62049 March - April 2008 Issue no 6 March - April 2008 Issue no 6 What is SUFORD? JOINT EFFORT FOR SUSTAINABLE FORESTS IN LAOS SUFORD is a multilateral coop- F eration project between the orests are very significant for Laos - as degradation and deforestation, the Government Government of Laos, Finland much as 80% of the population relies on formulated a Forestry Strategy to the Year and the World Bank. The over- the forests for income, food, shelter, 2020 (FS 2020) with the assistance of the 1 all goal of the project is to herbal medicines and other resources. Japan International Cooperation Agency (JICA) institute nation-wide system- Furthermore, forests are home to diverse and the Swedish International Development atic forest management which wildlife and offer protection from natural Cooperation Agency (SIDA), which ambitiously includes specific objectives disasters such as flooding and land slides. targets a return of forest cover to 70 percent 4 such as to: (a) improve the Efforts are needed to protect Laos’ forests and by the year 2020. The FS 2020 presents a policy, legal and incentive to develop more sustainable practices for using comprehensive review of the status of the framework enabling the ex- this valuable and disappearing natural resource. forestry sector, including current policies and pansion of Participatory Sus- programs and official guidance for managing The decline in forest cover in the past few tainable Forest Management production forestry, logging plan, conservation, decades is the result of the necessary (PSFM) throughout the coun- land conversion and many others. conversion of forestland for agriculture and try; (b) bring the country’s infrastructure development, such as road and The World Bank has been working with the priority natural production dam construction, but also from unsustainable Government since the 1990’s to assist in forests under PSFM; and (c) practices, such as uncontrolled commercial improving forest management and protection. improve villagers’ well-being logging and exploitation of non-timber forest Together with the Finnish Government, the and livelihoods through bene- products. Whereas the coverage of natural World Bank is implementing the SUFORD fits from sustainable forestry, forests was estimated to be 70 percent in the (Sustainable Forestry for Rural Development) community development and 1940’s, 47% in 1992 and 41.5 percent in 2002, project. The objective of SUFORD is to institute development of viable liveli- based on current trends, this figure could be as more systematic management of natural hood systems. low 30% by 2020.2 Understanding the need to production forests to protect biodiversity and reduce the impact of forest degradation and enhance the contribution of forestry to the deforestation, the Government of Laos has development of national and local economies. taken steps to try to deal with these problems The Government has recently agreed to expand through the 2005 revision of the Forestry Law the area covered under SUFORD and has of 1996, which provides comprehensive and extended the project for three more years. clear guidelines in many aspects of forestry, The project is implemented by the National especially promoting tree planting, and Agriculture and Forestry Extension Service In this issue protection and rehabilitation of natural forests. (NAFES) and is the largest donor-supported The Government has also developed related forest sector project in Laos. The key regulations to promote sustainable use of forest achievements to date are the establishment of ♦ Joint Effort For Sustainable products and enhance community participation eight Production Forest Areas (PFAs) in the four Forests in Laos in production forest management. An example most important timber-producing provinces in ♦ Carbon Finance of this effort is the recent regulation to set Laos - Khammouane, Savannakhet, Salavan, national wood quotas, which has significantly and Champasak. PFAs are areas determined by ♦ Interview with Vice Minister of the Ministry of Agriculture reduced the amount of natural wood harvested the Government where production of timber and Forestry as compared to a decade ago.3 and non-timber forest products is managed With the goal of reversing the trend of forest with the involvement of local communities. >> ♦ Nam Theun 2 Update ♦ World Bank Events Page 2 http: //www.worldbank.org/lao Mar-Apr 2008 << These eight PFAs, with a total in villages in Luang Prabang and area of about 656,000 hectares, Sayaboury provinces of Northern cover approximately one-forth of the Laos.11 Other donors involved in country’s estimated natural developing non-timber forest productive forests. The Prime products in Laos are SNV Minister has officially declared a (Netherlands Development further 29 new PFAs in September Organization), the Swiss Agency 2007. By the completion of the for Development and project, all potential PFAs in the Cooperation12 and GTZ. country – altogether 54 covering an