Forests for Prosperity Project (P163271) Project Fact Sheet 1. Name of The Project: Himachal Pradesh Forests for Prosperity Project 2. Sectoral Area: Forest Management, Rural Livelihoods, Nature- based Tourism, Sustainable, Hydropower, Sustainable Water Supply. 3. Total Financial Outlay: US$100 million (proposed) 4. Details of the external development agency: The World Bank (amount sought US$ 80 million) 5. Financial Arrangements: The Project is proposed as a results- based investment project finance.

Total Counterpart funds being made available by Total external Implementing State Central Others, if Assistance Agency Govt. Govt. any US $ 80 _ US$ 20 US$ 100 million Million million

80 % 20 %

6. Project Duration: Five Years (2018-19 to 2022-23) 7. Location of Project: State of Himachal Pradesh (Sutlej Basin) 8. Previous phases: The current project is a follow up to the recently conclude development policy financing to the State for Policy and Institutional reforms to support inclusive green growth and sustainable development. 9. Statutory clearance required: N.A. 10. Statutory clearance received: N.A.

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Description: By making forest service provision programs more effective and strengthening the roles of communities and the private sector in forest-related activities, the Project will contribute to the states’ economic development goals, but also lay the foundation for broader benefits. Improving the effectiveness of afforestation programs will, for example, improve the effectiveness of Central government allocations to the state for afforestation such as those made under the Compensatory Afforestation Management and Planning Authority (CAMPA) fund. Given that, as per the 14th Finance Commission, 7.5 percent of the allocations to states are based on the state’s forest quality, by helping HP improve its forest quality, the Project will help increase the fiscal allocations to the state and thereby the overall state budget for development programs. Improved forest quality will also lead to increased carbon sequestration, helping HP meet its state climate policy goals, and contribute to the achievement of ’s NDC targets.

Background: The current project is a follow-up to the recently concluded development policy financing to the State for policy and institutional reforms to support inclusive green growth and sustainable development. The financing amongst other issues, facilitated the state to develop a comprehensive Catchment area Plan for River Sutlej, which required an outlay of Rs 1440 crores (year 2011 levels) against financial provision of Rs 950 Crores , from all available CAT Plans. This left a gap of Rs 490 Crores for complete treatment of the catchment of River Sutlej and Bank proposed to fill this gap and help develop a model Catchment Treatment Plan for the whole river basin. The contribution of forest in state economic development and rural livelihoods has been limited. Between 2002 and 2012, area under dense forests decreased by 4.3 % and under open forest increased by 2.1 %. Because of this decline in forest quality, Himachal Pradesh was allocated only 2.43% of the 7.5% allocation made on the basis of forest cover under the 14th Finance Commission. The neighbouring state of Uttarakhand with a similar endowment of forest land received 4.77% of the share instead. Sediment continues to reduce the efficiency of hydropower facilities in the state. In 2012, stoppage of power generation due to high levels of silt in the river was said to cause a daily loss of Rs. 9 crores for the Nathpa Jhakri project. Decline in water discharges from forest landscapes have resulted in several drinking water supply schemes becoming dysfunctional and thus forcing the state to look at more distant sources of water, increasing the cost of water provision. Finally, local communities have seen limited benefits from forests, The Timber Distribution System has made timber available to rural households at nominal prices but has also been plagued by governance issues. Similarly, while the state’s NTFP resources carry the potential to supplement the incomes of rural households, this sector has largely remained underexplored. Moreover, human-wildlife conflicts are increasingly leading to a loss of lives and causing damage to livestock and crops.

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COMPONENTS Component 1. Improving forest sector service provision by HPFD (30 M)

Sub-Component 1.1: Improve forest and pasture management

This sub-component will finance a subset of key investments, including the procurement of goods, to improve forest and pasture management, forest quality, and community involvement, such as:

(i) Development of nurseries and improvement of seed orchards using state-of- the art technologies. (ii) Establishment of new plantations and enrichment planting. (iii) Digitalization of forest boundaries. (iv)Infrastructure for forest fire detection and equipment for forest fire suppression. (v) Improvement of pastures management.

