Ita6 ~~~~~E N V I R O N M E N T ta, ~~~D E P A R T M E N T PAPERS PAPER NO. 58 TOWARD ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT NATURAL HABITATS AND ECOSYSTEMS MANAGEMENT SERIES Natural Resource Management Portfolio Review John Redwood III Robert Robelus Tonje Vetleseter January 1998 A ESD2~\ Environmentally Sustainable Development The World Bank ESD L4 l¶Me Land, Water and Natural Habitats Natural Resource Management Portfolio Review John Redwood III Robert Robelus Tonje Vetleseter January 1998 Papers in this series are not formal publications of the World Bank. They are circulated to encourage thought and discussion. The use and citation of this paper should take this into account. The views expressed are those of the authors and should not be attributed to the World Bank. Copies are available from the Environment Department, The World Bank, Room MC-5-105. Contents FOREWORD V ACKNOWLEDGMENTS vi EXECuTIVE SUMMARY vii Chapter 1 Nature of the NRM Portfolio 1 Introduction 1 Nature of the NRM Portfolio 2 Chapter 2 Perfonnance of the NRM Portfolio and Projects at Risk 4 Comparative Performance of the NRM Portfolio 4 Findings of Pertinent "Sectoral Reviews" and Other Recent Portfolio Assessments 5 Natural Resource Management Projects at Risk 6 Current Assessments of Project Performance and Riskiness 8 Chapter 3 Factors Associated with Poor and Good Performance 10 Cross-Cutting or Systemic Problems 10 Proximate Casues 10 Underlying Causes 12 Borrower Factors 14 Bank Factors I: Quality at Entry 16 Bank Factors II: Quality of Supervision 20 Why Cross-Cutting Problems Arise 22 Experience with Successful NRM Projects 23 Natural Habitats and Ecosystems Management Series iii Natural Resource Management Portfolio Review Chapter 4 How to Improve Performance 27 Ways of Improving NRM Portfolio Quality and Performance 27 Assessment of Individual Projects and Associated Recommendations 27 General Ways of Improving NRM Project Performance 30 Recommendations for Further Analysis 33 ENDNOTES 36 ANNExES A. Natural Resource Management Projects 42 B. Summary of Recent Sectoral and Portfolio Assessments 44 C. Other Portfolio Review Observations on Specific NRM Projects 49 D. NRM Projects at Risk: Risk Factors 54 E. Recent Country Economic Performance Indicators 55 F. Recent Country Portfolio Performance by Country Economic Performance 56 BOXES 1. Generic Dimensions of Project Quality at Entry 6 2. Revised QAG "Flags" for Projects Potentially at Risk 7 3. NRM Projects with Overly Optimistic DO Ratings 8 4. "Flagged" NRM Projects that Do Not Appear to Be at Risk 11 5. Management and Institutional Problems in Selected NRM Projects 12 6. Impact of Macroeconomic Factors on Project Performance in Brazil 12 7. Impact of Political/Administrative Changes on NRM Project Performance in Brazil 15 8. "Ownership" and Project Performance in Indonesia and Malawi 16 9. Using Mid-Term Reviews to Increase Stakeholder Participation 17 10. Social Assessment in a Recent NRM Project in India 18 11. Assessment of Institutional Capacity in NRM Projects at Risk 19 12. Preparation Shortcomings in an Unsatisfactory NRM Project 20 13. Ecosystem Functions and NRM Project Design in Malawi 20 14. Field-Based Supervision of NRM Projects: A Growing Trend? 22 15. Keys to Success in NRM Projects in Sub-Saharan Africa 24 TABLES 1. Projects at risk in different segments of the Bank portfolio, FY96 4 2. Recent economic performance of countries with NRM projects at risk 13 iv Environment Department Papers Foreword The World Bank's natural resource ratings and other criteria, as being actually or management (NRM) portfolio includes some potentially "at risk" in terms of the 65 projects currently under implementation achievement of their development objectives. and involves three basic types of lending Examples of good practice, or highly operations: (i) those designed to promote satisfactory NRM projects, are also reviewed. sustainable agricultural, forestry and fisheries In both cases, the review seeks to identify the development and/or water resource use key factors associated with satisfactory and through the application of environmentally unsatisfactory project implementation and sound resource management techniques; (ii) outcomes. Particular attention is giverL to the those intended to conserve or protect specific preparation and design-or "quality at ecosystems and associated biodiversity, entry"-of these operations. including the establishment or consolidation of national parks, wildlife reserves, and so on; As part of the Environment Department's and (iii) those which seek to strengthen ongoing portfolio monitoring and assessment national and/or subnational institutional activity, it is hoped that this study will be capacity for improved NRM, as, for example, followed by a set of country-specific case through the development and use of rural studies of "clusters" of NRM projects in order land cadastres, geographic information to obtain more detailed, field-based systems, and other natural resource and information-as well as the borrowers' environmental planning tools. Many of the perspective-on successful and unsuccessful Bank's NRM projects are, in fact, "hybrids" in approaches to natural resource management. that they combine sustainable production, conservation and institution building objectives and components. The present review examines the implementation performance and future Colin Rees prospects of a subset of the Bank's NRM Environment Anchor portfolio, specifically those projects that have Environmentally and Socially been identified, on the basis of supervision Sustainable Development Natural Habitats and Ecosystems Management Series Acknowledgments This report was prepared by John Redwood Lewis (AFTA3), William Partridge (LATEN), (team leader and principal author), Robert Achim Steiner (World Conservation Union- Robelus, and Tonje Vetleseter of the Bank's IUCN), and Thomas Wiens (LATAD). former Land, Water, and Natural Habitats Division (ENVLW) and Kerstin Canby, of the Task managers interviewed in the course of Director's Office of the Environment the review included Giuseppe Topa (AFTA3), Department (ENVDR), under the overall Andrea Silverman (EA3RS), Andres guidance of Ken Newcombe (ENV). The Abramovich, Daniel Gross, John McKenna, financial support of the Norwegian Graciela Lituma, Steven Oliver (LAlER), Luis Government is gratefully acknowledged. Constantino, Adrian Demayo, and Augusta Molnar (LASLG). Helpful written comments The task team was assisted by a group of on the draft report were received from Ridwan technical specialists consisting of William Ali (SAlAN), Marjory-Anne Bromhead Magrath (AGRAF), David Cassells, Olav (MN2NE), Cynthia Cook (AFTE1), Choeng Kjorven (ENVLW), Louise Scura (ENV), and Chung (EA1AE), John English (OEDD1), John Kathryn McPhail (ENVSP) and guided by a Garrison (LA1BR), David Hughart (LATSO), Senior Advisory Committee composed of Chris Keil (SA2AW), Dennis Mahar (LA1BR), Bruce Cabarle (World Resources Institute), Laurent Msellati (MN1NE), Colin Rees Francois Falloux (AFTE1), Gershon Feder (ENVLW); Narendra Sharma (AFTA2), and (EA3AG), Douglas Forno (AGRAF), Jeffrey Gert van Santen (EMTAW). vi Environment Department Papers Executive Summary Introduction * Conserve or protect specific ecosystems and associated biodiversity (e.g., At the request of the Quality Assurance establishment or consolidation of national Group (QAG), ENV has undertaken a review parks, wildlife reserves, etc.); and of natural resource management (NRM) * Strengthen national and/or subnational projects considered actually or potentially at institutional capacity to achieve improved risk according to a (recently revised) set of NRM (for example, development and use performance indicators identified by QAG as of rural land cadastres, geographic being correlated with unsatisfactory project information systems and other planning outcomes. Some 65 projects currently under tools. implementation comprise the World Bank's active NRM or "green' environmental "Hybrid" projects include those combining portfolio. Although QAG's initial focus was production and conservation, or conservation on projects classified in the VM ("natural and institutional, objectives and components. resource management") subsector in the MIS, Virtually all NRM operations, however, ENV and QAG agreed to expand the analysis involve some institutional development to cover the entire "green" portfolio and to measures. Some NRM projects also contain include highly successful operations, as well components to protect indigenous people as those potentially at risk. and/or other vulnerable social groups, The Natural Resource Management thereby adding to their design complexity. Portfolio NRM Portfolio Performance and Quality The NRM portfolio includes three distinct of Ratings types of projects, as well as several A review of the active "green' portfolio at the combinations, each of which faces somewhat end of FY96 reveals that it was performing different implementation challenges. The better than the Bank portfolio as a whole in three basic types of NRM operations are terms of projects "actually at risk," but those primarily designed to: slightly less well than the entire portfolio with respect to those "potentially at risk," * Promote sustainable agricultural, forestry, according to the QAG criteria. Most Form and fisheries development and/or water 590 ratings for NRM projects on resource use through the use of - implementation progress (IP) and likelihood environmentally sound resource of achieving development objectives (DO) management techniques (such as soil appear to be realistic and consistent with the conservation and sustainable forest, text of accompanying supervision reports. fisheries, and water resource However, a tendency for over-optimism on management); the "DO" rating was detected in some cases. Natural Habitats and Ecosystems Management Series vii xLwaI Resource NIanagement Poit folio Review The review finds that the QAG risk "flags" preparation and implementation) relevant overstate the number of operations that stakeholders, as well as potential conflicts appear to be truly at risk. There may be among stakeholders over alternative several reasons for this: patterns of resource use; * Analysis of the property rights regime in o Too much emphasis on "contextual" the project area as this may have a factors such as country economic significant impact on how local management and past country portfolio stakeholders will react to project and subsector performance, as compared interventions; with project-specific performance'; * Careful analysis of the incentives to * The system doesn't distinguish between: farmers and other natural resource users (a) younger projects with merely start-up to adopt environmentally friendly or problems and those with more serious conservation-oriented resource design/implementation deficiencies; or management techniques, given the (b) older restructured operations that are technical and economic attributes of these now performing better and those still techniques; in particular, the economics of experiencing serious difficulties; the technologies being promoted among * Too much emphasis is given to farmers should be assessed from the disbursement lags, which may actually be perspective of the farmers themselves; neutral in terms of project outcomes; and, * For projects that entail the harvesting of a * The performance indicators focus on sensitive renewable resource (such as implementation issues and the fisheries and forests), understanding the implementation environment, rather than underlying ecosystem and population on the appropriateness of project design dynamics supporting the natural resource to achieve defined objectives. that is being harvested to help ensure that the proposed project leads to more While QAG "flags" are a useful starting sustainable utilization; point, using them as the exclusive basis for X When (as is often the case) understandin,g determining that NRM projects are at risk about ecosystem behavior and seems unwise. environmental variables critical to sustaining targeted natural resource Project Performance: "Quality at Entry" production is limited, provision of support for long-term applied research on This review confirms the relationship ecosystem functions and population between "quality at entry" factors and ecology to identify and protect key subsequent project outcomes. In addition to parameters in sustained natural resource the importance of obtaining borrower use; commitment to project objectives and project- * Especially in conditions of uncertainty, related policy, institutional and financial piloting of proposed approaches to test reforms, avoiding excessive design their local acceptability and complexity, and ensuring adequate implementability and learn from preparation prior to Board approval, the experience before applying them on a review identifies several "quality at entry" broader scale; dimensions that are particularly important * Inclusion of provisions for monitoring for NRM operations: and evaluating project outcomes to reveal actual economic, social and ecological * The use of social assessment to identify costs, benefits and implications for (and begin to engage in project sustainable natural resource use on the viii Environment Department Papers Executive Summary underlying ecosystems and affected problems are interrelated. For example, communities; and, initial effectiveness delays are often * Ensuring that project approaches and responsible for persisting disbursement lags. technologies are replicable. In many cases, such problems are linked to underlying country factors such as In most of the cases examined, these elements macroeconomic instability and stabilization were largely absent. However, some policies, which can block counterpart funding exceptions were found, particularly in more flows. Unforeseen changes in project recent operations: institutional arrangements and frequent management turnovers in project executing * The design of several projects has been agencies and sectoral ministries have also based in part on prior agro-ecological played a role in project implementation zoning studies or (regional) problems, particularly in Latin America. environmental assessments; * NRM operations involving on-farm soil Systemic factors related to quality at entry and water conservation at the that have adversely affected NRM project microcatchment level generally entail performance include excessive design significant decentralization of and complexity, insufficient stakeholder beneficiary participation in project participation in project preparation and decision making, substantially boosting implementation, and inadequate ex-ante local ownership of the interventions analysis of borrower institutional capacity involved; and project risks. These problems were often * Some older NRM projects are attempting characteristic of the "older" projects in the to retroactively incorporate broader sample, some of which are among the Bank's stakeholder assessment and consultation first attempts to strengthen national by conducting participatory mid-term institutional capacity for environmental and reviews and project restructuring natural resource management. On the exercises; positive side, there is evidence that more • A full ex-ante social assessment has been serious effort is now being made to undertaken in at least one recently incorporate lessons from previous NRM approved project; and, projects, including the need to: * Several recent (and at least one older) NRM operations give considerable * Involve stakeholders in project planning attention to monitoring and evaluating at as early a stage as possible; project environmental impacts. * Avoid attempting to do too much in a single operation; Other Cross-Cutting Problems * Pilot new approaches to resource The review finds that common design and management; and implementation problems are also * Improve institutional and risk analyses. encountered in the NRM portfolio, but observes positive trends in addressing these . . - problems. Proximate causes associated with unsatisfactory implementation performance In general, the quality of Bank supervision in in NRM operations include effectiveness NRM projects potentially at risk appears to delays, procurement difficulties, counterpart be reasonable in terms of consistency and funding problems, and poor project skill mix, although greater environmental and management. In many instances, these social expertise would have been beneficial in Natural Habitats and Ecosystems Management Series ix Nabtral Resource Management Portfolio Review many cases. There has been a high level of In contrast, most NRM projects at risk (as Task Manager turnover in about a fourth of well as those that have had unsatisfactory the operations reviewed, in some instances outcomes ex-post) are characterized by the with an adverse effect on project absence of many of these features. performance. There likewise appears to be a growing trend toward field-based Project-Specific Assessments and supervision of NRM projects. This is Recommendations appropriate given the close monitoring and NRM operations "flagged" as being actually intensive Bank-client contact which opentia "gg a s bendatuas implementation of these operations often or potentially at risk and recommendations as rirplesent. Rtructurin of.some oorly to how they should be handled in the future requires. Restructuring of some poorly alitvorgeea aeois performing NRM projects following mid- fall into four general categories: term reviews, finally, seems to have enhanced Projects not at risk that do not require exceptiolal their likelihood of achieving satisfactory supervision or special actions (other than closing outcomes, while in other cases future date extensions): prospects remain uncertain. Factors Associated with Good and * Brazil - Land Management II (may need Poor Outcomes an extension) * Brazil - National Environment (will An examination of both highly satisfactory require an extension) and unsatisfactory NRM operations in the * Honduras - Environmental Development active portfolio suggests that the following attributes are often closely associated with Projects under implementation for less than two good performance: years that are probably not at risk butfor which continued close monitoring and supervision is * They involve "win-win" approaches from recommended: both an economic and an environmental standpoint (e.g., improved soil and water * Niger - Natural Resource Management: management results in both tangible * Paraguay - Natural Resource economic benefits at the farm and Management community levels and measurable * Venezuela - INPARQUES (national environmental benefits at the budget allocation procedures, however, microcatchment level); need to be made more agile) * They entail high levels of beneficiary participation in project or subproject Projects under implementation for more than planning and implementation; three years that are probably not at risk butfor a They build upon locally generated which continued close monitoring is advisable: solutions to resource management problems; * Brazil - Mato Grosso Natural Resource * There is strong borrower and beneficiary Management (recommendations of ownership of the interventions involved; recently completed mid-term review * They involve stable, competent, flexible should be implemented; extension and demand-responsive executing probably required) agencies that identify closely with project * Mexico - Environment (recently objectives; and, extended) * Their designs are not overly demanding in * Paraguay - Land Use Rationalization relation to the capacity of local institutions. (will undoubtedly require extension) x Environrnent Department Papers Executive Summary Turkey - Eastern Anatolia Watershed Project design should be compatible with the Rehabilitation (lacking strong demand capacity of the (public and private) from other provinces, excess resources institutions responsible for implementation. should be canceled) Project design should be based on the best Projects at riskfor which close supervision and possible understanding of the underlying stronger action may be needed: ecosystem functions and services and the extent to which the proposed economic * Brazil - Rondonia Natural Resource utilization is biologically sustainable. This Management (if Bank conditions are met, implies a need for more systematic review of a one year extension and restructuring links between ecosystem functions and health should be approved; otherwise should be of the natural resources concerned as well as canceled) of the key biological and environmental * Indonesia - National Watershed factors enabling utilization at levels Management and Conservation (mid- supported by the project. term review recommendations should be implemented; project should be More attention should be given to policy "downsized" unless borrower ownership considerations, especially resource pricing, substantially improves) land tenure and access rights, and treatment * Malawi - Fisheries Development (recently of public and private goods including restructured following mid-term review; common resources. The impact of if borrower does not clearly buy into new macroeconomic and sectoral policies on approach, should probably be canceled). natural resource use likewise need to be assessed. General Recommendations for Improved NRM Portfolio Performance Careful attention should also be given to the To recapitulate, the main causes of assessment of alternative approaches for unsatisfactory NRM project performance achieving development objectives. In appear to be: (i) poor "quality at entry," addition, specific projects should ideally be especially in terms of borrower "ownership;" developed as part of longer-term strategic (ii) inadequate borrower institutional national programs to improve the performance; and (iii) country economic and effectiveness and sustainability of natural political factors. General recommendations resource management. for improving NRM project quality and performance, therefore, include the following: Provisions should be made to monitor and evaluate the impacts of project interventions Project objectives should be firmly agreed by on the ecosystems and resource base involved all major stakeholders. This implies a need: (including clear identification of institutional (a) for the effective involvement of affected responsibilities and adequate funding). stakeholders in project preparation from the outset; and (b) especially in non "win-win" Borrower institutional capacity should be situations where there is potential for conflict thoroughly assessed during project among these interests over resource use, to preparation and appraisal. Where existing carry out a systematic social assessment to capacity is weak, the emphasis should be on determine who the relevant stakeholders are its adequate development before requiring and what their "stakes" in the project are agencies to take on significant additional likely to be. responsibilities. Natural Habitats and Ecosystems Management Series xi Natural Resource Management Portfolio Review Economic analysis, in particular, needs to strengthen (as well as streamline) the project improve, especially the "fine-tuning" of cost- review process prior to Board submission, benefit analysis to integrate environmental including the quality and effectiveness of impacts. Similar progress needs to be peer review. Both QAG and the new achieved with respect to risk analysis. networks can make an important contribution in this regard. New or innovative approaches to NRM should be "piloted" during project Suggestions for Further Analysis preparation or through small components before being attempted on a larger scale in The present review identified a number of order to build local capacity and promote factors associated with good and poor NRM "learning by doing." project performance. In order to better define good practice, however, this survey should be Task managers need to be made more aware complemented by a more systematic analysis of the extent to which underlying country of the relationship between project "quality at economic, political and/or institutional entry" and outcomes. In doing so, particular factors may "derail" project implementation. emphasis needs to be given to linking Simple precautions, such as planning project understanding of ecosystem functions and implementation periods to coincide as closely the existing socio-political context with the as possible with national and subnational design of projects for sustainable economic election cycles, may substantially enhance utilization of the natural resources concernecl. project