Meanwhile, the WWF actively estimated 3.5 million ha – would works on environmental and have been identified and conservation issues in Laos. demarcated.5 weaving machine to support their REFERENCES: livelihood. The funds, which are managed As PFAs may also contain protected areas, 1 Forestry Strategy to the Year 2020 of the Lao PDR, July collectively by the villagers and local PFA management also serves other 2005, page 2. governments, are also utilized to build important functions such as biodiversity 2 SUFORD Project Document and interview with Tapani village infrastructure such as roads, conservation for the areas that could 8 Routsalainen, Technical Advisor for SUFORD. schools, and clinics. provide a habitat for wildlife; and soil and 3 Based on interviews with Tapani Routsalainen and Bouahong Phanthanousay, SUFORD National Project water conservation for rugged areas best The participatory and voluntary nature of Coordinator. left for its soil and water resources.6 project activities minimizes the risk of 4 Forestry Strategy 2002, page 3. serious social impacts from unmanaged Lao System of Participatory 5 SUFORD Project Document . timber production and contributes to Sustainable Forest Management 9 expanded local control over resources. 6 Ministry of Agriculture and Forestry, Forest Management (PSFM) Plan: Cluster of Village Development Number 7 Sub-FMA, Local residents benefit most from SUFORD Xebangfai FMA, Dongphousoi PFA, Kahmmouan Province, The villages inside the PFAs participate in as they are provided the opportunity for page 4. various aspects of forest management developing new livelihoods while at the 7 SUFORD Project Brief, February 2007. from planning to utilization. The same time assuring their fair share of 8 Based on interview with Bouahong Phanthanousay. stakeholders – including villagers and revenues from the forest products. 9 World Bank Rural Development and Natural Resources officials from the district office of the It is also worth noting that natural forest Sector Unit, East Asia and Pacific Region, Project Appraisal Ministry of Agriculture and Forestry - Document for a Sustainable Forestry for Rural Development areas covering close to 45,000 ha in two Project, page 24. jointly carry out detailed forest inventory PFAs under SUFORD have been certified based on which a Forest Management 10 SUFORD Project Brief, February 2007. by the Forest Stewardship Council Plan is prepared and approved. The plan 11 Based on interview with Sasaki Mitsugu, JICA Forestry certification scheme, the leading is usually for 15 years. Government Expert. international standard of good forest regulations prohibit any timber harvesting 12 World Bank, Lao PDR Economic Monitor, November 2007, management. Certification demands page 39. from a production forest, which does not transparency in timber business, invites have an approved forest management international scrutiny, and requires that plan. The forest management plan also profits from logging be shared equitably.10 WORLD BANK defines the village rules and regulations for collection and processing non-timber With these efforts, the vision of reversing EVENTS forest products. Villagers agree to these deforestation and forest degradation as ♦ Regional Program for Management rules and monitor compliance by outlined in the Government’s Forest of Health Risks of Persistent themselves. Strategy can be accomplished. At the Organic Pollutants (POPs) in South same time this forest management East Asia. The launching workshop About 29,200 families and 187,300 people scheme will help lift the country from was held on April 3-5, 2008 in from 412 villages in 18 districts are poverty by ensuring a sustainable stream Luang Prabang. already benefiting from SUFORD, notably of revenue from timber and non-timber ♦ Third Series of Seminars on Public through compensation (wages for labor) sales. Expenditure Review: Public Expen- for operational activities such as clearing diture Management was held on access trails, felling trees and forest road Joining this effort is JICA with its Forest April 8 at the National University of maintenance.7 In addition, the villagers Management and Community Support Laos, Faculty of Economic and have access to village funds - their share Project, which aims to stabilize shifting- Business Management. of the sale of timber - to promote cultivation, a major cause of deforestation, household income generation. Through by introducing alternative production and ♦ A Dissemination Workshop of the Study "Teaching in Lao PDR" was these funds, villagers can receive grants income generation (such as animal held at the Ministry of Education on to purchase, for example, a buffalo or a husbandry, fishery, and fruit tree planting) March 25, 2008. Mar-Apr 2008 http: //www.worldbank.org/lao Page 3 CARBON FINANCE: CLIMATE CHANGE AND FOREST Q&A with PROTECTION I t is widely publicized that deforestation and forest H.E. Dr. Ty Phommasack degradation are the second leading cause of global