Document of The World Bank

Transcription

1 Document of The World Bank Report No: IMPLEMENTATION COMPLETION REPORT (IDA-35580) ON A CREDIT IN THE AMOUNT OF SDR 4.0 MILLION (US$5.0 MILLION EQUIVALENT) TO THE REPUBLIC OF HONDURAS FOR A SUSTAINABLE COASTAL TOURISM PROJECT June 20, 2006 Environmentally and Socially Sustainable Development Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective January 25, 2006) Currency Unit = Lempira (Lps.) Lps = US$ US$ 1.00 = Lps. FISCAL YEAR January 1 December 31 AECI AHMON CAS EOP GEF GOH IDB ICB ICR IDA IHT INA IHAH INFOP IPDP LAC LIL MACAHO NCB NGO PAAR PAD PATH PHRD PIU PSR/ISR QAT QBS QCBS SCT SEA UTM ABBREVIATIONS AND ACRONYMS Spanish International Cooperation Agency (Agencia Espanola de Cooperación Internacional) Association of Municipalities of Honduras (Asociación de Municipios de Honduras) Country Assistance Strategy End of Project Global Environment Facility Government of Honduras Inter-American Development Bank International Competitive Bidding Implementation Completion Report International Development Association Honduras Institute of Tourism (Instituto Hondureño de Turismo) National Agrarian Institute (Instituto Nacional Agraria) Honduras Institute of Anthropology and History (Instituto Hondureño de Antropología y Historía) National Training Institute (Instituto Nacional de Formación Profesional) Indigenous Peoples Development Plan Latin America and Caribbean Region/World Bank Learning and Innovation Loan Association of the Municipalities of the Honduran Caribbean (Mancomunidad de Municipios del Caribe Hondureño) National Competitive Bidding nongovernmental organization Rural Land Management Project (Proyecto de Administración de Areas Rurales) Project Appraisal Document Land Administration Project (Programa de Administracion de Tierras de Honduras) Policy and Human Resources Development / Japan Trust Fund Project Implementation Unit Project Status Report/Implementation Status Report Quality Assurance Team/Latin America and Caribbean Region Quality-Based Selection Quality and Cost-Based Selection Sustainable Coastal Tourism Strategic Environmental Assessment Municipal Tourism Units (Unidad Turistica Municipal) Vice President: Country Director Sector Director Task Team Leader Pamela Cox Jane Armitage Laura Tuck Maria-Valéria Pena

3 HONDURAS SUSTAINABLE COASTAL TOURISM PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 6 5. Major Factors Affecting Implementation and Outcome Sustainability Bank and Borrower Performance Lessons Learned Partner Comments Additional Information 25 Annex 1. Key Performance Indicators/Log Frame Matrix 26 Annex 2. Project Costs and Financing 28 Annex 3. Economic Costs and Benefits 30 Annex 4. Bank Inputs 31 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33 Annex 6. Ratings of Bank and Borrower Performance 34 Annex 7. List of Supporting Documents 35 Annex 8. Borrower's Contribution 36 Annex 9. Data Tables 42 Annex 10. Endnote References 45

4 Project ID: P Team Leader: Maria-Valeria Pena Project Name: SUSTAINABLE COASTAL TOURISM PROJECT TL Unit: LCSEO ICR Type: Core ICR Report Date: June 20, Project Data Name: SUSTAINABLE COASTAL TOURISM L/C/TF Number: IDA PROJECT Country/Department: HONDURAS Region: Latin America and the Caribbean Region Sector/subsector: Other industry (37%); Sub-national government administration (34%); Central government administration (29%) Theme: Water resource management (P); Biodiversity (P); Rural non-farm income generation (P); Environmental policies and institutions (P); Municipal governance and institution building (P) KEY DATES Original Revised/Actual PCD: 09/14/2000 Effective: 10/25/ /29/2002 Appraisal: 05/14/2001 MTR: 12/15/ /15/2004 Approval: 07/25/2001 Closing: 06/30/ /30/2005 Borrower/Implementing Agency: Other Partners: Republic of Honduras/Honduras Institute of Tourism (IHT) STAFF Current At Appraisal Vice President: Pamela Cox David de Ferranti Country Director: Jane Armitage Donna Dowsett-Coirolo Sector Director: Laura Tuck John Redwood Team Leader at ICR: Maria-Valeria Pena Marea Hatziolos ICR Primary Author: Kathryn Johns Swartz; Maria-Valeria Pena 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: Sustainability: Institutional Development Impact: Bank Performance: Borrower Performance: HS HL H S HS QAG (if available) Quality at Entry: Project at Risk at Any Time: No ICR S

