Tanzania - Eastern Arc Forests Conservation and Management Project

Documentof The World Bank FOROFFICIAL, USEONLY ReportNo:23901-TA PROJECTAPPRAISALDOCUMENT ONA PROPOSEDGRANTFROMTHEGLOBALENVIRONMENTFACILITY TRUSTFUND INTHEAMOUNTOFUS$7.0 MILLION TO THE UNITEDREPUBLICOF TANZANIA FORTHE EASTERNARC FORESTSCONSERVATIONAND MANAGEMENTPROJECT May28,2003 Environment and Social DevelopmentUnit Africa Regional Office This document has a restricted distribution and may be used by recipients only inthe performance of theirofficial duties. Itscontentsmaynotbeotherwise disclosedwithout World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective November 5,2002) Currency Unit = Tanzania Shillings TSh 1000 = US$l.02 US$l.OO = TSh980.50 FISCAL YEAR July 1 -- June 30 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CBO Community BasedOrganization CEPF Critical Ecosystems Partnership Fund CFAA Country FinancialAccountability Assessment CFP Catchment Forest Project CI Conservation International COP Conference o fthe Parties CSD Civil Service Department CTB Central Tender Board DANIDA anishInternationalDevelopment Assistance DAWASA Dar es SalaamWater and Sewerage Authority DFO DistrictForest Officer DIDC Department o f InternationalDevelopment Cooperation DOF Danish Ornithological Foundation DTB District Tender Boards EAMCEF Eastern Arc Mountains Conservation EndowmentFund EC European Commission EIA EnvironmentalImpact Assessment EMP EnvironmentalManagement Plan ESW Economic and Sector Work EUCAMP East Usambara Conservation Area Management Project FBD Forestry and Beekeeping Divisionof the Ministryo fNatural Resourcesand Tourism FCMP Forest Conservation and Management Project FRMP Forest ResourcesManagement Project GEF Global Environment Facility GOT Government o f Tanzania Vice President: Callisto E.Madavo Country Director: JudyM.OConnor Sector Manager: RichardG. Scobey Team Leader: Nathalie W. Johnson  FOROFFICLALUSEONLY IAPSO Inter-Agency Procurement ICR ImplementationCompletion Report IDA InternationalDevelopmentAssociation IDTB Independent DepartmentTender Boards IFMS IntegratedFinancial ManagementSystem IPG InteragencyPlanningGroup on EnvironmentalFunds(Africa Working Group) JFM Joint Forest Management LAC Local Advisory Committee LAC1 LoanAdminstration ChangeInitiative 1 LEAT Lawyers EnvironmentalAction Trust LGATB Local GovernmentAuthority Tender Boards LGRP LocalGovernmentReform Program LKEMP Lower KihansiEnvironmentalManagementProject MNRT MinistryofNatural ResourcesandTourism MTB Ministry Tender Boards NEMC NationalEnvironmentManagement Council NEP National EnvironmentalPolicy NFP National ForestProgram NGO Non-GovernmentalOrganization NORAD NorwegianAgency for Developmentofthe Ministry of ForeignAffairs, Finland OP GEF OperationalProgram PDF Project DevelopmentFacility PFM ParticipatoryForestManagement PFMSU ParticipatoryForestManagementSupport Unit PHRI) JapanPolicy and HumanResourcesDevelopmentFund PMR Project Management Reports PPF Project PreparationFacility PRSP Poverty ReductionStrategy Paper PSI Private Sector Developmentand Infrastructure PSRC Parastatal Sector Reform Commission QTFCS QueenslandTropical Forest ConservationStrategy RTB RegionalTender Boards SOE Statements of Expenditure SPM Southern Paper Mills STAP Science andTechnical Advisory Panelof the GEF SUA Sokoine University of Agriculture TAF Tanzania Associationof Foresters TAFORI Tanzania ForestryResearchInstitute TANAPA Tanzania National ParksAuthority TANESCO Tanzania Electricity SupplyCompany TFCG Tanzania ForestConservationGroup TFS Tanzania ForestService TRA Tanzania RevenueAuthority UMADEP Uluguru Mountain Agricultural DevelopmentProject UNDP UnitedNations DevelopmentProgram VFR Village Forest Reserve WB World Bank WCST Wiidlife Conservation Society of Tanzania WWF World Wide Fundfor Nature This document has arestricteddistributionandmay beusedby recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed /withoutWorld Bank authorization.   TANZANIA EASTERNARC FORESTSCONSERVATIONAND MANAGEMENT PROJECT CONTENTS A. Project Development Objective Page 1. Projectdevelopment objective 2 2. Key performance indicators 6 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported bythe project 6 2. Mainsector issues and Government strategy 8 3. Sector issuesto be addressedbythe project and strategic choices 10 C.ProjectDescription Summary 1. Project components 12 2. Keypolicy and institutional reforms supportedbythe project 16 3. Benefits and target population 16 4. Institutional andimplementationarrangements 18 D.ProjectRationale 1. Project alternatives consideredandreasonsfor rejection 20 2. Major relatedprojects financedbythe Bank and/or other development agencies 21 3. Lessons learned andreflected inthe project design 21 4. Indications ofborrower andrecipient commitment and ownership 23 5. Value added o f Bank and Global support inthis project 23 E.Summary ProjectAnalysis 1. Economic 23 2. Financial 25 3. Technical 26 4. Institutional 26 5. Environmental 28 6. Social 31 7. Safeguard Policies 32  F. SustainabilityandRisks 1. Sustainability 32 2. Critical risks 33 3. Possible controversial aspects 34 G. MainGrant Conditions 1. Effectiveness Condition 34 2. Other 34 H. Readinessfor Implementation 35 I.CompliancewithBankPolicies 35 Annexes Annex 1: Project Design Summary 36 Annex 2: DetailedProject Description ,39 Annex 3: Estimated Project Costs 69 Annex 4: Economic and Financial Considerations 70 Annex 5: Financial Summary 81 Annex 6: Procurement andDisbursement Arrangements 82 Annex 7: Project Processing Schedule 91 Annex 8: Documents inthe Project File 93 Annex 9: Statement o f Loans andCredits 94 Annex 10: Country at a Glance 96 Annex 11:Environmental and Social Considerations 98 Annex 12: IncrementalCost Analysis 109 Annex 13: Technical Review 120 Annex 14: Responseto STAP Review 123 Annex 15: Threats and Root Causes of Biodiversity Loss and Mitigating Actions 125 Annex 16: Forest Biodiversity Value, Endemicity, Threats and Donor Support andEffectiveness 128 inthe EasternArc Annex 17: The Project Documentfor the UNDP Components 133 Annex 18: Letter o f Country Endorsement 160 Annex 19: Map o fthe Eastern Arc MountainForests 161 MAP(S) IBRD32235  TANZANIA EasternArc ForestsConservationandManagement Project ProjectAppraisal Document Africa RegionalOffice AFTES Date: May 28,2003 Team Leader: Nathalie Weier Johnson Sector Manager: RichardG. Scobey Sector(s): Forestry(96%), Central government Country Director: Judy M.O'Connor administration(4%) Project ID: PO57234 Theme(s): Environmentalpolicies andinstitutions (P), Focal Area: B - Biodiversity Other environment andnaturalresources management(P), Biodiversity (P), Civic engagement, participation and community driven development(S) [ ] Loan [ J Credit [XI Grant [ ] Guarantee [ ] Other: For LoanslCreditslOthers: urc BORROWEWRECIPIENT 1.10 I 0.60 I 1.70 IDA 19.70 11.40 31.10 GLOBAL ENVIRONMENT FACILITY 0.00 7.00 7.00 UNDEVELOPMENTPROGRAMME 0.00 5.00 5.00 NON-GOVERNMENT ORGANIZATION (NGO) OF 0.20 0.00 0.20 BORROWINGCOUNTRY Total: 21.00 I 24.00 1 45.00 BorrowerlRecipient: GOVERNMENT OF TANZANIA Responsibleagency: MINISTRYOFNATURALRESOURCES& TOURISM Forestry andBeekeepingDivision Address: P.O. Box426, Dares Salaam, Tanzania ContactPerson: Prof. SaidIddi, Dr.Felician Kilahama Tel: 255-22-2111602 Fax: 255-22-2130091 Email: tfcmp@intafrica.com Other Agency(ies): EasternArc Mountains ConservationEndowmentFund Address: P.O. Box40832, Dar es Salaam, Tanzania Contact Person: Vincent Shauri Tel: 255-22-2780859 Fax: 255-22-2780859 Email: ICumulative1 I 0.00 I I 0.00 I 0.00 I 7.00 1 7.00 1 Project implementationperiod: 4 years Expectedeffectivenessdate: 0913012003 Expectedclosing date: 1213112007  A. ProjectDevelopmentObjective 1. Projectdevelopment objective: (see Annex 1) The Global Environment Facility (GEF) financed Eastem Arc Forests Conservation andManagement project is a component o fthe broader Forest Conservation and Management Project (P058706) which was approved by the Boardon February 26,2002. The EasternArc component was appraised separately from the mainproject due to timingo f the GEF approval process, which has necessitatedthe separate processing o f the grant component. Background: Forests and woodlands inTanzania Tanzania is covered extensively with woodlands and forests. The bulko fthese resources between 30 -- and40 million hectares-- are comprised of extensive dry woodlands, primarilyofthemiombo type, which provide criticalwood resourcesand other forest products bothto rural communities andurban centers, andperformimportant services as watershed catchments and as dry season grazingreserves. Miombo woodlands are typically very resilient, andregenerate freely after disturbance ifleft alone. Althoughrates of species diversity and endemicity inmiombo woodlands are relatively low, they do provide extensive large mammalhabitats (which, inpart, support a valuable tourism industry) and are recognized as one o fWorldWide Fundfor Nature's (WWF) 'Global 200' priority ecoregions. Incontrast, the country's tropicalmoist forests accountfor arelativelysmallpercentageofthe total. The bulkofthe country's forest biodiversity is foundinits mountainforests, andinanarrow stripofforests along the coast which intotal comprise less than 5 percent o fthe total forest area. Amongst the most important o f these are the EasternArc forests, which cover an area o f around5,350 squarekilometers spreadacross 10 separate mountainblocks inTanzania (and one inKenya). The Eastern Arc forests represent one o fthe oldest andmost stable terrestrial ecosystems on the continent and are recognized globally as one o f 25 biodiversity hotspots, which are characterized byhighconcentrations o f endemic speciesunder considerable threat. The EasternArc forests have the highest knownnumber o fplant and animal speciesof any regionin Tanzania. Approximately 27 percent o f the plant species, 63 percent o f the linyphiidspider species, 43 percent o fbutterfly species, 33 percent o f amphibian species, 37 percent o fthe reptile species, 37 percent o f the birdspecies, and34 percent o f the mammal species found inTanzania occur inthese forests. The EasternArc is also characterized byhighconcentrations o fendemic species. Indeed, the EasternArc forests are knownas one o f the most important sites inAfrica for endemic birds, amphibians, reptiles, many groups of invertebrates, and plants, and contains one o f the highest proportions o f endemic species of any regionworldwide. There are at least 16endemic plant generainthe Arc. Twenty o f 21 African violet species ( ~ a i n ~ a u spp.) l i a are endemic to the Arc. O fthe knownspecies occurring within the EasternArc, approximately 23 percent o fmontane plant species, 82 percent o f linyphiidspider species, 39 percent o f the butterflies species, 63 percent o f forest dependent amphibian species, 68 percent o f forest dependent reptile species, 3 percent o fthe birdspecies, and6 percent o fthe mammal species are endemic. Patterns o f species diversity and endemism inthe Eastern Arc have been the subject o f extensive research. The fragmentation o fthe EasternArc into multipleforest blocks has contributed to enhancing its endemicity. Most mountainblocks are comprised o f a number o f fragmented forest patches, which also differ intheir speciesassemblages. Becauseo fits global biodiversity significance, the EasternArc is expected to be proposed as a WorldHeritage Site inthe near future. - 2 -  Tanzania's forests andwoodlands are extremely important for mitigating the impacts of rural poverty. Recent studies have shown that fully 40 percent o f total householdconsumption insome rural areas i s accounted for by forest and woodland products such as firewood, constructionmaterial, and wild h i t andother foods (a pointnotedinTanzania'sPovertyReductionStrategy Paper). Inaddition, woodlands are an important source of dry seasongrazing, reducinghouseholds' exposure to environmental risk. Rural households generally use a wide variety o f environmental resources from woodlands, and the sizeable aggregatevalue o f environmentally-derived income i s made up o f a fairly large number o f smaller individualincome sources. Inother studies from the region, it has also beenshown that there i s a negative relationship between aggregateenvironmental income share and total household income, that the poor are more resource-dependentthan the rich(though better offhouseholds are, inquantitative terms, the most significant userso f environmental resources). There is considerable complexity inthe factors which determine levels o f resourceuse: different households use different resourcesfor different reasons at different times. Still, the conclusions are inescapable: the ruralpoor are heavily dependent on resources derived from woodlands, and deforestation and forest degradationposes a significant threat to rural livelihoods. Inadditionto Tanzania's indigenousforests, there areanestimated 135,000 haofindustrialplantations, dominatedby pine and cypress, o f which 80,000 ha are under Government control and management. These plantations are a key resource for the production o f industrialroundwood, primarilyto meet domestic demands. In1998, the export offorest products amountedto US$6.5 millionwhile importstotalled aroundUS$4.2 million. Wood carvings, blackwoodclarinet sets, and logs from natural forests are the most important export products, whereas imports are dominated by value-added products such as paper, paperboard, fiberboard, plywood, and other panels, and highquality sawnwood. Like virtually every major forest areao f global importance, Tanzania's forests and woodlands are under growingpressuresfrom populationgrowth and economic development, andbecauseof the need for timber andforest products. Many forested areas have no protected status. The absence o fprotected status has meant that these forests maybe converted, legally, to other uses (primarily agriculture, which tends to be o fvery low productivity). For forested areas which are under some sort o f protected status, there is often substantial politicalpressureto use them for new settlement -- pressureswhich are amplifiedbecause o f encroachment insome areas. It i s acceptedthat formal protection or reservation i s no panacea, though, andrecent policy and legal changes have sought to improve the context for locally-based village-level woodland managementandprotection. Large-scale timber extraction still occurs, albeit illegallybecauseo f a moratoriumon the felling o fhigh forests established inthe early 1990s. Logginghasbeen almost completely stopped insome areas (such as inthe East Usambaras). However, there are few incentives or the capacity -otherwise to reduce or - evento monitor the rates o f extraction. Inpractice, District Forest Officers (DFO) (who are accountable to the localDistrict Administration rather than to FBD) sometimes condone harvesting inhighforests. ManyDistricts make their owndecisions about logging, andsome haveevencalledfor loggingintheir District forest managementplans, irrespective o fnational policy. Bans on the harvesting o f timber from dry woodlands are occasionally enforced, but only on an ad hoc basis. The issue is far less critical in these woodlands becauseo ftheir resilience, regenerative capacity, and relatively low conservation value. State-managedindustrialplantations couldease some o f the pressures on indigenous forests, but these have beenpoorly and ineffectively managed. There are sixteen state forest plantation areas. The bulk are found inSao Hill(41,600 ha), MeruAJsa, North Kilimanjaro, andWest Kilimanjaro, which collectively account for 72 percent o fthe total area under plantations. The private sector currently - 3 -  operates 55,000 ha o fplantations including about 6,000 ha o fwattle, teak and softwoods managedby Tanganyika Wattle Company inNjombe District, Escarpment Forest Company inMufindiDistrict, and KilomberoValley Teak Company inKilomberoDistrict respectively. The state plantation sector accounts for the bulko f all revenues collected by the FBDo fthe Ministryo f NaturalResourcesand Tourism (MNRT) --around 46 percent in 1998 largely becauseonly a small -- proportion o fthe revenue from natural forests (which account for most domestically marketed forest products) i s collected. Inlightofthe large inefficiencies andrelatively highcostsofcontinuingto managethe state plantation sector, there i s a limitedeconomic rationalefor continued Government involvement inthe sector. Ithas beenestimated that the plantation labor force exceedsthat which is neededby 150percent. Total employment inthe Forestry and Beekeeping Divisioni s around 2,150 staff, o fwhich 1,050 are employed inthe plantationsector. [Incontrast, staffing inthe entire EasternArc forests, anareacoveringover 5,000 square kilometers, consists of 8 Forest Officers and 57 Assistant Forest Officers.] The managementand conservation of all o fthese forest resourcesis widely agreedto be inthe country's national interests, but not surprisingly has provento be an enormous challenge. O fthe wooded area, around 10million ha are Central Government Reservesand 3 millionha are Local Government Reserves. The balance, estimated at around 20 million ha, has no protected status. A new category o freserved forest, the Village Forest Reserve, posesmuchpromise for legitimizing community-based woodland management and conservation, but this tenure category has yet to be formally legislated. The FBDprovides overall policy guidance for the forestry sector, and some technical oversight and supervision. For the most part, however, managementandprotectiono f all reserveshas beenhighly decentralized, andi s primarilythe responsibility o fDFOs and their staff, who report to local district administrations (with the exception o f a number o f major catchment forests, which are under the management o fFBD), The current institutional structure has beenproblematic, and badly inneed o f reform. The fundamental orientation o fthe institutional structure is toward regulation andenforcement o f forest legislation -roles which were largely appropriate inan earlier context when there were few needsto mediate betweenthe demands of ruralpeople, the state, and the private sector, but which are mostly inappropriate incontemporary Tanzania where forest protection and management canno longer be undertaken independently o fthe needs o f rural communities. Inparticular, Government hasbeenaggressively searchingfor moreeffectiveways to support the involvement o f communities inforest andwoodland managementand protection, as the bulk o f wooded areas are under their ultimate control. The potential for the involvement o f communities inwoodland managementhas been exploredand supported through a series o f innovative pilots. These experiences have been captured inextensive policy reforms, and legalmechanisms are being drafted which will reinforce the role o f communities inthis respect. Untilrecently, the institutionalpolicyandlegalframeworkprovidedonly limitedscopefor supporting forest biodiversity conservation. As a signatory to the Conventionon Biodiversity, Tanzania i s increasinglyrecognizing its important obligation to put inplace soundmechanisms for forest biodiversity conservation, but i s ill-equipped to do so withinthe prevailing institutional structure. Forest protection was undertaken inthe past only to meet the needso fthe timber industry, and also for watershed catchment protection. There i s a very limited capacity to take on the wider issues associated with biodiversity conservation within FBD, and a widespread recognition that this constraint needs urgently to be addressed. - 4 -  Resourcesto finance the management o f woodlands and forests are tightly constrained, and the sector remains heavily dependent on donors. The more effective collection o f revenues from the felling o f timber andother forest products, coupledwith greaterprotection from local and government sources, couldbeginto address the problem. Poor governance inthe sector, and the lack o f accountability and supervision inthe field, however, are constraints to doing so. Further, the ability to use these limited resourcesto finance biodiversity conservation i s limited, given the low returns which can be anticipated from these investments. Finally, althoughdonor support has providedbadly neededresources for forest andbiodiversity conservation andmanagement, this support remains highlyfragmented andlargely ineffective at addressing Tanzania's national policy priorities. In1996, it was estimated that the ratio o fdonor support inthe forestry sector to publicly-financed support for forestry was 19to 1andthat donor resourceswere largely not beingcapturedby the budget process. This disparity between donor andpublic funding, and the inefficiencies which insome respect are drivenby it, suggests that it i s extremely difficult for Government to address its own policy priorities (rather than the donor community's) through the public expenditure program. Past Bank support for the sector IDA'Smostrecent past support for the sector (through theForest ResourcesManagementProject (FRMP)) was formulated as a first step inaddressingTanzania's forest management challenges as articulatedinthe 1989 Tanzania Forestry Action Plan, and hadthree specific objectives: (a) to strengthen institutions incharge o fthe development o f forest policies and natural resources information; (b) to support the development o frural landpolicies, strengthencrucial governmental and non-governmental organizations incharge ofthe implementationo f these policies, and to support the implementationand monitoringo f government's policy o f village demarcation and titling; and (c) to strengthen regional and district forestry institutions inMwanza and Tabora Regions. This project has now closed, and its modest successes provided important lessonsand insights about the possibilities andpotentialfor improving forest management. Inmany respects, the forestry sector isat acriticalturningpointinTanzania. A newnationalForestry policy was adoptedby the Cabinet in 1998, andsupporting legislation is being drafted. The policy i s innovative and provides substantial scopefor developing alternative forest managementand conservation regimes and financing mechanisms. Consistent with the on-going civil service reformprogram, policy recognized the needfor substantive institutional reforms inthe forestry sector, and has proposed the creationo f a new Tanzania Forest Service (TFS). With regard to biodiversity conservation, the new policy commits government to establishing nature reservesinareas o f highbiodiversity value. Most importantly, however, the policy arguesthat local institutions and communities shouldhave a central role inforest conservation andmanagement. Policyprovidedthe framework for preparation oftheNational Forest Program(NFP), which was approved by Government inNovember 2001, and future Bank support is seento be entirely mainstreamed into the priorities outlined inthe NFP. Development objectives Buildingonexperience gained through FRMP, andrespondingto the prioritiesoutlined inthe new Forest Policy and the NationalForest Program, the objectives o fthe Forest Conservation andManagement Project (FCMP) are to provide the resources to assist Government inpolicy implementation, inparticular bydevelopinga framework for the long-termsustainablemanagementandconservation ofTanzania's forest resources, strengthening the role o f individuals, communities, villages, and the private sector in managementandconservation o f forests, and implementingthis framework on apilot scale. The - 5 -  project's specific objectives are to: (i) the establishment o f a new national forestry institutional support framework effectively to support the sustainablemanagementand protection o f Tanzania's forest, woodland and industrialplantation resources; (ii) establish the framework for involvement o f the private sector inindustrial plantation development and management; and (iii) develop the institutional capacity withinthe forestry sector for coordination, financing, andmanagementofbiodiversity conservation interventionswithinTanzania's forests, inparticular inthe forests of the EasternArc mountains. It is envisagedthat this thirdobjective will be implemented inconjunction with support from the Global Environment Facility. 2. Key performance indicators: (see Annex 1) The success o f the project will be basedon the following key performance indicators: a functioning Tanzania Forest Service (TFS) is established with clearly defined service delivery functions andresponsibilities with regard to natural forests, woodlands, andindustrial plantations; significant areas o f natural forests and woodlands are under effective managementas an outcome o fpartnerships and initiatives with multiplepartners (primarily communities and local governments); a range o f mechanisms for improving revenue collection involvingpartners such as the Tanzania Revenue Authority andlor the private sector are tested and implemented; time-bound forest revenue collectiontargets are established and achieved; and effective mechanisms for sharing revenues with villages are put inplace; a framework for private sector participation inthe managemento f industrialplantations, i s established, including guidelines, incentives, and regulatory, monitoring, and control mechanisms; 3 pilot operations are inplace andhave beenevaluated; an institutional framework consistent with overall civil service reforms is inplace which enables Government to undertake forest biodiversity conservation initiatives, inparticular inthe Eastern Arc Mountains; institutional capacity to do so i s strengthened; the modalities for the establishment o f a sustainable financial mechanism for conservation of the EasternArc mountain forests are developed and implemented; and the endowment has been capitalized andthe EAMCEF i s implementingthe proposed conservation program. B. Strategic Context 1.Sector-related CountryAssistance Strategy (CAS) goal supported bythe project: (see Annex 1) Documentnumber: IDAJR2000-90 Date of latestCAS discussion: 0611512000 The principal goal o f the CAS i s to help Government reduce poverty through the promotion o f higher growth, andthrough interventions that buildthe assets o fthe poor, reducetheir vulnerability, and promote better governance and accountability. The CAS fully recognizes Government's leadership in defining the development agenda, and its desire to enter into more productive relationships with its partners indoing so. The FCMP specifically addresses the CAS objectives o f supporting sustainable rural development and private sector development through the promotiono f off-farm activities and through the management o f woodlands and forests by communities andthrough the establishment o f a framework for the involvement o fthe private sector inindustrialplantationmanagement. The establishment o fthe TFS i s consistent with the CAS goal o f public sector reform and institution building, to increase the effectiveness o fpublic service delivery andimprove govemance. - 6 -  la. Global Operational strategylprogram objective addressedby the project: The Government o f Tanzania signed the Convention on BiologicalDiversity on June 12, 1992 and ratifiedthe Conventionon August 3, 1996. Tanzania i s aparty to the African Convention on the Conservation o fNature andNaturalResources, the Convention on the Protection o f World Cultural and NaturalHeritage, the Conventionon InternationalTrade inEndangered Species (CITES), and the Ramsar Convention onWetlands o f InternationalImportance. Government has placed a highpriority onthe conservation o fbiological diversity, and, for example, maintains one o fthe largest systemso fprotected areas inAfrica. Mucho fthe focus o f these efforts, however, has beenon wildlife habitat conservation andnot on forest biodiversity conservation. The proposed GEF activity i s consistent with the GEF Operational Strategy for Biodiversity Conservation, and specifically with the objectives o f Operational Programs 3 and4 on Forest Ecosystems andMountainEcosystems. Consistent with these objectives, GEF support will provide finance for the creation and strengthening o fparticipatory and co-managementschemes to buildsupport and ownership for biodiversity conservation, develop socio-economic activities to reconcile biodiversity conservation with humanneeds, identifyprocesseswhich are likely to have significant adverse impacts onthe conservation and sustainableuse o fbiodiversity, and support capacity buildingefforts while focusing primarily on a mountain tropical forest ecosystemthat i s at risk. Particular attentionwill be given to the demonstration and application o ftechniques to protect highly threatened endemic species; in situ conservation o f wild relatives o f domesticated plants and animals for the sustainable use of biodiversity; strengtheningconservation area networks; and development o f sustainable use methods inforestry by combiningproduction, socio-economic, andbiodiversity goals. In addition, GEF resourceswill seek to support sustainable agriculture and landuse practices on mountain slopes adjacent to the forests inorder to protect representative habitats and to strengthen the network o f representative conservation areas inmontane forest systems. Activities supported with GEF resources are designed to be replicated, with successful outcomes and lessons learned documented and sharedwith other GEF funded programs. GEF support is consistent withArticle 8 ofthe ConventiononBiological Diversity, whichrelates to in situ conservation, as it will support protection and managemento fprotected areas ina region o f globally important biodiversity, promote environmentally sound and sustainableactivities inareas adjacent to protectedareas. GEF support will promote the recovery o f threatened species through the development and implementationof managementand ecosystemprotection strategies, andwill support maintenance o f viable populations o f threatened and endangeredspecies within andbeyondprotectedareaboundaries. GEFsupport is consistent with CoP3's emphasison intersectoral cooperation innaturalresource biodiversity conservation, buildingcapacity inlocal institutions and communities, strengthening the involvement o f localpeople, promotingenvironmental awareness, and improvingthe disseminationo f information about sites o f global importance. GEF support will also help to achieve related goals of reducingpoverty inforest dependentcommunities byprovidingalternatives to destruction o f biodiversity habitat as a means o f securing a livelihood. GEFsupport is consistent withguidance from the COPwith respectto conservation, management, and sustainable use o f threatened andendangeredspecies; strengthening the involvement o f communities, and buildingpartnerships at the local andnational levels; andpromotingcost effective measures to conserve biodiversity, including economic incentives and alternative livelihoodopportunities for local communities. - 7 -  2. Main sector issues andGovernment strategy: Main sector issues Tanzania's 1998 Forest Policy characterizes the most importantpriorities and constraints with regardto the sector as beingrelatedto the need to: managethe country's forest resourcesinrespect o f its various types (woodlands, highforests, coastal forests); uses (production andprotection forests); and legal status (reserved forests, forestslwoodlands within national parks, andnon-reserved forested land); manageforest industriesand other forest-based activities to contribute to national development and to the equitable sharing o fbenefits between stakeholders; conserve the country's unique ecosystems and biological diversity, consideringthe needs o f local populationsand appropriate methods o fmanagementand use; and adapt the institutional arrangementsandfinancial and human resource requirements to meet these objectives o f forest sector development. More specifically, factors which constrain the effective managemento f Tanzania's forest and woodland resources include: weak oversi&t for forest andwoodland management, rooted inproblems o f accountability and supervision inthe current institutional framework. As an outcome, forest exploitationhas, inmany instances, been subject to few controls or constraints, andhas resultedinthe movement and settlement o fpeople into reserved forests, and the unsustainable and illegal harvesting o f wood for commercialpurposes; an ineffective system o f decentralized forest administration, which separates the need for enforcement andregulation from the needso f ruralcommunities for forest andwoodland products; one outcome o f this is the limitedemuhasison the role o f forestry institutions in service delivery; inadequate systems o f revenue collection ina decentralized forestry administration, and inadequate mechanisms for ensuring that revenuescollectedare used, inturn, for forest managementor are otherwise returnedor sharedwith villages and communities with a stake inforest protection. Targets set for revenue collection are not clearly rationalized, and though it is estimated that less than 10 percent o frevenues which are due from natural forests are actually collected, little thinkinghas focused on how andwith what objective shouldrevenues be collected. Lowrates o frevenue collection adversely affect recurrent fundingo f forestry activities, increase the potential for rent-seeking, and encouragerates o f consumption which are not consistent withthe economic costs o f forest exploitation; inadequate institutional mechanisms for forest biodiversity conservation specifically with the capacity to assess the need for, plan, coordinate, implement and monitor conservation activities; widely disuarate systems o ftenure over forested lands and relatedweak incentives to undertake community-based forest conservation, such as inthe EasternArc forests, with unclear opportunities for closer cooperation with villages to undertake these activities; limitedscope for Publiclv-financed forest biodiversity conservation (largely becausepublic revenue streamsfrom logginghave dried up since a loggingbanwas put inplace) and a heavy dependency on donor assistanceto provide irregular support for the sector; - 8 -  limited effectiveness o f the public expenditure programinthe forestry sector inmeetingnational forest policy obiectives, and highlydistortedfinancial and technical resource delivery from the donor community. Government Strategv Government's strategy for improvingthe managemento f the forest sector is captured inthree processes: the forest policyprocess, which was completed in 1998; the legislative process, which i s underway, and i s intendedto provide the basis for the implementationo fthe policy; and the process which has ledto the preparationo f the National Forest Program, which prioritizes a programfor future action within the already definedpolicy framework. The overall goal o f Government's National Forest Policy i s to enhancethe contribution o fthe forest sector to the sustainable development of Tanzania, and the conservation and managemento f its natural resources for the benefit o fpresent and future generations. Consistent with this overall goal, the government strategy for doingthis i s to: ensure sustainable supplies o f forest products and services by maintaining sufficient forest cover under effective management; 0 increase employment and foreign exchangeearnings through sustainable forest-based industrial development andtrade; ensure ecosystem stability through the conservation o f forest biodiversity, water catchments, and soil fertility; and 0 enhancenational capacity to manage and develop the forest sector incollaboration with other stakeholders. Government intends to implement its strategy by relyingon a diverse set o f institutions, includingthe private sector, localgovernment, specialized 'executive agencies', andcommunities or other organizations o f people livingadjacent to forests. Decentralized forest managementwill be strengthenedand improved byclarifyingthe role o fVillages inforest managementandprotection, by developingcoordination mechanisms between central and local forest administrations, andby ensuringaccountability mechanisms are incorporatedinto institutionalchange efforts. Functions which wouldbe retained by the Ministry responsible for natural resourceswould be limitedto policy development, regulation, monitoring, and facilitation. Legislation to support implementationo fthe 1998 Forest Policy is inthe process o fbeingprepared. While new legislationwill provide a stronger legalbasis for policy implementation, tremendous latitude for action i s possible within the existing framework (viz. the establishment o fNature Reserves, the scope for village-based forest reservesand management, improvedperformance with regardto revenue collection, the establishment o f specialized 'executive agencies', and so on). Followingadoption o fthe Forest Policy, Government launched preparation o f the National Forest Program (NFP), which outlines a plan for implementationo f the policy. The National Forest Program outlines a four-fold program o f forest development inTanzania: forest resources conservation and management(inwhich bothbiodiversity conservation and participatory forest managementfeature strongly); - 9 -  institutional andhuman resourcesdevelopment; 0 legal and regulatory development; and 0 forest industries development. The NFPprovides the framework for future public expenditure inthe forestry sector, and outlines priorities for donor financing. It has been envisaged that the principal financial delivery mechanism for the NationalForest Programis this Forest Conservation and Management Project (FCMP) into which proposed GEF support hasbeen fully-blended. As such, the FCMP has beenprepared inclose collaboration with the preparation o fthe NationalForest Program, to ensure consistency inapproach and objectives, andultimately, to focus on the strategic provision o f resourcesto assist inthe implementation of the NFP. Additional bilateral support for implementationo fthe NFP is inthe process o fbeing mobilized. 3. Sector issuesto be addressed by the project and strategic choices: Sector issues addressed bv the project Theproject is designedto address anumber ofpressing sectoral issues. Inparticular, the project will support Government's efforts to move forward with: substantive institutional reformto reduce problems associatedwith the current institutional structure, buildingonthe strengths inherentindecentralization while strengtheningcentralized structures which canprovide important service delivery functions to districts requesting them. The new Forest Policy and the National Forest Programclearly articulate the problems posedby the current institutional structure, and pose a series o f options for addressing these institutional constraints, including the creation o f a service-oriented forest managementagency, the more active involvement o f the private sector inplantationmanagement, anda better-defined basis for community-based forest and woodland conservation andmanagement. Among other things, the project will focus on developing service-delivery standards, andon introducing the institutional tools and mechanisms for ensuring these standards can be met. Inparticular, the project will focus ondevelopingandimplementingservice standardsto support village-based forest andwoodlands managementand conservationbybuildingupon some of the initiatives pilotedbythe FRMP (as well as through other interventions), inparticular ngitiri management, Joint Forest Management, the establishment o fVillage Forest Reserves, and through several pilot initiatives focusing specifically on community-based forest conservation ina selected priority area o fthe EasternArc forests. Inaddition, institutionalreformsareexpected to focus, as well, onaddressingthe needfor an institutional framework for forest biodiversitv conservation. It is envisaged that the projectwill provide resourcesfor the establishment o f a capacity within the institutional structure for forest biodiversity conservation. improved financial and procurement management, particularly through revenue collection and monitoring, which focuses on the relationship between improvedrevenue collection and forest management. The basis for revenue collection will be rationalized, and mechanisms for revenue sharing at the village level will be defined andimplemented. Alternative institutional mechanisms for revenue collection, and the monitoring o f revenue flows, will be developed andimplemented. These activities will buildonthe revenue collectionpilots launchedby FRMP. There are important synergiesbetweenprospects for improvedrevenue collection andproposed institutional reform. -10-  Itis envisagedthat improvements infinancial andprocurement management will contribute substantively to developinga framework for longer term public expenditure, complemented by donor support, for the sector, with the idea that a credible institutionalframework with strong service delivery objectives will help bringabout a stronger sector-wide approach to forestry. Inaddition, the project intends to pilot, inpartwith GEFfinancing, a sustainable financing initiative which focuses on the generation o fresourcesto finance forest biodiversity conservation. Withinthe constrained fiscal framework inTanzania, there are almost nopublic sector resourcesto make these types o f investments inthe absence o f a financial return. fuller involvement o fthe private sector inindustrial plantation management is envisagedbothto improve efficiency, productivity, and revenuesfrom these particular resources, but also to reduce the fiscal burdeno f continuedpublic sector managemento f a sector which should be commercially viable onits own. improvingthe framework for planning andimplementationo fbiodiversitv conservation initiatives through the GEF-funded Conservation of the Eastern Arc MountainForests Component. Building this capacity will bedone inconjunction with other proposedinstitutionalreforms inthe forestry sector and result inforestry sector institutions at the central, district andpartnership levels having greater institutional capacity to provide oversight and monitoring o f the whole EasternArc ecosystem. Stratepic choices Government has already made a number of strategic choices which are laid out inpolicy andinthe National Forest Program, particularly that the status quo with regardto forest management is not acceptable. These choices form the basis for the proposed intervention, andindeedare widely regarded as criticalto the outcome o fboththe project and the future o f forest management and conservation in Tanzania: Government has decided to establish a specialized 'executive agency' with clearly definedroles and tasks, andwith a mandate for bringingabout improvements inforest and woodland management through multipleinstitutional and service delivery mechanisms. It is envisaged that the Tanzania Forest Service (TFS) will be constituted with specific service delivery functions and performance targets. Responsibilities for forest policy, legislation, and planning are to remainwith a sectoral department ofthe Ministryo fNatural ResourcesandTourism. Government has committeditselfto more fully involvingthe private sector inindustrialplantation management, andenvisagestheir eventual operation on a more commercialbasis through lease, concession, orjoint management arrangements, with the objective o f improvingfinancial and economic returns from plantations through more cost-effective operational management. Government is seeking to maximize the benefits o f forest andwoodland managementto the large ruralpopulations dependent on them, by creating and supporting tenure and localcontrol mechanisms which support village-based management. Consistent with its obligations as a signator to the Convention on Biodiversity, Government has integrated conservation objectives into its wider forest policy framework, and intends to implement these objectives through the institutionalmechanisms posedinpolicy (through Government institutions, villages, the private sector, or specialized agencies). -11 -  C. Project DescriptionSummary 1. Project components(seeAnnex 2 for adetailed descriptionandAnnex 3 for adetailed cost breakdown): The Tanzania Forest Conservation andManagement Projectwill have three components. The first two components, Supportinginstitutional change and improving service delivery, and Private sector involvement inthe managemento f industrial plantations, were already approved onFebruary 26,2002 under P0.58706. Supportinp institutional chanpe and improvinp service delivery This component will assistthe government with the designand establishment o fthe Tanzania Forest Service (TFS), as a specialized 'executive agency' as defined bythe ExecutiveAgencies Act (1997), and consistent with the wider and on-going national program o f civil service reform. It is envisaged that the Tanzania Forest Service will, among other things, have responsibility for bringingabout improvements in the protection andmanagemento fnatural forests andthe development and managemento f industrial plantations (including promoting the private sector to take on these tasks). The concept i s that an agency with a national mandate will eventually be established. Technical assistancewill beprovided to work with FBDandthe Civil Service Department (CSD) andother relevant government agenciesto designthe structure andfunctions o fthe agency andto draw upthe necessaryimplementationplans and guidelines for establishment o fthe agency, including the formulation o fbusiness and staff recruitmentplans. This component will also provide support to buildon experience from previousoperations, and uponthe opportunitiesposed by the new Forest Policy, and planned legislation. Three sub-components o fthis activity are envisaged: 0) Establishment of the Tanzania Forest Service, focusing on the phased-in introduction o f the new executive agency, with clearly definedroles, hnctions, performance standards, and monitoring. This sub-component would provide resourcesto managethe change process, to strengthen the capacity for administrationand management, to rationalize and to strengthen the capacity for tasks relatedto policy, planning, and legislation (which would remain with the Ministry),andwouldsupport abadly-neededprogramofinvestments ininfrastructure, including headquarter and field facilities for the TFS. Complementary support will be providedby GEFto improve the capacity for the conservation and managemento f forest biodiversity, particularly in the Eastern Arc forests (described inthe thirdproject component). (ii) Improvingservice-delivery mechanismsforparticipatoryforestandwoodland management, inparticular, support for the establishment o f Village Forest Reserves, woodland managementby individuals and communities (ngitiri),and Joint Forest Management, buildingon experiences pilotedinearlier operations. This sub-component which will focus on facilitating the expansion o f community basedforest managementactivities, is envisagedto be supported by the Government o f Denmark. (iii) Improvingrevenuecollectionfromforestsandwoodlands,tomeetthedualobjectivesof improvingthe capacity o f the TFS to become self-financing, and o f ensuring that revenues are reinvestedat the locallevel inforest protection and managementthrough local institutions. This component will develop alternative revenue collection mechanisms, and monitoring systems to improve rates o f collection. -12-  A mid-termreview would determine outstanding issuesandproviderecommendations for improvingthe efficiency andeffectiveness o fthe TFS. A further evaluation will beundertaken prior to project completion and, as well as determiningthe degree o f achievement and success o fthe TFS, will develop lessonsfor the future. Private sector involvement inthe manapement of industrial plantations The project will provide resourcesto develop and implement a framework for the involvement o f the private sector inthe managemento f existing industrial plantations as well as to strengthen the potential for the development and managemento fnewplantations. This would include an analysis o f the technical and financial feasibility o f the industrial plantations with reference to existingandpotential markets as well as the formulation o f steps andguidelines for the private sector's involvement. Multiple mechanisms for the involvement o fthe private sector will be developed and implementedona pilot basis, and are expected to include leasing or concession arrangements,joint forest management, and co-management. Consistent with policy, the objective i s eventually to introduce fully commercial plantation management, buildingon information and experience gainedthrough project activities. Four sub-components are envisaged (i) Improvingthe plantation resource information base and management planningcapacity. This sub-component will provide resourcesto develop the information neededto allow for the identification and selection o f priority sites and for designing pilot activities. The sub-component will finance aerial photography, interpretation, mapping, and indcative inventories o f around 40,000 ha o f state-owned plantations; arapidsocio-economic assessment which identifies key stakeholders, their concerns, and expectations and any mitigatingsteps which mightbe needed; the development o f a plantation database for management purposes; preparationo fbasic guidelines to guide plantationmanagementand to establish parameters for monitoring commercialplantation operations; preparation o fbasic growthand yield tables for key speciesrelyingon existing data; preliminary estimates of growing stock and allowable cut; and capacity buildingo f staff inselected areas to buildcapacity to undertake these tasks. (ii) Strengtheninginstitutionalsupportservicesforprivatesectorinvolvement. This sub-component will support the creation o f an enabling institutional and market environment for private sector involvement inplantation development and management. Itwill provide resources for the design and implementationo f a communication strategy; the development o f a plano f action with agreedprinciples and clear objectives for private sector involvement; strengthening the capacity within MHRT or within the plannedforest agency to handle PSI; the development o f legal procedures and instruments for tendering to ensuretransparency and consistency with Government guidelines and with social and environmental safeguards; the preparationo f model information memoranda, leases, model contracts, and transparentbiddingassessment procedures, as well as community andenvironmental action plans where they are needed; prepare recommendations on an improvedlog sales system; an actionplant for improvingforestry taxation and the investment environment for plantation forestry; and study tours and staff training to increase anunderstanding o f the principles surrounding private sector involvement. (iii) Pilotalternativemanagementofselectedindustrialplantations. Threepilotactivitiesare envisagedunderthis component: the development o f leasing or concession arrangements for involvingthe private sector inplantation management; the development o f co-management arrangementswhere responsibility for plantation managementi s sharedbetween Government and - 13-  a partner (for example, a village or a company); anddesignated community management for a plantationareawhere responsibilities and control are assumedby a village. The project will provide resourcesto establishboundaries o feachpilot area, to carry out rapidinventories or aerial surveys as needed, to prepare legal documentation as needed, andto carry out stakeholder surveys and assessments where communities will be involvedor otherwise affectedby the program. (iv) Monitoring and evaluation. The project will place a strong emphasis on the monitoring and evaluationo fperformance under the pilot operations, The project will provide resources to establish a mechanism for monitoring and evaluation; to determine performance indicators for the pilot operations; to implement a regular monitoring process which reports against quantitative and qualitative performance indicators; andto provide feedback to MNRTto modify mechanisms and procedures on the basis o fresults from the pilot operations. EasternArc Forests Conservation and Management This thirdcomponent o fthe program, which is largely to be financed by GEF (andpossibly withbilateral sources) hasbeenjointly developed andimplemented by the World Bank andUNDP working with Government andother partners with interests inthe forestry sector. This component will support institutional reform, strategy development, pilot community-based conservation, and the development o f sustainable financing for tropical highforest conservation inTanzania. The mainglobal environmentalobjective o f this GEF activity i s to promote the sustainable conservation andmanagemento fthe EastemArc forests. The activity has four sub-components: subcomponent (i) will be implementedbythe World Bankwith IDA resources; subcomponent (ii) also be implemented will bythe WorldBankwith GEF grant resources; sub-components(iii) (iv) will be implementedthrough and UNDP with GEF grant resources. (0 Institutionai reforms for forest biodiversity conservation, inparticular of the Eastern Arc forests at central, district andlocalpartnership levels to incorporate specific responsibilities for biodiversity conservation, oversight, monitoring andcoordination. Such reforms will be linked with other reforms and institutionalrestructuringproposed for the forestry sector as awhole, which are to be financedby IDA. The implementingagency for this sub-component would be the Bank. (ii) Mechanismsforsustainablefinancingofbiodiversityconservationwillbedeveloped includingthe establishment o fthe Eastem Arc Mountains Conservation Endowment Fund (EAMCEF). It is envisagedthat a pilot endowment trust fundwill be established by the project, with GEF resources. The EAMCEF's initialoperations andprograms will be co-financed by IDA, The GEF implementingagency for this sub-component wouldbe the Bank. Two additional components are to be implemented bythe UNDP and are complementary to the Bank-implemented activities: (iii) Development andpreparation of an integrated Conservation Strategy for the EasternArc Mountain Forests usinga broad-basedparticipatory process, with a focus on institutional capacity building,andwhich considers links to other sectoral activities, such as agriculture, water, land, and energy. A wider dialogue on the impacts o f sectoral activities on forest biodiversity conservation inthe Eastem Arc will be developed amongst the key institutions involvedinsectoral activities. Mappingand baseline activities will be undertaken as part o f the -14-  Strategy development, and will include an assessment o fthe multiple tenure regimes found inthe forests of the Arc. The GEF implementing agency for this sub-component would be UNDP. (iv) A forest conservation interventionthrough government and community partnership initiatives which will beundertaken at priority sites inthe UluguruMountains - one o f the most important mountain forest blocks inthe arc. Firmlinkages will be established with partners (other donors, NGOs, Community-based organizations, government agencies, etc.). The GEF implementing agency for this sub-component would be UNDP. A Project Brieffor the full GEFactivity hasbeenpreparedandwas approvedbythe GEF Council in December 2001. Proiect Administration and Management Finally, the project will finance the costs o f administrationand managementof the project components, inamanner consistent withWorld Bank guidance with respectto accounting, financial management,and procurement. Indicative Bank % of costs % of financing Bank (US$M) Total (USSM) financing 0.0 0.0 0.0 ServiceDelivery 1. Establishmentofthe TanzaniaForestService 14.20 35.5 13.40 43.1 0.00 0.0 2. Improvingrevenue collection from forests 4.00 10.0 3.70 11.9 0.00 0.0 and woodlands 3. Improving service delivery mechanisms for 8.40 21.0 8.10 26.0 0.00 0.0 participatory forest andwoodland management B. Private SectorInvolvement intheManagement 3.40 8.5 3.30 10.6 0.00 0.0 o fIndustrial Plantations C. EasternArc ForestConservationand 0.0 0.0 0.0 Management 1. EasternArc Mountains Conservation 9.00 22.5 2.00 6.4 7.00 100.0 Endowment Fund 2. ImprovingInstitutional SupportServices 0.30 0.8 0.00 0.0 0.00 0.0 for forest biodiversity D. ProjectAdministration andManagement 0.70 1.8 0.60 1.9 0.00 0.0 Total Project Cosb 40.00 100.0 31.10 100.0 7.00 100.0 Total FinancingRequirec 40.00 100.0 31.10 100.0 7.00 100.0 I Notes: 1) Indicative costs exclude an estimated$4.5million inbilateral and other financing neededto support implementation of the Eastem Arc conservation component, most ofwhich will be requiredto establishand manage the Eastem Arc Mountains Conservation Endowment Fund. Costs to implement the UNDP componentsofthis activity are expectedto total $5 million, butthese are excluded from these estimates. ProposedBank financing incorporates$600,000 inProject PreparationFacilityresources. 