Ghana - Natural Resource Management Project

Document of The World Bank Report No: 17879 PROJECT APPRAISAL DOCUMENT ONA PROPOSED ADAPTABLE PROGRAM CREDIT IN THE AMOUNT OF SDR 6.9 MILLION (US$9.3 MILLION EQUIVALENT) AND GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND IN THE AMOUNT OF SDR 6.5 MILLION (US$8.7 MILLION EQUIVALENT) TO THE REPUBLIC OF GHANA FORA NATURAL RESOURCE MANAGEMENT PROJECT IN SUPPORT OF THE FIRST PHASE OF A NATURAL RESOURCE MANAGEMENT PROGRAM MAY 15, 1998 Agriculture Group 3 Country Department 10 Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective April 1998) Currency Unit = Cedi Cedi = US$ 0.00045 US$1.00 = 2,200 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AAC Annual Allowable Cut AfDB African Development Bank APC Adaptable Program Credit APL Adaptable Prograrn Lending CAS Country Assistance Strategy CFMU Collaborative Forest Management Unit CWMP Coastal Wetlands Management Project DANIDA Danish International Development Association DFID Department for International Development (UK) EA Environmental Assessment EC European Commission EPA Environmental Protection Agency ERMP Environmental Resources Management Project FD Forestry Department FIMP Forestry Inventory Management Project FMSC Forest Management Support Center FPIB Forestry Products Inspection Bureau FRMP Forest Resource Management Project FSDP Forest Sector Development Project GEF Global Environmental Facility GFS Ghana Forest Service GSBA Globally Significant Biodiversity Area IDA International Development Association IUCN World Conservation Union MEST Ministry of Environmnent, Science and Technology MLF Ministry of Lands and Forestry MLGRD Ministry of Local Government and Rural Development MME Ministry of Mines and Energy MOFA Ministry of Food and Agriculture NGO Non Government Organization NRMP Natural Resources Management Project PADP Protected Areas Development Program PCC Project Coordination Committee PCU Project Coordination Unit PPMED Project Planning Monitoring and Evaluation Department TEDB Timber Export Development Board TIDB Timber Industry Development Board WD Wildlife Department WFP World Food Program Vice President: Jean Louis Sarbib Country Director: Peter Harrold Sector Manager: Jean Paul Chausse Task Team Leader: Robert Epworth  GHANA NATURAL RESOURCE MANAGEMENT PROJECT CONTENTS A. Program and Project Development and Global Objective ...................................................1 1. Program development objective and key performance indicators .................................1 2. Program global objective and key performance indicators ............................................1 3. Project development objective and key perforrnance indicators ...................................2 B. Strategic Context ..................................................................2 1. Sector-related CAS goal supported by the project .........................................................2 2. GEF Operational Strategy/Program objective addressed by the project ........................2 3. Main sector issues and Government strategy .................................................................2 4. Sector issues to be addressed by the project and strategic choices ................................4 C. Program and Project Description Summary ..................................................................5 1. Ghana Natural Resource Management Program .............................................................5 2. Natural Resource Management Project I - Project Components ....................................6 3. Key policy and institutional reforms supported by the project ......................................8 4. Benefits and target population ..................................................................8 5. Institutional and implementation arrangements .............................................................9 D. Project Rationale .................................................................................. 11 1. Project alternatives considered and reasons for rejection ............................................ I 1 2. Major related projects financed by Bank, GEF and/or other development agencies ... 12 3. Lessons learned and reflected in proposed project design ........................................... 13 4. Indications of borrower commitment and ownership .................................................. 14 5. Value added of Bank and Global support in this project .............................................. 14 E. Summary Project Analyses ................................................................ 15 1. Economic ................................................................ 15 2. Financial ................................................................ 16 3. Technical ................................................................ 16 4. Institutional .................... 17 5 Socal ......... ......................... ......................................................................... 5. Social .. 17 6. Environmental assessment ..................... 18 7. Participatory approach ..................... 19 ~~~~~~~. SutiaiiyadRss....................................................................................... 19 F. Sustainability and Risks..19 1. Sustainability .19 2. Critical risks .20 3. Possible controversial aspects ..................... 21  -1 - G. Main Loan Conditions ........................ 21 1. Effectiveness conditions ........................ 21 2. Other ........................ 21 H. Readiness for Implementation ........................ 21 I. Compliance with Bank Policies ........................ 21 Annexes Annex 1. Project Design Summary .23 Annex 2. Detailed Project Description .33 Annex 3. Estimated Project Costs .50 Annex 4(a) Financial and Economic Analysis .52 Annex 4(b) Incremental Cost Analysis - Biodiversity ConservatiorL .62 Annex 5. Financial Summary .65 Annex 6. Procurement and Disbursement Arrangements .66 Table A. Project Costs by Procurement Arrangements - IDA .69 Table A(i) Project Costs by Procurement Arrangements - GEF .69 Table B. Thresholds for Procurement Methods and Prior Review .69 Table C. Allocation of Credit Proceeds - IDA .70 Table C(i) Allocation of Grant Proceeds - GEF .70 Annex 7. Project Processing Budget and Schedule .71 Annex 8. Documents in Project File .72 Annex 9. Statement of Loans and Credits .73 Annex 10. Country at a Glance .74 Annex 11. Social Analysis and Participatory Approach .76 Annex 12. Statement of Development Policy .78 MAP IBRD No. 29270  GHANA Natural Resource Management Project I Project Appraisal Document Date: 05/15/98 Task Manager: Robert Epworth Project ID: GH-PE-946 Sector: Rural Development Program Objective Cat.: Env. Sustain Dev./Poverty Allev. GEF Supplement ID: GH-GE-45 188 Focal Area: Biodiversity/Natural Resource Management Lending Instrument: Adaptable Program Credit Program of Targeted Intervention: [] Yes [/] No + GEF Grant Program Financing Data (US$ million) Total Cost IDA GEF Cofinanciers GOG NRMP 1 (1999-2000) 25.7 9.3 2.1 12.1 2.2 NRMP 11 (2001-2004) 37.0 10.7 6.6 12.7 7.0 NRMP III1(2005-2008) . 27.3 10.0 - 11.8 5.5 Program Cost 90.0 30.0 8.7 36 Project Financing Data [ ] Loan [x] Credit [] Guarantee [x] Grant [ ] Other[Specify] Amount: US$9.3 million/SDR 6.9 million (IDA) and US$8.7 million/SDR 6.5 million (GEF) Proposed terms: [x] Multicurrency [] Single currency, specify Grace period (years): 10 [] Standard Variable [] Fixed [] LIBOR-based Years to maturity: 40 Commitment fee: 0.5% Service charge: 0.75% Financing plan (US$ million): Source Local Foreign Total Government 2.2 - 2.2 IDA 6.4 2.9 9.3 GEFI 1.5 0.6 2.1 Cofinanciers2 8.1 4.0 12.1 Total 18.2 7.5 25.7 Borrower: Republic of Ghana Responsible agencies: Ministries of: Lands and Forestry; Food and Agriculture; and Environment, Science and Technology Estimated Disbursements (US$ million): NRMIP-I NRMP-II 1999 2000 2001 2002 2003 2004 IDA Annual 4.1 5.2 Cumulative 4.1 9.3 GEF Annual 1.0 1.1 1.9 1.7 1.6 1.4 Cumulative 1.0 2.1 4.0 5.7 7.3 8.7 .Uf .W i C......... ;WW... ..............................................9.................. .............................................. .....I....................... ............................................... ............................ GEF would approve funding for a six-year project, covering the first and second phases of the program (NRMP I and NRMP II), with a caveat in the legal documents to allow for the suspension of GEF disbursements in the event that IDA does not proceed with the funding of NRMP II. I GEF: First two years of six-year US$8.7 million program (see Section C: Biodiversity Conservation). 2 Cofinanciers: Apart from the DFID program of US$6.8 million, other donor prograns during the frst two-year phase are not yet fnalized, but based on ongoing discussions are estimated as follows: Danida US$1.2 million; AfDB US$0.8 million; EU US$1.4 million; Netherlands US$1.8 million; and WFP US$0.3 million.  A. PROGRAM AND PROJECT DEVELOPMENT OBJECTIVES 1. Program development objective and key performance indicators (see Annex 1) The development objective of the Natural Resource Management Program (NRMP) is to protect, rehabilitate and sustainably manage national land, forest and wildlife resources and to sustainably increase the income of rural communities who own these resources. Progress would be measured by: (i) improvement in the policy and regulatory environment for high forest management and timber industry development; (ii) enhanced local community involvement in management of the high forest and savanna woodland zones and improved flow of benefits to communities from resource sales; (iii) community and farner adoption of improved land and water management techniques; (iv) improved management of wildlife resources while increasing their contribution to local livelihoods and economic development; and (iv) implementation of the Forest Protection Strategy to enhance conservation of globally significant biodiversity in forest reserves and national parks. The ten-year program has been designed to be implemented in three phases: a first phase of two years, followed by two four-year phases. The full program will address issues of conservation, enhancement and sustainable utilization of Ghana's land, forest, savanna woodland and wildlife resources. The first phase objective would be to establish an effective national policy and institutional firamework for sustainable natural resource management and to develop and test collaborative resource management systems. Project activities in this phase would therefore concentrate on finalizing policy reform, undertaking institutional restructuring and strengthening and initiating baseline surveys/pilot projects associated with collaborative resource management programs. Conditional on successful implementation of the first phase, the second phase objective would be to establish collaborative management systems for forest, savanna and wildlife resources, in priority sites from environmentallsocial/economic perspectives. In the third phase, the objective would be to extend implementation of the program country-wide and ensure institutionalization of collaborative management systems of natural resource management. Benchmarks indicating the successful completion of each phase and triggering the commencement of subsequent phase are outlined in Section C: Program and Project Description Summary, and detailed in Annex 1, Tables 1 and 2. 2. Program global objective and key performance indicators (see Annex 1) The global environment objective is to increase the ecological security of globally significant biological resources, especially within threatened tropical moist forest ecosystems. Specific objectives are to: (i) protect a significant portion of forest biodiversity through implementing an ecosystem approach to management within the high forest zone that involves strengthening management of national parks and taking selected high-biodiversity forest reserves out of production; (ii) improve knowledge of the distribution and status of rare, threatened and endemic species through targeted surveys to better focus conservation measures; (iii) enhance biodiversity protection within multiple-use production forests through exclusion of critical habitats from logging; and (iv) ensure sustainability and preserve genetic diversity within non-timber forest species that rural populations use for medicinal and consumptive purposes by means of improved data collection, monitoring, harvest regulation and sustainable management within forest reserves. Progress would be measured by the number of hectares of high conservation priority forests brought under effective management, the stability of threatened and rare species populations and the increased security of natural habitats.  -2 - 3. Project development objective and key performance indicators (seeAnnex 1) The development objective of the first Natural Resource Management Project (NRMP I) is to establish the institutional and policy framework for implementing ecologically and socio-economically sustainable management systems for high forest, savanna woodland and wildlife resources, in collaboration with local communities. Key indicators signifying the successful completion of NRMP I are summarized as milestones in the Section C below and set forth in more detail in Annex 1, Table 1. B. STRATEGIC CONTEXT 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project The project is consistent with the Bank's CAS for Ghana (Report No. 17002-Gi, dated August 13, 1997 and discussed by the Board on September 2, 1997) in that it aims to promote environmentally sustainable social and economic development by capacity building within communities to encourage environmental protection and sustainable natural resource management; and contribute to rural poverty reduction by increasing the sustainable production of tradable commodities by the rural poor. 2. GEF Operational Strategy/program objective addressed by the project The project would address the conservation of tropical forest ecosystems by strengthening the network of conservation areas in Ghana and reinforcing the development of sustainable use and management systems for biodiversity resources. By financing the incremental cost of addressing global and regional biodiversity conservation priorities within the framework of the National Biodiversity Strategy and the Forest Protection Strategy, GEF funding would complement IDA and bilateral donor- financed programs for development of forest production systems that are environmentally and socially sustainable, and for management of protected areas. The project targets the approximately eight percent of moist tropical forests in Ghana that, based on a comprehensive national forest inventory, rank highest in terms of their global importance for biodiversity. This systematic evaluation of threat and rarity, covering more than 1000 tree species, carried out under the DFID-financed Forest Inventory and Management Project is unparalleled in the West Africa region in terms of its scope and comprehensiveness. Protection of these forests would secure representation of a significant fraction of the biodiversity of the upper Guinea-Congolean forest formation within a well-connected network of forest reserves. Additional priorities to be addressed by the project include the biologically unique southern dry forests of the Dahomey Gap that separates the two major high forest formations of western and central Africa, and the montane outlier forest of the Kyabobo highlands, the last disjunct forest within the savanna corridor that is the only place where elements of the eastern and western forest blocks intermingle, forming a globally unique composite biota. 3. Main sector issues and Government strategy Ghana comprises two broad ecological zones: the high forest and the savanna. The high forest zone covers roughly one third of the country and supports two thirds of the population. Most of the country's economic activity (cocoa, oilpalm, rubber, timber and mining) is concentrated in this zone. At the turn of the century, the area of high forest was 8.2 million ha, but this has been reduced to about 1.7 million ha today, of which 1.64 million ha is within the 216 forest reserves gazetted in the 1930s. Since then, almost all off-reserve forest has been clear-felled under a deliberate policy to open up farm land. It was not until 1994 that this policy was reversed and controls were put in place to extend harvesting of the small remaining off-reserve resource over a longer period. The boundaries of the reserves are still  -3 - intact today, with very little farm encroachment. Within the reserves, about 0.4 million ha are degraded (mainly by bushfires) and in need of replanting, 0.35 million ha are classified as needing permanent protection (hill and swamp sanctuaries, biodiversity, etc.), and the remaining 0.9 million ha are classified suitable for timber production. Based on recent forest inventories, the estimated sustainable annual allowable cut (AAC) from the high forest is 1.0 million m3 of round logs for the wood processing industry -- with half coming from reserve forests and half from scattered trees on farmland, off-reserve. The actual tree harvest is difficult to quantify accurately because of illegal felling -- but it is generally accepted to be at least twice this level. The savanna zone covers the drier northern two thirds of the country, where the main economic activities are the production of annual crops (cereals, root crops and cotton) and livestock. Woodland covers about 9.4 million ha of the savanna zone, producing mainly woodfuel and a small amount of building poles for local use. An estimated 70 percent of Ghana's primary energy requirements come from woodfuel, and this comprises about 10.0 million m3 of firewood and an additional 4.0 million m3 converted into charcoal for use in urban areas. Although current aggregate woodfuel supply exceeds demand, regional deficits occur in the Upper East, Volta and Brong-Ahafo regions. Historically, the main cause of deforestation in the high forest zone has been the need for more agricultural land, rather than the quest for timber or fuelwood. Other inter-linking factors contributing to an expanding agricultural acreage are the declining productivity of land under shifting cultivation, resulting from a shorter fallow period caused by increased population pressure, and the movement of cocoa farmers into the Western Region in response to disease problems in the traditional growing areas. Land degradation associated with loss of vegetative cover and improper farming practices is an increasing problem in the country, and was identified in the National Environmental Action Plan (NEAP) as one of the major environmental issues in Ghana. The national system of Protected Areas for wildlife includes fifteen gazetted conservation sites encompassing 1.2 million ha. Shortages of operating funds and qualified personnel within the Wildlife Department (WD) have left many of these areas lacking effective management for more than a decade. Rural communities living adjacent to the reserves tend to be alienated and often engage in poaching, which the WD is unable to control. Wildlife damage to crops is a chronic problem for farmers living close to reserves, and at present no compensation is paid. To date, little effort has been made to engage neighboring communities around Protected Areas in supporting wildlife management programs through outreach and extension activities. The key natural resource management issues in Ghana today are land and forest degradation and the loss of biodiversity associated with unsustainable harvesting levels, in the high forest and potentially the savanna zones, and with inappropriate farming practices. In the high forest, where the problem is more easily quantifiable, the current logging rate is unsustainable, and the commercial existence of several tree species is under severe threat. The main underlying problems include (i) a forest royalty system that does not price trees at their real economic value; (ii) ineffective sectoral institutions with overlapping responsibilities; (iii) insufficient involvement of communities who own the trees and woodlands in the management of the resource, coupled with negligible economic returns when the resource is utilized; (iv) a relatively inefficient milling industry with access to a dwindling but currently underpriced natural resource -- and therefore not encouraged to invest in either new equipment or industrial wood plantations; (v) weak institutional capacity in the wildlife sector and little involvement of communities in the management and sustainable use of the wildlife resource; and (vi) weak inter-agency coordination in planning and monitoring natural resource use, particularly at the regional and district levels.  -4- Ghana is notable in that all forest and savanna woodland reserves are owned by the local communities and traditional authorities, and government's role is to manage these resource in trust for the people. This situation is reflected in Government's natural resource policy embodied in the Forestry and Wildlife Policy and the Forest Development Master Plan (1996-2000). This policy aims to: (i) ensure a sustained and adequate supply of forest and woodland products; (ii) prevent further environmental degradation due to forest depletion and inappropriate farming practices; and (iii) stimulate community involvement in the management of the resources and enhance the economic well-being of rural residents. To support this policy, reforms will be directed at forest revenue policy and concessions allocation procedures, restructuring of sector institutions responsible for forest, savanna woodland and wildlife resource management, and strengthening sector institutions responsible for environmental management coordination. Work on these reforms has already begun. A new Timber Resource Management Act, covering revised concession allocation procedures and providing for enhanced royalties, became law in March 1998; and by late 1998 this is expected to be accompanied by a new Forest Service Act which will pave the way for forestry institutional reform. Companion wildlife legislation is also being prepared, and work has begun on a draft Land Policy. Other relevant government strategy documents include the National BiodiversityStrategy and the Forest Protection Strategy which seek to: (i) safeguard genetic diversity and diversity of indigenous species through an ecosystem approach to management within the high forest zone; (ii) improve knowledge of the distribution and status of rare, threatened and endemic species through targeted surveys; (iii) enhance the protection of critical areas for migratory species through improved monitoring and habitat management; and (iv) ensure sustainability and preserve genetic diversity within timber and non-timber forest species by improved data collection, regulation of harvesting, and proactive management for sustainable production within forest reserves. 