Document of The World Bank FOR OFFICIAL USE ONLY Report No: 27881 IMPLEMENTATION COMPLETION REPORT (IDA-31860) ON A CREDIT IN THE AMOUNT OF SDR 1.5 MILLION (US$2.0 MILLION EQUIVALENT) TO THE LAO PEOPLE'S DEMOCRATIC REPUBLIC FOR A DISTRICT UPLAND DEVELOPMENT AND CONSERVATION PROJECT March 25, 2004 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 25, 2004) Currency Unit = Kip Kip 1 = US$ .00012 US$ 1 = Kip 8,126.30 FISCAL YEAR Government October 1 - September 30 IDA July 1 - June 30 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy DAFO District Agriculture and Forestry Office DCA Development Credit Agreement DOF Department of Forestry ECRU Empowerment of Communities in Remote Upland Areas Project GoL Government of Lao People's Democratic Republic ICR Implementation Completion Report IDA International Development Association IUCN The World Conservation Union JSDF Japan Social Development Fund LFA Land and Forest Allocation Lao PDR Lao People's Democratic Republic LIL Learning and Innovation Loan M&E Monitoring and Evaluation NBCA National Biodiversity Conservation Area NFW Non-formal Education Worker NTFP Non-Timber Forest Product PAD Project Appraisal Document PAFO Provincial Agriculture and Forestry Office PCD Project Concept Document PID Project Information Document PIM Project Implementation Manual TA Technical Assistance TBA Traditional Birth Attendant QAG Quality Assurance Group QER Quality at Entry Review QSA5 Quality of Supervision Assessment VCMU Village Conservation Monitoring Unit VDFs Village Development Facilitators VHW Village Health Worker WMA Watershed Management Authority Vice President: Jemal-ud-din Kassum, EAPVP Country Director: Ian Porter, EACTF Sector Director: Mark D. Wilson, EASRD Task Manager: Susan Shen, EASRD LAO PEOPLE'S DEMOCRATIC REPUBLIC District Upland Development and Conservation Project CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 10 6. Sustainability 11 7. Bank and Borrower Performance 13 8. Lessons Learned 14 9. Partner Comments 15 10. Additional Information 16 Annex 1. Key Performance Indicators/Log Frame Matrix 17 Annex 2. Project Costs and Financing 19 Annex 3. Economic Costs and Benefits 21 Annex 4. Bank Inputs 22 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 24 Annex 6. Ratings of Bank and Borrower Performance 25 Annex 7. List of Supporting Documents 26 Annex 8. Government's Summary Report 28 Project ID: P059305 Project Name: District Upland Development and Conservation Project Team Leader: Susan S. Shen TL Unit: EASRD ICR Type: Core ICR Report Date: April 13, 2004 1. Project Data Name: District Upland Development and Conservation L/C/TF Number: IDA-31860 Project Country/Department: LAO PEOPLE'S DEMOCRATIC REPUBLIC Region: East Asia and Pacific Region Sector/subsector: General agriculture, fishing and forestry sector (40%); Other social services (27%); Sub-national government administration (27%); Health (3%); General education sector (3%) Theme: Biodiversity (P); Other rural development (P); Participation and civic engagement (P); Environmental policies and institutions (S) KEY DATES Original Revised/Actual PCD: 09/14/1998 Effective: 01/28/2000 01/28/2000 Appraisal: 01/08/1999 MTR: Approval: 03/17/1999 Closing: 09/30/2002 09/30/2003 Borrower/Implementing Agency: Government of Lao People's Democratic Republic/Government of Khammouane Province; Government of Lao People's Democratic Republic/Government of Nakai District Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Jean-Michel Severino Country Director: Ian C. Porter Ngozi N. Okonjo-Iweala Sector Director: Mark D. Wilson Geoffrey Fox Team Leader at ICR: Susan S. Shen Susan Shen ICR Primary Author: Lars C. Lund 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 3.1.1 The development objective of the project was the adoption of more intensified agricultural practices by farmers in the pilot areas to improve the livelihoods of local communities while conserving the biodiversity of a high-priority protected area. 3.1.2 The objective was and continues to be very relevant to the country and the rural sector. The communities involved are recognized as the poorest in the country and the conservation of biodiversity is intimately linked with the welfare of these communities. The objective is particularly relevant for conservation because the project is located within a National Biodiversity Conservation Area (NBCA) that is considered to be of great significance for global biodiversity. This area also contains significant cultural diversity; that is, the area consists of around 5,000 people of various ethnic groups living in 32 villages speaking 28 languages in four major language families. Most of them face severe poverty, expanding populations, and deterioration of their resource base. Their main response to this has been further reliance on forest products through expanding swidden agriculture and collecting wildlife and forest products for cash income. This expansion of swidden and increasing demand on the natural resources could compromise the biodiversity of the NBCA thus posing tremendous challenge to sustainable conservation and development. 3.1.3 The objective was consistent with the priorities of the Country Assistance Strategy (CAS) of poverty reduction and environmental protection. It was also consistent with the policies of the Government of Lao (GoL) outlined in the Prime Ministerial Decree No.164 (1993) to establish the NBCA and with the rural development programs that were established to counter the increasing loss of natural resources. 3.1.4 In pursuit of the development objective, the project was designed to determine whether and how: (a) available or locally-developed agricultural technologies and practices could be adapted to local conditions and accepted by farmers in the pilot villages; (b) these practices, combined with conservation awareness, provide sufficient incentives to villagers to reduce or halt current shifting cultivation practices; (c) effective local organizational arrangements could be strengthened to deliver appropriate and feasible upland poverty alleviation programs linked to conservation; and (d) the developed decentralized, locally-based practices are likely to be replicable to other sites. The design built on lessons learned during preceding IUCN-implemented activities in one of the villages in the project area which focused on rice cultivation to reduce reliance on shifting cultivation. One of the three villages was already involved in lowland rice cultivation as a result of these activities. It was felt that reliable improvement of swidden productivty could not be achieved during the three year period of the project. 3.1.5 The validation of the above set of hypotheses continues to be relevant in providing timely inputs into: (a) the implementation of the government's new rural development programs; (b) the proposed longer-term engagement of the International Development Association (IDA) in rural poverty alleviation and natural resources management; and (c) other donor-funded programs addressing natural resources development and conservation in Lao PDR. 3.2 Revised Objective: 3.2.1 The original objective was not revised, nor were the four basic hypotheses to be tested by the Learning and Innovation Loan (LIL). - 2 - 3.3 Original Components: 3.3.1 The project design contained four components. The costs presented here included physical and price contingencies. A. Agriculture Support Component (US$0.7 million, 31.1 percent of total cost estimate at appraisal; actual expenditures US$0.73 million). 3.3.2 Focusing on the three pilot villages, this component was designed: (a) to increase food security through the provision of information and the development of simple technologies to test, demonstrate, improve, and intensify production of paddy rice and supplementary food derived from home gardens; and (b) to domesticate Non-Timber Forest Products (NTFP). B. Social Support Component (US$0.17 million, 7.6 percent of total cost estimate at appraisal; actual expenditures US$0.19 million). 3.3.3 This component was designed to improve the level of basic health and education services throughout the three upper zones (or sub-watersheds) of the NBCA. The health sub-component aimed at raising awareness for personal, family and environmental hygiene and at the provision of basic health facilities and supplies. The education sub-component focused on primary education for children and non-formal education for adults to provide basic literacy and numeracy, especially for women. It was also designed to provide additional education facilities and supplies for children. C. Conservation Support and Awareness Component (US$0.26 million, 11.6 percent of total cost estimate at appraisal; actual expenditures US$0.27 million). 3.3.4 Focusing on the three pilot villages, this component was designed to elicit the active participation of the villagers in the sustainable management, use and protection of biodiversity. The emphasis was placed on participatory processes to develop a village land-use and resource-use plan: (a) to increase community awareness of the constraints and opportunities of the natural resource base; and (b) to promote village participation in protection and monitoring of valuable biodiversity within their village administrative and spiritual territory. 3.3.5 Conservation support and awareness-raising was to be implemented through three sub-components: (a) land- and resource-use planning; (b) awareness-raising; and (c) patrolling and monitoring. A participatory approach was used to develop the plan which also served to raise awareness. The component was to reveal to the villagers both the opportunities for and constraints to the continued exploitation of the natural resource base, and to reconcile the long-term biodiversity conservation objective of the NBCA with the basic needs of the villages. Lastly, the project was to provide training in patrolling and monitoring and field kits for the monitoring units, and to develop simple monitoring forms. D. Institutional Strengthening and Monitoring & Evaluation Component (US$1.12 million, 49.8 percent of total cost estimate at appraisal; actual expenditures US$1.06 million). 3.3.6 This component was designed to improve the management and technical skills of staff to implement activities at the provincial, district and village levels. It was also intended to test: (a) whether the current administrative implementation mechanism and decentralization process were enhancing the delivery of services to villagers; and (b) the extent to which village organizations had the capacity to absorb these - 3 - services. A simple and practical monitoring and evaluation (M&E) system was to be established to ensure timely qualitative and quantitative feedback on project implementation to make needed corrections. In addition, regular meetings at the village, district and provincial level were to be organized to ensure that implementation experience and lessons were documented and disseminated and considered for application in other programs by the government's rural development committees at various levels. 