System for Transparent Allocation of Resources: Options and Scenarios

1. Sub-Regional Workshop for GEF Focal Points in the Middle East, North Africa, and West Asia Cairo, Egypt, 20-22 October 2009 System for Transparent Allocation of Resources: Options and Scenarios 1

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3. The Resource Allocation Framework under GEF-4 Applies to Biodiversity (BD) and Climate Change (CC); 10% set-aside; Large number of countries in the �group� with no individual allocation; 10% cap for BD; 15% cap for CC; Mid-term review made a number of recommendations relative to structure of the RAF and implementation issues. 3

4. Agreement and Mandate for STAR after the June 2009 Council Meeting International Waters should remain outside the scope of the STAR; Eliminate the �50%� rule for accessing resources in future; Eliminate group allocations in future; Continue to apply caps, and to apply floors to allocations; Continue developing two options; Provide documentation on �eligibility�; Provide flexibility in programming for small allocations; Revise Global Benefits Indices (GBIs) for BD and other focal areas; Revise the Global Performance Index (GPI). 4

5. Two Options for STAR in GEF-5 Option 1. STAR as an improved version of GEF-4 : CC and BD under a resource allocation system. All other focal areas excluded. Option 2. Extension of the STAR to land degradation (LD) and persistent organic pollutants (POPs), in addition to BD and CC. For both options, a number of changes needed from the GEF-4 RAF to increase flexibility and improve rules for implementation as per mid-term review recommendations. 5

6. Access to STAR Country Allocations To receive an individual allocation, a country should: be a Party to the relevant Convention; meet Convention eligibility criteria, as decided by each COP; have had at least one national project over the past 5 years in any focal area � or have only become eligible for GEF support during the past 5 years; not be a member of the EU (due to the practical impossibility to define increment over baseline for projects). The amount �set aside� from the allocations can be used for newly eligible countries. 6

7. Proposed set of rules under STAR Increase flexibility for use of small allocations under a threshold, whilst �protecting� at least 90% of resources of each focal area. (55 countries to benefit under Option 1; 38 countries under Option 2). Level of focal area �set asides�. 15-20% for supporting costs of:- Enabling activities;- Incentives to regional projects;- Global projects. Focal areas and programs outside the STAR would include:- IW, ODS, sound chemicals management;- Agency fee, and corporate budgets;- NDI, CSP (sub-regionals), national voluntary business plans;- SGP, Earth Fund, non-grant instruments. Ceilings: CC: 15%; BD, LD, POPs: 10% Floors: CC: $2m; BD: $1.5m; LD, POPs: $0.5m 7

8. GEF Global Performance Index � GPI GPI is composed as for GEF-4 but with following difference: Project Portfolio Performance Index (PPI) based only on GEF projects: PPI = 0.4 x PIR (Project Implementation Report) + 0.6 x TER (Terminal Evaluation Review) Increased weight of PPI:GPI GEF-5 = 0.20 x PPI + 0.65 x CEPIA (Country Env. Policy & Institutional Assessment) + 0.15 BFI (Broad Framework Index) (in GEF-4, GPI was 0.1 x PPI + 0.7 x CEPIA + 0.2 BFI) Decreased weight of �country environmental policy and institutional assessment � and �broad framework indicator�. 8

9. Per capita GDP-based Index - GDPI New additional index in STAR included to take into account capacity and vulnerability of countries: GDPI = PPP(Purchasing Power Parity) GDP-0.04 An LDC at the lower end of the range of PPP GDP would receive a 12% higher allocation. A country at the higher end of the PPP GDP would receive a 6% lower allocation. 9

10. GEF Benefits Indices - GBIs Indices developed in collaboration with the STAP. BD: based on 2008 updated GBI. Increased weight of marine relative to terrestrial in response to, inter alia, mid-term review; CC: includes a 5% component related to forest cover and deforestation. LD: takes into account the land area affected; proportion of drylands; and proportion of rural population. POPs: takes into account arable and permanent cropland; and industry value added. 10

11. Combining Indices for STAR In GEF-4, GBI and GPI indices were combined in an equation: Country Score = GBI1.0 x GPI0.8 In GEF-5, the three indices are combined as follows: Country Score = GBI1.0 x GPI0.8 x GDP-0.04 11

12. Required Council Decisions on STAR Extent of STAR in GEF-5 across focal areas (Option 1 or Option 2); Criteria for provision of access to country allocations; Level of flexibility across focal areas under threshold; Level of focal area set-aside and uses; Other set-asides to be considered outside STAR; Height of any floors and any ceilings; Methodology for calculation of country allocations; Revised Global Performance Index (GPI); Revised Global Benefits Indices (GBIs) for each focal area; GDP index. NB: Full range of Implementation issues will be the subject of a paper for Spring Council 2010 meeting after Council has approved basic structure and rules of STAR. 12

13. Thank You for Your Attention ! Contacts: CBriggs@TheGEF.org Lgranier@TheGEF.org Myang@TheGEF.org 13