ASIAN DEVELOPMENT BANK - adb.org€¦ · THE TECHNICAL ASSISTANCE 12 V. CONCLUSIONS AND...

ASIAN DEVELOPMENT BANK PCR:SRI 19151

PROJECT COMPLETION REPORT

ON THE

PARTICIPATORY FORESTRY PROJECT (Loan 1183-SRI[SF])

IN

SRI LANKA

November 2001

CURRENCY EQUIVALENTS

Currency Unit – Sri Lanka Rupee/s (SLRe/SLRs)

At Appraisal At Project Completion(September 1992) (August 2000)

SLRe1.00 = $0.2341 $0.1284$1.00 = SLRs42.71 SLRs77.85

ABBREVIATIONS

ADTA – advisory technical assistanceAusAID – Australian Agency for International DevelopmentEIRR – economic internal rate of returnFIRR – financial internal rate of returnFD – Forest DepartmentFWL – farmer woodlotM&E – monitoring and evaluationMTR – midterm reviewNGO – nongovernment organizationNPV – net present valuePD – Project DirectorPWL – protective woodlotSDR – special drawing rightsTA – technical assistance

NOTES

(i) The fiscal year (FY) of the Government ends on 31 December.(ii) In this report, "$" refers to US dollars.

CONTENTS

Page

BASIC DATA ii

MAP ix

I. PROJECT DESCRIPTION 1

II. EVALUATION OF IMPLEMENTATION 1A. Project Components 1B. Implementation Arrangements 6C. Project Costs 6D. Project Schedule 6E. Engagement of Consultants, and Procurement of Goods and Services 7F. Performance of Consultants and Contractors 7G. Conditions and Covenants 7H. Disbursements 8I. Environmental and Social Impacts 8J. Performance of the Borrower and the Executing Agency 8K. Performance of the Asian Development Bank 9

III. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS 9A. Financial Performance 9B. Economic Performance 10C. Attainment of Benefits 11

IV. THE TECHNICAL ASSISTANCE 12

V. CONCLUSIONS AND RECOMMENDATIONS 13A. Conclusions 13B. Lessons Learned 13C. Recommendations 14

APPENDIXES 16

ii

BASIC DATA

A. Loan Identification

1. Country Sri Lanka2. Loan Number 1183-SRI(SF)3. Project Title Participatory Forestry Project4. Borrower Government of Sri Lanka5. Executing Agency Forest Department6. Amount of Loana SDR7,249,000

$10,500,0007. PCR Number PCR:SRI 659

B. Loan Data

1. Appraisal- Date Started 25 March 1992- Date Completed 15 April 1992

2. Loan Negotiations- Date Started 28 September 1992- Date Completed 30 September 1992

3. Date of Board Approval 5 November 1992

4. Date of Loan Agreement 17 December 1992

5. Date of Loan Effectiveness- In Loan Agreement 17 March 1993- Actual 11 August 1993- Number of Extensions 2

6. Closing Date- In Loan Agreement 30 June 1999- Actual 31 August 2000- Number of Extensions One

7. Terms of Loan- Interest Rate 1 percent per annum- Maturity (number of years) 40- Grace Period (number of years) 10

8. Terms of Relending (if any) Not Applicable

9. Disbursements

a. Dates

Initial Disbursement Final Disbursement Time Interval8 October 1993 31 August 2000 6 years, 10 months

a Equivalent SDR and $ at appraisal.

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Effective Date Original Closing Date Time Interval11 August 1993 30 June 1999 5 years, 10 months

Actual Closing Date Time Interval31 August 2000 7 years

b. Amount (SDR)

_______________________________________________________________________________________

No. Loan Category OriginalAllocation

LastRevised

AllocationAmount

CancelledAmount

Available

NetAmount

DisbursedUndisbursed

Balance_________________________________________________________________________________________________

01 Civil Works 528,000 957,323 0 957,323 927,076 30,24702 Fertilizer 52,000 36,689 37,252 36,689 36,045 64403 Vehicles 512,000 467,269 0 467,269 444,690 22,57904 Equipment 429,000 299,000 0 299,000 294,218 4,78205 Materials 205,000 228,400 0 228,400 214,226 14,17406 Training 260,000 305,209 0 305,209 270,260 34,94907 Incremental

Admin. & O&M1,267,000 1,291,644 670,531 1,291,644 1,284,473 7,171

08B Site Survey 216,000 143,000 0 143,000 140,725 2,27508D Seedlings 1,295,000 1,697,365 633,279 1,697,365 1,864,620 (167,255)08E Consulting

Services32,000 27,200 0 27,200 26,362 838

09 Unallocated 2,199,000 51,832 149,007 51,832 51,83210 Service Charge

DuringConstruction

254,000 254,000 254,000 147,854 106,146

Total 7,249,000 5,758,931 1,490,069 5,758,931 5,650,549 108,382_______________________________________________________________________________________O&M = operation and maintenance, SDR = special drawing rights.

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c. Amount ($)_______________________________________________________________________________________

No. Category OriginalAllocation a

LastRevised

AllocationAmount

Cancelled bAmount

Available

NetAmount

DisbursedUndisbursed

Balance_________________________________________________________________________________________________

01 Civil Works 764,900 1,339,613 0 1,339,613 1,300,487 39,12602 Fertilizer 75,800 51,523 50,000 51,523 50,689 83403 Vehicles 742,300 670,936 0 670,936 641,729 29,20704 Equipment 613,600 422,842 0 422,842 416,656 6,18605 Materials 15,800 319,351 0 319,351 301,016 18,33506 Training 313,300 423,507 0 423,507 378,299 45,20807 Incremental

Admin. & O&M2,178,800 1,807,258 900,000 1,807,258 1,797,982 9,276

08B Site Survey 312,700 197,210 0 197,210 194,267 2,94308D Seedlings 1,882,900 2,387,599 850,000 2,387,599 2,603,953 (216,354)08E Consulting

Services46,500 37,049 0 37,049 35,965 1,084

09 Unallocated 3,186,100 67,048 200,000 67,048 0 67,04810 Service Charge

DuringConstruction

367,300 338,212 338,212 200,905 137,307

Total 10,500,000 8,062,148 2,000,000 8,062,148 7,921,948 140,200_________________________________________________________________________________________________O&M = operation and maintenance.a $1.45 per SDR1.00 (at appraisal March 1992)b $1.34 per SDR1.00 (at cancellation date September 1998)

10. Local Costs (Financed)

- Amount (dollars) $4,471,019- Percentage of Local Costs 86.54- Percentage of Total Cost 56.40

C. Project Data

1. Project Cost ($’000)

Appraisal Estimate ActualForeign Exchange Cost 2,800 3,451Local Currency Cost 22,200 20,613Total 25,000 24,064

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2. Financing Plan ($’000)

__________________________________________________________________________

Appraisal Estimate Actual _Foreign Local Total Foreign Local Total

__________________________________________________________________________

Implementation CostsBorrower Financed 0 1,400 1,400 0 989 989ADB Financed 2,800 7,700 10,500 3,451 4,471 7,922AusAID Financed 0 5,800 5,800 0 3,868 3,868World Bank Financed 0 500 500 0 0 0Beneficiaries/Farmers 0 6,800 6,800 0 11,285 11,285Total 2,800 22,200 25,000 3,451 20,613 24,064

__________________________________________________________________________ADB = Asian Development Bank, AusAID = Australian Agency for International Development.

3. Cost Breakdown by Project Components ($’000)__________________________________________________________________________


__________________________________________________________________________

I. Participatory ForestryA. Investment Costs

a. Homestead GardensSeedlings 0.00 607.97 607.97 434.43 863.63 1,298.06Fertilizer 0.00 618.22 618.22 0.00 0.00 0.00Farm Labor 3,483.94 0.00 3,483.94 0.00 11,285.00 11,285.00

b. Farmer WoodlotsSeedlings 0.00 283.55 283.55 203.52 403.78 607.30Food Incentive 0.00 2,576.24 2,576.24 0.00 2,901.00 2,901.00Site Survey 0.00 329.14 329.14 15.90 188.59 204.49Fertilizer 42.64 12.45 55.09 27.95 7.84 35.79

c. Protective WoodlotsSeedlings 0.00 85.05 85.05 103.22 205.20 308.42Fertilizer 16.02 4.68 20.70 11.63 3.26 14.89Food Incentive 0.00 863.14 863.14 0.00 967.00 967.00

d. Misc. Planting 0.00 898.81 898.81 149.26 297.52 446.78e. Civil Works 272.00 528.00 800.00 535.97 884.23 1,420.20f. Vehicles 536.95 186.72 723.67 628.18 438.78 1,066.96g. Equipment 208.15 142.16 350.31 154.63 252.29 406.92h. Training

In-Country 0.00 134.96 134.96 0.00 213.59 213.59Overseas 171.81 62.38 234.19 164.71 11.89 176.60

i. Consultant 0.00 46.71 46.71 17.25 23.96 41.21

Total Investment I 1,247.58 10,864.12 12,111.70 2,446.64 18,947.57 21,394.21___________________________________________________________________________________

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__________________________________________________________________________


__________________________________________________________________________B. Operating Costs

a. Salaries 0.00 655.86 655.86 0.00 0.00 0.00b. Supplies 46.97 243.31 290.29 60.86 289.38 350.24c. Field Visit 24.69 143.15 167.84 0.00 0.00 0.00d. Operation and

Maintenance 477.78 883.19 1,360.97 659.90 1,226.60 1,886.50

Total Operating I 549.44 1,925,52 2,474.95 720.76 1,515.98 2,236.74

Total I 1,797.01 12,789.63 14,586.65 3,167.40 20,463.55 23,630.95

II. Tree Seed CenterA. Investment Costs

a. Civil Works 35.24 64.67 99.90 55.90 92.21 148.11b. Vehicles 61.62 57.31 118.93 0.00 0.00 0.00c. Equipment 46.50 261.53 308.02 16.41 22.50 38.91d. Seed Orchard

Establishment 0.00 7.48 7.48 0.00 0.00 0.00e. Training 0.00 6.50 6.50 0.00 0.00 0.00

Total Investment II 143.35 397.48 540.83 72.31 114.71 187.02

B. Operating Costsa. Salaries 0.00 69.07 69.07 0.00 0.00 0.00b. Supplies 0.27 15.64 15.91 0.00 0.00 0.00c. Field Visit 0.00 0.64 0.64 0.00 0.00 0.00d. Operation and

Maintenance 39.93 98.46 138.39 0.00 0.00 0.00

Total Operating II 40.20 183.81 224.02 0.00 0.00 0.00

Total II 183.56 581.29 764.85 0.00 0.00 0.00

III. Adaptive ResearchA. Investment Costs 0.00 331.43 331.43 0.00 0.00 0.00

Total III 0.00 331.43 331.43 0.00 0.00 0.00

IV. Monitoring and EvaluationA. Investment Costs 2.67 19.70 22.37 0.00 0.00 0.00B. Operating Costs 6.55 6.55 13.10 10.32 34.54 44.85

Total IV 9.21 26.25 35.46 10.32 34.54 44.85

Total Base Cost 1,989.78 13,728.61 15,718.39 3,250.03 20,612.80 23,862.83Contingencies 442.92 8,471.39 8,914.31 0.00 0.00 0.00Service Charge DuringConstruction 367.30 367.30 200.90 200.90

Total Cost 2,800.00 22,200.00 25,000.00 3,450.93 20,612.80 24,063.73___________________________________________________________________________________

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4. Project Schedule_____________________________________________________________________________

Milestone Appraisal Estimate Actual_____________________________________________________________________________

Date of Contract with Consultants

Loan-Funded: Land Identification Consultant June 1993 July 1994

ADTA-Funded:(i) Forestry Specialist June 1993 July 1994(ii) Tree Seed Consultant June 1993 October 1995(iii) Monitoring and Evaluation June 1993 September 1994

Completion of Engineering Designs September 1993 March 1998

Civil Works Contracts

Date of Award July 1994 July 1994Completion of Work September 1995 September 1999

Equipment and Supplies

Date of First Procurement July 1993 May 1994 Last Procurement December 1998 December 1999

Other Milestones

First Extension of Loan Closing Date up to 30 June 2000 Partial Cancellation of Loan Proceeds of $2.0 million 9 September 1998 First Reallocation of Loan Proceeds 31 January 1997

_____________________________________________________________________________ADTA = advisory technical assistance.

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D. Data on Asian Development Bank Missions___________________________________________________________________________________________

No. of No. of Specialization Name of Mission Date Persons Person-Days of Members___________________________________________________________________________________________Fact-Finding 31 January- 2 32 Project Engineer

16 February 1989 Forestry Specialist

Appraisal 25 March- 5 80 Sr. Project Economist15 April 1992 Programs Officer

CounselForestry SpecialistMission Secretary

Inception 10-16 March 1993 3 18 Forestry SpecialistProject EconomistSenior Clerk

Review (No. 1) 18-28 October 1993 1 6 Forestry Specialist

Review (No. 2) 14-21 June 1994 1 7 Forestry Specialist

Review (No. 3) 13-22 November 1995 1 9 Forestry Specialist

Midterm Review 8-19 July 1996 3 33 Project EconomistForestry SpecialistSr. Assistant, Project Adm.

Special Loan Administration (No. 1) 23-27 October 1996 1 4 Project Economist

Review (No. 4) 27 February-5 March 1997 2 12 Project EconomistSr. Assistant, Project Adm.

Special Loan Administration (No. 2)a 22 and 28 April 1998 2 4 Project Economist

Forestry Specialist

Review (No. 5) 13-22 July 1998 1 9 Project Economist

Review (No. 6) 1-11 March 1999 1 10 Project Economist

Special Loan Administration (No. 3)b 8-20 July 1999 2 8 Sr. Project Economist

Asst. Project Analyst

Review (No. 7)c 13-19 June 2000 1 4 Sr. Project Economist

Project Completion 18-29 March 2001 3 32 Project Economist Report Forestry Specialist

Asst. Project Analyst_____________________________________________________________________________________________

aCombined with a project preparatory technical assistance fact-finding mission.

bCombined with another loan review mission in Sri Lanka.

cCombined with another special loan administration mission in Sri Lanka.

I. PROJECT DESCRIPTION

1. Forest and nonforest resources are important in the Sri Lankan economy, as wood is thecountry’s main energy source and provides over 90 percent of the energy used in householdsfor cooking and heating. Increasing wood and timber demand, combined with populationpressures and associated land clearance, as well as illegal harvesting, have resulted indeforestation becoming a major environmental issue in Sri Lanka.

2. The Government’s forest sector policy, management, and implementation plans1 havefocused on reforestation activities in government, private, and farmer woodlots (FWLs), as wellas improving extension activities to promote nonforest plantings. Nonforest plantings wereidentified as important by the government as the majority of fuelwood and about 50 percent oftimber is obtained from nonforest resources (homestead gardens, plantations, and trees onpublic domains).

3. The objectives of the Participatory Forestry Project (the Project) were clear and relevantto support the priorities of the Government and of the Asian Development Bank (ADB) in thesector. The objectives were to (i) increase tree plantings and thereby create employmentopportunities and incomes as well as reduce poverty and rehabilitate environmentally degradedareas; and (ii) strengthen the institutional capability of the Forest Department (FD) to expand itsprograms for nonforest tree planting, adaptive research, extension delivery systems, andprivately operated village nurseries.

4. These objectives were to be achieved with a project design consisting of fourcomponents: participatory forestry, tree seed and seedling production, adaptive research, andmonitoring and evaluation (M&E). The project design was appropriate for achieving theseobjectives. The Project included 18 of the 25 districts in Sri Lanka, with initial phasing of districtlevel implementation. The 18 districts accounted for approximately 80 percent of the land area,65 percent of the forestland, and 90 percent of the agricultural households in the country.

II. EVALUATION OF IMPLEMENTATION

A. Project Components

1. Component 1: Participatory Forestry

5. This was the principal component of the Project and involved the planting of trees underfour land-use models, strengthening of FD to enable it to effectively undertake participatoryforestry, and a comprehensive training program for FD staff on all aspects of participatoryforestry. The four land-use models encompassed:

(i) homestead garden plantings, for the growing of fruit, timber, and multipurposetrees in homestead gardens to improve families’ livelihoods in terms of nutrition,cash incomes, and better wood supplies;

(ii) FWLs, for poor and marginal farmers to grow trees on degraded governmentland. This used an agroforestry approach for both establishing a wood supplyand improving the livelihoods of the households;

1 Forest Master Plan (1986), Five-Year Implementation Program (1988-1992), Forest Sector Policy (1995), Forest

Sector Master Plan (1995), and Five-Year Implementation Program (1995-2000).

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(iii) protective woodlots (PWLs), for planting trees and using soil and waterconservation measures to rehabilitate erosion-prone government land by localcommunities; and

(iv) miscellaneous plantings, of trees in schools, public areas, and along railways,roads, and canals to provide an amenable environment and raise publicawareness of the value of growing trees.

6. The area planted to the four land-use models under the Project totaled approximately54,000 hectares (ha) (homestead gardens, 36,000 ha; FWLs, 9,700 ha; PWLs, 4,600 ha; andmiscellaneous plantings, 3,700 ha) and was significantly higher than the project appraisaltargets of 15,000 ha (homestead gardens, 9,000 ha; FWLs, 4,000 ha; PWLs, 1,500 ha; andmiscellaneous plantings, 600 ha). The areas are outlined in Table 1 below, and the actual areasplanted are provided in more detail in Appendix 1. The increases in area have been madepossible by savings achieved through lower than estimated seedling and establishment costs,and an increase in the project implementation period of one year (Appendix 2).

7. These physical achievements in terms of planted area and number of households wereinstrumental in achieving the objectives of raising incomes, reducing poverty, and rehabilitatingenvironmentally degraded areas. It is estimated that approximately 387,000 householdsparticipated in, and benefited from, project activities, with 90 percent of the total involved inhomestead plantings. Details on the number of households involved in each of the land-usemodels are provided in Appendix 1.

Table 1: Project Land-Use Area

Subcomponent AppraisalTarget

RevisedTarget 1996

RevisedTarget 1998

Achieved % of 1998Target

Homestead Plantings (ha) 9,000 16,000 31,000 36,043 116Farmer Woodlots (ha) 4,000 6,000 9,000 9,678 108Protective Woodlots (ha) 1,500 2,000 4,000 4,635 109Miscellaneous Plantings: Public Lands (ha) Roads/Canals (km)

Total (ha equivalent)

500100

15,030

1,000500

25,170

2,000500

46,170

2,4261,294

54,070

121259

117Sources: Project data; Government of Sri Lanka project completion report; Technology, Engineering, Agriculture andManagement Specialists (TEAMS), “Social and Environmental Impact Assessment of the Participatory ForestryProject” report, 2000.

8. Homestead Gardens . The bulk of the plantings (36,000 ha of the 54,000 ha) are inhomestead gardens, and the percentage of such plantings increased from 60 to 66 percent withthe revised incremental area targets. Between 20 and 40 seedlings were distributed tohouseholds in wet, dry, and intermediate zones (Appendix 1), with timber and fruit tree speciespredominating, and tree survival rates estimated at 70 to 90 percent. These plantings are havinga positive impact on households with the provision of fruit for nutrition and sale, fodder andgreen manure for homestead use, and wood for sale. While extension advice was provided overthe initial establishment period, additional advice on fruit tree and timber tree management willbe required in future years to secure the anticipated returns. The Government is committed toproviding this support (paras. 57-59).

