Document of The World Bank

Report No: 30231

IMPLEMENTATION COMPLETION REPORT(SCL-42530)

ON A

LOAN/CREDIT/GRANT

IN THE AMOUNT OF US$ 28 MILLION

TO THE

VENEZUELA

FOR A

ENVIRONMENTAL MANAGEMENT AND CARTOGRAPHY PROJECT

October 14, 2004

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CURRENCY EQUIVALENTS

(Exchange Rate Effective )

Currency Unit = Venezuelan Bolivar (Bs)US$ 1.00 = Bs1,600.00 Bolivar

FISCAL YEAR1997 2004

ABBREVIATIONS AND ACRONYMS

ABRAE Areas Under Special Management RegimeBIRF International Bank for Reconstruction and DevelopmentBM World BankCARTOSURCAS Country Assistance StrategyCORDIPLAN Central Office of Coordination and Planning CSB Centro Simon Bolivar (Simon Bolivar Center)DEA Environmental State DirectionDE State DirectionsEA Environmental Assessment IGVSB Geographic Institute of Venezuela Simon BolivarMARNR Ministry of Environment and Renewable Natural ResoucesMARN Ministry of Environment and Natural ResourcesMF Ministry of FinanceMoE Monitoring and EvaluationMPD Ministry of Planning and DevelopmentNEAP National Environmental Action PlanNGO Non-Governmental OrganizationPNGA National Program of Environmental Management and CartographyPOA Direction General of Planning and Environmental OrderingPOTEV Land Ordering Plan of Vargas StatePNUD United Nations Development ProgramSAGA Autonomous Environmental Management ServiceSIG Geographic Information SystemTDR Terms of ReferencePCU Project Coordination Unit

Vice President: David de FerrantiCountry Director Marcelo GiugaleSector Manager Abel Mejia

Task Team Leader/Task Manager: Ricardo Hernandez

VENEZUELAEnvironmental Management and Cartography Project

CONTENTS

Page No.1. Project Data2. Principal Performance Ratings3. Assessment of Development Objective and Design, and of Quality at Entry4. Achievement of Objective and Outputs5. Major Factors Affecting Implementation and Outcome6. Sustainability7. Bank and Borrower Performance8. Lessons Learned9. Partner Comments10. Additional InformationAnnex 1. Key Performance Indicators/Log Frame MatrixAnnex 2. Project Costs and FinancingAnnex 3. Economic Costs and BenefitsAnnex 4. Bank InputsAnnex 5. Ratings for Achievement of Objectives/Outputs of ComponentsAnnex 6. Ratings of Bank and Borrower PerformanceAnnex 7. List of Supporting Documents

Project ID: P035743 Project Name: Environmental Management and Cartography Project

Team Leader: Ricardo Hernandez TL Unit: LCSENICR Type: Core ICR Report Date: October 14, 2004

1. Project DataName: Environmental Management and Cartography

ProjectL/C/TF Number: SCL-42530

Country/Department: VENEZUELA Region: Latin America and the Caribbean Region

Sector/subsector: Central government administration (81%); Sub-national government administration (19%)

Theme: Environmental policies and institutions (P); Decentralization (P); Civic engagement, participation and community driven development (P); Administrative and civil service reform (P)

KEY DATES Original Revised/ActualPCD: 01/23/1996 Effective: 03/24/1998 06/08/1998

Appraisal: 04/30/1997 MTR: 06/25/2001 04/28/2001Approval: 11/20/1997 Closing: 12/31/2002 02/27/2004

Borrower/Implementing Agency: GOV OF VENEZUELA/MARNROther Partners:

STAFF Current At AppraisalVice President: David de Ferranti Shahid Javid BurkiCountry Director: Marcelo Giugale Andres SolimanoSector Manager: Abel Mejia Maritta Koch-WeserTeam Leader at ICR: Ricardo Hernandez Richard M. HuberICR Primary Author: Julio Cordoba

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time:

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The purpose of the project was to strengthen the environmental management in Venezuela such that it contributes to sustainable socio-economic development of the country by: a) strengthening MARNR by improving its capabilities for environmental assessment, management, enforcement of environmental laws and regulations and environmental planning and education; b) strengthening and deepening the decentralization process for environmental management and planning; and c) strengthening institutional capabilities in connection with cartography services.

3.2 Revised Objective:No revisions were made to the project objectives, which remained clear and unchanged throughout the life of the project.

3.3 Original Components:The project comprised the following three components: (1) Modernization of MARNR; (2) Environmental Management at the state and Municipal Levels; and (3) Cartography Modernization.

Table 1. Original allocation of resources

Component GoV(US$M)

Loan(US$M)

Total(US$M)

1) Modernization of MARNR 11.16 16.62 27.782) Environmental Management at the State and Municipal

Levels0.90 5.45 6.35

3) Cartography Modernization 4.94 5.93 10.87Total Project Cost 17.00 28.00 45.00

Project Component 1. Modernization of MARNR - US$27.78 million - 61.7% (total cost of component with contingencies)

The Modernization of MARNR would contribute to support the development of national policies, legislation, regulations, economic incentives, and information systems for (i) environmental protection, monitoring, and evaluation, (ii) integrated environmental and economic planning, and (iii) decentralized environmental management in the country. Accordingly, four Sub-components were identified as: 1a. Environmental Quality; lb. Surveillance and Enforcement; 1c. National Environmental Planning, Environmental Studies and Environmental Education; and 1d. MARNR's Reorganization and Modernization of some Administrative Processes. Their contents were defined along 9 programs:

1. A program to improve the carrying out of EAs and to establish a certification system of firms carrying out EAs through: (a) the review, updating, publication and distribution of manuals on preparation of EAs; (b) the design and implementation of a certification program, including acquisition of equipment and training related thereto, for private firms and consultants to carry out EAs; and (c) the design and implementation of a computerized tracking system for EAs.

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2. (a) The conversion of the existing El Hatillo laboratory into a national reference laboratory including building construction, acquisition and utilization of office, informatic and laboratory equipment and furniture, training and other technical assistance related thereto; and (b) the establishment and operation of a national certification system for environmental laboratories including the acquisition and utilization of office, informatic and laboratory equipment, training and other technical assistance related thereto.

3. Establishment and operation of a department for environmental technology within MARNR including information systems, studies and development of data bases.

4. A program to improve the environmental approval mechanisms, including those for approval for operation of industrial plants, a program to evaluate small- and medium-size industries, the development of an environmental information system and acquisition and utilization of office and computer equipment, training and other technical assistance related thereto.

5. (a) Strengthening of the legal unit within MARNR, including acquisition and utilization of data bases and informatic equipment and related training of legal staff; (b) studies on environmental legislation and regulations to propose adjustments necessary to introduce market-based instruments; and (c) training of selected judges and attorneys on environmental matters.

6. A program to improve the level of enforcement of environmental laws and regulations through: (a) the implementation of a process of self-reporting by industry with systematic checks by MARNR inspectors; (b) the design and operation of an information system to support the above process; (c) the establishment and operation of a system for monitoring compliance with EAs; and (d) the acquisition and utilization of equipment and vehicles, training and other technical assistance related thereto.

7. (a) Implementation of an improved process, including acquisition and utilization of equipment and furniture, training and other technical assistance related thereto and public participation workshops, for updating the existing national and state land use plans to enable MARNR and CORDIPLAN to incorporate principles of sustainable development as the basis for the national development plans; (b) the design of the national environmental action plan including public participation workshops and technical support for the unit within MARNR in charge of preparing such plan; and (c) an environmental education and participation program including evaluation of existing curricula and necessary adjustments, inventory and evaluation of NGOs in the environmental sector, training of teachers and acquisition and utilization of office and informatic equipment.

