Document ofThe World Bank

Report No. T-7194-PE

TECHNICAL ANNEX

PERU

EL NINO EMERGENCY ASSISTANCE PROJECT

November 11, 1997

Finance, Private Sector and Infrastructure SMUEnvironment and Socially Sustainable Development SMUCountry Management Unit 6Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS(Oct. 29, 1997)

Currency Unit = Nuevo Sol (S/.)US$1.00 = S/. 2.68

FISCAL YEARJanuary 1 - December 31

ACRONYMS AND ABBREVIATIONS USED

CIMMYT - Intemational Center for Improvements in Maize and WheatCentro Internacional de Mejoramiento de Maiz y Trigo

COFOPRI - National Commission for Formalization of Informal PropertiesCONAE - National Council for Emergency AssistanceDHN - Direccion de Hidrografia y Navegaci6nENSO - El Nino Southem Oscillation'EMP - Environment Management PlansERFEN - Estudio Regional del Fen6meno del NiPoFAO - Food and Agriculture OrganizationGDP - Gross Domestic ProductIBRD - Intemational Bank for Reconstruction and DevelopmentICB - Intemational Competitive BiddingIDB - Inter-American Development BankIGP - Instituto Geofisico del PeruIMARPE - Instituto del Mar del PeruiIMF - Intemational Monetary FundINDECI - National Institute of Civil Defence (Instituto Nacional de Defensa Civil)INIA - Instituto Nacional de Investigaci6n AgropecuariaINRENA - Instituto Nacional de Recursos NaturalesMEF - Ministry of Economy and FinanceMIPRE - Ministry of the PresidencyNCB - National Competitive BiddingNOAA - National Oceanic and Atmospheric Agency01 - Office of Investments, Ministry of Economy and FinancePRASTER - Programa de Aguas Subterr6neas y Tecnificaci6n de RiesgoPRONAMACH- Programa Nacional de Manejo de Cuencas HidrogrdficasRRT - Reconstruction and Resettlement TeamSENAMHI - Servicio Nacional de Metereologia e HidrologiaQCBS - Quality- and Cost-Based SelectionUNA - Universidad Nacional AgrariaUNDP - United Nations Development ProgramUSAID - United States Agency for International Development

The Memorandum and Recommendation of the President and the accompanying technical annex for this operation wasprepared based on the findings of two missions that visited Peru during September 22-30 and October 13-27, 1997. Thecore project preparation team consisted of Eugene McCarthy, LCSFP (Team Leader), Max Pulgar-Vidal (AFTT2), JyotiShukla (LCSFP), Matthew McMahon (LCSES), William Partridge (LCSES), Roberto Laver (LEGLA), Efraim Jimenez(LCOPR), Issam Abousleiman (LOAEL), Oswaldo Patiiio (Lima Resident Mission), Carlos Emanuel and Jose Hermosa(consultants). Document production was undertaken by Maria Antonieta Gonzalez (LCSFP) and Mercedes Aleman(LCSFP) provided administrative support. The management team for this operation includes: Regional Vice President:Shahid Javed Burki, CMU Director: Isabel Guerrero, Sector Directors: Sri-Ram Aiyer and Maritta Koch-Weser, SectorLeader: Susan Goldmark and Lead Economist: Ernesto May. Peer reviewers are: Armando Araujo (OCSPR), JelenaPantelic (SASIN) and Robert Watson (ENVDR); and external peer reviewer: NOAA (J. Michael Hall, Director).

PERU

EL NINO EMERGENCY ASSISTANCE PROJECT

LOAN AND PROJECT SUMMARY

Borrower: Republic of Peru.

Implementing Sectoral ministries, related public sector enterprises, municipalAgencies: authorities, local communities in affected regions.

Coordinating Agency: Office of Investments in the Ministry of Economy and Finance.

Poverty Category: Not applicable.

Program ObjectiveCategory: Emergency Assistance Loan.

EnvironmentCategory: B

Loan Amount: US$150 million.

Terms: Repayment in 17 years, including 5 years of grace, at theBank's standard interest rate for LIBOR-based U.S. dollarsingle currency loans.

Commitment Fee: 0.75% on undisbursed loan balances, less any waiver,beginning 60 days after signing.

Estimated Costs: Prevention Phase: US$100 millionReconstruction Phase: US$330 million

Financing Plan: IBRD IDB GoP TotalPrevention Phase US$ 30 m. US$ 30 m. US$ 40 m. US$ 100 m.Reconstruction Phase US$ 120 m. US$ 120 m. US$ 90 m. US$ 330 m.TOTAL US$ 150 m. US$ 150 m. US$130 m. US$ 430 m.

Note: If reconstruction costs are higher than $330 million, theGovernment may seek additional financing from bilateral and multilateralsources.

Maps: IBRD-29186 and IBRD-29188.

Project IdentificationNumber: PE- PE 54667

PERUEL NINO EMERGENCY ASSISTANCE PROJECT

TECHNICAL ANNEX

TABLE OF CONTENTS

INTRODUCTION .............................................................. 1

BACKGROUND TO THE "EL NINO" EVENT .............................................................. 1

The El Nino Phenomenon ................................................... 1The Impact of the 1982/83 El Nio ................................................... 3The 1997/98 El Nifo ................................................... 3Reliability of Forecasts ................................................... 4The Government's Strategy for dealing with the 1997-98 El Niuo ................................... 5The Bank's Response ................................................... 6

PROJECT DESCRIPTION .............................................................. 6

Project Objectives ................................................... 6Project Design Alternatives Considered ................................................... 6Description ................................................... 7

A. The Emergency Prevention Component ................................................... 8B. Emergency Operations ................................................... 11C. Reconstruction Phase....................................................................................D. Institutional Support Component ............................................. 16

Environmental Impact ............................................. 19

PROJECT COSTS AND FINANCING .............................................................. 19

INSTITUTIONAL ARRANGEMENTS AND PROJECT IMPLEMENTATION .......................................... 20

Project Implementation Arrangements ................................................... 20Procurement Arrangements ................................................... 21Review by the Bank .................................................. 22Disbursement Arrangements ................................................... 23Financial Management and Reporting Requirements .................................................. 24Monitoring .................................................... 24Supervision Plan .................................................. 25

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APPENDICES

APPENDIX 1 -FLOOD CONTROL WORKS IN THE NORTHERN REGION WORKSPOTENTIALLY ELIGIBLE FOR RETROACTIVE FINANCING FROM THE PREVENTIVEPHASE OF THE PROJECT ............................................................................... 27

APPENDIX 2 - DRAFT TERMS OF REFERENCE FOR CONSULTANTS TO UNDERTAKE INDEPENDENTAUDIT AND VALUATION OF CIVIL WORKS UNDERTAKEN ON FORCE ACCOUNT AND TO BEFINANCED RETROACTIVELY ............................................................................... 30

APPENDIX 3 - DROUGHT COMPONENT SIERRA SUR ............................................................................... 37

APPENDIX 4 - DRAFT TERMS OF REFERENCE FOR A COMPREHENSIVE DISASTER FORECASTING,PREVENTION, RELIEF AND MITIGATION STRATEGY ............................................................................... 47

APPENDIX 5 - INSTITUTIONAL STRENGTHFNING AND CAPACITY BUILDING ..................................... 50

APPENDIX 6 - RESETTLEMENT ............................................................................... 54

PERU

EL NINO EMERGENCY ASSISTANCE PROJECT

TECHNICAL ANNEX

INTRODUCTION

I. This Technical Annex accompanies the Memorandum of the President for a proposed ElNinio Emergency Assistance Loan to Peru. The proposed Project will support the Government'son-going efforts to mitigate the potentially severe impact of the 1997-98 El Nifo event. In theevent of such an occurrence, the Loan will support reconstruction and other restoration activities.

BACKGROUND TO THE "EL NIMO" EVENT

2. The El Niho Phenomenon. Local fishermen along the coasts of Peru and Ecuador haveobserved for decades the periodic appearance of a warm ocean current that would extendsouthward along the west coast of South America. As it occurred around Christmas they termedthis current "El Nifio", or Spanish for the Christ child. Over the years, the term "El Nifio" hascome to be reserved for these exceptionally strong warm intervals that have disrupted the localfishing industry and have brought heavy rains and flooding to this coastal region. It has also beenincreasingly recognized as a phenomenon which has an impact throughout the world, bringingdrought to South-East Asia, Southern Africa and North-Eastern Brazil while bringing heavyrainfall to the normally arid coastline of the Americas.

3. In the scientific community, El Nino is more formally known as the El Niflo-SouthernOscillation (ENSO), as climate scientists now link the advent of these warm ocean currents to arelated atmospheric event called the "Southern Oscillation". The ENSO then is described as adisruption of the ocean atmosphere system in the tropical Pacific, during which trade winds relaxin the western Pacific, with a resulting rise in sea surface temperature and a drastic decline in theprimary productivity of the food chain, which affects commercial fisheries in the region. Rainfallfollows the warm water eastward, with associated flooding in Peru and drought in Indonesia andAustralia. The eastward displacement of the atmospheric heat source overlaying the warmestwater results in large changes in the global atmospheric circulation, which in turn forces changesin weather in regions far removed from the tropical Pacific. There is now a growing body ofevidence suggesting that this ENSO phenomenon contributes to, or is responsible for, anomalousweather patterns throughout the world, sometimes of disastrous proportions.

4. The El Nifno phenomenon occurs every few years, though not on a predictable cycle andwith varying magnitude and impact. Observations of conditions in the tropical Pacific areconsidered essential for the prediction of the short term (a few months to one year) climatevariations. To provide the necessary data, the U.S. National Oceanic and Atmospheric Agency(NOAA) operates a network of buoys which measure temperatures, currents and winds in theequatorial bands.

5. During the last century more than a dozen El Nifio events have affected the SouthAmerican Coast (See Table 1). Most of them raised water temperatures not only along the coastbut in a belt stretching 5000 miles across the Equatorial Pacific. The weaker events raised seatemperatures only 1-1 1/2°C and had only minor impacts on the fisheries; the stronger events, likethe El Nifio of 1982/83, raised temperatures 5-10°C and had a major impact not only on the localweather and marine life but also, it is believed, on climatic conditions around the globe.

Table 1: El Nifuo Events in the Last Century

1891 Very intense, heavy rains.

1925-26 Very intense.

1930 Weak.

1932 Weak.

1940-41 Intense (started September).

1957-58 Intense.

1963 Weak.

1965 Moderate.

1972-73 Intense, significant change in thequantity and types of marine life off thecoast of Peru.

1976 Moderate.

1982-83 Very intense. Apparent off the coast ofPeru in September.

1992 Moderate.

1994 Moderate

Source: National lnstitute of Civil Defense, Peru.

6. Compared to the 1982-83 episode, the 1997 El Nin'o has accelerated rapidly to a level (ofsea surface temperatures) already as high as those reached at the peak of the 1982-83 cycle. Acomparison of sea surface temperatures in the months leading to the 1972-73, 1982-83 and the1997-98 El Nifio events is shown in the chart accompanying the Memorandum of the Presidentfor this operation. Based on the behavior to date and statistical correlations with trends in thepast, it can be predicted with a high degree of confidence that the phenomenon will persist wellinto the first half of 1998 and lead to significant economic and social dislocation. A recentClimate Outlook Forum convened on October 28, 1997 in Lima, Peru reaffrmed that the El Nifhoevent was expected to remain strong over the forecast period of December 1997-March 1998.The Forum was comprised of representatives of Meteorological Services and climate researchersfrom universities and international research institutes. A statement issued by the Forum isavailable in the Project files.

7. The Impact of the 1982-83 El Nifio. The 1982-83 El Nifno has been the strongest suchevent of this century with devastating impact on many countries of the world, with widespreadincidents of drought, flooding and severe storms in 5 continents, and economic losses estimatedby some to be in excess of US$14 billion. The Western countries of Latin America, in particular,were most severely affected as the 1982-83 El Niflo event is estimated to have led to up to 100inches of rain over six months in the coastal desert regions of Northern Peru and Ecuador, andsevere drought in the Andean highlands with an estimated US$2 billion in direct and indirectlosses to fisheries, agriculture, transportation, housing, and other sectors of the economy. InPeru, the Government has estimated direct losses of up to US$ 1 billion, with subsequentestimates of reconstruction efforts over several years costing almost as much additionally. TheIMF estimates of the El Niiio impact on the Peruvian economy accounted for half of the 12percent decline in the GDP observed in 1982.

8. The social impact of the 1982-83 El Nifio was also severe in Peru. Over 200 lives werelost and there was significant social dislocation caused by the immediate needs to deal with floodsand droughts, incidences of breakout of disease with damage to potable water and sanitationfacilities. The change in temperature patterns typical of the El Niio event disrupted fishing assome fish migrated southward towards Chile or withdrew deeper into the ocean, crop cycles weredisrupted because of an increase in temperatures, and key economic and social infrastructureservices of electricity, roads, telephones, schools, hospitals and housing suffered damage'. In theAndean highlands in the south (Altiplano hereafter) , the drought conditions led to shortages offood for humans and shortages of forage for livestock. This led to a large-scale slaughter of cattlefor meat leading to cattle shortages in later years2. In the southern department of Puno, forexample, the Ministry of Agriculture estimates that crop production fell by 70%, while livestocksales increased by 25% in the 1982-83 episode, as people were forced to sell or decimatelivestock due to the lack of forage and shortage of food for human consumption. The decimationof livestock herds, the lack of food in local markets and a shortage of seeds for the next year'scrop impacted the local economy for several subsequent years and also contributed to a massmigration from rural communities to urban centers in search of employment.

9. The 1997-98 El Nin'o. The return of El Nifno was first detected in the Eastern Pacific inMay of this year. By July, it was clear that the phenomenon was as intense as that of 1982-83.Off the coast of Peru, the sea-surface temperature rose sharply in the period, March-June 1997.Compared to the 1982-83 episode, the one that began in 1997-98 has already accelerated rapidlyto a level (of sea surface temperatures) as high as reached at the peak of 1982-83 cycle.Although these temperature anomalies started earlier than in 1982-83, they could, if sustainedthrough the summer months of the Southern Hemisphere (December-April), give rise to rainfallon a scale experienced in 1982-83. IBRD Map No.29186 accompanying the Memorandum of thePresident to this operation shows the sea temperature anomalies observed off the coast of Peru inSeptember 1997. It is for this reason that the Peruvian government declared a state of emergency

In 1982-83, for example, 620 kilometers of roads, including 350 km. of the Pan American highway, the mainartery of the country, were out of service due to heavy rains; 47 bridges and 4 airports were also damaged, aswas 600 km. of the electricity distribution system. Additionally, 101 health centers and 875 educationalinstitutions suffered damage leading to prolonged loss of livelihoods and social services.

2 It is estimated that 2.6 million heads of livestock were lost in the course of the 1982-83 El Niflo event.

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in June 1997 to enable it take, sufficiently in advance, the needed preventive steps to mitigate theadverse socio-economic impact on the most vulnerable region of the country.

10. Reliability of Forecasts. The gross features of the El Ninio events, and some of itsclimate impacts, can be predicted in advance by ocean-atmosphere models. However, thepredictive capability of these models is still limited by an insufficient understanding of the intrinsicmechanism responsible for these events. In general, forecasts of shorter lead time i.e. threemonths, have shown themselves to be more reliable. Forecasts are currently showing thattemperature anomalies off the Northern Peruvian coast will continue at least until March 1998.As a result, it is reasonable to suppose, particularly in the northernmost reaches of the coastalplain (Tumbes and Piura), that the rainfall pattern may be similar to that in 1982-83. The durationof the rainfall from this 1997-98 El Niflo event, however, may eventually be less than in 1982-83(when it continued for over 6 months until June/July) since the 1997-98 El Nifno formed earlier.

