Document of

The World Bank

FOR OFFICIAL USE ONLY

ReportNo: 20611

IMPLEMENTATION COMPLETION REPORT(CPL-36580; SCL-3658A; SCPD-3658S; TF-20405)

ON A

LOAN

IN THE AMOUNT OF US$ 56.5 MILLION

TO THE

REPUBLIC OF INDONESIA

FOR

NATIONAL WATERSHED MANAGEMENT AND CONSERVATION PROJECT

June 23, 2000

Rural Development and Natural Resources Sector UnitEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in the perfonnance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective As of November 1999)

Currency Unit = Rupiah (Rp.)Rp. 1 million = US$ 142.86

US$ 1.00 = Rp. 7,000

WEIGHT AND MEASURESMetric System

FISCAL YEARApril 1 - March 31

ABBREVIATIONS AND ACRONYMS

AARD Agency for Agricultural Research and LBDS (NGO) Lembaga Bangun Desa Sejahtera (an NGO)Development LKMD Lembaga Ketahanan Masyarakat Desa

AD Areal Dampak (Impact Area) MMD Model Mikro DASBAPPENAS National Development Planning Agency (Model Micro-Watershed)CAS Country Assistance Strategy MOF Ministry of FinanceDG BANGDA Directorate General for Regional MOFr Ministry of Forestry

Development MOHA Ministry of Home AffairsDG RRL Directorate General Reboisasi dan MTR Mid-Term Review

Rehabilitasi Lahan (DG Reforestation and NIS National Institutional StrengtheningLand Rehabilitation) PRA Participatory Rural Appraisal

DPKT Dinas Perhutanan dan Konservasi Tanah R&R Regreening and Reforestation Program(District Agency for Social Forestry and RefMIS Reforestation Management Infonnation SystemSoil Conservation) RefRIS Reforestation Resources Information System

ERR Economic Rate of Return RegMIS Regreening Management Infornation SystemFAO/CP FAO/World Bank Cooperative Program RegRIS Regreening Resources Information SystemFORDA Forestry Research and Development REPELITA Indonesia National Five-Year Development

Agency RKTD PlanRencana Konservasi Tanah Desa (Village Soil

FRR Financial Rate of Return Conservation Plan)GIS Geographical Information System SALT Sloping Agricultural Land TechnologyGOI Government of Indonesia SPABP Regional Development Assistance BudgetINPRES R&R Presidential Instruction for Regreening TOT Training of Trainers

and Reforestation ProgramISS Information Support System UCWCD Upper Cimanuk Watershed Conservation andKFTD Key Farmers Technology Display Development

Vice President: Jemal-ud-din Kassum, EAPVPCountry Manager/Director: Mark Baird, EACIF

Sector Manager/Director: Geoffrey B. Fox, EASRDTask Team Leader/Task Manager: Sumaryo Soemardjo, EACIF

FOR OFFICIAL USE ONLY

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 14. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 86. Sustainability 107. Bank and Borrower Performance 108. Lessons Leamed 129. Partner Comments 1310. Additional InformationAnnex 1. Key Performance Indicators/Log Frame Matrix 26Annex 2. Project Costs and Financing 27Annex 3. Economic Costs and Benefits 29Annex 4. Bank Inputs 30Annex 5. Ratings for Achievement of Objectives/Outputs of Components 31Annex 6. Ratings of Bank and Borrower Performance 32Annex 7. List of Supporting Documents 33

Appendix A: Economic and Financial Analysis 34Appendix B: Research and Training and Extension Sub-Component 37

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not be otherwise disclosed withoutWorld Bank authorization.

Project ID: P003985 Project Name: WTRSHED CONSERVATION

Team Leader: Sumaxyo Soemardjo TL Unit: EACIF

ICR Type: Core ICR Report Date: June 23, 2000

1. Project Data

Name: WTRSHED CONSERVATION L/CITFNumber: CPL-36580;SCL-3658A;SCPD-3658S;TF-20405

Country/Department: INDONESIA Region: East Asia and PacificRegion

Sector/subsector: VM - Natural Resources Management

KEY DATESOriginal Revised/Actual

PCD: 12/13/89 Effective: 03/29/94 05/05/94

Appraisal: 02/22/93 MTR: 03/31/96 11/19/96

Approval: 11/09/93 Closing: 09/30/2000 12/31/99

Borrower/lmplementingAgency: GOI/DG Bangda (MOHA); DG RRL (MoFr); AARD (MOA); BAPPENAS

Other Partners:

STAFF Current At Appraisal

Vice President: J. Kassum Gautam Kaji

CountryManager: Mark Baird M. HaugSector Manager: Geoffrey B. Fox A. Cole

Team Leader at ICR: S.Soemardjo B. van de Poll

ICR PrimarvAuthor: R.Suppa (FAO)

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL="Highly Likely, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: U

Sustainabilitv: L

Institutional Development Impact: M

Bank Performance: U

Borrower Performance: U

QAG (if available) ICRQuality at En"ry: S

Project at Risk at Any Time: Yes

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

The main objectives of the NWMCP were to: (i) raise the living standards of poor upland farmers, and to

(ii) enhance watershed environmental quality, and prtect downstream watershed resources. The project

was designed to support the implementation of the GOI's Regreening and Reforestation Program (R&R),giving emphasis to the introduction of more productive and environmentally benign farning systemsamongst poor farmers in fragile upland non-irrigated agro-ecological zones. While the initial developmentfocus of the project was intended to be on the Upper Cimanuk watershed in West Java, the NWMCP wasalso expected to cover selected critical watersheds all over the country, applying the method initially testedin Upper Cimanuk.

Project objectives were clear and very much in line with the Bank's Country Assistance Strategy (CAS).Investment in natural resources and agriculture was considered to be an important aspect of the Bank'sassistance strategy in Indonesia, given the sector's role in employment generation, poverty reduction,sustainable natural resource management and protection of the environment. The Bank's support for theNWMCP was therefore justified as a response to the GOI's commitment and efforts to reduce ecologicaldegradation, alleviate poverty in the uplands, and foster a coherent institutional watershed managementapproach throughout the country. The technical assistance provided under the NWMCP was reasonablytargeted to support the institutional strengthening orientation of the project.

Two primary risks were recognized at entry: (i) finding a long-term resolution of institutional responsibilitywithin government for upland/watershed development; and (ii) identifying effective participatoryapproaches at the community and farmers level. Intensive Bank supervision, along with the internationaltechnical assistance proposed for the Regreening Secretariat, was foreseen at appraisal to ensure effectiveimplementation.

3.2 Revised Objective:A MTR was carried out in November 1996 (see para 3.4) and after two years of indecisiveness, finally,the Investment Support for INPRES R&R program was cancelled. However, the original project objectiveswere maintained, as they were still considered relevant and achievable, but within the geographic area ofthe Upper Cimanuk pilot. Project activities were confined within the Upper Cimanuk Watershed,comprising the districts of Garut and Sumedang, and on the basis of a pilot operation.

3.3 Original Components:The NWMCP was designed to include the following components: (i) National Institutional Strengthening(NIS) (Component A), (ii) Upper Cimanuk Watershed Conservation and Development (UCWCD)(Component B); and (iii) Investment Support for INPRES R&R program (Component C). The originalcomponents fitted well with the objectives of the project and were within the administrative and financialmanagement capacities of the major implementing agencies, i.e. Ministry of Home Affairs (MOHA) andMinistry of Forestry (MOFr). In addition, the project design incorporated the main lessons from the fiveprevious Bank projects in watershed management and conservation in Indonesia.

3.4 Revised Components.The MTR in 1996 rated the project as unsatisfactory, mainly because of delays in the implementation ofComponent C, confirming the ratings given in previous supervisions. As a result of the review, an actionplan was agreed to substantially strengthen Components A and B, and to cancel Component C.Unfortunately, the NIS component, which was to provide guidelines and manuals for implementing andmanaging the R&R program, started at the same time as the Upper Cimanuk component, and therefore toolate in the project period to be used as foreseen (see 3.5 para 2). Similarly, nearly three years had elapsedbefore the lessons of Upper Cimanuk could be incorporated in appropriate guidelines and manuals. Only in1998 was it possible for the consultants working on the NIS to provide the improved procedures andmanuals for planning and implementing the R&R Programme. The Cimanuk component obtained somevery positive results in developing new institutional tools for participatory planning and implementation of

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watershed development programs in small watersheds, but some unresolved problems continue to plaguethis component until the end of the project. These include lack of mechanisms for monitoring of financialand economic project impacts, lack of cost recovery and maintenance arrangements, and delay in landtitling.

3.5 Qualitv at Entry:The quality at entry in general is considered to have been partially satisfactory. At design stage, allobjectives and activities programs scheduled under the project responded to the priorities of GOI ofpromoting sustainable land use systems as indicated in the Five-year Development Plan (REPELITA) forthe period 1989/1990 - 1993/1994. Lessons from previous Bank operations (see para 3.3), were taken intoaccount at appraisal focusing on the need to shift from high cost, structural conservation technologies tobiological, vegetative watershed management treatments that actively involve farmers' participation.However, in selecting the Upper Cimanuk watershed as a pilot, the farmers' motivation to be involved inthe project activities was inadequately assessed. The soils in the Upper Cimanuk Watershed in general arethick and rich and many farmers are not motivated enough to put additional investments for soilconservation. As stated in the CAS, the Bank was, and remains, a strong supporter of the ambitiousobjectives of promoting economic growth with stability, reducing poverty and promoting soundmanagement of natural resources and environment.

The project design also failed to foresee the disruption and delays that would result from the impendingdevolution of extension to local governments and consequent reorganization of the forestry extensionservices. The newly established district levelsocial forestry and soil conservationservice (DPKT) was notable to immediately take up the task of project implementation as expected. Another design factorcontributing to difficulties in project implementation lay in the sequencing and timing of the differentproject interventions. The assumptions regarding the time required for completion of the NIS were toooptimistic and the Investment Support to R&R was never able to get off the ground. In regard to technicalaspects, although the project design adopted a pragmatic approach to watershed management, the on-farmtreatments did not adequately take into account the constraints imposed by the small size of holdings andthe difficulty of regularizing tenancy arrangements with absentee owners.

The project's institutional and technical risks (see para 3.1) were supposed to be minimized by the project'sefforts in training and use of technical assistance. In addition, it was planned to monitor risks by allocatingdouble the supervision staff weeks during the first three years of project implementation and a MTR wasenvisaged to take into account initial experiences of project implementation.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The project as a whole is rated unsatisfactory. The overall rating reflects the fact that the project's majorcomponent, the Investment Support for the INPRES R&R Program, was not implemented. This indicatesthat at design stage, the foreseen GOI's commitment was in fact unrealistic in view of the heavy investment(US$ 418 million) required to support the R&R program, and the difficulty to systematically change fromsupply driven to result oriented, demand driven and more focused approach to soil conservationHowever,the other two components, NIS and UCWCD, are rated partially satisfactory.

The project had some positive outcomes, especially with respect to farmer participation and transparencyof funding. A number of improved methodologies and approaches developed under the project are alreadybeing applied or will be incorporated in all future national regreening activities. These include use of themanuals and guidelines for improved watershed management planning, participatory extension methods, the

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employment of computer-based management information systems for natural resources development, theapplication of PRA methodology to promote community participation and ownership, the provision of anenhanced role for women, and community management of development funds and activities, especially forrural infrastructure works. However, socio-economic aspects, including cost-benefit analysisnd off-farmeconomic impacts of investments in soil conservation activities, have not yet been adequately addressed inthe guidelines and manuals, to determine the types of scope of soil conservation intervention to beundertaken.

Taking into account the final outcome of the UCWCD component of the project, in particular the progressso far achieved under both the Model Micro-watershed (MMD) and Impact Area (AD) programs, it isestimated that some 20,000 small farmers in the 146 participating villages have directly benefited from theproject. Project benefits include increased on-farm productivity and environmental quality in the uplandareas. However, in terns of final global project benefits, only about 60% of the original SAR's target hasactually been achieved, negatively affecting the project's overall economic performance (see para 4.3).Monitoring and Evaluation was not carried out in a satisfactory manner, making it necessary to limit thefinal economic evaluation only to the UCWCD component.

In August 1998 it was decided to close the NWMCP on 30 September 1999, or one year before its officialclosing date. However, as requested by the Ministry of Finance (MOF), the Bank, in October 1999, agreedto advance the project closing date by only nine months to 31 December 1999 so as to permit thecompletion of agreed project activities currently under implementation.

4.2 Outputs by components:The evaluation of how each of the project components contrbuted to the general outcome is presentedbelow.

A. National Institutional Strengthening. The main problem encountered in implementing the NIScomponent was that it started at the same time as the Upper Cimanuk Watershed Development. As a result,project managers did not have the benefit of new institutional guidelines developed under this componentfor nearly three years. The implementation of the different sub-components of NIS is evaluated as follows.