8. (a) Design, renovation, remodeling and construction of MARNR's central office building; (b) the design and implementation of a management information system to support the planning and budgeting functions within MARNR; (c) the consolidation of MARNR's information systems including upgrading of hardware, software improvements and training; (d) administrative modemization in procurement, disbursements and human resources; (e) upgrading of the communications system between MARNR's central office and regional offices; (f) the establishment and operation of SAGA including the acquisition and utilization of office and

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informatic equipment and data bases, training and other technical assistance related thereto; (g) a training program for MARNR personnel; and (h) studies and workshops to support MARNR's efforts to reorganize its overall organizational structure and decentralize environmental responsibilities.

9. Establishment and operation of the PCU.

Project Component 2. Environmental Management at The State and Municipal Levels - US$6.35 million - 14.1% (total cost of component with contingencies)

The purpose of this Component would be that MARNR could provide improved, high quality and timely services to the private sector (e.g. permitting, environmental impact assessment, and certification), and foster the development of the private environmental services and industry sector. This component would serve as a pilot, demonstration and structured learning experience to facilitate the decentralization of environmental management in Venezuela. Its contents would be:

1. A pilot program to improve environmental management in the Selected States and Selected Municipalities through: (a) the strengthening of the respective environmental agency including acquisition and utilization of equipment and training related thereto; (b) preparation of environmental action plans and their integration into socio-economic planning; and (c) the implementation of a public awareness and community participation program.

2. A technical assistance program to establish the necessary incentives and capacity at the regional and local level in connection with environmental management, such program to include promotional campaigns, preparation of cooperation agreements, state and local environmental action plans, participatory workshops, training of state and municipal staff on environmental management and enforcement, design of the legal framework to enable municipal environmental regulation and enforcement, and monitoring and evaluation of environmental investments.

Project Component 3. Cartography Modernization - US$10.87 million - 24.2% (total cost of component with contingencies)

The purpose of this Component would be to modernize capabilities of the cartography service through the establishment and operation, including studies, training and acquisition of equipment and data related thereto, of a digital mapping base to provide reliable and timely information for governmental functions such as economic planning, regional development, environmental management and national security. Its content would be a program to (i) convert to digital technology such that it can use data collected by satellites for updating information and for producing high quality maps specific to the needs of the different users, and (ii) ensure the preservation of important maps.

3.4 Revised Components:

The project had a slow start in June 1998. The political change in Venezuela of February 1999 brought a new dynamic to the public sector. A new constitution was drafted including important

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definitions about the value and role of the environment and the principles of policies to manage it. During the time needed for these changes the project implementation progressed slowly. A major event -meaningful for the project- occurred at the end of 1999 when a period of heavy rains caused a disastrous landslide in the state of Vargas causing numerous victims. The tragedy of Vargas -as it is called- forcing a reorientation of programs and budgets, which affected the project. The project regained momentum in 2000 after a major reorganization of the MARNR -which changed its name to MARN- in which a Vice-Minister assumed responsibility for the project. After the midterm review mission of June 2001, the project was reshaped: the amounts allocated and the specific activities were redefined and the implementation period was extended from 5 to 6 years. The number and names of components of the project remained the same as the ones in the original design, but the specific activities were redefined, as well as the allocation of resources.

Component 1. Modernization of MARN. This Component was rationalized by reducing the number of activities of the original sub-components. The amount allocated was reduced to US$24.15 million (53.6% of total cost).

Component 2. Environmental Management at the State and Municipal Levels. The Component which originally was directed to contribute to the process of de-centralization of environmental functions to scattered States and Municipalities and de-concentration of functions and processes in MARN, was refocused to address the prioritary zone south of the Orinoco. According to the revised priorities, the Component was changed to focus on Bolivar, Amazonas, Aragua y Carabobo States. The activities related to de-centralization policies were de-continued. Its size was increased to US$8.44 million (18.8% of total cost).

Component 3. Cartography Modernization. The objective of this Component remained unchanged. Its size was increased to US$12.41 million (27.6% of total cost) and focused mostly in covering the prioritary zone south of the Orinoco.

Table2. Allocation of resources at closing

Component GoV(US$M)

Loan(US$M)

Total(US$M)

1) Modernization of MARN 1a. Environmental Quality

lb. Surveillance and Enforcement1c. National Environmental Planning, Environmental Studies and Environmental Education1d. MARN's Reorganization and Modernization of some Administrative Processes

11.231.610.561.72

7.34

12.911.652.270.74

8.25

24.153.272.832.46

15.59

2) Environmental Management at the State and Municipal Levels 4.87 3.57 8.443) Cartography Modernization 0.90 11.52 12.41Total Project Cost 17.00 28.00 45.00

3.5 Quality at Entry:Consistency with the CAS. The proposed project was fully consistent with the Country Assistance

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Strategy (CAS) for Venezuela and with the government's economic and social program and investment priorities (Agenda Venezuela) which focused on: (i) enhancing sustainable growth with stability, which includes promoting and integrating sustainable environmental management, (ii) promoting social development, and (iii) modernizing the public sector. The project supported the CAS objectives by helping to modernize and streamline MARNR, as well as to support the decentralization efforts through technical assistance to state and local institutions. The proposed project was deemed consistent with the Government's initiative, fully supported by the Bank, to mainstream environmental considerations into development objectives.

Lessons learned from previous projects. The principal lessons learned from previous projects were that a successful environmental management project requires: (a) a project design as simple as possible, with a single government ministry as principal implementation agency; (b) strong political commitment; (c) an understanding of environmental management issues by the key decision-makers in the executive, legislative and judicial branches of government; (d) clear medium and long-term objectives, supported by an established planning process; (e) working towards a clear and consistent legal framework that introduces market based instruments that promote flexibility and least cost options; (f) close coordination of the activities of the many institutions whose activities affect the environment and its management; (g) accurate, reliable and accessible information to manage environmental and natural resource programs; and (h) sustained and coordinated Government and Bank supervision of the project throughout its implementation.

Lessons learned and incorporated into this project included: (a) political support, e.g. in the Congress, as well as "bureaucratic", e.g., in the Ministry of Finance and CORDIPLAN, were secured early in the project preparation phase; (b) particular attention was paid to the choice and design of procurement procedures that would be used during the project to avoid undue steps and subsequent delays; and (c) intensive training on the project's procurement and disbursement procedures would be provided to the appropriate staff, particularly the PCU, early in the project implementation phase.

Sectoral lessons learned and incorporated into the project included: (a) a well defined clear division of responsibility between national (MARNR) and regional agencies (MARNR State Environmental Agencies and Municipalities); (b) the participation of other government departments, e.g., planning and finance, should be well structured, assigning roles and responsibilities explicitly; (c) direct contact during preparation occurred with the local and/or regional authorities included in the project; (d) stakeholders' participation in project design through a series of seminars/workshops were significant and effective in directing the scope of the project; (e) the capacity of implementing institutions to absorb and utilize resources was carefully assessed and resulted in a downsizing of project components; (f) project activities focused on perfecting the legal and regulatory framework on environmental matters; and (g) a PCU (Project Coordination Unit) was created. The unit would be financed under the project, and would be supported by a well equipped office and highly qualified staff. The PCU staff should have substantial experience in project management, budgeting, procurement, and information systems, and have familiarity with Bank procedures.

Sustainability. By strengthening MARN’s environmental policy-setting and management

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functions, the project would help the Ministry fulfill its role as the leading agency for the sector and build the institutional capacity required to fully implement sustainable development goals called for in Agenda 21 and in national legislation. The project's support of state and local governments and NGOs' participation in environmental management in Venezuela, together with increased cost-recovery for services (cartography, permitting, lab certification and services) should help ensure the sustainability of project activities and benefits beyond the 5-year life of the project. The incremental costs resulting from project activities will be kept to a minimum. In addition, MARNR restructuring; including deconcentration, decentralization and promoting private sector participation involvement would result in more efficient environmental management. The Autonomous Environmental Management Service (SAGA) would serve as a single mechanism for granting environmental permits to the private sector with the technical supervision of the appropriate technical General Directorates of MARN and was designed to recover costs through the permitting process.

