Document of The World Bank FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: ICR00004889
IMPLEMENTATION COMPLETION AND RESULTS REPORT ON LOAN IBRD-82150
IN THE AMOUNT OF US$80 MILLION
FROM THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR THE HUNAN FOREST RESTORATION AND DEVELOPMENT PROJECT (P125021)
September 30, 2019
Public Disclosure Authorized
Sustainable Development Practice Group Public Disclosure Authorized East Asia And Pacific Region
CURRENCY EQUIVALENTS
Exchange Rate Effective March 31, 2019
Currency Unit = Chinese Renminbi (CNY) US$1 = 6.71 CNY 1 CNY = US$0.15
FISCAL YEAR January 1 - December 31
Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Regional Director: Benoit Bosquet Practice Manager: Ann Jeannette Glauber Task Team Leader(s): Jin Liu ICR Main Author: David Kaczan
ABBREVIATIONS AND ACRONYMS
CO2 Carbon Dioxide CPF Country Partnership Framework CPMO County Project Management Office CPS Country Partnership Strategy EIB European Investment Bank EIRR Economic Internal Rate of Return EMDP Ethnic Minority Development Plan EMP Environmental Management Plan FAO Food and Agriculture Organization of the United Nations FIRR Financial Internal Rate of Return FM Financial Management FYP Five Year Plan GIS Geographic Information Systems ha Hectare IBRD International Bank for Reconstruction and Development ISR Implementation Status and Results Report m3 Cubic Meters M&E Monitoring and Evaluation MTR Mid-term Review OP Operational Policy PDO Project Development Objective PLG Project Leadership Group PMP Pest Management Plan PPMO Provincial Project Management Office RF Results Framework SA Social Assessment
TABLE OF CONTENTS
DATA SHEET ...... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 5 A. CONTEXT AT APPRAISAL ...... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ...... 9 II. OUTCOME ...... 11 A. RELEVANCE OF PDOs ...... 11 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 12 C. EFFICIENCY ...... 17 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 18 E. OTHER OUTCOMES AND IMPACTS ...... 18 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 21 A. KEY FACTORS DURING PREPARATION ...... 21 B. KEY FACTORS DURING IMPLEMENTATION ...... 22 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ...... 23 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 24 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 26 C. BANK PERFORMANCE ...... 27 D. RISK TO DEVELOPMENT OUTCOME ...... 29 V. LESSONS AND RECOMMENDATIONS ...... 30 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 33 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 46 ANNEX 3. PROJECT COST BY COMPONENT ...... 47 ANNEX 4. EFFICIENCY ANALYSIS ...... 48 ANNEX 5. BORROWER COMMENTS ...... 51 ANNEX 6. SUPPORTING DOCUMENTS ...... 52 ANNEX 7. SUPPORTING DATA: FOREST ECOLOGY AND MODELS ...... 53 ANNEX 8. THEORY OF CHANGE ASSUMPTIONS ...... 55 ANNEX 9. IMPLEMENTATION ARANGEMENTS AND DISBURSEMENT ...... 56 ANNEX 10. OVERVIEW OF M&E ...... 57 ANNEX 11. MAP OF PROJECT AREA ...... 59
The World Bank Hunan Forest Restoration and Development Project (P125021)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P125021 Hunan Forest Restoration and Development Project
Country Financing Instrument
China Investment Project Financing
Original EA Category Revised EA Category
Partial Assessment (B)
Organizations
Borrower Implementing Agency
International Department, Ministry of Finance Hunan Provincial Forestry Bureau
Project Development Objective (PDO)
Original PDO The project development objective is to enhance the resilience and environmental function of selected ice storm affected ecologicalforest plantations in Hunan Province by increasing forest species diversity and vegetative tree cover in those areas.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
80,000,000 80,000,000 80,000,000 IBRD-82150 Total 80,000,000 80,000,000 80,000,000
Non-World Bank Financing 0 0 0 Borrower/Recipient 35,200,000 35,200,000 35,200,000 Total 35,200,000 35,200,000 35,200,000 Total Project Cost 115,200,000 115,200,000 115,200,000
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing 17-Jan-2013 07-May-2013 04-May-2016 31-Mar-2019 31-Mar-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
KEY RATINGS
Outcome Bank Performance M&E Quality Highly Satisfactory Highly Satisfactory Substantial
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 21-May-2013 Satisfactory Satisfactory 0
02 17-Dec-2013 Satisfactory Satisfactory 0
03 24-Jun-2014 Satisfactory Satisfactory 6.00
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The World Bank Hunan Forest Restoration and Development Project (P125021)
04 28-Dec-2014 Satisfactory Satisfactory 23.37
05 17-Jun-2015 Satisfactory Satisfactory 41.76
06 11-Dec-2015 Satisfactory Satisfactory 51.22
07 20-Jun-2016 Satisfactory Satisfactory 65.76
08 21-Dec-2016 Satisfactory Satisfactory 65.76
09 22-Jun-2017 Satisfactory Satisfactory 75.64
10 24-Dec-2017 Satisfactory Satisfactory 75.64
11 28-Jun-2018 Satisfactory Satisfactory 79.80
12 27-Dec-2018 Satisfactory Satisfactory 79.80
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Agriculture, Fishing and Forestry 97 Agricultural Extension, Research, and Other Support 1 Activities Forestry 96
Public Administration 3 Sub-National Government 3
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 100
Jobs 100
Finance 13
Finance for Development 13
Disaster Risk Finance 12
Agriculture Finance 1
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The World Bank Hunan Forest Restoration and Development Project (P125021)
Urban and Rural Development 37
Rural Development 1
Rural Markets 1
Disaster Risk Management 36
Disaster Response and Recovery 12
Disaster Risk Reduction 12
Disaster Preparedness 12
Environment and Natural Resource Management 100
Climate change 100
Mitigation 50
Adaptation 50
ADM STAFF
Role At Approval At ICR
Regional Vice President: Pamela Cox Victoria Kwakwa
Country Director: Klaus Rohland Martin Raiser
Director: John A. Roome Benoit Bosquet
Practice Manager: Mark R. Lundell Ann Jeannette Glauber
Task Team Leader(s): Jin Liu Jin Liu
ICR Contributing Author: David James Kaczan
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The World Bank Hunan Forest Restoration and Development Project (P125021)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context 1. Despite increased government focus on ecological restoration,1,2 China's forest's faced ongoing deficiencies in quality and resilience. By 2010, the extent of national forest cover had increased substantially, from less than 13 percent of the country's area in 1981 to more than 20 percent.3 Yet the quality of forests remained low due to extensive single-species reforestation, poor species-site matching, poor management, and continued over- exploitation of natural forests.4 Traditional approaches to reforestation were commonly used, where a focus on single species in vast areas of monoculture led to fragile and unstable forest ecosystems, vulnerable to storms, pest infestations, and fires. 2. Compounding this, Central and Southern China suffered from an exceptionally severe ice storm in 2008. The event affected 22 million hectares (ha) of forests and caused direct economic losses of around US$9 billion.5 Hunan was one of the worst affected provinces, with 4.5 million ha of forest (35 percent of the provincial total) and 170 million cubic meters (m3) of timber (43 percent of the provincial total) damaged or destroyed. Besides the losses from foregone timber production, the damaged forest areas were subsequently affected by insect infestation and fires that transformed them into degraded monocultures, grasslands, and bamboo shrublands. These were low value, vulnerable ecosystems, in which the restorative functions of the forest ecosystems had been permanently impaired. 3. With its longstanding relationship with the Hunan Provincial Forestry Bureau (the Bureau), a World Bank team made observations of damaged areas in 2011. An initial comparison between areas of damaged plantation and nearby ecologically diverse protected areas provided clear evidence that species and structural diversity of forests was critical to resilience and recovery. Specifically, the most badly storm-affected forests were monoculture plantations and single-story coniferous forests. By contrast, forests that comprised mixtures of trees species (particularly indigenous species) as well as multiple-story plantations suffered less damage. 4. The Hunan government recognized that investment and a new management approach – specifically, one based on diverse stands of indigenous species – were required to restore the degraded areas. The Bureau begun to shift policies and programs from production-oriented forest plantations towards more sophisticated multifunction forests and environmental landscape management. Significant public resources were earmarked for restoration, and international support in the form of financing and expertise was sought to implement Hunan’s new forestry agenda.
1 “China 2030: Building a Modern, Harmonious and Creative Society.” The World Bank and Development Research Center of the State Council, the People’s Republic of China, citing the World Bank 2007 Country Environmental Assessment. 2 Bryan, B. et al. (2018). China’s Response to a National Land-System Sustainability Emergency. Nature, 559 (7713): 193–204. 3 Ahrends A, et al. (2017). China’s fight to halt tree cover loss. Proc. R. Soc. B 284: 20162559. 4 Demurger, S.; Hou, Y.Z.; Yang, W.Y (2009). Forest management policies and resource balance in China: An assessment of the current situation. J. Environ. Dev.18, 17–41. 5 Hunan Forest Bureau (2019). Completion Report of the Hunan Forest Restoration and Development Project (Client ICR).
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The World Bank Hunan Forest Restoration and Development Project (P125021)
5. The Hunan Forest Restoration and Development Project (the project) was proposed as the centerpiece for this shift. The province approached the World Bank (the Bank) with a request for financing. The proposed project was to address forest resilience to natural disasters and climate variability, and improve the provision of ecosystem services such as soil water retention, soil conservation, and pollution control. Reforestation activities would focus on land legally designated as "ecological forests", land intended for the provision of ecosystem services (water, soil, carbon sequestration) and on which selective timber extraction is permitted but clear-fell harvesting is prohibited. More broadly, the project aimed to develop and promote new silviculture techniques with the potential to influence the forest sector in Hunan and across China long-term.
Figure 1: History and context of Bank engagements in China's Forest sector
6. Supporting the project was a logical step for the Bank's evolving engagement in China's forest sector (Figure 1). The Bank's early involvement supported monoculture timber production, with environmental elements limited to harm minimization. By the early 2000s, Bank projects were incorporating ecological elements in line with evolving national priorities6 and the Bank's perspective globally.7 Projects around this time included components on natural forest management and trials of mixed-species for ecological and carbon sequestration. This trend continued and by 2012 the Bank had prepared projects that focused almost exclusively on environmental outcomes (specifically soil and water) rather than production and employment. In 2013, the Hunan Forest Restoration and Development
6 Hoffmann, S., Jaeger, D., Shuirong, W. (2018). Adapting Chinese forest operations to socioeconomic developments: What is the potential of plantations for strengthening domestic wood supply? Sustainability, 10 (4). 7 The World Bank (2002) Sustaining Forests: A World Bank Strategy. Washington, D.C.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
Project incorporated lessons from both ecologically and production focused predecessor projects, adopting a balanced "multifunction" design for joint ecological and economic benefits. 7. The project was consistent with the Bank’s Country Partnership Strategy (CPS)8 at time of appraisal. As discussed further in Section II.A., improved natural resources management was a component of one of the CPS's three strategic themes: support for greener growth. Within this theme, the CPS called for ecological forestry approaches that could maximize ecosystem health, soil and water conservation, carbon sequestration, and reduce vulnerability to climate change, consistent with project goals. The project was also aligned with the CPS's second strategic theme of inclusive development, via the project's activities specifically designed for disadvantaged regions, and use of consultative implementation modalities (Section II.E.). 8. The policy context was characterized by increasing emphasis on ecological restoration and resilience. The shift to sustainable natural resource management featured in the 11th Five Year Plan (FYP) (2006-2010), and was emphasized further in the 12th FYP (2011-2015).9 The 12th FYP contained forest area and volume indicators (although not quality indicators), called for the use of forests to achieve carbon sequestration goals, and emphasized environmental services from natural resources management.10 While China's policies had changed from traditional plantation management to ecologically-focused management by this time, implementation of this shift remained lagging. 9. The sector context was characterized by increasing demand for forest management techniques for ecological forest areas, as well as rising demand for timber production. In concert with the growing ecological focus (Figure 1) a timber supply gap was developing nationally. Increased prices, along with private forest tenure reforms,11 encouraged collectives and households to raise production, increasing the demand for new productive silviculture techniques. The sector was thus well-suited for an investment that could contribute to the development of new commercial species and techniques that would improve management of ecological forests (that were intended to provide ecosystem services and not be clear-felled) yet could also provide some production for a growing market through selective harvesting. The project's resulting multifunction approach aimed to balance environmental sustainability while generating farmer income from the management of ecological forests.
Theory of Change (Results Chain) 10. The project addressed six key challenges, through two components, to achieve broad outcomes of improved resilience and ecosystem function (Figure 2). 11. Assumptions (A.1 to A.8 in Figure 2) required to support the results chain were realistic and based on contextual understanding developed through the Bank's previous forest projects. These included assuming that seedling survival rates would be sufficient (A.1), that the multifunction, multispecies models12 would exhibit their desired resilience and functional qualities (A.2, A.3), that the community consultation process would be respected and
8 World Bank (2013). Country Partnership Strategy: China 2013-16. 9 Government of China (2012). 12th Five Year Plan. See part VI (chapter 21, 22, and 25). For example, "We will reverse the trend of ecological degradation from the grassroots by implementing major ecological restoration and bolstering natural forest conservation and reforestation." 10 See 12th FYP, chapters 21 and 25 respectively. 11 In 2009 the Central Government extended the contract period for household forest rights to 70 years and allowed borrowing against those forest rights, strengthening incentives for investment in private forestry. 12 A forest "model" is a specific combination of tree species and planting requirements, determined through ecological theory and experimentation, that is expected to grow into a stable system delivering desired ecological functions.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
embraced (A.4), that selective timber extraction would be possible (A.5), that extension would lead to adoption of the project's techniques by farmers (A.6), that there would be demand for indigenous broadleaf species (A.7), and that there would be available markets for the resulting forest products (A.8). All were assessed as reasonable and likely at the time of the ICR, based on the project's experience to date (discussed in detail in Section II.B.). Appendix 7 elaborates on these assumptions.