(i) Information Support System (ISS). The main outputs of ISS include software modules for aRegreening Resources Information System (RegRIS), Reforestation Resources Information System(RefRIS), a Regreening Management Information System (RegMIS), a Reforestation ManagementInformation System (RefMIS), a project evaluation methodology and a database for regreening andreforestation activities. These have been piloted at the Provincial and District Government Offices (DPKT)level in Garut and Sumedang and are now largely fimctional, but the operators at Garut were still not fullyconversant with the Geographical Information System (GIS) and ISS systems. Expansionof the ISS toother R&R areas has not taken place yet. Only 6 ISS units having been established so far (two each inJakarta and Garut, and one each in Sumedang and Bandung). Some of the reasons for the limited expansionof ISS were the lack of trained personnel, the transfer of trained personnel to other jobs, the inadequatefunding for equipment and software, and the insufficient office space suitable to establish GIS units atother sites. The implementation of ISS is classed as partially satisfactory.

(ii) Land Use/Watershed Planning. The implementation of this sub-component was also partiallysatisfactory. Criteria for the selection and prioritization of "critical agricultural land" for R&R programshave been developed. Manuals have been written for formulation of regreening plans for Kabupaten level("the 18 steps"), for preparation of village soil conservation plans (RKTD) using a participatory approach,for district RTL and for rapid assessments of watershed problems and preparation of development plans

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based on these. However, the procedures were still quite complex and unless they are simplified, there willbe little potential to be replicated in the nation wide program Monitoring and evaluation and the definition

of indicators for regreening activities have tended to be neglected till the closing stages of the project.

Consequently, little data are available from the Cimanuk component on which conclusions can be drawnabout the effectiveness of the project's approach in achieving its main objectives, particularly those of

increasing farmers' incomes and reducing soil erosion.

(iii) Upland Research and Technology Development. The Research sub-component (see Appendix B)was only partially able to meet its objectives. All seven activities identified at appraisal were implemented

with varying degrees of success. The assessment of research needs was done with inputs from a widespectrum of stakeholders. The actual research work was implemented by the Agency for AgriculturalResearch and Development (AARD), the Forestry Research and Development Agency (FORDA) research

stations and partly by Universities. However, by the end of the project, some of the issues identified at

appraisal and by the research needs assessment remained to be addressed.

Research results were disseminated through publications, workshops, seminars and direct communicationwith farmers and extension staff. However, the dissemination methods and material were not fully adapted

to the technical capacity of extension workers and farmers. Although five members of the R&R Secretariatwent on overseas study tours, the overseas training should have been allocated more widely to include theoutposted research staff. Finally, a review of the R&R program, watershed management technology centers

and the conservation work done by FORDA and AARD was successfully conducted by a consultant andthe results were presented in a report, which was widely disseminated and discussed.

(iv) Training of Project Staff. The outcome of the training activities is rated satisfactory and itsphysical implementation was in line with the planned program. Overall, about 12,000 participants,including local government staff, extension workers, technical staff of implementing agencies as well as

village leaders and women groups, took part in the program. However, its impact on execution of related

project activities such as ISS, MMD and AD developments, and extension is yet to be felt since more than70% of the participants only received their training in the last two years of the project (see Appendix B).

(v) Extension. The coverage of extension services was generally limited by the budget and number ofstaff, even though a farner-to-farmer extension approach was used. Farmer group leaders participated inthe training programmes for extension staff, which covered subjects like Participatory Rural Appraisal(PRA), Training of Trainers (TOT) and extension management. In addition to training, manuals weresupposed to be provided to extension staff from the technical assistance and research activities but theywere not immediately ready for use. These manuals were later simplified for adoption to the targeted users'circumstances. Mechanisms to support the R&R extension through improved dissemination tools were

developed as planned at appraisal. Additional extension materials were also produced and used, such asleaflets, posters, visual and audio recordings produced by the training and extension working group,

technical assistance consultants and the LBDS (NGO) within the Cimanuk component. It is still too earlyto precisely evaluate the final outcome of the extension sub-component which, at project completion, israted partially satisfactory.

B. Upper Cimanuk Watershed Conservation and Development. As this component was designedas a pilot activity, there should have been more close monitoring, review and frequent evaluation of theapproached strategies and techniques being tested, in order to make in-course changes and corrections.However, the overall outcome of the UCWCD is considered partially satisfactory. A brief description of

the various sub-components and relevant ratings are given as follows.

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(i) Upland Conservation Management. The implementation of this sub-component has beenpartially satisfactory in terms of the physical targets achieved. In terms of the original SAR targets, 100%of the sub-districts and villages participated in the project, and 63% of the MMDs and ADs werecompleted. Of the planned village nurseries, 88% were established. However, the actual implementation ofthese activities is in line with the reduced program as recommended by the Bank Supervision Mission in1998, and related outcome is rated satisfactory.

(ii) Sloping Lands Agricultural Technology (SALT). In deference to the wishes of farmers, elicitedin the course of PRA exercises, some departures had to be made from the treatments originally suggested inthe SAR In the absence of monitoring data, there is some doubt about the efficacy of some of the other soilconservation measures implemented, particularly structural measures such as gully plugs, as well as thescattered planting of trees. MMDs have tended initially to actually increase soil erosion due to disturbanceof the soil caused by re-shaping terraces. However, the experience of older MMDs and ADs indicate thatthe system stabilizes after a few years, and that vetiver grass hedges proved to be a good practical solutionto soil conservation.

(iii) Nurseries. Village nurseries established under the project contributed to the availability of plantingmaterials during the initial years. However, in many cases, after project funding ceased, they closed down.Those that continued operations suffer from the lack of good mother trees from which to obtain plantingmaterials, lack of quality seeds, lack of training and poor management. The two larger district nurseriesproposed in the SAR were not established under the project but one was set up from GOI funds. Theoutcome of these activities is rated unsatisfactory.

(iv) Roads and Upland Erosion Control. At project completion, a total of about 110 km of accessvillage roads were improved representing 87% of the SAR target of 126 km. Associated drains were alsoimproved for a total of 62 km representing one third of the original programme of 188 km. Initially, thissub-component was contracted to the private sector but, from 1996/97, road improvement operations weregradually given to farmer groups (LKMD) for direct execution with assistance of field engineers. As aconsequence, concems on accountability and transparency in how private contracts were handled, and theinsufficient expert supervision of the works for quality assurance were overcome. Similar to the roads, theimplementation of the upland erosion control measures through LKMDs indicated increased transparency,flexibility, community ownership and cost effective and is therefore considered satisfactory. However,there has been a small flaw that in some locations, there was inadequate coordination mechanism to achieveimprovement along the entire length of the road which reduces the economic gains to passenger or producttransport.

(v) Upland Support Services. This activity was highly satisfactory. The LBDS NGO and districtstaff provided training on PRA and TOT to the extension workers and village leaders, which had ahighly beneficial impact on their capacity for planning and extension. Establishment of the on-farm KeyFarmers Technology Display (KFTD) was successfully implemented having 214 of the planned 292plots put in place by the MMDs, and some benefited from direct research advice. At the time of the ICRmission, the implementation rate for the granting of land titles was only 16%, although manyapplications were being processed. The village grants program was not put into operation on arecommendation from the Bank, because potential beneficiaries could not possibly fulfill the conditionsfor receiving the grant within the remaining project life.

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Activities to encourage women involvement were added to this sub-component. Farmer groups thatestablished women sections have substantially higher numbers of female members (30-50%) as comparedto those that did not (5-20%). As most of its major objectives were achieved, the outcome of thissub-component is to be considered satisfactory.

(vi) Project Management and Institutional Strengthening. This sub-component financed technicalassistance, special studies and NGO services. AlthoughNCB procedures for procurement of NGO serviceswas completed and the award made in March 1995, the selected NGO (LBDS) had to wait till the TApersonnel were in place before they could start work. In the end, 92% of the international TA and 77% ofthe local TA (including NGO services) were utilized by the project. Apart from the problems of theirmobilization, the quality of the TA services provided up to MTR was generally considered to beunsatisfactory in respect of technical expertise and commitment, however, it improved towards the end oftheir assignment. The performance of the NGO (LBDS) was considered as satisfactory. The specialstudies comprised a baseline study, a study on the role of women on upland agriculture, and a landutilization study. These were delayed because of the administrative requirement of waiting for a NoObjection Letter from the Bank. Overall, the implementation of this sub-component is consideredunsatisfactory since the procedural delays resulted in late take-off of most of the other components andsub-components of the project.

C. Investment Support for Regreening and Reforestation. The NIS component, which was toprovide guidelines and manuals for implementing and managing the R&R programme, started at the sametime as the Upper Cimanuk component. Consequently, nearly three years elapsed before the lessons ofUpper Cimanuk could be incorporated in these guidelines and manuals. The Cimanuk component itself gotoff to a slow start and progressed at a slower pace than expected due mainly to the participatoryapproaches being employed. The ultimate result was that the outputs of the NIS component came too latein the project period to be used in the investment support to R&R component. Both GOI and the Bankconcluded that it would be unwise to try to scale up the activities in the R&R component at that late stage.After the MTR, a decision was taken accordingly and the project was restructured by canceling thiscomponent.

4.3 Net Present Value/Economic rate of return:As at appraisal, the economic analysis was carried out for the UCWCD component of the project which,together with Component A, accounted for about 14% of total project costs. Details on the analysis arepresented in Appendix A of Annex 7, and results are given in Annex 3. As indicated in Appendix A, Table1, the total area actually developed under the project reached a total of about 10,000 ha of which, about1,400 ha in MMD and 8,600 ha in AD. Total project output in MMD and AD zones has been estimated onthe basis of a survey over 580 respondents chosen randomly in the project area within the districts of Garutand Sumedang. No benefits in downstream areas have been included in the analysis. The economicimportance of downstream benefits appears to be overstated. Firstly, there is considerable doubt as towhether these benefits actually materialize. Secondly, benefits that do arise will accme for enough into thefuture so as to be negligible in present value terms. In the absence of specific data regarding livestockactivities, relative project impact has been estimated taking into consideration the number of sheepdistributed under the project and production parameters collected in the field by the ICR mission. Totalproject costs included in the analysis amounted to about US$ 16.2 million and included a share of 20% ofthe total research and TA costs to avoid underestimating the economic performance of the Upper Cimanukcomponent. On these basis, the economic rate of retum (ERR) of the project is estimated at about 8% wellbelow the ERR of 17.3% estimated at appraisal. The main factor that has negatively affected the economicimpact of the project is the high investment cost of the operation, which is estimated at about US$ 1,600/haor about 60% above appraisal estimates. Implementation experience confirms that future investments in

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watershed management and conservation should be continued provided that simple and cost-effectiveon-farm soil and moisture conservation technology and improved fanning practices are applied.

4.4 Financial rate of return:On the basis of the assumptions given in Annex 7, Appendix A, and taking into consideration an averagefarm size of 0.5 ha, to be in line with SAR approach, the net incremental farm income by zone would rangefrom Rp. 363,000 (Zone III) to 496,000 (Zone II) and returns to family labor, with project, would rangefrom Rp. 54,300/day (Zone I) to Rp. 58,700/day (Zone II) with increases over the without project situationranging from 20% (Zone I) to 83% (Zone I1). The financial rate of return (FRR) analysis, also presented indetail in Annex 7, Appendix A, has been carried out on the basis of an average investment cost per farm ofRp. 2,020,000 including Rp. 1,928,000 per ha for civil works and inputs as detailed in Annex 7, AppendixA, Table 24 and Rp. 92,000 to cover the average livestock investment cost per farm on the basis of thetotal number of sheep distributed under the project and benefiting about 20,000 farm families. On thesebases, the FRRs over the on-farm investments undertaken under the project would range from 13.7% (ZoneIII) to 18.4% (Zone II). These values, although still considered satisfactory, are well below SARs estimatesbecause of the actual high level of on-farm investments.

4.5 Institutional development impact:The project has considerably improved the country's ability to plan and execute watershedmanagement projects under its national regreening and reforestation program. Of particular interestis the increased capacity of staff (i) to use PRA approaches in implementing project activities suchas soil conservation and extension, (ii) to mobilize village level institutions and farmer organizationsfor implementing civil works and other project activities, and (iii) to ensure transparency, flexibilityin implementation and increased ownership by transferring funds for soil conservation, villagenurseries, etc. directly to accounts established by farmer groups. While the ability to carry outwatershed planning has been built up at central level, insufficient progress has been achieved in thedevelopment of a watershed strategy based on economic assessments to guide priority setting forftture investments.

5. Major Factors Affecting Implementation and Outcome

3. 1 Factors outside the control of government or implementing agency:(i) Economic Crisis. Indonesia's economic crisis occurred towards the end of the project period anddid not significantly affect its implementation. Savings due to Rupiah depreciation made up for cutbacks incounterpart funds caused by the squeeze on fiscal resources. However, in the longer term, prolonged fiscaland economic instability would adversely affect GOI's capacity to finance the incremental recurrentexpenditure needed to maintain the services to farmers at the level reached at the end of the project. It isalso likely that, at national as well as district level, emergency safety net programs would take precedenceover investments in resources management.

(ii) Drought. Another extraneous factor affecting the performance of the project was the severedrought of 1997/98, which destroyed many of the seedlings that had been planted in the regreening area.

(iii) Small Size of Land Holdings and Absentee Owners. The small size of most land holdings (0.2 to0.3 ha) in the project area imposed a major constraint on the options available for promoting watershedprotection at farm level. Unless the farmers have other holdings elsewhere, they use most of their land toplant subsistence crops (maize, upland rice, cassava) or cash crops (vegetables, groundnut) and are leftwith little or no land on which to plant trees or grass.Another constraint was that there are absentee land

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owners who live outside the project area, and their lands are cultivated by tenantsFarmers in the projectarea were thus reluctant to accept soil conservation treatments involving tree planting.

