Upazila Afforestation and Nursery Development Project (Loan 956-BAN[SF])

7/31/2019 Upazila Afforestation and Nursery Development Project (Loan 956-BAN[SF])

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ASIAN DEVELOPMENT BANK PPA:BAN 16087

PROJECT PERFORMANCE AUDIT REPORT

ON THE

UPAZILA AFFORESTATION AND NURSERY DEVELOPMENT PROJECT(Loan 956-BAN[SF])

IN

BANGLADESH

September 2001


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CURRENCY EQUIVALENTS

Currency Unit Taka (Tk)

At Appraisal At Project Completion At Operations Evaluation(September 1986) (December 1995) (April 2001)

Tk1.00 = $0.0309 $0.0245 $0.0185$1.00 = Tk32.27 Tk40.75 Tk54.10

ABBREVIATIONS

ADB Asian Development BankCFP Community Forestry ProjectCGP Coastal Greenbelt ProjectEA Executing AgencyEIRR economic internal rate of return

FD Forest DepartmentFENTC forest extension nursery training centerFIRR financial internal rate of returnFSP Forestry Sector Projectha hectareLCO local community organizationm meterm3 cubic meterMOEF Ministry of Environment and ForestNGO nongovernment organizationOEM Operations Evaluation MissionPBSA project benefit-sharing agreement

PCR project completion reportPP project proformaPPAR project performance audit reportPPTA project preparatory technical assistanceSDR special drawing rightsTFF tree farming fundUNDP United Nations Development Programme

NOTES

(i) The fiscal year (FY) of the Government ends on 30 June. FY before a

calendar year denotes the year in which the fiscal year ends. Forexample, FY1990 begins on 1 July 1989 and ends on 30 June 1990.

(ii) In this report, $ refers to US dollars.

Operations Evaluation Department, PE-571


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CONTENTSPage

BASIC DATA iiEXECUTIVE SUMMARY iiiMAP vi

I. BACKGROUND 1

A. Rationale 1B. Formulation 1C. Purpose and Outputs 1D. Cost, Financing, and Executing Arrangements 2E. Completion and Self-Evaluation 3F. Operations Evaluation 4

II. PLANNING AND IMPLEMENTATION PERFORMANCE 4

A. Formulation and Design 4

B. Achievement of Outputs 5C. Cost and Scheduling 5D. Procurement and Construction 6E. Organization and Management 6

III. ACHIEVEMENT OF PROJECT PURPOSE 7

A. Operational Performance 7B. Performance of the Operating Entity 11C. Economic Reevaluation 12D. Sustainability 13

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS 14

A. Socioeconomic Impact 14B. Environmental Impact 15C. Impact on Institutions and Policy 15

V. OVERALL ASSESSMENT 15

A. Relevance 15B. Efficacy 16C. Efficiency 16D. Sustainability 16

E. Institutional Development and Other Impacts 16F. Overall Project Rating 16G. Assessment of ADB and Borrower Performance 17

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 17

A. Key Issues for the Future 17B. Lessons Identified 18C. Follow-Up Actions 18

APPENDIXES 20


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BASIC DATAUpazila Afforestation and Nursery Development Project (Loan 956-BAN[SF])

PROJECT PREPARATION/INSTITUTION BUILDINGTA No. TA Name Type Person-

MonthsAmount1

($)Approval

Date575 Second Community Forestry PPTA 20 150,000 23 Dec 1983

1142 Upazila Afforestation and NurseryDevelopment2 ADTA 84 2,528,859 30 Mar 1989

As per ADBKEY PROJECT DATA ($ million) Loan Documents ActualTotal Project Cost 50.4 46.8Foreign Exchange Cost 8.9 10.6Local Currency Cost 41.4 36.2ADB Loan Amount/Utilization 43.5 40.9ADB Loan Amount/Cancellation 0.0 6.5

KEY DATES Expected Actual

Fact-Finding Aug 1985 15 Apr-5 May 1986Appraisal3 Oct 1986 28 Sep-14 Oct 1986

Loan Negotiations Nov 1987 15-17 Feb 1989Board Approval 28 Mar 1989 30 Mar 1989Loan Agreement 31 May 1989 1 Jun 1989Loan Effectiveness 30 Aug 1989 31 Oct 1989First Disbursement 6 Feb 1990Project Completion 30 Jun 1994 31 Dec 1995Loan Closing 30 Jun 1995 15 Apr 1996Months (effectiveness to completion) 58 74

ECONOMIC AND FINANCIAL

INTERNAL RATES OF RETURN (%)

Appraisal PCR PPAR

Economic Internal Rate of Return 22.9 28.3 9.3Financial Internal Rate of Return 25.8 26.1 6.3

BORROWER Government of the Peoples Republic of BangladeshEXECUTING AGENCY Forest Department of the Ministry of Environment and Forest

MISSION DATAType of Mission No. of Missions No. of Person-DaysFact-Finding 1 84Appraisal 4 120Project Administration

Inception 1 6Review 13 196Project Completion 1 42

Operations Evaluation4 1 45

ADB = Asian Development Bank, ADTA = advisory technical assistance, PCR = project completion report, PPAR =project performance audit report, PPTA = project preparatory technical assistance, TA = technical assistance.1 Represents approved amount of technical assistance.2

Original approved amount is for $1.9 million with supplementary amount for $628,859 approved on 3 April 1995.3 Three follow-up appraisal missions were made after this mission: 4-9 November 1986, 6-16 October 1987, and 5-

13 October 1988.4

The Operations Evaluation Mission comprised Mr. Njoman Bestari (evaluation specialist, mission leader), Mr. BerryA. Van Gelder (social forestry specialist, staff consultant), and Dr. Afsana Wahab (community development

facilitator, staff consultant).


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EXECUTIVE SUMMARY

In the mid-1980s, the forest area per capita in Bangladesh was among the lowest inAsia, while biomass fuels, including fuelwood and agricultural residues, accounted for more than80 percent of all energy consumed in the country. The rationale for the Project hinged on the

need to address an acute shortage of fuelwood that placed serious pressure on scarce forestresources, and diverted the uses of agricultural residues and animal dung from fodder andmanure to fuel. The Project was designed with the following objectives: (i) increase theproduction of fuelwood, and (ii) enhance the institutional capability of the Forest Department(FD) of the Ministry of Environment and Forest and the local government administrations inimplementing a self-sustaining nationwide social forestry program. The project formulationbenefited from the design of the earlier Community Forestry Project,1 and, based on experiencethere, specific improvements were made in the design.

The project scope at appraisal included the establishment of woodlot plantations(16,000 hectares [ha]) on degraded public forestland; agroforestry plantations (3,200 ha) ondegraded/encroached public forestland; strip plantations (17,750 kilometers) along roads,railways, and embankments of canals and rivers; and block plantations (800 ha) on state-ownedvacant land. The Project also included (i) distribution of 70 million seedlings to interestedinstitutions such as schools, offices, and nongovernment organizations; (ii) upgrading of40 existing forest extension nursery training centers; and (iii) establishment of 346 localnurseries. Additionally, project support activities comprised publicity campaigns, field trials, fieldresource and socioeconomic surveys, and benefit monitoring. Despite the different names thatcharacterize the sites, features, and configuration of the plantations, tree planting for fuelwoodproduction was widely dispersed and many of these plantations were small. The Projectcovered 61 of the countrys 64 districts, excluding the Sundarbans and the Chittagong HillTracts. Landless and marginal farmers were targeted to receive benefits both in the form ofwages paid by FD during the plantation establishment, and fuelwood, intercrops, and a share ofthe harvests of trees according to benefit-sharing arrangements. The Project was also expectedto create capacity for self-sustaining social forestry schemes. FD was designated as theExecuting Agency of the Project.

The Project was approved in March 1989, following an extended preparation that beganin 1983 with a project preparatory technical assistance.2 The Asian Development Bank (ADB)provided a loan of $43.5 million equivalent from its Special Funds. The actual cost of the Projectamounted to $46.8 million, compared with the appraisal estimate of $50.4 million, and wasfinanced by the ADB loan ($40.9 million), grant assistance from the United NationsDevelopment Programme ($2.5 million),3 and the Government ($3.4 million). Cost savings weremade possible due to the depreciation of the local currency. A total of $6.5 million of the loanamount was cancelled. All project activities were originally planned for completion over sixannual planting seasons, with an original loan closing date of 30 June 1995. Activities in the firstyear were delayed. This delay was compensated by subsequent accelerated implementation,

and a loan extension to allow an additional year of planting in 1995. The loan was closed on15 April 1996. After completion, the management of the project plantations was transferred by

1

Loan 555-BAN(SF): Community Forestry Project, for $11 million, approved on 3 December 1981.2

TA 575-BAN: Second Community Forestry, for $150,000, approved on 23 December 1983.3 TA 1142-BAN: Upazila Afforestation and Nursery Development, originally approved on 30 March 1989 for

$1.9 million and revised to $2.5 million on 3 April 1995. This was administered by ADB.