9. Farmer Woodlots . The FWL model consists of a series of 0.4 ha plots for each farmhousehold within a block of 20 to 30 ha of degraded forestland. Blocks are leased to households

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for a period of 25 years, with a one-year renewal permit required for the first five years of thelease period. During the period, the land must be maintained with forest cover. The option existsfor lessees to renew the lease for further woodlot activities after the initial 25-year period. Muchof the land used was old chena (shifting cultivation) land, which had been cultivated in theprevious three years. The establishment of the FWLs has been a substantial physicalachievement, and they have provided households with both short-term income through food aidcoupons for labor input and, for some farmers, a return from cash cropping, as well as thepotential for medium- to long-term income. In the woodlots, the predominant tree species in thedry and intermediate zone was teak, and in the wet zone eucalyptus.

10. Overall, the dry zone accounted for approximately 63 percent of the plantings, and in thiszone the tree survival rates have been satisfactory (70-80 percent), while in the intermediateand wet zones the survival rates have been lower, ranging from 50 to 70 percent, and lowerthan the appraisal estimates of 75 percent. Tree growth rates are also lower than estimated inthe appraisal report (Appendix 1). Key factors influencing these lower production outcomes areagronomic and animal (especially elephant) damage, and lack of timely weeding andmaintenance. The latter was the result of poor extension in the early years of the Project, and,for some participants, limited maintenance influenced in part by late delivery of food aidcoupons.

11. Income from agricultural crops was lower than estimated at appraisal with intercroppingbeing carried out in less than 50 percent of the sites, and often for no more than one or twoyears, instead of the potential four or five years. Factors influencing this were drought and poorclimatic conditions, low crop returns, and limited availability of labor.

12. Protective Woodlots . The PWLs were established on degraded government landsusceptible to erosion so as to establish protective tree cover. While the PWLs have contributedto the rehabilitation of these degraded lands and a reduction in erosion, in many sites poor treesurvival rates and inadequate maintenance and protection will lower their effectiveness. Whenestablishing this model, a more adaptive approach to allow for greater flexibility in the choice ofspecies, and in the use of cost-effective physical soil and water conservation structures, wouldhave improved the model outcomes.

13. Miscellaneous Plantings . The miscellaneous plantings’ main contribution, apart fromtheir amenity aspect, was in serving to raise awareness for tree growing. Protection of theplantings along roads and canals has been a problem, with reportedly, considerable losses atthese sites.

14. Institutional Strengthening. Institutional strengthening was successful, with animproved FD extension capability, and the training of forestry staff at all levels in participatoryforestry principles. Considering that participatory forestry was a relatively new function in FD,the development of a participatory forestry culture in FD was a major achievement. Theimproved forestry extension system was a critical factor in the success of the woodlot program,with a key feature being the recruitment of 268 motivators, 40 more than proposed in theappraisal report. They were employed on an annual contract basis and established strongworking relationships with participants. While the project design did not plan for retaining themotivators after the project, the retention of a core group of them would have maintainedextension field links. After the project, FD expanded staff numbers with the employment of 1,200field assistants in 2000, but the motivators were not offered these positions. The loss of theseskilled resources trained under the Project was not cost effective, and will in the short term have

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a negative impact on the very strong community links that were established. The new fieldassistants who are involved in extension will require training in participatory forestry.

15. The planned recruitment of an additional 26 range forest officers and 28 beat forestofficers to become core members of divisional extension units did not take place as FD decidedthat existing staff could undertake these functions. At the midterm review, it was recognized thatproject coordination in the field needed further strengthening, and subsequently six coordinatorswere contracted.

16. As part of institutional capacity building, civil works were undertaken, involving theconstruction of 69 field offices and quarters, and 14 extension and inspection centers.

17. Training. Extensive local training was provided for FD staff, motivators, and householdparticipants in participatory forestry, participatory rural appraisal, leadership, horticulture,agriculture, tree seed production, and silvicultural practices. Approximately 3,500 peoplereceived local training. Overseas fellowships and study tours were undertaken by relevantproject staff, and involved three staff completing two-year postgraduate studies in treeimprovement and forestry extension, four senior forestry staff undergoing training in forestryproject planning and forestry extension, and 13 forestry officers participating in study tours toIndia and Nepal. Details on local and overseas training are provided in Appendix 3. Whiletraining in the management and marketing of the timber resources in the woodlots wasrecognized by FD as necessary in the midterm review and agreed to, it was not implemented(para. 34). The FD did not undertake evaluation of the training programs or assessment oftraining effectiveness. Extension aids, including videos and pamphlets were developed by theProject and used in extension activities.

18. Food Aid Coupons. To improve the access and participation of poor farmers in theProject, payments were provided for labor inputs in establishing and maintaining the FWLs andPWLs. The project payments were funded by the Australian Agency for InternationalDevelopment (AusAID) through the conversion of Australian wheat into monetary food aid. AfterFD certification of the completed work, food aid coupons were issued to households. Thesecoupons were tied, in that they were only redeemable at cooperative wholesale stores. The foodaid scheme had a catalytic effect as it improved household access to the Project and benefitedparticipating households. The scheme’s operation proved to be less efficient than planned,because of the use of tied coupons and long delays in handing over the food aid coupons, inpart due to the certification process and FD funding disbursement. These delays affectedhousehold incentives to maintain the plots.

19. With the large expansion in the planted area and the project extension of one year, thefood aid funds proved inadequate to ensure that all participants received full payment. This waslargely because AusAID was unable to extend its commitment to a seventh year to incorporatethe food aid requirements incurred with the project extension.

20. The food aid scheme involved a high cash-in-kind input. In retrospect, project designmodifications in terms of adjusting the labor resources per ha to a lower level of input, andtimely payment systems with untied coupons, could have improved both the cost-effectivenessand efficiency of the food aid scheme.

21. Component 1 activities accounted for approximately 99 percent of total projectdisbursement, which is slightly higher than the appraisal estimate of 93 percent, in partreflecting the expansion in planted area, the lower level of component 2 activities, which

5

resulted in reduced capital and operating costs, and the absence of the component 3 adaptiveresearch activities.

2. Component 2: Tree Seed and Seedling Production

22. The appraisal report recognized the importance of using good quality genetic plantingstock and made provision for building and operating a tree seed center, for establishing seedstands and seed orchards, as well as for importing seed. However, by project completion, seedquality had not improved, though the basis for such improvement had been initiated. Due todesign modifications and delays in undertaking the civil works, the seed center was not finisheduntil May 2000. It was too late for equipping under the Project, and to date it has not beenprovided with required staff, recurrent operating funds, or adequate equipment.

23. While teak seed stands were established in three districts, and two eucalyptus seedorchards were planted, FD estimates that the demand for teak seed will still not be adequatelymet from the seed production areas established. Imports of seed to improve genetic qualitywere significantly lower than the appraisal estimates. A vegetative propagation unit, which wasto have been established under the Project, was not established, though, under support fromthe Food and Agriculture Organization of the United Nations, vegetative propagation researchwas undertaken.

24. The Project successfully promoted and supported the establishment of 1,340 privatenurseries, which produced more than half the seedlings for the Project from the third year. Over420 nongovernment organization, school, and farmer society nurseries produced up to 1.5million seedlings for the Project. The private nurseries provided additional income generation,particularly for women, and many of the nurseries are still in operation.

3. Component 3: Adaptive Research

25. Adaptive research was planned to support the technical and socioeconomic aspects ofthe participatory forestry program. While there was some initial misunderstanding by FD onwhether the $0.5 million allocated from the World Bank Agricultural Research Project foradaptive research would become available, this was resolved in 1994 with a firm fundingcommitment from the Centre for Agricultural Research Policy which was supported under thatproject. Prolonged delays by FD in obtaining and processing satisfactory research proposalsresulted in submission of the proposals for funding in the third quarter of 1996, just prior to theWorld Bank project closure. The outcome was that project funding from the World Bank wascancelled, and no adaptive research was undertaken. Given the innovative nature of the projectactivities, the adaptive research would have provided a basis for more flexible approaches tohomestead, farmer, and PWL models.

4. Component 4: Monitoring and Evaluation

26. M&E was a key element in project design. An M&E consultant was employed to designan M&E system that would include: project physical and financial targets and achievements;production parameters including actual production growth and yield; and socioeconomicbenefits of the land-use models. The M&E system that was produced failed to meet theserequirements. It was overly complex and not practical for collecting physical, financial, andsocioeconomic data. FD subsequently simplified the system, and collected project physical andfinancial data. As a result, key data on benefits, yields, and socioeconomic impact were notcollected, and while two surveys were undertaken, the data were not analyzed due to staff

6

resource constraints. Consultants recruited by FD undertook two socioeconomic benefit andimpact assessment studies, the first in 1998 and the second in 2000. The latter study, based ona stratified sample, provided useful data on project achievements and impacts, though furthercross-analysis of the data would have enhanced the interpretative value. The financialmonitoring and audited financial statements were generally received on time and were of anacceptable standard.

B. Implementation Arrangements

27. FD of the Ministry of Forestry and Environment was the Executing Agency for theProject, with the Deputy Conservator of Forests (Extension and Education) as the ProjectDirector (PD), having overall responsibility for project implementation. While the PD role was tofocus on the participatory forestry component activities, the PD was also responsible foradaptive research, tree seed and seed production, and M&E components. In these lattercomponents, the PD was assisted by the Assistant Conservator of Forests (Research) withadaptive research and tree seed production, and by the Deputy Conservator of Forests(Silviculture and Planning) in implementing the M&E component.

28. In implementing the field level participatory forestry activities, the division forest officers,the range and beat forest officers, Project-contracted motivators, and the participating nurseriesand households were the key agents, with workplans prepared at the district level and submittedto the PD at FD headquarters. Adjustments in area targets were based on district performance,capacity, and workplans.

C. Project Costs

29. The total project cost at appraisal was $25 million over six years, with ADB projectfinancing of $10.5 million, AusAID to provide monetary food aid equivalent to $5.8 million, theWorld Bank to fund adaptive research of $0.5 million, the Government to provide $1.4 million,and beneficiary input in terms of homestead labor and fertilizer inputs equivalent to $6.8 million.ADB financing of $10.5 million consisted of a base cost, including contingencies, of $10.13million (local currency costs $7.70 million and foreign costs $2.43 million), and service chargesduring construction of $0.37 million.

30. During project implementation, lower actual unit costings for planting inputs, depreciationof the Sri Lanka rupee (SLRe) against the dollar—falling from SLRs49.62/$ in 1993 toSLRs74.95/$ in 2000—and lower contingency costs resulted in significant loan savings, andcancellation of $2 million of the ADB loan to the Project in 1998.

31. At project completion, total project costs were $24.1 million, with ADB disbursements of$7.9 million. The large expansion in the planned land-use model areas, in particular with thehomestead gardens, significantly increased the value of the beneficiary contribution to theProject from $6.8 million at appraisal to $11.3 million.

D. Project Schedule

32. The loan became effective on 11 August 1993, with a planned implementation period ofsix years, and a loan closing date of 30 June 1999. Loan effectiveness was delayed by fivemonths to meet loan effectiveness conditions. In 1999, the loan period was extended by oneyear to 30 June 2000. This was approved to enable inclusion of an additional planting season,and to institutionalize a number of the participatory forestry activities undertaken in the Project.

7

The loan account was closed on 31 August 2000, with ADB disbursements of approximately$7.9 million. The planned and actual project implementation schedule is detailed in Appendix 2.

E. Engagement of Consultants, and Procurement of Goods and Services

33. FD engaged consultants and procured goods in accordance with ADB Guidelines on theUse of Consultants and Guidelines for Procurement. Details on appraisal and actual levels ofconsulting services, and vehicle and equipment procurement are provided in Appendix 3.Consultant inputs were provided under the loan, and with bilateral (AusAID) funding. Atappraisal, one consultant—a land identification specialist—was to be employed under the loanfor 24 months.

34. The midterm review (July 1996) recommended three additional consultancies for:management of the woodlots (three months); impact assessment (six months); and forestrytraining and extension (nine months). The management and training and extension consultantswere not recruited due to a lack of suitable applicants, with the result that these importanttechnical areas were inadequately covered within the Project. This applied particularly tomanagement planning of the FWLs, which was not dealt with at the field level. A socioeconomicimpact assessment was undertaken in 1998. In 1999, an additional socioeconomic consultancywas identified as necessary to provide a more detailed evaluation of the socioeconomic impactof the Project. This consultancy was undertaken in 2000.

F. Performance of Consultants and Contractors

35. Overall, the Project did not receive satisfactory technical support from the consultantinputs provided under the loan and by AusAID. With the exception of the socioeconomic impactassessment consultancy in 2000, the outputs from the consultants were less than satisfactory(paras. 60-62). A land identification and evaluation consultant (24 months) was funded underthe loan, and while a criterion for land identification was established, the database setup lackedfield verification, and FD inputs were required to complete the identification of land. The women-in-development consultant, funded by AusAID, did not complete the planned assignment. Thisconsultant was not replaced, which impacted negatively on the development of genderstrategies for the Project (para. 42).

36. Government civil works procedures and contractor capacity constraints resulted in somedelays in construction of FD quarters and delays with the tree seed center, with the total numberof buildings constructed being less than the appraisal estimate of 94 (para. 16).

G. Conditions and Covenants

37. The Government complied with nearly all loan covenants. The loan covenants andcompliance status are summarized in Appendix 4. With a number of covenants there was partialand/or delayed compliance.

(i) food coupon payments to households in the FWLs and PWLs were stipulatedunder two covenants, but were only partially complied with. While the couponswere handed over, at times during the Project there were long delays;

(ii) the additional field staff covenant (26 range forest officers and 28 beat forestofficers) was only partially complied with as the responsibility for these activitieswas transferred to 26 existing staff at the district level;

8

(iii) the covenants that farmers be given leases to the woodlots was mostly compliedwith, though a small percentage of farmers in particular districts were, at projectcompletion, still waiting for signed project leases; and

(iv) the project completion report was submitted late.

38. Noncompliance occurred with the covenant on privatization of the three largest sawmillsowned by the State Timber Corporation, as FD indicated that no firms were interested inundertaking ownership and management of these enterprises. This matter is being addressedunder the Forest Resources Management Sector Project.2

H. Disbursements

39. Total disbursements under the ADB loan were $7.9 million and are detailed in Appendix5. In 1998, $2 million of the loan was cancelled. In the first two years, disbursements were low,accounting for only 11 percent of the loan, due to a slower rate of implementation with majorplanting activities not starting until the second year, and a slow start to the civil works programcaused by contractor implementation capacity constraints.

I. Environmental and Social Impacts

40. Overall, the Project has had a positive environmental impact, although it is too early tofully assess the extent of this impact. The PWLs have assisted with the rehabilitation ofdegraded land. The abandonment of chena cultivation by farmers obtaining alternative land andincome through FWLs has provided the potential for natural regeneration of forests in the olderchena sites, while woodlots established have provided tree cover from both planted speciesand, to some extent, from natural regeneration.

41. The Project had a direct social impact through targeted interventions to improve poorhouseholds’ participation in project activities, and through strengthening local socialinfrastructure in terms of community and farmer organizations. The food aid scheme, funded byAusAID, was the key mechanism that enabled the poor households to participate in the woodlotactivities as it paid for their labor inputs; and for those involved in the FWLs it established acapital asset. The beneficiary impact is detailed in paras. 48-59. The project targeting of poorhouseholds could have been improved with more tightly defined selection criteria, incorporatinga number of poverty indicators.

42. The Project lacked a gender strategy and did not directly target women. A women-in-development consultant was employed under the Project, though the input was not completed,and limited tangible outcomes were achieved. FD was not successful in finding a replacementfor this consultant and the absence of this expertise negatively impacted on development ofgender strategies. While women were the beneficiaries as part of the participating households,and they played a major role in providing the labor in the woodlot models, the Project did notassist in directly improving their participation in decision-making processes. This was especiallyapparent with the leases, which were predominantly signed by the men of the households.

J. Performance of the Borrower and Executing Agency

43. The Executing Agency was FD. Under the Project, FD adopted and implemented newparticipatory forestry approaches, and extended their services to households and small farmers.

2 Loan 1744-SRI: Forest Resources Management Sector Project, for $27 million, approved on 28 June 2000.

9

While FD had some initial exposure to social and community forestry activities in a smallcomponent of the previous ADB-assisted Community Forestry Project (1982-1992),3 this currentProject established and institutionalized participatory forestry approaches in FD, and contributedto the gradual change in FD to more locally based decision making.

44. While the project office in FD operated with limited staff resources, it worked effectively,and was committed to achieving these project outcomes. In terms of implementation, FD wassuccessful in achieving and increasing the project land-use model target areas. However, theefficiency and effectiveness of these activities were lessened by the delays in production ofimproved seeds, the lack of adaptive research, and the limited M&E data collected by theProject. The significant delays in getting the adaptive research proposals organized, and in theconstruction of the tree seed center were, in part, a reflection of the limited resources that wereavailable for such activities.

45. As the Project was introducing new participatory approaches in which FD had limitedexperience, strong technical support was required, and was provided, though several of theinputs were ineffective. Further, at the midterm review, additional technical skills gaps wereidentified, but these were not filled. These skills gaps impacted on project effectiveness, and FDshould have considered non-national consultancy resources to meet these needs. An additionalM&E resource for the Project was required to establish an effective benefit monitoring system.

46. The food aid coupon system was administratively complex and resulted in delayedpayments to households. During the Project, FD should have considered improving the systemor developing alternatives that would have been more efficient.

K. Performance of the Asian Development Bank

47. ADB undertook 11 supervision missions during implementation. As the Project wasintroducing new participatory forestry approaches into FD, a stronger forestry technical inputduring the missions would have assisted both ADB and FD in early identification of technicalproblems, and in addressing them. Given that it was a new approach for FD that required tightmonitoring, the absence of a supervision mission for over 16 months during the second year ofthe Project (June 1994 to November 1995) is likely to have been a factor in delaying thepreparation of some project activities, such as the adaptive research submission and civil works.ADB should have placed greater emphasis on inducing FD to establish an effective benefitmonitoring system for the Project.

III. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS

A. Financial Performance

48. The appraisal report estimated that the incremental cash income for householdsparticipating in the homestead gardens (using a 0.5 ha model) would range from SLRs6,900 toSLRs29,700 (in 1990 values) for the different climatic zones. In constant 2000 SLRs, this isequivalent to SLRs13,400 to SLRs77,800. For the FWL models (using a 0.5 ha model) theincremental cash returns ranged from SLRs1,100 to SLRs5,200 (in 1990 values), equivalent, inconstant 2000 SLRs, to SLRs2,800 to SLRs13,100. The homestead garden returns were based

3 Loan 568-SRI: Community Forestry Project, for $10 million, approved on 25 March 1982, and closed on 30

September 1992. It was a conventional reforestation project with a small social forestry component involving treecultivation by rural communities.