(iv) Design Problems. Expansion of the NIS, especially its ISS and Watershed Planningsub-components, to more watersheds in the country was hampered towards the end of the project due toinadequate provision of funds for equipment and training. The magnitude of the investment required forexpanding this component was not foreseen at project formulation/ appraisal. Other design problems whichaffected project implementation were institutional arrangements for implementing the project that wereover-optimistic scheduling of project activities.

5.2 Factors generally subject to government control:(i) Implementation Plan. The failure to prepare a detailed project implementation plan before theproject effectiveness resulted in the first year of the project being largely used for this purpose.

(ii) Funding Procedure. Funds for project activities were released by GOI and the Bank byauthorization letters from the Regional Development Assistance Budget (SPABP). As these letters weregenerally issued only in the second quarter of the fiscal year. From 1 April - 31 March., all projectactivities had to be crammed into the latter part of the year. Since 1998, howeverthe situation hadimproved and funds have been released in the first quarter.

(iii) Administrative Constraints. The long tender process for recruiting technical assistance andlaunching the studies and training activities caused major delays in the commencement of field activities bythe NGO and the staff of the DPKTs as well as in the commencement of the NIS component. This was amajor contributory factor to delays in implementation. There was also a serious lack of co-ordinationamong the different ministries and agencies involved in project implementation.

5.3 Factors generally subject to implenienting agency control:Monitoring and Evaluation. Irregular reporting of the results of monitoring and evaluation as well as theresults of supervision missions to field managers was an important constraint to proper implementation ofthe project. The weakness in monitoring and evaluation in this project, especially with regard tosocio-economic aspects, is also to be regarded as a lost opportunity to adequately assess the effectivenessof project interventions and draw lessons for future projects under the R&R program.

5.4 Costs andfinancing:At the end, the total cost of the project amounted to some US$ 26.2 million, of which the Bank Loan3658-IND after two cancellations for a total of US$ 40.2 million, contributed close to US$ 16.3 million, orabout 29% of the original amount of US$ 56.5 million. Other project costs were covered by GOI's funds ofUS$ 9.1 million and farmers' contribution of US$ 0.8 million. Details on project expenditures and financingare given in Annex 2.

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6. Sustainability

6.1 Rationale for sustainability rating:The two components of the project which were implemented, are likely to be sustainable and the overallsustainability rating is based on this. There appears to be continued government commitment at nationallevel to using the improved methodologies developed under the NWMCP. Development of a strategy forpriority setting in the R&R program, however, will need further work on the economic retums toinvestments in such projects. Since GOI, as well as major donors, will continue to emphasizeenvironmental management and poverty alleviation, the national R&R program is likely to continue overthe next 25 years given the backlog in degraded areas in need of treatment. The diversion of limitedfinancial resources at district level to other more visible and politically popular infrastnicturedevelopment will probably not happen as R&R funds provided by the central government are usuallydesignated for use in that program. Demand driven and results oriented program together with farmercontribution to the investment will contribute to greater sustainability.

6.2 Transition arrangement to regular operations:The participatory approach adopted in project implementation has sensitized farmers to the need forprotecting their land against degradation and would make the maintenance of the treatments, as well as thedemand for their extension to the remaining areas, more likely. Farmers could also put pressure on theBupatis to expand the extension services to the new areas. The soil conservation treatments promoted underthe project have been readily adopted by farmers in part due to the increased yields obtained through theuse of fertilizers and other inputs provided on a grant basis under the project. It is possible that farmers willdrop out of the conservation activities when such subsidies are no longer forthcoming. However, with thefiscal decentralization that is underway, it is likely that special grants from central government willcontinue or that local government will see R&R program activities as priority use of non-earmarked funds.A possible draw back is that the funds may be inadequate to provide NGO assistance for expansion of theproject into adjacent areas. Experience on older MMDs and ADs indicates that many of them continue withthe improved farming systems on account of the perceived benefits.

7. Bank and Borrower Performance

Bank7.1 Lending:The Bank's performance in the identification, preparation assistance and appraisal of the project waspartially satisfactory. The project was consistent with GOI and Bank development priorities and the Bank'scountry assistance strategy. The technical approach proposed for watershed management and conservationwas sound. A good deal of flexibility as well as a strong supervision program were worked into the design.A major design flaw, however, was over-optimism in the capabilities of the implementing agencies,particularly in view of the complex organizational arrangements of the national R&R program to be usedfor implementing the projectand some other responsibilities to new institutions at the local governmentlevels. The institutional complexity of the implementing arrangements compounded the problem. Thisresulted in the unrealistic expectation that project implementation would take off immediately the projectbecame effective and that the groundwork for implementing the component on investment in the R&Rprogramme would be laid by the third year of the project. The phasing of activities under the differentcomponents did not allow them to dovetail into each other properly, e.g. some of the activities of the NIScomponent were implemented simultaneously with those of the UCWCD component that were prerequisitesfor implementation of the NIS. These drawbacks were unfortunately not recognized at appraisal. Givingscrutiny by the Bank to procurement processes because of indications of shortcomings has caused delays

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in issuing the necessaryNo Objection Letters, resulting delays in recruitment of consultants, the selectionof the NGO and award of the special studies contract.

7.2 Supervision:Bank performance with respect to supervision was unsatisfactory, especially in view of the strong emphasis

given in the SAR to a strong supervision presence in the initial years of the project. The supervisionmissions were not adequate in frequency, staffing and output. The SAR supervision plan had recommended15 supervision missions during implementation; however, only 8 Bank supervision missions, including the

MTR mission, had been carried out up to February 1999 (Annex 4a). The missions were also notadequately staffed. There wereinadequate inputs from institutional and soil conservation specialists and

necessary corrective measures were not undertaken even when project activities were getting delayed andadjustments were needed. For example, more than 2 years elapsed between the first recommendation byMTR for cancellation of Component C and the restructuring of the project, before the cancellation actually

took place.

7.3 Overall Bank perfornance:Adequate supervision of implementation, for which there was provision in the design, could have resulted ina much more satisfactory outcome of the project. Therefore, the overall Bank performance is ratedunsatisfactory.

Borrower7.4 Preparalion:Borrower participation in preparation was limited. Consequently, the borrower failed to follow up the

preparation and appraisal with a detailed project implementation plan and a training program to prepare theimplementing agencies for the roles that were expected of them. The implementing agencies at national andregional level were not properly linked to the existing structures of government and, therefore, ended up asad hoc working groups rather than implementing agencies.

7.5 Government implementation performance:Macro-economic and sector policies did not directly affect implementation of the project. However, there

was insufficient emphasis on the importance of the project as a means of developing mechanisms foreconomic evaluation of regreening and reforestation projects for priority setting of investments in watershedmanagement. The timely provision of counterpart funds was hampered by GOI's budgetary proceduresuntil late in the project.

7.6 Implementing Agency:The major problems of project implementation arose from delays in start up of project activities,particularly the recruitment of technical assistance and the NGO. There was also inadequate linkagebetween the Upper Cimanuk Watershed Development component, which was meant to be a pilot project fordeveloping methodologies to be applied in the R&R program, and the NIS component to strengthen theplanning and implementation of the national R&R program. This was mainly due to lack of co-ordinationbetween the central and district level implementing agencies. As a result, close monitoring and frequentevaluation of the UCWCD component was not carried out with a view to developing strategies andtechniques that could be extended to the national programs. The use of technical assistance wasunsatisfactory as far as timing was concerned, since delays in their recruitment resulted in late start up ofkey project activities, but was generally satisfactory in relation to their outputs. On the positive side, a

number of useful approaches - beneficiary participation, transparency in funding, women' participation,watershed planning, district and village level conservation planning -have been developed and are alreadybeing adopted by GOI in its national R&R program.

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7.7 Overall Borrower performance:The overall performance of the borrower in this project was unsatisfactory. The main reasons for this weredue to inadequate interest in the objectives of the project as a whole and failure in reforming the R&Rprogram by developing a strategy for watershed planning based on economic evaluation of the watershedmanagement and conservation methodology developed under the UCWCD, resulting in cancellation of themajor component (Component C) of the project.

8. Lessons Learned

The main lessons learned from the project, in order of importance, are as follows:

(i) Adequate interest in the objectives of the project as a whole and full commitment from thegovernment for results oriented, demand driven and high quality soil conservation program would result insatisfactory implementation performance.

(ii) Direct Involvement of Primary Stakeholders in planning, implementation and management of keyactivities, e.g. conservation and village infrastructure works is important for realizing sustainable projectdevelopment. Direct funding of farmer groups, with transparency in all transactions, is welcomed byfarmers and is more cost-effective than hiring contractors. Demonstrated demand from the farmers is thekey for successful implementation of the project.

(iii) Correct Sequencing of Project Interventions especially design, organization and construction, bothin the planning and implementation stages is critical for achieving development objectives. Pre-projectactivities including the preparation of the detailed project implementation plan, and the bidding process forselecting consultants should be started without waiting for the loan to become effective.

(iv) Formal Long-term Tenancy Agreementsbetween landlords and tenants encourage tenants to investtime and capital and help to ensure high standards of land management.

(v) Simple Institutional Arrangements involving few organizations is important for projectimplementation. Under the project, some of the institutions such as DPKT were new and staff had littleexperience of Bank projects. Such institutional constraints need to be taken into account in order to avoidoverly optimistic targets, especially at project appraisal and in the early years of implementation.

(vi) The participation of NGO in the project implementation has proved to be a successful initiative andhas been rated as very satisfactory by all concemed including direct project beneficiaries and women'groups.

(vii) Adequate Monitoring and Evaluation is essential in case of pilot operations, which are to bereplicated throughout the country. The weakness in monitoring and evaluation in this project, especiallywith regard to socio-economic aspects, is to be regarded as a lost opportunity to adequately assess theeffectiveness of project interventions and draw lessons for future projects under the R&R program.

(viii) Promoting both On and Off-farm activities should be given high priority for increasing incomesof primary stakeholders. Livestock production provides an effective complement to crop production.

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9. Partner Comments

(a) Borrower/implementing agency:Borrower's Contribution to the ICR

Introduction

1. Two and a half decades of regreening and reforestation projects have failed to substantiallycontrol soil erosion on about 8.5 million hectares of non-irrigated agricultural uplands in the majorwatersheds of Indonesia. Unchecked watershed degradation and soil erosion could endanger thewelfare of the population and the ecological stability of these upland areas as well as irrigated cropproduction in linked lowland areas.

2. Recognizing the impact of soil erosion and watershed degradation on the country's foodsecurity, the Government of Indonesia (GOI) requested World Bank assistance for a NationalWatershed Management and Conservation Project (NWMCP). The primary emphasis of the projectwas on the introduction of more productive, environmentally benign, sustainable farming systems topoor farmers in fragile non-irrigated upland areas and rehabilitation of degraded forest areas in theUpper Cimanuk Watershed. The NWMCP was to also develop the technology and methodologyneeded to extend these sustainable farming and soil conservation practices with modifications in 39identified critical watersheds (63 million ha).

3. In response to GOI's request, the Bank sent an appraisal mission to Indonesia in February1993 consisting of Messrs. B. van de Poll, W. Magrath, A. Sahulata and. Ms. S. Bettencourt(Bank) and Dalton (consultant). 'he loan agreement for NWMCP , Loan No. 3658-IND, wassigned between by the Bank and GOI on December 10, 1993 and became effective on May 5, 1994.

Objectives and Components of the Project

4. Objectives The major objectives of the project were:(a) to raise the living standards of poorupland farmers by improving and restoring the productive potential of their resource base; and (b)to enhance the environmental quality in critical watersheds and protect downstream watershedresources.

5. Components. The project included three components:

Component A: National Institutional Strengthening (NIS) aimed at improvement of planning,management and natural resource information systems (RIS), creation of a multi-disciplinaryupland research program and strengthening of training and extension. The NIS componentconsisted of 4 sub-components: (i) Information Support System; (ii) Land Use Planning; (iii)Upland Research; and (iv) Training and Extension.

Component B: The Upper Cimanuk Watershed Conservation and Development (UCWD)component was designed to stabilize critical areas in the Upper Cimanuk watershed (West Java) bysupporting the introduction of improved farming systems combined with soil conservationpractices, road upgrading and drainage rehabilitation. UCWD consisted of4 sub-conponents: i.Upland Conservation Management, ii. Road and Upland Erosion Control, iii. Upland SupportServices, and iv. Project management and Institutional Strengthening.

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Component C: The Investment Support for R & R Program which was to finance the inputs forfarm system improvements and nursery development for GOI's ongoing R & R program.

6. Scope of the Project. The initial development focus was the Upper Cimanuk watershed inWest Java (see map). The Cimanuk component would serve as a pilot project to determine theprocedural changes and technical approaches that need to be introduced by the project in thenational R & Rprogram in 39 priority watersheds covering 193 kabupatens across the country.

Project Organization

7. Institutional Frame Work. The project was to be implemented under the existingorganizational arrangement of the national INPRES R & R program (Chart 1), which linked centralpolicy and budgeting with localized implementation and planning. BAPPENAS and BAPPEDAwere involved in the project for coordinating the work of the technical agencies involved inplanning, budgeting and resolving inter-agency issues.

