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2006-03-08 20:43:00
Embassy San Salvador
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DE RUEHSN #0637/01 0672043
R 082043Z MAR 06




E.O. 12958: N/A





E.O. 12958: N/A


1. Summary: As requested in reftel, this cable contains
Post priorities for CAFTA-DR environment activities for FY

2006. The proposals described here build upon a consultative
process that began almost six months ago and reflect a
consensus view on El Salvador's key environment needs and
related regional priorities. They are:
-- Creating Income Incentives to Support Sustainable
Management and Conservation in Critical Salvadoran Protected
Areas: $1,100,000
-- Environmental Law Compliance and Enforcement: $2,750,000
-- Improve Private Sector Compliance with Environment
Legislation: $1,750,000
-- Enhancing Public Participation in CAFTA-DR Environmental
Compliance: $660,000
-- Expand Countries' Compliance with Multilateral
Environmental Agreements: $1,150,000
-- Creating Incentives for Improved Management of Critical
Biodiversity-rich Watersheds: $1,800,000

A separate cable contains post's summary of CAFTA-DR labor
needs. See concluding comment at end of this telegram. End

2. Nearly six months ago, Post began a consultative
process to identify key labor and environment trade capacity
needs in El Salvador for FY 2006 and beyond. This process,
consisting of consultations with Government colleagues,
regional integration institutions, and the private sector,
identified several priority needs. To develop the project
proposals requested in reftel, Post also relied heavily on
the priorities in the CAFTA-DR Environment Cooperation

3. The proposals presented here represent a consensus view
from State and USAID bilateral and regional officers of key
USG projects that will help El Salvador and other countries
in the region meet the requirements of CAFTA-DR environment
provisions. Post recognizes that El Salvador is, in many
ways, in a unique position vis--vis other CAFTA-DR
countries in its efforts to implement CAFTA-DR and its
relationship with the United States. El Salvador led the
fight within the region for ratification by Central American

signatories. El Salvador was the first country for which
the treaty entered into force with the U.S. (on March 1,
2006). Also, the US Mission in El Salvador has a strong
regional presence and serves as the base for regional
offices of USG agencies such as Department of Commerce and
USAID. As a result, the proposals presented here include
both those that focus exclusively on El Salvador as well as
some that recognize the benefits of working regionally to
address environment issues of particular concern to El
Salvador and its neighbors.

4. It is more efficient, from a USG budget perspective to
offer some CAFTA-DR assistance from a regional platform.
More importantly, there is a need to harmonize environmental
regulations, procedures and information systems at a
regional level to make sure that all countries adhere to the
same minimum standards and compete on a level playing field.

-------------- --------------

5. TITLE: Creating Income Incentive to Support
Sustainable Management and Conservaton in Critical
Salvadoran Protected Areas
-------------- --------------

6. PURPOSE: The Activity will develop alternative income
sources and incentives to manage and conserve biodiversity
and natural resources within selected critical areas of El

coupled with uncontrolled and unsustainable economic
activity, are degrading the natural resource base of El
Salvador and leading to the irreplaceable loss of plant and
animal species. Fuel wood is the primary source of cooking
energy for approximately 70% of the rural population and
current requirements exceed sustainable yield levels for
present forest cover. Deforestation, the destructive use of
pesticides, agricultural practices that degrade the soil
base and domestic pollution are carried out with little
regard for downstream inhabitants or the natural habitat
that supports biodiversity. These conditions also threaten
the economic potential of hundreds of thousands of local

residents in one of the most biodiversity rich areas of the
country, Ahuachapan and Sonsonate (the proposed activity
area). More than a third of El Salvador's protected areas
are within the proposed activity area. Outside the
protected areas, natural forests are often fragmented
"islands." Conserving biodiversity will demand efforts to
link together these protected areas and fragmented forests
with biological corridors and buffer zones.

8. In this activity, USAID El Salvador will promote
sustainable management within protected areas, biological
corridors, and buffer zones by using market access and
increased income as incentives for rural residents to carry
out long term conservation practices. Such incentives
include certified products, alternative income sources such
as tourism, and non-traditional income opportunities that
are less environmentally destructive. Local capacity to
carry out integrated natural resource and biodiversity
conservation will be developed and mechanisms for users to
pay for environmental services will be introduced.

