asian development bank pcr:phi 24266 · philippines 1191(sf)/1192 forestry sector project republic...

ASIAN DEVELOPMENT BANK PCR:PHI 24266

PROJECT COMPLETION REPORT

ON THE

FORESTRY SECTOR PROJECT (Loan 1191[SF]/1192-PHI)

IN THE

PHILIPPINES

November 2003

CURRENCY EQUIVALENTS (as of 1 July 2003)

Currency Unit – peso (P)

At Appraisal At Project Completion (October 1992) (July 2003)

P1.00 = $0.040 $0.020 $1.00 = P24.83 P53.60

ABBREVIATIONS ADB – Asian Development Bank CFMA – community forest management agreement CSD – comprehensive site development DAO – DENR administrative order DENR – Department of Environment and Natural Resources EIRR – economic internal rate of return FLMA – forest land management agreement FSP – Forestry Sector Project MFPC – multisectoral forest protection committee NFDO – National Forestation Development Office NGO – nongovernment organization OCR – ordinary capital resources SMP – survey, mapping, and planning TA – technical assistance

WEIGHTS AND MEASURES m3 – cubic meter ha – hectare

GLOSSARY

barangay The smallest local government unit, with population generally in the range of 100 to 350 households.

community organizing The act of bringing farming communities together into organized economic groups (people’s organizations) with a legal form. This work is usually done by people with training in sociology and anthropology.

dipterocarp Trees belonging to the botanical family Dipterocarpaceae, the predominant and commercially most important species of the Philippines’ natural forests.

forest plantation Areas replanted with trees of various species on a commercial scale.

indigenous cultural communities A homogenous society identified by self-ascription and ascription by others that has lived continuously as a community on defined territory; that shares common bonds of language, customs, traditions, and other distinctive cultural traits; and that, because of resistance to the political, social, and cultural inroads of colonization became historically differentiated from the majority of Filipinos.

livestock dispersal Distribution of good breeds of farm animals—carabao (water buffalo), cows, goats, and so on—to members of people’s organizations under a sharing arrangement.

logged-over forest Natural forest that has been logged. mangrove forest A type of forest found in tidal flats and coastal areas. old-growth forest Natural (virgin) forest not yet subjected to extensive logging. production forest residual forest

Area of either natural or plantation forest designated for timber production. A second-growth forest that contain mature trees left after a timber harvest.

silvicultural treatment Tending of planted trees by pruning of unwanted branches and vines, thinning out of competing trees, removal of dead and diseased trees, and carrying out of other field activities that promote good growth of the tree crop.

silviculture A branch of forestry dealing with the development and care of forests.

watershed Land area that serves to store rainwater and is drained by streams and rivers.

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 DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 7 G. Conditions and Covenants 7 H. Related Technical Assistance 7 I. Consultant Recruitment and Procurement 8 J. Performance of Consultants, Contractors, and Suppliers 8 K. Performance of the Borrower and the Executing Agency 9 L. Performance of the Asian Development Bank 9

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9 B. Efficacy in Achievement of Purpose 10 C. Efficiency in Achievement of Outputs and Purpose 10 D. Preliminary Assessment of Sustainability 10 E. Environmental, Sociocultural, and Other Impacts 11

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 11

A. Overall Assessment 11 B. Lessons Learned 12 C. Recommendations 12

APPENDIXES 1. Project Framework 14 2. Executive Orders and Department of Environment and Natural Resources Orders to Support Project Implementation 18 3. Detailed Project Costs, Loan Allocation, Cancellations, and Actual Disbursements 20 4. Implementation Schedule at Appraisal and Actual, 1992–2000 30 5. Status of Compliance with Loan Covenants 31 6. Technical Assistance Completion Reports 37 7. Equipment Procured Under the Project 41 8. Economic Analysis 42

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan

7. Project Completion Report Number

Philippines 1191(SF)/1192 Forestry Sector Project Republic of the Philippines Department of Environment and Natural Resources SDR34,651,000 $50,000,000 PCR:PHI 779

B. Loan Data

1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual (physical completion) – Actual (closing of accounts) – Number of Extensions 7. Terms of Loan – Commitment Charge – Service Charge – Interest Rate

– Maturity (number of years)

– Grace Period (number of years)

6 May 1992 28 May 1992

14 October 1992 16 October 1992 19 November 1992

24 December 1992

24 March 1993 31 May 1993 2

30 June 1998 31 December 1999 12 January 2001 1

0.75 percent for ordinary capital resources 1.00 percent for Asian Development Fund Pool-based variable rates 35 years for ordinary capital resources, 25 years for Asian Development Fund 5 years for ordinary capital resources, 10 years for Asian Development Fund

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8. Disbursements a. Dates

Initial Disbursement 1 September 1993

Final Disbursement 12 January 2001

Time Interval 88 months

Effective Date 31 May 1993

Original Closing Date 30 June 1998

Time Interval 61 months

b. Amount

i. 1191-PHI (SF) (SDR‘000)

Category

Original

Allocation

Last Revised Allocation

Amount

Canceled

Amount

Disbursed

Undisbursed

Balancea A. Reforestation 13,616 5,450 8,166 5,854 (404)

Survey, Mapping, and Planning

339

135

204

212

(77)

Community Organizations

2,462

986

1,476

1,476

(490)

Comprehensive Site Development

9,961

3,987

5,974

3,499

488

Monitoring and Evaluation

854

342

512

667

(325)

B. Watershed Rehabilitation 5,195

1,906

3,289

1,440

466


120

44

76

108

(64)


987

362

625

341

21


3,746

1,374

2,372

897

477


342

126

216

94

32

C. Community-Based Forest Management

9,977

3,217

6,760

2,752

465

Upland 6,170 3,217 2,953 2,752 465 Mangrove 3,807 0 3,807 0 0

D. Support to Forest Protection and Law Enforcement

5,063

1,973

3,090

1,819

154 Forest Resources and

Demarcation

3,000

1,169

1,831

883

286 Organization of

Multisectoral Forest Protection Committee

389

152

237

156

(4) Task Force on

Indigenous Cultural Communities and Buffer Zone Management

160

62

98

75

(13) Environment Support 1,514 590 924 705 (115)

E. Consulting Services 249 256 (7) 242 14 F. Interest During

Construction

551

324

227

324

0 Total 34,651 13,126 21,525 12,431 695

a A portion of the undisbursed loan balance—SDR0.513 million ($0.669 million)—and the balance of SDR0.182 million ($0.237 million) in the imprest account were canceled on 12 January 2001.

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1191-PHI (SF) ($‘000)

Category

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Amount

Disburseda

Undisbursed

Balanceb A. Reforestation 19,647 7,317 11,001 8,072 (526)


490

182

274

292

(100)


3,553

1,323

1,988

2,035

(638)


14,373

1,845

8,049

4,825

636


1,232

169

690

920

(423)

B. Watershed Rehabilitation

7,497

2,559

4,431

1,993

607


172

59

102

150

(83)


1,425

486

842

472

27


5,406

1,845

3,196

1,241

621


494

169

291

130

42


14,396

4,319

9,108

3,809

606

Upland 8,903 4,319 3,979 3,809 606 Mangrove 5,493 0 5,129 0 0


7,307

2,649

4,163

2,523

201 Forest Resources

and Demarcation

4,330

1,569

2,467

1,224

373 Organization of


561

204

319

217

(5) Task Force on


231

84

132

103

(17) Environment Support 185 792 1,245 979 (150)


Construction

795

435

306

447

0 Total 50,000 17,623 29,000 17,197 906

a Based on ADB’s book rate on the date of disbursement. b Undisbursed loan balance multiplied by the exchange rate at the time of cancellation (12 January 2001).

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ii. 1192-PHI (ordinary capital resources) ($‘000)

Category

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Amount

Disbursed

Undisbursed

Balancea A. Reforestation 18,295 9,013 9,282 7,320 1,693


456

225

232

265

(40)


3,308

1,630

1,678

1,845

(215)


13,383

6,593

6,790

4,375

2,218


1,147

565

582

834

(269)

B. Watershed Rehabilitation

6,143

2,104

4,039

1,713

391


141

48

96

129

(81)


1,167

400

767

406

(6)


4,430

1,517

2,913

1,066

451


405

139

266

112

27


13,044

3,578

9,466

3,433

145

Upland 8,067 3,578 4,489 3,433 145 Mangrove 4,977 0 4,977 0 0


5,954

2,033

3,921

2,102

(69) Forest Resources

and Demarcation

3,527

1,205

2,322

1,020

185 Organization of


458

156

302

181

(25) Task Force on


188

64

124

86

(22) Environment Support 1,781 608 1,173 815 (207)


Construction

6,205

3,910

2,295

3,910

0 Total 50,000 21,000 29,000 18,831 2,169

a A portion of the undisbursed loan balance—$1.786 million—and the balance of $0.383 million in the imprest account were canceled on 12 January 2001.

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9. Local Costs (Financed) - Amount ($’000) 24,049 - Percent of Local Costs 68 - Percent of Total Cost 50 C. Project Data

1. Project Cost ($’000)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 26,000 11,979 Local Currency Cost 101,000 35,483 Total 127,000 47,462

2. Financing Plan ($’000)

Appraisal Estimate Actual Cost Foreign Local Total Foreign Local Total

Implementation Costs Borrower-Financed 27,000 27,000 11,434 11,434 ADB-Financed 19,000 74,000 93,000 7,622 24,049 31,671 Total 19,000 101,000 120,000 7,622 35,483 43,105 IDC Costs

Borrower-Financed ADB-Financed 7,000 0 7,000 4,357 0 4,357 Total 7,000 0 7,000 4,357 0 4,357

ADB = Asian Development Bank, IDC = interest during construction.

3. Cost Breakdown by Project Component ($‘000)

Component Appraisal Estimate Actual A. Reforestation 44,600 18,622

Survey, Mapping, and Planning 1,110 765 Community Organizations 8,040 4,674 Comprehensive Site Development 32,650 10,991 Monitoring and Evaluation 2,790 2,191

B. Watershed Rehabilitation 16,620 4,494 Survey, Mapping, and Planning 380 372 Community Organizations 3,150 1,100 Comprehensive Site Development 11,990 2,772 Monitoring and Evaluation 1,100 250

C. Community-Based Forest Management 32,670 8,725 Upland 21,210 8,725 Mangrove 12,460 0

D. Support to Forest Protection and Law Enforcement 14,860 5,214 Forest Resources and Demarcation 8,260 2,441 Organization of Multisectoral Forest Protection Committee 1,080 429 Task Force on Indigenous Cultural Communities and Buffer

Zone Management

440

201 Environment Support 5,080 2,143

E. Project Office (National Forestation Development Office)

10,530

5,301

F. Consulting Services 720 750 G. Interest During Construction 7,000 4,357 Total 127,000 47,462

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4. Project Schedule

Item Appraisal Estimate Actual

Date of Contract with Consultants 3rd quarter 1993 7 February 1994 Civil Works Contract (Comprehensive Site Development)

Date of Award 2nd quarter 1994 1 September 1994 Completion of Work 1st quarter 1997 31 December 1999 Equipment and Supplies Dates First Procurement 3rd quarter 1993 July 1994 Last Procurement 4th quarter 1995 31 December 1999 Start of Operations Beginning of Start-Up 1st quarter 1993 1 October 1993 Other Milestones Cancellation of Loan Proceeds First Partial Cancellation Second Partial Cancellation

16 February 1998 28 May 1998

5. Project Performance Report Ratings

Project Administration Committee Notes

Ratings Implementation Period Last Current

(i) From 31 May 1993 to 31 March 1994 AAA AAA

(ii) From 1 April 1994 to 30 November 1995 AAA AAA

(iii) From 1 December 1995 to 31 August 1996 AAA AAA

(iv) From September 1996 to November 1996 AAA AAA

(v) From December 1996 to December 1997 AAA AAA

Project Performance Reports

Ratings Implementation Period

Development Objectives

Implementation Progress

From January 1998 to December 2000 S S

S = Satisfactory.

viii

D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-

Days Specialization of

Members

Fact-Finding Mission 2–10 April 1992 5 45 Senior forestry specialist, senior programs officer, forestry specialist, young professional

Appraisal Mission 6–28 May 1992 8 48 Senior forestry specialist, senior programs officer, senior project economist, development policy officer, environment specialist, counsel (2), project economist

Inception Mission 3 June 1993 5 5 Senior forestry specialist, senior financial analyst, forestry specialist, control officer, project administration staff

Project Review 1 19–26 May 1994 1 8 Forestry specialist Midterm Review 28 November–11

December 1995 4 40 Forestry specialist, staff

consultant, senior clerk loan administration, deputy director

Project Review 2 15–19 July 1996 2 6 Project engineer, assistant project administration

Project Review 3 2 November–17 December 1996a

4 39 Project engineer (2), staff consultant, assistant project administration

Project Review 4 5–12 August 1997 2 16 Forestry specialist, assistant project administration

Project Review 5 30 March–4 April 1998;

13 –25 April 1998

1 19 Forestry specialist

Project Review 6 27 October–4 November 1998

1 9 Forestry specialist

Project Review 7 11–29 October 1999 1 19 Forestry specialist Project Completion Reviewb

23–28 June 2003 4 24 Senior water resources specialist, economist, assistant project analyst, staff consultant (forestry specialist)

a The Mission also reviewed the Industrial Forest Plantations Sector Project (Loan No. 1106-PHI[SF]). b The project completion report was prepared by T. Miyazato, senior water resources specialist; B. Alimov,

economist; N. Calma, assistant project analyst; and O. Gendrano, staff consultant (forestry specialist).

I. PROJECT DESCRIPTION

1. In November 1992, the Asian Development Bank (ADB) approved two loans to the Government of the Philippines consisting of SDR34.65 million ($50 million) from ADB’s special funds resources and $50 million from its ordinary capital resources (OCR) for the Forestry Sector Project (FSP). The objectives of the Project were to:

(i) reverse the process of upland and mangrove forest degradation, (ii) ensure the long-term sustainability of sector investments through broadly based

community participation, (iii) enhance environmental rehabilitation through forest protection and law

enforcement, and (iv) reduce poverty and augment income-earning opportunities among rural

communities in the project areas. 2. The Project had two main components for forestry sector development: (i) policy and institutional reforms, and (ii) sector investment. The policy reforms related to (i) the adoption of revised regulations governing reforestation contracts under forest land management agreements (FLMAs); (ii) the implementation of guidelines relating to community forestry management agreements (CFMAs); (iii) the integration of existing tenurial arrangements; (iv) the management and protection of critical watersheds; (v) the protection of old-growth forests, control of illegal logging, and enforcement of forestry regulations; (vi) the submission of the revised Forestry Code to the legislature; (vii) the financial sustainability of forest management activities, including the feasibility of establishing a forest management and development fund; and (viii) an increase in participation by non-government organizations (NGOs) in Department of Environment and Natural Resources (DENR) programs. A project framework is included as Appendix 1. 3. The institutional reforms related to (i) enhancing the coordination of sector investment activities; (ii) streamlining DENR’s organizational structure and realigning the functions of DENR’s agencies; (iii) strengthening DENR’s natural resources management information, monitoring, and communications systems; and (iv) improving the skills of DENR staff and of other institutions involved in the forestry sector through improved education and training programs that reflected changing approaches to forest resources management. 4. The sector investments consisted of the following:

(i) Community-based subprojects. The Project was expected to include 100 to 120 subprojects over an area totaling 170,000 ha. This area was to consist of 93,000 ha for management of residual upland and mangrove forest, 55,000 ha for reforestation of degraded sites, and 22,000 ha of critical watersheds for rehabilitation.

(ii) Support to forest protection and enforcement. This was to involve the

demarcation of 800,000 ha of old-growth forests, the establishment of multisectoral forest protection committees (MFPCs), and the provision of equipment and vehicles to control illegal logging.

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(iii) Consulting services. The Project was to provide 72 person-months of consulting services to assist DENR in site selection, subproject formulation, appraisal, and packaging.

