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32 The consulting team will implement the listed below tasks in close coordination with the lead agency,

decision-makers, and stake holders’ focal points. The following tasks include the technical and the additional coordination elements related to the 5-Step approach of the TSA methodology.

The TSA will attempt to respond the following policy questions; these questions will be refined during the Step 1 of the TSA:

(1) What are the social, economic, and environmental losses (monetary and non-monetary) resulting from the current BAU practices in the selected commodities sectors that justify a significant increase in public funding to shift to SEM?

(2) What are the potential net benefits to small farmers/indigenous communities and producers’

associations resulting from the shift from BAU to SEM that justify policy reform and increase funding?

(3) What will be the impact (in terms of increased return on investment -ROI) to small farmers (local and indigenous people), that justify expanding access to credit and establishing preferential credit schemes to small farmers?

(4) How are the benefits of deforestation free commodities distributed across sectors and people (including indigenous people and other vulnerable groups)?

(5) What is the annual cost from shifting from the current BAU scenario to SEM practices? I.e., what will be a realistic estimated cost of implementing sustainable landscape-level and sectorial land use plans?

(6) How are the costs of shifting from BAU to SEM distributed to all stakeholders (public and private) in the palm oil supply and value chains?

It is expected that the resulting information of the TSA study will be presented to stakeholders and influence decisions of budget allocations and financial instruments to support the shift to deforestation free coffee.

Step 1: Preparation and definition of the purpose, scope, and objective of the TSA

1. Review and become fully familiar with the UNDP TSA Guideline (TSA’s 5 Step process); and prepare an annotated outline for the report and share it with decision-makers and stakeholders.

2. Review literature, related projects and case studies on ecosystems valuation that could be relevant to the TSA (at national level, in other countries in the region, and countries in other regions).

3. Inception mission to the country to meet with decision makers and key stakeholders to launch the TSA study; and carry out a review of the TORs, verify focal points, define the team’s responsibilities, and update work plan (a work plan is included in Annex 1 to this TOR).

4. Support the implementation of a comprehensive TSA training, during the inception mission, for decision makers, and stakeholders to further the understanding of how the TSA will be applied to the targeted commodities sector. These activities could be incorporated in the inception workshop and other meetings during the TSA implementation and may be supported by the UNDP Global TSA Senior Advisor.

5. Carry out a policy analysis of the selected policies, regulations, sectorial plans, landscape land use plans linked to commodities. The analysis will identify loopholes and potential areas for action.

6. Draft initial BAU and SEM scenarios. A detailed description and definition of BAU and SEM scenarios including a description of practices, technologies, actions, and related policies.

7. Draft initial criteria and indicators for the construction of the BAU and SEM scenarios and any

other relevant information.

33 8. Prior to any field work, and based on the above indicated review, verify all possible interrelations

between the selected commodities sectors and the natural resource base. This task includes:

a. Construct a conceptual model of all existing interactions between the ecosystem and the cocoa, palm, livestock, and coffee sectors. The model should be concise and descriptive, rather than analytical or mathematical, and should include its potential and possible limitations.

b. Based on the conceptual model, identify actual and potential environmental inputs (including goods and services) that the ecosystems provide to the commodities sectors, including the targeted local and indigenous people.

9. Plan and carry out filed work (visit to targeted sites)

10. Verify and review existing information and identified data gaps.

11. In consultation with the TSA team, validate who the TSA clients are (decision-makers) and confirm the scope of the TSA (select the main issues to be analyzed or policy questions to be responded).

This task will be supported by the consultations with the targeted decision-makers and key stakeholders (including local and indigenous people), review the policy (ies) or management questions to be addressed.

12. Draft the inception report, including the background on how the process was conducted and how the target policies or development plans came about; and an annotated outline of the TSA report (using the UNDP TSA report format).

Step 2: Definition of the BAU and SEM baseline

13. Based on existing information, workshop results, field visits, focus groups and expert interviews, provide a detailed description of the BAU scenario and proposed SEM scenario in the targeted commodity sector. Describe the process of reaching agreement with key stakeholders.

14. Refine the BAU baseline and SEM intervention for the analysis.

Step 3: Selection of criteria and indicators

15. Define and justify the relevant criteria and indicators for TSA and for the specific SEM scenario, including any questions related to the targeted policy, development plan and/or investment decision. Include the justification of how the criteria and indicators are relevant and the specific question they will address.

16. In consultation with the decision-makers, select the relevant criteria and indicators that can capture change in the relevant criteria. Provide a sound and defensible justification for the selection. A table with illustrative criteria and indicators is included in Annex 2. The criteria and indicators could be revised during the study.

17. For each indicator, mention the expected relationship between the ecosystem under study and changes in the indicator.

18. Finalize the policy analysis including the identify loopholes and potential areas for action.

19. In coordination with stakeholders, authorities, and institutional focal points, carry out all other required research, technical activities, and field visits (as needed).

Step 4: Formulation of BAU and SEM scenarios, and analysis

20. Based on the selected criteria above (step 3) and indicators, select any valuation method that will

be applied to construct the BAU and SEM scenarios for each indicator.

34 21. Apply valuation methodology and start constructing BAU/SEM scenarios. Whenever primary data is collected, provide a detailed description of the valuation methodology used and its rationality;

and, how the estimated values respond to changes in the temporal and spatial dimension. In addition, provide an account of uncertainty in the analysis. This will help provide a background analysis on how generalizable the results are. The selection of valuation methods will be shared with key stakeholders through their respective focal points.

22. Carry out different levels of analysis, for example:

a. Breakdown of net values and benefits of key ecosystem services using the selected indicators under BAU and SEM; include an estimation of the sub-sectors’ multiplier effect (when appropriate). In addition to the economic and other benefits arising from shifting to SEM, consider the potential benefits (gains) or losses from shifting from BAU to SEM to other closely related productive sectors.

b. Analyze how ecosystem management costs and net benefits are distributed within the targeted sub-sectors, including net benefits or losses of the poorest and most vulnerable groups.

c. Identify benefits, winners and losers, and potential economic activities for SEM without affecting their economy and livelihoods.

d. Assess the cost of shifting from BAU to SEM and responsibilities.

e. Describe the way in which these economic values and services are reflected in economic and development indicators for the palm oil sector. This activity could cover both economic and development policies, strategies and sectorial development plans, land use plans, and other relevant documents such as poverty reduction strategies, environmental strategies (including Forestry and CC) and risk reduction strategies, etc.

f. The scenarios will consider the supply and value chains, market imperfections and price volatility.

g. Prepare BAU and SEM graphs for each indicator, showing the BAU and SEM scenario curves over time and a detailed explanation.

Step 5: TSA results

23. Present the preliminary TSA results to decision-makers and related stakeholders in the public;

and review the outline of the TSA report.

24. Draft clear policy and management-related recommendations based on the range of possible benefits and economic impact of BAU vs. SEM; and the rationale to shift from BAU to SEM. The recommendations should include a set of simple and direct policy and/or management reforms needed for the decision-makers. The recommendations will be operational and backed up by credible data from the results of the analysis.

25. Based on initial feedback from decision-makers and stake holders, prepare the draft report (including an action plan), and submit the draft report for comments.

26. Incorporate comments to draft report and produce the complete final report.

27. Prepare a short policy brief and action plan document for decision makers and communications purposes.

28. Prepare a short lesson learned document based on the TSA implementation process.

F. Qualification of Service Provider and Team of Experts

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