The development objective of the Environmental Services Project (ESP) for Albania is to support sustainable land management practices and increase communities' monetary and non-monetary benefits in targeted project areas which are mainly in erosion prone rural upland areas. The project comprises of four components. The first component, strengthening institutional capacity aims to build a stable institutional environment that facilitates sustainable upland use management to maximize the provision of the different environmental services. It includes following two sub-components: (i) strengthening forest and pasture management capacity; and (ii) empowering beneficiaries. The second component, planning and provision of instrument of pre-accession assistance for rural development (IPARD) like grants aims to increase income generation opportunities and support government efforts to alleviate poverty in rural areas and improve land use management through integrated planning and a competitive grant scheme. The component will finance following three sub-components: (i) preparation of communal micro-catchment plans (CMCPs) and upgrading of communal forest and pasture management plans (CFPMPs) into CMCPs; (ii) provision of IPARD like competitive grants; and (iii) strengthening the capacity of technical bodies and applicants. The third component, introducing payment for environmental services aims to assist the development of mechanisms that allow sustainable financing of natural resource management beyond the ESP horizon. It includes following three sub-components: (i) development of carbon projects; (ii) development of payment mechanisms for watershed services; and (iii) piloting of payments for watershed services (PWS). The fourth component, supporting project implementation will support the ministry of environment (MOE) to carry-out project implementation and overall coordina