5. Attached to the loans, two technical assistance (TA) grants were provided: (i) TA 1788-PHI: Establishment of Small-Scale Community-Based Forest Industries for $247,000; and (ii) TA 1789-PHI: Monitoring and Evaluation of Sector Activities for $490,000. 6. The Executing Agency for the Project was DENR. Its National Forestation Development Office (NFDO) coordinated field implementation with DENR’s regional offices. 7. The Project became effective in May 1993 and was closed in December 1999 after a 1-year extension. At the request of the Government the original loan amount of $100.0 million was reduced to $57.8 million with a corresponding reduction in the areas for development from 170,000 ha to 60,000 ha. The scope of the Project was further reduced to 35,000 ha in 1998. The final loan amount was $36.0 million, comprising $17.2 million from the Asian Development Fund and $18.8 million from OCR.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

8. The Project supported Government policies to promote sustainable development of the forestry sector through efficient management and production practices in the use of forest resources, which would also at the same time help protect the environment. During the early 1970s, the Government’s programs recognized that the problem of deforestation was socio-political in nature. Forestland provided livelihood for an estimated 1.2 million households, most of who are indigenous communities with claims on forestland as their ancestral domains. Lack of tenurial rights was a disincentive to the local community in sustainable management of the lands, which were mostly logged over or degraded. By the early 1980s, the Government recognized that improved land tenure and greater involvement of local communities in active forest management were crucial to sustainable development of forest resources. The Government adopted two main community-oriented forestry programs, the Integrated Social Forestry Program in 1982 and the Community Forestry Program in 1989, which consolidated earlier forestry programs and proposed transferring the responsibility for forest management into hands of local communities. These programs introduced the provision of a 25-year tenurial security and extended the coverage of community forestry to natural forests, allowing the beneficiaries to commercially utilize forest resources subject to appropriate technical and social preparation. The early 1990s were characterized by the further changes in community forestry to include degraded watershed areas and all types of forests where there are Indigenous Cultural Communities. The design and formulation of the Project supported these institutional changes and, particularly focused on the provision of varied types of tenure instruments and community participation in forestry management. 9. The Project directly supported ADB's operational strategy for the Philippines, which promotes rural employment, sound management of forest resources, and environmental rehabilitation. In the 1980s and 1990s ADB had provided funds for four projects that were intended to help build up timber resources, expand employment in the uplands, protect critical watersheds, and promote policies to sustain benefits to rural communities and indigenous

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groups.1 The design of the Project was based on the Master Plan for Forestry Development (MPFD) for 1991–2015, which had been prepared under an ADB TA grant.2 10. The Project was formulated after extensive policy dialogue with the Government and consultations with DENR, other forestry sector agencies, NGOs, and other external agencies. The project concept, objectives, and scope were further refined during a meeting of DENR’s Forestry Sector Coordinating Committee. The Government and ADB’s April 1992 Fact-Finding Mission determined the scope of the Project in detail and the implementation arrangements. ADB's appraisal of the Project took place on 6–28 May 1992. 11. The original target for reforestation, watershed rehabilitation, and community- based replanting was 170,000 ha. However, the EA could not implement the sector investment component. In view of the slow implementation of this component, in September 1997 ADB and the Government agreed to reduce the target to 60,000 ha (35% of the original amount) and the corresponding loan amount from $100.0 million to $57.8 million. Even this reduced scope was difficult for DENR to implement. As a consequence, further reduction in project scope and planting target was made in May 1998. The second reduction involved lowering the planting target from 60,000 ha to 35,000 ha and the loan amount from $57.80 million to $36.03 million. The major reasons the Government gave for the drastic reduction in project scope were (i) the poor performance of NGOs in community organizing, (ii) the poor quality of subproject appraisals, and (iii) the slow implementation of comprehensive site development (CSD). B. Project Outputs

1. Policy and Institutional Reforms

12. Twenty-two DENR orders and one presidential executive order were issued from 2 November 1992 to 18 February 1999 to support sustainable development of the forestry sector and implementation of the Project (Appendix 2 provides a list of these orders). DENR Administrative Order (DAO) 93–16 of 2 April 1993 spelled out in detail how the FSP would be implemented and created NFDO, responsible for coordinating the implementation of forestry projects and selecting, formulating, and appraising the subprojects under the FSP. 13. DAO 93-23 of 27 April 1993 provided guidelines for the adoption and implementation of a revised form of FLMAs. Until that time FLMAs had been used for reforestation contracts with local communities and covered the initial establishment period, usually 3 years, after which the plantations and their management reverted to the Government. As a result, local communities regarded FLMAs mainly as a source of employment and were not committed to protecting the newly established plantation areas. The revised FLMAs under the Project provided for a substantial share of benefits at maturity, including harvesting rights, to go to local communities in return for protection and management obligations. Some 120 revised FLMA contracts covering 79,445 ha were issued under the Project. 14. Guidelines for managing residual production forests through CFMAs with local communities were provided by DAO 93-2 of 27 April 1993. CFMAs entitled the communities to 1 ADB. 1983. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Republic of the Philippines for the Forestry Development Project. Manila (Loan No. 677-PHI); ADB. 1988. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Republic of the Philippines for the Forestry Sector Program. Manila (Loan Nos. 889/890-PHI); ADB. 1989. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Republic of the Philippines for the Low-Income Upland Communities Project. Manila (Loan No. 999 [SF]-PHI); ADB. 1991. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Republic of the Philippines for the Industrial Forest Plantations (Sector) Project. Manila (Loan No. 1106- PHI).

2 ADB. 1988. Technical Assistance for the Master Plan for Forestry Development. Manila (TA No. 993-PHI).

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manage, protect, develop, and use the forest resources. Thirty-four CFMAs were concluded under the Project covering 83,633 ha of residual production forests. The successful implementation of these agreements encouraged the Government to integrate all previously implemented forestry programs into one—Community-Based Forestry Management Program— through Presidential Executive Order No. 263 in 1995. This order established community-based management as the national strategy for sustainable development of the country’s forest resources. 15. In 1996, DENR submitted the proposed revised Forestry Code, a major policy reform instrument, to the Philippine legislature for enactment. Many public hearings and discussions were held, particularly on controversial issues, e.g., the total ban on logging in natural forests, but 7 years later, the Senate version (SB 830) and the Lower House version (HB 2966) have yet to be reconciled. 16. On 5 November 1992, DENR issued Memorandum Circular 92–20: Implementing Guidelines for the Awarding, Monitoring, and Evaluation of Community Organizing Contracts for Forest Land Management Agreement as part of the preparation of the FSP. In January 1997, DENR issued Memorandum Circular No. 97–01, which provided guidelines for community organizing under the FSP and simplified and strengthened the 1992 memorandum circular. 17. During the early years of the Project, 130 NGOs were engaged to help with community organizing work. NFDO and DENR’s regional offices screened the NGOs on the basis of their records in effectively bringing together farmers with diverse interests into a group that would focus its energy and skills on rehabilitating degraded forestland. Many of the NGOs that passed the screening process performed their tasks satisfactorily, particularly those that were linked to a university, but some NGOs that had been formed only after the Project had advertised its need for NGOs did not perform as well.

2. Sector Investments

18. The major part of sector investment component was reforestation, which was implemented through awarding of community-based contracts. Reforestation followed community organizing, CSD, and survey, mapping, and planning (SMP) work, which were implemented with the assistance of the NGOs. At the time of project completion, the scaled down target for reforestation and rehabilitation works (35,000 ha) had been slightly exceeded: the total achievement reported was 38,992 ha, consisting of 20,174 ha of reforested areas, 5,328 ha of watershed rehabilitation work, and 13,490 ha of forest plantations in community-based forest management areas. These activities were carried out under 183 subprojects appraised and approved by the Project. 19. Implementation of the sector investment program was hampered by three sequential requirements: (i) field activities for each subproject could only start if community organizing, i.e., the people's organizations had been established; (ii) community organizing could only be done following completion and approval of subproject appraisals by both DENR and ADB; and (iii) project implementation consultants had to be recruited to assist with after expedite appraisals, but the consultants could be recruited and fielded only 7 months after loan effectivity. The quality of community organizing and CSD, implementation of which was assisted by NGOs, varied significantly because of the differences in the performance of these NGOs. Although the sector investment component included monitoring and evaluation activities, which was supported by the TA associated with the Project, they were generally of poor quality.

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20. Inappropriate monitoring together with the absence of any follow-up silvicultural treatment contributed to poor quality of the tree plantations. DENR should provide funds for such treatment under some kind of cost-recovery arrangement with the people's organizations to enhance tree growth. 21. The Project also provided for demarcation of 800,000 ha of old-growth dipterocarp forests and better enforcement of forestry laws. The Project design at appraisal did not indicate specific sites or regions where demarcation was to be carried out. DENR reported that concrete boundaries (pillars) were placed in 34 sites nationwide to clearly indicate the location of old-growth forests. The demarcated forest area was about 1.085 million ha, or about 35% more than the original target. The demarcation of old-growth forests was done by DENR’s regional offices’ land evaluation parties, the regional counterparts of the National Mapping and Resource Information Authority, which turned the maps of the demarcated old-growth forests over to the Forest Management Bureau for validation and registration. 22. To improve protection of the forests, the Project envisaged the formation of MFPCs and a special task force to help indigenous cultural communities with forest protection. The task force assisted indigenous peoples not only from the project areas, but from other areas as well. DENR reported that 208 MFPCs were organized, but in some regions did not report that they were carrying out substantial work. Evaluating the effectiveness of these committees in reducing encroachment, poaching, and other destructive activities on the forests is difficult, as no performance criteria were established. In Region 10 (Cagayan de Oro), a regional MFPC was organized with staffed checkpoints to discourage illegal logging in natural forests, but this MFPC has since become inactive due to a lack of funds. In the Cordillera Autonomous Region, MFPCs have been active since 1996. The region now has 27 MFPCs, consisting of 1 regional, 6 provincial, 18 municipal, and 2 barangay MFPCs. Even though eight of the municipal MFPCs have been inactive, the rest, led by the regional MFPC, have been extremely active and have carried out an extensive awareness campaign on the importance of forest conservation and helped DENR reduce illegal logging, especially in the pine forests. C. Project Costs

23. At appraisal, the total project cost was estimated at $127.0 million, $26.0 million in foreign exchange costs and $101.0 million in local currency costs. ADB approved two loans for a total of $100.0 million (79% of total project costs) for the Project, consisting of $50.0 million from ADB's special funds resources (SDR34.65 million) and $50.0 million from its OCR. The loans were intended to cover the $26.0 million in foreign exchange costs and $74.0 million of the local currency costs. The actual project cost at loan closing was $47.5 million, consisting of $12 million in foreign exchange costs and $35.5 million in local currency costs. ADB financed the total foreign exchange costs and $24.05 million of the local currency costs, while the Government covered the remaining $11.45 million. The actual project cost was substantially lower due to (i) the reduction in project scope, and (ii) the depreciation of the peso against the dollar. At the Government’s request two loan cancellations totaling $58.0 million, SDR21.52 million of the Asian Development Fund funds and $29.0 million in OCR, were made during implementation. The net OCR loan amount was $18.8 million after the cancellation of the unused loan balance of $2.2 million at loan closing. The net Asian Development Fund loan was SDR12.43 million after the cancellation of the unused balance of SDR0.70 million. Appendix 3

6

shows the loan allocation at appraisal, the cancellations, and the actual disbursements under the Project.3 D. Disbursements

24. The project appraisers anticipated that full loan disbursement would be achieved within 5 years of implementation. Considering the requirements for sequential activities, wherein the activities in the first 2 years did not require substantial funding, i.e., surveying, mapping, planning, appraising subprojects, and undertaking community organizing, the disbursement projection was unrealistic. By the end of December 1996 the total amount contracted from the loan fund was $15.5 million and disbursements had amounted to $10.1 million, or only 10%. By 1998, fund utilization had accelerated, and at the loan closing date in December 1999, actual disbursement was $36.0 million, $18.8 million in OCR and SDR12.43 million ($17.2 million) from the Asian Development Fund. An imprest account of $3.0 million previously established for the Project helped expedite disbursements.

E. Project Schedule

25. The Project was to be implemented over a period of 5 years. The SMP work on subproject sites was to take place during the first 2 years of the Project. Individual appraisals of subprojects were to be carried out upon completion of each SMP, and community organizing work in the reforestation and watershed rehabilitation sites and in residual and mangrove forests was to take place during the first year of the Project. CSD of these major field activities was set to start during the second and third quarters of the first year. Monitoring and evaluation of the reforestation and watershed rehabilitation were to be done in the fourth year of the Project, when CSD would have been completed in the target areas. CSD for the residual and mangrove forests was to be completed during the fourth and fifth years. Monitoring and evaluation of the portion of the Project completed in the fourth year was to be conducted in the fifth year. 26. The project implementation schedule proved to be highly optimistic. The original implementation schedule was based on the premise that previous ADB-financed projects implemented through DENR had laid the groundwork for NGOs to flourish in rural areas and had provided the NGOs with sufficient experience in community organizing work. In addition, DENR had to look for competent private groups that could carry out the SMP task; however, finding such groups and then negotiating with them and getting contracts approved took about a year. The consultants who were to train the executing agency's staff in subproject appraisal were in place 7 months after the Project started. They were able to train 225 DENR personnel, who were shortly thereafter deployed at the subproject sites where SMPs had already been completed. Appendix 4 shows the project implementation schedule at appraisal compared with the actual schedule. 27. By November 1996, 230 subprojects covering 127,550 ha had been appraised and submitted to ADB for approval. By the end of the first quarter of 1997, ADB had approved 192 subproject appraisals covering 102,340 ha, and 109 of these covering 51,230 ha were contracted out for community organizing work. Initial CSD activities had already been undertaken in 54 subprojects (21,545 ha) and site development/plantation establishment had been completed for several subprojects covering 5,380 ha while community organizing was being undertaken. Actual tree planting did not begin in earnest until almost 4 years after the date of loan effectiveness. 3 The difference between $42.0 million (balance after loan cancellations of $58.0 million) and the actual utilization of

$36.0 million is explained by: (i) cancellations of $3.1 million at the loan closing date; and (ii) depreciation of the SDR against the US dollar.

7

28. In view of the slow implementation progress, ADB and DENR agreed to reduce the reforestation and watershed rehabilitation target from 170,000 ha to 35,000 ha. This drastic reduction affected subprojects that were already implementing CSD and were ready to follow the planting schedule in the last year of the project. As a result, about 15 million tree seedlings in the nurseries of people’s organizations already paid for under the Project had to be stocked for the next planting season. ADB agreed to extend the implementation period to December 1999 to enable subprojects with ongoing CSD to use their seedling stock during the year's planting season. F. Implementation Arrangements

29. DENR was designated as the Project’s Executing Agency, with day-to-day implementation to be carried out by the NFDO with the assistance of its 15 regional offices. DENR’s implementation supervision was affected by frequent changes in NFDO directors: between 1993 and 1999, NFDO had four project directors. The major project activities—community organizing, CSD, and SMP—were to be contracted out to private parties and NGOs. NFDO had difficulties in identifying competent private survey firms that could carry out SMP. This task could have been expedited if the regional offices, which were familiar with forest area boundaries, had been given the responsibility for SMP. Each region had a land evaluation party trained in forest survey work. During project implementation, in subproject sites where no private surveyors could be found the regional offices used their land evaluation parties to carry out SMP. CSD was to be carried out under contract with members of people’s organizations, which were to be organized. DENR survey teams and staff of provincial and community environment and natural resources offices were to supervise the task of demarcating the old-growth forests. G. Conditions and Covenants

30. The Government’s compliance with the loan covenants was generally satisfactory. Appendix 5 shows the status of compliance with the loan covenants. The key covenant regarding the adoption of community-based forest management as the national strategy to achieve sustainable forestry and social justice was complied with in 1995 by means of Presidential Executive Order No. 263 (para. 14). The covenant that required the enactment of a new Forestry Code was not complied with, as the proposed law, which was prepared and has been discussed in the legislature since 1996, has not yet been enacted. The covenant regarding the implementation of a mechanism for recovery of costs advanced by DENR was partially complied with, and forestry products revenue sharing of 75–25% between people’s organizations and DENR was promulgated. Some subprojects have implemented cost- and revenue-sharing arrangements, but whether proper recording and accounting is being done in relation to the Government’s share is not clear, because the forest development and management fund envisaged at appraisal has yet to be established. H. Related Technical Assistance

31. The two advisory TA grants approved in association with the Project—TA 1788-PHI, Study on the Establishment of Small-Scale, Community-Based Forest Industries; and TA 1789-PHI, Monitoring and Evaluation of Sector Activities—were implemented, and the required reports were submitted to NFDO and ADB. The utility of the findings and recommendations was, however, questionable. Only a few subprojects have used the recommendations of the first TA. Detailed evaluation of the TAs is shown in the TA completion reports, which are attached as Appendix 6.