10

on crop and horticulture activities, and for the FWLs the returns were based on a model thatinvolved horticulture production. The returns did not include income from timber.

49. The Project experience was that the FWL models were timber-only models, involvingagricultural intercropping for an average of one year only. Therefore, the Project incomestreams from the FWL models were more discrete with harvesting returns in years 8, 15, and26. To estimate the incremental cash return with this income stream, the net present value(NPV) has been estimated, and the NPV per person labor day used in the with project and thewith project incremental return situations to determine whether the financial incentive isadequate for households to participate. For this reason, it is difficult to compare thesehousehold returns with the appraisal estimates. The methodology and the models used inestimating the financial returns are detailed in Appendix 6.

50. For households participating in the homestead gardens, the with project incrementalcash returns indicate that households have a financial incentive to participate with the NPV perperson day of labor input ranging from SLRs208 to SLRs234. The comparison used is with the2000 market labor rate, which, during the peak labor demand period, was approximatelySLRs200 per day. For the FWL models, the with project financial return is the relevant return fora household that was not previously involved in farming, for such households have a financialincentive to participate, with the NPV per person labor day ranging from SLRs331 to SLRs396.For households that were previously practicing chena farming on the land, and have establisheda project woodlot, the with project incremental return is the appropriate measure whenestimating cash returns. The change from chena farming to an FWL would involve a reduction inlabor inputs, on average of approximately 30 days per year. This means that the NPV perperson labor day is not a relevant measure, and for these households the NPV and financialinternal rate of return (FIRR) are used. For the four FWL models in different climatic zones, theFIRR ranges from 11 to 17 percent and indicates that there is a financial incentive to participate.For two of the models, dry zone (teak/margosa) and wet zone (eucalyptus/teak/mahogany) theFIRRs are 11.6 percent and 11 percent, respectively.

51. These financial returns indicate that the Project beneficiary households undertakinghomestead garden activities estimated at 346,300, and the 22,600 households involved in theFWLs, have the financial incentive to sustain these enterprises. With the FWLs, the financialreturns also emphasize the critical importance of FD timber extension management andmarketing advice to ensure that households can achieve the expected return from theseactivities. Under the Project, PWL activities involved approximately 13,700 beneficiaries whoreceived payments for the provision of labor in establishing and maintaining the plots. A largenumber of local households also benefited from the nursery training programs and fromestablishing nurseries for the provision of seedlings during the Project. Several of theseenterprises have continued after the Project.

B. Economic Performance

52. The project economic evaluation is based on estimates of the quantifiable economicbenefits generated from the two land-use models (homestead gardens and FWLs) that arebeing utilized for agriculture, horticulture, and timber returns. While the PWLs andmiscellaneous plantings will result in timber stands, these benefits are not estimated in terms ofthe economic value of the timber, as the plantings have been developed to control erosion andimprove the environment. Details of the economic analysis and the methodology used areprovided in Appendix 6.

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53. The Project economic internal rate of return (EIRR) is estimated at 30 percent andindicates that the Project is economically viable. The EIRR is higher than the appraisal reportEIRR estimate of 13 percent for a number of reasons: higher real timber prices; lower unitproduction costs; and the significant increase in areas planted under the Project, which wereachieved at less than the original project cost estimate. These positive influences have beeneffective in compensating for the lower actual production levels. As a result of the increase inproject area, the economic benefits in terms of the number of participating households,estimated at 387,000, are markedly higher than the appraisal estimates.

54. Economic benefits at the household level are also higher than the appraisal estimates,as indicated by the higher EIRRs for the land-use models (Appendix 6). The home gardenmodel EIRRs range from 36 percent in the wet zone to 45 percent in the dry zone, while theFWL model EIRRs range from 26 percent in the wet zone to 29 percent in the dry zone (teak).

C. Attainment of Benefits

1. Livelihood Improvement

55. The Project has provided improved incomes in the short term through the provision offood aid coupons for establishment and maintenance of woodlots, through the sale ofagricultural crops under the FWL model and, to some extent, under the PWLs, as well asthrough the sale of private nursery seedlings. Longer-term financial benefits will accrue with thesale of wood from trees planted in both FWLs and around homesteads. The homestead gardenplantings of fruit trees have improved nutrition within the households and have providedopportunities for cash sales and should continue to do so. The targeted rural poor have beenparticular beneficiaries. Women, although not singled out for specific benefits, have improvedtheir livelihoods as both part of the family unit and individually through the sale of seedlings andcrops. General awareness has also been raised among the rural population and among seniorgovernment officials and politicians as to the benefits of growing trees, and this should befurther enhanced once sales of wood begin next year. The benefits per household are outlinedin paras. 48-54 above and are provided in detail in Appendix 6.

2. Institutional Benefits

56. A basis for further participatory forestry activities has been established within FD, with atrained core of staff, and the acceptance and adoption of participatory forestry approaches.Effective linkages and communication have been established between FD staff and ruralpeople. The formation and strengthening of farmer and community organizations through theirinvolvement in project activities, and the use of a collective approach to woodlot establishmentand management, are positive outcomes and are likely to generate wider benefits outside theProject.

3. Sustainability

57. The Project implemented and supported activities with households and communities toimprove their livelihoods and to reduce environmental degradation. The sustainability of theseactivities is dependent on the households’ assessment of the livelihood returns from theirinvolvement, which is influenced by anticipated production, FD provision of extension andmanagement advice, security of tenure, and maintenance requirements. FD is committed interms of staff to providing this support, and employed additional forest field assistants in 2000.As of September 2001, FD had cabinet approval to reemploy some of the social mobilizers. In

12

the short to medium term, FD will be assisted by other project interventions (the ForestResources Management Sector Project and a planned AusAID natural resource managementdry zone project) in many of the districts. This support will assist FD in terms of increasingresources and overcoming the financial constraints that dependence on the existing governmentbudget would involve.

58. Under the homestead gardens and FWLs there are potential long-term benefits, and fora significant percentage of households these are expected to be sustainable. This contrasts withthe PWLs, which generally have provided only short-term income streams from labor inputs,though their environmental impact is expected to be sustainable. The adoption of appropriatemanagement prescriptions and marketing of timber will be important to maximize returns fromFWLs, in particular for poor households and those without alternative land resources whorequire a regular income stream.

59. The few socioeconomic studies and the absence of data from project monitoring oflivelihood and production returns during the project limit assessment of key factors likely toaffect household involvement and sustainability, and strategies to address it. Studies to beundertaken in the Forest Resources Management Sector Project should provide the requiredinformation and enable the development of strategies.

IV. THE TECHNICAL ASSISTANCE

60. To strengthen the institutional capacity of FD an advisory technical assistance (TA 1777-SRI)4 was attached to the loan. The TA objectives were to: enhance the overall programming,implementation, and monitoring capabilities of FD and its operational units; assist FD with thedevelopment and implementation of its reorientation program for staff with the change fromregulatory to development functions; assist in the evaluation and improvement of theinstitutional and financial framework for private participation in forestry activities; advise andassist in the design, formulation, and implementation of benefit monitoring and evaluationprograms by FD; and train counterpart staff. The TA cost was $822,000 and, while the TAagreement was signed in December 1992, it did not commence until the loan became effective.The TA was completed in December 1998. Planned TA consulting inputs were an internationalforestry consultant (18 months), an international tree seed consultant (18 months), and anational M&E consultant (18 months).

61. The consultants under the TA undertook the following:

(i) the responsibilities of the forestry specialist included developing and undertakingtraining courses in silviculture, land-use planning and extension, and establishingspecies and site-matching guidelines. While the consultant provided training andextension inputs, overall performance was less than satisfactory, resulting in anadditional forest training and extension consultancy being proposed for later inthe Project;

(ii) the M&E consultant prepared an M&E system that was overly detailed and notfeasible for implementation by FD. Key elements relating to the monitoring oflivelihood improvement benefits, agricultural crop and forestry yields, and farmerattitudes and preferences were not included in the system; and

(iii) the tree seed consultant provided satisfactory outputs that included qualityreports and manuals on the establishment and management of tree seed

4 TA 1777-SRI: Institutional Strengthening of the Forest Department, for $822,000, approved on 5 November 1992.

13

sources, as well as on seed collection and technology, and staff training on seedtechnology.

62. The TA did not achieve its planned objectives and outputs, with the key factorinfluencing this being less than satisfactory consultant performance. The exception was the treeseed consultant, whose performance was satisfactory. More effective TA supervision wouldhave enabled identification of these problems, and provided an opportunity to rectify them.

V. CONCLUSIONS AND RECOMMENDATIONS

A. Conclusions

63. Overall, the Project is rated as successful. The Project was relevant and effective inachieving project objectives and key project outcomes. In terms of institutional development, theparticipatory forestry approaches for the development and protection of forest resources andforestland were adopted by FD and piloted through a series of land-use models, and the Projecthas provided an institutional base for future expansion of participatory forestry. Further, thephysical output targets for the planting of trees in homestead gardens, in woodlots, and inmiscellaneous areas to improve livelihoods were exceeded, increasing from 15,000 ha atappraisal to 54,000 ha by year seven of the Project. While the project design was appropriate toachieve project objectives, inadequate risk management and sensitivity analysis resulted ininitial overestimation of implementation capacity and less than planned performance in specificproject activities in components 2, 3, and 4. The efficiency of some of these project outcomeswould have been enhanced and beneficiary returns increased, had these shortfalls beenaddressed and all planned project activities implemented. A detailed analysis of the Project interms of relevance, efficacy, efficiency, sustainability, and institutional development and otherimpacts is provided in Appendix 7.

64. While this expansion in planted area has resulted in increased numbers of beneficiaries,involving an estimated 387,000 households, the potential benefits per beneficiary differ fromthose estimated at appraisal due to increases in real timber prices, lower timber productionlevels and survival rates, and climatic and animal damage reducing the extent and likelyduration of intercropping activities in a number of zones.

65. Higher levels of household benefits would be expected had the benefits from plannedkey adaptive research into technical and socioeconomic aspects of project intervention beenobtained. Further, if the Project had implemented fully the planned tree seed improvementmeasures to provide good genetic quality seed, this would have generated an improved yieldpotential for future forestry activities. While the project design recognized the importance ofM&E, an effective system incorporating livelihood, wood and crop production, and benefitassessment did not eventuate, and so limited the objective evaluation of the different modelsand the ability to improve model design and impact.

B. Lessons Learned

66. Key lessons learned that should be incorporated in similar types of participatory projectsare:

(i) the project design and implementation phasing must allow for establishinginstitutional capacities and mobilizing participants before large-scaleimplementation;

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(ii) motivators and community/farmer organizations play a critical role in facilitatinglocal stakeholder participation;

(iii) in developing participatory forest resources, a total integrated systems approachthat incorporates establishment, support services, management, and marketingis required to optimize beneficiary returns;

(iv) clear land tenure and leasehold entitlements are required that reflect timberrotation periods and ownership by both genders in the household to maximizebeneficiary involvement and commitment;

(v) stakeholder participation is a key requirement in all stages of the project cycle, interms of project ownership and planning the establishment of community andFWLs that fully reflect household resource constraints, preferences, and climaticand site characteristics;

(vi) for women to participate in and fully benefit from project activities, genderstrategies are required that specifically target their needs;

(vii) a technically competent and client-oriented extension service is required toeffectively facilitate and support households undertaking nonforest timberresource activities;

(viii) poverty targeting and poverty reduction are improved when active stakeholderparticipation results in interventions that are efficient and effective in improvingthe access and participation of the poor and landless in forestry activities. Thisrequires development of woodlot models that reflect their resource constraints,and are responsive in terms of tree spacing, tree species, intercropping, andlivestock enterprises to generate sufficient returns to maintain livelihoods;

(ix) financial interventions to facilitate household participation need to be costeffective and incorporate mechanisms for cost recovery for the approach to beefficient and financially sustainable;

(x) effective M&E systems are required to enable ongoing assessment andevaluation of performance and beneficiary impact;

(xi) project supervision with adequate technical inputs is important, particularly in theearly phase of the project, to ensure that all planned processes and activities areestablished and implemented effectively; and

(xii) when cofinancing a project, development partners need to establish mechanismsto enable effective coordination and participation in project reviews, and inmonitoring and reporting systems, for achievement of project outcomes.

67. Several of the lessons learned, such as the adoption of more flexible approaches towoodlot models, mechanisms to target the poor and enable their participation, longer leaseslinked to the timber rotation period, the need for gender strategies, and the importance ofadaptive research, have been incorporated in the Forest Resources Management SectorProject, which became operational in 2000.

C. Recommendations

1. Project Specific

68. To sustain, and achieve the benefits from the project participatory forestry activities it isrecommended that FD provide ongoing technical, extension and management support to theparticipating households; that land leasehold and tenure issues be resolved and finalized; thatthe tree seed center be made operational with provision of required equipment, staff andfinancial support; and that benefit monitoring systems be established to enable ongoing

15

assessment of the woodlot models. These recommended actions are to be monitored(paras.70-74).

2. General

69. In preparing and implementing participatory resource-based projects, it is recommendedthat: (i) active stakeholder participation be an essential requirement to improve the effectivenessof the project interventions, in terms of developing interventions that reflect resource constraintsand priorities, and which improve poverty targeting and livelihoods; (ii) during project design andappraisal particular attention is given to the phasing of proposed activities, so that adequatetime is allocated to establish institutional capacity and mobilize participants before large-scaleimplementation; (iii) M&E systems be established that are feasible, and will enable effectiveassessment and evaluation of project outcomes and impacts; and (iv) ADB project supervisionbe timely, and that technical inputs be included to enable effective assessment of performance.

3. Recommendations for Follow-On Actions

70. Tree Seed Center. The tree seed center established under the Project will beoperational by March 2002. FD agreed that staff would be allocated to the center subject to thepurchase of necessary equipment and the provision of a budget line for operation. FD currentlyhas SLRs1 million allocated for equipment. FD will transfer staff to the center, including a rangeforest officer as manager, and six field assistants. A recurrent budget allocation ofapproximately SLRs2 million will be required for operations.

71. Food Aid Coupons. To meet expected shortfalls in funding for beneficiary coupons formaintenance work undertaken on FWLs and PWLs in 2002 and 2003 of approximately SLRs38million, FD has agreed to seek additional funds from the Treasury for the FD budget, and in thefour core districts under the Forest Resources Management Sector Project to include thesemaintenance activities under the integrated rural management planning allocations.

72. Leaseholds and Annual Permit Renewal. FD agreed to finalize the 25-year leases forthe small percentage of participating households in the PWLs and FWLs that are still to signleases, and to finalize all delayed annual renewals. This was completed by June 2001. Further,it agreed that all permit renewals will be completed within the required time frame in the future.

73. FD Technical, Extension, and Management Support to Existing Woodlots. FDagreed to prepare a strategic plan for ongoing technical, extension, and management support,including development of participatory management prescriptions for the woodlots. The plan willidentify designated staff at the district level who will be responsible for implementation. This planis to be finalized by November 2001. In four of the 18 districts, these activities will beundertaken under the Forest Resources Management Sector Project.

74. Benefit Monitoring. The assessment of the sustainability and outcomes from theexisting homestead gardens and woodlots established under the Project will provide keylessons on the medium- and long-term sustainability of the systems, with the results relevant foractivities and approaches used in the Forest Resources Management Sector Project. FDagreed that such benefit monitoring and surveying would be undertaken under the ForestResources Management Sector Project research program activities.

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APPENDIXES

Number Title Page Cited on(page, para.)

1 Review of Project Land-Use Models and SupportServices

17 2, 6

2 Project Implementation Schedule 25 2, 6

3 Consulting Services, Procurement and Training Program 27 4, 17

4 Compliance with Specific Loan Covenants 32 7, 37

5 Project Disbursement by Component and Year, and byFinancier

37 8, 39

6 Economic and Financial Reevaluation 45 10,49

7 Assessment of Overall Project Performance 61 13, 63

SUPPLEMENTARY APPENDIX(available on request)

Economic and Financial Development Budgets for Homegardenand Farmer Woodlot Land Use Models

Appendix 1, page 117

REVIEW OF PROJECT LAND-USE MODELS AND SUPPORT SERVICES

A. Introduction

1. The Participatory Forestry Project objectives were the planting of trees by farmers tocreate employment opportunities, raise incomes, and reduce poverty as well as to rehabilitateenvironmentally degraded lands. This was to have been achieved by activities undertakenthrough four interrelated components: (i) Participatory Forestry, (ii) Tree Seed and SeedlingProduction, (iii) Adaptive Research, and (iv) Monitoring and Evaluation.

2. The Participatory Forestry component was the principal component of the Project andinvolved the planting of trees under four land-use models, strengthening of the ForestDepartment (FD) to enable it to more effectively undertake participatory forestry, and acomprehensive training program for FD staff on all aspects of participatory forestry. The fourland-use models covered:

(i) the growing of trees on degraded government land by poor and marginal farmersto both establish a wood supply and improve the livelihoods of the farmersconcerned (farmer woodlots) ;

(ii) the growing of fruit, timber and multipurpose trees in homestead gardens to raisethe livelihoods of the families concerned and to increase wood supplies(homestead garden plantings) ;

(iii) the planting of trees and use of soil and water conservation measures torehabilitate erosion prone government land by local communities (protectivewoodlots) ; and

(iv) the planting of trees in schools, public areas and along railways, roads, andcanals to provide an amenable environment and raise public awarenessregarding the benefits of growing trees (miscellaneous plantings) .

3. The use of a participatory approach to achieve forestry, social, and environmentalobjectives was an innovative one for Sri Lanka and FD. For this reason, the appraisal reportstated that the models chosen should be amended according to feedback obtained throughproject monitoring so as to obtain the optimal cost-effective achievement of the objectives. Adetailed monitoring and evaluation (M&E) program was to have been established. However, theconsultant employed to develop the M&E system concentrated mainly on a system for collectingphysical and financial data, but very little key data on benefits, wood and crop yields, andsocioeconomic data. FD conducted two surveys to collect some data in this area, but theresults have not been analyzed. Consultants then undertook two socioeconomic andenvironmental impact assessments, in 1998 and 2000. The latter, “Social and EnvironmentalImpact Assessment of the Participatory Forestry Project” prepared by the consulting firm,Technology, Engineering, Agriculture and Management Specialists (TEAMS), which undertooka stratified survey of 427 farmers over the three agro-ecological zones, provided useful data onproject achievements and impacts based on a stratified sample. However, further cross analysisof the sample data would have yielded further key insights.

4. This review encompasses the four land-use models as they were implemented, drawingon data from TEAMS survey, field observations, and discussions with participating householdsand FD staff.