8. Project Organization. The highest decision-making body in the national level projectorganization was the Inter-ministerial Steering Committee (Tim Pengarah) with members from theinvolved Departments (Chart 1). The Steering Committee, supported by the Guidance Team (TimPengendali) and the Secretariat, provided direction to project operations, including overallcoordination and monitoring. The Secretariat established four specific subcommittees / workinggroups to assist in the direction and implementation of (I) ISS and Reporting; (ii) Upland Researchand Development; (iii) Training and Extension; and (iv) Planning. Implementation of the UpperCimanuk Watershed and R & R Investment Support components of the project was assigned todifferent agencies according to GOI's existing organizational and management structure andfunding mechanisms of the R & R program.

9. Coordination Group. At the central level the R & R program was coordinated by a nationalSteering Committee made up of eight representative ministries / agencies. The Ministry of HomeAffairs (MOHA) was the lead agency; Ministry of Forestry (MOF) was responsible for planning;BAPPENAS was responsible for the allocation of funds; Ministry of Agriculture (MOA) andMinistry of Public Work (MOPW) provided technical support The other members were theMinistry of Finance (MOFi), State Ministry of Environment and State Ministry of National LandBoard (BPN). The executive secretary of the committee was the Chief of Bureau of SpatialPlanning and Environment (BAPPENAS). The Steering Committee was assisted by a CentralGuidance Team (Tim Pengendali) with its Secretariat providing the day-to-day data management,including planning, funding and reporting (Chart 1). At the provincial level the program wasimplemented by a Management Team (Tim Pembina), including a secretariat, appointed bygovemor. The main control for the Reforestation program was under the Head of the ProvincialForest Service. At the district level the Regreening program is under the authority of the Bupatiwith support of district guidance team (Tim Pembina) and the secretariat. While the INPRESprogram vested major responsibility for project execution with the provincial and districtgovernments, it was the Directorate General of Reforestation and Land Rehabilitation (DG-LRR)of MOF that assumed the main development role of this program through its nationwide network ofoffices for watershed management and soil conservation. The Directorate General for RegionalDevelopment in MOHA (BANGDA) was responsible for administrative control of the program.

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Implementation Record and Major Factors Affecting the Project

10. Project Period. The project commenced in FY 1994 / 1995, three months after LoanAgreement was signed, and was to finish on September 30, 1999 or one year earlier than theagreement (September 2000) but has been extended till December 1999.

11. Project Expenditure. The project expenditure by component and source of funding up toSeptember 1999 is presented in the table below:

Component Total (Rp.) GOI (Rp.) LOAN (Rp.)

A 39,137,548,193.00 14,578,756,700.00 24,558,791,493.00B 44,707,389,125.00 13,684,803,344.00 31,022,585,781.00C 0.00 0.00 0.00

Tot a l 83,844,937,318.00 28,263,560,400.00 55,581,377,274.00

12. Annual Expenditures (Indonesian Fiscal Year) are shown below (in Rp. million):

Total 94/95 95/96 96/97 97/98 98/99 99/00

Annual Project Cost 11,259 15,045 205,669 232,996 260,652 285,020Annual Expenditure 7,159 10,949 16,233 15,929 19,463 13,958

13. Amendment of Loan. At appraisal, the project cost was estimated at US $ 487.8 millioncomprising US $ 431.3 million from GOI and US $ 56.5 million from the Bank loan. However,during project implementation, GOI requested the Bank to cancel some project costs, US $ 33.9million on August 26, 1998 and US $ 6,342,372 on December 18, 1999. The cancellations were forComponent C only. Therefore, the project financing available from the loan was onlyUS $ 16,257,628.

14. Disbursement of Loan reached US $ 12,29 million by October 1999 and is likely to reach US$ 16,20 million by the of end of March, 2000. Annual disbursement (Bank fiscal year) progress issummarized below:

Disbursement 94/95 95/96 96/97 97/98 98/99 99/00

SAR Schedule (US $ million) 3.8 5.4 12.0 12.4 11.9 11.0Actual 3.1 2.6 3.9 3.5 1.3 1.4

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15. Major Factors Affecting the Project. The effect on the project of Indonesia's monetary crisisis not very significant. However, uncertainty and prolonged national financial /economic instabilitycould have negative impacts, particularly on prices of agricultural inputs, which could haveunfavorable effects on agricultural production.

16. Factors under Government Control. Due to limited field staff numbers and uneven targetdistribution, too low at the beginning and too high at the middle of the project period, the capacityof existing field staff was exceeded and project activities accumulated towards the end of theproject period. Therefore the targets of Component B (UCWD) could not be achieved fully.

17. The delay in commencement of the project, the long administrative tender process and the longprocedure for financial administration are the main factors that delayed project implementation.Coordination that did not run smoothly, implementation arrangements that lacked accountabilityand poor supervision, monitoring and evaluation are other factors that affected projectimplementation.

18. Factors under the control of the relevant Institutions. NWMCP worked with many Ad HocTeams such as Tim Pengendali, Tim Pembina and Working Groups. The members of an Ad hocTeam were generally occupied with regular functions in their own institutions. It was very difficultto get them to devote substantial amounts of their time to the project and to be based at the projectoffice. This adversely affected inter-agency coordination and the discipline of Ad Hoc Teammembers, thus ultimately affecting project performance.

Achievement of Project Objectives

19. Overall Progress (estimate) The average of overall project progress (estimate) at the end ofSeptember 1999 was 5.4%. Accounting for the average of Component A 77.8%, Component B30.5% ( Upland Conservation Management 85.10%, Road and Upland Erosion Control 40.75%,Upland Support Services 32.97%) and Component C 0%.

20. Achievements of key components are summarized in Table I and described by components inthe following paragraphs.

21. Information Support System (ISS). Activities carried out under this component included thefollowing: (i) On the Job Training. On the job training or direct training was conducted in theapplication of GIS instruments, mapping and RegRIS database program; (ii) Documentation. Twovolumes of RegRIS and PlanRIS have been prepared and each volume consists of two parts, a UserGuide for the RIS computer operators and Technical Reference Manual for use by Programmer andDatabase Designer; (iii) Planning System for Land and Water Management (PPLA). The progressat CIMANUK SBRLKT was mainly achieved by the staff themselves; (iv) Regreening ActivityManagement System (RegRIS). Version 1.2. of this software has been installed at DPKTSumedang and Garut. As an improvement, the printing program for reporting of Regreening Areasand Farmers Groups has been added. A review of version 1.2. of the RegRIS by ISS-WG resultedin production of version 2.0. DPKT Sumedang has largely completed the work to produce a " PetaKegiatan " showing location of all regreening sites in the Cimanuk Watershed, by using the RegRISsoftware; (v) Planning Resource Information System (PlanRIS). The system is now mature and theconsultant has also had several discussions with the head of SBRLKT concerning modification of"RTL" for the production of "Peta Arahan". The SBRLKT want to be able to develop their own

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plarning process and to evaluate them with GIS overlay analysis; (vi) Demonstration of GISCapability. The SBRLKT Cimanuk has conducted a number of demonstrations of GIS for staff ofthe entire SBRLKT of Java, and DPKT of Java; (vii) Developing of Institutional InformationSystem. Project has developed software of Information Support System (ISS) and some modules ofRegreening MIS & Reforestation MIS, project evaluation and database of regreening andreforestation activities.

22. Land Use Planning. Some activities conducted by the project under this subcomponent are:(i)definition of Critical Land; (ii) development of Five-Year Technical Plan of Land Rehabilitation(RTLlRencana Teknik Lapangan Limatahunan) (iii) formulating a "Manual for Preparation of aVillage Soil Conservation Plan (RKTD)", (iv) preparation of guidelines for an "Arahan RLKTKabupaten"; and (v) a survey of soil erosion in the Palu and BilaWatersheds.

25. Upland Research and Technology Development. Research was conducted jointly byresearchers from Agency for Agricultural Research and Development (AARD) and ForestryResearch and Development Agency (FORDA) under the coordination of the Center for Soil andAgroclimate Research and technical assistance from DHV. For several locations research wasconducted by local research agencies as described in the Table below.

Watershed Implementing agency

Upper Cimanuk, West Java AARD and FORDA

Toba Catchment, North Sumatra FORDA with assistance of AARD

Lembah Palu, Central Sulewesi Univ. Tadulako

Billa Walanae, South Sulawesi Univ. Hasanuddin

Upper Kapuas, West Kalimantan Univ. Tanjung Pura

Kambaneroe, East Nusa Tenggara Naibonat Assessment Institute for AgriculturalTechnology (BPTP) and Univ. Nusa Cendana

Research results were discussed in Seminars attended by staff implementing all components ofNWMCP. Dissemination of research results took the forn of publications of Proceedings,Technical Manuals, and Leaflets, regular field visits and interaction with farmers, and field days incoordination with Extension Working Group. Besides research papers, the proceedings also containreview papers written by Central Secretariat of Central Guidance Team of R&R.

26. Training and Extension. The training programncomprised: (i) Training Managementconsisting of planning, implementation and monitoring and evaluation; four training managementmanuals were produce; (ii) Training Needs Assessment with competence based approach;guidelines for conducting a training needs assessment were formulated; project staff were trained toconduct training needs assessment and to try training needs assessments in four "BLK(BalaiLatihan Kehutanan / Forestry Training Center)Bogor, Kadipaten, Ujung Pandang and PematangSiantar. (iii) Development of Curriculum and Training Material (iv) Farmer Groups TrainingDevelopment. The extension program consisted of four main activities: (i) Development of

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Extension Institution through improving several extension manuals-, (ii) Development of Methodsand Techniques of Extension, which was oriented towards developing participatory extension forprograms such as the regreening campaign, farmer to farmer extension and cross visits(iii)Strengthening of Project Staff Capacity in managing extension; and(iv) Development of ExtensionMaterials. Collaboration between the Training & Extension Working Group and Upland Researchand Technology Development Working Group has resulted in extension material such as booklets,leaflets, and flipcharts. Electronical media such as "radio drama", documentary film and story filmor cinetron (cinema electronic) were also developed.

27. Upland Conservation Management. This sub-component dealt with the critical land bypromoting land conservation fanning systems. The activities consisted of establishing Model MicroWatersheds (MMDs), impact areas and Village Nurseries (KBD). Evaluation conducted by Sub -Center for Land Rehabilitation and Soil Conservation (SBRLKT) of Cimanuk in December 1997and 1999 (Table 3), show that target achievement of MMD, AD and KFTD from the beginning ofthe project activities (1994/1995) to 1997 is quite high both in Garut and Sumedang Districts.However, the progress from 1997 to 1999 was slow. Furthermore, the terracing in MMDs both inGarut and Sumedang district show negative progress. The cropping pattem indicator shows nosignificant change from the beginning of the project to 1997 and from 1997 to 1999, both in Garutand Sumedang. Some activities have made a little progress for instance AD/Impact Area in Garutand MMD & AD in Sumedang. During project implementation 49.7 units of KBD were establishedin Garut district, while the project target was 52 units, so the project realization is about 95.6%. Inthe Sumedang District 15.5 units of KBD have been established while the project target was 23units, so the project realization is 67.4%.

28. Roads and Upland Erosion Control. This component was aimed at controlling erosion due tosurface water flow from residential areas and drainage channels on the sides of village roads (OffFarm Treatment). The activities comprised Land Stabilization, Residential Drainage, Drainage ofRoadsides and Restoration of Roads, particularly Village Roads. The following performance isobtained from evaluation using the criteria: good (no damage), lightly damage (<20% damage) andheavily damaged (20 - 40% damage):

District Total Good Lightly Damaged Heavily Damaged(km) (%/O) (%) (%/0)

Garut 60.58 42.50 31.00 26.50Sumedang 48.98 86.90 9.70 3.40

It can be concluded that the condition of village roads in the Sumedang District is better maintainedthan in the Garut District.

29. Upland Support Services. Services in this sub-component were aimed at improving theproject's capability and the capability of regional institutions in planning, extension anddevelopment of rainfed technology/upland farining systems. Project activities comprised: planning,training and extension for farmers and training for officers/apparatus, establishment of "KeyFarmers Technology Display", land titling and awarding village grants. The project adopted aparticipatory planning (Participatory Rural Appraisal) approach. All project staff were trained inPRA methods, which was used in participatory extension. No village grant were given, even thoughproject staff had encouraged farmers to request the grant.

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30. Project Management and Institutional Strengthening. As mentioned in the SAR (StaffAppraisal Report), the main target of the Project Management Unit of Upper Cimanuk WatershedComponent was to provide the following consultant and NGO services and Special Studies:(i)Baseline Information Study; this study was conducted by Research Institute of IPB for 8 months;(ii) Study of Role of Women in Upland Agriculture this study was conducted by the ResearchInstitute of IPB for 5 months, but as some additional data were required through ParticipatoryRural Appraisal Method, the time was extended to 10 months;(iii) Land Utilization Studythisstudy was conducted by Research Institute of IPB for 10 months;(iv) consultant services; based onthe technical and financial proposal, the winner was DHV Consultant (the Netherlands) associateswith PT.Tricon Jaya Consultant (Indonesia); the consultant services were for 36 months, from June1995 to June 1998. Local consultants extended from March 1999 to September 1999,(v)Non-Government Organizations (NGO) Services;based on the final evaluation of the bids thewinner was NGO-Lembaga Bangun Desa Sejahtera (LBDS). The NGO Services for 54 Monthsstart from April 1995 to September 1999.