performance. Other issues, such as More in-depth analysis requires undertaking those involving macroeconomic problems or case studies, including field visits, to better policies, should be addressed at the level of document and draw lessons from both good Bank country dialogue. and bad practice as well as to benefit from the borrowers' perspective. It is, thus, proposed Strong partnerships and cooperation with that recent experiences with Bank-supported other donors and NGOs that are active in NRM operations in Brazil, Indonesia, natural resource management at the country Madagascar, Malawi, Paraguay and, level need to be established and maintained. resources permitting, several other countries NRM project design should take into account (including India, China and other parts of not only the Bank's experience but that of Africa) be investigated in further detail. Over other agencies as well. the past decade, a variety of (successful and unsuccessful) approaches to NRM have been To the extent possible, project identification taken in these countries, which represent a and preparation should be based on prior broad range of situations in terms of sector work that seeks to improve territorial size, ecological conditions and understanding of the physical environmental, biodiversity, demographic pressures, income socio-economic, political and institutional levels, institutional capacity, economic "contextual" factors mentioned above. management and overall Bank portfolio Within the Bank, there is also a need to performance. xii Enviromnent Department Papers 1 Nature of the NRM Portfolio Introduction in other "sectoral reviews." In such cases, the present exercise draws on the findings of The Quality Assurance Group (QAG) has these reviews to arrive at a comprehensive recently commissioned a number of in-house view of the issues associated with "sectoral reviews" as part of its overall performance of the NRM portfolio. However, Portfolio Improvement Program (PIP).' The it does not duplicate the individual project "sectors" reviewed contain above-average assessments already undertaken by shares of active projects considered specialists in the sectors involved. The potentially at risk according to a set of present review also draws on relevant performance indicators identified by QAG as findings of broader portfolio assessments being correlated with unsatisfactory project contained in the most recent ARPP and OED outcomes. Following the most recent Annual Annual Review of Evaluation Results. It Review of Portfolio Performance (ARPP), the likewise examines several highly successful natural resource management (NRM) NRM projects and attempts to identify subsector was added to this list2 as a examples of "good practice." "problem cluster." The Environment Department (ENV) was asked to undertake As in the other "sectoral reviews," the this review in collaboration with the following questions are addressed: Agriculture and Natural Resources Department (AGR) and the Regions. * Is the current assessment of project quality, as in the MIS, realistic? Some 65 projects under implementation * What are the main cross-cutting or currently comprise the World Bank's "green" systemic problems? portfolio as identified by ENV and the * Why do these problems arise? Regional Environment Divisions (see Annex * What can be done to improve portfolio A). These projects are primarily concerned quality and performance? with sustainable natural resource management for productive (agriculture, To answer these questions it is first necessary forestry) purposes, environmental to further characterize the Bank's natural conservation, or both. Most also include resource management portfolio. It is also significant institutional development useful to compare recent implementation components. Although QAG's initial focus performance of NRM projects with that of the was on projects classified in the NRM entire set of Bank environmental operations, subsector (VM) in the MIS, ENV and QAG those in the principal investment sectors in agreed to expand the analysis to cover the which the NRM operations are classified in entire "green" portfolio. This contains the MIS, and the Bank active portfolio projects in the forestry, irrigation, and water generally. Finally, it is helpful to briefly supply subsectors that have been examined summarize the major findings of other Natural Habitats and Ecosystems Management Series Natural Resource Management Portfolio Review relevant "sectoral reviews" and recent provided by the Agriculture Ministry. Some portfolio-wide assessments. of the operations examined-the Paraguay project again, as well as the NRM projects in Nature of the NRM Portfolio Mato Grosso and Rondonia, Brazil-also contain specific components to protect T'he Bank's natural resource management indigenous populations and/or other portfolio includes several different types of inienu pouain-adote vulnerable social groups (such as traditional project, each of which faces different rubbertappers in the two Brazil cases). These implementation challenges. A preliminary concerns and approaches are relatively recent review of this portfolio suggests that there are in Bank lending. Thus, unlike "older" sectors, three basic types of NRM projects and several such as water supply and irrigation, it is not combinations. It also reveals that the current yet possible to meaningfully assess the MIS classification system has incorrectly evolution of project performance over time.6 placed at least one project (Honduras - Environmental Development) in the natural The portfolio under review contains resource management subsector. examples of each of the basic types of NRM projects and of several "hybrid" operations, The three basic types of NRM projects are which combine either productive and those primarily designed to: conservation or institutional and conservation objectives and components.7 • Promote sustainable agricultural, Such projects tend to be more complex in forestry, and fisheries development and/ design than other NRM operations, such thal: or water resource use through their implementation requirements are often environmentally sound resource intrinsically more demanding. Projects management techniques (such as soil flagged as potentially at risk and not coveredi conservation and sustainable forest, in other "sectoral reviews" can be classified fisheries or water resource management,3 as follows: or) * Conserve or protect specific ecosystems Primarily productive: and associated biodiversity * Brazil - Land Management II (Santa (establishment or consolidation of Catarina) national parks, wildlife reserves, etc.)4 * Indonesia - National Watershed * Strengthen national and/or subnational Management and Conservation institutional capacity to achieve * Malawi - Fisheries Development improved natural resource management * Niger - Natural Resource Management (development and use of rural land * Paraguay - Natural Resource cadastres, geographic information Management systems and other planning tools).5 * Turkey - Eastern Anatolia Watershed Rehabilitation Many of the projects reviewed involve two or all three of these elements. The Paraguay Primarily conservation: Natural Resource Management Project, for * Venezuela - INPARQUES example, although primarily focused on promoting sustainable agricultural Productive and conservation: development by improving land * Brazil - Mato Grosso Natural Resource management at the microcatchment level, Management also seeks to establish a national park and to * Brazil - Rondonia Natural Resource decentralize and strengthen support services Management 2 Enviromnent Department Papers Nature of the NRM Portfolio Primarily institutional: Institutional with conservation components:9 * Paraguay - Land Use Rationalization * Brazil National Environment * Honduras - Environmental Development8 * Mexico Environment Natural Habitats and Ecosystems Management Series 3 Performance of the NRM Portfolio and Projects at Risk Comparative Performance which compares it with that of the entire of the NRM Portfolio environmental portfolio, operations in the agriculture and water supply sectors (from ENV has been tracking the performance of which many of the projects presently under projects with primarily environmental review are drawn), and the active Bank objectives for the past several years. During portfolio as a whole. The table indicates the FY96, there were 152 active environmental share of projects found to be problematic in projects involving Bank/IDA commitments of terms of Implementation Progress (IP) and some US$ 10.7 billion net of cancellations.'0 Development Objectives (DO), the percentage For portfolio monitoring purposes, ENV that fall in one or both of these categories distinguishes among three major groups of ("projects actually at risk"), those identified environmental operations: (i) those primarily as "potentially at risk" on the basis of the concerned with natural resource revised QAG criteria (see Section E. below), management ("green" projects);"' (ii) those and the total share of Bank/IDA that primarily address issues of urban- commitments in projects (actually or industrial pollution control ("brown" projects); potentially) at risk. and (iii) those designed primarily to strengthen enviromnental institutions ("institutional" As a group, NRM projects were performing projects). During FY96, there were 67 active better at the end of FY96 than agriculture, "green" projects with total commitments of water supply and sanitation, other US$ 3.5 billion,12 59 "brown" operations with environmental operations, and the Bank's over US$ 7 billion in Bank/IDA commitments, active portfolio as a whole in terms of and 26 "institutional" projects with projects actually at risk and commitments commitments just under US$ 940 million. potentially at risk. However, they were performing slightly less well than all of these The overall performance of NRM (or categories except water supply and sanitation "green") projects is highlighted in Table 1, in terms of projects potentially at risk.'3 Table 1 Projects at risk in different segments of the Bank portfolio, FY96 (percent) Actually Potentially Total at Commitments Segment IP DO at Risk at Risk Risk at Risk Total Portfolio 16.4 11.4 19.7 12.3 32.0 28.1 Environment 15.8 8.6 17.1 12.5 29.6 31.8 "Green" 13.4 9.0 14.9 13.4 28.3 27.9 Agriculture 18.2 13.5 20.5 12.9 33.4 30.7 Water Supply 18.8 9.4 21.9 25.0 46.9 52.1 4 Environment Department Papers Performance of the NRM Portfolio and Projects at Risk Natural resource management projects at risk factors, many of which may be totally beyond are also concentrated in regional terms the control of project executing agencies. On (especially when the three "institutional" the Bank side, satisfactory performance projects included in the MIS VM subsector mainly involves project "quality at entry" are considered). Among the operations so and the quality of supervision, both of which identified by QAG, half - five in Brazil, two also have multiple dimensions. Other in Paraguay and one each in Honduras, "sectoral" and portfolio-wide reviews Mexico and Venezuela - were in Latin strongly suggest that insufficient borrower America, while the rest were split between commitment to project objectives and/or Africa (Gabon, Madagascar, Malawi and premature submission of projects to the Niger), South Asia (Nepal and Pakistan), the Board are often the main underlying causes Middle East (Tunisia and Yemen), East Asia of poor performance. (Indonesia) and Europe and Central Asia (Turkey). Project quality at entry appears to be of particular importance. Cross-cutting Findings of Pertinent "Sectoral dimensions of quality at entry are indicated Reviews" and Other Recent Portfolio in Box 1. In addition to these "generic" Assessments factors, which apply to projects in many Several other recent QAG-sponsored sectors, several other elements are of "sectoral reviews" examine some of the NRM particular relevance to NRM operations: operations considered actually or potentially at risk.14 The largest overlap is with the Whether project preparation involved a Forestry Portfolio Review, whose conclusions, social assessment, including therefore, are of particular relevance. identification of key local stakeholders in Pertinent findings of the forestry, irrigation the use and management of the natural and water supply/sanitation reviews are resources involved summarized in Annex B, together with those * Preparation should also include an of other recent portfolio assessments. analysis of the property rights regime since this is likely to strongly condition Both the portfolio-wide and more narrowly how local stakeholders will react to focused "sectoral" reviews suggest that a project interventions, thereby affecting range of factors tend to be associated with the pace of implementation and unsatisfactory project performance. These can effectiveness of these measures"5 be roughly divided into "proximate" and * The extent to which the design of projects "underlying" causes and "borrower" and that entail the harvesting of a sensitive "Bank" factors. Proximate causes include renewable resource (such as fisheries and many of the items identified on the Form forests) takes basic ecosystem functions 590s, such as poor project management, and services associated with the insufficient or untimely availability of particular resource involved adequately counterpart funding, procurement and into account'6 disbursement delays, lack of compliance with * The extent to which project policy and loan covenants, unsatisfactory project physical interventions are assessed in financial performance, and so on. Underlying terms of their implications for the longer- causes, in turn, are those which underpin run sustainability of the natural resource both borrower and Bank performance. On base in question the borrower's side, they include a variety of * Careful analysis of the incentives to macroeconomic, political and institutional farmers and/or other natural resource Natural Habitats and Ecosystems Management Series 5 Natural Resource Management Portfolio Review users to adopt environmentally friendly technologies and change perceptions and or conservation-oriented resource motivations of resource users and management techniques, given the government officials. In this regard, the technical and economic attributes of these adequacy of the economic and financial techniques'7 analysis is especially critical. * In conditions of uncertainty (i.e., where there is a lack of knowledge regarding The quality of supervision, in turn, refers how affected ecosystems will respond to largely to the timing, frequency, skill mix, project interventions), the extent to which thoroughness, focus (e.g., monitoring and project design includes the "piloting" of control of implementation progress versus proposed interventions to test their operational and technical support to the implementability and to learn from borrower) and flexibility of supervision experience before applying them on a missions and post-supervision follow up. It broader scale' also involves the consistency of supervision * The extent to which project design efforts (continuity of task managers and other includes adequate provisions for supervision participants, and project-related monitoring and evaluating the impact of management decisions) over time.20 project interventions on the affected ecosystems and natural resource base and Natural Resource Management for feeding the results of these activities Projects at Risk back into project (re)design during implementation as part of a permanent According to QAG's recently revised2' criteria learning process'9 for identifying projects at risk, twenty NRM * The scope for and likelihood of operations presently under implementatior replication of technologies and fell into this category at the end of FY96. approaches outside the immediate project Projects "actually at risk" are those rated at hand. This calls requires an "unsatisfactory" on Implementation Progress examination of the extent to which the or (likelihood of achieving their) project design and implementation Development Objectives at the time the FY96 process is likely to demonstrate new ARPP was undertaken. Projects "potentially Box 1 Generic Dimensions of Project Quality at Entry Project quality at entry is now generally understood to include: * strong borrower "ownership" of project objectives and components, particularly those involving critical policy, institutional and/or financial reforms; * active stakeholder participation in project design and implementation; * clarity of project objectives and component description (and clear logical connections between the two); * effective incorporation of lessons learned from previous projects in the same country and with similar objec- tives and designs; * identification of critical risks; * adequate project preparation prior to Board presentation; * careful implementation (and supervision) planning, including specification of key performance indicators,: * realistic assessment of borrower institutional capacity for project implementation; and * avoiding excessively ambitious objectives and/or overly complex project design (relative to actual borrower commitment and implementation capacity) in terms of the number of components, executing agencies, co- financiers, implementation arrangements, and so on. 6 Environment Department Papers Perfornance of the NRM Portfolio and Projects at Risk Box 2 Revised QAG "Flags" for Projects Potentially at Risk Criteria presently being used by QAG to identify projects potentially at risk are: * Form 590 ratings of 3 ("major problems that are being addressed") or 4 at the time of the ARPP on: (i) compliance with loan covenants; (ii) project management performance; (iii) counterpart funding availabil- ity; (iv) procurement progress; or (v) project financial performance; * Loan/credit effectiveness more than nine months after Board approval (this flag is turned off three years after Board approval); * Disbursement delays of 24 months or more; * Unsatisfactory ratings DO and/or IP ratings in two or more consecutive ARPPs (this flag is turned off and restarted when a project is restructured); * Located in a country with a recent history of high "failure" rate (i.e., where the percentage of projects closed in the previous five years and rated unsatisfactory by OED is over 50 percent, or when the share of commit- ments associated with these projects is more than 33 percent); * Located in a subsector with a history of high "failure" rate (i.e., where the project belongs to a subsector for which the percentage of projects closed in the previous five years and rated unsatisfactory by OED is over 50 percent, or when the share of commitments associated with these projects is more than 33 percent); * Problematic in relation to environmental and/or resettlement aspects; and * Country economic management problems (based on DEC country risk ratings and includes countries with three-year average ratings below 3 on a scale of 1 to 5). at risk" are those which, despite satisfactory * Pakistan - Punjab Forest Sector IP and DO ratings, had three or more of the Development (FY95)* "flags" indicated in Box 2. * Paraguay - Land Use Rationalization (FY92) NRM projects at risk on the basis of these a Tunisia - Second Forestry Development criteria (and their respective approval years) (FY93)* are listed below. Projects followed by asterisks have already been examined in other "sectoral reviews." The specific "flags" Projects potentially at risk:22 associated with each project are indicated in Annex D. * Brazil - Minas Gerais Forestry (FY88)* * Brazil - Land Management II (FY90) Projects actually at risk: * Brazil - National Environment (FY90) * Brazil - Mato Grosso Natural Resource * Brazil - Rondonia Natural Resource Management (FY92) Management (FY92) * Nepal - Hill Community Forestry (FY89)* * Gabon - Forestry and Environment * Niger - Natural Resource Management (FY93)* (FY96) * Honduras - Environmental Development * Paraguay - Natural Resource •(FY95) Paraguaymenatua Resourc * Indonesia - National Watershed Management (FY94) Management and Conservation (FY94) * Turkey - Eastern Anatolia Watershed * Madagascar - Tana Plains Development Rehabilitation (FY93) (FY90)* * Venezuela - INPARQUES (FY95) * Malawi - Fisheries Development (FY91) * Yemen Republic - Land and Water * Mexico - Environment (FY92) Conservation (FY92)* Natural Habitats and Ecosystems Management Series 7 Natural Resource Management Portfolio Review Most of the above projects were either Box3 approved prior to FY93 or are fairly recent. NRM Projects with Overly Among the "younger" projects, it is ptimistic O verly important to distinguish between those Optimistic DO Ratings which are in the process of overcoming The Rondonia Natural Resource Management "start-up" problems and those which are Project in Brazil is one example of a project with truly at risk. Among "older" or more an over-optimistic DO rating. This operation, tre , . . . which was rated "unsatisfactory" in terms of IP "mature" projects, it iS necessary to and "satisfactory" in terms of DO on the last Form distinguish between those that have had 590, has experienced serious implementation dif- serious implementation problems in the ficulties over the past several years and is pres- past but have resolved or are in the process ently being restructured. Even though the pro- of resolving them, and those which continue posed reformulation, which is highly participatory to present serious risks in terms of the in nature, will put the project on a much sounder .oo pee nt , s .u.come footing, there is still no absolute guarantee that it likelihood Of achieving satisfactory outcomes. will achieve its objectives. Prior to actual adop- The QAG "flags" per se do not do this. Nor tion of the new design, in any event, it is prema- do they directly identify problems related to ture to suggest that the project is likely to do so. inadequate project design, although many of A second example is the Northwest Mountainous the "flags" may be symptomatic of poor Area Development Project in Tunisia, which was quality of entry. Therefore, the extent to rated "highly satisfactory" in terms of DO at the which they are capable of detecting projects end of FY96 even though it was experiencing a that are, in fact, at risk remains to be seen. number of implementation problems, including lack of funding for subprojects at the community Current Assessments of Project level. This rating has recently been downgraded Performance and Riskiness [to "satisfactory. Project Performance for projects in countries that having poor portfolio performance in the past and which Based on a comparison of IP and DO ratings may still be having difficulties in terms of in the most recent Form 590s with the national economic management. Under the accompanying supervision reports, current present system, all projects in such countries MIS assessments of NRM project start out with "two strikes" against them, performance generally appear to be realistic independently of their quality at entry and and consistent. To the extent that there is a actual implementation performance. If such bias in the Form 590 indicators, however, it is a project also happens to be in a historically in the direction of excessive optimism, poorly performing subsector, it is particularly with respect to the DO ratings, automatically flagged as potentially at risk. where it is occasionally prematurely assumed while past is, indeed, often prologue, it is not that projects will eventually overcome always or necessarily so. This suggests that existing implementation problems, thus QAG ratings should give greater weight to enabling them to achieve their development actual project performance relative to objectives. Examples of this tendency among contextual factors such as country and sector. NRM projects are presented in Box 3. Project Riskiness This observation clearly applies to the NRM projects under review (see Box 4). Of the The revised QAG "flags" (still) appear to be twenty operations listed in the pervious incorrectly identifying some projects as section, eighteen are in countries with poor potentially at risk. This is particularly true current economic management, according to 8 Environment Department Papers Performance of the NRM Portfolio and Projects at Risk DEC, and sixteen are in countries with a In addition, several projects under review no recent history of poor portfolio performance. longer falls in the actually at risk category These two variables are, in fact, often when more recent (than end FY96) supervision associated, which is consistent with OED's ratings are considered. This includes the finding that country