World Bank Documentdocuments.worldbank.org/curated/en/719411468774971135/pdf/multi0... · Beneficiary: Punjab Forestry Department Amount: Credit: SDR16 million; US$24.87 million equivalent

Document of

The World Bank

Report No. 13589-PAR

STAFF APPRAISAL REPORT

PAKISTAN

PUNJAB FOREST SECTOR DEVELOPMENT PROJECT

MAY 30, 1995

South AsiaCountry Department IAgriculture and Natural Resources Operations Division

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CURRENCY EQUIVALENTS(April 1995 estimate)

Rupee 1.00 = US$0.032USS1.00 = Rs 31.20

FISCAL YEAR

July I to June 30

WEIGHTS AND MEASURES

Metric Unit British/US Equivalent

1 centimeter (cm) = 0.39 inch

1 meter (m) = 39.37 inches

I kilometer (km) = 0.62 mile

I hectare (ha) - 2.47 acres

I square kilometer (km2 ) = 0.386 square miles

I cubic meter (m') = 35.32 cubic feet

I liter (I) = 0.264 gallon (USA)

I kilogram (kg) = 2.205 pounds

I metric ton (m ton) = 2,205 pounds

PAKISTAN



Principal Abbreviations and Acronyms Used

ABAD Agency for Barani Area DevelopmentADB Asian Development BankAJK Azad Jammu KashmirCCF Chief Conservator of ForestsCCF(PD) Chief Conservator of Forests (Project Director)CF Conservator of ForestsCIDA Canadian International Development AgencyCO Community OrganizationDFO Divisional Forest OfficerFAO Food and Agriculture Organization of the United NationsFFW Farm Forestry WingFPDP Forestry Planning and Development ProjectFSMP Forest Sector Master PlanFY Fiscal YearGIS Geographic Information SystemGOP Government of PakistanGOPunjab Government of PunjabHESS Household Energy Strategy StudyIDA International Development Association, World BankIFC International Finance Corporation, World BankIGF Inspector General of Forests, GOPIUCN International Union for the Conservation of NatureMKDA Murree-Kahuta Development AuthorityNCS National Conservation StrategyNGO Non-Governmental OrganizationNWFP North West Frontier ProvincePARC Pakistan Agricultural Research CouncilPFD Punjab Forest DepartmentPFI Pakistan Forest InstitutePFRI Punjab Forest Research InstitutePTAT Project Technical Assistance TeamSU Sheep UnitUNDP United Nations Development ProgramUSAID United States Agency for International Development

PAKISTAN



Table of Contentspage

CREDIT AND PROJECT SUMMARY -iii -

1. PROJECT AND SECTOR BACKGROUND -1 -Project Identification -1 -Project Background I -

II. ISSUES, OBJECTIVES, STRATEGIES -2 -Natural Resource Management Issues -2 -Institutional Issues -3 -Insufficient Community Participation - 5 -Technical Issues -5 -Policy Issues -6 -National Conservation Strategy and Its Implications for Punjab - 6 -Bank Group Assistance Strategy -6 -Rationale for Bank Group Involvement - 7 -

Ill. THE PROJECT - 8 -Project Purpose and Scope - 8 -Summary Description -9-Detailed Features - 10 -

Project Costs and Financing - 19 -Procurement - 21 -

Disbursement - 22 -Accounts and Audit - 23 -

IV. ORGANIZATION AND MANAGEMENT - 23 -Implementation - 23 -

V. BENEFITS, JUSTIFICATION AND RISKS - 25 -Benefits - 25 -Fiscal Impact and Sustainability - 27 -Environmental Impact - 28 -Risks - 29 -

VI. AGREEMENTS AND RECOMMENDATIONS - 30 -

This report is based on the rindihgs of an appraisal mission which visited Pakistan in June 1994. Mission members includedMessrs./Mme. Nadim Khouri (Task Manager), Paul Francis (ASTHR), Haeyoung Lee (SA3AG), Abdul Qaiyunm Sheikh (SA3PK),Mohammad Noor and Raymond Rowe (Consultants). Mr. Ajit Banergee (ASTEN) developed the features of participatory planning andmicro-planning. Mr. Barry Deren (Consultant) undertook the economic and financial analyses and provided major support in theproduction of the report. Messrs. Navaid Qureshi and Anwar Ali Bhatti (SA3PK) provided support on procurement and disbursementissues. Messrs. Luis Constantino (LATEN), Norman Jones (AGRNR) and Alfredo Sfeir-Younes (ENVLW) were the peer reviewers. Mr.Paul Isenman was the Country Director, and Mr. Ridwan Ali was the Agriculture and Natural Resources Operations Division Chief ofCountry Department 1, South Asia.

PAKISTAN



Table of Contents

ANNEXES page

1. Economic Aspects of the Forest Sector in Punjab - 32 -2. The Project's Link to the Bank's Forest Sector Strategy - 36 -3. Implementation Plan - 38 -4. Terms of Reference for Technical Assistance -82 -5. Detailed Project Cost Estimates -97 -6. Methodological Details of the Financial and Economic Analysis - 104 -7. Related Documents and Data Available in the Project File - 137 -

MAP Agroecological Zones of Punjab

Tables and Figures in the Text

Table page

3.1 Phasing Out of PFD Nurseries - 11 -3.2 Forest Department Professional Staff Requirements - 12 -3.3 Participation of Community Organizations - 15 -3.4 Phasing of Community Participation - 16 -3.5 Inflation Rates and Exchange Rates - 19 -3.6 Project Cost Estimates - 20 -3.7 Financing of Project Costs - 20 -3.8 Procurement Arrangements - 21 -5.1 Estimated Average Financial and Economic Rates of Return - 26 -5.2 Estimated Budgetary Impact of the Project on PFD - 27 -

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PAKISTAN



CREDIT AND PROJECT SUMMARY

Borrower: Islamic Republic of Pakistan

Beneficiary: Punjab Forestry Department

Amount: Credit: SDR16 million; US$24.87 million equivalent

Terms: Standard, with 35 years maturity

Commitment Fee: 0.50°% on undisbursed credit balances, beginning 60 days after signing

Project Description: The main goal of the project is to promote sustainable land use in rural areas ofPunjab by redirecting public sector involvement towards the expansion of agro-forestryproduction systems and the rehabilitation of degraded range and scrub land. Theproject would inter ulia support the following components:

(a) Institutional Development would include: (i) reviewing the human resourcesavailable to the forest sector by providing technical assistance and training; (ii)improving the research facilities of the Punjab Forest Research Institute by providingequipment, training, technical assistance and operating funds; and (iii) strengtheningPFD's capacity to monitor and evaluate sector development under the project.

(b) Farm Forestry Expansion would involve: (i) facilitating the transfer oftechnology needed to expand private sector participation in the development ofsustainable supplies of wood and wood products through strengthening the extensioncapability of the Forest Department with vehicles, equipment, training, and operatingfunds; (ii) facilitating the transfer of information needed to increase smaliholderparticipation in wood markets by providing the PFD with facilities, technical assistanceand operating funds; (iii) improving the availability of superior planting material byproviding the Punjab Forest Research Institute (PFRI) with operating funds toundertake research on seed quality and to establish model nurseries; and (iv)undertaking adaptive research by providing operating funds to conduct species/varietytrials and improve silviculture practices on farm lands.

(c) Social Range and Scrub Forests Rehabilitation would entail: (i) rehabilitatingand improving about 21,400 ha of range and scrub forests in Pothwar (10,200 ha) andThal (11,200 ha); (ii) introducing participatory planning and management systems forpublic range and scrub lands through Community Organizations established in about100 villages clustered around selected public reserves (68 villages in Pothwar, 32 inThal); (iii) testing mechanisms for cost recovery to sustain range and scrubimprovement; (iv) providing training and support to Punjab Forest Department staffand farmers to promote a farmer oriented, participatory approach to rangemanagement; and (v) supporting applied research on fodder trees and shrubs, rangesystems ecology, feed quality, and related social and economic themes.

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(d) Timber Plantations would cover a pilot component to enhance the positiveenvironmental conservation role of irrigated timber plantations and to define optimaltechnical and organizational plans for the sustainable management of the plantations.The pilot will involve operations over three plantations representing differentagroecological conditions and its results would be applicable to Punjab's 62plantations.

Cost and FinancingPlan: Total project costs are estimated at US$33.7 million equivalent. Project baseline costs

are US$30.54 million. Physical contingencies account for US$1.94 million and pricecontingencies, including the impacts of currency devaluation amount to US$1.27million. Of the total project cost, US$22.64 million will be for investment andUS$11.11 million for incremental recurrent costs.

Estimated Project Costs, Financing Planand Disbursements

(US$ million)

Local Foreign Total

Project Costs

A. Institutional Support 1.54 0.65 2.19

B. Expansion of Farm Forestry 14.77 7.18 21.95

C. Social Range and Scrub Forests 2.65 0.87 3.52

D. Timber Plantations 1.51 1.37 2.88

Total Base Costs 20.47 10.07 30.54

Physical Contingencies 1.18 0.76 1.94

Price Contingencies 0.64k' 0.63 1.27

Total Project Costs 22.29 11.46 33.75

Financing Plan

IDA 13.41 11.46 24.87

The Government 8.88 0.00 8.88

Total 22.29 11.46 33.75

1/ Reflects impact of devaluation using Constant Purchasing Power Exchange Rates.

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Disbursements

Bank FY 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02

Annual 3.70 6.46 5.01 3.92 2.63 2.05 1.10

Cumulative 3.70 10.16 15.17 19.09 21.72 23.77 24.87

Benefits: The primary benefits of the project include increased rural production, improvedproductivity and environmental quality of forest lands, soil conservation measures, on-farm fodder production, improved public sector efficiency in the forest sector, anddevelopment opportunities for local participation, employment and income. Theinvestments in farm forestry research, tree improvement and extension are expected toincrease mainly the quality of forest raw materials. The project is expected to havesome dampening effect on environmental degradation in scrub forests, rangelands andother forest areas through the rehabilitation of wasteland, pasture development and thedemonstration of plantation rehabilitation. The project would reduce grazing pressureon natural forest areas and enable natural grass and forest cover to re-establish itselfand provide vegetative growth which would improve the resource base in the projectarea.

ERR: The economic rate of return (ERR) for the project is estimated at 14 percent: ERR ofthe farm forestry component is estimated at 14-19 percent; the return to the socialrange and scrub forests component is estimated at 12 percent.

Risks: For farm forestry the primary risks are: (i) the possibility that the implementation ofthe phase-out programs for seedling subsidies and government nurseries might bedelayed, which would mean a continued stimulus of wood supplies that is weaklyattentive to the demand for various types of wood; and (ii) the possibility that therelatively small base of farm forestry producers at present would destabilize woodmarkets and so discourage further on-farm expansion of wood supplies. The projectwould address these risks by: (i) obtaining prior government approval of the timedphase-out programs for subsidies and public sector nurseries (practically allgovernment interference in the sub-sector would be discontinued in time for mid-termreview and evaluation); (ii) broadening the base of wood producers by directingapplied research and extension activities towards communities where wood markets donot presently operate well for logistical reasons and where incremental productionwould likely be consumed by households; and (iii) contracting a market informationservice in the private sector that would assist the planning of wood users and producersand the development of forward contracts between producers and industrial woodusers. For the range and scrub forests component the primary risk is the reluctanceof PFD staff accepting a resource management approach for this sub-sector that jointlyinvolves the department, private sector and communities in decision making,administration and the negotiated sharing of resource benefits. The project willaddress this risk by: (i) providing TA for the facilitation of participatory managementof scrub/range land through proven micro-planning processes that ensure benefits to allstakeholders; and (ii) conducting and implementing the proposed Human ResourcesDevelopment study for the sector. Among its outputs, the study should provide an

2 Excluding duties and taxes.

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indicative plan for the deployment of public and non-public resources within thesector.

Poverty Category: Program of Targeted Interventions. The project qualifies for inclusion in the PTI sinceit would be targeting the poor and the proportion of the poor among projectbeneficiaries would likely be larger than their proportion in the overall population. Onthe basis of recent poverty studies, about one third of the rural population in Punjabfalls near or below several measurements of the poverty line. Most of these rural poorare farm households cultivating small areas of land and have not had equal access toassistance provided by previous farm forestry campaigns, which have generallybenefitted the largest land holders. It is therefore likely that over one third of thedirect beneficiaries of the farm forestry component would come from poor ruralhouseholds. In addition, there would be indirect impacts of the project in the form ofadditional income and employment that would be generated for small farmers (as wellas for larger landholders) and landless laborers through incremental wood productionfor fuel and industry. The expansion in the supply of fuelwood under the projectwould discourage the increased substitution of dung cakes, an inferior biomass fuel, forwood, which, because of the diversion of dung as a manure and soil conditioner wouldover time adversely affect farm productivity and profitability. Also, the social rangeand scrub forest component, by design, aims to improve the incomes of poor, ruralhouseholds reliant on livestock grazing.

Staff Appraisal Report: Report No. 13589-PAK

Map: IBRD 26496

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PAKISTAN



1. PROJECT AND SECTOR BACKGROUND

Proiect Identification

1.01 The Provincial Government of Punjab (GOPunjab) through the Government of Pakistan (GOP) hasrequested International Development Association (IDA) assistance in undertaking institutional reforns andoperations in the forest sector that would promote, among other objectives, the protection and extension of theprovince's forest resources. Specifically, GOPunjab has expressed interest in comprehensive, sector-wide supportto: (i) undertake policy reform to facilitate private sector participation in wood production and the managementof forest resources; (ii) improve the Forest Department's capabilities in social forestry; (iii) rehabilitate andincrease the sustainable productivity of existing natural and plantation forest resources; and (iv) promote farmforestry. GOPunjab prepared the present project in collaboration with the Bank Group and with financial supportfrom the Japanese Government.

Proiect Background

1.02 The project region will range over most of the province of Punjab.

1.03 The farm forestry component will involve scattered sites in both irrigated and baran, (rainfed)agricultural areas -- but primarily irrigated areas and areas outside Murree, Kahuta and Kotli Sattian --throughout the province while the component for scrub forests and rangelands will be restricted to the interior ofthe Pothwar Plateau and Thai.

1.04 Punjab occupies 20.6 million ha of the upper Indus plain. The plains rise from about 200 m inthe south up to 300 m at the Pothwar Plateau and into the Murree hills in the north. The climate of the provinceranges from arid to semi-arid. Average annual rainfall varies from 100 mm in the southern areas to over 1,500mm in the northern sub-mountainous tracts and highlands. In most of Punjab the climate is suitable for year-round cropping, provided that water supply is not a limiting factor.

1.05 Five major rivers traverse the plains, providing irrigation water through an extensive system ofcanals. Although the availability of irrigation water in the plain lands is frequently constrained, particularly forfarmers at the lower reaches of canals, it has established Punjab's dominance within the agricultural sector ofPakistan. About 0.2 million tubewells supplement canal irrigation in some areas or substitute for it in others.Together about 57 percent of the land in Punjab is cultivated, representing well over half of all agricultural landin Pakistan.

1.06 Pakistan's population is approximately 126 million and is growing at about 3 percent a year.Since independence (1947) the population has more than tripled, and by the year 2000 Pakistan will have some150 million people. More than 45 percent of the population is under 14 years of age. Nearly 77 percent of thepopulation lives in the Indus River Valley System and almost 70 percent of the country's population is found in

rural areas. Punjab has more than half of the country's population. Of its projected 68.8 million residents, 46.7million are rural and 22.1 million urban3!.

II. ISSUES, OBJECTIVES, STRATEGIES

Natural Resource Management Issues

2.01 A critical feature of the problem of natural resource management in Pakistan is that resourcedegradation is not caused by a few, large-scale enterprises, but by the unchecked activities of numerous smallcultivators or graziers who, because of their numbers, small land holdings, social independence and isolation, aredifficult to influence. Much of the pressure on forests can be attributed to continuing land clearance foragriculture, forest encroachment for grazing and expanded pasture and illegal felling of trees for timber.Although wood needs are met primarily outside forests, indigenous forests are in serious decline. Neitherplantation forestry nor farm forestry would be able to replace biological resources found in them, although theywould be able to provide many of the same products. Indigenous forests will require greater management andprotection even if the entire household sector shifts away from fuelwood use towards modem fuels.

2.02 Forest types in Punjab consist of: (i) natural forests, including conifer, scrub and riverine forests;and (ii) plantings on farmland and public lands for fuelwood and commercial timber production.

A. Natural Forest Resources

2.03 Conifer Forests. Only 30,000 ha of sparse forest are now left, including the tract enclosing thehill resort of Murree, where the influx of visitors during summer aggravates the problem of forest over-cutting.In the upland areas where these forests are generally found, soil erosion, land slides and general ecologicaldeterioration have set in.

2.04 This small area is the only source of softwood supply within the province. Against the provincialannual consumption of 0.3 million m3 of softwood, these forests presently have the potential for the sustainableharvest of only 45,000 m3 a year.

2.05 Scrub Forests and Rangelands . Local agricultural communities depend on the scrub forests andrangelands for domestic fuel, grass and grazing for their livestock and have rights on parts of the forests forthese uses. Heavy over-grazing has depleted considerable areas of the scrub. At places the vegetation is totallygone. Misuse and uncontrolled grazing by nomadic graziers have aggravated the situation and have made morelands barren. The sustainable yield of wood is estimated at only 53,000 m3/year. Most of the Pothwar Tract, alarge rural area in Punjab which contains scrub forest lands and some of the potentially most productive rangesin Pakistan, is subject to heavy soil erosion.

2.06 Riverine Forests. These are small scattered floodplain forests, locally called belas, found on thebanks of the Indus, Chenab, Jhelum and Ravi rivers. Originally, these forests were managed to stabilize the riverbanks, protect adjoining areas from floods and preserve the floodplain bio-diversity and environment. Thecontrol of water on the upper reaches of these rivers has eroded their utility and engineered their decline. Of the5 1,000 hectares of riverine forests administered by the Punjab Forest Department (PFD), only 53 percent, arewooded. The rest are blank, of which only 3,000 ha are plantable. The contribution of riverine forests to floodprotection and wood production is marginal and diminishing. Constituting only 0.13 percent of the total land

1/ Based on 1980 census figures (in thousands) of 34,241 rural residents and 13,053 urbanresidents and population growth rates of 2.58* for rural areas and 4.38t for urban areas.

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area, the forest is too small to be physically and ecologically effective. Also, even if fully forested, the belaswould not become a major source of wood.

B. Plantings

2.07 Timber Plantations. The Government-owned and managed timber plantations were initially set upto supply fuelwood for the railways. Previously the management of these areas aimed at the production of highquality commercial timber as well as fuelwood as a by-product. About 142,000 ha out of a total of 285,000 haof plantations have access to residual supplies of irrigation water for the initial period of the forest rotation. Outof this area, 79,000 ha actually support a tree crop; 63,000 ha are treeless. Of the treeless area, 49,000 ha areunplantable; the remaining 14,000 ha might be salvageable with reforestation.

2.08 Farm Trees. Punjab has about 12 million ha of farmlands, which is more than the combinedfarmland area of all other provinces. Over the past decade, the trees planted on or bordering these lands havebecome a prominent source of wood for the province. According to a farm forestry survey carried out by theForest Sector Master Plan (FSMP), on average 17.7 trees are growing per hectare of farmlands in the Punjab.Assuming a tree density of 700/ha, the total area under farmland trees would be equivalent to some 306,000 haof block plantations with an estimated annual growth of 5,200,000 m3 . At this scale farm production wouldprovide more than one-third of the total current wood requirement and five times the combined potential woodsupply from all other sources in Punjab.

Institutional Issues

A. Legislation

2.09 Numerous laws and regulations exist to govern the public and non-public forest sector, all ofwhich essentially emanate from a basic code promulgated over a century ago. The 1927 Forestry Act, whichreplaced the Indian Forestry Act of 1878, defined permanent public forest reserves in Punjab, prescribed penaltiesand framed the police role of the Forest Department. The fundamental approach of the legislation isadministrative and there is considerable debate over whether such acts have actually facilitated forestexploitation. The legislation contributes little to the development of forestry in the private sector and does notprovide for popular participation in the formulation of policy or in the investment planning for or themanagement of forests, rangelands and watersheds. According to the FSMP recommendations, the Forest Actshould eventually be repealed and replaced with legislation that reflects modern, sound environmentalmanagement.

B. General Planning and Operations of the Puniab Forest Department

2.10 In the forest sector the Punjab Forest Department (PFD) is accountable for the technicalmanagement of forests, the execution of development projects and the administration of rights related to thesector. The plans for its operations in reforestation and range rehabilitation are generally set out in standardizeddocuments (PC-l's) which function as a control mechanism for the spending of funds, and which are extremelyinflexible in use. The measurement of success is judged solely by the fulfillment of the plan targets, regardlessof the true environmental, economic or social impacts. In practice, plans are rarely subsequently adjusted tochanging local conditions; moreover, PFD staff are reluctant to consider cost sharing arrangements or self-helpactivities by villagers because these situations endanger control over work and potential departures from officiallysanctioned expenditures. The findings of the institutional review undertaken during project preparation agreedwith the FSMP in highlighting a number of institutional weaknesses in the forest sector: (i) lack of continuitybetween policy formulation and implementation; (ii) dearth of useful data (on resources, use, etc.) for planningpurposes; (iii) weak capabilities in planning, monitoring and evaluation; (iv) mismanagement of human resourcesdue to political interference, low morale and inadequate training; (v) public-sector orientation of forest

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department staff with limited experience or interest in community and private sector participation; (vi)insufficient research support; and (vii) inadequate finances.

C. Natural Forest Management

2.11 Scrub Forests and Rangelands. There are many provincial and federal agencies that have rangeand scrub land management interests as part of their mandates. The complexity inherent in range and scrubforest management is compounded by the segregation of responsibility for livestock management, animalhusbandry, veterinary medicine, etc., among a wide array of government agencies. This has resulted in partialattempts at range and scrub forest development by many separate (and non-communicating) departments and aconfusion of recommendations and policies that are frequently at cross purposes with one another.

2.12 In Punjab a degree of specialization exists within the PFD with the presence of a RangeManagement Circle that is headed by a Conservator of Forests who is trained in range management. This CFhas the responsibility of supervising and supporting the work of all staff assigned to range management taskswithin the PFD. Most of the Range Management Circle support staff members are, however, either junior ornon-professional. The training that they receive allows them to carry out instructions, but not to act as advisorsor on their own initiative. Range management science is also not considered to be a viable career path withinthe PFD. Consequently, the number of PFD staff having advanced training or specialization in rangemanagement is very limited and range science as a profession is not highly regarded.

D. Plantings

2.13 Irrigated Timber Plantations. The current yield of about 2.8 m'/ha per year is low; although,according to FSMP estimates, the plantations can yield 3 to 4 times the current production. The majorconstraints bearing on the inefficient performance of the timber plantations in the public sector are: (i) poormanagement and supervision; (ii) inadequate water supplies; (iii) deteriorating irrigation systems and waste ofwater; (iv) deteriorating site conditions due to waterlogging and salinity; (v) lack of skilled staff at lower levels;(vi) poor logging, inventory and grading system; and (vii) inadequate operating funds. These constraints are asmuch managerial and administrative as technical.

2.14 Farm Plantings. Recent progress in the adoption of farm forestry has been significant and wasfueled in part by incentives given to farmers in the form of subsidized seedlings and the guaranteed procurementof privately produced seedlings by the PFD. The progress, however, has come at the cost of economic efficiencyand equity as the government's interventions have inhibited the development of broad-based private sectorparticipation. A recent survey, for example, showed that two-thirds of those households who planted trees in1990/91 planted on average fewer than four and accounted for only one-twentieth of total plantings; whereas justover 1 percent of those who planted accounted for over half of the trees planted. This would imply these treeswere, for the most part, planted on the largest land holdings4'. The narrow base of participation introduces therisk that wood supplies and prices could swing widely on the economic decisions made by relatively fewfarmers. The possibility of this happening is not trivial as the HESS survey estimates that most of trees are nowalmost certainly being planted on agricultural or marginally productive agricultural lands. Changes ingovernment agricultural policies that affect the profitability of cropping would undoubtedly have some bearingon whether these past investments continue. The statistics moreover raise the question whether the government'ssubsidized distribution of seedlings is fair: those who benefit more from the subsidies are those having the bestmeans to pay.

4/ G. Leach, "Farm Trees and Wood Markets; A Review and Economic Appraisal." Prepared for theGovernment of Pakistan under the United Nations Development Program (PAK/88/036) by the EnergySector Management Assistance Program in association with the Energy Wing (Islamabad, Pakistan:Pakistan Household Energy Strategy Study (HESS), February 1993), pp. 3, 10-27.

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2.15 Also, farmers undertook most of these plantings in anticipation of the development of marketingchannels to timber industries. Given the massive tree planting encouraged by government campaigns, it isuncertain whether these local markets will be as extensive as would be required when the rotations are complete.Credit markets in Pakistan for medium- to long-term industrial investments, particularly among wood-basedindustries, are very thin. Apart from the problems of securing financing, the private sector is also likely tocontend with regulation and to face some technical difficulties related to the siting of new industries and thelogistics of collecting raw material.

Insufficient Community Participation

2.16 Symptomatic of the present approach of the PFD is the near absence of communication betweenvillages and the Department, especially where range management is concerned. Part of this may be attributed tothe requirement of officers to adhere to purely target-oriented work plans, which allow little scope, time orincentive to involving villagers in forestry or range management activities.

2.17 Given the limited technical manpower available in the range management sector, the focus ofmuch of PFD's effort has been upon the planning, preparation and execution of range rehabilitation schemes onpublic lands. There has been little or no effort focused on participatory strategies and methods. Where the PFDdoes operate, the efforts undertaken to rehabilitate rangelands are not aimed at the overall management of theareas per se, except when weakly enforced control of stocking rates are periodically imposed.

Technical Issues

2.18 Planting Stock. The quality of planting stock is consistently poor in Pakistan. This results inlower productivity, uneven tree development, and increased weeding and maintenance costs. Most importantly,poor quality of planting stock is causing very high rates of tree loss after planting. In farm forestry projects ofJhelum and Attock regions of Punjab, average tree survival rates are below 40 percent. The provision of betterplanting stock is one of the principal technical needs of the sector. Improving the planting stock will need toconsider two factors: better seeds selection and improved nursery operations. At present, PFD has limitedcapacity to collaborate with the existing seed banks or to assist farmers in the proper selection and collection ofseeds. The calibre of nursery operations is also invariably low in both PFD and private nurseries.

2.19 Pastoral Use of Scrub Forests and Rangelands. One of the chief concerns regarding the use ofcommon property resources is the need to enhance the on-farm delivery of technical support to facilitate theproper feeding, herd management and marketing of livestock and livestock products. These steps wouldencourage an intensification of livestock production as a means of increasing income from the activity rather thanthrough an expansion of herd size and the extension of grazing.

2.20 Forestry Research. Nationally, the Pakistan Forest Institute (Peshawar) is the principal researchinstitution on forestry and range management. PFI has a number of research projects in the provinces andcollaborates with other research institutions such as the Pakistan Agricultural Research Council (PARC). GOP'sstrategy is to retain the central role for PFI while promoting linkages with provincial research centers. Punjab isone of the provinces (with Sindh, and AJK) that has a provincial research entity -- the Punjab Forestry ResearchInstitute (PFRI) located near Faisalabad in Gutwala. Established in 1982. PFRI is a relatively young institution.

2.21 A needs assessment for overall forestry research development in Punjab should be an integral partof the general assessment of human resources development in PFD. Such a study would ensure that the availableresources for research are used efficiently. In the meantime, efforts in the areas of emphasis should bestreamlined and strengthened and a greater share of resources should be allocated to research on seed technology,nursery practices, tree management and participatory management systems in the scrub forests and rangelands.

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Policy Issues

2.22 Seedling Subsidies. The current policy of large-scale seedling subsidization for farmers is fiscallywasteful, inhibits the provision of quality nursery stock from the private sector and discourages the operation of amarket-oriented response by farmers to demands for short-rotation timber and fuelwood. HESS surveys indicatethat farmers have been planting trees mainly for the production of timber for sale. The production of fuelwood,however, is a primary by-product of this activity, and so long as farmers perceive financial incentives in theproduction of timber, the production of fuelwood benefits as well. The government's policy of supplyingseedlings to farmers at subsidized rates produced an unhelpful market distortion and diverted resources fromareas where the government, more than the private sector, could have usefully played a role in promoting farmforestry.

2.23 Transport Taxes and Regulations. Although the system of wood trading and transport appears tobe competitive and efficient overall in Pakistan. the system of transit taxes encumbers the marketing of wood andwood products. Transit taxes and other restrictions applied to hauling wood products show considerable variationdepending upon location. For traders in Punjab, overall transit taxes on average take up the same share as abouthalf the total en route cost, which could be considered a rather high tax burden for a non-manufactured good.The tax structure appears to be poorly understood by transporters and is subject to widespread abuse. A well-publicized simplification and standardization of the system of transit taxes and regulations should bolsterincentives to tree growing and efficient marketing.

National Conservation Strategy and Its Implications for Punjab

2.24 Historically, the forest resources in the areas now constituting Pakistan, may never have beenvery extensive, and there are presently few scientific criteria that can define a specific magnitude of increase inthe forested area as an objective for forest management in Pakistan. Assigning a specific objective forreforestation is not essential for the definition of a workable strategy for the protection of existing forestresources.

2.25 The NCS prescribes a two-pronged approach for forests: protection of existing resources whileexpanding the supply of wood (for timber, fuel and feed) from farmland. Within the Bank's regionalenvironmental and forestry strategies, Pakistan is identified as a forest-deficit country where significantimprovements are needed at the institutional level to allow for participatory protection and use of forestresources. Other areas of emphasis include land tenure and reforestation efforts.

Bank Group Assistance Strategy

2.26 The country assistance strategy for Pakistan focuses on two closely linked development goals:poverty reduction and the easing of constraints to sustained growth. To address the poverty reduction objective,the Bank Group's approach stresses the improvement of inadequate basic services and weak social indicators. Tosupport the growth objective, Bank efforts include: structural reform --with and emphasis on public financeissues and improving the enabling environment for the private sector; removal of constraints on agriculturalproductivity; and protection of Pakistan's natural resource base. In the forest sector, application of this strategywould require progress on the following priority issues: (i) expansion of the role of the private sector in market-driven subsectors such as nurseries, farm forestry, and plantations; (ii) reorientation of government operations tosupport this private sector role through appropriate policies, regulations, community extension, research andtraining; and (iii) increasing the role of users in the management of natural resources.

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2.27 The Bank Group has already supported projects in several sectors with components to improve theenvironment or to rehabilitate and develop natural resources. In agriculture the Bank Group projects havefocused on correcting waterlogging and soil salinity arising from inadequate irrigation drainage and on reversingdeforestation and depasturing on watersheds and rangelands5'. The Bank has also been the executing agency fora series of projects-' to repair environmental damage ensuing from the temporary settlement of large numbers ofAfghan refugees. In the energy sector, Bank Group projects have focused on strengthening energy productionand distribution institutions; rationalizing local energy prices and the price structure for different consumers, withregard to international energy prices; introducing energy conservation technology; introducing emission standardsfor the release of pollutants into Pakistan's air and water; and requiring environmental impact assessment (EIA)procedures to be undertaken before investing in energy producing activities. The Second Energy Loan (Ln.3107-PAK) is the main project with environmental protection components.

2.28 The Canadian International Development Agency (CIDA), the Bank, and other bilateral andmultilateral agencies are assisting GOP and the provinces to implement an environmental action plan based forPakistan based on the country's National Conservation Strategy (NCS). Associated with this assistance, the Bankis supporting the Environmental Protection and Resource Conservation Project (Cr. 2383-PAK), and theBalochistan Natural Resource Management Project (Cr. 2548-PAK) which are initiating actions, at the federallevel and in Punjab, Sindh, NWFP, AJK and Balochistan: to develop institutions responsible for the environmentand natural resource management, to formulate policies and legislation, to undertake field operations; to addressspecific problems of land degradation; and, to conduct public education of the environment.

Rationale for Bank Group Involvement

2.29 The present project will form part of the implementation of the Asian Development Bank (ADB)-supported Forest Sector Master Plan (FSMP) of Pakistan and NCS, the aims of which are broadly endorsed byIDA. The project would also be compatible with the Bank Group's emerging strategy of comprehensive resourcemanagement in Pakistan with its emphasis on site rehabilitation, institutional strengthening, education, trainingand community participation. The project should, moreover, contribute to the alleviation of rural poverty. Theinvolvement of IDA will contribute significantly to the solving of problems of policy formulation andimplementation and in facilitating the coordination of a number of donors operating in the sector. In particular,IDA's close coordination with the Asian Development Bank on the approach to the sector will foster the firstinstance of a comprehensive donor strategy for forest sector development in Pakistan.

2.30 This strategy for forest sector development is consistent with the overall country strategy fornatural resources conservation and with Pakistan's National Conservation Strategy. It aims at increasing andmaintaining the sustainable productivity of forest resources through: (i) expanding the role of the private sectorin agroforestry, seedling production and forest resources use; (ii) reorienting government operations to supportthis private sector role through appropriate regulation, community extension, research and training; and (iii)increasing the role of users in the management of natural resources.

1/ Projects to drain waterlogged and saline areas include Khairpur Tile Drainage and IrrigatedFarming Development (648-PAK), SCARP VI (Cr. 754-PAK), SCARP Mardan (Cr. 877-PAK), Drainage IV(Cr. 1375-PAK), Left Bank Outfall Drain (Cr. 1532-PAK), SCARP Transition I (Cr. 1693-PAK),Private Tubewells Development (Cr. 2004-PAK) and the Second SCARP Transition (Cr. 2257-PAK),while those to rehabilitate and develop watersheds and rangelands include Hill Farming TechnicalDevelopment (Cr. 751-PAK), Integrated Hill Farming Development (Cr. 1461-PAK) (IHFD) andEnvironmental Protection and Resource Conservation (Cr. 2383-PAK). A new project, NorthernResource Management (Cr. 2512-PAK) is continuing these actions in AJK.

The Income Generating Project for Refugee Areas I, II and III (IGPRA I, II and III).

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III. THE PROJECT

Proiect Obiective and Scope

3.01 The objective of the project is to improve the performance of the forestry sector in Punjab,entailing the natural, financial and human resources operating in the sector. The impact of this improvement willbe an abatement in the deterioration in quantity and quality of the forest sector's sustainable contribution to thewelfare of rural and urban households in Punjab. Harvests of wood and other products for energy or for otherdirect consumption by households, or for the development of wood-based industries that generate employmentand value added will be one form of contribution. Another may also take the form of a consumer surplusrealized in providing marketed wood energy less expensively. Other contributions will be environmental,affecting incomes, for example, by reducing potential losses in agricultural productivity owing to the externaleffects of certain land uses; influencing health; providing amenities; yielding recreational value; or providingother intangible natural conservation benefits.

3.02 Characterizing the scope of operations, the main concerns of the project's intervention in thesector are to:

(a) improve the incentive framework governing the use of resources;

(b) improve silvicultural productivity; and

(c) improve development planning and the setting of resource management priorities.

Improving the incentive framework will encompass the decision making regarding investments in and use ofprivate, common and public property resources. Improving silvicultural productivity would include improvingplanting materials, husbandry practices and the conduct of research. Improving development planning and thesetting of priorities will chiefly concern the collection and use of information on resources, and the provision ofenvironmental services.

3.03 The chief outcomes or goals of the project will include:

(a) conditions that would encourage a broadening of the productive base of wood (for use asan industrial raw material and as a fuel) supplied from farm land in terms of both numbersof farms participating and quantities of wood produced per farm;

(b) demonstrations of scrub forests rangeland and plantations rehabilitation and managementthat maintain the availability of common benefits and forestall the deterioration ofresources through open access and the exploitative behavior of local populations and theprivate sector; and

(c) strengthened local public and community institutions managing the sector in Punjab.

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Summary Description

3.04 The proposed project will cover: (i) support to forestry institutions, local community organizationsand NGOs including human resources development, and support to the Punjab Forest Research Institute (PFRI);(ii) expansion of farm forestry throughout Punjab; (iii) rehabilitation and improved management of existing forestresources including scrub forests and rangelands of the Pothwar and Thai areas and selected irrigated plantations;(iv) strengthening of administrative and monitoring and evaluation capabilities of the PFD; and (v) policy reformleading to the: a) simplification of taxes on wood transport across district boundaries and of permnits andpayments for wood harvesting on private land, b) promotion of users' participation in the management ofcommunal and governmental scrub and rangeland and c) transfer of forest nurseries to the private sector and thephased elimination of seedling subsidies. Briefly, activities for the individual components would include:

Institutional Support (US$2.35 million)

(a) reviewing the human resources available to the forest sector by providing technicalassistance and training;

(b) improving the research facilities of the Punjab Forest Research Institute by providingequipment, training, technical assistance and operating funds; and

(c) strengthening PFD's capacity to monitor and evaluate sector development under theproject.

Farm Forestry (US$23.94 million)

(a) facilitating the transfer of technology needed to expand private sector participation in thedevelopment of sustainable supplies of wood and wood products through strengthening theextension capability of the Forest Department with vehicles, equipment, training, andoperating funds;

(b) facilitating the transfer of information needed to broaden farmer participation in woodmarkets by providing the PFD with facilities, technical assistance and operating funds;

(c) improving the availability of superior planting material by providing the Punjab ForestResearch Institute (PFRI) with operating funds to undertake research on seed quality and toestablish model nurseries; and

(d) undertaking adaptive research by providing operating funds to conduct species/variety trialsand improve silvicultural practices on farm lands.

Scrub Forests and Rangelands (US$4.12 million)

(a) rehabilitating and improving about 21,400 ha of range and scrub forests in Pothwar (10,200ha) and Thal (11,200 ha);

(b) introducing participatory planning and management systems for public range and scrublands through Community Organizations established in about 100 villages clustered aroundselected public reserves (68 villages in Pothwar, 32 in Thal);

(c) testing mechanisms for cost recovery to sustain range and scrub improvement;

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(d) providing training and support to Punjab Forest Department staff and farmers to promote afarmer oriented, participatory approach to range management;

(e) supporting applied research on fodder trees and shrubs, range systems ecology, feedquality, and related social and economic themes; and

(f) expanding the rehabilitation models tested in Pothwar and Thal to other selected scrub andrange lands in Punjab.

Irrigated Timber Plantations (US$3.34 million)

(a) carrying out an inventory of biodiversity in public sector plantations of Punjab;

(b) coinpleting base line studies on physical and socio-economic conditions of the plantations;

(c) preparing management plans for priority plantations, including inter alia the study ofmanagement/organizational systems based on the environmentally and financiallysustainable involvement of the private sector: and

(d) implementing a pilot management and rehabilitation plan for three representativeplantations of Punjab's agroecological zones.

Detailed Features

Sector Activities

3.05 Human Resources Development. One of the main priorities for overall sector development is theinitiation of a comprehensive program of human resources development. This program would aim to fosterpublic/private interactions in the sector and to improve the efficiency of public sector services that facilitateoverall forest sector development without crowding out private sector roles. The first step in this direction willbe an in-depth study of human resources in the sector. GOPunjab has already agreed to the objectives of thestudy and will implement the study as a priority task among the start-up activities of the project's launch.Results of this study will be available by the end of first year of project implementation and will guide overallinstitutional reform including, in particular: (i) implementation mechanisms for forest sector activities; (ii) thestrengthening and streamlining of PFD research; and (iii) the promotion of public/private interaction in fosteringdemand for farm forestry products. Following up the HRD study, the project will provide funds to finance thepreparation of future projects in the sector based on the study's results and recommendations.

3.06 Research. The project will strengthen PFRI's human resources and facilities in areas directlyconcerning this project, but primarily in the area of farm forestry, which is discussed further below. GOPunjabwill allocate funds to meet the specific research objectives of the project including the areas of planting stockimprovement, agroforestry technology and participatory rangeland rehabilitation. The development of thisresearch support program will take into account the research activities of PFI and other research institutes.Another area of research will consider the environmental aspects of the public sector timber plantations and iscovered under the pilot component on plantations.

Farm Forestry

3.07 Objectives. The first objective of the farm forestry component is to encourage the farmingcommunity to provide its own seedlings on a sustainable basis by the fifth year of the project. The PFD willaccordingly phase out its own farm forestry seedling production over the same period. Ideally, at the end of the

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project farmers will have completely assumed all production aspects of farm forestry. The PFD would provideseed, technical assistance, research and training to help ensure sustainability. In the past PFD's main objectivewas to increase the numbers of trees planted by farmers using, for the most part, seedlings produced by the PFD.The numbers planted were impressive, but survival percentages and tree quality were poor. The second objectiveunder this component is therefore for the PFD to increase its efforts to help the farmer improve the quality oftrees grown. The third objective is to help the farmer find profitable markets for the final products. These lasttwo steps will assist the farmer to maximize the net returns on his/her investment. The project will give highpriority to treating unproductive degraded/marginal lands and to encouraging a shift in emphasis towardsproduction by smaliholders.

3.08 Activities. Project activities will fall under three major headings: tree establishment, treemanagement and marketing. The PFD, while maintaining a comparative advantage in research and extension ontree establishment, will substantially increase its provision of technical assistance to farmers in tree managementand marketing.

3.09 Tree Establishment will involve introducing: (a) improved seed quality and quantity; (b) a widerchoice in species and varieties; (c) better seedlings through improved nursery practice; (d) better plantingtechniques and spacing; (e) fertilizer application in the nurseries and at the time of planting; (f) development ofimproved agroforestry practices; and (g) improved weeding and beating-up practices. Aiming to improveseedling quality, species choice and establishment percentages, these tasks will require the coordinated efforts ofthe Farm Forestry Wing (FFW) and PFRI.

3.10 Tree Management will undertake the introduction of: (a) appropriate watering practices; (b)improved pruning schedules; (c) improved thinning schedules; and (d) determining optimum rotation ages. Theobjective is to improve cultural practices to enhance significantly tree volume, quality and marketability. FFW,PFRI and the PFD forest training schools will undertake these initiatives.

