Document of The World Bank FOR OFFICIAL USE ONLY Report No. 20589 PERFORMANCE AUDIT REPORT POLAND FOREST BIODIVERSITY PROTECTION PROJECT (GEF Grant 21685) June 20, 2000 Operations Evaluation Department Sector and Thematic Evaluation Group 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. Abbreviations and Acronyms BPF Bialowieza Primeval Forest GEF Global Environment Facility GIS Geographic Information System ICR Implementation Completion Report MENRF Ministry of Environment Protection, National Resources and Forestry PAR Performance Audit Report SFA State Forest Administration Director-General, Operations Evaluation Mr. Robert Picciotto Director, Operations Evaluation Department Mr. Gregory Ingram Manager, Sector and Thematic Evaluation Group Mr. Ridley Nelson (Acting) Task Manager Mr. Andres Liebenthal The World Bank Washington, D.C. 20433 U.S.A. Office of the Director-General Operations Evaluation June 20, 2000 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Performance Audit Report on Poland Forest Biodiversity Protection Project (GEF Grant 21685) The Forest Biodiversity Protection Project (GEF Grant 21685 of SDR 3.3 million, equivalent to US$4.5 million) was the Bank's first GEF-funded biodiversity project and the first GEF grant-supported project of any kind to be made in the Europe and Central Asia Region. The grant was approved in December 1991 and closed, almost fully disbursed, in December 1995, after a delay of 14 months. The objective of the project was to protect globally significant forest biological diversity through a balanced approach of in-situ (conservation in place) and ex-situ (conservation outside the target area) measures. As a pilot GEF project it was also to gain experience with environmental benefits, replicability, sustainability, monitoring, and evaluation. The project had two principal components: protection of the remaining biodiversity in the Sudety Mountain forest ecosystem, consisting largely of ex-situ measures and in-situ conservation of the Bialowieza Primeval Forest (BPF). The project also supported training and technical assistance to the Polish State Forest Administration. In the Sudety Mountains, with biological resources viewed as being threatened by immediate extinction, the project was to (a) confirm the extent of the threats to the ecosystem, especially pollution; (b) map such threats using GIS methods and outline future recovery options; (c) collect seed and shoots of threatened forest plant species, especially non-commercial species, and (d) establish a gene bank to preserve such collections for future restoration activities. At BPF, whose biological resources were not thought threatened by imminent disappearance, the project was to (a) identify the nature and magnitude of biophysical and sociological threats facing the forest and initiate pilot mitigation activities; (b) identify and incorporate into protected conservation units currently unprotected forest associations of exceptional biological value; (c) design and promote GIS-assisted, integrated land-use zoning and land-use planning at the landscape level; and (d) initiate public outreach and participatory planning in support of conservation. The project broadly met these objectives and carried out most of the above activities. In the Sudety Mountains, the main emphasis was on the gene bank, partly because the State Forest Administration was interested in it for more general purposes. The design was expanded and the final cost was US$6 million rather than US$3.5 million as initially estimated. In the Karkonose National Park a restoration program is underway, drawing upon the material made available by the gene bank, to replace the timber-oriented plantations of the late 19d and early 20'h centuries with indigenous species 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. 2 and strains. At the BPF, the area of the national park (under strict conservation) has been more than doubled and steps have been taken to modify the management of the surrounding forest to support the conservation of the park area. The economic structure of the area is weak, and steps are being taken, with external assistance, to marry economic and social strengthening with appropriate management of the biological resources. The audit rates the outcome as satisfactory, institutional development as substantial, sustainability as likely, and Bank and borrower performance as satisfactory. These are the same ratings as given by the ICR. The ICR noted that by more recent standards, this operations was under-designed and noted issues such as the need for clearer and more operationally relevant objectives and targets, and the importance of greater inclusiveness during both the preparation and implementation stages. These issues have been highlighted in reviews of the GEF program and have largely been incorporated in subsequent operations, so are not reemphasized here as lessons from this review. There are two main lessons from this project. This project made a substantial investment in the gene bank and GEF should review the potential role of its investments in the development of gene banks to determine whether there are possibilities for greater collaboration between them and with other institutions concerned with the global maintenance of germplasm. The more general lesson from the project is that, if the biological resources that this project sought to conserve are indeed of global significance, then it is now time to consider whether additional efforts are required to ensure the longer- term sustainability of efforts to manage them. GEF, and its implementing partners, should consider taking a lead in seeking to ensure stability of funding for this purpose. Attachment 1 Contents Principal Ratings ......................................................................................................................................... im Preface...........................................................................................................................................................v Background ................................................................................................................................................... 