Post on 13-Oct-2020
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: {PAD2532}
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROJECT PAPER
ON AN
ADDITIONAL FINANCING
IN THE AMOUNT OF US$42 MILLION
AND RESTRUCTURING OF THE ORIGINAL LOAN 8099-UY
TO THE
REPÚBLICA ORIENTAL DEL URUGUAY
FOR THE
SUSTAINABLE MANAGEMENT OF NATURAL RESOURCES
AND CLIMATE CHANGE PROJECT
October 26, 2017
Agriculture Global Practice
LATIN AMERICA AND CARIBBEAN
This document is being made publicly available prior to Board consideration. This does not
imply a presumed outcome. This document may be updated following Board consideration and
the updated document will be made publicly available in accordance with the Bank’s policy on
Access to Information.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective October 6, 2017)
Currency Unit = Uruguayan Peso (UR$)
29.18 UR$ = US$1
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AF Additional Financing
BP Bank Procedures
CC Climate Change
CONEAT National Commission for Agro-economic Soil Studies
CPS Country Partnership Strategy
DA Designated Account
DACC Sustainable Management of Natural Resources and Climate Change Project
DGDR Rural Development Directorate (MGAP)
DGNR Natural Resources Directorate (MGAP)
DINAMA National Environment Agency (MVOTMA)
DINAGUA National Water Directorate (MVOTMA)
EAAPs Productive Water Subprojects (Estrategias Asociativas de Agua para la
Producción)
EIA Environmental Impact Assessment
ERR Economic Rate of Return
ESMF Environmental and Social Management Framework
FAO Food and Agriculture Organization
FAGRO Faculty of Agriculture
FM Financial Management
GDP Gross Domestic Product
GHG Greenhouse Gas
GOU Government of the Oriental Republic of Uruguay
GPN General Procurement Notice
IBRD International Bank for Reconstruction and Development
IDA International Development Association
IDSS Information and Decision Support System
INIA National Institute of Agricultural Research
M&E Monitoring and Evaluation
MGAP Ministry of Livestock, Agriculture and Fisheries
MVOTMA Ministry of Housing, Territorial Planning and Environment
NRM Natural Resources Management
O&M Operation and Maintenance
OP Operational Policy
OPP Office of Planning and Budget
OPYPA Office of Agricultural Planning and Policy (MGAP)
PDO Project Development Objective
PGFCC Family Livestock Management and Climate Change Project (Proyecto
Ganadero Familiares y Cambio Climático)
PMU Project Management Unit
PPR Integrated Natural Resources and Biodiversity Management Project
PRENADER Natural Resources Management and Irrigation Development Project
RENARE General Directorate for Renewable Natural Resources (MGAP) SISU Soil Information System for Uruguay (Sistema de Información de Suelos en
Uruguay)
SNIA National Agricultural Information and Decision Support System
SNIG National Livestock Information System
SMP Soil Management Plan
UTEC The Technological University of Uruguay
USCC Climate Change and Sustainability Unit (MGAP)
Vice President: Jorge Familiar
Country Director: Jesko S. Hentschel
Country Representative: Matilde Bordon
Senior Global Practice Director:
Practice Manager/Manager:
Juergen Voegele
Preeti S. Ahuja
Task Team Leaders: Remi Trier and Katie Kennedy Freeman
URUGUAY
ADDITIONAL FINANCING –
SUSTAINABLE MANAGEMENT OF NATURAL RESOURCES
AND CLIMATE CHANGE PROJECT
CONTENTS
Project Paper Data Sheet 6
Project Paper 10
I. Introduction 10
II. Background, Lessons Learned and Rationale for AF 10
III. Proposed Changes 14
IV. Appraisal Summary 21
27
V. World Bank Grievance Redress
Annexes
Annex 1: Revised Results Framework and Monitoring Indicators 28
Annex 2: Detailed Description of Modified or New Project Activities 35
Annex 3: Revised Estimate of Project Costs 43
Annex 4: Revised Implementation Arrangements and Support 45
Annex 5: Economic and Financial Evaluation 46
Annex 6: Green House Gases Analysis 57
ADDITIONAL FINANCINGDATA SHEET
Uruguay
AF- Sustainable Management of Natural Resources and Climate Change (P163444 )
LATIN AMERICA AND CARIBBEAN
Agriculture Global Practice
Basic Information – Parent
Parent Project ID: P124181 Original EA Category: B - Partial Assessment
Current Closing
Date: 30-Jun-2018
Basic Information – Additional Financing (AF)
Project ID: P163444 Additional Financing Type (from
AUS): Scale Up
Regional Vice
President: Jorge Familiar Proposed EA Category:
Country Director: Jesko S. Hentschel Expected Effectiveness Date: 26-Jan-2018
Senior Global
Practice Director: Juergen Voegele Expected Closing Date: 16-Nov-2021
Practice
Manager/Manager: Preeti S. Ahuja Report No: PAD2532
Team Leader(s): Remi Trier and Katie
Kennedy Freeman
Borrower
Organization Name Contact Title Telephone Email
ORIENTAL
REPUBLIC OF
URUGUAY
Mariella Maglia Coordinator
IFIs 59817122220
mariella.maglia@
mef.gub.uy
Project Financing Data - Parent (Sustainable Management of Natural Resources and Climate
Change-P124181 ) (in USD Million)
Key Dates
Project Ln/Cr
/TF Status
Approval
Date Signing Date Effectiveness Date
Original Closing
Date
Revised
Closing
Date
P124181 IBRD-
80990 Effective 17-Nov-2011 17-Jan-2012 24-Feb-2012 01-Mar-2017
30-Jun-
2018
Disbursements
Project Ln/Cr
/TF Status Currency Original Revised Cancelled Disbursed
Undisbu
rsed
%
Dis
bur
sed
P124181 IBRD-
80990 Effective USD 49.00 49.00 0.00 36.56 12.44
74.
60
Project Financing Data - Additional Financing AF- Sustainable Management of Natural
Resources and Climate Change ( P163444 )(in USD Million)
[X] Loan [
]
Grant [
]
IDA Grant
[ ] Credit [
]
Guarantee [
]
Other
Total Project Cost: 47.20 Total Bank Financing: 42.00
Financing Gap: 0.00
Financing Source – Additional Financing (AF) Amount
Borrower 5.20
International Bank for Reconstruction and Development 42.00
Total 47.20
Policy Waivers
Does the project depart from the CAS in content or in other significant respects? No
Explanation
Does the project require any policy waiver(s)? No
Explanation
Bank Staff
Name Role Title Specialization Unit
Remi Charles
Andre Trier
Team Leader
(ADM
Responsible)
Sr Water Resources Spec. Irrigated Agriculture GFA04
Katie Kennedy
Freeman
Team Leader Senior Agriculture Economist Natural Resources
Management and
Agricultural Economics
GFA04
Martin Ariel
Sabbatella
Procurement
Specialist (ADM
Responsible)
Procurement Specialist Procurement GGO04
Luz Maria Meyer Financial
Management
Specialist
Financial Management
Specialist
Financial Management GGO22
Angel Alberto
Yanosky
Environmental
Safeguards
Specialist
Consultant Natural Resources
Management and
Environmental
Management
GFA04
Lilian Pedersen Social Safeguards
Specialist
Consultant Resettlement Policies GEN04
Maria Pia
Cravero
Team Member Junior Counsel Lawyer LEGLE
José C. Janeiro Team Member WFAFO Disbursements WFALA
Ana Elisa Bucher Team Member Sr Climate Change Specialist Natural Resources
Management
Information Systems
GCCRA
Mario I. Mendez Team Member Program Assistant ACS GFA04
Extended Team
Name Title Location
Luis Loyola Irrigation Specialist Santiago, Chile
Locations
Country First Administrative
Division
Location Planned Actual Comments
Uruguay Departamento de Treinta y Tres
Uruguay Departamento de Tacuarembó
Uruguay Departamento de Soriano
Uruguay Departamento de San José
Uruguay Departamento de Salto
Uruguay Departamento de Rocha
Uruguay Departamento de Rivera
Uruguay Departamento de Río Negro
Uruguay Departamento de Paysandú
Uruguay Departamento de Montevideo
Uruguay Departamento de Maldonado
Uruguay Departamento de Lavalleja
Uruguay Departamento de Florida
Uruguay Departamento de Flores
Uruguay Departamento de Durazno
Uruguay Departamento de Colonia
Uruguay Departamento de Cerro Largo
Uruguay Departamento de Canelones
Uruguay Departamento de Artigas
Institutional Data
Parent ( Sustainable Management of Natural Resources and Climate Change-P124181 )
Practice Area (Lead)
Agriculture
Contributing Practice Areas
Additional Financing AF- Sustainable Management of Natural Resources and Climate Change
(P163444 )
Practice Area (Lead)
Agriculture
Contributing Practice Areas
Consultants (Will be disclosed in the Monthly Operational Summary)
Consultants Required ? Consultants will be required
I. Introduction
1. This Project Paper seeks the approval of the Executive Directors to provide an additional loan in
the amount of US$42M to the República Oriental del Uruguay for the Additional Financing (AF) of the
Sustainable Management of Natural Resources and Climate Change Project (P124181, IBRD-8099-UY).
This Project Paper also reflects a proposed restructuring comprising: (a) modification of the PDO; (b) the
triggering of two safeguard policies: O.P. 4.12 Involuntary Resettlement and O.P. 7.50 Projects on
International Waterways; (c) a reallocation of the proceeds of the original loan among disbursement
categories; and (d) a six-month extension of the closing date of the original loan from June 30, 2018 to
December 31, 2018. The closing date of the AF would be November 16, 2021.
2. The additional loan would help finance the costs associated with scaling-up successful activities
under the original loan, while simultaneously promoting and piloting innovative activities, including
those originating from the technical assistance provided by the World Bank Group under the initiatives
“Water for Uruguay” and “Uruguay Green Growth.” In particular, the AF proposes to: (i) invest in an
expansion of outreach of subprojects for farmers and ranchers, including a geographic expansion of
activities aiming at the reduction of effluent from dairy production in the Santa Lucia and other
prioritized river basins; (ii) include new activities to enhance the resilience of family farms, specifically
related to water management, irrigation and grasslands management; (iii) increase the outreach capacity
and interoperability of the National Agricultural Information and Decision Support System (SNIA); and
(iv) invest in capacity building, research capacity and associated infrastructure related to soil.
3. The AF is expected to expand the land area under sustainable landscape management practices
from 2.9 to 3.6 million hectares, representing respectively 44 and 54 percent of total arable land in
Uruguay1. The AF is expected to benefit directly at least an additional 3,900 farmers with individual
and/or collective subprojects and knowledge dissemination, and since the original loan has thus far
benefitted around 5,900 farmers, the total outreach of the project would cover 20 percent of all farmers in
Uruguay.
4. The 3,900 targeted beneficiaries of the AF are: 300 farmers engaged in dairy production in the
Santa Lucia River Basin, 2,000 cattle ranchers with improved livestock practices, 500 farmers who would
benefit from small-scale collective irrigation subprojects, 700 ranchers and farmers with improved access
to water for cattle and individual irrigation, and 400 ranchers who would benefit from insurance for
livestock production. The AF also is expected to have direct and indirect impacts on the agriculture sector
nationwide, resulting from the use of the National Agricultural Information and Decision Support System
(SNIA), from enhanced enforcement of the Soil Management Plan Management policy and from capacity
building activities for farmers’ organizations.
II. Background, Lessons Learned under the Original Loan and Rationale for the Additional
Financing in the amount of US$42 million
Background
1 Considering the arable soils with: (i) very high; (ii) high and; (ii) medium suitability for agriculture, representing a total of
6,627,000ha.
5. The original loan of US$49M was approved on November 17, 2011, and became effective on
February 24, 2012, with a current closing date of June 30, 20182. The Project has been restructured three
times: (i) in July 2014 to trigger OP 4.09 (Pest Management) and revise the Project’s Results Framework;
(ii) in March 2015 to include Preparation Grants as an eligible cost under the Project to finance the
preparation of subprojects; and (iii) in October 2016 to extend the closing date from March, 01 2017 to
June, 30 2018.
6. The original loan has maintained a steady pace of implementation and disbursements. To date, a
total of US$36.56M (74.6 percent of the original loan) has been disbursed, and US$10M is fully
committed, primarily to field-level investments through open calls. The proposed restructuring would
extend the closing date of the original loan by 6 months to ensure a smooth transition between the
original loan and the AF and would provide additional time to complete ongoing investments and allow
for full disbursements of the original loan.
7. The original Project Development Objective (PDO) is to support Uruguay’s efforts to promote
farmer adoption of improved environmentally sustainable agricultural and livestock practices that are
climate smart. Progress towards achieving the PDO has been rated Satisfactory since June 2015.
Implementation Progress has been rated Moderately Satisfactory since October 2014, mainly due to
resource constraints on the Government side, which have also contributed to a 6-month disbursement lag.
The Project has already met the targets for the main PDO Indicators and most of the Intermediate Results
indicators, and is expected to meet the remaining Intermediate Results targets by the closing date.
8. The original loan has already achieved several significant results, including: (i) the launch of the
National Agricultural Information and Decision Support System (SNIA); (ii) the application of
sustainable land management practices to 2.9 million hectares; (iii) the funding of nearly 5,000 climate-
smart on-farm subprojects with individuals and producer groups; and (iv) technical assistance provided to
nearly 35,000 farmers.
Lessons Learned
9. Several important lessons learned from the original loan have been incorporated into the design of
the AF, including:
- Implementation Capacity of the Ministry: The Project Implementation Unit (PIU) of the
MGAP supports the execution of all externally-financed agriculture projects in the country,
including projects financed by the World Bank, the Inter-American Development Bank and the
Global Environment Facility. This has proven to be a unique model: on the one hand, the PIU
functions with a high level of capacity, flexibility and experience. Hosting multiple projects
means the PIU has a clear overview of all externally-financed projects in the country and can
avoid overlap and maximize complementarities. However, the concentration of all project
management in a single PIU may occasionally lead to processing bottlenecks. The AF rates the
implementation capacity of the PIU as a substantial risk, especially in light of the need to
supervise a large number of subproject grants under this project, and will invest in further
strengthening capacity and expanding the team to address this challenge.