11. Though there remains an element of uncertainty in the intensity of the El Nifno events,there is, nevertheless, considerable consensus that vulnerable regions such as Northern Perushould take the essential preventive measures to mitigate the impact of any flooding caused by alikelihood of a sustained period of heavy rainfall, as occurred in 1982-83, and which some stillthink could be exceeded by the 1997-98 El Niflo event. Equally, the Altiplano regions in southernPeru should begin to rehabilitate water management facilities and put in place contingentstrategies to deal with drought mitigation measures. Such preventive measures are particularlyimportant in Peru, as the departments that are the most vulnerable to the extreme weatherpatterns brought about by El Nifno also contain some of the highest percentages of economicallyvulnerable groups. The Altiplano in particular is one of the poorest regions in the entire LatinAmerica and the majority of the population has little economic security to withstand the effects ofany incidence of loss of crops or other livelihood caused by drought. The poorer populationgroups in the Northern Coastal area also have very simple dwellings whose construction materialshave little ability to withstand torrential rains as are being forecast. Table 2 shows the incidenceof poverty in some of the departments of the country which are expected to be the mostvulnerable to extreme weather patterns due to El Nifio.

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Table 2: Incidence of Poverty in Departments Vulnerable to Effects of El Nifio

Department % poor No. poor Index El Niho Effectspoverty

Tumbes 29 50,000 1.0 Extensive, torrential rains, possible floodingPiura 48 705,000 2.29 Extensive, torrential rains, possible floodingCajamarca 66 887,000 2.90 Extensive, torrential rains, possible floodingLambayeque 49 494,000 1.87 Extensive, torrential rains, possible floodingLa Libertad 54 738,000 2.08 Extensive, torrential rains, possible floodingAncash 56 574,000 2.31 Extensive, torrential rains, possible floodingArequipa 32 320,000 1.55 Failure of rains, possible drought conditionsMoquegua 37 51,000 1.49 Failure of rains, possible drought conditionsTacna 33 81,000 1.39 Failure of rains, possible drought conditionsPuno 68 778,000 2.83 Failure of rains, possible drought conditionsAyacucho 65 337,000 3.03 Failure of rains, possible drought conditionsApurilnac 73 299,000 3.16 Failure of rains, possible drought conditionsHuancavelica 72 298,000 3.39 Failure of rains, possible drought conditionsCusclo 60 662,000 2.93 Failure of rains, possible drought conditions

TOTAL 55 6,274,000

NLote: "Poor' is defined to include the poor and the extreme poor according to the definitions used by the Ministryof the Presidency. The poverty index is based on the methodology used by FONCODES on the basis of 11 socio-economic indicators. Data has been based on information from the National Institute of Statistics andFONCODES documents.

12. The Government's Strategy for Dealing with the 1997-98 El Nifio. Given the currentscenarios of the potential impact of the 1997-98 El Niiio event, the Government of Peru is takingdecisive steps to mitigate the impact of a potential emergency situation. On June 19, 1997 a stateof emergency was declared in 9 of the country's 24 departments, a number which hassubsequently increased to 14. These departments are: in the North - Tumbes, Piura, Cajamarca,Lambayeque, La Libertad y Ancash; and in the South - Arequipa, Moquegua, Tacna, Puno,Ayacucho, Apurimac, Huancavelica and Cusco. IBRD Map No. 29188 accompanying theMemorandum of the President illustrates the departments in which the Government has declared astate of El Nifio emergency.

13. A key element of the Government's strategy is a strong emphasis on preventive actions tomitigate the loss of human life and damage to infrastructure.

(a) As part of this prevention strategy, the Government has already begun therehabilitation and strengthening of key infrastructure facilities in the flood-proneNorth - dredging riverbeds, strengthening river defenses, cleaning/constructingstorm drainage, strengthening bridges, and the constructing of temporaly housingin elevated locations. In the drought-prone Altiplano (high plains), theGovernment is rehabilitating and strengthening water management infrastructureand taking steps to ensure the production and distribution of forage and seeds tominimize the impact of potential drought conditions.

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(b) The subsequent rliedf phase, to be implemented largely by the National Institute ofCivil Defense (INDECI), is expected to consist of standard disaster responseactivities in the immediate aftermath (90-100 days) of the disaster being declared.This is likely to include evacuation, temporary, and in some cases permanent,resettlement of households from flood affected areas, and the distribution of food,medicines and other essentials.

(c) Finally, the reconstruction phase, to be coordinated through the Ministry ofEconomy and Finance, is expected to last two to three years and would be focusedon reconstruction of economic and social infrastructure.

14. The Bank's Response. The Government requested Bank financial support for emergencyactivities just prior to the Annual Meetings and the Bank fielded a mission almost immediately toassess the Government's program and modalities of Bank support. This mission, and itssubsequent follow-up, assisted the Government in refocusing the design of a program ofprevention activities, in defining the eligibility criteria and the project management arrangementsfor the subsequent reconstruction phase, and an institutional strengthening component. A similarrequest for financing was made to the Inter-American Development Bank (IDB) with whom closecoordination has been maintained throughout the preparation of the Emergency Assistanceproject.

PROJECT DESCRIPTION

15. Project Objectives. The principal objectives of the proposed project would be to:

(a) Help reduce the loss of human life and a deterioration of living standards thatmight result from the floods and/or droughts caused by the 1997/98 El Niio event.

(b) Help reduce the loss of, or damage to, economic and social infrastructure thatmight result from similar events.

(c) Help increase Peru's capacity to forecast and respond to future El Ninophenomena.

16. Project Design Alternatives Considered. An unusual feature of this particularemergency operation is that, even though a potential emergency situation has been forecast with ahigh degree of probability, its severity and scope are not yet known at the time of project designand approval. Given this uncertainty, and at the same time, the immediate need for fundingpreventive activities, the project team considered several design options.

(a) Restructuring a part of the existing portfolio to include the needed preventionworks. In subsequent consultation with the Government, it was decided not torestructure project operations in the existing portfolio as the diversion of funds ofthe proposed magnitude from their originally designated uses was likely to put atrisk the basic development objectives of these operations.

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(b) Processing a new operation only for the preventive phase, while preparing anotherproject for the reconstruction phase to be approved once the effects of the El Nifnoevent became clearer. The option of a two-operation approach was also droppedas it was realized that given the uncertain nature and timing of the El Ninlo'simpact, it was important for the Government to have access to adequate financialresources to ensure timely response to both immediate and/or evolving emergencydisaster situations. The Government gave considerable importance to these twoconsiderations.

(c) On a more technical level, a strategic design choice was made for the droughtprevention program. The original project design called for livestock managementthrough culling of camelid herds and transportation of bovine and ovine livestockfrom drought prone areas to less vulnerable areas. In consultation with the Foodand Agriculture Organization (FAO), Centro Internacional de Mejoramiento deMaizy Trigo (CMIMYT) and the World Bank, the Government has now decidedto focus its drought prevention efforts on ensuring availability of some water, andminimal production of forage and seeds to ensure maintenance of livestock herdsand the availability of seeds for the next crop.

17. Description. Given the nature of the El Nino event, the proposed operation is designedto be implemented in three distinct phases: (a) a prevention phase of about six months (July-December 1997), in which project activities are now well defined; (b) an emergency phase inwhich the Bank will provide limited support, and (c) a reconstruction phase, estimated to requiretwo to three years, whose scope and content cannot yet be defined prior to the emergencyoccurring, but for which eligibility criteria have been drawn up and agreed to. In addition, theproject includes an institutional strengthening component.

(a) The prevention component consists of two sub-components:

(i) Flood-protection measures in northern coastal Peru, including riverdredging, strengthening of river defenses, cleaning/construction of stormdrainage canals in urban and rural areas, bridge strengthening, constructionof temporary housing, and protection of archeological sites.

(ii) Drought-mitigation measures in southern Peru's Altiplano, including watermanagement measures such as rehabilitation of wells, pumps, and smallirrigation systems, production of forage to mitigate the effects of a droughton livestock and a seed production program to ensure the availability ofseeds for the next planting season.

(b) In the emergency phase, the Bank will provide limited support, largely for theprovision of certain emergency equipment such as mobile bridge structures, mobilepower plants and water tanks, pumps and metallic protection structures neededurgently during the flood disaster.

(c) The reconstruction phase. Given that the full impact of the El Nino will only beascertained in the first few months of 1998, it is not possible to define this phasecompletely at this time. The eligibility of financing for any reconstruction activities

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would thus be contingent on damages sustained due to El Nifio relatedphenomena. It is likely to consist of the following three sub-components:

(i) Rehabilitation and reconstruction of key public infrastructure such as a)hospitals, health posts, schools; (b) roads and bridges; (c) irrigation anddrainage systems; (d) water supply and electricity; and (e) river training,defenses and embankments. Investment sub-projects to be financed underthe reconstruction phase would have to meet eligibility criteria agreed uponwith the Government (paragraph 21).

(ii) Resettlement of families in flood prone areas This sub-component willsupport the provision of infrastructure facilities and public services for thepermanent relocation of about 6,000 families identified to be living in areasthat are recurrently flood prone and/or whose relocation is consideredessential to carrying out the Government's emergency preparedness efforts.

(iii) Labor-intensive rural public works program. A labor-intensive rural publicworks program aimed at providing a safety net to vulnerable groupsaffected by the drought, who might otherwise migrate out of the Andeanhighlands to the coastal areas in search of employment. These workswould also strengthen sustainable agricultural capacity of drought-proneareas in the long run.

(d) Institutional support This sub-component will finance:

(i) Specialized expertise, training and equipment to a range of Peruvianinstitutions responsible for collecting information, and predicting,monitoring and mitigating the effects of future El Nino events.

(ii) The preparation of a comprehensive government strategy for disasterforecasting and management.

(iii) Technical assistance, to the Office of Investments in the Ministry ofEconomy and Finance to enable it to carry out project implementationeffectively, including necessary support for the planning andimplementation of the resettlement activities.

A. The Emergency Prevention Component (approx. US$ 100 million)

18. Flood Control Component (approx. US$ 90 million). This component will financemeasures in northern coastal Peru to undertake rehabilitation and maintenance works to minimizedamage to people and property by keeping flood water away from the flood prone areas. Thedesign of this component is based on the premise that the water flow due to the likely heavyrainfall associated with El Ninio will be significantly higher than normal and may well lead to waterflow patterns different from the "normal behavior" of rivers and streams the potentiallydevastating impact of which may require actions beyond routine maintenance works. The worksto be financed through this component include river dredging, strengthening of river defenses,

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cleaning/construction of storm drainage canals in urban and rural areas, bridge strengthening,construction of temporary housing, and protection of archeological sites. Appendix 1 provides alist of these preventive flood control works being undertaken in the Northern coastal area.

19. The flood control system against the impact of the 1997-98 El Niflo includes two mainsub-components: (i) controlling water encroachment from outside the protected areas throughoverflowing rivers, drainage canals and runoffs from upland areas, and (ii) controlling the surpluswater accumulating within the protected areas due to heavy rainfall or due to the water comingfrom external sources.

20. Controlling Waters Originating from Outside the Flood Prone Areas. In the northernregion, there are likely to be three major external sources of water coming into the region: rivers(including ravines), flooded drainage canals and runoff from upland areas. River banks anddrainage channel flooding occur because rivers and channels have insufficient carrying capacity tohandle the high flows. Thus, the preventive works in this area have been designed to increase theflood carrying capacity of the water courses by dredging river beds (Piura and Tumbes rivers);the upgrading of the levees and riverbanks (Motupe, Olmos, Chancay, Cascajal, Moche, Viru yLacramarca and other rivers and ravines ); construction of cutoff channels (La Leche and Zanarivers); placing facing against slopes in the ravines and drains to strengthen them and to preventscour and erosion (typically rip-rap protection, "gavione" mattresses, poly-ethylene sand-cementsacks; and the clearing of the obstructions in the water courses (including the cleaning andreinforcing capacity of the culverts, ditches, and bridges of the roads system). Specialconsideration is being given to bridges and culverts which can cause abrupt constriction ofstreams and at the same time constitute obstacles in the path of the flood. Runoff from uplandareas is being handled by interceptor channels coupled with small levees.

21. Control of Waters Originatingfrom Within the Flood Prone Areas. The design of theflood control system in the Northern area also takes into account the role of heavy rainfalls in thedevelopment of flood conditions. In this case, the flood protection measures being undertakeninclude improvement to the rain-storm drainage systems in the urban and rural areas, installationof pumping facilities to evacuate the accumulated water quickly, cleaning and strengthening ofsewage systems, the protection of public buildings ( archeological places, health posts, hospitalsand schools), and transport facilities (airports and ports). Although the planning authorities havegiven first priority to these measures to control water accumulation within the protected areas, theeffectiveness of these measures will depend critically on the effectiveness of the measuresdescribed above to additionally control water coming into the area from rivers, drainage canalsand runoffs.

22. Drought Mitigation Measures (approx. US$ 10 million). The Government'semergency program for drought areas covers seven departments, namely, Apurimac, Arequipa,Ayacucho, Cusco, Moquegua, Puno, and Tacna. Most of the activities proposed in thiscomponent will be focused on the department of Puno, which is expected to be the hardest hitdepartment. The principal activity is livestock production, the main products being milk, meat,and wool (both sheep and alpaca). Pasture production is mainly in rainfed areas, and is based onlow yielding native pasture. Crop production is almost entirely at subsistence levels and ischaracterized by extremely low productivity levels (yields/hectare). These areas are dominated byminifundio and low levels of productivity. Farms are segmented and highly dispersed, availabilityof working capital is scarce and this has been one of the principal factors why irrigation schemes

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have not prospered. It is also a principal reason why the farming community cannot developpreventive measures to combat the expected drought due to the El Ninlo phenomenon, andsignificant preventive rehabilitation needs to be undertaken.

23. Rehabilitation of Existing Water and ImWgation Systems. As a drought preventionmeasure in the Sierra Sur, it is necessary to ensure that existing water resources are operative forhuman, animal consumption and where possible for small irrigation systems.

(a) Rehabilitation of deep tubular wells. This component will support therehabilitation of tubular wells that are currently not functioning to enable them tobe used for irrigation in small areas. Of the 100 existing wells in Puno, forexample, only 25 are now operational and the other 75 need to be rehabilitated atan estimated unit cost of US$14,000. Activities to be financed include cleaning ofthe existing wells, repairs and replacement of pumps, and tests for pump capacityand quality of water. The rehabilitation of these wells will be carried out by thelnstituto Nacional de Recursos Naturales (INRENA) and the Programa de AguasSubterrineasy Tecnificaci6n de Riesgo (PRASTER), which are local agencies,currently working on drought prevention measures in Puno in collaboration withthe Comites de Regantes of each of the wells under repair. It is estimated that thiscomponent will benefit 1,370 families and provide potential irrigation for 2,300hectares of land.

(b) Rehabilitation of Small Wells. This sub-component will finance the rehabilitationof a series of shallow wells in Puno that can be used to provide water for humanand animal consumption. This sub-component will rehabilitate the existing 3500wells and install 3500 manual pumps throughout the department of Puno. It isestimated that the cost of rehabilitating and installing each pump will be US$225.The work is being carried out by the Direcci6n Regional del Ministerio deAgricultura.

(c) Rehabilitation of Existing Irrigation Infrastructure. This sub-component willfinance the rehabilitation of 94 existing irrigation systems across 7 departmentsthat are currently not fully operational for reasons of incomplete works and lack ofmaintenance. PRONAMACH has already started on the rehabilitation of a numberof these irrigation schemes throughout the Sierra Sur as part of its droughtprevention work. The sub-component is expected to benefit 8,163 families andprovide irrigation to 6,215 hectares.

