Updated Project Information Document (PID) Report No: AB363 Project Name VIETNAM - Forest Sector Development Project Region East Asia and Pacific Region Sector Forestry (100%) Theme Other environment and natural resources management (P); Biodiversity (P) Project P06605 1 Supplemental Project P074414 Borrower(s) VIETNAM Implementing Agency(ies) M1NISTRY OF AGRICULTURE AND RURAL DEVELOPMENT Address: 2 Ngoc Ha, Hanoi, Vietnam Contact Person: Nguyen Quang Duong, Vice Director, Forestry Development Department Tel: 844-8438795 Fax: 84-4-8438793 Email: cucptin@hn.vnn.vn Environment Category B (Partial Assessment) Date PID Prepared September 30, 2003 Auth Appr/Negs Date September 30, 2003 Bank Approval Date March 30, 2004 1. Country and Sector Background Forestry sector background and issues Vietnam's forest cover is about 9.4 million ha (29%) down from 14.3 million ha (43%) in 1943. After decades of deforestation, Vietnam has 7-8 million unused forest land that is degraded and denuded. Forests are classified into different management categories of production, protection (watershed) and special use forests (sites of both biodiversity and historical interests). Vietnam's rural population is estimated at about 58 million out of total population of 80 million. The forestry sector contributes officially only about 1.4 percent of the country's recorded gross domestic product, but forests still play a central role in the livelihood of rural population and ethnic minorities. An estimated 25 million rural people, most of them poor, use forest resources to meet subsistence needs and finance purchases. About 14 percent of Vietnam's total population are ethnic minorities, who mostly live in remote upland areas characterized by high poverty levels and forest dependence. Forests supply most of the energy they use and act as a safety net for rural poor. Forests are also important for providing critical environmental services, such as conserving soil and water resources and biodiversity. Vietnam's forests have high biodiversity value and lie within four of WWF's 200 Globally Important Ecoregions and contain four Endemic Bird Areas and 63 Important Bird Areas identified by Birdlife Intemational. The capacity of these forests to provide various environmental services continues to decline, despite the apparent slowing down of deforestation. Forest degradation and fragmentation are destroying valuable habitats and putting large number of vertebrate species at risk of extinction. In many areas, watershed degradation is causing environmental, human, and economic disasters as a result of floods, soil erosion, siltation, and reduced agricultural productivity. At the same time when forest land resources are being degraded and biodiversity lost, the demand for both subsistence and industrial forest products has increased due to rapid population growth and economic development. The supply of logs from domestic natural forests is declining because most of the forests have already been exploited and the remaining face smaller quotas, or have already been put under some form of protection. Industrial raw material requirements are increasingly met by imports from neighboring countries, which has a negative impact on the trade balance and sustainability of natural forest 2 PID management, especially in the border areas of Laos and Cambodia. In Central Vietnam, imported logs supply an estimated 80% of log input of some 60 large export-oriented sawmills/furniture factories. The Govemrnment of Vietnam (GoV) has long recognized the need to make better use of available unused, bare land for forestry development to reduce the dependence on the remaining natural forests and provide watershed protection and other environmental services. It has initiated a number of ambitious forestry-related programs with mixed results during the last two decades. Of note is the launch of the nationwide 327 Program launched in 1993 with offered better tenure security and cash incentives to replant and protect forests. While plantation areas has increased from some 100,000 ha in 1976 to 1.3-1.5 million ha at present, the gap between demand and supply for forest products and services has widened. Existing plantations contribute relatively little to the overall wood supply and economic development in rural areas. Plantations suffer from low productivity and poor survival, making many of them economically unviable. Tree planting under the 327 Program also had limited impact on forest protection. Although in some areas quite successful private plantation schemes have emerged driven especially by industrial development (e.g., wood chip exports), past investments as a whole have not resulted in the establishment of a commercially viable and sustainable plantation sector contributing both to the rural and national economic development. The existing plantations do not provide enough wood to meet increasing requirements and reduce pressure to over-exploit scarce natural forests which house globally important biodiversity. The main reasons for the inadequate performance of the plantation sector are the same problems which plague state-driven plantation forestry throughout the developing world--inadequate incentive framework; insufficient market orientation; heavy