|
 |
Contents |
|
|
| Forestry Development in Poor Areas |
|
2005/8/18
1. Main Sector Issues and Government Strategy. The forestry sector plays a critical role in the Chinese economy, providing 40 percent of rural household energy, almost all of the lumber and panel products for the large construction sector, and raw material for the large domestic pulp and paper industry. The resource base is small; forest cover amounts to only 0.11 hectares per capita, which is significantly below the world average of 0.77 hectares per capita. China is the third largest consumer of timber in the world and faces a worsening imbalance between supply and demand for wood products. The present consumption level (about 300 million m3 of roundwood) exceeds the annual growth increment of the forests and total imports by about 50 million m3 per year. As a result, about 500,000 hectares of forest area are lost each year, equivalent to one-half of one percent of total forest area. This loss is causing increased soil erosion, serious deterioration of the plant and wild-life habitat, and other environmental degradation, such as declining levels of carbon sequestration.
2. The over-reliance and over-exploitation of forest resources is particularly severe among poor households in the mountainous areas of central and western China, as a result of their limited access to productive land, low agricultural productivity, limited off-farm employment, and underdeveloped human capital. As reviewed in the 1992 World Bank report on poverty in China (No. 10409-CHA), a large share of the absolute poor are located in these remote upland areas where agricultural land is extremely poor and forest resources are the only significant productive asset at their disposal. Consequently, the development of the forest sector is a key element in the Bank and Government's strategy to reduce poverty.
3. The Government is taking a number of steps to expand supply and manage demand throughout the country, including extensive investment in a wide variety of afforestation programs and promulgation of new regulations encouraging conservation and substitution. The Ninth Five Year Plan aims to establish about 7 million hectares of intensively managed plantations in 1995-1999, of which about 15 percent would likely be financed by the World Bank under this and previous projects. The Ministry of Forestry (MFO) recently announced a long-term program to reclassify all forests according to their public welfare or commercial functions, with a corresponding change in organizational structure and silvicultural management. The Government's sectoral development program is supported by a relatively sound policy framework (including secure land tenure, market-based resource pricing for 90 percent of all timber, and increased emphasis on private sector activity) and a good institutional framework (MFO has effectively managed national afforestation programs, including four earlier IDA operations).
4. At the same time, the Government has launched an ambitious and comprehensive poverty alleviation program under the National Seven-Year Plan for Poverty Reduction, which is supporting strengthening of institutions responsible for poverty reduction, establishment of an independent poverty monitoring system, greater investment in the social sectors to develop human capital, and continued investment in agriculture, forestry, rural enterprise and rural infrastructure to raise rural incomes. While most of this work has been led by the State Council's Leading Group for Poverty Reduction, MFO has been involved in pilot poverty reduction programs in Guangxi and Guizhou since
1986.
7. Project Objectives. The main project objective is to develop forest resources in poor areas of central and western China on a sustainable and participatory basis to support poverty reduction, forestry development, and improved environmental management. Achievement of the poverty reduction objective would be measured by the increase in household income of project beneficiaries arising from the sale of project production (target of [20]% by the end of project and [50]% by full impact). Achievement of the forestry development objective would be measured by the increase in timber and horticultural production in project areas (target of [1] million m3 of timber by mid-term, [10] million m3 of timber and [2] million tons of horticultural production by end of project, and [38] million m3 of timber and [10] million tons of horticultural production by full impact). Achievement of the environmental objective would be measured by the reduction in soil erosion rates on sample monitoring plots (target of [20]% by end of project and [40]% by full impact).
8. Project Description. The project components, costs, and financing arrangements are reviewed below.
Component Category Cost Incl. %of Bank %of
Contingencies Total fin. Bank
(US$M) (US$M) fin.
Timber Plantation Component: Physical 116.9 32 61.9 31
Establish about 290,000
hectares of plantations
primarily for construction
timber and secondarily for
pulpwood and pit props on
mountainous wasteland
Economic Forest Crops Physical 133.5 36 79.9 40
Component: Establish about
225,000 ha of economic
forest crops, including
110,000 ha of new and
rehabilitated bamboo, and
115,000 ha of fruit, nut,
and medicinal trees
(including chestnut, walnut,
ginkgo, eucommia, apple,
pear).