24. Forage Production Program. This component will support a program of forageproduction in the irrigated areas of Puno, to guard against a repeat of the 1982-83 experience ofthe forced sale of livestock and the slow recuperation of the herd, because of the lack of forage.The program is run by the Ministry of Agriculture, coordinated in the field by the InstitutoNacional de Investigaci6n Agropecuaria (INIA) and implemented by various governmentagencies in collaboration with farmers in the existing irrigation schemes. The strategy beingimplemented by the Ministry of Agriculture is to sow annual forage crops such as barley and oatsalong with a small amount of perennial pastures. The agreement between the Ministry and thefarmers stipulates that the harvest will be divided in equal parts between the parties. It is estimatedthat under irrigation yields of green forage can reach 30 tons/hectare. The total projected harvest

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is calculated to provide forage for the equivalent of 50,000 cattle or 300,000 sheep, or 200,000camelids for a period of seven months which are estimated to be periods of severe shortages offorage in the case of a drought. It is estimated that sowing should be completed by December 31,1997.

25. Seed Production Program. One of the ingredients in hastening recovery from a droughtis the need to ensure an ample supply of good quality seed for the subsequent sowing season.This sub-component will finance the implementation of such a measure with a seed productionprogram consisting of crops that provide the basic foods and forage for the area, namely,potatoes, quinua, canihua, barley, oats, faba beans and tarwi. This program would beimplemented by INIA, and the Universidad Nacional Agraria (UNA) which have as a main partof their research strategy to provide seed for the basic food crops of Peru. Sowing will startimmediately in October 1997. It is proposed to finance the sowing of 2,660 hectares, all underirrigation, with a total seed production of 20,157 tons at an estimated cost of US$2.73 million.

B. Emergency Operations.

26. The emergency phase is expected to consist of standard disaster response activities in theimmediate aftermath (90-100 days) of the disaster being declared. This is likely to includeevacuation, temporary, and in some cases permanent, resettlement of households from floodaffected areas, and the distribution of food, medicines and other essentials. The Bank'sinvolvement in this phase will be limited. It is likely to be implemented through the NationalInstitute of Civil Defence with assistance from other agencies and NGOs with a comparativeadvantage in such activities. The Bank may, however, provide limited support, largely for theprovision of certain emergency equipment such as mobile bridge structures, mobile power plantsand water tanks, pumps and metallic protection structures needed urgently during the flooddisaster.

C. Reconstruction Phase. ( in the order of US$330 million).

27. Given that the full impact of the El Nino will only be ascertained in the first few months of1998, it is not possible to define completely up-front this component. It is, however, likely toconsist of the following three components.

28. Reconstruction and Rehabilitation of Economic and Social Infrastructure. While thespecific activities to be included in this phase cannot be identified up-front, the following types ofinfrastructure services will be eligible:

(a) hospitals, health posts, schools;

(b) roads (primary, secondary and rural), bridges and the urban street system;

(c) irrigation and drainage systems;

(d) water supply and electricity; and

(e) river defenses, river training construction.

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29. The specific works to be financed under the reconstruction phase cannot be defined untilthe full extent of any damages resulting from excessive rainfall in the coastal region and/or thedrought in the Altiplano are known. This will not be feasible until the beginning of 1998 at theearliest. As a consequence, the works to be financed under the reconstruction phase must meetthe following eligibility criteria:

(a) they must be located in the officially declared emergency regions;

(b) prior existence before the El Ninio event;

(c) they must form an integral part of the emergency operation;

(d) demonstration of clear cause and effect relationship between the El Nifno eventsand the damage;

(e) acceptable technical, economic and environmental rationale for rehabilitation;

(f) the existence of an appropriate and capable agency to execute the work;

(g) involvement of the direct beneficiaries and stakeholders in the identification anddesign of the sub-project; and

(h) to the extent possible, the integration of labor intensive technologies in sub-projectdesign and execution.

30. Though these works to be financed will not be known with certainty until early 1998, allrehabilitation works for financing under the Bank project, must be presented to the Bank withinone year of the effectiveness date of the project.

31. Resettlement of Families at Risk in the Flood Prone Areas (approx. US$ 28 milion).El Ninlo is expected to cause heavy rains resulting in flooding of towns and cities in the northcoast of Peru, causing landslides in sloping terrains and inundation in low-lying areas. Perhaps asmany as 60,000 people or 12,000 families are likely to be displaced as a result of destabilization ofslopes and flooding of low areas in three departments of the north coast: Tumbes, Piura andLambayeque. Civil defense authorities (INDECI) together with Regional Governments and theNational Commission for Formalization of Informal Properties (COFOPRI) have estimated that ofthese 60,000 people, as many as 30,000 people (6,000 families) would need to be resettledpermanently from their current place of residence. The other 30,000 persons or 6,000 familiesmay need to be temporarily resettled in case of floods that may make their place of residenceunsafe for a short period of time. The following table displays the expected numbers of familieswhich will require reconstruction programs to return to their sites of origin and those which willrequire permanent resettlement programs in the evacuation sites. In some communities, portionsof the population will require reconstruction while others will require resettlement. Thesenumbers are estimates and will be refined during completion of the necessary studies in the fieldprior to approval of plans.

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Table 3: Estimates of Families Likely to be Resettled

Department Community No. Families Area (Ha) Temporary Permanent

Tumbes Zarumilla .501 20 yes noTumbes 1,000 40 yes yesPto. Pizarro 220 10 no yesLa Cruz 195 10 yes noZorritos 80 5 yes noSub-Total 1,996 85

Piura Piura 3,078 65 no yesCastilla 1,750 40 no yesPaita 1,870 30 yes yesSechura 157 17 yes yesTalara 417 14 yes yesSullana 855 17 yes yesSub-Total 8,127 183

Lambayeque Sub-total 2,000 60 yes yes

TOTAL 12,123 328

32. Three broad phases of resettlement are expected during the course of the impact of the ElNifno phenomenon - Evacuation of Families At-Risk, the Emergency itself and the Reconstructionand Resettlement phase. All families at risk will be involved in the first phase, whereas the secondand third phases distinguish among those families able to return to sites of origin and reconstructor repair their homes and those who must be resettled permanently in new locations.

(a) Phase 1: Evacuation of Families At-Risk. The first phase entails the immediateevacuation of populations at risk of flooding or landslide and their transfer totemporary housing (communal barracks) in stable areas at higher locations,together with temporary provision of potable water, electricity, latrines, healthservices and communal kitchens. Due to the emergency conditions, INDECI andthe Regional Governments have already selected the sites for temporary transfer inall three Departments, land leveling and zoning into lots has begun in Tumbes andsome parts of Piura, and installation of temporary housing has started in Tumbes.It is expected that all evacuation sites will be ready to receive affected families byDecember, 1997. Evacuation will be carried out by INDECI. In several instances,Government has determined that the at-risk population will not be able to return totheir original homes, and, therefore, evacuation sites will be laid out from thebeginning as permanent new settlements (individual family lots). In these cases,COFOPRI will provide property titles and registry services to affected familiestransferred during the succeeding phases.

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(b) Phase 2: Emergency. During the expected emergency, the response to which willbe met by other institutions, the 01 will carry out needed planning studies for thereconstruction and resettlement operations, including social and environmentalassessments of the alternative solutions (reconstruction in original sites orpermanent resettlement in evacuation areas). The social assessments, containingreconstruction plans and resettlement plans, as well as environmental managementplans, will be completed by June 30, 1998.

(c) Phase 3: Reconstruction and Resettlement. Reconstruction plans will beimplemented for those areas that can be stabilized by civil works like drainagecanals and retention walls. For areas such as coastal and riverine floodplains,unstable river banks, and steep canyons which cannot be stabilized with civil worksin a cost effective manner, resettlement plans will be implemented to permanentlyresettle populations in areas to which they were evacuated during the emergency.The proposed operation will support preparation of site-specific ResettlementAction Plans, including definitive installation of infrastructure, provision of publicservices, community participation in operation and maintenance of public worksand services, capacity building to assist economic productivity of affected families,social development programs targeting especially vulnerable groups (e.g.fishermen, women, youth), and environmental management programs for theresettlement areas. In the areas of origin that are evacuated permanently,additional environmentally and socially sustainable management plans will beformulated to ensure settlements are not regenerated once the emergency is over.

33. To implement this resettlement program, the 01 will contract a Reconstruction andResettlement Team (RRT) at the end of the Evacuation Phase at the latest to provide technicalassistance and to supervise and monitor implementation of this component. This RRT will consistof an anthropologist/sociologist, a social worker and an economist, each with prior experiencewith resettlement operations. The team will be responsible for carrying out a Social Assessment(SA) which will provide the basis for resettlement and reconstruction planning during theEmergency Phase. The SA will consist of baseline socioeconomic data on the affectedpopulation, formulation of a process of consultation with affected populations and institutionsconcerned, analysis of the socioeconomic issues to be encountered in the operations, an analysisof vulnerability to identify special needs, and the resettlement and reconstruction plans themselvesbased on the foregoing assessment.

34. The Regional Governments concerned, COFOPRI and the 01 will then review,adjust/revise as needed, finalize and submit for the no objection of the Bank the proposed plans,which will then be officially issued no later than June 30, 1998. Resettlement and reconstructionplans will be implemented by Regional Governments supported by COFOPRI. The RRT willassist the relevant institutions in the implementation of these operations and provide the OI withbi-monthly monitoring reports and semi-annual evaluation reports. The project will supportappointment of the RRT, strengthening of COFOPRI offices in the field, and appointment ofshort-term consultant specialists as may be needed in addition to office, communications andtransport equipment needed to implement the resettlement and reconstruction programs.

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35. The Borrower and the Bank have agreed upon the overall resettlement policy and legalframework, the institutional responsibilities for implementation of resettlement operations, thedesign criteria which will be utilized for the operations, and the financial responsibilities andestimated budgetary requirements (see Appendix 6). These agreements will guide theresettlement planning process and form the basis for Bank review and approval of finalresettlement plans.

36. The following table displays cost estimates for each department. Estimates are based onthe expected costs of permanent resettlement and the assumption that costs of reconstruction insites of origin will be similar.

Table 4: Estimated Costs for Resettlement of Families at Risk (US$ thousands)

Department No. No. House4 Infrast Educ. Env. Evacu Admu Studies COSTFamily Ha.3 ructure & Mgt. ation @5% &

s Health Cons6

Tumbes 998 85 905 4250 410 150 20 499 X 6,234Piura 4063 183 3682 9150 1560 300 45 1182 _ 15,919Lambayeque 1000 60 906 3000 410 150 30 375 4,871Totals 6061 328 5493 16400 2380 600 95 2056 1180 28,204

37. The total cost of this resettlement operation is estimated to be US$ 28,204,000 (Table 4).Of this, the Bank will finance up to an estimated US$17 million for the provision of infrastructureservices to the resettlement facilities for those families that will be permanently resettled, inaddition to technical assistance for strengthening capacity of the OI and COFOPRI to deal withresettlement issues (this is described in the institutional strengthening component below). Thesebasic infrastructure services may include potable water supplies, provision of electricity, internaland access roads, drainage systems, and sanitation services. The Borrower will finance from itsown resources the provision of replacement land and houses, mobilization and transfer of thepopulation, public services such as education and health, and all recurrent administrative,personnel, equipment and vehicle costs of the Government agencies and institutions contributingto the design and implementation of different aspects of the resettlement program. The estimatedcosts of these elements is US$ 11 million (US$ 5.5 million for land and housing, US$ 2.4 millionfor public services, US$1 million for transfer, and US$ 2.1 million for administrative costs).

3 A 120 m2 lot will be allocated at no cost to each affected family. Lands are municipal government propertytoday, which will be transferred to COFOPRI for allocation and titling to the affected families.

4 A basic module house with one room of 1 1 m2 will be provided free of cost to each family. Communal kitchensand latines will be provided in each area. Total cost is US$ 453 per family.

Land leveling, division into lots, and provision of water supply, electricity, access and internal roads arecalculated at US$ 100,000 per hectare.

6 Studies and consultants include US$ 300,000 for the OI Resettlement and Reconstruction Team, US$ 150,000 forconsultants to conduct Environmental Audits and Environmental Assessments, and US$ 280,000 to establishregional offices of COFOPRI to issue titles to land and houses, US$ 200,000 to establish a social work unit inCOFOPRI field offices, and US$ 250,000 to finance restoration of mangrove forests in protected areas byPronatura of Peru.

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38. Labor intensive rural public works program. In the event of a severe drought in theAltiplano, this component would also finance a labor intensive rural public works program aimedat providing a safety net to vulnerable groups affected by the drought and who would otherwisemigrate out of the Altiplano to the coastal areas in search of employment. These works wouldalso strengthen sustainable agricultural capacity of drought prone areas in the long run. Such arural public works would be designed on the following principles:

(a) that it be undertaken only in the event of a drought in the Altiplano;

(b) that it be well targeted;

(c) that it be time limited and not become permanent;

(d) that the works undertaken be only on public (rather than private) infrastructure;

(e) that it be implemented through an agency with demonstrated capacity for suchworks in the Altiplano; and

(f) that it be monitored through the Office of Investments.

39. The details of the design of such a rural public works program and the implementingmechanisms will be agreed upon with the Government and the agreement on the regulationsgoverning the implementation of such a program will form a condition for the disbursement of thiscomponent.

D. Institutional Support Component. (approx. US$ 7 million)

40. This component will finance: (a) specialized equipment, technical assistance and trainingaimed at strengthening the capacity of selected Peruvian institutions to forecast and respond tofuture El Nin'o episodes; (b) the preparation of a comprehensive Government strategy for disasterforecasting and management; and (c) project management and other consulting services in supportof MEF's Office of Investments, as required to adequately carry out project implementation. It isworth noting that, in spite of the short-term emergency nature of this operation, this componentaims to increase the long-term sustainable impact of Bank involvement.

41. Institutional Strengthening and Capacity Building. This subcomponent aims tostrengthen the capacity of selected Peruvian institutions responsible for forecasting, preventing,mitigating and monitoring the effects of, and carrying out relief activities in connection with thisyear's and future El Nino episodes. The Bank will finance specialized equipment, technicalassistance and training for four institutions that have been identified in close consultation with theMinistry of Economy and Finance7: Instituto Geofisico del Perui (IGP), Instituto del Mar del Peru(IMARPE), Instituto Nacional de Defiensa Civil (INDECI) and Servicio Nacional deMeteorologia e Hidrologil (SENAMHI). Each one of these institutions has prepared preliminaryrequests for Bank financing. The technical and institutional soundness of the four requests will bereviewed by GOP and the Bank, with the benefit of qualified external reviewers, during the early

7 These institutions are statutory memrbers of the "Estudio Regional del Fen6meno del Milo" (ERFEN) which wasestablished by the intergovernmental Comisi6n Permanente del Pacifico Sur, and was recently ratified byGOP.

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stage of project implementation. In reviewing the four requests, GOP and the Bank will take intoaccount the proposals made by these institutions for close cooperation and operationalcoordination among them during project implementation and beyond, as well as the total amountof resources available for this subcomponent. The end result of the review will be a consolidatedlist of equipment, technical assistance and training which would be financed by the Bank. Thefollowing paragraphs reflect the nature and scope of the above-mentioned preliminary requests,which are described in greater detail in Appendix 5.

