1. Biodiversity Significance. Madagascar has been called the single highest major biodiversity conservation priority in the world owing to its combination of high diversity, endemism, and degree of threat. Although Madagascar occupies only about 1.9% of the land area of the African region, it has more orchids than the entire African mainland, and is home to about 25% of all African plants. Overall, about 80% of Madagascar's plant species are endemic, and for animals the proportion is usually even higher, the best example being the lemurs, close to 100% of which occur naturally only in Madagascar. In addition, 95% of the country's 265 reptiles and 99% of its 120 amphibians are endemic, and figures for other groups of organisms are comparable. Higher-order endemism is also extremely high in Madagascar, making even less diverse Malagasy taxa exceptionally valuable. For instance, although there are only eight genera of endemic Malagasy freshwater fish, the genetic information in these species has been compared to the entire very rich cichlid fish fauna of the African rift lakes. Madagascar has also recently been selected as a critical site for marine conservation worldwide.
2. Economic Situation. The Malagasy economy is natural resource based. Agriculture (including livestock, fisheries and forests) determines economic performance and is itself affected by national economic policies. The agricultural sector accounts for 31 per cent of GDP, provides raw materials for more than half of the industrial and services sectors, and employs over 70 per cent of the work force. Agricultural exports account for 60 per cent of foreign currency earnings. Exports of agricultural products will be key in determining growth. Although the number of foreign tourists is currently low (50,000 per year), tourism in general and ecotourism in particular are also expected to fuel growth. Gems represent another revenue-generating sector. Income indicators have deteriorated in the recent past. 74 per cent of the country's total population has been found to live below the poverty line, of which 92 per cent live in rural areas. In other words, 68 per cent of the total population are poor and live in rural areas. Income per capita has plummeted by 40 per cent over the past two decades to US$ 235 in 1995.
3. Environment. Madagascar is known for its high degree of environmental degradation. According to available information, almost eighty per cent of the country's original forest cover has disappeared, or has been severely degraded, mainly because of slash-and-burn agriculture. This also results in the loss of an estimated 200 tons of topsoil per hectare each year. Deforestation, bush fires, and extensive cropping of marginal lands are removing the ground cover necessary to keep in place the highly erodible soils. This degradation threatens not only biological diversity, but also watershed and soil stability vital to the agrarian economy. Reversing the downward spiral of environmental degradation would thus mostly benefit the poor, while maintaining the exceptional biodiversity wealth for the benefit of all.
4. Environmental Action Programme. Aware of these problems, the Government finalized its National Environmental Action Plan (NEAP) in 1989, with the support of a group of donors, international agencies and NGOs led by the Bank. The fifteen year programme it defines foresees a first five-year phase aiming at creating an effective policy, regulatory and institutional framework, a second phase aiming at the consolidation of the programmes initiated under the first phase, and a third phase that would achieve the mainstreaming of environment into macroeconomic management and sector programmes.
5. The first phase programme is nearing completion. It has the dual objectives of beginning resource management operations of an urgent nature while establishing the basis for the overall environment programme, in terms of building institutions, developing human resources, establishing sound environmental policies, methods, tools and procedures. It consists of six components: (i) protecting and managing biodiversity in a network of Protected Areas (up to fifty in the long run) and testing concepts such as integrated conservation and development projects (ICDPs) as a means to better conserve biodiversity; (ii) developing community-based soil conservation and watershed management mini-projects; (iii) developing land management tools through mapping and remote sensing; (iv) improving land security through cadastral operations; (v) promoting environmental sensitization, education and training, and developing environmental policies and procedures; and (vi) developing an environmental support programme including institution building, reinforcement of the environmental data base, marine and environmental research, monitoring and evaluation. Programme implementation has been to a large extent through local and international NGOs. In addition, a Forests Management and Protection Project (IDA Credit 1878-MAG) was also implemented, initially as a free-standing operation and later on under the umbrella of the Environment Programme. Since 1992, it has focused on forest inventory and the formulation a new forestry policy and of a new human resource policy, as well as the creation of new protected areas and the management of natural gazetted forests. Although progress on many components has been slower than anticipated initially, most of the programme's objectives are being met. Over 30,000 families will have benefited from some 1,000 mini-projects for soil conservation work by ANAE (Association Nationale d'Actions Environnementales); twenty nine national parks and other protected areas are being established and managed to the extent that ANGAP's (Association Nationale pour la Gestion des Aires Protégées) current funding allows; with nearly 200,000 ha surveyed, land titling has begun to have an impact in and around protected areas; FTM (National Geographic Institute) has significantly improved its mapping capacity and produced aerials photographs over 80,000 km2 of protected areas, and ONE (National Environment Office) has developed activities in environmental promotion, video production, training, policy formulation and regulatory framework improvement. New legislation has been established allowing the creation of Foundations and Trust Funds, and a National Environment Foundation (Tany Meva) has been established. A new forest policy has been formulated and is being translated into new legislation, providing for decentralization of forest management and rationalization of management plans and logging permits, and the reactivation of the existing National Forestry Fund. New legislation will also provide for the possibility of giving responsibility for natural resource management to local communities, under a negotiated contractual arrangements that will spell out the management system and the distribution of revenues.
