BRAZIL:Sustainable Land Management in the Semi-Arid Sertão Project

Project Concept Note and request for a PDF B

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Global Environment Facility

Proposed Project Concept and request for a PDF Block B Grant

Country:Brazil

Project:Sustainable Land Management in the Semi-Arid Sertão

Country’s Eligibility:Brazil ratified the United Nations Convention to Combat Desertification in 1997, the Convention on Biological Diversity (CBD) in 1994, and the UN Framework on Climate Change (UNFCCC) in 1994

GEF Executing Agency:IFAD – International Fund for Agricultural Development

GEF Implementing Agency:To be determined during Block B phase

National Implementing Agency: Ministry for Agrarian Development - MDA

GEF Focal Area: Land Degradation

GEF Operational Program: OP #15: Sustainable Land Management

GEF Strategic Priority (SP): The proposed project fits SP1 (capacity building) and SP2 (implementation of innovative sustainable land management practices) for Sustainable Land Management

Project Cost (tentative):USD 56.55 million

Financing Plan:GEF: USD 6.0 million (indicative)

IFAD:USD 25.0 million

Federal Government:USD 25.55 million

Duration:5 years

PDF Block B Request:USD 300,000

PDF Co-Financing:Federal Government:USD 16,000 (MDA/FIDA - PDHC)

Global Mechanism UNCCD:USD 61,000

Table of Contents

A. BACKGROUND AND ISSUES ...... 3

B. BASELINE SCENARIO ...... 7

C. PROPOSED GEF PROJECT ...... 10

D. PDF-B REQUEST...... 18

ANNEXES

Annex A – Map of Annual Rainfall...... 21

Annex B – Map of Desertification in Brazil...... 22

Annex C –Existing (UNDP/MMA) and Proposed (WB/State Governments and IFAD/MDA)

Full-sized GEF Projects in the Caatinga Biome...... 23

Annex D – Bibliography...... 26

A. Background and Issues

Brazil’s biodiversity patrimony is unique, resulting from the country’s large number of climate zones, ranging from the humid tropics to semi-arid and temperate areas. These characteristics contribute to making it one of the world’s megadiverse countries, comprising five ecologically differentiated bio-geographical zones (biomes), distributed throughout the country’s vast area of 8,5 million km2, i.e.: i) the Amazonian tropical rain forest (world’s largest standing tropical rain forest), ii) the Atlantic forest (one of the five "hottest hotspots" among the world’s 25 top priority conservation areas), iii) the Pantanal (the world’s largest wetland), iv) the Cerrado (vast high-altitude moorlands, comprising the largest extent of savanna in any single country), and v) the Caatinga (expanses of semi-arid thorn forests). In addition, there is more than 7,000 km of coastal and marine ecosystems.

The north-east Brazil’s semi-arid Sertão region covers an area of 980,711 km2 and is also the home to a population of 19 million inhabitants (20 inhab/ km2). Within the Sertão, the Caatinga is the predominant ecosystem. It consists of several kinds of tropical thorn scrub ranging from tall scrub forests to savannas dominated by cacti. The caatinga biome holds an exceptional level of species endemism (approx. one third of its 600 species of shrub and trees is endemic), and appears to be rich in biological diversity (414 species of fauna have been described, and are represented by 95% of birds, 20% of mammals, 11% of reptiles and 4% of amphibians).

In addition to the biodiversity associated with wildlife and plants, it should also be noted that the region’s smallholder agriculture sector constitutes a rich source of agro-biodiversity, including a wealth of local breeds and landracesfrom a diverse range of crops, including species introduced into the country over the last several centuries. Most of the plant species are subsistence crops such as manioc, sweet potato, corn, green beans and yam. Due to their tradition and adaptation over centuries, some rural communities maintain rare varieties of such crops that may be resistant to emerging pests and diseases. Animal species include local breeds of donkey (very valuable in cargo transportation), cattle, sheep and goats[1].

