Titicaca Lake

The Titicaca Lake is a touristic destination for many foreign visitors. It is a large, deep lake in the Andes on the border of Bolivia and Peru, often called the "highest navigable lake" in the world. By volume of water and by surface area, it is the largest lake in South America. It is an important asset to the area due to its natural values and biophysical  characteristics and dynamics. The degradation of this fragile natural system requires  the implementation of protection and recovery measures in order to preserve this  area and the ecosystem services that it provides. The environmental  awareness and scientific research are recognized to be crucial to the conservation  and protection of this area.

The Aymara and Uros cultures represent an important heritage, both in the structural organization, partitioning and rational use of landscape and through the presence of ruins of cultural and architectural value. Human interventions in this territory resulted in the appearance of new habitats and ecological niches, which are important nowadays for nature preservation.  Making this space available for visitors represents a unique opportunity and a great asset for both Peru and Bolivia, and it will also contribute to preserve and maintain this precious cultural landscape that is a central part of the collective memory.

Lake Titicaca has held an important place in the cosmology of neighbouring peoples since prehistoric times. The ancient myth holds that the creator god Viracocha rose up out of its waters to create the sun, moon and stars.

The hotel industry and transport industry (boats), as an important component of the tourism sector, involves many activities that have adverse effects on the environment. The high level of resource utilization (energy, water, consumables) in hotel facilities required to meet the need of hotel guests, and the pollution generated (wastewater, solid waste, air pollution, etc. ) by this sector, highlight the importance of hotels’ participation in environmental sustainable practices. Besides this, green consciousness has grown among tourists, who have a better appreciation for practices implemented in hotels. Therefore, in order to reduce the environmental impacts and respond to the recent increase in environmental awareness among tourists, several hotels have demonstrated their corporate commitment to sustainability.

There are many problems with the wastes (including toxic ones) and water waste. These days the shores of South America’s largest lake are littered with dead frogs, discarded paint buckets and bags of soggy trash. Less visible threats lurk in the water itself: toxic levels of lead and mercury.

Strong urban and tourist, demographic pressure on habitats, unregulated tourism, degradation of natural spaces (especially islands).

The world Bank organized a special project for sustainability : The development objective of the Lake Titicaca Local Sustainable Development Project for Bolivia is to improve the quality of life of the basin's residents - whom depend on the health of Lake Titicaca for their economic livelihoods - through: 1) protection of the Lake's long-term water quality and ecological vitality; and 2) local economic and social development activities that support tourism development for the communities surrounding the Lake. The project's overall implementation progress and its progress towards achievement.

It started in 2007 and ends in 2015. The total Project Cost was US$ 23.01 million. 

The project was envisioned to undertake projects to improve tourism and basic services in the Lake Titicaca Region including docks, rural water supply, solid waste management systems, urban water supply, drainage and wastewater treatment, tourist centers and signage for tourist areas. The implementation was delayed initially due to institutional deficiencies of the executing agency at the beginning of the project. A restructuring was undertaken to transfer the responsibility to FPS with a focus on the execution of the works. 

The project is in line with national development objectives as stipulated in the National Plan for Basic Sanitation 2009-2015 and a National Tourism Plan which considers tourism as the overarching and cross-cutting theme that can support development in the country. It is also in line with the priorities in the Bank’s CPS for 2010-15.

. M&E Design

The project included a set of indicators to measure the outputs (intermediary outcomes in the PAD and ICR) and three indicators to measure progress on outcomes related to tourism, service delivery and on coordination and information sharing. The indicators to measure outputs were clear and relevant but this is not the case for how outputs lead to outcomes and the PDO. Three indexes were identified to measure outcomes: the Geo-Tourism Score the Urban Environmental Sustainability Index and Quality of State of the Lake Report. Apart from the latter index, the two others do not present a logical chain between outputs and outcomes and neither can the attribution of the project to the PDO be assessed. Target values for the Outcome and Intermediary indicators were identified and the targets for the Intermediary indicators (these were outputs as discussed under the components above) were adapted at both restructurings. At the second restructuring, both the Geo Tourism and Lake report were dropped and at closure, the targets for the Urban Environmental Sustainability Index were not achieved. Both restructuring papers revised the outputs and the key output indicators, but remained largely inappropriate with regards to the achievement of the PDO. The indexes were also dropped and no indicators were provided to measure the contribution to the PDO. ICR, page 14. b.

