Project Information Document (Pid) s16

PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB3838

1. Key development issues and rationale for Bank involvement

1. With an area of 167.000 km² and a population of 686.000 inhabitants[1] (66 % urban) the State of Acre lies on the western most part of the Brazilian Amazon, at the border with Bolivia and Peru, flanked by the states of Amazonas and Rondônia (see map in annex 1).

1. Acre’s rural population dwells mostly on river banks. Rural and indigenous communities live in dispersed small groups of homes placed at every three or five kilometers along these river banks. Acre’s rivers are the most sinuous in the Brazilian Amazon. Therefore travel times to basic services and markets can take from three to five days of river travel.

1. A history marked by a highly income-concentrating, single-product dependent economy (rubber), unsuitable colonization projects, geographic remoteness, lack of adequate infrastructures for basic social services and productive activities and a long distance from urban centers made Acre one of the poorest states in Brazil. Despite significant improvements in recent years, the state’s social and economic indicators are, in many areas, worse than the Amazon region’s average, which in turn is well below the Brazilian average.

1. Acre’s economy is fairly under-developed and highly dependent on federal government transfers (73% of state revenues)[2]. Agriculture accounts for 20% of GDP, industry has a very small share (11.5%), and the service sector is relatively large, with public sector employment inordinately large (33.4%).

1. The high transportation costs, distance to markets and peculiar geographic setting of Acre’s waterways have: (a) hampered Acre’s integration to markets leading to under develop private sector and; (b) made the provision of universal basic services extremely costly and difficult.

1. On the other hand, these limitations have helped to maintain 90 % of the state’s forest cover intact. It has also allowed for the traditional livelihoods that depend on the native forests–indigenous peoples and rubber tapers to be preserved. Currently, the State of Acre has 45.6% of its territory covered by protected areas, including Extractive Reserves[3], and Indigenous Lands.

1. Distance to national and international markets is being reduced at a fast pace by important investments in infra-structure. The State’s investments include: (a) paving of the BR-364 highway (Acre’s main connection to the rest of Brazil and the main state transport corridor); (b) transnational roads leading to the Pacific coast, through Peru and Bolivia and; (c) the construction of the Madeira River dams (Santo Antônio and Jirau in the neighborly State of Rondônia) which will eventually have locks allowing for transportation of goods from Acre to the Atlantic Ocean. This will increase effective demand for Acre’s forest products, and increased pressure on Acre’s well preserved forests will have to be carefully managed. While these investments are crucial to the State’s economy development, investments in the human development, and for the inclusion of Acre’s poorest to basic services in health and education, are crucial for maintaining the equilibrium between Acre’s economy, social development, and environmental conservation.

1. Thinking ahead of these events and seeking to take advantage of the opportunities while managing potential risks, the government of Acre (GoAc) has set forth a development strategy based on the sustainable use of its forest resources. To depict such a vision the state has coined the term Florestania, or “forest based citizenship”, a shared vision of Government and Society on a new local and regional development strategy, focused on a sustainable forest economy and based on social, cultural and environmental assets and on people’s participation. Under this proposed “new paradigm of development” the GoAc will support activities that would increase the value-added of its forest extractive industries; making forest land rents competitive vis-à-vis agricultural land rents, in a State with more educated and healthy people.

1. Despite the state improvements in the access to treated water, and the increase in the coverage of the Family Health Program -PSF (50% of the population), as well as the reduction of the child mortality (from 34.8% of new born in 1998 to 20.5% of new born in 2006); Acre’s infant mortality rate (IMR) continues to be the highest in the Amazon region. In fact, the disaggregated numbers of the IMR shows that both post-neonatal mortality (28 to 364 days, mostly affected by social-economic conditions[4]; and the early neonatal mortality 0-7 days mostly affected by the quality of the health care chain of the maternal and neonatal services), are higher in Acre than in Brazil and even than in the Northern region as a whole. This explains why Acre’s life expectancy is five years lower than Brazil’s national average.

1. Additionally, even when the number of doctors per person increased by 50%, Acre still requires additional personnel for remote, dispersed and rural communities with difficult access, Moreover, due its particular geography, Acre requires a different health delivery model for attending the dispersed population with mobile health teams (mobile PSF)[5]. Sixty percent of the territory lacks roads, and some border towns even lack water based transportation during certain seasons.

1. Improvements are also required in terms of the State’s quality of expenditure. As an example, Acre spends approximately 10% of its GDP (more than the national average) on health, with a per capita expenditure of around 250 USD by year. This is more than double that which Paraguay spends (111 USD per habitant per year) for having similar life indicators with similarly difficult geography and similar income levels.

1. Over the 1999 to 2006 period the GoAc made a concerted effort to improve its educational indicators: (i) the state yearly investments in education were increased by 615%; (ii) enrollment increased by 41% in secondary education and by 23% in basic education; (iii) dropout rates fell 18.4% and 44.3% in secondary and primary schools, respectively; (iv) university enrollment increased by 206%; and (v) the proportion of teachers in the state network of schools with completed higher education increased from 27 % to 63 %. As a result, Acre rose from the 26th place (second worse) in the National System of Basic Education Evaluation’s (SAEB) ranking in 2001, to 11th in 2005. Similarly, efforts aimed at modernizing and decentralizing key functions to municipalities and schools, which had been neglected for too long, have translated into better management and administrative practice at various levels of the system.