top-down planning; weak extension capacity; limited technological and managerial capacity; and inadequate investment. An addition limitation to the development of a non-state plantation sector has been insufficient land available for planning by the non-state sector combined with insecure land tenure. The allocation of forest land and the issuance of Land Use Certificates (LUC) for forest use has been extremely slow. There are many reasons for the delay including limited resources and budget; lack of cadastral maps in forest areas; priority given to other land uses, particularly urban, rural industrial, and agricultural land; and difficulties arising from the transfer in 1999 of responsibility for allocating forest land from the Department of Forestry Development to the cadastral offices. If the future forest-related needs of society are to be met and the potential of the land to contribute to rural livelihood to be tapped, the economic viability of forest plantation development has to be improved; the area under market-oriented forest plantations and mixed forestry-agriculture systems greatly expanded; and the range of forest managers widened. To achieve these, a number of issues need to be addressed: * Government policies and legislation must provide an investment and market environment that promotes commercial tree growing by a mix of land managers including households, communities, and private sector. * The role of the state including SFEs and non-state sectors in commercial forestry development must be clarified, including responsibilities for provision of efficient market-driven extension services. * The process of land classification and allocation to the different uses and users, and provision of long-term tenure for the allocated land must be accelerated and followed up with measures to improve forest management capacity. * Financing mechanisms that reach the different land managers, including communities and smallholders, in a transparent and cost-effective manner need to be developed and supported both financially and technically. * The international competitiveness of the forest industry, which could provide a market that can 3 PID pay attractive prices for wood grown by the different land managers, including households, need to be improved. To protect valuable biodiversity and culturally-significant areas, GoV has established a nationwide system of Special Use Forests (SUFs). Currently, there are some 121 SUFs covering nearly 2.5 million ha. Even though the 327 Program was revamped under the 661 Program to focus primarily on forest protection, SUFs still suffer from effective management on the ground. Like other developing countries, many of the SUFs are paper parks. Limited funding and capacity within MARD and the provincial and district forest protection units are serious constraints. Any system-wide conservation effort therefore has to address the following challenges: * Increasing demands on national and provincial budgets both for conservation and for socio-economic development and poverty alleviation which starves most SUFs of management funds. * SUF management regulations which prohibit potentially sustainable use of natural resources that might provide incentives for local stakeholders to support conservation. * Limitations in capacity among government institutions mandated to manage SUFs. * Lack of understanding of the objectives and values of SUFs among decision makers at all levels; and * A conservation financing system that directs funds towards a small number of sites and infrastructure investment, as opposed to conservation field activities on a system-wide basis. Government strategy GoV's strategy to tackle declining forest cover, diminishing wood supply, and environmental degradation including loss of biodiversity is articulated in its 2001 Forest Sector Development Strategy (FSDS) which focuses on protection of crucial watersheds, biodiversity conservation, and expansion of production forests. Other related strategies include the National Biodiversity Action Plan, the National Environmental Action Plan, and Vietnam's GEF Strategy (2001-2010). In 1998, GoV launched the 5 Million Hectare Reforestation Program (5MHRP), which aims at reforesting 5 million ha by 2010 to bring the national forest cover back to 43 percent. Broad targets comprise 2 million ha of production forests, 2 million ha of protection and special use forests, and 1 million ha of perennial tree crops. However, 5MHRP lacks a detailed implementation plan; the financial resources needed to realize its targets; and a strategy to link market and wood production by the non-state sector in such a manner that national objectives and local development needs would be simultaneously met on a sustained basis. The financing gap to develop production forest plantations and perennial tree crops is very large in the order of magnitude of some US$ 700 million. In 1999, the Ministry of Agriculture and Rural Development (MARD) and the donor and NGO community formed a partnership to further the work related to 5MHRP and facilitate the preparation of a more comprehensive sector-wide program that would help with implementation of 5MHRP and addressing a wide range of sector development needs. The Forest