5 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The North Coast and Bay Islands of Honduras possess outstanding natural and cultural resources, including a portion of the Mesoamerican Barrier Reef System, several national parks, historic sites, and the populations of ladinos/mestizos 1, Garífunas 2, Miskitos 3, and Bay Islands Creole or Isleños 4. These resources endow the Honduras coastal area with a tourism potential that is unique in the Central American region. Tourism in Honduras has grown consistently over the past decade, including a 50 percent increase in the number of visitors between 2000 and When the Sustainable Coastal Tourism Project was being prepared, the Government of Honduras (GOH) was just beginning to recognize the tourism potential of the Caribbean area. At the time, there was no policy framework for the strategic development and sustainable management of these resources and a concern that when tourism development occurred, it would be environmentally unsustainable and economic growth would not benefit local residents and particularly the poorest populations in the area. The project was developed to address these concerns and identify the conditions that would catalyze sustainable tourism with benefits for local communities. The Project Development Objective was to create an enabling environment for the development and management of sustainable coastal tourism along the North Coast mainland and offshore Bay Islands, through a learning and participatory process that: (a) promotes dialogue on the objectives and elements of sustainable coastal tourism; (b) identifies best practice means to promote its adoption; (c) strengthens capacity at municipal and local levels to manage and benefit from sustainable coastal tourism; and (d) rewards innovation in pursuit of these objectives. The project area included three departments along the North Coast and the Bay Islands Department, with specific attention to the Municipality of Omoa in the Department of Cortés; the Municipalities of Tela and La Ceiba in the Department of Atlántida; the Municipality of Trujillo in the Department of Colón; and the Municipalities of Utila and Guanaja in the Bay Islands Revised Objective: N/A 3.3 Original Components: The project, designed as a Learning and Innovation Loan (LIL), had four components financed with a SDR 4.0 million (US$5.0 million equivalent) IDA Credit, Government of Honduras (GOH) counterpart of US$0.56 million, and beneficiary contributions of US$0.48 million, for a total cost of US$6.04 million equivalent. Component 1: National Strategy and Institutional Support for Sustainable Coastal Tourism (US$1.32 million; 21.9 percent of total project cost financing). This component would finance the development and implementation of a national strategy for sustainable coastal tourism on the North Coast, including tourism plans and development scenarios for priority areas. There were three sub-components: Sub-component 1.1: Formulate and promote a participatory approach to policy dialogue with public and private sector stakeholders at the national, regional and local levels - US$0.33 million. This sub-component would finance workshops in project areas and background studies related to Honduras sustainable tourism potential

6 Sub-component 1.2: Develop and implement a national tourism strategy for the North Coast, which includes integrated, sustainable tourism action plans over the short, medium and long term - US$0.47 million. Sub-component 1.3: Provide technical assistance to promote reform of policy, legal and regulatory instruments and improve institutional arrangements in support of plan implementation - US$0.52 million. This component would finance technical assistance and build the capacity of Project Implementation Unit (PIU) staff, the Honduras Institute of Tourism (Instituto Hondureño de Turismo, or IHT) staff in its new Environment Unit, and staff in the six Municipal Tourism Units (Unidades Turisticas Municipales, or UTM) to be established (see Component 2 below). Component 2 Institutional Strengthening, Training, and Technical Assistance at the Municipal Level (US$2.01 million; 33.3 percent of total project cost financing). This component would develop the capacity of coastal municipalities to engage in sustainable tourism development planning. A complementary sub-component would support restoration works in Trujillo. There were three sub-components: Sub-component 2.1: Create tourism and environmental technical assistance units at the municipal level to provide resources for local tourism development and environmental management - US$0.97 million. This sub-component would finance the development of Municipal Tourism Units (UTM) in Utila, Guanaja, Omoa, Tela, Trujillo, and La Ceiba. Sub-component 2.2: Provide training for municipalities in identified areas of need - US$0.34 million. This sub-component would support training for the participating municipalities in topics related to coastal tourism and environmental management. Sub-component 2.3: Conduct heritage site restoration activities for Trujillo's historic city center - US$0.70 million. This sub-component would support the creation of a cultural tourism destination demonstration site through the restoration of historic sites in Trujillo, one of Central America s oldest towns. This activity would be coordinated with the Honduras Institute of Anthropology and History ( Instituto Hondureno de Antropologia y Historia, or IHAH) and the Spanish International Cooperation Agency (Agencia Espanola de Cooperacion Internacional, or AECI). Component 3 Pilot Entrepreneurship Program for Sustainable Coastal Tourism (US$2.15 million; 35.6 percent of total project cost financing). This component would support the establishment of an entrepreneurship center and a matching seed grant fund to support innovative tourism enterprises. There were three sub-components: Sub-component 3.1: Design and deliver micro and small business enterprise training to stimulate productive capacity and create business opportunities - US$0.25 million. This sub-component would support the establishment of a Sustainable Coastal Tourism Enterprise Center, including training in the preparation of market studies, business plans and development of skills necessary to stimulate productive capacity and opportunities for public-private partnerships in sustainable tourism enterprise. Sub-component 3.2: Test and prepare for replication pilot innovation subprojects in local communities focused on sustainable tourism (e.g., ecolodges, handicrafts, tour guides and operators, and adventure travel outfitters) involving entrepreneurs in partnership with NGOs or government - US$1.14 million. This sub-component would support technical assistance for tourism product development and finance a - 3 -