portfolio, but not Honduras Environmental Development necessarily individual project, performance is Project, approved in March 1995, whose IP rating was upgraded from 'unsatisfactory" to closely correlated with country "satisfactbry" in October 1996 following the macroeconomic performance. Accordingly, it last supervision mission as the result of might make more sense to flag a project once successful resolution of project management if either one or both of these conditions are and procurement problems, as well as the met, but not twice, as is the case under the Mexico Environment Project, whose IP rating recently revised procedures.23 also was upgraded to a "satisfactory." Natural Habitats and Ecosystems Management Series 9 Factors Associated with Poor and Good Performance Cross-Cutting or Systemic Problems (Gabon Forestry and Environment, Malawi Fisheries Development, and Tunisia Second As suggested in chapter 2, problems Forestry Development), they may be related associated with poor project implementation to major procurement problems, for which and unsuccessful outcomes are normally due th opronwre alofled, as was to acombnatin ofproimat (opratinalthese operations were also "flagged," as was to a combination of proximate (operational the Nepal Hill Community Forestry Project.25 and financial) and underlying (economic, In several of the projects examined, present politicaL and institutional) causes, associated disbursement lags appear to be directly with both the implementation environment associated with past counterpart funding and project quality at entry In carrying out problem an/o pesting ma ng the desk review of NRM projects actually and problems. The extent to which, slow potentially at risk, the task team has disbuemes are ae go peicto sofo attempted to identify cross-cutting issues (i.e., proe mens,ahowevr premintor b problerrisseriously ffecting tree or mor project outcomes, however, remains to be problems seriously affecting three or more seen. Other NRM operations experiencing projects) with respect to votset o significant disbursement lags, according to problemrs. This assessment involved a the QAG criterion, are: thorough review of recent Form 590s and supervision reports, together with SARs and * Brazil - National Environment other background documents, for each of the * Brazil - Mato Grosso Natural Resource projects not covered under other "sectoral Management reviews," followed, in most cases, by * Madagascar - Tana Plain Development interviews with present and, in some Project instances, former Task Managers of the * Turkey - Eastern Anatolia Watershed operations involved. In the course of this Rehabilitation. review, both borrower and Bank performance factors were considered. Counterpart funding. Five NRM projects Proximate Causes have been identified as having major problems with respect to the availability or Disbursement, effectiveness and timeliness of counterpart funding. In at least procurement. Nine of the NRM projects three instances (Mexico Environment, Brazil considered actually or potentially at risk were Rondonia Natural Resource Management and "flagged" at the end of FY96 for having slow Minas Gerais Forestry Projects), these disbursements. In at least two cases (Land problems seem to be directly associated with Management II in Brazil and Land Use macroeconomic problems and/or Rationalization in Paraguay), disbursement stabilization measures. In the Venezuela lags are clearly associated with initial project, they are largely the result of federal effectiveness delays.24 In three other instances government budget allocation and 10 Environment Department Papers Factors Associated with Poor and Good Performance international loan use authorization processes continuing disbursement lags. In such cases, (see Box 4). None of the projects reported as the extent to which slow disbursements experiencing serious counterpart funding represent a project risk factor can indeed be difficulties were also "flagged" for slow legitimately questioned. disbursements, even though some of the operations in the latter category have Management performance. Five NRM nonetheless had significant counterpart operations at risk were flagged as being funding problems in the past (Brazil National problematic in terms of project management. Environment and Mato Grosso Natural Only two of these projects (Gabon Forestry Resource Management Projects, to cite two and Environment and Malawi Fisheries examples). This suggests that now largely Development), however, were also identified resolved counterpart funding difficulties, as having slow disbursements. The same two together with initial effectiveness delays, projects are problematic from a procurement provide at least a partial explanation for standpoint. Other operations reported as Box 4 "Flagged" NRM Projects that Do Not Appear to Be at Risk Among NRM projects potentially at risk based on the revised QAG criteria, five had the minimum of three risk "flags," two or which were country performance related: (i) Brazil - Minas Gerais Forestry; (ii) Brazil - Land Management II (Santa Catarina); (iii) Niger - Natural Resource Management; (iv) Paraguay - Natural Resource Management; and (v) Venezuela - INPARQUES. None of these projects appears to be seriously at risk. The Minas Gerais Forestry Project, which was restructured some years ago, continues to experience counterpart funding problems, but is generally satisfactory on all other counts and is expected to close at the end of 1996. The Santa Catarina Land Management Project is still characterized by slow disbursements stemming from an initial effectiveness delay, which was mainly due to elections in late 1990 and a change in state administrations in early 1991, but has performed well in all other respects since then (most of its Form 590 ratings over the years have been "ls" and it has never had a rating higher than "2"). It appears in no danger of having an unsatisfactory outcome. Both of these operations are "mature" operations in states having reasonably strong institutions and are near completion, even though the Santa Catarina project may require an extension beyond its present September 1997 closing date in order to fully disburse the Bank loan. The Niger Natural Resource Management Project, which was approved in December 1995, also experienced an effectiveness delay, but is currently rated "highly satisfactory" in terms of Implementation Progress and "sat- isfactory" in terms of Development Objectives. The Paraguay NRM Project, approved in February 1994, was also flagged for an initial effectiveness delay, caused by a requirement that all international loan agreements be approved by the National Congress. This is often a time-consuming, highly politicized process that affects the entire country portfolio and over which neither the Bank nor project executing agencies have any control. The Venezuela Project, which is likewise comparatively new, finally, is experiencing counterpart funding problems as a result of delays in Congressional approval of agency budget allocations and authorizing legislation for the use of international loan funds. While this is a continuing risk factor in relation to project performance in Venezuela, since such approvals are required annually, it is by no means unique to the NRM operation per se. The actual degree of riskiness of some of the projects having four flags, two of which are country performance- related, at the end of FY96 can also be questioned. The Brazil National Environment Project, which is flagged for slow disbursement and having previously been rated "unsatisfactory" in at least two successive previous ARPPs, is one such case. This "mature" project, which did, indeed, experience serious implementation prob- lems early on, was restructured in 1994 and, according to more recent Form 590s, has generally performed satisfactorily over the past two years. Even though an additional extension of the closing date (presently set at June 30, 1997) will probably be necessary to complete a new matching grants component that was added at the time of restructuring, the project appears highly likely to meet its (revised targets and) objectives. Natural Habitats and Ecosystems Management Series 11 Natural Resource Managemrent Portfolio Review having serious management problems are the projects), Gabon, Indonesia, Madagascar, Rondonia Natural Resource Management Nepal, Niger, Pakistan, Paraguay (2 projects), Project in Brazil, the Watershed Management Tunisia, Venezuela and Yemen. In several and Conservation Project in Indonesia and countries, including Mexico, which was not the Eastern Anatolia Watershed flagged on these grounds (but where more Rehabilitation Project in Turkey. Some of the than half of the original Bank loan was institutional problems encountered by NRM canceled due to a maxi-devaluation of the operations considered at risk are described in peso and stabilization measures continue to Box 5.26 limit the annual flow of counterpart funds for the Environment Project, requiring a one-year Underlying Causes extension of its closing date until the end of Country macroeconomic problems and 1997), macroeconomic management issues policies. Most of the NRM projects actually have, indeed, clearly affected project and potentially at risk have been so identified implementation. One clear example is Brazil in part on account of country economic or (see Box 6). economic management problems. Such problems were considered a potential risk In other cases, the impact of macroeconomic factor for NRM operations in Brazil (5 problems and/or related policy measures is less clear. The extent to which counterpart funding (i.e., budget approval) problems Box 5 experienced by the INPARQUES Project in Management and Institutional Problems Venezuela, where recent economic growth in Selected NRM Projects has also been low and inflation relatively high, are associated in part with In the Rondonia Natural Resource Management macroeconomic management strategies, for Project in Brazil, weak institutional capacity, in- example, is not evident. As Table 2 and Annex sufficient ownership of project objectives and an E show, other countries with NRM projects at overly complex project design are significant con- tributing factors to poor management perfor- risk that have had low economic growth and mance. Internal management problems, which appear now to have been generally overcome, | B have also affected past performance of several Box 6 other operations, including the National Environ- Impact of Macroeconomic Factors ment and Mato Grosso Natural Resource Manage- on Project Performance in Brazil ment Projects in Brazil, the Environmental Devel- opment Project in Honduras, the Environment Until relatively recently, macroeconomic instabil- Project in Mexico, both NRM projects in Paraguay, ity, including near hyperinflation, has hindered| and the INPARQUES Project in Venezuela. NRM and most other Bank-supported projects in Brazil. Macroeconomic management, however, ha, In most of these cases (Honduras, Mexico, Para- improved considerably at the federal level in Bra- guay, Venezuela), these problems have involved zil since adoption of the Real Plan (Plano Real), turnover of key project staff and/or changes in which dramatically lowered inflation and stabi- basic project institutional arrangements. In the lized the exchange rate, in mid-1994. As a result, Brazil National Environment Project, for example, the disruptive effects of high inflation on project coordination was transferred from one agency to financial management have diminished accord- another at the time of restructuring. In the Mexico ingly. On the other hand, sharply reduced infla- Environment Project, the overall framework for tion has increased state counterpart funding diffi- environmental management in the federal govern- culties (especially in Mato Grosso and Rondonia, ment has changed twice since the Bank loan was but also in Minas Gerais, among those with NRM approved. projects). 12 Environment Department Papers Factors Associated with Poor and Good Performance moderate or high inflation in recent years are Nepal, Pakistan, Paraguay, Venezuela and Turkey, Mexico, Paraguay, Honduras, Nepal, Yemen, while those with below average Malawi and Madagascar. In the two latter ratings include Brazil, Indonesia, countries, per capita GNP growth has, in fact, Madagascar, Malawi, Niger and Tunisia. been negative over the past decade. In Honduras and Mexico also had above contrast, Indonesia has had high growth and average IP ratings. For the most part, these low inflation, while Pakistan and Tunisia ratings are consistent with the country have had moderate growth and low inflation, economic performance ratings in Table 2, the suggesting comparative macroeconomic principal exception being Brazil, whose stability.27 This suggests that poor project overall portfolio performance ratings implementation performance, including that improved dramatically in FY96 relative to of NRM operations, is often, but not always, those recorded for FY94 and FY95.28 However, associated with poor country economic as noted in Box 6, its macroeconomic performance. In most cases, however, the performance has also improved significantly principal linkage between country economic since 1994. performance and management and project performance is the availability and timing of Political factors. While there are no instances counterpart funds, which often condition the of severe political disruption of NRM projects pace of project implementation and presently under review-as occurred, for associated loan or credit disbursements. example, with earlier such projects in Haiti and Rwanda that fell victim to larger civil The general (but not perfect) correlation conflicts-political factors have nevertheless between project performance and country influenced implementation of various economic performance seems to be borne out operations. In many cases (see Box 7), these by the NRM operations considered actually involve routine changes in administration at or potentially at risk. As Annex F shows, either the national or subnational level. countries with above average percentages of Another underlying political factor that has problem projects in terms of both IP and DO impacted upon some of the NRM projects ratings at the end of FY96 include Gabon, under review is the transition from less to Table 2. Recent economic performance of countries with NRM projects at risk Av. Inflation Growth of GNP Per Capita 1984-94** 1985-94* Negative Low High High Brazil Mexico Venezuela Paraguay Turkey Moderate Madagascar Honduras Malawi Nepal Low Gabon Pakistan Indonesia Niger Tunisia * Low growth: between 0.0 and 2.5 percent; high growth: greater than 2.5 percent. ** Low inflation: less than 10 percent a year; moderate inflation: between 10 and 25 percent; high inflation: above 25 percent. Source: World Development Report 1996 (no data available on Yemen Republic). Natural Habitats and Ecosystems Management Series 13 Natural Resource Management Portfolio Review more democratic forms of government. This adequately assessed at the time of appraisal process has affected both projects in or overcome during the early stages of project Paraguay, for example, on the one hand in implementation characterize several of the terms of the transparency of procurement NRM projects identified as potentially at risk. procedures (Land Use Rationalization) and, The National Environment and Rondonia on the other, resistance to efforts to Natural Resource Management Projects in decentralize and improve the effectiveness of Brazil have already been mentioned in this the public sector (Natural Resource connection (see Box 5). Another example is Management), since, until very recently, the the Fisheries Development Project in Malawi, country has been highly centralized, where the initial project design29 included two autocratic, paternalistic and politicized. pilot projects but did not provide adequate resources for their management, thereby Physical calamities. Natural disasters such as stretching the already limited implementing floods and droughts, which are generally capacity of the Fisheries Department. These beyond the borrower's control, can also have components were subsequently dropped in an adverse impact on project implementation order to reduce these pressures. and outcomes (e.g., loss of agricultural Implementation capacity constraints and production). This has occurred in semi-arid interinstitutional coordination problems are zones such as the Magreb region in northern likewise associated with unsatisfactory Africa and elsewhere. Such projects should performance of the Tunisia Second Forestry incorporate drought preparedness strategies Development and Gabon Forestry and and/or early warning systems in their Environment Projects. Similarly, the lack of an monitoring and evaluation components. adequate sector policy and regulatory framework, together with other factors, Old-fashioned party politics, together with especially lack of ownership of community procurement difficulties, created start-up forestry components, has adversely affected. problems in Honduras, as the Environment performance of the Pakistan Punjab Forestry Ministry (which is responsible for project Sector Development and Nepal Hill implementation) was awarded to the only Community Forestry Projects, according to opposition party member in the cabinet, who the Forestry Portfolio Review (see Annex B). then encountered serious problems receiving Borrower Factors counterpart funding for the operation and resistance from project technical staff. These Ownership. Macroeconomic variables, wea;k conflicts were recently resolved by the institutions-as reflected in poor project appointment of a new Vice Minister (a management and operational problems such government party member and a Ph.D. as procurement difficulties-and insufficient environmental economist), who has been commitment to project objectives and given day-to-day responsibility for components appear to be the most important overseeing project implementation. Now that cross-cutting borrower factors associated these initial political difficulties have been with unsatisfactory performance of NRM overcome and responsibility for procurement projects. The first two of these, which transferred to UNDP, prospects for potentially affect the performance of all NRM satisfactory project performance and operations, have already been touched on. outcomes are much greater Strong borrower "ownership" of project objectives, in turn, is especially important in Institutional and sectoral policy constraints. projects seeking to achieve sustainable forest Institutional weaknesses that were not management (see Annex B), conserve 14 Environment Department Papers Factors Associated with Poor and Good Perfornance Box 7 Impact of Political/Administrative Changes on NRM Project Performance in Brazil The Land Management 11 Project in Santa Catarina, Brazil experienced effectiveness and subsequent disburse- ment delays because of a change in state governments in early 1991. Similarly, the Mato Grosso and Rondonia Natural Resource Management Projects were affected by changes in state administrations, again due to the normal electoral cycle, in late 1994 and early 1995. In Mato Grosso, despite initial delays due to the transition from one govemment (and project management) team to another, this change has proven to be generally posi- tive as the incoming administration proved to be far more committed to project objectives than its predecessor. In Rondonia, in contrast, the successful candidate for Governor openly ran against the NRM project and was elected in part on the basis of his opposition to it. Government changes in 1995 also affected the performance of various states involved in the ecosystems component of the National Environment Project in Brazil, in some cases favorably (again Mato Grosso) and in others adversely (Mato Grosso do Sul and Espirito Santo). Differing degrees of state government commitment to subcomponent objectives, together with growing fiscal constraints at the state level, have also clearly had an impact on its performance over the past several years. In Rio de Janeiro, for example, continuing lack of ownership by the in-coming state government only exacerbated the poor implementation performance of its predecessor. biodiversity and/or strengthen national or * Such operations are essentially "win- subnational environmental institutions. It is win" in that they directly combine also essential in "hybrid" NRM projects economic and environmental benefits- that include significant environmental i.e., on-farm technical improvements in (and/or indigenous peoples) protection natural resource management enhance or components. extend natural soil fertility and, hence, crop productivity, with a positive In this context, it is important to distinguish potential impact on beneficiary income, between projects primarily designed to while at the same time reducing erosion, promote sustainable agricultural production sedimentation and agricultural run-off; through improvements in on-farm and off- and farm soil and water management, such as the * They necessarily entail decentralized Land Management Projects (Parana and actions (at the municipal and Santa Catarina) in southern Brazil, the microcatchment levels) and require active Natural Resource Management in Paraguay beneficiary participation in subproject and the Watershed Management and planning and implementation. Conservation Project in Indonesia, on the one In contrast, projects (or project components) hand, and those involving forest resource use, involving restriction of access to natural environmental zoning, monitoring, control resources, such as tropical forests or the land and conservation in active (agricultural and under such forests, and/or significant extractive) frontier areas such as the states changes in how these resources are managed such as Mato Grosso and Rondonia, Brazil, from a social, as well as technical, standpoint which is inherently very difficult due to the are likely to involve significant potential inevitable conflicts over natural resource trade-offs and conflicts, which makes their use, on the other. The former types of projects implementation much more problematic.30 In have two significant design characteristics such cases, broad stakeholder consultation not always shared by the latter that greatly and adequate assessment-and contribute to their prospects for smooth enhancement-of local political commitment implementation and successful outcomes: and institutional (including NGO) capacity Natural Habitats and Ecosystems Management Series 15 Natural Resource Management Portfolio Review during project preparation are particularly constraints, and lack of effective monitoring important. In both the Rondonia and Mato and evaluation of project environmental Grosso Natural Resource Management impacts. In general, older projects tend to be Projects this was initially lacking and more problematic in terms of quality of entry borrower ownership was weak. Two other than newer ones, which, on the whole, cases where insufficient borrower appear to have more concrete and realistic commitment to project objectives appears to objectives and less complicated designs. be adversely affecting performance are briefly described in Box 8. Complexity of project design.3' Four of the NRM projects in Brazil have suffered as the result of overly complex designs. This was Several of the operations examined in this cited in the Forestry Portfolio Review as one of review demonstrate deficient quality at entry, the underlying problems affecting particularly in terms of overly complex performance of the Minas Gerais Forestry designs (and, in some cases, overly ambitious Project. It is even more true of the National objectives), lack of stakeholder participation Environment and Mato Grosso and Rondonia in project design and implementation, Natural Resource Management Projects. All insufficient incorporation of lessons learned three of these projects have a large number of from previous operations, inadequate components, subcomponents, and analysis of institutional capacity and project implementing institutions. The Mato Grosso risks, insufficient preparation prior to Board and Rondonia projects are also "hybrid" presentation, inadequate consideration of operations having both sustainable underlying ecosystem functions and production and environmental conservation objectives and involve a large number of Box 8 conditionalities. Given a context of "Ownership" and Project Performance in macroeconomic instability, weak local Indonesia and Malawi institutions and lukewarm political commitment to project