Sector Support Program (FSSP) was formulated and adopted in 2001. It includes nine result areas: (1) Effective systems for collaborative planning and monitoring; (2) Policy, legal and institutional framework to harmonize national-provincial policies; (3) Macro land-use planning; (4) Integrated micro (decentralized) land-use planning; (5) SFE renovation; (6) Sustainable forest management planning and implementation; (7) Sustainable use and conservation of indigenous forest flora and fauna; (8) Integrated system of demand-driven research, extension, education, and training; and (9) Marketing and processing of forest product at a sustainable rate. 4 PID 2. Objectives The objective of the project is to achieve sustainable management of (plantation) forests and the conservation of biodiversity in special use forests to enhance the contribution of forestry to rural poverty reduction and global environmental protection. This objective will be attained by improving environment for sustainable forestry development and biodiversity conservation; providing attractive packages to mainly poor farming households to plant trees on a sustainable basis for generating additional income and employment; providing small competitive grants for managing priority special use forests of international importance effectively; and enhancing capacity in regional, provincial, district-levels, and site-levels to provide needed support services and to monitor and evaluate impact and outcomes. 3. Rationale for Bank's Involvement IDA and GEF involvement in the project and in FSSP would provide the following contributions: * This is IDA's third forest sector-related operation in Vietnam. Through these and similar projects elsewhere in the region and worldwide, IDA can facilitate integration of experiences and results into its policy dialogue with GoV. The project will be the first large-scale project under the FSSP and thus test out some of key principles. * IDA and GEF can be considered to have a comparative advantage in piloting effective and efficient financing mechanisms--in this case, the use of the Vietnam Bank for Social Policy for the credit will complement IDA's ongoing work on financial sector refonn and could led to a more efficient mechanism for financing production forestry activities. Similarly, the piloting of the conservation fund will draw upon experiences with other conservation funds financed by the GEF and implemented through the World Bank. These mechanisms will help to foster the development of a sector-wide approach program (SWAP) for the forestry sector and in line with the FSSP. * The Government has identified an increasing gap between the rapidly expanding demand for timber and forest products and the present and anticipated outputs from plantations and remaining natural forests intended for production. Investments in commercially viable and environmentally sustainable wood production would help in reducing this gap and directly contribute to poverty reduction by providing rural households employment opportunities and increased incomes on land allocated to them. On a limited scale, they would also benefit from partnership with viable SFEs or private companies. Despite the potential of production forest and high GoV priority placed on developing the plantation sector, a review of on-going projects and programs showed that most of the large-scale assistance focused on protection forestry and the smaller-scale assistance on integrated community-based projects or social forestry with a focus on poverty reduction. Producing multiple forest products for subsistence purposes to complement and diversify rural production systems have not received much attention. Land allocation programs have too often been implemented without adequate support to land managers to increase land productivity on a sustainble basis. Linking tree planting and improving land tenure and efficiency of forest land management is one of the most innovative features of this project. IDA has extensive experience in land administration and forest plantation establishment, particularly in the East Asia Region; therefore, IDA is in a good position to assist GoV in promoting the forest plantation sub-sector. * The project will require multiple sources of financing. IDA's experience in working with and coordinating multiple donors in financing a range of sub-projects is an area of comparative advantage. 5 PID 4. Description The project will finance, over a period of six years, the following main components and activities. Component 1: Institutional Development (US$1.17 million). This component, national in scope, will assist the GoV in strengthening the enabling environment for sustainable forest management and biodiversity conservation. The component includes the following subcomponents and key activities: (i) revising selected policies and regulations based on field implementation experiences with regard to management of production plantation forest and special use forests (examples include improved forest land allocation guidelines; development of more effective guidelines for SUF management, planning, and budgeting; and improve ways in which forests are addressed in provincial plans); (ii) establishing farm forestry groups to facilitate