China - National Afforestation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 18130 IMPLEMENTATION COMPLETION REPORT CHINA NATIONAL AFFORESTATION PROJECT (CR. 2145-CHA) June 30, 1998 Rural Development and Natural Resources Unit East Asia and Pacific Regional Office 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 Currency Unit: Yuan (Y) 1989 $1 = Y4.72 1990 $1 = Y4.78 1991 $1 = Y5.32 1992 $1 = Y5.42 1993 $1 = Y5.73 1994 $1 = Y8.70 1995 $1 = Y8.40 1996 $1 = Y8.30 1997 $1 = Y8.30 WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AE Afforestation Entity ABC Agricultural Bank of China CAF Chinese Academy of Forestry FDPA Forestry Development in Poor Areas Project FRDPP Forest Resource Development and Protection Project GEF Global Environment Facility ICR Implementation Completion Report MFO Ministry of Forestry (since May 1998, State Forestry Administration) NAP National Afforestation Project PMC Project Management Center (in MFO) SAR Staff Appraisal Report SDR Special Drawing Right SFA State Forestry Administration SFF State Forest Farm Vice President: Jean-Michel Severino Director: Yukon Huang Sector Manager: Geoffrey Fox Project Task Manager: Richard Scobey ICR Task Manager: Victoria Elliott  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT CHINA NATIONAL AFFORESTATION PROJECT (CR. 2145-CHA) CONTENTS Preface ............................................. i Evaluation Summary ............................................. ii PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Background .......................................... 1 B. Objectives .......................................... 1 C. Achievement of Objectives .......................................... 3 D. Major Factors Affecting the Project .......................................... 7 E. Future Operation and Sustainability of the Project ................................. ......... 8 F. Bank Performance .......................................... 11 G. Borrower Performance .......................................... 13 H. Assessment of Outcome .......................................... 14 I. Key Lessons Learned .......................................... 14 PART II: STATISTICAL TABLES Table 1: Summary of Assessment .16 Table 2: Related Bank Loans/Credits .17 Table 3: Project Timetable .18 Table 4 Credit Disbursements: Cumulative Estimated and Actual .18 Table 5: Key Indicators for Project Implementation .19 Table 6: Key Indicators for Project Operation .20 Table 7: Studies Included in Project .20 Table 8a: Project Costs (in US dollars) .......................................... 20 Table 8b: Project Costs (in Chinese Yuan) ............. ............................. 20 Table 8c: Project Financing .......................................... 21 Table 9: Economic Costs and Benefits .......................................... 21 Table 10: Status of Legal Covenants .......................................... 22 Table I1: Compliance with Operational Manual Statements ..................................... 23 Table 12: Bank Resources: Staff Inputs ........................................... 23 Table 13: Bank Resources: Missions .......................................... 24 APPENDICES A. Borrower's Contribution to the ICR .......................................... 25 B. ICR Mission's Aide-Memoire .......................................... 70 Maps: IBRD Maps 22268-22271, 22320 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.  IMPLEMENTATION COMPLETION REPORT CHINA NATIONAL AFFORESTATION PROJECT (CR. 2145-CHA) PREFACE This is the implementation completion report (ICR) for the National Afforestation Project in China, for which Credit 2145-CHA in the amount of SDR 230 million ($300 million equivalent) was approved on May 29, 1990 and made effective on August 20, 1990. The credit was closed on December 6, 1997, one year after the date originally envisaged. The credit was fully disbursed, with the last disbursement on December 6, 1997. The ICR was prepared by Victoria Elliott (Principal Economist, PRMEP), with assistance from Norman Jones, John Tumbull and Tom Brummer (consultants) and Weiguo Zhou (EASRD). It was reviewed by Richard Scobey (Task Manager and China Country Coordinator, EASRD) and Geoffrey Fox (Manager, EASRD). The ICR mission took place in May 1998. The Borrower contributed to the preparation of the ICR by providing a very detailed and thoughtful Completion Report and annexes, which are included in this report, and commenting on the draft ICR.  CHINA NATIONAL AFFORESTATION PROJECT (CR. 2145-CHA) EVALUATION SUMMARY INTRODUCTION 1. Before the National Afforestation Project (NAP), IDA had financed two forestry projects in China. The Forestry Development Project (Cr. 1605-CHA), approved in 1985, supported afforestation on state forest farms in three provinces and related research and extension activities. The Da Xing An Ling Forest Fire Rehabilitation Project (Cr. 1918-C[A) was a 1988 emergency operation to salvage the wood from trees killed in a massive fire, and to introduce improved fire detection and control systems. Several lessons emerged from these projects. First, China's forestry plantations were concentrated in the state sector, utilized traditional silvicultural and management practices that contributed to relatively low productivity levels by international standards, and were not supported by research targeted to operational needs. As a result, the government's large investment in plantation development was not particularly efficient and not redressing China's worsening deficit in wood supply. Second, the Ministry of Forestry's effective implementation of the two projects, particularly Da Xing An Ling, demonstrated its excellent institutional capacity and gave the Bank confidence that the government could plan and implement a large nation-wide afforestation program. PROJECT OBJECTIVES 2. NAP, the largest forestry investment ever funded by the Bank Group, had the following objectives: 1) To expand forest resources by assisting forest farms of various types to establish intensively managed forest stands on 985,000 hectares in 15 (later 16) provinces; 2) To improve the quality of forest plantations through the use of superior planting stock and by introducing and disseminating superior techniques of plantation establishment and intensive management; 3) To strengthen the research and extension programs that support plantation forestry; 4) To initiate an accelerated tree breeding program to increase the productivity of planting stock within 2 to 3 years; and 5) To create the organizational and managerial infrastructure to plan, appraise, finance, implement and evaluate plantation programs on a permanent basis.  3. Assessment of Objectives. The bulk of China's very limited wood supply was being drawn from the unsustainable exploitation of natural forests prior to the project. The government placed justifiably high priority on increasing timber production in a sustainable way, and the project's goal of wood production fit with both the Government and Bank's development strategies. The project design was relatively simple: a limited number of species were to be grown following standard silvicultural models, under about six different institutional arrangements. The market and price risks were managable, since plantations can produce wood of different dimensions according to market conditions. The risks of pests or fire destroying the plantations were minimized by incorporating suitable environmental guidelines into the project design. There was a real risk that forestry entities would not increase productivity enough to ensure good returns, but this was mitigated by the project financing arrangements, which provided an incentive -- heretofore unknown in Chinese forestry -- to maximize per-hectare returns. The research component was pragmatic, focusing only on the project's major tree species, and on the application of research completed but not yet applied. The