2) IDA financing for components A, B, and D is providedunderthe associatedForest Conservation and Management Project (P058706) approved on February 26,2002. - 15-  2. Key policy and institutionalreforms supported by the project: The project will directly support key policy reforms which have already been introducedthrough the new Forest Policy. These include the creation o f a more effective forest managementagency, the more active involvement o f the private sector inforest plantation management, greatly strengthened support for the establishment o f local forest and woodland managementand protection regimes, andthe development o f animproved capacity to undertake tropical highforest conservation andmanagement. With regardto the latter, the policy explicitly recognizes the role Tanzanians shouldplay inthe conservation and management o f forests and woodlands. The policy also spells out the needfor integrated strategic processesfor forestry activities, including the implementationo f broad-basedconservation initiatives. The project will support policy reforms through: The establishment o f a pilot, autonomous TFS that will be responsible for supporting and improvingindigenous forest managementand plantation management, including management o f public woodlands, by working with multiple stakeholders. This intervention i s also inline with Government objectives under the Civil Service ReformProgram. The TFS will have a strong service-delivery orientation, focusing on its role inencouraging individuals, communities, villages, and the private sector inundertakingwoodland and forest conservation andmanagement. The capacity to undertake financial and procurement managementwill be greatly strengthened, with the objective o f establishing amore transparent framework for public expenditure management; The development o f a framework to promote and oversee the involvement o f the private sector in industrialplantation development and management; Continuing efforts to foster and support more effective conservation and management o f community and private woodlands, the establishment o f Village Forest Reserves, as well as the management o f government woodlands by adjacent communities by ensuringthat direct benefits go to communities with managementandprotectionresponsibilities; and The involvement o f communities and other partners inthe conservation and management o f tropical highforests, inpartnership with key stakeholders with interests inbiodiversity conservation, as well as through support for the establishment o f a sustainable financing initiative which ensureslong-term accessto resourcesto invest inbiodiversity conservation. 3. Benefits and target population: Proiect benefits Reform of Forestry inst~tution~ The reformo fforest institutions inTanzania is expected to improve their capacity to functionas service delivery institutions, particularly to provide communities services related to the establishment o fVillage Forest Reserves, the strengthening o f traditional natural resource managementstrategies (such as ngitiri management), and the adoption o f locally appropriate tree cultivation and management strategies. In addition, these reforms are expected to complement -- andto strengthen-- the role o flocal government byimprovingthe effectiveness offorest revenue collection, by strengthening localaccountability for natural resources, andby developing transparent mechanisms for sharing revenues with villages and communities. Finally, a more effective institutional structure will more generally contribute to the long-term sustainable managemento f forest and woodland resourcesinTanzania, with significant impacts on the poorest groups and communities because o f their heavy dependence on woodlands to meet demands for consumption. The establishment o f an 'executive agency' is expected inthe longer term to reduce the financial burden o f existing forestry institutions on the public budget. - 16-  Private sector management of industrialplantations The involvement o fthe private sector inindustrial plantationmanagement i s expected to reduce the financial and institutional burdeno fplantations on the public sector, and is expected to leadto improvements inthe efficiency o fproduction and management. A clearer longterm commitment to the private sector with respect to plantation development will improve the climate for investment and reinvestment inthe wood products andprocessing industry, and will leadto greater employment and income generating opportunities. Eastern Arcforests conservationand management While the biodiversity o f the EasternArc Mountains i s o f extraordinary international significance and locally i s o f great value for mitigatingthe impacts o fpoverty, the value o fthese forests to the national economy, primarilythrough water and energy production, is o f great national importance. The Eastern Arc forests cover several major catchmentswhich collectively provide water for all o f the nation's coastal comunities (including Dar es Salaamwith its population o f 3 million). These mountain forests feed more than22 rivers, includingthe Sigi, Ruvu, Ruaha, Kihansi, and Rufiji. The Ulugurucatchment, for example, providesthe main source o f drinkingwater to both Morogoro town and Dar es Salaam. Hydroelectric energy productioni s similarly heavily dependenton maintaining the integrity o fthese forests. Nearly 70 percent o f Tanzania's electricity i s generatedfrom sources derivedfrom the Eastern Arc forests. The idea o f collecting environmentalrents, especially from the energy and water sectors, has been tabled inageneral way anumberoftimes. Theseproposals,however, are somewhat disconnectedfroman understanding ofthe tenuous - indeed, highlyprecarious -financial position o f service delivery institutions such as the Tanzania Electricity Supply Company (Tanesco) and the Dar es SalaamWater and Sewerage Authority (DAWASA). While the capturing o f environmental rents may seemto be a good idea inthe abstract, the current public expenditure framework suggeststhat this would be unrealistic inthe short term. Other environmental services captured bythe macro-economy associatedwith the EasternArc forests impact positively on agricultural production and also result from timber harvesting(both through the legal and illegal felling o f trees used inconstruction and to make hmiture andcharcoal). More recently a small ecotourismindustry has developed. There are some indications o f a growing trade inthreatened species of insects andreptiles. Accordingly, there i s a strongneed for sustainable use of forest products for these purposes andactivities such as tourism which maximize the non-destructive uses of forests. Proiect beneficiaries The project is primarilyintendedto benefit ruralhouseholds which are dependent on woodlands and forests to meet consumptive demands, andjob seekers who are able to findemployment ina revitalized forest industry(based on sustainable plantationproduction). The project i s expected to develop lessons from innovative pilot activities and as a result o f institutional development which will have potential benefits for the vast majority o fthe country's population. Direct benefits which will accrue to communities through the project include improvedconsumption and income through the use and sale of forest products obtained from sustainably managedresources, and an improved environment associated with enhancedforest conservation andprotection. National benefits ofbiodiversity conservation are expected to accrue as a result o fwatershed catchment protection, which inturn will yield significant benefits interms o f long-term hydroelectric energy productionandurbanwater supplies. -17-  4. Institutionalandimplementationarrangements: Governmentof Tanzania The NationalForest Programprovides the overall framework for project implementation. The project i s the primarymechanism for mobilizingfinance for implementationof the NFP, which will be complemented by other donor initiatives which are inthe process o fbeingmobilized. Three coordination mechanisms are envisaged: Consistent with the objectives o f developinga sector-wide approach toward forestry investment, the NationalForest ProgramSteering Committee will have overall oversight for ensuring that project activities are implementedina manner which is consistent with the NFP. The members o f the Project Preparation Working Group (which provided oversight duringpreparation) have been incorporatedinto the NFP Steering Committee, which may choose to constitute a smaller FCMP working group more closely to follow project implementation. The NFP Steering Committee is constitutedof representatives from MNRT, the Ministryo f Finance, the President's Office (Planning andPrivatization), the Policy and PlanningDivisiono f MNRT, the Division o f Forestry and Beekeeping, and several donor representatives. The Steering Committee has been broadened and includes the President's Office (Regional Administration and Local Government), the NationalLand Use PlanningCommission, the Vice President's Office (Environment Division), Sokoine University o f Agriculture, and the Private Sector Foundation. At the working level, project oversight and managementwill bethe responsibility o fa Senior Forestry Officer, to be appointed by the Permanent Secretary, and supportedby procurement and financial managementspecialists within the adrmnistrative framework o f MNRT. FBDwill be responsible for implementingactivities to be financedwith IDAresources, and has already put in place financial managementand procurement systems to assist inproject implementation. FBDalready has extensive experience intheseareas, throughimplementationofFRMP. Itis envisaged that FBDi s currently not 'LACI capable', but that a time-bound planfor implementation o f LACIrequirements will beprepared. Financialmanagementandprocurement specialists will be fully engagedinthe development ofthis planas members ofthe QualityAssurance Team. The Forestry Advisory Group was established by FBD, consistent with its policy objectives o f ensuring better overall coordinationat the national level, and will be consulted inan advisory capacity about the scope andobjectives o fthe proposed investments. The Forestry Advisers Group i s comprisedo frepresentatives from the donor community with interests inforest sector development, as well as the NGO andacademic community. Bilateraldonors such as Danida (Denmark), DIDC (Finland), SIDA (Sweden), GTZ (Germany) and NORAD(Norway) have been supporting various types o fpilot activities inthe forestry sector at district level. Inaddition, DIDChas supported the development o fthe NFP. Through the NFP Steering Committee andthe Forestry Advisory Group efforts will be made to make use o f the experience gained andto coordinate donor support relatedto the NFP. The aimwill be to gradually develop and strengthen a sector wide approach inthe forestry sector adaptedto the specific needs and complexities of the sector. CoordinationbetweenGEF ImplementinpAgencies The proposed Eastern Arc forest conservation and management component i s anunusual opportunity for collaboration between two GEF ImplementingAgencies. As such, UNDP andthe World Bankhave - 18-  different comparative advantages. The World Bankhas been at the forefront as a financier o f Government's efforts at civil service reform, andwill take the leadwith regardto financing and supervision o f institutional activities, inparticular, the development and establishment of the TFS, and institutional reforms leadingto better forest conservation, Inaddition, the Bankhas a comparative advantage inthe area o f sustainable financing, and will be responsible for these aspects o fthe GEF-financedactivities. UNDP's strengths are primarily inthe area o f capacity buildingand technical assistance. Inthis role, UNDP will be responsible for development o f the Conservation Planning sub-component o fthe GEF financed EasternArc activity, and o fthe pilot conservation activities inthe UluguruMountains. The Eastern Arc Mountains Conservation Endowment Fund(EAMCEF) will implement the sustainable financing initiativewith IDA and GEF resources. Underthe Forest Conservation and Management Project US$2million has beencommitted for boththe institutional andprogrammaticestablishment o f the EAMCEF. The EAMCEF is a Non-Governmental Organizationestablished by a deed o ftrust under the Trustees' Incorporation Ordinance (Cap 375) which has beenregistered with the Administrator General o f Trustees. An InauguralBoardhasbeen established and is comprised o f representatives o fthe public sector, the private sector, and environmental NGOs. A subsidiary agreementwill be established between the Government o f Tanzania and the EAMCEF, as well as a Project Agreement betweenthe Bank andEAMCEF. Financial ManaPement A financial managementassessmentwas carriedout duringAppraisal missionwhich indicatedthat the Ministry's Finance Department and staff have adequatefinancial management systems which can provide, with reasonable assurance, timely information on the status o f the project as requiredbythe borrower andIDA. The government financial managementsystem and controls over public finances have recently beenupdated andstrengthenedunderthe Integrated Financial Management System (FMS) usingcomputerized accounting software (the so-called`Platinum` system). A satisfactory project Accounting and Financial Management Manual describing the accounting system, procedures, internal controls, chart o f accounts and roles and responsibilities o f the key staff responsible for IDA finances has beenprepared. The Ministryhaswide experience inimplementingIDA projects and inmanagingIDA funds fromthe previousForest ResourcesManagement Project andvarious PHRD, PPF, andGEF resources. Therefore, the project financial managementsystem i s adequatefor the project to be presented to the Board. A review ofaccounting andfinancialmanagementsystemsconcluded that, while FBDhas extensive experience inworking with Bankprocurement and disbursement,it is currently not capable of complying withnew LoanAdministration ChangeInitiative(LACI) Guidelines. An actionplanwas agreedduring Appraisal which shouldbringFBDto LACIcompliance. Agreed actionplan: Before the project i s declared effective, an additional Ministry-qualified accountant will be deployed on a full-timebasis to assistthe current project accountant intheproject financial matters; and The project will be reassessedfor LACIcompliance when a LACIcompatible financial reporting format acceptable to the Bank has beenprepared(based onthe revisedLACIguidelines). - 19-  Provided the above steps are taken, it i s envisagedthat project shouldbe LAC1compliant within 18 months from the date o f project effectiveness. The decision to adopt to the periodic report based disbursement procedures will be made inconsultation with a Bank Financial Management Specialist who will: review experience to date with the quality o fwithdrawal submissions, operation o f the Special Account, SOE submissions and documentation retention inthe field, andthe general effectiveness o f project managementand accounting staff; ensure that the Special Account has been reconciledand any outstanding issues resolved; review supervision reports to assess implementationprogress and issues; e review any available audit information, as well as any other financial reports, with a view to forming an opinionon the reliability o f project accounts; and review the PMR format designed to be usedinconjunction with the Platinum computerized accounting package. Audited financial statementswillbepreparedand submitted within 6 monthsofthe close of eachFiscal Year. The Terms o f Reference for the Audit are included inthe Accounting and Financial Management Manual. Audits remainthe responsibility o f the Controller and Auditor General. Additional costs which mustbe incurredto complete the audit will be coveredbythe proceeds fromthe Credit. There are no deviations from standarddisbursement arrangementsregarding eligibility, funds flow, disbursement percentages, nor are there any special considerations regardingthe use o f Statementso f Expenditure (SOEs) or the Special Account. Annex 6 describes proposed Disbursement Arrangements in greater detail. D. Project Rationale 1. Project alternatives considered and reasonsfor rejection: A follow-on project from the FRMP was considered, involvinga continuation o factivities relatedto woodland management andcommunity forestry within Mwanza and Tabora regions with expansion to other regions. However, it became apparent inthe last two years o f FRMP that forest management and conservation, as well as village andcommunity-based forestry would not succeedwithin the existing institutional structure andthat major institutional reforms were necessaryfor any future forestry interventions to be successful. It hadbeenhoped that the piloting o f at least some aspects o f a forestry executive agency could have been undertaken inthe latter stages o f FRMP, but proposed pilotswere never implemented. The original project concept also didnot include action onplantations. Itwas felt that any institutional reformrelatedto forest management and conservation should include all forest resources, and the adoptiono f specific policy guidance favoring the role of the private sector inplantation management provided an excellent context for includingthis aspect into the project. Incorporation o f a lands component, similar to that under FRMP was also considered. This was rejected as it was felt that any further investment inlands shouldbe undertaken as a stand-alone project activity. These choices were intensively discussedamongst various stakeholders. The project concept was developed through a consultative process, and proposals for project preparationwere an outcome o f a strategic planning workshop heldinJune 1999. - 20 -  2. Major related projects financed by the Bank andlor other development agencies (completed, LatestSupervision Sector Issue Project (PSR) Ratings (Bank-finance irojectsonly) Implementation Development Bank-financed Progress(IP) Objective(DO) Forest and woodland management Forest ResourcesManagement S S Project Biodiversityconservation; lake Lake Victoria Environmental S S ecosystem management Management Project Biodiversityconservation Lower KihansiEnvironmental Management Project Other developmentagencies Catchment protectionand biodiversity East Usambaras Catchment conservation Forestry Project (DIDC); Forest sector planning National Forest Program (DIDC); Catchment protection and Natural Resources community-de\relopment; forest policy Management andBufferZone andlegislation Development Program(GTZ); Biodiversityconservation and UdzungwaMountains Forest community development; Management andBiodiversity Conservation Project (Danida); Village-based woodland management Community-based Natural Woodlands Management Project; UTUMI(Lindi) Woodland Management Projec1 (Danida); Catchment protection Catchment Forestry Program (NOmaY); Biodiversityconservation ReducingBiodiversity Loss at Crossborder Sites inEast Africa (GEFAJNDP) -21 -  the concept of strengthening traditional systemso f woodland management (ngitiri) is fundamentally sound and has good replicationpotential throughout the country. The most important aspect o f the program has beenthe support it has given to people to act to halt the disappearanceof remainingwoodland, and to bringas many pockets o fwoodland as possible under rehabilitation. This has beenaccomplished by working with villagers as the logical, long-term guardians of forest resources to protect andconservethese resources themselves, at little cost to government, andthrough socio-legal mechanisms which they themselves control and maintain according to their own interests. (ii) CommunityinvolvementinJointForestManagementofgovenunentforestreservescanleadto an improvement inthe condition o freserves, and to a sharp reduction inthe threats they face. The approaches pilotedby FRMP could, however, be strengthenedparticularly inregardto more fully transferringdecisionmakingresponsibilities to the communities involved. (iii) Moregenerally,drywoodlandmanagementposesgoodopportunitiesbecauseoftheresilienceof the woodland to harvesting, the cost-effectiveness o f relying on natural regeneration with minimal silvicultural treatments, andbecauseo f the few risks to the environmentposedby sustainable managemento f dry woodland ecosystems. Farmers are apt at adopting simple technologies that are basedon the use o f inexpensive local material, such as the improvedwood stoves. Higher-tech approaches are not needed and are difficult to disseminate through extension. Project identification and preparation benefitedfrom boththe resourceswhich were put into the effort, but also from the longer term iterative process o fproject design, and the linkageswhich were established with sectoral strategies, such as the Tanzania ForestryAction Plan. Indeed, experience with the project suggeststhat there can be significant project implementation benefits when project identification andpreparation i s bolstered by strategic studies, action-oriented research, and ESW. Weaknessesinproject performance were often linkedwith inadequacies inthe prevailing institutional mechanisms for forest managementinTanzania. These place responsibility for forest managementwithin a decentralized institutional structure, without adequatemechanisms for ensuring there i s technical, administrative, and managementoversight. Problems o f governance inthe sector are linked to these weaknesses, and future investments will likely be jeopardized inthe absence o f institutional reforms. The ICRnotedthat the problemi s widely recognized inGovernment, and that the Ministryhas made a commitment to launchinga reform process which seeks to addressthese systemic weaknesses. (vii) Technical assistancemay sometimes be delivered more effectively ifindividualconsultants are selected on the basis o f professional competence andexperience. The packagingof consultancies into larger packages duringthe tendering process limitedGovernment's flexibility infindingqualified individualconsultants, though someefficiencieswere gained. However, consequentdeficiencies inperformance were difficult, time consuming, and costly to rectify. Technical supervision o f advisory servicesneedsto be strengthenedand supported. (viii) A Project Coordination Unitmay facilitate implementationofproject activities, but may have little overall impact on increasing institutional capacity. Inthe case o f FRMP, a PCUwas justified onthe basis o f the needfor coordinationbetween multipleinstitutional partners, but provided little scope for the technical oversight neededinthe sector. Payment o fproject allowances may encourageproject staff to work diligently. Givenpublic spending constraints, this approach is not sustainable inthe long-term. - 22 -  4. Indicationsof borrower andrecipientcommitmentandownership: Since 1996 the Bank hasmaintaineda dialogue with MNRT and FBDon the conceptualization and design o f a future forestry investmentsthat would buildon achievements and lessonsfrom FRMP, but which would consider the forestry sector within Tanzania as a whole and addresscurrent important issues. A letter requesting Bank support for a further forestry project was receivedby the Bank from MNRT in 1998andthe Government's own concept paperwas completed andsentto the Bankin 1998, following several discussions betweenthe government stakeholders and Bank officers. The project as designed incorporates the Government concepts, but further preparation was delayeduntilthe ICRfor FRMP was completed. Government has also seenthat any future project would require the support of a new policy for forestry andto this end it has, over the last two years, vigorously pursued the formulation andeventual adoptionofthe new ForestPolicy(March 1998)andis continuingto pushfor the required legislative changesto support the newpolicy. The overall framework for public expenditure anddonor support to the forestry sector is set out inthe NationalForest Program, which has beenprepared to guide the implementationo f the new forest policy. Boththe NFP and the National Forest Policyprovide important guidance inestablishing priorities which will be captured inthe Biodiversity Strategy andAction Plan, which is under preparation. FCMP is the principalfinancial delivery mechanism for the National Forest Program, andproposed GEF support has been fully blended into this IDA operation. Additional bilateral support for implementation ofthe NFP i s inthe processofbeingmobilized. 5. Value addedof BankandGlobalsupport inthis project: The involvement o fthe Bankwould allow valuable lessons and initiatives started under the previous FRMPandother donor projects to beput into effect anda scaled-up approach to forest managementand conservation taken under FCMP. These include a more effective institutional approach to forest management andconservation as well as the application o f improvedparticipatory approachesto forest management and the involvement o fthe private sector as the key manager inindustrialplantations. The participation o f the GEF and the establishment o f a sustainable financing mechanism for ongoing conservation ofthe Eastern Arc MountainForests, and, eventually, other endangeredareas o f biodiversity inTanzania makes it possible for an integrated and participatory intervention to safeguard one o f the world's most important ecosystems. Added value from the Bank's perspective comes from its global experience inthe design, implementationandfinancing ofbiodiversity conservation and GEF projects. The GEF involvement makespossible a conservation programthat would otherwise have been difficult to achieve. E. Summary ProjectAnalysis(Detailedassessmentsare inthe project file, see Annex 8) ,- 1. Economic(see Annex 4): -' Cost benefit NPV=US$ million; ERR= % (see Annex 4) F I- Cost effectiveness IncrementalCost 'r-i Other (specify) The institutional reforms which FCMP seeks to support through the NationalForest Programare intendedto help to establish a new institutional framework, which is primarilyorientedtowardimproving service delivery functions: facilitating villages to establish Village Forest Reserves, strengthening the capacity for the management o f strategic forest reserveswhich are beingmaintainedinthe national - 23 -  interest, improvingthe financial sustainability o fforest managementinterventions, other local conservation and protection measures, and strengthening the role o fthe private sector inindustrial plantationmanagement. The current constraints inthe forest sector inTanzania call for a comprehensive approach to the development o f a sector-wide approach toward forest conservation andmanagement. Public financing o f woodland and forest conservation andmanagementisjustified both from the perspective o ftheir role in mitigatingthe impactsofpoverty as well as from the perspective ofthe environmentalvalue offorests andwoodlands as watershed catchments, which maintainwater flows to urbanareas andto hydroelectric generating facilities. Other environmental benefits from forest and woodland conservation and management accrue becauseo fthe value o f carbonsequestration. An IncrementalCostAnalysishas beenprepared for the GEF financed project component focusing on conservation o fEasternArc Mountains forest biodiversity (see Annex 12). A separateanalysis of the industrialtimber plantationsector was preparedwhich sought to estimate the value o f the industrialtimber plantation resource, and the economics o f project interventions, and this i s summarized inthe Annex. Poverty impacts. Tanzania's woodland and forests are extremely important for mitigatingthe impacts o f ruralpoverty. Recent studies have shown that hlly40 percent of total household consumptioninsome rural areas is accounted for by forest andwoodland products such as honeyproduction, firewood, constructionmaterial, and wild fruit andother foods (a point notedinTanzania's Poverty Reduction Strategy Paper). Inaddition, forests and woodlands are an important source o f dry seasongrazing, reducinghouseholds' exposure to environmental risk. Ruralhouseholds generally use a wide variety of environmentalresources from woodlands, and the sizable aggregatevalue o fenviroi~eiitally~eri~ed income is made up o f a fairly large number o f smaller individualincome sources. There is considerable complexity inthe factors which determine levels o f resource use: different households use different resources for different reasons at different times. Still, the conclusions are inescapable: the ruralpoor are heavily dependent onresourcesderived from forests and woodlands, and deforestation and forest degradation poses a significant threat to rural livelihoods. FCMP i s designed inpart to increasethe capacity o f villages to managewoodlands. It derives from experience with pilot and other operations acrossTanzania, which suggestedsignificant scope for improvingthe effectiveness o f this approach toward village-based management. As such, FCMPis seekingto facilitate the development o f local managementschemes through cost-effective interventions which serve primarily to informvillages and communities o fpolicy andlegal changes which underpin their rightsover localwoodland resources. Environmental valuesand the national economy. While the biodwersity o fthe Tanzania's tropical high forests i s o f extraordinaryinternational significance andlocally is o f great value for mitigatingthe impacts o fpoverty, the value of these forests to the national economy, primarily through water and energy production, is o f great national importance. The EasternArc forests, for example, cover several major catchments which collectively provide water for all o fthe nation's coastal communities (including Dar es Salaamwith its populationo f 3 million). These mountain forests feed more than 22 rivers, includingthe Sigi, Ruvu, Ruaha, Kihansi, and Rufiji. The Ulugurucatchment, for example, provides the main source o f drinkingwater to bothMorogoro town and Dar es Salaam. Hydroelectric energy production is similarly heavily dependent on maintainingthe integrity o fthese forests. Total installed electric generating capacity inTanzania (maximum annual firmenergy) i s 1323 GWh(1:60 year reliability). Hydroelectricity accounts for 720 GWh (54 percent) o f the total. O fthe 6 hydroelectric - 24 -  stations (Mtera, Kidatuand Lower Kihansiinthe RufijiBasin, andNyumbaya Mungu, Hale, andNew Pangani Falls onthe Pangani River), only 2 (Mtera and Kidatu) have seasonal storage capacity. The rest are `run-of-the-river' facilities which depend on more or less constant river flow, which, inturn, is dependent on the integrity o fwatershed catchments andthe forests found there. Other environmentalservices captured by the macro-economy associatedwithTanzania's forests impact positively on agricultural production andalso result from timber harvesting (both through the legal and illegal felling o f trees used inconstruction and to make furniture and charcoal). More recently a small ecotourism industryhas developed. There are some indications o f a growing trade inthreatened species o f insects and reptiles. Accordingly, there is a strong needfor sustainableuse o f forest products for these purposes and activities such as tourismwhich maximize the non-destructive uses o f forests. Carbonsequestra~ion.Simply becauseo f their very great extent inTanzania, miombo woodlands in particular have great potential for adding to the growing carbon dioxide content o fthe atmosphere, or helpingto reduce it. A well stocked hectare o f miombo woodland can sequester 200 to 300 tons o f carbon. Various sourcesplace the economic value o f sequesteredcarbon at $5 to $10 per ton, andso there are considerable benefits to be gained by conserving miombo, by increasing rates o f sequestration, or by limitingfuture losses. For example, against miombo stocks o f around 30 millionha inTanzania, stocked at a rate o f 150 tons o f carbon per hectare, an increase incarbon sequestration o f a tenth o f a percent over the life o fthe project would yield around US$22million inglobal environmental benefits. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR= % (see Annex 4) Consideringthe extent o f the asset, public fknding for forestry is generally inadequate and irregular. Over the last 10years, budgets to the Forest and Beekeeping Divisionhave been increasinginnominal terms -- growing four-fold from 1993194to 199912000 though have remained roughly constant when -- inflation i s taken into account. In199912000FBD's recurrent expenditure was aroundTSh 2.3 billion (US$2.9 millionat the then prevailing exchangerate). Out ofthis TSh 1.3 billion came from the Treasury and covered staff salaries; TSh 980 million was from revenue collected andretainedbyFBD and was used for forest operations. This sumi s intendedto provide for the management o f around 13 million ha (averaging about US$0.22 per ha). Outside o f specific donor-financed activities, development and recurrent costs are partly financedbyretainedrevenues, which currently total around 56 percent o f all revenues collectedfrom the sale o ftimber and other products from central government Forest Reserves. For the most part, FBDrelies on District staff (rather than FBD staff) to collect revenues, with the exceptiono fthe plantation sector, which accounts for around 40 percent o f total revenues collected. In199912000,revenuesfromCentralGovernmentForestReserves(includingplantations) totalled roughly TSh 2 billion (around US$2.5 million at the exchange rate which prevailed at the time). FBD total recurrent anddevelopment expenditures in 199912000 (including a proportion of, butnot all, donor-financed expenditure) totalled around TSh 5.6 billion. Financing o f the forestry sector by the donor community peaked in 1991192,when donor spending accounted for 90 percent o f all spending inthe forestry sector. Currently, it is estimated to account for around 68 percent o f all spending inthe forestry sector. It i s difficult to compare the efficiency o fpublic vs. donor spending because o fthe highlydistortedimpact o f heavy investments inrelativelyexpensive technical assistanceto manage donor financed projects. The bulko f donor assistance, however, is not mediated bythe budget process. As much as 60 percent o f donor investments inforestry are not captured by the budget. Inthis environment, arguably, donor - 25 -  resourcesare financing donor priorities, rather than the priorities outlined inTanzania's forest policy. It i s widely agreedthat the donor community needsto focus its priorities ina manner which i s more carefully aligned with Government's. The National Forest Program poses a mechanism for doing this, The development o f a sector-wide approach to financing o f the forestry sector i s a longer term objective o fFCMP. Investments inimproving financial management, procurement management, overall institutional management, and inmeetingservice delivery standards are intendedto establish the institutional framework for a sector-wide approach. FiscalImpact: Improvements inthe framework for royalty collection are expected to strengthen the overall financial sustainability o f the Tanzania Forest Service. FCMP proposesto change the overall framework, and to develop the means for returningrevenuesto villages and other forest managers. 3. Technical: Miombo woodland managementoptions are beingdeveloped and tested by the Tanzania Forest Research Institute (TAFORI), and some experience inthis area was also gained as a result o f FRMP. These findings will be more fully developed, andresearchrecommendations to improve woodland regeneration will be implementedthrough theproject. Lessonswith regardto the involvement of communities in forest management, gained from FRMP and other donor-assisted efforts, have been incorporatedinto the project's design. Collaboration with other researchinitiatives through the Center for International Forestry Research, andwith WWF will be strengthened. 4. Institutional: Institutional reform comprises a central element o f this project. The formation o fthe Tanzania Forest Service has already beenthrough initial processingwithin the context o fthe Civil Service Reform Programandthe Executive Agency Program, and it has been recommendedthat the TFS be established as a `self-starter`, with the assistanceo fthe CSD. The structure, staffing, andfunctions, ofthe TFS, as well as links with the MNRT,FBDanddistrict administrations remainto be determined, and these planning steps will feature prominently duringproject implementation. 4.1 Executingagencies: The project is to be executed bythe Ministryo fNatural Resourcesand Tourism. Close cooperation duringimplementationis expectedwiththe InstituteofResourcesAssessmentand its Tanzania Natural ResourcesInformation Center, Sokoine University o f Agriculture, the Civil Service Department, and TAFORI. Local government will also be a critical partner duringimplementation. The EAMCEFwill implement the sustainable financing initiative with IDA andGEF resources. Under the Forest Conservation andManagement Project US$2 million has beencommittedfor boththe institutional andprogrammaticestablishment o f the EAMCEF. The EAMCEFi s a Non-Governmental Organizationestablished by a deedo ftrust underthe Trustees' Incorporation Ordinance (Cap 375) which hasbeenregistered with the Administrator General o f Trustees. An InauguralBoardhas been established andis comprisedo f representatives of the public sector, the private sector, and environmental NGOs. A subsidiary agreementwill be establishedbetween the GOT andthe EAMCEF. - 26 -  4.2 Projectmanagement: Itisenvisagedthat FBDis currently not 'LACI capable', butthat atime-bound planfor implementationof LACI requirements will be prepared. Financialmanagement and procurement specialists will be fully engagedinthe development o f this plan as members o f the Quality Assurance Team. Modalities for the managemento f the plannedEasternArc Mountains Conservation Endowment Fund have beendeveloped and are included inthe Trust Administration Manual. Giventhat the Endowment Fundis beingnewlycreated, the development ofthese modalities is likely to continue duringproject implementation. It is not envisaged that the Trust will be fully operational untilthe thirdyear o f project implementation. 4.3 Procurement issues: Procurement andDisbursement issues are summarized inAnnex 6 4.4 Financial managementissues: A FinancialManagement Capacity Assessmentwas completed inconjunctionwith the Appraisal Mission and is inthe project files (Financial Management Assessment, Ministry of ~ a t u r aResources and l Tourism,October 25, 2001). There are no significant financial managementrisks faced by Tanzania which are expectedto impact the project. The recently completed Country Financial A c c ~ u n t a ~Assessment (CFAA) indicatedthat i l ~ ~ Government has established a sound financial managementand accounting systemto handle public accounts. Already there has beenan on-going special training program inplace since July 2001 for government accountants, auditors, Permanent SecretariesandMembers o fParliament on the control and management o f government funds andproperties which i s basedon new legislation. The main issues o f the existing public sector systemthat can be drawn from the CFAA which are relevant to the project include: (i)non-compliance with statutory rules andregulations and recordmanagement; lack o f sustainable technical capacity and Information Technology (IT) strategy to manageGovernment's IntegratedFinancial Management System (IFMS); lack o f culture o f accountability and enforcement of internal controls on the public finances; (ii) o f independency o fpublic national audit office; lack ineffective internal auditing. Inordertoaddresstheabovegaps,thereareon-going institutionalcapacitybuildingactivitiesunderway to strengthen the public accounting system. Withrespect to audit compliance and FBDIMNRTaudits for FRMP, these were consistently clean. Audits for the PPF-financed activities andthe PHRD grants are up-to date, andclean. There are no audit reports outstanding underthis sector. There are no major financial risks for this project. The additional support o f a qualified accountant from the Ministryi s important to ensure that qualified financial staff are adequatefor handling project accounts, for ensuring there is capacity buildingwithin the Ministryinfinancial management. Buildingonpast experience with implementationofPHRDiGEFIPPF-financedactivities, banking arrangements are expected to be satisfactory. Audited financial statements (project, SOEs, and Special Account1PMR) will be prepared andsubmitted within 6 months o f the close o feach FiscalYear. The Terms o f Reference for the Audit are included in the Accounting and Financial Management Manual. Audits remain the responsibility o f the Controller - 27 -  and Auditor General. Additional costs which may be incurred to complete the audit will be covered by the project. Documentationwith respect to SOEPMRexpenditures will beretainedbythe Ministryat the Ivory Rooms. 5. Environmental: Environmental Category: E (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessmentandEMPpreparation(including consultation and disclosure) and the significant issues andtheir treatment emerging from this analysis. The project has beenclassifiedas Category B with respect to its expected environmental impacts. The project i s not expected to result inany significant negative environmental or social impacts. An analysis o fEnvironmentaland Social issuesrelatedto the project was carriedout duringproject preparationand is includedas Annex 11to this Project Appraisal Document. Preparation o f the analysis was launched duringthe February 2001 stakeholder workshop convened inDar es Salaam which reviewed the project formulation andthe key issueswhich were emerging duringthe preparationprocess. The analysis was completed duringthe June 2001Technical Mission, where the preliminary findings were discussedand agreedwith Government. The key issuesrelatedto environmental and social safeguards are summarizedhere: Adequacy of implementing institutionsto address environmental management OPBP 4.01. - Althoughthere are significant shortcomings inthe national environmental management and regulatory framework have beenhighlighted, the forest sector has a strong assortment o f provisions to address virtually all potential environmental concerns that will arise as a result o f this project. These are specifically contained inthe relevant forest sector policy, NationalForest Program, and draft revisions to forestry legislation. Inaggregate, Tanzania's forest policy framework is one o fthe most constructive and forward looking inAfrica. Financing commercial logging operationsor thepurchase of logging equipmentfor use in primary tropical moistforests - OP/GP 4.36. Consistent with the Bank's current Forest Policy, the project will not finance any activities which leadto the logging o f highforests. The project will be supportingcommercial operations &inplantation forests. These forests consist of eucalyptus, cypress, pine and teak -most o f which were established over the last 30 years. The current standing crop has a history going back decadeson landthat was never covered by tropical moist forest, but was primarily grassland. The sixteen plantation forest blocks covered bythe project will continue to undertake silvicultural practices including harvest andreplanting. Participatory forest management plans will allow for expansion o fvillage and community basedplantation woodlots, but only with management plans that ensureprotection o f sensitive, biologically important and watershed catchments. Use of a sector-wide approachfor forest management OP/GP4.36. The National Forest Policy, - NationalForest Program, draft forestry legislation, and technical guidelines all constitute essential components o f a solid sector-wide approach to the forest sector inTanzania. A11o f the Bank's policy commitments inthis regardhave been addressedby GOT and include: adoption ofpolicies and a legal institutional framework for forest management; adoption o f an appropriate forestry conservation and development plan; use o f social, economic and environmental assessments of commercial forests; setting aside compensatory preservation forests; and establishment o f institutional capacity to implement and enforce these commitments. - 28 -  e Protection of forest areas that are considered critical natural habitats andpreservation and sustainableuse of forests of high ecologicalvalue - OP/GP 4.36, UPBP 4.04. The project proposes to support a numbero f activities within its three components that will adhereto forest sector provisions for identification, protectionand management o f criticalhabitats. These include, in particular, catchments and the Eastern Arc MountainForests. The sustainable management o f dry woodlands, however, i s expected to be an outcome o fproject implementation. Ultimately, the environmentalbenefits o f this approach are expected to be substantial, and will provide significant opportunities for increasing the viability o f managedmiombo woodlands. Miombo woodlands are unusual inthe extent to which they are extremely resilient to harvesting, and regenerate readily. Once miombo woodlands havebeen harvested, researchhas shown that regeneration i s actually enhancedbythe tillage o f soils, suggestingthat the management o f settlement inwoodland areas may be an effective woodland management strategy -- resultinginhigher yields andbetter overall productivity -- than outright miombo conservation or selective harvesting. Forest managementplans to be promotedby FBDwill contribute to increasing the viability o f these woodlands. The participatory forest managementapproach advocated inthe project also provides for local communities andforest users to identifyand manage ecologically important forest areas basedon their ownneeds. e Stakeholder consultation including theprivate sector and localpeople inforest management - OP/GP 4.36. Provisionsfor continuing stakeholder consultations are made inthe three project components. For National Forests, LocalAuthority Forests, Village and Community Forests, and Private Forests, the basic premise for future sustainable use is the development o f forest management plansthat are defined by a stakeholder involvedprocess. FCMPhas specifiedparticularprovisions for ensuring that all stakeholders, from the private sector to localpeople, are included inthe development o f forest managementplans. Avoid or minimize involuntary resettlementas it applies inparticular to encroachment inforest reserves -OPBP 4.12. The problemofencroachment inreserved forests hasbeena long-standing one, and accompaniedthe move to a more open economy which took place inthe early 1990s. Government has put inplace various mechanismsto limit the problem o f encroachment, including boundary demarcation, increased patrols, voluntary resettlement, and the development o fbenefit sharing schemes for communities livinginbufferzones around reserved forests. Proactive strategies, such as the potential for the establishment of Village Forest Reservesoffer perhaps the best opportunities for bringingcommunities andpeople living inforested areas into forest protection and management schemes. Experience has shown that reservation as a Government forest, as such, i s amongst the most costly and least effective mechanisms for limitingdamageto woodlands and forests. MNRT has developed a set of detailedguidelines for community basedforest managementwhich define methods for defining forest reserve boundaries, identifyingencroachment problems, consulting with offenders andestablishing fines and provisions for getting such offenders off designated lands. The LandAct also contains specifications for ensuring that peoples rights are duly respectedandthat incases where landappropriationis required, due compensation i s provided. Measures for appeals and investigations are also defined. - 29 -  Government reiterated duringpreparation that involuntary resettlement would not be carried out in conjunction with any project implementationactivity. Government has also agreed that inthe unforeseen event that involuntary resettlement becomes necessaryinthe course o fproject implementation, a detailed resettlement planto be completedand subject to IDA review well in advance of any resettlement actions associatedwith any o fthe project components. 5.2 What are the mainfeatures o f the EMP and are they adequate? The project's Category B rating does not require preparation o f an Environmental Management Plan. The EnvironmentalAnalysis, however, recommends that an environmental andsocial safeguardschecklist shouldbe incorporatedinto the Guidelines for the establishment of Village Forest Reserves, that detailed socio-economic studies shouldbe carried out inthe pilot industrial plantation areas affected byprivate sector involvement once these are identified, and that the impact o f the Participatory Forest Management component and other project activities on the integrityo ftropical highforests shouldbe monitored. 5.3 For Category A and B projects, timelineand status o f EA: Date o f receipt o f final draft: September 1,2001 The Environmental Analysis o f the project has been completedand i s includedas Annex 11to this Project Appraisal Document. 5.4 How have stakeholders been consulted at the stage o f (a) environmental screening and (b) draft EA report on the environmental impacts and proposedenvironment managementplan? Describe mechanisms o f consultationthat were used and which groups were consulted? The environmentalrating for the project was basedonthe results of consultations duringworkshops in June 1999 and February 2001. The findings o fthe Environmental Analysis were discussedwith Government and with key stakeholdersduringthe June 2001 Technical Mission. 5.5 What mechanisms have been established to monitor and evaluate the impact o f the project onthe environment? Do the indicators reflect the objectives andresults o f the EMP? The development o f an improvedinstitutional capacity to screenandmonitor projects relatedto the forestry sector for their environmental impact i s expectedto be an outcome o f the proposed institutional reforms, andthe establishment o f the Tanzania Forest Service. The project includes provisionfor buildingthis capacity inthe proposedTFS. A safeguard monitoring planhasbeendeveloped, andis outlinedinh e x 11, to ensurethat safeguard provisions are adequately implemented and sustained. The monitoring programwill be further developed, and will indicate how well each o fthe components is implementing the key provisions definedpreviously. The monitoring planwill define indicators for measurement, methods to be used, frequency of measurements, detection limits, andmonitoring responsibilities. The planwill be implementedwithin the overall context o f institutional reforms inthe Forestry andBeekeeping Division. The planwill include a descriptiono f how reviews o f selectedissues o f concern will be undertaken. The safeguard indicators and monitoring plan will be incorporated into overall project monitoringand evaluation. MNRT will be the ultimate GOT information focal point. The Bank will include inthe project supervision planthe participationo f an environmental specialist inselectedmissions, the Mid-Term Review and inthe ImplementationCompletionReport. This specialist will review progress in implementation o f the project safeguardprovisions. - 30 -  6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The democratizing impact associatedwith the establishment o f Village Forest Reserveshas been significant inTanzania, and will continue to be so duringthe course o fproject implementation. The project will have social impacts as a result o fthe participationo f rural communities and families inthe conservation andmanagemento fwoodlands as well as inthe development o f the forest conservation strategy, and inthe implementationo fpilot activities, inthe Eastern Arc MountainForests. These actions should yieldpositive social benefits. However, all this will require a highdegree o f social interaction with the relevant communities, andproject managementwill needto be sensitive to this requirements. The approaches to participatory managementof the woodlands should also take note o f the recommendations from the evaluation o fjoint forest managementand ngitiri registration under FRMP and from experiences inother projects with relatedactivities. 6.2 ParticipatoryApproach: How are key stakeholdersparticipating in the project? Key stakeholders are primarily communities with interests inwoodland andforest conservation and management. The central feature of the ParticipatoryForest Management sub-component o f the Institutional reform component seeks to strengthen the involvement o f these stakeholders inforest and woodland management. With respectto the GEF component, preparation ofthe conservation strategy for the EasternArc will require extensive consultationwith communities andlocal governments inorder to seek to develop a consensus about conservation and managemento f the forests of the Arc. Implementation o f the Uluguru Community-based conservation component will be carried out inconjunction with several strong local NGOs. The Eastern Arc Mountains Conservation Endowment Fund(EAMCEF) has already been constitutedas anNGO, and will be the primary implementingagency o fthe sustainable financing subcomponent o f the project. Key partners working with the EAMCEF are represented on its Boardand are prescribed inits Deedo fTrust. These include WWF Tanzania, the Wildlife ConservationSociety o f Tanzania (WCST), Songas, and an academichesearch institution (to be identified). 6.3 How does the project involve consultations or collaborationwithNGOs or other civil society organizations? Implementationo fthe Community-based pilot forest conservation activities and management o f the EAMCEF will be undertaken inthe close cooperation withNGOs andother Civil Society organizations. Potentialcollaborators may include CARE Tanzania, the Tanzania Forest Conservation Group (TFCG), Tanzania Association o fForesters (TAF), WWF Tanzania, and WCST. 6.4 What institutional arrangementshave beenprovided to ensurethe project achieves its social development outcomes? Strong institutional support and capacity buildingwill feature inthe institutional reformprocess, with a particular emphasis onbuildingthe capacity to undertake participatory forest management. 6.5 How will the project monitor performance interms o f social development outcomes? Social development outcomes will be monitoredas a regular part o f the project supervisionprocess. - 31-  7. Safeguard Policies: Pest Management(OP 4.09) Yes 0 No CulturalProperty(OPN 11.03) Yes NO IndigenousPeoples(OD4.20) Yes 0 NO InvoluntaryResettlement(OPIBP4.12) Yes 0NO SafetyofDams(OP 4.37, BP4.37) Yes 0 NO ProjectsinInternationalWaters (OP 7.50, BP7.50, GP 7.50) 1 Yes I)NO ProjectsinDisputedAreas (OP 7.60, BP7.60, GP 7.60)* . IYes 0NO 7.2 Describe provisions madeby the project to ensure compliance with applicable safeguardpolicies. The project complies with the applicable safeguardspolicies. Compliance is reviewedinSection E.5. F. Sustainabilityand Risks 1. Sustainability: The project's sustainability is dependent on four key elements: The successful establishment o f a TFS. Successwould include effectively functioning forestlwoodland management andprotectionoperations inforest reserveswithin designated districts andvillages. Adequate collection o f forest revenuesto sustain the TFS with benefit sharing arrangementswith Villages. There is considerable potentialto improve rates o frevenue collection, well above current levels (estimated at around 10percent o fthe revenues which are due). The development o f a sustainable mechanism for financing biodiversity conservation, including guidelines for the establishment and managemento f trust funds andother financial mechanisms. Acceptance by Government at the highest level o fprinciples o f sustainable forest management and biodiversity conservation, to complement village-based forest management. Such acceptance would needto be translated into active support for the activities such as those under FCMP. la. Replicability: NIA - 32 -  2. Critical Risks (reflecting the failure o f critical assumptions found inthe fourth columi o f Annex 1): Risk Risk Rating 1 Risk Mitigation Measure From Outputsto Objective There i s continuedstrong support for M Service delivery orientation i s incorporatedin introducing institutional reforms which institutional change proposals. Performance focus on service delivery functions and monitoringmechanisms are developed and mechanisms. implemented. The needfor revenue to sustain the M The potential for revenue sharing is more fully institutional structure can be balanced developed; project coordinates with fiscal with the needfor communities to retain decentralization initiatives. benefits from forest and woodland management. Encroachment issues are adequately S Encroachment issueswere reviewedduring considered. project preparation. GOT intends to address encroachment through participatory forestry, improved boundary marking, border patrols, and other initiatives. Government maintains its commitment to M Potentialrevenue benefits are expected to be the involvement o f the private sector in significant. industrial plantation production. Biodiversityconservation remains a N Catchment protection as an outcome o f forest priority for Government action. biodiversity conservation has significant national value. FromComponentsto Outputs Management and staffo f sectoral S Focus onperformance monitoring i s intended institutions internalize the change to buildnew institutional behaviors. process. Service delivery mechanisms can be fullj N Project builds on pilot activities already articulated. completed inFRMP and through other interventions. Communities and individuals have M Experience with pilot initiatives suggest interest andcapacity to undertake forest villages will have strong interests in andwoodlandmanagement. community-based woodland and forest management. Land tenure reforms strongly supportive o f localnaturalresource management. Private sector has capacity to undertake S Risk assessmentswill be carried out as part of plantationmanagement, and markets can project preparation. support these investments. Community interests inbiodiversity N Project design is intendedto focus on ensuring conservation can be tapped. longterm sustainable use o f forests. Co-financing for sustainable financing M Phasedimplementationo f Endowment Fund mechanisms can be mobilized. depends on donor co-financing. Resistance to professionaland S Project will work with established mechanisms institutional change limits effectiveness already inplace for institutional reformthrougl o freformprocess. the CSD. Overall Risk Rating M Risk Rating H (High Risk), S (Substantial Ri - , M (Modest Risk), N(Neg1igibleor Low Risk) -33-  3. PossibleControversial Aspects: Private sector involvement inplantation production, while mandated inpolicy, has not beenundertaken inTanzania. Multiplestakeholderswith competinginterests requirethat adequateconsultations are undertaken beforemoving forward with this component. Village-based approaches to the conservation o f ecologically sensitive areas will require adequate safeguardsto ensure that villages protect these habitats. There is considerable skepticism amongst conservation NGOs that villages have the capacity to take on forest biodiversity conservation. G. Main Grant Conditions 1. EffectivenessCondition (1) The Project Agreement has beendulyauthorized or ratifiedby EAMCEF. (2) The EAMCEF Subsidiary Agreement has been duly authorized or ratifiedby the Recipient and EAMCEF. 