B. Farmer Woodlots

1. About the Model

5. The farmer woodlot (FWL) model consists of a series of 0.4 hectare (ha), or 1-acre, plotsfor each farm family within a block of 20 to 30 ha of degraded forestland. The plots are leased tothe families for a period of 25 years, with a one-year renewal permit required as a performancesafeguard for the first five years. Much of this land is old chena (shifting cultivation) land.However, only land that has been cultivated within the last three years is considered suitable forconversion to FWL, as such land is unlikely to contain significant natural regeneration ofmerchantable tree species. In plots in which such species do occur, for example, satin wood,these saplings are protected and tended. The objective of the model is to grow trees,intercropped with agricultural and horticultural crops for the initial years to increase the forestresource base while improving livelihoods for poorer sections of the rural community. Suchimprovements were due to come from payment of food aid coupons for labor provided inestablishing the woodlots over the first four years, income generated from the sale of crops overapproximately the first four years until tree crown closure, and finally, from the sale of wood fromthinnings and final felling of the planted trees.

2. The Model in Practice

6. The initial target for FWLs was 4,000 ha. Due to savings achieved through lower thanestimated seedling and establishment costs, and the depreciation of the Sri Lanka rupeebeyond appraisal projections, the target was increased to 6,000 ha at the midterm review in1996, with a final target of 9,000 ha established in 1998. While further expansion would havebeen possible, a key constraint was a lack of access to suitable, identified land. The finalachievement, after a one-year extension of the Project in which 2,550 ha of FWL wereestablished, was 9,741 ha. As Table A1.1 indicates, the major share (63 percent) of FWLs aresituated in the dry zone, with teak being the predominant species planted in both the dry andintermediate zones.

Table A1.1: Farmer Woodlot Project Achievements

Zone Area Planted(ha)

FamiliesInvolved

Major TreeSpecies Planted

Weighted Avera geSurvival (%)

Dry 6,179 13,012 Teak, Margosa 70-80Intermediate 2,944 7,012 Teak 50-60Wet 618 2,632 Eucalyptus, Teak 60-70Total 9,741 22,656 66

Sources: TEAMS survey, 2000; project reports.

7. The planting achievement for FWLs is substantial. The woodlots have provided short-term income through payment of food aid coupons, returns from some cash crop plantings, andthere is the potential for significant benefits from the sale of wood. According to the TEAMSsurvey (2000), survival of trees in the dry zone, which accounts for 63 percent of the farmwoodlot area, was satisfactory. A satisfactory rating is based on a survival rate of 75 percent.Average survival of trees planted in both the intermediate and wet zones is less thansatisfactory. In fact, 50 percent of plots for the intermediate zone and 38 percent in the wet zonehad survival rates of less than 50 percent. Elephants were the main cause of tree destruction,particularly in the intermediate zone (46 percent of damage), and they also damaged manytrees, adversely affecting their growth and form. Lack of adequate rainfall in the dry zone wasan important cause of tree seedling mortality. Other factors such as delays in weeding or poor


weeding also contributed to the poor survival and would have constrained tree growth. Thislatter condition appears to have been more prevalent in the first few years of the Project, whenextension was not adequately focused on the problem; this was rectified after the midtermreview in 1996.

8. The overall average survival of trees is 66 percent, whereas the appraisal reportassumed that an average satisfactory survival of 75 percent would be achieved, which wasperhaps very optimistic, given the untried nature of the models. The appraisal report was alsooptimistic regarding growth rates, which were very high, even if actual survival had beensatisfactory. For the intermediate and wet zones, the lower than estimated survival rates meanthat site occupancy by the trees will be delayed, and both thinning and final yields will be lessthan estimated at appraisal, and result in reduced returns to the farmers.

Table A1.2: Estimated Yields and Income from Farmer Woodlot Plots a

Dry Zone Intermediate Zone Wet ZoneAnnual Growth (m3/ha/year) 4-4.5 4.5-5.0b 5.5-12.5c

1st Thinning Yield/Plot (m3) 4 2 41st Thinning Income (SLRs) 27,000 13,600 16,4002nd Thinning Yield/Plot (m3) 9-10 6 122nd Thinning Income/Plotd (SLRs) 44,400-75,000 45,000 31,000Final Felling Yield/Plot (m3) 27-31e 37 67Final Felling Income/Plot (SLRs) 213,600-263,500 314,500 259,300Total Yield/Plot (m3) 40-45 45 83Total Wood Income/Plot (SLRs) 285,000-365,000 373,000 324,000Total Yield FWLs (m3) 660,000 335,000 128,000

a Plot size is taken as an average of 0.4 ha for all zones, though actual size of the plots in the wet zone may be0.25 ha.

b Growth is 25 to 33 percent less than expected due to only 50-60 percent average survival and animal damage.c In the wet zone, teak is estimated to be growing at a mean annual increment of 5.5 m3 over 25 years and

eucalyptus at 12.5 m3 over 25 years. These are lower than optimum growth rates due to poor survival and stocking.d Farmgate wood prices are based on State Timber Corporation sale prices for teak logs and sawmill gate prices for

other logs less costs for transport, harvesting and middleman margins.e Difference in income and yields due to variations in species mix (teak, margosa, and other species).Sources: TEAMS survey field data, State Timber Corporation, sawmill data.

9. The TEAMS survey, together with project progress reports, indicate that less than 50percent of farmers undertook intercropping. Mission field inspections, as well as FD anecdotalevidence, suggest that, of those farmers that did intercrop, most only did it for a maximum oftwo years and more often for only one year (two seasons). Offsetting this lack of field crops inthe FWLs, a number of farmers were reported and observed to be interplanting fruit trees, whichwas an option proposed in the appraisal report. The future yields from these fruit trees may beaffected by the timber tree canopies. The reasons given for not cultivating between the treesincluded: lack of protection from animals, particularly elephants, in the intermediate zone; andpoor rainfall in the intermediate and wet zones. Other factors included (i) lack of seasonal laborat the required time due to other agricultural and off-farm employment commitments, (ii) anunwillingness to pay for labor to undertake the activity, and (iii) the risks associated with thelikely returns. Further, intercropping was a labor-intensive operation compared with growingtrees. The TEAMS survey indicated that prior to the Project, a significant share (65 percent) offarmers had cultivated crops on their own land, though 54 percent cultivated less than 1 ha, andthat 32 percent of farmers depended on nonagricultural income.


10. Indicative returns for a farm household, on the basis of an average 0.4 ha FWL plot,indicates that they should have received a total of approximately SLRs13,900 over a four-yearperiod, commencing with approximately SLRs8,000 following the successful completion of theyear’s establishment. For a majority of FWL households, the food aid coupon payments were, inthe short term, the major income source from the Project. During the Project, delays in paymentof more than six months occurred, and this seriously affected the poorer farm families’ incomeand may have influenced their commitment to maintenance. To date, no timber has been soldfrom the FWLs, and until this occurs, there will be, as indicated by anecdotal evidence,concerns that the household beneficiaries will receive the returns. The first thinnings from theFWLs over the next few years should allay these concerns. Extension on tree management andmarketing of the wood is required to maximize returns and remove uncertainty.

11. The FWLs have had a very positive response and there has been establishment offurther such woodlots for wood production outside of the Project. Some 850,000 seedlings,sufficient to plant 850 ha, have been provided to such entrepreneurs outside of the Project, andthe demand for seedlings is increasing. It is expected to further increase when the first thinningsfrom project woodlots are undertaken, and sold over the next year or two.

12. The success of the FWL planting program, and the awareness raised in conjunction withthis, is due to a much improved extension system within FD. This included the establishment ofdedicated extension officers at the district level and the training of these and other FD field staffin extension techniques and woodlot silviculture. A key extension development under theProject was the training and deployment of 280 motivators, who were the direct interface withthe farmers. The TEAMS survey indicated 77 percent of farmers found these motivatorssatisfactory and helpful. This resource was not retained at project closing as no provision hadbeen made in the project design for their retention. This loss of trained staff should beconsidered a project design shortfall. The Project also improved relationships between the ruralcommunities and the FD, with 80 percent of survey sample farmers saying they now had asatisfactory relationship with FD officials associated with participatory forestry.

C. Protective Woodlots

1. About the Model

13. The Protection Woodlots were established on degraded government lands susceptible toerosion to establish protective tree cover. The woodlots were usually less than 10 ha in area,and nearby communities or community-based organizations were contracted to undertake theestablishment and maintenance of the trees as well as to undertake appropriate soil and waterconservation measures, such as contour ditches and terracing. Provision was made forindividual farm families to lease plots (averaging 0.4 ha). The cultivation of interplantedagricultural crops was allowed provided they did not create erosion problems. While no treesmay be cut, farmers could collect fruits, dry fuelwood and nontimber forest products. Leaseswere provided for five years on an annually renewable basis, though it was possible for theseleases to be extended beyond the five years, to enable harvesting of crops and nontimber forestproducts. Food aid coupons for a total of 200 days were provided for all participants, subject tosatisfactory establishment and maintenance of the woodlots. This was to provide the incentivefor participation together with limited agricultural cropping and the collection of nontimber forestproducts.



14. The initial target for Protective Woodlots (PWLs) was 1,500 ha. This was increased to2,000 ha at the Midterm Review and because of the availability of additional funds throughprojects savings on costs and exchange rates, increased again in 1998 to 4,000 ha. The finalachievement was a total of 4,239 ha planted, as is detailed by zone in Table A1.3.

Table A1.3: Protective Woodlot Achievements

Zone Area Planted(ha)

Weighted AvSurvival %

Average Crown

Dry 1,602 <50 40–50Intermediate 1,766 <50 <40Wet 871 50–60 40–50Total 4,239

Sources: TEAMS survey, 2000; project reports.

15. Survival rates are less than optimum for the number of trees planted. Elephant damagewas a major cause of loss in the dry and intermediate zones, while lack of adequatemaintenance on the degraded sites may have also been a contributory factor. After an averageof three years, it is too early to fully assess the impact of the PWLs. The objective of soil andwater conservation may be largely achieved with the surviving trees and the physicalconservation measures. While this may be the outcome, the high rate of tree loss indicates thatthe intervention could have been more cost effective and efficient. The TEAMS survey noted thedevelopment of additional ground and tree cover through the natural regeneration of trees,shrubs, and grasses in over a third of the sampled plots in the wet zone, though to date verylittle regeneration was observed in the dry and intermediate zones.

16. Anecdotal evidence from farmers in FD progress reports indicates that PWLs haveresulted in some control of soil erosion and an increase in soil moisture. Further, the fire risk hasbeen reduced during the dry season in the PWLs.

17. Although farmers were expected to intercrop in the PWLs, no such intercroppingoccurred in the first four years of the Project. Subsequently, a limited amount of intercroppinghas occurred with vegetables, fruit, and fodder trees. While lack of interest and motivation arecited as the reasons for this, a major factor appears to be the location, with many of thewoodlots a considerable distance (up to 4 km) from the communities involved. Drought, otherlabor commitments, and the expected returns may have also influenced this outcome. The mainbenefit and incentive for farmer/community participation in the PWLs has been the food aidcoupons for four years. Few households have benefited from the use and sale of crops, fruit,and fodder.

18. The PWLs often suffered poor maintenance and protection by the communities whowere charged with their establishment and care. This was influenced by the distance fromhomesteads and timeliness of payment systems. The absence of tree tenure and inadequateincentives for management, after the food aid coupon payments finished in the fourth year, wereother operating constraints.


D. Homestead Plantings

1. About the Model

19. The objective was to provide fruit, fodder, fuel, and timber tree seedlings for plantingwithin homestead gardens to improve livelihoods.


20. This model represented the bulk of the tree planting with the equivalent of some36,000 ha being planted, out of a total project planting of 54,000 ha. The original target was for9,000 ha, which was increased to 31,000 ha in 1998. Extension services were provided over theinitial tree establishment period, with motivators playing an important role. However, advice onfruit and timber tree management will be needed in the coming years to ensure satisfactoryoutcomes for the plantings. Homestead garden plantings by zone are outlined in Table A1.4.

Table A1.4: Homestead Garden Plantings

Dry Zone Intermediate Zone Wet ZoneNumber of Homesteads 90,584 107,893 147,789Seedlings Distributed (millions) 3.01 3.92 3.18Ave. Size of Home Garden (ha) 0.4 0.75 0.3Ave. No. of Seedlings Distributed 33 36 22Ave. Survival % 80-90 70-80 80-90Ave. No. of Timber Trees 13 19 13Ave. No. of Fruit Trees 9 5 2Ave. No. of Fuel/Fodder Trees 5 4 3

Source: TEAMS survey, 2000.

21. The homestead plantings will have a positive impact on the households concerned in themedium to longer term, as the fruit trees begin to bear and wood becomes available from thetimber trees. A ready market currently exists for homestead logs, as many logs bought bysawmills come from homestead gardens. Some of the homesteads that planted fodder andgreen manure trees are already receiving benefits. Although homestead garden tree plantinghas been widespread in Sri Lanka, the project plantings have particularly benefited those poorerhouseholds, including resettled families, who have had minimum access to planting and tendedto be more marginal landowners.

22. Models developed for the homestead plantings project that families will start benefitingfrom fruit trees planted under the Project after five years. Based on project experience, annualincomes will average SLRs9,000 to SLRs16,000 after 10 years from fruit production, with thelevel of income depending on the zone and species planted. Sawlogs will fetch an additionalSLRs3,000 to SLRs20,000 when harvested.

E. Miscellaneous Plantings

1. About the Model

23. The Project supported the planting of trees in schools, parks, other public lands, andalong canals and roadsides. The objective was to rehabilitate these areas, provide amenities,and to raise awareness concerning the value of growing trees.



24. The revised project targets set in 1998 were exceeded, with 2,430 ha planted in schoolsand public lands and 1,290 km of trees planted along canals and roadsides as against targets of2,000 ha and 500 km respectively. While survival of the roadside and canal side trees wasreported as moderate by the TEAMS survey, a number of trees in the wet zone have been lostthrough negligence on the part of communities, and through roadworks and electrificationprograms. No survival rates were provided for school and public lands plantings.

F. Lessons Learned

1. Monitoring and Evaluation

25. Preproject surveys did not appear to have established, with sufficient accuracy, thewillingness of potential participants to undertake intercropping, given potential returns and otherresource constraints, and the climatic and soil factors. The FD progress report for the midtermreview (1996) mentions that only 46 percent of FWLs had adopted intercropping from 1993 to1995. Early monitoring with suitable key indicators would have indicated the actual fieldsituation. This outcome emphasizes the value of properly designed and analyzed surveys andfarmer consultations prior to participatory approaches, and reinforces the importance of acomprehensive M&E system, that includes indicators on farmers’ priorities, preferences, andresource constraints, as well as project benefits, yields, and socioeconomic impact.

26. During the project, such an M&E system would have enabled FD to modify the model toimprove land-use and increase both wood production and incomes. For example, a possiblevariation to improve the model where intercropping was not preferred, would have been toreduce the initial planting espacement of 5 x 3 meters to 2 x 3 meters. This spacing may stillhave provided adequate area for intercropping in the first year, and would have increased theplanting with an additional 266 trees per 0.4 ha plot and resulted in increased thinning volumesand income. For example, for teak in the dry zone, with equivalent survival rates to the existingmodel, the first thinning volume, number of poles, and income would have doubled from thatachieved in the plot established under the existing model. The second thinning would also beincreased, but only by approximately 30 percent, and the final felling by less than 10 percent,though the actual volumes and income would depend on the thinning prescriptions applied.

2. Farmer Woodlots

27. Factors affecting the success of participatory FWLs are:

(i) proven security of land and tree tenure. While nearly all farmers had theirleasehold secured by project end, many farmers had doubts as to tree tenure.These concerns will be resolved when the first thinnings are harvested, andfarmers receive the income;

(ii) a trusted and technically competent extension service;

(iii) the need to incorporate woodlot management and marketing of wood products aspart of the extension package at an early stage of woodlot development;


(iv) stakeholder participation, which is key in the planning of woodlots so that thedesign will fully reflect farm family resource constraints, land-use, productpreferences, and climatic and site characteristics; and

(v) consideration of resource constraints and needs among the poor and landlessand the provision of adequate means for generation of sufficient returns tomaintain livelihoods.

3. Protective Woodlots

28. An effective M&E system would have enabled early identification of implementationconcerns with the PWL model used. Improved preimplementation surveys and consultation withpotential participating communities would have enabled a more flexible approach, with thecommunities developing a PWL model for establishment and protection, which reflected theirresource constraints, priorities, and site characteristics.

29. Such an approach to the model may have involved varying the species and number oftrees planted, the use of planted grass and shrubs, and the inclusion of more fruit and foddertrees. The objective would have been to provide a more cost-effective method of soil and waterconservation, as well as to provide improved incentives for farmer/community participation overthe medium term. The siting of PWLs will also be a factor in their medium- and long-terminvolvement in maintenance and protection. Communities or community-based organizationsappear more appropriate for the establishment and protection of PWLs, the exception beingwhere individual farm families perceive sufficient incentive from participating over the mediumterm.

4. Food Aid Coupons

30. The use of food aid coupons for payment of services in participatory forestry activities(FWLs, PWLs) under the Project improved the access and participation of poor farmers in theProject. The food aid coupon scheme proved administratively cumbersome and less efficientthan planned, due to long delays in payments, which affected household incentives toparticipate. Modification in the system would have improved cost-effectiveness and efficiency.

5. Extension Services

31. To fully achieve the benefits from the Project activities will involve a continuing role forFD extension services, in terms of providing advice on the management of fruit and timbertrees. As employment of the motivators was not continued after the Project, there is anincreased reliance on existing staff and the new untrained field assistants. Careful FD fieldmanagement will be required to ensure that their commitment is maintained. In the short tomedium term, FD will be assisted in some districts by other project interventions that will ensurethat these activities are maintained.

Activity

1. Staffi ng

2. Domest ic Training

5. Part icipatory Forestry

6. Tree Seed Product ion

Homestead Tree Planting/Farm Development

Fielding Land Identification Consultant (L)

PROJECT IMPLEMENTATION SCHEDULE

2000I II III

1996IV I II II

RFO (Extension)

IIVIIIIIIIV

BFO (Extension)

Motivators

Extension/Agroforestry

Orientation

Basic Training and Leadership

Project Steering Committee

Nursery Management

Export Crops

Refresher Training

Village Nursery Establishment

4. Specialist Training (Local)

Nursery Production

Farmer Woodlots

Protective Woodlots

Seed Stand Establishment

Miscellaneous Planting

Seed Orchard Establishment

IIIIVIIII IVIII IV III IV IIIIIII II II III1997 1998 19991993 1994 1995

FD

3. Overseas Training

25 A

ppendix 2, page 1

Activity2000

I II III1996

IV I II IIIIVIIIIIIIV IIIIVIIII IVIII IV III IV IIIIIII II II III1997 1998 19991993 1994 1995

Associated Plantation Searches forSeed Stand and Plus Tree Identification

7. Forest Researc h Contracts

8. Advisory Technical Ass istance

9. Buildi ngs E& D Centers

Tree Seed Center

Vegetat ive Propagat ion

As Appraised

Actual BFO = beat forest officer, FD = Forest Department, E&D = extension and development, RFO = range forest officer.