the development of smallholder forestry; and (c) promoting certification of plantation forests to ensure environmental sustainability and higher prices for participating households. Component 2: Smallholder Plantation Forest (US$62.56 million). This component, covering four provinces of Quang Nam, Quang Ngai, Binh Dinh, and Thua Thinh Hue, will establish forest plantations and promote small-scale tree growing by rural communities, many of whom are poor, based on different cropping systems, including fast-growing plantations, mixed forestry-agriculture crops, and fruit trees. In addition, special attention will be paid to improving productivity of already existing but poorly performing plantations. It will include the following subcomponents and activities: (i) participatory site section involving village consultations and technical and environmental screening of proposed sites; (ii) land allocation and land use right certificate (LUC) issuance which is an eligibility criteria for the investment credit; (iii) extension and services delivery to assist the smallholders in all aspects of plantation forestry; (iv) plantation design and management; and (v) plantation investments in the form of credit to eligible households. While SFEs may also participate if they meet the agreed eligibility criteria, it is likely that the number would be very few, if any. Component 3: Special Use Forest (US$17.00 million). This component will improve the conservation and sustainable use of biodiversity in priority special use forests and increase the reliability of special use forest funding through the establishment of an innovative financing mechanism. It will be implemented nationally and include the following subcomponents and activities: (i) Vietnam Conservation Fund (VCF) establishment and operations including the set-up of the fund management structure and procedures; administration of a competitive small grants program; and monitoring, reporting, and dissemination of lessons learned; and (ii) special use forest planning and implementation which focuses on site-specific activities such as completion of conservation needs assessment, development of operational management plans, strengthening of field implementation capacity; and operationalization of a site-specific monitoring and evaluation system. It is expected that up to 50 priority SUFs could benefit from the grant packages during the course of the project. The fund would be open-ended and could be replenished at the end of the project by other donors based on evaluation of performance. Component 4: Project Management and Monitoring and Evaluation (US$5.68 million). This component would facilitate efficient project implementation and coordination and collaboration with various government agencies at central, provincial and district levels as well as undertaking project specific monitoring and ensuring effective collaboration and cooperation with other partners in the FSSP Partnership in accordance with the signed MOA and related principles. There are two subcomponents: (i) project management; and (ii) monitoring and evaluation to ensure the project is on course, improve project performance, and determine project impact. 6 PID 5. Financing Source (Total (US$m)) BORROWER ($20.80) IDA ($44.80) GLOBAL ENVIRONMENT FACILITY ($9.00) NETHERLANDS: MIN. OF FOREIGN AFFAIRS / MIN. OF DEV. COOP. ($6.80) Total Project Cost: $86.50 6. Implementation Project Management. Project steering committees at the central and provincial levels would be established to provide general policies and guidelines, review annual work plans, and ensure coordination and linkages with relevant agencies. Project entities at the national-, provincial-, district-, commune-, and SUF levels would be responsible for day-to-day implementation, supervision, and monitoring. National-level. The National 5MHRP Steering Committee will be the National Project Steering Committee (NPSC) for the overall project to avoid the need to develop a parallel structure and offer opportunities to scale up learning and experiences to the national program. However, for the Special Use Forest component, a Management Committee will be established to oversee the policy and operations of the Vietnam Conservation Fund (VCF) and endorse small grants proposals recommended by the Technical Review Group (TRG) and authorize fund disbursement to sub-projects. A National Project Management Unit (NPMU) will be established within the Department of Forestry Development (DFD) in MARD. The NPMU will be in charge of overall project coordination, and will be responsible for centralized procurement, financial management, monitoring and reporting. NPMU under the direction of the NPSC, will also be responsible for coordinating with DFD and Forest Protection Department (FPD) in the implementation of national level project activities related to institutional development as well as liaison with the FSSP. The Special Use Forest component will be managed by a deputy project director appointed from FPD and supported by a VCF Secretariat and the TRG. The latter would be responsible for the technical review and recommendations of all proposals sent to the VCF Secretariat. Field-Level: Field implementation of the Smallholder Plantation