6. Lessons from the First Phase Programme (EP1). Its main strengths include the effective development of institutions and partnerships, high visibility and a substantial demonstration effect, both domestically and internationally, and effective field results (see above). Weaknesses were a slow and uneven take-off, insufficient programme integration, consolidated monitoring not yet operational, and an insufficient role given to environment concerns when formulating sector policies that require hard choices, whether at national or local level. The most important lessons which can be drawn from the first phase of the Environment Programme, including the results of beneficiary assessment and other participatory processes that were carried out in EP2 formulation, concern the overall environmental strategy, institutions, programme scope and sustainability, and the importance of community involvement:
7. (a) Environmental management strategy. Depletion of Madagascar's natural resource base can only be reduced by changing the enabling policies, institutions and incentives, so that resource users have the authority to manage their own resources, and the responsibility and incentives to do so in a sustainable manner. Environmental outcomes are the by-product of land use management and production decisions. In the absence of a suportive land management and agricultural production policy, there is no viable resource conservation policy, because how people manage land and production options determines what they do with the forest. In particular, the realization that biodiversity cannot be isolated from other environmental concerns has led to the development of a regional/local approach to biodiversity conservation under EP2 that would be complemented by agricultural and other income generating activities that also aim at improving the management of natural resources at the local level. Therefore, the environmental strategy needs to increase the emphasis on rural development and smallholder land management on farmland and open access lands, especially in the areas where population pressure is the greatest, which are often far from the protected forests and parks. The design of the programme takes this into account. The EP2 would complement the activities undertaken under several agricultural programmes (extension, research, irrigation, livestock) that also aim at improving the management of natural resources at farm level; more generally, it would be a key part of a development strategy that combines macro-economic stabilization, structural reform and the promotion of private sector investment and export-led growth.
(b) Institutions. The first phase of the environment programme involved the establishment of several new institutions. Building capacity within these new institutions has taken time -- even more time than initially anticipated -- and has absorbed much of the efforts of this programme. Although the impact of this work is difficult to measure, it is clear that key results have been achieved: ONE is well established in its role as both an environmental coordinating and policy formulation agency; ANGAP (responsible for management of protected areas) and ANAE (responsible for soil conservation initiatives) have developed a clear vision of their mission and their capacity is growing. Now that the various agencies have reached their cruising speed, clarifying their roles and mandates vis-à-vis other Central Government agencies is essential; this has been spelled out in detail in a recently produced Manual of Inter-institutional Relationships.
(c) Programme scope. One central idea behind the design of the First Environment Programme was to integrate all activities which support the environment into a single programme -- particularly those activities concerning biodiversity conservation, soil conservation and policy development. Although such integration was only partially achieved, and the programme is seen by outside observers as too imbalanced in favor of biodiversity conservation in protected areas, it helped to foster environmental priority-setting on a national scale and coordination of donor funding, as well as creating synergy between closely linked environmental programmes (e.g. land tenure security as a means to improve soil, water and biodiversity conservation). In the second phase, the rationale for maintaining such an integration remains. In order to maintain the Environment Programme within the limits of the Government's implementation capacity, it is essential to keep improving the existing management mechanisms as well as to implement the decentralization policy provided for under the new Constitution. As sectoral programmes increasingly take the environment into account, another challenge is to determine which environment-related activities are better be carried out within the context of sector programmes and thus be left out of the Second Phase Programme (EP2).