environmental Insufficient borrower ownership, combined with objectives at best, their subsequent institutional weaknesses, seem to have played a implementation difficulties were highiy significant role in the implementation delays ex- perienced to date by the National Watershed Man- predictable. The Paraguay Natural Resource agement and Conservation Project in Indonesia. Management Project has likewise been More specifically, delays in mobilizing technical characterized by its current Task Manager as assistance (more than two years after loan effec- being "too complex." The Tana Plain tiveness) to bring about needed technical and in- Development Project in Madagascar, which stitutional changes at both the central and water- combines interventions in urban and rural shed levels, together with the lack of local leadership and full time commitment of the work- areas in a setting where local institutions ing groups are the major persisting risks in terms appear quite weak, provides yet another of the likelihood that the project will achieve its example. Implementation of this project, development objectives. which is co-financed by the Caisse Francaise Lack of full borrower commitment to project ob- de Developpement (CFD), has been seriously jectives, as revised at the time of the mid-term re- hindered by the suspension of CFD view, likewise appears to be a persisting risk fac- disbursements for a pumping station since tor in the Malawi Fisheries Development Project, January 1994. In contrast, the Venezuela although the Bank shares the blame due to poor INPARQUES and Paraguay Land Use preparation and inadequate supervision (see Box Rationalization Projects have much more narrowly focused objectives (although these 16 Environment Department Papers Factors Associated with Poor and Good Perfornance appear to be expressed too ambitiously in the Box 9 SAR in the Paraguay case)32 and much ox simpler designs which, in principle, should be Using Mid-Term Reviews to Increase considerably easier to implement. Stakeholder Participation In the Rondonia Natural Resource Management Insufficient stakeholder participation. Project, insufficient stakeholder involvement in Insufficient involvement of affected initial project planning and implementation was communities and other local stakeholders ,. one of the factors underlying a request by local prjcm mtls a ls otner ocharactaKenolaerized NGOs in July 1995 that the Independent Inspec- project preparation also characterized the tion Panel investigate the Bank's reported failure NRM projects in Mato Grosso and Rondonia. to comply with a number of its internal policies. Even though these operations were It also contributed to a lack of ownership of the pioneering in their attempts to involve NGOs project on the part of both the state government in project decision-making-the Rondonia and civil society until the mid-term evaluation. The Bank designed this evaluation as a way of sys- NGO Forum, which represented various local tematically consulting and engaging a broad range environmental and human rights groups, for of local stakeholders, many of whom had previ- example, was given a 50 percent ously had little or no contact with the project, and representation on the State Deliberative in some cases were openly hostile to it. The fe- Council (responsible for overall guidance and view, which was carried out by independent Bra- policy direions in e p rovect) an halfathe ., zilian consultants, created a forum for open dis- pOliCy direction in the project) and half the cussion of the project and a chance for all major seats on seven project planning councils affected interests to actively participate in its re- (responsible for discussing concrete design. This has likewise created an opportunity proposals)-these well-intentioned to simplify the project by reducing the number of administrative arrangements did not work components and executing agencies and making out in practice. One major reason for this was it more demand-driven by permitting local rural communities to gain direct access to project fund- that the Bank erroneously equated ing. Local facilitators have also played a key role "stakeholders" exclusively with NGOs and, in conflict resolution. in doing so, formally excluded economically and politically powerful actors (e.g., timber A similar process has also recently been concluded in neighboring Mato Grosso, where implementa- and ranching interests) from voicing their tion problems are less severe than in Rondortia and opinions on the project.' In both Rondonia both state govemment ownership and institutional and Mato Grosso, the Bank has recently used capacity are much stronger. Unlike Rondonia, the mid-term review process in an attempt to however, local NGOs have had less involvement correct this deficiency (see Box 9). However, in the operation to date and the mid-term evalua- many of the projects under review, tion and associated workshop is being used to many or the projects under review, draw them more effectively into the project deci- particularly older ones, reveal little evidence sion making process. In both projects, increasing of active stakeholder involvement. One stakeholder participation has been greatly facili- notable exception is the Eastern Anatolia tated by the presence, since January 1996, of a full- Watershed Rehabilitation Project in Turkey, time Bank NGO/civil society specialist in the Resi- in March 1993. This operation uses dent Mission. The distinguishing feature of these approved m March 1993. This operation uses exercises was the Bank's insistence that all stake- a participatory approach to strengthen holders be represented, that all agreements be farmers' planning and implementation made public, and that the Bank itself would not capacity and improve the responsiveness of impose its views (other than by insisting that the rural service agencies to farmers' needs34 in broad original objectives of these projects not be pursuit of its larger objective of helping to altered. restore sustainable range, forest and farming activities, thereby simultaneously reducing and increasing productivity and incomes in soil degradation, erosion and sedimentation, three provinces in the upper Euphrates Natural Habitats and Ecosystems Management Series 17 Natural Resource Management Portfolio Review watershed.35 In none of the "at risk" cases including the need to base preparation of examined, on the other hand, did project follow-on operations on a better preparation involve a systematic social understanding of the local political economy assessment, although this approach was used and institutional constraints, were not successfully in the design of the recently adequately incorporated in their design. approved India Ecodevelopment Project (see Operations approved more recently appear to Box 10).36 give greater attention to such lessons.38 Two of the projects reviewed here (e.g., the Land Incorporation of lessons from previous Management in Santa Catarina and the projects. Many of the projects reviewed are Natural Resource Management in Paraguay) "first generation" operations, especially those are conscious efforts to replicate, in similar focusing on biodiversity conservation agro-ecological conditions, the successful (INPARQUES in Venezuela) or national land management project in Parana, Brazil, environmental institution building (National drawing directly on that experience. The Environment in Brazil, Environment in highly satisfactory Loess Plateau Watershed Mexico, and Environmental Development in Rehabilitation Project also builds on previous Honduras), others represent a second attempt experience in the localities involved and other by the Bank to address the challenges of Bank operations in China. sustainable resource management in the same setting. This is the case of the NRM projects Analysis of borrower institutional capacity in Mato Grosso and Rondonia, which were and project risks. In hindsight, it is also intended to correct the failings of earlier Bank evident that Bank analysis of borrower operations in the same states. The five earlier institutional capacity (as well as commitment loans for this region, which were interlinked, to project objectives) and project risks at the were subject to ex-post evaluations by the time of appraisal was inadequate in various Region and OED.37 Some of the key lessons NRM projects that are now considered to be reported in these evaluations, however, potentially at risk. Several examples of this Box 10 Social Assessment in a Recent NRM Project in India Designers of the Ecodevelopment Project in India found social assessment (SA) to be a good starting point for stakeholder and NGO participation in project preparation. This operation, for which a parallel IDA credit (US$ 28 million) and GEF grant (US$ 20 million) were approved in September 1996, is designed to strengthen the conservation and management of protected areas by increasing local community benefits and local involve- ment, reducing conflict and engaging local support. The project focuses mainly on village ecodevelopment activities that seek to reduce negative impacts on biodiversity in and around protected areas by providing alternative livelihood and development opportunities linked to conservation agreements between the conimu- nities and park authorities. In addition to identifying key stakeholders, the SA supported the collection of socioeconomic and biophysical information to feed into project implementation and monitoring, and enabled those responsible for project preparation to build on the experience of people's involvement in forestry, conservation and rural develop- ment projects in India. The SA permitted stakeholders to identify interactions between parks and people, map out potential and actual conflicts and agree on a framework for ongoing participation during project imple- mentation through which communities and park officials will choose ecologically appropriate development activities and livelihoods. Source: Environment Department Dissemination Notes No. 42, "India: Using Social Assessment to Foster Participation in Protected Areas, May 1996. 18 Environment Department Papers Factors Associated with Poor and Good Performance problem are briefly described in Box 11. (i.e., the agencies responsible for future Again, there is evidence that greater attention operation and maintenance of the drainage, has been given to this question in the flood control and sewerage utilities and preparation and appraisal of more recent associated legislation) was not adequately environmental projects.39 advanced prior to Board approval. Insufficient preparation has also been Insufficient preparation prior to board identified as one of the critical factors in the presentation. A number of the projects unsatisfactory performance of the now reviewed appear to have been insufficiently completed Madagascar Forest Management prepared at the time of Board approval, and Protection Project (see Box 12). This contributing to subsequent implementation likewise appears to be a potential problem delays. One such case is the National with the generally "satisfactory" Northwest Watershed Management and Conservation Mountainous Area Development Project in Project in Indonesia, whose implementation Tunisia.40 might have proceeded more rapidly had necessary guidelines, technical manuals, and Inadequate consideration of ecosystem participatory mechanisms been more fully functions and constraints. Most of the developed during preparation. This might projects reviewed did not take underlying also have helped to generate greater ecosystem services and constraints ownership of the project on the part of local sufficiently into account during preparation. stakeholders. A second example is the Tana The clearest example of this is the Fisheries Plain Development Project in Madagascar, in Development Project in Malawi, whose which the legal and institutional framework design was inadequate from the beginning (see Box 13). On the most positive side, design of the Natural Resource Management Box 11 Projects in Mato Grosso and Rondonia, Brazil A s NtM of Institutional Capacity in was based in part on agro-ecological zoning NRM Projects at RiSk studies undertaken during preparation," Numerous NRM projects have been characterized while the Natural Resource Management by inadequate assessment of institutional capac- Project in Paraguay benefited from a full ity and associated risks. Bank appraisal of the (regional) environmental assessment. National Environment Project in Brazil underes- timated the difficulties of converting the newly created IBAMA into either an effective national Monitoring and evaluation of project environmental institution or an efficient project environmental impacts. Most of the projects coordination agency. Bank appraisal of the Mexico examined do not include specific provisions Environment Project failed to anticipate the sig- for monitoring and evaluating their nificant changes in institutional arrangements in- environmental and social impacts. Many, volving environmental management at the federal . ,, level that occurred shortly after project approval moreover, especially "older ones, also lacked in April 1992 and which helped to delay loan ef- explicit project performance monitoring fectiveness for nearly a year. Inadequate Bank indicators. However, several of the more assessment of borrower institutional capacity in recent NRM projects (especially Niger the Malawi Fisheries Project provides a third ex- Natural Resource Management and ample of this shortcoming, and its failure to cor- Venezuela INPARQUES), together with one rectly assess the role of Ministries other than the line executing Ministry during preparation of the of those that has been under implementation Northwest Mountainous Area Development longest (Brazil National Environment), are Project in Tunisia represents a fourth. significant exceptions. Participatory impact L___________________________________i monitoring and evaluation in the Niger Natural Habitats and Ecosystems Management Series 19 Natural Rlesource Management Portfolio Review Box 12 Preparation Shortcomings in an Unsatisfactory NRM Project The Madagascar Forest Management and Protection (FMP) Project was approved in February 1988 and closed in November 1995. The project was designed to help preserve ecosystems and biological species and to assist in implementing the National Conservation Strategy and Forestry Policy adopted in 1984-85. However, fol- lowing the mid-term review in 1992 most of its forest protection components were transferred to the IDA- financed Environment Project. The Implementation Completion Report (ICR) evaluates the overall outcome of the FMP operation as "unsatisfactory" and judges its sustainability as "unlikely." Poor preparation, particu- larly on the institutional and procurement fronts, was among the main reasons for the project's apparent fail- ure, Among the relevant lessons drawn by the ICR on the basis of this experience are: * Institutional strengthening at both the central and local levels may be needed before a project can be ex- ecuted; * The project coordinating unit must be given autonomy from political pressures; * Procurement work must be started early, preferably during the preparation phase, so that commitments and disbursements can begin in the first year of the project; * Monitoring and evaluation should be the subject of attention right from the start of the project and the M & E system should be based on systematic and reliable indicators; and, * Close support from Bank staff, preferably staff resident in country, is beneficial to project execution. Source: Implementation Completion Report, Madagascar Forest Management and Protection Project, Report No. 15442, March 19,1996 project, for example, will cover four key * Capacity building related to NRM at the areas: community level; and, * Capacity building related to NRM d Rehabilitation of the natural resource policies, strategies and coordination of endowment (i.e,, soil, water and activities at the national level. vegetation) sustaining the production Bank Factors 11. Quality of Supervision base; * The improvement of living conditions in Consistency in task management. In most ol rural communities; the projects reviewed, the quality of Box 13 Ecosystem Functions and NRM Project Design in Malawi The Bank appraisal team for the Malawi Fisheries Development Project believed that sufficient potential ex- isted for the expansion of commercial fish production (on specific species not exploited by artisanal fishermen) in Lake Malawi, on the basis of existing FAO reports. Project design, however, should have given more atten- tion to the underlying trends and factors affecting the fish population in the lake. In addition, project prepara- tion should have focused more on how to better manage the coastal fish resources exploited by small-scale fishermen (some 10,000 of whom fish within 3 km of the shore in small dugouts) even though, in fairness to the project team, there was limited knowledge at the time as to how to set up effective community management systems for fish resources in the coastal zone. Initial project design should also have more adequately considered the lake's ecological importance. Lake Malawi, which is the third largest in Africa, is a unique freshwater ecosystem that contains over 500 endemic fish species. These factors were, however, taken into account at the time of project restructuring. The revised design is sounder, focuses on institutional capacity building of the Fisheries Department and community- based fisheries management, and is more closely linked to a GEF biodiversity conservation project for Lake Malawi, approved in late 1994. 20 Environment Department Papers Factors Associated with Poor and Good Performance supervision appears to have been reasonably projects appears to be shifting to the field, good. Most of the NRM projects potentially at increasing possibilities of enhancing contact risk approved before FY95, however, have with and support to the borrowers (see Box 14). had at least two Task Managers and some, such as the Nepal Hill Community Forestry, Skill mix of supervision missions. The Madagascar Tana Plains Development, Malawi Fisheries Development Project Rondonia Natural Resource Management illustrates what can happen when Project and Mexico Environment Projects, supervision missions lack adequate technical have each had four or more, and the highly expertise. In addition to the significant problematic Malawi Fisheries Development turnover of Task Managers mentioned above, Project has had a total of six. The Paraguay none had sufficient background to accurately Land Use Rationalization Project, in contrast, gauge the technical or institutional aspects has had the same basic two man Bank task and changing requirements of this operation. team since it was first identified in 1989. In As a result, none believed that it was general, continuity of Bank Task Managers necessary to include such specialists in the for specific projects over time tends to supervision process, and the operation was contribute positively to their performance, largely approached as a traditional while multiple changes in task management, agricultural project with a focus on financial similarly to multiple changes in key aspects, covenants, procurement, timetables, executing agency staff, can often be and so on. While the participation of Resident disruptive. Mission staff provided some continuity, it did not solve these basic problems. In addition, Intensity and location of supervision. As a this led to often conflicting and/or ill-advised direct result of their complexity, several of the recommendations from supervision missions, NRM projects under review have required a which were irregular and often far between, considerable supervision effort on the part of in the process progressively alienating local the Bank thus far, and are likely to continue staff and authorities who were perplexed by to do so. The Madagascar Tana Plains the seeming irrelevance of some of the Bank's Development Project, for instance, has had at requests. In hindsight, this is one clear case least eighteen supervision missions since where more consistent involvement of staff August 1990, together with three changes in and/or consultants possessing greater task managers, while the Nepal Hill familiarity with sectoral issues and Community Forestry Project has had at least constraints would have improved both twelve such missions since July 1991 and the project quality at entry and its subsequent Brazil National Environment Project twelve supervision. missions since August 1990. The composition of supervision missions appears to have been Flexibility and creativity. Another key inadequate in some cases, and many of the element in successful supervision-and projects reviewed would clearly have project execution more generally-is benefited from greater or more systematic flexibility and creativity in responding to participation of environmental and social changing circumstances and demands of specialists. In addition to being multi- project implementation. There is evidence in disciplinary, moreover, supervision missions the projects examined in this review that, should systematically involve other donors despite or perhaps because of increasing and NGOs if they are directly involved in budget constraints, supervision of NRM NRM operations. In a growing number of operations is becoming more flexible over cases, finally, task management of NRM time. Increasing field-based supervision, Natural Habitats and Ecosystems Management Series 21 Natral Resource Management Portfolio Review Box 14 pollution control. As a result, the task Field-Based Supervision of NRM manager has been able to supervise a key ProFects: A Growing TrendS project component and provide specialized Projects: support to the borrower by bringing in staff The NRM Projects in Mato Grosso and Rondonia with the requisite skills and experience from are an interesting special case in terms of Bank somewhere else in the Bank. Supervision supervision since they have been partly super- budgets should contain sufficient flexibility to vised from the field (Cuiaba, the capital of Mato Grosso) for the last three years by a resident Bank permit replication of this approach in other staff person, as well as by periodic missions from NRM projects. Another example is the Loess Headquarters. In February 1996, task manage- Plateau Watershed Rehabilitation Project in ment of these two operations, as well as of the China. National Environment Project, was formally de- centralized to the Resident Mission in Brasilia in- WVhy Cross-Cutting Problems Arise cluding an increasing involvement of the recently hired NGO/civil society liaison officer. Task man- Most of the reasons why cross-cutting agement of the Indonesia National Watershed performance problems in NRM portfolio arise Management and Conservation and Malawi Fish- have already been touched on above. In many eries Development Projects has also recently been instances, they are related either to "country transferred to the field. Supervision of the Nepal Hill Community Forestry Project has likewise in- factors" largely beyond the control of project volved substantial involvement by the Resident executing agencies and Bank appraisal and Mission, including task management at one point. supervision teams. In others, they reflect Finally, the Honduras Environmental Develop- inadequate "quality at entry." In the case of ment Project is being supervised in part from the most "country factors" (e.g., constraints on Bank's Regional Implementation Office in San counterpart funding flows due to Jose, Costa Rica. Jose, Costa Rica. macroeconomic stabilization programs, Although costly in terms of human and financial implementation delays due to periodic resources, the experience in Brazil to date suggests national and/or subnational government that intensive, field-based supervision is permit- transitions, etc.), these problems affect Bank ting the Bank to become a more effective partner with local executing agencies and NGOs, as well projects in all sectors and are not unique to as helping to achieve more participatory processes NRM operations per se. of project (re)design and implementation. More specifically, field-based supervision seems to be In terms of "quality at entry," on the other generating important dividends in terms of: bet- hand, both executing agencies and Bank ter understanding by the Bank of a complex local . . context; more fluid communication with stake- project teams can have a signficant impact. holders; and an ability to respond more quickly While many of these issues (e.g., overly and flexibly to emerging