8

32. The study on the establishment of small-scale forest industries identified seven short- term projects with good domestic and/or export market potential. These were (i) handicrafts, (ii) management of logged-over forests, (iii) coconut husk processing, (iv) handmade pulp making, (v) handmade paper making, (vi) cut flower production, and (vii) sericulture. However, ADB did not receive reports of any thriving, small-scale, community-based forest industries that came about as a result of the Project. Livelihood projects did occur in areas governed by CFMAs, such as poultry, piggery, and carabao dispersal and charcoal briquette production, but none of the subprojects recommended by the consultants were undertaken. The consultants did not recommend new or innovative ways of making marketable products from forest-based raw materials. 33. Under the second TA, the consultants produced a benefit monitoring and evaluation system. The system was field tested and the consultants conducted extensive training in the regional and NFDO offices. However, the system came at a time when NFDO staff were just learning computer technology, and they found the system too sophisticated and difficult to use. DENR is currently using parts of the system for benefit monitoring and evaluation of forestry projects. I. Consultant Recruitment and Procurement

34. The Project provided for 77 person-months of consulting services to assist with detailed appraisals of subprojects, train DENR staff in appraisal, review and revise the initial environment examination matrix, and propose a manual of operations for the FSP. Within 7 months of the Project (February 1994) the loan consultants were recruited in accordance with ADB’s Guidelines on Use of Consultants. They were in the field for about 30 months (until June 1996). The consultants should have been fielded earlier given the importance of appraisal work on subproject sites. 35. The Project procured about $4.0 million worth of equipment, including four-wheel drive vehicles, patrol boats, motorcycles, global positioning system equipment, theodolites, computers and accessories, and office machines. The equipment was procured following ADB's Guidelines for Procurement. Appendix 7 provides a list of equipment procured under the Project. 36. Contracts for SMP and community organizing were awarded on the basis of DENR’s local competitive bidding procedures in consultation with ADB. CSD contracts were awarded to members of the people’s organizations at each subproject site based on guidelines approved by DENR. Contracts for the supply of tree seedlings were awarded in accordance with DENR procedures, which were acceptable to ADB. J. Performance of Consultants, Contractors, and Suppliers

37. The performance of the loan consultants was generally satisfactory. The consultants in community forestry land use, soil conservation, resource and environmental economics, and forestry were fielded from January 1994 until June 1996. The consultants accomplished the following tasks: (i) developing criteria for selecting subprojects, (ii) revising the outline for SMP reports by the NGOs, (iii) training 225 DENR counterparts in subproject appraisal, (iv) revising the environmental impact assessment matrix to suit forestry projects, (v) preparing a manual on subproject appraisal, and (vi) preparing an operations manual for the FSP. The loan consultants were instrumental in the speedy appraisal of subprojects and in the training of DENR staff.

9

38. The Project engaged about 130 NGOs mainly to help in community organizing in all regions of the country. When the project scope was scaled down, the contracts with several NGOs were reduced or canceled. The remaining NGOs have performed satisfactorily in their task of organizing people’s organizations, particularly the NGOs linked to universities. DENR’s regional offices monitored the progress of the NGOs’ work closely. The people’s organizations, which were the product of community organizing, expressed appreciation to the NGOs that patiently welded them into cohesive groups. In the early years of the Project, NFDO found that 22 of the NGOs were incompetent, canceled their contracts, and arranged for their work to be taken over by competent NGOs. 39. Contractors for SMP work performed satisfactorily, despite initial difficulties due to their unfamiliarity with forest boundaries. However, DENR field staff guided them from the outset. CSD was contracted to people’s organizations from the different subprojects, and included seedling production, land preparation, planting work, and maintenance and protection. No serious delays were experienced with these small contractors, and they performed satisfactorily. K. Performance of the Borrower and the Executing Agency

40. A month before the loan became effective in May 1993, DENR issued DAO 16, which laid out the guidelines for implementing the FSP. In July 1995, Presidential Executive Order 263 was issued, which adopted community-based forest management as the national strategy for rehabilitating the country's forestlands. These actions demonstrated the Government’s commitment to ensuring timely project implementation. However, delays were encountered in the approval of the release of funds for project expenditures. In addition, the enactment of the revised Forestry Code has been delayed and has been pending with the Congress for 7 years. Thus the Borrower’s performance was partly satisfactory. DENR administered the Project competently, supported the provision of necessary policy reform instruments, and fielded experienced foresters to manage the Project at the regional level. NFDO was provided with skilled staff who kept good records of field accomplishments, disbursements, delays in implementation, and performance by people’s organizations and NGOs. DENR’s performance was satisfactory. L. Performance of the Asian Development Bank

41. ADB monitored the Project closely, fielding one inception and eight review missions involving 185 person-days of staff and consultant services, including an intensive midterm review in November 1995, and took steps to solve problems during implementation. Mission recommendations, such as combining SMP and appraisal work and overlapping community organizing and CSD to save time and accomplish more plantations, were implemented quickly. ADB also decided to reduce the scope of the Project and the loan amount without delay when it became evident that planting targets could not be met. ADB also expedited reviews and approvals of subproject appraisal reports. ADB's performance in jointly administering the Project with the executing agency was satisfactory.

III. EVALUATION OF PERFORMANCE

A. Relevance

42. The Project directly addressed the Government’s concerns in regard to poverty and environmental degradation in rural areas. A major thrust of the country’s development programs was to empower communities, including indigenous cultural communities, to find solutions to their problems of lack of income and poor quality of life caused by degradation of their

10

environment. The long-term tenure (25 years renewable for another 25 years) in CFMAs, which covered vast tracts of land, offered adequate security and stability. The people’s organizations, which were awarded CFMAs, could carry out such activities as reforestation and livelihood projects with the confidence they would reap the benefits. The Project is highly relevant to the Government’s program to alleviate poverty and address the rapid deterioration of the environment. Given the Government’s continued commitment to poverty reduction and reforestation activities, the Project is considered relevant. B. Efficacy in Achievement of Purpose

43. The Project provided a necessary base for improving the management of forest resources by resolving property rights through award of CFMAs and simultaneously addressing the problem of deforestation. Communities used the incomes generated from reforestation activities for investments in livelihood activities, thereby contributing to economic sustainability. Beneficiaries’ incomes will rise significantly after the trees reach maturity, thereby enabling timber production. 44. The scope of the Project was modified significantly during implementation. Major delays in project implementation led to the reforestation of only 38,992 ha, or 28% of the appraisal target of 170,000 ha. When SMP and subsequent appraisal were finished, followed by the completion of community organizing, both DENR and people’s organizations had efficiently implemented CSD. Within 3 years (1997–1999), when the people’s organizations were fully operational, the Project achieved, and even slightly exceeded, the planting target of 35,000 ha. Overall the Project was less efficacious than originally envisaged. C. Efficiency in Achievement of Outputs and Purpose

45. The long delay in the implementation of the key components, i.e., watershed rehabilitation and community-based reforestation, was due largely to the design of the Project, whereby a sequence of three important activities—SMP, subproject appraisal, and community organizing—had to be carried out before site development could proceed. SMP activities required the engagement of private survey and mapping contractors who were not easily available in remote areas; subproject appraisal required prior training of field staff by loan consultants; and community organizing needed to be contracted out to NGOs, which were not readily available in many localities. 46. The reduction in project scope resulted in loan cancellation of $58 million. The scaled-down Project’s economic internal rate of return (EIRR) was significantly reduced to 9.3% from the appraisal estimate of 16.0–27.1%. The EIRR estimates are based only on the benefits from timber production and agroforestry development. Land tenure generated externalities through conferment of asset ownership rights on forest-dwelling communities besides ensuring that the planted trees realized their full value at maturity. At full development, the Project could result in environmental benefits, such as improved water retention in the uplands, greater soil fertility, and reduced soil erosion, as well as in economic benefits from the institutional strengthening of the beneficiaries. Appendix 8 provides the details of the economic analysis. D. Preliminary Assessment of Sustainability

47. Project’s activities, such as the awarding of CFMAs for 25 years, renewable for another 25 years; the strengthening of people’s organizations; the maintenance of properly audited books of accounts; and the encouragement of viable livelihood enterprises are key elements of

11

project sustainability. The long-term tenure instituted by the Government removes the uncertainty among CFMA holders about land ownership rights. 48. The people’s organizations, which established the tree plantations, can now engage in other viable ventures that will generate revenues alongside the tree plantations. Community organizing and revenues from reforestation work helped with the establishment of community-based microcredit facilities, thereby enabling broader access to capital goods. This, combined with communities’ increased environmental awareness and the provision of land tenure, increases the likelihood that the Project will be sustainable. E. Environmental, Sociocultural, and Other Impacts

49. In addition to the economic impact, communities will also benefit from positive effects of the Project on the environment and on communities’ sociocultural and entrepreneurial aspects. Over the years, as the trees grow to maturity in the reforestation and watershed sites, the topsoil will be stabilized, and erosion and siltation will be reduced. The water-holding capacity of watersheds will increase and surface runoff of rainwater will slow down. In addition, the microclimate of reforested areas will improve, because temperature extremes are less likely to occur. 50. The upland dwellers, including both the indigenous cultural communities and upland migrants, have begun to appreciate the value of sustainably managing forest resources. They have also realized that being members of people’s organizations enables them to reap benefits that were not available to them as individual farmers. The development of people’s organizations also enhanced cooperation between indigenous cultural communities and upland migrants. 51. Community organizing led to the development of entrepreneurial activities among the beneficiaries, such as poultry and piggery, livestock dispersal, microlending, and charcoal briquette making. Plans are also under way to venture into small-scale wood processing. With the financial resource buildup within well-organized people’s organizations, they are likely to explore microenterprises that will augment their incomes.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

52. The Project suffered more than 3 years of low field accomplishments and slow disbursements, mainly because of preparatory processes required before actual plantations could be started. Despite a slow start, the Project slightly exceeded its revised target for reforestation development and achieved more than the original target in relation to enhancing the protection of old-growth forests. Communities have been given the maximum security of tenure allowable under the country’s Constitution to the land planted to trees and food crops. The groundwork for continuing development has been laid with the establishment of people’s organizations and the granting of CFMAs. Livelihood and business ventures are at a nascent stage, but with continued efforts to strengthen the people’s organizations, progress appears highly likely. The Government should now consider providing assistance in processing and marketing products from the CFMAs and the reforestation areas using the results of TA No. 1788–PHI. 53. Based on the criteria for assessing project performance, the Project is rated as partly successful.

12

B. Lessons Learned

54. The following key lessons were learned from the Project:

(i) The project design was too ambitious, as DENR did not have the capacity, both at national and regional level, to implement such a large-scale sector investment. It would be more feasible to undertake reforestation projects on a smaller-scale within a contiguous area, rather than as a sector investment with a nationwide geographical coverage.

(ii) Delays in project implementation could have been minimized if the Project relied

on DENR’s technical expertise and experience in SMP instead of relying on private survey firms that were unfamiliar with forest surveys and boundaries. Even though the loan agreement specified contractual arrangements for SMPs, ADB and DENR should have taken early steps to overcome the delays caused by incapability of private firms to carry out SMP.

(iii) Loan consultants should have been recruited and fielded in the first year of

implementation, and the appraisal of subprojects could have been carried out as SMP work was being completed.

(iv) The success of people’s organizations in implementing CSD and in developing

themselves into viable organizations depended heavily on assistance provided by DENR, particularly during the first 2 years of the subprojects. The people’s organizations made earnest attempts to pursue livelihood projects; however, they lacked technical expertise and skills in marketing that would have enabled them to expand their projects into truly viable ventures.

(v) The subproject sites were spread out across remote areas and their sizes were

too small to justify the construction of access roads and other infrastructure. Monitoring of activities in such areas was much more difficult and less effective than it would have been if larger and contiguous planting sites had been used.

(vi) NGOs should have been screened more rigorously. (vii) Consultants under the TA on community-based, small-scale forest industries

should have been fielded when CSD was completed and people’s organizations were ready to pursue their recommendations.

(viii) Coordination between NFDO and the regional offices needed to be strengthened. (ix) Fund provision should have been made specifically for silvicultural treatment

(weeding, thinning) 3–5 years after subproject site planting under cost-sharing arrangements with the relevant people’s organizations.

C. Recommendations

1. Project Related

55. Project-related recommendations include the following:

13

(i) The Government should ensure that the regional offices provide adequate resources, and monitor the subproject sites closely.

(ii) The Government should ensure effective cost recovery either by enforcing its

current provision or by considering alternative schemes. The Government should expedite activation of the forest development and management fund for reforestation to ensure the Project’s sustainability.

(iii) The Government should construct new access roads in project sites in the near

future to facilitate harvesting of trees at the request of people’s organizations; however, this should be accompanied by a careful assessment of possible adverse environmental impacts.

(iv) The Government should help people’s organizations create high-value, forest-

based products that can be sold in local and export markets. In this regard, DENR should also tap the expertise of other Government departments, such as the Department of Agriculture, the Department of Trade and Industry, and the Technical Education and Skills Development Authority, to help promote and expand livelihood activities at the subproject sites.

(v) The Government should take the necessary actions to establish and enforce a

land use plan by local government units to restrict land use around each subproject site.

(vi) ADB should field a project performance audit report mission in 3 years when the

planted trees are nearing maturity and a well-informed assessment of sustainable timber production can be made.

2. General

56. General recommendations are as follows:

(i) The revised Forestry Code is intended to streamline and strengthen policies on forest resource use. The legislation of the revised Forestry Code should be expedited. The Government should also revise its forestry sector policies related to trade protection measures, which result in lower local prices than world prices of timber; to the market structure of the forest processing industry; and to the subsidization of reforestation activities.

(ii) The Government’s efforts to stabilize land resource use in the uplands depend

on the effective implementation of the CFMAs. DENR should focus its efforts on ensuring that the people’s organizations granted CFMAs are appropriately assisted to strengthen their financial and overall management capabilities.

14

A

ppendix 1

PROJECT FRAMEWORK

Narrative Summary Performance

Indicators/Targets Means of Verification Assumptions and Risks Evaluation

1. Goal

• Reverse the process of forest degradation, ensure the sustainability of sector investments through broadly based community participation, enhance environmental rehabilitation through forest protection and law enforcement, and reduce poverty in rural communities

• Increased areas of forest,

expanded participation of communities in forestry activities, and increase in communities’ incomes due to employment opportunities created by forest investments

• Delineation of old-growth

forests and formation of multisectoral forest protection committees

• Field surveys, forest

inventory, monitoring and socioeconomic surveys of people’s organizations after comprehensive site development

• Report on the number of

people’s organizations becoming involved in income-generating activities in the subproject sites

• Continuing

Government commitment to forest rehabilitation; watershed protection; and sustainable, community-based socioeconomic development

• People’s organizations

will undertake income-generating livelihood activities

• The Project has been

playing an important role in preventing forest degradation, and people in the communities have participated in forest protection; however, more time is needed to evaluate the actual financial impacts on the beneficiaries because of the long growing period before trees are harvested.