(a) Instituto Geofisico del Perui (IGP). To strengthen Peru's capacity to forecastclimate changes, including El Nino, IGP aims to use free-of-charge scientificmodels recently developed by the scientific community worldwide (including theUSA's National Center for Atmospheric Research) as inputs to regional models ofclimate change over Peru and high-resolution models of sea surface temperatureoff the Peruvian coast. Other inputs include real-time observations of Peru'satmosphere and coastal ocean which would be collected by automatic instrumentplatforms and manual measuring operations. These will also provide the basis forshort and long-term weather forecasting. While IGP would be responsible for thissub-component, it may choose to enter into specific "sub-contracting" agreementswith other institutions such as the Universidad de Piura (UdeP) and the Direcci6nde Hidrografiay Navegaci6n (DHN), and possibly Instituto del Mar del Peru(IMARPE). It is likely that IGP would ask: (a) DHN, and probably IMARPE, tomaintain and operate maritime and coastal instruments; and (b) UdeP to build and,with DHN's assistance, operate a wind profiler, a sea-state radar in Lobos deAfuera island, and a boundary layer radar. Regional forecasts would be madeavailable to the Instituto de Defensa Civil (INDECI), the Ministry of Agriculture,other sector ministries and the general public via Internet. Real-time observationsof the atmosphere would be shared with SENAMIJI. Ocean state parameters andpredictions would be made available to IMARPE.

(b) Instituto del Mar del Peru (IMARPE). Fishing is a major economic activity inPeru. The Instituto del Mar del Peru (IMARPE) is responsible for carrying outresearch and monitoring the impact of several factors (such as climate changes andfishing intensity) on the biomass off Peru's coast. This sub-component would helpIMARPE strengthen its operations. It would finance specialized equipment for 3coastal laboratories, advanced graduate training in relevant disciplines andspecialized foreign assistance for management of pelagic species, data processingand forecasting, and integrated coastal zones.

(c) Instituto Nacional de Defensa Civil (INDECI). INDECI is responsible fordesigning and implementing disaster prevention and relief activities in Peru. Itencourages the public and the private sector to carry out analyses of risks andvulnerability, and aims to improve the availability of human and logistical resourcesnationwide. Bank financing under this sub-component would allow INDECI toprocure equipment needed to receive data from weather satellites, water levelcontrols and alarm systems to be used in rivers, enhancements to existing

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Geographic Information System, and an integrated countrywide communicationsystem.-'

(d) Servicio Nacional de Metereologia v Hidrologia (SENAMHI). The ServcioNacional de Metereologia e Hidrologia (SENAMHI) has identified, as its mainrequirements: (a) improving and expanding its existing meteorological,hydrological and environmental data collection stations; (b) improving itscommunication systems; and (c) improving its climatologic data base.

42. Comprehensive Strategy for Disaster Forecasting and Management. Thissubcomponent will finance technical assistance to Government aimed at preparing acomprehensive strategy for disaster forecasting and management. An action-oriented study willbe conducted, whose main objectives will be: (a) to evaluate the effectiveness and efficiency ofexisting Peruvian institutions dealing with disaster forecasting, prevention, mitigation, monitoringand relief; (b) to'compare them against best practice available worldwide; and (c) to recommend acomprehensive strategy for eventual adoption by Government. The draft terms of reference forthis study are attached as Appendix 4.

43. TechnicalAssistancefor the Project Coordinaton Unit. The project will also financetechnical assistance to the Office of Investments in the Ministry of Economy and Finance whichwill be coordinating the implementation of this project (project implementation arrangements aredescribed in greater detail below). In particular, this sub-component will finance projectmanagement consultants whose main responsibilities would be to:

(a) Provide a recommendation to the tri-partite approval committee based on atechnical evaluation of the sub-projects presented for reconstruction;

(b) Ensure compliance of the proposed reconstruction works with the eligibilitycriteria;

(c) Ensure that the procurement procedures followed are in conformity with Bankguidelines;

(d) Ensure that the reconstruction sub-projects are undertaken in accordance with theenvironmental guidelines set out in the Project Operating Manual;

(e) Support the Borrower in preparing disbursement requests; and

(f) Prepare quality progress reports on project implementation to be sent to the Bank.

44. The mobilization of the project consultants, through a signed contract with the Borrower,would be a condition for disbursement of the reconstruction phase.

INDECI has also requested financing of items to be used during the emergency (blankets, clothes, shelters, handtools, portable power generators, portable water tanks, fuel, kitchen and eating utensils, rescue equipment,food, medicines, etc.) This is likely to be provided through a complementary project being prepared by theInter-American Development Bank.

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45. In addition, the Project will also finance technical assistance to the OI and to other entitiesinvolved in the resettlement program (approx. US$1.7 million) to support the planning andimplementation of the resettlement activities. This sub-component will finance: (i) strengtheningof COFOPRI field offices through personnel, equipment and vehicles to enable it to carry outsurveys of families that are being displaced, (ii) costs of the COFOPRI titling process and theprovision of social work assistance to affected persons, and (iii) costs of studies and surveys byspecialist consultants and other personnel to carry out the Environmental Assessments.

Environmental Imnact

46. El Nifno potentially represents a major environmental disaster. The project is designed toreduce the social and economic impacts of the disaster, to provide for emergency assistanceduring the event, and to support socially and environmentally sustainable reconstruction andrecovery following the disaster. Environmental impacts will be associated with both theprevention and reconstruction stages, and will be addressed through Environmental Audits withthe objective of designing and implementing Environmental Management Programs for each ofthe project components and major sub-components as needed.

47. Environmental Assessments. Environmental Assessments (EAs) will be conducted foremergency prevention measures implemented from July 1997 to December 31, 1997. The 01 willcontract a qualified and experienced environmental firm or entity to conduct the assessments. Theassessments will consist of: (a) analysis of the environmental impact of project components andmajor sub-components (e.g. drainage works, resettlement sites, etc.); (b) assessment of thedesigns of mitigation or management programs to address the environmental impacts identified;and, (c) evaluation and verification of compliance with applicable environmental criteria andstandards of proposed environmental management programs as integral elements of the projectcomponents and sub-components.

48. Environmental assessments will also be required for certain projects and sub-projects ofthe reconstruction phase, the exact locations and magnitudes of which cannot be identified at thismoment. Therefore, all proposed reconstruction phase investments will be screened for potentialenvironmental impacts according to criteria agreed between the Bank and the Borrower. Whereenvironmental assessments are required, these together with their resulting EnvironmentalManagement Plans (EMPs) will be submitted to the 01 for approval prior to beginning any works.The Bank will review and express its no objection to the first 10% of such works, and thereafterspot check for performance.

PROJECT COSTS AND FINANCING

49. The costs of the prevention phase are estimated to be approximately US$ 100 million, ofwhich funds from the proposed Loan would finance up to US$30 million. An additional US$30million would be financed by the Inter-American Development Bank with the rest being met fromGovernment resources and others. The costs for the reconstruction phase cannot be estimatedwith any degree of certainty at this time; based on the experience of the 1982-83 event, it isestimated that the costs of reconstruction may be of the order of US$500 million if the 1997-98 ElNifio event is of "moderate" to "severe" intensity.

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50. The proposed Loan is expected to finance about one third of the cost of reconstructionactivities subject to a maximum of US$150 million for the overall project (including theprevention activities). The IDB has made a similar amount available for prevention, emergencyrelief and reconstruction activities. The Government also plans to mobilize additional financingfrom the bilateral donors such as Japan for possible reconstruction activities.

51. At the end of the first six months of Loan effectiveness, the Bank and the Government willassess jointly the size of the damage of the El Nifno. If the damage is significantly less thananticipated at the time of the presentation of this project, the Bank reserves the right to cancel allor part of the Loan.

INSTITUTIONAL ARRANGEMENTS AND PROJECT IMPLEMENTATION

52. Project Implementation Arrangements. The implementation arrangements in theprevention phase have been coordinated at the highest levels of the Government with the activeinvolvement of President Fujimori since the emergency was first declared in June 1997. Given thescale of the works and the short lead time until the arrival of heavy rains (i.e. December 1997),most of the works have been undertaken directly by the concerned sector ministries and/or otherpublic sector bodies, including the National Institute of Civil Defense, by force account, i.e. usingtheir own work forces. These works have been coordinated by the National Commission forEmergency Assistance (CONAE) under the Ministry of the Presidency (MIPRE) during July andAugust and subsequently by the Council of Ministers. Municipal authorities, and to a smallerextent, local communities have been involved in drawing up of the emergency preventionprogram, though their involvement in the implementation of the works has been limited due to thecomplexity and urgency of the programme.

53. In the reconstruction phase, decisions on the sub-projects to be financed will be made by athree person Committee within the Ministry of Economy and Finance (MEF) comprising Vice-Minister of Finance, Director-General of Budget and the Head of the Office of Investments (OI).A strong decision-making body with authority to make resource allocation decisions is critical to arapid response to the reconstruction effort, while ensuring that only eligible sub-projects damagedby the El Nifno events are financed. Responsibility for implementation of the sub-projects willremain with those individual Ministries and/or public sector entities under whose authority therelevant works fall. They in turn may designate capable public sector institutions orregional/municipal entities to carry out the different civil works. Bank financing will be limited toinstitutions with proven implementation capacity and/or familiarity with Bank procedures.

54. The Office of Investments (01) of the Ministry of Economy and Finance (MEF) will serveas the link between the tripartite project approval Committee and the implementation agencies.The principal functions of the Office of Investments will be to:

(a) coordinate the implementation of the reconstruction program across multiplepublic sector agencies;

(b) undertake a technical evaluation of sub-project requests, including their eligibilityfor Bank financing and concordance with other Bank guidelines on procurement,environment and resettlement;

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(c) based on this technical evaluation, provide a recommendation on the sub-project tothe tripartite Committee;

(d) monitor the implementation of the reconstruction program, including due attentionto the resettlement activities and the environment audits;

(e) ensure a timely flow of budget resources to implementing agencies;

(f) prepare the disbursement requests to the different financing institutions;

(g) maintain acceptable accounting, auditing and financial management standards;

(h) provide timely reports to financing institutions in regard to project implementation;

(i) hire, as needed, specialized consulting services to assist in project implementation;and

(j) ensure the establishment of an adequate financial management system includingaccounting, internal control, financial reporting and audit arrangements acceptableto the Bank.

55. The Office of Investments will hire a Project Coordinator and a small complement of staffincluding specialists in procurement, environment, and social sectors. It will additionally besupported by a project management consulting firm, which would be hired prior to anydisbursements for reconstruction works. This consulting firm will provide the necessary expertisein the technical and economic evaluation of reconstruction investments, monitor implementation,assist in establishing a satisfactory financial management system and assist in the supervision ofprocurement and execution of works by the implementing agencies.

56. The works to be financed under the reconstruction phase cannot be defined until thebeginning of 1998 at the earliest, but would need to meet the eligibility criteria defined above.The 01 will also monitor the implementation of the rural public works program, in the event ofdrought conditions. The details of the design and operating rules for the rural public worksprogram will be agreed upon with the Government prior to any disbursements on this program.

57. Procurement Arrangements. The Project will follow the Bank's procurementguidelines for goods, services and consultant services. Given the nature of the project in whichthe nature of the works and repairs is not pre-defined, there is no procurement plan. The methodsand thresholds are fixed on the basis of estimates, flexibility and coordination with the Inter-American Development Bank.

(a) Civil works. Civil works estimated to cost above US$ 5 million will be procuredthrough ICB procedures. There would be few works of such size. Worksestimated to cost less than US$5 million will be procured through NCB proceduressatisfactory to the Bank. Smaller works estimated to cost less than US$3 millionwill be procured through shopping procedures based on price quotations from atleast three qualified contractors. Additionally, direct contracting procedures willbe used for small repair works estimated to cost less than US$100,000 up to anaggregate amount of US$1 million. Rehabilitation of deep and shallow wells and

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land plowing in the drought areas will be financed on the basis of flat rates percompleted units on the basis of certifications issued by an independent entitysatisfactory to the Bank. Preventive infrastructure works carried out by forceaccount by ministries and agencies in the flood areas from June to December 1997,will be financed retroactively on the basis of certifications issued by anindependent entity satisfactory to the Bank up to an aggregate amount of US$30million. In addition, small rural works would be carried out through directcontracting with the communities (on the basis of unit prices) for individualcontracts estimated to cost less than US$ 20,000, up to an aggregate of US$10million.

(b) Goods. Goods, including inputs for the production of seeds as well as tools andmaterials for the job generation component, costing less than US$350,000 will beprocured through shopping procedures. Mobile bridge structures, mobile powerplants and pumps, metallic mesh structures (gaviones) and selected items costingless than US$1 million and which may be urgently required during the peak of theemergency will be procured directly from qualified suppliers up to an aggregateamount of US$5 million.

(c) Consultant Services. Consulting Services urgently required to implement keycomponents of the Project, including the hiring the technical auditors and projectmanagement support, in contracts costing less than US$500,000 will be procuredon a sole source basis with firms and on terms and conditions acceptable to theBank. Other consulting services, including project supervision during thereconstruction phase will be procured using QCBS procedures or by extending thecontracts of the technical audits depending upon their performance. Theprocurement aspects of the PPF were defined in the corresponding agreement.

(d) Miscellaneous. The smaller purchases of sundry items and payment of fees andutilities will be made using administrative procedures acceptable to the Bank.

58. Review by the Bank. All ICB procedures will be subject to prior review as well as thefirst three NCB procedures for works. All direct contracting of goods and services, except forthe smaller works below US$100,000 up to the aggregate amount of US$ 1 million, and theselected goods for the emergency in packages costing less than US$1 million up to the aggregateamount of US$5 million, are subject to prior review by the Bank. The direct contracting ofconsultants as well as the hiring of other consultant services for firms costing more thanUS$100,000 and individuals costing more than US$50,000 will be subject to prior review by theBank. The works and activities subject to certification, including the forage component, wellrehabilitation and preventive infrastructure works to be included in the force account andretroactive financing component, will not require prior review by the Bank, provided that thecertifications issued by the independent entity accompany the withdrawal applications. Table 5summarizes the prior review by the Bank.

-23 -

Table 5: Prior Review

Category Method Prior Review

Civil Works ICB AllNCB First three

Shopping None

Certified works and land Noneplowing

Goods ICB AllShopping None

Emergency items within Noneagreed limits

Consultants Direct contracting All

QCBS Above__________ _________ ______ US$100,000

Individuals Above US$50,000

59. Disbursement Arrangements. The completion date for the project is determined to beJune 30, 1999 and the Closing Date December 31, 2000. The loan would be disbursed as shownin Table 6. Given the availability of a Special Account (SA), the minimum withdrawal applicationfor direct payment from the Loan Account would be 20 percent of the initial deposit to theSpecial Account. Withdrawal applications would be fully documented except for contracts for:(a) consulting firms costing less than US$100,000; (b) individual consultants costing less thanUS$ 50,000; and (c) works costing less than US$ 5,000,000 and goods costing less than US$350,000. These will be reimbursed on the basis of Statement of Expenditures (SOEs). Therelevant documentation will be retained at the OI for ex-post review by IBRD staff duringsupervision missions.

Table 6: Estimated Disbursements of IBRD Loan

(US$ million)

Fiscal Year FY98 FY99 FY00

Disbursements 40 50 60

Cumulative 40 90 150Disbursements

Cumulative (%) 27% 60% 100%

60. The 01 will open a Special Account in a commercial bank acceptable to the Bank. Tofacilitate disbursements, the authorized allocation for the Special Account would be US$ 15million. However, the initial deposit will be US$5 million until the disbursed amount from the

- 24 -

Loan Account reaches US$30 million. The Special Account will be replenished by submittingwithdrawal applications to the Bank on a monthly basis. In addition, the OI will open a ProjectAccount to receive the Government counterpart funds to the project.

61. Financial Management and Reporting Requirements The Office of Investments willbe responsible for putting in place a financial management system which will meet the Bank'srequirements for accounting, personnel, internal control, financial reporting and audits. The OIwill also submit quarterly reports on project activities to the Bank and participate in projectreviews with the Bank in June and December of each year of project execution.