problems. complex design or insufficient assessment of project risks) are also generic in that they affect the performance of Bank operations including the use of local consultants, is one independently of the sector or type of project indication of this. Bringing in human involved, some aspects, such as ex-ante resources from other parts of the Bank is assessment of underlying ecosystem another. One interesting example of this is the functions and services and adequate Honduras Environmental Development stakeholder consultation, are especially Project, where two Bank environmental important for natural resource management specialists from the Asia Region (ASTEN) projects. The main reason why such problems have provided guidance to the project occur is fairly obvious: not enough attention executing agency on organizing a technical is given to them during project preparatiorn workshop on industrial and municipal and appraisal. This stems in part from a 22 Environment Department Papers Factors Associated with Poor and Good Perfornance common tendency in the Bank to attempt to Brazil - Land Management I (Parana). This do too much, too soon in a single lending operation, which is now nearing completion, operation, especially in terms of (generally is designed to increase agricultural politically sensitive) policy, institutional and/ production and farm incomes by promoting or financial reforms. the adoption of sustainable, modern forms of land management and soil and water This clearly seems to have been the case in conservation in areas subject to serious several forest-related NRM projects erosion, thus safeguarding farmer incomes potentially at risk (e.g., the Nepal Hill and the state's natural resources. This Community Forest and Pakistan Punjab objective is to be achieved by increasing the Forest Sector Development Projects). It also extent and duration of vegetative cover of the appears to be true of several of the NRM soil, better protecting it from intense rainfall, operations in Brazil, particularly the National improving the soil structure and drainage, Environment and the Mato Grosso and thereby increasing water infiltration, and Rondonia Natural Resource Management safely disposing of any remaining run-off. At Projects, where insufficient attention was a year prior to closing, the project had begin given to institutional and/or political work in over 2,400 microcatchments reaching constraints, as well as of the National about 210,000 farmers, in both cases Watershed Management and Conservation surpassing original project targets. A Project in Indonesia, the Tana Plains preliminary evaluation of project impacts Development Project in Madagascar and the indicates that yield increases in assisted Fisheries Development Project in Malawi. watersheds range from 10 to 30 percent, Possible ways of avoiding some of these while water turbidity in four monitored pilot problems in the future are suggested in microcatchments has decreased by about 60 chapter 4. percent. Despite its location in a "high risk Experience with Successful country" according to the QAG indicators, NRM Projects implementation progress and likely development outcome of this project have It is useful to complement an examination of been rated "highly satisfactory" for most of factors associated with poor performance in the last four years. This can be attributed to: operations considered potentially at risk with (i) the relatively stronger financial and a brief review of several NRM projects whose institutional performance of Parana over the implementation progress and/or likelihood past decade when compared with many other of achieving their development objectives Brazilian states (including the more have been rated "highly satisfactory." Two developed Sao Paulo) and the federal such operations were specifically examined in government; (ii) the fact that it is based on an the present review: the Parana Land existing soil conservation program in the Management I Project in Brazil (approved in state; and (iii) its highly participatory and FY89), the Loess Plateau Watershed "win-win" nature. The approach followed in Rehabilitation Project in China (approved in this project has subsequently been replicated FY94), and the Natural Resource in several other Brazilian states (Santa Management Project in Benin (approved in Catarina, Sao Paulo, Mato Grosso do Sul, and FY92). Emerging results and lessons of Mato Grosso), as well as the eastern region of several generally successful ongoing NRM Paraguay, which are facing similar land projects in Sub-Saharan Africa (including the degradation problems due to the rapid Benin operation) are briefly summarized in spread of large-scale commercial agriculture Box 15. in the 1970s and '80s. It is also the basis for a Natural Habitats and Ecosystems Management Series 23 Natural Resource Management Portfolio Review Box 15 Keys to Success in NRM Projects in Sub-Saharan Africa Participatory, community-based NRM projects have been under implementation since the early 1990s in Benin, Burkina Faso, Mali and Niger with funding from IDA and several bilateral assistance agencies. Pilot projects in Chad and Guinea also have significant NRM components. According to a recent dissemination note, since most of the land in these countries is collectively owned, these operations are attempting to "reinforce common property management systems, with the dual objective of alleviating poverty and improving the management of (crop) land, water, pasture, and forest resources." On the whole, these projects are performing satisfactorily. Only the Niger operation has been, probably inappropriately, flagged as being potentially at risk. Among the positive results reported thus far: (i) local communities have rehabilitated village land through soil and water conservation measures (Burkina Faso, Mali) and improved pasture (Chad) and forest resource (Burkina Faso, Niger) management; (ii) some projects have helped resolve land conflicts, both between farmers and herders within the community and between local communities and outsiders; and (iii) local community in- volvement has not only improved the management of collectively-owned lands, but also that of goverunent- owned forests reserved for biodiversity conservation (Burkina Faso, Mali). Lessons learned from these projects, many of which are also relevant to NRM operations in other parts of the world, include: * With the proper institutional environment, rural communities can bring bottom-up solutions to land tenure and other natural resource management problems; * Governments should allow for innovative legal and regulatory measures suggested by local resource users to be tested in selected areas before proceeding to larger scale implementation; * Improved natural resource management requires governments to recognize and, if necessary, help enforce locally designed solutions; and, * Successful local-level management of natural resources necessitates investment in community-level capacity building and empowerment in the areas of organization, financial and natural resource management, which often requires more time than is normally allowed for in donor-supported projects. Source: "Natural Resources Management," Findings Infobrief, Africa Region, Number 8, September 1996 follow-on rural poverty alleviation and implementation is ahead of schedule and has natural resource management project in already produced significant results in terms Parana, approved by the Board in June 1996. of increased crop yields, after a year of lower output due to drought conditions. According China - Loess Plateau Watershed to a recent supervision report "with more Rehabilitation. This project, which involves than 15,000 ha of terraces completed, this seventeen counties and nine major project has already begun to make a positive watersheds in four different provinces, aims difference in tens of thousands of people's to reduce erosion and inflows of sediment to lives .. there was strong identification with the Yellow River by: (i) encouraging and commitment to achieving projects' sustainable crop production on high-yielding objectives among beneficiaries." Among the farm land; (ii) planting slope lands with a factors associated with its highly satisfactory variety of trees, shrubs and grasses for land performance to date are: stabilization; (iii) afforestation of degraded agricultural lands; and (iv) improved * Selection of the project site on the basis ojF livestock management. It also provides its existing poverty level and institutional support such as training, development potential, together with the technology transfer and research to presence of strong leadership and local strengthen the capacity of local agencies in govermnent commitment to project soil and water conservation. Project objectives;42 24 Environment Department Papeis Factors Associated with Poor and Good Performance * Past successful experience with soil groups to formulate rules governing forest conservation in the region in non-Bank- resource use and to create and manage forest- supported projects and components of based enterprises. Project activities are most earlier Bank projects, such that both local advanced in the 50,000 ha Tchaourou-Toui institutions and farmers viewed the Kilibo (TTK) forest, which has been organized technical package involved as risk-free; into four management units, each under the the only new approach that was added responsibility of a group of villages. As a was a component for integrated planning result, forest encroachment has been stopped, at the watershed level based on the boundaries of agricultural zones within consultation with village beneficiaries; the forest area have been determined and * All project beneficiaries were granted materialized with community participation, long-term land use rights under the and fields located outside such boundaries project (land contracts to be signed voluntarily abandoned by farmers. Key between farmers and local governments success factors in this case included: explicitly stating terms, land use rights and obligations associated with the lease); * The relatively good potential for forest- * Many project components have been based activities in TTK; designed so that their positive results are * The quality and commitment of the immediately visible to potential technical assistance initially provided participants (e.g., soil retention (one expert based in the forest area) and structures); where there is solid evidence of project staff; and clear understanding of land * The quality and intensity of the training productivity improvements, farmers are and organization support provided by a likely to be more willing to adopt other highly specialized NGO that became a land management changes such as full-fledged partner in the operation; and afforestation, grassland development, & The timeliness and quality of Bank grazing management, etc. * Flexibility of Project Management Offices supervision, together with the continuing i rlesponding to ,cangg beneficiy dialogue between the Bank, those work plan needs at the time of the responsible for implementing the project dro .ptand and country decision makers. drought; and c Widespread public information In summary, these three successful NRM campaigns. projects, together with those briefly described Benin - Natural Resource Management. This in Box 15, appear to share a number of key project, which was prepared just after the end features that should be highlighted: of the Marxist regime in Benin, was conceived as an instrument to test participatory * They involve "win-win" situations from approaches in NRM and to propose policy both an economic and an environmental and institutional adjustments that would standpoint (i.e., improved natural sustain new programs based on successful resource management results in both innovative pilot experiences. Project visible economic and environmental components include forest management benefits); (three gazetted forests covering 268,000 ha * They require and entail a high level of and involving some 320,000 people inside or beneficiary participation; near the forests), game reserves, and * They represent-in most cases, watershed management. Project previously tested and accepted-local implementation has involved formation of solutions to local problems; Natural Habitats and Ecosystems Management Series 25 Natural Resource Management Portfolio Review * There is strong borrower and beneficiary mechanisms between households in buffer ownership of the interventions involved; zones and the stewards of protected areas. * In most cases, they involve stable and This is particularly important in areas under (administratively and technically) population pressure. Under such capable implementing agencies that circumstances, investment in local identify closely with project objectives; participation and/or land tenure activities is * Their designs are not overly complex or a necessary but not sufficient condition for demanding in relation to the capacity of success. The key appears to be adequate local institutions; and "compacts" for joint protection and the * Bank supervision has been flexible and acs forljointp tion and te design and implementation of a system of supportive. appropriate incentives and sanctions. The . addition to these largely generic features, experience in Sub-Saharan Africa, finally, also In addition to these largely generic features, sget h motneo non which apply to many types of Bank suggests the importance of ongomg operations, not just those involving natural decentralization processes in many countries, resource management, recent Bank together with a clear definition of the roles of experience in Thailand and Vietnam suggests the public and private sectors, and of local that an essential ingredient for success in communities, for successful NRM operations. projects aimed at protecting and properly Inclusion of income and employment managing conservation forests or watersheds generation activities in such projects likewise is the establishment of joint protection contributes to better results. 26 Enviromnent Department Papers 4 How to Improve Performance Ways of Improving NRM Portfolio the Honduras Environmental Development Quality and Performance Project, should be removed from this list, since this rating has, justifiably, been This chapter is divided into two parts. The upgraded to "satisfactory" following the first sutmarizes the task team's assessment most recent supervision mission due to as to the extent to which each of the successful resolution of internal management individual NRM projects identified by QAG and procurement problems. As this is a as being potentially at risk is, in fact, at risk, comparatively "young" project designed to and, if so, what future actions are required. strengthen national and subnational The second suggests more general ways in snu which the quality and performance of the environmental institutions, however, it natural resource management portfolio can should continue to receive close supervision. be improved. Projects under implementation for less than Assessments of Individual Projects and three years that are probably not at risk. Associated Recommendations Three other relatively "young" projects- Niger Natural Resource Management, Projects not at risk. Among the NRM projects Paraguay Natural Resource Management and flagged as actually or potentially at risk by Venezuela INPARQUES-are probably not at QAG and not covered by other "sectoral risk, but will still require close attention by reviews," two "mature" projects, the Brazil the Bank over the next several years. The Land Management II (Santa Catarina) and situation of each of these projects is briefly National Environment Projects (NEP), are not summarized below. All three of these presently at risk and no specific Bank actions operations will continue to require close other than normal supervision and monitoring, but not exceptional supervision. completion reporting are necessary.43 Both of It is too early to say whether they will require these projects appear to be well on their way extensions or reformulations, but mid-term to successful outcomes, even though in one reviews should be carried out in all cases. case (NEP), getting to this point required a substantial mid-term restructuring, * Niger. Although under implementation downsizing of some components, reallocation for less than a year and effective only of resources and decentralization of project since October 1996, this operation seems activities, together with continued close Bank to have fostered considerable ownership supervision. from civil society, NGOs and government representatives. In addition, while In addition, one of the operations considered institutional capacity is probably weak, "actually at risk" by virtue of an project design is not overly complex, the "unsatisfactory" IF rating at the end of FY96, operation supports existing national Natural Habitats and Ecosystems Management Series 27 Nahual Resource Management Portfolio Review efforts to promote community-based Mato Grosso Natural Resource Managemeni: natural resource management, both in Brazil, and Eastern Anatolia Watershed supervision missions to date rated its Rehabilitation in Turkey-also fall in the implementation progress "highly category of probably not at risk. satisfactory" and there are no reasons a priori why it should not achieve its * Brazil - Mato Grosso NRM. While objectives. sharing many of the same "birth defects" * Paraguay NRM. This project has likewise as its sister operation in Rondonia (see the overcome its initial effectiveness delay, next paragraph), this project has had a succeeded in decentralizing decision- much less problematic (although by no making regarding the provision of means problem-free) implementation agricultural services from the capital city, experience, greater "ownership" on the Asuncion, to the project area, begun to part of the state government and stronger mobilize effective participation of local executing agencies, especially with rural communities, and possesses the respect to environmental management. A intrinsic "win-win" nature of similar mid-term review seminar was carried out microcatchment management projects in during the first week of December 1996, Brazil and elsewhere. which resulted in a proposal to reorient * Venezuela. This operation has a relatively the project along lines similar to those simple design with only one executing previously proposed for the Rondonia agency-the national parks service NRM operation, including more effective (INPARQUES), which appears to be a NGO and other stakeholder participation comparatively capable institution-and in project decision making. While this essentially involves expanding and project will not need a major strengthening activities which this agency restructuring, it will continue to require is already undertaking. Continuing intensive "hands-on" supervision from possible risks are: (i) cumbersome the field. government budget allocation * Mexico. This operation, whose major procedures, which affect the entire NRM component is funded by the GEF, Venezuela portfolio, and (ii) the has been affected by significant possibility of additional turnover of key institutional change (and associated staff agency and project personnel. Both of turnover) within the federal government, these factors slowed project start-up. together with macroeconomic Making Venezuela's budget allocation stabilization measures, over the past process more agile is obviously not several years. However, despite a something that can be accomplished at substantial financial downsizing in dollar the level of project supervision, but rather terms due to sharp devaluation of the needs to be a focus of Bank peso in 1994, a continued disbursement management's dialogue with national lag, and the need for a recently approved authorities on portfolio performance closing date extension, it seems likely to issues more generally. eventually achieve most of its initial objectives. While the GEF protected areas Projects under implementation for more component has likewise been problematic than three years that are probably not at in the past, it is now in the process of risk. Four comparatively "mature," if slow being restructured (as a trust fund) and disbursing, projects-Mexico Environment, has been extended through the year 2000. Paraguay Land Use Rationalization (LUR), The project may be upgraded to 28 Environmtent Department Papers How to Improve Performance "satisfactory" in terms of implementation term review in November 1995, is progress after the next supervision whether to extend the approach to mission, but should continued to be neighboring provinces in order to utilize closely monitored. some US$ 30 million that would Paraguay LUR. This operation is otherwise be unused or to cancel part of relatively straightforward in design and the Bank loan. As political instability and has now succeeded in overcoming two upcoming elections may exacerbate major procurement problems that, present uncertainty due to lack of together with an initial effectiveness agreement among project executing delay because of the need for agencies regarding the desirability of Congressional approval of the loan expanding the project's territorial scope, agreement, are likely to require two partial cancellation would appear to be additional years in order to complete the more suitable course of action. As implementation beyond its present with the other operations in this category, December 1998 closing date. Any moreover, whether expanded or not, it extensions should be granted for one year will continue to need close Bank at a time contingent upon the project supervision. meeting appropriate implementation benchmarks that should be clearly Projects at risk. Three of the projects specified and communicated to the reviewed, finally-the Rondonia Natural borrower. However, barring further Resource Management Project in Brazil, the unforeseen institutional and/or key National Watershed Management and personnel changes, it too appears likely to Conservation Project in Indonesia, and the eventually achieve its objectives. This Fisheries Development Project in Malawi- project may also be upgraded to appear to be clearly at risk. All three have "satisfactory" in terms of implementation undergone mid-term reviews and are in the progress following its next supervision process of being significantly restructured. mission. All three will continue to require intensive, * Turkey. Like the others in this category, field-based monitoring and supervision. this project is characterized by slow disbursements, due in part to insufficient * Brazil - Rondonia NRM. Despite local counterpart funds and lengthy substantial efforts on the borrower's and clearance procedures for procurement the Bank's part to put it on more solid (that were subsequently streamlined), and footing, as well as noteworthy institutional-in this case project implementation progress in recent coordination and executing agency months, this project is likely to continue staffing-problems. However, it is highly to be at risk of not achieving and participatory, with increasing beneficiary sustaining many of its development involvement and ownership at the objectives due to the state government's community level, and is making steady weak institutions and precarious financial progress toward achievement of its situation.44 While borrower commitment overall objectives (twenty-four to project environmental objectives microcatchment plans had been prepared appears to be improving, it is not clear and were under implementation at the how strong or sustainable the emerging time of the May 1996 supervision partnership between the state mission). The critical decision now faced government and local NGOs really is. As by the project, which underwent a mid- proposed, the restructured project would Natural Habitats and Ecosysterns Management Series 29 Natural Resource Management Portfolio Review simplify its administration by reducing nursery and soil conservation works, as the number of components and executing well as greater attention to conservation agencies, make it more demand-driven by issues at the watershed (as opposed to expanding a pilot community projects on-farm) level. The need to improve component, and increase the participation implementation of the institutional of civil society in decision-making on the strengthening component also persists, allocation of resources, while retaining and the status of a large component to and (hopefully) consolidating its provide investment support for the environmental and indigenous peoples' national Regreening and Reforestation protection components. The proposed Program requires