2. Purpose • Policy reforms relating to

regulations governing reforestation contracts, community participation in forestry projects, management of critical watersheds, protection of old-growth forests, revision of the Forestry Code, financial sustainability of forest management activities, and increased NGO participation in DENR programs

• Institutional reforms to enhance coordination of sector investments, streamlining of DENR’s organizational structure, and strengthening of management information system

• Consolidation of tenurial

arrangements on forestlands into long-term lease agreements and community participation in all forestry undertakings

• Revision of laws and rules to

enhance the management of forest resources

• Streamlining of coordination

and organization structures at DENR; improvement of information, monitoring, and communication systems; and further education and training

• Increased number of

people’s organizations and

• Periodic examination of

data on awards of long-term land tenure arrangements

• Investigation of the status

of effective coordination among DENR agencies

• Review missions and

project completion report

• Enactment into law of

the proposed revised Forestry Code

• DENR giving high

priority to its institutional strengthening by streamlining its organization and improving its monitoring and evaluation system

• Support for investors in

forest-based industries both from DENR and local financing institutions

• Several rules and

regulations on forest management have already been issued and DENR’s approach has shifted toward community participation, but the forest development and management fund envisaged at appraisal has yet to be established.

• Out of $127 million

envisaged at appraisal, a total of $47.4 million has been invested in the Project.

Appendix 1

15


Indicators/Targets Means of Verification Assumptions and Risks Evaluation

• Sector investments for community-based subprojects; forest protection, enforcement, and management activities; and consulting services to strengthen DENR’s capacity to formulate, appraise, and package subprojects.

of corresponding subproject sites for reforestation and community-based forestry activities

• Comprehensive site

development at all subproject sites under the Project

3. Major Components/Outputs

3.1 Policy and Institutional

Reforms

• Consolidation of technical arrangements for forest land use and revision of the Forestry Code

• Development of a revised

system of benefit monitoring and evaluation of field accomplishments in reforestation, and training of NFDO/DENR staff to implement the system

• Increased participation by

NGOs in rehabilitating and developing forestland resources

• Intensified forest protection

work in old-growth forests

• Crafting of department

administrative order to consolidate all tenurial arrangements , such as forest land management agreements (FLMA), community forest management agreements (CFMA), and integrated social forestry (ISF), into community-based forest management agreements (CBFMA) and enactment of the revised Forestry Code

• Completion of a revised

system of benefit monitoring and evaluation and implementation in NFDO/DENR

• Maintenance and expansion

of a roster of prequalified NGOs

• Demarcation of 800,000 ha

of old-growth forests

• Report from

NFDO/DENR on final approval by the authorities of orders and laws promulgated and their circulation to all concerned parties

• Reports resulting from

public forums to clarify the spirit and content of new orders and laws regarding forestland development and management

• Report on completion

and implementation of a revised monitoring and evaluation system

• Progress reports on the

expansion of participation by qualified NGOs in forestry development projects

• Speedy promulgation

and enactment of orders and laws by the authorities concerned

• Acceptance, adoption,

and use of the revised monitoring and evaluation system in NFDO/DENR

• Adequate number of

NGOs are qualified to carry out community organizing in subproject sites

• Appropriate maps are

compiled in DENR on demarcated old-growth forest

• Revision of the Forestry

Code is still under way. • Scope exists for further

strengthening of the capability of NFDO/DENR staff.

• Effective NGO

participation could have been enhanced further.

• The component for

intensified forest protection work in old-growth forest was implemented successfully.

16

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ppendix 1


Indicators/Targets Means of Verification Assumptions and Risks Evaluation • Review of NFDO/DENR

records of maps of demarcated old-growth forests

3.2 Sector Investments

• Examination of potential markets for products from forest-based raw materials, identification of such products, and conduct of feasibility studies

• Exploration of the possibilities

for local financing of enterprises that will make products based on forest materials

• Surveying, mapping, planning,

and appraisal of subproject sites suitable for reforestation; rehabilitating watersheds;and carrying out community-based forest development and management

• Formation, through community

organizing work, of people’s organizations in the subproject sites

• Completion of product

identification and corresponding feasibility studies

• People’s organizations

engaging in forest-based enterprises are qualified for financing by local development banks

• Completion of appraisal of

subproject sites suitable for forest rehabilitation and development

• People’s organizations are

formed for all subprojects found feasible

• The planting of 35,000 ha of

degraded uplands

• Report on completed

feasibility studies • Progress report of

NFDO/DENR on qualification of people’s organizations as borrowers from the banks

• Submission of subproject

site appraisal reports • Report on formation of

people’s organizations and their respective subprojects and their registration with the Cooperative Development Authority (or the Securities and Exchange Commission

• Completed appraisal reports of subproject sites are properly compiled and stored for easy reference and use

• A list of people’s

organizations that qualify as borrowers from the banks for forest-based ventures is prepared

• All legitimate,

registered people’s organizations are properly listed

• The feasibility study was

conducted, but the study result could not be utilized for the Project.

• Recommended activities

did not attract local enterprises.

• Surveying, mapping,

planning, and appraisal of subproject were implemented as envisaged, but activities were carried out slowly.

• Formation of people’s

organizations was successful.

A

ppendix 1 17

4. Activities/Input

• Reforestation

• Watershed Rehabilitation

• Community-Based Forest Management

• Support to Forest Protection and Enforcement

• Project Office

• Consulting Services

Subtotal

Interest During Construction and Service Charges

Total

Foreign Exchange

5,230

3,790

4,870

4,090

0

520

19,000

7,000

26,000

Local Currency

Costs

38,870

12,830

27,800

10,770

10,530

200

101,000

0

101,000

Total

44,600

16,620

32,670

14,860

10,530

720

120,000

7,000

127,000

• Project progress report

and review missions • Project completion report

• Project accounts

• Availability of local

counterpart funds on a timely basis

• Project executing

agency has adequate and trained staff to implement the Project

• Out of $127 million a total

of $47.4 million, consisting of $18.6 million for reforestation, $4.5 million for watershed rehabilitation, $8.7 million for community-based forest management, $5.3 million for support to forest protection and enforcement, $5.3 million for the project office, and $0.75 million for consulting services, have been spent.

DENR = Department of Environment and Natural Resources, ha = hectare, NFDO = National Forestation Development Office, NGO = nongovernment organization.

Appendix 2 18

EXECUTIVE ORDERS AND DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES ADMINISTRATIVE ORDERS TO SUPPORT PROJECT IMPLEMENTATION

Title Subject Date of Issue

Memorandum Circular (MC) 92–20

Implementing Guidelines for the Awarding, Monitoring, and Evaluation of Community Organizing (CO) Contracts for Forest Land Management Agreements

5 Nov 1992

Memorandum Order (MO) 93–13

Delegation of Authority for the Implementation of the Forestry Sector Project Loan

27 Oct 1993

Department Administrative Order (DAO) 93–16

Guidelines for the Implementation of the Forestry Sector Project

2 Apr 1993

DAO 93–22 Revised Guidelines for the Community Forestry Program

27 Apr 1993

93–23 Forest Land Management Program

27 Apr 1993

Executive Order (EO) 263

Adopting Community-Based Forest Management as the National Strategy to Ensure Sustainable Development of the Country’s Forestland Resources and a Mechanism for its Implementation

19 July 1995

DAO 96–19 Amendment of Memorandum Order No. 13 S. 1993 re Delegation of Authority Related to Implementation of the Asian Development Bank/Overseas Economic Cooperation Fund Forestry Sector Project

7 Jun 1996

MO 97–10 Hiring Professionals to Assist at the Forestry Sector Project Subproject Sites

29 Dec 1997

MO 97–09 Delegation of Authority of Central Office Transactions for the Forestry Sector Project Loan

11 Sep 1997

DAO 97–03 Amendment of Administration Order No. 96–19 Series of 1996 re Delegation of Authority

20 Feb 1997

DAO 97–18 Supplementing Guidelines for Environmental Impact Assessment of Forestry Projects

29 Apr 1997

MC 97–22 Monitoring Forms for the Forestry Sector Project

13 Nov 1997

MC 97–07

Terms of Reference for Site Coordinators

20 May 1997

Appendix 2 19

Title Subject Date of Issue

MC 97–03

Guidelines and Procedures for Processing Payments for CO and Comprehensive Site Development (CSD) of Subprojects under the Forestry Sector Project

20 May 1997

MC 97–01 Implementing Guidelines on the Conduct of CO under the Forestry Sector Project

20 Jan 1997

MC 99–17 Guidelines on the Conduct of Monitoring and Evaluation of the Forestry Sector Project

7 June 1997

MC 99–16 Amending Certain Provisions of MC No. 97–03 re Guidelines and Procedures in the Processing of Payments for CO and CSD under the Forestry Sector Project

28 May 1999

MC 99–09 Guidelines for the Implementation of the Department of Environment and Natural Resources Forest Production Project

13 Apr 1999

MC 99–08 Preparation and Evaluation of the Phase-Out Plan of the Assisting Organizations for the Forestry Sector Project

13 Apr 1999

MC 99–04 Extension of the CO Contract Under the Forestry Sector Project

13 Apr 1999

MC 99–03 Disposition of Excess Seedlings Produced Under the Forestry Sector Project

18 Feb 1999

DAO 99–05 Payment of Retention Fees for CO and CSD

18 Feb 1999

Appendix 3 20

A. Reforestation1. Survey, Mapping and Planning 130 990 1,120 100 665 7652. Community Organization 1,780 6,260 8,040 694 3,980 4,6743. Comprehensive Site Development 3,520 29,130 32,650 1,645 9,346 10,9914. Monitoring and Evaluation 300 2,490 2,790 314 1,878 2,191 Subtotal 5,730 38,870 44,600 2,752 15,869 18,622

B. Watershed Rehabilitation1. Survey, Mapping, and Planning 90 290 380 50 322 3722. Community Organization 750 2,400 3,150 157 944 1,1003. Comprehensive Site Development 2,700 9,290 11,990 412 2,361 2,7724. Monitoring and Evaluation 250 850 1,100 43 207 250 Subtotal 3,790 12,830 16,620 661 3,833 4,494

C. Community-Based Forest Management1. Upland 2,910 17,300 20,210 1,298 7,427 8,7252. Mangrove 1,960 10,500 12,460 0 0 0 Subtotal 4,870 27,800 32,670 1,298 7,427 8,725

D. Support to Forest Protection and Law Enforcement1. Forest Resources and Demarcation 1,970 6,290 8,260 1,127 1,313 2,4412. Organization of Multisectoral Forest Protection Committee 260 820 1,080 200 229 4293. Task Force on ICC and Buffer Zone Management 120 320 440 95 106 2014. Enforcement Support 1,740 3,340 5,080 901 1,241 2,143 Subtotal 4,090 10,770 14,860 2,324 2,890 5,214

E. Project Office (NFDO) 0 10,530 10,530 0 5,301 5,301

F. Consulting Services 520 200 720 587 163 750

G. Interest During Construction 7,000 0 7,000 4,357 0 4,357

Total 26,000 101,000 127,000 11,979 35,483 47,462ICC = indigenous cultural communities, NFDO = National Forestation Development Office.Source: Asian Development Bank estimates.

Foreign

($'000)Table A3.1: Summary of Project Costs

Actual

DETAILED PROJECT COSTS, LOAN ALLOCATION, CANCELLATIONS, AND ACTUAL DISBURSEMENTS

Local TotalComponentAppraisal

Foreign Local Total

Appendix 3

21

Continued on next page

Foreign Local Total Foreign Local Total Foreign Local Total Foreign Local Total Foreign Local Total

01A Reforestation 0 0 0 8 68 76 40 320 360 186 1,205 1,391 772 4,596 5,368Survey, Mapping, and Planning 0 0 0 0 30 30 1 79 81 7 121 128 28 142 170Community Organization 0 0 0 2 10 12 10 72 82 47 300 347 195 1,215 1,410Comprehensive Site Development 0 0 0 5 23 28 24 127 151 111 657 768 461 2,785 3,247Monitoring and Evaluation 0 0 0 1 4 5 5 41 46 21 127 148 88 453 541

02A Watershed Rehabilitation 0 0 0 16 122 139 21 171 193 58 381 440 205 1,232 1,437Survey, Mapping, and Planning 0 0 0 1 19 20 2 38 40 4 56 61 15 83 98Community Organization 0 0 0 4 35 39 5 43 48 14 90 104 49 297 345Comprehensive Site Development 0 0 0 10 64 74 13 79 93 36 213 250 128 790 917Monitoring and Evaluation 0 0 0 1 5 6 1 11 12 4 21 25 13 62 75

03A Community-Based Forest 0 18 18 38 235 272 38 331 369 170 952 1,122 289 1,720 2,009ManagementUpland 0 18 18 38 235 272 38 331 369 170 952 1,122 289 1,720 2,009Mangrove 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

04A Support to Forest Protection and Law Enforcement 0 3 3 50 151 201 70 226 296 181 449 629 1,595 1,049 2,645Forest Resources and Demarcation 0 3 3 24 62 87 34 127 161 88 222 310 774 441 1,215Organization of Multisectoral Forest Protection Committee 0 0 0 4 9 14 6 17 23 16 47 62 137 74 211Task Force on Indigenous Cultural Communities and Buffer Zone Management 0 0 0 2 4 7 3 6 9 7 17 24 65 38 103Enforcement Support 0 0 0 19 74 94 27 76 103 70 163 233 619 497 1,116

Project Office (National Forestation Development Office) 0 0 0 0 200 200 0 1,663 1,663 0 1,489 1,489 0 1,579 1,579

05A Consulting Services 0 0 0 243 54 297 167 80 248 173 27 200 2 2 3

06 Interest During Construction 43 0 43 238 0 238 425 0 425 582 0 582 833 0 833

Total 43 21 64 594 830 1,424 761 2,792 3,554 1,350 4,503 5,853 3,696 10,178 13,874

Category/Component19971993 1994 1995 1996

Table A3.2: Detailed Project Costs By Year, 1993–2000($'000)

22 A

ppendix 3

Foreign Local Total Foreign Local Total Foreign Local Total Foreign Local Total

01A Reforestation 775 4,403 5,178 357 2,285 2,642 615 2,993 3,607 2,752 15,869 18,622Survey, Mapping, and Planning 28 131 159 13 59 72 22 102 124 100 665 765Community Organization 195 1,101 1,296 90 536 626 155 746 901 694 3,980 4,674Comprehensive Site Development 463 2,696 3,159 213 1,293 1,506 367 1,765 2,132 1,645 9,346 10,991Monitoring and Evaluation 88 476 564 41 397 438 70 380 450 314 1,878 2,191

02A Watershed Rehabilitation 177 960 1,136 70 407 477 113 560 673 661 3,833 4,494Survey, Mapping, and Planning 13 61 75 5 24 30 9 39 48 50 322 372Community Organization 42 230 272 17 98 114 27 152 178 157 944 1,100Comprehensive Site Development 110 615 725 44 264 308 71 335 405 412 2,361 2,772Monitoring and Evaluation 12 53 65 5 21 26 7 34 41 43 207 250

03A Community-Based Forest 383 2,173 2,557 159 927 1,086 222 1,070 1,291 1,298 7,427 8,725ManagementUpland 383 2,173 2,557 159 927 1,086 222 1,070 1,291 1,298 7,427 8,725Mangrove 0 0 0 0 0 0 0 0 0 0 0 0

04A Support to Forest Protection and Law Enforcement 232 566 798 94 228 321 102 218 320 2,324 2,890 5,214Forest Resources and Demarcation 112 249 361 45 103 148 49 106 155 1,127 1,313 2,441Organization of Multisectoral Forest Protection Committee 20 46 66 8 18 26 9 18 27 200 229 429Task Force on Indigenous Cultural Communities and Buffer Zone Management 10 22 31 4 10 14 4 9 13 95 106 201Enforcement Support 90 250 339 36 97 133 39 85 124 901 1,241 2,143

Project Office (National Forestation Development Office) 0 318 318 0 37 37 0 15 15 0 5,301 5,301

05A Consulting Services 1 1 1 0 0 0 0 0 0 587 163 750

06 Interest During Construction 1,137 0 1,137 1,030 0 1,030 69 0 69 4,357 0 4,357

Total 2,705 8,421 11,126 1,710 3,884 5,594 1,120 4,855 5,975 11,979 35,483 47,462

Source: Asian Development Bank estimates.