Figure 2: Theory of Change for the Hunan Forest Restoration and Development Project
Notes: Figure presents a summary of challenges and activities only; specific project activities and outputs are described below. Theory of change depiction was developed ex-post (at time of ICR). 12. The Component II activities were intended to provide the knowledge and institutional capacity required to achieve the planting activities under Component I. They were also intended to ensure the sustainability of plantations, and promote the project's concepts and techniques both within and beyond the project's area. Outcomes (and their associated indicators) from Component II are cross-cutting, meaning that they underpin objectives of resilience and ecosystem function without distinction. Project Development Objectives (PDOs) 13. The project development objective is to enhance the resilience and environmental function of selected ice storm affected ecological forest plantations in Hunan Province by increasing forest species diversity and vegetative tree cover in those areas. Key Expected Outcomes and Outcome Indicators 14. There are two outcomes captured by the PDO: (1) enhanced resilience, and (2) enhanced environmental function. These are achieved through two intermediate outcomes: increased forest species diversity and increased vegetative tree cover, among others. The two PDO-level indicators are: • “Diversity of species and tree structures in replanted or rehabilitated forests” as a basic measure of resilience.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
• “Incremental tree canopy cover in (i) fully replanted forests, (ii) partially replanted forests, and (iii) naturally regenerated forests” as basic measure of enhanced environmental function. Components 15. Component I: Reforestation and Rehabilitation of Damaged Ecological Forest Plantations (cost at appraisal: US$98.22 million; actual cost: US$103.22 million). This involved establishment of locally-adapted mixed stands of conifer and broadleaf indigenous species: a) Reforestation of denuded ecological forest plantations through replanting. b) Rehabilitation of damaged ecological forest plantations, through (i) supplemental reforestation and (ii) assisted natural regeneration. 13 16. Component II: Institutional Support and Technology Enhancement (cost at appraisal: US$11.73 million; actual cost: US$11.70 million) a) Nursery upgrading and planting material development: Improve nursery management techniques, increase seedling production (particularly of broad-leaf indigenous species), and upgrade facilities at three provincial nurseries. b) Forest cooperatives: Strengthen 22 farmer forest cooperatives through provision of office equipment, vehicles, construction of small roads, and technical assistance for development and implementation of forest management plans. c) Research, Technical Service and Extension: Applied research, capacity building and knowledge dissemination, covering: (i) nursery technologies and management, (ii) silvicultural management systems, (iii) ecological forest plantation management, (iv) enhancing and monitoring carbon sequestration in forest plantations, and (v) climate change impacts on forest ecosystems. d) Monitoring and Evaluation (M&E): Establish and operate the project's data collection system. e) Project Management and Institutional Development: Capacity building and institutional strengthening for project management offices (PMOs) at provincial and county levels.
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION
Revised PDOs and Outcome Targets No revision. Revised PDO Indicators No revision. Revised Components 17. No revisions to component activities. Component I financing increased by US$5.08 million, covered by contingency funds budgeted from within the overall project envelope (US$5.05 million) and a transfer of US$0.3 million from component II. Factors contributing to this adjustment are discussed in Section 1.B.
13 Assisted natural regeneration is forest tending that supports germination of natural forest seedlings, supplemented by partial replanting.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
Other Changes 18. Four minor changes were made within the original framework of the project (no restructuring required); these did not affect the theory of change or achievement of project objectives. (1) The area of planting under each forestry model was adjusted (both up or down depending on the model); (2) a larger than planned area of demonstration forest was planted; (3) two nurseries were established under the project rather than three; and (4) the area of production forestry activities (e.g. fruits, nuts, tea-oil crops) in ethnic minority communities was reduced. Rationale for Changes and Their Implication on the Original Theory of Change
19. Plantation areas differed slightly from areas planned at Figure 3: Plantation areas planned at appraisal and appraisal due to farmer preferences. Site-selection achieved at completion occurred through a community participation process in which farmers would nominate the sites and models they 60,000 wished to use. Variation relative to the plan was thus expected. In addition, lower than expected assisted regeneration (model 8, or M8) occurred due to its lower labor requirements (lower labor requirements provided a 40,000 disincentive for uptake - more labor-intensive activities
provided greater earnings). The overall area of reforestation Area Area of planting(ha) and regeneration (i.e. all models) exceeded original targets 20,000 despite variation by model (Figure 3). 20. Two nurseries were established under the project rather than three due to changed financing need. The nursery in 0 Suxian District and the demonstration nursery in the Hunan M1 M2 M3 M4 M5 M6 M7 M8 Total Forest Botanical Garden were upgraded as planned, while Apraisal ICR the nursery in Taoyuan County nursery was dropped from the project. Civil works and equipment procurement were Note and Source: see Annex 7 for model descriptions. Figures undertaken on a shorter timescale with county government compiled from PMO data (project M&E). resources, Bank financing was thus no longer required. 21. The area of demonstration forests was increased due to their effectiveness. The most challenging element of the project was the education and outreach required to convince farmers of the benefits and methods of the project's multispecies approach. Demonstration forests – sites where farmers could observe the forestry models and their management techniques – were found to be a particularly effective education tool and were expanded to one per county (744 ha in total, up from 440 ha at appraisal). 22. The area of economic tree planting (fruits, nuts, and tea-oil) in ethnic minority areas was decreased due to labor and land shortages. Economic tree planting aimed to provide livelihood opportunities in ethnic minority areas. Areas planned at appraisal were scaled back due to: (a) labor shortages caused by rapid economic development in these counties (see also Section V); and (b) and plantation land shortages due to activities undertaken by other government forest programs in these counties. A shortfall relative to plans by mid-term review (MTR) led to an informal (without restructuring) revision of targets that were subsequently fully met.14
14 At Project close, 676 ha of economic planting had been completed (100 percent of the post-MTR target). The initial target was 810 ha (of which 80.4 was completed before MTR). Targets were informally adjusted (i.e. based on agreement between the Bank
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The World Bank Hunan Forest Restoration and Development Project (P125021)
II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 23. The alignment of the project's objectives with Bank strategy is strong. The relevant strategy document at time of completion remained that from the time of appraisal, the CPS of 2013-16.15 As discussed in Section I.A., This CPS included natural resources management as a theme component, and called for ecological forestry approaches that could maximize ecosystem health, soil and water conservation, carbon sequestration, and reduce vulnerability to climate change (desired outcomes of the project). The project also contributed to the CPS's theme of inclusive development, by geographically focusing a proportion of activity on lagging regions and by demonstrating consultative project implementation modalities (see Section II.B.). 24. Alignment is also strong with the Bank's draft Country Partnership Framework (CPF) for 2020-25, despite reorientation of the WBG program for a more selective engagement in China. Future Bank activities are expected to focus on China’s remaining gaps in policies and institutions, with an emphasis on global public goods (particularly environment). One of the Bank's three key engagement areas among a shrinking lending portfolio is the promotion of greener growth via (among others) strengthened sustainable natural resource management (engagement area 3.4), which is closely aligned with the project's objectives. Moving forward, the project's development of silviculture techniques offers large-scale proof-of-concept for multifunction forestry, providing the basis for the next generation of forest investments in China, notably the Forest Ecosystem Improvement in the Upper Reaches of Yangtze River Basin Program-for-Results (P164047). This program is highlighted as a key component of the CPF's environmentally- themed activities. The CPF also notes a parallel operation in Hunan by the European Investment Bank (EIB) that is a direct follow-on to this project (see Section II.E.). 25. The project's objectives remained consistent with policies for forest restoration and development in China at the time of completion. The 12th FYP strongly supported improved natural resource management and ecological protection, and contained forest area and volume indicators (although not quality indicators). The philosophy of "ecological civilization" (which among a wide range of environmental improvements, calls for expansion of forest area and protection16) was first incorporated into this plan. The subsequent 13th FYP (From 2016 to 2020) has further embraced improved forest management within broader ecological programs and policies, and included binding targets on forest cover. 26. The project is directly relevant for China's climate policies. Through its Nationally Determined Contribution under the Paris Agreement, China has pledged to achieve peak greenhouse gas emissions by around 2030 and increase the volume of the nation’s forest stock by 4.5 billion cubic meters relative to 2005.17 The project has a standing tree volume (projected over 30 years) of around 9.6 million cubic meters, and estimated carbon sequestration over the
and the provincial project management office (PPMO); restructuring was considered unnecessary given that no changes in the legal agreement were required. 15 The final version of the subsequent strategy document (Country Partnership Framework (CPF): China) has been delayed and is expected in late 2019; the CPS (2013-16) continues to guide Bank policy while the CPF is finalized. 16 See the 2015 Resolution of China State Council for Promoting Ecological Progress (link). 17 NDRC (2015). China's Intended Nationally Determined Contributions: Submission to UNFCCC (COP21) (link).
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The World Bank Hunan Forest Restoration and Development Project (P125021)
18 same period of over 5 million tonnes of carbon dioxide (CO2). The project is consistent with the National Plan for Climate Change (2014-2020), which emphasizes the need for mixed-indigenous species forests, improved forest tending, and improved stand structure for resilience and adaptation to climate change. 27. The project is also aligned with provincial priorities at time of completion. The Green Hunan Construction Outline of 2012 called for improved forest management for greater forest productivity, quality, and carbon sequestration. The provincial 13th FYP and Hunan Climate Change Plan (2014-2020) proposed the implementation of forestry carbon sink projects, with targets directly linked to the project's actions. There remains a clear need for forest quality improvement efforts in the province.19
B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome Rating: High 28. The project convincingly achieved the two outcomes contained within the PDO – enhanced resilience and enhanced environmental function – through both direct and indirect pathways of impact. The direct pathway was by increasing forest species diversity and vegetative tree cover in project areas (see appendix 7). The indirect pathway was though development and application of new silvicultural techniques, promotion of community participation in ecological forest management, and an increased supply of resilient seedlings (see Theory of Change, Figure 2), achievements that underpin both resilience and ecosystem function through improved forest management. 29. PDO outcomes are multifaceted and partially correlated: increased resilience is driven (and indicated) by many of the same factors as increased environmental function.20 Data collected by the project's M&E program (described in Annex 10) delineates these outcomes and provides evidence of the ways in which they were achieved. For environmental function, these include soil water retention, carbon sequestration, soil erosion, and metals pollution attenuation; for resilience: biodiversity, wood tensile strength, and pest, weed, and disease infestation. 30. Where possible, outcomes are assessed using a control-treatment framework for causal attribution. The RF recorded progress against a static baseline within project sites (see Table 1 and Annex 1). The project's wider M&E program covered some non-project sites in addition to project sites, providing plausible counterfactuals (see Section IV.A. for details on data collection). The combination of data supports a conclusion that the project both achieved its objectives relative to a no-project scenario, and relative to what would likely have occurred under a traditional (monoculture) forest plantation investment.
18 Both calculations by the PPMO. 19 Hunan's forest outcomes lag national averages. Forest quality is low, with average unit area standing volumes around 64 percent of the national average (and 52 percent of the global average). Forest structures are relatively simple, with around two- thirds of the province's forests dominated by conifers. Source: PPMO. 20 The Bank's guidance for the evaluation of resilience‐building operations (2017) defines resilience partially on system function: "climate and disaster resilience is about the ability of individuals, households, communities, institutions or higher-level systems to deal with shocks and stressors without undermining their welfare or functions." In the case of this project, the "community" is the ecological forest community, with functions defined by its ecosystem services.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
Table 1: Overview of results framework outcomes at completion
Baseline Target (informally Actual Percent of target (revised Results Framework Indicator Value revised target*) (complete) target*) achieved Project Development Objective Indicators 1. Number of species introduced by project: 4 40 43 108% 2. Tree canopy cover: (a) in fully replanted forests (%) 0 25 58 232% (b) in partially replanted forests (%) 32 48 61 127% (c) in naturally regenerated forests (%) 24 50 62 124% Intermediate Indicators 1. Area restored or reforested overall (ha) 0 58,900 (61,569) 61,986 105% (101%) (a) in fully replanted forests (ha) 0 27,700 (32,110) 32,651 118% (102%) (b) in partially replanted forests (ha) 0 18,600 (21,921) 21,673 117% (99%) (c) in naturally regenerated forests (ha) 0 12,600 (7,538) 7,662 61% (102%) 2. Upgraded nurseries (number) 0 3 (2) 2 67% (100%) 3. Seedlings produced (number) (million) 0 60.5 94.60 159% 3. Forest cooperatives strengthened 0 22 22 100% 4. Research programs (number) 0 5 5 100% 5. Project management staff trained (person-days) 0 13,800 14,070 128% 5. Forest beneficiaries trained (person-days): 0 60,200 62,294 103% (a) women (person-days) 0 10,100 11,598 148% (b) ethnic minorities (person-days) 3,000 4,960 165%
*Note: See Section I.B. for explanation of shortfalls in intermediate indicators 1.c. and 2 relative to the formal target at appraisal. Neither represent a substantial deficiency, and the Bank agreed to informally revise these targets at MTR. This occurred without restructuring (thus no formal target change is included in the RF). PDO Outcome 1: To enhance resilience – the state of being able to withstand biophysical shocks21 – of selected ice storm affected ecological forest plantations. 31. 61,986 ha of the province's total damaged forest area was restored with multispecies forestry. Denuded and damaged forests have limited capacity to withstand damaging events; replanting improves resilience. The total area reforested or regenerated exceeded the target (105 percent) (Table 1), and it is likely that this area would either have remained in a degraded, low-value state, or have been replaced with vulnerable single-species forest in the absence of the project. The survival rate of planted trees was around 95 percent. While the restored area is not large as a proportion to the storm-damaged area (1.36 percent22), it is substantial in absolute terms, and provided the capacity and technical basis for a much greater reforestation area (which is currently being realized, see Section II.E.).
21 More specifically, resilience is the "capacity of a forest to withstand (absorb) external pressures and return, over time, to its pre-disturbance state. See appendix 7. 22 Based on total damaged area within Hunan of 4,531,200 ha (PPMO data).
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The World Bank Hunan Forest Restoration and Development Project (P125021)
32. The diversity of tree species and structures within these replanted or rehabilitated forests increased. Biologically and structurally diverse forests tend to be more resilient (see appendix 7). Project forest plots contained a mix of between 3-18 newly introduced species, with a weighted plot average across the project of 11 new species.23 Of the 43 species introduced by the project in total (108 percent of the target), 38 were rare species native to Hunan (see list in appendix 7). The number of species used is the highest of any forest project undertaken by Hunan Province to- date. Relative to control plots (and thus likely outcomes under a traditional project), tree diversity was higher, and shrub and herb diversity was lower.24 However, it is expected that over time the diversity of herbs and shrubs will increase along with tree diversity leading to overall more diverse systems in project sites. 33. The incremental tree canopy cover within these forests increased. Tree canopy cover provides protection for the structure and function of the forest within, increasing resilience. Tree canopy cover exceeded targets without exception (Table 1 and Figure 5). Averaging across all project sites, tree canopy cover is estimated to have increased from an average of 14.2 percent at appraisal to 59.5 percent at completion. Tree canopy coverage of all eight models was higher than that of their equivalent control forests. Figure 4: Average occurrence rate across all observed diseases, Figure 5: Incremental tree canopy cover at appraisal pests, and weeds for project forests and control plots. and completion.