Sub-Component 1.2 – Strengthen technical capacity This sub-component seeks to improve the technical capacity at the HPFD, the availability of data/information, and planning and monitoring to help both generate increased revenues for the state and ultimately improve the quality of forest cover a. Strengthen forest management information systems (FMIS): b. Improve planning and training:

Sub-component 1.3. Manage catchment areas to maximize forest ecosystem services for hydropower

CAT plans effectiveness. To improve the effectiveness of comprehensive CAT plans, this sub-component will also support the development and implementation of a model CAT plan, the development of CAT planning approaches, targeted training of officers, investments in monitoring stations and silt laboratories, and investments to implement CAT plan activities. This activity has the potential to be replicated in and Bhutan and in other hilly terrains.

Specifically, under this sub-component, the Project will finance technical assistance and investments focused on the Sutlej basin (one of the five river basins in the state) to strengthen the flow of forest ecosystem services to forest-dependent sectors, such as hydropower. This basin has a length of over 200 km and an area of more than 50,000 hectares.

Both multi-layered plantations (grass, herbs, shrubs, and trees) and existing forests in the catchment will be managed to maximize ecosystem service flows. This sub-component will support water recharge to improve the hydrology of the catchment, such as: (i) forest spring rehabilitation, including spring monitoring, (ii) spring catchment protection and management program, and (iii) water harvesting based on investments in afforestation to improve percolation, infiltration, and year- round ground water availability. PPP schemes will be explored as part of these

3 potential activities. PES schemes that include benefit sharing arrangements with local communities will also be piloted in these communities to encourage their participation and identify successful models.

Operationalization of PES policy. Payments for Ecosystem Services appears as one of the incentives for stakeholders to contribute to forest management. This sub- component will support (i) the development of rules and regulations for the Payment for Ecosystem Services Policy, (ii) the design of the system to incentivize communities to participate in forest protection and plantation management,

Component 2. Incentivizing communities to better manage forests (USD 15M)

This component aims to remove barriers to and create incentives for improved forest management at the level of communities and private sector through a set of activities addressing institutional, governance, and technical constraints. Enhanced livelihoods benefits are expected to incentivize communities to contribute to improved forest quality. A clear policy environment will unlock private sector participation. These activities will also signal an institutional change at the level of the HPFD, getting it out of revenue generation where private sector and communities can play a role.

An NTFP sector strategy will underpin this component to catalyze the potential of NTFPs and support local livelihoods by securing communities’ access rights and increasing value-addition through improved harvesting, processing, storage, and marketing of selected NTFPs. (i) Provide technical and financial support to communities and individuals to initiate and manage NTFP-based enterprises. This could include startup capital through microfinance schemes, training, and other business development support. The specific financial mechanisms and their implementation will be analyzed during Project preparation. (ii) Support the development and piloting of value chains and markets for specific NTFPs, such as medicinal and aromatic plants (e.g., karoo, patish, dioscoria, ban kakri, mushakbala, chirata, chaura, chukhri, salam panja, satabar, banhaldi, kalmegh, gelaoi, nag chattri, etc.), including via certification, standards, targeted investments, etc.

Component 3. Project management and institutional coordination (USD 5M)

Subcomponent 3.1. Project management This subcomponent will finance Project management activities (mainly through consultant services), which will be undertaken by a Project Implementation Unit (PIU) established in the HPFD.

Subcomponent 3.2. Institutional coordination This subcomponent will support, though the financing of recurrent expenditures, the creation and maintenance of the Project’s Steering Committee (SC) as a key vehicle to ensure multi-sectoral coordination and participation among the HPFD .

Implementing Agency:

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The Project will be implemented by the HP Forest Department. However, as forest produce ecosystem systems services that supports number of other sectors such as hydropower, irrigation & water supply and rural development, collaboration with relevant sector departments will also be important.