1 Country and Sector Context .......... .................... ............... 1........ Bank/GEF Role ........................................................... I Project Objectives......................................................... 2 Components ............................................................. 2 Institutional Framework ..................................................... 3 Other Links .............................................................. 3 Implem entation and Results ........................................................................................................................ 3 Implementation........................................................... 3 ICR Findings ............................................................. 3 PAR Findings ............................................................ 4 Sudety Mountains............................................ ......................... 4 Bialowiesza Primeval Forest ................................................ 5 General...................................................................... 7 Other Issues .............................................................. 8 Assessm ent of Performance ......................................................................................................................... 8 Ratings................................................................ 8 Bank Performance .................................................... 9 Borrower Performance ...................................................... 9 Conclusions and Lessons .............................................................................................................................. 9 Conclusions .............................................................. 9 Lessons................................................................ 11 Annex A. Basic Data Sheet ......................................................................................................................... 13 Annex B. Comments from the Borrower .............................................................................................. 15 This report was prepared under the supervision of Mr. Andres Liebenthal (Task Manager) by Mr. John English (Consultant) who audited the project in September 1999. Mr. William Hurlbut edited the report. Ms. Soon-Won Pak provided administrative support.  111 Principal Rating ICR Audit Outcome Satisfactory Satisfactory Sustainability Likely Likely Institutional Development Satisfactory Substantial Borrower Performance Satisfactory Satisfactory Bank Performance Satisfactory Satisfactory Key Staff Responsible Task Manager Division Chief Country Director Appraisal August Schumacher Rory O'Sullivan Kemal Dervis Mid-Term Review August Schumacher Rory O'Sullivan Kermal Dervis Completion Emilia Battaglini Michele E. de Nevers Basil Kavalsky  V Preface This is a Performance Audit Report (PAR) on the Forest Biodiversity Protection Project in Poland, for which the GEF Grant 21685, in the amount of SDR 3.3 million (US$4.5 million equivalent) was approved on December 12, 1991, and made effective on February 19, 1992. The grant was closed on December 31, 1995, after a delay of 14 months. The final disbursement took place on January 22, 1996. The grant was almost fully disbursed, with an undisbursed balance of US$35,000. The PAR was prepared by the Operations Evaluation Department (OED). It is based in part on the Appraisal Report, the Implementation Completion Report (ICR, Report No. 17425, dated February 25, 1998, prepared by the Rural Development and Environment Sector Staff, Europe and Central Asia Region), sector and economic reports, loan documents, review of the project files and discussions with Bank staff. An OED mission visited Poland in September 1999 and discussed the effectiveness of the Bank's assistance with government officials, other development organizations, and other stakeholders. Their kind cooperation and invaluable assistance in the preparation of this report are gratefully acknowledged. Following standard OED procedures, the draft PAR was sent to the borrower for comments which is attached as Annex B to this report. s 1 BACKGROUND Country and Sector Context The environment was a priority issue at the onset of the relationship between Poland and the international development agencies in the late 1980s. In particular, there was great popular concern about the impact of pollution linked to the form (an emphasis on heavy industry) and nature (state-owned enterprises) of the economic policies pursued after World War II. These issues were highlighted by the Bank's first economic report in 1988. Significant areas of Poland remain forested and the country contains some of the most biologically significant forests in Europe. However, in 1990, it was estimated that at least half of the forested area showed signs of pollution-induced disease and decline and, in the worst affected areas, the forest was almost totally dead. There was a desire to take action to begin to mitigate the effects of pollution and other ongoing pressures in these areas. But the government, faced by many other priority areas for action in the early 1990s, was reluctant to borrow at commercial rates for this purpose. When the Global Environment Facility (GEF) was established, the government was keen to use it as a source of support to help protect the country's biodiversity. Two forest areas were identified as priorities for protection: the Sudety Mountain forests in the southwest (on the border with the Czech Republic), and the Bialowieza Primeval Forest (BPF) in the northeast (on the border with Belarus). The former was suffering severe pollution-induced dieback because of its location. It is in the heart of the industrial area of the former Eastern Germany, Czechoslovakia, and Poland, which was notorious as the most polluted region in Europe (the "Black Triangle"). The latter forest contains what are reportedly the last remnants of the primeval lowland forests of Northern Europe. Bank/GEF Role The Global Environment Facility was established to address international environmental issues. The two forests covered by the project are sites of international importance, being among Europe's largest expanses of remaining natural forests and areas of high endemism.' They are also transboundary areas, extending into the neighboring countries and, subsequent to the initiation of the Polish project, GEF-supported projects have been undertaken in Belarus and the Czech Republic to carry out similar activities in the adjacent areas. The project was seen as urgent and was prepared and negotiated quickly. GEF was keen to expedite its first biodiversity grant, and the Bank also wished to get operations in this area underway in Poland. The project was identified in February 1991, prepared over the summer, and appraised in October. Negotiations took place in December 1991, and the project was approved by the GEF Council and the legal documents were signed in the same month. It became effective in February 1992. 