India - National Social Forestry Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5591b-IN STAFF APPRAISAL REPORT INDIA NATIONAL SOCIAL FORESTRY PRO.JECT May 20, 1985 South Asia Projects Office Department General Agriculture Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  EXCHANGE RATE US$1 = Indian Rupees 12 WEIGHTS AND MEASMRES Metric System ABBREVIATIONS AND ACRONYMS ACF - Assistant Conservator of Foresters Addl. CCF - Additional Chief Conservator of Forests Add'I IGF - Additional Inspector General of Forests CCF - Chief Conservator of Forests CF Conservator of Forests CIDA - Canadian International Development Agency DCF - Deputy Conservator of Forests DEA - Department of Economic Affairs DFO - Divisional Forest Officer DIGE - Deputy Inspector General of Forests FD - Forest Department FG - Forest Guard FR - Forest Ranger Fr - Forester FRET - Forestry Research, Education and Training Project FRI - Forest Research Institute GOI - Government of India GOG - Government of Gujarat GOHP - Government of Himachal Pradesh GOR - Government of Rajasthan GOUP - Government of Uttar Pradesh HP - Himachal Pradesh ICAR - Indian Council of Agriculture Research ICB - International Competitive Bidding ICFRE - Indian Council of Forestry Research and Education ICRAF - International Center for Research on Agroforestry IDA - International Development Association IGF - Inspector General of Forests LCB - Local Competitive Bidding M&E - Monitoring and Evaluation NCA - National Commission on Agriculture NCAER - National Council of Applied Economic Rerearch NSFP - National Social Forestry Project ODA - Overseas Development Agency SFW - Social Forestry Wing SAU - State Agricultural University SIDA - Swedish International Development Agency T&V - Training and Visit System of Agricultural Extension UP - Uttar Pradesh USAID - United States Agency for International Development VFJW - Village Forestry Worker  FOR OMCIAL USE ONLY INDIA NATIONAL SOCIAL FORESTRY PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. INTRODUCTION ......................................................... I II. BACKGROUND... 1 A. Forestry in India. ............. . 1 Governmuent of India Policies for Social Forestry. . 2 B. The Bank's Role in Indian Social Forestry ...... 3 Uttar Pradesh Social Forestry Project ................ . . 4 Gujarat Community Foresty Project ... 5 West Bengal Social Forestry Project . . . 6 Jamnu and Kashmir and Haryana Social Forestry Project .. 7 Karnataka Social Forestry Project. . . 8 Kerala Social Forestry Project .. 8 C. Lessons Learned .. 9 TII Lessn LeROJECT ............................................... 13 III. THE PROJECT............................................13 A. Project Objectives and Rationale . . .13 B. General Features .. ..... 13 C. Detailed Features ....14 Plantation Program ..........14 Nurseries and Seedling Distribution . . .17 Plantation Techniques. . ....... 18 Project Review ....22 Infrastructure and Institutional Support . . .22 Training ....24 Research and Studies ...... ................ ... 24 Wood Saving Devices ...... ...25 Uttar Pradesh ....26 Rajasthan ....27 Gujarat .... .............. 28 Himachal Pradesh ....29 IV. ORGANIZATION AND MANAGEH E NT. . .......... 32 V. COST ESTIMATES AND FINANCING ................................ 36 A. Cost Estimates ........................................... 36 B. Proposed Financing ....................................... 39 C. Procurement ...............................*............. 40 l This document ha a resticed ditrbutionand may be used by rcpients only n the performance of tbei offaiad dute Its wotents may not oterwine be disdosd without Wold Bank authoiatioa  -ii- Table of Contents (continuation) PaRe No. qqqqqqD. Disbursement ............................................. 42 E. Accounts and Audit ...... ................................. 44 VI. PRODUCTION, MARKETING. FINANCIAL RESULTS AND COST RECOVERY 45 A. Production . ................. 45 B. Marketing of Produce.. ....... 46 C. Financial Results and Cost Recovery. .... 48 VII. BENEFITS AMND RISKS ....... .................................. 52 A. Benefits ......................... ....................... 52 Institutional Development ............. .. .............. 52 Production Impact ............. ........................ 53 Conservation ...................... .................... 53 Employment Generation ............... .. ................ 54 B. Economic Analysis .................... ................... 54 C. Sensitivity Analysis ................. .. ................. 56 D. Project Risks ...................... ..................... 57 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS ................. ... 58 List of Tables 3.01 - Plantation Program ........................................ 15 3.02 - Number of Trees per Hectare, by Plantation Model ......... . 20 3.03 - Key Incremental Staff to be Added Under NSFP ............. . 23 5.01 - Project Cost Summary by State Components ................. . 37 5.02 - Summary of Project Cost by Category of Expenditure ........ 38 5.03 - Project Financing ......................................... 39 5.04 - Procurement Arrangements .................................. 41 6.01 - Estimated Production at Full Development ......... ......... 46 6.02 - Financial Rates of Return and Cost Recovery .............. . 40-51 7.01 - Economic Rates of Return and Sensitivity Analyses ......... 56 List of Annexes Annex 1-A - Expenditures on Social Forestry during tne Sixth Five Year Plan Annex 1-B - Physical Achievements in Social Forestry during the Sixth Five Year Plan Annex 2 - Comparative Figures on IDA-Financed Social Forestry Projects Annex 3 - Species Information Annex 4 - Summary Cost Tables for Each State  -lll- Table of Contents (continuation) Annex 5, page 1 - Disbursement Schedule Annex 5, page 2 - U.P. Social Forestry/Cr. 925-IN Disbursement Profile Annex 5, page 3 - Gujarat Community Forestry Cr. 961-IN Disbursement Profile Annex 5, page 4 - West Bengal Social Forestry Cr. 1178-IN Disbussement Profile Annex 5, page 5 - Raryana and Jammu and Kashmir Social Forestry Cr. 1286-IN Disbursement Profile Annex 6 - Economic Cost and Benefit Streams Annex 7 - Summary of Financial and Economic Prices Annex 8 - Selected Documents and Data Available in the Project File OrRanizational Charts Chart 1 27197 - Proposed Organization in Uttar rradesh Chart 2 27192 - Proposed Organization in Rajasthan Chart 3 27198 - Proposed Organization in Gujarat Chart 4 27203 - Proposed Organization in Himachal Pradesh Map6 World Bank 18865 - India World Bank 18866 - State of Gujarat World Bank 18867 - State of Uttar Pradesh World Bank 18868 - State of Rajasthan World Bank 18869 - State of Uttar Pradesh Project Files Project files Cl through C6, listed in Annex 8, are available in printed copies.  INDIA NATIONAL SOCIAL FORESTRY PROJECT Credit and Proiect Summary Borrower: India. BeNeficiaries: The States of Gujarat, Himachal Pradesh, Rajasthan and Uttar Pradesh and the Government of India's Ministry of Environment and Forests. Amount: SDR 166.1 Million (US$165.0 M equivalent) Terms: Standard. On-lendinz Terms: From GOI to the Governments of Gujarat, Himachal Pradesh, Rajasthan and Uttar Pradesh as part of Central assistance for State development projects on terms and conditions applicable at the time. GOI would bear the foreign exchange risk. Proiect Description: The project would provide continuing assistance initiated under earlier credits to two states (Uttar Pradesh and Gujarat) to expand and improve their social forestry activities, and would initiate investment in two other states (Himachal Pradesh and Rajasthan). It would increase supplies of fuelvood, small timber, poles, bamboo, fodder and other minor forest products. It would also strengthen institutional capabilities including the strengthening of the Central Social Forestry Support Office, for better planning and management of forestry resources, through provision for additional staff, training of existing personnel, research and additional vehicles and equipment. Wood balance and other studies would be carried out, and programs would be conducted to promote fuel saving devices. There are no major project risks. However, shortage of funds could become a problem if the States over-extend themselves on forestry programs. To minimize this risk the States would inform the Association of any major developments concerning their social forestry programs to enable the Association to evaluate the impact, if any, which these developments might have on project-financed activities. An additional risk is that farmers may favor planting of and saturate the market for higher value products. However, wood balance studies to be undeitaken and continuous monitoring including the proposed mid-term review would effectvely minimize this risk.  Estimated Cost: 1/ (US$ Million) Local ForeisRn Total Incremental Staff 35.3 - 35.3 Civil Works 17.2 0.9 18.1 Vehicles and Equipment 8.1 1.6 9.7 Incremental Operating Costs 21.3 0.7 22.0 Training 3.8 0.4 4.1 Technical Assistance, Studies and Research 0.5 - 0.5 Plantation Activities 162.2 1.6 163.8 Total Baseline Costs 248.3 5.2 253.5 Physical Contingencies 11.2 0.3 11.5 Price Contingencies 61.9 0.9 62.8 Total Project Costs 321.3 6.4 327.8 jj Including taxes and duties of US$3.93 N equivalent. Financint Plan: Us$ Million Local ForeiRn Total GOIIGOG/GOUP/GOFP/GOR 82.3 0.5 82.8 USAID 79.0 1.0 80.0 IDA 160.0 5.0 165.0 TOTAL 321.3 6.5 327.8 Estimated Disbursements: (US$ million) IDA FY FY86 FY87 FY88 FY89 FY90 FY91 Annual 17.1 25.9 32.4 37.0 36.1 16.5 Cumulative 17.1 43.0 75.4 112.4 14G.5 165.0 Rate of Return: 27x. Appraisal Report: No. 5591b-IN, dated May 21, 1985.  INDIA NATIONAL SOCIAL FORESTRY PROJECT I. INTRODUCTION 1.01 The proposed National Social Forestry Project (NSFP) would be the seventh Bank or IDA-assisted project in India designed to promote social forestry in Rupport of increased production of fuel, small timber, pulpwood, fodder and other minor products. As the first two states assisted by the Bank were completing their five year projects, the Government of India (GOI) proposed that a composite project be considered to assist them and other states as well as to strengthen the central GoverDment's office which sup- ports state social forestry activities. This request stems from the growing importance being given by the Government of India to social forestry. The Seventh Five Year Plan (1985-90) calls for a several-fold increase in invest- ment and social forestry has become one component of the Government's Ten Point supported programs. 1.02 In 1984 four states (Uttar Pradesh, Gujarat, Rajasthan and Himachal Pradesh) prepared proposals for financing with the help of GOI's office of the Inspector General of Forests (IGF) and the Bank's office in New Delhi. As other donors have been active in financing social forestry projects through- out India, and in view of the size of the projects being brought forward, and in an effort to coordinate assistance, the Bank and USAID agreed to appraise NSFP jointly. This report is the result of appraisal missions in Octoberl November 1984 and January/February 1985 consisting of Mr. D. W. Jeffries, Mr. L. Ljungman, Ms. L. Muller, Ms. Ai-Chin Wee, Ms. T. Estoque (Bank), Mr. D. Beesen (USAID), Dr. J. G. Campbell, Dr. P. J. Wood (ICRAF), Mr. S. B. Palit, Mr. Raj Bhatia, and Dr. W. R. Bentley (Ford Foundation), consultants. II. BACKGROUND A. Forestry in India 2.01 Of India's total land area, 23% or about 75 M ha, is designated in land revenue records as "forests', mostly Government-owned. Increasing pressure of population (about 722 H jJ and growing at 2% per annum) and of cattle has resulted in ever increasing depletion and degradation of much of the natural forests so that only about 40 M ha of this land is actually tree covered. Deforestat5 on has taken the shape of either outright clearing for agriculture or the slow and continuous decimation, often illegally, for meeting the fodder, fuel and timber needs of the community and industry. ;J Based on 1981 Census figure of 684 M, with 2X annual growth  -2- 2.02 Non-commercial energy sources, including fuelvood, agricultura' wastes and animal dung, account for more than half of the total consumption of energy in India. Such fuel accounts for about 80Z of rural and 50Z of urban households' energy consumption. Nearly 55% of non-commercial energy is derived from fuelwood, obtained from reserve forests and from trees grown on private and communal lands. Much of the fuelvood burnt is gathered by women and an estimated 20Z of available labor in farming families is spent on this task. Many families, however, due to the absence of forest areas near their homes, are forced to burn only dung cake and crop residues. 2.03 While existing planting programs should be able to meet most of the industrial requirements for hardwood and, to a lesser extent, for coniferous pulpwood, they are inadequate for meeting the demand for fuelvood. Fuelvood demand in the year 2000, estimated in a stldy by the National Council of Applied Economic Research, will be 200 M m annually or roughly twice the estimated present level. If fuelwood were substituted for half of the energy represented bX cowdung presently burned, the total fuelwood demand Iould be about 230 M m . Adding the annual industrial wood demand of 65 M m (com- pared with estimated 1980 demand of 27 M m ) brings the total annual wood demand for the year 2000 to' nearly 300 ' m3, equivalent to some 20 to 30 M ha of mature plantation. Recognizing that fuelwood will continue to be an important source of energy, the Government of India (GOI) is focusing increased attention on the development and management of fuelwood resources. Government of India Policies for Social Forestry 2.04 As an awareness grew amongst administrators as to the implications of the social, economic and ecological consequences created by continuing degradation of forests, two conclusions became apparent: first, that tradi- tional development and management of government owned forest resources would not succeed in providing the rural and urban population with their basic needs for forestry products and second, that development of forest resources cutside the traditional reserve forests through active participation of local communities would be required to help break the vicious circle created by encroachment and the shortages of fuelwood, fodder and small timber. Although during the 1950's and 60's increasing emphasis was given to plant- ings on farm, village and communal lands, from the First to the Fourth Five Year Plans (1951-74), schemes which could be classified as social forestry received only 9.1% of total forest development investment. Toward the end of the Fourth Plan, the National Commission on Agriculture (NCA) made a compell- ing plea for a change in the traditional approach, recommending that forest resources should be developed outside the reserved and protected forests through a well organized social forestry program, with active participation of the local community. GOI accepted these recommendations and introduced a massiv2 program of social forestry throughout India. In the country's Fifth (1974-79) and Sixth (1980-85) Plans, social forestry was allocated 49% and  -3- 781, respectively, of total sectoral allocations and 46Z and 70Z, respec- tively, of total forestry planting targets. 2.05 Although social forestry development is a state responsibility, GOI assists through a number of centrally sponsored schemes, which finance half the plantation costs. During the Sixth Plan, about 1.9 M ha came under these schemes out of a total of about 4 H ha put under social forestry (Annex 1, Table lb) accounting for expenditures of over Rs 2,164 1 (Annex 1, Table la). The above figures include farm forestry under which some 3,720 H seedlings vere distributed to individual growers. The largest of these schemes, measured by planting area, is the Small and Marginal Farmers Program, started in 1983-84 with 0.8 M ha planted; the other programs, of 0.35 N ha planted each, are the Rural Fuelwood Program, Drought Prone Areas Program and National Rural Employment Program. In addition, statewide projects with external financial assistance are being implemented in the states of Gujarat, Uttar Pradesh, West Bengal, Haryana, Jarmu and Kashmir, Karnataka and Kerala (World Bank-assisted, Haryana and Jammu and Kashmir with DANIDA and Karnataka with ODA), Madhya Pradesh and Maharashtra (USAID-assisted), Tamil Nadu and Orissa (SIDA-assisted) and Andhra Pradesh (CIDA-assisted". These projects account for 0.68 million ha planted and over Rs 2,500 M in expenditures during the Sixth Plan period. Unlike expenditures under centrally-sponsored schemes which go to direct plantation costs, donor-assisted projects also help to finance incremental staff, civil works and vehicles. Finally, the states operate their own social forestry programs which during the Sixth Plan period account for 1.3 M ha planted and over Rs 3,000 M in expenditures. 2.06 Of the present India-wide tree planting of some billion seedlings annually (roughly equivalent to 0.67 M ha), about half is planted through farm forestry (by farmers on their own land). The rest is planted by the state forest departments in commercial plantations (30%) and social forestry plantations (20%). 2.07 Under the Seventh Plan, currently being formulated, resources allo- cated for social forestry are expected to increase several fold from those of the Sixth Plan. B. The Bank's Role in Indian Social Forestry 2.08 The Bank's first intervention in the forestry sector, the Nadhya Pradesh Forestry Technical Assistance Project (Credit 609-IN, December 1975), was directed primarily towards the development of plantations for the pulp and paper industry. Since then, the main thrust of Bank Group opera- tions in this sector has been in social forestry development, with six projects covering seven states. The status of these projects is summarized below. Each of these projects had the objective of increasing the supply of fuelvood and providing poles, small timber, fodder and other minor forest  -4- products to those living rural areas, with special concern for increasing employment and fuelwood supplies for marginal farmers and the landless, of increasing production of wood products from government and village waste lands and strengthening the social forestry organization within State Forest Departments. In addition to these projects, the Kandi Watershed and Area Development Project (Ln. 1897-IN, $30 M, July 1980), the Himalayan Watershed Management Project (Ln. 2295-IN, $46.2 M, June 1983) and the Rainfed Areas Watershed Development Project (Cr. 1424-IN, $31.0 M, February 1984) also include substantial components for reforestation and pasture development. 2.09 The relative emphasis on different types of plantation components has changed in Bank-financed social forestry (Annex 2), as it has in social forestry generally in India. The initial projects were not expected to invest heavily in farm forestry as little information was available as to whether or not farmers would plant trees on their holdings. Farm forestry has, however, grown rapidly, far exceeding appraisal targets. The projects also provide for improved extension, linked to the Training and Visit System of agricultural extension, where it exists, in order to help farmers to upgrade their agroforestry practices, improving inservice training, strengthening agro-forestry research within the state, introduction of more fuel efficient cooking stoves and crematoria, and strengthening monitoring and evaluation. Uttar Pradesh Social Forestry (Cr. 925-IN. US$23.0 M. June 21. 1979) 2.10 This was the Bank's first social forestry project in India. It called for the establishment of 8,000 ha of village woodlots, 27,000 ha of strip plantations along roads, canals and railways, rehabilitation of 13,600 ha of degraded government owned forest and the provision of seedlings for 4,000 ha of farm forestry. The project was completed on schedule and the credit closed December 31, 1984. A Project Completion Report is being prepared and will be available later in 1985. 