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FD, on the basis of geographic areas, to two subsequent, still ongoing ADB-financed forestryprojects executed by FD.4

The total physical achievements generally exceeded the appraisal targets for plantationareas and seedling distribution. Tree planting was successful, and tree survival rates duringestablishment were generally high. The tree planting initiatives were highly visible, and

responsible for raising the awareness of the population nationwide of the value of tree planting.Along with nationwide nursery development, distribution of seedlings, training, and intensivepublicity campaigns on tree planting, the Project promoted tree planting on lands of publicinstitutions and private properties, and encouraged the establishment of private nurseries thathave made various tree seedlings available in rural markets.

Despite the achievements in tree planting, nursery development, and the distribution ofseedlings, the implementation and operation of the project tree plantations have suffered frommanagement deficiencies that have seriously constrained achieving the project purpose. Manyof the potential benefits of these tree plantations have not materialized because of inadequatesilviculture management of the plantations and delayed harvests. The establishment of theplantations has so far been a tree planting exercise, without yielding significant benefits. FDs

management of the operations of the project plantations was weak, as evidenced by theabsence of systematic monitoring of plantation conditions, including stocks, age, species, treesurvival, and actual growth rates. Benefit monitoring was not undertaken. The land resource andsocioeconomic surveys were delayed and their relevance was marginal.

The arrangements for benefit sharing between the participants and FD, as detailed inproject benefit-sharing agreements, reflect the generally weak position of the participants, withterms and conditions that substantially favor FD. Participants have strong doubts as to whetherthey would receive the promised benefits from the plantations, and over the relevance andapplicability of the existing benefit-sharing agreements. Coupled with uncertain harvestschedules, this has led to impatience and a feeling of resignation among participants, and apotentially hostile social environment developed. While the participants were generally promised

a seven-year rotation for the plantations, the absence of time-bound harvesting targets andeffective communication between FD and the participants has generated distrust and causedthe plantations to suffer from widespread theft.

The Project has suffered from shortfalls in benefits, mainly because of organizationaland management shortcomings. The shortfalls are attributable to the absence of intermediateoutputs from the thinning of tree stands, the failure of intercrops, the poor quality of outputs andtheir reduced market values, and time lost due to delays in harvests. The financial internal rateof return of total project investments is recalculated at 6.3 percent and the economic internalrate of return at 9.3 percent, well below the rates of return anticipated at appraisal and projectcompletion.

The sustainability of reforestation efforts, and the success of collaborative effortsbetween FD and the participants, depend critically on efficient operation and management of theestablished plantations, the generation and distribution of benefits, and the reinvestment ofrevenues for sustained social forestry operations. The near-term sustainability of the Project israted less likely. First, the traditional role of the FD foresters was conservation and tree planting,and this has contributed to a strong focus on achieving planting targets and reforestation, withinadequate attention to people and their social conditions, and to the commercial aspects of theplantations. Participatory initiatives have been impeded by rigid, top-down, and hierarchical

4 Loan 1353-BAN(SF): Coastal Greenbelt Project, for $23.4 million, approved on 2 March 1995; and Loan 1486-

BAN(SF): Forestry Sector Project, for $50 million, approved on 21 November 1996.


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practices within FD. Decision making within FD remains highly centralized. Second, theoperation and management aspects of the plantation assets require significant improvement.The recommendations of the 1997 project completion report for the development ofmanagement plans for the tree plantations have not been implemented. Third, sustainability ofsocial forestry ultimately depends on the participants, considering that they have the mostincentive to achieve and retain high returns. Initiatives are required to strengthen the

participants organizations, with provisions to decentralize plantation management to localcommunity organizations, in the context of improved benefit sharing. However, majorresponsibilities are unlikely to be devolved in the near future to these organizations. Fourth, atpresent, the replanting of the project plantations depends on the Forestry Sector Project (FSP),including the use of the FSP loan proceeds and the establishment of tree farming funds as amechanism for reinvesting a portion of internally generated revenues. However, the tree farmingfund arrangements and their feasibility have not been fully determined.

The Operations Evaluation Mission has rated the Project as partly successful and drawnup a number of follow-up actions. First, the requisites for sound plantation management shouldbe reinforced through ongoing FSP initiatives. FD, with continuing ADB support, should giveemphasis on harvesting, replanting, and developing appropriate mechanisms and institutional

arrangements for self-sustaining operations including increased responsibilities for localcommunity organizations. Consequently, over the next two years, FD needs to make the projectplantations its priority, before undertaking new planting schemes elsewhere. ADB shouldmonitor the operations of these plantations until the full first rotation is completed.

Second, information for planning, operations, and management decisions is urgentlyrequired. FD should develop a functional monitoring system over the next 12 months, to includemeasurable performance indicators including standing stocks, age distribution, speciesperformance, tree survival, actual growth rates, and market prices of various wood products. FDshould undertake systematic assessments of plantation conditions on a sample basis by forestdivision, and the results of these assessments should be fed into the monitoring system.

Third, there are no site-specific plans for pruning, thinning, harvesting, and replanting toreflect the intended purpose of tree planting and output utilization. FD, with support from FSP,should prepare such plans within the next 24 months for the project plantations, indicating arealistically phased plan for thinning, harvesting, and replanting for all areas. These plansshould be prepared in the context of an overall management plan for the project plantations,with the objective of achieving sustained benefits through replanting and improved partnershipwith the participants.

Fourth, the replanting of the project plantations for the second rotation, as envisagedunder FSP, depends critically on the establishment of tree farming funds (TFFs). Severalconceptual issues have not been resolved, including the future management of the plantationsand the roles of the local community organizations, ownership of TFFs, and TFF management.

Therefore, FD should speed up the development of TFFs in the next 18 months.

Finally, FD has not carried out assessments of plantation losses due to thefts.Transparency and accountability between FD and the participants need to be improved bystrengthening partnership and benefit-sharing agreements. These assessments should beundertaken within 12 months, to provide reliable information on the remaining stocks andpromote cooperative efforts to prevent further losses before harvests.


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I. BACKGROUND

A. Rationale

1. In the mid-1980s, the forest area per capita in Bangladesh was among the lowest inAsia, while biomass fuels including wood fuels, animal dung, and agricultural residuesaccounted for more than 80 percent of all energy consumed in the country. In rural areas wherepoverty and other conditions permitted few affordable options, people relied almost exclusivelyon biomass fuels. Consequently, the Government of Bangladesh (the Borrower) becameincreasingly concerned at the rapid growth in the consumption of biomass fuels and its impacton the countrys fragile ecological balance. This concern was reflected in the Governments five-year development plan (1980-1985), which emphasized the need for active forest resourcesmanagement and tree planting. Accordingly, the Government sought external assistance,including from the Asian Development Bank (ADB), and embarked on reforestation programs toreduce the countrys rate of deforestation. In this context, the Upazila Afforestation and NurseryDevelopment Project (the Project) was prepared, based on the design of the earlier CommunityForestry Project1 (CFP). The rationale of the Project hinged on the need to address an acuteshortage of fuelwood. This shortage had placed serious pressure on scarce forest resources,and diverted the uses of agricultural residues and animal dung from fodder and manure to fuel.

B. Formulation

2. The Project was approved in March 1989, following an extended preparation period2 thatbegan in 1983 with a project preparatory technical assistance3 (PPTA) for carrying out afeasibility study of a social forestry development intervention. In addition to the PPTA, theproject formulation benefited from experience drawn from CFP, leading to specificimprovements in design features. The Project was the second ADB-financed project in theforestry sector in Bangladesh.

C. Purpose and Outputs

3. The Project was designed with objectives and scope similar to those of CFP, andprimarily intended to (i) increase the production of biomass fuels,4 and (ii) enhance theinstitutional capability of the Forest Department (FD) of the Ministry of Environment and Forest(MOEF) and the upazila5 administrations in implementing a self-sustaining nationwide socialforestry program. The scope of the Project at appraisal included the following:

(i) establishment of fuelwood plantations(a) woodlot6 plantations on16,000 hectares (ha) of degraded but unencroached public forestland;

1

Loan 555-BAN (SF): Community Forestry Project, for $11 million, approved on 3 December 1981. Completed inDecember 1987, this first ADB-financed forestry project in Bangladesh was designed to increase the supply of

fuelwood in northwest Bangladesh. Major project components included (i) replenishment of homestead woodlots;(ii) establishment of strip plantations along roads, railroads, and canal embankments; (iii) establishment ofwoodlots on state forestlands; (iv) establishment of pilot agroforestry farms; and (v) institutional and administrativesupport.