1. The BPF, for example, contains Europe's last wild bison herd. Most of this forest has been protected for more than 600 years and it contains unique plant associations and significant numbers of ancient trees (more then 400 years old). 2 Project Objectives The project had two objectives: (a) Further the protection of globally significant Polish biodiversity at four different levels - genetic, species, association, and landscape (ecosystem) - through a balanced approach between in-situ (conservation in place) and ex-situ (conservation outside the target area) conservation measures (b) Define and realize GEF Pilot Phase objectives, namely global environmental benefits, innovation, demonstration value and replicability, contribution to the GEF portfolio (i.e., testing of particular methodologies or protection of particular biodiversity not covered elsewhere in the GEF portfolio) sustainability, and monitoring and evaluation mechanisms. Components The project was estimated to cost US$6.2 million, with US$4.5 million to be covered by the GEF grant, US$0.3 from other bilateral sources, and US$1.4 to be provided by the Government of Poland. More than 97 percent of the baseline project cost was to be spent in the two forest areas. The conservation approaches adopted in the two areas were quite distinct and these formed the principal components: In the Sudety Mountains, (US$4.3 million), with biological resources under immediate threat, ex- situ conservation was to be undertaken by: (a) Determining the exact nature of the threats (b) GIS mapping of such threats and the outlining of future recovery options (c) Collecting seeds and cuttings of threatened forest plant species (especially non- commercial species) (d) Establishing a gene bank and nursery to preserve such collections for future research and restoration activities. At the Bialowieza Primeval Forest (US$1.75 million, including contingencies whose biological resources were not considered threatened by imminent demise, the approach was based on in-situ conservation and was to: (a) Identify the nature and extent of the biophysical and sociological threats facing the forest and initiate mitigating activities (b) Identify and incorporate into protected conservation units unprotected forest associations of exceptional biological value (c) Design and promote GIS-assisted, integrated land-use and conservation planning at the landscape level. 3 (d) Initiate public outreach and participatory planning in support of conservation. The project also supported training and technical assistance for the Polish State Forest Administration (SFA) to undertake such activities during and after the project period, and to establish international cooperation mechanisms with four neighboring countries in support of transboundary conservation. Institutional Framework The project was implemented by the SFA in the Ministry of Environment Protection, Natural Resources and Forestry (MENRF). It was the first project supported by the Bank to be implemented this ministry and, thus, during the project start-up period, both sides needed to make a special effort to understand the operational procedures of the other. Other Links The project has been complemented by the GEF-financed Belarus (FY93) and Czech and Slovak Republics Biodiversity Protection projects (FY94), and it also assisted in preparing the way for the Bank-financed Poland Forestry Development Project (FY94). IMPLEMENTATION AND RESULTS Implementation The ICR reported that the completion of the project was extended by 14 months (until December 1995) and that the cost of the project rose to US$8.35 million. The primary reason for both of these changes was that, in the process of detailed design, the gene bank was extended and, irrespective of the design changes, the bid prices for the contractual work were substantially above the initial appraisal estimate. Also, the initial choice of site was deemed not suitable and an alternative had to be found. These changes delayed the process of tendering and construction. The final cost of the gene bank was US$6.0 million, compared the initial estimate of US$3.5 million. As a result of this cost overrun, the share of the Government of Poland was increased to US$3.6 million, about 2.5 times its original commitment.' ICR Findings The ICR rated the project outcome as satisfactory, institutional development impact as substantial, sustainability as likely, and Bank and borrower performance as satisfactory. The ICR withheld a final judgment on the success of the efforts in the Sudety Mountains component. The construction of the gene bank was delayed, although it had been satisfactorily completed by the closing date. Partly in consequence, the collection of non-tree and non- commercial genetic material was not completed as planned during the implementation period. The component, however, had the potential to be satisfactory if these materials are stored at the gene bank and nursery, and highly satisfactory if they are used later for ecosystem restoration activities. 2. Part of this government input was covered out of the proceeds of the Forest Development Project. 