2.11 In terms of physical targets, the project has generally exceeded the overall targets set at appraisal, with about 76,000 ha of plantations achieved on government and community wastelands (i.e., not counting farm forestry) compared with about 48,600 ha proposed for the five-year period of the project. Survival rates on various plantation schemes are satisfactory. The farm forestry component has proved the most surprising, however, with the response of farmers to planting trees on their own lands far exceeding expec- tations. Compared with the original goal of 8 M seedlings, over 500 M (equiv- alent to 349,000 ha) 11 have been distributed. To handle both farm forestry and departmental plantation seedling requirements, a total of 1,037 new nurseries was established. 1/ Equivalent ha figured by dividing number of seedlings by 1500.  -5- 2.12 Despite these substantial overall achievements, the project fell short in several areas. Implementation of the civil works program, designed to support field activities, was neglected in favor of staff being diverted to expanding seedling production. There was also a shortfall in procurement of vehicles needed to improve staff mobility. The self-help village woodlots component lagged, with 136 ha established against a target of 3,080 ha, since poor villagers proved unwilling to contribute their labor as expected in exchange for rather limited potential benefits which would flow to a group sharing the produce from a small woodlot (about 2 ha.) after many years' protection and maintenance. As project implementation progressed, several other deficiencies have become apparent. The project did not cover effec- tively the eastern part of the state, where the smaller farms and landless poor are concentrated as the social forestrv organization lacked relevant know-how and resources to deal with the sociological and technical problems associated with densely cultivated areas and very small farms. The State has been slow to decide on the management system to be applied and on the mode of distribution of the produce from departmental plantations, although many are reaching maturity. The Uttar Pradesh extension services for social forestry are weak, with neither development of an effective departmental extension network nor systematic linkage with the agricultural extension organization. The latter, however, is shortly to be reorganized and strengthened with IDA assistance. In addition, monitoring and evaluation capability and research activities have made a slow start and need strengthening. The Government of Uttar Pradesh (GOUP) recognizes these problems and they would be addressed in the proposed project (para 3.24). Finally, the dissemination of fuel-efficient stoves seems to have been done more effectively by voluntary groups and services organizations than under the auspices of Forest Depart- ment, as had been envisioned at project appraisal. Guiarat Community Forestry Proiect (Cr. 961-IN. US$37.0 M. April 24. 1980) 2.13 The project calls for the establishment of 37,440 ha of village woodlots, 30,000 ha of reafforestation of government-owned degraded forests, 1,000 ha of privately owned and heavily eroded lands, establishment of 37,000 ha of strip plantations along roads, canals and railways, and the provision of 30 M seedlings to farmers to plant on 20,000 ha of privately-owned land. The physical planting targets for the project have been completed ahead of schedule, only the self-help village woodlot component falling somewhat below original targets with about 6,000 ha of the 9,200 ha targetted having been planted to date. Survival rates have been satisfactory. The credit is likely to be fully disbursed by the end of June 1985, six months before the original closing date. While the primary objective of the project was to increase fuelwood supplies in rural areas, due to prevailing high prices of wood, most of the wood produced on private holdings is expected to go for commercial, non-fiLelwood purposes. Nevertheless, given the acute shortage of wood in the state. the project is contributing to relieving the pressure on existing forests and, therefore, indirectly is helping fuelvood supply,  -6- particularly for the rural poor. About 20% of Gujarat farmers and a substan- tial number of landless laborers are likely to become self-sufficient in fuelvood from lop, top and fallen wood from project plantations. Furthermore, the majority of farmers benefitting from the farm forestry component are small and marginal (under 4 ha) who have planted three-fourths of the seed- lings distributed under farm forestry, the rest going to larger farmers. Gu-.arat has made particularly impressive progress in developing a network of small, decentralized "kissan" nurseries (operated by private farmers) and school nurseries. It has successfully introduced low-cost seedling produc- tion and distribution methods such as basketing and direct seeding. It has also been the most successful among states vith Bank-financed projects in introducing fuel saving stoves and crenatoria, having already exceeded the targets of 10,000 stoves and 1,000 crepmtoria by 10%. Private and voluntary groups have made important contributions to dissemination of these devices. Recognizing the problems associated vith village voodlot development, the state has introduced two innovative schemes to benefit the landless, Social Security Plantations and Malki Planuations. Under the former, landless tribal farmers are settled in groups of ten families on denuded goverment forest land as full-time employees of the forest department (FD). Under the Malki scheme, the FD plants trees on half of the land (maximum 1 ha per farmer) for those who have settled on encroached and eroded, formerly protected forest land. At harvest, costs of plantation establishment and subsistence allowan- ces are to be recovered by the Department, leaving the net profit to the farmer. Progress on research has been unsatisfactory in terms of producing relevant findings based on good research methodology. Civil works, and vehicle and equipment procurement are substantially behind appraisal schedule, and about 15% of staff positions (especially of Guards and Rangers) rsmAin unfilled, mainly as a result of the Agricultural Department undertak- ing increased responsibility for extension. But these lags have not caused serious problems in overall project performance. West Beu2al Social Forestry Proiect (Cr. 1178-IN. US$29.0 M. February 24. 1982) 2.14 Over a six-year period, the proiect will establish 6,000 ha of vil- lage woodlots, 20,000 ha of plantings along roads, railways and water cour- ses, and 52,000 ha of forests on private land and will rehabilitate 15,000 ha of government owned degraded forests. It will also construct a Forest Train- ing Center and expand the West Bengal Forest School. Physical planting targets are being exceeded by about 45%, particularly in farm forestry; however, due to budget restrictions, most plantings by the FD have been carried out by the existing territorial forest divisions rather than by expanding the Social Forestry Wing as called for under the project. Conse- quently, most planting has taken place in areas where there is enough forest to justify a territorial division and, as a result, five western districts have accounted for three-fourths of the area planted even though they have only one-third of the total population. Only about one-fourth of the total field level social forestry staff thought needed vere in position at mid-project period but another 40% of these posts have been sanctioned. Lower  -7- level staff such as Foresters and Forest Extension Workers were most affected. These shortages, compounded by lack of staff mobility due to non-procurement of vehicles required, are reflected in lover quality exten- sion services and research, lower survival rates and growth rates, and limitation of areas (and numbers of farmers) benefiting from the project. Finally, virtually no progress has been made on promotion of improved stoves, because forest department field staff lack the time and orientation, and because the technology used was not appropriate for West Bengal. 2.15 Considering the constraints imposed by lack of funds, physical progress has been generally good. Farm forestry has exceeded SAR goals, departmental plantations have generally gone according to plan, although village woodlots have encountered problems as in othar states. West Bengal has been innovative in promoting 'group farm forestz3 vhere the landless and poor farmers can take up to one hectare of governmenc wasteland for affores- tation and are given rights to the trees but not to the land. Group farm forestry has grown rapidly, accounting for about 360 ha during 1982183, 2,000 ha during 1983/84 and 5,009 ha in 1984/85, or half of the farm forestry target. West Bengal has also made strides in using vomen in field staff as 'tmotivators' . 2.16 As a result of the mid-term review recently completed, several adjustments have been agreed in the original project composition. In par- ticular, some village voodlots targets have been shifted to farm forestry. Revisions to the technical models for farm forestry were suggested as well as measures to strengthen research and field staffing, and dissemination and application of research results. JamUm and Kashmir and Haryana Social Forestry Project (Cr. 1286-IN. US$33.0 M. September 7. 1982: DANIDA. US$4.0 M) 2.17 The project vill, over a five-year period, establish 17,000 ha of village woodlots, 19,500 ha of plantings along roads, railways and water courses, 49,000 ha of plantings on private land, 15,000 ha of plantations on sand dunes, 2,000 ha of plantations on vet lands, and 500 ha of plantings on alkali lands and rehabilitate 17,000 ha of degraded government owned forest. Although both states have fulfilled their targets for 1983/84 and made adequate arrangements to meet 1984/85 planting targets, disbursements are only about 50% of appraisal estimates. This reflects the high level of vacancies in the social forestry departments and the lag in important support activities. Coordination with the T&V system for extension has been estab- lished in Haryana. A similar linkage between agricultural and forestry extension has been agreed to by J&K when the T&V system becomes operative in that state under the Second National Agricultural Extension Project approved by the Executive Directors Narch 22, 1985. Haryana, however, has faced organizational problems since tvo separate entities were implementing the social forestry program; these problems are being addressed by the current mid-term review mission. The forest department of J&K has been reluctant to  -8- recruit lower level staff until the introduction of the proposed extension project is determined. Modification of some plantation targets and staffing plans is being worked out with the Bank in light of initial experience in these states. For example, unlike many states, J&K has done particularly well with its village woodlots and will increase its woodlot goals while reducing those for degraded forests. Karnataka Social Forestry Project (Cr. 1432-IN, US$27.0 M, February 8. 1984: ODA. US$23.0 M) 2.18 In addition to the distribution of 600 M seedlings, the project is supporting departmental plantations including: 20,000 ha on "gomal" (cultiv- able wasteland used as common grazing grounds) and agriculturally unproduc- tive goverment wasteland; 3,000 ha on foreshores of irrigation tanks; 4,000 ha of strip plantations along roads and canals and 2,000 ha of bamboo planta- tions. Plantation programs exceeded targets during the first year and met 1984/85 targets as well. However, the "gomal" lands component has experienced many of the same problems of other village voodlot approaches, and hence will be reallocated to group farm forestry on government waste- lands. Some acceleration of the plantation program is being considered. This would require earlier sanctioning and provision of social forestry staff than agreed at appraisal. However, delays in sanctioning of staff have been of some concern, but recruitment is now underway. The state has maJe a good start in decentralizing seedling production and distribution, particularly important ir this project since farm forestry accounts for 80% of plantation targets. The project does not provide for promotion of improved stoves, but this is being done by various organizations under other development programs. Kerala Social Forestry Project (Cr. 1514-IN. US$32 M. December 12. 1984) 2.19 Plantations would be established on the equivalent of about 69,000 ha of private land, 12,000 ha on government block plantations, 2,000 ha on strip areas and 2,100 ha for special tribal schemes. In addition, the project aims establishing a network of small, family-operated nurseries to facilitate better distribution and extension services to farmers. 2.20 Although the credit only became effective in March 1985, it provides for retroactive financing to January 1984. Progress during the first year on all components has been good, including farm forestry which accounts for 80X of plantation goals. Initially, seedling production and plantation activities fell somewhat below schedule due to slow release of funds and staffing constraints, due to slow recruitment procedures.  -9- C. Lessons Learned 2.21 The Bank's experience with social forestry in India is relatively brief, with the first projects just completing five years of implementation. Nevertheless, many useful lessons have been learned and are constantly being used to improve social forestry programs. This is particularly relevant to organizational arrangements for social forestry. 2.22 OrRanization. Some of the earlier concepts of the organization needed for social forestry require modification in light of experience. In all projects staffing arrangements have not been as anticipated. Some reduc- tions in staff targets have been possible; for example, with greater depend- ence on using the existing agricultural extension services for social forestry, fewer staff thai: supposed earlier are required to provide exten- sion. Similarly, experience has shown that it is not necessary to set up a separate social forestry organization within the forest department in all states, although this may be the preferred route in some larger states, where state forests are limited and there are large numbers of small farmers in intensively cultivated areas. Forest departments have already transferred some staff to social forestry activities as well as started modifying the traditional forestry administration to include social forestry. As a conse- quence, the more recent projects and the proposed project provide for fever incremental field staff and give more emphasis to retraining of existing staff and broader training of new staff. Some uncertainty remains, however, as to the best overall organization of state forestry activities, e.g., the degree of separation of social and traditional activities and staff, and whether the most effective administrative division of field activities should be along the same block lines as other related rural development and agricul- tural extension organizations. EIn addition, some social forestry schemes in the states are under the jurisdiction of other agencies than the forest department, although they are for the most part carried out by the forest department. The coordination of all such schemes within a state would seem desirable and under the proposed NSFP the States have agreed that by March 31, 1988 they would carry out studies of the organizational issues in state forest departments which would include, among other things, the relationship of various social forestry schemes. While the extent that the center can influence state organization of such activities is somewhat lirited, the central Ministry of Environment and Forests Social Forestry Support Office would take appropriate note of the results of these studies in its capacity of bringing together the experiences of all states undertaking social forestry programs.  -10- 2.23 Fuelvood Production. The primary stated purpose of early projects was to produce fuelvood particularly for the rural poor. Although quantita- tive goals have been met or exceeded in all states, initial benefits have gone only indirectly to that primary target population. At the same time, tree farming by individual farmers has proved far more popular and cost effective than was originally expected. While only a small part of the earlier projects was aimed at farm forestry, this has become a major focus in later projects; however, due to veaknesses in extension and lack of appropriate agroforestry research, and because of lack of adequate staff numbers, resources and training, it has been harder to reach the really poor and smaller farmers. Moreover, most of the main stemwood planted by individual farmers has gone into commercial channels, vith the majority of species being planted for poles, timber, pulpwood and fuel, in that order. There is obviously a desire for early and the most lucrative returns. Thus, vhile farm forestry is very cost effective and helps raise farmers- standard of living, and a large volume in lop and top of the tree goes for fuelwood, experience has shown that social forestry must devise direct channels for meeting fuelvood needs of the poor, as another part of its program. In this respect, previous approaches to village woodlots would need to be revised because generation of cash income to meet other development needs is more important to the panchayats establishing woodlots than providing fuel for the less fortunate. Plantations on common and government wastelands devoted specifically to fuelvood production would give greater potential benefits to the primary target groups; however, costs must be reduced in current models so as to increase the amount available for distribution after cost recovery. 2.24 Cost Reduction. Early social forestry plantation models are now considered to be overly expensive. Use of barbed wire may double the costs of public plantations without providing effective protection. Earlier hand- over of management of community plantations by forest department to beneficiaries also reduces direct costs to the forest department. Decentral- ized seedling production and distribution can also reduce costs (para 2.29). 2.25 Distribution of ProducelBenefits. Forest departments and village panchayats have proved slow to develop detailed plans for distribution of the harvest from plantations. Many of these plantations are reaching maturity and decisions on distribution of produce are overdue and must be made. Dif- ficulties in identifying the beneficiaries and of distribution to them create institutional burdens for forest departments and panchayats vhich they seem unxilling or unable to bear. 2.26 The above does not mean that the poor have not benefited at all from past efforts. Until trees planted have reached maturity, sub6tantial benefits are derived from twigs, fodder, thatching, fruit and other by-products of growing trees. A major impact has also come from employment generation by village woodlots and departmental plantations. Since forestry work is mainly seasonal (two to three months a year), most work has gone to  -11- landless persons, often women, who do not have regular farming respon- sibilities of their own. 2.27 Support Services. Forest departments have now recognized shortcom- ings in not reaching the rural poor to the extent expected. They have begun improving extension, research, monitoring and evaluation and other support services. This has entailed not only supplying more of the staff, vehicles and other resources needed for strong field work, but also the design of special programs to reach a broader spectrum of the rural population. One such program has been the formation of linkages between forestry and agricul- tural extension services. Considerable improvement is still needed in prac- tical research, especially on agroforestry. 2.28 Group Farm Forestry. Programs involving the landless and poor on government wasteland or common marginal land are being tried in some states (e.g., West Bengal and Social Security Plantations and Malki Plantations in Gujarat) with considerable success. Such schemes represent an innovative way of reaching the target group and are a cost effective means of using otherwise unproductive land. They offer higher incentives to the par- ticipants and are easier to administer than other plantation models as they do not require detailed plans for distribution of the produce. Care must be exercised, however, in such schemes not to give a greater subsidy than needed and thus limit the number of potential participants by concentrating avail- able resources on a few. 2.29 Decentralized Nurseries. To ensure the maximum participation by smal'- farmers, nurseries must be decentralized and widely scattered as these farmers lack resources to transport seedlings over large distances. Small nurseries, especially those run by farm families, schools and non-government groups, have proved efficient and require less investment than large central- ized nurseries run by the forest department. Other cost reducing practices which are being developed include direct sowing of suitable species by farmers, providing seedlings in baskets ("basketing") and seed "minikits." 