M&E Implementation

The project included a set of indicators to measure the outputs and three indicators to measures progress on outcomes related to tourism, service delivery and coordination and information sharing. After the restructuring in 2010 some of the output targets were revised to allow for more realistic monitoring of results (ICR, page 6) and again in 2012 with dropping most of the outputs for components. Since implementation was so slow there was little to monitor and measure while the VMT and PCU were low in capacity. It was only under the FPS that subproject progress was monitored and some of the outputs measured. The ICR reports on subproject development projects after the restructuring in 2012 and works introduced in 2014. For the three indexes, one State of the Lake Report was produced as a baseline with the assistance of the World Bank team but no additional reports were produced due to insufficient ownership and continuity. The Environmental Sustainability Index was monitored but failed to meet the 4 of the 5 indicators. (ICR, Annex 2 page 26). The inter-institutional committee (ICSDLT) and workshops that were intended for monitoring and communication were never put into operation. (ICR, page 14) The ICR concludes that the monitoring of results indicators was not systematically carried out. ICR, page 22. c.

M&E Utilization

Given the unsatisfactory performance of the two key actors responsible for M&E and cancelling activities, the use of M&E was limited. The ICR does not report on this aspect. Use of this monitoring framework to measure intermediate outcomes and evaluate Project impacts was limited in Bank and FPS monitoring reports until the time of the ICR. This was due to limited results until the last year of the Project and the indicators did not reflect the outputs of subproject preparation, contracting and execution which was the focus of the supervision. (ICR, page 13 and 14 )

These are various indicators :

• Number of rural towns provided woth improved water and sanitation services

• Urban Environmental Sustainability Index for key communities (20 completed)
• Number of Tourism Studies - COMPLETED (3)
• New piped household water connections that are resulting from the project intervention (All connections in the rural water supply projects are communal. None of the urban water supply projects will be completed)
• Number of other water service providers that the project is supporting (6)
  
• Number of people in rural areas provided with access to Improved Water Sources under the project (Populations of Puerto Perez and Laja were targeted)
• Number of people in urban areas provided with access to Improved Sanitation under the project (?)
  
• Number of cities with adequate solid waste services (7)
  
• Number of urban communities provided with adequate wastewater services (3-5)
  
• Direct project beneficiaries (number not uploaded)

Objective 1

Objective Facilitating local activities that support tourism development and cultural protection in the communities surrounding the Lake Rationale Outputs: • Tourism improvement projects. The target was set at 100 tourism improvement projects and 2 were achieved at the end of the project. • Cultural sites protected: the target was 20 and 0 achieved. • Small businesses supported. The target set at 100 and there were no achievements • The project under the component institutional strengthening had an output of tourism studies completed of 4 and 2 were completed at closure. The information in the ICR is inconsistent in reporting on this target and contradicting tables suggest that the target was eliminated at restructuring but that nevertheless one study was completed. Outcome The outcome was not achieved to any significant degree and the evidence provided in the ICR is very limited. Tourism as an engine for development combined with improved water, sanitation and waste services for local communities would provide these communities with considerable opportunities to improve their lives (health) and income from tourist activities. The ICR fails to explain, for example, why the support to small business related to the tourist sector did not receive the necessary investment. There is no discussion in the ICR, nor evidence from the project as to who benefitted from the few tourist improvement projects that were completed.

