project area;(d) social benefits such as improved education, drinking water supply and sanitation, reducedpoverty, and employment generated through rehabilitation and construction of basic infrastructure inthe BZ, as well as through training and grants as part of the proposed social safety net; and(e) multiplier effects of increased farm production on rural services and small-scale industries.

3. Impact on Production and Prices. The incremental production is expected to be easilyabsorbed by the Vietnamese market, and to a lesser extent by export markets, without affecting pricesfor the major products. The domestic demand for fisheries products, which contribute more than 30%of animal protein in the daily diet, is expected to increase by more than 6% per year as a result ofpopulation growth and increased living standards. A substantial share of current aquacultureproduction is being exported, and export demand is expected to remain strong. During fullproduction in year 2003, the annual harvest of shrimp induced by the project is expected to be only300 tons higher than currently (less than 1% of current production in the four project provinces). Thisrelatively low total increase is due to the substitution of other aquacultural products for shrimp,which reduces the impact of higher shrimp yields on production. Within shrimp production, a shiftwill occur from rather small to slightly larger mid-sized shrimp, which command higher prices.Because of the expected increased demand for shrimp and the relatively small incrementalproduction, no impact on prices for mid-sized shrimp is to be expected. Frozen shrimp aretransported from the ponds to towns and cities in the Delta and to HCMC by boat. Annual productionof crabs is expected to increase by more than 1,000 tons. Strong demand exists for mud crab in allChinese communities in Southeast Asia as well as in China, while the market in Vietnam - gearedmainly towards the high-income segment - is also growing rapidly. Crabs can be transported alive atlow cost by boat from the Delta to HCMC. For export, crabs can easily be transported alive as aircargo. Marketing the relatively limited amount of crabs to be produced under the project should notbe difficult. Fish production would increase by more than 2,400 tons. In the case of fish, incrementalproduction is only a small fraction (less than 2%) of the total current marine and inland fish catch inthe project provinces. However, the fish species to be introduced have to be carefully selected in

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view of the demand in the local and HCMC market, in order not to depress prices for particularspecies. While local demand for Tilapia could be a constraint for marketing, the buoyant demand foraquacultural products in HCMC, however, is expected to absorb the production of medium sizetilapia to be produced under the project. Incremental annual vegetable production is estimated atmore than 20,000 tons, mainly consisting of shallots. A high share of the current shallot production inthe area is successfully being exported to other East Asian markets, which are expected to absorbhigher quantities by the time the project goes into full production in 2003. As data on local vegetableproduction are not available, it cannot be said by how much the incremental production for each typeof vegetable would increase the current production. Because of the perishable nature of somevegetables and difficult transport conditions in some areas, there is a risk that additional productionwill depress the local prices for specific vegetables. This possibility has been taken into account inthe sensitivity analysis by applying lower than current prices to vegetables (see below).

4. Impact on Rural Poverty. Although the Mekong Delta as a whole is not the poorest regionin Vietnam, the majority of the project area is located in some of the poorest districts in the Delta.Among the 13 project districts, 9 are poorer than the average of the Delta. In 5 districts poverty ishigher than the average for the whole country, and in 3 districts (one each in Tra Vinh, Soc Trangand Bac Lieu provinces) poverty is significantly higher than the national average (see Annex 10 onsocial analysis). These estimates are based on data from the IFPRI study "Mapping Poverty andAgro-Ecological Potential in Vietnam", which assesses poverty based on a comprehensive set ofindicators, including household expenditures, household size and composition, education, andownership of assets.

5. The project will generate additional employment for an equivalent of about 14,000 person-years in aquaculture, agriculture and small-scale livestock farming at full production in 2003.Additional temporary employment will be generated through forest planting activities. Forestprotection contracts, which provide a supplementary source of income, will be issued to about100,000 households.

Farm Income Analysis

6. Currently aquaculture is the main source of income in the coastal area of the Mekong Delta.The income from the extensive type of aquaculture, which is common in the project area, is low andunstable due to the frequent outbreak of shrimp disease, exacerbated by the absence of significantincome from sources other than shrimp. The project would assist in introducing improved extensive,diversified aquaculture, including fish, shrimp, and crabs. Due to the complexity and financial risksassociated with more intensive types of aquaculture, only gradual low-cost improvements areproposed under the project. These improvements necessitate only limited investments and generatemoderate yield increases, but nevertheless generate high rates of return. In addition, the projectwould support increased production of vegetables, small-scale livestock farming, and the planting ofmangroves in the vicinity of fish and shrimp ponds, both to improve aquaculture and for fuelwoodand timber.

7. The model for improved and diversified aquaculture assumes, in order of ascendingincremental costs, the following range of improvements: (a) introduction of a stress test to establishwhether purchased shrimp seed is disease-resistant; (b) increased commercial production of crabs,based on permitted harvest o mudcrab seed from the expanded mangrove areas, and introduction ofvarious fish species (mainly tilapia) to complement shrimp farming; (c) introduction of limitedfeeding to supplement natural feed; (d) planting and tending of mangroves on up to 50% of the pond

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area (either on slightly raised beds throughout the pond or in a separate section of the pond), in orderto maximize the nurturing function of the mangroves; (e) introduction of diesel pumps in selectedareas, in order to raise the water level in high-lying areas with limited tidal water exchange and inorder to dry the ponds on a regular basis to reduce the risk of disease; (f) slight deepening of ponds inareas where this is possible without disturbing acid-sulfate soils, in order to reduce daily fluctuationsin the water temperature and in water acidity, so as to allow a higher survival rate of the culturedspecies; and (g) construction of a second sluice gate for selected ponds where only one sluice gateexists, in order to improve water exchange, so as to increase the survival rate of species. Theadoption depends on the suitability of varying local conditions in the project area

8. The Technology Development and Transfer (TDT) component aims at refining theseimprovements based on the experience gained from pilot bilateral assistance projects (such as RMFP)and from research and extension undertaken under the proposed project.

9. The incremental fixed capital investment required on a typical farm of about 2.5 ha (out ofwhich about 1 ha is pond area) would add up to about VND 18 million (US$1,380), including asecond concrete sluice gate (VND 7 million), a diesel pump (VND 6.5 million) also to be used on aboat, planting of mangroves on I ha of degraded forests (VND 1.6 million), drilling of a well (VND2 million), as well as nets and tools (VND 0.7 million). Instead of adding a second sluice gate, thepond could be deepened by 10cm at a cost of VND 7.5 million. The fixed capital requirement couldbe lowered by installing a wooden instead of a concrete sluice gate or by renting instead of buying apump. The average gross working capital requirement is estimated at around VND 26 million for thefirst year, out of which VND 8m can be financed by the sale of natural shrimp (harvested once amonth) and of small livestock (sold every three months). The net working capital requirement ofVND 18 million and the fixed capital requirement of VND 18 million add up to a capital requirementof VND 36 million. VBARD's credit limit for farmers engaged in aquaculture and holdingpermanent land rights (red book) is VND 10 million per hectare. A typical farmer thus could obtain acredit of VND 25 million, while the remainder (VDN 11 million or 30%) has to be financed fromother sources. The farmer would be able to pay the credit back after one year, if no disease occurs.Otherwise repayment has to be delayed until production recovers back to normal levels. A farmerholding only temporary land rights (green book) can obtain a credit of up to VND 5 million/ha.Although such a credit ceiling would not allow to introduce the full range of improvements suggestedunder the project, substantial selected improvements are still possible.

10. In the economic analysis it is conservatively assumed that, through the combined effect ofthese improvements, the survival rate of shrimp will increase from 25% to 35%. The size of Penaeusmonodon (shrimp from stocked seed) at harvest is expected to increase moderately from 30 g to 35 g.The stocking density is maintained at 2 Post-larvae per m2 to ensure the production of shrimp of suchhigher size. The yield of Penaeus monodon increases from 150 kg / ha of pond area to 245 kg / ha ina year without a disease, with only a single crop per year. At the same time, the harvest of shrimpfrom wild seed (such as Penaeus merguiensis) continues in the same pond with an annual productionof 200 kg / ha of pond area from 20 harvests per year. The risk of shrimp disease is taken intoaccount by estimating that every fourth year a disease strikes all the farms in the project area, leadingto a loss of 80% of the shrimp crop in the first year and of 40% in the second year, with only the thirdand fourth year back at full production. The disease is assumed to first strike in the second year ofoperation. Other crops are assumed not to be affected by diseases. It is conservatively estimated thatthe risk for shrimp disease remains unchanged with and without project, although the project isexpected to reduce the incidence of disease.

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Specific Crops

11. Crabs are already raised in ponds together with shrimp from natural seed in the project area.Future expansion of crab culture is limited by the availability of seed. No crab seed from hatcheriesis available, so that all crabs have to be collected from the wild, predominantly from mud flats in ornear the mangrove forests. Through the project, it is expected that the availability of wild crab seedwill increase due to the nurturing function of newly planted mangroves. It is therefore assumed thatamong the farmers adopting new farming techniques, the share of pond owners raising crabs willreach 15 % with the project. Additional feed (rice bran and plants collected from the wild) is applied,so that no reduction of shrimp yield due to the introduction of crabs in the same pond is assumed.

12. While fish may have an important risk-mitigating function, it is hardly raised in ponds bysmall-scale farmers in the project area. The demand for tilapia in the local market is limited. Small-scale farmers with improved extensive systems have insufficient husbandry knowledge and access tocapital to raise fish to the size needed for export markets (500g for tilapia). However, the size of fishshould be increased for the lucrative market in Ho Chin Minh City (more than 300g). Other fishspecies could be introduced as well, but some species cannot be raised in the same ponds as shrimp.It is expected that the share of pond owners raising tilapia and other fish will gradually increase fromzero to 40 % of all farmers adopting new techniques.

13. The mangroves planted on slightly raised beds in the ponds located in the BZ allow thesustainable harvesting of 3 m3 of fuelwood and 2 m3 of poles per hectare and per year after five years.At full production, starting ten years after planting, 5 m3 of fuelwood and 5 m3 of poles can beharvested per hectare and per year.

14. Small-scale livestock farming, which is mainly undertaken by women, is already relativelywidespread in the project area. Pig farming is assumed to be representative of small-scale livestockfarming in the project area, although some poultry raising also exists. Pig farming is expected to beintensified from an average of 1 pig per household to 3 pigs per household for those households whoadopt new farming techniques. Pig manure will be promoted as fertilizer in aquaculture, for which itis already occasionally being used.

15. Agriculture in the project area is constrained by saline soils and lack of fresh water. It ismainly practiced on raised beds between ponds or mangroves, where salinity is washed out from thesoil by the monsoon, and where small deep tubewells are used for irrigation. The main crops arevegetables, including among others onions, spinach, squash, melons, beans, as well as somesugarcane.

16. Artemia and salt are currently produced in the area of Vinh Chau and Bac Lieu. No change inthis production is expected, although with moderate investments, the area used for the production ofArtemia could be slightly increased.

17. Some of the farming enterprises mentioned above are mutually exclusive (e.g. shrimp fromstocked seed and crabs; salt and mangroves). Most farming enterprises, however, can be combinedwith each other into farm models, which can be applied to specific areas within the project areadepending on natural conditions, as shown in Table 1.

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Table 1: Applicability of Farm Models to Natural Conditions

Share of Description ApplicabilityFarmersassumed to usethe model

Model 1 15% Stocked shrimp Availability of fresh groundwater and suitableand agriculture soils, but no crab seeds from mudflats

Model 2 15% Stocked Availability of fresh groundwater and suitableshrimp, fish soils, but no crab seeds from mudflatsand agriculture

Model 3 5% Crabs and Availability of fresh groundwater and suitableagriculture soils and availability of crab seeds from

mudflatsModel 4 30% Stocked shrimp No particular conditions necessary

Model 5 10% Crabs Availability of crab seeds from mudflats

Model 6 25% Stocked shrimp Availability of fresh groundwater and suitableand fish soils, but no crab seeds from mudflats

18. The models are based on a 2.5 ha farm, including about 1 ha of pond area not undermangroves. In all models, it is assumed that 20% of the farm area are under mangroves without theproject, and 40% (1 ha) with the project, which are also partly under water depending on tidalmovements. Agriculture is assumed to occupy only 0.1 ha with the project. It is assumed that withthe project 0.4 ha (without the project 1 ha) will remain barren or under degraded mangroves.

19. With the project, it is expected that 25% (more than 25,000) of the households living in theBZ will gradually adopt the new farming techniques promoted by the extension service under theproject. Adoption will be slower during the first three years, but it will be faster in the later years, asfarmers become more convinced about the farming techniques adopted by demonstration farmers. Itis assumed that the same improvements will also be adopted in the without project situation, but witha time lag of 10 years. The reason for the slower adoption in the without situation is the lack ofsuitable extension packages and the ineffectiveness of the extension service. As mentioned above, the1,860 households to be resettled from the FPZ to the BZ will adopt the same new farming techniques.

20. The financial rates of return of the six farming models vary between 37 and 45%. For theeconomic analysis, the cost of the extension service and of applied research is added. No shadowpricing for unskilled labor, for foreign exchange or for other inputs or outputs is applied. Taxes areexcluded from the economic analysis. The economic rate of return of the economic supportcomponent is 18%. It is expected that the share of shrimp in total revenue will decline substantially,as shown in Appendix 7.

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Economic Analysis

21. The incremental economic rate of return of the project is 14 %. The net present value (NPV)is US$ 18.2 million at a discount rate of 10 %. The project thus is economically marginally viable.

Table 2: Net present value and economic internal rate of return of the project

NPVinUS$mat10% ERRForestry 27.2 26%Economic Support 10.8 18%Resettlement - 11.4 NegativeTotal 18.2 14 %

Main Assumptions

Costs

22. The costs included in the economic analysis are: (a) the costs for reforestation; (b) the costsfor resettlement from the FPZ, including rehabilitation and livelihood restoration; (c) the costs for theextension network in the technical and economic support component; (d) the costs for research inaquaculture; (e) the incremental investment and operating costs for improved aquaculture, agricultureand livestock farming; and (f) the costs of institutional strengthening. The costs of the socialcomponent, which account for 16% of total project costs, have been excluded along with the benefitsof the social component.

Assumptions on Benefits of the Forestry Component

23. The economic rate of return of the forestry component is 26%. About 7% of the benefits ofthe forestry component can be attributed to the collection of fuelwood, and 93% to increasedaccretion. No benefits for the reduction of erosion or the nurturing function of mangroves areassumed.

24. It is assumed that 3 m3 offuelwood per ha and year can be sustainably collected from theFPZ. No poles will be harvested from the FPZ.

25. Land reclamation on the accretion coast in the project area (with an estimated length of 260km) is expected to increase from a past average of 34 m per year by 30% to 44 m per year. Withoutthe project, it is assumed that accretion will decline by 30% to 24 m per year, because of uncheckeddeforestation. The estimate for the past figure is a weighted average of the accretion on differentstretches of the coast during the years 1965-1995, ranging from about 6 m per year (West Coast ofCa Mau) to about 60 m (Ca Mau peninsula). The accretion benefit is assumed to materialize fiveyears after planting, when the roots of the mangroves are sufficiently strong to retain silt contained inthe seawater. This effect vanishes, however, after another five years, when the coastline hasprogressed more than 250 m away from the planted area. Nevertheless, the coastline in the situationwith project in year 2007 is expected to be about 75 m further than in the situation without theproject, creating a permanent benefit from an additional land area of almost 2,000 ha along theproject accretion coast. The BZ behind the FPZ can be extended at the same pace as the coastline

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expands faster, while the width of the FPZ is held constant, thus creating valuable production land.The value of this land is estimated as US$2,000 / ha, which is the estimated average land price in thecoastal area.

26. Land losses on the erosion coast in the project area (estimated at 200 kin) are expected in theeconomic analysis not to decrease. The current average past erosion is 27 m per year. It is a weightedaverage of the erosion on different stretches of the coast during the years 1965-1995, ranging from35 m (east coast of Ca Mau) to 10 m (parts of Tra Vinh). Planting on the erosion coast should beundertaken in an area located between 50 and 175 m away from the sea (corresponding to theexpected erosion over five years), in order to allow the mangroves to grow and gain the strengthneeded to better withstand the erosive forces of the waves.