2.30 Seedling Distribution Policies. There is no uniform policy in India on the pricing policy and limits on free seedling distribution, and states generally subsidize seedlings given to farmers. Even those which have a policy of charging for seedlings have distributed large amounts free under various centrally-sponsored schemes which have required them to do so. Such subsidization no longer appears needed to promote farm forestry. To ensure more equitable distribution of farm forestry benefits and to improve cost recovery, free seedlings for farm forestry should be limited to what small farmers need for self-sufficiency in terms of fuel and small timber. 2.31 Fuel-Saving Devices. Forest department staff have been generally less successful at promoting fuel-saving devices than voluntary and other non-governmental organizations, because FD staff lack the training and orien- tation necessary, have trouble communicating since most field staff are men  -12- but users are women, and tend to prefer plantation work. In the future, social forestry projects should continue to promote fuel-saving devices, but encourage active involvement by groups best suited to this purpose, and supply the engineering and sociological expertise to ensure appropriate design. 2.32 Monitoring and Evaluation. Recognition of the crucial need for effective monitoring and evaluation in projects as innovative and large-scale as social forestry led to the incorporation of M&E units in the Bank's pre- vious projects in U.P., Gujarat, and other states. The primary purpose of these units was to develop systematic methods for collecting and analyzing information useful to project management and to measure and evaluate the economic and social changes induced by the project. Operationalizing these units has proved to be more difficult than anticipated. This has been a result of the low priority given to M&E in the past. However, establishing and filling new positions has always been a time consuming endeavor and in the context of H&E the lack of the relevant social science skills among forest officers has made this problem worse. For these reasons, the GOI requested the Bank and FAO to provide assistance in developing practical guidelines for a system of H&E which could be used throughout the country (para 4.06). 2.33 Central Support. While the office of the Inspector General of Forests (IGF) has attempted to assist states in project preparation, to help design and implement a uniform monitoring and evaluation system and to review projects' progress, its involvement has necessarily been constrained by limitations in staff numbers 1/ and budget. The center could more effectively support states in several areas: promotion of consistency and complemen- tarity among centrally-sponsored schemes, donor-assisted projects and state schemes; assumption of greater responsibility in assisting states to design social forestry schemes, and in monitoring and evaluating them; facilitation of exchange of experience among states; undertaking of overview studies; and generally, provision of technical assistance, training, and special support where appropriate. Oj Until recently, only two upper level staff were assigned, and even then not entirely full-time; some of the posts for project formulation have been sanctioned and part filled in the past year.  -13- III. THE PROJECT A. Proiect Obiectives and Rationale 3.01 The project's primary objectives are to (i) increase production of fuelvood, small timber, poles and fodder; (ii) increase rural employment, farmers' incomes and opportunities for participation of landLess persons; (iii) afforest degraded areas and wasteland and reduce soil erosion; and (iv) strengthen forestry institutions. The first phase social forestry projects have substantially con:ributed tovards meeting commercial demand for poles and small timber, and raising incomes of land owners, but have fallen short of ensuring that the weaker sections of the population benefit in terms of access to wood products and increased community participation in social forestry development activities. The proposed project will help achieve these goals through (i) refocusing operations (plantation types, choice of species, dispersion of nurseries and seedling distribution policies) to increase the share of the benefits which would reach small and marginal farmers and the landless; and (ii) improving operating efficiency, reducing costs and helping the states to rationalize the organization of forestry departments. Furthermore, the project would assist in strengthening support activities including research, training, extension, and monitoring and evaluation. It would provide for the agricultural extension services to supplement the flow of techni_al agro-forestry information going to individual farm households through state forestry extension systems. It would emphasize monitoring and evaluation at both the state and central levels in order to assist the process of developing improved technological packages by analyzing cost effective approaches to social forestry. B. General Features 3.02 The proposed five-year project would provide continuing assistance initiated under earlier credits to two states (Uttar Pradesh and Gujarat) to expand and improve their social forestry activities and would initiate investment in two other states (Himachal Pradesh and Rajasthan). The project would also strengthen the Social Forestry Support Office in the Ministry of Environment and Forests to enable it to perform more effectively a coordinat- ing, support and policy guidance role in the development of social forestry throughout India. While the basic approach to social forestry is common to all participating states, adjustments have been made to take account of many differing factors: agro-ecological and social conditions; demographic fea- tures; land use, tenure and tenancy laws; the legal basis for forestry development; existing forestry institutions and past experience with social forestry; wood consumption, requirements and supplies of fuelwood, timber and fodder; current forest conditions; forestry and forest-based industries in  -14- the state economy. Such background information for the four participating states is summarized in Project Files Cl-C4. Summaries of each state's Seventh Plan targets in social forestry by program, including that under NSFP, together with any special features for the state subproject are given in the section following. Further details on the central Social Forestry Support Office are given in the Project Files C5. Project File C5 also covers subjects of common interest, e.g., monitoring and evaluation, training curricula, improved stoves and crematoria, social impact and benefit. Over- all project costs are given in Tables 5.01 and 5.02. C. Detailed Features - State Subproiects 3.03 To meet the general objectives of social forestry development and to suit differing requirements of each state, several types of activity or plantation models are called for, the general categories being: agro-forestry, participative tree tenure schemes targeted at landless persons and marginal farmers (normally on government wasteland), plantations on community wasteland, and departmental plantations on government wasteland. These may be planted in strips, blocks, or in the case of agroforestry, interplanted with agricultural crops. The trees may be planted, maintained and managed by farmers, by groups of villagers or local panchayats, or by the forest department, either on its own behalf or for others. The design for these very different plantations differs considerably with the number of trees per ha planted, generally ranging from 1,000 to 3,000. Table 3.01 shows the overall plantation targets for the projecr. A brief general description of these activities is followed by more specific data for each state's programs under NSFP (paras 3.24-3.27). Plantation Program 3.04 Agroforestry. (a) Farm forestrv would account for by far the largest plantation component in all participating states, totalling nearly half a million equivalent hectares. It yields the highest benefits to farmers, costs the least (about one-fifth the cost of plantation on government land), and gives the farmer control over the choice of species and use of the product. Most plantings are likely to occur on individually owned marginal and submarginal land 'hich provides little other agricultural return, on farm boundaries, bunds, around the homestead and along water channels.  -15- Table 3.01: PLARTTION PROGRAM (Equivalent Hectares) Uttar Himachal Percent Plantation Catetory Pradesh Raiasthan Cujarat Pradesh Total Total A. Asroforestr, (Private Lands) Far. Forestry (seedling distribution) S/ 134,000 80,000 200,000 53,000 467,000 71X !J Private Wasteland Planting hi - - 30,500 13,000 43,500 5Z !J Improved (grafted) Orchards c/ - 4,000 - - 4,000 1% Ml B. Tree Tenure, Poor + Landlems (Government Landsa Beneficiary Hananed) Strip Plaintations d/ 1,210 - - 1,210 .5% nl HouseholdlGroup Farm Forestry p1 11,000 7,500 - 833 19/333 2X o/ Arjun Plantations fI 1,000 - - - 1,000 .5X pl C. Cosuunity Wasteland Plantations (Com_unity Lands, Panchavat Mana ed) Commnity Woodlots (Rainfed) 8J 14,000 5,000 20,000 41,000 80,000 9X ol Co_uunity Woodlots (Irrigated) ki - - 5.000 - 5.000 1% o/ Tree Fodder Plantations ii - - 10,000 - 10,000 1X o/ D. Government Wasteland Plantations (Government Land. Government Managed) Rehabilitated Degraded Forest. ij - 20,000 30.400 5,000 55,400 6.5% p/ Strip Plantation. J 740 4,300 15,000 - 20,040 2X Al Fuelvood Plantations - - 2500 - 2500 5Z. p Total Plantation. 161.950 120,800 313,400 112,833 708.983 100% aJ Hectares based on 1,500 trees/ha. _I Species mix in HP 80% broadleaved, 20% conifer; in Gujarat 80% broadleaved, 5-10% Eucalpytue. 10-15Z misc. Trees/ha in HP 500; Gujarat 2,000. S/ Rajasthan comprises improved Ber (Zizyphus muritania) grafted onto existing rootstocks; 100 trees/ha. A/ UP: mainly mixed fuelvood with up to 15-20% of trees for fruit, edible flowersa seeds and small timber; 3,120 to 3,600 trees/ha. ej Mixture of fuelvood, fruit, and fooder producing species; no Eucalyptua used. In HP, balf broadleaved and half conifers. Tree/ha in UP 2,500; Rajasthan 1,670; HP 1,100. 1J Pilot operation in UP using Terminalia ariun for silk productionlor fuelvood, 5,000 trees/ha. BI) Lowland states (UP, Rajasthan, Gujarat) eaphasize fuelvood, fruits and other edible products. small tinber and grass fodder. More bamboo in Gujarat vhile HP emphasizes conifers, providing fuel, poles and fodder. Trees/ha in UP 2,500, Rajasthan 1,600, Gujarat 1,750, UP 1.100. The 41,000 bectares in HP includes 1,000 ha under pilot "self-help"/Panchayat management and 40.000 ha rainfed under Forest Department management. i Gujarat high technology model, objective maximmu biomass production; half Eucalvytus treticornis. a third Leucaena leucocenhala and the rest miscellaneous hardwoods and bamboo; iO.000 trees/ha. jJ Gujarat: High technology model designed to produce fodder from grasses and trees (100 trees/ba). j/ Rajasthan: Species Prosopis iuliflora/chilenais- both planted (1,320 trees/ha) and direct sown (higher density), producing grasses fodder, fodder pods and fuelvood. Gujarat: 80% mixed broadleaved species for fuel and small timber; 20% Eucalvytus Leucaena and bamboos. BP: mostly high altitude Pinus roxburghii (Chir or Chil pine), 2.000 trees/ha. xJ Roadside rows generally ornamental and not harvested; the rest: mixed rest fuel and pole species. Trees/ha in UP 2.500-3,1000, Rajasthan 1,300-2,000, Gujarat 2.500. ]J Gujarat: Misc. broadleaves with some Eucalvutua; 2.500 treesiha. ) Agroforestry/farm forestry totals 77Z. ul Strip plantations total 2.5Z. oJ Village woodlots total 13%. pj Block/degraded forests total 7.5Z.  -16- The only direct cost to forest departments would be in seedling production, but a substantial part of the social forestry extension and monitoring and evaluation effort vould be directed to the farm forestry components. (b) Private wasteland plantinu on eroded land accounting for 43,500 total hec- tares in the project, would differ from farm forestry because of increased input by (and cost to) the forest departments. It would assist in plantation establishment, and would provide an incentive payment during initial months to the farmers owning the land involved in order to compensate them for income foregone while they work on the plantation. The forest departments, applying their own existing rules, would have to ascertain that the land was seriously eroded or in imminent danger of erosion, and hence of concern for conservation, which would justify higher government investment than under farm forestry. To give planting and other technical advice to farmers, forest departments would make extensive use of the agricultural extension service (para 3.18). (c) Improved (grafted) orchards consisting of fruit bearing bushes (Zizyphus mauritania) would be developed on farmers land. Farmers would sell the fruit and could also use lop for fuel. 3.05 Tree Ownership Scbemes for Poor and Landless. (a) Household/group farm forestry would compose the largest proportion of plantation in this category (20,000 ha, mainly in U.P., 11,000 ha, and Rajasthan, 7,500 ha). Government wasteland, unfit for agriculture but fit for agroforestry, would be transferred from other government departments to the forest department. In turn, the department would consult with adjacent communities to designate landless persons and marginal farmers to use on a fixed term basis 0.5 to 2 ha of wasteland where they would plant trees and have ownership over those trees. (b) Tree tenure strip plantations would be attempted for the first time by U.P., on 1,210 ha. of road, rail and canal strips. Poor persons would be identified to participate; each would establish and care for a length of strip plantation (equivalent to about 0.5-2 ha) and would have ownership over the trees. (c) Ariun plantations would be undertaken on a trail basis on 1,000 ha in Uttar Pradesh on highly alkaline soils which have practically no other use. To ensure adequate protection of beneficiaries in the above models, each state would review current arrangements and where Government Orders and instructions, including proforma agreements, are not comprehensive, specifying the selection criteria, timing and terms for occupation of land by the beneficiary and the disposition of benefits, the state would take appropriate remedial action by December 31, 1985. Assuran- ces on the above were obtained during negotiations. 3.06 Plantations on Commmunity Wasteland. In collaboration with panchayat village organizations, plantations would be established on community owned wasteland, most of it rainfed (80,000 ha) but some irrigated (5,000). Gujarat would also provide for tree fodder plantation (10,000 ha) in areas adjacent to townships and in areas of low rainfall. Unlike "village woodlot" schemes in previous years, this approach would entail formulation of a written agree- ment with the community before planting denoting intended beneficiaries of fallen wood, leaves, and fodder, and disposition of the final product. It  -17- would also ensure early transfer of responsibilities to the community for protection, maintenance, and plantation establishment where possible. This would result in lower costs being incurred and later recovered by forest department, leaving higher benefits for the community. The forest department would recover direct costs at harvest, with the balance of produce/sales income going to the community. 3.07 Departmental Plantations on Government Land. (a) Rehabilitation of Degraded Forests would be carried out on 52,900 ha, but only when such land was governed by regulations which would enable suitable distribution of benefits. Although such plantations involve less participation than the schemes described above, they are justified economically by their production of fuelvood, small timber and poles, and fodder which would be directed in large part to the rural poor, and by their employment generation and conser- vation effects. Forest department staff would supervise planting, main- tenance, protection, harvesting and distribution of benefits. Adjacent villagers would derive additional benefits by cutting grass within the plan- tation for fodder and collecting fallen wood, leaves and thinnings, as agreed with forest department staff. (b) Strip Plantations. These plantings (total of 20,000 ha) on government reserves along roads, railways, canals, and embankments are of varying width but usually wide enough to support several rows of trees. Costs of establishment and protection are relatively high due to difficulty of protection. In the past, public authorities have been reluctant to harvest mature plantations because of their aesthetic value; but strip plantations under the project would be restricted to sites where the strip is wide enough to support sufficient rows to allow for progressive harvesting. (c) Fuelwood plantations (2500 ha.) would be estab- lished for high growth, short rotation production of wood, and targeted at areas of high fuelwood demand in Gujarat. Nurseries and Seedling Distribution 3.08 Under the project some 700 M seedlings would be produced in project- financed nurseries. All state subprojects support development of a large number of small, widely dispersed nurseries, moving away from large, central and forest department owned nurseries. These may be on family holdings with land rented and family labor hired, or with seedlings grown on a contract basis, or on forest department land, supervised by department staff and run by hired labor, or on school grounds and run by children and staff. Small nurseries have the advantages of being near to farmers and thus reducing transportation costs for seedling distribution. They also provide con- siderable employment and serve as a focus for extension promotion and advice. The forest department would provide technical advice and would supply seed, fertilizer, polyethelene bags aun other materials to those growing seedlings. Close supervision of these nurseries by the forest department is needed to ensure good quality of seedlings. Ultimately, such small nursery operators are expected to become a main source of planting material for farmers, but  -18- this will depend upon farm forestry becoming well established and upon seed- ling pricing policies which would enable them to do so. Larger departmental nurseries would be used to provide seedlings for block plantations and other departmental plantings, but would also distribute seedlings to farmers. 