Risks. The overall risk assessment rated the project as medium/high. As possible situation which could affect the project were identified: i) MARNR’s unproven institutional capacity for implementation of the project; (ii) Macroeconomic instability slows economic reform and thereby access to pollution control technology and expertise; (iii) Investments (building and equipment) in cartography component poorly utilized and maintained; (iv) Reorganization of MARNR delayed; (v) Fiscal (state and municipal) and budget constraints limit ability of states and municipalities to expand environmental monitoring and enforcement therefore cost recovery from permits, enforcement, and the MARNR certification lab that is an essential step for institutional viability, deconcentration, and decentralization; (vi) Ministries fail to understand importance of national environmental planning as part of overall economic planning; (vii) MARNR staff beneficiaries and training participants lack commitment or authority to forge change and innovation; (viii) Service provision of pollution prevention technical assistance by decentralized agencies within the states and municipalities not well received by the private sector; and (ix) Poor project administration due to lack of qualified staff and use of consultants.

Possible Controversial Aspects. Eventual de facto decentralization and deconcentration of environmental functions previously decentralized de jure through legal statutes was deemed controversial due to concerns that local authorities lack capacity and would politicize issues. While deconcentration would be done throughout the 22 states, decentralization activities under the project would be focused on two pilot states. In addition, the training programs would be geared not only to the MARNR state offices, but would be directed towards the municipalities and the NGO/private sector community as pertinent, and particularly as it pertains to cost effective solutions to pollution prevention.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:During its execution the project made a significant contribution to the achievement of the overall objective of to strengthening the environmental management in Venezuela and demonstrated a satisfactory completion of activities towards this objective. During the project life, there were two different phases: A) From the effectiveness to year 2000; and B) from 2000 to closing. The turning point was the redefinition of the role of the Ministry, enlarging its scope to oversee all

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natural resources -formerly, it covered only renewable ones- and the appointment of new authorities. This reorganization of the Ministry -it changed its name to MARN- meant the appointment of a Vice Minister and the allocation of the project directly to him. The project underwent a revision to accommodate to the new conceptions and priorities. In spite of the transition, the project development objective of strengthening the environmental management in Venezuela was deemed still valid because it satisfied the environmental needs of the country, one of the priorities identified in the new Constitution. The institutional development objective of the project -known locally as Programa Nacional de Gerencia Ambiental (PNGA) - fully complied with the revised National Development Plan and the Sectoral Plan of MARN. Thus the changes of government -and of policies- did not alter the purpose and objectives of the PNGA. The major lines of the program remained, although some specific goals and activities were modified following more precise definitions within MARN.

During the first phase, the project advanced very slowly and achieved few goals, while the second phase was characterized by a new momentum, a better organization and a reorientation of the project activities, within the original objectives. After the Midterm review, the project was simplified and some sub-subcomponents were dropped thus allowing to better focus on the more feasible ones. The implementation of the PNGA meant a dramatic advance in the modernization of the Ministry, enabling it to better perform in the managing of the environmental issues. Though the implementation of the project activities, the Ministry strengthened its communicational capabilities, allowing a more fluid daily interrelation with field offices (DEAs) and a stronger link with regions and programs. The productivity of the MARN and its efficiency were enhanced through better physical facilities and an improved technology acquired though the project, especially in the case of environmental laboratories and the cartography facilities. The improved capacity to communicate timely and efficiently among the Ministry and its dependencies was instrumental in supporting a better coordination in daily work and in the resulting better exploitation of latent synergies.

The project achieved meaningful results although the complete impacts of the initiatives launched will materialize beyond the life of the project. All these achievements represented a valuable contribution to a process that it is neither concluded nor consolidated at the time of closing of the project. The processes initiated require the continuation of the main lines of work the project supported plus additional ones that were identified during the last phase of the program. A follow up operation has been requested by the Government; if granted, this operation would improve the sustainability of this first phase..

4.2 Outputs by components:Component 1. Modernization of MARN. The total investment in this component represents 54% of the total amount of the loan. Originally there were considered 16 activities of which 10 remained at the end of the project. The overall result of this Component, at the end of the project, is satisfactory.

The main outputs were:• Permit System. After the initial work of technical design, -and as part of the rearrangement of priorities to improve focusing inn those deemed as more relevant- the MARN decided to transfer the bulk of the program to another source of funds within the MARN. It only remained in the

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project the design of an Integrated System to inform about the data gathered by the instruments of previous control and environmental supervision, in which the MARN takes part. This will technify and digitalize the processes to obtain a permit allowing the clients to use the internet for these purposes.

• Network of Environmental Laboratories. The activity that had a major achievement was the consolidation of the “Laboratorio Ambiental del MARN” -located in Hatillo- as the National Reference Laboratory for environmental purposes. The project invested both in physical facilities, improved technology and training and communication equipment to link the Hatillo Laboratory with the network of deconcentrated environmental laboratories. The existence of a Reference Laboratory with capacity to train personnel of the rest of the network caused an improvement in the quality of the complete network. Beside the facilities in Hatillo, the acquisition of a mobile laboratory unit, for on-site processing of water, air and toxic waste samples, contributed to improve the opportunity of the provision of services to support environmental controls. The sample-processing response time diminished and the reliability of the sampling increased.

•Technology and its Environmental Management. This program focused on the conception of a Center of Promotion of Clean Technologies but it advanced only to the development of a proposal for the operation of such Center, as a consequence of the decision to focus on fewer and more prioritary goals.

•National Program of Vigilance and Control. This program achieved several results: a) updating of DEAs maps of Anzoategui, Monagas and Delta Amacuro, which identified critical environmental issues in land, river and aerial routes; b) formulation of a Coastal Law; c) identification and diagnosis of selected environmental issues in seven regions as a first step to their vigilance and control plans: East, West, North center, High Orinoco-Apure, Mid and Low Orinoco, Esequibo and Marine-insular. This input will allow MARN to define a medium-large term program to reduce detected environmental damage and prevent further damage.

•Integration of Socio-Economic and Environment in Planning Systems. This program focused on the Land Management Plan of Vargas State (POTEV). This decision was taken as consequence of the Emergency Plan drafted to deal with the consequence of the so called Vargas Tragedy, a major disaster caused by heavy rains in 1999. The POTEV was completed and validated through a process of public consultation to communities and other stakeholders.

•Demarcation of Habitat and Land. This activity addressed the process of demarcation of habitat and land in the indigenous communities in eight States. At closing of the project this process was in its first steps due to the slow pace of reaching the social consensus needed for this kind of initiatives. At the time of closing, only three state commissions were operational and had just defined the methodology for land survey processes, according to the reality of each State. The remaining ones were still in the process of reaching basic agreements to integrate them.

•Environmental Education in Formal Primary and Secondary Education, and Participation of the Private Sector. This activity contributed to the new curricula design for the schools, generated a publication -Woman and Environment- to contribute to disseminate

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environmental principles and techniques. A Design of Socio-Productive Units was implemented in the community of Verde Valentin in the Miranda State to stimulate the incorporation of cleaner technologies in the production of cazabe and yucca. One of the pillars of the environmental education program was the use of mobile units -Ecobuses- to cover dissemination and education purposes in remote areas. The initiative could not be completed within the timeframe of the project due to a very cumbersome and slow strategy to build and furbish the buses instead of buying them ready to use. It is expected to be completed in the first half of 2004 through the use of funds of the regular budget of MARN.

•Refurbishment of the Central Offices of MARN. This activity improved the physical facilities: a) remodeling of three floors of the building; b) design and construction of a Star Room; c) improvement of the Air Quality Measuring Station; d) modernization of the elevator service; e) designed and implementation of the grounding network system of the building and f) advancements were made on the electric and hydro-pneumatic systems of the building. More advancement in these two systems was not achieved due to poor coordination with and collaboration from the Centro Simon Bolivar (CSB), which is the owner of the complex where the MARN building is located.

