ASIAN DEVELOPMENT BANK PPA:BAN 16087

Transcription

1 ASIAN DEVELOPMENT BANK PPA:BAN PROJECT PERFORMANCE AUDIT REPORT ON THE UPAZILA AFFORESTATION AND NURSERY DEVELOPMENT PROJECT (Loan 956-BAN[SF]) IN BANGLADESH September 2001

2 CURRENCY EQUIVALENTS Currency Unit Taka (Tk) At Appraisal At Project Completion At Operations Evaluation (September 1986) (December 1995) (April 2001) Tk1.00 = $ $ $ $1.00 = Tk32.27 Tk40.75 Tk54.10 ABBREVIATIONS ADB Asian Development Bank CFP Community Forestry Project CGP Coastal Greenbelt Project EA Executing Agency EIRR economic internal rate of return FD Forest Department FENTC forest extension nursery training center FIRR financial internal rate of return FSP Forestry Sector Project ha hectare LCO local community organization m meter m 3 cubic meter MOEF Ministry of Environment and Forest NGO nongovernment organization OEM Operations Evaluation Mission PBSA project benefit-sharing agreement PCR project completion report PP project proforma PPAR project performance audit report PPTA project preparatory technical assistance SDR special drawing rights TFF tree farming fund UNDP United Nations Development Programme NOTES (i) (ii) 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. For example, FY1990 begins on 1 July 1989 and ends on 30 June In this report, $ refers to US dollars. Operations Evaluation Department, PE-571

3 CONTENTS Page BASIC DATA EXECUTIVE SUMMARY MAP ii iii vi I. BACKGROUND 1 A. Rationale 1 B. Formulation 1 C. Purpose and Outputs 1 D. Cost, Financing, and Executing Arrangements 2 E. Completion and Self-Evaluation 3 F. Operations Evaluation 4 II. PLANNING AND IMPLEMENTATION PERFORMANCE 4 A. Formulation and Design 4 B. Achievement of Outputs 5 C. Cost and Scheduling 5 D. Procurement and Construction 6 E. Organization and Management 6 III. ACHIEVEMENT OF PROJECT PURPOSE 7 A. Operational Performance 7 B. Performance of the Operating Entity 11 C. Economic Reevaluation 12 D. Sustainability 13 IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS 14 A. Socioeconomic Impact 14 B. Environmental Impact 15 C. Impact on Institutions and Policy 15 V. OVERALL ASSESSMENT 15 A. Relevance 15 B. Efficacy 16 C. Efficiency 16 D. Sustainability 16 E. Institutional Development and Other Impacts 16 F. Overall Project Rating 16 G. Assessment of ADB and Borrower Performance 17 VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 17 A. Key Issues for the Future 17 B. Lessons Identified 18 C. Follow-Up Actions 18 APPENDIXES 20

4 BASIC DATA Upazila Afforestation and Nursery Development Project (Loan 956-BAN[SF]) PROJECT PREPARATION/INSTITUTION BUILDING TA No. TA Name Type Person- Months Amount 1 ($) Approval Date 575 Second Community Forestry PPTA , Dec Upazila Afforestation and Nursery Development 2 ADTA 84 2,528, Mar 1989 As per ADB KEY PROJECT DATA ($ million) Loan Documents Actual Total Project Cost Foreign Exchange Cost Local Currency Cost ADB Loan Amount/Utilization ADB Loan Amount/Cancellation KEY DATES Expected Actual Fact-Finding Aug Apr-5 May 1986 Appraisal 3 Oct Sep-14 Oct 1986 Loan Negotiations Nov Feb 1989 Board Approval 28 Mar Mar 1989 Loan Agreement 31 May Jun 1989 Loan Effectiveness 30 Aug Oct 1989 First Disbursement 6 Feb 1990 Project Completion 30 Jun Dec 1995 Loan Closing 30 Jun Apr 1996 Months (effectiveness to completion) ECONOMIC AND FINANCIAL Appraisal PCR PPAR INTERNAL RATES OF RETURN (%) Economic Internal Rate of Return Financial Internal Rate of Return BORROWER EXECUTING AGENCY Government of the People s Republic of Bangladesh Forest Department of the Ministry of Environment and Forest MISSION DATA Type of Mission No. of Missions No. of Person-Days Fact-Finding 1 84 Appraisal Project Administration Inception 1 6 Review Project Completion 1 42 Operations Evaluation 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 Three follow-up appraisal missions were made after this mission: 4-9 November 1986, 6-16 October 1987, and 5-13 October The Operations Evaluation Mission comprised Mr. Njoman Bestari (evaluation specialist, mission leader), Mr. Berry A. Van Gelder (social forestry specialist, staff consultant), and Dr. Afsana Wahab (community development facilitator, staff consultant).