plan for accelerated production of improved planting material aimed at introducing on a wide scale planting stock that was improved but not fully disseminated. IMPLEMENTATION EXPERIENCE AND RESULTS 4. The project is likely to exceed its physical objectives and goals for technological improvement. The re-estimated ERR is 23.5 percent and FRR is 21.7 percent, slightly above the original SAR estimates. The project also has significant, though difficult to quantify, environmental and institutional benefits. The project is likely to have an enduring impact on commercial forestry, particularly the development of the non-state sector. Overall the project is judged as highly satisfactory. Specific achievements are: - Plantation Establishment. The total area planted was 1,385,000 hectares, well above the SAR target of 985,000 hectares. The 40 per cent increase in the planting area was made possible, by savings arising from the devaluation of the Chinese currency against the SDR and lower unit planting costs. The planning and management systems that MFO put in place for NAP were able to prepare and implement this huge afforestation program smoothly and seamlessly. Project plantations are expected to produce 234 million cubic meters of wood as against 137 million cubic meters at appraisal. Many new silvicultural techniques have been developed, adopted, and disseminated in project and non-project areas. * Institutional. The project established an efficient administrative system within the provincial and county forestry bureaus. Project-financed overseas training and study tours accelerated the process of technology transfer. Thousands of county and township extension workers received field training in NAP silviculture methods. The project also stimulated new institutional linkages among forestry researchers, extension staff, and farmers. It fostered the creation of new non-state commercial forestry enterprises: of the 10,000 afforestation entities that participated in the project, about 40% were structured as new shareholding entities.  - iv - * Environmental. Important environmental benefits will accrue from the project. Land under NAP plantations will lose 60-70 percent less soil due to erosion than they would have if left barren. Project plantations during their lifetimes are expected to fix an estimated 722 million tones of Co2, equivalent to a one-quarter reduction in China's annual emissions. The environmental guidelines for forest plantations developed under the NAP have extended new soil and water conservation and biodiversity protection benefits to other govermnent and non-government forestry investments. * Poverty Reduction. Although no specific poverty alleviation objectives were defined at appraisal, the project has had an important socio-economic impact in remote poor areas. More than one-third of the project counties are classified as below the poverty line, where the project investments have generated employment and production income that will double household income over the medium-term, and the project infrastructure has facilitated economic development. MAJOR FACTORS AFFECTING THE PROJECT 5. The only exogenous factor that significantly affected the project's outcome was the depreciation of the Chinese currency against the SDR. Because of the high share of local costs in the project, this permitted the credit to finance the establishment of an additional 400,000 hectares. Crucial to the project's success was high-level political support. The Minister of Forestry clearly signaled NAP's special status among MFO's hundreds of foreign and domestically financed programs. Political support was also mobilized at the provincial and county levels through the establishment of Leading Groups, which ensure the cooperation of local officials in budgeting counterpart funds and making land available. The main project manager, Qu Shuye, made a unique contribution to the project's success and forged an effective collaborative relationship with the Bank. During the implementation period, China's newly unleashed market forces coexisted with its traditional, tightly managed bureaucratic command structure. For NAP, this provided an attractive incentive structure for wood production combined with reliable implementation and careful management. 6. The Bank's performance was good. It reacted positively and swiftly to the government's initial proposal in early 1988. It resisted an early temptation to widen the project goals from afforestation to broad sector reform, concluding that to do so would make the project too complex for both the Bank and the MFO to implement successfully. This decision to focus squarely on afforestation was a crucial factor for project success. There was unusual continuity in staffing. From identification in 1988 through completion in 1998, NAP had only three task managers, and the same two forestry specialists were continuously involved over the entire period. Since MFO performed its management and supervision functions so effectively, Bank supervision missions were able to focus on technical issues, particularly on accelerating the adoption of improved silvicultural methods. The Bank also capitalized on the preparation of the two follow-on projects to accelerate the dissemination of NAP research findings on planting densities, fertilization and environmental monitoring.  v - 7. The performance of MFO and the provincial and county forestry staff was highly satisfactory at all stages of the project. MFO secured financial and political commitment from the project provinces and delivered fully satisfactory technical preparation documents. All covenants were complied with. The quality of physical implementation, financial management, and overall planning and monitoring were consistently rated as highly satisfactory. The same management team remained in place throughout the life of the project. The Chinese Academy of Forestry seized the opportunities the project provided to demonstrate and operationalize its research in a commercial context. It rapidly created the ten research working groups needed for project purposes, and published hundreds of papers and training materials to disseminate NAP- related research. FUTURE OPERATION AND SUSTAINABILITY 8. The NAP plantations are virtually certain to survive and generate economic and financial returns as forecast. Project offices at the county, provincial and national levels remain in place and are monitoring the tending, thinning, fire and pest prevention, and loan repayment activities of the afforestation entities. Significant loss due to fires-or pests is unlikely, because measures are in place to monitor and control these risks, and project sites are in widely dispersed locations. However, the limited number of poplar and eucalyptus clones does present a marginally elevated disease risk in those species. The silvicultural and management techniques developed in NAP are now being adopted in many other plantation programs, projects and individual plantations. It is impossible to quantify the extent of this, but it is certain that NAP's impact on national wood production will be many times that of the project plantations alone. 9. The project created high-impact linkages among forestry research, extension, and farmers in ten subject areas. Although these relationships have been extended in the follow-on projects, the institutional linkages remain quite uneven, depending more on personal relationships or expedient financing arrangements than on sustainable incentives or structures. More broadly, the forestry research agenda remains somewhat isolated from commercial and environmental needs despite NAP's positive contributions. 