29868
INKA TERRA:
An Innovative Partnership for Self-Financing
Biodiversity Conservation & Community Development
A Medium Sized Project Proposal
from the International Finance Corporation
to the Global Environment Facility
OCTOBER 2003
1
Table of Contents
Project Summary
Project Rationale & Objectives
Globally Significant Biodiversity Conservation
Baseline Situation
Road Construction
Logging
Hunting and Fishing
Mining
Ecotourism
Ecotourism Market Assessment
Expected Outcomes
Forest Conservation and Management Plan
Community Partnerships for Forest Conservation & Sustainable Development
Environmental Training
Long-Term Conservation Finance through Ecotourism Development
Project Activities
Business Expansion
Forest Management and Conservation Plan
Community Partnerships for Conservation & Development
Long-Term Conservation Finance through Ecotourism Development
Education and Training
Implementation Plan
Innovative Partnership
Financing Plan
Sustainability Analysis
Environmental Sustainability
Social Sustainability
Institutional Sustainability
Financial Sustainability
Risk Assessment
Stakeholder Participation
Incremental Cost Assessment
Budget
Monitoring & Evaluation
Replication
ITA Cash Flow Projections
Annex 1: ITA’s Organizational Structure
Project Summary
Project Identifiers- Project Name:
- GEF Implementation Agency:
- Host Country: Peru
- Country Eligibility:
- GEF focal area(s):
- Operational program:
- Linkage of the Project and national priorities, action plans and programs
The project is also fully consistent with Peru’s National Strategy for Biological Diversity. This Strategy specifies the development of sustainable uses of biodiversity as a national priority. In fact, one of its specific objectives is to promote sustainable tourism. The document indicates that the Peruvian Government seeks to ensure that tourism operators have incentives to promote conservation. It also seeks to foster nature-based tourism that is carried out with appropriate management plans, both in and around protected areas. In addition, the Strategy specifies that the Peruvian government will seeks to promote the granting of long-term concessions to tourism operators so that they are able to manage and protect natural areas.
Peru’s Flora and Fauna Act of 2000 provides a legal basis for granting long-term forest concessions for ecotourism purposes. This law specifies that ecotourism operators may obtain the legal right to manage natural areas of up to 10,000 hectares for 40 years. It specifies the procedures for obtaining such a concession, the responsibilities that it entails, and the instances in which concessions may be revoked. This project will help to pioneer the implementation of this legislation.
In 1998, Peru’s National Environment Council (CONAM) sponsored a Sustainable Tourism Roundtable that recommended the promotion of ecotourism as a vehicle for biodiversity conservation. In October 2000, the Ministry of Tourism stated that a major strategic direction of its tourism planning will focus on the promotion and development of eco-tourism. In 2001, the President of Peru issued a decree that specifies the basic characteristics and offerings that tourism operators should have in order to be classified as “ecotourism” facilities. At present, PromPeru (a government agency that promotes tourism) is carrying out a large-scale public relations campaign In various countries, including the Unites States, in order to increase tourism visitation to Peru. PromPeru is focusing heavily on the promotion of ecotourism. Beyond that, considerable efforts on the part of the local government and other stakeholders are now being focused on promoting ecotourism speficically in the state of Madre de Dios – where this project will be located – because it generates economic benefits with less environmental impacts than other industries.
- GEF National Focal Point and endorsement date of the Project:
Project Objective, Outcomes and Activities
9. Project Objective: / Indicators:
To catalyse self-financing uses of the 10,000 hectare Inka Terra Ecological Reserve (IER) that achieve biodiversity conservation and sustainable development for local communities. This is expected to provide a replicable model for engaging the private sector in achieving financial sustainability for protected areas. /
- Elimination of logging
- Reduction in hunting and poaching to sustainable levels
- Increase in population of endangered species.
- Increase in community involvement in conservation-compatible livelihoods
- Increase in revenues available for biodiversity conservation & community development.
10. Project Outcomes
Business Expansion
Inka Terra will significantly augment its product range by expanding its existing facilities and developing new hotels in Cusco (the gateway city to Machu Picchu) and Puno (on Lake Titicaca). /
- Quarterly reports submitted by Inka Terra to IFC will indicate progress on construction and commercialisation of new & expanded facilities
Forest Management
The Forest Management and Conservation Plan is developed and implemented through local, national and international alliances. /
- Forest characterization document describes the detailed characteristics of the forest.
- Forest conservation activities are carried out with support of local inhabitants, local institutions (FADEMAD and FEDAMAD), national entities (the Ministry of Agriculture, Mining, Tourism and Fisheries) and international organizations (CI, ACEER, etc.)
Community Partnerships
Effective partnerships are established between ITA and the four communities located in and around the IER. These partnerships will allow the local communities to become allies in helping to preserve the IER in exchange for various forms of technical assistance. /
- 50% of the families and 100% of the organizations of the 4 communities are anticipated to participate in community development & conservation efforts.