2. Other [classify according to covenant types used inthe Legal Agreements.] (a) The condition for the disbursement o f the Grant into the endowment fund is the successful achievement o fthe following eight indicators: successful establishment and functioning o f the Secretariat (i.e. key positions inthe Secretariat have been filled, audits have been completed and are clear, an acceptable 2-year work planis developed); finalization o f the Financial, Operations, and Manage~entManual which defines and clarifies procedures andoperations for the EAMCEF and its approval by the Bank, establishment and functioning o fthe Endowment FundBoard(i.e. regular Boardmeetings, appointment o f four new Boardmembers, application o f the procedures for Board members); development and launching o fthe fundraising strategy; grant making activities have begun (proposals solicited, competitive selection procedures followed, grants awarded and pilot activities are under implementation); at least one LocalAdvisory Committee hasbeen established; documented adherence to the policies, procedures and principles set forth inthe Deedof Trust; and (viii) documented significant co-financingfor the EAMCEF. (b) Asset manager contract has been enteredbetween EAMCEF and the Asset Manager. - 34 -  H. Readinessfor Implementation r-- -1.a)Theengineeringdesigndocumentsforthefirstyear'sactivitiesarecompleteandreadyforthe 0 b)Not start ofproject implementation. 1. applicable. - -2.Theprocurementdocumentsforthefirstyear'sactivitiesarecompleteandreadyforthestartof project implementation. il]3.TheProjectImplementationPlanhasbeenappraisedandfoundtoberealisticandofsatisfactory - quality. I 4. The following items are lacking and are discussedunder loanconditions (Section G): I. Compliancewith Bank Policies 7 -1.ThisprojectcomplieswithallapplicableBankpolicies. 02. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bankpolicies. Team Leader - 35 -  Annex 1: Project Design Summary TANZANIA: EasternArc ForestsConservationand Management Project I II Sector-relatedCAS Key Performance Hierarchy of Objectives Criti Goal: Sector Indicators: Sector1country reports: rromGoalto Bank Mission) Improving environmental 3etter woodland and forest Forest sector ESW Stabilizingforests and quality :onsetvation and management improving livelihood sources ~ycommunities and for localpeople help ndividuals alleviate poverty ina significant way Promotingpoverty reduction 'ncreasedprivate sector Baseline and monitoring Private sector has capacity to through private sector growth nvestments inforest reports and ESW manage forests, and markets nanagement and industry are accessible Civil service reform :mprovedperformance o f Performance monitoring Reforms are sustainable Yorestry institutions reports GEF Operational Program: 3utcomeIImpact Indicators: Forest Ecosvstems ODerationalProgram Promoting in-situconservation Extent o fforests brought Baseline and monitoring Government maintains byrelying onthe involvement under community-based reports commitment to principles o f o fcommunities conservation Biodiversity Convention Promoting sustainable use Forest cover loss is slowed CIS and aerial surveys; mechanisms for biodiversity household consumption conservation surveys Promoting cost-effective Conservationmeasures are Sectoral expenditure reviews conservation measures financially sustainable Outcome IImpact Project reports: from Objective to Goal) Indicators: To assist Government in Forest and woodland cover is Quarterly monitoring reports Government remains implementingits new policy, brought under effective committedto the objectives bydeveloping a framework for managementbycommunities Household surveys o fthe National Forest Policy the long-term sustainable and individuals inproject and o fthe National Forest management and conservation areas Supervision missionreports Program o f Tanzania's forest resources, Government remains strengtheningthe role of Private sector is involved in Evaluation mission reports committedto supporting individuals, communities, plantation management (mid-termand final) participatoryforest villages, and the private sector conservation and inmanagement and Mechanisms for forest management conservation o f forests, and biodiversityconservation are implementingthis framework more fully established on a pilot scale - 36 -  Key Performance Data Collection Strategy archv o Indicators -- Crit S Dutputfrom each Output Indicators: 'rojectreports: 'romOutputsto Objective) 2omponent: The project is expected to: j)establishanewnational New institution is inplace innualwork programs and Continued strong support for Yorestry institutional with improved capacity for onvard budgets reforms which focus on iamework effectively to implementing policy service delivery functions jupport the sustainable objectives, improved financial 'erformance monitoring and mechanisms nanagement and protection o f sustainability, and with a eports and service delivery Encroachment issues are ranzania's forest, woodland greater focus on service urveys adequately resolved during indindustrial plantation delivery project design resources; 'roject supervision reports :ii)establishtheframework Private sector i s involved in Continued commitment to For involvement o f the private plantation development and involvement o f the private sector in industrial plantation management sector levelopment and management; and (iii) develop the institutional Institutional structure and capacity within the forestry capacity is inplace, backedup sector for coordination, by sound consultative financing, and management o f management planning, and biodiversity conservation financial mechanisms, to interventions within undertake community-based Tanzania's forests, in conservation o f forest particular inthe forests o fthe ecosystems Eastern Arc mountains. - 37 -  C S le Project ComponentsI iputs: (budgetforeach roject reports: *omComponentsto Sub-components: omponent) utputs) 1. Reformofforestry iS$25.2million (IDA) -ogressand disbursement vlanagement and staffo f institutions ports iectoral iiistitutions a) Establishment o fthe ntemalize the change Tanzania Forest Service irocess b) Improving revenue Service delivery mechanisms collection from forests :an be fully articulated andwoodlands Zommunities and individuals c) Improving service delivery lave interest and capacity to mechanisms for indertake forest and participatoryforest woodland management and woodland management 2. Private sector JS$3.3 million (IDA) rogress and disbursement ?rivate sector has capacity to management of industrial :ports indertake plantation plantations nanagement and markets can a) Improving the plantation iupport these investments resource informationbase and management planning capacity b) Strengthening institutional support services for private sector involvement c) Pilot alternative management o f selected industrial plantations d) Monitoringand evaluation 3. EasternArc forests JS$12 million (GEF) rogress and disbursement Political support for conservation and JS$2 million(IDA) :ports biodiversity conservation is management maintained a) Eastem Arc Mountains JS$7million(GEFIWB) Community interests in Conservation Endowment biodiversityconservation car Fund be tapped b) Improving Institutional JS$275,000 (IDA) Co-financing for sustainable Support Services for financingmechanismscanb< forest Biodiversity mobilized conservation Effective cooperation c) Developing Integrated between the involved GEF Conservation Strategy for JS$5 million (GEFIUNDP) ImplementingAgencies EastemArc forests maintained d) Piloting communitybased forest conservation activities inUluguru Mountains. 4. Proiect administration JS$0.7 million (IDA) I'rogress and disbursement 'roject activities are andmanapement reports iainstreamed into the lperations of the Ministry - 38 -  Annex 2: DetailedProject Description TANZANIA EasternArc Forests Conservation and Management Project This Annex is condensed from the Working Papers which describe each project component more fully, and which comprise part of the Project Implementation Plan. Project costs include IDA and ' GEF financing (where appropriate), and all contingencies and counterpart financing. By Component: Project Component 1 - US$26.70 million This component has already beenapproved onFebruary 26,2002, as part ofthe Forest Conservation and Management Project (PO58706). Suwortinp institutionalchange and improving:service delivery This component will assistthe government withthe design andestablishment ofthe Tanzania Forest Service (TFS), as a specialized 'executive agency' as defined bythe ExecutiveAgencies Act (1997), and consistent with the wider and on-going nationalprogramo f civil service reform. It is envisaged that the Tanzania Forest Service will, among other things, have responsibility for the protectionandmanagement o fnatural forests andthe development andmanagemento f industrial plantations (including promoting the private sector to take on these tasks). Initially, the agency will be established on a limitedbasis with clearly definedregional responsibilities and coverage, although the concept i s that an agency with a nationalmandate will eventually be established. Technical assistancewill be provided to work with FBD andthe Civil Service Department(CSD) and other relevant government agencies to designthe structure and functions o f the agency and to draw up the necessaryimplementationplans and guidelines for establishment o f the agency, including the formulation o f business and staff recruitmentplans. This component will also provide support to buildon experience from previous Bank-financedoperations, and uponthe opportunities posedby the new Forest Policy, and plannedlegislation. Three sub-components o f this activity are envisaged: (9 Establishment of the Tanzania Forest Service, focusing on the phased-in introduction o fthe new executive agency, with clearly defined roles, functions, performance standards, and monitoring. This sub-component wouldprovide resourcesto managethe changeprocess, to strengthen the capacity for administrationand management, to rationalize and to strengthen the capacity for tasks related to policy, planning, and legislation (which would remain with the Ministry),and would support a badly-needed program o f investment ininfrastructure. (ii) Improvingrevenuecollectionfromforestsandwoodlands,improvingthecapacityoftheTFS to become self-financing, and to ensure that revenues are reinvested at the local level inforest protectionandmanagementthrough localinstitutions. This component will develop alternative revenue collection mechanisms, and monitoring systems to improve rates o f collection. (iii) Improvingservice-deliverymechanismsforparticipatoryforestandwoodlandmanagement, inparticular, support for the establishment ofVillage Forest Reserves,woodlandmanagementby individuals andcommunities (ngitiri),and Joint Forest Management, buildingon experiences pilotedinearlier operations. This sub-component will be implemented inconjunction with community-based forest managementactivities which, it i s envisaged, will be supported by the Government o f Denmark. - 39 -  A mid-termreview woulddetermine outstanding issuesandproviderecommendations for improvingthe efficiency andeffectiveness of the TFS. A further evaluationwill beundertaken prior to project completion and, as well as determiningthe degree o f achievement and success o f the TFS, will develop lessonsfor the future. The three sub-components are described here infurther detail: ~stabli~hment the Tanzania Forest Service (USU4.2 million) of The rationale for the establishment o f the Tanzania Forest Service has been clearly established bothin policy and inthe National Forest Program(NFP). The project intends to finance a process which leads to the establishment o f the TFS. The process o f establishing anAgency i s definedby guidelines and criteria outlined bythe Civil Service Department. The design o f this subcomponent adheresclosely to these criteria. Four sets o f activities will be financedunder this sub-component. Change management The project will provide resourcesto launchthe process o f change managementinFBD, includingthe establishment and operation o f an ImplementationTeam, training to assist the Ministryinmanaging the process o fchange, development o f an organizational structure consistent with the functions o f an Agency which are envisaged inpolicy, and humanresource actions to ensure that staff deployment and remunerationis consistent with broader principles o f the change process. Central to the process o f change management will be a series o f stakeholder consultations with FBDstaff, as well as with the private sector and local government to clarify the Agency's primary service delivery functions. Cauacitvbuildingfor administrationandmanagement Fragmented donor financing for the forestry sector, through stand-alone interventions with their own support services andprocesses,has limitedtheir effectiveness inaddressing national forest policy concerns. More effective deployment o f donor assistancethrough the Ministrywill depend onrobust procurement and financial managementprocessesbeinginplace. The project will provide resourcesto improve the capacity o f the Ministryandthe Agency to handle financial andprocurement management, largely focusing on training inthe use andapplication o f new nationally acceptedprocurement processes and financial managementpackages. Inaddition, the project will finance an assessment o f the Agency's InformationTechnology requirements, and will prepare a programo f investment inimproving IT services which respondto institutional needs andrequirements, including financial management. Strengthening policy andulanning services The Ministrywill retain core responsibilities for strategic planningandpolicy development. The project will provide resourcesto improve this capacity, while providingscopefor wider stakeholder consultation about policy formulation. Relatedto the process o f changemanagementis the question o fhow the Ministry'sremainingfunctionswill be rationalized. Cauital investments ininfrastructure MinistrystaffinDares Salaamcurrently occupy multipleoffice premises, some ofwhichhavebeen occupiedfor as long as 40 years, with little new investment ininfrastructure. The delivery o f core services is constrained bythis fragmentation, and is compoundedby the problem o f shuttlingbetween offices and coordinating internal staff placement. The long standingneedfor improved infrastructure - 40 -  was recognizedduringthe preparation o f FRMP, and though finance for civil works was providedunder that project, delays inprocurement preventedthe constructiono f new facilities. FCMP will finance the construction o f new office facilities for headquartersandMinistry staffto address these constraints. Inaddition, the projectwill finance anassessmentofregionalanddistrict infrastructure needs, andwill provide modest support for this infrastructure as an outcome o f this assessment. These investments are to beundertaken inamanner consistent withthe wider mission ofthe TFS, as well as with the on-going program o f local government reform. Improving revenuecollectionfrom forests and woodlands(US$4.0million) This sub-component will provide resourcesfor the design and implement a coherent forestry revenue strategy to increase net revenues. These revenuesneedto be retainedand transferred ina way that service provisionactivities and enforcement can be successfully implemented. Three sets of activities are envisaged under this sub-component. Improvingnon-tax revenue administration The output o f this activity would be an improved non-tax revenue administration system. The activity would support a redesign o f licenses or transitpasses to make forgery, multipleuse and other abuses more difficult, a cleaningup o fthe fundstransfer system, an investigation into the use o f penalties and informants, and several meetings to discuss the results. This component i s considered a "stop-gap'' approach to temporarily improve financial administrationuntilthe results o f the pilot reforms can be incorporated. The project would finance audits o frevenue collectionin25 keyDistricts which wouldbe carriedout by external (local) auditors and auditors within FBD. The audits would collect information on the accounting o f financial documents (registers, receipt books, licenses, andtransit passes) and would cover checkpoints inan effort to reconcile originals and duplicates. Financialtransfers would be reconciled withheadquartersrecords. The results ofthe Audits wouldbe written into a reporting framework, anda presented at a workshop which would focus on key elements o f the systems' design and its strengths and weaknesses. On the basis o f the workshop and the audit results, a system o f funds transfer wouldbe designed, which would cover relevant informationwhich wouldbe submittedby districts. The information would likely include (but i s unlikelyto be limitedto): revenue byproduct (charcoal, registration fees, timber, etc.) andrevenue from each forest. As anoutcome ofthe consultationprocess, key documents wouldbe redesigned to minimizeevasion, fraud and forgery: felling licenses, Transit passes, and others. Penalties for non-compliance with the regulatory framework would be reviewed and revised. Stricter deterrent penalties would be developed and introduced. Studies would also assess estimated central government and district revenue losses due to improper recordkeeping and study the feasibility o f intensified auditing. Based on results from the audits andworkshops, a simplified MIS would be developed which tracks forest royalties byproduct (charcoal, timber, fuelwood) and forest reserve. Redesigning a revenue collection system Fundamentally, however, the revenue collection systemrequires a complete overhaul andredesign to complement a production basedsystem o f taxation to either a transport or market based one. Experience has shownthat a new system, which shouldbe introducedon a pilot basis, shouldbe transport based, and -41 -  royalties will be paidat the Regionalor District level for a "Transport License" or "Transport Time Pass". Under this system, a parallel system o f "extraction fees" will exist andthese will be entirely retainedbythe manager o f each forest. As best as possible, current royalty levels (rates) will be maintained, butthis will require a breakdownbetween "extraction fees" and "transit fees". Two pilot operations are envisaged: one inDar es Salaamwhich i s specific to a single product andmarket (charcoal), anda secondinMwanza, which covers multiple products and product delivery systems. Monitoring, seizure and confiscationmay be carried out byFBDbut also by other "partners" such as TRA, Local Governments, and the traffic police. The cooperation o fthese partnersandthe terms ofthe agreement will have to be worked out before the pilot can commence. Transit revenueswill have to be sharedwith Local Authorities on an agreeduponbasis. New legislation (Rules) will have to be passed dictating rates and coverage. An intensive promotional and informational campaign will be necessaryas long as the penalties for non-compliance are high. The pilots will address the following issues: penalties are substantially increased and are awarded to well specified individuals; points o f taxation are substantially lowered; multiple taxation is reduced; the system is simplifiedso that costs of compliance are minimized; other partners are involvedineither monitoringor collection. The pilot will be implementedin2 stages. First, fixed transport licenses will be designed and implementedinthe "catchment" area. Ifthe system i s successful, a second expansion stage would be implemented. Basedon anevaluationo f the pilot systems introduced inMwanza and Dar es Salaam, FBDwould holda wide-ranging workshop to establish the parametersor framework o f the new system, and then would introduce the new system. Centralizingrevenue collection and accounting Interms ofrevenue collection, the advantagesofworking within the structure ofthe Tanzania Forest Service will be that revenue collectors can be better remunerated; revenue collectors (and supervisors) will be more directly answerable to the TFS; and a system ofperformance targets, increased incentives and improved contractingcanbe introduced. Centralizingrevenue collection andseparating it from other service delivery functions o f the TFS will have profoundcost implications. These are difficult to predict since they are contingent uponthe ultimate revenue systemdesign, itself anunknownand an output o fthe project's other activities. With these caveats inmind, followingthe informational stages o fthe pilot, a consultant will develop contracts, incentives andperformance targets for revenue collectors duringthe pilot period. Cost implications, in terms o f hiring(salaries) and equipment i s made and a budget i s preparedto move to a centralizedmode o f hiringfor revenue collection. Duringthe planning stage, projectedbudget andrevenue targets will be prepared basedonthe pilot exercise. The project will provide for the purchase o frequiredvehicles and equipment to handle the new revenue collectionregime. Inaddition, theprojectwill seekto develop mechanismsfor returningrevenuescollectedto communities. This will be developed inconjunction withthe PFMcomponent ofthe project, which will monitorthe expansion o fVillage Forest Reserves. -42-  Governance, information and social marketing This activitywill focus onprovidingimprovedinformation about the objectives and approachestoward improvingrevenue collection, to buildwider support for forest conservation andmanagement through these types o f pricing interventions. Public awarenesso f the impacts o fthe revenue collection system will be quite important. Inorder to improve public awareness, the project will finance various public information activities gearedtowards developing wider-spread acceptanceo f the improved revenue collection system. The project will finance amedia service company to prepare informational material focused on the extent o f the illegal forestry sector inTanzania, and the costs the sector i s imposing on the economy. The activity shouldalso focus on buildingsupport for interventions throughkey entry points into the industry, for example, through the army. ImprovingSewice-delivery mechanismsfor participatory forest and woodlandmanagement (UXM.4 million) Ithasbecome clear since the adoption offorest policyreforms inTanzania in1998,which laythe framework for a new approach to forest conservation and management, that the institutional framework for service delivery with respect to participatory forest managementi s extremelyweak. While the new forest policy i s innovative andwill have far reachingimpacts, there i s limitedcapacity at the central, district and local levels to deliver on its objectives inthis respect. One o fthe objectives o f the project, then, i s to support an institutional reformprocess which buildsthe capacity for service delivery to extend participatory forest management dramatically andto recover lost ground inactivities which have lacked adequate facilitation and support. Activities supported by FCMP will be launched within the prevailing institutional framework. Service delivery responsibilities will become a key feature o f the new institutional framework which is to be introduced. FCMP will explore options for commencing financial support to districts and villages through government channels, inthe spirit o fthe Local Government ReformProgram. The overall objective o f this sub-component o f the institutional reformactivity i s to providethe framework to bringas muchunreservedforest and woodland as possible into the reserved category under clear localowner-management and to assist adjacent communities inparticipatingdirectly inthe management o fNational andLocal Authority Forest Reserves. This is designed greatly to enhance both conservation andlocal levelempowerment and livelihoodsupport. A core ParticipatoryForestry Management Support Unit(PFMSU) will be established within FBD, inthe first instance, to form the institutional foundation and center of responsibility for ensuringthat services are delivered. The unit will be headedby a Coordinator, assistedby a LeadFacilitator and a Resources andMonitoringSpecialist. This small team will be supported by an adviser, recruitedby FBD. Indue course, should a service-oriented ExecutiveAgency be formed, then the PFMSUwould ideallymove into that framework, inorder to gain from institutional and administrative efficiencies and the flexibility which such agencies can provide. Inline with LGRP, the primary role o f the PFMSUwill be to promote and facilitate the adoption o f PFMbyregions, districts and forest-adjacent communities. Due to the magnitude o fthe task ahead(i.e. a large scale promotion o f PFM), the PFMSUwill only to a limited extent deliver services directly to local communities. The main strategy for achievingthe sub-component objective will be the `facilitation' (implyingthe provision o fa host o f services rangingfrom advice, guidance and technical assistance to training, extension and general capacity building,etc.) o fPFM, bothtowards the local governments andtowards - 43 -  the forest adjacent communities deciding to enter into JFM arrangements or to set up and manageVFR's. Facilitationo f PFMwill be done bythe PFMSU, assistedby different `assistant facilitators' at the national, regional, district and locallevels, and incollaboration with andvia the regional and, in particular, the district authorities. Itfollows that there will be different categories and levels o f `facilitation' services adapted to different sets o f circumstances and levels. Five sets o f activities are envisaged Mobilization andsupport The core o fthe programwillprovide support for existingPFMinitiatives, andwill develop the capacity for rapidextension into new initiatives. The project will initially work with a limitednumber o f PFM initiatives inselected districts. The initiatives anddistricts will be selected basedonthe probability for creatingearly successes, which can be expected to boost the expansion o f the programand the adoption o fPFMpractices by other communities and districts. A first activity will be to carry out an assessment to determine where to focus service interventions. The service interventions to be offered will focus on `facilitation' o f PFMthrough a range o f support activities aiming at buildingup local capacity to facilitate introduction andimplementationo fPFMinvarious types o f forest reserves, inline with FBD's recently published `Guidelines for ParticipatoryForest Management". Facilitation services will work from a common menuof approachesbasedonanunderstanding ofthe evolving legal framework, and tailored closely to fit local conditions and concerns. The PFMSUwill use its own facilitator and a numbero f assistantfacilitators (individuals, institutions, NGO's, CBO's, etc.) on short-task centered assignments, to work with district staff inhelpingthem restructure or deliver PFMfacilitation inthe selectedvillages. Over time, the more successful o f these district level staff (DFOs and DCFOs) andthe assistant facilitators deployedbythe program will add to the growingcadre o f expert practitionersinTanzania, inturnable to provide facilitation support to less experienced foresters. As experience accumulates and capacity increasesthe programwill graduallybe expanded into other districts. Priorities for the expansion will be set according to criteria such as demand by communities and district authorities for PFM, district capacity (particularly regardingthe DFO's office), motivation, districts targeted for local government reform, the urgency o f forest loss and degradation, and the existence o f appropriate bodies to assist inPFM facilitation (e.g. NGO's, CBO's, companies, institutions, individuals, etc.). Effortswill aimto help villagers put Village Forest Reserves inplace or to introduce village-based approachesinto the managemento fNational and LocalAuthority Forest Reserves, including those earmarked for catchment protection. Facilitation will include assistanceto communities informulating formalby-laws based on informal community rules or through other mechanisms. As a national unit, PFMSUwill have a special role in ensuring clear procedures for registrationand for training o f district council staff to facilitate this. In other instances, communities will needto be assistedinrestructuringtheir management arrangements, developing forest use protocols, and inzoning andboundary marking methods, as well as in strengthening systems for accounting for income from fines and fees and so on. There will be cases where the PFMSUwill assistvillages directly but ingeneral the assistancewill be channelled through locallybased `assistant facilitators'. Bythe endofthe secondyear ofimplementationit is expectedthat foresters inaround 25 districtswill have their capacity to undertake PFM facilitation improved, through assisted `learning-by-doing' andthat their supporting District Councils will also have been successfully assistedbetter to plan androute at -44-  least some level o f continuing support to PFM. Also bythe end o f the secondyear a number o f JMA's (20 -30) will have beendeveloped inselectedLocalArea Forest Reserves andNationalForest Reserves. With the enactment o f the new Forest Bill it is possible that this number couldincrease more rapidly than currently foreseen. As far as Village, Community or Private Forests withinvillage lands are concerned a significant number o f forest-adjacent villages andlor communities will have beenassistedto initiate, consolidate, refine or expand efforts towards creating forest reservesand towards bringingtheir forests undermanagement. At the endo fthe program, capacity will have beenbuilt at various levels as aresultofPFMfacilitation. At the regionalanddistrict levels a general capacity (primarily within the DFOs office but also extending to other departments) to actively support forest adjacent communities inthe process o f establishing and managingVFRs will have been created. The focal point for facilitation o f PFMingeneral will have been shifted fromthe national to the regional, district and local levels, involving different types o f `facilitators', such as local government officials, NGOs, CBOs, companies, institutions, organizations and individuals. Furthermore, villages and community groups should be actively soliciting the assistance o f these local `facilitators'. At the village level, PFMis beingpracticedindifferenttypes o fForest Reservesinaccordancewiththe spirit o fthe PFMguidelines byFBD. PFMbodies have been established withinthe village government system and forest managers(whether individuals or community groups) are networking with eachother, exchanging experiences, knowledge and ideas. There i s a basic understanding within communities engagedinPFMo fthe principles, requirements and potentialbenefits to be derivedfrom the system, and there i s general acceptance among the different groupings inthe local community o f the objectives o f and approach to the management of the reserved forests. The sub-component's other four sets o f activities will be gearedprimarilytoward providing support services for facilitation, for networkingand information sharing, and for monitoring. Legal, technical andenvironmental guidance This activitywill backstop facilitators andnewvillage forest managerswiththe rightlegal, technical, and environmental guidance with respectto village-based forest and woodland management. Inparticular, strategies for dealingwith particular environmental and social concerns associatedwith PFM-- for example, incatchment forest areas, areas o fhighbiodiversity, or inareas where settlement may pose special problems -- will be developed. The objective will be to find ways o fbalancingnational (and global) needs for environmental services with local needs for forest products. Legal aspects are being addressedat the overall level through the NFP where a imjor aim i s the harmonization o frules, procedures andregulations to facilitate the achievement o f the program objectives for the sector. Legal matters inconnection with the introduction and implementation o f PFM will therefore have to be seeninthe overall context o f the NFP. There will, however, be a needfor legal guidance and support to PFM specific issuesencountered onthe ground, inconnection with actual forest management by communities. Legalguidance will therefore include not only practical guidelines (pamphlets, radio programs etc.) but also legal support on the ground. Such direct legal support may take the form of e.g. contracting o f legal assistance and mediation aimed at ensuring villagers' rights to establish and managevarious types o f Forest Reserves. Cross-sectoral collaboration and training of key district officers from other departments (land use; planning etc) will be requiredto ensurethat landrightso f villagers are ensured. Particular attention will have to be madeto potential and actual conflicts over forest resourcese.g, betweensettled -45-  farmers andpastoralists and to gender specific forest managementissues. An important function o fthe PFMSUwill be to offer clear and reliable guidance about how people may act to secure and manage forests o f interest to them infully sustainable ways. Inaddition, PFMSUwill have an important function to play inensuring that all those involvedinfacilitating this development are quite clear as to the technical options andlegalparameters available, and are fully able to access informationabout the best ways to launch and sustain the process. They also needto know the kindo f issues that will likely need to be addressedby boththemselves as facilitators andbynew village level forest managers. Through the project, Guidelines will be produced which can be readily usedby all PFMactors. They will designed to be action-oriented, short, sharp, clear and inKiswahili (as well as English). Fromtime to time it will beproductive to prepare guidelines which target aparticular audience, for example, for facilitators or for those designed to assist new local levelforest managers. Presentationwill vary accordingly. PFMi s an entirely voluntary. Although proposed forest legislation makes it clear that government is obligedto provide good advice to assist inimplementing the approach, people are under no obligation to accept this advice. There are, o f course, exceptions. The current Forest Ordinance andproposed forest legislation set out parameters providingfor forest access anduse. Proposedlegislationdescribes the procedures for how a community may declare and manage a Village LandForest Reserve or Community Forest. Shoulda community wish to do this, it will needto follow the procedures for declaration and regulation set out inlegislation. Localparticipationinmanagementof Government Forests i s byjoint agreement, which i s also providedfor inproposedlegislation. The production o ftraining material will be the responsibility ofthe Resourcesand Monitoring Specialist working directly with the Facilitator. Guidelines will be derived directly from field experience and through consultative processes, shapedas necessaryby silvicultural, biodiversity, marketing, financial management, legal or other parameters as are appropriate. Particularly where there i s a range o f opinions as to best ways forward, or where practitionershave found solutions difficult, the content o f guidelines will be definedthroughbroadconsultative processeswith localactors. Where special technical or legal issues arise, the PFMSUwill seek to develop the most appropriate information for dissemination. Guidelines onplanting trees on farm, stimulatedby natural forest protection, i s a likely demand. Management practices to stimulate productiono fpreferred species in production forests may also be developed into Guidelines. Checklists andsteps towards identifying, zoning and protecting areas o fhighbiodiversity value within forests, may be developed. Fromtime to time the PFMSUwill produce and disseminate pamphlets that are producedjointly with other sector interests or departments. This particularly includes drawing up guidelines onbeekeeping andthe management o fwildlife inforested areas. Local government caDacitvbuilding, This activitywill be focused on working withthe localgovernment reformprocessto buildcapacity both to managea wider program o f PFMthrough local government, to develop ways o f mediatingnational and local concerns over the use o fwoodland andforest resources, and to strengthen local government capacity for facilitating local environmental management initiatives. The immediate objectives o f this activity are to raise local awarenesso f PFMpolicies andopportunities; to provide a positive support environment inthe localgovernment sector; andto buildthe capacity o f District Forestry Officers and other relevant District Officers to facilitate and support villagers to become forest managers. - 46 -  The project will prepare clear andsimplepublic information about PFM approachesand the opportunities available for villages to be involved inthe protection and management and regulation o f forests intheir areas. Different arrangementsavailable to them inrespect o fbothreserved areas (such as National andLocal Authority Forest Reserves) and inrespect o funreserved forests within village areas will be set out. Supportingnationalpolicy andlegalprovisions will be indicated. Informationwill be presented inshort pamphlets inEnglishandKiswahili which will be distributed to information officers, local authorities and other agencies. Press and radio services will be encouraged to produce articles and programs on current developments. Rurallocalgovernments (district councils) inparticular are regardedas the mainplatformfrom which PFMwill be launched andsustained. DistrictForestry Officers are regarded as the key actors and facilitators which require the support o ftheir ExecutiveDirectors, PlanningOfficers and Council bodies. The project will provide resourcesfor a series o f workshops to which District Executive Directors, Council Chairmen, PlanningOfficers and other keyplayers will be invited. Representatives from the MinistryofLocalGovernment, the LocalGovernment Service CommissionandLocalGovernment ReformProgramwill be closely involved. The objective will be to informthem fully o f forest policy and national forest managementplans with respect to PFM; provide case studies and general guidelines includingpresentations by one or two districts already practicing PFM; assist them inidentifyingin broadterms the priority areas for action intheir respective districts; work through with them the levelo f personnel and support implications; and to identifyand prioritize critical constraints to action and discuss how these maybe overcome. Service agreementswill be madebetween the FBDITFS andrespective districts specifying 1) obligations andtargets o fthe district interms offorest andforest biodiversitymanagement and2) needsand requirements for facilitation and support including proposed contracts for tendering and provision o f services bythe TFS. The service agreementswill be basedpartly on district annual work plans and, at a later stage, onDistrict Forest Plans (inaccordancewith the NFP). Personnel andresource constraints are likely to be the most commonand severeconstraint identified. Over the project periodandwith the assistanceo fthe DirectoriChief Executive Officer and Permanent Secretary, the project will work with the Local Government Reform Program, and with the Local Government and Civil Service Commissions to findways bywhich councils may be better staffed in these areas. As the LGRP is consolidated and expandedDistricts are also expected to have their access to other resources (apart from stafl) improved. The PFMSUwill work actively withthe CSD to identify ways inwhich the project can support ongoing efforts to strengthen local government capacities in support o fPFM. Coordination and exchange One o f the strengths o f recent efforts to support PFMhas come from efforts to exchange information and ideas amongst practitioners, as well as amongst villagers. The process o f establishing community-based or partnership forest management i s a highlydynamic development process involving changed institutional and government-people relationships. An annual meetingwill be convened to bringtogether PFMfacilitators andpractitionersto compare notes, learn from eachother, andto gain a sense o f support and sharedcommitment. This will also allow progress to be monitoredand consensusreachedas to priorities for PFMSUand other agencies. The project will also provide resourcesto enable facilitators to visit a range o fsites where PFMis underway. -47-  At the village level, as well, muchhasbeengained already byexchanges facilitated betweenvillages. Many new Village Forest Managers have suggestedthat they shouldbe assistedto form a Village Forest Managers Association both as a mechanismo f disseminating and receiving information from each other and as a forum through which their interests may be promoted. There has also beengreat interest in beingable to meet together periodically. The project will provide resources for four activities inthis regard: First, there will be an effort to make it possible for village forest managersto meet together regularly to share experiences, learn from eachother and to prioritizeproblem areas and support needs. This also offers an important opportunity for technical advisers andmonitoringstaff to collect first-hand informationonprogress, problems, needsand impacts. Second, the project will assist inestablishing a Village Forest Management Newsletter. Needs for local newsletters shouldbe considered. Third, the project will provide resourcesto enable groups o f village levelforest managersto visit selected PFM developments as an on-site learningactivity. This would likely be undertaken inconjunction with facilitator cross visits. Fourth, the project will explore how village forest managersmay be assistedto form themselves into a formal interest group association. Finally, at the national level, the PFMSUwill develop the capacity to function as a clearing house and contact point for PFMactivities throughout the country, providinga forum through which knowledge and skills maybe productively sharedand utilized. Linkages with other activities will evolve initially through cooperation inthe provision o f facilitation support from the first year o f the project, andthrough other supportingactivities, such as those linkedto local Government capacity development to support PFMdevelopment. Secondly, projects will be directly representedinthe annual practitioners conference. More task-specific forums will be developed as necessary, often ledby one or other project (such as RIPS, MEMA, LAMP, NRBZ, UTUMI, EUCAMP, CFP, HASH1andHADO.) Further linkswill be established with the wildlife, beekeeping, environmental and other sectors o f Government and NGOs inthe sector. Inlight o fthe commencement o fthe new landlaws o f Tanzania, PFMSUwill establish close linkswith the Ministryo f Lands, Housingand Urban Developmentto assist itto develop with pilotvillages, clear guidelines for tenure relatedaspectswhichdirectly support creation o fVillage, Community and Private Forests. Monitoring.and feedback Inlightof the extensive investments whichareenvisagedinPFM, a strong monitoringcapacityneedsto be more clearly established better to informpolicy andprogram development at national, district and village levels. There will be aneedfor PFMSUto have up to date information on specific developments andprogress ingeneral, and ina fully accessible form. Such information will be useful to other agencies, includingvillages, but will be essential for forward planning and for devising fully appropriate guidelines and support systems. To achieve this, the project will assist PFMSUto put inplace a simple system for collecting and compilingsharply focused information about PFM developments throughout the country to identify where centralresponsesor actions are needed. At the same time, neither time nor resources shouldbe wasted on detailed studies andreports which have no links with actionneeds. A critical first task o fthe ResourcesandMonitoring Specialist will be to establish a set o fminimuminformationpoints and indicators which maybe developed for useby all local PFM actors. A time-efficient means o f receiving this information will be to request participants to the annual working conference to complete andbringwith them these simple f o m . At the macro level, Tanzania's extensive forest andwoodland resourcesclearly play a central role in providing resources for rural andurbanhousehold consumption, andfor mitigating the impacts o f poverty. PFM seeks more fully to integrate localforest and woodland managementefforts with local needs and concerns. The development o f abetter understanding o f the linkages between poverty and - 4 8 -  natural resource managementwas highlightedinthe PRSP as a central issue o f concern. Although these linkages are widely speculatedupon, the development o f analytically sound and empirically rigorous household-based information is badly needed. The project will provide resources to support a five-year program o f applied household monitoring and assessmentbetter to informpolicy about these linkages. Withrespect to the specific impacts o fPFM, a criticalaspect offorest managementplanning and implementation is to be able to know ifthe regime itself is working as planned and the effect it i s having upon the localforest and uponlocal development systems, organization and local livelihood. The Resourcesand Monitoring Specialist will work closely with other members o f the PFMSU team to refine simplemonitoring indicatorsandprocesseswhich villagers can easily adopt anduse on a sustainedand regular basis. Monitoringactivities will also beusedto informFBDITFS managementabout how best a schemecan be designed to ensurethat revenues collectedby FBDare returnedto villages which have undertaken new woodland managementresponsibilities. Usefulproject key performance indicatorswill have to be developed, includingboth indirect and direct indicators. Indirect monitoring indicators are infact already routinely identifiedinthe preparationo f village forest managementplans but on the whole there i s little systematic assessment o f these. Therefore, such indicators shouldbe collectedand assessedina systematic manner betterto inform the PFMprocess. Direct keyperfomance indicatorswill have to be established duringthe inceptiono fthe PFM component. Such indicators must relate directly to the level, type and magnitude o f capacity for PFM facilitation (ina broad sense) that have beenbuilt at the local, district, regional and national levels. Performance indicator targets will be, inter alia, the number o f `facilitators' (local government officers, NGOs, CBOs, companies, institutions, individuals) capable of facilitating PFMand actively engagedin PFMprocesseswith villages and local communities; the degree to which the FBDguidelines onPFM are beingadheredto and the degree to which field experience is being fed-back into the FBDITFS; the numberofVFRs being established or requestsbeingsubmitted to the district authorities for endorsement; andthe number o fJMAs being entered into. Project Component2 US$3.40 million - This component has already been approved onFebruary 26,2002, as part ofthe Forest Conservation and Management Project (PO58706). Private sector involvement inindustrial plantation management The project will provideresourcesto develop and implementa framework for the involvement o fthe private sector inthe managemento f existing industrial plantations as well as to strengthen the potential for the development andmanagemento fnew plantations. This component will provide the resources to assess the technical and financial feasibility o fthe industrialplantations with reference to existing and potentialmarkets as well as the formulation o f steps and guidelines for the private sector's involvement. Multiplemechanismsfor the involvement ofthe private sector will be developedand implementedona pilot basis, and are expected to include leasing arrangements,joint forest management, and co-management. Four sub-components are envisaged: -49-  Improving theplantation resourceinformation base and managementplanning capacity (US$0.3 million) This sub-component willprovide resourcesto develop the information neededto allow for the identification andselection o fpriority sites and for designingpilot activities. The sub-component will finance aerial photography, interpretation, mapping, and indicative inventories o f around 40,000 ha o f state-owned plantations; a rapidsocio-economic assessmentwhich identifies key stakeholders, their concerns, and expectations; the development o f a plantation database for management purposes; preparationo f basic guidelines to guide plantationmanagementand to establish parameters for monitoringcommercial plantation operations; preparation o fbasic growth andyield tables for key species relying on existing data; preliminary estimateso f growing stock andallowable cut; and capacity buildingo fstaffinselectedareas to buildcapacity to undertake thesetasks. An exhaustive mappingand inventory exercise is not envisaged. Strengthening instit~tionalsupport servicesfor private sector involvement (US$1.3million) This sub-component will support the creation of anenabling institutionalandmarket environment for private sector involvement inplantation development andmanagement. It will provide resourcesfor the design andimplementation o f a communicationstrategy; the development o f a plano f action with agree principles andclear objectives for private sector involvement; the establishment o f a PSIunit within MNRT; the development o f legalprocedures andinstrumentsfor tenderingto ensuretransparency and consistency with Government guidelines; the preparation o fmodel informationmemoranda, leases, model contracts, and transparent biddingassessmentprocedures, as well as community and environmentalaction plans where they are needed; prepare recommendations on an improved log sales system; an action planfor improving forestry taxation andthe investment environment for plantation forestry; and studytours andstaff training to increaseanunderstanding o f the principles surrounding private sector involvement. Pilot alternative management of selected industrialplantations (US8I.6 million) Three pilot activities are envisaged under this component: the development o f leasing arrangements for involving the private sector inplantation management; the development o f co-management arrangements where responsibility for plantation managementi s sharedbetween Government and a partner (for example, a village or a company); and designated community managementfor a plantation areawhere responsibilities and control are assumedby a village. The project will provide resources to establish boundaries o f eachpilot area, to carry out rapidinventories or aerial surveys as needed, to prepare legal documentation as needed, and to carry out stakeholder surveys and assessments where communities will be involvedor otherwise affected bythe program. Pilot private company involvement inplantation management Government has indicated that its preferredapproach toward involvingthe private sector inplantation management, is to develop the option o f leasing pilot plantation areas with either anupfront or part payment for the current crop. For these forests, an open biddingprocess i s recommended, whereby the private sector would be invitedto bid(following the preparation o f biddingcriteria andbidevaluation documentation), offeringeither their total offer price at the outset or an initial payment with a series o f deferred payments for the balance o fthe offer price. The Government would indocumentation for invitingbids, needto indicate itspreferences andhow itwill evaluate andrank bids. Assuminga successful biddingand negotiationprocess, managemento f these plantations will be progressively assumedby the private sector on a pilot basis. - 50 -  The pilot will develop a gradual process o f transferringmanagement o f selected state plantations to private company managementusingleasing mechanisms appropriate inthe Tanzanian conditions. Itwill commence with a single pilot plantation (most probably Sao Hill)and then drawing from lessonslearned duringthe pilot phase, moveonto hrtherplantations (possibly Mtibwa, Longuza andMedusa) ifthis is judged to be appropriate. The purpose is to improve the productivity ofplantation management, increase sustainable wood supply, andreduce the financial burdenon government. The project will provide resourcesto demarcate and map plantationboundaries; to identifyandmap areas to be excludedsuch as critical watersheds; to carry out a more detailed valuation o f the pilot areato set a benchmark for tendering; to prepare for biddingltendering, includingconsultations, investment informationmemorandums, and leaselcontract legal documents. Special attentionwill be given inthe tenderingprocess to accommodate the needs o f small saw-millers, for example, byparcelling a portion(s) into small enough tendering packages for a range o f small millers to bid, or byrequiringbidders to otherwise be responsive to the needso f small processors. The project will provide resources to undertake bidding, bidevaluation, contract negotiations andtransfer to the private sector. Pilot co-management o f industrialplantation Co-management refers to a partnership between the state, the private sector, and organized villagers for the management o f a designatedplantationto supply wood to the market and sustain the flow ofbenefits fairly sharedbythe managementpartners. The term "partnership" meansthat eachpartner has decisions to make and execute, which shouldbe defined ina Joint Management Agreement. A Joint Management Committee will be established to provide this forum. The Agreement will explicitly addressthe issue o f benefit and cost sharing amongst the managementpartners, through a transparent and consultative decision makingandplanningprocess. Pilot co-management o f an industrialplantation shouldbe considered as an option inareas, where there is good commercial plantation potential, population pressure on landi s high, communities are already using the forest, andwhere inputs from communities can actually help inreducingplantation management costs andprotecting the plantation from fire and encroachment. Plantations such as North Kilimanjaro, ShumelMagamba, West Kilimanjaro, Kawetire and Buhindiare some o fthe candidates for piloting a co-management approach to commercial plantation management. ShumeirvIagambaalready has a pilot underway, from which lessonsmay be learnt. The project will provide resourcesto conduct consultations with all stakeholders to agree on issues and cooperation principles; to undertake participatory planning o f the co-managementconcept, including allocation o fmanagement and control rights,localconflict resolutionmanagementsystems as well as benefit and cost sharing arrangements; participatory preparationo f an action plan to proceedwith co-management andvillage organizingandcapacity strengthening as needed. The project will provide assistance to demarcate andmap plantationandvillage and sub-village boundaries and to divide the pilot plantation area into managementareas by village or sub-village. A detailedforest resource inventory will be undertakento provide the basis for a detailedvaluation o fthe plantation to set benchmarks for auctioningor tendering or other negotiations with a private sector partner. The project will provide assistanceinpreparing legal documents (possibly including biddingltendering, investment information memorandums,pro forma contracts, outlining conditions of co-management), and will support the development of contract mechanisms for transfer to a co-managementstructure. In addition, the project will provide assistanceinthe development o f forest managementsystems and -51 -  related trainingloperationalmanuals, buildingas much as possible on already existing material, andwill provide training for trainers, staffand villagers inorganizational, technical, financial and market aspects o f co-management. Pilot desimated community plantation management This activity will develop andimplementcommunity-based plantationmanagement systemsfor apilot plantationwhich cannot be managed commercially either byprivate companies or by the state but which has potentialto provide benefits to local communities. Joint forest management has already been piloted inparts ofRum(since 1998/99),Rubare, Ukaguru,Rondo, Kiwira, andMatogoro. FBDhasrecently decided to turnMatogoro into a catchment forest so it cannot beused for production purposes inthe future. Designated managementrefers to recognition and empowerment o f organized villagers as managers o f a plantationor part of aplantation inorder to sustain the flow o fmainly industrial wood but also fuelwood, as well as other forest products andservices mainly to the benefit o f the villagers but also the rest o f the country, basedon a long-term lease arrangement. Underthis concept, villages or sub-villages wouldbe managingthe plantation reserve on a pilot basis on behalf o f Government inaccordance with a regulatory framework and a contract. Rights andresponsibilities will be defined inaJoint Management Agreement, which will be negotiated and entered into by the two parties to the agreement. The roles, functions and responsibilitieso f eachpartner should be clearly defined inthe Agreement, includingwhat the designated manager can