Despite its renown as an important habitat for terrestrial biodiversity, the natural systems of Sertão are directly threatened by land degradation/desertification. Desertification studies carried out in Brazil indicate that the whole semi-arid Sertão area is prone to desertification (see Maps in Annexes B and C). Desertified lands have been classified in three categories of severity: moderate (358,037 km2), high (384,030 km2) and very high (238,644 km2). These studies also estimate 20% of the total semi-arid Sertão land area of North-East Brazil (i.e. 197,897 km2) is already affected by desertification (at different degrees of severity), threatening directly or indirectly the livelihood of about 15 million people (i.e. 78% of the semi-arid population). An estimated 10% of the total semi-arid land area (i.e. 98,595 km2) is affected by high desertification levels; 8.3% (i.e. 81,870 Km2) is affected by very high desertification levels; and 1.8% (i.e. 17,432 Km2) is extremely desertified. Moreover, an estimated 30% of the irrigated land area (i.e. 180,000 ha) is affected by salinization, water erosion and soil compaction. In addition, the desertification issue seems to be worsening (e.g. the deforestation of the semi-arid is 1% per year, corresponding to an annual loss of 9,000 km2).An estimate of the accompanying economic costs associated with desertification is US$ 300 million per year[2].

Principal underlying causesof land degradation affecting the structure and functional integrity of the Caatinga ecosystem include:

Underlying Causes of Land Degradation / Desertification
Types of Land Degradation
(leading primarily to loss of natural productivity of land and loss of sequestred carbon in soils)
Soil vulnerability to water erosion / - overgrazing and excessive trampling leading to increase in surface run-off and erosion
- inappropriate agricultural practices such as inadequate contouring in crop systems and inappropriate irrigation practices
- high poverty and land tenure issues (see tenure issues below) leading rural workers and landless people to focus on meeting short-term economic needs, to the detriment of the soil conditions
Soil fertility loss / - overgrazing
- reduction of fallow periods in rainfed agricultural lands
- unsustainable agricultural practices
- high poverty and land tenure issues (see tenure issues below) leading rural workers and landless people to focus on meeting short-term economic needs, to the detriment of the soil conditions
Soil salinization in irrigated croplands / - inappropriate irrigation practices (soil salinization covers about 30% of 600,000 ha that comprise the total irrigated cropland)
- high salt content of soil and waters as a result natural geological characteristics of the Semi-arid
- shallow soils and presence of significant erosion plains associated with natural geological formations
Environmental Issues
(leading primarily loss of native biological richness, increased release of carbon dioxide)
Deforestation (increasing pressure on natural habitats) / - reduction of fallow periods in rainfed agricultural lands leading to additional deforestation
- unsustainable exploitation of scrub species for fuelwood and firewood (mainly for cooking), representing 30% of the energy consume in the North-East Brazil (second energy source, after hydropower)
- expansion of the agricultural frontier and semi-intensive livestock practices
- high poverty and land tenure issues (see tenure issues below) leading rural workers and landless people to focus on meeting short-term economic needs, to the detriment of the environment
Thinning out of ecosystems vegetative cover, leading to loss of bioviversity / -overgrazing (of Cactaceaeplants) leading also to the reduction of most palatable species
- deforestation (see above)
- prolonged droughts

The following are the principal constraints interfering with achieving progress leading to the adoption of cross-sectoral approaches that address the aforementioned issues and lead to sustainable land management, while addressing rural poverty:

  • limited human and institutional capacity to create an enabling environment needed to support sustainable land management and to combat desertification at the state and local levels;
  • absence of in-depth analysis to better understand the policy and institutional failures that drive land degradation and to facilitate the refinement and adoption of innovative sustainable land management practices and technologies, to restore and maintain ecosystem functions and services, as well as to create new livelihood opportunities;
  • limited technical assistance and financial resources to promote on-the-ground investments that in turn would support sustainable agriculture and rangeland/pasture management;
  • lack of data and information necessary for decision-makers to incorporate sustainable land management considerations into production activities;

Socio-economic Issues

The table above shows that the smallholder agricultural activities also contribute to desertification of the semi-arid Sertão lands, particularly through the reduction of fallow periods, overgrazing and unsustainable rainfed agricultural practices. However, one major “driving force” which has contributed to the present environmental and socio-economic situation has been past rural policies, which were historically aimed at assigning priority to mono cropping (particularly sugar cane and cotton) and extensive cattle-raising. Currently, extensive livestock is the main economic activity in Brazil’s semi-arid Northeast.

