Completion Report

Project Number: 30032 Loan Number: 1643 May 2008

Bangladesh: Sundarbans Biodiversity Conservation Project

CURRENCY EQUIVALENTS

Currency Unit – taka (Tk)

At Appraisal At Project Completion August 1998 November 2007

Tk1.00 = $0.0211 $0.0146 $1.00 = Tk47.30 Tk68.64

ABBREVIATIONS ADAB – Association of Development Agencies in Bangladesh ADB – Asian Development Bank ANR – assisted natural regeneration BME – benefit monitoring and evaluation BPC – Bangladesh Parjatan Corporation EA – executing agency FAO – Food and Agriculture Organization FRMP – Forest Resources Management Project GEF – Global Environment Facility IUCN – International Union for Conservation of Nature IWM – Institute of Water Modeling KNM – Khulna Newsprint Mills LCO – local community organization LGED – Local Government Engineering Department MOEF – Ministry of Environment and Forests NDF – Nordic Development Fund NGO – nongovernment organization PCR – project completion report PKSF – Palli Karma-Sahayak Foundation PPTA – project preparatory technical assistance RIMS – resource information management system RRP – report and recommendation of the President SAC – Stakeholder Advisory Council SMU – Sundarbans Management Unit SRF – Sundarbans Reserved Forest SSC – Sundarbans Stewardship Commission TAG – technical advisory group UNESCO – United Nations Educational, Scientific and Cultural Organization

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 30 June. FY

before a calendar year denotes the year in which the fiscal year ends, e.g., FY2008 ends on 30 June 2008.

(ii) In this report, "$" refers to US dollars.

Vice President L. Jin, Operations 1 Director General K. Senga, South Asia Department (SARD) Director F. C. Roche, Agriculture, Natural Resources and Social Services

Division, SARD Team leader S. Ranawana, Natural Resources Economist, SARD Team member V. Mariano, Project Implementation Officer, SARD

CONTENTS

Page

BASIC DATA i

MAP

I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 8 D. Disbursements 8 E. Project Schedule 9 F. Implementation Arrangements 10 G. Conditions and Covenants 10 H. Related Technical Assistance 11 I. Consultant Recruitment and Procurement 11 J. Performance of Consultants, Contractors, and Suppliers 12 K. Performance of the Borrower and the Executing Agency 12 L. Performance of the Asian Development Bank 12

III. EVALUATION OF PERFORMANCE 13 A. Relevance 13 B. Effectiveness in Achieving Outcome 13 C. Efficiency in Achieving Outcome and Outputs 13 D. Preliminary Assessment of Sustainability 14 E. Impact 14

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 15 A. Overall Assessment 15 B. Lessons 15 C. Recommendations 16

APPENDIXES 1. Project Framework 19 2. Assessment of the Impact of Assisted Natural Regeneration 26 3. Analyses of the Permanent Sample Plot Data from the Sundarbans Reserved Forest 33 4. Palli-Karma Sahayak Foundation Progress Sundarbans Biodiversity Conservation Project Report (June 2004) 41 5. Financing Plan 42 6. Project Cost 43 7. Loan Utilization by Year 44 8. Project Implementation Schedule 46 9. Status of Compliance with Loan Covenants 46 10. Technical Assistance Completion Report 55

BASIC DATA

A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

Bangladesh 1643 Sundarbans Biodiversity Conservation Project People’s Republic of Bangladesh Forest Department SDR24,569,000 1024

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years)

6 August 1998 20 August 1998 1 October 1998 3 October 1998 27 November 1998 20 January 1999 20 April 1999 6 August 1999 4 31 December 2006 19 December 2007 None 1% per annum 40 years 10 years

8. Disbursements a. Dates Initial Disbursement

20 April 2000

Final Disbursement1

20 April 2007

Time Interval

85 months

Effective Date

6 August 1999

Original Closing Date

31 December 2006

Time Interval

90 months

b. Amount (in SDR)

1 The final transaction date was 19 December 2007, the date the Asian Development Bank (ADB) received the

refund of the outstanding advances of $1.16 million from the Government of Bangladesh.

ii

Category

Original

Allocation

Last Revised

Allocation

Amount

Canceleda

Amount

Disbursed

Undisbursed

Balanceb

01 Civil Works 8,633,000 2,889,906 5,743,094 2,383,215 506,69102 Vehicles 285,000 270,934 14,066 270,934 003 Equipment 2,218,000 684,936 1,533,064 847,636 (162,700)04 Marketing 472,000 220,950 251,050 13,379 207,57105A Overseas Training 631,000 128,207 502,793 129,223 (1,016)05B Local Training 3,054,000 509,462 2,544,538 509,462 006 Consulting Services 1,819,000 1,254,115 564,885 1,254,115 007 Incremental O&M 4,270,000 1,870,560 2,399,440 390,734 1,479,82608 Service Charge 817,000 588,389 228,661 94,813 493,57609 Unallocated 2,370,000 0 2,370,000 0 099 Imprest Account (FD) 0 0 0 89453 (89,453) Total 24,569,000 8,417,459 16,151,541 5,982,963 2,434,497— = not available, FD = Forest Department, O&M = operation and maintenance. a The amount was partially canceled when the loan was cancelled in January 2005. The amount was re-employed

for ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grants to the People’s Republic of Bangladesh for the Emergency Flood Damage Rehabilitation Project. Manila (Loan 2156-BAN[SF]).

b The undisbursed balance will be canceled upon closing of the loan account.

9. Local Costs (Financed) Appraisal Estimate Actual - Amount ($) 21.39 million 3.72 million - Percent of Local Costs 40% 25% - Percent of Total Cost 26% 16% C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual

Foreign Exchange Cost 27.74 7.99 Local Currency Cost 54.50 14.94 Total 82.24 22.93

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Foreign Local Total Foreign Local Total ADB 15.6 21.4 37.0 3.98 3.72 7.71 Government of Bangladesh – 16.1 16.1 0.39 4.99 5.38 GEF 8.6 3.6 12.2 3.26 1.37 4.64 NDF 3.5 1.0 4.5 – – – PKSF – 6.8 6.8 – 4.14 4.14 Beneficiaries – 3.7 3.7 – 0.25 0.25 NGOs – 1.9 1.9 0.09 0.09 Government of the Netherlands

– – – 0.35 0.38 0.73

Total 27.7 54.5 82.2 7.99 14.94 22.93 — = not available, ADB = Asian Development Bank, GEF = Global Environment Facility, NDF = Nordic Development Fund, NGO = nongovernment organization, PKSF = Palli Karma-Sahayak Foundation.

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3. Cost Breakdown by Project Component ($ million) Appraisal Estimate Actual Item Foreign Local Total Foreign Local Total A. Effective Organization of the

SRF

4.03

9.45 13.48

2.02

1.26 3.28B. Biodiversity Conservation and

Sustainable Resource Management

3.91

9.36 13.28

0.25

1.88 2.13C. Socioeconomic Development

of the Impact Zone

2.11

22.55 24.66

0.86

10.01 10.88D. Ecotourism and

Environmental Awareness

0.95

1.74 2.69

0.03

0.07 0.10E. Technical Advisory Group 8.75 0.79 9.53 4.69 1.72 6.42F. Khulna Newsprint Mills

Effluent Treatment Plant

3.07

1.32 4.39

0.00

0.00 0.00Total Base Cost 22.82 45.21 68.03 7.86 14.94 22.80Physical Contingencies 2.10 2.43 4.53 0.00 0.00 0.00Price Escalation 1.58 6.85 8.43 0.00 0.00 0.00 Subtotal 26.50 54.49 80.99 7.86 14.94 22.80Service Charge 1.23 0.00 1.23 0.13 0.00 0.13 Total Project Cost 27.70 54.50 82.20 7.00 14.90 22.90SRF = Sundarbans Reserved Forest. 4. Project Schedule

Item Appraisal Estimate Actual Date of Contract with Consultants October 1998 April 2000 Civil Works Contracts First Contract Award June 1999 March 2000 Completion of Work December 2006 June 2004 Vehicles, Equipment, and Supplies First Procurement October 1998 May 2000 Last Procurement March 1999 June 2001 Other Milestones Suspension of Statement of Expenditure Procedures August 2002 Suspension of Borrower’s Right to Withdraw from Loan September 2003 Loan Cancellation January 2005 5. Project Performance Report Ratings

Ratings Implementation Period

Development Objectives

Implementation Progress

From 1 January 1999 to 31 December 1999 Satisfactory Satisfactory From 1 January 2000 to 31 December 2000 Satisfactory Satisfactory From 1 January 2001 to 31 December 2001 Satisfactory Satisfactory From 1 January 2002 to 31 August 2002 Satisfactory Satisfactory From 1 September 2002 to 31 December 2002 Satisfactory Partly Satisfactory From 1 January 2003 to 31 August 2003 Satisfactory Partly Satisfactory From 1 September 2003 to 31 December 2003 Unsatisfactory Unsatisfactory From 1 January 2004 to 31 December 2004 Unsatisfactory Unsatisfactory

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From 1 January 2005 to 31 December 2005 Unsatisfactory Unsatisfactory From 1 January 2006 to 31 December 2006 Unsatisfactory Unsatisfactory From 1 January 2007 to 30 November 2007 Unsatisfactory Unsatisfactory D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of

Persons

No. of Person-

days

Specialization of Members

Fact-Finding 23 Nov–12 Dec 1997 7 96 a, b, c, d, e, f, g, h Follow-Up Fact-Finding 9–28 Feb 1998 4 107 a, c, f, i Preappraisal 20 Jun–4 Jul 1998 7 113 a, c, d, j, k, l Appraisal 6–20 Aug 1998 7 69 a, d, e, m, n, o Review 1 14–20 Mar 1999 1 7 o Review 2 22–26 Apr 1999 1 5 o Special Loan Administration 1 28 Sep–5 Oct 1999 2 16 o, p Inception 2–10 Jul 2000 3 24 c, o, q Review 3 18–30 Nov 2000 3 36 c, i, o Review 4 1–8 May 2001 1 8 o Review 5 15–19 Jul 2001 2 10 r, s Review 6 12–31 Oct 2001 3 46 c, h, r Special Loan Administration 2 2–4 Dec 2001 1 2 r Midterm Review 2–21 Feb 2002 7 123 c, e, i, r, s, t, u Review 7 5 Jun 2002 1 1 e Review 8 8–19 Aug 2002 3 33 e, s, u Project Specific Contact/ Consultation 1

9 Oct 2002

1

1

e

Project Specific Contact/ Consultation 2

30 Nov–2 Dec 2002

2

6

e, v

Review 9 25 Feb–6 Mar 2003 3 27 e, s, u Review 10 6–8 Jul 2003 2 6 e, u Review 11 10–12 Feb 2004 2 6 e, v Review 12 5–14 Oct 2004 2 20 e, u Project Completion Review 30 Oct–10 Nov 2007 3 36 q, w, x a = senior project economist, b = senior project implementation specialist, c = social development specialist, d = senior environmental specialist, e = economist, f = project specialist, g = sustainable development specialist, h = staff consultant/ecologist, i = staff consultant/environment, j = counsel, k = staff consultant/financial analyst, l = staff consultant/pulp paper process engineer, m = financial analyst, n = senior programs officer, o = project economist, p = consulting services specialist, q = associate project analyst, r = senior project specialist, s = assistant project analyst, t = principal project engineer, u = staff consultant/project specialist, v = director, w = natural resources economist, x = staff consultant/forestry development specialist.

I. PROJECT DESCRIPTION

1. The Sundarbans is the world’s largest contiguous mangrove forest. It covers about 600,000 hectares (ha) in Bangladesh alone and serves as habitat for around 334 species of flora and 375 species of fauna, including the endangered Bengal tiger (Pantera tigris tigris). The Sundarbans Reserved Forest (SRF) was declared as a Ramsar site by the Convention of Wetlands of International Importance in 1992.1 In 1997 an area of about 140,000 ha of the SRF2 was declared a World Heritage Site by the United Nations Educational, Scientific and Cultural Organization (UNESCO). The SRF attracts around 100,000 tourists per year, generating about $50,000 per year in revenue from entrance fees. 3 Around 3.5 million people live within 20 kilometers (km) of the northern and eastern borders of the SRF (the impact zone) and depend on its resources for their livelihood.4 In recent times, population pressure, economic development, and unsustainable management practices have resulted in the rapid depletion and degradation of the SRF’s resources and biodiversity, threatening its very survival as well as the livelihood of many rural people.

2. The Sundarbans Biodiversity Conservation Project (the Project) was designed with the goal of securing the integrity of the environment and biodiversity of the SRF. The objective of the Project was to develop a system for sustainable management and conservation of the SRF and the surrounding impact and marine zones. 5 The Project consisted of six components: (i) effective organization of the SRF; (ii) biodiversity conservation and sustainable resource management; (iii) socioeconomic development of the impact zone; (iv) ecotourism and environmental awareness; (v) technical advice, monitoring, and research studies; and (vi) an effluent treatment facility for the Khulna Newsprint Mills (KNM). 6

3. The Project was partially financed by a loan from the Asian Development Bank (ADB). The loan was approved by ADB’s Board of Directors in November 1998, and the Project was declared effective in August 1999. The Project was implemented for slightly over 4 years before it was suspended in September 2003 due to serious implementation delays and inadequate financial management.7 The Government failed to fulfill the conditions for lifting the suspension;8 therefore the Project was cancelled in January 2005.

1 The Ramsar Convention on Wetlands promotes national action and international cooperation for conservation and

wise use of wetlands and their resources. 2 Consisting of three sanctuaries, namely Sundarban East, Sundarban South, and Sundarban West. 3 Year-wise visitor statements of Sundarbans Forest Division. 4 Dependence varies by distance to the forest. According to a survey carried out in 1995, over 75% of households

living within 0–2 km of the boundary depend on forest resources, whereas dependence reduces to about 65% in the 8–10 km distance zone.

5 ADB. 1998. Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the People’s Republic of Bangladesh for Sundarbans Biodiversity Conservation Project. Manila.

6 The component related to KNM was removed when the Nordic Development Fund withdrew its commitment to cofinance the project.

7 New activities were suspended in March 2003 and an additional 6 months was given to suspend ongoing activities. 8 The conditions were to (i) revise the project design according to a plan acceptable to ADB, (ii) reconcile the project

account in compliance with ADB’s financial management guidelines, and (iii) take action to comply with crucial loan covenants.

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II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

4. The Project was relevant to the country at the time of formulation. The project preparatory technical assistance (PPTA)9 to prepare the Project was consistent with priorities of ADB’s country program at the time.10 Similarly, the Bangladesh Forestry Sector Master Plan (1995) and the National Environment Management Action Plan (1995) highlighted the need for sustainable management of the SRF. The PPTA proposed a participatory and integrated natural resource management approach, which was consistent with ADB’s Forestry Policy.11

5. However, the PPTA was overly ambitious in attempting to design a state-of-the-art integrated conservation and development project for the SRF within the context of the governance and institutional structures and existing management ethos at the Forest Department. The vision was to design a project to "save the Sundarbans." The terms of reference called for exploring radical options to this end, particularly in terms of management strategies. The PPTA envisaged introducing an ecosystem-based multisectoral management system that would increase efficiency, accountability, and transparency of management decisions. It was ambitious to expect the Forest Department to accept such radical changes, considering it had governed the SRF for over a century, adopting a conventional command-and-control style of management. Not surprisingly, the Forest Department refused to accept the PPTA but was overruled by the Ministry of Environment and Forests (MOEF).