31. Investment Support for Regreening and Reforestation. Following the midterm evaluation ofthe project, Component C was canceled. On the other hand, the Model of Upper CimanukWatershed conservation and development management will be used as a reference to manage othercritical watersheds. Until the second year of implementation, the project still could not achieve thetargets. The cancellation mentioned above can be explained as follows:(i) The preparation ofproject implementation According to the SAR, the project must be carried out immediately in themiddle of June 1993, so that by the fiscal year 1994/95, the action plan could have been prepared(starting from April 1, 1994). However, during the first year of project implementation (1994/95)the project staff was still working on project preparation. This was particularly caused bynon-similarity in the perceptions among the members of Tim Pengarah / Tim Pengendali in theCentral Level and members of Tim Pembina at West Java Province;(ii) Bidding process of NGOand consultant. The winning bidder is decided by Govemor and announced through a Letter ofDecision, the preparation of which usually takes some time. Beside that for each of tender phaseGOI must obtain a 'letter of no objection" (NOL) from the World Bank (the Bank Factor), whichprocess also takes time. This bureaucratic procedure delayed mobilization of the consultants.Therefore, project implementation did not run well in the first and second year(iii) FundingProcedure through SPABP. Funding activities financed from APBN and IBRD are mentioned in anAuthorization Letter of Regional Development Assistance Budget (SPABP). SPABP was mostlyissued in Quarter II (month of June-July). This means that all of the activities must beautomatically adjusted to the available budget. Consequently, the project implementation will beaccumulated at the end of fiscal year;(iv) Recommendations of Aide-Memoire. The Aide-Memoireissued by a supervision mission team is influenced by the background of each expert who ismember of the team. So there are often inconsistencies among recommendations made bysuccessive supervision missions. On the other hand, the Aide-Memoire is regarded as a referencedocument that must be obeyed by the Government of Indonesia. The issues raised were one ofcauses of the cancellation of component C. Although the implementation of the component ofInvestment Support for the R & R Program (component C) is canceled, many documents that haveresulted from NWMCP could be used to support the implementation of the R & R Program. Thedocuments are as follows: (1) Written documents from NIS including: reports, guidelines, trainingmodules and extension materials, Letters of Decision of the Government and preparation ofcomplete and integral documents on Regreening Process including planning and implementation inthe district and village level. (2) Written documents prepared by Cimanuk consultants and NGO -LBDS.

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Assessment of Project Outcome

32. At Central Level. There has been a suggestion that the use of "ad hoc" institutions has had anadverse impact on project perfornance. Appropriate methods and techniques have been developedin NWMCP for the strengthening of the community based approach to programs. Also theapplication of the Participatory Rural Appraisal (PRA) method in all program phases, namely:planning, implementation, monitoring and evaluation have been able to increase public participationin the regreening activities.

33. At Local Level. Farmers' incomes have been increased through absorption of labor, during theperiod of project, growth of livestock production along with the establishment of MMD,improvement of land coverage and increasedestablishment of forage, timber trees and fruit trees,supported by the increased accessibilityto smooth transportation of agricultural inputs andproducts and to decreased transportation costs.

34. The involvement of the NGO in project activities to facilitate farmers' participation caused thegrowth and development of 216 Regreening Farmers Group (RFG) in Garut. The NGO alsoencouraged the self-management and transparent fund management system by RFG and LKMD tocarry out independent activities, through the implementation of PRA.

35. With the support of Consultant services and the NGO and the "Transfer of Knowledge" eitherthrough participation or training, the knowledge of the project management and the community hasbeen increasing.

36. The rehabilitation and soil conservation measures conducted on critical areas in the UpperCimanuk Watershed during the project, has decreased the critical land area from 28,500 hectare in1994/1995 to 5,315 hectare in 1999/2000. Or in other words, a decrease of 23,185 hectare inDistrict Garut, While in Sumedang the critical land has decreased from 5,279 hectare in 1994/1995to 723.5 hectare in 1999/2000, or in other word a decrease of 4,55,5 hectare. Through the project,land certification / titling has been conducted in the project locations. In total of 1,996 plots werecompleted and 2,500 are under process in 1999/2000 for Garut District and for Sumedang 308plots have been completed and 1,300 plots are being processed. Furthermore, GOI has allocatedadequate budget for completion of land titling in the project area in Garut and Sumedangamounting to Rp 80 million and Rp 100 million respectively for fiscal year 1999/2000.

37. Project Benefit to the Farmers. The result of a simple survey to the 580 respondents chosenrandomly from Garut and Sumedang district show that: (i) Yield of farming activity in the MMD ishigher than that of AD and non-projectin the first planting season, but lower in the second plantingseason. In the first planting season, the surface of MMD land had not been shaded yet by trees (stillsmall) but in the second planting season the MMD land has been shaded by tree crops. It causes thedecrease of yield of annual crops planted under the tree crop. In AD and Non Project areas, theland is not shaded yet by tree crops and the yield is not affected; (ii) The existence of RegreeningFarmer Groups (Kelompok Tani Penghijauan/KTP) was recognized by the project and beneficiarygroups were offered the responsibility of managing project funds for regreening activities resultingin improved participation of group members; (iii) The RFG recognize the value of, and benefitfrom, extension activities. According to RFGs' opinion, methods and materials of extension are

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appropriate; (iv) There has been a significant change in farmers' knowledge, attitude and skillswithin MMDs and Ads as well as Non Project areas.MMD farmers and AD farmers, however,have better knowledge, attitude and skills of conservation techniques than non-project farmers.

Project Sustainability

38. Legal Aspect. The issuance of the Law No. 22 Year 1999 of Local Government, and theLawNo. 25 Year 1999 on Financial Balance between Central and Local Government will enable localgovernments themselves to decide on priorities for the allocation of the regional development fund(including for regreening and continuation of R&R activities). The governments of Garut andSumedang districts are also expected to be able to continue the management of the rest (about 90%/6)of Upper Cimanuk Watershed area. Together with other related services at District level, theDPKTs of Garut and Sumedang should coordinate the preparation of R & R Program budgets tomanage the Upper Cimanuk Watershed. And as the service that is functionally responsible forregreening and soil conservation, the head of DPKT Garut and Sumedang services should be ableto convince the respective Bupati and head of BAPPEDA of the urgency of providing funds formanagement of Upper Cimanuk Watershed. The advantages of giving priority to this programwould include the regional advantage of improving the living standards of upland farners in thewatershed area, supporting the national program on food security and maintaining the sustainableirrigation water supply to the linked lowland area.

39. Institutional Aspect. Three factors: (i)development of RFG according to their profile, (ii)continuously improving the community-based program approach to create a "revolving approach",and (iii) the presence of PKL and PPL always on site, ready to guide the farmers using theNWMCPs' results, would encourage the community to participate in the regreening program.

40. Central Government Role. The regreening of upper watershed areas usually also benefits thelowland region linked with the upper watershed. This consideration does not always receive theattention of upstream district authorities. Based on this experience, it is necessary that the centralgovernment suggest to local governments (Bupatis) of upstream areas that they should prioritizeregreening and soil conservation activities also taking into account factors such as the supply ofsustainable irrigation to downstream areas in order to maintain national food stability, floodcontrol, etc. and the Central Govemment should continue the National R & R Program, givingmore support to the upstream areas. The central government provides funding support forregreening and soil conservation programs in upstream districts through the budget transfermechanism of APBN to APBD as a general fund or special fund or other type of fund to theBupatis.

41. Training and Extension. Training and Extension in regreening and soil conservation couldcontinue supporting the regreening and soil conservation program through: araluating and revisingthe training and extension manuals based on experience gained after implementing them in severalareas; continuing to apply a participatory approach in training and extension programs;strengthening the collaboration among researchers, extension workers and farmers in developing theextension method, developing appropriate extension materials such as leaflets, posters, flipcharts,video visuals and film.

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Bank Performance

42. The Bank has provided a Staff Appraisal Report (SAR) which facilitated the preparation bythe borrower of the project implementation plan. The Bank consistently supported theaccomplishing of project objectives through Bank supervision missions which gave advice onproject implementation. However, some problems should be noted in relation to the performance ofthe Bank:

- According to SAR, the project should have been supervised 13 times (until December 1999).But until Februaty 1999, the Bank supervised the project 8 times only.

- While Aide-Memoire left by a supervision mission is regarded as a reference by the GOI, oftenthere are inconsistencies between recommendations of successive supervision missions. Theserecommendations seem to vary depending on the particular expertise and background of themembers of the mission.

- Although it is very important, the process of getting NOLs at every stage obstructs thesmoothness of project implementation. It is proposed that for similar projects in the future, theBank should only issue one NOL for both the Program and Fund Disbursement.

Borrower Performance

43. Factors Under the Government Control. Administrative aspects such as the lack of readiness ofGOI to begin the project, the long tender process and long procedures of financial administration,are the main factors that delayed project implementation. Coordination among implementingagencies was very difficult and is still limited. Monitoring & evaluation has been conductedirregularly and sometimes the result is not followed up properly. Ad hoc teams were expected toassure coordination among the agencies / institutions implementing the project. But in reality it wasvery difficult to get team members who were able to devote most of their time to the program andwilling to be based at the project office.

Lesson Learned

44. Technical Aspect. Since the initiation of Regrening in 1976, the program has been faced withproblems of institutional complexity, long planning procedures and inappropriate field-levelselection of soil conservation measures. Options should not be limited to a very narrow range oftechnologies, while a wide rangingbest-bet menu is available, which could be given to farmersThese include construction of small sized sedimentation pits, conventional mulching, vegetativereinforcement of existing bench terraces, contour hedgerow planting, conservation tillage, stripcropping with fodder grass or legumes, etc. A livestock production component in regreeningprojects would open up opportunities to introduce vegetative conservation measures.Recommendations to farmers must be followed up with thorough explanation of the advantages anddisadvantages and subsequently a demonstration should be carried out of how selected optionscould be implemented. And the farmer should have the option to choose the technologies best suitedto his circumstances. Separation between production and environmental management objectivesmakes the demonstration unpopular and unreplicable.It appears that in many situations low costvegetative conservation measures can be applied.

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45. A combination of (i) the Strategy for Watershed Management using the paricipatory method;(ii) the Integrated Rehabilitation Pattem Approach in a Water Catchment Area (DTA) in theSmallest Unit of Regreening Management (UTPP); and (iii) the Village Regreening ParticipatoryRural Appraisal (P3D - Pengkajian Partisipatif Penghijauan Desa) as a bottom up planningprocess, has been found to be very effective in implementing regreening programs.

46. Administrative Delays. The commencement of project is always delayed at Central level dueto lack of preparation of GOI to prepare a project implementing plan. At provincial and districtlevel the major factors that cause delays in project activities are: (i) the differing perceptions amongmembers of Tim Pembina on the position of consultant, NGO services and Special Studies; (ii) thelong tender process; (iii) the obligation to conduct the NOL-program for each phase of tenderactivities and NOL-financial disbursement for the liquidation of budget; and (iv) the longadministrative funding procedure. The development of Management Information System (MIS)prepared by consultant will be very helpful in the recording of activities; it was just introduced atthe end of the project Budget allocation should be justified based on local community-developedrather than local government-developed proposals. However the weakness of understandingfinancial administration at the level of the implementor (Farmers Group, LKMD), caused lag offund distribution (transparency system). In addition, improper budget allocation leads to excessiveand/or improper recommendations. Long-term and stepwise efforts must be taken to improveinstitutional capability. The short-term solution is to conduct intensive field training for extensionworkers starting in high priority watersheds.

47. Institutional Aspect. As a non-formal organization of farming communities, KTP is a groupof farmers that have a common interest in the same farming system / business. And therefore, KTPsmust be established by, from and for the interests of the farmers in critical regreening areas, withthe guidance of Field Officers. This would enhance the sense of belonging and sense ofparticipation of the members. Well developed KTPs, can be directed and developed further intoCooperatives or joint businesses farmers. In order to economically achieve a business scale, theworking area of the Cooperative should comprise several adjacent KTPs.

48. Strengthening of KTPs with the establishment of Sections (including a Women Farmers'Section) to implement regreening activities has given positive results with respect to accountabilityof duties of each group. Women Farmers empower the KTP by helping to increase the income offanmer group members by engaging in the processing of agricultural products, handicrafts andother business activities.

49. The involvement of LKMD as the institution responsible for bottom up planning andimplementation of village works through consultation at village level, is very suitable.Strengthening of LKMD by selection of appropriate members (public figures) and training itsmembers to obtain a correct understanding of the importance of regreening in order to managecritical land is still necessary.

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Table 1: Achievement of Key Component, Upper Cimanuk Watershed Development Project

Unit Garut Target Sunedang Target Total Target % Achievemert_________ _______ ______ ____I_I_to

SAR Revised Realized SAR Revised Realized SAR Revised Realized SAR RevisedUPLAND CONSERVATIONMANAGEMENT _ _ .