Smallholder agriculture is suffering the effects of these policies that have significantly increased rural poverty in the Northeast Region, the most undeveloped of the country, with family income profiles equal to the poorest of Latin America.Social indicators are below the national average with above average unemployment and under employment rates, and poverty affecting half of the population. In the rural sector, 12 million inhabitants earn incomes below poverty levels, with 5.4 million inhabitants living under extreme poverty conditions.

Agricultural policies adopted in the past, particularly up until the early 1990s, emphasized assistance to medium and large producers, with little regard for the essential integration of environmental and social sustainability into development and poverty strategies, to alleviate poverty and improve rural livelihoods. These policies also promoted adoption of unsustainable agricultural practices (both rainfed and irrigated) without regard to landscape characteristics, and which promoted the advance of the agricultural-livestock frontier which, in turn, substantially reduced native vegetation cover without adequate attention to economic, environmental and social sustainability consequences.

These “policies of exclusion” adversely affected the lives of many smallholder producers and rural workers throughout the Sertão and contributed to an increase inrural poverty associated with low agricultural productivity (hence, with loss of natural productivity of land), declining agricultural incomes, deterioration of soils and economic isolation. Currently, the mainsocial social issues and associated causes of land degradation in the Caatinga ecosystem are:

Social Issues / Underlying Causes
Land tenure issues leading rural workers and landless people to focus on meeting short-term economic needs, to the detriment of the environment / - concentrated land tenure
- land insecurity or badly defined land use rights[3]
Increased rural poverty associated with desertification, drought and
land tenure issues / - land tenure issues (see above)
- periodical and cyclical droughts, affecting 10 million people with food insecurity and lack of water[4]
Reduced incomes, worsen livelihood conditions and intensification of rural exodus / - lower crop productivity and yield reductions associated with erosion and loss of soil fertility and biodiversity (see underlying causes above)
Gender issues / - non-participation in decision making and little or no access of women to training, including those to better understand their interactions with the ecological systems of the Sertão;
-lack of awareness of gender issues (though those will be addressed by the baseline project PDHC)

The previous paragraphs describe the problem of land degradation in the semi-arid Sertão and its global implications, i.e., the existing situation of land degradation in the semi-arid Sertão is leading to both social and global environment issues. It is adversely affecting the structure and functional integrity of the Caatinga ecosystem, and they are primarily manifested ini) loss of natural productivity of land, ii) loss of native biological richness, and iii) increased release of carbon dioxide and loss of sequestred carbon in biomass and soils.

New Policies and Development Strategy

The Government of Brazil (GOB) is well aware of the significance of poverty, desertification and drought issues in the semi-arid Sertão region of North-east Brazil, as well as the inter-relationships among them. In light of this situation, it has focused efforts to develop the “National Policy for Fighting against Desertification” and to establish and implement a number of programs to address poverty at its very center, taking into account the social structures and land ownership as well as paying proper attention to education, training and communication in order to provide the basis for an integrated approach which alone can effectively combat desertification. In support of this new policy, the Ministry of Agrarian Development (MDA), a key player on the country’s rural development, launched a number of initiatives to provide technical and financial assistance to rural smallholders and to address land tenure issues. In many cases, these programs have attempted to incorporate concepts of environmental management and sustainability associated with decentralized rural development at the community, municipal, provincial and national levels, working with local governments, non-governmental organizations (NGOs) and producer groups. A number of international financing agencies (including IFAD, in line with its mandate) have supported this approach through loans for rural development projects whose primary objectives are to improve the living standards of the rural poor.

The 1997 “National Policy for Fighting against Desertification” is the GOB’s major policy instrument for dealing with land degradation issues. Among the principles of this policy are i) the country’s responsibility before the international community, reaffirming its commitment to combat desertification in conformity with the UNCCD, and ii) the participation of civil society in the prevention and control of desertification. One of the specific dispositions of this policy is to prepare and implement the UNCCD National Action Program (NAP), currently under preparation by the GOB (with support from the Global Mechanism of the UNCCD).