27. In a scenario for the sensitivity analysis, it is assumed that erosion will be reduced by 30%through the newly planted mangroves and from better protection of existing mangroves. In thewithout project scenario, erosion is assumed to increase by 30%, because some of the unprotectedmangroves are cut down. As on the accretion coast, it is assumed that the width of the FPZ is heldconstant by expanding the FPZ at the expense of the BZ. This expansion of the FPZ into the BZ willbe slowed down if erosion is reduced, thus protecting valuable productive land. The benefit fromreduced erosion through additional planting thus materializes about five years after planting, whenthe sea reaches the newly planted area, and lasts until the newly planted area finally succumbs to theforces of the sea about 25 years after planting on the average (and about five years later than withoutthe project). In 2007, the coastline is expected to be 66 m further out than without the project. Thiscorresponds to a permanent land gain of more than 1,100 ha along the project erosion coast, valued atUS$2,000/ha.

28. The nurturingfunction of mangroves affects the marine productivity in canals, mud flats, andcoastal waters. No quantitative data are available for the effect on marine productivity in canals andmud flats, although studies in other countries suggest that this is an important benefit of mangroves.For the effect on marine productivity in coastal waters in the Mekong Delta in Vietnam, Euroconsult(1996) has undertaken a regression analysis for the years 1986-1990, estimating the nurturingfunction of one hectare of mangroves on coastal fishery as 700 kg. The value of the marine catch isconservatively estimated at US$0.5/kg, resulting in a mangrove nurturing value of US$350/ha. Thisvalue may however drop, if overfishing occurs, because juvenile fish will be caught before they reachtheir optimal size. Although the nurturing function will still be positive, an estimate for that valueunder the conditions of overfishing is not available. The nurturing function of mangroves is notconsidered in the economic analysis, because of the lack of data for its quantification. The fullenvironmental benefit of mangroves may thus be understated in the analysis.

Assumptions on Benefits of the Resettlement Component

29. It is assumed that half among the 2,149 households to be resettled under the project from theFPZ to the BZ will adopt the improved farming techniques described below with a lag of two years.The faster and more widespread adoption compared to the other residents in the BZ is based on theincreased training and extension effort towards the resettled households. Under these assumptions,the net present value of the resettlement component is US$-1 1.0 million.

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Assumptions on Benefits of the Economic Support Component

30. The project area consists of more than 357,000 ha (3,570 square km) of coastal wetlandsalong a 460 km coastline, with more than 100,000 households living in 298 villages (includingcurrent population of FPZ). The physical conditions, which shape the potential for aquaculture andagriculture, are different over the project area in terms of height of land, tidal regime, salinity of seawater, availability of fresh groundwater, soil characteristics, existing forest cover and marineproductivity of coastal mangroves and mudflats.

31. In order to approximate the diverse characteristics of the project's buffer zone, six farmmodels have been developed (see Table 1 above). For illustrative simplicity, each applies to a singlehousehold. Subsequently, it is estimated for which share of the farming population in the projectarea, and consequently for which number of households, each model is applicable. It is assumed thatat full production 20% of the households in the project area will have adopted improved farningtechniques. Each farm model is multiplied by the number of households, which are expected to adoptimproved farming techniques. Finally, the net present values of the aggregated farm models areadded to yield the total net present value of the improved farming systems in the project area.

Sensitivity Analysis

32. As shown above, the combined economic rate of return of the forestry, resettlement andeconomic support components is 14% with a NPV of US$18.2 million at a discount rate of 10%.Various sensitivity tests are applied to that base case.

Table 3: Sensitivity Analysis

Assumption NPV in US$ m ERRBase Case 18.2 14%1O % lower shrimp price 14.5 13%20 % lower shrimp price 10.7 12%1 0 % lower crab price 15.9 13%20 % lower crab price 13.6 13%10 % lower price for vegetables 15.0 13%20 %/o lower price for vegetables 11.8 12%10 % lower price for all outputs (incl. fish and wood) 0.6 10%20 % lower price for all outputs (incl. fish and wood) - 16.9 7%Adoption of improved farming techniques by 30 % of farmers instead of 22.8 14%25%Adoption of improved farming techniques by 20 % of farmers instead of 13.7 13%25%

Adoption of improved farming techniques by 15 % of farmers instead of 9.2 12%25%Increase of accretion 15% instead of 30% with project -0.5 10 %Decrease of accretion 15% instead of 30% without projectReduction of erosion 50 % instead of O % with project 47.2 17 %Nurturing function of mangroves 350 $ /ha instead of nil 31.7 16 %

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Fiscal Impact

33. The project will have a slight negative impact on public finances. Additional revenues will belimited. The land and shrimp tax are levied on an area basis, so that revenue is not expected to risedue to an improvement of farming techniques without an increase in the area farmed. Thegovernment is expected to finance recurrent costs after completion of the project, which are shown inTable 4.

Table 4: Impact of Project on public Expenditures after Completion

Item Annual expenditures inUS$

Incremental staff allowances 395,000Of which for PFCU 50,000Of which for TDT-Sub-Unit and Research 160,000Of which for PPMUs at provincial and district levels 92,000Of which for commune demonstration post staff 38,000Of which for forestry guard stations 41,000Of which for social staff 14,000

Incremental O&M for boats, vehicles and equipment 276,000Incremental payments for forest protection contracts 467,000Total (excluding social safety net) 1,138,000Social Safety Net 400,000Total 1,538,000Incremental Staff Allowances for PFCU and TDT Sub-Unit - 210,000Total 1,338,000

34. It is assumed that the Project Field Coordination Unit (CFCU) as well as all TechnologyDevelopment-and Transfer Sub-Unit are dissolved after the project ends. No recurrent costs wouldremain for the local staff employed by these units, including the Monitoring and Extension Trainers(METs). The personnel would be either affected to other government units or, in the case of theMETs, may be employed by farmers' groups. The staff employed by the provinces in the PPMUs andat the commune level is expected to remain employed for the purposes set under the project and atthe salaries paid under the project. Payments under the social safety net are expected to be continued,but the training and civil works undertaken under the social support component will not be continuedafter the project ends. Nurseries established under the project are expected to continue production ofseedlings, albeit at a reduced rate. These nurseries are expected to cover their operation andmaintenance costs through the sale of seedlings after the project ends.

35. Under these assumptions the total fiscal burden of the project is close to US$1.34 millionannually after the project ends. Most of these expenditures will have to be borne by the provinces. Itis crucial that the provinces perceive the full potential benefits of the project and the need to maintainthese expenditures to achieve the benefits. The annual benefits from the project from land gains andhigher incomes in the Buffer Zone amount to about US$20 million annually, thus substantiallyexceeding the annual recurrent costs. If, however, government commitment is lacking, funding forrecurrent costs may be insufficient, thus jeopardizing the long-term benefits of the project.

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Annex 4 - Table 1: Crop Budgets

Joint costs for various crops (desilting of pond, taxes) are shown in italics.

Annex 4 - Table Al: Shrimp (in a year without disease)

With project Without projectQuantity/ha/year US$/ha Quantity/ha/year US$/ha

OutputShrimp from 245 kg 1696 150 kg 923stocked seedShrimp from 200 kg 600 200 kg 600natural seedTotal Outputs 2296 1523InputsPost-larvae 20000 184 20000 184Dry Feed 190 kg 137Fertilizer 50 kg 16Gasoline 400 liter 120 _

Labor 322 person-days 501 268 person-days 416Pond Desilting 500 cubic meter 290 500 cubic meter 290Taxes 31 31Total Inputs 1279 921Net Financial 1017 602Benefit

Annex 4 - Table A2: Crabs and Shrimp from Natural Seed

Quantity/ha/year US$/haOutputCrabs 480 kg 1479Shrimp 200 kg 600Total Output _ 2079InputsCrab Seed 140 kg 308Dry Feed 360 kg 260Labor 286 person-days 446Pond Desilting 500 cubic meter 290Taxes 31Total Inputs 1335Net Financial Benefits . 744

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Annex 4 - Table A3: Tilapia and Shrimp from Natural Seed

Quantity/ha/year US$/haOutputTilapia 408 kg 375Shrimp 200 kg 600Total Output 975InputFingerlings 2000 60Dry Feed 312 kg 225Labor 62 person-days 106Pond Desilting 500 cubic meter 290Taxes 3 1Total Inputs 712Net Financial Benefits 263

Annex 4 - Table A4: Pigs

Quantity/year US$Output (after 180 days raising) 6 462InputsPiglets 6 138Feed 300 kg 46Labor 72 person-days 108Total Inputs 292Net Financial Benefits 170

Annex 4 - Table A5: Mangroves

Quantity/year US$Output (at full production)Fuelwood 7.5 cubic meter 75Poles 7.5 cubic meter 375Total Output 450Variable InputsLabor 10 person-days 15Net Financial Benefits 435

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Annex 4 - Table A6: Vegetables

Quantity/ha/year US$/haOutputOnions (shallots) on 0.5 ha 25000 kg 7500Spinach on 0.5 ha 17500 kg 1400Total Output 8900InputSeed 2380Gasoline for Pumping 12001 360Fertilizer 2000 kg 620Other(Pesticides, straw, marketing) 1540Labor 2050 3590Total Inputs 8490Net Financial Benefits 410

Annex 4 - Table A7: Share of Crops in Gross Revenue

Table A7.1: Share of crops in gross revenue of a 2.5 ha farm with and without projectin a normal year

Shrimp + Fish + Agriculture Crabs + Shrimp(Model 2) (Model 5)

with project without project with project without projectShrimp 55 % 91% 22% 91%Crabs 55%Wood 4 % 9% 6% 9%Vegetables 21 %Livestock 11 % 17%Fish 9% .Total gross revenue/year US$ 4,170 US$ 1,677 US$ 2,692 US$ 1,677of which non-shrimp US$ 1,877 US$ 168 US$ 2,100 US$ 168

Table A7.2 Share of crops in gross revenue of farming households with and without projectin a year with shrimp disease

Shrimp + Fish + Agriculture Crabs + Shrimp(Model 2) (Model 5)

With project Without project With project without projectShrimp 20% 67 % 5% 67 %Crabs 0% 33 % 67% 33 %Wood 6% 7%Vegetables 38% .Livestock 20% 21%Fish 16%Total gross revenue/year US$ 2,331 US$ 454 US$ 2,208 US$ 454of which non-shrimp US$ 1,877 US$ 168 US$ 2,100 US$ 168

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Annex 4 - Table A8: Prices

Outputs Unit PriceStocked shrimp (35g each) US$/kg 6.92Stocked shrimp (30g each) US$/kg 6.15Natural shrimp US$/kg 3.00Crabs (400 g each) US$/kg 3.08Pig US$/pig 77Fuelwood US$/cubic meter l0Poles US$/cubic meter 50Tilapia US$/kg 0.92Onions US$/kg 0.3Spinach US$/kg 0.08InputsPump (2.5 hp) US$/unit 500Sluice gate US$/unit 540Manual earthwork US$/cubic meter 0.58Hired labor _ US$/day 2.3Family labor US$/day 1.5Dry feed US$/kg 0.72Shrimp postlarvae US$/thousand 9.2Gasoline _ US$/I 0.3Fertilizer (Urea) US$/kg 0.32

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Annex 5 - Procurement, Disbursement and Financial Arrangements

PROCUREMENT PLAN AND SCHEDULE

Introduction

1. The Bank guidelines. "Guidelines for Procurement under IBRD Loans and IDA Credits"(published in January 1995 and revised in January and August 1996; September 1997 and January1999) would be applied to IDA-financed procurement of works and goods. The Central ProjectOffice would be responsible for procurement through ICB as well as for contracting of internationalTA. Contracts for consulting services would be procured in accordance with the provisions of the"Guidelines for the Selection and Employment of Consultants by World Bank Borrowers", publishedby the Bank in January 1997 and revised in September 1997 (Consultant Guidelines). Theseguidelines were revised on January 1999 to incorporate the introduction of the EURO as a currency.All consulting assignments will follow the Bank/IDA's "Standard Request For Proposals," dated July1997, revised April 1998.

Procurement by Expenditure Categories

2. Procurement for various expenditure categories under the project is discussed below (detailsare in Annex 5, tables A, Al, and B; and charts 1-4.

3. Works of US$16.1 million4 would be carried out under the project, including forest planting(US$8.0 million and civil works (US$8.1 million). Forest planting includes the procurement andplanting of mangrove seedling either undertaken as one contract or two separate arrangements. Thelatter would involve community participation for the planting activity if employment provision forbuffer zone residents is part of the project's arrangement for joint protection of the Full ProtectionZone. Mangrove seedlings are to be procured mainly through national shopping, obtaining at leastthree written quotations from local nurseries or farmers following paragraph 3.5 of the Bank'sProcurement Guidelines. Requests for quotations shall indicate the desired quantity and quality of theseedlings, as well as desired delivery time and place. This is expected to be a significantimprovement over the current practice of direct contracting from a single source. Only in exceptionalcircumstances will direct contracting be allowed under the project. This is the case if it can be clearlyshown that only a single source is available in the whole coastal area of Southern Vietnam for aspecific tree species in acceptable quality and sufficient quantity at the required time. Any directcontracting for seedlings has to be cleared in advance by the Project Field Coordination Unit(PFCU). In designing the size of packages to be procured under one contract, on the one hand smallsuppliers should be given a chance to compete (suggesting smaller contracts of a few thousandUS dollars only), while on the other hand the lowest price should be sought (possibly suggestinglarger contracts). Provinces are encouraged to test both smaller contracts (e.g. covering only onespecies in one commune) and larger contracts (e.g. covering different species for a district or even aprovince) depending on the conditions in the project area. All contracts should include penalties forinsufficient quality, delays in delivery or non-delivery. Suppliers would be expected to submit a bondbefore signing the contract, which would be deposited in a separate bank account and would bewithheld in case of breach of contract. The value of an individual contract should not exceedUS$100,000. Any contract exceeding this value would be handled by the Central Project Office(CPO) in Hanoi under procedures for national competitive bidding.

4Costs in this procurement plan are inclusive of contingencies, unless otherwise noted.

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In the case of large contracts which specify delivery only at a central point (such as a district or acommune center), the services to transport the seedlings to the actual planting areas could beprocured separately, either under shopping procedures or by community participation. Paid labor forplanting can also be procured under community participation, to be organized by the provincialFPMBs and FFEs.

4. Civil works are varied, being required for boundary demarcation of the FPZ (cement polesand signboards), to construct public buildings, infrastructure and ponds for aquaculture in theresettlement sites as well as small office buildings. The works would be scattered over the coastalarea of the four project provinces in the Mekong Delta (for resettlement sites, commune extensionposts, district extension stations, boundary demarcation, and research centers) and the four provincialcapitals (for PPMUs). Civil works of similar scope and timing are to be packaged together, such asworks to be undertaken for infrastructure in resettlement sites, at the research centers and thePPMUs. Even then, these works, although comprising a total of US$8.1 million for four provinces,would usually be less than US$50,000 and in some cases up to US$100,000 each and would beprocured by obtaining written quotations from a minimum of three qualified contractors andawarding a lump sum contract to the contractor submitting the lowest evaluated quotation. If anycivil works has a contract value above US$100,000 procurement would have to be undertaken underNCB, to be organized by CPO.

5. Goods to be procured (vehicles and equipment) are estimated to cost a total ofUS$2.4 million. Contracts above US$100,000 would be procured through ICB. Contracts belowUS$100.00 but above US$50,000 would be procured through NCB. ICB and NCB contracts wouldbe managed by the CPO. The remaining contracts for goods (valued at less than US$50,000 percontract) will be purchased through local shopping with a minimum of three quotations. Shoppingwould be administered either by PFCU (for the TDT sub-unit and sub-centers as well as the researchinstitutes) or by PPMUs (for the items under other sub-components) with assistance from PFCU. Ingeneral, individual procurement packages combine similar items for use in specific locations.Annex 5, Tables F, G, and H provide details of the procurement packages for goods (vehicles andequipment).