further review. project restructuring represents a major Continuing dialogue with the Indonesian step in the right direction. However, Government and key stakeholders on given the severe institutional, financial these issues, together with and political constraints mentioned encouragement of greater direct above, the proposed reorientation and involvement of local farmers in project democratization of the project may, implementation, should be priorities in nevertheless, be "too little, too late." If future Bank field-based supervision. project reformulation and extension of the * Malawi. Despite significant restructuring March 31, 1997 closing date45 are of the project following the mid-term approved by the Bank, close supervision, review, institutional capacity remains especially of its environmental, land weak and borrower ownership regularization, indigenous peoples and questionable. The Government of Malawi community projects components, will still also has severe financial constraints that be needed. may jeopardize the institutional reforms Indonesia. While the design of the and more sustainable approach to Indonesia operation is not overly fisheries management now promoted by complex, executing agencies are weak the project. It will, therefore, continue to and there appears to be insufficient require careful monitoring and close borrower ownership of project objectives. supervision. Any future such projects, It is also unfortunate that the Ministry of moreover, should be based on a better ex- Agriculture does not participate in the ante understanding of the underlying project, which has sustainable ecosystems involved and adequate agricultural development in critical expertise for this purpose should be watersheds as one of its main objectives, included in Bank preparation and While the (late) arrival of technical appraisal missions. Stronger borrower assistance may help to improve current commitment should also be obtained implementation delays, this will not, in prior to Board presentation. and of itself, ensure a successful outcome. General Ways of Improving The mid-term review found that, while NRM Project Performance progress had been made in the Upper Cimanuk Watershed component as the The main causes of unsatisfactory NRM result of substantial improvements in project performance are: (i) poor "quality at farmer participation as the result of the entry," especially as relates to borrower introduction of participatory rural ownership; (ii) inadequate borrower appraisals, the need remains for greater institutional performance; and (iii) country transparency of project activities and economic and political factors that are often more active farmer management of the beyond the control of project executing 30 Envirorrnent Department Papers How to Improve Performance agencies and Bank task teams. Except for often a key element in successful excessive Task Manager turnover in some NRM operations; NGOs should also cases (e.g., Malawi Fisheries Development, be involved whenever possible in the Mexico Environment, Nepal Hill Community design stage, especially in social Forestry), Bank supervision appears to have assessments and the analysis of generally been a positive factor in project property rights. performance. Ways of improving each of the * Project design is compatible with the other factors mentioned above are briefly (realistically assessed actual and/or indicated below. potential) capacity of the institutions (both public and private) that will be Quality at entry. All of the dimensions of responsible for project implementation. project quality at entry identified in chapter 2, Project designers, accordingly, should as well as their costs,46 need to be adequately conduct a proper evaluation of existing considered by the borrower and the Bank in capacity and local/national institutional the preparation and appraisal of NRM arrangements for managing natural projects. Based on the above review, however, resources.47 particular attention should be given to * Project design is based on an adequate ensuring that: understanding of the underlying services and functions provided by the * Project objectives are firmly "owned" by ecosystems that will be affected during all major stakeholders, which implies: project implementation, particularly with - a need for the active and effective respect to the implications of these involvement of legitimate interventions for the longer-term representatives of all affected interests sustainability of the (renewable) natural in project preparation from the outset; resources involved. This implies the need - the need to carry out a systematic for adequate environmental assessment social assessment to determine of NRM projects.48 whom the relevant stakeholders are * Especially in cases of uncertainty as to and what their "stakes" in the project what these effects are likely to be, NRM are likely to be; this will be projects should include provisions particularly necessary in non "win- (including clear identification of win" NRM projects (such as those in institutional responsibility and adequate Rondonia and Mato Grosso, Brazil) funding) to monitor and evaluate the where there is significant potential for impacts of project interventions on the conflict among affected stakeholders ecosystems and resource base involved. over resource use and where some * More attention should be given to policy kind of transparent negotiation and considerations, particularly resource consensus building process among pricing, land tenure and access rights, all the interested parties (e.g., loggers, and treatment of public and private gods, miners, ranchers, small farmers, including common resources. Since rubbertappers, indigenous macroeconomic and sectoral policies have communities, local governments, etc.) both direct and indirect effects on the use will need to be established; and of natural resources, they need to - the need to ensure effective considered as well. collaboration between affected * Cross-sectoral factors likewise merit communities, local NGOs and special scrutiny. Often the focus of NRM implementing agencies as this is operations is multisectoral, involving Natural Habitats and Ecosystems Management Series 31 Natural Resource Management Portfolio Review multiple agencies that have implications be piloted prior to being adopted on a for management and coordination of larger scale. More time should be various programs. dedicated to asking the "right questions" * The treatment of any single natural that need to be addressed in designing resource, such as water, forests, or pilots as simple products-not as wildlife, as well as groups of natural conventional Bank operations in terms oiE resources (i.e., ecosystems) needs to occur format, process, and implementation- in the context of a land use framework. that can provide rapid responses and Such a framework allows for better quick solutions at the same time as they assessment of the linkages among natural permit "learning by doing." resources, the impact of human * Many of the above observations also interventions on natural systems, and the point to the need to base NRM operations dynamics of the interactions of to the extent possible on prior quality population, subsistence economies and sector work since this is one clear way in poverty which frequently results in non- which the Bank can obtain a better ex- sustainable resource use. ante understanding of the socio- = Careful attention should also be given to economic, environmental, political, policy the assessment of alternative approaches and institutional context in which it is for achieving development objectives. proposing to intervene. Those responsible for project preparation * Within the Bank, finally, there is also the and appraisal should demonstrate need to strengthen (as well as streamline) selection of a viable project design the internal project review process prior alternative over other options on the basis to Board submission, including the of rigorous technical, economic, financial, effectiveness of peer review. QAG's institutional, environmental and social quality at entry reviews of selected analysis. In addition, specific projects projects are a good step in this direction. should ideally be developed as part of a longer-term (10-15 year) strategic Borrower institutional performance. As national program to improve the suggested above, borrower institutional effectiveness and sustainability of natural capacity should be thoroughly assessed resource management. during project preparation and appraisal, * Economic analysis, in particular, needs to and, project objectives and design should be improve, especially the "fine-tuning" of gauged accordingly. Where existing capacity cost-benefit analysis to integrate is weak, the emphasis should be on its environmental impacts. In most cases, adequate development prior to requiring NRM projects include both positive and agencies to take on significant additional negative externalities, which are difficult responsibilities (e.g., administering large to assess and quantify. However, investment programs, undertaking new or techniques exist that can-and should- innovative activities on an ambitious scale, be applied more consistently in Bank etc.) during project implementation. In this project work.49 Similar progress needs to connection, new or innovative approaches to be achieved with respect to risk analysis. natural resource management, whether for Better guidance and training is needed by purposes of sustainable agricultural, forest or both Bank staff and borrowers in these fisheries production or biodiversity areas. conservation, should be "piloted" during * New and/or locally untested approaches project preparation or through small to natural resource management should components before being attempted on a 32 Environment Department Papers How to Improve Performnance larger scale so as to simultaneously build adequately contemplated. Simple local capacity and "learn by doing." The precautions, such as planning project proposed new lending instrument for project implementation periods to coincide as closely preparation, which would share some of the as possible with relevant national and features (e.g., small size, flexibility, focus on subnational electoral cycles, for example, may preinvestment studies, etc.) of the older significantly enhance project performance. "engineering loans" that have been largely Other issues, however, such as those abandoned in recent years due to their involving macroeconomic problems or comparatively high transactions costs, policies, can only be effectively addressed (if represents one good mechanism to support at all) in the Bank's country dialogue. Such this approach. issues need to be clearly identified for discussion in the appropriate context, for External partnerships and coordination. It example in connection with elaboration of the will also be essential to establish and Country Assistance Strategy (CAS) or of the maintain a broad coalition with other donors annual Country Portfolio Performance and (both international and local) NGOs in Review (CPPR). Effective action, moreover, supporting natural resource management will require interventions at the level of Bank programs. In virtually every country in which management (i.e., at a level higher than that the Bank is working, many donors and NGOs of the Task Manager).5" Finally, as OED has are presently involved in NRM operations, repeatedly pointed out in recent years, the often supporting diverse interests and potential risks of working in any specific agendas. As a result, the approach to NRM at country facing significant political, the country level is frequently fragmented macroeconomic or portfolio performance and uncoordinated. Without real partnership problems and their likely impact on the among external agencies, internalizing each performance of future lending operations country's needs and priorities, the overall need to be more explicitly taken into account impact and effectiveness of development in Bank decision-making about when, how assistance are likely to be weaker than they and even whether to process NRM and other might otherwise be. At the outset, there is a types of projects. strong need for the Bank to work with other donors and NGOs in developing projects that Recommendations for Further Analysis support a common vision and action plan (similar to the approach proposed for the The present desk review has identified a development of national environmental and number of factors associated with good and sustainable development strategies).50 Project poor performance of NRM projects. This design, moreover, should take into account preliminary assessment should be not only the Bank's experience, especially complemented by more systematic analysis of good practice and lessons learned, but that of the relationship between project design and other agencies as well. "quality at entry"-as opposed to implementation environment- "Country Factors." Task managers need to characteristics, on the one hand, and concrete become more aware of the extent to which outcomes (or lack thereof), on the other. underlying country macroeconomic, political Annex G summarizes the findings of an and/or institutional factors may "derail" initial survey of various dimensions of project implementation, even when all of the "quality at entry" for selected NRM projects, "quality at entry" and borrower institutional including both highly satisfactory ones and performance concems mentioned above are those flagged by QAG as "potentially at risk" Natural Habitats and Ecosystems Management Series 33 Nahural Resource Management Portfolio Review but not discussed in other "sectoral" reviews. Should there be an opportunity to add other Examples based on this analysis have been countries to the list, candidates would highlighted throughout the preceding text. include India and/or China, one or more semi-arid countries in Sub-Saharan Africa, Ultimately, however, this assessment requires and the Philippines (including the Central undertaking more in-depth country case Visayas Project), all of which focus on the studies, including field visits, to document importance of developing effective more fully and draw lessons from both good community based organizations for natural and bad practice in such operations, as well resource management. as to obtain the borrowers' perspectives on the issues examined above. It is, therefore, The project iclusters" to be examined (and proposed that five national experiences with t r Bank-supported NRM projects over the past Brazil decade be investigated in further detail: Minas Gerais Forestry (FY88) Brazil, Indonesia, Madagascar, Malawi and * Land Management Project I (Parana) Paraguay.52 A variety of approaches has been (FY89) taken to natural resource management in * National Environment Project (FY90) each of these countries, with a mixture of * Land Management Project II (Santa successful and unsuccessful results. Most of Catarina) (FY90) the projects involved are "mature" and, in * Rondonia Natural Resource Management some cases, have recently been or soon will (FY92) be completed. However, the review would . Mato Grosso Natural Resource also focus on newer operations that Management (FY92) demonstrate improved quality at entry and * Parana Rural Poverty Alleviation and have made a serious effort to incorporate Natural Resources Management (FY97) lessons of experience Indonesia The countries proposed present a range of * Forestry Institutions and Conservation situations in terms of territorial size, (FY88, completed in FY96) population pressures, income levels, * Yogyakarta Upland Area Development institutional capacity, country economic (FY91) problems and overall Bank portfolio * Integrated Pest Management (FY93) performance. Brazil, Indonesia and National Watershed Management and Madagascar are also of global importance in Conservation (FY94) terms of biodiversity Malawi has been * Kerinci-Seblat Integrated Conservation selected because it includes the only fisheries and Development (FY96) project in the sample and because of the Madagascar parallel GEF operation. Paraguay would be a Forest Management and Protection (FY88, examined because of its proximity to Brazil completed in FY96) and similar approach to land /watershed * Tana Plains Development (FY90) management, and because of its pioneering * Environment I (FY90) efforts to develop information systems for * Environment II (FY97) natural resource management in a free- standing NRM operation. The NRM-related Malawi experience of other bilateral and multilateral * Fisheries Development (FY91) donors in these countries should also be * Lake Malawi/Nyasa Biodiversity considered in carrying out these studies. Conservation (FY95) 34 Environment Departnent Papers How to Inprove Performance Paraguay such questions as the following: What are the * Land Use Rationalization (FY92) organizational set-up, system of cost sharing * Natural Resource Management (FY94) and participation and incentives in more successful case, such as the Parana Land The case studies would be carried out in close Management Project in Brazil? On the other coordination with the respective Country hand, what is it about the set-up in Indonesia Departments (and Resident Missions), to the that is leading to problems and how is these extent possible in connection with regularly similar to or different than the problems scheduled supervision missions. It is experienced in other NRM operations. To proposed that these studies be funded jointly what extent can things that appear to be by ENV (Bank staff time), QAG (Bank staff working in one place should-and can-be travel), the Norwegian Trust Fund (research used as models for application elsewhere? It assistance, consultants and consultant travel), is hoped that, together with specialists from and, to the degree possible, the Regions (as ENV, several NRM Task Managers will be regular cross support in connection with able to participate actively in the review, ongoing project supervision activities). including field visits to projects other than their own, in order to promote a fuller Wherever possible, finally, cross-country interchange of experience and lessons learned comparisons will be made in order to answer in this complex area. Natural Habitats and Ecosystems Management Series 35 Endnotes 1. This Program includes a range of activities as the Forestry Portfolio Review points out, designed to improve both project quality at the focus of such operations has shifted in entry and the quality and effectiveness of recent years tog an increasing concern with Bank supervision. watershed management and parks and 2. The other "sectors" that have been subject to protected areas, as well as social issues. specific review are adjustment lending, 7. The Tana Plain Development Project in agricultural research and extension, Madagascar, which was examined in the financial intermediary loans, forestry, water supply and sanitation review, is yet highways, oil and gas, power, public another type of "hybrid" in that it combines enterprise reform, social funds, social interventions to improve living conditions sectors, water supply and sanitation, and of low-income populations in low-lying technical assistance loans. areas of the city and the Antananarivo Plain 3. This review does not discuss performance/ and to increase the productivity of effectiveness issues specifically associated industries and farms in the area through with projects involvingwaterresourceflood protection, irrigation rehabilitation wth prjet inovn wate reouc and other works. Moreover, it can be management, which are largely covered m leitmthely arg edtath is ca mh the irrigation and water supply and lbrown,,as a"gree poett intat it se sanitation portfolio reviews. However, ro as a 'green project n that t seeks greater attention should be focused on the drainage and sewerage facilities to evacuate ecological dimensions of such operations in surface runoff and sewage from the plain, future analytic work. even though its primary objective from an 4. Most free-standing Bank-assisted projects environmental standpoint is to arrest that primarily involve biodiversity "degradation of the unstable, nearly conservation are financed through the deforested soils ... over an area of 16,200 ha Global Environment Facility (GEF). These in the Antananarivo Region." operations were not specifically assessed as 8. This project is on the NRM list provided by part of the present exercise. However, QAG due to its classification in the VM relevant findings of a recent ENVLW review subsector in the MIS. However, except for a of biodiversity conservation initiatives in minor land use planning component, it does World Bank and GEF projects, as well as of not involve natural resource management. a GEF portfolio assessment, are summarized in Annex B below. 9. In ENV's internal project classification system, these two operations are classified 5. Rural land titling projects, such as a recent as "institutional" rather than "green," operation in the Lao Peoples Republic, because their primary focus is on capacity potentially also fall in this category. building. The Mexico project also contains 6. Forestry is a partial exception since the an important pollution-related component Bank has been involved in forest and thus focuses on "brown" as well as management for many decades. However, "institutional" and "green" issues. 36 Environment Department Papers Endnotes 10. This compares with 47 operations with observations from these reviews are commitments of just under US$ 3 billion reproduced in Annex C. classified as "environment sector" projects 15. Past experience has shown that legal factors in the MIS, according to the FY96 ARPP and, in particular, communities' access to 11. Even primarily "green" projects may have property/ resource rights can be a other types of environmental components. significant factor in poor performance of Mato Grosso Natural Resource NRM projects. Many Bank operations Management Project in Brazil, for example, involving natural resource management includes construction of a solid waste (irrigation, biodiversity conservation, etc.) processing (including recycling, resource have experienced considerable delays due recovery and composting) and disposal to issues relating to property rights. This facility near the capital city, Cuiaba. It also may be because there is no legal framework contains a component to reduce mercury establishing communities' rights to land or (air and water) pollution from gold the resources on which they depend. In prospecting activities. some countries, it is part of public policy 12. Four NRM projects closed during or at the that communities have no property rights end of FY96 and, thus, were not considered (i.e., all land belongs to the State), or there in the present review, which focuses on the no recognition is given to indigenous active portfolio. Two of these operations peoples' property or resource rights. Where (Guinea Forestry and Fisheries there is such legislation, often the Management and Madagascar Forest administrative or enabling conditions to Management and Protection) were implement the legislation are weak. Thus, "' unsatisfactory" in terms of IP and/or DO acquiring land, determining which and two (Cote D'Ivoire Forestry Sector and communities depend on what land and Indonesia Forestry Institutions and protecting communities' access to land and Conservation) were satisfactory on both natural resources can result in considerable counts. delays to project implementation. 16. Earlier OED evaluations of Bank natural 13. These figures also suggest that (financially) resource management projects have smaller "green" projects are potentially esize teneed forets type somewhat more at risk than larger ones, aemssment See, for example, ED unlike he sitution fo the eniromnen assessment. See, for example, OED, unlike the situation for the environment Evaluation Results for 1991, Chapter 5 portfolio as a whole, and particularly ("Renewable Resource Management in "brown" projects, where larger operations Agriculture: A Sample of Issues and seem to be potentially more risky than Problems"), March 1993. smaller ones. 17. The potential sustainability of the 14. The Brazil - Minas Gerais Forestry, Gabon - technology proposed is of particular Forestry and Environment, Pakistan - importance in this regard. In the Yogyakarta Punjab Forest Sector Development, Nepal - Upland Area Development Project in Hill Community Forestry, and Tunisia - Indonesia, for example, it has been Second Forestry Development Projects were observed that "regression" in the adoption assessed in the Forestry Portfolio Review; the of conservation-oriented farm practices was Yemen - Land and Water Conservation often related to insufficient economic pay- Project was examined in the Irrigation off from the farmers' perspective. Greater Subsector Review; and, the Madagascar - attention to this issue during project Tana Plains Development Project was preparation would presumably have led to included (but not specifically commented further refinement of the technology upon) in the Review of the Water Supply and proposed. Active farmer participation in Sanitation Portfolio. Project-specific this process would probably have Natural Habitats and Ecosystems Management Series 37 Natural Resource Management Portfolio Review contributed to detection of the non- indicators of project risk and for portfolio attractiveness of tentative technology monitoring. proposals. 