2 After the Appraisal Mission in September/October 1986, three missions were conducted in November 1986,October 1987, and October 1988 to finalize details of project components and organizational arrangements, takinginto account the experience and completion of CFP.

3 TA 575-BAN: Second Community Forestry, for $150,000, approved on 23 December 1983.4 Biomass fuels, as documented in the appraisal report, comprise mainly fuelwood.5

An upazilais an administrative government unit and was renamed thanaon 30 June 1992.6

Located in the districts of Gazipur, Tangail, Sherpur, Comilla, Mymensingh, and the greater districts of Dinajpur,Rangpur, and Rajshahi, woodlots were defined as tree planting in contiguous blocks of about 20 ha, free ofencroachment. In theory, participants could temporarily grow food on unused land until the block was fully planted.


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(b) agroforestry7 plantations on 3,200 ha of degraded and encroached publicforestland; (c) strip8 plantations along 17,750 kilometers of roads, railways,embankments of canals, rivers, and coastal areas; and (d) block9 plantations on800 ha of vacant land of the Bangladesh Water Development Board or the LandsAdministration;

(ii) provision of 70 million seedlings for schools, colleges, mosques, governmentoffices, nongovernment organizations (NGOs), farmers, and others;

(iii) rehabilitation and upgrading of 40 existing forest extension nursery trainingcenters (FENTCs), and establishment of 346 upazila nurseries to support theplanting program and seedling distribution; and

(iv) organization and implementation of publicity campaigns to increase publicawareness of the value of tree planting; simple research trials; and projectsupport, including field resource and socioeconomic surveys, monitoring, andevaluation.

4. Despite the different names that characterize the sites, features, and configurations ofthe plantations, tree planting for fuelwood production in widely dispersed and small areas was acommon feature. The Project covered 61 of the countrys 64 districts, excluding theSundarbans10 and the Chittagong Hill Tracts. Participants, comprising landless and marginalfarmers, were targeted to receive benefits in the form of (i) wages paid by FD during theplantation establishment; and (ii) intercrops, fuelwood, and a share of the final harvests of treesaccording to benefit-sharing arrangements, with separate terms for woodlots, agroforestry, andstrip plantations. The Project was also expected to create capacity for self-sustaining socialforestry. The participants were anticipated to come from communities in the vicinity. More than21,000 participants were paid wages for their labor to establish the plantations, and promised ashare of the outputs of the plantations with a condition that they were engaged to protect andmaintain the forest assets.

D. Cost, Financing, and Executing Arrangements

5. At appraisal, the total project cost was estimated at $50.4 million, consisting of about$41.4 million in local currency costs and $8.9 million in foreign exchange. The sources offinancing comprised an ADB loan of $43.5 million equivalent from the ADBs Special Fundsresources, $5 million from the Government, and $1.9 million in the form of a grant assistancefrom the United Nations Development Programme (UNDP) for training of participants,

7 Located in the same districts as the woodlot plantations, the agroforestry scheme allows alley cropping of foodcrops between rows of trees of wood species under several models that vary in spacing for alley cropping. Theagroforestry schemes were defined to comprise tree planting in widely dispersed areas of about 30 ha each.

8 Located nationwide in 61 districts, excluding the Sundarbans and the Chittagong Hill Tracts. In the case of majorroads, feeder roads, and railways, one or two rows of trees could be planted on both sides. Depending on spaceavailability, one or more rows of trees were planted on embankments.

9 Depending on the size of land parcels at specific sites, this plantation type resembled woodlot plantations incontiguous areas, with strip plantations on embankments of small parcels of land.

10Later, ADB financed a project in the Sundarbans, Loan 1643-BAN(SF): Sundarbans Biodiversity ConservationProject, for $37 million, approved on 27 November 1998, to develop a sustainable management and biodiversityconservation system for all Sundarbans Reserve Forest resources, and to reduce poverty among the 3.5 millionpeople living in the impact zone.


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community leaders, and selected FD staff.11 FD was designated as the Executing Agency of theProject. After completion, the management of the project plantations was transferred by FD, onthe basis of geographic areas, to two subsequent and ongoing ADB-financed forestry projectsexecuted by FD: Coastal Greenbelt Project12 (CGP) and Forestry Sector Project13 (FSP).

E. Completion and Self-Evaluation

6. The Project was considered completed on 31 December 1995 and the projectcompletion report14 (PCR) was finalized by ADB in June 1997. The PCR noted that (i) thephysical achievements from FY1990 to FY1996 exceeded the appraisal targets for areadevelopment and seedling distribution,15 (ii) tree planting had generally been successful, and(iii) tree survival rates were high. Despite the physical achievements in tree planting, nurserydevelopment, and the distribution of seedlings, the Project was rated only partly successful forseveral reasons concerning the operation, management, and sustainability of the plantations.The PCR outlined several major deficiencies. Tree congestion in woodlots, agroforestry, andblock plantations, in the absence of thinning of tree stands, had led to less than optimal growthand the discontinuation of intercrops in agroforestry plantations due to shading by the densetrees. The PCR noted the continuing removal of leaves and twigs from the forest floor that

jeopardized the long-term fertility of the soil. Decomposition of leaves would provide naturalnutrient recycling. The Project was assessed to be deficient in benefit monitoring and in simplefield trials to test silviculture parameters. Overall, the PCR objectively identified the major issuesfacing the Project. It emphasized that the participants had not received major benefits, and thatthe plantations had not been placed under systematic management. Accordingly, the PCRrecommended (i) the development of management plans for the plantations, (ii) that FD fulfill itsobligations under the benefit-sharing agreements, and (iii) that ADB review the Project at leastannually until the participants received their benefits from the first rotation. While ADB hasregularly monitored the operations of the Project, to date FD has not implemented the PCRrecommendations. Further capacity-building initiatives have been provided to FD on acontinuing basis under CGP and FSP to improve plantation management practices.

11

TA 1142-BAN: Upazila Afforestation and Nursery Development, originally approved on 30 March 1989 for$1.9 million and revised to $2.5 million on 3 April 1995. The grant, which was administered by ADB, financed theservices of (i) 84 person-months of international consultants with specialized expertise in training, agroforestry, andcommunications; and (ii) 14.5 person-months of domestic consultants. ADB was responsible for the recruitment ofconsultants through the Food and Agriculture Organization of the United Nations.

12Loan 1353-BAN(SF): Coastal Greenbelt Project, for $23.4 million, approved on 2 March 1995. The developmentobjectives of this project are to protect and improve the coastal environment by increasing tree cover, and toreduce poverty by creating supplementary income opportunities for the poor. The project finances plantationestablishment, nursery development, seedling distribution, an awareness campaign, training, and support activities.

13Loan 1486-BAN(SF): Forestry Sector Project, for $50 million, approved on 21 November 1996. The objectives of

the project are to enhance conservation of forests in selected protected areas; increase overall wood production;and institute sustainable management of forest resources through local community participation, capacity building,and policy reform. FSP has a nationwide coverage, including replanting of CFP and the project plantations.

14PCR: 956-BAN(SF): Upazila Afforestation and Nursery Development Project, June 1997.

15 Achievements included (i) 19,415 ha of woodlot plantations (mainly Acacia auriculiformis, A. mangium, Eucalyptuscamaldulensis, Dalbergia sissoo, Swietenia macrophylla, Cassia siamea); (ii) 5,110 ha of agroforestry plantations(mainly A. auriculiformis, A. mangium, E. camaldulensis, D. sissoo with paddy, peanut, and other agriculturalcrops); (iii) 17,809 kilometers of strip plantations (mainly A. nilotica, E. camaldulensis, D. sissoo, S. macrophylla,and intercropping with Cajanus cajan); (iv) 1,342 ha block plantations (following the woodlot model, includingA. catechu, D. sissoo, and Casuarina equisetifolia); (v) distribution of 99 million seedlings to various institutions,government offices, NGOs, private farmers, and interested individuals; (vi) upgrades of 46 FENTCs;(vii) establishment of 345 upazila nurseries; and (viii) training of about 89,000 community leaders, 777 nurseryoperators, 851 forest rangers, and 514 upazila-level officers.