50 0.8 Appraisal Completion
40 0.6 target 30 target
0.4 (proportion) 20 target 0.2
10 treatement areas cover Canopy in Average rate occurance (percent) Average
(zero baseline) 0 0 In naturally In partially In fully replanted regenerated replanted forests forests forests Notes and source: M6, a restoration model, has the same control as M2 and M4, which are afforestation models. This is because the M6 monitoring site had very few original trees and so was considered more comparable to an afforestation control site. These models also featured similar mixed broadleaf species (notably phoebe zheman). Figures compiled from PMO data (project M&E). 34. Damage from diseases, pests and weeds was reduced. A direct measure of resilience is the extent to which a forest can withstand attack from harmful organisms that would otherwise reduce the forest's productivity and value. While project M&E data showed that afforestation models had a higher diversity of diseases, pests, and weeds than their equivalent control forests, overall occurrence levels were 29-75 percent lower (statistically significant). Consequent damage was lower also. Two models (M5 and M8) showed greater occurrence levels than their equivalent controls,
23 The project avoided "token" diversity by ensuring that every species comprised at least 10 percent of the total number of trees for each plot. 24 This is likely due to management and forest thinning decisions: a denser canopy layer suppresses shrub and herb growth.
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and in general it is not clear whether restoration models have greater resilience to diseases, pests, and weeds than their degraded non-restored equivalents (Figure 4). However, it was reported by the provincial project management office (PPMO) that this result may be a function of a pest outbreak specific to these models during the project years.25 35. The project's mixed-species models demonstrated improved mechanical wood properties. The project assessed strength and flexibility metrics for Cunninghamia lanceolata (Chinse fir), one of the most common commercial species in Hunan (and the most common species utilized in the project, comprising around a third of plantings). Project M&E data allowed for a comparison of the physical characteristics of Chinese fir raised in a mixed model to those raised in a monoculture. Individuals in mixed models were found to have statically significant higher density (by 8-9 percent), flexural strength (65 to 68 percent), elasticity (71 to 73 percent), and compression strength (11-13 percent) in the main trunk. These improved physical properties are expected to increase the wind and snow resistance of mixed stands relative to traditional monocultures of this commercially important species. PDO Outcome 2: To enhance environmental function of selected ice storm affected ecological forest plantations. 36. Soil erosion rates and runoff rates under the project are substantially lower, and soil water storage capacity higher, than under traditional forest models. Cumulative soil losses over the five-year project period within afforestation model plots (M1-M4) were between 41-44 tonnes per ha compared to rates within traditional (control) stands of 48 tonnes per ha (statistically significant) (project M&E data). This is estimated to have delivered 217,888 tonnes of avoided soil erosion during the project period.26 Correlated with this outcome, five-year cumulative runoff rates were similarly lower for afforestation models (and lower, but not statistically significant, for restoration models) with runoff of 225-243 mm over a five-year monitoring period, compared to 271 mm recorded under traditional (control) stands. Project M&E data also show soil water storage capacity was higher among afforestation models than under traditional (control) stands, and increased over the project period. Reduced runoff and soil erosion are expected to confer water catchment management benefits by reducing siltation and pollution, flooding, and water treatment costs. 37. Soil quality improved on a series of project sites specifically chosen for testing the pollution-mitigation potential of reforestation. While data was not collected in control sites regarding soil quality (and thus conclusions cannot be drawn regarding the benefits of the project's forest models relative to traditional forestry), the project had generally positive effects relative to baseline conditions on contaminated ex-industrial sites. Over the five-year monitoring period, heavy metal contaminants decreased, with consistent reductions across models for lead (7.3-31.2 percent), cadmium (5.0-23.5 percent), zinc (22.2-28.9 percent), and arsenic (17.7-27.5 percent).27 This is of practical significance given relatively high concentrations of cadmium and zinc in the polluted sites at baseline. These positive trends over time occurred as vegetation sequestered soil contaminants, causing reciprocal increases measured in metal concentrations in plant leaves. 38. Carbon sequestration rates were substantial over the life of the project, and long-term are expected to be higher
25 M8 and M5 include enrichment plantings of Liquidambar formosana. An outbreak of a pest specific to this species occurred in 2017 and 2018 in the monitoring site area, disproportionately affecting this model relative to its control. The PPMO believes this was an unusual event. 26 Calculation is based on project M&E data and assumes (1) monitoring sites are representative project-wide, and (2) the counterfactual would be a project with traditional monoculture for afforestation sites (M1-M4), and no reforestation on restoration sites (M5-M8). 27 In absolute terms, average decreases in lead (Pb) were recorded of 31.24 mg kg-1, cadmium (Cd) of 23.46 mg kg-1, zinc (Zn) of 104.56 mg kg-1, and copper (Cu) of 8.87 mg kg-1 for soils in the M1 monitored site over five years. Data is collected as part of the project M&E program by the PPMO. See Annex 10 for details of the M&E program.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
than those under comparable traditional forest models.28 Around 281,000 tonnes of carbon was estimated to be sequestered by project forests within the project period, more than 104,000 tonnes above that expected in ex-ante carbon calculations (due to higher planting density and later timing of thinning). Total expected carbon sequestration over 20 years (including the project period) is over 3.1 million tonnes. Predictions of sequestered carbon after 20 years is between 5 and 14 percent higher than under comparison control forests (see Annex 10, Table A - 4) when the carbon contained in extracted thinnings is included.29 The project thus substantially increased carbon sequestration relative to both baseline and relative to traditional reforestation. Cross-cutting outcomes: institutions and knowledge for resilience and ecosystem function. 39. The project improved knowledge, management and generated more resilient seedlings for ecological forestry. These outcomes (for which evidence is presented below), are proxy indicators of improved resilience and environmental function and represent improvements in forest management that are necessary for the biophysical outcomes described above. They equally underpin outcomes of resilience and ecosystem function. 40. The research program optimized fertilizer regimes, germination and cultivation techniques for the project's newly- developed cultivars. Research activities improved seedling substrates and container shapes for cultivation of indigenous broadleaf species, increasing the survival rate by 7.9 percent relative to traditional techniques (reported by PPMO). The research program refined the project's forest models and establishment techniques (for example, establishing optimal planting densities, fertilizer regimes, and conifer to broadleaf species ratios), delivering extensive scientific output.30 41. The project improved the reported31 skill levels and working efficiency of farmers through promotion of the project's techniques and research findings. Training covered forest design and establishment, financial management, fertilizer use, tending, and pest and disease control, among other topics. 92 percent of surveyed project beneficiaries reported in surveys for the project M&E program that they obtained skills and knowledge from the training, and 85 percent reported that their working efficiency had increased as a result. In addition to formal training, ad hoc field training was provided through a network of demonstration forests that were established by the project in each of the 22 project counties (744 ha in total). 42. The project increased capacity at two provincial nurseries and 22 farmer forest cooperatives. Nursery upgrading increased the supply and quality of resilient indigenous species for project planting areas. A total of 15.5 million seedlings were produced by the upgraded nurseries. The nurseries focused on production of resilient indigenous broadleaf species for which prior to the project there was no known means of cultivation. County nurseries also adopted the project's techniques, resilient species, and quality standards to supply project sites, with a total of 94.6
28 Because most carbon sequestration benefits will occur in the future (as the forest continues to grow), carbon sequestration was both modelled over a thirty-year period as well as calculated for the six-year project period by the PPMO as part of the project M&E program. 29 Thinnings are extracted from the managed project forests two or three times in the first 20 years, and are expected to involve a greater extraction of timber than under traditional ecological forest management (the higher extraction improves forest 3 structure and promote understory regeneration). Carbon content is assumed to be 1.83 tonnes CO2 per m stand volume. Note that these figures are in terms of carbon; there is approximately 3.67 tonnes of CO2 for each tonne of carbon. 30 The project published three handbooks: (1) Cultivation Techniques for Major Indigenous Tree Species in Hunan Province (2) Colored Illustrations of Hunan's Major Indigenous Tree Species and Seedlings, and (3) Sustainable Forest Management Handbook of Hunan Province. In addition, the Project's research activities led to 20 scientific publications (principally in national journals), was granted one patent. The Project's researchers won two science and technology awards (3rd prize Science and Technology Progress Award of Hunan Province; second prize Science and Technology Progress Award of Changsha city). 31 Based on farmer household interviews conducted as part of the project M&E program for social monitoring (see Annex 10).
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million seedlings produced for the project overall (159 percent of target). Forest farmer cooperative capacity was strengthened, with cooperatives able to develop and implement their own forest management plans by project completion, a key instrument for effective and economic silviculture. At completion, 70.54 percent of surveyed households considered the capacity of the forestry cooperatives to have improved. 43. The project further achieved a range of socioeconomic outcomes, not directly contributing to the PDO, described in Section II.E. below. Justification of Overall Efficacy Rating Rating: High 44. The project exceeded all PDO indicators and demonstrated realization of the desired development objectives through a variety of additional metrics. Comprehensive data demonstrate improved resilience through greater species diversity, forest area, forest canopy density, wood strength, and reduced susceptibility to pests, weeds, and diseases. Improved environmental function is indicated through improved soil water retention, reduced erosion, carbon sequestration, and reduced metals contamination. The efficacy of the project is high when assessed under a comparison of the project's outcomes versus baseline (i.e. the project exceeded almost all the targets in its RF), and is also high when compared to likely outcomes under a counterfactual traditional monoculture project (some replacement of the damaged forests would likely have occurred regardless of Bank involvement, and this would likely have used traditional models and techniques). The project’s outcomes are being replicated in non-project areas (see Section II.E.).
C. EFFICIENCY
Assessment of Efficiency and Rating Rating: Substantial 45. Cost-benefit analysis was conducted to reassess the project’s economic viability at completion, covering each plantation model, the nursery investments, and the project overall (see Annex 4). The analysis has adopted the same approach as that used at appraisal for consistency, with the following assumptions and parameters adjusted to reflect the situation at the project closure: (a) a lower bound of carbon sequestration benefit of US$40 per tonne of 32 CO2 per Bank guidelines (versus US$10 per tonne used at appraisal); (b) quantities of major inputs are based on actual expenditures, while the future production projections are made jointly by the project monitoring units and extension workers; and (c) market prices for major inputs and outputs have been updated (in 2018 constant prices) to reflect price trends during the project's life. 46. The economic analysis quantified key environmental benefits, and found an economic internal rate of return (EIRR) of 21.3 percent (higher than the 17.6 percent predicted at appraisal). Benefits quantified in the analysis included: (a) direct production benefits including returns to the production of quality seedlings; (b) carbon sequestration; and (c) the retention of water, soil and nutrients. The project costs cover all incremental expenses under each component, including operations and maintenance costs after project completion. The overall EIRR is higher than the appraisal estimate partially due to the increased shadow price for carbon, but is also higher than the appraisal EIRR if calculated with consistent carbon prices (19.02 percent). It should be noted that other substantial but not-readily-quantifiable
32 World Bank Group (2017). Shadow price of carbon in economic analysis: Guidance note.
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benefits, such as biodiversity conservation, landscape improvements and contribution to agricultural tourism, are not included in the calculation of project EIRR, rendering the economic return estimation conservative. 47. Financial analysis was conducted to evaluate the incentives for beneficiaries to participate in the project, and found a financial internal rate of return (FIRR) of 8.3 percent (slightly lower than estimated at appraisal). The direct production benefits are the incomes and revenues generated by timber (selective harvesting of mature logs), fuel wood and bamboo poles from thinning, harvesting of bamboo sprouts, harvesting red bayberries and nuts from firebreaks and some economic plantations, as well as seedlings produced by the nurseries. The overall FIRR of 8.3 percent, and the FIRRs for individual plantation models at completion (7.8 to 9.2 percent) are slightly lower than estimates at appraisal (8.1 to 10.1 percent) due to input price increases including labor. It should be noted that the loan proceeds were provided as grants to farmers to subsidize the establishment costs of forestation models. As such, all plantation models proved financially attractive to farmers with effective FIRRs for individuals above 12 percent. 48. Project implementation efficiency was high. Most of the project activities were completed well ahead of schedule. The loan was fully disbursed from the Bank over a year ahead of completion (Jan 19, 2018) (see Figure A - 2 in Annex 9). Project management costs (including institutional development activities) were budgeted at appraisal at USD$5.37 million with a further US$2.09 million for M&E (6.49 percent of the total project cost). Actual project management expenditure was lower due to increased use of existing government systems and equipment, and rental car use instead of new purchases.33
D. JUSTIFICATION OF OVERALL OUTCOME RATING Rating: Highly Satisfactory 49. The overall outcome rating is based on a high relevance rating (based on close alignment with Bank and Government priorities), a high efficacy rating (based on achievement of all PDO objectives), and a substantial efficiency rating (based on strong economic and financial returns). The project achieved more than its intended results as measured by multiple metrics, has provided the technical knowledge and infrastructure basis (e.g. nurseries) for multiple follow-on projects (which are underway), and appears to have positively shifted attitudes towards multifunction mixed-species forestry among both officials and farmers. Most activities (including all plantings) were completed ahead of schedule with full disbursement more than a year before completion.
E. OTHER OUTCOMES AND IMPACTS Gender 50. Women participated at higher rates than men in impoverished areas and ethnic minority areas. In total, 35 percent of participating farmers (those who planted seedlings, undertook management actions, and received project payments) were women. Of the project's 8,858 poor34 forest farmers, 51 percent were women, and of the project's 16,517 ethnic minority forest farmers, 72 percent were women. While relatively higher participation by women is to be expected in ethnic minority and poor communities (given that many have a large proportion of men working outside the community), the project represented an economic opportunity for these women who remain in the
33 Reported by PPMO. 34 Poverty status is defined according to the national poverty line, which changes annually. In 2015 the poverty line was US$360 per year (2300 CNY).