independently decide andexecute, what needs approvalby the state, andhow the benefits and costs shouldbe distributed. The need for mutual consultationand transparency should also be specifiedtogether with monitoring and control as part o f the Agreement. The adoption o f a designated managementmodel also implies certainresponsibilitiesand changes inthe roles ofthe various stakeholders. Villagers are not tojust use the forests butthey are to manage it sustainably, with guidance from a district forest officer. Some o f the most important roles and responsibilitiesare: to protect the forest, to prepare a simple plan to manage the forest, manage the forest accordinga managementplan or Village Assembly approved by-laws, enhance the value o f forest through stand improvement andreforestation, fell and sell trees, collect non-timber forest products, and pay all the necessaryfees (e.g. an annual lease fee). The forestry officers will have to become more service-oriented and focus onfacilitation. Their main functions would be to provide a supportingpolicy andregulatory framework and extension services to villagers; to facilitate and guide villagers intheir forestry development activities; to assist inforest managementplanning; to approve the plans; to monitor village forestry and be responsible for overall regulation. The project is expectedto provide resourcesto conduct consultations with all stakeholders to agree on key issues; facilitate participatory preparation of an actionplanand negotiation o f a management contract based e.g. on long-term lease; strengthen village organizational capacity e.g. through Village Management Committees based on existing village institutions (continuous activity or process); undertake participatory demarcation andmapping o fthe plantation and village and sub-village boundaries; undertake participatory forest resource assessment, including wood, environmental and other resource services; introduce simple forest managementpractices buildingas much as possible on already existing knowledge andaccumulated experience; train trainers, and villagers inorganizational, technical, financial andmarket aspectso f plantation managementand setting up a simple audit system; assist inthe development o f by-laws; assist villagers inthe preparation o f simple forest managementplan(s) and annual operationplans (by village or sub-village); support managementplanimplementationbyvillage or sub-village; develop participatory monitoring, evaluationand auditing; andprepare an action planfor expanding the (refined) co-managementmodelto other selectedplantations. - 52 -  For forests where partial or full community involvementthrough co-management or full participatory forest management arrangements, the choice o f mechanismwill follow the social assessment and social action planningprocess plannedfor each forest, Monitoring and evaluation (US$0.2m~llion~ The project will place a strong emphasisonthe monitoring and evaluationof performance under the pilot operations. The project will provide resourcesto establish a mechanism for monitoring and evaluation; to determine performance indicatorsfor the pilot operations; to implement a regular monitoringprocess which reports against quantitative andqualitative performance indicators; andto provide feedback to MNRTto modifymechanisms andprocedures onthe basiso fresults from the pilot operations. The monitoringand evaluationsystem will focus specifically on determiningidentifiable performance indicators for eachpilot operation; implement a regular and periodic monitoringprocess to report against quantitative and qualitative performance indicators which consider boththe effectiveness o fprivate sector management as well as the extent to which lease conditions are beingmet, and will provide feedback information to managementto improve or otherwise modify the pilot approach. Project Component3 US$9.20 million - Eastern Arc forests conservation and management This thirdcomponent o fthe program, which is largely to be financedbyGEF (as well as with IDAand bilateral sources) has beenjointly developed and implemented by the World Bank andUNDP working with Government andother partners with interests inthe forestry sector. This component will support institutional reform, strategy development, pilot community-based conservation, and the establishment andoperation of a sustainable financing mechanismfor tropical highforest conservation inTanzania through the EasternArc Mountains Conservation Endowment Fund(EAMCEF). The mainglobal environmentalobjective o f this GEF activity is to promote the sustainable conservation and managemento fthe EasternArc forests. The activity has four sub-components: subcomponent (i) will be implementedbythe WorldBankwith IDAresources; subcomponent (ii) also be implemented will bythe World BankwithGEFgrant resources; sub-components (iii) (iv) will be implementedthrough and UNDPwith GEFgrant resources. (0 Institutional reforms for forest biodiversity conservation, inparticular of the Eastern Arc forests at central, district and localpartnership levels to incorporate specific responsibilities for biodiversity conservation, oversight, monitoring and coordination. Such reforms will be linked with other reforms andinstitutionalrestructuringproposed for the forestry sector as a whole, which are also to be financedby IDA. (ii) Mechanismsforsustainablefinancingofbiodiversityconservation,willbedevelopedincluding the establishment o f an EasternArc Mountains Conservation Endowment Fund. It i s envisaged that anendowment trust fimdwill be established by the project, with GEF resources. The GEF implementingagency for this sub-component would be the Bank (GEF financing o fUS$7million) which will co-finance the establishment andinitial operations o f the EAMCEF (IDA financing o f US$2 million). - 53 -  Two additional components are to be implemented bythe UNDP and are complementary to the Bank-implementedactivities: (iii) DevelopmentandpreparationofanintegratedConservationStrategyfortheEasternArc Mountain Forests usinga broad-basedparticipatory process, with a focus on institutional capacity building,andwhich considers linksto other sectoral activities, suchas agriculture, water, land, and energy. A wider dialogue onthe impacts o f sectoral activities on forest biodiversity conservation inthe EasternArc will bedeveloped amongstthe key institutions involvedinsectoral activities. Mapping and baseline activities will be undertaken as part o fthe Strategy development, and will include an assessment o f the multipletenure regimes found inthe forests o f the Arc. The GEF implementing agency for this sub-component would be UNDP. (iv) A forest conservation interventionthrough government and community partnership initiativeswhich will be undertakenat priority sites inthe UluguruMountains - one o fthe most important mountain forest blocks inthe arc. Firmlinkages will be established with partners (other donors, NGOs, Community-based organizations, government agencies, etc). The GEF implementing agency for this sub-component would be UNDP. A Project Brieffor the full GEFactivity hasbeenpreparedjointly bythe BankandLJNDP. The Project Briefwas approved bythe GEF Council duringthe December 2001Council meeting. While GEF support will be integrated into the overall program o fIDA support to the forest sector inTanzania, explicit IDA co-financing has beenprovidedfor the EAMCEF. The sub-components are described here indetail: Eastern Arc Mountains ConservationEndowment Fund (US$!?.0 miiiion) The establishment o f the EAMCEF i s intendedto beginto addressthe need for a long-term sustainable approach to fundingthe conservation o f forest biodiversity. EndowmentFundshave typically been established when public resourcesfor biodiversity conservation are constrained, when other support has beeninconsistent or irregular, andwhen there is a strong enablingframework for their establishment. Inadequate andpoorly targeted public and donor resourcesfor forest biodiversity conservation inthe Eastern Arc has meant that there i s a limitedview of long-tenn resource requirements and financing needs. Most efforts to develop sound forest biodiversity conservation programs inthe EastemArc have suffered from the 'feast-or-famine' five-year project cycle: a periodo f raised expectations and increased resource flows followed by the departure o f staff, andconstrained finances. Eventhe best designed initiatives have failed, ultimately, to create the mechanisms for longer-term financing. Indeed, ifthere i s any single 'lesson learned' from donor financing, ithasbeenthat their impacts are muchmore likely to be short term, rather than longterm. The financial sustainability o f donor assistedforest biodiversity conservation projects has beena longstandingconcern. Government ultimately pays the price when financial sustainability is not assured. The EAMCEFprovides an important opportunity to buildon synergies indonor support. Endowment Fundsrely on several sources o f financing: resourcesfor establishment and initial operations; programmaticresources; and the capital endowment. GEF Guidelines require that the institution responsible for the Endowment Fundshouldbe privately constituted, and that the capital endowment is managedoff-shore to meet certain investment standards. The revenues from the capital endowment are usedon a perpetual basis to finance programmatic and operational expenses. It is expectedthat GEF will finance the capital endowment ($7 million) once particular performance - 54 -  benchmarks have been achieved. IDAresources (US$2 million) are requiredto finance establishment, initial operations, and programmatic expenses. Additional bilateral and multilateral resourcesare inthe process o fbeingmobilized. Preoaratory work. A feasibility studywas prepared and concluded that the policy and institutional framework would support the establishment o f anEndowment FundinTanzania, and couldbejustified on the basis o f the biodiversity values found inthe Eastern Arc. The feasibility studyrecommended that an Endowment Fundworking group shouldbe established, that a profile o f the fund shouldbe prepared, and future work shouldfocus on further development o fthe design o f the fund and should support a studytour to another endowment fundsite. Because o f the proposednature o f the Endowment Fundas a privately-managed institution, the Bank sought Government's agreement to support its establishment on these terms. MNRThas strongly endorsed its establishment, has agreedthat its initial operations shouldbe co-financed with IDA resources, andhas arguedthat it is consistent with the national policy objective o f seeking to involve a wider group o f stakeholders inforest conservation and managementthrough a diverse range o f approachesand instruments, outside o fthe influence o f the public sector. An Endowment Fundspecialist was subsequently employed by FBDand resulted inthe formal establishment o f the EAMCEF. A deed o f trust under the Trustees' Incorporation Ordinance (Cap 375) has beenprepared andregistered with the Administrator General o f Trustees. As such, the EAMCEF has now been legally constituted as aNon-Governmental Organization. An Inaugural Boardhas been established and i s comprised o frepresentatives o f the public sector, the private sector, and environmental NGOs. The Deedo f Trust requires that the Boardo f Trustees is to be constituted ina manner so that there is expertise inconservation inthe Eastern Arc Mountains, forestry, academialresearch, law, business and financial matters, community development, and the work o f local and international conservation NGOs. The FoundingBoardhasbeenconstituted of representatives from the Forestry andBeekeeping Division o fthe MinistryofNaturalResourcesand Tourism, the National Environment Management Council (NEMC), the Lawyers EnvironmentalAction Trust (an environmental NGO), WWF Tanzania, and Songas(a private company with interests inoff-shore gas field development). Four additional members o fthe Boardare to be appointed according to terms specified inthe Deedo f Trust. The Deedrequires the appointment o f four additional Trustees who shall represent a reputable NGO which has the objective o f supporting community-based conservation andnatural resource management, a representative from the academiclresearch community from a national institution, and two members representing communities inthe areas of operation o fthe Endowment. The Deedalso provides for the establishment o f LocalAdvisory Committees (LACs) inthe areas o f EAMCEF operation, andthat these will be constituted o frepresentatives from Village Environmental Committees. LACs will be constituted to provide guidance and advice to the Board. Collectively, these various mechanisms provide for representation o f diverse interests inthe conservation and management o f the EasternArc. Thematic and IzeograDhic coverage. The preparatory work which underpinned the establishment o f the EAMCEF focused developingthe mechanisms for financing three key priorities: community-based conservation; applied biodiversity research; and protected areas management. The design o f the fundhas been responsive to these three priority areas. - 55 -  Because o fthe great extent o fthe Eastern Arc and the concern that the EAMCEF shouldbe seen to have a sustained impact inthe short term, the Fundi s expected to operate, inthe first instance, across a limited geographic range, primarily intwo or three Mountainblocks o f the EasternArc forests. These were established as an outcome o f the ranking exercise which was undertaken duringpreparation. Inthe first instance, support is to be provided for activities inthe UluguruMountains, the Udzungwa Mountains, and inthe East Usambara Mountains. Inthe mehum-term, once a track recordhas beenestablished for operation o fthe EAMCEF inpriority sites, programs are expected to be extended into other mountain blocks, such as the Malundwes, Mahenges, Rubehos, and Ukagurus, but this will depend on additional (probably substantial) capitalization o f the fund, andits success indeliveringexpected outputs. The EAMCEF is designed to support three types o f activities: community development and conservation projects; research; and forest and reserve management. The EAMCEF is expected to dedicate at least 50% o f its available grant funding to support community-based development andconservation projects. These projectswill be developed bythe communities or NGOsworking with communities with assistance from the Secretariat. All proposals will be reviewedby the LocalAdvisory Committee and then sent onthe Boardfor final approval. Researchprojects will be preparedby students or university andresearchorganizations andwill be selectedonthe basis oftheir relevance to the conservation of biodiversity inthe EasternArc Mountains. A researchcommittee comprised o f experts from established research institutions will review all researchproposals. All Reserveand Forest Management and Project proposals will be prepared bythe entity charged with managemento fthe forest or reserve area. Details o fthe program activities, eligibility, proposal review and grant process are containedinthe EasternArc Mountains Conservation Endowment FundFinancial, Operations and Management Manual. PhasedSupport. Support for establishment and operation o fthe Fundwill be phased. PhaseI,which i s expected to last two to three years, will buildthe capacity within the EAMCEF and its partners to carry out their respective roles inthe managemento fthe Endowment Fundand the coordination and implementation o f the activities described above. A modest unallocatedfund for technicalprograms will allow EAMCEFto addressearly needsand to gain experience inprogramplanning and implementation. At the end o fyear 2 or 3 depending, anassessment ofthe achievement ofthe agreed indicatorsof institutional capacity andreadinesswill serve to trigger the releaseo f the endowment capital from GEF into the Fund. Duringyears 3 and4, the endowment will earn interest and these funds will finance Phase 11,the implementationphase, whichwill beginat the start ofyear 5, or later ifthe originallyallocated$2 million from IDAhas not beenspent. Assistance from the GEF is requestedto provide the initial endowment capital o f US$7million for the EAMCEF. Assistance from IDA i s required for the three year start-up phase and for operational and programmatic support. Financingi s neededto support 5 major activities (including capitalization o fthe Endowment Funditself). IDAsupport willbe providedto finance the first 4 ofthese activities (but will not beusedto capitalize the Endowment Fund). (a) Endowment Administration. The Endowment FundSecretariat will be established inMorogoro andwill consist o f an Executive Director, three ProgramOfficers, an Accountant, a Secretary, and support staff. These individuals will be the only full-time employees o f EAMCEF. The Secretariat will be responsible for (i) developing the program content for each o f the three priority areas o f support (Community-based conservation, appliedbiodiversity research, andprotectedareas management); (ii) working incollaborationwith FBDand suitable NGOsto implement activities in these three priority areas; (iii)submittingannual work plansandbudgets to the EAMCEFBoard for approval; (iv) disbursingapproved funds andensuring that proper disbursement, procurement and supervision procedures are followed; (v) maintaining financial records and - 56 -  accountingireporting; and (vi) ensuringongoing monitoringand evaluationo f all work receiving EAMCEF funding. Other activities which will be undertaken by the Secretariat include, communications and education andfundraising. Applied BiodiversityResearch. Under this component the EAMCEFwill support research which strengthens anunderstandmgo f the extent andvalue o f biodiversity andecosystemhealth in priority geographic sites, andwhich can help to reduce the impacts o fhumanpressureson the ecosystem and its biological resources. Researchwill be undertaken inthe context of overall efforts to improve the managemento fthe EasternArc forests ina way which maintains and increasestheir contribution to localand national economic development. Specific attentionwill be paidto ensurethat biodiversity conservation i s a clear focus o ftargeted researchinitiatives which are linkedwith forest managementand conservation, along with other important objectives such as maintaining water supplies and providingsustainable supplies o f valuable timber and non-timber products. Participatory Forest Conservation. The objective o f these activities i s to increase the share of the benefits from forest conservation and managementto local communities and to ensure that these continue on a sustainablebasis. These activities are fully consistent with Government's policy for participatory forest management(including co-management) o f forest reserves and forests on customary land. Fundswill support training, workshops and technical assistance to help mobilizethese stakeholders and enhance their knowledge and skills to become effective forest managementpartners. ProtectedForest Reserve Management activities should strengthen the capacity o f FBDor other institutions withjurisdictionover forest reserves. Improvingforest ecological and economic viability will be o fparamount importance. Priority forest management activities for fundingunder the Endowment Fundwould include improvement o f staffcapabilities (e.g. training, skills development o f reserve staff), forest managementand ecotourisminfrastructure (e.g.; trails, access roads, ranger stations, etc.), conservation education, managementplanning, and others. Where appropriate, activities shouldinclude a training component. Establishment of the Conservation Endowment Fund. The purpose o fthe Conservation Endowment Fundi s to provide sustainable in-country funding for biodiversity conservation o f the Eastern Arc Forests, inthe context o f ecologically sustainable development. The EAMCEF Fund will be established as the long-termfinancing mechanism to support these activities. Inorderto assess progressinmeetingthe objectives ofIDAandGEFsupport, aMidtermReview willbe carried out at the end o fthe secondor thirdproject year to assess performance with respect to meeting particular benchmarks andindicators. Indicatorswhich will trigger releaseo f the EndowmentFundfrom GEFinclude the following: (i) successful establishment and functioning o f the Secretariat (i.e. key positions inthe Secretariat have been filled, audits have beencompleted and are clear, an acceptable 2 year work plan i s developed); (ii) finalization of the Financial, Operations, and ManagementManual which defines andclarifies procedures andoperations for the EAMCEF andits approval by IDA; (iii) establishment and functioning of the Endowment FundBoard(i.e. regularBoardmeetings, appointment o f four new Boardmembers, application o fthe procedures for Boardmembers); (iv) development and launching o f the fundraising strategy; (v) grant making activities have begun(proposals solicited, competitive selection procedures followed, grants awarded andpilot activities are under implementation); (vi) at least one LocalAdvisory Committee has been established; (vii) documented adherenceto the policies, procedures andprinciples set forth inthe Deedo fTrust; (viii) documented - 57 -  significant co-financing for the EAMCEF. The Asset Manager will be procuredfollowing Bank guidelines andthe Bank will approve the process o f selection, and also the asset manager's contract. The initial investment strategy for the endowment will be reviewed and approved bythe Bank. The spending plan for the revenue generatedfor the year will be developed on an annual basis bythe EAMCEFBoard o f Trustees andthe Endowment FundSecretariat. A subsidiary agreement will be prepared between Government andthe EAMCEF which clarifies respective responsibilities for IDA and GEF funds and project management. ConservationStrategyfor the Eastern Arc Mountain Forests (US$2.0million) This UNDP implemented sub-component includes nine activities coordinated towardpreparationan implementation o f an overall integrated conservation strategy for EasternArc Mountains. Rationale With the EasternArc MountainForests situatedwithin 12districts inthe East ofTanzania, the establishment and implementationo fprograms to conserve biodiversity inan effective andefficient manner will be unusually challenging. The complex tenure regimes and the different objectives for the Arc Mountainsthat come from the forest, agricultural, water andpower sectors exacerbate this challenge. Inaddition, policychangesestablishedat the nationallevelthat are intendedto promoteconservation of biodiversity require implementationthrough the many different local, regional, andnational authorities that are responsible for managing the natural resourcesofthe arc. Accordingly, cross-sectoral strategies that addressbiodiversity and that leadto a communally accepted goal andvision for the resources o f the Arc, needto be devised and implemented at the regional level. Corresponding efforts are neededto identify critical needsand establish priorities. The closest parallel to this is the Overall Conservationand Management Strategy for the Forest Resourceso f Queensland, Australia. This Eastern Arc development process benefitedfrom a lessonslearned seminar from the Queensland situation inthe arc. To be effective, these strategies will needto be pursuedina participatory manner, with all stakeholders, includinglocalcommunities, participating, and effective communicationand outreach activities undertaken. Strategies will of necessity be hierarchical, with an overall EasternArc strategy that i s basedon the strategies agreedfor each o f the separateMountainBlocks. Incases where Blocks encompass more than one District, then there is needto bringDistricts together to merge their interests (eg Udzungwa and West Usambaras). The lowest level o f strategic planningwill be the Management Plans for the component Protected Areas (National Parks, Nature Reserves, andForest Reserves). Cutting acrossthese geographic plans and strategieswill be a set o f common thematic plans and strategies. For example the pattern o f addressing how catchment forestry links to water sector interests shouldbe similar across the Arc. So too shouldbe strategiesaddressing for example: the restoration o f degraded forest, sustainable use regimes, biodiversity monitoring, and modalities for participatory forest management (PFM). Then, once programs are underway, effective ecological and socio-economic monitoringprograms will needto be put inplace to evaluate program effectiveness andprogress towards goals. Strategies and management interventions mustbe adaptive, responding to such monitoring information. Strategies for long-term sustainability, including financing and fee-based solutions will needto be explored and implemented. This first output for the EasternArc Projectis designedto address these needsthrough the development and implementation o f an integrated set of conservation strategies andmonitoring programs. Government authorities at all levels andacross sectorswill be engagedwithin the districts that comprise - 58 -  the EasternArc Mountains. Linkages will be forgedwith national institutions and specific activities undertaken to align on-ground resourceuse practices with biodiversity protection policies. The intent i s to engageauthorities responsible for policy, planning, andmanagement inan integratedmanner to bring biodiversity to the fore; and to engineer a set o f strategiesandpractices that will provide for protection over the longrun. Strategies will focus on conserving existingforest ecosystems and implementing sustainable use participatory managementstrategies. Core activities will involve methodologies to remove threats andstrengthen institutions. This component also involves integrating with other sectors, includingagriculture, poverty eradication, andwater, to achieve success. This GEF investment is almost entirely incremental becausethe baseline has limited emphasis on biodiversity (other than policy statements inthe national forest policy and program and limited field activities). Consequently, strategies and policies today are largely designed to achieve other ends, which incidentally may protect biodiversity, but have not yet done so ina sustainable fashion. Incremental investment is vital to achievingthe GEF goal o fprotecting the biodiversity found throughout the Eastern Arc Mountainforests. The strategy processesthat are laid out below are broad rangingand are designed to meet both surface threats to forest conservation, as well as to address root causes. They encompass lessonslearned from past conservation initiatives inTanzania andelsewhere. This GEF component develops the strategy andplans, and seeks to leverage other donor and government support to implement plans risingout o f the strategies. The UluguruMountains Component (the second section below) is where pilot innovative interventions under the strategy can be tested inan integrated andparticipatory way through GEF funding. The Strategy Activities are to be implementedbythree sets o f interactive donor support: GEF (through this project), Danida,andthrough IDA financing to the forest sector. Linkageswill be made withNGO activity. The lead agency is identifiedinthe activity lists that follow - withan estimate o f financing. Danish andIDA inputsare co-finance to the GEF intervention. The nine separateActivities withinthe Strategy Component are listed inthe Summary Table below, with an indication o f donor leadership and extent of GEF support. Summary Table: A Summary of Activitiesleadingto preparation of a ConservationStrategyfor the Eastern Arc Mountains Activity NameI Donor 1.1 An overall Eastem Arc Conservation Strategy is developed and key elements o f it are implemented. (0.9 mill$). GEF-UNDP 1.2 A set o fthematic strategies for biodiversity conservation are developed and implemented through both macro frameworks and individualmanagement ulanurocesses. (0.8 mill$). GEF-UNDP 1.3 Socioeconomic monitoring programdeveloped that evaluates linkages betweenconservation, poverty and livelihoods. This strengthens the project ICDP linkages. (0.2 mill$). GEF-UNDP 1.4 Public expenditure management and the financing o f forest biodiversity conservation (0. imill $)GEF-UNDP, This adds to overall Endowment Fundactivity o fGEF-WB, see below. 1.5 Service fees and user charges for forest biodiversity - water fees linkages, from the major cities and power usersare exploredand started. Danida 1.6 Participatory Forest Management strategies for biodiversity conservation are elaboratedand field-tested. This will incorporate the lessons from Output 3 (Institutional Reforms for ParticipatoryForest Management), andnot duplicate it. GEF-WB, IDA,andDanida 1.7 Adaptive resource monitoring programs for forest biodiversity are developed and under implementation. Danida 1.8 Catchment Management Strategies are elaborated, and under implementation. Financed and implemented byNORAD. 1.9 Information. education and communicationstrategies IIEC) are develoued andunder imulementation. Danida - 59 -  The specific tasks to be carried out within each o f these activities are detailedas follows: Activity 1.1: An overall Eastern Arc Conservation Strategy, which addresses the Vision and Goal for the Eastern Arc Mountains; is developed and under implementation This activityis basedon lessonslearned fiom the Queensland Tropical Forest Conservation Strategy in Australia. The QTFCS has great similarity to the EasternArc, where successful conservation i s dependent on several independent stakeholders eachwith different tenure and access rights to the resource. A commonly agreedvision and strategy provides a coordination framework for ALL stakeholders to participate. This Activity develops a strategic planningprocess, buildingon that established inthe PDF activity. The process involves several stages from individualreserve management plans through district strategiesand individual mountain block strategies. Some mountainblocks cover more than one District-e.g. the UdzungwaMountains have three Districts in two Regions. The UluguruMountains incontrast fall inoneDistrict. The Strategy processhas a number o f distinct component tasks. These include: Linkages from Forestry to Agriculture, Water and Energy sectors are maintained This builds onthe National Forest PolicyandNational Forest Programme directives. All sectorshave major roles and interests inthe easternarc mountains - all have roles inthe strategy. Forestry sector develops capacity buildinglinkages to Districts. Districts will not have ability to do this alone, they will need guidelines, training, networking and support. This support will be into Local Government and between LocalGovernment, the Central Government, private sector and the NGOcommunity. The Forestry sector completes processesfor holistic participatory reserve management plans. These include Nature Reserves,Forest Reserves and Village and Private Forest Reserves. Forest Reserve managementplans are the basic buildingblocks around which strategies are developed. These plansmustbe broadbasedandput eachreserve inits overall development and community context. Forestry HQ must set guidelines as to boththe processandthe content for the holistic plans, and, after broad-basedapproval - procedures for joint implementation. Plans must integrate the conservation (biodiversity andcatchment functions) with community demands for sustainable resource processes and increasedaccess and tenure. Plans musthave capability for adaptive responseto management, as shown by strong monitoring systems. District Conservation Strategies developed, integrating sector concerns and reserve plans. Strategies integrate the overall district development processeswith reserve conservation plans. These strategies addresslocal, national and global values, seeking sustainable benefit flows to all stakeholders. District ownership within guidelines from central government is essential. MountainBlock Conservation Strategies developed, integrating district plans. This will be an amalgamation of adjacent district plans, into a single mountainblock strategy -e.g. the East Usambaras (2 Districts), West Usambaras(2), and Udmngwas(3). World Heritage Site nomination developed and implemented for whole Eastern Arc. This is Tanzania affirming the global value o fthe Arc forests (just like Kilimanjaro, Ngorongoro, and Serengeti -which are already nominatedas WorldHeritage Sites). There i s a complex nomination process - includingsetting out conservation strategies. MAB status to be extended. - 60 -  (g) A suite of planningtools developed, andused, through national and district capacity. These tools will assist inearlier tasks, andwill include: threat reduction analysis, participatory planning procedures andmap-basedforest biodiversity planning & assessment tools. Activity 1.2: A set of thematic strategies for biodiversity conservation are developed and implemented, through macro frameworks and individual management plan processes The overall strategy will have two main components, the first which i s geographic and cross-sectoral is described in 1 above. The other (described here) will be a series o f thematic issues, which cut across all the district and mountain strategies. These themes are listed below: Developing biodiversity conservation strategies and guidelines for implementation. This is a broadtopic and includes: Species conservation strategies, guidelines for ICDPprocessesand links to Participatory Forest Management, option setting for sustainable use versus stricter Nature Reserveprocesses, and the linkages between biodiversity and catchment conservation will be important. Guidelines will include optimum funding and staffing intensities, compartment / beat managementprocedures, etc. This strategy component will be a major part o fthe GEF - UNDP activity, butwill linkto other developingco-finance (eg the WWF-IUCN Forest Restoration Project, the USAID - Sokoine University Forest Health Project). Developing procedures for selecting, setting up andimplementing Nature Reserves. At present there is no national framework for Nature Reserves, despite their prominenceinthe NationalForest Policy andProgram. This activity will develop a national framework and set up a Nature Reserve system acrossthe EasternArc Forests that adequately covers the range of diversity. Fire management strategies. Fire i s a major threat to the arc forests inmost mountainblocks - there are no overall control or prevention strategies inplace. Again fire strategies needto be integrated into JFM agreements andbuffer zone managementpractices. Forest health strategies. The project will liaise with the US Forest Service Forest HealthProject to develop further strategies. Dealingwith invasive species (both plant and animal) will be a key issue here. Sustainable Use Strategies developed for forest periphery communities; includingsustainable collection o f e.g. chameleons, violets; sustainable wood product use (poles, fuelwood, carvings etc); Insect farming (mantises andstick insects as well as butterflies are increasingly collected from Arc forests). This i s a core concept inthe long-term conservation o f the arc forest, andlinksto the CBD as well as to Tanzania's Policies on Environment and Forestry. Sustainable Use links to income generation processes from forest products; and to community andjoint forest management initiatives. Strategies include micro-enterprise, resource assessment, marketingetc. Alternative Income Generation Strategies developed for forest edge communities; including: Agro-forestry inputs to sustainable agriculture, handicrafts, eco-tourism. The rationale here i s findingAIGactivity outside the forest, butlinkingsupport to conservation processes(the classic ICDP dilemma). Forest Restorationfor Biodiversity and Catchment Capacity. Large areas o f the Arc forests have been degradedover time, with considerable canopy opening and fires reducingregeneration. -61 -  Forest under-stories are no longer dense enough to allow many forest birds to pass or plants o f conservation interest to regenerate; and catchment values are impaired. There i s a needto have an overall restorationplan inplace - for habitats and, where essential, key species. Activity 1.3: A socio-economic monitoring program developed and under implementation Nationaldevelopment goals see forestry supporting rural communities. Past conservation paradigms have seen ruralpoverty as a major factor inresource degradation. There i s little understanding o f the relationships between these factors, nor how to integrate sustainable use into anti-poverty processes. This actionprovideslinkages to the national PRSPprocess, andmore especiallythe imperative to integrate environmentalissues into the PRSP itself. Forestryhas several entry points, two o fwhich link to the mainpriority areas for PRSP. These are links from forests as catchments to water, and from forests to agricultural incomes. Inaddition PRSPrecognizes the importance o f direct forest incomes inimpoverishedruralareas, andlastlythe needfor povertyenvironment indicators. The poverty to forest conservation linkages need to be captured withinpolicy frameworks. There are three tasks. A suite of monitoringtools andprotocols developed around the people -forest interface. Whilst developingGEF documentation i s beginning to addressthe community perspective - and how to quantify dependence and responseto interventions, these have been little usedinAfrican forest situations. Goodtested field tools are needed, which can be usedwithin participatory situations. Baseline information on socio-economics collectedandanalyzedaroundkey forest sites. This buildsfrom task 3.1 above, andusesthe tools to collect baseline data, and continuemonitoringto show bothhoped for impact, and to show managementhow to adapt to community needs and pressures. Specific linkages to Poverty ReductionStrategy Paper (PRSP) process are developed,to better integrate or mainstream forest dependentpoverty processes into nationalplanning andto seek specific funding into this project poverty relatedactivity. At government levelPRSP activity i s the entry point to poverty reduction. PRSP- environment linkages have not been strong and needelaborationifboth sectors (forest conservation through PFM; andpoverty reduction through forest sustainable use o f forests) are to see benefit, Activity 1.4: Public expenditure management and the financingof forest biodiversityconservation This activity is intendedto complement the EndowmentFundActivity byputtingsustainable financing into a broader context. There are two main tasks: (r) Royalty and fee basedstrategies based on biodiversity resources developed and inplace. Whilsttimber harvestingwill be ofminor importance inthe Arc forests, it is important that resource harvesting(violets, poles) does attract meaningful fees and levies. See for example the recent papers on forest valuation inEast Africa (from InnovationMagazine Nairobi {edLucy Emerton et all based on an IUCN-UNDP GEF project process). (s) Longterm donor support processescanvassed. The rationalehere i s that the EAMCEF should not be the endpoint o f all donor investment inthe arc. One o f the world's 25 top biodiversity sites needs longer-terminvestment. Investment is neededinto conservation directly, and into sustainable livelihoods and agriculture. - 62 -  Activity 1.5: Forestconservation-water fee linkagesfrom towns are exploredandstarted This activitywill be co-financed. This task is basedonthe comparative advantageof Danida program, with their SustainableCities Program inthree EasternArc forest dependent cities: DSM, Morogoroand Tanga. This will allow greater interactionbetween the sectors that use and supply water. Activity 1.6: Overallcommunityconservationguidelinesdevelopedandunderimplementation This activity is intended to incorporate the findingsofOutput 3 into the strategy with respect to community-based forest biodiversity conservation guidelines, The task i s listedhere only to affirmthat community interactions will be a major component o f conservation strategies for the Arc forests. (t) Information,educationandcommunicationstrategies(IEC) developed andimplemented. Overall framework for awarenessraisingdeveloped, with stakeholders1partners; Coinmunication and outreach -advocacy program developed; Information Technology support to IEC activity. Activity 1.8: CatchmentManagementGuidelinesare elaboratedandunderimplementation This task integrates the on-going catchment forestry managementactivity (fundedbyNORAD andGOT) into this strategy process). Guidelines will be incorporated into broader strategy documents and specific managementplans. Activity 1.9: Adaptive monitoringprogramdevelopedandunderimplementation This activity willbe co-financed. The rationalebehindthesetasks andtheir linkages to Danidais that perhaps the greatest databaseon EasternArc biodiversity i s inCopenhagen, and that Danishfunds have supported muchfield researchinthe Arc forests, Danida funding therefore has comparative advantage in developing the following activities: A participatory M&Estrategy which i s accepted, and implementedin sites; A Researchstrategy which is prioritized, including specieslcommunities recovery; A field research programthat addresses priority issuesthrough innovative pilot studies, Inaddition, suchresearchwill needa small fieldresearchstationto be setupinpriority site; plus providingthe capacity to implement conservation biology researchlinonitoring; and developing a suite o f monitoringtools for forest biodiversity at species and habitat levels. Communily Based Forest Biodiversity Conservationin Uluguru~ o u n t ~ i n s (US$3million) This UNDP implementedsub-component consists of 5 activitiespilotinginnovative community based forest biodiversity conservation inthe UlugurMountains. Rationale Annex 16stressesthe urgent needinthe UluguruMountainForestsofthe EasternArc Mountains, for concerted and integrated action to protect the remainingforests from further encroachment and degradation. Theirprotected status i s as Government Forest Reserves, andthere are few left on village land. These forests, comprising approximately 210 squarekilometers, are among the most important in the entire EasternArc interms o f species richness, with many rare species o fplants and animals, and extremely highlevels o f species endemism. The UluguruMountains and their forests also provide the main source o f fresh water for Dar es Salaam (via the RuvuRiver) as well as the town o f Morogoro. - 63 -  Withpopulation growth, continuedexpansion ofcommercialand subsistenceagriculture, continued illegal logging, as well as fires and other human activities, these forests and the endemic species within themare highlythreatened. Government officials andmany local community stakeholders are aware of these problems, but have provennot to have the capacity to address the situationon their own. A Danida financedNGOproject (DOF-WCST), which has conducted extensive researchand i s now beginningto work with local communities on conservation i s ongoinginthe northernforests (North UluguruForest Reserve and tiny BundukiForest Reserve) aboveMorogorotown. However, the scopeofthis activity relative to the need i s quite small. The larger, less exploredand potentially richer South UluguruForest Reserveand patches o f village forest are not included. Inaddition, the DOF-WCST effort primarily focuses on forest - community practices. Ithas not tackledthe complex governance issuesassociated with the forests. GEFfundingis the cornerstone ofan expandedprogramto safeguardthe UluguruMountainforests through an integrated conservation and development approach. This approach results from a nine-month design process, involvingstakeholdersthrough workshops, meetings, and forums as well as field research, analysis, and the application of lessons learned from other biodiversity conservation activities. The GEFinvestment will specifically address the shortcomings ofthe baseline andwill be linkedwith co-financing from partners to provide the resources, technology, and leadership neededto protect the international interest inbiodiversity. Inthe case o fthe Ulugurus, biodiversity and water values g be maintainedthrough specific actions to preserve the catchment forests. However, all the local communities adjacent to the forests depend onthem to one degree or another for their livelihood. Thus the challenge o fthis activity will be to balance the interests andneedso f all the different people that benefit directly or indirectly from the forests from the local level to the internationallevel. It i s a complex problem, but with recent changes - inthe government policy, newtechnology andapproachesto forest andlandmanagement,andfunding from GEF andother donors, there is a real opportunity to achieve change that can protect diversity, water values and address the needs o f the localpopulations. GEF support should achieve this change by simultaneously addressing the near term need for effective protection measureswhile layingthe foundation for a longer termmanagementstrategy which actively engages local stakeholders inforest managementand conservation. There are five component activities within this output. They are summarizedhere, indicating field partners andfundingrequirements. The Summary Table below describes activities that are plannedfor GEF support, inconjunction with expected inputsfrom key co-financing partners. Because o fthe critical needto ensure that long-term support is available for forest biodiversity conservation inthe Ulugurus, the development o f these activities will complement closely the proposedwork o f the Eastern Arc Mountains Conservation Endowment Fundinthe Ulugurus. These activitieswill be carried out inclose cooperation and interaction with eachother. - 64 -  Summary Table: Activitiesproposedfor GEF support Associated with pilotcommunity-based forest conservationinthe UluguruMountains Activity NameI Partner Institutions 2.1 Protected Area Management:Managementandprotection systems inthe South UlugumForestReserve improved, and biodiversity and hydrological values sustained. Catchment Forestry andNORAD 2.2 Participatory ForestManagement: strategiesfor resourceuse and conservation are implemented. FBDand IDA-Danida components 2.3 AgricultureiAgroforestry: communities with greater capacity for sustainableland usemanagement and small enterpriseimarketing. Selected opportunities for income generationare developed, emphasizing sustainableuse of forest resources. Basedon, and to continue the work by UMADEP 2.4 InfonnationiEducation: Conservation awarenessis increasedat all levels (through education campaigns addressing politicians, schools, opinion leaders and local communities). Linkages to activity startedby WCST and DOF inthe northern Forests 2.5 Institutional Development: Capacity o fpartners inplanningand management o fland, conservation, agriculture, forestry andenvironment is enhanced. All partners The activities are described indetail as follows: Activity 2.1: ProtectedArea Management: Management and protection systems in the Uluguru South Forest Reservesare substantially improved, and biodiversity and hydrological values better understood This is the core activity, ensuring adequateconservation ofthe mainforest blockonthe South Uluguru Mountains, with community involvement. There are 5 maintasks: (a) Develop participatory managementplans for South UluguruFRaccording to guidelines developed under the EasternArc Conservation Strategy, including upgradingstatus, developingbuffer zone status and elaborating community rightsand roles. (b) Collect baseline data on keybiodiversity and hydrological values to support managementplan development, andallow later M&Eprocesses. (c) Implement the provisions of the managementplan, including sustainable use harvesting, zonation, eco-tourism, species conservation inputs andhabitat restoration. (d) Demarcate, maintain, and patrol forest boundaries to maintainreserve integrity andreduce illegal use. (e) Establish native speciesnurseries andpromote community restorationand species regeneration. Activity 2.2: Participatory Forest Management: Participatory forest management and other resource use arrangements are establishedto work with communities around the Ulugurus This activity puts inplace the PFMprocessesaroundthe Reserve, including capacity building, negotiating contracts, settingup sustainableuse regimes, and monitoring. There will be five maintasks: (a) Develop awarenesso fparticipatory strategies and monitoring systems. (b) Buildcapacity within collaboratingvillages, hamlets anduser groups. (c) Negotiate PFMcontracts, around definedrightsroles and responsibilities. (d) Develop sustainable use regimes with PFMpractitioners. (e) Support monitoring and adaptive implementationprocesses. - 65 -  Activity 2.3: SustainedLivelihoods through improved agriculturelagroforestry: and small enterpriselmarketing. Selectedopportunities for income generation inthe Ulugurus are developed. The capacity of local communities in sustainable landuse management is enhanced This will be working with forest adjacent communities to incorporate ecologically sustainable livelihoods into their agricultural practices and infurther use o f forest products. There are five tasks: (a) Identify and establish benchmark practices, and conduct marketingand feasibility studies on sustainable use o f forest resources. (b) Provide training: soil andwater conservation, bio-intensive gardening, agro-forestry, crop diversification, traditional irrigation systems. (c) Promote experimentation and extension activities. (d) Provide training andtechnical advice inincome generating activities, marketingproducts, and small enterprise management. (e) Monitor activity includingproduct use and impact on biodiversity byparticipants and feed back into integrated community development and managementprocesses. Activity 2.4: InformatiodEducation: Conservation awareness is increased at all levels amongst key stakeholders around the Ulugurus (through education campaigns addressing politicians, schools, opinionleaders and localcommunities) Thisbuildsonthe CommunicationInformationandEducationStrategy, and develops a set of awareness tools and case studies. There are four main tasks: (a) Operationalize the communications, information, and education strategy (b) Conduct training workshops for awarenessfacilitators (c) Disseminate information through printedmaterials, radio, schools, wildlife clubs and other community basedgroups. (d) Monitor the impact o f awareness-where does it work? Where does it fail? How can it be improved? Activity 2.5: InstitutionaiDevelopment: Capacity of partners inplanningand management of land, resource consewation, agriculture, forestry and environment around the Ulugurus is enhanced The need for capacity cannot be overstated, and this applies at all levels. It will be especially important inconflictresolutionandnetworkingbetweenpartners. Partnersatvillage levelareespecially heterogeneous,a fact which implementationmust accept. There are four maintasks: (a) Assess needsfor technical andmanagement skills and existingmanagementmechanisms (b) Assist inestablishing community-based organizations (CBOs) andprovide linkages from CBOs to NGOsandgovemment. (c) Provide training andskills as assessedabove. (d) Monitor capacity and learn from experience. - 66 -  Institutional reforms for EasternArc Mountainsforest biodiversityconservation (USU 75,000) Rationale Within the current institutionalframework, the Forestry andBeekeeping Divisionprovides overall policy guidance for the forestry sector, and some technical oversight and supervision. For the most part, however, management and protection o f all reserveshasbeenhighlydecentralized, and is primarily the responsibility o f District Forest Officers (DFOs) and their staff, who report to local district administrations (with the exception o fa number of major catchment forests, which are underthe management o f FBD). The current institutional structure has been problematic, andbadly inneedo f reform. The fundamental orientation o f the institutional structure i s toward regulation andenforcement o f forest legislation-- roleswhich were largely appropriate inan earlier context when there were few needs to mediate between the demandso fruralpeople, the state, and the private sector, but which are mostly inappropriate incontemporary Tanzania where forest protectionand managementcan no longer be undertaken independently o fthe needso f rural communities. Untilrecently, the institutional, policy, andlegalframework providedonly limitedscopefor supporting forest biodiversity conservation. As a signatory to the Convention on Biodiversity, Tanzania is increasingly recognizing its important obligation to put inplace sound mechanisms for forest biodiversity conservation, but is ill-equipped to do so withinthe prevailing institutional structure. Forest protection was undertaken inthe past only to meet the needs o fthe timber industry, and also for watershed catchment protection. There is a very limitedcapacity to take on the wider issues associatedwith biodiversity conservation withinFBD. Other institutions inTanzania also have a mandate for forest biodiversity conservation, such as training centers, research organizations, and the NGO community. Inparticular, there is a needto develop further clarity about the institutional role which i s expected o fthe Sokoine Universityo f Agriculture (SUA) and Tafori indeveloping a programof relevant researchinthe EasternArc. Within this context, there i s a widespread recognition inthe NationalForest Policy and the National Forest Program that Tanzania's forest institutions as they are currently structured are not adequate for meetingthe challenges o fconservation and managemento f Tanzania's forests andwoodlands. Inorder to respondto this concern, Government haslaunchedaprocessofcivil service reformwhichis expected to transform Tanzania's forestry institutions. Government has proposed the establishment o f the Tanzania Forest Service (TFS) as a stand-alone `executive agency' with clearly defined roles and tasks, and with a mandate for bringingabout improvements inforest and woodland managementthrough multiple institutional andservice delivery mechanisms. Iti s envisaged that the TFS will be constituted with specific service delivery hnctions andperformance targets, while responsibilitiesfor forest policy, legislation, andplanning are to remain with a sectoral department o fthe Ministryo fNaturalResources and Tourism. The IDAsupport through FCMP will focus primarilyon improvingthe overall institutional framework, improvingfinancial andprocurement management, andsupporting participatory forest managementand the involvement o fthe private sector inplantation management. The principalrationalefor GEF support for this activity, is to provide incremental resourcesto strengthen the capacity o fthe new Tanzania Forest Service (TFS) to support, implement, and monitor forest biodiversity conservation activities. - 67 -  The TFS is expectedto be a service delivery organization, rather than an institution primarilywith regulatory or enforcement responsibilities. Supporting the development o f participatory forest managementregimes will be one of its main service delivery roles. Inspite o f the fact that there has been some support for participatory forest managementinTanzania, anunderstanding o fthe most effective approacheswhich can support forest biodiversity conservationper se is limited. GEF support, then, will be geared toward integrating forest biodiversity conservation into the participatory forest management program. See, inparticular, Charumbira, op cit, which shouldbe readinconjunction with commitments to forest biodiversity conservation inthe National Forest Policy and the NationalForest Program. See also the review o f FBD's weak institutional capacity inthis area in, Ishengoma, R.C. (2001). Interim report on humanresourcesdevelopment. Unpublished report, Dar es Salaam, Forest and Beekeeping Division. The activityunder this subcomponent i s described as follows: Activity 3.1: Participatoryforest conservationguidelinesare developedand are under implementation (a) GEF support will finance anevaluationofParticipatoryForest Management (PFM) activities and their impacts, with the objective o fpreparing a `best practice' evaluationo f PFM and forest biodiversity conservation. (b) Onthe basis ofthe findings ofthe `best practice' study, guidelines will be developedto expandthe existing Communi~-basedForest Management Guidelines,Ministryo fNatural Resources and Tourism (2001), Op cit, so that they incorporate forest biodiversity conservation as a key element o f PFM. (c) Inconjunction withthe PFMsub-component ofthe FCMP, capacity buildingandtrainingprograms to implement the revised Guidelineswill be developed andunder implementation. Project Component4 US$0.70 million - This component has already beenapproved on February 26,2002, as part ofthe Forest Conservation and Management Project (PO58706). ProjectAdministrationandManagement Finally, the project will finance the costs o f administrationand managemento fthe project components, inamanner consistent withWorldBankguidance withrespectto accounting, financialmanagement,and procurement.  