Fielding Monitoring and Evaluation Consultant (L)

Tendering Process

Implementation of Contracts

Fielding Forestry Consultant (L)

Selection Process

Construction

Tendering Process

Fielding Tree Seed Consultant (L)

Tendering Process

Construction

Redesigning

Vegetative Propagation

Site Preparation (Seed Orchards)

Planting-Seed Orchards

Seed Collection, Seed Stands

Tendering Process

Construction

Design

10. Midterm Review

BFO/RFO Quarters Construction

26 A

ppendix 2, page 2


CONSULTING SERVICES, PROCUREMENT AND TRAINING PROGRAM

Table A3.1: Consulting Services, Appraised and Actual

Expertise Person-MonthsAppraisal Midterm

ReviewActual

A. Loan Financed

1. Land Identification 24 - 24 2. Forest Management - 3 - 3. Forestry Training and Extension - 9 - 4. Impact Assessment - 6 a

B. ADTA Financed

1. Forestry Specialist 18 - 18 2. Tree Improvement 18 - 18 3. Monitoring and Evaluation 18 - 18

C. AusAID Financed

Women in Development 3 (input not completed)

ADTA = advisory technical assistance, AusAID = Australian Agency for International Development.a Two socioeconomic impact assessment studies were undertaken, one in 1998, and a second more

comprehensive one in 2000.


Table A3.2: Procurement of Equipment and Vehicles

Quantity ProcurementItem Unit Appraised Actual ModeA. Vehicles4WD vehicle Unit 29 29 IS

Motorcycles Unit 76 170 IS

Trucks Unit 1 5 IS

Tractors/Implements Unit 20 3 IS

Trailers Unit 2 6 IS

Bicycles Unit 228 210 IS

Water Bowser Unit 0 5 IS

B. Audiovisual SetTV Set Unit 4 15 IS and DP

VCR Unit 4 16 IS and DP

Overhead Projector Unit 0 12 IS and DP

Slide Projector/Screen Unit 8 28 IS and DP

Camera Unit 20 19 IS and DP

Whiteboard Unit 430 45 IS and DP

Buffles Unit 14 IS and DP

Microphone and Stand Set 17 IS and DP

Amplifier Unit 12 IS and DP

Radio Cassette Unit 8 IS and DP

Speaker Unit 12 IS and DP

Light Box Unit 12 IS and DP

Megaphone Unit 3 IS and DP

Binocular Unit 20 IS and DP

Flip Chart Unit 2 17 IS and DP

Slide Tray Unit 27 IS and DP

Video Tape Rewinder Unit 2 IS and DP

Wireless FM system Unit 1 IS and DP

Video Projector Unit 2 IS and DP

C. Office EquipmentPhotocopiers Set 20 14 IS and DP

Typewriters Unit 2 22 IS and DP

Computer Set 5 33 IS and DP

Printer Unit 0 19 IS and DP

Fax Machine Unit 1 1 IS and DP

Airconditioner Unit 6 IS and DP

Voltage Regulator (UPS) Unit 20 IS and DP

Scanner Unit 1 IS and DP

Calculator Unit 96 IS and DP

Adding Machine Unit 4 IS and DP

D. Office FacilitiesElectric Fans Unit 24 IS and DP

Office Table Unit 53 IS and DP

Office Chair Unit 305 IS and DP

Computer Table Unit 8 IS and DP

Filing Cabinet Unit 50 IS and DP

Steel Cabinet Unit 71 IS and DP

DP = direct purchase; IS = international shopping.


Table A3.3: Training Program

A. Overseas

Period Course Participant

1 19-30 Sep 1994 (2 weeks) Farm Forestry – FAO Assistant Conservator2 3-15 Sep 1995 Sustaining Livelihood: Current Issues for

Rural Development – United KingdomProject Director

3 3 Sep – 8 Dec 1995 Local Level Management of Trees andForests for Sustainable Land Use –Netherlands

Assistant Conservator

4 17-26 Sep 1995 Agro-Forestry, Investment, Production, andMarketing – India

Deputy Conservator

5 16 Oct-8 Dec 1995 Forestry Planning & Management –Australia


6 15 Jul 1996-01 Feb 1998 Post Graduate Studies (MS in SocialForestry) – Netherlands


7 7-22 Dec 1996 Study Tour – Nepal and India 12 Forest Dept. staff8 9-27 June 1997 Marketing of Tree and Forest Products –

ThailandAssistant Conservator and Forester

9 7 Jul-1 Aug 1997 Community Forestry Extension – Thailand 2 Assistant Conservators10 15 Sep-5 Oct 1997 Participatory Process, Tools & Techniques –

ThailandAssistant Conservator

11 21 Oct-7 Nov 1997 Senior Study Tour on Seed Technology andVegetative Propagation

3 Assistant Conservators

12 19-30 Jan 1998 Conflict Resolution in Community Forestryand Forest Resource Management –Thailand

Project Director

13 8 Jun-7 Jul 1998 Project Monitoring and Evaluation –Thailand

Project Accountant

14 Jun 1998 Community Forestry Extension – Thailand 2 Foresters15 20 Sep-12 Dec 1998 Local Level Mgt of Trees and Forests –

NetherlandsAssistant Conservator

16 16 Nov 1998 Participatory Process – Tools & Techniquesin Community Forestry – Thailand

Assistant Conservator and Forester

17 13-26 Oct 1997 World Forestry Congress – Turkey Conservator General and AdditionalConservator

18 17-18 Nov 1997 IUFRO symposium: Forest Tree SeedScience & Nursery Technology – Malaysia

Project Director

19 17-21 Nov 1997 International Environmental Auditor Course– Thailand

Project Chief Accountant

20 3-19 Feb 1999 Conflict Resolution – Thailand Deputy Conservator21 5-23 Jul 1999 Community Forestry Extension – Thailand Assistant ConservatorFAO = Food and Agriculture Organization of the United Nations, MS = Master of Science, IUFRO = International Union ofForest Research Organizations.


B. Local Training Program

Year Topic No. of Participants

1993 Agroforestry for Forest Department (FD) field staff – 3 days 20Extension Techniques for FD field staff – 3 days 20

1994 Nursery Techniques – 2 days 142Project Interventions – 1 day 386Extension Techniques and Participatory Approach for FD field staff –5 days (4 programs)

86

Introductory Forestry and Project Related Activities for Motivators –10 days (6 programs)

198

1995 Agroforestry, Extension Techniques, Participatory Approach for Motivators– 10 days

198

Nursery Techniques for Farmers – 1 day 192Farmer Training on Agroforestry – 1 day (123 programs) 2,386

1996 Training for Motivators on Extension, Methodology, Communication Skills,Catalytic Process, Group Formation, and Strengthening, NurseryManagement, and Agroforestry – 5 days

151

Participatory Forestry Project and Agroforestry Training for AgriculturalInstructors – 3 days

84

Training on Participatory Forestry Project, Agroforestry, and NurseryManagement for Unit Managers and Field Officers – 1 day

36

Homestead Development Workshop for Motivators – 4 days (4 workshops) 188Small Farmer Group Formation for Motivators – 4 days (5 workshops) 182Participatory Rural Appraisal for Range Forest Officers – 1 day 26Farmer Training on Project Interventions – 1 day (186 programs) 2,837

1997 Training for Motivators on Extension Methodology, Communication Skills,Catalytic Process, Group Formation, and Strengthening, NurseryManagement and Agroforestry – 5 days

84

Workshop for Forest Dept. Officers and Motivators on Social Forestry,Catalytic Process, Agroforestry, and Plant Raising – 1 day (7 workshops)

210

Awareness Program on Participatory Forestry Project for District Officers –1 day (7 programs)

216

Field Staff Training for Identification of Income Generating Activities –1 day

36

Range Forest Officers, Beat Forest Officers, and Motivators of NuwaraEliya District on Participatory Rural Appraisal – 1 day

36

Farmer Training on Project Interventions – 1 day (205 programs) 4,812

1998 Forest Tree Procurement and Handling – 2 days (12 courses) 286Office Administration and Management Training for FD Senior Staff –5 days (2 courses)

40

Training on Participatory Approach and Change of Attitudes for FD FieldStaff – 5 days (6 sessions)

154

Computer Training for FD Staff – 7 days 24Leadership Training for FD Field Staff – 3 days (12 programs) 121Training of Motivators on Plantation Management and SilviculturalTreatments – 5 days (6 programs)

182

Farmer Training on Project Interventions – 1 day (302 programs) 4,818Nurserymen Training – 1 day (18 programs) 284

1999 Refresher Training for Motivators – 1 day (18 programs) 236Tree Seed Improvement Training for FD Field Staff – 3 days (3 programs) 72Nurserymen Training – 1 day (18 programs) 182

2000 Farmer Training on Forest Inventory and Management – 1 day(8 programs)

346


C. Awareness Programs

Year Topic No. of Participants

1993 Project Introduction to Divisional Forest Officers and Other Senior FieldStaff – 1 day

35

Project Introduction to District Heads of Other Relevant Institutions – 1 day 78

1994 Project Introduction to District Level Forest Department (FD) Staff andOther Relevant Institutions – 1 day (12 programs)

610

Preparation of Action Plans for Implementation FD staff – 1 day(12 programs)

134

Introductory Seminar for Farmers on Project Intervention – 1 dayAwareness Seminars for Schoolchildren – 1 day (5 seminars) 372

1995 Project Introduction to District Level FD Staff and Staff of Other RelevantInstitutions – 1 day (18 programs)

840

Preparation of Action Plans for Implementation FD Staff – 1 day(18 programs)

204

Introductory Seminar for Farmers on Project Intervention – 1 day

1996 Awareness Session on Participatory Forestry Project (PFP) forGovernment officers of Polonnaruwa District – 1 day

40

Awareness program on PFP for Project Managers of Major IrrigationSchemes – 1 day

24

Workshops for Forest Department Officers and Motivators to ReviewProject Progress and Discuss Implementation Methodology and ActionPlan for the Year – 1 day (8 workshops)

246

Awareness Program on PFP for Government Officers of MonoragalaDistrict – 1 day

35

Awareness Program on PFP for Government Officers of WildlifeDepartment – 1 day

46

Workshop for Journalists – 1 day 30Awareness Seminars for School Children – 1 day (18 seminars) 3,604

1998 Workshop for DFOs to Review Implementation Strategy of PFP – 1 day 36Awareness Program on PFP for Government Officers in Various Districts –1 day (7 programs)

216

Field Trips for Motivators and RFOs to Anuradhapura, Sinharaja andBadulla on PFP and Protected Areas Conservation – 5 days(3 trips)

138

Awareness Seminars for Schoolchildren – 1 day (18 programs) 2,508

1999 Workshop for DFOs and Other Senior Staff on the Experience of theProject – 2 days

58

Awareness Seminars for Schoolchildren – 1 day (18 programs) 1,056

2000 Awareness Seminars for Schoolchildren – 1 day (12 programs) 122Teacher Awareness Program – 1 day (2 programs) 103

PFP = Participatory Forestry Project, DFO = Divisional Forest Officer, RFO = Range Forest Officer.


COMPLIANCE WITH SPECIFIC LOAN COVENANTS 1

COVENANT REFERENCE STATUS OF COMPLIANCE

1. Borrower to make arrangements for insurance ofproject facilities to such extent and against suchrisks and in such amounts as shall be consistentwith sound practice.

Section 4.05(a), Art. IV Loan Agreement

Complied with.

2. Borrower to insure the goods to be imported forthe Project and to be financed out of the proceedsof the Loan against hazards incident to theacquisition, transportation and delivery thereof tothe place of use or installation, and for suchinsurance any indemnity shall be payable in acurrency freely usable to replace or repair suchgoods.

Section 4.05(b), Art. IV Loan Agreement

Complied with.

3. Borrower to maintain records and accountsadequate to identify the goods and services andother items of expenditures financed out of theproceeds of the Loan, to disclose the use thereofin the Project, to record the progress of the Project(including the cost thereof) and to reflect, inaccordance with consistently maintained soundaccounting principles the operations and financialconditions of the agencies of the Borrowerresponsible for carrying out the Project andoperation of the project facilities.

Section 4.06(b), Art. IVLoan Agreement

Complied with.

4. Borrower to (i) maintain separate accounts for theProject and have such accounts and relatedfinancial statements audited annually; (ii) furnishto the Asian Development Bank (ADB) as soon asavailable but not later than six months after theend of each related fiscal year, unaudited copiesof such accounts; (iii) furnish to ADB as soon asavailable but not later than nine months after theend of related fiscal year, certified copies ofaudited accounts and financial statements, andthe report of the auditor relating thereto, all in theEnglish language.


(i) Complied with.(ii) Complied with.(iii) Complied with.

5. Borrower to furnish to ADB quarterly progressreports on the carrying out of the Project and onthe operation and management of projectfacilities.


Complied with.

6. Borrower to prepare project completion report notlater than three months after physical completionof the Project.

Section 4.07(c), Art. IVLoan Agreement

Delayed compliance. Submittedin March 2001.

7. Borrower to ensure that the project facilities areoperated, maintained, and repaired in accordancewith sound administrative, financial, engineering,environmental, and maintenance and operationalpractices

Section 4.08, Art. IVLoan Agreement

Complied with.

1 As of 23 March 2001.



8. Forest Department (FD) shall be responsible forexecuting the Project. Within FD, the DeputyConservator of Forests in charge of Education andExtension shall be appointed as Project Directorand shall have the overall responsibility for theimplementation and coordination of the Project.He shall be assisted by two (2) AssistantConservators of Forest for education and training,programming and field operations, respectively.

Schedule 6,Para. 1Loan Agreement

Complied with.

9. The Additional Conservator of Forest (Research)shall be responsible for the adaptive research andthe tree seed production components.

Schedule 6Para. 2Loan Agreement

Complied with.

10. The Deputy Conservator of Forest in charge ofSilviculture and Planning shall be responsible forimplementation of monitoring and evaluation partof the Project.


Complied with.

11. The Divisional Forest Officers, Range ForestOfficers, and Beat Forest Officers shall implementthe Project at the field level. The Range ForestOfficers and the Beat Forest Officers shall preparean annual work plan in consultation with theProject beneficiaries, the motivators, the villagenurserypersons, and the Divisional Secretaries.


Complied with.

12. FD shall engage on a honorarium basis, about228 motivators during the six-year implementationperiod. The motivators shall be engaged on anannual contract basis, and shall receive short-termtraining in project objectives and structure, as wellas technical matters including extensionmethodology.

Schedule 6 Para. 5 Loan Agreement

Complied with. A total of 268motivators recruited.

13. Borrower shall, within the end of the first year ofthe Project, strengthen the Extension andEducation Division of FD, through theengagement of one additional AssistantConservator of Forest.


Complied with.

14. At the field level, FD shall be upgraded in order toimprove its capability to provide farmer trainingand extension services. For this purpose, trainingon nursery seedling production shall be providedto field staff and private nurserypersons, andrecruitment of about 26 Range Officers and 28Beat Forest Officers.


Partially complied with, as 26Range Officers and 28 BeatForest Officers already workingin the districts were given theadditional responsibilitiesassociated with implementingthe Project.

15. Borrower to establish a Project SteeringCommittee (PSC) in Colombo, with the Secretaryof Ministry of Lands, Irrigation and MahaweliDevelopment (MLIMD) as chairman, the ProjectDirector as Secretary, and the following asmembers: senior representatives of MLIMD,External Resources Dept. of the Ministry ofFinance, Department of National Planning,


Complied with.



Ministry of Agricultural Development & Research,Ministry of Plantation Industries and the Director ofthe Forestry Planning Unit. The PSC shall meet atsuch intervals as the Chairman may determine butnot less than once every three (3) months.

16. Establishment of a Project Implementation

Committee (PIC) in Colombo under thechairmanship of the Conservator of Forests andwith the Project Director as secretary. The PICshall meet at such intervals as the Chair maydetermine, but not less than once every month.


Complied with.

17. About 45,200 individual farmers with land title orland on leasehold or settlers shall be selected forthe homestead garden component. Thebeneficiaries shall have the freedom to choose thespecies composition in accordance with theirpreference.


Complied with. With theexpansion in project scale, thenumber of individual farmershas increased to 345,000.

18. About 6,000 individual farmer participants shall beselected for the Farmer Woodlots and ProtectiveWoodlot component. Each farmer will be givenaccess to state land varying between 0.2 hectare(ha) and 1 ha each, suitable for small-scale family-established woodlots with the trees belonging tothe family for planting. The state lands shall beleased to the individual participants and a writtenagreement concluded between FD and the farmerparticipants. The beneficiaries shall be farmerswho are interested in participating and whosemonthly income is not more than SLRs1,500, tobe adjusted annually, and are prepared to work atthe rate of 200 days per ha during the first year,and adequate work days for maintenance insubsequent years.


Complied with. With expansionin project scale, number ofparticipants increased to27,000. A total of 7,457 farmerswere selected in 1993-1995.The farmers were given landsvarying from 0.2 ha to 1 ha.Leasehold agreements wereentered into between FD andthe participating farmers. Foodwas provided to the farmers. AtProject closure, a smallpercentage of farmers were stillawaiting a signed leaseagreement.

19. The protective woodlots shall be divided intoblocks varying from 0.5 ha to 1 ha which are to beplanted with a variety of timber species andmultipurpose trees. Planting and maintenance ofsuch blocks shall be contracted to village forestsocieties and rural development societies as wellas individual farmers who are prepared to devoteadequate number of work days for planting andmaintenance and whose monthly income is notmore than SLRs1,500 to be adjusted annually.The participants shall be contracted for a period of3 years on the basis of food or cash for work tocompensate for the labor inputs. At the expiry ofthe three-year period, options shall be given to theparticipants to review a long-term maintenance ormanagement contract for thinning, additional useof land, and fire protection. The form andsubstance of such contract shall be subject toADB approval.


Complied with. Protectivewoodlots were established byfarmers and farmer societies.Farmer-beneficiaries arecontracted for a period of fiveyears, and have received foodaid for their input.



20. The farmers participating in the farmer woodlotscomponent, the individuals participating in theprotective woodlots component, and nurseryoperators shall receive incentive vouchers issuedby FD. FD shall release funds periodically to therespective Divisional Secretaries or localcooperatives who shall cash the vouchers. FDshall furthermore ensure that the Range ForestOfficers and the Beat Forest Officers provide thenecessary extension and technical support to theparticipants.


Partially complied with, as attimes during the project therewere long delays in farmer foodvoucher payments for laborinputs.

21. Land surveying shall be subcontracted to theSurvey Dept. of MLIMD and/or to private licensedsurveyors. The Borrower shall further ensure thatseedlings shall be purchased from private villagenurseries being established under the Project andthat research and parts of the training shall besubcontracted to appropriate institutions or privateorganizations.


Complied with.

22. The Borrower shall cause and enable FD to recruiton timely basis such additional staff as may berequired for proper and efficient implementation ofthe Project.


Complied with.

23. FD shall, with the assistance of the consultantprovided under the technical assistance(i) develop and implement a system of recordingobservations during the Project period; (ii) conductbenchmark surveys on a district by district basis,as they become part of project implementation;and (iii) during project implementation, prepareannual monitoring and evaluation reports whichassess the receipt and use of project funds andservices by beneficiaries.


(i) Complied with.(ii) Benchmark survey on a

district basis not carriedout as it was notconsidered necessary.Adequate data had beencompiled by the women indevelopment specialist,funded by AusAID.