- Level of technical assistance provided by ITA
- # of agricultural ecosystem techniques being applied in 4 communities.
- Feedback from community members
Ecotourism Development
ITA develops new eco-tourism attractions that generate long-term revenues for forest conservation and community development /
- # of new eco-tourism products implemented
- Level of profits generated
Environmental Training
Training for local communities and other local stakeholders with regard to forest management, sustainable use, and ecotourism. /
- # of people receiving training
- Feedback from community members
11. Project Activities
Business Expansion
Expansion of Machu Picchu Pueblo Hotel and Reserva Amazónica lodge, and development of two new hotels in Cusco and Puno /
- Quarterly reports submitted to IFC
Forest Management
Forest reserve is characterized and zoned using Geographic Information Systems (GIS) /
- Forest categorization document is produced.
Endemic forest species are inventoried, including their potential uses /
- The database of endangered flora and fauna is established.
- A catalogue of current and potential uses of flora and fauna is produced.
Community Partnerships
Formal agreements are reached with 4 communities concerning the use and conservation of the forest (including hunting, fishing, and tree cutting). /
- # of agreements established
- # of people participating
Programs are developed with 4 local communities to promote crop rotation, natural pest control, soil management, and drainage techniques to avoid damage from flooding /
- # of people participating in program
- Community feedback
Eight native tree nurseries are established to repopulate the IER with species that have been depleted /
- # trees successfully replanted
- Community feedback
Eight small-scale fish aquaculture operations are established (2 per community) to supplement local consumption and provide income /
- # of fish produced
- amount of income generated
Animal breeding programs, including chickens, ducks, capybaras peccaries, will be established in each community for local consumption /
- # animals bred
- Community feedback
A Community Fund will be established to finance small-scale community development projects proposed and executed by the local inhabitants /
- # of small scale projects financed
- Evaluation results of community-based projects
A Contingency Fund will be established to assist communities if/when they experience extraordinary hardships from flooding or other adverse climatic events /
- Amount of funds made available
- Community feedback
Ecotourism Development
Four new eco-tourism attractions will be developed: Palm Forest Walk, Canopy Walk, Primate Rescue Center, and Giant Otter Observation. /
- New eco-tourism products are constructed and operational
- Amount of profits generated
Environmental Training
At least four workshops on forest conservation and sustainable use will be held each year for local people (including women and youth) from groups that constitute both opportunities and threats for forest conservation (e.g., colonists, loggers, teachers, unions, public officials). /
- Reports on workshop results
- Participant feedback
A special training center will be set up for ecotourism operators and guides /
- # of individuals receiving training
- Participant feedback
A mining campaign will be undertaken to create awareness about the detrimental effects of mercury and to promote alternatives that reduce impacts /
- # of individuals who learn about the deleterious effects of mercury
- # of gold miners who improve their practices
12. Estimated Budget (in US$)
Project Preparation:
GEF: $ 25,000 PDF-A
Co-financing: $ 65,518 José Koechlin (cash)
TOTAL: $ 90,518
Project Implementation:
GEF Grant: $ 361,757
GEF Loan: $ 363,243
TOTAL GEF: $ 725,000
Co-financing: $ 5,103,465 Inka Terra (cash and in kind)
$ 187,000 ACEER (cash)
$ 90,000 Missouri Botanical Gardens (cash)
$ 919,601 ITA (cash)
$ 5,000,000 IFC (loan)
TOTAL: $ 11,300,066
GRAND TOTAL: $ 12,115,584
Information on Institution Submitting Project Brief
13. Information on Project Proposer
This project has been developed and will be implemented by the Inka Terra Association (ITA), a not-for-profit, nongovernmental organization that aims to conserve and sustainably utilize biodiversity in Peru in conjunction with the local ecotourism company Inka Terra Peru (ITP). Although ITA is a relatively new organization, it contains highly capable and dedicated staff who have been working on biodiversity conservation in Peru for many years. The staff members have undertaken various conservation projects in conjunction with the Missouri Botanical Garden. These have included, for example, an orchid conservation project (which has been in operation since 1989), and a reforestation of the “cock of the rock” habitat (which has been in operation since 1983). ITA staff members have also implemented a conservation project for the spectacled bear (which has been in operation since 2000) and collaborated on a biological research project with the University of Kansas, which was financed by the National Geographic Society.
ITP has a long track record of promoting successful ecotourism in Peru. Since ITP began in 1976, it has grown into a multi-million dollar company that currently owns and operates a major eco-lodge located near Machu Picchu. ITP also has a wholly-owned subsidiary called Palma Real which operates an ecolodge called Reserva Amazónica (formerly Cusco Amazonico). Located in the Madre de Dios region of southeastern Peru, Reserva Amazónica is situated within a 10,000 hectare biological reserve (known as the Inka Terra Ecological Reserve), for which the company has a private concession.