Category/Component1998 1999 Total2000

Table A3.2: Detailed Project Costs By Year, 1993–2000—continued($'000)


01A Reforestation 0 0 0 3,909 19,282 23,191 19,947 98,404 118,351 93,505 461,291 554,795 385,227 1,899,629 2,284,856Survey, Mapping, and Planning 141 698 840 722 3,562 4,284 3,385 16,699 20,084 13,945 68,767 82,712Community Organization 985 4,861 5,846 5,029 24,808 29,836 23,573 116,291 139,864 97,116 478,897 576,012Comprehensive Site Development 2,336 11,525 13,861 11,922 58,816 70,738 55,888 275,713 331,601 230,250 1,135,408 1,365,658Monitoring and Evaluation 446 2,198 2,644 2,274 11,218 13,492 10,660 52,587 63,247 43,916 216,558 260,474

02A Watershed Rehabilitation 0 0 0 8,246 40,679 48,925 10,589 52,240 62,829 31,675 156,263 187,938 105,474 520,112 625,586Survey, Mapping, and Planning 620 3,059 3,679 796 3,928 4,725 2,382 11,751 14,133 7,932 39,112 47,044Community Organization 1,954 9,641 11,595 2,510 12,381 14,890 7,507 37,034 44,541 24,997 123,267 148,264Comprehensive Site Development 5,134 25,327 30,461 6,593 32,524 39,117 19,721 97,289 117,010 65,668 323,822 389,490Monitoring and Evaluation 538 2,652 3,190 690 3,406 4,096 2,065 10,188 12,254 6,877 33,911 40,788

03A Community-Based ForestManagement 0 0 0 18,758 92,541 111,299 18,974 93,607 112,581 86,815 402,465 489,280 144,217 711,165 855,382Upland 18,758 92,541 111,299 18,974 93,607 112,581 86,815 402,465 489,280 144,217 711,165 855,382Mangrove

04A Support to Forest Protection and Law Enforcement 0 0 0 25,125 62,813 87,939 34,851 87,128 121,979 90,682 226,704 317,386 871,201 414,351 1,285,552Forest Resources and Demarcation 12,191 30,477 42,668 16,910 42,274 59,184 43,999 109,997 153,995 422,707 201,043 623,750Organization of Multisectoral Forest Protection Committee 2,158 5,396 7,554 2,994 7,484 10,478 7,790 19,474 27,263 74,836 35,593 110,429Task Force on Indigenous Cultural Communities and Buffer Zone Management 1,030 2,575 3,605 1,429 3,572 5,001 3,718 9,295 13,013 35,719 16,988 52,708Enforcement Support 9,746 24,365 34,111 13,519 33,797 47,316 35,175 87,938 123,114 337,939 160,727 498,666

05A Consulting Services 0 0 121,722 26,965 148,687 83,708 18,510 102,218 86,650 13,310 99,960 828 828 1,655

06 Interest During Construction 1,163 0 1,163 15,667 0 15,667 22,234 0 22,234 23,590 0 23,590 55,206 0 55,206

Total 1,163 0 1,163 193,427 242,281 435,708 190,303 349,888 540,191 412,915 1,260,032 1,672,948 1,562,153 3,546,085 5,108,238



Table A3.3: Loan Disbursements, Loan No. 1191-PHI, 1993–2000($)

Appendix 3

23


01A Reforestation 380,351 1,875,580 2,255,931 175,767 866,743 1,042,510 302,251 1,490,453 1,792,704 1,360,956 6,711,383 8,072,339Survey, Mapping, and Planning 13,769 67,896 81,665 6,363 31,376 37,739 10,941 53,954 64,896 49,267 242,952 292,219Community Organization 95,886 472,834 568,720 44,311 218,506 262,817 76,198 375,743 451,941 343,097 1,691,940 2,035,037Comprehensive Site Development 227,336 1,121,034 1,348,370 105,056 518,053 623,109 180,656 890,844 1,071,499 813,443 4,011,393 4,824,837Monitoring and Evaluation 43,360 213,816 257,176 20,037 98,809 118,846 34,457 169,912 204,368 155,149 765,098 920,247

02A Watershed Rehabilitation 86,527 426,683 513,211 34,655 170,892 205,547 58,853 290,216 349,069 336,019 1,657,085 1,993,104Survey, Mapping, and Planning 6,507 32,087 38,593 2,606 12,851 15,457 4,426 21,824 26,250 25,269 124,613 149,881Community Organization 20,507 101,124 121,631 8,213 40,501 48,715 13,948 68,781 82,729 79,636 392,729 472,366Comprehensive Site Development 53,872 265,653 319,525 21,576 106,398 127,974 36,642 180,688 217,330 209,205 1,031,701 1,240,907Monitoring and Evaluation 5,642 27,820 33,461 2,260 11,142 13,402 3,837 18,922 22,759 21,908 108,042 129,950

03A Community-Based ForestManagement 188,372 928,898 1,117,270 78,695 388,058 466,753 110,671 545,748 656,419 646,503 3,162,482 3,808,985Upland 188,372 928,898 1,117,270 78,695 388,058 466,753 110,671 545,748 656,419 646,503 3,162,482 3,808,985Mangrove

04A Support to Forest Protection and Law Enforcement 117,316 293,166 410,482 45,906 114,719 160,625 39,629 99,032 138,661 1,224,711 1,297,913 2,522,624Forest Resources and Demarcation 56,922 142,244 199,166 22,274 55,662 77,935 19,228 48,050 67,279 594,230 629,747 1,223,977Organization of Multisectoral Forest Protection Committee 10,077 25,183 35,260 3,943 9,854 13,798 3,404 8,507 11,911 105,203 111,491 216,693Task Force on Indigenous Cultural Communities and Buffer Zone Management 4,810 12,020 16,830 1,882 4,703 6,586 1,625 4,060 5,685 50,213 53,214 103,428Enforcement Support 45,507 113,719 159,226 17,807 44,500 62,307 15,372 38,415 53,787 475,065 503,460 978,526

05A Consulting Services 357 357 715 0 0 0 0 0 0 293,265 59,970 353,235

06 Interest During Construction 106,405 0 106,405 153,499 0 153,499 68,808 0 68,808 446,573 0 446,573

Total 879,329 3,524,685 4,404,013 488,523 1,540,413 2,028,936 580,213 2,425,449 3,005,662 4,308,026 12,888,833 17,196,859


Category/Component1998 1999

Table A3.3: Loan Disbursements, Loan No. 1191-PHI, 1993–2000—continued($)

2000 Total

24 Appendix 3


01A Reforestation 0 0 0 3,909 16,676 20,585 19,947 85,106 105,053 92,390 386,733 479,123 386,700 1,649,637 2,036,337Survey, Mapping, and Planning 141 604 745 722 3,081 3,803 3,345 14,000 17,344 13,999 59,717 73,715Community Organization 985 4,204 5,189 5,029 21,455 26,484 23,292 97,495 120,787 97,487 415,873 513,361Comprehensive Site Development 2,336 9,968 12,304 11,922 50,868 62,790 55,222 231,150 286,372 231,131 985,988 1,217,119Monitoring and Evaluation 446 1,901 2,347 2,274 9,702 11,976 10,532 44,088 54,620 44,084 188,059 232,142

02A Watershed Rehabilitation 0 0 0 8,246 35,182 43,428 10,589 45,180 55,769 26,654 113,723 140,377 99,649 425,097 524,746Survey, Mapping, and Planning 620 2,646 3,266 796 3,398 4,194 2,004 8,552 10,556 7,494 31,967 39,461Community Organization 1,954 8,338 10,292 2,510 10,708 13,217 6,317 26,952 33,269 23,617 100,748 124,365Comprehensive Site Development 5,134 21,904 27,038 6,593 28,129 34,722 16,595 70,804 87,399 62,042 264,665 326,707Monitoring and Evaluation 538 2,294 2,831 690 2,946 3,636 1,738 7,415 9,153 6,497 27,716 34,213

03A Community-Based ForestManagement 0 0 0 18,758 80,035 98,793 18,974 80,957 99,932 83,300 356,355 439,655 144,498 616,420 760,918Upland 18,758 80,035 98,793 18,974 80,957 99,932 83,300 356,355 439,655 144,498 616,420 760,918Mangrove

04A Support to Forest Protection and Law Enforcement 0 0 0 25,125 46,661 71,787 35,016 65,030 100,047 90,212 167,763 257,975 724,277 306,634 1,030,911Forest Resources and Demarcation 12,191 22,640 34,831 16,990 31,553 48,543 43,771 81,399 125,170 351,419 148,779 500,198Organization of Multisectoral Forest Protection Committee 2,158 4,008 6,166 3,008 5,586 8,594 7,749 14,411 22,160 62,215 26,340 88,555Task Force on Indigenous Cultural Communities and Buffer Zone Management 1,030 1,913 2,943 1,436 2,666 4,102 3,699 6,878 10,577 29,695 12,572 42,267Enforcement Support 9,746 18,100 27,846 13,583 25,225 38,808 34,993 65,075 100,069 280,947 118,943 399,890

05A Consulting Services 0 0 121,722 26,965 148,687 83,708 18,510 102,218 86,650 13,310 99,960 828 828 1,655

06 Interest During Construction 41,413 0 41,413 222,666 0 222,666 402,706 0 402,706 557,928 0 557,928 778,103 0 778,103

Total 41,413 0 41,413 400,426 205,520 605,946 570,941 294,784 865,725 937,134 1,037,883 1,975,018 2,134,056 2,998,615 5,132,671



Table A3.4: Loan Disbursements, Loan No. 1192-PHI, 1993–2000($)

Appendix 3 25


01A Reforestation 394,941 1,684,790 2,079,732 181,187 772,931 954,119 312,411 1,332,727 1,645,138 1,391,485 5,928,601 7,320,086Survey, Mapping, and Planning 14,297 60,989 75,286 6,559 27,980 34,539 11,309 48,245 59,554 50,372 214,615 264,987Community Organization 99,565 424,736 524,300 45,677 194,856 240,533 78,759 335,980 414,739 350,793 1,494,600 1,845,394Comprehensive Site Development 236,056 1,006,999 1,243,056 108,296 461,981 570,277 186,728 796,571 983,299 831,691 3,543,525 4,375,215Monitoring and Evaluation 45,023 192,066 237,089 20,655 88,114 108,770 35,615 151,931 187,546 158,629 675,860 834,490

02A Watershed Rehabilitation 90,134 384,502 474,636 35,517 151,512 187,029 54,428 232,185 286,613 325,216 1,387,381 1,712,598Survey, Mapping, and Planning 6,778 28,915 35,693 2,671 11,394 14,065 4,093 17,460 21,553 24,456 104,331 128,787Community Organization 21,362 91,127 112,489 8,418 35,908 44,326 12,899 55,028 67,927 77,076 328,809 405,886Comprehensive Site Development 56,117 239,391 295,508 22,113 94,331 116,444 33,887 144,558 178,445 202,480 863,784 1,066,263Monitoring and Evaluation 5,877 25,070 30,946 2,316 9,879 12,194 3,549 15,138 18,687 21,204 90,457 111,661

03A Community-Based ForestManagement 194,950 831,644 1,026,594 80,192 342,097 422,290 111,056 473,758 584,814 651,729 2,781,266 3,432,995Upland 194,950 831,644 1,026,594 80,192 342,097 422,290 111,056 473,758 584,814 651,729 2,781,266Mangrove

04A Support to Forest Protection and Law Enforcement 114,483 212,612 327,095 47,867 88,898 136,765 62,014 115,173 177,187 1,098,996 1,002,771 2,101,767Forest Resources and Demarcation 55,547 103,159 158,706 23,225 43,133 66,359 30,089 55,882 85,971 533,233 486,545 1,019,777Organization of Multisectoral Forest Protection Committee 9,834 18,263 28,097 4,112 7,636 11,748 5,327 9,893 15,220 94,404 86,138 180,542Task Force on Indigenous Cultural Communities and Buffer Zone Management 4,694 8,717 13,411 1,963 3,645 5,607 2,543 4,722 7,265 45,059 41,114 86,172Enforcement Support 44,408 82,472 126,880 18,568 34,484 53,051 24,055 44,676 68,731 426,300 388,975 815,275

05A Consulting Services 357 357 715 0 0 0 0 0 0 293,265 59,970 353,235

06 Interest During Construction 1,030,324 0 1,030,324 876,861 0 876,861 0 0 0 3,910,000 0 3,910,000

Total 1,825,189 3,113,906 4,939,095 1,221,625 1,355,438 2,577,063 539,908 2,153,843 2,693,751 7,670,691 11,159,990 18,830,681


Total2000

Table A3.4: Loan Disbursements, Loan No. 1192-PHI, 1993–2000—continued

1998 1999Category/Component

26 A

ppendix 3

Appendix 3

27

01A Reforestation 0 31,766 136,126 357,377 1,046,728 842,675 645,311 169,342 3,229,325Survey, Mapping, and Planning 0 28,840 72,696 90,655 13,793 1,632 0 0 207,616Community Organization 0 1,252 25,826 86,437 320,461 203,080 122,520 34,216 793,792Comprehensive Site Development 0 1,674 17,162 150,269 663,872 567,969 312,902 77,457 1,791,305Monitoring and Evaluation 0 20,442 30,016 48,601 69,995 209,889 57,669 436,612

02A Watershed Rehabilitation 0 46,619 74,002 111,228 286,384 148,573 84,618 37,283 788,706Survey, Mapping, and Planning 0 13,323 31,128 36,178 11,973 311 0 0 92,913Community Organization 0 16,730 19,657 26,314 72,793 37,774 21,124 27,759 222,151Comprehensive Site Development 0 16,566 18,665 45,303 201,283 110,387 63,494 9,524 465,222Monitoring and Evaluation 0 4,552 3,433 336 101 0 0 8,421

03A Community-Based Forest Management 17,855 62,032 156,802 193,401 392,644 412,706 197,270 50,163 1,482,873Upland 17,855 62,032 156,802 193,401 392,644 412,706 197,270 50,163 1,482,873Mangrove 0 0 0 0 0 0 0

04A Support to Forest Protection and Law Enforcement 3,146 41,087 74,332 54,035 328,239 60,401 23,984 3,998 589,223Forest Resources and Demarcation 3,146 9,306 52,912 30,930 91,264 3,299 4,089 2,100 197,046Organization of Multisectoral Forest Protection Committee 0 0 4,195 12,847 11,800 2,900 35 0 31,776Task Force on Indigenous Cultural Communities and Buffer Zone Management 0 0 155 585 7,976 845 1,904 0 11,464Enforcement Support 0 31,781 17,070 9,674 217,199 53,357 17,957 1,899 348,937

Project Office (National Forestation Developoment Office) 0 200,434 1,663,221 1,488,767 1,578,873 318,132 36,853 14,613 5,300,893

05A Consulting Services 0 0 43,186 0 0 0 0 0 43,186

06 Interest During Construction 0 0 0 0 0 0 0 0 0

Total 21,001 381,938 2,147,669 2,204,809 3,632,867 1,782,487 988,036 275,400 11,434,206