Technical Support Services Institution 71.0 20 34.8 17
Component: Strengthen Building,
technical support programs Physical
for project afforestation
activities in three areas:
(a) the planting stock
development program would
raise the quality of
planting materials through
introduction of improved
genetic materials and
nursery management
technologies, and support
the production of the 0.8
billion seedlings required
under the project; (b) the
training and extension
program would disseminate
key technical silvicultural
guidelines to project staff
and beneficiaries, through
domestic and overseas
training programs and study
tours, equipment for
grassroots extension
workers, and demonstration
plantations; and (c) the
rural infrastructure program
would support the
construction of village and
forest trails, limited
irrigation facilities for
some economic tree crops,
and small guard/storage
sheds
TVE Development Component: Credit 42.6 12 23.4 12
Provide sub-loans to support
the development of small-
scale, labor-intensive,
commercially oriented
township and village
enterprises (TVEs) in the
forestry sector, such as
pine resin extraction,
bamboo processing, wicker
works, edible forest product
processing, and parquet and
veneer production
Total 364.0 100 200 100
9. Project Design. While previous World Bank forestry projects in China were designed in a fairly "top-down" manner, the proposed project has involved extensive social assessment and community participation in order to ensure effective targeting of poor households, the appropriate design of project activities, and strong incentives for afforestation entity performance.. The project has followed a "community forestry assessment" (CFA) technique piloted in China by the Chinese Academy of Forestry and the forestry departments of Yunnan and Sichuan, with technical support from the Ford Foundation, Regional Community Forestry Training Center in Bangkok, and
the Community Forestry Department of FAO. The project CFA work included the following steps: collection and evaluation of baseline socio-economic data for the selection of project areas; interviews with local leaders and farm households to assess household preferences for species, identify potential beneficiaries, and develop a menu of project activities; interviews with grassroots research and extension staff and experienced farmers to finalize the afforestation models and technical design of planting sites; and group meetings to reach agreement on organization and production arrangements, including the structure of the afforestation entity, nature of land tenure
arrangements, allocation of roles and responsibilities, distribution of benefits, and content of project contracts.
10. Benefits and Target Population. The project would generate the following benefits: (a) an increase in per capita income for 2 million poor households that would raise them above the poverty line by the project closing date, and 1.1 million non-poor households, arising from the sale of project production and the creation of new employment opportunities; (b) an increase in the supply of forest products that would support the continued growth of the construction and agro-processing sectors, including 38.7 million m3 of timber, 10 millions tons of bamboo, and fruit, nut, and miscellaneous forest production amounting to 44 billion yuan at current financial prices; (c) an increase in value-added processing of forestry products through development of new TVEs, estimated at $__ million per year at current financial prices at full development; (d) improved environmental management of ecologically fragile mountainous watersheds, including reduced soil erosion, flooding, and river sedimentation, preservation of biodiversity, and reduced greenhouse gas emissions through increased carbon sequestration; and (e) development and dissemination of improved silvicultural technologies that would raise the productivity of forest resources on steeper, higher elevation sites. The target population would be households living below the poverty line in mountainous areas of central and western China, where the largest concentration of absolute poor reside. The beneficiary group would include a
large share of ethnic minorities and women.
11. Selection of Project Areas and Beneficiaries. Project areas and beneficiaries were selected in line with the following socio-economic
criteria. First, the proposed areas contain large blocks of barren wasteland with suitable agronomic and climatic conditions for commercial forestry development. Second, the majority of the direct project beneficiaries are poor households located in remote mountainous. "Poor" has been defined as below the national poverty line in nationally-designated poverty counties, and below the relevant provincial poverty line in other counties. The beneficiary assessment process is reviewed in Section E.7 and the organizational structure for the beneficiary groups is reviewed below. Third, the project management units -- located in the provincial forestry departments and county forestry
bureaus -- have sufficient institutional capacity and managerial expertise to plan and implement project activities. Fourth, the provincial, prefecture, municipality, and county governments have agreed to finance 25-30 percent of project investment costs as counterpart funds, and have made a general commitment to finance complementary investments in social and rural services in project areas during the project implementation period. Fifth the beneficiary groups have agreed to provide 15-20 percent of project investment costs as counterpart funds, primarily in the form of voluntary labor, and assume the responsibility for debt service. In line with these criteria, 183 counties in 12 provinces have been selected to participate in the project, of which 53 percent are designated as national poverty counties, 27 percent are
provincial poverty counties, and 20 percent are not poor counties. Of the total 3.1 million households participating in the project, 2.0 million, or 65 percent, are classified as below the poverty line.