7 seed grant program to stimulate innovative proposals for public/private partnerships in some form of tourism enterprise. Up to 29 grants totaling up to $30,000 each would be awarded on a 2:1 matching basis. Grant administration would be contracted out to an eligible firm or NGO. Sub-Component 3.3: Build capacity in indigenous communities for preparation, financing and implementation of pilot innovation subprojects focused on sustainable tourism involving entrepreneurs in partnership with NGOs or government - US$0.76 million. This sub-component would finance a training program, provision of technical assistance, and a matching seed grant fund targeting the indigenous population. Up to 14 matching grants totaling $28,000 each would be awarded to eligible communities or to NGOs/representatives on their behalf. Grants would be awarded on the basis of a 3:1 match. Component 4 Project Management (US$0.56 million; 9.3 percent of total project cost financing). This component would support the establishment of a Project Implementation Unit (PIU) in the IHT to implement the project, process all procurement in accordance with World Bank guidelines, and handle financial management and monitoring and evaluation. In addition to the PIU in Tegucigalpa, a sub-team of technical specialists would be based in La Ceiba to oversee field activities and carry out community outreach along the North Coast. 3.4 Revised Components: N/A 3.5 Quality at Entry: ICR Rating: Satisfactory. The Quality at Entry is rated satisfactory for the following reasons: (a) the LIL was consistent with the objectives of the 1999 Country Assistance Strategy (CAS); (b) the project supported the GOH s strategy for tourism development as part of the reconstruction effort after Hurricane Mitch devastated much of Honduras in October 1998; and (c) the project design was based on substantial analytical work and lessons learned from Latin America and around the world on how to stimulate sustainable tourism. 6 Preparation included a partial Environmental Assessment (Category B), a Social Assessment, and an Indigenous Peoples Development Plan (IPDP). As a LIL, this project was designed to be flexible and respond to new priorities and plans implemented by the IHT, and this functioned as planned. Honduras' North Coast is a complex area characterized by poverty, land conflicts and unclear land rights, as well as competing priorities among the private sector, international tourists, indigenous/ethnic communities, and civil society organizations, in a scenario of increasing crime and security concerns in certain areas. These factors complicated the preparation of a participatory project and generated relatively high expectations. The Bank managed these complexities and completed extensive background studies with the support of a strong local team that traveled frequently to the project area. Yet, as a result of these complexities, the project preparation period was relatively long (interrupted by Hurricane Mitch, the worst natural disaster to strike Honduras in modern times) and the preparation cost was relatively high (over US$700,000, including a US$500,000 PHRD grant). Some of the lengthy preparation was also due to the Bank s need for assurances that the communal land titling issues in the North Coast were being or would be addressed by the GOH through parallel initiatives, including the World Bank-financed Rural Land Management Project, its Supplemental Credit, and the World Bank-financed Land Administration Project. Unresolved land issues, especially those related to Garífuna communally-held lands, were clearly identified as a possible controversial issue. However, the Project Appraisal Document (PAD) acknowledged that land - 4 -

8 regularization and resolution of land tenure issues are a huge challenge and went far beyond the scope of the LIL. However as a first step, a Land Diagnostic to identify the legal and technical obstacles to more efficient land administration in the North Coast, to be financed by the GEF-financed Biodiversity in Priority Areas Project, was included as a dated covenant in the Credit Agreement of the LIL. The project design was appropriate for a LIL, as it was exploring a new area of growth in Honduras and seeking to develop a framework for sustainable pro-poor tourism development which would prepare the GOH for a larger follow-on project. The GOH did request the Regional Development in the Copán Valley Project (Cr ), a US$12.0 million follow-on project to be implemented by the IHT, to sustainable tourism development with creation of an archeological tourism circuit including the Copán Archeological Park. That project was approved by the Executive Directors of the World Bank on May 3, Country Assistance Strategy. The LIL was included in the 1999 CAS, which discussed economic growth that benefits coastal communities in the aftermath of Hurricane Mitch. The project was designed to support capacity building to manage natural and cultural resources, innovation in private-public partnerships, promotion of private sector-led growth, and greater participation of civil society. Government Strategy. Tourism was identified as a key part of the GOH s strategy for National Reconstruction and Transformation after Hurricane Mitch. The LIL supported the Government s strategy in the tourism sector both in terms of creating a framework for sustainable coastal tourism and in generating employment. At the time of project preparation, government institutions in the tourism sector were weak and had not established strong working relationships with other stakeholders, particularly the private sector. The project was designed to strengthen the institutional capacity of the IHT and support its efforts to network among the private sector, civil society organizations, and other involved parties. Assessments. The Environmental Assessment highlighted the need to build capacity for municipal level environmental planning. The assessment included preparation of an Environmental Management Plan that emphasized strengthening the IHT s Environmental Unit and the municipalities environmental/tourism units. An extensive Social Assessment was carried out and an Indigenous Peoples Development Plan (IPDP) was prepared to ensure that these groups benefited from the project activities. The project addressed many of the issues identified in the Social Assessment by linking the project to complementary World Bank-financed projects, such as the Rural Land Management Project. The issue of HIV/AIDS also surfaced as a serious concern and a portion of World Bank funding was allocated specifically to address HIV/AIDs in North Coast communities. However, after project approval, the GOH received US$23.0 million in international funds directed towards HIV/AIDS programs, which included activities that were originally budgeted in project. Therefore, at the time of the Mid-term Review, the GOH and the Bank agreed that these IDA resources would be reallocated to other activities within the project. Risks. The project identified the main risks, some of which were mitigated over time. Three risks were identified as high: (a) lack of government investment in physical infrastructure to support tourism destinations; (b) short implementation period and weak project management capacity; and (c) security situation in the North Coast and high rate of HIV/AIDS in coastal communities. With the Government that took office in 2002, there was a strong interest and financial backing for building the infrastructure needed to support tourism destinations and the PIU proved capable of executing the project within the available time. The security situation was mitigated somewhat with the special tourism police financed by the IHT, 7 but security concerns and the HIV/AIDS crisis remain high risks to the economic potential of the North - 5 -