Revised Objective : Facilitating local activities that support tourism development and cultural protection in the communities surrounding the Lake Revised Rationale Outputs: • Tourism improvement projects - The target was set at 100 tourism improvement projects and 2 were achieved at the end of the project. The target was revised to 31 at restructuring, but was still high given that the project was so close to closure. Only 2 tourism improvement projects were completed after restructuring. • Cultural sites protected. The target was 20 and at restructuring the achievement was 0 and the output was dropped at restructuring. • Small businesses supported. The target and outputs were dropped at restructuring. • The project under the component institutional strengthening had an output of tourism studies completed. The target was 4 and at restructuring the target was reduced to 2 which was achieved at closure. The information in the ICR is inconsistent in reporting on this target and contradicting tables suggest that the target was eliminated at restructuring but that nevertheless one study was completed. • At restructuring, activities aimed at promoting the region were added as an output and the original target of three studies was achieved but these studies have had no follow up and were not tracked to assess their impact on the outcome in any significant way. Outcome • Targeted cultural heritage investments and Community demand driven small-scale investments for tourism. The outcome was not achieved to any significant degree and the evidence provided in the ICR is very limited. Tourism was to improve lives, but there is no evidence that this in fact occurred. Moreover, adding an output at restructuring like “Activities aimed at promoting the region’s international tourism potential” does not make sense if the tourist sites had not been improved and local communities were not in a position to provide the services required of tourists.

Revised Rating : Negligible

Objective 2

The basic services in water, sanitation and waste services improved for rural and urban communities. Rationale Outputs: • Small scale water and sanitation structures had a target of 20 which was exceeded since 39 were achieved. • Urban communities with adequate wastewater services was set at 5. The ICR is inconsistent in its reporting: the achievement is 1 ( ICR page, viii) versus achieved 0 ( ICR, page 19, para 95) • Cities with adequate solid waste management was targeted at 3, This was exceeded at project closure with 4. For all three outputs the World Bank Core indicators overview provided in the ICR ( page 27) does not link a specific output to the component outputs but to the project. This makes it impossible to assess what has been achieved per component. In sum the achievements are: • Rural Water Supply Systems: 34 communities in 4 municipalities benefiting and 8,414 people • Rural Sanitation Systems: 3 municipalities benefitting a population of 2,536. • People provided with access to “Improved Water Sources” under the project 8,414 • New piped household water connections that are resulting from the project intervention 1,974 • Water utilities that the project is supporting 31 • People provided with access to “improved sanitation facilities” under the project 2,536 • Improved latrines constructed under the project 634 • Sub-projects or investments for which arrangements for community engagement in postproject sustainability and/or operations and maintenance are established 100% • Industrial and municipal waste disposal capacity created under the project (tons) 16,617 • Contaminated land managed or dump sites closed under the project (ha) 0.75 • People in urban areas provided with access to regular solid waste collection under the project 19,362 Based on the above outputs it is impossible to verify how the targets have been achieved : it is a mixture of different outputs. The ICR reports that ‘in the last year, the Project would implement what was ready to be implemented in the time period and could consider new projects that were outside the original scope of the targeted investments but supported the PDO’. (ICR, page 12,13, para 61,62) The ICR indicates that 10 new works were added works in rural water supply systems in two municipalities; rural sanitation systems in two municipalities; additional solid waste equipment in four municipalities; and a sewerage system in one municipality. The total beneficiary population for basic services was 27,776 two years after restructuring ( 2012-2014). The project entered a third phase introducing the additional works increasing the number of beneficiaries benefitted under the project from 30,041 to 57,817. Achievement to improved basic services in water, sanitation and waste services for rural and urban communities is achieved is rated modest under the original target. Rating Negligible

Revised Objective

The basic services in water, sanitation and waste services improved for rural and urban communities. Revised Rationale Outputs: In sum the achievements are the same as under the original rating, though many more had been completed and the disbursement rate increased significantly following the restructure. At restructuring it was clear that the project could not deliver satisfactorily in both components and that is was very unlikely that sustainable development in the Lake Titicaca region would be achieved.

