Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: RES21192

Restructuring PAPER

ON A

PROPOSED Project restructuring

of

PHILIPPINE CLIMATE CHANGE ADAPTATION PROGRAM

GLOBAL ENVIRONMENT FACILITY GRANT TF096649

DECEMBER 21, 2010

TO THE

REPUBLIC OF THE PHILIPPINES

NOVEMBER 26, 2015

ENVIRONMENT GLOBAL PRACTICE

EAST ASIA AND PACIFIC REGION


ABBREVIATIONS AND ACRONYMS

ATI / Agricultural Training Institute
AWS / Automatic Weather Station
BSWM
CCA / Bureau of Soils and Water Management
Climate Change adaptation
CCC / Climate Change Commission
CSDSS / Climate Smart Decision Support System
DA / Department of Agriculture
DENR / Department of Environment and Natural Resources
DOST / Department of Science and Technology
ECSFFS / Enhanced Climate Smart Farmers Field School
GIU / Geographic Insurance Units
IDMF / Integrated Decision Making Framework
IEC / Information, Education and Communication
IRRI / International Rice Research Institute
LGU / Local Government Unit
NIA / National Irrigation Administration
PAGASA / Philippine Atmospheric Geophysical and Astronomical Services Administration
PCIC / Philippine Crop Insurance Corporation
PhilRice / Philippine Rice Research Institute
PMO / Project Management Office
WIBCI / Weather Index-based Crop Insurance
Regional Vice President: / Axel Van Trotsenburg
Country Director: / Motoo Konishi
Senior Global Practice Director: / Paula Caballero
Practice Manager/Manager: / Iain Shuker
Task Team Leader: / Leonardo Paat Jr.