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F. Operations Evaluation

7. This project performance audit report (PPAR) is based on (i) the findings of anOperations Evaluation Mission (OEM) that was fielded from 10 to 25 March 2001, and (ii) a deskreview of relevant records of the Project. The OEM held discussions with FD staff, consultantsof CGP and FSP, representatives of NGOs, domestic observers of social forestry practices, and

numerous participants at selected project sites located at Dhaka, Tangail, Mymensingh, andDinajpur forest divisions. A draft PPAR was sent in May 2001 to FD and the Economic RelationsDivision of the Ministry of Finance, which represents the Borrower, with a request to providecomments in two weeks. After a follow-up to this request, comments were received from FD. Nocomments were received from the Borrower, and it is, therefore, assumed that the Borrowerdoes not wish to comment on the PPAR. Comments received from FD and the ADBdepartments and offices concerned have been considered in finalizing the PPAR. This PPAR isof particular relevance to the ongoing ADB-financed CGP and FSP, considering the nature ofissues concerning sustainability and institutional capacity. These issues include commonfeatures such as (i) benefit-sharing arrangements between FD and participants;(ii) requirements for replanting, including financing arrangements for reinvestment; (iii) plantationmanagement practices and their implications on sustained operations; and (iv) major requisites

for self-sustaining social forestry.

II. PLANNING AND IMPLEMENTATION PERFORMANCE

A. Formulation and Design

8. The scope of the Project focused on tree planting and the enabling support initiatives,with the intention to allow the country to produce fuelwood and other intermediate biomass fuelas quickly as possible from the introduction of fast-growing wood species. The project initiativeswere highly relevant in the context of (i) the nationwide demands for fuelwood; (ii) theGovernments priorities to address the increasing pressure on existing forest resources; and(iii) ADBs strategic development objectives, which were aimed at broadening the productive

base of the economy. Biomass fuel (including fuelwood) could not be easily replaced with otherfuels as (i) rural households could not readily afford alternative sources of energy such aselectricity and natural gas given the socioeconomic conditions of rural Bangladesh, and(ii) electricity and natural gas required capital-intensive investments and specialized distributionnetworks. Overall, the PPTA, the CFP experience, and the extended period of projectprocessing allowed the Project to be prepared thoroughly with approaches that were envisagedat appraisal to generate self-sustaining social forestry initiatives.

9. The Project was formulated during the implementation of CFP. Based on the CFPexperience, design features were improved and incorporated into the Project. While CFP hadnot fully developed the intended benefit-sharing arrangements with the participants,16 theProject deliberately included initiatives to formalize benefit sharing between FD and the

participants. However, in retrospect, the project design underestimated the tasks and thegestation period needed for (i) developing the benefit-sharing arrangements and the requiredefforts for social and community mobilization, and (ii) the uptake of the emerging social forestry

16

The PCR of CFP (PCR: 555-BAN[SF]: Community Forestry Project, September 1989) concluded that FD did notsucceed in developing workable mechanisms for benefit sharing with the participants. The PPAR of CFP (PPA:555-BAN[SF]: Community Forestry Project, July 1993) confirmed that, although the achievements included theestablishment of 4,890 ha of fuelwood plantations, 121 ha of agroforestry lots, and an equivalent of 1,336 ha ofstrip plantations, the terms of benefit sharing were ambiguous. Under CFP, FD made different promises for benefitsharing that ranged from 10 to 60 percent of harvests for the participants. The PPAR of CFP cautioned thatdisputes could arise and damage the credibility of the Governments intentions in social forestry because of theseambiguities.


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concepts by FD. The agroforestry initiatives as piloted under CFP succeeded in developingschemes for alley cropping of food crops, in between rows of trees of wood species, to fosterpartnership with occupants of the land. Building on the CFP pilot, the design of the Projectincluded agroforestry initiatives for encroached degraded forest areas to avoid alienation of theexisting settlers by allowing the occupants of the land to cultivate food crops based onprescribed practices. Nonetheless, the expansion from a pilot scheme into a nationwide

application under the Project encountered unforeseen problems in following the prescribedpractices. Homestead planting of trees for fuelwood as carried out under CFP was excludedfrom the project scope because it was evident from the CFP experience that (i) homesteadwoodlot development was unsuccessful as farmers preferred fruit and multipurpose trees towood species; and (ii) FD was unable to meet this demand and provide the appropriateextension services, as this was outside its organizational mandate. With the exclusion ofhomestead woodlots from the Project, initiatives to distribute seedlings of various tree species toinstitutions and private individuals nationwide were formulated, along with localized nurserydevelopment. Other project components (woodlot and strip plantations for fuelwood production)also benefited from CFP.

B. Achievement of Outputs

10. Except for strip plantations, the total achievements from FY1990 to FY1996 significantlyexceeded the appraisal planting targets (Appendix 1). An area statement of the plantations, asimplemented, is shown in Appendix 2. Tree planting was successful, and tree survival ratesduring establishment were generally high. Tree planting initiatives were also highly visible asshowcases for raising the awareness of the population nationwide of the value of tree planting.Along with nationwide nursery development, distribution of seedlings, training, and intensivepublicity campaigns on tree planting,17 the Project promoted tree planting on lands of publicinstitutions and private properties, and encouraged the establishment of private nurseries thatmade various tree seedlings available in rural markets.

11. Despite the achievements in tree planting, nursery development, and the distribution of

seedlings, the operation of the project tree plantations suffered from management deficienciesthat have constrained achieving the project purpose. The plantations have not generated theexpected major benefits because of delayed harvesting and disorganized post-plantingmanagement. The project participants have not received significant benefits, apart from wagespaid to them by FD during tree planting, leaves and twigs collected from the ground, and short-lived benefits from intercrops under agroforestry schemes. It was impossible to successfullyraise food crops in the woodlot and block plantations, as the actual tree planting density(2,900 seedlings/ha) as prescribed by FD would not permit such intercrops. Similarly,intercropping did not materialize in strip plantation areas due to lack of participation, and manystrip plantation areas were without enlisted participants. The establishment of the plantationshas so far been a tree planting exercise, without yielding significant benefits.

C. Cost and Scheduling

12. The actual cost of the Project amounted to $46.8 million, compared with the appraisalestimate of $50.4 million (Appendix 3). Overall, the actual cost was financed by ADB($40.9 million), UNDP ($2.5 million), and the Government ($3.4 million). Although the Projectexceeded its appraisal physical investment targets, cost savings were made possible due to the

17

About 40,000 copies of tree planting booklets, describing basic techniques, were distributed for public awareness,along with nationwide poster and news media campaigns. About 4,000 copies each of general and technicalmanuals on social forestry were produced and distributed to stakeholders and interested parties.


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depreciation of the local currency.18 As detailed in Appendix 4, a total of $6.5 million of the loanamount was cancelled ($5 million in June 1994 and $1.5 million at loan closing). All projectactivities were originally planned for completion over six annual planting seasons, with anoriginal loan closing date of 30 June 1995. The loan became effective on 31 October 1989, fourmonths into FY1990 and after the rainy season. Activities in the first year were delayed. Thisdelay was compensated by accelerated implementation, and a loan extension to allow for an

additional year of planting in FY1996. The loan was closed on 15 April 1996.

13. The Project included a field resource survey19 aimed at identifying suitable sites for treeplantations, and a baseline socioeconomic survey20 as a benchmark for monitoring theparticipants socioeconomic conditions. The recruitment of domestic consultants to undertakethese surveys was delayed. Consequently, the field resource survey that began in November1992 was not completed until June 1993, and its findings were too late to influence much of thesite selection. By June 1993, more than 12,000 ha of woodlots and 2,100 ha of agroforestryplantations had been established. Similarly, the socioeconomic survey that started in September1992 was not completed until July 1993, rendering its findings less relevant for the selection ofsites and participants. An impact study that was planned for project completion was notundertaken.

D. Procurement and Construction

14. Due to the nature of tree planting, nursery establishment, the distribution of seedlings,and the dispersion of project sites, these activities were largely labor intensive and undertakenon force account administered by FD. The implementation involved more than 2,500 FD staffand thousands of participants who were paid daily wages for limited labor contribution onspecific plots. About 70 percent of the local costs for plantation establishment comprised wagesfor labor, including the participants labor. Small civil works contracts, such as for nurseryconstruction work and the rehabilitation of FENTCs, were awarded to local contractors selectedunder local competitive bidding procedures, while simple field structures such as nursery shedswere constructed on a force account basis. Materials were procured locally in accordance with

the Governments local competitive procedures acceptable to ADB, with the exception offertilizers, which were purchased locally from the Governments outlets. The performance ofcontractors and suppliers was generally satisfactory.

E. Organization and Management

15. FD was the Executing Agency, and the Project was implemented in accordance with theorganizational arrangements designed at appraisal. The National Project CoordinationCommittee for the earlier CFP was reorganized to cover the geographic areas of the Project,with its main functions to approve annual plans, review implementation, and mediate betweenFD and other agencies. Project committees at the district and upazila levels were established,with the respective district divisional forest officer serving as the committees secretary. The

upazila administrations were initially made responsible as the implementing agencies for thestrip plantations, upazila nurseries, and tree planting on lands of local institutions. This upazilaresponsibility was subsequently transferred to FD, following the recommendations of the ProjectMidterm Review (March 1992). Tree planting and reforestation were evidently not among theexplicit functions of the local administrations. The performance of the upazila administrations

18 In addition, the ADB loan was denominated in special drawing rights (SDR), and the slight depreciation of the dollar

against the SDR increased the amount of available loan funds in dollar terms.19

Designed to gather data on the physical environment, including land use, microclimate, topography, soil conditions,and vegetation.