1999 2000 Total

($)Table A3.5: Government Counterpart Funding, 1993–2000

Category/Component 1993 1994 1995 1996 1997 1998

28 A

ppendix 3


1192 Total 1192 Total 1192 TotalSDR US$ US$ US$ SDR US$ US$ US$ SDR US$ US$ US$

01A Reforestation 13,616 19,647 18,295 37,942 5,450 7,317 9,013 16,330 8,166 11,001 9,282 20,283Survey, Mapping, and Planning 339 490 456 946 135 182 225 407 204 274 232 506Community Organization 2,462 3,553 3,308 6,861 986 1,323 1,630 2,953 1,476 1,988 1,678 3,666Comprehensive Site Development 9,961 14,373 13,383 27,756 3,987 5,353 6,593 11,946 5,974 8,049 6,790 14,839Monitoring and Evaluation 854 1,232 1,147 2,379 342 459 565 1,024 512 690 582 1,272

02A Watershed Rehabilitation 5,195 7,497 6,143 13,640 1,906 2,559 2,104 4,663 3,289 4,431 4,039 8,470Survey, Mapping, and Planning 120 172 141 313 44 59 48 107 76 102 93 195Community Organization 987 1,425 1,167 2,592 362 486 400 886 625 842 767 1,609Comprehensive Site Development 3,746 5,406 4,430 9,836 1,374 1,845 1,517 3,362 2,372 3,196 2,913 6,109Monitoring and Evaluation 342 494 405 899 126 169 139 308 216 291 266 557

03A Community-Based Forest Management 9,977 14,396 13,044 27,440 3,217 4,319 3,578 7,897 6,760 9,108 9,466 18,574Upland 6,170 8,903 8,067 16,970 3,217 4,319 3,578 7,897 2,953 3,979 4,489 8,468Mangrove 3,807 5,493 4,977 10,470 3,807 5,129 4,977 10,106

04A Support to Forest Protection and Law Enforcement 5,063 7,307 5,954 13,261 1,973 2,649 2,033 4,682 3,090 4,163 3,921 8,084Forest Resources and Demarcation 3,000 4,330 3,527 7,857 1,169 1,569 1,205 2,774 1,831 2,467 2,322 4,789Organization of Multisectoral Forest Protection Committee 389 561 458 1,019 152 204 156 360 237 319 302 621Task Force on Indigenous Cultural Communities and Buffer Zone Management 160 231 188 419 62 84 64 148 98 132 124 256Enforcement Support 1,514 2,185 1,781 3,966 590 792 608 1,400 924 1,245 1,173 2,418

05A Consulting Services 249 358 359 717 256 344 362 706 (7) (9) (3) (12)

06 Interest During Construction 551 795 6,205 7,000 324 435 3,910 4,345 227 306 2,295 2,601

Total 34,651 50,000 50,000 100,000 13,126 17,623 21,000 38,623 21,525 29,000 29,000 58,000

Table A3.6 Loan Allocation, Cancellation, and Disbursements('000)

1191Category/Component

Amount Cancelled1191

Original Revised1191

Appendix 3

29

1192 Total 1192 TotalSDR US$ US$ US$ SDR US$ US$ US$

01A Reforestation 5,854 8,072 7,320 15,392 (404) (526) 1,693 1,167Survey, Mapping, and Planning 212 292 265 557 (77) (100) (40) (140)Community Organization 1,476 2,035 1,845 3,880 (490) (638) (215) (853)Comprehensive Site Development 3,499 4,825 4,375 9,200 488 636 2,218 2,854Monitoring and Evaluation 667 920 834 1,755 (325) (423) (269) (692)

02A Watershed Rehabilitation 1,440 1,993 1,713 3,706 466 607 391 998Survey, Mapping, and Planning 108 150 129 279 (64) (83) (81) (164)Community Organization 341 472 406 878 21 27 (6) 21Comprehensive Site Development 897 1,241 1,066 2,307 477 621 451 1,072Monitoring and Evaluation 94 130 112 242 32 42 27 69

03A Community-Based Forest Management 2,752 3,809 3,433 7,242 465 606 145 751Upland 2,752 3,809 3,433 7,242 465 606 145 751Mangrove

04A Support to Forest Protection and Law Enforcement 1,819 2,523 2,102 4,625 154 201 (69) 132Forest Resources and Demarcation 883 1,224 1,020 2,244 286 373 185 558Organization of Multisectoral Forest Protection Committee 156 217 181 398 (4) (5) (25) (30)Task Force on Indigenous Cultural Communities and Buffer Zone Management 75 103 86 190 (13) (17) (22) (39)Enforcement Support 705 979 815 1,794 (115) (150) (207) (357)

05A Consulting Services 242 353 353 706 14 18 9 27

06 Interest During Construction 324 447 3,910 4,357 0 0 0 0

Total 12,431 17,197 18,831 36,028 695 906 2,169 3,075Source: Asian Development Bank estimates.

Undisbursed Balance1191

Disbursement1191

Table A3.6 Loan Allocation, Cancellation, and Disbursements—continued('000)

Category/Component

30

Appendix 4

ACTIVITY 1992 1993 1994 1995 1996 1997 1998 1999 2000

Loan Approval

SMP and Appraisal

Community Organizing



Support to Forest Protection

and Law Enforcement

Consultancy Services

Technical Assistance

Equipment Procurement

PCR Preparation

Note: Appraisal Actual

IMPLEMENTATION SCHEDULE AT APPRAISAL AND ACTUAL, 1992–2000

Appendix 5 31

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement

Status 1. The Borrower will cause the Project to be carried out with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental, and forestry procedures. 2. The Borrower will make available, promptly as needed, the funds, facilities, services, land, and other resources, which are required in addition to the proceeds of the Loan, for the carrying out of the Project and for the operation and maintenance of Project facilities. 3. In the carrying out of the Project, the Borrower will (a) engage competent and qualified consultants and contractors, and (b) ensure the Project to be carried out in accordance with plans, specifications, work schedules, and construction methods acceptable to the Borrower and the Bank. 4. The Borrower will maintain or cause DENR to maintain records and accounts adequate to identify the goods and services and other items of expenditure financed out of proceeds of the Loan, to disclose the use, to record the progress. 5. The Borrower will (i) maintain, or cause DENR to maintain, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually; (iii) furnish to the Bank not later than 3 months and 12 months after the end of each fiscal year the unaudited copies, and certified copies of audited accounts and financial statements and audit report, respectively. 6. The Borrower will furnish, or cause DENR to furnish to the Bank, quarterly reports on the carrying out of the Project and on the operation and management of the Project facilities. 7. Promptly after physical completion of the Project, but in any event not later than three months thereafter, the Borrower will prepare and furnish to the Bank the Project Completion Report.

LA (SF) Section 4.01 LA (SF) Section 4.02 LA (SF) Section 4.03 LA (SF) Section 4.06(a)/LA (OCR) Section 4.02 LA (SF) Section 4.06(b) LA (SF) Section 4.07 (b)/LA (OCR) 4.03(b) LA (SF) Section 4.07(c)/LA (OCR) Section 4.03(c)

Complied with. However, in the early stage of the Project implementation was slow because of a long preparatory process. Complied with. Public lands were readily made available to the beneficiaries through FLMAs and CFMAs. The services of DENR staff and equipment and technical training were also provided. Complied with. Complied with. Complied with. However, the last audited financial statements (1999) showed a qualified opinion due to DENR’s failure to conduct physical inventories, reconcile accounts, and so on, which prevented the auditors from verifying the validity of some account balances in the executing agency’s books of accounts. Complied with. Complied with.

Appendix 5 32

Covenant

Reference in Loan

Agreement

Status 8. The Borrower will ensure that the Project facilities are operated, maintained, and repaired in accordance with sound administrative, financial, engineering, environmental, forestry, and maintenance and operational practices 9. National Forestation Development Office (NFDO). (i) The Borrower will cause DENR to establish, prior to the effective date, NFDO to act as Project Office, which will be headed by a Project Director to be appointed prior to effective date; (ii) the Borrower will give priority to using the current staff of NPCO in the assignment of appropriate personnel to NFDO. 10. NFDO, in coordination with the Regional Executive Directors (REDs), the Community Environment and Natural Resources Offices (CENROs), the Provincial Environment and Natural Resources Offices (PENROs), selected NGOs and consultants will select, formulate, and appraise subprojects. 11. Project Coordination. The Borrower will establish a National Forestation Management Committee (NFMC) immediately after effective date to facilitate Project Implementation. 12. Inter-Agency Coordination. The Borrower will cause its various departments and agencies to assist and cooperate with DENR for all purposes required to ensure successful achievement of Project objective, particularly with regard to forest protection and law enforcement. DENR will prepare a proposal to improve inter-agency coordination and submit the same to Bank for review immediately after effective date. The proposal will thereafter be submitted to NFMC for approval. 13. Project Participants and NGOs. The implementation of subproject activities will be carried out by DENR with the active participation of Project Participants under close supervision of NFDO; DENR will ensure that community leaders are consulted in the selection of NGOs and ensure that suitable NGOs participate in subproject implementation. 14. Project Implementation Manual. DENR will cause NFDO to revise and refine existing DENR guidelines concerning procedures and arrangements, including report formats, subproject selection, preparation, implementation, monitoring, and evaluation.

LA (SF) Section 4.09 LA (ADF) Schedule 8, para. 2a LA (ADF), Schedule 8 para. 2b LA (ADF) Schedule 5, para. 3 LA (ADF) Schedule 5, para. 4 LA (ADF) Schedule 5, para. 5 LA (ADF) Schedule 5, para. 6

Complied with. Complied with. NFDO was established per DAO No. 16, S. dated 2 April 1993. Complied with. Complied with. NFMCs with 11 members were established per DAO No. 16 S. dated 3 April 1993. Complied with. Interagency committees were established at the national, regional, and community levels. Complied with. Complied with.

Appendix 5 33

Covenant

Reference in Loan

Agreement

Status 15. Selection of Subprojects. NFDO will (i) select subprojects on a preliminary basis with the assistance of DENR regional offices and NGOs in accordance with criteria. 16. Appraisal of Subprojects. NFDO will carry out, with the assistance of concerned Project consultants, detailed appraisal of subprojects selected for implementation. 17. Approval of Subprojects. NFDO, through its Project Director, will submit the subprojects to the Bank for its prior approval. DENR will conduct Initial Environmental Examinations (IEEs) for all subprojects and submit to Bank together with subproject appraisal report. Core subprojects will implement them immediately and make available to Bank their IEEs. 18. Approval of Small Subprojects. NFDO will appraise and approve small subprojects without prior reference to the Bank, but will submit the same to the Bank for post-facto concurrence and reimbursement 19. Further Processing of Subprojects. Upon approval by Bank or NFDO, NFDO will enter into a suitable reforestation or community-based forest management agreement with concerned Project participants. 20. Revision of Contract Reforestation Regulations. DENR will (i) adopt and promulgate, prior to effective date, revised DENR regulations relating to award and implementation of FLMA; issue, by December 1994, FLMAs on at least 50,000 ha of previously established plantation areas; (iii) ensure that no reforestation subprojects will be financed under the Project unless supported beforehand by FLMAs. 21. Implementation of Guidelines on Community-Based Management of Residual Forest. DENR will adopt and promulgate prior to effective date revised DENR regulations relating to the award and Implementation of CFMAs which will detail the procedures applicable to the selection and identification of CFMA areas.

LA (ADF) Schedule 5, para. 7 LA (ADF) Schedule 5, para. 8 LA (ADF) Schedule 5, para. 9 (a)(b) LA (ADF) Schedule 5, para. 10 LA (ADF) Schedule 5, para. 11 LA (ADF) Schedule 5, para. 12 LA (ADF) Schedule 5, para. 13

Complied with. NFDO identified 342 subproject sites covering 257,640 ha. Complied with. NFDO appraised a total of 236 subprojects consisting of 135 reforestation subprojects, 33 watershed subprojects, 45 Community Forest Program subprojects, and 23 mangrove subprojects covering 132,200 ha. Complied with. ADB has approved 194 subprojects covering a total area of 104,046 ha. Environment Compliance Certificate dated 24 August 1992 were submitted to ADB for all core subprojects. Complied with. However, no small subprojects were identified. Complied with. The Government has issued 154 agreements covering 163,078 ha. Complied with. FLMAs were promulgated by virtue of DAO No 23 S. of 1989, which was amended by DAO No. 22, S. of 1993. Complied with. A single tenurial instrument was devised by virtue of Executive Order 263 and DAO No. 96–29, known as the Implementing Rules and Regulations in the Implementation of Community–Based Forest Management Strategy.

Appendix 5 34

Covenant

Reference in Loan

Agreement

Status 22. Integration of Existing Tenurial Instruments to Promote Community-Based Management of Forest Land. DENR will formulate to the extent feasible, a single tenurial instrument, which (i) integrates the best features of FLMAs and CFMAs and (ii) regulates the different types of community-based forest. DENR will test the use of such instrument in selected subprojects before January 1995. 23. Management and Protection of Critical Watersheds. DENR will promote ecologically sound production activities within the watersheds pursuant to the National Integrated Protected Area Systems Act, and evaluate in consultation with the Bank, the most practical way to ensure that a single government agency will have full responsibility for the rehabilitation of critical watersheds. 24. Protection of Virgin Forests, Control of Illegal Logging, and Enforcement of Regulations. The Borrower and DENR will promote subprojects in forest access points which have already been surveyed and identified; strengthen its support for: (i) the formation of community-based multi-sectoral forest protection committee; (ii) ground and aerial patrolling; (iii) prosecution of forest law violators; and (iv) public awareness activities. 25. Revision of the Forestry Code. DENR will seek to bring about the enactment of a new forestry code (The New Code), which should reflect the radical changes in the Borrower’s resources situation, its forest management and protection experience and corresponding regulatory efforts, and international expertise now available on the subproject of forestry law. The Borrower, through the DENR, will furnish a revised draft of the proposed Forestry Code to ADB. 26. Financial Sustainability of Forest Management. The DENR will study the feasibility of having all or some of the proceeds of forest charges levied by the Borrower under RA 7161 allocated to various DENR development activities; examine the feasibility of establishing a forest management and development fund to be financed, among others, by set-aside from fees and levies in the forestry sector and supplemented grants from interested funding agencies and other sources. 27. Increased Participation of NGOs in DENR Programs. DENR will (i) amend Guidelines (DAO 120, S. of 1989) on participation of the NGOs in DENR programs by more clearly defining the NGOs

LA (ADF) Schedule 5, para. 14 LA (ADF) Schedule 5, para. 15 LA (ADF) Schedule 5, para. 16 LA (ADF) Schedule 5, para. 17 LA (ADF) Schedule 5, para. 18 LA (ADF) Schedule 5, para. 19

Complied with. The executive order on adopting community-based forest management as the national strategy to ensure sustainable development of the country’s forestland resources and provide mechanisms for its implementation was approved on 19 July 1995. Complied with. Presidential Decree 705 provides that the administration control, regulation, and management of the watersheds are functions of the government through DENR. Complied with. A total of 208 MFPCs were formed nationwide. The demarcated forest area was 1,084,782 ha, or about 35% more than the original target of 800,000 ha. Not complied with. The bill was not passed during the last Senate session. However, the bill is being reviewed again in Congress for eventual passage into law. DENR will continue to lobby for enactment of the bill. Not complied with. The proposed management and development fund was not established pending approval of the Senate. However, DENR established the mechanisms of production sharing with people’s organizations through Department Order 98-42. Complied with. (i) DAO 120 s of 1989 was amended by DAO 52, S. of 1992 and supported by Memorandum Circular 20, S. of

Appendix 5 35

Covenant

Reference in Loan

Agreement

Status DENR programs by more clearly defining the NGOs role and extent of their collaboration, (ii) develop and implement a program of training of NGOs in FLMA and CFMA administration, (iii) establish a Task Force on NGOs and (iv) recommend measures to promote DENR collaboration in overseeing and implementing forestry and other natural resources conservation programs. 28. Sector Coordination. DENR will provide necessary support and assistance to the Forestry Sector Coordination Committee (FSCC), which will be chaired by the Secretary of DENR, and will convene regular FSCC meetings at least once in 6 months. 29. Streamlining of DENR and Agency Coordination. DENR will further streamline its organizational structure and realign the functions of its various agencies (especially FMB and the REDs). The Borrower will seek to improve interagency coordination among members of the agro-industrial cluster of the Cabinet of the Borrower, and other relevant agencies. 30. Information Management and Communication. DENR will ensure that on a timely basis, funds are made available to support the gathering, processing, and storage of information relating to the Borrower’s management of its forest resources, the eventual transmittal of said data to end-users especially at the field level, the provision of computer equipment for processing and storage of said data, and the training of personnel who will be involved in data processing and management. 31. Education, Training, and Research. DENR will also make suitable arrangements with concerned educational institutions and offices to evaluate the improvements necessary to upgrade the quality of forestry education; undertake suitable training programs to develop the capabilities of staff. 32. Mid-term Review of Project Implementation. The progress of the Project will be reviewed by the Bank and DENR every year. The Bank and DENR will conduct a mid-term review of the project upon the (i) disbursement of an aggregate amount of $50 million equivalent under both loans, or (ii) lapse of 2

LA (ADF) Schedule 5, para. 20 LA (ADF) Schedule 5, para. 21 LA (ADF) Schedule 5, para. 22 LA (ADF) Schedule 5, para. 23 LA (ADF) Schedule 5, para. 25

Memorandum Circular 20, S. of 1992; (ii) the Project has conducted several training events on surveying, mapping, and planning and community organizing, and consolidation of this training is in process by DENR; (iii) the NGO Desk was established on 14 July 1992 by virtue of DAO No. 36 S. of 1992. Partly complied with. The Forestry Sector Coordination Committee was replaced by the National Forest Management Committee, which was inactive. However, the function of this committee has been taken over by DENR’s quarterly management conference. Complied with. DENR was streamlined during 1996–1997 to delegate authority to the regional offices and to make administrative decisions smoothly. Complied with. Computer equipment was provided under the Project and staff training was carried out. Complied with. University of the Philippines Los Baños has community management in its curriculum. This was covered by the university’s Social Forestry Department. Complied with. The midterm review was held in November–December 1995, although the disbursement of $50 million was not reached.