3.3.7 The NBCA addressed by the project covers three sub-watersheds (zones) of the Nam Theun watershed area with 32 villages inhabited by several indigenous ethnic minority groups. The project design chose three pilot villages for the Agriculture Support component, one from each watershed; fifteen villages for the Social Support component; and six villages for the Conservation Support and Awareness component. These villages are remote, lying between one and two and a half days of travel (by boat and walking) from the district town of Nakai. At the start of the project, Nakai itself was a day's travel by car from the provincial capital from where GoL managed the project (post-decentralization initiative), although the journey now requires only about three hours by car. The district that covers the project area has three more sub-watersheds outside the project area, which are also remote but in a different direction of travel from Nakai. 3.4 Revised Components: 3.4.1 While no changes were made to the outputs sought from the four components, the delivery mechanism of the Agriculture Support component was recast. The component performed poorly during the first year of implementation. Although the original support measures were identified in a participatory manner by the communities, when it came to implementation the better-off villagers were receiving the bulk of the gains. Specific activities (such as land clearing for paddy fields) improved food production only for those who owned potential paddy land, as did the creation of small irrigation canals. Typically, potential paddy land is near the village and controlled by the more prosperous households. To reach the poorer households and to bring equity to the support mechanism and distribution of benefits, the project introduced a "Household Grant" scheme with an allocation of US$700 for each family. With this grant, each household could finance its individual choices for agricultural and livelihood improvements from a menu of activities and items. As each household received the same value of support, equity was restored and participation improved greatly. 3.4.2 There was another change in the delivery mechanism. During project preparation it had been envisaged that in each of the three pilot villages a field extension team, consisting of government employees (with support from a national consultant acting as a village development facilitator - VDF), would be established. Technical input would be provided by the Provincial and District Agriculture and Forestry Offices (PAFO/DAFO) staff with expertise in forestry and agriculture. However, during implementation PAFO/DAFO staff were quite unwilling to stay in these remote villages because of the loss of opportunity for off-the-job income-generating activities. This made it necessary, after a year of slow and inadequate progress, to rely more on the VDFs and to strengthen the direct provision of agricultural and conservation support to the villagers. 3.4.3 The overall project design, particularly with the recasting of the Agriculture Support component, was appropriate to reach the objective of the project. Components A and C addressed both parts of the project objective directly (improving the livelihoods of local communities and conserving the biodiversity of a high-priority protected area) while components B and D were designed to support the objective indirectly. The provision of services under the Social Support component was designed to improve basic literacy and numeracy skills of the villagers, especially women, permitting them to participate in planning and implementation of local social and development initiatives which could solve local problems. Such skills - 4 - could also help them with market transactions. The component also addressed health issues, an important factor for villagers, which often prevent them from timely and adequate work on their farms and thereby contribute to further risks and poverty. The project experience shows that most of the planned activities within each component worked towards the improvement of local communities' livelihoods while supporting conservation. 3.4.4 With the benefit of hindsight, the main weakness in project design was the capacity building of PAFO and DAFO. Based on discussions with a few leaders, the project design had assumed that the staff of PAFO and DAFO would be eager to participate in the project. Unfortunately, too many of them found being posted in a remote location to be a "punishment" and, in addition, any travel out of the district town became an additional burden of forgone income. The technical training was helpful because with the training provided, the VDFs were able to help the villagers on the Agriculture Support component quite effectively. Moreover, staff of the Education and Health departments did use the opportunity offered by the project. If the needs and incentives of PAFO and DAFO staff had been assessed more fully during project preparation, the impact might have been greater. 3.5 Quality at Entry: 3.5.1 The project's Quality at Entry is rated as satisfactory. The development objective was consistent with the CAS priorities for poverty reduction and environmental protection and with government's policies for NBCAs. The project design correctly used the learning of inter-connectivity of livelihood, health and education, and environmental degradation from the World Conservation Union (IUCN) pilot project and integrated conservation and development projects elsewhere in the Asia region. The project's design was in full consistency with the Bank's safeguard policies. 3.5.2 This was the first LIL in the East Asia and Pacific Region; the design was well-articulated and followed the LIL guidelines. The Project Appraisal Document (PAD) identified the risks well, except for the availability and interest of local counterpart staff to work in the field with the project. Although the project was ready for implementation at the time of IDA Board approval (that is, at entry, project management, procurement and financial management arrangements were in place and satisfactory), the provincial government staff was inexperienced and required more start-up time. 3.5.3 The project underwent two Quality of Supervision Assessments (QSA4 and QSA5) and was rated satisfactory by both of them. The first QSA was carried out in September 2000, less than one year after loan effectiveness. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: 4.1.1 The project outcome is rated as satisfactory. The project's development objective was substantially achieved. The project had a positive, significant and visible impact in the pilot villages and on their surrounding environment. The availability of food in the villages has increased while only a marginal expansion of the area of shifting cultivation has been observed. Interim indicators also point to an increasing presence of wildlife in the project area. The project villages also have access to functioning schools and dispensaries with teachers and health workers in place. The project demonstrated that available agricultural technologies and practices could be adapted to local conditions and accepted by farmers in the pilot villages, and that these practices, combined with conservation awareness, have provided at least initial incentives to villagers to stabilize current shifting cultivation practices. - 5 - 4.1.2 The project experienced a slow start up, in part because the provincial government/administration was handling an IDA-financed project directly for the first time. In addition, the Project Director appointed initially by the province did not have the requisite skills to manage a complex project. The delay in start-up resulted in an additional year being required for the completion of the project. However, even with the delay, the project was able to demonstrate with a modest outlay that effective local organizational arrangements could be developed to deliver appropriate and feasible upland poverty alleviation programs linked to conservation. It made corrections after one year and the local arrangements finally developed relied more on villagers. Such arrangements developed during the project appear to be replicable to other sites. 4.2 Outputs by components: Agriculture Support Component 4.2.1 The achievement of the outputs of the component is rated as satisfactory. This component tested appropriate technologies to reduce reliance on shifting cultivation and unsustainable forest exploitation. These trials were able to provide more stable and productive farming systems. Although project design included a range of intensification activities, actual implementation focused on improving access to paddy through wet rice cultivation. Consequently, wet rice cultivation was improved, leading to a doubling of the annual rice cropping area. The component also improved home gardens, increased the area of settled vegetable and fruit tree gardens, and stabilized the areas cultivated in second-choice staple foods (maize and cassava). Planting of perennial crops (e.g., NTFPs) on fallow land was discontinued because the cost of transport from this remote area for commercial purposes was prohibitive. The "farmer exchange day" concept was not pursued because it was not well received. These did not represent significant changes to the component. The component supported some activities, based on demand from farmers, such as the provision of buffaloes, that had not been envisaged in the original design and which had the effect of increasing the capital assets of the poorest. It is noteworthy that the buffalo population did not increase in the NBCA because they were purchased from villages in the watershed area, consistent with the conservation objective of the project. Out of 160 households in the three pilot villages, 150 households (94 percent) engaged in demonstrations of different types. 4.2.2 In all three pilot villages, the process of support started with a village resource-mapping exercise using participatory appraisal tools and conducted jointly with the land- and resource-use planning exercise of the Conservation Support and Awareness component. The participatory appraisals led to the identification and formation of farmer interest groups and the selection of farmers for initial demonstration trials. However, when it came to building the capacity of district and provincial government agriculture staff through training, the performance fell short of expectations. As mentioned above (Section 3.4 Revised Components), based on early encounters with key government staff during preparation, the design process for the project had misjudged the nature of incentives and the capacity among agriculture and forestry extension staff. 4.2.3 To redress matters quickly, the project started to provide support to the farmers through the VDFs. The VDFs, who were originally hired to facilitate the community decision-making processes and to coordinate with PAFO/DAFO staff, now took on a more direct role in providing extension services and training to selected farmers to carry out demonstration trials. The farmers consulted the VDFs regarding their trials and the VDFs, in turn, were supported through international technical assistance (TA). 