3.11 Marketing Intelligence will comprise: (a) introducing a log grading system based on measurementsthat can be made by the farmer; (b) improving harvesting (felling, bucking, logging) practices; (c) improvinglinkages between the producer (farmer) and the user (industry); (d) creating a data base; and (e) developing amarketing strategy. The project will finance the purchase of private sector expertise and marketing services toundertake these tasks with assistance from the PFD. Project financing will also support the contracting of privatesector services to provide periodic assessments of current marketing prospects and trends for various rawmaterials and to produce information on wood purchase contracts and prices for regular dissemination by radio orthrough other suitable mass media.

3.12 Phasing Out of PFD Nurseries. There are some 700 PFD nurseries currently providing farmforestry seedlings requirements. These will be phased out by year 5 and replaced by over 1,000 farmer nurseries,which are expected to be established by the same year. The project anticipates the following phasing ofnurseries:

Table 3.1 Phasing Out of PFD Nurseries

Number of Nurseries

Year 0 1 2 3 4 5 6

PFD 700 560 280 210 140 0 0

FF 0 200 620 720 830 1035 1035

Numbers for the PFD are firm but only indicative for the private farmer nurseries (FF), assuming an average ofthree per Markaz.

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3.13 Targeting of Extension Activities. Although generally all farmers will have access to theinformational services of the project, extension activities will be organized primarily around groups of farmerswho hold each arable holdings of land of five hectares or less to broaden the production base of farm forestry.These farmers, who form the largest percentage of cultivators, are greatly under-represented among participantsof previous farm forestry campaigns. As a group, these farmers constitute much of the rural poor in Punjab.Moreover, the delivery of seedling subsidies will be directed towards those farming communities where averagehousehold income are below the median income for the province, where farm tree planting is an unfamiliarpractice and where wood would be produced primarily for home consumption as fuel.

3.14 Implementation Arrangements. The delivery system will pattern the provincial civil administrativestructure, rather than the PFD's, to provide better coordination with other line departments, facilitate monitoringand ensure even extension coverage throughout Punjab. One extension forester (Forester or Forest Guard) willbe posted to each of the 354 Markazs (there are on average 66 villages per Markaz). One Forest Ranger willsupervise the Extension Foresters in two Tehsils and there will be an SDFO to supervise Forest Rangers in eachof the 34 Districts. A DFO will be posted to each Divisional HQ. Three Conservators of Forests (CF) one eachat Rawalpindi, Lahore and Multan will provide the overall supervision required to implement this component.Heading the Farm Forestry Wing and Scrub/Rangeland conservancy will be the CCF(PD) stationed in Lahore.Professional staff requirements will be as follows:

Table 3.2 Forest Department Professional Staff Requirements for the Farm Forestry Component

Administrative No. of Units Total Staff Level Staff from Level IncrementalUnit PFD

Markaz 354 354 FG/F 92 F 30 F

92 FG

140 EXT

Tehsil 106 53 FRISDFO 34 FR/SDFO 19 FRISDFO

District 34 (some SDFOs would cover 2 tehsils & a district)

Division 8 8 DFO 2 DFO 6 DFO

Zone 3 3 CF I CF 2 CF

Province I I CCF 0 t CCF

Total 419 361 58

The project will finance these incremental staff: 58 professional, 70 technical staff, including drivers, and 162support staff. PFD will provide the remaining technical staff requirements through transfers. By the end of theproject, the PFD will absorb all technical staff below the level of CF, except for 34 Forest Rangers who willremain at the Tehsil level to ensure continued farmer access to technical assistance. The CCF(PD) and two CFposts will then discontinue, leaving one CF at the center.

3.15 Delivery Mechanisms for Seedling Subsidies. In its tree-planting campaigns PFD has providedseedlings to farmers virtually free of cost. Under this project, the subsidy will be phased out over four years:75% in year 1, 60% in year 2, 40% in year 3, 25% in year 4 and 0 in years 5 and 6. Under the current system,when the farmer collects his/her seedlings from the private nurseryman, payment of the non subsidy element ismade (e.g., in year I of the project this would be 25% of Rs 1.75 or about Rs 0.44 per seedling). Thenurseryman is not paid the balance or subsidy element (in this case Rs. 1.31 per seedling) until the number ofseedlings actually planted by all the farmers obtaining seedlings from his/her nursery has been verified in thefield by a forest officer. Delays in the final payment (crossed check) to the nurseryman, by the DFO or his

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designate, sometimes run into months. It is the nurseryman who is penalized if the seedlings are not planted, notthe fanner. The present project will intervene to simplify the process. One approach would be for a forestofficer to make payment (of the subsidy element) once he has verified that the nursery contains the contractednumber of quality seedlings of the correct species. As before, the farmer would pay the non-subsidy element oncollection of the seedlings. This would ensure prompt payment to the nurseryman and a reduction in the numberof PFD staff involved in the process. The project will use sampling techniques to determine the number ofseedlings planted. IDA and GOPunjab agreed that IDA funds would not be used for seedling subsidies. PFDinformed IDA that these subsidies will be covered by the Punjab Finance Department until the total eliminationof the subsidies (year 4 of the project).

3.16 Training. Critical to the success of the farm forestry component will be the training of territorialforest guards, foresters, forest rangers and SDFO/DFO's in extension methods. PFD will undertake a crashprogram before credit effectiveness using retroactive financing to train 200 foresters/FG's for two weeks, 40SDFO/forest rangers for one week and 13 DFO/CF's for one week. The project will also finance underretroactive financing before the project's launch training some 50 farmers in nursery and tree managementpractices. PFD will run local training and refresher courses thereafter at both Forest Training Schools (Gora Galiand Bahawalapur) and at PFRI for all technical staff and selected farmers. Some 1,350 staff and farmers willhave received in-service training by the time of the project's completion. The project will finance overseas studytours (II senior officers for three weeks each) and short courses (12 weeks to a year for 37 DFO/SDFOs andscientists from PFRI). These tours/study courses, to be conducted in countries with similar conditions will centeron farm forestry needs. Participants will be expected to produce comprehensive reports reviewing lessonslearned and their relevance to Punjab. The project will provide three PhD fellowships for PFRI staff coveringtissue culture, forest genetics and silvicultural practices on farmland.

3.17 Farm Forestry Research. The two top priority areas for farm forestry research are theimprovement in seed quality/quantity (collection, processing, storage, etc.) and the improvement of nurserypractices. In addition, species/variety trials, improvement in cultural practices and dissemination of researchfindings and farmer production should increase dramatically. The project will strengthen PFRI by financingequipment, buildings, incremental staff (two Additional Directors, three Senior Research Officers, four ResearchOfficers, one Superintendent, one staff nurse and 56 support and technical staff) vehicles and technical assistance.PFRI's Program Committee, which usually meets once a year to guide research priorities, will be reconstituted toinclude a farmer representative from each territorial zone.

3.18 Technical Assistance in Farm Forestry. The project will finance consultancies covering thefollowing areas of farm forestry training and technology transfer: nursery techniques, extension and marketing.Each consultant will be engaged for 6 months in the first year and a month each in years 2 and 3. In farmforestry research, the project will finance a total of 24 staff months of technical assistance for improving seedquality and quantity and for improving nursery practices. (See Technical Assistance Summary, Annex 3 Table13; and Terms of Reference, Annex 4).

3.19 Taxes and Permits. Current tree cutting permits and transit taxes discourage planting by farmers.PFD will abolish these permnits and transit taxes for all farm forestry trees except for Acacia modesta in all areasand for trees within an 8-km belt along national boundaries. PFD agreed to contact local authorities to repeal theoctroi charges on farm forestry products, which penalize marketing between districts.

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Social Range and Scrub Forest Management

3.20 Working with communities lying adjacent to reserve range and scrub forest areas in selected tractsof Pothwar and Thal, the project will initiate a pilot program of range management that aims to involvestakeholders in the protection, management and utilization of resources. The project will support therehabilitation of degraded communal land and the promotion of fodder crops on private land. During projectimplementation PFD and IDA will assess the feasibility of applying lessons learned from this component torange/scrub areas outside of Pothwar and Thal.

3.21 The establishment of participatory management over selected scrub forests and range lands willinvolve the following three processes:

(a) the formation of Community Organizations (COs):

(b) the preparation of microplans defining improved land use and management through participatoryplanning; and

(c) the sanctioning and implementing of formal agreements between communities and the ForestDepartment.

3.22 Formation of Community Organizations. Following the selection of priority reserves and apreliminary screening of villages, the project will invite communities where a majority of members wish toparticipate to form COs. The COs will have a formal constitution and membership will be open to all membersof the community, both men and women. In some instances existing village organizations, for example, those setup through the activities of NGOs, could form the basis for a CO.

3.23 Participatory Micro-Planning. The implementation of the component will use participatorymethods to define the resource use and priority needs of enlisted communities, concentrating particularly on thoseuses and needs that impact range and scrub forest resources on public and communal land. The COs, workingwith project personnel, will define alternative strategies for the use of these resources within the constraints oftechnical options and their needs and priorities. The strategy would likely include pasture improvement,afforestation with multipurpose trees, rehabilitation of degraded land, and the planting of fodder trees and cropson private land (see physical treatments below). The micro-plan would also lay down grazing plans andregulation for the protection and management of improved rangeland and scrub forest.

3.24 Joint Management Agreements. The micro-planning process will lead to a formal agreementbetween the COs and the Forest Department defining the terms of participation in joint management of therange/scrub forest area. The agreement will link the community to the management of a defined area of thepublic reserve, specifying management treatments, protection measures, arrangements for sharing products,sanctions, and conflict resolution procedures. The DFO will approve joint management agreements.

Physical Treatments

3.25 The technical options on offer during the participatory planning process will depend upon localconditions and priorities. The following is a listing of a number of anticipated interventions with estimates ofthe scale of their application.

3.26 Pasture Establishment on Public and Communal Lands. The project would establish improvedpasture on public land (Reserve Forest) in Pothwar and Thal and, where available, on community (shamlat) landin Pothwar. The establishment would involve selective uprooting of undesirable plants, land levelling, plowing,

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and seeding, followed by protection for one year. About 5,100 ha in Pothwar and 8,000 ha in Thal wouldreceive this treatment together with approximately 500 ha of private lands.

3.27 Afforestation in Scrub Forests. The project will plant multipurpose tree and shrub seedlings,raised in local nurseries, on public land in the scrub forest areas of both Thal and Pothwar (where available,communal land in Pothwar would also be treated). Tree establishment would follow land preparation. and, inPothwar be accompanied by soil and water conservation measures. The establishment phase in Thal would likelyrequire watering. Lands undergoing this treatment may in total amount to about 5,100 ha in Pothwar and 3,200ha in Thal.

3.28 Improved Range and Pasture Management. The project will introduce rotational and deferredgrazing systems on both improved pastures and untreated public lands in consultation with COs under thetechnical guidance of the FD. The COs will subsequently regulate the use of these areas, which are expected tototal as much as 10,200 ha in Pothwar and 8,000 ha in Thal.

3.29 Development of Water Points. Where the groundwater is deep in Pothwar the project will assistin the construction of mini-dams to create ponds on public land for the watering of livestock. In Thal, theproject will help install hand pumps at selected sites. In total, the project proposes the placement of 30 waterpoints in Pothwar and 20 handpumps in Thal.

3.30 Fodder on Private Land. To reduce livestock pressure on public land and to supplement fodderduring the winter deficit period, the project will encourage farmers to cultivate fodder crops on private land. Aspart of this effort the project will provide seed of improved varieties of fodder crops (oats. vetches, sorghum andmaize) to introduce production on 400-500 ha. The project will also promote the cultivation of fodder treesthrough the farm forestry component of the project.

3.31 The project will target in total the forming of 100 COs over the project life, 68 in Pothwar and 32in Thal. The following table summarizes the expected average areas to be treated per community in Pothwar andThal.

Table 3.3 Participation of Community Organizations

Pothwar Thal

Number of Community Organizations (COs) 68 32

Pasuire Establishment per CO (ha) 75 250

Afforestation per CO (ha) 75 100

Additional Management (ha) 150 300

In total. the 100 COs would participate in the improvement and joint management of about 39,600 ha of publicand communal range land and scrub forests.

3.32 Table 3.4 presents the expected phasing of CO formation under the project. These initial targetsare relatively modest to allow for close monitoring of progress.

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Table 3.4 Phasing of Community Participation

Project Year 1 2 3 4 5 6 Total

No. of COs, Pothwar 4 12 18 22 12 - 68

No. of COs, Thal 2 6 9 11 4 - 32

Total COs 6 1 8 27 33 16 100

Selection Criteria and Planning Methods

3.33 The project will finance an Initiation and Site Selection Study at the start of the project to identifyand select reserves for the introduction of participatory management. The study will assess current land use andpotential, as well as the expressed needs of adjoining communities and their willingness to participate in theproject (see Terms of Reference, Annex 4). Criteria for site selection will be both physical and socio-economic,and will include the willingness of surrounding villages to participate.

3.34 In implementing participatory management, the project will adopt a cluster approach, throughwhich groups of villages around the same reserve would develop joint management plans in concert. Theobjective of this strategy would be to handle management units in an integral and coordinated fashion, and toconsider concurrently the interests of neighboring villages. This would represent a departure from current PFDpractice, whereby planning is executed on a compartment by compartment basis without reference to neighboringcommunities.

Terms of Participation

3.35 The project will finance the direct costs of range and scrub forest improvement. Through theparticipatory planning process, COs will be jointly involved in decision making regarding which physicaltreatments and proposed grazing systems to adopt. Joint management agreements will define COs responsibilitiesfor the protection of improved and rehabilitated areas and for the enforcement of agreed grazing systems.

3.36 CO members will also be entitled to free fuelwood during thinning of afforested areas and to ashare of the final yield. Grazing access and grass cutting will be available to community members on paymentof the regular per animal grazing fee. In addition, the COs will receive for a time a watch and ward fee,equivalent to the wages of one guard per 150 hectares of treated land (approximately one guard per CO).

3.37 Cost recovery. Early in the implementation, the project will develop and test mechanisms tomobilize funds from within the community for continuing investment in range land and scrub forestimprovement. This might take the form of a fund under the control of the CO into which members would makecontributions. The initiation and site selection study will examine candidate mechanisms for cost recovery takinginto account existing rights of access to reserves.

Implementation Arrangements

3.38 Existing PFD staff from the Range Management and Rawalpindi Circles, under their respectiveConservators of Forests, will implement the component; however, over the course of the implementation theproject will provide financing on a declining basis for one draftsman and 18 technical and support staff to aid theexpansion of the work program in the two target areas. The professional staff implementing this component will

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report to the Chief Conservator of Forests (Project Director), Lahore. By the end of the project professional staffwill return to their regular postings and contracts for other support and technical staff would be completed.

3.39 Two specially trained spearhead teams will assist and train PFD field staff in the processes offorming Community Organizations, participatory planning, and formulating joint agreements. Each spearheadteam will consist of three Forest Department staff (a DFO, an SDFO, and a Forest Ranger) and two resourcepersons. The project will recruit resource persons with skills in participatory appraisal and planning techniquesfrom universities, research institutes, and NGOs specializing in training in participatory work. Of the tworesource persons on each team, one will be a specialist in institution building and community development, andthe other in livestock and rangeland management. Spearhead teams will in all cases work alongside local FDfield staff, who will take responsibility for continuing SRSFM work in communities.

Training and Reorientation

3.40 Success in participatory management will depend upon a reorientation of PFD staff towardsproviding a client-centered, flexible and responsive service. This will require training in participatory planning,institutional building, and technical and training skills. The project will provide training for the two spearheadteams, FD field staff, and farmers. The training program will draw upon the staff and facilities of the PunjabForest Research Institute, the Department of Rural Sociology of the University of Agriculture at Faisalabad, andNGOs experienced in training in participation such as the South Asia Partnership and the Association for theDevelopment of Human Resources. Provision is also made for workshops, study tours and overseas training.

Studies and Research

3.41 The project will undertake a site selection study in the first year of the project. This wouldidentify priority reserves according to their ecology, biological potential, current patterns of land use, andpotential for involving adjoining communities in improved range management (see Terms of Reference, Annex4).

3.42 An external evaluation of the component, assessing the progress and impact of the participatoryapproach to land management, will take place in year 3 as part of the project's mid-term review. This study willexamine the extent to which SRSFM activities have been successful in meeting their objectives, especially withrespect to attempts to build effective and sustainable institutions; and make recommendations as to thecontinuation of the component (see Terms of Reference, Annex 4).

3.43 Research themes will include:- Introduction trials of grasses, shrubs, and trees;- Establishment of exclosures for ecological studies;- Range conditions and trend;- Rotational and deferred grazing systems; and- Economic analysis.

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Monitoring and Evaluation Arrangements

3.44 Monitoring and evaluation will be particularly critical to this component given its innovatorynature, and the importance of adopting a learning stance towards participating communities. Feedback fromparticipants will be essential in ensuring that strategies can be adjusted in a timely manner so as to meet agreedobjectives. In addition to conventional financial and physical monitoring criteria, the project will develop social,institutional and attitudinal indicators with support from technical assistance. These will nevertheless be assimple and standardized as possible, and designed to meet management needs. Suggested indicators are includedin Annex 3. The PFD Monitoring Unit will compile collected data. The project will actively involve COs inmoniitorinig through the selection of verifiable indicators of physical. social and economic impact and thecollection of data. As noted above, an external evaluation of the SRSFM component will occur in year 3.

Technical Assistance

3.45 The project will provide 12 staff months of internationally recruited TA for human ecology inrange management (to help address issues defining the role of local participation and pastoral institutions), 6moniths of internationally recruited TA for research on traditional and adapted grazing systems, and 18 staffmonithis of local consultancy training in participatory resource planning. Locally recruited resource persons willsupport spearhead teams in participatory planning activities (See Technical Assistance Summary, Annex 3 Table13; and Terms of Reference, Annex 4).

Irrigated Timber Plantations

3.46 The project will undertake a pilot operation to assess the land use of public sector timberplantations and to explore alternative institutional arrangements, particularly those incorporating local communityor private sector participation, that would better support sustainable, socially profitable uses of the environmentaland biological resources enclosed in their areas. The operation will focus on three representative plantations,whose selection the Bank and PFD will jointly agree upon following a general diagnostic study of all plantationsites using the implementation arrangements presented in Annex 3 and technical assistance detailed in Annex 4.

3.47 Environmental Surveys. The project will undertake surveys of the topography, soils, fauna andflora of public sector timber plantations. The objectives of these studies are to provide a) baseline measurementsof environmental/ecological conditions and constraints that delimit land management options; b) data to guide thedesigni and analysis of contingent valuation studies of the plantation areas' principally non-timber forest productsamong local stakeholder communities or groups in or around the sites; and c) parameters for an analysis of landuse involving some form of bio-economic optimization. Selected detailed studies will also include hydrologicalsurveys as necessary for drawing up detailed engineering options to re-design or rehabilitate existing irrigationsystems and structures as part of the exercise to formulate new management plans for the plantation areas.

3.48 Contingent Valuation Studies. The project will identify and count the principal local stakeholder;,roups within and around the selected plantations, and describe their main socio-economic characteristics.Separately, the project will undertake analyses of stakeholder use of plantation resources and of the values thatstakeholder groups impute to those resources with the use of contingent valuation surveys. These studies wouldresult in specific recommendations for increased community and private sector participation in the sustainablemaniagement of the plantations.

3.49 Management Plans. Given data from the environmental and contingent valuation studies andengineering estimates, the project will select three representative plantation and specify, from estimated andknown biological relationships, a tentative zoning of the three pilot plantations into areas for xeric forest, tropicalthorn, timber production and other uses. The objective of the zoning exercise will be to optimize land use withinthe plantations according to the comparative advantages of areas; the cost of incremental investments, operation

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and maintenance; and the nature of participatory, institutional arrangements with local communities. Within thenon-timber production zones -- so called "low intensity production areas" -- the plan will outline improvementsto the production of non-timber products and suggested extraction rates. For the high intensity timber productionareas, the plan will entail an exercise to optimize harvest scheduling.

3.50 Improvement of Water Management. The project will undertake engineering trials of improvedwater management options for the selected plantations to gauge their technical and economic efficiency. Thesetrials will include the range of requirements of various land uses and management objectives for differentcompartments in each plantation. The project will produce detailed plans for the improvement or rehabilitationof the irrigation systems at the three selected sites. These plans will be subject to IDA approval before they areimplemented by PFD.

3.51 Improvements in the Legal Framework and Institutional Arrangements. The project willcommission an independent study to propose specific changes in the legal framework currently applying to theplantations to promote their environmental role and allow for their multipurpose management. The study willconsider the requirements for permitting a broad range of private/public sector institutional arrangements aimingfor the financially autonomous management of plantations and an increased role for the private sector. Theproject will define amendments in the existing laws and propose new legislation on the basis of the study'srecommendations.

Proiect Costs and Financin2

Project Costs

3.52 Table 3.6 presents the summary cost estimates for the various project components. Project costsare expressed at projected April 1995 value and include duties and taxes. For the most part, the base costestimates reflect the expenditures of comparable provincial government agency operations, includingreforestation, soil erosion control, forestry extension, staff training, construction contracts and vehicle andequipment purchases. Consultant service costs are based on recent contracts for similar services in Pakistan.The cost estimates include allowances for physical contingencies of 15 percent for civil works and 10 percent formachinery, equipment, materials, training and technical assistance, where applicable. The cost estimates alsoinclude allowances for price escalations during the implementation period based on IDA estimates for domesticand foreign rates of inflation. The following are the fiscal year inflation rates on which the cost estimates werebased:

Table 3.5 Inflation Rates Used in the Project Costing

Fiscal Year Domestic Inflation Foreign Inflation

1994/95 13.5 1.5

1995/96 9.5 1.8

1996197 6.5 2.6

1997/98 6.3 2.5

1998/99 6.3 2.5

1999/00 6.3 2.4

2000/01 6.0 2.4

The exchange rates used in the costings are constant purchasing power parity rates. The exchange rate at thetime of the appraisal (June/July 1994) was approximately Rs 30/US$. Adjusting for projected inflation, the costestimates employ an exchange rate of Rs 32.0/US$ up to the start of the project.

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Table 3.6 Project Cost Estimates

(Rs million) (US$ million)

Component Local Foreign Total Local Foreign Total FX

A. Institutional Support 47.67 20.14 67.81 1.54 0.65 2.19 30

B. Farm Forestrv 457.99 222.61 680.60 14.77 7.18 21.95 33

C. Scrub/Rangelands 82.09 26.95 109.04 2.65 0.87 3.52 25

D. Plantations 46.68 42.50 89.19 1.51 1.37 2.88 48

Total Base Costs 634.43 312.20 946.64 20.47 1007 30.54 33

Phvsical Contingencies 36.76 23.53 60.29 1.18 0.76 1.94 39

Price Contingencies 143.20 74.54 217.73 0.64 0.63 1.27 50

Total Project Costs 814.39 410.26 1224.65 22.29 11.46 33.75 34

FX 'forein exchange

NOTE: Annex 5 provides details of the costs for the components.

Project Financing

3.53 Table 3.7 sets out the proposed financing of the project components. IDA disbursements against

the costs of incremental staff decline from 80 percent at the start to 40 percent by the last year of the project.

Table 3.7 Financing of Project Costs (US$ million)

Component Government IDA Total

Institutional Support 0.48 1.87 2.35

Farm Forestry 7.29 16.65 23.94

Scrub/Ratigelands 0.69 3.43 4.12

Plantations 0.42 2.92 3.34

Total 8.88 24.87 33.75

IDA/Bank Group financing will amount to approximately US$24.87 million. The Government's share of total

project costs tally to about US$8.88 million, including the financing of taxes. Of total project costs excludingtaxes and duties (US$29.80 million), IDA/Bank Group financing would cover 84 percent. Excluding taxes and

duties, the Government would finance approximately US$4.93 million equivalent. An IDA Credit of US$24.87million would be made to GOP which would pass it on to GOPunjab in accordance with its standard budgetary

procedures.

3.54 GOPunjab will provide their share of project finances to the implementing agencies out of annual

budget appropriations. Funds for provincial expenditures would flow from the Federal Ministry of Finance

directly to the province as development funds. GOPunjab will provide its share of project finances to the

implementing agency PFD out of annual budget appropriations. Full amproval by the Executive Committee ofthe National Economic Council (ECNEC) of the proiect's Planning Commission Form No.1 (PC-I) andsanctioning of proiect expenditures would be a condition of project effectiveness.

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Procurement

3.55 Table 3.8 provides a summary of arrangements for the project's procurement of civil works, goodsand services. Retroactive financing up to US$3 11,000 for procurement of essential goods and services under allcategories of expenditure was requested by the Government of Pakistan to allow early start-up of projectactivities and maintain the momentum achieved during project preparation. All retroactive financing is expectedto be for eligible expenditures incurred between January 1, 1995 and the date of Credit agreement signing.

Table 3.8 Procurement Arrangements

Procurement Method (USS million)

Category Intemational Local CompetitiveCompetitive Bidding Bidding Other Total

A. Civil Works --- 3.75 0.95 4.70(H) (3.10) (0.85) (3.95)

B. Vehicles & Equipment 5.86 0.31 0.26 6.43(2.72) (0.26) (0.20) (3.18)

C. TA, Training, Studies and Marketing Services

- Institutional Development --- --- 1.79 1.79

(0) (-) (1.77) (1.77)

- Project Preparation/Evaluation/Supervision --- --- 0.65 0.65

(-) (-) (0.64) (0.64)

- Training --- --- 5.77 5.77

(-) (-) (5.75) (5.75)

- Studies/Marketing Services --- --- 3.30 3.30

(-) (-) (2.92) (2.92)

D. Recurrent Costs

- Incremental Salaries --- --- 4.84 4.84

(-) (-) (2.92) (2.92)

- Incremental Operating Costs --- --- 6.27 6.27(-) (-) (3.74) (3.74)

Total 5.86 4.06 23.83 33.75(2.72) (3.36) (18.79) (24.87)

Notes Figures in parentheses are the respectivc amounts financed by IDA. ICB='ntemational Competitive Bidding, LCB=Local Competitive Bidding. Other= forceaccount, international and local shopping. consultant services, training and project mnnagemene expenditures, and contfibutions by communitim.

3.56 Civil Works: Civil works estimated to cost US$4.70 million include afforestation (US$0.99million), field works (US$2.89 million) and other works consisting of the construction of offices, staff housing,garages, sheds, seed stores and fencing (US$0.82 million). These works, which are small in size and scatteredover various locations, are not expected to attract any foreign contractors. To maximize contract size, however,these works will be packaged into groups valued at least equal to US$40,000 equivalent and undertakenfollowing local competitive bidding procedures (LCB) satisfactory and acceptable to IDA. PFD will invite bidsfrom CWD registered contractors of the appropriate categories for undertaking these works. GOPunjab'sprocurement procedures have been reviewed during appraisal and found to be consistent with the Bank'sGuidelines. It has been agreed that PFD will use LCB bidding documents developed under the 1992 FloodDamages Rehabilitation Project for procurement of civil works (for contracts up to Rs. 15 million/ US$456,000equivalent). Afforestation expenditures will occur under the scrub forest/range component and include nurseryexpenditures, land preparation and planting out costs. These works will be undertaken at a number of sites andwould generally require close supervision of the staff of PFD. Field works include soil conservation works(such as gully plugging, check dams, contour ripping, levelling and vegetative hedges), canal rehabilitation,

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pasture establishment, adaptive research trials and demonstration plots. Similar to the afforestation works underthe same component, these works would be small and scattered, undertaken at many sites, and would generallyrequire the close supervision of forestry staff of PFD. As for afforestation, a combination of LCB procurementand force account will be used for field works. At appraisal it was agreed that, wherever possible, civil workswill be executed through local contractors using suitably packaged LCB contracts. Where private contractors arenot available, the work will be executed by force account.

3.57 Vehicles and Equipment - (US$6.43 million). Vehicles, motorcycles, heavy machinery andlaboratory equipment estimated to cost the equivalent of US$5.86 million will be procured followinginternational competitive bidding (ICB) procedures in suitable packages by grouping similar items together. Apreference limited to 15 percent of the CIF bid price or the actual customs duty applicable to non-exemptimporters, whichever is lower, will be extended to qualified local manufacturers in the evaluation of ICB bids.GOPunjab has formally , following loan signature, no further government/inter-ministerial clearances will berequired to initiate ICB procurement of vehicles and other equipment financed under the project. Computerswith peripherals and software worth US$0.31 million will be procured following LCB procedures as mostforeign suppliers of this equipment are represented in the country. Items or groups of items relating to officefurniture, tools and equipment including seed collection, testing and laboratory implements (other than motorizedtransport, bulldozers, tractors with implements and some laboratory equipment) required at different places and insmall quantities and costing less than the equivalent of US$50,000 will be procured through international or localprudent shopping by obtaining at least three quotations from reputed suppliers, subject to an aggregate amount ofUS$200,000.

3.58 Technical Assistance, Training. Mass Awareness, Studies and Marketing Services - (US$11.51million). Technical Assistance (US$2.44 million) consisting of Institutional Development (US$1.79) and ProjectPreparation, Evaluation and Supervision (US$0.65) and Marketing Services and Studies (US$3.30) will becontracted in accordance with the Bank's Guidelines - Use of Consultants by World Bank Borrowers and by TheWorld Bank as Executing Agency. Studies include soil mapping and local support for the range/scrub forestinitiation and site selection study and will be subject to IDA approval. Foreign and local Training (US$5.77million), including US$3.40 million for mass awareness expenditures, comprising art work, videos, films, serviceawards and other publicity materials as part of the publicity and extension activities, will be procured followingnormal GOPunjab administrative practices that are acceptable to IDA.

3.59 All civil works and goods contracts in excess of US$200,000, and all consulting contracts inexcess of US$100,000 for firms and US$50,000 for individuals will be subject to IDA's prior review. However,with respect to all consulting contracts, irrespective of value, prior review will continue to be required for: (a)terms of reference; (b) single source contracts regardless of value; (c) all consultant contracts and assignments ofa critical nature (because of environmental safety or public health considerations); and (d) contract amendmentsvalued at about US$100,000 equivalent for firms and US$50,000 for individuals, or those that raise the totalcontract value to about US$100,000 equivalent. The Bank's Standard Bidding Documents for Works, Goods andConsulting Services will be used. Bank staff will selectively post-review about 10 percent of the awardedcontracts (including bid evaluations) which are below the threshold levels.

Disbursement

3.60 The Credit will be disbursed over six years, with the Credit closing June 30, 2001. The proceedsof the Credit will be disbursed against:

(a) 90% of expenditures on afforestation and field works and 80% of expenditures of othercivil works;

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(b) 100% of foreign expenditures, 100% for ex-factorv, and 80% for locally procuredequipment;

(c) 100% of expenditures on consultant services, training and studies; and

(d) incremental recurrent costs on a declining basis according to the following program: 80%in FY96 and FY97. 60% in FY98 and FY99, and 40% in FY2000 and thereafter.

3.61 IDA will disburse against certified statements of expenditure (SOEs) for: (a) civil works andgoods contracts below US$200,000 equivalent; and (b) training, afforestation works, field works and incrementalstaff salaries, allowances and operating costs. Disbursement applications for all other items will be fullydocumented. Supporting documentation for SOEs will not be submitted to IDA, but will be retained byGOPun jab and be made available to IDA staff during supervision.

3.62 To facilitate timely project implementation, PFD will open a special account for IDA projectfunds with the National Bank of Pakistan with an authorized allocation of US$800,000. This account will beused for both local and foreign expenditures of less than US$100,000 equivalent under all categories. Allexpenditures above US$100,000 could be submitted directly to IDA for payment without using funds from thespecial account after the implementing agency has made project expenditures. PFD will submit applications forreplenishment of the account to IDA on a monthly basis (the minimum replenishment being US$50,000) orearlier if the account falls below 50% of its allocation. A schedule of disbursements is provided in Annex 3.

Accounts and Audit

3.63 The participating entities will establish separate accounts for the project. These accounts, togetherwith supporting documentation, including contributions from the Provincial Government, and the Credit, wouldprovide a comprehensive record of project financing and expenditures. Assurances are sought from GOP andGOPunjab that: (a) these accounts would be maintained and audited annually in accordance with sound auditingstandards consistently applied by independent and qualified auditors acceptable to IDA; (b) certified copies of theannual financial statements and SOEs. together with the auditor's report, which would comment separately on theSOEs. would be submitted to IDA no later than nine months after the close of each fiscal year; and (c) theSpecial Account would be audited annually and an audited statement of the account and the auditor's report willbe submitted to IDA no later than nine months after the close of each fiscal year.

IV. ORGANIZATION AND MANAGEMENT

Project Organization

Implementation

4.01 The Punjab Forest Department will be the main implementing agency for the project with theSecretary serving as overall manager. The Department will liaise with the IDA and prepare half-yearly progressreports on all aspects of the implementation of these components. During appraisal of the project, the capacityof PFD to execute the project as well as its overall capacity to lead sector development were evaluated andcertain deficiencies related to priority areas of planning, research, monitoring and evaluation, interaction withprivate sector and local communities were deficient (see para. 2.10). Project support is therefore directedtowards increasing PFD's experience and know how in these areas while building on the Department's presentexperience in farm forestry.

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4.02 For overall project implementation, an Administration Unit consisting of one Procurement Officer,one Accounts Officer and support staff will be established in the office of the CCF/PD. It will assist the CCF inmaking procurement of goods and equipment, account keeping, audits, preparing half-yearly reports andprocessing disbursement applications. Monitoring and evaluation (M&E) for the project will be carried out bythe existing CF(M&E) who reports directly to the Secretary of Forestry. The addition of two DFOs (one eachfor the farm forestry and social range/scrub forests components), two SDFO/ROs, one Economist, twoStatisticians and II technical and support staff will strengthen the M&E office. The primary role of the unit willbe to maintain a Management Information System (MIS) that will first assist the implementation of the projectand then monitor other sector development. (See Annex 3, for further details of the scope of the work programfor the MIS under the project, which will include the monitoring and evaluation of project's implementation, itsfinancial management and its socio-economic impacts). The project will finance short-term technical assistanceat the time of the project launch to aid in the setting up of the MIS and in training personnel. In addition, theproject will provide financing for the hiring of local consultancies to conduct studies as needed by the Bank forits supervision missions.

4.03 One Chief Conservator of Forests/Project Director (CCF/PD; new position) will head theorganization. There will be four CFs under him -- three for extension (farm forestry) at Rawalpindi (new),Lahore (existing), and Multan (new), and one for Range Management (existing). In Farm Forestry, each CivilDivision (8) will have a DFO (Extension) and each District (34) an SDFO and 19 Forest Rangers (FRs) will belocated at Tehsils (about one for two tehsils). The lowest tier will comprise extension workers (Foresters/SeniorForest Guards) at Markaz level (354). Only incremental staff, including support staff will be provided. Thefarm forestry incremental staff positions, except some nucleus technical staff, will be discontinued at thecompletion of the project.

Conduct of Forest Department Operations

4.04 There is consensus on the need for reorganization of the Forest Department to ensure thesustainability of projected benefits under the project. In particular, PFD will have to reconcile the demands of acourse to alter its current, limited role as protector of state lands with the budgetary constraints that inescapablyconfront public institutions managing forest resources.

4.05 PFD has already agreed to establish a separate cadre of forest officers under a Social ForestryWing, providing career opportunities as attractive as other career paths within the Department. A chiefconservator of forests will head this wing. The project will contribute by financing on a declining basis requiredincremental professional and technical personnel and their support staff.

4.06 Also, if the Forest Department is to expand its role in the range sector beyond one of simplyundertaking revegetative work on state rangelands to one of executing a rational, socially oriented and integratedrange management program, it will need to revamp its regulations to allow the recruitment and careerdevelopment of officers with range science backgrounds.

4.07 Because rational range management -- especially in Pakistan -- will be an essentially human-oriented discipline, the PFD will reclassify the Range Management Circle as the Integrated Social RangeManagement Circle to emphasize a new focus not only on range rehabilitation and development of grasslands,but on a holistic approach to range ecosystems, including vegetation and livestock, and range economic systems,including human needs, values and markets.

4.08 The project will require that PFD establish appropriate linkages with the Animal Husbandry Unitand the Agriculture Department to ensure that the latter focus their attention on livestock improvement and feedimprovement in villages. The Conservator of the Integrated Social Range Management Circle will have theresponsibility of maintaining a permanent liaison with related departments in Agriculture and Animal Husbandry.

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Proiect Reviews

4.09 The Administration Unit, with support from the M&E unit, will undertake quarterly reviews ofprogress in implementation. In addition, PFD will carry out a comprehensive review of the project progress inthe third year of the project, and the Bank would participate in this review. The mid-term review will cover allaspects of project implementation and project impact. This review will identify shortcomings, if any, and areasof improvement and recommend actions for dealing with them for government's consideration.

V. BENEFITS, JUSTIFICATION AND RISKS

Benefits

5.01 The primary benefits of the project include increased rural production, improved productivity andenvironmental quality of forest lands, soil conservation measures, on-farm fodder production, improved publicsector efficiency in the forest sector, development opportunities for local participation, rural employment andincome. The investments in farm forestry research, tree improvement and extension are expected to increasemainly the quality of forest raw materials. The project is expected to have some dampening effect onenvironmental degradation in scrub forests, rangelands and other forest areas through the rehabilitation ofwasteland and pasture development. These activities will reduce grazing pressure on natural forest areas andenable natural grass and forest cover to re-establish itself and provide vegetative growth which would improvethe resource base in the project area. Nevertheless, not all of these expected benefits are readily quantifiable.

5.02 Timber and fuelwood will be the main outputs of the project's farm forestry component. Sincefuelwood is a main source of energy for both rural and low income urban areas, these incremental production infuelwood will help ease the shortage of fuelwood in both project areas and throughout the country. The increasein the supply of fuelwood will favor the realization of a consumer surplus and discourage the increasedsubstitution of inferior biomass fuels, such as dung cakes, for wood. This inter-fuel substitution is expected tobecome increasingly prevalent in the future without the project, especially among poor rural and urbanpopulations, as fuelwood becomes relatively scarcer. One of the environmental consequences of this process, ifleft unaddressed, is a gradual deterioration of the productivity of farm lands as dung is diverted from its use as amanure and soil conditioner. The loss of farm productivity in turn has clear implications for the sustainability ofrural incomes among the least advantaged.

5.03 The project should lead to a significant increase in the availability of raw material for industry.New processing capacity would most likely be needed to utilize fully this potential incremental supply. Theanticipation of supplying raw material markets would in fact be the primary motivation behind farmers'participation in tree planting. Although farmers will be planting chiefly for these commercial reasons, theiractivity will also produce substantial quantities of fuelwood as a by-product.

5.04 The pilot timber plantations component would lead to environmental benefits in the form ofinventories and plans for biodiversity conservation and the demonstration of modes for the rehabilitation andsustainable use of Punjab's 285,000 ha of plantations. The demonstration of management systems with increasedprivate sector participation is expected to cause an increase in land use efficiency in these plantations and adecrease of budgetary allocation from public budgetary resources.

5.05 The scrub forests and rangelands component, concentrating on the rehabilitation or improvementof key resource areas through its micro-planning approach, should enhance the productivity of approximately13,600 ha of pasture, along with about 8,300 ha of scrub forests. Additionally, the project will introduceimproved varieties of fodder crops over an estimated total cropped area of 400-500 ha to improve the farm

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production of forage. These improvements are expected to benefit about 20,000, mainly poor, rural householdsthat are dependent upon common property resources and animal husbandry by increasing their net income byabout US$36 per household.

5.06 Financial and Economic Analysis. The table below summarizes the average, expected financialand economic rates of return for the field operations of the project. Details of individual derivations areprovided in the following sections, Annex 3 (Implementation Plan) and in Annex 6 (Financial and EconomicAnalysis, including an appendix of tables). The overall financial and economic rates of return of the project areboth expected to fall within a range of 12-18 percent.

Table 5.1 Estimated Average Financial andEconomic Rates of Return (%)

Financial Economic

Farm Forestry 11-14 14-19

Scrub Forests andRangelands 16 12

Pothwar 17 15

Thai 15 11

Project 12-15 14-18

The net benefits of farm forestry do not include an assessment of the environmental impact of producing moretrees on farms, which would likely increase overall returns to the project. Similarly, the results here are likely tounderstate the returns to the social scrub and range component for not accounting for environmental benefitsaccompanying the anticipated changes in the land use. They nevertheless are sufficient to justify the inclusion inthe project of the pilot activity in social range management. It was not possible to valuate the potentialenvironmental and economic benefits of the pilot plantations and institutional strengthening components.

5.07 The economic analyses used border prices, at August 1994 value, for major tradeable commoditiesderived from World Bank projections of cif or fob values adjusted for local handling and transportation costs tothe farm gate. The derivation of border prices for major agricultural commodities was based partially on datapresented in "Pakistan: Irrigation and Drainage Sector Strategy Review" and adjusted for current prices. Thecommodity price projections used were those provided in the World Bank's "Revision of Primary CommodityPrice Forecasts and Quarterly Review of Commodity Markets -- March 1993." In general, the crop and activitiesbudgets of the analysis use the average of prices expected to prevail over the period between 1993 and 2005.The prices used in the analysis are listed in tables that follow Annex 6. The border prices for non-tradeablecommodities that constitute minor project costs were estimated from current local prices using a StandardConversion Factor (SCF) of 0.9. The analysis also applied the SCF to minor costs of tradeable commodities.

5.08 The economic price for fuelwood was derived partly on the basis of its equivalent kerosenecontent and on an estimate of the medium- to long-term agronomic effects of diverting on-farm use of manure asa substitute for wood as a fuel for cooking. An indicative price for industrial grade wood was based on theimport parity value of manufacturing short-fibre pulp using estimates of local costs of conversion. The financialwage for casual labor was priced at Rs 63/day, which was considered to be a reasonable estimate of marginalvalue product. The economic wage was then derived using the SCF.

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Sensitivity Analysis

5.09 Variations in the benefits or costs of the range development or in the project costsassociated with this component have little impact on overall project performance: the scale of this pilot effort istoo small relative to farm forestry to have much bearing on the ERR. Farm forestry benefits are the maindeterminant of the project's rate of return. Keeping all costs at their base levels, a decrease in the incrementalbenefit stream from farm forestry of 40 percent would lower the ERR to the average opportunity cost of capitalassessed for Pakistan: 10 percent. Further decreases in the benefit stream without compensatory decreases incosts would produce a negative overall net present value (NPV) for the project when discounting at 10 percent.The sign of the NPV switches with a uniform 95 percent increase in project costs associated with farrn forestry.It would take an increase in all costs included in the economic analysis of about 65 percent to switch the sign ofthe NPV if incremental benefits are at their estimated baseline values. Chart I in Annex 6 simulates theexpected impact of combinations of variations in costs and benefits on expected profitability of projectinvestments. The chart shows that performance of the project would depend more upon changes in benefits thanin costs (see Chart I in Appendix I to Annex 6). The project does not appear to be very sensitive to changes inbenefits. For example, a uniform decrease in the incremental benefit stream of 20 percent would not switch theNPV as long as all costs do not increase at the same time by as much as 30 percent.