4. Sector issues to be addressed by the program and strategic choices The program would underwrite the implementation of the Forest Development Master Plan and the Forest Protection Strategy and continue to support implementation of the National Environmental Action Plan (NEAP) currently underway with support from the IDA- and GEF-funded Environmental Resources Management Project (ERMP). It would address major sectoral issues and aim to sustainably increase the supply of forest products through project interventions to: (a) support community-based high forest, savanna woodland, and wildlife resource management; (b) stimulate private investment in off- reserve tree planting and reforestation of degraded areas in forest reserves; (c) encourage efficiency of the logging and wood processing industry; (d) support improved management and monitoring of forest biodiversity through the establishment of special biological protection areas within the existing system of forest reserves that explicitly incorporate biodiversity conservation as an integral management objective; and (e) promote better coordination between ministries and agencies involved in management and monitoring of environmental resources. These sectoral issues are closely inter-linked. Increasing efficiency of the wood processing industry will require an increase in private investment that will only be forthcoming if reliable supplies of raw materials can be assured. Reforestation of degraded areas of reserves will be most efficiently achieved through private involvement in plantation development that would contribute to more secure industry access to future supplies of raw materials. Community-based forest and woodland management would both increase the economic retums realized by rural residents and provide a direct involvement of the stakeholders with the most to gain in terms of environmental benefits from improved resource management. Enhanced management of biodiversity resources, including better fire control and assured access to sustainable supplies of non-timber forest products,  -5- would benefit rural communities as well as preserve future options for the local, national and global communities. C. PROGRAM AND PROJECT DESCRIPTION SUMMARY 1. Ghana Natural Resource Management Program The program would be implemented in three phases, the first covering a period of two years, and the second and third covering four years each. The first phase (NRMP I), to be funded through an Adaptable Program Credit (APC), would concentrate on finalizing policy reform and enacting legislation related to resource pricing and forest concession allocation and management; restructuring and strengthening sector institutions; completing resource assessments and undertaking baseline technical and socio-economic studies; and piloting collaborative resource management programs. Conditional on the successful implementation of this project, the second phase (NRMP II) would support the initial implementation of the collaborative resource management programs, focusing on selected sites considered priorities from environmental, economic or social points of view. The third phase (NRMP III) would complete implementation of the program country-wide and ensure that the system of collaborative management with local communities are properly institutionalized at national, regional and district levels. The key indicators of successful completion of each phase are outlined below and detailed in Annex 1, Tables 1 and 2. Achievement of these milestones would trigger the subsequent phase to be funded by successive APCs. IThe total cost of the three-phase program is estimated at US$90 million, of which it is proposed that IDA would finance US$30 million and GEF US$8.7 million. The remaining funds would come from GOG and a range of donors who would fund discrete aspects of the program through parallel financing arrangements -- under the coordination of the Ministry of Lands and Forestry (MILF). Milestones to Trigger Subsequent Program Phases NRIP I (Initiation): 1998-2000 * Sector institutions strengthened or reorganized - high forest, savanna and wildlife. * Collaborative resource management pilots established in high forest and savanna zones. * Wildlife Protected Area management plans revised and infrastructure development prioritized. * Globally Significant Biodiversity Areas (GSBAs) and provenance reserves identified and demarcated; and modalities of alternative livelihood investment program designed and agreed with committees and GEF. * Environmental Protection Agency (EPA) human resources development plan under implementation. NRIP II (Acceleration): 2000-2004 * Management plans completed in all forest reserves and plans operationalized in 70 percent of reserves; and all timber concessions managed in accordance with collaborative management principles. * On and off-reserve collaborative management pilots in high forest and savanna woodlands completed and costs/benefits analyzed; and expanded pilot program planned. * Controlled burning program in savanna zone planned and initiated. * Revised management plans operationalized for principal Protected Areas and priority infrastructure completed.  -6 - * All proposed GSBAs and provenance reserves being managed in accordance with agreed biodiversity conservation principles; and the Alternate Livelihood Investment Fund functioning effectively. NRMP m (Institutionalization): 2004-2008 * All forest reserves operated by GFS in collaboration with local communities and in accordance with agreed management plans. * Savanna Resource Management Center responsibilities devolved to district assemblies who collaborate with local communities to continue to expand the program of sustainable fanning systems and associated fuel wood production. * Management plans operationalized for all fifteen wildlife Protected Areas. 2. Natural Resource Management Project I - Project components NRMP I is designed to comprise five components: (i) High Forest Resource Management; (ii) Savanna Resource Management; (iii) Wildlife Resource Management; (iv) Environmental Management Coordination; and (v) Biodiversity Conservation. Total project costs are estimated at US$25.7 million. High Forest Resource Management (US$14.2 million). The project would assist the government to design and implement further sectoral policy and institutional reforms to substantially increase forest royalty rates and enhance revenue capture; improve concession allocation procedures and concession management; improve sustainability of the forest industry through the introduction of new legislation; and by streamlining mandates of forest sector agencies and strengthening their implementation capacity. The project would build on the experience of the pilot Collaborative Forest Management Initiative in participatory forest management and conservation education, and mainstream collaborative management into the operational procedures of the new Ghana Forest Service (GFS), and promote the development of privately owned plantations to supply the wood processing industry, as harvesting from natural forests continues to decline. Specific activities of this component would be to: (i) establish and operationalize the Ghana Forest service (GFS); (ii) merge the Timber Export Development Board and the Forest Products Inspection Bureau to form the Timber Industry Development Board (TIDB); (iii) introduce a forest certification and computerized log tracking system; (iv) undertake a log export ban study; (v) prepare and publish a National Forestry Plan; (vi) prepare twelve priority Reserve Management Plans and analyze the costs/benefits of collaborative management system in six of these; (vii) initiate pilots to explore collaborative approaches to forest management off-reserve in two districts; (viii) establish a central bushfire detection system and initiate green fire break program in five reserves; and (ix) design a financing mechanism for private sector plantation development, including legal framework and operating policies/procedures. Savanna Resource Management (US$4.5 million). The project would help improve the operational framework for harvesting and processing woodfuels; and strengthen field extension capacity by creation of a multidisciplinary resource management center to work in collaboration with local communities and the district level environmental and planning committees to promote integrated management of soil, water, and natural land cover. Pilot activities to improve woodland management and revenue generation with increased local community involvement would be developed, along with initiatives to improve woodfuel marketing and utilization. Specific component activities would be to: (i) establish and operationalize the proposed Savanna Resource Management Center (SRMC) with staff from Ministry of Lands and Forestry (MLF), Ministry of Food and Agriculture (MOFA), Environmental Protection Agency (EPA) and Ministry of Mines and Energy (MME); (ii) complete an assessment of  -7 - natural resources of the savanna zone; (iii) plan and initiate six community-based resource management pilots on-reserve; (iv) complete surveys and planning for pilots in six priority watersheds off-reserve; and (v) complete a survey of woodfuel markets/marketing and organize a national woodfuels workshop. Wildlife Resource Management (US$3.2 million). Based on a master plan currently being finalized by the Wildlife Department (WD), the project would reorient and strengthen the management of the Department, develop its capacity to enhance the economic and social sustainability of wildlife management programs, and foster closer collaboration between WD and rural communities, the private sector, NGOs and other partners. The project would also: support the implementation of management and infrastructure development plans for selected protected areas; support community-based initiatives to develop sustainable systems for bushmeat production; promote private sector and community involvement in wildlife-related economic activities such as ecotourism, game ranching, and live animal export; and improve public understanding and support for wildlife conservation and management through public education. Specific NRMP I activities would be to: (i) restructure the Wildlife Department, recruit new staff and initiate training programs; (ii) revise all Protected Areas management plans and operationalize these through the introduction of annual work planning procedures; (iii) prioritize proposed infrastructure development programs at each site to be implemented in later phases; and (iv) develop extension capacity within WD to support district- and community-level wildlife conservation and management. Environmental Management Coordination (US$1.5 million). The project would support EPA to implement its Strategic Vision for environmental management coordination; and, through EPA and the Ministry of Local Government and Rural Development (MLGRD), strengthen the capacity of district- level environmental management committees to prepare local environmental action plans based on catchment-level land use planning. Support would also be provided for action required under the UN Desertification Convention and for expansion and development of the existing EIS to encompass high forest, savanna and wildlife resources. Specific NRMP I activities would be to: (i) implement EPA's revised human resources development (HRD) Plan, based on the newly developed Strategic Vision; (ii) develop regional and district EIS and the proposed geo-spatial information framework; and (iii) prepare a National Action Program to Combat Desertification. Biodiversity Conservation (US$9.4 million for a six-year program). With GEF support, the project would implement key elements of the Forest Protection Strategy and the National Biodiversity Strategy over a six-year program corresponding to the first two phases of NRMP. The project would strengthen the biodliversity conservation and management capacity of GFS; protect priority conservation areas within existing production forest reserves; establish selected reserves as Globally Significant Biodiversity Areas (GSBAs) that will be taken out of production; and initiate pilot activities to generate revenues from activities other than logging in selected forest reserves, including ecotourism, sustainable production of non-timber forest products, and restoration of degraded forest lands through commercial plantations. The project would assist the government in strengthening its capacity for community-based participatory management and for implementing improved technical management practices to enhance the environmental sustainability of production forest management. Specific biodiversity conservation activities in the first two years of the program, corresponding to NRMP I, would be to: (i) undertake baseline studies to identify GSBAs and demarcate 25 percent of the areas identified; (ii) establish a Biodiversity Advisory Group and train GFS and WD staff to organize and implement collaborative management programs for GSBAs; (iii) identify and demarcate provenance reserves within production forest reserves; and (iv) define the scope and operating modalities for an alternative livelihood investment program acceptable to communities, the government and GEF. The estimated cost of the first two years of the program is US$2.26 million.  -8- Total Cost % of IDA /I of IDA GEF Other Component (incl. contingencies) Total Financing . Financing Financing Cofinancing (US$ mill.) (US$ mill.) (US$ mill.) (US$ mill.) High Forest Resource Mngmt. 14.2 56 4.3 46 8.7 ~~~~~~~~~~~~~~~~~~~~~~.. . .................... .............I........................... ...................... ......................... .............................,, Savanna Resource Mngnf. 4.5 17 2.7 29 1.5 ..W...................... ................... ................. ............................................ Wildlife Resource Mngmt. . 3.2 12 1.6 17 1.3 .................................. ...........................I................... ............... ................. .................... Environmental Mgmt. Coordin. 1.5 . 6 0.7 i 8 * 0.6 ........................................................................... ; ;......................................................................;............... Biodiversity Conservation 2.3 9 2.1 Total ., 25.7 1100 9.3 100 2.1 j 12.1 Project Costs. The total cost of the project (including only the first two years of the GEF- financed program) is US$25.7 million. The cost of activities supported by IDA would be US$10.1 million, financed from a proposed Credit of US$9.3 million. The six-year biodiversity conservation program would cost US$9.4 million, supported by a GEF grant of US$8.7 million -- of which US$2.1 million would be disbursed in the first two years, corresponding to NRMP I. Total cofinancing would be US$12.1 million. The major portion (US$6.8 million) has already been committed by DFID, and the remaining US$5.3 million are expected to be committed by other donors (Danida, AfDB, EU, the Netherlands and WFP) before the end of 1998. GOG's contribution to NRMP I would be US$2.2 million. A detailed description of NRMP 1 is given in Annex 2 and a detailed cost breakdown is given in Annex 3. 3. Key policy and institutional reforms supported by the project The key policy reforms to be addressed by the project relate to the sustainable use of timber from the high forest zone, increasing the efficiency of the wood processing industry, and fostering plantation development. These policy reforms are embodied in two pieces of legislation -- the Timber Resource Management Act and the Forest Service Bill. The former was passed by parliament in December 1997 and became law in March 1998, while the latter is expected to be tabled in Parliament by mid-1998. Major issues addressed in the first piece of legislation include increased forest royalty rates and systems to enhance revenue collection; and improved concession allocation procedures and management requirements, including better monitoring of concession management, independent technical auditing, public reporting and some form of performance bonding. The Forest Service Bill would allow for the establishment of GFS. A log export ban is currently in force, primarily as a result of the inability of sector institutions in their present state to control illegal logging. The institutional problem would be addressed by the project. At the same time, the log export ban would be reviewed, analyzing the use of alternate mechanisms that might achieve the same objective, but at lower economic cost. Institutional reform would include: restructuring the Forest Department into an autonomous Forest Service; merging two existing public sector organizations to form the Timber Industry Development Board; significant restructuring and management reorientation of the Wildlife Department; and the creation of a multidisciplinary Savanna Resource Management Center, which in time would devolve its functions to district assemblies. 4. Benefits and target population The main benefits of the project would be (a) the sustainable management of Ghana's natural resources with increased economic benefits from these resources flowing to the communities who own them, and (b) more efficient government institutions providing better service to resource owners, at less  - 9- public cost. The principal project beneficiaries would be rural communities who own the natural resources; with secondary beneficiaries being the private sector operators who use the resources and the public institutions responsible for planning and monitoring their sustainable use. Institutional restructuring within the public sector is aimed at improving public sector management efforts while reducing government expenditure and improving forest and wildlife resource rent capture and collection. Improved processing efficiency within the wood processing and finishing industry would benefit both rural workers and artisans by increased employment, through investments in secondary processing (due to more assured supplies of raw material) and a high level of sustainable forest industrial activity in the medium to long term through enhanced efficiency of resource utilization and reforestation. Environmentally sustainable woodland management in the savanna zone would enhance rural incomes as well as generate ancillary environmental benefits to rural communities in the form of improved soil, water and wildlife habitat management. Community participation in wildlife resource management would increase revenues captured and retained, while development of compatible uses such as ecotourism would increase locally retained revenues from wildlife resources by rural communities living adjacent to the reserves. Improved conservation of biodiversity will ensure a sustainable supply of non- timber forest products such as medicinal plants which contribute differentially to the health and well- being of the poorest population segments. Expected global benefits include maintenance of genetic diversity within natural populations of commercially valuable timber species, conservation of regionally and locally endemic species within their native habitats, and preservation of unique ecosystems that characterize the region through effective landscape-level management. A properly functioning monitoring and evaluation system is recognized by MLF as essential. 5. Institutional and implementation arrangements The Government of Ghana -- through the Ministries of Lands and Forestry (MLF), Food and Agriculture (MOFA), Environment, Science & Technology (MEST), Local Government and Rural Development (MLGRD), and Mines and Energy (MME) -- would be responsible for ensuring that the project is undertaken as planned. MLF would act as lead ministry for implementation of the project. Executing agencies. The project would be implemented primarily through the existing government institutions or departments of the relevant line ministries: * policy and institutional changes would be managed by MLF. * high forest resource management (integrated forest resource management; forest resource management off-reserve; and biodiversity conservation activities) would be undertaken by the proposed Forestry Service. * wildlife resource management would be undertaken by the Wildlife Department. * environmental management coordination would be undertaken by EPA. Savanna resource management requires a multidisciplinary approach, and would be undertaken by the proposed Savanna Resources Management Center, to be established under the project with staff seconded from MLF, MOFA, EPA and MME. The Center will work closely with district assemblies, and at an appropriate time its responsibilities would devolve to district assemblies, in line with government's decentralization policy. Investments in plantation development and wood industry restructuring would be undertaken solely by the private sector, including existing and new industrial investors and individual or community landowners. Project coordination. Interministerial cooperation and donor coordination would be achieved through a Project Coordination Committee (PCC). It would be under the chairmanship of the Technical  - 10- Director of MLF, with representation at Director level from all participating ministries, the private sector (plantations/logging/processing, crop and livestock farmers), NGOs and relevant academic institutions. It would meet as required, but at least on a quarterly basis, to review proposed work programs and budgets, monitor implementation performance, and foster inter-agency cooperation in sound management of the country's natural resources. Project management Overall responsibility for project management and coordination (annual work plan preparation; budgeting and finance; procurement; progress reporting) would rest with a Project Coordination Unit (PCU) within the MLF, headed by the Technical Director and supported by an experienced Project Administrator, a qualified Financial Controller, and four administrative staff. This unit was established under the IDA-financed Forest Resource Management Project (FRMP) and has been functioning effectively for at least five years. Staff of the unit are fully conversant with Bank procurement guidelines and reporting requirements. Auditors' reports on FRMP have always reported positively on the adequacy of the internal controls in the financial management system operated by the PCU. Nevertheless, financial management arrangements for NRMP are currently being reviewed, and an action plan to address any deficiencies identified would be agreed with IDA prior to Credit Effectiveness. Auditing of project accounts for NRMP would continue to be done externally. Monitoring and evaluation. This would be undertaken by the Project Planning and Monitoring and Evaluation Department (PPMED) of MLF. This unit was established and equipped under FRMP, but to date has performed inadequately. It would be considerably strengthened under NRMP through the provision of technical assistance and training. Community collaboration. Pilot participatory