4.2.4 The second revision to the original design, the Household Grant scheme (Section 3.4 Revised - 6 - Components), also functioned satisfactorily. Each household took responsibility for how the project was to support its needs and households received equal project benefits. This led to greater satisfaction and confidence among villagers, as they felt greater equity in the project. The project staff, in turn, shifted from their role of allocating sub-project benefits to a role of a consultant helping the villagers to use their allocations. Overall, the households chose to spend on agricultural support 65 percent of their funds (40 percent on rice cultivation), followed by housing (27 percent), other items such as clothes (three percent), trading including sewing/weaving machines (three percent), and transport (one percent). Social Support Component 4.2.5 The achievement of the outputs of the component is rated as satisfactory. The Health and Education sub-components both achieved satisfactory results with limited (but well-targeted) support from the project. Focused assistance for training and capacity building also achieved very good results. 4.2.6 Health sub-component. No general training program was organized for the Health Department because it considered that its staff was trained adequately to implement and achieve the targets of the project. As planned, six district nurses were successfully trained before they were sent to the three pilot village dispensaries. The village health volunteers training for Village Health Workers (VHW) and Traditional Birth Attendants (TBA) was successfully organized in several sessions by the provincial and district medical staff. Twenty-eight VHWs and twenty-two TBAs were trained. In general, those volunteers met the villagers' satisfaction in the improvement of health conditions. Fifteen village medical kits were established and were kept reasonably replenished (57 percent of the target of 60 percent). Training on data collection was also proposed for project M&E purposes, but was not systematically followed up by the health authorities. As a result, quantitative data collection remained weak but qualitative interviews confirmed the appreciation of the improved services now available in the area. Awareness-raising of personal, family and environmental hygiene was also part of the services delivered to the villages. Support was provided through training, including activities such as village volunteers and nurses general training, special training on sanitation and environment for the new village nurses and district staff, as well as regular cleaning of villages. 4.2.7 Education sub-component. This sub-component provided additional basic primary education facilities, including the construction or rehabilitation of basic primary schools and supplying them with basic teaching equipment. The project built, staffed, furnished and supplied six schools in the target area. The Education Department also considered that its staff was trained adequately to implement and achieve the targets of the project, so no general training for existing teachers was organized. To solve the problem of maintaining teachers from the public sector in such remote areas, the project arranged training for seventeen young villagers chosen by the villages. While they were being trained, the project hired nine temporary teachers from the private sector to teach in the villages. By September 2003, these trained villagers started work as government-employed teachers in their home villages where they are committed to stay for three to five years. During the project period, overall school attendance among children between the ages of 6 and 14 rose from 33 percent to 89 percent (and from 24 to 83 percent for girls). 4.2.8 In addition to the effort on primary education, the Education Department recruited, trained and equipped 30 non-formal education workers (NFW) - two per village - with project financing. They work on adult literacy campaigns for about four months per year. As a result of their work, a significant number of villagers learned to read, write and calculate. The number of persons between the ages of 15 and 45 who can read and write increased from 48 percent to 68 percent of the overall population (and from 32 to 40 percent for women). - 7 - Conservation Support and Awareness Component 4.2.9 The achievement of the outputs of the component is rated as satisfactory. The component simultaneously addressed: (a) land use and resource planning; (b) awareness-raising; and (c) patrolling and monitoring. 4.2.10 Land use and resource planning was implemented through support of the Land and Forest Allocation (LFA) process as it is implemented all over Lao PDR. Staff training in the LFA process has been conducted in Khammouane Province by PAFO since 1994. The most visible signs of the LFA process are the signboards with the land-use plan maps. In addition to the required maps, the project supported the production of similar three-dimensional models. Maps and models are displayed in the villages. They show demarcations, and indicate where trails cross into other land use zones. The planned activities have been successfully implemented except for official land registration, which had been completed for more than 100 (out of 160) interested households. 4.2.11 However, land use and resource planning could have been integrated better with both the project's Agriculture Support component (more detailed planning for the areas designated for agricultural use) and the Social Support component (awareness-raising/education). The Agriculture Support component could have planned for the use of all the villages' agricultural area rather than only the land on level terrain, and thereby would have helped decrease the pressure for expanding shifting cultivation outside the designated agricultural areas. Likewise, the Awareness sub-component and Education sub-component could have better linked more of their activities to the land- and resource-use planning, thereby ensuring basic understanding of the land-use maps. However, these gaps did not affect the overall effectiveness of the project. 4.2.12 On the awareness-raising aspects, the project conducted workshops on natural resources management and conservation in the pilot villages, in Nakai District and in Thakhek. Most workshop and training activities were meant as "training of trainers" for government staff and selected villagers (e.g., the formal and non-formal teachers who are sometimes referred to as community awareness volunteers). In addition, the intensive training of Village Conservation Monitoring Unit (VCMU) members for patrolling and monitoring had an important impact on conservation awareness, as the VCMU members were able to discuss their patrol findings with other villagers in village meetings. 4.2.13 Lastly, on direct patrolling and monitoring aspects, six VCMUs (doubling the project target) were established, equipped, and trained for patrolling and monitoring of wildlife and human impacts on the NBCA. Each VCMU consists of six villagers. NBCA staff are responsible for the supervision of the VCMU and occasionally joined the patrols towards the end of the project. This made it necessary to appoint a VCMU-Facilitator to ensure better permanent follow-up of the VCMU work. Trained by international conservation TA, the VCMUs patrolled for more than 1,500 days during the project's life and walked more than 13,000 km within the forests of the project area. A very large amount of relevant monitoring data was collected. The recorded and widely-acknowledged increase in wildlife numbers and the reduction in the use of traps and weapons may be the results of their intensive patrolling and monitoring effort. 4.2.14 As in the Education and Health sub-components, the project showed that villagers can play a vital role in conservation tasks in remote areas where public employees are unavailable or are unwilling to be posted. The VCMUs can take responsibility for patrolling and monitoring if provided with training, supervision, equipment and allowances. It is unlikely that a similarly strong patrolling and monitoring effort will be needed for all villages. The project equipped NBCA staff and VCMU members as planned - 8 - with equipment such as raincoats, boots, backpacks, tents and sleeping bags. The results of the patrolling and monitoring indicate that unsustainable hunting, trapping and collection of wildlife declined during the project implementation. 4.2.15 The expansion of shifting cultivation into primary forest is a problem in the area and represents the greatest danger to the habitats and biodiversity of the NBCA. One of the Key Impact/Outcome indicators for the project was defined as "No expansion of net area under slash and burn cultivation in the pilot villages." As indicated in Section 4.1.1, there is some indication that shifting cultivation appears to be stabilizing in the project area. Institutional Strengthening, Monitoring and Evaluation Component 4.2.16 The achievement of the outputs of the component is rated overall as satisfactory. Apart from ensuring the coordination and management of the project, which had an important demonstration effect, the component's main outputs were training, TA and detailed M&E of the project. 4.2.17 The design of the project had over-estimated the institutional incentives for and motivation of PAFO and DAFO staff in project participation, and the project was unable to improve their performance through training. In addition, the high turnover of staff worked against the lasting and successful dissemination of knowledge. Further, the general attitudes of government staff towards highland ethnic groups as being backward contributed to their poor performance. Training of staff in these institutions does not appear to have increased the capacity of staff to address similar issues elsewhere. Despite the poor performance of PAFO and DAFO, the component was able to contribute towards institutional strengthening through capacity building in other government agencies and at the village level. 4.2.18 Training and capacity building in the social sector was more successful. The project followed existing government approaches and programs. Village health service volunteers, midwives, nurses and teachers all showed considerable enthusiasm to address the issues of the villages. The Health and Education Departments now enjoy the services of trained villagers who have been recruited as government employed teachers. 4.2.19 TA provided under the component was also satisfactory. There was some delay in initiating the process of hiring and engaging international TA. However, once it was set up, the project was able to provide adequate TA for various activities although more time could have been allocated to the anthropologist. For the Agriculture Support component, the TA was helpful in the creation of the field-level teams which took the lead in helping the farmers adapt to various farming systems. However, the farming systems TA focused primarily on introducing and improving wet rice cultivation, which prevented a concerted effort on other, more adaptive, options for improving food security. Perhaps it is in conservation M&E where the TA was most successful; here the villagers learned directly from the international TA how to monitor biodiversity in the field. 