9. Expected Results:

-- Increase in annual income of $1.5 million for local
residents through increased market access, alternative
employment, crop diversification, and non-traditional income

-- Generation of $50,000 per year for payment for
environmental conservation of critical protected areas.

-- 75% of residents living in protected areas, buffer
zones, and biological corridors will adopt environmentally
sustainable farming methods or benefit from non-traditional
income-earning opportunities.

10. Specific Activities:

-- Green Certification. Green certification mechanisms will
be used to promote certified product market access and
improve agricultural practices that support conservation.
Coffee certification will be the principal focus due to the
conservation importance of shade forests and the economic
importance of coffee. In addition to providing a
significant amount of firewood as coffee plants are pruned
to manage the shade, tree cover on coffee farms protects
some of the better but erosion-prone volcanic soils and
improves watershed stability.

-- Non-Traditional Income Alternatives. By introducing
alternatives to traditional farming, USAID will help reduce
the current pattern destruction of forests, soil, and
biodiversity habitat. Eco-tourism mechanisms will be
developed to provide jobs, training, and increase
environmental awareness amongst populations residing within
protected areas, buffer zones, and biological corridors.

-- Financial Mechanisms for Conservation. Financial
mechanisms for conservation will be developed using tariffs
and user fees to pay for local implementation of
conservation activities. The Ministry of Agriculture is
carrying out a rural modernization program and will be a key
partner for generating financial resources for conservation
efforts. Other options will be explored to support the
financing of environmental services. This activity will
support local capacity and awareness of the need to pay for
and carry out conservation interventions.

11. US POLICY OBJECTIVES. This activity specifically
addresses the ECA work plan section 2, "Development and
promotion of incentives and other voluntary and flexible
mechanisms to encourage environmental protection, including
the development of market initiatives and economic
incentives for environmental management needs, and includes
activities to improve implementation and improved compliance
with multilateral environmental agreements." It will also
support the GOES Ministry of Environment and Ministry of
Agriculture goals of sustainable conservation of protected
areas and rural modernization.

12. NEW OR PREVIOUS WORK. This activity will build on
USAID's previous integrated water resource management
Activity (AGUA) that successfully linked the demand for
clean water to the conservation of the Activity's three
major watersheds. It will also support the new GOES water

law expected to be presented later this year, which contains
provisions for financing environmental services through
water use tariffs.

13. ESTIMATED COST. $1,100,000 for FY 2006 (Biodiversity

14. LOCAL BUY-IN. A consultative process was carried out
with the Government of El Salvador including its Ministries
of Environment and Agriculture, the National Water Agency,
the Social Investment Fund for Local Development (FISDL),
and organizations working in the activity area. The
government has specifically requested assistance in
conservation and management of biodiversity and natural
resources. USAID will work with the Ministry of the
Environment, the Ministry of Agriculture, and FISDL as well
as potential partners with other organizations such as the
Canadian Development Agency (ACDI), the World Conservation
Union (IUCN), and the Spanish Development Agency (SECI).

15. PUBLIC DIPLOMACY. The goals of the Central American
Free Trade Agreement (CAFTA-DR) include support of
environmental conservation along with increased economic
growth and trade. This activity responds by providing the
opportunities for rural residents to increase their incomes,
while developing sound practices for the long term
conservation of biodiversity and natural resources in some
of the most critical conservation areas of El Salvador.

-------------- --------------

16. TITLE: Environmental Law Compliance and Enforcement
-------------- --------------

17. PURPOSE: This activity will strengthen the ability of
El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua and
the Dominican Republic to enforce existing environmental
legislation. This was the number one priority identified by
the parties during the negotiation of the Cooperative Work

enforcement within the CAFTA-DR countries is weak. Existing
institutions within the countries have limited human and
financial resources, and many lack the necessary authority
to enforce laws. Existing legal frameworks often lack the
implementing regulations and procedures, hindering
implementation. In addition, current environmental laws
throughout the region need to be harmonized to reduce trade
barriers brought about by differing standards and systems.
While the challenge of meeting the obligations of CAFTA-DR
and other agreements falls primarily on the national
governments of each country, a regional approach is
essential to harmonize implementation across borders. USAID
will work with EPA and relevant government ministries by
using the CCAD regional environment platform. This approach
will build continuity through administration changes; build
on positive experiences in some countries; and offer
economies of scale as similar themes can be handled by the
same team of experts.