4 The mission considered that the BPF component had been successful. The project completed the biological and social analyses, and the planning and public outreach programs in the BPF area as planned. These, and capacity building within SFA, helped make possible the decision to expand the National Park and to formerly designate the surrounding areas as buffer zones. The ICR noted, however, that these actions came near the end of the project and that their effectiveness, and that of the earlier scientific efforts, remained to be seen. In particular, they reserved judgment on whether the decrees would translate into improved protection of the greater Bialowieza forest complex, and, therefore into improved biodiversity protection. The project-wide elements were judged to have been successful. The Polish counterparts confirmed to the ICR mission that the project supported an attitudinal shift towards more ecologically sensitive forestry. International cooperation between Poland and four of its neighbors exceeded original project expectations. In reviewing the relevance and efficacy of the project in relation to the objectives of the GEF Pilot Phase, the conclusion of the ICR was positive. The "global biodiversity benefits" consist not only of the in-situ conservation of unique and threatened biological resources, but also an improvement in the enabling environment for their conservation. The project confirmed the BPF's biological value at all levels, and assisted in its protection in a range of ways. It also had a more diffuse global benefit of introducing new paradigms of forest management and new methods of decision-making to SFA. The project was "innovative" in the relatively narrow sense of being locally innovative, while transferring international good practices. Most aspects of the current project were innovative for Poland, but not for biodiversity conservation in general. The project introduced, inter alia, (a) a broader view of land management and forestry that incorporated considerations of ecosystem health, biodiversity, recreation and tourism, participatory decision-making, and the encouragement of small-scale economic activities; (b) ex-situ conservation for non-commercial and non-tree plant species; (c) new technologies, such as GIS for land-use planning and forest management; and (d) improved communication between Polish and foreign agencies that had previously not been in contact but had much to offer each other. The project was also judged to have been "fairly successful" from the standpoints of demonstration value and replicability. The project had led to the application of various technologies and paradigms, like GIS-assisted land-use planning beyond the original target sites. The Sudety restoration sub-components had not resulted in firm plans for field activities at the time of the ICR mission, although preliminary restoration efforts had been extended to the adjacent area in the Czech Republic. The gene bank, also, was expanded to store genetic material for more sources than initially planned. PAR Findings Sudety Mountains The project activities in the Sudety Mountain area, on the border between Poland and the Czech Republic, had two principal elements. The construction and development of the Gene Bank, and field operations in the Karkonose National Park. The highest points of the mountains (about 1300 meters) form the border. On the northern (Polish) side, the land drops away rapidly and the park forms a long, narrow strip with an elevation between about 200 and 1,300 meters. On the Czech side, the mountain forms a plateau sloping to the southwest. The vegetation on the highest areas is 5 tundra- like (similar to northern Scandinavia) and represents a relic of the earlier post-glacial period. The region is in the heart of the industrial area of the former Eastern Germany, Czechoslovakia, and Poland. This area was notorious as the most polluted region in Europe (the "Black Triangle"). Significant forest degradation and tree mortality in the 1970s and 1980s was ascribed to the ravages of pollution, including acid rain. The appraisal report particularly emphasized the need to monitor and counter the effects of pollution. It proposed to "foster the protection of the remaining biodiversity in the Sudety Mountain forest ecosystems by identifying and collecting endangered seed and vegetative materials, for [sic] storing the collected seeds and vegetative materials in a genebank and related archival nurseries [ex-situ], undertaking intensified air and water pollution monitoring of the ecosystem and finally by mapping (using GIS) the zone for establishing the criteria for seed collection in light of the results of the expanded air pollution monitoring" (para 3.01). In reviewing the outcome, the ICR states that "like the outcomes of the gene bank and nursery, the results of the research and GIS work, summarized in a Czech-Polish joint publication, seem disproportionately focussed on trees rather than on the Sudety ecosystem, leading the mission to assume that the relevant staff did not have a sense of the component's holistic, ecosystem-wide objectives" (para 25). This criticism appears to be mis-placed. As noted above, the appraisal did not express the objectives in holistic, ecosystem-wide terms. When the project agreed, and financed, a cutting- edge facility for the selection, treatment, and storage of seeds (and, where necessary, of other forms of germplasm) it essentially ordained the approach that was adopted. Also, by its nature, the gene bank has to concentrate on the material it is handling one batch at a time, ensuring that the material is correctly identified, is pure, and that its viability will be ensured for a significant period. These things the gene bank has done. Also, with a short time horizon of three years and a wish to see quick results, the focus on narrowly defined research was not surprising. It may also reflect the general approach to research under the old system, as discussed further below. It should be noted that the problems in the National Park, in particular the deterioration of the spruce stands, cannot be solely attributed to pollution, as implied in the appraisal report and ICR. During the 100 years or more before World War II, when the area was part of Germany, forest