Environmental Assessment Update

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UPDATED REPORT

Ministry of Agriculture, Food and Forests, Romania

Romania Forest Development Project: Environmental Assessment Update

Volume I

Summary and Main Report

September 2002

Environmental Resources Management 8 Cavendish Square, London W1M 0ER Telephone 020 7465 7200 Facsimile 020 7465 7272 Email [email protected] http://www.ermuk.com in association with Intergroup Engineering SRL, Romania

Romania Forest Development Project: Environmental Assessment Update

September 2002

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ACRONYMS AND NAMES AAC Annual Allowable Cut AGV Association of Hunters AGVPS Association of Hunters and Fishermen ALFO Association of Local Forest Owners ANT National Tourism Authority ANTREC National Association for Rural Tourism APM Environmental Protection Agency APMR Association of Romanian Furniture Producers APPR Association of Private Forest Owners APPR Association of Private Forest Owners ASFOR Association of Romanian Foresters Asociatia “Stejarul” “Oak” Association DoF Department of Forests DS County Branch, National Forest Administration DSPL Directorate for Strategy, Policy and Legislation, Dept. of Forests EA Environmental Assessment (equivalent to EIA) EIA Environmental Impact Assessment (equivalent to EA) EMP Environmental Management Plan ERM Environmental Resources Management (consultancy) EU European Union FAO Food and Agriculture Organization FDP Forest Development Project FI Forest Inspectorate FMIMS Forest Management Information and Monitoring System FMP Forest Management Plan ForsBIC Forest Business Information Center Fortech FORTECH – FDP project preparation consultant FSC Forest Stewardship Council GDF General Directorate of Forests GEF Global Environment Facility GIS Geographic Information System GOR Government of Romania IBA Important Bird Area IC Institutional Change ICAS Forest Management and Research Institute (Institutul de Cercetari si Amenajari Silvice) INL Wood Institute (Institutu National al Leminuliu) IT Information Technology MAFF Ministry of Agriculture, Food and Forests MIS Management Information System MoI Ministry of Industry MWEP Ministry of Water and Environmental Protection MWFEP Ministry of Water, Forests and Environmental Protection NFA National Forest Administration NFPS National Forest Policy and Strategy NTFP Non-timber Forest Product

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ACRONYMS AND NAMES PCT Project Coordination Team PFOA Private Forest Owners Associations PM Project Management Group Ltd. (consultancy) POC Project Oversight Committee PPT Project Preparation Team RNP Regiei Nationale a Padurilor (see also NFA) ROMPAP Association of Romanian Pulp and Paper Producers SAPARD Special Accession Program for Rural Development SDF Social Development Fund SFM Sustainable Forest Management SME Small and Medium-scaled Enterprise TOR Terms of Reference WB World Bank

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Romania Forest Development Project: Environmental Assessment Update

PREFACE

This Environmental Assessment Update was prepared to provide additional information about the proposed Romania Forest Development Project which was not available at the time when work on the original Environmental Assessment was completed and made available in October 2001. (The EA was actually finalized on October 9, 2001, but its final version was not made publicly available until later in the month).

The original Environmental Assessment was prepared by ERM and Intergroup Engineering Romania. This Update has been prepared by staff commissioned by the Ministry of Agriculture, Food and Forests in cooperation with ERM and Intergroup on the basis of additional inputs prepared for the Project Appraisal Mission (which took place from October 14 to 26, 2001) and which had not been available at the time the EA was finalized.

The Update includes all the information outlined in the original Environmental Assessment. It does not substantively change any of the findings from the original Environmental Assessment, but seeks to address concerns with respect to incomplete information in the original EA which were raised during subsequent consultations with Romanian NGOs. It also seeks to clarify some of the issues which were not clear in the original Environmental Assessment. It draws on additional material prepared for the project.

There have been numerous consultations and public discussions about this Environmental Assessment, and these are summarized in Appendix 3: Consultations and Disclosure with respect to project preparation and in relation to preparation of the Environmental Assessment of the Forest Development Project. These include public consultations about the Terms of Reference for the Environmental Assessment (which were held in Piatra Neamt, Targoviste, Arad, and Bucharest in October 2000), and about the draft and final Environmental Assessment (held in Brasov in July 2001 and in September 2001). In addition, the Ministry sought comments on the process by soliciting these through announcements in the press.