24. The Paraguay and Niger Natural Resource 18. Given that there are often significant Management Projects were also flagged for limitations to the potential for supervision effectiveness delays. to correct major deficiencies in project 25. Although not presently flagged on this design (see OED, Annual Review of criterion, serious procurement problems are Evaluation Results 1995, for example), it is also clearly associated with the current even more important that adequate disbursement lag in the Paraguay Land Use resources be made available for piloting, Rationalization Project. testing and learning from new approaches. 26. In addition to the proximate causes 19. A recent OED review has found that mentioned above, the Yemen Land and monitoring and evaluation of impacts Water Conservation Project was identified continue to be a weak element in many as having serious problems in terms of Bank operations (see OED, "An Overview of compliance with loan covenants and the Monitoring and Evaluation in the World Bank," Indonesia Watershed Management and Report No. 13247, June 30, 1994). Given the Conservation and Mexico Environment uncertainties involved, however, they are Projects as having financial performance particularly important for NRM projects. difficulties. 20. QAG, in conjunction with OPR, OED and 27. On the basis of these figures, Brazil, other units in the Bank, is currently followed by Mexico, Venezuela, Paraguay, developing questionnaires on both quality Turkey, Madagascar and Malawi, would be of supervision and quality at entry that set the countries most at risk in terms of past out these factors in greater detail. macroeconomic performance. 21. See Prem Garg, "Portfolio Improvement 28. The FY96 ARPP specifically highlights Program: An Update," November 4, 1996, project performance in Brazil, which for details. registered the largest improvement among large country portfolios over the past year, 22. Applying the recently revised QAG criteria while also calling attention to Pakistan, to identify projects potentially at risk has which registered the greatest decline. meant that six NRM operations (Colombia - Natural Resource Management; India - 29. As initially designed, this operation was not Andhra Pradesh and Maharashtra Forestry; a natural resource management project Indonesia - Integrated Pest Management; since it was concerned almost exclusively Lao PDR - Forest Management and with production. Following the mid-term Conservation; and, Pakistan - Fordwah review, the emphasis shifted from Eastern Sadiquia Irrigation and Drainage) increasing fish production to improving the Fisheries Department capacity for research -afour of which (the Colombia, Lao PDR and sustainable fisheries resource and both India operations) were covered in management. Its redesign complements a the forestry review - are no longer so US$ 5.4 million GEF biodiversity considered, while one previously unflagged conservation project for Lake Malawi, project (Niger - Natural Resource approved in December 1994, which is Management) has been added to the list. conducting faunal surveys, identifying 23. We understand that QAG has conducted biodiversity hotspots, and preparing a work to validate the use of both flags. We conservation and management plan for the recommend that QAG continue to monitor lake, among other activities. and evaluate the predictive value of these 30. In this connection, it is useful to contrast the two indicators to assess their usefulness as experience in "extractive" frontier states of 38 Environment Department Papers Endnotes Rondonia and Mato Grosso with that in 32. According to the SAR, the project would: consolidated agricultural region of Parana "(a) improve the Government's information and Santa Catarina. In addition to their base as a means of raising its effectiveness "win-win" nature, the success of the land in: (i) land titling; (ii) the long-range management projects in Parana and Santa planning of natural resource management; Catarina is due in part to the more stable (iii) the provision of services to agriculture; economic and political situations prevailing and (iv) raising fiscal revenue from the in these two states, combined with generally sector; and (b) provide a basis for more robust ecosystems. For more on the strengthening the institutions responsible political economy of the Amazonian for land settlement and for natural resource frontier, see Robert R. Schneider, management and protection." However, Government and Economy on the Amazon improving the information base per se does Frontier, World Bank Environment Paper not ensure greater govemment effectiveness No. 11, August 1995. in land titling, etc., if political will and the 31. Project "complexity" always needs to be requisite institutional capacity are lacking. viewed in light of borrower commitment 33. In addition to the exclusion of strategically and capacity, and, thus, ultimately needs to important private sector actors, such as be assessed on a case by case basis. In loggers, ranchers and miners, who are key addition, some issues that the Bank to the natural resource conflicts and attempts to address through its lending degradation experienced in Rondonia (and operations are inherently more complex part of Mato Grosso), other reasons for the than others, with many natural resource failure of the initial efforts to establish a management problems clearly falling into participatory management mechanism on this category. As noted throughout this this project were: (i) the state government report, for example, attempting to introduce largely ignored or boycotted these fora as it mnore sustainable natural resource was not willing to recognize or accept the management in a frontier region such as role of civil society in the decision making Amazonia in Brazil which is characterized proles ocv siy the doechisio akn by~~~~~ a lagl.xrcieeooy oiia process; and (ii) the lack of technical and by a largely extractive economr y eolincal organizational capability on the part of the instability, and weak, fNGOs to effectively participate in the eight local civil and public sector institutions, is NGOs bodies paricreated. inherently a difficult task involving multiple bipartite bodies that were created. dimensions that need to be addressed 34. This is highlighted in the SAR as "an simultaneously. In such circumstances, innovative and essential feature" of the complex projects are probably inevitable, project and characterized as a "farmer- and much of the emphasis needs to be on centered - problem census, problem managing complexity through such means solving" approach to planning at the as decentralization, community microcatchment level. participation and ensuring effective 35. This operation also has a US$ 4.8 million ownership amongst the widest possible GEF component to establish, manage and range of partners as the operations in monitor sites for in situ conservation of the Rondonia, Mato Grosso and Paraguay are wild relatives of globally significant now attempting to do. On the experience of herbaceous and woody species indigenous ten countries with decentralization and biodiversity conservation, for example, see to Turkey. the recent publication by Ernst Lutz and 36. See also Maria Concepcion J. Cruz and Julian Caldecott (eds.), Decentralization and Shelton H. Davis, "Social Assessment in Biodiversity Conservation: A World Bank World Bank and GEF-Funded Biodiversity Symposium," Washington D.C., December Conservation Projects: Case Studies from 1996. India, Ecuador and Ghana," Environment Natural Habitats and Ecosystems Management Series 39 Natural Resource Management Porffolio Review Department Papers, Social Assessment Series, completion, which was not assessed in October 1996. detail in the present review. 37. See, OED, World Bank Approaches to the 44. For further information on the present Environment in Brazil: A Review of Selected situation of this project, see LA1, Brazil - Projects, Volume V: The POLONOROESTE Rondonia Natural Resources Management Program, Report No. 10039, April 1992. Even Project (Loan 3444-BR): Report on the Status cf though this report was issued in gray cover Implementation, November 27, 1996. shortly after the Board approved the 45. The original December 31, 1996 closing date Rondonia Natural Resource Management was extended for three months to permit Project (March 1992), preliminary drafts the government of Rondonia to adequately were available to and had been discussed comply with Bank conditions for a full year with the Region as early as the fall of 1990. extension. It should be observed in this 38. See, for instance, the section on lessons connection that one of the Bank's main learned in the SAR for the Paraguay requirements for an extension of the project, Natural Resource Management Project, was a clear demonstration of greater approved in February 1994, which "ownership" of project environmental and specifically refers to the experience in social objectives from all local stakeholders, Northwest Brazil. The SAR for the Niger but especially the state government. Natural Resource Management Project, 46. This goes beyond the scope of the present approved in December 1995, provides review. However, it is important to another example of good practice in this recognize that the various social, regard. environmental and institutional 39. See the section on "Risks" in the SAR for the assessments required to ensure greater quality at entry - and greater quality of Honduras Envirounmental Development supervision - for NRM projects will affect Project, approved in March 1995. task teams' time and cost coefficients prior 40. Achievements of this project are important to Board presentation, and also during and include: (i) adoption of soil and water supervision (even though third party conservation measures at the farm level on supervision can roll some of the costs of this private land; (ii) increased cost sharing from activity over to the projects themselves. private beneficiaries; and (iii) design of a 47. A more detailed discussion of the analysis participatory approach to natural resource of institutional capacity in NRM projects management by rural populations, which is goes beyond the scope of the present considered a best practice in the Region and review, but the interested reader in referred has benefited the preparation of the Natural to several recent papers on this subject, both Resources Management Project in Tunisia. in general and for environmental 41. In addition, "second approximations" of management more specifically: Cheryl W. these zoning exercises, which are now Gray, Lynn S. Khadiagala, and Richard J. referred to as "socio-economic- ecological More, "Institutional Development Work in zoning" are being undertaken as key the Bank: A Review of 84 Projects," Policy, components of these two projects. Research and External Affairs Working Paper 42. An August 1995 Form 590, for example, 437, June 1990; Alberto de Capitani and observes: "particularly impressive has been Douglass C. North, "Institutional thebstrves:g' parhcularly commitinent haseen Development in Third World Countries: the the strong local commitment and the Role of the World Bank:, HRO Working Paper enthusiasm at all levels to implement the No. 42, World Bank, October 1994; Albert various components ahead of schedule." Greve, "Institutional Structures for 43. This situation probably also applies to the Environmentally Sustainable Minas Gerais Forestry Project, also nearing Development," Towards Environmentally 40 Environment Department Papers Endnotes Sustainable Development in Sub-Saharan Africa 49. See, for example, John Dixon, Louise Fallon Paper No. 3," Africa Technical Department, Scura, Richard A. Carpenter, and Paul B. World Bank, February 1995; Magda Lovei Sherman, Economic Analysis of Environmental and Charles Weiss, Environmental Impacts, Earthscan Publications Ltd., Management in OECD Countries: Experience London, second edition, 1994. and Lessons Learned, draft, World Bank 50. See, for example, National Environmental Environment Department, February 1996; Strategies: Learningfrom Experience, Land, and, Sergio Margulis and Tonje Vetleseter, Water and Natural Habitats Division, "Capacity Building for the Environment: Environment Department, World Bank, Does It Work? Perspectives of the World March 1995, and Jeremy Carew-Reid, Robert Bank and Some Recipient Countries," paper Prescott-Allen, Stephen Bass, and Barry Dalal- presented at the OECD/DAC Workshop in Clayton, Strategiesfor National Sustainable Capacity Development and the Development: A Handbookfor their Planning and Environment, Rome, December 1996. Implementation, IUCN/IIED, 1994. 48. Several recent Bank publications begin to 51. While this already occurs to some extent, address and provide better guidance on this the process should be strengthened. In the important issue, both from an agricultural past, feedback to Task Managers from and an ecological perspective: Jitendra Country Portfolio Performance Reviews has Srivastava, Nigel J. H. Smith, and Douglas erhaps tended to be too eneric and too Fomo, "Biodiversity and Agriculture: perhapsect-peto g Implications for Conservation and little project-specific. Development," World Bank Technical Paper 52. This exercise would also draw on previous No. 321, May 1996; Stefano Pagiola and John OED studies on natural resource Kellenberg with Lars Vidaeus and Jitendra management in Bank projects, including Srivastava, "Mainstreaming Biodiversity in country case studies for Bolivia and Nepal. Agricultural Development: Towards Good See, OED, Renewable Resource Management in Practice," World Bank Environment Paper No. Agriculture, December 1989; Natural Resource 15, February 1997; Colin Rees, "Biodiversity Management in Nepal: 25 Years of Experience, Issues in Environmental Assessment," February 1992; and Natural Resource Environmental Assessment SourcebookL Update, Management in Bolivia: 30 Years of Experience, draft, January 1997. May 1993. Natural Habitats and Ecosystems Management Series 41 Annex A Natural Resource Management Projects Sector COUNTRY PROJECT NAME BOARD DATE Code US$MILLION PROJECTS ACTUALLY AT RISK BRAZIL RONDONIA NATURAL RESOURCES MANAGEMENT 3/17/92 VM 167 GABON FORESTRY/ENVIRONMENT 7/2/92 AT 22.5 GUINEA FORESTRY & FISHERY MANAGEMENT (COMPLETED) 10/24/89 AT 8 HONDURAS ENVIRONMENTAL DEVELOPMENT 3/28/95 VM 10.8 INDONESIA WATERSHED CONSERVATION & MANAGEMENT 11/9/93 VM 56.5 MADAGASCAR TANA PLAIN DEVELOPMENT 3/29/90 WS 30.5 MADAGASCAR FOREST MANAGEMENT (COMPLETED) 2/16/88 AT 4.8 MALAWI FISHERIES DEVELOPMENT 4/2/91 AF 83 MEXICO ENVIRON/NATURAL RESOURCES 4/14/92 VM 23.8 PAKISTAN FOREST SECTOR DEVELOPMENT 6/20/95 AT 24.9 PARAGUAY LAND USE RATIONALIZATION 3/17/92 VM 29 TUNISIA SECOND FORESTRY DEVELOPMENT 5/11/93 AT 69 PROJECTS POTENTIALLY AT RISK BRAZIL MINAS GERAIS FORESTRY 12/17/87 AT 40.3 BRAZIL LAND MANAGEMENT Il-S. CATAR 1/30/90 VM 3:3 BRAZIL MATO GROSSO NATURAL RESOURC 6/18/92 VM 205 BRAZIL NATIONAL ENVIRONMENT 2/27/90 VM I l7 NEPAL HILL COMMUNITY FORESTRY 5/30/89 AT 13.5 NIGER NATURAL RESOURCE MGMT 12/14/95 AY 26.7 PARAGUAY NATURAL RESOURCES MGMT I 2/22/94 VM 50 TURKEY EASTANATOLIAWATERSHED 3/11/93 AY 77 VENEZUELA INPARQUES 6/13/95 VM 5! YEMEN LAND & WATER CONSERVATION 5/28/92 Al 27.8 PROJECTS NOT AT RISK ALGERIA FORESTRY & WATERSHED MGMT. 6/11/92 AT 19 BANGLADESH FOREST RESOURCES MANAGEMENT 6/23/92 AT 49.6 BENIN MGMT OF NATURAL RESOURCES 3/24/92 AY 14.1 BHUTAN FORESTRY III 7/6/93 AT 5.4 42 Environment Department Papers Annex A Natural Resource Management Projects BOLIVIA EASTERN LOWLANDS: NTRL 3/29/90 VM 35 BRAZIL LAND MANAGEMENT I-PARANA 1/31/89 VM 63 BURKINA FASO ENVIRONMENTAL MANAGEMENT 4/25/91 AY 16.5 CAR NATURAL RESOURCES MGMT 5/22/90 AY 19 CHINA LOESS PLATEAU 5/26/94 AD 150 CHINA FOREST RESOURCE DEVELOPMENT 6/7194 AT 200 COLOMBIA 12/23/93 VM 39 NATURAL RESOURCE MANAGEMENT COTE D'IVOIRE FORESTRY SECTOR (COMPLETED) 4/3/90 AT 5I ECUADOR GUAYAS FLOOD CONTROL 126/90 Al 59 EGYPT MATRUH RESOURCE MANAGEMENT 5/27/93 AD 22 GAMBLA, THE ENVIRONMENTAL MANAGEMENT 4/12/94 VI 2.6 CAPACITY BUILDING GHANA FORESTRY I 2/22/88 AT 39.4 INDIA WATERSHED PLAINS 5/15/90 AY 55 INDIA WATERSHED HILLS 3/6/90 AY 75 INDIA UP SODIC LANDS RECLAMATION 6/10/93 Al 54.7 INDIA MAHARASHTRA FORESTRY 1/14/92 AT 124 INDIA FORESTRY RESEARCH EDUCATION 2/24/94 AT 47 INDIA ANDHRA PRADESH FORESTRY 2124/94 AT 77.4 INDIA MP FORESTRY 3/30/95 AT 58 INDONESIA FORESTRY INST.& CONSERVATION 3/31/88 AT 30 (COMPLETED) INDONESIA YOGYAKARTA UPLANDAR 3/19/91 AD 15.5 INDONESIA INTEGRATED PEST MANAGEMENT 3/30/93 AY 32 INDONESIA KERINCI SEBLAT INTEGRATED 4/30/96 AY 19.1 CONSERVATION & DEVELOPMENT KENYA FOREST DEVELOPMENT 12/20/90 AT 19.9 KENYA WILDLIFE SERVICES PROJECT 2/11/92 AC 60.5 LAOS FOREST MGT & CONSERVATION 3/25/94 AT 8.7 MALI NATURAL RESOURCES MANAGMT 5/26/92 AY 20.4 MAURITANIA WATER SUPPLY 6/17/92 WU 10.5 MEXICO WATER RESOURCES MANAGEMENT 6/20/96 Al 186.5 MOROCCO FORESTRY 11 1/9/90 AT 49 PAKISTAN SCARP TRANSITION 11 6/4/91 Al 20 PAKISTAN EAST SADIQIA SO PHAS 7/2/92 Al 54.2 PAKISTAN NORTH PAKISTAN RESOURCE 6/15/93 VM 28.8 PAKISTAN BALUCHISTAN NATURAL RESOURCE 3/22/94 VI 14.7 PHILIPPINES ENVIRONMENT & NAT. RES. MGT 6/25/91 MA 224 POLAND FORESTRY DEVELOPMENT 7/29/93 AT 146 SRI LANKA FORESTRY II 6/15/89 AT 13.4 TANZANIA FOREST RESOURCES MANAGEMENT 2/11/92 AT 18.3 TUNISIA DEVELOPEMT OF MTS NW REGION 12/23/93 AD 27.5 URUGUAY IRRIGATION NATURAL RES MGMT 1/25/94 Al 41 Natural Habitats and Ecosystems Management Series 43 Annex B Summary of Recent Sectoral and Portfolio Assessments $everal of the operations in the natural difficult and demanding of resources; (ii) the resource management (NRM) portfolio have combination of high expectations regarding already been examined in the context of cross-cutting potential benefits from invest- QAG-sponsored "sectoral reviews" of for- ment in forestry and the high level of rent- estry, irrigation and water supply and sanita- seeking and vested interest which character- tion projects considered potentially at risk ize its present modus operandi in many (see Annex B). The Environment Department countries, make the sector politically visible, (ENV) has also recently completed an assess- and it is perceived by some operational ment of active Bank-assisted projects and managers as a risky and costly sector. The project components that are specifically review's basic finding, however, is that concerned with biodiversity conservation. poorly performing projects suffer from one or The Global Environment Facility (GEF) has both of two fundamental problems: inad- likewise reviewed the implementation perfor- equate borrower commitment to policy and mance and early results of its portfolio, institutional reform and inappropriate including numerous biodiversity-related project design. Its general recommendations operations. In addition, Bankwide annual are: reviews of both active and recently completed projects have been undertaken by OPR * A way must be found to concentrate (ARPP) and OED (Annual Review of Evalua- more human resources on directly tion Results), respectively. All of these sur- assisting task managers responsible for veys contain findings and recommendations preparation and supervision of forestry that are germane to the present exercise. projects; * Linkages between macroeconomic and Forestry. Forestry projects have been changing sector work and forestry operations rapidly in nature in recent years with increas- must be improved; and ing emphasis being given to the Bank's * The Bank's policies and procedures emerging environmental and social goals. which impact on the forestry sector may The responsiveness of the portfolio to such need review (e.g., more flexibility to cross-cutting concerns as poverty alleviation, work with stakeholders without govern- participation and biodiversity conservation as ment agency involvement; more freedom well as the intrinsic ability of the sector to to make investments which may seem as deliver major gains in these areas, were contravening bans on direct investment in judged by the Forestry Review to be high. commercial logging (but have positive However, according to this report, significant biodiversity implications); and a more costs are also involved: (i) projects have proactive approach to acting in a become more complex; as a result, project brokering role for desirable private sector design and supervision have become more solutions).' 