Philippines - Environment and Natural Resources Sector Adjustment Program Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 20256-PH IMPLEMENTATION COMPLETION REPORT (27040; 33600; 3360A; 22770) ON A LOAN IN THE AMOUNT OF US$158 MILLION AND A CREDIT OF SDR 50 MILLION (US$66 MILLION EQUIVALENT) TO THE REPUBLIC OF THE PHILIPPINES FOR AN ENVIRONMENT AND NATURAL RESOURCES SECTOR ADJUSTMENT PROGRAM May 30, 2000 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective March 2000) Currency Unit = Peso (PHP) I PHP = US$ 0.0245 US$ 1.00 = 40.85 FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS ANR Access to Natural Resources CAs Community Associations CADC Certificate of Ancestral Domain Claim CADC/CALC Ancestral Domains/Lands Claims CAS Country Assistance Strategy CBFM Community Based Forest Management CBFMA Community-Based Forest Management Agreement CBFMP Community Based Forest Management Programme CCFS Community Certificate of Forest Stewardship CPPAP Conservation of Priority Protected Areas Programme CRD Community Resources Development CRF Community Revolving Fund CSC Certificate of Stewardship Contract DA Department of Agriculture DBM Department of Budget and Management DENR Department of Environment and Natural Resources DLO Development of Livelihood Options ENR-SECAL Environment and Natural Resources-Sector Adjustment Programme ff ARM Forestry, Fisheries and Agricultural Resource Management FLMA Forest Land Management Agreement FMB Forest Management Bureau FSMS Forest Stocks Monitoring System GAA General Appropriations Act GEF Global Environment Fund GOP Government of the Philippines Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Vinay Bhargava, EACPF Sector Manager/Director: Geoffrey B. Fox, EASRD Task Team Leader/Task Manager: Carolina V. Figueroa-Geron, EACPF  FOR OMCLAL USE ONLY IEC Information and Education Campaign IFD Infrastructure and Facility Development IPAS Integrated Protected Areas System IRA Internal Revenue Allotment IS Institutional Strengthening LCMS Log Control Monitoring System LGC Local Government Code LGUs Local Government Units LSD Local Social Development M&E Monitoring and Evaluation MEC Monitoring and Enforcement Component MFPCs Multi-Sectoral Forest Protection Committees MOAs Memoranda of Agreement MTR Mid-Term Review NGOs Non-Government Organizations NBI National Bureau of Investigation NIPAS National Integrated Protected Areas System NTWG National Technical Working Group OSG Office of the Solicitor General PAMB Protected Area Management Board PEENRA Philippine Economic Environmental and Natural Resources Accounting PMO Project Management Office RRMP Regional Resource Management Projects SAP Sector Adjustment Programme SOEs Statements of Expenditures SWC Soil and Water Conservation This document ha; a resticted distibution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 4 5. Major Factors Affecting Implementation and Outcome 11 6. Sustainability 13 7. Bank and Borrower Performance 14 8. Lessons Learned 15 9. Partner Comments 17 10. Additional Information 20 Annex 1. Key Performance Indicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 23 Annex 3. Economic Costs and Benefits 26 Annex 4. Bank Inputs 32 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33 Annex 6. Ratings of Bank and Borrower Performance 34 Annex 7. List of Supporting Documents 35 Annex 8. Status of Agreed Policy Actions (Tables 1 and 2) 36 Annex 9. Executive Summary of the Borrower's Evaluation of the Project 45   Project ID: P004558 Project Name: ENV. & NAT. RES. MGT Team Leader: Carolina V. Figueroa-Geron TL Unit: EACPF ICR Type: Core ICR Report Date: May 30, 2000 1. Project Data Name: ENV. & NAT. RES. MGT L/C/TFNumber: 27040; 33600; 3360A; 22770 Country/Department: PHILIPPINES Region: East Asia and Pacific Region Sector/subsector: AT - Forestry; VM - Natural Resources Management KEY DATES Original Revised/Actual PCD: 05/23/89 Effective: 10/10/91 10/10/91 Appraisal: 05/10/90 MTR: 05/10/95 06/19/95 Approval: 06/25/91 Closing: 12/31/98 12/31/99 Borrower/Implementing Agency: GOVT. OF PHILS./DENR Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Attila Karaosmaaoglu Country Manager: Vinay Bhargava Gautam Kaji Sector Manager: Geoffrey B. Fox Donna Dowsett-Coirolo Team Leader at ICR: Carolina V. Figueroa-Geron Thomas Wiens ICR Primary Author: Raffaele Suppa; FAO 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UJN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability. L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: For the adjustment program, the objectives were to preserve the biological diversity of the Philippines, to re-establish natural resources that had been degraded or destroyed and to introduce sustainable land use practices. For the investment project, the objectives were to develop an effective protected areas system, improve enforcement of logging regulations, provide secure tenure rights to users in return for sustainable resource use, offer extension service to upland dwellers and develop mechanisms to support small-scale community-based resource management and livelihood projects in upland areas. The objectives of the sector adjustment program were clear, realistic, and were a priority at the time when the Government of the Philippines (GOP) was pursuing the stabilization and deepening of its economic programs to achieve sustainable growth and poverty alleviation. The project objectives were consistent with the sector structural reforms that the Bank/IDA were actively support,ing at the time and continue to support until now. They were also in line with the Bank's Country Assistance Strategy (CAS) which aimed at providing assistance for macroeconomic policy reforms and supjporting lasting sectoral reform programs. The ENR-SECAL was designed as a reflection of the CAS, taking explicit account of other ongoing complementary development activities affecting the environment and natural resources management. For example, the ADB program loan for fisheries and a project for replacing mangroves, specifically dealt with these aspects which were consequently excluded from the ENR-SECAL. The Bank's concern with rural environmental degradation in the Philippines dates frorn the late 1 970s when it financed a Watershed Management and Erosion Control Project (Ln. 1890-PHI), and worked closely with DENR on a strategy for improved management of natural resources througlh the Forestry, Fisheries and Agricultural Resource Management (ff ARM) study. The Bank's support for the ENR.-SECAL was therefore justified as a response to the GOP's commitment and prioritized development efforts to reduce ecological degradation, protect the natural resources and thus contribute to rural growth, employment generation and poverty alleviation. 3.2 Revised Objective: The original project objectives were maintained throughout the life of the project. The Mid-Term Review (MTR) mission (June/July 1995), confirmed the validity of the original project objectives noting that there was a need to pursue them more vigorously so as to ensure the wiider application of the program by DENR offices and personnel in the field. 3.3 Original Components: The ENR-SECAL, designed as a hybrid operation, consisted of: (i) a sector adjustment component aimed at implementing major reforms governing the management of the country's natural resources; and (ii) an investment component which would strengthen the local public institutions charged with monitoring and managing these resources. The adjustrnent program was designed to be a q[uick disbursing operation with disbursement to take place in two tranches: the first to be disbursed at loan/credit effectiveness and the second about eight months later, conditional on completion of actions requiring more preparation time and studies, as well as on the maintenance of a satisfactory macro-economic framework. The investment component was implemented through three subcomponents: (i) Monitoring and Enforcement (MEC) subcomponent: focused on development of capabilities of DENR and civil society to monitor logging operations and to enforce forestry regulations; (ii) Regional Resources Management Projects (RRMP) subcomponent: co.ncerned with the development of capabilities of LGUs, government line agencies and local communities in implementing community-based -2 -  management activities involving watershed, forest and land resources; and (iii) Conservation of Priority Protected Areas in the Philippines (CPPAP): supports the management of ten priority protected areas under the Integrated Protected Area System (IPAS) through a grant from the Global Environment Facility (GEF). Since the grant was only declared effective on October 14, 1994, almost three years later than the original target date, the CPPAP is still under implementation and its activities are expected to be completed in December 2001. Its final assessment is therefore not included in this ICR. CPPAP implementation was treated as a separate project (although still linked within the over-all ENR-SECAL program framework) in order to better consolidate efforts in implementing a project with such a widely dispersed geographical spread. While MEC was to be generally and universally adopted, RRMP activities remained to be implemented in the six regions as originally designed, as part of the regular activities of DENR field offices. The technical assistance package, as provided under the project, was reasonably targeted to support the institutional strengthening orientation of the project and to implement the training component. In designing the Project, both positive and negative lessons from previous rural community development projects, including those sponsored by non-government organizations (NGOs) were considered. These included the ADB's Forestry Project I (started in 1989), the Ford Foundation's Social Forestry and Community Forestry Project (1982-1992), the Bank's Central Visayas Regional Project (1983-early 1990s), and the USAID's Rainfed Resources Development Project (1982-1990). Furthermore, the design of the components took into account the creation and institutionalization of proper incentive mechanisms to ensure that critical stakeholders such as LGUs, NGOs and communities, in active partnership with DENR, are part of the overall efforts in managing forestry resources. However, an effective funds flow mechanism from the DENR to the LGUs was not provided for in the design, which would have supported the envisioned decentralized mode of implementation. This concem became more important with the enactment of the Local Government Code (LGC) in 1991. More importantly, the weak financial management capabilities of LGUs and communities have not been properly addressed in the design of the training programs pursued under the Project. 3.4 Revised Components: The components of the sector adjustment programme and the investment programme were maintained as foreseen and no major changes were required during their implementation. However, it was noted during the medium-term review (MTR) that, as originally designed, the ENR-SECAL did not incorporate specific measures targeted at bringing about a complementarity in the implementation of its principal components, particularly in terms of institutional arrangements and site selection. In view of this, the Project Management Office (PMO) drew up a program for better integrating RRMP and MEC project activities. 3.5 Quality at Entry: QAG did not exist at the time of the Project's approval. Peer reviewers and Bank decision makers endorsed the project's design and considered its quality at entry as satisfactory. The ICR mission also concluded that the Project's quality at entry is satisfactory. At design stage, all objectives and activities scheduled under the project responded to the priorities of the GOP's agenda for forestry policy reforms and for community-based forest management. This initiative helped create an avenue for forestry issues to be included in the macro-economic structural and sectoral adjustment dialogue for the first time and provided an opportunity for GOP to address environmental issues within this broader context. DENR was very much aware of the environment-poverty-economy linkages, and actively used the Brundtland Commission report issued in 1987 as a leverage for designing a more comprehensive and integrated adjustment program for Bank financing. -3 -  ENR-SECAL was designed to tackle the full range of issues concerning forestry and natural resources management - sector policy environment, enforcement/regulatory role of government, and the importance of LGUs, communities and civil society involvement in securing forest protection and sustainable resources management. The whole Project design was innovative, at a time when there were very few such types of operations within the Bank's portfolio. Also, it is worth stating, that the P'roject provided the GOP through DENR, a working laboratory for modelling the intents and purpcses of the L(WC (which only came into force in 1992) while most other devolved line agencies are still grappling on the issue of how best to address decentralized delivery of front line services. However, it was also geographically dispersed, with the components covering almost all the regions of the country. Inevitably, as a result of these factors, it was also complex and arnbitious, which may have contributed to the slow start up of implementation in the initial stages. Hence, its original design could have been better if specific measures were done to ensure complementarity in the implementation of the two principal sub-components of the investment program, i.e. MEC and RRMP. The three main risks identified at appraisal were mainly those arising from possible delays, inadequate implementation, and non-sustainability. These were expected to be mininiisecl through the enactment of key legislation and separate bills for forest charges which were either approved or were in the process of being approved by the legislative body at the time of appraisal. The inclusion of ai long-term investment and institutional strengthening component with strong cross-linkages to policy reforms, provided the opportunity for continuous monitoring intended to minimise the possibilit/ of slippage. The implementation of the policy reforms was designed to reduce risks of failure of the institution building and investment components. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The outcome of the project as a whole, both in relation to its development objectives and its physical implementation, is rated satisfactory. All major legal covenants of the Loain/Credit were satisfactorily complied with. The overall rating reflects the fact that the implementation of the quick-disbursing Sector Adjustment component and the MEC were satisfactorily completed in 1996, with the latter having been institutionalised in the DENR's regular program of activities. This indicates that at design stage, the foreseen GOP's commitment towards the actual implementation of the pol.icy reforms was realistic. The RRMP component has achieved an overall accomplishment rate of over 100% and has demonstrated an acceptable approach such as the Community-Based Forest Management (C]BFM), by which concerned stakeholders can participate in decision making processes for managing communal forestry resources. Later on, there may be scope for the Bank to assess whether substantive positive economic and environmental effects and impacts can best be obtained through the irnplernentation of the CBFM, as compared with other non community-based approaches. 4.2 Outputs by components: The Sector Adjustment Component. Objectives and outcomes for this component have, on the whole, been achieved in a satisfactory manner. The GOP confirmed its commitment to undertake and implement the requisite sectoral reforms through a statement of policy on environment and natural resources sector adjustment (issued jointly by DENR and the DOF in May 1991) and a resolution issued by the Cabinet Subcluster on Rural Development. The sectoral reforms were on proper pricing of natural resources; property rights reform; establishment of an integrated protected areas system; rehabilitation of degraded ecosystems; inducing growth in the rural areas; and integration of population concerms and social welfare in development planning. The current status of these required policy actions are summarized in Table I in Annex 8. During the February 1998 supervision mission, the policy action matrix agreed during appraisal -4 -  was revised and updated. Table 2 in Annex 8 outlines the revisions made and the latest current status of the agreed natural resources policy actions. As can be seen in the Tables 1 and 2 in Annex 8, the relevant laws agreed for the component have been enacted and additional legislative bills on Sustainable Forest Management, National Land Use Code and gazetting of individual IPAS areas are also in different stages of approval by Congress. The corresponding rules and regulations for these laws have also been issued by the concerned government agencies. Relevant institutional units for environmental and natural resource management at the national and local levels have been established and CBFM has been recognized as the principal strategy in sustainable forest resources management. These reforms form the basis for a comprehensive legal and regulatory framework in the Philippines necessary for pursuing a long-term sustainable track for environmental and natural resource management. The challenge now lies in sustaining these enabling mechanisms for effective implementation; in ensuring that the intents of these policy issuances, institutional reforms and laws are effectively carried out, and more importantly, policy reversals must be avoided so as not to send conflicting signals and create disincentives to primary stakeholders of CBFM. The Investment Component. The evaluation of how each sub-component contributed to the general outcome is presented below. Monitoring and Enforcement Component (MEC). The MEC which was implemented from 1992 to 1996 in Regions II, IVA, VII, VIII, XIII and NCR had demonstrated that illegal logging and sawmilling can be curbed, provided that there is the political will to do so and that there is active cooperation between and among communities, civil society and concerned government agencies, notably DENR, and the other Departments of Interior and Local Government, Justice and Defense. MEC was able to show that the enforcement of forestry rules and regulations is not the sole responsibility of DENR, but rather, a joint collaborative undertaking with LGUs, communities and civil society, who have a greater stake in ensuring the protection and sustainable management of their own forest resources. On the downside, MEC's implementation also showed the inadequacy of nationwide communication and computer facilities to access/transfer big databases in real time, hence, impeding the national replication of the information system on Log Control Monitoring being espoused under the Project. Multi-Sectoral Forest Protection Committees (MFPCs). The creation