Extensive information about the project has been made available on the project’s website (www.forestier.ro), including (and unusually) the full version of the draft Project Appraisal Document, since January 2002.

Additional concerns were raised about the project and the Environmental Assessment following Appraisal, which had not been voiced during the initial and extensive period of consultation leading to project preparation and to preparation of the Environmental

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Assessment. In December 2001, the Romanian project preparation team met with concerned local NGOs to discuss these issues more fully. Subsequent correspondence from CEE Bankwatch and a group of 17 Romanian NGOs with World Bank President James D. Wolfensohn indicated continuing concern about the project and the Environmental Assessment. This correspondence is included with this Update in Volume II, Annex 4.

During another NGO consultation convened in Brasov, on March 21, 2002, it was agreed that there was scope for improving the original Environmental Assessment. The meeting made the following suggestions for improvement, which have been incorporated into the Terms of Reference for this Update (See Appendix 2: Terms of Reference for Environmental Assessment Update):

· Include information which was not fully reported upon, particularly with respect to fuller information about the project, the location of the initial list of roads targeted for rehabilitation or construction, changes to the legal framework which may impact project implementation, information about the consultation process which was used both to inform preparation of the project and to improve the Environmental Assessment, maps (for those roads which have preliminarily been identified for rehabilitation or construction) and other information about initiatives with respect to public activities to conserve biodiversity (including the GEF-financed Biodiversity Conservation Management Project);

· Incorporate the text and recommendations which are outlined in Annex IIA of the original Environmental Assessment ['Initial Report on Environmental Aspects of Forest Roads Component' prepared by Fortech, Dames and Moore, and Projec t Management (Ireland)] into the Environmental Assessment as an integral part of it, to develop binding recommendations during roads construction and rehabilitation;

· Consider more fully the likely direct and indirect impacts of project investments on harvesting, based on information which is available, and develop and describe actions to mitigate these impacts where they are not consistent with sustainable forest management practices;

· To the extent possible, examine the risks to project performance associated with illegal harvesting and problems of governance, and propose steps to reduce these risks;

· add more information about the project alternatives considered and the reasons for their rejection (particularly in the context of the National Forest Policy and Strategy).

· Describe in detail the steps taken to publicly disclose information about the project, as well as the steps taken to disclose and consult with key stakeholders during preparation of the original Environmental Assessment.

This Update seeks to provide clarification about these issues.

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Romania Forest Development Project: Environmental Assessment Update

TABLE OF CONTENTS

VOLUME I: SUMMARY AND MAIN REPORT

SUMMARY ...... I

1. INTRODUCTION...... 1 1.1 PROJECT BACKGROUND...... 1 1.2 NEED FOR ENVIRONMENTAL ASSESSMENT...... 2 1.3 SCOPE OF THE ENVIRONMENTAL ASSESSMENT...... 3 1.4 STUDY APPROACH AND METHODOLOGY ...... 5 1.5 CONTENTS OF THIS REPORT ...... 6

2. POLICY, LEGAL, AND INSTITUTIONAL FRAMEWO RK...... 9 2.1 POLICY AND LEGISLATION...... 9 2.1.1. Forest Policy...... 9 2.1.2. Environmental Policy and Strategy ...... 12 2.1.3. Environmental Impact Assessment ...... 13 2.1.4. Policies Toward Biodiversity and Protected Area Management ...... 16 2.2 INSTITUTIONAL FRAMEWORK FOR FOREST CONSERVATION AND MANAGEMENT IN ROMANIA...... 19 2.2.1. Department of Forests ...... 19 2.2.2. National Forest Administration ...... 23 2.2.3. Non-governmental Organizations ...... 25 2.3 KEY SECTORAL ISSUES...... 27 2.3.1. Overview...... 27 2.3.2. Restitution of Forest Lands...... 27 2.3.3. Evolving Role of the National Forest Administration ...... 28 2.3.4. Timber Pricing Policy ...... 29 2.3.5. Access to Forest Resources...... 29 2.3.6. Low Productivity in Primary Wood Processing Industries...... 30 2.3.7. Legislation, Enforcement and Governance ...... 31