5 iii EXECUTIVE SUMMARY In the mid-1980s, the forest area per capita in Bangladesh was among the lowest in Asia, while biomass fuels, including fuelwood and agricultural residues, accounted for more than 80 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 forest resources, and diverted the uses of agricultural residues and animal dung from fodder and manure to fuel. The Project was designed with the following objectives: (i) increase the production 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 in implementing a self-sustaining nationwide social forestry program. The project formulation benefited from the design of the earlier Community Forestry Project, 1 and, based on experience there, 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) on degraded/encroached public forestland; strip plantations (17,750 kilometers) along roads, railways, and embankments of canals and rivers; and block plantations (800 ha) on state-owned vacant land. The Project also included (i) distribution of 70 million seedlings to interested institutions such as schools, offices, and nongovernment organizations; (ii) upgrading of 40 existing forest extension nursery training centers; and (iii) establishment of 346 local nurseries. Additionally, project support activities comprised publicity campaigns, field trials, field resource and socioeconomic surveys, and benefit monitoring. Despite the different names that characterize the sites, features, and configuration of the plantations, tree planting for fuelwood production was widely dispersed and many of these plantations were small. The Project covered 61 of the country s 64 districts, excluding the Sundarbans and the Chittagong Hill Tracts. Landless and marginal farmers were targeted to receive benefits both in the form of wages paid by FD during the plantation establishment, and fuelwood, intercrops, and a share of the harvests of trees according to benefit-sharing arrangements. The Project was also expected to create capacity for self-sustaining social forestry schemes. FD was designated as the Executing Agency of the Project. The Project was approved in March 1989, following an extended preparation that began in 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 Project amounted to $46.8 million, compared with the appraisal estimate of $50.4 million, and was financed by the ADB loan ($40.9 million), grant assistance from the United Nations Development Programme ($2.5 million), 3 and the Government ($3.4 million). Cost savings were made possible due to the depreciation of the local currency. A total of $6.5 million of the loan amount was cancelled. All project activities were originally planned for completion over six annual planting seasons, with an original loan closing date of 30 June Activities in the first year were delayed. This delay was compensated by subsequent accelerated implementation, and a loan extension to allow an additional year of planting in The loan was closed on 15 April 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 TA 575-BAN: Second Community Forestry, for $150,000, approved on 23 December 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 This was administered by ADB.