62. Monitoring The project monitoring indicators are tailored to the rather unusual featuresof this operation, that all disaster prevention works will have been carried during projectprocessing (before Board presentation) and that individual reconstruction sub-projects will onlybe identified once the damage caused by the El Ninio event becomes known.

63. Because the prevention component is well advanced and on schedule, neither inputindicators, such as timely availability of resources, nor output indicators, such as actual executionof physical works compared to original schedule or actual costs compared to original contractcosts, are of much use in monitoring the project ex-post. For these works, attention will be paidto outcome indicators -- the cost-effectiveness and success of the prevention works in reducingthe loss of human life and social/economic infrastructure. These indicators will be analyzed in thecontext of the losses incurred as a result of the severe El Niio in 1982-83 when little or nopreventive works were undertaken.

64. Progress under the reconstruction component is more easily amenable to traditionalmonitoring indicators. These indicators will be developed in detail as part of the OperationalManual, which will be acceptable to the Bank and will include input, output and outcomeindicators.

(a) The main input indicators would be used to monitor the efficiency with whichMEF's Office of Investments carries out its coordinating work: resourceavailability (timeliness of local counterpart funds), skills (adequate staffing of unit),procurement (amount of time required for various phases of sub-projectprocurement), contract administration (amount of time required to pay sub-projectcontractors), adequate accounting, financial, management and reporting practices,appropriate internal controls, etc.

(b) The main output indicators would monitor the compliance of the sub-projects withthe eligibility criteria spelled out in the Operational Manual, and efficiency andspeed with which they were carried out.

(c) The main outcome indicators, which will be observed only in future years, willreflect the extent to which reconstructed infrastructure will be able to withstandfuture El Nifio events.

65. Finally, the institutional strengthening component will be monitored in terms of output andoutcome indicators. The main output indicators will reflect the timely execution of the variousphases of the consultant's work as set forth in the Terms of Reference -- these will be finalized

- 25 -

shortly after loan effectiveness. The main outcome indicators will be: Government's earlyadoption of a comprehensive strategy for disaster forecasting and management; and theeffectiveness of the new strategy and institutional setup to respond to future disasters.

66. Supervision Plan The detailed implementation schedule for the emergency operation willremain uncertain until the full impact of the 1997-98 El Ninio event is known. Notwithstandingthe uncertainty, a supervision plan for the first phase until mid 1998 has been drawn up, with laterplans being outlined in broader terms until the anticipated loan closing date of December 31,2000. Three general principles will govern the initial phase of the supervision plan:

(a) Close supervision by a core project team, drawn mainly from headquarters becauseof the needed expertise in procurement (review/approval of certification audits ofprevention works undertaken by force account during July-December 1997),financial management to assess the adequacy of the systems in place, resettlement(review of resettlement plans) and the institutional strengthening component.

(b) Involvement of the field office in Peru in (a) monitoring on a monthly basis, overallprogress in implementation, in particular status of compliance with disbursementconditions, and (b) undertaking visits to affected regions as needed using eitherResident Mission staff or local consultants.

(c) Joint supervision with the IDB project team to ensure close coordination andsynergies in overall supervision effort.

67. The estimated supervision effort in the first 7 months of supervision (December 1997-June1998) would be 22 staff weeks of mainly Bank headquarters staff and some local staff .Supervision activities in this period will likely to include a project launch workshop and a fullsupervision mission complemented by field visits from local staff and consultants.

Table 7: Supervision Activities Planned Until June 1998

Activity Timing Priority Skills Needed

Initial Supervision Mission December 1997 Procurement, disbursement,and Project Launch institutionalWorkshop

First full supervision mission March 1998 Flood, drought, institutional,resettlement, legal

Second supervision mission June-July 1998 Flood, drought, institutional

68. The supervision plan for the period July 1998 until December 2000 when the project isscheduled to close would be determined by the scope and duration of the disaster emergencywhich may not be known until mid 1998. On the assumption of a moderate to severe El Nifioevent (which has guided reconstruction estimates in this report), the main objectives of thesupervision plan would be as follows:

- 26 -

(a) Two superviision mission per year from headquarters on average 20 staff weeks peryear.

(b) Increasing delegation to Resident Mission to expedite decision making onoperational issues, including procurement, once the necessary expertise is recruitedand/or established in the Resident Mission (by mid 1998). Field visits to affectedareas would be undertaken from the Resident Mission.

(c) Close Bank-IDB coordination throughout.

(d) Determination in consultation with the Government, and no later than December1998, the impact of the disaster emergency, and whether there is a need for partialor complete cancellation of undisbursed funds.

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APPENDIX 1

FLOOD CONTROL WORKS IN THE NORTHERN REGIONWORKS POTENTIALLY ELIGIBLE FOR RETROACTIVE FINANCING

FROM THE PREVENTIVE PHASE OF THE PROJECT

- D epartment ...... :Sub~.p~ject Name J Type Wor..

Tumbes Canal Intemational Rural Drainage Channel RehabilitationRio Tumbes River Dredging WorksEsteros Rio Tumbes Natural Channel Dredging WorksLeft Bank Drainage System Rural Drainage Collector RehabilitationRight Bank Drainage System Rural Drainage Collector RehabilitationQuebrada Corrales Riverbanks Protection WorksWater Intake Left Bank Protection of Hydraulic if rastructureSector la Pena Strengthening of Walls

Piura Dren 1308 Urban/rural Drainage Collector RehabilitationDren Sechura Urban/Rural Drainage collector RehabilitationRio Piura River Dredgino WorksCesar Vallejo Collector Urban Drainage Collector RehabilitationIgnacio Merino Collector Urban Drainage Collector RehabilitationGullman Collector Urban Drainage Collector RehabilitationPetroperu Collector Urban Drainage Collector RehabilitationSullana Collector Sector 1 Rural Drae Colector RehabiitationSullana Collector Sector 2 Rural Drainage CoSector RehabictationSullana Collector Sector 3 Rural Drainage Cotlector RehabilitationSullana Collector Sector 4 Rural Drainage Collector RehabilitationSullana Collector Sector 5 Rural Drainac e Collector RehabilitationCastilla Casco Central Collector Urban Drainage Collector RehabilitationEstacion de Bombeo Pumping Station ConstructionLa Primavera Collector Urban Drainage Collector Rehabilitation

0 ~~~~Tambo Grande Collector Rural Drainage Collector RehabilitationDesvio Sechura Collector Rural Drainage Collector WorksHuancabamba Airport Rain Stoer Draining System Protection WorksPiura-Huancabamba Road Road Drainage Protection WorksPiura HuancarbanSc Road Road Culverts UpgradingPanamerica-Cruceta Road Road Dr Wage Protection WorksPuente La Legua Bridge Bridge Access Protection WorksCarretera Panamericana Drainage and Culvert UpgradingQuebrada L-as Lomas Ravine Bank Protection WorksHuancabamnba River = River Bank Protectaon WorksPiura River Dike Rockfill Protection WorksPiura River Urban Sectr River Dredging WorksPiura River Caffasquillo Sector RiUver Dredging Works-

- 28 -

h ''' .. .. .,...,..; h j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~......eP.itet Sub-rjt Nam yeo ok

El Penal Piura Rain Storm Drainage Protection WorksTalara Canal Vencedores Urban Drainage Collector RehabilitationQuebrada Cieneguillo Talara River bank Protection WorksTalara Canal Sudamerica Urban Drainage System RehabilitationTalara Canal Avenida 6 Urban Drainage Collector RehabilitationTalara Colector Estadio Urban Draimage Collector RehabilitationColector Canchari Bellavista Urban Drainage Collector RehabilitationPaita Accesses Roads Rain Storm Drainage Protection WorksTalara Colector Avenida F Urban Drainage Protection WorksZarunilla El Reducto Road Culvert Road Upgrading and RehabilitationVeredas de San Jose Urban Protection WorksRio Chira River Dredging WorksDiques Rio Piura Strengthening of existing dikes system

Lambayegue Enrocado La Leche-Saleno Rockfill dike UpgradingRio La Leche Sector La Junta River Dredging WorksRio La Leche Sector Morrope River Channeling WorksRio Motupe Sector Puente River Dredging WorksPacoraRio Olmos River Dredging WorksRio Zana IRiver Dredging and Canalization WorksRio Chaman Sector 4+000 River Dredging WorksRio Chaman Sector 6+800 River Dredging WorksRio Jequetepeque River Dredging WorksRio Salas Sector La Alita Riverbanks Protection WorksRio Eten Riverbanks Protection WorksPanamericana La Leche Roads Protection WorksCanal Cois Urban Drainage Collector Protection WorksCarretera Olmos Corral Drainage and Culvert UpgradingQuemadoCarretera Chiclayo Morrope Drainage and Culvert UpgradingHuaca Rajada Sipan Archeological Site Protection WorksCanal Poulen Urban Drainage Collector Protection Works

La Libertad Rio Santa Toma Tanguche Hydraulic Infrastructure Protection WorksRio Santa Toma Chavimochic Hydraulic Infiastructure Protection WorksRio Santa Sector Guadalupito Riverbank Protection WorksRio Santa Sector Urena Riverbank Protection WorksRio Chao River Channeling and Dredging WorksRio Huanmanzana River Channeling and Dredging WorksRio Chicama Diversion Dam Hydraulic Infrastructure Protection WorksRio Chicama River Dredging WorksRio Moche River Dredging WorksCanal La Mochica Hydraulic Infrastructure Protection WorksCanal Madre Chavimochic Hydraulic Infrastructure Protection WorksEvacuador La Agonia Hydraulic hifastructure Protection Works

-29 -

' _m _- ~....... .. . ......._Quebrada Caracol River Dregig WorksRio Viru River Dredging WorksPorvenir La Cava Riverbank Protection WorksRio Huamanzava Riverbank protection WorksEvacuador La Rinconada Hydraulic Infrastructure Protection WorksDrenaje Valle Viru Rural Drainage Collector RehabilitationDefensas Chavimochic Riverbank Protection WorksDrenaje Valle Chao Rural Drainage Collectors RehabilitationPlaya Pacasmayo Rockfill Protection DykesPlaya Buenos Aires Rockfill Protection WorksCarretera Trujillo Chiclayo Drainage and Culverts UpgradingPuente Careaga Moncada Bridge Protection Works

Ancash Rio Santa Riverbanks Protection WorksRio Lacramarca Sector River Dredging WorksChimnboteRio Lacramarca River Channeling and Dredging WorksRio Lacramarca Sector River Dredging WorksClemenciaRio Casma Riverbank Protection WorksRio Santa Sector Rinconada Riverbank Protection WorksRio Santa Sector Panamericana Riverbank Protection WorksRio Santa Sector San Bartolo Riverbank Protection WorksEnrocado Rio Sechin Rockfill Protection DikesValle de Casma Riverbank Protection WorksRio Yautan River Channeling WorksRio Huari Riverbanks Protection WorksLagunas de Huaraz Upgrading of Lagoons Protection Works

Cajamarca Carretera Cajamarca Drainage and Culverts UpgradingCajabambaCarretera Cumbil Chota Drainage and Culverts UpgradingHidroelectrica La Pelota Hydraulic hifrastructure Protection Works

- 30 -

APPENDIX 2

DRAFT TERMS OF REFERENCE FOR CONSULTANTSTO UNDERTAKE INDEPENDENT AUDIT AND VALUATION OF

CIVIL WORKS UNDERTAKEN ON FORCE ACCOUNT ANDTO BE FINANCED RETROACTIVELY

TERMINOS DE REFERENCIA PARA LA CONTRATACION DE FIRMASCONSULTORAS PARA LA CERTIFICACION Y AUDITORiA TECNICA DE

INVERSIONES DENTRO DEL PROGRAMA BAJO LA MODALIDAD DEADMMISTRACION DIRECTA Y RECONOCIMIENTO DE DIVERSIONES

A. Obietivo.

1. El prop6sito de los servicios de consultoria (en adelante "los Consultores") esproporcionar al Ministerio de Economia y Finanzas y al Banco Mundial Certificaciones sobreelegibilidad y costo de las obras civiles realizadas por las diversas entidades ejecutoras poradministraci6n directa y/o contratadas en la etapa de prevenci6n del Programa de Emergencia,hasta por un monto total agregado a ser determinado por el Ministerio de Econonia y Finanzas(en adelante "el Cliente") pero que, en principio, se estima alrededor de [US$60] 9 millonesequivalente, con el objetivo de solicitar financiamiento retroactivo de tales inversiones. El nivel ydetalle de las certificaciones sera el suficiente para que el Banco Mundial procese las solicitudesde financiamiento retroactivo de las inversiones con un minimo de verificaci6n. Informaci6nincompleta certificada por los Consultores podra ser objeto de penalizaci6n de conformidad conlas normas sobre anticorrupci6n y fraude nacionales y del Banco Mundial.

B. Plan de Trabaio.

Primera actividad: Inventario

2. Se espera que los Consultores desarrollen sus actividades de conformidad con el Plan deTrabajo aqui descrito. Si los Consultores desean introducir cambios al Plan de Trabajoestablecido en el contrato, deberan consultar los ajustes propuestos con el Cliente y con el BancoMundial antes ejecutar tales cambios. La primera actividad de los servicios consiste en laobtenci6n y compilaci6n por parte de los Consultores de datos disponibles en el Ministerio deEconomia y Finanzas y en otras dependencias ministeriales y agencias, con el objeto de prepararun inventario o listado descriptivo de las obras de infraestructura fisica del Programa. Elinventario debera incluir, pero no limitarse a, la siguiente informacion por cada obra identificada:

(a) localizaci6n por Regi6n, Departainento, Provincia y Distrito;

(b) nombre de los principales organismos participantes en la ejecuci6n;

(c) valor presupuestado;

9 Los montos indicados entre [ ] son solamente indicativos y deberin ser establecidos por el MEyF

- 31 -

(d) descripcion fisica;

(e) progreso fisico de la obra, la fecha de inicio, la fecha de terminaci6n;

(f) nombre del supervisor o entidad encargada de la supervisi6n;

(g) en la medida de lo posible, las partidas presupuestarias imputadas; y

(h) un c6digo unico de obra que servira para prop6sitos de registro, archivo ycomprobaciones de auditoria, supervisi6n o verificaci6n por parte del BancoMundial.

3. El inventario podra incluir obras con un valor superior a un monto minimo que seradeterminado por los Consultores, con vista a las metas financieras de reembolso y financiamientoretroactivo que el Cliente le informara oportunamente, pero en ningun caso inferiores alequivalente de [US$100,000] equivalente. Si al momento de iniciarse las actividades, el Clientedispone del inventario, los Consultores solamente deberan conocer y familiarizarse con talinventario y usarlo como referencia para las siguientes actividades.

Segunda actividad: Determinaci6n de la Prioridad de las Obras para Certificaci6n

4. Una vez concluido el inventario general, los Consultores determinaran la prioridad para laselecci6n de las obras que seran objeto de certificaci6n, generalmente escogiendo las obras demayor valor en primera instancia. En la determinaci6n de la lista preliminar de obras sujetas acertificaci6n, los Consultores deberan tomar en cuenta:

(a) que las obras hayan sido contratadas en alguna forma;

(b) que un porcentaje estimado del [25%] de las obras en tal lista podrian no reunir lainformaci6n o condiciones apropiadas para producir una certificaci6n final en elcorto plazo;

(c) que el Banco Mundial podria contribuir al financiamiento parcial de las obras porun monto que oscilaria entre [50% y 60%] del costo certificado; y

(d) que el costo certificado podria diferir substancialmente respecto al costo estimadoo documentado de las obras. Los consultores deberan informar al Cliente sobre lafista preliminar a examinar.