Various types of vehicles (four wheel drive cars, speed and small boats, and a minibus) totalingUS$809,000 (excluding contingencies) will be procured by the project. One ICB package covering 9four wheel drive cars and I minibus5 will total approximately US$335,000 (excludingcontingencies). Additionally, 5 four wheel drive cars and 5 speed boats 6 (one car and one speed boatfor each PPMU and the PFCU) will be procured through the UN Inter-Agency Procurement ServiceOffice. The remaining speed and small boats will be procured in contracts less than US$50,000.Vehicles will be distributed among the various operational units of the project according to Annex 5,Tables F and G.

Equipment including office, field, and laboratory equipment and computers will be procured by theproject totaling US$1.3 million. Various packages for computers (3 packages totaling US$174,000,

5The four-wheel drive cars should be suitable for year-round use on roads and tracks in the Mekong Delta and the mini-bus should have at least 12 seats6Speed boats should have 60hp engines, a maximum speed of at least 30 knots (48 km/h) and space for one driver and fivepassengers.

Computers should have at least 266 MHz, 32 MB RAM, a 4GB hard drive, and a CD ROM drive. Computers shouldinclude a color monitor, a combination fax/printer, a keyboard, and standard word processing and spreadsheet software.The package should include at least a two years guarantee and repair services in Can Tho or in one of the provincialcapitals in the project area.

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excluding contingencies), laboratory equipment (2 packages totaling US$100,000, excludingcontingencies), and field equipment (2 packages totaling US$99,000, excluding contingencies) are tobe procured under NCB. The remaining equipment packages, each contract totaling less thanUS$50,000 will be procured by shopping. The specific equipment procurement packages are detailedin Annex Table H and their distribution among the various operational units of the project is detailedin Annex Tables F and G.

6. It should be noted that GOV procedures for NCB do not quite conform to IDA proceduresfor scope and areas of application; advertising; selecting modes of bidder and procurement forms;eligibility; bidding; bid evaluation; and bank guarantee. The non compliant aspects of theseprocedures will be waived in accordance to a supplemental letter to the Development CreditAgreement of this project which provides more details on the waivers .

7. Services totaling US$13.8 million would be required for the project. Of this total,US$8.8 million will be funded through DANIDA grants provided as a trust fund for IDAadministration and executed under IDA procurement and disbursement guidelines. Project servicesinclude technical assistance (salaries and field allowances for technical assistance: US$9.3 million);training (US$1.4 million); and research contracts, surveys and special studies (US$3.1 million).

8. Technical Assistance would be carried out by sub-teams of consultants to assist theprovinces in project implementation and institutional strengthening. Technical assistance will beprocured through two packages. A procurement specialist will be procured by single sourcecontracting (with a contract totaling US$106,000). The remaining technical assistance (totalingUS$8.8 million for international and national technical assistance and staff and field allowances) willbe contracted with international firms based on procedures for quality and cost-based selection(QCBS).

9. Local institutes, through their research centers, will be contracted for research/technologypackage development, surveys, and special studies -- the conduct of which are financially andmanagerially autonomous of Government. Most of these contracts (each less than US$100,000) willbe procured based on consulting qualifications (CQ) procedures (total of US$2.2 million). Only alimited number of qualified institutes have field testing presence close to the project area to be able toundertake research and technology development replicable to the aqua-ecological conditions ofproject sites. Under CQ, expressions of interest will be limited to these institutes and the selectedones would be invited to submit proposals in accordance with paragraph 3.7 of IDA's consultantguidelines.

10. In addition, in line with the justification of paragraph 3.8 of the Consultant Guidelines and inthe overall interest of the project, US$0.5 million of special monitoring studies will be procuredunder single source contracting to strengthen (a) coastal area monitoring (FIPI), (b) water qualitymonitoring (SIWP) and (c) Bai Boi fish sanctuary monitoring (CRES/WFRC/RIA-2). These localinstitutes have been undertaking the tasks for years, have much of the needed equipment andaccumulated historic data and implemented several monitoring improvement programs satisfactorilyfor programs funded by the Australian, Swedish and Netherlands governments. It would beparticularly efficient to use these institutes to continue the work with marginal improvements tailoredto the need of specific sites. Finally, US$0.3 million will be procured through Quality BasedSelection (QBS) for participatory rural appraisal (PRA) under the social component of the project.For additional details of the procurement contracts for research/technology package development,surveys, and special studies, see Annex Table I.

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11. Training (US$1.4 million) is unsuitable for competitive bidding and would be procuredfollowing government procedures which are acceptable to IDA.

12. Under the Miscellaneous category, expenditures of a varied nature will be made under thevarious social funds (communal, social support and ethnic minority development) under the socialcomponent. These expenditures will be detailed in Commune Action Plans (CAPs) developed underthe project. The CAPs can include works (for primary schools, primary health centers, rural watersupply and sanitation, electricity connections, community centers), goods (equipment for primaryschools and primary health centers as well as books and leaflets in both Vietnamese and Khmerlanguage), and services (training). The individual value of each contract shall not exceed US$20,000(VND 280 million). Small works can be carried out by the communities themselves, with thematerial and technical assistance financed by the project. If works are conducted without communityparticipation and are valued at more than US$5,000 (VND 70 million), they will be procured undershopping with the submission of at least three written quotations, following IDA guidelines. Thecontract is awarded to the contractor having submitted the lowest accepted proposal. Procurementunder shopping will be handled by the PPMU, which will submit a report on the procurement to theCommune Working Group (CWG). Equipment with lower values can be procured locally by thecommune under procedures acceptable to the CWG. Training contracts valued at more than US$5,000 (VND 70 million) will be procured through the PPMU in close consultation with the CWG.Training contracts with lower values will be procured at the commune level under proceduresacceptable to the CWG.

13. The project will also fund incremental costs, including (a) operations and maintenance(US$1.2 million) and (b) transportation allowances (US$0.9 million) as needed and in accordancewith IDA procedures. In addition, forest protection contracts of US$1 1.50/ha per year (total:US$3.4million) would be issued under community participation procedures to individual farmer families bythe Provincial Forest Protection Management Boards (FPMBs) or Fisheries/Forestry Enterprises(FFEs), after consultation with the respective Village People's Committee and with the clearancefrom the PPMU.

14. IDA Prior Review (Annex Table B) would apply to all ICB and NCB contracts. The firstthree contracts under national shopping for goods (equipment materials, vehicles and boats) andworks (civil works and forest planting) for each province would also be subject to prior review. Allconsultant contracts of firms above $100,000 and individuals above $50,000 would be subject toprior review. Ex-post review of 1-in-5 awarded contracts would be carried out on a sample basisduring supervision.

ICB and NCB Procurement Schedule (See Annex Table E and Charts 1 and 2)

15. December 1999 - After the expected date of approval by the Board, a procurement expertfrom the Bank's Resident Mission or an expert contracted by the Bank assists MARD in thepreparation of the bid data sheets, containing detailed technical and performancespecifications for the ICB tender. The bid data sheet will be used together with the Bank'sStandard Bidding Documents.

Early January 2000 - General Procurement Notice is published in Development Businessfor ICB contract (for vehicles) and in Vietnam News for NCB contracts.

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Early May 2000 - The Specific Procurement Notices for the four tenders will be published inVietnam News and possibly in other suitable newspapers.

July 2000 - Submission of bids and bid opening. No pre-qualification is necessary.

August 2000 - Evaluation of Bids and Award of Contract.

December 2000 - Delivery of Computers, Printers and Fax machines.

December 2000 - Delivery of Cars, Speed Boats and Laboratory Equipment. Cars and speedboats shall be delivered at Can Tho Port. The PPMU and PFCU will be notified in advanceby CPO about the shipment together with a detailed list of how the vehicles will be allocatedto different provinces and institutions. CPO will transmit the same list to the provinces,which are responsible to transport the vehicles from Can Tho Port to their destination.

Technical Assistance Procurement

16. The bilateral grant package, to be financed by DANIDA, totals US$11.26 million. The TAcomponent comprises US$7.36 million for TA (both international and national) salaries; andUS$1.4 million for national and international TA field allowances.

17. The technical assistance for the project is expected to be procured under one package becausedifferent segments are inter-related and coordination would be more efficient if they were allundertaken by one international firm or consortia.

18. The procurement schedule (see Annex Table E and Chart 4) will be as follows:

December 1999 - Publication of Expression of Interest in Development Business.

December 1999 - Deadline for receiving expressions of interest and approval of proposedshortlist.

January 2000 - Finalize TOR and Letter of Invitation package.

March 2000 - Procurement documents for selection of consultants (both international andlocal) ready for distribution to short-listed firms.-- Send Letter of Invitation package to short-listed firms.

May 2000 - Review technical proposals.

July 2000 - Opening of financial proposals and final ranking of firms followed byconfirmation of no objections.

August 2000 - Negotiations and final approval followed by review of final contract forsubmission to winning firm.

September 2000 - Sign contract and mobilization of Consultants.

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Procurement Capacity Building8

19. The Procurement Action Plan for this project will focus on four major areas in capacitybuilding (see Project Implementation Manual):

(a) Appointment of well qualified and experienced staff at both the Central andProvincial Levels. With grant technical assistance provided by DANIDAcompetitively remunerated staff has been provided for in the CPOIPFCU and in thePPMUs (see the Project Implementation Manual for their terms of reference andqualification requirements). Project procurement staff at the CPO and Provincialshould be appointed before mid September, 1999, when project launch is expected totake place.

(b) Preparation of appropriate guidelines, especially for the procurement of seeds.This is incorporated in the Guidelines under the Financial Management Plan for thisproject -which requires that the National Project Steering Committee issue a standardguideline or instruction applicable to all four provinces (see para. 23 below and theProject Implementation Manual).

On the basis of the -above, a draft procurement plan for the first year of projectimplementation is expected to be prepared by MARD and the provinces by mid-September, 1999. In July 1999, an expatriate mangrove specialist and a procurementspecialist (secured under Swedish Trust Funds) will work with the provinces toprepare the required guidelines for seed procurement and reforestation for the firstyear of the project. Those for mangrove seed procurement and planting(reforestation) can then be incorporated into the guidelines for financial management(see para. 23 below). Because GOV's budget exercise for FY2000 starts in July,MARD has also committed to have guidelines for other procurement prepared aswell. These other guidelines are expected to be ready for circulation to the provincesin June, 1999 and will be included in the draft overall procurement plan.

(c) Appropriate training. This will be undertaken in two phases:

At project launch in April 2000 (before the selection of the Technical AssistanceTeam), when training on procurement and financial management will be one of themain activities. MARD and the Provincial Peoples Committees have committed tohave the appropriate staff appointed for this training by then.

During implementation (after the TA team is appointed and in place). The officemanagement/procurement officer of the CPO/PFCU will have been appointed andwill be in a position to provided further hands on training to the Provincialprocurement staff. This will take place throughout 2000 and early 2001.

(d) Provide Opportunities for Cross-fertilization among the Implementing Agencies.The project will provide opportunities for relevant staff working on different projectsboth at MARD and in the provinces to have a chance to share their experiences with

8 Background on existing procurement practices, including capacity and inadequacies, are given in the PIM.

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each other. This will be organized by the management/procurement officer of theCPO/PFCU.

Disbursement Plan and Flow of Funds

20. The project will use a funding mechanism which is being established for the Five millionhectare Reforestation Program. Government counterpart funds will be channeled through the GeneralDepartment of Development and Investment (for the Central Project Office activities in Hanoi) orthrough Provincial Department of Development and Investment (for activities in the four projectprovinces). To withdraw counterpart funds, the appropriate project director (either the ProjectDirector, Project Field Coordinator or PPMU Directors) will first examine the eligible expendituresand then submit these to the appropriate Department of Development and Investment (DDI). DDIwill check those expenditures again (comparing them with the approved annual work plan andbudget) before authorizing a request to withdraw money from the National Treasury (for CentralProject Office activities in Hanoi) or from Provincial Treasuries (for provincial project activities).

21. For disbursement of IDA credit, five special accounts (SAs) will be opened at a commercialbank agreed upon between the government and the World Bank (four SAs at the four projectprovinces, one for the CPO /PFCU). The SAs, with an authorized allocation of an estimated fourmonths expenditure and to be designated in US dollars, will cover the World Bank's share ofeligible expenses for disbursement in both local and foreign currencies. An initial deposit will bemade to the SAs. The Project Director, with help from the Project Coordinator and PPMU Directors,must submit quarterly work plans and budget requests to the appropriate DDI for approval beforemoney can be withdrawn. When the quarterly work plan and budget request have been approved byDDI, funds will be released for reimbursement of eligible expenditures after the designated Directorhas approved and authorized the withdrawal of money from the SA. The designated Director willprepare an application for replenishment of the SA once every two months and send it to the Ministryof Finance for review. The application then will be signed by the State Bank of Vietnam and sent tothe World Bank for replenishment of the SA.

22. Similar to the IDA credit, five separate SAs, in the same commercial bank as for IDA SAs,will be opened for grant funds from DANIDA. Grant funds will be channeled through separateproject accounts from those used for IDA funds. All SAs will be audited annually by an independentaudit team acceptable to IDA and DANIDA. The auditing will include separate opinions on the useof the SOEs and the status of audit compliance. The detailed audit report would be submitted to IDAand DANIDA within six months of the closing of the government's fiscal year.

23. Reimbursement of expenditures for all goods contracts costing less than $100,000 equivalenteach, all works (including forest planting or reforestation) under contracts less than $100,000 each,all forest protection contracts, incremental operating costs (including incremental allowances),training, social/communal grants, consultant contract of firms below US$100,000 and individualconsultant contracts of less than US$50,000 will be will be made on the basis of statements ofexpenditure (SOEs). For counterpart funds, appropriate amounts will be directly released by theProvincial Treasury after the approval of each quarterly work plan.

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Accounting, Financial Reporting and Auditing 9

24. The overall project account would be maintained by the CPO (with assistance from itsAdministration sub-unit of the PFCU); and separate project accounts for each province would bemaintained by each PPMU. The project accounts would reflect all financial transactions during theproject implementation period for both IDA Credit, counterpart funding and bilateral (DANIDA)grants. PPMUs would be responsible for filing reports on the project's account every two months toCPO/PFCU.

Financial Management Action Plan

25. There is a need for specific targeted improvements in financial management practices inorder to meet the needs of the project, which will massively increase the throughput of funds throughthe implementing provincial agencies. In proposing changes, a balance needs to be struck betweenthe "ideal" requirements that an accounting specialist would like to see, and what is feasible onground administratively and in terms of implementation costs. The proposed action plan thereforefocuses on material weaknesses and on the minimum actions required to reach an acceptablestandard of financial management. The following paragraphs describe the main issues and thesolutions proposed in the Action Plan.

Financing Seedling Procurement and Planting (Reforestation)

26. Each province has its own procedures for purchase of seedlings and for payment for plantingof seedlings. The procedures are reasonably sound in most cases, but there are a number of cases ofnon competitive setting of seedling prices which may need to be changed (see para. 16 above). Theexisting financing and procurement procedures were evolved to meet the relatively low volume ofactivity currently undertaken. Since the project will substantially increase the volume of treeplanting, it is necessary to have clear written guidelines for every step of the process, which will thenform the basis of financial control. The financial management action plan therefore requires that theNational Project Steering Committee issue a standard guideline or instruction applicable to all fourprovinces which should cover:

* the different methods by which seedlings can be procured and the implied pricingmechanisms

* procedures for taking delivery of seedlings, including for verification of quantity and quality* procedures for handing over of seedlings to farmers* procedures for checking actual extents planted by farmers and for payment to farmers* payment schedule for planting* verification of planting by independent agencies at some stage, on a sample basisex post facto audit of the whole program, tallying seedlings purchased, seedlings handed over,seedlings planted (derived from acreage), and planting payments made.

The preparation of the above guidelines and the appointment of appropriate staff is a condition ofeffectiveness of this project.

9 The background on existing financial management practices relevant to the project is given in the Project ImplementationManual.

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Resettlement

27. The provinces all have experience with resettlement activities, and the controls overdisbursement are generally good. Payment is made in public at a pre-announced location in thevillage, by an inter-departmental team of officials. However the project entails a huge increase in theamounts spent on resettlement. The action plan will adopt the guidelines given in the ResettlementAction Plan of the Project.

Staffing

28. The provincial agencies have little previous experience with World Bank projects or withpreparation of the kinds of financial statements which will be required. This, when combined withthe weaknesses and other issues discussed above, means that there is a definite need for some initialtechnical assistance, for a period of about one year from effectiveness. Given the shortage ofprofessionally qualified accountants in Vietnam, this will almost inevitably have to be through anexpatriate.