24. Notwithstanding the provision in para. 21, theForestry Planning Unit of MLIMD shallindependently monitor and evaluate the overallimplementation of the Project.


Complied with.

25. During 1995, the Borrower shall, in consultationwith ADB, carry out a comprehensive mid-termreview of the implementation of the Project.


Complied with. Midterm reviewwas carried out in July 1996.

26. Within one month of effective date, FD shalldevelop a system satisfactory to ADB that shall beimplemented to ensure that the fertilizer providedunder the Project is properly used for the Project.


Complied with.

27. The Borrower shall, by 30 June 1993, establish aForestry Advisory Committee, comprisingindividuals with special knowledge of forest in bothpublic and private sectors to advise theGovernment on forestry policies.


Complied with.



28. Land Acquisition: The Borrower shall ensure thatall lands, properties, rights of way, easements,licenses, permits and other rights of privilegesrequired for the purpose of the Project will beacquired, leased, or otherwise made available insufficient time.


Complied with.

29. Land Availability: The Borrower shall ensure thatidentification and availability of land for the Projectis accelerated through the Presidential Task Force(1989) on National Land Utilization andDistribution.


Complied with.

30. Sawmills: The Borrower shall, prior to 30 June1993, privatize or cease to operate the threelargest sawmills owned by the State TimberCorporation. The Borrower shall, prior to 31December 1993, undertake to study to explore thepossibility of privatization of the State TimberCorporation’s sawmill operations in general.


Not complied with. No firm wasinterested to take over theoperations of the sawmills.

FC LC Total FC LC Total FC LC Total

A. Participatory Forestry 1. Investment

a. Homestead GardenSeedlings - 18,200 18,200 - 101,549 101,549 303,904 96,830 400,734 Fertilizer - - - - - - - - - Farm Labor - 29,000 29,000 - 281,000 281,000 - 780,000 780,000

b. Farmer WoodlotsSeedlings - - - - - - - - - Food Incentive - - - - - - - 156,489 156,489 Site Survey - 6,163 6,163 - - - - 6,680 6,680 Fertilizer - - - - - - 8,310 2,091 10,401

c. Protective WoodlotsSeedlings - - - - - - - - - Fertilizer - - - - - - 3,536 1,080 4,616 Food Incentive - - - - - - - 52,163 52,163

d. Miscellaneous Planting - - - - - - - - - e. Civil Works 336 651 987 50,832 98,674 149,507 65,730 127,593 193,322 f. Vehicles - - - 187,309 187,309 24,485 7,376 31,861 g. Equipment 4,440 7,244 11,684 13,144 21,445 34,589 35,317 57,623 92,941 h. Training -

In-Country - 8,117 8,117 - 12,105 12,105 - 14,895 14,895 Overseas - - - - - - 26,246 - 26,246

i. Consultant - - - - 4,982 4,982 - 9,135 9,135 Subtotal (1) 4,776 69,375 74,151 63,976 707,065 771,041 467,528 1,311,956 1,779,485

2. Operating Costs a. Salaries - - - - - - - - - b. Supplies 6,982 42,736 49,718 2,435 8,152 10,586 12,668 42,410 55,078 c. Field Visit - - - - - - - - -

(Transport and Allowance) d. Operation and Maintenance 72,510 17,833 90,343 5,334 97,000 102,334 58,277 159,831 218,108

Subtotal (2) 79,492 60,569 140,061 7,769 105,152 112,920 70,945 202,241 273,186 Subtotal (A) 84,268 129,944 214,212 71,745 812,216 883,961 538,473 1,514,198 2,052,671

($)Table A5.1: Project Disbursement by Component and Year

PROJECT DISBURSEMENT BY COMPONENT AND YEAR, AND BY FINANCIER

ComponentDec. 1993 Dec. 1994 Dec. 1995

Appendix 5, page 1

37


B. Tree Seed Center 1. Investment Costs

a. Civil Works - - - - - - - - - b. Vehicles - - - - - - - - - c. Equipment - - - - - - - - - d. Seed Orchard Establishment - - - - - - - - - e. Training - - - - - - - - -

Subtotal (1) - - - - - - - - - 2. Operating Costs

a. Salaries - - - - - - - - - b. Supplies - - - - - - - - - c. Field Visit - - - - - - - - - d. Operation and Maintenance - - - - - - - - -

Subtotal (2) - - - - - - - - - Subtotal (B) - - - - - - - - -

C. Adaptive Research Investment Costs - - - - - - - -

Subtotal (C) - - - - - - - - - D. Monitoring and Evaluation

1. Investment Costs - - - - - - - - 2. Operating Costs - - - - - - - -

Subtotal (D) - - - - - - - - - Total Base Cost 84,268 129,944 214,212 71,745 812,216 883,961 538,473 1,514,198 2,052,671 Service Charge During Construction 1,403 1,737

Total 84,268 129,944 214,212 73,148 812,216 883,961 540,210 1,514,198 2,052,671 FC = foreign cost, LC = local cost.


Appendix 5, page 2

38



a. Homestead GardenSeedlings - 140,931 140,931 - 130,622 130,622 - 218,740 218,740 Fertilizer - - - - - - - - - Farm Labor - 1,622,000 1,622,000 - 2,461,000 2,461,000 - 2,919,000 2,919,000

b. Farmer WoodlotsSeedlings - 107,224 107,224 - 69,138 69,138 - 124,077 124,077 Food Incentive - 309,435 309,435 - 574,552 574,552 - 684,697 684,697 Site Survey - 17,571 17,571 - 16,977 16,977 - 129,174 129,174 Fertilizer 3,023 903 3,925 2,010 600 2,610 9,986 2,983 12,968

c. Protective WoodlotsSeedlings - 27,169 27,169 - 76,717 76,717 - 39,657 39,657 Fertilizer 2,456 450 2,906 1,005 300 1,305 4,190 1,300 5,490 Food Incentive - 103,145 103,145 - 191,517 191,517 - 228,232 228,232

d. Miscellaneous Planting - 70,744 70,744 - 61,764 61,764 149,258 75,431 224,689 e. Civil Works 39,728 77,119 116,847 57,499 111,615 169,114 167,647 325,432 493,078 f. Vehicles 456,089 126,542 582,631 5,169 39,878 45,047 93,921 58,514 152,435 g. Equipment 18,762 30,612 49,373 8,904 14,528 23,432 49,556 80,855 130,411 h. Training

In-Country - 35,693 35,693 - 62,290 62,290 - 48,361 48,361 Overseas 36,579 - 36,579 20,451 - 20,451 39,585 - 39,585

i. Consultant - 2,385 2,385 - - - - 4,386 4,386 Subtotal (1) 556,636 2,671,923 3,228,559 95,037 3,811,499 3,906,536 514,142 4,940,838 5,454,980


(Transport and Allowance) d. Operation and Maintenance 78,976 236,927 315,903 77,071 250,818 327,889 63,281 189,846 253,127

Subtotal (2) 90,776 296,517 387,293 89,777 339,532 429,309 72,157 219,560 291,717 Subtotal (A) 647,412 2,968,440 3,615,853 184,814 4,151,031 4,335,845 586,299 5,160,398 5,746,697


39A

ppendix 5, page 3



a. Civil Works - - - - - - 21,634 31,246 52,880 b. Vehicles - - - - - - - - - c. Equipment - - - - - - - - - d. Seed Orchard Establishment - - - - - - - - - e. Training - - - - - - - - -

Subtotal (1) - - - - - - 21,634 31,246 52,880 2. Operating Costs


Subtotal (2) - - - - - - - - - Subtotal (B) - - - - - - 21,634 31,246 52,880

C. Adaptive Research Investment Costs - - - - - - - - -


1. Investment Costs - - - - - - - - - 2. Operating Costs - - - 3,753 12,564 16,317 3,363 11,257 14,620

Subtotal (D) - - - 3,753 12,564 16,317 3,363 11,257 14,620 Total Base Cost 647,412 2,968,440 3,615,853 188,567 4,163,595 4,352,162 611,295 5,202,902 5,814,197 Service Charge During Construction 11,754 25,507 33,994

Total 659,166 2,968,440 3,615,853 214,074 4,163,595 4,352,162 645,289 5,202,902 5,814,197 FC = foreign cost, LC = local cost.


40A

ppendix 5, page 4



a. Homestead GardenSeedlings 130,529 124,763 255,292 - 31,995 31,995 434,433 863,630 1,298,063 Fertilizer - - - - - - - - - Farm Labor - 3,193,000 3,193,000 - - - - 11,285,000 11,285,000

b. Farmer WoodlotsSeedlings 203,520 103,338 306,858 - - - 203,520 403,777 607,297 Food Incentive - 744,698 744,698 - 431,136 431,136 - 2,901,009 2,901,009 Site Survey 15,900 12,028 27,928 - - - 15,900 188,592 204,492 Fertilizer 4,625 1,265 5,890 - - - 27,953 7,842 35,795

c. Protective WoodlotsSeedlings 103,221 61,655 164,876 - - - 103,221 205,198 308,419 Fertilizer 444 133 576 - - - 11,631 3,263 14,894 Food Incentive - 248,233 248,233 - 143,712 143,712 - 967,003 967,003

d. Miscellaneous Planting - 89,583 89,583 - - - 149,258 297,522 446,780 e. Civil Works 147,917 130,953 278,870 6,279 12,189 18,469 535,967 884,226 1,420,193 f. Vehicles 48,516 19,157 67,673 - - - 628,180 438,776 1,066,956 g. Equipment 24,503 39,979 64,483 - - - 154,627 252,286 406,913 h. Training - -

In-Country - 28,836 28,836 - 3,296 3,296 - 213,593 213,593 Overseas 25,900 11,893 37,793 15,945 - 15,945 164,706 11,893 176,599

i. Consultant - - - 17,246 3,073 20,319 17,246 23,962 41,208 Subtotal (1) 705,075 4,809,514 5,514,589 39,470 625,401 664,872 2,446,642 18,947,572 21,394,213


(Transport and Allowance) d. Operation and Maintenance 195,612 208,913 404,525 108,836 65,433 174,269 659,897 1,226,601 1,886,498

Subtotal (2) 199,302 221,268 420,570 110,541 71,143 181,684 720,759 1,515,982 2,236,741 Subtotal (A) 904,378 5,030,782 5,935,160 150,012 696,544 846,556 3,167,401 20,463,553 23,630,954

ComponentTotalAug. 2000Dec. 1999

41A

ppendix 5, page 5



a. Civil Works 34,260 60,967 95,227 - - - 55,894 92,213 148,107 b. Vehicles - - - - - - - - - c. Equipment 3,702 6,040 9,743 12,711 16,455 29,166 16,413 22,495 38,909 d. Seed Orchard Establishment - - - - - - - - - e. Training - - - - - - - - -

Subtotal (1) 37,962 67,007 104,969 12,711 16,455 29,166 72,307 114,709 187,016 2. Operating Costs


Subtotal (2) - - - - - - - - - Subtotal (B) 37,962 67,007 104,969 12,711 16,455 29,166 72,307 114,709 187,016

C. Adaptive Research Investment Costs - - - - - - - - -


1. Investment Costs - - - - - - - - - 2. Operating Costs 3,201 10,717 13,918 - - - 10,317 34,538 44,855

Subtotal (D) 3,201 10,717 13,918 - - - 10,317 34,538 44,855 Total Base Cost 945,541 5,108,506 6,054,047 162,723 712,999 875,722 3,250,025 20,612,800 23,862,825 Service Charge During Construction 53,661 72,849 200,905 200,905

Total 999,202 5,108,506 6,054,047 235,572 712,999 875,722 3,450,930 20,612,800 24,063,730 FC = foreign cost, LC = local cost.

Dec. 1999 Aug. 2000 TotalComponent

42A

ppendix 5, page 6

Govt. Beneficiaries AusAidFC LC Total LC LC LC FC LC Total


a. Homestead Garden Seedlings 434,433 836,011 1,270,444 27,619 434,433 863,630 1,298,063 Fertilizer - - - - - - - Farm Labor - - - - 11,285,000 - 11,285,000 11,285,000 b. Farmer Woodlots - - - - Seedlings 203,520 391,127 594,647 12,650 203,520 403,777 607,297 Food Incentive - - - - 2,901,009 - 2,901,009 2,901,009 Site Survey 15,900 178,367 194,267 10,225 15,900 188,592 204,492 Fertilizer 27,953 7,842 35,795 - 27,953 7,842 35,795 c. Protective Woodlots - - - Seedlings 103,221 198,636 301,857 6,562 103,221 205,198 308,419 Fertilizer 11,631 3,263 14,894 - 11,631 3,263 14,894 Food Incentive 967,003 - 967,003 967,003

d. Miscellaneous Planting 149,258 287,747 437,005 9,775 149,258 297,522 446,780 e. Civil Works 535,967 641,705 1,177,672 242,521 535,967 884,226 1,420,193 f. Vehicles 628,180 13,549 641,729 425,227 628,180 438,776 1,066,956 g. Equipment 154,627 223,802 378,429 28,484 154,627 252,286 406,913 h. Training - - -

In-Country - 213,593 213,593 - - 213,593 213,593 Overseas 164,706 - 164,706 11,893 164,706 11,893 176,599

i. Consultant 17,246 18,719 35,965 5,243 17,246 23,962 41,208 Subtota l (1) 2,446,642 3,014,361 5,461,003 780,199 3,868,012 11,285,000 2,446,642 18,947,572 21,394,214

2. Operating Costs a. Salaries - - - - - - - b. Supplies 60,862 240,154 301,016 49,227 60,862 289,381 350,243 c. Field Visit - - - - - - -

(Transport and Allowance) - - - - d. Operation and Maintenance 659,897 1,096,818 1,756,715 129,783 659,897 1,226,601 1,886,498 Subtota l (2) 720,759 1,336,972 2,057,731 179,010 - - 720,759 1,515,982 2,236,741

Subtota l (A) 3,167,401 4,351,333 7,518,734 959,209 3,868,012 11,285,000 3,167,401 20,463,554 23,630,955

B. Tree Seed Center - 1. Investment Costs -

a. Civil Works 55,894 66,921 122,815 25,292 55,894 92,213 148,107 b. Vehicles - - - - - - - c. Equipment 16,413 21,814 38,227 682 16,413 22,496 38,909 d. Seed Orchard Establishment - - - - - - - e. Training - - - - - - - Subtota l (1) 72,307 88,735 161,042 25,974 - - 72,307 114,709 187,016

ADB TOTAL

Table A5.2: Pro ject Disbursemen t by Financ ier($)

Component43

Appendix 5, pa ge 7

Govt. Beneficiaries AusAidFC LC Tota l LC LC LC FC LC Tota l

2. Operating Costs - a. Salaries - - - - - - - b. Supplies - - - - - - - c. Field Visit - - - - - - - d. Operation and Maintenance - - - - - - - Subtota l (2) - - - - - - - - -

Subtota l (B) 72,307 88,735 161,042 25,974 - - 72,307 114,709 187,016 C. Adaptive Research - - -

Investment Costs - - - - - - - Subtota l (C) - - - - - - - - -

D. Monitoring and Evaluation - - - 1. Investment Costs - - - - - - - 2. Operating Costs 10,317 30,950 41,267 3,588 10,317 34,538 44,855

Subtota l (D) 10,317 30,950 41,267 3,588 - - 10,317 34,538 44,855 Total Base Cost 3,250,025 4,471,018 7,721,043 988,771 3,868,012 11,285,000 3,250,025 20,612,801 23,862,826 Service Charges 200,905 200,905 200,905 - 200,905

Tota l 3,450,930 4,471,018 7,921,948 988,771 3,868,012 11,285,000 3,450,930 20,612,801 24,063,731

AusAID = Australian Agency for International Development, FC = foreign cost, LC = local cost.

ADB TOTALComponent

44A

ppendix 5, page 8


ECONOMIC AND FINANCIAL REEVALUATION

A. Economic Reevaluation

1. Methodology and Assumptions

1. The economic viability of the Project was assessed using a similar methodology to thatapplied at project appraisal. The methodology for the economic analysis follows AsianDevelopment Bank (ADB) Guidelines for the Economic Analysis of Projects. The economicanalysis is based on the following key assumptions:

(i) the enterprise budget for the different land-use models is based on a 26-yearperiod, which is the period required to harvest the timber;

(ii) the project economic analysis is based on a project period of 32 years to enabletimber to be harvested;

(iii) import parity prices for traded timber commodities are estimated, based on worldcommodity price projections;

(iv) prices of nontraded commodities and inputs are based on farmgate prices, withprices and costs provided by farmers, agriculture and forestry departments, andtimber merchants;

(v) the financial labor rate used for the food aid payments is based on an average ofthe minimum wage rates during the period of SLRs131 and SLRs178;

(vi) labor rates for casual work ranged from SLRs185 to SLRs200 per day duringpeak labor demand periods. A shadow wage rate factor of 0.9 is applied to getthe economic price;

(vii) a standard conversion factor (SCF) of 0.9 is used to convert prices of nontradedinputs and other financial costs to economic prices. This SCF is consistent withrecent ADB and World Bank estimates for Sri Lanka; and

(viii) all project costs and benefits are in constant 2000 SLRs.

2. Appraisal Report Economic Evaluation

2. The appraisal report economic evaluation (Appendix 14, Appraisal Report) was basedon land-use models developed for each of the planned systems developed in the three climaticzones (dry, intermediate, and wet): homestead garden; farmer woodlot (FWL); protectivewoodlot (PWL); and one model for miscellaneous (road and school) plantings. The projectestimates of economic benefits (unnumbered Table, Appendix 14, Appraisal Report) are basedon the timber value, and agricultural and horticultural returns from all land-use models, andinclude the timber value of the PWLs and miscellaneous plantings.

3. The without project situation is required to determine the incremental with project return,and the following assumptions were made in the appraisal report. The homestead gardenwithout project return was based on agriculture production on land that is used by settlers andencroachers, and on this land production was based on a chena farming system, which involvescropping the land one year in four. The with project homestead garden returns were based onincreased agriculture returns, and horticulture and timber production returns. For PWLs, thewithout project situation involved no economic activity, as the land is degraded and eroded landnot suited to production. The FWLs in the without project situation are assumed to involve noalternative activity as the beneficiary households currently do not have any land apart from theirhomestead gardens. In terms of the economic analysis, if the FWL land without project was


generating a return it should have been included. The ownership of the land and whether it wasused by the project target beneficiaries are not the relevant criteria for the economic analysis.As it is likely the land use, was as chena farmland that would have been the appropriate withoutproject return to use.

4. The land-use models and the incremental with project economic benefits in the appraisalreport are based on the land-use model returns prepared under the project preparatorytechnical assistance for the Project in 1990. These land-use models as presented in Annex 8 ofthe Economic and Financial Aspects Report (1990), prepared under that technical assistance,are the basis for the calculation of the economic benefits. Therefore, the benefits are in 1990prices, and while a table in the appraisal report (Table 3, Appendix 14) is presented andincludes a number of changes in the prices from those used in 1990, particularly in terms of logvalues, these altered values were not incorporated in the land-use model returns used in theproject economic analysis (unnumbered Table, Appendix 14). The project costs are based on amix of 1990 costs and 1992 updates.