The ICR does not address the extent to which – after restructuring – the project contributed further to the development objective. The results framework and output indicators were not revised and there is little information on how the reduction in PDO indicators provides a better overview of the project's achievements.

Revised Rating : Modest

For Component 1, the Project benefits were calculated based on projected increases in the volume of tourist visits based on historical trends, the average length of stay in the area and the average expenditure per tourist in the Region. (PAD, page 20 and ICR, page 9 Annex 3). Disappointingly, this approach was subsequently dropped and we do not see what impact, if any, the project had on the tourism sector with regards to costs and benefits.

For Component 2, a detailed economic cost benefit analysis was conducted from a sample of 21 potential subprojects (PAD, page 20). The main benefits of these projects are improved water services to 5,545 beneficiaries in 21 small communities in the municipality of Laja. Of the 21 pilot projects, 12 were found to be economically viable with a NPV average of US$44.85 and an average of IRR of 29 percent. This calculation covers only part of the basic services component. Several assumptions underpin this analysis, including investment, economic, maintenance and operations costs, incremental benefits and discount rates. The conclusion is that the economic analysis is a conservative estimate of the economic impacts of the financed investments. ( PAD, page 85). At appraisal the timing of the project was considered ‘good’ since the Government prioritized tourism as one of the key sectors for the country’s economic development. (PAD, page 86). The ICR did not undertake an economic analyses for small activities in the Tourism component since most of the outputs were dropped. There is no analysis for the few activities that remained. For the ICR ( page 19) an economic analysis was undertaken covering the subproject investments under the basic services component ( Water Supply Projects, Solid Waste Management Systems and the Sewerage Project) but all used different methods and values compared to the PAD. Moreover, the Sewerage Project is part of a larger investment which was not yet completed. The ICR (page 19), however, reports that a net present value (NPV) of USD 2.1 million and an internal rate of return (IRR) of 15.8% were obtained. The economic analysis of the investments reported in the ICR indicated the investments met the standard based on economic efficiency or cost-benefit analysis. These analyses are sub component specific and do not correspond to the economic analysis at appraisal. Moreover, some works were added outside the Bank’s investment which is not reported upon and therefore it is not clear whether these are included in the calculations. The ICR, however, provides costs per community or town per activity and calculate the costs per beneficiary. User fees were expected to cover O&M costs ( PAD, page 11) and the ICR reports on work undertaken to assess the willingness to pay for such services. It is uncertain, however, whether that willingness still exists after a considerable delay of implementing the works. An additional assumption is that water and waste companies are fully functioning which is not commented upon. Administratively, the project was expensive to administer and was plagued by various delays that made it difficult to achieve the PDO. The preparation and supervision costs of 23% are unreasonably high and there is little evidence that the project sought to find ways to efficiently administer what was an overly complex project. The project suffered from a very slow disbursement rate and the studies were delayed or cancelled which affected the design and procurement of works. After restructuring most of the earlier prepared works were finally being pushed forward to procurement stage but not all were completed at closure. The project closed 18 months after the estimated closing date at appraisal. Due to slow implementation, two restructurings and extremely low disbursement rates; insufficient economic analysis, the Efficiency is rated at Modest before and after restructuring.

Relevance of the project objectives both before and following the restructure is rated as Substantial. However, the relevance of design was weak and is rated modest both before and after the restructure. Efficacy of the first objective is negligible in both periods, with little progress made against the outcome even after the changes that took place during the restructure. Efficacy against the second objective did improve following the restructure and is reflected in the improvement from negligible prior to the restructure to modest post restructure. Efficiency is rated Modest as benefits were only partially realized, the project closed 18 months after the original project closing date and there were considerable administrative inefficiencies. Thus, the outcome rating both before and after restructuring is Unsatisfactory even with the slight improvement in the achievement of Objective 2.