2 The original loan closing date of March 1, 2017, was extended by 15 months in October 2016 to June 30, 2018.
- Soil Management Plans: Today, Uruguay enforces one of the most advanced soil protection
regimes for arable land in the world. In 1982, Uruguay passed a Soil and Water Conservation
Law (Law Nº 15.239) that established the background and technical rules for preservation of soils
and waters with agricultural purposes and the recovery of eroded soils. In light of this law, and of
the promulgation of the 2015 budget law (Law Nº 19.355), soil use and management plans
became a requirement for any farmer cultivating over 100ha of arable land. To date, 12,493 plans
have been presented, covering 1.88 million hectares and 96 percent of all crop producers over
100ha.
To date, Soil Management Plans have proven, through meticulous data collection and hundreds of
soil use and management plans, that Uruguay’s agriculture generates high levels of production
with less erosion potential for agriculture. It has also demonstrated Uruguay’s vast capacity for
implementing planning approaches with high degrees of success, largely due to the country’s size,
homogeneity and capacity for data collection (which may limit the ability for lessons to be scaled
to other countries). The AF will build on these successes and support the expansion of these
policies to the grassland systems and develop information systems to help remotely monitor their
compliance.
- National Agricultural Information and Decision Support System (SNIA): During the past
decade, the Sistema Nacional de Información Ganadera (SNIG) brought organization and
international market access to Uruguay’s cattle ranching system and, by association, to Uruguay
beef exports. Under the original loan, SNIA has intended to bring the same organization, best
practice, and data-rich decision making support to the agriculture sector. However, progress has
been slow. Challenges with interoperability between the Ministry’s databases (including SNIG)
and issues with system governance have slowed the development and implementation of SNIA,
which has led to slower than expected dissemination throughout the country.
The AF acknowledges the challenges related to SNIA to date, and has developed a plan for
integrating SNIA into the MGAP’s current operations. The interoperability proposed through the
AF will help ensure the buy-in of multiple groups, easing the issue of governance. The
dissemination plans will aim to reach technicians and farmers throughout the country, and
promote the use of the SNIA platform, enhancing its utility.
- Lessons learned from Technical Assistance provided by the WBG: During the last five years,
the WBG provided several TA that have contributed to the definition of agricultural policies and
project’s activities. Among them, the “Water for Uruguay” TA supported the MGAP in revising
of the Irrigation Bill, approved by the Senate and currently under discussion in the Chamber of
Deputies. This revision aimed at creating favorable conditions for the promotion and the
sustainable management of collectively-managed irrigation schemes (fiscal incentives, obligation
to have an Operation and Maintenance fee, etc.). In addition, the “Green Growth” TA generated
new knowledge on Nutrient Modelling for the Santa Lucia River Basin that will inform and
support the AF.
10. Financial Management was rated Satisfactory by the most recent implementation support mission
carried out in April 2017. Procurement has been rated Moderately Satisfactory for the last 3 years. The
project has complied with all key loan covenants, including audits, financial management reporting
requirements, and environmental and social safeguards. The project has no overdue audits.
Rationale for the Additional Financing
11. Alignment with Country and Bank agendas/priorities. The Project is consistent with the Country
Partnership Framework (CPF) for Uruguay FY16-FY20 (Report No. 97063-UY), which was discussed
by the Board of Executive Directors on December 21, 2015. The project contributes to CPF Pillar I -
building resilience to shocks, and especially to Objective 2 - increase the sustainability and efficient use
of resources. The project is also contributing to the achievement of agricultural targets under the
Nationally Determined Contributions (NDC), both on the adaptation3 and mitigation
4 agendas (cf. Annex
6 – GHG accounting).
12. Scaling-up the development effectiveness of the Sustainable Management of Natural Resources
and Climate Change Project. The Government is seeking to scale-up project approaches that have
demonstrated proof of concept and have directly contributed to the achievement of the Government’s
strategic vision for the sector. The AF would expand its interventions by, among others: (i) scaling-up
agro-environmental measures and investments to reduce and control the effluent load from dairy
production in the whole Santa Lucia River Basin, while the original loan covered only a pilot area, and
expanding this activity to other prioritized river basins that could be selected during implementation (e.g.
Laguna del Sauce); (ii) financing technologies that enhance the resilience of family farming to climate
variability and changes, by increasing access to irrigation, and to water and soil management in general,
at both individual and collective levels; and (iii) strengthening the capacity of the Ministry of Agriculture
in the implementation and monitoring of the Soil Management and Conservation Program, specifically
through the use of online tools and satellite imagery. The AF would also strengthen the National
Agricultural Information and Decision Support System (SNIA in Spanish, for Sistema Nacional de
Información Agropecuaria) and make it accessible to farmers nationwide, whereas under the original
loan the SNIA targeted policy makers and technical staff in the public and private sectors.
13. Piloting new technologies and proposing innovations in climate-smart practices. In addition to
scaling up successful activities, the AF proposes to incorporate new activities to pilot the potential of new
climate-smart investments. A call for proposals related to grasslands management will incorporate
international best practices on grazing and water / shade management for livestock, including forestation,
to increase livestock production efficiency and reduce GHG emissions. In addition, investments in the
SNIA will take national-level information and make it accessible and useful for family farmers, using a
variety of technologies, including SMS, special trainings, and online courses. Additional studies
examining the efficacy of watershed approaches, including tailored nutrient modeling in the Santa Lucia
River Basin, will provide a baseline and direction for future investments.
14. An AF, rather than a new operation, would better consolidate and scale up the current activities,
operational approach, and procedures and also allow for continuity in the ongoing project.
3 On adaptation, the project is promoting: (i) Design and implementation of adaptation measures in cattle production, including water
sources, feed and rangeland management measures; (ii) Development of soil use plans to reduce erosion; and (iii) Protection of surface and
underground water sources through the promotion of non-point sources pollution control (in the Santa Lucia River Basin for example). 4 On mitigation, the project is contributing to reducing emissions from beef production (which account for 78% of CH4 emissions and 63%
of N2O emission) by promoting climate-smart livestock practices to increase productivity and efficiency in beef and dairy production.
III. Proposed Changes
Summary of Proposed Changes
The Additional Financing (AF) proposes to increase the development impact of the original loan, by expanding current
investments to enhance the resilience of family farming, such as small-scale irrigation and management of animal waste
in the country's watersheds, as well as by including new activities, such as the improvement of grazing areas. The AF
will build on activities executed under the original loan that have been shown to effectively promote farmer adoption of
improved environmentally sustainable and climate-smart agriculture and livestock practices.
Change in Implementing Agency Yes [ ] No [ X ]
Change in Project's Development Objectives Yes [ X ] No [ ]
Change in Results Framework Yes [ X ] No [ ]
Change in Safeguard Policies Triggered Yes [ X ] No [ ]
Change of EA category Yes [ ] No [ X ]
Other Changes to Safeguards Yes [ ] No [ X ]
Change in Legal Covenants Yes [ X ] No [ ]
Change in loan Closing Date(s) Yes [ X ] No [ ]
Cancellations Proposed Yes [ ] No [ X ]
Change in Disbursement Arrangements Yes [ ] No [ X ]
Reallocation between Disbursement Categories Yes [ X ] No [ ]
Change in Disbursement Estimates Yes [ ] No [ X ]
Change to Components and Cost Yes [ X ] No [ ]
Change in Institutional Arrangements Yes [ ] No [ X ]
Change in Financial Management Yes [ ] No [ X ]
Change in Procurement Yes [ X ] No [ ]
Change in Implementation Schedule Yes [ X ] No [ ]
Other Change(s) Yes [ ] No [ X ]
Development Objective/Results PHHHDO
Project’s Development Objectives
Original PDO
The development objective of the project is to support Uruguay’s efforts to promote farmer adoption of improved
environmentally sustainable agricultural and livestock practices that are climate smart.
Change in Project's Development Objectives PHHCPDO
Explanation:
The PDO has been changed to streamline the language and eliminate the imprecision of the term “environmentally
sustainable” to allow for more precise measurement of AF outcomes.
Proposed New PDO - Additional Financing (AF)
The development objective of the project is to support Uruguay's efforts to promote farmer adoption of climate smart
agricultural and livestock practices, and improved natural resource management practices in project areas.
Change in Results Framework PHHCRF
Explanation:
Changes are proposed to improve the Results Framework and incorporate lessons learned from the original loan's
experience with data collection and analysis. The proposed changes will do several things: (1) add gender
disaggregation to some indicators, where previously there has been no disaggregation; (2) replace dichotomous
indicators that have already been met (for example, 'Information Decision Support System (IDSS/SNIA) functioning
has been met for several years; (3) modify the wording of several indicators so that it matches the wording of the
World Bank Corporate Results Indicators; (4) redefine some of the indicators to improve data collection and precision
of measurement; and (5) include an intermediate indicator related to the activities developed in the Santa Lucia River
Basin for the reduction of nutrient pollution.
Compliance PHHHCompl
Change in Safeguard Policies Triggered PHHCSPT
Explanation:
Given the increased focus on irrigation projects and improvement of water quality in Santa Lucia, the AF will trigger
OP 4.12 - Involuntary Resettlement, to cover the potential impacts of the collective irrigation subprojects (EAAPs) that
could generate issues of land loss (due to the construction of small water storage infrastructure) and/or right of way (for
water conveyance or electric line transmission). A Resettlement Policy Framework has been prepared by the Borrower
under the supervision of the safeguards specialist, consulted with the main stakeholders and disclosed on September
26, 2017 in the World Bank’s website and on the MGAP’s web site (http://www.mgap.gub.uy/institucional/dacc).
In light of activities related to small-scale irrigation development, OP 7.50 (Projects on International Waterways) is
triggered. The Project however falls under the exception from the requirement to notify other riparian countries
provided for in paragraph 7(c) of OP 7.50 since the water used by the Project’s beneficiaries will be withdrawn from
tributaries that run exclusively in one state and that state, Uruguay, is the lowest downstream riparian. The Project will
not cause appreciable harm to the other riparian countries. The exception to the notification requirements was approved
by the Regional Vice President on July 11, 2017.
Given the small scale of the irrigation investments, the Project will not trigger OP 4.37 (Safety of Dams).
Current and Proposed Safeguard Policies Triggered: Current (from Current
Parent ISDS)
Proposed (from Additional
Financing ISDS)
Environmental Assessment (OP) (BP 4.01) Yes Yes
Natural Habitats (OP) (BP 4.04) Yes Yes
Forests (OP) (BP 4.36) No No
Pest Management (OP 4.09) Yes Yes
Physical Cultural Resources (OP) (BP 4.11) No No
Indigenous Peoples (OP) (BP 4.10) No No
Involuntary Resettlement (OP) (BP 4.12) No Yes
Safety of Dams (OP) (BP 4.37) No No
Projects on International Waterways (OP) (BP 7.50) No Yes
Projects in Disputed Areas (OP) (BP 7.60) No No
Covenants - Additional Financing (AF- Sustainable Management of Natural Resources and Climate Change -
P163444)
Source of
Funds
Finance
Agreement
Reference
Description of Covenants Date
Due Recurrent Frequency Action
IBRD Section I.B.5 of
Schedule 2
Hire experts with experience, qualifications
and terms of reference acceptable to the
Bank in accordance with Section 5.13 of
the General Conditions, for purposes of
assisting the PMU in the supervision of
Sub-projects, and as set forth in the
Operational Manual.
October
26,
2018
New
IBRD Section I.D.1of
Schedule 2
Carry out the Project in accordance with
the ESMF, the RPF, and the Operational
Manual.
CONTINUOUS New
IBRD Section I.D.4 of
Schedule 2
Ensure that the terms of reference for any
consultancy required under Part 2 (a), Part
3 (b) (iii) and Part 3(b) (v) (F) of the
Project shall be satisfactory to the Bank
and, to that end, such terms of reference
duly incorporate the requirements of the
Bank’ Safeguards Policies then in force, as
applied to the advice conveyed through
such technical assistance.
CONTINUOUS New
Covenants - Parent (Sustainable Management of Natural Resources and Climate
Change - P124181) PHHCAFPPrj
Ln/Cr/TF
Finance
Agreement
Reference
Description of
Covenants Date Due Status Recurrent Frequency Action
IBRD-80990 Section I.E.1
of Schedule 2
Carry out the Project in
accordance with the
ESMF, the RPF, and the
Operational Manual.
CONTINUOUS New
IBRD-80990 Section I.E.4
of Schedule 2
Ensure that the terms of
reference for any
consultancy required
under Part 2 (a), Part 3
(b) (iii) and Part 3 (b)(v)
(F) of the Project shall
be satisfactory to the
Bank and, to that end,
such terms of reference
duly incorporate the
CONTINUOUS New
requirements of the
Bank’ Safeguards
Policies then in force, as
applied to the advice
conveyed through such
technical assistance.
IBRD-80990
Finance
Agreement:
Schedule 2,
Section II B 1
Accounting and
Management
Information System
Complied
with
Marked for
Deletion
IBRD-80990
Finance
Agreement:
Schedule 2,
Section I E 1
Compliance with
provisions of
Environmental and
Social Management
Framework and
procedures outlined in
the Operations Manual
Complied
with
Marked for
Deletion
Conditions
PHCondTbl
Source Of Fund Name Type
IBRD Operations Manual updated Effectiveness
Description of Condition
Operations Manual to be updated to reflect the new activities under AF.
Risk PHHHRISKS
Risk Category Rating (H, S, M, L)
1. Political and Governance Moderate
2. Macroeconomic Low
3. Sector Strategies and Policies Moderate
4. Technical Design of Project or Program Low
5. Institutional Capacity for Implementation and Sustainability Substantial
6. Fiduciary Moderate
7. Environment and Social Moderate
8. Stakeholders Low
9. Other Low
OVERALL Moderate
Finance PHHHFin
Loan Closing Date - Additional Financing (AF- Sustainable Management of Natural Resources
and Climate Change - P163444)
Source of Funds Additional Financing Loan Closing Date
16-Nov-2021
Loan Closing Date(s) - Parent (Sustainable Management of Natural Resources and Climate
Change - P124181)
PHHCLCD
Explanation:
A change in the closing date of the original loan is proposed to ensure a smooth transition between the original loan
and the AF, as well as to provide several months of additional time to complete ongoing investments and allow for full
disbursements from the original loan.