29. It is also necessary that each PPMU have adequate staff to meet the expected standards ofaccounting and financial control. The CPO/PFCU will have to consolidate the accounts of the fourprovinces in order to produce the accounts for the whole project. The CPO/PFCU will therefore needto have a small accounting unit of its own.

30. In order to ensure that there is adequate accounting competence, the action plan requires thatthe provinces and the Steering Committee agree that the accounting unit of each provincial PPMUand the PFCU will be headed by a Senior Accountant who has:

* a bachelor's degree in accounting and* at least five years experience in heading an accounting unit.

31. The existing DARD chief accountants in Ca Mau and Bac Lieu would be well suited for thisposition; in Soc Trang and Tra Vinh new staff will have to be brought in.

32. Each PPMU needs to be staffed adequately to the extent necessary to meet the workload as itevolves and ensure timely completion of accounts. In any case, each PPMU will require a minimumof 2 staff other than the Senior Accountant. The action plan requires the provinces to agree to thisand to ensure that this complement (Senior Accountant plus two or more other staff) is in positionprior to disbursement.

Project Account Codes

33. As noted earlier, the standard system of account codes is sufficiently detailed and flexible tomeet the project's needs. A review of the account codes presented by the Provinces indicate that thedetailed structure provided by Bac Lieu is sufficient to be used as the initial model for otherprovinces in the Project. This structure will, however, be re-evaluated at project launch with respectto the needs of each province.

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Timeliness of Checks by Treasury and Department of Finance

34. Accounts of the implementing agencies are required to be checked by the provincial Treasuryand Department of Finance before formal approval. This is a potential source of delay in submissionof accounts and financial reports. It is necessary that the implementing agencies discuss, and agree,with the two departments on the number of days which will be taken to complete this check.

Preparation of PMRs

35. Although this project is not considered by IDA to be ready for disbursements made on thebasis of Project Management Reports (PMRs), CPO/PFCU will, under the Financial Action Plan andthrough technical assistance, prepare simplified PMRs beginning with the second quarter of 2000 andregular PMRs starting with the July 1- September 2001 quarter (details are in the ProjectImplementation Manual).

Requirements for Project Effectiveness

36. A summary of the requirements from the above financial management plan that will be needed asformal conditions of effectiveness for the project is given in Annex 5, Table A.

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Annex 5 - Table A: Project Costs by Procurement Arrangementsl0

Procurement Arrangements. (US$ million equivalent, including contingencies)

Expenditure Category Procurement Method Total CostICB NCB Other NBF

1. WorksPlanting /Reforestation 8.0 - 8.0

(7.2) (7.2)Civil Works - 8.3 - 8.3

(7.5) (7.5)

2. GoodsVehicles 0.4 - 0.5 - 0.9

(0.4) (0.5) (0.9)Equipment 0.4 1.0 - 1.5

(0.4) (0.9) (1.3)3. ServicesTechnical Assistance - - 7.5 - 7.5

(0. 1) (0. 1)Training - - 1.4 - 1.4

(1.4) (1.4)Research, Surveys & Special Studies - - 3.1 - 3.1

(2.3) (2.3)4. MiscellaneousSocial Support Funds - - 8.5 - 8.5

(6.5) (6.5)Farmer Grants - - 0.9 - 0.9

(0.8) (0.8)Farmer Credit - - 10.2 10.2

Land Acquisition - - 5.4 5.4

ResettlementlRehab Compensation - - - 2.8 2.8

Forest Protection Contracts - - 3.4 - 3.4(2.2) (2.2)

Staff, Field, and Trans. Allowances - - 2.7 - 2.7(0.6) - (0.6)

Operation and Maintenance - 1.2 - 1.2(0.9) . (0.9)

Total 0.4 0.4 46.5 18.3 65.6(0.4) (0.4) (31.1) (0.0) (31.8)

Notes: (1) NBF = Not IDA-financed, ICB = International Competitive Bidding, NCB = National Competitive Bidding.(2) Figures in parenthesis are the amounts to be financed by the Bank loan/IDA credit.

'°For details on presentation of Procurement Methods refer to OD 11.02, "Procurement Arrangements for InvestmentOperations."

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Annex 5 - Table Al: Consultant Selection Arrangements (US$ millionequivalent)

Consultant Services Selection Method Total CostExpenditure Category QCBS QBS SFB LCS CQ Other NBF (including

______________________________ _______ _____contingencies)

A. FirmsNational and International 8.8 8.8Technical Assistance. Central (0.0) (0.0)Project Coordination Unit: ChiefProject Advisor, CommunityDevelopment and ResettlementAdvisor, national short-term experts,international short-term experts forforestry, environment and micro-credit. TDT Sub-Unit and Sub-Centers, as well as TA for RIA II.Includes staff& field allowances forboth national and internationaltechnical assistance. "Research 0.3 2.3 0.5 3.1Contracts, Surveys, and Special (0.0) (2.3) (0.0) (2.3)Studies 12

B. IndividualsProcurement Specialist 0.1 0.1

(0.1) (0.1)

Total 8.8 0.3 2.3 0.6 12.0(0.0) (0.0) (2.3) (0.1) (2.4)

Notes: (1) QCBS = Quality- and Cost-Based Selection; QBS Quality-based Selection; SFB ='Selection under aFixed Budget; LCS = Least-Cost Selection; CQ = Selection Based on Consultants' Qualifications; Other = Selection ofindividual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc.; NBF =Not Bank-financed.(2) Figures in parentheses are the amounts to be financed by the Bank loan.

" The total TA package is to be procured through QCBS procedures. DANIDA financing of the TA package totalsUS$8.8 million, of which US$7.4 million is for consultant services and US$1.4 million is for staff and field allowances.12 For further details, see Annex 5, Table 1.

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Annex 5 - Table B: Thresholds for Procurement Methods and Prior Review'3

Contract ValueExpenditure Category (Threshold) Procurement Method Contracts Subject to Estimated Total Value

(US$ Prior Review Subject to Prior Reviewthousands) (US$ millions)

1. WorksCivil Works > 100 NCB. All 0.3

< 100 Small Works ~1 3 contracts in each 2.0province

Planting/Reforestation > 100 N.C.B. All 0.3< 100 Participation /Local I' 3 contracts in each 2.0

Shopping province

2. GoodsEquipment & Materials > 100 I.C.B. All 0.0

> 50 to < 100 N.C.B. All 0.4< 50 Shopping I' 3 contracts in each 0.5

province

Vehicles > 100 1.C.B. All 0.4> 50 to < 100 N.C.B. All 0.0< 50 Shopping I' 3 contracts in each 0.5

provinceSubtotal Goods and 6.4Works

3. ServicesTechnical Assistance Consulting Services Firms > $100,000 9.6and Studies (QCBS, QBS, other) Individuals > $50,000

4. MiscellaneousSocial Support Grants Shopping and None 0.0

CommunityParticipation

Forest Protection Direct None 0.0Contracts Contracting/comm

unity Participation

Total value of contracts 16.0subject to prior review:

'3Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" andcontact the Regional Procurement Adviser for guidance.

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Annex 5 - Table C : Allocation of IDA Credit and DANIDA Grant Proceeds

Expenditure Category Amount Financing Percentage(US$ million)

IDA DANIDA IDA DANIDA

1. Civil Works under Parts A and 7.46 90%D of the Project.

2. Reforestation (including 7.24 - 90%seedlings) __ __

3. Goods (excluding seedlings) 2.15 0.09 100 % foreign expenditures, 100 % oflocal expenditures (ex-factory cost) and85% of local expenditures for otheritems procured locally

4. Consultants' Services 2.37 8.07 100 % 100 %

5. Training 1.44 - 100%

6. Communal Grants 6.53 - 100% of amounts disbursed

7. Farmers Grant (for Demonstration 0.89 - 100 % of amounts disbursedFarmers)

8. Forest Protection Services 2.20 - 100% for payments made prior to January1, 2003 and 50% made thereafter

9. Incremental Operating, 1.53 - 100% for payments made prior toMaintenance Costs & Transportation January 1, 2003 and 50% made thereafterAllowances

10. Social Support and Ethnic 1.78 100%Minorities Development Funds

11. Incremental Field & Staff 1.40 100%Allowances

Total 31.76 11.33 1

Annex 5 - Table D: Summary of Financial Management Action Plan

Item Issue and Actions required To be completed before.I. Procedures forforest planting (reforestation) activities Loan Effectiveness

National Project Steering committee (in consultation with provinces) to issue written guidelines prescribing a standard procedure forall provinces covering:

i) the different methods by which seedlings can be procuredii) procedures for taking delivery of seedlings, including for verification of quantity and qualityiii) procedures for handing over of seedlings to farmersiv) procedures for checking actual extents planted by farmers and for payment to farmersv) payment schedule for plantingvi) verification of planting by independent agencies at some stage, on a sample basisvii) ex post facto audit of the whole program, tallying the following

seedlings purchasedseedlings handed overseedlings planted (derived from acreage)planting payments made.

2. Strengthening accounting staffi) The accounting unit of CPO and each PPMU will be headed by a "senior accountant" holding a bachelor's degree in accounting and i) Loan Effectivenesshaving at least 5 years experience in heading an accounting unit.(N.B. Existing DARD chief accountants in Ca Mau and Bac Lieuwould be well suited for the PPMU position.)ii) The accounting unit of each PPMU will have such number of staff as may be necessary (to meet workload and ensure timely ii) Loan Effectivenesscompletion of accounts) but in any case not less than 2 persons other than the senior accountant.iii) Accounting staff of CPO and each PPMU to be appointed. iii) Loan Effectiveness

3. Provincial Treasury and Depts. of Finance in all provinces have issued instructions to implementing departments establishing an Loan Effectiveness.__.__. _ appropriate time period for checking of unit accounts so that project reporting is not delayed by the checking mechanism.

Note: Initial Project Monitoring Report (PMR) tables to be prepared under the project is given in the Project Implementation Manual,Section 2.

Annex 5 - Table E: Procurement Schedule

Responsible Staff 2000 2001 2002 2003 2004 2005

PROJECT ACTIVITY or Institution I 2 1 4 41 2 34 1 2 4 2 3

ICB & NCB PROCUREMENT.............. -..... ,- _.. _. _.... _.._.,_ ..-. ............... ........... _ . .... . ._ -...... ... .._ ....... ........ . ........ ........

Preparation of ICD& NCB bid sheets Procurement Specialist

Piulication of general procuremient notices Procurement Specialist

ublication of specific procurement notices ProcurementSpecialisrt. .. ... . . _ ... .. __ .. _._ .... _ _ ._._ .... __ .. ........... .... _ _ ......... ._ ............. ..... .......... .. ......... ..

Submission of bids & bid opening Contractors

Evaluation of bids & award of contract NPSC. . ... . .. . ._ . _ ... __ .. _ .. ........... .... _ ._._ .... _ ._ ...... ... ..._._._ ..... _ ... .....~~~~~~~~~~~~~~~~~.. .. .. .... ....

Delivery of computers and printer/faxes Contractorsa........... ... ......~~........... ...... .._ _ ............ ...... ... _. _ . ...... .............. ... ... ............ ____

Delivery of cars, motorcycles, and speed boatsContractors

TECHNICAL ASSISTANCE __ . _. _ . __.__.PROCUREMENTCompletion of Terms of Reference for TA *

consultant bid IDA/GO VIDANIDA c

Submit request for "Expression of Interest" toDevelopment Business IDA/GOV

Finalize TOR and Letter of invitation packageProcurement Specialist

Deadline for receiving expressions of interestand approval of shortlist Contractors

Send letter of invitation package to shortlistedfirms Procurement Specialist

Review technical proposals NPSC

Opening of financial proposals and finalranking of firms NPSC

Confirmation of no objection IDA

Negotiations and finala approval NPSC

Review of final contract fo submission towinning firm NPSC

Sign contract and mobilization of consultants NPSC/Contractor .

Annex 5 - Table F: Construction, Equipment, and Vehicle Costs per Operational Unit

Construction Equipment Vehictlespildinqt w,eIIs office equip corn4uters tab euip field e uio ; Quantity per Province

Operational Unit ( cost) 6(cost) S3000 (cost) (cost) $8,000 $1,500 $35,000 20000 unit cost Tra Vinh Soc Trang Bac LieuForest Guard Stations

Upgraded $2,300 $5 000 t $8,500 3 5 3New $5,000 $5,000 1 $11,500 1

District Demonstration Nurseries $6,000 $6,000 3 2 3Reserves and Sanctuaries

Headquarters $ 5000 $5,000 $10,000 1Guard Stations (OT & DM) $4,D00 1 S5,000 1 2 $20,600Guard Stations (Bai Bo!) $4,000 1 S0000 2 2 $25 600

Sub-regional Center (contracts) $0CTU Mariculture Department $35 000 $8 500 2 $25,000 $14 000 S8esooCTU Sub Centre Vinh Chau $34,000 $2,000 1 1000000CFSRC, Tra Vinh $50 000 $9,000 1 $25,000 $14,000 $101 000RIA-II $107 000 $10,000 2 $25,000 $20,000 s5I68a 0CTU Sub Centre, Bac Lieu $38,000 $2,000 1 $15,000 $58,000Minh Has WFRC $5,00D $11,000 2 S25,000 $20 D00 S70 000

Commune Demonstration Postn $50 00 S1,000 $6,000 7 12 7

Provincial Land Use Planning Team i $S3000 1 1 1District Land Use Planning Team S10 000 $10,000 3 2 3Commune Land Use Planning Team S2,000 $2,000 7 12 7Tam Giang I FFE Restructuring $75,000 $75,000 $150,000 '0Dam Doi FFE Restructuring $300 000 $75,000 $375,000 0

Resettlemen1 tmplemenlation r.Tra Vinh 3 $9,000 1Sec Trang 4 $12,000 1Bac Lieu 4 $12,000 1Ca Mau 9 $27,000

Support to Provincial DOSTEs $7,000 1 $30,000 $400 00 1 1 1Special M&E Studies

FIPI-II GIS & Coastal Mapping $405000 $45,000DotiRIA-liCTU Fish Recruitment $45,000 S45,000

Project Field Coordination Unit $30 000 $34,000 a $4,000 $4,000 4 1 $163,000TOT Sub Unit $27,000 6 $4,000 $4,000 1 1 S108,000PPMUs

Tra Vinh $25,000 S6,000 3 2 3 5161 .000 1Soc Trang $25,000 $6,000 3 2 3 $161,000 1Bac Lieu 525.000 $6,000 3 2 3 $161,000 1Ca Mau $25,000 $6,000 3 3 3 5169.000

District Project Teams $20,000 $2,000 1 1 1 S34.500 3 2 3

Annex 5 - Table G: Total Quantity and Cost of Equipment and Vehicles by Operational Unit

Equipment Vehicles

office lauiD compuers iabequip field equip speeqL bat smallbt MimbusOperational Unit (cost) $3,000 (cost) (cost) $8,000 $1,500 $35,000 $20,000Forest Guard Stations

Upgraded $55,000 - - - 11New $10,000 - - - 2

Reserves and SanctuariesHeadquarters $5,000 - - - - - - -Guard Stations (OT & DM) $15,000 - - 3 6Guard Stations (Bai Boi) $5,000 2 2

Sub-regional Center (contracts)CTU Mariculture Department $8,500 2 $25,000 $14,000 - -

CTU Sub Centre, Vinh Chau $2,000 I - $16,000CFSRC, Tra Vinh $9,000 1 $25,000 $14,000RIA-il $10,000 2 $25,000 $20,000 - - -

CTU Sub Centre, Bac Lieu $2,000 1 - $15,000MinhHauWFRC $11,000 2 $25,000 $20,000 - - - -

Commune Demonstration Posts $45,000 0 - -

Provincial Land Use Planning Team - 4District Land Use Planning Team - - - $130,000Commune Land Use Planning Team - - - $90,000 --

Tam Giang I FFE Restructuring $75,000 - - - - - - -

Dam Doi FFE Restructuring $75,000 - - - - - - - m

Resettlement ImplementationTra Vinh 3Soc Trang - 4Bac Lieu 4Ca Mau 9

Support to Provincial DOSTEs - 4 - $120,000Special M&E Studies - - $0

FIPI-lI GIS & Coastal Mapping $45,000 - - $0DoffRIA-II/CTU Fish Recruitment $45,000 - - $0 -