9 Coast. Weak government leadership in the sector was identified as a concern, but the IHT team included strong leaders in promoting environmental and social sustainability in tourism development on the North Coast. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: ICR Rating: Highly Satisfactory. The overall achievement of objective is rated as highly satisfactory since the project successfully helped to create an enabling environment for the development and management of sustainable coastal tourism in the North Coast and Bay Islands of Honduras, and exceeded the planned activities in some cases. Since many activities only concluded in 2005, it is too early to evaluate long-term impacts. However, based on initial indications, field visits and feedback from beneficiaries and stakeholders, it is highly likely that the project will achieve substantial development results. These results are expected to be sustained based on continuing tourism growth in Honduras (see Table A9.1). In recent years, tourism has become one of the most important factors in the Honduran economy, with the North Coast, Bay Islands, and Copán Archeological Park areas contributing nearly all of the tourism inflows. Six of the seven impact indicators of the LIL were achieved 8 and the project exceeded expectations for performance, particularly related to the matching seed grant fund Fondo Prosperidad (Prosperity Fund), technical assistance to improve artisan work, and the restoration work in Trujillo. The project started with an implementation delay as there were ten months between Board approval and project effectiveness, but the PIU was able to complete nearly all activities, and some new initiatives, within the planned time. A six-month extension of the Closing Date was needed to complete two restoration works in Trujillo that were affected by inclement weather. The project had a broad, cross-cutting communications/dissemination strategy and emphasized learning and participatory approaches to sustainable tourism. The project was also responsive to the needs of the IHT to improve its planning of sustainable tourism and environmental management. The LIL provided direction and structure to the IHT s actions during , particularly for public-private collaboration. In 2005, the project was one of 12 projects recognized by the World Bank s Results Showcase in the Annual Strategic Forum for its results and impact on beneficiaries, particularly through the Fondo Prosperidad. The main outcomes and impact indicators of the LIL at the national, municipal, and local levels are detailed below (see also Annex 1): (1) Strategy for Sustainable Coastal Tourism in the North Coast. The Regional Sustainable Coastal Tourism Strategy was prepared using a participatory methodology during and finalized, disseminated, and implementation initiated in This impact indicator was fully achieved, although with a delay (originally planned to be under implementation by 2003), mainly due to the above-mentioned effectiveness delay and additional time needed for consultations prior to finalizing the document. The Regional Strategy includes six Municipal Action Plans developed through a participatory process that involved diverse sectors, including governmental authorities, tour operators, business leaders, community leaders, and Garífuna communities. The Strategy and the Municipal Plans are available on the website of the project ( and serve as a framework for tourism development. The accompanying Action Plan identified 112 actions, grouped into 24 priorities to be implemented over the next two years, with identification of the responsible party and funding. Ten of the actions are currently under implementation with government, donor, or municipality funding, including inter alia: training in sustainable tourism practices for tourism service providers; improved management of solid waste, water - 6 -