•Improvement of the informatics facilities. This activity modernized the capacity of the MARN: a) installed 2400 data-voice points network, including active equipment on complete connectivity and network; b) acquired and installed more than 500 PCs and more than forty network printers, and provided five portable computers for field works; c) acquired software licenses; d) implemented a network of internal e-mail addresses; and e) incorporated 18 out of the 23 State Direction of Environment to the MARN WAN.

•Project Coordination Unit. After a poor performance in the first phase of the PNGA the Coordination Unit was reorganized along better defined functions and lines of authority. In the last phase the PCU developed a reliable organization which was responsible for the momentum and efficiency that characterized the program in its last years. The PCU set up an "ad hoc" evaluation system that served as methodological tool to monitor and control the phases of execution of every activity. With this system, it could be determined in real time the state of progress of the Procurement Plan and the action (in terms of efficiency of the time of response) both of the executors (directors) and of the Bank. The implementation and enhancement of this tool permitted the professionalization of the PCU and the development of a device for budgetary planning for the Ministry.

Former programs such as: Improvement of EA System and certification; Improvement of Permit System for Industrial Plants; Updating of the legislation and regulation framework, preparation of a National Environmental Plan; Environmental Studies, Design of the Autonomous Service of Environmental Management; Professional Development of MARN, were discontinued in the revision made to the project in 2001, marking the beginning of the second phase of the project. The rationale for this decision was to focus the project of fewer and more reachable goals instead of pursuing all of the programs formerly defined in the PAD.

Component 2. Environmental Management at the State and Municipal Levels. Total

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investment on this Component was 19% of the loan. The list of states to be addressed by the project was modified in 2001focusing in supporting the region South of the Orinoco (Bolivar and Amazonas States) instead of the 5 scattered states in the original list. Later the State of Aragua was added to the list. The rationale for this re-focusing was to sustain a different vision of the regional priorities, concentrating resources in the most strategic part of the country, according to the conception of the new authorities.

The main outputs were:• In Nueva Esparta State the outcome was satisfactory, two Municipal Environmental Offices were created, which served as model for nine more, covering the total extension of Nueva Esparta. Some functions of the MARN were transferred to these offices. Diverse studies supported the updating of the Land Management Plan which is under implementation. Other studies are contributing to the design of a Plan for Solid Waste Management.

• In Falcon State two Municipal Environmental Offices were created but only one is functioning as of now. This program was discontinued in 2001 for the reasons given above.

• In Amazonas State the DEA was improved its technical capacities by an estimated 60%. A new institutional organization was implemented. Additional equipment as boats, trucks and laboratory hardware, allowed a better vigilance and control over the environmental consequences of the mining activities. The Land Management Plan was updated.

• In Bolivar State the results were also satisfactory. Its DEA was consolidated along the same lines of the Amazonas State.

• In Aragua State the support was limited, focusing basically in design of a water quality monitoring network in the Lake Valencia basin and improvement of laboratory equipment that allowed an increment on sample processing capacity, with greater precision and in less time.

Component 3. Cartography Modernization.

The investment in this component represented approximately 27% of the total amount of the loan. The execution in the first years was slow but in general, can be described as satisfactory, and could be said that the central objective of modernizing the cartographic production systems in digital format was fulfilled. Main results were:

•Improvement in the information systems and communication, in addition to making it possible to the Institute to market the end products via Internet;

•Procurement of high-technology equipment achieving a greater precision and quality in the obtained products, at a relatively smaller cost;

•Physical adaptations that although low-cost, have a high impact since, makes it possible to guarantee that exist the necessary physical conditions for the preservation of the state-of-the-art

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technology equipment installed;

•Training and specializations to the personnel of the Institute, for the purpose of improving its daily operating and labor capacity;

•Studies of great social impact were conducted: CARTOSUR II with an investment of US $ 6,000,000 and the Map of Risks of Avila with a total investment of US $ 1,530,000. The outcome of these sub-projects was the one expected; however, in the first case the product has not been made available yet to the potential clients since it was completed very close to the closure of the project. In the second case, the product is already in the process of marketing and sale. Furthermore, it has served as basis to conceive the National Plan for the Risk Management in Venezuela. The Bank supported the implementation of a business plan to make products available to the public by a cost recovery policy.

•One of the important achievements reached in the IGVSB constitutes the design for the implementation of a database about geography, cartography, and census, with an inverted total of US $ 790,000.00. It has only reached the conclusion of the conceptual design and 10% of the implementation.

4.3 Net Present Value/Economic rate of return:N/A

4.4 Financial rate of return:N/A

4.5 Institutional development impact:The institutional development impact is rated as modest because the transformation of the MARNR -one of the purposes of the project- was achieved during the project life. At preparation of the project the Ministry scope covered only natural resources that were renewable. This scope was enhanced during the project life, to encompass all natural resources, changing the Ministry name to MARN. As compared with the situation prior to the project, at its completion the Ministry is a much stronger organization, very well positioned as head of its sector. It has both the capacity to contribute the environmental view to the strategic discussion within the Government and between this on and the rest of the political system, and an improved efficiency to conduct its daily business through its network if deconcentrated offices and decentralized dependencies.

The project activities made a meaningful contribution to this goal, supporting studies and actions to design and implement new organizational charts in the Headquarters and in some of the State Offices (DEAs). A major contribution was the update of the technology of communications, including the informatics network. For this to be possible, buildings in Headquarters and decentralized offices were refurbished, renewing their wiring to make the networks reliable. Software and hardware were renewed and upgraded and staff was trained.

Decentralization advanced through strengthening the DEAs and some Municipal Units, allowing them to assume the provision of some environmental services, replacing the need to involve the

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central offices of MARN in some routine processes. The capacity of laboratories to conduct surveys and on-site controls was enhanced, making less expensive and quicker and more reliable the response to demands from the field. The Reference Laboratory in Hatillo became the benchmark of the network of deconcentrated laboratories, serving at the same time as a major training facility to improve capacities of the human capital in the network.

The Simón Bolívar Geographic Institute of Venezuela (IGVSB) was created to replace the former Cartography Department of MARNR and during the project life consolidated itself as a reliable source of technical inputs to its clients, providing charts, maps and the services of electronic databases containing the most updated information about geographic and geomatic data. The CARTOSUR II Program surveyed the Southern region employing the state-of-the-art technology in radar-based imaginary, an experience that would permit the GVSB to offer its services to other countries. The Risk Map of the Avila was a leading study, which offers non previously available data of all sorts to be used by urban developers and scientists in the densely populated area of Caracas to prevent situations like the Tragedy of Vargas. This study is the first step toward establishing a national policy on territorial risks.

Most of the achievements of the project are the foundation of processes that should be continued during the next years -with or without the support of Bank loans- to obtain their full impact.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:The change of Government and the new National Constitution were factors that influenced the limplementation of the project. Both were outside the control of the implementing Institution and of the Bank. Moreover, the emergency suffered in the state Vargas in December 1999 affected the course of implementation of the project, by redefining a series of activities as well as the reassigning of financial and human resources.

On December 2002 the strike of the oil industry resulted in a serious disruption of the public lfinances, leading to a serious shortage of counterpart resources which affected the pace of the project and the balance between loan and local resources.

5.2 Factors generally subject to government control:The frequent changes of Ministers of MARN, MPD and of the coordinator of the PCU.l

The lack of planning to request budget appropriations for the local contribution to the project lresulted in delaying and the stoppage of many activities of the procurement plan of the second stage of the project.

The MF should prevent delays in the financial allocation of the local counterpart. l

5.3 Factors generally subject to implementing agency control:At the beginning of the project, the PCU had an excessive number of people, of little lfunctional efficiency; in addition these personnel was rotated continually, concentrating functions in some persons and adjusting consonant positions to the new functions in others.

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Although the objectives of the project were designed in accordance with a current regulatory lframework at the date of its inception, they had to be adjusted due to the new Constitutional order.

The planning in the execution of the subcomponents was absent in the first stage of the lproject.

The assignment of the project to the Office of the Vice Minister made it possible to lconsolidate the leadership in the guidance and management of the project and rendered more efficient its execution.