Tercera actividad: Formacion de los Equipos de Trabajo

5. Una vez establecido el orden de prioridad para el trabajo de certificaci6n, los Consultoresprocederan a establecer equipos de trabajo para cada una de las Regiones, Provincias u obras, uotra forma de organizaci6n que los Consultores consideren a su juicio apropiado para la ejecuci6noportuna de las tareas, asegurando que la metodologia y estandar de calidad de la Certificaci6n aser emitida es uniforme. Antes de la movilizaci6n y el trabajo de campo, los Consultores deberaninformar al Ministerio de Economia y Finanzas sobre la formaci6n de los Grupos de Trabajo. Encada caso, los equipos deberan estar encabezados por profesionales en ingenieria de reconocida

- 32-

reputaci6n y acompafiados de expertos en contabilidad y otras disciplinas. Los Consultoresdeberan proporcionar a sus equipos una estrecha supervision de los equipos para asegurar suindependencia de criterio y las normas de desempefno.

Cuarta actividad: Trabajo de Campo y Producci6n de Certificados

6. Una vez completado el trabajo de campo y revisi6n de pruebas documentales, losConsultores deberan compilar y procesar la informaci6n recopilada, ampliar la base de datos yestablecer una lista borrador de obras certificables. Si los numeros satisfacen las metas, losConsultores deberan proceder con la etapa final de certificacion que consiste en la emisi6n delborrador de la lista final y los correspondientes Certificados que podran constituir las solicitudesde desembolso.

7. Si por el contrario, los resultados de la visita al campo y el procesamiento de lainformaci6n derivada anticipa insuficiencia en los montos que seran sujetos de certificaci6n, losConsultores deberan informar prontamente al Cliente y al Banco Mundial sobre esta situacion yproponer las soluciones para aumentar el nuimero de actividades o acciones que conduzcan aincrementar los desembolsos de la porci6n retroactiva del financiamiento.

C. Metodolofia de Revisi6n v Certificaci6n

8. Los Consultores deberin emplear tecnicas de metrado de cantidades de las obras,comprobacion de registros y datos de costos disponibles en las zonas donde se efectuan oefectuaron las obras. Tales tecnicas deberin ser consistentes con pricticas internacionalmentereconocidas de ingenieria y de auditoria tecnica que aseguren un alto nivel de confiabilidad yprecision, que a su vez, aseguren al Cliente y al Banco Mundial que ha habido un uso adecuado,econ6mico y eficiente de los recursos empleados dentro de las circunstancias de emergencia delProyecto.

9. En las visitas de campo, los Consultores deberan comprobar la exdstencia de las obras,mediante tareas que pudieran incluir, pero no limitarse a, la combinaci6n de las siguientestecnicas:

(a) comprobaciones fisicas;

(b) mediciones topogrificas;

(c) pruebas de laboratorio geotecnicos;

(d) entrevistas a los directores de las obras, personal tecnico, supervisores,interventores, contratistas, operadores y beneficiarios;

(e) comprobaciones de facturaciones realizadas por contratistas y proveedores; y

(f) comprobaciones de registros y libros de contratistas y proveedores, en el niumeroy la naturaleza que los Consultores juzguen apropiado para rendir un testimonio

- 33 -

fidedigno, que a su vez, permita una determinaci6n precisa y una descripci6ncertificada sobre los volumenes y caracteristicas de las obras.

D. Valuacion de las Obras v Costo Certificado

10. Una vez determinada las caracteristicas fisicas y volumetricas de las obras seleccionadas,los Consultores procederan a establecer un costo certificado. Este costo certificado individualdebera elaborarse y mantenerse en forma confidencial por lo menos hasta la revisi6n del borradorde la lista final de obras certificadas por parte del Cliente.

11. En la elaboraci6n del costo certificado, los Consultores tendran en cuenta los precios demercado, la naturaleza de emergencia de las obras, la lejania de las obras, la experiencia de losConsultores, las contribuciones en especie, el costo del combustible, el trabajo comunal yvoluntario, la contribuci6n material, intelectual y administrativa de los organismos ejecutores,incluyendo las intervenciones por parte del Cuerpo de Ingenieros de las FF.AA., los registroscontables y presupuestarios y toda otra informacion que a juicio de los Consultores ileve a unadeterminaci6n de un valor certificable de las obras para los prop6sitos de reconocimiento deinversiones por parte del Banco Mundial tomando en cuenta que el Banco no financia impuestos otrabajos ejecutados por intervenciones militares.

12. Los Consultores mantendran una memoria de calculo de sus estimaciones que llevaron a ladeterminaci6n del valor certificado por cada una de las obras. El Cliente tendri acceso, porpedido o inspecci6n, a tales memorias de calculo y podra solicitar a los Consultores que excluyancualquier obra de la certificaci6n final, cuando, en opinion del Cliente, el costo a ser certificadoresulte excesivamente diferente por exceso o defecto de sus propios registros o noci6n de costo.

13. En ningiun caso, el Cliente podri pedir que se corrija el monto certificado, excepto cuandoa juicio del Cliente, la discrepancia se pueda deber a omisiones significativas, en cuyo caso, ajuicio del Cliente, se podra discutir con el Banco Mundial la conciliaci6n de tales discrepancias.

14. Los Consultores presentaran un borrador de listado de obras certificadas, en el plazo abajosefialando, con indicacion del monto certificado en el formato acordado con el Banco Mundial. ElCliente dispondra de tres dias para opinar sobre el borrador y presentar a los Consultores una listade exclusiones y una lista de discrepancias senialando errores significativos.

15. En el termino de dos dias a partir de la recepcion de las listas de exclusiones ycorrecciones, los Consultores procederan a emitir:

(a) una lista final de obras certificadas acompaniadas de su certificado individual paracada obra, eliminando la obras excluidas por el Cliente y efectuando lascorrecciones que a su juicio si pudieran obedecer a errores, empleando el formatoacordado con el Banco Mundial para prop6sito de reconocimiento y desembolso; y

(b) una lista obras con las discrepancias sefialadas por el Cliente junto con su opini6nsobre errores sefialados, memoria de costos y toda informaci6n que considereconveniente presentar para la conciliaci6n de discrepancias con el Banco Mundialarriba apuntada.

- 34 -

16. Una vez emitida la lista final, los Consultores podran emitir suplementos a la lista final deobras certificadas conforme las discrepancias se resuelven o para incorporar obras adicionales deconformidad con el progreso de su trabajo para complementar las metas financieras que resultendespues de efectuados los primeros desembolsos.

17. Los costos certificados seran expresados en d6lares equivalentes al tipo de cambiopromedio del mes en que se realizaron los trabajos y tales calculos deberan ser reflejados en lashojas de calculo de cada obra.

18. Los Consultores mantendrAn registros ordenados y consistentes con la hoja de inventario yla lista final disponibles para los auditores, inspectores que el Cliente o el Banco Mundial designenpara sus prop6sitos de comprobaci6n, muestreo o desembolso.

19. Los Consultores no estAn obligados a ofrecer explicaciones detalladas al Cliente sobre laimposibilidad de certificar obras incluidas en el listado preliminar, pudiendo limitarse a indicarque, en su opini6n, la informaci6n compilada o disponible al momento de su asignaci6n erainsuficiente para certificar las obras realizadas de conformidad con estos Terminos de Referencia.Los Consultores podran sin embargo ofrecer al Cliente recomendaciones de las acciones que losorganismos ejecutores podrian tomar para elevar el nivel de informaci6n disponible sobre obrasespecificas que puedan ser certificadas con posterioridad.

E. Porcentaie de Financiamiento

20. Eni base al listado final de obras certificadas, los Consultores deberan incluir en elcertificado individual de las obras una recomendaci6n del porcentaje de financiamiento por partedel Banco Mundial y la Contraparte Nacional.

21. Al presentar su recomendaci6n de financiamiento, los Consultores tomaran en cuenta:

(a) el uso y depreciaci6n de maquinaria o el valor de otros insumos que pudiesenhaberse sido objeto de financiamiento separado;

(b) el monto de los impuestos nacionales o de importaci6n que los OMF no puedenfinanciar;

(c) la contribuci6n del Cuerpo de Ingenieros de las FF.AA. o de otras fuentes deayuda o financiamiento que pudiesen estar asociados al costo de cada una de lasobras;

(d) el grado de conexi6n de las obras con el Fen6meno de El Nifio y la emergencia; y

(e) la elegibilidad de los bienes y servicios por fuente de financiamniento.

22. No obstante la referida recomendaci6n, el Cliente podra considerar y solicitar a las fuentesde financiamiento porcentajes por encimna o por debajo de tal recomendaci6n en base a razonesque discutira con los Consultores, y cuya opini6n, sera dada a conocer al Banco Mundial en cadacaso.

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F. Certificaci6n de las Obras

23. La certificacion final de las obras consiste en un listado general y sumatoria de montoscertificados y certificados individuales de cada obra incluida en el listado. El certificado individualincluiri, pero no se limitara, a la siguiente:

(a) informaci6n indicada en B. 1 arriba;

(b) costo certificado expresado en US$ equivalentes;

(c) recomendaci6n del porcentaje de financiamiento establecida en el parrafo E. 19;

(d) una declaraci6n jurada de los Consultores de que la informaci6n contenida en elCertificado es cierta, fidedigna, incondicionada y que representa a su mas leal sabery entender el costo razonable y las caracteristicas fisicas de las obras; y

(e) la certificaci6n de la elegibilidad de la obra de conformidad con los acuerdos delCliente y el Banco Mundial.

24. El modelo de certificaci6n sera identico para todas las obras en el listado final.Certificaciones parciales o condicionadas no seran consideradas como certificados validos.

G. Auditorias tecnicas v sugervisi6n de obras.

25. La participaci6n de los Consultores en el proceso de certificaci6n no impediria a losconsultores participar en las contrataciones de servicios de ingenieria y supervisi6n o de auditoriatecnica de otras obras dentro de los alcances del Proyecto de Emergencia.

H. Forma de Pago.

26. Se negociari con los Consultores una forma de pago proporcional al costo certificado delas obras, que podri ser variable por Regi6n o por tipo de obra vial, hidraulica fluvial, agricola,protecci6n maritima, proteccion de infraestructura, pero que en ningun caso podra exceder [1%]

del costo certificado. Una vez acordado el costo proporcional que sera determinado sobre la basede la lista preliminar, el porcentaje sera fijo y no sera objeto de ajuste alguno.

27. Si el Banco Mundial llegase a rechazar alguna certificaci6n en sus pruebas o controles, sepenalizara a los Consultores en un monto comnensurado al perjuicio que se cause al Cliente.

28. Con el objeto de compensar a los Consultores por los gastos incurridos respecto a obrasque no puedan ser certificadas, u obras que el Cliente decida excluir del proceso de certificaci6n oque estan sujetas a conciliaci6n, el Cliente pagari a los Consultores tarifas fijas adicionales alporcentaje pagado por cada certificaci6n como sigue:

(a) al inicio de los trabajos la suma de [US$ ] equivalentes como pago inicialcontra la presentaci6n de una garantia bancaria por igual monto, que no sera

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deducida de los pagos parciales; la garantia seri devuelta al t6enino de losservicios;

(b) a la presentaci6n de la lista preliminar la suma de [US$ I equivalentes comopago parcial y unTico por el trabajo de procesamiento, elaboraci6n de la base dedatos;

(c) a la presentaci6n del borrador de lista final la suma de (US$ I equivalentes comopago parcial y iunico por el trabajo de selecci6n de obras certificables;

(d) una suma fija equivalente a [US$ I equivalentes por cada obra que el Consultorcertifique y que el Cliente decida excluir del listado para reembolso

(e) una suma fija equivalente a [US$ I equivalentes por cada obra que el Consultorcertifique y que el Cliente discrepe por raz6n de errores significativos, sujeta adiscusi6n, monto que se deduciri del pago porcentual si finalmente se acuerdaincorporar la obra a la lista final o se acreditari al pago establecido en (d) arriba sise excluye.

29. Gastos de servicios de fotograffa aerea, traslado por avi6n o helic6ptero y de emergenciao rescate sera reembolsados al Consultor si son autorizados previamente por el Cliente y que enning6n caso deberan exceder en agregado un monto de (US$ I equivalente.

L Informes

30. Los Consultores presentaran los siguientes informados en dias calendario a partir de lafirma del contrato o carta de intencion:

(a) informe inicial dentro de los primeros cinco dias;

(b) infonne del inventario preliminar dentro de los primeros diez dias;

(c) dictamen sobre suficiencia de las obras certificadas dentro de los cinco diassiguientes a la terminacion del trabajo de campo;

(d) borrador de la lista final de obras certificadas dentro de los diez dias siguientes a laterminaci6n del trabajo de campo;

(e) lista final dos dias despues de recibidas la lista de exclusiones o correcciones;

(f) lista final y certificados antes del 30 de Noviembre de 1997; y

(g) informe final al termino del contrato.

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APPENDIX 3

DROUGHT COMPONENT SIERRA SUR

BACKGROUND

1. While drought is a constant threat to agricultural production in the Sierra Sur, recordsshow that its effects are strengthened in El Ninio years, with particular devastation during the laststrong El Niiio of 1982-83. During that year, according to data from NOAA, damages to theeconomy of the Altiplano of Peru and Bolivia were estimated to be US$250 million.

2. During 1982-83 estimates for the Department of Puno (Ministerio de Agricultura) showthat crop production was reduced by 70%, while livestock sales increased by 25%. Theseincreased sales were forced due to the lack of forage. Because of the decimation of livestockherds and the lack of food in local markets, the social effects of the drought were devastating,resulting in mass migration from rural communities to urban centers in search of employment.

3. In areas such as Puno, which has a very fragile natural resource base, the effects of thedrought had consequences for several years, with the lack of seed for sowing, and the slowrecuperation of animal herds.

CHARACTERISTICS OF THE DROUGHT AREA

4. The Government's emergency program for drought areas covers seven departments,naamely, Apurimac, Arequipa, Ayacucho, Cusco, Moquegua, Puno, and Tacna. Social andproduction data for Puno, are shown in Table 1, which is the department most likely to beaffected by the drought and in which much of the Govemment's drought prevention andalleviation program is focused.

5. The sector is dominated by minifundio and low levels of productivity. Farms aresegmented and highly dispersed. For example, it is not unusual that a farmer may have twohectares of crops which are divided into ten different units, and scattered throughout hiscommunity. Availability of working capital is scarce and this has been one of the principal factorswhy irrigation schemes have not prospered. It is also a principal reason why the farmingcommunity cannot develop preventive measures to combat the expected drought due to the ElNino phenomenon, and why the government has to step in with temporary measures to produceforage in these irrigated areas.

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.. ...... ...... ... . .,.. . ... ,............... . ..... ........... ....,,,,,,.,,,.,,,. ,

,,'.' ..'..'..'.................... ''".-....... .......... ......... ... . ... m .............. ...................

No. of Farmers 184018Men 137640 75%O/Women 46378 25%

No of Farms 184610Cultivated Area (Fa) 363863Native Pastures (Ha) 3485810Irrigated Area (Ha) 14313

Crops 96-97 Area (Has) Production Yield(Tons) (Tons/Ha)

Potatoes 41960 239280 5.70Barley 21900 20440 0.93Barley Forage 17635 177080 10.04Quinua 17870 14170 0.79Oats 3609 2810 0.78Oats Forage 20600 253270 12.29Faba Beans 6530 6070 0.93Canihua 5500 3360 0.61Total 135604

Livestock 96-97 HeadCattle 547000Sheep 3100000Camelids 1500000

6. The principal activity is livestock production, the main products being milk, meat, andwool (both sheep and alpaca). Pasture production is mainly in rainfed areas, and is based on lowyielding native pasture. Crop production is almost entirely at subsistence levels and ischaracterized by extremely low productivity levels (yields/ha).