Fiscal Impact and Sustainability

5.10 On year I of project implementation, the share of government financing of the project willcompare to about 25% of PFD's expected, without-project, budget --based on historical trends. Starting fromyear 2, this share will be comparable to about 5 to 6% of the expected without-project budget, as indicated inTable 5.2 below. The project is therefore not expected to overly stretch PFD's capacity of implementation.Support to recurrent costs will further ensure that PFD's capacity is not exceeded. IDA, however, will onlydisburse against incremental recurrent costs and on a declining basis (para. 3.60).

Table 5.2 Estimated Budgetary Impact of the Project on PFD (Rs'000, current values)

Without Project With Project

Incremental % Share of w/oTotal Budget Total Project IDA Financing Govt Financing Project Budget

Year Estimates"' Costs2' Available Required"' Estimates

1995/96 484,000 374,509 251,393 123,116 25

1996/97 551,560 221.550 194,483 27,067 5

1997/98 586,308 203,524 164,335 39,189 7

1998/99 623,246 165,584 126,933 38,651 6

1999/00 661.887 122,543 75,117 47,426 7

2000/01 701.600 136,957 88,888 48,069 7

2001/02 743.696 11,000 0 11,000 1

2002/03 788,318 11,000 0 11,000 I

NotsI/ DcrDeed from on cslin,-tr of dIe lV95/96non.-dcelopmcnLPFD bndgetthat Is di.nstod ecar by tear for proywted inflanon. and on pnoi-tions.of ADP

and olher Incal dee.lopmenbudgetatlocatons that arn boned on estinss of th. past fundingof PFD operations

2/ Costs from fiscal car 20110/lA2on ar- esGimarns of mcnimenia e-eront expcnditures

3/ Does not includc costs of needling subsidiks

2 27-

5.11 At the end of the project implementation period, the institutional and operational costs introducedby the project (residual staff salaries, benefits and travel/daily allowances and operational costs in Research andMonitoring and Evaluation, mainly) would amount to about Rsl I million (US$350,000) per year. These willhave to be borne in full by PFD but appear reasonable because of their relatively small size (about 1% ofwithout-project total PFD budget) and because of the expected relief that policy reforms under the project willhave on the government's budget. In particular, the combined phase-out of farm forestry seedling subsidies andgovernment nursery activities would represent a saving estimated at about Rs6O million (US$2 million) per year.The net impact of the project, after completion, would therefore be an increase of more than US$1.5 million peryear that could help alleviate the overall fiscal condition of the Province or be reallocated to traditionally under-funded areas of public sector activity (such as research, poverty alleviation on degraded lands and environmentalconservation). Additional gains in efficiency are also expected from the future large-scale application of lessonsof the project's demonstration activities (institutional reform in range/scrub forests and timber plantations).

Environmental Impact

5.12 Community participation in natural resources management is one of the major strategicunderpinnings of this project and is absolutely necessary for the sustainability of the changes in environmentalmanagement that the project plans to introduce. The principle of participatory implementation will guide theinstitutional and policy reforms included in the project and should lead to the improved delivery of technicalservices to communities in and around existing forest resources as well as to farmers involved in farm forestry.Through participatory implementation, the following areas of Pakistan's natural environment should receivebeneficial impacts from specific project components:

(a) Improved Soil and Moisture Conservation: Investments in farm forestry, irrigated timberplantations and scrub/range land will lead to increased soil cover, decrease in fallow land, andsustainable increase in productivity of the land through improved land management and return ofmore organic matter to farm land; and

(b) Improved Grazing Conditions: Investments in range rehabilitation and management will leadto an increase in the availability of fodder. Participatory management will ensure that thisincrease is sustainable. Already, during project design, a participatory approach was used for thedefinition of acceptable land treatment specifications. This approach will continue through projectimplementation with the interface of multidisciplinary spearhead teams and NGOs who will linkbetween government agencies (livestock, agriculture, forestry) and local users of the scrub/rangeproject area.

Project monitoring activities will evaluate the degree of environmental improvement achieved during projectimplementation and detect any sign of non-sustainability of improvements (through over-grazing for example).

5.13 Carbon Emissions. The accumulating evidence concerning the environmental consequences of theresidential burning of various types of biomass and petroleum fuels would suggest that forest sector developmentcould contribute towards an improvement of Pakistan's balance of greenhouse gases. Looking at the CO2emissions per cooking task from household fuels, recent reviews at the World Bank7' have found that total netemissions are highest for charcoal, followed by natural gas, kerosene and coal. For wood, the net carbon effectdepends upon whether the wood is sustainably managed. If sustainably managed, the use of wood represents nonet carbon emissions. If wood is not drawn from sustainably managed supplies, the net carbon emission effect is

7/ Willem Floor and R. van der Plas, "CO2 Emissions by the Residential Sector: EnvironmentalImplications of Inter-fuel Substitution." Industry and Energy Department Working Paper, EnergySeries Paper no. 51 (Washington, D.C.: World Bank, 1992).

- 28 -

positive. The reliance on sustainably-grown and managed fuelwood is more environmentally advantageous thanreliance on petroleum fuels or non-sustainably managed fuelwood.

Risks

5.14 Farm Forestry. For this component, one risk is the possibility that the implementation of thephase-out programs for seedling subsidies and government nurseries might be delayed and that plantingcampaigns of previous years in addition to planting under the present project would lead to a destabilization ofwood markets. However, safeguards built in the project -- such as prior government approval of the timedphase-out programs for subsidies and public sector nurseries as well as monitoring of market signals and theimpact of project activities -- should alleviate this risk. The government, moreover, will have discontinuedpractically all interference in the sub-sector in time for the mid-term review and evaluation.

5.15 Although PFD will briefly continue the seedling subsidy scheme, the project will reduce thepossible risks it raises by strictly limiting the total value of subsidy to be made available. In principle, thesubsidies would be used in those communities where wood markets do not operate well primarily for logisticalreasons and where the substantial part of the incremental production that might be realized through the projectwould likely not be marketed, but instead be consumed by households.

5.16 Another possible risk in farm forestry is that, although farmers have been planting with theexpectation of marketing their wood primarily as a raw material for industry, which would command a higherprice than would fuelwood, it is as yet unclear that the present capacity of wood-based industries would be ableto absorb all of the short-rotation production due to come on stream soon from past planting campaigns.Moreover, given the difficult environment for industrial investment in Pakistan, it is doubtful that muchadditional capacity would be able to develop quickly, even if short-term prospects of raw material suppliesappear encouraging.

5.17 This risk, however, is not expected to be critical. Only about 15% of the wood harvested byfarmers would be marketed as higher value timber for domestic industry. The great bulk of the wood would besold in the market for fuelwood and this market should be able to absorb without much difficulty the productionincrement preferably directed to industry. The possible realization of lower real prices for raw materials in theshort term and expectations of non-rising real prices at least in the medium term should provide additionalincentives for investment in various wood-based industries. Also, as international prices for pulp wood increase,there is at least an even chance that the export of wood chips may become feasible, which would provideadditional marketing opportunities and incentives.

5.18 Moreover, the project would support the launching of a market information service, provided bythe private sector, that would assist the planning of wood users and producers. The aim of the service would beto assist the development of forward contracts between producers and industrial wood users, encouraging andfacilitating further investment planning. The extension efforts of the project are also aimed at broadening thebase of wood producers. With the development and dissemination of market information these activities shouldmake aggregate wood supplies less sensitive to short-term price variations than they might otherwise be.

5.19 Scrub Forests and Range Lands. Bank studies indicate that governments routinely neglectproblems concerning the state of common property resources within their purview of natural resourcesmanagement. That finding is valid to some extent for Punjab and perhaps represents the greatest risk to thiscomponent. In part, a potential lack of strong government support might be ascribed to a reluctance of theforestry department to modify how it views its role and use of its resources in the subsector in isolation of theway it views and conducts its management mandate in other areas. What may pose a particular problem for thedepartment is the prospect of accepting a resource management approach that jointly involves the department,private sector and communities in decision making, administration and the negotiated sharing of resourcebenefits. Related to this may be the difficulty of the department to cooperate with NGOs (and a risk in having

- 29 -

selected NGOs not performing satisfactorily). The project would aim to address this risk by providing TA forthe facilitation of participatory management of scrub/range land and conducting the proposed Human ResourcesDevelopment study for the sector. Among its outputs, the study should provide an indicative plan for thedeployment of public and non-public resources within the sector. This plan would provide the basis fordeveloping a consensus within the forestry department on the future direction of its role and on the adjustmentsthat need to be made within its organization. The training of personnel in support of the study'srecommendations would also be a high priority of the project.

5.20 Scrub forest rehabilitation measures will include reseeding and revegetation at selected sites.Many areas have poor soils with very limited fertility. There is a risk of failure of some of the revegetationattempts. Special care will be made to build on research already undertaken at PARC and PFI to select the mostadapted species of grasses and trees. Leguminous vegetation will be favored to counteract the limited levels ofsoil fertility.

VI. AGREEMENTS AND RECOMMENDATIONS

6.01 The following agreements were reached at negotiations. The Borrower, GOPunjab and/or PFDwill:

(a) initiate an in-depth study analyzing the institutional capacity of PFD. The study will becompleted by June 30, 1997, and its recommendations be considered for execution withinthe present project. The study will be prepared by PFD in consultation with Punjab P&Dusing external and internal TA (para. 3.05);

(b) agree with IDA, by December 31, 1995, on an action plan based on the results of theenvironmental study of the public sector timber plantations carried out by PFD and IUCNin December 1994. Thereafter, PFD will carry out the agreed action plan (para. 3.06,3.46);

(c) implement the agreed program for gradual transfer of commercial nursery activities to theprivate sector. By June 30, 1999 PFD will have discontinued all nurseries activities exceptfor the running of model nurseries for research and demonstration (para. 3.12);

(d) implement the agreed phase-out program for seedling subsidies throughout the provinceeliminating these subsidies and guaranteed seedling procurement by June 30, 1999. Byproject effectiveness, PFD will set the level of subsidy at no more than 75% of seedlingproduction cost (para. 3.15);

(e) select suitable consultants, before December 31, 1995 to assist in technical aspects of farmforestry promotion and research (para. 3.18);

(f) implement the farm forestry training program targeting PFD staff and local farmers (para.3.16);

(g) cause PFRI to develop in accordance with guidelines satisfactory with IDA, and adopt, byDecember 31, 1995 and thereafter carry out a research program on priority areas of farnforestry (para. 3.17);

- 30 -

(h) abolish, by July 1, 1995, the permit and tax requirements for the cutting and transport offarm forest trees outside of the border area. Permits on conifers and Acacia modesta treeswill be maintained for environmental protection reasons (para. 3.19);

(i) implement the treatment of scrub/rangeland with the participation of local institutionsaccording to formal PFD-CO agreements to be cleared with IDA before July 31, 1996(para. 3.21, 3.24, 3.35 and 3.36);

(j) establish two spearhead teams (micro-planning facilitators) by June 30, 1996 and providetraining to these teams (para. 3.39);

(k) implement training for PFD staff and farmers in participatory range/scrub management(para. 3.40);

(I) carry out, by June 30, 1996 a range/scrub site selection study in accordance with terms ofreference agreed with IDA (para. 3.41). Selected sites will be primarily in the Pothwarand Thai areas with the possibility of extending this pilot to other areas after IDAconcurrence (para. 3.20);

(m) recruit consultants, by December 31, 1995, to assist in the carrying out of technicalassistance under the project (para. 3.05, 3.18, 3.44-3.46, 4.09 and Annex 4);

(n) provide adequate funds to project entities as outlined in para. 3.54;

(o) follow the procurement arrangements outlined in para. 3.55-3.59;

(p) GOPunjab would establish acceptable accounting and auditing arrangements as outlined inpara. 3.63; and

(q) initiate a mid-term review of the project during FY 1997 with IDA participation andcomplete the mid-term review by December 31, 1998 (para. 4.09).

6.02 The IDA Credit will not become effective until: (i) GOPunjab has satisfied IDA that the level offarm forestry seedling subsidies are no more than 75% of the actual costs of production (para. 3.15); and (ii)ECNEC has approved the project's PC-I and sanctioned project expenditures (para. 3.54).

6.03 With the above assurances and conditions, the project would be suitable for an IDA credit ofSDR16.00 million (USS24.87 million equivalent) on standard terms with 35-year maturity. The Borrower wouldbe the Islamic Republic of Pakistan.

3 31-

PAKISTAN



ANNEX 1

ECONOMIC ASPECTS OF THE FOREST SECTOR IN PUNJAB

1. Demand and Trade. The consumption of roundwood for use as fuel far outweighs the quantitiespresently used for industrial purposes. For 1993 the Household Energy Strategy Study (HESS) data baseestimates a roundwood fuel demand of about 13 million m3; whereas, the demand for industrial wood isestimated at about 1.8 million m3. This partly reflects the generally relatively nascent and small-scale nature ofwood based industries in Pakistan. Much of the economic activity generated within the sector therefore revolvesaround the trade of fuelwood.

2. There are an estimated 13,530 fuelwood traders in Punjab, of which more than 90 percent areinvolved in retail marketing. In addition, about 1,980 traders market both timber and fuelwood (there are about3.500 traders dealing exclusively in timber). It is likely that most of these are also primarily retailers.

3. The number employed in the sale of fuelwood is estimated at approximately 28,200. Of these,about 20,130, including owners, would be permanently employed in the trade. Of those permanently employed,some 17,060 are in involved in retailing; the remaining 3,070 are employed in the wholesale trade.Approximately 8,000 are employed part-time, mostly in the retail trade. Revenue in 1991/92 from sales offuelwood is estimated to have been Rs 3,700 million. Over 90 percent of the marketed fuelwood is produced byfarms.

4. A significant portion of the roundwood sold to industries has been hardwood for furniture making.The furniture industry, concentrated around Lahore, Gujrat and Chiniot employs possibly as many 10,000 peopleworking in about 1,500 shops. Most of the high-quality timber used in the industry is shisham and is producedon irrigated plantations and other public lands. Supplies of shisham from these areas, however, has beendeclining for some time, and there is now a severe shortage of veneer quality shisham logs. Although in thefuture, some shisham may also be produced on farms, the supply from this source would be quite limited andwould not likely be of the quality produced under long rotations.

5. Most of the furniture industry is artisanal and small-scale; there are, however, at least two largerconcerns in Punjab that operate to supply the industry with processed materials. These are Jhelum-basedchipboard manufacturers that together employ about 800 people. Their raw material is mostly mango and poplar,supplies of which appear to be adequate; however, these industries face the same problem of obtaining shishamlogs of veneer quality, which is required for many of their finished products.

6. Most of Pakistan's 40-odd pulp and paper mills are located in Punjab, but none uses domestichardwoods as a source of fibre material. One market pulp mill is under construction with a capacity to produce100 tons of kraft pulp per day from eucalyptus. If this business is capable of competing efficiently withimported wood pulp then there should be considerable potential to replicate the enterprise to expand the supplyof raw material to existing local paper industries.

7. Energy SuPDIV Considerations. Fuelwood is the most important fuel in Pakistan, supplying over50 percent of the energy consumed. The projected demand for fuelwood in Punjab for 1993 is estimated at 17.5million tons and is expected to increase at an annual rate of about three percent. The main users of fuelwood are

- 32 -

Annex I

rural households, who also supplement the use of fuelwood with the buming of dung cakes and other inferiorbiomass fuels.

8. The expansion of the supply of fuelwood in itself is a desirable outcome not because the effectivecost of its use ranks favorably with other modem fuels -- it is about as cost effective as kerosene, but far moreexpensive than natural gas or LPG (see the following table) -- but because the population is heavily reliant onwood energy and modem energy altematives cannot be made extensively available, technically and economically,for some time. It is environmentally and economically worthwhile, as the viability of modem altemativesdevelops, to address physical scarcities of fuelwood, promote the sustainability of the fuelwood supply and avoidincreased substitution into the use of lower quality biomass fuels.

Table 1.1 Effective Cost of Household Fuels

Energy Content Financial Cost/EffectiveMJ/unit Appliance Financial Cost MJ (1991 Rs/MJ)

Fuel Unit Efficiency (%) (1991 Rs/unit)

Crop Residues 15 kg 12.0 0.70 0.39

Dung 12 kg 12.0 0.58 0.40

Fuelwood-urban 16 kg 12.0 1.01 0.53

Fuelwood-rural 16 kg 12.0 0.98 0.51

Kerosene 35 It 35.0 6.62 0.54

Natural Gas 1030 mcf 60.0 31.30 0.05

LPG 45.5 kg 60.0 5.70 0.21

Electricity 3.6 kwh 65.0 0.69 0.29

Source: HESS Household Consumption Survey as cited by Richard H. Hosier, "Forest Energy in Pakistan: The Evidence forSustainability, Pakistan Household Energy Strategy Study, Islamabad, Pakistan, July 1993, p.75. Note: data do not include amortisedappliance costs.

9. Interfuel Substitution and Farm Productivity. Although fuelwood use is not a major factor in thedegradation of forest cover in Punjab, an increasing relative scarcity of wood can lead to other environmentalconsequences. The real price of fuelwood in Pakistan has not increased over the last ten to fifteen years, partlydue to increasing incomes among some groups (fuelwood is an inferior good), but partly due to its substitutionwith other, lower quality biomass fuels. Especially among poorer households, other biomass fuels, such as cowdung and crop residues, are highly substitutable for fuelwood. The use of these biomass sources as fuels insteadof as manures will lead to a gradual deterioration in soil nutrients and in other physical characteristics of soil,unless elements are replaced with the application of chemical fertilizers. For poorer households, the cost of suchfertilizers may be prohibitive. At best, cash incomes would decline, adding further to the entrenchment of ruralpoverty. Although increases in the price of fuelwood have so far not been observed at regional levels, pocketsof fuelwood scarcity would add pressure local markets and would propel these developments.

10. Interfuel Substitution and Rural Health. Further interfuel substitution among the poor could haveother human health effects for the women and children who are exposed to a large number of pollutants from theground-level buming biomass fuels in poorly ventilated houses. As dung releases three times the amount ofsuspended particulates produced by the burning of fuelwood, it would be potentially much healthier and lesscostly, in terms of health care costs and lost household labor to bum more fuelwood than dung. As a matter ofhealth policy, it should be reasonable to prefer actions that lead to substitution towards fuelwood and other

- 33 -

Annex 1

modem fuels to those that maintain or increase dependence on low quality biomass fuels. It should be noted,however, that strong correlations between health and the indoor combustion of fuels have not been wellestablished, but even if they were, this in itself would not justify the subsidization of modem fuels. What isbeing suggested instead is that increases in the supply of wood that lower the cost of its collection or purchase incomparison to other biomass fuels are likely to be substantive steps in the direction of improved rural health.For further discussion on the household health aspects of burning various fuels refer to Hosier±'.

1/ R. H. Hosier, "Forest Energy in Pakistan: The Evidence for Sustainability." Prepared for theGovernment of Pakistan under the United Nations Development Program (PAK/88/036) by the Energy SectorManagement Assistance Program in association with the Energy Wing (Islamabad, Pakistan: PakistanHousehold Energy Strategy Study (HESS), July 1993), pp. 46-9.

- 34 -

PAKISTANPUINJAB FOREST SECTOR DEVELOPMENT PROJECT


Sunintary of Sectoral Constraints and Recommendations

Issue/Constrainis Recommesdation (Responsibility)

A The Incenitre Faumesolk (a) Remove seedling subsidies(PFD); (e) Provide improved rniens,os services (PFD, NGOs),I Priv ae Propetl) Resources Financial & non-finamcial resources inefTficieoily dirccied, limiled access to (b) Piornole privale nurseries (PFD, NGOs), (f) Reform transis lax sysrems (GOPunjab, GOP),ich ric.al infoirnaiivo, oia cling of goods encumbered, difficuli access Io qualily plariling riascrial of (c) Esisalic access lo iupioved pl-o rusic.i s (Pl ). (g) Rcsolc disinccfiics for ood-based ridsimries.choice, small popular base of wood production, lrmiid ourleis for th sale of indusiltat-grade wood (d) Reform private foresl acis, harvestinig, transpolt, niukeleiog regult,ois (Ih) Praio e lInks belsco faire fairr) producrs nd rdastris

that inhibit farm forestry (GOPujab), (PFD)........................................................................................................................................................... .........................................................................................................................................

2 Common Property ResourCe t Irdflerem or detrime,nal slate policy leading lo funther prvaiizuiion or (a) Enarl policies that further restrict loss of areas to open access (GOP, (d) Encourage sustanahle resersions of open access resources io CPRconsersion io open access resources, lack of technical opponunities, lack of adequate fiscal resources and GOPanjab, PFD), (GOPunjab, PFD, NGOs);-sirutronal focus to ca-) through comrmuay-bhsed developmeom nservemnos, esploriatrse behavior of (b) Pursue novestmrnts miih clear benefil sharing autangemrnts for (e) Develop and enhaince status of esrenesrn cadre (PFD).

local populations comnunilis (GOPunjab, PFD, NGOs), (f) Encourage NGO assistanse for involv ng user groups (PFD.(c) Fomulate interventions ihat place user groups at the center of resource NGOs),management (PFD, NGOs), (g) Modify reseuch work pluns to address CPR dcvelopmenl and

monagement improvements (PFD, PFI)................................................................................................................................................ ,..,,. ................................................................. ... . .... .. .. ... ... .... . .... .. ... .. .. . ... ... . ... .. .. .. .... . ... ..... .. ... .

3 Public Propert) Resources Unclear user nghts leading to open access or esploilative use/poaching by (a) Introduce joint management arrangements with user groups and (c) Take up joint management around protected areua a prioritylocal populations, inadequate fiscal tesoarceS for management clearly define duties mild bentefit sharitig (PFD), (PFD),

(d) Apply panicipatory approach to development nd resourcemanagement (PFG. NWOOs)

w a Imnpro,ing Productiv (a) Remove seedling subsidies(PFD); (d) Promote improved nursery praciJces for seedlings and clonesI Planting Materials. Lank of quality material (genetic amd physical weaknesses), inefficient distribution (b) Promote private nurseries (PFD), (PFD, PFI),of as aluable niatenals (c) titprov- seed collection and handling (PFD, PFI); (e) Establish data base for improving species and site matchtng

(PFD)..,.,,,................................................................. .. ..... .. . ... .... ... ... ... ... ... ... ... .. ... .. .. . .. . ... . .. .. . .. .. .. .. .. .. .. .... . .... .. .. ... .... .. . .. .. ... .. .... . .. . ... .. . .. ... . .... .. . ... ..... .. ... .

2 Silsieultsr.al Practices Inadequale manmenance, pruning and harvesting of commercial plantings ont (a) Sttengthen extension services so transfer technical nforneauon (b) develop dryland scrub forest and rangelands technical andprivate farms, mnappropnate product selection, Itck of models foi scrub forestVangeland rehabiltafion effecitvely and widely (PFD), nianagement modets (PFD, PFI)insolsing a CPR perspective ad community participation in management

................................................................................................................. ......................................... ............................................................. .................................... .. ... .. .... . ... .... . .. .. ... ... ... . .I .. .. ..............................

3 Research Inapproprinae voik plans, inadequate resourccs. cak links to extension (a) Address requirenres of fami forestry devclopmcnVtCPR munage-mnt (d) Identify sociological research needs given rechirical nd economicas priority research (PFD, PFI, universities), options. (PERI, PFD),(b) Improve qualifications of staff(PFD), (e) Develop n extension mechanism for tree farming in coordination(c) Involve field staff in topic selection nd evaluation of results (PFD), with existing services (PFD),

(f) Promote NGO, private nd contract reseuch (GOPunjab, PFD,NCOs, universilics).

C Deselopment Prionites (a) Dcvelop project monitoring md evaluation (bIE) capabilities (d) Establish a resources information senice to collect nd e aluateI Planning. Lack of data base, uncoordinated, ad hoc interentions, inefficient use of existing human (GOPutijab, PFD, NGOs), data that would guide she allocation of addifional resources to thetesources in the forest sector, absence of land use optimization (b) Incorporate project MIE outputs into planning (PFD), sector (PFD).

(c) Establish data base on pricing and maiketing of forcst raw materials. (e) Undertake human resources (HR) assessmemt for the sector andforest producis and non-timber forest products with special emphasis on define action plans for FIR development (PFD);the marketing of farm foresiry produce (PFD, NGOs, industries); (t) Transfom NCS/FSIMIP objectives into detailed, operational

prograins (GOPunjab, GOP, PFD, NGOs)......... I.................................................................................................................................................................................... ....................................... ............................................................... >

2 En iranmensal Sen ices: Ineffective bio-diversity protection, conflicts with land uses of local residents (o) Pursue joint. community/public managemetit of protected areas (PFD. (b) Issue clear benefit sharing aragements (GOPanjab, PFD. GOP) JMOP), Ilb

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~ ~ 1`~ (

PAKISTAN



ANNEX 2

THE PROJECT'S LINK TO THE BANK'S FOREST SECTOR POLICY

1. The project will be an instrument to attain the forest development and conservation goals outlinedin the World Bank's forest policy paper, dated june 1991. In particular, it will (a) encourage sustainableresource use and discourage deforestation; (b) expand forest resources; (c) develop models for the participation oflocal people in forest management; and (d) foster nature preservation. Under the project, most accessible forestresources would be brought under scientific and sustainable management to maximize their contribution to theeconomic, social and environmental goals of the province of Punjab. All forest management activities would becarried out according to forest management strategies, which would be continuously updated as new informationbecomes available through resource inventories, socio-economic surveys and environmental studies financedunder the project. Sustainability would be the main guiding criterion in allocating forest resources to varioususes. Institutional, technical and procedural systems, which are partly lacking or ineffective today, would beestablished to apply this criterion to all forestry decisions (Human Resources Development subcomponent).Resource expansion programs supported by the project would aim to rehabilitate degraded forest areas and lands(Rehabilitation of Scrub Forest and Rangelands component) and to introduce production in areas where mixedforestry/non-forestry land uses are feasible, complementary and desirable (Expansion of Farm Forestrycomponent). Such land management interventions would be designed to balance national and local needs. Inthis context, the project would support a pilot schemes for people's participation in forest development andmaintenance (Rehabilitation of Scrub Forests and Rangelands). Institutional arrangements to be introduced bythe project would help secure the preservation of nature and environment and enhance forestry planning andoperations by inserting social and environmental aspects into the decision-making process.

2. For the type of activities supported under the proposed project, the Bank's forestry policy requiresthat several prerequisites be met by the concerned government to justify Bank/IDA involvement. Theseconditions and the corresponding policies and activities supported by the proposed project are summarized below(the Bank's conditions are underlined):

(a) adoption of policies and an institutional framework to ensure conservation and sustainableuse of existing forests and to promote active participation of people an the private sector inthe long-term management of forests. The project has been designed in accordance with apolicy framework promoting planned utilization and regeneration of forest resources (theNational Conservation Strategy and Environmental Action Plan); optimizing resource useby balancing environmental, social and economic goals; developing systems and methodsto secure people's participation in planning, managing and utilizing forest resources; andstrengthening environmental management and nature conservation capabilities. A majoreffort would be made under the project to address the current institutional shortcomings ofthe Punjab Department of Forestry, GoPunjab's main agency for managing forestresources.

(b) adoption of a comprehensive and environmentally sound forestry conservation anddevelopment plan that contains a clear definition of the roles and rights of the government,the private sector and local dwellers. A key objective of the project would be to ensurethat all of PFD's forest operations are regulated by up-to-date and scientifically prepared

- 36

Annex 2

forest management plans. These plans would be prepared in line with sound economic,environmental and social goals. The government has established a framework for the long-term protection and development of forest resources in the preparation of a forest sectormaster plan. The project would assist in continuing the planning process to ensure that theMaster Plan can be updated and revised as and when required.

(c) establishinz the institutional capacity to implement and enforce the above commitments.With its environment and institutional development components and its provisions fortechnological improvements and training/education, the project would make a majorcontribution to improving the institutional capacity of the PFD to help ensure sustainableand socially-minded conservation-oriented forestry.

- 37 -

PAKISTAN



ANNEX 3

IMPLEMENTATION PLAN

l. The Project

A. Summary of Project Scope and Objectives

1. The purpose of the project is to improve the performance of the forestry sector in Punjab,entailing the natural, financial and human resources operating in the sector. The impact of this improvement willbe an abatement in the deterioration in both quantity and quality of the forest sector's sustainable contribution tothe welfare of rural and urban households in Punjab. Harvests of wood and other products for energy or forother direct consumption by households, or for the development of wood-based industries that generateemployment and value added will be one form of contribution. Another may also take the form of a consumersurplus realized in providing marketed wood energy less expensively. Other contributions would beenvironmental, affecting incomes, for example, by reducing potential losses in agricultural productivity owing tothe external effects of certain land uses; influencing health; providing amenities; yielding recreational value; orproviding other intangible natural conservation benefits.

2. Characterizing the scope of operations, the main concerns of the project's intervention in thesector are to:

(a) improve the incentive framework governing the use of resources;

(b) improve silvicultural productivity; and

(c) improve development planning and the setting of resource management priorities.

Improving the incentive framework will encompass the decision making regarding investments in and use ofprivate, common and public property resources. Improving silvicultural productivity will include improvingplanting materials, husbandry practices and the conduct of research. Improving development planning and thesetting of priorities will chiefly concern the collection and use of information on resources, and the provision ofenvironmental services.

3. The chief outcomes or goals of the project will include:

(a) conditions that would encourage a broadening of the productive base of wood (for use asan industrial raw material and as a fuel) supplied from farm land and timber plantations interms of both numbers of private farmers participating and quantities of wood produced perfarm or per plantation;

(b) demonstrations of scrub forests and rangeland rehabilitation and management that maintainthe availability of common benefits and forestall the deterioration of resources throughopen access and the exploitative behavior of local populations; and

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Annex 3

(c) strengthened local public and community institutions managing the sector in Punjab.

4. Specific project objectives within this scope will involve the following:

(a) regarding the improvement of the incentive framework in the area of:

Private Property Resources:

i) to obtain a more efficient allocation of financial and non-financial resources;

ii) to improve access to technical information for the majority of farmers;

iii) to improve access to quality planting material of choice;

iv) to broaden popular base of on-farm wood production;

v) to reduce the tax burden on marketing of wood and wood products; and

vi) to improve farmers' prospects for marketing wood to industries.

Common Property Resources:

i) to remove indifferent or detrimental government policy leading to furtherprivatization or conversion of resources to open access;

ii) to expand technical opportunities; and

iii) to reduce fiscal requirements for rehabilitating and managing communitygrazing areas that impact forested and potentially forestable land resources.

Public Property Resources:

i) to develop approaches for resolving user rights conflicts that presently leadto the conversion of resources to open access or poaching;

ii) to reduce the burden on Government for managing state forests andprotected areas; and

iii) to demonstrate environmentally and financially sustainable private/publiccollaboration in the management of public sector timber plantations.

(b) regarding the improvement of productivity with respect to:

Planting Materials:

i) to improve the genetic quality and vitality of planting material; and

ii) to improve efficiency in the distribution of planting materials.

Silvicultural Practices:

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Annex 3

i) to improve the maintenance, pruning and harvesting of commercial plantingson private farms;

ii) to improve farmers' decisions of the product-mix of materials to be madeavailable for market; and

iii) to expand the technical options available to scrub forest and rangelandmanagement.

Research:

i) to improve the formulation of work plans;

ii) to provide resources for financing research; and

iii) to improve links to extension.

(c) regarding the improvement of development planning in the area of:

Plannjing:

i) to improve the forest sector and biodiversity data base;

ii) to eliminate uncoordinated, ad hoc interventions of various governmentaldepartments and agencies;

iii) to improve the efficiency of the use of existing human resources in thesector; and

iv) to introduce a framework within the PFD for assessing resource managementalternatives with a view towards determining optimal land use.

Environmental Services:

i) to improve the effectiveness of bio-diversity protection;

ii) to reduce the damage of unofficial stakeholder claims in protected areas; and

iii) to increase public awareness in natural resource conservation through massmedia campaigns.

These objectives entail achieving the project outputs that are presented in the following table.

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PAKISTANPLINJAB FOREST SECTOR DEVELOPMIENT PROJECT


Table 1. Summary of Project Goals, Objectives and Implementation Outputs

GOALS/OBJECTIV'ES OUTPUTS

A Imp,rosement of the Incentive Framework (a) Seedling subsidies removed, (e) Improved exsension serViCes provided.I Pris ate Property Resources so oblain eficient allocation of financial & non-rinancial resources, so (b) Privase nurseries promoted, (f) Transis sax syssems reformed.smpiose access to technscal soforsiation, to reduce tax buhdens on mnaseting, so improve access to quality (c) Improved plant maseinats mose accessible, (g) issnks beltseet fasm forestry psoducess and industries promotedplanmmg matenial, to broaden popular base of wood production, so improve prospects for she marketing (d) Privase forest acts, harvesting, transpor.i markesing cegulations thatindUsFsial-grade wood ihhibit farm foresiry reformed;

....... ................................ .................................................................. ...................................................................................................... . ..... I ......................... .........................................

2 Common P-operl) Rnources (CPR) to remove indifferent or detrimental state policy leading lo further (a) Interventions that place user groups at ihe center of scsource (d) status of rangelond ecsension cadre enhanccd,prisaiiaiton or conversion to open access resources, so expand tecirscal opportunities, to FrdUce fiscal managetuen formulated, (e) NGO assistance for involving uscr glOups encouraged,requirements fot schabilitating and managing community grazing areas (b) Itivesimemn with clear benefit shanng arrangements for communities (f) Research work plans modified to address CPR developmem and

pursued. management improvcmenis(c) Susiainable reversioms of open access resources to CPR encouraged.... .., ,............................................................... ... ... .... .... . ..... . . ... ... ... .. . .... .... . .. .. ... .. .. .. ... . . ... .. .. ... ... .. ... .. . ... . .. .. ... . .. . ... ... . ...... .. ... ... .. .... . .... .. . ... .... .. .. ...

3 Public Propert) Resources so develop approaches fos tesolming uses rights conflicts, to reduce fiscal (a) Joint managemen arrangemenis with user groups and clearly define (c) Parlicipatory approach to deselopment and resourcc managementrequirements fos managing state forests and piotected ucas duties mid benefit sharing inlroduced, applied,

(b) Joint mangenseat around prolecled areas taken up as a priority (d) Rehabilitation and model of sustainable management ofplmtations

B Improving Produclivity (a) Seedling subsidies renoved, (d) Improved nursery praclices for seedlings and clones promoted.I Planting Materials. to improve genilsc quality and itality of matenal, to improve efficiency in the (b) Private nurseries promoted, (e) Dala base for improving species and site matching esihlisedistribution of mareri,,s and farmers access to them (e) Seed collection and handling improved.

2 Sils iaultural Practices to improve rairitenance, pruning and haresting uf commercial plantings on (a) Extension serviccs strengthened to transfer technical information (b) Dryland scrub foresi and rangelands technical and managementpfis ate farms, improve choices of product-mis on fauis, to expamd the technscal options aatlhble so scrub rffeciively and widely, models developedforest and rangeland management

3 Research to Improv the formulation of sork plans, so provide resources to researcC, to i-prove links to (a) Requiremems of fasirn forestry developmenrlPR masagement (d) Sociological research rceds given technical ad economic optionscsctnsion addressed as priority research, identified,

(b) Qualificatiotis of ialffliiqpioved, (c) Exlist ion mechanism for iree fanming dveloped in coordinationic) Filcd staffinvolved in Ioprc selclion arid evaluairon of resuhs wiih existing servies

I) N(iO, privale and cotitract rescarch promoltd (i)

C Deslopnmen Priorities (,) Projcci nioniioriig and evaluation (ME) capabilities developed, (d) resourccs information semice established to collect nd evaluateI Planning to develop the sector data base, so climinate uncoordinated, ad hoc mrcrvciliorts; to improsc (b) ProjeCt ME outputs incoiporaied into planning, data that would guide the allocation of additional resources to theefficiency of the use of existing human resources, to initoduce fiamnwork for assessitg optimal land use. (c) Data base established on pricing nd marketing of forest raw sector,

materials, foesi products aid noa-timlcr forest products with special (e) Human tesourtes (HR) ssessment for the sector undenaken andemnphasis on the marketing of fanm forestry ploduce, action plans defined for HR development,

(f NCS/FSMP objectises nuasfomed into detailed, operationalplOglms........................................................................................................................................................... .............................................................. ....................... .................................................

2 Environmental Senicer so improve the effectiveness of bio-dihecsily proteclion, to reduce the daiolage (a) Joins, community/public maniagemens of protected aeas pursued, (c) Management plns Io promote the conseration role of plantationsof unofficial stakeholders claims in plotected areas ! (b) Clear benefit sharing urrangemens Issued,

1' Pending results of rapid assessment study of public sector timber plantations.

Annex 3

B. Financing Plan

5. The project's detailed cost tables (see Annex 5) list the resources that are needed to achieve theoutputs outlined in the previous table and that require financing. Details of project financing are presented inTable 3.7. IDA/Bank Group financing will amount to approximately US$24.87 million. The government's sharewill total about US$8.88 million.

6. GOPunjab will provide their share of project finances to the implementing agencies out of annualbudget appropriations. Funds for provincial expenditures will flow from the Ministry of Finance directly to theprovince as development funds.

7. The following tables show the financing of project costs broken down into disbursement andexpenditure accounts. The disbursement accounts classify costs according to the types of expenditure againstwhich the Bank credit will be disbursed. The expenditure accounts aggregate costs into the various classes ofinvestment and recurrent expenditures.

Table 2 Financing of Project Costs (US$ million)

Component Government IDA Total

Institutional Support 0.48 1.87 2.35

Farm Forestry 7.29 16.65 23.94

Scrub/Rangelands 0.69 3.43 4.12

Plantations 0.42 2.92 3.34

Total 8.88 24.87 33.75

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PakistanPunjab Forest Sector Development Project

Staff Appraisal ReportTable 3: Expenditure Accounts by Financiers

(US$ 000) LocalThe Government IDA Total (Excl. Duties &

Amount % Amount % Amount % For. Exch. Taxes) Taxes

1. Investment CostsA. Civil Works 565.1 20.0 2,260.5 80.0 2,825.7 8.4 269.4 2,480.5 75.8B. Field Works 91.8 10.3 800.4 89.7 892.2 2.6 - 892.2 -C. Afforestation 99.9 10.1 886.6 89.9 986.6 2.9 - 986.6 -D. Vehicles 2,308.7 56.1 1,804.6 43.9 4,113.4 12.2 1,670.8 133.8 2,308.7E. Machinery & Equipment

Farm 52.0 29.0 127.6 71.0 179.7 0.5 120.1 7.5 52.0Transport 774.4 53.3 678.0 46.7 1,452.5 4.3 644.3 33.7 774.4ElectronicrTechnical 87.9 16.3 453.0 83.7 540.9 1.6 417.6 35.3 87.9Other Materials/Tools 2.3 8.5 24.9 91.5 27.2 0.1 - 24.9 2.3

Subtotal Machinery & Equipment 916 7 107 1 1,283.5 292.9 2,200.2 6.5 1,182.0 101.4 916.7F. Office Fumiture 12 8 11.6 97.5 88.4 110.4 0.3 10.6 88.8 11.0G. Studies - - 1,391.8 100.0 1,391.8 4.1 1,281.7 110.1 -H. Consultant Services

Foreign Technical Assistance 19 6 1.0 1,936.8 99.0 1,956.4 5.8 1,615.6 340.8 -Local Services 12.2 2.5 475.2 97.5 487.4 1.4 - 475.2 12.2

Subtotal Consultant Services 31.7 3 5 2,412.0 196.5 2,443.8 7.2 1,615.6 816.0 12.2I. Training

Foreign - - 1,790.4 100.0 1,790.4 5.3 1,790.4 - -Local 20 8 0.5 3,955.1 99.5 3,975.9 11.8 80.6 3,874.5 20.8

Subtotal Training 20.8 0.5 5,745.5 199.5 5,766.2 17.1 1,870.9 3,874.5 20 8J. Marketing Services 381 9 20.0 1,527.6 80.0 1,909.5 5 7 1,510.8 398.7 -

Total Investment Costs 4,4296 19.6 18,210.1 80.4 22,6396 67.1 9,411.8 9,8826 3,3452II. Recurrent Costs

A. Incremental Staff 1,918.0 39.6 2,919.4 60.4 4,837.4 14.3 - 4,837.4 - 3B. Field Works/Afforestation 67.3 23.7 216.6 76.3 283.9 0.8 - 283.9 - vX :C. Civil Works O&M 442.7 40.8 641.1 59.2 1,083.8 3.2 52.7 922.7 108.4 F- XD. Materials/Equipment and Tools O&M 811.3 41.8 1,130.9 58.2 1,942.2 5.8 548.3 1,190.0 203.8E. Vehicle O&M 1,210.4 40.9 1,750.8 59.1 2,961.2 8.8 1,448 7 1,222.8 289.7

Total Recurrent Costs 4,449.7 40.1 6,658.8 59 9 11,108.5 32.9 2,049.7 8,456.9 602 0Total Disbursement 8,879.2 26.3 24,868.9 73.7 33,748.1 100.0 11,461.5 18,339.4 3,947.2


Staff Appraisal ReportTable 4: Disbursement Accounts by Financiers

(USS'000) LocalThe Government IDA Total (Excl. Duties &

Amount % Amount % Amount % For. Exch. Taxes) Taxes

1. Civil Works 565.1 20.0 2,260.5 80.0 2,825.7 8.4 269.4 2,480.5 75.82. Afforestation 99.9 10.1 886.6 89.9 986.6 2.9 - 986.6 -3. Field Works 91.8 10.3 800.4 89.7 892.2 2.6 - 892.2 -4. Vehicles 2,308.7 56.1 1,804.6 43.9 4,113.4 12.2 1,670.8 133.8 2,308.75. Materials/Equipment and Tools 916.7 41.7 1,283.5 58.3 2,200.2 6.5 1,182.0 101.4 916.76. Office Furniture 12.8 11.6 97.5 88.4 110.4 0.3 10.6 88.8 11.07. Publications - - - - - - - - -8. TechnicalAssistance & Studies 31.7 0.8 3,803.8 99.2 3,835.6 11.4 2,897.3 926.1 12.29. Training & Mass Awareness 20.8 0.4 5,745.5 99.6 5,766.2 17.1 1,870.9 3,874.5 20.810. Incremental Staff Salaries, Allowances& Operating Costs 4,449.7 40.1 6,658.8 59.9 11,108.5 32.9 2,049.7 8,456.9 602.0

11. Marketing Services 381.9 20.0 1,527.6 80.0 1,909.5 5.7 1,510.8 398.7 -

Total 8,879.2 26.3 24,868.9 73.7 33,748.1 100.0 11,461.5 18,339.4 3,947.2

iII

Annex 3

C. Financial and Economic Analysis

Summary

8. Project benefits include increased rural production, productivity and environmental quality,improved public sector efficiency in the forest sector and development opportunities for local participation,employment and income. The investments in farm forestry research, tree improvement and extension areexpected to increase the quantity and quality of forest raw materials. The project is expected to have somedampening effect on environmental degradation in scrub forests, rangelands and other forest areas through therehabilitation of wasteland and pasture development. Not all of these expected benefits are readily quantifiable.The economic analysis did not cover the studies and mass awareness campaigns for environmental education, andthe pilot environmental plantations component.