10. Continued liberalization and economic growth in China will be favorable to wood markets and project production. In mid-1998, the government introduced a new ban on large- scale commercial harvesting of natural forests. If this is enforced, it should increase the price of plantation-grown wood. On the other hand, substitution of other materials (concrete for railway ties, metal for windows), already occurring, could intensify. This makes it especially important to strengthen research on wood properties and to improve the linkages between plantation establishment and market needs. To ensure that investment funds continue to flow efficiently to timber forestry in China, financing and taxation policies need to be made more attractive to private investors (the maturity periods offered by commercial banks are too short for timber investments, and forest products are highly taxed).  -vi- KEY LESSONS 11. Following are the key lessons of the NAP. * The borrower was in the driver's seat. The project was initiated by the highest level of government and continued to enjoy strong political support throughout implementation. It was therefore somewhat inoculated against the bureaucratic obstacles that afflict other projects. The borrower's priorities were the bedrock of the project, upon which the Bank's goals of technology and institutional modernization were grafted. * Where institutional capacity is robust, an investment project can be treated as a program or sector loan. NAP's massive geographic scope and widely dispersed project sites meant that the Bank could never directly appraise or supervise a large sample of the physical works. MFO's excellent institutional capacity for supervision and management facilitated preparation ancf implementation, and allowed the Bank to focus on the key issue of technology transfer. * A project with highly focused investment objectives can nonetheless generate a broad sectoral impact. Although NAP's objectives were few and concrete, it served as a platform for the Bank and Chinese authorities to open up a dialogue on a wide range of forestry issues, including forest resource planning, natural forest management, wood products marketing and pricing, environmental management and poverty alleviation in remote areas. The dialogue initiated under NAP led to the development of two follow-on projects with significant sectoral policy content. NAP's simplicity of objectives, far from narrowing the sector dialogue, actually widened it by establishing a successful relationship. * Further sectoral policy reform is needed to complete the transition to a market economy. Despite China's rapid liberalization, decision-making and planning in the forestry sector still do not fully reflect market principles. The people managing the plantations need better tools -- and the freedom to use them -- for assessing market conditions to guide their harvesting and replanting decisions. * The project achieved a high impact from research that had already been done, but did not address the broader constraints affecting future research. Although the original objectives of the research component were appropriate, the Bank could have leveraged the component's impact more effectively during supervision. The linkage of financial control with technical standards was critical to project success. If on-lending and disbursement had been transferred to a financial intermediary, as originally envisioned, technology transfer and development impact would have been significantly limited.  CHINA NATIONAL AFFORESTATION PROJECT (CR. 2145-CHA) PART 1: PROJECT IMPLEMENTATION ASSESSMENT A. BACKGROUND 1. Before the National Afforesation Project (NAP), IDA had supported two projects with the Ministry of Forestry (MFO). The Forestry Development Project (Cr. 1605-CHA) had been approved in 1985, when the Bank/China relationship was at an early stage. It financed afforestation and stand improvement on State Forest Farms in three provinces; construction of roads and wood processing facilities; and equipment and technical assistance to forest research and extension centers. By the time the NAP was proposed, the Bank and the MFO had come to realize that China's prevailing plantation forestry methods, including old-fashioned silvicultural practices and reliance on State Forest Farms, could never fill China's worsening deficit in wood products. In addition, it was clear that forestry research priorities were not being systematically based on the potential for economic gains, and that economic analysis played a very limited role in forestry planning. 2. The Da Xing An Ling Forest Fire Rehabilitation Project (Cr. 1918-CHA) was an emergency operation in 1988 to salvage the wood from trees killed in a massive fire, and to introduce improved fire detection and control systems. The salvage effort generated both economic and financial rates of return of over 200 percent. Experience in preparing this project strengthened the Bank's confidence in the MFO's implementation capacities, and helped MFO to appreciate the value of international experience and expertise. B. OBJECTIVES Statement of Objectives 3. The main objectives of the project, as stated in the SAR of May 1990, were: 1) To expand forest resources by assisting forest farms of various types to establish intensively managed forest stands on 985,000 hectares in 15 provinces; 2) To improve the quality of forest plantations through the use of superior planting stock and by introducing and disseminating superior techniques of plantation establishment and intensive management. 3) To strengthen the research and extension programs that support plantation forestry. 4) To initiate an accelerated tree breeding program to increase the productivity of planting stock within 2 to 3 years.  -2 - 5) To create the organizational and managerial infrastructure to plan, appraise, finance, implement and evaluate plantation programs on a permanent basis. 4. These objectives remained unchanged during implementation. A sixteenth province was added shortly after project approval. Improving the environmental management of plantations emerged as an additional, separate goal during the early stages of implementation. Evaluation of the Objectives i) Consistency with Bank and Government Priorities 5. Wood markets had already been liberalized and there was excess demand for all types of wood for construction, mine pit props and consumer products. The bulk of China's very inadequate wood supply was being drawn from the unsustainable exploitation of natural forests. The government placed justifiably high priority on increasing timber production, in a sustainable way, to keep pace with economic growth. The project's overall goal of wood production addressed this priority. 6. For the Bank, the project offered an opportunity to invest in a program with national economic impact, and to operate on a long-desired sector-wide level instead of the province-by- province approach that the government consigned to the Bank in agriculture. ii) Plantation Program 7. The plantation program's huge scale initially seemed awesome and risky. However, the Ministry of Forestry had a track record of success in the Da Xing An Ling project. The forestry administration at all levels was well established and accustomed to implementing large scale programs. Indeed, since 1985 it had established 4 million hectares of "fast-growing high- yielding" plantations, the largest production forest program in the world. The project design was relatively simple: a limited number of species were to be grown following standard silvicultural models, under about six different institutional arrangements. 8. The market and price risks were managable, because wood is multi-purpose, and plantations can be managed so as to produce products of different dimensions according to market conditions. The risks of pests or fire destroying the plantations were minimized by imposing suitable guidelines. 