management programs within the high forest zone have already been initiated by the Collaborative Forest Management Unit within the Forestry Department (FD) of the MLF; and in the savanna regions local NGOs have been working successfully with government and donors to promote community managed operations, particularly in potable water supply. NGOs have also been engaged by the Wildlife Department to help in conflict resolution with communities in areas adjacent to national parks. These provide a basis for expanding the formal involvement of local organizations in wildlife and forest reserve management. The presence of an active and growing community of conservation NGOs and the project's intention to engage this community in monitoring and evaluation of program performance as well as in key aspects of program implementation will improve transparency, accountability and, ultimately, performance of the public agencies responsible for executing the program. Cofinancing. Parallel financing of the program is expected from a number of donors. DFID has cofinanced previous forestry and environmental projects in Ghana with IDA, and will participate in NRMP, concentrating on high forest resource management -- establishment of the Forest Service (which they are currently supporting under the US$6.8 million FSDP), and operationalizing collaborative forest management programs. Further commitments will be decided at the end of their present program in December 1998. Danida has also cofinanced both forestry and environment projects with IDA in Ghana, and has indicated that it will support the savanna component of NRMP, specifically those aspects relating to renewable (woodfuel) energy. Danida participated in the preappraisal of NRMP and is expected to finalize its commitment in late 1998. AfDB has expressed interest in the plantation subcomponent and has already fielded its own preparation mission, with appraisal expected in late 1998. The EU joined the appraisal mission and is expected to become involved in specific (but not yet nominated) aspects of the high forest component. The Netherlands plan to support both the wildlife component (Protected Area development and institutional strengthening) and the district-level activities of EPA. Formulation missions were fielded in April 1998 and a final commitment is expected later in the year. WFP plans to  - I 1 - support tree planting in the Savanna zone and has proposed a program commitment of about US$4.5 million over five years, commencing in 1998. D. PROJECT RATIONALE 1. Project alternatives considered and reasonsfor rejection The original proposal was to follow up the recently closed IDA-supported Forest Resources Management Project with further assistance to those aspects of that program that address the ongoing problems of the forestry and wildlife subsectors, but which still need further external support. At the same time, it was proposed to mainstream environmental issues in all future projects, across all sectors, rather than to provide discrete project follow-up support to the Environmental Resources Management Project which is due to close at the end of 1998. In view of the need for broad institutional and policy reforms in the proposed program, the more structured investment project approach was rejected in favor of a broader sector-based program approach. Such a program would focus on creating the right environment to encourage community and other private sector involvement in sustainable management of key natural resources, and on reducing poverty in the more disadvantaged rural areas. This approach reflects the lessons learnt from the implementation of FRMP. The government wants to improve coordination of aid coming from all donors in support of sustainable natural resource management and regards this program as the vehicle for achieving this aim. The project was initially planned as a five-year investment project. However, the recent development of a new lending instrument by the Bank, Adaptable Program Lending (APL), allows for a more logical sequencing of policy initiatives, institutional development, pilot resource management programs, and associated investments in civil works, goods and services. The proposed program is ideally suited to that approach and has therefore been designed as an APL operation, with a first phase of two years -- at the end of which the necessary policy and institutional reform would be in place and the stage set for country-wide implementation of the proposed collaborative resource management programs in subsequent phases.  - 12 - 2. Major relatedprojects financed by the Bank and/or other development agencies Sector issue Project Latest Form 590 Ratings IP DO Bank-financed ................................................................................ ......................... ....-....... Sustainable forest management Forest Resource Management Project S S ............................................................................................................................................................... .... Strengthen environmental management capacity Environmental Resource Management Project S S ........................................................................................................... ................................................................................. .......... ........ Other development agencies Maintain ecological integrity of globally important Coastal Wetlands Management Project S S coastal wetlands (WB/GEF) .............. ............................. ............................................................... .................................. Savanna woodlands management, soil and water Soil and Water Management Component of conservation ERMP(cofinanced by Demnark/DANIDA) ..... .....................................................................................................................................:: Policy reform in the forestry sector and Forest Inventory and Management Project institutional strengthening of the Forestry Dept. (UK/ODA) Biodiversity conservation and sustainable forest Block-A Gra f Preparation of the Atewa management Range Management Plan (GEF) Identify national priorities related to biodiversity National Biodiversit Strategy in preparation, conservation and management coordinated by the Ministry of Environment, Science and Technology (UNEP/GEF) ......... .................................................................... .................. .............. Improve management of biodiversity infor ation * Biodiversit Data Management(MST) (UNEP/GEF) ~~~~~~............................................................................. .............................. ......... Analyze and prepare policy and legal framework Bioprospecting Policy Study (MEST) for bioprospecting (W3/GEF) ~~~~~.......... ......................................................................-.................. .............. Biodiversity conservation and ecotourism Central Region Natural Resource Conservation development and Historic Preservation Project (USA/USAID) Development and management of Bia and Ankasa Protected Areas Development protected areas Program (EU) .......................................................................... .....................................4; Conservation and sustainable utilization of * Volta Mangrove Management Project mangrove forests in the Volta Delta (UK/DFID) ..................................................................................................... ................ ......... Preservation of sacred groves and related cultural Environmental Protection Agency heritage (UNESCO/MAB) Protected area buffer zone management and Bia National Park Invenory and Bufer Zone protected area inventory Management Plan (UNESCO/MAB) Biodiversity conservation UNDP Small Grants Program (GEF) .T i ii i;................................................................... ........................................... ........................................................... .......... ........ Transition forest and savanna woodland protection Forest Protection and Resource Use and management Management Project for the Volta Region (Germany/GTZ) IP/DO Ratings: HS = Highly Satisfactory; S = Satisfactory; U = Unsatisfactory; HU = Highly Unsatisfactory.  - 13 - 3. Lessons learned and reflected in the project design The Forest Resource Management Project (FRMP) became effective in November 1989 and closed in June 1997. Lessons learned from this project include the need to: regard natural resource management projects as long-term programs made up of a series of projects, or phases; ensure that an effective sector policy environment and efficiently operating sector institutions are in place before major infrastructure development is started, or wide-scale resource management is initiated; realize that institutional strengthening may mean fundamental change far beyond training programs and provision of improved facilities and equipment -- requiring good planning and adequate implementation time; involve all stakeholders -- including loggers and millers, but especially the local resources owning communities -- in the planning of resource use, and ensure local communities gain an equitable share of the revenue generated; and develop within ministries/agencies responsible for sector policy adequate technical support, especially in the areas of resource economics and planning, and effective monitoring and evaluation systems, These lessons have been incorporated into the design of NRMP. The high forest component of the first phase of this program will therefore concentrate on institutional restructuring and policy reform that builds on ongoing analytical work under the Forest Sector Development Project (FSDP) supported by DFID over the past three years. The Environmental Resource Management Project (ERMP) became effective in March 1993 and is due to close in December 1998. The project explicitly recognizes the intersectoral nature of environmental management and has provided support for institutional strengthening of EPA in its central role as a coordinating and regulatory body for environmental monitoring and management. The principal lesson from this project has been the value of investing in strengthening the capacity of sectoral agencies for environmental management and mainstreaming environmental protection as a standard element of sectoral activity. The proposed program would build on this experience by targeting improvements in policies and practices of forest and wildlife management to conserve biodiversity and reverse forest degradation -- implemented by the sectoral agencies, with EPA maintaining its role as an independent monitoring agency. The Coastal Wetlands Management Project (CWMP) was financed by the GEF as an integral component of ERMP and has addressed the issue of maintaining the ecological integrity of coastal wetland ecosystems under a multiple use management regime, with significant involvement of local stakeholders in both planning and implementation. This project has enabled the Wildlife Department to gain valuable experience in locally-based cooperative management of protected areas, with the goal of safeguarding globally important biodiversity within a management regime that recognizes the use and access rights of local residents and seeks to stimulate economic growth that is compatible with maintaining global and national conservation values. Plans for institutional restructuring and strengthening under NRMP call for substantially strengthening the Collaborative Forest Management Unit (CFMU) within the Forest Service and development of more effective community outreach capacity within the Wildlife Department. The latter will involve retraining and redeploying some wildlife personnel to the district level, where they will work with forestry staff and local communities in developing appropriate regulatory mechanisms for bushmeat harvesting and surveillance procedures for monitoring endangered species, such as primates. CFMU has already initiated pilot programs with communities that involve licensing of community groups for harvesting and limited propagation of non-timber forest products within production forest reserves. It has also had some initial success in involving communities effectively in monitoring and surveillance of timber harvest and hunting within reserves.  -14- 4. Indications of borrower commitment and ownership The adoption in 1990 of the National Enviromnental Action Plan and in 1994 of a new Forest and Wildlife Policy and the subsequent preparation in 1996 of a Forestry Development Master Plan (FDMP) by MLF provide a firm foundation for implementing this program. The FDMP includes strategies for forest protection, forest production and increasing communities participation in forest and woodland management and in revenue sharing from forest resources. Furthermore, the government's Forest Protection Strategy defines its approach to safeguarding biodiversity. MLF has identified three critical reforms necessary to upgrade sector performance and has recently introduced, or is about to introduce, legislation to address all three issues: (i) reorganization of the Forestry Department into a responsive, service-oriented agency; (ii) policy reforms to encourage private sector investment in forest restoration within degraded reserves and outside reserves; (iii) introduction of resource price incentives to encourage the private sector to invest in improving the efficiency of the logging and wood processing industry. Indicators of Government commitment to implementation of the biodiversity conservation components of the proposed project include the preparation of the National Biodiversity Strategy and of the Protected Areas Systems Plan, completion of a national inventory of priority sites for conservation of forest tree species, and inclusion of biodiversity protection and maintenance of bioquality as key elements in the Forest Development Master Plan. Assurances were given at negotiations that the GSBAs to be established with GEF financial support would be gazetted with appropriate restrictions on uses to safeguard the biodiversity they are designed to protect. Almost all proposed project interventions, including all institutional and most of the policy reforms, have grown out of previous projects funded in part by IDA and other donors, particularly DFID. Government has identified the initiatives that make up NRMP as programs it wants to expand, based on its experience with the earlier projects. 5. Value added of Bank and Global support in this project The project would build and expand on advances made in natural resource management under FRMP and ERMP and on pilot experience gained over the past three years under FIMP and the ongoing FSDP, both financed by DFID. A considerable number of bilateral and multilateral donors are currently involved or interested in financing activities within the sector. Leadership by the Bank would encourage adoption of necessary structural reforms to improve sectoral performance overall through a multi-donor financed sector investment program. MLF strongly supports this coordinated approach by donors and has encouraged the Bank to assist in this regard and to adopt the role of lead financier. Inclusion of GEF- financed enhancement of biodiversity conservation in the program will ensure that maintenance of bioquality is securely embedded as an integral aspect of natural resource management.  - 15 - E. SUMMARY PROJECT ANALYSIS 1. Economic [x] Cost-Benefit Analysis (see Annex 4a): High Forest Component - Collaborative Forest Management: ERR 20% Savanna Component: NPV=US$ 17.3 million; ERR= 19% Wildlife Component: NPV=US$ 12.6 million; ERR= 22% [x] Incremental Cost (see Annex 4b): Biodiversity Component: US$8.7 million The main productivity benefits under the project's high forest component will come from the reforms in the incentive framework, and in particular the increased royalty rates and improved collection rates, as well as from the possible replacement of the log export ban by an appropriate export tax at the end of NRMP I. A very tentative estimation suggests that the net welfare gains to Ghana of replacing the log export ban with a 30 percent export tax would be in the range of US$28-78 million annually (Annex 4a, para. 7). Benefits are also expected from collaborative forest management, with preliminary estimates suggesting an economic rate of return of about 20 percent (Annex 4a, para. 4). An in-depth study of the log export ban would be undertaken during the first phase of the program to evaluate various options and to make specific recommendations under which the net social benefits for the nation are maximized. The pricing reforms would be designed in such a way that loggers and millers would have increased incentives to reduce waste and to increase efficiency in their operations. The institution building to be done is intended to help reap the full benefits of the policy reforms and to minimize or eliminate possible negative consequences of the reform effort. It is also expected to reduce illegal logging and other extractive activities, where private benefits are generated on the basis of public or common property assets. Aside from net social welfare gains from a more efficient incentive system, there would also be other economic benefits from an improvement in the protection and management of these forests, such as biodiversity conservation, carbon sequestration, regulation of stream flow, and soil conservation. The biodiversity component does not lend itself to conventional economic analysis since no monetary value can be placed on species and ecosystem conservation. However, an analysis has been undertaken of "incremental costs," i.e., the additional costs accruing to Ghana for protecting its globally valuable biodiversity. This analysis is presented in Annex 4b, showing an incremental cost of US$8.7 million. The main economic benefits of the savanna component would be increased production of woodfuel, poles, crops and livestock, bushmeat and other non-wood forest products. Other important benefits, more difficult to quantify, include: a reduction in the incidence of bush fires, a reduction in soil erosion and flooding, stabilization of stream flows, and less siltation of reservoirs. Given the limited data available, rough assumptions had to be made to estimate the economic benefits from increased fuelwood production over the longer term. A rate of return of 19 percent was obtained. Likely benefits from increased crop productivity were also estimated, suggesting a rate of return of 13 percent. During NRMP-I, a baseline survey would be undertaken to assess relevant costs and benefits more accurately and to set in motion monitoring and data collection so that a better evaluation would be possible before the commencement of the second phase of the program. The wildlife of Ghana represents a national heritage that needs to be managed wisely for the overall benefit of society. From an economic and revenue-generating perspective, two outputs/services  - 16 - of the wildlife component are most relevant -- bushmeat, and wildlife viewing and nature experiences. For wildlife to provide a sustainable flow of bushmeat, overharvesting must be avoided. It is estimated that in the "with-project case" the decline in bushmeat production could be slowed, beginning at about the start of the third phase of the program. In recent years, a sharp increase in park visits by tourists has occurred -- in spite of weak infrastructure and other visitor facilities, inadequate training of guides, and an absence of interpretative aids. Based on a number of conservative assumptions, it has been estimated that increased nature tourism would result in an economic rate of return of 6 percent, and a rate of return of 22 percent if the bushmeat benefits are included. The environmental management coordination component intends to continue the institution- building, the coordination work and the information management work that has been going on during the ERMP, which is expected to close at the end of 1998. That project has had satisfactory ratings, and ongoing initiatives funded under this project merit continued support. The benefits of capacity building and an improved information management capacity are indirect. It is therefore not possible to estimate benefits associated with this component. 2. Financial (see Annex 4a) Plantation Development Sub-component: NPV= (to be calculated); FRR= 12-18% depending on plantation management model. To achieve a sustainable forestry sector in Ghana over the medium to long term, development of private sector plantations is considered essential, and a favorable incentive environment is crucial to encourage the private sector to plant and effectively manage significant areas. The plantation sub- component is currently being prepared by AfDB and is expected to be appraised during NRMP I and parallel financed by AfDB during the second phase of the program. Based on earlier work by FAO/CP on behalf of AfDB, a financial analysis was carried out on industrial plantation development, foreseen under five different management models, and this analysis suggests IRRs ranging from 12 percent to 18 percent, depending on the model. At present, wildlife park entry fees in Ghana are low by international standards. An entry permit for Ghana's best known park, Mole National Park, is only US$1.80 for a foreign tourist, less that one tenth of that charged in East Africa. Notwithstanding the more limited wildlife viewing options, and limited infrastructure and other services, more could be charged without a significant reduction in the number of paying visitors, for whom park entry fees are a very small portion of the overall expenses connected with a visit to Ghana. Charging higher fees would be even more justified once the project is underway and better conditions have been created for an improved nature tourism experience. For purposes of the revenue analysis, it was estimated that in project year 1 there would be about 40,000 entries to individual parks by paying visitors and that total revenues collected would amount to US$40,000. Under reasonable assumptions for increases in park entry fees, total revenues collected could reach US$515,000 in project year 6. 