9. Such environmental benefits would include, for example, recreation, watershed protection, floodcontrol, the productivity of rangelands and the substitution of wood for inferior biomass fuels. Although benefitsunder each of these categories may be realized, a broad consideration of the array of production, consumptionand environmental impacts would much complicate the analysis. In any case, adequate data to undertake suchanalysis are not available and only proxy measures of such impacts might be made.

I0. The project is expected to increase the establishment of trees on farms by an average of about 5million trees a year over the ten years following the start of the project, as compared to a the number of treesthat would be planted in a future without the project. With improvements in per tree productivity under theproject, this increased rate of planting is expected to lead eventually to an increase in the supply of wood fromfarms by about 8 million tons a year. Part of this supply would be available for wood-based industries, partwould satisfy household energy demands.

11. Regarding supplies to industry, the project is expected to lead to a sustainable incremental supplyof approximately 2 million tons of raw material over the course of twenty years. New processing capacity willprobably be needed to absorb all of this increased output. The anticipation of supplying raw material marketswould in fact be the primary motivation behind farmers' participation in tree planting. Although farmers wouldbe planting chiefly for these commercial reasons, their activity would also produce substantial quantities offuelwood as a by-product.

12. The increase in the supply of fuelwood will favor the realization of a consumer surplus anddiscourage the increased substitution of inferior biomass fuels, such as dung cakes, for wood. This inter-fuelsubstitution is expected to become increasingly prevalent in the future without the project, especially among poorrural and urban populations, as fuelwood becomes relatively scarcer. One of the environmental consequences ofthis process if left unaddressed is a gradual deterioration of the productivity of farm lands as dung is divertedfrom its use as a manure and soil conditioner. The loss of farm productivity in turn has clear implications forthe sustainability of rural incomes among the least advantaged. The contribution of the value of this substitutionto the overall net benefits of the farm forestry component, however, is expected to be relatively small.

13. Under the scrub forests and rangelands component, the project will finance physical investmentsimproving approximately 13,100 ha of pastures and 8,300 ha of scrub forests. Additionally, the project wouldalso extend improved grazing management over 18,200 ha of untreated pastures. The total pasture area projectedto benefit should amount to approximately 3 1,300 ha. Including the improved areas of scrub forests, the totaltargeted area for improved land management under this component would be about 39,600 ha. The projectwould also would assist the private production of fodder on some 400-500 ha with the introduction of geneticallyimproved planting materials. These improvements are expected to benefit about 23,700, mainly poor, rural

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Annex 3

households that are dependent upon common property resources and animal husbandry by increasing their netincome by about US$118 per household.

14. Financial and Economic Analysis. The table below summarizes the average, expected financialand economic rates of return for the field operations of the project. Details of individual derivations areprovided in the following sections and in the appendix of tables accompanying Annex 6. The overall financialand economic rates of return of the project are expected to range from 12 to 18 percent.

Table 5. Base Financial and Economic Internal Rates of Return fbr ProjectComponents (%)

Financial Economic

Farm Forestry 1 1-14 14-19

Scrub Forests and Rangelands 16 12

Pothwar 17 15

Thal 15 1 1

Total Project 12-15 14-18

The farm forestry net benefits do not include an assessment of the environmental impact of producing more treeson farms, which would likely increase overall returns to the project. Similarly, the results here are likely tounderstate the returns to the social scrub and range component for not accounting for environmental benefitsaccompanying the anticipated changes in the land use. They nevertheless are sufficient to justify the inclusion inthe project of the pilot activity in range management.

15. Overall, the results appear satisfactory and are not critically sensitive to variations in any one costor benefit stream. As described below, these results derive from conservative assessments of quantifiable impactson rural and urban incomes. Moreover, the impacts considered were generally those that would be most directlyperceived. There are likely numerous secondary environmental net benefits that could also contribute to thejustification of several components, but for lack of data are not developed here. The general approach to theanalyses was to examine whether proposed investments could stand primarily on the basis of effects most directlyrelating to the production and consumption of commodities. Such effects would also be the ones most likely tobe understood and appreciated by personnel screening the project within the GOPunjab and the World BankGroup.

Prices Used in the Financial and Economic Analyses

16. The commodity prices used in the financial and economic analyses are listed in Tables I and 2 ofAppendix I to Annex 6. Project financial costs were expressed at projected end-1994 value, and include dutiesand taxes. The economic cost estimates exclude these elements. Base costs reflect the expenditures ofcomparable provincial government agency operations, including reforestation, soil erosion control, forestryextension, staff training, construction contracts and vehicle and equipment purchases. Consultant service costsare based on recent contracts for similar services in Pakistan. The cost estimates in the analyses includeallowances for physical contingencies.

17. The economic analyses use border prices for major tradeable commodities derived from WorldBank projections of cif or fob values adjusted for local handling and transportation costs to the farm gate. Thederivation of border prices for major agricultural commodities was based partially on data presented in "Pakistan:Irrigation and Drainage Sector Strategy Review" and adjusted for current prices. The commodity price

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Annex 3

projections used were those provided in the World Bank's "Revision of Primary Commodity Price Forecasts andQuarterly Review of Commodity Markets -- March 1993." In general, the crop and activities budgets of theanalysis use the average of prices expected to prevail over the period between 1993 and 2005 (see Annex 6,Appendix 1, Table 3).

18. The border prices for non-tradeable commodities that constitute minor project costs were estimatedfrom current local prices using a Standard Conversion Factor (SCF) of 0.9. The analysis also applied the SCF toto minor costs of tradeable commodities.

19. The economic price for fuelwood was derived partly on the basis of its equivalent kerosenecontent and on an estimate of the medium- to long-term agronomic effects of diverting on-farm use of manure asa substitute for wood as a fuel for cooking. An indicative price for industrial grade wood was based on theimport parity value of manufacturing short-fiber pulp using estimates of local costs of conversion.

20. The financial wage for casual labor was priced at Rs 63/day, which was considered to be areasonable estimate of marginal value product. The economic wage was then derived using the SCF.

21. Unit costs and values are expressed in terms of constant end-1994 prices. The appearance of aprice or unit cost for a commodity or service that remains unchanged through the time horizon of the analysisimplies that the current price of the commodity or service (also called the nominal price) is adjusting from periodto period according to the given rate of inflation in the economy. Equivalently, for each period the cost of thecommodity is not more expensive relative to the prices of most other goods during that period. As long asincomes also adjust according to the inflation rate, quantities of goods can be purchased more or less in the samequantities as in the first period, and the same decisions can be made as before if all prices and incomes increaseby the same amount. For many commodities in the analysis there are no particular reasons to assume thatnominal prices would change by more or less than the general rate of inflation and so no real change, relative to1994 prices and incomes is expected. In some instances, however, movements in the real prices of certaincommodities are assumed to avoid an implication that prices become much more distorted over time. Recentgovernment decisions permitting the further deregulation of the pricing of agricultural inputs and the generalloosening of restrictions binding economic activity and trade, if not reversed, should in the future increase thelikelihood of closer correlations than realized now between the border and domestic prices for several tradeablecommodities. As a guarded view, the working assumption of the analysis is that the basic deregulation to datewill not be reversed, and although pricing is not expected to become more distorted, it is not expected to becomemuch less so.

Farm ForestryIntroduction

22. Discussions of the state of Pakistan's forest sector frequently begin with the observation thatforests (of all conditions) now cover only a small proportion of the land area and that these remaining resourcesface imminent catastrophic depletion. The ensuing argument made on this observation alone is that tree covershould be extended on a massive scale to meet existing wood shortages and expanding, population-driven, futuredemands.

23. Historically, however, the forest resources in the areas now constituting Pakistan, may never havebeen very extensive, and the attention to the developing scarcity that gained some prominence under Britishcolonial administration is likely to have derived more from the specialized needs of the introduced railroads thanfrom a comprehensive assessment of the evolving wood balance. Although the administration and the original

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Annex 3

technical demands have passed, the forest policies and the approach of national forest sector planning from thisera have carried considerable momentum.

24. As in other instances where market and non-market signals have induced changes in behavior,households have formed expectations about and adapted to changes in the availability of wood from traditionalsources. This much has been demonstrated by recent experience in Punjab. The massive planting of trees onfarm land over the past nearly ten years has now made farm forestry the largest source of household woodsupplies in Punjab.

25. The essentially financial motivation behind the expansion of farm forestry is attested by theHousehold Energy Strategy Study (HESS) survey that concludes that farmers have planted trees mainly for theproduction of timber for sale. The production of fuelwood, however, is a primary by-product of this activity,and so long as farmers perceive financial incentives in the production of timber, the production of fuelwoodbenefits as well. This may appear to be a rather trivial factual statement, but it does express an alternative to thestrategy presently favored by the Punjab Forest Department (PFD) for increasing wood supplies from privatelands.

26. The PFD prefer a supply-side approach to eliminating a broadening excess demand "gap" forfuelwood that would consequently provide a stimulus for further investment in wood-based industries.Specifically, the proposal is an expansion of an on-going USAID-financed scheme that encourages on-farrninvestments in tree planting by selling seedlings to farmers at subsidized prices. The approach seems to embodyan assumption that. however justified in the context of national planning, linear plantings, or the substitution ofcrops for the establishment of block plantations, would appear attractive now only with a reduction in the currentcost of investment. Later on farmers would become convinced of the decision expedited by the 'psychological'bribe. (At full cost, however, the returns to investments in trees are currently very attractive -- provided thatfarmers do not face cash flow constraints.

27. One difficulty with this approach is that it could lead to inappropriate land use decisions. Forexample, without the seedling subsidy, it would not be financially profitable to replace barani crops with a blockplantation of eucalyptus, except on land of very low productivity. Economically, this is also the case. Thesubsidy, however, depending upon the level of expenditure, is likely to render some uneconomic land usesfinancially acceptable.

28. Another concern is that, unless some plans are made in advance, the marketing of wood producedfrom further massive plantings on farm land may face the kind of problems that followed India's farm forestrycampaigns. In India, partly due to uninformed silvicultural practices. large quantities of wood came onto themarket in the mid- to late 1980s which could not be sold as timber, although this had been the intention offanners who had planted trees in the early 1980s in response to rapidly rising wood prices during the 1960s and1970s. Because of difficulties in accessing other wood-based markets, the disposal of the wood was limitedmainly to the construction pole market, which subsequently crashed. Fuelwood markets, equally depressed, alsooffered little relief. Farmers who had expected to receive a minimum income per tree when deciding to plantfound that they would be fortunate after 1986 to earn ten times less than what they had expected. Many farmersconsequently began to harvest prematurely and uproot trees to return areas to crops. Although conditions whichmay have exacerbated market operations in India may be absent in Pakistan, the potential for large oscillations inPakistani wood markets, with undesirable financial, economic, environmental and social costs, neverthelessappears credible.

29. The financial consequences of large wood market oscillations include impacts on incomes forconsumers and producers, which will in turn have an effect upon the transition between low-quality biomassfuels and fuelwood on one hand, and between fuelwood and other fuels and sources of energy on the other. The

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Annex 3

focus of the project may not be the supply of (wood) energy, yet forest sector development and energy policyobjectives (and implications) are likely to coincide in many instances. This is such a point. Income is a majordeterminant of decisions to switch from fuelwood to modem fuels, as well as from dung and crop residues tofuelwood. The development of wood production and marketing in a way that increases rural income andbroadens its distribution should also encourage the transition to relatively efficient and clean sources of energy.Similarly, consumers could benefit from an increase in their purchasing power if, as a result of forest sectordevelopment, the supply of fuelwood becomes relatively less scarce, allowing more dung to be used as a soilconditioner than would have been used otherwise.

30. If large quantities of wood are brought to market and not easily disposed, however, triggering acrash in prices, consumers may benefit for a while from very low fuelwood prices, but are then likely to face aperiod of accelerating real price increases to levels above those that prevailed before the crash as formerproducers switch to other activities. Once out, all but the largest producers are likely to stay out until prices risehigh enough to justify the risk of re-entering the market. Consequently as prices increase in real terms, moreconsumers -- especially among low income groups- -- would switch from purchasing wood to collecting it andincrease their use of lower quality and less efficient biomass fuels than would have otherwise done had pricesremained relatively stable at initial levels or at levels that were low but still financially attractive to producers.An opportunity would therefore be lost to direct consumption towards using a renewable supply of energy andfrom accelerating the depletion of another. A similar lost opportunity arises from foregone wood producerincome and its multiplier effects.

3 1. The swings in interfuel substitution induced by large market oscillations in turn occasionenvironmental, economic and social repercussions. The economic and environmental consequences are furtherdiscussed below. Of the social impacts, what is primarily in mind is the health hazards, particularly for women,associated with indoor air pollution from household cooking. As dung releases three times the amount ofsuspended particulates produced by the burning of fuelwood, it would be potentially much healthier and lesscostly, in terms of health care costs and lost household labor to burn more fuelwood than dung. As a matter ofhealth policy, actions that lead to substitution towards fuelwood and other modem fuels should be preferred tothose that maintain or increase dependence on low quality biomass fuels. For further discussion on thehousehold health aspects of burning various fuels refer to Hosier".

32. Clearly, lessening the relative scarcity of wood in Punjab is desirable, but since the supplies ofwood channelled through the markets are critical, the consequences of wood supply strategies on the operation ofwood markets should be a prominent concern. Whether the present policy of seedling subsidization has alreadyencouraged in Punjab a market-destabilizing overplanting of a few species is debatable, but it is revealing thatthis question has now drawn so much attention. Assuming that the current policy will not destabilize markets,whatever benefits the policy may produce must still be weighed against efficiency criteria such as those impliedby the alternative land use issue described above and against fiscal implications. Given the government's limitedresources, the subsidies also divert funds from other uses. This consideration is all the more relevant when thegovernment borrow for the financing of much of its development budget. Moreover, the subsidies are not likelyto lead to a sustainable effect on producer behavior unless they are maintained.

2/ Low income households include those with annual expenditures of less than Rs 18,000, at 1991value. Medium income households are defined to have expenditures ranging from Rs 18,000 to Rs46,0000.

3/ R. H. Hosier, "Forest Energy in Pakistan: The Evidence for Sustainability." Prepared for theGovernment of Pakistan under the United Nations Development Program (PAK/88/036) by the Energy SectorManagement Assistance Program in association with the Energy Wing (Islamabad, Pakistan: PakistanHousehold Energy Strategy Study (HESS), July 1993), pp. 46-9.

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Annex 3

33. Instead of pushing through an expansion of wood supply through a subsidization scheme onecould consider a strategy of drawing out a measured supply response through stimulating and/or facilitating ademand-led expansion of wood industries and markets. Such a strategy would have two advantages. The firstrelates to the source of incentives for farmers' participation: conditions would be set in place that motivatefarmers to invest in plantings on the basis of forward sales of raw material and of comparisons to marketopportunity costs, rather than on the basis of subsidized capital costs. The second relates to the scale of effort:plantings for wood industries should be on a scale large enough so that fuelwood, as a by-product, is producedon a scale sufficient to generate a consumer surplus. Ideally this strategy would avoid a 'boom/bust' fluctuationof supply. i.e., avoid large over- and undersupply or, perhaps more practicably, to have fluctuations occur withinrelatively narrow bands around a medium- to long-term clearing price. Meanwhile, welfare is improved via theimpact of long-term price trends on rural and urban consumer behavior.

34. Industrial demand for wood, however, may not be strong in the absence of good prospects ofadequate supplies at attractive prices. To some extent a prior demonstration of increased planting may need tooccur to stimulate a demand-led expansion of wood industries and markets. If farmers are reacting to prospectsof tuture profits from wood plantings, yet sales prices in the longer run need to be lower to be consistent with ademand-led expansion of farm-produced wood, then farmers' per unit costs of production will have to fall tomainitain present levels of profit at lower sales prices. The seedling subsidization has this effect, but veryweakly. A much better approach, for its long-term fiscal implications alone, would be to lower the per unit costof production through improving the productivity of farms. The present analysis demonstrates this in modellingthe project's impact of an increase in farm productivity of 25 percent through extension efforts while phasing outthe current policy of subsidizing seedlings for farmers.

Approach

3*5. The project is "large" in the sense that the project is likely to affect both the quantity and price ofwood in Punjab. The impact of price changes are only partially accounted for. Price adjustments to reduceexcess demands in the cash fuelwood market would, for example, lead to some interfuel substitution and affectdecisions to collect versus to buy fuelwood. If the project leads to a long-term reduction in fuelwood prices, it ispossible that a switch from collecting to purchasing more fuelwood would benefit the environment and in turnbenefit rural welfare in general. While the impacts of interfuel substitution have not been estimated, the analysisuses price adjustments to calculate benefits in the form of the period-by-period consumer surplus that may berealized under the project.

36. The approach of the analysis is to model explicitly, over time, the investment responses of woodproducers to changes in the investment costs of establishing plantings, to improvements in the sustainableproductivity of their stands, and to adjustments in the market price of wood. This involves developing afi-amework that can account for past observations of wood demand, the development of farm forestry and themovement of prices, given some reasonably known technical parameters.

37. The chief outputs of the analysis are projected time series of the aggregated marketed output offuelwood and tinber and their composite price. The prices emerging from the analysis are in general notequilibrium or clearing prices: wood markets are diffuse and consumers have a range of alternatives topurchasing wood. At the same time, producers are not obligated to lower prices to clear their output: populationgrowth will continue to exert an upward pressure on prices while producers can postpone harvesting as long asthis is financially advantageous. The analysis also recognizes that producers, because of the growth period offorest rotations, are not in a position to increase production much beyond a certain point in the short term. Theresult is that consumers in the aggregate are generally always in a position of wanting to purchase more wood atthe current price, but are constrained from doing so because of the limitations of supply. Period by period

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Annex 3

adjustments in the price of wood can be expected, but not enough to eliminate excess demand. Excess demands,of course, would be shifting continually period by period, moving the "goal posts" of adjustment each time.

38. Using these time series of outputs and prices with and without the project, the analysis estimates aconsumer surplus as the main quantifiable benefit over the next twenty years. There likely are environmentalbenefits, but because of the difficulty of isolating identifiable and measurable environmental impacts, they havenot been explicitly included. The analysis however, indirectly accounts for some environmental impacts inadjusting the consumer surplus by the economic conversion factor fuelwood.

39. The base rate of return calculation accounts for the project costs of extension and research,converted to economic values, and for the incremental costs of establishing plantings. The costs for establishingplantings includes investments for replacing growing stock that has come to the end of its useful economic life.

Results

40. The simulation implies that without the project, farmers will be planting out between 40 to 50million seedlings a year over the first six years. With the project, planting is higher as farmers respond more toincreases in the productivity of their investments than to the subsidization of seedlings. The wood price does notchange sharply, but in the with project situation is also lower period by period as compared to without theproject. This could be explained by noting that the increases in productivity of the growing stock lowers the costof investment for the farmer per unit of output, and so stimulates more investment. Larger supplies of wooddecrease excess demand and lead to a decrease in the wood price. In comparison, the seedling subsidy has aweaker effect in encouraging investment. In general, the behavior of the system appears consistent withobservations and with short-term expectations of the forest department regarding the take up of seedlings byfarmers.

41. These results system fairly well reflect the stylized facts of recent farm forestry plantings andprice movements. The analysis does not claim to present a comprehensive set of causal relationships that explaininvestment behavior, but it does demonstrate a logical mechanism that mirrors the rationale of the componentand offers sufficient, monitorable conditions for affirming a decision to accept the project.

42. Base Rate of Return. The base financial rate of return to the farm forestry development isestimated at about II percent. When the value of the resources saved by the government through the removal ofthe seedling subsidies are included in the net benefit stream as incremental resources available to the governmentfor development, the rate of return increases to about 14 percent. The base economic internal rate of return,excluding the value of additional resources released to the government in phasing out the seedling subsides overthe project period is estimated at 14.5 percent. Including the value of additional resources to the government, therate of return is estimated at about 19 percent.

Social Range and Scrub ForestsApproach

43. This pilot component aims to improve the efficiency of traditional grazing systems in promoting aworking partnership of local pastoral organizations and government institutions for the regulation of the use oflands suitable for grazing. Broadly, this partnership would work toward strengthening a sustainable pastoraleconomy, and will be the framework within which land improvement investments would be undertaken and otherexistent services and resources mobilized. Among the expected outcomes of this partnership are land useagreements, or contracts that lead to an overall reduction of grazing pressure on pasture and scrub forest areas,while increasing overall forage availability and access. The actions producing these outcomes will include

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Annex 3

rehabilitating or improving high potential pasture areas through soil and vegetative conservation works, reseedingand ponding and/or other water harvesting techniques. Areas of scrub forests will be replanted with fodder-producing species of trees. Treatments will vary from area to area according to the conclusions of themicroplanning exercise and the constraints of agroclimatic and geophysical characteristics. Feed supplementationfrom farm production, where possible and economic, will be promoted. The project will also concentrate onanimal health. Above all, the project will work, in assessing the potentials of all grazing lands and pastureswithin the catchment areas of communities, including public and private lands, to adapt stocking and marketingstrategies in ways that enhance forage utilization in consideration of animal performance. This might involve,among other measures, the introduction of rotational grazing arrangements on public land and greater access tomarketing information to guide the acquisition and disposal of stock.

44. Apart from its environmental aspects, the component will also contribute toward povertyalleviation. Its activities will involve and affect the poorer segments of the rural population. Operating in thePothwar Plateau and Thal areas, the project should add to the cash incomes of households who generally holdlittle productive, arable land.

45. There is also a likelihood that a significant fraction of rural women will benefit through theproject since women are in fact engaged in much of the herding. Although this work by women is generally notopenly admitted, it exists and is tolerated because of the necessity for male members of households to seekemployment outside the community.

46. To measure the project's potential impact on incomes, the analysis considers a generalization ofthe current conditions facing poorer villages in the project areas, based on the results of the socio-economicsurveys conducted by the preparation mission. These have led to estimates of the average size of the shamiatarea of these villages, its current productivity and exploitation, the average size of the village, expressed in sheepunits (SUs) (most of the animals to be affected would be small stock), and the capacity and level of use of othersources of fodder. The labor time required for keeping livestock has been estimated, along with the averagevalue of income per sheep unit realized from the sales of culls, wool and household consumption of meat. In thewithout project situation, the productive value of animals gradually decreases over time to reflect deterioratingconditions of forage supply and quality as well as the longer distances over which animals would eventually begrazed.

Results

47. The analysis estimated project financial internal rates of return (IRRs) for the developmentsinvolving 68 communities in Pothwar and 32 communities in Thal. To the two areas the analysis apportionedthe project costs for community extension, including the purchase and operation of heavy equipment, vehicles,the construction of staff offices and housing, equipment and tools, portion of component technical assistance andtraining, incremental staff salaries and other overhead expenses. Residual values for heavy equipment, vehiclesand office equipment partially offset incremental project costs at the end of the project's implementation period.For the Pothwar development the financial internal rate of return was estimated at approximately 17 percent. ForThal, the IRR was estimated at 15 percent. The rate of return of the component as a whole is estimated at 16percent (the calculation is displayed in Annex 6, Appendix 1, Table 7). This result is not very sensitive to smallvariations in the benefit or cost streams.

48. For the economic analysis livestock revenue was converted into its economic value using aconversion factor of 0.60, which was derived from a calculation of the average import parity value of muttonproduced in barani areas in central Punjab. Using economic values for inputs, outputs and project costs, theeconomic internal rate of return (ERR) for Pothwar was estimated at 15 percent and for Thal at 11 percent. The

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Annex 3

rate of return for the component in aggregate amounts to about 12 percent. See Appendix 1, Tables 4 and 6 forthe calculations of the economic budgets of grazing and husbandry development in Pothwar and Thal. Annex 6,Appendix 1, Table 7 presents the calculation of the analysis.

Overall Project Results

Base Rates of Return

49. Overall project rates of return were estimated on the basis of the net benefit streams of the farmforestry and social range and scrub forest components, and the costs of institutional support under the project,which include Human Resource Development, incremental administrative operating expenditures and theestablishment and operation of M&E facilities. The base financial rate of return (IRR) of the project wasestimated at 12-15 percent. The base economic rate of return (ERR) was calculated to range from 14 to 18percent.

Sensitivity Analysis

50. Variations in the benefits or costs of the range development or in the project costs associated withthis component have little impact on overall project performance: the scale of this pilot effort is too smallrelative to farn forestry to have much bearing on the ERR. Farm forestry benefits are the main determinant ofthe project's rate of return. Keeping all costs at their base levels, a decrease in the incremental benefit streamfrom farm forestry of 40 percent would lower the ERR to the average opportunity cost of capital assessed forPakistan: 10 percent. Further decreases in the benefit stream without compensatory decreases in costs wouldproduce a negative overall net present value (NPV) for the project when discounting at 10 percent. At the baselevel of incremental benefits, project costs associated with project activities plus institutional support costs, butexcluding the investment costs and incremental operating costs of the activities themselves, would have toincrease uniformly by about 90 percent to switch the sign of the project's NPV. Separately, institutional supportcosts have a switching value of about 1900 percent: their contribution to overall project costs is small. Incontrast, the sign of the NPV switches with a uniform 95 percent increase in project costs associated with farmforestry. It would take an increase in all costs, including all investment and incremental operating costs ofactivities, of about 65 percent to switch the sign of the NPV if incremental benefits are at their estimatedbaseline values. Combinations of variations in costs and benefits show that the performance of the project woulddepend more upon changes in benefits than in costs (see chart I in Appendix I to Annex 6). Still, the projectdoes not appear to be exceptionally sensitive to changes in benefits. For example, a uniform decrease in theincremental benefit stream of 20 percent would not switch the NPV as long as all costs do not increase at thesame time by as much as 30 percent.

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Annex 3

11. Implementation Arrangements

A. Overall Responsibility

51. While GOP have overall liability for the IDA credit agreed to with the Bank, GOPunjab willexecute the project. GOP will make the proceeds of the IDA credit available to GOPunjab as the primary part ofits assistance to the implementation of the project. GOPunjab shall carry out the project and shall provide, orcause to be provided, as needed, the funds, facilities, services and other resources required for the project.

B. Implementing Agency

52. The Punjab Forest Department will be the main implementing agency for the project on behalf ofGOPunjab with the Secretary serving as overall manager. The Department will liaise with the IDA and preparehalf-yearly progress reports on all aspects of the implementation of these components.

53. One Chief Conservator of Forests/Project Director (CCF/PD; new position) will head theorganization. There will be four CFs under him -- three for extension (farm forestry) at Rawalpindi (new),Lahore (existing), and Multan (new), and one for Range Management (existing). In Farm Forestry, each CivilDivision (8) will have a DFO (Extension) and each District (34) an SDFO and 19 Forest Rangers (FRs) will belocated at Tehsils (about one for two tehsils). The lowest tier will comprise extension workers (Foresters/SeniorForest Guards) at Markaz level (354). Only incremental staff, including support staff will be provided. Thefarm forestry incremental staff positions, except some nucleus technical staff, will be discontinued at thecompletion of the project.

54. For overall project implementation, an Administration Unit consisting of one Procurement Officer,one Accounts Officer and support staff will be established in the office of the CCF/PD. It will assist the CCF inmaking procurement of goods and equipment, account keeping, audits, preparing half-yearly reports andprocessing disbursement applications. Monitoring and evaluation for the project will be carried out by theexisting CF(M&E) who reports directly to the Secretary of Forestry. The addition of two DFOs (one each forfarm forestry and range), two SDFO/ROs, one Economist, two Statisticians and II technical and support staffwill strengthen the M&E unit. The primary role of the unit will be to maintain a Management InformnationSystem (MIS) that will first assist the implementation of the project and then monitor other sector development.See below for further details of the scope of the work program for the MIS under the project, which wouldinclude the monitoring and evaluation of project's implementation, its financial management and its socio-economic impacts. The project would finance short-term technical assistance at the time of the project launch toaid in the setting up of the MIS and in training personnel. In addition, the project will provide financing for thehiring of local consultancies to conduct studies as needed by the Bank for its supervision missions.

B. The Role of the Bank

55. The Bank will supervise the project starting with a mission to launch the project following crediteffectiveness. Following the project launch, the Bank will conduct three semi-annual reviews before a mid-termreview, now scheduled within the third year of the project's implementation. A semi-annual review will followthe mid-term review and then two annual reviews. A final Bank mission to review the project's completion willtake place after the close of the project.

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Annex 3

C. Administrative and Implementation Arrangements for Farm Forestry

56. The delivery system will pattern the provincial civil administrative structure, rather than thePFD's, to provide better coordination with other line departments, facilitate monitoring and ensure evenextension coverage throughout Punjab. One extension forester (Forester or Forest Guard) will be posted to eachof the 354 Markazs (there are an average of 66 villages per Markaz). One Forest Ranger will supervise theExtension Foresters in two Tehsils and there will be an SDFO to supervise Forest Rangers in each of the 34Districts. A DFO will be posted to each Divisional HQ. Three Conservators of Forests (CF) one each atRawalpindi, Lahore and Multan will provide the overall supervision required to implement this component.Heading the Farm Forestry Wing and Scrub/Rangeland conservancy will be the CCF(PD) stationed in Lahore.Professional staff requirements will be as follows:

Table 6. Forest Departnment Professional Staff Requirements

Administrative No. of Units Total Staff Level Stafl from Level IncrementalUnit PFD

354 354 FG/F 92 F 30 F

92 FG

140 EXT

Tehsil 106 53 FRISDFO 34 FR/SDFO 19 FRISDFO

District 34 (some SDFOs would cover 2 tehsils & a district)

Division 8 8 DFO 2 DFO 6 DFO

Zone 3 3 CF I CF 2 CF

Province I I CCF 0 I CCF

Total 419 361 58

57. The project will finance these incremental staff: 58 professional, 70 technical staff, includingdrivers, and 162 support staff. PFD will provide the remaining technical staff requirements through transfers.By the end of the project the PFD will absorb all technical staff below the level of CF, except for 34 ForestRangers who will remain at the Tehsil level to ensure continued farmer access to technical assistance. TheCCF(PD) and two CF posts will then discontinue, leaving one CF at the center.

58. Delivery Mechanisms for Seedling Subsidies. In its tree-planting campaigns PFD has providedseedlings to farmers virtually free of cost. Under this project the subsidy will be phased out over four years:75% in year 1, 60% in year 2, 40% in year 3, 25% in year 4 and 0 in years 5 and 6. Under the current system,when the farmer collects his/her seedlings from the private nurseryman, payment of the non-subsidy element ismade (e.g., in year 1 of the project this would be 25% of Rs 1.75 or Rs 0.45 per seedling). The nurseryman isnot paid the balance or subsidy element (in this case Rs. 1.30 per seedling) until the number of seedlings actuallyplanted by all the farmers obtaining seedlings from his/her nursery has been verified in the field by a forestofficer. Delays in the final payment (crossed check) to the nurseryman, by the DFO or his designate, sometimesrun into months. It is the nurseryman who is penalized if the seedlings are not planted, not the farmer. Thepresent project will intervene to simplify the process. One approach would be for a forest officer to makepayment (of the subsidy element) once he has verified that the nursery contains the contracted number of qualityseedlings of the correct species. As before, the farmer would pay the non-subsidy element on collection of theseedlings. This would ensure prompt payment to the nurseryman and a reduction in the number of PFD staffinvolved in the process. The project will use sampling techniques to determine the number of seedlings planted.

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Annex 3

IDA and GOPunjab will agree on a suitable system during negotiations. In addition, the subsidies would betargeted toward poor households.

59. Under an expenditure category of marketing services, project financing will support thecontracting of private sector services to provide periodic assessments of current marketing prospects and trendsfor various raw materials and to produce information on wood purchase contracts and prices for regulardissemination by radio or through other suitable mass media. The project will also employ the private sector for:(a) introducing a log grading system based on measurements that can be made by the farmer; (b) advising onharvesting (felling, bucking, logging) practices; (c) improving linkages between the producer (farmer) and theuser (industry); (d) determining the role of the middle man in marketing; (e) creating a data base; and (f)developing a marketing strategy. The Bank would agree on the procurement and contracting of these services.

60. Phasing Out of PFD Nurseries. There are some 700 PFD nurseries currently providing farmforestry seedlings requirements. These will be phased out by year 5 and replaced by over 1,000 farmer nurseries,which are expected to be established by the same year. The project anticipates the following phasing ofnurseries:

Table 7. Phasing Out of PFD Nurseries

Number of Nurseries

Year 0 1 2 3 4 5 6

PFD 700 560 280 210 140 0 0

FF 0 200 620 720 830 1035 1035

Numbers for the PFD are firm but only indicative for the private farmer nurseries (FF), assuming an average ofthree per Markaz.

61. Targeting of Extension Activities. Although generally all farmers will have access to theinformational services of the project, extension activities will be organized primarily around groups of farmerswho hold each arable holdings of land of five hectares or less to broaden the production base of farm forestry.These farmers, who form the largest percentage of cultivators, are greatly under-represented among participantsof previous farm forestry campaigns. As a group, these farmers constitute much of the rural poor in Punjab.Moreover, the delivery of seedling subsidies will be directed towards those farming communities where averagehousehold income are below the median income for the province, where farm tree planting is an unfamiliarpractice and where wood would be produced primarily for home consumption as fuel. As a working figure, poorhouseholds whose per capita income falls at or below Rs 400 per month.

D. Administrative and Implementation Arrangements for Social Range and Scrub Forest Management(SRSFM)

62. Existing PFD staff from the Range Management and Rawalpindi Circles, under their respectiveConservators of Forests, will implement the component; however, over the course of the implementation theproject will provide financing on a declining basis for one draftsman and 18 technical and support staff to aid theexpansion of the work program in the two target areas. The professional staff implementing this component willreport to the Chief Conservator of Forests (Project Director), Lahore. By the end of the project professional staffwill return to their regular postings and contracts for other support and technical staff would be completed.

63. Two specially trained spearhead teams will assist and train PFD field staff in the processes offorming Community Organizations, participatory planning, and formulating joint agreements. Each spearhead

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Annex 3

team will consist of three Forest Department staff (a DFO, an SDFO, and a Forest Ranger) and two resourcepersons. The project will recruit resource persons with skills in participatory appraisal and planning techniquesfrom universities, research institutes, and NGOs specializing in training in participatory work. Of the tworesource persons on each team, one will be a specialist in institution building and community development, andthe other in livestock and rangeland management. Spearhead teams will in all cases work alongside local FDfield staff, who will take responsibility for continuing SRSFM work in communities.

64. The operation of this component will consist of a number of sequential steps; namely, theselection of the villages, the motivation of the villagers, the formation of a community organization so that thevillagers can operate as a group, the microplanning of work to be carried out in the village in the project period,and the execution of the microplan. Except for instances when an NGO is operating, all of these steps will fullyinvolve PFD.

65. Selection of Villages. The PFD along with the NGOs will select villages on the basis of thefollowing criteria:

(a) the people of the village are willing to participate in the program;

(b) within reasonable distance of the village sufficient range and scrub forest land is availablefor rehabilitation;

(c) the site quality of the available land is satisfactory (this would ensure that there is morelikelihood of the success of the program which would encourage others to emulate); and

(d) the villages are distributed as far as possible in different forest ranges which will allowsharing of the workload by staff posted in different parts of the Pothwar and Thal areas.

Selection of the villages should be completed at least a year in advance of the year when the work will beundertaken.

66. Motivation of the villagers, grou, formation, signing of agreement and entitlement of the villagersfor participation. Wherever possible, the project will engage NGOs to carry out the work of motivation of thevillagers. The NGOs will work under the administrative guidance of the local PFD. Where NGOs are notavailable, the PFD will carry out this task. The motivation work will consist of meeting the villagersindividually and in mass meetings to explain to them the program, to understand what their reactions are, to findout whether they are interested to form village organization to participate in the program, their responsibilitiesand the benefits that they would be entitled to as compensation. If through these interactions, a majority of thevillagers agree to participate, the NGO or the PFD will assist the villagers to form a representative group drawnfrom as many families as possible but not exceeding 20 members. The group should include at least four landlesspeople. The group would then sign with the PFD an agreement specifying the program, the responsibilities ofthe parties, the cost and benefit shares and the penalties in the breach of the agreement. The general principlesto be incorporated in the agreement follow. Preferably, PFD will appoint an NGO at the time of the projectlaunch to standardize a document containing the methods to be followed in motivation and group formationwork.

67. The project will provide the following entitlements to the villagers:

(a) individuals who agree to rehabilitate their private range land will receive as an incentivefree grass seeds and tufts, some assistance in land preparation with the provision of tractors

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Annex 3

with attachments and diesel (the total cost of this assistance not exceeding about Rs 700per ha) and free technical advice;

(b) in the case of rehabilitation of common, state and FD range lands, the project will bear thetotal cost of rehabilitation while the Community Organization (CO) will be responsible forthe protection of the land and the regulation of grazing as specified in the microplan. Inexchange for this support, the CO will be entitled to a compensation of Rs 625 per monthfor every 50 ha of range land (i.e. Rs 150/ha per year) and allowed grazing at a fee pergrazing cattle;

(c) in fodder plantations, the project will finance the cost of planting. The CO will beresponsible for its protection and for the regulation of grass cutting and lopping. Themembers of the village will receive free grass, free lops and tops and about 20% (to bedecided by the government) of the final product when the plantation is be finally felled;and

(d) the project will finance the cost of scrub forest rehabilitation work while the protection ofthe area from misuse will be the responsibility of the CO. The CO will be entitled to freegrass cutting, spaced or thinned fuelwood free of royalty and 20% of the final productwhen the forest is felled.

68. Microplanning. PFD, NGOs and COs will jointly prepare microplans. The microplan will be abrief document in the local language consisting of the following sections. It has to be understood thatmicroplanning is not an elaborate exercise intended to document precise quantitative data and rigid targets. Onthe other hand, it is proposed to be an indicative document specifying indicative targets, responsibilities ofdifferent parties and their entitlements. The plan will form a part of the agreement that the CO will sign withthe PFD.

69. The first section in the microplan will, along with a map, list the land available (i.e., agreed to bespared) for private, non-private range land and FD scrub forest rehabilitation work in the project period. It willalso indicate whether any other similar schemes or operations are being carried out. If there are other activitiesunder way, the plan would explain how the present scheme would not duplicate ongoing work. The secondsection of the microplan will tabulate a tentative target for the project period and approximate the forestproduction and the number of grazing cattle, or other livestock, that the area would ultimately bear. The thirdsection will specify the costs and the responsibility of the parties in sharing it, while the final section willindicate the benefits and the entitlements of each party and how the benefits would be provided.

70. Rangeland Imnrovement. Depending on the existing quality of the range, the area will be eitherrevegetated or reseeded. If the range has sufficient increasers, revegetation will be carried out, which wouldconsist of protection for a few years followed by regulated grazing. If the range is in poor condition, theexisting vegetation-will be removed by disc plough, cultivated and seeds of appropriate species of grasses andlegumes will be broadcast. For shade, about 100 seedlings of non-grazable species will be planted in 30 x 30 x30 cm holes. If the reseeding is successful, the reseeded area would be protected for the first three years and thenopened for regulated grazing.

71. There will be no fencing for the revegetation or the reseeded area. The CO will arrange suitablesupervision of the area during its closure and will regulate grazing on it afterwards. The CO will receive acompensation for this support as mentioned above. Revegetation and reseeding will be planned so that sufficientareas are kept open for grazing.

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Annex 3

D. Administrative and Implementation Arrangements for Timber Plantations Pilot Component

72. This component will be under the overall direction of the CCF/Project Director and will beimplemented by existing staff of the PFD at headquarters and in the various plantations to be covered by studiesand/or demonstration of management systems. Technical assistance will be used for the following studies: (i)environmental/biodiversity inventories and rapid socio-economic surveys covering all public sector plantations;(ii) selection of three representative plantations for detailed implementation of a demonstration project on therehabilitation of plantations for multipurpose use (conservation and commercial); (iii) design of models forfinancially and environmentally sustainable involvement of the private sector in plantation management; (iv)design of rehabilitation and improvement plans for land and water resources of the plantations to maximize itsmultipurpose output, biodiversity conservation in particular.

73. Rehabilitation of water management and irrigation systems in selected plantations: thisrehabilitation will follow the methodology and criteria followed in the Second Irrigation System RehabilitationProject (ISRPII). PFD would obtain from the Punjab Irrigation Department all pertinent information,specification and other model documents for adaptation to rehabilitation works in the irrigated plantations. PFDwould contract, through the use of TA and service funds, the assessment of water ditribution systems in the threeselected plantations and determine the nature and extent of problems with respect to needs under the proposedland-use objectives of every compartment of the three plantations (as defined in IUCN's Study on Environmental& Ecological Considerations for Management of Punjab's Irrigated Plantation, December,1994). Thispreliminary survey work will result in a set of Condition Survey documents that will be submitted, along withproposed solutions, to IDA for review and comment. At this stage, a formal determnination of respectiveauthorized entitlements for water of the three plantations will be required. Rehabilitation work will include canalbank rehabilitation, and, if needed, restoring canal prisms to their normal section by cleaning or the use of brushand stakes as sediment traps, modification of selected structures and outlets. No systematic, large scale lining ofcanals will be implemented. Once the works have been approved by IDA they will be contracted out by PFDaccording to IDA guidelines.