6. The PPTA consultants were confronted with the challenge of fulfilling the ambitious vision set out in the PPTA paper within an unreasonably short period of 5 months.12 They proposed revolutionary institutional reforms for managing the SRF (i.e., a single-purpose, multi-stakeholder agency akin to a corporate entity, headed by an internationally recruited chief executive officer, with authority and power to manage all the SRF resources, retain revenue, and reinvest in management of the SRF). It was unrealistic to expect such reforms to be designed and fully owned by the Forest Department within the duration of the PPTA. Understandably, the Forest Department objected to the proposed reforms from the outset. The Forest Department’s counterproposal was rejected by the consultants since it was based on the current institutional setup as the point of departure and was therefore considered “evolutionary rather than revolutionary.”13 Differences over institutional reforms remained unresolved until the end of the PPTA, and since they had direct bearing on the core implementing arrangements of the Project, the PPTA ended without consensus and commitment of the Forest Department on this crucial aspect. Overall, the consultants failed to produce a project that met substantive and procedural rigor and the firm's performance was rated unsatisfactory by ADB. 14

9 ADB. 1996. Technical Assistance to the People’s Republic of Bangladesh for the Biodiversity Conservation in the

Sundarbans Forest Project. Manila. 10 ADB. 1996. Country Program Notes for Bangladesh (1996–1998). Manila. These program notes highlighted the

country’s poor performance in forest management and severe natural resource degradation caused by intense population pressure.

11 ADB. 1995. The Bank’s Policy on Forestry. Manila. 12 The PPTA was carried out between April and August 1997. A preliminary logical framework for the project was to

be prepared within 3 weeks of commencement and a midterm report with different management options was due within 9 weeks of commencement of the PPTA.

13 ADB. 1997. Biodiversity Conservation in the Sundarbans Reserved Forest: Final Report of the PPTA No. 2724-BAN. Manila (October, Volume 1, p. 72).

14 The economic and financial analyses and the social and environmental safeguard assessments needed further refinement after completion of the PPTA. The firm provided some additional inputs but also pointed out the unrealistic expectations of the PPTA given the tight constraints of resources and time.

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7. During the PPTA, ADB provided limited support to the consultants and the Forest Department, in part because of a change of the responsible project officer midway through the PPTA.15 Following the PPTA, ADB revised the final project proposal submitted by the PPTA consultants. The proposed institutional arrangements were revised mainly to obtain a minimum level of buy-in by the Forest Department. However the revisions were perfunctory and many details were left unaddressed. ADB also revised the social and environmental safeguard assessments. Although the Project was approved several months after the issuance of ADB’s Policy on Indigenous Peoples,16 the social assessment and strategy did not present any information or issues related to indigenous peoples because none were anticipated at the time of project design. 8. Concern over the evident lack of government commitment and complexity of the project design were raised at the ADB management review meeting. The Forest Department’s governance and organizational deficiencies were highlighted by the ADB staff review committee as potential risks of undertaking the Project. The staff review committee recommended closer than normal supervision, partly by strengthening the Bangladesh Resident Mission and establishing a working group to monitor key milestones. The project team was requested to simplify the institutional and implementing arrangements further. This was done to some extent17 but the details were left to be sorted out during implementation through policy dialogue and enforcement of loan covenants. At the time of approval ADB’s Board expressed concern over the Forest Department being nominated as the Executing Agency (EA) since the Project had multiple components which required coordination between multiple stakeholders. The MOEF may have been a more appropriate choice for EA in this case. In spite of being the EA, the Forest Department was not present at loan negotiations, and was instead represented by MOEF. This arose as an issue during implementation, since the Forest Department disclaimed agreeing on the final project design. B. Project Outputs

1. Part A: Effective Organization of the SRF

9. This component dealt primarily with establishing new institutional structures and upgrading facilities for efficient management of the SRF. Three institutional structures were to be established, namely, the Sundarbans Management Unit (SMU), the Sundarbans Stewardship Commission (SSC), and the Stakeholder Advisory Council (SAC).

10. The SMU was to be established as the new administrative unit of the Forest Department to coordinate and implement a program of integrated natural resource management in the SRF. The Khulna Circle, which was the Forest Department’s existing administrative unit responsible for the SRF, was to be subsumed under the SMU. This was implied by the rank proposed for the head of the SMU (deputy chief conservator of forest) which was higher than that of the head of Khulna Circle (conservator of forest). Although the SMU was to be established before the Project could be declared effective, it was not set up as envisaged even at the time of cancellation.18 A project director with the rank of conservator of forest was appointed to head

15 Between the PPTA inception and the workshop to discuss the draft final report, ADB attended a one-day tripartite

meeting in Dhaka, which constituted the midterm review mission. 16 ADB. 1999. Policy on Indigenous Peoples. Manila 17 From the Sundarbans Conservation and Development Authority to a combination of the Sundarbans Stewardship

Council and a project management agency. 18 ADB declared the loan effective by stating that the SMU had been established “in the manner and intent as stated

in the RRP and Loan Agreement.”

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the SMU. Since the project director and the head of the Khulna Circle held similar ranks, the SMU could not function as the apex unit as envisaged in the project design. Instead, the SMU was reduced to being a project support unit handling project-related procurement, disbursements, and management of consultants. The Forest Department agreed during the midterm review in February 2002 to rename the unit as the Sundarbans Management Wing and elevate the rank of the project director to deputy chief conservator of forest. However, the Sundarbans Management Wing was not established at the time of cancellation.

11. The SSC was to be established as a mechanism to improve governance of the SRF by broadening the scope for active stakeholder participation in management decision making. The SSC was to be responsible for oversight and long-term policy issues including communication of such issues with the Parliament. It was to be chaired by the Minister of Environment and Forests and have members representing key public and private-sector institutions. Notably, the Forest Department was not to be represented in the SSC, presumably in the interest of maintaining nonpartisanship. An inaugural meeting of the SSC was held, primarily to fulfill the condition for declaring the loan effective. However, the legitimacy of the SSC to make policy decisions regarding the SRF was subject to question. Lacking a clear mandate and leadership, the SSC convened on four occasions during the project period but remained largely ineffective.

12. The SAC was expected to be a forum for expression of views and concerns for numerous stakeholders of the SRF. It was to have close operational ties to the SMU and also have representation in the SSC. Representatives of user groups (e.g., woodcutters; fisherfolk; shrimp fry, fuelwood, and honey collectors; and tour operators) were to be nominated to the SAC by nongovernment organizations (NGOs) engaged under the Project. User group representatives were to be identified through a process of social mobilization and group formation activities. However, due to the delay in mobilizing NGOs under the Project, MOEF handpicked nominees to represent user groups in the SAC. Although this was done as an interim measure, these nominees were not subsequently replaced by elected representatives of user groups. The SAC met once in 2004 but it lacked credibility since the members were not considered to be true representatives of the user groups. Hence the SAC did not serve an effective role in the Project and was terminated at the time of project cancellation.

2. Part B: Biodiversity Conservation and Sustainable Resource Management

13. Project activities under this component aimed to improve resource management in three key areas (forest, aquatic, and wildlife resources) and prepare and implement integrated conservation management plans. The Project also supported numerous civil works, equipment, and vehicles to improve the Forest Department’s efficiency and effectiveness in managing the SRF (Appendix 1). Civil works included construction or upgrade of dockyards, pontoons, gangways, jetties, range offices, fuel stations and temporary camps. A significant number of land- and water-based vehicles were purchased or rehabilitated and office and field equipment was procured primarily to support field operations in the SRF.

14. Forest Management. In forest management, the Project supported a range of timber-stand improvement activities. The Forest Department considered these to be useful interventions, in particular the assisted natural regeneration (ANR) program which targeted regeneration of Sundri (Heritiera fomes), the dominant mangrove species in the SRF that was being depleted due to a disease affecting its canopy cover (top-dying disease). However, the lack of follow up after suspension of the Project reduced the impact of these interventions. An assessment of natural regeneration at selected sites was undertaken during the project

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completion review (PCR) mission and showed that gains made during the Project were not sustained (Appendix 2).

15. The SRF forest resource inventory was to be conducted with the support of the Project. The inventory was last carried out in 1996 under the World Bank-funded Forest Resources Management Project (FRMP), based on which the Integrated Forest Management Plan for the SRF (1996–2010) was prepared. Data collection from the sample plots within the SRF commenced during the Project; however, systematic entry and analysis of data using the Forest Department’s database (the resource information management system [RIMS]) was not completed. Consequently, the resource inventory was not completed and the Integrated Forest Management Plan could not be updated as envisaged. The Forest Department has not initiated a program to update the plan for the period beyond 2010. The PCR mission analyzed the existing information contained in the RIMS to assess trends in standing volume and species composition of the SRF (Appendix 3). The limitations of irregular data collection and poor management of data were clearly illustrated during this exercise.

16. Aquatic Resource Management. With respect to aquatic resource management, the Project supported preparation of a draft fisheries management plan, a preliminary assessment of fishery stocks in the SRF, and several other useful reference documents (e.g., a Field Guide to Fin Fish, a book written in Bangla titled Sundarban Fisheries Resources and its Management, and several posters). A database on 224 fish species was established based on the stock assessment. The aquatic resource unit within the SMU was established and several staff were trained in aquatic resource management. At cancellation, the unit was dissolved and the functions were absorbed by the Wildlife and Nature Conservation Division of the Forest Department based in Khulna. The division has continued with limited activities under the revenue budget but no further work was taken up on the fish stock assessment or on updating the management plan. The overall impact of the Project in relation to aquatic resource management was negligible.

17. Wildlife Management. A wildlife management plan was prepared under the Project, based on a review of existing wildlife management strategies. The plan contained useful information on conservation objectives, species management and zonation strategies, and ecosystem monitoring techniques. During the Project, a wildlife and ecotourism unit was established under the Khulna operations circle. After cancellation, the wildlife functions of this unit were absorbed by the newly established Wildlife and Nature Conservation Division of the Forest Department. The division’s primary function now is conducting limited patrolling activities in the three sanctuaries. The Forest Department has been unable to implement measures proposed in the wildlife management plan, primarily due to resource constraints. The Project also supported a crocodile breeding center at the Karamjal Visitor Center and infrastructure facilities in the three sanctuaries. Operation and maintenance of all these are also seriously jeopardized due to the lack of funds.

3. Part C: Socioeconomic Development of the Impact Zone

18. This component aimed to support communities living in the 17 thanas (local government units) surrounding the SRF through (i) training and awareness on sustainable resource utilization and group management skills for resource user groups, (ii) microfinance to establish alternative income generating activities, and (iii) improved access to social services and rural infrastructure.

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19. Initially, activities under this component were held up due to the delay in finalizing arrangements to contract NGOs. The report and recommendation of the President (RRP) listed the types of services to be provided by NGOs but was not specific on modalities such as selection criteria and process of recruitment. A group of NGOs under the auspices of the Association of Development Agencies in Bangladesh (ADAB) had been engaged during the design phase of the Project and anticipated a role during implementation. However, due to the eligibility criteria of the Palli Karma-Sahayak Foundation (PKSF), which provided the line of credit for the Project’s microfinance program, many of the ADAB NGOs were precluded from participating in the Project. 19 The failed expectations of some NGOs contributed towards the formation of an NGO advocacy group that was active in highlighting numerous problems related to implementation of the Project.

20. Barring the initial delay in selecting NGOs, the activities under this component were implemented well. First, a comprehensive socioeconomic survey was carried out to establish a benchmark of SRF resource-use intensity. This was done as a collaborative exercise by the Forest Department, NGOs, and the project consultants. Thereafter, the results of the survey and other information regarding the importance of the SRF and the need to adopt sustainable resource-use methods was disseminated to community groups, also as a collaborative activity involving the Forest Department and NGOs. Twenty-two of the selected NGOs commenced microfinance programs which continue to date. Availability of microfinance was a boost to improving the livelihoods of many rural households, which had previously relied on moneylenders who levied exorbitant interest rates. Due to the Project, many beneficiaries repaid the first loan and obtained a second loan to expand their livelihood activities. Details of the microfinance program are provided in Appendix 4.

21. To complement the above interventions, the Project also aimed to provide social infrastructure (i.e., primary schools, drinking water ponds with filters, sanitary latrines, rainwater collectors, and small roads) to targeted resource user groups. Community needs were identified and prioritized by the respective union parishad, and after construction the facilities were handed over to user groups or to the union parishad for operation and maintenance. The Local Government Engineering Department (LGED) was responsible for constructing facilities. The LGED commenced activities on schedule in 2000 and made steady progress until suspension. Details of social infrastructure constructed by the LGED are presented in Appendix 1. At the time of cancellation, the LGED had utilized 69% of all loan funds in the civil works category. However, since LGED activities were managed by a separate project director operating under a separate project proforma, the LGED failed to coordinate closely with the Forest Department and NGOs. During the first 2 years, SRF resource user groups were not specifically targeted for provision of social infrastructure, as was expected in the Project design.

4. Part D: Ecotourism and Environmental Awareness

22. The Project aimed to undertake a series of programs to promote tourism and environmental awareness including (i) supporting local communities to effectively engage in tourism activities in the SRF; (ii) supporting the Forest Department to prepare and implement a tourism management plan; (iii) establishing tourism partnership arrangements; and (iv) establishing public information and education facilities including a website, a visitor center, and wildlife observation structures.

19 PKSF maintained that local NGOs had to be partners of PKSF in order to participate in microfinance activities.

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23. The main achievements under this component were (i) establishment of a public information and education center in Khulna; (ii) establishment of a visitor center near the entrance to the SRF at Karamjal; (iii) provision or upgrade of buildings, jetties, a wildlife observation tower, and other facilities in the three sanctuaries; (iv) preparation of an ecotourism management plan; and (v) production of material such as posters, films, and drama to raise awareness. These activities have generally had a positive though limited impact. The public information and education center in Khulna and the visitor center at Karamjal continue to attract tourists, although the facilities have deteriorated substantially due to lack of adequate maintenance. The information brochures and signage have not been updated since the Project was suspended and will eventually become outdated or obscured. Similarly, the improved tourism facilities in the sanctuaries are useful but badly need maintenance. A draft ecotourism management plan was prepared but has not been made operational. First, the general recommendations of the plan need to be translated into specific management prescriptions. Second, the management prescriptions must be incorporated into an integrated management plan for the SRF. Since the Project was terminated the Forest Department has had neither the funds nor a strong motivation to move this process forward.

5. Part E: Technical Advisory Group, Monitoring, and Research Studies

24. Consultants in a wide range of technical fields were provided through the technical advisory group (TAG) to (i) support overall administration and management of the Project; (ii) provide technical advice on planning and implementing various aspects of integrated conservation management, tourism, and livelihood development; (iii) establish baseline information on all aspects of the Project; and (iv) provide training to Forest Department staff and community groups. In addition, an independent conservation monitoring program and research studies on various aspects of conservation and resource management were also supported by the Project.

25. Overall, the impact of the TAG was marginal for a number of reasons. Most crucially, the bulk of consultant inputs were scheduled during the first few years of the project period. In fact, the majority of inputs were exhausted by Project midterm, although the institutional arrangements for implementing the Project were still unclear at the time. The Forest Department also viewed the TAG as allies of external parties which threatened to undermine the Forest Department’s status quo with regard to control over the SRF. Hence, the consultants did not receive adequate support from the Forest Department, particularly by way of suitable counterpart staff and office space within Forest Department premises. The team leader and 2–3 other consultants were based in the office of the project director but the rest operated out of a separate office somewhat isolated from the Forest Department. As a result, the Forest Department was unable to assimilate the technical know-how generated by the consultants and utilize them effectively in implementing project activities. The internal dynamics of the TAG were also somewhat volatile, which led to frequent replacement of consultants including the team leader.20 Such changes disrupted continuity of activities and affected relations with the client (i.e., mainly the Forest Department). All of these factors resulted in the general ineffectiveness of the TAG. The consultants produced a large number of technical outputs, some which the Forest Department regarded as being very useful and others which it dismissed as being technically inadequate or impractical. The majority of consultant outputs, although useful, remain unimplemented or unutilized.

20 Replaced three times in the period of 3.5 years.

8

26. The Project supported a range of training programs both in-country and overseas. The Food and Agriculture Organization (FAO) was commissioned to carry out a training needs assessment and facilitate the overseas postgraduate training of selected Forest Department staff. Short-term overseas and in-country training was implemented by the TAG. Overall, the training programs exposed Forest Department staff and impact zone beneficiaries to useful technical information. Six of the seven Forest Department officials who underwent postgraduate training are still with the Forest Department.