3. THE PROPOSED FOREST DEVELOPMENT PROJECT...... 33 3.1 PROJECT DEVELOPMENT OBJECTIVES AND OVERVIEW...... 33 3.2 PROJECT COMPONENTS...... 33 3.2.1. Establish Systems to Ensure Sustainable Management of Private Forest Lands (Component 1)...... 34 3.2.2. Mitigate the Consequences of Restitution on Management of State Forest Land (Component 2)...... 39 3.2.3. Support Increased Productivity and Competitiveness of Forest Industries (Component 3) ...... 44 3.2.4. Building Public Support for Sustainable Forest Management (Component 4)...... 45

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3.2.5. Project Management and Monitoring (Component 5)...... 46 3.3 INSTITUTIONAL ARRANGEMENTS FOR PROJECT IMPLEMENTATION ...... 46 3.4 ANTICIPATED BENEFITS OF THE FDP...... 47 3.4.1. Environmental Benefits: ...... 47 3.4.2. Economic Benefits ...... 48 3.4.3. Social Benefits ...... 49 3.4.4. Institutional Benefits ...... 50

4. BASELINE ENVIRONMENTAL AND SOCIAL CONDITIONS...... 51 4.1 INTRODUCTION ...... 51 4.2 THE FOREST SECTOR...... 51 4.2.1. Introduction ...... 51 4.2.2. Forest Resources...... 52 4.2.3. Forest Management...... 53 4.2.4. Forest Production...... 54 4.2.5. Trends in Resource Use...... 58 4.2.6. Forest Certification...... 59 4.2.7. Illegal Harvesting ...... 60 4.2.8. Forest Land Ownership...... 60 4.3 ENVIRONMENTAL CONTEXT...... 60 4.3.1. Flora and Fauna ...... 60 4.3.2. Geology and Soils ...... 62 4.4. SOCIAL AND ECONOMIC CONTEXT...... 63

5. FDP’S CRITICAL ENVIRONMENTAL AND SOCIAL IMPACTS AND MITIGATION MEASURES...... 67 5.1 INTRODUCTION ...... 67 5.2. ESTABLISH SYSTEMS TO ENSURE SUSTAINABLE MANAGEMENT OF PRIVATE FOREST LANDS (COMPONENT 1)...... 70 5.2.1. Likely Environmental Impacts ...... 70 5.2.2. Mitigation Measures ...... 71 5.3 MITIGATE THE CONSEQUENCES OF RESTITUTION ON MANAGEMENT OF STATE FOREST LAND (COMPONENT 2)...... 73 5.3.1. Likely Environmental Impacts ...... 74 5.3.2. Mitigation Measures ...... 84 5.4 SUPPORT INCREASED PRODUCTIVITY AND COMPETITIVENESS OF FOREST INDUSTRIES (COMPONENT 3)...... 103 5.4.1. Likely Environmental Impacts ...... 103 5.4.2. Mitigation Measures ...... 103 5.5 BUILDING PUBLIC SUPPORT FOR SUSTAINABLE FOREST MANAGEMENT (COMPONENT 4) ...... 104 5.5.1. Likely Environmental Impacts ...... 104 5.5.2. Mitigation Measures ...... 105 5.6 PROJECT MANAGEMENT AND MONITORING (COMPONENT 5)...... 105 5.6.1. Likely Environmental Impacts ...... 105 5.6.2. Mitigation Measures ...... 105 5.7 LIKELY SOCIAL IMPACTS OF PROJECT INVESTMENTS...... 106 5.7.1. Income and Employment...... 106 5.7.2. Access to Resources ...... 106 5.7.3. Additional Social Issues ...... 107

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6. PROJECT ALTERNATIVES ...... 109 6.1 THE PROJECT IDENTIFICATION PROCESS AND THE NFPS PROCESS...... 109 6.2 STRENGTHENING THE STATUS QUO...... 109 6.3 OPTIONS FOR DEVELOPIN G THE FOREST ROAD NETWORK...... 110 6.4 THE ‘WITHOUT PROJECT’ SCENARIO...... 111 6.4.1. Likely impacts of restitution ...... 111 6.4.2. Establishing Systems to Ensure Sustainable Management of Private Forest Lands and Building Public Support for Sustainable Forest Management: Analysis of Components 1 and 4 ...... 119 6.4.3. Mitigation of the Consequences of Restitution on Management of State Forest Lands: Analysis of Component 2 ...... 125 6.4.4. Support for Increased Productivity and Competitiveness of Forest Industries: Analysis of Component 3 ...... 131