E. Accounts and Audit

74. To facilitate timely project implementation, PFD will open a special account for IDA projectfunds with the National Bank of Pakistan with an authorized allocation of US$800,000. An account will beallocated to the office of the Project Director stationed at Lahore. This account will be used for both local andforeign expenditures of less than US$100,000 equivalent under all categories. All expenditures aboveUS$100,000 could be submitted directly to IDA for payment without using funds from the special account afterthe implementing agency has made project expenditures. PFD will submit applications for replenishment of theaccount to IDA on a monthly basis (the minimum replenishment being US$50,000) or earlier if the account fallsbelow 50% of its allocation. This account, together with supporting documentation, including contributions fromthe Provincial Government, and the Credit, will provide a comprehensive record of project financing andexpenditures. PFD will have the account audited annually in accordance with sound auditing standardsconsistently applied by independent and qualified auditors acceptable to IDA. PFD will submit to IDA certifiedcopies of the annual financial statements and Statements of Expenditure (SOEs), together with the auditor'sreport, which would comment separately on the SOEs, no later than nine months after the close of each fiscalyear.

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PAKISTANPUNJAB FOREST DEVELOPMENT PROJECT

Project Organization

|II Z ZSecr ay

4 CF-Monitonng and Evaluation

- _~|CF-Range Management |__ CF-Laor

DFO, Chakwal DFO, Bhakkar----

(CommunityOrganizations................................ ;

*Selected range/scrub rehabilitation EstLblished by projat. to b phased ot at ed odrprojert CF = Conservator of Forests f I>activities will be implemented by existing DFO = Divisional Forest Officerstaff under the CF-Rawalpindi E** SDFO = Sub-Divisional Forest Officer

sSttttg ~~~~~~~~~F =Forester ** For facilitating community participation i w

(bEst.Ishhd by pojet ad to ret-in Oaet projoot -oepletion

Annex 3

III. Implementation Schedule

The Timing of Project Events

75. The following table presents an indicative scheduling of the project's overallimplementation including procurement events, summary component activities and supervision. Using schedulingsoftware, PFD will establish a file similar to this one -- and other project component files as necessary -- at thetime of the project launch, taking into account IDA recommendations on the level of detail in which to definesome of the tasks. PFD will share this file or files with IDA, along with GIS and financial files, and produceupdated versions in time for IDA supervision missions.

The Use of Scheduling Software

76. Scheduling software are computer applications for time management that facilitate the break downof some project into a sequence of constituent tasks whose duration and relationship to one another can bepresented graphically in a chart. Such programs are useful for communicating the process by which a project isto be implemented, but they typically have more powerful capabilities. They would likely also allow the linkingof resources to defined activities and so assist the planning of the use of available resources. After defining tasksin appropriate detail, specifying task relationships and assigning resources to tasks, a manager using the softwarecould record data on the actual use of resources and the completion of tasks once the project is under way toproduce reports on the status of the project's implementation, including the rescheduling of planned tasks andtheir completion times. In the present context, the PFD will use scheduling software to plan the activities of thecomponents in detail and to communicate information on their progress for its own use as the chief implementingagency and for IDA's supervision of the project. The structure of tasks for the project's components can in turnstructure the use of a financial management software package, which would be used to provide the accountingdata that scheduling software files require in tracking the use of resources. The software would then be used toproduce reports that would expedite PFD's dialogue with IDA regarding the use of funds and disbursements.

77. PFD will use scheduling software not only to schedule the implementation of individual projectcomponents, but as a tool employed in combination with financial management and GIS software to trackchanges in the state of forest sector against applications of resources under the project. The information on thestatus of resource use and task completion which is stored in the MS Project file can be "exported" into thetabular form of a data base. This data base can then be combined with others registering information associatedwith geographic locations of interest to the project. The GIS software would then employ this extended database, which would also contain socio-economic data and sectoral monitoring data on the project's impact such asindicators of the performance of farm forestry plantings, nurseries, the performance of COs, the status of jointmanagement agreements and rehabilitated range lands, etc., to convey information through maps. In combiningthe use of software in this way, PFD will be able, for example, to show where in the province resources forextension are employed and where changes in the farm production of wood by product and quantity areoccurring.

78. For farm forestry, PFD can establish extension implementation schedules for separate divisions ofthe province. These could then be combined as the subprojects of a provincial Project File. Project managementwould likely also set up separate files for the scrub forests and rangelands in Pothwar and Thal, and, ifappropriate, for subregions within these two areas.

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PAKISTAN -- PUNJAB FOREST SECTOR DEVELOPMENT PROJECTStaff Appraisal Report

Annex 3, Table 8: lmplenientation Schedule

1995 | 1996 [1997 | 1998 | 1999 | 2000 2001 2002ID Name 041102IQ31 Q1FQ2FQ3|Q40Q10Q20Q3 Q4jQ1 1020Q3|Q4|Q1 |Q2|Q3jQ4|Q1 0Q20Q3104010Q20Q3Q40Q1 Q2|Q31 Bank Project Processing _ ___I_!

2 Appraisal3 Issuing of Draft Yellow Cover

4 Yellow Cover Review

5 Negotiations

6 Board

7 Loan Effectiveness

89 GOPunjab Startup Activities *10 Preparation of PC-1

11 Approval of PC-112 Agreement on Action Plan from Environmental Study of Plantations

p.

page 1 of 10. Entries are for fiscal years ending 30 June of the years designated.


Annex 3, Table 8: Implementation Schedule

1995 1996 | 1997 1998 1999 2000 2001 2002ID Name Q401 Q2Q304010Q20Q3104|Ql Q2030Q4|010Q20Q31040Q10Q20Q30Q4010Q20304|Q1 Q20Q313 Project Implementation |14 Project Launch e

15 Engagement of Administration Unit and M&E Unit Staff I |

16 Arrival of Project Start-up Mission gf

17 Setting Up of Special Accounts18 Establishment of ProcuremenVDisbursement Procedures I

19 Arrangement of TA Contradct.

20 Preparation of Tender Documentst 21 IDA Non Objection to Tender Documents i|

22 Invitation to Bidders23 Preparation of Proposals Z

24 Evaluation & Selection of Offers El25 IDA Non Objection to Contract Signing o

26 Technical Assistance for MIS & Project Management27 Arrival of TA28 Execution of TA Contracts l |29 Human Resources Development U

w 30 Technical Assistance in Sector Appraisal. Dev. Planning & Follow-

31 Arrival of TA32 Execution of TA Assignments .______

33 Yr1 -- | lYl

34 Yr2 Follow-up n

35 Yr3 Follow-up L O ! _

36 Training ,__.__ __ __ __ = _ tI


PAKISTAN - PUNJAB FOREST SECTOR DEVELOPMENT PROJECTStaff Appraisal Report


1 1995 1996 1997 1998 1999 2000 2001 2002ID Name 04014 Q3|4|1 0203040 1 |Q203|Q4|Qt |021034Q4010 2I 3040 20304 2337 Farm Forestry Research _38 Procurement of Vehicles & Equipment (1st lot) _39 Preparation of Tender Documents40 Invitation to Bidders -

41 Preparation of Offers42 Evaluation & Selecton of Suppliers r

43 Request of IDA Non Objection44 Contract Signing45 Delivery __I

46 Evaluation & Reception of Equipment DI

47 Procurement of Vehicles & Equipment (2d lot)48 Preparation of Tender Documents49 Invitation to Bidders50 Preparation of Offers51 Evaluation & Selecbon of Suppliers i52 Request of IDA Non Objection53 Contract Signing54 Delivery

' 55 Evaluation & Reception of Equipment D I56 Construction Except Residences57 Construction of Residences58 Seed Collection & Distribution59 Engage Incremental Staff60 Local Training Courses for FF Staff

61 Technical Assistance in Quality Seed Production62 Arrival of TA63 Execution of TA Assignments

64 Local Technical Assistance in Nursery Practices65 Overseas Short Courses for FF/PFRI Staff

66 Study Tours for Sr PFO Officers67 PhD Course for PFRI Staff _ _ -

page 3 of 10. Entries are for fiscal years ending 30 June of the years desigpated.

PAKISTAN - PUNJAB FOREST SECTOR DEVELOPMENT PROJECTStafT Appraisal Report

Annex 3, Table 8: Implementation Scheduile

1995 1 1996 1997 1998 1999 2000 2001 2002

ID Name 04010203040 EQ203 Q4 010Q2Q30Q41 Q2|304Q010203104010203040102Q3|4 Q1|020Q3

68 Farm Forestry Extension _

69 Procurement of Vehicles & Equipment

70 Preparation of Tender Documents

71 Invitation to Bidders _______-

72 Preparation of Offers73 Evaluation & Selecton of Suppliers I 0

74 Request of IDA Non Objection |_________i

75 Contracst Signing -

76 Delivery|C3 _ _ _ _ ___ _ _I

77 Evaluation & Reception of Equipment 78 Provincial Implementation Structure Set-up r_--___79 Engage lncreffental Staff

80 Procurement of Soil Mapping __ _ __ __-______

81 Extension Activities

82 Introduction of Log Grading System E 7 Zl

83 Silvicultural Training of Farmers - -- -- - -r r- = _

84 Phazing Out of Seedling Subsidies

Li' 85 Seedlings 75% Subsidized - I

1 86 Seedlings 60% Subsidized I

87 Seedlings 40% Subsidized

88 Seedlings 25% Subsidized

89 Seedlings Unsubsidized - - t90 Removal of Transit & Marketing Taxes C

91 Technical Assistance in Nursery Technique, Extension & Marketin

92 Arrival of TA | *

93 Execution of TA Assignments ___I

94 Yftilz 95 Yr2 Follow-up O

96 Yr3 Follow-up -97 Procurement of Marketing Services -- , ;

98 Local Training -i ; . . _

99 Overseas Training __=-

100 Local Studies _ _____ _

101 Phazing Out of PFD Nurseries T

107 Phazing In of Private Nurseries T

page 4 of 10. Entries are for liscal years ending 30 June of the years designated.



1995 1996 l 1997 1998 1999 2000 2001 2 Z002ID Name 04[011Q21031Q4011021Q4jQ102103104JQ1021Q3104 QQi02QQ3 04 01 020Q3 Q4 01 Q2 030Q4 010Q20Q3

113 Social Range and Scrub Forests T -

114 Initiation and Site Selection Study115 Arrival of TA116 Execution of TA Contracts |1!117 Evaluation of Study Findings/Selection of Sites118 Recommendations by Human Ecologist 1119 Drafting of PFD Action Plan 0120 Consultation & Incorp. of IDA Views O121 Procurement of Vehicles and Equipment122 Preparation of Tender Documents I

123 Invitation to Bidders I124 Preparation of Offers125 Evaluation & Selecton of Suppliers 3

126 Request of IDA Non Objection127 Contract Signing128 Delivery129 Evaluation & Reception of Equipment oI130 Deployment of Local Personnel

Ca 131 Engagement of Incremental Stafft 132 Redeployment of Existing Staff 0

133 Engagement of NGOs (if applicable)134 Setting Up of Spearhead Teams135 Selection of 2 DFOs, 2 SDFOs, 2 FR & 2 Resource Pers I *136 Training of Teams 0137 Holding of Launch Workshop I138 Part. Planning Skills Training for Field Staff I.139 Technical Assistance in Human Ecology & Grazing Systems - I

140 Arrival of TA j

141 Exectution of TA Assignments (12 mo total) __ ._-__-_*_142 Adoption of Research Plan143 Formulation of Plan _144 Consultation with IDA |I145 Overseas Community Forestry Training146 Field Operations - 1 I

147 Nursery Development for Grass Seed I -I148 DFO Office and Residence Construction L ____| _ I _




_ 1995 1996 1 1997 1998 1999 2000 2001 2002ID Name 04 Q102103i04 0Q 1 IQ Q2 lQ3040102Q304101Q2lQ3040Q1023Q0Q4010Q2103 Q4QllQ2030Q4010lQ213149 Community Work150 1st Group of Communities151 Selection of Communities

152 Vitlage Motivation153 Group Formation i

154 Micoplanning155 Joint Management Agreements Signed____

156 Land Improvement O157 2d Group of Communities164 3d Group of Communitbes

171 4th Group of Communities178 5th Group of Communitbes185 HRD186 Overseas Community Forestry Training187 PFD Regional Study Tour

188 Yr 2189 yr4A

o 190 Refresher Course for Spearhead Teams

191 Part. Planning Skills Training for Field Staff m u,I -

192 Yr 2193 Yr 3

194 Yr 4 ll^l|1

195 Yr5 j

196 Monitoring & Evaluation

197 Initial Review of Work 0

198 Initial Evaluation/Reflection Workshop |

199 2d Review of Work/Mid-term Evaluation200 2d Evaluation/Reflection Workshop

201 IDA Mid-term Recommendations

202 3d Review of Work

203 4th Review of Work204 3d Evaluation/Reflection Workshop

205 Project Completion Review 9206 Completion Evaluation/Reflection Workshop

page 6 of 10. Entries are for fiscal years en(ling 30 June of the years designated.



1995 1996 1997 1998 1999 2000 2001 2002ID Name Q4|Q1 |Q2|Q3|Q i Q1|Q2|Q3|Q4 1 02 03j04 00203Q4QllQ20Q3lQ4Q1|Q2Q30Q40Q10Q20Q30Q401|Q20Q30Q40Q10Q2jQ30Q40Q10Q2|Q

207 Timber Plantations Pilot m

208 Technical Assistance in Design Preparation and M&E

209 Arrival of TA

210 Initial Surveys and Studies

211 Surveys/inventories212 Selection of 3 Representative Plantations _ a213 Study of Private Sector Involvement214 Design of Demonstration Activities in Selected Plantations

215 Detailed Surveys216 Options for PhysicaVlnstitutional Interventions217 Study on InstitutionalLegal Implications |218 Final Design for Plantation Demonstrations El

219 Supervision and Evaluation of Pilot Implementation220 Draft Contract for Rehabilitation Works (3 Plantations) 'a

221 IDA Review/Clearance of Contracts (3 Plantations)222 Supervision of Rehabilitation Works (3 Plantations) ,

I 223 Implementation of Organizational Measures 0

a 224 Dissemination Workshops m I225 Mid-Term Review

226 Completion Review227 Execution of Land/Water Rehabilitation Works

228 Recruitment of Contractors229 Preparation of Tender Documents230 IDA Non Objection to Tender Documents

231 Invitation to Bidders232 Preparation of Proposals 3 I

233 Evaluation & Selection of Offers234 IDA Non Objection to Contract Signing

235 Mobilization of Contractors

236 Execution of Rehabilitation Contract237 Assessment of Water Distribution Systems

238 Reports on Land and Water Conditions Surveys239 IDA Review of Proposed Solutions l

240 Execution of Rehabilitation Works - _ | | _ _


PAKISTAN -- PUNJAB FOREST SECTOR DEVELOPMENT PROJECTStalT Appraisal Report


1995 1996 1997 1998 1999 2000 2001 2002ID Name Q1Q4 Ql Q1|Q2|Q0 Q10Q320Q30Q4 Ql|Q2jQ3jQ4'Q10Q20Q30Q40Q10Q20Q30Q4010Q203241 Preparation of Future Project r I Q242 Engagement of TA

243 Preparation of ToRfTender Documents _

244 IDA Non Objection to Tender Documents

245 Invitation to Bidders

246 Preparation of Proposals l

247 Evaluation & Selection of Offers 0248 IDA Non Objection to Contract Signing 0

249 Arrival of TA250 Formulation & Drafting of Preparation Report _ I I I - 31


PAKISTAN -- PUNJAB FOREST SECTOR DEVELOPMENT PROJECTSlaff Appraisal Report


1995 1996 1997 1998 1999 2000 2001 2002ID Name Q4 Q10Q21Q3 Q4 0102 Q30Q41 Q20304010Q20304Q01Q2Q30Q40Q1 Q203040 20Q3|Q4 010Q20Q3

251 Project Reporting _ _ -

252 1st Progress Report

253 2d Progress Report _

254 3d Progress Report l_____i

255 4th Progress Report __ __ _ Ii

256 5th Progress Report I _ i257 6th Progress Report/Mid-term Review

258 7th Progress Report/Review of Mid-term Action Plan_______*259 8th Progress Report ___

260 9th Progress Report _ __|_*__

261 10th Progress Report262 11th Progress Report |

263 Project Completion Report ______

264 _ _265 Audits

i 266 1 st report to IDA-o 267 2d report to IDAC-

268 3d report to IDA269 4th report to IDA

270 5th report to IDA

271 Final report to IDA

272 _ _ _ ___ _______ ___

273 Supervision ._____i I - _

274 Semi-Annual Review |

275 Semi-Annual Review I

276 Semi-Annual Review

277 Midterm Review278 Semi-Annual Review

279 Annual Review i

280 Annual Review _ I I I i

281 Project Completion Review - - _ _|_ j J




Date: 5/20/95 Critical U ~ -Mla 0 Progress Summary oNoncritical L| | Milestone Rolled Up a

page IO of IO. Entries are for fiscal years ending 30 June of the years designaled.


Staff Appraisal Report

Table 9: Schedule of lechnical Assistance

QuantUtesUnit 95196 96/97 97i98 98/99 9U00 99 0001 Total

investmnt CostsTechnical Assistance

Intemtionally RecyultedFarm Forestry Extension

Nursery Tedvmiqu mornh 6 1 1 - - 8Exaensmri month 6 1 1 -IMarrling month 6 1 1 - -

Subtotd Farm Forestry Extension 18 3 3 - - 24Farm ForestVr Research

Quality Seed Pro&rclmNusrwy T.chnus month 12 12 - - - 24Sobia Range and Scrub Forest Managemnnt(Pothww and Thait

Hoiuan Erology in Range MGT month 6 3 3 - - 12Researdhon Gtazin Systems month 2 2 2 6

Subtotal Social Rnge and Scrub Forest ManagementIPothwu and Thlt 8 5 5 s8

Human Resources ievelopm ntSector Appraisal. Dev. Plan & Foltowv- mornh 6 a- - 1 8

Administraton UnitProsoct Manageret Traawnig morth 2 - 2Preparation of FubLs Projed month - - - - 24 24

Subtotal AdmrnIstration Unit 2 - - - 24 26Subtota trnattonatly RecruIted 46 20 8 1 - 25 100Local

Farm Forestry ResearchNrwwy Practies month 12 12 - - - - 24

Social Range and Scrub Forest Managemnnt(Pothwr and Thai)Panicptory Trawg & Plann month a 6 3 3 18Spearhead Teani Resource Persons montr 24 24 24 48 48 48 216Mid-tlnm Evaiuaiion month - - 4 - - - 4Econmnicm Aniysis morith 2 2 - - 2 2 a

Subtoal Socat Ran and Scrub Foret M 9anagent(Pothwr and Thai) 26 26 28 48 S0 50 228

Adtnlaration UnitPreparationf Fulie Proed month - - 24 24 H

Monitoring wnd Evaiuaion UnitConsuncy tor M&E Surwyng month 4 4 4 4 4 4 24 F m

Subtotld Local 48 48 35 SS 54 78 318 m xTotal InvestUent Cosb month 94 68 43 56 54 103 418 Z W

Pab4retas An IPFejab Feint Sela Denlepet Prr ec I*MJ

Stiff Appraisal RinrtTable IS: Schedule .f leromeasal Saff

Unit 9516 9L11S7 s7n9g gSt 80 O016 Total

Recurrent CostsIncrnmnta Staff

Profesa.onal StaffFarm Fareny Extulon

Chre Cornnstaor of Forsts Staffywar 1 1 1 1 I 1 6ConservatorotFonras atrTysr 2 2 2 2 2 2 12Dimvnal Forest Offiker utSfyw 6 6 6 6 6 36SOFOa/RFOs saleffew 19 19 19 19 19 iS 114FosremrForest Gura strverr 30 30 30 30 30 30 180

Subtotal Fnrm Foreftry Extren St 5se S 58 Se 5S 348Farm Foresby Resserh

AddIsneODir ectOr statOye 2 2 2 2 2 2 12Sr Research Offlwr sraffyaw 3 3 3 3 3 3 isResearch Offcr stiffyr 4 4 4 4 4 4 24Supenntencent stnyewr 1 1 1 1 1 1 6Staff Nurse ndtai r 2 2 2 2 2 2 12

Subtotal Form Forestry Rasearch 12 12 12 12 12 12 72Social Rang and Sorub Forest Management(Pothwar and Thal1Orabrnran tatrw I Ir 1 1 1 1 e

Monitoring and Eveluitlon UnitDFO staaYr 2 2 2 2 2 2 12Econorrast str 1 1 1 1 1 1 6Statsanian staffyir 2 2 2 2 2 2 12SOOF/RO stefyewr 2 2 2 2 2 2 12

Subtotal MAnitroing and Evtuaffdon Unit 7 7 7 7 7 7 42Subtatl PIFSalonal StS 76 78 78 78 78 78 467Technical Staff

Fane Forery ExtensionPhieooit lygarw 7 7 7 7 7 7 42Dnwars talstygwr 63 03 63 83 63 63 378

Subtotal Farm Foestry Ertngloen 70 70 70 70 70 70 420Frm Foresby Reaserch

Doe,r seaffyar 12 12 12 12 12 12 72Trator Dnver stattyas 2 2 2 2 2 2 12Eleran styst 1 1 1 1 1 1 eGeoen orOpetatr aafiyewr 1 1 1 1 1 1 6

Subttotl Farm Fortry Resarch 10 16 l l 16 18 96Soclal Rang And Smrub Foeert MenigementiPothwar and ThalTractor DOnver atst4yeer 3 3 3 3 3 3 1slulleozr Onvoe safteyr 1 1 1 1 1 1 6

Dnoor stayr 3 6 6 e e 6 33Subtoal Socel Range and Sorub Formet Mtnag(Pothwr and Thall 7 10 10 10 10 10 57

Montorintg and Eveluallon UnitDherw r alaysr 4 4 4 4 4 4 24

Subtoal Technical Staff 87 100 100 100 100 100 507Support Staff

Farm Foerby EtsenaionAdmnir nr Otier staffYar 1 1 1 1 1 1 6Superintandenta slafflyer 4 4 4 4 4 4 24Acastrs sdafter 13 13 13 13 13 13 7aSteocgraopher stslty 9 9 9 9 9 9 54Senor Clets staffysr 18 18 18 18 1S 18 106Junr rCdlrs ntafyar 63 83 63 63 63 63 370DaM1 ebtfw 3 3 3 3 3 3 18Chowuldars stlrlyear 7 7 7 7 7 7 42Mal. rtalfeer 2 2 2 2 2 2 12Sweeper staltyar 7 7 7 7 7 7 42Neb Oasd lafswr 35 35 35 35 35 35 210

Subtotal Faim Fonstry Eumenalon 162 162 162 162 162 162 872Farm Foreetry Rrserch

Stenographer stanffar 5 5 5 5 5 5 30Resarch Arssnt #dyrr 4 4 4 4 4 4 24Labortry Aaslrt slaRt 4 4 4 4 4 4 24Dspenser rrater 2 2 2 2 2 2 12OtlherSupportSt4af rAllafrr 25 25 25 25 25 25 150

Subtot l Fam Forestry Regesrefh 40 40 40 40 40 40 240Social Range and Scrub Fotres Manegeme(Pottrwr WAn TmaWH~ prw or Dqer ntalear 2 2 2 2 2 2 12Chowodwr eYre 4 4 4 4 4 4 24Mair satayw I 1 1 1 1 1 6Sweepr staltyer I 1 1 1 1 1 6

Subtotal Social Range end Scrub Fosent Manag(Pothwr and Thai) 8 8 8 a 8 a 46

Monitorng and Evelseilln UnitSlernoapsr staffyer 3 3 3 3 3 3 iSJunor Clek stlalew 3 3 3 3 3 3 isNum Osoud Stafyw 1 1 1 1 1 1 6

Subtotal Monitoring and Eveluwton Unt 7 7 7 7 7 7 42Subtotal Support Stiff 217 217 217 217 217 217 1.3C2

Total Recurrent Costs 392 395 325 366 3SS 3C. 2.367

- 73 -

PAKISTANPUNJAB FOREST SECTOR DEVELOPMENT PROJECT


Table 11: Techrnical Assistance Summary

Source & DuralionObjective Aclivities Output

Foreign Local

Improve the institutional semup Assisi PFD-led Working Group on all steps of a study of future sectoral policy 4 mso Status papers for consideration of consensus buildinig workshops.of Punjab's forest sector. anid PFD's role, conduct consensus buildinig workshops, formulate action plan.

Assist PFD Working Group on human resource issues in the forest sector, 4 no Stalus papers for considerationi of consensus building workshops.including orgattization, capacity building and pariicipalioll; conducl coutseisus

building workshops, fornmulale action plan; assist in contracting outenyirornienal nuass awareiiess work.

Streiigdlteti public aiid privale Assist PFD, PFRI iii research ott iniprovenirit ol' plaisitig stock quality. 24 inio Reports, research work plans.sector capacity in fami forestry evaluation of species & varieties, site triatclting.

Local support to PFRI on research plaining for farm foresiry and dissentination 24 mo Reports, workshops with farm forestry extetision personnel.of research results.

Critically review private and public sector nurseries atid assist PFD in iraining 8 mo Reports, training curriculuni, workshops.and extension on nursery techniques.

Assist PFD in the design and implementation of aclions for ise improventct of 8 silo Reports, training curriculum, workshops.farm forestry cultural practices through on-farm research, trainitig arid extesision.

Assist PFD in selecting a private contractor for farm forestry marketing services; 8 tiio Reports, workshops for private/public instituLions,assisL the private contractor it providing riic services needed by fatiiicrs anid deniosiiration/developiient of appropriate data base.wood noanufacrurers.

Assist PFD in rehabilitation Assist PFD and Cooiimurtiiy Organizations (CO) i iriiroduLciig participatory 12 mio Reporls. Lraiiiirig manuals for "spearhead teams" and farimiers,and sustainable nianagemenm of range iniprovenieti & management through grazing sysLenis suited to local workshops.range/scrub lands through ecological/socio-econoniic condilions; lcad ititiaLion & site selection study.siakeholder participation.

Assisl PFD and CO in Lhe social aspects of participatory management through 18 mio Reports, training of spearhead teams and farmers, workshops, socio-irainiing, implenmentation atid monitoring. economic data base.

Assist PFD with community development, resource persoit on spearhead leani 108 mo Reports, training workshops, nicroplannitig manual.responsible for participatory appraisal techniiques, comniunicalion, local

institution building.

Assist PFD with livestock management, resource person on spearhead team 108 ino Reports, joint nsaitagemeist agreements.responsible for identifying and implementing alteritarive grazing systems. t3 >

Assisl the preparation of research plans for SRSFM; define & assist in studies 6 mo Reports, research plans, research papers. 1- D

for the measurement of project inspacts ott range/scrub forest ecosystems. CD X

I- uHl


Staff Appraisal ReportTable 11: Technical Assistance Summary - continued

Source &DurationObjective Activilies Forcign I Lo Ouilput

Assist PFD in conducting a Biodiversity inventories aind socio-econiomic sludies in tile irrigated planiiationis of 10 mo 34 mo Suirvey reporls, maps, workshops.pilot component on proiisoting Punjab, selection of three planitationls for detailed design of uisanagement plans,tile ens ironimenmal and finanicial including tie relsabilitationi of irrigatiots distiibtilion syslems for mtdil-purpose

sustainabilisy of irrigated conimercial/environmnental use of plantialions.timber plantations.

Definition of sustainable models for privale/puiblic interaction on the managenient 7 mo 23 mo Design reports, maps, workshopsof plamstaliomss.

Assist PFD in coustiacting out the wotks for rclsabilitation and irnplemsmenatson of 10 olso 50 mo Reports, workshops.new conservationi land use us three selected planitalions.

Assist PFD in tnonitoring and Itilroduce project nianagemiient software lo PFD; assist PFD in M&E and 2 mo 32 nso Reports, vorkshops, deinonstration/development of sofiware.esaluation of project supersision activilies, interact wilh IDA supersision missions.iimplementation.

CondUct mid-term review of project activities. 4 mo Mid-leens Reviesv Report, workshops.

u,

Assist PFD us further sectoral Prepare fulure project 24 no 24 ino Preparationi report witli supporting annexes.

planning.

I) 9,sfiom o* PID Fa ID

m "xI-..

PAKIRSTANPUNJAB FOREST SECTOR DEVELOPMENT PROJECT


Table 12: Schedule of Supervision Missions

Date SCOPE/AREAS OF CONCENTRATION STAFFING

I 9/95 Project Launch: credit effectiveness; procurement, disbursement procedures; Special Account; review Task Manager, Disbursement Officer, Sociologist/Communityof site selection study for SRSF; ToR of HRD study; PD resource mobilization; appointment of Development Specialist, Farm Forester.consultants; detail planning and scheduling of training programs; establishment of MIS; establishment ofperformance/condition indicators data base; detail specification of work plans; implementation ofPlantations pilot; computerized project management.

2 2/96 Semi-Annual Review: procurement; progress of work planning; PFD resource mobilization; briefing of Task Manager, SociologistlCommuniLy Development Specialist,consultants; review of research plans; progress of plantations studies; trainring; fnmtioning of MIS. Range Management Specialist, Irrigation, Biodiversity

specialists.

3 9/96 Semi-Annual Review: FY96/97 work program; progress of staff training; performance of farm Task Manager, Sociologist/Comnunity Developmnent Specialist,extension/fanmer training; forest produce marketing; progress of nursery privatization; progress of SRSF Farm Forester, Range Specialist.conmmunity organization; progress of physical works; performance of range management; review ofresearch; consultant reports and recommendations; implementation of pilot demonstration on 3plantations.

4 2/97 Semi-Annual Review: progress of forestry extension; training; physical works; MIS performance; Task Manager, Fanm Forester, Wood/Forest Produce Marketinga' remaining project scheduling; cost estimate revision; progress on HRD recommendation; preliminary Specialist, Range Management Specialist.

planning of FY97/98 work program; preparatons for Mid-Term Review.

5 9/98 Mid-Term Review: environmental impacts; conditions of pastoral economies in Pothwar and Thal; Task Manager, Sociologist/Community Development Specialist,project scheduling: financial planning: FY98/99 work program. Farm Forester, Range Management/Animal Husbandry

Specialist.

6 2/99 Semi-Annual Review: follow-up to Mid-Term Review; implementation of Mid-Term Action Plan; Task Manager, Farm Forester, Range Management, Irrigationreview of institutional reform; progress of works. Engineer, biodiversity specialist.

7 9/99 Annual Review: FY99/00 work program: progress of extension. community organization and physical Task Manager, Sociologist/Community Development Specialist,works; monitoring; identification of seconad-stage operation. Farm Forester.

8 9/0 Annual Review: FY99/00 work program; progress of extension, community organization and physical Task Manager, Sociologist/Conminunity Development Specialist,works; monitoring; arrangements for the preparation of the completion report. Range Management Specialist.

9 9/01 Project Completion Review: review of completion reponr; reconciliation of accounts; final Task Manager.disbursements; loan closing.

-3-A

5 XW

I' L.a

Annex 3

IV. Monitoring and Evaluation

A. Progress of Implementation

Monitoring Physical Achievements and Progress Reporting

79. The project's monitoring system will be designed to record basic physical progress and financialdata required to assess the status of the project's implementation and evaluate its financial management. Theproject management office will periodically report on the progress of project implementation, including actualaccomplishments versus planned tasks, and actual expenditures versus planned allocations.

80. The project management unit will present these data in semi-annual reports, which will serve theBank as well as GOPunjab in providing a common frame of reference for analysis and decisions. The report'ssummary of the project status will describe project implementation within the reference period, commenting onthe situation for each component and on progress of the project as a whole. They will indicate advances asscheduled and agreed with the Bank, as well as the project's general impact to date. The report will provideinformation on financial management. Questions and problems from prior reports will be addressed, and newor remaining questions will also be discussed. Implementation and impact indicators will be provided in aformat to be designed and agreed upon at the time of the project's launch. The reports will also indicate thestatus of compliance with legal covenants.

81. The presentation of each semi-annual report should use the following outline:

1. Executive Summary

2. Project Status- Implementation by Component

Implementation IndicatorsCompliance with Legal Covenants

- Significant Developments since the Previous Report

3. Project Administration- Monitoring and Evaluation- Coordination among Involved Institutions/Departments

4. Financial Reporting- Disbursements- Acquisition Procedures- Financial Reports- Project Technical Assistance

5. Project Evaluation- Problems and Recommended Corrective Actions

82. The semi-annual reports will include tables of implementation indicators, expenditure indicatorsand status of legal covenant indicators.

7 77

Annex 3

Monitoring of Socioeconomic Benefits

83. The project's monitoring will also link physical progress and financial monitoring with monitoringthat evaluates impacts on local communities and individual beneficiaries. The project will undertakerepresentative household surveys and field investigations to measure the impact with and without the project.Special attention will be given to measuring changes in output due to investments in land development and to thegrazing management improvements introduced under the project. Household investigations will also measurethe project's impact on increasing household wealth and on improving access to public services. These data willbe retained in the project's overall information system to allow for the establishment of correlations betweeninvestments and financial, economic and social benefits.

B. Management Information System

84. The project will support the establishment of a computer-based Management Information System(MIS) based on a set of related if not integrated personal computer software applications to facilitate themanagement of financial, temporal and spatial information. The applications under consideration forconstituting the MIS are Microsoft Project, for computerized project management (CPM), Quicken, forfinancial management, and ATLAS-GIS or Map Info, as a desktop GIS package.

85. Microsoft Project could be used to facilitate overall project scheduling and detail planning ofsubprojects such as the individual community developments under the social range and scrub forest component.One of the attractive features of the software is its facility for relating time scheduling with resource use andcost data. A number of Bank-financed projects are now employing the software; their experience will helpguide the design and use of implementation files for the present project.

86. Quicken would standardize financial accounting and facilitate the production of reports organizedby expenditure class, procurement class, disbursement class, location, or client. The software would providethe framework for developing a financial database of actual costs, resource use and disposition of assets.

87. The GIS software would permit the storage of maps and the consolidation of various sets ofinformation associated with specific physical sites of the project's operation. Not only would the GIS be usedto document existing site conditions and changes in land characteristics and use under the project, as would berequired, for example, for the social range and scrub forest component, but it could also record the spatialfeatures of a wide range of project implementation activities, such as the introduction of various farm forestryhusbandry techniques, as well as of the project's impacts on economic, marketing and social conditions. As atool for synthesizing data collected in monitoring, the GIS could be used with the CPM, the financial accountingsoftware and possibly other software applications to portray when, where, by whom , for whom, and using whatresources and techniques project implementation is expected to occur and to compare actual versus plannedachievements against observed conditions following the completion of the project.

88. The detailed specification of the MIS will begin at the time of the project launch and is expectedto be completed by the time of the first semi-annual review. The project will finance technical assistance todesign the MIS, install and adapt the software applications, and train project personnel.

C. Key Performance Indicators

89. The remainder of this annex is a listing of possible project implementation and impact indicatorsfor use in the MIS. The indicators are not listed in any particular order of priority. The lists are not intendedbe exhaustive accounts nor are all items to be considered necessary; although, strongly recommended items aremarked by an asterisk.

- 78 -

Annex 3

Farm Forestry

1. Quantity of improved seed produced by species.

2. Number of new species/improved varieties introduced.

3. Number of new research findings transmitted to farmers.

4.* Number of new nurseries established by farmers.

5.* Number of existing nurseries expanded by farmers.

6.* Number of nurseries closed by PFD.

7.* Number of new farmers (by farm size) taking up farm forestry.

8.* Number of existing farmers expanding their FF activities.

9. Number of seedlings grown in farmer nurseries.

10.* Number of seedlings planted by farmers.

ll.* Number of seedlings established by farmers.

12. Number of farmers to use fertilizers (a) in nurseries and (b) in planting.

13. Number of farmers to take up agroforestrv techniques.

14. Number of farmers that (a) prune and (b) thin.

15.* Number of farmers adopting improved harvesting techniques.

16.* Shifts (upwards or downwards) in unit prices for tree produce.

17. Number of contracts drawn up between industrial user and farm producer (individuals orcooperatives).

18. Date loz grading system introduced.

19.* Area of fallow land and degraded/marginal areas treated.

20.* Numbers of farmers trained (a) in the field and (b) by PFRI.

21. Numbers of PFD staff trained (a) locally and (b) overseas.

22. Numbers of women forestry extension staff engaged.

23.* Annual series of per seedling quantity and value of inputs and labor used in establishingplantings over a range of current farm planting densities.

- 79 -

As

24.* Annual quantities of wood marketed and sales Drices.

25.* Annual series of estimates of wood demand for various types and grades of wood.

26. * Annual series of quantities of wood harvested and marketed by farmers.

Social Range and Scrub Forest Management

1. No. of training workshoDs held.

2. No. of Spearhead Teams established.

3. No. of Svearhead Teams trained.

4.* No. of Community Organizations formed.

5. No. of participatorv Wlanning exercises completed.

6. No. of ioint management agreements sanctioned.

7. No. of farmers trained.

8.* No. of hectares of wublic land treated: (pasture, afforestation, etc.).

9.* No. of hectares under village committee management.

i0.* No. of hectares of communal land treated.

i I.* No. of hectares private land treated.

12.* Grazing uressure and forage biomass by season for various pasture and scrub forest areas.

13. * Stocking rates by season for various types of pasture and scrub forest areas.

14.* Effectiveness of community management/protection (to be monitored in conjunction withthe community using mutually agreed indicators).

15. Amount of community funds mobilized.16. * Herd composition, herd management and animal performance: age classes, numbers of

animals by age and sex and breeding function, fertility rates, birth weights, averageweights by age class and sex, numbers of animals culled by age class and sex, times ofculling, culling weights, mortality by age class and sec, production of wool and otheranimal projects.

17.* Unit prices of animals, for sale to and by pastoralists, and of animal products.

18.* Amount of labor time, by age and gender, devoted to animal husbandry.

19. Number, frequency and quality of marketing services.

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20. Formal (and, if feasible, informal) credit statistics: number of disbursements, averageamounts of loans, collections and default rates.

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PAKISTAN



ANNEX 4

TERMS OF REFERENCE FOR TECHNICAL ASSISTANCE

A. Overall Forest Sector

Human Resources in Punjab Forest Sector

Objective: This consultancy aims at the improvement of the institutional set-up in the forestry sectorof Punjab by concentrating both on public sector institutions and the public at large. Inparticular, a study will produce specific province-wide recommendations concerning: (i)redistribution of roles between public sector forestry institutions and the private sector; (ii)redefinition of roles within forestry agencies of the public sector; and (iii) requiredgovernmental actions to support the role of public and private sector institutions involvedin the forestry sector in an economically efficient way. In addition, the consultants willassist PFD in contracting out services for the preparation and mass diffusion of programspromoting the conservation of forests and natural vegetation according to theguidelines recommended for the implementation of Pakistan's National ConservationStrategy (see IUCN: Implementation Design for the NCS of Pakistan January, 1992).

Study Methodology:Sector Obiectives and Present Capacitv: Two working groups will be created in the PunjabForest Department (PFD). Group 1, at management level, will examine sector objectivesin the light of present and future provincial and national needs related to forestry. Thiswill include a review of policies, legal frameworks, responsibilities, comparativeadvantages, linkages, structure and funding. Group I will define the forest sector for thefuture regardless of constraints. Group 2 will concentrate on human resource issuesincluding staff numbers, education, training and experience profiles, deployment, jobdescriptions, personnel policies, training opportunities and funding of training. Thefindings of the two working groups would form the basis for a thorough review of humanresources and the institutional setting in which the human resources operate. The reviewwill include PFD, other government institutions and private sector institutions includinglocal rural communities.

Consensus Building Workshops: Series of working level workshops will be held to discussthe working groups recommendations and reach provincial consensus (with Federal, NGO,and popular participation) on the need for action and a time-table for implementation ofrecommended changes. High level PFD and GOPunjab support to the recommended actionplan will be sought.

Duration: to be initiated at project launching and will extend for a period of 12 months.

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Annex 4

Implementationand TechnicalAssistance: This effort will be led by Punjab P&D and PFD. For the study, hired technical assistance

will be required to facilitate the process of the two working groups described above byassisting in the preparation of status papers to form the basis for the analysis of forestsector development and make suggestions for improvement. TA activities will include thedefinition of frameworks for policy and human resources reviews, data collection,interviews and analysis to arrive to workable options for consideration at the plannedworkshops. TA will be required to assist in the preparation and execution of theworkshops. Two consultancies will be needed for this activity, adding to a totalrequirement of 8 man-months. The expertise required is Forest/Natural Resources policyand Institutional Analysis/Human Resources Development. For assisting PFD incontracting out the mass awareness services, the consultants will advise PFD on terms ofreference for these services after clearance by IDA and in accordance with the overallpolicy directions pursued in the NCS and in the present project.

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B. Farm Forestry

1. The following three farm forestry consultants should be in country at the same time as the threeactivities of nursery management, tree management and marketing are closely related.

B.1. Consultant on Nursery Techniques

Duties

2. The consultant will be responsible to the CCF(PD), Lahore. The consultant will work in-countryfor 8 months over the 6-year project period. Specifically the consultant will:

a. Review current nursery practices in both the farm forestry and scrub & range landscomponents. The main focus of this review would be on private farm nurseries but wouldalso cover practices in PFD and PFRI demonstration and research nurseries.

b. Recommend a package of improved practices for all three types of nurseries bearing inmind the different objectives of each, the urgent need to improve seedling quality, demandsof the farmer and returns to the private nurseryman.

C. Review the current system by which the private nurseryman: determines the quantity andtype of seedlings required annually by farmers, PFD and others; obtains quality seed;receives technical assistance; and arranges for sale and distribution of seedlings.Recommend improvements in these systems.

d. Organize workshops for PFD extension foresters, trainers and "contact" farmers.

e. Develop a program of adaptive nursery research priorities for PFD and PFRI.

f. Prepare a succinct report on his/her findings and recommendations at the end of each visitbefore departure.