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community. Overall, around 82 percent of surveyed participants believed that women's position at home had improved to some extent under the project. 51. There is modest evidence that women's economic empowerment improved under the project. Between 2014 and the midline social survey in 2016 (when the project's labor requirements were highest), the proportion of women with income equal to mens' within their household increased from 10 percent to 21 percent. At project completion, 56 percent of all surveyed participants believed that the project had increased women's employment opportunities (however, there were no substantial changes observed in the proportion of women employed among surveyed participants). Institutional Strengthening 52. Component II focused directly on institutional strengthening, both to ensure delivery of the project's objectives and for improved capacity in forestry activities beyond the project. Key elements included: (a) the nursery upgrades, which increased the number and quality of seedlings available for the forestry sector; (b) the research program, which generated knowledge directly applied in the project and in follow-on projects; (c) the strengthening of forest cooperatives, which could better manage forests for resilience and ecosystem function as a result; and (d) the extension program, which improved farmer skills and attitudes towards multifunction ecological forestry. More detail on institutional strengthening is described in Section II.B. above (where relevant for PDO achievement) and is not repeated here. Mobilizing Private Sector Financing 53. The project contributed to the competitiveness of private forest-related enterprise through improved input materials and technologies, and encouraged in-kind co-investment from private landholders. Around 80 percent of participants were private farmers (contracted either directly, or through cooperatives and forest collectives), who received training in addition to inputs for planting. Landholders were required to co-invest in the project's outcomes in the form of an approximate 20 percent in-kind contribution to the cost of planting. The upgrading of nurseries supported forestry sector supply chains by lowering costs, improving quality, and increasing the variety of high-value timber seedlings available. Ethnic minority communities were permitted to plant production forests (e.g. orchids and tea-oil crops) in addition to ecological forests, which provided opportunities to increase commercial activities, and again required in-kind co-investment (see Box 1 below).
Poverty Reduction and Shared Prosperity
54. The project delivered socioeconomic benefits to households. A total of 146,103 participants from 2,238 villages participated in the project, including 8,858 forest farmers below the poverty line. 85 percent of participating farmer households (who can be considered the project's direct beneficiaries) stated that the project had delivered them economic benefits. 55. The principle source of economic benefit was through jobs provision. Large labor inputs were needed for forest land preparation and planting, with lesser labor needs for ongoing maintenance and protection. Average income from the project during the first year (during planting) was around US$830, decreasing to an average of US$175 in later years (forest patrol and management only).35 Earnings increases may occur in future as thinnings increase in size, and as timber becomes harvestable (beyond the life of the project).
35 By completion, around 45 percent of households were no longer receiving direct income from the project.
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56. Economic benefits were delivered in a context of strong economic growth, meaning that although the project likely contributed to poverty reduction, it was only one of many factors. Per capita disposable income of rural residents in project counties increased by 46 percent over the project period. Poverty levels in the project's five poverty- affected counties36 were substantially reduced through a range of government programs and special funding, with a total of 8,090 poor households raised above the poverty line within project areas during the project period (94 percent of those poor at appraisal). The project likely contributed to this, with the income from the project's labor hiring representing around 50 percent of a poor farmer's average annual income (US$495 per year). However, it remains only one of many factors (among government programs and economic development trends) and causality of poverty reduction cannot be attributed. 57. There is considerable potential for income generation through the eventual selective harvest of the project's high- value timber. After 30 years of growth (with management and maintenance) a timber stock of value around US$30,000 per ha is expected.37 Realizing this value assumes that selective harvesting and marketing will be possible: plantings are on ecologically designated forest land, which permits selective harvesting of regenerated timber but not clear-felling. Around 30 percent of this value may thus be realizable by farmers. 58. The project may also deliver ongoing economic benefits through forest-related, non-timber business activities. During implementation the project provided benefits primarily in the form of labor payments, which decreased over time. There were non-labor benefits: 20.97 percent of sampled farmer households at completion had obtained income from the development of forestry products, mostly wood from thinnings, but also tea-oil, fruits, and nuts from select production plantations that the project permitted in ethnic minority areas (Box 1). In addition, central and provincial governments have a range of public support programs for landscape management ("eco-compensation"); some project communities will be eligible to apply for such financial assistance for ongoing forest management.
Box 1: Ethnic minority participation
The project included activities targeted towards benefiting some of Hunan's ethnic minority groups, specifically the Miao People and Yao People. These peoples have distinct languages and well-maintained traditional cultures, and in Hunan are concentrated in Luxi, Mayang, Yuanling, and Rucheng Countries, and Changning City. They have an estimated population of 1.01 million in 2017, representing around 33 percent of the total in these areas. The rate of poverty is elevated among these communities at around 13 percent, and they are geographically concentrated in more remote mountainous areas. In recognition of their relative disadvantage, the project provided financing for the planting of commercial crops (such as fruits, nuts, and tea-oil) in ethnic minority areas that could generate more immediate incomes than the project's ecological forest plantations. A total of 676 ha of such "economic" plantations was competed.
Other Unintended Outcomes and Impacts 59. The project's approach was adopted in other provincial projects, is being further scaled through a follow-on project, and has influenced provincial and national forest management guidelines. The widespread acceptance of the project's multifunction mixed-species approach, in combination with the project's infrastructure (such as the nursery upgrades and demonstration forests), gives confidence that project outcomes will be replicated. Between 2015 and 2018, the project's models were extended to (a) an EIB project in 12 Hunan counties, (b) a Yangtze River protection forest project in 52 counties and cities, and (c) an afforestation subsidy project in 60 counties and cities, together totaling an extension of 118,00 ha in four years. A further EIB-financed forest project is in preparation, which similarly
36 Pingjiang, Rucheng, Guidong, Mayang, and Luxi Counties. 37 Based on volume of 84 m3 per ha and a price of US$ 360 USD per m3 (20-26 cm diameter-breast-height class), Calculation by PPMO, and is not discounted to account for 30-year time period.
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draws directly on the project's models. Scaling is occurring province-wide through inclusion in long-term forest management plans (for 2020-2050) at provincial and county levels, currently under preparation. In addition, the State Forestry Administration of the central government (now the State Forestry and Grasslands Bureau) invited the Bureau to provide input into the National Forest Guidelines for promoting long-term timber supply and forest management. These guidelines include recommendations based on the project's mixed-species and natural regeneration models. 60. The project reduced the use of burning for forest site preparation. Burning is a labor-saving preparation method that damages soil quality, reduces biodiversity (shrubs and grasses), causes air pollution, emits greenhouse gases, and risks fire outbreak. Prior to the project, burning was commonly permitted by county governments (who initially wanted it to be used in the project). The project demonstrated feasible alternatives to burning, contributing to governments' increasing enforcement of burning prohibitions. 61. The project utilized a community consultation process more comprehensive than had been previously used by provincial forestry officials. 79,988 participants took part in 3,135 village meeting consultation events, where project details were discussed, applications for funds made, and contracts signed. The project promoted a bottom-up decision-making approach, where sites and forest model choices were made by individual farmers through an application process via county governments.38 Applications made clear the expected contributions from farmers and governments during the reforestation stage, and explicitly set out the rights of farmers and cooperatives during the forest management phase. The model was codified in a community consultation manual which standardized the approach across counties. The use of this codified consultative approach was based on its earlier use under the World Bank's Forestry Development in Poor Areas Project (P046952) (a first for the sector).
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION 62. The project incorporated lessons from earlier operations (see Figure 1 in Section I.A.), notably the Forestry Development in Poor Areas Project (P046952). This covered 11 provinces including Hunan, and supported the development of economic forests (similar to those planted by the project in ethnic minority areas) and some ecological forests. The process of consultation and bottom-up site and model selection by famers was adapted from its pioneering use in the Poor Areas Project. The project was further able to draw on a range of earlier analytical work, such as the 2010 China Forest Policy Report39 and a detailed sector performance assessment report in 2012.40
38 It should be noted that the project was implemented on ecological forest land, a legal designation that prevents land clearing and thus agricultural use. Farmer choices were thus made within a limited subset of possible land uses. However, consultation gave farmers an opportunity to decide whether and how to manage their forest land (which the project could then support). 39 World Bank (2010). China Forest Policy: Deepening the Transition, Broadening the Relationship. Washington, D.C. This report drew on two technical assistance projects to recommend that Bank engagement with forestry be organized around three themes: (1) a move away from financing commercial plantations; (2) consolidating the reform of collective forestland tenure; and (3) restructuring the state forest sector to increase productivity. The Hunan Project exemplified the first two of these themes. 40 The review made three recommendations, all of which were followed by the Hunan Project: (1) poverty reduction should be monitored, even if not the objective of the Project, given the incentives created for beneficiary participation and thus overall project success; (2) Project's should harness the increasing willingness of provincial and county governments to "on-borrow" from the central government loans with interest for ecological forest plantations; and (3) parallel financing with other donors in the sector is difficult and should not be allowed to constrain activities. All three recommendations were taken up by the project.
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63. The project's design was simple and clear. The implementing arrangements were modelled on previous projects and were well-suited to centralized strategy-setting with decentralized implementation (See Figure A - 1 in Annex 9). Project Management Offices (PMOs) were established within the provincial and county forestry bureaus for day- to-day project implementation, supervision, and monitoring and evaluation, as well as for the grant payments to participating farmers. This model ensured full participation (and thus capacity building), and was aligned with the administrative responsibilities of each level of government. Technical assistance provision was similarly "passed down" ensuring ownership of the project's philosophy and methods at the provincial level (who had to teach as well as learn). A suitable mechanism for intra-government coordination was established prior to appraisal. Project Leading Groups (PLGs) headed by a vice-government representative and comprising members from key departments such as finance, development, and forestry, provided overall guidance and coordinated project preparation and approvals within government. 64. Capacity and familiarity with project preparation and implementation processes was high at the provincial level. The Bureau has already successfully implemented four Bank-financed projects in the forestry sector (although previous projects had focused on improving timber production, quality and standards, rather than ecological or multifunction forestry). Capacity was lower at the county level with some counties new to Bank fiduciary and safeguard procedures. These capacity levels were anticipated, and trainings in financial management and safeguards were provided. Overall project risk was considered moderate at appraisal. 65. Nevertheless, issues occurred during preparation with implications for implementation; these were relatively minor. Counterpart funding was a challenge, as is common in county-implemented projects across sectors in China. Although the Bank team advised PMOs during preparation that County Financial Bureaus should include counterpart funding in their annual budget plan for the first year of operation, and that bridge funding should be obtained (since the loan is transferred on a reimbursement basis), this did not fully occur, leading to delays in payments and activity completion during the early years of implementation. Second, the quality of some socio-economic baseline data collection was poor, specifically on ethnic minorities, including inadequate assessment of risks and opportunities within ethnic minority areas. While these deficiencies were largely remedied after Bank-requested revisions, and the quality of the eventually-produced safeguards instruments was sound, it was a missed opportunity to gather more comprehensive baseline data that could have better targeted the project's ethnic minority activities (discussed further in Section III.B. below).
B. KEY FACTORS DURING IMPLEMENTATION 66. Implementation progressed smoothly, with plantation works completed nine months ahead of schedule and Bank funding fully disbursed by January 2018, over a year in advance (see in appendix 7). Challenges during implementation were relatively minor, namely: (a) occasional failures of understanding by staff at county project management offices (CPMOs) and farmers of the project's mixed-species multifunction approach in early stage of the project implementation; (b) a severe but short drought in the project's first year of implementation; (c) delays in activities in ethnic minority areas; and (d) some delays in counterpart funding and consequent delays in payments to farmers in early stage of project implementation (discussed further in Section IV.B.). Factors subject to the control of implementing agencies: 67. The most common challenge was incomplete understanding of the project's philosophy and associated planting techniques, by farmers and CPMOs in early stages of project implementation. The project's mixed-species multifunction concept was new to local government and communities, requiring project officials and farmers to see forests as producers of ecological as well as economic goods, and necessitating planting and forest management
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techniques at odds with standard practices. This led to occasional deficiencies in implementation, for example, overly dense plantings occurred in some counties in early years.41 (Denser plantings reduce management costs by shading competing undergrowth and promotes rapid tree growth and is thus traditionally favored by farmers. However as demonstrated by the project, it also increases establishment costs and reduces biodiversity). Similarly, enrichment planting (M5-M8) was occasionally misapplied42 with the notion of reforestation via rehabilitation (rather than plantation) challenging farmers' conventional understanding. It was correctly foreseen, from the identification stage onward, that achieving a complete understanding and acceptance of the project's radically different approach to forestry would be the central challenge to achieving the project's objective. 68. Successful remedial action was achieved through (a) improvements to the training program (and an increase in budget), (b) closer integration of research activities and planting activities, and (c) increased use of demonstration farms. The training programs were adapted in response to early problems to emphasize the benefits of enrichment planting (M5-M8), and were reportedly "largely accepted by local project agencies and planting entities" by MTR in May 2016. The budget for training was increased. This was made possible by changes in laws (unrelated to the project) restricting purchases of vehicles and overseas trips, preventing some initially planned expenditure on such items that could be subsequently reallocated. A second remedial action was to increase coordination between the project's planting component (I) and research component (II) – to ensure that new knowledge was being harnessed for physical works. Research staff were encouraged to spend time in the field, and an illustrated guide for farmers was developed with simple instructions on why and how the planting models should be applied. Third, the project made increased use of demonstration plantations, showing farmers what models and techniques look like to promote successful replication. Together, these strategies were largely successful.43 Factors outside the control of implementing agencies: 69. Temporary drought conditions caused a setback in early years. A particularly dry July and August of 2013 caused damage to some young plantations, with 40-50 percent mortality rates observed in some sites. This damage had been repaired by May 2014 with replacement seedlings provided by county governments and additional labor provided by households. However, this incident highlighted benefits of using containerized seedlings, which fared better than bare-root plantings in the drought conditions.44 Containerized seedlings was a stipulation of the project. 70. Implementation of activities in ethnic minority areas (see Box 1) was initially slowed by labor and land shortages (although targets were adjusted at MTR and satisfactorily met). Economic tree planting (fruits, nuts, and tea-oil) was planned in ethnic minority areas to provide additional economic opportunities. The project initially faced some difficulties in meeting the Ethnic Minority Development Plan's (EMDP) targets for these plantings for three reasons: (a) Rapid economic development of ethnic minority areas caused labor shortages, and alternative economic opportunities – including migration – reduced the relative attractiveness of work on the project; (b) farmers' uncertainties around how to get products to market and effectively compete on cost (given remote areas) decreased
41 Some M1 planting sites were found to have initial planting density of 2,400-2,550 stem/ha, higher than the designed density (1,650 stem/ha) (May 2017 Aide Memoire). 42 For example, inappropriate under-canopy enrichment planting (May 2017 Aide Memoire) or overly dense planting (mid-term review Aide Memoire). 43 For example, planting after 2014 does not seem to have suffered from instances of excessive density, likely due to more effective extension and training (December 2017 Aide Memoire). 44 For example, a mission to Leiyang County found a high mortality rate due to drought. Field inspections found that seedlings with bare-roots had been planted (at odds with Project recommendations), causing poor root system development. Use of containers could have substantially improved the survival rate (September 2013 Aide Memoire).