4.2.20 The component's provision of M&E activities is rated as satisfactory. Monitoring was done at three levels: the delivery of inputs by the project activities, outputs including the use of project goods/services by villagers, and the extent to which project objectives have been achieved (outcome/impact). However, the M&E system became operational only in the second year of the project after the collection of baseline information took place. Since implementation of the main project activities was delayed, the late start of the M&E system was not a major problem. In the key area of conservation management, the system for data collection and analysis has been satisfactory. The general information on wildlife and habitat is being fed back into village decisions on land-use issues. On monitoring the provision - 9 - of more intensified agricultural practices by farmers, a system for rice yield monitoring was designed and established by the international farming systems and agro-forestry specialist. The system was well suited to assess the on-farm trials for paddy production improvements. However, the final impact evaluation was not undertaken prior to project closing because of difficulties in physical access to villages during the rainy season. The project did undertake a well-attended "lessons learned" workshop to disseminate the results more widely. 4.3 Net Present Value/Economic rate of return: 4.3.1 No economic analysis of the project or of any of its components was carried out at appraisal. The intention of the project was to test a low-cost method of increasing incomes and food security, providing minimal social services and protecting the conservation area. It therefore maximized the use of existing institutions and local TA, and operated only in a small number of pilot villages. The design was diametrically-opposed to traditional approaches (of moving people, consolidating settlements, regulatory management) but although it was a low-cost approach there is not sufficient data to establish whether it was de facto the least-cost solution. 4.3.2 In the PAD, it was expected that data would be collected during implementation to permit the preparation of farm budgets as the basis for cost-benefit analysis to be carried out for a successor project on a large scale. 4.4 Financial rate of return: 4.4.1 Because it was not applicable, no financial analysis of the project or of any of its components or activities was carried out at appraisal. The project had no revenue-generating activities; its outputs by component were designed to provide support to villagers to generate a series of benefits few of which were quantifiable. 4.5 Institutional development impact: 4.5.1 This was the first project to have a Special Account established in the province instead of being managed from Vientiane, the capital. The provincial government office now has a hands-on understanding of how to manage IDA-financed projects. They have gained experience on how to review annual work plans, financial plans and procurement schedules. 4.5.2 However, as indicated earlier, capacity building in PAFO and DAFO remained elusive. Within these institutions, the knowledge transferred remains with the individual who received the training and may be applied at different locations and in different contexts. However, to have systemic effect, new initiatives would have to be undertaken. On agricultural support, the actual "institutional" beneficiaries from the TA were the VDFs and the villagers from whom other villages nearby will benefit. Similarly, on conservation support, the institutional changes have come from the use of detailed monitoring systems and procedural changes undertaken by the villagers through the VCMUs. 4.5.3 In the Social Support component, the project has made an impact within the public institutions at the provincial and district levels, which were already doing a reasonably good job. Both the Education and the Health Departments were already tuned to provide their services to the villagers, and this project supported their work with the necessary financial resources. 5. Major Factors Affecting Implementation and Outcome - 10 - 5.1 Factors outside the control of government or implementing agency: 5.1.1 There were no major exogenous factors that adversely affected the implementation of the project or its outcome. Because of previous negative interactions of the villages with outsiders, the project faced initial skepticism and had to spend more time than anticipated to build confidence and achieve a satisfactory level of participation. Although implementation of activities was delayed, the outcome of the project was not seriously affected. 5.2 Factors generally subject to government control: 5.2.1 No major factors under government control adversely affected the implementation of the project. The Khammouane Provincial Government supported the project well with its active involvement through the project steering committee, timely provision of counterpart funds; and responsiveness to requested actions, which allowed the project to change appropriately during implementation. While Central Government did not have a significant role in implementation, it did support and facilitate the decentralization process by agreeing to allow management of the Special Account by the province. 5.3 Factors generally subject to implementing agency control: 5.3.1 The implementation of the project was affected both positively and negatively by the performance of the implementing agencies. As one of the first projects to work directly with the province, it took several months until working relations and procedures could be well understood by all of the implementing entities. The development of an operational manual and code of conduct for staff helped to clarify roles and responsibilities. The participation of government departments was mixed, with the Health and Education Departments being very good but with the contribution of both PAFO and DAFO being limited, mainly as a result of a lack of staff motivation. This problem was solved by a decision to use VDFs to work directly with the villagers. The replacement of the first Project Director improved the working environment of the Project Implementation Unit and facilitated implementation (particularly procurement). 5.4 Costs and financing: 5.4.1 The total project cost projected at appraisal was US$ 2.25 million and project records show that this was the actual cost of the project (see Annex 2). Small adjustments were made between the projected and actual component allocations as a result of the project implementation being extended by one year beyond the originally-estimated three-year period. The category of incremental operating costs was increased, but expenditures on civil works decreased significantly. Although the project records show project expenditures from the loan at US$2.0 million, the disbursement records show that the actual disbursed amount equivalent to SDR 1.5 million was US$1.964 million. 6. Sustainability 6.1 Rationale for sustainability rating: 6.1.1 Overall, the project's sustainability is rated as likely. The rating is based mainly on the likelihood of the various interventions continuing in the pilot villages. Sustainability is likely because the villagers were involved in project activities and because most of these activities can be continued with very modest - 11 - financial inputs. Apart from the government's own budget, future interventions such as the Empowerment of Communities in Remote Upland Areas Project (ECRU) funded through the Japan Social Development Fund (JSDF) and the recently-established Watershed Management Authority (WMA) are expected to provide some of the required resources. 6.1.2 During appraisal, two important risks were identified: (a) potential external threats to the area and its biodiversity were felt to be posed by incursions for the purpose of illegal hunting; and (b) potential in-migration into existing villages in the project area was considered a threat to the achievement of the development objective. In practice, neither of these threats materialized because of the implementation of the risk minimization measures identified in the PAD (strengthened patrolling and monitoring, and agreement on administration boundaries and land/resource use plans, respectively). 6.1.3 In the Agricultural Support component, the improvement and intensification of paddy rice production will probably continue, since beneficiaries have indicated their willingness to spend some 67% household grant funds on agriculture (40% on expanding rice cultivation) and because difficulties with engineering aspects of water supply were overcome during the project. Areas under shifting cultivation will be stabilized, and remain an important basis for stable food, although with expanding populations there will inevitably be pressure to reduce rotation lengths and thus the stability of the system. Supplementary food derived from home gardens will support the continuation of vegetable and fruit growing. The sustainability of rice and home garden activities is highly likely. However, despite their direct and indirect contributions to improved livelihoods in the villages, vaccination campaigns for animals may cease. The activity is dependent on a cold chain for vaccinations supplied through the PAFO/DAFO. About 30 percent of the Household Grants went into housing, and villagers are proud of the improved housing conditions and improved hygiene of their villages. Sustainability of these positive changes is likely. 6.1.4 In the Social Support component, the village volunteers in the fifteen villages are able to continue their activities with limited support from the district officers. These activities relate to basic health care, support to pregnant women and new-born babies, sanitation, and primary and adult education. There will also be extended support to the revolving funds for medicine until the villagers' economic status is further improved. Awareness-raising of personal, family and environmental hygiene is expected to be continued by village nurses, NFWs, TBAs and VHWs. The continuation of services delivery at dispensaries is considerably dependant on village volunteers and nurses, and therefore likely. 6.1.5 The continuation of education services is in part dependant on village NFWs and, thus, on the incentives provided by the Department of Education. At the end of the project, there were long delays in the delivery of these incentives. If this is not improved, this particular activity could suffer. However, the Department did recruit the village teachers trained by the project as government employees and the availability of teachers is assured for the next three to five years. Lastly, the school facilities were built with inexpensive local materials and local labor and are likely to be maintained by the villagers and the parents' committees. 