3. Project Completion Report Economic Evaluation

5. The project completion report (PCR) economic evaluation is based on estimates of thequantifiable economic benefits generated from the two land-use models that are being utilizedfor agriculture, horticulture, and timber returns. While the PWLs and miscellaneous plantings willresult in timber stands, these benefits are not estimated in terms of the economic value of thetimber, as the plantings have been developed to control erosion and improve amenities.Estimates of the quantifiable benefits from the erosion control and improved amenities could notbe calculated for the PCR, and are therefore not included in the economic analysis.

6. Three homestead garden and four FWL land-use models were prepared, based on thetypical land-use system developed during the Project in each of the three climatic zones (dry,intermediate, and wet). The economic budget for each of these seven land-use models, and thesupplementary data on each in terms of production, inputs, and costs, are detailed in theSupplementary Appendix. The land-use models estimates of tree survival rates, growth rates,and production levels in the different climatic zones are based on project records and thesocioeconomic assessment findings, while the survival and growth rates are lower than forecastat appraisal.

7. For the homestead gardens, the model area varies depending on the different zones: inthe dry zone 0.4 hectare (ha), intermediate zone 0.75 ha, and wet zone 0.3 ha. The project inputin terms of tree seedlings likewise varied between the different zones, from 20 to 40 trees. Theproject inputs involved in undertaking these activities only utilize a small part of the totalhomestead garden area, and for this reason when calculating the project benefit in homesteadgardens the appropriate measure is the number of participating households and the benefit perparticipating household.

8. The four FWL models are all based on an average 0.4 ha model, with the predominanttree species and tree mix established under the Project being selected. In the dry zone, twomodels were developed, one for a teak single-species stand, and another for a teak andmargosa mixed stand. In the intermediate zone, one model was developed for teak, and in thewet zone one model was developed for a eucalyptus, teak, and mahogany mixed stand.

9. The without project situation for the different homestead and FWL models is based onactual project experience. In the homestead gardens, the without project scenario involves


agricultural crop activities, and the with project scenario involves incremental activities thatgenerate horticulture and timber returns. The FWL models are based on a without projectsituation of the land being utilized for chena farming, with a cropping rotation of one year inthree, and involving a crop intensity of 150 percent. A chena economic enterprise budget for1 ha has been prepared (refer to Table 1.9 in the Supplementary Appendix), and the returnonce every three years, which is equivalent to 0.5 ha of cropping per year, is presented in thislatter format.

10. The with project incremental economic returns, which are the returns after deducting anywithout project returns, are estimated for each of the homestead and FWL models, and theseincremental returns are used for calculating the project economic return. The project plantingsby land-use model, year, and zone are outlined in Table A6.1, and provide the base forestimating the economic cost and benefit stream. With the FWLs, the planted area (in ha) is thebase used, while with the homestead gardens it is the number of participating households.

11. The economic internal rates of return (EIRRs) for the FWL and homestead models aredetailed in Tables A6.2 and A6.3 respectively, and are summarized in Table A6.4. Thehomestead garden model EIRRs range from 36 percent in the wet zone to 45 percent in the dryzone, while the FWL model EIRRs range from 26 percent in the wet zone to 29 percent in thedry zone (teak stand), and indicate that the activities are economically viable.

12. The appraisal report estimates are also included, and while not based on similar areasthey are useful for comparison. The PCR EIRRs are higher than the appraisal estimates, withkey factors being a real price increase in timber products and lower unit production cost. Whilethe PCR models use lower tree survival rates and growth rates than estimated at appraisal, thetimber products’ economic price in constant SLRs is significantly higher than estimated atappraisal, and seedling costs are significantly lower. The PCR estimate of the economic timberprice (Tables A6.5 and A6.6) range from SLRs4,000 to SLRs18,000. This compares to theappraisal report estimate, which used the farmgate financial price as a proxy for the economicprice, with timber log prices ranging from SLRs1,000 to SLRs3,500 (in 1990 SLRs) per cubicmeter, which in constant 2000 SLRs is equivalent to SLRs2,500 to SLRs8,800 per cubic meter.

13. The overall project economic analysis is summarized in Table A6.7. The project analysisincludes all project benefits as outlined above, and the project costs (in constant 2000 SLRs)and includes an estimate of post-project recurrent costs that will be required if the expectedproject benefits are to be obtained. The project life is 32 years to cover the period required toharvest planted timber. The project EIRR is estimated at 30 percent and indicates that theproject is economically viable. The EIRR is higher than the appraisal report EIRR estimate of13 percent. This increased EIRR results from a combination of factors: higher real timber prices;lower unit production costs; and the significant increase in areas planted under the Project,which was achieved at less than the original project cost estimate. These positive influenceshave been effective in compensating for the lower actual production levels.

14. As a result of the increase in project area, the economic benefits in terms of the numberof participating households, estimated at 387,000, are markedly higher than the appraisalestimates.


B. Financial Reevaluation

1. Methodology

15. Seven land-use models were prepared for the FWLs and homestead gardens in thethree climatic zones (dry, intermediate, and wet) to estimate financial returns to participatinghouseholds. The financial enterprise budgets for these seven models, for the chena farmingfinancial model, and the supporting production, input, and cost data, are detailed in theSupplementary Appendix. These models are based on field estimates, as only limitedsocioeconomic and production data were collected during the Project.

16. The FWL financial models only include the labor inputs that were paid for under theAusAID supported food aid coupon scheme. This payment is included to estimate the cashreturn to participating households. The model income distribution is discrete with large incomepayments linked to harvesting in years 8, 15, and 26. To estimate the incremental cash returnwith this income stream, the net present value (NPV) has been estimated using a discount rateof 12 percent, and the NPV per person labor day used in the with project and with projectincremental return situations to determine returns, and the financial incentive for households toparticipate.

2. Project Completion Report Financial Evaluation

17. The appraisal report estimated that the incremental cash income for householdsparticipating in the homestead gardens (using a 0.5 ha model) would range from SLRs6,900 toSLRs29,700 (in 1990 values) for the different climatic zones. In constant 2000 SLRs this isequivalent to SLRs13,400 to SLRs77,800. For the FWL models (using a 0.5 ha. model) theincremental cash returns ranged from SLRs1,100 to SLRs5,200 (in 1990 values), which isequivalent in constant 2000 SLRs to SLRs2,800 to SLRs13,100 SLRs. The homestead gardenreturns were based on crop and horticulture activities and the FWL returns were based on amodel that involved horticulture production. The production is based on a steady state year, andthe returns did not include the timber returns.

18. The project experience was that the FWL models were timber-only models, and thatagricultural intercropping was only undertaken for one year. Therefore, the Project incomestreams from the FWL models were more discrete than the appraisal estimates, and for thisreason it is difficult to compare these household returns with the appraisal estimates.

19. The with project and with project incremental financial NPVs for the FWL and homesteadgarden models are outlined in Tables A6.8 and A6.9 respectively, and summarized in TablesA6.10 and A6.11. For households participating in the homestead gardens, the with projectincremental cash returns indicate that households have a financial incentive to participate, withthe NPV per person day of labor input ranging from SLRs208 to SLRs234. The comparisonused is the year 2000 market labor rate, which, during the peak labor demand period, isapproximately SLRs200 per day.

20. For the FWL models, the with project financial return is the relevant return for ahousehold that was not previously involved in farming; for such households there is a financialincentive to participate with the NPV per person labor day ranging from SLRs331 to SLRs396.For households that were previously practicing chena farming on the land, and have establisheda project FWL, the with project incremental return is the appropriate measure when estimatingcash returns. The change from chena farming to a FWL generates a positive incremental cash


return for the household, and involves a reduction in labor inputs of approximately 30 days peryear. This indicates that the NPV per person labor day is not a useful measure, and for thesehouseholds, the NPV and financial internal rate of return (FIRR) are used. For the four FWLmodels in different climatic zones, the FIRR ranges from 11 to 17 percent and indicates thatthere is a financial incentive to participate. For two of the models, dry zone (teak/margosa) andwet zone (eucalyptus/teak/mahogany), the FIRRs are 11.6 and 11 percent respectively, and asa result the NPV for the two models is slightly negative.

21. These financial returns indicate that the project beneficiary households undertakinghomestead gardens, estimated at 346,300, and the 22,600 households involved in the FWLs,have the financial incentive to sustain these enterprises. For the FWLs, the financial returns alsoemphasize the critical importance of the FD timber extension management and marketingadvice to ensure that households can achieve the expected return from these activities. Underthe project PWL activities, approximately 13,700 beneficiaries received payments for theprovision of labor services in establishing and maintaining the plots. A large number of localhouseholds also benefited from the nursery training programs and from the establishment ofprivate nurseries for provision of seedlings during the Project. A number of these nurseryenterprises have continued operating after the Project.

Land Use Model Type 1993 1994 1995 1996 1997 1998 1999 Total

1. Homestead Total Area (ha) 557 2,556 5,576 7,416 7,235 8,392 4,531 36,263

Seed Distribution by ZoneDry Zone 147,770 177,682 656,734 674,366 687,065 666,461 3,010,078 Intermediate Zone 62,020 237,782 557,099 628,944 851,437 854,633 724,070 3,915,985 Wet Zone 12,793 241,157 412,403 667,192 712,669 612,967 521,360 3,180,541

No. of Households Participating (average size of homegarden) Dry Zone (0.4 ha) 4,980 7,185 20,353 20,201 20,392 17,473 90,584 Intermediate Zone (0.75 ha) 1,588 6,758 15,803 16,946 20,901 23,379 22,518 107,893 Wet Zone (0.3 ha) 599 7,889 13,908 31,790 30,179 31,102 32,322 147,789

2. Farmer Woodlot Total Area (ha) 93 327 701 1,522 2,027 2,521 2,550 9,741 Dry Zone 20 137 377 965 1,253 1,707 1,720 6,179 Intermediate Zone 73 144 216 444 618 711 738 2,944 Wet Zone 46 108 113 156 103 92 618

No. of Households Participating 22,656 Dry Zone 13,012 Intermediate Zone 7,012 Wet Zone 2,632

3. Protective Woodlot Area (ha) 150 183 378 586 1,155 1,137 653 4,242 Dry Zone 1,602 Intermediate Zone 1,766 Wet Zone 871

No. of Households Participating 13,693 Dry Zone 3,545 Intermediate Zone 7,408 Wet Zone 2,740

4. Miscellaneous PlantingsArea (ha) 36 49 237 466 526 581 573 2,468 Kilometers 1,288

ha = hectare.Notes:1. Slight rounding errors with some estimates due to use of different data sources. 2. Models used are representative of the major tree stands, and used as indicative of the returns for different tree mixes.Sources:1. Socio-Economic and Environmental Impact Study by Technology, Engineering Agriculture and Management Specialists (TEAMS) in 2000.2. Midterm report, project reports, PCR data.

Table A6.1: Area Planted to the Different Land-Use Models by Year50

Appendix 6, pa ge 6

Item 1 2 3 4 5 6 7 8 9-14 15 16-25 26 Without Pro ject Net Economic ReturnChena farming (1 ha) (1,773) (1,389) (2,206) (1,773) (1,389) (2,206) (1,773) (1,389) (2,206) (2,206) (1,773) (1,389)Labor days 90 83 83 90 83 83 90 83 83 83 90 83Chena farming (0.4 ha) (709) (556) (882) (709) (556) (882) (709) (556) (882) (882) (709) (556)Labor days 36 33 33 36 33 33 36 33 33 33 36 33

Farmer Woodlot Dr y Zone-Teak (0.4 ha)With Pro jectNet economic return (11,700) (3,488) (2,880) (1,800) (90) (90) (90) 54,366 (90) 140,640 (90) 494,419Labor days (person-days) 65 43 16 10 1 1 1 1 1 1 1 0With Pro ject IncrementalEconomic return (10,991) (2,933) (1,998) (1,091) 466 792 619 54,922 792 141,522 619 494,975Labor days (person-days) 29 10 (17) (26) (33) (33) (35) (33) (33) (33) (35) (33)NPV discount 12% 62,466EIRR (%) 29.0%

Farmer Woodlot Dr y Zone-Teak/ Mar gosa (0.4 ha)With Pro jectNet economic return (11,700) (3,465) (2,880) (1,800) (90) (90) (90) 54,366 (90) 80,307 (90) 393,167Labor days (person-days) 65 43 16 10 1 1 1 1 1 1 1 0With Pro ject IncrementalEconomic return (10,991) (2,909) (1,998) (1,091) 466 792 619 54,922 792 81,189 619 393,723Labor days (person-days) 29 10 (17) (26) (33) (33) (35) (33) (33) (33) (35) (33)NPV discount 12% 46,169EIRR (%) 27.1%

Farmer Woodlot Intermediate Zone-Teak (0.4 ha)With Pro jectNet economic return (11,700) 2,421 (2,880) (1,800) (180) (180) (180) 27,048 (180) 84,258 (180) 590,113Labor days (person-days) 65 51 16 10 1 1 1 1 1 1 1 0With Pro ject IncrementalEconomic return (10,991) 2,977 (1,998) (1,091) 376 702 529 27,604 702 85,140 529 590,669Labor days (person-days) 29 18 (17) (26) (32) (32) (35) (32) (32) (32) (35) (33)NPV discount 12% 50,487EIRR (%) 27.1%

Farmer Woodlot Wet Zone-Eucal yptus/Teak/Maho gany (0.4 ha)With Pro jectNet economic return (11,610) (3,803) (2,880) (1,800) (90) (90) (90) 32,611 (90) 129,980 (90) 644,779Labor days (person-days) 65 41 16 10 1 1 1 1 1 1 1 0With Pro ject IncrementalEconomic return (10,901) (3,247) (1,998) (1,091) 466 792 619 33,167 792 130,863 619 645,334Labor days (person-days) 29 8 (17) (26) (33) (33) (35) (33) (33) (33) (35) (33)NPV discount 12% 59,471EIRR (%) 25.6%EIRR = economic internal rate of return, ha = hectare, NPV = net present value.

Table A6.2: Pro ject Farm Woodlot Models in each Zone-Incremental Economic Returns(SLRs)

Year51

Appendix 6, pa ge 7

Item 1 2 3 4 5 6 7 8 9-14 15 16-25 26

Homestead Gardens a

Homestead Dr y Zone (0.4 ha)With Pro ject IncrementalEconomic Return (839) (900) (720) (720) 0 180 3,024 3,618 6,930 12,474 12,474 51,696Labor days (person-days) 4 5 4 4 0 1 2 3 7 10 10 10

NPV discount 12% 34,690EIRR (%) 45.5%

Homestead Intermediate Zone (0.75 ha)With Pro ject IncrementalEconomic Return (1,030) (900) (720) (720) 0 198 2,304 2,574 4,234 8,622 16,442 78,285Labor days (person-days) 5 5 4 4 0 1 2 2 5 8 8 8


Homestead Wet Zone (0.75 ha)With Pro ject IncrementalEconomic Return (619) (720) (540) (540) 0 18 846 1,764 2,819 5,364 5,364 52,408Labor days (person-days) 3 4 3 3 0 0 1 1 3 4 4 4


EIRR = economic internal rate of return, ha = hectare, NPV = net present value.a Project homestead garden activities are incremental activities.

Table A6.3: Pro ject Homestead Garden Models in each Zone-Incremental Economic Returns(SLRs)

Year52

Appendix 6, page 8

53

Land-Use Model PCR Appraisal ReportEIRRs (%) EIRRs (%)

Homestead GardensDry zone (0.4 ha) 45Intermediate zone (0.75 ha) 38Wet zone (0.3 ha) 36

Dry zone (0.2 ha) 17Dry zone (0.8 ha) 30Intermediate zone (0.2 ha) 14Wet zone (0.1 ha) 15

Farmer Woodlots (all 0.4 ha models)Dry zone (teak) 29Dry zone (teak/margosa) 27Intermediate zone (teak) 27Wet zone (eucalyptus/teak/mahogany) 26

Dry zone (1 ha) 24Intermediate zone (0.4 ha) 18Wet zone (0.2 ha) 18

EIRR = economic internal rate of return, ha = hectare, PCR = project completion report.

Appendix 6, page 9

Table A6.4: Farmer Woodlot and Homestead Garden ModelEconomic Internal Rates of Return

Item 2000 2010 2000 2010 2000 2010Projected FOB Price $ 197.8 214.7 197.8 214.7 197.8 214.7(constant 1990 prices)MUV Index 106 106 106 106 106 106FOB (constant 2000 Price) 209.7 227.6 209.7 227.6 209.7 227.6

Quality Adjustment Factor 1 1 0.8 0.8 0.4 0.4Adjusted FOB Price 209.7 227.6 167.7 182.1 83.9 91.0Freight 60 60 60 60 60 60Border Price Colombo (CIF) 269.7 287.6 227.7 242.1 143.9 151.0Exchange rate 75 75 75 75 75 75Local Currency CIF (SLRs) 20,225.1 21,568.7 17,080.1 18,154.9 10,790.0 11,327.5 Port Handling Transport 2,427.0 2,588.2 2,049.6 2,178.6 1,294.8 1,359.3 Domestic Handling & Transport 1,500.0 1,500 1,500 1,500 1,500 1,500 Parity Price 24,152.1 25,656.9 20,629.7 21,833.5 13,584.8 14,186.8 Logging & Transport Costs 1,500 1,500 1,500 1,500 1,500 1,500Overhead 1,200 1,200 1,200 1,200 1,200 1,200Profit/Risk Margin 4,830.4 5,131 4,125.9 4,366.7 2,717.0 2,837.4 Stumpage Value 16,621.7 17,825.5 13,803.8 14,766.8 8167.9 8,649.4

CIF = cost, insurance and freight; FOB = free on board; MUV = manufacturers' unit value.Note: Adjusted by the MUV index.Sources: World Bank estimates (April 2000); Timber, World Bank Commodity Price for Meranti (Borneo).

Table A6.5: Economic Prices Of Logs

MahoganyHigh Quality Teak

Eucalyptus54

Appendix 6, page 10

Financial Economic Price Price 2010

Item Unit (SLRs) (SLRs)Timber/Wood Prices

Fuelwood (SLRs/cum) Cum 190Poles (SLRs/pole) (Av 3 m length) Pole 500

Sawlogs:Teak 58-62 cms MG Cum 9,500 17,826 Teak 54 cms MG Cum 8,500 15,949 Teak 40-45 cms MG Cum 7,500 14,073 Teak, 40 cms MG Cum 4,500 8,444 Mahogany, < 30 cms MG Cum 5,700 10,337

Margosa (A. indica) Cum 6,000 10,400 Eucalyptus 80-90 cms MG Cum 1,450 8,649 Eucalyptus < 80 cms MG Cum 1,100 6,562 Melia dubia Cum 2,700 4,600

Agricultural Crops 0.9Horticulture Crops 0.9

InputsSeedlings (fruit) Seedling 4 3.6Seedlings (trees) Seedling 3.5 3.15Fertilizer Lump sum 250 225

LaborFood aid payment (average) Person-daySeasonal (2000) Person-day 200 180

MG = midgirth.