Ln/Cr/TF Status Original Closing Date Current Closing
Date
Proposed Closing
Date
Previous Closing
Date(s)
IBRD-
80990 Effective 01-Mar-2017 30-Jun-2018 31-Dec-2018 01-Mar-2017
Allocations - Additional Financing (AF- Sustainable Management of Natural Resources and
Climate Change - P163444)
Source of
Fund Currency Category of Expenditure
Allocation Disbursement %(Type
Total)
Proposed Proposed
IBRD USD Good, Works, non-Consulting services
(other than under category 3) 1.61 80.00
IBRD USD Consulting services and training (other
than under category 3) 17.90 80.00
IBRD USD Preparation Grants and Subprojects
Grants 21.18 100.00
IBRD USD Operating costs 1.31 85.00
Total: 42.00
Reallocation between Disbursement Categories PHHRBDC
Explanation:
The Additional Financing will reallocate US$2.5M of unallocated funds (category 5) of the original loan to Works,
Goods, Non-Consultant Services and/or Consultant Services under Sub-projects (category 3).
Ln/Cr/TF Currency Current Category of
Expenditure Allocation
Disbursement %(Type
Total)
Current Proposed Current Proposed
IBRD-
80990
USD
Good, non-consulting services (other
than under cat 3) 2,600,000.00 2,600,000.00 80.00 80.00
IBRD-
80990
Consulting services and training
(other than under cat 3) 17,000,000.00 17,000,000.00 80.00 80.00
IBRD-
80990
Preparation Grants and Sub-project
Grants 22,800,000.00 25,300,000.00 100.00 100.00
IBRD-
80990 Operating costs 4,100,000.00 4,100,000.00 85.00 85.00
IBRD-
80990 Unallocated 2,500,000.00 0.00 0.00 0.00
Total: 49,000,000.00 49,000,000.00
Components PHHHCompo
Change to Components and Cost PHHCCC
Explanation:
While the Components of the AF will remain the same, a few modifications to the original Project description under
components 1, 2 and 3 are introduced to better reflect the nature of support provided by the Project and the AF will
increase the value of each component. Annex 2 includes a detailed description of the components and activities.
Current Component
Name
New Component names and
Comments
Current Cost
(US$M)
Proposed Cost
(US$M) Action
Establishment of an
Agricultural
Information and
Decision Support
System
Agricultural Information and
Decision Support System
US$5.1 million additional funds from
IBRD under the AF
5.00 10.10 Revised
On Farm Investments
for Climate Smart
Agriculture and
Livestock Management
Territorial Interventions and On
Farm Investments for Climate Smart
Agriculture and Livestock
Management
US$24.8 million additional funds from
IBRD under the AF and US$2 million of
contingencies reallocated to
subprojects of original loan
29.60 56.40 Revised
Capacity Building and
Training US$6.6 million additional funds from
IBRD under the AF 7.50 14.10 Revised
Project Management,
Monitoring and
Evaluation
US$5.5 million additional funds from
IBRD under the AF 4.90 10.40 Revised
Contingencies 2.00
Total: 49.00 91.00
Other Change(s) PHHHOthC PHImplemeDel
Implementing Agency Name Type Action
Ministry of Livestock, Agriculture and Fisheries
(MGAP) Implementing Agency No Change
Change in Procurement PHHCProc
Explanation:
The AF will be implemented under the Procurement Regulations for IPF Borrowers, effective since July 1, 2016. The
Project Procurement Strategy for Development (PPSD) and a Procurement Plan were prepared by the Borrower before
the Decision Meeting, and approved by the Bank on October 5, 2017.
Change in Implementation Schedule
Explanation:
The restructuring includes a six -month extension of the closing date of the original loan from June 30, 2018, to
December 31, 2018. The closing date of the Additional Financing would be November 16, 2021.
IV. Appraisal Summary PHHHAppS
Economic and Financial Analysis PHHASEFA
Explanation:
With the scale-up of investments in irrigation subprojects, the enhancement of benefits under SNIA, and further
strengthening of OPYPA, the pattern of benefits generated by the Project has changed. In addition, with the injection of
the AF resources and Government counterpart financing, the costs of the Project have also changed. During the
preparation of the AF, the team updated the original financial and economic analysis using a cost-benefit methodology to
capture the new estimation of economic benefits from the Project. The analysis found an EIRR of 18 percent and a FIRR
of between 25-42 percent. However, these benefits are considered to be lower bounds of what the project might achieve,
specifically for the EIRR. The analysis recognized additional economic benefits (for example, those of the SNIA), but
describes them qualitatively in the analysis, and plans to quantify them during implementation and the Implementation
Completion and Results (ICR) stages. The costs considered were the AF, Government counterpart financing and
beneficiary contribution, and the benefits were analyzed from the perspective of direct, indirect and co-benefits. A full
description is included in Annex 5.
Technical Analysis PHHASTA
Explanation:
The framework of the four components will remain the same, but the AF will expand investments to scale-up activities
and include additional innovation (cf. Annex 2 for further details):
Component 1: Agricultural Information and Decision Support System
Activities under the AF will aim at: (i) integrating with full interoperability all the distinct information modules of the
Ministry of Livestock, Agriculture and Fisheries (MGAP), such as the existing traceability system for livestock - SNIG
(Sistema Nacional de Información Ganadera), the existing system of agrochemical use (Monitoreo de Aplicación), the
Soil Information System (Sistema de Información de Suelos de Uruguay - SISU), which are currently under construction,
the Soil Management Plan System (Sistema de Gestión de los Planes de Uso- SGPU), currently under construction,
among others; and (ii) enhancing communication about the services provided by the SNIA, establishing a management
system for the sustainability of the system, and ensuring coherence with Uruguayan initiative of Electronic Government.
These will be crucial for ensuring that family farmers throughout the country have access to the aggregated national-
level information for decision-making. Additional tools will be put into place to link small farmers with the SNIA,
including specialized technology and tailored training.
The complete updated component description, considering the activities that will be supported by the AF and those that
were supported under the original loan, is as follows: Provision of support for strengthening SNIA to integrate,
synthesize, and generate critical and timely information in relation to natural resource management, short and medium
term climate forecast, as well as potential long term changes and impacts, including:0
(a) facilitating the integration and consolidation, with full interoperability, of dispersed agriculture, natural
resource management and new climate-related information in an online state-of-the-art platform tailored
to the needs of different users including farmers, advisory service providers, rural insurance and
agricultural research and policy institutions.
(b) improving the methodologies for establishing climate related early warning systems, including the
consolidation of tools developed for risk management and early warning systems by using information
on climate, soil, agrochemical, land uses and water layers;
(c) simulating and evaluating the expected impacts of introducing different adaptation technologies and
policies and contributing to the elaboration of forecasts of agricultural production;
(d) carrying out awareness campaigns, dissemination and communication activities and training programs
for, inter alia, staff of DGRN and INIA, farmers and advisory service providers, on the use and features
of the SNIA;
(e) providing feedback and advice to improve targeting of MGAP’s assistance to farmers, in particular in
respect of Sub-projects; and
(f) establishing a governance system for data sharing, decision making and risk management consistent with
the Electronic Government Initiative to ensure SNIA’s sustainability.
Component 2: Territorial Interventions and On Farm Investments for Climate Smart Agriculture and Livestock
Management
Investments under the AF would scale-up successfully piloted activities under the original loan aimed at: (i) reducing
diffused pollution load from dairy production in the Santa Lucia River Basin and other prioritized river basins that may
be selected during implementation (e.g. Laguna del Sauce); and (ii) increasing access to water for livestock and crops
(irrigation) in order to enhance resilience, through support to individual farmers and to Water Users organizations by
expanding the successful experience of the EAAPs (Estrategias Asociativas de Agua para la Producción). In addition,
based on international best practices and Uruguay’s leadership in environmental stewardship, the AF would undertake a
new activity to promote the establishment of integrated systems, combining grazing areas with rapid-growing trees
providing shade for livestock.
The complete updated component description, considering the activities that will be supported by the AF and those that
were supported under the original loan, is as follows:
(a) Provision of: (i) Preparation Grants; and (ii) technical assistance to Beneficiaries for the preparation and
implementation of Sub-projects.
(b) Provision of Subprojects grants financing for investments and technical assistance to: (i) reduce farm
vulnerability to extreme climatic events; (ii) improve farm productivity and sustainability; (iii) increase
the availability of water resources for irrigation and livestock consumption; (iv) promote adoption of an
integrated approach to natural resources management practices in agriculture and livestock production
systems, including improved water use efficiency and generation of biodiversity benefits in natural
pastures; (v) reduce diffused pollution load from dairy production in the selected River Basins; (vi)
promote the adoption of energy efficiency measures and the generation of cost effective and clean
biomass energy in the agriculture sector; and (vi) promote the establishment of integrated systems for
the combination of grazing areas with rapid-growing trees.
(c) Carrying out of training programs for: (i) Beneficiaries, to enhance their capabilities to implement
natural resources management and climate change adaptation and mitigation activities; and (ii) rural
workers engaged in natural resources management activities.
Component 3: Capacity Building and Training
Activities under the AF: (i) add new support to the USCC (Unidad de Sostenibilidad y Cambios Climáticos) within the
OPYPA (Oficina de Programación y Política Agropecuaria) for the development of Adaptation and Mitigation analysis,
and for the development of Impact evaluation methods and tools to assess impacts of agricultural policies and project’s
activities; (ii) expand the original loan’s successful experiences with Soil Management Plans (SMP), including the geo-
referenced module for the management and monitoring of the SMPs, that the AF would integrate into the SNIA; (iii)
complement the inventory of soils at national level (SISU - Sistema de Información de Suelos en Uruguay) and include
the database (maps and analysis) in the SNIA; and (iv) strengthen the Soil Laboratory (rehabilitation). In addition, this
Component will further the work started under the Technical Assistance (TA) for Green Growth and TA for Water for
Uruguay and build national-level capacity for this type of highly-sophisticated modeling through targeted investments in
training and equipment.
The complete updated component description, considering the activities that will be supported by the AF and those that
were supported under the original loan, is as follows: Strengthening the capacity of: (a) farmers (regardless of their
farm’s size) and technical staff of the Borrower’s advisory service providers, to adopt integrated natural resource and
water management; and (b) MGAP, focused on DGRN, to implement its natural resources management policies,
programs and climate change strategy in the agricultural sector, including, inter alia:
(a) the development of MGAP’s web-based services related to land and water use, conservation and
management;
(b) the updating of the Borrower’s soil mapping and cartography inventory;
(c) the provision of technical assistance to improve the Borrower’s legal and policy framework and strengthen
DGRN’s operational capacity for water resources management, soil management and grasslands;
(d) the provision of technical assistance to MGAP’s staff in the dissemination of experiences, organization of
conferences and participation in international events related to climate change;
(e) the provision of support to DGRN to, inter alia: (A) expand the geographic reach of Soil Management Plans;
(B) design a geo-referenced module (Sistema de Gestión de los Planes de Usos) for the management and
monitoring of said plans with the purpose of integrating it into the SNIA; (C) expand the geographic reach of
the Borrower’s soil mapping and cartography inventory and include said inventory into the SNIA; (D)
rehabilitate the Borrower’s soil laboratory; (E) strengthen the Borrower’s capacity for the use of advanced
modeling technology through the provision of training and the purchase of equipment; and (F) carrying out
complementary studies and research on sustainable use of natural resource management; and
(f) the provision of support to strengthen OPYPA’s capacity on the evaluation of policies in the agricultural
sector and for natural resource management.
Component 4: Project Management, Monitoring and Evaluation
The AF will provide additional resources for Project Management and the M&E system until the closing of the project.
These changes will be made to incorporate lessons learned from the original loan and scale-up their impact. The changes
in Component 1 will be introduced to ensure that each of the distinct information systems currently operated by MGAP
is able to communicate with others and is leveraging all information. Changes in the way that communication is done
regarding the SNIA will also help to improve the interaction of farmers with the information system. Based on the
demand as shown under the original loan, and the increasing variability of rainfall, Component 2 will have a strong focus
on water (both quality and quantity) to enhance resilience of agricultural production (small-scale irrigation and water for
livestock) and reduce environmental impacts (in the Santa Lucia river basin and other river basins to be prioritized).
Changes under Component 3 will help to further expand the reach of the Soil Management Plan policy, strengthen
national research capacity, specifically as it relates to soil and improve the related infrastructure. A more detailed
presentation of components, planned activities and targets are included in Annex 2.
The original description of this component will not be modified. Said description is as follows:
(a) Supporting the operation of the PMU for the efficient coordination and management of the Project.
(b) Supporting the operation of a monitoring and evaluation system for the Project.
(c) Coordinating and supervising the implementation of the training activities under the Project.
(d) Supporting the design and implementation of a communication strategy to disseminate results and
lessons learned within the Borrower’s territory and in other countries acceptable to the Bank.
Summary of Greenhouse Gases Accounting Analysis:
The activities under the AF will generate a carbon sink of 1.27 million tCO2-eq, largely via reduced agricultural
emissions, grassland improvements, and reduced livestock emissions. Emissions are initially projected to increase by
26 927 tCO2-eq due to the land use change (LUC) from planting trees in grassland areas as part of the sustainable
management practices. However, the planted trees eventually will constitute an emission sink that will be more than
sufficient to overcome the emissions generated from the LUC. The proposed investment to improve grasslands has a
removal contribution representing 30 percent of the total tCO2-eq equivalent removed by the Project. Investment in
irrigation will contribute directly to a 22 percent reduction of total tCO2-eq when compared to the without Project
scenario. The investments are interlinked, however, so activities supporting irrigation and grasslands improvement will
indirectly improve livestock management. As a result, investments supporting dairy and cattle raising will make a
significant contribution to reducing emissions in the livestock sector. These investments will improve productivity,
limiting the need to increase the number of animals and providing better diets when compared to the without Project
scenarios, thereby significantly reducing the emission of methane gases. As a result, approximately 48 percent of the
total reductions will be generated by the livestock sector. The detailed results of the GHG analysis are shown in Annex 6.
In addition to the benefits estimated in the GHG analysis, the AF will also have an important impact on the reduction of
GHG emissions through their beef and dairy exports to higher emitting markets. In 2015, Uruguayan beef exports
generated US$1.5 billion in revenue and comprised 16 percent of Uruguay’s exports. The process of producing beef in
Uruguay’s major markets – China and Europe – is significantly more carbon-intensive. In this way, the comparative
advantage of Uruguay’s low-carbon production of beef contributes to the off-set of GHG emissions in countries where
domestic production of beef would produce higher GHG emissions. A calculation to determine the AF’s contribution to
this off-set will be undertaken during project implementation, after specific sub-projects are selected.