7. ENVIRONMENTAL MANAGEMENT AND MONITORING PLAN...... 133 7.1 INTRODUCTION...... 133 7.2 MEASURES RELEVANT TO IMPLEMENTING THE ENVIRONMENTAL MANAGEMENT PLAN ..133 7.2.1 Involvement of the Civil Society and the Private Sector ...... 133 7.2.2. Institutional issues...... 134

APPENDICES...... 145 APPENDIX 1: RESPONSIBILITIES FOR PREPARATION OF ENVIRONMENTAL ASSESSMENT OF THE FOREST DEVELOPMENT PROJECT...... 146 APPENDIX 2: TERMS OF REFERENCE FOR ENVIRONMENTAL ASSESSMENT UPDATE...... 147 APPENDIX 3: CONSULTATIONS AND DISCLOSURE WITH RESPECT TO PROJECT PREPARATION AND IN RELATION TO PREPARATION OF THE ENVIRONMENTAL ASSESSMENT OF THE FOREST DEVELOPMENT PROJECT...... 153 APPENDIX 4: PROTECTED AREAS OF ROMANIA (MAP, LOCATION, AREA) ...... 174 APPENDIX 5: PRELIMINARY LIST OF ROADS REHABILITATION AND CONSTRUCTION SUB-PROJECTS AND MAPS...... 177 APPENDIX 6: PROTECTION FORESTS: FUNCTIONAL CATEGORIES AND PERMISSIBLE FELLING SYSTEMS IN ROMANIA...... 190 APPENDIX 7: LIST OF UNDISTURBED FORESTS IN ROMANIA...... 193 APPENDIX 8: SUGGESTED SCREENING FOR WOOD PROCESSING INDUSTRIES...... 196 APPENDIX 9: DRAFT TERMS OF REFERENCE FOR DIAGNOSTIC STUDY OF CORRUPTION IN THE FORESTRY SECTOR...... 197 APPENDIX 10: RESULTS FROM PRELIMINARY SCREENING OF ROADS REHABILITATION SUB- PROJECTS FOR THEIR ENVIRONMENTAL AND SOCIAL IMPACTS...... 204 APPENDIX 11: BIBLIOGRAPHY...... 210

L TABLES

Table 1: Status of restitution of forest land under Law 1/2000 (as of May 2002)...... 12 Table 2: Institutional responsibilities of key Romanian institutions relevant to forestry and the environment.... 20 Table 3: Indicative Costs and Bank financing by FDP component/subcomponent...... 33 Table 4: Net Present Value and Internal Rate of Return of the FDP ...... 48 Table 5: Sensitivity Analysis Changing variables to reduce the NPV to zero...... 49 Table 6: Overview of Romanian Forests (May 2002) ...... 53 Table 7: Employment in Forestry and Wood Processing in Romania...... 64 Table 8: Summary of Potential Impacts With and Without the FDP (excluding mitigation steps)...... 68