management emphasized timber production. Much of the area, originally covered with mixed stands, was planted with other species, primarily spruce, planted at high density. While spruce had been present in the area, the new plantings extended its range to higher altitudes. The high density and extended range stressed the trees. Pollution damage increased this stress and, consequently, the susceptibility of the stands to attack by pests such as bark beetle. The current policy of the national park, as foreseen under the project, is to gradually replace the existing, degraded plantation stands with plantings more in line with the native stands. Bialowiesza Primeval Forest Some of the problems noted by the ICR remain: Cross-border collaboration. Cross-border collaboration remains limited and has largely focused on research rather than operational issues. For example, a workshop was held in September 1998 on the state of knowledge of invertebrates in the border area. A catalogue of the known fauna in the Bialowiesza Forest, some 11,000 species, is being prepared. Some efforts have been made to facilitate cross-border tourism. A ministerial-level meeting was held in February 1999, which 6 reviewed possible steps to reduce formalities for short-term, cross-border visitors. However, little follow-up is reported and, as the mission found, difficulties and misunderstandings remain. National Park expansion. Initial planning work was undertaken during the project period, and the National Park was subsequently extended from 5,500 to 10,500 ha. The role of the buffer zones was agreed, but further follow-up has been limited. Recently, attention has been focused on the proposal to extend the national park boundaries to encompass the whole forest area, largely under the pressure of environmental groups and a limited further extension has now been agreed. The latter were doubtful about the consequences of following multiple-use objectives in the buffer zones, fearing that it could be harmful to conservation. This, no doubt, reflected a deeper-seated mistrust of management by the SFA. At the same time, the local communities fear that any extension of the park area will mean further restrictions on timber production and on wider economic activities in the region. As a means of reconciling these conflicting views, the Ministry of Environmental Protection has initiated the "Contract for the Bialowieza Forest."3 This was published by the ministry in December 1998 and "is the name for the development programme for the region of the Bialowieza Forest based on the sustainable use of its natural resources with the purpose of: * Provision of organizational and financial support to the sustainable socio-economic development of the forest residents * Extension of the National Park to cover the whole of the Primeval Forest" (p 3). As an element of the contract, the ministry is initiating a program of "Promotion, Public Awareness, Sustainable Management and Population Incomes in Bialowieza Forest" which is to be supported by Denmark. This will draw up development plans, within the framework of the agreed management plan, which will: * Be aligned with (and complementary to) those existing initiatives of stakeholders and individuals that also share the project's objectives * Create and enhance mutual reliance among members of the community, among different groups of individuals, and among stakeholders * Transfer international experience and skills * Target the optimal use of all of Bialowieza Forest's resources to the benefit of the community * Be sustainable following the end of the project.4 In general it should be remembered at the outset of the project only 5,000 ha of the BPF was protected and was only a small element in a 58,000 ha commercial forest. Now efforts are proceeding to include the whole of the contiguous forest area as a national park under multiple- objective management. The situation in Bialowieza also reflects fundamental problems of the area. The forest straddles the border with Belarus and is in the region of Poland which was a part of Russia through the 19h century. In fact, most of the park headquarters in Poland are located in buildings built by the Tsars in the last quarter of the century as a hunting lodge. The region is one of low agricultural 3. Ministry of Environmental Protection, Natural Resources and Forestry, "The Contract for Bialowieza Forest", Warsaw, December 1998. 4. COWI Polska, Consultant's Statement, July 1999. 7 potential. The topography is flat, sometimes marshy, and soils are sandy. Dtvelopment during the Russian period was limited. By contrast, the Sudety Mountains are much closer to the main population centers of Europe and its spas, as well as its mountain scenery, are attractions for tourists. Prior to World War II there was significant tourist-related development (hotels, etc.), together with some manufacturing industry. For these reasons, the overall level of development and range of economic activity was, and remains, much higher in the Sudety region than in Bialowieza. The potential for tourism development related to the Bialowieza National Park is, therefore, limited. The attraction of the primeval forest is biological rather than scenic. The park museum is being upgraded and expanded, and a small wildlife reserve containing examples of the reserve's bison, deer, wild boars, and bears has been developed. There is potential for self-guided hiking and cycling tours in the forest, but the nature of the resource means that there is a conflict between increasing access and degradation. Thus, the potential for generating sufficient finance to cover the cost of maintaining the facilities and generating adequate local incomes must be limited. Some other source of external funding must be found. The research value of the area is high and could be expanded and viewed as a source of funding. But that potential has limits. General Underlying the specific objectives of the project was a broader goal of assisting in the shift of forestry policy in Poland to encompass a wider view of the role of forestry. In 1990, the GDSF was transferred from the Ministry of Agriculture to the newly reorganized