India - Uttar Pradesh Social Forestry Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7780 PROJECT CIMPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (CREDIT 925-IN) MAY 22, 1989 Agriculture Division Asia Technical Department This document has a resicted distfibution and may be used by reipients only In the performnce of their officfal duties. Its contents may not otherwise be disclosed withot Wordd Bank authodzaton.  CURRENCY EQUIVALENTS Appraisal Year (1979) US$. = Re 8.6 1980 Rs 7.9 1981 Rs 9.1 1982 Rs 9.7 1983 Rs 10.5 1984 Rs 12.5 GOVERNMENT OF INDIA FISCAL YEAR April 1 - March 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS ACCF - Additional Chief Conservatory Forests ACF - Assistant Conservator of Forests CCF - Chief conservator of Forests ERR - Economic Rate of Return FAO - Food and Agriculture Organization of the United Nations FAO/CP - Food and Agriculture Organization Cooperative Programme FD - Forest Department FEW - Forest Extension Worker GOI - Government of India GOUP - Government of Uttar Pradesh IDA - International Development Association IFS - Indian Forest S2rvice MEU - Monitoring and Evaluation UJnit NABARD - National Bank for Agriculture and Rural Development NCA - National Commission on Agriculture NCAER - National Commission on Agricultural Economics/Research NREP - National Bank for Agriculture and Rural Development PIR - Plannidg and Information Resources Office PQLI - Physical Quality of Life Index RLGEP - Rural Landlers Employment Guarantee Program SAR - Staff Appraisal Report SCF - Standard Conversion Factor SFD - State Forest Department T&V - Training & Visit TER - Training, Extension and Research UP - Uttar Pradesh  FoaOFFICIAL US OLY THE WORLD SANK Washmnton. O.C. 20433 U.S.A. Ok. .6 Oitm-G4r May 22, 1989 KIOzXRAU W TO THE EUCUTIVI DIRo CTORS AND ThU PRESIDENT SUBJECTs Project Completion Report or Tndia Uttar Pradesh Social Forestry Project (Credit 925-IN) Attached, for information, is a copy of the report entitled 'Project Completion Report on India Uttar Pradesh Social Forestry Project (Credit 925-IN)" prepared by the Asia Regional Office. No further evalu- ation of this project by the Operations Evaluation Department has been made. Attachment This document has a restricted distribution and may be used by rcipients only in the performance of their official duties Its contents may not otherwise be disclosed without World Banc authorization.  FOR OMCIAL USE ONLY PROJECT COMPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (Credit 925-IN) Table of Contents Page No. Preface ......................................... i Basic Data Sheet ................... o..........................._.o. li Evaluatlon Sumwmry *....... 0 0.... 00...............-................... $ii OVERVIEW OF PROJECT BY IDA PROJECT STAFF .. ......................... 1 A. Project Objectives ....... ............. . 1 B. Implementation ...................................... 3 C. Operating Performance ...... . . . . .... ........... *. 4 D. Production and Distribution of Benefits ............... 9 E. Marketing of Project Output ........................... 9 F. Organizationul Issues ........ ........ ......*.. * * * ... . 10 PROJECT COMPLETION REPORT ......................................... 12 I . INTRODUCTION ............................ ............. 12 A. Brief Account of Forestry Sector in India ......... 12 B. Sector Issues .............. .. .... ............. .... 14 C. Sector Problems .... . 6.4* .............. .............. 16 II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL ..... 18 A. Origin .............. ... ..... 18 B. Preparation and Appraisal ..... .................... 19 C. Project Objectives and Description ................ 20 III. IMPLEMENTATION ........ o......... ........................ 23 A. Start-Up ...................................................... 23 B. Revisions ..... ................................... 23 C. Implementation Schedule ........................... 23 D. Reporting .................................................... 23 E. Procurement . ..... . ... . ...*............... 23 F. Costs and Financial Resources ..... ................ 24 G. Performance of Consultants, Contractors, Suppliers .......................................... 26 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Cont'd.) Page No. IV. OPERATING PERFORMANTCE ......... . . . . .. . . . .... ........... 26 As Farm Forestry ............... 26 Be NWirseries ..o..........e 29 Co Ex%;cnslon ....... ,30 D. Self-Help Village Woodlots ....... ................ 30 E. Supervised Community Woodlots ..................... 31 F. Rehabilitated Degraded Forest ....... .............. 32 G. Strip Plantations ............................................ 33 H. Pilot Tassar Production Component .o .....*a****..... 33 I. Efficient Wood-Burning Stoves ..................... 34 J. Research so.... osooo. , .......................so ...... 34 K. Training ............*.O....**00.. .... 35 V. FINANCIAL PERFORMANCE ........................... ... 35 A. Financial Results ................. ............ . *. 35 Bo Rate of Return . ................... s 36 VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT ............. 36 A. Policy and Support ................................ 36 B. Staffing 00.0 ...................... ......... **s*oo....... 37 C. Nurseries ......................o...oo ..... ................. 38 D. Support Services ................. ........ 38 E. Management and Organizational Effectiveness ....... 39 VII. ECONOMIC ANALYSIS ..............*..... .... .. 39 '3III. CONCLUSIONS .................. o..................... ... e,........ 41 IX. EVALUATION OF PROJECT IMPLEMENTATION AND OUTCOMES ..... 42 ANNEXES 1. Total Physical Achievements ............................ 43 2. List of Publications Prepared by Forest Department on Social Forestry . ........ ... ................... 44 3. Land Use in Gujarat and Uttar Pradesh .................. 45 3a. Year-Wise Financial Progress .......................... 46 3b. Actual Expenditure from 1979180 until June 1984 ....... 47 4. Product Type Percentage of Trees Planted and Proportional Area Covered (1979 to 1984) ............ 48 5. Total Estimated Production .... .............................. o...o 49 6. Benefit Streams by Product ............................ 50 7. Economic Analysis (Tables) ............................ 