20 Designed to assess socioeconomic conditions such as land tenure, food requirements, energy consumption, andpreferences for crops and tree species.


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was constrained by (i) lack of interest and accountability, (ii) low priority accorded by the localadministrations to the Project, and (iii) cumbersome procedures within the upazila system foraccessing project funds. Despite the poor performance of the upazila administrations, thesubsequent transfer of responsibility to FD enabled FD to complete the planting program.

16. Most loan covenants were complied with, notably those concerning the establishment of

project office and committees; the submission to ADB of quarterly reports, annual plans, and thePCR; umbrella agreements between FD and participating agencies; publicity campaigns; andsubmission of audited annual financial statements.21 Nonetheless, shortcomings in compliancewith the loan covenants were noted in the following areas: (i) no action was taken to review theappropriateness of the one-year renewable participation agreement between FD and theparticipants for benefit sharing; (ii) the provision for the exclusion of encroached state land forwoodlot development was not entirely adhered to; (iii) the land resource and socioeconomicsurveys were delayed; (iv) FD did not undertake benefit monitoring and studies; (v) field trials totest silviculture parameters were overlooked; (vi) information exchange with NGOs wasinadequate; (vii) project participants were not adequately organized into forestry associations;22

and (viii) the Borrower did not ensure that FD undertook adequate operation and maintenanceof the plantations, including specific actions for timely thinning, harvesting, and replanting.

III. ACHIEVEMENT OF PROJECT PURPOSE

A. Operational Performance

17. The physical achievements in nursery development, seedling distribution, and treeplanting were significant. Public awareness building through publicity campaigns gainedconsiderable recognition from stakeholders, although interaction between FD and NGOs wasinadequate. Training initiatives were well delivered to reach community leaders, participants,nursery operators, forest rangers, and selected FD staff (Appendix 5). However, deficiencies insilviculture management and lack of monitoring of the plantations, combined with unworkablebenefit-sharing agreements with the project participants, seriously undermined the intended

purpose of the plantations and jeopardized the realization of sustained benefits. The intendedpartnership between FD and participants did not develop, and the plantations had not producedsignificant benefits for distribution to legitimate beneficiaries. The credibility of the social forestrydevelopment is at stake, and delayed harvests and uncertainties over future harvests have ledto a situation in which the plantations suffer from thefts and damages.

1. Silviculture Practices

18. The rotation period for the woodlots, agroforestry, strip plantations, and block plantationswas planned at appraisal for seven years with fuelwood production as the primary objective, andintermediate benefits were expected to come from the thinning of tree stands at mid-rotation(three to four years after planting). The intended silviculture practices would have generated

significant benefits for participants during and at the end of the rotation period. However, thesilviculture practices as prescribed at appraisal were not undertaken in all plantation types.Essentially, planted stands have not been thinned and harvested as planned. Intercroppingdesign features could not be implemented and sustained. The dense trees and their crownscaused overshading and led to the discontinuation of alley cropping in agroforestry areas after

21 The PCR recorded compliance; however, the OEM could not locate the audited annual financial statements for

FY1993, FY1994, and FY1996 from the archived documents of the Projects Division. On several occasions, ADBfollowed up with FD concerning government auditors observations.

22 Later under FSP, participants were to be organized into local community organizations, with NGO assistance forgroup formation and management development.


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from thefts and other causes. The OEM found no evidence that simple field trials to testsilviculture parameters, such as species provenance, growth, and spacing requirements, hadbeen conducted as planned at appraisal.27

3. Selection of Participants

22. It was expected that participants would come from underprivileged sections of villagecommunities, comprising nearby residents who were landless or owned land of less than 1 ha.In the case of woodlots, and block and strip plantations, participants were to be recruited andorganized into forestry associations, with benefit sharing agreed between FD and theseassociations.28 In practice the participants acted as individuals, with separate agreements withFD. For the strip plantations, farmers with agricultural land adjacent to the strips were givenpriority, while in the case of agroforestry the participants were predominantly occupants ofencroached state forestland, with an individual benefit-sharing agreement between eachparticipant and FD. All lands for woodlots, agroforestry, and block and strip plantations weredegraded state-owned lands with marginal productive value, although encroached lands werepredominantly used by the occupants for growing food crops. The established wood treesbecame state property under FDs custody. The participants were paid daily wages for labor in

establishing the plantations, and allowed to keep outputs from the intercrops, and promised ashare of the forest produce provided that the participants maintained and protected the forestassets as prescribed by FD.

23. Participants were not always selected according to the envisaged criteria.29 On a case-by-case basis, FD regarded as necessary the involvement of influential local people.30 FD alsofaced a problem when a large portion of the plantations had no active participantssomeparticipants had left because they could no longer wait for the promised benefits, and someplantations were established without enough participants in the first place. As FD recentlydocumented, about a third of the project strip plantations under the CGP management werefound to be without participants. Similar conditions could be expected elsewhere, although FDhad not systematically monitored the beneficiaries and their current socioeconomic conditions.

Participants interviewed generally expressed their concerns over (i) irregular communicationswith FD, (ii) inflexibility in the selection of tree species, and (iii) the absence of regular incomes.

24. The criteria for selection of participants have been modified and improved under theongoing FSP to allow for more explicit preferences for the disadvantaged. Consequently, theexisting participants will not automatically be eligible for the next tree rotation, although they willbe considered. The possible exclusion of more affluent participants from the next rotation couldtrigger social conflict if the existing participants are considered ineligible under the new selectioncriteria. As future initiatives will be targeted to include the most disadvantaged, flexibility isrequired to address their needs for livelihood. The poor and disadvantaged do not have themeans to simply wait for unpredictable intermediate benefits and harvests.

27 The Forestry Research Institute in Chittagong was unaware of FDs obligation to conduct field trials, although FDwas expected to seek appropriate assistance from this institute.

28In addition, umbrella agreements for the use of designated land were required with the land-owning agencies suchas the Bangladesh Water Development Board (for block plantations), and Bangladesh Railway and the Roads andHighways Department (for strip plantations). In the case of seedling distribution to various interested parties,planting was demand based, and the seedlings were delivered to recipients for their own use.

29 The appraisal report recognized that due to the sociopolitical setting in the rural areas, the inclusion of moreaffluent farmers in the social forestry program was considered necessary, although landless and marginal farmerswere the primary beneficiary targets.

30As an example, the OEM interviewed a participant (Bhaluka, Mymensingh) who claimed that he had been a woodtrader for 20 years, participated in a tree auction on 27 February 2001 among five bidders, and won a bid for a 6 hawoodlot valued at about Tk249,000 ($4,600).


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replanting costs. FD has undertaken no specific technical assessments to address theimplications of the species ban.32

b. Replanting Under the Forestry Sector Project

28. The scope of FSP includes a provision to finance the replanting of second-rotation

plantations (mainly the plantations established under the Project and CFP). At present, the ADBloan for FSP is envisaged to finance 50 percent of the replanting costs. The remaining50 percent are to be financed from a portion of the sales proceeds of the final harvests(para. 29). Under this scheme, the Government contributes to second-rotation replanting byusing FSP loan funds. According to FD, the delays in harvesting and replanting projectplantations were caused by the delayed availability of FSP loan funds, resulting from delays infulfilling the FSP loan disbursement conditions for field development activities.33 As harvestingof project plantations is unlikely to proceed without a parallel replanting program and itsfinancing scheme in place, the realization of the purpose of the Project hinges on the FSPreplanting program.

c. Tree Farming Funds

29. Later in 1996 under the FSP, an innovative initiative to establish tree farming funds(TFFs) at local community organization (LCO) level was proposed. TFFs were to financereplanting on a sustained basis, into which 10 percent of harvest revenues would be deposited.However, to date no TFFs have been established, nor has the conceptual design been finalized.TFFs were envisaged to finance 50 percent of the replanting costs to match the FSP loan fundsfor the full replanting costs (para. 28). While FSP had originally envisaged that TFFs would beset up and operated separately by the participants at LCO level, with the assistance of an NGO,other options have emerged and deviate from the original intention.34 The functioning of TFFs orother means for financing replanting will determine the pace at which harvesting and replantingcan realistically be undertaken. Nonetheless, FD has not fully assessed the feasibility ofestablishing TFFs at LCO (or any other) level.35 The dependence of replanting on TFFs is

further complicated by the fact that FD has not estimated potential TFF income and whethersuch income would be sufficient; this is partly due to the absence of an up-to-date inventory ofthe plantations.