warming Vice Minister of Ministry of and responsible for about 20% of global carbon emission, Agriculture and Forestry more than from all the cars, trains and planes in the world. Living trees absorb CO2, and as they are cut down or burned, they release their stored carbon into the air. In addition, thinning forests mean fewer trees to capture the carbon emitted by industry and transport. Experts and policy makers have been debating about how to prevent or reduce forest loss, especially in developing countries What are the main challenges Laos faces in managing its where deforestation and forest degradation are by far the main forests? source of national emissions. The debate has gained new mo- mentum since the World Bank launched the Forest Carbon Natural resource management faces many challenges such Partnership Facility (FCPF), a financing mechanism that gives as deforestation caused by infrastructure development and incentives to developing countries for preserving their standing the shift of land use to agriculture along with an increasing tropical forests and saving them from burning, logging, demand for timber as a raw material. This puts much conversion and other types of degradation. pressure on forest resources - an important source of Why the World Bank? revenues for sustained national economic growth. The World Bank’s goal is to reduce global poverty. Forests play a crucial role in the lives of many of the poor, and the loss of Illegal logging is a challenge faced by many countries in forests as well as its impact on global warming is of particular Southeast Asia due to the valuable timber species. How is concern to the World Bank. The carbon finance activities of the the Government addressing this challenge? World Bank are a natural extension of its mission to reduce poverty. The World Bank, therefore, became a “market maker” to The Government of Lao PDR has developed its forest reduce CO2 emissions and currently manages 12 carbon funds management plan and strategy to the year 2020. Timber and facilities with contributions of more than $2 billion from quotas are being implemented annually at the local level to public and private entities. manage, control and monitor resource exploitation. These How does FCPF work? practices have been effective. However, illegal logging FCPF is a World Bank carbon finance initiative. This facility remains a challenge for which we need to further seek supports projects that encourage governments and companies in solutions, namely through increased community awareness the developed world to pay for preserving trees in the tropics in and improvement of control and monitoring systems. It is exchange for “carbon credits” that grant them the right to emit necessary to increase local community participation and CO2. The World Bank does not directly lend or provide grants to enhancement of ownership and accountability of forest projects, but with the carbon fund, the Bank will remunerate the participating governments and companies - in accordance with protection throughout the country. negotiated contracts - for reducing emissions more than a What contribution has SUFORD made to improve forest determined reference scenario (i.e. recent historical emissions). The Bank, then, pays “carbon revenue” to the parties management? contributing to these reductions after verification by independent The project’s success has brought benefits in many aspects. auditors. It has helped to enhance the development of community What are the implications for Laos? livelihoods in some of the project areas to reduce poverty. Laos is amongst the many developing countries that have Production forests are gradually being brought under requested an opportunity to participate in the FCPF. The benefits sustainable management with community participation, for the country are substantial. The initiatives to reduce ownership and accountability, and illegal logging has been deforestation and degradation (REDD) are in line with the reduced. An important result has been to improve Government’s Forestry Strategy to the Year 2020 to increase forest cover and directly impacts poor people who depend on international confidence in the policy guidelines adopted by forests for their livelihood. At the same time, this partnership will the Government for the protection of forests and the use of provide the country with a new source of revenue for the natural resources. This project will serve as a model for sustainable use of forest resources and biodiversity conservation. sustainable community participative use of forests and the REFERENCES: http://www.carbonfinance.org/fcpf; The World Bank, Forest Carbon preservation of forest resources. Partnership Facility Booklet; Interview with Peter Jipp, Brian Walsh, “Getting Credit for Saving Trees,” TIME Magazine, July 2007; and Charles Peterson et.al., “Make Money While Saving the World,” Water Environment Federation Magazine, December 2007. Page 4 http: //www.worldbank.org/lao Mar-Apr 2008 World