Project Field Coordination Unit $34,000 8 $4,000 $4,000 4 - 1TDT Sub Unit $27,000 6 $4,000 $4,000 - - 1 1PPMUs

Tra Vinh $6,000 3 - - 2 - 3Soc Trang $6,000 3 - - 2 - 3Bac Lieu $6,000 3 - - 2 - 3Ca Mau $6,000 3 - - 3 - 3

Distrct Project Teams $26,000 13 - - 13 13

Total Quantities 76 31 34 14 1Total Cost $528,500 $228,000 $108,000 $447,000 $248,000 $51,000 $490,000 $20,000

Page 76

Annex 5 - Table H: Procurement Packages for Equipment and Vehicles

lCB NCB ShpigUNDP TotalsProcurement Packages units units conits is caSt tsDP cost units costCars (4x4, minibus) 9,1 S335,OOD 5 $175,000 14,1 S50,000

Speed Boats 31 $248,000Initial start-up package 5 $40,000Tra Vihn (PPMU & DPT) 4 $32,000Soc Trang (PPMU & DPT) 3 $24,000Sac Lieu (PPMU & DPT) 4 S32,000Ca Mau package I (PPMU) 2 $16,000Ca Mau package 2 (DPT) 5 $40,000Ca Mau package 3 (sanctuaries) 5 S40.000CPO/PFCU 3 $24,000

Small Boats 34 S51,000Tra Vihn 6 $9,000Soc Trang 7 $10,500Sac Lies 7 $10,500Ca Mau 14 S21,000

Lab Equipment $108,000Sub-regional Research Centers

microbiology $50,000plant and soil analysis $50,000

CPO/PFCU (& TDT Sub-Unit) S8.000

Field Equipment S447,000Sub-regional Research Centers

soil and water testing SS4.000aquaculture testng $45,000

PFCU & Sub-Units $8,000Provinical DOSTEs

Tra Vihn S30.000Soc Trang S30.000Bac Lieu $30,000Ca Mau $30D000

Land Use Planning (district)Tra Vihn $30,000Soc Trang $20,000Bac Lieu $30,000Ca Mau $50,000

Land Use Planning (commune)Tra Vihn $14,000Soc Trang $24,000Bac Lieu $14,000Ca Mau $38,000

Office EquipmentVarious packages $528,500 $528,500

Computers 76 $228,000Project start-up package for PPMUs 4 $12,000TDT Sub-regional Centers, Land Use Planning & DOSTE 17 $51,000Resdetlement 20 $60,000CPOIPFCU 14 S42.000PPMUs/DPT 21 $63,000

TotalsVehicles $335,000 $259,000 $215,000 $809,000

percent 41.41% 32.01% 26.58%Equipment $373,000 $938,500 $1,311,500

percent 28.44% 71.56%

Annex 5 - Table I: Procurement Arrangements for Research Contracts, Surveys & Special Studies

SW iles cost table Q(3S CQ SS TOTAL

TDrSubRegionial Centes 201 $476,072 $476,072

PRAteansTraM nh 301 $35,976 $35,976

Soc Trang 302 $178,051 $178,051

Bac Lieu 303 $35,976 $35,976

Ca Mau 304 $75,785 $75,785

Land & Ver Use Zning 401 $22,509 $22,509

Reserenut SHte Planning & PreparaionTra Vinh 501 $24,184 $24,184

Soc Trang 502 $47,599 $47,599

Bac Lieu 503 $29,257 $29,257

Ca Mau 504 $300,900 $300,900

Resenennt lrrIemuntaplonTra inh 505 $89,402 $89,402

Soc Trang 506 $91,238 $91,238

Bac Lieu 507 $89,402 $89,402

Ca Mau 508 $100,751 $100,751

Nbiihtng and EvaluahionErrvrantiral Monitouing Studes and AnAysAs 601 $525,696 $45Z592

Socal nMtoning Studes &Anaysis 601 $386,784 $471,514

DANDA Financed Monitouing & EvaluaionFIPI-II GlSand Coastal Mapping 601 $209,000 $209,000

SV\RRV\bterCoa1m Montonng 601 $85,000 $85,000

CRESWIFRCRIII Studies 601 $212,000 $212,000

Coordination with NENOSTE 601 $35,359 $35,359

Total $326,788 $2,183,794 $641,359 $3.0SO,941

Page 78

Annex 6: Project Processing Budget and Schedule

Planned Actual(At final PCD stage)

A. Project Budget (US$'000) 319 1,028

B. Project ScheduleTime taken to prepare the project (months)First Bank mission (identification) October 1994 October 1994Appraisal mission departure October 1996 October 18, 1999Negotiations January 1997 October 20, 1999Planned Date of Effectiveness May 1997 April 2000

Prepared by: Ministry of Agriculture and Rural Development

Preparation assistance: PHRD; Dutch, Danish, Canadian and Swedish TFs

Bank staff who worked on the project included:

Name Specialty

Ronald Zweig Agricultural Ecologist (Task Team Leader)Choeng-Hoy Chung Economist (Retired)Christopher Gibbs Rural Development SpecialistSusan Shen EcologistRob Crooks Environmental SpecialistLars Lund, Lanfranco Blanchetti-Revelli Social SpecialistsMatius Schlund Agricultural EconomistManuel Schiffler/Jeffrey Muller EconomistsTrikkur V. Somanathan Financial SpecialistDavid Sislen ConsultantCao Thang Binh Natural Resource Management SpecialistJack FringerJNguyen Chien Thang Procurement SpecialistsGaye Lindsey ConsultantKaren Hudes/Carlos Escudero Legal CounselsOmowunmi Ladipo Financial Management SpecialistCarmen Beaulieu Task Assistant

Page 79

Annex 7: Documents in the Project File

A. Project Implementation Manual, including Detailed Cost Tables (hard copy plus COSTAB filein diskette)

B. Project Documents

1. DANIDA. Ministry of Foreign Affairs. "Coastal Wetlands Protection and Development ProgrammeLower Mekong Delta, Vietnam. Components: Integrated Management and Mangrove Ecosystemsand Rehabilitation of Coastal Wetlands Forest Reserves." Draft. Ref. No. 104, Viet. MICA.0.September 1997.

2. Euroconsult in Association with FIPI-2 and RIA-2. "Coastal Wetlands Protection and Development,Southem Mekong Delta. Project Preparation Final Report. Amhem, May 1996.

3. GEC Global Environmental Consultants, Ltd. "Environmental and Social Review of the Buffer ZoneComponent." The World Bank Coastal Wetlands Protection and Development Project. Vancouver,November 1996.

4. GEC Global Environmental Consultants, Ltd. "Update of the Environmental and Social Assessment ofthe Vietnam: Coastal Wetlands Protection and Development Project." The World Bank CoastalWetlands Protection and Development Project. Vancouver, September 1999.

5. JAAKKO POYRY and the Sub-Institute of Ecology Resources and Environment Studies."Community Participation in Forest Protection and Socio-Economic Development. Communitydevelopment Approach in Selected Communes to Protect the Coastal Mangrove Areas of Tra Vinh,Soc Trang, Bac Lieu and Ca Mau Provinces, Vietnam. Ministry of Agriculture and RuralDevelopment, the World Bank. March 1998; Vol 1 (stage 1) and Vol 2 (Stage 2).

6. Ethnic Minority Development Plan (EMDP), December 1998.

7. Resettlement Action Plan, January 1999.

8. Files for the financial and economic analysis (in EXCEL) are in the directory n:/manuel/cwp/cba/Files showing the project costs (both COSTAB and EXCEL) are in the directory n:/manuel/cwp/costs.

C. Bank Staff Assessments

IDA Preparation Missions Aide-Memoirs: May 1996, December 1996, April 1997, October 1997,March 1998, June 1998, and November 1998.

Annex 8: Statement of Loans and Credits

Status of Bank Group Operations in VietnamIBRD Loans and IDA Credits in the Operations PortfolioAs of 31 -December-98

Original Amount in US$ MillionsFiscal

Project ID Year Borrower PurposeIBRD IDA Cancellations Undisbursed

Number of Closed Loans/credits: 3

Active LoansVN-PE-4837 1994 GOVT OF VIETNAM AGRIC REHABILITATION 0.00 96.00 0.00 2.31VN-PE-4835 1994 SOC REP OF VIET NAM PRIMARY EDUCATION 0.00 70.00 0.00 35.50VN-PE-4832 1994 GOVT OF VIET NAM HIGHWAY REHAB 0.00 158.50 0.00 68.37VN-PE-4836 1995 EVN PC2 PC3 POWER SECTOR REHAB & 0.00 165.00 0.00 42.56VN-PE-4834 1995 GOV IRRIGATION REHABII-IT 0.00 100.00 0.00 72.10VN-PE-42236 1996 GOVT. OF VIETNAM POWER DEV 0.00 180.00 0.00 8.48VN-PE-36042 1996 SOC. REP. OF VIETNAM BANKING SYSTEM MODER 0.00 49.00 0.00 45.49VN-PE-4847 1996 GOV RURAL FINANCE 0,00 122.00 0.00 66.52VN-PE-4841 1996 SOC REP OF VIETNAM POPULATION & FAMILY 0.00 50.00 0.00 35.16VN-PE-4838 1996 SOCIALIST REPUBLIC OF VIE NATIONAL HEALTH SUPP 0.00 101.20 0.00 82.47VN-PE-39021 1997 GOV'T OF VIETNAM RURAL TRANSPORT 0.00 55.00 0.00 39.51VN-PE-4842 1997 GOVT OF VIETNAM HIGHWAY REHAB II 0.00 195.60 0.00 181.78VN-PE-4830 1997 GOV WATER SUPPLY 0.00 98.61 0.00 99.67VN-PE-45628 1998 GOV TRANSMISSION & DISTR 0,00 199.00 0.00 202.85 V0

asVN-PE-4844 1998 GOV AGRI DIVERSIFICATION 0.00 66.85 0.00 69.68 ,_VN-PE-4843 1998 GOVT OF VIET NAM INLAND WATERWAYS 0,00 73.00 0.00 74.38VN-PE-4839 1998 GOVT OF VIETNAM FOREST PROT.& RUL DE 0.00 21.50 0.00 21.60VN-PE-4833 1999 MOF, GOVERNMENT OF VIEl'NA URB TRAN IMPROVEMENT 0.00 42.74 0.00 44.67VN-PE-4828 1999 SOC REP OF VIETNAM HIGHER EDUC. 0.00 83.30 0.00 87.24

Total 0,00 1,927.30 0.00 1,280.34

Active Projects l TotalTotal Disbursed (IBRD and IDA): 612.43 243.82 856.25

of which has been repaid: 0.00 5.97 5.97Total now held by IBRD and IDA: 1,927.30 238.73 2,166.03Amount sold : 0.00 0.00 0.00

Of which repaid : 0.00 0.00 0.00Total Undisbursed : 1,280.34 0.00 1,280.34

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.b. Following the FY94 Annual Review of Portfolio perfommance (ARPP), a letter based system was introduced (HS = highly Satisfactory, S satisfactory, U = usatisfactory, HU highly itnsatisfactory): see proposed

Improvements in Project and Portfolio Perfomance Rating Methodology (SccM94-90 1), Augast 23, 1994.Note: Disbursement data is updated at the end ofthe first week ofthe month.

VietnamSTATEMENT OF IFC'sCommitted and Disbursed Portfolio

As of 31 -Dec-98(In US Dollar Millions)

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1994 Hanoi Metropole 3.67 0.00 3.50 12.12 3.67 0.00 3.50 12.12

1995 Baria Serece Prt 3.00 0.00 0.00 1.80 3.00 0.00 0.00 1.801995 Foremost Dairy 6.40 0.00 0.00 5.20 6.40 0.00 0.00 5.201996 Kyoci Steel 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.001996 Mom.Star Cement 30.00 0.00 0.00 66.60 30.00 0.00 0.00 66.601996 Sucre de Bourbon 22.00 0.00 0.00 20.00 22.00 0.00 0.00 20.001996 SMH Glass Co. 10.00 0.00 0.00 4.50 10.00 0.00 0.00 4.50

1996 Vimaflour 8.00 0.00 0.00 3.00 8.00 0.00 0.00 3.001996 VILC 0.00 .75 0.00 0.00 0.00 .75 0.00 0.001997 Saigon Hilton 13.05 0.00 0.00 21.00 0.00 0.00 0.00 0.00

1997/0 Nghi Son Cement 30.00 0.00 0.00 26.50 0.00 0.00 0.00 0.00

Total Portfolio: 141.12 .75 - 3.50 160.72 98.07 .75 3.50 113.22

Approvals Pending Conmnitment

Loan Equity Quasi Partic

1998 BA RIA 24.20 4.00 0.00 49.001998 BAWC 12.50 0.00 0.00 12.501997 NGHE AN SUGAR 20.00 0.00 0.00 30.001997 SEM HOTEL 0.00 0.00 4.50 0.001996 VIETNAM INTL LSE 5.00 0.00 0.00 10.001997 VINAFOOD 10.50 0.00 0.00 13.50

Total Pending Commitment; 72.20 4.00 4.50 115.00

Page 82

Annex 9: Vietnam at a Glance

EastPOVERTY and SOCIAL Asia & Low. _

Vietnam Paciftc income Development diamond1998Pooulation. mid-vear (millionsl 765 1S.817 3.515 Life expectancyGNP ner cavita (Affas method. USSi 330 990 520GNP IAtlas method US$ billions) 25.8 1t802 1.844 TAveraoe annual arowtlt. 1992-98 TPoculation t%) 1.7 1.2 1.7 [GLaborforce %l 1.9 1.6 1.9 GNP GrossMost recent estimate latest vear available. 1992-981 capita enrimryent

Povertv (% of 0.0oiation below nalional foveftvNine) 37Urban oooulation/% oftota/oDoDUationl 24 35 31Life exoectancy at birth ivearsi 68 69 63 Infant nortalitv (oer 1.000live births: 35 37 69Child malnutrition f% of children under 5 45 20 - Access to safe waterAccess to safe water f% of oooulalionl 38 77 74Illiteracv (% of ooou/ation ace 15+) 17 15 32Gross orimarvenrollment W% ofschoosl-aoe ooDulationl 114 117 108 !Vietnam

Male :. 119 113 Low-income groupFemale -. 118 103

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1977 1987 199? 1998Economic ratios'

GDP ILSS billions) .. 24.8 25.9Gross domestic investment/GDP 14.6 27.6 19.8Exoorts of ooods and services/GDP .. 6,5 475 484 TradeGross domestic savinoslGOP . 5 1Gross nationat savinosiGOP . 19.8 14.9

Current acDount balance/GDp .. .. -7.7 -S50Interest oavments/GDP .. 1.1 15 Domestic InvestmentTotal debt/GDP .. 87.0 86.6 SavingsTotal debt service/exoorts .. . 7.g 9.0Present valsje of debt/GDP .. 78.4Present vallue of debt/exoorts , 167,7

Indebtedness1977-87 198S-98 1997 1998 1999.03

(avemnoSennual o,owthl GDP .. 7.9 88 3.5 5.1 VietnamGNP Der ca3ita . 5.S 3.7 .. .. Low-income groupExDortsofooodsandservices .. 25.0 13,3 3.3 9.1

STRUCTURE of the ECONOMY1977 1987 1997 1998 Growth rates of output and investment 1%)

/% of GDPiAariculture .. 39.1 26.2 28.6 40Industrv .. 33.9 31.2 36.1 30

Manufacturin . 31.5 .. .. 20+Services .. 27.0 42.6 35.3 .

Private consumDtion .. . 71.7 77.0 93 94 95 96 97 98General aovemment consumotion .. .. 8.8 9.0 |0_GDI w GDPImDorts of aoods and services .. 15.9 55.5 52.3

1977-87 1988-98 1997 1998 Growth rates ofexports and imports (%)(averaoe annual orowfhlAariculture .. 5.0 4.5 2.5 71 Industrv .. 12.3 13.1 7.5

Manufacturina ..Services .. 8.5 9.2 1.2 25

Private consumotion .. 7.1 2.7 2.0General oovemment consumDtion .. 10.2 2.5 2.0 oGross domestic investment .. 23.2 7.8 3.0 93 94 95 96 97 98Imoorts of aoods and services .. 27.1 7.2 3.6 Exports -ImponrsGross national oroduct .. 7.8 5.6

Note: 1998 data are preliminary estimates.