MEPNRF. Under the former ministry the principal emphasis was on production. In the year after the transfer, 1991, a new forestry law was passed which laid out a more environmental approach to forest management. This trend has continued and a further policy shift in the same direction was reflected in a further statement of the "National Policy on Forests" adopted by the Council of Ministers in 1997. This states that "the overriding aim of policy concerning forests is to designate the complex of actions shaping relations between humankind and forests, with the aim of preserving - in changing natural and socio-economic circumstances - the conditions for the indefinite maintenance of the multifunctionality of forests, their multi-faceted utility and protection and their role in the shaping of the natural environment, in line with the present and future expectations of society."' The safeguarding of the permanence of forests... .will be achieved by:... reorienting forest management away from the previous dominance of the raw- materials model towards a pro-ecological and economically-balance model of multi-functional forest management that corresponds with criteria formulated for Europe by the Helsinki process and takes account of the specifics of Polish forestry."' The role of the Forest Biodiversity Protection Project in bringing about this shift in policy is impossible to assess. The fact that the project was sought and agreed to reflected a movement in the direction supported by the project, and the above excerpts indicate that a broad set of objectives for the forestry sector have been internalized by the ministry. 5. Ministry of Environmental Protection, Natural Resources and Forestry, "National Policy on Forests", Warsaw, 1997, Section 111.1, Page 11. 6. Ibid. Section 111.2. 8 Other Issues Two somewhat indirect benefits of the project might be noted. First, that it helped to get tri-lateral cooperation in the Carpathians. During preparation, assistance to a proposal for a cross-border park with Slovakia and Ukraine was proposed. However, it was decided that the available funds could not cover effective interventions at all three proposed sites and it was decided to drop the support for the Carpathians. However, project management did use the name of the Bank and GEF to increase interest in the park and to help leverage input from the MacArthur Foundation. Second, on a more general level, the project also helped improve the profile of the Bank in Poland, i.e., it showed that the Bank was not only interested in narrow and short-term economic interests. Several interlocuters in Poland expressed in various ways the view that, in the very fluid conditions of the early 1990s, the Bank, and other external agencies, might have been a bit more adventurous in their approach to institutional issues. Given the length of time that Poland had followed socialist, statist policies, by the early 1990s almost all senior staff had spent their entire careers within this system. Thus, although there had been significant contact with non-socialist countries, so that many professionals had exposure to other approaches, the difficulties of making major changes and limited flexibility loomed large in their minds. For example, at the outset of the project, forestry institutions were subject to attack from outside, particularly from parties who held strong views on ecological issues, but had no responsibility for day-to-day management or to society as a whole. The sector, thus, adopted a rather defensive posture and it has taken some time to become more comfortable in the new environment and to operate effectively within it. It has been suggested that, in these circumstances, once there was agreement on the basic objectives of the proposed operation, the Bank might have suggested the solicitation of both from the existing ministry and from non-governmental sources (profit and non-profit), for implementation of at least part of the operation. This might have led to some innovative public/private collaboration mechanisms and permitted the PMU to be more independent of the ministry and given it more freedom to maneuver. On the other hand, many of the same interlocutors also noted that the project had been helpful as an element in fostering the changes in philosophy that have occurred in the forestry establishment. Forcing the pace at the beginning might have increased the initial defensiveness and not been beneficial in the longer term. ASSESSMENT OF PERFORMANCE Ratings The audit rates project outcome as satisfactory, sustainability as likely, and institutional development impact as substantial This confirms the ratings of OED's ICR review. Sustainability is judged as likely as both the elements of the project have become significant elements of the operations of the Ministry of Environment, and the initiatives continue to be pursued. However, as noted earlier, especially given the unique nature and global significance of the biological resources in the Bialowieza forest, as claimed by those involved with the area, greater efforts might be made to ensure some longer-term, dedicated external source of funding to secure their future and to reflect this judgment. 9 Bank Performance Overall, Bank performance was satisfactory. The operation was relevant and timely. As noted in the ICR, if the project was being prepared now it would have adopted a more participative approach, both in preparation and in some aspects of implementation. However, it was a pioneering effort in a time at which there was a desire to get a project up and running and not spend a great deal of time in preparation. Given the short time horizon, initially three years, the design might have reduced the range of activities. This was undoubtedly a contributing factor to the focus on achieving specific research and other outputs, with less emphasis on broader ecological issues and on efforts to ensure continued financial support. Supervision was intensive, but heavily focused on technical/research issues. Given that it was the first Bank operation with the Ministry of the Environment and one of the first in Poland, greater emphasis on operational issues, especially