El Salvador Bilateral Project Recommendations for use of

UNCLAS SAN SALVADOR 000785 SIPDIS SIPDIS FOR OES/ENV RACHEL KASTENBERG AND BOB WING WHA/EPSC JUN BANDO USAID/LAC/RSD JOHN GARRISON USTR ENVIRONMENT AND NATURAL RESOURCES MARA M. BURR E.O. 12958 N/A TAGS: EAID ETRD SENV ECON ES SUBJECT: El Salvador Bilateral Project Recommendations for use of CAFTA-DR Environmental Cooperation Agreement FY 2007 Funds. REF: STATE 37718 1) Summary: Per reftel this cable contains Post proposals for bilateral projects for use of FY 2007 CAFTA-DR Environmental Cooperation Agreement (ECA) funds. These proposals build on priorities presented by El Salvador trade and environment representatives during consultative meetings between CAFTA-DR country representatives, State/OES and USAID in March 2007. The proposals also build upon work that began with FY 2006 funding. In addition to these bilateral proposals, Post is sending a list of regional priorities in a separate cable. For bilateral programs the breakdown in requested funding is as follows. Institutional Strengthening for Effective Implementation and Enforcement of Environmental Laws: $1,180,000 Biodiversity and Conservation: $90,000 Market-Based Conservation $1,200,000 Total $2,470,000 End Summary. Introduction -------------- 2) Posts in the CAFTA-DR countries have been requested to develop suggestions for trade-related labor and environment projects utilizing $40 million in FY2007 trade capacity building funds(reftel). For environmental projects, these funds will be a continuation of the $18.6 million of FY 2006 funds. Some of the projects outlined build on efforts begun with FY 2006 funds. All the bilateral projects contained in this cable follow Department of State guidance that the projects be trade enhancing. Implementation of these projects will allow El Salvador to raise environmental enforcement standards, allowing greater public access to information and greater investor confidence. As a result of history, geography, and population, El Salvador faces many more "brown" issues than "green" issues and the projects outlined in this cable attempt to address these issues in a balanced manner. Post urges that when project decisions are made, El Salvador's unique environmental challenges be taken into account. 3) With FY 2006 funds now in place and work commencing on selecting projects for FY 2007 funds, Post requests that the Department keep in mind the number of projects initiated in FY2006. Due to congressional reporting requirements, each of these projects needs management and oversight, the levels of which do not differ greatly depending on the size of the project. The funds for FY2006 were allocated across many elements. Many elements received low levels of funding, but still implied a significant management burden on posts. Therefore, in order to maximize the use of funds to support our partner nations, Post requests a smaller number of total projects, each being funded more fully, thereby minimizing overhead costs. A more targeted approach to the projects will also ease implementation by allowing agencies in the field to concentrate on the management of fewer projects and focus on key priorities with the partner countries. A planned, targeted approach also is easier to justify to Congress. El Salvador Bilateral Proposals -------------- ¶I. Institutional Strengthening for Effective Implementation and Enforcement of Environmental Laws -------------- -------------- 4) PURPOSE: This activity will strengthen the ability of El Salvador to develop sound environmental regulations and policies and effectively enforce existing environmental legislation. Developing and enforcing sound environmental regulations will provide El Salvador with an environment attractive to investors. When combined with planned regional programs, this activity will ensure that El Salvador does not provide perverse incentives to investors due to lax environmental standards or enforcement. This was the number one priority identified during the negotiation of the Cooperative Work Program. It has remained a priority for all countries as evidenced by the country presentations at the March 2007 CAFTA-DR environmental meeting in San Salvador 5) DESCRIPTION AND JUSTIFICATION: El Salvador has a relatively new Ministry of Environment that is working hard to develop and implement regulations across a broad spectrum of priorities. The programs outlined here will proactively engage the private sector, establish regulations for environmental permitting (including the administrative procedures for receiving permits),codify the sanctions for breaking environmental regulations, and allow for the proper management of dangerous and toxic substances. Long term results will be an improvement in environmental standards, enforcement of environmental regulations, and a more transparent investment climate. 6) EXPECTED RESULTS: - Prepared guidelines for administrative and sanctions/fines procedures. - Establishment of a manual of procedures for processing environmental permits. - A final draft bill prepared for the management of agricultural and industrial chemicals. - Establishment of an operational management information system for toxic and dangerous chemicals within MARN. - 20% reduction in operational costs for firms using cleaner production procedures. - Establishment of three clean production agreements with private firms. - Cleaner production technologies research and benefits identified and publicized. - Increase in access to and number of products available in the market resulting from cleaner production. - Establishment of an environmental evaluation system, including land cover and land use mapping capability. - 100 persons trained in environmental evaluation. - Evaluation manuals developed for sectors identified with high environmental impact. - Five Municipal Environmental Units established. - Establishment of a public contact office within MARN for the receipt and processing of public complaints. SPECIFIC ACTIVITIES: -------------- Strengthen legal and institutional frameworks ($90,000) 7) El Salvador needs to improve its