6 iv FD, on the basis of geographic areas, to two subsequent, still ongoing ADB-financed forestry projects executed by FD. 4 The total physical achievements generally exceeded the appraisal targets for plantation areas and seedling distribution. Tree planting was successful, and tree survival rates during establishment 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 intensive publicity campaigns on tree planting, the Project promoted tree planting on lands of public institutions and private properties, and encouraged the establishment of private nurseries that have made various tree seedlings available in rural markets. Despite the achievements in tree planting, nursery development, and the distribution of seedlings, the implementation and operation of the project tree plantations have suffered from management deficiencies that have seriously constrained achieving the project purpose. Many of the potential benefits of these tree plantations have not materialized because of inadequate silviculture management of the plantations and delayed harvests. The establishment of the plantations has so far been a tree planting exercise, without yielding significant benefits. FD s management of the operations of the project plantations was weak, as evidenced by the absence of systematic monitoring of plantation conditions, including stocks, age, species, tree survival, and actual growth rates. Benefit monitoring was not undertaken. The land resource and socioeconomic surveys were delayed and their relevance was marginal. The arrangements for benefit sharing between the participants and FD, as detailed in project benefit-sharing agreements, reflect the generally weak position of the participants, with terms and conditions that substantially favor FD. Participants have strong doubts as to whether they would receive the promised benefits from the plantations, and over the relevance and applicability of the existing benefit-sharing agreements. Coupled with uncertain harvest schedules, this has led to impatience and a feeling of resignation among participants, and a potentially hostile social environment developed. While the participants were generally promised a seven-year rotation for the plantations, the absence of time-bound harvesting targets and effective communication between FD and the participants has generated distrust and caused the plantations to suffer from widespread theft. The Project has suffered from shortfalls in benefits, mainly because of organizational and management shortcomings. The shortfalls are attributable to the absence of intermediate outputs from the thinning of tree stands, the failure of intercrops, the poor quality of outputs and their reduced market values, and time lost due to delays in harvests. The financial internal rate of return of total project investments is recalculated at 6.3 percent and the economic internal rate of return at 9.3 percent, well below the rates of return anticipated at appraisal and project completion. The sustainability of reforestation efforts, and the success of collaborative efforts between FD and the participants, depend critically on efficient operation and management of the established plantations, the generation and distribution of benefits, and the reinvestment of revenues for sustained social forestry operations. The near-term sustainability of the Project is rated 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, with inadequate attention to people and their social conditions, and to the commercial aspects of the plantations. 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 BAN(SF): Forestry Sector Project, for $50 million, approved on 21 November 1996.

7 v practices within FD. Decision making within FD remains highly centralized. Second, the operation and management aspects of the plantation assets require significant improvement. The recommendations of the 1997 project completion report for the development of management plans for the tree plantations have not been implemented. Third, sustainability of social forestry ultimately depends on the participants, considering that they have the most incentive to achieve and retain high returns. Initiatives are required to strengthen the participants organizations, with provisions to decentralize plantation management to local community organizations, in the context of improved benefit sharing. However, major responsibilities are unlikely to be devolved in the near future to these organizations. Fourth, at present, 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 a mechanism for reinvesting a portion of internally generated revenues. However, the tree farming fund arrangements and their feasibility have not been fully determined. The Operations Evaluation Mission has rated the Project as partly successful and drawn up a number of follow-up actions. First, the requisites for sound plantation management should be reinforced through ongoing FSP initiatives. FD, with continuing ADB support, should give emphasis on harvesting, replanting, and developing appropriate mechanisms and institutional arrangements for self-sustaining operations including increased responsibilities for local community organizations. Consequently, over the next two years, FD needs to make the project plantations its priority, before undertaking new planting schemes elsewhere. ADB should monitor the operations of these plantations until the full first rotation is completed. Second, information for planning, operations, and management decisions is urgently required. FD should develop a functional monitoring system over the next 12 months, to include measurable performance indicators including standing stocks, age distribution, species performance, tree survival, actual growth rates, and market prices of various wood products. FD should undertake systematic assessments of plantation conditions on a sample basis by forest division, 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 to reflect 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 a realistically phased plan for thinning, harvesting, and replanting for all areas. These plans should 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 partnership with the participants. Fourth, the replanting of the project plantations for the second rotation, as envisaged under FSP, depends critically on the establishment of tree farming funds (TFFs). Several conceptual issues have not been resolved, including the future management of the plantations and 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 by strengthening partnership and benefit-sharing agreements. These assessments should be undertaken within 12 months, to provide reliable information on the remaining stocks and promote cooperative efforts to prevent further losses before harvests.