To allow the interaction between the PCU and the Directions of the MARN and the IGVSB lresponsible for the execution of the project permitted to define better the expected outcomes and evaluate the results obtained.

The appreciable delays -sometimes between three and six months- on the part of the lauthorities of the MARN (Directors) for decision-making on some sub projects; furthermore, the lack of planning in the execution of the activities, the little supervision on the contracted consultants and the delivered products, influenced the execution of the first stage, situation that was improving over time due to the assistance provided by the PCU.

A selection of the adequate personnel to receive the training financed through the project lcould not be developed. Besides, MARN exerted very little control to avoid the loss of this trained staff, especially by the low-level salaries.

5.4 Costs and financing:The only major change during the project life was the reallocation of US$1.9 million to the preparation of a risk sensitivity map of the Vargas area, as part of the Emergency Program activities; this task was executed by the Cartography Department of MARNR.

6. Sustainability

6.1 Rationale for sustainability rating:The ICR mission assigned a likely sustainable ranking to the project for the following reasons.The Government of Venezuela supports the strengthening and consolidation of the general policies on environmental management. The new tools that MARN has to implement its policies and to play its regulatory entity role (obtained through this project) have made it possible to consolidate MARN even more in the areas of cartography and modern models for institutional management. However, the sustainability of these actions, undertaken with the project, requires additional technical and financial support. Thus, MARN, through other financial projects (program Venehmet, Delcan, etc.) has allocated financial and human resources that would allow to consolidate the activities initiated through PNGA. With resources of the `regular` budget, MARN has decided to finance the continuation in time of activities leading to improve and modernize the action of the MARN as principal authority in the national environmental management. The government has considered it necessary to continue with the program for strengthening environmental management, and a formal request from the Government for

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developing a second PNGA, which would make it possible to consolidate definitively areas addressed in this initial project.

6.2 Transition arrangement to regular operations:The Ministry has provided transitional funding and human resources by reallocating resources from other ongoing programs funded with their own budget as well as other donors. The regular budget is already providing support for the rest of the calendar year and will be able to consolidate it during the next budgetary planning cycle. In the case of the Geographic Institute, the capacity developed during the project implementation allowed them to develop a business plan and a whole catalog of products for other government agencies as well as for private developers.

7. Bank and Borrower Performance

Bank7.1 Lending:Bank overall performance during preparation is considered Satisfactory.The issue of client ownership was not sufficiently addressed during preparation. A different sense of client ownership registered from 2000 on, which was reflected in the revision of priorities and the focusing of the resources in fewer but more attainable goals. The Bank team assisting the Borrower in preparing the project was largely responsible for a design which included a well thought cluster of activities to build capacity in areas requiring strengthening and develop a minimum platform in terms of institutional arrangements, tools and infrastructure. A second cluster of activities integrated the decentralization component for selected states and municipalities. The third component was probably the one which was better integrated with the Borrower and responded specifically to a master plan to upgrade the cartography area. Nevertheless the clustering of activities was not accompanied by a strategic selection of indicators and a monitoring design to verify progress in performance and development objectives. This initial weakness was not corrected later during implementation.

7.2 Supervision:Bank overall performance during supervision is considered Highly Satisfactory.As pointed out before, the project went through two significantly different phases with a turning point in year 2000. The Bank carried out a total of 12 supervision missions. The first 4 missions were carried out during the first phase (1997-2000) by the initial Bank team. A new Bank environmental team for Venezuela took over the supervision of the project during its second phase. The new team embarked in a thorough review of the project in the new context since the approval of a new Constitution and a reform of the Ministry and Environmental Policy. During the second phase, an effective collaboration with the Ministry was achieved through regular and frequent supervision missions (8 in 3 years) and most of the main outputs occurred. Supervision focused on the information provided by the Ministry of Environment and Natural Resources and the team was able to meet with all the relevant technical areas of the Ministry and conduct several site visits including the main executing agencies such as the Geographic Institute, the Central Laboratory and the State of Bolivar.

7.3 Overall Bank performance:Bank overall performance is considered SatisfactoryAlthough the two phases of the project are triggered by Venezuelan events, they also correspond

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to decisions in the Bank management. In November 2000, despite the shrinking lending program in the sub region the Bank decided to appoint a new environmental team to supervise the projects in Venezuela in an effort to improve the performance of the portfolio.

Borrower7.4 Preparation:Borrower overall performance during preparation is considered Unsatisfactory.The preparation of the project was centralized in an administrative area of the former Ministry of Environment and Renewable Resources and its technical areas were not involved. The result of a lack of participation of the relevant areas was a lack of integration of activities and of a strategic design, which in turn led to a poor design in the monitoring and evaluation indicators and processes to measure them. At the same time, although the activities to perform were listed, they were not assigned to responsible executing areas. This caused many confusions and serious delays in getting the project on its track during the first years.

7.5 Government implementation performance:Government overall performance during implementation is considered Satisfactory.The project suffered from a shortage of funds that was common to all the investment programs in the country. Nevertheless, during the second phase, the project served as a strategic administrative platform for the rest of the investment programs in the Ministry of the Environment. Therefore, both the Ministry of Planning and the Ministry of Finance provided a close supervision to the project and a continuous support to the Ministry of Environment to provide counterpart funding and endorse the project in their respective areas.

7.6 Implementing Agency:Government overall performance during implementation is considered Satisfactory.The project suffered from a shortage of funds that was common to all the investment programs in the country. Nevertheless, during the second phase, the project served as a strategic administrative platform for the rest of the investment programs in the Ministry of the Environment. Therefore, both the Ministry of Planning and the Ministry of Finance provided a close supervision to the project and a continuous support to the Ministry of Environment to provide counterpart funding and endorse the project in their respective areas.

7.7 Overall Borrower performance:Overall Borrower performance is considered Satisfactory.The project was conceived under an administration near the end of its term; the new administration which took over after 2000 was clearly very proactive in reassessing the usefulness of the operation with a strategic vision. The Borrower decided to redefine the project as a strategic tool and appoint the Vice minister of Environment to head the project. It is particularly relevant to point out that the decision was clearly supported by a coordination achieved between the three ministries involved (including Planning and Finance). As a result, the second phase clearly showed an ownership and commitment which partially made up for the initial lack of impulse and made it possible to achieve most of the goals sought in the design.

8. Lessons Learned

Most of the lessons are common to almost every Bank project that has been implemented without

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proper attention to technical assistance and capacity building needs of the client.• The assumption of the project as national policy of Government, and the direction of the project by high-ranking authorities evidences the commitment of the Government in the execution of the project. • The suitable targeting and clarity in the objectives of the project ensure its later completion. • The participation of the government staff is critic in the design of the project.• The training of the personnel who would manage the coordination of the implementation of the project is a key factor to improve the probabilities of success.• From the start, the team in charge of the formulation of the project and the PCU staff should be trained on the theory and practice of management of projects.• During project formulation, the country team should be accompanied by an institutional expert that at the same time trains the personnel on Bank methodologies for the project preparation (PCD, PAD, logical framework).• When necessary, the execution of activities referred to updating or creation of standards, regulations, or laws should consider the difficulty of bringing about their approval, because it depends on agencies external to the institution.• Infrastructure investments should be defined by the client after complete feasibility analysis. • The flexible treatment of the operation by the Bank team during the second phase was an important factor to adapt the project to the new needs and to the new political and social situations of the country without having to interrupt its implementation.• The permanent evaluation of the performance of the unit and its interaction with the Bank and senior government staff the executors was a key factor. The permanence of the members of the PCU for the length of the project is desirable. When this was achieved, it allowed to better understand the purposes of the project, and to develop abilities and skills to achieve the strategic macro objectives of the project.• To execute a project related to decentralization, it was essential to consult and to interact more with the states, municipalities and communities, and to define clearly the competences of each one of the actors, the reforms and the reinforcing of the political motivation would be thus achieved in order to assume the new competencies.• The Bank team should have assisted in the implementation of the evaluation systems of the project. The impact and process indicators not only should have been defined but also the mechanisms to evaluate them should have been developed. • The incorporation of the Unit of Evaluation into the organization chart of the PCU was essential to perform control measures in the management, the results, and the impact expected of the project. The ad-hoc evaluation system allowed smooth daily management the project, the control and prevention of unfavorable situations regarding the execution of the activities. With the system of evaluation any anomaly in the execution of the project could be detected on time, and consequently the solutions can be suggested as rapidly as possible.• Having an expert in the implementation of the project with experience in targeting and structure of projects facilitates the formulation of the annual plans of action. The lack of this resource endangered the timely delivery of the convened outputs.• The Bank should have contributed strongly to the training of the members of the PCU and of the project managers. During the development of the project this is essential in the areas of