monitoring and enforcement of its environmental laws. Based on GOES priorities, CAFTA-DR FY 2007 resources will focus on 1) improving administrative and sanctioning procedures; 2) developing procedures manual for processing environmental permits; 3) drafting laws for the management/use/prohibition of agricultural and industrial chemicals, and 4) establishing a Management Information System for controlling the use of dangerous and/or toxic substances. These actions will provide the teeth that El Salvador needs to ensure businesses and individuals comply with environmental regulations. It will also create a transparent mechanism for environmental impact assessments and their authorization. This project will directly support ECA work plan priorities 1.1.2, and 1.1.3. Promote industrial competitiveness and environmental compliance through cleaner production. ($700,000) 8) By leveraging ongoing work being undertaken by the Comision Centroamericana de Ambiente y Desarrollo (CCAD) in the region, private sector firms in El Salvador will be able to increase productivity by adopting cleaner production techniques. Efforts will focus on voluntary clean production agreements, whereby firms invest in newer, cleaner technologies in order to reduce firm production costs. The use of voluntary clean production agreements will also enhance the ability of MARN to verify compliance with pollution regulations. This project supports ECA work plan priorities 3.1.1, 3.1.2, and 3.1.3. Establish an environmental evaluation system ($220,000) 9) El Salvador includes ecosystems that span the range from mountain cloud forests to mangrove estuaries along the coast. The GOES lacks the ability to efficiently review potential impacts, either from small enterprises or large state programs. Sectors that potentially produce high environmental impacts such as agriculture are a particular concern and need established evaluation criteria. For instance the GOES is considering expansion of sugar cane production as a source for biofuels production. Furthermore, the GOES cannot systematically assess the impact of proposed land use patterns given the lack of a central database. By establishing an environmental evaluation system, El Salvador will be able to make informed, science based decisions. This project will support ECA work plan activities 1.1.4 and 1.1.5. Improve public information and participation ($170,000) 10) As part of its obligations under CAFTA-DR, El Salvador is required to ensure public participation in the environmental complaints process. This is one of the most important tenets in promoting and maintaining a participatory democracy. El Salvador has established a public information office within MARN. This activity will improve public diffusion of environmental management information. In addition to efforts at a national level, MARN will push for the development of Municipal Environmental Units to better respond to needs at the local level. This project will support ECA work plan activities 1.2.1, 1.2.2, and 1.2.3. 11) NEW/PREVIOUS WORK: In September 2005, the President of El Salvador launched an effort to promote greater competitiveness with an emphasis on the industrial sector. The Ministry of Economy (MINEC) has taken the lead in implementing the National Cleaner Production Policy that focuses on the development of economic incentives for cleaner production and the promotion of voluntary agreements to improve environmental compliance. In addition, MINEC has developed a Technical Assistance Fund to promote the adoption of energy efficiency and cleaner production practices. USAID also funded CAFTA environment public awareness promotion efforts that included the development and mass distribution of a background pamphlet explaining CAFTA requirements and also provided support to a technical library for the Ministry of the Environment. 12) ESTIMATED COST: The estimated cost of the four components described above is $1,180,000. 13) LOCAL BUY IN: CAFTA-DR Article 17.4 establishes the need for flexible voluntary mechanisms to improve environmental performance. CAFTA-DR governments have recognized cleaner production as a key priority for cooperation in Sections 1.1.9 and 4 of the ECA Work Plan. These activities respond directly to the top priorities established by the GOES at the April 2007 CAFTA-Dr environment meeting in El Salvador. USAID worked with MARN in series of formal work sessions to refine El Salvador's CAFTA-DR priorities. USAID prime counterpart was MARN's Office of International Cooperation and its director, Rina de Jarqun. 14) PUBLIC DIPLOMACY: These activities will provide many opportunities to highlight USG efforts to ensure the success of CAFTA-DR and help El Salvador comply with Chapter 17 commitments. II. Biodiversity and Conservation -------------- 15) PURPOSE: This activity will strengthen the ability of El Salvador to effectively implement CITES agreement responsibilities and ensure existing Salvadoran wildlife conservation laws are consistent with CITES. It will also improve interagency coordination on CITES issues. 16) DESCRIPTION AND JUSTIFICATION: Illegal trafficking in wildlife species is widespread throughout Central America, but El Salvador's current capacity for complying with CITES requirements is weak. Existing Salvadoran wildlife conservation laws and regulations were established prior to CITES and are not always consistent with CITES standards. When it comes to enforcement actions, interagency communication and coordination is generally poor. The GOES has proposed the establishment of an inter-institutional committee of Ministry personnel and law enforcement entities to meet CITES commitments. The GOES is also exploring the creation of a centralized service for keeping and rehabilitating rescued wildlife. Lastly, the GOES currently does not have any policy tools that permit effective management of invasive or exotic species. 