51 ATTACHMENTS I-It Comments from Ministry of Environment & Forests III Comments from Ministry of Finance MAP: IBRD 14120R  - i - PROJECT CONPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (Credit 925-IN) Preface Attached are the Project Completion Report (PCR) for the Uttar Pradesh (UP) Social Forestry Project, prepared by the UP Forest Department, and a PCR Overview prepared by IDA's Asia Technical Department. The Project entailed a credit for US$23 million, which became effec- tive January 3, 1980. Tne original project Closing Date of March 1984 was extended to December 1984, at which time the Credit was fully disbursed. An IDA mission visited UP in October 1985 to discuss the Borrower's draft PCR. Forest Department staff met with IDA staff again on December 11, 1985 in Delhi, to further finalize the draft. It' was decided to arrange assistance of an economist from FAO to provide more in-depth cost/benefit analysis; that economist visited UP during the last two weeks of March 1986. The draft report has been read by the Operations Evaluation Department (OED), and copies were sent to the Borrower and its agencies for comments irn January 1989. Comments received were incorporated in the text and appear as Attachments I - III.  -11. PROJECT COMPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (Credit 926-IN) Ba"ic Data Shoet KUS PROJIICS DATA Apprtmisal Actual an stmtote Actual Z of SAR Total Project Cost (US$ *illion) 46.5 46.5 1002 Credit 4ount (USS Million) 23.0 23.0 1002 Date of Board Approval. Cmo/day/yr) 06/05/79 Date of Effectivenes (mo/day/yr) 01/08/80 Date Physical Componnto Completed (ao/daylyr) 03/31/84 12/31/84 Credit Closing Date (Io/dy/yr) 12/31/84 12/31/64 iconomic Rate of Return 12.42 * lt41 Institutional Porfooance good STAFF INPUTS (Staff weeks) FY78 FY79 MO8 MI1 -FS82 "83 t84 n8S n6 W"8 mE Pr_ppraidal 6,4 Apprdeal 77 1 Negotiation 0.6 Superviion 10.2 8.3 15.8 18.4 3.2 10.55 3.2 Other (lAO/CP) 7.5 0.6 0.3 Total 7.5 84.1 10.2 .9 15.8 18.4 3.2 10.55 3.2 CUlATIVE DIS3URSNTS 180 M81 182 1n83 FY84 85 Appraisal d ti8tto tUSS million) 0.5 2.7 6.4 11.2 16.5 23.0 Actual (USS *illion) 1.3 4.5 9.0 13.7 19.2 23.0 f-tual ma 2 of Estimate 260 167 141 122 116 100 , ce of Final Disburements Jan. 18. 1985 MISSION DATA Date go. of kandayv Specialiation Performance Type of (mo/ar) Sent by Persons in Pield R4su*ft*d /o Retina /b Trend / Proble Identification 05-06/78 FAO/CP 2 30 B Preparation 09/78 FM1/CP 3 54 B., Aproi l 10/78 IDA 5 110 A.B.C.9 Appraisal follo-up 03/79 IDA 2 1,5 Supervision I 02/80 IDA 1 6 A I - Supervision IL 11/80 IDA 3 18 A.B.C 1 2 - Suprvision III 12/81 oD 2 12 A.C 2 2 P Supervision IV 04/82 IDA 3 18 A.D 2 3 F It 0 Supervision V 12/82 IDA 4 24 B.D. 2 1 N 0 T Supervision VI 12/83 IDA 1 4 A 2 1 P Supervision VII 01/84 IDA 2 8 A.1 I I T Suporvi on VIII 09/84 IDA 2 34 B.E 2 2 I Completon 04-05/86 FAO/CP 1 23 a OTHER PROJBCT DATA Borrower : Govermont of India,Goverment of Uttcr Pradesh fiscal Year of Borrmer : April I - March 31 Ieee of Currency : Rupees (Re.) Currency Exchange Rates: Appreisal Year US$l = Re 8.60 Intervening Years Averoge: YY79 US$l a R 8.10 n180 US$1 a t 7.90 ne8 US$1 Re 8.95 1182 US$1 u Re 9.65 FY83 US$1 = Ra 10.30 FM84 USSI = Ra 11.90 Ms85 US$1 * Rs 12.20 p186 US$1 = Re 12.40 1. A - Agriculture. B - forestry. C - Sociology. D - Rural Dvelopant. B - Economics. P - Consultant. C - Financial Analysis /b I - Problem-free or Minor Problems. 2 - Moderate Problemos. 3 - MAjor Problem 1c - Improving: 2 - Stationary; 3 - Deteriorating 7 F financial; N - Manegeti; T - Tecbuical P Political; 0 - Other *ROR analysis exclud'd farm forestry.  - il - PROJECT COMPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (Credit 925-IN) Evaluation Summary Introduction 1. The Uttar Pradesh Social Forestry Project represented one of the first two IDA investments in Indian social forestry, the other being the Gujarat Community Forestry Project. IDA involvement now extends to nine states in India including follow-up projects in both Uttar Pradesh and Gujarat. Tais project reflects much of the experience of the broader IDA investmenL, and many of the lessons discussed below have been incorporated into the design of recent projects. Objectives 2. The major task of the state Forest Department handling the tree plantation program was to encourage local appreciation for trees and partici- pation in activities. To support the programs, the Forest Department was to strengthen its capacity for extension, research, and monitoring and evalua- tion. 3. The Uttar Pradesh project was appraised in March 1979 and became effective January 1980, with an IDA credit of US$23.0 million. Project Implementation 4. The project started up promptly and progressed on a timely basis. It closed as scheduled in December 1984, being disbursed faster than either the appraisal estimate or thte South Asian profile disbursement rate. Credit amount was fully disbursed. 5. There were revisions in project design, determined during the mid- term review. The fuel-efficient stove component was dropped and funds trans- ferred to the planting program. Operational Results 6. Far surpassing original expectations, the component for plantation of trees by farmers on their private land was extraordinarily successful (tar- get of 8 million seedlings to be distributed and achievement of 354 million). While motivation for farm forestry had been expected to be production of fuel- wood and other materials for home consumption, farm forestry's success was due to commercial incentives. The success brought new unanticipated issues, including potential environmental risks, need for better marketing arrange- ments, and weakness of research with regard to agroforestry and other tree management methods.  - iv - 7. ro support the expanding interest in private planting, the project moved toward small decentralized (accessible) nurseries, and intensified extension. Further qualitative improvements are still needed in areas such as research, extension and monitoring and evaluation. 8. As for the community plantation components, the Forest Department did best with "supervised woodlots" where its staff performed the work. But communities did not take over management as hoped, for a variety of economic and sociological reasons. The "self-help woodlots" schemes never really took off for the same reasons, and the fact that poor people would not volunteer labor as expected. 9. Predictably, the Forest Department capably handled the technical side of plantations on government lands. However on the social side, it has been slow to consolidate arrangements for distribution of benefits. Findings and Lessons 10. The issue arises of how much responsibility should be transferred away from government, as has already begun with farm forestry and establish- ment of contract nurseries. There is a fundamental financial consideration since these Departmental plantations are about five times as expensive as farmers planting on their own land, given the high labor costs incurred by Forest Department. This would seem to imply that, to the extent that wood production can be handled economically on private lands or through similar means (para. 12), Forest Departments should turn over that responsibility. They could then focus on areas where Forest Department must still be involved, for instance production of fuelwood or assistance to the poor in meeting sub- sistence needs for wood, and provision of technical expertise for plantation and nursery operation. 