9. Although the SAR foresaw "no major risks", there was, in retrospect, a risk that forestry entities -- accustomed to command-style, low-productivity afforestation programs --- would not, or could not, increase productivity enough to ensure good financial and economic returns. This risk, as it turned out, was mitigated by the financing arrangements. First, the GOC's onlending terms required the township or forest farm level implementing agencies to assume most of the repayment obligation for the IDA credit. Second, the entities' share of financing was provided in the form of labor and land, against a share of the final harvest. These two features provided an incentive -- heretofore unknown in Chinese forestry -- to maximize per-hectare returns.  -3 - iii) Technology Improvement 10. Objectives 2, 3 and 4, which relate to improved technology, were based on the preparation missions' observations that China's prevailing "fast-growing, high-yielding" plantation program was delivering productivity far below international standards. The project had the pragmatic goal of ensuring that NAP plantations immediately adopted modem techniques that would deliver high returns. The research component focused only on the project's major tree species, and on the application of research completed but not yet applied due to the absence of effective linkages between research and extension. The plan for accelerated production of improved planting material aimed at introducing -- on a wide scale -- planting stock that was improved but not fully tested (instead of waiting the ten years or more necessary to develop new genetic material). 11. NAP did not tackle the broad range of scientific and institutional issues facing China's forestry research and extension programs. Could it have had more far-reaching objectives? Chinese forestry research is a massive endeavor, involving dozens of institutes and universities under national, provincial and local jurisdiction. To rationalize and modernize this program would take a concerted effort lasting decades, would not necessarily have borrower support and would have conflicted with the project's production goals. It was wise, therefore, to have limited NAP's goals for research. iv) Institutional Goals 12. The project had secondary institutional goals aimed both at the structure of the industry and at the MFO itself. On the structural side, it aimed to foster the establishment of commercially oriented, locally-run, timber enterprises. State Forest Farms, which then dominated plantation forestry, offered little potential for increased production or income gains for poor farmers. Although the MFO was initially reluctant to move away from the low-risk and familiar world of State Forest Farms, during preparation it was agreed that only 25 per cent of the project support would go to SFFs. The project's financing and monitoring mechanisms were designed to encourage high-productivity forestry in afforestation entities having a more arms'- length relationship with the government. 13. The government forestry administraton already functioned well at all levels. The project aimed mainly to introduce new tools for planning, assessing and monitoring plantation activities. C. ACHIEVEMENT OF OBJECTIVES Plantation Establishment 14. The physical objectives of the project were significantly exceeded. The total area planted was 1,385,000 hectares. This is equivalent to the total forested area of Kenya, or to the annual forest loss in Indonesia -- a remarkable accomplishment in only four years. The financing of the 40 per cent increase in the planting area was made possible by devaluation of the Chinese currency against the SDR. The planning and management systems that MFO had put in  -4 - place for NAP were able to prepare and implement this additional program smoothly and seamlessly. 15. The survival rates are over 90 per cent. Timber yields are projected to exceed by 10 percent to 20 percent the predicted yields at appraisal, which in turn were estimated to exceed normal plantation growth by at least 10 percent. Overall, the project plantations are expected to produce 234 million cubic meters of wood as against 137 million cubic meters at appraisal. Of the added 97 million cubic meters, about 57 million is attributable to the increased planting area, and 40 million ha to increased per-hectare productivity. Technology Transfer 16. Many new techniques were developed, adopted and promulgated in the selection, establishment and maintenance of NAP plantations. The table below summarizes the major technical differences between the "fast-growing high-yielding" program and the NAP, as well as their impact on production, returns and environmental protection. 17. Project afforestation entities were required to use these new techniques as a condition of receiving project funds to reimburse their costs. Substandard stands either had to be replanted or were not reimbursed. Table 1: Technology Transfer in NAP Old FGHY program |NAP as appraised |Impact Planning Little use of cost-benefit or rate Investment based on species Financed only highest return of return analysis rates of return species and sites Incomplete matching of species Species matched to site Higher productivity and sites conditions Planting Material Low use of superior seed Source-identified seeds used Permits species/site wherever possible matching Minimal use of clonal material 6% of Chinese Fir, 100% of Higher value through poplar, 26% of eucalyptus selection of desired plant planted with clonal material characteristics Seedling quality low and 98% of seedlings used were Higher volume and quality unregulated Class 1 of wood; fewer seedlings per ha. Silviculture High planting densities Reduced planting densities Lower estab. costs, higher (up to 4000 stems/ha) (below 3000 stems/ha) wood production per hectare  - 5 - Limited fertilization Scientifically based fertilizer Lower establishment costs, use less runoff Intensive soil preparation Little or no site clearing; Lower establishment costs, and/or large planting holes smaller planting holes less soil erosion Planting up and down slope Planting across contour Less soil erosion Management and Finance Establishment financed by up- Financed by on-lending of IDA Incentive to maximize front grants from different credit and "sweat equity" returns levels of government Automatic disbursement of Disbursement of credit funds All plantations meet quality grants; ineffective quality only after quality checked standards monitoring Institutional 18. The project established an efficient administrative system within the provincial and county forestry bureaus. The links up and down the project management chain and across local government entities (through the Leading Groups) have worked well. The PMC has introduced constructive changes in the MFO's (formerly rather rigid) "corporate culture", including intensified vertical and horizontal communications among administrative levels, franker discussions, accountability for results, and delegation to younger staff. The project financed overseas training and study tours for about 80 individuals in forestry bureaus at all levels. Their exposure to modern techniques has accelerated the process of technology transfer. Further opening up of China's forestry sector was stimulated by language training for staff and the publication of a specialized Chinese/English forestry glossary. 19. At the local level, thousand of country and township extension workers received field training in NAP silviculture methods. These workers are now disseminating these methods, illustrated by NAP demonstration plantations, to all local farmers establishing timber stands. The project also stimulated new institutional linkages between forestry researchers, extension staff and plantation operators. The project supplied land for research trials and demonstrations, in turn generating direct contacts among formerly unconnected people. 