Qualifications and Experience

3. The consultant should have a research degree and preferably be a staff member of a researchinstitute, university or tree seedling production entity. The consultant should have experience working incountries where similar tree/shrub species are being grown for large scale production on farmer lands.

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B.2. Consultant on Forestry Extension: Cultural Practices

Duties

4. The consultant will be responsible to the CCF(PD), Lahore. The consultant will work in-countryfor 8 months over the 6-year project period. Specifically the consultant will:

a. Review current farmer practices in planting, beating-up, weeding, pruning, thinning andprotecting (i.e. the full range of activities involved in tree management) and recommendhow these can be improved to increase the volume and quality of end product.

b. Organize workshops for PFD forestry extension staff, trainers and selected "contact"farmers.

c. Determine what, if any, priority adaptive research activities related to cultural practicesneed to be undertaken by PFD/PFRI.

d. Prepare a succinct report on his/her findings and recommendations at the end of each visitbefore departure.


5. The consultant should have a post-graduate degree in forestry and be a staff member of a forestrytraining institute, University, research institute forest department or private company working on the developmentof improved cultural practices. The consultant should have experience working in countries where similarspecies are being grown for large scale production by farmers.

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B.3. Consultant on Marketing

Duties

6. The consultant will be responsible to the CCF(PD). Lahore. The consultant will work in-countryfor 8 months over the 6-year project period. Specifically the consultant will:

a. Assist PFD in contracting marketing services from private sector and in implementingmechanisms for collecting data on expected farmer yields and disseminating it to theprovince's wood using industries.

b. Review existing harvesting and distribution systems (felling, bucking, log measurement,transportation to market, etc.). Recommend improvements to these systems and helpstakeholders formulate appropriate log grading rules for farm forestry produce.

c. Help develop models for estimating future yields (by species, log assortments, locationetc.) from Punjab's farm lands and projecting the forest industries future requirements.Recommend ways of providing this information to the producers and users of wood.Special emphasis will have to be given to the pulp and paper industry which is likely to bethe largest consumer of small sized material.

d. Organize a workshop for PFD staff, representatives of the industry and farmers toformulate future working relationships.

e. Prepare a succinct report on his/her findings and recommendations at the end of each visitbefore departure.


7. The consultant should have a post-graduate degree, preferably a MBA, and be a staff member of areputable firm or organization working specifically on forest products marketing. The consultant should haveexperience working in developing countries and be familiar with methods of harvesting and transportation to millsite.

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C. Social Range and Scrub Forest Management

C.I. Consultant on Human Ecology in Range Management

Responsibilities

8. The consultant will provide a total of twelve months of inputs over project years I to 4. She orhe will report to the Chief Conservator of Forests (Project Director), Lahore.

9. The consultant would assist the PFD and Community Organizations in developing and introducingimproved range and scrub utilization and management, through range rehabilitation, rotational grazing and othersystems suited to local ecological and socio-economic conditions.

10. In particular, the consultant would provide technical leadership in the design and implementationof initial site selection survey work (see following ToRs for site selection study) and

a. Provide technical support to the development of training courses for forest department staffand farmers on range management;

b. Act as resource person at an initiation workshop for PFD officers to be held during projectyear l;

c. Act as a resource person at a workshop for implementing field staff to review theexperience of the participatory approach to range management to be held in project year 3;

d. Prepare a succinct and action-oriented report outlining his or her findings andrecommendations for discussion at the end of each visit.


11. The consultant should have a higher degree in social aspects of range management, or a closelyrelated discipline, and have at least five years' field experience in the management of rangeland with theparticipation of local communities (e.g. with group ranching grazing associations)in countries with similar agro-ecological and socio-economic conditions.

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C.2. Consultant on Participatory Training and Planning

Responsibilities

12. The consultant will provide a total of eighteen months of inputs over project period, including sixmonths in each of Years I and 2. She or he will report to the Chief Conservator of Forests (Project Director),Lahore. The consultant would assist the PFD and in preparing and implementing training courses inparticipatory natural resource planning and management for the SRSFM component.

13. In particular, the consultant would:

a. Prepare courses and course materials for training Spearhead Teams, DFO field staff, andfarmers (see following indicative training plan);

b. Prepare and facilitate the initiation workshop for PFD officers to be held during projectyear I;

c. Prepare and facilitate a workshop for implementing field staff to review the experience ofthe participatory approach to range management to be held in project year 3.


14. The consultant should have a Masters degree in a development related field and at least five yearsexperience in participatory planning/training with government or non-government organizations.

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C.3. Resource Persons for Spearhead Teams

15. Under the Social Range and Scrub Forest Management component, two specially trained spearheadteams will assist and train PFD field staff in the processes of forming Community Organizations, participatoryplanning, and formulating joint agreements. Each spearhead team will consist of three Forest Department staff (aDFO, an SDFO, and a Forest Ranger) and two resource persons. Spearhead teams will at all times workalongside locally posted PFD field staff, and be responsible for imparting to field staff the skills necessary forsupporting an ongoing social range management program.

Responsibilities

16. The resource persons will be recruited on an annual contract basis and report to the Conservator ofForests. Their immediate supervisors will be the Divisional Forest Officer heading their spearhead team.

17. The resource persons will support the spearhead teams in their work of promoting the formationof Community Organizations, participatory planning, and the formulation of joint management agreements byproviding support in the area of local institutional development, and participatory appraisal and planning.

18. Of the two resource persons on each spearhead team, one will be a specialist in communitydevelopment and institution building, the other in livestock and rangeland management.

19. The community development resource person will be responsible for providing practical fieldtraining to PFD staff in:

a. participatory appraisal techniques such as resource mapping and assessment;

b. communication and extension techniques;

c. local level institution building.

20. The livestock management resource person will be responsible for providing practical training toPFD staff in:

a. assessing, through participatory appraisal, current livestock management and range usepractices;

b. identifying, in collaboration with community members, alternative grazing and managementsystems which are both technically and institutionally viable (for example, appropriaterotational or deferred grazing systems);

c. formulating joint management agreements between Community Organizations and the PFD*for the management of rangeland.

Qualifications and experience

21. Resource persons should have degree level education in the social sciences or other developmentoriented discipline. Their main qualification would be that of practical skills and at least three years experiencein participatory appraisal and planning techniques and community development gained through NGO,government, university, or research institute. Willingness to live and work under field conditions will beessential. Women will be encouraged to apply.

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C.4. Initiation and Site Selection Study

Objectives22. The objectives of the study are:

(i) to select priority areas for the implementation of the Social Range and Scrub ForestManagement Component according to the criteria given below; and

(ii) define participatory institutional forms and mechanisms for the implementation of thecomponent at the community level.

Terms of Reference

23. The consultants will:

a. assemble available information on the soils, ecology, use, and condition of range and scrubforest in the Pothwar and Thai zones, as well as on rights and usages governing theirexploitation and socio-economic information on adjacent communities;

b. on the basis of this information and discussions with communities, define physical andsocial criteria for the identification of priority reserve areas for initial implementation ofthe SRSFM;

C. prepare a detailed implementation schedule for the SRSFM component detailing reservesand villages to be worked in;

d. define institutional forms and procedures for the implementation of the component,including proforma joint management agreements;

e. make proposals for a pilot cost recovery scheme which would give an opportunity forcommunities to invest in the continuing improvement of rangelands, possibly with thesupport of matching funds from the government.

Timing and Team Composition

24. The initiation study will be undertaken over a three month period during the first year of theproject. The study team will consist of the Consultant on Human Ecology and Range Management, supported bytwo research assistants and members of PFD staff.

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C.5. Mid-Term Evaluation

Objectives

25. The objectives of the review are:

(i) to assess progress in Social Range and Scrub Forest Management (SRSFM) componentactivities against the evaluation criteria given below; and

(ii) in the light of the findings from (a) to advise on use of funds allocated to the social rangeand scrub management component during project years 4 to 6.

Terms of Reference

26. The consultants will:

a. Collate PFD monitoring data on Community Organizations participating in the SRSFMcomponent and range and scrub forest areas coming under joint management.

b. Undertake field visits to these villages to provide first hand confirmation of the data;

c. On the basis of the data and field visits, review the viability and sustainability of theSRSFM component in the light of the following evaluation criteria;

1. Institutional sustainability and the adequacy of the organizational arrangements forparticipation; and

2. Technical viability, productivity and appropriateness of the range improvementmethods and grazing management systems adopted;

3. Economic viability of component activities, including the implications for equity(the proportion of benefits received by women, and landless or marginal farmers;

4. Environmental implications in the long term of the kinds of activities promotedunder the project.

Timing and Team composition

27. The evaluation study will be undertaken over a three month period during the third year of theproject. The review team will consist of three members, with skills in range and scrub forest management,community development, and rural sociology. The report and recommendations will be delivered in advance ofthe project mid-term review.

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C.6. Preparation of Research Plan

28. The objective of the Social Range and Scrub Forest Management (SRSFM) component is toimprove the productivity of range and scrub forest lands in the Pothwar plateau and Thal areas through theparticipation of local communities in their protection and management. Communities will be given a stake in themanagement and utilization of public (Forest Department) rangeland and scrub forest, and alternative sources offuelwood and fodder will be created through the development of communal and private lands.

29. The component includes research activities directed at assessing improved methods of range andscrub management, including range rehabilitation, rotational grazing and other systems suited to local ecologicaland socio-economic conditions.

Tasks

30. The consultant will in the period of one month:

a. prepare a Research Plan for the SRSFM component to be implemented during the life ofthe project;

b. define physical criteria and measurement methods for monitoring the impact of projectsupported activities on range and scrub forest productivity and utilization; and

c. where feasible, assess the scope for the involvement of participating CommunityOrganizations in research and monitoring.

31. Research themes considered should include, but not be confined to:

- Introduction trials of grasses, shrubs, and trees;- Establishment of exclosures for ecological studies;- Range conditions and trend;- Rotational and deferred grazing systems; and- Economic analysis.

Research activities would be implemented by the Punjab Forest Research Institute, where necessary withsupporting local or international Technical Assistance (for example, in rotational grazing systems and economicanalysis). Proposals for each theme should be defined in terms of: justification; objectives; methods; researchdesign; data collection and analysis; staff/human resource requirements (including the need for externalresources); and budget.

32. All proposed research activities should be applied in nature, and be closely justified in terms oftheir relevance to the development and improvement of technologies and management systems suitable forcommunity implementation.

Qualifications and experience

33. The consultant should have an advanced degree in range management or forestry, and extensiveexperience of range management research and implementation, preferably with a participatory dimension.

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C.7. Training of Spearhead Teams

Participants: Spearhead Team members (DFOs, SDFO, Forest Ranger, and two resource persons)

Purposes/ Participatory rural appraisal skillsSubject Matter: Diagnosis and design

Gender issuesVillage social mappingVillage resource mappingFocus groupsPriority settingInstitutional Development

Social Range ManagementMonitoring and evaluation (principles, methods, procedures)Training skills

Trainers/Resource Institutes: PFRI, Department of Sociology, University of Faisalabad, NGOs

Duration: 3 weeks (refresher course of I week)

Timing: Year I for the two Spearhead teams. Refresher course in Year 3.

C.8. Training in Participatory Planning Skills for Field Staff

Participants: Rangers, foresters, and guards in SRSFM ranges

Purposes/ Participatory skillsSubject Matter: Diagnosis and design

Village developmentGender issuesVillage social mappingVillage resource mappingFocus groupsPriority settingInstitutional DevelopmentMonitoring and evaluation (principles, methods, procedures)

Trainers/Resource Institutes: PFRI, Department of Sociology, University of Faisalabad, NGOs

Duration: 2 weeks (at PFRI)

Timing: Year 1 (100 persons), and Year 2 (200 persons).

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C.9. Training for Community Organization Members

Participants: Community Organization (CO) members

Purposes/Subject Matter: Organizational skill, range management skills

Trainers/Resource persons: NGOs, PFRI, Spearhead Tearns, etc.

Duration: up to one week per course

Timing: Years 2 to 6 (40 participants per year)

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D. Timber Plantations

34. The overall objective of this pilot component of the project is to define and demonstrate thefeasibility of private/public interaction for the rehabilitation and sustainable management of Punjab's irrigatedtimber plantations along multi-purpose objectives of environmental conservation, commercial timber production,and training/education (see the IUCN/PFD study on Environmental and Ecological Considerations forManagement of Puniab's Irrigated Plantations, December 1994). The pilot will be executed by PFD with theconsultants assisting PFD headquarter and field staff in data collection, analysis and interpretation. Theconsultants will be expected to develop close working relations with PFD and national/local NGOs and academicinstitutions that are relevant to this field.

D.I. Initial Surveys and Studies

Objective: These activities will be undertaken as part of the pilot component on irrigated timber plantationsto: (i) inventory the biodiversity value of plantations; (ii) select three representative plantations fordemonstrating altemative multi-purpose management techniques; and (iii) conduct a study onprivate/public sustainable plantation management.

Duties: The Consultants will assist PFD in undertaking the following actions: Survevs-(i) Grouping of allPFD plantations into a rational system of classification with respect to agroecological andbiodiversity data and current land use and management objective; (ii) preliminary selection of arepresentative number of plantations for baseline surveys; (iii) completion of base line surveys onspecies diversity, agroecological and socio-economic conditions, current management practiceswith respect to land, water and vegetation; (iv) quantitative and qualitative assessment of theoverall importance of plantations for biodiversity conservation and other environmental objectives--i.e. land/water conservation, carbon sequestration, training/teaching; Selection-(v) finalization ofcriteria for the selection of three priority plantations for demonstration of cost-effectiverehabilitation and management; (vi) selection of the three plantations; (vii) finalization of terms ofreference for the design of plans for technical, institutional and financial management of the threeplantations; Private Sector-(viii) conduct surveys and studies to define options in future privatesector involvement in plantation management; and (ix) recommend potential models ofprivate/public interaction that can be tested in the three selected plantations.

Duration: The above actions should be initiated at project launching and would require about 12 months forcompletion.

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D.2. Design of Demonstration Management Plans on Selected Plantations

Output: As part of the pilot component on Timber Plantations, this consultancy will lead to the design ofdetailed plans for demonstrating sustainable plantations management on three selectedrepresentative plantations.

Duties: For each of the three selected plantations, the consultants will assist PFD in undertaking thefollowing actions: (i) physical and socio-economic surveys; (ii) identification of options forland/water use for attaining multi-purpose management objectives; (iii) study of altemative modelsfor private sector involvement in plantation management for achieving financial autonomy of theplantations; (iv) determination of regulatory and institutional implications of management options;(v) feasibility study of alternative management plans; and (vi) finalization, in consultation with allstakeholders, of detailed plans for demonstrating environmentally and financially sustainableplantation rehabilitation and management.

Timing: This assignment will be initiated as soon as the selection of three plantations has been completed(see previous terms of reference) and would extend for about 5 months.

D.3. Supervision and Evaluation of Pilot Implementation

Objective: The duties summarized here aim at: (i) assisting PFD in the execution of works and services forthe implementation of the pilot component on Irrigated Timber Plantations as prepared in theplans designed for three selected plantations as detailed above; and (ii) evaluation of the results ofthis demonstration component.

Duties: For each of the three demonstration plantations the consultant will assist PFD in: (i) thecontracting out of services related to land and water system rehabilitation and management usingthe guidelines and methodology followed in the Second Irrigation System Rehabilitation Project(including assessment of water distribution systems and preparation of reports on land and watersystems condition surveys and proposed solutions for IDA review and comments--irrigation systemrehabilitation work will include canal bank rehabilitation, restoring canal prisms to their normalsection, and modification of selected structures and outlets. No systematic, large scale lining ofcanals will be implemented); (ii) the contracting out of works for the rehabilitation of land andwater management systems in the plantations according to plans acceptable to IDA; (iii)supervising these works as well as planting reforestation included in the demonstration component;(iv) implementing selected organization and management arrangements with private sector andlocal community involvement; (v) monitoring of relevant physical, socio-economic and financialindicators of the pilot's impacts; (vi) evaluation of the pilot and dissemination of its results in tostages--mid term review and at year 5 of project implementation; (vii) definition of policyimplications of the pilot component; and (viii) preparation of an action plan for theimplementation of these policy implications.

Duration: The above activities will be implemented as soon as the detailed plans for the three selectedplantations have been finalized. It is expected that this work will extend for about 3 years.

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PAKISTAN



ANNEX 5

DETAILED PROJECT COST ESTIMATES

A. Price Contingencies

1. The foreign cost component of the project's price contingencies are based on projections, currentas at May 1994, of changes in the World Bank's Manufactured Unit Value (MUV) index, which is based onmanufactured exports, expressed in U.S. dollars, from selected industrialized countries to developing countries.

2. The projected rates of annual local inflation were provided by the Country Operations, Industryand Finance Division, Country Department III (Afghanistan, Pakistan and Sri Lanka) of the World Bank, and arebased on movements in the Consumer Price Index. Given these projections of foreign and domestic inflation,movements in the nominal rupee/US$ exchange rate were estimated, assuming that the real effective exchangerate remains constant.

3. The inflation rates are yearly values within each project year, with project years corresponding tofiscal years. Fiscal years start in Pakistan on July 1. The exchange rates used are constant purchasing parityrates estimated for project-year midpoints. An exchange rate of Rs 30.0/US$ was applied at the time of datacollection to convert local and foreign exchange costs, while a rate of Rs 31.2/US$ was used to convert costs upto the start of the project. The following table summarizes the parameters used:

Table 1. Inflation Rates and Exchange Rates Used in the Costings andProject Analysis

Fiscal Domestic Foreign Inflation Exchange RateYear Inflation (Rs/US$)

1994/95 13.5 1.5 31.5

1995/96 9.5 1.8 32.8

1996/97 6.5 2.6 34.7

1997/98 6.3 2.5 36.0

1998/99 6.3 2.5 37.3

1999/2000 6.2 2.4 38.7

2000/01 6.0 2.4 39.7

4. Four months were expected to pass from the time of the collection of data and the negotiation ofthe loan. The Base Costs presented in the Detailed Cost Tables have been adjusted to account for inflation duringthis period, i.e., base costs are values expected to be current for the beginning of December 1994. For domestic

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Annex 5

costs, this adjustment was approximately 3.3 percent. The adjustment for the foreign exchange components ofcosts was zero. An additional adjustment was made to the price contingency estimates to account for inflation inthe time between negotiations and the project start up (6 months). For local costs, this additional adjustment was4 percent. Again there was no adjustment for foreign costs in this period.

5. Cost estimates for incremental government staff are based on revised pay schedules as of June1994. They are calculated on the midpoint monthly salary of the basic pay scale range and include allowancesof 40 percent of the basic pay for housing, travel, etc. Inflation rates of 2 percent within project years wereapplied to these base costs, which reflects the general lag in the cost of living adjustments for civil serviceemployees.

6. The compounded rates generally applied to base costs (plus physical contingencies) to arrive atcosts including price contingencies were the following:

Table 2. Compounded Inflation Weights (%)

1995/96 1996/97 1997198 1998199 1999/00 2000/01

foreign 1.5 3.4 6.1 8.7 11.4 14.1

local 7.9 16.5 23.9 31.7 40.0 48.6

Compounded rates of 9 percent and 8.1 percent were used to adjust local costs until the time of negotiations andto the project start. The corresponding compounded rates for foreign cost adjustments were zero and 1.3 percent.

B. Physical Contingencies

7. A general rate of 10 percent was applied to base costs for physical contingencies. A rate of 15percent was used for most civil and field works. No physical contingencies were calculated for incremental staffcosts.

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PAKISTAN


Staff Appraisal ReportTable 3: Expenditure Accounts by Components - Totails Including Contingencies (USS'000)

Institutional Support Rehabilitation

Human Monttoring of Scrub Expansion

(USS '000) Resources Administration & Forests and of Farm Timber

Development Unit Evaluation Rangelands Forestry Plantations Total

1. Investment CostsA Civil Works - - 125.5 632.7 2,067.5 2,825.7

B Field Works - - - 892.2 - - 892.2

C. Afforestation - - 973.9 - 12.6 986.6

D. Vehices - - 168.9 302.8 3,641.6 - 4,113.4

E. Machinery & EquipmentFarm 179.7 - 179.7Transport - - - - 1,452.5 - 1,452.5

Electronic/Technical - 10.4 15.2 34.2 481.1 - 540.9

Other Materiais/Toos - - 10.5 4.0 12.8 - 27.2

Subtotal Machinery I Equipmant 10.4 25.6 217.9 1,946.3 2200.2

F. Office Fumdure - - 18.0 - 92.4 - 110.4

G. Studies - - 20.7 110.1 1,261.0 1,391.8

H. Consultant ServicesForeignTechnicalAssistance 154.0 547.0 - 344.9 910.5 - 1,956.4

Local Services - 59.6 53.2 321.8 52.8 - 487.4

Subtotal Consultant Services 154.0 606.6 53.2 666.6 963.3 - 2,443.8

1. Training

Foreign - - - 135.6 1,654.8 - 1,790.4

Local 368.2 - - 17.5 3,590.1 3,975.9Subtotal Training 368.2 - - 153.1 5,244.9 - 5,766.2

J Marketing Services - - - 1,909.5 1,909.5

Total Inveetment Costs 522.3 617 0 265.7 3,352.7 14,540.7 3,341.2 22,639.6

II Recurrent CostsA Incremental Staff - 59.5 485.0 98.7 4,194.2 - 4,837.4

B Fied Works/Afforestation - - 51.0 232.9 - - 283.9

C. Civil Works O&M - - 6.4 1,077.4 - 1,083.8D. Materias/Equipment and Tools O&M - 3.7 257.1 96.3 1,585.1 1,942.2

E. Vehicl O&M - - 89.0 333.2 2,539.0 - 2,961.2

Total Recurrent Costs - 63.3 882.1 767.4 9,395.7 11,108.5

Total PROJECT COSTS 522.3 680.2 1,147.8 4,120.2 23,936.5 3,341.2 33,748.1

Taxes 3.5 118.9 257.4 3,567.4 3,947.2

Foreign Exchange 127.3 461.1 142.4 959.7 8,313.2 1,457.8 11,461.5

PAKISTANPtlNJAB FOREST SECTOR DEVELOPAIENT PROJECT

Staff Appraisal ReportTable 4: Expenditure Accounts by Components - Totals Including Contingencies (Rs'000)

Institutional Support RehabilitationHuman Monitoring of Scrub Expansion of

(Rs '000) Resources Administration & Forests and Farm TimberDevelopment Unit Evaluation Rangelands Forestry Plantations Total

I. Investment CostsA. Civil Works - - 4,390.3 21.479.0 75,659.0 101,528.2B. Field Works - - 33,094.1 - - 33,094.1C. Afforestation - - - 36,157.3 - 461.5 36,618.8D. Vehicles - - 5,735.4 10,441.2 123,897.1 - 140,073.7

E. Machinery & EquipmentFarm - - - 6,099.2 - - 6,099.2Transport - - - - 49,310.9 49,310.9Electronic/Technical - 352.0 515.2 1,162.4 16,413.7 - 18,443.3Other Materials/Tools - - 382.4 134.8 476.9 - 994.2

Subtotal Machinery & Equipment - 352.0 897.6 7,396.4 66,201.6 - 74,847.6F. Office Fumiture - - 609.8 - 3,187.4 - 3,797.2G. Studies - - - 702.2 3,808.9 43,927.6 48,438.7H. Consultant Services

Foreign Technical Assistance 5,444.4 21,855.2 - 12,089,7 31,441.0 - 70,830.2Local Services - 2,409.4 1,859.1 12,116.2 1,828.3 - 18.213.0

Subtotal Consultant Services 5,444.4 24,264.5 1,859.1 24,205.9 33,269.3 - 89,043.21. Training

Foreign - - - 4,706.2 59,488.7 - 64,194.9Local 12,989.6 - - 646.7 134,018.5 - 147,654.8

Subtotal Training 12,989.6 - 5,352.9 193,507.2 - 211,849.7J. Marketing Services - - - - 70,864.4 - 70,864.4

Total Investment Costs 18,434.0 24,616.5 9,101.9 121,740.2 516,214.9 120,048.1 810,155.6II. Recurrent Costs

A. Incremental Staff - 2,210.4 18,030.1 3,671.7 155,719.7 - 179,631.9B. Field Works/Afforestation - - 1,907.8 8,915.4 - 10,823.2C. Civil Works O&M - - - 242.7 40,320.5 - 40,563.1 >

D. Materials/Equipment and Tools O&M - 138.9 9,701.9 3,600.3 59,255.9 - 72,697.1E. Vehicle O&M - - 3,326.4 12,489.4 94,980.6 - 110,796.3 I-r

Total Recurrent Costs - 2,349.3 32,966.2 28,919.5 350,276.6 - 414,511.6 X XTotal PROJECT COSTS 18,434.0 26,965.8 42,068.1 150,659.7 866,491.6 120,048.1 1,224,667.3 4- v,

Taxes - 129.0 4,169.2 9,014.9 123,128.5 - 136,441.7Foreign Exchange 4,498.3 18,369.1 5,015.6 33,833.9 297,431.3 51,125.6 410,273.8

PAKIS'TANPlUNJAll lFORES'T SECI'OR1 D)EVEIA)PNlENTP' I'OJECI'

Staff Appraisal ReportTable 5: Expenditure Accounts Project Cost Summary

(Rs '000) (USS '000)% % Total % % Total

Foreign Base Foreign BaseLocal Foreign Total Exchange Costs Local Foreign Total Exchange Costs

I. Investment CostsA. Civil Works 64,273.3 6,838.9 71,112.2 10 8 2,073.3 220.6 2,293.9 10 8B. Field Works 21,978.7 - 21,978.7 - 2 709.0 - 709.0 - 2C. Afforestation 24,893.4 - 24,893.4 - 3 803.0 - 803.0 - 3D. Vehicles 67,102.7 45,887.9 112,990.6 41 12 2,164.6 1,480.3 3,644.9 41 12E. Machinery & Equipment

Farm 1,802.4 3,636.1 5,438.5 67 1 58.1 117.3 175.4 67 1Transport 22,240.7 17,734.0 39,974.7 44 4 717.4 572.1 1,289.5 44 4Electronic/Technical 3,531.8 12,055.1 15,587.0 77 2 1139 388.9 502.8 77 2Other Materials/Tools 735.8 - 735.8 - - 23.7 - 23.7 -

Subtotal Machinery & Equipment 28,310.7 33,425.3 61,735.9 54 7 913.2 1,078.2 1,991.5 54 7F. Office Furniture 2,980.7 317.3 3,297.9 10 - 96.2 10.2 106.4 10 -

G. Sludies 3,270.0 38,198.2 41,468.2 92 4 105.5 1,232.2 1,337.7 92 4H. Consultant Services

Foreign Technical Assistance 9,810.0 46,965.0 56,775.0 83 6 316.5 1,515.0 1,831.5 83 6Local Services 13,734.0 - 13,734.0 - 1 443.0 - 443.0 - 1

Subtotal Consultant Services 23,544.0 46,965.0 70,509.0 67 7 759.5 1,515.0 2,274.5 67 7I. Training

Foreign - 47,584.9 47,584.9 100 5 - 1,535.0 1,535.0 100 5Local 108,808.4 2,275.2 111,083.6 2 12 3,509.9 73.4 3,583.3 2 12

Subtotal Training 108,808.4 49,860.1 158,668.5 31 17 3,509.9 1,608.4 5,118.3 31 17J. Marketing Services 9,810.0 37,572.0 47,382.0 79 5 316.5 1,212.0 1,528.5 79 5

TotallnvestmentCosts 354,971.8 259,064.7 614,036.5 42 65 11,450.7 8,356.9 19,807.6 42 65II. Recurrent Costs

A. Incremental Staff 169,148.5 - 169,148.5 - 18 5,456 4 - 5,456.4 - 18B. Field Works/Aflorestation 7,178.3 - 7,178.3 - 1 231.6 - 231.6 - 1C. Civil Works O&M 27,624.1 1,423.0 29,047.1 5 3 891.1 45.9 937.0 5 3D. Materials/Equipment and Tools O&M 36,700.8 14,238.5 50,939.3 28 5 1,183.9 459.3 1,643.2 28 5E. Vehicle O&M 38,812.4 37,481.2 76,293.6 49 8 1,252.0 1,209.1 2,461.1 49 8

Total Recurrent Costs 279,464.1 53,142.8 332,606.9 16 35 9,015.0 1,714.3 10,729.3 16 35Total BASELINE COSTS 634,435.9 312,207.5 946,643.4 33 100 20,465.7 10,071.2 30,536.9 33 100

Physical Contingencies 36,760.7 23,530.3 60,291.0 39 6 1,185.8 759.0 1,944.9 39 6Price Contingencies 143,196.9 74,536.0 217,732.9 34 23 635.1 631.2 1,266.4 50 4

TotalPROJECTCOSTS 814,393.5 410,273.8 1,224,667.3 34 129 22,286.6 11,461.5 33,748.1 34 111

PAKISTAN

PUlNJAB FOREST SECTOR DEVELOPMENTF PROJECTStaffAppraisal Report

Table 6: Project Components by Year

Totals Including Contingencies (Rs '000)95/96 96197 97198 98/99 99/00 00101 Total

A. Institutional SupportHuman Resources Development 7,866.5 4,334.8 4,610.0 765.2 - 857.6 18,434.0Administration Unit 1,996.0 378.4 386.9 395.6 404.7 23,404.2 26,965.8Monitoring & Evaluation 12,233.6 5,867.7 5,531.5 5,680.0 6,136.5 6,618.7 42,068.1

Subtotal Institutional Support 22,096.0 10,581.0 10,528.5 6,840.8 6,541.2 30,880.5 87,467.9

B. Rehabilitation of Scrub Forests and Rangelands 30,277.9 30,718.9 28,489.2 32,442.2 20,277.2 8,454.4 150,659.7C. Expansion of Farm Forestry 301,069.8 147,146.1 120,784.3 104,144.2 95,724.8 97,622.3 866,491.6D. Timber Plantations 21,065.2 33,103.6 43,722.4 22,156.8 - - 120,048.1

Total PROJECT COSTS 374,508.9 221,549.6 203,524.4 165,584.0 122,543.1 136,957.2 1,224,667.3

o Totals Including Contingencies (US$ '000)

95/96 96/97 97/98 98/99 99100 00/01 Total

A. Institutional SupportHuman Resources Development 231.7 123.0 126.1 20.2 - 21.2 522.3Administration Unit 58.8 10.7 10.6 10.5 10.3 579.3 680.2Monitoring & Evaluation 360.3 166.5 151.3 150.1 155.8 163.8 1,147.8

Subtotal Institutional Support 650.8 300.2 288.1 180.7 166.1 764.4 2,350.3B. Rehabilitation of Scrub Forests and Rangelands 891.8 871.5 779.5 857.1 511.0 209.3 4,120.2C. Expansion of Farm Forestry 8,868.0 4,174.4 3,304.6 2,751.5 2,421.5 2,416.4 23,936.5D. Timber Plantations 620.5 939.1 1.196.2 585.4 - 3,341.2Total PROJECT COSTS 11,031.2 6,285.1 5,568.4 4,374.7 3,098.7 3,390.0 33,748.1

mo-W

PAKISTANPUNJAB FOREST SECTOR DEVELOPMENT PROJECT

Staff Apprisal ReportTable 7: Cemponents Project Cost Summary

(Rs'000) (US$ '000)% % Total % % Total

Foreign Base Foreign BaseLocal Foreign Total Exchange Costs Local Foreign Total Exchange Costs

A. Institutional SupportHuman Resources Development 10,594.8 3,757 2 14,352.0 26 2 341.8 121.2 463.0 26 2Admnmistration Unit 6,314.0 12,508.3 18,822.3 66 2 203.7 403.5 607 2 66 2MonitonngS Evaluation 30,7637 3,872.2 34,635.8 11 4 992.4 124.9 1,117.3 11 4

Subtotal Institutional Support 47,672.4 20,137.7 67,810.2 30 7 1,537.8 649.6 2,187 4 30 7Q B. Rehabilitalion of Scrub Forests and Rangelands 82,094.6 26,951 9 109,046.5 25 12 2,648.2 869.4 3,517.6 25 12

C. Expansion of Farm Forestry 457,989.6 222,614 5 680,604.1 33 72 14,773.9 7,181.1 21,955.0 33 72D. Timber Plantations 46,679.3 42,503.3 89,182.6 48 9 1,505 8 1,371.1 2,876.9 48 9Total BASELINE COSTS 634,435.9 312,207.5 946,643 4 33 100 20,465 7 10,071 2 30,536 9 33 100

Physical Contingencies 36,760.7 23,530.3 60,291.0 39 6 1,185.8 759 0 1,944.9 39 6Pnce Contingencies 143,196.9 74,536.0 217,732.9 34 23 6351 631.2 1,266 4 50 4

Total PROJECT COSTS 814,393.5 410,273.8 1,224.667.3 34 129 22,286.6 11,461.5 33,748.1 34 111

PAKISTAN

PUNJAB FOREST SECTOR DEVELOPMENT


ANNEX 6

METHODOLOGICAL DETAILS OF THE FINANCIAL AND ECONOMIC ANALYSIS

1. Farm Forestry

A. Analytical Framework

1. The analysis assumes that it is possible to define aggregated producers' profit, [I , in terms ofcurrent price, output, the cost of establishing plantings several periods earlier and an additional cost for adjustingthe size of the growing stock in the current period:

I=pq,-vI- 2 CJ22

where p is the present value of fuelwood sold seven years after an initial investment, q, is thequantity of wood produced at this time, v is the per unit of growing stock cost of investment, 1, is the investmentin growing stock measured in physical units and c is the unit cost of adjusting the size of the growing stock. Allvalues are to be interpreted in constant terms. Investment and the present value of wood will vary from periodto period, and so too the value of the profit function.

2. Revenues are discounted by a annual rate of r, which the analysis assumes for Punjab to be 10percent. The discounted price of fuelwood at a time t is therefore

Pr= Pt-6 =pPC I

where

w_1

The supply of wood, q, is a linear production function of the growing stock:

q,=AK

where A is the period's productivity parameter and K is the growing stock.

3. A change in the growing stock in a period is a result of investment (or disinvestment) and thenatural deterioration of the growing stock:

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Annex 6

dK=k=X-6K

Here, 6 is the rate at which the growing stock is naturally decaying.

4. The objective of the producer(s) is to maximize profit over all future periods, given the relationbetween investment, decay and the rate of change in the growing stock. That is, to maximize

fU( t) e-rdt0

such that

K=I -8K

The associated Hamiltonian is therefore

H=e'rM+A (I-6K)

The variable multiplying the second term in parentheses, X, is the Lagrange multiplier for theinvestment condition. The variables n, x, I and K vary over time.

5. From the Euler equation, the conditions of optimality imply that

I= Ap _ v= ApP _ vc(r+6) c c(r+6) c

Noting that

dt dt

the change in the growing stock at a time t becomes

k*= A(pP - V_6KcC(-+8) c

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Annex 6

This is a differential equation in two of the state variables of interest: the growing stock, K, andthe price, P.

6. In the simulation of the development of the growing stock and the movement of prices with andwithout the project, the cost of investment, v, varies from Rs 1 1.9 per ton of growing stock to Rs 17.7 as theseedling subsidy is gradually phased out. This corresponds to an initial seedling price of Rs 2.1 per plantingwithout the subsidy. This price includes the cost of replacing failures (20 percent of the seedlings in the firstyear of planting). Other costs initially amount to approximately Rs 2.45 per planting for other inputs and forlabor employed in planting, maintenance and protection. [This calculation uses a conversion ratio of fourestablished trees per ton of growing stock, seven years after planting.] With the project and the development ofcompetitive private nurseries, the seedling cost is expected to decline. Other costs per planting are likely toincrease somewhat as farmers learn to intensify their tree management. Without the project, the subsidization ofseedlings is expected to continue for period in which the project would be implemented. The investment costwithout the project is then initially Rs 9.9 per ton of growing stock (farmers continue to pay for all other costs),then about Rs 18 when the subsidy discontinues, it is assumed, six years later.

7. The productivity parameter, A, like the cost of investment, v, is a short time constant in theequation. It may change period to period as an external input to the mechanism that governs the farmers'investment decision. Within each period it is treated as a "given". Under the project, the productivity of farmplantings is posited to improve by about 25 percent through the application of superior husbandry techniques andthe use of genetically superior planting material. In the present framework, this is quantified as a change in theA from 0.14 to 0.175 tons of wood produced yearly per ton of growing stock. The analysis phases in thisproductivity improvement over a period of 6 years, as the trees established during the project's implementationperiod graduate into the pool of growing stock on farms. Without the project, the productivity parameterremains constant at 0.14.

8. A second equation in the two state variables is needed to calculate a solution. This is provided byhaving the price adjust to excess demand, that is, to the gap between the quantity of wood provided from thefarms and the quantity that consumers in the aggregate would purchase at a given price.

dP=P=t [qd_q,l

where q, is the quantity demanded and , is the speed at which the price is adjusting to the gapbetween q, and q, in the period. From HESS data, it appears that over the last ten to fifteen years the real priceof fuelwood has been adjusting very slowly -- less than one percent a year. The analysis reflects this features inusing a value that would fit these observations and the expected adjustment given the current estimated gapbetween current supply and unconstrained demand.

9. The unconstrained demand for wood is found in estimating an aggregated demand schedule. Alinear relation is assumed:

P=ao -ald

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Annex 6

where a,, the slope, is positive. A plot of the schedule produces the expected downward slopingdemand curve (here a straight line) with the curve intersecting the price axis at a,. The quantity demanded at agiven price, P, is therefore

ao-P

a,

With population growth, the demand schedule is shifting outward, so from one period to the nextmore wood is demanded at any given price. As long as the slope of the demand schedule remains constant forthe timeframe of the analysis, the price intercept will move proportionately to the population growth rate. Thismeans that given an initial intercept of a, at time 0, the intercept increases at the rate of growth of thepopulation. So at time t, the position of the intercept is

ao =aOinitial eg

Substituting this relation into the equation above, the price change at time t after a specified initialtime is given by

p p[a.i.iti.le t-P Ktal

The slope of the schedule is expected to be small to reflect the observed high rate of substitutionbetween purchased fuelwood and other fuels.

10. With assignments for v, A, c, ao ini.j1 a1, r, and 8, the two-equation differential system in K and Pcan be solved given a starting point for the growing stock and price. The starting point would be selected eightyears from now, which would be the time, if the project proceeds on schedule, when the trees established duringthe first year of the project join the pool of growing stock from which wood is harvested on a sustainable basis.The solutions for K for years 7 to 20 then indicate how many established trees are present in years I to 14. Thedifference in the number of established trees from one period to the next indicates the progression of newplantings.

B. Parameter Assignments

I. For the analysis, this initial condition was estimated to be about 21.7 million tons and Rs 1000/t ata point seven years from the start of the project (eight years from the present). The initial demand scheduleintercept at this time was estimated at 4000. The following is a summary of the parameter value assignmentsused for differential system:

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Annex 6

Table 6. Parameter Assignments and Initial Conditions

c, adjustment cost 0.00005

r, discount rate 0.10

6, natural decay rate 0.02

a initial demand intercept 4000

K,,, initial growing stock (t) 21724000

P,, initial price (Rs/t) 1000

Table 7. Assignments for v,, investment cost (Rs/t)

t without with

1 9.9 11.9

2 9.9 13.5

3 9.9 15.5

4 9.9 16.0

5 9.9 16.9

6 9.9 17.4

7-14 18 17.7

Table 8. Assignments for A,, productivity parameter

t without with

1 0.14 0.145

2 0.14 0.150

3 0.14 0.155

4 0.14 0.160

5 0.14 0.165

6 0.14 0.170

7-14 0.14 0.175

Like Ko and P0, the assignments for the productivity parameter A refer to a starting point eight years from now.

12. With these assignments, a Runge-Kutta algorithm was used to solve numerically the differentialequations. The results were interpreted to provide indicative projections of the numbers of trees on farms, thewood produced and the wood price movement for the next twenty years with and without the project, with andwithout the current policy regime for seedling subsidies. The projections for wood production and it price werethen used to estimate the year-by-year consumer surplus (deficit) that the alternative imply.

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Annex 6

C. Results

13. The simulation implies that without the project, farmers will be planting out between 40 to 50million seedlings a year over the first six years. With the project, planting is higher as farmers respond more toincreases in the productivity of their investments than to the subsidization of seedlings. The wood price does notchange sharply, but in the with project situation is also lower period by period as compared to without theproject. This could be explained by noting that the increases in productivity of the growing stock lowers the costof investment for the farmer per unit of output, and so stimulates more investment. Larger supplies of wooddecrease excess demand and lead to a decrease in the wood price. In comparison, the seedling subsidy has aweaker effect in encouraging investment. In general, the behavior of the system appears consistent withobservations and with short-term expectations of the forest department regarding the take up of seedlings byfarmers.

14. The behavior of the differential system fairly well reflects the stylized facts of recent farm forestryplantings and price movements. The analysis does not claim to present a comprehensive set of causalrelationships that explain investment behavior, but it does demonstrate a logical mechanism that mirrors therationale of the component and offers sufficient, monitorable conditions for affirming a decision to accept theproject.

15. The increased plantings with the project resulting from the solution of the differential systemmean that there are incremental farm investment costs in aggregate. These were included up to year 14 so thatcorresponding benefits appear within the twenty-year time horizon of the analysis. The analysis also included theproject costs of forestry extension and research, and recurrent costs that decrease over time. Re-investment instands has been accounted for in the projected development of the standing stock (this was part of the investmentdecision entailing the farmers' optimization of profit for each period).

16. Base Rate of Return. Given the solutions of the analysis, given the information available, the basefinancial rate of return to the farm forestry development is estimated at about II percent. If one includes thevalue of the resources saved by the government through the removal of the seedling subsidies as incrementalresources available to the government for development, the rate of return increases to about 14 percent. Thebase economic internal rate of return, excluding the value of additional resources released to the government inphasing out the seedling subsides over the project period is estimated at 14.5 percent. Including the value ofadditional resources to the government, the rate of return is estimated at about 19 percent.