11. Forest Departments have begun to experiment with new plantation approaches, a key one being tree tenure schemes, whereby poor farmers and landless persons lease public lan.1 at nominal _ees and take the benefits of the trees they grow there. Uttar Pradesh is trying such an arrangement in its follow-on project. 12. Not only should social forestry look toward the supply side of the equation, but also toward demand. Fuel-efficient stoves are recognized as an effective way of reducing wood demand, when stoves are appropriately designed and installed. At this time UP has made no headway with stoves. 13. Social forestry experience has -aised several questions about the organization of forestry. Some functions which can be handled better by the private sector (e.g., some commercial production), or by other organizations (e.g., field contacts by agricultural extension, seedling distribution and stoves by NGOs, etc.) should be released by the Forest Department. This also avoids building an overly large, expensive forestry bureaucracy.  14. On the whole, the project was well conceptualized. Social forestry was still being pioneered during this project; however, the overwhelming suc- cess of farm forestry could not be anticipated. Also, social forestry may need to evolve as public awareness grows. For example, strip plantations have been effective in introducing not only to the public but also to the Forest Department the idea of trees for public benefit; thus, despite their lower rates of return, strip plantations still serve a useful purpose as social forestry begins to evolve. The one component based on erroneous assumptions was village woodlots; communities were often unable to take on organizational responsibilities for woodlots, or had poor incentives because woodlots were too small to yield benefits or else benefits were unclear. Also, land was not always available. Sustainability 15. Uttar Pradesh has launched expansive plantation and seedling distri- bution programs through various schemes, of which IDA financing is only one part. The public demand for these programs has grown over the last ten years, as has Forest Department commitment to meeting that demand. In terms of quan- tity of trees planted and output produced, UP has the capability to handle its own programs and even teach others. 16. There are, however, qualitative aspects for which the Department has not established so firm a capacity; the strengthening of qualitative perfor- mance has comprised a major justification for follow-on IDA lending to social forestry in Uttar Pradesh. First, institutional weaknesses have resulted in poor delivery of advice to farmers, inefficiencies, etc. Second, little effort has been put into the distribution and marketing aspects of tree pro- duction. Third, subsistence fuel needs of the poor, and urban population fuel needs, have not been satisfactorily addressed. Bank Performance 17. The project was generally well conceptualized. No one could have anticipated the substantial response to farm forestry; the appraisal mission did overestimate the direct costs for farm forestry (seedling production). Regarding the village woodlots component, the appraisal miszion might have foreseen common property problems, particularly in the self-help woodlot schemes which IDA pressed in spite of forestry officials' misgivings. 18. Supervisions occurred fairly regularly, and a useful exchange of views between mission members and forestry officials often occurred. A number of forestry officials took increasing initiative and responsibility over the five years, even helping supervise and formulate other IDA projects once they left their social forestry positions. 19. IDA showed flexibility during project implementation and allowed the project to adopt new ideas (e.g., kissan nurseries), and to modify concepts (e.g., self-help village woodlots components).  PROJECT COMPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (Credit 925-IN) Overview 1. The Social Forestry Directorate of the Uttar Pradesh Forest Depart- ment has prepared a full Project Completion Report in keeping with the Bank guidelines. This section covers issues which warrant further discussion from the Bank perspective, including questions about the appropriateness of original project objectives and design. A. Project Objectives 2. The original project targets provided for plantation of 48,600 ha on public and village lands in Uttar Pradesh (UP). The project, which was to be administered by the State Forest Department, was to employ laborers from the poorest section of the population. In UP, only a little over 5,000 ha were expected to be planted by farmers privately following the distribution of some 8 million seedlings. Benefits were conceptualized as production of fuel, fodder and other products for home consumption, generation of employment and environmental stabilization. Of the 12,125,000 mt of total production anticipated in UP, 882 was expected to comprise fuelwood, grass and leaf fodder. The remaining production was to consist of timber, fruits, oilseeds and edible flowers and cottage industry materials. Thus, the overwhelming proportion of production was expected to be utilized for subsistence purposes such as fuelwood and fodder. 3. Clearly the Project was viewed essentially as a Government rural development effort, where the "beneficiaries" were enjoined to participate "first in planning, then protection of the village forest, and later in man- agement and harvesting." The self-help woodlots components were to guide the way for later phases of the social forestry program, although they still aimed at production of subsistence materials. 4. But several things were beyond the perception of either the Bank or the State Forest Department at the time of appraisal. First, commercial incentives for personal profit emerged as the most powerful drive for tree planting; eventuall Dover 350 million seedlings were distributed in UP during the project period,-' far exceeding the 8 million original target. Not only were expectations low on total demand, but also on commercial potential. Many farmers have said they prefer to sell the trees they grow, and continue using home materials (dung, agricultural wastes, etc.) and residuals from the trees for subsistence purposes. This had not been expected. 1/ Including 134 million directly under the project, and the remainder through additional schemes but implemented by staff provided by the IDA project.  5. Related to the unanticipated commercial incentive was the fact that communities did not show much motivation or ability to gradually take over management and protection of community woodlots, which were intended to deal essentially with subsistence needs. However, it should be noted that there was a misperception regarding peoples' incentives to volunteer their labor for subsistence benefits provided by village woodlots. 