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the attractiveness of these investments to farmers; and (c) available area was constrained by plantings being undertaken by other government programs. The shortfall by MTR lead to a revision of targets for this activity, which were subsequently fully met by program completion.45 Factors subject to the control of the Bank 71. The Bank's performance in terms of supervision, reporting, administrative procedures (e.g. disbursement, no- objection provision), and technical assistance, positively contributed to implementation success. PMOs' described the Bank's support during the above implementation challenges as constructive and valuable. Bank performance is assessed in Section IV.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E) Rating: Substantial
M&E Design 72. The project's implicit theory of change was clear and the M&E system was suitably designed for capturing the project's outcomes. The theory of change was evident from the activities and project description (although an explicit theory of change was not included in the project appraisal document) (see Section I.A.). The metrics selected for monitoring outcomes were appropriate: resilience‐building is a long-term endeavor and not easy to measure,46 yet the metrics chosen were able to credibly monitor resilience even in the short term. Environmental function similarly takes time to be fully demonstrated given tree growth times, yet the selected metrics were able to capture these outcomes on the project's timescale (see Section II.B.). 73. The results indicators were sufficient to record the project's progress towards its objectives. The RF, which included four PDO level indicators and 15 intermediate indicators, indicated progress in terms of tree species, forest coverage, seedlings produced, and training and capacity-building provided. Indicators were well-defined, achievable, and measurable against baselines. 74. The RF was supported by detailed additional M&E metrics that could provide a richer view of the project's outcomes. These included soil water retention, erosion, pest and disease incidence, and pollution abatement variables, among others, along with socio-economic variables (see Section II.B. and Annex 10). In addition to project outcome monitoring, the M&E design allowed for evaluation of the forest models relative to each other, supporting the research component of the project and providing a basis for future refinement and reapplication of the models (see M&E utilization below). 75. Inclusion of control sites was a valuable addition to the M&E framework. The Bureau's extensive data collection
45 At project completion, 676 ha of economic planting had been completed (100 percent of the post-MTR target). The initial target was 810 ha (of which 80.4 was completed before MTR). The revision of targets was informal (no restructuring) with no changes to the RF. 46 World Bank operational guidance (Evaluation of Resilience‐Building Operations, 2017), states that teams should generally consider increased resilience as a longer‐term outcome beyond the control and lifetime of a single project. This may be interpreted by some as a caution against inclusion of resilience in a PDO, suggesting that this project was ambitious in its aims.
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capability, and the availability of traditional forest plots of similar age to the project sites, allowed for incorporation of non-project sites (both sites under traditional forest plantation, and sites with no forest) into the M&E framework for comparison purposes. Comparator areas were selected based on biophysical similarity with well-documented rationale (see Annex 10). 76. A fundamental challenge to M&E for resilience projects remained despite overall strong M&E design: disaster events are infrequent. The project collected data that could credibly show short-term increases in resilience. Understandably lacking, however, was direct evidence that the plantations would withstand a winter storm of the type that caused the initial destruction (a one-in-one-hundred-year event). While the measures of resilience that the M&E program did collect (decreased pests and diseases, increased canopy cover, increased wood strength) are strongly suggestive of increased resilience, proxies related to snowfall and wind may have further supported this element of evaluation. For instance, while a severe winter storm is unlikely to occur on the project's timescale, it is likely that some wind or snow events would occur, providing grounds for evaluation. However, the absence of such a metric is not a deficiency per se given the variety of other metrics that were included. M&E Implementation 77. The client had extensive experience with forest monitoring and capably collected data. The RF indicators were relatively simple; data collection for these was well within the capabilities of the PPMO and CPMOs. The larger M&E program was more sophisticated and was competently executed by the PPMO. The quality control system appears strong, with the PPMO performing random checks on 20 percent of sites (monitored in the first instance by the CPMOs). Baseline data collection was carried out as planned, and data collection methods used throughout the M&E program (Annex 10) were rigorous and documented in detail. 78. Some deficiencies were present in the collection of socioeconomic data. Household surveys were undertaken in 2014, 2016, and 2018 (see Annex 10), however, variation in what should be time-invariant statistics suggests that the sample varied substantially between rounds, reducing the accuracy of intertemporal comparisons. The density of sampling for social monitoring was relatively low (n=240), enough for presenting overall results, but somewhat limiting for sub-group disaggregation (i.e. it is difficult to test for differences in outcomes across different categories of participants). Insufficient control group data was collected, preventing causal attribution of the project's socio- economic impacts.47 However, these limitations did not extend to the environmental and forest data, and so did not detract from the monitoring of the project's progress towards its objectives of improved forest function, resilience, and management. M&E Utilization 79. Control group data on environmental outcomes were well-utilized. Data from the project's reforested areas were compared not only to those from non-reforested areas, but also to areas reforested with traditional methods. This allowed for conclusions to be drawn regarding what was arguably the most important element of the project, its innovation in silviculture techniques, not simply the benefits of reforestation per se. 80. Data was also well-utilized in evaluating the forest models for their future refinement and reuse, in addition to evaluating the project itself. Analysis was undertaken to compare models in terms of detailed environmental function and growth indicators, providing the basis for their refinement and redeployment in other projects (see
47 Rapid economic development occurring in both project and non-project areas over past years means that causal attribution of socioeconomic outcomes is difficult. For example, while a large proportion (94 percent) of impoverished households in project areas were lifted out of poverty during the project period, a lack of credible non-project-area data prevents comparison to the underlying rate of poverty alleviation (which is likely very high also).
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The World Bank Hunan Forest Restoration and Development Project (P125021)
Section II.E.). Findings were well communicated to stakeholders through workshops, presentations to the central government (see Section II.E.), and publications for specialist and generalist audiences (see Footnote 30). Justification of Overall Rating of Quality of M&E 81. The overall M&E rating is Substantial. Shortcomings in the design of the M&E system were minor, and the M&E system as designed was more than sufficient to assess the achievement of the project's objectives. There were some moderate shortcomings in implementation, specifically in the collection of socio-economic data. Results have been well-utilized through extensive analysis that is informing follow-on projects, and have been widely disseminated.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Safeguards 82. The project's safeguards compliance was rated satisfactory throughout implementation. The safeguard policies triggered under the project were Environmental Assessment (operational policy (OP) 4.01), Forests (OP 4.36), Pest Management (OP 4.09), and Indigenous Peoples (OP 4.10).48,49 The project was classified as Category B (partial assessment). No waivers to the Bank's safeguard's policies and procedures were sought. The Environmental Impact Assessment was completed in March 2012, and publicly disclosed on the websites of the Bureau (April 20, 2012) and the Bank (May 23, 2012) in line with Bank policy. 83. The project maintained strong compliance with planned risk mitigation measures. An Environmental Management Plan (EMP) was prepared based on the experience of previous forestry projects in China (see Section I.A.), and included Environmental Protection Guidelines (EPG) and a Pest Management Plan (PMP). An environmental compliance rate scored the use of key risk-mitigation measures contained in the EMP and PMP, and was used to assess acceptance of a site's completion and subsequent reimbursement (a project innovation). 84. The EMP, including EPG and the PMP, were generally well followed by PPMO, CPMOs, project planting entities and farmers; minor exceptions50 were addressed quickly. Environmental protection was regarded as one of the priorities of the project (as per PDO), with environmental safeguards and project technical design strongly complementing each other. Training activities on the EPG and PMP were delivered before planting. The “environmental protection compliance rate” was set up as a criterion for quality checking and acceptance of each afforestation sub-compartment, ensuring execution of the EPG and EMP. External monitoring agencies were contracted as specified in the EMP and PMP, with some monitoring activities exceeded those required by the EMP. 85. The project used an integrated pest management approach. This incorporated use of the national and local
48 Environmental Assessment (OP4.01) was triggered given the (limited) potential negative impacts if the project is not designed and implemented as planned (e.g. application of unsuitable planting materials and species, or improper site selection and preparation). Forests (OP 4.36) was triggered given implications for forests (although expected to be positive). Pest Management (OP 4.09) was triggered given the need for some pesticide and herbicide use in forest establishment and maintenance. Indigenous Peoples (OP 4.10) was triggered given the presence of Miao and Yao ethnic minority groups in the project areas. 49 The Environmental Assessment (EA) and Social Assessment (SA) conducted during preparation did not identify any potential large-scale, significant and/or irreversible impacts, did not flag any possibility of involuntary relocation or land acquisition, or any archaeological and historical sites. 50 Examples of isolated activities that were not compliant with the EPG include burning of slash (plant debris) on some sites, some mechanized and soil-damaging site preparation (although stopped early) and the use of some pesticides not proscribed by the PMP. These were addressed through enhanced trainings and on-site supervision regarding implementation of the EMP and PMP (May 2014 Aide Memoire) and were not further observed by the Bank team.
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monitoring network to improve pest predictions, bred native tree species and varieties with strong resistance to disease, strengthened forest management measures that improved disease resistance, and promoted physical and biological pest control methods among farmers. It promoted the use of high efficiency, low toxicity and low residue pesticides where chemical control was needed. 86. The project paid careful attention to ethnic monitories (see Box 1), starting with a social assessment (SA) exercise during preparation. This consisted of field interviews in 10 project counties and aimed to provide data for the EMDP, the primary IP related safeguards instrument. The SA further piloted the project's consultation approach, and identified economic livelihood activities (the economic forest plantations). Some deficiencies were noted in the SA around the quality of baseline data collection (as discussed in Section III.A.). Fiduciary 87. Adequate financial management (FM) arrangements were in place. All audit reports were unqualified (clean) opinions and submitted to the Bank on time without significant FM-related control weaknesses reported. While the project had many participants and thus payees, risk to Bank funds was kept low through the use of unit-cost contracts agreed with the Bank (i.e. payments for completed and verified plantations at a set rate). 88. Minor deficiencies in FM performance were noted and quickly resolved, such as some delayed county-level counterpart funding. IFRs were of acceptable quality. Disbursement was slow in early project years (2015 and 2016), caused by CPMO's lack of experience in Bank policies and procedures. In the first year, disbursement was requested in a larger lump-sum following quality control checks, rather than in smaller packages as subsequently recommended by the Bank team. Disbursement caught up in later years with assistance from the Bank team in terms of close support, supervision and capacity-building for CPMOs (see Annex 9, Figure A - 2) Counterpart funding was also delayed at times in the early years of the project.51 89. Procurement performance was satisfactory. Procurement management assessments were carried out during preparation and a procurement manual developed to guide project procurement based on Bank policies. The primary approach used was "community participation in procurement," in which project beneficiary households undertook the majority of activities using local labor, materials and equipment, and received unit-cost reimbursement at set rates. Bank supervision missions reviewed the implementation of the project's procurement plan. No major issues were identified. 90. Some isolated deficiencies in contract management were identified but quickly resolved. The contracts signed between county governments and project participants were initially inconsistent across counties and lacked some details such as counterpart funding arrangements. With Bank support these were standardized. Other isolated deficiencies include an instance when a village head signed on behalf of farmers, and when some plantings occurred in advance of contract signing.52 These problems were fully addressed, and further instances prevented through close supervision and increased trainings provided to PPMO and CPMOs by the Bank team, and by trainings and technical assistance provided to the planting entities and farmers by CPMOs.
51 For example, counterpart funding after the first year (Oct 2014) for provincial and county governments stood at 50.8 percent and 62.3 percent of the amount committed respectively. 52 October 2014 Aide Memoire.
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The World Bank Hunan Forest Restoration and Development Project (P125021)
C. BANK PERFORMANCE Rating: Highly Satisfactory Quality at Entry 91. The project's strategic relevance was high at entry. It responded directly to a natural disaster and was aligned with national and provincial priorities (see Section II. A.). Preparation ensured that the project satisfied the immediate client need (restoration of damaged forestland in a way that would minimize the chance of future such damage) and did so in a way well-aligned with the increasing ecological focus of the national and provincial governments. The project was well-aligned with the Bank's key strategy documents at time of appraisal (see Section I.A.).
92. The project's technical design was sound, with a simple design and highly complementary activities. The design incorporated lessons from a range of previous forest projects in China (see Section I.A.) and recent sector performance reviews. The project's design was relatively simple and focused. The design was also highly complementary in that Component II (research and extension) directly supported the reforestation activities (component I) and brought about the mindset change required for their effective undertaking. (This mindset change was the single most ambitious element of the project and was strongly emphasized during preparation.) The design incorporated innovations such as its ambitious multifunction models and community consultation requirements. The technical models were successful (with high survival rates and final coverage that was close to that intended despite their novelty (see Table 1 and Figure 3). The Bank's technical input on model design (through the convening of expertise from the Chinese Academy of Sciences, for example) was reportedly valued by the PPMO. 93. Implementation arrangements, fiduciary arrangements, and M&E arrangements were appropriately prepared. Quality at entry is supported by the relatively smooth initial implementation, despite a multitude of government actors (see Section 3.A.), and rapid achievement of effectiveness (May 2013, following approval in January 2013). Implementation arrangements and the roles of different stakeholders were clear and functional (see Annex 9, Figure A - 1). Fiduciary arrangements were designed around a relatively standard method (for forest projects) of unit cost reimbursement that reduced complexity. The minor FM issues that did arise were largely foreseen and prepared for (see Sections III.A. and IV.B.). M&E was designed around clear project goals and an achievable RF, was sufficiently resourced, and included a comprehensive research-grade monitoring program. Little change was required throughout implementation: all planned project elements were executed as intended with minor adaptations for reasonable changes in circumstance (see Section I.B.). 94. Risks were correctly identified at entry with appropriate mitigation measures readied. This included capacity-building for CPMOs on FM and procurement, attempts to reduce the risk of counterpart funding delays (caught-up by MTR), and safeguards training and monitoring for planting entities. Compliance with these instruments (notably the EMP and PMP for environmental aspects, and the SA and EMDP for social development aspects) was broadly sound (see Section IV.B.), with timely interventions by the PPMO and Bank team when isolated deviations were identified. 95. Poverty, gender, and social development aspects were incorporated into the project's design, despite the strongly environmentally-focused objective. The EMDP promoted benefits for ethnic minorities through targeted activities, and both the consultation and selection approaches were intended to encourage participation of women and poor farmers (see Section II.E.). Quality of Supervision 96. The Bank effectively supervised project implementation. Eleven implementation support missions (including the ICR mission) were undertaken. Fiduciary and safeguard aspects were regularly supervised via field and administrative
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systems inspections. Performance reporting was candid and of high quality: aide memoires were detailed and recorded critical milestones, key decisions, and next steps as well as information on sub-project site visits; implementation status and results reports (ISRs) were candid and filed on time. The Bank tracked progress and assisted counterparts in improving implementation and mobilized outside support (such as Food and Agriculture Organization (FAO) forestry specialists). The MTR led to minor changes which responded to the project's central challenge: the need to fully embed the project's multifunction mixed-species approach in silviculture practice throughout the sector, and socialize associated techniques. More emphasis was placed on training and demonstration as a result. The Team Leader did not change during the life of the project and maintained a strong working relationship with the client. Justification of Overall Rating of Bank Performance 97. Overall Bank performance is rated Highly Satisfactory. The Bank's interactions both during preparation and implementation showed dedicated support to the counterpart. The project was of high quality at entry, with a streamlined structure, adequate implementation arrangements, sufficient technical groundwork, and a clear and achievable PDO. Implementation was closely supervised with isolated shortcomings highlighted and satisfactorily addressed by the PMOs.