Bank Update on Nam Theun 2 Project Activities O n April 10, 2008, the tunnel assessed the status of all the actions men- which has been diverting the tioned above and also the status on rec- water around the Nam Theun 2 ommendations they had made during their (NT2) dam will close and the reservoir January visit (see POE 13th and 14th re- will gradually begin to fill. Tunnel closure ports). The Panel has expressed its full will allow for the filling of the permanent support to tunnel closure in April, and inundated areas of the reservoir, 80km2 their 14th report further highlights actions of the 450km2 reservoir. Following this, that need to be completed ahead of dam in mid-June 2008, the dam gates are gate closure in June 08. scheduled to close which will mark the The World Bank, together with other fi- full inundation of the reservoir. nancing institutions, will continue its close In February of this year, the World Bank supervision of social and environmental reported in its Interim Progress Report programs. Particular attention in the next that in order for reservoir inundation to coming months will be paid to the full go ahead three benchmarks have to be completion of infrastructure in the new met according to the Concession Agree- villages, the provision of boats for villagers ment between the Lao Government to fish in the reservoir, the permanent (GOL) and the Nam Theun 2 Power Com- relocation of the Vietic villagers from pany (NTPC). SopHia, the progress on livelihood activi- ties throughout all project areas, the pro- The three benchmarks and their current tein status of the 37 villagers downstream status as of April 4, 2008 are as follows: their current status as of April 4, 2008 are of the dam and the continued progress of as follows: ♦ Resettlement of all impacted house- the Watershed Management Protection holds in the Nakai Plateau to be com- ♦ Comprehensive plan for mitigation Authority (WMPA). pleted, along with related infrastruc- and compensation for the villages For more information on the activities ture (houses, water wells…) and ser- who will be impacted in the Down- described above see the World Bank’s vices – 98% of houses have been stream Areas – NTPC, GOL and the Interim Progress Report, February 2008 completed with the remaining 35 IFIs are currently discussing the final and the World Bank’s Update on NT2, houses, which will not be impacted refinements to the rolling plan of the December 2007. For more detailed infor- until June, fully resettled by end of Downstream Program that will cover mation regarding the current activities in April. Water wells and other infra- activities for approximately the next the Nam Theun 2 Project, including an structure, including community build- two years; “Action Plan” see GOL and NTPC’s latest ings (schools, health centers) are ♦ Selective vegetation clearance in the Progress Report on Reservoir Impound- almost finished and will be fully com- areas of the reservoir that will be ment and Action Plan. pleted by June 15, with finishing permanently inundated will be com- All the documents, including reports from touches to take place throughout the pleted to help with improving water year; the International Panel of Experts are quality as well as providing navigation available on the World Bank’s NT2 web- ♦ The Reservoir Fisheries Plan, and access – Most of the 1500 hectares site: http://www.worldbank.org/laont2 related sub-plans, must be completed (ha) identified have been cleared and – Draft plans have been completed are currently being burned. Additional For a look at how we work on a daily ba- and will be reviewed by GOL and the vegetation clearance will take place sis, read our NT2 blog, which is accessible international financing institutions until mid June. from the NT2 website. (IFIs) in April, and the plans will be ♦ Implementation of a water quality completed by June 15 so that the monitoring program, including base- resettler villages can start taking ad- line information, must be operational vantage this year of fishery opportu- – This is ongoing and will continue nities; throughout the coming years. ♦ An Emergency Contingency Plan must For more information about the World The International Panel of Experts be finalized in consultation with the Bank in Lao PDR, please contact: (POE), who advise the Lao Government on Dam Safety Review Panel – This has Nanda M. Gasparini social and environmental issues related to been completed and communities E-mail: mgasparini@worldbank.org NT2, also weighed in on the status of the have been made aware of potential Viengsamay Srithirath actions laid above when they undertook risks. E-mail: vsrithirath@worldbank.org their 14th visit to the project site March Website: In addition, the World Bank also high- 26-April 4. http://www.worldbank.org/lao lighted in February that three other re- In their latest visit, the Panel reviewed the lated actions also needed to be met and Editor: Anita Dean progress made since their visit in January,