27. The contract to undertake an independent conservation monitoring program was awarded directly to the International Union for Conservation of Nature (IUCN) in Bangladesh. IUCN conducted extensive field visits in the SRF and consulted key stakeholders, including external technical experts, to develop a set of indicator species to monitor the health of SRF ecosystems. However, IUCN could not commence the actual monitoring program adopting these indicators due to suspension and cancellation of the Project.

28. Several research studies were undertaken, amongst which the surface water quality modeling study conducted by the Institute of Water Modeling (IWM) stood out as an exceptionally successful study. The study modeled sedimentation, water quality, and salinity levels in the SRF and developed the capability to predict outcomes based on different hydrological scenarios. For several months after suspension of the Project, the IWM continued to collect data at its own expense to further calibrate the model. Although the model was never used for its intended purpose (analyzing ecosystem changes and formulating management strategies based on hydrological changes), it remains a useful tool for this purpose. The Khulna University undertook a study to determine the causes for the top-dying of Sundri (Heritera fomes), but the results were inconclusive.

C. Project Costs

29. At approval, the Project cost was $82.2 million. ADB was to provide a concessionary loan of $37.0 million and the Nordic Development Fund (NDF) was to provide a concessionary loan of $4.5 million. The Global Environment Facility (GEF) was to provide grant financing of $12.2 million. The Government of Bangladesh (GOB) was to finance $16.1 million and the PKSF was to contribute the equivalent of $6.8 million of its own funds as a line of credit for microfinance. Local beneficiaries and NGOs were to contribute the equivalent of $5.6 million. The cost of the Project was later revised to about $77 million. The difference was due to (i) the NDF withdrawing its commitment to finance the KNM wastewater treatment plant, (ii) the Government of the Netherlands’ (GON) providing grant cofinancing of $3.5 million equivalent, and (iii) corresponding adjustments in the ADB loan (Appendix 5).21 Actual project cost incurred at the time of loan cancellation was $22.9 million (30% of the revised cost estimate), of which $7.9 million were foreign currency costs and $14.9 million local currency costs (Appendix 6).

D. Disbursements

30. The project financing arrangements were the cause of considerable confusion from the outset. Firstly, as mentioned in the previous paragraph, the financing plan and detailed cost estimates in the RRP were based on grant cofinancing by the GEF and the NDF. However, after ADB approval but before the Project was effective, the NDF withdrew its commitment and instead the Government of the Netherlands agreed to cofinance the Project. This resulted in a 21 The GEF and Government of the Netherlands grants were both assigned technical assistance (TA) numbers since

there was no other provision in ADB to manage the grant cofinancing at the time. However, for all purposes these were cofinancing grants but not technical assistance. As such, separate TA completion reports were not prepared.

9

change in financing percentages of each expenditure category, but the financing plan and detailed cost tables in the RRP and project administration memorandum were not updated accordingly. As an interim measure in February 2001, some guidelines were developed to help facilitate disbursements. Since the Government’s project proforma was prepared on the basis of the project administration memorandum, it also failed to distinguish between grant and loan financing in each expenditure category. As a result, the accounts maintained by the project office could never be reconciled with ADB’s accounts. Attempts to update the cost tables and revise the project proforma were repeatedly postponed until the project implementing arrangements could be resolved, which did not happen until cancellation.

31. Government auditors as well as ADB review missions noted on several occasions that the project financial records were poorly maintained and deficient. This was primarily due to the Forest Department’s failure to appoint a qualified accountant to the project office, but was also in part due to the complicated financing arrangements.22 The Government auditors reported serious financial irregularities in their audit statements of three consecutive fiscal years.23 Since the Forest Department was unable to address these audit queries, ADB suspended the statement of expenditures procedure in August 2002.24 Thereafter, EAs had to submit evidence of payments for all project-related expenditure directly to ADB, which in turn prolonged the release of payments by ADB. ADB also withheld reimbursement of expenses (i) deemed questionable and/or irregular by the Government auditors, and (ii) without sufficient proof of purchase. The Forest Department alleged that it was not fully informed of reasons for ADB’s disallowance of payment until after loan suspension and cancellation. At the time of suspension, ADB issued a deadline for submitting all withdrawal applications and extended the deadline twice at the request of the EAs. 25 Withdrawal applications and supporting documents for expenses received beyond the deadline were considered ineligible. In all, Forest Department claims amounting to about $0.94 million for which funds were already advanced to its imprest account were not accepted by ADB.26

32. A total of $7.9 million of the ADB loan was disbursed. Loan savings were cancelled on two occasions: $25.0 million was partially cancelled in January 2005 and redeployed to the Emergency Flood Damage Rehabilitation Project, and $3.8 million was cancelled when the loan account was closed in December 2007. The yearly loan utilization is in Appendix 7.

E. Project Schedule

33. The Project was to have been implemented over a period of 7 years with an expected completion date of June 2006 (Appendix 8). The loan was approved in November 1998 and was originally scheduled to be effective in April 1999. As the conditions for loan effectiveness were 22 An accountant was hired at the insistence of ADB in early 2003, but resigned within a month of assuming duties.

Subsequently in 2004 the Forest Department selected an accountant but the decision to cancel the Project was made before the accountant was appointed.

23 In fiscal years 1999/2000, 2000/01, and 2001/02, the Government’s auditor generals’ reports noted things such as a lack of central accounts and required books of accounts of the Project, questionable and/or irregular expenses, expenses without bills, work awarded to nonresponsive bidders, splitting of items to avoid advertisement, and nonsubmission of auditable documents.

24 The Project had two imprest accounts; one each for the Forest Department and LGED. ADB’s statement of expenditures procedure was prescribed for individual payments not exceeding the equivalent of $50,000, both for reimbursement and liquidation of advances to the imprest accounts.

25 The initial deadline of 31 December 2003 was extended until 29 February 2004. 26 The following reasons were quoted: (i) expenses were identified by the auditor general as questionable and/or

irregular, (ii) expenses were not substantiated by receipts or other evidence of payment, (iii) expenses relate to contracts that have not been awarded in accordance with the provisions of the Loan Agreement, and (vi) withdrawal applications were received by ADB beyond the deadline of February 2004.

10

not met by the appointed date, four extensions were granted, delaying loan effectiveness until August 1999. Initial delays were in connection with establishing the SMU and the SSC; however, many project activities were delayed throughout the implementation phase as well. The Forest Department-administered activities lagged behind, primarily due to inadequate project implementing arrangements. Micro-credit did not start until late 2001 due to the lengthy and cumbersome procedures of selecting NGOs. Only the LGED-administered activities were implemented on schedule. Slow implementation progress was one reason for suspending operations and cancelling the Project.

F. Implementation Arrangements

34. Poor performance of the Project can be attributed largely to weakness in its implementation arrangements. To some extent this was the inevitable consequence of a design flaw. As discussed earlier in paras. 6–8, the institutional and implementation issues remained a point of contention between ADB and the Forest Department until the very end of the project design phase and therefore the details were left to be sorted out during implementation through policy dialogue and by dictum (i.e., compliance with loan covenants). The major institutional issues that had bearing on the Project were discussed previously in paras. 10–12. In particular, the Forest Department's failure to establish, adequately resource and support the SMU as envisaged in the RRP was a major lapse which resulted in (i) limiting the SMU’s functional responsibilities; (ii) a lack of adequately qualified staff to carry out the project activities, including financial management; and (iii) a lack of clear guidelines and instructions on the chain of command and fund flow mechanisms between the SMU and the wider Forest Department establishment.

35. During the implementation phase ADB’s efforts to address project implementation delays were rebuffed either by legitimate administrative and procedural obstacles or deliberate evasive measures. ADB could have taken a more aggressive approach in assessing the implications of certain crucial delays (e.g., delay in setting up the SMU) and taken immediate remedial measures (such as early suspension or reducing the scope of activities). ADB’s failure to do so could be attributed to (i) a change of the project officer responsible for the Project shortly after it was approved but still not declared effective, which resulted in some loss of ADB’s institutional memory; (ii) a tendency to tolerate slippages in the interest of keeping the Project alive (even when the core principles of the proposed reforms were being compromised); and (iii) the limited supervision and implementation support provided by the resident mission.

36. MOEF’s limited role was also a contributing factor in the implementation problems. Although MOEF assumed the role of de facto project implementing agency on numerous occasions, it was not designated as such in the loan agreement. 27 However, the Project involved institutional and policy reforms and intersectoral coordination functions that are often most effectively served by a line ministry rather than a line department.

G. Conditions and Covenants

37. Compliance with loan covenants was generally unsatisfactory. The Project included a number of loan covenants which had significant bearing on project implementation. Noncompliance or partial compliance with these covenants was one of the reasons for suspending and eventually cancelling the Project. These were covenants related to submission 27 Apart from designating the minister of MOEF as chairperson of the SSC, MOEF is mentioned only in the context of

the project steering committee in the Loan Agreement. However, it was MOEF and not the Forest Department that participated in the loan negotiations.

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of audit statements and establishing and operationalizing institutional arrangement, including the SMU, SSC, SAC, and the project coordinating committee (Appendix 9).

H. Related Technical Assistance

38. An attached advisory technical assistance was provided to assess future options for KNM. The KNM was the only commercial-scale user of a resource from the SRF, namely Gewa wood (Exococaria agallocha) which was used in paper production. KNM’s requirement far exceeded the sustainable yield of Gewa in the SRF, hence this caused a rapid depletion of the growing stock of Gewa. Furthermore, KNM discharged untreated effluent into the Bhairab River, which flowed through the SRF, thus affecting aquatic and marine life. The objective of the technical assistance was to assess the future options for the KNM. The technical assistance was linked with component (vi) of the original project design (para. 2), to construct an effluent treatment plant for KNM. This component was to be implemented based on the outcome of the technical assistance. The consultant reached the inevitable conclusion that the best option would be to deactivate KNM given its poor financial condition and management problems. Since this was both socially and politically sensitive (particularly during an election year), the consultant's recommendations were not heeded; however, KNM was forced to shut down due to these very reasons in 2002. It was somewhat fortuitous that the component relating to the effluent treatment plant had been removed from the Project by then due to the withdrawal of the cofinancing commitment by the NDF. Overall, the TA was assessed "partly successful." A separate TA completion report on this TA is attached in Appendix 10.

I. Consultant Recruitment and Procurement

39. The consultancy services were to be financed through both grant and loan funds. Rather than splitting the inputs between grant and loan financed consultant packages, it was agreed that all 17 specialists would be obtained from one source. 28 A Netherlands-based consulting firm was selected, but operated under two separate contracts—one with the Government for the loan-financed inputs, and another with ADB for the grant-financed inputs. The firm was selected by ADB following ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). ADB completed negotiations of the grant-financed contract in June 1999, but deferred contract signing until the firm and the Government completed negotiations of the loan-financed contract. Eventually, ADB signed the grant-funded contract in November 1999 and mobilized the consultants in February 2000. The loan consultancy contract was signed in April 2000 due to the delay in obtaining the ministry’s clearance.

40. Procurement of civil works and goods was mostly done in line with agreed procedures. During project implementation, ADB allowed the Forest Department to use force account procedures for certain works because of the small size of contracts (below $50,000 equivalent), and the remote locations involved. ADB noted from the claims submitted by the Forest Department that some works that were supposed to be done through force account had in fact been awarded to contractors following tender procedures, without seeking prior approval from ADB as required. Despite requests from ADB, the Forest Department did not provide any clarification for such actions nor did the Forest Department provide copies of the tender documents, evaluation reports, and other requisite documents. Moreover, Government auditors found that some of the contracts were awarded to nonresponsive bidders. In such instances, ADB did not finance the related expenditure. 28 Individual consultants were identified by the source of financing, in order to distinguish between grant- and loan-

financed portions of the total consulting services package. Partly as a result of this dual accounting system, the consulting firm was unable to submit proper financial records of expenditure incurred.

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J. Performance of Consultants, Contractors, and Suppliers

41. In general, there were no significant issues or problems with suppliers and contractors. Performance of the consultants on the other hand was mixed (para. 25). The TAG team comprised consultants provided by one firm, but under two separate contracts. While the Forest Department had direct authority over the inputs of the loan-financed consultants, it felt that it did not have such control over the inputs or expenses of the grant-funded consultants. For its part, the Forest Department rejected several outputs produced by some loan-financed consultants and withheld corresponding payment. 29 ADB also noted that the consulting firm’s administration of the TAG (i.e., managing personnel and finances) was weak. While remedial measures were taken, these were only partly implemented before the consultants were demobilized due to loan suspension.

K. Performance of the Borrower and the Executing Agency

42. The Forest Department's overall performance is rated "unsatisfactory." Although the Forest Department objected to various aspects of the Project during the preparatory phase, once the loan agreement between the Government and ADB was finalized, the Forest Department was obliged to implement the Project effectively and efficiently. However, the Forest Department remained intransigent, particularly with regard to the proposed institutional reforms. Over the course of the Project, Forest Department performance improved in certain areas, notably in supporting outreach activities for the impact zone communities. In fact, the Forest Department continues to maintain good working relations with the Project’s microfinance partner NGOs to date.

43. The Forest Department’s commitment increased when it was provided with an opportunity to redesign the Project after the suspension. Although the Forest Department took longer than ADB specified for the redesigning process, its field staff and most senior management were fully supportive of the outcome. In fact, most Forest Department staff were surprised and disappointed when the Project was cancelled. LGED’s overall performance was rated "satisfactory." However, LGED operated somewhat independent of the rest of the Project, which resulted in a mismatch between community development activities and community infrastructure development.

L. Performance of the Asian Development Bank

44. ADB's overall performance was rated "unsatisfactory." Fundamentally, ADB failed to assess the risks and implications of proposing an ambitious state-of-the-art integrated conservation and development project within the existing country and institutional contexts. The Project's aim to improve governance and management of the SRF threatened a much broader interest group than just the Forest Department establishment.30 ADB’s determination to pursue the Project in spite of evident lack of ownership and commitment was perhaps influenced by external factors such as the prospect of supporting a conservation project in a recently declared World Heritage site, and being the first GEF cofinanced project for which ADB assumed responsibility as a direct implementing partner. Frequent changes of the staff responsible for the Project (including once during the crucial period between approval and effectiveness) weakened ADB’s relations with the Forest Department. It also had other negative effects, such as the loss 29 The Forest Department did not pay the last invoice (amounting to $109,843 and Tk11,561,447) in view of which the

consultant held on to two vehicles procured under the loan-financed contract. The matter is unresolved to date. 30 It threatened to undermine a well-established system of patronage and rent seeking based on managing SRF

resources.

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of institutional memory, which weakened ADB’s understanding and commitment to push reforms and establish procedures that were fundamentally important to achieving the Project’s goal and objectives. Failure or delays in undertaking certain critical reforms and procedures should have triggered remedial measures much earlier, and also prompted a reassessment of the situation vis-à-vis the Project's goal and objectives.31 During implementation, ADB made a considerable effort to improve project performance; 16 missions were conducted between March 1999 and October 2004. Considering the complexity of issues and the need for frequent interaction with the stakeholders, a more hands-on role by the Bangladesh Resident Mission would have been useful.32

III. EVALUATION OF PERFORMANCE

A. Relevance

45. The Project is rated "partly relevant." At the time of appraisal, the Project’s goal and objectives were consistent with the Government’s development priorities and with ADB’s country strategies for Bangladesh (para. 4). Although the project design was conceptually sound, it was overambitious and unrealistic. It failed to assess risks and diagnose key threats and weaknesses in the existing institutional structure. The project scope and implementing and financing arrangements were complex and could not be achieved within the time frame of a single project. The Project began to lose relevance at the onset as a result of fundamental changes in institutional arrangements (paras. 10 to 12), and subsequent delays and abortion of key project activities. Failure to assess the implications of such changes and delays and take timely remedial measures further undermined the Project’s relevance.