THE PROPOSED DROUGHT EMERGENCY PREVENTION PROGRAM

7. Because of the lack of capacity of the minifundio to embark on a program of emergencymeasures to combat the expected drought, for the reasons given above, it is necessary for thegovernment to initiate a series of short term activities to alleviate the possible effects of thedrought. It is important to understand that these are stop gap measures, and until a coherentstrategy is developed for agriculture in the Altiplano and Sierra Sur, in which the roles of Stateand private sector are clearly defined, and appropriate policies put in place, emergencies such asthis will continue to be the responsibility of the government. It is important therefore that in the

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agricultural sector study being prepared by the GOP and the World Bank, these drought affectedareas receive due attention.

8. The following activities are proposed for financing;

(a) the rehabilitation of existing wells and irrigation systems;

(b) a forage production program; and

(c) a seed production program.

(a) Rehabilitation of Existing Wells and Irrigation Systems.

9. As a drought prevention measure in the Sierra Sur, it is necessary to ensure that existingwater resources are operative for human and animal consumption and where possible for smallirrigation systems.

10. Rehabilitation of deep tubular wells. In the department of Puno, there are a series ofdeep tubular wells that are not functioning for various reasons, among which are lack ofmaintenance and the lack of appropriate equipment. Such wells can be rehabilitated, and used forirrigation purposes on small areas. Of the 100 existing wells only 25 are now operational and theremaining 75 need to be made operational. These wells vary in depth from 30 to 80 meters andhave a capacity of between 25 and 45 liters per second. The rehabilitation of these well will becarried out by the Instituto Nacional de Recursos Naturales (INRENA) and the Programa deAguas Subterrdneasy Tecnificaci6n de Riego (PRASTER), which are local agencies. Bothagencies are now working on drought prevention measures in Puno in collaboration with theComites de Regantes of each of the wells under repair. The distribution of the work and thebudget are presented in Table 2. Among the activities to be financed are cleaning of the existingwells, repairs and replacement of pumps, and tests for pump capacity and quality of water.

Table 2. Rehabilitation of deep tubular wells

Institution No. of wells Beneficiaries Cost / unit Total Cost

Families Has. US$ US$

INRENA 39 650 1200 14,000 550,000

PRASTER 36 720 1100 14,000 500,000

Total 75 1370 2300 1,050,000

11. Rehabilitation of Small Wells. Also in the department of Puno, there are a series ofshallow wells which can be used for human and animal consumption. These need to be equippedand made functional. This sub-component will rehabilitate existing wells and install 3500 manualpumps throughout the department of Puno. It is estimated that the cost of rehabilitating andinstalling each pump will be US$225. The work is already being carried out by the Direccion

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Regional del Ministerio de Agricultura as part of its drought prevention work. A summary ispresented in Table 3.

Table 3. Rehabilitation of Small Wells

Institution No. of wells Beneficiaries Total Cost

No. Families US$

MINAG 3,500 31,500 787,500

12. Rehabilitation of Existing Irrigation Infrastructure. Throughout the Sierra Sur thereexist several irrigation systems that are not fully operational for the following reasons; incompleteworks such as lateral canals, deterioration and lack of maintenance. In some cases these problemsare exacerbated by the lack of credit for farmers to fully exploit the installed irrigation system,and the absence of effective user organizations. PRONAMACH has already started on therehabilitation of a number of these irrigation schemes throughout the Sierra Sur as part of itsdrought prevention work. This work covers 94 irrigation projects spread throughout the 7departments that have been declared in a state of emergency. This sub-component is summarizedin Table 4.

Table 4. Rehabilitation of existing Irrigation Schemes

No Department Beneficiaries N° of Proj Cost (US$)Families Hectares

1 Apurimac 1,437 814 14 273,0002 Arequipa 575 909 9 103,0003 Ayacucho 2,048 1,267 26 515,0004 Cusco 1,225 723 17 27,000

5 Moquegua 611 470 6 44,0006 Puno 1,260 1,262 19 281,0007 Tacna 1,007 770 3 14,000

= TOTAL 8,163 6,215 94 1,500,000

(b) Forage Production Program

13. One of the most devastating effects of the major drought of 1982-83, which coincidedwith the El Nifno phenomenon, was the forced sale of livestock and the slow recuperation of theherd because of the lack of forage. Because of the lack of capital in the minifundio in the irrigatedareas, farmers are not in a position to embark on a new forage program and the experience of1982-83 is likely to be repeated in the event of a drought.

14. Therefore as a prevention measure, the Ministry of Agriculture has embarked on a forageproduction program in the irrigated areas of Puno. The program is being coordinated in the fieldby the Insfituto Nacional de Investigacion Agropecuaria (INIA) and is being implemented byvarious government agencies in collaboration with farmers in the existing irrigation schemes. The

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strategy being implemented by the Ministry of Agriculture is to sow annual forage crops such asbarley and oats along with a small amount of perennial pastures. The agreement between theMinistry and the farmers stipulates that the harvest will be divided in equal parts between theparties. It is estimated that under irrigation yields of green forage can reach 30 tons/hectare. Thetotal projected harvest is calculated to provide forage for the equivalent of 50,000 cattle or300,000 sheep, or 200,000 camelids for a period of seven months which are estimated to beperiod of severe shortages of forage in the case of a drought. The areas selected and the cropsbeing sown are shown in Table 5.

15. The program was reviewed in the week of October 13, 1997. About 2,000 hectares havebeen ploughed and about 500 hectares have been sown to oats and barley. It is planned thatsowing should be finished by December 31. The Ministry of Agriculture has bought 100 newtractors to complete this task. At the moment, about 72 tractors are filly operational. The othertractors are not filly equipped as yet.

16. The project was judged to be technically feasible, since the soils on which the project isplanned are relatively productive if irrigation is assured. Other aspects of the technology packageto be applied i.e. crops, varieties, fertilizer, seeding density etc. are also thought to be adequate.However, the mission had misgivings as to the logistical scale of the activity, and hasrecommended and agreed with the Ministry of Agriculture to cut back the area sown from theplanned 20,000 hectares to 10,000 hectares. It was felt that the quality of the work could not beassured on the bigger area.

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Table 5. Distribution of Areas for Forage Production and Implementing Agencies

Implementing Location Area Oats Barley New PasturesAgencies (has) (has)

(has) (has)

CTR MTP Melgar 1500 850 600 50PRORRIDRE Azangaro 1000 380 550 70

Sub Total 2500 1230 1150 120

D.R.AGRICULT. El Collao 150 100 30 20Puno 200 110 70 20San Roman 350 210 110 30Huancane 170 100 60 10Melgar 420 150 180 40Lampa 270 150 100 20S.A. Putina 150 100 80 20Azangaro 130 60 50 20Chucuito 80 40 35 5Yunguyo 40 20 15 5Moho 40 20 15 5

Sub Total 2000 1060 745 195

INIA San Roman 3000 1500 1200 300Lampa 1000 500 400 100

Sub Total 4000 2000 1600 400

EJERCITO 4ta DI Collao 500 250 200 50Puno 1000 460 305 235

Sub Total 1500 710 505 285

TOTAL 10000 5000 4000 1000

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Table 6. Forage Production Program Budget

Umt ........... ~ii. .TtaSty~~~~~~~~..... . S.....

I. Seed- Rye Grass "Nui" Kg. 10,000 6.90 69,000- Dactylis "Apanui" Kg. 7,000. 7.56 52,920White Clover "Hulia" Kg 2,000 12.73 25,460Red Clover Kg. 1,000 13.75 13,750"Queniqueli"- Alfalfa "Ranguer 6Saranac" Kg. 10,000 12.86 128,600Oats "Tayco,""Vilcanota"

"MANTARO 15" Kg. 625,000 1.80 1,125,000- Barley "UNA-80" Kg. 500,000 1.35 675,000- Barley "GRINON" Kg. _ _

Sub Total 1,155,000 2,089,730 773,974

II. Fertilizers- Urea Bag (50 Kg) 21,288 45.00 957,960- Dianumonium Bag (50 Kg) 23,856 45.00 1,073,520Phosphate- Rock Phosphate Bag (50 Kg) 2,120 25.00 53,000Sub Total 45,144 2,031,480 752,400

III. Inoculants- Rhyzomnack: Bag 1,000 25.00 25,000clover, alfalfaSub Total 1,000 25,000 9,259

IV. Machinery (*)- Tractor hours 163,000 25.00 4,075,000Sub Total 163,000 4,075,000 1,509,259

V. Labor-Days Man 350,000 10.00Sub Total

VI. LandRent has 10,000 150.00Sub Total

VII. Technical Assistance andSupervision_(**) __ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

International has 10,000 383,261 60,000ConsultantsSub Total 10,000 383,261 201,948