related to procurement, etc., for which there was little experience in the country, would have been helpful. Project management felt a little out on a limb and also would have appreciated more effort from the Bank to improve communication with other projects, especially those in the environmental area, so that they could better respond to the inevitable questions from NGOs etc. More funds might also have been included for public dissemination in support of the project.' With this type of project, where there is a need for continued support by the broader public, consideration might have been given to holding some more visible close-out of the project, i.e., some sort of publicized ceremony to celebrate its completion. This would have increased the visibility of the effort in the country as well providing a psychological reward for the staff and other participants. Borrower Performance Borrower performance was fully satisfactory. High-quality staff were obtained for the project. Project leadership was strong and innovative and relations with the Ministry of Environment were good. The operations supported by the project have been absorbed into the work of the Ministry and the key elements are still on track. CONCLUSIONS AND LESSONS Conclusions The overall objectives of the project were largely achieved and the project had a significant role in encouraging the evolution of broader-based policy towards forestry and the management of forests in Poland. The principal conclusions from the audit relate to the longer term issues of funding in support of global biodiversty objectives, the use of the gene bank, and the importance of the institutional background to the project. Funding of global biodiversity. The initial GEF support was predicated on the international value of the biodiversity resources and the need to protect them against the effects of pollution in particular and encroachment in general. However, the project activities made no provision for efforts to obtain long-term funding for the region. Unfortunately, this tendency is not confined to GEF. The Bialowieza park was included on the list of World Biosphere Reserves in 1977 and was 7. Discussions in Poland suggest that this may have applied to the GEF projects in general, especially given the emphasis in that entity on public participation. 10 declared a World Heritage Site by UNESCO in 1979. In 1997, the park was also granted the Diploma of the Council of Europe. But these honors do not result in financial support for the resource, although they may help in fund raising. Some external funding has been obtained for aspects of the planned work related to the "Bialowieza Contract," and for the improvement of the museum, but what is needed is some contribution to base funding for management of the park. Presumably, because of the uniqueness and biological richness of the park, its global biological value may be assumed to continue to exceed that to Poland alone. On that basis, it might be adjudged to qualify for continued GEF funding, since GEF is designed to finance "incremental costs required to achieve global benefits." However, the GEF is not seen as a long-term funding entity. This leaves open the question of how the "incremental costs required to achieve global benefits" are to be covered, since the principal costs are ongoing maintenance of the resource, rather than one-time investments. Given its significant role in environmental funding, it may be appropriate for the GEF to begin to raise this issue. Otherwise, the benefits it has helped achieve may risk being undone. That may be less likely in this case than in many countries, but the review of the project does highlight the issue. Some dedicated source of funding may be desirable. For example, implementation of the Kyoto Agreement (if it is ratified) appears likely to lead to the use of carbon emissions trading contracts. Funding will be required to cover the costs of monitoring these agreements and might be raised by a surcharge on the contracts. Consideration might be given to using this source to finance other limited, long-term, global environmental goals such as preservation of biodiversity. The Gene Bank. The Gene Bank is a substantial investment. The project spent $6 million and additional, more limited, funding has been obtained from other sources, e.g., EU/PHARE. The State Forest Administration (SFA) believed that such a facility could play an important role in its overall forest management program, enabling it to make best advantage of favorable seeding conditions, so as to build up a supply of high-quality seed and planting material of known provenance.! The facility was designed to meet SFA's estimate of national needs. It is clearly larger than would be justified by a localized restoration program, and its capacity may now exceed national needs. However, this facility is one of a relatively small number in the world of its degree of sophistication, and its staff have now developed considerable expertise in the maintenance of perennial plant germplasm. GEF might consider how this type of facility fits into its overall program of protection of species and genetic material, and how more use might be made of it by the international plant research community. Research institutions and practice. As noted, the project focused on research to assess the severity of the threat to the forests, which would lead to the determination of a range of responses to them. Companion projects in Belarus and the Czech Republic, which supported similar efforts in contiguous forests, were used as vehicles to promote cross-border collaboration on this basis. However, the ICR concluded that the results in this area had been disappointing. This appears to have been at least partly a result of the structure of research funding in the former socialist countries, and which has been largely retained in Belarus. This provides a large role to Academies of Sciences, which disburse significant research funds. These tend to view research very much from an academic viewpoint, its contribution to a discipline, rather than in a problem- oriented mold. Given the short duration of the project, research