B. Effectiveness in Achieving Outcome

46. The Project is rated "less effective." The Project goal and objectives stated at appraisal are not likely to be achieved in a meaningful manner. Similarly, most of the performance targets stated at appraisal are not likely to be achieved either. Termination of the Project contributed towards this result; however, the causes were prevalent from the very inception of the Project. Achieving the goal and objectives was virtually impossible considering the poor project design and the lack of ownership and commitment by th0e Forest Department from the outset. Effectiveness was jeopardized by poor implementation, supervision, and lack of attention to addressing problems through appropriate remedial measures. There were exceptions, however. The microfinance program has continued and even expanded in some areas. Several useful outputs contributed towards partial achievement of the expected outcomes. Examples are the hydrodynamic modeling exercise, the draft management plans and some technical reports produced by consultants, the social infrastructure developed by the LGED, and the visitor service facilities established in Khulna and the SRF.

C. Efficiency in Achieving Outcome and Outputs

47. The Project is rated "inefficient." A re-estimation of the Project’s economic internal rate of return was irrelevant in this case because of early termination which (i) cut short the project implementation period, (ii) suspended disbursement of project funds, and (iii) curtailed the Project’s benefit stream. Efficiency is assessed qualitatively instead, on the basis of how the 31 It is noteworthy that the failure to implement institutional reforms, although critical, was not mentioned as a potential

risk in the Project's log frame. 32 The resident mission assumed a key role during the latter stages, particularly in resolving the dispute over

reconciliation of the project imprest account.

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project resources were utilized in achieving the desired outcomes. At the time of loan suspension, the Project had achieved 23% physical progress33 utilizing 30% of the total project finances and 60% of the total project period. Most project activities that were undertaken are not likely to yield meaningful returns. In particular, the utilization of funds in connection with (i) institutional strengthening and capacity building, (ii) resource management and ecotourism planning, and (iii) provision of consultancy services, were considered inefficient. The construction of social infrastructure by LGED and the microfinance activities carried out by NGOs do stand out as being somewhat efficient uses of resources; however, even in the case of these activities, the disconnect with the overall objectives of the Project rendered them less efficient.

D. Preliminary Assessment of Sustainability

48. The Project is unlikely to be sustainable. Firstly, most activities that would have contributed towards achieving the goal and objectives of the Project were incomplete when the Project was cancelled. Sustainability was particularly compromised by failure to implement the institutional and policy reforms which aimed at establishing an effective and efficient system of governance and management for the SRF. Although some progress was made (i.e., draft management plans, sound analytical and research products, microfinance for resource users, and increased awareness), due to the lack of a cohesive management and governance system for the SRF, these are not likely to contribute significantly towards achievement of sustainable outcomes. Secondly, the infrastructure facilities that were developed and equipment and vehicles that were procured under the Project are unlikely to produce sustainable outcomes due to lack of operational and maintenance funds in the Forest Department’s budget. Infrastructure facilities and vehicles in the SRF require more regular maintenance because of exposure to salinity and extreme weather events.34 Thirdly, the negative publicity caused by the Project may have reduced the likelihood of future donor support for conservation and management of the SRF.

E. Impact

49. Overall, the Project is assessed as having a negligible impact. In terms of institutional impact, the Project had a somewhat negative effect on the Forest Department by creating a poor image of its capabilities and reducing the morale of its staff. Similarly, the Project had a somewhat negative impact on ADB’s image as a development partner capable of handling complex natural resource management projects. The socioeconomic impact of the Project is generally positive; many rural poor people benefited from the microfinance facilities and from the rural infrastructure established under the Project. The increase in tourism (partly attributed to the Project) has positive spillover effects on the local economy. As a result of the Project, NGOs and civil society were mobilized and gained greater awareness of the importance of the SRF. The Project did not encounter any issues related to indigenous peoples during implementation. The environmental impact of the Project is considered marginally positive. This was mainly due to the availability of better equipment and facilities for the Forest Department to engage in patrolling the SRF. The increased environmental awareness and appreciation gained by impact zone communities will also lead to better conservation and resource management practices. However, some beneficiaries used the microfinance facility to expand their resource extraction activities from the SRF. 33 Physical progress is a measure of the weighted average of progress in all project activities. It is not a measure of

tangible physical outputs. 34 In fact, a substantial part of the infrastructure that was inspected by the PCR mission in November 2007 was

completely destroyed a week later by Cyclone Sidr.

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IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

50. Overall, the Project is assessed "unsuccessful." Fundamentally, the Project failed to achieve its stated goal and objectives. It achieved marginal progress on physical and financial targets. Most physical activities were halted midstream due to suspension and eventual cancellation and are unlikely to be followed through to sustainable and logical completion. This is primarily because the Forest Department lacks not only the resources but also the commitment and motivation to carry through with activities initiated under the Project. However, the Project’s intended outcomes remain relevant; perhaps even more so now in the context of increased population and economic development pressures and projected scenarios of climate change.

B. Lessons

51. The following important lessons were learned.

(i) Policy and institutional reforms imposed on an institution under a project need to be realistic and achievable, in view of the limited leveraging power of a project. The Project was ambitious in attempting to transform the management of the SRF within the time horizon of a single project period, considering that the SRF had been managed for over a century by the Forest Department under a traditional command-and-control regime. The proposed ‘revolutionary’ reforms should instead have been introduced in an ‘evolutionary’ manner through a phased approach.

(ii) Policy and institutional reforms in challenging environments (i.e., marked by political patronage and authoritative civil service regimes) are more likely to succeed if they have sufficient ‘buy in’ and have strong champions within the system. The Project demonstrated that such reforms cannot be enforced simply by dictum (i.e., imposed as loan covenants). The chances of success were also seriously jeopardized by attempting to circumvent the Forest Department on several occasions.

(iii) Institutional reforms that also have a direct bearing on project implementation should be addressed as project-readiness criteria and, to the extent possible, recommended as conditions for project approval rather than project effectiveness. For instance, establishment of the SMU and SSC were long-term institutional changes to the Forest Department but were also essential for smooth project implementation. They could have been addressed as project-readiness criteria prior to approval.

(iv) A risk assessment of the EA’s capacity to undertake institutional and policy reforms should be conducted during the design phase, and specific corresponding indicators should be listed in the project design and monitoring framework. During implementation such indicators should be monitored by ADB through review of project performance reports. In the case of the Project, although the SMU, SSC, and SAC were established to comply with the effectiveness condition, there was no basis for assessing the effectiveness of these institutions. Therefore, for all practical purposes, the Project was implemented for several years without functional institutional arrangements.

(v) Projects that involve complex implementing arrangements and challenging reforms require closer supervision. Such projects should be targeted for delegation to resident missions or for special joint supervision arrangements between headquarters and resident missions. However, resident mission staff assigned to

16

such projects should be included as core members from the early stages of project design.

(vi) A change in the officer responsible for a project during crucial stages (in this case soon after commencement of the PPTA and between project approval and effectiveness) should be avoided whenever possible. If unavoidable, the transition should be carefully managed to avoid a complete lapse of institutional memory (e.g., by ensuring the active participation of other team members, especially national officers). This can help to reduce unintended changes in project implementation arrangements (such as when the criteria for NGO participation in this Project were changed between the design and implementation phases).

(vii) Lessons from previous projects implemented by the Forest Department could have been incorporated more effectively into the project design. One such lesson was the Forest Department’s poor assimilative capacity of technical know-how imparted by consultants under previous donor-assisted projects. Regardless, the Project included a front-loaded consultancy service package which was largely ineffective. Previous Forest Department projects had also encountered problems with TA consultants not being accountable to the Forest Department but instead to ADB; however, the same problem was repeated in this project.

(viii) The administrative and financial management capabilities of the executing agency must be assessed as a ‘quality at entry’ issue. For instance, the Forest Department did not have qualified accountants at the time the Project was approved. Furthermore, the Forest Department was implementing several other large donor-financed projects (including two other ADB-financed projects) when the Project was approved. The implications of implementing several large projects for the Forest Department’s financial management and administrative staff were not assessed beforehand. Similarly, coordination between project executing agencies was undermined, in this case by having two project directors administering two separate project proforma.

C. Recommendations

1. Project Related

52. Future Monitoring. The Project laid the groundwork for useful programs on biodiversity and water quality monitoring and the Forest Department should continue to implement these programs. In addition, the Forest Department should continue collecting and analyzing data from the sample plots within the SRF. In the absence of such monitoring programs, the Forest Department has little information on the trends and conditions of key species, and therefore has no basis for preparing future management plans and seeking future assistance to conserve and manage the SRF. For instance, there is no scientific basis to document the decline of Sundri species in the SRF. A preliminary analysis of data from the RIMS, undertaken during this project completion review study, did confirm that this is the case (Appendix 3). The conservation monitoring program which was developed by IUCN would substantially improve information on biodiversity conditions and trends in the SRF. The water quality model developed by the IWM is a useful analytical tool to assess salinity, sedimentation, and water pollution trends affecting the SRF. Monitoring water quality on a continuous basis will help to establish causality between the health of biodiversity in the SRF and land-use patterns, as well as the impact of climate change.

53. Covenants. The Project included several covenants related to institutional arrangements. Partial compliance or noncompliance with these covenants was one of the key reasons for the cancellation of the Project. The institutional arrangements introduced through

17

these covenants contained key elements for sustainable and integrated management of the SRF (such as transparency, efficiency, and rights of beneficiaries). The Forest Department should therefore consider adopting them (perhaps suitably revised to suit its structure and mandate). Doing so would convey the Forest Department’s commitment to adopting good practices for conservation and management of the SRF and serve as an indicator of readiness to potential development partners interested in supporting the Forest Department in the future.

54. Further Action or Follow Up. Termination of the Project left many initiatives incomplete. The Forest Department could continue several activities to a logical conclusion, thereby ensuring that the investments under the Project yield some positive returns. These include (i) selectively continuing timber-stand improvement activities, especially ANR activities; (ii) finalizing the fisheries management plan and the ecotourism management plan; (iii) implementing certain provisions of the wildlife management plan; (iv) incorporating specific provisions from the above plans in the update of an integrated management plan for the SRF; and (v) implementing social programs in the impact zone together with microfinance NGOs to raise awareness on sustainable use of SRF resources.

55. Inadequate funds for operation and maintenance of facilities is a perpetual problem. However, even the limited funds could be more effectively utilized by identifying priorities.35 The Forest Department should also take immediate measures to utilize the equipment and motorcycles procured during the Project, which have remained in storage since the Project was suspended.36

56. The Government audit department raised two types of queries: (i) serious financial irregularities, and (ii) nonserious financial irregularities. At the time of the project completion review mission, the Forest Department had responded and resolved five of the nine serious financial irregularities and nine of the 38 nonserious financial irregularities raised by the auditors. The Forest Department should address the remaining queries without further delay.

57. Additional Assistance. The SRF is a globally significant natural asset which is increasingly under pressure from population growth and economic development, and in future will also be subject to the impacts of climate change. It is therefore a resource that is in urgent need of proper conservation and management. Poor performance of this Project should not deter efforts to conserve and sustainably manage the SRF. Neither should the Project be considered a permanent injunction on the Forest Department and its ability to assume a responsible role in managing the SRF. In many ways, the Project has established a useful foundation from which future projects and programs can be launched. Lessons from the Project are a useful guide for future initiatives.

58. Timing of the Project Performance Evaluation Report. The PCR was done 3 years after suspension of project activities.37 The Project was also subject to a post-project evaluation

35 For example, the animated documentary on the SRF which was the key feature at the Khulna visitor center has

been discontinued for over a year due to lack of funds to replace the bulb of the multimedia projector. Merely replacing the bulb will once again attract larger numbers of visitors (especially children) to the center.

36 Some valuable electronic equipment such as computers, digitizers, and plotters may already be damaged due to lack of use.

37 The PCR could not be completed earlier due to the delay in resolving the issue of disallowed payments by ADB, which in turn prevented the loan account from being closed. The account was closed in December 2007.

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under a special evaluation study by ADB’s Operations Evaluation Department in 2006. 38 Therefore a project performance evaluation report may be considered optional in this case.

2. General

59. The following general recommendations are proposed.

(i) The project design and monitoring framework should include leading indicators to facilitate real-time assessments of project performance (particularly with regard to qualitative aspects such as institutional and policy reforms).

(ii) The EA’s commitment and capacity should be objectively assessed before commencing a project. A project’s ability to leverage reforms as well as an EA’s willingness and capacity to absorb reforms must be realistically assessed.

(iii) To the extent possible, institutional, policy, and legal reforms (particularly when such reforms have a significant bearing on implementation of the project) should be proposed as conditions for loan approval (not effectiveness) and monitored as project-readiness criteria.

(iv) The financing plan of a project must be finalized prior to Board approval and must be accurately reflected in the Government’s version of the project document (in countries where this is applicable).

(v) Consultancy services on projects must be phased in accordance with the absorptive capacity of the recipient agency, particularly when existing institutional capacity is weak. Front-loading of consultancy services should be avoided, especially in projects where institutional reforms are proposed as a precursor to capacity building.

(vi) Projects with complex scope and implementing arrangements must be more actively supported by resident mission-based staff, either through delegation or shared responsibility for administration.

38 ADB. 2007. Asian Development Bank - Global Environment Facility Cofinanced Projects: Performance and

Process Evaluations. Manila.

Appendix 1 19

PROJECT FRAMEWORK

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

1. Goal To secure the integrity of the environment and biodiversity of the Sundarbans Reserve Forest (SRF) in Bangladesh.

• Human-induced degradation of the SRF reversed by 2003. Biodiversity losses in SRF reduced by 2001.

• Sound management achieved by 2002.

• Environmental awareness of the SRF in society improved by 2005.

• Sustainable and participatory community activities established by 2003.

• Economic and social indicators improved in 17 thanas (local government units) of impact zone by 2004.

• Effluent disposal from Khulna Newsprint Mills (KNM) controlled by 2001.

• Financial and economic sustainability of the SRF achieved by 2005.

• Annual independent conservation monitoring by the International Union for Conservation of Nature (IUCN).

• Existing baseline surveys from Integrated Resource Management Program (FAO/UNDP), Forestry Resources Management Project, (World Bank), and studies by technical advisory group (TAG).

• Water quality and pollution monitoring by Surface Water Modelling Center.

• Innovative research and socioeconomic surveys by Project.

• Benefit monitoring and evaluation (BME) system; project completion report.

• Civil society and high-level political commitment to the SRF.

• SRF management will be multisector and multidisciplinary.

• Stakeholders accept the project plans.

• Nongovernment organizations (NGOs) and local community organizations (LCOs) participate in community. development in the impact zone.

• Shrimp controls introduced to prevent further loss of agricultural land.

• KNM phases out Gewa over 4-year period.

2. Purpose 2.1 Effective organization and management of the SRF.

• Sundarbans Management Unit (SMU), Sundarbans Stewardship

• BME reports; review missions; TAG reports.

• Accurate scientific information is available and sound conservation management plans are

20 Appendix 1

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

Commission (SSC), Stakeholder Advisory Council (SAC) all set up.

• Environmentally sound biodiversity conservation by 2001.

• Sustainable SRF management practices based on sector plans and integrated conservation management plan in place by 2002.

• BME reports and review missions; TAG reports; integrated conservation management plans; annual State of the Sundarbans Report by IUCN.

implemented. • Strong interest in

conserving SRF resources, including three wildlife sanctuaries. Public environmental education and tourism are expanded.

• Adequate financial resources to sustain investments.

2.2 Reduce poverty, improve living standards, promote sustainable development in the impact zone, and promote ecotourism and environmental awareness.

• Legally recognized organizations of SRF resource users that meet members’ needs and enforce agreed user practices.

• Improved life skills and creation of options in the impact zone.

• Improved access to social infrastructure and services in the impact zone by 2005.

• Average household income increased by 30%; poverty reduced by 30% in the impact zone by 2004.

• Tourist numbers increased by 50% by 2005.

• Government statistics, NGO reports, and independent academic studies on 17 thanas in impact zone.

• Socioeconomic studies. • Reduced dependency on

the SRF, diversification of income sources.

• Local Government Engineering Department (LGED) programs and reports.

• BME reports, review missions.

• Bangladesh Parjatan Corporation (BPC) reports.

• NGOs and LCOs participate effectively with the Project in socioeconomic development of impact zone.

• LGED is appointed to implement social infrastructure program and to coordinate with NGOs and/or LCOs and stakeholders.