Annex 3: Estimated Project Costs TANZANIA EasternArc ForestsConservation and ManagementProject Local US $million A. SupportingInstitutional Change and 0.00 0.00 0.00 ImprovingService Delivery 1. Establishment o fthe Tanzania Forest Service 6.50 5.30 11.80 2. ImprovingRevenue Collection from Forests 2.20 1.00 3.20 andWoodlands 3. ImprovingService Delivery Mechanisms for 5.50 1.60 7.10 Participatory Forest andWoodland Management B. Private Sector Involvement inthe Management 1.70 1.20 2.90 of IndustrialPlantations C. EasternArc Forests Conservation andManagement 0.00 0.00 0.00 1. Eastern Arc Mountains Conservation 2.10 6.90 9.00 Endowment Fund 2. ImprovingInstitutional Support Service for Forest 0.20 0.00 0.20 Biodiversity Conservation D. Project Administration and Management 0.50 0.10 0.60 Total BaselineCost 18.70 16.10 34.80 PhysicalContingencies 1.60 0.80 2.40 Price Contingencies 1.80 1.oo 2.80 Total ProiectCosts1 22.10 17.90 1 40.00 Total FinancingRequired 22.10 17.90 40.00 CivilWorks 4.90 1.30 6.20 Goodsand Equipment 2.00 2.80 4.80 Consultants'Services 4.80 4.40 9.20 Training 4.60 2.50 7.10 OperatingCosts 5.80 0.40 6.20 ConservationEndowment Fund 0.00 6.50 6.50 Total ProjectCostsI 22.10 17.90 40.00 Total FinancingRequired 22.10 17.90 40.00 Costs to implement the UNDP components of this activity are expected to total $5 million, but these are excluded from these estimates, 1Idcntifiablc taxcs anddutics arc 0 (Ussin) andthc total projcct cost, nct of taxcs, is 45 (USSm). Thcrcforc, the project cost sharingratio is 84.67% of total project costnet of taxcs. - 69 -  Annex 4: Economicand FinancialConsiderations TANZANIA Eastern Arc ForestsConservation and ManagementProject Summary There i s an enormous disconnect between the policy objectives which are described inTanzania's 1998 ~ u t ~ o n u Z Forest Policy,and the prevailing institutionalframework which i s supposedto deliver on these objectives. The Policy framework (and the National Forest Programwhich was developed inresponse) describes the role o f the public sector as one which i s primarily orientedtowardcost-effectively deliveringservices to the country -- serviceswhich shouldfacilitate the role o fthe private sector, communities, and other stakeholders inconserving and managing Tanzania's forest resources, or which manageandprotect forests o f strategic national and global importance onbehalfo f the nation. The existing andoutdated institutional framework removes most responsibility from stakeholders who are most dependent on these resources, and places it inthe hands o f district governments which lack the capacity for maintaining oversight or for managing forest resourceswith village (or national) interests in mind. At the national level, the Forest andBeekeepingDivision's responsibilitiesare largely regulatory, and it has limited specific service delivery functions. The institutional reforms which FCMP seeksto support through the NationalForest Programare intendedto help to establish a new institutional framework, which is primarily orientedtoward improving service delivery functions: facilitating villages to establish Village Forest Reserves, strengthening the capacity for the management o f strategic forest reserveswhich are being maintainedinthe national interest, improvingthe financial sustainability o f forest management interventions, and other local conservation and protectionmeasures. EconomicConsiderations The current constraints inthe forest sector inTanzania call for a comprehensive approach to the development o f a sector-wide approach toward forest conservation andmanagement. Public financing o f woodland and forest conservation and managementisjustifiedboth from the perspective o f their role in mitigatingthe impactsofpoverty as well as fromthe perspective o fthe environmentalvalueo fforests and woodlands as watershed catchments, which maintain water flows to urban areas and to hydroelectric generating facilities. Other environmental benefits from forest and woodland conservation and management accrue becauseo f the value o f carbonsequestration.A separateIncrementalCost analysis has beenprepared for those components o f the project which specifically focus on conservation o f EasternArc Mountains forest biodiversity (to be financed by GEF), and this will be reviewed separately whenthese activities are Appraised. Finally, the economic rationalefor involvingthe private sector in industrialplantationmanagementis also reviewed. Inadditiontoexaminingthiswiderrationaleforpublicfinancing, theForestConservationand Management Project was also analyzed interms of its rationale for cost-effectiveness and financial sustainability. Poverty impacts Tanzania's woodland and forests are extremely important for mitigating the impacts o f ruralpoverty. Recent studies (Monela et aZ, 1999) have shown that fully 40 percent o ftotal household consumptionin some rural areas i s accounted for by forest and woodland products such as honey production, firewood, constructionmaterial, andwild fruit and other foods (a point notedinTanzania's Poverty Reduction - 70 -  Strategy Paper). Inaddition, forests and woodlands are an important source o fdry season grazing, reducing households' exposure to environmental risk. Ruralhouseholds generally use a wide variety o f environmentalresources from woodlands, andthe sizable aggregatevalue o f environmentally-derived income i s made up o f a fairly large number o f smaller individualincome sources. Inother studies from the region(cf. Cavendish, 1999),it has also been shown that there is a negative relationshipbetween aggregateenvironmentalincome share andtotal household income, that the poor are more resource-dependent than the rich(though better offhouseholds are, inquantitative terms, the most significant users o f environmental resources). There i s considerable complexity inthe factors which determine levels o fresource use: differenthouseholds use differentresources for different reasons at different times. Still, the conclusions are inescapable: the rural poor are heavily dependent on resources derived from forests and woodlands, and deforestation and forest degradation poses a significant threat to rural livelihoods. As such, forests andwoodlands are inextricably linkedto the social and economic fabric o fthe communities living adjacent to them. Stakeholder processes and studies (undertaken duringproject preparation) confirmed the importance o fthese forests to livelihoods andthe linkages between effective forest management, conservation, and poverty reduction. These studies identified boththe benefits associatedwith conservation (primarily relatedto water) andthe costs associatedwith changing current practices. These costs include the potential loss of livelihood for residents engagedintimber felling, charcoal production, and agriculture (taking place within forest boundaries) and potentialeconomic adversity for current users o f those forest products - such as urban dwellers dependent on charcoal for fuel andpoles for constructionandwomen engagedinlocalbrew making. Indeeddiscussions with community groups, foresters, and government officials undertaken duringproject preparation demonstrated convincingly that virtually all livelihoods inthe communities adjacent to forests are dependent insome way and to varying degrees on forest resources. These findings underscore the importance o f developing comprehensive strategiesto address socio-economic issues associatedwith forest and woodland conservation andmanagementinTanzania. FCMP i s designed inpart to increasethe capacity o f villages to managewoodlands. It derives from experience with pilot and other operations across Tanzania, which suggestedsignificant scope for improvingthe effectiveness o f this approach towardvillage-based management. As such, FCMP is seeking to facilitate the development o f local management schemes through cost-effective interventions which serve primarilyto informvillages and communities o fpolicy andlegal changes which underpin their rights over local woodland resources. Environmental values and the national economy While the biodiversity o f the Tanzania's tropical highforests is o f extraordinary international significance andlocally is of great value for mitigating the impacts o fpoverty, the value ofthese forests to the national economy, primarily through water and energy production, is o f extreme national importance. The EasternArc forests, for example, cover several major catchmentswhich collectively provide water for all o f the nation's coastal communities (including Dar es Salaamwith its population o f 3 million). These mountain forests feed morethan 22 rivers, includingthe Sigi, Rum, Ruaha, Kihansi, and Rufiji. The Ulugurucatchment, for example, provides the main source of drinkingwater to bothMorogorotown and Dar es Salaam. Hydroelectric energy productioni s similarlyheavily dependent on maintaining the integrity o f these forests. Total installedelectric generating capacity inTanzania (maximum annual firm energy) is 1323 GWh(150 year reliability). Hydroelectricity accounts for 720 GWh(54 percent) o fthe total. O fthe 6 hydroelectric stations (Mtera, KidatuandLower Kihansi inthe RufijiBasin, andNyumbaya Mungu, -71 -  Hale, andNew Pangani Falls on the Pangani River), only 2 (Mtera andKidatu) have seasonal storage capacity. The rest are `run-of-the-river' facilities which depend on more or less constant river flow, which, inturn, i s dependent on the integrity o fwatershed catchments andthe forests found there. Other environmentalservices capturedby the macro-economy associatedwith Tanzania's forests impact positively on agricultural productionand also result from timber harvesting (both through the legal and illegal felling o ftrees used inconstruction andto make furniture and charcoal). More recently a srnall ecotourismindustryhas developed. There are some indications o f a growing trade inthreatened species o f insects and reptiles. Accordingly, there is a strong need for sustainable use o f forest products for these purposes and activities such as tourism which maximize the non-destructive uses o f forests. The idea o f collecting environmental rents, especially from the energy andwater sectors, has been tabled ina general way anumber oftimes. Theseproposals, however, are somewhat disconnectedfroman understanding o f the tenuous -indeed, highlyprecarious -financial position o f service delivery institutions such as the Tanzania ElectricitySupply Company (Tanesco) and the Dar es SalaamWater and SewerageAuthority (DAWASA). While the capturing o f environmental rents may seemto be a good idea inthe abstract, the current public expenditure framework suggests that this wouldbe unrealistic inthe short term. Carbonsequestration Simply because o ftheir very great extent inTanzania, miombo woodlands inparticular have great potential for adding to the growing carbon dioxide content o fthe atmosphere, or helpingto reduce it. In the event that substantial areas of miombo are cleared for cereal crop production insouthern Africa, 6 to 10billionmetric tons o fcarbon could bereleased. If,on the other hand, woodlands are managedto maximize carbon storage, a similar amount couldbe taken up. Ineither case, about half o f the change in carbon stocks occurs inthe soil, andthe rest inabove-ground biomass. Net annual primary production inmiombo woodlands is around 10tons per ha. The annual increment o f woody biomass is usually no more than 3 to 4 percent inmature stands. These rates, which define the upper limit o fthe strength o fthe sink, couldbe higher inan atmospherehigher incarbondioxide, but an increase innet primary productivity o f greater than 15 percent is unlikely. A well stockedhectareo fmiombo woodland can sequester200 to 300tons o fcarbon. Various sources place the economic value o f sequesteredcarbon at $5 to $10per ton, andso there are considerable benefits to be gained by conserving miombo, by increasing rates o f sequestration, or by limitingfuture losses. For example, against miombo stocks o f around 30 million ha inTanzania, stocked at a rate o f 150 tons o f carbonperhectare, an increase incarbon sequestration o f a tenth o f a percent over the life o f the project would yield around US$22 millioninglobal environmental benefits. The main techniques for increasing carbonuptake inmiombo is the reduction infire frequency. Experimentsinmanyparts o f Africa have shown that woody biomass and soil carbon both increase if fires are excluded. Permanent fire exclusion i s virtually impossible inthe strongly seasonalmiombo climate, but a reduction infrequency i s probably achievable at reasonablecost. This would simultaneously increase carbon dioxide uptake and decreasethe emission o f methane and ozone precursors. The carbon-storagebenefits o fmiombo managementcanbe extended by harvestingthe timber sustainably, andeither converting it to long-lived products such as furniture, or byusingit as an energy source inplace o f fossil fuels. - 72 -  Industrialplantati~nproduction The sixteen industrial forest plantations inTanzania are under the control o f the Forest and Beekeeping Division. Plantations are organized as projects managedby Forest Project Managers, who report directly to the Forest Development Divisiono fthe FBDinDar es Salaam. Organizationally plantationprojects have little to do with the district andregional forestry organizations. The plantations are under central FBDmanagementthat inthe pasthas also providedall the funds neededto operate the plantations. Around 1,060 personswork inthe plantationprojects on FBDspayroll. Most plantation staff are forest assistants. Many state forest plantationprojects are seriously overstaffed; e.g. inSao Hilland North Kilimanjaro the labor force couldbe cut by 50 percent. Inthe mid-1990s aforest revenueretentionschemewas introducedallowingthe MNRTto keep 70 percent o f its royalties and other forest revenue collectedfrom while 30 percent still need to be submitted to the Treasury. MNRT retains 20 percent o f the 70 percent for financing its own administration, and 80 percent @e. 56 percent o f the original total revenue) is allocated to the FBDto use for managingcentral government forest reserves, including plantations. The central govemnent, through Treasury, still pays all the salaries o fplantation project staff. Eachyear Forest Project Manager mustprepare and submit an Annual Plan o f Operationwith abudget to FBDthat allocates funds back to the field. Actual disbursements from the central government to the projects have usually been 30-50 percent o fwhat has beenbudgeted bythe plantation management. Despite this, plantationprojects are under-funded and cannot fully take care o f their managementresponsibilities such as replanting, thinningand pruning. Investing inthe upgrading o f machinery or expandingplantations i s for the most part out o f the question. The total collectedrevenue from government plantations in 1999100 was TSh 945.0 million. Revenue collection has more than doubled since 1995 innominal terms. The revenue increase is mainly due to the increase inroyalty rates and other fees. It also reflects the fact that many plantations have reached maturity increasing the annual allowable cut opportunities. The share ofplantation related revenue o f total forest revenuewas 46.1 percent in 1999100. Unfortunately, it i s difficult to get reliable anddetailed enough data on logremovals to allow assessingthe efficiency o frevenue collection from state plantations. Demandsfor sawnwood The demand for domestic logs i s driven very muchby changes inthe domestic sawmilling sector because there i s only very little internationaltrade inlogs and sawnwood from Tanzania andthe Southern Paper Mills (SPM) has not been operating since 1997. Sawmilling representscurrently about 90 percent o f total industrial wood consumption. Most sawmills are very small, producing less than 1,000 m3 per year. In the last 5-10 years the number o f mobile sawmills has mushroomed. Infact, due to their large number their aggregatedproduction volume i s likely to equal, or even exceed, that o f traditional sawmills. In addition, pit sawing is still common insome areas, but there are no statistics about production levels. Mobile sawmills andpit sawyers supply to the local market and are increasinglyproducing sawnwood to regional markets and to Dar es Salaam, Mwanza and other major cities. Domestic prices for sawnwood range between TSh 60,000 andTSh 100,000 per m3 dependingon the qualityldimension and market. The demand for sawnwood i s expected to increasebetween 4 to 6 percent a year duringthe coming decade amounting to an average annual increase o f 12-16,000 m3. Sustainable long-termsupply of sawlogs from industrial plantations is estimated at about 540-600,000 m31year. - 73 -  At present, there is a considerable surplus o fsawlogs, althoughlocally the industrialcapacity e.g. inthe North can exceed the sustainable supply. InSao Hill,over-aged plantations have reached 3,300 ha, which couldprovide, ifthe markets allowed, 1.3 million m3 o f logs (0.7 millionm3 sawlogs) immediately to the market. Onthe other hand, due to a very uneven age structure o f plantations, the long-term supplyo f sawlogs will decline unless new planting and replanting schemes are quickly initiated. Most o fthe current log supply is o fnot very goodquality. Rapidexpansion o f exports and domestic industrial expansion concentrating on more value-added products may offer the only alternative to optimize the utilizationo f these valuable resources and avoid wasting past investments. Investments into modernizing, and ina way, into restructuringthe forest industrysector are desperately needed. Small, mobile sawmills canbequite efficient and definitely have a role to play especially inproducing low-medium quality sawnwood for the localmarkets. However, increasingreliance on small, mobile sawmill operators may devalue the forest plantations. These mills are not interested inproducingquality products, value-added productionand exports, and neither do they have the necessarycapital to invest into forest management. Pulpwooddemand Domestic demand for pulpwoodwill very muchdependon the future o f the Southern Paper Mills (SPM) inMufindi. Itisanintegratedpulpandpaper millwitha capacity of60,000 tfyear. Itis the onlypaper millofsizeable capacity inthe country. SPMconsumed 150,000m3 -200,000 m3 ofpulpwoodperyear after it started operating inthe mid-1980s. At hllcapacity, its annual wood demand couldreach a theoretical maximumo f 360,000 m3 although 300,000 m3 maybe a more realistic figure. However, it has beenclosed since 1997 leaving considerable pulpwoodresourcesunutilized, and thus endangering the financial viability o f the Sao Hillplantation and the past investments. SPM i s one o f the companies inthe list ofcompaniestobeprivatizedbythe Presidential ParastatalReformCommission. Ifthe mill were reopened it would greatly facilitate the marketing o fpine and eucalyptus, improve the profitability o f sawmilling, and thus enhancethe value o f the Sao Hillplantation. Privatization negotiations are going on with a foreign investor but no salehasbeenyet agreed. International markets for softwoods Export o f logs andsawnwood (both hardwoods and softwoods) from Tanzania to overseasmarkets has beenquite limited inthe past. In 1998199log and sawnwood exports were 3,897 m3 and 8,066 m3, respectively. Irrespective o f who will be managing the industrialplantations -be it private sector or state -itwillbeessentialtoexpandexportsfromthiscurrentlowlevel. Thisisnecessaryto: a Make use o f all available wood that cannot be absorbedbythe domestic market; Increase the value o fplantations by creating a market for quality wood; a Increase competition inthe roundwood market resultinginmore efficient pricing; a Generate foreign exchange as requiredby the new national Forest Policy. The key softwood lumber markets from a Tanzanian point o f view are Middle-East, Egypt, China and East Asian markets, including Vietnam. Egypt imports annual almost 2.5 million m3 o f sawn softwood, most o f it from Europe but also from fast-growing Pinus radiata plantations e.g. inChile. China due to its size, provides another important market. Rapideconomic growth, large annual increases inabsolute population combinedwith introduction o f logging restrictions, have causedChina to increasingly rely on imported wood andforest products to meet increasing demand. - 74 -  Softwood lumber markets are very competitive, especially for commodity (structural andpackaging) lumber, because o f rapidly increasing supply o f wood from fast growing plantations inNew Zealand, Australia, South Africa and Chile. Increasingsupplyand competition i s anticipatedto keep markets under ongoing price pressure. However, the size ofpineexport market i s so substantial that it shouldbe possible for Tanzanian producers to expand exports if: e Prices are competitive; e Quality and dimensionrequirements are met; e New added value products are developed; e Consignments are large enough and regular supplies (long-tenn supply contracts) can be secured; e Local industries become more active intheir marketing efforts. Markets for teak The global teak supply i s projected to increase to some 10million m3lyear by 2030 from the current 4 million m3. Africa i s a growing source ofteak logs and lumber. The current teak plantationare in Tanzania is estimated to at 5,000 ha, but by 2010 the total area coveredbyteak will be close to 15,000 ha mainly becauseo fthe expansion o fplantations. The domestic market o fteak is limitedbut export opportunities are good. Wood from thinnings and low quality sawlogs can be sold locally but all quality sawlogs or sawnteak timber canpotentially be exported to the overseas market. The biggest future markets for teak logs and sawn timber are expected to be India, Thailand, China andWestern Europe. Vietnammay also offer export opportunities, The future market is that o f increasing supplies o f plantation grown teak and decreasing supplyo fnatural teak. This i s likely to keep teak logprices relatively stable but still high enough to provide attractive revenues. Prices for teak logs vary considerably basedon quality. Plantationgrownteak fetches low prices relative to naturalteak from Burma. Prices inIndia are US$400 - 700 per m3 for Indianand African plantation teak. Potentialvalue o f Sao Hillplantations A series o fmodels were developedto evaluate the value ofthe Sao Hillplantations. Three different scenarios were calculated to estimate thepotential value o f Sao Hillusingthe following set o f assumptions: Scenario I: Market for pulpwoodassumed. The sales volume i s assumedto be maximum315,000 over bark (equalling to the maximum capacity o f the mill). Pulpwoodpriced at 14US$lm3 at mill gate. Scenario 2: No market for pulpwood. Only 50 percent o f the annually available pulpwoodi s utilized (mainly by small sawmill operators), who are assumedto pay a stumpage o f 5 US$lm3. Scenario 3: N o market for pulpwood. This is the current trend (business as usual scenario) that assumes no improvement inthe quality o fmanagement over time and that the prices obtained by the seller (i.e. the Government) are basedon current royalty and LMDAlevels. The estimates of plantation value range from USS2.3 million (Scenario 2) to US$12.5 million (Scenario 2), indicating the great impact the future o fthe Southem PaperMillswill have on the plantation value. Plantation value in Scenario 1could be even higher, ifsawmills were able to sell slabs and other waste wood to the pulp andpaper mill and thus increasetheir profitabilityand wood paying capability. It is - 75 -  important to note that valuation assumedthat markets can be found for most o f the sawlogs. This is not realistic in short term, becauseo f inadequate domestic demand and inadequate experience inmeetingthe needs o f export markets. The main conclusionthat can be derived from the valuation exercise is that the management o f Sao Hillplantation canbe financially profitable and that the plantationhas a positivenet present value. Another conclusion is that ~plantat~onwood is valued using existing royalties, SuoHill would lose money (Scenario 3). The government has beenunderselling its assets over the years. The current royalties, even combinedwith the LMDA,are so low that the government cannot recover all the costs that it would have to incur ifit were to manageall the plantations efficiently and sustainably. The main factors reducingthe value of Sao Hillare: e Remote location about 600 kmfrom the mainmarket and export port; 0 Difficulties infindingmarkets for pulpwood and waste from sawnwoodproduction; 0 Uncompetitive transportation systems; 0 Forest industrieswith inappropriate and outdated machinery, which reduces wood paying capability; 0 Domestic markets that do not pay attentionto quality. Itneedsto emphasizedthat although the estimatedprices mayappear low, under the current situation they should be regardedas m ~ i m u m estimates. The lack o f competition inthe forestry sector and political and other risks are likely to reduce the bidvalues. Whatever measures canbe taken to attract the interest o f foreign investors is likely to increasethe value o f forest plantations. Plantationvalue estimates were not found to be sensitive to variations inthe discount rate as i s normally the case with plantation project with long gestation periods. This is explainedby the largevolume o f mature logs immediately available for harvesting as longas there will be a market for all this wood. UnderScenario 1the followingvalues were obtained: US$10.8 million (18 percent), US$12.5 million (15 percent) andUS$14.7 million (12 percent). The corresponding figures under Scenario 2 were US$2.1, US$2.3 and USS2.6 million. Sensitivity analysis indicates that plantation value depends crucially on the price o fwood. A 20 percent reduction inwoodprice would make Sao Hillfinancially unviable. All measures,which will reduce harvesting andtransport costs, can thus be expectedto enhanceplantation value. Maybe the best way o f maximizingthe value o f Sao Hilli s to improve marketing and concentrate on producingquality logs basedon differential production and pricing. At present, the wood prices are more or less the same irrespective o f quality: low quality wood dominates consumption, andonly small quantities are exported. Financial benefits of PSI Enhancedprivate sector involvement will bringa number o fbenefits, most o f themo f economic and fiscal ones. Many o fthe benefits will not be immediately realized, but will accrue over time through improvedefficiency inproductionandincreased investment by the private sector. It is difficult at this stage to precisely quantify the benefits. The actual benefits will dependvery much on the way the entire PSIprocess inthe plantation sector is handled and to what extent the Government can increase competition, e.g. through foreign investment, and improve the overall investment andmarket environment for forestry. - 76 -  The implementationofthe proposedPSIprogramis expected to provide the following benefits: Easedbudgetary pressure on Government; Greater certainty o ftenure and wood supply to encourageboth new processing investment and investment innew plantation forests; Improvedmanagemento f plantationforests, including undertakingarrears o f silviculture; Better recognition o f the needs and aspirations o f local communities as stakeholders and futurejoint forest owners inplantations where landpressureis an issue; Liberalization o f forest product markets, through the elimination o f state subsidies and market price distortions through opening themup to greater competition; Greater certainty and new career options for staff currently employedbyFBD; Attraction o f possible foreign investment and technology to the sector; Increasedexport earnings; Reducedpressureon indigenous forests for the supply o f timber products; Revenue generation for Government duringthe divestment process. The main financial benefits to the Government from implementing this component will the savings inthe costs. At present the Government is not making any net profit out o fplantation managementbut it is spending more than it is earning (especially ifyou include all the capital costs). Annual plantation-related labor costs alone were estimated to be more than TSh 800 billion or US$1millionin 1998199. Duringthe same year anadditional TSh 263 million was allocated by FBD for operational costs. Incontrast, the annual plantationrevenue duringthe same year was only TSh 681,445,550 or US0.85 million. There i s not enough data onthe forest plantation resources, managementcosts and forest product markets to allow proper valuation o fplantations and to estimate the value private sector would be preparedto pay for their management. Sao Hill,the most important plantation inthe country, was used as a case study to derive initial benefits from privatization. A highreal discount rate o f 15 percent was adopted to allow for the highcapital costs and investment risk inTanzania. Dependingon the market situation (especially for the pulpwood, which again i s linked to the future o f the Southern Paper Mills),the estimated economic value o f Sao Hill(32,300 o f established plantations) rangesbetween US$2.3 millionand 12.5 million. Ifthe Government were able to capture the lowest estimated value, Le. US$2.3 million, the total sub-component investment cost o f 2.7 million would be almost entirelycovered. However, it mustbe, accepted that transferring stateplantations under private managementwill take years, and full benefits from it cannot thus be realizedimmediately. Without any changes inthe logpricing, plantation managementwill not be financially viable. Sao Hill would have a negative net present value under the existing royalty system and assuming that adequate funds were invested inmaintainingthe growing stock. This is ahypotheticalcalculation, becausethe FBDis actually not investing enoughinforest management,and consequently the growingstock is in reality declining becauseo f neglect, fire damage, andinadequate replanting. The real "without a project" scenario would include estimates o f current benefit and costflows as well as depreciation of forest capital. This type of analysis was not possible given the existing data. However, an initial attempt was made to estimate the "with and without" project scenarios, to be able to assess incrementalbenefits. - 77 -  Benefits from imtxovedmanagement Improvedresource information base and increasedprivate sector involvement will improve management efficiency andplantationproductivity. An attempt was made to quantify the possible impacts o f these improvements interms o f wood growing costs for new plantations. The (compounded) costs savings for pinewere US$3-4per cubic meter, or 20-22 percent o ftotal costs, includingthe establishment, annual maintenance andoverhead costs over the entire rotation. The savings are mainly due to reducedwastage and improved yields. Under the current (business as usual scenario) costs were estimated at USS16-17 per m3 (over bark) andunder the new scenario US$13 per m3 at 15 percent, andUSS8 and US$11at 12 percent discount rate. Improved rent recovery. The introduction o fa more competitive log sales system will results in more efficient and fair pricing. Itwill result inmaximum 20 percent (see the above text) increase in revenue per harvested cubic meter. However, insome casesprices are expected to drop inrelation to current combined and LMDA levels. Assumingthat annual cut is 350,000 m3 andthat 250,000 m3 o f that would be priced3 US$lm3 higher, and 100,000 m3 US33 lower per cubic meter, a net annual benefit estimate o f US$750,000 can be derived, Impact on poverty alleviationand employment. Plantationforests are locatedinrural areas, and provide thus benefits to the ruralpopulations. Villagers would continue enjoying the same benefits as before e.g. interms o f access to fuelwood. Improvingprofitability o f tree growing, better markets and increased private sector investment will inthe long term create new employment opportunities bothinthe plantations and the wood-based industries. EnhancedPSIinthe plantation sector can initially leadto increasedunemployment, because o f rationalizingthe existing labor force inthe sector andbecauseo f the lead-time for increased follow-on private sector investment. Impact on environment. Although it is acceptedthat plantation forests are generally planting exotic species on monocultural regimes, their impacts onthe environment will be positive. It i s plannedthat environmentally sensitive areas are excluded from the PSIprocess already duringthe planning stage. The environmental assessmentsduringthe planning stage will also concentrate on protecting any areas o f indigenous biodwersity; assessingharvesting, roadconstructionand management practices to ensure that soil erosion potential is minimized andwater values are enhanced; and ensuringthat any use o fchemicals inplantation managementi s inaccordancewith internationally accepted codes o fpractice. Itis expectedthat certainplantations or parts ofaplantation willbe classifiedas catchment forests or buffer zone forests basedon explicit criteria. The most criticalones will be entirely excluded from the PSIprocess. The possible dual function forests will have additional environmentalguidelines for their management. Overall the existing State ownedplantation forests area and any expansion o f such forests under private sector ownership will be small inrelation to the natural forest area (currently plantation forests cover 160,000 ha to 200,000 ha comparedwith the 33.6 millha o f naturalforest). Their impact on construction wood supply however i s major, with the most recent survey estimating that plantation wood i s supplying over 50 percent o f constructiontimber inDar es Salaam and Arusha. Plantationforest wood supply, with its lower cost, continuitylcertainty o f supply, and increasing market acceptance, i s havingan important impact on eroding the market for illegally cut natural forest timbers and thus assisting inthe preservation o f natural forests. - 78 -  Financial Considerations Financial issues with respect to the forestry sector were reviewedas part o f the Forest Resources Management Project (FRMP, 1996), duringpreparation o f the NationalForest Program(Salmi, 2000), and as part o fpreparation of this project (Kobb, 2001). Public funding for forestry is generally inadequate andirregular. Over the last 10 years, budgets to the Forest andBeekeeping Divisionhave beenincreasing innominal terms -- growingfour-fold from 1993194to 199912000, though have remained roughly constant when inflationi s taken into account. In 199912000, FBD'sbudget was around TSh 2.5 billion (US$3.2 million at the thenprevailing exchange rate), but this only covered salaries and didnot finance either recurrent or development expenditures. Outside o f specific donor-financed activities, development and recurrent costs are partly financedby retainedrevenues, which currently total around 56 percent o fall revenues collectedfrom the sale o f timber and other products from central government Forest Reserves. For the most part, FBDrelies o f District staff(rather than FBD staff) to collect revenues, with the exception o f the plantation sector, which accounts for around 40 percent of total revenuescollected. In 199912000, revenuesfrom Central Government Forest Reserves (including plantations) totalled roughly TSh 2 billion(around US$2.6 million at the exchange rate which prevailed at the time). FBD expenditures from the budget allocation plusrevenues retainedin 199912000totalledaround TSh 3.6 billion (US$4.7 million). Financing o fthe forestry sector by the donor community peaked in 1991192, when donor spending (estimated at US$24 million) accounted for 90 percent o f all spendinginthe forestry sector. Currently, it is estimated to account for around 68 percent o f all spending inthe forestry sector. In199912000, donor spending which was capturedbythe budget processtotalled TSh 7.75 billion (around US$lO million). It i s difficult to compare the efficiency o fpublic vs. donor spending becauseo f the highly distortedimpact o fheavy investments inrelatively expensive technical assistanceto manage donor financed projects. The bulko fdonor assistance,however, is not mediatedbythe budget process. As muchas 60 percent o f donor investments inforestry pass are not captured by the budget. Inthis environment, arguably, donor resources are financing donor priorities, rather than the priorities outlined inTanzania's forest policy. It i s widely agreed that the donor community needsto focus its priorities ina manner which is more carefully aligned with Government's. The National Forest Program posesa mechanism for doingthis. The development o f a sector-wide approach to financing o f the forestry sector i s a longer term objective of FCMP. Investments inimproving financial management, procurement management, overall institutional management, andinmeeting service delivery standards are intendedto establish the institutional framework for a sector-wide approach. Improvements inthe framework for royalty collection are expected to strengthen the overall financial sustainability o fthe Tanzania Forest Service. FCMP proposes to change the overall framework, andto develop the means for returningrevenuesto villages and other forest managers. - 79 -  References Acres International (2000). Power SystemMaster Plan. 2000 Updateprepared for the Tanzania Electric Supply Company. Cavendish, W. (1999). Poverty, inequality and environmental resources: quantitative analysis o f rural households. WorlclngPaper 1999.9. Oxford, Center for the Study o f African Economies, University o f Oxford. FRMP(1996). Long-term financing o fforestry. Reportpreparedfor the Forest andBeekeeping Division. Hartley, D.and Kaare, S. (2001). Institutional, Policy, and LivelihoodAnalysis o f Communities Adjacent to UluguruMountains Catchment Reserves, EasternArc Mountains. Dar es Salaam, CARE Tanzania. Kobb, D. (2001). Improvingforestry revenue collection inTanzania. Report prepared for the World Bank. Monela, G.C., G.C. Kajembe, A.R.S. KaonekaandG. Kowero. (1999). Household Livelihood Strategies in the Miombo woodlands of Tanzania: emerging trends. Report preparedfor the Center for InternationalForestry Research. Ogle, A. andKatila, M. (2000). Involvement o fthe private sector inindustrial plantations development andmanagement. Report to the Forestry and Beekeeping Division. Salmi, J. (2000). Study on financing inforestry. Report preparedfor the National Forest Program. Scholes, R. (1996). Miombo woodlands andcarbon sequestration. In, Campbell, B. (1996). The Miombo in Transition: Woodlandsand Welfare in Africa. Bogor (Indonesia), Center for InternationalForestryResearch. Wild, Robert (1998). A Framework for the Development o faholistic strategy for the Eastern Arc Mountains o f Tanzania. Dar es Salaam, CARE Tanzania. - 80 -  Annex 5: Financial Summary TANZANIA Eastern Arc Forests Conservation and Management Project Years Ending June 30 I Year1 1 Year2 I Year3 I year4 I Years I Year6 IYear 7 Total Financing Required Project Costs InvestmentCosts 4.7 6.4 15.0 6.5 5.0 RecurrentCosts 0.2 0.4 0.5 0.6 0.7 Total Project Costs 4.9 6.8 15.5 7.1 5.7 0.0 0.0 Total Financing 4.9 6.8 15.5 7.1 5.7 0.0 0.0 Financing IBRDllDA 4.7 6.4 8.3 6.5 5.2 Government 0.1 0.3 0.3 0.2 0.1 Central Provincial Co-financiers Global EnvironmentFacility 0.0 0.0 7.0 0.0 0.0 Other 0.0 0.0 0.3 0.3 0.3 Total Project Financing 4.8 6.7 15.9 7.0 5.6 0.0 0.0 Mainassumptions: Assumes that the Eastern Arc Mountains Conservation EndowmentFundis capitalized at the end ofthe thirdproject year, andgeneratesrevenueswhichcanbeusedbythe EAMCEF Board. Costs to implement the UNDP components o fthis activity are expected to total $5 million, but these are excludedfrom these estimates. -81 -  Annex 6: Procurementand DisbursementArrangements TANZANIA EasternArc ForestsConservationand Management Project Procurement General Public procurement procedures inTanzania are inthe process o f reform. InFebruary 2001, new procurement legislationwas passedby Parliament and was subsequently signed into law by the President (The Public Procurement Act, No. 3 o f 2001). The Bank contributed substantially to the development of the new legislation. Supporting regulations have been drafted and are under review by the Bank. The new Act applies to all procurement undertakenbypublic institutions, except for financially independent parastatal organizations and for defense procurement. The Act specifies several tender boards with responsibility for procurement, tender evaluation, and contract awardinaccordancewith pre-determined thresholds. The tender boards include: the Central Tender Board(CTB) under the MinistryofFinance; Ministry Tender Boards (MTB)undereachministry; IndependentDepartment Tender Boards (IDTB) under each independent department o f the government; Regional Tender Boards (RTB) under eachregion; DistrictTender Boards (DTB) under eachdistrict; ParastatalTender Boards for every governingbody of the parastatal organization; and Local Government Authority Tender Boards (LGATB)under each council. Exceptfor LGATB,thresholds ofthe remainingtender boards are prescribed inthe Regulations and subject to review on annual basis by the Minister responsible for Finance ifneedarises. The Bank intends to provide assistance inimplementing the new procurement legislationand regulations through the planned Accountability, Transparency and Integrity Project, Procurement capacity Procurement inthis project will be mainstreamed within the structure o f the Ministry o fNatural Resources and Tourism. A Procurement Capacity Assessment was carried out and concluded that the Overall Procurement Riski s Average. Inconjunction with this assessment, the Bankhas recommended, and it was agreed, that: (i) the Ministry(Forestry andBeekeeping Division) shouldretainthe Procurement Specialist currently contracted bythe Ministryor shouldrecruit a new one with equivalent qualifications and experience or higher; (ii)the Ministryshouldprepare IntemalInstructions articulating the new Regulations to assist procurement staffwho will deal with procurement for FCMP to enable them to carry out procurement inan efficient manner; (iii) the Ministryshoulduse IDA's Standard Bidding Documents andStandardForm of Evaluation for ICB andNCB (with modifications) procurement; and(iv) the Ministryshoulduse IDA's StandardRequestfor Proposals and StandardForm ofEvaluation for the selection of Consultants. To ensurethat there i s continuedcapacity buildinginthe area o f procurement, the Procurement Specialist, the secretary to the MinistryTender Board(MTB), and other project procurement staff will receive further training inprocurement, inparticular, IDA procurement procedures, to enhance their skills. Procurement Plan MNRThasprepared anoverallprocurement planto cover the entire project period. The Ministryhas also prepared detailedprocurement plans for the first project year. The first year procurement plan includes relevant informationon all goods, works, and consulting services expected to be procured, and - 82 -  their estimated cost; type o f contract; procurementlselection methodas well as timing inthe procurement process, The procurement planwill be updated on annual basis inconjunctionwith preparationo f the Annual Work ProgramandBudget. ProcurementImplementationArrangements Procurement will be carried out usingexisting MNRT structures. FBDwill be responsible for day to day procurement. Procurement at the department level will be carried out by a Procurement Specialist contracted bythe Ministry. The Procurement Specialist will be responsible for, among other things: (i) preparationo fthe GPN; (ii) preparation o f SPNs; (iii) biddingdocuments and RFPs; (iv) draft draft contract documents; and (v) contract administrationand management. Inrecruiting and employing consultants, the unitor section inneed o fthe consultant will be responsible for drafting TORSand will coordinate with the Procurement Specialist for further processing. The MNRT Director o f Administration and Personnel (DAP), through the Supplies Officer Incharge will be responsible for pre-screening all procurement documents prior to forwarding to the MTB for approval or awardo f contracts. The Supplies Officer Incharge will be assistedby another Supplies Officer, who will be assigned to the office o f the DAP specifically to deal with procurement o f activities relatedto this project. A Procurement Evaluation Committee will be constituted on an ad hoc basis to evaluate bids andproposals. The Procurement Specialist will be secretary and membero f the Committee. Procurement financedunder the project will comprise the recruitment o f consultants services and training, office equipment, vehicles, civil works, and operating costs. The Procurement Specialist, with Ministryoversite, willberesponsible for ensuringthat procurement for works andgoods is carriedout in accordance with the Bank's Guidelinesfor Procurement under I B mLoans and IDA Credits (dated January 1995 andrevised inJanuary andAugust 1996, in September 1997, andJanuary 1999) and that consultancy services financedby IDA are procuredinaccordancewith the Bank'sGuidelinesfor the Selection and Employment of Consultants by World Bunk Borrowers (dated January 1997, and revised September 1997 and January 1999). A GeneralProcurementNotice hasbeenpublishedinUnitedNations Development Business (UNDB)and includes a descriptionof requiredservices or goods, the client agency, andthe budgeted cost. This notice will be updated every year duringthe executiono f the projectsuntilall contracts and assignments have beenprocured. Inthe case of contracts which are expected to cost more than $200,000 equivalent, Specific ProcurementNotices will be issued inUNDB, and will be advertised inthe national, regional, andlor internationalpress. To the extent possible, procurement arrangementshave been designed to respondto the needfor flexible use o fprocurement methods. A detailedProcurement Plan, basedon the inputs identified inProject Implementation Plan, has beenprepared, andwill be revisedannually duringpreparationo f the Annual Work Programand Budget. Whenever possible, procurement items will be consolidated into appropriately-scaled contracting packageswith a value of $150,000 and over. To complement a L A C Icompatible financial management system, FBDwill also implement a procurement management andmonitoring system. The system shouldbe designed inorder to: (i) estimate cash forecasts for withdrawals under the LACIsystem, and to (ii) physical progress of monitor outputs against contracts committed. Most procurement of goods, works, andservices will be carried out by FBD. Procurement will be managedbythe Ministerial Tender Board, inline with the regulatoryframework established by recent legislation. - 83 -  Aggregate values for NCB or other non-ICB procurement methods for goods and works are limitingand cannot be exceededwithout the Bank's prior 'no objection'. The Ministrywill maintain a tracking system to monitor such procurement inorder to alert the Bankina timely manner whenthis may occur. Prior review thresholds are indicated inTable B ofthis Annex. Civil Works Civil works contracts will include infrastructure for Forest Department Headquarters, and minor civil works andbuildingrehabilitationas required at regional and district levels. The Ministrywill first carry out an infrastructure needsassessment before launchingregional and district infrastructure programs. Civil works costing less that $50,000 per contract (up to aggregate total not exceeding $200,000) will be procured on the basis of quotations obtained from three (3) qualified domestic contractors inresponseto a written invitation. The invitation shall include a detailed description o f the works, includingbasic specifications, the required completion date, abasic fonn of agreementacceptable to the Association, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the requiredwork, and who has the experience and resources to complete the contract successfully. Civil works costing more than $50,000 but less than $150,000 (up to an aggregate total not exceeding $250,000) will be procuredon the basis o fNCB. Civil work costing greater than $150,000 will be procuredthrough ICB. Prequalificationwill be required for all ICB contracting. The contract for constructiono f headquartersbuilding,estimated to cost about US$5.0 millionequivalent will be awardedonthe basis o fInternationalCompetitive Bidding(ICB) usingBankGuidelines and Bank StandardBidding Documentsfor Smaller Works,(January 1995, with corrigenda Nos. 1to 4) and modified to meet project needs. Contracts for district infrastructure not exceeding US$150,000 equivalent will be awarded on the basis o fNational Competitive Bidding(NCB) procedures acceptable to IDA. This would include advertising the works, public opening ofbids, clearly stated evaluation criteria and awardof contract to the lowest evaluated bidder. Foreignbidders, ifinterested would not be precluded from participation. The new Public Procurement Act provides for this requirement. The civil works contracts will be supervised by consulting firms selectedinaccordancewith Bank Guidelines. The Bank's StandardBidding Documentsfor Worksand Goods and the StandardBid Evaluation Forms would be usedfor International Competitive Bidding(ICB) procurement. Since the govemment has not prepared StandardBiddingDocuments that couldbe usedfor National Competitive Bidding(NCB) as per the new Act, IDA'SStandardBidding Documentsfor Worksand Goodsand the StandardBid Evaluation Forms would be used for NCB procurements as well with necessarymodifications. Goods Individualcontracts for goods with an estimated value of less than 530,000 will be procuredusinglocal or international shopping, for an aggregatenot to exceed $400,000 based on comparingprice quotations from at least three suppliers inresponseto written invitation. Individualcontracts for goods more than US$30,000 per contract and less than $150,000 per contract will be procuredthrough National Competitive Biddingprocedures for an aggregatenot to exceed $400,000. The first three o f these contracts will be subject to prior review. For contracts estimated to cost $150,000 andabove, International Competitive Biddingwill be used. Individualunits o f office equipment(individual fax machines, printers, and laptop computers) as well as individualvehicles may be purchasedthrough the Inter-Agency Procurement Services Office (IAPSO) o f the UnitedNations with an aggregatevalue not to exceed $300,000. - 84 -  Consultants services and training ' Services for all components of the project, including studies, technical assistance, and the supervision o f works, which require the recruitment o f consultingfirms or individualconsultants will be procured in accordance with the Bank's Guidelinesfor the Selection and Employment of Consultants by WorldBank Borrowers. The cost o f audits will also be financed by the Credit. The Bank's Standard Requestfor Proposals; Forms of Contractsas needed(lump-sum,time based, andlor simplifiedcontracts for short-term assignmentsand individual consultants); andSample Form of Evaluation Report for the selection o f consultants would be used. Individualconsultants contracts and consultingfirms contracts below the threshold o fUS$50,000 and US$lOO,OOO respectivelymay be awarded on the basis o f qualifications and experience in accordance with Bank guidelines. Forthese contracts, prior review willbe requiredof all TORS,proposedbudgets, contracts, and consultant qualifications. Sole sourcing may be allowed on an exceptional basis andwith the prior agreementwith IDA, subject to the conditions outlined inthe Guidelines. Prior review will also be required o f all single-source consultancies, regardless o ftheir value. Contracts for individual consultants below US$50,000, and for consulting firms below US$lOO,OOO, will be subject to post-review. Prior review will be requiredfor individualcontracts above US$50,000 and above US$lOO,OOO for firms. Withregardto workshops, training, studytours and field expenses, prior review o fall activities will be required, includingproposedbudget, agenda, participants, location o f training, and other relevant details. Incremental operatingcosts Incrementaloperatingcosts are definedto meanbuilding,equipment, and vehicle maintenance costs, fuel, office supplies, buildingrental charges, utilities, and telecommunications costs, and the costs o f Project support staff, but excluding salaries o f officials o fthe civil service (which are, inany event, not eligible for IDA financing). For most activities, however, prior review will be limitedto contracts above the thresholds stated above. IDA mayrequest prior review ofbiddocuments, evaluationmethods andcontracts for which they require more detailed information. Similarly, any request for no objection will be formally repliedby IDA. Post review Procurement actions not subject to prior review as described above will be subject to post-review. This i s to allow for efficient disbursement o f funds while assuring transparency andconsistency with these procedures. A 11documentation used for the procedures o f contracting ,recruitment of consulting services, evaluationand award shall be retained for subsequent examinationby independent auditors and IDA supervision missions. Frequencyof procurementsupervisionmissions Once every six (6) months (including special procurement supervision for post-reviewlaudits). The overall procurement risk assessment i s rate average. The following steps are designed to mitigate procurement r i s k  Ministry or recruit a new one with equal qualifications and experience or high Prepare InternalInstructions articulating the Within one year o f Borrower NewPublic Procurement Act and Regulations implementation Training o f staff, who deal withprocurement Prior to or at time o f Launching IDkiBorrower the project and continuous thereafter Detailed draft ProcurementPlan for the first Bynegotiations BorrowerlIDA year IDA'Sprior reviewo fthe first three contracts Early days o f implementation IDA below thresholds stage Use o f IDA StandardBiddingDocuments for Life o f the Project NCBprocurements IBorrower Procurementmethods (Table A) Table A: Prqiect Costs by ProcurementArraneements Expenditure Category A. CivilWorks B. Goods C.Consultants' Services D.Training/a D.Operating costs (5.4) (5.4) E. Conservation 7.0 7.0 Endowment (0.0) (0.0) FundI% Total Project 5.8 3.3 0.5 7.2 16.2 0.5 6.5 40.0 Costs,by methodof Procurement .I. amounts (5.3) (3.0) (0.4) (6.2) (15.8) (0.4) (0.0) (31.1) financedby IDA I I I I I I I Figures inparen esis are the amounts to be financedbvthe IDA credit. All costs include contingencies. I \a Includesworkshops, training, andstudy tours, as well as consultancieswhich are gearedtowardcapacity building. \b ComprisedofGEFfinancing. - 86 -  Prior review thresholds (Table B) Tab1 B: Thresholds for Pr Expenditure Category Contract value Procurementmethod Contracts subject to prior review A. Civil Works la <$50,000 Quotations(up to an aggregate first three contracts value of $200,000), awardedon the basisof quotations obtained from three qualified national contractors >=$50,000but NCB for an aggregate not to All < $150,000 exceedS250,OOO >=$150,000 ICB All B. Goods <$30,000 Local or International None Shopping, for an aggregate not to exceed$400,000 >=S30,OOO but NCB, for anaggregate not to first three contracts subject <$150,000 exceedS400,OOO to prior review >=$150.000 ICB All Individualunits of IAPSO. Individualcontracts none oftice equipment, not to exceed$30,000 for an fumiture, vehicles aggregatenot to exceed $300,000. >=$50,000 for IndividualQualifications. Sole All andTraining (including individuals sourcingmay be allowed, Audits) subiectto clauses 3.8 - 3.11 of Guidelines. >=$ 100,000 for QCBS All <$50,000 for IndividualQualifications. Sole TORS,budget, individuals or sourcingmaybe allowed, qualifications,contract <$100,000 for firms subiectto clauses 3.8 - 3.1Iof Guidelines. Workshops, training, Acceptable national practice All studytours All operatingcosts Local shopping None andfield expenses - 87 -  Disbursement Allocation of grant proceeds (Table C) All disbursements o fIDA funds will be handledina manner which is consistent with the World Bank's ~i~bursementHandbook, and as described inthe Development Credit Agreement. Fundswill be disbursed over 5 year period, plannedto begininJune, 2002. The Completion Date will be June 30, 2007 and the Closing Date will be December 31,2007. As part o fproject preparation anAccounting andFinancial Management Manual was prepared, andhas beenincorporatedinto the Project ImplementationManual. Fivedisbursement categories are envisaged: civil works, goods and equipment, consulting services, training, and operating costs. Table C: Allocation of Credit Proceeds ExpenditureCategory Amount in US$million FinancingPercentage 1. Civilworks 5.10 100 percent o f foreign expenditures; 90 percent o f localexpenditures 2. Goods 4.10 100 percent o f foreign expenditures; 90 percent o f local expenditures 3. Consulting services andaudits 8.50 100percent 4. Training 6.00 100 percent 6. Refundo f Project Preparation 0.60 Amount due pursuantto Advance Section 2.02 (b) o f the Development Credit Agreement 17. Unallocated I 1.90 I I Total ProjectCosts 31.10 Total 31.10 All disbursements ofthe GEF Grantwillbemade at one time intothe agreedendowment fund. EAMCEF will establish the endowment fundto receive and manageUSS7.0 million from the GEF and possible other donor funds. The GEF and any other funds will be managedby an asset manager selected byEAMCEF following Bankprocurement guidelines andsatisfactory to the Bankandunder investment guidelines andspending rules approved bythe Bank and detailed inthe Financial, Operations and Management Manual o f the EAMCEF. The condition for the disbursemento f the grant into the endowment fundi s the successful achievement o fthe following eight indicators: (i) successful establishment and functioning ofthe Secretariat (i.e. key positions inthe Secretariat have beenfilled, audits have beencompleted andare clear, an acceptable 2-year work plani s developed); (ii) finalization o f the Finunciul, Operations, and Munuge~entMunuul which defines and clarifies procedures and operations for the EAMCEFand its approval by the Bank, (iii) establishment andfunctioning o fthe Endowment FundBoard(Le. regular Boardmeetings, appointment o f four new Boardmembers, application o f the procedures for Boardmembers); (iv) development and launching o f the fundraising strategy; (v) grantmakingactivities have begun (proposals solicited, competitive selection procedures followed, grants awarded andpilot activities are under implementation); (vi) at least one Local Advisory Committee has beenestablished; (vii) documented adherenceto the policies, procedures andprinciples set forth inthe Deedo f Trust; (viii) documented significant co-financing for the EAMCEF. The investment strategy for the endowment will also have to be approved bythe Bankprior to disbursement. - 88 -  Table C1: Allocation of Grant Proceeds 1. EndowmentFund 7.00 I 100percent o f foreign expenditures Summaryof the financialmanagementassessment: A financial managementassessmentwas carriedout duringAppraisal missionwhichindicated that the Ministry'sFinance Department andstaff have adequate financial managementsystemswhich can provide, with reasonable assurance, timely information on the status o fthe project as requiredbythe borrower and IDA. The government financial management systemand controls over public finances have recently beenupdatedand strengthenedunder the Integrated FinancialManagement System (IFMS) usingcomputerized accounting software (the so-called 'Platinum' system). A satisfactory project Accounting and Financial Management Manual describingthe accounting system, procedures, intemal controls, chart o f accounts androles and responsibilitieso fthe key staff responsible for IDA finances has beendeveloped. The Ministryhas wide experience inimplementing IDAprojects and inmanagingIDA fimds from the previous Forest ResourcesManagement project. Therefore, the project financial management system i s adequatefor the project to be presentedto the Board and the project i s ready for implementation. A review ofaccounting and financial managementsystems concludedthat, while FBDhasextensive experience inworking with Bankprocurement and disbursement, it is currently not capable o f complying with new LoanAdministration ChangeInitiative(LACI) Guidelines. Two actions must be completedin order to become LACI-compliant: Before the project is declared effective, an additional Ministry-qualified accountant shouldbe deployed on a full-time basis to assist the current project accountant inthe project financial matters; 0 The project will be reassessedfor LACIcompliance when a LACIcompatible financial reporting format acceptable to the Bank has been prepared (based on the Revised LACIguidelines). Once FBDis assessedto be LACIcapable, the CreditAgreement will be amendedto reflect that disbursements are to take place on the basis o f Project Management Reports thereafter. Inthis event, it envisaged that the project will adopt streamlined disbursement procedures once LACI Guidelines have beenmet. The decisionto adopt streamlined disbursement procedures will be made inconsultation with a BankFinancialManagement Specialist who will: review experience to date with the quality o f withdrawal submissions, operationo f the Special Account, SOE submissions anddocumentation retention inthe field, and the general effectiveness o f project managementand accounting staff; ensure that the Special Account has beenreconciled and any outstanding issues resolved; review supervision reports to assess implementationprogress and issues; review any available audit information, as well as any other financial reports, with a view to forming an opinion onthe reliabilityo fproject accounts; review the PMRformat designed to be usedinconjunction with the Platinum computerized accounting package. - 89 -  Audit arrangements: Audited financial statements (project, SOEs, and Special Account/ PMR) will be prepared and submitted within 6 months ofthe close o feachFiscal Year. The Terms o fReference for the Audit are includedin the Accounting andFinancial ~ a n a g e ~ eManual. Audits remain the responsibility o f the Controller n t and Auditor General. Additional costs which may be incurred to complete the audit will be covered by the project. Documentationwith respect to SOEIPMR expenditures will be retainedby the Ministryat the Ivory Rooms. Use of statementsof expenditures(SOEs): All applications to withdraw proceedsfromthe Credit will be fully documented, except for expenditures for incrementaloperatingcosts, training costs, and contracts with a value o f $30,000 or less for goods and equipment, $50,000 or less for civil works, $100,000 or less for consultants services (firms), $50,000 or less for consultants services (individuals), for which reimbursements or replenishments to the Special Account may be made against Statements o fExpenditure (SOEs). Supporting documentation will be retainedby the Government and will be available for inspectionand review as requested by IDA SupervisionMissions andbyproject auditors. Special account: Itis envisaged that a singleSpecial Account, acceptableto IDA,will be established. The authorized allocation ofthis account will be US$l,OOO,OOO, though the balance will be maintained at $500,000 until total disbursements have exceeded SDR 5 million. Requests for replenishment of the Special Account will be submitted to IDA every monthuntilsubmissiono f quarterly PMRs commences. Each replenishment request will accompanied by anup-to-date bank statementanda reconciliation statement. The size of the authorizedallocation maybe revisedonce experience with LACI-compatible disbursement and financial managementprocedures is gained.  