6.1.6 In the Conservation Support and Awareness component, conservation awareness-raising through adult and primary education is likely to be continued by NFWs and teachers. Regarding protection and monitoring of valuable biodiversity, considering the VCMUs' capacities, performance and permanence in the zones, it is very likely that these groups will continue to play an important role in conservation, provided that payment of the small allowances are continued by the WMA. 6.1.7 In the Institutional Strengthening and Monitoring & Evaluation component, the various - 12 - implementing agencies are expected to coordinate and carry out their fiduciary responsibilities within the framework and standard of the government. Training of PAFO and DAFO staff is not expected to improve until issues of staff outlook and turnover are comprehensively addressed (which was not possible during the course of this LIL). The project has, however, demonstrated the viability of a technical assistance program driven by local consultants with upland backgrounds. Training and capacity-building in the social sector have a much better prospect within the existing culture of those institutions. Village health service volunteers, midwifes, nurses and teachers all are expected to improve their professional capabilities from the opportunities provided within their organizations. On having access to TA, the new projects envisaged are expected to provide support particularly in the area of M&E of biodiversity. The following section on transition arrangements provides further clarification on prospective institutional arrangements. 6.2 Transition arrangement to regular operations: 6.2.1 The activities in the Social Support component have been included in the continuing activities of the respective Departments. As mentioned above, village volunteers in the fifteen villages under the project will receive support from the district officers. In addition, the required resources for extension to seventeen new villages in the three sub-watershed zones are already secured through the ECRU project, which will supply mobile units to increase the technical knowledge of volunteers and villagers in all thirty-two villages in this upper watershed area. The provision of training to provincial and district medical staff, volunteer VHWs and TBAs will continue. The extension of activities in the Education sub-component to new villages in the same zones will also be supported under the ECRU project, which has set up its office in the district with the Department of Education. This will further strengthen their involvement and commitment, and will increase the chances for long-term sustainability. Provision of additional basic primary education facilities, including construction or rehabilitation of basic primary schools and the provision of supplies, will also continue under the ECRU project. 6.2.2 For some of the new investments, such as replication of activities in other villages, extension of new infrastructure (irrigation, water supply, latrines, schools, village accesses, etc.), and continuation of many of the existing activities in the project area, additional resources are expected to come from the newly-established WMA. This includes continuation and expansion of conservation activities. At the village level, expansion to new villages will be a part of the ECRU project. The continuation of the activities at district and province levels is expected to be supported by the WMA. The completion of the land allocation process in the pilot villages and its expansion to other villages is dependent on the Department's motivation and on villagers' interest, and these may not materialize if the villagers are apprehensive of future land-related tax burden. 7. Bank and Borrower Performance Bank 7.1 Lending: 7.1.1 The Bank's performance during identification, preparation and appraisal of the project is rated as satisfactory. The project provided a suitable response to the complexity of problems to be addressed in the Laotian context. It articulated a very relevant hypothesis that lies at the core of many integrated conservation and development interventions. The preparation team was successful in urging the government to decentralize activities to address conservation and poverty. To save time during preparation, the team correctly established the design based on studies carried out as part of Nam Theun II and projects being implemented by other institutions (such as the IUCN). However, this reliance also led to under-estimation of the needs of PAFO and DAFO. The IUCN effort had identified many of the - 13 - requirements for success but was not sufficient when it came to the design of the delivery of agriculture support through the public institutions. Changes in design later adjusted to this. 7.2 Supervision: 7.2.1 The Bank's performance during the implementation of the project is rated as satisfactory. The team was diligent in its pursuit of the project objectives and surmounted initial project delays and skepticism from the villagers. Project design was carefully adjusted to address the initial lack of progress in the Agriculture Support component. Consequently, more supervision missions were carried out than had been originally planned and the life of the project had to be extended. The timely reaction to identify weaknesses of some of the project's design features enabled comparatively smooth adaptation of project activities. 7.2.2 The Borrower has indicated its appreciation for the technical and managerial proficiency of the Bank's mission members. Clear and objective reports, including useful, pertinent and concrete recommendations aimed at helping the project management, were issued in a timely manner at the end of each mission. 7.3 Overall Bank performance: 7.3.1 The Bank's overall performance is rated as satisfactory. Borrower 7.4 Preparation: 7.4.1 The Borrower's performance during preparation is rated as satisfactory. The GoL worked closely with the Bank team from the initial planning phase throughout the project life. The government appreciated the innovation and learning nature of the project, and agreed to make available the needed counterpart funds in the amount of US$ 250,000 (in cash and in kind) for the project. 7.5 Government implementation performance: 7.5.1 The Government's implementation performance is rated as satisfactory. The Government's financial commitments under the project were usually met in full and on time. Extending the project life, including the reorganizing of the government's contribution, was arranged on time and in a satisfactory way, though it appears that the last tranche of disbursement of the Household Grants using counterpart funds to the villagers still has not been released by the project entity. This serious issue is being followed up by the Bank and provincial authorities. 7.6 Implementing Agency: 7.6.1 The performance of the implementing agencies is rated as satisfactory overall. The provincial and district implementing units had to overcome the challenges of following both Bank and government procedures in procurement and financial management, and this delayed initial project start-up. They also had to learn to be adaptable and make adjustments throughout the whole period of implementation to - 14 - achieve the development objective. During implementation, the implementing entities and government agencies complied satisfactorily with the legal covenants in the Development Credit Agreement. The PIU provided reports and necessary project information on a timely basis. 7.7 Overall Borrower performance: 7.7.1 The overall performance of the Borrower is rated as satisfactory. 8. Lessons Learned The key lessons learned from this project and use of the LIL are the following: 8.1 The project confirmed that conservation is linked intimately with the welfare of the communities and that interventions must address both. Addressing welfare and livelihood issues comprehensively is important for achieving conservation. Conservation requires participation from the villagers, and addressing their health and education needs establishes a basic level of trust that is not easy to establish when only issues of income, production or conservation are addressed. Villagers immediately appreciate the value of interventions in health and education, whereas the benefits from agricultural and livelihood support require time to establish credible and lasting benefits. 8.2 Two key assumptions came under scrutiny: (a) The linkage between food security and availability of paddy rice. The project found that: (i) a household that does not have sufficient rice for year-round consumption is not automatically food insecure, and (ii) not every poor family is best helped by providing it with wet rice or the means to produce it. In Lao's diverse socioeconomic and natural environment, interventions must be based on a clear understanding of the specific situation on the ground. This can be achieved either by a slow pace of project activities (i.e., learning while doing, with the option to adjust planning as activities move forward) or by gaining up-front understanding through studies. This project used both of these approaches; however, the studies were too general for operational purposes and the project relied more on previous experiences in the area and the adaptation and learning approach, which slowed implementation progress. Previous work carried out by IUCN in one of the pilot villages had largely focused on introduction of paddy. Therefore, the project managed only to a limited extent to move from a substitution approach of replacing shifting cultivation with sedentary paddy cultivation to a "livelihood" approach based on prevailing farming systems and the importance of swidden and household priorities. (b) The project also found that an in-depth analysis of public policies and institutions is required for project success, and that analysis of the problem of the beneficiaries alone will not suffice. In the absence of the former, working relations between the project and PAFO/DAFO remained weak. PAFO/DAFO expected the project to develop new approaches, but their weak structures down to village level prohibited any knowledge transfer through the intensive project TA. 8.3 The project developed a low-cost mechanism of effective local organization to strengthen delivery of poverty alleviation programs linked to conservation. This mechanism is able to address welfare and conservation issues in remote places where public services are limited and/or where public servants are reluctant to serve. Training villagers chosen by their own village is effective in providing social services. - 15 - Where teachers are unavailable in a remote area, villagers, have to be trained as teachers, and sustainability is achieved if the government commits to hire them in return for a commitment to serve for a minimum period of at least three to five years. When the needs of the villagers are highly differentiated, the control of what is to be financed must be passed on to the villagers and households. Participation in a community is enhanced if there is equity in the support provided. This project addressed both of these aspects through the Household Grants mechanism. 8.4 The LIL instrument itself proved to be valuable because of the ability to make key changes during implementation. However, the limits placed on the loan preparation period (six months) and the implementation period (three years) is too restrictive. Initiating sustainable changes in farming systems requires a long-term commitment of all stake-holders. 