• BPC and private operators fully involved in Project.

Appendix 1 21

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

3. Outputs

3.1 Effective organization of the SRF 3.1.1 SMU 3.1.2 SSC 3.1.3 SAC

• SMU set up by

December 1998. Fully functional for forestry, fisheries, and wildlife conservation operations by 2003.

• SSC established, on

broad-based principles incorporating civil society's participation, by March 1999.

• SAC set up by June 1999 and representing views of stakeholders in effective manner.

• Review missions.

• Minutes of SSC meetings; review missions.

• Minutes of SAC

meetings; review missions.

• SMU works effectively with

stakeholders.

• High-level commitments to the role of the SSC and the Project.

• All user groups are effectively represented on the SAC.

• Project head office established in Dhaka with the deputy chief conservator of forest as project director and conservator of forest Khulna as deputy project director.

• Sundarbans Management Wing not incorporated in the Forest Department’s organogram with clear line of authority. Four divisions and three units created and operating. SSC formed and three meetings held by April 2004.

• First meeting of SAC was held on 17 March 2004 in Khulna. SMW placed on agenda for discussion at the third SSC meeting.

3.2 Biodiversity conservation and sustainable resource management 3.2.1 Forestry

• Forest management plan by 2001; 5,000 hectares (ha). Enrichment planting, 10,000 ha assisted natural regeneration, 2,000 ha Golpatta planting, 800 ha silviculture trials; 35 permanent sampling

• Project reports and review missions.

• BME reports; World Heritage Site reports; review missions.

• SWMC monitoring reports; review missions.

• Project reports and review missions.

• Plans and review

• Sufficient expertise and resources are available to gather and analyze the required data, and implement the sector plans and the integrated plan.

• SRF user charges set at economic levels, and are directly used to conserve the Sundarbans.

• Timber-stand improvement performed through enrichment planning, assisted natural regeneration, and Golpatta plantation. Less than 50% of target achieved. No further assisted natural regeneration justified

22 Appendix 1

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

3.2.2 Aquatic Resources 3.2.3 Wildlife 3.2.4 Integrated Conservation

Management Planning

plots, all in the SRF by 2006.

• Mangrove arboretum, 2 range offices, 20 temporary camps, 7 jetties, 9 pontoons, training established.

• Fisheries/aquatic resources management plan and introduction of fisheries management in the SRF by 2001.

• Wildlife management plan prepared (2001), especially for three sanctuaries.

• Integrated plan prepared and operational by 2002.

missions.

• Appropriate measures, including upstream pollution controls and mitigation measures re urban, ports and shipping, and industry sources. Suitable controls on shrimp-based aquaculture.

without detailed study. • 70% stock assessment

done under TAG guidance. Draft fisheries management plan prepared. Materials for mass awareness developed.

• Ban on fishing in the breeding and rearing ground at 18 canals and shrimp fry collection from the SRF.

• Baseline survey of tiger and deer, crocodile breeding center, plot study for three sanctuaries, vegetation study, and wildlife management plan with TAG.

3.3 Socioeconomic development of the impact zone

• Mobilization and organization of 170,000 households and resource users into viable LCOs by 2005.

• $6.8 million for microcredit by 2005 for alternative income sources and sustainable SRF resource use.

• Social infrastructure constructed comprising village water supplies, sanitation, schools,

• Expanded NGO coverage in 17 thanas.

• NGO and BME reports. • Review missions. • PKSF reports on

microcredit. • LGED reports, review

missions. • NGO reports, review

missions.

• Appropriate NGO selection process, NGOs participate in mobilization, training, and set up of LCOs.

• NGOs establish programs in the impact zone. Credit reaches target households and leads to increased incomes.

• LGED leads a coordinated approach.

• 24 NGOs contracted to identify and organize resource users. Boat license certificate redistribution study effective. Human resource development done by local NGOs with the Liaison Education Extension Unit of the Bangladesh Sundarbans Project.

• The Project set up 670 rainwater collectors, 41 pond sand filters, and 24 deep well tubes in the impact zone, and

Appendix 1 23

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

rural roads, etc. in 17 thanas.

• Improved environmental awareness and education about the SRF in schools in 17 thanas, plus nonformal education and adult literacy programs.

constructed 10 km of village roads, 24 culverts, and 12 boat landing stations. The LGED constructed 16 primary schools in the impact zone.

• Strip and block plantation in the coastal embankment, roads, and marginal land.

• PKSF funds to divert to alternative livelihoods.

3.4 Ecotourism and environmental awareness

• Modern tourism strategy and plan developed, and training program implemented.

• Public infrastructure built and policy framework to support private sector plans and development.

• NGO and/or LCO participation in training/development.

• Environmental information and education center operational in Khulna.

• National and local environmental awareness campaigns.

• Tourist numbers, receipts, BPC reports. Review missions.

• Review missions.

• Press, media coverage of Sundarbans.

• Modern, private sector tourism is not dominated by public sector. Appropriate policy framework is adopted.

• Network with Asian locations is established.

• Tourism opportunities can be created, and risks can be mitigated.

• Public education program is successful.

• Visitor information center built at office of Khulna conservator of forest.

• Karamjal visitor information center built. Upgrading of basic infrastructure, jetties, watchtowers, small huts, and public awareness material developed.

• Mangrove arboretum center at Chandpai range and suspended wooden bridge and watch tower constructed at Herbaria tourist spot.

• An interactive website was developed.

3.5 TAG, monitoring, and research studies

• TAG team established and supporting conservation planning, plan implementation, and training.

• IUCN and TAG reports. • Annual State of the

Sundarbans reports. • Contract for services.

• Innovative research and monitoring are used for effective management.

• 70% of 400 person-months consumed and number of training programs provided.

24 Appendix 1

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

• IUCN monitoring. • Other studies

contracted. • Fellowships program

implemented. • Inspection and

certification system designed.

• Number of fellowship holders.

• Consultant's report.

• Government implements the recommendations.

• IUCN has developed indicator list for monitoring ecosystem health of the SRF. Built capacity of 55 Forest Department officials for biodiversity monitoring.

• Completed biodiversity survey (on undergrowth, regeneration, orchid, fern and lichen, mollusk, bird, dolphin, invasive species, butterfly and dragonfly, etc.).

• Recorded seven new species from the SRF.

• The Institute of Water Modelling undertook salinity study and submitted final report.

• Study of the top-dying of Sundri and its management was completed by Khulna University.

• Five assistant conservators of forest sent abroad to complete 1-year master of science under fellowship program.

3.6 Effluent treatment • KNM effluent treatment system installed and operating well.

• BME; review reports. • Water quality monitoring

reports.

• Discharge levels are environmentally accepted.

Component cancelled.

3.7 Advisory technical assistance (TA) for KNM

• TA will include the organization and/or management

• TA report. • Policy changes adopted,

• KNM, Ministry of Industries, and Ministry of Environment and Forests

Appendix 1 25

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Actual Outputs and Outcomes at Cancellation

structure, commercialization and privatization options, environmental management.

commercialization and management changes.

agree to phase out Gewa use from the SRF and use imported waste.

• Financing is available for KNM's rejuvenation based on imported waste for recycling as a source of pulp for newsprint manufacture.

4. Inputs 4.1 Consultants 4.2 Equipment and software 4.3 Civil works 4.4 Microenterprise investment, including credit 4.5 Training 4.6 Marketing 4.7 Salaries/Others

• Consultants $11.6 million

• Equipment and software $6.9 million • Civil works

$26.8 million • Microenterprise investment, including credit $11.3 million • Training

$ 9.4 million • Marketing

$1.4 million • Salaries/Others

$13.6 million • Service Charge

$1.2 million Total $82.2 million

• Project implementation progress reports.

• Project accounts.

• Consultants are competent.

• Local contractors are competent.

• Counterpart budget is available on a timely basis.

• Counterpart staff are available.

BME = benefit monitoring and evaluation, BPC = Bangladesh Parjatan Corporation, IUCN = International Union for Conservation of Nature, FAO = Food and Agriculture Organization, KNM = Khulna Newsprint Mills, LCO = local community organization, LGED = Local Government Engineering Department, NGO = nongovernment organization, SAC = Stakeholder Advisory Council, SMU = Sundarbans Management Unit, SMW = Sunderbans Management Wing, SRF = Sundarbans Reserved Forest, SSC = Sundarbans Stewardship Commission, TA = technical assistance, TAG = Technical Advisory Group, UNDP = United Nations Development Programme.

26 Appendix 2

ASSESSMENT OF THE IMPACT OF ASSISTED NATURAL REGENERATION

A. Background 1. The national moratorium on the felling of trees from the natural forests imposed in 1973 had an unanticipated negative consequence on regeneration of mangrove species in the Sundarbans Reserve Forest (SRF). In the absence of selective commercial felling according to management prescriptions, tree cover at some of the locations became over-congested. Moreover, the growth of unwanted species such as thorny plants and ground-covering bushes exceeded normal limits. These factors caused undesirable shade on the forest floor, which in turn seriously impaired the regeneration of almost all mangrove species, especially Sundri (Heritiera fomes). 2. Assisted natural regeneration (ANR) was introduced as a method of increasing the survival of key mangrove species. The ANR program was implemented under the Sundarbans Biodiversity Conservation Project in areas that showed very little or no regeneration due to shading or coverage of the forest floor. The method involved physically removing some of the thorny plants and ground-covering bushes as well as climbers that were found to be infesting good trees. Thus, the ANR operations essentially permitted more light to reach the forest floor in a diffused manner, so as to initiate regeneration of desirable species. 3. However, ANR operations were discontinued after suspension of the Project. In order to assess the impact of the ANR activities carried out during the Project, a sample of the ANR sites was selected for a rapid assessment during the project completion review mission. The objective was to assess if ANR had been successful in initiating regeneration, and if so, to what extent. B. Methodology 4. The extent of area subject to ANR during the Project is provided in Table A2.1. Forestry Department personnel who had participated in ANR operations during the implementation of the Project confirmed that there had been almost no regeneration at these sites prior to the ANR operations.

Table A2.1: Areas Worked Under ANR During SBCP

Year Area (ha) 1999/2000 112 2000/01 1,400 2001/02 1,050 2002/03 1,040

Total 3,602 ANR: Assisted natural regeneration. Source: Mission estimates. 5. Due to resource and time constraints, it was not possible to collect primary data from all ANR sites for the assessment during the project completion review mission. Instead, a selection of sample ANR sites was identified representing three different salinity zones, namely fresh water, brackish water, and saline water. Since the focus of ANR operations had been on

Appendix 2 27

regeneration of Sundri, and since Sundri is least prominent in the saline zone, the sites were selected in the following manner:

(i) three ANR sites in the freshwater zone, (ii) three ANR sites in the brackish water zone, and (iii) one ANR site in the saline zone.

6. In each ANR site, four plots (each measuring 2 meters [m] wide and 20 m long) were established for data collection. The plots were selected by first conducting a reconnaissance of the entire ANR site, so as to locate plots that (i) generally represented the ANR site, and (ii) were well distributed over the given ANR area. A map presenting the location of the sampling sites is given in Figure A2.1. Accordingly, primary data were collected from seven ANR sites consisting of 28 sample plots. Each and every seedling between 0.15 and 3.3 m high that was found in the plot was measured and recorded.

Figure A2.1: Locations of Sampling Sites

Source: Mission estimates.

28 Appendix 2

C. Analyses 7. The height measurements of seedlings were used to ascertain their age, using the assumption outlined in Table A2.2.

Table A2.2: Assumption Regarding Height Class and Age of Seedling

Sl No. Salinity Zone of the ANR Location

Number of ANR Sites

Data Collected from Number of Plots

1 Freshwater zone 3 12 2 Brackish water zone 3 12 3 Saline water zone 1 4 Total 7 28

ANR: assisted natural regeneration. Source: Mission estimates. 8. Accordingly, the following information was generated on the number of species and age class distribution of plants in each hydrological zone.

Table A2.3: Average Number of Seedlings per Hectare by Age Class in Different Hydrological Zones

Number of Seedlings per Hectare by Age Class

Species 1 year 2 years 3 years

More than 3 years

A. Freshwater Zone Sundri 39,646 6,042 4,500 208 Gewa 4,792 917 125 0 Goran 1,542 1,021 0 0 Amur 333 375 21 0 Others 1,521 229 333 0 B. Brackish Water Zone Sundri 9,583 3,396 1,333 0 Gewa 3,792 875 271 0 Goran 9,854 2,688 42 0 Amur 2,000 521 104 0 Others 5,708 417 125 0 C. Saline Water Zone Sundri 563 750 250 0 Gewa 1,563 188 0 0 Goran 3,375 813 0 0 Amur 688 0 0 0 Others 0 0 0 0

Source: Mission estimates. 9. The data in Table A2.3 was plotted against the ideal number of seedlings at different age classes and is presented in figures A2.2 to A2.4.

Appendix 2 29

10. Figure A2.2 indicates the following.

(i) At present, the total number of seedlings at age 1 is close to the ideal. (ii) At present, the total number of seedlings at age 2 is less than the ideal. These

were the seedlings that sprouted in the second year of ANR operations and suggests that there may have been some problems hindering the growth and regeneration of seedlings in the second year of ANR operations.

(iii) At present, the total number of seedlings at the age of 3 is almost close to ideal. These are the seedlings that regenerated in the first year of ANR operation.

(iv) At present, the total number seedlings at the age of 3 and above is far below the ideal. These were seedlings that sprouted or regenerated while the ANR operation was not practiced.

(v) The behavior of Sundri is very close to the observations stated above.

Figure A2.2: Age-Class Distribution in Freshwater Zone

-

0

10,000

20,000

30,000

40,000

50,000

60,000

0 1 2 3 4 5 6 7 8 9 10

Age in Years

Num

ber/h

ecta

re

Gewa Goran Amur

Others Total

Sundri

Ideal

Source: Mission estimates.

30 Appendix 2

11. Figure A2.3 indicates the following.

(i) At present, the total number of seedlings at age 1 is less than ideal although not by much.

(ii) At present, the total number of seedlings at age 2 is less than ideal. (iii) At present, the total number of seedlings at the age of 3 has the similar trend as

that of age 2, but their number is much lower than ideal. These are seedlings that regenerated in the first year of ANR operation. Sundri regeneration was more successful than Goran regeneration during the first year of the ANR operation. In the second year, however, the regeneration of Sundri declined. In this brackish water zone Goran regeneration appears to be more sustainable.

(iv) At present, the total number seedlings at the age of 3 and above is almost zero. These were seedlings that sprouted or regenerated while the ANR operation was not practiced.

(v) Of all these species, Goran exhibits a better trend under ANR operations.

-5,000 0

5,000 10,000 15,000 20,000

25,000 30,000 35,000 40,000 45,000 50,000

2 4 6 8 10

Age in Years

Num

ber/h

ecta

re Goran

Other

Ideal

Species

Gewa Sundri

Amur

Total

Figure A2.3: Age-Class Distribution in Brackish Water Zone

Source: Mission estimates.

Appendix 2 31

12. Figure A2.4 indicates the following:

(i) At present, the total number of seedlings at age 1 is less than ideal, although the trend in age class distribution is similar to that of the ideal.

(ii) At present, the total number of seedlings at age 2 is far below the ideal. (iii) At present, the total numbers of seedlings at the age of 3 were seedlings that

regenerated in the first year of ANR operation. Their number is almost zero, which means that the impact of the first year of the ANR operation was negligible.

(iv) At present, the total number seedlings at the age of 3 and above is almost zero. These were the seedlings that sprouted or regenerated while the ANR operation was not practiced.

(v) Of all these species, Goran exhibits a better trend since the ANR operation.

Figure A2.4: Age-Class Distribution in Saline Water

-5,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0 2 4 6 8 10

Age in Years

Num

ber/h

ecta

re Species

Sundri GewaGoranAmurOthers Total

Ideal

Source: Mission estimates.

32 Appendix 2

D. Conclusions 13. The conclusions from this limited sample of sites and data are as follows.

(i) In general, the data suggest that ANR operations can have a positive impact on regeneration, especially of Sundri in freshwater zones.