Climate Co-Benefits:
Extreme weather events and recurrence of low onset events such as consistent droughts are considered one of the main
risks facing agricultural producers in Uruguay, and small-scale producers are particularly vulnerable given their reliance
on rain-fed agricultural cycles for their livelihoods. Floods and droughts have a direct impact, affecting productivity,
profit and input pricing. Under a changing climate, these events are projected to increase in frequency and recurrence.
Project activities will yield potential climate co-benefits with the capacity to mitigate GHG emissions, while helping
farmers adapt to climate variability and climate change risks. It is estimated that the project has the potential to generate
important climate (adaptation and mitigation) co-benefits, by enhancing the provision of climate related information for
climate smart planning, increasing irrigation infrastructure, implementing sustainable management practices in grassland
livestock production systems, and treating and reusing effluent to fertilize pastures to enhance carbon sequestration and
soil quality. Climate co-benefits will come mainly from three sources: a) access to climate related information and
environmental indicators to enhance climate smart planning at the national level; b) crop production and irrigation
investments to install irrigation systems on 1,788 ha of crop land, including for maize, sorghum, forage and sugarcane,
which will increase crop efficiency and productivity, with the added co-benefit of reducing crop vulnerability to climate
change impacts (adaptation) and reducing the need for fertilizers (mitigation). c) Improvements in natural grasslands
livestock production systems will include the introduction of trees and reduction of stocking per ha on an area of
approximately 173,000 ha. Reduction of stocking per ha will allow more natural regeneration of grasslands, and
conversion of pasture lands to tree crops will result in a net carbon sink via natural grasslands improvements
(mitigation.) and provide areas of shade for livestock as an adaptation to severe heat waves; and d) livestock production
improvements will have a direct impact on livestock feeding and treatment of effluents. In addition to increasing
production efficiency, changes in livestock diet also have important co-benefits of reducing GHG emissions (mitigation),
while treatment and reduction of effluents help to improve the country’s water sources.
The original project was considered to have 98 percent climate change co-benefits, in terms of both adaptation and
mitigation, mainly due to components 1, 2 and 3. The AF was estimated at appraisal to have 52 percent Climate Change
co-benefits, largely attributed to components 1 and 2, which is a lower proportion than under the original loan as the AF
also includes an emphasis on water quality. While the final calculation will be confirmed at a later stage, taken together,
the original loan and AF were estimated at appraisal of the AF to generate climate change co-benefits in relation to
US$70 million, or 77 percent, of the total Bank financing for the project.
FY Total IDA/IBRD
Commitments ($M)
Total WB Climate
Funds ($M)
% Climate over
Commitments
Original Loan 12 49 48 98
Additional Financing 18 42 22 52
Total Bank Financing 91 70 77
Maximizing Financing for Development: The aim of the Project is to use public financing to overcome information-related market failures by demonstrating the
technical and economic viability of climate-smart technologies for agriculture and livestock, and then allowing the
private sector to take over. Demonstrated use of these technologies is expected to lead to the wider adoption through
investments by private firms and individuals. This methodology is aligned with the World Bank’s “cascade” model,
which emphasizes encouraging private sector participation in investments where feasible by improving the investment
environment and addressing key risks.
Social Analysis PHHASSA
Explanation:
Social evaluation. Given the modifications to the Project design, it was necessary to update the Social Assessment to
reflect the altered characteristics of Project-supported interventions, including the socioeconomic and demographic
characteristics of the beneficiaries. Specific questions that were examined included the conditions of land tenure and
types of land ownership, as well as how to expand benefits to a larger group of farmers. Safeguards rating have been
Satisfactory for the last 3 years.
OP 4.12 Involuntary Resettlement. The AF will result in the project triggering OP 4.12 - Involuntary Resettlement,
to cover the potential impacts of the collective irrigation subprojects (EAAPs) that could potentially generate issues of
land loss (e.g. due to the construction of small water storage infrastructure) and/or right of way (e. g. for water
conveyance or electric line transmission). As subproject designs and locations have yet to be defined, a Resettlement
Policy Framework (RPF) has been prepared by the Borrower in order to outline general implementation procedures,
mitigation measures and monitoring procedures for resettlement under the project, including the procedures for
preparation and implementation of Resettlement Action Plans, when applicable. The RPF has been published in the
Borrower’s website on September 26, 2017, and on the Bank’s website on September 26, 2017. It includes a Grievance
Redress Mechanism to resolve the issues that may arise during the implementation of the project.
Citizen Engagement: The preparation of the AF has included extensive rounds of citizen consultations – focusing on
technical, social and environmental safeguards aspects of the Project. During preparation, the Government’s team held
technical consultations with current Project beneficiaries, while safeguards specialists held safeguards consultations on
the Resettlement Policy Framework with institutions and farmers’ organizations throughout the possible areas of
intervention. These consultations allowed farmers from different areas of the country to understand the proposed
design of the AF, as well as to provide input and feedback. Feedback from all the consultations was considered in the
Environmental / Social Assessment updates. The Project design incorporates several citizen engagement mechanisms
to be employed throughout implementation. Citizen satisfaction surveys will be used to determine the overall
satisfaction with the project’s service delivery and communications activities. Any dissatisfaction will be identified and
addressed by the project. Community oversight will be used at the state level to monitor the sub-projects. Information
about the project will be displayed publicly on the Ministry’s website, and the SNIA will be used for information
dissemination. The AF will rely on the original loan’s current grievance mechanism to allow citizens to ask questions,
or express problems or concerns. The project will address each of these in turn, and monitor the response rate and
quality.
Gender. In rural Uruguay women have less access than men to resources, particularly to productive assets such as
land, water, credit and agriculture inputs. This disparity helps account for the pronounced gap in poverty and
vulnerability. In rural Uruguay women are 20 percent poorer than their male counterparts (FAO 2011). Ownership
and control over assets such as land contribute to economic empowerment; they provide direct and indirect benefits to
individuals and households, including protection during emergencies and collateral for credit that can be used for
investment or consumption (IDB technical note No. IDB-TN-763, 2014). Income from labor of rural women in
Uruguay is 52 percent lower than that of men and while men have average land holdings of 81.7 ha, women hold an
average of only 18.2 ha (IDB technical note No. IDB-TN-763, 2014). 2011 FAO studies show that if rural women had
the same access to productive resources as men, they could increase yields on their farms by 20–30 percent.
The project will work to bridge the rural gender gaps in Uruguay, and work specifically by targeting female
beneficiaries through the unit of the family farm. Women play a unique role in family farms in Uruguay. Formally
defined in terms of size, income, and the residency location of the owner, family farms are an important unit for men
and women throughout Uruguay. Within these farms, women and men are equally susceptible to the impacts of
climate change, and reducing the vulnerability of family farms to the adverse impacts of climate change benefits the
entire family. The original loan focused heavily on the family farm unit, and as such, did not disaggregate indicators by
gender, despite the fact that many of the project beneficiaries were woman. In development of its national adaptation
plans to climate change, the Government cited the observation of the Uruguayan Rural Women’s Association that the
“distribution of productive and domestic responsibilities between men and women is different, and that the
consequences of climate change are perceived also differently”. Since adaptation to climate change and variability is a
strategic priority for Uruguay and the Objective of the project, understanding the woman’s perspectives on climate
change and vulnerability is particularly critical for the project, the AF will carefully consider the differences in the way
that women are impacted by climate change, and hold targeted workshops and trainings to encourage women to
participate in the AF’s calls for proposal.
In order to address some of the gender gaps, the project will consider gender in a three-phased approach, including:
- Gender analysis. The project will deepen its gender analysis, as part of the social safeguards, to further
understand gender dynamics and roles in agriculture, and identify gender-based constraints.
- Gender actions. Based on the findings of the gender analysis, the project will develop a gender action plan.
Specific actions aiming to close the identified gap will be elaborated and promoted during the project
implementation. Such actions may include:
a. ensuring that women are included in consultations and decision-making processes;
b. ensuring that women participate in training activities (i.e. offered at times and in places that
accommodate women’s needs or constraints);
c. ensuring that production cost reductions and competitiveness increases, equally benefit female and
male beneficiaries;
d. integrating gender considerations into different tools and social safeguard guidelines.
- Mainstreaming gender into M&E. Gender will be mainstreamed into the project’s M&E and indicators will
be disaggregated where possible.
The AF will also place a continued emphasis on investments in family farms and an increased emphasis on women-run
enterprises. In addition, the results indicators will be changed to disaggregate the results by male and female
beneficiaries, helping to capture the important work that the project is doing with female beneficiaries throughout the
country, primarily through the family farm unit. It is expected that 20 to 25 percent of the farmers benefited by the
project will be women (cf. Result Framework for more details.)
Human resources in social issues. Given the new challenges of DACC-AF in social issues (application of new
safeguards, grievance redress mechanisms, and monitoring of new gender indicators in the Result Framework), it will
be necessary to hire a new staff member to support the project Implementation Unit (PIU) to oversee these issues. The
Terms of Reference for this role will specifically include experience supporting gender integration and monitoring
within projects, as well as capacity related to the monitoring and oversight of safeguards. The World Bank team, and
specifically the Safeguards Specialists, will provide support to the PIU in crafting the Terms of Reference and
overseeing the selection of a candidate with an appropriate skill-set.
Environmental Analysis PHHASEnvA
Explanation:
The improvement in the management of natural resources (soil, water and vegetation) is expected to expand the land
area under sustainable landscape management practices from 2.9 to 3.6 million hectares, representing respectively 44
and 54 percent of total arable land in Uruguay5, by promoting of sustainable management practices (subprojects) and
supporting the GoU in the enforcement on the policy of Soil Management Plan (SMP). This public policy requires
farmers to prepare multiyear cropping plans that guarantee a sustainable agronomic crop rotation and soil protection.
5 Considering the arable soils with: (i) very high; (ii) high and; (ii) medium suitability for agriculture, representing a total of
6,627,000ha.
The SMP are elaborated by independent experts, approved by the public sector (Ministry of Agriculture) and
monitored thanks to modern tools (combining remote monitoring with field visits). The positive impacts of the project
and the public policies have been captured and evaluated in the MTR and the ISRs, and reflected in the satisfactory
environmental safeguard ratings. Safeguards rating have been Satisfactory for the last 3 years.
No significant changes are anticipated from the original loan regarding environmental impacts. The ESMF was
updated to reflect the expected impacts of the activities included in the AF, and disclosed on the World Bank’s website
on September 14, 2017, and in MGAP’s website on September 26, 2017. The primary potential negative environmental
and social impacts are essentially related to the civil works for the small-scale irrigation subprojects (called EAAPs).
Potential negative impacts of Component 2 could include: typical construction work impacts such as dust, noise, waste
generation, etc. Land-use changes in native grasslands and forestation for shelter and shade are not considered relevant
as no new native areas will be intervened, and tree covering will be minimal in close relationship to water access
points.
It is not expected that many and/or lengthy electricity distribution lines will be built as the network is already dense in
the rural areas. In case it is necessary, the project would include the construction of lines to provide energy to the
infrastructure associated with irrigation systems (e.g. pivots-sprinkled irrigation) and it will follow, to the extent
possible, the rural roads to minimize impacts on private properties. The potential electric lines will be triphasic and low
tension to feed pivots, pumps and provide energy for lights to some storage facilities. Given the nature of this project, its predecessor (the Integrated Natural Resource and Biodiversity Management
project, P070653) and the activities for the AF, no significant cumulative impacts are anticipated. Nevertheless, an
environmental cumulative impact assessment will be prepared by the Borrower during the first semester of project
implementation to understand the distribution, concentration and possible impact of water capture and storage in the
landscape.
Risk PHHASRisk
Explanation:
Given that the AF will finance similar activities as the original loan, it is expected that the risks will remain broadly the
same. The overall risk for the project remains Moderate, and the rating for Institutional Capacities for Implementation
is kept as Substantial.
The Project Implementation Unit (PIU) of the MGAP supports the execution of all donor-funded agriculture projects in
the country. This has proven to be a unique model: on the one hand, the PIU functions with a high level of capacity,
flexibility and experience, and hosting multiple projects means the PIU has a clear overview of all donor-financed
projects in the country and can avoid overlap and maximize complementarities. On the other hand, this can from time
to time lead to processing bottlenecks. The AF acknowledges the implementation capacity of the PIU as a substantial
risk, especially in light of the need to supervise a large number of subproject grants, and will invest in further
strengthening the PIU’s capacity in relation to subprojects supervision, audits and safeguards.
V. World Bank Grievance Redress
15. Communities and individuals who believe that they are adversely affected by a World Bank (WB)
supported project may submit complaints to existing project-level grievance redress mechanisms or the
WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly
reviewed in order to address project-related concerns. Project affected communities and individuals may
submit their complaint to the WB’s independent Inspection Panel which determines whether harm
occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints
may be submitted at any time after concerns have been brought directly to the World Bank's attention,
and Bank Management has been given an opportunity to respond. For information on how to submit
complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit
http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank
Inspection Panel, please visit www.inspectionpanel.org.
Annex 1: Revised Results Framework and Monitoring Indicators
Project
Name:
AF- Sustainable Management of Natural Resources and
Climate Change (P163444)
Project
Stage: Additional Financing Status: FINAL
Team
Leader(s): Remi Trier
Requesting
Unit: LCC7C Created by: Katie Kennedy Freeman on 02-Aug-2017
Product
Line: IBRD/IDA
Responsible
Unit: GFA04 Modified by: Remi Trier on 24-Sept-2017
Country: Uruguay Approval FY: 2018
Region: LATIN AMERICA AND
CARIBBEAN
Financing
Instrument: Investment Project Financing
Parent Project
ID: P124181
Parent Project
Name: Sustainable Management of Natural Resources and Climate Change (P124181)
.
Project Development Objectives
Original Project Development Objective - Parent:
The development objective of the project is to support Uruguay’s efforts to promote farmer adoption of improved environmentally sustainable
agricultural and livestock practices that are climate smart.
Proposed Project Development Objective - Additional Financing (AF):
The development objective of the project is to support Uruguay's efforts to promote farmer adoption of climate smart agricultural and livestock
practices, and improved natural resource management practices in project areas.
Results
Core sector indicators are considered: Yes Results reporting level: Project Level
.
Project Development Objective Indicators
Status Indicator Name Corpo
rate Unit of Measure Baseline Actual(Current) End Target
Marked for
Deletion
Information Decision Support
System (IDSS) functioning
Yes/No Value No Yes Yes
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment Achieved. Replaced by the indicator on the Number of data
Products generated by the interoperability.