Forest component would be a direct responsibility of each of the four provinces. A Provincial Project Management Unit (PPMU) will be established in each project provinces under the oversight of the Provincial 5MHRP Steering Committee. The PPMU will be responsible for coordinating implementation of the component dealing with plantation forest as well financial management of provincial project funds and procurement through national shopping. It will also be responsible for liaising with Department of Land Administration in land allocation and issuance of Land Use Certificates (LUCs), a critical project activity. A District Working Group (DWGs) and a Commune Working Group (CWGs) will be established in each of the participating district and commune, respectively, to facilitate day-to-day implementation. The DWGs should be closely integrated into routine operations of the district administration. The CWGs would facilitate and be in charge of participatory planning and infonnation dissemination. Existing extension units will be used to provide support services to households. Field implementation of the Special Use Forest component will be the responsibility of the individual SUF Management Board in concert with the related provincial Forest Protection Department, Accounting, Financial Reporting, and Auditing Arrangements. A preliminary assessmen't of the adequacy of the project financial management system was conducted at pre-appraisal (May 2003) and concluded that this project meets the minimum Bank financial management requirements (see Annex 6). All previous forestry projects have been in full compliance with audit and accounting covenants. The 7 PID Project will be monitored using standard Financial Monitoring Reports (FMRs). In terms of disbursement technique, traditional transaction-based disbursement techniques will be used. Project accounts will be kept for all project related expenditures using accounting principle and practices acceptable to IDA. Project accounts will be audited on an annual basis in accordance with international standards on auditing and in compliance with the independent auditing regulations of Vietnam. The auditor's report will be made available to IDA within six months of the close of each fiscal year. The audit will include a separate opinion on the SOEs other than the Special Accounts and Project Accounts. A management letter addressing internal control weaknesses of implementing agencies will also be provided by the auditor together with the audit report. On-Lending Arrangements: Only the credit scheme under the Smallholder Plantation Forest component would be on-lent. The Ministry of Finance (MOF) would on-lend IDA Credit to Vietnam Bank for Social Policy (VBSP). While there are concerns about using the recently-established VBSP as the financial intermediary for passing on the IDA credit, VBSP was set up explicitly by GoV to channel credit to poor households. The project therefore could provide a vehicle for the World Bank to stay engaged with the operationalization of VBSP, although due caution is needed in identifying what can realistically be done under the project. Foreign exchange risk between SDR and local currency would be borne by MOF. However, it was agreed that at a minimum, the rate should be based on recovering cost of IDA funds, operating costs of the financial intennediary, and risk provision. If at any time, the cost recovery for the institution cannot be achieved, then GoV will need to cover the difference with GoV budget. This will prevent an erosion of capital and deposits. Monitoring and Evaluation Arrangements. Monitoring and evaluation will be done at four levels--5MHP-M&E, the project-level, special use forest site-specific level, and plantation block level as a result of forest certification. The latter is an independent tool for M&E. The overall project M&E plan will be developed during the first year of implementation, and specific special use forest M&E will be included as part of each special use forest operational management planning process. During implementation, project performance, including the achievement of project outputs and progress toward the attainment of development objectives, would be monitored through the use of semi-annual progress reports prepared by the NPMt. Supervision and Reporting Arrangements. The project will be supervised through IDA missions scheduled for twice a year consisting of both Field Office and Headquarters staff. A project launch workshop will be arranged soon after Board approval which will focus on (a) project concept and objectives; (b) project management activities including procurement, financial management, and implementation arrangements; and (c) project environmental management plan, resettlement policy framework, and ethnic minority development strategy. An annual work and financing plan for the next calendar year would be furnished to IDA for comments each year. In addition, a mid-term review will be undertaken. Prior to that, a mid-term report will be prepared by the NPMiU and furnished to IDA. The report will summarize the results of M&E, identify problems encountered during implementation, revise project costs, and discuss measures to complete the Project as scheduled. In