(ii) ANR operations appear to have enhanced regeneration in brackish water zones in general. Goran appears to have benefited most from the ANR operations in this hydrological zone.

(iii) The ANR operation in the saline zone has had some positive impact on regeneration of Goran and, to a lesser extent, of Gewa. In general, ANR operations have had a negligible impact on regeneration of Sundri in the saline zone.

14. The overall conclusion is that ANR operation has had some positive impact on enhancing the regeneration of mangrove species, particularly in freshwater zones and to a lesser extent in brackish water zones. Regeneration in saline zones does not appear to have benefited from ANR operations. It is also evident that ANR operations cannot be undertaken as a one-off exercise (in this case, implemented over 3 years). In order to be sustainable, ANR operations may need to be carried out over a longer period of time.

Appendix 3 33

ANALYSES OF THE PERMANENT SAMPLE PLOT DATA FROM THE SUNDARBANS RESERVED FOREST

A. Background 1. The Sundarbans Reserved Forest (SRF) possesses a variety of flora and fauna which need to be managed sustainably by harmonizing development with conservation efforts. Regular monitoring of the Sundarban resources is essential for sound management. To this end, in 1984/85 it was decided to establish a series of permanent sample plots (PSPs) throughout the SRF to collect data on resource stocks and trends on a regular basis. The activity was supported by a project of overseas development assistance. One hundred and twenty PSPs were established, each measuring 100 meters (m) x 20 m, covering 0.2 hectares (ha). The PSPs were distributed using statistical principles of sampling, in a manner that they cover all the important variability of the SRF (Figure A3.1).

Figure A3.1: Distribution of Permanent Sample Plots in the Sundarbans Reserved Forests

PSP = permanent sample plots. Source: Mission estimates.

34 Appendix 3

2. The first recording of data was done during 1986/87, aided by the aerial photographs of 1984. However, the Forest Department has not been able to collect data from these PSPs on a regular basis due to the paucity of funds and human resources. As a result, only five measurements (with irregular intervals) were taken during the last 20 years and those do not cover all PSPs.

3. The institutional responsibilities of data collection and subsequent analysis were not very well defined by the Forest Department. The Management Plan Division under the Khulna Circle is responsible for collecting data from the PSP, whereas the resource information management system (RIMS) unit at the Dhaka office of the Forest Department is responsible for entering the data and performing any required analyses. The split responsibilities caused mismanagement, lapses in completing the necessary tasks, and even the misplacement of data.

B. Objective of the Study

4. During the project completion review mission, it was decided to analyze the PSP data to obtain an assessment of the major trends of trees and volume of wood (by species) in the SRF.

C. Trend Analyses of Wood Volume (by Species)

5. As indicated in Table A3.1, data in the RIMS corresponds with measurements that were recorded on five different occasions. Of the five measurements, data recorded in connection with M2 and M3 are incomplete. In both the cases, data pertaining to height and/or the diameter at breast height (DBH) are mostly missing.

Table A3.1: Measurements Recorded in the Resource Information Management System (RIMS) to date

Duration of Measurement Measurement Number Starting Date Finishing Date

1 First Measurement (M1) 26 January 1986 29 December 1987 2 Second Measurement (M2) 17 April 1988 12 December 1989 3 Third Measurement (M3) 17 April 1990 26 September 1991 4 Fourth Measurement (M4) 16 April 1994 22 April 1995 5 Fifth Measurement (M5) 05 January 1998 02 November 1999

Source: Forest Resources Management Project, Forest Department, Government of Bangladesh.

6. Based on the available data, frequency tables were prepared by diameter class (DBH class) in intervals of 10 centimeters (cm) and height class in intervals of 5 m. The results were used to determine the Most Frequent Diameter Class and Most Frequent Height Class for all species as a whole, and by individual species (i.e., Sundri, Gewa, and Others). Trees measuring less than 10 cm at DBH or less than 5 m high were considered to be poles or saplings and not trees. Accordingly, these were omitted in measuring timber volume.

Appendix 3 35

D. Diameter-Class Frequency 7. Table A3.2 indicates that in all cases (with one exception1) the most frequent diameter class of trees in the SRF is 10–20 cm. Accordingly, the average DBH used for computation of the timber volume was 15 cm (mid-value of 10–20 cm).

Table A3.2: Diameter Class Distribution of Trees Species

Diameter (cm) Species Measurement Wise

Tree Count (no. of trees) 0 to

<10 10 to <20

20 to <30

30 to <40

40 to <50 >50

All- 1986/87 44,631 32,460 10,841 1,153 137 26 14All- 1988/89 47,316 34,642 11,266 1,206 154 30 18All- 1990/91 6,476 4,126 1,988 298 48 10 6All- 1994/95 31,655 21,270 9,338 915 93 17 22All- 1998/99 46,971 31,961 13,491 1,217 223 48 31

Sundri- 1986/97 16,040 10,903 4,285 804 48 0 0Sundri- 1988/89 16,734 11,389 4,464 830 51 0 0Sundri- 1990/91 3,237 2,089 934 198 16 0 0Sundri- 1994/95 11,858 7,345 3,732 728 46 4 3Sundri- 1998/99 16,677 10,663 5,043 870 93 6 2

Gewa- 1986/87 25,349 19,256 6,018 74 1 0 0Gewa- 1988/89 26,894 20,509 6,304 79 1 0 1Gewa- 1990/91 2,884 1,901 970 13 0 0 0Gewa- 1994/95 19,013 13,517 5,423 71 2 0 0Gewa- 1998/99 27,904 19,737 8,026 130 6 0 5

Others-1986/87 3,242 2,301 538 275 88 26 14Others-1988/89 3,688 2,744 498 297 102 30 17Others-1990/91 355 136 84 87 32 10 6Others- 1994/95 784 408 183 116 45 13 19Others- 1998/99 2,390 1,561 422 217 124 42 24Source: Mission estimates.

E. Height-Class Frequency

8. Table A3.3 indicates that the most frequent height class of tree species in the SRF is 5–10 m. Accordingly, the average height used to estimate the volume of timber was 7.5 m.

Table A3.3: Height Class Distribution of Tree Species Height (m) Species

Measurement Wise

Tree Count

0 to <5

5 to <10

10 to <15

15 to <20

20 to <25

25 to <30 >30

All- 1986/87 435 0 187 158 65 25 0 0All- 1988/89 0 0 0 0 0 0 0 0All- 1990/91 0 0 0 0 0 0 0 0All- 1994/95 32,524 3,929 18,244 5,740 735 586 67 9All- 1998/99 46,617 3,524 32,948 8,140 1,322 557 114 12

1 M3 for “other” species. This was considered as an outlier and was therefore dropped from the calculation of the

timber volume.

36 Appendix 3

Height (m) Species Measurement Wise

Tree Count

0 to <5

5 to <10

10 to <15

15 to <20

20 to <25

25 to <30 >30

Sundri- 1986/87 273 0 62 125 61 25 0 0Sundri- 1988/89 0 0 0 0 0 0 0 0Sundri- 1990/91 0 0 0 0 0 0 0 0Sundri- 1994/95 12,097 1,245 6,555 3,025 647 558 64 3Sundri- 1998/99 16,563 788 10,438 3,812 973 478 72 2

Gewa- 1986/87 147 0 122 24 1 0 0 0Gewa- 1988/89 0 0 0 0 0 0 0 0Gewa- 1990/91 0 0 0 0 0 0 0 0Gewa- 1994/95 19,356 2,309 14,460 2,537 43 6 0 1Gewa- 1998/99 27,881 2,030 21,637 3,995 212 3 0 4

Others- 1986/87 15 0 3 9 3 0 0 0Others- 1988/89 0 0 0 0 0 0 0 0Others- 1990/91 0 0 0 0 0 0 0 0Others- 1994/95 1,071 375 443 178 45 22 3 5Others- 1998/99 2,173 706 873 333 137 76 42 6

Source: Mission estimates.

9. The number of trees per hectare in each DBH category (exceeding 10 cm) is required for the purpose of computing the volume per ha. The values obtained from the RIMS are presented in Table A3.4 and graphically illustrated in Figure 3.2.

Table A3.4: Number of Trees per Hectare from Permanent Sample Plots Data (PSP)

Tree typea Measurement Year All Sundri Gewa Others

Number of PSPs Visited

1986/87 507.13 214.04 253.88 39.21 120.001988/89 528.08 222.71 266.04 39.33 120.001990/91 652.78 318.89 273.06 60.83 18.001994/95 633.23 275.18 335.12 22.93 82.001998/99 625.42 250.58 340.29 34.54 120.00

a Diameter >10 cm Source: Mission estimates.

Appendix 3 37

10. The volume computation was based on the following equations:

Vol2 Sundri = 0.00006083*D^1.9631*H^0.827 Vol2 Gewa = (0.0004218*D^2)-(0.002032)-(0.2506/H) Vol3 Other Species= D^2*H*3.14*0.489909711596962/40000 Where D = DBH in cm (15 cm) and H = Height in m (7.5 m) Form Factor3: 0.489909711596962 Volume of all species = Vol Sundri + Vol Gewa + Vol Others

2 Volume function of FRMP inventory 1997 is used. 3 Form factor that has been derived during the National Forest Assessment, Bangladesh (FAO 2007) exercised

under FAO project TCP/BGD/3001.

Figure A3.2: Number of Trees per Hectare (All Species)

0 100 200 300 400 500 600 700

1986/87 1988/89 1990/91 1994/95 1998/99

Num

ber /

hec

tare

Measurement in Years Source: Mission estimates.

-

300.00

400.00

1987 1989 1991 1995 1999

Gewa OthersSundri

200.00

100.00

0

Figure A3.3: Number of Trees per Hectare in the SRF

Num

ber /

hec

tare

Source: Mission estimates.

Measurement in Years

38 Appendix 3

11. Using these volume equations and the number of trees per hectare in Table A3.4, the volume per ha of all species and by key species was estimated as shown in Table A3.5 and illustrated in Figure 3.4.

Table A3.5: Species-Wise Volume of Wood – All Species and Key Species (m3)

Item M1: 1986/87 M2: 1988/89 M3: 1990/91 M4: 1994/95 M5: 1998/99 PSPs Visited 120 120 18 82 120All Species 31.67 32.97 41.09 39.45 38.90Sundri 14.03 14.60 20.90 18.04 16.43Gewa 15.10 15.82 16.24 19.93 20.23Others 2.54 2.55 3.95 1.49 2.24PSP = permanent sample plots. Source: Mission estimates.

-

5.00

10.00

15.00

20.00

25.00

M1-1987 M2-1989 M3-1991 M4-1995 M5-1999

GewaSundri Others

Figure A3.5: Species-Wise Volume of Wood in the SRF

Measurement in Years

SRF = Sundarbans Reserved Forest. Source: Mission estimates.

Volu

me

(m3 )

Figure A3.4: Volume (m3) per Hectare for All Species

0 5

1015202530354045

1987 1989 1991 1995 1999

Measurement in Years

Volu

me

/ hec

tare

Source: Mission estimates.

Appendix 3 39

F. Trend Analysis of Species Structure 12. The percentage of major species as recorded from PSP measurements is shown in Table A3.6 and graphically illustrated in Figure A3.6.

.

Table A3.6: Percentage of Major Species in the SRF (%)

Item Sundri Gewa Others

M1-1987 42.21 50.06 7.73

M2-1989 42.17 50.38 7.45

M3-1991 48.85 41.83 9.32

M4-1995 43.46 52.92 3.62

M5-1999 40.07 54.41 5.52

SRF = Sundarbans Reserved Forest. Source: Mission estimates.

13. The data suggests that the composition of the species in the SRF is changing. The proportion of Sundri and other species is decreasing while the proportion of Gewa appears to be increasing. This is reinforced by the structural composition of species found during each measurement.

0%

10%

20%

30%

40%

50%

60%

0 1 2 3 4 5 6

SundriGewa Others Poly. (Sundri)Poly. (Gewa) Poly. (Others)

Figure A3.6: Percentage of Major Species in the SRF

SRF = Sundarbans Reserved Forest. Source: Mission estimates.

Number of species

Perc

enta

ge

40 Appendix 3

Table A3.7: Species-Wise Number of Stems Against Each of the Five Measurements

Number of Stems (per hectare) Species 1986/87 1988/89 1990/91 1994/95 1998/99 Gewa 42 45 32 53 55 Sundri 28 28 36 32 33 Goran 1 2 0 2 3 Baen 1 1 1 0 1 Amur 1 1 1 1 1 Keora 1 1 1 0 1 Passur 1 1 0 1 1 Kankra 0 0 0 0 1 Total per hectare 75 79 71 89 96

Source: Mission estimates.

G. Conclusions and Recommendations 14. The analyses indicate that Sundri is declining in the SRF, while Gewa and Goran appear to be increasing.

15. The PSPs in the SRF are a very sound basis for determining the ecological changes over time. At present, the data collection, management, and analyses are severely neglected in Forest Department operations. The Forest Department needs to put more effort into data collection and analysis to ensure that future planning processes are based on scientific information.

Appendix 4 41

PALLI KARMA-SAHAYAK FOUNDATION SUNDARBANS BIODIVERSITY CONSERVATION PROJECT

PROGRESS REPORT JUNE 2004

Name of NGO Number of Members

Number of Loanees

Total Disbursement

(Tk)

Recovery Rate (%)

1 Padokhep 1,718 1,713 10,903,000 99.822 Annesa Foundation 853 686 6,689,000 99.683 Sangram 1,566 1,129 9,325,000 99.474 Sangkalpa Trust 5,485 1,481 20,084,000 100.005 BRIC 1,152 952 8,472,000 100.006 PPC 480 380 2,387,000 100.007 Sakelor Janno Kailan 1,189 651 7,835,000 98.978 Saplaful 1,024 900 3,792,000 91.079 Help 332 258 1,315,000 100.0010 Bridge 2,761 1,631 7,652,000 98.0511 Unnayan 252 155 138000 100.0012 Naboloka 0 0 0 013 Dak Dia Jai 3,578 1,400 11,115,000 99.9614 Life Association 1358 1033 7,027,000 100.0015 SUS 3,815 1,268 3,834,000 99.8416 Unnayan Procesta 1,488 1,302 6,014,000 99.4017 MASUK 1,639 822 5,683,000 99.6118 Noabenki 5,509 2,954 34,369,000 99.6519 Hilful Fuzul 682 540 3,705,000 100.0020 Prodipon 2,222 1,661 9,437,000 90.1721 Setu

Bangladesh 1,387 1,010 2,470,000 99.03

22 PSS 0 0 0 023 Head Bangladesh 0 0 0 024 BRAC 19,049 9,890 72,543,900 99.43 Total 57,539 3,1816 239,339,900 99.08BRAC = Bangladesh Rural Advancement Committee, BRIC = Bangladesh Resource Improvement Center, NGO = nongovernment organization, PPC = Palli Punargathon Club, PSS = Parashmani Seba Sangstha, SUK = Samaj Unnayan Kendra, SUS = Satkhira Unnayan Sangstha. Source: Project completion review mission.

.