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monitoring, project control, and evaluation.• Handling of all the information relative to the project and understanding its internal logic is facilitated by previous knowledge by the executors and Task Managers of the economic and social assessment studies of the project as well as those studies that support the operation. During the first phase this handling was poor.• Public consultations are inexpensive activities and permit community participation and impede unilateral decision-making and the generation of tensions and ruptures with communities, although they not always end up in agreements. Between participants.• Permitting the transfer of financial resources to third parties for the organization of activities framed in the project complicated the implementation of the project because an efficient mechanism to do so was not defined previously.• Numerous requests of contracting studies and advisory services to individual consultants originated a large number of activities in the category of Technical Assistance and produced scattered information whose results were not the expected ones. • Given by the temporary nature that characterizes projects, it is advisable to establish a reward system for the PCU for the purpose of promoting more efficient arrangements, as well as a system of annual wage improvements to incentive the personnel who works in the projects and to diminish the negative effect that causes the uncertainty and the labor instability.• For a better management of the financial resources of the project through a third party (UNDP, BANDES, etc.), it should be established in advance the functions of this entity as well as the obligation to follow the instructions of the executing agency, with the purpose of avoiding difficulties in the course of the project execution as a result of the assumption of additional functions.

If a Second Environmental Management Project were to be developed, these lessons should be taken into account, especially those which address the role expected from the Bank in assisting decisively in the organization and intensively training of the PCU in the best practices of project management.

9. Partner Comments

(a) Borrower/implementing agency:As an important premise it should be considered the circumstance that the project implementation occurred under two different governments and of two different legal frameworks. This situation is most important because it forced to perform a deep review of the components of the project and of the designed activities, to align them with the new National Constitution, especially with its principle of co-responsibility between the citizen and the government, regarding the utilization and conservation of the environmental heritage. Thus, it is advisable to consider two stages in its implementation.First Stage: (1997-2000). This stage covers the events occurred from the beginning of the project in 1997 until the end of the 2000. In this stage several important changes within both the framework of the national public policies and the legal framework of the country took place, as a consequence of the promulgation of the new Constitution. This stage of the project was characterized by a slow physical and budgetary execution. Some of the factors that influenced this slow pace were the limited knowledge of the executors of the management of multilateral projects and the confusion of the phases of implementation of the project with the organization of its

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execution. This was a stage where serious problems of managing were originated; there were three coordinators of the Coordinating Unit, the responsibility for the project was under a supporting unit of the Ministry (Division of Planning and Budget), and not under the management of a strategic unit of the Ministry. The project was not assumed by the rest of the management units of the Ministry as theirs; even there was lack of knowledge concerning its existence. This implied a certain degree of organizational disorder with regard to the direction of the project (its mission and vision).Second Stage: (2001- 2004). This phase was marked by the reformulation of the loan with the purpose of making it possible to overcome the obstacles of the first stage and achieve an efficient execution. Both parties assumed commitments of joint participation in the redesign of the project, taking into account the new Ministry vision of territorialized management. With the reformulation of the project the Coordination Unit was assigned functionally the Vice Minister, who would function as Coordinator General. Several functions were delegated to the Technical Coordination of the project to improve its flexibility and efficiency, becoming the project Executive Coordination. The re-design of the subcomponents and the "new" activities were product of exchanges and participatory meetings with the different officials of the Ministry. With the deepening of the actions of the project in accordance with some general principles of the new Constitution, the implementation of the project was inspired in the sustainability and greater participation of the communities in its execution. The institutional reorganization of the Ministry favored the implementation of the project in this stage, since the revised general policies (preservation of water resources, strengthening of the environmental education, strengthening of the environmental ordering, and the modernization of the management of the MARN) fully supported the implementation of the project. The condition as "coordinator" of the Unit allowed a more effective scope of its actions and made it possible to guide and evaluate the action of the Ministry concerning the project. This contributed to consolidate a high-level effective leadership that steered the Directorates of the MARN to achieve their goals with greater ease. The Managers of the Directorates of the MARN were responsible for the implementation of each one for the activities included in this stage of the project. In turn, the MARN provided the assistance of external professionals that formed the project Coordination Unit (PCU); this Coordinating Unit had its functions defined in the Operating Manual of the project. In this stage of the project, despite the fact that the indicators of impact and of process were not structured nor developed, the executive coordination of the PCU set up an "ad hoc" evaluation system that served as methodological tool to monitor and control the phases of execution of every activity. With this system, the state of progress of the Procurement Plan and the action (in terms of efficiency of the time of response) both of the executors (directors) and of the Bank could be determined in real time. The implementation and enhancement of this tool permitted the professionalization of the PCU and the development of a device for budgetary planning for the Ministry. The coordinating function of the PCU was strengthened with the use of this tool.A baseline of reference to establish comparisons was not available from the beginning of the implementation of the project. Nor there was a system of objective indicators that were verifiable, replicable and comparable in time and space. In spite of that, in 2001, a mechanism of evaluation of the execution of the project activities encompassing both the action of the PCU, the executors and the Bank was implemented. For this reason, the results of the project are analyzed from the quantitative and qualitative point of view.2.1 Quantitative results of the project

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Even though there were intents to define performance indicators, these were never approved nor updated by the PNGA. However, it was possible to evaluate partially the results of the project by virtue of some outcome indicators that were established to determine reliably the change and magnitude induced by the achieved results. Although there was a considerable reduction of the number of subjects in the project (from 22 to 10), the activities were numerous (495) and they were not weighed one against the others. So that, only with base in information of physical-budgetary execution, the following results appear, which only represent the percentage of execution of the loan respect to the total amount, by stages.a) Physical-financial execution of the first stage. During year 1997 the financial execution of the PNGA was of U.S$ 424,461 which represents 0.94 % of the total amount of the loan. For 1998 the financial execution was around U.S$ 1.242.114, equivalent to 2.76%. In 1999, the percentage reached 3,45%, being disbursed in that year U.S.$ 1,556,699. At the end of 2000 the disbursements increased significantly, disbursing some U.S. $ 7,000,000, reaching a percentage of 14,58% of the total of the loan and an increase of 421% in the disbursements respect to the previous year. Despite it, considering the time of implementation in this phase of the project (more than three years) the execution did not advanced enough.b) Physical-financial execution of the second stage. In this stage of "renegotiation” of the project and of execution of a new plan of procurement, there was a better interaction between the PCU and the General Directions and Regions of the MARN. For the year 2001 U.S.$ 9,339,218 were disbursed. An effective monitoring of the execution of the first stage (U.S.$ 20,000,000) was performed. As of that moment it had been possible to execute 45% of the total amount of the loan. In 2004 (last year of the project), after the agreement to extend the execution of the plan of procurement established for the year 2001 and 2002, it was possible to conclude it, but only concerning the activities with external financing, since the local contribution could not be delivered totally because the budget transfers were not carried out on a timely basis.c) Investment by categories. In this project the highest investment was carried out in the category of Goods, which amounts to 60% of the disbursed amount, followed by the category referred to Consultancies, that reached 23% of the disbursement and, in the third place, the category of Works that represents 9% of the total. The categories that resulted with lower investments were the referred to publicity, informatics platform and operating expenses, which amounted to 9% of the total disbursed to may 2004.2.2 Qualitative Results of the project• It made possible to enhance the knowledge of the staff members of the MARN about the implementation of projects with multilateral financing.• It generated an important institutional experience in the logical design of projects and in the strengthening of the comprehensive environmental management.• The design and implementation of the system of evaluation of the PCU, as an "ad hoc" tool for planning, supervision, and control of the execution of the procurement plan of the project, generated an interesting and efficient experience as a new form to monitor projects.• Policies of dissemination were promoted, to avoid duplicity of efforts and to present documents produced by the MARN to the users.• A Library of the PNGA was created, offering organized information to interested persons, including the use of network LAN or Intranet. • By the dynamic and evolutionary characteristic of the projects, the flexibility of the operation was an important factor to adapt the project to the new needs and to the new political