Safeguard

The project was a category B project and triggered OP/ 4.01 Environment Safeguards; OP/BP 4.10 Indigenous People, OP 4.01 Natural Habitats, OP 4.11 Physical Cultural Resources, OP 4.12 Involuntary Resettlement and OP 7.50 Projects on International Waterways. OP/ 4.01 Environment Safeguards An Environmental Management Framework (EMF) was developed with implementation arrangements. OP/BP 4.10 Indigenous People. The PAD, also refers to social safeguards (page 89) and a social cultural analysis and organisational assessment was undertaken by the government. This triggered the OP/BP 4.10 Indigenous People but the appraisal concluded that a stand-alone Indigenous Peoples Plan (IPP) was not necessary since the Project document itself was considered an IPP and that the principles and elements of an Indigenous Peoples Plan (PP) have been incorporated into the Project design. (PAD, page 89) The ICR concluded that it was complied with through the project’s social assessment and the process of consultations during the sub project development. (ICR, page 15). OP 4.01. Natural Habitats and the Screening criteria and management mitigation measures were included in the environmental assessment process for each subproject. OP 4.11 Physical Cultural Resources. For subprojects near potentially important sites and monuments, archaeologists were included as part of the design teams but the tourism component was largely dropped avoiding any impact. OP 4.12 Involuntary Resettlement. At appraisal it was anticipated that the activities under the tourism and basic services components would not have an impact on people and property but as a precaution an Abbreviated Resettlement Plan would be prepared (PAD, 100) in the unlikely eventuality that this would occur. At restructuring in 2012, the majority of the works would involve such impacts and FPS guidelines and manuals on resettlement were revised and updated in compliance with Bank policies. OP 7.50 Projects on International Waterways. The procedures outlined in the policy including prior notification to the Peruvian Government (via a letter from the Bank Country director) were undertaken. ICR, page 14 and 15) Just before the first restructuring the Bank’s team visited Bolivia and a safeguards specialist was added to the team. No additional reporting was in the ICR.

Financial Management

As part of the preparation process of the Project, a preliminary financial management assessment was performed to determine the adequacy of the Vice Ministry of Tourism-PCU financial management arrangements to support Project implementation. This was essential since the PCU had not dealt with Bank projects before. In addition an action plan to strengthen FPS was developed since it lacked project and procedural capacity. (PAD, page 157). The FPS was, amongst others, responsible for investment in waste and sanitation infrastructure. Both the Public Financial Management (PFM) risk rating and the Project inherent and control risks were rated as substantial (PAD, pages 61 and 62). The project experienced serious implementation issues but there are no specific details on whether financial management was an issue. There is no reporting on the number of audits but the ICR concludes that External audits were all carried out as expected with no major issues raised (ICR, page 15) as well as all fiduciary controls were monitored and complied with and external audits were undertaken. ( ICR, page 21). The restructuring paper mentions that overall operational arrangements (financial management, procurement, etc.) remain the same namely moderately satisfactory (Restructuring Paper 1 page 4 and the second restructuring paper page 4). Procurement The overall Project risk for procurement was high and an action plan was designed to mitigate the risks, notably in improving capacity of agencies responsible for procurement: the VMT and FPS. (PAD, page 78). Moreover, for some works the procurement was done through municipal governments which would be in charge of signing contracts for investments in infrastructure. The market for contractors and suppliers and their preferred packaging and terms of contracts were not known and procurement considerably affected implementation of the project. Turn-key contracting and contracting of public academic institutions were introduced in reaction to difficulties in the market environment. (ICR, page 6). The Bank assisted the FSP in launching and awarding contracts but with limited mixed results. For example, of the 19 subprojects that launched a bid, 10 were able to award contracts for the nine set of docks. Nevertheless, the ICR reports that no major financial or procurement issues were faced during the Project’s life. ICR page, 15)

1 Implementation Support in Low Capacity Environments ( Bolivia is an IDA country) should be better identified at appraisal and project supervision, including direct technical support using practical international experience should be offered from the start in order to avoid delay in implementation and provide hands-on assistance when bottlenecks occur.