VIII. Training(***) no. promot. 900 958,153

Sub Total 900 958,153 354,871

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Table 6. Forage Production Program Budget

~~~~~~~~~~............... ,{....... ... ...,,......

LY. Infrastructure- Transport

. Pick-ups unit 8 54,000 432,000

. Motorcycles -unit 7 10,800 75,600-Storage unit 5 5,400 27,000- Equipment

. Computers unit 2 6,000 12,000

. Soil analysis unit 1 35,000 35,000

. Pasture analysis unit 1 45,000 45,000.00

. Audiovisuals nld n/d 25,000Office supplies n/d n/d 30,000 _____

Sub Total 0.00 ____ 681,600 252,444

X. Fuel and lubricants- Fuel gallon 7,200 5.00 36,000- Lubricats 600 5.00 3,000 ______

Sub Total 7 __8W_ 39,000 14,444

XI. Travel_____ ____ ____ ____n/d n/d 12,000 _ _ _ _ _ _

Sub Total 0 ____e_ 12,000 4,444Transport Tn. 8,750 25.00 218,750 ______

Sub Total 8,750(____ 218,750 81,018

XII. Administration- Salaries Man/months 240| 1,500 360,000- Per diem Man/months 240 1,000 240,000 ______

Sub Total ______480 ____ 600,000 222,222

XIII. Contingencies 5 531,098 ______

Sub Total 485 ____ 531,098 196,703

TOTA1L 11,645,073 4,372,990

(c) Seed Production Program

17. Based on the experience ofthe 1982-83 drought and other drought hit areas around theworld the rate of recuperation of crop production is slow. One of the ingredients in hastening thisrecuperation is an ample supply of good quality seed for the subsequent sowing season. For suchan eventuality, a seed production program needs to be put in place immediately. Such a seedproduction program would consist of crops that provide the basic foods and forage for the area,namely, potatoes, quinua, canihua, barley, oats, faba beans and tarwi.

18. This program would be implemented by INIA, and the Universidad Nacional Agraria(IJNA) which have as a main part of their research strategy to provide seed for the basic foodcrops of Peru. Sowing was starting in October 1997. It is proposed to finance the sowing of

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2,660 hectares, all under irrigation, with a total seed production of 20,157 tons at an estimatedcost of US$2.73 million. Cost and production data for the proposed program are presented inTables 7 and 8.

Table 7. Seed Production Program: Input Costs (US$/ha)

Crop Seed Fert Pest Mach Labor Total

Quinua 7 101 82 66 109 364Potatoes 800 290 180 130 600 2000Canihua 3 80 60 72 120 335Barley 53 89 80 80 160 462Oats 60 80 72 72 144 428

Faba Beans 64 53 107 71 128 423Tarwi 57 57 57 76 114 360

Table 8. Seed Production Program: Area and Total Costs

Crop Area Cost/ha Total cost Production Total Production(US$) (US$) (Tons/ha) (Tons)

Potatoes 1000 2000 2000000 16 16000Barley 800 462 369600 2.8 2240Quinua 80 364 29120 1.9 152Oats 500 428 214000 2.6 1275Faba 200 423 84600 1.8 360Beans

Canihua 20 335 6700 2 40Tarwi 60 380 22800 1.5 90

Total 2660 2726820 20157

Table 9: Cost Summary by Component and Phase

(US$)

Component Costs US$ million

Rehabilitation of 3.4Irrigation

Forage Production 4.4Program

Seed Production 2.7Program

Total 10.5

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Environmental Impact

19. The overall environmental impact of this operation should be positive. The rehabilitationof the irrigation schemes is in areas that have sufficient water resources and will not put extrapressure on the existing water resources. Moreover, increased productivity in the irrigationschemes should reduce farming pressure on more fragile environments such as hillsides.Likewise, the forage production program will be conducted on stable soils, in irrigated areas. Thepesticides that will be used will be herbicides, and will be used in doses that are recommended forefficient use. Increased forage production will alleviate the effects of overgrazing in more fragileenvironments during the drought period. The rural public works program will be gearedspecifically towards those works that preserve the natural resource base, such as the repair ofterraces and the improvement of rainfall infiltration.

Sustainability

20. All of the activities that are proposed for financing in this drought component for theSierra Sur, are designed with the long term sustainability of the agricultural system and its naturalresource base in mind. The repair of the irrigation systems should improve productivity on themore stable soils and relieve the pressure on the more fragile hillside soils. These works shouldalso improve the efficiency of existing water resources. The forage production program willallow farmers to maintain their herds and therefore avoid their forced sale and subsequentdeterioration. This forage program should also mitigate the effects of overgrazing in the event ofa drought and the subsequent deserfification which is a latent problem in the Altiplano. The seedsprogram will bring new seeds to the agricultural system, which should result in stable yields. Therural public works program is oriented in its entirety to stabilizing the soil resources of thehillsides with its emphasis on repair and building of terraces, and the construction of infiltrationcanals.

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APPENDIX 4

PREPARATION OF A COMPREHENSIVE DISASTER FORECASTING.PREVENTION. RELIEF AND MITIGATION STRATEGY

DRAFT TERMS OF REFERENCE

There are, at present, many public sector agencies and NGOs involved in one way oranother, and with varying degrees of efficiency, in disaster forecasting, mitigation, prevention,monitoring and relief There does not appear to exist, however, a clear-cut, comprehensivestrategy and institutional setup in this regard. As a result, there is not one single top-levelinstitution which, cutting across sectors, would be effectively responsible for designing andimplementing disaster-related activities. The actual roles of the different public sector agenciesare sometimes parallel or overlap with each other, and do not necessarily reflect their legalmandates. And the relationship between the public sector agencies and NGOs is not always aseffective as would be desirable, even though it would be important for Government to avail itselfof the skills and experience that some NGOs have amassed over time, as well as their closecontacts with local populations. This sub-component will help the GOP design a comprehensivestrategy for disaster forecasting and management.

The objectives of this study are:

(a) To evaluate existing institutions and current practices in disaster forecasting,prevention, mitigation, monitoring and relief in Peru,

(b) To compare the existing situation in Peru against worldwide best practice, and

(c) To recommend a comprehensive strategy for eventual adoption by theGovernment.

Methodology.

(1) The consultant will identify all the institutions that currently play a significant role indisaster forecasting, prevention, mitigation, monitoring and relief in Peru. These institutions maybe public sector agencies °, non-governmental organizations" or private sector entities .

10 For instance, the Instituto Geoflsico del Peri (IGP), the Servicio Nacional de Meteorologla e Hidrologia(SENAMI), the Insfituto Nacional de Defensa Civil (INDECI), the Instituto del Mar del Pera} (MARPE),the Consejos Transitorios de Administraci6n Regional (CTARs) and/or other authorities at the regional level,the municipalites, the districts, the Comites de Emergencia, Colegio de Ingenieros del PerM, Colegio deArquitectos del Perm, public universities.

For instance, the PREDES, rTDG, Cruz Roja Peruana, Caritas.

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The consultant will meet with managers and/or staff of each one of these institutions,collect and fully familiarize her/himself with relevant written information.

The consultant will prepare a descriptive inventory (diagnostic) of each one of thoseinstitutions, identify their specific institutional objectives (in connection with disaster forecasting,prevention, mitigation and relief), and ascertain the actual experience each one of them has had inthese four "aspects' 13 in connection with recent disasters, particularly since the early 1980's.

The consultant will also ascertain, for each institution, the resources available to them tocarry out its tasks, and the efficiency (cost-effectiveness) with which they use resources in orderto attain their stated objectives.

The consultant will actively seek to understand, for each institution, exactly: (a) what andhow it is supposed to do according to its written mandate; (b) what and how it actually does --which may or may not be fully consistent with its written mandate; (c) which of its activitiesoverlap, duplicate or are in conflict, with those of other institutions; and (d) any relevantconstraints, institutional or other, under which it operates.

(2) The consultant will carry out a comparison between the institutional setup and practicescurrently existing in Peru and the best practice available elsewhere in the world. The consultantwill ensure that comparisons are based on facts and clear evidence.

(3) The consultant will submit an interim report on her/his findings resulting from steps (1)and (2). The purpose of this interim report would be to elicit Government's views and reactionsbefore going ahead with the next and final step of the process.

(4) The consultant will prepare action-oriented recommendations for submission toGovernment. The recommendations will be formulated in a manner that makes them amenable todiscussion, debate and decision making within Government with a view to their eventual adoptionas Government's own comprehensive strategy for disaster forecasting and management.

In preparing her/his recommendation, the consultant will keep in mind a number ofimportant considerations:

(a) the consultant should indicate how the recommended institutional setup will ensurethat there will be an effective authority that will be able to carry out disaster-related activities across sectors, regions and levels of government;

(b) the amount of recommended institutional restructuring and inevitable dislocationwill be kept to a minimum;

12For instance, private universities, private insurance industry.

13 As part of the review of prevention and mitigation activities, the consultant will take a look at institutionsresponsible for preparing, and recommending adoption of, building codes (use of hazard resistant buildingtechniques and standards this is particularly relevant in a country like Peru with significant frequency ofseismic phenomena), and regulations regarding prudent land use planning (particularly in flood-pronemeasures).

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(c) where applicable, recommendations will be clearly labeled as short-term, medium-term or long-term;

(d) it would be important to clearly identify areas where cost effectiveness andinstitutional efficiency and coordination may be improved;

(e) resource requirements, for start up and on a recurrent basis, will be identified;

(f) if, as is likely to happen, the consultant calls for the private sector, localcommunities and NGOs to play a role in disaster management, therecommendations should elaborate on the modalities under which they willcoordinate with public sector agencies; and

(g) specialized skllls requirements in disaster forecasting, prevention, mitigation,monitoring and relief will be identified, and training programs will be proposed.

Oualifications of the consultant.

The consultant should be familiar with best practice worldwide in the area of disasterforecasting, prevention, mitigation and relief. The consultant should be fluent in Spanish and havean adequate knowledge of the South American context.

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APPENDIX 5

INSTITUTIONAL STRENGTHENING AND CAPACITY BUILDING

1. This sub-component aims to strengthen the capacity of Peruvian institutions responsiblefor collecting data, predicting, monitoring, and better responding to future El Ni o episodes. Incontrast with the emergency nature of this operation, this component is expected to increase thelikely long-term, sustainable impact of Bank involvement.

2. In consultation with the Ministry of Economy and Finance, four institutions have beentargeted to receive support under this component. All of them are statutory members of the"Estudio Regional del Fen6meno de El Nino" (ERFEN), which was established by the k

intergovernmental Comision Permanente del Pacifico Sur, and was recently ratified by GOP.The four institutions, which are responsible for a wide range of activities, include: InstitutoGeofisico del Peru (IGP), Instituto del Mar del Perui (IMARPE), Instituto Nacional de DefensaCivil (INDECI), and Servicio Nacional de Metereologia e Hidrologia (SENAMII). Bankfinancing will be used to procure data collection and processing equipment, specialized foreigntechnical assistance, and training. The following is a summary of the proposals presented by theseentities:

3. Instituto Geofisico del Perui This sub-component would help the Instituto Geofisico delPeru (IGP) strengthen Peru's capacity to forecast climate changes, including El Nirio. In order todo this, IGP aims to use free-of-charge models recently developed by the scientific communityworldwide (including the USA's National Center for Atmospheric Research) as inputs to regionalmodels of climate change and to high-resolution models of sea surface temperature prediction offthe Peruvian coast. Other inputs required in this regard include real-time parameters of Peru'satmosphere and coastal ocean which would be collected by automatic instrument platforms aswell as manual measuring operations. These will also provide the basis for short and long-termweather forecasting.

4. IGP would be responsible for the execution of this sub-component and may choose toenter into specific "sub-contracting" agreements with two institutions with which it already hasentered into broad collaboration agreements, namely, the Universidad de Piura (UdeP) and theDirecci6n de Hidrografiay Navegaci6n (DHN). Similarly, it may also choose to enter into anagreement with the Instituto del Mar del Perui (IMARPE). Among other things, the above-mentioned sub-contracting agreements would have to specify the responsibilities of thesubcontractors but clearly indicate that the IGP retains full responsibility for sub-componentimplementation.

5. Among other things, IGP would ask: (a) DHN, and probably IMARPE, to maintain andoperate maritime and coastal instruments; and (b) UdeP to build and, with DHN's assistance,operate a wind profiler, a sea-state radar in Lobos de Afuera island, and a boundary layer radar.

6. Regional forecasts would be made available to the Instituto de Defensa Civil (INDECI),the Ministry of Agriculture, the Ministry of Fisheries and the general public via Internet. Real-time observations of the atmosphere will be shared with SENAMHI. Ocean state parameters andprediction will be made available to IMARPE.

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7. Financing requested includes (with notional estimates)

Equipment2 super workstations US$ 110,000'2 personal computers US$ 6,00045 data collection platforms14 US$ 810,0001 Boundary Layer Radar to measure

winds in lower atmosphere US$ 100,0002 Ocean-moored buoys to measure ocean

and surface meteorological data US$ 300,000150 balloons US$ 15,0005 "logging" stations US$ 25,0001 Sea-state radar and wind profiler US$ 80,000HW to link earth station to internet US$ 40,000GIS software US$ 10,000

Specialized Technical Expertise US$ 75,000

Training (1 Ph.D. and 2 M.Sc.) US$ 280,000

8. Instituto del Mar delPerui The Instifuto del Mar del Perti (ARPE) is responsible forcontinuously carrying out research and monitoring the impact that of several factors (such asfishing intensity and climate changes) on the biomass off Peru's coast. This is very important in acountry where fishing represents a significant sector of the economy. This sub-component wouldhelp IMARPE strengthen its operations. Financing requested, with notional estimates includes:

(a) Equipment for 3 coastal laboratories, with a total estimated cost of aboutUS$500,000. Each coastal laboratory requires various types of equipment,including microscopes (electronic, composite with microphotography, triocular),analytical scales (digital, electronic, mechanical), microtomes, cooling and heatingequipment, pumps, programmable tissue processors, personal computers, magneticagitators, water analysis and water pollution measuring equipment, sea divingequipment, anemometer, echosounds, etc.

(b) Training, estimated cost is US$ 300,000 for 5 M.Sc. degrees (two years each) inrelevant disciplines: biomass management, fish population dynamics, underwaterelectroacoustics, chemical oceanography, and physical oceanography.

(c) Specialized foreign technical assistance, estimated cost is US$ 72,500:

(i) Study of population growth of minor pelagic species (30 person-days),estimated cost US$ 17,500, including fee, subsistence and travel

(ii) Data processing and forecasting (30 person-days), estimated cost US$17,500, including fee, subsistence and travel

4 This could be reduced in number of platforms and degree of soplustication.

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(iii) Analysis of pelagic species' fishing volume per unit of effort (30 person-days), estimated cost US$ 18,500, including fee, subsistence and travel.

(iv) Integrated coastal zones (30 person-days), estimated cost US$ 19,000,including fee, subsistence and travel.

9. Instituto Nacional de Defensa Civil. 5 The Instituto Nacional de Defensa Civil(INDECI) is responsible for designing and implementing disaster prevention and relief activities inPeru. It encourages the public and the private sector to carry out analyses of risks andvulnerability, and aims to improve the availability of human and logistical resources nationwide.Financing requested, with notional estimates includes,

(a) Equipment needed to receive data from weather satellites (US$ 42,800), includinga computerized Wefax Explorer antenna system.

(b) Water level controls and alarm systems to be used in rivers (US$ 10,000).

(c) Enhancements to existing Geographic Information System (US$ 93,000), includingpersonal computers, software, digital plotter, remote sensing devices, and laserprinters.

(d) Integrated countrywide communication system (LJS$ 787,400), including switcher,servers, personal computers, various peripherals, software and training.

10. Servicio Nacional de Meteorologia The Servicio Nacional de Meteorologiae Hidrologia (SENAMHI) has identified, as its main requirements: (a) improving and expandingits existing meteorological, hydrological and environmental data collection stations; (b) improvingits communication systems; and (c) improving its climatologic data base. Financing requested withnotional estimates includes: The Direcci6n General de Hidrologiay Recursos Hidricos hasrequested financing for about US$ 20,000 worth of equipment and materials. The DireccionGeneral de Metereologia has requested financing for about US$ 1,200,000 worth of equipment,including, among other things: a meteorological radar (US$ 735,500), a workstation (US$120,000), a high-resolution image data drive (US$ 60,000) and digital image processing software(US$ 60,000). The Oficina General de Operaciones Ticnicas has requested US$ 2-3 million offinancing, including inter alia, 2 doppler radars (US$ 2.5 million), current meters (US$ 245,000),geothermometers (US$ 70,000) and anemometers (US$ 100,000) The Oficina General deEstadistica e Informdtica has requested financing for about US$ 140,000 worth of equipment,including a fully equipped microcomputer (US$ 200,000) and a portable terminal (US$ 65,000).

is INDECI has also requested Bank financing of items to be used during the emergency (blankets, clothes, shelters,hand tools, portable power generators, portable water tanks, fuel, kitchen and eating utensils, rescueequipment, food, medicines, etc.). These may be provided by the complementary project through IDB.

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Finally, the Direcci6n General de Agrometerologia has requested financing for about US$165,000 including specialized software (US$ 100,000) and a 4x4 truck.

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APPENDIX 6

RESETTLEMENT

Objectives

The agreed objectives of the Project's resettlement operations are to remove people fromareas at risk of flooding and landslide, relocate them to environmentally and socially sustainablesettlements, and provide them opportunities to improve their standards of livelihood in the newresettled locations.

The resettlement policy to be applied in the case of the above mentioned displacement ofpopulation shall be consistent with the principles contained in the World Bank OperationalDirective 4.30 (Involuntary Resettlement) and the document entitled "LATEN Guidelines forReview of Projects Where Resettlement Needs are Not Known in Detail at the Time ofAppraisal."

Policy Framework

The following would be some of the policies and elements of the resettlement operations:

(a) Persons entitled to resettlement shall be those, regardless of tenure status, whosehouses and/or lands are in areas at risk of flooding or landslide and who appear onthe census of affected families conducted by COFOPRI and included in theResettlement Action Plan approved by the Bank;

(b) All affected persons will be resettled at no cost to the affected family;

(c) All affected persons will be provided a replacement house and plot better than orequivalent to their previous house and lot (it is currently planned that this be ahouse lot of about 120 square meters and a modular house of about 11 squaremeters);

(d) The resettlement areas will be provided with communal kitchens and latrines,potable water standpipes, public lighting and access and internal roads, all inadequate conditions of operation;

(e) The affected persons will be promptly provided freehold titles to lots and houseswhich will be recorded in the respective property registry at no cost to the affectedperson;

(f) Each affected person will have access to low-interest credit from the Borrower toimprove and/or expand their modular houses;

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(g) All affected persons, and specifically those that are considered most vulnerable insocioeconomic terms, such as female-headed households and ethnic minorities, willbe provided special assistance to increase their income-generating capacities;

(h) All areas that are evacuated will be devoted to reforestation or other public uses inorder to prevent any further human settlement including invasion by squatters;

(i) To the extent that affected persons to be resettled are squatters on public lands atrisk of flooding or landslide, compensation will be provided for loss of assets in theform of replacement lot, modular house and basic infrastructure. In other cases,lost assets will be valued at their replacement cost as to permit continuation of thesocial and economic function they had before they were adversely affected.

Institutional Responsibilities

(1) INDECI and the local governments will be responsible for the mobilization and physicaltransfer of the affected people to resettlement sites. All logistical arrangements needed for timelyand orderly moving of such affected people and their belongings both before and during theemergency rests with these local institutions.

(2) Regional Governments will be responsible for the development of resettlement sitesincluding land leveling, survey and division into house plots, and installation of modular houses,communal infrastructure and public services. For such purposes, such Regional Governments willestablish, and thereafter maintain, regional coordinating committees composed of representativesof major line agencies of government, INDECI, non-governmental organizations and the privatesector to oversee and coordinate resettlement and reconstruction works.

(3) COFOPRI (the Borrower's National Commission for Formalization of InformalProperties) will be responsible for conducting and updating a census of the areas to be evacuated,for assisting affected families to select plots acceptable to them, for issuing freehold title to houseplots and modular houses in resettlement areas, and for recording titles in the property registry.To accomplish these tasks, COFOPRI will establish, and thereafter maintain, offices in eachdepartment (departamento) staff with key professionals, including a civil engineer, a lawyer andan administrative officer. In addition, COFOPRI will establish, and thereafter maintain, in eachdepartment office a social work unit to provide social communications for all affected persons andspecial assistance for vulnerable households to increase their income-earning capacities.

(4) The 01 will be responsible for technical assistance and guidance to all entities and agenciesinvolved in the resettlement program, timely and efficient allocation of financial resources toresponsible agencies, ensuring timely delivery of social assessments, environmental audits andenvironmental assessments necessary for detailed planning of the resettlement operations inpreparation for the Bank's no objection a Resettlement Action Plan (RAP) containing site-specificdetailed plans and thereafter implementation of the RAP, monitoring performance of responsiblegovernment agencies at all levels, and periodic reporting of results to the Borrower and the Bank.For these purposes, the 01 will establish a Resettlement and Reconstruction Team composed ofan anthropologist/sociologist, social worker, civil engineer and an administrator all with priorexperience with resettlement operations.

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Financing Arrangements

The total cost of the definitive resettlement operations in northern Peru is estimatedapproximately to be US$ 28,805,000.

The Bank is requested to finance, through the loan: (a) institutional strengthening of the01 as regarding environmental and resettlement operations as well as COFOPRI's departmentaloffices, including contracting of technical teams and purchase of equipment and vehicles; (b)studies to be performed by consultants in connection with environmental and resettlementoperations; and (c) basic infrastructure for the definitive resettlement areas. The estimated cost ofthese elements of the project is US$ 18,780,000 (US$1,780,000 for institutional strengthening,and studies and US$17,000,000 for infrastructure).

The Borrower will finance, out of its own resources the provision of replacement land andhouses, mobilization and transfer of population, public services such as education and health, andall recurrent administrative, personnel, equipment and vehicle costs of government agencies andinstitutions contributing to design and implementation of components of the resettlementoperation. The estimated cost of these elements of the project is US$10,025,00 (US$ 5,493,000for land and housing, US$ 2,380 for public services, US$ 95,000 for transfer, and US$ 2,056,000for administrative costs).

PERUEL NINO PHENOMENON

OBSERVED SEA SURFACE TEMPERATURE ANOMALY(°C)

-2 -1.5 -1 -.5 .5 1 1.5 2 3 4 5

7 - day Average Centered on 1 0 September 1 997

0 1,000 2,000 3,000 4,000 5,000 KILOMETERS (EQUATORIAL SCALE)I ------- This map was produced by the Map Design Unit of The World Bank.

The boundaries, colors, denominotions and anyother information shown

Source: NCEP/Climate Modeling Branch on this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.

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