Target Area: • Circles (5): Mandi, Rampur, Bilaspur, and Shimla WL • Divisions (10): Kinnaur, Sarhan W/L, Anni, Karsog, Shimla, Shimla W/L, , Kotgarh, Rampur, Shimla Urban • Ranges (19): Kalpa, Moorang, Rupi WL, Kilba, Rampur, Nankhari, Bahali, , Kotgarh, Bhajji, Dhami, Pangana, Seri, Magru, Karsog, Chowai, Chandi WL, Darlaghat, Shimla Urban

Project area Map:

Implementation:

• Funds allotted by state .. 80% reimbursable • CPD office at Una • The works are to be undertaken by field officers of HPFD • Fund Flow through treasury .. no need for society • Procurement approvals from WB through Systematic Tracking of Exchanges in Procurement ( STEP)- fully functional

Outcome of the project The project is expected to achieve the following short-term and long –term outcomes: In short-term it is expected to: 5

(i) Benefit household by increasing household incomes from appropriate management of non-timber forest product (medicinal plants, etc.) payments for ecosystem services, and from improved nature- based tourism. (ii) Benefit other sectors due to increased community participation and private sector engagement in (a) creating employment opportunities in the forest produce and nature-based tourism sectors; (b) improved efficiency of hydropower sector through reduction in the flow of sediment and regulation of water flows, particularly during lean months: (C) helping in improved water quality helping in catering to the needs of drinking water & irrigation; (iii) Benefit the State through increased revenues from royalty and other payments related to marketing of non-timber forest products, nature based tourism, increase in more reliable and cheap drinking water supply and improved performance of irrigation and hydro power sectors. In the long term the project is expected to improve forest cover and forest quality, improve the economic efficiency of the hydropower sector, help reduce poverty among rural household and support total economic development in the state.

Present Status • Environmental assessment – GB Pant institute Kullu • Social Assessment – Samaj Vikas , Hyderabad • Project Procurement Strategy for Development ( PPSD)- completed • GeM- approved source for procurement-functional • Results Framework – finalized • NTFP study conducted • Project Implementation Plan (PIP) / Operational Manual- bids finalized • Budget heads created …separate heads for all 3 components • 25 Forest nurseries identified in 5 districts for modernization with plan prepared & approved • Orientation workshop for field staff • Fire Danger rating Index workshop –(FSI) with field officers • Preparation advance ready for dispersal (Rs 16 crore)

Vehicles required:

Sr No Office No of Vehicles remarks 1 CPD Office 5 Govt vehicle 2 DPD Shimla 1 Taxi 3 Circle Offices 5 Taxi DFO offices 10 Taxi 4

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Range Offices 19 (i)Taxi, 5 (ii)Pick up Utility vehicle Note: Vehicles have already been agreed & approved by WB.

Staff requirement:

Sr. Category of post Equivalent to Posts No. proposed for sanction A. Forest Department/ other deptt 1 Chief Project Director CCF & above 1 2 Deputy Project Director DFO/ACF 3 3 Supdtt. Gr II Sudtt. Gr II 1 Senior Assistant Senior 2 4 Assistant 5 Forest Ranger/Deputy Rangers Ranger/Dy.R 1 6 Forest Guards Forest Guard 1 7 Class IV Class IV 2 Total A 11 B. From HPNRRMS/ other sources 1 Sr.SMS (Social Safeguard ) Professional 1 2 Sr. SMS - (Environment) Professional 1 Sr.SMS -Monitoring and Professional 1 3 Evaluation) 4 SMS -Procurement Professional 1 5 SMS -NTFP- Agri Business Professional 1 SMS-Communication Professional 1 6 /community dev./Training 7 SMS-Information-tech Professional 1 8 Computer Accountant Professional 42 Sr Scientific professional (GIS) Professional 1 9 in GIS lab of HPFD 10 Technical Assistant (GIS) Professional 3 Jr. Programmer/ Project Professional 5 11 Associate (IT) 12 Facilitator Professional 38 13 Drivers Class-III 5 Workman/maintenance staff Professional/ 14 14 (Class IV) Class IV 15 Sweeper (Part Time) Professional 2 Total B 117 G. Total (A+B) 128

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