3. Technical The forest resource management component will implement the new manual of forest management procedures which represent a demonstrable improvement over current management practices and procedures and approach current "state of the art" protocols for environmentally sensitive tropical forest management. The wildlife component will operationalize park management plans developed in conjunction with IUCN. Implementation of watershed-focused local land management  - 17 - methods based on best-practice experience from a number of pilot projects carried out recently within the savanna zone under ERMP. The biodiversity component will employ an ecosystem approach to management of natural forest landscapes that seeks to integrate biodiversity protection with production forestry and with other land use objectives. By protecting critical areas within forest reserves from logging and other inappropriate extractive uses, the project will enhance the security of globally significant biodiversity resources. Alternative livelihood investments financed under the project will stimulate economic development is areas bordering reserves and will be designed in collaboration with these communities. lMajor initiatives proposed under the program have evolved from pilots undertaken in earlier IDA and /or donor financed projects. As such, they are tailored to local implementation capacity. For the same reason, program costing is realistic and contains adequate provision for physical and price contingencies. 4. Institutional Executing agencies: Both the Forest Department (excluding its Planning Branch - FDPB) and the Wildlife Department are institutionally weak in their present form. Both are overstaffed with unskilled labor and guards, while deficient in skilled and professional officers. In addition, both have a control and command management ethic which is unsuited to today's approach to forest and wildlife management. Radical reform of both institutions is a major aspect of the project. FDPB is institutionally and technically stronger, having received support under DFID programs for a number of years. Management of the savanna resource has in the past been largely neglected by govemment, and the project will therefore create a special multidisciplinary, cross-ministerial unit to adopt this role, working closely with district assemblies in line with government's decentralization policies. EPA, while well managed and relatively effective, needs further strengthening at national and regional level, and in the manner in which it relates operationally to district assemblies -- and this would be addressed by the project. Project management: MLF and its Project Coordination Unit provided good project management in the last four years of the FRMP, in terms of general coordination of implementing agencies, and in implementation of IDA guidelines concerning procurement, financial management and project reporting. The same PCU will now be responsible for managing NRMP and will be further strengthened under the project, especially in regard to monitoring and evaluating development impact. 5. Social The project will be characterized by a strong participatory approach from the outset. It will build on lessons learned in community participation and management in FIMP and the GEF-financed Coastal Wetlands Management Project and in the community consultation approach used in GEF-sponsored coastal zone management sector work. The following consultation and participation mechanisms are envisioned: (i) national and local government/private sector roundtables to discuss proposals for forest policy and institutional reforms; (ii) devolution of responsibility for off-reserve savanna woodland management to local communities and consultation on management plans for savanna woodland reserves with affected communities; (iii) consultation with NGOs and communities living near protected areas and forest reserves on proposed strategic and operation management plans through semi-structured interviews and public meetings; (iv) establishment of pilot community-managed revenue-generating activities other than logging in selected forest reserves and protected area buffer zones; and (v) increased community employment through pilot private sector activities in and around protected areas.  - 18- No voluntary or involuntary resettlement is planned. The project's aim is rather to effectively engage rural residents in management and more sustainable exploitation of forest and wildlife resources. Investments in alternative livelihoods to compensate for foregone short-term revenues due to adoption of a more restrictive management regime for high-priority biodiversity conservation sites would be channeled through community-based mechanisms to finance environmentally compatible development enterprises. 6. Environmental assessment: Enviromnental Category [x] A []B ]C Given the potential impact of the project on environmentally sensitive areas, a full project Environmental Impact Assessment (EIA) was carried out, and an Environmental Management Plan was prepared and integrated into the final project design. Overall, the project is expected to have a number of strong positive impacts on the environrment -- including increased sustainability of forest, woodland savanna and wildlife resource management, improved soil, watershed and biodiversity conservation, and enhanced effectiveness of environmental management and monitoring. In the course of EIA preparation, twenty-five communities were surveyed, the majority of which are situated adjacent to forest reserves or protected areas. Discussions were also held with representatives of the logging and milling industries, and a public hearing to discuss the preliminary findings of the draft report was held in Kumasi and attended by a broad range of NGOs, industry representatives, traditional leaders, sectoral agency personnel and the general public. Comments received during the public consultation process were taken into account in producing the final project EIA and the Environmental Management Plan. Of the twenty-seven Important Environmental Components (IECs) identified and evaluated in the EIA, the project would have significant positive effects for ten and both positive and negative impacts for the other seventeen. Of those IECs with some negative effects, seven would be mitigated through planned project activities, seven would be addressed through adoption of improvements in project design and application of "best practice" guidelines, and the remaining three would be addressed by specific mitigation measures to be incorporated in the project. Implementation of environmental mitigation measures will be independently monitored by EPA and district environmental committees with resources included in the project. If poorly implemented, the project could provide significant risks to rare and endangered species of flora and fauna and their habitats. As part of project preparation, extensive surveys were undertaken to identify and determine the status of plant and animal species that are potentially at risk. The biodiversity and wildlife resource management components are designed to explicitly address local, national and global priorities for biodiversity conservation and monitoring. The project also makes financial provisions for ongoing surveys to further clarify the status of organisms that are potentially at risk, to establish an independent monitoring program to track project performance, and to explicitly enhance biodiversity protection through the establishment of new protected areas and strengthening the national capacity for protected area management. A necessary reduction in the allowed logging volume in order to bring management of the forest estate in line with ecologically sustainable harvesting will result in some loss of employment in the logging and wood processing sectors. Project-financed mitigations such as worker retraining and project actions to achieve ecologically sustainable timber production through managed plantations and restoration of degraded reserves will, in the medium to long term, contribute to stabilizing job security. In the "without project" scenario, the Ghanaian forest industry faces the likelihood of economic  - 19- extinction due to severe domestic supply shortages within two decades, a situation likely to be more lasting and devastating to the rural economy than the temporary decrease in employment anticipated under the project. 7. Participatory approach a. Primary beneficiaries and other affected groups Stakeholders and Beneficiaries Preparation Implementation Operation .. ...................................................................................... ......................................................... ..... . . ............................. Cultivators/community groups CON COL COL Intermediary NGQs CON COL CON/COL ....................... .. o..... "s.............................. C............................................ ................................ ............... ....... Academic institutions CON CON/COL Local government CON/COL COL COL ~~~~~~~~.................................................................................................................. . Ot.her donors IS/CON/COL COL . IS/CON/COL .............................................................................................................................. ................................. Concessionaires/millers CON CON CON/COL Note: CON: consultation, COL: collaboration, IS: information sharing b. Other key stakeholders. Project preparation included a number of innovative pilots to involve communities and specifically targeted stakeholder groups (e.g., rural women, youth groups) in harvesting and management of non-timber forest resources, maintenance of boundaries and firebreaks and other revenue-generating enterprises. These were initiated by the Collaborative Forest Management Unit. Lessons learned and experience gained will be put in practice under the project through the Cooperative Forest Management Center to be established under the project within the reformed Forest Service. With regard to the biodiversity component, senior personnel of the Ghana Wildlife Society have been consulted and provided significant input into the definition of community education and public awareness components financed by the project, the design of research, monitoring and evaluation procedures, and guidance on implementing community investment components of the project based on the experience gained under the GEF-financed Coastal Wetlands Management Project. F. SUSTAINABILITY AND RISKS 1. Sustainability Government's commitment in terms of sustaining policy reforms as well as staff and funding of project initiatives and other support after the project ends is crucial. Success in developing a participatory approach involving all relevant stakeholders in project design and implementation is necessary if there is to be enduring project ownership by the beneficiaries. Ensuring that resource owners receive adequate compensation for their efforts in sustainably managing the resource is critical in this regard, and this is a major objective of the project. The program seeks to establish a balance between sustainable forest production and enhanced protection of globally significant biodiversity resources. Long-term biodiversity protection is ultimately linked to success in achieving sustainable production that adequately meets local needs for forest products. Enhancing protection of biodiversity in Globally Significant Biodiversity Areas (GSBAs) will need to be based on negotiated agreements with the responsible local communities that tie some benefits in the form of alternative livelihood investments, to verifiable performance criteria if it is to be effective. The success of project in encouraging reforestation of degraded forest areas within reserves and policy changes to encourage wood industry efficiency is inextricably linked with the sustainability of the proposed biodiversity protection measures. To this end, Government's commitment to improving institutional capacity, stabilizing sustainable logging levels (the  -20 - AAC), increasing the share of benefits realized by rural communities, and improving community knowledge and field capacity for effective stewardship of biodiversity resources through the implementation of an integrated sector-wide strategy will ultimately determine the sustainability of conservation achievements. 2. Critical Risks Risk Risk Rating Risk Minimization Measure Project outputs (i) lack of political will, results in low (i) adequate consensus developed and to development restructuring of forest and wildlife assurance of high-level government approval and global management institutions being delayed or given during project appraisal. Restructuring environmental only partially implemented plans for both organizations being prepared objectives (ii) political will is insufficient to ensure moderate (ii) high-level government assurance given new forest policy regulations are during appraisal, including possibility of enforced without exception incorporating performance bonding for concessionaires (iii) collaborative management plans for moderate (iii) ensure stakeholder participation in the forest and wildlife reserves not design and development of management plans implemented because systems are not and undertake cost: benefit analyses of pilot cost effective for all stakeholders schemes. (iv) interministerial cooperation and moderate (iv) extensive participatory planning among coordination weakly implemented and collaborating agencies carried out and new staff positions not filled with agreement reached on TORs and qualifications qualified personnel for new staff positions to be created and on changes in institutional structures. (v) negotiation of an acceptable alternative (v) incentives for short-term gain low to livelihood package for rewarding community outweigh those for protecting global moderate implementation of effective resource biodiversity assets management and monitoring (vi) identify means to increase the sustainable (vi) incentives to communities are moderate flow of benefits or to maintain revenues at an insufficient to sustain conservation adequate level - mainly through progressively efforts increasing administratively adjusted resource prices. Project (i) critical sectoral policies not adopted low (i) acceptable sectoral policy is already components to identified by government and legislation outputs drafted -- with remaining details to be agreed before negotiations (ii) incentives for private sector and low to (ii) extensive participatory planning during community participation are inadequate moderate preparation and analysis of lessons from similar programs in adjacent countries (iii) difficulty in recruiting adequately substantial (iii) agreement on new compensation and qualified managerial, administrative and incentive structure for reformed agencies and technical personnel implementation of new management approach based on annual performance contracts Overall Risk moderate rating  -21 - 3. Possible Controve,sial Aspects Proposed changes to concession allocation procedures and increased royalties are expected to be opposed by less efficient wood processors, some of whom will eventually be forced out of the industry. In the short to medium term this could cause limited unemployment -- but this will be offset by increased opportunities for employment/small business generated by greatly increased income flowing to resource owning local communities. Efficient timber millers are less concerned and regard sustained access to supplies as more critical than resource unit costs. Local lumber prices will also increase as raw material prices rise and improved log movement controls constrain illegal logging operations -- necessitating more efficient use by the building and furniture trades. G. MAIN LOAN CONDITIONS 1. Effectiveness Conditions (i) successful passage through Parliament of the Legislative Instrument to increase timber royalties to the agreed levels; (ii) tabling of the Forest Service Bill in Parliament to enable establishment of the Ghana Forest Service; (iii) finalization and adoption by the government of the National Biodiversity Strategy; (iv) establishment of a project financial management system acceptable to IDA; and (v) finalization and submission of a Project Implementation Plan acceptable to IDA. 2. Other Initiation of major policy and institutional reforms is already underway. Project conditionality would seek to minimize risks and would address: (i) restructuring of the forest and wildlife management and forest revenue collection agencies; (ii) gazettement under an appropriate management regime of high-priority areas identified for biodiversity conservation; and (iii) adoption of an appropriate incentive structure (resource pricing and export ban/levy reform) for mobilizing private investment and community participation in forest plantations, protection of biodiversity, management of wildlife resources and savanna woodland management. H. READINESS FOR IMPLEMENTATION [ ] The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [x] Not applicable. [x] The procurement documents for the first year's activities are being finalized and will be ready for the start of project implementation. [ 1 The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [x] The following items are lacking and are discussed under loan conditions (Section G): The PIP is being drafted and will be finalized prior to Credit effectiveness. I. COMPLIANCE WITH BANK POLICIES [x] This project complies with all applicable Bank policies. [ 1 [The following exceptions to Bank policies are recommended for approval: The project complies with all other applicable Bank policies.]  -22 - (of Task Team Lc Robert Epworth Sector Manager: Jean Paul Chausso Cow-try Dire : Peter Harrold  -23 - Annex 1 Program Design Summary GHANA: Natural Resource Management Program (NRM I, NRP T and NRMP III) Narrative Summary Key Performance Indicators Means of Verification Critical Assumptions A. Sector Related CAS Goal: To protect, rehabilitate and Acknowledgment that income Surveys, sector studies National economic sustainably manage land, forest realized and retained by and independent reviews policies on growth in the and wildlife resources through communities has increased and agriculture and forest collaborative management; and environmental quality has product sectors are sustainably increase the income improved. compatible with of rural communities who are the ecologically sustainable resource owners. resource management and biodiversity conservation. B. GEF Operational Program Goal: Globally significant biological resources secured. A. Program Development End-of-Program Indicators Objectives: (after IO years): To institutionalize viable and Collaborative management Annual reports on status World market demand for sustainable land, forest and plans operational for all forest of forest and wildlife sustainably harvested wildlife management systems reserves including effective fire resources based on timber and other forest nationwide. control systems. remote sensing imnagery, products is maintained. independent NGO Globally Significant surveys, and monitoring Biodiversity Areas established. carried out by the EPA Off-reserve forestry Ghana Forest Service development plans and district (GFS) Annual Reports environmental plans under implementation in the majority of districts within each ecological zone. Management plans under implementation within all Parks and Game Reserves. Woodfuel production and marketing programs developed and operating within the three northem regions.  -24 - Annex 1 Narrative Summary Key Performance Indicators Means of Verification Critical Assumptions B. Global Program Objective: To establish effective systems Stability of threatened species Independent monitoring The global community is for the protection of globally and populations, and the of biodiversity indicators willing to pay the significant biodiversity in all integrity of fragile habitats and and GHI incremental cost of tropical forest biomes in Ghana. ecosystems secured; genetic protecting and monitoring heat index (GHI) of Globally globally significant Significant Biodiversity Areas biodiversity. (GSBAs) maintained at current level or higher. Program Development Objectives (continued): NRMP I Legislation enacted and Ghana Law Gazette (Initiation Phase): promulgated to define new rules for reserve management Effective national policy and based on Timber Utilization institutional framework to be Contracts; and to establish the established and collaborative Ghana Forest Service. management programs Collaborative management developed. systems piloted and tested. NRMP II National Forest Plan reviewed Supervision reports Increased revenues from (Acceleration Phase): and revised. forest products and other benefits realized by local Viable collaborative All commercial timber and Certification reports communities are management programs for most non-timber forest sufficient to discourage forest, wildlife and savanna products harvested from conversion of natural woodland resources to be independently certified forests and wildlands to established at priority sites production operations. other uses. within the high forest, transitional and savanna Stewardship of all National Independent reviews ecological zones. Parks, Game Reserves and GSBAs in conformance with sound ecosystem management principles. Public sector management of Annual reports of the forest and wildlife resources in Forest Service conformnance with Parliament- approved Annual Performance Agreements. NRMP III same as End of Program Targeted socio-economic (Institutionalization Phase): indicators listed above surveys, annual reports and ICR Country-wide implementation of collaborative management system for forest, woodland and savanna resources achieved and institutionalized at national, regional and local levels.  -25 - Annex 1 Narrative Summary Key Performance Indicators Means of Verification Critical Assumptions Project Development Objectives: (NRMP-1: Years 1-2) Establish the institutional Enactment and promulgation Ghana Law Gazette Economic pricing of the framework for implementing of legislation for improved resource coupled with ecologically and socio- forest management, including increased security of economically sustainable forest increased revenue collection resource access and management systems and and more equitable tenure will stimulate and improve the efficiency of public distribution to local sustain community utilization of forest products by communities. involvement in resource the private sector and rural management. communities within the high forest zone. Establish the policy and legal Completion and adoption of a Project Annual Report framework and technical National Action Plan to capacity for sustainable Combat Desertification. management of woodlands and land resources within the savanna zone. Improve the institutional Adoption and implementation Technical supervision capacity for management of of Institutional Restructuring missions Parks, Reserves and off-reserve Plan for Ghana Wildlife wildlife resources and establish a Department including framework for community recruitment and redeployment participation in wildlife resource of staff. management.. _ _ _ Project Outputs: 1. The policy, legal, Ghana Forest Service Project Annual Report Industry cooperation and administrative and technical established and operational political will are bases for sustainable forest including recruitment of new sufficiently strong and management including staff and redeployment of constant to effect and biodiversity conservation, surplus staff. maintain changes in community collaboration and public forest management efficient utilization of forest New forest policy and Results of revenue study, institutions and products by the private and regulations adopted including annual report of GFS implementation of new public sectors and local an increased in the rate of management regulations. communities established within collection of outstanding the High Forest Zone. royalties to greater than 90%. Revenue sharing with National Forestry Plan Districts and Stools is prepared and published. timely and systems are cost effective for all Economic options study for stakeholders. log export policy completed. Twelve priority reserve Report of study findings, management plans prepared supervision missions and analysis of cost /benefits analysis completed for six ______ ______ ______ _____ reserves.  -26- Annex 1 Narrative Summary Key Performance Indicators Means of Verification Critical Assumptions Project Outputs (continued): 2. An enabling framework Savanna Resource Project quarterly and Inter-ministerial established for poverty Management Center (SRMC) annual reports cooperation and alleviation activities through established and staffed and coordination is adequate local community participation in operating modalities to ensure effective sustainable management and developed. functioning of SRMC. conservation of Savanna Zone natural resources, development Six community-based pilots field visits, project social The benefits of and utilization of woodland for woodland reserve and economic participation in reserve resources, and improved land management Identified and assessments and woodland resource management within the three planned. management will exceed northern regions. the costs for communities Surveys and planning ICR for Phase I completed for six priority off- reserve watersheds. National Action Program to Combat Desertification discussed, agreed and endorsed by regional and district administrations in the three northern regions. 3. The policy, legal Wildlife Department Project supervision New management administrative and technical restructuring completed, new reports organization and staffing framework established for staff recruited and training will result in improved conservation and sustainable program initiated and under outward-looking management of wildlife implementation. management style of WD. resources with participation of rural communities both within Management plans revised Project Annual Report Adequate technical and outside of protected areas. and updated for all National capacity exists in country Parks and Zoological Gardens to implement plans. and proposed infrastructure developments prioritized and costed. NGO-implemented extension Output of studies and Potential local benefits program for conservation ICR for NRMP I and incentives are education and community- adequate for communities based wildlife management to participate in wildlife defined, costed and ready for management. implementation.  -27- Annex 1 Narrative Summary Key Performance Indicators Means of Verification Critical Assumptions Project Outputs (continued): 4. Environmental The Five-Year Strategy Plan Project Annual Reports District Assemblies are Management Coordination and and the Human resources and technical willing to undertake monitoring of natural resources development Plan for the supervision reports environmental is achieved at national, regional Environmental Protection management planning and and district planning levels. Agency are developed and EPA can provide adopted. adequate technical support and guidance. Regional and District level Site visits, participant EIS capacity is developed and. interviews and technical a national geo-spatial reviews information framework is developed. ICR for NRMP I Global Outputs: By the end of NRMP I: 1. Forest reserve areas within Baseline studies to identify, Technical reviews and Forest Service and the High Forest Zone that are of confirm and document supervision reports Wildlife Department Staff high importance for global Globally Significant are sufficiently well biodiversity conservation are Biodiversity Areas (GSBAs) trained, motivated and identified, documented and completed and 25% of areas resourced to cary out demarcated. demarcated. biodiversity identification protection and monitoring Provenance protection areas within production forest reserves identified and demarcated. Alternative livelihood investments are adequate Legislative basis for providing Ghana Law Gazette to sustain communities permanent protection to commitment to protection GSBAs enacted. of reserves. The scope and operating Project mid-term review modalities for an alternative at end of PY2 livelihood investment program agreed with communities, government and the GEF. By the end of NRMP 1I: Management plans completed 2. Globally Significant and implemented for five total Project Annual Reports Biodiversity Areas within the forest reserve GSBAs (44,000 tropical moist and dry forest ha) and sixteen partial forest Site visits zones are brought under reserve GSBAs (74,000 ha) effective management in full completed. collaboration with adjacent communities. Alternative livelihood Participant interviews, investment programs annual project audits functioning in 70% of GSBAs.  - 28 - Annex 1 Narrative Summary NRMP I Input: Means of Verification Critical Assumptions Project Components/Activities: High Forest Resource US$14.2 million Management 1.1 Establish policy, legal, Annual and quarterly Essential sectoral policies technical and administrative reports and audits and institutional reforms framework to support will be adopted. sustainable high forest resource Supervision mission management, including creation reports of GFS and amalgamation of other sectoral institutions. Site visits and 1.2 Design and test integrated participant interviews forest reserve management systems incorporating ICR for NRMP I community collaboration in both on- and off-reserve settings. 1.3 Design and test mechanisms to encourage private sector involvement in reforestation of degraded reserves and off- reserve lands. Savanna Resource Management US$4.5 million 2.1 Develop and operationalize new multidisciplinary Project quarterly and Inter-ministerial institutional arrangements for annual reports and coordination and drylands management, audits cooperation arrangements utilization and monitoring. are adequate and effective. 2.2 Pilot test and implement Technical supervision improved systems for reports community-based management of savanna woodland, wildlife, land and water resources both on and off reserves in support of rural poverty alleviation strategies. Review Action Plan 2.3 Improve operational fiamework for woodfuel production, harvesting, processing and marketing. Site visits and technical supervision reports 2.4 Develop a National Action Program to Combat Desertification based on a participatory process beginning at community level.  -29 - Annex 1 Narrative Summary NRMP I INPUT: Means of Verification Critical Assumptions Wildlfe Resource Management US$3.2 million 3.1 Implement organizational Annual Reports, Sufficient technical and and management reforms technical supervision administrative capacity within the Wildlife reports exists within the public Department including and NGO sectors to retraining and redeployment of implement program. personnel to support district and community-level wildlife resource management. 3.2 Prepare and implement park Site visits, participant and reserve management plans interviews and assist in preparing pilot district level plans for collaborative wildlife resource management. 3.3 Develop and manage Supervision reports implementation of a conservation awareness program. EnvironmentalManagement US$1.5 million Coordination 4.1 Implement elements of the Quarterly and annual Ministry and public EPA's Strategic Plan related to reports, annual audits support are adequate for coordination and monitoring implementation of new of natural resource initiatives. management, including the Technical supervision human resource development reports plan. ICR for NRMP I 4.2 Develop and operationalize regional and district level environmental information management systems to monitor project performance and to improve information flow within and among Site visits and participant relevant sectoral agencies. interviews 4.3 Support district level environmental management planning and monitoring capacity through support to the district environmental committees and preparation of local environmental action plans.  -30 - Annex 1 Narrative Summary Input: Means of Verification Critical Assumptions Biodiversity Conservation US$9.4 million* 5.1 Strengthen the capacity of * The proposed GEF grant Quarterly and Annual The implementation GFS, WD and collaborating wouldfinance the incremental Project Reports capacity of public communities to manage and cost of biodiversity institutions and NGOs is monitor GSBAs. conservation over a six-year adequate to implement the period coinciding with the first program and the 5.2 Identify, evaluate, document two phases of the 10-year Independent monitoring incentives for and establish conservation Natural Resource of Biodiversity communities to areas to encompass the full Management Program. indicators participate in forest range of globally significant Approximately US$ 2.3 conservation programs biodiversity within the tropical million in total expenditures are adequate and can be forest biomes of Ghana. would be made in the first two sustained. years under this component. Site visits 5.3 Develop and implement Approximately US$1.6 million integrated reserve would be committedfor management plans eligible expenditures under incorporating community the Wildlife Resources Technical and financial collaboration for GSBAs. Management Component over reports, audits, sixyears. beneficiary assessments 5.4 Develop and implement a mechanism for financing alternative livelihood investments for communities involved in GSBA conservation.  -31 - Attachment to Annex 1 Table 1: Triggers for Initiation of NRMP II Project Component Triggers for NRMP II Means of Verification High Forest Resource * Ghana Forest Service (GFS) Law Gazette of Ghana Management established and operational including recruitment of new staff and redeployment of surplus staff. * Timber Resources Management Act GFS Annual Report regulations, including increased collection of enhanced timber royalty rates to more than 90%, effectively enforced. * Log export ban study completed and Reports of independent forest outcome agreed. certification body * Twelve priority reserve management ICR and technical supervision mission plans prepared and analysis of costs reports and benefits for six of these completed. Savanna Resource * Savanna Resource Management Project annual reports Management Center established and staffed; and operating modalities developed. * Six conmmunity-based pilots for on- Site visits and technical supervision reserve resource management reports identified and planned. * Surveys and planning for protection ICR for NRMP I and Project Annual of six priority off-reserve watersheds Reports completed. Wildlife Resource * Wildlife Department restructured and Technical supervision reports Management reorganized, key new staff recruited and training programs initiated. Project annual report * All protected area management plans revised and operationalized under annual work plan procedures and ICR for NRMP I proposed infrastructure developments costed and prioritized. Environmental Resource * EPA's revised Human Resource Supervision reports and ICR Management Development Plan being Coordination implemented.  - 32 - Attachment to Annex 1 Table 2: Triggers for Initiation of NRMP III Project Component Triggers for NRIP III Means of Verification High Forest Resource * Integrated management plans ICR for NRMP II and Project Annual Management completed for all forest reserves. Reports * All timber utilization contracts (TUCs) managed in accordance with collaborative forest management principles. Savanna Resource * Six pilot management programs in ICR for NRMP II, Project Annual Management existing woodland reserves in Reports collaboration with local communities and district assemblies implemented and cost/benefit analysis undertaken; additional nine pilots planned and initiated. * Collaborative protection programs Technical Supervision Reports for six priority off-reserve watersheds implemented and cost/benefit analysis undertaken; additional six watersheds surveyed and planned. * Controlled burning program planned and initiated on a scale to be determined in NRMP I. Wildlife Resource * Revised management plans ICR for NRMP II and Project Annual Management operationalized for seven principal Reports national parks and reserves and priority infrastructure development Site visits and technical supervision completed. Reports  -33- Annex 2 GHANA: Natural Resource Management Project I Detailed Project Description Component 1: High Forest Resource Management (Total program cost for NRMP I = US$14.2 million) 1. The project would seek to alter the incentive structures operating in the sector, so that forestry professionals are encouraged to adopt a service role for communities; industry is encouraged to invest in more efficient equipment and value adding processing; private investors are encouraged to engage in plantation development; and communities and district assemblies are rewarded for pursuing sustainable forest management and conservation principles. The component would encompass five subcomponents: policy and legislative reforn; sector institutional reform; integrated forest reserve management; forest resource management off-reserve; and, plantation development. 2. Policy and Legislative Reform. The project would help to expedite the implementation of new government policies in the forestry sector, leading to enactment of legislation crucial to future efficiency, productivity and sustainability of the forestry sector in Ghana. The core policy and draft legislative package underpinning the project objectives have been developed over an extended period by MLF, with input from DFID, IDA, FAO, ITTO, EU and other donors. The Forest and Wildlife Policy was adopted by Government in 1994, and from this the Forestry Development Master Plan was developed and released in mid-1996. Two major pieces of legislation were subsequently prepared to be enacted: the Timber Resources Management Bill, and the Forest Service Bill. 3. The Timber Resources Management Bill was enacted in March 1998, and provides for the adoption of transparent procedures for awarding timber rights, and ensure that only capable and properly equipped concessionaires will have access to the limited natural timber resource base -- repealing a range of existing legislation and procedures that led to unauthorized and improper renting of concessions and unsustainable management of the forest resource. Instead of granting concession leases, the rights to harvest and utilize timber within strict resource management guidelines (timber harvesting manual) would be awarded in the form of a timber utilization contract (TUC); and a streamlined procedure for awarding timber rights would be adopted using objective criteria to pre-qualify capable applicants followed by a competitive procedure to select a suitable applicant from this short list. The new Act would provides for consultation with respective stools, landowners and district assemblies prior to advertising the availability of the timber resource, and also during the evaluation of the shortlisted proposals, particularly in respect of commitments to reforestation, environmental damage mitigation and support to local communities through social responsibility agreements. 4. The Act will also provide for timber stumpage (royalty plus forest administration fees) rates to redress the current situation where the timber resource is substantially underpriced in the market. Royalty rates will be increased significantly, especially for the scarce species group as identified by the forest inventory program. These new rates will range from 7% to 20% of the FOB price, depending on the scarcity of the species, based on a formula recommended in a DFID-financed study undertaken by the UK Forestry Commission which, inter alia, automatically adjusts FOB prices on a six-monthly basis for each species. Currently, an estimated 85 percent of logs being harvested would attract the maximum rate. The aim is to increase stumpage to a level that will impact on demand to bring it in line with the annual allowable cut for each species group, and at the same time be sufficient to provide financial incentives to encourage loggers and millers to utilize the resource more efficiently; landowners to be more involved in management of their resource; and investors to engage in plantation development. A realistic objective is  - 34 - Annex 2 to bring the domestic market to somewhere near border prices for the resource within five years, and royalty rates will need to be judiciously managed to achieve this, supported by the possible introduction of an export tax (para. 7). To improve royalty collection, it is proposed to collect estimated stumpage for each concession six months in advance. 5. The Forest Service Bill is expected to go before Parliament in mid-1998. It will provide for the establishment of the Ghana Forest Service and to define its' operating principles, including formation of the Forestry Service Board. Subsequent legislation will proscribe required forest resource management planning (a National Forest Plan, forest reserve management plans, and district forestry development plans), creation and management of new forest reserves, creation and management of dedicated forests outside the forest reserve system, ownership of trees and timber and the rights of land owners and farmers, timber utilization provisions, and enforcement provisions and penalties. 6. At this stage the government is not planning any action on the suspension of natural timber log exports that had been applied progressively to selected commercially endangered species since the late 1980s, and was extended to cover all naturally grown timber in 1994 -- at the time of the introduction of the "interim measures" aimed to stem the rash of speculative logging (not against firm export orders, and often illegally felled) that resulted in large volumes of logs accumulating in the ports that were not being shipped and were eventually auctioned off by TEDB. Much of the problem was caused by ineffective concession management/monitoring by the Forestry Department and poor control and monitoring of log movement by FPIB. Both these institutional problems would be addressed by the project, but until they are, and concession management and log movement monitoring are greatly improved, Government rightly will not consider lifting the log export suspension. However, once these controls are being effectively enforced, Government will need to decide if an export ban is the most efficient way of protecting the dwindling resource base, or whether some other policy, such as an export levy, would have the same effect but at a lower economic cost. 7. Sector Institutional Reform Restructuring and operational reorientation of the public institutions responsible for management of Ghana's forest resources is a crucial aspect of the project. Based on the ongoing work being undertaken by the DFID supported Forest Sector Development Project, the Forestry Department (FD) will be replaced by an autonomous Ghana Forest Service (GFS), operating outside the civil service. As envisaged, GFS will be a smaller, more professional organization, with a clear focus on conservation and sustainable development of forest reserves, and working in collaboration with resource owning communities, rather than in a command and control situation. It will regulate harvesting of all natural timber, in coordination with district assemblies and other sector agencies involved in natural resource management; and be committed to transparency and cost efficiency in its role as steward of the nations forest resources. Specific responsibilities of GFS will be to: * protect, manage and develop in a sustainable manner all forest reserves in the high forest zone, in the national interest and for the benefit of the owners; * monitor the condition and extent of the Nation's forest resources; * advise the Minister of Lands and Forestry on forest policy formulation; * regulate the allocation and utilization of natural forest and timber resources; * provide management services on agreed terms to private individuals, traditional authorities, communities, companies, unit committees, district assemblies and others for the protection, management and development of forests outside the forest reserve system. 8. GFS will enter into contract agreements with the government ministries/departments, corporate bodies, district assemblies, land owners and any other clients for the provision of any of these services. Compared to the past, the Service will be less concerned with forest industry development and timber  - 35 - Annex 2 marketing, both of which will be the responsibility of the new Timber Industry Development Board. In a significant departure from the present arrangements, the proposed GFS would in future be concerned only with resource management in the high forest zone. Management of woodland resource in the savanna zone would be the responsibility of the proposed multidisciplinary Savanna Resource Management Center, to be staffed by officers from the erstwhile FD and other relevant departments/ministries (EPA, MOFA and MME). 9. As currently proposed, the GFS would have only skeleton staffing at the central level, with most operational authority and responsibility transferred to the regional level. Regional Officers will be given authority to propose budgets and required to commit to timely achievement of clearly identified results. Accounting and finance (including introduction of a computerized royalty accounting system) will be managed at the regional level and consolidated centrally only to facilitate oversight and reporting. GFS will be accountable to a Board that will include specialists appointed by MLF, along with representatives of Forestry Commission, forest owners (nominated by the House of Chiefs), MOF, the wood industry, and recognized environmental NGOs. The executive will be headed by a Managing Director, supported by Directors for Corporate Services (finance/administration and human resource development), and Technical Services. The latter will operate through three Divisions: HFZ Operations Division, the "operational arm", responsible for preparation of forest management plans and control and monitoring of timber harvesting; the Forest Management Support Center, the "technical arm", responsible for developing, mainstreaming and monitoring the introduction of collaborative forest management techniques into GFS operational methods; and the Resource Development Division, the "commercial arm", responsible for day-to-day management of TUCs, monitoring of royalty billing and disbursements of revenue to local government and landholders, and generation of statistics on the resource base and the industry. The first phase staff redeployment associated with the establishment of GFS would involve the shedding of about 2,000 staff, or about 45 percent of the current FD staffing level. Subsequent redeployment would depend on further efficiency gains, and the ability to outsource additional GFS activities to the private sector. DFID has provided US$5.0 million under FSDP for redundancy payments following standard GOG guidelines. It is expected that GFS will not be financially self sufficient in the early years of its operations and therefore for the initial three years of GFS and operations, selected incremental operating costs would be supported by the IDA Credit to the level of 75% in Year 1 and 2, and 50% in Year 3 -- provided the support in any year does not exceed 20% of total expenditure. It was further agreed that if royalty collection drops below agreed thresholds, this Credit support for the financing gap would decrease proportionally in a formula to be agreed at negotiations. 