6. The project started up just before "social forestry" began to gain its exceptional momentum in India. The Forest Department's relationship to the rural public in the past had been one essentially of policing. The Forest Department did not expect the public to take such a positive view toward growing trees; just educating farmers to appreciate social forestry was considered a major objective in the project. The skepticism about public responsibility has continued, although to a declining degree; it has contribu- ted toward some foresters' reluctance to hand over management of community plantations to the local communities. When rural cowmunities are not motivated to assist in community woodlots, and foresters are not anxious to hand them over to local people, then implementation is impaired. 7. What factors have given rise to this situation? To begin with, India has become very rapidly a leader in the social forestry field, and we have noted that these projects commenced only at the beginning of the Indian experience. Second, it seems that Bank and Indian economists alike overesti- mated the demand for fuelwood. They may have failed to factor in sufficiently the amount of home materials that were used and would continue to be used. Recent surveys have shown that woody material from twigs, bushes and fallen trees constitutes about two thirds of total fuelwood consumption. Further- more, lops and tops from trees grown commercially are also used for fuel and fodder. 8. The project, which has a good economic rate of return (19Z), shows a number of lessons which could be used in the design of future social forestry projects, including: (a) to the extent that markets are accessible and prices for wood prod- ucts ara attractive, commercial incentives for growing will consti- tute a powerful incentive for planting and for public participation; however, Forest Department plantings will to some extent help generate interest and demonstrate know-how; (b) private planting, especially for commercial purposes, induces greater public motivation for protection. Furthermore, it costs about one fifth the amount per tree of Forest Department-handled plantations; thus, private planting should receive continued support in the future; (c) village woodlots seem workable only under special sociological con- dit: ns, and therefore, any efforts to increase community responsi- bility will demand particular attention in project design; (d) to support expanded private planting, the number of small, decen- tralized nurseries should be expanded; some nurseries can be run on  a contract or private basis and this should be encouraged where feasible; (e) the greeter emphasis accorded to private plantings means that exten- sion services for tree planting will have to be strengthened considerably; (f) Bank and borrower need to differentiate, at an early stage, their production objectives from their welfare goals; private planting may not incorporate any special benefits for the poorest farmers and landless rural persons, but is justified because of increased production and increased income benefits; however, to provide subsistence materials or specific benefits to the extremely poor, special project components would be necessary. Much of experience gained ander the project has been incorporated in Indian National Social Forestry Project now underway (Cr. 1611-IN), in which UP is qne of the participating states. B. Implementation 9. A major issue concerning the original project concept, which is not discussed by the Borrower's PCR, is the concept of charging for seedlings distributed for private planting. UP adopted differing policies on seedlings. The SAR noted that, "In order to avoid waste, a nominal price of Rs 0.10 would be charged for polypot plants (mostly fuel species) and of Rs 0.25 for pindi plants (such as fruit trees). The level of this charge would be reviewed in the course of project execution" (SAR, para. 2.17). The Mid-term Review noted that this had become a controversial subject. While the Treasury and the Ministry of Economic Planning had issued a directive urging the Forest Depart- ment to move towards cost recovery in its charge for seedlings given for private distribution, Bank staff were suggesting that to provide some incentive a certain number of seedlings be given free "to any farmer interested in tree planting" (Mid-term Review, para. 16); above that limit, the Bank supported maintaining a nominal charge. 10. Later, when the Bank was formulating the National Social Forestry Project (1984/85), the Bank defined its position more fully. The Bank urged that a certain number of trees (those needed to meet a family's subsistence needs) be given free, and for the remainder the states charge seedlings equal to the tull direct cost of production. This policy was to apply to all seedlings distributed throughout the state. While such states such as Gujarat had reservations about the idea of charging for seedlings, Uttar Pradesh was already well on its way to cost recovery, assessing Rs 0.25 per containerized seedling (compared to direct production cost of about Rs 0.35-0.40). Rather than providing some Project-financed seedlings free, UP instead opted to purchase a certain number of the seedliLgs with funds from the Small and Marginal Farmers Scheme (sponsored by GOI), and distributing these seedlings free to eligible participants. Districts with larger numbers of eligible par- ticipants distributed larger numbers of seedlings through this Scheme. 11. Evidence shows that it took the Bank some time to define its policy  - 4 - on seedling pricing and on the distribution of free seedlings. Experience also shows that a policy of charging for some seedlings and not the others complicates record keeping and leads to some misrepresentations. At this time, it is not too clear whether charging for seedlings aotivates farmers to take only the number needed, thus providing them with better care. Also, it is not too clear to what extent free seedling distribution is necessary, at least in the beginning. 12. Bank social forestry in the broader contest of the entire social forestry programs was not dealt with directly until the preparation and appraisal of the National Social Forestry Project. During implementation of the initial projects, there were at least five schemes besides the IDA- financed projects supporting social forestry, including four GOI centrally sponsored schemes (Rural Fuelwood Program, Drought-Prone Areas Program, Small and Marginal Farmers Scheme, and National Rural Employment Program) and the state schemes. Of the 462,012 ha planted in UP during the Sixth Five-Year Plan (1980-85, covering the project period), the IDA-financed project accounted for just over 20Z of trees planted, and almost 23X of the overall financial outlay in these schemes. It should be noted that the various schemes have in fact adopted different approaches, varying plantation criteria, seedling pricing, etc. 13. The above suggests that the Bank has to take account of the broader forestry context and policy framework in project design. For instance, if the Bank would insist on seedlings pricing based on actual cost, free seedlings might still be available without restriction under another scheme, which would only undercut farmer participation in the Bank-financed nurseries. Another lesson may be the need for more active coordination among schemes, even though Bank experience has shown consistently the difficulties in trying to achieve interagency coordination. 