PHILIPPINES

CLIMATE CHANGE ADAPTATION PROJECT

Contents

A.SUMMARY OF PROPOSED CHANGES5

B.PROJECT STATUS 6

C.PROPOSED CHANGES8

D.APPRAISAL SUMMARY15

ANNEX 1: RESULTS FRAMEWORK AND MONITORING 16

DATA SHEET
Philippines
Climate Change Adaptation Program (P101076)
EAST ASIA AND PACIFIC
Environment & Natural Resources
.
Report No: / RES21192
.
Basic Information
Project ID: / P101076 / Lending Instrument: / Specific Investment Loan
Regional Vice President: / Axel van Trotsenburg / Original EA Category: / Partial Assessment (B)
Country Director: / Motoo Konishi / Current EA Category: / Partial Assessment (B)
Senior Global Practice Director: / Paula Caballero / Original Approval Date: / 29-Jun-2010
Practice Manager/Manager: / Iain G. Shuker / Current Closing Date: / 15-Dec-2015
Team Leader(s): / Leonardo Jr. Batugal Paat
.
Borrower: / Republic of the Philippines
Responsible Agency: / Department of Environment and Natural Resources, Department of Agriculture, Department of Science and Technology, Philippines Climate Change Commission
.
Restructuring Type
Form Type: / Full Restructuring Paper / Decision Authority: / Country Director Approval
Restructuring Level: / Level 2
.
Financing ( as of 06-Nov-2015 )
Key Dates
Project / Ln/Cr/TF / Status / Approval Date / Signing Date / Effectiveness Date / Original Closing Date / Revised Closing Date
P101076 / TF-96649 / Effective / 21-Dec-2010 / 21-Dec-2010 / 31-Jan-2011 / 15-Dec-2015 / 15-Dec-2015
Disbursements (in Millions)
Project / Ln/Cr/TF / Status / Currency / Original / Revised / Cancelled / Disbursed / Undisbursed / % Disbursed
P101076 / TF-96649 / Effective / USD / 4.97 / 4.97 / 0.00 / 3.32 / 1.65 / 67
.
Policy Waivers
Does the project depart from the CAS/CPF in content or in other significant respects? / Yes [ ] / No [ X ]
Does the project require any policy waiver(s)? / Yes [ ] / No [ X ]
.
A. Summary of Proposed Changes
The Philippine Climate Change Adaptation Project (PhilCCAP) is supported by the Global Environment Facility (GEF) through a grant agreement with the Government of the Philippines (GOP) signed on December 21, 2010. Four years into the implementation of the project, the Department of Environment and Natural Resources (DENR) as the implementing agency with the endorsement from the Department of Finance (DOF) has requested an extension of project closing date, adjustments in the results framework, component costs, risk assessment, disbursement estimates, and changes in FM-related requirements.
Through this proposed restructuring the task team supports an extension of the Closing Date of the project by 12.5 months, from December 15, 2015 to December 31, 2016, to allow the completion of the testing and demonstration of the adaptation measures. Although the Borrower has requested a two year extension, the Bank team is of the view that an extension of the Closing Date by one year will enable the agencies to complete the actions to support the institutionalization of these adaptation measures and the generation of broader constituency for climate change adaptation. This has been discussed with the Borrower subsequent to the letter of request and the Borrower agrees that a one year extension would suffice. The team also supports an adjustment of the results framework to reflect better the project implementation progress and results. The outcome indicators and targets were refined to sharpen the logic of change and to tighten the framing of how the project can contribute to the overall climate change adaptation and response in the country. This adjustment considered the recent changes in the climate policy and institutional landscape and the actions taken by the GOP to enhance resilience. Consistent with other recent restructurings, the project monitoring indicators will be removed by amendment out of the Grant Agreement and included in the Operations Manual by way of revision. This will allow the Project greater flexibility should the indicators need to be adjusted later. Also included as part of the proposed changes under this restructuring, and supported by the FM specialist, is the removal of the requirement under the Grant Agreement for project review by the Internal Audit Service of DENR and DA.This requirement, set out in Section IIB4 of Schedule 2 of the Grant Agreement is no longer necessary given that the internal audit requirement remains part of the overall internal control using existing country systems and the Project is still subject to an external audit on an annual basis. Changes in the component costs and disbursement rates are also supported to reflect the activities that were already carried out and proposed to be extended. The risk assessment of the project has been adjusted to reflect the political risks from the national elections in 2016 and the enhanced institutional capacity of the government counterpart.
This is a Level Two restructuring as the requested changes will not affect the Project Development Objective (PDO) nor trigger additional safeguards policies. This restructuring is the first for this project.
Change in Implementing Agency / Yes [ ] / No [ X ]
Change in Project's Global Environmental Objectives / Yes [ ] / No [ X ]
Change in Results Framework / Yes [ X ] / No [ ]
Change in Safeguard Policies Triggered / Yes [ ] / No [ X ]
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 to Financing Plan / Yes [ ] / No [ X ]
Change in Disbursement Arrangements / Yes [ ] / No [ X ]
Reallocation between Disbursement Categories / Yes [ ] / No [ X ]
Change in Disbursement Estimates / Yes [ X ] / No [ ]
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 [ ] / No [ X ]
Change in Implementation Schedule / Yes [ ] / No [ X ]
Other Change(s) / Yes [ ] / No [ X ]
Appraisal Summary Change in Economic and Financial Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Technical Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Social Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Environmental Analysis / Yes [ ] / No [ X ]