17. Alternative assignments for the parameters in the equations are possible, but solutions appear notto be stable for wide departures from the values used in the analysis. The analysis concludes that the targets ofthe project have some likelihood of turning out an acceptable economic result in increasing the standing stock oftrees on farms and in lowering the cost of fuelwood to consumers. Additional environmental benefits and theincremental availability of resources for development investments further increase the probability that the rate ofreturn of the component would exceed ten percent.

11. Social Range and Scrub Forests

A. Analytical Framework

Productivity and Incomes without the Project

18. The villages to be targeted are expected to have grazing areas, including those in scrub forests,averaging 300 hectares per community on the Pothwar Plateau and 600 hectares per community in Thai. For the

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Annex 6

analysis the communities in Pothwar without the project keep on average 750 animals, measured in sheep units(SUs) per community, on the given size of total community grazing area, and for Thai communities keep onaverage 1066 animals per community.

19. The stocking of animals on the grazing areas breaks down as follows. Of the 300 hectares ofgrazing areas per community for Pothwar, about 225 ha are expected to consist of pastures while 75 ha wouldfall in scrub forests. The perennial forage biomass of the Pothwar pastures is estimated at 300 kg/ha. Scrubforest perennial forage biomass is estimated at 500 kg/ha, not all of which is of high digestibility. On averagethree SUs would be stocked per hectare of pasture and one animal would be supported on average in the scrubforests. In total, about 675 SUs would be stocked on pastures per community in Pothwar and 75 SUs would begrazed in scrub forests. For Thai, perennial forage biomass production is estimated at 200 kg/ha for pastures andabout 333 kg/ha for forests. Of the average herd of 1066 SUs per community in Thal considered here, about1000 SUs would be found on pastures and 66 SUs would use the forests (a total forest area of about 100 ha).

Present Incomes from Livestock

20. From the surveys it has been determined that sales of culls from the herd provide on average Rs52.5 per SU. The off take is estimated at 5%. Approximately 0.6 kilograms of wool per SU provide an incomeof Rs 8.2 per SU. Households consume about 1.25 kilograms of meat per SU, which is valued at about Rs32.80. The total value of income per SU is therefore estimated at about Rs 94.50. As mentioned above, theanalysis shows this revenue as slowly declining over the next 20 years to reflect worsening trends in forageutilization, animal nutrition and husbandry standards.

Present Costs of Production

21. Present labor requirements, supplied by adults and children, are estimated at 2.43 mandays per SU.At a wage of Rs 63/day, the full value of this labor amounts to about Rs 153 per SU.

Current Net Revenue from Livestock

22. With a full costing of the labor employed, the present net revenue from livestock is negative,which is consistent with observations of the frequency of women, children and elderly engaged in minding theanimals. In general, women's time is not valued as highly as men's, and where possible, many men avoidworking with the livestock and seek employment outside the village.

Productivity and Incomes with the Project

Sources of Benefits

23. Under the project total perennial forage biomass would increase, first of all, on improved pasturesand then on unimproved areas following changes in the management of grazing. For Pothwar the productionfrom improved pastures (75 ha per community on average) is estimated to reach about 2.4 t/ha. Perennial foragebiomass for unimproved pastures (150 ha) and for treated scrub forests (75 ha) would rise to about 600 kg/haand 1000 kg/ha, respectively. Stocking on improved pastures could increase to about 4 SU/ha, while 2 SU/hawould be stocked in the unimproved pastures and in the treated scrub forests. With these stocking rates, the totalnumber of animals stocked would match the number held without the project. Adding in some incrementalforage production on farms, total perennial forage biomass would increase, indicatively, from about 105 tons forthe total grazing area without the project to about 405 tons with the project. For Thal perennial forage biomasswould increase from 200 kg/ha to 1.5 t/ha on improved pastures (250 ha) and from 200 kg/ha to 400 kg/ha onunimproved pastures (250 ha) following changes in the management of grazing. In improved scrub forests (100

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Annex 6

ha) perennial forage biomass is expected to increase from about 333 kg/ha to about 600 kg/ha. Total foragebiomass per community in Thal would therefore improve from about 133 t without the project to approximately541 t with the project. Stocking on improved pastures would increase from 2 SU/ha to 2.5 SU/ha. Stocking onthe unimproved pastures and improved scrub forest areas would increase from about 0.66 SU/ha to 1.33 SU/ha.

24. The changes in grazing management would likely include the closure of some areas at the start,and some destocking might be required. This is reflected in the analysis and represents an increase inincremental costs with the project in the form of foregone income. In the medium term, however, animalpopulations with the project are allowed to be at least as high as current estimates.

25. In addition to the income from livestock, villages should also profit from the incrementalproduction of wood from afforested scrub forest areas. The scrub forest improvements under the project areexpected to add an average of 370 trees per hectare. Roughly thirty of these trees per hectare could be harvestedeach year and replanted, stalting after ten years, to sustain an incremental supply of about 1000 tons of fuelwoodfor the village. The average yield per tree is expected to be 1.85 maunds (74 kg). The income from this harvestwas valued at Rs 25 per maund (or Rs 0.66 per kilogram at the farmgate).

Incomes from Livestock with the Project

26. With the improved availability of forage and nutrition under the project, it is expected that culledanimals could achieve a 20 percent increase in weight and that the offtake can increase to 25 percent. Thesechanges alone would increase the value of income from the herd by about Rs 236 per SU over five years, andthis increment should be realized as cash. The analysis has ignored increases in marketed wool and quantities ofmeat consumed by households.

Net Revenue with the Project

27. Five years after the investment, if works are completed in one season, villages are expected toearn incremental income of about Rs 103,880 (US$ 3,351) in Pothwar and Rs 134,370 (US$4,334) in Thai fromtheir livestock, which would amount to an increase of about Rs 138 (US$ 5.5) per SU in Pothwar and Rs 123(US$4) per SU in Thai. The value of incremental wood produced from the afforested areas would eventuallybring the community's incremental net income to approximately Rs 211,480 (US$6,822) in Pothwar and to aboutRs 244,270 (US$7,880) in Thai. Assuming an average of 200 households per community, incremental netincome would then amount to about US$34 per household in Pothwar and about US$39 per household in Thal(see Appendix 1, first pages of Tables 4 and 6). If for rural households in these area per capita income isestimated at half the national average of US$400, the project impact calculated here would represent an increasein household incomes of less than 20 percent: the scale of calculated incremental net benefits considered here,given the level of investments envisioned for the component, would probably not be an unreasonably highexpectation.

B. Results

28. Project financial internal rates of return (IRRs) were estimated for the developments involving 68communities in Pothwar and 32 communities in Thal. Part of project costs for community extension, includingthe purchase and operation of heavy equipment, vehicles, the construction of staff offices and housing, equipmentand tools, technical assistance, training, incremental staff salaries and other overhead expenses were apportionedto the two areas. Residual values for heavy equipment, vehicles and office equipment partially offset incrementalproject costs at the end of the project's implementation period. For the Pothwar development the financialinternal rate of return was estimated at approximately 17 percent. For Thal, the IRR was estimated to be 15

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Annex 6

percent. The rate of return of the component as a whole is estimated at 16 percent (the calculation is displayedin Appendix 1, Table 8). This result is not very sensitive to small variations in the benefit or cost streams.

29. For the economic analysis livestock revenue was converted into its economic value using aconversion factor of 0.60, which was derived from a calculation of the average import parity value of muttonproduced in barani areas in central Punjab. Using economic values for inputs, outputs and project costs, theeconomic intemal rate of return (ERR) for Pothwar was estimated at 15 percent and for Thai at 11 percent. Therate of return for the component in aggregate amounts to about 12 percent. See Appendix I, Tables 4 and 6 forthe calculations of the economic budgets of grazing and husbandry development in Pothwar and Thai. Annex 6,Appendix 1, Table 7 presents the calculation of the analysis.

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Pakistan AnnxirPujab Femt Sector Development Project Apdwndi

staff Apprsisal Report Table IFinancial and Economic AnaIyvis

Table 1: Financial Prices

April-March(Rs) 199 to 201 to

Unit 1994 13S 119 2018

OutputsArabie Crops

Wheat kg 4.00 4.12 4.19 4.38Chopped Straw kg 0.80 0.82 0.84 0.88Basmati Rice kg 3.75 3.75 3.75 3.75Coarse Rice kg 2.88 2.88 2.88 2.88Yellow Maize kg 4.25 4.25 4.25 4.25White Maize kg 5.00 5.00 5.00 5.00Stalks & Thinnings kg 0.40 0.40 0.40 0.40Sugarcane kg 0.44 0.44 0.44 0.44Seed Cotton kg 8.63 8.53 8.83 8.63

Wood Products laPulp, Paper, Fuekvood /b maund 24.00 24.00 24.00 24.00Pulp, Paper, Posts /c maund 32.00 32.00 32.00 32.00Chipboard, Matchwood, Sports Goods /d maund 38.00 38.00 38.00 38.00Chipboard, Sports Goods, Fumiture le maund 45.00 45.00 45.00 45.00Matchwood, Sports Goods, Fumiture If maund 50.00 50.00 50.00 50.00

InputsSeed

Wheat Seed kg 4.10 4.10 4.10 4.10Maize Seed kg 6.00 6.00 6.00 6.00

FertilizersUrea kg 3.20 3.20 3.20 3.20DAP kg 3.50 3.50 3.50 3.50Manure /g kg 0.13 0.13 0.13 0.13

Machine UseCuitivation hr 100.00 100.00 100.00 100.00Irrigation hr 24.00 24.00 24.00 24.00Threshing kg-grain 0.33 0.33 0.33 0.33Shelling hr 100.00 100.00 100.00 100.00

Other AgriculturalBullockLabour day 110.00 110.00 110.00 110.00Canal Water 1000m3 55.00 55.00 55.00 55.00Land Rent Ih ha 3,430.00 3,430.00 3,430.00 3,430.00

SNiviculturalPoplar Seedling A plant 4.00 4.00 2.80 2.80Tube Seedlings plant 1.65 1.65 1.16 1.16Other Plantation Establishment Costs plant 2.45 2.45 2.78 2.96

LaborFarm Labour hr 7.90 7.90 7.90 7.90Farm Labour day 63.00 63.00 63.00 63.00

la 1 maund equals 40 kg.Ib Young wood for use primarily as fuclwood.%c Better quality wood for use primarily as fuehwood.%d For use primarily as pulp, post or chipboardle For use primarily as superior pulp, posts or chipboardUf For use primarily as superior pulp, chipboard, funiture and specialty wood.%g Pnce per kilogram frsh weight.%ih For 6 months.ti 2-yr-old.

- 113 -

Annex 6 Pakistan Annex 6Appendix I Punjab Forest Sector Development Project Appendix 1Table 2 Staff Appraisal Report Table 2

Financial and Economic AnalysisTable 2: Economic Prices

April-March(Rs) 1996 to 2001 to 2005 to

Unit 1994 1995 1999 2000 2004 2018

OutputsArable Crops

Wheat kg 5.68 5.72 5.72 5.68 5.28 4.88Chopped Straw kg 0.72 0.72 0.72 0.72 0.72 0.72Basmati Rice kg 3.38 3.38 3 38 3.38 3.38 3.38Coarse Rice kg 2.59 2.59 2.59 2.59 2.59 2.59Yellow Maize kg 5.02 5.06 5.19 5.27 4.93 4.63White Maize kg 4.50 4.50 4.50 4.50 4.50 4.50Stalks & Thinnings kg 0.36 0 36 0.36 0.36 0.36 0.36Sugarcane kg 0.39 0.39 0.39 0.39 0.39 0.39Cane Tops kg 0.17 0.17 0.17 0.17 0.17 0.17Seed Cotton kg 7.76 7.76 7.76 7.76 7.76 7.76

Wood Products /aPulp, Paper, Fuelwood lb maund 21.00 21.00 21.00 21.00 21.00 21.00Pulp, Paper, Posts/c maund 37.12 37.12 37.12 37.12 37.12 37.12Chipboard. Matchwood, Sports Goods Id maund 38.00 38.00 38.00 38.00 38.00 38.00Chipboard, Sports Goods, Furniture /e maund 45.00 45.00 45.00 45.00 45.00 45.00Matchwood, Sports Goods, Furniture /f maund 50.00 50.00 50.00 50.00 50.00 50.00

InputsSeed

Wheat Seed kg 6.15 6.15 6.15 6.15 6.15 6.15Maize Seed kg 8.40 8.40 8.40 8.40 8.40 8.40Cane Seed kg 15.84 15.84 15.84 15.84 15.84 15.84

FertilizersUrea kg 3.52 3.52 3.52 3.52 3.52 3.52DAP kg 4.45 4.45 4.45 4.45 4.45 4.45Manure /g kg 0.20 0.20 0.20 0.20 0.20 0.20

Machine UseCultivation hr 95.79 95.79 95.79 95.79 95.79 95.79Irngation hr 23.22 23.22 23.22 23.22 23.22 23.22Threshing kg-grain 0.31 0.31 0.31 0.31 0.31 0.31Shelling hr 95.80 95.80 95.80 95.80 95.80 95.80

Other AgriculturalBullock Labour day 99.00 99.00 99.00 99.00 99.00 99.00Canal Water /h 1000m3 550.00 550.00 550.00 550.00 550.00 300.00Land Rent /i ha 3,087.00 3,087.00 3,087.00 3,087.00 3,087.00 3,087.00Transport of Cane kg 0.04 0.04 0.04 0.04 0.04 0.04Transport of Manure kg 0.01 0.01 0.01 0.01 0.01 0.01

SylviculturalPoplar Seedling /j plant 3.60 3.60 2.52 2.52 2.50 2.52Tube Seedlings plant 1.49 1.49 1.04 1.04 1.04 1.04Other Plantation Establishment Costs plant 2.21 2.21 2.50 2.66 2.66 2.66

LaborFarm Labour hr 7.10 7.10 7.10 7.10 7.10 7.10Farm Labour day 54.00 56.70 56.70 56.70 56.70 56.70

\a 1 maund equals 40 kg.\b Young wood for use primarily as fuelwood.Ic Better quality wood for use pnmarily as fuelwood.\d For use primarily as pulp, posts or chipboard\e For use primarily as superor pulp, posts or chipboard\ For use pnmanly as supenor pulp, cthipboard, funiture and specialty wood.\g Price per kilogram fresh weight.\h Financial price is estimated at Rs 5511000m3. Use EPAKFOR.MOD to generate economic values.\i For 6 months.\j 2-yr-old

114 -

Pakistan Annex 6Punjab Forest Sector Development Project Appendix 1

Staff Appraisal Report Table 3.1Financial and Economic Analysis

Breakdown of Import Parity Prices

WheatCase 1: Constant Local Prices year 1993 1994 1995 2000 2005White Wheat, Australia, fob 1/ 130 125 133 143 114Transport and Insurance 25 25 25 25 25cif, Karachi 155 150 158 168 139(Rs/t)cif, Karachi 4604 4449 4681 4990 4140Port Charges 180 180 180 180 180Storage and Handling 265 265 265 265 265Transport to Mill 53 53 53 53 53At-Mill Price 5256 5096 5336 5655 4777Less Transport to Gujranwala 2/ 539 539 539 539 539Value at Gujranwala Market 5587 5432 5664 5973 5124Less Local Agent's Commission 140 136 142 149 128Less Transport - Farm to Market 98 98 98 98 98Value at Farmgate 5349 5666 5904 6220 5350Import Parity Value at Farmgate (Rs140kg) 214 227 236 249 214

Local Farmgate Price (Rs/40) 150 150 150 150 150Ratio of Border to Local Farmgate Price 1.43 1.51 1.57 1.66 1.43Average Conversion Factor 1.561/ Competing with subsidised deliveries of wheat to Karachi from Middle Eastem sources.l2/ Estimated at Rs 0.41/t/km for approximately 1300 km.

- 115 -

Pakistan Annex 6Punjab Forest Sector Development Project Appendix I



WheatCase 2: Partially Adjusting Prices year 1993 1994 1995 2000 2005White Wheat, Australia, fob 1/ 130 125 133 143 114Transport and Insurance 25 25 25 25 25cif, Karachi 155 150 158 168 139(Rs/t)cif, Karachi 4604 4449 4681 4990 4140Port Charges 180 180 180 180 180Storage and Handling 265 265 265 265 265Transport to Mill 53 53 53 53 53At-Mill Price 5257 5097 5336 5656 4778Less Transport to Gujranwala 2/ 539 539 539 539 539Value at Gujranwala Market 5588 5433 5665 5974 5124Less Local Agent's Commission 140 136 142 149 128Less Transport - Farm to Market 98 98 98 98 98Value at Farmgate 5350 5667 5904 6221 5350Import Parity Value at Farmgate (Rs/40kg) 214 227 236 249 214

Local Farmgate Price (Rs/40) 150 160 165 175 175Ratio of Border to Local Farmgate Price 1.43 1.42 1.43 1.42 1.22Average Conversion Factor 1.391/ Competing with subsidised deliveries of wheat to Karachi from Middle Eastern sources.l2/ Estimated at Rs 0.41/tNkm for approximately 1300 km.

- 116 -

Pakistan Annex 6Punjab Forest Sector Development Project ADppnd*x I



WheatCase 3: Adjusting to Parity year 1993 1994 1995 2000 2005White Wheat, Australia, fob 1/ 130 125 133 143 114Transport and Insurance 25 25 25 25 25cif, Karachi 155 150 158 168 139(Rs/t)cif, Karachi 4604 4449 4681 4990 4140Port Charges 180 180 180 180 180Storage and Handling 265 265 265 265 265Transport to Mill 53 53 53 53 53At-Mill Price 5257 5097 5336 5656 4778Less Transport to Gujranwala 2/ 539 539 539 539 539Value at Gujranwala Market 5588 5433 5665 5974 5124Less Local Agent's Commission 140 136 142 149 128Less Transport - Farm to Market 98 98 98 98 98Value at Farmgate 5350 5667 5904 6221 5350Import Parity Value at Farmgate (Rs/40kg) 214 227 236 249 214

Local Farmgate Price (Rs140) 150 187 214 214 214Ratio of Border to Local Farmgate Price 1.43 1.21 1.10 1.16 1.00Average Conversion Factor 1.141/ Competing with subsidised deliveries of wheat to Karachi from Middle Eastern sources.l2/ Estimated at Rs 0.41/tlkm for approximately 1300 km.

- 117 -




Maize year 1993 1994 1995 2000 2005($t)Yellow Maize, no.3, US Gulf (fob) 104 105 106 114 91Transport and Insurance 28 28 28 28 28cif, Karachi 132 133 134 142 119(RsIt)cif, Karachi 3923 3955 3987 4212 3537Port Charges 180 180 180 180 180Storage and Handling 265 265 265 265 265Value at Karachi Market 4367 4399 4431 4657 3981Transport to Lahore 761 761 761 761 761At-Mill Price, Lahore 5128 5160 5192 5417 4742Less Transport Gujranwala to Lahore 95 95 95 95 95Value at Gujranwala Market 5222 5255 5287 5512 4836Less Local Agent's Commission 131 131 132 138 121Less Transport - Farm to Market 98 98 98 98 98Value at Farmgate 4994 5025 5057 5276 4617Import Parity Value at Farmgate (Rs/40kg) 200 201 202 211 185

Local Farmgate Price (Rs/40) 170 170 170 170 170Ratio of Border to Local Farmgate Price 1.18 1.18 1.19 1.24 1.09Average Conversion Factor 1.19

- 118 -




Sugarcane year 1993 1994 1995 2000 2005

($/t)Mill White Sugar, Caribbean Ports, fob 230 236 235 275 302Transport and Insurance 30 30 30 30 30cif, Karachi 260 266 265 305 332(Rs/t)cif, Karachi 7727 7905 7875 9063 9865Port Charges 180 180 180 180 180Storage and Handling 265 265 265 265 265Value at Karachi Market 8171 8349 8320 9508 10309Transport to Faisalabad 653 653 653 653 653At-Mill Price, Faisalabad 8824 9003 8973 10161 10963Less Milling Costs 11 3745 3745 3745 3745 3745Value of Cane, ex Mill 432 447 444 545 614Less Local Agent's Commission 11 11 11 14 15Less Transport - Farm to Market 98 98 98 98 98Value at Farmgate 323 338 335 434 500Import Parity Value at Farmgate (Rs/40kg) 13 14 13 17 20

Local Farmgate Price (Rs/40) 17 17 17 17 17Ratio of Border to Local Farmgate Price 0.76 0.79 0.79 1.02 1.18

1/ Adjusted by 0.97 for value of by-products.

- 119 -

Pakistan Aex 6Punjab Forest Sector Development Project Appndix L

Staff Appraisal Report Tabk 3.6Financial and Economic Analysis


Mutton Produced in Central Punjabyear 1993-2005

(s)Export Price Whole Sheep Carcas, fob 200Premium for Hal Al (20%) 40Ocean freight, Australia to Karachi 868cif, Karachi 1108(RsA)cif, Karachi 32908Port Charges 927Storage & Handling 12Transport to Lahore 3Value of Mutton, Wholesale, Lahore 33849Less Wholesale Commission 10155Less Transport, Barani Punjab to Lahore 648Less Slaughter Charges 1200Add Value of Offal, Bone Meal

Skin, Wool 12840Value at Village, Barani Punjab 34687Less Transport to Village 60Value at Farm, Barani Punjab 34627Conversion to Liveweight 17313

Import Parity Value at Farmgate per Headbased on 20 kg, dcw 693

Local Farmgate Price (Rs/head) 1400Ratio of Border to Local Farmgate Price 0.49

120 -




Wood for Pulp year 1993-2005(s/t)NW America, fob 600Transport and Insurance 60cif, Karachi 1/ 660(RsA)cif, Karachi 19602Port Charges 180Storage and Handling 265Value at Karachi Market 20046Transport to Gujrat 2/ 492At-Mill Price, Gujrat 20538Less Milling Costs 3/ 16335Value of Wood, ex Mill 1051Less Local Agents Commission 26Less Transport - Farm to Market 98Value at Farmgate 927Import Parity Value at Farmgate (Rs/40kg) 37

Local Farmgate Price (Rs/40) 32Ratio of Border to Local Farmgate Price 1.16

1/ The landed cost of pulp at Karachi over the last x years has declinedto about $400/t from $900/t in step with cyclic trends in the world market.The present price of kraft wood pulp of about $400 -$450/t is thoughtto mark the trough of the current cycle. The cif cost used here is an estimateof the minimum average cost of imported pulp required over the project period.The feasibility of this import price must be matched against the expectations ofNorth and South American pulp industry export price projections.

2/ Estimated at Rs 0.41/tUkm for approximately 1200 km.3/ Estimated at approximately $550/t pulp including capital chargesand an operating margin of $100/t to obtain a minimum return on a 100-150 TPDplant investment (employing used European equipment) of $20 million.

- 121 -


Staff Appraisal Report Table 3.Financial and Economic Analysis


Economic Price for Fuelwood in Kerosene Equivalent 1/

Import Parity Price of Kerosene (Rs/l) 3.96Heat Value of Kerosene (KCal/l) 8109Effective Heat from Kerosene -- 40% effeciency (Rs/l) 3244Cost of Effective Heat from Kerosene (Rs/000 KCal) 1.22Heat Value of Fuelwood (air dried) (KCal/kg) 4700Effective Heat from Fuelwood -- 15% efficiency (KCal/kg) 705Value of Fuelwood in Kerosene Equivalent (Rslkg) 0.86Value of Fuelwood in Kerosene Equivalent (Rs/m3) 602

1/ Source: Investment Centre, FAO/World Bank Cooperative Programme,"Integrated Hill Farming Development Project (Phase 11), " 2 vols.,report no. 23/91 CP-PAK 46)(a restricted-circulation document)(Rome: 21 March 1991),vol. 1, annex 7, tables 18 & 19.

- 122 -

Pemeo.a. TotaRep.n.tdalN Land A.. Forgo tass and Foraga ForagoSmnokg naton WosIoaoig bte Soo. ad ia P oojth A e 6ioqIO5 0iotass StockingEfpctd taspact S. (ha) (k/ha) () (05/so) PakisnsiW00oul Ptod MacaUgomotl Aloa Fami.jb Forest Sector D1v[ epiratr P*roject

a Paso AlArea 225 D 00 88 1 Sc Appmrairl Report

b Foroea Ao USed lot Grazig 75 S00 38 I Fuemoarl and Ecm i.k A.aaysis

Total 300 155TabIc 4: Soil Range and Srub Forest-- Pttkwar

wAh Prt MagtNot Areas Financial Vaioes

a lmFroved Pasu. 75 2400 I0S 4

D AddtoaAno.otk4 nproodozngkthgnm 250 e0o No 2

o FoteoArgsUsedIraozsg7 75 0300 75 2

d Fatoacl g Im o ¶0000 N

Total 30e 405

,Wa (Rndy) g3

Ph-4hg no Prajact Consnr,nlty Pnicipr0no - Polwaryoar ¶ 2 3 4 S Tirda

Cottoiniodins 4 22 20 22 12 68

yenr ¶ 2 3 4 5 0 7 0 9 10 I1 12 13 14 15 10 17 18 19 20

Aeoa Stockibng p.r Cononity - Pottoar OktShp UntsIn Wsrool Pro le Macaogeereot Ar.as

a Ponton Anea 675 675 075 67S 575 675 075 075 675 e75 0 675 675 675 75 675 5 75 675 675 675 675

b Fores Ar-a Used lo-GruzIrl7 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75

tloal 7S0 7 50 750 750 75 0 750 755 755 750 7 50 755 750 750 750 750 750 755 755 750 Iso

to Wah Pjoscl Me Mangmen Areasa Are ot Pasture l3p0ocertnt l 30estonts 0 300 300 300 300 30D 300 300 300 305 300 300 300 300 300 300 300

bAitgoa Al.rea. c Iropred Grng Marragoeot1 450 300 300 300 300 300 350 300 300 300 300 300 300 300 300 300 3X0 300 300 300

o Fornot Ar.a Used 1b GIro... 75 0 ° 250 150 10 IS0 10S ISO 150 150 150 150 I5O 150 ISO tSO 150 750 150

ralta 525 600 0o0 750 750 750 750 750 750 750 750 750 750 7SO 750 730 750 750 750 750

BUdont por Co-monity - Pothot (gRs)

year 1 2 3 4 5 6 7 a 9 10 11 12 13 14 1s 16 17 10 19 20

tH W4hOurl ProiecrI.) Recrr

W.2 Sales olAnaNs 000 ProdurS 63708 63150 62510 51093 61274 60061 60055 59454 50060 5a271 57685 57171 56540 55975 55415 54861 54312 53709 53232 52699

suctoal Reocnur 63708 63150 62510 61893 01274 60061 60055 59454 50000 582771 5760 57117 56540 55975 55415 54851 54312 53769 53232 52699

Ac-alIHosSa0ry Labor II 118125 1r0725 110125 110125 101825 118125 710125 110825 118125 110125 118125 110125 118125 118125 1 025 1175 118125 riiz25 110125 710125

srb.o0a1Cosr 117125 178725 118125 118125 1a0175 118125 110125 110125 118125 118125 110t25 118125 11t125 110125 118125 118125 118125 1 8725 118125 118125

Net Rececue -54338 54975 -55607 56232 -56501 -57464 .5S070 -50071 -59265 -59054 40437 41014 61585 -62150 -62710 -03264 -03813 -44358 44893 -5426

yW-r 1 2 3 4 5 6 7 0 9 10 II 12 13 14 I5 10 17 10 19 20

5005 Pr0705RevenueSolos of Aotao ard Pldodrs 2/ 82680 110200 110200 15750 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150 177150

Wood 3 106313 100313 106313 100313 106313 106313 106313 100313 1003t3 10373 106313

sulaotalR.e.enu 02608 110200 1l02t0 157500 177150 177150 177150 177550 177150 283463 203463 283463 283463 283463 283463 203463 283463 283463 203463 283403

CoolsLan0 deprocnerls 4/ 304640 302453 303251 30068

Foddr Crops5/ 7 120 50 12000 22000 12000 12200 12000 72000 72000 72000 12000 12500 12000 72000 22500 12000 1250 72000 12000

Re.snedsrgoadPastoreutoM eoonse a 0 0 0 0 22500 0 0 0 0 0 22500 0 0 0 0 0 0 0 a

ToreReplto 0/ 4500 4555 4500 4555 4500 4500 4500 4555 4500 4500 4500

Area Prole.d.o 71250 71250 I1250

AoarrHuS0ordryL.b.r 02000 04500 64550 118125 118125 170125 118125 118125 110125 118125 718120- 110125 118125 110225 118125 118125 1a1025 218125 118125 110125

suboltal Co.s 410785 420203 421501 430193 130125 152025 130125 130125 130125 134025 134625 157725 134825 134625 134025 134625 134625 134625 134625 13462S

Net Re-nse 32eo00 -309923 -310721 -272093 4702S 24525 47025 47025 47025 4252S 42525 20025 42525 42525 42525 42525 42525 42025 42525 42525

y..o 1 2 3 4 5 0 7 8 9 10 17 12 13 14 IS 16 17 10 19 20

lnortomeolalRe-eaa 10000 47130 47762 95607 115870 210489 717095 117056 118290 225192 225774 220351 226922 227480 228047 228502 229150 225903 230231 230763

CoitoIconrsesteet 304U84 3024S3 303251 30060 0 0 0 0 0 0 0 0 0 0 0 a 0 O 0 0

OpeilrQg ¶2108 .375 .375 12000 12000 345X 12000 12500 12005 16500 10500 39000 16500 16500 1500 18500 10500 16500 76500 10500

subotal CosIo 292081 302078 302070 312060 12000 34600 12000 1200 12000 10500 16500 39000 16S00 50 17500 105 10X 10500 16050 16500

Not Roen -273761 -264940 -255114 -212461 103576 81969 105095 105650 150290 200092 209274 187351 210422 2150sa 211547 212102 212650 213193 213731 214263

1/ E tele4 St 2 5 day/SU 9S 8s3/day 4/ Pastia tptouteom of 75 ha pk.. afoNrtsiator -wr 75 ha a 370 1goons/h

2/ R.nu p.r SUoning from Rs 94 5 .o0-d to Rs 236 2 nah PteJd Y/ Ototia4ed he7-em4nl- ptodidlon of 60-70 oo. ca rr-s inpus * Ia50e3/ H-ows ot 1 mIuIsWren from 30 W-WM 0 75 n CAe R0 t 6 Manteoon ot aomgn stocM lo ot 370 I-%/.a

HP8

hk.ln."P..j.b V.ee Sal., le-d.pon,ol rret*

S..n Appr.ir,l Rqinr

Fifst.oal adl EC-oit Aalafyd.

Table 4; Socal Range and Sonib Ferne - PteIwha

Fhnaidal Vtleu

I,naAIOnl4 P.Oact Costs mId 11000 - Pethn 5R96W6Yea. I 2 3 4 5 a 7 I 6 10 II 12 13 14 IS 16 17 Is 19 20

R"enwe etwrLankkbedW od 76 415 5097 2220 3734 5194 6629 7669 7646 6413 9729 11683 14062 15377 15416 15454 15492 15530 615141 1140

Laa InPn Ven -In9"l' 1220 3630 5459 6707 3400 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

OP.isl-k -49 .14t .225 .23t 31 485 920 1221 1311 1104 u4s 5059 1336 1527 5617 1392 1122 1122 1122 1122

TaLilegnlrwvali NotRe.- k5m ,n kleca4d Vod -1095 .3057 -413U -4254 103 4708 5895 6440 6635 7309 945 10624 12724 13950 13799 14062 14370 14404 1"44 14483

lrmnlwal Pwld co.

H.&"y Eq 50689 -2056Vdeln 3521 2340 -l4E qipld ae Toeaf 734 -308th_,6 416 2359TA

68neUl.eil 642 401 401Lral 170 170 161 29 220 220

I klOe Fo 5818 W573 5277 062 229 220 -3072 0 0 0 0 0 0 0 0 6 9 0 0 0 0

R- .1.85.6 COWlkIGumel am n19 In 1i9 169 I"6 189ON" ERII 71 71 71 71 71 71

,ima4d cn-*n4 C."S 2 e0 296 260 26 26 2e0 0 6 0 6 0 a 0 0 0 0 0 6 6

TeOW Ca l0633 6537 a2 4U 416 -2912 0 0 0 0 6 0 0 0 0 0 0 0 0 0

lnasnwliNin -51S294 -904 -4959 4745 -377 7521 9591 64 4635 7309 6841 101t24 12724 13l80 13709 14tlU 14370 14408 1444 14463

17%

IQ0 tO 00q - 10 X

4Olox t-

__1,_NWA.eLa" Ass. Fp 1 _mmes Fmesp Fwsp

aPaws Aa ns 300 I0 Sr ApprmA E.po

Feots Agee ULI i5 GkmM 7S we I Flacci sa TAs 5: Kasasslk AMoyssTa 300 10 Swd IE as Satea Ft-r - Pawsr

- Lossawlo VAIEsa D P -u" 7T 2340 I00 4

S _ass _oss 5 o~u o 2hsawt 6 0C F hiSs UNa t QbOe7S 75 MG iS 2

raFw sL0 do I 0TaS 20 400

SOOS C_'_srs Pea, ma 5 s paMa7 ST mass C wla PFcsr 0.5

-^t - -2 T

"a I 2 1 4 £ 5 I 7 * 10 IS1 12 1S 14 IS 16 17 Is is 20A ses 55c_ par ..sas - Paw (Ibsp tUOt)in OMMi Pupot Mlasaegms Annsa. Pat* An 75 S7s 57S *57 575 *75 775 * ais *ne 475 07' 675 *n75 57 475 675 475 875 675

DFonSArea Utu b.asrm 71 iS 75 7S 75 70 is i s 75 75 75 7536 7 75 75 71 75 is 75l.w 750 750 10 710 760 7 S0 750 iS0 750 73 150 7S0 ino 770 710 750 750 750 750 750

hs INI Pnictd _agrosM A.na.* ot iPua s kiarowemms n_OtM 0 300 300 300 300 300 300 300 300 305 30 3 300 300 30 0 30 3 30 700 300 303

D Aoders A.s a Swond Gas1v USatto rwd 4s0 30 34 300 3tO 300 300 300 300D 3C 300 300 30 30 30 300 300 300 330 30

eFss nAres, s UtS. Qum 75 0 0 ISO 0 0 "a0 IS0 550 IS0 IS0 IS0 10 ISO 1S0 I10 1I0 IS0 IS0 IS0

toal 525 0 S00 710 750 750 7S 750 750 70 7 750 750 750 710 750 710 710 710 750 750

d* PM Cmasa" - P54h655 (Ra)pR S I1 2 3 4 5 5 7 6 9 10 1 Z II 14 1s to 17 is to 20

65 7 Ratarose

S.sW ot A,r,lS od Produs 30273 37590 37511 37136 30704 35397 30033 35572 35316 34963 30013 34207 33924 335U5 33249 32217 323U7 32202 31935 31620

tutlal Ri...us 34273 37690 37511 37130 30704 20307 36033 15072 31310 34903 30013 34267 33924 33005 33249 32017 32557 32262 31930 31620

CostsAf."a LtIhodrts If 1003125 1063123 1013125 100312.3 1003123 100313 1003123 1003125 1003125 10Q3123 1003123 1003125 1003123 5I00325 10Q3135 1003123 10631255 1003125 101215 1063123

sotlolal Cost 103135 1003125106313 100313 1003121 106113 100312 5 10631.25 10I3125 106312 5 100312 5 100312.5 100312 5 106312.5 100313 5 1012.5 100312 5 10312 5 105312 5 106312 5

ho Retnos 44040 -00423 40U 2 -401177 -00545 9010 -70250 -70404 -7097 -71310 -71750 -72040 -72350 -7272 -73063 -7330 -73725 -74051 -74174 74053

le. 1 2 3 4 5 0 7 a 9 10 II 12 13 14 IS IS 17 la I1 20

WAD ProddRev4u

See of Aus. Pod ProdUs 2/ 40013 66165 "o10 94500 10250 100290 106290 100290 1009D0 1002 106290 100290 106290 100310 100250 100290 106290 100290 102520 106290

Wbea 31 106313 100313 100313 100313 100313 106311 100313 106313 100313 100313 100313

stasi Roo ma 40613 M160 60165 04100 100290 10290 1002900 100 10290 212003 212603 212003 232603 212003 213103 212003 212003 212003 212303 212103

CoUsLW a Wh url 41 23060 23U900 25513 200S5 2566U

Fdowo Crops 5/ lO0o 1o00 10a0 1 0 low 1o 000 10 10WD0 5000 100 1 °0 1DD 0 1am 1 0 10U00 low 00 10000 1100 1m0 100a

145."ssdsussPsouasw Nowoncs 5 0 0 0 0 20250 0 I 0 201250 0 0 I 0 0 0 0 aTran R tg lv 4500 4050 4050 4050 4050 4050 4050 4550 4050 4000 4050

Ass Pr a 10121 10125 10125A"tH"bdt3 LaIR 74419 65050 15050 1003125 1003120 100313 1003125 100312.0 1003125 1003121 1053125 100312. 105312 5 10031 1003125 1l0t125 1003125 105312.5 1003125 1063125

istutalCows 3562934 304015 3555543 371105TD1 3735705. 1373t3 1171125 1171125 117112$ 121012 t21to2.50 14141205 121 1211625 12116S3 129112.5 121102 2 1711625 121142eS 121125

Not laatui -30551 -304707 30031190 -263150 -3071501 -51072.5 -106123 S -10022.5 -101221 -11323 S -146731S -30120 5 -14072.1 -5457215 -140731 545 -148 0 -4721 -14072 5 -50872.1 -146721

ps, 1 2 3 4 5 6 7 a 9 10 It 12 13 14 IS 10 17 1i 19 20

R vomue 11340 20278 2e0S7 573t4 0 520 o0693 70257 70516 70974 177640 177900 176330 170178 179018 179353 176010 130015 1U0341 10064 1ON3

CostOrossaimuo 260950 205t9020 513s 2tOWS02 51 0 0 0 0 0 0 0 0 o 0 0 o0 0 0OP.mh,* 10000 -330 -135 1000 00 15 000 lo 1 l)~ 1000 1000 15306 14.5 36100 141510 14650 14550 14550 14000 54650 14610 14010D

ws las Csts 249001 250503 356240 271745 367t00 31050 IB000 IO00 10|000 15300 14010 35100 141850 14050 14010 14050 14110 14010 14 50 14650

Noa R. 4 230041 230204 23059 -214301 -190132 30343 59457 S0814 OI174 162340 163140 143230 168326 104161 104S03 16462 505166 10S391 165614 10133

If funt50 02 5 dsVuSU RSS71doY 4/ PAsMt" sAO.to Wt (7?S sf OA rM *t t 75 ta g 370 Ins/It2/ lsst pa, SU ,st run RtIasto Is N5 o ft 212 Sal pnaa V 5 Eseaii -d onsra4Fl pradudo ot 60 70 two. e a s,pAs & IMO-

3d Hpstont sI waO W S 6m 30 OWass t,o 75 ha S Rs O1 m a 1 st omw e gato p dl 370 uastm

Fill

ru04statm

Ptijab Forest Sclar D-et.opaeottt Projeot

Stall Appraisul R,eporlFia.r.. l an1d Table 0: Eloanulit Attalysie

Social Rangp and Scrub Fat-slt-- Potlhar

Eco..o..te Valus

looreennotat Project Coaln and nentln - PoIMrear (IRs060Yea, _1 2 3 4 5 8 7 6 9 '0 I11 12 1 3 14 1 5 16 117 is le 20

RevenueSore Livesloand Wood 45 249 658 1332 2241 3116 3977 4602 4768 5218 6518 8456 0osia 12118 12141 12154 12187 12210 12232 12255Load ImMIoveonl Inoeolmeelo 1040 3107 0673 5741 3082 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Op-ealmn 44 -133 -203 -208 28 037 844 1090 1180 995 eus 961 1214 1380 1455 1253 1010 1010 1010 1010Total l Nn,en lhl niRnena Sen Leslo-k1 nd Wool -955 -2725 *3a12 -4201 -869 2680 3133 3503 3588 4222 5713 7494 9604 10135 106086 10911 11177 11200 11223 11245

lo -e-eenlal Pleol Cooss

H.aW Eqp4ne-l 3593 -1451

Veedes 1929 1311 -408Eqau1eeI and Tool 625 -303

Boitmngs 3485 147

- TAI'-.) Oneam-lio-aj 632 395 395C' Looal 149 149 142 201 194 194

Fonerg Tehminu 0 0 0

Soulotailrinvsaueo 7272 3902 536 201 174 -2046 0 0 0 0 0 0 0 0 0 0 0 0 0 0Reconot Coslo

Inoetneral Stan 144 144 144 144 144 144Ofl5ce E .s.e.s 57 57 57 57 57 57

uataotllRe.anees Co0ll 201 201 201 201 201 201 0 0 0 0 0 0 0 0 0 0 0 0 0 0TolalCools 7473 4003 737 402 395 -1845 0 0 0 0 0 8 0 0 0 0 0 0 0 0

In-onltatNel lNcone -8428 .6728 -4549 -4e03 .1264 4525 3133 3503 35s8 4222 5713 7494 9604 10739 10686 IO8II 11177 11200 11223 11245

IRR 1%

wX Pr o nM Fl M (D

CD H - S

"3

Pereenaa¶lateu Pak istaOapeaaa.taea LaLd A a. F r. B -. s nd Fooap Farag. l re Sent U e Fnjeo¶

tocI-ng Ratn OlWu.tratag b Scop. Md h. Proio Iranraps 6ot . St a pp Repat.