20. NAP succeeded in fostering the development and creativity of new commercial forestry enterprises: of the 10,000 afforestation entities that participated in the project, about 40% were structured as new shareholding entities. Environmental 21. Important environrental benefits will accrue from both the project plantations themselves and the wider application of environmental guidelines developed in the project. The borrower estimates that soils under NAP plantations will retain about 10-15 per cent more soil  -6- moisture, and lose 60-70 percent less soil due to erosion, than they would have if left barren. Moreover, the project plantations during their lifetimes would fix an estimated 722 million tons of C02, equivalent to a one-quarter reduction in China's annual C02 emissions. The environmental guidelines for forest plantations developed under the NAP will extend the soil and water conservation and biodiversity protection benefits to other government and private financed plantations. Poverty Reduction 22. Although no specific poverty alleviation objectives were defined at appraisal, NAP was expected to disproportionately improve incomes in poorer communities, since forest plantations are typically in remote hilly areas. One third of the 316 NAP participating counties with NAP plantations are classified as "poverty" counties under national or provincial guidelines. 23. At completion, it appears that the project has helped reduce poverty in several ways. First, it created more than one million person-years of paid employment for plantation establishment and initial tending. Additional jobs will be created when plantations are thinned and harvested. Project wages have tended to lag behind prevailing urban wage levels, so these jobs are typically done by men and women with the fewest other income opportunities. 24. Second, individual farmers and local communities will earn a share of the revenue from thinning and final harvest. Some 72 per cent of project plantations are being implemented by collective, township or county shareholding entities (as distinct from State Forest Farms). Farmers will receive between 20 and 80 per cent of the after-tax wood revenues, depending on whether the plantations are on individual or collective land. The townships' shares would typically be used for local infrastructure improvements. As for the 22 per cent of the project accounted for by State Forest Farms, more than half of this amount will be jointly developed with local farmers from whom the SFF leases land. 25. The farmers will typically get 30 per cent of the pre-tax revenues. Although the farmers' shares appear modest, it must be remembered that the hilly land used for plantations has a low opportunity cost, and also that the farmers' labor is directly compensated by wages. 26. The borrower's contribution to the ICR includes an illustrative snapshot of the NAP's benefits to a typical country. 27. Because of timber plantations' long rotation period, an afforestation entity needs another source of income to survive and to finance the establishment costs during the growing period. Virtually all NAP participants have other plantations and/or small agro-processing or aquaculture activities that generate income and permit them to repay the loan. The most destitute families or townships, therefore, cannot participate in timber investments. The Bank's follow-on project, Forestry Development in Poor Areas (approved in May 1998), aims at developing fruit, nut and other non-timber trees that provide early cash flow and are therefore more suited to poor areas.  -7- Rates of Return and NPV 28. The rates of return and NPV at appraisal and completion are summarized in the following table and given in more detail in Annex Table 9. Table 2: Rates of Return and NPV Economic Rate of Return j Financial Rate of Return NPV Appraisal I Completion Appraisal Completion I Appraisal Completion 22.8 % 23.5 % 1 19.3 % 21.7 % 3.6 billion Y 9.1 billion Y 29. The ERRs and FRRs at completion are slighly higher than at appraisal, reflecting the area and productivity increases. Overall, there are differences among species. Returns to Chinese fir and pine species are estimated about 3.5 percentage points higher than at appraisal because the improved planting material program has been implemented more quickly, and has generated better growth improvements, than anticipated. Estimated returns to eucalyptus are lower than expected at appraisal because different varieties were used. The large increase in the estimated NPV is attributable mainly to the increase in planted area, and secondarily to the increase in productivity and the decrease in establishment costs. 30. The estimated returns are sensitive to assumptions about the stands' age at final harvest. Large dimension timber is always more valuable per cubic meter than small dimension wood, but the size of the premium varies over time depending on wood utilization patterns in the marketplace. To optimize returns from a stand, harvesting time should be determined by considering physical growth curves in combination with wood prices and replanting options. The NAP local officials and afforestation entities need, but do not yet have, simple methods to make these calculations. D. MAJOR FACTORS AFFECTING THE PROJECT Exogenous 31. The only exogenous factor that significantly affected the project's outcome was the depreciation of the Chinese currency against the SDR. Because of the high share of local costs in the project, this permitted the credit to finance the establishment of an additional 400,000 hectares. 32. World and domestic prices of forest products declined slightly in real terms during the project period. Wages increased in real terms, but this cost increase was more than offset by reduced use of labor and other inputs for site preparation, planting and fertilizing. Factors within Government Control 33. Crucial to the project's success was consistent, high-level political support. The State Council had endorsed the proposal even before it was put to the Bank. The Minister of Forestry  - 8 - demonstrated the project's importance, by, for example, personally chairing the Project Leading Group, and meeting with Bank missions. Such Ministerial attention is unusual in China and clearly signaled NAP's special status among MFO's hundreds of foreign and domestically financed programs. 34. Political support was also mobilized at the provincial and county levels through the establishment of Leading Groups. These groups (akin to steering committees or advisory boards) involve local officials, local branches of Ministry of Finance and the Agricultural Bank of China. They serve as a mechanism to ensure the cooperation of local officials in budgeting counterpart funds, making land available, etc. and proved to be instrumental in ensuring the adequacy of counterpart funds. 35. The Minister's selection of an outstanding project manager (Qu Shuye, who had been the Director of the Silviculture Department) turned out to be a major contributor to the project's success. He combined a broad vision of a modernized forestry sector with meticulous monitoring of plantation standards and a knack for recruiting able staff. 36. During the implementation period, China's newly unleashed market forces coexisted with its traditional, tightly managed bureaucratic command structure. For NAP, this provided an attractive incentive structure for wood production combined with reliable implementation of decisions and directives. At the same time, prevailing forestry practices, deeply rooted in the command economy, proved slow to change. (For example, planting sites and holes were prepared with excessive care and cost, because plantation managers were rewarded and penalized on the basis of total plant survival, not cost-effectiveness.) There remains a reliance on directives in preference to market signals. Project Elements 37. The project , like most in China's agriculture sector financed little foreign technical assistance. Instead, Bank preparation and supervision missions were expected to -- and did -- include world class forestry experts, whom the Chinese used effectively as consultants to their program. The International Advisory Panel on Research was the only significant foreign technical assistance. The recommendations of its two missions were not effectively incorporated into the project research program, or pursued by Bank supervision missions. 