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9 I. BACKGROUND A. Rationale 1. In the mid-1980s, the forest area per capita in Bangladesh was among the lowest in Asia, while biomass fuels including wood fuels, animal dung, and agricultural residues accounted for more than 80 percent of all energy consumed in the country. In rural areas where poverty and other conditions permitted few affordable options, people relied almost exclusively on biomass fuels. Consequently, the Government of Bangladesh (the Borrower) became increasingly concerned at the rapid growth in the consumption of biomass fuels and its impact on the country s fragile ecological balance. This concern was reflected in the Government s fiveyear development plan ( ), which emphasized the need for active forest resources management and tree planting. Accordingly, the Government sought external assistance, including from the Asian Development Bank (ADB), and embarked on reforestation programs to reduce the country s rate of deforestation. In this context, the Upazila Afforestation and Nursery Development Project (the Project) was prepared, based on the design of the earlier Community Forestry Project 1 (CFP). The rationale of the Project hinged on the need to address an acute shortage 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 period 2 that began in 1983 with a project preparatory technical assistance 3 (PPTA) for carrying out a feasibility study of a social forestry development intervention. In addition to the PPTA, the project formulation benefited from experience drawn from CFP, leading to specific improvements in design features. The Project was the second ADB-financed project in the forestry sector in Bangladesh. C. Purpose and Outputs 3. The Project was designed with objectives and scope similar to those of CFP, and primarily intended to (i) increase the production of biomass fuels, 4 and (ii) enhance the institutional capability of the Forest Department (FD) of the Ministry of Environment and Forest (MOEF) and the upazila 5 administrations in implementing a self-sustaining nationwide social forestry program. The scope of the Project at appraisal included the following: (i) establishment of fuelwood plantations (a) woodlot 6 plantations on 16,000 hectares (ha) of degraded but unencroached public forestland; 1 Loan 555-BAN (SF): Community Forestry Project, for $11 million, approved on 3 December Completed in December 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 of woodlots on state forestlands; (iv) establishment of pilot agroforestry farms; and (v) institutional and administrative support. 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, taking into account the experience and completion of CFP. 3 TA 575-BAN: Second Community Forestry, for $150,000, approved on 23 December Biomass fuels, as documented in the appraisal report, comprise mainly fuelwood. 5 An upazila is an administrative government unit and was renamed thana on 30 June 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 of encroachment. In theory, participants could temporarily grow food on unused land until the block was fully planted.

10 2 (b) agroforestry 7 plantations on 3,200 ha of degraded and encroached public forestland; (c) strip 8 plantations along 17,750 kilometers of roads, railways, embankments of canals, rivers, and coastal areas; and (d) block 9 plantations on 800 ha of vacant land of the Bangladesh Water Development Board or the Lands Administration; (ii) (iii) (iv) provision of 70 million seedlings for schools, colleges, mosques, government offices, nongovernment organizations (NGOs), farmers, and others; rehabilitation and upgrading of 40 existing forest extension nursery training centers (FENTCs), and establishment of 346 upazila nurseries to support the planting program and seedling distribution; and organization and implementation of publicity campaigns to increase public awareness of the value of tree planting; simple research trials; and project support, including field resource and socioeconomic surveys, monitoring, and evaluation. 4. Despite the different names that characterize the sites, features, and configurations of the plantations, tree planting for fuelwood production in widely dispersed and small areas was a common feature. The Project covered 61 of the country s 64 districts, excluding the Sundarbans 10 and the Chittagong Hill Tracts. Participants, comprising landless and marginal farmers, were targeted to receive benefits in the form of (i) wages paid by FD during the plantation establishment; and (ii) intercrops, fuelwood, and a share of the final harvests of trees according to benefit-sharing arrangements, with separate terms for woodlots, agroforestry, and strip plantations. The Project was also expected to create capacity for self-sustaining social forestry. The participants were anticipated to come from communities in the vicinity. More than 21,000 participants were paid wages for their labor to establish the plantations, and promised a share of the outputs of the plantations with a condition that they were engaged to protect and maintain 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 of financing comprised an ADB loan of $43.5 million equivalent from the ADB s Special Funds resources, $5 million from the Government, and $1.9 million in the form of a grant assistance from 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 food crops between rows of trees of wood species under several models that vary in spacing for alley cropping. The agroforestry 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 major roads, feeder roads, and railways, one or two rows of trees could be planted on both sides. Depending on space availability, 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 in contiguous areas, with strip plantations on embankments of small parcels of land. 10 Later, ADB financed a project in the Sundarbans, Loan 1643-BAN(SF): Sundarbans Biodiversity Conservation Project, for $37 million, approved on 27 November 1998, to develop a sustainable management and biodiversity conservation system for all Sundarbans Reserve Forest resources, and to reduce poverty among the 3.5 million people living in the impact zone.