1- New Data products generated by the
interoperability of IDSS/SNIA
and made available to users
Number Value 0.00 21.00 30.00
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment Component 1
2- New Farmers adopting improved
agricultural technology
Number Value 0.00 4,700.00 7,000.00
Date 17-Oct-2011 23-Aug-2017 16-Nov-2021
Comment Component 2
2a-New Farmers adopting improved
agricultural technology -
Female
Number Value 0.00 940.00 1,400.00
Sub Type
Supplemental
2b-New Farmers adopting improved
agricultural technology - male
Number Value 0.00 3,760.00 5,600.00
Sub Type
Supplemental
3- New Land area under sustainable
landscape management
practices
Hectare(Ha) Value 0.00 2,908,000.00 3,600,000.00
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment: Components 2 and 3: Soil Management Plans & subprojects
4- New Number of people trained in
project objectives
Number Value 0.00 6,200.00 8,000.00
Date 17-Oct-2011 23-Aug-2017 16-Nov-2021
Comment Component 4: technical staff at MGAP and beyond, and
farmers (via formal events and e-learning)
4a-New Number of people trained in
project objectives - Female
Number Value 0.00 1,240.00 2,000.00
Sub Type Date 17-Oct-2011 23-Aug-2017 16-Nov-2021
Breakdown Comment
4b-New Number of people trained in
project objectives - Male
Number Value 0.00 4,960.00 6,000.00
Sub Type Date 17-Oct-2011 23-Aug-2017 16-Nov-2021
Breakdown Comment
Marked for
Deletion
Land area where sustainable
land mgt. practices were
adopted as a result of project
Hectare(Ha) Value 0.00 2,908,000.00 2,700,000.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment Replaced by the corporate indicator 'Land Area under
Sustainable Landscape Management practices'
Marked for
Deletion
Number of people trained in
project objectives
Number Value 0.00 8,861.00 3,500.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment Replaced by the corporate indicator.
5- Revised Climate Change Adaptive
Capacity Index (%)6
Number Value 0.00 0.24 0.30
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment
6 As defined after the Mid-Term Review of the original loan in the document “Indicador Sensibilidad y capacidad adaptiva”, prepared by the PIU in November
2014.
Intermediate Results Indicators
Status Indicator Name Corpor
ate Unit of Measure Baseline Actual(Current) End Target
Marked for
Deletion
Data products developed for
IDSS and made available to
users
Number Value 0.00 21.00 20.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment Moved to the PDO indicators
1- New Monitoring of Soil
Management Plan
implementation - % of SMP
audited -
Percentage Value 0.00 10.00 40.00
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment Component 3. Audited on the field. Cumulative indicator
2- New Area of country with soil maps
updated (1:40,000) - % -
Percentage Value 0.00 35.00 75.00
Date 17-Oct-2011 24-Sept-2017 16-Nov-2021
Comment Component 3
3- New Area provided with
new/improved irrigation or
drainage services
Hectare(Ha) Value 0.00 400.00 3,500.00
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment Component 2.
Collective
(EAAPs) and
individual
subprojects
200ha of collective
irrigation + 200ha
of individual
irrigation
3,000ha of
collective
irrigation+ 500ha
of individual
irrigation
3a- New Area provided with new
irrigation or drainage services
Hectare(Ha) Value 0.00 280.00 2,450.00
Sub Type Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Breakdown Comment
3b- New Area provided with improved
irrigation or drainage services
Hectare(Ha) Value 0.00 120.00 1,050.00
Sub Type Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Breakdown Comment
Grievances registered related to
project benefits that are
4- New addressed (%) Percentage Value 0.00 0.00 90.00
Date 17-Oct-2011 24-Sept-2017 16-Nov-2021
Comment Component 4
Marked for
Deletion
Number of institutions which
contribute information to the
IDSS
Number Value 0.00 37.00 23.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
5- Revised Number of IDSS / SNIA Users
Number Value 0.00 3,700.00 5,000.00
Date 17-Oct-2011 24-Sept-2017 16-Nov-2021
Comment Component 1: registered users of the SNIA or modules
6- Revised Decisions made by the public
sector based on information
from the IDSS
Text Value 0 5 8
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment Component 1. Decisions with ministerial decree
7- Revised Climate-smart on-farm
subprojects funded by project
Number Value 0.00 2,600.00 4,000.00
Date 17-Oct-2011 24-Sept-2017 16-Nov-2021
Comment Component 2
7a- Revised Climate smart on-farm
subprojects with producer
organizations funded by project
(PFI)
Number Value 0.00 114.00 170.00
Sub Type
Supplemental
Marked for
Deletion
Completion ratio of climate-
smart subprojects with
producers
Percentage Value 0.00 89.00 90.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
Marked for
Deletion
Completion ratio of climate-
smart subprojects with
producer organizations
Percentage
Value
0.00
56.00
90.00
Sub Type
Supplemental
Marked for
Deletion
Technical assistance provided
to producers (individuals)
Days Value 0.00 34,671.00 32,800.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
Marked for
Deletion
Technical assistance provided
to producer organizations
Days Value 0.00 3,732.00 3,600.00
Sub Type
Supplemental
8- Revised Activities (combination of
technologies) promoting
sustainable natural resources
management
Number Value 0.00 6,757.00 8,500.00
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment Component 2
Marked for
Deletion
Cartographic updated
(1:50,000) and made available
to general public
Yes/No Value No No Yes
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
9- Revised Soil-Use Management Plans
for agricultural producers with
more than 100 ha under
cultivation monitored by
DGRN and presented in digital
format compatible with
DGRN's information
management system
Percentage Value 0.00 96.00 96.00
Date 17-Oct-2011 24- Sept-2017 16-Nov-2021
Comment:
achieved
Marked for
Deletion
Regional RENARE offices
established
Number Value 0.00 8.00 8.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
Revised Potential surface area for
application of NRM models
developed by project
Hectare(Ha) Value 0.00 1,807,400.00 2,500,000.00
Date 17-Oct-2011 16-Sep-2016 16-Nov-2021
Comment
10- New Farmers benefitted with actions
% Value 0.00 25.00 40.00
that contribute to reduce soil
and water pollution in
prioritized river basins (Santa
Lucia, Laguna del Sauce, etc.)
Date 17-Oct-2011 24-Sept-2017 16-Nov-2021
Comment: Component 2. %
of family and
medium farmers
25% for Santa
Lucia
40% for Santa
Lucia and other
selected river
basins
Marked for
Deletion
Integrated M&E System
developed and integrated
Number Value 0.00 20,487.00 18,000.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
Marked for
Deletion
Project activities widely
communicated and
disseminated
Number Value 0.00 2,859.00 650.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
Marked for
Deletion
Management support tools
developed by project
Number Value 0.00 22.00 21.00
Date 17-Oct-2011 20-Apr-2017 01-Mar-2017
Comment
.
Annex 2: Detailed Description of modified or new project Activities
Component 1: Agricultural Information and Decision Support System (SNIA). (Total cost
of the project including AF: US$12.6 million, of which US$10.1 million financed by IBRD)
16. The SNIA is already operating with basic functions, including: (i) a data library (such as
a census, farmers’ registration and production statistics); (ii) a map library; and (iii) viewing
platforms. The SNIA has developed 21 submodules in the two last years. These submodules are
mainly related to agricultural production and climate information and have been used by the
MGAP to carry out analysis and provide inputs for policies and actions (inputs for insurance,
drought monitoring, elaboration and monitoring of Soil Management Plans, etc.). The AF
proposes to continue some of the original loan’s activities and invest in: (i) expanding the target
users of SNIA (from policy-makers and technical staff to farmers); and (ii) strengthening the
capacities of SNIA to contribute to decision-making and risk management (early warning for
climatic risks, basic information for agricultural insurance, etc.).
17. The AF will expand investments in three specific areas with the following objectives:
- To deepen the improvement of the SNIA to generate full interoperability with all the
existing MGAP information systems and, in the future, with external information systems
(INUMET, MVOTMA, etc.) by:
o Consolidating an information systems architecture and its associated data to
facilitate the full interoperability of distinct information modules operating within
the Ministry of Livestock, Agriculture and Fisheries (MGAP) such as: the existing
traceability system for livestock - SNIG (Sistema Nacional de Información
Ganadera), the existing system of agrochemical use (Monitoreo de Aplicación),
the Soil Information System (Sistema de Información de Suelos de Uruguay -
SISU), which are currently under construction, and the Soil Management Plan
System (Sistema de Gestión de los Planes de Uso- SGPU), which is also currently
under construction under Component 3 of the project, among others (cf. Figure 1);
o Advancing in the consolidation of a governance structure and the implementation
of policies, processes and standards compliant with the rules of Uruguayan E-
government that will ensure the sustainability of the SNIA.
Figure 1: Snapshot of the main systems operating within MGAP and the interoperability that will
be achieved under the project (original and additional)
- To design and implement the SNIA as a tool for support to decision-making for
sustainable and climate smart planning, and for informing policies by:
o Consolidating the instruments generated in the framework incorporating
technologies that ensure efficient, timely and transparent use of information
resources, allowing the processing and analysis of large volumes of data.
o Consolidating the tools developed for risk management and Early Warning by
using information on climate, soil, agrochemicals and water layers.
- To design and implement awareness campaigns, dissemination and communication
actions to consolidate, promote and improve the various instruments that are generated
under the SNIA by:
o Implementing adequate mechanisms to maintain a two-way relationship with
other institution involved.
o Carrying out dissemination and training activities for MGAP users in order to
achieve appropriate use of available information services.
o Carrying out dissemination, training and communication activities with users
outside the MGAP, including technicians, producers and other relevant users, to
promote the use of the services available.
Component 2: Territorial interventions and on Farm Investments for Climate Smart
Agriculture and Livestock Management (Total cost of the project including AF: US$59.3
million, of which US$56.4 million financed by IBRD)
18. The component will finance investment, technical assistance and training for farmers and
farmers’ organizations. These interventions will generate a greater capacity for mitigation and/or
adaptation to climate changes and climate variability and other co-benefits.
19. The component will apply non-reimbursable support mechanisms of up to 80% of the
amount of investment for family farmers, and 50% for medium-sized farmers, with a threshold of
US$ 16,000 per farmer depending on their degree of vulnerability degree.
20. For the specific call for proposal aiming at reducing effluent load in Santa Lucia River
Basin (and other prioritized river basins that may be selected during the project implementation),
the subsidy for medium-sized farmers has been increased from 50% to 80%, considering the
public interest in such investments (protection of the main water source for the water supply of
Montevideo).
21. In case of the collective small-scale irrigation schemes (EAAPs), the total grant cannot
exceed US$ 500,000 per subproject, taking into consideration the costs of some investments
(weirs, pivot, pipes). In the first batch of EAAPs subprojects, the subsidies provided by the
project represented 52% of the total investment (US$ 2.5 million out US$ 4.8 million). The
remaining 48% was financed by the beneficiaries.
22. The investments under Component 2 are demand-driven and generated by specific calls
for proposals (water for production, support to ranchers, reduction of pollution in Santa Lucia,
etc.). With the support of agricultural technicians and agronomists, the farmers submit proposals
for subprojects that are revised and assessed by an evaluation committee. A Committee
determines, for each call for proposals, the criteria used for the rating of the proposals and the
minimum total to be eligible. After implementation, a systematic on-field review is carried out to
verify compliance with the investments. The calls for proposals target family farmers and
medium-sized farmers with different subsidies as described below. All the details of the
subproject cycle are included in the Operation manual.
23. The project is granting the largest amounts to the most vulnerable producers and to
investments with greater externalities, according to the MGAP policy guidelines. The call for
proposals will continue to be widely disseminated to ensure transparency and equity in access to
project opportunities.
24. Farmers’ organizations that demonstrate competence in the transparent and efficient use
of resources, may be contracted by the DACC, on behalf of the farmers to provide services, be
responsible for procurement (in case of the EAAPs), manage payments and be accountable to the
project.
25. The promotion of the sustainable use of natural resources and enhancement of mitigation
capacity and adaptation to variability and CC will be achieved with the following sub-
components:
Calls for proposals targeting environmental issues
26. The AF will finance the expansion of investments aiming at reducing diffused pollution
load from dairy production in the Santa Lucia River Basin. The original project had financed
325 subprojects (totaliing US$4.5 million) in the pilot area upstream of the intake for
Montevideo’s water supply (cf. the “Área Piloto” in Figure 2 below) as of the date of the AF’s
preparation (September 2017). It is expected that the original loan will benefit 500 farmers as of
its proposed closing date in December, 2018.
27. The AF will finance 300 to 400 additional demand-driven subprojects in the rest of the
Santa Lucia River Basin for an estimated US$ 4.0-5.5 million. The eligible investments consist
of storage infrastructure for effluents and equipment for more efficient and sustainable effluent
treatment and reuse in the different farm plots. It is expected that the effluents from dairy
production in the watershed will be reduced from 60 to 46 liters/cow/day.
Figure 2: Location of dairy farms within the Santa Lucia River Basin and its Pilot Area
Calls for proposals promoting access to water for livestock and irrigation
28. The AF will promote increased access to water for livestock and crops (irrigation) in
order to enhance resilience, through support to individual farmers and to Water Users
organizations by expanding the successful experience of the EAAPs (Estrategias Asociativas de
Agua para la Producción). Under the original project, 15 EAAP subprojects have been
elaborated across the country, benefitting 463 organized farmers with around 1,400 ha with new
irrigation and drainage services (cf. location in the Figure 3 below). The original project financed
US$ 2.5 million out of a total of US$ 4.7 million in investments (storage facility ponds, pivot,
modern gravity and drip on-farm irrigation equipment, pumps).
29. The AF will finance 25 additional subprojects with a target of 1,600 to 1,800 ha
countrywide, covering different collective irrigation schemes with specific objectives: (i)
improvement of water efficiency and water savings in the production of sugarcane in the north of
the country (370ha); (ii) development of new areas and improvement of irrigation in existing
areas for cereals and forage production under pivot, mainly in areas handed over to the farmers
by the Instituto Nacional de Colonización (around 1,400 ha). The project will finance small
water storage infrastructures, modern on-farm irrigation (pivot and drip) and technical assistance
for operation, maintenance and management of irrigation equipment.