The diamonds show four kev indicators in the countrv oin bold) comoared with its income-arouo averaae. If data are Missino. the diamond willbe incomolete.

Note: 1998 data are preliminary estimates.

The diamonds show four kev indicators in the countrv (in bold) comoared with its income-arouo averaae. If data are missina. the diamond willbe incomolete.

Page 83

Vietnam

PRICES and GOVERNMENT FINANCE

Domestic prices 1977 1987 1997 1998 Inflation (%)

(% change) 40Consumer prces 3.2 7 .8 30

Implicit GDP deflator 365.6 5.1 6.5 20

Government finance |0

(% of GDP, includes current grants) |Current revenue 14.2 20.4 20.7 93 94 95 94 97 99

Current budget balance 0.0 5.3 5 -GOP deflator 5CPOverall surplus/deficit - -0.6 -0.5

TRADE

(US$ millions) 1977 1987 1997 1998 Export and Import levela (US$ nillions)

Total exports (fob) 610 8,955 10,379 20,000

Rice 927Fuel 1,443 15,000Manufactrres

Total imports (cif) 1,184 13,466 17,443 10,000Food 7,0Fuel and energy

Export price index (1995=100) .. .. .. 94 95 95 97

Import price index (1995=100) .. .. .. .. m Exports U ImportsTerms of trade (1996=100)

BALANCE of PAYMENTS

(US$ millions) 1977 1987 1997 1998 Current account balance to GDP ratio (%)Exports of goods and services 11,841 11,997Imports of goods and services 13,841 13,526Resource balance -2,000 -1,529

Net income -94 -632 4Net current transfers 27 712 950 I I ICurrent account balance -592 -1,920 -1,292

Financing Rems (net) 295 2,236 1,307Changes in net reserves 297 -316 -15 -121

Memo:Reserves including gold (US$ millions) .. .. 94 -524Conversion rate (DEC, local/US$) I 1,900.0 12,580.0

EXTERNAL DEBT and RESOURCE FLOWS1977 1987 1997 1998

(USS millions) Composition of total debt, 1998 (USS millions)Total debt outstanding and disbursed 0 191 21,629 22,437

IBRD 0 0 0 0 - G- 227 C1

IDA 0 60 569 851 :,1 c:391_ :419

Total debt service 0 2 907 1,087IBRD 0 0 0 0IDA 0 0 4 5 F: 4,421

Composition of net resource flowsOfricial grants 207 41 222Official creditors 0 -1 382 1,092Private creditors 0 0 287 -36Foreign direct investment .. 1,800 1,200Portfolio equity 0 0 -94 E 14,08

World Bank programCommitments 0 0 466 427 A - IBRO E - BilateraiDisbursements 0 0 181 254 B-IDA D-Other rutjiateral F - rvate

Prindpal repayments 0 0 1 1 C - IMF G -Shor-terrnNetflows 0 0 180 253Interest payments 0 0 3 5Net transfers 0 0 177 248

Development Economics 9/13199

Page 84

Annex 10: Summary of Resettlement Action Plan

1. The Resettlement Action Plan (RAP) prepared for the Coastal Wetlands Protectionand Development project (CWPDP) offers a detailed census of Project Affected Households(PAH) and identifies all project impacts on land and properties. The document alsoestablishes a compensation policy and relative entitlement/rehabilitation frames which fullysatisfy the requirements of WB OD 4.30 on Involuntary Resettlement. Finally, the RAPoffers a detailed account of the implementation features and procedures of the resettlementprocess. This account includes: (a) an assessment of the replacement land needed andavailable; (b) an identification of the 30 commune villages receiving resettlers; (c) adescription of RAP organization and staffing features; (d) an account of consultation,participation and public informnation activities; and e-frames/schedules; and (e) costs.

2. When the RAP was completed and the full dimensions of the resettlement programbecame apparent, the project was reclassified from environmental screening category B to Aand supplementary environmental field studies were commissioned to evaluate the potentialenvironmental effects of the resettlement plan. These studies were carried in a sample ofcommune villages receiving resettlers between July and August, 1999. The objective was todetermine whether there were any potentially significant environmental dimensions to theprogram that had not been accounted for in project planning to that time. The results of theenvironmental studies are outlined in Annex 11, but, in summary, the investigations indicatedthat there were potential environmental issues in some locations that would require mitigationand monitoring. As part of the recommended mitigation measures, it was recommended thatno element of the resettlement plan should be initiated in any village without certain fieldinvestigations, along the lines of those undertaken in the supplementary environmentalassessment, being completed for that village. The purpose of the additional fieldinvestigations would be to ensure that proposed resettlers could be accommodated in anenvironmentally satisfactory way. The indications from the initial environmentalinvestigations were that, in general, this could be achieved but it may require modifications tothe implementation details of the RAP in terms of either programming or in the exactallocation of resettlers amongst potential commune villages receiving resettlers.

3. The programming issue was responded by extending the duration of the project andby establishing a more systematic and gradual implementation process. The new schedulewill provide more time for on-site environmental investigations to be used for detailedimplementation arrangements. Notwithstanding the programming and management changesproposed, the basic framework of the RAP remains unchanged. The RAP was foundsatisfactory to the Association and approved by the Prime Minister's Decision No. 367/CP-NN dated April 10, 1999 and the Decision No. 1336-BNN-HTQT/QD of the Borrower'sMinistry of Agriculture and rural development dated April 19, 1999.

4. The text below is divided in two sections. Section one summarizes the original RAP.Section two accounts for the changes in RAP design that were prompted by the EA.

A - THE RESETTLEMENT ACTION PLAN (RAP)

5. Given the damage to the mangroves by poor farmers living in the FPZ and the severedecline in coastal fishery productivity linked with mangrove destruction and eco-system loss,

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the resettlement of FPZ households will be necessary to preserve the mangrove ecosystemand allow for its rehabilitation. Every effort has been made to reduce unnecessary involuntaryresettlement. First, the boundary of the FPZ was drawn to minimize interference withexisting habitation and land use for agriculture. Second, the following groups of FPZ settlerswere allowed to stay: (a) fishing families living near river mouths; (b) families living in fastaccretion areas (other than the coastal areas of the Bai Boi Fish Sanctuary) because theywould in years to come become buffer zones; and (c) families fartning on elevated sandysoils, where mangrove planting would not be economic.

6. To ensure that Project Affected Peoples/Households or PAPs (this term refers toindividuals, families, firms or institutions) will be adequately compensated for their lossesand provided with rehabilitation and compensation, a Resettlement Action Plan (RAP) hasbeen prepared in accordance with OD 4.30 on Involuntary Resettlement. The RAPincorporates agreements reached with the four project provinces on the number of PAP to beresettled from the FPZ. The implementation of the RAP is a specific component of theproject. A condition for negotiations would be the submission of a GOV approved RAPwhich is acceptable to IDA.

7. A detailed 100% sample socio-economic survey undertaken in December 1996-January 1997 established the number of FPZ occupants in Ca Mau (1723), Bac Lieu (336),and Tra Vinh (448) at 2663. A 100 % socio-economic survey for Soc Trang undertaken inAugust 1998 established that the number of FPZ occupants in that province is 1,414. Thesurveys registered number of families per hamlet, average family size, occupation, income,ethnicity, children at school age, working members, land holdings and land use, access tosocial infrastructure and estimated losses as regards land (homestead, agricultural,aquacultural, forested) structures (houses, shops, animal houses, private wells, sluicestombstones drying areas) and crops and trees.

8. Following various changes due to modifications in resettlement strategy in October1998, the number of PAP to be resettled has been fixed at 2,149. These include all PAPresiding in the FPZ except for households: (a) living near river mouths; (b) living in fastaccretion areas; and (c) living in elevated areas where mangrove planting would beuneconomical. Details are presented in Table I below.

Table 1- Total number of PAP/FPZ inhabitants

Province PAP FPZ inhabitants

Ca Mau 1,175 1,723Bac Lieu 264 336Soc Trang 442 1,414Tra Vinh 268 268

Total 2,149 3,741

9. Before the socio-economic survey was carried out, all Commune People'sCommittees were fully briefed. During this phase, Provincial/District authorities and the PAP

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representatives made constructive comments on issues relating to project design andresettlement tasks. The 100% socio-economic survey has been prepared in close coordinationwith provincial authorities and was conducted with participation of Commune andforest/fisheries enterprise officials. Resettlement workshops have been held (October 1997and June 1998) in which extensive comments of the provinces were received andsubsequently integrated in the Resettlement Action Plan.

Legal and Policy Framework

(a) The RAP reflects the new Decree 22/CP, effective form May 9, 1998.Although Decree 22/CP comes closer to meeting international standards,there are still gaps relative to OD 4.30 on Involuntary Resettlement, whichhas been used as the basis for the project's compensation policy. Differencesbetween the Decree 22/CP and the OD 4.30 relate to eligibility andcompensation rates.

(b) Concerning eligibility, the OD 4.30 considers all PAPs as fully entitled tocompensation. The Decree 22/CP, instead considers as entitled to fullcompensation only PAP holding: (a) a permanent or temporary land usecertificate from the District Land office; (b) a permanent or temporary landuse certificate issued by the relevant FFE; (c) proof of employment with theFFE; and (d) proof of residency in affected areas pre-dating October 15, 1993(see Decree 45 CP of 3/8/96).

(c) On compensation rates, OD 4.30 requires full compensation at substitutioncost for land, houses and trees and compensation at market rates for cropsThe Decree 22/CP, instead requires depreciation deductions for housecompensation and bases compensation rates for crops on provincial tariffswhich may differ from market prices.

10. Project specific waivers of points where Decree 22/CP differ from OD 4.30 wouldhave to be included in the Prime Minister approval of the project. (These pertain tocompensation and rehabilitation approaches for various type of PAPs and how rehabilitationshould be implemented and monitored, for which IDA requirements are more generous).Moreover, prior to project implementation, all compensation prices will have to be checkedand, if necessary, changed to correspond to substitution and market rates as required by thisRAP.

11. According to the RAP policy, all PAPs with and without legal papers accounted inthe RAP inventory of affected families, or able to prove their residence in affected areas priorto RAP cut-off date, are to be considered as legitimate and therefore eligible to fullcompensation for their losses. The cut-off date is the date of the final count of the PAP ineach province. This date is March 15, 1997 for Ca Mau, Tra Vinh and Bac Lieu provinces,and August 31, 1998 for Soc Trang province.

12. PAPs who moved in project areas after the cut-off date will be considered as illegaland therefore will not be eligible to compensation. They will, however, receive some basicrehabilitation provisions.

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13. Compensation varies according to entitlement category and type of loss as follows:

(a) Productive land will be compensated at substitution rates in terms of land forland arrangements with land of equal area and/or productivity to land lost.

(b) Residential land will be compensated at substitution cost in terms of land forland arrangements with plots of equal area to land lost but never smaller than200 m2 .

(c) With the exception of PAPs who own a second house in the BZ, houses willbe compensated in kind with a standard type four house of 50 m2 . In case thetype house lost is of higher quality than type four compensation will bedelivered in cash at substitution cost free of depreciation, salvaged materialsand demolition costs.

(d) House compensation for PAPs owning a second house in the BZ will becompensated at substitution cost free of depreciation, salvaged materials anddemolition costs.

(e) Illegal PAPs (as defined in the RAP) will not be compensated for productiveland losses. However, in order to help them in the relocation process, theywill be eligible to a rehabilitation residential plot of at least 60 M2 . IllegalPAP shall not have to pay demolition costs nor be fined or sanctioned andwill receive ownership certificates for their rehabilitation plots.

(f) General provisions for all legal PAPs include: (i) Certificates of landoccupancy for agricultural replacement plots and full ownership certificatesfor replacement residential/commercial plots; (ii) Annual crops/fish producelost will be compensated in cash with a sum equal to average production inthe last 3 years multiplied by relevant market prices at compensation time;(iii) Tree losses will be compensated in cash. This will cover total investmentcost plus production cost from time of planting to time of expropriation. Ifthis cost cannot be determined, compensation will be fixed at 2 yearsproduction, calculated on the basis of average production during the last 3years, multiplied by fruit market prices prevailing at resettlement time; and(iv) Tenants will receive a 6 months rent allowance and assistance fromlocal authorities in finding new accommodation.

(g) All legal PAP are entitled to the following allowances: (i) Transport. Boatand/or truck transport will be put at the disposal of all relocating PAP so as totransport household effects, salvaged and new building materials to the newresettlement site. Transport will provided in kind and is budgeted at US$77per household; (ii) Subsistence. Each PAP will receive food support equal toUS$30 per month for 6 months; (iii) Training. One member for each PAPwill be entitled to a vocational training course to enhance householdproduction or facilitate employment search. The allocation for this purpose isUS$100 per PAP to be paid directly to the training institution; (iv) Businessallowance. Affected businesses will receive cash compensation for lostrevenues equal to six month of average income to be defined by PAP and

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VPC Chairman or a fixed allowance for lost business of US$100; and (v)Relocation Incentive. All PAP relocating in accordance with the schedule asproposed by the Project Management Board will receive a bonus of US$77.

(h) Illegal PAPs will receive a US$30 transport allowance to move salvagedmaterials and to transport their goods to their relocation site.

Rehabilitation

14. All PAP will need residential replacement land as defined in the above policy.Compensation for agricultural land will be provided only to current entitled landholders.These are PAP involved in farming, forestry and aquaculture (49% of PAP). The remainingPAP are fishermen, hired laborers, and public sector employees.

15. Community infrastructure and buildings will be provided, if adequate infrastructure isnot available near the resettlement sites. Infrastructure costs have been estimated based onmodules housing 300 families. Each module contains access roads, internal roads, drainagecanals, power lines, a transformation station, a community water supply system, a primaryschool, and a public health station. The costs of topographic surveys, land leveling and sitepreparation have also been included. The total cost per module is US$310,000 or US$1,030per family. In addition, ponds for aquaculture will be constructed or existing ponds will berehabilitated for families formerly engaged or wishing to engage in aquaculture.

16. The resettled families will also benefit from social support grants and the socialsafety net under the project's social component, as well as from extension and credit underthe TDT component. Special needs of the Khmer minority will be satisfied by an EthnicMinorities Development Plan (EMDP.) As well, re-forestation programs under the projectwill give priority to PAPs in labour recruitment. In addition, training will be provided to onemember of each PAP.

Implementation and Land Requirements

17. Following a request from the World Bank, the four project provinces have presentedpreliminary plans for resettlement of FPZ occupants in the BZ. Productive and residentialReplacement land availability has been selected by means of a map-survey. A detailedassessment of the quality of the areas selected will be conducted in parallel with the detailedmeasurement survey at the beginning of project implementation. The selected resettlementsites are as follows:

(a) Ca Mau Province. Ca Mau Province confirmed the availability of sufficientreplacement land to compensate all 1,175 PAP and has presented a majorresettlement program which includes resettlement of all occupants of the FPZ.With Ca Mau Province, agreement was reached to resettle all families livingin the FPZ in the buffer zone nearby (West coast) or in resettlement areas'(fishing Communes) at Song Doc, Cay Tho, Trai Luoi, Ong Tran, Rach Tau,Rach Goc, Bo De - Xin Thu and Ho Gui. The PPC of Ca Mau Province hasstated that the PAP will receive replacement land which is thus far unusedand owned by the province. The source of replacement land in Ca Mau will

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be existing State farms that will be redistributed to the PAP. An agreementwith State farms is yet to be obtained.