9. Partner Comments (a) Borrower/implementing agency: 9.1 We agree with the Implementation Completion Report and the assessment of the Bank. Throughout implementation of the project we gained a very valuable experience and lessons learned. Although the project met its development objectives and successful achievements were made during the project life, there were also weaknesses highlighted. 9.2 We would like to add some comments on the high turnover of PAFO/DAFO staff and the performance of teachers and nurses: (a) PAFO/DAFO staff fielding is found only in the first two years of the implementation period. Staff have been in their stations regularly since then. (b) Performance of teachers and nurses: compared to PAFO/DAFO staff, the teachers and nurses seem to carry out their jobs satisfactorily and missing their assignments had not been reported during the project life. The reason is that teachers and nurses are dedicated and well-known in isolated areas; only teachers and nurses have cooked on the ground with local villagers throughout the country for a period of time. For other line departments, especially the Agriculture and Forestry Department and the Conservation Service, working with rural communities is pioneering and takes time. 9.3 Considering that upland development and conservation is complex technologically, culturally and institutionally, we highly value all staff working in this project. Without them and all project-related partners and the participation of the local villagers, the project would never have been completed or met its development objectives. Considering that the project was a LIL and had average expectations in term of short-term development, we are able to say that this Project made more steady progress than others being implemented or completed in Laos. 9.4 For more details, please see Annex 8 for the full report of the Borrower. (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10. Additional Information - 16 - - 17 - Annex 1. Key Performance Indicators/Log Frame Matrix Main Outcomes Impact Indicators Baseline 2001 2002 The adoption of more intensified agricultural practices by upland farmers in pilot village Area of settled rainy season rice 37.5 34.4 47.4 (ha) % of Households engaged 53 57 61 Area of settled dry season rice (ha) 7.8 14.7 15.5 % of Households engaged 14 25 26 No village vegetable gardens 103 112 185 % of Households engaged 62 71 80 Increased literacy School attendance rate (6-14 years) 33.3 69.5 83.19 % Adult literacy rate (15-45 years) % 48 56.1 63.45 No expansion of net area under shifting cultivation Area of pure rice swidden (ha) 7.7 41.7 20.7 % of Households engaged 16 34 19 Area of mixed rice swidden (ha) 87 56.1 78.3 % of Households engaged 77 59 64 - 18 - Output Indicators Indicators End of Project Agriculture Support Number of farmers engaged in demonstrations Out of 160 households 150 (94 percent) of different types Village mobilization and resource mapping Done in all three pilot villages Social Support Number of village health volunteers trained 28 Trained Birth Attendants 22 Nurses 6 Village medical kits established 15 (57 percent replenished) Number of graduates from literacy courses 407(M=201;F=206) Number of graduates from numeracy courses N/A Non-Formal Education Worker 30 Teachers 17 Conservation Support and Awareness Land and resource use plans negotiated in the Done in the pilot villages three pilot villages and inlcluded in the village plan submitted by the Village Chief Institutional Strengthening and Monitoring & Evaluation At least 75 percent of field teams confident of All six Field Extension Teams (FET) are their ability to implement project activities confident. Delay or cancellation of activities due to delays In the last six months of field implementation of budget approval or release of funds some activities (exchange days) were cancelled and some (rice field extension, last mapping, buffaloes purchase and vaccination, medicine replenishment) delayed Inter-departmental issues quickly resolved by No interdepartmental issues but low provincial and district steering committees involvement of some departments - 19 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Agriculture 0.60 0.73 112.1 Social 0.13 0.19 153.6 Conservation 0.22 0.27 117.1 Institutional Strengthening and M&E 0.95 1.06 106.7 Total Baseline Cost 1.90 2.25 Physical Contingencies 0.19 Price Contingencies 0.16 Total Project Costs 2.25 2.25 Total Financing Required 2.25 2.25 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N.B.F. Total Cost Other 1. Works 0.00 0.00 0.06 0.00 0.06 (0.00) (0.00) (0.06) (0.00) (0.06) 2. Goods 0.00 0.00 0.28 0.00 0.28 (0.00) (0.00) (0.28) (0.00) (0.28) 3. Services 0.00 0.00 1.43 0.00 1.43 (0.00) (0.00) (1.43) (0.00) (1.43) 4. Miscellaneous 0.00 0.00 0.23 0.25 0.48 (0.00) (0.00) (0.23) (0.00) (0.23) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.00 0.00 2.00 0.25 2.25 (0.00) (0.00) (2.00) (0.00) (2.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N.B.F. Total Cost Other 1. Works 0.00 0.00 0.12 0.00 0.12 (0.00) (0.00) (0.04) (0.00) (0.04) 2. Goods 0.00 0.00 0.36 0.00 0.36 (0.00) (0.00) (0.33) (0.00) (0.33) 3. Services 0.00 0.00 1.43 0.00 1.43 - 20 - (0.00) (0.00) (1.43) (0.00) (1.43) 4. Miscellaneous 0.00 0.00 0.19 0.14 0.33 (0.00) (0.00) (0.19) (0.00) (0.19) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.00 0.00 2.10 0.14 2.24 (0.00) (0.00) (1.99) (0.00) (1.99) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate IDA Govt. CoF. IDA Govt. CoF. IDA Govt. CoF. Agriculture Support 0.60 0.10 0.65 0.08 108.3 80.0 Social Support 0.10 0.07 0.13 0.06 130.0 85.7 Conservation Support and 0.21 0.05 0.23 0.04 109.5 80.0 Awareness Institutional Strengthening 1.09 0.03 0.99 0.07 90.8 233.3 & Monitoring & Evaluation - 21 - Annex 3. Economic Costs and Benefits Not Applicable - 22 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Lending August 1, 1998 4 Task Team Leader; Sociologist; S S Agricultural Economist; Liaison Officer January 20, 1999 11 Task Team Leader; Liaison S S Officer; Sociologist; Financial Management Specialists (2); Procurement Specialist; Project Lawyer; Young Professioanl; Agricultural Economist; Peer Reviewers (2) Supervision 05/14/1999 4 Social Scientist; Liaison Officer; S S Program Assistant; Procurement Officer 12/01/1999 2 Task Team Leader; Institutional S S Specilaist 12/01/1999 3 Mission Leader; Institutional S S Specialist; Procurement Specialist 12/01/1999 2 Sociologist/Team Leader; S S Financial Management Assistant 06/23/2000 2 Team Leader/Ecologist; S S Procurement Assistant 08/18/2000 4 Social Scientist; Procurement S S Officer; Procurement Assistant; Financial Management Specialist 12/20/2000 6 Task Team Leader; Social S S Scientist; Country Representative; Procurement Officer; Procurement Assistant; Financial Management Specialist 12/20/2000 3 Team Leader; Institutional S S Apecialist; Procurement Specialist 09/28/2001 5 Task Team Leader; Institutional S S Specialist; Social Development Specialist; Procurement Officer; Procurement Assistant 02/22/2002 5 Task Team Leader; Resident S S Representative; Consultant; Program Assistant; Procurement Assistant 11/29/2002 4 Mission Leader/Social Scientist; S S - 23 - Financial Analyst; Procurement Assistant; Biodiversity/Environmental Specialist 04/24/2003 2 Team Leader; Social Scientist S S 06/16/2003 2 Team Leader; Social Scientist S S ICR 11/24/2003 5 Team Leader/Social S S Scientist; Agricultural Specialist; Biodiversity Specialist; Financial Management Specialist; Procurement Specialist (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Lending 33.75 148,467 Supervision 61.73 293,448 ICR 7.5 80,602 Total 102.98 522,517 - 24 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 25 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 26 - Annex 7. List of Supporting Documents Project Documents: Project Implementation Manual, February 1999 Agreed Minutes of Negotiations, February 1999 Project Appraisal Document, February 1999 Revised Project Information Document, March 1999 Development Credit Agreement, July 1999 Project Implementation Manual (revised), July 2002 Activity Achievements Report, May 2003 Lessons Learned Workshop materials, June 2003 Lessons Learned from the District Uplands Development and Conservation Project, Nakai-Nam Theun National Biodiversity Conservation Area, Lao PDR, October 2003 Implementation Completion Report - Working Draft prepared by the Technical Assistance, July 2003 Implementation Completion Report - by the Borrower (executive summary), October 2003 Semi-annual reports: Six months activity report, April 2003. Annual work plans: Work plan 3 - Annual activity report, November 2002 Work plan 4 - Annual activity report, October 2003 Monitoring and evaluation reports: Ongoing Monitoring and Evaluation Report, November 2002 Ongoing Evaluation Report, May 2003 Six months final evaluation report, June 2003 Technical assistance reports: Anthropologist Report, February 2001 Proposal to re-orient the field delivery mechanisms (household grants), March 2002 On Farm Rice yield monitoring - Dry season rice cropping 2001-2002 (Part 1 and 2), July 2002 Non-Timber Forest Products: Market-oriented process, July 2002 Farming System and Agroforestry: Mission 3, December 2002 Report on Field Procurement and Disbursement/Financial Management Review, March 2003 IDA supervision reports: Aide-Memoires (February 2000, March 2000, June 2000, September 2001, August 2000, December 2000, June 2001, September 2001, February 2002, June 2003) Project Status Reports (May 1999a, May 1999b, December 1999, March 2000, April 2000, August 2000, December 2000, October 2001, February 2002, April 2002, June 2002, December 2002) - 27 - Other documents: Environmental and Social Management Plan for Nakai-Nam Theun Catchment, IUCN, July 1997 Khammouane Province: a preliminary environmental inventory, IUCN, December 1997 Wildlife in Lao PDR: 1999 status report, IUCN/WCS/CPAWM, 1999 Training for field conservation staff in Indochina: Lessons learned, R. Boonratana in Asean Biodiversity, 2002 Japan Social Development Fund Grant Proposal, February 2002 Japan Social Development Fund Grant: 3 years overall work plan - 28 - Additional Annex 8. Government's Summary Report LAO PEOPLE'S DEMOCRATIC REPUBLIC Peace - Independence - Democracy - Unity - Prosperity ********** IMPLEMENTATION COMPLETION REPORT (Assessment and Comments of Implementing Agency) A. Assessment of Development Objective and Design and Quality at Entry 1. Original Objective The original objective of the Project was "to promote the adoption of diversified agricultural practices by farmers in the Project Area with a view to improving the livelihoods of local communities, whilst at the same time assisting in biodiversity conservation in a high priority protected area". Improving the livelihoods of local communities ­ recognized as the poorest and the most out-of-the-way in the country - and sustainable management of the country's natural resources - particularly in the upland areas that are critical for watershed protection ­ are well consistent with GOL's priority policies and strategies, as outlined in: - Rural Development GOL Program (1998-2002) to counter the increasing loss of natural resources by the reduction of shifting cultivation; - Prime Ministerial Decree No. 164 (1993) to establish the National Biodiversity Conservation Areas. - GOL's policy favouring the development of populations living in NBCAs rather than displacing them to be resettled elsewhere; - GOL's general new approach to first develop and test models followed by replication and scaling up. - GOL's poverty reduction program: decree about poverty definition and indicators issued in 2001. 