38. Two project requirements -- an annual survey of wood prices and the preparation of comprehensive forest resource management plans for all the participating province -- did not have a direct impact on the implementation of NAP or the design of follow-on projects, but they did help to deepen the MFO's capacities and experience in these relatively unfamiliar areas. E. FUTURE OPERATION AND SUSTAINABILITY OF THE PROJECT 39. Afforestation projects are unusual because significant returns don't accrue until at least seven, and as much as twenty, years after the investment is made. Longer term systemic  - 9 - changes, likewise, bear fruit only gradually, as new generations of forests are established. In NAP, therefore, sustainability has two dimensions: * the future of the project plantations themselves, to be harvested between 1997 and 2014, depending on species, and * the adoption of the technical, institutional and intellectual improvements generated by the project in other plantation activities. Project Plantations 40. The NAP plantations are virtually certain to survive and generate economic and financial returns as forecast. Project offices at the county, provincial and national levels remain in place and are monitoring the tending, thinning, fire and pest prevention and loan repayment activities of the afforestation entities. Leading Groups also remain in place and will in particular ensure repayment of the IDA credit and government financing. 41. Significant loss due to fires or pests is unlikely, because measures are in place to monitor and control these risks, and because project sites are in widely dispersed locations. However, the limited number of poplar and eucalyptus clones in use does present a marginally elevated disease risk in those species. 42. Some changes in stand management between now and final harvest could help to maximize total returns. In particular: * Thinning to lower densities, especially of the earliest-planted stands, would produce higher total wood production by reducing inter-tree competition. * Improved tree growth rates should lead to a corresponding decrease in planned rotation age. * The timing of final harvest should -- rather than remaining as prescribed in the afforestation models -- be a management decision based on actual growth and wood properties, market prices, interest rates and opportunity costs of the land. The PMC should develop some simple models incorporating these variables to help provincial and county foresters make these decisions. Afforestation Program Generally i) Technical Aspects 43. The silvicultural and management techniques developed in NAP are now being adopted in many other plantation programs, projects and individual plantations. It is impossible to quantify the extent of this, but it is certain that NAP's impact on national wood production will  - 10- be many times that of the project plantations alone. Following are examples of national and local programs that have adopted NAP technologies: Table 3: Adopting of NAP Technologies Program Location Chinese National Plantation Technical Guidelines, 1997 National Forest Resource Development and Production Project 725,000 ha. in 17 provinces (IDA) l FDPA (IDA/IBRD) 315,000 ha. in 12 provinces Community Forestry Project (New Zealand sponsored) 2,500 ha. in Fujian Three Gorges Afforestation Project (MFO) 110 State Forest Farms in Fujian Province 14,600 ha. Adoption of NAP-style local financing for plantations Guizhou province ii) Institutional Aspects 44. The project successfully challenged the MFO and its provincial and country level offices to fortify their already solid implementation capabilities. 45. The project created high-impact linkages between forestry research, extension and commercial plantations in 10 subject areas. Although these relationships have been extended in the FRDPP, they may not all survive when FRDPP funding ends, nor is there evidence that they have been adopted by research groups in other areas. The institutional linkages remain quite uneven, depending more on personal relationships or expedient financing arrangements than on in-built incentives or structures. More broadly, the forestry research agenda remains fragmented and somewhat isolated from commercial and environmental needs despite NAP's positive contributions. iii) Markets and Policy Environment 46. Continued liberalization and economic growth in China will be favorable to wood markets. In mid 1998, the Chinese government began to phase in a ban on large-scale commercial harvesting of natural forests. If this is fully implemented and enforced, it should increase the price of plantation-grown wood. On the other hand, substitution of other materials (concrete for railway ties, metal for windows), already occurring, could intensify. This makes it especially important to strengthen research on wood properties and to improve the linkages between plantation establishment and market needs. 47. Financial intermediation poses a challenge, as it does throughout the economy. To ensure that investment funds continue to flow to timber forestry in China, financing and taxation regimes need to be made more attractive to investors. Available government and ABC financing carries low interest rates, but maturities that are too short for most timber crops. Moreover,  forest products are highly taxed: taxes and fees typically take about 30 percent of gross revenues. A policy paper and action plan to improve the incentive and financing structure for investment in plantation forestry would be a useful contribution if it could be informed by NAP experience and analytical methods, and be linked to the Bank Group's ongoing sector work on rural and micro-credit issues. Follow-on Projects 48. NAP has been followed directly by two Bank Group-supported national forestry projects. The Forest Resource Development and Protection Project (FRDPP) was approved in 1994 and is being implemented satisfactorily in its seventeen provinces. It replicates and builds on NAP's technology improvements for commercial plantations, but also broadens out into the establishment of watershed protection forests and strengthening of sector-wide planning and management capacities. 49. The more recent Forest Development in Poor Areas Project (FDPA), approved in May 1998, moves away from commercial timber plantations, which are best implemented in areas with well established institutions and reasonable growing conditions, toward forestry activities suited to poor households in remote mountainous areas. It relies on the proven capacities of the State Forestry Agency (formerly the MFO) and its local units, but unlike NAP and FRDPP, its design drew extensively on beneficiary participation. F. BANK PERFORMANCE 50. The Bank's performance was characterized by responsiveness, continuity and a consistent focus on technical improvement. Responsiveness: 51. The Bank reacted positively to the government's initial proposal in early 1988, and sent an identification mission in September 1988. The project offered an opportunity to work on a national, sector-wide scale, unlike the single-province, multi-activity agricultural development projects that the Chinese authorities preferred the Bank to finance. 52. Initially, some in the Bank proposed to widen the project goals from afforestation to broad sector reform. It was decided, however, that to do so would lengthen the preparation period; not respond to the borrower's priorities, and make the project too complex for both the Bank and the MFO to implement successfully. This decision to focus squarely on afforestation and its supporting activities was a crucial factor for project success. 