44 Enviromnent Department Papers Annex B Summary of Recent Sectoral and Portfolio Assessments Irrigation. The irrigation portfolio has also time and budget for preparation"); (ii) im- evolved significantly over the past decade, proving quality at entry (including: (a) the most important changes being a move greater realism about water management and toward projects of national or regional scope, agricultural assumptions and targets in greater beneficiary participation, a shift from feasibility studies and appraisal reports; (b) developing new irrigated lands to completing better understanding of the interaction and improving existing systems and progres- between design and water management; and sive application of the bank's 1003 Water (c) shifting from unrealistic designs that are Resource Management Policy.2 Cross-cutting too demanding on staff of agencies respon- problems encountered by the review were sible for operation of canal systems, to de- that: (i) some projects tended to be overopti- signs which provide improved service to mistic and ambitious relative to the users and are simpler to operate); (iii) better borrower's commitment and administrative design of the Project Development Objectives capacity, particularly in relation to policy (DO) Rating System; and (iv) enhancing issues; (ii) SARs generally do not reflect an resources for portfolio management ("For in-depth analysis of project risks; and (iii) the Bank to continue supporting irrigation projects were often presented to the Board development, an active recruitment of irriga- before design is completed. An examination tion technical staff is needed").3 of satisfactory projects, in turn, suggested that the main factors associated with good Water Supply and Sanitation. The fundamental performance are: issue identified by the review was a "flow problem" of quality at entry, which can only * Strong government commitment and be solved by "more continuous and consis- ownership tent managerial interest at the regional, * Beneficiary participation departmental and division levels (including * Accountability of borrower staff at all the appointment of knowledgeable task levels managers) and developing staff skills * Continuity in Bank and borrower staff necessary to understand and use the new - Advanced preparation of detailed design approaches to sector improvement and and procurement before Board presenta- communicate them effectively to potential tion borrowers." Sector portfolio improvement * Adequate technical staff in Bank opera- also requires "continuous and consistent tional divisions management endorsement of the importance * Intensive supervision inputs in the early of keeping the standards high and managerial years of implementation. support to task managers in their efforts to build borrower ownership of the reform The principal recommendations of the review agenda early in the project cycle."4 are: (i) the need to establish more realistic work programs for project preparation Biodiversity. Between 1988 and 1996, approved ("Land acquisition, field investigations, investments for biodiversity conservation in developing stakeholder participation and Bank-assisted operations amounted to US$ detailed engineering design of irrigation 1.3 billion, involving 95 projects or project projects generally require more than two components in 54 countries. Of this total, 39 years. The current constraints are leading to percent was from IBRD loans and IDA credits poor quality at entry and/or progressive (in 33 and 25 projects, respectively), 18 decline if the irrigation lending program in percent from GEF grants, 3 percent from the favor of projects less demanding in terms of Trust Fund to Conserve the Brazilian Natural Habitats and Ecosystems Management Series 45 Natural Resource Management Portfolio Review Rainforest, 21 percent from borrower contri- Project. Among the findings and preliminary butions and 19 percent from other multilat- lessons learned are: eral or bilateral donors and NGOs. Among Bank and IDA operations, "environment" * Strong national commitment is essential was the primary program objective of most for successful project implementation projects supporting biodiversity conserva- * Implementation difficulties or successes tion, which fell mainly in the forestry (18 were often attributable to the skills and projects), natural resource management (13) commitment of project management and agriculture (10) sectors. staff; high turnover in staff in executing agencies, on the other hand, was fre- The most relevant findings of this study, quently identified as an impediment to which assessed both project quality at entry project implementation * Slow release of funds to executing agencies has adversely affected several • Many of the Bank's present efforts to projects (e.g., the absence of an effective mechanism for ensuring that funds support biodiversity conservation (e.g., reached the field level was problematic the Brazil National Environment Project) for park conservation in the Mexico are the first generation of such opera- Protected Areas Project) tions in the respective countries involved * Effective public involvement has con- e Institutional weaknesses or instability tributed significantly to improving are the source of implementation prob- conditions for project performance; public lems such as slow disbursements or involvement activities initiated early in procurement and delays in hiring techni- the project cycle have promoted owner- cal assistance ship and accountability, developed * Where many actions are expected to sensitivity to the needs of affected peop].e, occur simultaneously, several often lag and created broad support for the behind the overall package project.6 * The time required for planning protected areas management can easily be underes- FY96 ARPP. Generic findings regarding active timated Bank portfolio performance are relevant to * Problem projects may still realize impor- NRM projects at risk. According to the most tant gains in some areas, complicating recent ARPP, Africa and Latin America have how success is gauged the highest percentage of projects at risk and .. Experienc with multi-donor ef s iEast Asia and the Pacific the lowest. Problem Eien projects were concentrated in a relatively mixed small number of countries (including Turkey, * Responding adequately to implementa- Venezuela and Yemen), but several others tion issues requires flexibility (including Brazil and Indonesia) come into * The quality of reporting on biodiversity the picture when potential problem projects in Form 590s and accompanying Back-to- are considered. Country or borrower-relatedl Office reports is extremely variable.5 factors continue to be crucial for portfolio performance. Broadly, these involve three sets Global Environment Facility. The 1995 GEF of issues: (i) political stability; (ii) macroeco- implementation review examined 82 projects nomic policies and performance; and (iii) financed by the World Bank, UNEP and implementation capacity. UNDP. Over one-third of these involved biodiversity conservation, including the GEF Supervision ratings of problem projects component of the Mexico Environment reveal that inadequate project management 46 Environment Department Papers Annex B Summary of Recent Sectoral and Portfolio Assessments is the most adverse factor (roughly 40 percent performance is likely to reduce the risk of of all such projects), followed by delays in project failure, the effort has to be very strong implementation due to procurement, land to overcome the odds of a poor country acquisition and related bottlenecks (close to economic and implementation environment. 30 percent) and lack of counterpart funds With respect to borrower ownership, more (about 25 percent). Insufficient counterpart specifically, OED affirms that: "there is a close funding, in turn, often reflects fiscal con- relationship between government commit- straints, inefficient budgetary processes, and ment to operational goals and observed in some instances low priority attached to outcomes. Evaluation has established that projects. Insufficient government commit- ownership depends on four factors: locus of ment also leads to inadequate sector policies. the initiative; level of conviction among Poor financial performance affected about 20 policy makers; expression of political will by percent of the problem projects and non- top leadership; and efforts towards consen- compliance with loan covenants about 30 sus. We also know that borrower ownership percent. Some performance problems are due must be nurtured. Capacity building is to factors under Bank control, principally critical."8 "quality at entry" and quality of supervision. Quality at entry factors evident in ongoing As concerns completed NRM projects, finally, projects include: the appropriateness of OED reports that successful operations are project design, which may be excessively frequently characterized by "harmony complex or reflect overoptimistic assump- between stakeholder income needs and tions regarding demand or institutional conservation." This is illustrated by a forestry capacity; lack of readiness for implementa- project in Ethiopia in which "the availability tion; and poor appreciation of project risks.7 of profitable land management systems was critical in fostering interest in resource OED Annual Review. Highlights of the find- conservation and management." Similarly, ings of this year's review, which assessed 264 two rural development projects in Benin completed projects, are: (i) at the individual encouraged farmers to intensify use of project level, borrower performance had the seasonally flooded land as an important greatest influence on project performance, component of sustainable farming systems. closely followed by the impact of Bank Effective collaboration between implementing performance; (ii) outstanding projects (5 agencies and NGOs has also been a key percent of the total evaluated) all illustrate element in the satisfactory performance of strong borrower ownership of and commit- some completed NRM projects. In the Sabah ment to the operation, while none of the Land Settlement and Environmental Manage- poorly performing projects (2 percent of the ment Project in Malaysia, for instance, "the total) does so; and (iii) at the portfolio level, partnership between the state government cross-country econometric analysis suggests and locally based NGOs helped ensure broad that good short-term and long-term macro- support for conservation efforts, and the economic management has the highest preparation of a statewide conservation plan payoff for improving portfolio outcome and provided an invaluable base for dialogue sustainability, particularly in countries with between stakeholders and increasing aware- poor portfolio performance. While good Bank ness of the issue."9 Natural Habitats and Ecosystems Management Series 47 Natural Resource Management Portfolio Review Endnotes 1. The observations in this paragraph are 4. The above statements are quoted from the drawn directly from the Executive Sum- Executive Summary of the Review of the mary of the Forestry Portfolio Review (AGR, Water and Sanitation Portfolio (TWUWS, October 1996). The emphasis is ENV's. November 1996). Emphasis ENV. 2. Application of the Bank's 191 Forest Sector 5. These conclusions are drawn from the draft Policy is also a key factor in the changing report cited in note 3 in the main text. profile of forestry projects. In both cases, Emphasis ours. considerably greater attention has been given to environmental concerns, particu- 6. See GEF, Project Implementation Report, larly the improved management of water August 1966, paras. 22, 44-46. Emphasis and forest resources in new lending opera- ENV. tions. As noted in the Forestry Portfolio review, however, this has tended to increase the complexity and "demandingness" (to 7. These observations are taken from the use OED's expression in reference to the Executive Summary of the FY96 ARPP, degree of attention required from the Bank) which has been submitted to the Board as of such projects. The same is true with many Document R96-230, November 13, 1996. NRM projects, especially those involving a Emphasis ENV. combination of production, conservation and/or capacity building components. 8. OED, Annual Review of Evaluation Resultsfor 1995 (draft, October 31, 1996), Executive 3. The two paragraphs above are based on the Summary. Emphasis ENV. Executive Summary of the Irrigation Review (AGR, September 1996). Emphasis ENV. 9. Ibid., paras. 2.38 and 2.43. 48 Environment Department Papers Annex C Other Portfolio Review Observations on Specific NRM Projects Among the natural resource management * Underlying problems: (i) project design projects actually or potentially at risk, seven complex; (ii) early in the project, after a have been specifically examined in other change of government, there was a "sectoral reviews." In one case, Madagascar - serious lack of commitment by the state Tana Plains Development, which was in- government and drastic salary cuts cluded in the water supply and sanitation caused a collapse in morale and support review, no specific observations were made, for the project in the forestry agency; so this operation has also been specifically assessed in the course of the present exercise. . Remedies applied: (i) 1992 project restruc- The comments on six other projects contained tured; new administration and project in the irrigation (Yemen) and forestry (Brazil, manager appointed; (ii) environmental Gabon, Nepal, Pakistan and Turkey) reviews and social concerns given greater atten- are reproduced below. tion; (iii) physical plantation targets reduced; (iv) procurement rules changed Yemen to allow necessary equipment purchase - Land and Water Conservation (FY92) under project; The project was rated unsatisfactory in terms * Lessons learned: (i) counterpart funds and of IP for 2 years and upgraded to satisfactory effectiveness delays were generic Brazil by the May 1996 supervision mission on issues - Bank should have dealt with them account of some completed actions; no key accordingly; (ii) when political change actions are recommended; mid-term review is occurs, which has the potential to influ- needed, including economic analysis in line ence implementation of a project, a pause with OPR instructions. Based on the poor and review phase may be justified; (iii) performance of completed projects in Yemen, project benefited from substantial rede- more in-depth supervision is needed. sign mid-term; Brazil * Comments/future actions: The project is due - Minas Gerais Forestry (FY88) to close in December 1996. Government has requested a second generation project * Problems identified: (i) significant disburse- for natural resource development. Bank ment lag: lack of counterpart funds (ge- team has refused request for financing of neric to state), but also costs of plantation studies under the current project to underestimated in preparation; (ii) this prepare such a project. This is an appro- project has had five different task manag- priate response at this time: issues relat- ers from its inception and consistency and ing to allowing NGOs and communities commitment have been problems; to become much more effective in refores- Natural Habitats and Ecosystems Management Series 49 Natural Resource Management Portfolio Review tation must first be resolved; a workshop follow-up supervision has devised and with NGOs, the state government, and promulgated a clear set of time-bound Bank staff will be held to consider these performance indicators. It is now neces- matters. sary to establish with the Borrower realistic targets for completion of policy Gabon and institutional reforms and provide for - Forestry and Environment (FY93) specific interventions and revisions if targets are not achieved. The Borrower * Problems identified: (i) significant disburse- should be required to sign off on these ment lag; (ii) delays in introduction of targets at the earliest opportunity. The major policy reform - some persisting achievement of the project development (parastatal organizations not yet priva- objective will depend upon the clear tized); resolution of this matter. * Underlying problems: (i) relations between Nepal project unit and Ministry of Water and - Community Hill Forestry (FY89) Forestry poor; (ii) legal and institutional reforms meant to be completed during * Problems identified: (i) delays in reform of preparation were not and it is clear strong regulations (forest rules) needed for vested interests in the sector are impeding community management; (ii) plantation this; efficacy of subsequent technical objectives target driven, not quality work is low as a result; (iii) stakeholders oriented; (iii) disbursement and imple- (including implementing agency) have mentation delays (ESP training); poor understanding of project objectives; Underlying problems: (i) proper regulatory * Remedies applied: (i) some of the conflicts framework and forest agency training between the project unit and the Ministry delayed; (ii) commitment for community have been resolved in supervision; (ii) forest management lacking; well-organized and well-attended semi- nars on biodiversity and the impacts of * Remedies applied: (i) rules promulgated; (ii) poaching have broadened stakeholder community forest user groups formed in awareness of issues and project objec- larger numbers than SAR target; (iii) tives; plantation targets reduced; (iv) training and research programs initiated (late); * Lessons learned: (i) support base and relationship for project unit within * Lessons learned: (i) emphasis should have Ministry should have been clearly estab- been given early to appropriate regula- lished prior to implementation; (ii) tion and staff training, not involvement strategy of completing policy and institu- requirements; (ii) centrally determined tional reforms during supervision was too plantation targets are unrealistic and optimistic; (iii) leaving the uncompleted counterproductive; (iii) more initial reforms for later in implementation was training in procurement and other imple- risky given the strength of vested inter- mentation requirements was needed; ests; * Comments/future actions: development of * Comments/future actions: a mid-term objective success of this project will review is in progress. This review and require the successful handover of control 50 Environment Department Papers Annex C Other Portfolio Review Observations on Specific NRM Projects of significant areas of forest to communi- the region. Conscious risks were taken ties. Careful monitoring of the forest when implementing this project, in that agency's capability and commitment to policy commitments and institutional do this is being given priority in supervi- readiness were not in place. Subsequent sion, with a view to achieving a major deterioration in borrower commitment part of the goal before loan closure in has weakened the chances of favorable 1997; an extension to complete the pro- outcomes. Some progress on institutional cess could be considered, if major change issues is being made, but policy progress occurs between now and June 1997. in the areas of subsidization and partici- pation remains weak. A substantial Pakistan restructuring if this project, involving - Punjab Forest Sector Development redesign of some components to fully (FY95) agreed pilot level implementation and elimination of some others, is probably in * Problems Identified: (i) serious procurement order. and staffing delays; (ii) weak project management; (iii) communications with Tunisia Department poor; (iv) diminished owner- - Second Forestry Development (FY93) ship; political interference; Problems identified: (i) lengthy delay in * Underlying problems: (i) adequate policy project start-up and serious constraints in and sector framework not established; (ii) implementation capacity; (ii) forestry doubts about community ownership agency management changes; (iii) surfaced early (in preparation); drought in the country has constrained progress; * Remedies applied: (i) action plan addresses staffing and procurement issues and * Remedies applied: problems recently progress achieved; (ii) meeting with identified on supervision mission: Gov- Minister and senior officials on manage- eirnent has undertaken to strengthen ment and communications issues have management and accelerate implementa- established some ground rules; tion; * Lessons learned: (i) being the first forestry * Lessons learned: the implementation project in Pakistan, stronger economic capacity and management problems were and sector work was needed in advance not anticipated in the SAR; the preceding to establish a clearly understood project project did not encounter serious prob- framework; (ii) early indications of lems of this nature; weakening borrower commitment should have been acted on more strongly when * Comments/fiture actions: Obviously with they were noted; unsatisfactory ratings for both the devel- opment objectives and implementation * Comments/future actions: The annual 1996 criteria, an intensive supervision should Review Report for this project notes the be undertaken as soon as possible. This poor project performance and recom- supervision should concentrate not only mends suspension of the credit, if major upon the attainment of certain levels of improvements are not noted soon. The activity and disbursement, but also on an project is now under close supervision by assessment of whether the commitment Natural Habitats and Ecosystems Management Series 51 Natural Resource Management Portfolio Review of new forest agency managers for the procurement/implementation delays; project is generic and long-term. A deci- quality problems; (iii) poor start with sion should be made on whether to joint forest management; continue with or cancel this project. * Underlying problems: (i) GOAP agreed to India reforms in negotiation, but did not - Maharasthra Forestry process legislative change needed quickly - effective 5/92, closing 9/98; enough; (ii) the Indian system of rotating * Problems identified: (i) part of the project senior servants very quickly; put under a new executing agency after * Remedies applied: (i) senior project person- project effectiveness; (ii) serious procure- nel situation appears stabilized for now; ment delays; (iii) design/quality prob- (ii) joint forest management seriously lems; (iv) insufficient government budget introduced; (iii) reduced implementation during first project year; delays; * Underlying problems: (i) initial GOM commitment to policy/institutional reform i Lessons learned: (i) effectiveness should weak; (ii) frequent change of top officials; have been delayed until legislation passed; (ii) more undertakings re project * Remedies applied: (i) project consultancies staff stability required prior to effective- restructured prior to mid-term review; (ii) ness; planting areas reduced; (iii) village eco- development component modified; * Comments/future actions: specific targets and dates should be given for final c Lessons learned: (i) more support for policy passage of needed reforms. Given that reform prior to effectiveness; (ii) more this project still has a significant period to progress in institutional change prior to run, GOAP should be advised that a effectiveness; (iii) more focus in project major restructuring of the loan will be design on plantation quality, not area; necessary if progress is not made on this matter. * Comments and future actions: (i) in the remaining two years this project has to Lao PDR run, attention will focus on building - Forest Management and Conservation commitment to community forest man- g agement, institutional & policy reform - effective: 1/95; closing 9/00 and improved plant technology in the forest agency; (ii) specific target dates * Problems identified: (i) funding and imple- have been agreed with GOM by which mentation behind schedule due princi- specific progress with this commitment pally to delays in approval of loan docu- are being recorded; failing these targets, ments; (ii) Ministry of Justice did not further major revision may be needed. issue on schedule a decree on customary rights in forests as required under a India condition of disbursement; (iii) state- - Andhra Pradesh Forestry owned logging companies impeding - effective 7/94, closing 9/00 development of competitive log market; * Problems identified: (i) changes in senior * Underlying problems: (i) lack of under- GOAP project personnel too frequent; (ii) standing, coordination and commitment 52 Environment Department Papers Annex C Other Portfolio Review Observations on Specific NRM Projects in all necessary levels of GOL prior to Colombia implementation of the project; (ii) overly - Natural Resources Management ambitious conditionality in macroeco- - effective: 11/94; closing: 12/99 nomic and policy rules; * Problems identified: (i) effectiveness de- * Remedies applied: (i) decree on customary layed 11 months - generic budget con- rights has been issued; (ii) a comprehen- straints impacted the project; (ii) project sive five year implementation plan and was transferred from DNP to new Minis- detailed performance criteria have been try of Environment - this created signifi- agreed upon and supervision is concen- cant start-up problems; trating on attainment of these goals; * Underlying problems: project is complex, * Lessons learned: (i) as the first project in especially given inexperience of new what is intended to be a program of Ministry of Environment in financial investment in the Lao PDR forestry sector, management and control; the project may have needed even more time during preparation to obtain the * Remedies applied: (I) project coordinating necessary understanding and commit- unit is now functioning effectively; (ii) legal ment in GOL and among other stakehold- measures for land titling have been put in ers; (ii) although a long-term program of place; (iii) intensive supervision is planned activities is suggested in the documenta- and a mid-term review in mid-1997; tion of the project, the objectives set for it in its 5-year terms are probably too * Lessons learned: (I) project is based on new optimistic; macro policy reforms in the concepts of integrated natural resources area of pricing or legislation and policy management and community participation reform should probably be addressed - these are desirable but place greater under structural adjustment lending; policy and implementation pressure on government executing agencies; (ii) budget * Comments/future actions: The project constraints in Colombia need to be ad- illustrates the costs and benefits of pre- dressed as a generic issue between the paring and implementing forestry Bank and GOC; (iii) greater than normal projects which comply with Bank guide- support for GOC staff involved in procure- lines on forestry and cross-cutting objec- ment and financial matters is needed in tives. The project is complex and its projects based on heavy decentralization preparation involved extensive consulta- and new participatory arrangements. tion with stakeholders; the pressures it has placed on Lao PDR institutions is * Comments/future actions: The project design great. It does, however, focus on the main is sound and consistent with Bank objec- issues of non-sustainable and exploitative tives. Since implementation, progress logging, tenure and participation for this appears to be improving and commitment most significant of Lao PDR's resources, in the new Ministry seems strong. Strong and vital biodiversity conservation goals. supervision, and perhaps introduction of Continued intensive supervision will be some additional inputs to assist with the required for the project to achieve its coordination of a complex project design major development objectives, but the involving a number of national, regional resource costs to the Bank to do so will and local agencies, should allow the continue to be high. project to achieve its objectives. Natural Habitats and Ecosystems Management Series 53 BOARD Effctv Compi Mgmt Count Proc. Fin. Env. Slow Ext.Consec Risky Risky Econ. COUNTRY PROJECT NAME DATE UIS$M IP DO Dela s Covnts Perfin Funds Prog Perfin Reset Disb. Prob. 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