Appendix 5 36

Covenant

Reference in Loan

Agreement

Status million equivalent under both loans, or (ii) lapse of 2 years from the effective date. 33. Cost Recovery. To ensure the financial sustainability of the subprojects, DENR will faithfully implement the cost recovery mechanism incorporated in the tenurial instruments to be used in subproject implementation. 34. Creating Environmental Awareness. DENR will

provide the necessary support, including adequate financial assistance, to enable the special protection staff of the REDs, PENROs, and CENROs carry out a sustained environmental awareness campaign.

35. Protection of Subprojects from Fire . DENR will formulate and implement a program to strengthen community participation and provide requisite training in the protection of forests. 36. Other Funding Assistance . The Borrower will promptly seek support from funding institutions for applied research in forest plantation management, training in forestry and environment, establishment of seed production area, forest fire management, and forest insect pest and disease management, and (ii) United Nations Volunteer Programme for selected UN Volunteers to assist in the implementation of the community-based forest management activities.

LA (ADF) Schedule 5, para. 26 LA (ADF) Schedule 5, para. 27 LA (ADF) Schedule 5, para. 28 LA (ADF) Schedule 5, para. 29

Partly complied with. The mechanics to be used for the cost recovery is the 75%/25% sharing of the people’s organizations and the DENR as stipulated in DAO 42, S. of 1998. This is also part of the provisions in DAO 23 S. of 1993. The sharing arrangement is being implemented in some subprojects. Complied with. Activities accomplished were (i) publications related to the Project; (ii) documentation of successful subproject sites; (iii) photo exhibit of community-based forest management and Project accomplishments; (iv) press release of forestry issues; (v) production of dictionary of the environment and natural resources; (vi) newsletters; and (vii) advertisements on the radio and television to create environmental awareness. Complied with. The Forest Land Management Plan includes a section on the Fire Protection Control Plan for implementation by people’s organizations and communities. Complied with. Eight projects funded by different external funding agencies were implemented by the Ecosystem Research and Development Bureau.

CENRO = community environment and natural resources offices, CFMA = community forest management agreement, DENR = Department of Environment and Natural Resources, DAO = department administrative order, FLMA = forest land management agreement, FMB = Forest Management Bureau, ha = hectare, IEE = initial environmental examination, NFDO = National Forestation Development Office, NFMC = National Forestation Management Committee, NGO = nongovernment organization, NPCO = National Program Coordinating Office, PENRO = provincial environment and natural resources offices, RED = regional executive director.

Appendix 6 37

TECHNICAL ASSISTANCE COMPLETION REPORT TA No. 1788-PHI Division: SEAE

Amount Approved: $247,000 TA No. and Name TA No. 1788-PHI: Study on the Establishment of Small-Scale Community-Based Forest Industries Project

Revised Amount: -

Executing Agency: DENR Source of Funding: ADB TA Amount Undisbursed $23,272.80

TA Amount Utilized $223,727.20

Date Completion Date Original

28 Feb 1995 Actual

June 1996 Closing Date

Approval

19 Nov 1992

Signing

24 Dec 1992

Fielding of Consultants

June 1994 Original

June 1996 Actual

June 1996 Description In 1992, the Asian Development Bank (ADB) approved two loans to the Government of the Philippines for the Forestry Sector Project (FSP). The objectives of the Project were to (i) reverse the process of upland and mangrove forest degradation, (ii) ensure long-term sustainability of the sector investments through broad-based community participation, (iii) enhance environmental rehabilitation through forest protection and law enforcement, and (iv) reduce poverty and augment income-earning opportunities of the rural communities in the project areas. Rural communities under the FSP were expected to produce large quantities of forest-based products such as logs, poles, construction material, rattan and resin on a sustainable basis. However, project beneficiaries did not have capacity to process expected timber products (logs and other minor forest products). The establishment of small-scale forest-based industries in project areas was expected to produce greater benefits to the communities in terms of rural employment and income when harvested materials are processed and marketed as semi-finished or finished products. This was expected to create a more enduring basis for community development, which was one of the primary objectives of the FSP. Assistance was needed to determine the type of forest-based processing enterprises that would be viable, extent of processing to be done, manner of financing these enterprises, and identify linkages and support systems, such as marketing and material input sources, that must be established to ensure viability of the ventures. The communities in the Project also needed to be assisted in developing simple systems and procedures to organize, register, and operate small-scale forest-based industries. Objectives and Scope The objective of the TA was to examine the feasibility of establishing small-scale industries based on wood and non-wood forest resources such as rattan, bamboo, nipa, and resin in the project area. The TA was to provide information on (i) technical and financial viability of establishing small-scale forest-based processing units in representative subproject locations; (ii) the need and nature of financing for the establishment of selected processing units including necessary market linkages and support services; and (iii) the procedures and legal instruments necessary to involve the communities in the implementation and operations of different types of processing ventures. Evaluation of Inputs A total of 20 person-months (pm) of consulting services were provided, 8 pm by international consultants from GOPA-Consultants (Germany) specializing in wood industry development and m arketing, and 12 pm by domestic consultants from Pacific Rim Innovation and Management Exponents, Inc (Philippines) specializing in small-scale forest-based industries, vocational training, and financial analysis. The TA was implemented over six months, as scheduled. The team of consultants initially carried out a review of available data relevant to the study, held meetings with parties concerned from the Government, non-government organizations, research and academic institutions, and representatives of various industries. They made field visits and selected four pilot sites to conduct the study: Labo in Camarines Norte, Natividad in Pangasinan, New Corella in Davao del Norte and Banacon Island in Bohol. The selection was done in consultation with project communities and DENR under the following criteria: (i) availability of raw materials from sustainable sources, (ii) possibility for one-step upgrading or processing, (iii) potential for high-value products, (iv) employment-generating potential of the venture, (v) potential for generating rural income, (vi) sustainability and financial viability of the proposed projects, (vii) with minimal adverse impact on the environment, and (viii) should comply with DENR guidelines on community-based reforestation program. Additional requirements were imposed for the selection of potential industries in the communities to be included. These were (i) community support to the Project; (ii) availability of land for use of the project; (iii) presence of natural and plantation forests accessible to the communities; (iv) existence of basic infrastructures (i.e. roads, water and power supply); and (v) availability of manpower resources.

Appendix 6 38

The performance of the consultants was partly satisfactory, as produced output was only partly applicable to the project communities and it was never adopted. Evaluation of Outputs At the end of the study period, the consultants submitted a two-volume final report consisting of (i) project background, profiles/summaries of the selected indus tries, and guidelines for the promotion of feasible small-scale industries; and (ii) details of the feasibility studies and description of livelihood opportunities. The report provided profiles of viable industries that could be promoted in areas where raw materials were adequately available and where there were potentials for high-value and marketable products. There were two main groups of industries/projects that were identified, and for which feasibility studies were conducted. These were the short-term and the medium/long-term projects. The short-term projects were (i) handicraft-making, (ii) small-diameter log grading, (iii) coconut husk processing, (iv) hand-made pulp production, (v) hand-made paper-making, (vi) cut flower and cut foliage production, and (vii) sericulture. The medium/long-term projects were (i) eco-tourism, (ii) reforestation, (iii) rattan production, (iv) bamboo craft, (v) essential oil extraction, (vi) resin and oil production, (vii) cashew nut processing, (viii) bio-organic fertilizer production, and (ix) mangrove utilization. The technologies proposed by the consultants were not forest-based as envisaged in the terms of references, and not innovative. Some of the recommendations seem not feasible considering current socioeconomic conditions of project beneficiaries. The communities never adopted any of the recommended wood processing technologies, but it might be too early to evaluate the outputs of the TA as the reforested areas are yet to produce commercial timber. However, the outputs of the TA might be outdated by the time of their potential operation. The TA did not produce any substantial procedures and legal instruments needed to encourage communities to organize small-scale forest-based processing units envisaged at appraisal. Overall Assessment and Rating Based on the inputs and outputs evaluation, the TA is considered unsuccessful in meeting its objectives and scope. Although the design of the TA was appropriate in the framework of the FSP, its outputs were not utilized for lack of opportunity. Major Lessons Learned The major lessons learned during TA implementation are as follows: (i) target beneficiaries and prospective entrepreneurs should be involved in the identification and conduct of feasibility study on forest-based industries; (ii) consultants should have been engaged and fielded when the project has had substantial accomplishment in the tree plantations and POs were well established; and (iii) the design of the TA should have considered examination of new technologies in processing, packaging, and marketing new products.

Recommendations and Follow-Up Actions To assist the communities in establishment and operation of the small-scale forest-based processing units at the time of the timber harvest, it is recommended that

(i) DENR produce comprehensive information materials (e.g. brochures) on small-scale forest-based industries identified as viable and suitable. These materials should be disseminated to POs in subprojects sites (and translated to the local dialect) where the raw material base is available.

(ii) The regional offices should regularly monitor the development of forest-based enterprises and be prepared to assist where appropriate, in management and growth of the ventures; and

(iii) DENR should find ways to enable POs to qualify for financial assistance from local funding institutions (i.e. Development Bank of the Philippines, Land Bank of the Philippines).

Prepared by

Tetsuro Miyazato

Designation

Senior Water Resources Specialist

Appendix 6 39

TECHNICAL ASSISTANCE COMPLETION REPORT TA No. 1789-PHI Division: SEAE

Amount Approved: $490,000 TA No. and Name

TA No. 1789-PHI: Monitoring and Evaluation of Sector Activities Project

Revised Amount: -

Executing Agency: DENR Source of Funding: ADB TA Amount Undisbursed $57,565.45

TA Amount Utilized $432,434.55

Date Completion Date Original

June 1996 Actual

June 1996 Closing Date

Approval

19 Nov 1992

Signing

24 Dec 1992

Fielding of Consultants

1995–1996 Original

June 1996 Actual

June 1996 Description An advisory technical assistance (AOTA) piggy-backed to he Program loan was approved in 1988 to redesign Department of Environment and Natural Resources (DENR) system for selection, appraisal, and monitoring of forestation projects and to introduce a system of periodic appraisal of field level accomplishments. Although, this assistance enabled DENR to initiate systematic measures for selection, appraisal, and monitoring of accomplishment of targets, the monitoring and evaluation of benefit impact, particularly those related to social and economic effects, was not satisfactory. When in 1992, the Asian Development Bank (ADB) approved two loans to the Government of the Philippines for the Forestry Sector Project (FSP), the need for institutional strengthening of benefit monitoring and evaluation became apparent. DENR needed the technical assistance to enable it to review and analyze the current system of monitoring and evaluation, with particular attention to practicability, applicability, and costs. The assistance was also needed to (i) study and propose systems for expediting progress payments during project implementation; (ii) develop field tests and appropriate measures to improve benefit monitoring so that it could be more efficient, accurate and cost effective; and (iii) design a revised and strengthened monitoring system based on periodic and interactive field appraisals that focus on impact assessment in four key areas, namely, behavioral changes of target communities, institutionalization of these behavioral changes, the effect of these changes on income and socioeconomic development of target communities, and effects on forest conservation, protection, management, and reforestation. Further assistance was required to assess manpower resources for monitoring and evaluation; identify suitable nongovernment organizations (NGOs) to monitor sector investments; assess the conduct of NGOs and DENR staff in implementing the monitoring and evaluation system; inventory area-specific subprojects in reforestation, community-based forest management, critical watershed rehabilitation and enforcement of forestry laws; determine sampling procedures to verify baseline data and report progress in various project components; and help formulate an appropriate training program for local staff. Objectives and Scope The objectives of the technical assistance were to (i) strengthen and complement DENR’s existing monitoring and evaluation system; and (ii) redesign and redirect monitoring and evaluation procedures based on the findings of the TA. The TA was to be implemented in close coordination and consultation with the Field Operations Office and Foreign-Assisted and Special Projects Office of DENR, which is responsible for coordination of monitoring of project activities to guarantee objectivity of monitoring and evaluation task. The consultants were to work in close coordination with NGOs. Evaluation of Inputs The TA utilized 36 person-months (pm) of consulting services, consisting of one international expert on forestry project monitoring and evaluation for 12 pm, and 24 pm of domestic consultants and NGO services. The international consultant was provided by SGS Silviconsult, Ltd. (Sweden), which engaged the services of one individual local specialist, and St. Augustine Sambali Fund, Inc., an NGO based in Iba, Zambales Province. The NGO assisted in the survey of 24 subproject sites. The consultants first carried out an assessment of the status of monitoring and evaluation effort within DENR and then created a Benefit Monitoring and Evaluation (BME) system, which was field-tested in 24 subproject sites in 10 regions of the country. The Terms of Reference for the study were clear and comprehensive, and the design of the TA was considered adequate to achieve its objectives. The performance of the consultants, however, was partly satisfactory, as the designed BME system was never used during the project implementation.