11 3 community leaders, and selected FD staff. 11 FD was designated as the Executing Agency of the Project. After completion, the management of the project plantations was transferred by FD, on the basis of geographic areas, to two subsequent and ongoing ADB-financed forestry projects executed by FD: Coastal Greenbelt Project 12 (CGP) and Forestry Sector Project 13 (FSP). E. Completion and Self-Evaluation 6. The Project was considered completed on 31 December 1995 and the project completion report 14 (PCR) was finalized by ADB in June The PCR noted that (i) the physical achievements from FY1990 to FY1996 exceeded the appraisal targets for area development 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, nursery development, and the distribution of seedlings, the Project was rated only partly successful for several reasons concerning the operation, management, and sustainability of the plantations. The PCR outlined several major deficiencies. Tree congestion in woodlots, agroforestry, and block plantations, in the absence of thinning of tree stands, had led to less than optimal growth and the discontinuation of intercrops in agroforestry plantations due to shading by the dense trees. 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 natural nutrient recycling. The Project was assessed to be deficient in benefit monitoring and in simple field trials to test silviculture parameters. Overall, the PCR objectively identified the major issues facing the Project. It emphasized that the participants had not received major benefits, and that the plantations had not been placed under systematic management. Accordingly, the PCR recommended (i) the development of management plans for the plantations, (ii) that FD fulfill its obligations under the benefit-sharing agreements, and (iii) that ADB review the Project at least annually until the participants received their benefits from the first rotation. While ADB has regularly monitored the operations of the Project, to date FD has not implemented the PCR recommendations. Further capacity-building initiatives have been provided to FD on a continuing 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 The grant, which was administered by ADB, financed the services of (i) 84 person-months of international consultants with specialized expertise in training, agroforestry, and communications; and (ii) 14.5 person-months of domestic consultants. ADB was responsible for the recruitment of consultants through the Food and Agriculture Organization of the United Nations. 12 Loan 1353-BAN(SF): Coastal Greenbelt Project, for $23.4 million, approved on 2 March The development objectives of this project are to protect and improve the coastal environment by increasing tree cover, and to reduce poverty by creating supplementary income opportunities for the poor. The project finances plantation establishment, nursery development, seedling distribution, an awareness campaign, training, and support activities. 13 Loan 1486-BAN(SF): Forestry Sector Project, for $50 million, approved on 21 November 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. 14 PCR: 956-BAN(SF): Upazila Afforestation and Nursery Development Project, June Achievements included (i) 19,415 ha of woodlot plantations (mainly Acacia auriculiformis, A. mangium, Eucalyptus camaldulensis, 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 agricultural crops); (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, including A. 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 nursery operators, 851 forest rangers, and 514 upazila-level officers.