2. Original Components The specific objectives of the four sub-components were: (i) Agriculture Support Component. Focusing on the three pilot villages, this component intended to increase food security through provision of information and development of simple technologies to test, demonstrate, improve, and intensify production of paddy rice and supplementary food derived from home gardens and to domesticate NTFP. (ii) Social Support Component. This component intended to improve the level of basic health and education services throughout the three upper Zones (or sub-watersheds) of the NBCAs. The Health sub-component focused on raising awareness of personal, family, and environmental hygiene and provision of basic health facilities and supplies. The Education sub-component focused on non-formal education to provide basic literacy, especially for women, and the provision of additional basic primary education facilities and supplies. The project tested the hypothesis that improvements of livelihood and acquisition of basic social qualifications will strengthen the social capital, self-esteem and cultural identity of upland communities. (iii) Conservation Support and Awareness Component. Focusing on the three pilot villages, and on three - 29 - other selected ones, this component tried to reach active participation of the villagers in the sustainable management, use, and protection of biodiversity. The focus was on participatory processes to developing a village land and resource use plan, increasing community awareness of the constraints and opportunities of the natural resource base, and village participation in protection and monitoring of valuable biodiversity within their village administrative and spiritual territory. (iv) Institutional Strengthening and Monitoring and Evaluation Component. This component intended to improve the management and technical skills of staff to implement activities at the provincial-, district-, and village-levels. It also tested whether the current administrative implementation mechanism and decentralization process are enhancing delivery of services to beneficiaries and the extent to which village organizations have the capacity to absorb these services. A simple and practical monitoring and evaluation (M&E) system was to be established to ensure timely qualitative and quantitative feedback on project implementation to make needed corrections. In general, the components of the original design were reasonably related to achieving the objective(s) and to the capacity of the implementing agency. Considering the Project's complex design and environment, most of planned activities within each component worked well towards reaching the improvement of local communities' livelihoods while supporting the biodiversity conservation. Presently available impact indicators clearly point out that development and conservation evolved in the expected direction. Activities to enhance the capacity of the implementing agency and its have not been as satisfactory as expected. B. Achievement of Objective and Outputs On the whole, the Project can be rated satisfactory, i.e. it has achieved most of its major relevant objectives and has achieved satisfactory development results. 1. Outcome / Achievement of Objectives One has to distinguish between the two main parts of the Project and their specific objectives. Field activities for villagers' development and for conservation, were a great success compared to their reasonable costs. HHG and VCMU patrols gave the main results with only a small part of the total budget. Unfortunately, capacity building activities showed only low results despite absorbing a great part of the budget. 2. Output by Components (i) Agriculture Support Component: The results are considered highly satisfactory compared to the short implementation period and the rather difficult geographic, social and economic situation at the beginning of the project. Only the results in NTFP domestication and the achievements from advisory services and training to local staff remained behind expectations. (ii) Social Support Component: The Health sub-component focused on provision of training to provincial and district medical staff and volunteer Village Health Workers and Trained Birth Attendants, raising awareness of personal, family, and environmental hygiene, provision of improved health services, and of basic health facilities (one basic - 30 - health dispensary in each of the three sub-watershed zones) and supplies. The rating of this sub-component is satisfactory. The Education sub-component focused on non-formal education, i.e. training of non-formal education workers and provision of basic literacy and numeracy, especially for women. The result is considered satisfactory. Primary education, i.e. provision of additional basic primary education facilities, including construction or rehabilitation of basic primary education schools, and supplies, and improvement of the teaching skills of provincial and district education staff can be rated highly satisfactory. (iii) Conservation Support and Awareness Component. This component elicited active participation of the villagers in sustainable management, use, and protection of biodiversity, through development of village land and resource use plans, community awareness of the constraints and opportunities of the natural resource base, and protection and monitoring of valuable biodiversity within the village administrative and spiritual territories. This component can be rated highly satisfactory. (iv) Institutional Strengthening and Monitoring and Evaluation Component. This component intended to improve the management and technical skills of staff to implement activities at the provincial-, district-, and village-levels, through training of staff to activities implementation, management, monitoring and evaluation, and dissemination of experiences and lessons for application in other government programs at various levels Output achievement was low. This sub-component needs to be rated unsatisfactory. C. Institutional Development Impact Capacity building took place in form of training for province and district institutions staff. However, efforts were not enough for successful and sustainable accomplishments with this task. The rating is unsatisfactory . TA and training were important for capacity building, skills strengthening and knowledge & expertise transfer to local staff, so that they can manage and implement projects themselves. However, TA and training have been limited by: language barriers between TA team and local staff; high turnover in national and international TA, causing inconsistency in knowledge transfer; shortage of time, and limited incentive structures for local staff to attend. D. Major Factors Affecting Implementation and Outcome Factors with substantial influence on implementation and outcome included: - Long period of confidence building in the pilot villages before implementation of activities - Weak commitment of some village chiefs to the project program and some weak village institution. - Until 2001, unresolved conflicts between project objective and logging and illegal NTFP activities in the same area and with the same villagers (especially in Teung). - Low capacity and ability/motivation to learn of the provincial/district staff, resulting in low achievement in capacity building - Some trainees selected for the training comprised individuals who were not from the target groups and who were disinterested in the training. The training neither benefited these individuals nor benefited - 31 - from these individuals. - There was a high turnover in staffing at the PIU and the field level, resulting in protected areas and other activities being staffed with inexperienced and unqualified individuals. - The participation of the Province and District Departments generally remained low. This can be explained by the fact that the Departments did not feel themselves enough involved in the successful achievement of the Project's objectives. - Facing such low motivation, the Project tried to solve the problem by increasing its Management authority on the seconded officers as well as on the Departments themselves. On the whole, this attempt has not really met a success E. Cost and Financing Cost Changes The total budget was not changed, however reallocations between components and between expenditure categories occurred. Disbursement delays on the GOL side for the last annual work plan caused postponement of scheduled activities, but he matter was finally resolved. F. Sustainability Most of the Project "routine" activities can be continued by the villagers and the District civil servants, because they do not need much financial inputs. But, new investments such as replication of activities in other villages in the 3 zones, extension of new infrastructures (irrigation, water supply, latrine, schools, village accesses, etc.) will necessitate external financial and human resources. (i) Agriculture Component. Sustainability of the improvement and intensification of paddy rice production and of supplementary food derived from home gardens is highly likely. For other sub-components sustainability is considered unlikely. (ii) Social Support Component. The village volunteers in the 15 DUDCP villages, will be able to continue their activities with a limited support from ­ but a constant monitoring by ­ the District officers. Such activities relate to basic health care, support to pregnant women and newborn babies, sanitation, primary and adult education, etc. Needed resources for extension to 17 new villages in the 3 zones are already secured through the new ECRU Project, funded by a grant from the Japanese Social Development Fund; ECRU will also support the volunteers activities in the 15 former villages: mobile unit to increase the technical knowledge of volunteers and villagers, extended support to the medicine revolving funds (until the villagers' economic status is improved) etc. Sustainability of both sub-components, health and education is likely. (iii) Conservation Support and Awareness Component. Investments for continuation and expansion of conservation activities will be supported by the new Nam Theun Watershed Management Authority (WMA). Sustainability of respective activities and achievements is likely. (iv) Institutional Strengthening and Monitoring and Evaluation Component. Sustainability must be rated unlikely. G. Government of Laos Performance - 32 - Taking into account the various challenges and achievements developed here above, the overall rating is satisfactory. The Government of Laos always granted the Project the best commitment towards achieving its objectives. The government agreed with the International Development Agency to make available a needed counterpart fund in the amount of US$ 250,000 (in cash and in kind) for the project. The Central Government empowered financial management to Khammouane Province. The Office of Governor of Khammouane Province was made responsible