12. Project Management. Project management would be based on the successful implementation structure developed under the four earlier Bank forestry projects: Leading Groups at the central, provincial, and county levels would continue to establish general policies and procedures and review work programs; the Project Management Center (PMC) at MFO would continue to have overall responsibility for project design, execution, and supervision; Project Management Offices (PMOs) at Provincial Forestry Departments and County
Forestry Bureaus would continue to manage the work, mobilize counterpart funding, and provide technical support; Seedling Production Coordination Groups at the national and provincial levels would continue to supervise production and distribution of planting materials; Environmental Protection Groups at the national and provincial levels would continue to be responsible for environmental management issues in the project; and Provincial Finance Departments and County Finance Bureaus would continue to channel project funds. The project management structure is in place and a detailed work plan for the first year of the project has already been agreed with the Bank during preparation.
13. Production Arrangements. All beneficiary groups would be organized as follows. First, all horticultural crops would be established on land directly under the responsibility and management of beneficiary households or groups of beneficiary households. Second, the relative priority for land tenure and organizational arrangements for timber plantations would be: (a) land directly under the responsibility and management of beneficiary households or groups of beneficiary households; (b) households or groups of households participating
in a shareholding arrangement with a village/township collective farm or a state farm at the county/prefecture/provincial level; and (c) village or township collective forest farms. Unlike the previous Bank forestry projects, state forest farms would not be eligible to participate by themselves in the project. Third, households and groups of households would receive use rights for a term of not less than fifty years for land directly under their responsibility and management under the project. Fourth, production arrangements based on a shareholding structure would ensure that the majority of net profit (after debt service) from project production would accrue directly to project households, and not to the share-holding partners. Fifth, as in the previous Bank forestry projects, all afforestation entities would
sign "project implementation agreements" with the relevant administrative village, township or county governments that specify their respective rights and responsibilities under the project. Sixth, all afforestation entities involving different parties (such as groups of households; households and collective forest farms; households and companies; etc.) would sign "joint cooperation contracts" that specify their respective rights and responsibilities within the afforestation entity.
14. Monitoring and Evaluation. The Bank has reviewed and approved a monitoring and evaluation plan that incorporates: (a) Development Impact Indicators that measure the degree to which project objectives have been achieved (such as reduction in poverty levels, increased silvicultural productivity, improved environmental management); (b) Project Output Indicators that measure the quantity of goods created or services provided by the project (such as hectares of plantations established, numbers of TVE enterprises established, numbers of seedlings produced, numbers of beneficiaries trained); and (c) Project Input Indicators that measure the quantity of resources provided for project activities (such as Bank funds, counterpart funds, consultants, technical assistance). The plan covers the following topics: (a) objectives; (b) performance indicators table; (c) implementation arrangements for data collection and analysis (how will each
indicator be measured; how often; who will collect the information; from what source; who will set, monitor, and be accountable for the target; how will the results be used in project planning and management); (d) implementation arrangements for socio-economic survey work; and (e) budget and timetable.
15. Value Added of Bank Support. Bank involvement in the project would provide three unique contributions.
First, the project would demonstrate that poor households are bankable for afforesation investments. While there is no question that MFO and the lower levels are committed to the overall goal of poverty reduction, they have typically preferred to focus afforestation efforts in more developed areas where the social, economic, and agronomic conditions are easier for large-scale afforestation. This would be the first project in which the government supports a large forestry investment targeted to the poor -- if implementation is successful, the project would demonstrate the complementarity of the two key national development objectives of economic growth and poverty reduction
within the forestry sector.
Second, the project has introduced new social assessment and community participation planning techniques into the design and implementation of the government's afforestation program. While community forestry work has been piloted in a few areas in China, this project would constitute the first large-scale roll-out of beneficiary participation in the sector. A summary description of the "community forestry assessment" process is included in Section E.7.