19. Expected Results:

-- At least one environmental regulation or administrative
procedure developed per country each year of the activity.

-- At least 50 government officials/trainers trained in each
country on how to use relevant environmental management
principles and tools, including the use of regulatory and
administrative incentives, as well as voluntary measures.

-- Each government has completed an internal assessment and
plan on how they can more efficiently use the resources they
have for environmental management.

20. Specific Activities:

-- Eliminate law enforcement gaps. Help Governments develop
the needed legislation to fill existing legal gaps in
environmental legislation. Work will focus on priority
sectors as defined by the trade Ministries in each country.

-- Strengthen the capacity of authorities to apply existing
environmental protection procedures. Authorities charged
with environmental protection, natural resource protection,
and pollution control and prevention face capacity problems.

USAID will strengthen the countries in the region to
identify and effectively prosecute environmental crimes
using each country's environmental legislation.

-- Define environmental law enforcement process. USAID will
work with judicial authorities and environmental agencies to
help develop enforcement procedures, from investigation and
gathering of evidence, to building a case, to determining
how to prosecute a case and presenting that case and
evidence effectively to a judicial body. The training will
focus on the importance of working with other national
enforcement entities to build successful cases.

-- Train key staff in environment management tools. USAID
will train authorities in relevant environmental management
principles and tools, including the use of regulatory and
administrative incentives. Develop a strategy to create or
use financial/economic incentives to contribute to
environmental protection in productive sectors.

-- Provide technical assistance to governments to assist
them in internalizing management costs in national and local
municipal budgets. National Governments need to internalize
the costs of environmental law enforcement. Adequate
operating budgets are necessary so that Environment
Ministries and other entities have the means to carry out
inspections (staff and operating expenses).

21. US POLICY OBJECTIVES. As signatories to CAFTA-DR,
participating countries are required to improve and
effectively enforce their existing environmental laws.
Article 2 of the Environment Chapter under CAFTA-DR
establishes that a party "shall not fail to effectively
enforce its environmental laws, through a sustained or
recurring course of action or inaction, in a manner
affecting trade between the Parties, after the date of entry
into force of this Agreement." The ECA work plan identifies
environmental law enforcement as a priority under section
1.1 "Strengthening Environmental Law Compliance and
Enforcement Systems: Support the strengthening of national
systems for effective enforcement of Parties' environmental
legislation, including administrative and judicial
procedures." It is a key USG policy goal that this
commitment be met.

22. NEW/PREVIOUS WORK. USAID has built a strong foundation
for policy work throughout the region, working in close
collaboration with bilateral and regional organizations
including CCAD, local and international NGO's, USG agencies
(DOI, EPA, USDA, DOI, NOAA, DOC, NASA) and other
organizations. Thanks to USAID's early work with EPA and
CCAD, a framework document to develop effective
environmental laws and regulations was developed and served
as the base for creating most of the Environment Ministries
in the region. CCAD and EPA collaborated to develop an
environmental law textbook and developed a regional law
network. Model legislative frameworks and regulations have
been developed on several environmental topics. The
experience these actors have gained working in the region
will allow us to quickly target assistance to fill
legislative gaps and address law enforcement priorities in
each country. FY 2005 funds will be used to develop a
baseline needs assessment.

23. ESTIMATED COST. $ 2,750,000 in FY 2006 ESF ($1,250,000
for technical assistance provided by USAID and EPA and
$250,000 per country to address country-specific
constraints). A similar investment should be considered for
FY 2007.

24. LOCAL BUY IN. Local authorities identified
"Strengthening each Party's environmental management
systems, including strengthening institutional and legal
frameworks" as first priority in the Cooperative Work
Program. The Cooperative Work Program was formulated
through interagency coordination among the Ministries of
Environment and Trade of each of the countries in the region
and based upon joint and consensual decisions. On the
ground activities will be developed regionally or
nationally, depending on local capacity.

25. PUBLIC DIPLOMACY. This project would provide a venue
to increase the visibility of USG efforts to
conserve/maintain the environment in Central America and the
Dominican Republic.