of MFPCs constitutes one of the biggest accomplishments of ENR-SECAI, in terns of raising people's awareness of forestry and environmental concerns and harnessing their active participation in fighting illegal forestry activities. Technical assistance provided through MEC developed the necessary framework for organising the various interest groups on forestry issues and at the same time coordinating their activities for more effective monitoring of illegal forestry activities. When this component closed in 1996, 94 MFPCs had been organised, well above the original target of 16 MFPCs in the six target regions. By 1998, 297 MFPCs had been formed in 15 regions, 49 provinces, 9 cities, 206 municipalities and 35 barangays. Based on the evaluation made by DENR Regional Offices in 1998, most of them are functioning satisfactorily and have formed a national federation which held its latest annual meeting in 1997. However, there are about 50 MIFPCs (comprising about 17% of the total number) which are inactive because of inadequate funding support, and lack of interest and initiative on the part of its members. The lack of a sustainable source of funding support has made it difficult for many MFPCs to continue their activities and pursue interregional cooperation. The MFPCs have evolved over the years from a pure surveillance group to monitor illegal forestry activities to a civil society group concerned with advocacy of forestry and other environmental policy issues. In general, local awareness of forestry and other environmental issues has increased significantly, - 5-  and concern and interest on these issues continue to grow. It would be a grave setback if the GOP fails to support this initiative and to sustain this level of civil society and stakeholder awareness. One issue that remains to be resolved is the clear enunciation of the institutional and working relationship between DENR and the MFPCs in order for both parties to maximize their effectiveness as partners in natural resources conservation. The DENR, through its Forest Management Bureau (FMB), committed during the ICR wrap up meeting to hold a three-day MFPC National Conference this year. This Conference will aim to finalize MFPC sustainability plans and to resolve the issue on future institutional linkages and working relationship between the DENR and the MFPCs. Log Control Monitoring System (LCMS)/Forest Stocks Monitoring System (FSMS). This sub-component has only partially accomplished its objectives, mainly due to ambitious expectations during Project design. It was assumed then that DENR had an adequate nationwide communication system that can handle data exchange in real time. In reality, the LCMS had limitations in handling different transport systems, varying timber sale procedures, and harvests from plantations and private lands. In addition, it would be very costly and unsustainable in the long run to maintain this information system. A further weakness was the absence of information about the residual stands, which serve as the basis of future decisions and flow of benefits. For these reasons, FSMS, an enhanced version of LCMS, was developed to address the deficiencies of the previous system particularly in providing data on the species, number, diameter and height of the trees remaining in a given area after logging. DENR staff from the Operations Office, FMB and regional offices overseeing harvesting operations were trained on FSMS, and a National FSMS Core Group chaired by the Assistant Director of FMB was organized and given the task to implement the system nationwide starting this year. Presently, the FSMS is implemented only in Region XIII. Interdiction and Enforcement Activities. This sub-component of MEC showed the effectiveness of well-planned and coordinated efforts of DENR officers and co-operators in enforcing forestry laws and regulations in the six target regions. Air, sea and ground surveillance operations plans were put in place and implemented using equipment provided by the project and cooperating agencies. Procedures, administrative orders, implementing guidelines, directives and manuals were prepared as required. DENR foresters, military and police personnel and other cooperators were trained in all phases of surveillance, seizure and arrest. Illegally cut logs (20 to more than 30 thousand cu.m./year) and various equipment (trucks, sea vessels and chain saws) were seized, and illegal sawmills were closed down (90% in the Agusan provinces and all in Region II) by the mobile and transitory strike forces. Cases were then filed against the perpetrators by the legal teams. It is sad to note that 14 DENR staff and MFPC members were killed in action while performing their duties under this Project activity. Legal Technical Assistance. The results of this technical assistance sub-component is considered satisfactory and resulted in the filing of numerous cases (541 in 1996 alone) against illegal loggers (including powerful local leaders), illegal log transporters and operators of illegal sawmills. More significantly, for the first time in the DENR, hundreds of these cases resulted in the conviction of forestry criminals. These court victories can be attributed to the training workshops and seminars conducted for judges, prosecutors, foresters, MFPC members and lawyers who were designated to handle or assist in the forestry cases as well as the cooperation of various sectors. Memoranda of Agreement (MOAs) were executed between the DENR and other agencies including the Department of Justice, the Supreme Court, the Department of National Defense and the Philippine National Police. However, after the completion of the technical assistance, while the high number of cases filed in the courts has continued, the number of cases resolved and the number of convictions have dropped drastically (An exception to this is the case of Nueva Vizcaya where the PENRO reported that they continue to record a high conviction rate: 26 convictions out of 88 cases filed from 1996 to 1999). Evidently, the presence of a concerned judge, a motivated prosecutor and a supportive Governor in the province are the right ingredients needed for the -6 -  successful prosecution of forestry cases. Regional Resources Management Projects (RRMP). The objective of RRMP was to support the development of the institutional capabilities of LGUs and communities to plan, generate and service small-scale community-based resource management and livelihood sub-projects in upper watershed areas. It followed a strategy to address upland poverty by empowering communities through improved local organisation, enhancement of skills for natural resource management and sustainable agriculture, secure tenure arrangements and better access to financial resources for livelihood improvements. It was implemented in 28 project sites covering an area of about 134,000 ha and directly benefited around 18,000 rural households. In terms of physical achievements, RRMP exceeded the targets set in the 7-year Work and Financial Plan (revised in 1995) and executed over 8 years following the GOP request to extend the Project by one year. The overall outcome of RRMP is rated satisfactory. This reflects the success of RRMP in raising awareness of environmental issues at the regional and local levels, particularly in the targeted communities, wherein the critical foundations for future sustainable upland development were built up. However, it should be noted that the RRMP was better implemented in the Luzon sites rather than the Mindanao sites mainly due to facilitating factors such as effective collaboration among the major implementers such as the DENR, LGUs, technical assistance team, local communities, NGOs and other service agencies; and the presence of an operational monitoring and evaluation system. On the other hand, RRMP implementation in Mindanao was beset with problems due to weak coordination among project implementers, numerous unresolved tenure issues, weak monitoring and evaluation system; and dispute on technical assistance services. Also, the poorer performance of NGOs in the early stages in supporting implementation in Mindanao, partly contributed to the slower start up of activities in those areas. Based on this implementation experience, it is clear that there is a need to carefully review the skills and capacities of NGOs, and making sure that they match the requirements of project design, before engaging them in supporting project activities. Also, given the substantial geographic dispersion of implementation activities, the scale of operations at a particular site and within a participating municipality was fairly small. Hence, the larger objective of realizing improved natural resources management and conservation through discernible impacts can only be gauged much later, and will depend on the extent to which there was replication. Initial evidence suggests that LGUs have shown enthusiasm and interest in pursuing the RRMP model. They have taken on board the important messages of the ENR-SECAL, despite their resource limitations. However, if their efforts are not properly supported with future assistance, LGUs would have limited ability to replicate and broaden the scope of their initial RRMP activities. Despite this, it must be said that it is clear that the Project provided a good model for community-based natural resource management for DENR, LGUs and the communities to build upon. The performance of specific RRMP activities is discussed below. Local Social Development (LSD). The presence of community organizations were a prerequisite to obtaining communal tenure rights and participating in RRMP activities. The RRMP helped establish 110 community associations (CAs),transform 80 CAs into multipurpose cooperatives, and create over 130 community-based resource management committees. At project completion, over 9,500 participants were registered members of CAs while non-registered members, or informal participants, numbered nearly 4,600. Women played an active part in project implementation and committee functions including in key positions as treasurers or presidents of CAs. One of the project sites in Luzon was cited by the Philippine Commission on the Role of the Filipino Women in its efforts to mainstream gender considerations in planning, implementation and monitoring of community subprojects. A socio-economic survey was conducted in 1993 to gather benchmark information on the condition, issues, concems and problems of men and women in the community. These indications were taken into account by the project. In the context of RRMP, gender awareness raising was conducted and women were given equal opportunities to participate in technical training and in accessing financial resources. Women took an active, and frequently leading, - 7 -  role in community organizations and credit committees and carried out livelihood projects as well as some non-traditional infrastructure work. It appears, however, that one of the mnajor driving forces behind the creation of many of the CAs was the opportunity to obtain project funds for livelihood enhancement rather than to obtain the inherent benefits of belonging to self-sustaining commtnity support organizations. Several CAs are now idle following project completion or only concentrate on problem-ridden lending activities. This can be attributed to the quality of community organizing provided to the target communities as well as the supervision at the field level. Under the RRMP, project beneficiaries receiving payment for labor in comrnunity resource development or infrastructure projects contributed a part of their earnings to a Communit y Revolving Fund (CRF). This mechanism was introduced in order to improve access to short-term loans. The rate of contributions differed between Project areas and sub-project types, typically ranging from 5% to 30% of total wages. Over the course of the project, 146 CRFs were established with estimated total funds amounting to 51 million pesos. To date, the estimated take up of funds from the CRF as loa ns th) members remains low and many of the communities transferred over 50% of their CRF to a bank deposit. This can also be due to the fact that most of the community members are risk averse in view of their prevailing marginal conditions, hence it is difficult for them to avail of loans. Only approximately 13 million pesos were taken out on loan by members. Repayment rates in some areas have also been low. Due to the inadequate time frame involved in developing capabilities of communities in handling the CRF, it wvill be difficult to sustain the current CRF system beyond the project life unless further sustained interventions are provided, particularly in the area of technical assistance on production and non-production-related skills and other support mechanisms. Although physical LSD targets were exceeded, the outcome is, rated unsatisfactory. Community Resources Development (CRD). The CRD has promoted sustainable land use practices for upland farming communities. Off-farm activities supported reforestation of some 14,800 ha with mainly fast-growing tree species, the protection of over 1,800 ha of natural forest, and the establishment of 68 nurseries producing nearly 20 million seedlings. Communities benefited frorn the issuing of communal tenure arrangements for forest management. On-farm activities included thei establishment of model farms (approximately 725 ha) for agroforestry and other soil and water conservation (SWC) measures (about 13,000 ha). Farmers participating in the on-farm activities further benefited from the issuance of individual tenure arrangements. The Project Impact M&E system or PRIMES survey carried out in September 1999 indicated that 90% of respondents rated on- and off-farm activities as "effective" or "very effective" at reducing rates or levels of resource depletion. Both reforestation and agroforestry activities can be financially viable (see Annex 3). However, insufficient attention was paid by staff providing TA to the communities under CRD to maximise income improvements through the careful choice of the tree species or cropping pattern most likely to maximise financial returns to participating farmers. While these considerations need to be incorporated in the replication of CRD activities, the overall implementation of the CRD is rated satisfactory. Development of Livelihood Options (DLO). The RRMP provided support for community livelihood sub-projects through a grant seed money of P 60,000 per project site. Over the project life, these funds sponsored 97 livelihood projects. A further 175 projects were created drawing, on funds from the CRF and other sources. The most common activity undertaken by the commtnities was short-term lending operations, particularly for agricultural inputs. Other livelihood activities included raising or fattening of small animals (such as goats and pigs), community stores, handicrafts and trading operations. Albeit financially and economically viable in principle, some of these livelihood sub-projects have failed or are expected to fail due to lack of financial management skills. In many sites, repayment of loans has been poor and there appears to be a lack of community pressure to sustain the payment cycle and initiate new activities. Technical assistance provided in the implementation of this component has been insufficient. - 8 -  Neither DENR nor the Department of Agriculture (DA), who provided the bulk of extension advice, have sufficient intemal capacity to support communities in these activities in a systematic manner, particularly on the important aspect of marketing information and support services. This points to a fault in the design of the project in failing to identify the need for the proactive and integrated involvement of other related agencies to provide these support services in a cost-effective and sustainable manner. In order to facilitate and sustain community livelihood sub-projects and to develop the CRF as an effective source of support to groups seeking financial assistance for such activities, communities will require additional and sustained technical assistance on various needed skills and competencies from various institutions which could provide production and non-production related support (eg., marketing, financial intermediation, etc.). Due to these reasons, the DLO is rated unsatisfactory. Infrastructure and Facility Development (IFD). Through this subcomponent, RRMP provided small-scale but key rural infrastructure to improve market access, water supply and economic activities. These included the construction of 16 km and rehabilitation of 1,440 km of rural roads, 63 bridges, 30 multi-purpose buildings, 107 multi-purpose drying pavements and 58 new small-scale irrigation systems, as well as the rehabilitation of 34 existing micro-irrigation schemes. In addition, some 240 small domestic water supply systems were constructed under the project benefiting over 17,000 households. Structures have been turned over to the relevant level of LGUs who will now be responsible for maintenance. Given their limited resources, however, continued maintenance cannot be guaranteed. The project did not introduce an obligation for the establishment of maintenance funds, but some LGUs and communities committed themselves to provide some internal funds and free labor for maintenance operations, as part of the sustainability plans they have drawn up. Although the maintenance problem is significant and actions will need to be taken to sustain benefits, the overall achievement of IFD in providing key infrastructure with an immediate impact on the livelihood of participating communities is rated satisfactory. Institutional Strengthening (IS). One of the most important outcomes of ENR-SECAL is the institutional development of the DENR, LGUs and the forest communities for effective forest resources conservation and development. The DENR is being transformed from a purely regulatory agency into an organization providing upland extension service and technical assistance. The start of project implementation coincided with the coming into force of the LGC in 1992. Although the original project design had not taken this decentralization into account, the Project design in itself, is all about decentralization. In fact, RRMP was amongst the first initiatives to put LGU involvement into practice. The institutional strengthening sub-component enhanced the capability of the LGUs as well as DENR, CAs and NGOs to plan, coordinate and support the implementation of community-based activities and shift to the new paradigm of devolution of social forestry activities. At the community level, multi-purpose buildings constructed through the IFD subcomponent contributed significantly to improvements in extension services as they provided settings for regular community gatherings. IS included support for training and provision of Information and Education Campaign (IEC) resources, some equipment and facilities. The targets set by the work plan were exceeded significantly, particularly in the provision of training. IS activities created a strong sense of ownership not only of RRMP but of the new approach of community-based resource management at the levels of the LGU, the local DENR and the community. This constituted a sound basis for replication of such activities where resources permit it. The farmers-to-farmers training program was implemented successfully and was well received by the participants. The implementation of the institutional strengthening program is rated highly satisfactory. Access to Natural Resources (ANR). ENR-SECAL made a strong contribution to the development of tenure arrangements for upland communities and institutionalized the GOP's Community Based Forest Management Program (CBFMP) as the primary national strategy for sustainable forestry. More specifically, RRMP supported preparatory activities such as boundary surveys, socio-economic profiling, - 9-  community organising, various skills training, resource surveys, and other activities to allow CAs to apply for communal tenure arrangements such as the Community-Based Forest Management Agreements (CBFMAs) and the Certificate of Stewardship Contracts (CSCs'). ANR cooperated closely with other social forestry programs in the same implementation area in fostering the issuance of various tenure instruments. Over the project life, more than 5,500 CBFMA-type tenurial instruments covering over 75,000 ha, including some 5,000 CSCs covering over 10,000 ha were issued in the project area and awarded to participating communities. Over 50% of these were a direct r esult of ANR activities. In addition, ancestral domain and lands claims (for over more than 100,000 ha) were issued to communities of indigenous peoples (predominantly in the CAR). However, this accomplishment is only partial since the bulk of the tenurial instruments to be issued to IP communities would be awarded under the on-going CPPAP project. Overall, the achievements of ANR are rated satisfactory. 4.3 Net Present Value/Economic rate of return: As stated in the President's Report, the characteristics and design of the ENR-SECAL make it impossible to come up with a meaningful estimation of economic rates of retum. It would be extremely difficult to assess the social benefits accruing from the totality and diversity of all interventions done under the Project (eg., social benefits accruing from reductions in the rates of soil erosion and forest depletion and degradation, etc.) Also, it must be noted that social and economic benefits accruing from upland service extension would greatly vary among diverse sites and clients. Inspite of this, the ICR mission tried to give an estimation of the environmental benefits of reforestation and agroforestry practices (see Annex 3, Tables 3 and 4) which do not accrue on-site and are conventionally not quantified, using one-ha models (see Annex 3, Tables 1 and 2), representing typical agroforestry and reforestation subprojects done under ENR-SECAL. Estimated off-site benefits of reduced sedimentation of downstream irrigation systems and dams as well as reduced damage to fisheries resulting from decreased soil erosion upstream, are low (50 Pesos/ha/yr for reforestation and 79 Pesos/ha/yr for agroforestry) and do not change the IRRs significantly, which remain at 43% and 48%. Estimates of global benefits in term of incremental carbon sequestration, on the other hand, amount to over 2,600 Pesos/ha/yr for reforestation and over 2,800 Pesos/ha/yr for agroforestry and raise estimated rates of return considerably to 69% and 59%, respectively. 4.4 Financial rate of return: The President's Report did not also include an estimation of the financial rate of return for this type of operation since it was not considered applicable to ENR-SECAL. However, the ICR mission considered it useful to provide an indication of the financial viability of on- and off-farm activities supported by the project as this will be a key determinant of sustainability and replicability of such initiatives. For this purpose, one-ha models of a typical reforestation site (off-farm) and an agroforestry (on-farm) are presented in detail in Annex 3, Tables 1 and 2. These models indicate that both activities would be viable and attractive for farmers even in the absence of subsidy payments and would generate financial rates of return of 43% and 48% for the off-farm and on-farm investments respectively. 4.5 Institutional development impact: The Project is a major initiative for changing attitudes and approaches to natural resource management, as it provided a different definition of the roles and responsibilities among the DENR, NGOs, local communities and other stakeholders in forest resource management. It was among the first initiatives to put the decentralized institutional structure for the natural resource sector into practice. As discussed in the foregoing sections, the implementation experience shows that LGUs and local communities can undertake forest resource rehabilitation and development activities, and help curb illegal forestry practices given the necessary enabling mechanisms, skills training, and proper incentives. DENR has demonstrated its ability to provide a catalytic role in providing upland extension service and technical assistance for enabling communities and other stakeholders as their active partners in managing communal forestry resources. The - 10-  challenge now lies for DENR to sustain this thrust by supporting replication initiatives jointly with LGUs, providing adequate resources, reinforcing established incentive mechanisms, and further improving collaboration within its regular functional units in order to continue its avowed thrust on supporting community-based forest management. 5. Major Factors Affecting Implementation and Outcome 5. 1 Factors outside the control of government or implementing agency: The East Asian financial crisis in 1998 severely affected the ability of the GOP to provide adequate and timely counterpart funds for the implementation of its foreign-assisted projects. The counterpart funds which were finally released to the Project for the said year were inadequate for its needs, considering the fact that the Project was already in its last two years of implementation and catching up of some delayed activities were being actively pursued. 5.2 Factors generally subject to government control: Proiect Design. As mentioned earlier, the design of the investment component would have been much better if there had been a better integration between the MEC and RRMP activities in terms of its location and operating modality. Such integration would have provided a more definite and clearer carrot-and-stick mechanism for communal forest management. Also, the GOP could have worked for a faster, smoother, and more organized transition into devolution among its concemed line agencies. This could have greatly facilitated the implementation of ENR-SECAL within the framework of partnership, devolution and decentralization. The fact that the procedures, mechanisms and models of this framework were still being developed by the rest of the Philippine bureaucracy, while ENR-SECAL was already being implemented, caused initial delays and misunderstandings among the players and participants. Thus, the first 3 years of project implementation was constrained because the key players were undergoing transition due to these change in institutional arrangements. Lastly, at project design, the existing tenure instruments had a number of shortcomings with respect to the objectives of RRMP. The available tenure instruments were the CSC for individual households, Community Certificate of Forest Stewardship (CCFS) for community organizations under the Integrated Social Forestry Program, and the Forest Land Management Agreement (FLMA) for organizations involved in contract-reforestation implemented under the National Forestation Program. There was as yet no strategy on how to put recognition of ancestral domains and lands rights into practice since the instrument for the recognition of ancestral domains/lands claims (CADC/CALC) was only promulgated in January 1993 (DENR Administrative Order No. 2, s. 93). The preferred tenure arrangement, the Community-Based Forest Management Agreement (CBFMA) was not introduced until the adoption of the CBFM strategy in 1995-1996 (as supported by ENR-SECAL). In several RRMP areas, the inadequacy of existing tenure instruments caused delays in project irnplementation because the issuance of such instruments was a milestone which detertnined the time when project resources were made available to the site, such as the release of the seed-money for the CRF. Overall, if these factors have been addressed more proactively by the GOP, the scope of Project outcomes would have been more substantial. Implementation Plan. The 7-year implementation plan had to be revised several times with the major revision done in 1995. The adjustments made were mostly on physical targets, since the original implementation plan was very optimistic and did not take into account absorptive capacities of implementing units and the fact that modalities for effective DENR-LGU partnership were still being developed. Funds Availabilitv. The inadequacy of GOP counterpart funding affected the pace of Project implementation and in the end, resulted to the cancellation of US$ 9.6 million, representing 9% of the total IBRD loan. The amount had to be cancelled because the GOP counterpart provided for in the annual appropriations was always less than the required amount as foreseen in the implementation plan. On top of - 11 -  that, there were mandatory reserves imposed by the Department of Budget and Management (DBM), such that the effective resources available were always lower than thalt provided in the GAA. The situation is further aggravated by the fact that there was always the problem of untimely releases of the GOP counterpart. More often than not, the loan proceeds (consisting cf 60-750%'o of implementation costs) were available but could not be utilized until the GOP counterpart (25-.40%) has been released. Administrative Constraints. Government contracting and bidding procedures (in addition to the unavailability of adequate counterpart funds) were too restrictive and in thie end, contributed to long delays in procurement of needed equipment and fielding of technical assistance contractors. For example, the last batch of seven 4x4 vehicles was only finally purchased in December 1999 after more than two years of contract bidding and processing. Similarly, the last batch of dump trucks supposed to be procured in the first three years of the project was never purchased at all. 5.3 Factors generallv subject to implementing agency control: Monitoring and Evaluation (M&E). Program monitoring by DENR and supervision missions by the Bank identified the problems and bottlenecks in implementation and made proposals to correct the problems. These provided bases for revising the implementation plans and allowed the Project to make up for the delays. However, initially, the M & E efforts focused on physical outputs. It was only in 1998 that the project attempted to put in place a revised system for evaluating the outcomes and impacts of the Project, through the establishment of a Project Impact Monitoring and Evaluation system. The said system took more than one year to develop and was set up belatedly, two years before project closure. Also, there was no economic analysis or an assessment done on the environmental impacts of the Project. Furthermore, no attempt was made during implementation to see how the mainly micro-watershed level interventions fitted into, and contributed towards, the larger watershed management objectives. Funds Flow: The setting up of the US$ 3.0 million Working Fund Special Account was very effective in facilitating the flow of loan proceeds to the Project. It was a facility from which funds could be released as advances to the implementing units (DENR and LGUs), and was periodically replenished by the Bank as Statements of Expenditures (SOEs) were submitted by the PMO. These SOEs were, in turn, based on submissions of SOEs from the field implementing units. However, the rate of replenishment of the account and, consequently, the rate at which funds could be forwarded to the implementing units, were dependent on how fast the implementing units could liquidate the advances given to them. As a result, implementing units with high throughput rates (fast implementation and fast liquidations) still had to wait for some time before new funds are made available to them because the replenishment rate was being slowed down by those units which were lagging behind (slow implementation, slow liquidations). This situation would have been alleviated if there was a directed capacity building assistance provided. for LGUs and DENR central and field personnel on financial management. Although the Project's institutional development component provided some resources for capacity-building in financial management for DENR and LGUs, it is evident that the financial management systems and capabilities of the LGUs and DENR need to be better enhanced to respond efficiently to the requirements of facilitating Project implementation. 5.4 Costs andfinancing. Actual project costs as of May 15, 2000 amounted to US$ 331.89 million, almost 90% (or about 96% if the on-going GEF-funded CPPAP component is excluded) of the estimates made at appraisal. The following are the final disbursements: (i) IBRD Loan of US$ 145.67 million, (ii) IDA Credit of US$ 66 million, (iii) OECF co-financing of US$ 100 million, (iv) Japan-WB Technical Assistance Grant of US$ 4.3 million and (v) GOP/Beneficiaries contribution of US$ 15.92 million. During appraisal, disbursements for the Project was estimated to be completed in seven years. However, a one-year extension was foreseen by both the Bank and the Borrower as early as the medium-term review in 1995. - 12 -  This was due to the high rate of slippage in RRMP activities in the initial years of implementation, brought on largely by the lack of linkage and integration of institutional efforts. This was also caused by legal dispute problems encountered by the Project, particularly in the Mindanao regions, with its technical assistance service provider. As requested by the Borrower, US$ 9.6 million has been cancelled as of September 1999 since the said loan amount cannot be fully utilized even within the extended Project implementation period. On May 15, 2000, the undisbursed loan balance of $2.7 million was also cancelled. While both the IDA Credit and the OECF co-financing were fully disbursed, the Nordic Development Fund participation did not take place. Disbursements by component is given in Annex 2. 6. Sustainability 6.1 Rationale for sustainability rating: The ENR-SECAL was designed to bring about a change in the manner by which DENR carried out its functions, and how local communities and other stakeholders were integrated into this approach for improving overall natural resource management. Within this context, the sustainability of the project has been rated as likely. This can be justified not only by the successful attainment of most objectives in physical terms but more so on the successful achievement of sectoral adjustment objectives. The laws that have been passed, the Executive Orders that have been issued, and the corresponding policies, rules and regulations to implement them as well as the successful mobilization, involvement and deep commitment of the LGUs, local communities and DENR in the new approach to forest resources conservation, protection and development are to be seen as positive signs with respect to project sustainability. Other legislative proposals such as the Sustainable Forest Management Act, the Land Use Act as well as the law approving IPAS sites, remain at varying stages of approval. The completion of these reforms would additionally provide clearer and more consistent directions concerning the conservation and management of natural forestry resources. It is important to note that with the institutionalization efforts done under this Project for CBFM, DENR must continue to reinforce and be consistent in the implementation of its policies and incentive mechanisms in order to sustain the full and continued engagement of stakeholders in CBFM approaches and modalities. The institutional ownership of future activities is expected to remain strong since there is greater awareness among LGUs and benefiting communities of the need for their direct contribution to meet future financial obligations either from the LGU's Internal Revenue Allotment (IRA) and other resources, or as equity contribution from the beneficiaries themselves. In this context, all LGUs involved in the Project have formulated their own sustainability plans, with corresponding budgetary requirements and identified sources of financing. Also, reforestation and tree plantation subprojects are considered sustainable and replicable on the basis of their financial and economic viability as well as their acceptance by the local communities. However, concerns remain about the continued availability of the necessary financial resources for the maintenance of completed and turned-over civil works. Finally, the replication of some livelihood projects initiated under the community revolving fund scheme failed mainly because of inadequate financial management systems and skills among the CAs. Adequate and continuing technical assistance on production and non-production related skills from various institutions within the context of a decentralized system for upland support service delivery would be necessary to ensure the continuation of these important income-generating activities. 6.2 Transition arrangement to regular operations: DENR has allocated regular budgetary funds for the continued operations of its CBFM initiatives starting this year. Although modest in comparison with the previous budgetary resources provided for under the Project, the DENR's FMB and regional offices have been tasked by the DENR Secretary to provide the necessary support to sustain CBFM initiatives through their regular activities and funding. A CBFM - 13 -  Office has been created both at the Central and Regional Offices during the life of the Project and after completion, a number of the staff would remain in DENR. In the field, most of the staff have been absorbed by either the DENR regional offices or partner LGUs to staff the environmental and natural resources (ENR) offices which have been created and institutionalized in the provincial and municipal LGUs to continue and sustain Project activities on CBFM and CBRM. It is expected that these DENR and LGU CBFM and ENR offices would continue to maintain the PRIME system in order to provide DENR management and other interested stakeholders on the impacts and effects of CBFM efforts initiated during the Project. The PMO, has also focused its last few months of implementation in turning over to LGUs Project equipment and facilities, which are now expected to be fiully maintained by the latter. In terms of related operations, the Bank and the GOP started in 1998 the imnplementation of the Community-Based Resource Management Project (CBRMP). The Project, which is being implemented by the Department of Finance, in collaboration with the DFNR, DA, and DILG, has a strong focus on addressing local natural resource management and poverty alleviation issues through the provision of a local government financing window under the Municipal Development Fund. Although there is only one ENR-Secal region which is currently being covered by CBRMP, DENR aknd DOF are collaborating actively on replicating the lessons learned and initiatives of ENR-Secal into CBRRMP implementation. It would be extremely useful both for the Bank and the Borrower if say, five years from now, impacts of the Project would be examined by the OED, particularly on assessing the effectiveness of CBFM approaches in arresting the degradation of natural resources and alleviating rural poverty. As of to date, ENR-Secal is included in two on-going OED review efforts: (i) Evaluation of the Environmental Impacts of World Bank Adjustment Operations; and (ii) Gender Impact Assessment in the Philippines (a joint undertaking with the ADB). These on-going evaluation efforts, along with this ICR, can certainly provide critical lessons and guidance in designing and implementing similar future operations. 7. Bank and Borrower Performance Bank 7.1 Lending: The Bank's performance in the identification, preparation assistance and appraisal of the Project is rated satisfactory. The original objective of the project was consistent with the GOP's agenda for preserving the country's biological diversity and introducing sustainable land use practices. The Bank designed the Project as a reflection of the priorities of the CAS, taking into account other ongoing complementary development co-operation activities in natural resource management. The Bank team also consciously designed this lending operation based on the results of a highly analytical sector work onl the constraints and challenges facing Philippine forestry, fisheries and agricultural resources (the ffARM study). The Bank recognised, at appraisal, some risks and concluded that these were worth taking, given the high importance of the Project to the GOP. The main shortcomings in designing this operation were the lack of integration of RRMP and MEC activities, too much geographical dispersion of Project sites, and inaclequate assessment of institutional capacities of implementing units, particularly on financial management. The role of the Bank in effectively organizing the various donors involved in natural resource management and resulting to co-financing arrangements for the Project was also satisfactory. 7.2 Supervision: Bank performance with respect to supervision was satisfactory. Overall, 12 well-staffed supervision missions were carried out and adequately reported implementation progress; (,Anmex 4). The project was well managed from Headquarters from the beginning and during the latter half of 1999, the responsibility was given to the World Bank Office in Manila, which successfully carried out its role of supervising the project up to its completion. Implementation problems were identified early and performance ratings were - 14 -  realistic. The MTR, carried out in June/July 1995, confirned the validity of the project objective, indicating as well, the successful implementation of the program policy reforms. The MTR also had an important catalytic role in expediting physical implementation, reviewing RRMP targets to reflect realistic implementation possibilities and adequately assisted DENR in planning the realistic deployment of resources for the balance of the Project's duration. 7.3 Overall Bank performance: Because of the satisfactory performance during identification, preparation, appraisal and supervision, overall, the Bank performance is rated satisfactory. Borrower 7.4 Preparation: Borrower's performance during the preparatory work for the Project was satisfactory. By the time of negotiations, the GOP had reviewed and agreed to a detailed matrix of project activities in line with the planned timetable to meet datelines up to Loan/Credit effectiveness. 7.5 Government implementation performance: The GOP was able to achieve satisfactory progress under the Sector Adjustment Component, which was completed as per the agreed schedule. It took actions required to satisfy all macro-economic framework conditions for the release of the second tranche. In this respect, the GOP was able to continue to adhere to a sound program of macroeconomic management despite natural disasters and difficult internal and external economic conditions. The cooperation between the GOP and the Bank was satisfactory. It remained firm throughout the implementation period and resulted in a positive impact on project performance. The GOP complied satisfactorily with the legal covenants in both the Loan and Credit Agreements. 7.6 Implementing Agency: The performance of DENR, the main implementing agency, is considered satisfactory. It was able to successfully carry out pre-implementation activities, like the appointment of regional project managers and key staff, and the initiation of training and community organising activities by utilising the Japan-WB technical assistance grant in anticipation of loan effectiveness. The PMO played a very constructive role during project implementation and maintained good working relations with DENR, LGUs, the communities, and the Bank. It assisted adequately the WB supervision missions and presented a complete and well-documented report on their evaluation of Project implementation. This report's summary is presented in Annex 9 while the complete report has been placed in the project files and is available to interested readers. 7.7 Overall Borrower performance: In view of the above, the overall Borrower's performance is rated satisfactory. 8. Lessons Learned Lessons of General Applicability: I. Sectoral reforms, in themselves, cannot be entirely effective without the accompanying investments needed to support the transition into a new policy environment. 2. It is critical to underline the importance of process-orientation in community-based approaches for project implementation, as opposed to a purely physical output orientation of - 15 -  traditional projects. In this approach, outputs simply become the means by which the success or failure of desired processes are manifested. 3. Substantial delays in project start-up and implementation can be avoided if institutional capabilities (including technical, financial and administrative) are thoroughly assessed as early as project preparation stage and a corresponding agreed action plan formulated with involved institutions for focused capacity building interventions. 4. Introducing and testing out new approaches requires geographical focus, in order to maximize opportunities for fine-tuning implementation as results of pilot testing and innovations are generated. Hlaving a wide dispersal of activities across the country dissipates, the Project management's capability to strategically re-design and phase implementation to achieve desired objectives and results. 5 . Monitoring and evaluation systems (particularly on establishing the baseline database) need to be in place shortly before or right at the start of project implementation, in order to provide the necessary data in regularly assessing project implementation, sharpening project design and mechanisms during implementation, and in drawing out effects and impacts accruing directly or indirectly due to project interventions. 6. Provision of training and other forms of technical assistance are most effective and relevant when real felt needs of targeted participants are answered in relation to improving their effectiveness in carrying out their specific roles and responsibilities in their respective olrganizations. 7. Precise institutional development plans must be formulated prior to project implementation. T hese should specify procedures for selecting NGOs, training beneficiaries, setting up monitoring and evaluation systems, etc. ,Specific Lessons: I . Communal responsibility is essential for promoting sustainable natural resources management. With institutional support and the right incentive structure, ]LGtJs and communities are capable of being effective stewards of natural resource management, actively participating in NRM and conservation type initiatives, with long gestation benefits. Social assessment in each concerned community is critical for identifying development priorities, and each site must have a comprehensive development program, agreed to and owned by all stakeholders, specifying concrete responsibilities and counterpart arrangements. 2. With the limited human and financial resources of DENR, there are tremendous benefits to be gained in devolving natural resource management and delivery of basic services to LGUs and communities, as long as the latter are fully engaged in the process and proper capacity building measures are provided based on their specific felt needs. 3. LGUs and communities are willing to commit and allocate their scarce resources for sustainable resource management, livelihood generation, rural infrastructure development and maintenance, provided that they are recognized as the overall manager for these efforts and are properly supported with relevant technical assistance from national agencies, donor communities and other stakeholders. - 16 -  4. Strong and committed partnerships among various stakeholders (national and local governments, rural and upland communities, downstream resource users, civil society, donor community, etc.) are critical for sustainable natural resource management. 5. Community organizing has to focus on building partnerships at the local levels for mutual support in the community. Associations created with the primary purpose of accessing donor's funds are not sustainable and cannot make a significant contribution to community development in the long run. The CRF can provide a valuable source of funding for local development through start-up assistance to income generating activities. However, CRFs can only be sustainable if sound financial management is introduced and all participants feel a strong sense of ownership of the fund's resources. 6. Formal long-term tenurial agreements for the utilization of State lands provide concrete incentives for farmers and upland settlers to invest time and capital, in ensuring high standards of land management. The issuance of CBFMAs and Certificates of Stewardship Contract (CSC) in the Project areas have proven to be highly beneficial towards the implementation of on-farm agroforestry and off-farm reforestation activities. 7. Fund transfers to LGUs through the national government agencies can be inefficient. There is a real need to put into place an efficient fund transfer mechanism by which national and donor financial resources can be channeled to LGUs during this transition stage prior to their full decentralization (especially among the poorer LGUs which still do not have enough capabilities and internal resources to access formal financing windows). Such an effective fund transfer mechanism must be able to provide a purely financial transfer function, ably supported by existing national and regional development institutions which will provide expert technical analysis for gauging feasibility of proposed local projects for financing. 8. Involvement of NGOs does not automatically lead to successful community involvement and action -- they need to be qualified, and also acceptable to the communities they will be working with. 9. Good laws and regulations can have major impacts on curbing activities which degrade the environment. Even highly profitable activities such as illegal logging can be controlled effectively. However, this requires strong political commitment and partnership with local communities and other stakeholders. 10. A multi-agency approach is needed to tackle complex forest protection type initiatives. Linkages established with the Department of Justice (for the prosecution of criminal cases), the National Bureau of Investigation (NBI), the Office of the Solicitor General (OSG) for the prosecution of civil cases and the Supreme Court were very successful. For the first time, inter-personal relationships established between the DENR on the one hand, and the mentioned agencies on the other, smoothed the path for significant cooperation and increased conviction rates. 9. Partner Comments (a) Borrower/implementing agency: April 14, 2000 Ms. Carolina V. Figueroa-Geron Task Manager for ENR-SECAL Program The World Bank, Taipan Place, Emerald Avenue Ortigas, Pasig City - 17 -  Dear Ms. Figueroa-Geron: This is to acknowledge receipt of the draft ENR-SECAL, Project Implementation Completion Report of the World Bank-FAO ICR mission. We are very pleased about the result of the evaluation including the overall satisfactory performance rating given by the WB/FAO Team to the project. In general, we concur with the ICR mission's analysis of the performance and outcomes of the various components and sub-components of ENR-SECAL. However, we would like to dispute the team's unsatisfactory rating of two RRMP components: Local Social Development/Community Organizing and Development of Livelihood Options. 1. Local Social Development/Community Organizing The ICR team based its assessment on its impressions on the financial operations of community associations (CAs) interviewed in Regions 2 and 9, specifically on the operations of the Community Revolving Fund (CRF). While the viability of the financial operations of the CAs is a measure of their internal strength, we believe that other criteria have to be given equal consideration in the evaluation because the main emphasis under this sub-component is on the strengthening of local community institutions with respect to the development objectives of RRMP. This sub-component is one of the major interventions towards local empowerment and in unifying community participation in the management of upland resources likewise, in systematizing the mobilization and re-channeling of community savings into a community revolving fund (CRF) that will finance livelihood endeavors of the members. The primary objective of LSD/CO is to build strong people-oriented, value-based groups that will carry out development activities in the watershed. It is hinged on the thesis that organized upland communities can be effective natural resources managers if they have access to options that would improve their economic well-being. The CRF was put up to promote thrift and savings movement amoong the project participants and in turn, becomes the "people's development bank" to serve micro-financing needs of the community association. The conditions and terms imposed on the borrower-member focus more on the service -- i.e., access to credit that is otherwise inaccessible through traditional facilities such as rural banks -- that the Fund provides to its members, rather than on the absolute profit generated from the lending operations. An important milestone under the LSD/CO activities is the registration of the CAs with the appropriate regulatory agency. The very nature of the operations and objectives of the associations necessitate that they possess a legal personality and be governed by certain statutory laws. Most registered CAs under the project are registered as non-stock and non-profit entities. The size and growth of membership are also important indicators in determining the organization's overall health and performance. Every single member is a potential contributor of ideas, financial resources and social/moral strength required to keep the association strong. This implies that the larger the membership size, the stronger is the association. It also reflects the association's attractiveness to the members, and is an indication of the perceptible rewards that may be obtained by anyone joining or maintaining his relationship with the association. A reduction in membership size indicates that the association is no longer able to provide such expected benefits to the members. An assessment of the current organizational set-up of the association is another important factor -18 -  since the effectiveness and sustainability of the CAs are dependent to a large extent on the capability of the officers to formulate policies and strategies and to translate them into outputs and services that would lead to the achievement of the organization's goals. Records from the field disclosed that CAs have their Board of Directors, management officers such as the Secretary, Treasurer and Manager and heads of working committees such as Membership and Education Committee; Credit Committee; Project Development Committee; and Audit and Inventory Committee. Technical assistance have been provided to these officers in such areas as management skill development, and supervision and monitoring activities so that they are now able to operate on their own with consistency and improved quality. The intemal strength of the associations can likewise be assessed in terms of the frequency and the quality of meetings conducted either by the officers, working committees or the General Assembly. In general, meetings are decision-making exercises. They provide the forum for the democratic exercise by the member of his/her duties and obligations as well as his/her rights in the organization. They also serve as avenues for the association to pool together ideas and talents for generating additional resources and the conversion of these resources into outputs and services for its members. For instance, Region 2 CA agenda and records of minutes of meetings showed discussions on house rules that would discipline members, credit policies, accounting and intemal control measures and plans for community development affairs. (refer to Status and Performance of Community Associations of Region 2, Special Study Report #24, March 1995). The installation of basic intemal control system is another crucial element to the overall strengthening of CAs primarily to safeguard the CRF and maintain the credibility in the community. With the CRF capital build-up growing, both officers and members of the CA may have different expectations and interest on the fund and oftentimes their expectations do not match and could become the source of conflicts within the organization. The absence of this intemal control system has led to either loss or disarray of some CA assets. To address this need technical assistance and on-the-job training were provided to CA officers for the installation of accounting and bookkeeping system; proper enforcement of loan policies and regulations; regular updating of financial status; and regular auditing of CA transactions. The extent of improvement in knowledge and skills was rated 'much' to 'very much' by 95% of the respondents (p. 48 Completion Report of Northem Luzon RRMP Five-Year Training Program Implementation). In effect, we believe that the LSD/CO component of ENR-SECAL/RRMP has strengthened local govemance and has "achieved most of its relevant objectives or is expected to achieve satisfactory development with only a few shortcomings," Guidelines for Preparing Implementation Completion Reports (ICR), World Bank, p. 12 and should therefore be rated Satisfactory. 2. Development of Livelihood Options Per design of ENR-SECAL, the introduction of sustainable livelihood options is the main extension goal of the project. Under the project, a seed fund of P60,000.00 per site was provided as start-up financing for non-farm livelihood projects and this forms part of the project share contribution to the community revolving fund. The release of this seed fund was dependent on the CA's demonstrated capability to manage the CRF. Project records showed a total of 272 livelihood projects operationalized during the life of the project. The question of the likelihood of replication and initiation of additional economic generating projects has been raised by the ICR team. While the issue is completely valid, we feel that it is more relevant to look at how ENR-SECAL has demonstrated the vital linkages between: providing the institutional platform for local economic activities to flourish, providing the skills for managing these economic activities, and how improvements in the local economy will bring about sustainable natural - 19-  resource management at the local level. Our assessment is that ENR-SECAL has amply demonstrated these linkages, and has set the example from which future work can draw on. For instance in Luzon, assessment of various livelihood projects at the close of 1996 disclosed maximum utilization of the LDF and CRF amounting to P2,975.,937.00 and P1,654,450.00, respectively. These funds have been augmented by fund assistance from the Department of Agriculture (P120,000.00); Department of Science and Technology (P150,000.00); Department of Trade and Industry (P200,000.00) Office of the President (P200,000.00) and LGU-R2 Internal Revenue Allocation (P54,000.00). A summary of the livelihood projects and sources of funding in Regions 1, CAR and 2 are shown in Tables 22, 23 and 24 of the Luzon Technical Assistance Completion Report dated May 1998. In Mindanao, development and packaging of livelihood projects by CAs themselves accelerated only in late 1998 until 1999 when the Enterprise Development Program was introduced. In Region 9, there were ten line agencies that actively responded to the People's Organizations Grant Networking and Product Marketing and Installation of Marketing Infonnation System. The alliance with government agencies was firmed up during the Investment Networking for Cooperatives in Region 113. Report showed six assisting agencies affirmed their collective commitments to provide technical, fnancial, and marketing assistance to the CAs/Cooperatives through a Memorandum Agreement signed by the parties on May 11, 1999 which was witnessed by the visiting World Bank Mission, Mr. Herbert Acquay and Ms. Carolina Figueroa-Geron and DENR officials. Similar activity was conducted in Region lD in which ten assisting agencies participated and approved the MOA on June 3, 1999. In addition, eight coop-beneficiaries were introduced to five Coop/Rural Banks as Cooperative Intermediary Banks (C1'Bs) in one forum conducted last June 25,1999. This forum signaled the start of a cordial business relationship between cooperatives and the CIBs. (Details are found in the Training and EDP Terninal Report dated July 1999). In this respect, we feel that the rating for this RRMP component should likewise be Satisfactory. We will appreciate consideration of the above comments in the final ICR. Best regards. Very truly yours, (Original Signed) MARIO S. RONO Undersecretary :for International Commitment aind Local Government Affairs (b) Cofinanciers: A copy of the draft ICR was provided to the OECF (now known as the Japan Bank for International Cooperation or JBIC). No additional comments were received. (c) Other partners ('NGOs/private sector): Not applicable at this time. It is expected that during the preparation of the CPPAP ICR, comments from the Borrower's partner NGOs would be documented. 10. Additional Information - 20 -  Annex 1. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: |ndicatoiMaxtdx Projected in last PSR A;tuatILatest Estimate Project Objectives - Adjustment Component Preservation of remaining biological diversity, Satisfactory outcome re-establishment of natural resources that have been degraded, and introduction of sustainable land use practices through enactment of critical policy reforms and enabling legislation - Investment Project Improvement in the enforcement of logging Satisfactory outcome regulations, provision of upland extension service and secure tenure rights to users in return for sustainable resource use, and development of mechanisms for supporting small-scale community-based resource management and livelihood projects in impoverished upland areas Note: One of the components, the GEF-supported Conservation on Priority Protected Areas in the Philippines Project is still on-going and will be completed in December 2001. CPPAP covers ten priority protected areas nationwide and is implementing activities which will contribute to the development of an effective protected area system, charging of apprpriate user fees for public resources, provision of secure tenure rights and altemative livelihood activities to upland communities in order to ease pressure on the remaining natural resources in these priority sites. Output Indicators: Ind ka iMetrix Projected In last PSR ActualLatest Estinat Sectoral Adjusment Component - First Tranche Released by October 31, 1991 Released by October 10, 1991 - Second Tranche Released by June 30, 1992 Released by October 28, 1992 Policy Actions Matrix Pls. see Table 1, Annex 9 Pls. see Table 1, Annex 9 Natural Resource Policy Matrix Pis. see Table 2, Annex 9 Pis. see Table 2, Annex 9 Investment Component Monitoring and Enforcement (MEC) To be implemented in Regions II, IV, VIl, Vil Implemented in Regions Il, 1II, IV, VIl, VIII, X, and X (Region X was divided into two Xill and NCR regions: X and Xil) Multisectoral Forest Protection 16 MFPCs (in six regions) 200 MFPCs (in 15 regions; with 50 of them Committees (MFPCs) inactive) Log Control Monitoring System (LCMS)I To be implemented nationwide The FSMS is implemented only in Region Forest Stocks Monitoring System (FSMS) XiII, but a National FSMS Core Group has been formed to organize and implement FSMS nationwide in Year 2000 Interdiction and Enforcement Activibes Enforcing forestry law and regulation -DENR foresters, military and police - Increased effectiveness of enforcement by personnel, government prosecutors, judges concentrating on illegal logging hot spots and NGOs were trained in all phases of Improve capacity of local DENR officers in surveillance, seizure and arrest enforcing forestry laws and regulations - 20/30 thousand cum./year were seized, and illegal sawmills were closed down - Noticeable reduction in illegal logging activities in hot spot areas - Increased capacity of DENR to implement enforcement activities through provision of equipment and supplies - 21 -  Regional Resources Management Projects (RRMP) -Administrative Regions 4 + 2 6 - Provinces 26 24 - Municipalities 48 38 - Barangays n.a. 121 - Project Sites 28 28 - Area Covered n.a. 134,000 ha - Project Beneficiares 20,800 households 18,000 households Local Social Development (LSD) - Barangay Resource Management Planning 127 133 Committee - Establishment of Community Associations (CAs) 107 110 - Multipurpose Co-operabives (Conversion from CAs) 79 80 - CAs Participants (Formal) n.a. 9,500 - CAs Participants (Informal) n.a. 4,600 Community Resources Development (CRD) - Off-farm Activities/ Reforestation - Model Farms 14,600 ha 14,846 ha - On-farm Activities (Agroforestry/swc) 725 ha 725 ha 12,600 ha 13,017 ha Development of Livelihood Options (DLO) - Number of Projects 255 272 Infrastructure and Facilities Development (IFD) - Road Construction (Main) 13 km 14 km - Road Construction (Secondary) 171 km 181 km - Bridge Construction 63 63 - Road Improvement 1,410 km 1,440 km - Multipurpose Buildings 29 30 - Multipurpose Pavements 107 107 - Irrigation (New) 14 18 - Irrigation (Improved) 32 34 - Domestic Water Supply Systems (Constructed) 231 240 - Domestic Water Supply Systems (Upgraded) 64 64 - School Buildings 62 62 Institutional Strengthening (IS) - Barangay Development Units (BDUs) 81 81 - Watershed Management Units (WMUs) 29 29 - Provision of training and organizational development support for LGUs and communities 30,872 person days 40,010 person days - Provision of equipment support na 332 End of project - 22 -  Annex 2. Project Costs and Financing Proiect Costs by Component (in US$ million equivalent) Component Appraisal Estimate Actual/Latest Estimate Percentage of Appraisal (%) Adjustment Component 266.00 266.00 100.00 Investment Component: RRMP 64.60 56.69 87.76 MEC 14.20 7.00 49.30 IPAS Design 2.20 2.20 100.00 CPPAP 22.00 on-going on-going Total 369.00 331.89 89.94 Project Costs by Procurement Arrangements (in US$ million equivalent), Appraisal Estimate: Component/ ICB NCB Other NBF Total Category (by Force (GOP Account) Counterpart) IBRD Loan: Eligible Imports 100.00 100.00 Works 15.10 5.00 20.10 Goods 7.60 0.65 8.25 Agroforestry 4.60 1.50 6.10 Project Mgt. / Tech.Services 15.00 4.25 19.25 Incremental Cost 12.00 4.20 16.20 Unallocated 3.70 1.80 5.50 IDA Credit (Adjustment loan) 66.00 66.00 OECF (Adjustment loan) 100.00 100.00 GEF (CPPAP) 20.00 2.00 22.00 Japan-WB TA (IPAS Design) 4.60 4.60 NDF 1.00 1.00 Total 185.60 7.60 156.40 19.40 369.00 -23 -  Project Costs by Procurement Arrangements (in US$ million equivalent), Actual/Latest Estimate: Component/ ICB NCB Other NBF Total Category (by Force (GOP __Account) Counterpart) IBRD Loan: Eligible Imports 100.00 100.0 Works 9.84 3.36 13.20 Goods 6.00 1.51 0.16 7.67 Agroforestry 3.39 1.16 4.55 Project Mgt. / Tech.Services 12.15 1.62 6.30 20.07 Incremental Cost 11.17 4.94 16.11 IDA Credit (Adjustment loan) 66.0 66.00 OECF (Adjustment loan) 100.0 100.0 GEF (CPPAP) on-going Japan-WB TA (IPAS Design) 4.30 4.30 NDF Total 188.45 1.51 126.02 15.92 331.90 Note: GEF CPPAP implementation is still on-going and will be completed by December 2001; Nordic Development Fund (NDF) did not materialize; as requested by the Borrower, $9.6 million was cancelled in September 1999 and the undisbursed loan balance of $ 2.7 million was also cancelled on May 15, 2000. Proiect Financing by Component (in US$ million equivalent), ADpraisal Estimate: Component IBRD IDA OECF GEF Japan-WB NDF GOP/ TA Grant Beneficiary __________ Contribution Adjustment 100.00 66.00 100.00 Component Investment Component: ______l RRMP 50.0 2.40 12.20 MEC 8.00 1.00 5.20 IPAS Design 2.20 CPPAP 20.00 2.00 Total 158.00 66.00 100.00 20.00 4.60 1.00 19.40 -24 -  Project Financing by Component (in US$ million equivalent). Actual/Latest Estimate: Component IBRD IDA OECF GEF Japan-WB NDF GOP/ TA Grant Beneficiary Contribution Adjustment 100.00 66.00 100.00 Component Investment Component: RRMP 39.08 2.10 15.52 MEC 6.60 0.00 0.40 IPAS 2.20 Design CPPAP on-going on-going Total 145.68 66.00 100.00 on-going 4.30 0.00 15.92 Note: GEF CPPAP implementation is still on-going and will be completed by December 2001; Nordic Development Fund (NDF) did not materialize, as requested by the Borrower, $9.6 million was cancelled in September 1999 and the undisbursed loan balance of $ 2.7 million was also cancelled on May 15, 2000. Project Financing by Component, Percentage of Appraisal (%): Component IBRD IDA OECF GEF Japan-WB NDF GOP! TA Grant ~~~~Beneficiary TA Grant ~~~Contribution Adjustment 100.00 100.00 100.00 Component Investment Component: RRMP 78.16 87.50 127.17 MEC 82.50 0.00 7.69 IPAS 100.00 Design CPPAP on-going on-going Total 92.20 100.00 100.00 on-going 93.5 0.00 I 82.04 Note: GEF CPPAP implementation is still on-going and will be completed by December 2001; Nordic Development Fund (NDF) did not materialize: as requested by the Borrower, $9.6 million was cancelled in September 1999 and the undisbursed loan balance of$ 2.7 million was also cancelled on May 15, 2000. - 25 -  Annex 3: Economic Costs and Benefits As stated in the President's Report for this Project, financial and economic evaluation was not done for this lending operation since this type of analysis was not considered applicable to the design of ENR-SECAL. However, the ICR mission considered it useful to provide an indication of the financial viability of both on- and off-farm activities supported under the RRMP subcomponent of this Project, as well as an assessment of the potential environmental benefits that can be generated from such activities. These financial viability analysis and environmental assessment can be useful in gauging sustainability and replicability of RRMP initiatives. Financial Viability of Off-Farm and On-Farm Activities Present Value of Flows _= Economic Analysis Financial Analysis Appraisal Latest Estimates Appraisal _ Latest Estimates ERR (%) Not applicable Not applicable - FRR (%) - - - Not applicable 43 Reforestation - - - Not applicable 48 Agroforestry Based on data provided by the Project Management Office (PMO) and informnation collected in the field and in interviews with farmers, one-ha models of a typical reforestation site (off-farm) and an agroforestry model farm (on-farm) are presented in Tables 1 and 2 of this Annex. These models indicate that both activities would be viable and attractive for farmers even in the absence of subsidy payments. Reforestation activities based on Gmelina arborea, carry an estimated rate of return of 43% assuming a wood volume of 56 cu.m./ha harvested after 10 years and sold at a farmgate price of 2,200 pesos/cu.m. This rate of return estimate is broadly in line with other studies (eg., Christophersen, K.A., 1996, "Farmer Perspective Financial Analysis", USAID, reports rates of return to Gmelina plantations ranging from 35% to 45%). The full assumptions used in the model are specified in Table I of this Annex. In order to assess returns to typical on-farm activities, an analysis was made for a one-ha model farm planting eucalyptus, fruit trees and cash crops. This operation would generate a rate of return of 48%. Cash crops are only planted and harvested over the first seven years after which the growing trees reduce light availability to the point that no significant yields can be obtained. The fruit trees, in this case jack fruit and rambutan, start bearing fruit after six and nine years respectively, 3 years later than in an open area owing to competition for light from the growing eucalyptus. Eucalyptus is planted for one rotation only and harvested over four years and starting in year 9. Detailed assumptions for the model are presented in Table 2 of this Annex. - 26 -  Table 1. Reforestation: Gmelina arborea (One-ha Model) Fast growing Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 YearlO Yearll speciesiGmelina in Pesos Costs: Seedlings 6418 Estab. Cost 6000 Maint./ 420 420 144 144 144 144 144 144 144 Protection Thinn./ 2084 67500 Harvesting Revenues: Thinnings _ _52100 Final Harvest 106920 Total Costs 12418 420 420 144 2228 144 144 144 144 144 67500 Total Revenues 52100 106920 Net Revenues (12418) (420(420) (144) 49872 (144) (144) (144) (144) (144) 39420 One harvest horizon (11 years) Unit NPV at 10% Pesos 32,394 NPV at 15% Pesos 21,554 NPV at 20% Pesos 14,222 IRR % 43% Input Data Unit Seedings first year planting no 1667 Cost of seeding pesos 3.5 Establishment cost days/ha 50 Maintenance and protection years 2 and days/ha 3.5 Maintenance and protection years 4-10 days/ha 1.2 Trees/ha after (three) thinning @five years unit 625 Thinning cost pesos/stem 2 Price of thinnings (farmgate) pesos/stem 50 Harvest volume (10 year rotation) cu.m./ha 54 Proportion of wood fit for selling % 90% Price of wood at harvest (farmgate) pesos/cu.m. 2200 Harvesting cost pesos/cu.m. 1250 Wage rate pesos/day 120 Notes: (a) calculations based on data provided by the Project Management Office as well as on data collected in the field. Estimates made on the basis of one rotation which does not include potential benefits from coppicing. (b) allowing for 10% mortality and replanting at the end of year I (c) allowing for 10% reduction for fire, drought or pests (d) wage rate is higher than for work on agroforestry model farm (see Table 2) reflecting harder labor conditions and potential distance of reforestation site from the villages - 27 -  Table 2. Agroforestry Farm (One-ha Model ) Item/In Pesos Year Year Year Year Year Year Year Year Year Year Year Year Year 1 2 3 4 5 6 7 8 So 10 11 12 13/25 Costs: Seeds/Pi 15000 Mats. Labor 3000 1800 1800 1800 1800 1800 1780 1780 153500 169500 169500 16950 32000 __ ~~ ~~~~~0 0 0 Revenues: Cash Crops 2000 2000 2000 2000 2000 1000 1000 Rambutan = = = 4000 4000 4000 4000 Jackfruit 1600 2400 32000 40000 40000 40000 40000 _0 0 Eucalyptus 262500 262500 262500 26250 Total Costs 18000 1800 1800 1800 1800 1800 1780 1780 153500 169500 169500 16950 32000 0 0 0 _ Total 2000 2000 2000 2000 2000 1000 1700 2400 294500 306500 306500 30650 44000 Revenues I _ 0 0 I _ 0 Net Revenues (16000) 200 200 200 200 (800 (800) 6200 141000 137000 137000 13700 12000 25 year horizon (length of tenure arrangement) NPV at 10% Pesos 219,509 NPF at 15% Pesos 129,485 NPV at 20% Pesos 77,406 IRR % 48% Input data unit Cost of labour pesos/days 100 Setup costs pesos/ha 18,000 Incl. Labour days/ha 30 Labour cost pesos/ha 3,000 Cash crops land care and harvest cash crops days/ha/yr 18 pesos/yr 1,800 revenue years 1-5 pesos/ha 2,000 revenue years 5-6 pesos/ha 1,000 Fruit trees Land care and harvest - Fruit trees days/tree 2 Pesos/tree 200 Pesos/tree 32,000 Rambutan trees/ha 80 Yield/ha pesos/ha 4,000 Yield/ha kg/tree 3 Price/kg pesos/kg 17 Jackfruit trees/ha 80 fruit/ha pesos/ha Yield year 7 fruit/tree 4 320 16,000 Yield year 8 fruit/tree 6 480 24,000) - 28 -  Yield year 9 fruit/tree 8 640 32,000 Yield year 10 fruit/tree 10 800 40,000 Price pesos/fruit 50 Trees Eucalyptus stems/ha 500 Survival rate/actually sold % 60% Price/pole pesos 3,500 Revenue at harvest pesos 1,050,000 Harvesting cost pesos/stem 1,000 Harvest cost pesos/ha 500,000 Uprooting days/stem I Cost/stem pesos/stem 100 Cost/ha pesos/ha 50,000 Notes: (a) estimates based on data collected in the field during farmers' interviews on current and expected yields (b) monggo, sweet potato, peanuts, vegetables, corn, cassava - 29 -  Environmental Benefits of Reforestation and Agroforestry Activities This Annex examines how environmental benefits, which are conventionally not quantified, affect the rates of return on reforestation and agroforestiy activities. The types of environmenital benefits can be broadly divided into: off-site benefits - resulting from a reduction in soil run-off upstream leading to reduced sedimentation and siltation problems in downstream infrastructure, a reduction in damages to downstream fishery resources and improved moisture balance reducing incidences of flooding and drought; and global benefits - including incremental carbon sequestration and enhanced protection of biodiversity. Further there are also other benefits, such as reduced illness and mortality owing to a reduction in pollution and improvement in air quality and recreation benefits from improved natural amenities. Off-site benefits considered include the reduction of sedimentation in the irrigation system and in dams as well as diminished damages to fisheries. No estimation is made of benefits from improved moisture balances. In terms of global benefits the estimates presented below only consider potential gains from incremental carbon sequestration. As most reforestation activities promote exotic species, biodiversity benefits should not be significant. Health and recreation benefits are not included in the analysis. Table 3 below provides estimates of (i) downstream benefits from reduction of soil erosion owing to the adoption of reforestation or agroforestry practices as well as (ii) potential gains from incremental carbon sequestration. Values are based on incremental benefits from switching land use to forestry or agroforestry. The assumptions are that reforestation activities replace grassland (90%) and cultivated land (10%) while agroforestry replaces grassland (25%), cultivated land (70%) and plantations (5%). Table 3. Estimation of Environmental Benefits from Reforestation and Agroforestry Activities (in Pesos/ha/yr) Type of Benefits Reforestation Agroforestry Reduction in Soil Loss (off-site benefits) Impact on: 41.43 65.32 Irrigation System 17.52 2.40 Dams d 50.18 79.12 Fisheries Subtotal Carbon Sequestration '(global benefits) 2611.20 2880.00 Total Benefits 2661.38 2959.12 Notes: (a) Estimates of soil erosion from different land use types (based on the P'hilippine Environmental and Natural Resources Accounting Project (ENRAP) Phase II, Main Report, Appendix E): open grassland - 79.6 tlha/yr, agroforestry (trees, shrubs, grasses) - 12.5 tlha/yr, Gmelinar plantations - 1 tlhalyr and unsustainable upland agriculture 191.6 tlha/yr. (b) Estimates are based on the loss of value of production from a reduction in irrigable area owing to soil - 30 -  erosion/sedimentation. The analysis draws on Segayo, M.L. "Environmental Damage in Irrigation Systems" (DENR, 2000, unpublished) which estimates the loss in terms of gross value added (GVA) from paddy production. In the analysis presented in this Annex, the total loss is calculated as the difference between GVA of paddy production and the GVA of rainfed corn (estimated alternative planting strategy in areas not irrigated owing to erosion damage). (c) Estimates are based on the total cost of damages from sedimentation owing to the decrease in service life based on amortized capital cost of the four reservoirs most affected by sedimentation problems (57.7 million Pesos/year in 1988 prices - based on ENRAP Phase II, Main Report, Appendix B). (d) Estimates consider the benefits of a regeneration of fishery yields resulting from reduced upstream soil erosion based on data collected by the mission on fisherfolk offering fish at discounted prices to upstream farmers in compensation for their application of agroforestry practices. This estimate reflects a lower bound of the willingness to pay to avoid soil erosion upstream in order to protect downstream fishery resources, and is likely to be lower than the full benefits of the value added of additional fish caught. (e) Estimated on the basis of a shadow carbon price of $24/tC (using an exchange rate of 40 Pesos/$) and incremental carbon sequestration of 3 tC/ha/yr and of 3.4 tC/ha/yr as a result of adoption of agroforestry and reforestation practices respectively. The sequestration figure for reforestation is adjusted to 2.7 tC/ha/yr reflecting the assumption that only 80% of the harvested wood will be used for poles or timber. It should be pointed out that scientific research on incremental carbon sequestration potential is still at an early stage and that these estimates carry a large margin of error. Total domestic benefits considered, i.e. the reduction in production losses attributable to sedimentation of irrigation systems, the reduced life-span of dams owing to siltation and the damage to fisheries from soil run off, only amount to a value of 50 Pesos/ha/yr and 79 Pesos/ha/yr for reforestation and agroforestry respectively. An inclusion of these values in the one-ha models (see Tables 1 and 2 of this Annex) does not change the IRRs for reforestation (43%) and agroforestry (48%) significantly. The consideration of benefits from carbon sequestration, however, does have a large impact. Annual values are estimated at 2,661 Pesos/ha/yr and 2,880 Pesos/ha/yr and IRRs consequently increase from 43% to 69% for reforestation and from 48% to 59% for agroforestry (see Table 4 of this Annex). Table 4. Effect of Inclusion of Environmental Benefits on the IRR on Reforestation and Agroforestry Activities Internal Rate of Return Impact Reforestation Agroforestry (IRR) Without environmental benefits 43.0 47.6 Including off-site benefits 43.4 47.8 Including global benefits 68.8 59.4 It is important to point out that farmers adopting agroforestry or reforestation practices do not currently receive compensation for downstream or global benefits. In the case of fisheries, the estimates were based on actual transfer payments from fisherfolk to upland farmers (although this is not yet a common practice across all of the Philippines). From the farmers' point of view, the relevant rate of return for an investment decision is therefore the original one ignoring all environmental benefits. This could change if a market in carbon develops and certificates of sequestration could be sold or if transfer payments from downstream beneficiaries were introduced on a larger scale. - 31 -  Annex 4. Bank Inputs (a) Missions: te of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 7 U June 1989 Appraisal/Negotiation May 1990 7 U Supervision August/Sept. 1992 1 AE S S June/July 1993 1 AE S s March 1994 4 AE, WM, F, BD S S Oct./Nov. 1994 3 EC, NRM, F S S June/July 1995 5 E, EC, NRM, F, LCS S S February 1996 5 EC, E, NRM, F, EE S S Sept./Oct. 1996 4 EC, NRM, FS, LR S S June 1997 3 EC, LR, EE S S February 1998 3 NRM, E, P S S October 1998 5 NRM, E, RD, P, FN S S May 1999 4 NRM, OP, FN, IN S S October 1999 4 OP, NRM, P, FN S S ICR Feb./March 2000 3 E, EE, IL S S (b) Staff: Stage of Project Cycle Actual/Latest Estimate ________________ __ uNo. Staff weeks LiUS (000) Identification/Preparation 105.2 292.3 Appraisal/Negotiation 69.8 _ 208.8 Supervision 175.2 __ _ 571.2 ICR 10.0 45.0 Total 360.2 __ _ 1,117.3 AE = Agricultural Economist; BD = Biodiversity; E = Economist; EC = E,cologist; EE = Environmental Economist; F = Forestry Specialist; FN = Finance Specialist; FS = Farming Systems Specialist; IL = Institutional Legal Expert; IN = Infrastructure Specialist; NRM = Natrual Resources Management Specialist; WM Watershed Management Specialist; LCS = Local Consultant Sociologist; LR = Land Resources; OP = Operations Officer; P = Procurement Specialist; RD = Rural Development Specialist; U = Unidentifiable - 32 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating F Macro policies O H OSUOM O N * NA F Sector Policies O H * SU O M O N O NA F Physical O H *SUOM O N O NA O Financial O H OSU*M O N O NA F Institutional Development 0 H * SU O M 0 N 0 NA IEnvironmental O H * SU O M O N O NA Social Z Poverty Reduction O H OSUOM O N O NA ZGender OH *SUOM ON ONA Z Other (Please specify) O H * SU O M O N O NA Stakeholder Participation Z Private sector development 0 H 0 SU O M 0 N 0 NA Z Public sector management 0 H 0 SU O M 0 N 0 NA O Other (Please specify) - 33 -  Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 61 Bank performance Rating F Lending O HS * S O U O HU Z Supervision O HS * S ( U O HU Z Overall OH1S (DS O U O HU 6.2 Borrowerperformance Rating I Preparation O HS * S O U O HU I Government implementation performance 0 HS 0 S (D u 0 HU I Implementation agency performance O Hs * S CD u O HU X Overall OHS OS ( U O HU -34 -  Annex 7. List of Supporting Documents Documents on File: President's Report dated May 1991 Legal Documents Supervision Reports ICR Mission's Aide-Memoire (February/March 2000) Borrower's Contribution to the ICR (Full Text with Annexes) DENR DAO 25, series 1992 Implementing Rules and Regulations for RA 7586: National Integrated Protected Areas System (NIPAS) ENR-Secal RRMP Institutionalization and Sustainability Plans Status of Agreed Actions During the Last Supervision Mission in October 1999 (as of 15 December 1999) ENR-Secal Project Impact Monitoring and Evaluation Report (1998-1999) ENR-Secal Program Profile Prepared by PMO-DENR - 35 -  Annex 8. Status of Agreed Policy Actions Table 1. Policy Agenda Action Matrix Objectives/Proposed Actions Already Taken Short-Term/ Current Status at Project Action Program (as of 1991) Medium-Term Completion (1991-1992) (31 December 1999) A. Protect Biological Diversity Develop an effective Integrated Protected Area System (a) Determine and survey Consultants appointed and Sites identified, described proposed sites studies underway and justified (b) Prepare and submit Satisfactory enabling IPAS enabling law passed 28 sites including 9 under enabling legislation; issue legislation submitted to by Congress on June 1, ENR-SECAL proclaimed; regulation Congress; consultants 1992 and implementing 222 draft proclamations appointed to study gazetting guidelines issued on June under review issues 29,1992 (c) Prepare and implement Consultants appointed and Management plans being One management plan management plans for studies undertaken prepared for 10 areas; approved; six others in gazetted areas corresponding 1992 budget second draft and being done requests submitted to under CPPAP Congress (d) Eliminate pasture Completed report on status Similar reports completed Policy not to renew Pasture leases from parks, reserves, and rationale for for above terrestrial Leases in place; existing critical watersheds and all cancellation of pasture protected areas and at least leases are subject to areas with slopes > 50% leases in the Magat one other critical evaluation in Protected watershed, and agreed watershed; agreed Area Suitability Assessment administrative actions taken administrative actions taken - 36 -  B. Discourage excessive or illegal logging 1. Introduce user fees recovering full economic rents (a) Competitive bidding for Procedural guidelines Public bidding for at least As a policy, public bidding new logging licenses issued; initial areas two new TPSAs completed for TPSAs and similar identified and timber use-privileges are in place inventory authorized (b) Legislation setting Administrative Order Forest charge of 25% of Law setting forest charge of adequate formula for forest imposing Environmental market value passed by 25% of market value passed charge Fee; bills approved by Congress; implemented; by Congress; implemented; House and Senate normal legal remedies for normal legal remedies for non-compliance plus non-compliance plus cancellation of TLAs cancellation of TLAs violating terms of license agreement are in place (c)Maintain reforestation Strengthened monitoring to Revised procedures Environmental fee deposit and provide for ensure compliance and implemented (reforestation deposit) for periodic adjustments institution of true operating TLAs being performance bond managed by the Philippine Wood Producers Association (PWPA). (d) Study effects on prices TORs agreed, study carried Export of logs from natural and rents of export ban and out, actions agreed forests and raw sawnwood other restrictions not allowed. No restrictions on plantation wood and processed products. (e) Increased fees for Study of appropriate rental DA and ADB agreed on DA A.O. issued to fishpond use of mangrove fee underway, sponsored by new fee level implement new fee level areas ADB Fisheries Sector Loan (f) Reversion of idle or Joint DENR-DA ADB-fmanced survey ADB-financed survey abandoned fishpond areas Memorandum of carried out, DA/DENR carried out, DA/DENR to forest use Agreement on reversion Mangrove Committee Mangrove Committee signed by DENR rescinded leases of all idle rescinded leases of all idle ponds ponds -37 -  2. Improve enforcement of forestry laws and regulations (a) Develop and implement Monitoring plan agreed and Program monitoring Program monitoring an adequate monitoring TOR for TA in commissioned and commissioned and system implementation drafted reporting system reporting system operational operational (b) Develop and implement Enforcement plan agreed Annual evalualion report on Annual evaluation of law an adequate enforcement and TORs for TA in imp]ementation, including enforcement, including strategy implementation drafted quantitative indicators, quantitative indicators, agreed with Bank being undertaken. (c) Enlist cooperation of Memoranda of Agreement MOAs with DOJ, DND and Depts. of Justice and between DENR and DOJ DILG executed; Special Defense and DILG drafted Courts on forestry cases assigned C. Encourage Sustainable Land Use Practices 1. Provide secure tenure rights (a) Improve tenure value AO revising CSC terms Routine issue Routine issue of CSC (stewardship issued; revised contractual contract) form issued (b) Extend modified CSC AO defining mangrove Routine issue Routine issue for mangrove areas CSCs and appropriate contractual form issued (c) Legislation to Various bills on ancestral Passage of the Indigenous recognize, delineate, and domains filed in Congress; Peoples Rights Act (IPRA) adjudicate land occupancy interim mechanism for in October 1997 claims of indigenous recognition of ancestral communities domains claims implemented by DENR Administrative Order No. 2, issued January 1993 Adequate funding provided for task force and evaluation report on work submitted to the Bank -38 -  (d) DENR public Task force formed to Implementing rules and recognition of prior rights delineate ancestral domains regulations of IPRA of ancestral domains and and recommend provides for DENR role in administrative assistance in mechanisms for transfer of delineation of ancestral delineation resource ownership rights domains. DENR DAO 2 and management (1993) resulted in issuance responsibility in operation; of Certificates of Ancestral delineation guidelines Domains Claims (CADC) issued. Statement of policy over 1.4 million hectares. recognizes ancestral domain Recognition and rights in principle. adjudication process now subject to IPRA. (e) Expand numbers of Seven and twenty CFLs The CBFM strategy Community Forest Leases issued in 1990 and 1991, developed a comprehensive issued respectively package for establishing contractual arrangements (f) Devise and issue new AO and guidelines defining over all types of state forest contractual instruments instruments signed lands (including natural giving property rights over forests, forest plantations, reforested areas to local agroforestry areas). Work is residents underway to unify all existing tenurial arrangements into the comprehensive Community-Based Forest Management Agreement (CBFMA) (g) Authorize ISF and CFS Draft IPAS legislation NIPAS law and its in protected areas provide scope for such implementing rules and programs in appropriate regulations provide for zones within protected areas recognition of tenure of as part of long-term migrant communities and protective management indigenous peoples in program protected areas; CBFM-type approaches to be implemented in buffer zones and multiple-use zones of protected areas. - 39 -  2. Establish organizational framework for provision of extension services in upland areas (a) Recognition of Resolution (No. 01-90) of Implementation within Interagency convergence extension requirements of Cabinet Cluster A on Rural administrative units covered policy under the Social upland populations and Development and Statement by public investment Reform Agenda and the agreements on sourcing of Policy extend this component National Anti-Poverty recognition; Program addresses this implementation within concern. Inclusion of scope of public investment CBFM as part of the component agreed Agrarian Reform Program (upland component) opens up agrarian reform resources for uplands. (b) Improved autonomy, ISF separated from FMB, ISF program devolved to visibility, mandate, and Asst. Secretary responsible LGUs by virtue of the 1992 staff complement for ISF for program. New ISF and LGC; Environment and program CFS guidelines issued; new Natural Resources Offices field staff positions added created in many Provincial for "Social Forestry and Municipal government Technicians" units; CBFM strategy provides for partnership between LGUs, DENR and communities (c) Implement common Training materials Implementation within training program (for DA, developed; implementation administrative units covered DENR, DAR) within scope of public by public investment investment component component agreed. (d) Complete census of Census completed, future Perceived need for another forest occupants measures agreed census of forest occupants to determine magnitude of work to be undertaken in CBFM and protected areas. (e) Develop NGO linkages NGO Desk created; Civil society participation registration of NGOs being tapped for upland undertaken; NGOs used development programs in extensively in contractual the area of mobilization, work; roles confirmed in monitoring and Statement of Policy enforcement, involvement in CBFM and MFPC activities - 40 -  3. Establish mechanisms to New ISF and CFS CBFM strategy emphasizes promote small-scale, guidelines issued; development of sustainable community-based resource organization and livelihood projects by management and livelihood procedures for interagency, communities as part of projects LGU and NGO involvement overall natural resources in agreed public investment management framework component -41 -  Table 2: Natural Resource Policy Matrix Issues and Strategic Initial Status Revised Policy Framework Current Status Consideration (At project appraisal, (Per Aide-TIMmoire, (At project closure, 1990) February 1998; items in December 1999) italics directly addressed by SECAL conditions Resource Mobilization Policy should seek to assure that natural resources are allocated to appropriate and sustainable uses, that rents generated from exploitation of publicly-owned natural resources are channeled through appropriate budgetary procedures to high priority uses, and that public expenditure procedures provide adequate resources for natural resource investments, maintenance and protection Protected Area System Inadequate legislation, National Integrated Implementing Rules and funding, land allocation and protected Areas (NIPAS) Regulations (DENR DAO management did not Law in place 92-25) issued guarantee adequate GEFfunding securedfor GEF-funded CPPAP in protection of a representative priority sites under CPPAP place; first phase of selection of critical habitats * Draft guidelines on the EU-supported NIPAP nearing integration ofpeople and completion parks Initial components of the system identified, in various stages of assessment and gazetting User fee system for protected areas being developed through ENRAP Forest Land Allocation Forest designation applied to * National Land Use Code essentially all public lands under consideration in and defined on strictly Congress technical basis (slope) DENR field offices excluding consideration of preparing forest land use actual use and occupancy plans, assisting LGUs prepare their Provincial/Municipal Land Use Plans * DENR planning in the context of watershed ecosystems - 42 -  Mechanisms for Long term concessions had No new TLAs issued; Implementing rules and Industrial Forest generally been awarded Existing TLAs scheduled to regulations for Industrial Utilization untransparently and without expire no longer to be Forest Management competition. Largely not in renewed Agreement (IFMA) in place, compliance with TLAs not complying with including profit-sharing management requirements management requirements mechanism between investor cancelled and government Old-growth naturalforests Socialized Industrial Forest included in Protected Areas Management Agreement System (SIFMA) for small holders in place. CBFM provides for utilization offorest resources Incentive Framework Policy should aim to ensure that all resource users recognize and respond to natural resource scarcity through realistic prices, regulations and other incentives User Fees and Royalties Forest charges set at 25% fo.b. price Improve Forestry Law Routine aerial and marine LCMS further developed Enforcement surveillance missions into FSMS as forest conducted management information * Log control monitoring system; national and regional system piloted in CARAGA core staff trained to install region FSMS nationwide * Multisectoral Forest More than 200 MFPCs Protection Committees organized; long term (MFPCs) organized institutional relationship with DENR needs to be clarified Expand access to secure Issuance of tenure Community-Based Forest Community-Based Forest tenure instruments proceeding on a management established as management established as limited basis, essentially national strategy (EO 263) national strategy (EO 263) with experimentation on a All tenurial instruments All tenurial instruments range of instruments and under previous under previous terms people-oriented people-oriented programs/projects to be programs/projects to be eventually converted to eventually converted to CBFM CBFMAgreement Agreement Log and Forest Products Log exports banned since Various versions of 'total Trade Restrictions 1986, raw lumber exports logging ban' bills pending in banned since 1989. Bans Congress; DENR advocating have potential to reduce log for Sustainable Forest values and promote Management as a better inefficient processing. alternative to total logging ban - 43 -  Forest Management Private logging operations Stricter requirements Forest Stocks Monitoring Regulations on public land were poorly imposed on Timber License System (formerly LCMS)for controlled and essentially Holders (e.g., submission of nationwide installation by unmonitored aerial photo coverage; trained national and regional integrated annual operations DENR core staff plans required) Log Control and Monitoring System piloted in CARAGA region Sector Governance and Policy should be based on a Organization broad consensus among a range of stakeholders on the legitimacy of control over resource use and access. Develop NGO linkages Confrontational atmosphere NGOs now recognized as NGOs now recognized as between Government and legitimate players in public legitimate players in public NGOs lands management lands management Indigenous Peoples Land Ancestral Domains to Before the passage of the Rights come under policy of IPRA in 1997, DENR initiated National Commission on since 1992 (DENR DAO 02, s. Indigenous Peoples created 1992) the recognition of under the Indigenous ancestral domains/lands Peoples Rights Act (IPRA) claims of IPs over 1.4 M hectares * DENR, through its Ancestral Domains Management Program within the CBFM strategy, will continue to assist in the delineation of ancestral lands/domains * The NCIP is in place, but the constitutionality of IPRA has been challenged before the Supreme Court. Role of Local National Government Local Government Code Joint Memorandum Circular Government Units dominant in policy and delegates significant 98-1 between DENR and (LGUs) in resource budgeting, but limited resource management DILG clarifies the roles of management capacity to influence responsibilities to LGUs DENR and LGUs activities on the ground. DENRfieldoffices providing technical assistance to LGUs in land-use planning, and incorporatingforest land use plans in LGUplans * LGUs still need substantial assistance to develop skills, and to generate resources, for local management of natural resources - 44 -  Annex 9. Executive Summary of the Borrower's Evaluation of the Project: ENVIRONMENT AND NATURAL RESOURCES SECTORAL ADJUSTMENT LOAN (ENR-SECAL) PROJECT EVALUATION REPORT EXECUTIVE SUMMARY The Environment and Natural Resources Sectoral Adjustment Loan (ENR-SECAL) Program is a hybrid operation, consisting of a quick-disbursing sector adjustment_program based on policy and institutional reforms and an investment project in support of institutional strengthening and regional community-based resource management activities. After final appraisal in May 1990, the ENR-SECAL was approved by the Board of the World Bank on 25 June 1991, and both the IBRD loan and the IDA Credit became effective on 10 October 1991. Implementation of the investment component (see para. 1 1 for the various sub-components) commenced in January 1992; RRMP was implemented until December 1999 while MEC was implemented until June 1996. CPPAP is ongoing. Total project cost was estimated during appraisal at US$ 369 million, consisting of US$266 million for the quick-disbursing sectoral adjustment component, and US 103 million for the investment component. The financing plan consisted of the following: Adjustment Component US$ 266 million IBRD US$ 100 million IDA US$ 66 million OECF US$ 100 million Investment Component US$ 103 million IPAS/CPPAP US$ 24.2 million IPAS Design US$ 2.2 million IPAS Implmn (GEF) US$ 20.0 million IPAS Implmn (GOP) US$ 2.0 million RRMP US$ 64.6 million IBRD US$ 50.0 million Japan-WB TA Grant US$ 2.4 million GOP and Beneficiaries US$12.2 million MEC US$ 14.2 million IBRD US$ 8.0 million GOP and Beneficiaries US$ 5.2 million Nordic Dev. Fund US$ 1.0 million Note: Nordic Dev Fund of US$ 1.0 million did not materialize; loan cancellation of US$ 9.6 million in September 1999. The objectives of the sectoral adjustment program were: to preserve what remains of the biological diversity of the Philippines; to re-establish the natural resources that have been degraded, and; to introduce sustainable land use practices. The objectives of the investment component were: to develop an effective protected areas system; promote proper pricing and imposition of user fees for natural resources; improve the enforcement of logging regulations; provide secure tenure rights and extension services in the uplands, and; establish mechanisms for community-based resource management and livelihood in the impoverished uplands. The logical framework of ENR-SECAL is available in the project files. - 45 -  Evaluation of the obiectives. * Relevance to national and sectoral development goals is rated highly satisfactory. The program concept, objectives and approaches are highly relevant to the country development strategy, which is anchored on the principle of sustainable development. * Efficacy is rated satisfactory. The implementation approach aimed to introduce processes characterized by participatory approaches involving all stakeholders (e.g., upland communities, indigenous peoples, other national line agencies, local governments, and civil society). * In terms of efficiency, the program is rated satisfactory. The program provided adequate safeguards for the efficient and effective utilization of program resources. World Bank staff and GOP oversight agencies closely guided program implementers on procedures for procurement, disbursement, and resources utilization. Participation of stakeholders (including participating LGUs ancl communities) in the planning, implementation, and monitoring ensured transparency at all levels and phases of project implementation. * Sustainabilitv is rated conditionally likely. The operationalization phase will require future continuation and replication of the ENR-SECAL development model, with the local government units (LGU) playing greater roles. Replication and sustainability will depend on whether the national and local governments can continue to provide resources to replicate and expand the coverage of the strategies and approaches, with the proper mix of physical and human resources shown during the implementation of ENR-SECAI, as vital elements of success. The Sectoral Adjustment Component Attainment of policy and institutional reforms obiectives. The following have been achieved: * Development of an effective Integrated Protected Area System (iPAS). The NIPAS law and its implementing mechanisms are in place. The initial components of IPAS, consisting of miore than 200 sites covering an aggregate area of 2.6 million hectares, have been identified Additional 171 sites have been recommendedfor inclusion in the system. * Proper pricing of environmental services and natural resources. The achievements in this area are: (i) institutionalising the Philippine Economic-Environment and Natural Resources Accounting (PEENRA) System; (ii) reforming the user fees system for environmental services, the appropriation of economic rent from natural resources use (e.g., raising forest charges on timber harvested from natural forests to 25% of market price, determination of governnent share in the proceeds of industrial forest plantations), and the formulation of economic instruments for ENR management (e.g. pilot implementation of user charges on wastewater discharges into the Laguna de Bay); * Property rights reforms. The Community-Based Forest Managemnent Strategy has been adopted by the GOP as the principal strategy for sustainable forest management. The Indligenous People's Rights Act was passed in 1997. Presently, CBFM-type projects, including those covered by the Integrated Social Forestry Program, the Forest Land Management Program, and the Ancestral Domains Management Program, cover an aggregate area of 5.114 million hectares, including 2.543 million hectares covered by in(digenous peoples' ancestral domains/lands claims (CADC/CALC). * Devolution and decentralization of environmental and natural resources management responsibilities to LGUs. The Local Government Code specifies the services and functions related to environmental protection and natural resources management which local government units and executives shall perform. * Various legislative bills on Sustainable Forest Management, Land Use, Wildlife Resources Protection, and gazetting of protected areas, are in different stages of the legislative process. The policy and institutional reforms agenda under the adjustment component are summarized in Annex 8, Tables I and 2. Annex 8, Table I is the matrix of reforms committed to by GOP at project design. This was updated in 1998 (and presented in Annex 8, Table 22) after an assessment done by the WB supervision team and DENR. - 46 -  The Investment Component 1. The investment component financed the following: * design of an Integrated Protected Areas System, including a suitable legislative framework; * program support for management of ten priority protected areas; * improved monitoring of logging operations and enforcement of forestry laws and regulations through the provision of equipment, training and technical assistance to selected DENR regional and local offices; and, * development of the capacity of local governments and line agencies to generate and service small-scale community-based resource management and livelihood projects in watershed areas, combining community organizing and pre-cooperatives development; improvements in tenure and resource management; introduction of sustainable means of livelihood; and improvement of infrastructure and services 2. The investment component was implemented through three sub-components: * Regional Resources Management Project (RRMP), which is concerned with the development of the capacities of local governments, government line agencies, and local communities to implement community-based management of watershed, forest and land resources. The objectives of RRMP were to be achieved through community organizing and development initiatives, primarily livelihood development, provision of physical infrastructures, and enhancing the role of women in uplands development. * Monitoring and Enforcement Component (MEC), which focused on the development of capabilities to monitor logging operations and enforce forestry regulations. Its objective was to develop a bottom-up approach to transform community attitudes towards the forest resources, combined with a top-down effort to strengthen capacity to identify, apprehend, and prosecute violations of forestry laws, rules and regulations. The MEC component financed the provision of (a) training and educational efforts to increase community awareness of the negative effects of illegal logging; (b) the establishment of joint Government-NGO monitoring committees to encourage community involvement in monitoring and enforcement activities; (c) training, technical assistance, equipment, and operational support to increase the quantity, quality, timeliness, and utility of Governmental monitoring activities, addressing all identified weaknesses; (d) training, technical assistance, equipment, and operational support to improve the effectiveness of all operatives involved in forestry law enforcement. * Conservation of Priority Protected Areas in the Philippines (CPPAP), which supports the management of ten priority protected areas in the country under the Integrated Protected Areas System (IPAS). Performance in the investment component' The cumulative weighted performance of the investment component is 107% of target'. In terms of the various investment components, the performance targets and accomplishment are as follows: Weighted Target Weighted Accomplishment RRMP 60.49% 67.93% MEC 18.85% 18.85% Technical Assistance and Program Management 20.66% 20.66% 100.00% 107.44% RRMP Performance. RRMP was implemented in 28 project sites covering an aggregate area of 134,090 hectares. These sites, in turn, were part of major watersheds covering an aggregate area of 922,038 hectares. located in six (6) administrative regions (3 in Luzon and 3 in Mindanao), 24 provinces, 38 municipalities, and 121 barangays. - 47 -  RRMP was implemented through four complementary strategies: * Local Social Development! Community Organizing-Community Development (LSD/CO-CD). This subcomponent was intended to strengthen local community institutions with respect to the devlopment onjectives of RRMP. Hence, participants were organized, trained and mobilized to undertake community-based environment and natural resources management projects. In the RRMP project sites, 110 community associations were organized, trained and assisted; 80 of these associations have gone forward to develop as registered cooperatives. Participatory decision-making was enhanced with the organization of 133 Barangay/Community Resource Management Committees; 149 barangay development plans were firmed up. At project completion there were 9,524 registered members of the CAs, and 4.627 participated as non-formal members. Women played an active part in the project implementation and participated in the CAs, community planning, barangay councils, and in participatory monitoring and evaluation activities. TA and on-the job training were provided to CA officers and members on installation of accounting and bookkeeping systems, proper enforcement of loan policies and regulations, and regular auditing. A local financing mechanism, the Community Revolving Fund (CRF), was developed through ENR-SECAI. There are presently 146 CRFs in place and managed by the community associations themselves. As of end of 1999, the aggregate fund accumulation of these CRFs totaled PHW 51.22 million. The CRF is the community organization's own pool of financial resources built up from various sources: start-up seed money from ENR-SECAL, members' contributions from their wages in project-related infrastructure and contracted project activities, profits from the CA's business operations (e.g., community store, products trading, loan facility), donations and grants, etc. This pool of resources is accessible to members finance household-level livelihood projects (e.g., hog/cattle fattening, agricultural inputs), and to finance projects of the organization (e.g., communal tree farms, forest plantations, small irrigation systems, rice/corn mill). This sub-component is one of the major interventions towards local empowerment and in unifying community participation in the management of upland resources in systematizing the mobilization and re-channeling of community savings into a CRF that will finance livelihood endeavors of the members. The primary objective of l SD/CO i's to build strong people-oriented, value-based groups that will carry out development activities in the watershed. It is hinged on the thesis that organized upland communities can be effective natural resources managers if they have access to options that would improve their economic well-being. o Development of Livelihood Options. Per design of ENR-SECAL, the introduction of sustainable livelihood options is the main extension goal of the project. Under the project, a seecl fund of P60,000.00 per site was provided as start-up financing for non-farm livelihood projects and this forms part of the project share contribution to the community revolving fund. The release of this seed fund was dependent on the CA's demonstrated capability to manage the CRF. Project records showed that a total of 272 livelihood projects were operationalized during the life of the project. The question of the likelihood of replication and initiation of additional economic generating projects has been raised. While the issue is completely valid, we feel that it is more relevant to look at how ENR-SECAL has demonstrated the vital linkages between providing the institutional platform for local economic activities to flourish, providing the skills for managing these economic activities, and how improvements in the local economy will bring about sustainable natural resource management at the local level. Our assessment is that ENR-SECAL has aniply demonstrated these linkages, and has set the example from which future work can be drawn. * Community Resources Development (CRD). Community resources development (CRD) consists of: provision of tenurial rights to land and natural resources, the development of the forest and land resources-base through forest rehabilitation, and the introduction of