3.09 Seed would be sown in seedbeds or directly into sleeves. Seedlings from seedbeds would be transplanted into polythene sleeves. All states would take measures to reduce the cost of seedlings, by using smaller sleeves where the species are suited to such techniques. Other measures would include training for nursery staff in improved handling between nursery and planting site, and careful quality control of stock issued from nurseries. Newly established nurseries would be equipped with pumps for hand or overhead irrigation, unless water is otherwise freely obtainable at the site. 3.10 Each of the participating states has its own policy on seedling distribution. Uttar Pradesh and Himachal Pradesh already assess a nominal charge for most seedlings distributed and in the current year Gujarat is introducing a small charge for seedlings, with a free limit of 1,000 per farm family. The forest departments also require nurseries to maintain registers showing the number of seedlings distributed to each family, so as to monitor survival rates. Rajasthan currently has no limit to free distribution of seedings, in order to promote seedling uptake for social forestry develop- ment, which is a relatively new activity in the state. The participating states have recognized the principle of full cost recovery for all social forestry seedlings distributed, except for small and marginal farmers, and during negotiations assurances were obtained that under the project they would undertake socio-economic studies to ascertain farmer response to charg- ing for seedlings as a basis for determining a program of action for implementing the principle of full cost recovery. The results of these studies would be discussed with the Association at the time of the midterm review, i.e., by March 31, 1988, and thereafter the states would start implementing their programs. Meanwhile, for the project, free distribution of seedlings, except for small and marginal farmers, would be reduced in accordance with a schedule aRreed with IDA, and seedlings above the free limit would be charged for at rates, also agreed with IDA, which would progressively be increased to cover the direct cost of production. Above about 100 seedlings per farmer per year, farmers would be growing trees for commercial purposes and the small cost assessed for seedlings would not significantly change their returns. Plantation Techniques 3.11 Choice of species. All states would select species suited to the sites to be planted. Most are indigenous or thoroughly naturalized, and virtually all seed is collected within the state. Species have been chosen for their suitability for use in social forestry situations. Many are truly multipurpose or effective nitrogen fixers. Eucalyptus tereticornis would be a major species planted where poles are needed. Most farmers tend to choose  -19- species which give a cash income, particularly trees providing fruit, edible flowers and seeds and small timber. A breakdown of the major species to be planted in each state is given in Annex 3. Decisions on the species mix would be made after considering the objectives of the plantations and the needs of the locality. In strip plantations fuelwood and pole species predominate, with ornamental and shade trees included along roads. In vil- lage woodlots in the lowland states the main choices would be species provid- ing fuelvood, fruits and other edible products, and small timber. Grass would be interplanted to provide fodder. In Gujarat, emphasis would be placed on bamboo and in Himachal Pradesh on fuel, poles and fodder, with conifers providing much of the biomass, especially from regularly pruned branches. In rehabilitation of degraded forests in Rajasthan, the main species to be planted would be Prosopis iuliflora or P. chilensis, whereas in Gujprat mixed broadleaved species would predominate. In Himachal Pradesh, as forests are at high altitudes, Pinus roxburfthi would be the main species established. Improved material or Zizvphus mauritania (ber) grafted onto wild rootstock and planting of Terminalia ariuna for silk production would constitute small pilot operations to test the feasibility for large-scale application. 3.12 Site Preparation. Very little site clearance is required in any of the states as most vegetation has already been removed. However, in most cases pitting is necessary to provide improved rooting conditions for planted trees. The size of pits depends upon the state of the soil, the species to be planted and traditional practices of the forest department. The size varies from 30 x 30 x 30 cm to 60 x 60 x 60 cm. Pits are usually dug in the pre-monsoon period when labour demand is slack. In most plantation models, nursery stock is then planted out, but direct sowing of some species would be practiced in UP and Rajasthan. In this case mounds and trenches are used to provide a seedbed for germinating seeds, and to provide protection against animals. All site preparation would generally be done by hand. Table 3.02 shows the number of trees to be planted per hectare under each model.  -20- Table 3.02: NUMBER OF TREES PER HECTARE, BY FLAITATION MODEL Uttar Himachal Model Pradesh R2iasthan Gujarat Pradesh A. Azroforestrv 1. Farm Forestry 1,500 1,500 1,500 1,500 2. Private Wasteland Planting - - 2,000 500 3. Improved Orchards (Zizyphus mauritania) - 100 - - B. Tree Tenure for Poor and Landless 1. Strip Plantations 3,120 to - - - 3,600 2. Group Farm Forestry 2,500 1,670 - 1,100 3. Arjun Plantations 5,000 C. Pl-ntin2 on Community Wastelands 1. Community Woodlots - Rainfed 2,500 1,600 1,750 1,100 2. Community Woodlots - Irrigated - - 10,000 - 3. Tree Fodder Plantations -Trees - - 100 - -Grasses (NT/ha) - - 20,000 - D. Planting on Government Wastelands 1. Rehabilitation of Degraded Forests - 1,320 2,000 2,000 2. Strip Plantations 2,500 to 1,300 to 3,100 2,000 2,500 - 3. Urban Fuelvood - - 2,500 - 3.13 Plantation Establishment. In order to ensure the highest survival rates most trees would be nursery raised in polythene sleeves which are subsequently removed at planting to ensure minimum disturbance to the root system. Experience has shown that bare-rooted seedlings are not generally suitable for issue from nurseries except where the distance between nursery and the planting site is minimal or where more temperate conditions exist at higher altitudes (Himachal Pradesh). The "basket" method of seedling dis- tribution (large number of fingerling seedlings in a basket, raised to larger seedling by farmers themselves) would be continued or introduced, and farmers would be encouraged to collect seeds from nurseries for raising on their own  -21- or for direct soving. Direct soWing would be used mainly for Acacia tortilis Acacia arabica and Prosopis iulifloralchilensis. 3.14 Tree Planting and Maintenance. Planting would normally occur at the onset of the monsoon in late June/early July. In Uttar Pradesh, where many soils are highly alkaline, soil acidifying agents (mainly pyrites), would be applied to both strip and block plantings, typically at 200-300 kg per ha applied at planting time. Fertiiiser application is heavy in Gujarat, with 20-50 kg per ha of compound fertilizer or urea being used. In other states, the use of fertilizers is not common, except in nurseries. Maintenance of plantings would include the replacement of casualties for up to two years. Different levels of mortality are estimated for each state depending on experience; up to 30% casualty replacements have been included ir all project estimates. Weeding vould be carried out to ensure survival and good early growth. In farmer's fields weeding may be expected to be of a higher stand- ard than in FD plantings. A particular feature of the maintenance system would be that local people or private owners would be encouraged to cut and remove grass and herbaceous fodder from plantations, thus performing a valu- able weeding function and reducing the dry season risk of fire. The trees would eventually surpress much of the weed growth as the canopy closes. Waterinz after seedling establishment is prescribed for some models in the lowland states of UP, Rajasthan and Gujarat, the objective being to lengthen effectively the wet season and to ensure improved survival and growth. 3.15 Plantation Projection. Experience in the four states differs videly over the amount and type of protection needed for planted trees. Protection needed also depends on the species grown, e.g., whether palatable to wild or domestic animals, or susceptible to termite dsmage. Termite vrotection is required most with Eucalyptus species which are the most commonly attacked. In general, protection is given by application of persistent insecticides in the n:trsery. If attacks are noted after planting out, localized applications of insecticide are made. In Rajasthan and Gujarat insecticide is routinely applied. For protection against browsing. wire fencing is used in some areas of Rajasthan and H.P. for strip plantations, especially along routes used by migrating herdsmen, but an effective alternative method of fencing is the use of a trench planted or sown with a live hedge of thorny (Acacia Prosovis) or unpalatable (Euphorbia or Ipomea) species. In degraded hills in Rajasthan and Gujarat, effective protection is afforded by dry stone vall construction. Experience has shown that the need for wire fencing decreases as social awareness of the benefits of such plantations has grown. Wire fencing would be phased out as soon as possible in favor of systems using locally available materials. Watchmen would be provided for most plantation areas, at a rate of one per 2 to 10 ha depending on the shape and nature o' the site. Local custom also accounts for variation among states. For many plantations under forest department management, the normal cadre of "Forest Guard" takes cver. Since most of the benefits from land tenure, community and vasteland planta- tions go to the local population, the need for paid watchmen would be reduced in those models.  -22- Proiect Review 3.16 Since it is not possible to predict with certainty the response of farmers and panchayats to the alternative approaches suggested above, flexibility would be maintained during project implementation and would allow shifting from one category of planting to another according to results. This would be accomplished by monitoring of results by the Monitoring and Evalua- tion Cell of the state forestry department concerned and by a mid-term review to be held after completion of the third yen 's planting. Assurances were obtained during negotiations from each state that it would undertake a joint review of the project vith GOI, IDA and USAID no later than March 31, 1988. Infrastructure and Institutional SupDport 3.17 State institutions have been appraised vith a viev toward their capability to handle the entire social forestry program in the state, not just that being financed under the proposed project. The project would provide for incremental forestry staff, vehicles, equipment, housing, offices and incremental operating costs in support of plantation development and farm forestry. Table 3.03 shows key professional incremental staff to be added under each subproject. Mobility of forestry staff is important, and during negotiations the states confirmed that adequate provision of vehicles and travel allovances had been made, and they gave assurances that policies governing these would be revised as necessary to ensure requisite mobility fcr field staff. 3.18 Given the importance and scope of farm forestry in the state sub- projects, extension and promotional activities vould be critical to project success. Eacbh :tte would support a relatively small, trained cadre of social forestry field staff vho would be responsible for farm forestry promo- tion. Although the forest department would have primary responsibility for extension and comunication, the project would rely on village level exten- sion workers to supplement its own field contacts, which would not only release the forest department from having to expand its field staff, but also would offer excellent field coverage because of the larger number of exten- sion staff and would automatically he'p integrate agroforestry recommenda- tions with other advice on crops. The Training and Visit (T&V) System of agricultural extension is well established in Gujarat and Rajasthan, and is being established in Uttar Pradesh and Himachal Pradesh. In each state, the forest department and the agricultural extension service would enter into an agreement to provide the required cooperation. The forest department would designate Rangers to serve as Forestry Subject Matter Specialists;  -23- Table 3.03: KEY INCREMENTAL STAFF TO BE ADDED UNDER NSFP A. State Subprojects Uttar Pradesh Rajasthan Guiarat H.P. Chief Conservator of Forests - 1 - Add'l Chief Conservator 2 - 1 1 Conservator of Forests 9 1 2 1 Deputy Conservator of Forests 28 10 14 5 Assistant Conservator of Forests 88 6 9 41 Ranger Forest Officer 712 60 37 84 Deputy Ranger 343 22 - 79 Forester 1,329 137 22 - Social Forestry Worker 1.013 657 78 364 (all Guard Level) TOTAL 3,524 894 163 575 B. Support Office Subproject SuPport Office Read of Support Office 1 Chief Conservator of Forest (Central) 5 Deputy IGFIM&E 2 Assistant IGF 2 Conservator 6 Deputy Conservator of Forest 11 Assistant Conservator of Forests 5 Sociologist 1 Chief Project Economist 1 Project Economist 1 Deputy Director Statistics 1 TOTAL 36 these SMS would attend monthly planning meetings and fortnigbtly training sessions for VEW as appropriate. Each state would be required under NSFP to give assurances of such cooperation by Government order. Gujarat and Rajas- than have already done so; Himachal Pradesh and Uttar Pradesh have undertaken to do so once the T&V system has been initiated under proposed projects to improve agricultural extension services in those states, but no later than December 31, 1985.  -24- Training 3.19 Additional emphasis would be given to basic and in-service training under each state subproject. A large number of existing staff working in social forestry lack training at their professional level, many having been promoted from lower levels or transferred into social forestry from other branches of the forestry department without adequate orientation to their new task. Training also needs to be reoriented so as to be less theoretical and to favor practical, people-oriented skills. Training of trainees has been provided in the state as vell as the central components. In addition, forest departments have begun and vould continue to revise curricula so as to give greater emphasis to social forestry commensurate with its importance in their overall activities. Present curricula require greater emphasis on operation of nurseries, seed collection and storage and extension methodology and are being revised to reflect these needs, and should include lectures and workshops on preparing village level forest management plans. Short inten- sive courses for senior management and training for Rangers who would serve as Forestry Subject Matter Specialists to the agricultural extension services would also be provided. In general, the states under NSFP would use existing training institutions. A small amount of financing for improved facilities is, however, included. In aiddition, the project would provide for study tours or fellowships in India and abroad. Brief descriptions of present and proposed training facilities and programs in each state are described in Project Files CI-C4. Research and Studies 3.20 The project would strengthen agro-silviculture research through provision of some additional staff and funds for contractual research with the ultimate objective of providing better information in dealing with imediate problems faced by project management. The need for research under the state subprojects is focussed on seed source identification, seed collec- tion and handling, nursery practice, optimizing productivity and reducing costs. The state social forestry projects and work done by their research staff and research stations would also be supported by: the proposed National Agricultural Research Project II which provides assistance through the Indian Council of Agricultural Research (ICAR) to State Agricultural Universities (SAUs) to develop research programs; Forest Research Institute (FRI) at Dehra Dun; and the proposed Forest Research, Education and Training Project (FRET). The research responsibilities of each relevant to NSFP are as follows: (a) ICAR and the SAUs would be responsible for on-farm and on-station research on agroforestry in the main agro-ecological zones of India; competition effects; physiological and nutritional studies; physiology of coppicing, pollarding and coppicing; some breeding work and farm budget analyses. (b) FRI and state silviculturists would be responsible for comprehensive species intro- duction trials; selection and progeny testing; breeding of trees for use in farm, village and departmental forestry; detailed yield studies of different species under different management systems including trees in free growth,  -25- partial harvesting by coppicing, pollarding etc.; and non-wood products. More detailed descriptions of the vork proposed for each state under NSFP and cost details are given in the Project Files Cl-C4. 3.21 The project would provide for wood balance studies to be undertaken by all states to develop a basis for estimating future consumption and plan- ning future supplies for major products like fuelwood, pulpwood, poles and timber. The study findings would help define the needs of different user groups and help determine the composition of planting targets and species selection. To serve as effective management tools, these studies need to be revised continuously, and under the project the staff required to do this would be provided. The FDs of Gujarat and Uttar Pradesh have prepared draft reports. Himachal Pradesh and Rajasthan have prepared detailed wood balance study proposals, following the guidelines and terms of reference provided by the Bank and USAID. The Bank and USAID, assisted by the Ford Foundation, are holding discussions with the states to assist in refining the objectives of these studies and in practical methodology including sampling design and analysis so as to improve the basis for social forestry project planning over the longer term. Wood Saving Devices 3.22 Programs to promote efficient wood burning stoves and crematoria are included in the state projects. Efficiency of stoves used in rural households is very low and can be increased by as much as 50Z through scien- tifically designed, low-cost improved stoves. Reduction of smoke also provides substantial health benefits. Improved crematoria can reduce vood consumption by about 40Z. In Himachal Pradesh, advantage would be taken of the progress made by the Indo-German Dhauladhar Project in establishing a program of improved stoves and pressure cookers. The subproject would fund an evaluation study of these devices under field conditions, soliciting users' recommendations. The Himachal Pradesh subproject also provides for hiring women forest guards to work as extension agents, inter alia. for promotion of improved stoves. The project would provide funds in all four states for improved crematoria in areas were significant segments of the population use these common facilities. Further information on improved stoves and crematoria is given in Project File C5, Item 7. 3.23 Special features of the individual state subprojects are described below in paras 3.24-3.27. Cost figures in parentheses in these paragraphs represent base costs. Table 3.01, para 3.03, shows the breakdown of planta- tion components for each state. Summary costs are reflected in Table 5.01. The numbers of key incremental staff appear in Table 3.03, para 3.17. Assurances were obtained during negotiations that by December 31, 1985, the following state positions would be sanctioned: Rajasthan, a Conservator of Forest for Planning, Monitoring and Evaluation; Uttar Pradesh, an additional Chief Conservators of Forests, and a Conservator of Forests for Planning.  -26- 'Uttar Pradesh (US$103 1) 3.24 With a population of over 110 million, or 16Z of the Indian total, Uttar Pradesh is the largest state in India. The Project would cover all 49 districts of the Plains region (9 more districts than in the previous project). In particular, the Project would provide: (a) Tree establishment of about 134.000 hectares under farm forestrV. jj with more intensive efforts in the more heavily and intensively cultivated Eastern Region, where agroforestry would comprise the main thrust; these efforts vould be supported by strong extension to recommend species and approaches best suited to farm conditions and needs; (b) Plantations involving tree ownership for poor and landless people (US$11.8 H) with 11,000 ha of unirrigated blocks, 1,210 ha of strip plantations alongside roads and 1,000 ha of irrigated Arjun plantations to be established on goverrnment owned land; in each of the models in this category, participants would be selected in consultation with village authorities; landless persons and marginal farmers would have responsibility for plantation work on leased land with right of ownership to trees planted; the arjun plantations established in alkaline soils would produce tassar for silk making; Cc) Plantations on Public Wastelands (US$12.1 M) involving 14,000 hh of community woodlots on panchayat owned waste lands; agree- ments with villages/panchayats involved wouald stipulate early local participation and take-over of plantation management responsibilities; (d) Plantations on Goverment Wastelands, (US$1.3 H) with 740 ha of strip plantations; roadside and railside sites would be selected which are nearby to communities and could support several rows of trees (so as to enable progressive harvesting); (e) A network of small decentralized nuuseries (US$23.9 1) to boost participation in tree planting by small farmers and those living in more remote areas through better access to seedling distribu- tion and advice; each of the 800 Development Blocks would have at least two family or school-operated small nurseries in addition to its existing large departmental nursery; and X,J The only direct costs associated with UP farm forestry would be for seedling production, which is reflected as US$23 M in part Ce) following.  -27- (f) Institutional support (US$54.3 M) including a strengthening of field operations to coincide with block level administrative arrangements and creation of two administrative zonal head- quarters to administer the statewide organization; field staff at the block level would be deployed to facilitate coordination with the extension service and to maximize contacts vith farmers and plantation beneficiaries, and to help operate a strong nursery system; the project would provide about 3,100 key professional staff, in addition vehicles and requisite travel and vehicle operating allowances, and residential housing (about 1,000 units) for new field staff to be located in remote arear. Costs include strengthening of extension, training, monitoring and evaluation and social forestry research. Details are given in Table 5.01. Rajasthan (US$25.0 M) 3.25 Although the second largest state in the country, Rajasthan is more sparsely populated than Uttar Pradesh, contains few natural forests and suffers from a harsher climate. Of the relatively low proportion of land which is covered by forests (9X), about two-thirds is substantially degraded. The project would cover only the Eastern Region of thc z;ate which, while excluding the vast desert areas of the West, still experiences generally inhospitable agroclimatic conditions. This project would represent the first externally assisted social forestry effort, although the state has already undertaken plantations through centrally-sponsored schemes. Special features of the state project would include: (a) Tree establishment on the equivalent of 80.000 ha under farm forestry. jj This component would include a 4,000 ha pilot program for establishment of fruit bearing bushes (Zizyphus), with hectares calculated at 100 bushes per hectare; (b) Plantations involving tree ownership for poor and landless people on 7.500 ha of Government wastelands (US$2.6 M); plantings would be rainfed and adjacent to village areas; (c) Plantation of Community wastelands (US$1.9 M) including 5,000 ha of community woodlots on panchayat owned wastelands; lj Agro forestry direct costs would include $0.05 M for grafted fruit trees, and $4.5 M for seedling production for farm forestry; the latter figures is reflected in part (e) following.  -28- (d) Plantation on Government wastelands (US$7.1 M), including 20,000 ha rehabilitated degraded forests, and 4,300 ha of strip planta- tions along roads, canals and railways. This would necessitate FD gaining jurisdiction over certain tracts of land presently controlled by other government departments; (e) Establishment/maintenance of a network of at least 600 decentral- ized small nurseries (US$5.1 M), some of which would be temporary and could be relocated as deemed desirable; and (f) Institutional support (US$8.3 M), to comprise reorganization of field operations along Comminity Development Block lines, strengthening of extension, improved social forestry training (entailing construction of two new social forestry training wings), and appointment of a Woodlot Planning Officer to super- vise production distribution and guide formulation of plantation management plans and revise/develop new social forestry planta- tion models, and harvesting arrangements more responsive to local needs; the project would provide incremental staff (including about 900 key professional positions); 768 bicycles, 72 motor- cycles and cars, jeep, vans, etc; travel allowance and operating costs; and about 100 residences for field staff; and installation of 160 fuel-saving crematoria. Costs include strengthening of extension, training, monitoring and evaluation and social forestry research. Guiarat (US$83.8 M) 3.26 Over half the land of Gujarat (of total state area about 200,000 km2) is under agricultural production; of the remainder, a quarter is classified as wasteland of which 80% is to be found in Kachchh District. Since the land in the other districts is largely cultivated, agroforestry has received special emphasis in the state and would continue to do so under the proposed project. The project would include: (a) Some 200.000 ha of farm forestry plantation Ij on field boundaries, bunds, and farm wastelands, together with 30.500 ha of GCOG-assisted planting on particularly erodedierodable Dri.vate lands (US$5.4 M); the latter plantations would expand on the "malki" approach of the previous project, and would provide assistance to the farmer to maintain for a limited period the trees on his land (as income foregone); XJ The only direct costs associated with Gujarat farm forestry would be for seedling production, which is reflected at US$4 H in part (d) following.  -29- (b) Plantations on community owned vastelands, (US$23.7 M) including 20,000 ha of unirrigated woodlots, c,000 of irrigated woodlots, and 10,000 ha of tree fodder plantations on panchayat lands; (c) Plantations on Government Lands (US$40.8 M), consisting of 30,400 ha rehabilitated degraded forests, 15,000 ha road, rail and canalside strip plantations and 2,500 ha of fuelvood plantations adjacent to urban areas; (d) Establishment of over 2.500 small nurseries (US$4.0 M), with about two thirds of them being farmer-operated and the rest run by schools; and (e) Institutional support (US$9.9 M) including the designation of special "Extension" staff which would enable existing staff to concentrate on physical plantation and nursery work, while the Extension staff (which would include female Plantation Assis- tants) would devote full-time to farm forestry promotion and advice, identification of sites for public plantation and for- mulation of plantation management agreements, and promotion of wood saving devices; organizational strengthening would also entail: appointment of a Conservator-level officer for Planning, Information, Reporting and Project Formulation to help institute the system of plantation management plans and arrangements for production distributicn and the development of more responsive social forestry plantation models; strengthening of training capacity, including the appointment of an additional DCF level instructor and construction of another dormitory at the Rajpipla School, in order to provide support for stepped-up inservice training; appointment of incremental staff including about 150 key professional positions; provision of 467 motorcycles and other vehicles, plus travel allowances, to support effective field staff mobility; construction of 460 residences for field staff, 80 workshops/sheds/garages for field support; and instal- lation of 11,000 fuelsaving devices. Costs also include strengthening of social forestry research. Himachal Pradesh (US$37.3 H) 3.27 In contrast to the other three states in this project, Himachal Pradesh would target social forestry within hilly to mountainous terrain, 38% of which i8 already afforested. Although this would represent the first externally assisted activity in social forestry, the state has already estab- lished about 60,000 ha of social forestry plantations under centrally spon- sored and state schemes in the past five years, and for several decades the government has fostered a system of accomodating villagers' minimum needs for fuelwood, sm4l1 wood for construction, etc. to be provided from state  -30- protected forests. This also prevents uncontrolled felling of trees and permits FDs to retain those trees of highest economic value. The project would provide: (a) Azroforestry plantations, including 53,000 ha equivalent under farm forestry jJ, and another 13,000 ha of Forest department assisted plantation on highly eroded/erodable lands (US$2.0 M) lands involving groups of individuals with no more than 2 ha plantation per farmer; (b) Tree ownership for groups of participants. plantinz on Government vastelands (less than US$0.1 M) a pilot test involving some 833 ha; (c) Plantation of public owned wastelands (US$13.0 H), consisting of 41,000 ha of community land; (d) Plantation on Government Lands (US$1.6 M), involving rehabilita- tion of 5,000 ha of degraded forests; (e) Establishment and operation of nurseries (US$7.0 M); and (f) Institutional support (US$13.7 H), including designation of "Extension" staff to work together with territorial forestry staff, whereby the former would undertake promotion, extension and formulation of agreements with villages, and the latter would do the physical plantation work for social forestry; formulation of plantation management plans and distributional arrangements for public plantation sites which ensure social benefits and attention to local needs; strengthening of social forestry research, monitoring and evaluation, and training with stepped-up ins.Lvice training at Chail, Mallan and other facilities; field evaluation of existing stove programs, and the installation of some 7,500 fuelsaving devices facilitated by project-hired women stove extension workers; and the addition of incremental staff, including 575 key professional positions; civil works mainly entailing 250 residences for field staff to be posted in remote areas; and 175 motorcycles for field staff. LI The only direct cost for farm forestry would be seedling production which, as part(e) shows, would total about US$7 M.  -31- C. Detailed Features - Social Forestry Support Office Subproiect (US$4.0 M) 3.28 The Social Forestry Support Office would be located under the Special Secretary of Forests in the Ministry of Enviornment and Forests. While the newly created Support Office would provide support to the NSFP, its role and functions would be broadly based encompassing the entire forestry subsector throughout the country. Since the Ministry has only recently been estab- lished, its internal organization is still incomplete. Accordingly, during negoriations assurances were obtained that GOI would furnish to the Associa- tion the completed organizational structure and proposed staffing by April 30, 1986. 3.29 The Support Office would consist of two cells and possibly five regionally oriented support groups. The Project Formulation Cell, headed by the Chief Project Economist, would assist states in project preparation and would foster a consistent social forestry policy among centrally-sponsored and donor-assisted schemes. A Monitoring Cell, headed by the DIGF/M&E, would review progress of all social forestry schemes, and maintain records of total plantation achievements and expenditures by state. The regional support groups, each headed by a Chief Conservator of Forests (Central), would pay attention, inter alia, to training and technical assistance. 3.30 Besides assisting in project preparation and monitoring, the Social Forestry Support Office would provide other assistance which would include: promoting cross-fertilization of experience among states; tracking progress of all social forestry schemes, and working to eliminate redundancies or inconsistencies among them; conducting overview studies, such as national wood supply and demand studies; providing training and technical assistance support where economies of scale so warrant; facilitating nominations for international training; and providing supplementary assistance to states which lack adequate capacity to handle their social forestry programs. 3.31 Central support for social forestry would be achieved by the follow- ing: (a) Establishing the Social Forestry SuPPort Office (US$3.4 H), including appointment of some 36 incremental higher level staff plus support staff to the offices of the nead of the Social Forestry Support Office, Chief Project Economist and Deputy IGF/Monitoring; assurances were obtained at negotiations that GOI would sanction the new position of the head of the Social Forestry Support Office by April 30, 1986 and that by October 31, 1986 it would have filled this position and would thereafter maintain that position and those of the Chief Project Economist and the Deputy IGF/Monitoring and Evaluation. The project would also provide rented office space, plus necessary resource support including  -32- vehicles (car, jeep and three station wagons), office equipment and furniture, and operating/maintenance costs; (b) Provision of funds for training (US$0.4 M) and technical assis- tance (US$0.5 M) in social forestry. Certain training and techni- cal assistance functions (e.g., training of trainers, assistance in selecting and introducing computerized monitoring systems) would be more efficiently done by the Support Office than by each state on its own. A Training Coordinator' in central headquarters would organize such training, identify institutions and individuals to carry out such training and process nominations, and would solicit active state participation in designing the program for training and technical assistance. Under this program, a sizable amount of management training could be conducted by the Indian Institute of Forest Management; and (c) Special studies (US$0.1 M), including inter alia, an overview of wood supply and demand, and analyses of other policy matters with regional or national ramifications. IV. ORGANIZATION AND MANAGEMENT 4.01 The implementation of the proposed project would be carried out within the framework of the existing institutions at the federal and state levels (paras 4.03 and 4.04). However, to provide better policy direction, technical advice and support throughout the country, as well as to ensure effective coordination of various investment programs for forestry develop- ment, the Social Forestry Support Office would be established in the Ministry of Environment and Forests, under the direction of the Special Secretary of Forests in GOI. The primary responsibility of the Social Forestry Support Office would be to undertake forestry sector reviews and analyses and to develop sound sector policies. In addition, this office would assist state entities in sub-project identification, preparation and implementation, provide training and technical assistance support to states, monitor and evaluate ongoing state projects, and foster common approaches to implementa- tion of the various centrally-sponsored, state, and donor-assisted social forestry programs. The Support Office would act in close cooperation with the states, with other GOI agencies conducting social forestry activities, and with external supporting agencies. For states which have yet to develop expertise in project works, the Support Office would provide back-stopping technical support. It is envisaged that in the long run, as it develops and strengthens its capacity for providing effective policy and technical support for forestry development in the country, the Support Office would emerge as an important development entity.  -33- 4.02 Compared with previous social forestry projects, GOI will take an increasingly active role in the support of state social forestry activities. Joint IDA/USAID supervision missions would be about made twice a year to each state and GOI staff would accompany them. During project implementation, the Social Forestry Support Office would assume greater responsibility for assisting, coordinating, guiding and monitoring state subprojects. The increased staff and resources provided under NSFP would allow central govern- ment to provide greater support to states, including more field visits, than previously possible. This support would extend to all states aud to social forestry programs as a whole, not just activities financed under NSFP. The staffing pattern of the Support Office would provide for regional specializa- tion by some staff and it would be decided later whether to decentralize these staff to regional offices. 4.03 Responsibility for forestry has recently been moved from the Ministry of Agriculture to a new Ministry of Environment and Forests, attached directly to the Prime Minister's Office. The Special Secretary of Forests, who is also the Inspector General of Forests (IGF), is responsible for coor- dinating the planning and implementation of development projects in forestry and has direct responsibility for forestry activities in the Union Ter- ritories. He works together with a Joint Secretary to GOI for general administrative purposes, including administration of the Indian Forest Serv- ice (IFS), and on the technical side he is assisted by an Additional IGF and six Deputy IGFs, one each for Research and Education, Central Forestry Com- mission, Survey and Utilization, Afforestation and Extension, Conservation, and Monitoring and Evaluation. Under the project, another Additional IGF is likely to be added to head the Social Forestry Support Office, including the regional (zonal) offices. The initial organization would be decided by April 30, 1986 (para 3.31). A Chief Project Economist (foree'ry) and Project Economist (forestry) are responsible for formulating projects under multi- lateral and bilateral assistance. A DIGFIM&E heads up the monitoring and review of donor-assisted projects in social forestry. 4.04 Within the states, forestry administration is the res -ensibility of a separate Department of Forests with a Secretary to the State Government looking after forestry. The Department is headed by a Chief r.'nservator of Forests (CCF) or Principal CCF who belongs to the IFS. He is assisted by one CCF and/or Additional CCFs and Conservators of Forests (CFs) for functional support, and for administration of field activities. The Circle or Region is generally the largest administrative unit, and it is in turn divided into Divisions, usually five or six, each under a Divisional Forest Officer (DFO) with the rank of Deputy Conservator of Forests (DCF). The DCFs are assisted by other DCFs (state cadre) or Assistant Conservators of Forest (ACF) in managing the Division and implementing development projects. Divisions normally consist of four to six Ranges, each under a Range Forest Officer. The Range is further divided into four to six Rounds, each in the charge of a Forester; Foresters are assisted by several Forest Guards, each on a Beat.  -34- 4.05 The organization of forestry and social forestry varies among states, usually as a result of the amount and distribution of state forest reserves to be found in the states. The organization for states participating in NSFP is detailed in Project Files C1-C4. A brief description is given below of organizational arrangements for social forestry in each state. (a) Uttar Pradesh. A separate line organization for social forestry was set up under the first project, and would continue under the proposed project and its support functions (extension, research, H&E training and planning) would be strengthened. As before, a CCF (Chief Conservator of Forests) vould take charge of social forestry, under supervision of the Principal CCF. The 49 dis- tricts covered under the project would now be grouped into ten (instead of the previous five) Circles, te facilitate administra- tion. Field operations would now be structured along "develop- ment block" lines and staff would be added for better extension and operation of decentralized nurseries. (Organizational Chart 1) (b) Raiasthan. As in U.P., a CCF would head up social forestry, under the supervision of a Principal CCF. In support of the CCF, there would be sections for Extension and Communications; Plan- ning, Nonitoring and Evaluation; and Woodlot Planning. Since there are almost no natural forests in the project area and most forestry and social forestry operations would be technically similar, the state vould maintain the existing organization but would add Social Forestry staff under each Divisional Forest Officer (DFO). Field operations would be structured along block lines. (Organizational Chart 2) (c) Guiarat. The separate line organization for social forestry set up under the first project would continue, with selective strengthening of functional support at headquarters. Respon- sibility for sorial forestry lies with a CCF, under the supervi- sion of a Principal CCF. For functional support, there would be three sections covering monitoring and evaluation; research, training and communication; and planning. At field level there would be five social forestry circles, an increase of one from the previous project. Special exten,ion field staff would be added in each division who would focus on farm forestry and wood-saving devices promotion, formulation of agreements with villages and extension. (Organizational Chart 3) (d) Himachal Pradesh. Since a relatively high proportion of the state is already afforested (although degraded in some parts) and since there is already a well-established tradition of individual rights to forest produce, the state would maintain the existing organization but would add social forestry staff  -35- under each DFO, and would strengthen functional support at head- quarters. Tvo CCFs are managing social forestry, the CCF/Planning and Development in charge of general program direc- tion and functional support, and the CCF/Territorial looking after all field staff including those added under the project; they both answer directly to the Forest Secretary (there is no PCCF). Assurances vere obtained that a single line of command would be maintained from the circle Conservator dcvn for field staff and that a steering committee headed by the Forest Secretary would meet at least every quarter to discuss and assign work priorities to field staff. (Organizational Chart 4) 4.06 Continuous monitoring and evaluation is an integral part of all ongoing Bank-assisted social forestry projects; however, participating states have been slow to establish monitoring and evaluation units and to begin collec- tion and analysis of appropriate data. In recognition of the shortcomings and at the request of GOI, the Bank, FAO and the Office of the IGF, in consult- ation with state forest departments and the major donor agencies supporting social forestry projects in India, prepared an operational guide in 1982 which was revised after a workshop in 1983. VJ This guide describes an operational system which all states vould implement under the guidance of the DIGF/Monitoring and Evaluation. These guidelines, therefore, would form the basis for state M&E operations under the project. A detailed review of monitoring and evaluation in the project states has been undertaken. A report containing extensive recoumendations, which have been taken into account in calculating project costs, is available in the project file (C5, Item 5) 4.07 The project provides for strengthening of M&E cells in each state. Within a state, M&E is the responsibility of a DCF or CF in the forest department, reporting to the head of the department or the social forestry wing. He is assisted by a small headquarters staff including a statistician and an economist, and would supervise a team of Field Supervisors and Inves- tigators to collect field level data. Assurances were obtained at nego- ti!tions that all states would undertake monitoring and evaluation in the form already agreed with GOI, and that snummary results would be forwarded to IDA and USAID at least once a year. 4.08 State projects would receive general supervision and guidance from the Central Support Office-s M&E Unit. This Unit would also be responsible for technical guidance to state M&E cells and for collecting and coordinating the monitoring and evaluation reports from all subproject states including / R.LH. Slade and R. Noronha with contributions from J.G. Campbell, P. Guhathakurta, and B. Tepping, "An Operational Guide to the Monitoring and Evaluation of Social Forestry in India," Working Draft, June 1984.  -36- those directly supported by the Bank before NSFP, analyzing and forwarding then to the Bank at prescribed intervals. 4.09 Coordination of forestry activities among all agencies in each state would be through an existing committee at the secretarial level. Assurances were obtained during negotiations that the states would maintain these com- mittees. The states also agreed that by March 31, 1988, they would carry out studies of the organizational issues in their forest departments, includ- ing, inter alia. the relationship of various social forestry schemes. 4.10 Proiect Reporting. Each state would be responsible for preparing semi-annual progress reports in a format approved by IDA and USAID, and submitting its reports to the Special Secretary of Forests and DEA. This would include a table on total social forestry performance regarding physical achievements and financial outlays, presented according to a standard format which has been developed at the center for mouitoring these data on a state by state basis. The Social Forestry Support Office would prepare semi-annual progress reports each June and December giving a summary of NSFP project activities undertaken during the prior six months. These would be forwarded to IDA and USAID for review. Each participating state and the Social Forestry Support Office would also undertake to prepare a completion report on its subproject. The Social Forestry Support Office would prepare the project completion report required by IDA. Assurances were obtained on the above at negotiations. V. COST ESTIMATES AND FINANCING A. Cost Estimates 5.01 Total project cost is estimated at Rs 3,933 X (US$327.8 N), including Rs 47.1 N (US$3.93 H) for taxes and duties. Cost estimates are based on May 1985 prices. The foreign exchange component is estimated at Rs 77.0 M (US$6.6 M), which represents 2% of total project cost. Physical and price contingencies over the project period amount to Rs 891.2 M (US$74.3 M), or 23Z of total project cost. Physical contingencies have been estimated at 10% of civil works, and 5% of other costs except for staff salaries and travel allowance for which no physical contingency has been provided. Price contin- gencies at about US$62.8 million were derived from projected local inflation rates of 8.5% during 1985-90 and foreign inflation rates of 5% in 1985, 7.5% in 1986 and 8.0% in 1987-1990.  -37- Table 5.01: PROJECT COST SUMMARY BY STATE COMPONENTS (RIFEES '000) (15S '000) Z Total Z Foreiun Bse Local Foreign Tta-l Local Foreign Total Exdc e Costs A. GUJARAT 1. ORANIZATION NS MNAGERENT 90,984.2 2,772.5 93,656.7 7h573.7 231.0 7M90.7 3 3 2. PHYSICAL TARGETS 882P803.8 8,605.2 891,409.0 73,567.0 717.1 74,284.1 1 29 3. RESEfN 3P896.4 94.3 3,980.7 324.7 7.0 331.7 2 0 4. EXTENSION 2,727.2 53.8 2i781.0 227.3 ;.5 231.7 2 0 5. TRAINING 5.911.5 1,041.5 6r953.0 492.6 86.8 579.4 15 0 6. PLAIING 1,566.9 49.1 1,616.0 130.6 4.1 134.7 3 0 7, ONWIiORING AND EVALUATION 4,656.? 191.0 - 4Y947.9 388.1 15. 404.0 4 -A0 Sub-Total GUJARAT M2446.9 12,97.3 ,005i244.3 82,703.9 1,066.4 83,770.4 1 33 D. HflYCAl. PRADESH 1. ORGANIZATION AND NANA6EJENT 120,496.7 4,060.7 124,577.4 10,041.4 340.1 109381.5 3 4 2. PHYSICAL TARGETS 291Y389.9 2,753.8 284143.7 23,449.2 229.5 23p678.6 1 9 3. RESERCN 54U.6 138.5 5625.1 457.2 11.5 468.8 2 0 4. EXNIO 44182.9 190.3 4,373.2 348.6 15.9 364.4 4 0 5. TRAINING 10v7931. 1,194.0 11,987.1 899.4 99.5 998.9 10 0 6. NONITURING AND EIMPTION 15v954.3 362.4 16,316.7 14329.5 30.2 19359.7 2 1 Sub-Total HIrAIAL PLUESM 438i303.4 8,719.9 447,023.2 36i525.3 726.6 37t251.9 2 15 C. RPUASTHAN 1. ORGANIZATION AND KWNAGEMENT 67,662.8 3,409.2 71,O71.9 59638.6 284.1 5s922.7 5 2 2. PHYSICAL TARGETS 1989078.1 1,934.1 204P012.2 16,506.5 161.2 16,667.7 1 7 3. RESEARCH 2 190.6 52.2 2,242.7 182.5 4.3 186.9 2 0 4. EXTENSIND 99307.5 341.2 9,648.6 775.6 28.4 904.1 4 0 5. TRAINING 6v481.2 1,233.2 7,714.4 540.1 102.8 642.9 16 0 6. NANITURING AND ESUMATION 9,304.3 176.4 9,480.7 775.4 14.7 790.1 2 0 Sub-Total RAJ4STKN 2939024.4 7plqo.1 300w170.5 24,418.7 595.5 254014.2 2 10 D. UTTAR PRAJESH 1. ORGANIZATION AND NANAGEIENT 465i658.0 199799.5 485,457.5 389804.8 1,650.0 40,454.8 4 16 2. PHYSICAL TARGETS 584119.9 5,727.6 599,847.5 489676.7 477.3 49154.0 1 19 3. RESEARCH 6v266.7 195.6 6p452.3 522.2 15.5 537.7 3 0 4. EXTENSION 56v302.2 19614.4 57,996.6 4,698.5 134.5 4,833.1 3 2 5. TRAINING 86,783.4 4,995.7 91,669.1 7P231.9 407.1 7P639.1 5 3 6. PLAIWING 39282.9 58.3 3,341.2 273.6 4.9 278.4 2 0 7. HONITORING AND EUALUATION 6,198.4 111.4 6h309.8 516.5 9.3 525.8 2 0 Sub-Total IJiTAR PRA3KE 19208,691.4 32,382.6 1l2419073.9 1009724.3 29698.5 103,422.8 3 41 E. CENTRAL SUPPORT OFFICE 479404.2 1032.8 48,437.0 39950.3 86.1 4,036.4 2 2 Total BASELINE COSTS 29793,870.3 62,078.7 3&041P94.9 248m322.5 5P173.2 253,495.7 2 100 Pnsical Contingecies 134,077.8 3,632.0 137w709.7 11,173.1 302.7 11,47.98 3 5 Price Contiliemnies 742,164.5 11,323.8 753488.2 61,847.0 943.6 62,790.7 2 25 Total PRPOECT COSTS 3,956,112.5 77,034.4 3,933,146.9 3219342.7 6,419.5 327,762.2 2 129 = = - _= =  -38- Table 5.02: SUMCMARY OF PROJECT COST BY CATEGORY OF EXPENDITuRE (MFES '000) (US$ '000) Z Total --XZ Forein Omst Lwcal Foreign Total Local Foreign Total k:xcunhe Costs -~ ~ ~ ~ ~ ~ ~ ~ ~ if DKTSfl COST A. CIViL UICS 2060702.2 104560.8 217,262.9 17v225.2 8N.1 18P105.2 5 7 3. IERIXfES 70M48.4 17m272.3 88,220.7 5,912.4 1439.4 7,351.7 20 3 C. E UJIINWT 219392.8 2N309.3 231702.1 1,792.7 192.4 1IP75.2 10 1 3. FIUIITrI 4.318.7 - 4318.7 359.9 - 359.9 - 0 E. 7RA2DIDIB 1. STAFF TRAINIDG NIESTIC 36447. - 36447.9 3,037.3 - 3.037.3 - I 2. STAFF TRAh INTEIMUTIOMwL 516.0 4,508.5 5,024.5 43.0 375.7 418.7 90 0 3. CENTRALLY - SPOhISRE _5S 2,158.0 - 2,158.0 179.8 - 179.8 - 0 4. FOU TRAININ AO0 EXTEISIN 6fl11.5 - 6&119.5 510.0 - 510.0 - 0 SUbiTotal TRAINIjI 45241*4 4509.5 49,749.8 30770.1 375.7 4I145.8 9 2 F. TECHNICIL ASSISTANCE 2,502.0 - 29502.0 206.5 - 208.5 - 0 S. S'ECIAL STIDIES MD EVAIJUTI0N 2.914.8 - 2,914.8 242.9 - 242.9 - 0 H. RESEARCN UFERATIN MD GRATS TO SWIS 755.8 - 755.8 63.0 - 63.0 - 0 I. PLAmIATIO 1. NESMERY IEVEJNIENfT 5059.0 S,099.4 525,158.4 43,338.2 425.0 43t763.2 1 17 2. FAR FEWSRY 988533.1 868.2 89,406.3 7P378.2 72.3 7v450.5 1 3 3. TMEE TEJ REPLAITIG 148,364.7 1s454.8 149P819.5 12P,363.7 121.2 12,485.0 1 5 4. CDiIUIIJY FDRES 581P078.9 5,697.8 596,776.6 48w423.2 474.8 48898.1 1 19 5. iUTEL.AU PLNITATION 601P759.3 5,900.5 607,659.8 50u146.6 491.7 50,638.3 1 20 Sub-Total PWATATIE 1P939799.9 19,020.7 1v958v820.6 161I650.0 1,585.1 163P235.1 1 64 J. FUELD SAUDi BEMIWES 6P643.9 - 6643.9 553.7 - 553.7 - 0 Total INKESTIENT COSTS 243019219.9 539671.5 2,354,891.4 19mI768.3 4,472.6 1969241.0 2 77 II. REDJWE COSTS A. STAFF SLARiBES 423,160.7 - 423P160.7 35,263.4 - 35s,263.4 - 14 3. STAFF TRAWL NLLEIINIE 81PS56.7 - 81,956.7 6&821.4 - 6,B21.4 - 3 C. mDING REY AND Ii ffIEJWICE 63PSZ2.1 3v246.0 66,768.1 5P293.5 270.5 5,564.0 5 2 D. VEREME OEPATIN MD AMliINTEMCE 47P949.9 5,161.1 53W011.0 3,987.5 430.1 4'417.6 10 2 E. IFFICE ANtO OTlER EVBUITIRE 62p261.1 - 62Y261.1 5r188.4 - 5,188.4 - 2 Total RECINT COSTS 678g650.4 B.407.l 687,057.5 56,554.2 700.6 57D254.8 1 23 T,tal ASEDE COST 29979,870.3 62,078.7 3,041,948.9 248,322.5 5173.2 253,495.7 2 100 Phusical CantinIncies 134P077.8 3.632.0 137,709.7 119173.1 302.7 11,475.8 3 5 price Contirncigs 742P1645 11i323.8 753,411.2 U1847.0 943.6 62,790.7 2 25 Total PMECT COST 3.956.112.5 77,034.4 3p933P146.9 321,342.7 6,419.5 3279762.2 2 129 ,, .ZZ .~ =X=- . ==== =  -39- 5.02 Project cost estimates are suamarized in Tables 5.01 a,d 5.02, and subcomponent summaries given in Annex 4. Detailed cost tables are given in Project Files Cl-C5. Cost by year are shown in Annex 4. B. Proposed Financing 5.03 External financing for the project would be provided by the proposed IDA credit of US$165 M and by USAID financing of US$80.0 N representing 50Z and 24Z, respectively, of total project costs, net of taxes aud duties. GOI and the four state governments would supply the remaining US$83 M under their Seventh Plan. The proposed IDA credit would be made to GOI on standard terms and conditions. The proceeds of the IDA credit would be channeled to the Ministry of Envirorment and Forests and to the participating states in accordance with arrangements applicable at the time for central assistance to states for development projects. The USAID funds would be made available, US$3 N as a grant and US$77 M as loan funds, on its standard terms and would be similarly channeled to the Ministry and participating states. The balance of project financing would come from state goverrment sources and GOI as indicated in the table below. Participating states have included these subprojects in their draft Seventh Development Plans and provided sufficient funds in their annual budgets to cover the cost of the subprojects in the first year. Table 5.03: PROJECT FINANCING jj Local Support IDA USAID Total Component Source Amount US$ H Gujarat GOG/GOI 16 62 31 108 Himachal Pr,-desh GCHP/GOI 11 24 12 48 Rajasthan GORIGOI 8 17 9 33 Uttar Pradesh GOUP/GOI 46 61 27 134 GOI Support GOI 2.5 1.5 1 5 Office Total 83 165 80 328 Percentage 26 50 24 100 Foreign Exchange 82.4 160.0 79.0 321.4 Local Costs 0.5 5.0 0.9 6.4 1/ The figures in this table include contingencies.  -40- 5.04 Retroactive financing by IDA of up to US$14.5 M would be provided to cover the following expenditures incurred after October 1, 1984: .nursery development, advance soil works for plantations, and incremental staff employed on 1985 planting operation. C. Procurement 5.05 For items to be financed by IDA, the following procurement procedures would be applied. 5.06 Civil Works (US$24.5 N). Requirements would consist mainly of hous- ing of standardized design, office and training facilities and small inspec- tion huts, which would not attract international bids as they would be widely scattered both geographically and over time. Larger contracts (over Rs 100,000) would be avarded on the basis of competitive bidding following local advertisement and in accordance with established state procedures which are satisfactory to IDA. The local contracting industry in India is well developed and adequate competition would be offered. Contracts would be handled through the Public Works Department or Forest Department. Smaller civil works (inspection huts) located in remote areas would be built depart- mentally by force account. 5.07 Vehicles. Kauipment and Furniture (US$11.7 M). These items are needed in small quantities and are available locally. As adequate main- tenance facilities and availability of spare parts would be important, locally made vehicles of types already used by government departments would be procured according to well-established government procedures which are acceptable to IDA. Usually items such as cars, motocycles, bicyles, barbed wire and office furniture and equipment would be purchased on rate contract approved by the Director General of Supplies and Disposals, GOI, or otherwise sanctioned by the state government. Such purchases are made from firms with whom the state Department of Stores Purchase, the state government's central purchasing organization, has entered into a rate contract valid for a par- ticular period, generally one year. The Stores Purchase Department calls for tenders, evaluates and enters into rate contract with the lovest evaluated bidder, following procedures adopted by DGSD. Other items (e.g., polythene bags) would be procured by field officers through local competitive bidding. 5.08 For all contracts for civil works, vehicles, equipment and furniture estimated to cost US$100,000 or more, before bids are invited, IDA would be furnished for its comments, the test of the invitations to bid and the specification, other bidding and draft contract documents together with a description of the advertising procedures to be followed for the bidding. Orders for purchase of minor equipment, furniture and supplies would be  -41- bulked wherever possible and purchased according to established local bidding procedures, except where valued at less than US$50,000 and not in the rate contract list, when they would be purchased by prudent shopping through normal trade channels. Assurances on procurement procedures mentioned in paras 6.06-6.08 were obtained.during negotiations. 5.09 The balance of project costs (US$291.6 M) would consist of plantation activities and fuel-saving devices (US$211.4 M), adaptive research, support to state agricultural universities and special studies and evaluation (US$0.4 M), training (US$5.4 M), technical assistance (US$0.3 M), incremental salaries and travel allowances (US$53.8 H), and incremental office and vehicles operating expenditure (US$20.3 M) which would not involve procure- ment. All of the above figures include contingencies, which amount to US$62.8 M. Procurement arrangements are summarized in the table below. Table 5.04: PROCUREMENT ARRANGEMENTS (US$ Millions) - Procurement Method -- Total ICB LCB OTHER NA Cost Civil Works - 5.9 18.6 - 24.5 (3.0) (9.3) (12.3) Vehicles and Equipment - - '11.7 - 11.7 _ ; 9) (1.9) Training - - - 5.4 5*4 (2.7) (2.7) Support to SAUs, Special - - - 0.7 0.7 Studies and Tech'l As6'ce (0.3) (0.3) Plantation Activities and - - - 211.4 211.4 Fuel Saving Devices (126.8) (126.8) Salaries & Allowances - - - 53.8 53.8 - - - (18.8) (18.8) Vehicle and Office O&M - - - 20.3 20.3 and Other Expenditures - - (2.2) (2.2) - 5.9 30.3 291.6 327.8 (3.0) (11.2) (150.8) (165.0) (Figures in parentheses are amounts to be financed by the credit.)  -42- D. Disbursement 5.10 Project funds would be disbursed over five-and-a-half years and completed by September 1990, about six months after project completion, coterminus with the Seventh Five-year Plan Period on March 31, 1990. The estimated disbursement schedule for the proposed IDA credit and the USAID funds is given in Annex 5. This is to be compared with the eight year di8- burcement period for the forestry and fisheries subsector in South Asia and in India. While experience with social forestry projects in India is admit- tedly limited, disbursement of the first two social forestry credits (in Gujarat and Uttar Pradesh) will be completed by or before their closing dates, i.e., within six years and these states would account for a substan- tial part of the proposed NSFP. The other states (Rajasthan and Himachal Pradesh), although new to IDA financing in this subsector, have experience with social forestry which should enable them to carry out their projects in a timely manner. Furthermore, the retroactive financing proposed to enable the states to prepare for the initial year planting season should help plan- tation activities to move rapidly. Civil works and procurement of vehicles would also be early in the implementation period and the declining disburse- ment rate proposed to be applied to incremental staff costs and vehicle operating and maintenance costs should also favor rapid disbursement of the credit. 5.11 The proposed IDA credit of US$165.0 M would be disbursed as follows: (a) Field activities, including farm forestry and nursery development; tree ownership on government waste land; community wasteland planta- tions; and reforestation of degraded forests and strip plantations on government land; fuel savings devices: 60% of total costs; Cb) Incremental staff salaries: 30% of total costs, to be financed on a declining basis: year 1, 50%; year 2, 41%; year 3, 31Z; year 4, 26% and year 5, 21%; (c) Travel allowances: 62% of total costs, to be financed on a declin- ing basis: year 1, 100%; year 2, 85Z; year 3, 75%; year 4, 55%; and year 5, 40%; (d) Civil works including building maintenance: 50% of total costs; (e) Vehicles: 100% of ex-factory price or 75% of purchase price if procured locally; (f) Vehicle operating costs: 50% of total costs, to be financed on a declining basis: year 1, 100%; year 2, 80%; year 3, 50%; year 4, 30Z and none in year 5;  -43- (g) Furniture and equipment: 100% of c.i.f. costs if imported; 100% of ex-factory price if locally manufactured or 75% of purchase price if procured locally; and (h) Scaff training, farmqr training, central workshops, technical assis- tance, special studies and -'acarcL grants: 50% of total costs. 5.12 The proposed USAID assistance of US$80.0 M would be disbursed as follows: (a) Field activities, including farm forestry and nursery development; tree ownership on government waste land ; community wasteland plan- tations; and reforestation of degraded forests and strips planta- tions oD government land; promotion of fuel savings devices: 30% of total costs; (b) Incremental staff salaries: 30% of total costs, to be financed on a declining basis: year 1, 50%; year 2, 41Z; year 3, 31%; year 4, 26%; and year 5, 21%; (c) Staff training, farmer training, central workshops, technical assis- tance, special studieE and research grants: 50% of total costs. 