10. Creation of GFS has been accepted in broad principle by the government, but the law instituting it, the Forest Service Bill, has not yet been introduced to parliament. An agreement has been established between the government and DFID to extend FSDP by one year to December 1998 to complete the Forest Service institutional design, and to initiate the transformation of the FD into the GFS, and the Planning Branch of FD into the Forest Management Support Center. Subsequent DFID support will depend on the outcome of the current phase -- but is expected to include support for establishment of GFS, including FD redundancy costs, and operational support for collaborative forest management initiatives. 11. In a separate exercise, the Timber Export Development Board (TEDB) will be merged with the Forest Product Inspection Bureau (FPIB) to form a new Timber Industry Development Board (TIDB). TEDB's role is to promote timber exports, provide market intelligence and collate and publish statistics on the Ghanaian industry. FPIB's role is to set and enforce standardized grading rules for export timber, review all export contracts to prevent under-invoicing, and monitor ex-concession log movements. Government involvement in export promotion and contract vetting will cease under the new TIDB arrangement, and a computerized log tracking system will be introduced -- with installation and initial operation of the system outsourced to the private sector. Consultants are working on the modalities of  - 36 - Annex 2 merging TEDB and FPIB, and the final proposal is expected in late 1998 in conjunction with forest certification proposals now being developed. At a later date, government has indicated it is willing to consider privatization of all TIDB's functions. 12. Integrated Forest Reserve Management. Under the project, strategic planning for forest reserve management will take place at two levels. A National Forest Plan would be prepared to establish national resource management objectives in accordance with the aims of the 1994 Forest and Wildlife Policy(e.g., the AAC for timber harvesting). At the resource level, existing forest reserve management plans will be revised, or new ones prepared, for all reserves in the HFZ -- with priority given in NRMP I to the twelve most productive ones. These plans will define the long-term forest management objectives for each reserve, along with specific management zones and prescriptions. They will not only identify protection and production management zones, but also clarify beneficiary objectives, specifically revenue sharing and access to forest products for domestic use. The planning process will be collaborative, led by GFS, but involving representatives of the different client and interest groups. The project will provide critical support by establishing decentralized planning capacity at regional and district level with technical support from the FMSC in Kumasi, in particular, building short- and long-term capacity to initiate participatory planning procedures and undertake collaborative management programs. A temporary collaborative forest management support team would be established in each region to assist in training district GFS staff and community representatives to conduct socio-economic surveys and engage in participatory planning. 13. The project will pilot an improved integrated forest reserve management system, building the capacity of all the main players in forest reserve management, in particular the Forest Service as managers; rural communities as resource owners and resource users; district assemblies as beneficiaries of forest utilization; and timber contractors as industrial resource users. Substantial work has been undertaken over the last three years in Ghana on forest policy and pilot collaborative management systems development for the high forest, and the project's aim will be to test and analyze the costs and benefits of these new systems before they are operationalized country-wide during NRMP II and III. 14. Also supported will be: the introduction of improved operational systems to ensure that management plans are implemented with the most efficient use of human and financial resources; capacity building for biodiversity conservation objectives, including development of programs for the protection of faunal diversity as well as botanical diversity; watershed maintenance and wildfire management; training for GFS staff and loggers on implementation aspects of the new Timber Utilization Contract system and the use of the new Manuals of Operation; improved timber harvesting procedures (including, possibly, low-impact logging); and introduction of a certification scheme to achieve sustainable timber production objectives. Gathering, processing and trading non-timber forest products (NTFPs) provide a source of supplementary income to many rural households, particularly important during the "hungry" season when there is little farm work or when there is an emergency need for cash. For this reason, community and institutional capacity building to encourage development of traditional and new non-timber forest products, a hitherto neglected area of forest management, would be specifically fostered, as would the promotion of forest-based rural enterprises to directly increase the opportunities for poverty alleviation and job creation. 15. Forest Resource Management Off-Reserve. Resource management strategies outside reserves have only been developed since 1994, with the change in government policy from salvage felling to clear land for agriculture to one of controlled exploitation of the remaining timber resource over a 50-year period. Development of resource use strategies off-reserve are therefore not as advanced as in the reserve situation, but some principles are emerging. Timber harvesting will be regulated through implementation of a new Annual Allowable Cut (AAC), off-reserve district quotas, the (interim)  - 37 - Annex 2 harvesting procedures, allocation of the new TUCs, the introduction of social responsibility agreements with communities, anid more equitable sharing of timber revenue between resource owners and resource users. Strategic planning may later be developed at district level, eventually leading to a forestry component of the district development plan. 16. The on- and off-reserve resource environments, while inter-related, are quite distinct. Outside reserves forest resource management takes place in a primarily agricultural context and is led by the holders of land title and land use rights. Forest management off-reserve, therefore, will not be based upon forest reserve management concepts and parameters aimed at making forest production permanent and sustainable. Off-reserve, land and tree management choices will be the prerogative of the farmers and land owning communities. The objective will be to facilitate utilization of existing tree resources gradually, and maximize economic benefits for forest owners and environmental benefits for all; and where appropriate, to provide a framework for local communities to declare a "dedicated-forest status" for sacred groves and other forest areas and woodlands of particular economic or cultural significance to the community. 17. Specific project-financed activities during NRMP I would include the creation of widespread understanding of the radical changes in Forest Policy proposed in 1994 through a range of discussions and innovative awareness creation campaigns; and the piloting in two districts of a collaborative approach to strategic planning for forest resource management off-reserve, in coordination with LEAP initiatives and possibly linking into the district development planning process. Strategic planning would aim to create a better understanding of the potential for forestry to contribute to rural development in a district (through use of the ongoing 'Farmer First' and similar participatory programs), and in turn improve the ability of a range of public sector agencies, NGOs and CBOs to support local forest resource management aspirations. Also supported would be the development and introduction of a system for operational monitoring off-reserve to ensure all forestry operations, including those related to timber harvesting, are implemented in accordance with service agreements and standards, in accordance with new codes of conduct for social and environmental responsibility and new production quotas; equitable distribution of timber revenues; individual and community forest resource management initiatives, in particular capacity building for local management of discrete blocks of forest, through a new dedicated forest program; and the establishment of a forest-based enterprise development scheme to directly support income generation and job creation opportunities in rural areas. 18. Wood Industry Reform. A wood industry study conducted in early 1997 concluded that over the past five years, more than US$70 million has been spent by the wood industry in Ghana to upgrade and to add to existing capacity, now estimated to be in the order of 3.7 million m3 per annum -- compared to the annual allowable cut of 1.0 million m3. Eight new sawmills started operations (one large, and seven medium/small mills), along with four veneer processing firms. At the same time, documented changes of the wood processing sector over the same period show that the current trend is towards an erosion of the logging industry's financial and managerial capacity; an increasingly wasteful use of resources; an increase of the milling industry's reliance on illegal harvesting operations; and a stagnation of the milling industry's efficiency -- despite the fact that an increased share of overall sectoral production is going to higher value-added products. This means that over this period the processing section has moved even further out of balance with the resource base. 19. One policy objective of the Forest Development Master Plan is that measures would in future be adopted to discourage marginal and inefficient wood processing plants. These measures are not defined in the Plan, but, in the longer run, the development of any strategy to increase wood processing efficiency will need to be based on an increase in forest fees, greater enforcement of the AAC and phased introduction of open market competition in the wood sector. With forest fees at 1987 real-cost levels, full  -38 - Annex 2 protection from international competition for raw materials, and a logging and processing sector that captures more than 95 percent of the estimated stumpage value, the industry lacks incentives to invest in becoming more efficient and competitive. 20. The 1997 study also concluded that an additional US$150 million would be necessary to completely upgrade industry processing capacity in Ghana, and that adequate commercial bank credit facilities are available for interested investors with good bankable operations. On this basis no direct financial support to industry upgrade therefore would be justified under the project -- although the project would seek to create the right environment to encourage investrnent to take place, including plantation development to increase the availability of future raw material supply. At the same time, NRMP would also support measures to ensure that adequate institutional capacity to control illegal forest exploitation will be established, including the introduction of new technologies to perform computerized log tracking; monitoring of concession management and timber harvesting operations; and increased timber royalties and an improved forest revenue collection system. Training programs at the Wood Industry Training Center would also be supported aimed at improving operational efficiency in mills and supporting firms moving towards value adding. These approaches are key to encouraging transparency and efficiency within the wood industry. 21. Plantation Development. Investment in tree plantations in Ghana is a potentially attractive proposition for a number of reasons: favorable conditions for tree growth and quality wood development; reasonable local infrastructure and access to ports; strong domestic market for wood products and good access to major European markets; a favorable labor market in terms of skills, price and availability; existing processing capacity; and extensive areas of degraded forest within forest reserves suitable for tree planting, and by statute dedicated to permanent forest status. The project would seek to capitalize on these circumstances and promote the development of privately financed plantations by fostering an increasingly favorable investment policy environment; facilitating allocation or availability of land to the private sector for forest plantation activities; investigating the need for creation of a Plantation Development Fund; establishing a seed bank and fostering development of a private, decentralized seeds distribution system; promoting adaptive research; and providing selective technical assistance and training for all stakeholders. 22. The project would develop an effective land allocation system within existing forest reserves and assist in identifying suitable land off-reserve where communities are interested in a joint venture with plantation investors, in the latter case in collaboration with local Chiefs and District Assemblies. Initial emphasis would be placed on allocating land within reserves, where inventory work carried out by the FD in recent years has identified up to 0.4 million ha of degraded forest -- caused almost entirely by bushfires, rather than farm encroachment. NRMP I activities would include an initial technical survey (site indexing involving soil surveys and site mapping), followed by socio-economic survey of the potential plantation land inside forest reserves -- designated as degraded forest areas suitable only for regeneration; and the definition and implementation of procedures for land allocation inside forest reserves. 23. The financing of tree planting is currently a major problem in Ghana because loans for long term investments with specialized financing needs such as plantations are currently not available. Under these circumstances, the need for a dedicated plantation fund should be investigated. The requirement for such a fund, the form of such a fund and its' operational modalities would be investigated during NRMP I. It established, such a fund could be created from a variety of potential sources, including multilateral and bilateral donors and investors such as local and foreign pension funds, insurance companies and banks; and with grant assistance from GEF through the alternative livelihood investment initiative for communities who forgo income when forest is taken permanently out of production for biodiversity  -39 - Annex 2 conservation purposes. Because of the carbon absorption aspect associated with plantation development, support for such a find might also be sought from the Global Carbon Initiative. 24. For potential investors in industrial scale plantations, access to some area of existing plantation to improve early cash flows may be crucial, and here the release of government owned teak plantations and the Gmelina plantation at Subri through full divestiture or by simply allocating harvesting rights will be necessary, and therefore promoted by the project. NRMP I activities would involve technical (by species and condition, in terms of yield and timing), and financial assessments of these resources and detennining the terms and conditions for allocation of harvesting rights. Significant areas of rubberwood also exist at the partly government-owned Ghana Rubber Estate, where planned replanting programs could release up to 500 ha of old trees for timber harvesting annually for the next twenty years. 25. To overcome the current shortage of planting material, the project would establish of an autonomous and self-financing Seed Bank and support development of a decentralized private sector seed distribution system for the sale of certified tree seeds linked with the Forestry Research Institute of Ghana (FORIG) and its field stations. Initially it would be necessary to identify teak and other species which are genetically superior to those that are currently distributed in Ghana. In the longer term, the seed bank has to be involved in selection, mating and genetic testing which will ensure a continuing supply of ever improving genetic material. Tree plantation research would also be supported with the aim of improving the quality and diversity of forest plantations products and would initially concentrate on; the rehabilitation of existing teak trials and the establishment of new non-teak species trials for industrial and commercial purposes; socio-economic surveys to determine farmer preference for planting material and focused research programs on those species; improved husbandry practices for nursery and plantations (optimum spacing, fertilizing, enrichment planting and other methods of restoring natural forest cover, fire control techniq[ues, etc.) and the subsequent preparation of technical manuals; improved agro- forestry/land use planning; and wood technology practices to promote rational utilization of plantation products. 26. Given the potentially innovative nature of this subcomponent, involving the creation of an investment environment that encourages the private sector to engage in plantation development, along with the current institutional/financing mechanism uncertainties and need for collecting more technical and socioeconomic iinformation prior to the final design of this sub-component, the government requested assistance from the FAO Technical Cooperative Program (TCP). This was followed by an FAO/CP preparation mission on behalf of AfDB in February 1998 the report of which is still awaited. Provided this report is positive, the final scope of this sub-component will be based on the AfDB appraisal mission, expected to be undertaken in late 1998. Component 2: Savanna Resource Management (Total program cost for NRMP I = US$4.5 million) 27. The objective of this component is to promote community management of natural resources, including rehabilitation of degraded areas. Communities would be encouraged to take ownership of these resources and manage them in a sustainable manner, while at the same time extracting the maximum benefit. An estimated 70 percent of Ghana's primary energy needs come from woodfuel, and most of this from the savanna zone, but to a large extent this satisfied through the subsistence practice of women and children looping branches, felling small trees and collecting dead wood. Currently, only very limited commercial woodfuel is harvested from reserves, plantations or woodlots/agroforestry plots. As a result, distances from the major collection areas to the main marketing/consumption centers are increasing. NRMP I would therefore focus on developing integrated institutional capacity at national and district level capable of designing and implementing collaborative resource management programs, and  -40 - Annex 2 designing pilot programs in the woodland reserves to determine the best approaches to developing the needed community capacity to sustainably manage and exploit these resources, and to determine the most cost effective way to achieve this result. The pilots would also examine how to organize and plan in close association with local communities and stakeholders in the non-reserve areas, integrated watershed management programs involving practical, cost-effective measures for sustainable use of the land, water, vegetation and animal resources. These measures would take into account the threat of desertification in the areas where the soils have been severely eroded and where regeneration of vegetation presents a major challenge. 28. Communities would be encouraged to take most, if not all, of the responsibility to implement catchment management plans and would be provided with the necessary training to do this. Part of the labor provided by the communities for implementing the program would be their contribution to the investment, and they would be provided with food under the World Food Program (WFP) to the value of the remainder of the labor input. The intention is to have the communities in a better position to increase their food production capacity by improving their operational and managerial skills as well as the fertility of the land they farm. Because of the multidisciplinary nature of this work, a special unit would be created, the Savanna Resource Management Center (SRMC), based in Tamale. The head of the Center would be recruited competitively, while technical staff would be seconded from MLF, MOFA, MME and EPA. The SRMC would eventually devolve its functions to the respective district assemblies, as these developed the necessary resource management capabilities. 29. Woodland Reserve Management. This program would focus on developing appropriate management systems and procedures that could be tested on a pilot basis. While implementation of the planned management programs would be primarily by the communities with guidance of the social forestry officials, the planning and the front-line extension staff of the relevant district assemblies be fully involved in the initial planning exercise. These forest reserve management plans would be included in the overall district plans and be partially supported by the DA Common Fund. The district assemblies would also have implementation monitoring roles, especially since the status of these resources would have strong bearing on the welfare of the communities, including income generation capacity, and the effects on the physical environment. 