10 and sanitation systems in Trujillo (financed by the Inter-American Development Bank); and tourism marketing and promotion. The Regional Strategy also served as a basis for the development of a National Sustainable Tourism Strategy. The participatory approach used to develop the Regional Strategy produced important results, including the organization of municipal committees for tourism development and the formation of the Association of the Municipalities of the Honduran Caribbean (Mancomunidad de Municipios del Caribe Hondureño, or MACAHO), which is responsible for implementing and monitoring the strategy. MACAHO was founded in October 2004 and is a legal entity with a budget and Board of Directors consisting of the main authorities of the six municipalities in the project area. The development of the MACAHO was supported from the beginning by the IHT, the Ministry of Governance and Justice, AECI, and the Association of Municipalities of Honduras (Asociación de Municipios de Honduras, or AHMON). One of the impact indicators of this activity was that the perceived economic, ecological and social benefits of tourism by key stakeholders in the pilot destinations increased 35 percent from the baseline measure of attitudes. Based on a study by the Department of Statistics in the IHT, the perception of the benefits derived from tourism increased by 22 percent from in the project area. This is less than the planned percentage, but it covers only three years, whereas the original indicator covered almost four years ( ). Pilot Strategic Environmental Assessment. As a complement to the Regional Strategy, the World Bank team secured US$300,000 from the Norwegian Trust Fund for Environmentally and Socially Sustainable Development for analytical work related to eco/cultural tourism development and a Strategic Environmental Assessment (SEA) of the tourism sector. In coordination with the Environmental Unit in the IHT, the SEA addressed: Environmental and Social Best Practice Guidelines; Wastewater Policy Analysis and Management Plan; Solid Waster Policy and Management Plan; and Maximization of Income Generation and Social Inclusion through Micro-enterprise Development. The SEA currently serves as a framework to inform decisionmaking in the tourism sector. The SEA has resulted in several environment and licensing legislation initiatives supported by the IHT, including inter alia changes in the wastewater law to allow for more sustainable management of wastewater in tourism areas. The Ministry of Tourism and the IHT were very satisfied with outcome of the SEA and it is being disseminated as international best practice in SEAs. (2) Municipal Strengthening. The project strengthened the tourism and environmental management capacities in the six municipalities of La Ceiba, Tela, Trujillo, Omoa, Utila, and Guanaja. Through agreements with the six municipalities, Municipal Tourism Units (Unidades Turisticas Municipales, or UTMs) were established and staffed, as part of the technical team of the municipality; responsibilities include providing technical assistance in many different areas, including tourism promotion, environmental guidelines, networking and building partnerships, outreach to communities, and training for municipal staff and local communities. A special Technical Unit was also created in La Ceiba to provide specialized environmental expertise to the UTMs. These municipalities also had municipal-level Environmental Units, supported in part by the Ministry of Natural Resources and Environment, and the UTMs worked closely with these units in many of the environmental-related activities. In four of the six municipalities (Tela, Utila, Trujillo, and Omoa), the project supported the development and implementation of a database of tourism information which is consistently updated. This database allows municipalities to identify and adopt tourism revenue capturing mechanisms at the local level, among other types of information

11 The UTMs faced challenges in working with the municipalities, mainly due to institutional weaknesses, lack of leadership, and difficulties coordinating with the other public and private sector actors. During implementation, the municipalities financed 25 percent of the salaries of the UTM coordinators. There was some concern about the sustainability of all of the UTMs after project closing; however, at the time of drafting the ICR, the operating costs of four of the six units were assumed by the municipalities (La Ceiba, Tela, Trujillo, and Utila). Unfortunately, the units in Omoa and Guanaja were practically dissolved after local government changes. The IHT has continued to maintain a dialogue with these municipalities to explore funding options and encourage the continuation of the units. (3) Cultural Tourism Demonstration Site. The restoration and rehabilitation civil works in Trujillo exceeded the original plans as the work was very popular and it was expanded to other buildings and facilities. In total, more than 25 sites and historic buildings in the Historic Center were restored; the original target was five sites. The work in Trujillo was truly a collaborative effort among the IHT, AECI, IHAH, the National Training Institute (Instituto Nacional de Formación Profesional, or INFOP), the World Bank, the United States Agency for International Development, and local leadership of Trujillo. There are indications that tourism to Trujillo is increasing, as the numbers of visitors increased from 6,433 in 2004 to 9,196 in 2005 (see Table A9.2). The restoration work generated substantial interest from the general public about historic preservation and there were many requests for technical assistance. The overall quality of the works was very good and despite tropical storms and significant flooding in late 2005, the buildings that were restored suffered no damage. The project also supported the indirect development of micro-enterprises related to the restoration work, including carpentry, collection of waste and recycling, private museums, and small firms specialized in restoration. The local Garífuna community in Trujillo is the most enthusiastic supporters of this program and the municipality has assumed maintenance costs for some of the buildings restored by the project. (4) Fondo Prosperidad. The Fondo Prosperidad was established in 2004 and managed by a well-respected international NGO (selected through international competitive bidding), which also operates a micro-lending program in Honduras. The Fondo included a competitive seed grant fund and technical assistance and training to small and micro-enterprises and community enterprises. 9 The grants and technical assistance together are referred to as subprojects. Ninety-five seed capital co-investments grants, totaling over US$1.0 million, were awarded to eligible enterprises in 25 communities in six municipalities. These subprojects helped hundreds of beneficiaries establish and expand sustainable businesses that both provide income to support their families and enhance their communities economic viability through tourism development. Based on a questionnaire filled out by beneficiaries, 61 percent benefited from enhanced facilities/installations, 23 percent from improved production, 10 percent from better products, and 6 percent in greater sales. Examples of subprojects include: recycling, artisan groups, hotels and bed and breakfasts, tour operators, kayak and boat rental companies, a glass bottom boat enterprise, restaurants, bakery, art gallery, outdoor adventure company, a historic museum, and transportation operators. Most of the grants were awarded in 2004 and 2005 and there was close monitoring of the execution of the grants and the planned activities by the NGO and IHT. In general, all of the grants were successful, with 99 percent of the assigned resources disbursed. At the time of preparation of the ICR, all of the enterprises are operating well, but it is too early to assess the future sustainability of these enterprises. The competitive process utilized by the Fondo consisted of a general call for subprojects, which resulted in - 8 -