(On Farm Treatment)Participating Sub-district No. 13 13 13 5 5 5 18 18 18 100 100Participating Villages No. 103 103 103 43 43 43 146 146 146 100 100Total MMD ha 1,546 - 983 645 - 307 2,191 - 1,370 62.9 -

Unit 206 - 131 86 - 41 292 - 172 58.9 -

Total AD ha 9,570 9,540 6,060 3,990 4,020 2,520 13,56 13,530 8,580 63.27 63.41______________________________ _ _ O____ _ 0Unit 160 - 101 66 - 42 226 143 63.3 -

Village Based Nurseries Unit 521 50 23 16 75 66 88.0Kabupaten Based Nurseries Unit I 1 2 - -Average Achievement (%) 85.08 85.10

ROAD & UPLAND EROSIONCONTROL _ _

(Off Farm Treatment) _ _Village Access Road km 88.60 88.60 60.58 37.0 37.0 49.0 125.6 125.6 109.6 87.3 87.3Inprovement IRoadside Drainage km 132.9 132.9 24.0 55.5 55.5 38.2 188.4 188.4 62.1 33.0 33.0Vegetative & Structural Rp. 4,170 4,170 - 1,974 1,974 - 6,684 6,884 - - -

Treatments millAverage Achievement (%/o) _O-40.75 40.75

UPLAND SUPPORTSERVICES _ _Land Titles t Unit 24,675 24,675 4,496 10,32 1,300 35,00 5,796 16.56 16.47

__5 0 _ _Village Funds (Grants) Rp. 591 591 - 248

millOn Farm Technology Display Unit 206 205 136 86 87 78 292 292 214 73.3 73.3(Key Farmers Tech. Display) l l _Research Plot Unit 2 I 3 -Average Achievement (%) = = 32.97 32.97

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Table - 2. The Tendency of Average Physical performance of MMD, AD and KFTDGarut and Sumedang District.

Activity Phvsical PerformaneeTerrace Stabilization TeIraces Fixed Vegetative Croppin attern

Begin. 1997 1999 Bein. 1997 1999 Bein. 1997 1999 Begin. 1997 1999Gart- _ t_ _MMD 6.39 32.72 38.83 25.49 52.59 53.70 40.57 64.70 62.07 49.48 52.07 52.07AD _ 4.12 20.62 32.31 27.91 51.08 54.55 28.35 55.56 63.93 45.00 45.00 45.00KFTD 9.06 52.42 56.27 25.58 64.82 66.48 31.51 62.26 70.00 49.08 55.31 55.31Sumedang _ ___ ___

MMD 5.73 39.57 43.70 30.00 60.30 61.70 30.45 56.23 54.80 55.50 55.50 55.50AD 6.33 33.50 37.50 30.00 50.83 50.85 18.26 40.96 43.50 68.33 68.33 68.33KFTD 5.55 48.89 62.25 32.22 62.50 62.98 15.57 51.12 58.00 77.77 77.77 87.50

Source: Final Report National Watershed Management and Conservation - Component B, Gamt andSumnedang District

Note:MMD: Model Mikro DAS AD: Areal Dampak KFTD: Key farmer Technology Display

(Micro Watershed Model) (Lmpact Area)

(b) Cofinanciers:N/A

(c) Other partners (NGOs/private sector):N/A

10. Additional Information

- 25 -

Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome I Imeact Indicators:

- Project objectives - Raise the living standards of poor uplandfarmers.

- Improve and restore the productive Satisfactory outcome within the Upperpotential of the resource base. Cimanuk project area.

- Protect downstream watershedresources.

- Institutional impact Address problems of the national watershed Outcome rated partially satisfactory since themanagement and conservation program. procedural delays resulted in late take-off of

most of the other components of the projectand, ultimately, in forcing the cancellation ofComponent C.

- Environmental impact Introduce a more appropriate farming system Project benefits include increased on-farmand farming practices and improvement in productivity and environmental quality in thetreatments for off-farm sedimentation control. upand areas due to improved retention of

soil nutrients.

- Impact on women Reduce labour for farm cultivation but Satisfactory outcome of the role of women inincrease the work load for processing and the regreening programme within UCWCD.other activitis traditionally performed bywomen.

- Impact on indigenous people Negative impact not envisaged. No displacement impact on contested landhas actually taken place.

Output Indicators:

Upland conservation management(On farm treatment)Participating sub-district (No.) 18 18

Participating villages (No.) 146 146Model Micro-Watershed (MMD) (No.) 292 172

(ha) 2,191 1,378Impact Area (AD) (ha) 13,560 8,590

(No.) 226 143Village (Desa) Based Nurseries (No.) 75 66District (Kabupaten) Based Nursery (No.) 2

Road and upland erosion control(Off farm treatment)

Village access road improvement (Km) 125.6 109.6Roadside drainage (Km) 188.4 62.1

Upland support servicesLand titles (No.) 35,000 5,796On farm technology display (No.) 292 214(Key farmers technology display)Research plot (No.) 3

End of project

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Annex 2. Project Costs and Financing

Pro ect Cost by Component (in US$ million equivalent)

National Insfitution Strengthening 22.00 16.90 76.8Upper Cimanuk Watershed 31.10 9.30 29.9Investment Support Regreening & Reforestation (R & R) 305.20 0.00 0

Total Baseline Cost 358.30 26.20Physical Contingencies 18.10 0.00Price Contingencies 111.40 0.00

Total Project Costs 487.80Total Financing Required 487.80 26.20 .

Proect Costs by Procurement Arrangements (Appraisal Estimate) (USS million equivalent)

. . . ...... .. T NO Cos. ... .....

1. Works 0.00 0.30 7.50 0,00 7.80(0.00) (0.20) (4.50) (0.00) (4.70)

2. Goods 2.80 1.20 1.00 3.20 8.20(2.10) (0.90) (0.80) (0.00) (3.80)

3. Services 0.00 0.00 10.60 0.00 10.60(T.A and Studies) (0.00) (0.00) (9.10) (0.00) (9.10)

4. Miscellaneous 0.00 0.00 116.70 324.30 441.00(Farm Treatments and (0.00) (0.00) (27.40) (0.00) (27.40)

Village Grants)5. Training, Research & 0.00 0.00 12.30 0.00 12.30

Extension Material Dev. (0.00) (0.00) (10.50) (0.00) (10.50)

6. Support and Project 0.00 0.00 1.90 6.00 7.90Management Cost (0.00) (0.00) (1.00) (0.00) (1.00)

Total 2.80 1.50 150.00 333.50 487.80(2.10) (1.10) (53.30) (0.00) (56.50)

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

1. Works 0.00 0.00 3.60 0.00 3.60

(0.00) (0.00) (2.30) (0.00) (2.30)2. Goods 0.40 0.20 0.10 0.10 0.80

(0.20) (0. 10) (0.00) (0.00) (0.30)3. Services 0.00 0.00 9.30 0.00 9.30

(T.A and Studies) (0.00) (0.00) (9.30) (0.00) (9.30)4. Miscellaneous 0.00 0.00 9.40 0.00 9.40

(Farm Treatments and (0.00) (0.00) (1.70) (0.00) (1.70)Village Grants)

5. Training, Research & 0.00 0.00 3.00 0.00 3.00Extension Material Dev. (0.00) (0.00) (2.70) (0.00) (2.70)

6. Support and Project 0.00 0.00 0.10 0.00 0.10Management Cost (0.00) (0.00) (0.00) (0.00) (0.00)

Total 0.40 0.20 25.50 0.10 26.20

(0.20) (0. 10) (16.00) (0.00) (16.30)

" Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

"Includes civil works and goods to be procured through national shopping, consulting services, services of contractedstaff of the project management office, training, technical assistance services, and incremental operating costs related to(i) managing the project, and (ii) re-lending project funds to local govermnent units.

Project Financing by Component (in US$ million equivalent)

1. Works 4.70 3.10 2.30 1.30 48.9 41.9 0.02. Goods 3.80 4.40 0.30 0.50 7.9 11.4 0.03. Services 9.10 1.50 9.30 102.2 0.0 0.04. Farm treatments and 27.40 344.60 69.00 1.70 6.90 0.80 6.2 2.0 1.2

Village GrantsS. Training, Research & 10.50 1.80 2.70 0.40 25.7 22.2 0.0

Extension Material Dev.6. Support and Project 1.00 6.90 0.0 0.0 0.0

Management Costs

TOTAL 56.50 362.30 69.00 16.30 9.10 0.80 28.8 2.5 1.2

Note: CoF is farmers' contribution for farm treatments.

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Annex 3: Economic Costs and Benefits

Cost Benefit Analysis

(Indicate currency, units and base year)

Present Value of FlowsEconomic Analysis Financial Analysis

Appraisal Latest Estimate Appraisal Latest Estimate

No. of Beneficiaries 31,500 20,000 31,500 20,000

Area Developed (ha) 15,750 9,970 15,750 9,970

Incremental Agricultumal Production:- Paddy (tons) n.a 1,600 . -

- Maize (tons) n.a 3,700- Vegetables (tons) n.a 7,800 _

- Cassava (tons) n.a 600

Incremental Livestock Production n.a 124(tons LW)

ERR (%) 17.3 7.9

FRR (%) -___X_-__

MMvIDIAD- Zone I _ 31.8 15.7- Zone II 27.5 18.4- Zone III 17.8 13.7

Note: Details of the analysis are in Appendix A of Annex 7.

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Annex 4. Bank Inputs

(a) Missions:.g .f .roject .ycle No........... .f .ersons and S:Nciaelo Panfo m .. . P

(e.g- 2q Economists I MS, t. Impmnatri NIpm

Identification/PreparationIdentification - 10/89 3 E,A,Ev,NePre-Preparation - 05/90 2 Ev,APre-Preparation Ev,AWoikshop - 10/90 2Preparation - 02/92 8 E,Ev,A,Ib,Ao,M,Nr,APre-Appraisal - 07/92 8 E,Ev,A,Ib,Ao,M,Nr,A

Appraisal/NegotiationAppraisal -02/93 5 A,Ev,Ao,Ne,M

Supervision1. (02/94) 4 A,Nr,M,Ne S S2. (11/94) 5 A,Ne,Nr,A,Ao S S3. (02/96) 5 A,Nc,A,Nr,M U S4. (Follow-up) (05/96) 1 A U S5. (MTR) (1196) 4 Ao,Ib,Nr,Cd U U6. (06/97) 3 Ao,Cd,Ib U U7. (06/98) 3 Ib,Ao,Nr U U8. (02/99) 2 E,Ao U U

ICR11/99 4 E,A,A, Ao U U

1/ lb = Institutional Specialist; Ev Environmental Specialist; A Agriculturist; Ao = Agricultural Officer;E=Economist/Agric.Economist; Ne = Natural Resources Economist; M = MIS Specialist; Nr = NahtonalResource Specialist;Cd = Community Development Specialist.

(b) Staff

Stage of Project Cycle ~~~ActuablLats E sftimate:No. StSffWC~~~~~~ U SS (000) i

Identification/Prepamtion 105.8 328.0Appraisal/Negotiation 102.9 318.7Supervision 132.3 380.1ICR 12.1 45.3Total 353.1 1,072.1

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)Rating

0 Macro policies O H OSUOM O N * NAZ Sector Policies O H OSUOM O N O NAN Physical O H OSUOM * N O NAZ Financial O H OSUOM * N O NAZ Institutional Development 0 H O SU 0 M 0 N 0 NAZ Environmental O H OSUOM O N O NA

SocialZ PovertyReduction 0 H O SU 0 M 0 N 0 NAZ Gender OH OSUOM ON ONAr Other (Please specify)

Z Private sector development 0 H O SU 0 M 0 N 0 NAZ Public sector management 0 H O SU O M 0 N 0 NAEl Other (Please specify)

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactoly, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

*. Lending OHS OS OU OHU* Supervision OHS OS *U OHUJ Overall OHS Os * u O HU

6.2 Borrowerperformance Rating

2 Preparation OHS OS * u O HUX Government implementation performance O HS 0 S 0 U 0 HUZ Implementation agencyperformance O HS Os 0 U 0 HUZX Overall OHS OS * U O HU

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Annex 7. List of Supporting Documents

1. Economic and Financial Analysis (Appendix A).

2. Research and Training and Extension Sub-Component (Appendix B)

3. Ministry of Home Affairs, DG for Regional Development, Secretariat Central Guidance Team for Regreeningand Reforestation,October 1999: Draft 3 -Project Completion Report.