-------------- --------------

26. TITLE: Improve Private Sector Compliance with
Environmental Legislation

-------------- --------------

27. PURPOSE: This activity will improve the private
sector's environmental performance and competitiveness by
providing flexible incentives for them to adopt clean
production technologies in their production processes.
USAID will spearhead public-private partnerships that
leverage private sector resources to achieve voluntary
compliance with national environmental laws.

industry poses a serious risk to the region's ability to
comply with CAFTA-DR. The private sector plays an
influential role in determining whether governments develop
and implement legislation that addresses environmental
hazards. The implementation of voluntary mechanisms to
enhance environmental performance will bring together the
private sector and Government as partners to reduce
contamination. This program will create public private
partnerships that will encourage voluntary compliance with
environmental legislation. It will enlist the private
sector in making investments that both improve environmental
performance yet also have a direct impact on firm

29. Expected Results:

-- Net reduction in energy consumption and expenditures.

-- Net reduction in wastewater generation from production
processes and improved solid waste management through the
more efficient use of inputs.

-- Public employees and private sector businesses more
knowledgeable about best practices that will improve
environmental performance.

-- Net savings in production costs due to more efficient

30. Specific Activities:

-- Develop public-private partnerships. Public-private
partnerships will be developed to facilitate the transfer
and adoption of cleaner production technologies. USAID will
promote voluntary and flexible mechanisms to encourage
public/private partnerships for environmental protection,
including the development of market incentives and economic
incentives for environmental management.

-- Increase access to clean production financing. One of
the biggest limitations businesses face is the lack of
capital available in the region to make clean production
improvements. The clean production Development Credit
Authority establishes a non-traditional line of credit for
private sector companies in the region interested in making
clean production improvements. The Development Credit
Authority reduces the risk banks face by providing partial
loan guarantees. USAID proposes to increase the available
credit under the Development Credit Authority and expand
coverage to include the Dominican Republic and Guatemala.

-- Promote clean production best practices. USAID will
promote clean production schemes in productive processes,
applying best practices to improve efficiency in the use of
raw materials and inputs. USAID will promote incentives by
creating a program to recognize private sector success and
performance through national environmental innovation
awards, in cooperation with other donors

31. US POLICY OBJECTIVES. The Governments in the region
recognize that incentives and other flexible and voluntary
mechanisms can contribute to the achievement and maintenance
of environmental protection. The Cooperative Work Program
stresses under Article 1.1.8 which stresses the need to
strengthen the private sector's ability to comply with
environmental legislation. US policy interests are best
served by a cooperative effort between the private sector
and government.

32. NEW/PREVIOUS WORK. USAID has already established a
regional clean production Development Credit Authority
(scheduled to end in 2010) and funds a clean production
expert at CCAD who works with the Clean Production Centers
in each country (many of them funded by USAID bilateral
programs) to encourage private sector businesses to make
clean production improvements. The clean production
Development Credit Authority provides a partial loan
guarantee to banks to encourage loans in clean production.
USAID El Salvador recently started a clean production
activity with the World Environment Center, to promote
private sector led clean production in El Salvador. This
activity will complement efforts by providing funding to
disseminate best practices and develop public private
partnerships so that government authorities, clean
production centers, banks and the private sector work in
harmony to promote voluntary compliance with existing
environmental laws.

33. ESTIMATED COST. $ 1,750,000 in DA Energy funding
and/or ESF for 2006. A similar amount will be needed for FY

2007. USAID is already investing $600,000 in clean
production activities in El Salvador in FY 2005. USAID also
plans to spend $100,000 this year to fund a clean production
expert at CCAD to work closely with banks and clean
production centers to encourage the private sector to apply
for loans.

34. LOCAL BUY-IN. Chapter 17 of CAFTA-DR (Article 17.4)
establishes the need for flexible voluntary mechanisms to
improve environmental performance and environmental
cooperation to facilitate the development and transfer of
appropriate technologies. Demand for clean production
technologies is increasing throughout the region because
energy costs make businesses less competitive in global
markets. We expect to leverage at least $1 million from the
private sector through a public private partnership.