Third, the project would support the development and dissemination of improved silvicultural practices, based on the implementation experience of World Bank and private sector investments in other countries and the findings of international research work. As demonstrated with the NAP and FRDPP projects, the Chinese silvicultural system has not yet adopted many of the key technical elements of international forestry production and the Bank projects have proven to be very effective vehicles for this technology transfer. The main improvements would include lower planting densities to promote shorter production cycles, faster income generation, and agricultural
intercropping; revised fertilizer application rates that reflect the specific nutrient requirements of the poorer sites; less intensive site preparation, smaller planting holes, and reduction in tending times to decrease labor requirements and minimize environmental damage on steep sites; and greater reliance on clonal planting stock and other improved planting materials in order to promote faster tree growth.
16. Social Issues. Since poverty reduction is a key project objective, the design of the project has paid particular attention to the following social issues.
First, project activities have been targeted to poor townships in poor counties, using national and provincial poverty data. While the participation of higher income households in an administrative village is necessary for demonstration purposes and fairness onsiderations, the project design has ensured that the large majority of project benefits accrue directly to households below the poverty line.
Second, the selection of project sites, activities, and beneficiaries have been based on detailed social assessment and community participation.
Third, the project design has incorporated a wide range of forestry investments to ensure that poor households receive a diversified income stream over the short, medium, and long term. The integration of these different activities will take place not merely at the county and township levels (i.e. one township invests in timber while another invests in bamboo) but at the lowest level possible (i.e. each administrative village invests in different activities), so that the benefits of shorter-term income generation are widely shared among all the project areas and beneficiaries.
Fourth, the project design has ensured that the selection of activities and sites would not result in any inadvertent deterioration in household income or living standards, particularly in the short-term. To this end, close attention has been paid to the current land-use patterns on wasteland proposed for afforestation and no sites have been selected that are presently used for minimum food consumption requirements, livestock grazing, or other essential economic activities of poor households.
17. Environmental Issues. The project, which is rated in Cateogory B, would generate significant environmental benefits, including increased forest cover, preservation of biodiversity, and reduced soil erosion, flooding and river sedimentation. However, the project could support some activities with potentially adverse social and environmental impacts: earthworks, roads, trails, small blocks of monoculture, and limited pesticide use in the afforestation components; and some limited effluent disposal in the TVE development component.
18. For the afforestation components, the Government carried out a comprehensive assessment of environmental impacts, mitigation measures, management issues, and monitoring requirements during project preparation. Based on this assessment, the Government prepared a detailed environmental management plan (EMP) to strengthen safeguards against problems from insect and disease outbreaks, soil erosion and fertility loss, fire, and ecological degradation. The EMP draws heavily on the EMP prepared in 1994 during the preparation of FRDPP, the implementation experience of environmental management in NAP and FRDPP, and the results of the research report on
environmental monitoring issues completed under FRDPP in May 1997. Since the proposed project would focus more on fragile ecological sites and on horticultural production than NAP and FRDPP, the EMP has been expanded to address environmental management issues related to higher elevations, shallower soils, steeper slopes, and fruit and nut production. The Bank will review the EMP and related implementation arrangements during appraisal.
19. For the TVE development component, individual EAs would be prepared for all sub-projects, carried out in accordance with OD 4.00. These EAs would identify environmental impacts, mitigation measures, environmental management issues, and environmental monitoring requirements for each sub-project. They would pay particular attention to effluent disposal and existing land-use issues in order to check if the development of new enterprises involves any land acquisition. All EAs would be reviewed and approved by the Environmental Protection Bureau at the relevant level, in line with existing Chinese regulations. No sub-projects that involve land acquisition or
involuntary resettlement would be eligible for participation in the project.