addition, an implementation completion report, reviewing the planned objectives and achievements of the project, including costs and benefits derived and performance and contribution of all parties associated with project execution, would be prepared by the NPMU and submitted to IDA within three months of the closing date. 8 PID 7. Sustainability A number of measures have been taken to ensure sustainability. First, institutional sustainability is being addressed through the use and strengthening of existing service and financing delivery mechanisms and not the creation of new and parallel structures. This will also foster greater ownership by the implementers. Extensive training will be implemented to build up training and extension capacity and strengthen management capacity of the forest managers including smaliholders. Second, financial sustainability of the plantation forest component will be ensured by promoting tree growing that is expected to be financially profitable, allowing cost recovery and repayment of the credit. The project addresses financial and institutional sustainability of special use forests through the provision of small, realistic financing for core protection and management activities that can be sustained with limited external support and capacity building for priority special forests focusing on government staff and other stakeholders at the local level where most decisions on resource management are taken. It is expected that the VCF will be replenished through other donor financing if the model proves successful. Third, environmental and social sustainability will be ensured through improving land-use planning, enhancing security of land tenure and recognizing traditional land management systems, strengthening protection of special use forests, promoting envirorunentally sound forest management, applying socio-economic plantation development guidelines, and involving all stakeholders including ethnic groups and women in planning and forest management. 8. Lessons learned from past operations in the country/sector The World Bank, Asian Development Bank, bilateral development agencies and NGOs have only limited experience in promoting production-oriented forestry in Vietnam. However, several donors have accumulated experience in afforestation and reforestation of barren lands mainly for protection purposes or as part of the development of an integrated farnning system. Some of the main lessons learned in Vietnam are: * Plantations should be established to meet specific needs, which will require a better understanding of the markets and the needs of local populations. * Policy, market and organizational analysis and development must receive proper attention, since policy and market failures can create even more serious constraints than technical forest management problems. * Security of land tenure must be improved. * Farm forestry cannot be divorced from the rest of the livelihood systems of rural families. * Technical management standards related to all aspects of forest management need to be raised in order for plantation forestry to become a viable land-use alternative * Site and species matching must receive more attention. * Forestry extension for the period after plantation establishment has to be provided. * Land availability for plantation development can be overestimated; land that is assumed to be unused is often already being used for agriculture or grazing. * Natural regeneration has turned out to be a cost-effective way of rehabilitating degraded land. * Plantations that are linked to industries tend to have much higher productivity than plantations that are not linked to the industries and the market place. The OED review of 1991 Bank Forest Policy, WB's Forest Policy Implementation Review and Strategy (FPIRS) and related working papers have highlighted the following issues of concern to the development of the forest plantation sector in Vietnam: * The Bank's forestry interventions should be based on the following three pillars of engagement: (i) harnessing the potential of forests to reduce poverty; (ii) integrating forests into sustainable economic development; and (iii) protecting vital global forest values. 9 PID * Forest concerns should receive due consideration in the Bank's macroeconomic work, and if possible, they should be explicitly treated in its Country assistance Strategy in countries where forest development and conservation are important issues. * The Bank should, through partnerships, help to create both public and private capacity for widespread application of improved forest management and tree planting. * Sound national policies, and institutional and management capacity for their implementation are preconditions for aid effectiveness. The Bank can support countries to improve policies and legislation and build the capacity to put the enabling conditions in place, or implement effectively already existing sound policies and legislations. * It is important to better address the needs of the forest-dependent poor and improve the understanding of the complex land and other rights on the ground. * Plantation development should only be undertaken within the framework of a transparent, accountable and consultative land use plan, which aims