(b) Tra Vinh Province. The resettlement plan of Tra Vinh for a total of 268PAP is as follows: (i) Hiep Thanh commune: 27 PAP will move into the BZnear Bao and Cay Da hamlets; (b) Dau Thanh Commune: 30 PAP will moveto the BZ near Mau and Lang Chao hamlets; and (ii) Dong Hai Commune:the 211 PAP will move to Ho Tung and Phuoc Thien hamlets, to Vinh Loiriver mouth, and to Ho Tau and La Ghi hamlets. The RAP reportsreplacement land requirements, availability and source for each commune.This information is summarised in table 2 for the province as a whole

(c) Bac Lieu Province. The resettlement plan entails the relocation of 264families so subdivided: 86 in Ganh Hao Town; 77 in Long Dien TayCommune; 38 in Long Dien Dong Commune and 63 in Thuan HoaCommune. All PAPs will be relocated in replacement land areas situatedwithin the communes in which they currently reside. The RAP reportsreplacement land requirements, availability and source for each commune.This information is summarised in table 2 for the province as a whole.

(d) Soc Trang Province. In Soc Trang Province it was agreed to resettle 442families living in the FPZ. The PAP will be accommodated in BZ areasadjacent to their present homesteads. In Lai Hoa Commune will be resettled6 PAPs, in Vin Than Commune 18; in Vinh Phuoc Commune 51; in VinhChau Commune 112; in Lac Hoa Commune 24; and in Vin Hai Commune231. Replacement land requirements, availability and source for the wholeprovince are summarized in Table 2.

Table 2 Replacement land demand and availability (by province)

Province Households Required land (ha) Available land (ha) SourceResidential productive TOTAL residential Productive TOTAL

Ca Mau 1,175 30.342 1,537.54 1,567.88 36.37 1,537.54 1,573.91 PublicBac Lieu 264 7.92 1,056 1,063.92 7.92 1,056 1,063.92 PublicTra Vinh 268 7.32 380.00 387.32 10.00 440.00 450.00 PublicSoc Trang 442 9.88 186.91 196.79 46.39 399.81 446.20 Public

Schedule

18. The CWPDP differs in character from other projects in that resettlement is notpreceding major infrastructural works (hydropower development or road or waterwayconstruction), but is an integrated coastal resource management project. Therefore, theimplementation schedule for resettlement can be defined so as to enable a well-preparedrelocation process with logical sequential steps.

19. While the overall CWPDP implementation schedule remains to be determined, thenature of the project allows for a structured implementation of the resettlement component.Resettlement in each specific area will adhere to a standard timetable allowing for low- andno-activity periods during the rainy season and the Tet holiday. The standard resettlementtimetable will be as follows:

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(a) Replacement land preparation (5 months from end of rainy season inNovember to March),

(b) House construction (5 months from January to May)

(c) Actual resettlement process (6 months from mid-April to mid-October)

(d) Buffer period (6 months from November to April in which the PAPs will bestill allowed to cultivate the old plots before evacuation date)

20. In order to safeguard PAP needs, the relocation period will entail the followingdeadlines:

(a) Replacement land and houses shall be ready to occupation at least 1 monthbefore actual delivery to the PAPs.

(b) Notification of compensation shall be delivered to the PAPs at least onemonth before compensation delivery and at least one month after theyvisited/selected their new plots.

(c) The transitional period (from compensation delivery to deadline for theoccupation of new land and house) will be 6 months.

(d) The PAPs will be allowed to continue the exploitation of their old productiveplots for six months after the deadline for the occupation of the new land.

(e) The deadline for old land evacuation shall be set one month before the land isoccupied by the project.

Public Information, Consultation and Participation

21. The PAP have been, and will be, informed of the details of therelocation/compensation process throughout the entire resettlement process. In particular:

(a) They were already informed about their upcoming resettlement during thesurveys undertaken in December 1996-January 1997 (followed by a secondsurvey in August 1998 for Soc Trang).

(b) At the beginning of project implementation, the population at large (of theaffected provinces) have been notified regarding the details of project policyand implementation. This was conducted by means of news papers, radioannouncements and by posters posted in important public locations.

(c) Finally, after the PAP have visited and chosen their replacement land plotsthey will be informed again of their respective compensation entitlements,including location of replacement houses and land and of the modalities ofrelocation, including of the various relocation process dead-lines.

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22. As for consultation and participation, the PAPs where and will be repeatedly asked tocontribute with their ideas to the definition/implementation of the resettlement andrehabilitation component of the project. In particular:

(a) They were already consulted during the implementation of the socio-economic survey.

(b) Consultation/participation functions will continue throughout the entireproject implementation period. This will occur (i) at the beginning ofimplementation when the PAP will have occasion to chose their replacementplots and (ii) during a public meeting to be organized in each project-affectedcommune at the beginning of the implementation process.

(c) Finally, other meetings will be organized as the Commune Action Plan (CAP)for the definition of the social support, poverty reduction, and EthnicMinorities Development Plan.

Implementation Organization

23. Resettlement tasks will be divided among central GOV and local Governments.Central GOV will carry out inter-provincial coordination functions through the Project FieldCoordination Unit (PFCU) in Ca Mau, and within it through the Social Support &Resettlement Sub-unit (SSRSU). Actual resettlement/rehabilitation tasks in each provincewill be the responsibility of Local People's Committees (PPC) at Provincial, District andCommune level. In order to assure smooth collaboration between the PFCU and the PPCs aProvincial Project Steering Committee (PPSC) will be established in each province. EachPPSC will meet every two months and will gather PFCU-SSRSU, Provincial, and Districtofficers. (The Composition and staffing of the PPSCs and of the SSRSU are outlined in theRAP and the Project Implementation Manual).

24. In order to carry out resettlement and compensation tasks within their jurisdictionsthe PPCs at provincial, district and commune level will establish ad hoc resettlement offices.These will be respectively: (a) the Province Project Management Office (PPMU) and withinit the Province Resettlement Office (PRO); (b) the District project Team (DPT) and within itthe District resettlement Office (DRO), and; (c) the Commune Resettlement Office (CRO.)The PRO, DRO and CRO will plan/implement detailed RAP programs for their jurisdictionsin accordance with RAP policies These entities will be in charge of organizing the variousRAP tasks, including PAP identification, socio-economic surveys, provision of informationto PAPs and administration of all compensation-related matters. (The staffing of PRO, DROand CRO are detailed in the RAP and the PIM).

25. In each Commune relations between the PAP and the local resettlement offices willbe coordinated by the Commune Working Groups (CWG) which will gather the Communeresettlement officer, various representatives of local mass organizations and representativesof local ethnic minorities. The CWGs will meet every two weeks for the entire duration ofresettlement functions in each project affected commune.

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26. Finally, to implement specific short-term and high-intensity tasks on the ground, anumber of task forces will be established in each district. These task forces will include: (a) aDetailed Measurement Survey Task Force responsible to assess the final number of PAPs,affected properties and compensation amounts; (b) a Replacement Land Survey task Forcewhich will gather the data necessary for the identification and evaluation of replacement-land, and; (c) a Multi-purpose Task Force which will carry out several miscellaneousactivities during the resettlement process. Task Forces staffing is outlined in the PAD and thePIM.

27. RAP programs will be implemented in such a away as to ensure that local authoritiesand PAP's representatives participate in planning and decision making processes. The PFCUwill continue the dialogue with Provincial and District People's Committees during theproject preparation period through the PPSCs.

28. The PFCU will advise the PROs, DPTs and CROs in regular meetings. Progressreports will be prepared by these latter agencies every three months. These reports shallspecifically include conventional issues regarding any aspect of RAP formulation andimplementation. The responsible offices shall timely address these issues and formulateguidelines for the task forces as and where required.

29. After project approval a series of meetings will be organized with the planningcommittees of all Provincial PCs. In these meetings a full briefing on scope andconsequences of the project will be given.

30. After the GOV approves the RAP, the PFCU-SSRSU and the PROs will implementan information campaign. This must take place at least I year before actual resettlement andwill be carried out through a pamphlet detailing project facts, RAP features andcompensation provisions, and by means of media announcements. A special version of thepamphlet in Khmer language will be made available.

31. PFCUs-SSRSUs, PROs, DROs and CROs will jointly organize public meetings in allareas affected by resettlement. Minutes of the meetings will be recorded by each DRO andcopies shall be made for the PFCU.

Monitoring

32. The PPMUs are responsible for internal monitoring. Indicators to be monitored areindicated in the RAP. The PPMU will collect inforrmation every three months fromProvincial People's District People's Committees (DPCs). The data base will be up-datedcorrespondingly. Every 3 months the PPMU will submit a report to PRO and WB.

33. The project will also be monitored by an External Monitoring Agency (EMA). TheEMA will be chosen, following the submission of a monitoring plan proposal and relativebudget, by the PRO. Candidates for the position are: (a) The Institute of Social Sciences inHCMC (ISSHO); (b) The School of Agriculture and Rural Development, HCMC; (c) Socialsupport Research Consultancy, HCMC; and (d) The Human Geography Research Center,Hanoi.

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34. The External Monitoring Agency will prepare a trimestral report to be submitted toPRO and WB and detailing: (a) progress in RAP implementation; (b) deviations, if any, fromRAP provisions and principles; (c) identification of controversial issues and recommendedsolutions; (d) progress on the follow-up of problems and issues identified in the previousreport; and (e) a compilation of data on the (i) resettlement sites and commune villagesreceiving resettlers; (ii) post resettlement conditions; and (iii) post resettlement situation.

35. The reports will be discussed by EMA and project authorities immediately after theirsubmission. Necessary follow-up action will be taken based on the problems and issuesidentified during reports and follow-up discussions.

36. Complaints/grievances regarding compensation, relocation or unaccounted lossesshall first be dealt with by the CRO and Commune People's Committee chair. If no amicablesolution is reached, the complaints may appeal to first to the District People's Committee andsecond to the Provincial People's Committee. As a last resort, the complainants may appealto the Provincial Courts. Complaints must be submitted to the Provincial Court no later than15 days after the PAPs have been informed of compensation rates/provisions. Claimssubmitted later will not be considered. The claim will be dealt with in accordance with thenew Ordinance on Complaints and Denunciation of Citizens. All grievance proceduresincluding those at the Provincial Court will be free of charge to the PAPs. No sanctions orfines will be imposed on illegal PAPs.

Costs

37. The total resettlement cost for the CWPDP was estimated at US$16,135.00, includingcontingencies.

38. The list of unit prices has been prepared on the basis of compensation rates forhouses, land and trees as received from the Provinces of Ca Mau (September 1997), Tra Vinh(December 1996) and Soc Trang (September 1997). During a series of field visits these priceswere adjusted on the basis of information received from local officials and individualfarmers. Compensation rates for other structures as tombstones dryer areas, animal houses,wells, sluices and pipes were obtained from local officials and subsequently tested withindividual farmers and with the technicians of the Rehabilitation of Mangrove Forest Project(RMFP).

39. A large portion of the resettlement cost will be provided in kind, mainly in the formof land and houses.

B - UPDATE OF THE RAP

40. Following the change of project environmental category from B to A, a number ofadditional preparation studies were carried out. The results of these studies promptedrelatively minor modifications in RAP design and implementation frames. These changesrelate mainly to the phasing of the implementation period from the original three years to fouryears, with the first year mainly for planning activities and minimal resettlement (about 5%).

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Environmental Assessment (EA)

41. The "Update of the Social and Environmental Assessment of the Vietnam CoastalWetlands Protection and Development Project" (EA) focused in particular on data gatheringactivities in the areas where the replacement land to be delivered to the resettlers is located.These studies included the identification of all commune villages receiving resettlers, acensus of their population, and an assessment of their post-resettlement demographic growth.The EA included the identification of a number of changes regarding the provisional list ofcommune villages receiving resettlers provided in the original RAP. As shown in Table 2,below, the commune villages receiving resettlers list a number of the previously identifiedcommune villages receiving resettlers do not appear in the list while new ones are added. Inall the number of to commune villages receiving resettlers is, according to the EA, 30.

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Table 2: Estimated population and post-resettlement changes in commune villages receivingresettlers household density

Total Change inVillage Cominune Province HH Resettlers HH density

Go Cong Viet Thai Ca Mau 707 56 8%

Cay Tho Dat Moi Ca Mau 220 26 12%

Trai Luoi B Dat Moi Ca Mau 334 71 21%

Ong Trang Vien An Ca Mau 479 71 15%

Rach Tau Dat Mui Ca Mau 689 269 39%

Khai Long Dat Mui Ca Mau 391 88 23%

Xom Moi Vien An Ca Mau 223 83 37%

Rach Goc A Tan An Ca Mau 1915 282 15%

Mai Vinh Tam Giang Ca Mau 1611 72 4%

Hiep Du Nguyen Huan Ca Mau 168 157 93%

Khu Vuc I Ganh Hao Town Bac Lieu 592 59 10%

Khu Vuc 3 Ganh Hao town Bac Lieu 1021 13 3%

Bien Dong A Thuan Hoa Bac Lieu 244 63 26%

Bien Dong B Thuan Hoa Bac Lieu 443 12 2%

Bien Tay Thuan Hoa Bac Lieu 473 12 2%

Diem Dien Long Dien Tay Bac Lieu 570 77 14%

Vinh Dien Long Dien Dong Bac Lieu 210 38 18%

Xung ThumB Lai Hoa Soc Trang 308 6 2%

No Pol Vinh Tan Soc Trang 517 14 3%

Bien Tren VinhPhuoc Soc Trang 324 14 4%

Bien Tren A Vinh Phuoc Soc Trang 416 37 9%

Khu 6 Vinh Chau Town Soc Trang 382 87 23%

Huynh Ky Vinh Hai SocTrang 340 98 29%

Giong Noi Vinh Hai Soc Trang 202 176 87%

Ho Tau Dong Hai Tra Vinh 82 52 63%

Ho Thung DongHai Tra Vinh 179 84 47%

Mu U Dan Thanh Tra Vinh 295 30 10%

Cay Da Hiep Thanh Tra Vinh 240 27 11%

La Gi Long Vinh Tra Vinh 116 55 47%

Phuoc Thien Dong Hai Tra Vinh 253 20 8%

TOTAL 13,944 2,149

42. The EA investigations were complemented by a sample socio-economic surveycarried out in one commune villages receiving resettlers per province in project area. Thissurvey allowed a preliminary comparison of the expected post-resettlement situation of theresettlers and the populations of commune villages receiving resettlers; provided an initialassessment of the quality and land-tenure status of the replacement land to be delivered to thePAPs; and lead to the strengthening of the implementation frames for the commune villagesreceiving resettlers. This sample socio-economic review highlighted the need to undertakemore careful assessments of each commune villages receiving resettlers to reduce the risk of

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creating inequalities between the resettlers and the population of the commune villagesreceiving resettlers. This assessment will be done as part of the detailed planning ofresettlement sites.

43. The EA also indicated that more intensive consultation and planning activities shouldbe carried out in order to properly satisfy both the needs of the resettlers and of thepopulations of the commune villages receiving resettlers. In order to reflect demographicchanges and new situations that may emerge in the period between RAP preparation andactual resettlement, the EA also recommends that additional planning efforts are carried outin the first project year and suggests that the available base-line information andimplementation schemes are reviewed each year before beginning any resettlement operation.These observations led the EA to conclude that the proper implementation of the resettlementprograms would require a revision of the RAP schedule including the extension of the RAPimplementation period from 3 to 4 years. Such an extension would both allow the use of thefirst year of the project for more extensive preparation work and a more gradualimplementation process the following years. At Negotiations, an understanding was reachedon the need to change the phasing of the RAP.

Implementation Plan

44. Following these initial investigations several changes in resettlement implementationframes have been carried out as reflected below:

Modifications in Project Schedules

45. The most important change has been the extension of the duration of resettlementprograms from 3 to 4 years and the adoption of a phased RAP implementation scheme with amuch more gradual start than previously planned. According to the new schedule, the firsteight months of the project (from April to November) will be occupied by preparation workand planning activities. RAP implementation will be gradually carried out starting frommonth ninth of the first year according to a phased scheme entailing the movement of 5% ofthe PAHs during the first year, 20% the second year, 50% the third year, and 25% the fourthyear. To support this phased resettlement program, 25% of the final planning and sitepreparation work will be done during Year 1, 50% during Year 2, and 25% during year 3. Achart indicating the related schedules of resettlement activities and mangrove planting inincluded in table 3 at the end of this annex.