35. PUBLIC DIPLOMACY. This activity provides public
visibility through the Environmental Innovation Prize for
Clean Production. As Environment Ministries have
enthusiastically embraced clean production as a way of
addressing the twin goals of reduced pollution and increased
competitiveness, USG public diplomacy efforts can highlight
these "win-win" solutions.

-------------- --------------

36. TITLE: Enhancing Public Participation in CAFTA-DR
Environmental Compliance

-------------- --------------

37. PURPOSE: This activity will help Costa Rica, the
Dominican Republic, El Salvador, Nicaragua and Honduras
comply with CAFTA-DR provisions on increased public
participation in environmental matters.

DR countries have had limited experience in encouraging
public participation in environmental matters. Furthermore,
the capacity to effectively manage and respond to citizen
complaints regarding alleged environmental law violations
varies significantly between countries. Yet, CAFTA-DR
establishes a number of requirements for public
participation and communication. Under the CAFTA-DR
Environment Chapter, the countries must receive public
complaints and make them available to the public. Signatory
countries are required to develop systems to investigate
alleged violations of its environmental laws and to
establish a national consultative or advisory committee.
This activity will help the Dominican Republic, Costa Rica
and other Central American nations comply with these

39. Expected Results:

-- Build national capacity to respond to citizen

-- Create a designated environmental information center
within each Ministry of Environment that will provide public
access to information.

40. Specific Activities:

-- Establish a functioning Trade and Environment Office in
each country to manage environmental claims. The CAFTA-DR
agreements require that signatory countries establish Trade
and Environment Offices once the treaty enters into force.
To help governments meet this requirement, USAID will
provide assistance to develop administrative procedures and
capacity to respond to communications and complaints
received either directly under Chapter 17 or through the
SIECA Citizen Submissions Unit. USAID will strengthen
existing systems for environmental claims used by civil
society to help reduce the response time for responding to
and investigating citizen complaints. USAID will also help
establish points of contacts in other Ministries to handle
and follow through on complaints. We will purchase critical
computer equipment, software and web based communications to
manage and track environmental complaints.

-- Enhance environmental information available to the
public. Most countries do not have a resource center where
the public can easily access information, severely limiting
the ability of the public to initiate a complaint or raise
issues of concern. In order to support each country's
citizen submission process and their newly established trade
and environment offices, USAID will help develop an
environmental information center in each Environment
Ministry. The purpose of these information centers will be
to provide and distribute information about CAFTA-DR to the
general public and provide a one stop shop on laws,
regulations, procedures and other information companies and
private citizens need in order to comply with each countries
environmental legislation when setting up a business. The
centers will provide the countries with the ability to
disseminate environmental information, including information
on environmental impact assessments and the procedures
required to obtain an environmental permit. The countries
would be obligated to provide the staffing for the
information center. USAID will provide some of the basic
infrastructure (computers, office equipment) and funding for
informational materials and public campaigns. USAID will
provide training and technical assistance to government
officials to improve communication and outreach through the
development of websites, and other media.

41. US POLICY OBJECTIVES: This component will assist the
Parties in meeting the public consultation and participation
obligations set out in the CAFTA-DR. This activity will
support the creation or strengthening of entities in the
region responsible for addressing the roles established in
articles 17.5 and 17.6 of the CAFTA-DR and in the ECA. The
national units established (for citizens submissions and
providing environmental information and information on CAFTA-
DR) established through this regional approach, will provide
information about Chapter 17 under CAFTA-DR and the ECA in a
harmonized and consistent manner. Specifically this
activity will address Cooperative Work Program articles:

-- Strengthen technology and installed capacity in
connection with the training of personnel in the offices
designated as Points of Contact by the countries of the

-- Strengthen the ability of the Parties; response
mechanisms to public communications with the Ministries of
Environment and Trade or their equivalent.

-- Promote training and information sharing activities as
well as develop and disseminate materials to promote public
awareness of the environmental provisions of the CAFTA-DR
and ECA.

-- Strengthen the management of, and access by the public to
environmental information in the region.