B. Performance of the Operating Entity

30. FD is the operating entity, acting as the custodian of the plantations (except for treesestablished from seedling distribution). This section focuses on financial reevaluation of

32 FD has not assessed the full implications of the tree species ban on (i) the replacement of tree species, and (ii) the

availability of replacement seeds for seedling production. The ban was in response to public pressure, particularlythe NGO community, for supposed environmental and health reasons. The plantation harvests had yielded

marginal benefits to date, and the income-generating role of the banned species had been discounted in thedecision for the ban. FDs proposed replanting provisions under FSP indicate full replanting, rather than reliance on50 percent regeneration through coppices.

33The conditions require the Borrower to promulgate an ordinance or introduce a bill in Parliament to implement therecommendations of a task force on legislative reforms (formed by the Government under the project of the Foodand Agriculture Organization of the United Nations on Institutional Support to the Master Plan for the ForestrySector) to establish an appropriate legal, economic, and institutional framework.

34 FD has proposed various options, including the establishment of TFFs at the forest range level within a forestdivision, requiring the merger of a large number of participant groups with contributions that vary according toactual harvest yields by area. Several issues remain unresolved: (i) relevance of the original LCO concept, (ii) FDinvolvement in the management of TFFs, (iii) procedures for dealing with the fungibility of funds across participantgroups, and (iv) procedures for conflict resolution.

35 The FSP feasibility studies (1999) for new planting and replanting did not cover TFF design.


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plantation performance. The financial returns of the project investments are calculated toinclude all outputs before their distribution to legitimate beneficiaries under the benefit-sharingarrangements. The project plantations are expected to fall short significantly on benefits for anumber of reasons. First, the Project failed to generate significant intermediate benefits thatcould have been derived from thinning operations. Second, benefits from intercropping wereminimal: (i) the high tree density and overshading due to the absence of pruning and thinning

prevented alley cropping in agroforestry areas, (ii) the dense planting configuration preventedparticipants from growing food crops in the woodlot and block plantation areas, and(iii) intercropping in strip plantations was unsuccessful due to inadequate participation. Third,the absence of thinning, despite the extension of the rotation period from 7 to 10 years, limitedthe size and the quality features of poles and small logs, thereby significantly reducing theirpotential market values. Fourth, delayed harvests reduced the time value of expected benefits.Fifth, while the plantations were projected at appraisal to be sustained over four seven-yearrotations without reliance on external financing, benefits that can be justifiably attributed to theProject are now limited to one extended rotation; the financial and economic reevaluation is,therefore, based on one rotation. Sixth, the harvest delays undermined the partnership tomaintain and protect the plantations, and significant tree losses due to thefts occurred and areexpected to continue. Seventh, despite the success in seedling distribution, the effective

plantation areas resulting from these seedlings are not expected to exceed 16,500 ha.36 Eighth,the poor performance of the upazila administrations, combined with inadequate participation inmaintenance, affected tree survival, created gaps, and reduced the effective strip plantationareas.

31. Since most of the plantation outputs have not been realized and distributed, thelegitimate beneficiaries of the plantations have so far gained little from project outputs. However,participants received daily wages (about Tk60/day in 2001 prices) as laborers during the initialperiod of tree planting. About 70 percent of tree establishment costs were estimated to compriselabor costs, including payments to participants. The Project contributed to rural wage generationthat benefited more than 20,000 participants. The project investments are expected to generatea financial internal rate of return (FIRR) of 6.3 percent, based on estimated quantifiable outputs

in constant 2001 prices before distribution, and after taking into account a provision of20 percent for unaccounted losses due to theft before harvests. With the exception of the stripplantation, the FIRRs range from 10 to 15 percent for plantations. The strip plantation has thelowest FIRR (negative) because of reduced benefits and high development costs.37 The FIRR isfar below the expected overall FIRR of 25.8 percent at appraisal, and 26.1 percent at projectcompletion. Details of the financial and economic reevaluations are in Appendix 7.

C. Economic Reevaluation

32. Tangible outputs from the project investments, including unaccounted harvests andthefts, are estimated at 4.65 million cubic meters (m3) of wood, comprising 1.51 million m3 offuelwood, 2.06 million m3 of poles, and 1.08 million m3 of small sawlogs over one rotation.

These outputs represent an average effective gross yield of 104.7 m3

/ha for all plantations,before losses. In addition, leaves and twigs (collected from the forest floor for fuel) areestimated to amount to about 688,000 tons. The economic reevaluation has been conducted

36

The OEM estimated that 6,000 seedlings were required for an effective planting of 2,900 seedlings/ha, taking intoaccount (i) a cull allowance of 10 percent; (ii) 50 percent loss during transport, distribution, and waiting periodsbefore planting; and (iii) 25 percent replacement rates after planting. The levels of quality planting expected fromFD cannot equally be expected from the seedling recipients. The OEM estimated the effective planted area to be16,500 ha, compared with 22,000 ha at appraisal and 29,000 ha at project completion.

37The financial investment costs for the strip plantations amounted to an average of Tk229,000/ha equivalent inconstant 2001 prices, compared with Tk38,400/ha for woodlots, Tk20,100/ha for agroforestry, and Tk25,000/ha forblock plantations.


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using constant 2001 prices and based on the domestic price numeraire. Adjustments have beenmade for the exclusion of taxes, duties, subsidies, and debt service, and the application of ashadow exchange rate factor of 1.25 to the border prices of traded goods. Given less than fullemployment in rural areas, a shadow wage rate factor of 0.85 has been used. On this basis, theeconomic internal rate of return (EIRR) of the Project is estimated at 9.3 percent, far below theexpected EIRR of 22.9 percent at appraisal, and 28.3 percent at project completion. The EIRRs

for the different project components are estimated at 11.8 percent for seedling distribution,14.3 percent for woodlots, 18.0 percent for agroforestry, 20.1 percent for block plantations, anda negative 3.5 percent for strip plantations. The detailed economic analyses are in Appendix 7.

D. Sustainability

33. The sustainability of the project initiatives and their ultimate objective of creating anationwide capacity for sustained supply of fuelwood depends on several factors. The majorelements include (i) the organizational and institutional arrangements for social forestry,including the participatory processes and the emergence of satisfactory benefit-sharingarrangements; (ii) operations management capability; and (iii) the development of anappropriate modality for sustained reinvestment and replanting. Ongoing FSP initiatives in

institutional reforms, management development, and capacity building are relevant factors thathave much influence on the project sustainability. Nevertheless, the sustainability of theoperations of the project plantations, in the context of social forestry, is rated less likely over thenear future for the following reasons.

1. Organizational and Institutional Arrangements

34. The traditional role of the FD foresters was conservation and tree planting, and thiscontributed to a strong focus on achieving planting targets and reforestation, with inadequateattention to people and their social conditions, and to the management and commercialperspectives of the fast-growing plantations. The participation features of social forestry aspracticed require further development, including organizational and management reforms within

FD to respond to demands for self-sustaining social forestry. Although such reforms have beeninitiated under FSP,38 these initiatives have not had much impact on improving the existingpartnership between FD and the project participants. FSP initiatives to decentralize plantationmanagement to divisional level have not materialized. Participatory initiatives have beenimpeded by rigid, top-down, and hierarchical practices within FD. Decision making within FDremains highly centralized.

2. Operation and Management Capability

35. The management aspects of the plantation assets require much improvement. Therecommendations of the PCR (para. 6) for the development of management plans for theproject tree plantations have not been implemented, although capacity-building initiatives under

CGP and FSP have continued to support FD in its management development. ADB reviewmissions for CGP and FSP have repeatedly requested FD to prepare such management plans.As FD is entirely budget funded, and operates as a government department with noauthorization to retain revenues, it has little financial incentive to undertake the prescribedplantation management for revenue sharing with participants. The project plantations need to beoperated in a disciplined manner to yield high returns from fuelwood and other products. Thesustainability of social forestry ultimately depends on the participants and how they are

38

Relevant features that have been proposed include the creation of an FD social forestry wing, decentralization ofFD management to divisional level, improvements of participation and benefit-sharing arrangements, the use ofNGOs for the development of LCO project participants, and the development of TFFs for replanting.


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organized, considering that they have the most incentive to achieve and retain high returns.Initiatives are required to strengthen the participants and their organizations, with provisions todecentralize plantation management and decision making to LCOs, in the context of improvedbenefit sharing that is conducive for maintaining forest cover that yields sustained benefits.Nonetheless, initiatives to devolve responsibilities to LCOs have met resistance from FD, asseen in the formulation of TFFs (footnote 34).