Appendix 6 40

Evaluation of Outputs During the assessment of of the status of monitoring and evaluation system consultants identified following shortcomings: (i) There were at least 17 offices / organizations involved in community forestry approach, with their own monitoring and evaluation activity, large uncoordinated with each other; (ii) the information flow and administrative structures of DENR was highly centralized and complex, and hence, prone to irregularities, distortions, and delays; (iii) Information was collected by various parties at different stages in uncoordinated ways; (iv) DENR’s information structure could not handle large information and fund flows; (v) The monitoring and evaluation (M&E)/ Management Information Systems (MIS) system of the National Forestation Development Office (NFDO) was mainly focused on billing and disbursements, and did not measure progress in economic growth, poverty alleviation and social equity, and ecological balance; (vi) Inspection Chart Mapping, which was used to monitor reforestation accomplishment, was costly and inefficient; (vii) DENR’s physical monitoring of accomplishment in rattan plantations, assisted natural regeneration, and timber stand improvement were not implemented in the field due to lack of trained personnel, equipment, field procedures, and funds; (viii) survey, mapping, and planning maps and reports were inadequate; and (ix) there were no incentives for staff to promote responsible use of information and increase performance quality. The consultants submitted a final report in June 1996, which outlined a revised system of monitoring and evaluation of benefits in DENR’s forestry projects. The system has two major components: (i) data collection on socioeconomic biophysical, environmental information; and (ii) data processing and analyses. Three M&E modules were developed in close cooperation with DENR staff, NGOs, and the communities, and field-tested. The modules were intended to complete existing M&E system in DENR, and make it more efficient, accurate, and cost-effective. These modules were (i) Socioeconomic (SEME) Module, (ii) Biophysical (BPME) Module, and (iii) Environmental (EME) Module. During the field tests in 24 subprojects sites, the system was proven effective in carrying out M&E work for the Forestry Sector Project. To institutionalize use of the modules, the consultants created a software package to be integrated into the MIS of DENR, and proceeded to do the following tasks: (i) set up a local area network (LAN) within DENR, (ii) install the BME modules into the LAN, (iii) conducted training in use of the LAN and BME modules, (iv) drafted guidelines and the enabling DENR official memorandum circular to incorporate the use of BME into DENR’s institutional structure, and (v) conduct continuing dialogue with NGOs and communities on BME. The consultants organized 13 training workshops on BME use over the two-year period (1994–1996). Overall Assessment and Rating Despite the major effort of overhauling the M&E system of DENR, involving extensive field tests and training of end-users over the two years of TA implementation, DENR was unable to internalize the revised process. This revised M&E system came at a time when computers were just being introduced to DENR staff. At that time the revised system was found to be inappropriate for the technical capacity of the DENR and, therefore, difficult to use. Non-operational BME system significantly hindered the implementation of the FSP. With increased technical capacity of the DENR, parts of the system are now being used in benefit monitoring and evaluation of forestry projects. Eventual application of the entire system is expected when regional offices reach a technical capacity required by the system. TA implementation was rated as partly successful. Major Lessons Learned The major lessons learned during the TA implementation were: (i) the proposed revision of the M&E system should take into account the present technical capacity of the implementing agency; (ii) BME system should be in place before the implementation of the project. Recommendations and Follow-Up Actions It is recommended that (i) DENR take immediate steps to make full use of the M&E process developed by the TA, either by carrying out the field surveys exclusively for all subprojects, under the Forestry Sector Project, or by complementing DENR’s exis ting MIS; (ii) analyses of field data must be carried out as an on-going activity so that they provide sound bases for decision-making in the DENR leadership; and (iii) DENR should consider decentralizing benefit M&E work to the regional offices, which should be given adequate fund support to effectively carry out the task. Prepared by

Tetsuro Miyazato

Designation

Senior Water Resources Specialist

Appendix 7 41

Appraisal ActualItem (no.) (no.)Transport Vehicle/Equipment

4x4 15 120 Serviceable4x2 1 1 ServiceableTruck 15 0AUV 153 0Motorcycle 0 4 ServiceableBoat 10 8 Serviceable

2 Unserviceable

Fire Fighting Equipment and ToolsBinoculars 208 87 ServiceableCompass 208 72 Serviceable

3 For RepairFirst Aid Kits 238 0

RadiosBase Radio 247 15 Serviceable

4 UnserviceablePortable 460 51 ServiceableMobile 55 0

Office EquipmentComputer 91 12 Serviceable

1 UnserviceableCamera 92 0Typewriter 185 32 Serviceable

CabinetsSteel Cabinet 502 13 ServiceableMap Cabinet 317 13 Serviceable

AUV = asian utility vehicle.Source: Department of Environment and Natural Resources.

LIST OF EQUIPMENT, TOOLS, AND VEHICLES PROCURED

Condition during PCR

Appendix 8 42

ECONOMIC ANALYSIS 1. This Appendix provides details of the economic analysis of the Project. The economic analysis is undertaken on the basis of the methodology used at project appraisal. The economic internal rate of return (EIRR) is estimated for the core subprojects and for the entire Project. 2. The financial analysis was not undertaken, because the Project is not a financial entity and the costs of production were subsidized.

A. Major Assumptions

3. Economic analysis is based on the assumptions outlined in the following subsections.

1. Prices

4. All project effects are expressed at the domestic price level in national currency. Prices used in the analysis are expressed in constant 2003 levels. The economic prices, at the farm gate, of internationally traded agricultural outputs and inputs are based on world market prices from the World Bank’s Global Economic Prospects 2003.1 These prices were adjusted to a 2003 level using the World Bank’s manufactures unit value index. Adjustments have also been made for quality, freight, insurance, handling, inland transport, and processing. The economic prices of timber are calculated by adjusting domestic stumpage prices (local market prices less production costs and profit margin) by the existing export tax of 20% on logs. 5. Economic prices for traded commodities, originally expressed at border price levels, are converted to domestic prices using a shadow exchange rate factor of 1.2, which is recommended by the Investment Coordination Committee of the National Economic and Development Authority of the Republic of the Philippines. 6. Based on the legislated minimum wage of P167 per day for plantation agriculture and P147 per day for nonplantation agriculture, the economic analysis uses a wage rate of P167 per day adjusted by the shadow wage rate factor of 0.7 (estimated using the data collected during the Project Completion Report Mission).

2. Period of Analysis

7. The economic life of the Project is assumed to be 30 years, from 1993 to 2022.

3. Project Costs

8. The economic costs for the total project are based on actual investment costs incurred between 1993 and 2000. Investment costs are adjusted to a constant year 2003 base price by adjusting the domestic cost element by the consumer price index and the foreign cost component by the manufactures unit value index. For the purposes of the analysis, the costs pertaining to support to forest protection and law enforcement, consulting services, and the project office are appropriately apportioned between subprojects. The Mission did not find evidence of maintenance of timber plantations. Thus operations and maintenance costs pertain to agroforestry only. These were collected from farming models presented by the Department of Environment and Natural Resources.

1 World Bank. 2003. Global Economic Prospects and the Developing Countries 2003 . Washington D.C.

Appendix 8 43

4. Project Benefits

9. The economic benefits of the Project that were considered at appraisal arise from the incremental production of project outputs. The estimation of the benefits is limited to the participating beneficiaries of the Project. 10. These benefits are represented by two groups of benefits identified in this analysis: reforestation and agroforestry. The economic benefits from reforestation are derived from selective logging in reforestation areas only. Thus timber production does not occur in watershed protection and assisted natural regeneration areas. The economic benefits from agroforestry arise from the introduction of high-yield fruit trees, the increase in rice cultivation areas, and the incremental production of fuelwood. 11. Project benefits are the difference between the stream of net farm income with the project and without the project. The calculations assume that no substantial changes in production and income levels were expected in the project area without the Project. Table A8.1 presents the assumptions regarding the yields and harvesting schedule. 12. The analysis does not include unquantified benefits. These primarily include benefits from institutional strengthening of the beneficiaries and potential environmental benefits, such as the improved water retention in the uplands resulting from more trees, higher soil fertility, and reduced soil erosion. B. Economic Performance

13. The results of the EIRR calculation for core subprojects and the Project as a whole are presented in Table A8.2. The base case EIRRs for core subprojects are 10% for Natividad, 16% for Bugallon, 12.5% for Sta. Cruz, 13.6% for Labo-Capalonga, and 12.7% for Sta. Elena, compared with appraisal estimates of 16.3%, 16%, 20.1%, 20.3%, and 24.8%, respectively. The Luquin core subproject was cancelled after incurring costs of P228,000. The Bugallon subproject is one of the few subprojects that attained a level of economic performance envisaged at appraisal. This occurred because of the full achievement of physical targets, explained by the strong community leadership greatly assisted by the nongovernment organization (Institute for Development Alternatives). The base case EIRR for the entire Project is estimated at 9.3%. This low EIRR can be explained by the significant reduction in project targets along with the disproportionate savings in project costs. The estimated EIRR is based on the assumption of selective logging for timber production. Based on the assumption that the remaining trees should have an economic value greater than their timber value, the Project is still economically viable even though the project EIRR is below the opportunity cost of capital of 12%. 14. The Project’s economic performance is based on existing government policies in the forestry sector, which have sometimes been inconsistent with respect to project objectives. Local timber prices are distorted by existing trade restrictions and the noncompetitive market structure of the domestic wood processing industry. The Ecosystems Research and Development Bureau reports that forest farmers face a serious marketing problem of low product prices caused by (i) limited options for selling their products and their resulting limited bargaining power in relation to buyers, and (ii) poor farm to market roads and inadequate price and market information.

Appendix 8 44

15. In most cases, farmers sell logs that have low value added. Farmers depend on traders who provide financing as their market outlet. The poor quality of farm to market roads, which are impassible during heavy rains, contributes to buyers’ high market entry costs. Combined with the protective measures undertaken by the Government (e.g., export tax on logs and import tariffs on processed wood products), all these factors lead to an uncompetitive market structure of the domestic wood processing industry, making forest farmers price-takers. 16. Sensitivity analysis shows that an additional decrease in output prices by 10% will result in an EIRR of 8.6%.

Appendix 8 45

CommodityUnit of

Measure

Production Forest Narra 4,090 Sawlog m3 25 120 6,100 7,320 Fuelwood m3 10 30 450 540 Mahogany 6,920 Sawlog m3 25 175 4,600 5,520 Fuelwood m3 10 30 420 504 Gmelina 6,855 Sawlog m3 15 220 1,900 2,280 Fuelwood m3 6 15 320 384 Eucalyptus 1,300 Sawlog m3 15 175 3,800 4,560 Poles m3 10 60 1,900 2,280 Fuelwood m3 7 50 400 480 Acacia Auriculiformis 1,360 Sawlog m3 15 175 4,400 5,280 Fuelwood m3 5 15 350 420 Mangium 4,430 Sawlog m3 15 175 4,400 5,280 Fuelwood m3 5 15 350 420 Agoho 380 Sawlog m3 30 110 3,800 4,560 Fuelwood m3 10 15 420 504 Pine 340 Sawlog m3 21 110 3,700 4,440 Fuelwood m3 10 and 15 20 400 480 Falcata 1,530 Sawlog m3 10 200 1,050 1,260 Fuelwood m3 5 15 320 384Protection Forest 3,540Timber Stand Improvement 1,115Assisted Natural Regeneration 1,692Rattan Plantation 3,250 Poles lm 10 and 20 2400 10 10Bamboo 415 Poles poles 2–30 400 20 20Agroforestry 1,775 Mango ton 600 8 6 20,000 Fuelwood m3 800 6 and 12 100 500 Rice ton 375 1–25 2.3 8,461lm = linear meter, m

3 = cubic meter.

Area Allocation

(ha)Years to Harvest

Yield per hectare

Stumpage Price (P)

Economic Price (P)

Table A8.1: Assumptions

46

Appendix 8


A. Natividad Watershed Rehabilitation Core SubprojectItem 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020Project Investments 6 2,043 2,309 2,245 2,792 2,381 292 101Economic Benefits 0 0 0 0 0 0 0 65 313 0 0 0 204 36,898 0 6,546 Narra 101 5,502 Mahogany 16 1,043 Gmelina 313 27,290 A. Auri 33 4,865 Mangium 32 4,657 Pine 86 86Net Incremental Benefits -6 -2,043 -2,309 -2,245 -2,792 -2,381 -292 -36 313 0 0 0 204 36,898 0 6,546EIRR 9.97%

B. Bugallon Reforestation Core SubprojectItem 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020Project Investments 277 2,269 2,527 2,454 2,444 2,137 292 101Economic Benefits 0 0 0 0 0 0 0 213 0 898 432 432 4,941 82,516 1,440 5,787 Mahogany 68 4,347 Eucalyptus 752 4,289 50,035 A. Auri 213 31,185 Agoho 8 Agroforestry 146 432 432 576 1,296 1,440 1,440Economic O&M costs 160 160 160 160 160 160 219 219 219 219 219 219 219Net Incremental Benefits -277 -2,269 -2,527 -2,614 -2,603 -2,296 -452 -48 -160 679 213 213 4,722 82,297 1,221 5,568EIRR 16.02%

Table A8.2: Economic Internal Rate of Return

EIRR = economic internal rate of return, O&M = operation and maintenance.

A

ppendix 8 47


C. Sta. Cruz Watershed Rehabilitation Core SubprojectItem 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020Project Investments 1,581 4,617 4,791 3,807 4,058 3,634 4,087 101Economic Benefits 0 0 0 0 0 0 0 624 24 534 0 0 3,066 129,075 0 0 Gmelina 24 2,098 Eucalyptus 534 3,043 35,501 A. Auri 472 69,181 Mangium 152 22,295 Agoho 23Net Incremental Benefits -1,581 -4,617 -4,791 -3,807 -4,058 -3,634 -4,087 523 24 534 0 0 3,066 129,075 0 0EIRR 12.47%

D. Labo-Capalonga Community-Based Forest Management Core Subproject Item 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020Project Investments 6 159 492 2,457 3,021 2,607 4,087 101Economic Benefits 0 0 0 0 0 0 0 34 0 487 1,440 1,440 4,523 9,310 7,200 16,604 Narra 122 6,588 Mahogany 82 5,216 Mangium 34 4,990 Rattan 2,400 2,400 Agroforestry 487 1,440 1,440 1,920 4,320 4,800 4,800Economic O&M costs 236 236 236 236 236 236 453 453 453 453 453 453 453Net Incremental Benefits -6 -159 -492 -2,692 -3,021 -2,607 -4,087 -67 0 33 987 987 4,070 8,856 6,747 16,151EIRR 13.57%

Table A8.2: Economic Internal Rate of Return—continued


48

Appendix 8

E. Sta. Elena Community-Based Forest Management Core SubprojectItem 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020Project Investments 6 159 4,154 3,033 4,480 1,198 292 101Economic Benefits 0 0 0 0 0 0 0 76 0 498 1,600 1,600 2,558 15,888 5,333 30,101 Narra 243 13,176 Mahogany 181 11,592 Mangium 76 11,088 Rattan 0 0 Agroforestry 498 1,600 1,600 2,133 4,800 5,333 5,333Economic O&M costs 280 280 280 280 280 280 497 497 497 497 497 497 497Net Incremental Benefits -6 -159 -4,154 -3,313 -4,759 -1,478 -572 -305 -280 1 1,103 1,103 2,061 15,391 4,837 29,605EIRR 12.68%

F. Overall ProjectItem 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020Project Investments 2,090 51,043 129,886 200,371 513,588 535,968 244,769 291,704Economic Benefits 0 0 0 10,618 10,983 10,983 10,983 24,570 62,828 15,663 32,583 32,583 313,234 3,024,510 160,983 3,166,196 Narra 19,877 1,077,797 Mahogany 31,389 2,005,416 Gmelina 11,845 1,031,540 Eucalyptus 4,680 26,676 311,220 A. Auri 2,570 376,992 Mangium 8,373 1,227,996 Agoho 862 Pine 979 979 Falcata 2,644 115,668 Rattan 78,000 78,000 Bamboo 3,320 3,685 3,685 3,685 3,685 3,685 3,685 3,685 3,685 3,685 3,685 3,685 3,685 Agroforestry 7,298 7,298 7,298 7,298 7,298 47,298 7,298 28,898 28,898 36,098 72,098 79,298 79,298Economic O&M costs 6,985 6,985 6,985 6,985 6,985 6,985 6,985 9,493 9,493 9,493 9,493 9,493 9,493Net Incremental Benefits -2,090 -51,043 -129,886 -196,738 -509,590 -531,970 -240,771 -274,119 55,844 8,678 23,090 23,090 303,742 3,015,018 151,490 3,156,703EIRR 9.32%

Table A8.2: Economic Internal Rate of Return—continued


asian development bank pcr:phi 24266 · philippines 1191(sf)/1192 forestry sector project republic...

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