53. After identification, the Bank had planned to engage a firm of forestry consultants to prepare the project. But the MFO insisted on taking full responsibility for preparation. They agreed to use consultants only for particular aspects -- the economic and financial analysis and on-lending arrangements -- where their own expertise was inadequate. MFO then submitted a "model" preparation document for one province. After reviewing it, the Bank agreed to the  - 12 - MFO's proposal. This somewhat risky decision proved to be sound, because it stimulated the creation of project teams in every county and "ownership" of the project throughout implementation. The Bank did engage consultants to review and refine the MFO work after it was completed; this resulted in a few modifications to project design. Continuity 54. From identification in 1988 through completion in 1998, NAP had only three task managers. In addition, the same two forestry specialists each participated in preparation, appraisal and most supervision missions. This unusual continuity in the Bank's project team allowed missions to work efficiently despite the project's geographic scale; fostered personal relationships (which are important in China), and permitted targeted use of expert consultants. The borrower has particularly praised the continuous supervision of the accelerated planting material development program by its designer, Norman Jones, after whom it is named. Consistency of Focus 55. During implementation, the MFO's management systems ensured that plantation establishment (and the concomitant monitoring, procurement, reporting and financial activities) proceeded smoothly. This permitted Bank supervision to focus consistently on technical issues. During project design some compromises had to be made because the borrower had resisted introducing a number of the technologies known to be effective elsewhere in the world. During supervisions it was possible to make adjustments, to seize on opportunities for faster modernization. 56. Major technical issues emphasized by successive missions included: . insistence on use of selected planting material * better nursery practices to improve the quality of seedlings * increasing the number of eucalyptus and poplar clones in use * proper staff training in pesticide use * planting on the contour and other environmental measures * decreasing planting densities 57. The Bank also capitalized on the preparation of the follow-on FRDPP project, to accelerate the dissemination of NAP research findings on planting densities, fertilization and environmental monitoring. 58. As for the research and extension component (which accounted for only 2 per cent of total project costs) Bank supervision missions ensured that it was being implemented as appraised, but did not attempt to use it as a vehicle for a broader dialogue about the modernization of forestry research. It also did not effectively pursue implementation of the two technical reports of the International Advisory Panel on research issues.  - 13 - G. BORROWER PERFORMANCE Ministry of Forestry and Chinese Academy of Forestry 59. The performance of the staff at PMC and the provincial, prefecture, muncipal, county, and township forestry offices was highly satisfactory at all stages of the project. At the preparation and appraisal stage, PMC effectively secured financial and political commitment from the project provinces. PMC and the provinces delivered fully satisfactory technical preparation documents that appropriately incorporated the recommendations of Bank missions and the preparation consultants. 60. During implementation, all covenants were complied with. The quality of physical implementation, financial management and overall planning and adaptation was consistently rated as highly satisfactory -- an impressive achievement considering that more than 1,000 project staff were involved in 16 provinces. The same management team remained in place throughout the life of the project in PMC and most of the provinces. They developed smooth procedures for monitoring the work of the project afforestation entities. The project management offices facilitated Bank supervision by arranging field visits to remote areas and providing data and timely reports in English. Again, much of this credit is due to the dynamic project manager, Qu Shuye, and his two successors. 61. The Chinese Academy of Forestry seized the opportunities the project provided to demonstrate and operationalize its research in a commercial context. It rapidly created the 10 research working groups needed for project purposes and participated in the establishment of demonstration and pilot plantations. It has published hundreds of pamphlets, papers and monographs to disseminate NAP-related research, which will make an important contribution to raising silvicultural productivity throughout China. Other Agencies 62. At the time of project approval, the MFO entered into an agreement with the Agricultural Bank of China (ABC). ABC was to monitor the progress of afforestation entities' work, disburse project funds and ensure that the beneficiaries maintain reliable accounts, in consideration of a service fee of 0.3 percent. During the project's first year, though, it became clear that the ABC local branches could not do this work effectively, and MFO decided that the afforestation entities would simply maintain ordinary accounts in ABC branches. Technical advice and oversight of the accounts was instead provided by the Provincial and county level offices of the State Audit Administration, which provided a professional and independent service during implementation. 63. MFO engaged the China Instruments Import/Export Company to handle the international procurement for the project. Despite some initial problems following the Bank's standard bidding documents, its overall performance was satisfactory and it has subsequently been prequalified to handle procurement under the FDPA.  - 14- H. ASSESSMENT OF OUTCOME 64. The project is likely to exceed its physical objectives and meet or exceed its goals for technological improvement, as described above. Its re-estimated economic and financial rates of return exceed those estimated at appraisal; it also has large, though difficult to quantify, environmental and institutional benefits. The project is likely to have an enduring impact on the development of commercial forestry, as described above. Overall the project is judged as highly satisfactory. I. KEY LESSONS LEARNED 65. The borrower was in the driver's seat. The project was initiated by the highest level of government and continued to enjoy strong political support throughout implementation. It was therefore somewhat inoculated against the bureaucratic obstacles that afflict some other projects. Moreover, because marketing and pricing in the forest sector had been substantially liberalized at the time of preparation, the Bank did not need to use the project to advance sectoral reform. The borrower's priorities were the bedrock of the project, upon which the Bank's goals of technology and institutional modernization were built. 65. Where institutional capacity is robust, an investment project can be treated as a program or sector loan. NAP's massive geographic scope and widely dispersed project sites meant that the Bank could never directly supervise a large sample of the physical works. At appraisal and in early supervisions, it became clear that project management had created reliable monitoring and control systems. This good institutional capacity pennitted the project not only to be implemented successfully, but also to be expanded by 40 percent in mid-implementation. 67. A project with highly focused objectives can nonetheless generate a broad sector relationship. Although NAP's objectives were few and concrete, it served as a platform for the Bank and Chinese authorities to open up a dialogue on a wide range of forestry issues, including forest resource planning, natural forest management, wood products marketing and pricing, environmental management and poverty alleviation in remote areas. This dialogue has resulted in two follow-on projects. NAP's simplicity of objectives, far from narrowing the sector dialogue, actually widened it by establishing a successful relationship. 