14. The Bank provides a substantial amount of organizational support for social forestry. The percentage of project costs devoted to management, staffing, research, extension and training in Bank-financed projects has ranged from 302 up to nearly 702 (the latter in the first UP project); the average runs about 30-35Z (Annex 2). By contrast, most GOI centrally sponsored schemes provide a maximum of 5S of total costs for organizational support. It is conceivable that the staff, resources and support activities irom the Bank-financed projects are often utilized to implement other schemes. The Bank should use this as a leverage to promote a more uniform approach to social forestry development. C. Operating Performance Farm Forestry 15. The project completion report does not mention the environmental and economic issues which have arisen with the vastly increased number of trees planted on private lands. However, this subject deserves mention because it has affected social forestry in this, and other projects. Fears have been expressed that: (a) the Eucalyptus species has been overemphasized for farm fo-istry distribution; (b) forest departments have promoted private planting  to feed large wood industries; (c) fast-growing species planted on farmers' lands may lower the water table or have other undesirable environmental effects; (d) the plantation of large numbers of the same species risks all the undesirable repercussions of monoculture; (e) good agricultural land providing essential food crops has been converted over to tree growing;_ and (f) agricultural labor has been displaced since tree growing need much less labor input than crops. At a conference on the subject of eucalyptus planting held in Southern India in 1984, the only point of consensus for participants was the lack of sufficient research to prove either the presence or absence of ill-effects on farmers' land. 16. Since then, the British ODA has embarked on a special research project to systematically study the effects of fast-growing species on sites and crops, and other research initiatives have been started in various places in India. While definitive results take some time to emerge in the case of tree trials, evidence now available indicates that environmental risks--and benefits--depend on the agroclimatic conditions and management methods under which trees are grown. 17. What is the experience in this regard from the Uttar Pradesh project? Farmers have shown a marked preference for species like eucalyptus because they are fast-growingr coppicing, not browsed by livestock except for very young seedlings and, at present, have an attractive market value. Even when the Forest Department has urged farmers to take a variety of seedlings, they still express their preferences. But to be objective, extension under the projects has been weak, as both the Bank Mid-term Review and the PCR have pointed out, both in terms of the scope and regularity of contacts, and the quality of recommendations. Future projects should strengthen extension, develop better information on the effects of fast-grcwing species (this depends on research outcomes), and formulate recommendations which make sense technicelly and yet still respond to farmers' priorities. The Research Department in Uttar Pradesh has, in fact, led the way during the project period in some trials with fast-growing species regarding root competition from eucalyptus, etc. 18. The UP project completion report brings up the issue of equity in farm forestry, noting that larger farmers have continued to take a dispropor- tionately higher number of seedlings; the share of smaller farmers did improve, however, during implementation. Bank missions consistently articula- ted their concern that distribution should be more equitable. Besides the fact that larger farmers have more land (and thus also more land not given over to subsistence agricultural crops, and available for tree planting) for planting more trees, the participation rates have in fact been lower for small and marginal farmers. It is not reprehensible that a large number of seed- lings went to larger farmers; but an additional number should go to small and marginal ones. There are reasons why this did not happen during the first Project, for example, the relative lack of access to nurseries and weakness of extension. 2/ Annex 3 shows that only a small proportion of farmland has been planted with trees.  -6- Extension 19. The UP PCR describes weaknesses in extension recommendations and organization (UP PCR, para. 4.09). Bank missions had seen the need for more intensive extension. Could the Borrower and Bank have better anticipated the needs in this area? As noted before, no one expected that the farm forestry response would be so strong. But on the other hand, no one envisioned a need for comprehensive field extension either. The UP SAR provided for five Communication Units to motivate farmers to plant trees, one in each region, each staffed with a sociologist, three rangers (one each to handle audiovisual services, village training, and improved stoves), and a film projectionist. The "publicity/extension" function of the units involved production of films to be shown by mobile units (UP SAR, para. 2.23). Forest Extension Workers (450) were provided for field operations, but their tasks were articulated in ter-ms of physical planti.g targets (maximum 25 ha departmental/community plantations each). The Communications Units were never formed, although a central imit oversaw communication work. And the field staff (predictably, in retrospect) favored the visible, easier work on plantations to unfamiliar field contacts with farmers. All this illustrates that the original extension designs were not sufficient to provide for substantive contact and effective feedback on farmers' needs and progress. 