Appraisal Summary Change in Risk Assessment / Yes [ X ] / No [ ]
.
B. Project Status
The Philippine Climate Change Adaptation Project (PhilCCAP) aims to develop and demonstrate approaches that would enable targeted communities to adapt to the potential impacts of climate variability and change. This would be achieved by strengthening existing institutional frameworks for climate change adaptation, and by demonstrating cost-effective adaptation strategies in agriculture and natural resources management. The project consists of four components, namely (i) strengthening the enabling environment for climate change adaptation; (ii) demonstrating climate change adaptation strategies in the agriculture and natural resources sectors; (iii) enhancing provision of scientific information for climate risk management; and (iv) project coordination. The pilot sites for the project are Penablanca Protected Landscape and Seascape (PPLS) in Cagayan Province, the Jalaur River basin in Iloilo Province, and the Siargao Island Protected Landscape and Seascape (SIPLAS) in northeastern Mindanao. Four years into the implementation, PhilCCAP was able to develop a set of adaptation approaches that were demonstrated in the pilot sites. The project also enabled identified institutions to take stock of climate policies and provided information that support the adaptation approaches. The project however experienced challenges particularly procurement delays during the startup as well as bottlenecks in fund transfers due mainly to delays in the issuance of the allotment release documents and changes in the requirements for project fund liquidation. These were addressed in the course of implementation allowing the project to catch up and exhibit progress starting in 2013. These however caused significant delays in the delivery of outputs with the disbursement still at 67% (or USD 3.3 million) as of November 2015. The most recent ISR, reflecting the results of the July 2015 review, indicated achievements of physical targets of the different project components. However due to implementation delays and low disbursement rate, the project is rated moderately unsatisfactory.
A survey, commissioned as part of the Mid Term Review, confirmed the uptake by farmer households of the measures that were demonstrated at the pilot sites, and the level of knowledge and awareness of the stakeholders on climate change adaptation strategies. The heightened awareness of the impacts of climate change and the effects of extreme climate events motivated the various government agencies to strengthen the policies and institutions to further support the adaptation measures. This early indication of results suggests that the project can achieve its objective given sufficient time. Overall, the project demonstrated achievements in terms of developing and innovating adaptation approaches in the agriculture and natural resources sector even with the considerable delays and challenges that it hurdled. While these achievements may not be complete in relation to the overall project design, these provide indication and impetus to the agencies that given sufficient period, the project can achieve its objective. For its part, the inter-agency Project Steering Committee (PSC) identified the causes of the bottlenecks and established mechanisms to reduce if not eliminate their recurrence -- for example obtaining clarity on policy related to project-based liquidations, advanced work and financial planning to avoid delays in the issuance of allotment release documents, and acquiring additional support to assist agencies in project financial management. This project restructuring affirms the recommendations of the Mid Term Review on the need to extend the implementation period to allow sufficient time for refining the adaptation measures and approaches following the pilot testing. The refinements will also enhance the credibility of these adaptation measures, and increase the likelihood of replication and upscaling. Changes in the results framework particularly the adjustments of indicators, targets and outputs will reflect more accurately the current circumstances, generate clearer signaling of project outcomes, and provide better logical connections of results and outcomes.
Progress under each component and activities proposed to be extended are summarized below:
Component 1: This component supports climate change adaptation policy strengthening at the national and local levels, development of decision-making framework, and knowledge management on climate change adaptation. The implementing agency, the Climate Change Commission (CCC), conducted a policy gap assessment as input to policy recommendations and the integrated decision-making framework. A knowledge management unit was established at CCC that documented the climate change adaptation practices and developed the process for climate information sharing, communication and engagement. Activity to be implemented under Part 1(h) in the proposed extension include the communication and education program implemented at the national level and at the project’s pilot areas that will not only communicate the results of the project but also advocate for policies that will support the institutionalization of the adaptation measures. This activity will strengthen the support of- and promote the adoption by the Government and stakeholders of the adaptation measures.