E.pcId hIpat S&. (Ira) (kW7ha) (1) (5u0.)Wlhrl FaPr, M-nage-ent daa FinAl.aial and Ktaatto Ana!ysia Past A.-. 500 200 100 Tabl 6: Sain! RaSg ad Sci-b FaInt - Thdab FmtnA .t. hUdtGraaG- 100 333 33 0S Fmaa,oiaV.I---Tate 600 133.3

*'r Fea¶nddaaraarnlAtda.a*a .d Fa."en 250 1000 375 25b A te dao lltploWnod Gg`in-g Ma n 250 40 100 133a Faa ddta Lk.d lol GenAg 100 600 66 133

dFa-m Ld d 0° 0tTidal 600 541

W.g. (Flc/dy) 63

IPnal,g " Prjd Cenn_3'4y Ptaa pftn - Thboyeaa 1 2 3 4 5 hIMa

Caeanasta 2 06 9 I 4 3

y.e 1 2 3 4 5 0 7 a 9 10 11 12 13 14 15 10 17 to 10 20Aea.ga Sleb ng p. Can y - Tha1 (Shnp U6.0.bA Wahu FPogad U-aao-1nr A.eana Pnntn daa 1000 1000 1000 1000 1006 1000 1000 1000 1000 ¶006 1006 1000 1000 IWco 1000 1000 1003 1000 1060 2000tF.r-s dAn LUhdb LGeanr Sb0 Sb 66 6b 66 bb 60 ff 0b bb b6 66 bb 66 66 6b 00 bb 6bbia 1000 1066 1000 ¶000 6 0 10 006 ¶060 00 1066 10 00 106 006 ¶066 ¶000 0 106 006 ¶006 ¶065 1000 ¶060 woo6

a Whr Fraad M-s-agent An-nA a aI Pasase I -n.n ailnaerhnb 0 625 625 625 625 625 625 625 625 625 625 625 625 625 625 625 625 625 625 625

b Ad Al- -dA a aI....d Gear k-lg.a-rl 5000 333 333 333 333 333 333 333 333 333 333 333 333 333 333 333 333 333 333 333a FrtlA-nLnh8d 0.G10aagf 66 0 0 133 133 133 133 133 1 13 33 133 133 133 133 131 135 133

,ate 566 058 955 IC11 1091 1091 lIWI 100791 to10 1001 1591 1001 1001 1091 1091 1091 1091 1091 1091 1091

Bdtgn P. Cot toaay - ThaI (A.)year 1 2 3 4 5 n 7 8 9 10 11 12 13 14 IS 16 I7 1 19 20

Wloul8a Propti

Saat. 01 Aa .al. and PFrdr,r 94500 93555 92619 91693 90776 59069 00970 88000 07199 56327 15464 840W 83763 n2926 82096 81276 80463 79658 78562 78073oub6la¶a Onannue 94500 93551 92610 91603 90776 09069 00 870 8800O 87199 06327 05464 84609 03763 82926 02096 81276 80463 79658 7*026 78073

Aa¶ llaHuadra Labo 17 1678095 167895 167205 0785 ¶67805 163805 167815 167895 168095 167695 167895 1678095 167095 167895 167595 167895 167n95 167855 167095 167895

ab¶¶il Cas,t 167895 167895 167895 167095 167695 167895 167895 ¶67895 167805 06780a 167895 167895 ¶67895 167895 167895 167095 167095 167095 167895 167895

N.n Rnsoae -73395 -74340 -75276 76202 -77110 -70X6 -76525 -79015 -696 -61568 -62431 -43726 04132 -45969 -5759 -0010 -67432 -66237 -093 -56322

year 1 2 3 4 5 6 7 0 9 10 11 12 13 14 1 16 17 l8 19 20arMd Protd

Sale. otr Arrinak and dur. 27 53487 150006 150806 200434 229005 257576 257576 257576 257576 257576 257576 257576 257576 257576 257576 257576 257576 257576 257570 257576Wood 75 70 750 78 750 78750 70750 78750 78750 78760 78750 70750 78750

artlarl R -son . 53467 ¶50606 150006 200434 225go5 257576 257576 257576 257576 336326 336326 336326 336326 336326 336326 336326 336326 336326 336526 336326

CasLand Orravenrn0 602649 601025 600410 600599 602649R. .a.dg randp asP-etnaMr.nn.. n 0 0 0 0 I0 75000 0 0 0 0 0 75000 0 0 0 0 0 0 0 0

7reat Rtpe4nbg 54 6556 6500 6000 6000 6000 6000 6000 6000 6000 8000 6600Saa Pltlata 37500 37500 37500aral-WnandrrtLabr 89145 15006 150 806 171754 171754 171754 171754 17:7 14 171754 171750 ¶71754 171754 $71754 171754 171754 171734 1775 101754 10176 1754

ablabaC-mb 720404 709331 788716 772353 774603 246754 171734 171754 171734 177754 177754 252754 177754 177754 177754 177754 177754 177754 177754 177754

hNO Rnasrm 476007 638525 437910 -571919 -545590 10822 85822 85422 85822 7022 79822 4a2n 79022 79022 79022 70622 79822 79622 79822 79622

Year 1 2 3 4 5 6 7 8 9 10 I1 12 13 14 I5 16 17 18 19 20

Rve-nac 41013 57251 58187 108741 130229 167708 160606 169496 170377 249999 250862 251717 252563 253400 254230 255051 255563 25S668 257405 258253

Ca.tIm ,rDb 602649 601025 600410 600599 602840 0 0 0 0 0 0 5 0 0 0 0 0 0 0

Opnrbag 41250 20411 20411 3859 385S 70059 3050 3050 3051 9059 9059 64859 90850 9850 050 085 9 059 0000 9859 9650nolel Cabn 561599 621436 620021 004458 606704 70059 3059 3850 3809 9859 9859 84859 S00 90859 9059 9859 9059 9459 0 850 0059

N4d R-aar 602612 -564185 562635 -495717 -46479 08,49 164747 165637 166518 240140 241003 160050 242704 243542 244371 245192 2460D0 246809 247606 240354

I/ Etmndd u 25 d&WSU 4 R. 6/day 4/ P431u- arorn .9250 ha pk- nlao .ntl 100 hag 370 vo...ra

21 R.a pa SU r.mg tam R. 94 5 a lt¶ Ra 235 2 oh prq eL 51 MaIntrac .1 *na aYastora a! 370 trn..sa7S Hnl ol r at tor 30 t 09 0100 h4 R. 6504

hP jab F uI SeiT D0"edp-.. Pr l

Staff Appvi.. SqmprlFm _ad i -n__ AAysis

Tahe 6: Socia R1 a Scr,b P- - ThF i

Fi al Val

0,m.udP4a06" Cos lo _at - Tbl, l(RasF d t.d -3., 1 2 3 4 5 a 7 a * 380 11 2 3 14 35 38 17 to 38 20

R.w rWL.- ee* WOod U2 132 S1 623 3138 2013 4016 4635 5273 5573 4074 4811 710 8047 8074 303 83126 $154 618n 8206

L.Woosn.80ma6 206 2407 5403 6607 2411 0 0 0 0 0 0 a 8 8 0 0 0 8 0

Opsoas; -82 -207 .28 -140 274 522 640 768 945 435 171 376 741 990 1140 615 315 315 315 215

TosM0aan,40303n3 Rasma 103l - Lkvntcb aetod -3205 -352 .5105 -5436 -747 2491 2277 4017 4324 5138 5803 6425 6983 7057 8934 7488 7812 7038 7885 7891

0nasl Pvo$ Cost

H_y E _-smd 424 1713157 1105 434

EvAp4 d Toot 345 048

VAN knsat88 252 3232 221 0

CO Lnd 64 84 79 113 388 100FP.w T-im 0 0 a 0

Imd ,,_ a 3109 343O 230 3 104 445 0 0 0 0 0 0 8 0 8 0 8 0 0 0

Ranl Cost0858 54.6OSlk e E s. 22 33 2 °3 23 22 32-.at,4SRe.--,aC., 33 32 22 33 22 22 0 0 0 8 0 8 0 8- 0 0 8 0 0 0

low C.st 2j2 3442 334 344 343 4312 0 0 a 0 0 a 8 8 0 0 0 0 0 0

hw. Mraltisbacms 4347 4975 -5438 -5942 -808 3103 3377 4017 4324 5138 5903 8435 6982 7057 6934 7488 7612 7539 7465 7601

IRR I5%

0 1-1010

a -A

p_.. Teu4Rapo.ita LMA Ana, Faag limm. aid $Sici Faqt Farp teaiMeNata S oag Ne SCe tvtP ef a Eawns Bi Sadai Feajb 1venal Seciw D4ev el d FPrejillupin he .) C^) i) /Sin) SR

Proged MaIIeI0 A,r" ff pn* P.".e Area so 200 1oo rmtioi and Ec_s.. AslSyde

Fan9 Aft. Uis lr Qazn,o ioo 333 o 3 9 Tabe 7: Swa Rap .. Sreb Fervs - falalid SWn n33 Es .mk VYe

WPh PFpd MaagMee Ann*Mpid peaM 250 Itw 370 2.5* AflanAl"Si1pwdh dGnGM an 4.um eAt 250 400 100 53o Fern Am Usaed i G V 505 500 55 1.33d FtmLaol 0 0aTileS ooS 541

St#idad Cnon Fart 0 9 W." P.90e) 50 7 Maoa Coes-i Facd 50

P basms of PinI COMM-Aly Puulclp - T|iyear 1 2 3 4 8 TotaL

Ce nAla. 2 a 9 11 4 *5

"W I 2 3 4 5 a 7 a 0 i II 1i2 13 14 15 10 17 Ii IY 20A-gW 1S1loMg pP Caneaniy -lb ISit p Links)h WAW Pted a niageui-n Aea* Pa Aea iow 1000 low lw io i D ssO 1000 i 0so low tas usa00 10o 10s i i0s i0s i0s isa0 10is i0sa 10iVFaea Aa Uad ba Grfr 66 ea Be Me as Go 6 66 G0 00 5 0 66 Go f 6 SI 66 66 00 66 60total low e 0ff losa lose is isa isa isO is ie O 10Ci lso 0ia s ia lse IS iS8 i0sa losw i0s low lOaf

ba V Pqad MaapeiWa An.. Am ofd Plaoiv wAoismn iahaa s D W G0 025 025 635 025 e2s e2s 025 625 025 e 25 025 022 025 625 025 025 025b. ASSiS 0* A t" 'W 455 C.-% lMan9 ot soo 333 23 33 533 II 3 333 3$3 ass 333 233 an in anIII s s u3s 1 25 33 325s 133 333o FoamAraaULdldh.rGwg 60 0o 133 133 133 533 133 133 133 133 133 133 133 133 133 132 133 133 113satalt 06 955 u 50 1091 1001 1091 1081 1051 1091 1o1l 1001 1001 1801 5091 1091 1001 1001 1001 5081 1001

gap pa Casay -That Psi

-a, 1 2 3 4 5 6 7 U 9 10 11 12 i3 i4 is le i7 Is i9 20Wvat. Projo

FFRe~

Sa7 ol Aoiua a Poed. 51700 50133 05572 5201e S4450 53021 53382 52840 52120 51790 51278 50750 00250 41755 40250 40795 4270 47705 47317 46440'3 abotlkRenoe 50700 56133 50572 55010 s4400 53021 53382 52848 S2320 51796 51278 50768 50258 49700 49250 46785 48275 47705 47317 45044

CostaA t isb.,dry Lab.01) 151100 1510b 151155 1 iSiM 161100 151100 151100 151100 151100 lo 151100 15110 131105 is510 151186 5si5oe 151105 1s5110 1s511s 751100 1s51osoots Co." 151106 151100 151100 15110 0 15110 0 15110 0 15110 151 106 151100 151100 181100 151150 101150 1511180 151100 1510 Is1ios Is e Si e51100 1511iDNo ReAn -54400 .94n73 9U0534 -0o0 -86640 -971U4 .87724 -68257 -007e -89309 -927 -100340 -10O47 -101350 -101641 -102140 -10221 e103311 -183718 -104262

Wkh Prtc

R..n-

g.b.of Afty Plod.cls 2 32092 s04u4 sM4u 1202s0 137403 154546 t5e4W sUS4W 15s4 MOO 1s4e 54548 1us4e4 154se 154S46 154546 154S46 154s46 1545e Ises4e 154s4e

Wood 3J 76750 71750 78f750 78750 78?50 71750 78750 74750 70750 78750 ?4750

s.oda R..*4 320s2 sNu& 9so4u 120260 137403 1se454 154S 1us4e 1us4s 2332sS 233U98 23U98 231296 23329e 23U298 2332se 233298 2332s 233295 23396

cow4

L."mm -nd 41 530550 S37917 s373e7 537S36 S39550

Rr.ft W^ Prrd MzurIamenu 0 o 0 o a o 75o0 o o a o o1 e7oo ooI'o ooM

T,. R.pnM.V St 50 5400 5400 ..o 5..0 s4o s. oo 50 50 .oAr.:P'ot fgion 346SO 34650 34eso

Arw 4r* .bWy LA. *023 1 35M2 135726 154575 i54576 1I4072 154S57 15S078 164578 IS457 154578 IS4578 154578 l54575 15578 i$4578 154571 154578 154570 IS4570

u"OuolCog$ 854431 7ee2u 707742 8U2rS es128 222nn 154576 154576 15U78 15sSn 159978 2274n 15997 16"M 16097 15sn7 ISs7n 151107 15n7 15097

NoR.wo e22ne -41780 -617239 -571854 ss8ens 4n733 -33 -33 -33 U533 U533 -72Ye3 5433 -U433 sas3 5S^33 saX3 UU1 UU UU343

Y-a 1 2 3 4 5 a 7 a 9 1o it iz 13 14 Is 1e 17 Is it 20

Cm"

In.s- 539S5O Waitl s37357 S37s3e 539550 ° ° ° D 0 0 D o 0 0 a 0 a 0 OOpnVg 3e225 lU270 19270 473n U73 70973 347n 3473 U473 8e73 U73 7e37n e873 Bell 807 8un U73 1en en3 San

nTdal cog. 503325 S57187 555637 541009 543023 70n73 347 n U73 3473 873 91173 7533n 8un *7 9 u ee U73 $73 Un7 1117 en3

NtR.*nB -527933 s228eY -U2725 -1765e -4eFoDe 29652 97691 98225 se753 172625 17314U 106167 1IU165 174e67 175185 175657 17e145 176f28 17710 177579

tU EWW* 0 2z5 d4ys5U R.6Af 74y Psad-7 knra od 250 h. pk. ftmtl-sl -J 10 ha e 370 sr 4r

21 R- pw SU -rk Ag Rs 4 s_04 10 ft 2 2 W WOd V1 Mdv^ U-P-'. of 370 V.Ms

v r# of I famhAn rN 30 VsnU c~ 0 A&r s0O Rs esen

FFFit

Pakistan e Puo.jab Foresl Sector Dend.ops -1rt Projectg ltq=

Sl.ff Apl,,.i,.l R,p.,l. _

Fiosorial tl,d Ecostosir AlaaiysiTable 7: Soial R:sae asid Scrub FParro -- Tha1

Econo.ic Va1las

Inormsnula Proo,l Costs and Bensflts - Thai (R,000oe7-r 1 2 3 4 S 6 7 0 9 10 I $2 13 $4 15 16 $7 $0 09 20

Ro Lnueol liodsslo kaodWood -49 -79 54 37e $15 $008 2410 2889 3164 3407 3896 4622 5505 5830 5853 5800 5885 5900 5916 5932Land I$nc,bosoO$nen I5noen ento 1079 3220 4836 5013 2150 0 0 0 0 0 0 0 0 0 0Op.,a,.g -72 -70 -172 -102 20 403 570 779 854 392 $54 330 067 091 1026 554 284 204 204 284To7a$$nctn,nstalMe 0enus onLheSo$9and Wood I156 -3128 -4610 -5432 '276 1324 1831 2171 2310 3015 3742 4204 4837 4945 4820 5315 5001 5617 5032 5648

naeotnal P1osd Costsm_floel$ntnHe-V Equnl 299 -12$Vehes. 900 605 -227Eqopnent aMd 7000 294 142OBu dngs 246TA

IoleOma-onal 310 $90 700 0Local 75 75 71 10$ 07 07

.7 Fnregn !tanns 0 0 7s i o$al$noem*n 2137 077 269 l$0 97 -303 0 0 7 0 0 0 0 0 0 0 0 05,540cun$n Costs

ore ssEeen.es 26 26 20 26 20 26 0 0 0 0 0 0 0 0 0 0 0 0 0 0Ru.oss-on$ Con- 26 20 20 20 20 20 0 0 0 0 0 0 0 0 a 0 0 0 0 0

T., Cools 2153 903 295 $27 123 -307 0 0 0 0 0 0 0 0 0 0 0 0 0 0

10-teenta Ni I.n.om -3219 -4031 -904 .5550 -7300 1092 1$31 2171 2310 3015 3742 4284 4037 4945 4026 5315 5601 5617 5632 5648

IRR 11%

I>>

CD HI P7 C

P X

s-J r O

PaeJabo Fot-c S-cser D-elapesnl PrjesStlffApprisal Rport

FIea al and Ecssek Anab aleTabk S: Swcil Rep ad S-rub Far.-Ia Aggrpled Caale and Befits (R8.000)

F- Ineul V

Incno4& nMesAcltty es 1 2 3 4 5 6 7 8 9 10 Ii 12 13 14 IS 16 17 18 19 20Scrb Fo-eWRangs9ndsP=lhw l 76 415 3097 2220 3734 5194 6629 7669 7948 6413 9729 16863 14052 15377 15416 15454 15492 15530 15A5 ISb5OThal -2 -132 91 631 1916 3013 4016 4815 5273 5573 6074 8811 7705 90-7 8074 8101 8128 8154 8180 8208

To.alsoB fihl 5 284 1188 2850 8552 8206 10845 12435 13219 13986 15803 164S4 21766 23424 23460 23355 23026 23684 23748 23811

I-cstetlr CostaAdctly 0 7 9 L 2 3 4 5 6 7 6 9 10 11 12 13 14 IS 16 17 18 19 20

Scrub Fol-sR9

ngIe,ndsPotlhaa 1220 360 5459 707 3WO 0 0 0 0 0 0 0 0 0 0 0 3 0 0 0lhaI 1206 3607 5403 6307 2011 0 0 O 0 0 0 0 0 0 0 0 5 0 C D

s-btdlIllme l-efCo.s. 2425 7236 1O02 13313 bO12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Operahng

S9Crb Fresl5R-ngsland,Polfth. 49 -143 225 -231 31 465 93 1221 1311 1104 8b3 10O9 1338 1527 8617 1392 122 1122 112 1122Tha l-83 .207 208 -140 274 522 640 798 946 4s 171 375 741 990 1140 615 335 315 315 315

S aIOpsetIOoS .- 131 -s34 433 -371 305 1-087 577 2MIS 2254 1539 1054 1634 207S 2517 2757 2007 1437 1437 77 137Total4c91dy Cost 2294 6082 10429 12942 6316 1007 1577 2619 2259 1539 1266 144 2879 2517 2757 2007 137 1437 1437 137

Proet yer I 2 3 4 5 6 7 a 9 10 II 12 13 14 IS 16 17 18 19 28

Scrb Fo-r.gea3-SPut-ys' 10573 5277 5f2 229 220 -3072 0 0 0 0 0 0 0 0 0 0 0 0 0 0Th1 3109 1410 301 113 10 45 0 0 0 0 0 0 0 0 0 0 0 0 0 0

astsolallnossb Im 13682 b867 b63 342 329 3717 0 0 0 0 0 0 0 0 0 0 0 0 0 0R-e Cosb

Scrub FclesORangsIlrndPob waa 260 26 0 20 2b0 25 0 0 0 0 0 7 0 0 0 0 0 0 0 0Thal 33 33 3 3 33 33 0 0 0 0 0 0 0 0 0 0 a 0 0

su-toMI Reccce-l Cos- 293 2 D3 3 293 293 293 0 0 0 0 0 0 0 0 0 0 0 0 0 07oT1.Pro,eotlCA 13875 6980 1150 b35 822 -3424 0 0 0 0 0 0 0 0 0 0 0 0 0 0

TlI Costs 1828 13482 I8sss 13577 69b3 -2417 1577 2814 2259 1539 105 1434 2079 2517 2757 2D07 147 437 147 1437

Ve4r I 2 3 4 5 6 7 8 9 10 11 12 13 14 l5 16 17 18 19 207J TotalN n -leotetetaD eWStab -18276 -13579 -10448 -10727 1280 10623 906 19465 1060 12446 14794 17059 19687 2O20 28732 21548 22183 22247 22330 2233

IRR 16%

sdtloly 751 I 2 3 4 5 6 7 8 9 30 11 12 13 14 19 16 17 18 19 20Scrub FolesbRapItgelaPo8lnal 45 29 8S6 1332 2241 3116 3977 4802 4768 5218 651 a 846 19818 12115 12141 12194 12187 12210 12232 12255Thyl -4 .79 S 378 1151 I80 2410 2869 3184 3407 3b96 4622 S530 568m 6583 5 889 S9 5916 5932

Total eeB. s -4 370 7I3 1710 3391 4624 83t7 7461 7932 8625 19414 I3378 16323 17954 17994 18033 38072 18110 1S146 15188

Inotnrnlal CostaAdoltly I6n . 2 3 4 5 6 7 8 9 10 11 12 13 14 15 38 17 36 19 2M

Scrub Foleraao8acgsls

PoI-e' 1044 3107 4673 5743 3062 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Th1 079 3228 4638 5913 2158 0 0 0 0 0 0 0 0 0 0 0 C 0 0

a - -o Ca.lllalm4nltCca 2123 4335 9bO9 8154 5240 D 0 C D 0 D 0 0 0 0 0 0 5 c 0

Scrub F-RestlIangstn4sPolroes 44 .133 -203 -20 28 437 844 1099 11' 995 WSO 93, 1234 1380 134f 1253 1012 1010 1010 1030

Thal -72 .179 -172 -302 2M6 403 579 739 854 302 154 333 887 891 1028 Su9 284 284 284 284s-o ,lal Oplg Cos -316 .332 .375 311 296 920 1423 1638 2034 3367 959 1296 1861 2271 2482 307 1294 1294 t284 1294

TOMAdb"YCost 2007 6023 9334 11344 036 920 1-83 1638 2934 M337 953 729 5361 2373 2432 1801 1294 1294 1294 1294

l- -ye1 a"' I 2 3 4 5 6 7 8 9 30 31 12 13 14 5 36 1 7 13 19 28Scuob F-`sURacgea5-sPol.tos 7272 3802 536 23 394 -2046 0 0 0 0 0 0 0 0 0 0 0 0TeAI 2137 677 289 301 97 390 0 0 0 0 0 0 0 0 0 0 0 0 C

C, ola,Ous4menl 9409 4880 WS3 302 291 .2440 0 0 0 0 0 0 0 0 0 0 0 0 0 0Rscur'a" Coest

Scrub F-.ResUangeucdsPoFhaa= 283 201 203 .01 208 203 0 0 0 0 0 0 0 0 0 0 0 0 0 0Thal 26 28 28 26 2 25 0 0 0 0 0 0 0 0 0

suOOolaI RtculenCosls 227 227 227 227 227 27 0 0 0 0 0 0 0 0 0 0 0 0 0 O

T.tIlP,o1

edCo.l. 6336 49f7 1032 529 518 -23 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Costs 3w38 I30 3O036 11872 bOS4 -3233 1423 1818 2034 1367 959 129 388 2271 2432 1807 1324 1794 3294 1294

vel 2 3 4 0 5 7 8 9 3 0 II 37i 1 3 34 I35 18 37 3 8 39 28

Total Ne lte1nalB ne5l -33547 -10759 9054 -30162 -2882 8217 4984 6073 5S93 7° 11776 144 35I3 15532 16225 '6778 367 36655 16802ERR 13%

19 I|

rP_jeb F-l SMnar ttd6va ar,.

S9in Apps Howr,Fl.add _i Ereeseec A.*..

Fn FSsry Fs_

Proecllon of Orovobg Block Wood Supply ad Pilel

with Prced tcs Prqct uernntialWood Wood

Wood of which Trees Produced of edI* Trees Produced of dwic TreesProduced Inustial Tres in PlarrWd d Indusliel Trees in Pltied in Growing and Inussiial Tres in Plated in

Grrmrg Sk Producivity and Traded Wood Corroulo Stnds in Peniod Grig ProducK y Traded Wod Conpoeite stands Period Slodc Traded Wood Stands PeriodYOr ((000) Parnoi (OO0) (1000) Price (R&t) ('1000) ('000) Stock (rOOO) Parantler (1`O0) (M000) Prie (RSA) (1000) ('000) Year (rOOO) (rOO0) (0OOO) (1000) (000)

Present 0 66996 6698 Preen tO 0 0 0 0 01 116991 30095 118898 30000 1 0 0 0 95 952 171738 54747 168684 51688 2 0 0 0 3154 30593 227405 55687 219060 50504 3 0 0 0 8317 51634 263772 58367 2t8344 49256 4 0 0 0 15428 71115 340737 56965 316204 47940 5 0 0 0 24453 90256 397498 56761 362816 46532 6 0 0 0 34682 102297 21724 0145 3150 787 10000 443485 45887 21724 0.14 3041 760 10000 407204 44388 7 0 109 27 36201 1599a 29248 03150 4387 1097 1000 1 489801 46417 29224 014 4091 1023 1000.1 450164 42960 8 24 296 74 39737 34579 42934 0 155 6655 1664 1001 4 536554 46652 42146 0 14 5900 1475 1001.8 491660 41496 9 708 754 189 44894 5156

i0 56851 0160 9098 2274 1000 2 583239 48885 54772 014 7668 1917 1001.7 531652 39992 10 2079 1428 357 51587 669311 70943 0165 11706 2928 9984 627428 44190 67086 014 9392 2348 999.9 588226 36576 11 3857 2314 578 59200 761412 85184 0170 14481 3620 989.6 667428 40000 79071 014 11070 2767 596.5 808228 40000 12 6113 3411 853 59200 013 99374 0.175 17391 4348 979.4 707500 40072 90704 014 12699 3175 991.5 648228 40000 13 8670 4692 1173 59272 7214 110871 0175 19402 4851 97.9 707500 101901 014 14252 3563 9854 648228 14 9070 5150 1288 59272 01 5 122475 0 175 21433 5358 954 0 707500 112541 0 14 15758 3939 978.0 648228 15 9934 5677 1419 59272 01a 134138 0.175 23474 5869 938 1 707500 122915 0.14 17206 4302 969.2 649228 16 11223 6268 1567 59272 0'17 145810 0175 25517 6379 920.3 707600 132913 0.14 19908 4652 8693 848228 17 12897 6909 1727 59272 019 156857 0175 27450 6882 901.8 707500 142057 0.14 19688 4972 9488 648228 18 14800 7562 1891 59272 019 166657 0175 29200 7300 901.8 707500 152057 014 21288 5322 948 8 648228 19 14800 7912 1978 59272 020 176875 0 175 30953 7738 9019 707500 162057 014 22688 5672 948.8 648228 20 14818 8265 2056 59272 0

InrrenentTree Prqecl and Total Irrlniental

Estabitshment Recurrent iocsmenia Consumer tDevelopmertCosis Costs ICosu Surplus Net Benefits I Resources Nei Benefits

Year (Rs'OOC) (Rs'O0O) (Rs-OD) (RAsOO) (Rs'000) EIRR I (Rs'O0O) 11 (Rs'ODO) EIRR 11Present O 0 0 0 0 0 11.01 0 0 14 0%

1 16034 220847 238881 0 -238881 15600 -2210812 57880 118209 176089 0 -176069 39564 -1365063 91696 80747 152443 0 -152443 59298 -931454 104933 44454 149387 0 -149387 78777 -700105 123510 40609 184179 0 -164179 100974 435058 132338 38150 170408 0 -170488 97717 -727717 94511 28981 123492 0 -123492 -123492a 9694 14491 24184 42 -24142 -241429 17397 7245 24642 2762 -21880 -21080

10 24384 3623 28007 12936 -15182 -15182 >11 28897 1811 30708 37765 7057 7057 A 10 t12 -5200 908 -4294 87896 92191 92191 0 X S13 4883 453 -4430 182490 188921 18S921 tT D X

14 226 226 295151 294924 294924 m XIs 0 446081 446081 446081 M 0'1S 0 632203 632203 63220317 0 858884 858884 858884to 0 1113389 1113359 111336 t19 0 1167477 1107477 110747120 0 1261839 11261639 1218139

rFoj b Pesos Sa-ter gk dsp ro.lSsol App-l A -

Fasese and Essasod Ans,poFn Fenury E.kasia

r ._ Vok

Prajew d Gswinrg SleF0, Wood Supp and PMe

wit PrMee ow PidernWod

Wwod d rtidh Trees P,odsad of whecb Trees Woos of oth TrsProduced Ind"sral Trees in Plated nd Indurk t Tres r Planted hi Gr.r Produed Industn! Tres r PatUd m

Gmg Seod Prosc and Traded Wod Compones Stnds o Penod Going S'o Preidty Trded Wroo Conwosr Stans Penod Stock end Traded Wood StAnds PnosdY.w (MM00) Prenrater (rooot (70t Pm (RaA) (1000) tOOD) (fO0) Prmter (r"OO) (rOOO) Prce (Rai) CIOO) (000) Yew (COW) (r`000) (7ODO) C(OO) (000)

Pr sent0 88898 85898 Presento 9 0 0 0 01 118901 30095 118888 30000 1 0 0 0 95 95

2 171738 54747 180584 6188$ 2 0 0 0 3154 30593 227405 50f87 219089 50504 3 0 0 0 8317 51634 283772 58387 268344 49258 4 0 0 0 15428 7111

6 340737 58985 3152t4 47940 6 0 0 0 24453 9025

8 397498 58781 302818 48532 8 0 0 0 34682 10229

7 21724 0146 3150 797 8750 443485 45987 21724 014 3041 760 8750 407204 44388 7 0 109 27 38281 1599

8 29248 0 1SO 4367 log? 8751 489990 46417 29224 014 4091 1023 8751 450164 42980 a 24 296 74 39737 34579 42934 0 r5 6895S 1884 7682 538554 46852 42149 014 6900 1475 876.6 491660 41496 9 788 754 189 44894 5156

10 58851 0 160 9098 2274 875.2 583239 48880 54772 0 14 7688 1917 87095 631652 39992 10 2079 1428 367 51587 669311 70943 0.165 1178 2928 8718 827428 44190 87088 014 8392 2349 974.9 558228 36576 11 3857 2314 578 59200 781412 95164 0170 14491 3820 855.9 687428 40000 79071 014 11070 2787 8719 608229 40000 12 6113 3411 853 59200 013 99374 0 175 17391 4348 857.0 707500 40072 90704 014 12899 3175 887 6 648228 40000 13 9970 4892 1173 59272 72

14 110971 0175 19402 4851 8489 707500 101801 014 14252 3583 8522 84228 14 9070 5150 1288 69272 0

15 122475 0175 21433 5358 834.7 707500 112541 014 15758 3939 8557 648228 IS 9934 5877 1419 59272 018 134138 0175 23474 6e89 820 9 707500 122915 0.14 17208 4302 148 1 848228 16 11223 6268 1567 59272 0

17 145810 0 175 25517 8379 8053 707500 132913 014 18508 4652 939 4 649228 17 12897 9909 1727 69272 019 156857 0175 27450 9882 7890 707500 142057 014 19988 4972 8302 848228 18 148M 7552 1991 59272 019 166857 0175 29200 7300 7890 707500 152057 014 21258 5322 9302 648228 19 148M 7912 1978 59272 0

20 176875 0175 30963 7738 789.0 707500 182057 014 22688 5872 9302 848228 20 14819 9285 2068 69272 0

tnrernWente Prqed and Total tnr mentalTre Recltrn Iremnulted Consums Dsve"oprnet

EsSabl,serrent Coats Costs Surplus Not Benefits I Resources Net BeneftsYer Coos (Rs000) (RsaOO) )Ra'000) (Rs'sOO) (Rs'00M) EIRR I (Rsa00) 11 (Rs'ODD) EIRR 11

Pr sort0 0 0 0 0 0 132% 0 0 17.8%1 2280 198582 200883 0 200863 14040 -1888232 19723 109388 128111 0 -128111 3580e -905033 32340 54872 97012 0 47012 53308 -338434 28843 40009 8852 0 48852 70898 42476 23572 3802 80175 0 40175 90807 304328 34090 34335 98425 a 48425 87945 195207 3883 26083 30048 0 -30048 -300488 t1431 13041 24472 33 -24439 -244399 19271 821 24792 2175 -22817 -22817

10 24488 3280 27726 10099 -17929 -1782811 29312 1830 29942 29740 -202 -20212 -2160 9S1 -1345 88216 70983 70S8313 -1975 408 .1487 143711 145178 14517814 204 204 232431 232227 23222715 0 3512t9 351299 35128918 0 497StO 497950 497tS017 0 876371 978371 8M71is 0 978794 976794 07879419 0 938130 935138 938138

20 0 993541 993541 993541

tII

Pa t it i a tFortprt. F'rrert Sector tir etopeteitl P.alert

Staff .asrtreiaal report

Fitt-ri.Cl and Ecottotei AaItysir

Project Aggregated Costs and Bents (9s'0008

Fmt-atl ala-s

Incremental BenefitsActivity year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Faom Forestry 0 0 0 0 0 0 0 42 2762 12825 37765 87896 182490 295151 446081 632203 858884 1113389 1187477 1261639

Scrub ForesyfRangelandsPolhwar 76 415 1097 2220 3734 5194 6629 7669 7946 8413 9729 11683 14062 15377 15416 15454 15492 I5530 15568 15605

Thal -82 7132 91 631 1918 3013 4016 4815 5273 5573 6074 6811 7705 8047 8074 8101 8128 8154 8180 8206

Total Benefits -6 284 1188 2850 5652 8206 10645 12527 15982 26811 53568 106390 204257 318575 469571 655759 882504 1137073 7211225 1285450

Incremental Costs

Activity year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

InvesrmentFarm Forestry 16034 57860 91696 104933 123510 132338 94511 9694 17397 24384 28897 -5200 -4883 0 0 0 0 0 0 0

Scrub ForestVRangelandsPothwar 1220 3630 5459 6707 3600 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Thal 1206 3607 5403 6607 2411 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

subtotal Investment Costs 18459 65097 102558 118246 129521 132338 94511 9694 17397 24384 28897 -5200 -4883 0 0 0 0 0 0 0

Operating

Farm Forestry

Suub Forest/RangelandsPothwar -49 -148 -225 -231 31 485 938 1221 1311 1104 888 1059 1338 1527 1617 1392 1122 1122 1122 1122

Thal -83 -207 -208 -140 274 522 640 798 948 435 171 375 741 990 1140 615 315 315 315 315sublotal Operating Costs -131 -354 -433 -371 305 1007 1577 2019 2259 1539 1059 1434 2079 2517 2757 2007 1437 1437 1437 1437

k- TotalAcivity Costs 18328 64742 102125 117875 129826 133345 96088 11713 19656 25924 29956 -3766 -2804 2517 2757 2007 1437 1437 1437 1437

Project year 1 2 3 4 9 6 7 8 9 tO t1 12 t3 14 15 16 17 18 19 20

InvestmentFarm Forestry 191666 89228 31766 15473 11688 9169

Suub ForesLURangelandsPothwar 10573 5277 562 229 220 -3072 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Thal 3109 1410 301 113 108 -645 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Instilutional Support 9891 7120 4814 2083 1590 2083subtotal Ivsastment 215239 103035 37442 17898 73606 7535 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Recurrent CostsFarm Forestry 28981 28981 28981 28981 28981 28981 28981 14491 7245 3623 1811 906 453 226 0 0 0 0 0 0

Scrub FoesURargelandsPothwar 260 260 260 260 260 260 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Thal 33 33 33 33 33 33 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Institutional Support 347 347 347 347 347 347sublotal Recurrent Costs 29621 29621 29621 29621 29621 29621 28981 14491 7245 3623 1811 906 453 226 0 0 0 0 0 0

Total Pro)ecd Costs 244860 132656 67063 47519 43227 37156 28981 14491 7245 3623 1811 906 453 226 0 0 0 0 0 0

TotalCosts 263188 197398 169188 165394 173054 170501 125069 26204 26901 29547 31768 -2660 -2351 2744 2757 2007 1437 1437 1437 1437

year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Total Not1 ncremental Benefits -263194 -197115 -168001 -162543 -167401 -162295 -114424 -13677 -10920 -2736 21800 109250 206607 315831 466814 653751 881066 1135636 1209787 1284012

Eacluding Incremental Development Resources trom the Eliminabon of Seedling Subsidies

IRR 12 3%Total Not tncremental Benefits -247594 -157551 -108703 -43767 -66727 -64577 -114424 -13677 -10920 -2736 21800 109250 206607 315831 466814 653751 881066 1135636 1209787 1284012

Including Incremental Development Resources trom the Eliminatton of Seedling Subsidies

IRR 15 0% H >rJ :3

Fm fD

F-

Pakis.1nPanj-b F-otst Sector Deveyospol Pojec

Staff Apprnil ReeplFinancial nd Ec.no.ic At aly.i.

Projeca Aggtgoted Cols and Bestito (R.'O0O)

Economic Values

Incremental BenefitsActivtty yea, I 2 3 4 5 6 7 B 9 10 1I 12 13 14 15 16 17 18 19 20

Fann Foresfry 0 0 0 0 0 0 0 33 2175 10099 29740 69218 143711 232431 351289 497860 676371 876794 935138 993541

Scrub Forest,lRangelandsPothwar 38 208 548 1110 1867 2597 3314 3835 3973 4419 5716 7649 10008 11303 11322 11342 11361 11390 11398 11417

TIal -41 -66 45 315 959 1506 2008 2406 2636 2865 3352 4075 4955 5284 5297 5311 5324 5337 5350 5363

Total Benents -3 142 594 1425 2826 4103 5322 6276 8785 17384 38807 80942 158674 249018 367908 514512 693056 893511 951887 1010321

Incremental CostsActivIty year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

investmentFam Forestry 2280 19723 32340 26643 23572 34090 3963 11431 18271 24466 28312 -2160 -1875 0 0 0 0 0 0 0

Scrub Forest/RangelandsPoth.ar 477 1430 2146 2622 1430 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Thai 339 1018 1526 1866 678 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal lnvestmentCosts 3096 22171 36012 31131 25681 34090 3963 11431 18271 24466 28312 -2160 -1875 0 0 0 0 0 0 0

OperabngFaom ForestryScrub ForesVRangelands

Poth.ar -44 -133 -203 208 28 437 844 1099 1180 996 805 961 1214 1380 1455 1253 1010 1010 1010 1010

fr-i Thai -72 -179 -172 -102 268 483 579 719 854 392 154 338 667 891 1026 554 284 284 284 284

subtotalOperatngCosts -116 -312 -375 -311 296 920 1423 1818 2034 1387 969 1299 1881 2271 2482 1807 1294 1294 1294 1294U1 Total Activity Costs 2980 21859 35637 30821 25977 35010 5386 13249 20305 25853 29270 861 7 2271 2482 1807 1294 1294 1294 1294

Poject year 1 2 3 4 5 6 7 9 10 11 12 13 14 15 16 17 1a 19 20

rnvestcnent

Farm Forestry 172499 80305 28589 13926 10519 8252

Scrub ForesyRangelandsPoth.ar 11647 7292 2681 1068 968 -1272 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Thai 4187 2500 1258 502 455 -35 0 0 0 0 0 0 0 0 0 0 0 0 0 0

lnsbtutuonca Suppon 8836 6054 4640 1941 1448 1941subtotal Investcnent 197150 96152 371689 17437 13391 8886 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Recunent CostsFarm Forestry 26083 26083 26083 26093 26093 26083 26083 13041 6521 3260 1630 815 408 204 0 0 0 0 0 0

Scrub ForestvRangelandsPothwar 201 201 201 201 201 201 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Thal 26 28 26 26 26 26 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Projed Management 312 312 312 312 312 312subtotal Recurrent Costs 26622 26622 26622 26622 26622 26622 26083 13041 6521 3260 1630 815 408 204 0 0 0 0 0 0

Total Proed Costs 223772 122774 83791 44060 40013 35509 26083 13041 6521 3260 1630 815 408 204 0 0 0 0 0 0

TotalCosts 226752 144633 99428 74860 65990 70519 31469 26290 26826 29113 30901 -46 414 2475 2482 1807 1294 1294 1294 1294

year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 18 17 18 19 20

Total Net tncremetoal BeneFts -226756 -144491 -96834 -73455 -63164 -66415 -26146 -20014 -18041 -11729 7906 80968 158259 248543 365427 512706 691762 892217 950593 1009027

EFdudig Incremental Development Resources from the Eliminabon ol Seedling SubsidiesERR 14%

TotalNetIncremental Benetfts -212716 -10884 -45466 -2556 27443 21530 -26146 -20014 -18041 -11729 7906 80988 158259 246543 365427 512706 691762 892217 950593 1009027

Induldng Incremental Development Resources trom the Etiminabon ot Seeding SubsidlesERR 18%


Staff Appraisal Report !IIFinandal and Economic Analysis

Sensitivity of hte ERR to Variatlons in Total Project Costs and Benefits

Locus of Switching Values

30-

20

10-

~~~ g20;) ~~~~~~~~~~~ 15 30 5 so 95 115

0

q2 -20

-30

-40

Variation In Costs (%)

rIlJt P

PAKISTAN



ANNEX 7

RELATED DOCUMENTS AND DATA AVAILABLE IN THE PROJECT FILE

A. Reports and Studies on the Sector or Subsector

A. I Islamic Republic of Pakistan, Forestry Sector Master Plan, Prepared with the assistance ofADB and UNDP, December 1992.

A.2 Government of Pakistan, Pakistan Household Energy Strategy Study (HESS), Series of 6reports prepared with the assistance of UNDP and the World Bank, 1991-1993.

A.3 Winrock lnternational Inst. for Agricultural Development, Forestry Planning andDevelopment Project (Government of Pakistan and USAID), Final Report, September 30,1994.

A.4 The Forest Sector; A World Bank Policy Paper (1991).

B. Reports and Studies Dealing with the Project

B. I Joint Project Preparation Team, Project Preparation Report (Main Report) Forest SectorDevelopment Project, December 1993.

B.2 Annexes to Project Preparation Report, Forest Sector Development Project, December1993:

Farm Forestry in Punjab, PakistanIrrigated Plantations in PunjabSocial Range and Scrub Forest ManagementForest Policy and LegislationForest Products, Markets and PricesForestry Research and Training in PunjabFinancial and Economic Analysis.

B.3 IUCN/PFD, A Study on Environmental & Ecological Considerations for Management ofPunjab's Irrigated Plantations, December 1994.

B.4 Working Paper: Social Range and Scrub Forest Management Component, July 1994.

- 137 -

IBRD 26496

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I _ _ _ _ _ _ __I_ _ _ _ _ __I_ _ _

IMAGING

Report No: 13589 PAKType: SAR