ITA and ITP have been spearheaded by Mr. José Koechlin, a well-known leader of eco-tourism and biodiversity conservation in Peru. Mr. Koechlin is an Emeritus Board Member of Conservation International. Working through private sector business associations, Mr. Koechlin has encouraged the Peruvian government to pass laws for the development and promotion of sustainable tourism in Peru. And through his efforts with ITP and ITA, Mr. Koechlin has pioneered the use of scientific tourism as a vehicle for biodiversity conservation in the Amazon jungle. In fact, E.O. Wilson conducted his seminal work on ants at ITP’s privately managed biological reserve near Puerto Maldonado – identifying the area as having the world record for the number of ant species found in a single location.
14. Date of Initial Submission of the PDF-A Proposal
February 28, 2001
15. Project Identification Number
506050
16. Contact Person in the GEF Executing Agency
Mr. Sam Keller, Projects Officer,
17. Project Linkage to Implementing Agency Programs:
The GEF's existing portfolio in Peru aims largely at strengthening the country's capacity to implement the National System of Protected Natural Areas and developing a participatory approach to protected area management. There are several full-sized projects and roughly five medium-sized projects (MSP) under implementation by UNDP and the World Bank for this general purpose. The proposed Inka Terra MSP will complement these GEF projects by increasing the involvement of the private sector in protected area management. It will also complement these projects by demonstrating that some protected areas have the potential to be self-financing through on-site revenue-generation if appropriate market linkages are established.
The proposed Inka Terra MSP also builds upon IFC’s portfolio of biodiversity projects. IFC has provided support to various types of “biodiversity businesses”, which are commercial enterprises that help to conserve biodiversity. Either directly or through intermediaries, IFC has helped to finance organic agriculture companies, ecotourism companies, sustainable cocoa growers, a sustainable hearts-of-palm producer, a sustainable babassu producer, a shade-grown coffee producer, and a poison dart frog export company. IFC has also supported protected area management through innovative approaches in the Philippines (Asia Conservation Company) and Indonesia (Komodo National Park). The Inka Terra MSP builds upon these initiatives by providing a promising new model: An ecotourism company will manage several new attractions in order to increase revenues, which, in turn, will cover the long-term costs of managing a biological reserve and working with local communities.
The Inka Terra proposal does not overlap geographically with any other GEF project in Peru. Cooperation shall take place with an MSP currently under implementation by UNDP called Conservation and Sustainable Use of the Biodiversity of the Amarakaeri Communal Reserve and Indigenous Lands. Located along the south-eastern border of the Manu National Park, this project seeks to enhance biodiversity conservation through participatory preparation and implementation of management plans at several sites. The Inka Terra project will be coordinated with UNDP's activities to ensure maximum benefits from information sharing and lessons learned.
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Project Rationale & Objectives
InkaTerra is a Peruvian hotel owner and operator that specializes in facilities oriented towards eco-tourism. The company has been offering eco-tourism experiences since the mid-1970s, initially in the Amazon region and more recently in the Machu Picchu area. It has carefully managed its operations and it has been able to generate sufficient cash to slowly grow its properties while also helping to preserve and investigate the local ecology.
Due to its small size and limited product offerings, InkaTerra does not, as yet, have the ability to offer stand-alone vacation packages. Consequently, most of its guests tend to stay at its properties for only 1-2 nights. Inka Terra's business strategy is to expand its product range by developing hotels at two new locations, Cusco (the gateway city to Machu Picchu) and Puno (on Lake Titicaca), thereby creating a network of hotels in Southern Peru which collectively would provide eco-tourism and cultural experiences in three distinct zones -- the cloud forest (Cusco/Machu Picchu), the high andes (Lake Titicaca), and the rainforest (Amazonia).
Inka Terra believes that a network of this type will enable tour operators and clients to plan themed vacations centered around its properties, thereby creating complementary demand from one property to the next. In addition to increasing guest stay duration at its properties, the expanded network would also generate efficiencies from the company's centralized administration structure and in its sales efforts. IFC has agreed to provide an US$5 million loan for this expansion program.
In addition to this expansion program, an “incremental” proposal has been developed to save globally significant biodiversity in conjunction with Inka Terra’s Reserva Amazónica lodge in southeastern Peru. Reserva Amazónica has been in operation for over 25 years and was one of the first eco-tourist facilities developedin Peru.[1] During much of this time, Inka Terra has leased a 10,000 hectare area of tropical rainforest located adjacent to the lodge.
Known as the Inka Terra Ecological Reserve (IER), the company has supported considerable ecological research within this reserve. The studies carried out to date in the reserve have identified considerable biological diversity, including 136 species of mammals, 366 species of birds, 83 species of reptiles, and 362 species of ants. In fact, after conducting some of his seminal work in the IER, Harvard biologist E.O. Wilson cited the area as having more species of ants than any other location in the world. Many of the species of flora and fauna in the reserve were discovered there and some have not been found elsewhere in Peru.