42. NEW/PREVIOUS WORK: EPA has received funding to design
an information system for public communications and
establish a monitoring system. Matching funds are needed
to cover local costs such as the purchase of equipment,
replicate materials, coordinate efforts regionally and
dedicate staff to the effort. The national information
centers proposed here will feed into the Regional
Environmental Information System known as SIAM which was set
up with support from the World Bank and USAID through NASA.
USAID/El Salvador provided support to the local Environment

Ministry to establish such an information center in 2004
which can be used to quickly jump start the process.
USAID/El Salvador also developed environmental information
materials which can be adapted for use in other countries.
The 2004 ESF funds designated to address these issues are
not enough to adequately address the needs of each Ministry.
USAID's regional program will take advantage of existing
efforts (such as the CAFTA-DR environmental manual and the
information center established with funding from USAID in El
Salvador) to reduce overall costs that would be incurred if
this effort were undertaken individually in each country.

43. ESTIMATED COST: $660,000 of FY 2006 ESF ($110,000 per
country). Each CAFTA-DR country Environment Ministry will
be asked to submit a proposal on how they would like to
utilize the allotted funding to address their priority needs
in establishing information/citizen submission units. Each
ministry will be required to provide information on
counterpart contribution they will provide for the project
and how these centers will become sustainable.

44. LOCAL BUY-IN: The proposal was discussed conceptually
with El Salvador and Nicaragua key government officials in
January. With CAFTA-DR now in force in El Salvador (and
hopefully soon in the other countries), the need to
establish the proposed offices is urgent.

45. PUBLIC DIPLOMACY: Inaugurating information centers and
contact point offices in each country will provide a
tangible means for the US and participating countries to
show that positive steps are being taken to address public
participation needs established by CAFTA-DR.

-------------- --------------

46. TITLE: Expand Countries' Compliance with Multilateral
Environmental Agreements (MEAs)
-------------- --------------

47. PURPOSE: To help CAFTA-DR countries meet their
obligations under the following critical Multilateral
Environment Agreements: CITES, UNFCC and Montreal Protocol.

complying with Multilateral Environment Agreements (MEAs) is
low due to limited resources and lack of trained personnel.
One of the major risks posed by the establishment of common
borders under CAFTA-DR is regulation of the transport of
endangered species and hazardous chemicals. This activity
will ensure that countries have the tools and systems so
that they can meet their obligations under the following
multilateral agreements: CITES, UNFCC, and the Montreal
Protocol. A regional approach provides a more consistent
platform to ensure Ministries do not lose direction when
Governments change.

49. Expected Results:

-- Effective enforcement mechanisms of at least three key
international environmental agreements will be established
and working.

-- Customs officers will better understand their role in
enforcing environmental laws, including international
agreements and domestic implementing legislation. By the
end of the strategy period at least six customs officer
trainers will have developed the skills to provide training
to their fellow officers in each country on these subjects.

-- The CAFTA-DR countries will improve their performance in
meeting CITES obligations. Harmonized procedures and
regulations for implementing CITES will be in place.
Scientific and Management Authorities will have sufficient
capacity to document population status to meet CITES
obligations. The police, customs officers, and general
public will have basic awareness and knowledge of CITES.
Updated regional lists of endangered flora and fauna will be

50. Specific Activities:

-- Regional Mechanisms for Effective Enforcement of MEAs.
MEA implementation is hindered by missing procedures. A set
of procedural road maps will be developed and tailored to
meet each country's specific legislative conditions. USAID

will help strengthen the registration and procedures for the
sound management and transboundary movement of pesticides,
hazardous materials, substances and wastes, including
procedures for Prior Informed Consent. Regional norms will
be developed in some specific instances (such as chemical
importation and use), where they are lacking. Informational
materials will be prepared regarding waste, toxic chemicals,
endangered species and biodiversity, and ozone-depleting
substances. Linkages at the national level between key
enforcement stakeholders, customs officers, customs training
institutes, national focal points for MEAs, judges, and
prosecutors will be strengthened.

-- Build capacity for effective enforcement. Law
enforcement officers (customs, police, judges) lack the
tools and knowledge to effectively enforce existing
legislation related to MEAs. Training materials will be
customized for the CAFTA-DR countries, and customs officials
will be trained in the recognition of species listed on
CITES Appendices. Harmonized procedures and regulations for
implementing CITES will be developed. Regional lists of
endangered flora and fauna will be updated and published.
Guidelines for the population estimates necessary for proper
compliance will be developed. Police, customs officers, and
the general public will be educated and provided with
training through multi-media outreach campaigns.