(d) Sustainability. The sustainability of some of the activities initiated under the EP1 is uncertain. This is particularly the case for the Integrated Conservation and Development Projects that have been started around some of the Protected Areas. Apart for the fact that the approach has been costly, the conservation impact of development actions in the immediate vicinity of the protected areas has been limited. As a result, EP2 will expand conservation activities beyond the periphery of protected areas into a more regional approach which better integrates environmental concerns into economic and sectoral planning. However, in its current economic situation, Madagascar cannot afford to protect its biodiversity patrimony alone. The expected global benefits, coupled with resource scarcity, justify cost-sharing with the international community, and hence the use of GEF resources.
(e) Community involvement. Another very clear lesson learned in the course of the first phase is the importance of working with the affected communities. The ownership created when communities are involved increases the pace of implementation, the positive impact on the environment and the sustainability of this impact. This is now widely recognized in the country, and it is anticipated that all future programmes will rely heavily on local participation, particularly through the transfer of management responsibilities to local communities.
8. Biodiversity Areas and Conservation Priorities. Madagascar possesses a network of 35 protected areas, with 3 more in the process of classification. These 38 protected areas, covering a total area of around 1.13 million ha or 2% of the total land area, are divided into 8 national parks, 11 integral natural reserves and 22 special reserves (some protected areas are made of two parts with different status), all of them terrestrial (see Annex A and Map). The Government also intends to classify a small number of marine areas as national parks. In addition, around 15% of the territory is still covered by biodiversity-rich natural forests. To fully elaborate the conservation lessons learned in EP1, a GEF PRIF financed a participatory process for the design of the biodiversity elements of the Second Environment Programme Support Project (EP2). The GEF preparatory activity involved three stages. The first stage was a scientific priority-setting workshop, the second a review of selected EP 1 Biodiversity activities and policy issues, followed by the third stage, a participatory priority-setting process which integrated both scientific findings, the results of the review, and local stakeholder concerns. The scientific workshop followed a methodology established for the Amazon and other key biodiversity areas. It assembled over one hundred of the foremost authorities on the biodiversity of Madagascar. These specialists defined priority areas for eight species groups and identified historical patterns of habitat loss and current human pressures. Through a participatory process, the workshop elaborated an integrated set of geographic priorities for biodiversity conservation and research. This scientific output, together with the results of the review studies, was then taken to the stakeholder level to evaluate possible solutions, institutional needs, and conservation approaches. The scientific priority-setting process found that over half of the highest priority conservation areas lay outside of parks and reserves (see Annex B on gazetted forests). The review studies revealed, in particular, some of the problems with the ICDP approach. The stakeholder consultations confirmed the results of the review studies and underlined the need to work closely with communities and to develop a more decentralized approach to solving environmental problems.
9. Root Causes of Biodiversity Loss. The GEF PRIF process clarified both the immediate and the root causes of terrestrial biodiversity loss in Madagascar which are essentially the same as those driving the overall spiral of environmental degradation. Expanding human populations using inappropriate agricultural technologies, including slash and burn, with little security of land tenure and few opportunities besides subsistence agriculture, are overexploiting existing agricultural and marginal lands and directly encroaching on forest areas in search of new land. Contributing to this is a breakdown in traditional regulatory mechanisms caused by increasing human migration within the country. These effects are further compounded by poorly regulated commercial exploitation of forests for timber due to weaknesses in central policies and institutions, and a failure to invoke the cooperation of all stakeholders, particularly those at local and regional levels. While existing protected areas are continually threatened by inadequate management, the major part of the country's biodiversity still lies outside statutory protected areas. Hence biodiversity loss is a direct consequence of forest loss. While coastal and marine sedimentation resulting from soil erosion is widespread, the consequences of this marine biodiversity is little known. Currently the distribution, importance, status and threats to marine biodiversity as a whole are little known and understood.