2 Adopting appraisal stage readiness criteria for subprojects to avoid delays in implementation and in reducing risks.

3 Taking the market of contractors and suppliers into account with regards to contracting and their preferred packaging and terms of contracts is important in order to avoid project risks and ensure timely implementation.

4 Learning from other projects in country and applying lessons both at the design stage and during implementation, particularly if they face the same implementation challenges.

 The Government of Bolivia was supportive during appraisal and undertook a comprehensive sociocultural and organizational assessment as part of the development of a long-term strategic vision for the Lake Titicaca watershed. (PAD page 7). Counterpart funding was satisfactory and on time. The Government of Bolivia preferred that several agencies and ministries were to be included in the implementation and oversight roles given the political situation at the time. In addition, two different sectors were involved and different actors had to coordinate and support project implementation. The key oversight body was the Ministry of Production and Micro Enterprise (MPME) and its Vice Ministry of Tourism (VMT) which would act as the operational unit implementing the project, assisted and advised by the Inter-institutional Committee for the Sustainable Development of Lake Titicaca (ICSDLT). The VMT also had a PCU as key project coordinator while the investments in infrastructure would be administered by the Social and Productive Investment Fund (FPS). (PAD, page 15,16). It was the first time that the Ministry of Tourism was to execute a Bank financed Project and it experienced challenges. (PAD, page 13). It was assumed that resolving the implementation issues would bring the project back on track, but a lack of political commitment to the project, the lack of experience in project implementation and its scarce coordination capacity severely affected the project implementation, leading to an eventual standstill in contracting and subsequent elimination of the PCU in VMT. At the second restructuring in 2012, additional deficiencies in the Project’s implementation arrangements were rectified and FPS became the sole agency implementing Project investments and technical assistance activities and the Project closing date was extended to February 2, 2015. (Second restructuring paper, page 8). The first restructuring came late in the project cycle and the second restructuring could only support investments related to the project while having little impact on the achievement of the objective. (ICR, page 8)

There were two implementing agencies at effectiveness of the project: the Vice Ministry of Tourism (VMT) and the National Productive and Social Investment Fund (FPS). At restructuring in 2012 FPS became the sole implementing agency due to lack of performance of the VMT and its Project Coordination Unit (PCU). The ICR discusses their performance separately on page 23. The VMT was responsible for implementation of the tourism component except for infrastructure investments which was the responsibility of the FPS. The lack of political commitment and experience combined with scare capacity led to a standstill in contracting. The FPS, however, despite its efforts in taking responsibility and improving contracting, could not prevent delays and ensure proper implementation. Given that multiple sectors were involved and capabilities of the national institutions was weak, the PCU under the VMT had major challenges. The project as originally envisioned, expected to build institutional capacity in VMT and other agencies and stakeholders through a coordinative mechanism. With the lack of coordination, and the eventual dissolution of the PCU in VMT capacity was not built. (ICR, page 23) The ICR reports that the institutional setup in the design did not maintain the anticipated political support in VMT or in other levels of Government which resulted in poor project performance and coordination between the different government entities. (ICR, page 22). This also caused substantial delays resulting in low disbursements at year 4 of project implementation.

http://documents.worldbank.org/curated/en/590891467988722756/pdf/ICRR-Disclosable-P101426-07-08-2016-1467988695988.pdf

http://projects.worldbank.org/P101426/lake-titicaca-local-sustainable-development?lang=en&tab=documents&subTab=projectDocuments

http://documents.worldbank.org/curated/en/663021468014389452/Bolivia-Lake-Titicaca-Local-Sustainable-Development-P101426-Implementation-Status-Results-Report-Sequence-14