51. US POLICY OBJECTIVES: As signatories to CAFTA-DR,
participating countries are required to implement and
improve compliance with multilateral agreements to which
they are all party. This project will address three actions
identified in the ECA work plan as follows:

-- Strengthen capacity for national implementation of CITES,
RAMSAR, the Montreal Protocol and other relevant MEAs to
which we are all Party, including by disseminating
procedures for their implementation and undertaking public
awareness campaigns.

-- Provide training and capacity building to Scientific and
Management Authorities, Customs authorities and national
police to enhance implementation of CITES.

-- Develop programs and projects to provide economic
instruments to protect wildlife at the regional and national

-- Strengthen the enforcement of restrictions on trade in
ozone depleting substances under the Montreal Protocol and
the development of innovative mechanism for encouraging
cross boundary engagement in reducing the use of such

52. NEW/PREVIOUS WORK: USAID has built a strong foundation
for policy work throughout the region, working in close
collaboration with the Central American Governments through
CCAD. USAID has worked with CCAD and EPA to promote
knowledge of relevant MEAs and harmonization of regulations
and procedures. In collaboration with EPA and NASA, USAID
is helping countries meet the United National Framework
Convention on Climate Change (UNFCCC) requirements to
produce a report on their greenhouse gas emissions through
the development of tools and improvements in data quality.
Activities planned here complement the UNDP GEF activities
on climate change, the World Bank efforts on payments for
environmental services, and the Spanish Cooperation's
biodiversity conservation work.

53. ESTIMATED COST: $1.15 million of FY 2006 ESF and DA
(with $150,000 for each CAFTA-DR country and $250,000 for
regional core costs). USAID requests DA Biodiversity and NRM
funding in order to include Costa Rica. Matching funds will
be provided from national governments through CCAD. This
activity will work in close coordination with other USG
agencies through USAID's existing interagency agreements to
provide specific training and technical assistance that is
not available in the region. Other project partners and
implementers may include Environment and Trade Ministries,
Agriculture, and Customs staff, and local and international

54. LOCAL BUY-IN: As the activity is designed to meet
national government requests for assistance through CCAD.
Proposals were shared with CCAD as the representative agency
for all the Ministers of Environment for the CAFTA-DR


55. PUBLIC DIPLOMACY: A public diplomacy strategy is
already incorporated through planned public outreach
campaigns. Opportunities for public diplomacy would come
from key workshops and materials published and disseminated.

-------------- --------------

56. TITLE: Creating Incentives for Improved Management of
Critical Biodiversity-rich Watersheds
-------------- --------------

57. PURPOSE: This activity will enhance market incentives
for improved natural resource management in Costa Rica,
Guatemala, Honduras, and Nicaragua and build the basis for
sustainable financing in three watersheds of high
biodiversity importance (utilizing DA biodiversity and
agriculture funds).

exceptional biodiversity that needs to be conserved for both
its current economic value and potential future value. The
future growth of the region depends on the health of its
natural resource base. For example, sustainable flows of
income from tourism and the availability of clean water
supplies are both directly related to environmental health.
However, there are insufficient financial resources to fully
fund and implement protected area and watershed management
plans. Governments rarely allocate adequate funds for the
environment during the budget process, and current policies
rarely allow for significant generation and retention of
fees for management at the local level. There are few
incentives for local producers to manage their natural
resource base themselves. Recognizing the considerable
potential of tourism and non-traditional agricultural and
forestry products, this activity will help build market-
based incentives for improved natural resource management.

59. Expected Results:

-- Improve visitor infrastructure at 10 target sites.

-- Reduce environmental infractions by the tourism sector.

-- Reduce resource degradation by six communities within and
near protected areas.

-- Increased trade of sustainably produced environmental
goods and services.

-- Increase the level of sustainable financing available for
resource management.

-- Increase the level of sustainable financing made
available for resource management through "payment for
environmental services."

60. Specific activities:

-- Improvement of tourism infrastructure. Visitor
infrastructure, such as trails, observation towers, and
information centers, will be improved at priority sites
identified by Tourism and Environment Ministries. Guides,
and other service providers, such as hotel staff, and
transportation providers, will be trained in best practices.