1. However, there are still challenges ahead that must be overcome to improve access to services, quality of service delivery and, ultimately, raise the competencies, skills and economic opportunities for young people entering the labor market. In particular, policies focused on improving retention in the first level of basic education, increasing access to secondary education, improving the quality of service delivery, increasing learning outcomes at all levels and increasing access to education opportunities in rural, isolated and ethnically diverse communities have been identified as priority areas for investment The Education Strategic Plan for Acre establishes several principles: (i) building a strong partnership between the state and municipalities to expand services; (ii) improving student learning as a priority area for investment, (iii) improving the effectiveness of educational policies and strategies, (iv) strengthening education management practice, and (v) improving institutional capacity and school-based management.

1. The Government’s Strategic Plan 2007/2010: Despite the significant results of the public policies in the recent years, starting in 2007, the Government of Acre decided to initiate a new cycle of institutional changes to take the state to new level of development. The recent experience has allowed the government to establish a set of policies and actions linked to strategic objectives and expected results. Three major strategic objectives were defined as follows: (i) guarantee basic public services with quality to all; (ii) strengthen the private sector to consolidate a clean, fair and competitive forest-based economy; and (iii) promote community empowerment. To achieve these objectives the Government has established a series of programs and strategies with specific actions for communities located in low-income defined areas.

1. Another important Government’s strategy is the support to the decentralization in the provision of basic services in health and education. Due to the weakness of the municipalities in Acre, the State Government has a tradition to provide and, frequently operate, the basic services, in health and education, even thought those services are by Constitution, a responsibility of the municipalities. A huge effort needs to be made to strengthen the municipalities to play their Constitutional role.

1. To strengthen the capacity of those municipalities as well as of the Secretariats responsible for these services, the Government has been developing several tools and mechanisms to increase their capacity of planning, monitoring and evaluation, as well as their capacity to provide technical assistance to sub-national agents. Strategic Planning exercises have been developed with all the social Secretariats. These exercises have permitted the identification of major issues in each sector, and the establishment of goals, key development objectives and targets for different regions and communities.

1. Rationale for Bank Involvement: The Acre Social and Economic Inclusion Project (PROACRE) is in line with the priorities of the 2008-2011 Country Partnership Strategy and related sector strategies, which focus on improving the well-being of Brazilians by fostering greater equity, sustainability, competitiveness and sound macroeconomic management. Additionally, and as an Amazonian state, Acre is within the focus of the Amazon Partnership Framework (APF, part of the CPS) on conservation and development in sensitive biomes, which aims, among other goals, at increasing access to basic services for the population living in the Brazilian Amazon and ensuring employment and economic growth through sustainable use of resources. Within the context of the “Human Development for Growth” agenda, the project aims at reducing inequalities, building human capital to increase opportunities for the poorest and at strengthening the quality of services in Acre. Also, the Bank’s extensive national and international experience on public management reform can support the institutional strengthening objectives articulated by the Government of Acre.

1. The Bank has been a partner on regional development policies in Brazil and in the Amazon since the late 80’s. Acre has benefited from several grants managed partially or entirely by the World Bank, including the Rain Forest Trust Fund (RFT) and GEF Amazon Region Protected Areas (ARPA). While ARPA contributed to the establishment of almost 28,000 km2 of protected areas in Acre, RFT supported the following initiatives: (i) Ecologic-Economic Zoning (ZEE) of the State and strengthening of the State Environmental Agency (SEMA) through Natural Resources Policy Program (NRPP) project; (ii) improved forest management, certification and monitoring, training on forest management and strengthening of a forest research/training center through PROMANEJO project; (iii) improved resource use and administration of Extractive Reserves through the RESEX project; and (iv) demarcation of indigenous lands / protected areas through the PPTAL project. The Bank’s involvement in the Brazilian Government’s Rainforest Pilot Program and its support to the demarcation of indigenous lands, extractive reserves and the preparation of the state’s zoning (under the NRPP project) give the Bank a privileged position to support GoAc in its efforts.

1. Proposed objective(s)

19.  The overall project development objective is to assist the Government of Acre in its efforts to promote social and economic inclusion of the poorest communities in the State. Therefore, the specific objectives to be targeted by the Project are:

·  the expansion of access to food security and to basic public services of health and education in the most isolated areas of the State;

·  quality improvement of health care (maternal and neonatal health care) in all of Acre’s territory, guaranteeing inclusion of poorest communities in these critical life events;

·  improvement in completion rates in the first level of basic education, increase in access to secondary education, improvement in the quality of service delivery and increase in learning outcomes at all education levels.

·  the strengthening of market productive chains for economic spatial integration of these communities in to Acre’s sustainable growth; and

·  the strengthening of the GoAc’s capacities as a steward in health, education, and rural economy for guaranteeing the institutional support and impact of poorest social and economic inclusion (the latter includes several secretaries involved in sustainable development of rural communities).

1. Preliminary description

1. Project Components: the project will consist of four components defined by a territorial approach. A brief description of each component is provided below:
2. Component 1 – Inclusion of Isolated Communities: This component would encompass the provision of basic education, health and community development services to the most dispersed state’s communities, in isolated areas with little infrastructure. In the health area the main target will be the expansion of PAC/PSF mobile teams for expanded coverage to the remote populations living in isolated and dispersed areas that face continuous constraints to services demanded. This would be through general Family Health mobile teams that would simultaneously deliver the State’s basic health portfolio of services in those communities and enroll these populations in the family health national program and in the Quality Insurance System for mother and neonatal (QIS-MN) care to be supported by the Project. Additionally, the component will provide health promotion and prevention services aimed at overcoming potential cultural barriers. The subcomponent would finance the 10 PSF mobile teams and also the contracting-out of those teams by the QIS-MN as necessary.
3. In relation to the education area the component objective is to provide a menu of services intended to universalize education opportunities for children, youth, young adults and ethnically diverse populations residing in isolated communities, where essential basic services are still lagging well behind more urbanized parts of the state.