In addition, these new policies and development strategies will promote the implementation of the seven Millennium Development Goals (MDGs) in the country, particularly those three goals related to i) eradication of extreme poverty and hunger, ii) promotion of gender equality and empowerment of women, and iii) ensuring environmental sustainability. Regarding the latter, the World Bank Country Assistance Strategy (CAS) Progress Report (2002), jointly prepared by the GOB/WB, stresses the support to improve environmental sustainability, and states that the next full CAS to be prepared soon would lay out how international assistance would help Brazil achieve a set of indicators adapted from the seven MDGs, including “ensure environmental sustainability”.

Moreover, to demonstrate the country’s commitment to address social and poverty issues, the GOB has formulated and is in the process of implementing a number of initiatives through a programmatic approach. Among these initiatives, the following major actions and priority policies should be pointed out at national level: i) focus on approaches that strengthen the access (and rights) of the poor to social services; ii) national programs to promote income increase, new employment opportunities, and improved living conditions, including those to support smallholder agriculture (see baseline programs below), agrarian land reform (National Agrarian Reform program), and access to micro-credit (various programs); ii) programs target at the most vulnerable population groups, such as the Projeto Fome Zero – PFZ (Zero Hunger Project), a GOB highest priority to the eradication of hunger; the project Bolsa-Escola (School Bursary program),a public policy on minimum income and education to ensure that every child between 7 and 14 years of age has access to basic schooling; and the national program on Eradication of Child Labor.

Projeto Fome Zero places primary importance on the reduction of hunger, malnutrition and extreme poverty. Such an approach is inspired by the World Food Summit and Millennium Development Goals, which call for cutting hunger and extreme poverty by half by 2015. Extreme poverty – inadequate resources to produce or to acquire enough food – is estimated by PFZ to affect 9.3 million households or 44 million people in Brazil. While a national problem, occurring throughout the country, extreme poverty has certain regional “pressure points”, with a concentration of the poor in the North East Region (50%) and the South East Region (26%).

B. Baseline Scenario

GOB presently supports a number of programs which provide assistance to farmers in the poorest rural areas of the semi-arid Sertão. While all of these programs incorporate the concepts of financial, social and environmental sustainability, they are generally applied at the on-farm or, at best, community level. Thus, while these programs do provide assistance for activities related to GEF Operational Programs on semi-arid ecosystems, their localized and sector-by-sector approach prevents them from supporting the broader strategies needed to promote more sustainable land management and to combat desertification. However, many of these existing programs, particularly IFAD’s project portfolio in Brazil, do provide the basis for baseline activities consistent with OP15: (i) they address land tenure issues; (ii) they improve the access by the rural poor of current GOB financial services and credit lines; (iii) they tend to work with a broad range of actors, including government, private sector and NGOs; (iv) they utilize participatory methodologies which facilitate community-based management approaches consistent with developing and implementing a broader strategy; and (iv) they promote gender sensitization and training in gender-oriented field methodologies in the implementation of projects, hence empowering women and promoting equality between women and men.

Two of the most relevant programs identified as baseline activities, consistent with OP15, are described below. Under the proposed Block B Grant phase, this list of programs may be expanded and their activities reviewed in detail to provide a more exact estimation of the proposed project baseline.

Sustainable Development Project for Agrarian Reform Settlements in the Semiarid of Northeast

The Sustainable Development Project for Agrarian Reform Settlements in the Semiarid Northeast(theProjeto Dom Helder Camara - PDHC) started in 2002, under the responsibility of the MDA, and is financed by the International Fund for Agricultural Development (IFAD). The overall PHDC goal is the sustainable improvement of social economic conditions of poor agrarian beneficiaries and neighbouring smallholders in the semi-arid Sertão. The project’s general objective is to improve the capabilities and involvement in the local market of beneficiary families, to enable them to manage more efficiently and sustainably productive activities in agriculture, marketing, micro-enterprise and small-scale agro-industry. Additionally, it will allow them to use financial services within normal market procedures. These will be achieved through the implementation of three components: