Malawi - Economic report on environmental policy (Vol. 1 of 2) : Main report

Repol No. 9888-MAI Malawi Economic Report on Environmental Policy ,1) IWvO \VIlU1t'') 'VOILuW 1: k1r1 Rep. r-t March 20, 1992 CoIunLry O)perattios I )i soun Southern Atriaa Depirtmient FOL OFFICIAL USE ONLY U Docum,it of the Wod Rank IThis docoimmnt haf a restricted distribution and may be used by recipients o'ify in the peernmance o4f their official duties. Its conterts may not otherwise be disclosed without World Bank authorization.  E > ' CURRENCY EQUIVALENTS' US$1 MK 2.79 MK 1 US$0.36 WEIGHTS AND MEASURES I Kilogram (kg) = 2.2 Pounds I Metric Ton (mt) = 2,204.6 Pounds 1 Liter (1) 2.116 US Pints I Hectare (ha) 2.471 Acres I Cubic Meter (cm3) = 35.3 Cubic Feet 1 Kilometer (km) = 0.621 Miles GLOSSARY OF ABBREVIATIONS ADD - Agricultural Development Division ADMARC - Agricultural Development and Marketing Corporation AES - Agro-Economic Survey aic - average incremental costs ASA - Annual Survey of Agriculture ASAC - Agricultural Sector Adjustment Credit CEM - Country Economic Memorandum CITES - Convention on Intl. Trade in Endangered Species of Wild Fauna and Flora DEVPOL - Statement of Development Policies DLV - Department of Lands and Valuation DNPW - Department of National Parks and Wildlife DWSF - District Water Supply Fund EES - Estate Extension Service EPA - Environmental Planning Area ehu - erosion hazard unit EIA - Environmental Impact Assessment EP&D - Economic Planning and Development Department EU - Environment Unit, National Research Council FAO - Food and Agricultural Organization IITA - International Institute for Tropical Agriculture LHB - Land Husbandry Branch I/p/d - liters per day mai - main annual increment MBS - Malawi Bureau of Standards MOA - Ministry of Agriculture NCE - National Committee for the Environment PFP - Policy Framework Paper RDP - Rural Development Project SACA - Smallholder Agriculture Credit Administration San-Plat - sanitation platform latrine SLEMSA - Soil Loss Estimation Model for Southern Africa t/ha/yr - tons per hectare per year USAID - United States Agency for International Development USLE - Universal Soil Loss Estimation Model VIP - ventilated improved pit latrine GOVERNMENT OF MALAWI FISCAL YEAR Anril 1 to Mqirch 31  FOR OMCIAL USE ONLY MALAWI ECONOMIC REPORT ON ENVEIONMENTAL POLICY TABLE OF CONTENTS VOLUME I: MAIN REPORT EXECUTIVE SUMMARY ..................................... i-xi I. OVERVIEW: ECONOMICS AND NATURAL RESOURCE USE. 1 A. Introduction. I B. Economic Development and Environmental Sustainability. 2 C. The Econormics of Resource Degradation. 4 D. The Causes of Resource Degradation. 4 H1. LAND DEGRADATION AND SOEL EROSION ..... ............ 10 A. Introduction ...................................... 10 B. Depletion Rate .................................... 12 C. Economic Valuation and Soil Erosion ....... ............... 13 D. Market Failures .................................... 15 E. Policy Failures .................................... 20 F. Action Program .................................... 27 Im. DEFORESTATION . .................................. 32 A. Intr duction ...................................... 32 B. Depletion Rate .................................... 33 C. Economic Valuation . ................................ 36 D. Market and Policy Failures .......... .................. 38 E. Action Program .................................... 42 IV. WATER DEGRADAION ................................ 45 A. Introduction ...................................... 45 B. Extraction and Water Degradation ....... ................. 46 C. Pollution and Water Degradation ........ ................. 47 D. Market and Policy Failures .......... .................. 51 E. Action Program .................................... 53 V. WILDLIFE DEGRADATION .......... ................... 57 A. Introduction ....................................... 57 B. Depletion Rate and Economic Valuation ....... .............. 58 C. Market and Policy Failures . .................... 61 D. Action Program .................... 64 VI. FRAMEWORK FOR SUSTAINABLE RESOURCE MANAGEMENT .... 66 A. Macroeconomic Framework for Investment ...... ............ 66 B. Analytical Framework for Policy Reform ...... .............. 69 C. Regulatory Framnework for Resource Management ..... ......... 70 D. Institutional Framework for Resource Management ..... ......... 75 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.  ,, a , Str -1 I I MAPS IBRD No. 20924R EBRD No. 23304  MALAW ECONOMIC REPOR ON ENVIONIMENTALF POUCYQ EXECUTIVE SUMMARX 1. Malawi, one of the poorest countries in the world, is experiencing significant natural resource degradation. Land degradation and deforestation rates are on the rise and surface water pollution is increasing. This signals inefficient and unsustainable use of the natural resources that are essential for future economic development. In fact, Malawi's impressive macroeconomic performance under the recent structural adjustment program, including a 4.4 percent annual increase in gross domestic product (GDP) in 1988-90, has been achieved, to some extent, by the depletion of soils, forests, and other natural capital. If the national accounts were adjusted to reflect the depreciation of environmental assets, particularly the economic losses arising from soil erosion and deforestation, then GDP would have grown by only 1.9 percent per year over this period. 2. The Government recognizes the central importance of environmental sustainability in economic development, as demonstrated by the discussion of environmental issues in the 1987 Statement of Development Policies and the 1991 Policy Framework Paper. Similarly, the World Bank and other donors have increasingly integrai I specific natural resource issues into investment and adjustment operations in Malawi, not- 'ay the Energy I Project and the Agricultural Sector Adjustment Credit (ASAC). However, there has been, as yet, no systematic review of the overall process of resource degradation and no formulation of a comprehensive national environmental action plan. To this end, this report evaluates the current management of natural resources and maps out a medium-term policy reform and investment program to promote a more efficient and sustainable use of the resource base over time. The report deals with degradation of the natural resources resulting from the present and future projections of population pressures. It does not take into account the pressures arising from the continued presence of 1.0 million refugees. The Government's view is that since the total refugee population is large in relation to the total population of Malawi and since it is not yet clear when they will return to their homes the effects of their presence should be reflected in the report. xtent of Resource Degradation 3. Agricultural lana, which generates over 40 percent of domestic output and 90 percent of export earnings, is the central natural resource in Malawi's economic development strategy. Land resources, however, are deteriorating with the average plot sizes decreasing to les! than 1.0 ha.; soil fertility reducing; and a significant rate of soil erosion. Soil erosion is generating a variety of on-site economic costs, such as reduced soil fertility that affects crop productivity and farm income, and off-site costs, such as increased runoff and siltation that affect water supplies and fisheries. The welfare losses arising from soil erosion are sizable, as agricultural productivity declines alone amount to 1.5-11.0 percent of GDP per year, depending on a number of technical assumptions about erosion, crop yield and discount rates.  - ii 4. Forests play an important role in the economy, providing 90 percent of national energy requirements and a substantial volume of timber production. While Malawi's aggregate forest resource is extensive, there are significant regional imbalances. This has led to a substantial gap between the sustainable supply and actual demand for wood products in local areas, which has been met by the harvesting of standing stock, particularly indigenous woodlands on customary land. It is estimated that 3.6 percent of the total forest cover is lost each year. This level of degradation is extremely high for Sub-Saharan Africa, where only three other countries face deforestation rates in excess of 3 percent. The consumption of forest capital is generating large economic costs, including the loss of a sustainable supply of wood for future generations, increased incidence of soil erosion, the loss of valuable secondary biomass products, and watershed degradation. These losses are estimated to amount to about 1.04.5 percent of GDP per year. 5. Water resources, an essential input for human survival and economic growth, are also experiencing degradation, albeit at a mucl. lower scale than soils and forests. Malawi faces no problem of excessive extraction of wa:er resources, as water utilization currently accounts for less than 1 percent of total availability although, as in forestry, there are regional imbalances with 50% of the country in, relatively, water scarce zones. There is little industrial pollution, given the small manufacturing base and a relatively strong regulatory framework for effluent disposal. However, there has been increasing incidence of water quality deterioration in surface water supplies as a result of soil erosion, agro-chemical runoff, and improper disposa' of human waste. Many principal rivers are carrying suspended solid loads and faecal bacteria counts dangerously above WHO guidelines for safe drinking water. This level of pollution is contributing to the spread of infective and parasitic diseases, particularly diarrhea, cholera, typhoid and bilharzia, which are leading causes of the high morbidity and mortality rates in Malawi. While it is difficult to quantify the economic costs of water degradation, it is clear that polluted water supplies are contributing to the underdevelopment of human resources and low labor productivity. 6. Wildlife resources do not, at present, play a particularly important role in the economy, as a result of low animal densities and limited tourism infrastructure. Nonetheless, wildlife resources are not utilized efficiently, as there is virtually no multiple-use zoning in protected areas. Consequently, there is very little non-consumptive exploitation of wildlands. Thus, the important e. -nomic valuation issue is not the cost of wildlife depletion, but rather the opportunity cost of maintaining a large share of national land area under the current protected system in light of competing high value alternative uses. 7. While some level of resource depletion is inevitable, the magnitude of soil and forest degradation, and to a lesser extent water pollution, is worrisome. From the national point of view, the reduction in production and income from sub-optimal resource use leads to lower aggregate savings and investment levels, which feeds into slower economic growth. From the household point of view, the welfare losses exacerbate the vicious cycle of food insecurity, malnutrition, and rural poverty. For the rural poor, which comprises one-half of the smallholder population, the productivity losses arising from soil and forest degradation reduce the already limited household income.  - iii - B. Causes of Resource Degradation 8. Resource degradation emerges from three interrelated causes. First, ppuja ion gowth leads to demands on natural resources that exceed the regenerative and assimilative capacity of the environment. Malawi, with a population of 8.4 million, and an additional refugee population of 1.0 million, has one of the highest population growth rates, estimated at 3.5 percent per year, and population density rates, estimated at 87 persons per kim2, in Africa. The scale of human demands on the environment arising from this population size clearly exceeds the country's "carrying capacity," as evidenced by the destruction of indigenous woodlands and the unsustainable farming of marginal land. 9. Second, povrty leads the poor to trade off long-term sustainable resource use for short-term consumption of stocks. Poverty is a pervasive problem in Malawi, with an estimated 55 percent of the population living below the poverty line. While there is little data on how different income groups use natural capital in Malawi, it does appear that the nexus of economic and social factors that contribute to low income are essentially the same factors that promote unsustainable resource use. These include low agricultural productivity, limited off- farm employment opportunities, underdeveloped human resources, and limited access to rToductive land. Taken together, these factors have created an incentive framework for the poor to misuse natural capital: since they face low health levels and remain entirely dependent on their e"isting natural resource endowment for income generation, they heavily discount future income and turn to unsustainable production decisions to meet current consumption requirements. 10. Finally, market and policy failures lead to inefficient resource allocation and subsequent degradation. These issues are the principal focus of this report, as the recent World Bank Population Sector Study and Country Economic Memorandum address population and poverty concerns. Market problems account for a significant share of resource depletion in Malawi, as many environmental assets function outside of the market framework and many of the conditions for efficient functioning of markets are missing. The key issues include the following. * Insecure Property Rights. In the forest sector, most indigenous woodlands on customary land and a portion of government forest reserves are exploited as open access resources as a result of ill-defined, insecure, and unenforceable property rights. Wildlife resources, to a lesser extent, also suffer from open access, as there is little enforcement in practice of the government's exclusivity in ownership. In agriculture, tenure insecurity is less of a problem, as the smallholder and estate property rights regime functions relatively efficiently. * Limited Access to Land. In the agricultural sector, the average land holding has reduced to less than 1.0 hectare. This is the lower limit for food security. Continued cultivation for subsistence maize results in spiraling degradation of soil fertility and in increased soil erosion. * Limited Access to Information. In agriculture, while smallholders and estates understand the impact of soil erosion on cultivation, they face limited access to information regarding appropriate soil conservation measures. The smallholder  - iv - extensloni system reaches only about one-third of the i, pulation, emrrphasizes credit distribution over conservation extension, and lacks appropriate land husbandry messages for cultivation of hills and fragmented plots. The extension network for estata. is effective for tree crops but less for tobacco. In forestrv, the small size of the of the Forestry Department extension staff, the lack of integration of silvicultural messages in agricultural extension, and limited emphasis on tree planting in the new Estate Extension Service have constrained afforestation. Finally, in water, there is limited extension on the impact of sanitation disposal on public health, which has led to low adoption rates of improved sanitation technologies. * Labr MU]= Weaimesses. Many smallholders face seasonal labor constraints during the peak labor demand period at the beginning of the growing season, when many of the labor-intensive soil erosion and afforestation investments need to be undertaken. In the estate sector, wage policy and employment practices tend to exploit the land resources on a short-term basis (mainly tobacco growers). * Capital Market Weaknesses. The majority of smallholders face limited access to seasonal credit, as the government's agricultural credit program (which is essentially the only source of rural agricultural finance) has a small capital base, *oes not finance conservation investments, and lends only to farmers clubs which consist of farmers with larger holdings. This constrains the adoption of soil conservation and productivity enhancing measures, such as fertilizer and improved maize varieties, which decrease pressure to farm marginal erosive land. In the estate sector, limited availability of medium-term credit from the commercial banking system is a significant constraint to improved land management. This reflects a small, long-term deposit base that does not provide for an efficient level of term lending, institutional bias against agricultural investments in the smallholder, and administrative credit ceilings that constrain efficient intermediation in agriculture. 1I. While market failures arise from the inherent characteristics of natural resources, policy failures apear to be generated by government intervention in the rules governing market transactions. These distortions undermine the incentive framework for efficient resource allocation ar. may encourage more extensive resource degradation than market forces alone would generate. The key issues in Malawi are as follows: * Inadequate Regulation. The level of penalties for misuse of natural resources is extremely low in Malawi and, consequently, the economic benefits of resource degradation typically exceed the costs of getting caught. In addition, the Government's capacity to enforce penalties is inadequate, reffcting limited budgetary support, conflicting institutional arrangements, and political difficulties. Finally, while Malawi has a very impressive array of environmental laws, there is no general environmental framework legislation that esta}lAishes national conservation principles, and sector legislation requires review and strengthening.  -V. * 1in tign gnui. Effective national environmenal planning has beon hampered by cpcity constraints with the cental environmental agencies responsible for policy formuation, particularly the Environmental Unit of the National Research Council, and the sector ministries responsible for resource monitoring, pjticularly the Land Husbandry Branch, the Department of Lands and Valuation, and the Water Department. * . In forestry, the government administered stumpe rates are only one-quarter of the long-run marginal supply cost. This Is causing wrong signals to be sent regarding the accute scarcity of wood resources. In agriculture, the smallholder producer price structure has been characterized by large shifts in relative prices, which has hindered the development of environmentally sound, long-term inter-cropping systems. In the estate sector, land rents are below the real opportunity cost of land use, which has led to widespread under-utilization of land by tobacco estates. In water, the pricing framework is not recovering the full financial costs, with the result that there is inadequate maintenance of the existing supplies. Current urban tariff levels do not cover long-run marginal supply costs in the two urban water boards, resulting in an economic subsidy. Ihe Government's view, however, is that the provision of clean, potable water for domestic consumption is a social service which it must provide equitably along with other elements of infrastructure. Due to the extremely low level of water zonsumption in rural and peri-urban areas, Government does not believe that the present policy of subsidized water is leading to inefficient consumption or to resource depletion. The Government, therefore, views the issue of water pricing as a fiscal issue rather than one of environmental policy. Consequently, the Government does not intend, at present, to impose tariffs on the rural poor nor to recover the full cost of production from the urban poor. C. Ntural Resource Management Strategy 12. The Governmenc is committed to sound environmental management and is pursuing a number of specific project and poticy initiatives in the areas of soil erosion, deforestation, and water pollution, with signi-icant support from the World Bank, USAID, EEC, UNDP, and other donors. However, Malawi has no comprehensive environmental action plan and, consequently, current efforts are incomplete and ad hoc. Given the central importance of natural resources in Malawi's development efforts, a new strategy is required to reduce current consumption of natural capital and move towards more efficient and sustainable use of the resource base. This will entail a program of policy reform, investment, and institutional srengthening to redress the prcblems of population growth, joverty, and market and policy failures. Ihe key elements of the strategy are reviewed below and summerized in Table 1, Environmental Action Plan. The table also highlights the relative priority, timing, and implementation requi:ements for each measure, indicating where Government has adequate capacity for implementation or requires additional assistance from donors.  VI-- Stengthening the Regulatory Framework. 13. The overall regulatory framnework for natural resource use needs to be strengthened to impose and enforce positive duties to prevent resource degradation. This should take the form of strengthening the institutional establishlment, licensing and approval mechanisms, generic prohibitiort and regulations applicable to resource degrading activities ano technologies. Key measures include: (i) updating of sectoral legislation, particularly the Customary Land (Development) Act, the Forest Act, and the agro-chemical laws; (ii) promulgation of an umbrella framnework law for environmental protection; (iii) granting of regulatory power to the Environmental Unit to ensure sectoral ministry compliance with national environmental policy; (iv) increase in penalty levels, particularly for tree cutting, wildlife poaching, and effluent dumping; (v) stricter enforcement of regulations, particularly commercial harvesting restrictions on indigenous woodlands and conservation covenants in estate land leases; and (vi) strengthening the Environmental Unit at the National Research Council. Reorientation of Public Expenditure Priorities 14. Allocation priorities in the public expenditure program need to be reviewed and adjusted beginning in the 1992/93 budget in light of the economic costs of soil, forest, water and wildlife degradation. This implies increased expenditures for soil conservation, in line with the urgent need to reduce degradation of Malawi's most valuable productive asset; increased expenditures for pollution abatement, expansion of rural water supply systems and improved sanitation disposal, in line with the growing economic and social losses arising from water pollution; maintaining expenditures in forestry, giving emphasis to smallholder and private woodlots as the private sector has been making some progress in redressing the proble"n of deforestation in line with the reduced need for continved investment in government fuelwood plantations; and maintaining expenditures in wildlife, in line with the conclusion that, although, wildlife is not facing significant degradation, it remains under- utilized and should be further developed for the expansion of tourism. 15. Since the efficiency of existing natural resource investments has been severely hampered by persistent underfunding of recurrent expenditures, particularly in the areas of soil conservation, estate covenant compliance, and rural water supply, the balance between capital and recurrent expenditures in the government budget needs to be adjusteJ. Given tho limited tax base, the increased recurrent financing requirement will need to be met through greater reliance on donor financing, non-governmental organizations, and non-traditional financing mechanisms such as debt-for-nature swaps. Development of Sector Investment Programs 16. Existing sector investment programs need to be reviewed and adjusted in light of the analysis of market and policy failures. This implies a reorientation of sector portfolios towards education and extension, in response to the role of limited information in adoption of conservation technologies; financial market deepening, in responlse to the problem of inefficient financial intermediation in rural areas; low capital/high labor inputs, in response to the pervasive income and credit constraints in rural areas; and institutional strengthening, in response to the weak monitoring and enforcement of the regulatory framework. Significant  - vii - donor support will be required to develop and finance the sectoral investment strategies. Priority hIvestmnents for 1992-94 are reviewed below. 17. bfricuiltur. Improving the ability of smalilholders to respond to market incentives for snil conservation will require substantial complementary investment in the following areas: (i) increased access to short-term credit for fertilizer and conservation investments, particula1rly for the poorest households; (ii) development of pilot schemies to encourage community-based conservation; (iii) increased support for land husbandry extension services; (iv) development of low-cost technologies to enable the farmers to mark contour ridges; (v) increased research and extension on conservation programs for marginal lands and steep slopes, particularly agro-forestry systems and grass buffer strips; rvi) support to development of smallholder, smJlIscale, appropriate irrigation schemes for crop diversification and landuse intensification and (vii) institutional strengthening of sector monitoring capacity at the Land Husbandry Branch. In the estate sector, there is need for expansion of land husbandry capabilities in the Estate Extension Service, expansion of medium-term credit facilities for conservation investment, and strengthening of enforcement capacity at the Department of Lands and Valuation. 18. Fgrestry. Given the strong private sector supply response in afforestation, the sectoral investment program should be reoriented away from government fuelwood plantations and towards private sector and smallholder supply arna demand management programs. Priorities include: (i) expansion of the input supply program. in the retail nursery network, including introduction of new multi-purpose species; (ii) increased support for the new forestry extension units; (iii) development of improved inventory data and management programs for indigenous woodlands; (iv) increased dissemination of fuel-efficient tobacco barns and charcoal kilns; and (v) privatXzation of the softwood charcoal pilot program. 19. Water. Increased investment is required to expand the supply of improved water, with emphasis on the following: (i) development of a prioritized investment program, with priority given to rural water supply, groundwater schemes, and low-maintenance; (ii) increased allocation for rural water supply installation and maintenance; (iii) expansion of pilot programs for couimunity-based maintenance of boreholes; (iv) introduction of low-cost pollution abatement technologies in piped water schemes; (v) increased support for improved pit latrine extension in rural areas; (vi) upgrading of the sewerage and sanitation system in Blantyre and Lilongwe; and (vii) institutional strengthening of the Water Quality and Pollution Control Section in the Water Department. 20. Wildlife. Increased investments in infrastructure and development of multiple-use zones in and around the protected areas including (i) expansion of the legalization of exclusive rights to traditional uses of protected areas by local population (fishing, livestock); (ii) development of commercial activities such as safari hunting, crocodile ranching and aquarium fish export; and (iii) development of infrastructure in and to existing National Parks to attract tourism and create off-farm opportunities for rural poor.  - Vill - Adiustment of Prices 21. Some adjusting of administered prices is recommended to reflect the real opportunity cost of resource use to the economy. Ihese reforms can be implemented directly by the Governmnt with minimal dornor involvement. In agriculture, Government should: (i) stengthen irceptives for crop diversification and production systems in the smallholder producer price structure and (ii) raise land rents to the real 1985 level in the estate sector, as agreed undar the ASAC Program. In forestry, price signals need to be strengtened through: (i) phased increases in stumpage rates towards full cest recovery; (ii) introduction of fuelwood auctions for large-scale commercial buyers; and (iii) introduction of differentiated stumpage rates based on transport diffaentials, as has been done with maize and fertilizer. In water, the following pricing measures Pre recommended for action: (i) irtroduction of tariff increases for the two urban water boards; (ii) introduction of a two- or three-tier tariff schedule that reflects basic differences in service and cost as well an increase in the average weighted tariff for the smaller urban supply systems; and (iii) introduction of pilot schemes to expand cost recovery in rural water supplies, including individual metered connections for large users and limited rural water fees. Finally, in wildlife, a two-tiered entrance fee system for national parks should be introduced, with a low rate for Malawians (to encourage environmental appreciation) and a high rate for tourists (to better capture economic rents). 22. Given Malawi's pervasive poverty problem, it is important to recognize that these pricing reforms may lead to an inequitably large social burden on the core poor, who can ill afford additional expenditures for maize, fuel and water. Consequently, it is recommended that the iovernment reviews the scope for increasing targeted transfer programs, involving fertilizer, improved seed, fuelwood, tree seedlings and soil conservation technology for the cor? poor. The Government views this approach as impractical as almost half of the popu!ation is poor and would merit such assistance. The Government, therefore, objects to the pricing reforms proposed by the Bank. 23. Pricing reforms will have no impact on market efficiency unless accompanied by policy measures redressing the problems of property rights. Since market prices do not account for the off-site social costs arising from resource degradation, it is recommended that the Government continue to provide incentive payments for smallholder tree planting and review the scope for introducing a new tax credit for estate soil conservation investment. Similarly, tenurial insecurity needs to be addressed through: (i) introduction of pilot programs for community-based management of indigenous woodlands in areas of high commercial wood demand; (ii) extension of the estate lease period from the current 21 years to 99 years; and (iii) strict enforcement of the new prohibition on customary land conversion for estate expansion.  - ix - TABLE 1: ENVIRONMENTAL ACTION ML19N __-_ SECTOR REFORM RECOMMENDED MEASURE PRIORITYI IMPLEMENTATION AREA TIMING REQUIREMENTS - , ,,,, - m Agricuture Credt Expand smahode acces to sho .term credit for High SACA requires financing from ferilizer and conservation investnt 1992 donors Expnd estate acomn to mediunm-tam credt for Medium Commercial banks requre TA in consrvation invegtments 1993 lan appraiul from donors Exteuion Expand lnd husbandry extension ervices for High LHB and EBS require financing and smallholde and eates 1992 TA from donors Disseminate low-cost technologies to mark contour Medium GOM liai with Christian Services ridges 1992 Committee Rescarch Develop agro-forestry and grss buffer strip systems Medium DAR and ICRAF require financing for marginal lands and steep slopes 1993 and TA from donors Institution Strengthen Land Husbandry Branch and Department High LHB and DLV require TA from Building of Lands and Valuation 1993 donors Pricing Raise estate land rents to real 1985 level High/I992 GOM implementation responsibiiity Review tax credit for estate conservation investment Low/1994 GOM implementation responsibility Property No expansion of titling program on customary land High/1M GOM implementation responsiblity Rights Limit conversion of customary land for enA High1l992 GOM implementation responsibility Extend estate lease period from 21 to 99 yam Low/1994 GOM implementation responsibility Foresty Pricing Increase stumpage rates to full cost recovery High/1992 GOM implementation responsibility Introduce fuielwood auctions for large commercial Medium MFNR requires TA from donors consumers 1993 Maintain subsidy on smaliholder tree seedlings High/1992 GOM implementation responsibility Regulation Enforce restrictions on commercial harvesting of High GOM implementation responsibility indigenous wood 1992 i_____ Increase penalties for illegal tree cutting High/1992 GOM implementation rcsponsibility xtension Expand new forestry extension units Medium MFNR requires financing from 1993 donors Expand input supply progrm in retail nursery Medium MFNR requires financing and TA network 1993 from donon Property Introduce pilot program for cormunity-based Medium MPNR requires financing and TA Rights management of indigenous woodlands 1993 from donon Develop improved inventory dAt of indigenous Medium MFNR requires financing from woodlands 1993 donor Limit future public investment in peri-urban High GOM implementation responsibility I_____ fuelwood plantations 1992 Demand Expand dissemination of fuel-efficient tobacco bams Medium GOM implemenation responaibility Mgmt and charcoal ina 1993k Privatize softwood charcol pilot proj, am Low/1994 GOM implementation reponsibility  - - SECTOR REPORM RECOMMENDED MEASURE PRIORITY/ IMPLEMENTATION AREA TIMING REQUIREMENTS War Pricing Inease LilonSwe and Blantyre water tariffi HighSI992 GOM iunplemeation responsibility Rai averap tuiffs for othe urban water supply High DWSF requires TA from donors By 1993 Introduoe pilot schema to expand cost recovery High Wn requira TA from donors in rural wa supply, including user feo 1993 _ Maintain. Inrewa budget for rural water supply High/1992 WD requires futancing from donors maintence Expend communitybased maintenance of High/lM WD requires financing from donors boreboles __ __ Supply Develop prioritized ten-year let-cost investment High WD requirs TA from donors Expanion progrm for sector 1