DESIGNING BD2 PROJECT WHAT DID WE DO AT THE CO CROATIA

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DESIGNING BD2 PROJECT WHAT DID WE DO AT THE CO
CROATIA? UNDP/GEF COAST PROJECT CASE EE
PRACTICE COP MEETING Bratislava, Sept. 27 28,
2005 by Sandra Balent Environment Progamme
Associate UNDP Croatia
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Conservation and sustainable use of biodiversity
on Dalmatian coast through greening coastal
developmentPROJECT OF THE GOV. OF CROATIA
(MEPPPC) AND UNDP/GEF
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GEF BD2 COAST Croatia

GEF/UNDP COAST project BD SP2
BD2 objective ...to integrate BD conservation
in agriculture, forestry, fisheries, tourism and
other production systems and sectors to secure
national and global environmental
benefits... COAST project objective To
effecitvelly transform actions, practices and
approaches of private operators in the tourism,
agricultures and fisheries sectors in the four
coastal counties, in part by influencing the
banking sector, and thereby mainstram BD
conservation into these sectors.
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GEF BD2 COAST Croatia

• There are 4 integrated and inter-related
  outcomes
• BD-friendly development is demonstrated in four
  small but globally important productive
  landscapes
• An improved investment climate is formed across
  the four counties for BD-friendly enterprises
• Compliance with BD-related regulations has
  increased significantly across all sectors in the
  four counties
• A national level enabling environment is formed
  that appreciates, supports, institutionalises and
  disseminates BD-friendly development in coastal
  areas.

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GEF BD2 COAST Croatia

• How did we get there?
• (Through PDF A and PDF B, of course... -)
• The PDF B (March 2004 May 2005)
• Analyses of problems and barriers at the sectoral
  level
• Possible solutions to problems (using tools and
  drivers)
• Drafting project brief accordingly
• Through PARTICIPATION and PARTNERSHIP
• Mix of expert-work (group of 23 guided by the
  project manager) local and national-level
  experts (a few intn.)
• Sectoral Focus groups 8 workshops (tourism,
  fisheriesmariculture, multi-sectoral, banks,
  PAs)
• Meetings and consultations at national, county
  and local level (over 250)

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GEF BD2 COAST Croatia

• Innovative and demonstrative aspects of the
• project strategy (BD-mainstreaming)
• Demonstrating barrier removal and change
• Modifying the banking and loans sector to ensure
  financial sustainability
• Using secondees to mainstream BD into the
  work-programmes of key organisations (ownership
  and sustainability)
• Directly catalysing pro-BD initiatives by local
  stakeholders
• Comprehensive partnership building and exploiting
  a participatory approach
• Targeting the EU accession process

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GEF BD2 COAST Croatia

• Why the banking sector?
• TWO (of 5) barriers identified are
• unsupportive investment climate for private
  sector
• lack of financial/fiscal incentives
• ...AND
• SMEs are important stakeholders across the coast
• An optimal way to influence them is through the
  capital supply from banks (90 of all finance
  available) but also from public sector credit
  schemes
• At present, available fiscal tools are considered
  administratively complex and inaccessible to SMEs

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GEF BD2 COAST Croatia

• ...AND why BANKS?
• Important bank stakeholders are keen to cooperate
  (10 commercial banks, the national development
  bank HBOR and Croatian Association of Banks
  representing 83,5 of total assets of Croatian
  banking sector)
• Banking sector as the key entry point for BD
  mainstreaming into local economic development, at
  present is unaware of BD-issues and unable to
  assess investment risks associated with
  environmental impacts

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GEF BD2 COAST Croatia

...SO WE DESIGNED THE PROJECT AS... Project
Outcome 1 BD-friendly development demonstrated
in four demo-sites. Demonstration of how to
remove barriers to mainstraming BD into economic
activities at the local level. Demonstrate
benefits in terms of BD and for the
economy. Project Outcome 2 An improved
investment climate is formed across the four
counties for BD-friendly enterprises. Aims to
make the private sector more willing to invest in
BD-friendly production and to increase the supply
of BD-friendly loans.
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GEF BD2 COAST Croatia

• What is BD-friendly investment?
• Sustainable tourism facilities (trails, visitor
  centres, visits to sites)
• Restoring abandoned land with traditional
  species/cultures, restoring terraces, hedges,
  rubble walls and combine them with eco-tourism
• Developing organic farming and indigenous
  branding
• Relocating fish-farms, expanding shellfish farms
• Investing in smart fishing gear

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GEF BD2 COAST Croatia

• HOW we make SMEs to invest in BD?
• Increase the availablity of affordable capital
• Develop market premiums for BD producst,
  incentives
• Incetive tools certification schemes
  (BD-friendly tourism operators, organic produce,
  smart fish catches...)
• Support integration of PAs into tourism packages
  in a BD-friendly way, increase revenues from PAs
• Improve the approval process for BD-frinedly
  investment
• Increase demand for capital and provide technical
  support for new activities, for loan applications
• Targeted awareness campaigns
• Increase consumer demand for BD-frinedly services
  and products

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GEF BD2 COAST Croatia

• How we work with banks to increase the supply of
  BD-friendly loans
• Develop programme of loans focussing BD-friendly
  investments
• Training banks staff, develop guidelines for
  banks
• Incorporate BD considerations into banks lending
  practices
• Explore banks potential to develop a green niche
• Develop a system of partial guarantees to reduce
  the risks banks face when lending for BD-friendly
  investments
• ...We focus on modifying investments in order to
  be BD-friendly

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GEF BD2 COAST Croatia

• All nice, and then we got the comments ...
• 1. The terms of partial risk guarantees have not
  been negotiated?
• It is a process. Requires time. The bank is not
  ready to invest much into negotiations before
  having a committed partner and before having
  performed an assessment of market potential. The
  bank has procedures and wants to be very sure and
  at low risk.
• Start early.
• Create partnership and trust.
• Engage an excellant finance specialist who talks
  their language. (count it costs! )
• Build on already proven concepts familiar to
  banks (energy efficiency partial risk guarantees
  fund...)

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GEF BD2 COAST Croatia

• 2. It is not clear that the proposed banking
  reforms have been reviewed in the context of the
  safety and the soundness of the overall banking
  system?
• Of course they have. We havent explained it
  clearly and straight away. DO IT!
• AND
• Be absolutely sure you know what you mean by
  using specific words and concepts.
• Do not be general nor vague.
• Be very specific and backed by data and facts.

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GEF BD2 COAST Croatia

• OTHER TIPS...
• Competent, experienced, dedicated, full-time
  project manager
• Project office in the project area and in already
  functional unit
• Flexible and operational team, supported by UNDP
  CO (DEX)
• Participatory approach and transparency time
  and resources!
• Project visibility and PR strategy
• Critical a high-level political support (NPD)
  appointed by national agency (MEPPPC)

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THANK YOU!