68. Despite China's rapid liberalization, decision-making and planning in the forestry sector still do not fully reflect market principles. The people managing the plantations need better tools -- and the freedom to use them -- for assessing market conditions to guide their harvesting and replanting decisions. This could increase the project's financial returns and thereby create more incentive for future financing in the sector. 69. The project achieved a high impact from research that had already been done, but did not address the broader constraints affecting future research. Although the original objectives of the research component were appropriate, the Bank could have leveraged the component's impact more effectively during supervision (as was done in the rest of the project). To do so, the  - 15 - Bank could have perhaps spent resources on distinguished research consultants to help implement the recommendations of the project-financed International Advisory Panel. 70. The linkage offinancial control with technical standards was critical to project-success. If control of on-lending and disbursement had been in the hands of a purely financial institution, such as ABC, the technology transfer would have been significantly limited.  -16- PART II: STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS A. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Environmental objectives X Public sector management X Private sector development X B. Project Sustainability Likely Unlikely Uncertain x C. Bank Performance Highly Satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X D. Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation X Implementation X Covenant compliance X Operation (if applicable) X E. Assessment of Outcome Highly Satisfactory Unsatisfactory Highly Satisfactory Unsatisfactory x  - 17- TABLE 2: RELATED BANK LOANS/CREDITS Year of Loan/Credit Title Purpose Approval Status 1. Forestry Development Project (Cr. Support establishment of 118,000 FY85 Coleted 1605-CHA) hectares of new plantations, tending omple of 166,000 hectares of existing plantations in three provinces and plantation infrastructure, provincial forestry research institutes, county extension stations and several wood processing factories. 2. Daxinganling Forest Fire Salvage burned timber and establish a FY88 Completed Rehabilitation Project (Cr. 1918- comprehensive fire protection system CHA) in Northeast China 3. Forest Resource Development and Support dissemination of the NAP FY94 Under Protection Project (Cr. 2623-CHA) plantation program to another Implementation 620,000 hectares in 16 provinces and establishment of improved models for watershed management on 280,000 hectares of protection forests. 4. Nature Reserves Management Promote improved management of FY95 Under Project (GEF) biodiversity resources and natural Inplementation forests. 5. Changing Institutional Roles in the Strengthen institutional framework FY96 Completed Forestry Sector (IDF) for private sector investment, SFA's regulatory role, and public sector management of environmental forests 6. Forestry Development in Poor Develop forest resources in poor FY98 Board approved on Areas project areas of central and western China on a sustainable and participatory basis May 21, 1998 to support poverty reduction, forestry development and improved environmental management.  - 18 - TABLE 3: PROJECT TIMETABLE Steps in project cycle Date planned Date actual Identification na 10/02/88 Preparation 03/89 03/19/89 Preappraisal 10/89 10/29/89 Appraisal 02/90 02/15/90 Negotiations 04/23/90 05/04/90 Board presentation 06/05/90 05/29/90 Signing 06/90 06/20/90 Effectiveness 08/90 09/24/90 Project completion 12/31/96 12/06/97 Loan closing 12/31/97 12/06/97 TABLE 4: LOAN/CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL ($ million) FY91 FY92 FY93 FY94 FY95 FY96 FY97 Appraisal estimate 40.0 100.0 175.0 235.0 275.0 290.0 300.0 Actual/a 43.4 91.7 136.1 208.3 261.4 311.1 328.4 Actual as % of adjusted estimate 108.5 91.7 77.8 88.6 95.1 107.3 109.5 Date of final disbursement December 6, 1997 /a Higher actual disbursement in US dollar terms than appraisal estimate is due to depreciation of US dollar against SDR.  - 19- TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Estimated Estimated Key Implementation Indicators in SAR at Appraisal at ICR (------ - O ha.---- ) Plantation Area 985.0 1,385.0 Chinese Fir 341.8 538.4 Masson Pine 85.9 164.8 Slash Pine 71.8 214.3 Larch 176.0 96.5 Chinese White Poplar na 56.6 Black Locust na 21.6 Other Broadleaf Trees 36.2 72.7 Italian Poplar 191.4 117.5 Eucalyptus 59.5 89.0 Paulownia 20.0 13.7 Black Wattle 2.0 0.0 (- ---- '000 m3-----------) Total Output (volume) 136,869 233,915 Chinese Fir 54,786 101,589 Masson Pine 10,790 30,328 Slash Pine 9,166 41,559 Larch 25,659 14,907 Chinese White Poplar na 7,059 Black Locust na 1,466 Other Broadleaf Trees 9,628 9,076 Italian Poplar 17,991 19,167 Eucalyptus 5,943 6,851 Paulownia 2,795 1,913 Black Wattle 111 (-----------'000 ton----------) Fuelwood 25,032 19,052 Resin 266 443 (-------------'000 yuan---------) Total Output (value in 1990 constant prices) 50,612,824 71,633,456 Chinese Fir 26,343,047 38,940,963 Masson Pine 3,531,236 7,970,959 Slash Pine 2,978,903 10,515,674 Larch 8,210,893 3,585,258 Chinese White Poplar na 2,102,924 Other Broadleaf Trees 2,888,465 2,206,315 Italian Poplar 3,674,919 3,093,661 Eucalyptus 1,307,460 1.248,880 Paulownia 698,850 364,961 Black Wattle 24,323 Fuelwood 742,328 726,975 Resin 212,400 519,372 Incremental Employment During Implementation Period (person.year) 680,000 1,100,000 During Plantation Lifetime (person.year) Over 7,000,000 7,252,000 Training and Consultant Services Center, Provincial, County Training Courses (person/time) na 228,500 Farmer's On-spot Training (person/time) na 780,000 Consultant Services (person/day) na 4,348  - 20 - TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS (Not Applicable) TABLE 7: STUDIES INCLUDED IN PROJECT Study Purpose as defined at Status Impact of Study AppraisallRedefmed Forestry Resources To begin planning the Completed Strengthened Management Plan for each sustainable conservation and MFO's capabilities project province utilization of, and future and breath of investments in, forests of all expertise, and types. provided background information for preparation of follow-on project. TABLE 8A: PROJECT COSTS (Yuan million) Component Appraisal estimate Actual/latest estimate Local Foreign Total Local Foreign Total Afforestation 2,303.3 336.9 2640.2 3,302.0 395.4 3,697.4 Research and Pilot Plantations 38.5 10.7 49.2 46.7 22.9 69.6 Accelerated Planting Material Dev. 7.5 7.3 14.8 5.3 2.0 7.3 Information System 8.7 1.9 10.6 2.0 0.7 2.7 Total 2,358.0 356.8 2714.8 3,356.0 421.0 3,777.0 TABLE 8B: PROJECT COSTS ($ million) Component Appraisal estimate Actual/latest estimate Local Foreign Total Local Foreign Total Afforestation 422.8 63.1 485.9 490.1 58.7 548.8 Research and Pilot Plantations 7.0 2.0 9.0 6.7 3.3 10.0 Accelerated Planting Material Dev. 1.4 1.3 2.7 0.7 0.3 1.0 Information System 1.7 0.3 2.0 0.3 0.1 0.4 Total 432.9 66.7 499.6 497.8 62.4 560.2  -21 - TABLE 8c: PROJECT FINANCING ($ million) Source Appraisal estimate Actual/late estimate Local Foreign Total Local Foreign Total IDA 233.3 66.7 300.0 266.0 62.4 328.4 Provincial govermment 50.0 50.0 56.8 56.8 Prefecture/municipality government 15.0 15.0 12.0 12.0 County government 60.0 60.0 50.4 50.4 Afforestation entity 74.6 74.6 112.6 112.6 Total 432.9 66.7 499.6 497.8 62.4 560.2 TABLE 9: ECONOMIC COSTS AND BENEFITS Appraisal Estimate ICR Estimate Species FRR ERR NPV FRR ERR NPV (%/6) (N) (Y M) (%) (