12 4 F. Operations Evaluation 7. This project performance audit report (PPAR) is based on (i) the findings of an Operations Evaluation Mission (OEM) that was fielded from 10 to 25 March 2001, and (ii) a desk review of relevant records of the Project. The OEM held discussions with FD staff, consultants of CGP and FSP, representatives of NGOs, domestic observers of social forestry practices, and numerous participants at selected project sites located at Dhaka, Tangail, Mymensingh, and Dinajpur forest divisions. A draft PPAR was sent in May 2001 to FD and the Economic Relations Division of the Ministry of Finance, which represents the Borrower, with a request to provide comments in two weeks. After a follow-up to this request, comments were received from FD. No comments were received from the Borrower, and it is, therefore, assumed that the Borrower does not wish to comment on the PPAR. Comments received from FD and the ADB departments and offices concerned have been considered in finalizing the PPAR. This PPAR is of particular relevance to the ongoing ADB-financed CGP and FSP, considering the nature of issues concerning sustainability and institutional capacity. These issues include common features such as (i) benefit-sharing arrangements between FD and participants; (ii) requirements for replanting, including financing arrangements for reinvestment; (iii) plantation management 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 fuel as quickly as possible from the introduction of fast-growing wood species. The project initiatives were highly relevant in the context of (i) the nationwide demands for fuelwood; (ii) the Government s priorities to address the increasing pressure on existing forest resources; and (iii) ADB s strategic development objectives, which were aimed at broadening the productive base of the economy. Biomass fuel (including fuelwood) could not be easily replaced with other fuels as (i) rural households could not readily afford alternative sources of energy such as electricity and natural gas given the socioeconomic conditions of rural Bangladesh, and (ii) electricity and natural gas required capital-intensive investments and specialized distribution networks. Overall, the PPTA, the CFP experience, and the extended period of project processing allowed the Project to be prepared thoroughly with approaches that were envisaged at appraisal to generate self-sustaining social forestry initiatives. 9. The Project was formulated during the implementation of CFP. Based on the CFP experience, design features were improved and incorporated into the Project. While CFP had not fully developed the intended benefit-sharing arrangements with the participants, 16 the Project deliberately included initiatives to formalize benefit sharing between FD and the participants. However, in retrospect, the project design underestimated the tasks and the gestation period needed for (i) developing the benefit-sharing arrangements and the required efforts 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 not succeed 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 the establishment of 4,890 ha of fuelwood plantations, 121 ha of agroforestry lots, and an equivalent of 1,336 ha of strip plantations, the terms of benefit sharing were ambiguous. Under CFP, FD made different promises for benefit sharing that ranged from 10 to 60 percent of harvests for the participants. The PPAR of CFP cautioned that disputes could arise and damage the credibility of the Government s intentions in social forestry because of these ambiguities.

13 5 concepts by FD. The agroforestry initiatives as piloted under CFP succeeded in developing schemes for alley cropping of food crops, in between rows of trees of wood species, to foster partnership with occupants of the land. Building on the CFP pilot, the design of the Project included agroforestry initiatives for encroached degraded forest areas to avoid alienation of the existing settlers by allowing the occupants of the land to cultivate food crops based on prescribed practices. Nonetheless, the expansion from a pilot scheme into a nationwide application under the Project encountered unforeseen problems in following the prescribed practices. Homestead planting of trees for fuelwood as carried out under CFP was excluded from the project scope because it was evident from the CFP experience that (i) homestead woodlot development was unsuccessful as farmers preferred fruit and multipurpose trees to wood species; and (ii) FD was unable to meet this demand and provide the appropriate extension services, as this was outside its organizational mandate. With the exclusion of homestead woodlots from the Project, initiatives to distribute seedlings of various tree species to institutions and private individuals nationwide were formulated, along with localized nursery development. 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 significantly exceeded the appraisal planting targets (Appendix 1). An area statement of the plantations, as implemented, is shown in Appendix 2. Tree planting was successful, and tree survival rates during establishment were generally high. Tree planting initiatives were also highly visible as showcases for raising the awareness of the population nationwide of the value of tree planting. Along with nationwide nursery development, distribution of seedlings, training, and intensive publicity campaigns on tree planting, 17 the Project promoted tree planting on lands of public institutions and private properties, and encouraged the establishment of private nurseries that made 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 deficiencies that have constrained achieving the project purpose. The plantations have not generated the expected major benefits because of delayed harvesting and disorganized post-planting management. The project participants have not received significant benefits, apart from wages paid to them by FD during tree planting, leaves and twigs collected from the ground, and shortlived benefits from intercrops under agroforestry schemes. It was impossible to successfully raise 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 many strip plantation areas were without enlisted participants. The establishment of the plantations has 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 appraisal estimate 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 Project exceeded 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 technical manuals on social forestry were produced and distributed to stakeholders and interested parties.