4. World Bank, Oct. 1993: Staff Appraisal Report: Indonesia -National Watershed Management andConservation Project.

- Dec. 1993: Loan Agreement: NWMCP. Washington, D.C- Feb .1994: NWMCP - Full Supervision Report. Washington, D.C- Nov. 1994: NWMCP - Full Supervision Report. Washington, D.C- Feb. 1996: NWMCP - Full Supervision Report. Washington, D.C- Nov. 1996: NWMCP - Mid Term Review Mission Report. Washington, D.C- Jun. 1997: NWMCP - Full Supervision Report. Washington, D.C- Jun. 1998: NWMCP - Full Supervision Report. Washington, D.C- Feb. 1999: NWMCP - Full Supervision Report. Washington, D.C- Nov. 1999: NWMCP - ICR Mission Report (incl. aide-memoire). Washington, D.C

- 33 -

Appendix A

Economic and Financial Analysis

Financial Benefits

An ex-post financial analysis has been carried out to assess the achievement of the stated objectives of theproject. At appraisal, the financial analysis was carried out on the basis of three indicative scenarios, takinginto account the major agro-ecological zones of the Upper Cimanuk Watershed. At project completion, forboth Model Micro-Watersheds (MMD) and Expansion Areas (AD), the three different agro-ecologicalzones remained classified as follows: (i) a highly sloped vegetable growing area, characterized by largenutrient losses (Zone I); (ii) a medium to high-sloped area with poorly built or no terraces (Zone II); and(iii) a moderately sloped area with well built terraces (Zone III). The total project area of about 15,750 hacorresponding to 2,190 ha in MMDs and 13,560 ha in ADs, has been taken into account. However, asindicated in Table 1, the total area actually developed under the project reached a total of about 10,000 haof which, about 1,400 ha in MMD and 8,600 ha in AD. Project benefits were derived from the differentagro-ecological zone indicated above and included both incremental agricultural and livestock productions.Total project output in MMD and AD zones has been estimated on the basis of data derived from a surveyrecently carried out by the Project Management Unit (PMU), over 580 respondents chosen randomly in theproject area within the districts of Garut and Sumedang. The survey was considered appropriate as far asland use, crop yields and crop production, crops which gave the basic data to estimate the incrementalvalue of the agricultural production. In the absence of specific data regarding livestock activities, relativeproject impact has been estimated taking into account the number of sheep distributed under the project andproduction parameters collected in the field by the ICR mission.

Based on production parameters, land use and production costs as given in details in Tables 1 to 17, theincremental net value of agricultural production by zone with relative values per ha, are schematicallygiven below:

Estimated Net Value of Agricultural Production........ (Rp.' million) .

Zone I Zone II Zone IIIWithout With Without With Without WithProject Project Project Project Project Project

Total Gross Value of Production 14,842 19,287 18,043 24,306 6,013 8,077

Total Production Costs' 10,409 12,600 14,400 16,546 4,124 4,977

Total Net Value of Agricultural 4,433 6,687 3,643 7,760 1,889 3,100Production

Total Area (ha)' 3,258 3,258 4,729 4,729 1,981 1,981Average Net Value of Production 1,360 2,052 770 1,641 954 1,565(Rp.'000/ha)

Incremental Net Value - 692 - 871 - 611of Production (Rp.'000/ha) I_I I

1/ Based on data given in Tables 12, 14 and 16 and using financial prices as given in Table 7.2/ Based on data given in Table 13, 15 and 17, and converting values in financial tenns.3/ As given in Table 2.

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In the absence of specific data regarding livestock activities, relative project impact has been estimatedtaking into consideration the number of sheep distributed under the project and production parameterscollected in the field by the ICR mission. A total of 3,682 sheep was actually distributed during the project(2,082 in Garut and 1,600 in Sumedang). The total number of lambs born every year is estimated at 4,125and the total annual incremental production is estimated at 123,750 kg LW on the basis of 30 kg/hd LW.The net incremental value of livestock production is therefore estimated at Rp. 1.2 billion per yearassuming a net income of Rp. 10,000/kg LW.

On the basis of the above and assuming an average farm size of 0.5 ha to be in line with SAR approach,although it is believed that it is currently smaller, the net incremental farm income by zone would rangefrom Rp. 363,000 (Zone III) to 496,000 (Zone II) and returns to family labor, with project, would rangefrom Rp. 54,300/day (Zone I) to Rp. 58,700/day (Zone II) with increases over the without project situationranging from 20% (Zone I) to 83% (Zone II) as indicated in the table below.

Estimated Farm Income (0.5 ha/farm)

............. .(Rp.'000) .

________________ Zone IZone HI Zoine IIIWithout Project With Project Without Project With Project Without Project With Project

Average Net Value 680 1,026 385 821 477 783

of Agricultural Production

Average Net Value 60 60 60

of Livestock Production

Total 680 1,086 385 881 477 840

Family Labor Input (pd) 15 20 12 15 12 15

Rettun to Family Labor (Rp./pd) 45,300 54,300 32,080 58,700 39,750 56,000

Increase (%) 20 83 41

Financial Rates of Return

The financial rate of return (FRR) analysis has been carried out on the basis of an average investment costper farm of Rp. 2,020,000 including Rp. 1,928,000 per ha for civil works and inputs as detailed in Table24 and Rp. 92,000 to cover the average livestock investment cost per farm on the basis of the total numberof sheep distributed under the project as indicated above and benefiting about 20,000 farm families. Onthese bases, the FRRs over the on-farm investments undertaken under the project would range from 13.7%(Zone III) to 18.4% (Zone II) (Table 25). These values, although still considered satisfactory, are wellbelow SARs estimates because of the actual high level of on-farm investments.

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Economic Re-evaluation

As at appraisal, the economic analysis is carried out for the Upper Cimanuk component of the project. Themain assumptions underlying the ex-post analysis and the methodology followed are described below:

(i) Benefits. The main project benefits materialized in an annual incremental agricultural production,including about 1,600 tons of paddy, 3,700 tons of maize, 7,800 tons of vegetables including cabbages andchilies and 600 tons of cassava (Tables 12, 14 and 16). The total estimated net value of annual incrementalagricultural production in economic terms is given in Table 22. The incremental annual livestockproduction is estimated at about 124,000 kg LW taking into account that some 3,682 sheep weredistributed by the project in both Garut and Sumedang districts.

(ii) Standard Conversion Factor. Following the approach used at appraisal, a SCF of 0.9 has beenused to convert local financial costs of non-traded items into border price terms, in order to reflect theprevailing distortions in the economy.

(iii) Investment Costs. The investment costs of Components A and B (Table 20), were included in theoverall project Economic Rate of Return (ERR) calculation. However, it was assumed that only 20% ofthe TA and research and training costs would be attributable to the Upper Cimanuk component. The localcosts were adjusted by applying a SCF of 0.9.

(iv) Prices. A list of economic prices of main project outputs is given in Table 7. Specifically, detailedcalculation to estimate the economic prices for rice, maize, groundnuts and cassava are given in Tables 8 to10. In line with the assumptions used at appraisal, an average import and export parity prices for rice,maize and groundnuts, and an export parity price for cassava have been used. For other project output,considered non tradable, financial prices have been adjusted by using the SCF of 0.9.

(v) Operating Costs. Operating costs including labor have been estimated on the basis of financialcosts as presented in Tables 5, 6 and 7 and multiplied by the SCF of 0.9.

On the basis of the above assumptions, the ERR for the Upper Cimanuk component of the project isestimated at 7.9 (Table 23), which is well below the ERR of 17.3% assessed at appraisal. Major factorsthat have negatively affected the economic impact of the project include the high investment cost of theoperation, which is estimated at about US$ 1,600/ha or about 60% above appraisal estimates. No separateeconomic analysis has been carried out for the road component because of lack of data.

Note: The complete tables (1 - 25) are available together with other supporting documents.

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Appendix B

Research and Training and Extension Sub-Component

INTRODUCTION

The National Watershed Management and Conservation project aimed at building up the technical and

institutional ability of the GOI's Regreening and Reforestation Programme (R&R) to promote communitybased management of upland resources. The Research and Training-and-Extension sub-components were

pivotal for the project's success as they provided technical inputs, enhanced communication with farmers

and were essential for implementing the other sub-components. The research working group and associated

technical assistance provided inputs that were used for training and extension mainly in the form ofguidelines, manuals and extension materials. Although training for Information Support Systems (ISS) wasto be the responsibility of the training-and-extension working group as designed at appraisal it was actually

administered by the ISS working group and therefore required close collaboration between the ISS andTraining and Extension working groups. The execution of farmer level operations under the UpperCimanuk sub-component was also very much dependent on a well-trained extension service.

This annex describes the experience and results of these two sub-components in more details.

RESEARCH SUB-COMPONENT

The research sub-component aimed at providing a continuous flow of new technologies and alternatives to

policy makers, planners, extension agents and farmers to promote soil conservation and upland resource

development.

This objective was to be achieved by institutionalizing support for a decentralized, multi-disciplinary

program of upland research; integrating new research findings and technical improvements into the field

level investments of the national R&R program; and continuously incorporating into research, problems

that were identified during implementation.

Seven activities were planned at appraisal to be overseen by a subcommittee of the central secretariat andthe research working group, and contracted out to individuals and groups of researchers. The planned

activities were; a) needs assessment, b) development of improved planting material, c) a research grant tofind solutions to project-identified research needs, d) dissemination of results, e) literature review, f) study

tours of research institutions abroad and, g) development of strategic plans for Watershed Management

Technology Centre(s) (WMTC) and the Soil Conservation research program of the AFRD. Emphasis was

to be placed on conducting research in an interdisciplinary manner encompassing a wide range of land use

systems and developing linkages to the Agriculture, Forestry and Public Works Ministries.

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Implementation Experience

All seven activities identified at appraisal were implemented with varying degrees of success. Theassessment of research needs was done by first consulting farmers, extension workers, local governmentunits and local NGOs. The outcome from this was then reviewed at a seminar involving the centralSecretariat and the research working group. Three priority fields of interest were identified, namely: locallyadapted vegetative soil conservation measures; constraints faced by farmers in adopting recommendationsof improved land use; and ways to incorporate economic benefits to farmers' conservation practices.

The actual research work was implemented partly by the Agency for Agricultural Research andDevelopment (AARD) and/or by the Forestry Research and Development Agency (FORDA) researchstations and partly by Universities. At the end project, some of the issues identified at appraisal and by theresearch needs assessment still remained to be addressed. Several factors limited the progress of research:Firstly, for research work to begin a No Objection Letter was required from the Bank who would only issuethis once the technical assistance was in place. Secondly, qualified interdisciplinary research staff waslimited and no additional research staff could be recruited for the project's work. Thirdly, there was astrong bias, at least in the initial stages, towards academic solutions, particularly by the Universities.Finally, the research that was done resulted in blanket recommendations that were not necessarily suited tosite-specific requirements.

Research results from the activities that were to develop of improved planting material and use the researchgrant were disseminated through publications, workshops, seminars, and field level interaction with farmersand extension staff No figures were provided on the number of farmers who adopted the recommended anddisseminated technologies. However, the impact of research recommendation could have been greater if thedissemination methods and material were better adapted to the technical capacity of the target groups -extension workers and farmers. Simplification of these materials was later done by Extension Centres, asmentioned in the Extension section below.

The literature review was well integrated into the research and dissemination processes of this project aswell as other completed or on-going projects in the country. It also resulted in some publications. Fivemembers of the R&R Secretariat went on overseas study tours. The benefits of the overseas training couldhave been greater if the tours were more widely allocated to include the outposted research staff. Finally, areview of the R&R program and watershed management technology centres and of the conservation workdone by FORDA and AARD was successfully conducted by consultants with facilitation from the researchworking group and the results were presented in a report.

Results and Impact on Overall Project

Five of the seven planned activities were well executed. The sub-component's impact, however, was verymuch dependent on the findings from the other two features which were to develop improved plantingmaterial and utilize the research grants to find solutions to project-identified research needs, and report onthe findings. These two items accounted for the largest proportion of costs within the sub-component. Theywere meant to provide findings on, among other things, ways to integrate annual and perennial crops inexisting farming systems; vegetative soil and water conservation measures; socio-economic and marketingaspects of conservation; effects of soil and climate on potential crops; proposals for series of improved soiland moisture conservation techniques; and, assessment of the availability of quality planting material (fruittrees, timber trees, grass) for which there was a farmer demand and which were suited to local conditions.Some positive results emerged on these themes, but work remained weak on the socio-economic benefits

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both from the government and the farmers' perspective. For example, ways to overcome constraints andimprove the economic returns of farmers adopting recommended conservation measures were notsufficiently addressed by the research programme. The recommended technologies tended to focusexclusively on soil conservation, while farmers frequently did not see erosion as a problem and thereforewould only adopt recommended measures when incentives were provided.

The research component was essentially meant to use MMD and AD project farmers to demonstrateresearch findings through the extension workers, so as to encourage voluntary adoption of conservationpractices in the surrounding areas. Little or no voluntary adoption took place and often, after initial works,maintenance did not continue. The measures proposed were generally not sufficiently site specific, andsometimes inappropriate for existing farming systems. These weaknesses were recognized in FY 95196 andthe research approach was changed the following year to increase farmer consultation. Great strides weretaken to involve farmers in research and valuable lessons, particularly from Sumedang, were incorporatedinto the manuals and guidelines. For example, in one village visited, farmers were facing the problem thattheir regular crops were unable to grow under shade as the trees they had planted as a conservationmeasure grew taller. Research recommended changing to shade resistant crops like ginger, turmeric andchilli, which were also easily marketable in the area. Some progress has been made in acknowledging theimportance of incorporating field level experience into research. Researchers have started involving farmersin research work to develop several "best bet" practices from which they can select what suits theirsituation. One such initiative that took place to a limited extent was to have tripartite meetings betweenresearchers, extension workers and farmers to exchange information. However, weak linkages betweenresearch and extension continued to impede implementation. Planning for research under the project did notadequately take into account the limited resources available, especially inter-disciplinary research staff andgiven the current economic crisis in the country it is unlikely that funds would be made available for hiringadditional staff under the national R&R programme. To achieve the goal of providing site specificrecommendations the extension services would need to be much stronger and provide feedback to researchon local farmer problems.