5.13 Disbursements against expenditures for the following items would be made against certified statemerts of expenditures: (a) staff salaries, operating costs, local training and plantation costs; (b) civil works con- tracts not exceeding Rs 300,000 and those carried out under force account; Cc) locally procured vehicles, equipment and furniture costing Rs 150,000 or less, (d) research, studies and local consultant costs. The documentation for these expenditures would not be submitted to IDA for review but would be retained by state goverDments and GOI. These documents would be available for inspection by IDA during project review missions. Certificates of expen- ditures would be audited at least once every year and a report submitted to IDA within nine months of the end of each fiscal year. Disbursements against all other items and excluding the above would be contingent upon full and satisfactory documentation. All disbursement applications would be submitted to IDA through the Department ef Economic Affairs (DEA) of GOI. Assurances covering the above were obtained during negotiations. 5.14 Similarly, USAID loan funds (US$77 X) would be disbursed against plantation costs, fuelwood saving devices, and staff salaries upon receipt of certified statements of expenditure. As stated above, these would be forwarded by the cognizant project authority to the IBRD office in New Delhi. IDA would review each statement and effect disbursement from Washington of its share of the various line items as described in para 5.11. IDA would then forward a copy of the certified statement to USAID/New Delhi along vith  -44- a statement of the IDA funds disbursed against the statement. USAID would then initiate disbursement of its share as reflected in para 5.12. 5.15 USAID grant funds (US$3 M) would be used to finance project "software" activities identified as line items for domestic staff training, international staff training, farmer training and extension, technical assis- tance, special studies and evaluation, research operations and grants to state agricultural universities. In those instances where these activities are undertaken directly by the implementation agencies themselves, grant funds would be disbursed upon receipt of certified statements of expenditure processed in the manner described above for loan funds. In those instances where the implementing agency contracts with or grants funds to a separate party such as a state agricultural university, non-governmental organization or independent research groups to provide services, USAID would disburse against certified statements of expenditure, providing the original contracts or grant agreements were reviewed and approved by USAID prior to their execu- tion. Finally, in certain instances it is expected that USAID may be asked by the implementing agencies to arrange for the provision of certain services on their behalf. In these cases direct financing, most likely through direct USAID contracts, would be in order. International staff training is the best example of this situation, although it may also arise in the provision of Indian or expatriate technical assistance or in making certain domestic staff training, special studies, evaluation and research arrangements. IDA and USAID will continually consult on the most effective means of sharing the cost of such activities. It may be, for example, that in some instances, IDA may fully finance an individual activity and in others USAID would bear all costs. Ultimately, however, it is expected that cost of all such "software" activities would be equally shared by IDA and USAID as reflected in Annex 5 on disbursements. E. Accounts and Audit 5.16 Assurances were obtained that separate accounts would be kept of expenditures made under the project, the principal format having been agreed with the Accountant General. In each state, the forest department, at head- quarters and throughout its field offices, would maintain separate project accounts in a readily identifiable form under a separate budget head with subheads corresponding to disbursement categories specified in the staff appraisal report. For the purpose of control of expenditures, divisional accounts would be consolidated in the headquarters office while budgeted expenditures would be consolidated and rendered to the Accountant General of the state every month. The normal auditing procedures within the states would continue to apply. These consist of an internal audit on the basis of spot checks every six months and random annual checks including physical verification of inventory ledgers, external audits carried out annually by the Accountant General (Audit) GOI, and the forestry department's own annual  -45- spot check of stores and equipment. All project accounts would be audited annually for each fiscal year, in accordance with sound auditing principles, consistently applied, and the audit reports, together with certified copies of project accounts, submitted to IDA and USAID within nine months after the end of the fiscal year. Such.reports and audits would show, inter alia, that the funds withdrawn were used for the purpose intended, that goods have been received or work performed, and that payments have been made. All reports vould be submitted by the states through the Special Secretary of Forests to the DEA, GOI, for onward transmission to IDA and USAID. VI. PRODUCTION. MARKETING. FINANCIAL RESULTS AND COST RECOVERY A. Production 6.01 The main output from both farm forestry (which accounts for about 77% of plantings in the proposed project) as well as plantations established o-n government and community lands would be fuelvood and poles. Other important products would be bamboo, small timber, fodder leaves and grasses, fruits and minor forest products. Most plantation designs include a mixture of fuel- wood, fruit and fodder producing species, with local variations such as greater emphasis on bamboos in Gujarat and fodder in H.P. 6.02 In all cases, and as far as practicable, plantation designs stress quick-maturing and coppicing species which enable early harvesting, thinning and lopping to provide household fuelwood needs as well as allow for natural regeneration. The species have been chosen for their adaptability in social forestry situations and many are truly multi-purpose. The relative quan- tities by category of products could vary somewhat in reality; for instance, trees grown for pole production could be sold for fuelwood and vice versa, depending on farmer or market requirements. Production which is based on yields experienced to date, are shown below in Table 6.01.  -46- Table 6.01 ESTIMATED PRODUCTION AT FULL DEVELOPMENT aJ Himachal Uttar Pradesh Guiarat Raiasthan Pradesh Fuelvood mt 740,000 3,900,000 491,000 - -conifer mt - - - 26,200 -broadleaf mt - - - 2,700,000 Poles no 14,800,000 22,000,000 6,700,000 - Small timber cu m 89,000 - 38,300 Bamboo no - 6,800,000 - - Grass mt 67,000 82,000,000 8,110 180,000 Leaf fodder mt - 860,000 800 2,900,000 Dry fodder mt - 50,000 - - Stemwood cu m- - - 520,000 Edible flower mt 8,000 - - - Fruit (inc. Ber) mt 5,600 13,350 12,000 Neem seeds mt - 2,250 - Bidi leaves mt - 304 - Seed pods mt - - 59,000 Fallen vood/lops mt - - 8,200 Oilseeds mt 5,000 - - Cocoons (000 nos) 60,000 - 40,000 Other tree by products mt - - 40,000 A/ Full development years vary by products depending on gestation periods and rotation cycles. For the major products, it is Years 10-15 in Uttar Pradesh, Gujarat and Rajasthan and Years 26 and 50 in Ilimachal Pradesh. B. Marketing of Produce 6.03 A considerable proportion of the farm forestry produce beyond the producers' own immediate requirements would be marketed in the form of sawlogs, poles or fuelvood. Other products like lop and top, fallen twigs, fodder leaves, grasses, fruits and minor forest products would be largely home-consumed or sold to the local market on an intermittent basis. It is expected that there would be no marketing constraint to the incremental production from the farm forestry component; the products would go to assuage a growing scarcity for fuelvood and fodder, indicated by 6Z per year real price increases in recent years as well as by extensive wood pilferage and overgrazing on government and community lands in all the states covered by the project.  -47- 6.04 The produce from tree tenure schemes for the landless and po)r would mainly go to beneficiary participants in these schemes. The product's from planting on community vastelands would be distributed more broadly, with free collection of fallen wood and minor forest products by local villagjrs (including innovative features such as free headloads to harvest 1:borers employed by the Forest Department in Gujarat), and produce sharing'between panchayats and forest departments, the latter for cost recovery pitposes. In departmentally-mana2ed plantations, forest departments would appripriate the bulk of the harvest; it is intended, however, actively to encourage par- ticipation in management by local communities (whether groups of farmers or panchayats) as soon as practicable, with the forest departments :ontinuing to supervise and provide technical guidance. 6.05 Panchayats would generally sell their share of product jy local auction (a fairly established process); however, forest extens.on officers would seek innovative arrangements for more direct distributio.& of part of the produce to local households, the poorer whl-h are generally unlikely to be able to purchase their fuel and other woos needs. While piomoting such direct distribution, however, there is a need to raise enough revenues from auctions to hold panchayat interest and recover departmental costs. 6.06 The same concerns hold for produce from departmental plantations. Forest departments generally auction their harvests at rural and urban depots, invariably supplying sawmillers, timber merchants, packing case industry and others who can afford to purchase their wood needs. Attempts to channel part of this produce to rural households include proposals for free collection of fallen wood, grasses and minor forest products by locals, as well as free headloads to laborers recruited for harvesting; allocation of up to 10% of harvest for free distribution to the local needy; and sales of part of the harvest at concessional rates of 20-80% of market price. These proposals have been put forward mainly in Gujarat, with variations in the other states. 6.07 Given the shortage of forest products and fuelwood in India and the multi-product nature of most trees, market saturation is not expected to be a problem. In isolated instances, a glut of poles may be realized but these could always be converted to small timber or fuelwood. Where earlier plant- ings are reaching maturity, modest marketing assistance for small growers is provided (as in Gujarat) and market information functions are incorporated in the extension services. 6.08 The distribution modes showing the proportions of the benefits from production to be shared by individual farmers, local poor households, village panchayats and forest departments for each plantation model in each of the four states are presented in Project Files Cl-C4. Other distribution modes that could be tested in the course of the project include sale at conces- sional prices or on a 'ration basis' to enable easy access to wood products  -48- by both rural and urban poor households. The forest departments in each state vill, as emphasized during appraisal, review different mechanisms for produce distribution and exchange experiences vith other states in order to develop improved but practical measures. 6.09 The wood balance situation in each of the four states is generally not well known. Inventory figures are non-existent, and consequently little is known about growth. Removal estimates are reasonable for legal harvests, but either illegal removal are high or farm forests contribute far more than expected. The current situation strongly suggests, hovever, that there are dramatic imbalances in each state although there is little basis for either projecting future balances or planning efficient long-term pregrams for closing the gap between growth and renewals in critical commodities like fuelvood. For these reasons, the Bank requires that states with social forestry projects develop a reasonable information base to estimate wood balances by fuelwood and roundwood, to project consumption levels vis-a-vis alternative energy resources, and to predict future supply responses. Assurances vere obtained from all states that they would continue to revise and update these studies at least biannually. C. Financial Results and Cost Recovery 6.10 The cash flows for plantation models (taken over a 30 year period) also show the analyses of financial rates of return to the model and to forest departments, and cost recovery to the departments. The detailed tables are in Project File C6, and the results are summarized in Table 6.02. 6.11 Costs and returns have been calculated in 1985 financial prices. Farmers' labor inputs and products accruing to rural households have been valued at imputed prices equal to financial wages and prices. This implicitly assumes that the farmer has the option to use his labor or the plantation products at home or offer them for sale at market rates. The analysis shows healthy financial rates of return for most models, mostly in the 11-35% range except for strip plantations on government wastelands in Gujarat and Rajasthan (4-8%). These lower rates of return are the result of high investment costs (mainly borne by forest departments) and the exemption of part of the plantations from harvest (for aesthetic, shade and demonstra- tion purposes). 6.12 Financial rates of return to the forest departments for the various plantation models are substantially lower than the returns on the models themselves (see columns 1 and 2 of Table 6.02). Despite these low FRRs, investments are justified considering the economic benefits and other unquan- tified benefits (para 7.10). In about half of the cases, the FRR for forest department undertakings is zero or negative. The departments in Rajasthan and Rimachal Pradesh do not intend to recover costs in six of their models  -49- (see column 7 of Table 5.02). In the remaining models, forest departments generally recoup from 100 to 200% of their initial cost outlays in nominal terms. These figures reflect undiscounted costs and returns in 1985 prices, whereas actual net present values at 12Z discount rate are generally nega- tive, indicating a measure of Government subsidy over time (see Column 8 of Table 6.02). 6.13 The particular mix of plantation models proposed in each state as indicated by plantation targets (Column 9, Table 6.02) reflects a number of objectives of this Project. Among these concerns are (i) the emphasis on the development and finaacing of lower cost models (such as farm forestryl, (ii) relative financial rates of return (suc-h as fewer strip plantations and more planting on wastelands); (iii) emphasis on more direct distribution of benefits to individual beneficiaries and panchayats (as in private wasteland plantings by small and marginal farmers and community woodlots); as well as (iv) cases where forest departments would be able to recover the direct cost of field investments at least in nominal terms.  Table 6.02: FINANCIAL RATES OF RETURN AND COST RECOVERY (per ha basis) S of Benefits to Total Cost to FD FRR of FRR of Forest in nominal terms Returas to NPV to FD (at Plantation State/Model /a Model VD Villagers Panchayat Dept. (over 30 yr.) ?D as X of 12% Discount Targets I 2 2 2 2 Rs/ha Coat to FD Rate) ha Column 1 2 3 4 ' 6 7 8 9 UTTAR PRADESH A. Farm Foreuery 58.0 - 100 - - - - - 201 mill seedlings x x (134,000 ba equiv) B, Tree Tenure for Poor and Landless (Beneficiary Manamed) IA. Roadside Strip Plantation 10.9 0.5 76 - 24 18,941 112 -14,254 900 1. Railside Strip Plantation 10.0 -2.5 85 - 15 19,387 71 -17,699 310 2. Group Fare Forestry 23,1 2.4 84 - 16 8,804 186 -6,930 11,000 (Unirrigated block plantations) 3. Irrigated Blocks (Arjun) 36.3 negative 100 - - 15,600 0 -13,036 1,000 C. Plantineps on Community Wastelands (Joint Dept.-Panchayat Manaded) 1. Cc.munity Woodlots, Rainfed 19,2 2.3 64 18 18 8,804 186 -6,930 14,000 D. Plantina on Government Wasteland. (Dept.-Managed) 2A. Roadside Strip Plantations 10.9 3.4 52 - 48 23,941 178 -12,033 600 23. Railside Strip Plantations 10.0 0.6 70 - 30 24,387 114 -16,801 140 A. Atroforestry 1. Farm Forestry 31.6 - 100 - - - - - 300 mill seedings x x (200,000 ha equiv) 2. Private Wasteland Planting by 25.9 negative 100 - - 2,583 0 -2,131 30,500 Small and Marginal Farmers C. Planting on Community Wastelands 1. Community Woodlots, Rainfed 20.1 8.8 35 33 32 5,723 301 -1,349 20,000 2. Community Woodlots, Irrigated 34.8 11.8 6 44 49 112,287 145 2,822 5,000 3. Community Tree Fodder Lots 12.5 8.3 18 41 41 3,767 430 -1,069 10,000 D. Plantint on Government Wastelands 1. Rehabilitation of Degraded Areas 15.7 14,3 11 - 89 6,215 590 1,305 30,400 2. Strip Plantations 5.9 -1.0 24 38 38 21,818 85 -11,604 15,000 3. Urban Fuelwood Plantations 17.4 13.0 14 - 86 112,287 157 5,149 2,500  Table 6.02: FINCIAL RATES OF RCSTURN AID COST RECOVERY (cant) (per ha basis) I of Beafits to Total Cost to PD nR of FRR of ForpCt in nominal terma Retural to UPV to lD (at Plantation State/Model /1 Model ?D Villagera Panchayst Dept. (over 30 yr.) rD as 2 of 121 Discount Targets S S S I Z Rat&b Cost to PD Rate) ba ColUm 1 2 3 4 5 6 9 A. AArgiJgtr 1. form Forestry 23 .5 - 100 - - - - - 120 mill seedlings x x (80,000 ba aqul) 3. Improved (Grafted BSr) Orcbards 99.4 negative 100 - - 125 0 -112 400,000 plants x x (4,000 hi *quiv) S Tree tanura for Poor and Landlese 2. Household Far. Forestry - per ha basis 18.7 negative 100 - - 2,276 0 ) -2,071 7,500 - per participant bsis ) 15.0 negative 100 - _ 5,690 0 ) -4,181 C. PlAntinn on Counitv W Cagus 1. Commuilty hoodlots 12.8 negative 27 73 - 4,807 0 -4228 5,000 D. PlAnt1nA on 0_ wainu Sle1.tlDdA 1. Rababilitation of Degraded 31.4 5.9 17 63 3,065 211 -957 20,000 forests 2A Roadside Strip tlantations 6.3 0.5 12 33 55 32,125 109 -11,949 2,500 & 21 Lilasde Strip Plantations 3.7 -t.2 23 49 27 28,220 42 -11,537 1,000 t 2C Canalside Strip Plattatiozs 7.7 4.4 9 19 72 32,125 159 -9,007 300 2D flood Control and Tank 23.1 7.5 30 35 35 7,659 196 -949 500 Embankmenta NIKACUAL PRADISE A. MJAUEgfg ZZr 1. Fam Forestry 33.8 t 100 - - - 53,000 X z hh equiv 2. Private Wasteland Plantation 36.9 negative 1002 - - 2,824 0 -2,483 13,000 Group ram Forestty S. Tres Tenure 2. Croup Farm Forestry 35.3 1.2 96 - 4 4,225 143 -3,548 1,10 Goverment Lands ha equiw C. Comnity WVastelJes 1. Woodlots Self Help 35.3 1.2 1 95 4 4,225 70 -3,548 1,000 (Panebayat Kaniged) 2. Woodlote 35.3 1.2 72 - 28 4,225 933 -1,124 40,000 (Dept-Kanaged) D. CGovsront VAsteland 1. Rebabilitation of 22.4 13.6 26 - 74 5,125 1,219 1,216 5,000 Degraded Areas /I For F omplete schematic presentation of models, see Table 4.02, page 20.  -52- VII. BENEFITS AND RISKS A. Benefits 7.01 Social forestry represents an ideal project in many ways for dealing witb poverty in rural areas, as well as for dealing with energy scarcity at household levels and avoiding further degradation of land. The most direct beneficiaries under the proposed project would be farmers planting trees on their own lands. Through species selection, wide dispersion of nurseries, seedling distribution methods and extension efforts, more small farmers would be involved than has been initially experienced with social forestry projects. Under the proposed project about 6 to 8 K farmers, mainly small and marginal (under four ha), are expected to participate in NSFP in the four states. Other beneficiaries would be the rural and semi-urban population in these states who depend heavily on such forest produce as firewood, small timber and poles for their everyday needs. The rural poor, including land- less laborers, small and marginal farmers, members of tribal groups and other disadvantaged communities would be particularly benefitted by the additional output generated by the project and by part of the output from plantations on public land that would be distributed to them for their labor or at low prices. Indirect benefits would flow to the population as a whole from the improvement in wood balances and energy supplies in these states, as well as from environmental enhancement. Institutional Development 7.02 The institutional development, which is the core of NSFP, would represent the most important long-term benefit of the project, for it would help to enable and to sustain increased economic and environmental develop- ment not only in the states directly benefitting but also, by establishing the central Social Forestry Support Office, in all states and territories of India. Both at the state level and at the center, greater coordination of various schemes which support social forestry would make mo-e efficient use of the resources invested in them. With the substantial increase in social forestry which is called for under the Prime Ninister's ne, Ten Point Program and the Seventh Five Year Plan, such institutional strengthening is of utmost importance. 