14 6 depreciation of the local currency. 18 As detailed in Appendix 4, a total of $6.5 million of the loan amount was cancelled ($5 million in June 1994 and $1.5 million at loan closing). All project activities were originally planned for completion over six annual planting seasons, with an original loan closing date of 30 June The loan became effective on 31 October 1989, four months into FY1990 and after the rainy season. Activities in the first year were delayed. This delay 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 The Project included a field resource survey 19 aimed at identifying suitable sites for tree plantations, and a baseline socioeconomic survey 20 as a benchmark for monitoring the participants socioeconomic conditions. The recruitment of domestic consultants to undertake these surveys was delayed. Consequently, the field resource survey that began in November 1992 was not completed until June 1993, and its findings were too late to influence much of the site selection. By June 1993, more than 12,000 ha of woodlots and 2,100 ha of agroforestry plantations had been established. Similarly, the socioeconomic survey that started in September 1992 was not completed until July 1993, rendering its findings less relevant for the selection of sites and participants. An impact study that was planned for project completion was not undertaken. 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 undertaken on force account administered by FD. The implementation involved more than 2,500 FD staff and thousands of participants who were paid daily wages for limited labor contribution on specific plots. About 70 percent of the local costs for plantation establishment comprised wages for labor, including the participants labor. Small civil works contracts, such as for nursery construction work and the rehabilitation of FENTCs, were awarded to local contractors selected under local competitive bidding procedures, while simple field structures such as nursery sheds were constructed on a force account basis. Materials were procured locally in accordance with the Government s local competitive procedures acceptable to ADB, with the exception of fertilizers, which were purchased locally from the Government s outlets. The performance of contractors and suppliers was generally satisfactory. E. Organization and Management 15. FD was the Executing Agency, and the Project was implemented in accordance with the organizational arrangements designed at appraisal. The National Project Coordination Committee 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 between FD and other agencies. Project committees at the district and upazila levels were established, with the respective district divisional forest officer serving as the committee s secretary. The upazila administrations were initially made responsible as the implementing agencies for the strip plantations, upazila nurseries, and tree planting on lands of local institutions. This upazila responsibility was subsequently transferred to FD, following the recommendations of the Project Midterm Review (March 1992). Tree planting and reforestation were evidently not among the explicit 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, and preferences for crops and tree species.

15 7 was constrained by (i) lack of interest and accountability, (ii) low priority accorded by the local administrations to the Project, and (iii) cumbersome procedures within the upazila system for accessing project funds. Despite the poor performance of the upazila administrations, the subsequent 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 the PCR; umbrella agreements between FD and participating agencies; publicity campaigns; and submission of audited annual financial statements. 21 Nonetheless, shortcomings in compliance with the loan covenants were noted in the following areas: (i) no action was taken to review the appropriateness of the one-year renewable participation agreement between FD and the participants for benefit sharing; (ii) the provision for the exclusion of encroached state land for woodlot development was not entirely adhered to; (iii) the land resource and socioeconomic surveys were delayed; (iv) FD did not undertake benefit monitoring and studies; (v) field trials to test silviculture parameters were overlooked; (vi) information exchange with NGOs was inadequate; (vii) project participants were not adequately organized into forestry associations; 22 and (viii) the Borrower did not ensure that FD undertook adequate operation and maintenance of 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 tree planting were significant. Public awareness building through publicity campaigns gained considerable recognition from stakeholders, although interaction between FD and NGOs was inadequate. Training initiatives were well delivered to reach community leaders, participants, nursery operators, forest rangers, and selected FD staff (Appendix 5). However, deficiencies in silviculture management and lack of monitoring of the plantations, combined with unworkable benefit-sharing agreements with the project participants, seriously undermined the intended purpose of the plantations and jeopardized the realization of sustained benefits. The intended partnership between FD and participants did not develop, and the plantations had not produced significant benefits for distribution to legitimate beneficiaries. The credibility of the social forestry development is at stake, and delayed harvests and uncertainties over future harvests have led to 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 plantations was planned at appraisal for seven years with fuelwood production as the primary objective, and intermediate 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, the silviculture practices as prescribed at appraisal were not undertaken in all plantation types. Essentially, planted stands have not been thinned and harvested as planned. Intercropping design features could not be implemented and sustained. The dense trees and their crowns caused 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, ADB followed up with FD concerning government auditors observations. 22 Later under FSP, participants were to be organized into local community organizations, with NGO assistance for group formation and management development.