D. RISK TO DEVELOPMENT OUTCOME 98. The project fits within an established system for investment and management of Hunan's forest resources; it is likely that the project's physical outcomes (restored forests) will be sustained. Ongoing public expenditure will be required for thinning, continued weed and pest control, and other management needs. This is within the scope of the Bureau's budget and does not require expertise beyond that which is well-established. The project represents a relatively small proportion of the province's total forest investment and its upkeep can be absorbed into the larger government program. Private financial returns are positive (see Section II.C.), providing strong incentives (in the form of select high- value harvestable logs, bamboo production, and wood from thinning) for private farmers to maintain quality forests. The provincial government is committed to the objectives of the project, as indicated by the EIB-financed follow-on project (in preparation) and the uptake of the project's approach in multiple other projects (see Section II.E.). 99. The project faces residual risks from winter storms, despite its resilient design (low likelihood, moderate impact). Severe ice storms and wind events could damage project forest areas, and may increase in severity or frequency due to climate change. The project was designed specifically to improve resilience against this risk, with forest models that use diverse, local-provenance species with demonstrated resilience (see Section II.B.). Species were also selected for enhanced cold-resistance. While very severe storms could damage project forests, damage would likely be less than for traditional plantations. 100. There is risk from fire, along with weeds, pests and diseases, which will require continued management (low likelihood, moderate impact). In the past ten years, the province has seen 8,981 fires burn an area of over 68,000 ha, including over 39,000 ha of forest. Fire prevention is a key priority for government, but some inherent vulnerability will remain. Longer and more extreme drought periods are expected under climate change, increasing fire risk. County governments have incorporated the project's forests into their fire prevention programs and there have been no fires so far in project areas. While pest and disease damage is lower than under traditional forests (see Section II.B), it remains a threat. The project has introduced integrated pest management based on biological and physical, and low- toxicity chemical approaches which appear to be working. 101. Policy changes or market changes could reduce incentives for ongoing upkeep and management of forests (low likelihood, low impact). Ecological forests rely on direct public subsidy for their management, so continued subsidy is
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needed for ongoing maintenance of some (but not all) of the project's forests. Additionally, harvesting of timber (wood from thinning in early years, and select high-value species cutting in later years) supports private returns and thus further incentivizes ongoing sustainable management. Structural changes in China's timber market, such as rising labor prices, falling demand, or a reduction in local processing capacity, could reduce the feasibility of selling select forest products. These factors can be only weakly mitigated or predicted at the PMO level.53
V. LESSONS AND RECOMMENDATIONS 102. The depth and quality of extension is critical for the success of a forest project's physical works (applicable to forest projects). The importance of extension was foreseen during preparation and budgeted for, with recognition by both Bank and PMO staff that the greatest challenge would be changing traditional forestry mindsets and methods. Despite this recognition and preparation, this challenge exceeded expectations and corrective action was required (such as increased training and new extension materials, among other measures, see Section III.B.). Substantial budgeting, early preparation, and use of demonstration forests can help smooth the crucial adoption of required mindsets and technical skills. 103. Demonstration forests were critical for the effective promotion of the project's objectives, intended benefits, and practical techniques, and should be established early (applicable to forest and agriculture projects). The project established a demonstration forest in each county for education and training of project staff and farmers. Physical demonstration of techniques and results convinced initially skeptical participants. Ideally, demonstration forests should be established early – from the project's initiation – and additionally, should draw on earlier plantings that exemplify a project's objective (i.e. repurpose forests and pilot plots established using similar techniques). 104. Mechanisms to incorporate research activities with other project activities promote knowledge spillovers and help ensure research is relevant (applicable to projects with research components). Different timelines of research and practical activities (and different incentives for researchers and practitioners) means is it easy for research activities to diverge from (and fail to contribute to) wider project goals. Requiring researchers to take part in extension activities (as in this project) helps researchers produce materials relevant to the project (such as operational handbooks) as well as learn from field experience. Similarly, close integration of research activities and monitoring and evaluation (for instance, by having M&E functions undertaken by research units) likely increases the quality of M&E (through research staffs' understanding of experimental design and commitment to rigor). 105. Geographic information systems (GIS) data would be a valuable addition to forest projects' M&E programs (applicable to forest, environment, and agriculture projects). It became clear during ICR discussions that long-term monitoring would be dependent on actions and budgeting by the Bureau. Given that such long-term monitoring is crucial in forest projects (which deliver ecological and landscape benefits over many decades), third-party alternatives could ensure that key outcomes continue to be monitored. GIS data of plot locations would allow for the use of publicly accessible satellite imagery for evaluating long-term outcomes such as forest planation extent, density and possibly diversity, providing a means of verification (in addition to site-inspections) and impact evaluation. This would ideally be made public to allow for independent assessment, reducing the risk that any funding cuts to long-term monitoring programs interrupt crucial time series data, and ensure that decadal environmental benefits can be tracked and
53 However, project design can explicitly mitigate their likely impacts (for instance, by prioritizing plantings by accessibility and industry supply needs.
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assessed regardless of future government priorities. Sensitivities around spatial data sharing would need to be addressed upfront. 106. Project and M&E design must consider the extraordinary rate of change in parts of China (applicable to projects in high growth contexts). The per capita disposable income of rural residents increased by 46 percent over the project period, leading to shortages of labor in some project areas. Investment by land management programs unrelated to the project left few suitable sites in some communities for planting (primarily in ethnic minority communities). Projects in such contexts need the flexibility to make large changes in scope, scale, and activity. Rapid social change also made attributing income and poverty outcomes of the project difficult. Comparison sites (control villages or counties) should be surveyed to collect counterfactual gender, poverty, and other socio-economic data (and in some cases, institutional outcomes such as local capacity) for effective outcome attribution. .
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The World Bank Hunan Forest Restoration and Development Project (P125021)
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: Enhance resilience and ecological function of selected storm-affected ecological forest plantations Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Diversity of species and tree Number 4.00 40.00 43.00 structures in replanted/rehabilitated 30-Apr-2012 31-Mar-2019 31-Mar-2019 forests increased to improve forest resilience: Number of species introduced by the project in all sites
Comments (achievements against targets): Target surpassed (108 percent). Forest plantations included 53 species in total, including 38 rare and high-value species indigenous to Hunan. Of these, 10 species within the Quercus genus (Oaks) were counted as one species given their similar characteristics, giving a conservative final number of 43 species-groups. Each project forest plot required a mix of at least three species, with specific forest models designed for the project that specified the proportion of each species (at least ten percent). The number of species is a proxy measure of forest species and tree structure diversity, which contributes directly to resilience and ecosystem function. The number of species used is the highest of any forest project undertaken by the province to-date, and provides a model for the development of multi-species forests for enhanced resilience and ecosystem function beyond the project area. It should be noted that forest species and structure diversity in many cases will be higher than
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suggested by this indicator, given that many sites have some tree species already present (not counted in this indicator), along with non-tree biodiversity (shrubs and herbs) (also not counted). Data source: Annual reports from PPMO.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Incremental tree canopy Text please refer to the please refer to the please refer to the cover increased to improve below 3 sub-indicators below 3 sub-indicators below 3 sub-indicators environmental protection function: 30-Apr-2012 31-Mar-2019 31-Mar-2019
(iii) In fully replanted forests Text 0% 25% 58% (percentage) 30-Apr-2012 31-Mar-2019 31-Mar-2019
(ii) In partially replanted Text 32% 48% 61% forests (percentage) 30-Apr-2012 31-Mar-2019 31-Mar-2019
(i) In naturally regenerated Text 24% 50% 62% forests with treatment (percentage) 30-Apr-2012 31-Mar-2019 31-Mar-2019
Comments (achievements against targets): Target surpassed. Tree cover increased by 58 percentage points in fully replanted forests (232 percent of target), 29 percentage points in partially replanted forests (127 percent of target), and 38 percentage points by naturally regenerated forests with treatment (124 percent of target). Tree canopy cover provides protection for the forest within, increasing resilience and environmental function. (Note: percentage point
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changes are the difference between endline and baseline percent coverage). Data source: Field surveys at baseline, year 3 and year 6, undertaken by the PPMO via a contracted surveying institution.
A.2 Intermediate Results Indicators
Component: Component 1: Reforestation and rehabilitation of damaged ecological forest plantations
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Area restored or Hectare(Ha) 0.00 58900.00 61986.70 re/afforested 30-Apr-2012 31-Mar-2019 31-Mar-2019
Areas in fully replanted Hectare(Ha) 0.00 27700.00 32651.60 forests 30-Apr-2012 31-Mar-2019 31-Mar-2019
Areas in naturally Hectare(Ha) 0.00 12600.00 7662.00 regenerated forests with treatment 30-Apr-2012 31-Mar-2019 31-Mar-2019
Areas in partially replanted Hectare(Ha) 0.00 18600.00 21673.00 forests 30-Apr-2012 31-Mar-2019 31-Mar-2019
Comments (achievements against targets):
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Target surpassed for overall area reforested (105 percent of formal target). Within this category are three types of reforestation. Targets were surpassed for areas fully replanted (118 percent of the target), and areas partially replanted (117 percent). The target was not achieved for areas restored through natural regeneration (61 percent of the target) (see Section I.B. for explanation). In general, natural regeneration models were less popular among farmers than predicted at appraisal, leading to the shortfall in this sub-category (but not for reforestation overall). The project's use of a consultation approach, in which farmers and cooperatives selected for themselves the forest model most suited to their circumstances, meant that achieved areas would naturally deviate from predictions and targets to some extent. It should be noted that an informal revision of targets was undertaken at MTR (without restructuring), all these informal targets were met (see Table 1 in Section II.B.). Areas reforested are a direct measure of the project's restoration of denuded and degraded forest lands affected by the 2008 storm, and proxy for ecosystem system function. Data source: semi-annual reports from PPMO (from CPMOs).
Component: Component 2: Institutional support and technology enhancement
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of upgraded Number 0.00 3.00 2.00 nurseries which are able to produce high quality 30-Apr-2012 31-Mar-2019 31-Mar-2019 seedlings of indigenous species.
Number of seedlings Number 0.00 60.50 94.60 produced for project reforestation and 30-Apr-2012 31-Mar-2019 31-Mar-2019 rehabilitation (million).
Comments (achievements against targets):
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Target not achieved for nursery upgrades (67 percent of target at appraisal). Target surpassed for seedling production (159 percent). Two provincial nurseries were upgraded, one in Suxian District, and one in Hunan Forest Botanical Garden (a provincial demonstration nursery). The upgrades consisted of new equipment and planting materials, construction of facilities, and staff training on new cultivation techniques. A third nursery was originally planned for upgrading, however construction commenced (and was completed) in advance of the project schedule, obviating the need for project financing. Given this, the target was informally revised down (i.e. without a restructuring) to reflect this change (see Table 1 in Section II.B.). A total of 96.4 million seedlings were produced (in both the upgraded and existing county nurseries, which adopted project techniques and species) for the project. Forty-four percent of these were broad-leaf species. Total construction area at Suxian District nursery was 23.9 hectares, and included a new production management room and materials shed. Total construction area at Hunan Forest Botanical Garden nursery was 20.77 hectares, and included a tissue culture laboratory, seed detection room, management room and road construction. These two upgraded nurseries provided 15.5 million high-quality seedlings for the project. Through the upgrades, the project aimed to increase the supply of broad leaf indigenous species (with superior resilience and ecosystem function characteristics), many of which were previously unavailable. Data source: semi-annual reports from PPMO and nursery managers.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Forest Cooperatives:Number Number 0.00 22.00 22.00 of forest cooperatives established or strengthened 30-Apr-2012 31-Mar-2019 31-Mar-2019 with their operational plans completed
Comments (achievements against targets): Target achieved (100 percent). A total of 22 forest cooperatives were strengthened. Support was provided in the form of office equipment, vehicles, construction of small roads, and the provision of training for forest farmers and managers. Technical assistance was further provided for cooperatives to develop and implement forest management plans. Data source: semi-annual reports from CPMOs (via PPMOs).
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Research, technical services Text please refer to the please refer to the please refer to the and extension: below 2 sub-indicators below 2 sub-indicators below 2 sub-indicators
30-Apr-2012 31-Mar-2019 31-Jan-2019
a. Number of on-going Text 0 5 5 research programs. 30-Apr-2012 31-Mar-2019 31-Jan-2019
b. Number of workshops Text 0 3 3 undertaken to disseminate project experience in 30-Apr-2012 31-Mar-2019 31-Jan-2019 applying technical models among project and non- project staff/counties.