42 Appendix 5

Components NDF PKSF Beneficiaries NGO Government ADB GEF Total

Part A. Effective Organization of SRF 0.00 0.00 0.00 0.00 5.05 9.97 1.55 16.57 Part B. Biodiversity Conservation and Sustainable Res Mgt 0.00 0.00 0.00 0.00 5.86 9.40 1.72 16.98 Part C. Socioeconomic Development of the Impact Zone 0.00 6.77 3.76 1.91 4.06 11.35 0.16 28.01 Part D. Ecotourism Development and Environmental Awareness 0.00 0.00 0.00 0.00 0.46 0.79 2.04 3.29 Part E. Technical Advisory Group, Monitoring, and Studies 0.00 0.00 0.00 0.00 0.11 4.26 6.73 11.10 Part F. KNM Effluent Treatment Plant 4.52 0.00 0.00 0.00 0.53 0.00 0.00 5.05 Subtotal 4.52 6.77 3.76 1.91 16.07 35.77 12.20 81.00 Service Charge 0.00 0.00 0.00 0.00 0.00 1.23 0.00 1.23

Total 4.52 6.77 3.76 1.91 16.07 37.00 12.20 82.23

Components NDF PKSF Beneficiaries NGO Government ADB NET GEF Total

Part A. Effective Organization of SRF 0.00 0.00 0.00 0.00 5.05 8.99 0.98 1.55 16.57 Part B. Biodiversity Conservation and Sustainable Res Mgt 0.00 0.00 0.00 0.00 5.86 8.48 0.92 1.72 16.98 Part C. Socioeconomic Development of the Impact Zone 0.00 6.77 3.76 1.91 4.06 10.24 1.11 0.16 28.01 Part D. Ecotourism Development and Environmental Awareness 0.00 0.00 0.00 0.00 0.46 0.71 0.08 2.04 3.29 Part E. Technical Advisory Group, Monitoring, and Studies 0.00 0.00 0.00 0.00 0.11 3.84 0.42 6.73 11.10 Part F. KNM Effluent Treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Subtotal 0.00 6.77 3.76 1.91 15.54 32.27 3.50 12.20 75.95 Service Charge 0.00 0.00 0.00 0.00 0.00 1.23 0.00 0.00 1.23 Total 0.00 6.77 3.76 1.91 15.54 33.50 3.50 64.98 77.18

FINANCING PLAN

($ million)

Table A5.1: Original Financing Plan

ADB = Asian Development Bank, GEF = Global Environment Facility, GOB = Government of Bangladesh, NDF = Nordic Development Fund, PKSF = Palli Karma-Sahayak Foundation, GON = Government of Netherlands, NGO = nongovernment organizations, SRF = Sundarbans Reserved Forest. Source: Project completion review mission estimates.

Table A5.2: Revised Financing Plan

ADB = Asian Development Bank, GEF = Global Environment Facility, GOB = Government of Bangladesh, NDF = Nordic Development Fund, PKSF = Palli Karma-Sahayak Foundation, GON = Government of Netherlands, NGO = nongovernment organizations, SRF = Sundarbans Reserved Forest. Source: Project completion review mission estimates.

Appendix 6 43

Foreign Local Total Foreign Local Total Foreign Local TotalExchange Currency Cost Exchange Currency Cost Exchange Currency Cost

Part A. Effective Organization of SRF 4.03 9.45 13.48 4.03 9.45 13.48 2.02 1.26 3.28 Part B. Biodiversity Conservation and Sustainable Resource Management 3.91 9.36 13.28 3.91 9.36 13.27 0.25 1.88 2.13 Part C. Socioeconomic Development of the Impact Zone 2.11 22.55 24.66 2.11 22.55 24.66 0.86 10.01 10.88 Part D. Ecotourism Development and Environmental Awareness 0.95 1.74 2.69 0.95 1.74 2.69 0.03 0.07 0.10 Part E. Technical Advisory Group, Monitoring, and Studies 8.75 0.79 9.53 8.75 0.79 9.54 4.69 1.72 6.42 Part F. KNM Effluent Treatment Plant 3.07 1.32 4.39 0.00 0.00 0.00 0.00 0.00 0.00

Total Base Cost 22.82 45.21 68.03 19.75 43.89 63.64 7.86 14.94 22.80 Physical Contingencies 2.10 2.43 4.53 1.99 2.31 4.30 0.00 0.00 0.00 Price Contingencies 1.58 6.85 8.43 1.50 6.50 8.00 0.00 0.00 0.00 Service Charge 1.23 0.00 1.23 1.23 0.00 1.23 0.13 0.00 0.13 Total 27.74 54.49 82.23 24.47 52.70 77.17 7.98 14.94 22.93

Components

Appraisal Project Cost Estimates Actual Project CostsRevised Project Cost Estimates

PROJECT COST ($ million)

KNM = Khulna Newsprint Mills. Source: Project completion review mission estimates.

44 A

ppendix 7

No. Item 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total

01 Civil Works 0.00 621,114 1,466,033 520,227 338,257 0.00 184,144 0.00 0.00 3,129,775

02 Vehicles 0.00 11,104 332,289 0.00 0.00 0.00 0.00 0.00 0.00 343,393

03 Equipment 0.00 549,773 344,854 156,319 62,542 0.00 0.00 0.00 0.00 1,113,488

04 Marketing 0.00 0.00 14,553 2,486 0.00 0.00 0.00 0.00 0.00 17,039

05A Overseas Training 0.00 0.00 0.00 52,746 206,330 0.00 0.00 (86,758) 1,339 173,657

05B Local Training 0.00 38,931 410,642 0.00 0.00 225,109 0.00 0.00 0.00 674,682

06 Consulting Services 0.00 644,551 582,320 334,378 0.00 61,458 0.00 0.00 0.00 1,622,707

07 Incremental O&M 0.00 24,951 404,900 56,189 11,949 0.00 0.00 0.00 0.00 497,989

08 Service Charge 0.00 9,051 24,582 56,811 35,987 0.00 0.00 0.00 0.00 126,431

09 Unallocated 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

99A Imprest Account - FD 0.00 0.00 0.00 0.00 1,184,834 0.00 0.00 0.00 (1,184,834) 0.00

Total 1,899,475 3,580,173 1,179,156 1,839,899 286,567 184,144 (86,758) (1,183,495) 7,699,161

Category

LOAN UTILIZATION BY YEAR

($)

FD = Forestry Department, O&M = operation and maintenance. Source: Project completion review mission estimates.

Appendix 8 45

Activity I II III IV I II III IV I II III IV I II III IV I II III IV I II III I II III I II III I II III

Part A: Effective Organization of the SRF

Sundarbans Management Unit

Sundarbans Stewardship Commission

Stakeholder Advisory Council

Upgrade Infrastructure

Part B: Biodiversity Conservation and Sustainable Resource Management

Forestry

Aquatic Resources

Wildlife

Integrated Conservation Management

Part C: Socioeconomic Development of the Impact Zone

NGO Social Mobilization, Microenterprise Management, and Training

Social Forestry

Rural Development

Part D: Ecotourism and Environmenal Awareness

Construction of Basic Public Infrastructure

Environmental Awareness Program

Part E: Technical Advisory Group, Monitoring, and Research Studies

Part F: Khulna Newsprint Mill (KNM) Effluent Treatment Plant a (Dropped from the Project)

Advisory Technical Assistance - Options Study of KNM

Annual Review * * * * * * * * * *

Midterm Review *

Completion Review *

1999 2000 2001 2002 2003IV

2004IV

2007IVIV

2005 2006

PROJECT IMPLEMENTATION SCHEDULE

a Subject to results of the technical assistance. NGO = nongovernment organization, SRF = Sundarbans Reserved Forests. Source: Project completion review mission.

46 Appendix 9

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement

Status of Compliance

Particular Covenants

The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 12 months after the end of the related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures) all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonable request.

Article IV, Section 4.06 (b)

Partly complied with. Forest Department – audit reports for FYs 1999/00 to 2001/02 were submitted. Financial statements from FY 2002/03 onwards were never submitted to the Auditor due to unavailability of an accounts officer to prepare the financial statements. Local Government Engineering Department –audit reports for FYs 1999/00 to 2003/04 have been submitted.

The Borrower shall furnish, or cause to be furnished to ADB all such reports (including a report on the midterm review to be carried out in accordance with para 26 of Schedule 6 to the Loan Agreement) and information as ADB shall reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof, (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of the agencies of the of the Borrower and the international balance-of-payments position of the Borrower; (v) financial and economic conditions in the territory of the Borrower and the part thereof; and (vi) any other matters relating to the purposes of the Loan.

Article IV, Section 4.07 (a)

Complied with.

Without limiting the generality of the foregoing, the Borrower shall furnish or cause to be furnished, to ADB semi-annual reports on the carrying out of the Project and on the operation and management of the Project facilities.

Article IV, Section 4.07(b)

Partly complied with. Submission of progress reports ceased after the consultants were demobilized in 2003.

Promptly after physical completion of the Project, but in any event not later than 3 months thereafter or such later date as may be agreed for this purpose between

Article IV, Section 4.07 (c)

Complied with.

Appendix 9 47

Covenant

Reference in Loan

Agreement

Status of Compliance

the Borrower and ADB, the Borrower shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under this Loan Agreement and the accomplishment of the purposes of the Loan. Organizational Arrangements a) Project Execution Agency The Forest Department (FD) will be the Executing Agency for the Project. FD will appoint a full-term CEO (PD). The terms of reference for the CEO (PD) shall include appropriate university level qualifications and extensive experience in the implementation of foreign assisted projects. The CEO (PD) will have necessary delegated responsibility and authority to manage the personnel under the Project and Project funds including recruitment of consultants and contract negotiations.

Schedule 6, para. 1

Partly complied with. The PD had no delegated responsibility and authority to manage the personnel under the Project.

(b) Sundarbans Management Unit (SMU) Prior to the Effective Date, a SMU, headed by the CEO (PD), shall be established within the FD for the purpose of Project implementation, and shall be based at Khulna. The SMU will have the overall responsibility for administration, implementation, monitoring, reporting and coordination of activities in the SRF and the Impact Zone. The SMU will maintain close and effective links with the World Conservation Union responsible for independent conservation monitoring, the SSC, the SAC, LGED and other key institutions.

Schedule 6, para. 2

Partly complied with. The SMU had not been fully functional since its establishment in 1999 due to lack of key personnel and unclear lines of authority between the PD and CF Khulna. In an effort to have a fully functional and authoritative project management entity, Sundarbans Management Wing (SMW) was established within FD in Dhaka to replace the SMU. The SMW was headed by the PD. Despite this, however, the PD had not been delegated the overall management of the Project.

The Integrated Resource Management Policy/Program Committee, will comprise the CEO (PD), the head of the operational circle (see para 4), and the heads of the following 4 central divisions (i) Liaison, Extension and Education division, (ii) Revenue Division, (iii) Administrative, Finance and Support Services Division, (iv) Database Management, Monitoring and Research Operations Division.

Schedule 6, para. 3

Not complied with.

Appendix 9

48

Covenant

Reference in Loan

Agreement

Status of Compliance

Within SRF, field operations will be organized into a Sundarbans Operational Circle, having jurisdiction over the terrestrial forest and aquatic resources in SRF. A Conservator of Forests will head the Sundarbans Operational circle.

Schedule 6, para. 4

Complied with.

The Sundarbans Operations Circle will be divided into four divisions: East Sundarbans Division, with responsibility for the management of all wood and non-wood resources in East Sundarbans. It will be headed by a Deputy Conservator of Forests, and have its own field staff of qualified and experienced Range Officers, Forest Rangers, Foresters and Forest Guards.

Schedule 6, para. 5(i)

Complied with.

West Sundarbans Division, with the same responsibilities as the East Sundarbans Division but within West Sundarbans instead of East Sundarbans. It will be headed by a Deputy Conservator of Forests, and have its own field staff of qualified and experienced Range Officers, Forest Rangers, Foresters and Forest Guards.

Schedule 6, para. 5(ii)

Complied with.

Aquatic Resources Division, responsible for all operations of aquatic resources management. This will include development and enforcement of aquatic and fisheries regulations, based on sustainable resource utilization criteria, survey data and analysis undertaken by the Project. A Deputy Conservator of Forests (Fisheries) will head the circle. The division will have its own field staff of qualified and experienced Aquatic Resources Forest Rangers, Aquatic resources Inspectors and Guards, supported by the necessary field staff.

Schedule 6, para. 5(iii)

Complied with during implementation. The unit was dissolved after the Project’s closure.

Wildlife Conservation and Tourism Promotion Division, comprising a Wildlife Conservation and Management Subdivision, and a Tourism Promotion Subdivision. A Deputy Conservator of Forests trained in wildlife conservation and management will head it.

Schedule 6, para. 5(iv)

Complied with during implementation. Presently called “Wildlife and Nature Conservation Division” in Khulna.

(c) LGED LGED, through its Project director, will be responsible for the overall planning, supervision, implementation and monitoring of social infrastructure development program, such as village water supplies and sanitation, in the Impact Zone.

Schedule 6, para. 6

Complied with

Appendix 9 49

Covenant

Reference in Loan

Agreement

Status of Compliance

(d) NGOs The NGOs to be selected for Part C of the Project shall be selected according to the procedure and criteria agreed upon with ADB under the FSP. However for those NGOs utilizing microfinance for income generating activities, PKSF shall select NGOs as partner organizations, according to its established criteria for microfinance.

Schedule 6. para. 7

Complied with. However, the selection criteria were changed and the NGOs recruited under the project provided both social and microfinance services.

Participating NGOs will be fully familiarized with the Project approach at a start-up workshop to be organized by ADAB’s Khulna Chapter, with the participation of local and national NGOs.

Schedule 6, para. 8

Complied with.

(e) PKSF The Borrower shall cause PKSF to confirm to ADB its agreement to lend an amount equivalent to US$6,800,000 to participating partner organizations from its own resources at an interest rate of not more than 6.8% per annum. Participating partner organizations will pass on the proceeds of the loan from PKSF for sustainable socioeconomic development activities and microenterprises at the prevailing market rate.

Schedule 6, para. 9

Complied with.

Project Coordination (a) Project Steering Committee (PSC) Within three months of the Effective Date, the Borrower shall establish the PSC for coordination of the Project at a national level. The Secretary, MOEF, shall chair the PSC. The PSC shall comprise representatives from the Borrower’s LGD, Planning Commission, Ministry of Tourism, Implementation Monitoring and Evaluation Division, Economic Relations Division, Finance Division, Ministry of Industry NGO Bureau, FD, LGED, ADAB and PKSF. ADB and other Cofinanciers shall also be represented on the PSC as observers. The PSC shall meet at least once every six months to discuss progress of Project implementation and resolve conflicts, if any.

Schedule 6, para. 10

Partly complied with. The PSC met on 27 March 2001, but has not met since then.

(b) Project Coordination Committee (PCC) A PCC will be organized to provide technical and management guidance to the Project. The PCC will be headed by the CEO (PD); the members of the PCC will include senior officials from FD, PKSF, the participating NGOs, and LGED. The PCC will meet at least quarterly.

Schedule 6, para. 11

Not complied with. PCC was not established.

Appendix 9

50

Covenant

Reference in Loan

Agreement

Status of Compliance

(c) Thana Coordination Committees At the thana level, coordination will be provided by the Thana Coordination Committee chaired by the Thana Nirbahi Officer (TNO), with representatives from NGOs and local concerned government agencies such as the LGED and FD. This committee will meet on a monthly basis and will coordinate the implementation of Project activities, review problems that may arise, and report to the PCC at Khulna.

Schedule 6, Para. 12

Complied with.

Public participation and control over the SRF

(a) Sundarbans Stewardship Committee (SSC) Prior to the Effective Date, the SSC will be established. The SSC will be responsible for addressing the long-term policy issues and providing public oversight for the long-term conservation of the SRF. For this purpose, the SSC shall provide guidance to the SMU as and when necessary. The SSC will comprise not more than 18 members chosen for their knowledge of and/or interest in the future of SRF but without direct, vested interests and will be headed by the Minister of Environment and Forest, the chairman of ADAB and a retired Judge of the Supreme Court of Bangladesh, nominated by the Chief Justice. Of the remaining members of the SSC, three members will be appointed by the Ministry of Environment and Forests, consisting of highly respected and eminent citizens (two males and one female). Nine members will be nominated respectively by: (i) Parliamentary Standing Committee on the Environment; (ii) Member of Parliament from the Sundarbans, nominated by the Speaker, (iii) Bangladesh Chamber of Commerce and Industry; (iv) Bangladesh Environmental Lawyers Association; (v) Bangladesh Environmental Journalists Association; (vi) Consortium of Environmental NGOs; (vii) Dhaka University; (viii) Khulna University; and (ix) SAC. Representatives of three other civil institutions may be added to the SSC with the prior approval of ADB.

Schedule 6, para. 13

Partly complied with. The SSC was constituted and met in early 1999 to comply with loan effectiveness conditions. Thereafter, the SSC was inactive until it was reconstituted in 2002. The SSC met 3 times during the Project period – once in 2002, 2003, and 2004. In all these meetings, no policy agenda or issues have been discussed.