30. Six pilots programs in established woodland areas would be initiated -- in the Upper East, Upper West and the Northern Region. The pilots would be located in reserves which satisfy specific eligibility criteria -- primarily that local communities and the DA show commitment to participate in the program under a formal collaboration agreement, with communities contributing time and labor and the DA contributing some counterpart funds. Initial surveys and species inventory and density determination would be undertaken, involving mapping watershed boundaries within pilots using satellite images and ground surveys, determining the composition and quality of natural resources and infrastructure, and collecting relevant socio-economic data. This would be followed by the definition of the activities to be incorporated in the management plans, the implementation of which would begin in the second year of the project. This planning and design work requires special skills in land resources management, and it would be necessary to engage resource persons with such skills from local research institutions to assist SRMC and DA staff working with the local community. 31. Community awareness and training programs would be accorded high priority in this exercise, and would be undertaken by competent NGOs, supported by specialist technical staff of SRMC and resource persons from other local institutions including extension personnel. The project would finance the cost of training and capacity building as well as materials and equipment required for rehabilitating degraded areas and establishing essential infrastructure such as access tracks, water facilities etc. In this latter regard, collaboration with the new Village Infrastructure Project (VIP) would pursued.  -41- Annex 2 32. Off-Reserve Integrated Catchment Management. This program would focus on planning for sustainable land use, through collaboration with farming communities in planning and implementing land management programs. The programs would start with identifying communities who are interested and willing to collaborate in integrated watershed management, and would build on local experiences in soil and water conservation activities. Planting trees and other vegetation in rehabilitating and conserving the soil, water and wildlife resources would be important measures to be promoted. Advantage would also be taken of the community collaboration experiences of the EPA in assisting stakeholders to manage recognized sacred groves, to ensure the sustainable participation of the stakeholding communities; and with the land and water management component of ERMP 33. The activities under this subcomponent would be wide ranging in scope and would require technical assistance to plan and implement. As with the pilots in the reserve areas, eligibility criteria on similar lines would be applied in selecting the catchments to be included in the program. Implementation would be primarily by the beneficiaries, working in groups or individually, following an integrated physical plan prepared in close consultation with them. In addition to formal training activities, a Technology Development and Demonstration Center would be established under the project at Walewale, working in close collaboration with local participating villages to promote the application of the various rehabilitation and conservation measures. Field demonstrations would involve communities in the practical application of a range of activities, including: (a) Integrated Watershed Management Plans: Surveys would be conducted to determine the status of the existing resources and to design measures which would be applied in rehabilitation and management programs. Because of the present limitations of experienced technical staff in the rural areas, arrangement would be made for technical assistance in the initial years primarily from competent local research/training institutions, such as the University of Development Studies (UDS) in Tamale and the Institute for Renewable Natural Resources (IRNR) which have ongoing programs of training and investigations in catchment management in the savanna region. The target for NRMP I would be to complete land management plan development for six priority off-reserve watersheds. (b) Nursery Development: Managing the watershed resources and keeping headwaters under continuous cover of trees and associated vegetation is a crucial aspect in this program. Preferably, such trees and vegetative cover would be managed as a reserve, excluding agriculture which would deplete the protective cover effect of the natural vegetation. The communities and other stakeholders would be assisted with materials and simple tools and equipment to operate their own nurseries to produce the needed planting material. They would also be assisted in the field establishment and trained in the proper field management techniques. The project would promote the establishment of privately run community nurseries. Infrastructure development to be supported would include watering systems, propagation bins, bagging or potting facilities and spray equipment. Nursery operators would be provided with training in nursery operations and plant propagation. Introduction of improved planting material would be supported under the project, initially from selected trees in the region. For the longer term, provision would be made under NRMP II and III to establish about 240 ha of seed producing tree gardens by private outgrowers or nursery operators to meet the future needs of natural resources regeneration programs. (c) Bush Fire MWanagement: Annual bush fires are prevalent in the Savanna zone and not only destroy wildlife and the ground cover, but also greatly reduce soil organic matter recycling. This situation could be alleviated by prudent management of the annual bush fires to avoid hot fires which destroy the low shrubs and severely damage the trees. Under the project, and with support  -42- Annex 2 from local fire services, communities would be encouraged to manage the bush fires through early burning at the beginning of the dry season leaving some unburned organic matter to absorb some of the raindrop impact and to support soil micro-organisms; minimizing the spread of fire by establishing firebreaks before the onset of the dry season; and undertaking essential bush control between planted tree seedlings. The project would support programs of awareness building and training communities in managing bush fires to reduce their frequency and damage potential. Use would be made of the Non-formal Adult Education Unit of the Ministry of Education, where possible, to achieve this. Communities in the high fire risk areas would be assisted in establishing fire breaks where needed. 34. Woodfuel Market Development. Fuelwood and charcoal producers would be assisted to develop the capacity to market of their products more effectively. This would enable them to retain for the benefit of the communities a greater proportion of the market value of their production, and to devote some of the increased returns into the sustainable management operations of the woodlands. The increased cost of the woodfuels at the collection points to the buyers and transporters would be expected to be financed from improved market efficiency, and not be transferred to the final consumer. The approach to be adopted would be similar to that proposed in the off-reserve situation in the high forest zone, involving collaboration with all stakeholders (rural producer groups, transporters, retailers and district assemblies) to address issues such as rationalization of the multitude of levies and market taxes applied to woodfuel; strengthening of woodfuel traders; and strengthening of the regulatory powers of district assemblies. A pilot project would be undertaken in NRMP I to develop and test the progressive introduction of initiatives leading to more equitable revenue sharing between stake holders, including standardized unit of sale and firewood auctions and a National Workshop organized in NRMP I to discuss these issues. 35. At the same time, increased effort would be made to promote more effective systems of charcoal production and efficient use of wood and charcoal as sources of heat for domestic and industrial applications. This would build on work already initiated by MME in the north. Project interventions would include training for charcoal producers; strengthening of the "pito" brewers association; training of artisans in improved stove fabrication and promotion of the use of new stoves; and public awareness campaigns on energy conservation. The first phase of this work would be initiated in NRMP I. To implement this program, a Traditional and Renewable Energy Unit would be established within the SRMC. 36. Combating Desertiflcation. The threat of desertification is more pronounced in the north of the savanna zone, where persistent drought in the 1970s and 1980s prompted initiation of a number of mitigation schemes with mixed success. In 1991, the National Environmental Action Plan recognized land degradation as a major environmental problem in the country. Ghana was among the first countries to sign the UN Convention to Combat Desertification in 1994 and ratified it in 1996. Under this convention each country must prepare a National Action Program to Combat Desertification (NAP). Development and implementation of the action program would not create any new institutional structure, but follow the existing desertification control institutional arrangements, which would now be harmonized with the implementation arrangements planned for the savanna component of the NRMP. A National Committee on Desertification already exists, and it is proposed to establish under this a Technical Committee on Drought and Desertification, co-chaired by EPA and MLF, to oversee the development of the NAP, with support from the project. This would involve: review of the 1987 National Plan of Action to Combat Desertification, the NEAP and other relevant documents; preparation of a draft NAP; design and implementation of land, water and vegetation programs (incorporated within NRMP pilot activities); a national awareness campaign; district and regional workshops to review the draft NAP; and a national forum leading to finalization of the NAP. These activities are expected to be completed during NRMP I, with implementation of the NAP to be initiated under subsequent phases of the program.  -43 - Annex 2 This would be coordinated by the SRMC in Tamale, but implemented primarily by the district assemblies through the district and community environmental management committees, in collaboration with interested NGOs. Component 3: Wildlife Resource Management (Total program cost for NRMP I = US$ 3.2 million) 37. Based on a sectoral master plan that is currently being finalized by the Wildlife Department (WD) with support from IUCN, the project would re-align and strengthen WD capacity to enhance the economic, social sustainability and relevance of wildlife management programs and foster closer and more effective collaboration between WD, the private sector, rural communities, non-governmental organizations and other partners. WD has initiated an integrated package of needs assessments, workshops and strategic planning initiatives, and has commissioned specific thematic studies to assist in defining an investment program and identifying priorities for: (i) institutional restructuring; (ii) training needs and human resource development; (iii) community based conservation initiatives; (iv) ecotourism development and promotion; (v) wildlife utilization and other wildlife-based income generation; (vi) protected area infrastructure development; (vii) public education; and (viii) development of appropriate research and monitoring capacity. 38. Activities in this component will incorporate institutional restructuring and strengthening; implementation of park management plans and development of priority park infrastructure; community empowerment; public education; and encouragement of private sector and NGO involvement in activities such as ecotourism, park concessions operation, and selected park management functions. Project interventions will be based primarily on the preparation work undertaken by WD/IUCN, but also taking into account the experiences of PADP which is already testing many of the ideas and interventions proposed under NRMP. 39. Institutional Strengthening. Institutional strengthening will be effected through organizational restructuring and management reorientation of the Wildlife Department. The objective of a more decentralized WD management structure will be to enhance the economic and social sustainability of wildlife management programs and foster close collaboration between the WD and local government, rural communities, the private sector, NGOs and other partners in management of protected areas, and wildlife in general. This will involve significant management reorientation of WD through implementing changes in the management structure based on the recommendations from the recently completed Institutional Review; implementation of the recently prepared human resource development plan; changing the approach to wildlife management from regulation and enforcement to collaboration with local communities; and improvement in WD's management capacity through introduction of improved planning and management systems, monitoring and evaluation procedures, information management systems, and necessary technical assistance and training to implement them. During the period of institutional strengthening, interim measures to protect the wildlife estate will be needed, involving an interim management unit comprised of personnel already available in WD which would systematically visit each of the protected areas providing stop gap technical assistance and laying the groundwork for management plan review.  - 44 - Annex 2 40. Park Management Plans. The implementation of key elements of the Protected Areas Systems Plan and the individual Protected Areas management plans prepared under the recently-closed Forest Resource Management Project, as well as necessary environmental and social assessments of proposed project-financed interventions would be supported by NRMP. The main emphasis would be on the implementation of priority elements of management plans for Mole, Digya, and Shai Hills. The project would also finance limited and prioritized infrastructure improvements and operational costs for other selected protected areas. Specific investments will include upgrading of interior roads to facilitate tourist access for game viewing, completion of range camps to improve security, and limited investment in upgrading tourist facilities. Decisions concerning specific investment priorities within individual protected areas would be arrived at through the proposed new system of decentralized management authority. The management plans for all parks would be revisited during NRMP I. Only limited critical infrastructure development would be done in NRMP I, with the majority of this work planned to be undertaken in successive phases of the program. The project would finance technical and operational support for initiation of consultation and collaborative planning with communities surrounding the Kyabobo NP and development of a management plan for the area to be financed, in part, by the GEF. The project would also promote increased private sector/community involvement in wildlife related economic activities such as ecotourism and enable the WD to systematically explore options for expanding the role of NGOs and the private sector in taking on selected protected area management functions, concession operation, and related activities. Financing for studies to identify private sector options and seed money for community-based initiatives would be provided under the proposed GEF grant. 41. Community-Based Wildlife Management The project would support development of a stronger and more effective extension program for community-based wildlife management through developing an outreach program to communities adjacent to reserves, and developing district level community-based wildlife conservation in three districts. The project will support pilot community-based bushmeat production programs and address necessary legal and regulatory reforms. The project will finance operational support for WD to provide extension expertise and monitoring input for development of integrated community-based land management programs under the Savanna resources component. The project will finance technical and operational support to enable WD to support the Forestry Department in identification, planning, management, and monitoring of GSBAs to be established for biodiversity conservation under the project and to support the overall FD collaborative management initiative. Implementation would be carried out in collaboration with national NGOs and CBOs as partners. Planning for these activities will start in NRMP I, recognizing the ongoing work at Kakum and PADP involving liaison with both the traditional authorities and district assemblies in their project areas.. 42. Public Awareness. To promote increased public awareness of wildlife conservation issues, the project would support improved capacity of WD to manage contracts and work in partnership with NGOs and CBOs to support programs for conservation education and environmental awareness. In this context infrastructure improvements to upgrade and modernize the management of the zoological gardens in Accra and Kumasi in partnership with national NGOs will be planned in NRMP I. Implementation of these plans and operational support would be undertaken in subsequent phases of the program. Component 4: Environmental Management Coordination (Total program cost for NRMIP I = US$1.5 million) 43. Coordination and Monitoring. The project would support the implementation of EPA's Five- Year Strategic Plan, which is now under preparation with assistance through a twinning arrangement with the Environmental Protection Authority of Victoria. This plan is expected to be completed in late 1998. The project would support those aspects of EPA's operations that relate to coordination and monitoring  -45 - Annex 2 of natural resource management in Ghana -- including training and staff attachments as laid out in the HRD plan to be developed to support the strategic plan implementation. Building on initiatives commenced under ERMP, EPA would be further strengthened institutionally at the national level and also at the level of the regional offices. The project would also, through EPA and MLGRD, strengthen the capacity of the district-level environmental management committees to enable them to prepare local environmental action plans and participate in district-level land use planning. 44. Information Management. The management of information would address both the objectives that are specific to each of the project components, as well as the strategic consideration relative to environmental information that cuts across project agencies and other institutions. This would include both administrative and thematic aspects for each project component, including systems to track project activities and expenditures. These would provide the information necessary to monitor project performance relative to objectives, and integrate and strengthen the information systems of each of the implementing institutions. 45. The Forest Service would develop a Forest Management Information System to meet project and FS reporting requirements, and to monitor forest revenue and forest exploitation. The system would build upon current information modules used by the Forest Department to manage royalty billing, log information forms, certificates of conveyance, and permits. The system would support the production of maps required for the preparation of management plans, and support the monitoring of forest operations and biodiversity conservation initiatives. The use of GPS to be provided under the project would allow data collected during stock surveys to be tied with log movement information, to provide for seamless monitoring of forest resource use. A similar Savanna Management Information System (SMIS) would be developed, and include modules to manage geo-reference natural resource information such as land cover, soils, biodiversity and topography, required for woodland management pilot areas in reserves, and for the integration of sound catchment management practices in non-reserve savanna areas. Data base development would involve the participation of local populations to incorporate their perception of the status of natural resources and historical changes. A Wildlife Management Information System (WMIS) would include modules to manage biodiversity information, in particular information collected from the fifteen conservation areas managed by WD. The project would provide GPS capabilities for mapping of observations collected form the field, and the development of simple and targeted software applications (including GIS capabilities). System costs would include computer equipment for all of these units; the establishment and maintenance of databases; the development of software applications that target specific management functions; and specialized training and technical assistance. 46. Building on the Environmental Information System (EIS) capacity developed under ERMP, the project would foster further development and dissemination of EIS capacity at national, regional and local level. Five key data sets have been produced to date: topography; soils; land use; land ownership; and climate. These data sets cover the entire country, and constitute the basic information on which environmental management decisions should be made, together with other specific resource or socio- economic information. Under NRMP, these data sets would be developed on regional basis for distribution to various stakeholders in electronic format (CD-ROMs) to facilitate their use for planning and decision making. This will involve integrating the data sets and developing a set of decision-support applications. The capacity of agencies to use the product will be enhanced through training workshops and the provision of appropriate software. The land use database will be updated under a separate contract to the RSAU, and new satellite imagery will be acquired for the purpose. As part of its program to support district-level environmental management, five high-priority districts would be selected as pilots, and EPA would commission the development of a district-level EIS to support environmental management at the local level in selected districts, covering topography, soils, land use and land ownership, all at the scale of 1:50,000. As with the regional-level EIS, the project will provide support  - 46 - Annex 2 for the development of data sets to be integrated for each district. A set of decision-support applications will be developed to facilitate the use of these data. The products will be pressed on CD-ROMs for distribution to the respective district assemblies. 