Annex 7: Project ProcessingSchedule TANZANIA: EasternArc Forests Conservationand ManagementProject IFirstBank mission(identification) 0110112000 /Appraisalmission departure I1 II 04/08/2002 II Negotiations 0411612003 PlannedDate of Effectiveness 0913012003 Preparedby: The project was preparedby the Forestry and Beekeeping Divisiono f the Ministryo f Natural Resources and Tourismunder the direction o f a Project Preparation Working Group. The PPWG comprised: Dr.FelicianKilahama, Assistant DirectorofForestry, Group Leader Mr.J. Musokwa, ProjectImplementationSpecialist Dr.G. Monela, Associate Professor ofForest Economics, SokoineUniversity of Agriculture Dr.P. Yanda, Director, Tanzania NaturalResourcesInformationCenter, UniversityofDares Salaam Dr.I. Forestry andBeekeepingDivision Aloo, Ms.Amina Akida, Forestry andBeekeepingDivision Ms. T. Mbaga, Forestry andBeekeepingDivision Mr.Matthew Mndolwa, Tanzania ForestResearchInstitute The PPWGhas employedvarious consultants to provide assistanceduringpreparation. Thesehave included Prof. R. Ishengoma, HumanResources Development Specialist, Dean, Faculty o f Forestry, Sokoine Universityo f Agriculture Alan Ogle, Private SectorForestry Specialist, Groome Poyry Marko Katila, Private Sector Forestry Specialist, Jaako Poyry Fortune Charumbira, Institutional Change Specialist, Consultant Ray Victurine, GEF Trust FundSpecialist, Cascadia Consulting Prof. R. Malimbwi, Forest Management Specialist, Professor o f Forest Mensuration and Management, Faculty o f Forestry, Sokoine University o f Agriculture Liz Wily, Community-based Natural ResourcesManagement Specialist, Consultant Barney Laseko, Financial Management Specialist, Consultant O.Mkungu, Accountant N.G. Sem, Procurement Specialist Inaddition, the Bankprovidedfurther preparation assistance, Toshiftimi Serizawa (Natural ResourceManagement Specialist), SADC Food Security andRural Development Hub, Harare DanKobb (Governance andRevenueSpecialist), Consultant K e nGreen, Social and Environmental Safeguards Specialist, Consultant -91 -  Marc Daudon, GEF Trust FundSpecialist, Cascadia Consulting Melissa Moye, GEF Trust FundSpecialist, Consultant KithinjiKiragu, Institutional ReformSpecialist Assistance to prepare GEFAJNDP financedactivities was providedby a team with CAREiTanzania. Preparation assistance: The project was preparedwith resourcesmade available from a PPF, a Policy andHumanResources Development Trust Fundand with a PDFiB Grant from the Global Environment Facility. Bank staff who worked on the project ncluded: Name Speciality Nathalie W. Johnson Sr. Environmental Specialist, Team Leader MartinFodor Environmental Specialist Pascal Tegwa Procurement Specialist Mercy Sabai Financial Management Specialist EdithMwenda Counsel Steve Gaginis Finance Officer Marie Claire Li Progam Assistant The Forest Conservation and Management Projectwas Appraised inOctober 2001. Inaddition to these staff, the Bank's teamwas comprised o f KithinjiKiragu(Institutional ChangeSpecialist) Jyrki Salmi (Sector Program Specialist, Consultant to the NationalForest Program) Campbell Day (Forest Management Specialist, Consultant to Norad) Margrethe-Holm Anderson (Participatory Forest Management Specialist, Danida) Per Rasmussen(Participatory Forest Management Specialist, Consultant to Danida). The Government o f Tanzania team was comprised of: Dr.FelicianKilahama(Forestry andBeekeepingDivision) George Mbonde (Assistant Director, Forest Development) G.P. Mashurano (Assistant Director, Forest Utilization) I.Y.Mnangwone (Assistant Director, Research, Training, and Statistics) D.Kihwele(Assistant Director, Beekeeping) StephenMariki (Coordinator, National Forest Program) The EasternArc Forests Conservation and Management Project was appraised inApril 2002. - 92 -  Annex 8: Documentsin the Project File* TANZANIA Eastern Arc ForestsConservationand ManagementProject A. ProjectImplementationPlan Project ImplementationManual Annex 1. Improving Service Delivery through Institutional Reform: Establishment o fthe Tanzania Forest Service Annex 2. ImprovingService Delivery for ParticipatoryForest Management Annex 3. Improvingthe Financial Sustainability o f Forest and Woodland Management Annex 4. Involvement of the Private Sector inthe Development andManagement ofIndustrial Plantations Annex 5, EasternArc Mountains Conservation EndowmentFund,Financial, Operations, and Management Plan Annex 6. Accounting and FinancialManagement Manual 6. BankStaffAssessments Pascal Tegwa, Procurement Capacity Assessment, Ministry o fNatural Resources and Tourism, October 16,2001 Mercy Sabai, FinancialManagement Assessment, MinistryofNatural Resourcesand Tourism, October 25,2001 C. Other MinistryofNaturalResourcesandTourism(1998), NationalForestPolicy MinistryofNaturalResourcesandTourism (200l), ForestryProgram National Daniel Kobb, Improving Forestry Revenue Collectionin Tanzania, 20 February 2001 Marko Katila andAlan Ogle, Involvement of the Private Sector in theIndustrial Forest Plantation Development and ~anagement,16 February 2001 Wily, L.A. andP.A.Dewees. Fromusersto custodians: changing relationsbetween peopleandthe state inforest managementinTanzania. World BankPolicy ResearchWorking PaperNo. 2569. March2001 EasternArc Mountains Conservation Endowment Fund(2001). Trust Deedof the Eastern Arc Mountains Conservation Endowment Fund.March20, 2001 *Including electronicfiles - 93 -  Annex 9: Statementof Loans and Credits TANZANIA: EasternArc ForestsConservationand ManagementProject 21-May-2003 Difference betweenexpected and actual OriginalAmount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA Cancel. Undisb. Orig FrmRev'd PO58706 2002 Forest Consewationand Management 0.00 31.10 0.00 33.06 2.79 0.00 PO02797 2002 TZ SONGOSONGOGAS DEV, & POWERGEN 0.00 183.00 0.00 179.20 117.98 0.00 PO71012 2002 Primary EducationDevelopmentProgram 0.00 150.00 0.00 105.23 41.66 0.00 PO73397 2002 LowerKihansi Environmental Management 0.00 6.30 0.00 5.98 1.59 0.00 PO47762 2002 RURALWATER SUPPLY 0.00 26.00 0.00 27.51 2.64 0.00 PO65372 2001 SOCIALACTIONFUNDPROJECT 0.00 60.00 0.00 29.00 -2.70 0.00 PO69982 2001 RegionalTrade Fac.Proj. -Tanzania 0.00 15.00 0.00 11.91 2.98 0.00 PO50441 2000 RURAL&MICROFINSVC 0.00 2.00 0.00 1.09 1.06 1.06 PO57187 2000 FIDPH 0.00 27.50 0.00 15.70 14.68 6.57 PO58627 2000 HealthSectorDevelopmentProgram 0.00 22.00 0.00 4.30 -6.30 0.00 PO60833 2000 PUBLIC SERV REFPROG 0.00 41.20 0.00 30.91 -10.17 0.00 PO02622 2000 TANZANIA PSACI 0.00 190.00 0.00 81.21 -108.84 0.00 PO49838 2000 PRIVATIZATION 0.00 45.90 0.00 32.77 22.63 0.00 PO47761 1999 TAX ADMINISTRATION 0.00 40.00 0.00 25.71 22.09 0.00 PO02804 1998 AGRIC RESEARCH 0.00 21.eo 0.00 5.21 4.89 0.00 PO02789 1996 HUMANRESOURCEDEV 1 0.00 20.90 0.00 1.93 0.35 0.00 PO02753 1997 NAT EXT PROJ PH.11 0.00 31.10 0.00 2.12 4.51 -1.97 PO46837 1997 LAKEVICTORIA ENV. 0.00 10.10 0.00 3.40 -1.28 0.00 PO38570 1997 TZ:RIVER BASINMGMSMAL 0.00 26.30 0.00 4.43 6.38 0.00 PO02758 1996 URBANSECTOR REHAB 0.00 105.00 0.00 17.65 21.39 0.00 PO02770 1994 ROADS11 0.00 170.20 63.53 36.25 106.13 34.73 Total: 0.00 1225.40 63.53 654.55 244.48 40.39 - 94 -  TANZANIA STATEMENTOF LFC's HeldandDisbursedPortfolio Jun30 - 2002 InMillions USDollars Committed Disbursed IFC IFC F Y Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic _,_- 1999 AEF Blue Bav 1.45 0.00 0.00 0.00 1.45 0.00 0.00 0.00 2001 AEF Bound& Hi1 0.20 0.00 0.00 0.00 0.20 0.00 0.00 0.00 1996 AEF Contiflora 0.35 0.00 0.00 0.00 0.35 0.00 0.00 0.00 1998 AEF DropZanziba 0.32 0.00 0.00 0.00 0.32 0.00 0.00 0.00 1997 AEF Hort. Farms 0.19 0.00 0.00 0.00 0.19 0.00 0.00 0.00 1998 AEF Ma$ Masafi 0.27 0.00 0.00 0.00 0.27 0.00 0.00 0.00 1996 AEF Milcafe 0.18 0.00 0.00 0.00 0.18 0.00 0.00 0.00 1994 AEF Moshi Lthr 0.00 0.19 0.00 0.00 0.00 0.19 0.00 0.00 1999 AEF Musoma Fish 1.50 0.00 0.00 0.00 I.50 0.00 0.00 0.00 1997199 AEF Pallsons 0.32 0.00 0.00 0.00 0.32 0.00 0.00 0.00 1995 AEF Tanbreed 0.70 0.00 0.00 0.00 0.70 0.00 0.00 0.00 2000 AEF Zan Safari 0.70 0.00 0.00 0.00 0.70 0.00 0.00 0.00 2002 EximBank 2.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 IHP 0.82 0.60 0.00 0.00 0.82 0.60 0.00 0.00 2000 IOH 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2000 NBC 0.00 10.00 0.00 0.00 0.00 3.44 0.00 0.00 1993 TPS (Tanzania) 5.69 0.87 1.04 0.00 5.69 0.87 1.04 0.00 1991I97 TPS Zanzibar 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 1994 Tanzania Brewery 0.00 6.00 0.00 0.00 0.00 6.00 0.00 0.00 1998 Tanzania Jubilee 0.00 0.29 0.00 0.00 0.00 0.29 0.00 0.00 1994 ULC Leasing 0.00 0.38 0.00 0.00 0.00 0.38 0.00 0.00 2001 AEF 2000 Indust 1.60 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996199 AEF A&K Tanzania 0.15 0.00 0.00 0.00 0.15 0.00 0.00 0.00 1997 AEF Aquva Ginner 0.68 0.00 0.00 0.00 0.68 0.00 0.00 0.00 Total Portfolio: 20.12 18.36 1.04 0.00 16.02 11.80 1.04 0.00 Auurovals Pending Commitment F Y Approval Company Loan Equity Quasi Partic 2002 Exim Bank 0.00 1.oo 0.00 0.00 Total PendingCommitment: 0.00 1.oo 0.00 0.00 - 95 -  Annex 10: Country at a Glance TANZANIA EasternArc ForestsConservationand Management Project Sub- POVERTYand SOCIAL Saharan Low- Tanzania Africa income Developmentdiamond' 2001 Population,mid-year (millions) 34.5 674 2511 GN1percapita (Atlas method, US$) Lifeexpectancy 210 470 430 GNI (Atlas method, US$billions) 9.4 317 1,069 I Average annual growth, 1995-01 Population(%) 2.5 2.5 1.9 Laborforce (%) 2.5 2.6 2.3 GNI Gross primary Most recent estimate (latest year available,1995-01) capita enrollment Poverty(77 ofpopulationbelownationalpovertyline) 35 Urbanpopulation(% oftotalpopulation) 29 32 31 Life expectancyat birth(years) 44 47 59 Infantmortality(per 1,000livebirths) 93 91 76 Child malnutrition(% ofchildrenunder5) 29 Accessto improvedwater source Access to an improvedwater source (% ofpopulation) 54 55 76 Illiteracy(% ofpopulationage 15+) 24 37 37 Grossprimaryenrollment (% ofschool-age populafion) 65 78 96 Tanzania Male 65 85 103 Low-incomegroup Female 65 12 86 I KEY ECONOMICRATIOSand LONG-TERMTRENDS 1981 I991 2000 2001 1 Economicratios' GDP (US$billions) 5.5 5.0 9.1 9.3 GrossdomesticinvestmentJGDP 26.3 11.6 15.8 Exportsof goods and serviceslGDP 14.0 10.3 14.6 15.9 Trade Gross domesticsavingslGDP - 13.5 3.0 9.2 1.0 GrossnationalsavingslGDP I 22.1 3.9 8.5 6.7 I Currentaccount balancelGDP 0.0 -16.5 -9.1 -9.2 InterestpaymentslGDP 0.9 1.1 0.5 1.1 Domestic Investment TotaldebtJGDP 0.0 132.3 81.9 66.2 savings Totaldebt servicelexports 31.2 36.7 14.2 21.1 Presentvalueof debtJGD? 28.9 43.2 Presentvalueof debtJexports 189.1 137.0 Indebtedness 1981-91 1991-01 2000 2001 2001-05 (average annualgrowth) GDP 3.4 5.2 5.6 5.8 i --'- Tanzania GDP per capita .... 0.6 3.0 2.9 3.6 - Low-incomeorouo EXDO~~Sof a d s and services - ., 9.6 18.4 17.8 2.7 STRUCTUREof the ECONOMY 1981 1991 2000 2001 Growthof investmentand GDP (W) (% of GDP) Agriculture 45.4 48.1 45.0 44.8 120 - Industry 16.2 16.9 15.7 15.8 Manufacturing 10.6 9.0 7.5 7.4 Services 38.3 35.0 39.2 39.4 Privateconsumption 13.8 18.1 84.3 83.4 Generalgovernment consumption 12.7 18.9 6.5 9.6 Importsof goods and services 24.4 33.6 23.1 24.8 -GDI *GDP 1981-91 1991-01 2000 2001 1 (average annualgrowth) Growth of exportsand imports(W) Agriculture 3.4 3.4 5.4 T Industry 4.1 7.3 6.5 40 Manufacturing 3.4 4.8 5.0 I20 Services 3.2 6.0 5.5 0 Privateconsumption 2.4 -0.9 3.1 1-20 Generalgovernment consumption 3.6 5.0 6.6 -40 - Gross domesticinvestment -0.9 1.5 5.8 - Exports -+-Imports Importsof goods and sewices 1.3 0.1 8.1 Note:2001 data are preliminaryestimates. *The diamondsshow four key indicators in the country (in bold)comparedwith itsincome-groupaverage, If data are missing,the diamondwill be incompiete. - 96 -  PRICESand GOVERNMENTFINANCE 1981 1991 2000 2001 Domestic prices IInflation(~r.1 I (?Achange) 40 T I Consumer prices 25.6 28.7 5.9 5.2 30 ImplicitGDP deflator 28.1 7.4 6.7 /20 Government finance (% of GDP,includescurrentgrants) l 0oI- , - - -- Currentrevenue 19.2 12.3 10.6 11.4 96 97 98 99 00 Currentbudget balance -3.3 -0.2 -0.5 -0.7 Overallsurplusideficit -13.7 -1.7 -5.4 -4.2 I w---GDP deflator -0-CPI TRADE I 1981 1991 2000 2001 (US$mi//ionsJ Exportand importlevels (US$ mill.) Total exports(fob) 562 394 663 772 Coffee 165 77 84 57 Cotton 78 63 38 33 Manufactures 60 70 34 56 Total imports(cif) 1,111 1,276 1,592 1,726 Food 104 32 176 169 Fuel and energy 261 1a9 95 106 I Capital goods 563 579 638 755 Exportprice index (1995=100J 103 75 130 136 95 96 97 ga 99 ao 01 Importprice index (1995=100) 93 98 90 100 I Exports aImports Terms of trade (1995=100) 112 77 143 136 BALANCEof PAYMENTS 1981 1991 2000 2001 (US$ mi//ions) 1 Current account balance to GDP(%) Exportsof goods and services 572 529 1,330 1,487 Importsof goods and services 1,192 1,569 2,094 2,316 Resourcebalance -619 .1,040 -765 -829 Net income 0 -185 -83 -44 Netcurrenttransfers 510 408 18 15 Currentaccountbalance -110 -818 -830 -858 Financingitems (net) 94 825 1,179 1,058 Changes in net reserves 16 -8 -348 -201 -25 Memo: Reserves includinggold (US$mi//ions) 209 974 1,157 Conversionrate (DC, loca//US$J 8.2 219.2 800.4 876.3 EXTERNALDEBTand RESOURCEFLOWS II 1981 1991 2000 2001 (US$mi//ionsJ Compositionof 2001 debt (US) mill.) Total debtoutstandingand disbursed 5,822 6,558 7,440 6,185 IBRD 210 208 11 a IDA 319 1,434 2,593 2,588 G:475 A'8 Totaldebt service 179 207 198 331 IBRD 23 56 5 4 IDA 3 17 52 57 Compositionof netresourceflows Ofiicialgrants 67 685 709 Officialcreditors 524 170 111 125 Privatecreditors 59 -9 Foreigndirect investment 193 203 Portfolioequity I World Bank program Commitments 91 334 329 360 A - IBRD E Bilateral ~ Disbursements 98 181 131 75 B IDA D Othermultilateral - F Private Principalrepayments 8 43 37 40 C IMF -- G Short-term -- Netflows 89 137 94 35 Interestpayments 17 1oa 29 20 21 Nettransfers 72 74 14 ueveiopmenttconomics YI IYIUL - 97 -  Additional Annex 11: Environmentaland Social Considerations TANZANIA EasternArc ForestsConservation and ManagementProject Introduction The project has been classifiedas Category B with respect to its expected environmental and social impacts. The project i s not expected to result insignificant negative environmentalor social impacts. The project will support the implementationo f a series o fparticipatory forestry management activities, which government has endorsedinits National Forest Program, which are intendedto bringabout the proper managemento f Government Forest Reserves, industrialplantations, forests on village lands, and community andprivate forests. As part o f this process, provisions will be made to bringabout sound forest management, andwhen required, the preservation o f criticalbiodiversity habitats. Inparticular, areas classified as catchment forest that are important for watershed protectionandthe EasternArc Montane Forests will be targeted for priorityprotectionand conservation. Environmental risks are associatedwith well-known and documented forest management constraints - encroachment into forest reserves, difficulties inimplementing practical sustainable forest management plans and sometimes ineffective traditional government forest managementpolices and regulatory measures. Furthermore, the project will support Government initiatives more fully to involve the private sector inthe management inindustrialforest plantations. Social and economic impacts will be assessed for all plantation forests which are expected to be directly affectedby this component o f the project, consultations will be undertakenwith all stakeholders. Special attentionwill be directed at small sawmillers to ensure they are adequately protected duringproject implementation. An additional benefit o f the involvement o f the private sector is that the creation o f an expanded investment climate could introduce new sawmilling technologies including opportunities to use currently discarded millwaste. Legal and RegulatoryFramework for SocialDevelopment and EnvironmentalManagement A nationalenvironmentalregulatoryandpolicy framework hasbeen evolving duringthe last several years. Currently, two independent agencies oversee environmentalassessment andreview processes, the National Environment Management Council (NEMC), a semi-autonomous statutory body, andthe Division o f the Environment (DOE) o fthe Vice-president's Office. The National Environmental Policy W P ) o f 1997provides guidance for environmental assessment procedures, includingEIA requirements. These provisions are primarily concerned with development projects andtheir potential impacts on the biologicalandphysical environment. However, it is important to point out that currently there is no comprehensive legislationto implement the NEP policies and there is no empowerment o f NEMCor o f DOEto make EIArequirements legally binding. The national capacity for managementand implementationo f environmental assessment requirements is still limited, particularly in light o f the nearly complete lack o f a regulatory framework. There are no clearly defined institutional responsibilities for EIAreview, approval and enforcement, and an EIA regulatory framework is usually only introducedon an ad hoc basis ina few protectedareas such inthe nationalparks, marine parks and game reserves. Unfortunately, there is no effective co-ordination and collaboration among environmental andsector agencies, such as FBD, inthis regard. - 98 -  Policies and regulations with respect to environmental assessmentrelated to forest and biodiversity are based onthe NationalForest Policy o f 1998 and the NationalForest Programo f 2001. There are plans to formalize a regulatory framework inproposed changesto forestry legislation, These instruments will provide GOT with a comprehensive sector framework with the objective o fbringingabout sustainable forest management and protection, andwhich recognizes multipleuses andinterests inthese resources. TableAll. I: Objectivesofdraft Forest Legislation encourage andfacilitate the active citizen involvement inthe sustainableplanning, management, use and conservation o fforest resources through the development o f individual and community rights; ensure ecosystemstability through conservation of forest biodiversity, water catchmentsand soil fertility; delegate responsibility for the management of forest resources to the lowest possible level o f local management consistent withnational policies; ensure the sustainablesupply o f forest products and services by maintaining sufficient forest area under efficient, effective and economicalmanagement; enhancethe quality and improve the marketability o f forest products andregulate their export; promote coordination and cooperation betweenthe forest sector and other agencies and bodies inthe public and private sectors; facilitate greater public awarenesso fthe cultural, economic and social benefits of conserving and increasing sustainable forest cover by developingprograms intraining, research andpublic education; and enableTanzania to play a full part incontributingtowards and benefiting from international efforts andmeasuresto protect and enhance global biodiversity. Source: Ministry o fNatural ResourcesandTourism. Forest Bill (drafi). 2001 Draft forest legislation, which describes the objectives and instruments for managingforest lands, outlines the need for a well defined and comprehensive forest managementplan for each forest reserve and private forest. Such managementplans shouldinclude: e a description o fthe biological, environmental, economic, geological andcultural resources o fthe forest, and an inventory o fresource uses; e a statement o fthe economic, environmental and social objectives to be achieved inthe management o f the forest; e a descriptiono f the surrounding areas and villages and their interaction with the forest; e a description o f the areas o f landwithinthe forest reserve inwhich it is proposedto establish local user zones to facilitate local communities obtaining benefits from the forest reserve; e a description of the local communities residinginthe vicinity o fthe forest andtheir relationship to the forest, includingtheir forest resource use; e inrespect offorests other thanvillage landforest reserves, anfor the involvement ofthe communities and managemento fthe forest resources; provisions regulating commercial forest exploitation including afforestationand reforestation; e provisions directed to forest conservation and preservation, includingwild animals and wildplants; e proposals for forest includinga managementplan; and e an identification o f financial andhuman resourcesneededto implement the management plan includingforest use charges and fees between the various authorities and persons likely to be involvedinthe management o f the forest. - 99 -  A keyprovision o fthe draft forestry legislationaddressesEIArequirements for anyproposed development inforest reserves, private forests, or sensitive forest areas including watersheds. The law clarifies that all parties, persons, or organizations inthe public or private sector, must prepare andsubmit to the FBDDirector an environmental impact assessment o f the proposed development from independent consultants selected from a list approved by GOT. TableA11.2: Classificationof Forestsin drap Forest Legislation Nationalforests forest reserves; nature forest reserves; forests on general land other than unoccupiedor unusedvillage landwhich are not reservedand o fwhich the right o f occupancy or a lease has notbeengranted to any personor body; Local authorityforests local authority forest reserves; forests on general land other than unoccupiedor unusedvillage landwhich are not reservedand o f which the right of occupancy or a lease or a licensehasbeen granted, to the local authority; Villageforests village land forest reserveswhich are declaredor gazetted; community forest reserves created out o fvillage forests; forests which are not reservedwhich are on village landand o fwhich the management is vested inthe village assembly; Privateforests forests on village landheld by one or more individuals under a customary right ofoccupancy; forests on general or village lando fwhich the right ofoccupancy or a lease has beengranted to a personor personsor a partnership or a corporate body or a Non-Governmental Organizationor any other body or organization. The list o f development activities subject to environmental assessment includes: commercial loggingand forest industryexceeding five hectares; miningdevelopments; roadconstruction or the layingo fpipelines; the construction o f dams, power stations, electrical or telecommunication installations; the constructionof a buildingor group o fbuildings for purposes other than the management o f a forest reserve on an area o f landexceeding one hectare or such area as maybe prescribed; and agricultural, aquacultural or horticultural development on an area o f land exceeding five hectares or such area as may be prescribed. LandTenureand SocialIssues Comprehensive revisions to Tanzania's landlegislation were recently enactedby Parliament, comprised ofthe LandAct o f 1999andthe Village LandAct of 1999. These laws define modemconstructs o f customary landrights and ifand how compensation i s to proceed when land is expropriated. Tanzanian legislation i s emphatic indeclaringthat any person whose righto f occupancy, recognized long-standing occupation, or customary use o f land is revoked or otherwise interfered with to their detrimentby the State is entitled to compensation as definedby full and fair pay. Furthermore, the LandAct sets out detailed terms for compensation under the following considerations: market value o f the realproperty, disturbance allowance, transport allowance, loss o fprofits or accommodation, cost o f acquiring or getting the subject land, any other cost loss or capital expenditure incurredto the development o fthe subject land, and interest at the marketrate. - 100-  A significant portionofthe Village LandAct details how peoplemay securetheir customary landrights. The customary landrightmay be registered and titled to an individual, spouse, clan, group or to an entire community. The process of adjudicating, registeringand issuingtitle deeds over village land is devolved to the community, andelected Village Councils become the LandManager through an elected Land Committee. These modernforest and landlaws provide the framework for the rightso f citizens to create their own reserves, to managecentral and local Government reserves and to sustain customary and granted access and use rights. Within this regulatory framework are specific rights andprocessesavailable to individuals andlor groups affected bythe declaration o f national forest or local forest reserves for proper compensation basedonwell-defined consultationand investigationprocedures. Other legislationprovides for mitigating social andeconomic impacts which might be an outcome o f the loss o f employment by current employees o fFBD(a possible impact o f involvingthe private sector in management o f industrialplantations). GOT has been engagedinnumerous privatization procedures duringthe past decadeandhas establishedtransparent provisionsfor reducingthe civil service work force under such initiatives. The Parastatal Sector ReformCommission (PSRC), responsible for these undertakings, has establishednorms for determining what will happen to the work force, how many and whatjobs would be redundant. At the same time, terms for retrenchment, separation and redeployment are defined. Environmental and Social Safeguard Issues The key safeguard issues which require evaluationinthis project are summarized here. The applicable safeguards are defined inOP/BP4.01 Environmental Assessment, OP/GP 4.36 Forestry, OPBP 4.12 Involuntary Resettlement and OP/BP4.04 Natural Habitats. This section summarizes the important triggers and mechanisms inthe project for achieving these policy objectives. The adequacy of implementing institutions to addressenvironmental management OP/BP 4.01 - Although the shortcomings o f a national environmentalmanagement and regulatory framework have beenhighlighted, the forest sector has a strong assortment o fprovisions to addressvirtually all potential environmental concerns that which arise as a result o f this project. These are specifically containedin the relevant forest sector policy, national program and draft law. Inaggregate, Tanzania's forest policy framework i s one o f the most constructive and forward looking inAfrica. Financing commercial logging operationsor thepurchase of logging equipmentfor use inprimary tropical moistforests - OP/GP 4.36 The project will not be financing any commercial logginginnatural forests. The project will be supporting commercial operations o& inplantationforests. Theseforests consist ofeucalyptus, cypress, pine andteak -most o fwhich were established over the last 30 years. The current standing crop has a history going back decades on land that was never coveredbytropical moist forest, but was primarily grassland. The sixteen plantation forest blocks covered bythe project will continue to undertake silvicultural practices includingharvest and replanting. Participatory forest management plans will allow for expansion ofvillage andcommunity basedplantationwoodlots, butonly withmanagement plans that ensureprotectionof sensitive, biologicallyimportant andwatershed catchments. - 101 -  Useof a sector-wide approachfor forest management OP/GP 4.36 - The NationalForest Policy, NationalForest Program, draft forestry legislation, andtechnical guidelines all constitute essential components o f a solid sector-wide approach to the forest sector inTanzania. All o f the Bankpolicy commitments have been addressedby GOT and include: adoption o f policies and a legal institutional framework for forest management; adoption of an appropriate forestry conservation anddevelopment plan; useofsocial, economic andenvironmental assessmentsofcommercial forests; setting aside compensatory preservation forests; and establishment o f institutional capacity to implement andenforce these commitments. Protection of forest areas that are considered critical natural habitats andpreservation and sustainableuseof forests of high ecologicalvalue - OPEP 4-36, OPBP 4.04 The project proposes to support a number o f activities within its three components that will adhere to forest sector provisions for identification, protection andmanagemento f critical habitats. These include, inparticular, catchments andtheEasternArc Montane Forests. Miombowoodlands, animportant and widely distributed andrelatively abundant forest ecosystem, and will continue supplyingwoodfuel and other forest supplies to adjacent communities. Unlikeother more fragile forest types, miombo woodlands are resilient to sustainable harvesting due to their regenerative capacity. Forest management plansto bepromotedbyFBDwill contributeto increasing the viability o fthese woodlands. The participatory forest management approach advocated inthe project also provides for local communities and forest usersto identify and manage, basedon their own needs, ecologically important forest areas. Stakeholder consultationincluding theprivate sector and localpeople inforest management OP/GP - 4.36 Provisions for stakeholder consultations are evident across the three project components. ForNational Forests, LocalAuthority Forests, Village and Community Forests, and Private Forests, the basic premise for future sustainable use i s the development o f forest managementplans that are defined by a stakeholder involvedprocess. FCMP has specifiedparticular provisions for ensuringthat all stakeholders, from the private sector to localpeople, are included inthe development o f forest managementplans. Avoid or minimize involuntary resettlement as it applies inparticular to encroachmentinforest reserves -OP/BP 4.12 ~ J ~ NhasTdeveloped a set of detailedguidelines for community basedforest managementwhich define R methods for definingforest reserve boundaries, identifying encroachment problems, consulting with offenders and establishing fines andprovisions for getting such offenders off designated lands. The Land Act also contains specifications for ensuring that peoples rights are duly respected and that incases where landappropriation is required, due compensation i s provided. Measures for appeals and investigations are also defined. Lastly, the Government has reiterated that involuntary resettlement would not be carried out in conjunctionwith any project implementation activity. Government has also agreed that inthe unforeseen event that involuntary resettlement becomesnecessary inthe course o fproject implementation, a detailed resettlementplan (including any compensation for lost livelihood) would be completedand subject to IDAreview well inadvanceofany resettlement actions associatedwith any ofthe project components. -102 -  Other issues The project will finance the construction of a new HQbuildingfor FBD. The proposed construction site i s a parkingarea under the immediate control and use o f the FBDat the so-called `Ivory Rooms' facility. No resettlement is envisaged as an outcome, though a bus stop will be relocatedto an adjacent location to allow access to the newbuilding. Implementationof ProjectEnvironmentaland Social Safeguards Participatory forest management A national strategy andprogramfor participatory forest managementhasbeendeveloped which addresses key safeguard issues. These measuresconstitute a comprehensive approach to sustainable forest management andmultiple resource use, including preservation o f critical forest and special biologically important areas. The emphasisinrecent GOT policy and legislation i s that central ministry control i s no longer the only administrative process. Government decentralization has continued over the years to the extent that localparticipationinmanagementand administration o f forest resources i s a principalobjective. Overall, the essential ingredients of participatory forest management inTanzania are that it: 0 reflects priorities within the sector for community basedforest management; 0 balances the needfor protection, resource extraction and sustainable use; 0 acknowledges that specific forest uses requires stakeholder inputs; 0 identifies critical forest habitats requiring strict protection; 0 provide for the community andother stakeholdersto undertake that protection; 0 makes provisions for national andlocalmanagement; 0 allows for joint forest managementbetween government andlocal communities incertain cases. The project will support the enabling framework for the establishment ofVillage Forest Reservesunder the management o f localVillage Councils (as well as other private andcommunity forest constructs as defined inpolicy). Simply because o f their much greater extent, these Reserveswill be established primarily inmiombo woodlands. Miombo is characterized by (among other things) its rapidregenerative capacity, andlow biodiversity. Miombo tends to be found inrelatively flat areas, andvirtually all miombo inTanzania has beenheavily modifiedbyhuman use. The literature suggests that the extensive areas which are now miombo, incentral Tanzania, were under cultivation 150years ago, prior to the Ngoni invasions. Much miombo which was cleared duringthe establishment o fUjamaa villages inthe 1960s is has beenrapidly regenerating, and accounts for significant new areas o f woodland. The establishment o fVFRs in miombo woodland areas is unlikelyto pose any significant environmental risk, or any risks which cannot be mitigated through natural regeneration. The establishment o fVFRs inforests o fmore significant ecological important is consistent with the GEF Operational Strategy for Biodiversity Conservation, and specifically with the objectives o f GEF OperationalPrograms 3 and 4 on Forest Ecosystemsand MountainEcosystems. Consistent withthese objectives, the project will provide finance for the creation and strengthening o fparticipatory and co-management schemesto buildsupport and ownership for biodiversity conservation, develop socio-economic activities to reconcilebiodiversity conservation with human needs, identifyprocesses which are likely to have significant adverse impacts on the conservation and sustainable use o f - 103-  biodiversity, andsupport capacity buildingefforts while focusing primarily on a mountaintropical forest ecosystem that is at risk. Government's Guidelines for the establishment o f VFRs emphasizethe needto raise awareness at the local level about the potential for multipleresource use, provide guidance for the identificationo f specific managementuse zones, recommend the development o f a protection process when it i s required, clarify that VFRs will have legal status, and also outline conflict resolution procedures. Establishmento f VFRs is a decisiontaken bythe village, and social impacts are determined bythe village, and compensated withinthe framework o f the village's operation. Government i s responsible for providing technical support for resourceuse zoning and mapping, andfor providinga generic safeguards checklist for all new forest reserve areas-Village Forest Reserve, Community Forest Reserve, Village Forest management Area- which are thought to contain critical ecosystems. The project will provide specific support for implementationo f all o fthese measures. Involvement of the private sector inindustrial plantation management The large forests o fTanzania include natural forests and plantations which cover only a fraction o f the total forest area o f 33.6 million hectares. The total area o f forest plantations i s relatively small and comprises both state-managedindustrialplantations and village, farm andprivate company plantations. State plantations are distributedwithin 16 plantation areas. Sao Hilli s the most important plantation area, followed byMeruAJsa, NorthKilimanjaro and West Kilimanjaro plantations. These four plantation areas cover altogether more than 80 percent o f the growing stock instate-managedplantations. Sao Hill alone covers about 50 percent o f the total state plantation area. Many individualforest plantations under state control were established without clear management objectives. Inthe early 20th century andlater inthe 1950s trees were planted mainly to provide long term timber supply, to act as bufferzones for natural forests and to protect watersheds. Plantations were established for industrial purposesinthe 1950s and 1960sbut only on a small scale and without linking management to the development o f forest industries. Larger scale industrial plantation development started only inthe mid-1970s when the Sao Hillplantations were greatly expanded to provide raw material for the proposed paper mill at Mufindi. Farmer andcommunity tree plantinghas taken place throughout the country but particularly inCentral and West Tanzania e.g. inNjombe andMufindidistricts. Forest plantation by the private sector i s a relatively new development inthe country with several operations initiated inthe 1990s by the Commonwealth Development Corporation and more recently byprivate Norwegian investors. Specific measuresthat address safeguardconcerns are highlighted below. - 104 -  TableAII.3: Elements of the EIA Process.for Pluntutions in Envjronmentul~Important Habitats Objective: Ensure that environmentalissuesare consideredas part ofplantation nmnagementplan. Ensure that environmentalimpacts are reduced or minimized. Solicit feedbackfrom affected stakeholders Actions: Review the current biophysical status ofthe plantation. Assess the potential environmental impact to critical or sensitive habitats associated with the managementplan. e Identifymitigation or protection measures. Party Responsible,for Mitigation: Leaseholder e TFSwith Technical Support from regional Catchmentand Forestry Officers Yerifeation: Environmental Assessment Statemenu'Report Environmental audiu'inspectionby TFS EIAsfor designatedplantations The project proposes to support the involvement o f the private sector inindustrial plantationmanagement through three pilot schemes(private management o f a selected industrial plantation, co-management of an industrial plantation which brings an industrialplantation with multiple stakeholders under commercial management, community-based plantation managementfor areas which cannot be managed commercially either by private companies or by the state but which have potentialto provide benefits to communities). Pilot areas are to be identified duringthe early stages o fproject implementation. Proposedpilot areas will be inventories and map. The result will be the demarcation and establishment of plantation boundaries, including identification andmapping of areasto be excludedfrom cutting such as critical watershedsand areas containing important natural habitats. A standard assessmentand documentation process will be developed to accomplish this objective. When appropriate, mitigationor protectionmeasureswill be identified and implemented. Socio-economic studies There hasbeen some concern that the involvement o fthe private sector will have serious economic impacts on small sawmillers and onplantation-adj acent communities. The sawmilling industryis an important sourceo f employment and revenue generation for local communities. Woodproducts are sold for buildmgmaterial, poles and other associatedenterprises such as furniture mahng. Eachpilot plantationwill develop general socio-economic information to portray the social, economic and social service instrumentswithin surrounding communities. The information to be collected will include: Communityivillage profiles that include populationstatistics, demographics, overview of labor force, employment opportunities and services; a description o f each small to medium sawmill including equipment, labor force, daily volume o f production, sources o fwood supply, clients and or end product markets; - 105-  a summary o f sawmill operator issues regarding supply and/or productionproblems, opportunities andpotential solutions; and an overview o f economic situationineachcommunity. The informationwill be incorporatedinto any social impact mitigationplans, as relevant, for individual plantation areas posed for PSI. takeh holder partic~ationinplantation management The project will support the adoption o fparticipatory plantationmanagement. This will require an acceptanceo f certain responsibilities and changes inthe roles o f the various stakeholders inforest management. The village, the state, and the private sector will have to cooperate andwork with each other ifparticipatory or joint forest managementis to succeed. The following actions will be undertaken to facilitate success: e clarify through contractual arrangement as appropriate the respective roles o f communities, state and industryinforest managementandprotection; e establish mechanisms to ensure that the expectations o f respective partners regardingplantation management i s understood by everyone; e strengthen the organizational and technical capacity o f villagers inresource management; e integrate plantationmanagementrelatedactivities with other village landuses and development activities; recognize traditional/custom~rightsand possible claims to landbasedon traditional village boundaries (ifsuch situations exist); e develop local conflict resolution mechanismsfor situations requiringconsideration o f different stakeholder objectives. Encroachment in plantution or other reservedforest areas and issues with respect to involuntavy resettlement Government has established several mechanismsto reduce the problemo f encroachment inreserved forest lands, includingboundary demarcation, patrols, voluntary resettlement andthe implementation o f benefit sharing schemes for communities living inbuffer zones around the forests. Many o f these measures have also beenappliedto plantation forests as well. However, a shift to having non-forest Department staff involved insome o fthese sensitive matters will require establishing good lines o f communicationbetweenthe plantation operators and local community stakeholders. The Government has confirmedthat involuntary resettlement will not be carried out inconjunction with any activity inthis project, and suchpolicy is expected to be applied inthe plantation forest lands. Many o f the plantation forests have individuals living on the border, and at times, within the forest who as Forest Department employees serve as forest guards. Eachplantationmanagementplan will identify such individuals and indicate how these personswill be effectedduringthe privatization process. Production waste management An issue relatedto the development of industrial operations aroundplantation areas which could benefit from project activities relates to the accumulation o f commercial wood-based wastes. It is common practice inmany sawmill operations to dump andlor burnthese byproducts, resulting indeleterious environmental impacts and inefficient use o fwoody biomass. Use o f this biomass for alternative - 106-  products such as blocks, he1and or other products is uncommon. Several operators expressedthe desire for technical assistanceto help identify viable alternatives to these practices, and lookedto the project for providingpossible solutions from experts outside the country. EasternArc Conservation andManagement: catchment forests and critical and sensitive habitats Specific activities will be undertaken, with GEF support, within the Ulugurumountains which are both "catchment forests" as definedbyrecent legislation andhighmountainforests o f unique biodiversity value. As such, this component o f the project will have the challenge o f applying the new GOTjoint forest managementpolicy, which recognizes the involvement o f local communities or NGOs inthe management and conservation o f forests and forest lands. The project will strive to meet the needs o f different stakeholder groups inthis region through a combination o f initiatives that will ensure protection o f the Catchment Forest Reserves, especially those areas with highbiodiversity and hydrological values. Itis anticipatedthat somedegreeofresource usewill occur butthat this will bebalancedwith conservation and protection. Other issues Monitoringand Supervision An outline safeguardmonitoring planhas beendeveloped to ensurethat safeguardprovisions are adequately implementedand sustained. The monitoring program will be further developed, and will indicate how well each o f the components is implementing the key provisions defined previously. The monitoringplanwill define indicators for measurement,methods to be used, frequency o f measurements, detection limits, andmonitoring responsibilities. The plan will be implementedwithinthe overall context o f institutional reforms inthe Forest and Beekeeping Department. The plan will include a description o fhow reviews of selected issues o f concern will beundertaken. A simple and pragmatic collection o f monitoring indicators is providedbelow. The safeguard indicators and monitoring planwill be incorporatedinto the overallproject monitoring planas described inthe PAD. Consequently, the MNRT will be the ultimate GOT informationfocal point. The Bank will include inthe project supervision planthe participation o f an environmental specialist inselectedmissions, the Mid-TermReview and inthe ImplementationCompletion Report. This specialist will review progressinimplementationo fthe project safeguardprovisions. -107-  TableA11.4: Monitoring Compliance with Environmental and Social Safeguards Zomponent/ Safeguard Issue MonitoringIndicator Responsibility for Frequency Yub-component Monitoring and Mitigation Institutional reform: Encroachment Community FBD Annual survey/ Participatory Forest problems in specific complaints to FBD report Management forests Claims filed against Resource use and FBD extraction without Legal actions against stakeholder citizens byFBD consensus [nvolvement o f the FBDemployees not Grievances filed FBDmonitors Annual survey ?rivate sector in provided adequate against FDB or mill performance o f industrialplantation compensation owner private sector Parastatal Sector management Small milloperators Millclosures, partners Reform experience economic worker layoffs, sale Commission downturn o f operations Reports No logging o f high Managementplans forests completed and Socio-economic reviewed survey and privatization reports for pilot plantations Conservation and Modification or Numberof FBDandNGO Catchment Forestry Management o f the deforestation o f unauthorized partners Project Reports EasternArc critical habitats incursions into Mountain forests protected forest UluguruMountains zones Biodiversity Forest change as Conservation detected through ProjectReports aerial photography or other remote sensing -108-  AdditionalAnnex 12: IncrementalCost Analysis TANZANIA EasternArc ForestsConservationand Management Project Overview The principalobjective of the GEF alternative is to provide resourcesto assistTanzania inconserving the unique biologicalbiodiversity o fthe Eastern Arc Mountain forests and their ecosystems, which are o f global importance, as well as vital to the livelihoods o fpeople livinginsurrounding areas. This objective will be achieved through a combination o f capacity building,conservation activities, strengthenedprotection, environmental education, and the development and implementationo f participatory forest conservation managementstrategies. The GEF alternative will provide resources for the development o f an EasternArc Mountains Conservation Strategy. The processby which this i s prepared will seek to establish a common platformthrough which multiple stakeholders with interests in the resources o fthe Arc can reach a consensusabout the most constructive approach toward its Conservation. Resources will be providedto establish a series o f community-based conservation initiatives inthe UluguruMountains, a priority site for action to reduce biodiversity loss, andwill assist increatingaframework for incorporatingforest biodiversityconcerns intoparticipatory forest managementprocesseswhich are to be supported by a new forest institution, the Tanzania Forest Service. The GEF alternative will also provide resourcesto enable the EasternArc Mountains Conservation Endowment Fundto beginits operations, and to capitalize the Endowment to improvethe sustainable flow o f resourcesto communities inthe Arc. The Endowment Fundi s expected to be capitalizedby GEF at the endofthe secondproject year after aperiodo finstitutional capacity building,which will lay the foundation for the EAMCEF andkey stakeholdersto implement a longer term operational conservation program. Net income generatedby the fund, beginninginthe fourth project year, will finance the following activities: trust fund admmistration, appliedbiodiversity research, forest conservation and participatory forest management, and forestlnature reserve conservation. Context and broad development goals Tanzania is a developing country with a GDP per capita o f US$260. Between 1989 and 1999, average annual GDP growth was 3 percent. Most social development indicators are below the means for sub-SaharanAfrica. Recent social and economic development indicators are summarized inthe table on the followingpage. Rates o f population growth tendto be highest inareas o f good agricultural potential, which are primarily highland areas with good forest cover. About 68 percent o f the population lives inrural areas, subsisting largely on agriculture and the use o f forest and woodland resources for a variety o f timber and non-timber products. At the national level, agriculture contributes to 45 percent o f GDP. Commercial tea andcoffee are significant export crops, as are tobacco and cotton, and these are very important for rural income generation. A primarydevelopment goal ofthe Government ofTanzania is to alleviate povertythroughthe sustainable management o f naturalresources, including the conservation o f biological diversity. Within this policy framework, the protection o fwatersheds is criticalto maintainingwater supplies for urban areas and for hydroelectric generation. Tanzania has the largest gross areaunder protectedstatus o f any country insub-SaharanAfrica (around 13.8 million ha under IUCNManagement Categories 1to 4). As a proportion o ftotal landarea, it has the secondhighest percentageunder protectedarea status (14.6 percent, compared with Botswana's 18percent) insub-SaharanAfrica. A very constructive policy - 109-  framework seeks to capture this priority onthe conservation o f forest biodiversity, particularly through the National Forest Policy, and its program for implementation, the National Forest Program. Tanzania has abundant tree resources, and over a thirdo f the country (between 30 and 40 million ha) is under forest andwoodland cover. A relatively small percentage o fthe country, however (less than2 percent), comprises closed tropical highforests, while the bulki s accounted for by open woodlands o f the miombo type (dominated by Brachystegia species). About 40 percent o fTanzania's tropical high forest area i s concentrated ina belto fgeologically ancient crystalline mountain formations knownas the Eastern Arc Mountains. Biophysical aspects of the Eastern Arc The Eastern Arc Mountains stretch from southeast Kenya through south central Tanzania. They consist o f the Taita Hills inKenya, and the Pare, Usambara,Nguru,Nguu,Ukaguru, Rubeho, Uluguru, Mahenge, andUdzungwaMountains inTanzania. The mountains range inaltitude from 500m to 2,850m. Rainfall insomeblocks is as highas 3000 mmper year, but falls as low as 600 mminthe western rain shadow. Formed 100million years ago, the EasternArc forests represent one o f the oldest and most stable terrestrial ecosystemsonthe continent. Their age, geologic origin, andproximityto the IndianOcean are features which separate them from other highlandregions inEast Africa. Currently, the total area o f natural forest inthe Tanzanian Eastern Arc Mountains i s approximately 5,350 km2.Ithas been estimated that this is around a thirdo fwhat it was a century ago. Nearly three-quarters o fthe remainingnatural forest inthe Eastern Arc i s open (and sometimes degraded) forest -forest inwhich the canopy is not contiguous. The total area o f closed forest -forest inwhich the canopy i s generally intact and contiguous -inthe EasternArc is slightlymorethan 1,45 1km2. The EasternArc forests have the highest knownnumber ofplant and animal speciesof any regionin Tanzania. The EastemArc i s also characterized by highconcentrations o f endemic species. The EasternArc forests are known as one o fthe most important sites inAfrica for endemic birds, amphibians, reptiles, many groups o f invertebrates, and plants. Indeed, the EasternArc contains one o f the highest proportions o f endemic species o fany regionworldwide. The EasternArc is also the habitat for the majority o f the globally critically endangered, endangered, and vulnerable mammal, bird, and tree species found inmainlandTanzania. Eighty-sixpercent o f all mammal species and 90 percent o f all birdspecies listed by IUCN(1996) as either critically endangered, endangered, or vulnerable inmainland Tanzania are found inthe EasternArc forests. Furthermore, approximately 52 percent o fthe globally threatened tree species occurring inTanzania are found inthe EasternArc Mountains. As aresult o fthe extensive threats facing the EasternArc forests andtheir exceptionally high concentrations