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and social situations of the country, without having to interrupt its execution. Without a doubt, the constant communication between the PCU and the World Bank made it possible to flexibly the different investments and to make more efficient the global impact of the project.• The institution strengthening through the implementation of the principle of the knowledge management -or what is the same, the transfer and management of the information through the incorporation of new technologies for management of the information-, brought numerous benefits, among which should be pointed out a better and greater communication among the staff at the central and regional levels in order to achieve an environmental comprehensive management. With the installed computer platform and the voice and data network, now the management of the MARN is more efficient and effective. The environmental management of the MARN now is, from the technological standpoint, of high profile. This also made it possible to better understand the directives of the project, and develop abilities and skills so that the strategic macro objectives of the project were achieved.• It was possible to conceive an electronic permission system, which is going to manage a database with all the permissions and authorizations that the MARN grants. • The MARN was strengthened to be able to establish the national strategy of surveillance and environmental control. Alliances were achieved with all the organizations that have to do with this matter, such as Civil Defense, Armed Force, and all the related Ministries and organizations.• It made it possible for the MARN to have adequate equipment to perform its surveillance and control functions.• It made it possible to make an important effort in environmental education to the community concerning the utilization and conservation of the environmental heritage.• It made possible to the MARN to become the adequate consultant to the National Assembly to review and update the laws that define the environmental management in Venezuela.• It strengthened the MARN as coordinator of the process of Demarcation of Habitat and Lands of the Indigenous Communities in eight (8) states, adapting its mission to the new Constitution.• It made it possible to implement new Models of Management for the institutional development of the Regional Directions chosen as pilots (Amazonas and Bolivar) who become tutors to repeat the experience in other Regional Directions.• It made it possible to strengthen and modernize the systems of cartographic production in digital format of the IGVSB. This technological change in the Institute improved the systems of Geographic information and of telecommunication, strengthening the technical capability of the Institute• It made it possible to strengthen the technical and administrative capability of the MARN through the implementation of new information systems.2.3 Achievement of the project objectivesAs said, the key indicators of expected performance were not defined in the initial design of the project. As a result, the periodic measurements of its performance that had to be made could not be done as expected. Accordingly there exists no precise and objective data that could determine whether the objectives of the project were effectively fulfilled and to determine to what extent the initial situation changed. However, even though the project underwent important changes –coming both from the adaptations to the changes of Government and consequent policies and from the reassignment of resources after the tragedy occurred in Vargas in December 1999-, the general objective of restructuring and modernizing the environmental management in Venezuela

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continued to be served throughout the life of the loan agreement. As a result, the project always advanced in the correct direction in accordance with the proposed Development Objective. The specific objectives of the project were updated in order to adapt them to the new legal, political, economic and social reality of the Country.Component 1 Modernization of the MARN: The total investment carried out by this component represents 54% of the total amount of the loan. It can be affirmed that, in general and after its re-sizing in the 2001, the results in this component are satisfactory. Today, the MARN has an infrastructure adequate to perform its functions as regulatory entity in the National Environmental Management. The knowledge management is part of the current policies both of the MARN and of the IGVSB, who assumed the management of the territory as a basis of their policy and the information system for the management as the principal tool to implement it.Although difficult to measure, there was progress in the process of deconcentration of the institution through the pilot projects carried out through Component 2 "Support to the Deconcentrated and Decentralized Management". The total investment in this component amounts to 19% of the loan. Indeed, the Regional Directorates of Bolivar and Amazonas managed to implement advanced management models, and the Office of the Director of Nueva Esparta succeeded in to strengthening its management through the decentralization of functions toward the Municipalities. The “window effects” of these cases triggered similar developments in other regional directions of the Ministry. Finally, without a doubt, Component 3 “Cartographic Modernization” was consolidated. The investment in this component represented approximately 27% of the total amount of the loan. The central objective of modernizing the cartographic production systems in digital format was achieved in 100%. This technological change in the IGVS improved the information and communication systems, making it possible to fortify the bonds among the personnel and with the client, exchanging knowledge and information by electronic media, in addition to marketing the end products via Internet. On the other hand, studies of great national impact were conducted, such as CARTOSUR II with an investment of US $ 6,000,000 and the Risk Map of Avila with a total investment of US $ 1,530,000. In the second case the dissemination process begun and the product is already in the process of marketing and sale. Furthermore, it has served as basis to conceive the National Plan for the Management of Risks in Venezuela.

3.2 Factors subject to the Control of the World Bank

• The project was designed with very general definitions. There is a feeling that there was not effective participation of the staff members of the Ministry in the original design of the project and, accordingly, little importance was given to the magnitude and complexity of the project. • The action of the World Bank in the first years was insufficient from the standpoint of the supervision. The evaluations that arose from the Missions of Supervision did not reflect the critical situation.• In the First Stage, the World Bank permitted an inadequate administrative and financial management on the part of the PCU. It accepted that the procurement bypassed the majority of the procedures for selection of contractors, favoring direct allocations. Even the Audits were not contracted in the right time. In spite of that, in the second Stage of the project the World Bank strengthened its role of supervision.• In some cases the responses of the Bank to the requests and queries of the Executive

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Coordinator were slow and this had a negative impact on the general performance of the activities. The evaluation system set up by the PCU confirmed the recurrence of this situation.• The supervision of the BM focused on the revision of the financial management of the PNGA and it never obtained that the indicators of base and impact the project required were elaborated. By this reason, the results obtained with the investments made were not considered, in principle, important.• After numerous discussions with the MARN, the World Bank was flexible to accept changes in the allocations of resources by categories allowing a better performance of the project in the second stage.The World Bank carried out limited visits to verify the execution of activities in site, with the exception of some isolated cases, as the Environmental Laboratory of the MARN, located in El Hatillo (a visit carried out in the year of extension) and to the IGVSB (since the year 2002).

(b) Cofinanciers:N/A

(c) Other partners (NGOs/private sector):N/A

10. Additional Information

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

-Increase in well prioritized environmental problems at the State and Municipal level, focusing on explicit targets and cost effective strategies for attaining these targets.