17) EXPECTED RESULTS: - El Salvador's current wildlife regulation framework will be fully reviewed and inconsistencies with CITES identified and appropriate national changes made. - 40 officials from customs, police, and attorney general offices trained in CITES enforcement. Appropriate government institutions will understand their role in implementing wildlife conservation laws and coordinate actions effectively. - An effective wildlife rescue center will be operating. - Policy changes will permit the effective management of exotic species. 18) US POLICY OBJECTIVES: As signatories to CAFTA-DR, participating countries are required to comply with existing environmental laws, regulations and/or agreements. Furthermore, as signatories to CAFTA-DR, countries are required to implement and improve compliance with multilateral agreements to which they are a party. This project will address three activites identified in the ECA work plan as follows: 19) Activity 1.3.1. Strengthen capacity for national implementation of CITES, RAMSAR, the Montreal Protocol and other relevant MEA's to which we are all Party, including by disseminating procedures for their implementation and undertaking public awareness campaigns. 20) Activity 1.3.2. Provide training and capacity building to Scientific and Management Authorities, Customs authorities and national police to enhance implementation of CITES. 21) Activity 1.3.3. Develop programs and projects to provide economic instruments to protect wildlife at the regional and national levels. This project meets the requirements under the Natural Resources and Biodiversity and Clean Productive Environment Elements of the Joint State/USAID Framework. 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, NOAA, DOC, NASA) and other organizations. Thanks to USAID's early work with EPA and CCAD, effective environmental laws and regulations were developed and most of the Environment Ministries in the region were created. USAID successes include the framework regulation for waste water, a regional manual for environmental inspections, and the harmonized administrative procedures for sanctions for environmental crimes. 23) ESTIMATED COST: The estimated cost of this activity is US $90,000. 24) LOCAL BUY IN: This project was developed in close consultation with El Salvador's Ministry of Environment. It is one of the top three priorities of the GOES. 25) PUBLIC DIPLOMACY: This activity would provide a venue to increase the visibility of USG efforts to promote wildlife conservation within El Salvador and El Salvador's commitment to comply with CITES requirements. III. Market based conservation in Montecristo National Park -------------- -------------- 26) PURPOSE: This activity will improve El Salvador's capacity to effectively manage biodiversity and natural resources within GOES priority protected areas. Management capacity includes the ability to identify and prioritize biodiversity threats, the establishment of effective interventions that both conserve eco-systems, ability to generate revenue from protected areas, and ability to monitor results. This is one of El Salvador's top three priorities. 27) DESCRIPTION AND JUSTIFICATION: Montecristo National Park is one of El Salvador's most important national parks and natural areas. This park, in the far northwest of the country, borders Guatemala and Honduras. Possessing mountain tropical forest and pine-oak woodlands, it is one of the jewels in the Salvadoran protected area system. But the park is under pressure from threats that include human encroachment, poor management practices, and a lack of conservation incentives for surrounding communities. The Ministry of the Environment currently manages park operations. Tourism, now very limited, has great potential for revenue generation. Opportunities for local residents to engage in revenue-creating conservation activities (guide services, retail sales, etc.) are needed. Considerable scope exists for alliances with private sector tourism operators and local businesses. 28) EXPECTED RESULTS: - Enhanced park budget though allocation to the park of a portion of park visitor and concession fees. - Improved park infrastructure that minimizes potential negative environmental impact from construction and/or increased tourism. 29) 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 activities that include: 30) Activity 3.2.1. Improve visitor infrastructure and services to increase tourism while better protecting the resources. 31) Activity 3.2.2. Promote alternative livelihoods based on sustainable resource use for communities within and near protected areas. 32) Activity 3.3.1. Promote activities directed towards strengthening the capacity of the Region to identify, produce and trade in environmental goods and services. 33) This project fits under the Economic Growth Objective, Environment Program Area. It meets the requirements under the Natural Resources and Biodiversity Element of the Joint State/USAID Framework. 34) NEW/PREVIOUS WORK: USAID is currently implementing a biodiversity conservation project with similar goals within the western region of the country (an area that does not include the area described in this project). USAID received $600,000 in FY 2006 CAFTA-DR funds to advance biodiversity and conservation goals under this project. USAID has considerable experience working on tourism and sustainable management of natural resources in the region. This project complements World Bank efforts to create ways to create revenues for environmental services and the Interamerican Development Bank tourism initiative. 35) ESTIMATED COST: The estimated cost of this activity is $1,200,000. 36) LOCAL BUY-IN: This is a top priority of the GOES. The Minister of Environment personally asked the U.S. Ambassador to El Salvador for assistance in carrying out the activities described here. Furthermore, during the March 2007 CAFTA-DR environment meeting, El Salvador representatives endorsed continuing work in trans-boundary watersheds such as Trifinio (Guatemala, El Salvador, Honduras) which includes Montecristo National Park. 37) PUBLIC DIPLOMACY: The activities described here represent some of the most visible 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 and benefits of such programs have proven to be enormous. Glazer