20. By 1984, Bank staff concluded that social forestry extension should be coordinated with the T&V system of agricultural extension, for three main reasons: first, T&V already had a large field staff whose sole job was to regularly contact farmers and bring them recommendations; second, linkages with the T&V system would help coordinate forestry and agriculture recommendations$ and avoid potential for conflicting informaticn; third, forestry could avoid building a large field bureaucracy which was beyond its capacity to support. While Gujarat led the way in coordination of social forestry and T&V extension, this was only star.ed after the first forestry project in UP because of T&V extension's late introduction to that States However, it should be recognized that the T&V system only addresses farmers, and therefore other provisions must be made in social forestry to meet the needs of the landless. Nurseries 21. Another factor which contributed to less participation in tree planting by small and marginal farmers was the relatively small number of nur- series, especially in the first years of the Project. The UP Forest Depart- ment relied on one centralized nursery for each of the 140 project ranges; only 50 existing nurseries were utilized in the beginning. Even with one nur- sery per range, the nursery would be serving over 1,000 ktm2 on the average. But experience over the last five years has shown that small and marginal farmers will normally walk no farther than 2-3 km to collect seedlings; larger farmers have vehicles, or can afford to pay for transportation. Thus, the impact of this first project in UP was to demonstrate that broad-based farm forestry required a decentralized network of (smaller, by implication) nurseries; this has been incorporated in the design of the second-phase project in UP.  - 7 - 22. Forest Department officials in states such as UP initially expressed reservations about whether contract or private nurseries would produce poor- quality seedlings and whether there would be adequate incentives for partici- pation. Concerning the choice between coi;tract and private nurseries, experi- ence implies that whenever contract/private operators can manage nurseries (perhaps, particular speciss) as well as the Forest Department, then the Department should take steps to transfer responsibility. In fact, the UP Forest Department has, on its own initiative in the second-phase project, arranged credit for private nursery operation and intends to encourage this on a large scale. Government reservations stem from the old perceptions that Forest Departments are the only source capable of providing high-quality planting material. Experience shows, however, that for certain species results are equally good or better in private nurseries. 23. Another feature of nurseries not foreseen is the important potential they have had in serving as points for extension, where farmers collecting seedlings could receive advice on the spot as to species selection, care, etc. Woodlots 24. The Project Completion Report by the Borrower mentions two reasons for problems in the supervised and self-help woodlots schemes: poor quality of land and competing uses for land. There are other factors which have affected the viability of the woodlots concept as well. One of the fundamen- tal problems has been the failure of the Forest Department in handing over responsibility for managenent of the woodlots--and the failure of communities to take that responsibility. First, communities may lack interest or organi- zational capability to manage woodlots. As with management of common property resources generally, social fractionalization (e.g., strong caste divisions) makes it difficult to reach consensus on how land should be used and who should receive benefits. 25. Secondly, incentives involved may not be attractive, which is often the case when the amount of wood to be produced is too small to motivate people. Sometimes this happenied because the woodlots were small and the num- ber of beneficiaries high; for the future, the lesson is that larger woodlot areas (or smaller number of beneficiaries) should be provided, although this may be difficult when much land is not available for woodlots to begin with (uncultivated land has often been assumed free for woodlots, when in fact it is subject to a number of usufruct rights such as grazing and fuel collec- tion). Another important factor which undercuts incentives is the fact that Forest Departments expect to take a high percentage of the wood harvest in order to recover costs--in UP this is estimated to be 70% or more of produce from these woodlots (estimate given by the October, 1985 supervision mission). This has happened because maintenance, protection, etc.--tasks which theoretically should have been taken over by the community--continued to be done by the Forest Department, for reasons listed in para. 6. It is hard to imagine that communities will want to continue setting aside land for woodlots when Forest Departments take the majority of the produce. Thus, the woodlots model must be managed to be more cost-beneficial which implies earlier, greater community responsibility.  - 8 - 26. Yet another related factor concerns difficulties by Forest Depart- ment staff in formulating agreements with communities for woodlots. Contacts were made with village leaders, but often without the consensus or even know- ledge of the community at large. Arrangements as to responsibilities and turnover of management were often unclear, and details on who were beneficia- ries and how much they would get were virtually nonexistent. Forest Depart- ment staff lacked training in this kind of work; experience shows that it demands skill and perhaps some sociological input. 27. The lesson in all this for the supervised woodlot scheme is that such woodlots can only be established under certain conditions, includin- adequate land availability, attractive cost-benefit incentives, and community cohesion. The latter, given the prevailing social organization and increased population pressures on the majority of rural villages in India, makes it an exceptionally difficult task. 28. In the supervised scheme, but especially in the self-help scheme, it was envisioned that the poor could volunteer labor in return for benefits. The UP report contends (PCR, paras. 4.10-4.11) that the concept was flawed, because they would not "volunteer" labor (SAR, para. 2.14). Furthermore, it had been assumed that resources would benefit the poor. But in reality, it depended mainly on who controls the community land and resources. It may be that equal distribution to all residents would be the most feasible arrange- ment, since the village woodlots model seems a less-effective vehicle to help the poor. Species Selection and Other Technical Inputs 29. Supervision missions have noticed that in some nurseries, eucalyptus seedlings have been taken, but other species remained in surplus. This has raised the question of whether Forest Departments have adequately attempted to encourage farmers to try other species, and how extension could help. 30. The PCR mointains that the research wing of the UP Forest Department was not particularly responsive to the needs of social forestry (UP PCR, para. 4.32). However, the research being done has been more relevant and certainly much more professional than research related to social forestry in other IDA- financed projects in India. It has dealt, inter alia, with trials using euca- lyptus and other fast-growing species (para. 19 above). Trials have included degree and timing of root competition, weeding regimes, multistory planting of various species, etc. 31. More research needs to be done on management techniques for tree growing, given different objectives. For example, the research wing in UP questions whether fodder and fuelwood production can be undertaken efficiently with the same trees. The need for management research is particularly impor- tant for farm forestry where growing of crops may be related to trees. Other issues requiring more research attention include tree improvement, contour planting, and soil conservation approaches.  - 9 - D. Production and Distribution of Benefits 32. Statistics on growth rates and yields have been less than satisfac- tory. In part, this is because, on Departmental/community plantations, little felling and distribution of mature trees has taken place to date, and arrange- ments for distribution of benefits are vague if they exist at all. But this has also occurred in large part because monitoring and evaluation did not develop to the desired capacity during the project. The projected yields and production could have been ascertained from existing stands by measuring present volume, etc. 33. For the future, social forestry projects should improve recording of production. For purposes of the present project, this weakness has led to a request that FAO/CP provide technical assistance in economic analysis. In April 1986, an agricultural econcomist visited UP to prepare such an analysis. On the economist's request, UP then arranged for a technical survey of growth rates and estimated yields, to be followed by sample tree cutting and measure- ments from the various kinds of plantations. The results are presented in Annex 7. Among the interesting results are: (a) highest fuelwood yields on canalside plantations and lowest on village commor land; (b) survival rates for farm forestry generally higher than for plantations on public land; (c) fuelwood production at 105% of that estimated at appraisal, and timber production at 206% of SAR--not counting farm forestry; and (d) an economic rate of return estimate at 19%, excluding farm forestry (because of data inconsistencies for farm forestry); the ERR including farm forestry is expected to be much higher. 34. Recent IDA supervision missions have pointed out the lack of detailed plans about how tree benefits wouid be distributed, when, and to whom. The lack of local involvement in the plantations, resulting from unawareness of benefits forthcoming seems to have contributed heavily to the poor participation. In part, the poor plans for distribution occurred because project design did not put strong erough emphasis, and in part because Forest Departments delayed taking up the subject. But IDA has required in its second-phase National Social Forestry Project that distribution of benefits be decided clearly from the beginning, ideally at the time before planting when other plans are still taking shape. E. Marketing of Project Output 35. As noted by the Mid-term Review, the marketing projections origi- nally envisioned at appraisal proved outdated, given the unanticipated over- whelming response to farm forestry. The Mid-term Review suggested that studies be done across the board on forest products. The studies which were done eventually related to another exercise, the "wood balance study.' The UP Wood Balance Study focused on two basic themes: existing trees on private holdings and willingness to plant, and energy, timber and bamboo consumption. Still, this study did not examine in depth the newly emerging commercial side of social forestry, let alone market prospects for the large volume of wood being produced by farrmers, and whether do-mand and prices would continue to support large-scale planting.  - 10 - 36. Reflective of the lack of market planning for social forestry was the pilot effort with tassar silk production in UP. Although the Forest Department felt confident that the demand for silk cocoons would support tassar production, substantial research was never done on the subject. The technology for tassar production proved very successful in the first-phase project but enough questions about marketability still remained during appraisal of the second phase and consequently the tassar silk component was vastly reduced from what the preparation report had proposed. There were also needs to improve profitability; for example, the pilot approach pursued during the first Project entailed substantial input from the Forest Department, with production on a widely scattered basis. This meant a large investment from the Forest Department in terms of training, staff, and deploying staff throughout the project area to small sites. Furthermore, certain economies of scale in production, collection and sale of cocoons could have been achieved by focusing production only in certain areas. 37. The lessons to be learned for future Bank projects in social fores- try are: (a) marketability requires attention early in the project, including projections of future supply and demand, for instance where market gluts might occur; (b) just because a scheme like the tassar component is directed at the rural poor does not mean that it cannot be profitable; in such a scheme, eco- nomic objectives such as cost recovery and economies of scale can be met simultaneously with poverty objectives; by supervising too closely and invest- ing more staff time than necessary, the Forest Department is narrowing the profit margin for the beneficiaries. F. Organizational Issues 38. Paragraphs above such as those on extension and woodlots have already mentioned some organizational aspects; and the Borrower's PCR deals with a number of other organizational considerations. But there are two more which deserve further mention here. 39. First of all, the Government of India encouraged Forest Departments to create a separate wing for social forestry, which most states including Uttar Pradesh did. The idea was that such separate wings were necessary in order to promote consciousness of social forestry, and to focus forestry staffs' attention on social aspects rather than the traditional "enforcement- oriented" forestry to which they were accustomed. It was expected that forestry staff would resist transfers to the social side. Uttar Pradesh created a completely separate stream for foresters and guard-level staff in social forestry; these staff would not be interchangeable with staff on the traditional "territorial" side. 40. The question has begun to arise of whether this separation between social and territorial forestry is actually desirable in the long run, and whether the two sides should now be integrated. Some critics claim that, because of the attention devoted to social forestry, valuable staff and resources have been drawn away from other forestry work; social forestry has career growth, additional responsibilities, benefits and status such as vehi- cles. Another issue is that there is not such a clear differentiation between social and territorial forestry conducted on government lands; both should  - 11 - elicit local cooperation if not participation, and should aim at addressing local needs. Also there is the idea that the Forest Department should devolve to the private sector what the latter can do as (or more) efficiently, and that it should avoid creating a larger bureaucracy when other services (e.g., agricultural extension) can take responsibility; as a result, the Forest Department's own responsibilities might be consolidated. 