3. Reinvestment

36. The appraisal assumption that the replanting of the project plantations would be largelyindependent of external funding, through reinvestments of the harvests and contributions of theparticipants, is rated less likely to materialize soon. At present, the replanting of the projectplantations depends on FSP initiatives, including the use of ADB loan funds and theestablishment of TFFs as a mechanism for reinvesting a portion of internally generatedrevenues. However, the TFF arrangements and their feasibility have not been determined.Uncertainties have remained, especially on harvests, distribution of benefits, replanting, andresources required for sustaining the plantations into the second rotation and beyond.

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

A. Socioeconomic Impact

37. More than 21,000 participants were each allocated about 1.21 ha (3 acres) of land underthe Project, excluding strip plantations.39 Apart from leaves and twigs collected from the forestfloor, and wages as hired labor for establishing the plantations, the participants have receivedonly minimal benefits. Participants interviewed by the OEM expressed strong doubts about(i) ever receiving promised benefits from the plantations, (ii) the timing of the expected harvests,and (iii) the relevance and applicability of the existing benefit-sharing agreements. Theseuncertainties have led to impatience and a feeling of resignation among participants, anddeveloped into a potentially hostile social environment. While the participants were generally

promised a seven-year rotation for the plantations, the absence of time-bound harvestingtargets and lack of effective communication between FD and the participants have generateddistrust. The partnership that requires FD and the participants to safeguard the plantation assetshas unraveled. The mutual distrust is reflected through pervasive allegations of thefts of trees.FD field staff and independent observers informed the OEM that thefts over recent years inModupur, where there had been a long history of deep-rooted concerns over land tenure andclaims made by local communities, had caused tree losses of up to 85 percent over 1,810 ha ofwoodlots.40 FD claimed that losses elsewhere were much lower.

38. The social dimensions of reforestation were not adequately addressed during projectimplementation. The socioeconomic survey was not completed until July 1993, and did not havemuch influence on the selection of sites and participants. Gender considerations in the selection

of participants were not adequate

female participation was limited to a spousal role as co-signatory to a PBSA, and cultural norms prevented female-headed households andsingle/divorced females from becoming independent signatories. Choices for land use, tenureclaims in specific areas by minority tribal communities, and the FD-dominated terms of the

39 There is no up-to-date monitoring of participants, and the number of them who have actually remained with the

Project is unknown.40

Although the OEM visited sites in Modupur where trees had been illegally cut, the OEM received no specific figuresfor losses as FD had undertaken no surveys to assess the remaining stocks. ADB ceased financing of woodlotdevelopment in Modupur in 1993. In accordance with the loan covenants (Schedule 6, para. 10), encroached areaswere to be excluded from woodlot development.


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PBSAs affected the partnership between FD and the participants. While the project areas weredefined as state forestland or state-owned land, security of land tenure as a motivating force forparticipants was not fully understood at appraisal, as reflected in the annual renewal of thePBSAs.

B. Environmental Impact

39. The Project generated positive environmental impacts. First, tree cover wasreestablished on underutilized land and degraded forestland. Second, tree planting onroadsides and waterway embankments, including coastal areas, stabilized erosion-prone areasand served as windbreaks to reduce wind-induced soil erosion and as protection againststorms. Third, the awareness building and publicity campaigns encouraged private initiatives fortree planting on private property, homesteads, and farms. The increase in tree cover will alsohave a positive impact on carbon sequestration. Nonetheless, the thefts in Modupur have hadnegative environmental impacts, considering that the sites were previously forested, albeitdegraded, with coppices of Sal trees. The thefts have left large blocks of land barren withouttree cover. Observers claimed that the degraded Salforests would have produced coppices toreforest the areas naturally. The Government banned several tree species in response to

reasons deemed related to health and the competing uses of water during the dry season.However, the justification for the ban and its implications have not been fully assessed(para. 27).

C. Impact on Institutions and Policy

40. FD went through a significant learning process to cope with an emerging strategy thatwas focused on social forestry. For the implementation of the Project nationwide, FD had toengage more than 2,500 staff, including retaining CFP personnel, representing 20 percent oftotal FD personnel. Despite the CFP experience, the new social forestry approach and theaugmented nationwide targets placed tremendous pressures on FD. The associated UNDP-financed TA 1142-BAN (footnote 11) specifically provided training (Appendix 5) and consulting

services for the Project, including the delayed land resource and socioeconomic surveys. TheTA produced numerous training materials, handbooks, and guidelines related to nurserydevelopment, communications, participatory agroforestry, and forestry extension. These outputswere used for skills development of FD staff and other target groups. Nevertheless, projectpersonnel were inadequately prepared to implement new practices apart from planting trees tomeet the physical targets. Social mobilization and its requirements for building a successfulpartnership with communities did not receive adequate on-the-job application. The training andadvisory services under TA 1142-BAN, however, increased awareness for change within FD,and spawned support for institutional reforms, albeit at a slow pace, under FSP.

V. OVERALL ASSESSMENT

A. Relevance

41. The rationale and purpose of the Project were sound and highly relevant, taking intoaccount the demand for fuelwood, and the need to arrest the countrys rate of deforestation. Thedevelopment strategy, focusing on social forestry and emphasizing participatory approachesand reorientation of FDs practices, has remained relevant. But this strategy has beenineffective, as project implementation has focused more on planting trees than on the requiredpartnership with people in the community. Despite the management problems associated withthe plantations (paras. 18-24), the Project, in the context of its intended purpose, is ratedrelevant.


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B. Efficacy

42. The Project has established standing trees. The absence of site-specific plans forthinning, harvesting, and replanting, and the poor performance in silviculture management,underscore the uncertainties surrounding the achievement of project purpose. The widespreadtheft of trees reflects the ineffective management of the reforested areas under the existing

partnership agreements with the participants (para. 37). The Project has not developed theinstitutional capacity within FD and local administrations for self-sustaining social forestry,including its operations management requirements. The unintended change in plantationmanagement practices (paras. 18-19) has altered the composition of end productsthe OEMhas estimated that fuelwood represents only a third of project outputs. Overall, the achievementof project purpose, to increase the production of fuelwood, is rated less efficacious.

C. Efficiency

43. The Project has suffered from serious shortfalls in benefits, which were caused mainlyby organizational and management shortcomings. The shortfalls stemmed primarily from theabsence of intermediate outputs, the failure of intercrops, poor quality and reduced prices for

poles and small logs, and delayed harvests (para. 30). The estimated FIRR of 6.3 percent(para. 31) and EIRR of 9.3 percent (para. 32) are significantly lower than the rates of returncalculated at appraisal and project completion. Consequently, the Project is rated less efficientin terms of its achievements as measured against the use of inputs, and as compared withappraisal expectations.

D. Sustainability

44. The Project is rated less likely to be sustainable considering (i) the uncertainties overharvests and the faltering partnership with participants, and (ii) the uncertain arrangements forreplanting (paras. 33-36). Further, FDs slow reorientation to improve its management practicesand realign its approaches to become more socially oriented has had little impact on the

operations of existing plantations. The sustainability of the project initiatives depends on thesuccess of the ongoing FSP in instituting the necessary reforms and managementimprovements, and in reestablishing trust with participants on the basis of improved andenforceable partnership agreements.

E. Institutional Development and Other Impacts

45. The Project has brought little institutional development impact (para. 40). Institutionalaspects were mainly dealt with through training and advisory services provided under TA 1142-BAN. Organizational and management development has been limited, and the training initiativesfor FD staff were mainly of a technical nature, and were insufficiently focused on operationsmanagement. Nonetheless, the project initiatives have heightened awareness of the strengths

and weaknesses of past and present institutional arrangements for social forestry, andcontributed to the mobilization of general support for the ongoing FSP institutional initiatives.While the social impacts have been undesirable (paras. 37-38), the Project has generatedfavorable environmental impacts, albeit with some deficiencies (para. 39).

F. Overall Project Rating

46. Based on the above five performance evaluation criteria, the Project is rated partlysuccessful.


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G. Assessment of ADB and Borrower Performance

47. ADB provided significant resources to the Project, from preparation to implementation.The appraisal was thorough, although the project design inadequately addressed the benefitsharing. ADB provided timely inputs to FD during frequent review missions. However, the OEMconfirmed the PCR findings that ADB review missions paid insufficient attention to

socioeconomic considerations, including arrangements concerning the participants. Attention tothe management of the plantations, despite the CFP experience, was also inadequate.However, ADB followed up on the PCR recommendations and has continued to provide adviceto FD through CGP and FSP. Overall, the performance of ADB is rated satisfactory. While theBorrower has generally complied with the loan covenants, it suffered from major shortcomings,most notably insufficient attention to ensuring that FD provided adequate management,operation and maintenance of the plantations, including specific actions for timely harvests,benefit distribution, and replanting. Shortcomings in plantation management by FD wereevident: among others, it did not implement the PCR recommendations. Overall, theperformance of the Executing Agency is rated less than satisfactory.