12 approval of 69 grants, and a special Business Development Program in Tela, which awarded 26 grants (see below). For the 69 subprojects, there were 144 direct beneficiaries (57 private entrepreneurs and 87 as members of groups) representing 57 micro-enterprises, 10 business associations; 1 business chamber, and 1 NGO. The grants provided direct employment for approximately 426 individuals (276 men and 150 women). The grants included co-investment from the beneficiaries, which totaled 139 percent of the total Fondo grants. Over half of the beneficiaries were women (55 percent) and the beneficiaries by ethnicity were: Garífuna: 42 percent; Ladino/mestizo 33 percent; Isleño 22 percent; and foreign residents 3 percent. Approximately 54 percent of the resources benefited Garífuna micro-enterprises (100 percent in the Business Development Program in Tela). The Fondo Prosperidad model was so successful that it was replicated in the follow-on Copán Valley Project and it has been recognized by the GOH and other Central American countries as a model for supporting pro-poor, small-scale tourism development. Additional data regarding the subprojects can be found in Section 4.2 below. Business Development in Tela. A targeted Business Development Program in Tela supported 26 subprojects, mainly among poor, ethnic (Garífuna), female-led micro-enterprises. The implementation of this program helped to build trust between the IHT and the local Garífuna communities. (See Section 4.2 below.) Technical Assistance for New Tourism/Artisan Products. This program was developed separately from the Fondo to consolidate and enhance tourist/artisan products developed by Garífuna artists in the project areas. From July 2004 to February 2005, high quality technical assistance and training was provided to 16 micro-enterprises, the majority of which are Garífuna. This assistance resulted in the generation of 78 product designs to be produced in the following lines: candles, jewelry, shirts and clothing, and bags and purses. (See Section 4.2 below.) (5) Environmental Actions for Sustainable Tourism Development. A series of environmental activities were carried out to improve the tourism potential of the zone based on sustainable development principles, including: Municipal Environmental Action Plans, the Rehabilitation of Coral Gardens (one of two such projects in Latin America), Solid Waste Management in the Bay Islands, a Clean Honduran Caribbean Campaign, a recycling program in hotels, and an environmentally-sensitive program to eradicate the jején or no-see-um sand fly. 10 The jején program has been noted as a best practice by the Quality Assurance Team in the Latin America Region. These activities filled important financing gaps for the IHT in terms of helping to improve the conditions for sustainable coastal tourism in the North Coast and Bay Islands. Some challenges to sustainable tourism development remain, including regular garbage collection and improved sanitation systems, but the project made a contribution in certain areas of environmental enhancement. (See Section 4.2 below.) (6) Land Issues/Indigenous Peoples Development Plan The IPDP for the project included some actions to be financed by the LIL and others that were ongoing or to be financed by complementary World Bank-financed projects. On land issues, the IHT signed an agreement with the World Bank-financed Rural Land Management Project and World Bank-financed Land Administration Project. The following actions were carried out as part of the IPDP: a) Completion of the Land Titling Diagnostic in October 2002, financed by the GEF-financed Biodiversity in Priority Areas Project. This Diagnostic was prepared by an expert team and contains substantial information on the legal issues, claims, conflicts, and trends on the ground. b) Execution of aerial photographs in the Departments of Atlántida and Colón (441,847 hectares) as an - 9 -

13 input into the land titling process. c) Introduction of conflict resolution strategies in the municipal planning process for the above-mentioned Regional Sustainable Coastal Tourism Strategy. d) Execution of urban land planning for the Municipalities of Omoa and Tela and the process of consultation. e) Allocation of 54 percent of the Fondo resources to Garífuna enterprises. In the Business Development Program in Tela, 100 percent of beneficiaries were Garífuna. 4.2 Outputs by components: Component 1: National Strategy and Institutional Support for Sustainable Coastal Tourism. Highly Satisfactory. Overall, the outputs of this component were highly satisfactory, although the Regional Strategy was launched later than originally planned. The Regional Tourism Strategy for the Honduras Caribbean was officially launched at the national level in December 2005 and is currently under implementation. The innovative participatory planning process used in the development of the strategy helped to build a strong consensus about the strategy and led to the formation of the Association of the Municipalities of the Honduran Caribbean (Mancomunidad de Municipios del Caribe Hondureño, or MACAHO), which is responsible for the implementation of the strategy. A Municipal Strategic Planning process was carried out in the six participating municipalities (Omoa, Tela, Utila, Guanaja, La Ceiba, Trujillo) with approximately 394 participants and documents were prepared, which are available on-line at including: methodology, objectives and strategies, programs, actions, implementation, and participants. The on-line information also includes information on the history, demography, socioeconomic issues, calendar of events, tourist travel, and photos of each municipality. Based on the results of this process, the Regional Strategy was prepared during regional- and national-level dialogues. The Strategy includes the results of the Municipal Strategic Planning process; methodology; as well as identification of objectives, strategies, and lines of action for tourism in the North Coast area. The Strategy also includes annexes on urban development, an inventory of tourism attractions, characteristics of tourist segments of interest, legal aspects, a national ecotourism strategy, tourism circuits, criteria for hotel classification, good practices, and an investment program. Communications and Dissemination. The project financed a cross-cutting communications/dissemination campaign in the project areas and nationally with the following activities: a) Design and launch of webpage for the project ( with discussion forums and an informational bulletin. This site was nominated as the best government web site in From 2004 to the end of 2005, there were approximately 5,427 visitors to the site. b) Production of a monthly informational bulletin reaching 1,068 individuals on the Internet, of which 296 subscribed to the bulletin. c) Dissemination of approximately 83 press releases and publication of 18 special reports in the project areas. d) Preparation of public information notices for local radio during the Clean Honduran Caribbean Campaign. e) Design of tourism signs, garbage cans, hats and shirts, and other promotional items