Data Verification Activities

46. A general review will be carried out in the first three months of projectimplementation over the whole project area. The objective of this review is to provide theenvironmental, social and technical information necessary to lay out the phasing schemeabove described and, in particular, to validate commune villages receiving resettlers targetedby the resettlement programs in the first and second year of project implementation. Thetiming for the relocation of each group of resettlers will be decided on the basis of severalfactors among which: (a) manageable number of PAPs, (b) degree by which replacement landcan be readily used; (c) time needed for the construction of infrastructure needed by resettlersand commune villages receiving resettlers; (d) distance between the resettlers originalsettlement and the commune village receiving resettlers; (e) readiness of the resettlers tomove and readiness of the commune villages receiving resettlers to receive them. The

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general review will result in a Resettlement Implementation Report (RIR) prepared by eachrespective Provincial Resettlement Office (PRO) at the end of the third month of the projectand will include public consultation with a Stakeholders Representation Group (SRG) electedby the inhabitants of each conmmune village receiving resettlers. The RIR will need to beapproved by the PPMU, the CPO, and the MARD followed by a no objection note from theBank.

47. The work will include of a yearly review of the RIRs for each group of resettlers andrelative commune village receiving resettlers will be verified by means of ad hocinvestigations and by means of consultation/participation activities. The information to beverified for the phased implementation program for the RAP will include:

(a) a Detailed Measurement Survey (DMS);

(b) an up-date of the compensation/rehabilitation rates;

(c) a review of the availability/quality of replacement land and a detailedhydrological/geological assessment of the water resources in communevillages receiving resettlers;

(d) a review of the housing plans for the resettlers;

(e) A review of the infrastructure and services needs of the post-resettlementcommunities;

(f) a review of eventual changes in programs suggested by the outcomes of thetechnical investigations and of the consultation/participation meetings; and

(g) a final assessment of the commune villages receiving resettlers readiness toreceive the resettlers and of the resettlers readiness to move in the scheduledcommune village receiving resettlers.

48. This information will be collected in a Village Action Plan (VAP) to be developedunder the direction of the respective PRO and resettlement Committees. The VAPs willinclude all PAPs to be resettled in the year in a respective village. For the 5% PAPsscheduled to move the first year, the VAP will be carried out in parallel with the PIR.

49. Annual VAPs will have to be approved by MARD prior to implementation of theseplans.

Modifications in assistance programs for commune villages receiving resettlers

50. In order to expand the attention given by the project to the to commune villagesreceiving resettlers, part of the funds delivered by the Communal Development Fund will beearmarked for the direct benefit of the commune villages receiving resettlers. Such funds willbe used by the commune village receiving resettlers to accomplish a 100% registration ofvillage lands, for the development of commune infrastructure, and for services to be chosenby the villagers themselves in accordance with the criteria and options noted inSubcomponent (a) of the project's Component 3. The amount of funds from the Commune

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Development Fund to be distributed to commune villages receiving resettlers has beencalculated at a total of US$1.63 million. These funds will be distributed to each village inproportion to the number of their post-resettlement population and in such a way to reflectthe post- resettlement demographic increase of each village. In addition, there are similarresources for these activities and infrastructure development included under the RAP for eachPAH moved.

Costs

53. The changes in project implementation schedule described above will result in achange in costs. With the new schedule the total estimated cost of compensation andrehabilitation programs will be US$16.2 million or an increase of about US$0.3 million dueto price contingencies associated with the longer implementation period for the RAP.

Annex 10 - Table 7.1: Schedule: Resettlement Action Plan

ACTIVITY II 1 I VvV

PreparationPMU establishmnentPRB estallishtmrntResetl-emet Cammotttec establhltabensEns. M4onitaning Agency establishmentBriefintg ofPRCIDRC/VRC ~Task force trainingGaneral planning r-nte (PIRsIEstablishmet nfSRlIl

t,choical/SOciaassssm-easCesettatian with SRGsP`eesnsatian ofPIE so MARD and Bank Detiled planning (VAPs) 1' ~ 354,s"I

DMbI preprtion nod iMPte-mctionCantattatinn/participation mneetingsC,ompensain ealcalatira IisformtioaPeed replaceme antod (mapafs-,,ys)Ra, replacemnent land (mlap-/arey's)Watper-rtnoees satv.y asVAPs rsntto to MARD and Bank tOlb

Po,rplaceme.nt land preparation tO

Ret. erpla--met plots preparationNosehilding

PAPa visits ta replacement tandlplotsLan tiling

Ineatracto-re building in host vitlg-oNtficationil;

Compoain Floaceoamnla"plmeotatiano-ftaining peonamMon.itoring and -val-aion -Routine participation/eOnSaIttaioo Besttlem,entp pcnen

Ocoaion. ofn,wprodarsivpe. plotOccapation of.ne ho-srE-aq-tian old PTadoctiv- plotsEvaq.anson old ho-ses

Other P-ojeet ActIvties

Mangrv ,plantin (in -rsttment areas)social drvrtopt.ee...afrty o7aho.ic ioiislrvlpctPa

S The lines across the chart distinguish between yearly resettlement cyclesindicate separate eachb resettlement

Page 100

Annex 11: Environmental Assessment and Action Plan Summary

Overview and Context:

1. The Coastal Wetlands Protection and Development Project (CWPDP) is a social andenvironmental mitigation project. It is designed to restore the mangrove ecosystem of thecoastal zone of Mekong Delta of Vietnam, and improve the standard of living of peopleliving in four Delta provinces. Thus, the overall impact of the CWPDP is expected to be bothsignificant and positive. The need for restoration and improved protection of the mangroveecosystems in the Mekong Delta was identified in the Mekong Delta Master Plan'4, aregional development-cum-environmental protection plan which the Government of Vietnamand the World Bank have used for guidance on sustainable development options for the deltaregion, and in the Vietnam Environmental Sector Strategy (1995)15, which has also providedguidance for the Bank's overall environmental investment program in Vietnam.

2. The CWPDP has three primary objectives: (a) re-establish the coastal mangrovewetland ecosystems and sustain their habitat and coastal protection functions in the SouthernMekong Delta provinces of Ca Mau, Bac Lieu, Soc Trang and Tra Vinh; (b) improve theeconomic and stable use of land in the buffer zone; and 3) improve the social and livelihoodstatus of impoverished communities to reduce exploitation of mangrove ecosystems ofFPZ16. Originally the CWPDP was classified as a IDA Category B EA for which theEnvironmental and Social Review of the Buffer Zone Component (GEC Ltd. 1996) wasprepared in order to satisfy Bank EA requirements. The potential adverse environmentalimpacts identified in the Environmental Review were restricted to organochlorine pesticideresidues from intensive horticulture practice, and erosion and siltation from pondrehabilitation activities. Mitigation measures and monitoring requirements were specified forthe CWPDP. These results were carried forward to the recent EA update.

3. However, as preparation of the project progressed, it became increasingly apparentthat, to achieve the environmental objectives, the scale of resettlement required would besubstantially greater than originally envisaged. The resettlement plan that was finallyassessed as being necessary will require relocation of approximately 2000 households fromthe area of mangrove rehabilitation inland to the defined buffer zone. This raised thepossibility that the resettlement program might itself be a source of adverse environmentalimpact and, accordingly (a) the project was reclassified into environmental screeningcategory A; and (b) additional environmental assessment work was carried out to assess, inparticular, the impact potentials of the resettlement program and, as required, specifyenvironmental management and monitoring procedures to be incorporated into projectdesign. This necessitated preparation of the Update of the Environmental and Social

14 Mekong Delta Master Plan (VIE/87/03 1). Thematic Study of Environmental Impacts. November 1992; MainReport Environmental Profile: Pages 65-66.Is Vietnam: Environmental Program and Policy Priorities for a Socialist Economy in Transition (1995), ReportNo. 132000-VN, World Bank, Washington, DC (2 Volumes)16 From Resettlement Action Plan for CWPDP.

Page 101

Assessment of the Vietnam Coastal Wetlands Protection and Development Project(GEC/ESSA, 1999).

4. The focus of the Update was on the RAP because: (a) the RAP represented the onlysignificant change to the Project since the 1996 Review; and most significantly; (b) the RAPforms the pivotal component the CWPDP that will be a major determinant of the overallsuccess of the CWPDP. The success of the CWPDP depends on whether replantedmangroves are left alone to restore ecosystem diversity and delta stability. The socialwellbeing of the integrated resettler and to commune villages receiving resettlers, i.e., thesuccess of the RAP, will determine whether resettlers return to the full protection zone. Thusthe success of the CWPDP is heavily dependent on the success of the RAP.

5. The CWPDP is one of three water resource based studies being conducted by theBank on the Mekong Delta. The Inland Waterways and Port Rehabilitation Project, and theMekong Delta Water Resources Development Project are focusing on hydrology, watersupply and transportation. While coastal ecosystem diversity and the RAP are unique to theCWPDP all three projects share the goal of poverty reduction.

Potential Environmental and Social Issues of RAP

6. Potential adverse environmental impacts of the RAP were assessed during the (a) SitePreparation and (b) Arrival and Integration phases of the RAP. Potential impacts arisedirectly from density effects of enlarged populations on the commune villages receivingresettlers, and indirectly as a response to the ultimate socioeconomic well being of theintegrated resettler and to commune villages receiving resettlers. Example potential densityeffects are degraded surface and groundwater quality, and inadequate domestic wastetreatment. Potential socioeconomic issues that could arise from the RAP stem frominequalities in standard of living, income, and employment, which could lead to dissatisfiedresettlers and continued exploitation of the BZ and FPZ environments. Some key potentialenvironmental effects and social issues, and mitigation measures are summarized in the TableA1.1.

Environmental Monitoring

7. Environmental and social monitoring of the realized effects of the RAP and of theoverall success of the CWPDP will begin with baseline surveys of environmental conditionsof resettlement areas. Socioeconomic data collected during the RAP and as part of the EAUpdate will be reviewed and verified during the first year of the project. It is critical that thepre-resettlement baseline water and groundwater quality and quantity are determined.

8. In addition to monitoring resettlement, the effect of the CWPDP on water quality,fisheries diversity and productivity and mangrove rehabilitation in the full protection zonewill be monitored. Table A 11.2 summarizes the monitoring framework for the CWPDP.

Annex 11 - Table Al 1.1: Some Key Potential Environmental Impacts and Social Issues, and Mitigations

Potential Environmental Impact Mitigation ImplementationOr Social IssueDegradation of surface and groundwater water During Site Preparation standard civil PPMU, and PMCU to take responsibility forquality construction practices that prevent erosion and managing Site Preparation phase.

sedimentation, and contamination from Local institutes (SIWRR, EPC, CTU, CEFINEA)construction materials such oil, lime, chemicals to in conjunction with DOSTEs and MARDsetc. should be applied take responsibility for collecting baseline waterDomestic waste treatment facilities (e.g., simple quality, and for determining groundwater supply.septic tanks, or double vault latrines) should beprovided to resettlers. Facilities should be locatedaway from ponds and canals.New wells construction should not interfere withquality or operation of existing wells.Procedures for disposal of solid waste, such as in Xdesignated land fill areas, should be instated inresettlement areas to offset the increase inpopulation density.

Depletion of groundwater leading to land Number and location of new wells should be The SIWRR with assistance of internationalsubsidence located based on results of hydrogeological study consultants should take responsibility.

of groundwater availability in resettlement sites

Insufficient domestic waste treatment on human As already stated for water quality degradation, SIWRR in conjunction with PPMU and PMCUhealth provision of adequate household waste treatment

facilities are required.Strain on social services and infrastructure from Resource needs of resettlers need to be PPMU, PMCU with direct assistance fromincreased household density determined before resettlement. Inventories of community leaders should take responsibility.

commune villages' receiving resettlers socialservices (education, medical services) andinfrastructure services (water supply, electricity,roads) should be compiled.

Potential Environmental Impact Mitigation ImplementationOr Social IssueUnrest created from resettlers being given Ensure resettler & the households in commune Bank, and GoV must determine the extent toreplacement houses that are superior to houses of villages receiving resettlers end up with similar which housing can be equitable.the villagers in commune villages receiving quality houses. 1) Upgrade houses in communeresettlers. villages receiving resettlers to the level

equivalent to Standard Type 4 house, or 2) Onlyprovide resettlers with houses equivalent tohouses of commune villages receiving resettlersif less than Standard Type 4.

Resettler unemployment due to occupational Maximize match between occupations of PPMU, PMCU with direct assistance fromincompatibility of resettlement site resettlers and opportunities in commune villages community leaders should take responsibility.

receiving resettlers. Carefully reviewcompatibility of proposed resettlement sites withresettlers before resettlement

Disparate land allocation commitments leading Police the actual allocation of land to resettlers to Provincial Peoples Committees, MARD, andto resettlers being given inadequate land by local ensure that it is the same as planned in RAP. Bankauthorities -

Cumulative effects of social and environmental Phase RAP over time to allow learning, and Bank in conjunction with GoVissues and impacts listed above on success of enabling mid stream modifications if necessary.RAP

Annex II - Table A11.2: Project Monitoring Framework

Issue Indicators to Monitor Location of Monitoring Frequcncy of Monitoring

ENVIRONMENTAL

Success of buffer zone activities Fish and invertebrate species Fisher and index surveys of inshore Quarterly harvest surveys,on marine environmental quality abundance and offshore fish harvest in FPZ biannual index surveys

adjacent areas of mangroverehabilitation including canals

Mangrove rehabilitation Area of successfully replanted Surveys in FPZ and BZ Once per yearmangroves. Total area of mangroveforest.

Surface and groundwater quality Physical & chemical parameters: Representative pond(s) and canal(s) of Quarterlysuspended solids (SS), nutrients (TN, each resettlement site before and afterTP), faecal coliform bacteria, resettlement, coastal sites in FPZbiochemical oxygen demand (BOD), X

select metals, common pesticides £0

Groundwater depletion and land Groundwater supply, land slumping, Resettlement sites Quarterly in year first then bi-.subsidence standing water annually

Risk of aquaculture disease Incidence of disease, aquaculture Representative aquacultural pond in Midway and at harvest ofproduction each resettlement site aquaculture crop

Pollution from human waste See recommendations for waterpollution _

Human waste impact Incidence of waterbome disease (e.g., Resettlement communities Quarterly reporting bydiarrhea ear, skin infection, diseases community leadersin infants

Drinking water quality See water quality and human waste

Issue Indicators to Monitor Location of Monitoring Frequency of Monitoring

SOCIAL

Household density Density of households commune 20 - 30 households in all buffer zone Once prior to resettlement, andvillages receiving resettlers before and hamlets receiving resettlers once per year after resettlementafter resettlement. Accessibility ofhouseholds services in communevillages receiving resettlers, (e.g.,education, water, medical treatment)prior to and after resettlement

Preferential housing Comparison of floor, roof, and wall 20-30 resettlers' houses and 20-30 Once prior to arrival oftypes of resettlers houses in commune houses in each commune village resettlers, and after lst yearvillages receiving resettlers receiving resettlers.

Occupational compatibility Unemployment level, change in 20-30 resettlers in each commune Once per year afterresettler income FPZ, intrusion villages receiving resettlers FPZ of resettlementrate/level to FPZ resettler communities Once per year after

resettlement

Disparate land allocation Official land allocation commitment All resettlers in the Project At resettlement and within first

commitments (area, location) by GOV vs. actual six monthsland holding of resettlers

Effects of land tenure, resource Proportion of population with legal, 20 to 30 randomly selected Once per year after

use rights signed tenure to land holding (red, households in each commune village resettlement.green, or provisional certificate), with receiving resettlers.accompanying survey map oflandholding.

Human health Incidence of malaria, infectious and Health centres serving settlement Before resettlement, andcontagious diseases, infant mortality sites, and centres in BZ not serving biannually thereafterrate resettlers

Impact on existing transport Congestion in canals and on roads. All commune villages receiving Once prior to resettlement,routes resettlers once per year thereafter.

Issue Indicators to Monitor Location of Monitoring Frequency of MonitoringPreservation of historic remains Number of historic remains All resettlement areas Once prior to resettlement,

(tombstones, pagodas) in the once after resettlement.resettlement area

Number of historic remains that aremoved or destroyed as a result ofresettlement

Cumulative effects of the RAP Incursion rates of resettlers back to the All communities in the FPZ that were Once per yearon the sustainability of the Full FPZ, income levels of commune home to resettlersProtection Zone village receiving resettlers and

resettlers, restoration of social andcultural networks, human healtheffects (as described above) _ __

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