o f endemic species, the EasternArc andthe coastal forests o f Tanzania and southern Kenya have beenidentifiedas one o f the 25 most threatened ecosystemsworldwide - one o f the so-called `global biodiversity hot spots' -recognized by Conservation International, and are included in WWF's listingof200 ecoregions ofcriticalglobal importance. The EasternArc Mountains andcoastal forests o f Tanzania andKenyahave the highest ratio o f endemic plant and vertebrate species per 100 kmzofall 25 biodiversity hot spots. -110-  Socio-economic characteristics of communities around the Eastern Arc The Eastern Arc Mountains are scattered over an enormous area. Becauseo f the higher rainfall and better soils which are found at higher elevations inTanzania, there are naturally much higher human population densities inthe vicinities o f these forested areas. Perhapsas many as 4 millionpeople live within 10 kmo f one o f the Arc's 11main forest blocks. Between40 and 50 percent o fthis population lives below the poverty line. At least 80 percent o fthe population livinginthe vicinity o f the Eastern Arc Mountains derive their principallivelihoods from agriculture and livestock husbandry, and many are heavily dependent on forest products and environmental services. Because o f differences inrainfall and altitude, there are widespread differences infarming systeins, and while there i s little evidence o f significant food insecurity, farmers have consistently reportedthat yields have declined. Soil erosion remains a serious problem insome areas. Scope of analysis and assumptions The analysis o fbaseline, GEF alternative, andincremental costsis focused onthe forests o fthe Eastern Arc, andthe areas where proposed GEF support is to be targeted, as well as on the broader set o f institutional and policy changeswhich are expected to impact on forest biodiversity conservation in Tanzania. The benefits o fbiodiversity conservation within the forest reserve do extend further afield, particularly with respect to the benefits from watershed catchment protectionwhich accrue interms o f water andhydroelectric energy supplies. The analysis consider the fully 6 year implementationperiod for the project. Baseline Scenario The baseline set o f actions which are being undertaken on a `business-as-usual' basis inthe Eastern Arc includes the activities inthe forest andagricultural sector. Boththese sectors have significant linkages to the water and energy sectors. The baseline largely comprises: forest sector planning; forest catchment andprotected areas management; plannedforest institutionalreforms; biodiversity conservation activities; and agricultural andrural development activities. We review as well the activities and outputs financed with PDF resources. Inadditionto donor-financed activities i s the wage bill for forest officers deployed byFBDand staff ofTANAPA inthe EasternArc, as well for agricultural extension officers working on specific soil erosion and sustainable farming systems inthe vicinity o fthe EasternArc. Rural liyeli~oodsand ruralpoverty The Eastern Arc forests are extremely important for mitigatingthe impacts o frural poverty. Recent studies have shown that fully 40 percent o f total householdconsumption in some rural areas is accounted for by forest and woodland products such as honey production, firewood, construction material, andwild fruit andother foods (a point noted inTanzania's Poverty Reduction Strategy Paper). Inaddition, forests andwoodlands are animportant source ofdry seasongrazing, reducinghouseholds` exposure to environmental risk. Ruralhouseholds generally use a wide variety o f environmental resources from woodlands, and the sizable aggregatevalue o f environmentally-derived income i s made upofa fairly largenumber ofsmaller individualincome sources. Inother studies fromthe region, ithas also been shown that there i s a negative relationshipbetweenaggregateenvironmentalincome share and total householdincome, that the poor are more resource-dependentthan the rich (thoughbetter off households are, inquantitative terms, the most significant users of environmental resources). There is considerable complexity inthe factors which determine levels o fresource use: different households use different resources for different reasons at different times. Still, the conclusions are inescapable: the - 111-  ruralpoor are heavily dependent on resourcesderived from forests and woodlands, and deforestation and forest degradation poses a significant threat to rural livelihoods. The Eastern Arc Mountainforests are inextricably linkedto the social and economic fabric o fthe communities livingadjacent to the forests. Indeed, these forests are important because they sustain livelihoods and becauseo f the linkages between effective forest management, conservation, andpoverty reduction. Studies have identified both the benefits associatedwith conservation (primarily related to water) and the costs associatedwith changing current practices. These costs include the potentialloss of livelihoodfor residents engagedintimber felling, charcoal production, and agriculture (taking place within forest boundaries) andpotential economic adversity for current users o fthose forest products - such as urban dwellers dependent on charcoal for fuel and poles for construction and women engagedin localbrew making. Indeeddiscussions with community groups, foresters, and government officials have demonstrated convincingly that virtually all livelihoods inthe communities adjacent to these forests are dependent insome way and to varying degrees on forest resources. These findings underscore the importance o f developing acceptedstrategies which address socio-economic issues associatedwith developingand implementingbiodiversity conservation initiatives inthe EasternArc Mountains. Eastern Arcforests and the national economy While the biodiversity o f the Eastern Arc Mountain forests i s o fextraordinary international significance andlocally is o fgreat value for mitigating the impacts ofpoverty, the value o fthese forests to the national economy, primarily through water andenergy production, is o f extreme national importance. The Eastern Arc forests cover severalmajor catchmentswhich collectively provide water for all o fthe nation's coastal communities (including Dar es Salaamwith its population o f 3 million). These mountain forests feed more than 22 rivers, including the Sigi, Rum, Ruaha, Kihansi, and Rufiji. The Ulugurucatchment, for example, providesthe mainsourceofdrinkingwater to bothMorogoro town andDar es Salaam. Hydroelectric energy production is similarly heavily dependent onmaintainingthe integrity o f these forests. Nearly 70 percent o f Tanzania's electricity is generatedfrom sources derived from the EasternArc forests. Water from the EasternArc also supports river ecosystems, mangrove forests, coastal ecosystems andcoral reefs. Inshort the value o f water derived from the EasternArc forests cannot be overstated. Other environmental services captured bythe macro-economy associatedwith the Eastern Arc forests impact positively on agricultural production and also result from timber harvesting(both through the legal and illegal felling o f trees usedinconstructionand to make furniture andcharcoal). More recently a small ecotourismindustryhas developed. There are some indications o f a growing trade inthreatened species o f insects andreptiles. Accordingly, there i s a strong need for sustainable use o f forest products for these purposes andactivities such as tourism which maximizethe non-destructive uses o f forests. The idea o f collecting environmental rents, especially from the energy andwater sectors, has been tabled ina general way a number o f times. Theseproposals, however, are somewhat disconnected from an understanding o fthe tenuous -indeed, highlyprecarious -financial position o f service delivery institutions such as the Tanzania Electricity Supply Company (Tanesco) and the Dar es SalaamWater and Sewerage Authority (DAWASA). While the capturing o f environmentalrents may seem to be a good idea inthe abstract, the current public expenditure framework suggeststhat this would be unrealistic inthe short term. -112-  Forestry sectorplanning The National Forest Programprovides the overall planning framework which describes the needfor interventions inthe forestry sector. The planwas the product o f extensive consultations and consensus-building activities between government andcivil society. With respect to forest biodiversity conservation andmanagement, the planproposes to launch steps to reduce forest biodiversity loss, to promote village-based forest conservation, to identifyandprioritizethreatened forest ecosystems, to propose and support implementationo f mitigationsteps, andto prepare management guidelines for forest biodiversity conservation. The NFP Steering Committee hasbeenestablished to see through the process o f implementation, andhas primaryresponsibility for ensuring that donor activities are implementedina manner which is consistent with the NFP. (The NFP Steering Comnittee i s comprisedo frepresentatives from MNRT, the Ministryo f Finance, the Planning Commission, the MinistryofRegionalAdministration andLocalGovernment, theNational LandusePlanning Commission, the Vice President'sOffice (Environment Division), Sokoine Universityo f Agriculture, andthe Private Sector Foundation.) The principalfinancial delivery mechanism for the NationalForest Program is the plannedUS$62.2 million Forest Conservation and Management Project (FCMP) (comprised inpart o f $32.1 million inIDA financing) into which the proposed GEF financed alternative hasbeen fully blended. The NFP Steering Committee has been given oversight for preparationo fthe FCMP, andmonitoring o f its implementation. Additional bilateral support for implementation o f the NFP is inthe process o f being mobilized. Withrespect to the EasternArc forests, the NFP explicitly recognizes their global biodiversity values, but also acknowledges that nationalresourcesto investintheir conservation are likely to beextremely constrained. The NFP fails to establish a strategic framework for how forest biodiversity conservation inthe EasternArc canbebroughtabout. Forest catchment andprotected areas conservationand management Almost the only highforests inTanzania over which Government has any immediate control are classified as catchment forests, which are maintainedandprotected for their watershed catchment values. Catchment managementis essential for national power generation, to provide urbanand rural water supplies, and for existing andpotential irrigation. Linkagesbetween management o fthe forest sector and the water and energy sectors are weak. N o water or power user fees revert to forest managers, despite generalist suggestionsto do so. Water supplies inTanga, Morogoro and Dar es Salaam have been severely affected by the lack o f a regulatory framework for water management. As with many other areas, the policy framework for water managementhasimprovedconsiderably over the last several years, andnational policy now places a priority on determining water rights partly on the basis o f the needto maintain downstream environmental flows. The translation o fpolicy into effective action to ensure upstreamcatchment protection maybe a longer term outcome. Similarly, catchment protection remains critical for ensuringlongterm access to power, yet there i s something o f a disconnect between the energy, forest, andwater sectors. Constrained installedhydroelectric generating capacity has meant that the impacts ofreduced catchment flows as a result o fpoor landmanagement practices are greatly amplified duringdrought periods. The Forestry andBeekeeping Divisionhas deployed staff to managemajor catchment forests inthe EasternArc, andthese are concentrated inthe UluguruNorth, UluguruSouth, andEast Usambara Mountains. A total of 8 Forest Officers and57 Assistant Forest Officers have beendeployedbyFBDto assist inmanagingcatchment forests inthese particular blocks. They are assistedwith support from the Norwegian-financed Catchment Forestry Project as well as bythe German-financed NaturalResources - 113-  Management andBufferZone Development Program. Additional staffhave been deployedbythe Tanzania NationalParks Authority (TANAPA) to managementthe Udzungwa National Park. TANAPA has beenpreparing(withWWF support) a managementplan for the UdzungwaNational Park. Plannedforest institutional reforms Government intends to establish the Tanzania Forest Service as a specialized 'executive agency' as defined bythe ExecutiveAgencies Act (1997), and consistent with the wider and on-going national programo fcivil service reform. It is envisaged that the Tanzania Forest Service will, among other things, have some responsibilitiesfor the protection andmanagemento fnatural forests. Establishment o f the TFS i s being supported bythe WorldBank. Planned investments are intendedto focus on improvinggovernance inthe sector, andto develop means o f ensuring that revenues collected from forest management are reinvested at the local level inforest protection andmanagement through local institutions. Inaddition, the TFS i s expectedto establishvastly improved service-delivery mechanisms for participatory forest andwoodland management, inparticular, support for the establishment o f Village Forest Reserves, forest and woodland conservation and managementby individuals and communities, and Joint Forest Management, buildingonexperiences pilotedinearlier efforts. With respect to the Eastern Arc, the capacity to plan, mobilize resources for, implement, andmonitor biodiversity conservation initiatives i s lacking. For the TFS to have any national mandate for forest biodiversity conservation, thesetypes o f skills will needto be upgraded and greatly enhanced. In particular, the inclusion o f a particular focus onparticipatory forest biodiversity conservation inthe emerging institutional framework i s a criticalneed. The Baseline provides no resources to enable this kindofinstitutional strengthening. Biodiversity conservationin theEastern Arc The bulko f the most significant biodiversity conservation activities which are beingundertaken inthe EasternArc are donor-financed. Donor support has been highlyfragmented and inconsistent, and has primarilyaddressednationaland localneeds(important intheir own right), with very little focus on globally significant biodiversity values. Some activities have providedmuchneeded research about biodiversity inthe Arc, andits conservation. However, becauseo fthe multiplicity o f objectives, approaches, and outcomes, donor support has not reflected any particular set o f strategic objectives. Inaddition, donor support for work inthe EasternArc hasbeenirregular andinconsistent. Nationaland local institutions are not able reliably to depend on long-term donor support for financing local biodiversity conservation initiatives, and the sustainability o fmanydonor interventions i s open to question. The certainty o f long-term financing for forest biodiversity conservation inTanzania remains problematic. Indeed, long term financing needsto conserve the EasternArc are enonnous. One study concludedthat, inorder to addressprevailing forest biodiversity policy priorities, public expenditures totaling around $15 millionper year would be requiredinthe long-term - a five-fold increase over current total public financing levels. Subsequent efforts have sought to identifyhow the efficiency o f expenditures could be increased, and whether alternative resource delivery models would be more effective (i.e. financing communities directly to assist them inundertakingforest conservation, rather than financing Government). - 114-  The extent o f future donor commitments to biodiversity conservation inthe EasternArc is not clear. While the Eastem Arc has, for instance, beenidentified for eventual support from the Critical Ecosystems Partnership Fund(CEPF), no specific commitments have been made, andthe timing and scopeo ffuture support i s uncertain. Most donors view potential GEF support as an important catalyst for their own actions, and are likelyto make new commitments as the outcomes from the proposed EasternArc activitybecome clearer. Agriculture and rural developmentactivities For the most part, the EasternArc Mountains have reliable rainfall o fbetween2200 nunand 1000mm per year. Despitetheir rather poor soils, population densities are high- up to 450 people per km2in some areas. Agriculture consists o f commercialestates (mainly tea, some cinchona, increasing horticulture) andintensive and extensive subsistence cultivation. Landshortages have forced cultivation onto ever steeper slopes and onto streambanks, and have brought about the conversion o f remainingforest land to agriculture. Erosioni s widespread, and has ledto soil andnutrientlosses, decreasedcatchment capability, flash floods and landslides, andreservoir siltation. Poor farming practices inmucho fthe EasternArc area accentuatespoverty and increases dependence on forest resourcesfor alternative incomes. Agricultural extension inTanzania is providedas an advisory service by District Agriculture Officers. Inthefaceofpublicexpenditureconstraints, theseserviceshavebeenindecline. Donorand government supported schemeshave sought to increase the areaunder tea inrecent years through out-grower schemes, to integrate ago-forestry, to increasehorticulture, to encourage the adoption o f stall fed cattle rearing. Pyrethrumis increasingly beingcultivated, as i s the cultivation o f spices. Economic liberalizationinthe sectorhas greatly increasedthe incentive to expand agriculture, but advisory services are not inplace adequately to address the increased demand. GEFAlternative Costs. The total cost o fthe Forest Conservation andManagement Project is estimated at US$62.2 million. Ofthis, US$50.4 million is expected to be forthcoming from GEF, IDA, and other co-financing sources. The balance o f $11.75 million i s associatedfinancing which constitutes part o f the baseline, andis funded from various sources. GEFIncremental costs are expected to total aroundUS$12million. The proposed structure o fIncrementalcost financing i s outlined inthe Summary Table. Table A12.1: Summary proposed financing ofIncrementalCosts (US$ million) Baseline GEF IncrementalCosts financing 1. DevelopmentofanIntegrated 12.6 6.6 0.00 2.00 21.2 EasternArc MountainBiodiversity Conservation Strategy 2. Community-based conservationin 12.4 4.4 0.00 3.00 19.8 the UluguruMountains 3. Institutional reformsfor forest 8.3 0.7 0.00 0.00 9.0 biodiversityconservation 4. Establishment and operationof the 5.1 0.1 7.00 0.00 12.2 EasternArc MountainsConservation - 115-  Benefits. Implementationofthe GEFAlternative would enablebiodiversity conservation activities and programs to occur that would not have been undertaken through current baseline activities, The establishment o f a financial mechanism,the EAMCEF, will ensure long-term support for biodiversity conservation activities inthe EasternArc. Under the GEF alternative, Tanzania will strengthen the baseline scenario by contributing to the conservation o f this globally significant mountain forest ecosystem, conserving rare and endangeredspecies, maintainingwatershed integrityandinternational water flows, improving tourism values, andbuildingthe capacity o f communities (as well as national institutions) to managethe Eastern Arc's natural resources. Incrementalcosts. The difference betweenthe cost o fthe Baseline scenario (co-financingplus associated financing which totals US$50.2 million) andthe cost o f the GEF Alternative (USS62.2 million) i s estimated at US$12 million. GEF resourcesare required to meet these incrementalcosts for achieving long-termglobal environmental benefits as a result o f developingan integrated Conservation Strategy for the EasternArc, undertakingcommunity-based conservation activities ina priority site in the Arc (the Ulugurus), supporting institutional reforms which incorporate forest biodiversity conservation objectives into participatory forest management strategies, and from establishing a long-term sustainable financing mechanism for forest biodiversity conservation through the EAMCEF. Co-financing. The EasternArc has already benefitedfrom US$373,000 inPDFIA and B resources which have been usedto finance preparation costs. Co-financing andcounterpart financing has been sought from a range o f donors and from Government, andthis totals an estimated US38.4 million. Table A12.2: IncrementalCosts Matrix Project Domestic Benefit Global Benefit Component Developmentand Limited capacity to Nofocal point for biodiversity implementation o f implementnew forest, conservation activities inthe an Integrated water, and land policies in region EasternArc a mannerthat conserves Biodiversity andprotects vital forest Conservation resources and values, Strategy including water and local livelihoods. No framework or other No mechanismto integrate approachto consider the disparatepolicies, districts, and EasternArc Mountains as government agencies into a an entire unit and comprehensiveset o f strategies I implement an integrated for biodiversity. set ofpolicies for conservation. Limited recognition that biodiversity is an important value to vrotect. With GEF 21.18 Implementationof Implementationo f strategiesto Alternative strategies that serveto conserve biodiversity conservecatchment forests throughout the region. and improve the socio-economic conditions offorest dependent communities. Monitoring programsto Adaptive monitoring and provide feedbackon evaluation to measure effectiveness,change, and biodiversity status andfield threats to forest resources. programimpacts. - 116-  Jew capacity at the Potential new hnding strategies .ationaland regional level that can finance conservation o f 3 address Eastem Arc forestswith maximum $suesas a whole. biodiversitv. Total 5.0 Incremental Cost o fthe GEF Altemative Incremental 3.0 providedby leveraged co-financing Incremental 2.0 resources required from GEF Community-based Baseline 13.38 lapidloss o fUluguru Loss ofbiodiversity, conservation in vlountains catchment specifically species endemic to the Uluguru orests, which provide the Ulugurusandmost seriously Mountains water for severalmillion species found inthe ieopleand support the mid-mountain zone. ivelihoods o f brest-adjacent :ommunities. I iesearchand monitoring Further fragmentation o f )fcatchmentforest forests. .esources; development o f :apacity to conserve Forests. Collection o fdata on biodiversity values; pilot projects to establish boundaries and involve communities in conservation. New resourcesto New resourcesto protect Altemative demarcate and protect endemic species, through forest reserves; training improved forest management, andassistanceinan enforcement o fboundaries, and integrated set o factivities participatory management to conserve forest schemes. resourceswhile improving livelihoods. Use o fconservation Leverageconservation capacity capacity developed inthe already developed for global baseline. benefits. Total 6.40 Incremental Cost o fthe GEF Alternative Incremental 3.40 provided by leveraged co-financing Incremental 3.0 resources required from GEF Institutional Baseline 8.3 Implementationof forest No capacity inthe Eastem Arc - 117-  cforms for forest sector reformjust Mountain districts to address iiodiversity underwayat the national biodiversity issues. :onservation level. Commitment to Limited capacity nationallyto Participatory Forest address these issues. Management as an alternative approachto involve all stakeholdersin managingforests. With GEF 9.3 New capacity within the National and regional capacity Alternative EastemArc Mountain to address and act on districts to implement conservation o f globally reforms that are to leadto significant biodiversity. improvedmanagement and protectiono fcatchment and other forests. Total 1.os Incremental Cost o fthe GEF Altemative Incremental 0.8 provided by leveraged co-financing Establishment o f Baseline 0.0 No long-term sustainable No long-term sustainable the EasternArc financing mechanismfor financing mechanism for Mountains conservation inplace. conservation in place. Conservation Endowment Fund With GEF 11.9 EAMCEF endowment is Ongoing long-term financing Altemative capitalized. Ongoing, for projects that will conserve long-term financing for the globally significant conservation projects that biodiversity resource. will improvelivelihoods andpreservewater and energy values. Total 11.90 Incremental Cost o fthe GEF Alternative Incremental 5.15 provided by leveraged co-financing Incremental 6.75 resources required from GEF Totals Baseline Co-financing 38.4 Associated 11.8 financing GEF 12.00 financing Total GEF 62.2 Altemative - 118-  Table A12.3: Summary, Co-financing and GEFfinancing EasternArc ForestsConservation andManagement(US$ million) I ndicative Co-finan iI:* Activities IDA I @ 5 millio IDA EC GOT OtherI Sub-total, FCMP LKEMP Costs ~ co-financing 1. Development ofan 0.5 Integrated Eastern Arc Mountain Biodiversity Conservation Strategy ~ 2. Community-based 1.1 I conservationinthe Uluguru Mountains I 3. Institutional 0.2 reforms for forest I biodiversity conservation I 4. Establishmentand 1.1 0.1 1.0 I 5.1 operation of the EasternArc Mountains Conservation Endowment Fund - Total -1.1 1.9 - 119-  AdditionalAnnex 13: Technical Review TANZANIA EasternArc Forests Conservationand Management Project byJohn Mugabe, African Center for Technology Studies 1. GeneralRemarks IreadtheproposalontheConservationandManagementoftheEasternArcMountainForestsproject prepared bythe World Bank and the UnitedNations Development Programme (UNDP) with great interest. Itreads well and i s coherent. Analytical rigor andempirical materialhave beenbrought to the effort. Ihavejust two general comments to make. * The proposalis unnecessarily too long; with repetitions. . There i s a tendency to makegeneral assertions - essentially,some o f the statementsmade inthe proposalmay require clarificationlexplanation (see below for specifics). Interms of scope, it covers abroadarray ofproblems, issues andhaswell sequencedactivities. For its core objectives to be achieved it will require a strong inter-agency mechanism to ensurethat the proposed activities are implementedina coherent or synergistic way. 2. Key Issues Scientific and Technical Soundness The proposalprovides a good descriptiono fthe ecological structure and socio-economic benefits o f the Tanzanian EasternArc Mountainforests. Itadequately identifies andanalyses some o fthe root causes o f the degradation and loss offorest biodiversity o f the EasternArc. Onthe whole, it i s scientifically and technically sound. There are, however, a number o f comments Iwish to make on the conceptual framework and analysis issues. First,the notionso f conservation, managementandprotection are sometimes usedinterchangeably and often loosely. Suchphrases as "the protection o f forest biodiversity conservation" (page 6,para 23) are confusing. . Second, there are a numbero f strong assertions, with very little or no empirical evidence given. For example, what i s the basis forjudgingwhether Tanzania's policy for forest conservation is `very strong'? Compared to? Isuggestedthat the proposalavoids makingjudgment o f the adequacylstrength o fthe policy, particularly the National Forest Policy that i s relatively new. Its strengths can be effectively assessedduringits implementation. * Third,the proposalstressesthe needto cast discussion of andsolutions of forest degradation andloss problems inTanzania generally andinthe EasternArc inthe overall wider policy reformcontext. However, the analysis is restrictedto the explicit newNational Forest Policy and some reference made to the draft nationalbiodiversity strategy and actionplan, water policy and agricultural policy. How are forests ingeneral and the Eastern Arc Mountainforests inparticular (as national economic wealth) addressedby the Tanzania's Poverty Reduction Strategy Paper (PRSP) that i s likely to be the framework andwith priorities for development assistanceand lendingto the country? What specific actions for betterlimproved forest management are outlined inthe PRSP apart from the mere - 120-  recognition o f the direct economic importance of forests (page 22, para 81). A discussion o f forest management (conservation and sustainable) issuesas addressedby the PRSP would be useful; and particularly give a context for the cluster of activities and outputs proposed under Activity 1.3 on page 22 as well as Activity 1.2 e andf. . Fourth, the long-term objective o f the proposedproject is show be clearly state as to accommodateiarticulate sustainableuse goals or imperatives. To address some of the socio-economic challenges faced inthe Arc, a strategy for forest conservation andprotectionper se would be limited. Para 63 last phrase i s confusinglunclear - "incorporate biodiversity conservation objectives more effectively into forest management". What are these objectives? Those inArticle 1 o f the Convention on BiologicalDiversity? What isn't forest management biodiversity conservation? Are there specific biodiversity conservation not incorporated into forest management? Which ones? These are some o fthe questions that emerge from reading andreflecting on the long-term objective stated on page 16 (para 63). . Fifth,onthe institutional arrangementsfor forest management, the proposalrefersto reformsaimed at establish a `service-delivery mechanism'. Are there mechanismsbeingestablished for the regulatory and enforcement roles? Areiwill regulatory and enforcement functions integrated into the operation o fthe `service-delivery mechanism'? IdentificationandArticulationof GlobalEnvironmentalBenefits The proposaldoes not explicitly identifyandarticulate global environmentalbenefits that the project would generate. There are such global environmental benefits as its potential contribution to the management o fclimate change - e.g.sinks for emissions and carbon sequestration, shouldbe described; inadditionto what arelargelynationalbenefits outlined onpage68. Coherencewith GEFGoalsandCouncilGuidance The proposed project would contribute to the achievement o f overall GEF goals and inparticular to those pertaining to the conservation and sustainableuse o f biodiversity. Its proposed activities are within the GEF operational. It is beingproposedwith operational programmes 2 and3. Itis withinone o fthe priority areas that were identified by the 5th Conference o f Parties to the Convention on Biological Diversity, andthus GEF investment inthe project would be within the framework CBDiCOP decisions, particularly Decision Vi13 that calls on the Facilityto support, as priority, projects that implement the Convention's programme o fwork on forest biodiversity. Itwould contribute to the implementation o f the elements o fthe programme o f work that focus on: . Holistic andinter-sectoral ecosystemapproachesthat integrate the conservation andsustainable use o fbiologicaldiversity,taking account o f social and cultural and economic considerations; and . Comprehensive analysis o fthe ways inwhichhuman activities, inparticular forest-management practices, influence biological diversity andassessment o fways to minimize or mitigate negative influences. The proposed project would enableTanzania to engage inthe implementationo f several o fthe provisions o fthe Convention on BiologicalDiversity(e.g. Articles 6, 8, 10, 11and 20). For example, it would create incentives for local communities to engage inconservation o f forest biodiversity (Article 11 o f the CBD). - 121 -  Replicability of the Proposed Project Problems associatedwith the conservation and sustainableuse o f the EasternArc Mountainforests are common to many other forest ecosystemsinTanzania and elsewhere inAfrica. The role o f local communities inthe conservation and sustainableuse o f forests, and the needto enlarge institutional capacities as well as to ensurereliable, predictable and adequatefinancing o f conservation efforts are issuesthat preoccupy nationalpolicy-makers andinternationalagencies. The proposedproject activities are sequencedinsuch a way as to maximize learningduringthe life o f the project and make strategic interventions to addressroot causes of the problems. A richbody o f informationandknowledge that may be usedto establish similar activitiesiinterventions will be generatedby the proposed project. The involvement o fNon-governmental Organizations (e.g. WCST and LEAT) and such donor agencies as DANIDAoffers an opportunity to replicate the project inother parts ofthe Tanzania with similar ecological andsocio-economic conditions and forest managementchallenges. Sustainability of the Project There is an explicitly recognitionto establish sustainability measuresfor the project. The proposed endowment fundwould be a major source o f financial sustainability o f conservation and sustainable use efforts that the project intends to stimulate. Inaddition, ifthe project succeedsinmobilizinglocal communities and enlarging the range o f socio-economic opportunities available to them, it will have built a constituency for conservation and sustainableuse ofthe ecosystem. This constituency together with strong participationo f national public (central and localgovernments) institutions would manage initiated processesandactivities at the end o f its plannedlifeiduration. Some o f the proposedproject activities are aimed at transferringownership o fthe processesand outputs to local actors. 3. Secondary Issues 1. Linkage to other focal areas- The proposedprojectlinkswell to climate change, internationalwaters, land degradation. 2. Linkages to other programmes and actionplans at regional or sub-regional The project has direct - linkage to such initiatives as the GEF financed project `Reducing BiodiversityLoss at Cross-Boarder Sites inEast Africa'. 3. Degree o f involvement o f stakeholders - The proposedproject wouldbringtogether at least four groups o f stakeholders: localhouseholds living and interacting with forests inthe Arc; national policy-makers and conservation agencies; private sector; and internationaldonors. Itoffers relatively highopportunities ofmobilizingandengaging these groups. Itisbeingdeveloped with areasonable measure o f their participation. 4. Capacity building - The proposed project is largely about capacity buildingo f at least four types: institutional strengthening (centra1and local government authorities and localcommunity institutions), resource mobilization, environmental education for local communities, and improvement o f overall national and localpolicy contexts. - 122-  Additional Annex 14: Responseto STAP Review TANZANIA: EasternArc Forests Conservationand ManagementProject The STAP Technical Review confirms that the proposed GEF project support for the EasternArc MountainForests would contribute to achievement o f overall GEF goals and inparticular to those pertaining to the conservation and sustainableuse o fbiodiversity. Further the proposal i s consistent with GEFOperational Programs, and the priorities identifiedbythe 5thCOP. The STAP review acknowledges the elements o f sustainability which have beenincorporatedinto the project design, and suggests that there i s good scope for replicability. Finally, the review confirms that the many linkages across sectors, institutions, and among stakeholders are clearly articulatedand will contribute to meeting the project's objectives. The Technical Review makes several general andspecific points about the Project Brief. We respond to several o f these issues insome detail: Length of the proposal. The lengtho f the proposal i s an outcome o f the complexity o f the project, the needfor clarity about institutional and implementationarrangements inlighto f this complexity, andthe needfor anunderstanding o f how GEF support fits within the broader forest development framework in Tanzania. The proposalhas beenpreparedto address the many and varied questions which have been raisedinternally bybothIAs, and so the proposal representsa consensusbetweenthe Bank and UNDP about the way forward. Muchinformation has beenmoved, from earlier drafts, to the Annexes. A needto clarify certain assertions inthe Project Brief about the strength of the NationalForest Policy inTanzania. This was a professional judgment, and was basedon experience with similar policy processes andoutcomes elsewhere inAfrica. The fundamental question about the effectiveness o fpolicy implementation i s a different question, andthis can only bejudged inthe mediumterm. We continue to have the view that the policy framework for forest biodiversity conservation inTanzania is very strong. This is incomparisonto the past forest policy (which was very out ofdate), and incomparison to other naturalresource policies inthe easternAfrica Region. The forest policy itselfmakes explicit reference to other policies - includingthat o f decentralization, as well as water and energy. That determined the focus on the forest policy itself inthe analysis process. W e agree the need for a continuing and wider discussion of the Poverty Reduction Strategy Paper and what it says about forest and woodland management. The PRSPwas preparedby Government and publishedinOctober 2001. The PRSPrecognizes explicitlythat the poor inTanzania areaheavily dependent onthe environment, and statesthat the poorest households insome areas are those most dependent on forest and woodland resourcesfor income. The PRSPproposesto findways o f incorporating environmental quality indicators into its poverty monitoring systeminaway which captures these levels o f dependency. Future iterations o fthe PRSP andthe Medium-term Expenditure Framework are expectedto capture more fully these linkages and to help define a more consistent framework for managing activities aimed at protecting the environment. The development ofthis Eastern Arc project established contact with PRSPprocesses seeking as to how to elicit further support from PRSP, andto linkthe monitoring o f enhancedlivelihoods to PRSPMand Emethods. This i s stated in para 83 (p22). Further descriptionofprocess will be dealt with duringproject implementation. What are biodiversityconservation objectives? Why isbiodiversity conservationnot synonymous with forest management? They have certainly not been synonymous inthe past-which is a mainreason for the new policy. Biodiversity conservation focuses attention away from trees to all taxa and to all -123-  products and services notjust woody products from trees. Definitions o f forest biodiversity do follow from the CBD andthe CBD hasbeen a guidingforce inTanzania's National Forest Policy. Issues o f sustainable use and equitable use are important. It is important to note that the Objective o f the project (para 63) states ... to incorporate biodiversity conservation objectives MORE EFFECTIVELY into " forest management." Yes biodiversity is more integrated than inthe past, but the effectiveness o f this integration i s not always obvious. The Review states the need for clarity about the regulatorylenforcement mechanisms and revenue collection that are to be introducedthrough the new institutional arrangements. These mechanisms are under active development inTanzania at the moment, through a number o f field projects. Lessons learnedare being sought - suitable for both forests o f highbiodiversity value and forests o f local resource benefit. With respect to revenue collection (primarily royalty on logging) proposals are under consideration that would remove muchresponsibility for revenue collection from District Forest Officers andplace it inthe hands o fprivate sector contractors working on behalf o f Government, subject to monitoringbythe Tanzania Revenue Authority. However logging bans continue for the EasternArc Forests, andrevenues there are likely to be those through ecotourisin and NTFP collection, collected through community forestry arrangements. New tenure arrangementswhich give primary responsibility for forest managementto villagers are expected to provide the best form o f decentralized regulation over forest use. The STAP review statedthe needto identify other global benefits (inparticular carbon sequestration) that the project would generate. The project is not intendedto addresscarbon sequestration issues, and so little work has been carriedout onthe extent o fthese benefits. What little data there i s with respect to the miombo woodlands o f Tanzania, (which comprise the largest woody cover type inthe country), suggeststhat the greatest benefits from carbonsequestration can be accrued through better fire management and reducedloss o f woody cover. Ingeneral, any conservation processthat reduces forest loss and reduces annual cropping infavor o f woody crop agriculture will contribute positivelyto carbon sequestration. We still do not see the needto develop detailed carbon models for the EasternArc. The biodiversityglobal values are described insome detail for the EasternArc as a whole, andsome level o f description given for some individualforest blocks. The UluguruMountains are a major field site for this project (see paragraphs 88 to 97). The UluguruMountainForests score highly for species endemism despite havinghadmost low altitude forest cleared for agriculture. The East Usambaras and Udzungwas do still have considerable low altitude forest -typically warmer andwetter. This emphasizes the extreme biodiversity values o f the higher altitude forests o f the Ulugurus,with extensive radiation in several genera o fthe Rubiaceaeplant family for example. -124-  AdditionalAnnex 15: Threats and Root Causes of BiodiversityLossand Mitigating Actions TANZANIA EasternArc ForestsConservationand Management Project There are six main anthropogenic threats to the loss of biodiversity inthe Eastern Arc forests, namely a) commercial agriculture, b) subsistenceagriculture, c) intentionally set fires, d) commercial timber extraction, e) domestic timber extraction, and f) other householduses. (a) Commercial agriculture. Highly diverse farming systems across the regionwhere the Eastern Arc forests are foundhave favored the emergence o fmultiplecoinmercial cropping strategies with varying impacts on forest cover. The four primary cash crops inTanzania are coffee, tobacco, tea, and cotton, but typically, these have not hada huge impact onhighforest cover loss inthe Arc. The main coffee producingareas o f Tanzania are mostly inthe Kilimanjaro and Kagera regions (away from the Eastern Arc), andtobacco and cotton are grownprimarilyindrier areas. Tea i s grown inIringa, Tanga, andKagera, mostly inlarge estates, andposes a modestly greater threat. The most significant threat, however, comes from the cultivation o fvegetables andcookingbananas for localmarkets, and, insome places, the cultivation o f cardamom andother spices under the forest cover. The former requires outright forest clearance o f cultivable areas, while the latter results inthe clearance o f the understory and cultivationfor several years before soils are depleted. This type o f commercial cultivationplays an extremely important role inrural livelihoods. (b) Subsistenceagriculture. Subsistencefarming systems are characterized by very low productivity (less than Iton per ha for maize, which is the main subsistencecrop). This is inpart due to the lack o fbetter alternatives. Cultivation on steep slopes andslash and bumcultivation are common. Cropping practices are widely perceivedto have ledto a decline inalready low yields, and to deforestation, and soil erosion. Agriculture continues to expand into forested areas. (c) Intentionally set fires. The burningo f fields and grasslandsis a key feature o f subsistence farming inTanzania, and posesanother riskto highforests inthe Arc. Honeyhunters are also widely blamedfor setting fires. (d) Commercialtimber extraction. Large-scale timber extraction still occurs, albeit illegally because o f a moratoriumon the felling o fhighforests established inthe early 1990s. Logging has been almost completely stopped insome areas (such as inthe East Usambaras). However, there are few incentives -or the capacity -otherwise to reduce or even to monitor the rates o f extraction. Inpractice, District Forest Officers (who are accountable to the local District Administration rather than to FBD) sometimes condone harvesting inhighforests. Many Districts make their own decisions about logging, and some have even called for logging intheir District forest managementplans, irrespective o f national policy. Strong action is, therefore, required at the national level to clearly delineate logging policies as they apply to the EasternArc forests, andenforcement mechanismsneedto be implemented. Commercial extraction to meet charcoal and woodfuel market demands occurs, but is limitedto those few areas o f the Arc which are inthe vicinity of largerurban centers (primarily Morogoro and Tanga). (e) Domestic timber extractionfor household construction also poses a threat to the highforests, particularly inareas o f recent settlement becauseo f the need for buildingmaterial. Most o f this extraction is carried out byrelatively low impact pitsawyers. - 125-  non-extractive -the collection o fwild foods andfruits, the use o f forests for beekeeping, and livestock (0 Other householdusesposeless ofathreat to the highforests ofthe Arc becausethey tendto be grazing. These also play an extremely important role inmitigatingthe impacts ofpoverty. Anthropogenic threats are the result o f a series o f root causes, which seldom act independently o f each other, butwhich overlap, and mutually reinforce the nature o f the threat and its outcome inthe forests. Root causesof the threats Threatsassociated with Raselineactionsto mitigate 4ctions to bejkancedby to biodiversityconservation particular root causes 'mpactsof root causes SEF to mitigate impactsof in theEastern Arc By letter referred to *oat causes Mountain Forests zbove) 1. Extensivepoverty a, b, c, d, e, f Ruralroads improvements, 2ommunity-based throughout the region xonomic liberalization to improve :onservation activities inthe Functioningo f markets. Heavy Jlugurus, andthose nvestments inhealth and 'inanced bythe Endowment :ducation. Forest management jund, are intended to link :ontributes significantly to iiodiversity conservation initigatingthe impacts of poverty, Nithpoverty reduction in Jut will likelydo little to increase xitical ecosystems. The rural incomes. Baseline ievelopmento fa strategic investments ininstitutional reform, mdintegrated view of focusing on strengthening Conservationinthe Eastern participatory forest management, 4rc will provide important will contributeto mitigating guidance about resolving poverty. ievelopment and oiodiversityconservation needs. a, b, c Agricultural extension activities, Community-basedforest land-use practices new landlegislation and support for biodiversity conservation its implementation, economic activities seek to bring liberalization to improve operation improvedland-use practices ofmarkets. into the agricultural landscane. Community basedwoodland -- ditto -- awareness management and biodiversity conservation projects (Danida, UMADEP). Forest sector planning contributes to longer term view o f increasedenvironmental awareness. 4. Lack o f experienceand -- ditto -- -- ditto -- incentivesto develop alternative resourceuse and conservation frameworks in communities and onprivate land 5. Fewfora that promote -- ditto - UIugurusactivity, communal exchanges and FCMP will also invest in preparation o fthe local networking community exchanges, Conservation Strategy, and farmer-to-farmer exchanges, and operation o fthe Endowment interactions to widen the group o f Fund will provide a fora to interestedparties inVFR promote communal establishmentand management. exchanges and local Development o fnetwork of networking. practitioners. d. e Conservation programs in GEF support will improve mechanismsfor controlling catchmentForest Reservesand in institutional capacity to forest exploitation other protectedareas beginto undertakebiodiversity addressthis problem. National conservation activities, in ForestPolicy and National Forest part by focusing on local - 126-  Programintroduce new framework :apacity to undertake forest For local control, and are inthe :onservation and processofbeing implemented. nanagement. Proposedinstitutionalreforms will also addressthis constraint. a, b, c, d, e NationalForest Programprovides Preparationo f integrzted broad framework for action on strategic conservation plan forest biodiversity conservation, but For the Eastem Arc will seek provides no specific guidancewith :o establish a common respectto the EasternArc. slatfonn for arangeo f stakeholders to develop a :onsensus about the sriorities for conservation m d management inthe EastemArc. 8. Weak institutional c, d, e Framework for institutionalreform Projectproposesto improve capacity for forest is being developed. :apacity for forest biodiversity conservation biodiversity conservation in new institutional framework through training and by integratingforest conservation initiatives into the broader program o fthe TFS. 9. Weak forest govemance Planned institutional reforms are partly intended to improve forest govemance 10. Inadequateandpoorly Donor resources and wage bill for Longterm sustainable targeted fiscal resources catchmentforests and National financing for forest parks protection. biodiversity conservation will bean outcome ofthe Move to a sector-wide approach establishment o fthe Eastem supportedby the FCMP is intended Arc Conservation to improve resource flows and Endowment Fund. targeting. 1I.Limitedeffectivenesso f Alternative village-based Community-based protectionregimes management andprotectionregimes conservation through the havebeen introduced inpolicy and Ulugum component, as well are waiting ratification inthe legal as supported bythe framework. Endowment Fund, should provide important support The introductiono fvillage-based to the establishment of forest managementand VFRs incriticalbiodiversig conservation schemes will be a key catchments. focus o f the proposed Forest Conservation and Management oroiect. - 127-  Additional Annex 16: Forest BiodiversityValue, Endemicity,Threatsand Donor Supportand Effectiveness in the EasternArc TANZANIA EasternArc Forests Conservationand ManagementProject There i s a richand growing scientific literature about the extent o f forest biodiversity and endemism in Tanzania. Burgess et a1(2001) Burgess, N,Lovett, J. and Mhagama, S. (2001). Biodiversity conservation and sustainable forest managementinthe Eastern Arc Mountains. Unpublishedreport prepared for the GEF PDFB Eastern Arc Strategy Process, made an effort to rankdifferent blocks o f the Eastern Arc on the basis o frates o f endemism. The results from that assessment are suinmarized in Table A16.1. Table A16.1: Incidence of biodiversityendemism inthe forest blocks of the EasternArc mountainsforests, and area adjustedrankings ofbiodiversityvalues Uluguru 13 27 20 60 2 1 Malundwe I 5 1 0 0 0 0 12 Hill Mahenge 5 0 1 0 1 11 1o+ Udzungwa 1017 13 18 25 56 3 4 - 128-  The fact that forest blocks occur inwidely disbursed fragments has contributedto the highrates o f endemism found inthe Eastern Arc, but are increasinglya reflection ofthe threats which are posedto their integrity. Table A16.2 summarizesinformation about fragmentation, makes an estimate o f the areas which have been lost to deforestation, and the extent ofthe threat to future forest biodiversity loss. Table A16.2: Estimated threats to forest biodiversity loss inthe Eastern Arc Mountains Source: derived from Burgesset a1(2001). - 129-  Poverty and other social indicators inTanzania are extremely poor. Most data i s out o f date, andi s only aggregatedat the regional level inthe first instance. Recent census information is not available. The lack o f data makes it very difficult to draw any particular conclusions about the immediate incidence o f poverty amongst communities livinginthe vicinity o fthe EasternArc and the pressuresthis poses. Nonetheless, Table A16.3 makes an attempt to present some o fthe poverty andsocial welfare indicators which are know for the 4 regions across which the Eastem Arc forests extend. Accordingto these statistics, poverty indicators are the worst inTanga and Iringaregions, measuredboth interms ofthe incidence ofpoverty as well as interms ofthe prevalence ofstuntingamongst children. The statistics with respect to population pressureare almost meaningless becausepopulation data i s long out of date, andbecauseregional aggregations fail to capture the fact that locally, population densities around individualforest blocks can be extremelyhigh. Table A16.3: Poverty and Social Welfare Indicators and the EasternArc Forests Eastern Arc Forest Location by Incidenceof Nutritional Status Rural Rural population Mountain area (kmz) Region Poverty, by of Children population per ion':of forest area 3582 1209 602 Rubeho \ 654 I Uluguru Malundwe Hill ,Mahenge 5 Udzungwa 1017 Iringa 42 70.5 1,030,489 1013 Tanzania, total 40 43.4 16,948,27 1 Sources: World Bank (2000). Agriculture in Tunzaniusince 1986.Washington, D.C. World Bank; World Bank (1994). TunzaniaAgriculture. Washinpton. D.C. The incidence o f poverty is basedon 1993data, and is the percentageo f householdswhere per capita expenditure is below the poverty line, defined at the 40th percentile nationally (TSh 43,773 for rural households). Other statistics suggest higher incidence, but this is a function of how the poverty line is defined. Nutritional status is indicatedby the percentageo f children below 2.5 s.d. o f the median height for age which exhibit moderatestunting. Populationdata which dates from 1988 is unreliable, and is only repeatedto give an indication of land pressuresacross various regions. Fromthis, one could conclude that populationpressures on forests are probably highest in Kilimanjaro Regionand lowest inMorogoro Region, but this fails to capture the distribution o f populations withinregions. Populationpressure around forests inMorogoro Regionare thought to be very high because o f the coincident limited availability of good agricultural land. Patternso f forest loss outlined inTable A16.2 suggest this is the case. - 130-  Withrespect to donor support for forest biodiversity conservation, andits effectiveness inthe Eastern Arc, Table A16.4 summarizes some o fthe donor activities which are currently underway invarious blocks, andranks their effectiveness (on the basis o f a great deal o f very subjective judgment) in achieving longterm and sustainable outcomes. Table A16.4: Donor-financed forest biodiversity conservationactivities in the EasternArc Eastern Arc ProjecVDonor Extent of lxtent to which Long term Comments Overall ratingof Mountain financial project prospectsfor the effectivenessof 'orest Blocks support interventions sustainable donor supported (1to 5) have hada biodiversity forestbiodiversity majorimpact on conservation conservationin forest activities? achievinglong biodiversity (1 to 5) term sustainable conservation outcomes lorthPare Projectactivities in thc Forestry Pares an: arelatively ViaNORAD small sub-componcntof a wider initiatives iouthPare Reducing Biodiversity Loss , at Cross Bordcr Sites in East Africa Nest NaturalResources Project supportis part of 4 Jsambara Managementand awider program of land Buffer Zone andforest managemcnt, Development and doesn't havea Program(GTZ) specific emphasis on hiodivcrsity conservation per se Cast Longtcrm support has Usambaras ConservationArea 114 hada goodimpact on Managemcnt biodiversity conservation, Project(DIDC) but sustainable financing mechanismsarc not in place, andproject approach has resultcd in possibly serious conflicts with communities in forest adiacent areas. Yguu Yguru 4 Ukaguru 3 Rubeho 4 I 5 Uluguru Projcct is a modest ncw initiativewith limited track record to datc. DOF, UMADEP) Malundwe InNationalPark 4 5 5 Basic protection Hill Mahenge CF-N 5 4 Udzungwa 1 Udzungwa 2 Projecthas focuscd 1on Mountains Forcst the important forest arcas Managementand that areoutsidethe park. Biodiversity Conservation Focuscsonthe National Project(Danida) Park only 2 UdzungwaNP (WWF) - 131-  Finally, inan effort to consolidate the information collectedand evaluated during the PDFIA andB exercises with respect to the threats and their impacts on forest biodiversity loss inthe EasternArc, a ranking exercise was undertakento establish priorities for fbture action. The results are summarized in Table A16.5. The results are highlysubjective, but are thought to be an indication of the bestjudgment o fthe many experts who were consulted duringthe PDFlA andB activities. Table A16.5: Summary Table, Rankingforest blocksin terms of priorities for actionto reduce threats to biodiversityloss intheEasternArc Notes: Rankings are basedon the other Tables inthis Annex. Scoringis highly subjective, but representsthe best estimates o fexperts familiar with the challenges of forest biodiversity conservation inthe EasternArc. A low score means that the forest block is a highpriorityfor effective actioninreducingthreats to forestbiodiversityloss. Scoring was determined onthe basis of the following: Score =(~12)+(b/lO)~c/3)*0.~-(~5) -132-  Additional Annex 17: The Project Documentfor the UNDP Components TANZANIA EasternArc ForestsConservation and ManagementProject Preamble 1. After approval by GEF Secretariat ofthis combinedProject Documentwhich operationalises the Project Briefthat was approvedby GEF Council, the UNDP component documentation andbudgets will form a stand-alone Document for ease o f operations. / 2. The UNDP Project Documentwill have the Standard Cover Page for signature (see next page), which will be followed by the full Project Brief. Then will follow six operational appendices, these are: 1) ImplementationModalities for the two UNDP components andorganigrams. 2) DetailedMand EandReportingFramework, the Legal Basis for this Project Document (Standard Text) andAudit Requirements. 3) DetailedImplementationModalities for the Strategy Component 4) Terms o f Reference for the MainInstitutional Structures andIndividuals Financedthrough UNDP/ GEF. 5) An InputBudgetinUNDP Terminology. 