7.03 In the states, the forest departments would be reorganized to give more emphasis to social forestry activities and social forestry. Forest department planning, training, extension and monitoring and evaluation capabilities would be strengthened. Efforts would be made to involve local commnities in the planning and management of village woodlots and other community forestry schemes. This would also involve strengthening the linkages between social forestry and agricultural extension, as well as other closely related rural development activities. The small nurseries which  -53- would be promoted by the project, beyond benefitting their operators with an additional source of funds, could in time be taken over by them, ultimately leading to development of a network of privately operated nurseries. Production Impact 7.04 The incentive for small farmers under farm forestry is substantial since they would retain all of the revenues from any of the produce sold. Less obvious would be the impact on production from more equitable arrange- ments for distribution of the product under other social forestry schemes. Much of the reason why wood flow imbalances and forest degradation occurs is that most people do not have a vested interest in harvesting at sustainable rates and investing to increase future sustainable rates on community or government lands. This is the difficulty of common property and com- mon-access property rights that exist on much of the legal forest, revenue lands and marginal cultivated lands used in social forestry. By sharing in the benefits the poor have a greater vested interest in making social forestry work. 7.05 The project would promote improved production methods and cost reduc- tion in seedling production and distribution and in management of planta- tions, including protection. Research efforts supported by the project would also be directet to cost reduction. 7.06 The project would also help to improve flexibility in production. Given the relatively short growing period required before harvesting many of these plantations (five to eight years), through improved planning, including wood balance and other marketing studies, production could be directed to meet expected priority needs, taking into account social objectives and financial return. Conservation 7.07 The project wouid have positive enviornmental izpact. The imbalance between timber growth and removals is causing rapid depletion of timber inventories and degradation of soil and water resources, coupled with a disproportionate negative impact on the rural poor. Pressures on existing forest land have mounted in recent years, and will continue to do so if fuelvood shortages are allowed to become even more acute. The project would help to ease these pressures, while at the same time restoring trees to many areas now degraded and subject to erosion. As indicated above, by greater involving of the rural poor and rural communities in social forestry and giving them a stronger interest to invest in increases in future sustainable harvesting rates, it may be pcssible to improve the wood flow imbalance and reverse forest degradation.  -54- Ernloyment Generation 7.08 Project-financed plantations would generate about 100 M laborer-days of work on establishment and maintenance, usually extending over a six year period for each plantation area started during the five yeaxa of the project. These activities provide a major source of employment for landless people, especially women. Direct incremental employment in the forest departments would be relatively small under the four state projects: about 10,000 new jobs created in social forestry operations, including 5,156 key positions (mainly field staff, see Table 3.03). Incremental employment has been kept to a minimum in the interest of not burdening state budgets and sus- tainability after the project period. The 4,300 small nurseries would provide employment for approximately 9,000 farmers and others operating them, not counting occasional nursery labor. B. Economic Analysis 7.09 The economic rate of return on the Project is 27Z and for each of the four States the rates are as follows: Uttar Pradesh 25Z, Gujarat 26Z, Rajasthan 17%, and Himachal Pradesh 34%. For details see Table 7.01 and Annex 6. These Base Case results have been computed on the following basis: vi) All costs taken are base costs, including physical contingencies; (ii) investment costs are taken over project period (Years 1-6) including pre-project year (Year 0), and without replacements; (iii) 100% of staff costs for project period and 100% of extension staff costs for Year 7-15 have been taken; this provides for forest departments' supervision and extension for individual schemes for at least ten years with eventual handing over to local beneficiaries or panchayats; (iv) 100% of other recurrent project costs for the project period and 100% of costs of extension components only in Years 7-15 for the reasons indicated in (iii) above; and (v) plantation recurrent costs are taken through Year 31. 7.10 The rates calculated underestimate the real returns by not including other important external benefits of the project, amongst others: (i) demonstration effect of highly visible plantings on private, community and government vastelands and peripheries of houselots and fields, which have made important contributions to greater  -55- community and political awareness and uptake of the social forestry program; (ii) tangible benefits from replacement of tree cover, arrest of soil erosion and land degradation and consequences for improved soil productivity over the medium and long-term; (iii) improved socio-ecological environment including aesthetic, shade, improved health and other effects from trees, smokeless stoves, etc.; (iv) improved efficiency in project implementation arising from and learning effects from project monitoring and evaluation, cost effective plantation protection measures, nursery layout and propagation techniques, research trials, and exchange of experiences between states which would be actively fostered by the Central support office; (v) increase in productivity that could be attributed to time savings by the local communities, particularly women, resulting from vastly improved access to nearby woodlots and other planted sites for their fuel and fodder collection needs; (vi) time savings resulting from the use of improved stoves, crematoria, and pressure cookers; and (vii) increase in agricultural productivity as a result of returning animal dung and agricultural wastes to the fields, in cases where they would otherwise be collected to meet fuel needs. 7.11 In the calculation of economic costs and benefits, all values are in 1985 constant prices at exchange rate of Rs 12 - US$1. The economic analysis has been made in border rupees, using a standard conversion factor of 0.8 and specific conversion factors which are described in Project File C6, Item 3. Due to seasonal unemployment and under employment, wage rates vary, for example, in Gujarat from highs of about Rs 13 in seasons of peak agrictiltural demand to lows of Rs 8 in other periods. It is estimated that 25% of social forestry activities take place in the season of high wages, giving a weighted shadow wage rate for unskilled labor which comes to about 702 of the finan- cial wages which have been prescribed under the Minimum Wages Act in each of the states. Traded goods and services have been valued on the basis of their financial c.i.f. import prices, adjusted by tax rates, foreign exchange component and local material and labor inputs. The opportunity cost of land is taken to approximate zero in the economic rate of return calculations as the social forestry plantings are either on very poor, highly overgrazed and marginal lands with virtually no displacement of agricultural crops, or on  -56- peripheries with no shade or deleterious effects on field crops. Departmen- tal plantings are on wastelands and no land value has been imputed. A sum- mary of economic and financial prices used are shown in Annex 7. C. Sensitivity Analysis 7.12 As summarized in the Table 7.01 below, the economic rate of return shows little sensitivity to changes in most variables. Total benefits would have to decrease by 67Z for the rate of return of the project to fall below the opportunity cost of capital at 12%; alternatively, total project cost would have to increase by 201%. Under the unfavorable circumstances of both a reduction in benefits by 20% and an increase of costs by 20% (or a lag in the benefit stream by one year), the economic rate of return for the project would still be 21% and in every state it vould equal or exceed the oppor- tunity cost of capital. Table 7.01: ECONOMIC RATES OF RETURN AND SENSITIVITY ANALYSESI1 (Percentage) Economic Rate of Return Himachal Uttar Guiarat Pradesh Rajasthan Pr'ldesh NSFP Base Case 26 34 17 25 27 Total Benefits down 20% 22 31 14 21 23 lagged 1 yr. 22 30 15 21 24 Total Costs up 20% 23 32 14 22 24 Total Costs up 20% and benefits down 20% 19 28 12 18 21 Switchins Values Total benefits -59 -87 -42 -56 -67 Total Project Costs 144 647 71 127 201 a/ Opportunity cost of capital - 12%.  -57- D. Proiect Risks 7.13 The project faces no major risks that might endanger its overall viability during the five-year implementation period. The forest departments have sufficient capacity and experience to implement the departmental planta- tion schemes and sufficient funds have been earmarked in the state budgets to cover these projects. Shortage of funds could become a problem, however, should the state over-extend itself on forestry or other programs. In farm forestry, the levels of seedling distribution under the state subprojects should be easily attainable even with the limitations on free seedling dis- tribution called for under the project. While farmer acceptance of higher levels of seedling distribution is unlikely to be a problem, and wastage and survival rates should be within reasonable limits, risks of such losses would be increased if other seedling distribution programs in these states under various centrally sponsored and donor schemes should create an over-supply of planting stock or over-extend the staff and other resources available. Therefore, the participating states gave assurances during negotiations that they would inform the Association about any major developments concerning social forestry programs carried out by their forest departments, in order to enable the Association to evaluate the impact, if any, these developments might have on project-financed activities. 7.14 The extension staff employed by the forest departments under NSFP have been kept to a minimum by supplementing field contacts vith farmers through the agricultural extension services, which would give advice on proper tree planting and maintenance techniques. This approach necessarily involves certain risks since it depends on effective coordination and cooperation between the forest department and the agricultural department. To minimize the risks, the two services in each state have undertaken to exchange memoranda of understanding or issue government orders outlining how this cooperation would be effected and the responsibilities of each. Where improved professional extension service promoted by the Bank is just being established-in Himachal Pradesh and Uttar Pradesh-this necessarily involves more uncertainty than in the other states where T&V agricultural extension services are well established and arrangements are already underway for the forestry departments to work through agricultural extension in their farm forestry programs. 7.15 Since it is expected that farmers under the project would plant a large proportion of trees for sale as poles, timber or other products of higher value than firewood, there is also a theoretical risk of market saturation. Given the apparent shortages of wood products this risk is considered remote. The wood supply and demand studies to be carried out under the project would help to provide the data needed to effectively monitor the situation. Wood balance studies to develop a basis for estimat- ing consumption and planning future supplies are needed if social forestry is  -58- to become a sustainable social and economic basis for continued rural development and alleviation of rural poverty. 7.16 The five-year implementation period of NSFP will not assure that all the institutional changes are made which would put social forestry on a socially and economically sustainable basis after the current period of major donor funding. Social forestry represents a means of creating assets and giving ownership and control of those assets to rural poor people. Tree and fodder tenurial rights and the assignment of those rights to poor people is a difficult problem which cannot be dealt with in a short period of time in a large democratic society. NSFP would make a major contribution towards changing the nature of tenures on various products of public and common land. VIII. AGREEMENTS REACHED AND RECOMMENDATIONS 8.01 During negotiations, assurances were obtained from GOI and from the states involved on the following: (a) The project states would by March 31, 1988 carry out studies of the organizational issues in their forest departments, which would include, inter alia, the relationship of various social forestry schemes (para 2.22); (b) The project states would review current arrangements concerning procedures for selecting participants for private wasteland planting schemes, tree tenure schemes, community managed woodlots and tree fodder plantations, the rights and responsibilities of these par- ticipants and the procedures for advising them of their rights and responsibilities; where Government orders and instructions, including proforma agreements, are not comprehensive, the states would take appropriate remedial action by December 31, 1985 (para 3.05); tc) The project states would undertake socio-economic studies to ascer- tain farmer response to charging for seedlings, as a basis for deter- mining a program of action for implementing the principle of full cost recovery; the results of these studies would be discussed with the Association at the time of the mid-term review (para 3.16), and thereafter they would start implementing their programs; until such programs are undertaken, for the project, eachA state would gradually reduce free distribution of project seedlings in accordance with a schedule agreed with IDA and seedlings above the free limit would be charged for at rates, also agreed with IDA, which would progressively be increased to cover the direct cost of production (para 3.10);  -59- (d) Each state would undertake a joint review of the project with GOI, IDA and USAID promptly after the third year's planting program, and not later than March 31, 1988 (para 3.16); (e) Each state would revise policies governing provision of vehicles and travel allowances, as needed, to ensure requisite mobility for field staff (para 3.17); (f) By December 31, 1985, both Himachal Pradesh and Uttar Pradesh would make arrangements to ensure that their Departments of Forest and Department of Agricultural Extension Services cooperate to provide social forestry extension services to farmers (para 3.18); (g) By December 31, 1985, Rajasthan would sanction the position of Con- servator for Planning, Monitoring and Evaluation, and Uttar Pradesh would sanction the positions of Additional Chief Conservator of Forests and a Conservator of Forests for Planning; (para 3.23); (h) By April 30, 1986 GOI would furnish to the Association the proposed structure of the central forestry organization (para 3.30); *i) By April 30, 1985 GOI would sanctioD and by October 31, 1986 fill the position of the head of the Central Social Forestry Support Office and thereafter maintain that position and those of the Chief Project Economist and the Deputy IGF/Monitoring and Evaluation (para 3.31); Cj) The Government of Rimachal Pradesh would maintain a single line of command from the circle Conservator down for field staff, and a steering committee headed by the Forestry Secretary would meet at least quarterly to discuss and assign work priorities (para 4.05); Ck) Each state would undertake monitoring and evaluation of its project in accordance with the Guidelines agreed by GOI and the Bank and would forward simmary results to IDA and USAID at least once a year (para 4.07); (1) In order to ensure the coordination of forestry activities among all state agencies, the project states would maintain coordination com- mittees for social forestry activities (4.09); (m) Each state would prepare and submit semi-annual progress reports, and the Social Forestry Support Office would prepare a project com- pletion report (para 4.10); (n) The participating states and GOI would implement procurement proce- dures satisfactory to IDA (para 5.08);  -60- to) Each state would prepare and present to GOI for tranmission to IDA and USAID administrative and financial data regarding progress of the project, including procurement of goods and services, civil works, expenditures, audits and requests for disbursement in accordance with the schedules agreed (paras 5.13 and 5.16); (p) Each state would continue to revise and update its wood balance study at least biannually (para 6.09); and (q) The project states would inform the Association about any major developments concerning social forestry programs carried out by their forest departments, in order to enable the Association to evaluate the impact, if any, these developments might have on project-ftnanced activities (para 7.13). 8.02 To encourage the prompt implementation of the project and to recog- nize the early initiatives taken by GOI and the state governments to imple- ment the project, it is recommended that retroactive financing by IDA up to a total of US$14.5 M be made available for expenditures incurred after October 1, 1984 (para 5.04). 8.03 With the above assurances, the proposed project would be suitable for a credit of SDRs 166.1 M (US$165.0 H) to GOI on standard IDA terms.  INIMA SOCIAL FOR1STRT PROGRAM DURING SlT FIVE TZAR PUA! (1950-85) A -PIT IXCAL AC8IIVZKUTS .J --------- Centrally Sponsored Schmes - -------- --- - --Donor-Asited Scemes- State Total2/ INtl Rural Other Rural Fuel Drought Prone Small A Kargi- E ploymat Integrated (Zatt ted) Wood Program Areas Program nal Parers Program Rural Dev't. World State *Ot- (UIM-iq. 4At.) (DPAP-Min ID) 31 (BrP-Kit AS) NRIP-MinRd / (Min-Rd) Back USAID SIDA CIuD Scbes 5/ Plan TOTAL Andhra Pradesh 23,367 43,580 52,820 19,365 * - - 55,125 93,000 * 287,437 Assam 14,874 - 21,440 763 * - - - _ 10,000 0 47,077 Bihar 25,335 24,648 93,920 22,864 * - - - - 56,000 * 222,767 Cujarat 13,891 14,092 34,890 15,776 * 274,280 - - - 105,000 * 437,919 laryana 14,169 10,654 14,850 10,544 28,972 - - - 57.000 * 136,219 limachal Pradesh 12,120 - 11,040 2,702 *- - - 33,00 568U2 Ja_m & Kashair 1,000 102 12,000 2,207 * 16,87 - 2300 * 5,196 aruataka 17,272 14,823 28,000 49,083 ' 49,669 - - - 53,000 ' 211,847 terala 10,74 - 24,160 3,751 5,905 - - - 13,000 * 57,562 Nsdhys Pradesh 29,103 21,373 73,280 25,830 * - IJ,819 - - 181,000 ' 349,405 Kaharaehtra 6,019 25,836 47,630 4,751 ' - 18,333 - - 135,000 * 240,569 Xanipur 22,750 - 4,160 810 * - - - - 14,000 * 41,720 Neghalaya 33,910 - 3,840 453 * - - - - 5,000 * 43,203 Nsgaland 7,719 - 3,360 - * - - - - 10,000 21,079 Oriese 19,339 26,840 50,240 84,511 * - - 5,653 - 70,000 256,583 Punjab 12,006 - 18,880 5,577 * - - - _ 15,000 * 51,463 Rajasthan 26,700 78,010 37,760 30,615 * - - - - 50