Monitoring of indicators not implemented

-Private sector demand for services increases by 5% per year-Environmental services and industries sector increases 10% per year starting in year 2000-Change in policy reforms and improvements in regulatory framework that would create incentives for the private sector participation-Redefinition of roles and functions of MARNR at national, state, and municipal levels in pilot sites.-State/municipal Action Plan prepared-Baseline environmental quality and awareness indicators "defined"

Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Average time for issuing operating permits reduced by:-Year 3: 5% (Base year: Year 0)-Year 4: 10%-Year 5: 20%

Monitoring of indicators not implemented

Average time for issuing permits for new projects reduced by:-Year 3: 5% (Base year: Year 0)-Year 4: 10%-Year 5: 20%

Certification system established by the end of year 2 and No. of private firms certified for EA studies

Percent of total medium-large projects with environmental assessment permits

Supervision/mitigation plans monitored and evaluated by the private sector (% of the total supervision plans for each calendar year:-Year 4: 30%-Year 5: 50%

Access to the MARNR data bases (No. of formal inquiries from the private sector per year):-Year 2: --Year 3: --Year 4: 10-Year 5: 20

% MARNR projects submitting EA studies:-Year 2: 50%-Year 3: 60%-Year 4: 80%-Year 5: 100%

Certification system:-Year 1: TORs and feasibility study for

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certification system completed-Year 2: Certification laboratory functional-Year 3: Certification system becomes operational-Year 4: 5 laboratories certified-Year 5: 10 laboratories certified

National Reference Environmental Laboratory:-Year 2: Detailed project completed-Year 3: NREL funcional

Clean and Environmental Technologies Transfer Department:-Year 1: Feasibility study on the establishment of a Department completed-Year 4: Clean and Environmental Technologies Transfer Department established

Market-based Economic Instruments:-Year 2: Feasibility study on the use of selected market-based economic instruments completed-Year 4: Pilot on the use of selected market-based economic instruments completed

State of the environment reports for Venezuela produced in years 2 and 5-Year 4: Establish framework for completing ambient standards with realistic ambient quality targets over time for key ecosystems

No. of inquiries to environmental data base for planning purposes:-Year 3: 5-Year 4: 10-Year 5: 20

By year 5, the following revised or new legislation would be prepared:-Water and water resources management -Soil conservation-Management of solid waste-Management of toxic waste-Biodiversity conservation-Trade and environmental protection

No. of industries in the "self reporting system" increasing by:-Year 2: 10% (Base year: Year 0)-Year 3: 20%-Year 4: 40%-Year 5: 60%

No. of companies certified for providing inspection/laboratory services:-Year 2: 5-Year 3: 10-Year 4: 20-Year 5: 30

% discrepancies between "self-reports" and MARNRs inspections:-Year 3: 50% (Base year)-Year 4: 40%-Year 5: 35%

System for integrated environmental and socio-economic planning:-Year 2: Feasibility study completed-Year 3: National land use plan completed

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-Year 4: System fully operational -Year 5: System used in the preparation of the Plan de la Nacion

National environmental action plan:-Year 1: Agreement reached on table of contents, methology and schedule-Year 4: National Environmental Action Plan completed

1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionModernization of MARNR 25.28 24.15 95.5Environmental Management at the State and Municipal Levels

5.83 8.44 144.8

Cartography Modernization 9.57 12.41 129.6

Total Baseline Cost 40.68 45.00 Physical Contingencies 1.27 Price Contingencies 3.05

Total Project Costs 45.00 45.00Total Financing Required 45.00 45.00

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 2.28 0.00 0.25 4.00 6.53(1.95) (0.00) (0.22) (0.00) (2.17)

2. Goods 13.20 1.27 3.61 0.00 18.08(8.28) (1.09) (3.10) (0.00) (12.47)

3. Services 0.00 0.00 14.86 0.53 15.39(0.00) (0.00) (13.36) (0.00) (13.36)

4. Miscellaneous 0.00 0.00 0.00 5.01 5.01Recurrent and Non-Recurrent Operating Expenditures

(0.00) (0.00) (0.00) (0.00) (0.00)

5. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

6. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 15.48 1.27 18.72 9.54 45.01(10.23) (1.09) (16.68) (0.00) (28.00)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 5.04 0.00 0.00 0.00 5.04(3.00) (0.00) (0.00) (0.00) (3.00)

2. Goods 10.05 0.38 0.07 0.00 10.50(0.00) (0.00) (0.00) (0.00) (0.00)

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3. Services 0.00 0.00 28.00 0.00 28.00(0.00) (0.00) (18.33) (0.00) (18.33)

4. Miscellaneous 0.00 0.00 0.00 0.00 0.00Recurrent and Non-Recurrent Operating Expenditures

(0.00) (0.00) (0.00) (0.00) (0.00)

5. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

6. Miscellaneous 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 15.10 0.38 28.07 0.00 43.55(3.00) (0.00) (18.33) (0.00) (21.33)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.Modernization of MARNR 16.62 11.16 12.91 11.23 77.7 100.6Environmental Management at the State and Municipal Levels

5.45 0.90 3.57 4.87 65.5 541.1

Cartography Modernization

5.93 4.94 11.52 0.90 194.3 18.2

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Annex 3. Economic Costs and Benefits

The project benefits may be estimated as a function of the: (i) improved information systems, streamlining and decentralization of environmental management services such as land use planning and permitting; (ii) improved mapping and information systems to facilitate cadastres and efficient natural resource exploitation and protection, resulting in improved environmental management and increased land values; (iii) increased number of qualified environmental goods and services providers; (iv) improved environmental quality data, policy analysis and program evaluation capacity at the national, regional, and municipal levels; (v) better enforced property rights; and (vi) reduced negative environmental impact and more cost effective pollution control and enforcement. It will also strengthen the regulatory framework and environmental monitoring and evaluation capacity in the regions, thus providing the pre-conditions for appropriate enforcement of environmental standards, and improved assessment of environmental problems and definition of environmental strategies and action plans in the future. Indirect benefits will be improved water and air quality and regulated solid, liquid, and toxic waste disposal.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation09/16/1996 3 TTL (1); PUBLIC SECTOR

SPEC. (1); ENVIRONMENTAL (1)

12/8/1996 2 ENVIRONMENTAL (1); CONSULTANT (1)

Appraisal/Negotiation02/17/1997 5 TTL (1);

ENVIRONMENTAL (3); PUBLIC SPEC. (1)

05/25/1997 5 TTL (1); ENVIRONMENTAL (1); PUBLIC SECTOR SPEC. (1), CONSULTANT (2)

Supervision10/12/1998 4 TTL (1);

ENVIRONMENTAL (1); INTITUTIONAL (1); FIN. MGT. SPECIALIST (1);

S S

03/26/1999 3 TTL (1); ENVIRONMENTAL (1); INSTITUTIONAL (1)

S S

10/03/1999 4 TTL (1); POLLUTION SPECIALIST (1); ENV. SPECIALIST (2)

S S

05/04/2000 3 TASK TEAM LEADER (1); FORESTRY EXPERT (1); CONSULTANT (1)

U S

12/14/2000 3 TTL (1); NAT.RES.ECONOMIST (1); ENVIRONMENTAL SPEC. (1)

U U

06/30/2001 3 TTL (1); ENVIRONMENTAL (1); SR. SOCIAL DEVELOPMENT AND CIVIL SOCIETY SPEC. (1);

S S

01/30/2002 3 ENVIRONMENTAL /TTL (1); SR. SOCIAL DEVELOPMENT AND CIVIL SOCIETY SPEC. (1); GEOMATICS SPEC (CONS.) (1)

S S

11/29/2002 3 DECENTRALIZATION SPEC (1); CONSULTANT (1); TTL (1)

S S

04/28/2003 6 ENVIRONMENTAL /TTL (1); SR. INSTITUTIONAL DEV. SPEC. (1); SR. SOCIAL DEVELOPMENT AND CIVIL SOCIETY SPEC. (1);

S S

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PROCUREMENT SPEC. (1); CONSULTANT (2)

08/29/2003 6 ENVIRONMENTAL /TTL (1); SR. INSTITUTIONAL DEV. SPEC. (1); SR. SOCIAL DEVELOPMENT AND CIVIL SOCIETY SPEC. (1); PROCUREMENT SPEC. (1); SR. FINANCIAL MANAGEMENT SPEC. (1); CONSULTANT (1)

S S

ICR

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 29 95.20Appraisal/Negotiation 19 41.00Supervision 121.9 307.15ICRTotal

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Bank preparation documents

Venezuela - Interim Country Assistance Strategy (CAS). Report No. 16471 of April 8, 1997 and Report No. 25125 of November 18, 2002. The World Bank

Project Information Document (PID). Report No. PIC3392 of August 5, 1997. The World Bank.

Project Appraisal Document (PAD). Report No.17130 of October 20, 1997. The World Bank.

Identification Mission Terms of Reference and Aide-Memoire. September, 1996. The World Bank.

Preparation Mission Terms of Reference and Aide-Memoir