Table A6.6: Financial and Economic Prices

55 A

ppendix 6, page 11

Item 1 2 3 4 5 6 7 8 9-14 15 16 17-27 28-31 32

1. Homestead Total Area (ha) 557 2,556 5,576 7,416 7,235 8,392 4,531 No. of Households Participating (average size of homegarden) Dry Zone (0.4 ha) 4,980 7,185 20,353 20,201 20,392 17,473 Intermediate Zone (0.75 ha) 1,588 6,758 15,803 16,946 20,901 23,379 22,518 Wet Zone (0.3 ha) 599 7,889 13,908 31,790 30,179 31,102 32,322

2. Farmer Woodlot Total Area (ha) 93 327 701 1,522 2,027 2,521 2,550 Dry Zone (total) 20 137 377 965 1,253 1,707 1,720 Teak Woodlot (ha) 44 153 579 411 415 553 Teak/ Margosa (other) Woodlot (ha) 20 93 224 386 842 1,292 1,167 Intermediate Zone 73 144 216 444 618 711 738 Wet Zone 46 108 113 156 103 92

Project Land Use Model Economic Returns:1. Homestead Gardens Dry Zone (0.4 ha) 0.0 (4.2) (10.5) (27.1) (44.0) (55.1) (61.3) (28.6) 16.1 825.2 936.5 1,129.9 1,776.5 903.3 Intermediate Zone (0.75 ha) (1.6) (8.4) (23.5) (37.7) (53.0) (66.1) (66.5) (29.4) 30.8 644.7 749.4 1,040.9 1,902.5 1,762.8 Wet Zone (0.3 ha) (0.4) (5.3) (14.6) (34.3) (53.3) (65.7) (75.2) (48.4) (6.3) 581.4 659.1 820.9 2,168.1 1,693.9

2. Farmer Woodlots Dry Zone (Teak area) 0.0 (1.2) (4.5) (17.3) (16.4) (17.7) (21.6) (6.2) 4.0 3.7 18.8 3.6 718.9 684.3 Dry Zone (Teak/Margosa (other) area) (0.5) (2.7) (6.9) (12.8) (27.3) (44.0) (46.2) (13.5) 5.5 10.6 24.7 26.8 385.9 1,148.7 Intermediate Zone (2.0) (3.4) (5.2) (11.5) 1.9 (22.1) (15.7) 7.9 5.5 18.9 33.1 111.0 658.2 1,089.8 Wet Zone 0.0 (1.3) (3.6) (4.6) (2.0) (4.3) (4.2) (1.7) 2.6 (0.1) 14.9 0.0 182.1 148.3 Net Land Use Economic Returns (4.6) (26.5) (68.9) (145.2) (194.2) (274.9) (290.7) (119.7) 58.3 2,084.3 2,436.6 3,133.3 7,792.3 7,431.1 (million SLRs)Project a

Investment Costs 3.1 42.9 38.3 82.0 54.2 113.3 78.4 15.9Recurrent Costs b 12.4 12.4 25.2 32.8 36.5 24.8 33.8 17.7 8.9 8.9 8.9 8.9 8.9 8.9Total Project and Recurrent Costs 15.6 55.3 63.6 114.9 90.7 138.0 112.2 33.6 8.9 8.9 8.9 8.9 8.9 8.9

Net Economic Benefit (20.1) (81.8) (132.5) (260.1) (284.9) (413.0) (402.9) (153.3) 49.4 2,075.5 2,427.7 3,124.4 7,783.4 7,422.2EIRR (%) 29.7%

Table A6.7: Project Economic Analysis

EIRR = economic internal rate of return, ha = hectare.a Project costs exclude those project costs that are covered in the homestead garden and farmer woodlot models.b Post project recurrent cost, is the cost of staff to provide extension advice on timber management and marketing, indicative cost 50 percent of project year 7 recurrent cost.

Year

56 A

ppendix 6, page 12

Item 1 2 3 4 5 6 7 8 9-14 15 16-25 26Farmer Woodlots Cash Returns (SLRs)Without Project Net Cash Return-Chena FarmingChena farming (1 ha) 15,930 15,107 14,199 15,930 15,107 14,199 15,930 15,107 14,199 14,199 15,930 15,107Labor days 90 83 83 90 83 83 90 83 83 83 90 83Chena farming (0.4 ha) 6,372 6,043 5,680 6,372 6,043 5,680 6,372 6,043 5,680 5,680 6,372 6,043Labor days 36 33 33 36 33 33 36 33 33 33 36 33

Farmer Woodlot Dry Zone-Teak (0.4 ha)With ProjectNet cash return 8,060 8,964 2,480 1,550 0 0 0 27,228 0 75,000 0 263,500Labor days (person-days) 65 43 16 10 1 1 1 1 1 1 1 0With Project IncrementalCash return 1,688 2,921 (3,200) (4,822) (6,043) (5,680) (6,372) 21,185 (5,680) 69,321 (6,372) 257,457Labor days (person-days) 29 10 (17) (26) (33) (33) (35) (33) (33) (33) (35) (33)Total incremental labor days (743)Total incremental cash return 229,614NPV discount 12% 7,786FIRR (%) 17.0%

Farmer Woodlot Dry Zone-Teak/ Margosa (0.4 ha)With ProjectNet cash return 8,060 8,990 2,480 1,550 0 0 0 27,228 0 43,875 0 212,625Labor days (person-days) 65 43 16 10 1 1 1 1 1 1 1 0With Project IncrementalCash return 1,688 2,947 (3,200) (4,822) (6,043) (5,680) (6,372) 21,185 (5,680) 38,196 (6,372) 206,582Labor days (person-days) 29 10 (17) (26) (33) (33) (35) (33) (33) (33) (35) (33)Total incremental labor days (744)Total incremental cash return 147,640NPV discount 12% (552)FIRR (%) 11.6%FIRR = financial internal rate of return, ha = hectare, NPV = net present value.

Table A6.8: Project Farm Woodlot Models in Each Zone-Incremental Financial Returns

Year

57A

ppendix 6, page 13

Item 1 2 3 4 5 6 7 8 9-14 15 16-25 26

Farmer Woodlot Intermediate Zone-Teak (0.4 ha)With ProjectNet cash return 7,750 18,941 2,480 1,550 0 0 0 13,614 0 45,000 0 314,500Labor days (person-days) 65 51 16 10 1 1 1 1 1 1 1 0With Project IncrementalCash return 1,378 12,898 (3,200) (4,822) (6,043) (5,680) (6,372) 7,571 (5,680) 39,321 (6,372) 308,457Labor days (person-days) 29 18 (17) (26) (32) (32) (35) (32) (32) (32) (35) (33)Total incremental labor days (724)Total incremental cash return 246,666Net Present Value (NPV discount 12%) 7,161FIRR (%) Unable to calculate, though based on the positive NPV it is greater than 12%

Farmer Woodlot Wet Zone-Eucalyptus/Teak/Mahogany (0.4 ha)With ProjectNet cash return 8,060 8,315 2,480 1,550 0 0 0 16,350 0 48,453 0 259,297Labor days (person-days) 65 41 16 10 1 1 1 1 1 1 1 0With Project IncrementalCash return 1,688 2,272 (3,200) (4,822) (6,043) (5,680) (6,372) 10,308 (5,680) 42,773 (6,372) 253,255Labor days (person-days) 29 8 (17) (26) (33) (33) (35) (33) (33) (33) (35) (33)Total incremental labor days (745)Total incremental cash return 187,337Net Present Value (NPV discount 12%) (2,196)FIRR (%) 10.9%FIRR = financial internal rate of return, ha = hectare, NPV = net present value.

Year

58A

ppendix 6, pa ge 14

Item 1 2 3 4 5 6 7 8 9-14 15 16-25 26Homestead Garden Models a Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9-14 Year 15 Year 16-25 Year 26(SLRs)Homestead Dry Zone (0.4 ha)With Project IncrementalCash return 0 0 0 0 0 400 3,760 4,520 9,020 15,860 15,860 34,940Labor days (person-days) 4 5 4 4 0 1 2 3 7 10 10 10Total incremental labor days 194Total incremental cash return 297,700NPV discount 12% 45,331NPV/person-day 234FIRR (%) Unable to calculate

Homestead Intermediate Zone (0.75 ha)With Project IncrementalCash return 0 0 0 0 0 380 2,880 3,260 5,760 11,180 15,770 48,780Labor days (person-days) 5 5 4 4 0 1 2 2 5 8 8 8Total incremental labor days 159Total incremental cash return 234,290NPV discount 12% 33,192NPV/person-day 208FIRR (%) Unable to calculate

Homestead Wet Zone (0.75 ha)With Project IncrementalCash return 0 0 0 0 0 100 1,100 2,160 3,660 6,760 6,760 32,430Labor days (person-days) 3 4 3 3 0 0 1 1 3 4 4 4Total incremental labor days 84Total incremental cash return 147,080NPV discount 12% 20,415NPV/person-day 244FIRR (%) Unable to calculate

FIRR = financial internal rate of return, ha = hectare, NPV = net present value.a Homestead garden project activities are incremental activities.

Table A6.9: Project Homestead Garden Models for each Zone-Incremental Financial Returns

Year

Appendix 6, page 15

59


Table A6.10: Homestead Garden Models With Project Incremental Cash Returns

With Project Incremental Return NPV(SLRs)

Labor(person-da ys)

Return to Labor(NPV per person-day)

Homestead GardenDry zone (0.4 ha) 45,331 194 234Intermediate zone (0.75 ha) 33,192 159 208Wet zone (0.3 ha) 20,415 84 244

ha = hectare, NPV = net present value.

Table A6.11: Farmer Woodlot Models With Project andWith Project Incremental Cash Returns

With Project Return NPV(SLRs)

Labor(person-da ys)

Return to Labor(NPV per person-day)

FWLs (all 0.4 ha)Dry zone (teak) 55,631 140.5 396Dry zone (teak/margosa) 47,293 140 339Intermediate zone (teak) 55,007 159 346Wet zone(eucalyptus/teak/mahogany)

45,650 138 331

With Project Incremental Return NPV(SLRs)

FIRRs(%)

FWLs (all 0.4 ha)Dry Zone (teak) 7,786 17Dry Zone (teak/ margosa) (552) 11.6Intermediate Zone (teak) 7,161 >12Wet Zone(eucalyptus/teak/mahogany)

(745) 11

FIRR = financial internal rate of return, FWL = farmer woodlot, ha = hectare, NPV = net present value.


ASSESSMENT OF OVERALL PROJECT PERFORMANCE

1. Overall assessment of the Project was based on the Guide to Project Rating containedin the Guidelines for the Preparation of Project Performance Audit Reports, Asian DevelopmentBank (ADB), September 2000. In line with international practice, the Guidelines define fiveevaluation criteria:

(i) Relevance is the consistency of a project’s goals, purposes, and outputs with thegovernment’s development strategy, and with ADB’s lending strategic objectivesat the time of the approval and evaluation.

(ii) Efficacy refers to the achievement of purpose (i.e., immediate objectives) asspecified in the policy goals and the physical, financial, and institutionalobjectives adopted at project approval, or as formally modified duringimplementation.

(iii) Efficiency compares the achievement of the project purpose with the use ofinputs. It is based on implementation performance with consideration of theeconomic internal rate of return (EIRR) or cost-effectiveness of the investment.

(iv) Sustainability focuses separately on the likelihood that human, institutional, andfinancial resources are sufficient to support the achievement of the result andbenefits over the economic life of the project.

(v) Institutional development and other impacts refer to the improvements in theability of the Executing Agency or country to make effective and efficient use ofhuman, financial, and natural resources in pursuing economic, environmental,and social activities prompted by the project. It also incorporates improvementsin other development impacts not considered elsewhere.

2. Under each criterion, detailed checklists of subcriteria were adopted to the Project. Eachsubcriterion was then evaluated regarding (i) compliance, which was marked “Y”; (ii) itsnoncompliance, which was marked “N”; or (iii) its nonapplicability under thecomponent/subcomponent, which was marked “N/A”. Subsequently, the total number ofapplicable criteria was noted under each component/subcomponent and the percentage ofcomplying criteria as compared to the total number of applicable criteria was calculated. Asprescribed in the Guidelines, a rating was assigned on the basis of this percentage providing 0for the range of 0 percent to 25 percent; 1 for the range of 26 percent to 50 percent; 2 for therange of 51 percent to 75 percent; and 3 for the range of 76 percent to 100 percent. Usingweights for each component subsequently, the overall rating for each of the five criteria wasdetermined.

3. Weights of components were derived using two approaches:

(i) Dollar fund allocation for each component, which was calculated in constant2000 dollars using the appraisal budget and the actual cost of the project. Themain difference between the two was that in the actual project cost, thecomponent 1 percentage increased from 93 to 99 percent, the component 2 costwas slightly higher at 0.65 percent, there was no component 3 expenditure, andcomponent 4 cost remained at 0.2 percent. The calculations resulted in anoverall rating of 2.33 for the appraisal project budget and 2.39 for the actualproject cost. While both evaluations indicate a satisfactory rating for overall


project performance, the concern is that a project performance assessmentbased on actual project costs would be dominated by component 1 costs andmay not accurately reflect the key contribution of the other components toachieving key project outcomes. For this reason an alternative allocation system,outlined below, was used.

(ii) An allocation based on an indicative estimate of the potential contribution fromeach component toward the achievement of the project objective and projectoutcomes. While Component 1 focused strongly on establishing andinstitutionalizing participatory forestry with trained staff and participating farmers,and achieving targets in terms of planted areas, Component 2 was to contributethrough the productivity improvement from the improved seed quality and accessthrough private nurseries. Component 3 was to improve productivity and benefitsfrom the woodlot models through an adaptive research program, and Component4 was in part to provide for systems to monitor and assess performance of thesemodels. While a very precise allocation of component contribution toachievement of project objective and outcomes is difficult, given the lack of acomprehensive M&E system, an indicative allocation of 65, 15, 15, and 5 percentto Components 1 to 4, respectively, is used. This allocation is based on theimportance of Component 1 in achieving the project objective and outcomes, thepotential of Component 2 to increase productivity through genetic materialimprovement, the significance of Component 3 in increasing productivity throughimproving production practices and systems, and the importance of Component 4in terms of monitoring and evaluation. The evaluation using this allocationindicates a satisfactory rating for overall project performance of 1.94.

Table A7: Assessment of Project Achievements in Meeting SubcriteriaUsing Project Component Weightings Based on Actual Project

Expenditure Share (in constant 2000 values)

A. Relevance

Subcriterion Components1 2 3 4

Evaluation at the time of project approval:Relevance of project output to achieve project goals Y Y Y YRelevance of component to achieve project purpose Y Y Y YPriority in the context of DMC’s development strategy Y Y Y N/APriority in the context of ADB’s development strategy for the DMC Y Y Y N/A

Evaluation at the time of project completion report:Priority in the context of DMC’s development strategy Y Y Y N/APriority in the context of ADB’s development strategy for the DMC Y Y Y N/APriority in the context of one or more of ADB’s strategic objectives Y Y Y N/AAppropriate changes to make the project more relevant: At midterm review Y N N N At other reviews Y N N N

Number of relevant criteria 9 9 9 4Number meeting criteria 9 7 7 2Percent of subcriteria that met assessment 100% 78% 78% 50%Equivalent rating 3 3 3 1Relative weight of each component 0.65 0.15 0.15 0.05Equivalent Overall Rating: 2.90 1.95 0.45 0.45 0.05ADB = Asian Development Bank, DMC = developing member country.


B. Efficacy


Achievement of most project physical achievements Y N N NAchievement of most project intangible outcomes N N N N/AThe likelihood of project outcomes leading to project goals Y Y N N/A

Number of relevant criteria 3 3 3 1Number meeting criteria 2 1 0 0Percent of subcriteria that met assessment 67% 33% 0% 0%Equivalent rating 2 1 0 0Relative weight of each component 0.65 0.15 0.5 0.05Equivalent Overall Rating: 1.45 1.3 0.15 0 0For explanation of abbreviations, see text.

C. Efficiency


1. Efficiency of InvestmentsEIRR > 12 percent Y Y N/A N/AFIRR > weighted average cost of capital Y Y N/A N/ACost-effectiveness in generating the project outputs N N N N

2. Efficiency of processManner of ADB’s internal processing of the project Y N N NOrganization and management of executing and implementing Y N N N agenciesEffectiveness of project management Y N N NEfficiency in recruiting consultants and other procurement N N N YTimely and adequate availability of counterpart funding N N N N/A

Number of relevant criteria 8 8 6 5Number meeting criteria 5 2 0 1Percent of subcriteria that met assessment 63% 25% 0% 20%Equivalent rating 2 0 0 0Relative weight of each component 0.65 0.15 0.15 0.05Equivalent Overall Rating: 1.30 1.3 0 0 0For explanation of abbreviations, see text.


D. Sustainability


Availability of adequate and effective demand for project services Y Y Y Y or productsProbable operating and financial performance of the operational N N N N entity and ability to recover costsProbability of the existence of appropriate maintenance policy Y Y N/A N/A and proceduresProbability of funds availability (cashflow) for continued Y Y N N operations, maintenance and growth requirementProbable availability of skills to continue project Y Y N N/AProbable availability of appropriate technology and equipment to Y Y N N/A operate the projectProbable availability of the enabling environment (subsidies, Y Y Y N/A tariffs, price competitiveness and political developments) in which the project is operatingGovernment ownership and commitment to the project Y Y N YThe extent to which community participation and beneficiary Y Y N/A N/A incentives are adequate to maintain project benefits

Number of relevant criteria 9 9 7 4Number meeting criteria 8 8 2 2Percent of subcriteria that met assessment 89% 89% 29% 50%Equivalent rating 3 3 1 1Relative weight of each component 0.65 0.15 0.15 0.05Equivalent Overall Rating: 2.60 1.95 0.45 0.15 0.05For explanation of abbreviations, see text.

E. Institutional Development and Other Impacts


1. Institutional development impacts Country's formal laws, regulations, and procedures N N/A N/A N/A The people's informal norms and practices Y N/A N/A N/A Institutional or organizational strengthening Y Y N N Participatory attitudes of the society Y N/A N N

2. Other development impacts Impacts on poverty Y N N N/A Impacts on the environment Y N N N/A Impacts on social organization N N/A N/A N/A

Number of relevant criteria 7 3 4 2Number meeting criteria 5 1 0 0Percent of subcriteria that met assessment 71% 33% 0% 0%Equivalent rating 2 1 0 0Relative weight of each component 0.65 0.15 0.15 0.05Equivalent Overall Rating: 1.45 1.3 0.15 0 0For explanation of abbreviations, see text.


F. Assessment of Overall Project Performance

Criterion Assessment Rating Weight WeightedRating

Relevance Relevant 2.90 0.2 0.58Efficiency Efficacious 1.45 0.25 0.36Efficiency Relatively Efficient 1.30 0.2 0.26Sustainability Sustainable 2.60 0.2 0.52Institutional Development and Other Impacts Moderate 1.45 0.15 0.22

Overall Rating Successful 1.94

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