-- Increased options for sustainable income generation.
Many rural residents have few income generation options, a
pattern that encourages adoption of environmentally
destructive agricultural practices. USAID will build on its
experience in identifying and promoting alternative
livelihoods for communities near protected areas. Community
members will be provided specialized technical assistance
and vocational training. Where possible, assistance will be
provided in establishing market access for natural products
from communities living near protected areas.

-- Helping governments remove barriers that keep funds from
reaching protected areas. The activity will address policy
constraints that prevent funds from getting to where they
are needed for improved management. It will also address
capacity limitations that prevent local residents from
identifying, producing and trading in environmental goods
and services.

-- "Payment for Environmental Services" as a concept for
improved management will be promoted with selected local and
national governments, building on the existing experience at
sites in Costa Rica, Honduras, Nicaragua and Guatemala.
Payments for Environmental Services will be implemented at
selected target sites. Environmental payment service
systems will be reviewed by experts, and their findings will
be discussed at public meetings. Findings of evaluations
will be provided to NGOs, the general public, as well as
national and local government.

61. U.S. POLICY OBJECTIVES: This activity directly
addresses priorities established by the signatories of CAFTA-
DR in the ECA work plan that highlights the need for
sustainable financing for natural resource management.
Specifically, it addresses ECA work plan sections that

-- Improve visitor infrastructure and services to increase
tourism while better protecting the resources.

-- Promote alternative livelihoods based on sustainable
resource use for communities within and near protected

-- Promote activities directed towards strengthening the
capacity of the Region to identify, produce and trade in
environmental goods and services.

-- Promote and implement market schemes for environmental

-- Validate and promote at a regional level the use of
evaluation methodologies for environmental payment services

62. NEW/PREVIOUS WORK: USAID has experience working on
tourism, payments for environmental services, and
certification of environmental goods in the region. USAID
has worked in close collaboration with the CA governments
through CCAD. Some examples include the development of a
tri-national ecotourism route in the Gulf of Honduras and
the development of public use plans for protected areas. In
the agriculture sector, USAID support for sustainably
produced gourmet coffee led to the sale of 6.6 million
pounds of certified organic coffee and over 237,000 tons of
certified environmentally friendly bananas. In addition,
over 60,000 cubic meters of certified timber products were
sold. In this activity, USAID will build upon this
foundation and work on these issues through local
organizations. Activities complement the World Bank efforts
on payments for environmental services and the Interamerican
Development Bank work on tourism.

63. STIMATED COST: USAID requests $1,800,000 in FY 206
DA Biodiversity funds to fund the first year o this
activity. For FY 2007, an additional $1,60,000 request
will be made. Matching funds will e provided from national
governments and other dnors working with CCAD. This
activity will also everage a 25 percent from Conservation
Internatinal who has an extensive network of local partners
in the region.

64. LOCAL BUY-IN: Proposals wee shared with CCAD as the
representative agency for all the Ministers of Environment
for the CAFTA-DR countries. This proposal is endorsed by

65. PUBLIC DIPLOMACY STRATEGY: The activities described
here represent some of the most visible and valued USG
investments in the region. By directly working with
communities around protected areas, USAID can positively
influence the livelihoods of thousands of individuals and
demonstrate that free-trade agreements, environmental
progress and income growth for the poor are not
incompatible. In the past, the public diplomacy
opportunities of such programs have proven to be enormous.

66. Comment. Post appreciates the opportunity to provide
input into environment TCB programs. Regional buy-in to the
process is of vital importance, and we believe the programs
outlined will encourage the maximum benefit and compliance
with the CAFTA-DR agreement. We understand that the
interagency group is working to obligate the funding for FY
2006 as equitably and as rapidly as possible. Post hopes

that future project requests will provide as much time as
possible to work with the CAFTA-DR governments, business and
NGO communities to develop these project ideas. We also
wish to ensure that projects have the ability to access
follow-on funding in future years to make sure that
commitments negotiated within CAFTA-DR are complied
with. Overall compliance with the letter and the spirit of
the FTA are our goals, and some projects will require a
several year commitment to see them through to their
conclusion. We look forward to the backing of the
interagency group for these programs. End Comment.