41. The second organizational issue worth mentioning in this overview is the failure to develop a strong monitoring and evaluation capacity. Although during appraisal stress was put on developing a strong capacity, monitoring and evaluation was accorded a lower priority than much other project work, and sometimes staff assigned to it were relatively unqualified. Rather than being understood as a tool for management, monitoring and evaluation were viewed more as a report-generating function. A workshop on M&E was held in February 1986, to train staff from all the Indian projects and clarify any remaining questions on the subject. In collaboration with forestry officials from dif- ferent states in India, a Guide to Monitoring and Evaluation has been pro- duced. This, in combination with computerized data processing, will hopefully improve the situation. This institutionalization of M&E may be expected to greatly improve the situation in this second phase.  - 13 - PROJECT COMPLETION REPORT INDIA UTTAR PRADESH SOCIAL FORESTRY PROJECT (Credit 925-IN) I . INTRODUCTION A. Brief Account of Forestry Sector India 1.1 With only 2% of the total forest area of the world, India supports about 15% of the total human population and about one seventh of the cattle population of the world. The per capita forest area in India is about one tenth of the corresponding world average3 The per capita growing stock of "the forest under working" is only 5.2 m as against 46.7 m* for the world. The existing level of production from India's f rests (0.5 m3/ha/year) is considerably below the world average (2.1 m3/ha/year) and its total production is far short of actual requirements. The following table presents the status in respect of Industrial Wood and Fuetwood: Table 1: WOOD REQUIREhENTS AND ACTUAL OUTPUT FOR INDIA Annual requirement estimates 1985 Recorded annual Type of product Unit Low High production forests Industrial wood Million m3(r) 30 35 13 Fuelwood Miliion mt 133 137 15 1.2 The total gross revenue earned by the Forest Department totaled Rs 4.7 billion in the 1980/81 financial year (3% of total annual plan budget). The total Plan and non-Plan expenditure in the forestry sector in the same year amounted to Rs 3.2 billion (2.4% of the total budget). 1.3 Plan expenditure under the forestry sector as compared to total public sector investment from the Third through the Fifth Plans (1961-80) showed no significant change. Since then, there has been a substantial increase as will be evident from following table. This reflects a shift in the Government policies towards forestry sector and particularly towards Social Forestry:  - 14 - Table 2: PLAN EXPENDITURE ON FORESTRY IN INDIA 3rd, 4th, 5th plans lst plan 2nd plan & 1979180 6th plan (1951-56) (1956-61) (1961-80) (1980-85) Plan period 5 years 5 years 20 years 5 years Percentage of total fores- try in total public sec- tor expenditure 0.39 0.46 0.53 0.71 Social forestry as percent- age of forestry sector 2.15 9.40 21.53 50.81 expenditure (11.84 to 33.20) Forestry other than social forestry as X of public sector expenditure 0.38 0.42 0.41 0.35 1.4 Taking production forestry as the main indicator of "Forestry Sector other than Social Forestry," the percentages in the above table indicate that funding for production forestry has remained almost constant from 1961 to date; the physical achievements under production forestry have also remained constant (0.6 million ha/year). Uttar Pradesh 1.5 Uttar Pradesh has 6.8Z of the forest area of India and supports 16.21 of its human population on 91 of the India'c geographical area. The per capita growing stock is about 4% only. The following table indicates annual requirements and average annual recorded production from forests: Table 3: WOOD REQUIREMENTS AND ACTUAL PRODUCTION FOR UTTAR PRADESH STATE Annual requirement estimates 1985 Recorded annual Type of product Unit Low High production forests Industrial wood Million m3(r) 4.8 5.6 1.0 Fuelwood Million mt 13 14 1.0 1.6 The total gross revenue earned by the UP Forest Department is about 2.3Z (1982/83) of the UP State revenue. The plan expenditure during 1982/83 as percentage of total State expenditure was about 1.3%.  - 15 - 1.1 Plan expenditure under the forestry sector remained almost station- ary (near 1Z) from the First Five-Year Plan to the Fourth Five-Year Plan; how- ever the Fifth Five-Year Plan accorded loge, priority (0.76%). It was the Social Forestry Program launched in 1979/80, which restored the forestry sec- tor share. During the Sixth Plan, the share further increased to 1.31% due to Social Forestry. Comparing the Sixth and Seventh Plans, while the amount of expenditure for social forestry is planned to increase, the percentage of bud- get devoted to social versus total forestry will actually decrease souewhat (Table 4): Table 4: PERCENTAGE-WISE OUTLAY FOR SOCIAL FORESTRY, FORESTRY SECTOR, AND TOTAL PLt' FOR UTTAR PRADESH /a 1st, 2nd, 3rd, and Annual 4th plans 5th plan plan 6th plan 7th plan Plan period (1951-74) (1974-79) (1979/80) (1980-85) (1985-90) Forestry sector as X of total plan 1.00 0.76 0.91 1.31 1.70 Social forestry as X of forestry sector expen- diture 11.17 18.40 49.74 65.30 47.04 /a Includes both State Plan schemes as well as centrally sponsored schemes. B. Sector Issues Solving Household Energy Problems 1.8 Of the UP population (1981 Census), 81.99% is rural (90.9 million) and 84X of the total labor force of the State is employed in rural areas and is expected to reach 129 million by the year 2000. To maintain the consump- tion level of 0.21 m3 (197i), the annual prodyltion of fuelwood should increase by 9.24 million m by the year 2000d Given an average production of 8 m /ha/year, this would mean additional fuelwood plantations over the 1.2 million ha over next 15 years or about 80,000 ha annually. The per capita consumption (1978) of cattle dung is about 173.8 kg (52 kg coal replacement value) which is equivalent to 0.13 m3 of fuelwood. To replace the future use of cow dung as fuel by fuelwood would require an additional annual production 1/ This was calculated by multiplying the expected population growth from 1978 t the year 2000, by the conswn1ption level (1978) per capita 0.21 la.  - 16 - of 11.1 million m3.21 In order to provide fuelwood to replace the cow dung for an increased population by the 3year 2,000 would require an