47. The project will also support the development of a Geo-spatial Information Framework (GIF) as the main vehicle for coordinating the production and exchange of data sets among institutions, expanding on the Land Information Project Operations Committee (LIPOC) established under ERMP. The development, distribution and maintenance a metadata catalog will also be supported, as well as the development and maintenance of a Web site to disseminate information about available data sets. Establishment of a GIF is expected to have high-level government support, and a stakeholders workshop would be organized under the project to determine roles and responsibilities, as well as to formulate operational mechanisms. Work on the component MIS, the regional and district EIS, and the geo-spatial information framework would commence in NRMP I and be continued in subsequent phases of the program. Component 5: Biodiversity Conservation (Total program cost for 6-year GEF-financed program: US $9.4 million, including $1.6 million for qualifying expenditures under the Wildlife Component) 48. Financed by the GEF, this component would confirm, refine and document priority areas within the high forest zone that are of global importance for biodiversity conservation to be excluded from future logging; develop and implement community- based management plans for protection of these areas; finance alternative livelihood schemes for affected communities; and provide for ongoing monitoring and evaluation of biological and social indicators of program performance. The component will address priorities for global biodiversity conservation in three ways: (i) reclassification of high biodiversity value forest reserves and major fractions of reserves as Globally Significant Biodiversity Areas (GSBAs) where future logging would not be permitted; (ii) systematic identification and demarcation of high biological priority zones within production forest reserves, and their designation as Provenance Reserves where logging and other consumptive uses will be eliminated or tightly regulated, and (iii) improved fire protection for dry forest remnants and outliers that are of high biological importance and under threat from bushfires. 49. Baseline Surveys, Applied Research and Monitoring. The project will finance applications- oriented research in support of the objectives of sustainable conservation and locally based management. The project will draw on completed work such the recommendations on forest protection in Ghana from the National Forest Inventory, emerging priorities from ongoing work such as the Important Bird Areas surveys, and studies to be commissioned under the project such as a national assessment of primate conservation priorities and options. The purpose of this project subcomponent is to pull together into a consistent and analytically robust framework, the results of these analyses of different biological taxa and to define an effective program to address conservation priorities within the forest reserve network. Implementation of this subcomponent would involve close inter-institutional collaboration between the FD and the WD and significant input from Ghanaian universities and research institutes with demonstrated sectoral experience. Where domestic expertise is limited, institutional twinning relationships would be sought with external organizations with a demonstrable interest in long term cooperation and academic collaboration. 50. Establishment of GSBAs. Analysis of global priorities for conservation of botanical diversity in Ghanaian forests has identified, within the existing forest reserve system, a potential network of thirty reserves which are proposed for either full (1 1) or partial (19) protection to provide global security for floristic diversity. The total area of these reserves represents approximately 400,000 ha or 25 percent of  -47- Annex 2 the existing forest reserve system that would be included in the conservation progran. Of this total, approximately 130,000 ha would be permanently removed or excluded from logging exploitation or other consumptive harvesting. These areas include both the finest remaining examples of "pristine" or "old- growth" forests as well as some of the last surviving remnants of forest formations that are now extremely rare in Ghana and elsewhere in the region. Through a systematic process of participatory strategic and operational planning the project would develop integrated management plans for the GSBAs to be implemented under a collaborative management program with local communities. Specific project- financed activities will include: mapping, delineation and demarcation of GSBAs; establishment of a community-based monitoring program for key indicators; support for development of community based enterprises with direct linkage to biodiversity conservation objectives; and integration of biodiversity conservation with the general FD initiative for collaborative management of forest resources both on and off reserve. The baseline studies would be completed and 25 percent of the proposed GSBAs demarcated in the first two years of the program, corresponding to NRMP I. 51. Alternative Livelihood Investments. It is generally accepted that rural residents who are the legal owners of resources held in trust by Government within the reserved forest estate, should not be made to bear the full cost in terms of lost revenues and/or opportunities of forest protection to conserve biodiversity for the "global" community. Acknowledging this, the project would establish a foundation to finance income generating small scale enterprises and invest in alternative livelihood projects that would: improve the economic status of the communities living around the GSBAs and encourage them to participate in the program and forgo income previously generated from the newly designated GSBAs; and relieve pressure on biological resources by supporting alternative development options. Investment in plantation development, whereby communities who forego income from harvesting rights in GSBAs would be compensated with shareholdings in new plantation developments off-reserve would be strongly supported. The direct cost of establishment and maintenance of approximately thirty GSBAs is estimated at $ 3.5 million. The form, scope and operational modalities of community development activities and alternative livelihood investments to be implemented as part of the management"contracts" developed under the collaborative management scheme would be developed during NRMP I and agreed with communities, govermment and GEF. 52. National Capacity Building. An explicit aim of the project is to involve national NGOs, CBOs, academic and research institutions in implementation to build country capacity for collaborative resource management with maximum involvement of local communities in planning, implementation and monitoring activities. Following the same methodology and general approach as the integrated forest management component for production reserves and the village-based land management approach of the savanna resource management component, this component will emphasize the empowerment of local communities to play a lead role in reserve management. To this end the project will finance decentralization of management to district and community level and grassroots public awareness activities under the wildlife component as well as specific site enhancement activities such as fire break establishment, border clearing and enrichment planting as pilots in five reserves during NRMP I. 53. Identification and Establishment of Provenance Reserves. Building on the methodology and local expertise developed under the project for identification of GSBAs, the project would seek to extend conservation more effectively into the domain of the production forest reserves which represents some one million ha, or about 60 percent or the reserved forest estate. By extending the botanical and zoological surveys into this domain the project will identify critical natural habitats for fauna and important sites for preservation of genetic diversity in tree stocks and other flora. 54. The biodiversity conservation activities of the project will be managed by a GSBA coordinator situated within the Forest Management Support Center of the GFS. A GSBA Technical Advisory Group  -48 - Annex 2 would be established to support subproject implementation, under the guidance of the PCU. The GFS will collaborate with WD under a Memorandum of Understanding to ensure an integrated approach to faunal and floral diversity and habitat within an ecosystem-based management system for biodiversity in the GSBAs and other forest reserves. At the local level, site management committees will play an increasing role in management decision making and locally-recruited community forest monitors will play a significant role in routine surveillance. Implementation Schedule 55. The program would be implemented in three phases, the first covering a period of two years, and the second and third covering four years each. The first phase (NRMP I) would concentrate on finalizing policy reform and enacting legislation; institutional restructuring and strengthening; completing resource assessments and undertaking baseline technical and socio-economic studies; and, finalizing plans for implementation of collaborative resource management programs. Provided NRMP I is successfully implemented, the second phase (NRMP II) would be initiated, focusing mainly on the country-wide implementation of these resource management programs. The third phase (NRMP III) would complete country-wide implementation, taking into account the experiences of NRMP II. The main component activities in NRMP I can be summarized as follows: High Forest Resource Management: (i) completion of policy reform through the enactment of the Timber Resources Management Bill and the Forest Bill; (ii) preparation of log export ban study; (iii) formation of Forestry Service, including recruitment of new staff and redeployment of unwanted FD staff; (iv) formation of TIDB and installation of a computerized log tracking system; (v) preparation of the National Forestry Plan; (vi) preparation of priority reserve management plans, testing of the new manual of operations and analyzing the cost and benefits of the proposed system; (vii) conducting community awareness campaigns on new off-reserve resource management systems; (viii) conduct pilots to explore collaborative approach to strategic planning off-reserve linked to district development planning; (ix) development of operational monitoring off-reserve -- social agreements, production quotas (AAC), and distribution of forest revenue; (x) continuation of wood industry training programs; (xi) formation of the Plantation Development Fund -- legal framework, financing arrangements and operating policies and procedures; (xii) establishment of the seed bank; and (xiii) initiation of plantation applied research program. Biodiversity Conservation: (i) establish the Biodiversity Advisory Group; (ii) complete baseline studies for prioritized identification of forest reserves for biodiversity protection; (iii) implement a monitoring program for key biodiversity indicators; (iv) initiate socio-economic studies of communities bordering reserves; (v) develop implementation manual for alternative livelihood investments; (vi) initiate NGO contracts for collaborative management planning, biodiversity research and monitoring and preparation of alternative livelihood investment program; (vii) complete training, institutional strengthening of FS and WD to undertake and supervise the collaborative management program for GSBAs; (viii) refine criteria and initiate field work to identify and demarcate provenance reserves within production forest reserves; (ix) complete necessary training of field personnel of WD and FS for implementing fine-grained protection measures within the forest reserve system; and (x) enact necessary legislation for appropriate re-gazettement of GSBA reserves. Savanna Resource Management: (i) formation of the Savanna Resource Management Center -- staff recruitmentlsecondment and training; (ii) assessment of savanna woodland resources through satellite imagery and ground botanical surveys; (iii) pilot area identification -- natural resource, infrastructure and socio-economic surveys -- and community awareness programs; (iv) establishment of Technology Development and Demonstration Center; (v) conducting detailed surveys of priority watersheds to be  -49- Annex 2 protected; (vi) promoting establishment of private tree nurseries; (vii) expansion of ongoing bushfire prevention program; (viii) baseline surveying of firewood/charcoal marketing and consumption; (ix) inception workshops with woodfuel stakeholders in pilot districts -- leading to National Woodfuels Workshop in mid- 1998; study tours to Burkina Faso; and preparation of the National Action Plan to combat desertification. Wildlife Resource Management: (i) restructure management organization of WD in accordance with findings of the Institutional Review; (ii) recruit qualified staff to fill vacancies in senior management, administrative and technical posts; (iii) implement staff training in line with recently prepared human resource development plan; (iv) establish NGO liaison function; (v) define and adopt policies and procedures for expanding NGO participation in protected area management, public awareness, and facilitating collaborative management of wildlife resources; (vi) develop and implement policy, guidelines and procedures to actively encourage and facilitate private sector involvement in protected area management; (vii) review protected area system plan and prioritize infrastructure investments for rehabilitation of parks, zoos and other managed areas -- prepare designs and contract documentation for priority infrastructure; (viii) develop extension capacity for supporting district and community level wildlife conservation and management; and (ix) finalize the MOU between WD and the Forestry Service for cooperative management and monitoring of GSBAs. Environmental Management Coordination and Monitoring: (i) implementation of EPA's HRD plan; (ii) development of MIS for forest, savanna and wildlife components; and (iii) development and installation of regional and district level EIS, and the Geo-spatial Information Framework. 56. With the strengthened institutions and required policy reform in place, and baseline studies and surveys completed, subsequent phases of the program would concentrate on the country-wide implementation of the collaborative management programs for forest and NTFPs, savanna woodland and wildlife resources, on a scale and timetable to be determined during NRMP I.  -50- Annex 3 GHANA: Natural Resource Management Project I Table 1: Estimated Project Costs Project Component Local Foreign . Total . _____________ (US$ million) ~~~~~~~~~............ ............................................................- High Forest Resource Management 9.7 2.8 12.5 Savanna Resource Management 2.7 1.3 4.0 Wildlife Resource Minagement 1.6 1 2.8 Enviro mental Management Coordit in 0 o 5 0.8 . 3 ......................................................................................... ............ ................................ T......................................... ............ ...................... ...... .......... ..... ..................................................................................................................................................................I........................................................ GoaComponent ........................ .......................................................................I............................................................................. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.................. 6.-............................................................................. Biodiversity Conservation 1.505 2.0* .......................................................................................................... ..-................................................................. Physical Contingencies 1.6 0.7 2.3 ......................................................................................................................................................................... Price Contingencies .0.6 0.2 ~~~~~~~~~~~i s0 6 ....................... .Y ....................... ................................. .................................................................................................................................................................................................................................... Total Project Cost 18.2 7.5 25.7 * Represents the first two years of the six-year GEF Biodiversity Program.  -51- Table 2: Project Summary Cost Annex 3 Ghana Natural Resources Management Poject Expenditure Accounts by Components * Totals Including Contingencies (USS '00O) High Forest Savanna Wildlife Resource Resource Resource Environmental Blodiversity Management anagement anagement Management Conservation Total I. Investment Costs A. Civil Works 1. Building Construction and Renovation Building Construction - 138.0 166.0 - - 304.0 Housing Construction - 417.4 - - - 417.4 Field FacIlities Construction 115.0 - 104.4 - - 219.4 Building Rehabilitation - 136.0 29.9 - 33.7 199.6 Field Facilities Rehabilitation 22.3 - 30.7 - - 53.1 Subtotal Building Construction and Renovation 137.3 691.4 331.1 - 33.7 1,193.5 2. Road Construction and Rehabilitation Secondary Road Rehabilitation - - 56.5 - - 56.5 3. Boundary Establishment - - 29.4 - 79.3 108.8 Subtotal Civil Works 137.3 691.4 417.0 - 113.1 1,358.8 B. Vehicles and Motorcycles 1. Vehicles 4-VWD and Pick-up Trucks 235.7 342.7 266.9 46.0 129.7 1,021.0 Other (tipper trucks, etc.) 273.3 - 103.5 40.2 - 417.1 Subtotal Vehicles 509.1 342.7 370.4 86.2 129.7 1,438.1 2. Motorcycles and Bicydes 186.2 117.3 102.5 - 109.2 515.3 Subtotal Vehicles and Motorcycles 695.3 460.0 472.9 86.2 239.0 1,953.4 C. Equipment Office Equipment 852.8 695.4 91.0 45.7 64.8 1,749.7 Communications Equipment 117.7 - 61.8 103.5 - 283.0 Laboratory Equipment - - - - 22.3 22.3 Field Equipment (incl. GIS) 226.5 396.2 144.2 - 22.3 789.1 Subtotal Equipment 1,197.0 1,091.6 297.0 149.2 109.4 2,844.2 D. Consulting Services and Studies, TraIning, and Audits 1. General Consulting Services Expatriate 1,852.4 - 623.8 459.9 277.7 3,213.8 National 561.7 119.2 183.9 135.2 238.0 1,238.0 Subtotal General Consulting Services 2,414.1 119.2 807.7 595.1 515.7 4,451.8 2. Studies and Surveys 535.3 56.8 179.7 4.6 264.4 1,040.8 3. Training, Workshops and MeeUings International Training - 170.0 126.5 365.3 51.7 713.5 National Training 275.5 251.0 299.5 16.9 108.8 951.7 Workshops and Meetings 276.9 - 99.7 132.7 48.5 557.8 Subtotal Training, Workshops and Meetings 552.4 421.0 525.7 514.9 209.0 2,223.1 4. Audits - 68.3 - - 34.0 102.3 Subtotal Consulting Services and Studies, Training, and Audits 3,501.8 665.4 1,513.1 1,114.6 1,023.2 7,818.1 E. Livelihood Investments - - 56.7 - - 56.7 F. Plantation Establishment High Forest Zone (Industrial) 122.0 - - - - 122.0 Savannah Zone (Woodfuel/iand protection) - 406.4 - - - 406.4 Subtotal Plantation Establishment 122.0 406.4 - - - 528.4 G. Field Operations - 26.8 - - - 26.8 Total Investment Costs 5,653.4 3,341.5 2,756.6 1,350.1 1,484.6 14,586.3 II. Recurrent Costs A. Staff Salaries and Allowances Salaries - - - . 143.5 143.5 Allowances 8,066.3 956.0 144.3 - 169.8 9,336.3 Subtotal Staff Salaries and Allowances 8,066.3 956.0 144.3 - 313.3 9,479.8 B. Casual Labor 270.5 - - - 56.8 327.3 C. Opermton and Maintenance 1. Supplies and Materials Office Supplies and Materials 102.0 51.2 84.2 38.5 2.8 278.8 Field Supplies and Materials - - 6.8 - 35.5 42.3 Subtotal Supplies and Materials 102.0 51.2 91.0 38.5 38.3 321.1 2. Buildings - 4.0 - - 290.3 294.3 3. Vehices and Motorcycles 22.7 87.0 139.0 32.2 1.6 282.5 4. Equipment - - - - 31.7 31.7 Subtotal Operation and Maintenance 124.7 142.3 230.0 70.7 361.9 929.6 D. Monitoring and Evaluation 113.3 79.3 79.3 22.7 45.3 340.0 Total Recurrent Costs 8,574.7 1,177.6 453.6 934 777.3 11,076.6 Total PROJECT COSTS 14,228.2 4,519.1 3,210.2 1,443.5 2,261.9 25,662.9 Taxes 1,117.5 638.3 327.5 135.4 199.5 2,418.2 Forelgn Exchange 3,168.2 1,453.7 1,417.5 929.8 588.3 7,557.5  - 52 - Annex 4a GHANA: Natural Resource Management Project I Financial and Economic Analysis' 1. The Natural Resources Management Program is a complex operation, consisting of five components which together seek to improve natural resources management in Ghana. The program is divided into three phases of two, four and four years duration, respectively. Most of the activities in each component in the first phase focus on policy reform, building local capacity and strengthening institutions and do not lend themselves to standard economic analysis since the linkages of improved institutional capacity to productivity or health benefits are indirect. Also, some of the expected benefits, like biodiversity conservation, wildlife protection and soil moisture retention, are difficult to assess accurately from a technical standpoint and even more so from an economic one. Therefore, the strategy for financial and economic work for this program is aimed at: (i) quantifying economic benefits where possible (e.g., woodfuel and wood products and crop benefits in the Savanna zone, improved efficiency of timber harvesting in high forests, bushmeat and tourism benefits under the wildlife component, wood output benefits under the high forest and plantation components); (ii) qualitatively describing expected benefits in all other cases; and (iii) suggesting where baseline and monitoring work should focus, so that improved financial and economic analyses could be undertaken before commencing NRMP II. Important work to be undertaken during NRMP I will, therefore, be the collection of critical baseline data and the implementation of pilot operations to generate information needed for more detailed analysis and, if necessary, modification of program implementation parameters for the second and third phases of the program. High Forest Component 2. The main productivity benefits under the program will arise due to the reforms in the incentive framework, and in particular the increased royalty rates (prior to Credit effectiveness) and the possibility of a replacement of the log export ban with an appropriate export tax.2 The envisaged institution building is intended to help reap the full benefits of the policy reforms and to institutionalize the system of collaborative management of natural resources with local communities. It will also help reduce or eliminate illegal logging and other extractive activities, where private benefits are generated on the basis of the public or common-property assets. 3. The logging and sawmilling industries are an important part of the Ghanaian economy. It is estimated that in 1996 they generated US$350 million of value added, or about 5 percent of Ghana's GDP.3 Forest revenue collection, while significant, has been well below optimal levels and as a result of project initiatives, is expected to be increased substantially. Revenue collected by the Forestry Department during 1996 was only