20. Sustainability. Institutional sustainability is addressed through a comprehensive program of technical assistance, training, and study tours to strengthen existing capacity and ensure development of long-term management skills in PMOs, extension institutions, and beneficiaries. Financial sustainability is addressed through an appropriate cost recovery program based on project taxes and charges. Project beneficiaries will be responsible for full repayment of the loan and credit, with income generated through the sale of project production. The level of budgetary support required after the implementation phase is extremely small and would account for less than one
percent of the annual budgetary allocations of provincial forestry departments. Environmental sustainability is addressed through the
introduction of detailed environmental protection and monitoring guidelines for the afforestation components, which are designed to strengthen safeguards against problems from insect and disease outbreaks, soil erosion and fertility loss, fire, and ecological degradation.
21. Risks. The main risks include: (a) output prices for project production would not be maintained in real terms during the life of the
project; in response the project will support a high degree of diversification of species and end-products in order to minimize losses from price fluctuations; (b) institutional capacity would not be sufficient to manage project activities; in response, the project will provide training to strengthen PMC and PMO management capacity; (c) farmers would not have sufficient incentives for sustainable management of long-term forestry crops; in response, the project will provide short and medium-term income generating activities to meet immediate income requirements; (d) insufficient rainfall in planting season; in response, the project will emphasize use of containerized planting stock in areas prone to erratic rainfall; (e) key inputs would not be available and used correctly (improved seedlings, fertilizers, pesticides,
construction materials, equipment); in response, the project will provide extensive training program for farmers on silvicultural techniques; (f) pest, pathogen, or fire outbreaks; in response, the project will include detailed guidelines related to forest health in EMP, a comprehensive forest health monitoring program, and provision of pesticides as necessary; and (g) counterpart funding is not provided on time; in response, the project Implementation Rules will specify that failure to provide funds on a timely basis would result in the exclusion of the afforestation entity, county, or provincial government in continued involvement in the project. Based on the individual risk ratings, the overall level of project risk is rated as modest.
Contact Point:
Rick Scobey
The World Bank
1818 H Street, N.W.
Washington, D.C. 20433
Telephone: (202) 458-4056
Fax: (202) 522-1659
Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project.
Processed by the InfoShop week ending March 27, 1998.
Annex
The main project objective is to develop forest resources in poor areas of central and western China on a sustainable and participatory basis to support poverty reduction, forestry development, and improved environmental management. Achievement of the environmental objective would be measured by the reduction in soil erosion rates on sample monitoring plots (target of [20]% by end of project and [40]% by full impact).
The project would generate significant environmental benefits, including increased forest cover, preservation of biodiversity, and reduced soil erosion, flooding and river sedimentation. However, the project could support some activities with potentially adverse social and environmental impacts: earthworks, roads, trails, small blocks of monoculture, and limited pesticide use in the afforestation components; and some limited effluent disposal and, possibly, land acquisition in the TVE development component.
For the afforestation components, the Government carried out a comprehensive assessment of environmental impacts, mitigation measures, management issues, and monitoring requirements during project preparation. Based on this assessment, the Government prepared a detailed environmental management plan (EMP) to strengthen safeguards against problems from insect and disease outbreaks, soil erosion and fertility loss, fire, and ecological degradation. The EMP draws heavily on the EMP prepared in 1994 during the preparation of FRDPP, the implementation experience of environmental management in NAP and FRDPP, and the results of the research report on environmental monitoring issues completed under FRDPP in May 1997. Since the proposed project would focus more on fragile ecological sites and on horticultural production than NAP and FRDPP, the EMP has been expanded to address environmental management issues related to higher elevations, shallower soils, steeper slopes, and fruit and nut production. The Bank will review the EMP and related implementation arrangements during appraisal. An assurance would be sought during negotiations that all afforestation activities would be carried out in
accordance with an EMP acceptable to the Bank.
For the TVE development component, individual EAs would be prepared for all sub-projects, carried out in accordance with OD 4.00. These EAs would identify environmental impacts, mitigation measures, environmental management issues, and environmental monitoring requirements for each sub-project. They would pay particular attention to effluent disposal and existing land-use issues in order to check if the development of new enterprises involves any land acquisition. All EAs would be reviewed and approved by the Environmental Protection Bureau (EPB) at the relevant level, in line with existing Chinese regulations. An assurance would be sought at negotiations
that all EAs and any involuntary resettlement or land acquisition would be carried out in accordance with procedures and principles acceptable to the Bank |
| Source:http://www.worldbank.org.cn/ |
|
|