30. In addition to the support to collective irrigation development, the project will support
individual interventions that will increase access to water for crops and livestock (continuation of
the call for proposal “Agua para la Producción”). It is expected that the area under irrigation will
increase by 500ha with individual subprojects. In total, it is expected that the area under
irrigation will have increased by 3,500ha:
Around 3,000ha of collective irrigation: 1,430ha financed under the original project and
1,600ha with the AF;
Around 500ha of individual irrigation: 200ha financed under the original project and an
additional 300ha with the AF.
Figure 3: Location of collective irrigation subprojects (EAAP) financed under original project
Calls for proposals promoting better management of livestock production including improvement
of grazing areas
31. The AF would undertake a new activity to promote the establishment of integrated
systems, combining grazing areas with rapid-growing trees providing shade for grazing cattle, in
articulation with the actions and proposals that are being generating in the scope of REDD +.
This activity will draw on lessons learned under the Proyecto Ganadero Familiares y Cambio
Climático (PGFCC), funded by the Adaptation Fund, which benefitted 1,140 farmers
(US$ 6.5 million in investments complemented by US$ 1.5 million of Technical Assistance).
The AF will target 2,000 additional beneficiaries, promoting sustainable grazing areas
management and the incorporation of trees in the landscape. The results obtained by the PGFCC
showed an increase of 7.6 kg of meat/ha with the project related to the improvement of natural
pastures and ranching conditions (improved access to shade and water).
Agricultural Insurance
32. The development of agriculture insurance for livestock will continue to be a priority in
the AF. Access to agriculture insurance will enhance the resilience of farmers to climate related
impacts such as recurrent droughts and floods. The development of parametric or indexed
insurance will continue in the AF in articulation with producer organizations and insurance
companies with partial financial support to producers. In the original project, 178 ranchers have
benefitted under this pilot with support to the insurance premium during three dry seasons. The
target is to extend this pilot to 400 ranchers in the AF.
Component 3: Capacity Building and Training (Total cost of the project including AF:
US$17.5 million, of which US$14.1 million financed by IBRD)
33. Activities under this component will continue the original loan’s focus on building the
capacity of the DGRN (Dirección Nacional de Recursos Naturales) and will also add new
support to the USCC (Unidad de Sostenibilidad y Cambios Climáticos) within the OPYPA
(Oficina de Programación y Política Agropecuaria) to expand the original loan’s successful
experiences.
34. Support to the DGRN (Dirección Nacional de Recursos Naturales). The component
specifically proposes supporting the implementation of the DGRN’s Strategic Plan for the Use,
Management and Conservation of Natural Resources, with an emphasis on soils, waters and
natural pastures, to support the implementation and execution of medium and long term
environmental and climate smart public policies. The DGRN proposes to reach four public
policy products during the implementation of the DACC’s Additional Financing: 1) to support
the generation of information relevant to the adjustment of the regulatory framework; 2) to
consolidate the Soils Area by improving staff capacities, expanding the capacity to effectively
monitor Land Use and Management Plans, completing the new mapping at a scale of 1:40,000 of
the country's agricultural areas under SISU (Sistema de Información de Suelos en Uruguay) and
expanding and upgrading the Soil Laboratory; 3) to consolidate the Water Area to collaborate in
improving the quantity and quality of water available for production by improving the training of
personnel and include the SMP of irrigated agriculture in the monitoring system for the
management of all the SMPs; and 4) consolidate the management of grazing areas to promote
productive uses of the same, with a view to increasing productivity and conservation in the
medium and long term.
35. The main activities to be undertaken include:
Development and enforcement of the monitoring system for the Soil Management
Plans. It would: (i) develop routines and protocols for the control by satellite images of
the compliance of SMP at the farm level; (ii) make available the Monitoring System of
SMP for public use, with the object of modeling productive systems; (iii) provide
support to the Technical Monitoring Committee in charge of integrating the Faculty of
Agronomy, INIA and DGRN, and develop a soil quality monitoring Plan within this
framework; and (iv) offer the monitoring tool of SMP to the rest of the Ministry with the
aim of transforming it into a platform for the management of plant resources and soils.
Integration of irrigation plans into the monitoring system of SMPs. This will include:
(i) development of routines and protocols for the control by satellite images of the
irrigated areas; (ii) training of DGRN technicians on irrigation issues; (iii) training of
private technicians in coordination with The Technological University of Uruguay
(UTEC), INIA and the Faculty of Agriculture at the University (FAGRO); (iv) promotion
of opportunities identified through basin surveys; (v) implementation of online
procedures in coordination with DINAGUA and; (vi) establishment of protocols for the
monitoring quantity and quality of water for productive use with DINAGUA.
Conducting studies and research such as: (i) broad basin studies integrating more than
one natural resource; (ii) mapping of soils, continuing the soil description tasks at a scale
of 1: 40,000; (iii) studies to review criteria with DINAGUA; (iii) grassland cartography;
(iv)studies / research on technological routes for the intensification of the productive use
of the natural field; (v) building capacities, through training and purchase of equipment,
in the use of advanced modelling technology as a continuation of activities implemented
through the “TA-Green Growth” (Modelling of effluent load) and the “TA-Water for
Uruguay” (Water allocation modelling); and (vi) studies on indicators of the state/use of
the natural field.
Completion of pending building materials in the Soil Laboratory, including: (i)
incorporation of new analytical determinations to be carried out by the Soil Laboratory
(physical properties, determinations of environmental interest and of interest for decision
making for production, etc.); (ii) implementation of a quality management system at the
Laboratory level and; (iii) consolidation of the Laboratory to support the Guidance and
Control System and, in particular, implementation of inter-laboratory rounds.
Integration of grassland mapping information: this would include monitoring and
comparing different indicators of state and natural field productivity. Such monitoring
will enhance the capacity of a range of stakeholders to plan and manage resources in a
climate smart way, by reducing GHG emissions and enhancing soil water, carbon pools
and productivity.
Component 4: Project Management, Monitoring and Evaluation (Total cost of the project
including AF: US$12.8 million, of which US$10.4 million financed by IBRD)
36. This component aims to consolidate the institutional capacities to implement the projects
with external financing in an efficient way. The AF will add support to the Agricultural Policies
Evaluation Area that operates within the OPYPA orbit, for the design and implementation of the
Evaluation Plan for the projects executed in the orbit of the project Management Unit. This
includes the hiring of technical specialists in impact assessment and other quantitative or
qualitative techniques of policy evaluation, as well as conducting surveys and financing
consultancies and studies that are part of the Evaluation Plan.
37. The AF will use a management tool for each component (e.g. the Integral Management
System -SGI) to strengthen the M & E, ensuring transparency, efficiency, participation, quality
control for the information entered into the System, as well as other complementary tools or in
the transition. The M & E area must lead the analysis of the results with the participation of all
the actors and raise their findings in a way that contributes to take corrective measures and to
gather lessons learned.
38. The management cost of the project (component 4), including the support to the
communication unit of the MGAP, represents around 13% of the total implementation costs
which is within international standards and reflects the cost of reaching and building skills
among a large population of small farmers.
39. As a global staffing strategy of the project, the overall quantity of staff (individual
consultants) to be funded under the AF is expected to be reduced during the AF’s
implementation period, as up to 28 of the 45 staff dedicated to component 3 will continue to
work on the project but will be integrated as public servants in the Ministry of Agriculture during
the AF implementation period.
Annex 3: Revised Estimate of project Costs
Table 1: Project Costs of the Additional Financing
Project Components AF Cost
(USD)
IBRD
financing
(USD)
% of Bank
Government
counterpart
(USD)
1. Agricultural Information and
Decision Support System 6.4 5.1 80% 1.3
2. Territorial Interventions and on
Farm Investments 25.7 24.8 97% 0.9
3. Capacity Building 8.2 6.6 80% 1.6
4. Project Management and M&E 6.9 5.5 80% 1.4
Total Project Costs 47.2 42.0 89% 5.2
Table 2: Project Costs of the original loan
Project Components
Original
Project
Cost (USD)
IBRD
financing
(USD)
% of Bank
Government
counterpart
(USD)
1. Agricultural Information and
Decision Support System 6.2 5.0 81% 1.3
2. Territorial Interventions and on
Farm Investments 31.1 29.6 95% 1.3
3. Capacity Building 9.3 7.5 81% 1.8
4. Project Management and M&E 5.9 4.9 83% 1.2
Physical contingencies 1.2 0.9 75% 0.3
Price contingencies 1.3 1.1 85% 0.1
Total Project Costs 55.0 49.0 89% 6.0
Table 3: Total revised Project Costs before reallocation (original loan + additional
financing)
Project Components
Total
Project
Cost (USD)
IBRD
financing
(USD)
% of Bank
Government
counterpart
(USD)
1. Agricultural Information and
Decision Support System 12.6 10.1 80% 2.6
2. Territorial Interventions and on
Farm Investments 56.8 54.4 96% 2.2
3. Capacity Building 17.5 14.1 81% 3.4
4. Project Management and M&E 12.8 10.4 81% 2.6
Physical contingencies 1.2 0.9 75% 0.3
Price contingencies 1.3 1.1 85% 0.1
Total Project Costs 102.2 91.0 89% 11.2
Table 4: Total revised Project Costs after reallocation (original loan + additional financing)
Project Components Total
Project Cost (USD)
IBRD financing
(USD) % of Bank
Government counterpart
(USD)
1. Agricultural Information and Decision Support System
12.6 10.1 80% 2.5
2. On Farm Investments 59.3 56.4 95% 2.9
3. Capacity Building 17.5 14.1 81% 3.4
4. Project Management and M&E 12.8 10.4 81% 2.4
Physical contingencies
Price contingencies
Total Project Costs 102.2 91.0 89% 11.2
Annex 4: Revised Implementation Arrangements and Support
40. Implementation Arrangements. The AF would be implemented using the same
arrangements as are being used under the original loan. The project would continue being
implemented by the MGAP through the PIU, which also has experience acquired as a result of
the successful implementation of previous Bank-financed programs, as well as a number of
operations financed by other multilateral development organizations. The PIU is properly staffed
with specialized professionals but requires strengthening on subprojects supervision and audit
and safeguards. In order to implement Component 2, the AF will build capacity in field-level
staff to support the implementation of on-farm investments. There is no specific need to
strengthen capacities within the PIU for the other components. During the appraisal mission, it
was agreed to revise the fiduciary arrangements for the subprojects in order to gain efficiency,
using the new opportunities offered by the revised Procurement Framework. Amongst other, it
was decided to use request for quotations for all investments in collective irrigation subprojects
(EAAPs) and direct selection for the investments at farm-level (inversiones prediales) based on
the statement on page 36 of the procurement framework in paragraph 6.9 c, which indicates that
this is possible when the investments are of “very low value and low risks”.
41. The Inter-ministerial coordination committee. This Committee, which during the
implementation of the original project was led by the Minister of MGAP, is now led by the
National Secretary of Environment, Water and Climate Change (Secretaría Nacional de
Ambiente, Agua y Cambio Climático”) created by Article 33 of Law No 19.355 (budget 2015-
2019).
42. Procurement Framework. The AF will be implemented under the Procurement
Regulations for IPF Borrowers, effective since July 1, 2016. A draft version of the Project
Procurement Project Strategy for Development (PPSD) and a Procurement Plan were prepared
by the Borrower before the Decision Meeting and approved by the Bank on October 5, 2017.
43. Disbursement arrangements. The disbursements for the AF would be implemented
under the same arrangements of the original loan.
44. Financial management internal controls. During the implementation of the original
project, the Financial Management Assessment pointed out that one of the major areas of
fiduciary risks was Component 2, which consists of several thousand individual and collective
demand-driven subprojects. Thus, it was recommended that the PIU reinforce controls at the
subproject level and identify a more cost-effective mechanism for the project’s needs than the
external operational audit required under the original Loan Agreement. Thus, internal control
arrangements to support the PIU on subproject supervision will be developed and it was agreed,
and included as a covenant, that the PIU will hire dedicated staff for the supervision and audit of
component 2’s subprojects no later than nine months after the Effective Date of the Loan
Agreement for the AF. The scope, terms and conditions of the activities expected, as well as
qualifications and terms of reference of the consultants acceptable to the Bank, would be
described in the Operational Manual. The project has no overdue audits.
Annex 5: Economic and Financial Evaluation
Objective:
45. Based on the initial Cost / Benefit analysis conducted for the original loan, a revised
Cost/Benefit analysis was undertaken for the Additional Financing (AF), with the objective of
estimating the economic viability of the AF. The analysis took into account the direct economic
costs and benefits of the project, and it also incorporated some of the expected environmental co-
benefits. The main expected environmental co-benefits include: restoration of ecosystem services
in watersheds, soil conservation, and carbon sequestration [Grassland Alliance, REDD + Project,
Green Lab UC (2011)]. Where the benefits and co-benefits cannot be quantified, they are
described qualitatively.
Budget:
46. The budget of the AF describes the estimated cost by component and cost category,
disbursed over the 5 years of the project.
Table 1: Proposed Budget for the DACC Additional Financing (in US dollars)
47. The budget is based on estimates made by MGAP authorities during project preparation,
and given the flexibility of the project design, especially the fact that it allows for demand-driven
sub-projects, the assumptions may change during the implementation.
Project Benefits by Component:
48. The project is expected to generate three types of benefits. First, direct benefits will be
derived from productive improvements in the beneficiary farms that can be completely
appropriated by the beneficiaries through the market system. Second, indirect benefits will derive
in the form of increased adaptive capacity to climate change and shocks. Third, environmental
co-benefits will be derived from the restitution of ecosystem services, understood as goods,
products or services provided or regulated by ecosystems for global benefit. The following
analysis quantifies all three of these benefit types: direct benefits, indirect benefits, and co-
benefits.
Component 1: Agricultural Information and Decision Support System (SNIA for its
Spanish acronym)
49. The main objectives of the SNIA are to provide information services, providing quality
data and information through improved visualization and consultation tools for integrated data
analysis and the provision of monitoring and alerting services. The investments to be supported
under Component 1 are divided into three main areas: a) support services for the construction of
interoperability, which will be consolidated in the IT area of MGAP; b) information services for
decision-making, design, implementation and evaluation of sectoral and territorial policies and
risk management; and c) awareness-building and dissemination of system to promote use. The
total cost of these activities is US$6.4 million.
50. The expected result of Component 1 is to provide a public good consisting of a
centralized information system and agro-climatic alerts for agricultural producers, with the aim
of improving decision-making. More informed productive and managerial decisions are expected
to allow for increases in agricultural productivity.