14 The project also developed promotional materials to support the future sustainability of the UTMs, including: 21,000 tourist maps and 14,000 postcards of the six project municipalities; 6,000 brochures about tourist sites in Omoa and Trujillo; and 14,000 copies of the Caribe Hondureño Magazine. The project also financed the production of 58 small, illuminated tourism informational signs in the main streets in La Cieba, Tela, Omoa, and Trujillo. After project closing, it is expected that the UTMs will manage the content of these signs and solicit sponsorships. This income will help support the functioning of the UTMs. Specific Studies. This component supported the following studies that have informed planning in the IHT: Level of Satisfaction of Foreign Tourists that visit Honduras. Investigation of the USA Market related to Honduras. Market Study on the Vacation Habits of the Honduran People. Study on the Behavior of International Tourists in Honduras. Tourist Classification of Hotels and Services in Honduras. Design and Adoption of Legal and Policy Instruments for the Sustainable Tourism Strategy. The Environmental Unit in the IHT also carried out an environmental classification of hotels in Honduras. This process was fully participatory and the hotels were in agreement with the final results. This was not certification, but rather a process to provide information to visitors about quality standards and to the hotels regarding how to become more environmentally friendly and attractive to travelers. Component 2 Institutional Strengthening, Training, and Technical Assistance at the Municipal Level. Highly Satisfactory. Overall, the outputs of this component were highly satisfactory, particularly the improvements in Trujillo. The main activities are detailed below: Sub-components 2.1 and 2.2: Technical Assistance and Training for Local Tourism Development and Environmental Management. Satisfactory. The project financed the creation of Municipal Tourism Units (UTM) in the six project municipalities. The technical specialists provided support to the municipalities and served as resource people for the local communities on tourism-related opportunities. All of the UTMs created a Tourist Information Center in the municipality stocked with maps, the Caribe Hondureño magazine, postcards, promotional videos, and guides to local tourism sites. The UTM in Trujillo has a multiple use room that can be used for community meetings. Some of the main activities carried out by the UTMs include: Provided training to 5,902 individuals through 230 workshops on sustainable tourism development and environmental management. These training workshops were carried out in coordination with community organizations, business owners, and local government personnel. Developed environmental actions plans and environmental inspections in the municipalities, in coordination with the Municipal Environmental Units. Organized and launched Environmental Committees in the municipalities. Carried out environmental sensitivity campaigns including clean up, garbage removal, radio programs, signs, etc. Developed a Best Practice Manual in Environmental Issues, which was approved by the municipal authorities. Established six new tourism circuits, based on sustainable tourism development, including the Trujillo Circuit, the Forts Route, the Garífuna Coast, Cruises of the Bay Islands, National Parks, and La Ceiba and Cayos Cochinos