16 8 two years. The planting density in woodlots and block plantations did not allow adequate space for other crops. Participation in strip plantations was generally poor, and did not lead to optimal use of the land for food crops and other permissible crops as designed. 19. Given that tree planting was conducted from FY1990 to FY1996, entire plantations would have entered their second rotation by FY2004 if the seven-year rotation rule, as recommended at appraisal, had been adhered to. Instead, FD extended the rotation period in FY1997 from 7 to 10 years. With the exception of the trees established from seedling distribution to the public, a negligible amount of harvesting took place in the project plantations in FY2000 and FY2001. According to FD, the extended rotation period 23 was introduced to generate larger benefits from final harvests, as this practice would have allowed the production of fuelwood and higher-priced small sawlogs. The rotation was extended but the thinning operations never materialized. FD s decision reflects unfocused end-product objectives. Sawlog production was not the project objective at the outset, fuelwood was. There are significant inconsistencies between the recommended silviculture practices as presented in the appraisal report and the implementation guidelines as detailed in the project proforma (PP) of FD. 24 These inconsistencies and the retroactive decision to follow extended rotation may have led to unclear responsibilities for plantation management. 2. Plantation Management and Benefit Monitoring 20. Overall, FD s management of the project plantations has been weak, as evidenced by the absence of systematic monitoring of plantation conditions, including stocks, age, species, tree survival, and actual growth rates. FD made no sample surveys of plantation conditions, nor undertook benefit monitoring. The land resource and socioeconomic surveys were delayed, and their relevance was marginal. Record keeping of plantation assets and performance was particularly poor, 25 and information gathering for management decisions was rarely undertaken. Assessments of tree stands, by tree counting and measuring the wood volumes, were only conducted recently for the preparation of tree auctions of selected plots. 26 Such measurements were not sample based, and were restricted to trees that had reached 10 years of age. Nonetheless, these measurements provided FD with some growth and yield estimates. 21. As FD does not obtain its budget funds directly from the sale of forest products, it has no incentive for product planning and harvesting, or for monitoring market prices of fuelwood, poles, logs, and other wood products at various local markets. At present, the fiscal system in the country requires FD and other state-owned land-owning entities to surrender their earnings from the sale of forest products to the state treasury. FD and its divisional offices do not maintain records of past and current wood prices at various market intermediaries, including sawmills. Further, FD has not carried out specific assessments to estimate plantation losses 23 Initiated by FSP, tree rotation was changed from 7 to 10 years to benefit from the enhanced value of larger trees. With 10-year rotation, thinning, and intermediate felling in the fourth and seventh years were recommended to provide intermediate returns and improve the quality and growth rates of the remaining trees to produce small logs. 24 The appraisal design specified woodlot and block planting of 2,500 seedlings/ha based on 2 meters (m) x 2 m spacing, while FD s original PP recommended 2,900 seedlings/ha based on 6 feet by 6 feet spacing. Actual planting followed the PP density specification that was later changed to 2 m x 2 m. However, when the PP was revised in 1994, the recommended planting density was changed to 1,667 seedlings/ha on the basis of 3 m x 2 m spacing, without provision for thinning and without further investment after the first eight years. The revised PP projected that benefits would be generated over 25 years from the eighth year onwards, without specifying requirements for replanting and reinvestments. 25 FD had serious difficulties in retrieving manual records to reconcile the actual areas planted by types of plantations, year, and forest division location. On sites that the OEM visited, records of intercropping with the tree plantations were either absent, or poorly maintained over one or two seasons only. 26 Pre-auction measurements were carried out in 2001, including selected sites in Dhaka Division (40 ha), Tangail Division (603 ha), and Dinajpur Division.