51. Productive decisions, like other economic decisions, are made in a frame of uncertainty.
Improving the quality of these decisions and limiting the degree of uncertainty requires the
generation and use of information that is expensive to obtain (not only in monetary terms, but
also in terms of the time required for collection, processing, and systematization). For this
reason, a public system that makes the information available to the producer in a way that is
centralized and cost-free is expected to result in improved management, reflected in better
productive achievements by individual farmers.
52. Potential users of SNIA are a very broad group comprising agricultural producers,
technicians, and policy makers, among others, but currently available information allowed
quantification of the expected benefits of Component 1 only in terms of the expected increase in
beef productivity. This benefit will be generated when livestock producers use SNIA information
to make better productive decisions. Methodologies have also been identified to quantify the
economic benefits of information systems for the applications of early warning systems and
enhancing farm productivity. Although these calculations were not incorporated into the current
analysis for SNIA, they will be considered in the final Implementation Completion Report
(ICR)’s economic analysis.
53. Baseline survey data for the Family Cattle and Climate Change (GFCC) program were
used to calculate the benefit. This survey consulted 270 livestock producers about their use of
medium-term agro-climatic information ("forecasts for the coming months") to make decisions
regarding the management of their enterprise. The data show that 52% of the respondents use
this type of information for management purposes, and livestock producers who use this type of
information obtain higher productivity in terms of meat per hectare. The partial correlation of
the use of agro-climatic information and meat production was estimated based on simple
regressions, controlling for land quality, the landscape unit, and the use of other technologies and
management practices (differential grazing, temporary and early weaning). The correlation
between use of agro-climatic information and productivity ranged from 0.25 to 0.30 according to
the specification of each model (significant at the 10% level).
54. The survey results were extrapolated to the national level using data from the 2011
Agricultural Census. According to the Census, approximately 15,900 family farms are engaged
in beef cattle raising or sheep farming. The total area exploited by these producers is 1,280,000
hectares. The average production of meat per hectare is estimated at 80 kilos per hectare.
55. As shown by the GFCC survey, about one-half of livestock producers (48%) still do not
use medium-term agro-climatic information to make decisions. If the strengthening of the SNIA
allows 10% of these producers to start using such information, and assuming that as a result their
yields increase by 25%, meat production will increase by 640 tons per year. Recognizing that the
SNIA is a part of the complex of institutions that provide agro-climatic information, however, a
conservative approach was adopted for the current analysis, and only a share of the total effect
(25%) was attributed directly to SNIA.
Table 2: Estimated Benefits of SNIA
56. Additional benefits generated by the investments to be made under Component 1 are
expected to flow from better decisions made in public agencies based on information generated
by SNIA.
57. Although these benefits are difficult to quantify and value, examples of public decisions
that are based in part on the information provided by SNIA are:
Development of Livestock Insurance
Diagnostic of the Santa Lucia River Basin
Climatic products (though online service INUMET)
Declaration of agricultural emergency in 2015
Component 2: Territorial interventions and on-farm investments for Climate Smart
Agriculture and Livestock Management
58. Component 2 will finance investments, technical assistance and training, among other
activities, with the objective of promoting integral development from an environmental, social
and economic point of view. These interventions are expected to generate greater capacity for
mitigation and / or adaptation to weather variability and climate change in family and medium
producers.
59. The emphasis of this Component will be on promoting investments and accompanying
technical assistance aimed at increasing the production and sustainable management of water
resources, biodiversity, soils and agricultural production. Component 2 will provide support to
agricultural producers in the form of financial resources to improve Natural Resource
Management (NRM) on farms, and accompanying trainings and technical assistance to improve
adaptive capacity to climatic events.
60. At least four types of intervention have been identified, and all are linked to the
sustainable and productive management of water, soil and natural resources. The NRM
dimension is intersected by livestock, dairy, agricultural and horticultural producers. The benefits
generated by the execution of Component 2 will be quantified from each of the projected
interventions.
Interventions for Water User Associations
61. The AF proposes to deepen the work undertaken by the DACC in the promotion of
associative experiences with irrigation technology. The small-scale irrigation subprojects
(EAAP) under the original loan comprised a portfolio of 15 projects representing US$2.5 million
to promote the use of irrigation and water in an associative way. These projects involved
460 producers linked to rural institutions. The AF plans to expand the scope of these sub-projects
by allocating an additional US$6.5 million to this type of intervention. The next open call for
sub-project proposals is expected to increase the ceilings per project and expand the set of
activities to be financed, and with this, is expected to reach 25 new projects (for an increased
irrigated area of around 2,000ha). The quantified benefits of this subcomponent are the increase
in agricultural and livestock production derived from irrigation.
62. For this purpose, a financial analysis was undertaken of a sample of the current 15
projects of the EAAP. A weighted average was calculated of the Internal Rate of Return (IRR) of
each project, with the same set of assumptions (time horizon, expected prices of agricultural
products, increases in physical production derived from irrigation, etc.). To obtain the benefits
of the AF, it was assumed that the additional investment will have the same IRR as the current
EAAP. For this, it is assumed that the net benefit as a proportion of the additional investment and
the temporary distribution of these benefits is equal to EAAP.
Water Interventions for Dairy Production (APA dairy)
63. A key area of support that is aligned with the specific objectives of the AF, which in turn
are aligned with the strategic objectives of the Ministry, will be local interventions to improve
the distribution of water from troughs for animal production. The original loan implemented sub-
projects for "Water for Animal Production" (APA) reaching 1,750 producers, of which 620 were
dairy farmers and 1,130 were beef farmers, with a support of 3 million dollars for the former and
7 million for the latter.
64. The analysis assumed that this subcomponent will receive US$3.5 million for water
solutions on dairy farms and that the average cost per individual project will remain the same
(US$4,850 in dairy sub-projects). Based on these assumptions, 715 dairy producers would be
reached by the AF.
65. For the present ACB analysis, the results of the dairy APA impact assessment [MGAP-
AGEV (2017)] were used—specifically, the data referring to dairy projects. In APA impact
assessment, administrative data were used for the annual declarations of livestock stocks and
annual milk production of the National Livestock Information System (SNIG) between 2009 and
2015. The identification strategy was based on the ‘difference in differences’ (DIDs) method.
The APA impact assessment found that the implementation of the APA project resulted in an 8%
increase in dairy productivity per hectare and an increase in the total milk production of
participating producers of 7.9 million liters per year.
66. To estimate the benefits included in the present ACB analysis, it was assumed that this
increase in production would be achieved gradually during the first four years of the project. The
estimated effect based on the impact of the APA project, and considering the estimated number
of producers covered by APA 2, would be an additional production of 4.67 million liters from
the fourth year.
Table 3: Estimated Benefits of Increased Milk Production
Interventions that contribute to the improvement of water quality
67. Within the framework of the original loan, the project launched a call aimed at dairy
producers in the Santa Lucia River Basin, with the aim of contributing to the improvement of
water quality. So far, the project has supported 325 farms with an investment of US$4.5 million
dollars and an average area per property of 150 hectares. The AF will provide additional
resources to extend these sub-projects to other dairy farmers in the country’s main watersheds.
The AF allocates an estimated US$5.125 million to the scale-up of these activities. This will
allow an additional coverage of 300 to 400 sub-projects with similar characteristics.
68. The cost assumptions for the current year were based on expert opinions from INALE,
MGAP, INIA and private experts. On average, beneficiaries are expected to irrigate 3% of the
area of their farm. Extension of the area to be irrigated depends on the balance of nutrients and
organic matter in the soil, characteristics of infiltration and water retention capacity, the
topography of the site and the size of the detour among other factors. This could imply an
increase of about 30% of the forage production in that area by eliminating the nutrient restriction
(fertilized irrigation) per conservative agricultural data, so that the beneficiary farms would be
more productive in forage and, consequently, increase milk production while reducing some
fertilization costs.
69. In addition, effluent management within watersheds contributes to the improvement of
water quality, implying an ecosystem service of significant economic and social value. To assess
this, it was assumed that dairy effluents contribute approximately 10% of the total contamination
of the Santa Lucía river basin (80% of the contamination is of a diffuse nature, linked to
agricultural activity, including effluents from dairy pens, with soil erosion being the most
important cause followed by dairy effluents, while cities and industries contribute the remaining
20%) [UdelaR (2013), MGAP]. The expected impact of this intervention is to reduce the
contribution of effluents from the farms that are discharged into the Santa Lucía river. The
investments and resulting adoption of proposed technologies will allow for the reduction of
effluents from an average of 60 liters per cow per day to an average of 46 liters per cow per day.
70. The co-benefits of this intervention were assessed based on the expected savings of
investments by the Planning Organization Responsible for the Provision of Drinking Water
(OSE) for water purification. The amount and expected duration of the investments required for
the purification process were considered for the analysis. The state has invested a considerable
amount of water treatment resources and has an investment plan of US$62 million for this basin
in the medium term according to the OSE. According to the OSE, the cost of treatment and
purification is greater the worse the quality of the raw water.
71. The analysis assumed a baseline of 60 liters of effluents per cow, with a total necessary
investment of US$62 million. Taking this baseline, and assuming a reduction of effluents to be
46 liters per cow and taking into account the proportion of farms in the basin that can be included
in the project (estimated to be 310 of 720 establishments), this requires an investment of
US$61.375 million, representing a savings of 0.625 million dollars.
Livestock interventions on pasture land
72. MGAP and IBRD have a long history of supporting the development of livestock
producers and promoting the sustainable adoption of technology and good productive practices.
For the current analysis, the benefits linked to this project line were estimated based on the
experience gained with the Proyecto Ganadero Familiares y Cambio Climático (PGFCC).
73. The PGFCC project reached 1,140 beneficiaries in the two most vulnerable landscapes in
Uruguay, with investment support and technological promotion of US$6.5 million accompanied
by US$1.5 million in technical assistance. For the sake of simplicity, it was assumed that the
amount of investment and technical assistance per producer would be similar to that of the
PGFCC (US$7,300), that the characteristics of the beneficiary farms would be similar 210
hectares per producer), and that the territorial scope of the project will be extended to the total
area of Uruguay.
74. The AF will allocate $ 7.3 million in this intervention, which will allow it to reach an
estimated 1,000 to 1,100 new beneficiaries. A livestock breeding project based on natural pasture
land within the framework of current technical and technological proposals has great potential to
increase meat production per hectare over time. The opinions of ministerial specialists in animal
husbandry confirm this idea. Based on information from DICOSE and SNIG, as well as from the
baseline survey of the PGFCC project, this impact was estimated at 7.6 kg per hectare, which is a
conservative expectation according to ministry experts. The direct economic benefits of the
project amounted to 1,600 tons of meat per year or $ 2.7 million per year.
Table 4: Estimated Benefits of Increase Meat Production
75. The sustainable management of natural pasture land implies a greater amount of inter-
annual vegetation and consequently a greater capacity to incorporate organic matter into the soil.
One of the most important results expected from AF interventions is better management of
natural pastures and the management of, a larger area of pastures. This has implications for the
amount of greenhouse gases, carbon dioxide which can be avoided. This co-benefit is estimated
according to parameters provided by ministry experts. Given the sequestration favor in carbon
soil (20 grams per square meter), the implied factor of metric tons per hectare (.73) and the area
of livestock projects, the project intervention is expected to cover 173,000 ha. Therefore, it is
expected that 63,420 metric tons of carbon dioxide gases will be avoided. This contribution was
valued at US$5 per ton according to values managed by the World Bank in REDD + projects.
Table 5: Estimated Benefits of GHG avoided
Component 3: Capacity Building for the Department of Natural Resources (DGRN)
76. Component 3 proposes the consolidation of a strategic plan for the use, management and
conservation of natural resources, with emphasis on soils, waters and natural pastures. It
proposes to support the implementation of medium and long-term related public policies.
Investments in Component 3 (with a budget of US$8.2 million, distributed across consultancies
and training, works, goods and operational expenses) will generate four products t over the life
of the AF, detailed below. The benefits were calculated specifically for the Consolidation of Soil
aspects, since the other areas will largely support the benefits in other Components.
Support for generating relevant information
77. The result of this subcomponent is the production of information that enables better
implementation of the other Components (as well as other MGAP programs). The value of this
sub-component is already included in the estimated value of other Components.
Consolidation of Soil
78. The funds allocated to this subcomponent will be used to improve staff capacities,
expanding the capacity to effectively monitor Land Use and Management Plans (PUMS),
completing the new mapping of country's agricultural areas and expanding and improving soil-
related services. The valuation of the benefits of this subcomponent is made from the PUMS.
The objective of these plans is to ensure the maintenance of the productive potential of soils in a
very long term horizon. The intervention is justified by the negative environmental externalities
that are generated by inadequate agricultural practices, which determine soil losses beyond the
tolerable limits. In addition to environmental effects, such inadequate practices lead in the long
run to a progressive decline in agricultural yields, which would affect the production and income
of producers of future generations.
79. The benefits were calculated for offsetting the unsustainable use of resources and the
improved soil composition. The calculated values are based on the relationship between erosion
and decline in agricultural yield via soil loss (loss of organic matter, loss of nutrients, loss of
structure and physical properties). FAO (1993) brings together a set of studies that report
productivity losses in relation to the degree of erosion or soil loss. The ranges were from 16 to
34% [Schertz (1985)], 34% [May and Souza], between 38% and 52% with a loss of 10 cm
[Swaify and Dangler (1982)] and total loss at 20 cm [Spavorek (1990)], all for the same soil
types. The decline in agricultural productivity (at constant prices) is modeled on previous data
relating years of erosion and its impact on productivity.
80. Sustainable rotation models were constructed and presented in the PUMS, showing
sustainable levels of soil-loss. The "with project" scenario implies a sustainable agricultural
picture. Rotation “without project” (with erosion) is characterized by a crop rotation average of
the years prior to the application of the soil law. The current yields and the prices considered are
the same in the two scenarios.
Figure 1 and Table 6: Benefits of Soil Rotations
81. The model assumes that in the erosive scenario the productive potential declines over
time in a curved function as the erosion process progresses. Technical change acts as a force in
the opposite direction, sustaining the productive level; however, this would entail rising costs to
maintain a stable level of yields, which would reduce the economic margin. Therefore, the curve
can be interpreted as one of economic deterioration of the margins. The calculated deterioration
implies that at 20 years of soil loss, the yield falls to 90%, while in year 40 the yield will fall to
80%. Using a discount rate of 4%, the NPV would be US$174,000,808.