6) Initial Workplan for 2003 and indicative workplan for the project period. These Operational Modalities and the draft GEF Project Document were discussed and approved within a UNDP PAC (Project Appraisal Committee) heldinDar es Salaam onthe 26 November 2002. The PACwas co-chaired by Government (Forestry and Beekeeping Division) and U"DP, andwas attendedby both Central andDistrictGovernment, Morogoro Forestry, World Bank, NGOpartners (CARE Tanzania and Tanzania Forest ConservationGroup) and Danidaco-finance throughthe WCST DOFproject. - 133-  UNITED NATIONSDEVELOPMENTPROGRAMME GlobalEnvironmentFacility(GEF) PROJECTDOCUMENT PROJECTNUMBER: URTiOliG3liA/1Gi99 PIMSNUMBER:446 PROJECTTITLE: THE CONSERVATIONAND MANAGEMENT OF THE FORESTSOF THE EASTERNARC MOUNTAINS OFTANZANIA GEFFOCALAREA: ConservationofBiologicalDiversity COUNTRY: UnitedRepublic ofTanzania DURATION: 60 Months EST. STARTINGDATE: August 15th,2003 EST. ENDDATE: January 2008 ACC I UNDP SECTOR: NaturalResources ACC I UNDPSUBSECTOR BiologicalResources EXECUTINGAGENCY: GovernmentofTanzania,MinistryofNaturalResourcesandTourism IMPLEMENTINGAGENCIES: TheForestandBeekeepingDivisionof Government COOPERATINGAGENCIES: CARE(Tanzania): A NationalNGO The TanzaniaForestConservationGroup: A NationalNGO UNOPS-A UnitedNations ServiceAgency UNDPDirectFinancing Co-Finance: DANIDA $4,500,000 Government (in kind) I1 $2.500.000 , I (Details inBrief) SUMMARY: The primary objective ofGEF support is to bringabout the long-termsustainableimplementation and financing of forest biodiversity conservation and community-based conservation and sustainabledevelopment activities in Tanzania's EasternArc Mountain forests. The World Bankprovides GEF assistance to two components: an endowment fund andinstitutional development inthe forest sector. UNDP provides GEF support to two components: A Conservation Strategy for the EasternArc as a whole, andto pilot field conservation activities in the UluguruMts, in Morogoro Region. This UNDP "Project Document" annexedto the overall submission to the GEF describes the implementationmodalities for the two UNDP components-the Conservation Strategyand the UluguruPilot Component. On behalfof: A) Signature B) Date C) NamelTitle GovernmentofTanzania The ExecutingAgency UNDP - 134-  Appendix 1: ImplementationModalities D) Implementationof the UNDPComponents 1) The Project Briefapprovedby GEF Secretariat inJanuary 2002, outlinedthe broad implementation strategy for the project. This stressedboth the oversight role o f the Tanzania National Forest Programme (NFP) and the importance o fpartnership processes. The mandate o f the NFP was laid out inthe NationalForest Policy o f 1998 and i s operationalised inthe NationalForest Act o f 2002 and the Programme documentation o f 2001. The UNDP Components are part o f the overall EasternArc Project; andthe whole EasternArc Project reports to the NFP. The NFP will set up a Biodiversity Conservation Committee to oversee the Eastern Arc Project as well as other initiatives. This Committee will have the mandate to seek coordinationand synergy betweenother donor initiatives. 2) The Biodiversity CommitteeofNFP, together with UNDP, Treasury andDecentralised project components will act as the formal Steering Committee and Tripartite Review mechanism for the UNDP Components (TOR for such a function are attached at the end o f this Annex). 3) The Biodiversity Committee o f TFMP acts as the National Steering Committee for bothUNDP Components o f the EasternArc Project: ++ The EasternArc Conservation Strategy Component The Conservation and Management o f the UluguruMountainForest Component However, these components have different implementation modalities and are described in detail in sections B and C o f this appendix, below. 4) Both components will be managedthroughNational ExecutionModalities @EX) with the MinistryofNaturalResourcesandTourism, viathe ForestandBeekeepingDivision(FBD), or successor agency, beingthe ExecutionAgency. A senior Tanzania Forester with bothproject managementand conservation experience will be appointed as National Project Coordinator (NPC) to manageboth components. TOR for the NPC are inAppendix 4 below. The NPCwill be funded through an ImplementingAgency agreement, see section B o f this Appendix, below. 5) The NPC will have an office inMorogoro andbe supported by clerical staff and necessaryoffice equipment. The NPC will report to the Director o f Forestry and Beekeeping Division, andto the ImplementingAgency andSite Based Coordination Committees. 6) Several principles govern the use o fthese GEF funds within the EasternArc, including e The principle o f capacity buildingand empowerment o f national and local institutions. e The buildingofpartnership between government and civil society. e The needto develop sustained impact on bothresourcesand on community livelihoods. e Where necessaryto ensure the additionality o f GEF funding, the use o f short term advisory support, with a mandate bothto transfer skills andcapacity to national institutions, andto increase the global linkages between Tanzanian forestry anddeveloping internationalinitiatives inthe fieldofforest biodiversity. e These implementationprinciples have been developedwith the Ministryand Forest and Beekeeping Division, and were agreedto by stakeholders at a localProject Advisory Committee (PAC) inDar es Salaam(26 November 2002). -135-  E) Implementationof the UluguruComponent 7) The GEF-UNDP Projectmakes available US$ three millionfor a six year conservation and management intervention inthe UluguruMountainForests. This Component i s to be implementedby an NGO development partner incollaboration with Government Forestry Sector at national and local levels. The NGOwill have experience inIntegrated Conservation and Development projects inthe forest sector, and experience with community levellivelihood, and linkages between natural resources and poverty processes. CARE Tanzania was selectedas that development partner. 8) Government o f Tanzania, via the Ministryo fNatural Resources and Tourism as Executing Agency will prepare a Memorandum o fUnderstanding which sets out the goals outputs and responsibilities o f CARE Tanzania as Cooperating Agency. This MOUwill be signed byMinistry, CARE and UNDP; and will provide, indetail, for services and activities to be provided by CARE, and the funds to be providedby UNDP and GOT. This signedM O Ubecomes an integral part o fthe Project Document. 9) The CARE implementationpackage will include the salaryibenefits for the overall National Project Coordinator, who will be a senior Tanzanian forester, either recruited directly or on secondment from Government (see para 4 above). 10) CARE will recruit advisory assistancethrough normal international searchprocesses,to provide expert technical advice and support to the UluguruComponent for the first part o f the activity. The principalfocus will be on linking forest values to community livelihoods. This external assistancewill finishhalfway throughthe GEFfundingperiod, havingtransferred the necessaryslull sets. 11) CARE will work inclose collaborationwith bothCentral and LocalGovernment and other development partners intheir implementationo fthis project activity. The M O Uwill spell out clearly the role o f CARE as a facilitating institution. The basic role o f CARE, and for GEF-UNDP finances passing through CARE, is to assist existingorganisations with mandatesfor forest conservation and livelihood support inthe fulfilment o ftheir tasks. Inthat regardCARE will subcontract such organisations as appropriate, with the approval o fthe Steering Committee. 12) Ofparticular importance isthe maintenance of close co-operation with the ongoing DoFiWCST project inthe UluguruMountains. The two projects provide "co-finance" to each other; and, inthe Ulugurus, work towards a common goal. Coordinationbetweenthe two projects will bemaintainedby Government creatingan UluguruMountainForest Coordination Committee(UMFCC). This Committee will bringtogether bothconservation and development agencies at central, district andvillage level. 13) The GEF/UNDP andDoFiWest projects will, with Government facilitation, establish a common set o f working principles designedto reduce overlap and enhance synergies. An over-arching, but long-term, principle will be to work together inaprogramme approach to achieve cost effective and efficient implementation o f forest conservation goals. Inthe immediate short term the two projects will adopt a geographic separation o f project inputs; with DoF concentrating on the North UluguruForest Reserve and GEF on the South UluguruForest Reserve. - 136-  14) CARE will develop and support the UluguruComponent Project Management Unitinclose co-operation with forestry authorities inMorogoro. The National Project Coordinator will leadthe PMU. The P M Uwill establish an office, bank account and other operational activities. The details o f this operational processandthe principles governingco-operation will be spelled out indetail ina Project Inception Report preparedwithin four months o fNPCiTAbeing recruited. 15) The InceptionReport will give detailedworkplans and a complete M& E framework. 16) The Project Briefhada broad schedule o f outputs to be achieved and activities to be implementedto reach such outputs. These activities are described inmore detail inAppendix Two; and an InputBudget inUNDP format is set out inAppendix Five. F) Implementationofthe ConservationStrategy Component 17) The Conservation Strategy Component o f the UNDP-GEF EasternArc Project is designed as a national process, cutting acrossthe stakeholder sectors, five regions and seventeendistricts that make up the EasternArc Mountains. As a national process, the development and eventual implementation o f the strategy has to be ledby the Forest Division(or successor) agency within the Ministry. 18) The Strategy i s a multi-faceted process, with ninesets of outputs. These outputs are broad, and linkto the objectives ofthe Tanzania NationalForestProgramme ofthe nine. Six are to be implemented byUNDP-GEF, one by DANIDA,onejointly by DANIDkrWB-IDA,andone byNORAD. The needfor coordination and synergy between components i s thus o f great importance. The BiodiversityCommittee o f the NationalForest Programme will provide such coordination. 1 A holistic EastemArc Conservation Strategy, whichaddressesthe overall Vision for the EasternArc MountainForests, and is basedon individual mountainblock strategies and District strategies; i s developed, approved and under implementation. 2 A set ofthematic strategiesfor biodiversity conservation are developedandimplemented- through bothmacro frameworks and individual managementplanprocesses. 3 Sustainable financing strategies are developed and under implementation. 4 Adaptive monitoring programmes developed andunder implementation. 5 A socio-economic monitoringprogramme developedthat linksto the PRSP and livelihoods. I 6 1Information, education and communicationstrategies (IEC) developed and implemented. I 20) The UNDP funded strategy processwill be executed throughNEX processes, ledby the MinistryofNatural ResourcesandTourism, andFBDor successor agency. Oversight andleadership will be providedthrough the NationalProject Coordinator described above, to the ForestryDepartment andthe Project Steering Committee. - 137-  21) O fthe six components four are to be implemented directly bythe Forest andBee-keeping Division or successor agency. One component (number 5 above) on socio-economic monitoring and linkages, has strong similarity to the UluguruMountainForest conservation activities implementedby CARE Tanzania. CARE will implement component 5, under an MOUfrom Government, usinglessons learned by the CAREUluguruactivity. Component 6 on Information, Education and Coinmunication Strategies will be implementedthrough a Memorandumo f Understandingfrom FBDto an NGO with a backgroundinEastern Arc Forest Conservation and awarenesseducation activity-the Tanzania Forest Conservation Group (see Appendix 2). 22) The Strategy component is an interactive process between central government and district government, between the forestry sector and the other sectorsthat both dependuponand impact upon forestry, andbetweengovernment and civil society. Buildingpartnerships, facilitation and coordination are key aspectso fthe strategy process. Mechanisms for conflict resolution are thus o f importance, as will be the role ofa steering committee that includes major stakeholder interests. 23) The Strategy component i s primarilyabout developingan accepted strategy andplanthat is tested andpilotedinsome circumstances. The Strategy component does not have the resourcesto implement the prioritised actions at the present time. The strategy process needsto coordinate with other sectors (agriculture, water, energy etc), other donors (andespecially those with programmes inthe EasternArc) and agenciesto seek implementationfunding. O fparticular interesthere is the creation o f a set o f international major fundingprogrammes that support global hotspots, such as the Critical Ecosystem Partnership Fund(CEPF) through Conservation International (capitalised inthe order o f 150 - 300 milliondollars US-with Global Conservation Fundfinances). 24) The strategy component will recruit internationaladvisory inputs with a specific mandate not only to move the conservation process forwards, but also to buildpartnership for implementationand partnership with other largerfundingsources globally. Such expertise will be recruitedthrough UNDP Dar es Salaam contractingUNOPS, and the appointee will report to the Director o f Forestrythrough the NationalProject Coordinator. TOR for the inputs are inAppendix 4. 25) An inceptionreport to bepreparedbythe Strategy team (NPC, Advisor andpartners) will set out interaction processes, milestones andanMand Eframework ininore detail, within four months o f start-up. The InceptionReport will be presentedto and approvedby the Steering Committee. 26) The UNDP funded strategy component i s but one part o f a larger overall set o f strategies being developed bythe Forestry Sector. It is important that this strategy component builds solidlinkages betweenother such components, inparticular the World Bank and Danida financedParticipatory Forestryactivity, the ongoing Catchment Strategy, and the broader Poverty Reduction Strategy and DecentralisationStrategy processesgoing on inTanzania. Inaddition the strategy has immediate importance to the implementationof other GEF activities such as the Endowment Trust andthe Uluguru Mountains Conservation activity. - 138-  These outline arrangementsare shown inthe two diagrams below: i 3 -1 - 139 -  Appendix 2: DetailedReportingMonitoringandAudit Requirements 1. Reporting. The Project Secretariat (NPC i TA) will prepare and submit the following reports to Government and UNDP. (a) Inception Report (tR) The inception report will be prepared by the NPCiTA with the assistance o f the project experts as relevant. The IRwill be preparedno later than three months after project start-up and will include a detailedWorkplan, Mand EFramework, first BudgetRevision for the duration o f the project, progress to date on project establishment, details o f start-up activities and any proposed amendmentsto project activities or approaches. The report will be circulatedto all the parties who will be given a period o f one calendar monthinwhich to respond with coimnents or queries. UNDP Country Office and UNDPiGEF will review the report to ensure consistency with the objectives and activities indicated inthe Project Document. (21) Annual ProjectReport (APR) and PtR The Annual Project Report (APR) is designed to obtain the independent views o f the main stakeholders o f a project on its relevance, performance and the likelihoodo f its success. The APR aims to: a) provide a ratingand textual assessineiit o f the progress o f a project inachieving its objectives; b) present stakeholders' insights into issuesaffecting the implementation o f a project andtheir proposals for addressingthose issues; and c) serve as a source o f inputsto the Tripartite Review (TPR). The mainproject stakeholdersparticipate in the preparationo f the APR. The APRs will detail activities undertaken since the last APR, milestones reached, key results and achievements, problems encountered and any other issuesthat needto be highlighted. The APR will use the format of the streamlined APWPIR provided by UNDP-GEF. Information from this document will beusedbythe Regional Coordinator o f UNDPiGEF to compile the PIR for GEFSEC. (c) PeriodicStatus Reports As andwhen calledfor bythe Government or UNDP, the NPCiTAwill prepare StatusReports, focusing on specific issues or areas o f activity as stipulated by the querant. The request for a Status Report will be inwritten form, and will clearly state the issueor activities that needto be reportedon. These reports can be usedas a form o f specific oversight inkey areas, or as troubleshooting exercises to evaluate and overcome obstacles and difficulties encountered. The parties are requested to minimise their requests for Status Reports, and when such are necessary will allow reasonable timeframes for the preparation o fthese Reports. (d) TechnicalReports Technical Reports are detailed documents covering specific areas o f analysis or scientific specialisations within the overall project. As part o fthe InceptionReport the NPCiTA will prepare a draft "Reports List", detailing the technical reports that are expected to be prepared by project staff and partners, on key areas o f activity duringthe course o f the Project, and tentative due dates. Where necessarythis Reports List will be revisedand updated, and included in subsequentAPRs. Technical Reportsmay also beprepared byconsultants as FinalReports for their technical inputs, and shouldbe comprehensive, specialised analyses o f clearly-defined areas o f researchwithin the framework o f the project and its sites. - 140-  ProjectPublications Project Publicationswill form a key methodo f disseminating the results and achievements o f the Project. Publicationswill be scientific or informational texts inthe form o fbooks, journal articles or multimedia publications. These Publications will form a visible public output o f the Project, andshouldbe preparedand presentedto the highest scientific and technical standards. Project TerminalReport Duringthe lastthree months ofthe project the NPCiTAwill prepare the ProjectTerminal Report, which will summarise all activities, achievements and outputs o fthe Project, lessonslearnt, objectives met and missed, structures and systems implemented, etc. This will be the definitive statement o f the Project's activities over the five-year duration, Itwill lay out recommendations for any further steps that mayneedto be taken to ensure sustainability and replicabilityo f the Project's activities. Other Publicationsand PublicityActivities Inorder to ensureinternationaldissemination ofproject results, a high-quali~publicationof results will beprepared, basedupon the Terminal Report andprevious Project Publications. Monitoring& Evaluation TrbartiteReview (TPR) The tripartite review (TPR) is the highest policy-level meetingofthe parties directly involvedinthe implementation o f a project. The project will be subject to Tripartite Review(TPR) at least once every twelve monthsby representatives o f the Government, the executing agency and UNDP. The first such meetingwill be heldwithin the first twelve months o f the start o f full implementation. The Project Managers will prepare an Annual Project Report (APR) to be ready two weeks prior to the TPR. The APWPIR will be usedas one o fthe basic documents for discussions inthe TPR meeting. The Project Leader presents the APR to the TPR, highlightingpolicy issues andrecommendations for the decision o f the TPR participants. Terminal TrbartiteReview (TTR) The terminal tripartite review is heldinthe last montho fproject operations. The NPCiTA are responsible inpreparingthe Terminal Project Report. It shall be prepared indraft sufficiently inadvance to allow review and technical clearanceby the executing agency at least two months prior to the terminal tripartite review. The Terminal Reportwill serve as the basis for discussions inthe TTR. The TTR considers the implementation o f the project as a whole, paying particular attentionto whether the project has achieved its immediate objectives andcontributedto the broader environmentalobjective, and decides whether any actions are still necessary. ProjectIm~lementationReview (PIR) The PIR i s a major tool for monitoring the GEF portfolio and extracting lessons. The PIR has become an essential management andmonitoring tool for project managersand offers the main vehicle for extracting lessonsfrom ongoing projects. The PIR i s mandatory for all GEF projects that have beenunder implementation for at least one year at the time that the exercise i s conducted. A project becomes legal and implementation activities can beginwhen all parties have signedthe project document. The PIR questionnaire i s sent to the UNDP country office, usually around the beginningo f June. It i s the responsibility o fthe NPCiTA to complete the PIRquestionnaire, together with the UNDP Country Office and Regional Coordinator (RC); and for the RCto forward the PIR to UNDP-GEF Headquarters. - 141-  Mid-term Evaluation An independent Mid-TermEvaluationwill beundertaken towards the middleofthe project period. The Mid-Term Evaluationwill focus onthe effectiveness, efficiency andtimeliness o f project implementation; will highlightissuesrequiringdecisions and actions; and will present initial lessons learned about project design, implementationandmanagement. Findingso f this review will be incorporatedas recommendations for enhancedimplementation duringthe final halfo f the project's term. The organization, terms o freference and timing o f the mid-term evaluation will be decided after consultationbetweenthe parties to the project document. Final Evaluation An independent FinalEvaluationwill take place three months prior to the terminal tripartite review meeting. The final evaluation will look at early signs ofpotential impact and sustainability o fresults, includingthe contribution to capacity development andthe achievement o f global environmental goals. The Final Evaluationshould also provide recommendations for follow-up activities. The organization, terms o freference andtimingo f the final evaluationwill be decided after consultationbetween the parties to the project document. Regular Monitoring and Evaluation An environmentaland socio-economic baseline assessment will be carriedout from the start o fthe project. Monitoringprogrammes for the project will be developed once the project team i s inplace, and presented indetail within the Inception Report. M& Eprogrammes will be developed incollaboration with relevantmonitoring activity beingdeveloped at national anddistrict levels for the EasternArc Forests. Project performance will be monitoredaccordingto the indicators andbenchmarks defined in the Logical Framework Analysis. Examples o f output indicators are givenbelow to guide this process. ConservationImpact Outputs 1) The EasternArc MountainForests are declared a World Heritage Site 2) Area o f forest under ForestNature Reserve category i s more than doubled. 3) The value o f EasternArc forest to the Tanzanian nation acceptedby all levels o f government in Tanzania, and by external agencies funding development inTanzania. This is measuredby increased funding flows. 4) Increasedlevels o f sustainable funding for Endowment Fundinplace. 5) Area o f forest cover onUluguruMountains stabilised, andforest corridors are established. ConservationProcess Outputs 6) The numbero f endemic species and their population trends measured. 7) The area o f forest habitat andthe deforestation trends measured. 8) A `State o fthe EasternArc' reporb`book is produced. 9) AnUluguruOverview ReportI Bookproduced, with DANIDAIDOFpartners. 10) At least XX new Catchment Reservesproposedto cover non-gazetted forest patches. 11) At least XX forests are surveyed for biodiversity, boundary condition andforest condition. 12) At leastXX government staff andpolitical leadership inDistricts andRegions have greater appreciation o f the conservation value o f Eastern Arc Mountains. 13) At least XX staffmembers within FBDare trainedinaspectso fforest conservation. 14) Database o fproject activities developed for the Eastem Arc (conservation and development). -142-  Learning and Knowledge Sharing To participate inUNDPiGEFnetworks, organized for Senior Personnel working onprojects that share common characteristics. UNDPiGEF shall establish a number o f networks, such as Forest Conservation from the year 2002, that will largely function on the basis o f an electronic platform. To identifyandparticipate inscientific, policy-based and/or any other networks, which may be o fbenefit to project implementationthough lessonslearned. To identify,analyze, share and communicate lessonslearned that may be beneficial inthe design and implementationo f similar future projects. The needto identify and analyse lessonslearned i s an on- going process, and the needto communicate such lessons i s on an as-neededbasis, but not less frequently than once every 12months. UNDPiGEF shall provide a format for categorizingand reporting lessonslearned withinthis and similar projects. To ensurethat the Termo fReference for consultants recruitedbythe project incorporate mechanisms that capture and share lessonslearned through their inputs to the project, and to ensure that the results are reflected inthe reporting format described above. Indicative W o r k d a n and Budpet for Monitorinp and Evaluation Lead responsibleparty in bold Budget Time frame InceptionReport ProjectImplementationTeam Inreporting At the beginningo fproject lines implementation APRiPIR The Government, UNDPCountry None I Every year, at latest byJune o f Office,ExecutingAgency, Project that year Team, UNDPiGEF Task Manager, and Target Groups TPR and TPR The Govemment, UNDPCountry None Everyyear, upon receipt o f APR report Office,Executing Agency, Project Team, UNDPiGEF Task Manager, and Target Grouus Progress reports ProjectManager None To be determined by Executing Agency Mid-term Project team, UNDPlGEF HQ, $30,000 At the mid-point o fproject External UNDPlGEF Task Manager, UNDP implementation. Evaluation Country Office, ExecutingAgency Final Extemal Project team, UNDPlGEF HQ, $30,000 At the end ofproject Evaluation UNDPiGEF Task Manager, UNDP implementation, and Country Office, Ex-post: following project completion Terminal Report UNDPCountryOffice, UNDPlGEF Task Manager, Project lines endo fthe project Team Audit ExecutingAgency, UNDP Country Average Yearly Office, Project Team $ 1 .OOO ua Visits to field UNDPCountryOffice,Executing sites Agency Lessons learnt UNDP-GEF,GEFSEC, Project Team, ExecutingAgency - 143-  Legal Context This project document shall be the instrument(therein referredto as a planof operation) envisaged in Article 1Paragraph 2 ofthe Agreement (as paragraph2 of the Assistance Agreement) between individual Governments andthe UnitedNational Development Programme concerningassistanceunder the Special FundSector o fthe UnitedNational Development Programme, as signedbyTanzania on29 April 1977. Audit Requirements All funds disbursedthroughNEXand other execution modalities are subject to audit procedures. 0 IncaseofNEXthey are subject to audit requirements ofthe Auditor General ofGOT. 0 GOT will provide the UNDP CO with certified periodc audited financial statements. Incase ofimplementationbyNGO, accountsareinitially subject to audit procedures ofthe NGO, prior to reporting to Government. Copies of audit documents are to be returnedannually to UNDP andreportedto the SteeringCommittee via the APR. 0 Auditprocedures are governedbyUNDP Rules andRegulations, as spelled out inthe UNDP Manuals, andUNDP reservesthe rightto carry out extra audit procedures as may be required. - 144-  Appendix 3: Integrated Conservation Strategy Component Introduction The Strategy Component for the EasternArc Forest Project has nine separatesub-components or outputs. Some ofthese are specific to the Arc Forests; others have a broader use within conservation forestry in Tanzania. Some components are new, other components are ongoing. Some are to be funded by GEF, some by other donors -but all are necessaryparts o f a broad-based holistic strategy component. The strategy takes its start from the National Forest Policy (1998), newly approved law -the Forest Act 2002, andthe NationalForest Programme o f 2001. Ofthe nine outputs within the strategy three areto be implementedoutside GEF fmancing. One is an ongoing NORADsupported activity (catchment), one is a major initiativeonParticipatory Forest Management, with sharedfinance through Danida at district levelandIDA credt at broader levels, and one i s an ongoing Danida initiative addressing water inthe Sustainable Cities project. The other six are to be fundedbyGEF inthe first instance. Itis expected that as the activities develop other donors will buyinto the process, and integratethe activities intotheir own field programmes eg Udmngwa, East Usambaras. These nine outputs are described below: THE UNDP-GEFFUNDEDOUTPUTS. 1. A holistic EasternArc Conservation Strategy is developed and under implementation. This strategy addresses the overall Vision for the Eastern Arc Mountain Forests, and is based on individual mountain block strategies and district strategies. Rationale. This is based on lessons learnedfrom the Queensland TropicalForest Conservation Strategy in Australia. The QTFCShas great similarity to the EasternArc, where successful consewation is dependent on several independent stakeholders each with d8erent tenure and access rights. A commonly agreed vision and strategy provides a coordinationframework for ALL stakeholders to participate. This Output develops a strategicplanningprocess, building on that established in thePDF activity. Theprocess involves a hierarchy of stagesfrom individual reserve man~gementplans through district strategies and individual mountain block strategies'. 1 Note somemountain blocks involve morc than one District -eg thc UdzungwaMountains havethree Districts intwo Rcgions(Iringa and Morogoro). Thc SouthPareMountains incontrast fall inonc District. The Ulugurus have becninonc District, but govcmment is planningto createtwo districts (Morogoro RuralandMvomero)., TheStrategy process has a number of distinct activities. Theseinclude: la) Linkages from Forestry to Agriculture, Water and Energy sectors are built and maintained. This builds on the National Forest Policy and National Forest Programme directives. All sectors have major roles in the eastern arc -all have roles toplay in the overall strategy. lb) The Forestry Sector develops capacity buildinglinkages to District level stakeholders. Districts will not have the ability to develop strategies alone, they will needguidelines, training and support. TheStrategy team will need toprovide that support and transfer capacity. - 145-  1c) The Forestry Sector develops holistic participatory reserve managementplanguidelines. Forest Reserve Management Plans are the basic building blocks around whichstrategies are developed, as is stressed in the Forest Act 2002. Theseplans must be broad based andput each reserve in its overall development and community context. Forestry HQmust set guidelines as to both theprocess and the contentfor the holistic plans -andproceduresfor joint implementation by relevant stakeholders. Plans will address issues of revenue sharing and issues of responsibilitiesforJinancia1 support. Id) The linkages between forest resource use andruralpoverty are analysed andmonitored. National development goals seeforestry supporting rural communities. Past conservationparadigms saw rural poverty as a majorfactor in resource degradation. There is little understanding of the relationships between thesefactors, nor how to integrate sustainable resource use regimes into anti-poverty processes. This sub-component provides linkages to the national Poverty Reduction Strategy (PRS) process, and more especially the imperative to integrate environ~enta~issues into the PRS itse@ (See component 5). le) District Conservation Strategies developedthat integrate sector concerns andreserve plans, District Forest Conservation Strategies integrate the overall district development processes withforest reserve conservation plans. Thesestrategies address local, national and global values, seeking sustainable beneJitflows to all stakeholders. TheDCS needs to be mainstreamed into district activity. Again issues ofJinances (costs and revenue) will be addressed here. Thepriorityfocus will be Eastern Arcforests, but it may be the case that a district has non-arcforests (eg Muheza with lowlandforests). But where the utilisation of non-arcforests absorbspressure that could impact on the arc, then these forests will be included. TheDistrict strategies will also identi& unreservedforests that should be gazetted as Forests Reserves full, local authority or village reserves). This strategy activity will build in the new Ministry policy of strengtheningdistrict linkages. 1f) MountainBlock Conservation Strategies developed, integratingdistrict plans. This will be an amalgamation of aGacent District Conservation Strategies (see above), into a single mountain block strategy. lg) WorldHeritage Site nomination developed andimplemented for whole Eastern Arc. This is Tanzaniaafirming the global value of theArcforests (just like Kilimanjaro, Ngorongoro, and Serengeti). There is a complex nomination process -including setting out conservation strategies. lh) A suite ofplanningtools developed andusedthrough increasednational anddistrict capacity. These tools will include, amongst others: Threat ReductionAnalysis (as an input to the M&Eprocess see component 6), and subsequent threat reduction planning. This links with sectoral approaches2 c and 2 d. Participatoryplanningprocedures (which linkinto managementplans, District and Mountain Block Conservation Strategies), Map-based planning & assessment tools (which linkinto managementplans, District and MountainBlock Conservation Strategies). 2. A set ofthematic strategies for biodiversity conservation are developed and implemented, through macro frameworks and individual management plan processes: Rationale: Theoverall strategy will have two sets of core components. One is geographic (which is component I above -looking at issues across districts). A second is across sectors) (described here) will - 146 -  be a series of thematic issues, which would be included within all the district and mountain strategies. A corollary is that output one sets out theformat of Strategies and Plans, output two develops the content of key chapters in those Strategies and Management Plans. Thesekey themes include: 2a) Developing and implementing biodiversity conservation strategies; at species and community level, as well as thematic concepts. This is a broad topic and includesfor example guidelinesfor forest zonation, for ICDPprocesses, links to Participatory Forest Management, option settingfor sustainable use versus stricter Nature Reserve processes, understanding the linkages between biodiversity and catchment conservation, At species and community level, this will includefor example Red Data Book analysesfor threatened species including population studiesfor selected important speciesfor which data is inadequate; andplansfor example, orchids,forest primates andforest birds. Timber species and otherplant species with a high use value e.g. Prunus afiicana, Ocotea usambarensis will be included 2b) Developingprocedures for selecting, settingup and implementingNature Reserves. Apartfrom the strongprinciples within the National Forest Policy, there are no operationalframeworks at national levelfor NatureReserves, despite their prominence in the National Forest Programme. This activity will develop a nationalframework and set up a NatureReserve system across the Eastern Arc Forests that adequately covers the range of biological diversity values. 2c) Fire management strategies. Fire is a major threat to the arcforests in most mountain blocks - there are no overall control or prevention strategies inplace. This component woulddevelop a strategy and guidelines to assist stakeholders to reduce the damage caused byfire. 2d) Forest health strategies. Theproject will liaise with the USForest Service Forest Health Project to developfurther strategies to deal withpests and invasive species. 2e) Sustainable Use Strategiesdeveloped for forest periphery communities; including: e Sustainable collection o fbiodiversity products eg: chameleons, African violets, bushmeat e Sustainable non-timber wood-based resources(eg fuelwood, poles, possible oils, etc). This is a core concept in the long-term conservation of the arcforest, and links to the CBDas well as to Poverty Reduction initiatives through improved livelihoods (see 5 below). 2f) Alternative Incomeand ResourceUse Strategiesdeveloped for forest periphery communities. These could include: Ago-forestry inputs to sustainable agriculture and sustainable livelihoods (see 5). Butterfly farming and other product basedenterprise (see 2e above) e Improvedwood-fuel use, sustainable fuel wood supplies and alternative fuels (Jatropha). Therehave been a series of locally based initiatives across the arc in thepastJive years (eg GEF Cross Borders with support to Jatropha oil as an alternative energy source). Theseneed to be analysed as to successstories and lessons learned applied across the arc in a more coherent and cost eflective strategy. Initiatives are beginning eg butterfly farming concept in the East Usambaras. -147-  3. Sustainablefinancingstrategiesare developedandunderimplementation: Rationale: This is a relatively minor activity that complements the activities of the Eastern Arc Endowment TrustFund. Three activities are envisaged: 3a) Levies (royalties) and other fee basedstrategies basedon biodiversity resources are developed, as per prescriptions inthe Forest Act 2002, This has obvious linkages to boththe Forest Fundas specified inthe Forest Act 2002, and the GEF EndowmentTrust Fund. Manyforest resources are treated asfree or greatly under-priced goods -from royalties onproduce to thepotentialfor fund raisingfrom eco-tourism etc. This activity develops strategies to set realistic pricingfor forest resource use. 3b) Longterm enhancedgovemment and donor support for implementing the Arc Strategy. This would be done through the NFP and FAG. There is considerable evidence that theforest sector has been under~undedby government in thepast decades -as a result of inade~uateperceptions of the value of forest resources in the overall national economy. Advocacy is needed to increase direct and indirect fie the reduction of perverse incentives) support. The GEFProject Proposal discusses the need to seek short-term and long-term donor supportfor theforests andfor sustainable livelihood initiatives in the Eastern Arc Mo~nta~ns.Strategies to achieve that will be developed here, 3c) Potential fundingthrough the newly established Global Hotspot Fundsi s sought (eg from the Critical Ecosystem Partnership Fund(CEPF) of Conservation International (CI) etc). CEPFand otherfunds have been created to support the world's GlobalBiodiversity Hotspots -which include the Eastern Arc and CoastalForests of Tanzaniaand Kenya. Somefunds arefor Civil Society; others arefor supporting long-term monitoring centres. Tanzanianeeds to establish patterns of access to thesefunding sources. 4. Adaptive monitoringandevaluationprogrammesdevelopedandimplemented. Rationale: Whilst existing donors in the arc have their own M&Eframeworks there is no nationally based set ofprocedures or norms. Tanzania as a member of SADC has agreed to a set of indicatorsfor such M&E, but this has not been initiated. Themandatefor M&E processes is not clear, especially as regards the need to monitor thepeopleforest interface (see 5 below). The Tanzaniaforest sector is alone amongst East African nations in not having a GIscapability with which to use spatial monitoring processes. Overall capacityfor M&E is weak. M&E is linked to targeted research -finding out how to do certain things, continuing methodology testing. Whilst the Eastern Arcforests have had considerable survey based documentation in thepast 20years, there are major gaps. Theeflective implementation of the M&E strategy will depend onpartnerships - nationally and globally. Links to thosepartners must be consolidated (TAFOM, Universities,PRSP institutions, Copenhagen University (the most important repository of EA data), Kew Gardens, W F ' sEco-Region programme, CIandplansfor global hotspot monitoring; etc) Four activities are envisaged: 4a) A participatory M& Estrategy for forest conservation is developedandaccepted, and implementedby stakeholders insites. This is the core activity, there is much experience to draw onfrom ongoing andpastprojects in the Arc and elsewhere. National leadership and donor -sector buy in will be needed. - 148 -  4b) A suite ofmonitoringand evaluationtools developedfor the M&Estrategy. Activity 4a) suggests what should be done and by whom. Activity 4b) suggests HOW this can be done. Guidelinesfor tools will include cost eflective andparticipatory approaches. 4c) Capacity for M&Eprocesses is enhancedamongst key stakeholders. This links to mandates, coordination between mandated bodies, and awareness /training within such institutions. Particular attention will bepaid to setting up spatial monitoringprogrammes around usefriendly GIsfacilities. Capacity will be built through hands-on experiences infor example GIs monitoring of boundaries andforest cover parameters. GIS links with theplanning components of IC,l e and If 4d) A targetedresearch strategy for the EastemArc forests is outlined andprioritised. This needs to be integrated into the Mand E strategy itself- seeking to411spatial infor~ationsurvey and methodological andprocess gaps. Note that this links to the Eastern Arc Endowment Fund - that has a mandate to support targeted research in and around the arcforests. This will also have a capacity building component, linking to conservation biology processes. Coordination with research processesproposed within the Kihansi Dam Project will be needed. 5. A socio-economicmonitoringprogrammearoundthe people-forest interface is developed andimplemented. Rationale: This has obvious links to 4 above. Output 4 will address theforest parameters. This output looks atpeople based and resource useparameters. Thereare linkages to thePFMprocessesof other donors (see Output 9 below). There is a need to build integration mechanisms with the strengthening environmental content of the PRSP and the anti-poverty - livelihood programmes. 5a) A participatory strategy for such socio-economic M&Eis developed, tested andaccepted, and then implementedby stakeholders insites. 5b) A suite ofmonitoring tools andprotocols developed, including householdpoverty & forest dependency assessmentprocesses. 5c) Capacity for socio-economic M&Eprocesses is enhancedamongst key stakeholders. Again these link to mandates, coordination between mandated bodies, and awareness /training within such institutions. Note that theforest sector has historically much less experience with suchpeople oriented systems. This needs to be very carefully linked to the McfEprocesses developing around the PFMactivity. Danida (who support thePFMstrategy) has an interest in such collaboration. 6. Information,educationandcommunicationstrategies(IEC) developedand implemented. Rationale: All of the gains that could be achieved within other outputs could be greatly reduced unless the successesare disseminated, and all stakeholders are aware of the successes,and the lessons learned in their implementation. Thestrategy, when implemented, is likely to necessitate some change in both land and resource use. This will require considerablepersuasion to achieve; requiring an investment in advocacy and awareness raising. Four distinct activities areplanned.. 6a) Overall framework for awarenessraisingdeveloped, with stakeholderslpartners. This activity will learn lessonsfrom past conservation awareness and education initiatives and develop and implement aprogramme of awareness raising throughout the Arc. Theactivity capitalises on separateproject initiatives and develops new initiatives in the arc. - 149-  6b) Communication and outreach -advocacy programme developed. This activity will demonstrate cost-effective methods to target specific policy and management leaders, so as develop a successful advocacy programme. 6c) InformationTechnology support to IEC activity. Advocacy/Awareness programmes need to be substantiated by spatial information, and thepresentation of scientific information in easily understandableformats. This will requiresupport in ~nformation Technology. 6d) A targeted flow of information onthe conservation o fEastern Arc resources is developed and distributed. Feedback mechanisms are developedto ensure disseminationo f lessonslearned. Newsletters, policy brief, videoprogrammes will beprepared. The impacts of these tools will be assessed and tools strengthened accordingly. B. ONE OUTPUT I S SUPPORTEDTHROUGHNORAD I GOT FINANCE 7. CatchmentForestryActivity This hasbeena longrunningprogramme inmost areas o fthe Arc districts (not IringaRegion) and other forests inKilimanjaro and Arusha. There are many strong lessonsthat have been learned, and a large body o f knowledge on catchment forest properties that needsconsolidation and dissemination. There will be muchroomfor collaborationfor the NORAD financed economic analysis of four major forest catchments inTanzania, ofwhich two will be inthe Arc areas. C. TWO OUTPUTS ARE SUPPORTEDTHROUGHDANIDAFINANCE 8. Forestconservation-water fees linkagesfor some major cities are explored. This is based on comparative advantage of an ongoing DANIDAprogramme: the Sustainable Cities Programme which is active in threeEastern Arcforest dependent cities: Iringa, Morogoro and Tanga. No extrafunding is expected, inputs would be through the existingDanidaproject(s). A pilot example (outside the Arc) is in theArusha Sustainable City Programme -which is starting to address water catchment issues andpricingfrom Mount Meru Forests. 9. Overallparticipatoryforest management(PFM) guidelinesdevelopedandunder implementation. (Note this is linkedto the IDA componentof TFCMP). Thereare obvious linkages to many otherparts of the overall strategy,for example: Community sustainable useprogrammes, (see outputs 1and 2). Communityparticipation in strategy and managementplan processes, (see output 1). Poverty -Livelihood assessmentprocesses, (see output 5). Alternative Income and Resource Use Strategies, (see output 2). Participatory M&E processes (see output 5). - 150-  Costinpof Stratew Components1 6 - 1) Components 5 and6 are implementedbyNGOs (See Appendix 1):- a) Component5. To CARE, Socio-economicM& E strategies andlinkto PRSPJLivelihoods, strategisingwhat CARE implements onthe UluguruMountains, costedat 160,000$. b) Component6. To TFCG for Communication,Awareness, Out Reach, costedat 140,000$. 2) This leaves 1,700,000S for activities 1- 4. Ofthis some 550,000$ goes for core staff, training, M andEfunctions, vehicles andequipmentetc. Weightings betweencomponents are: Component $ Amount $ Amount minusCore 1 Geographic StrategyI Vision. Muchconsensus 400,000 290,000 activity-andcapacitybuilding at district level. 2 Thematic Strategy& Action Plans. Much 650,000 410,000 fieldwork. Management plans, research, documentation. 3 Global issues & financing, basedon contacts - 50,000 40,000 someworkshop traininglawareness -a maintask of the TA 4 M&E.Implementation& strategising.GIS 600,O 00 410,000 capacity; imagerybaselines & database. Training. 5 Socio-Economic Monitoring 160,000 160,000 6 Information. EducationandCommunication 140,000 140,000 I TOTALS I 2,000,000 I 1,450,000 - 151 -  Appendix 4: Eastern Arc Strategy Component: Specific Terms o f Reference 1. The National Project Coordinator (NPC) The NPCwill be a senior Tanzania Forester appointed by the Executing Agency to headthe implementation process o fthe UNDP GEF Components. The position will be financed by GEF-UNDP funding. TheNPCwill report to the Chairperson ofthe National Steering Committeethrough the ExecutingAgency -the Ministryo f Natural Resourcesand Tourism. As per the reporting requirements o f this project interms o ftechnical and financial reports the NPC reports to UNDPCountry Office inDar es Salaam. The NPC will, interms o f the implementationmodalities o f the UluguruComponent, liaise closely with the UluguruForest Conservation Coordination Committee. The National Project Coordinator (NPC) will ensure: The overall coordination o fthe project, technically andfinancially. The recruitment o fnational consultants as foreseen inthe project document andworkplan. The contractingo fnational institutions as foreseen inthe project document andworkplan. Providing logistical andtechnical support to the consultants recruitedunder this project. Ensure timely delivery o f the consultant reports and arrange meetings to review them. Communication and reporting on matters relatingto project implementation to all stakeholders. Liaisingclosely with the districts and other stakeholdersto ensurecoordination. Organisingi facilitating stakeholder workshops as planned inthe workplan. Organisingand facilitating training courses for project stakeholders as indicated inworkplans. The preparation, incollaboration with the TA, of Project Inception and Terminal reports, Annual and Periodic Reports includingthe APWPIR as specified inthe Project Document. Organise Project Steering Committeemeetings and act as Secretariat to the meetings as required. The Conservation Strategy Advisor (CSA) The CSA will be a senior internationalforest conservationist appointed byUNOPS onbehalfofUNDP andthe Government of Tanzania. The position will be financedby GEF-UNDP funding as a 75% time inputspreadevenly over the three years. The CSA will work inclose collaboration withthe NPC onall matters related to the project. The CSA reportsjointly to the UNDP Country Office Dar es Salaam and the Chairperson o f the National Steering Committee through the ExecutingAgency the Ministryo f - Natural Resources andTourism. The CSA will, interms o f the implementationmodalities o f the UluguruComponent, liaiseclosely withthe UluguruForestConservationCoordinationCommittee and CARE, and on the Strategy Component, liaise closely with CARE Tanzania andTFCG. The Conservation Strategy Advisor (CSA) will: a) Provide advice on boththe development and implementationo f the conservation strategy for the EasternArc Mountains Forests through the project process. Provide support to colleagues and institutions, interms o fknowledge, awarenessand improvedcapacities, that are involved inthe management and utilisation ofEasternArc Resourcesacross all sectors fromagriculture, through biology to water andpower and finance. -152-  b) Inconsultationwiththe National ProjectCoordinator(NPC) andDirector FBDIFSA, the CSA will have responsibility for the technical aspects o f strategy development. This is a more direct responsibility for Strategy Components 1-4, andi s a more indirect responsibility, as set out inLetters o f Agreement to contracting institutions, for Strategy Components 5 and6. This indirect responsibility refers to oversight and monitoring functions. c) Be responsible for networking the strategy processto external interests inthe EasternArc Forests. Specifically this includes developing and fostering linkages to: PotentialFundingPartners such as the CEPF o f Conservation International (CI). Monitoring& ResearchOrganisations, such as Overseas institutions. EgThe University o f Copenhagen, CI, Kew, MBG, WCS, WRI, andCIFOR; and Tanzanian institutions such as UDSM, TAFORI, UCLAS and Frontier. Forest policy & documentation processes(inTanzania and overseas). Conservation planning activities at eco-regionalilandscape scales, eg. WWF, CI, TNC, WCS. d) Provide facilitative networkingbetween the components o f the GEF Project; with particular reference to linkages between the Strategy and the UlugurusMountains Component and the EasternArc MountainForests Endowment Fund(EAMFEF). This networlung includes linkingthe components of the strategy funded byUNDP-GEF and the components hnded and managed by other agencies. Increase networking with other forest conservation project interventions inTanzania. e) Inconsultationwiththe NPC &Director FBD,provide technicalnetworkingbetween forestry and other sectors o f government (particularly agriculture, energy andwater) and to private sector interests inthe Eastern Arc. Such networlung i s o f great importance at district levels. f) Incollaboration with theNPCandFBDprovide support for designingand implementing an in-service training programme for counterpart individuals and institutions involvedinthe conservation o f the Eastern Arc. g) InconsultationwithNPCandDirectorFBD,to develop aTanzania basedEasternArc web page that is coordinatedwith other inter-net awarenessactivities. h) Be responsible, with the NPC; for the timeliness and quality o f technical documentation from the overall Strategy Activities o f the UNDP-GEF Project. Inparticular the CSA will ensure comprehensive technical reporting on all four o fthe direct strategy components, and how they link with other components andactivities. CSA withthe NPC will report annually on lessonslearned onproject implementation. i) Be responsible, with the NPC, for providing linkages to and from the developing computer based mapping unit and the field basedforest conservation needs inthe EastemArc. j) Assist FBDwith advice and input over the development o f other funding proposals for the long-term conservation o f the EasternArc Mountains. k) Assist FBDto prepare the proposalo fthe EasternArc Mountains as a World Heritage Site. - 153-  1) Support FBDto ensurethat the Forest Reserves and Forest Nature Reserves o fthe EasternArc are recognised as protected areas under the IUCNinternational Protected Areas System. m) Support FBDinundertakingeconomic analyses o f the local, national and global values of forests. n) Support the NPC andFBD insettingup a detailedproject level Mand EFramework linkedto Impact andProcessOutputs, and that i s nestedwithin the overall MandEFramework for the Eastern Arc Forests (within Strategy Component 4). 3. TERMS OF REFERENCE:NATION& PROJECTSTEERINGCOMMITTEE(PSC) A NationalProject Steering Committee will ensure adequate oversight andintegration o fproject activity. The NationalProject Co-ordinator andTechnical Advisor will be co-opted members o fthe NPSC and provide the Secretariat to the Committee. The Project Steering Committee will meet at least twice a year but couldmeet more frequentlyat the start ofthe project. Meetingsshouldbeheldfollowingmeetings of the Advisory Committeewhenever possible, to avoid duplication and to reduce costs. The chairperson o f the Project Steering Committee will call Steering Committee meetings. The committeemay invite other institutions as the need arises. The Project Steering Committee will have eight major objectives: 1. To monitor project implementationinterms o f effectiveness and timeliness o f inputs and in terms o fthe success o fproject activities. 2. To oversee andprovide guidance to project activities, ensure activities addressthe project objectives. 3. To provide a forum for ensuringan integrated approachto project activities within allparts o fthe EasternArc Mountains. 4. Provide a forum for, and linkto, the National MarineParks processes. 5. Approve annual work-plans and broadbudgetary provisions, and consider changes as recommended. 6. InUNDPterminology: to performthe functionsofthe Tripartite Review (TPR) to consider and approve Annual Project Reports (APRS). 7. To review the TOR o fproject staff, and amend them as necessary. 8. To approve the proposed implementingagencies for theproject. Minutes of meetings will be kept. Decisions will be by consensus. The Project Steering Committee may constitute sub-committees and or task forces to discuss specialist topics or to review project activities. -154-  Compositionof the ProjectSteeringCommittee The Project Steering Committee will consist o f members from main stakeholders and the Implementing Agencies. The Chairperson will be the Permanent Secretary to the Ministryo fNatural Resourcesand Tourism, or his I her representative. Inaddition, members will be: The Regional Administrative Secretary o f Morogoro representingthe UluguruMountains Stakeholders The Director o f the Forest andBeekeeping Division The Country Director CARETanzania (AnNGO-implementationpartner) The Project Coordinator Tanzania Forest Conservation Group (AnNGO- implementation partner) A representative ofthe MinistryofFinance Representatives from village councils, from the UluguruMountains. Two District Executive Directors from key District Partners. The Executive Director o f the EasternArc Mountains Trust Fund UNDP Country Office Dar es Salaam UNDP GEF Regional Co-ordination Unit The NationalProject Coordinator for the Project The TeamLeader for the CARE Component inthe UluguruMountains The Conservation Strategy Advisor to the Strategy Component. Representatives from Co-Finance Partners. Others maybe co-opted as the need arises. - 155-  Appendix 5: Input Budget - 19 COMPONENT TOTAL 994,000 303,000 363,000 292,000 2,000 2,000 32,000 20 CONTRACTS - 156-  - 59 COMPONENT TOTAL 85,000 19,000 25,000 39,000 0 0 2,000 99 GRAND TOTAL 5,000,000 1,364,000 1,348,000 1,060,000 532,000 402,000 294,000 - 157-  Appendix 6: EasternArc UNDPStrategy ComponentWorkplans BroadWorkplan2003-2005 -158-  IndicativeWorkplan2003 - 159 -  AdditionalAnnex 18: Letter of Country Endorsement TANZANIA EasternArc ForestsConservationand Management Project Yours siiicercls. - 160-  Additional Annex 19: Map of the EasternArc Mountain Forests TANZANIA EasternArc ForestsConservation and ManagementProject Udzungwa Q Mahenge 200 km I Map preparedbythe US ForestService, ForestHealthProject - 161-  162-  MAP SECTION   IBRD 32235 U G A N32 D