Comments (achievements against targets): Target achieved (100 percent). The applied research program covered five topics: (1) nursery technologies and management, (2) silvicultural management systems, (3) ecological forest plantation management, (4) enhancing and monitoring carbon sequestration in forest plantations, and (5) climate change impacts on forest ecosystems. The research program aimed to support the project's primary outcomes of resilience and environmental function by providing the knowledge needed to optimize plantation activities (for example, testing of fertilizer regimes and development of improved cultivars), and (2) support improved forest management beyond the project through knowledge dissemination. The project's research activities published 3 forestry science books, 20 scientific publications (principally in national journals), and one patent, and won two science and technology awards. Three workshops were held (100 percent of target) to disseminate lessons learned from the project,
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promote the project's multi-function concept, and exchange experiences with other government stakeholders (provincial and national). Data source: semi-annual reports from PPMO.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion M&E: System fully Yes/No N Y Y operational 30-Apr-2012 31-Mar-2019 31-Mar-2019
Comments (achievements against targets): Target achieved (100 percent). The M&E system was reported as fully operational from the project's first ISR (May 2013) and maintained functional status throughout the life of the project. (See Section IV.A. for details on M&E). Data source: semi-annual reports from PPMO.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Project Management and Yes/No Y Y Y Institutional Development: Fully staffed & functional 30-Apr-2012 31-Mar-2019 31-Mar-2019 PPMO & CPMOs kept during project period
Comments (achievements against targets):
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Target achieved (100 percent). PPMOs and CPMOs were reported as fully operational from the project's first ISR (May 2013) and maintained functional status throughout the life of the project. (See Section III.A. for details on implementation arrangements). Data source: semi-annual reports from PPMO.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of project Number 0.00 13800.00 14070.00 management staff trained on project management and 30-Apr-2012 31-Mar-2019 31-Mar-2019 technical innovation
Comments (achievements against targets): Surpassed target (128 percent). 14,070 person-days of training was provided to provincial and county project staff. A total of 32 persons also received international training in Australia and Austria on forest management approaches (532 person-days). Training covered forest design and establishment, financial management, fertilizer use, tending, and pest and disease control, among other topics. Data source: semi-annual reports from PPMO and CPMOs.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Beneficiaries trained Number 0.00 60200.00 62294.00
30-Apr-2012 31-Mar-2019 31-Mar-2019
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Forest Beneficiaries trained Number 0.00 10100.00 11598.00 - Female 30-Apr-2012 31-Mar-2019 31-Jan-2019
Forest Beneficiaries Number 0.00 3000.00 4960.00 trained - Ethnic minority/indigenous people 30-Apr-2012 31-Mar-2019 31-Jan-2019
Comments (achievements against targets): Surpassed target (103 percent). 62,294 person-days of training was delivered to beneficiaries (local farmers and planting entities). This included 11,598 person-days for women (148 percent of target) and 4,960 person-days (165 percent of target) for ethnic minorities. Training covered forest design and establishment, financial management, fertilizer use, tending, and pest and disease control, among other topics. In addition to formal training, ad hoc field training was provided through a network of demonstration forests, which were established in each of the 22 project counties, with visitations made by students, forestry staff and farmers. Data source: semi-annual reports from PPMO and CPMOs.
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A. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: To enhance resilience of selected ice storm affected ecological forest plantations. PDO# 1. Diversity of species and tree structures in replanted/ rehabilitated forests increased to improve Outcome Indicators forest resilience: Number of species introduced by the project in all sites • Area restored or re/afforested in (i) naturally regenerated forests with treatment, (ii) partially replanted forests, and (iii) fully replanted forests • Number of upgraded nurseries which can produce high quality seedlings of indigenous species. • Number of seedlings produced for project reforestation and rehabilitation (million). Intermediate Results Indicators • Forest Cooperatives: Number of forest cooperatives strengthened with operational plans
completed Note: intermediate indicators apply to both • Number of on-going research programs objectives/outcomes.54 • Number of workshops undertaken to disseminate project experience in applying technical models among project and non-project staff/counties • Number of project management staff trained on project management and technical innovation • Number of beneficiaries trained: (i) total, (ii) women, (iii) ethnic minorities Component I: Reforestation and rehabilitation of damaged ecological forest plantations
1. Forest diversity: project sites used a total of 43 species, of which 38 are rare species native to Key Outputs by Component: linked to the Hunan. Forest plots contained 3-18 species with an average of 11 species (weighted average by achievement of enhanced resilience area). Among the 10 most commonly used afforestation tree species, 7 were broadleaf tree species, accounting for 44 percent of trees planted. 2. Pests and diseases: Pest and disease occurrence rates 29-75 percent lower (than equivalent control plots) among afforestation models (M1-M4).
54 There are two reasons for the overlap in outcomes from these indicators: (1) Resilience is correlated with ecosystem function: a more functional forest is more resilient. Restoring areas of damaged forests, for example, (an intermediate indicator) improves resilience of those forests and simultaneously improves the ecosystem function of those forests. (2) Improving institutions and capacity is necessary for the improved forest design and management that leads to both improved resilience and ecosystem function.
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3. Physical tree strength: The project's models delivered higher density (8-9 percent), flexural strength (65 to 68 percent), elasticity (71 to 73 percent), and compression strength (11-13 percent) in the main trunk of the most common tree species (Chinese fir), expected to improve resilience to adverse weather conditions.
Component II: Institutional support and technology enhancement
1. Research: Five topics covered: (1) nursery technologies and management, (2) silvicultural management systems, (3) ecological forest plantation management, (4) enhancing and monitoring carbon sequestration in forest plantations, and (5) climate change impacts on forest ecosystems. Research contributions to the project include: collection of germplasm resources for 15 species of high-value indigenous trees, development of cultivation methods (e.g. spacing, fertilizer use, incorporated into field guides and extension activities). Research output includes three handbooks, 20 scientific articles, and one patent. The project's research won two science and technology awards. 2. Nursery upgrades: Two provincial government nurseries were upgraded (Suxian District and Hunan Forest Botanical Garden). Construction of new nursery area totaled 44.67 ha, including 6.8 ha of precious tree species nursery area, 8.7 ha of general native tree species nursery area, 1.6 ha of greenhouse shed area and 6.8 ha of large seedling cultivation area, 6.8 ha of transplant breeding area, and 6.8 ha of experimental demonstration area. Construction also included a tissue culture laboratory, seed testing room, seedling refining field, production room, and a 1,000 m2 glass greenhouse. The upgraded nurseries produced 15.5 million seedlings for the project, and have a capacity of 3-4 million seedlings per year. 3. Seedling production: A total of 96.4 million seedlings were produced (in both the upgraded and existing county nurseries) for the project's reforestation activities. Forty-four percent of these were broadleaf species. Although county nurseries did not receive upgrading from the project's funds specifically, they needed to adopt the project's cultivation methods and cultivars, building capacity. 4. Forest cooperatives: 22 Forest cooperatives were strengthened with provision of office equipment, vehicles, construction of small roads, and training for forest farmers and managers.
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5. Training: 3,572 person-days of training was delivered to provincial project staff and 14,068 to county project staff. In addition, 32 staff undertook international training in Australia and Austria on forest management approaches (532 person-days). A further 62,294 person-days of training was delivered to beneficiaries (local farmers and planting entities). This included 11,598 person- days for women and 4,960 person-days for ethnic minorities. Training covered forest design and establishment, financial management, fertilizer use, tending, and pest and disease control. In addition to formal training, ad hoc field training was provided at demonstration forests, which were established in each of the 22 project counties (744 ha in total). 6. Impact beyond the project site: project technology and approaches have been used to plant 115,000 ha of ecological forests outside the project area to date; a follow-on project (EIB) is in preparation.
Objective/Outcome 2: To enhance ecosystem function of selected ice storm affected ecological forest plantations.
PDO# 2. Incremental tree canopy cover increased to improve environmental protection function in (i) Outcome Indicators naturally regenerated forests with treatment, (ii) partially replanted forests, and (iii) fully replanted forests (also indicating objective/outcome 1). Intermediate Results Indicators See objective/outcome 1 above Component I Outcomes: 1. Forested area: A total of 61,987 ha of land, 1.36 percent of the Province's total damaged forest area, was restored with mixed-species forestry. This includes 32,652 ha of reforestation, 21,673 ha of enrichment plantations (partially replanted), and 7,662 ha of natural regeneration promotion. 2. Tree canopy cover: Tree cover increased by 58 percentage points in fully replanted forests, 29 Key Outputs by Component: linked to the percentage points in partially replanted forests, and 38 percentage points in naturally regenerated achievement of enhanced ecosystem function forests with promotion. Averaging across all project sites, tree canopy cover is estimated to have increased from 14.15 percent cover to 59.5 percent cover over the project period. 3. Forest models: Eight forest models were developed by the project for multispecies, multifunction forestry. All models had positive EIRRs and FIRRs. Total survival rates were over 95 percent. 4. Soil erosion reduction: cumulative soil losses over the project period were 3.7-6.9 tonnes/ha lower under afforestation models (relative to equivalent control plots), leading to an estimated
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217,888 tonnes of avoided soil erosion during the project period (relative to an equivalent traditional plantation). 5. Runoff reduction: Cumulative runoff reduction of 28-46 mm (relative to equivalent control plots), during the project period (for afforestation models). 6. Soil quality improvements: Decreases in soil concentration of heavy metals across models: lead (7.3-31.2 percent), cadmium (5.0-23.5 percent), zinc (22.2-28.9 percent), and arsenic (17.7-27.5 percent). 7. Carbon sequestration: 281,000 tonnes of carbon was estimated sequestered by project forests within the project period. Expected total overall carbon sequestration of 3.1 million tonnes of over a 20‐year period. Estimated to be 5-14 percent more carbon sequestration than under comparison traditional forests. Component II: (Key outputs for component II are common across objectives/ outcomes, see above).
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The World Bank Hunan Forest Restoration and Development Project (P125021)
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Jin Liu Task Team Leader Yunlong Liu Procurement Specialist Haixia Li Financial Management Specialist Zongcheng Lin Social Specialist Yiren Feng Environmental Specialist Wenyan Dong Team Member Yunqing Tian Team Assistant Ulrich Schmitt Economist Kishor Uprety Counsel Supervision/ICR Jin Liu Task Team Leader Hua Xu Procurement Specialist Yuan Wang Procurement Specialist Haixia Li Financial Management Specialist Zongcheng Lin Social Specialist Yiren Feng Environmental Specialist Xieli Bai Team Assistant Mingjie Li Team Assistant David Kaczan ICR Author Richard Owen Forestry Specialist (FAO/CP) Liu Xueming Economist (FAO/CP) Lu Yuanchang Forestry Specialist (Chinese Academy of Sciences) Mingjie Li Team Assistant
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Jianxin Chen Interpreter
A. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY11 6.725 34,526.54 FY12 15.050 154,976.97 FY13 4.050 26,327.19
Total 25.83 215,830.70
Supervision/ICR FY13 0 12.53 FY14 9.968 52,616.40 FY15 5.777 41,201.86 FY16 12.050 59,800.25 FY17 9.400 41,687.34 FY18 11.800 94,189.79 FY19 12.037 101,086.43 FY20 6.004 30,203.08 Total 67.04 420,797.68
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The World Bank Hunan Forest Restoration and Development Project (P125021)
ANNEX 3. PROJECT COST BY COMPONENT
Table A - 1: Project costs by component
Amount at Approval Actual at project completion Percentage of Components (US$ million) (US$ million) Approval Component I: Reforestation and rehabilitation of 98.22 103.30 105.2 % damaged ecological forest plantations Component II: Institutional support and technology 11.73 11.70 99.7 % enhancement Contingencies 5.05 n/a n/a
Front end fees 0.20 n/a n/a
Total 115.2 115.2 100.00 Note: Contingency of US$ 5.05 million was budgeted at approval, this covered an increase in costs of component I (as did a transfer of US$0.3 million from component II).
107. Funding by source: An International Bank for Reconstruction and Development (IBRD) loan financed 70.8 percent (US$80 million) of the project, with the remainder of costs (US$35.2 million) financed from the counterpart (unchanged from appraisal). Counterpart financing included provincial- level supporting funds (3.96 percent of the project total), county-level supporting funds (5.60 percent), financial funds for bundled projects (3.00 percent), and beneficiary investment (16.65 percent). Beneficiary investment comprised in-kind labor contributions. Specifically, beneficiaries would be reimbursed for a certain quantity of agreed labor from project funds, while a further amount of their labor contribution (around 20 percent) was not-reimbursable and thus represented an in-kind contribution.
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ANNEX 4. EFFICIENCY ANALYSIS
108. Cost-benefit analysis for the project was conducted to re-assess the project’s economic viability at completion. The analysis has adopted the same approach as at project appraisal for methodological consistency, with the following changes to reflect the situation at project completion: (a) a carbon sequestration benefit of US$40 per tonne is adopted against the US$10 per tonne CO2 value used at appraisal (in line with updated Bank guidance);55 (b) quantities of major inputs for the production modules are based on actual expenditures , while the future production projections are made jointly by the project monitoring units and extension workers; and (c) market prices for major inputs and outputs have been updated (in 2018 constant prices) to reflect price trends during the project's life. 109. The economic analysis took into the consideration key quantifiable benefits. These include (a) direct production benefits, including returns to the production of quality seedlings; (b) carbon sequestration; and (c) the retention of water, soil and nutrients. The project costs cover all expenses under each component including operations and maintenance costs after the project completion. Both Bank and counterpart funds are included. • Direct production benefits: Input/output plantation models and cash flow models are used to estimate the net value of production from all plantation and rehabilitation activities. These models use quantities of inputs (seedlings, fertilizer, labor, etc.) valued at prevailing market prices. Similarly, outputs such as timber, fruits and non-timber products are estimated and valued at market prices (excluding cost of harvesting and transport). For forest products that are not harvested, the market value of the standing volume is estimated at the end of each production cycle. • Carbon sequestration: Vegetation and soils are widely recognized as carbon storage sinks. Species and plantation arrangements and thus carbon sequestration rates vary across project sites and models, however most reforestation activities in the project can be expected to generate incremental carbon sequestration over the project's life. The expected increase in biomass is used to estimate carbon sequestration. • The retention of water, soil and nutrients: one of the key environmental benefits of reforestation is the retention of water, soil and nutrients. This reduces sediment inflow into rivers with several benefits: (a) irrigation systems suffer less from large inflows of sediment that choke canals and often make it necessary to stop diversions when sediment loads are high; (b) river channels become stable and maintenance costs for river drainage works are reduced; (c) sediment build up in downstream reservoirs is slowed, and (d) the rise of the riverbed is slowed and the cost of raising flood embankments can be deferred. Based on established practices in Hunan Province,56 the economic value of each ton of water and soil retained is estimated at RMB1.6 and RMB 10.56, which are conservative estimates (values were set in 2008).
55 World Bank (2017). Guidance note on shadow price of carbon in economic analysis (link). Note that the US$40 per tonne carbon value is the lower-bound recommendation, leading to conservative estimates. 56 “Guidelines on Economic Evaluation of Forest Ecosystems” 《森林生态系统服务功能评估规范》（LY/T 1721-2008）
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• Economic price assumptions: It is assumed that the prevailing market prices net of taxes are a sufficiently accurate representation of economic value.