Consolidation of the Water area
82. The objective of this subcomponent is to collaborate in improving the quantity and
quality of water available for production and as a tool to reduce the vulnerability of production
systems to variability and climate change, improving the training of personnel and using the
System of the Management of Plans of Use (SGPU) for the management and control of irrigated
y = 2E-05x2 - 0.0061x + 1.0111
0%
20%
40%
60%
80%
100%
120%
0 50 100 150 200
Y
systems. The benefits of this component are expressed through the interventions related to water
availability described in Component 2.
Consolidation of the Natural Pasture area
83. This subcomponent, like the previous ones, tries to promote technologies that preserve
natural pastures, while increasing the productivity. This subcomponent will support grassland
mapping and its integration with other geographic data platforms. The benefits of this
subcomponent are included in the provision of information and coordination of natural field-
based livestock interventions included in Component 2.
Component 4: Project Management and Evaluation and Monitoring
84. The Project Implementation Unit (PIU) Component has a supporting role in the project.
Its main objective is to consolidate the institutional capacities to execute the subprojects with
external financing in an efficient way. The PMU's effectiveness in reducing the costs of
executing subprojects with external financing depends on the number of projects it manages. At
present, most of the budget of the PMU is financed by the original loan. In the AF, the goal is
that the operational costs of the PIU will be increasingly shared by other donors. Conceptually,
the PIU has an institutional role supporting the other three components, and is considered
necessary for the effective realization of all the benefits presented in this analysis.
Economic Evaluation:
85. In this section the indicators of project feasibility are analyzed from the point of view of
the Uruguayan economy as a whole (Net Present Value (NPV) and Economic Internal Rate of
Return (EIRR).
86. The economic discount rate of the project was set at 4.7%, according to the financial cost
of capital, which arises from weighing the estimated average rate of the loan with the discount
rate for investment projects with public funds recommended by SNIP-OPP (7.5%). The
proportions used in the weighting correspond to the contribution of the WB and the Uruguayan
state in financing the project (80% and 20%, respectively).
87. The relevant time horizon for the Project, given the type of investments and benefits
considered and the amortization structure, was set at 20 years. Streams of discounted costs and
benefits calculated based on these assumptions are summarized in Table 6.
88. The NPV and EIRR were calculated for two scenarios. For the Base Scenario, a
conservative approach was adopted including as benefits of the project only the benefits
generated under Component 2, since Components 1 and 3 will be focused on the production of
public goods and the quantification of such benefits constitutes a challenge. However, the costs
considered for the calculations were the total costs of the project (all Components). In this
scenario, the project generates economically attractive returns, since the EIRR (12.7%) exceeds
the reference rate and the NPV is positive at US$30.23 million (Table 6).
Table 6: NPV and EIRR in base scenario and with all components
89. For the second scenario, a full project analysis was carried out incorporating all of the
expected benefits, including those associated with the public goods to be generated under
Components 1 and 3. Including the benefits from all components, the NPV and EIRR increase to
US$44.07 million and 17.5% respectively. However, this is still a conservative estimate, as the
benefits from Components 1 and 3 have not been fully monetized. Additional economic benefits
from the public goods created by these Components will be considered during project
implementation and included in the ICR evaluation of the project.
Annex 6: Green House Gases Analysis
Background and Methodology
90. In its 2012 Environment Strategy, the World Bank adopted a corporate mandate to
conduct greenhouse gas (GHG) emissions accounting for investment lending. The quantification
of GHG emission is an important step in managing and ultimately reducing GHG emission, and
is becoming a common practice for many international financial institutions. The World Bank
adopted the Ex-Ante Carbon-balance Tool (EX-ACT), which was developed by the Food and
Agriculture Organization of the United Nations (FAO) in 2010 to assess the impact of
agricultural investment lending on GHG emission and carbon sequestration. EX-ACT allows the
assessment of a project’s net carbon-balance, defined as the net balance of CO2 equivalent GHG
that were emitted or sequestered as a result of project implementation compared to a without
project scenario. EX-ACT estimates the carbon stock changes (emissions or sinks), expressed in
equivalent tons of CO2 per hectare and year.
91. The Sustainable Management of Natural Resources and Climate Change Project (DACC)
was approved by the Board on November 30, 2011 and became effective on February 24, 2012.
The objective of the project is to support the efforts of the Government of Uruguay (GOU) in
promoting farmer adoption of improved environmentally sustainable and climate smart
agricultural and livestock practices. The original loan has achieved several significant results
including: the application of sustainable land management practices applied to nearly 3 million
hectares of land, funding of nearly 5,000 climate-smart on-farm projects with individuals and
producer groups and technical assistance provided to nearly 35,000 farmers. The AF aims to
support the GOU to scale up approaches that have demonstrated proof of concept and have
directly contributed to the achievement of the government’s strategic vision for the sector. The
AF would specifically support investments to: (i) reduce diffused pollution load from dairy
production in the Santa Lucia River Basin; (ii) increase access to water for livestock and dairy
productions, and (iii) support irrigation investments for crop production. In addition, the AF
would undertake a new activity to promote the establishment of integrated natural grassland
management systems, combining grazing areas with rapid-growing trees providing shade for the
grazing cattle.
The Ex-ACT tool was used to assess the Greenhouse Gas (GHG) impacts associated with the
investment activities contemplated in the AF.
Application of EX-ACT
92. Project boundaries. The GHG accounting considers the investment support to the
following activities 1) construction of irrigation infrastructure over 1,788 ha used for a
combination of annual and perennial crop production; 2) implementation of sustainable
management practices in grassland livestock production systems in approximately 173,000 ha;
3) improvements in animal drinking water infrastructure in 713 dairy establishments; and
4) treatment and reuse of effluent to fertilize pasture in 310 dairy production systems (tambos).
93. Data source. The main sources of data used to carry out the analysis include information
generated in the Economic and Financial Analysis as well as data provided by the Ministry of
Livestock, Agriculture and Fisheries (MGAP). The specific inputs to EX-ACT are detailed at the
end of the report.
94. Basic assumptions. Uruguay has a warm temperate climate and moist regime. The
dominant soil type is Low Activity Clay (LAC) soil. The implementation of the AF phase is 4
years and the capitalization phase is assumed to be 16 years, thus the analysis period is set for a
total of 20 years. The “without project scenario” is assumed not to differ from the “initial
scenario”. This default assumption is deemed reasonable as changes in agricultural activity
crucially depend on the technology available, which in this case will be a contribution of the
project. The analysis further assumes the dynamics of change to be linear over the duration of the
project. Existing production techniques are assumed to be replaced by the introduction of
sustainable and climate smart agricultural practices over the project area.
95. Crop production and irrigation investments. A significant share of cultivated land in
Uruguay is dedicated to meet the animal feed needs in the country. The project will support the
uptake of irrigation in crop production to improve yields. This will be identified in Ex-Act as
adoption of “improved water management.” The total area and crops to be supported with
irrigations systems are as follows:
Crop Area
(Ha)
Land use change
expected
Maize 274 no
Sorghum 106
Forage 1035
Sugarcane 372
Total Area (ha) 1,788
96. The irrigation investment will cover an area of 1,788 ha of agricultural land, of which
most are under perennial crop production.
97. Natural grasslands improvements. One of the main economic activities in the country
is extensive cattle rearing. According to literature, there are more than 13 million ha under
permanent pasture, almost 83% of the agricultural area. To this end, the project will support
investment to promote the adoption of sustainable management and better practices in natural
grassland livestock production systems. This will help improve productivity of livestock raising
activities while improving the state of grasslands. A potential outcome is a positive adjustment
on the animal stocking per ha thus reducing the pressure on natural grasslands. The project will
support investment in an area of 173,000 ha.
98. The sustainable grassland management package will include the introduction of trees in
the surrounding areas to provide shade for animals. In this analysis, it is assumed that 1% (1,730
has) of the area will be associated with tree plantations. This implies a land use change from
grassland to perennial-tree crop and a source of GHG emissions.
99. Livestock production improvements. The project investments supported by the project
will have a direct impact on improving animal feeding. Firstly, the sustainable management of
grassland will improve pasture quality and quantity. Secondly, the use of treated effluents
generated from the water quality technologies in dairy production will be used to meet needs for
water and fertilize in fodder production.
100. The improvements of productivity in cattle raising in the “with project scenario” will be
attained through gains in efficiency that result from the proposed investments rather than from
increasing the heard. Thus, the “with project” scenario will attain the same level of production
with a smaller heard than the “without project scenario”. The productivity with project is
expected to increase by 7.6 kg of beef per ha per year. Therefore, to produce the same quantity of
beef, the without project scenario will require only 200,000 heads of livestock whereas the “with
project scenario” will require 190,000 heads.
101. In the case of dairy production the productivity of milk with investment projects is
expected to reach 8%, however previous investment have indicated that upward productivity
respond to both increases in heard as well as product yield. As a result, the heard will increase
around 6% or 4,710 heads in the “with project” scenario when compare to the “without project”
scenario.
Agricultural inputs. The type of irrigation systems that will be deployed by the project are:
Pivot 782 has
Surface 227 has
Drip 779 has
102. The irrigation systems deployed by the project will be associated with so-called
‘fertirrigation’ technologies. According to the literature, fertirrigation is more efficient than
conventional fertilization, some values indicating 24% reductions in fertilizers usage with
fertirrigation. The analysis assumes a 15% reduction in fertilizers as a result of efficiency gains
from the application of fertirrigation technology. The electricity consumption associated with the
irrigation system is 266 MW per year.
103. It is expected that treated effluents from the dairy production systems will be used to
fertilize pasture production in the farm. This could be used in 3% of the farm area and will
displace the use of agrochemicals. Given that the project will support 310 dairy production farms
each with an average of 150 has, the treated effluents will be used to fertilize and irrigate a total
of 1,395 ha of pasture.
104. A summary of expected fertilizer inputs in tons per year for the two scenarios is
presented below:
Input7 Without project (tons per year) With project (tons per year)
Nitrogen 329 161
Phosphorous 95 46
Potassium 355 184
Table 1: Analysis in EX-ACT organized by activity and sector.
Activities and project scenarios Total
Annual crop management - IRRIGATION (ha)
Without project scenario 0
Project scenario: climate smart agriculture
practice- irrigation 274
Perennial crops (ha) from Land Use Change
Without project scenario 0
Project scenario: Converted to perennials (trees) 1,730
Perennial Crops Management - irrigation (ha)
Without project scenario 0
Project scenario (Sorghum/Forage/Sugarcane) 1,514
Perennial Crops Management – use of effluents from dairy in pasture production (ha)
Without project scenario 0
Project scenario (Pasture) 1,395
Grassland
From moderately degraded to “improved without inputs only management”
Coefficient for sequestration set to 0.73 tons of CO2 per ha
Area with project 171270 ha
Livestock (number)
Without project scenario 270,000
Dairy cattle 70,000
Beef cattle 200,000
Project scenario 264,710
Dairy cattle 74,710
Fertilizer recommendations for Maize, Sorghum, Forage crops are 100, 30 and 100 kg per ha of N, P and K
respectively. In the case of sugarcane, NPK recommendations are 130, 30 and 200 kg per ha respectively.
Beef cattle 190,000
Results
105. Net carbon balance. The net carbon balance quantifies GHGs emitted or sequestered as
a result of the project compared to the “without project” scenario. Over the analysis period of 20
years, the project constitutes a carbon sink of 1.27 million tCO2-eq. This is largely due to
avoided emissions in agriculture, grassland improvements and livestock.
106. Carbon sources and sinks. The main emission source was the initial 26 927 tCO2-eq
from the land use change (LUC) from planting trees in grassland areas as part of the sustainable
management system. However, the trees eventually generate an emission sink that is more than
sufficient to overcome the emissions generated from the LUC. The proposed investment to
improve grasslands has a removal contribution representing 30% of the total tCO2-eq equivalent
removed by the project. Investment in irrigation will directly contribute to a 22% reduction of
total tCO2-eq when compared to the “without project” scenario. However, note that investments
are interlinked so that activities supporting irrigation and grasslands improvement will indirectly
improve livestock management as well. As a result, investments supporting dairy and cattle
raising will result in a significant contribution to emission reductions in the livestock sector.
These investments will improve productivity, thereby limiting the need to increase the number of
animals and provide better diets when compared to the without project scenarios thereby
significantly reducing the emission of methane gases. As a result, approximately 48% of the total
reductions are attributed to the livestock sector.
107. Sensitivity analysis. The Exact tool calculates an uncertainty level of approximately
35%. This analysis was run using mostly tier 1 coefficients which in some cases may provide
over or underestimated values. In the case of grassland, a tier 2 coefficient was used based on
country expert knowledge. The project assumes that under the project scenario there will be no
increases in livestock herds but rather a potential reduction. In case this assumption doesn´t hold,
higher carbon emissions may be generated than estimated in this analysis.
-30%
-48%
-22%
Contributions of emision reduction per investment activity
Grasslands
Livestock
Irrigated agriculture
Table 2: Results of the ex-ante GHG analysis in tCO2-eq
Share per GHG source of the Balance Results per year
Project activities
Without
project
scenario
Project scenario Balance CO2,
Biomass
CO2,
Soil Other N2O CH4
BAU
scenario scenario Balance
Land use change 0 26,927 26,927 26,927 0 0 0 0 1,346 1,346
Improvement in annual crops 493 -4,973 -5,466 0 -5,466 0 0 25 -249 -273
Improvement in perennial crops -40,712 -288,362 -247,650 -226,457 -21,193 0 0 -2,036 -14,418 -12,382
Grassland 0 -402,777 -402,777 0 -402,777 0 0 0 -20,139 -20,139
Livestock 10,431,003 9,819,555 -611,448 -99,615 -511,833 521,550 490,978 -30,572
irrigation systems, energy and
agricultural inputs 67,476 37,772 -29,704
-
16,005 -13,768 0 3,374 1,889 -1,485
Total 10,458,260 9,188,142 -1,270,117 -199,530 -429,436
-
10,275 -108,793 -511,833 521,889 458,899 -62,990
per hectare 59 52 -7 -1.2 -2.4 -0.1 -0.6 -2.9
per hectare per year 3.0 2.6 -0.4 -0.1 -0.1 0.0 0.0 -0.1 3.0 2.6 -0.4