supported was largely based on proposals made by relevant researchers. They largely made choices based on this disciplinary 8. The possibility of developing a gene bank had first been raised in the late 1980s. 11 rather than problem-oriented perspective. The results of the joint programs on the Bialowieza forest were published in two volumes: one on the Polish work.o and one on Belarus." In consequence, the results did not lend themselves as much as they might have to the development of operational programs. This does point up the importance of ensuring that the existing institutional structures, including operational procedures, are consistent with the aims of the project. Lessons The ICR noted that by more recent standards, this operation was under-designed, and highlighted issues such as the need for clearer and more operationally relevant objectives and targets, and the importance of greater inclusiveness during both the preparation and implementation stages. These issues have been highlighted in reviews of the GEF program and have largely been incorporated in subsequent operations, so are not reemphasized here as lessons from this review. The principal lessons bought up by the current review relate to the points discussed above: longer-term funding for conservation of high-value biological resources, and the GEF's approach to the protection of genetic material. GEF should review whether steps are not required to ensure long-term support for efforts to protect resources of high global biological value. At the outset it was assured that other donors would follow the GEF lead. In this way, the sustainability of the effort would be ensured. In practice, this has not happened. However, the logic under which they were seen as being worthy of GEF support remains valid and would justify further external support. GEF's current pilot efforts at country program funding, in which GEF itself is taking a more active role in program formulation and in seeking funding, is a move in this direction. However, a more general review of the issue may be appropriate in the run-up to the 10 anniversary of the Rio Conference. GEF should review its approach to the protection of genetic material and the role of gene banks in this effort. The investment in the gene bank was substantial and it is primarily being used in support of the overall program of the SFA. The staff of the Kostrzyca gene bank have now developed considerable expertise in the maintenance of perennial plant germplasm and GEF might also consider how more use might be made of it by the international community as an element in its program of protection of biodiversity. 9. Remember, this was nearly a decade ago, shortly after the demise of the socialist structures in Poland. Attitudes have changed greatly since then. 10. Piotr Paschalis, Kazimierz Rykowski, and Stefan Zajaczkowski, "Protection of Forest Ecosystems Biodiversity of Bialowieza Primeval Forest", Warsaw, 1995. 11. Alexander Luchkov, Vladimir Tolkach, Stephen Berwick and Philip Brylski, "Belovezhskaya Pushcha Forest Biodiversity Conservation". Minsk, 1997.  13 Annex A Annex A. Basic Data Sheet POLAND FOREST BIODIVERSITY PROTECTION PROJECT (GEF GRANT 21685) Key Project Data (amounts in US$ million) Appraisal Actual or Actual as % of Estimate Current estimate appraisal estimate Total project costs* 6,210 8,350 134 Grant Amount 4,500 4,500 100 Cancellation Cumulative Estimated and Actual Disbursements FY92 FY93 FY94 FY95 FY96 Appraisal estimate (US$M) 1,000- 3,000 4,500 4,500 4,500 Actual (US$M) 450 750 1,050 2,140 4,465 Actual as % of appraisal /a 45% 25% 23% 48% 93% Date of final disbursement: January 24, 1996 Project Dates Original Actual Identification 2/91 2/91 Preparation 4/91 4/91 Appraisal 10/91 10/91 Negotiations 11/91 12/91 Signing 12/91 12/91 Effectiveness 1/92 2/92 Project completion 10/94 12/95 Closing date 10/94 12t95 14 Annex A Staff Inputs Planned Actual Staff weeks US$('000) Staff weeks US$(1000) Preparation to appraisal 5 15,000 4.8 13,400 Through appraisal 10 30,000 14.8 42,200 Appraisal-Board approval 1 3,000 4.5 14,200 Supervision 49 147,000 51.3 155,200 Completion 5 15,000 4.7 24,600 Total 70 210,000 80.1 249,600 Mission Data Date No. of Staff days Specializations Performance Rating Types of (month/year) persons in field represented rating trend problems Identification/ 4/91 4 10 F,F,B,B n.a n.a n Preparation a Appraisal 12/91 2 12 E,B,B n.a n.a n.a Supervision 2/92 2 20 B,B S S 6/93 5 15 E,F,F,B,B S S M,P 11/93 3 10 B,B S S 3/94 3 12 B S S F 5/94 4 8 F,F,FS,B,B S S F,P 7/95 1 5 B S S 10/95 1 10 B S S Completion 10/96 4 6 B,F,F,E S 8 Specialization: E=Economist; B=Biodiversity Specialist; F=Forester; FS=Financial Specialist Performance Rating: S=Satisfactory Types of Problems: F=Financial; M=Management; P=Procurement 15 Annex B Annex B. Comments from the Borrower MINISTRY OF THE ENVIRONMENT Undersecretary of State Janusz Radziejowski Warsaw, 9 May 2000 DLwzl-0835/164/2000 Mr. Gregory Ingram, Manager Sector and Thematic Evaluations Group Operations Evaluations Department WORLD BANK Dear Mr. Ingram, Referring to your Draft Performance Audit Report, dated April 18, 2000 concerning Poland - Forest Biodiversity Project (GEF Grant 21685), Ministry of the Environment would like to make a few comments. 1. The Project was one of the first World Bank operations during the phase of transformation in Poland from centrally planned to market economy. 2. The Project successfully confirmed the biological value at the genetic, species, association and ecosystem level of polish forests ecosystems and furthered its protection in numerous ways. 3. The Polish authorities effectively using the Forest Gene Bank to protect unique genetic forest material. 4. Project sustainability can be assessed from many angles, such as from the biological, technical, institutional, financial and also social standpoints. GEF Project - Forest Biodiversity Protection Project in Poland fulfils all requirements to be sustainable. 5. The appointment of very qualified, independent and very committed professionals headed by Prof. Piotr Paschalis ensured a full implementation of all components of the project. Yours sincerely,