sustainable land-use practices. T hese CRD activities were generically categorized into on-farm activities in individual farmer-participants' farmiots, and off-farm activities, involving development of the larger areas granted under the community-based forest management strategy. On-farm activities covered 13,017 has. of farner-participants' fannlots; off-farm activities covered 14,846 hectares. A total of about 18,000 hectares of plantations (timber, rattan, bamboo, fruit trees, etc.) were developed through agroforestry and forest plantations establishment in RRMP project areas. Natural forests within the project sites, covering 1,848 hectares, were protected and managed by the CAs as part of their CRD activities. The following table summarizes the various tenurial arrangements and instruments put in place in the RRMP project sites. These tenurial instruments/arrangements include those issued tinder other CBFM - 48 -  programs/projects (e.g., Forestry Sector Project, Integrated Social Forestry Program, Ancestral Domains Management Program, etc.) in RRMP sites. These were facilitated through RRMP in line with the integrative approach of RRMP/ENR-SECAL: Area Covered (ha.) No. of Instruments Issued/Perfected 186,594 8,165 CBFM-type (CSC, FLMA, CBFMA, etc.) 75.097 5,731 CADC/CALC 102,918 82 Leases (PLA, AFFLA, IFMA, SIFMA) 5,562 6 Others (JVA, etc.) 3,017 2,346 In-process (as of end of 1999) 454,125 2,449 * Infrastructure and Facilities Development. ENR-SECAL/RRMP provided resources for the construction and/or improvement of infrastructure and related facilities in the project sites. The main objective of these infrastructure was to provide basic facilities to the target communities, under the premise that the provision of basic infrastructure to poor communities is necessary in catalyzing local economic activity and, consequently, promote rational use of environmental and natural resources in these areas. A secondary objective, but of more immediate impact, was for the creation of temporary employment to local peoples. RRMP infrastructure projects were either contracted out to local firms - which were required to employ local labor - or to the community organizations or barangay governments themselves. Infrastructure development under RRMP was also an entry point for local government participation in the project. The initial participation of the LGUs was in establishing these infrastructure and facilities through their respective engineering offices (Provincial/Municipal Engineering Offices), using funds and equipment provided to them by the project. Through time, the LGU's involvement expanded to the other components of RRMP in line with the institutional development process. The project established or improved the following infrastructure and facilities in the various project sites: Barangay Development Unit Bldgs. (81 units); Watershed Management Unit (WMU) Office Bldgs. (29 units); multi-purpose buildings (30 units); school buildings (62 units); housing units (80); Multipurpose pavements (107 units); new (main) road constructed (16 kms.); secondary road constructed (169 kms.); road improvement (1,443 kmns.); trails & tire-path constructed (352 kms.); trails & tire-path improved (149 kms.); bridge construction (63 units); bridge rehabilitation (2 units); culverts construction (95 units); domestic water supply systems (238 units constructed and 238 units upgraded); irrigation systems (58 units constructed and 34 units upgraded). * Institutional Strengthening. This involved the development of the capabilities of DENR, LGUs, other national government agencies (NGAs) concemed, community associations, and supporting NGOs, to develop, implement, and manage community-based ENR projects. It included the provision of support for training and organizational development for LGUs and participant communities; provision of information, education and communication (IEC) resources; and provision of equipment. Mechanisms were developed for the operationalization of partnership between stakeholders in community-based resources management, including the participation of NGOs in the implementation of development programs and projects. MEC Performance. The monitoring and enforcement component was intended to develop and implement strategies for improved forestry law enforcement, initially directed at selected areas where illegal logging operations have been identified as prevalent. In the long run, DENR would intensify direct management presence in the forests, particularly in areas where the Timber License Agreements(TLAs)s have expired, in primary forests placed under the protected area system, and in areas where production-sharing or community-forest management arrangements are extended. MEC was implemented through the following sub-components: formation of Multisectoral Forest Protection Committee; conduct of operations services in organizing and managing interdiction and law enforcement -49 -  activities; development and implementation of a Log Control and Monitoring System (later to be improved into a Forest Stocks Monitoring System), and; provision of legal technical assistance for the improvement of the capabilities of DENR and other related agencies in the prosecution of forestry cases. Myltisectoral Forest Protection Committees. The organization of MFPCs was intended to unify and mobilize the then fragmented various interest groups espousing forest and environmental protection, and to provide direction for their efforts in coordination with DENR. The work on MFPC focused on the development of a framework within which these groups can work together and be legally recognized as partners of DENR in forest protection advocacy. At the termination of this component in 1996, 94 MFPC's have been organized, well above the original target of 16 MFPCs. A national MFPC federation has been organizedl. As of 1999, there were 297 MFPCs formed in 15 regions, 49 provinces, 9 cities, 206 municipalities and 35 barangays. Operational services. This sub-component of MEC improved the capacity and effectiveness of local DENR offices and forest protection advocate groups in enforcing forestry laws and regulations in the identified critical or "hotspot" areas. Air, sea and ground surveillance plans and procedures, administrative orders, implementing guidelines, procedural directives and manuals were prepared. Staff of the DENR, Department of National Defense, Department of Justice, the military services, the national police, and NGOs, were trained in all phases of surveillance, seizure and arrest, and prosecution. Illegally cut logs and equipment used were seized and confiscated, and illegal sawmills were closed down by the mobile and transitory strike forces. Cases were filed and prosecuted against the perpetrators. Log Control Monitoring System (LCMS)/Forest Stocks Monitoring System (FESMS). The LCMS is a computerized database system to document and track legally harvested timber from the stump to the processing plants. Conceptually, it is possible to document and track all legally-sourced timber nationwide, and any timber that has no record in the database can be considered illegal. The system was developed and tested in Caraga region. This first attempt revealed some limitations in handling different transport systems, varying timber sales procedures, and harvests from plantations and private lands. Another drawback was the system's assumption that a fully operational nationwide communication system would be in place that can handle data exchange in real time. It was also realized that, in order for the system to be cost-effective, information on the quantity, quality, and location of post-harvest residual stands should also be included in the system. For these reasons, LCMS was further developed into the FSMS. DENR staff from the Field Operations Office, Forest management Bureau, and the regional DENR offices were trained on the FSMS, and a National FSMS Core Group was organized and tasked to implement the system nationwide. Legal Technical Assistance. Legal technical assistance is crucial to the whole MEC initiative. The TA provided legal assistance to the interdiction and enforcement activities. Workshops and seminars were conducted for judges, prosecutors, foresters, MFPC members, and lawyers who were designated to handle or assist in forestry cases. Various Memoranda of Agreement (MOA) were firmed up between the DENR and other agencies including the Department of Justice, the Supreme Court, the Department of national Defense, the Philippine National Police, and the military services. High-profile forestry cases were aggressively prosecuted to demonstrate the government's strong commitment to stop serious forestry crimes, Conservation of Priority Protected Areas in the Philippines (CPPAP). As part of the ENR-SECAL Program, ten (10) priority sites were identified for implementation under the Conservation of Priority Protected Areas in the Philippines (CPPAP) component: Batanes Protected Landscape and Seascape; Northern Sierra Madre Natural Park; Mt. Kitanglad Natural Park; Mt. Kanlaon National Park; Bataan Subic Natural Park; Turtle Islands Wildlife Sanctuary; Agusan Marsh Wildlife Sanctuary; Siargao Island Protected Landscape and Seascape; Apo Reef Natural Park; and Mt. Apo Natural Park. Nine (9) of these priority sites have been issued presidential proclamations under the IPAS. The Protected Area Management Boards (PAMB) have been organized and are meeting regularly Two sites, Batanes Protected Landscape and Mt. Kitanglad National Park have been approved on 3rd reading at the Lower House and awaiting to be filed at the Senate. The integrated strategic action plan for Turtle Island has been prepared by a multi-sectoral body. Natural resource inventory has been completed for nine (9) sites, and the management plans for five (5) sites namely Batanes PLS, Bataan NP, Mt. Kanlaon NP, Mt. Kitanglad NP and - 50 -  Northern Sierra Madre NP have been submitted. Program Costs and Financial Performance The total ENR-SECAL program cost was planned at US$369 million. Actual expenditures amounted to US$329.689 million, about 98% of appraisal estimates (net of the GEF grant and GOP counterpart for CPPAP, the Nordic Development Fund which did not materialize, and the loan cancellation of US$ 9.6 million. The costs by category and financing source are (in US$ million equivalent): Project Component Appraisal Actual/Latest Actual/Appraisal Estimate Estimate A. IBRD Loan. Eligible Imports 100.0 100.0 100.00% Works 15.1 9.234 61.15% Goods 7.6 7.332 96.47% Agrofrestry 4.6 3.154 68.56% Proj. Mgt./Tech. Services 15.0 13.474 89.83% Incremental Cost 12.0 10.629 88.58% Unallocated 3.7 Total IBRD 158.0 143.823 91.03% GOP Counterpart 17.4 15.566 89.46% B. IDA (Loan) 66.0 66.0 100.00% C. OECF (Loan) 100.0 100.0 100.00% D. GEF (Grant) 20.0 on-going GOP Counterpart 2.0 on-going E. NDF Grant 1.0 Did not materialize 0.00% F. Japan-WB TA Grant 4.6 4.3 93.48% TOTAL 369.0 329.689 98.01% Note: Net of CPPAP GEF Grant - US$ 20 million and GOP counterpart - US$ 2 million); NDF (US$ I million) did not materialize; loan cancellation - US$ 9.6 million From 1992 to 1999, the ENR-SECAL program (RRMP and MEC components only) was allocated, through the GOP Annual Appropriations Act, PHP 2.245 Billion, of which GOP counterpart is PHP 587 M and loan proceeds (LP) is PHP 1.658 B. Cumulative utilization rate is 94% (obligation/allotment) while the disbursement rate is 80% (disbursement/NCAA and NCA releases). Lessons Learned: On community-based approaches to environment and natural resources management: * ENR-SECAL has shown that community-based approaches to the management of environmental and natural resources are effective and cost-efficient, provided the responsibilities and use-rights of the different stakeholders are clearly defined, acknowledged, and respected by all parties. These are cost-efficient in that the costs of managing these resources, which used to be regarded as 'public goods' and should be managed using public resources, can in fact be managed by private (albeit community-level) resources. Strong partnerships between the different stakeholders of environmental stability and natural resources conservation (national government, LGUs, downstream resource users, environmental advocates, rural and upland communities) is vital. The link between rural poverty and natural resources degradation is real, and thus, strategies for resources conservation should firmly address poverty-eradication. Rural development strategies should clearly link the issues of poverty and natural resources at several levels - at the community level, at the watershed level, at the sub-national (regional) and national levels. The natural resource base is a vital element in rural development, and - 51 -  rural development programs should enhance the importance of these resources in the rural economy. * Community-based approaches (CBA) are process-oriented rather than physical targets/outputs- oriented. The objectives of CBA can best be attained if performance indicators for CBA programs are linked to the successful playing-out of the processes, rather than simply to the attainment of physical outputs by fiscal years. Environmental and natural resources are, in most cases, state-owned (as in the case of the Philippines). The state-as-owner invariably lacks the resources to fully fulfill its ownership role, and effectively these resources become open-access in nature. Under this condition, the state should be able, and willing, to delegate its ownership roles, responsibilities, and use-rights to the sectors of the society that are willing, capable, and have interests in the sustainability of these resources. Learnings from field experience: Policy changes are necessary condition for change, but not a sufficient one; another necessary condition is the "capitalization of experiences". It is essential to establish an environment that supports experimentation, learning, correcting, and adjusting. "Project-based" community organizing (CO) is effective in facilitating the implementation of a multi-component community development project like ENR-SECAL, * Existing institutions governing the mode of voluntary cooperation in the community are effective "entry points" of community organizing. Participation in training and expression of strong commitment are not assurance enough that the CA officers will faithfully exercise their respective functions which is necessary to establish the internal strength of the organization. There should be a mechanism for insuring that these officers will actually perform these functions until such time that doing so will already become a sort of habit on their part. Greater farmer commitment to the attainment of community-based project goal is achieved when they are encouraged to voice out their "own expert opinions and field-tested experience". On-the-job training, cross-farm visits and actual demonstrations' were very effective training methodologies for on-site courses; improving work attitudes; and promoting immediate application of technologies. Training is most relevant and responsive when it addresses the real needs of the participants in improving the performance of their roles and functions in relation to the mandate, goals and objectives of their organization or project. Evaluation of Implementing Agency's Performance: The Philippine Government has substantially achieved the sectoral reforms under the adjustment component. These commitments were embodied in the Government Statement of Policy and Environment and Natural Resources Sector Adjustment and a Policy Resolution adopted by the Cabinet Sub-Cluster on Rural Development (Cluster A, Resolution No. 01-90). The major commitments consisted of: proper pricing of natural resources; property rights reforms; establishment of an IPAS; rehabilitation of degraded ecosystems; inducing growth in the rural areas; and, integration of population concerns and social welfare in development planning. These sectoral reforms are now embodied in the framnework for environment and natural resources management of the Philippines. The GOP has drawn from the lessons and experiences from the implementation of the ENR-SECAL investment component, in further developing the various people-oriented forestry programs to the current community-based resource management strategy. - 52 -  There is still a need to improve the coordination and complementation of development programs and projects. ENR-SECAL's institutional strengthening work, particularly in bringing LGUs and organized communities to the forefront in the development planning and implementation process, has provided important lessons. Nonetheless, these lessons need to be translated into firm policies and effective mechanisms that would enhance inter-agency and multi-sectoral coordination at all levels of governance, including coordination between financing organizations. Operational constraints to effective implementation of development programs (e.g., complementation across programs/projects, adequacy and timing of counterpart resources, time-consuming and complex procurement procedures, ambiguity in policy interpretation at different levels of the bureaucracy) need to be effectively addressed. Evaluation of World Bank Performance The congruence of historical developments, both intemationally and domestically, that led to the situation of the country at the time of project appraisal, was adequately considered. The poverty-environment nexus was fully recognized and influenced the design of the ENR-SECAL program. Supervision by Bank staff was adequate and effective; diagnosis of implementation constraints, conducted jointly by Bank and project staff, were timely and provided a forum for frank and fruitful dialogues between the Bank and the GOP. The periodic interaction of Bank staff with the stakeholders/implementers on the ground enriched the perspectives of the latter, particularly in disabusing their minds that development assistance loans incurred by government are, as far as they are concemed, effectively 'grants' or dole-outs. Conversely, Bank staff have been receptive to feedback from the stakeholders, and have positively responded by taking these into consideration in their assessments of project performance. This is a summary of the Main Report, copies of which can be obtained from the implementing agency, DENR, Philippines. Annex 8, Table I is the matrix of reforms committed to by GOP at project design. This was updated in 1998 (and presented in Annex 8, Table 2) after an assessment done by the WB supervision team and DENR. This Project Completion Report does not include the performance of CPPAP which is ongoing implementation. References to CPPAP performance are for information only. Weighted performance consists of the ratio of 8-year physical accomplishment to physical target in each of the implementing activities, weighted by the corresponding ratio of financial resources allocated to each activity viz. the program-wide allocation. For example, the Upland Field School (UFS) concept implemented in Mindanao was found very effective. - 53 -