Lessons

The division of responsibilities between the various agencies involved in soil and water conservationresearch needs to be clearly defined to avoid gaps and overlaps.

To increase the likelihood of adoption, research needs to be re-oriented away from the existing top-downapproach by consulting farmers not only in defming the annual work plans but also in the process ofimplementing the research. Advantage should be taken of known technologies, both local and international,and these should be adapted to local circumstances through field trials at farmer level in differentagro-ecological zones. Efforts should also be made to include indigenous technologies to the menu ofrecommended technologies.

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TRAINING AND EXTENSION SUB-COMPONENT

The objective of the training and extension sub-component was to strengthen GOI's ability to effectivelyimplement the R&R program by increasing awareness of the need for improved watershed management,enhancing capabilities for planning, promoting project participation at the district and farmer levels, andadvocating the utilization of improved, site specific farm production and conservation technology.

The training and extension working group was composed of representatives from MOHA, MOFr andMOA, where MOHA was responsible for managing the funds and general administration, and MOFr andMOA provided the technical inputs. Funds for training and extension were roughly 55% and 45 %,respectively, of the total and were channeled either through the MOHA project leader in the working groupor the Ministry of Finance at the local government level.

Cost and Number of Participants for Training CoursesNational Watershed Management Conservation

1994/1995 - 1999/2000

No. Training Number of BudgetParticipant (Rp.)

1 ISS 152 1,395,000,000

2 Conservation Technology 5,166 6,558,029,855

3 Project Management 420 1,681,900,000

4 Extension 6,564 6,473,185,965

TOTAL 12,302 16,108,115,820

Source: BANGDA, December 1999.

Training

In order to more effectively implement GOI's national soil conservation and R&R program, the trainingand extension working group was assigned the task of developing a taining program concentrating on thefields of ISS; land use and participatory planning; improved site-specific conservation technology andproduction and marketing.

Three categories of training were conducted under three different sub-components. Besides extensionworkers, participants in the training programmes included local government staff, technical staff ofimplementing agencies as well as village leaders and women's groups. The first category was managed bythe working group under the ISS sub-component. The ISS training was provided to government staff fromthe district (60% of participants) and central (MOHA -20% and MOFr - 20%) levels through resourcepersons from Universities and the private sector. The second category of training fell under the Upper

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Cimanuk component, where extension workers and village leaders were trained by the LBDS - NGO onways to facilitate their communication with farmers using Participatory Rural Appraisals (PRA) and

Training of Trainers (TOT). Under the third category, the national training centres provided courses on

conservation technology, extension and project management to project staff using inputs from research and

the technical assistance. This was conducted nation wide under the training and extension sub-component.

Implementation Experience

Among the training programmes foreseen at appraisal only the overseas visits were not carried out due to

Central Secretariat's decision to reduce costs given the ongoing regional economic crisis. This led to a large

reduction in costs and, combined with savings made from a higher exchange rate, it resulted in only 20 %

of the allocated training funds being utilized. An assessment of training needs was done only in 1998

because the two pre-requisites needed were not in place at the right time. The first related to the timely

availability of the training modules supposed to be provided under technical assistance, which started witha two year delay. The other was linked to an independent decentralization in which forestry extension

workers were moved from the local level MOFr offices to a unit under the local government(Bupati/MOHA) where extension workers from other fields were also located. With this move, the role of

forestry extension workers changed radically from one of managing activities in a top-down association

with farmers to one solely of extension to be conducted in a participatory manner. Thus, implementation of

training was slowed down by late issuance of the new job descriptions, becoming available only in 1996,

and by the time needed for forestry extension workers to adjust-to their new functions. Although themajority of extension staff was from MOFr, the others were recruited from diverse backgrounds and had

widely varying skill gaps. These gaps had to be identified for the competence-based approach to be adopted

for the training activities.

Training was conducted on the following topics:

(i) Conservation technology: land rehabilitation and soil conservation; planning of regreening andrehabilitation activities; planning for soil conservation; village nursery development.

(ii) Extension: management of forestry extension; basics of forestry extension; planning and organizing

extension activity.(iii) Project Management: project management for project managers; project management for project

treasurers; administration of loan project management.

The majority of participants came from the district government offices (90%/6) and the rest were farmer

leaders or government staff from the central and provincial levels (MOHA/MOFr) depending on the course.

Sixty percent of participants were from Java, which accounts for the same percentage of the country's

population and the largest number of critical watersheds identified in the regreening programme. There is

about 5,000 extension workers nation-wide, with roughly one per 20 villages. Overall, the programme is

recorded as having had more than twelve thousand participants for training, most of whom were extensionworkers who attended more than one course.

Different training centres within the country were used, depending on the programme. Ninety five percent

of participants were trained on conservation technology and extension, which were carried out by the

Ministry of Forestry regional training centres. This was done over a 2-week period for about 20

participants per session. Three trainers were needed for a training session to effectively run the courses,

particularly field trials where classes were divided into smaller groups of six or seven per trainer. Each

session had 4 days of initial classroom lectures & group work; one week of field practice on topics such as

semi-structured interviews, cropping calendars, sketch map or crop analysis; then 3 final days were devoted

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to presenting reflections and recommend improvements. Since participants were trained in regional centresof the areas they worked in, their feedback on applicability of conservation methods advocated wasconstructive. This first evaluation is to be followed by a second one, after a year of testing the skills learntin their home environment Through this evaluative process the participants were expected to give theirviews on the usefulness and gaps of the skills acquired. They were also required to contribute to theinclusion of the local level perspective in manuals/guidelines developed for use at the national level plusgive advice on new trends in farmer attitudes at their home villages.

Project management courses were provided by the Ministries of Finance, Home Affairs or Forestrydepending on the specialization required in the programme.

Extension

Extension was to assist in the transfer technical knowledge on upland conservation practices from researchand the technical assistance to farmers in the project sites. Dissemination was to be enhanced bystrengthening extension workers' capacity through training and by adapting materials received fromresearch, technical assistance and the training sub-components into forms usable at the fanner level.Additional support was to be given in (i) improving extension programs to the general public (e.g. radioand television); (ii) undertaking special R&R campaigns; (iii) field workshops for farming groups, NGOs,LKMDs, women groups, and (iv) study tours for technicians at Kabupaten level.

Implementation Experience

At the beginning of the project, the role of extension and its distinction from training was unclear to theproject managers until the technical report (No. 1) of November 1995 provided an explanation. Extensionwas conducted at two levels, at the central level by the Extension Centres and at the district level byextension workers. The former were responsible for providing manuals and guidelines on ways ofcommunicating with farners, and for explicating other manuals/guidelines into simpler language that couldbe used for training farmers. The Centres' other roles included dissemination activities such as thecampaigns and media communication under this and the research sub-component, as well as theintroduction of innovative ways to facilitate inter-district exchange of experiences.The two levels of extension are not related administratively, even more so now, since the forestry extensionworkers were transferred to the local government offices under the Bupati. Information on changingrequirements at the field level with on-going implementation was obtained through independent regularmeetings held between Bupati and heads of line ministries where district needs are presented. For instancemarketing of surpluses and access to credit were brought up as constraints facing farmers in response towhich the Extension Centres provided guidelines explaining the processes involved in both and alsocontacted headquarters of companies in the centre and provinces to raise awareness to these constraints andwork out possible solutions.

The large majority of the extension workers were from the Ministry of Forestry (PPL) and, as explained inthe training section above, their transfer to the local governnent also meant a significant change in theirrole, which required some time to adjust to. The extension workers' role as advanced under this projectintroduced new methods of communicating with farmers and within the Cimanuk component it closelyliaised with the LBDS-NGO under the technical assistance. The approach adopted had the flexibility torespond to the needs and priorities of beneficiaries with special emphasis on community participation andownership, albeit more time consuming. The Government's decision to permanently assign extensionworkers to a given area allowed for continuity and improved relations with beneficiaries. The restricted

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budget and number of staff generally limited the coverage of extension services, even though a

farmer-to-farmer extension approach was used. Farmer group leaders participated in the training

programmes for extension staff, which covered subjects like Participatory Rural Appraisal (PRA), Training

of Trainers (TOT) and extension management. In addition to training, manuals were supposed to beprovided to extension staff from the technical assistance and research activities but they were not

immediately ready for use. These manuals needed to be simplified further for adoption to the targeted users'

circumstances, thus slowing down the extension process. The simplification was being done by theExtension Centres and was still ongoing at the time of the mission. On the basis of the above, it is yet too

early to precisely evaluate the final outcome of the extension sub-component which, at project completion,is rated partially satisfactory.

Mechanisms to support the R&R extension through improved dissemination tools were developed asplanned at appraisal. This was planned to take place in four stages, that is; a trial in Cimanuk; evaluation

by a consultant team; nation-wide promotion; and, final evaluation. Within the trial stage extensionmaterials such as leaflets, posters, visual and audio recordings were produced and used through workshops

and field meetings within the Cimanuk component. This stage also included campaigns as well as two types

of village to village study tours, a demonstrative type for three days and another with a leam by doingorientation over a two week period. These were positively evaluated by a consultant team whorecommended that the materials needed to be further simplified prior to national promotion.

Funds for extension services from the Centres was provided through the project leader within the trainingand extension working group, while those at the field level were received through the Ministry of Financeand the local government. Most of the funds were used to meet the cost for improved disseminationmethods and equipment. Under the Cimanuk components provisions were made for extra incentive toextension staff and six new extension workers were recruited for the first three years out of which two were

retained up to the end of the project.

Results and Impact of Training and Extension on the Overall Project

The project created a critical mass of trained staff at the extension level and support functions at higher levels atthe centre and provinces as well as assisted the forestay extension staff as they redefined their role. The plannedactivities were reasonably related to achieving the project objectives and to improving management andimplementation capacity of the extension services at the central and district levels. The training feature of thissub-component was able to reach all districts and the approach was changed from the one previously used oflectures only, to include more interactive group discussions and field practice.

The adoption of participatory planning and implementation methods for development activities in the UpperCimanuk Watershed Development component involved farmer group formation and more intensive extensionefforts and consequently were more time consuming though much more effective than traditional approaches. Thisparticipatory approach to extension was not envisaged at the time of project appraisal, but on the other hand is oneof the lasting contributions made by the project to the whole R&R programme. The project has illustrated that theGOI, in particular the MOFr, can evolve from one concemed mainly with policing and promoting tree planting toone that supports local communities to manage forests and promotes upland conservation practices. Thereorientation to the community forestry concept and the bottom-up approach was critical for implementation of thisproject. The change in institutional culture was accelerated by investing heavily in training to buildimplementation capacity at district levels and supporting functions at the central and provincial levels as well as bythe involvement of an NGO to facilitate communication with farmers.

With the exception of the change in institutional culture, the impact of training on execution of relatedproject activities is not yet discernible since more than 70% of the participants only received their training

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in the last two years of the project. This is particularly true of the performance of MMD and ADoperations where a better trained extension service was not established long enough for any beneficialeffects to become evident.

The government's decision to permanently assign individual extension workers to one district helped tobuild trust and long-term relations with local communities. It is hoped that the R&R will follow-up on thecollection and analysis of observations from extension workers after one year of tryout and that effortstaken to improve linkages between research-extension-farmers are extended even further. The mission wasinformed that an evaluation of the extension programme is planned for year 2000, but a source of fundinghad not yet been identified.

Some external factors that impeded implementation and adoption of recommended technologies were:

The fact that institutional and social changes take time regardless of the extent of commitment from allstakeholders was one factor. Watershed development is greatly dependent on community commitment,participation, benefit and maintenance of assets created. The project helped create a general acceptance onthe importance of expanding the level of community involvement.

A second factor was a drought in 1997-98, which not only reduced farmers' yields but also killed some ofthe trees planted in the Upper Cimanuk districts, Garut and Sumedang. New seedlings were obtained fromthe project nurseries for re-planting.

The small size of most of the land holdings (0.2 to 0.3 ha) in the project area was a third factor. Generallyin upland areas of West Java, small land holdings impose a major constraint to farmers adoption ofrecommended soil conservation treatments, particularly those involving tree planting. The governmentcould benefit from looking at how other Asian governments are handling the same situation, for examplethe Philippines.

Finally, the uncertainty of land ownership inhibits farmers' adoption of conservation measures, especiallywhen these require a long-term investment like in planting of trees and perennial crops. Since 1998, thisland tenure problem is being properly addressed through the redistribution of available state land, theintroduction of simplified procedures for the issuance of land title certificates and the promotion ofmedium-term agreements between tenants and absentee landowners.

Recommendations/Lessons

For participatory projects there is a need for a pre-construction phase before the actual physical works arestarted to develop fully operational groups and during which process communities can be fully involved andconsulted. Building consensus in a village is a time consuming process and "social engineering" requires alonger time to implement than physical works financed by the project.

The experience of beneficiary empowerment through increased involvement in project management startingfrom the planning stages to the actual management of funds was taken very positively by farmers, projectmanagers and policy makers. Positive effects that were especially appreciated were the incorporation offarmers' priorities at planning stage and farmer administration of funds, with the ensuing reduced costs andenhanced ownership.

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