at determining the permanent forest estate and land available for production forestry, and which considers the needs of all stakeholders. * Plantations should be established giving due consideration to the end uses and the markets. * Environmental impacts need to be fully considered, especially in respect of biodiversity, hydrology, soil conservation and adjacent land use practices. * Social impacts, which can be more serious than environmental ones, must also receive due consideration. * Concentrated production through industrial plantations allows intensive management at acceptable cost, and can thus result in high productivity per unit area, which is very important in high population countries such as Vietnam A variety of lessons have been learned from implementation of conservation projects in Vietnam. These include the following: * Protected areas in Vietnam rely almost wholly on state budgets or donor funds. Few other sources of income are currently generated or retained at the SUF level. Government sources tend to cover salary and infrastructure development and little else. Therefore, a source of sustainable funding for protected areas will strengthen conservation on-the-ground. * Biodiversity conservation success will depend on an improved planning and budgeting process linked to biodiversity conservation. Developing investment plans linked to conservation needs is critical to ensure more effective fund allocation to Special Use Forests. * Community access to natural resources is important both for local economies and conservation and practical approaches are needed to balance the reality of community needs and conservation. 10 PID 9. Environment Aspects (including any public consultation) Issues : An independent environmental consultant was hired by MARD during project preparation to assess any environmental issues encountered, to evaluate the potential environmental impact of the project and to identify, where necessary, mitigation measures for any potentially negative environmental impact. Both the environmental (and social) inputs were made continuously throughout the project preparation process to guide design. Early in project preparation, the environmental assessment (EA) and social assessment (SA) consultants collaborated with the project preparation team in the preparation of an environmental and social impact assessment matrix that identified potential impacts and possible means of impact management. The intent of this document was to guide the environmental and social aspects of project design. This document and a simple project description were used in initial consultations to gauge the views of local communities on potential issues. A second version was disseminated to all 120 project communes and meetings were held in all 21 project districts. A final infonmation disclosure leaflet was disseminated to all project communes, and sample disticts and communes held meetings, facilitated by the national social and environment consultants, to solicit feedback on proposed project and the potential impacts. The EA consultant also provided comments to the various versions of the project feasibility reports and consulted with various GoV agencies and institutions and environmental NGOs. Potential environmental impacts identified in the draft EA all relate to the Smallholder Plantation Forest component. They are: (a) potential loss of residual biodiversity as a result of conversion to plantations of better quality successional vegetation communities; (b) potential site degradation and nutrient depletion of sites after several rotations; (c) potential increase incidence of pest and disease due to overly simplistic plantation communities; and (d) potential increase in soil and water loss due to poor plantation practices and infrastructure development (e.g., trail/road upgrade). Since most proposed plantation sites are located within 2 km of a secondary service road, building of access tracks within plantation blocks will be limited to that necessary to transport planting materials to the site and to extract products from primary landings in the woods to secondary landings at the service road. Such tracks should be sufficient for passing motorcycles and wagons towed by either draft animals or small tractors. This component is not located in any natural forest area; has no pesticide issue; and covers a potential area of 66,000 ha in four provinces, smaller in scale than most other World Bank-financed forestry projects. The draft EA concluded that the potential issues can be mitigated and the prescriptions are laid out in the Environmental Management Plan (EMP) which includes an Environmental Guidelines for Plantation Management based on best code of practice. The methodology taken will be adapted for use in the Forest Sector Manual of the FSSP and this will have an impact beyond the four project provinces. 10. List of factual technical documents: 11. Contact Point: Task Manager Susan S. Shen The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 202-458-2430 Fax: 202-522 1666 12. For information on other project related documents contact: The InfoShop 11 PID The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:l/ www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.