for provision of a needed counterpart fund to the Project. The Special Account has been opened and is managed by the Provincial Financial Office (PFO) and the PIU. The Central Government prepared financial management frameworks, procurement, and also providing some training for project key personnel. Compared with the average level of GOL's commitment in other projects, DUDCP benefited from a higher involvement, especially with regard to its financial participation in cash. When it became necessary to extend the Project life time, without increasing the original global budget, GOL decided to decrease the amount of its in-kind participation and increase, by the equivalent, its cash contribution. Without such decision, the extension could not have been possible and the Project success level would have been significantly reduced. Annually, when establishing the national budget for the fiscal year exercise, GOL approved the requested amount by the Project for the next work plan. Up to the last year of Project life, adequate counterpart funds were released within reasonable time limits. Financial difficulties started in the course of the last 6 months of field implementation: only 32% of the needed funds were available (that is 20% of the approved budget) and could be released. But GOL gave formal commitment to release the balance before the Project closing date. This allowed DUDCP to borrow the needed amount to continue its field activities. The GOL finally could solve the financial crisis. All needed counterpart funds were transferred to the Project Account before the Project closing. And all activities were completely implemented. In order to improve the livelihood of rural communities, and consistent with poverty alleviation, the Central Government as well as province collaborated with planning and coordination departments both central and provincial levels in rural communities socio-economic development planning. A major priority of the government is the strengthening of the institutions and the development of human resources. The Central Government Sectors attempted to transfer the responsibility to local level according to decentralization policy by turning province to be a strategic unit, district to be a planning and budgeting unit, and village to be an implementing unit. The ministries concerned made an effort in training on technical knowledge transfer to the province, especially coordination and implementation of loan and grant projects. The government (Khammouane Province) was conscious and made its efforts in environmental protection and reduction of shifting cultivation practices, particularly in Nakai-Nam Theun National Biodiversity Conservation Area (NNT-NBCA), which enriches the valuable natural biodiversity resources. In order to protect the enrichment of natural biodiversity and watershed resources, which are the most important to the first priority macro-economic project (Nam Theun 2 Hydropower Project), the government endeavored to improve and replicate sustainable environmentally friendly development method in this area, established NNT-NBCA Head Quarter, and set up conservation monitoring units. As the project area is located in critical biodiversity protected area, the government as well as the province carefully developed a simple development and conservation method to be more flexibility either for the - 33 - needs for development or conservation. The objective is to use local human and natural resources for sustainable development and conservation within the pilot area. Government of Laos's support to operational decisions never failed and its respect for decentralization prevented any negative interference in the Project implementation. Another sign of GOL's high commitment is its quick positive decision-making in ratifying the adjustments proposed within the framework of a LIL concept. The government is aware that the commitments of local institutions' staff, part of the Implementing Agency, could not always meet the Project expectations. Also at management level, initial assignments were not fully satisfactory. However, as soon as necessity for change at the management level became obvious, GOL immediately answered the Bank's request and implemented the related transfers. This quick decision-making is indicative of the high commitment of GOL, especially in a country where such transfers take a long time to be implemented. Once the new Director was appointed, the Project knew a revival in its implementation progress The Project went through two periods of delays. The first one was at the time of setting up the Project structures. Here, delays can be explained by the lack of experience of the provincial institutions in finalizing the various procedural stages: first time to deal with an international donor; first experiences in the recruitment of international technical assistance and in entering international procurement processes; complexity of reaching a consensus between all involved stakeholders at the various levels, etc. The second period corresponds to the start of field activities implementation. Here, delays can be explained by the lack of experience and adaptation flexibility of the first Project manager on top of which came the problems encountered during the first contacts with the target villagers. H. Bank Performance Overall Bank Performance is rated highly satisfactory. The Bank might have underestimated at appraisal the practical implications in implementing the Project. Although the Project's practical experience shows that most of planned activities within each component actually worked towards reaching the objective of improving the livelihoods of local communities and to assist the biodiversity conservation, the assumption of a immediate full mobilization of the villagers in participatory processes was optimistic. It took a long time and many efforts to get a relative participation. The complexity of such a project was already highlighted at the time of its preparation: "Upland development and conservation is complex, not only technologically but also culturally and institutionally. The addition of an explicit biodiversity conservation objective makes it even more challenging to design and implement in Laos." It has not been possible to abide to the original planning, as it underestimated the time needed for the preparation phase, the villagers' confidence gaining, and overcome the difficulties met during the various training. The Learning and Innovation Loan (LIL) provided the suitable response options and was really adapted to the complexity and difficulties of the context. Thanks to it, and its related M&E system, it was easy to timely uncover weaknesses of some methods and to react quickly and to get in due time the donor's approval on proposed changes. Within the framework of this LIL project, each time proposals were submitted, in view to improve implementation weaknesses, the missions responded proactively and authorizations for the needed changes were obtained quickly. Relations between the Project and the Bank staff and consultants built up throughout preparation and - 34 - supervision missions. The level of Bank's mission members was highly satisfactory as well for their professionalism as for their concern towards the Project success and their full availability to support the Project. Clear and objective reports, including the most useful, pertinent and concrete recommendations aiming at helping the Project Management towards success, were immediately issued at the end of each mission. Apart from the Bank's field missions, the Project management was always welcome at the Vientiane WB office with the same concern and the same availability aiming at helping the Project it its efforts. As from the establishment of the PIM, the Bank favored coordination between the Project and other organizations/projects with similar interests, recommending Fomacop for training activities, IUCN and Ecolao for their previous experiences in the Project area, WCS for a support to villagers training, UNICEF for teachers' training, JSDF for financing additional activities in the Project area, Consultant firm for provision of backstopping to the ECRU project, etc. I. Lessons Learned Planning and Implementation The target population still believes in superstitions and fears external intervention. Gaining their trust takes a long time. In addition, project activities had in the beginning not taken sufficient account of the local environment the Project was operating in. To solve some of the implementation difficulties at the village level, a new delivery approach, the household development grant, was designed, to benefit more equitably each household. After introduction of this new approach, field implementation showed steady progress: credibility of the project vis-à-vis the villagers greatly improved; target population cooperates in project activities more actively. However, the household grant approach has weaknesses which may make it unsuitable for use outside the project area. The approach is effective for short term socio-economic development inside the project area but it is not recommended nor suitable for long-term sustainable development. Two Steering Committees, district and provincial, created problems in implementation, decision-making, coordination between steering committee members, as well as in work plan and budget approvals and amendments. Institutional Capacity Building Understanding and suitably reacting to the cultural differences between foreign experts, local staff, and villagers is important. Civil servants deployed to the field to work with target population are mostly young, and not well trained in working with rural villagers. Moreover, local staff are not always able to fully absorb new techniques taught by experts because instruction and topics are too sometimes sophisticated. Appropriate incentive structures need to be put in place to motivate staff (PIU & PO). Their low remuneration might otherwise lead to little interest to participate in project activities and high turnover of staff. However, TA and training are important for capacity building. Skills strengthening, knowledge and expertise transfer to local staff are required, so that they can manage and implement projects themselves. Nevertheless, TA and training have been limited by language barriers between TA team and local staff, high turnover in national and international TA, shortage of time; unavailability of local staff to attend; and inappropriate training topics (e.g., NTFP marketing). - 35 - Villagers and project staff were given the well received opportunity to learn new things outside the project area, creating a possibility for learning from fellow farmers outside their area and subsequently apply new ideas in their home village. Unfortunately, the number of women involved was small (scared to face outside world; family institution women are obliged to feed their children). In addition, there are limitations to what new techniques the villagers are ready to learn and adopt. Due to its pilot character, the Project received priority from Province in management of its finances. A special project account allowed easy disbursement and replenishment, and the procedures for disbursement were not complex. - 36 - - 37 -