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A. Key Issues for the Future

48. FD owes its management tradition to a custodial forestry approach. The switch from acustodial to a people-oriented approach for social forestry activities has been slow. Prevalentviews among FD foresters have constrained participatory initiatives.41 Lack of dialogue betweenFD and participants and the continuing uncertainties on benefit distribution have reinforced theperception among participants that FD was primarily interested in the recovery and control oflands with custodial reforestation objectives. The features of the participatory approachesrequire much improvement, and the trust of the participants needs to be reestablished.

49. Improvements to benefit sharing have been made under FSP, with the intention of

replacing previous PBSAs nationwide.42

However, the existing PBSAs for the Project have notbeen replaced. In addition, these improvements have not incorporated several features desiredat FSP appraisal.43 For example, no arbitration mechanism has been set up, leaving FD to havefinal decisions on disputes and the unilateral authority to terminate the PBSAs; and benefitsharing in the event of premature termination has remained undefined. The PBSA terms couldbe further improved to (i) allow more accountability and predictability, (ii) permit participants toinvest and own the trees, (iii) allow participants to monitor harvests and auctions, (iv) providespecific performance criteria for renewal or termination, and (v) allow an independent arbitrationprocess for the settlement of disputes.

50. As felling of trees for final harvests will have to be followed by replanting, financingarrangements for replanting will affect plans and decisions for harvesting. FD currently has little

41 Khan, Niaz Ahmed. 1998. Interviews with the Sahibs: Bureaucratic Constraints on Community ForestryProgrammes in Bangladesh. Journal of World Forest Resource Management. Vol. 9: 73-93. These views include(i) land-use decisions for social forestry should remain under government control and the prerogatives of FD,(ii) the main role of foresters is to protect forests for the Government, and (iii) local people are the main causes ofdeforestation.

42Notably, the improvements included (i) extending the agreement to match the rotation period with an automaticrenewal on satisfactory fulfillment of the conditions; (ii) defining the timing for thinning and harvesting, and theobligations of FD and the participants in this context; (iii) recognizing spousal rights and accepting them as co-signatories, and allowing inheritance by designated heir in the event of death; and (iv) using an NGO to assist insocial preparation, group formation, and administration.

43 Report and recommendation of the President: 1486-BAN(SF): Forestry Sector Project, October 1996,Supplementary Appendix B: Social Forestry Participation and Benefit Sharing Agreements.


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financial incentive to undertake prescribed plantation management for revenue generation. Atpresent, the government contribution for the replanting of project plantations is derived from theFSP loan. A suitable modality needs to be developed for FD and participants to retain therevenues both for sustained reinvestment and to serve as performance incentives.

B. Lessons Identified

51. The social forestry initiatives have been hindered by social issues concerning theselection and eligibility criteria for participants, land tenure security for participants, roles andobligations of the parties involved, ownership of trees, and benefit sharing of the forest assetsdeveloped. The importance of conducting thorough social assessments prior to physicalimplementation is evident, for such critical social issues could have been anticipated andmeasures designed to minimize undesirable effects.

52. Despite the CFP experience, the development of PBSAs has been disappointing. Thecredibility of the social forestry initiatives has been jeopardized by unfulfilled promises toparticipants. Community participation cannot be taken for granted through the engagement ofparticipants as wage laborers for investment purposes without clear mechanisms for

participatory social mobilization and organizational development, and the establishment ofworkable mechanisms for realizing, distributing, and reinvesting the benefits of the investmentsaccording to the project purpose. As social forestry initiatives are increasingly targeted to benefitthe most disadvantaged, flexibility is required to address the needs for livelihood. The poor anddisadvantaged do not have the means to wait for unpredictable benefits and harvests(paras. 23-24). Future development initiatives should include broader provisions for investmentsto enhance livelihood opportunities and downstream employment for supplemental income inthe areas within and adjacent to the plantations and forestlands.

53. The sustainability of the reforestation efforts depends crucially on the success of thepartnership between FD and the participants, efficient operation and management of theestablished plantations, the generation and distribution of benefits, and the reinvestment of

revenues for sustained social forestry operations.

C. Follow-Up Actions

54. Continuing efforts under CGP and FSP for FD to adopt the basic principles of socialforestry (including FSP loan covenants that require legal and institutional reforms in the forestrysector) offer remedial opportunities to address the shortcomings mentioned above. Highlyrelevant are efforts to improve benefit sharing and plantation management, and to developTFFs. The credibility of the social forestry initiatives depends on whether the existing plantationscan in fact generate and distribute benefits to participants. FD, with continuing ADB support,should give emphasis on harvesting, replanting, and developing mechanisms and institutionalarrangements for self-sustaining operations. Over the next two years, FD needs to make the

project plantations and CFP plantations its priority, before embarking on new planting schemeselsewhere. ADB should monitor the project plantations until the first rotation is completed.

55. FDs management of the plantations is weak. Information necessary for planning andmanagement decisions is lacking. Overall capacity building for an improved monitoring systemthat includes price monitoring and analysis is required. FD should make efforts to develop afunctional monitoring system over the next 12 months, taking into account performancemeasures including stocks, age distribution, species performance, tree survival, tree growthrates, and market prices of wood products. FD should undertake systematic assessments ofplantation conditions on a sample basis by forest division.


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56. FD has not carried out specific assessments to estimate plantation losses due to theft.Transparency and accountability need to be improved between FD and the participants byimproving partnership and benefit-sharing agreements. FD and the participants shouldundertake these assessments within 12 months to provide reliable information on the remainingstocks and promote cooperative efforts to prevent further losses before harvests.

57. The Project does not have an operational management plan based on an inventory ofthe established forest assets, including age distribution and site-specific schedules for trees tobe replanted. There are no operational plans for site-specific pruning, thinning, harvesting, andreplanting to reflect the intended purpose of tree planting and output utilization.44 FD, withsupport from FSP, should prepare such plans within the next 24 months for the projectplantations, indicating a realistically phased plan for thinning, harvesting, and replanting. Theseplans should be consistent with the objective of achieving sustained benefits through replantingand improved partnership with the participants.

58. The replanting of the project plantations for the second rotation depends on theestablishment of TFFs.45 Several conceptual issues have yet to be resolved, including futuremanagement of the plantations and the role of LCOs, ownership of TFFs, prudential rules for

TFFs, TFF management and their responsibilities to LCO members, and LCO membership size.The role of FD in TFFs has yet to be clearly defined. The participants have not been consultedon TFF initiatives. The provisions for making TFFs feasible need to be developed by FD, withFSP support and in consultation with the participants. The TFF initiatives will inevitably bringchanges to the existing participation agreements and the role of participants. FD should developTFFs in the next 18 months.

44 Under CGP management, the preparation of pruning and thinning plans began, and FD approval for thinning of

project strip plantations with identifiable beneficiaries was obtained in April 2001. Plans for the remaining stripplantations were still being prepared. Actual thinning operations in 2001 were expected to be limited, consideringthe late preparation and approval of the plan, and the timing of the monsoon season.

45 Although the TFF framework and its operational design can be formulated in the near future, the actual harvestingand replanting will depend on the t ime and resources available to establish LCOs.


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APPENDIXES

Number Title Page Cited on(page, para.)

1 Comparison of Physical Achievements under the Project 21 5, 10at Appraisal and As Implemented

2 Area Statement of the Project Plantations 22 5, 10

3 Project Costs and Financing Plan 23 5, 12

4 Allocation of Loan Proceeds and Disbursement 24 6, 12

5 Training Delivery 25 7, 17

6 Main Features of the Project Benefit-Sharing Agreements 26 10, 25

7 Financial and Economic Reevaluation 27 12, 31


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Component Total

Woodlots (ha)

Appraisal 1,300 2,000 2,800 3,200 3,200 3,500 16,000

PCRa

550 2,024 2,860 2,877 3,800 4,624 2,680 19,415

PPARb

551 1,983 2,845 2,851 3,811 4,591 2,703 19,335

Agroforestry (ha)

Appraisal 370 480 560 560 600 630 3,200

PCRa

40 539 406 447 750 800 2,128 5,110

PPARb

48 538 409 466 722 800 2,128 5,111

Strip Plantations (km)

Appraisal 1,170 1,600 2,800 3,530 4,180 4,470 17,750PCR

a0 1,543 2,860 438 3,57

Upazila Afforestation and Nursery Development Project (Loan 956-BAN[SF])

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Transcript of Upazila Afforestation and Nursery Development Project (Loan 956-BAN[SF])