• Project life: Models are assumed to have production cycle of 30 year, except nurseries, which have a production cycle of 10 years. 110. The overall project EIRR is estimated at 21.3 percent. This is higher than the estimation at appraisal (17.6 percent) mainly due to the increased carbon value. A sensitivity analysis was performed regarding this carbon value, which indicated an overall EIRR of 19.02 percent at completion with the carbon price used at appraisal (US$10 per tonne), and an EIRR of 18.21 percent at completion when estimated with a carbon value of zero. Other substantial but not-readily-quantifiable economic benefits, such as biodiversity conservation, landscape amenity improvements, and contribution to agricultural tourism, are not included rendering the economic return estimation conservative. 111. Financial analysis was conducted to evaluate the incentives for beneficiaries to participate in the project. The direct production benefits are the incomes and revenues generated by wood, fuel wood and bamboo poles from thinning, and harvesting of bamboo sprouts from forest plantations; harvesting red bayberries and nuts from firebreaks and some economic species, as well as seedlings produced by the nurseries. 112. The overall FIRR is calculated at 8.3 percent, with FIRRs for individual plantation models at completion ranging from 7.8 to 9.2 percent. These are slightly lower than estimates at appraisal (8.1 to 10.1 percent) due to input prices increases including labor, but broadly in line with the benefit expectations of key stakeholders from an ecological forestry project. It should be noted that the World Bank loan proceeds were provided as grant to farmers to subsidize the establishment costs of forestation models during project implementation. As such, all plantation models proved financially attractive to farmers with FIRRs above 12 percent. 113. Project financing arrangements took the primary public good nature of the project into consideration. The provincial and project county governments provided around two thirds of the required counterpart funding and take responsibility for IBRD loan repayment. Financing for farmers was provided on grant basis, and as such all FIRRs by model are above 12 percent on their investment indicating reasonable financial incentives for participation. Additionally, some participating farmers also raised mountain chickens, planted medical herbs and other non-timber products under forest stands to increase income further (not included in economic analysis). 114. Project implementation efficiency was high. Most project activities were completed well ahead of schedule and all loan proceeds disbursed a year before project completion (see Annex 9). Component costs are very similar to that estimated at appraisal (see Annex 3), with minor reasons for divergence described in Section I.B. Plantation costs compare favorably to other forest projects, partially due to the project's partial use of relatively low-cost regeneration methods.
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Table A - 2: Economic and financial analysis of project by component at appraisal and completion
EIRR (%) FIRR (%)
Activity or Model At Appraisal At ICR At Appraisal At ICR M1: Conifer + Broadleaf 18.9 20.11 8.4 7.95 M2: Conifer + Precious Broadleaf 18.8 21.02 9.2 9.11 M3: Precious and High-value Broadleaf 24.6 26.40 9.2 8.88 M4: Mixed Broadleaf 26.6 24.74 8.1 8.03 M5: Conifer + Broadleaf 18.9 26.28 8.9 7.82 M6: Conifer + Precious Broadleaf 18.8 25.94 10.1 9.18 M7: Bamboo + Tree 11.4 19.20 10.0 8.34 M8: Assisted Natural Regeneration 18.0 24.02 8.1 8.16 Nurseries 23.8 24.96 21.6 21.58 Total project – including administrative costs 17.6 21.32 8.4 8.32
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ANNEX 5. BORROWER COMMENTS
Dear World Bank Officer:
The project agencies have reviewed the ICR of Hunan Forest Restoration and Development Project, which is prepared by the World Bank. We believe that the ICR has evaluated all the aspects relevant to the project preparation and implementation with thorough assessments and the key lessons learned from the project summarized. The cited literature is comprehensive, the data used is accurate and the evaluation results are objective. Therefore, we fully support the ICR’s evaluation work and its results.
We would like to take this opportunity to thank the Bank task team for their outstanding contributions made in guiding the successful project implementation and the high quality ICR prepared by the authors.
Hunan Provincial PMO
September 10, 2019
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ANNEX 6. SUPPORTING DOCUMENTS
Client project Documents:
• Completion Acceptance Report of Hunan Forest Restoration and Development project (March 2019) (with annexes) • Environmental Management Plan (2012) (link) • Ethnic Minority Development Plan (2012) (link) • Pest Management Plan (2012) (link) • Procurement Plan (2013-14) (link)
World Bank Documents:
• project Appraisal Document: Hunan Forest Restoration and Development project (2012) • Integrated Safeguards Datasheet: Hunan Forest Restoration and Development project (2012) (link) • Implementation Status and Results Reports (ISRs) (Seq. 1 June 2013 - Seq. 12 December 2018) (link) • Aide Memoires (from identification, March 2011 through to ICR, March 2019) • World Bank Group (2012) Country Partnership Strategy (CPS) for China, 2013‐16 (link) • World Bank Group (2019). China Country Partnership Framework (CPF), 2020‐25 (draft). • World Bank Group (2018). China Systematic Country Diagnostic: towards a more inclusive and sustainable development. (link) • World Bank Group (2017). Evaluation of Resilience-Building Operations (Guidance Paper for project Task Teams). (link) • World Bank Group (2012). Performance Assessment Report: A Cluster Assessment of Forest projects and Analytic and Advisory Activities (Independent Evaluation Group).
Other literature is referenced in footnotes throughout document.
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ANNEX 7. SUPPORTING DATA: FOREST ECOLOGY AND MODELS
115. Forest model descriptions and areas planted:
Table A - 3: Model descriptions and areas
Model description Area Completed (ha) M1 Coniferous and broad-leaved mixed forest 21,374.3 Cedarwood, liquidambar formosana hance, blueberry tree, cedrela sinensis) M2 Coniferous and precious broad- leaved mixed forest 9,418.8 (Cedarwood, liriodendron, sassafras tzumu) Full M3 Precious and rare broad-leaved forest Reforestation 760.6 (sassafras tzumu, liriodendron Chinese, cinnamomum camphora and gingko) M4 Mixed forest of general broad- leaved trees 1,097.9 (liriodendron, nanmu, ginkgo) Total area of full reforestation 32,651.6 M5 Coniferous and broad-leaved mixed forest 11,345.2 (Slash pine, liquidambar formosana Hance, Robinia pseudoacacia and cinnamomum camphora) M6 Coniferous and precious broad- leaved mixed forest 5,422.0 Partial (masson pine, camphor tree, liquidambar formosana Hance, schima superba) Reforestation M7 Bamboo and arbor mixed forest 4,906.2 moso bamboo, blueberry tree, schima superba) Total area of partial reforestation 31,673.4 M8 Artificially promoted natural regeneration forest 7,661.7 Regeneration (cedar, wild jujube, michelia, taxus chinensis) Total area of regeneration 7,661.7 Total 61986.7
116. The relationship between resilience and diversity: Resilience is the "capacity of a forest to withstand (absorb) external pressures and return, over time, to its pre-disturbance state. When viewed over an appropriate time span, a resilient forest ecosystem is able to maintain its ‘identity’ in terms of taxonomic composition, structure, ecological functions, and process rates".57 The basis for the relationship between diversity and resilience is the insurance hypothesis. This hypothesis posits that species richness helps to buffer fluctuations in environmental conditions. The key mechanism underlying the insurance hypothesis is species asynchrony, i.e. species may have different and independent responses to similar environmental conditions. This variety in responses helps insure
57 Thompson, I., Mackey, B., McNulty, S., Mosseler, A. (2009). Forest Resilience, Biodiversity, and Climate Change. A synthesis of the biodiversity/resilience/stability relationship in forest ecosystems. Secretariat of the Convention on Biological Diversity, Montreal. Technical Series no. 43.
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ecosystems against declines in overall functioning because of the higher likelihood that that some species will maintain function even if others fail. 58 117. Species introduced by the project: A total of 53 tree species were introduced, of which all 10 species within the Quercus genus (oaks) were treated as one species given their similar characteristics (hence the recorded number of species in the RF is 43). Species were: China fir, pinus massoniana, cypress, slash pine, Japanese larch, metasequoia, cyclobalanopsis glauca, castanopsis sclerophylla, phoebe zhennan, beech, castanopsis eyrei, cyclobalanopsis gilva, albizzia julibrissin, liriodendron, michelia yunnanensis, manglietia, acer mono maxim, cerasus campanulata, koelreuteria paniculata, castanea henryi, castanea mollissina, and magnolia moso bamboo, myricaceae, walnut, camellia oleifera, cedrela sinensis, taxus chinensis, var. mairei, sassafras, schima superba, sweetgum, choerospondias axillaris, camphor, cinnamomum micranthum, ginkgo, dalbergia odorifera, betula luminifera, ailanthus altissima, robinia pseudoacacia, elaeocarpus decipiens, Quercus sp., cryptomeria fortunei, fokienia hodginsii, pinus densiflora, cephalotaxus fortunei, toon, tanoak ,castanopsis fissa, machilus thunbergii, ornamental wood, cyclocarya paliurus, osmanthus and camptotheca acuminata.
58 Yachi S., and Loreau, M. (1999). Biodiversity and ecosystem productivity in a fluctuating environment: the insurance hypothesis. PNAS 96(4), 1463–1468.
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ANNEX 8. THEORY OF CHANGE ASSUMPTIONS
118. The following assumptions are required for the project's theory of change (Figure 2) to hold. All were assessed as reasonable/likely at time of ICR based on the project's experience to date.
• Assumption 1 (A.1): An outcome of successful reforestation assumes that young tree survival rates would be sufficiently high.
• A.2: An outcome of improved resilience assumes that the project's models would have increased storm, pest and disease resilience relative to traditional plantation models (the project introduced eight new multifunction forest models, which were untested at scale prior to the project).
• A.3: An outcome of improved ecosystem function assumes that the forest models will reduce soil erosion, retain water, increase biodiversity, and attenuate soil pollution.
• A.4: An outcome of increased community involvement over forest management assumes that stakeholders will respect and embrace the community consultation process.
• A.5: An outcome of increased income for rural communities assumes that timber extraction will be possible, i.e. that at time of maturity, selective harvesting will be economically feasible and permitted.
• A.6: An outcome of farmers and officials knowledgeable about multifunction forest management assumes that research translates successfully into extension, and that lessons are effectively communicated to, and adopted by, farmers and officials.
• A.7: The above outcome (A-7) similarly requires that there will be demand for indigenous broadleaf species (on which many of the project's multifunction models are based) beyond the project areas.
• A.8: An outcome of increased income for rural communities assumes that there will be available markets for the resulting forest products.
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ANNEX 9. IMPLEMENTATION ARANGEMENTS AND DISBURSEMENT
Figure A - 1: Implementing arrangements and financial management overview
Figure A - 2: Planned and actual disbursements from the Bank to the project designated account
100
80
60
40
20
Disbursement Disbursement (US$, millions) 0
Originally planned amount Actual amount
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ANNEX 10. OVERVIEW OF M&E
119. A total of 130 sites in 10 counties (out of a total 22) were selected for forest monitoring, distributed throughout the province and across all eight forest models. Outcomes monitored include the amount and quality of reforestation, carbon sequestration, soil water retention, soil erosion, diseases and pest incidence, vegetation diversity and coverage, heavy metals, soil nutrients, soil pH, and air pollution, among others (see Table A - 4). Not all variables were measured at all sites. 120. Outcomes were assessed using fixed sample plots laid evenly through the forest area and across topographies in select forest plots. Monitoring frequency varied from every two years for carbon, once per year (for soil erosion, biodiversity, tree growth, forest structure), once per month (soil water holding capacity), to daily (for pest incidence, but only during certain months). 121. A range of environmental outcomes were measured within control plots, selected for their similar environmental conditions, proximity, and forest stand age to project plots, but crucially differing in the forest model used. Control plots contained "traditional" forest methods, while project plots contained one of the eight new ecological forest models. In the case of afforestation models (M1- M4), either pure conifer or pure broad-leaf species (depending on the dominant species in each model) were selected as controls. In the case of forest restoration models (M5-M8), open forest land without tending or replanting was selected. 122. To determine social outcomes, a total of 400 farmer household questionnaire interviews, 31 village representative meetings (with 227 village representatives), and 44 government department/agency surveys were conducted across the 22 counties. Data collected includes employment, training, forest cooperative capability, public awareness of the project, changes in government practices, sustainability, and fulfillment of the ethnic minority development plan. Surveys were undertaken in 2014 (baseline), 2016 (midline), and 2018 (close to completion). A further assessment of project outcomes specific to ethnic minority peoples (see Box 1) took place through five village representative discussions with 195 people participating. In addition, 196 ethnic minority households were interviewed using the same questionnaire.
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123. Summary of ecosystem function monitoring and evaluation results
Table A - 4: Select indicators of environmental function of project forest models and control plots, and establishment cost
Stand volume CO2 Input Cost in at project Stand volume sequestered Disease and the First Three Number of tree completion (m3 after 20 years after 20 years Soil loss (tonnes Water storage pest occurrence Model Years (US$) species per ha) m3 per ha (tonnes per ha) per ha) (T/ha) rate (percent)
Mixed stand in project 2,778 15 4.86 446.8 817.61 41.05 2,090.5 10.1 M1 Control pure stand 2,138 13 5.23 406.2 743.3 48.01 1,703.2 14.3
Mixed stand in project 2,859 13 6.12 403.3 738.0 41.74 1,881.2 10.9 M2 Control pure stand 2,475 6 6.42 366.6 670.9 48.01 1,701.2 14.3
project replanting nursery 2,933 4 4.72 422.9 773.9 44.22 1,137.3 9.7 M3 Control stand 2,700 4 5.12 384.4 703.5 48.01 1,701.2 14.3
Mixed stand in project 3,215 14 7.64 425.4 778.5 44.25 1,127.6 5.6 M4 Control pure stand 2,813 1 9.42 405.2 741.4 48.01 1,700.2 23.1
Mixed stand in project 1,216 3 4.42 273.9 501.3 0.67 1,019.0 23.4 M5 Control pure stand 608 5 4.27 238.2 435.9 0.73 1,025.9 13.5
Mixed stand in project 1,691 6 5.23 335.3 613.6 0.66 1,016.7 9.8 M6 Control pure stand 619 5 4.38 304.8 557.8 0.71 1,025.3 23.1
project replanting nursery - 18 - - - 1.67 1,092.8 20.9 M7 Control bamboo forest - 8 - - - 1.98 1,070.1 29.6
project replanting nursery 1,287 7 5.80 477.2 873.2 0.34 1,024.8 37.3 M8 Control stand 641 14 5.40 433.8 793.8 0.42 1,014.8 32.5
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ANNEX 11. MAP OF PROJECT AREA
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