Members will receive suitable honoraria and their expenses will be covered, initially by the Project, for each day they undertake on behalf of SRF. The term of office of each member shall be three years non-renewable.

Schedule 6, para. 14

Not complied with.

The SSC will be served by a small Secretariat, provided by the MOEF, which will prepare studies and policy briefs for SSC consideration and endorsement to the government of the Borrower. The SSC will also receive regular independent conservation monitoring reports from the World Conservation Union. The SSC will be established through an Executive Order.

Schedule 6, para. 15

Partly complied with. Although 3 meetings were convened by the SSC during implementation, no policy agenda had been discussed in those meetings.

Appendix 9 51

Covenant

Reference in Loan

Agreement

Status of Compliance

(b) Stakeholders Advisory Council (SAC) Representatives of the various local user groups will form a SAC that will work with the SMU. The SAC shall liaise with SMU through the Liaison, Extension and Education Division of the SMU. The SAC shall include members from groups representing fisherfolk, woodcutters, honey collectors, tourist operators, FD staff, timber merchant, shrimp aquaculturists, local residents and women’s groups.

Schedule 6, para. 16

Partly complied with. The SAC was formed in 2004 as a condition for lifting loan suspension. Furthermore, SAC members were nominated by the Minister, MOEF, and therefore not representative of local user groups.

Implementation Schedule

The Project will be implemented over a period of seven years. Consultant recruitment for the TAG will be undertaken during the first year, as will training of LGED, FD, PKSF and other staff, NGO selection, and the commencement of participatory processes. By the end of year four, a comprehensive midterm review of the Project will be carried out.

Schedule 6, para. 17

Partly complied with. The Project was implemented from 1999 to 2003. No new activities were carried out under the Project following loan suspension in September 2003.

Community Organization and Group Development Activities NGOs and appropriate local research institutions such as University of Khulna will carry out baseline socioeconomic surveys of the 17 thanas. This will be followed by community meetings by NGO staff to explain the Project approach and objectives, and group formation, including women’s groups, and informal resource user/extractor groups. In addition, formation of local community organizations (LCO), such as women’s groups, village development groups, will also be undertaken by NGOs.

Schedule 6, para. 18

Complied with.

NGOs, PKSF, SMU will ensure development of microenterprise activities, and credit to group members (including both resource user/extractor groups and LCOs), along with parallel savings activities, SMU shall enter into formal agreements with the resource user/extractor groups, using the model agreements proposed pursuant to FSP as guidelines. LCOs will be registered under appropriate legislation, to enable them to receive funds, and carry out works agreed upon by the communities for village infrastructure development and maintenance. Resource user/extractor groups shall be federated into national organizations.

Schedule 6, para. 19

Partly complied with. Federation of resource user/extractor groups was not done because of loan suspension.

Training will be provided to: Resource user/extractor group members in the Project objectives the objectives for group formation (such as SRF protection, maintenance, and alternative livelihood development), community groups (e.g. improving their

Schedule 6, para. 20(a)

Complied with.

Appendix 9

52

Covenant

Reference in Loan

Agreement

Status of Compliance

access to social services, and infrastructure), and in community participation for planning, implementation, and management of infrastructure and services. NGOs will be responsible for training, as well as organizing technical training by LGED; Resource user/extractor groups in sustainable extraction techniques, management practices, rules and regulations to be formed by the SMU for sustainable resource management (conditions for licensing, levels of extraction, permissible equipment), self-regulation, and management of activities. The training will be by SMU, and NGOs; and

Schedule 6, para. 20(b)

Not complied with.

All groups and LCOs in microcredit management and microenterprise development. This training will be by NGOs, PKSF, SMU and other technical agencies. Environmental awareness education among the communities will be provided by NGOs working closely with the SMU.

Schedule 6, para. 20(c)

Partly complied with.

Monitoring of group development, microcredit management, microenterprise development, poverty reduction, WID and gender and development, levels of social development, resource extraction norms and social enforcement will be done by local research institutions and ADAB. Social surveys will be conducted annually by local institutions and NGOs.

Schedule 6, para. 21

Not complied with.

Technical Advisory Group

Consultants will be engaged to create a Technical Advisory Group (TAG). The TAG will (i) establish baseline information and criteria for sustainable practices, draft sector plans and integrated conservation and management plans, and assist in developing a self-sustaining management system, including the development of market based instruments for access to SRF resources; (ii) assist the FD to retrain staff and help focus its activities to more effectively conserve the SRF, and to serve the needs of its primary stakeholders; and (iii) train resource users and community representatives to engage in ecotourism related activities. Specific training and support will also be included for FD, LGED and NGO staff with respect to organization of resource users into groups, women in development issues, and specific conservation issues. The TAG will provide intensive in-country training for Project personnel.

Schedule 6, para. 22

Partly complied with. Complied with as to the creation of a TAG. However, the baseline information system had not been established.

Appendix 9 53

Covenant

Reference in Loan

Agreement

Status of Compliance

Monitoring Studies And Evaluation

A. Organizations Monitoring and evaluation of the Project will be carried out by (i) ADB, FD and LGED in accordance with ADB’s Benefit Monitoring and Evaluation Handbook, (ii) PKSF in accordance with its recording and evaluation systems already in place and (iii) the World Conservation Union will submit an independent annual report on the status of the conservation and management of the SRF and its biodiversity.

Schedule 6, para. 23

Complied with.

B. Studies Studies and analysis by the TAG, other consultants and contracted agencies in Bangladesh will include, amongst others: (i) forestry research into Sundri top-dying disease to assist in understanding and possibly counteracting the widespread natural degeneration, as well as research into mangrove regeneration, habitat adaptability and regeneration of Goran, Golpatta and Gewa; (ii) aquatic resource assessments and analysis of existing exploitation levels, and better understanding of the habitats of endangered species, as inputs for developing fisheries plans; (iii) wildlife-related studies of tiger ecology, marine turtles, otters, etc. as inputs for wildlife planning; (iv) development of a remote sensing system for monitoring ecological changes; (v) ecotourism-related studies of visitors; and (vi) surface water modelling regarding aspects of water changes, salinity and pollution.

Schedule 6, para. 24

Complied with.

C. Inspection and certification service Independent inspection and certification of SRF resources use shall be undertaken through the system designed under Part E of the Project.

Schedule 6, para. 25

Not complied with.

D. Review Annual monitoring reviews will be jointly carried out by the FD, LGED, ADB and Cofinanciers. A comprehensive midterm review will be carried out in the fourth year of implementation. The purpose of the review will be to evaluate the actual progress of the Project; implementation procedures; procurement methodology; Benefit Monitoring and Evaluation activities; management and coordination functions, and related activities of PKSF and the implementing NGOs; the performance of the consultants; and related matters. The Implementation, Monitoring and Evaluation Division of the Ministry of Planning will participate in the midterm review. Following the review, corrective measures as appropriate will be introduced to remedy and identified weaknesses.

Schedule 6, para. 26

Partly complied with. Complied with as to annual monitoring reviews, not complied with as to monitoring of the benefit monitoring and evaluation activities. The Monitoring Evaluation Division of the Ministry of Planning did not participate in the MTR. No corrective measures were introduced to remedy the identified weaknesses.

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Covenant

Reference in Loan

Agreement

Status of Compliance

Legal And Institutional Reform A restructuring and staff redeployment plan for the FD, as agreed by ADB and the Borrower, shall have been implemented by 31 March 1999.

Schedule 6, para. 27

Not complied with.

The amendments to the Forest Act (1927), as agreed with ADB shall be introduced in Jatiya Sangsad (National Parliament) within six months of the Effective Date.

Schedule 6, para. 28

Complied with.

Environmental Measures Starting from the Effective Date, the maximum annual allowable harvest of SRF resources shall be within the following sustainable levels as estimated by FRMP: (i) Sundri: 43,000m3, (ii) Gewa: 53,000m3. These levels shall be verified, and if necessary, shall be adjusted by the TAG. For all other natural resources, including forest products, non-forest products and aquatic resources, the TAG shall determine the sustainable annual extraction levels.

Schedule 6, para. 29

Partly complied with. Complied with as to the maximum annual allowable harvest of SRF resources, but not complied with as to the verification of sustainable level.

The Borrower shall ensure that KNM is managed and operated in such a way that the use of SRF resources by KNM is within the sustainable limits specified in paragraph 29 above.

Schedule 6, para. 30

No longer applicable. KNM’s operations were suspended in 2000 due to lack of funds for repair and maintenance of machineries.

MOEF and the Ministry of Industry of the Borrower shall agree, within six months of the Effective Date, on a 4-year plan to phase out completely the use of Gewa by KNM.

Schedule 6, para. 31

Complied with. The Government agreed to cease using Gewa in the mill from the fourth year – 2003 – of the SBCP.

The licensing for the use of SRF resources shall be limited to the annual sustainable levels referred to in paragraph 29 above. The fees for the use of such resources shall be set on the basis of market determined rates, including for KNM and for tourism.

Schedule 6, para. 32

Not complied with.

The plans for forestry, aquatic resources, wildlife, tourism and integrated conservation management to be prepared with the assistance of TAG shall be reviewed by the Borrower in consultation with ADB. The Borrower, as agreed between the Borrower and ADB, shall implement the final plans.

Schedule 6, para. 33

Partly complied with. The plans have been prepared. Before the plans could be integrated into one management plan for implementation, however, the loan was suspended.

The technical assistance defined as KNMTA in the Recital of the Loan Agreement shall be completed within the first year of the Project.

Schedule 6, para. 34

Complied with. The KNMTA was completed August 2000 with the submission of the TA consultants’ Final Report.

ADAB = Association of Development Agencies in Bangladesh, FD = Forest Department, FRMP = Forest Resources Management Project, KNM = Khulna Newsprint Mills, KNMTA = Khulna Newsprint Mills Technical Assistance, LCO = local community organization, LGED = Local Government Engineering Department, NGO = nongovernment organization, MOEF = Ministry of Environment and Forests, PCC = Project Coordination Committee, PSC = Project Steering Committee, PKSF = Palli Karma-Sahayak Foundation, SAC = Stakeholder Advisory Council, SMU = Sundarbans Management Unit, SRF = Sundarbans Reserved Forest, SSC = Sundarbans Stewardship Commission, TAG = Technical Advisory Group, TNO = Thana Nirbahi Officer.

Appendix 10

55

TECHNICAL ASSISTANCE COMPLETION REPORT Division: Agriculture, Natural Resources and Social Services Division, South Asia Department

TA No., Country and Name Amount Approved: $570,000

3104-BAN: Study of Future Options for Khulna Newsprint Mills Revised Amount:

Executing Agency: Ministry of Industry (MOI)

Source of Funding TASF

Amount Undisbursed: $162,734.72

Amount Utilized: $407,265.28

TA Approval Date: 27 November 1998

TA Signing Date: 24 October 1999

Fielding of Consultant: 16 January 2000

TA Completion Date Original: 30 September 1999

Actual: 29 August 2000

Account Closing Date Original: 30 September 1999

Actual: 30 April 2003

Description

The Khulna Newsprint Mill (KNM) was the only large-scale user of Gewa (Exococaria agallocha) wood from the Sudarbans Reserved Forest (SRF). The requirement of KNM historically was between 100,000 - 120,000 cubic meters per year, whereas the sustainable yield from SRF was between 40,000 - 50,000 cubic meters. As a result of overharvesting, the Gewa growing stock in the SRF had shown a rapid decline since the mid-eighties and was projected to be exhausted by around 2010. Furthermore, the KNM discharged untreated effluent into the Bhairab River, which flowed into the SRF. The effluent loads affected downstream water users and was harmful to marine life in the SRF.

The Government of Bangladesh requested ADB to include provision in the Sudarbans Biodiversity Conservation Project (the Project) for equipping the KNM with effluent treatment and de-inking facilities. However ADB considered that the proposal by itself would not solve the problems at KNM as it had been operating inefficiently since the mid-1970s due to: (i) poor quality of equipment and machinery; (ii) poor quality of pulp generated from Gewa (the main raw material); (iii) poor management and technical capacity; and (iv) insufficient funds for reinvestment in capital assests and routine operation and maintenance of facilities. Therefore while ADB agreed provisionally with the request to upgrade the effluent facilities at the KNM, it was decided that an advisory technical assistance grant would be provided to more broadly assess the future options for the KNM.

Expected Impact, Outcome and Outputs

The objective of the TA was to assess the future options for the KNM. The TA aimed to undertake: (i) a detailed evaluation of KNM’s financial position with and without reforms; (ii) assess the financial position of the Bangladesh Chemical Industries Corporation (BCIC), the owner of the KNM; and (iii) assess KNM’s management capacity. In addition the TA aimed to assess strategies to contain Gewa use to within sustainable limits and the growth and demand for newsprint.

Delivery of Inputs and Conduct of Activities

The TA was adequately formulated as it was designed on the basis of previous work conducted by ADB on the KNM.1 An international consulting firm (the Consultant) from Finland (associated with national experts) was engaged in accordance with the ADB’s Guidelines on the Use of Consultants to carry out the TA. The international consulting team comprised 7 specialists (total of 31.85 person-months) and the national consulting team comprised 4 specialists (total of 16.25 person-months). The TOR were prepared on the basis of the previous work carried out by ADB, where the scope of the study had been identified and discussed. It was originally envisaged that the TA was to be implemented from mid-April 1999 to end September 1999. Due to the delay in signing of the TA letter, TA activities commenced only from mid-January 2000. The TA consultants performed well under the difficult circumstances of having to assess a state-owned enterprise and make objective recommendations concerning its future. ADB’s performance was also satisfactory particularly in terms of guiding the consultants.

Evaluation of Outputs and Achievement of Outcome

The TA was controversial since it was designed as an objective analysis of a state-owned-enterprise. The inevitable conclusion reached by the consultants was that that the KNM should be shut down. However this was both socially

1 Poyry, Jaakko. 1998. Assessment of Options for the Khulna Newsprint Mill.

Appendix 10

56

and politically sensitive particularly in an election year. Instead of accepting the findings, the Government accused the consultants of poor work quality. For their part the consultants were somewhat aloof in explaining the methodology and analytical techniques applied in the TA. The consultants submitted a Final Report in August 2000 in which the recommendations for KNM were modified to be less objectionable to the Government. By this time, financing of the effluent treatment plant of the KNM was no longer included in the Project due to the Nordic Development Fund rescinding its offer of cofinancing. Therefore the Final Report was accepted but its recommendations were not implemented by the Government. The KNM eventually ceased to function in October 2002, due to the problems identified prior to the Study and which the Study aimed to address.

Overall Assessment and Rating

Overall, the TA was assessed as being partly successful. The consultants performed well under difficult conditions (including strike action and riots). The analysis of future options for the KNM was objective and technically sound. However the consultants and ADB were unable to convince the Government to implement the main recommendation, of deactivating the KNM, due to the political sensitivity involved with option. Alternative options were considered but found to be financially non-viable by the consultants. Their views were challenged by the Government. Consequently, no action was taken after completion of the TA.

Major Lessons

The scope of the TA was to undertake a comprehensive assessment of future options for the KNM, in view of the fact that the KNM activities had a significant bearing on the sustainable management of SRF resources. A TA of this scope should ideally have been carried out during the design phase of the Project rather than during the implementation phase. Measures to address the problems caused by the KNM should have been identified on the basis of the TA findings and recommendations. Instead, in this case, the Project design included provision to support an effluent treatment plant for the KNM even before the TA was carried out (although the RRP did note that the component would be subject to the outcome of the TA). As it transpired, the main recommendation by the TA consultants was to deactivate the KNM. It was somewhat fortuitous that the KNM effluent plant component had already been deleted from the Project scope by then (due to withdrawal of the cofinancing commitment by NDF). If not, the recommendations of the TA would have been at odds with the scope of the Project.

Recommendations and Follow-Up Actions

No follow up action is recommended since the KNM no longer functions.

Prepared by: ___Sanath D. B. Ranawana_______________ Designation: ____Natural Resources Economist________