15 Planned and organized cultural activities in the municipalities including carnivals, fairs, and special events to promote tourism. Some of the UTMs performed better than others, and all of the UTMs encountered some common challenges in performing their duties, including: weak human resource capacity for tourism in the municipality; limited budget support for the UTMs and tourism-related activities; lack of support from the municipalities for trash removal; and poor coordination among all stakeholders in the municipalities. In some cases, these challenges were addressed over time and the participatory planning process for the Regional Tourism Strategy helped to bring together all the stakeholders to agree on priority issues, but in other municipalities, these problems persist. Training. The project financed training and workshops in the project areas for the general public, for micro and small business owners in tourism management, and for university students to be trainers in tourism management and environmental impacts. Some of these workshops included: presentation/ introduction of the project; forum on the Mesoamerican Barrier Reef; Sustainable Tourism and Ecotourism; Introduction to the UTMs; training for taxi drivers on tourism culture and customer service; training in restaurant service and technical assistance in providing tourism services; inventory of tourism attractions; development of profiles of tourism projects; design of urban spaces; the role of the municipality; and conflict resolution. Among the training programs for micro-enterprises was a three-day course on My First Business, which included the formation of a simulated micro-enterprise and the selection of personnel, a feasibility study, development of a business plan, and the simulation of a business day. Environmental Activities. There were several innovative activities that directly supported environmental conservation and/or tourism enhancement in the project areas. These programs included: Solid Waste Management in the Bay Islands. The project financed the collection of solid waste and sensitization among the residents about reducing, reusing, and recycling materials. This effort generated visible changes in some areas on the Bay Islands, particularly in the Cayo Bonacca in Guanaja, but full implementation was hindered by the lack of recycling on the islands together with the expense and difficulty of shipping items to the recycling plant in La Ceiba (located on the mainland). Coral Gardens Project. The Bay Islands coral reefs have been affected by many factors, including water contamination from sediment and run-off and uncontrolled fishing. In coordination with a well-respected international NGO and the Inter-American Development Bank (IDB)-financed Environmental Management in the Bay Islands Project, a coral garden in the Bay Islands was restored with the conservation of coral species. The introduction of coral gardens is expected to maintain and improve the environmental quality in the Bay Islands as a base for sustainable economic development. This technique has only been implemented in two countries in Latin America Honduras and Jamaica. This program was multifaceted and included conservation and restoration of the coral reefs, community awareness (e.g., ten brochures in English and Spanish on coral reefs and sustainable fishing), and local participation in management of coastal and marine resources. The program specifically sought to conserve and rescue the Acropora coral species, which provide an essential habitat for marine species. The program also worked with local fishermen to create economic opportunities based on better fisheries management and greater participation in the tourism industry. Local volunteers were mobilized to map, monitor and stabilize wild coral species to recuperate the biological diversity of the coral reefs. This effort was supported by multiple stakeholders including the government, hotel resorts, diving industry, youth groups, fishermen, and conservation organizations. The

16 above-mentioned NGO is currently raising funds to expand this program and begin a second phase in Tela, Omoa, and Trujillo. Hotels Recycling. This program was designed to encourage recycling of solid wastes generated in the hotels in La Ceiba, including separation of recyclables and fostering the concept of social responsibility. The Technical Unit in La Ceiba led this program, together with a local recycling company. The program included identification of recyclables (e.g., paper, plastics, cans, cardboard), location of recycling containers, and training of hotel employees (124 individuals). To date, 11 hotels are voluntarily participating in the program and they receive a payment from the local recycling company based on the type and amount of material and condition. Clean Honduran Caribbean Campaign. A national campaign was launched during spring breaks in 2004 and 2005 to inform the local population and visitors about maintaining clean beaches and tourist areas in the municipalities of Omoa, Tela, La Ceiba, Trujillo, Utila, Guanaja, and Copán Ruinas. The campaign provided garbage containers, recruited volunteers to keep tourist areas clean, posted signs about tourist areas, and provided information about tourist security. In total, 450 volunteers supported the UTMs in beach monitoring. Pilot Recycling Program. A pilot recycling program was designed for 2005 to address some of the problems encountered in the previous year. One village in each of the municipalities of Omoa, Tela y La Ceiba was selected and 121 volunteers were identified. In order to help launch this program, the coordinator of the Technical Unit in La Cieba carried out a study tour to visit a local, micro-enterprise recycling project supported by the World Bank-financed Gender Equity Project in Mexico. This visit provided valuable information for the launch and coordination of this pilot program. The objective was to support a change in attitude of the vacationers and local residents regarding garbage disposal and increase awareness about the importance of recycling. This program had the strong support of a private sector partner that provided hats and t-shirts to the volunteers in each municipality, as well as signs and garbage bags for the containers. The volunteers distributed information on recycling, provided garbage bags to people, and cleaned and separated solid waste materials. Other partners in this effort included new recycling micro-enterprises in Omoa and Tela, which benefited from the Fondo Prosperidad, and the existing recycling company in La Ceiba. The pilot program was very successful with collection of large quantities of cans and plastic bottles. For example, after witnessing the positive effects of recycling, a local restaurant in one of the villages decided to implement a permanent system of garbage separation for recycling. The students involved in the program also commented about how easy it was to think about separating garbage into recyclables and many seemed to have a new appreciation for the people who collected garbage and sorted it for recyclables. The program also helped to stimulate the interest of local residents in recycling materials, particularly when the companies provided cash for the items. Jején Control Program. The prevalence of the jején on the Bay Islands was a concern for the IHT in terms of promoting sustainable tourism development. In order to learn more about this problem, the IHT proposed an environmentally-sensitive Pilot Program of Integrated Management of the Jején in the Bay Islands, which included the participation of a prominent NGO, other donors and the private sector. This program was launched in 2003 and included a technical component with a fumigation plan for adults and larvae with environmental monitoring; a research component on biological controls; the use of non-chemical alternatives; and a social component with public awareness, and monitoring and evaluation. This program was approved by a World Bank Pest Management Specialist prior to being launched and based on the initial results, the World Bank identified this is a best practice example in the Latin America and Caribbean Region of pest management. This work is continuing with support from the GOH and other