Component 2: The activities under this component involve the development and demonstration of adaptation measures in targeted communities with focus on the agriculture and natural resources sectors. The National Irrigation Administration (NIA) completed the feasibility studies on incorporating climate change impacts into the designs of two pilot irrigation systems in the provinces of Cagayan and Iloilo. A Supplemental Guideline was developed by NIA to assist designers, operators, and farmers in integrating climate change into the planning, design, implementation, and operations of irrigation infrastructures. In terms of enhancing the delivery and effectiveness of extension services, the Bureau of Soil and Water Management (BSWM) and the Agricultural Training Institute (ATI) completed the Enhanced Climate Smart Farmers Field School (ECSFFS) Manual following the series of trainings of farmers and extension workers in the pilot sites. As an additional support, the International Rice Research Institute (IRRI) developed a web-based climate smart agriculture decision support system (DSS) for rice and corn farms. This tool provides farmers with site-specific climate smart agriculture (CSA) recommendations. The Philippine Crop Insurance Corporation (PCIC) started the second cycle of field-testing of the weather index-based crop insurance covering the dry season in the pilot sites of the Cagayan Valley and Western Visayas regions (Region 2 and 6). PCIC also started the process for developing a geographic insurance unit (GIU)to reduce the transaction cost for parametric insurance system. If completed, the GIU will provide adequate data set that will be used as basis for the design of WIBCI. The draft of the enhanced PA management plans of the two pilot protected areas were completed and presented to the protected areas management boards (PAMB) of PPLS and SIPLAS. The implementation of specific PA management recommendations and alternative livelihoods are ongoing as these activities have been affected by the implementation delays.
For the proposed extension, the following activities will be undertaken:
  • Under Part 2 (a) (i), use the supplemental guideline for the redesigning of two irrigation systems to further validate the approach by NIA and the training of field and technical staff on the use of Supplemental Guidelines;
  • Under Part 2 (a) (ii), training of extension workers on the use of the Enhanced Climate Smart Farmers Field School (ECSFFS) Manual and the Decision Support System (DSS), conduct of final evaluation of adoption of tools, and completion of the AgroMet investment plan for the country;
  • Under Part 2 (a) (iii), completion of the geographical insurance units (GIUs) development by PCIC supportedby BSWM, completion of the wet season testing of WIBCI in Region 2 which was not completed in 2015 on account of the ENSO, and validation of data generated by the AWS in the pilot sites, and
  • Under Part 2 (a) (iv), integration of the PA management plans with the comprehensive development plans of LGUs, completion of testing and implementation of key adaptation measures identified in the revised PA management plans, capacity strengthening of PAMB and communities, and completion of resource generation programs that can lead to additional financing for the PA.
Component 3: This component aims to strengthen the provision of climate information to guide the design of adaptation actions. This component is supporting the technical capacity enhancement of the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) that enabled the agency to provide the necessary climate information that supported the activities under Component 2 of this project. Climate projections were provided by PAGASA to the DENR for the revision of the protected area management plans, NIA for the irrigation infrastructure design, DA and PCIC for climate smart agriculture training modules and parametric insurance design. The automatic weather stations (AWS) for the three sites (Cagayan, Iloilo, and Siargao) were installed and handed over to the LGUs. To be completed in the proposed extension is the capacity strengthening of PAGASA through the Australian CSIRO under Part 3(b) of the Project to generate and share climate information and for the implementing agencies and local stakeholders on the use of such information.
Under Component 4: The Project Management Office (PMO) provided inter-agency coordination and facilitated the conduct of support activities. The PMO implemented an information, education and communication (IEC) program designed to sustain the interest and support of the stakeholders to the project. The PMO also facilitated the conduct of activities including technical summits, geo-tagging workshop, and even in leveraging additional resources to support the uptake of adaptation measures such as the GEF-funded regional knowledge management project through the Partnership for the Environmental Management of the Seas of East Asia (PEMSEA) and technical support to the index-based crop insurance through the International Finance Corporation (IFC). To support project management, the PMO developed a results-based monitoring and evaluation system (RBMES) enabling agencies and stakeholders to track the progress of each component and activities of the project. Project support and coordination activities are proposed to be continued during the extension including the conduct of end of project evaluation and the project level information and education campaign to promote the adoption of the adaptation measures.
.
C. Proposed Changes
.
Development Objectives/Results
Project Development Objectives
Original GEO
The project development objective is to develop and demonstrate approaches that would enable targeted communities to adapt to the potential impacts of climate variability and change.
Change in Project's Global Environmental Objectives
Change in Results Framework
Explanation:
This restructuring proposes to remove the project outcome and intermediate indicators from the Grant Agreement as reflected in Annex 1 and incorporate such in the Project Operations Manual. The indicators to be included in the Operations Manual will include the following changes described below.