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Table 9: Schedule for implementation of FDP Forest Road Sub-Component ...... 85 Table 10: Screening Roads Construction and Rehabilitation Sub-projects for their potential environmental and social impacts...... 87 Table 11: Results from testing the screening method planned for FDP forest road rehabilitation sub-projects, key issues in road feasibility studies...... 90 Table 12 : Results from initial environmental and social screening of proposed roads rehabilitation sub-projects ...... 90 Table 13: Impacts, Mitigation and Management Actions for FDP Components ...... 97 Table 14: Area of Forest Cover of Forest Restituted in the 1991 Program, by Year...... 113 Table 15: Percentage distribution of Canopy Closure in Restituted Forest in 1992 and 1999...... 114 Table 16: Derived Standing Volume of Restituted Forests in 1992 (m3 x 103)...... 116 Table 17: Derived Standing Volume of Restituted Forests in 1999 (m3 x 103)...... 117 Table 18: Area of Forest Claimed by Type of Ownership under Law 1/2000...... 119 Table 19: Volume of Annual Loss in Production – Without Project, Likely Restitution Scenario ...... 121 Table 20: Value of Annual Loss in Production – Without Project, Likely Restitution Scenario...... 122 Table 21: Volume of Annual Loss in Production – Without Project, Prudent Restitution Scenario...... 122 Table 22: Value of Annual Loss in Production – Without Project, Likely Restitution Scenario...... 122 Table 23: Volume of Annual Loss in Production – With Project, Likely Restitution Scenario...... 123 Table 24: Value of Annual Loss in Production – With Project, Likely Restitution Scenario...... 123 Table 25: Volume of Annual Loss in Production – With Project, Prudent Restitution Scenario...... 123 Table 26: Value of Annual Loss in Production – With Project, Prudent Restitution Scenario...... 124 Table 27: Gross Economic Benefit of the Project – Likely Restitution Scenario ...... 124 Table 28: Gross Economic Benefit of the Project – Prudent Restitution Scenario...... 124 Table 29: Projected Cash Flow For FDP less Roads and Business Development Components...... 125 Table 30: Net Present Value at a Cost of Capital of 12 percent and the Economic Internal Rate of Return over 17 year period (the loan period) ...... 125 Table 31: Extraction Costs Without the Road, Valea Ruzii...... 127 Table 32: Estimated Extraction and Haulage Costs by Year Without the Road, Valea Ruzii (US$ )...... 128 Table 33: Extraction Costs With the Road, Valea Ruzii ...... 128 Table 34: Investment and average completion of the road by year, Valea Ruzii ...... 129 Table 35: Estimated Extraction and Haulage Costs by Year With the Road, Valea Ruzii (US$ ) ...... 129 Table 36: Cash Flow for first Eleven Years, Valea Ruzii...... 130 Table 37: Recommended Institutional Actions to Improve the Effectiveness of the FDP in environmental terms ...... 137 Table 38: Environmental Management Plan for the Romania Forest Development Project...... 139 Table 39: Key Public Consultations and Their Results...... 153

LIST OF FIGURES

Figure 1: Summary of the National Forestry Policy and Strategy for Romania...... 11 Figure 2: The structure of the Department of Forests within MAFF (April 2002)...... 21 Figure 3: Distribution of Forests in Romania...... 55 Figure 4: Annual Timber Harvesting in Romania, 1994-1999 ('000 m3) ...... 59 Figure 5: Graph showing predicted area restituted by year and type of ownership ...... 120 Figure 6: Comparison of the Restitution Scenarios, Total Area Restituted by Year...... 121 Figure 7: Romania Biosphere Reserves, National, and Natural Parks...... 175 Figure 8: Number/ Area of Scientific Reserves, Natural Reserves, and Natural Monuments, by County...... 176 Figure 9: Approximate Orientation of Detailed Maps Showing Location of Roads Identified in Preliminary Screening for Rehabilitation or Construction...... 180 Figure 10: Location of proposed rehabilitation and construction, Valcea (Map 1)...... 181 Figure 11: Location of proposed rehabilitation and construction, Suceava (Map 2)...... 182 Figure 12: Location of proposed rehabilitation and construction, Prahova (Map 3)...... 183

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Figure 13: Location of proposed rehabilitation and construction, Neamt (Map 4) ...... 184 Figure 14: Location of proposed rehabilitation and construction, Mehedinti (Map 5)...... 185 Figure 15: Location of proposed rehabilitation and construction, Maramures (Map 6)...... 186 Figure 16: Location of proposed rehabilitation and construction, Bucarest (Map 7)...... 187 Figure 17: Location of proposed rehabilitation and construction, Hunedora (Map 8)...... 188 Figure 18: Location of proposed rehabilitation and construction, Cluj (Map 9) ...... 189

LIST OF TEXT BOXES

Box 1: Water Law No. 107/1996, Article 31...... 16 Box 2: Current approval process for forest roads...... 26 Box 3: Impacts of the 1991 restitution of forest lands...... 112

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VOLUME II: ANNEXES

Annex 1: Initial Report on Environmental Aspects of Forest Roads Component, report prepared by Fortech, Dames & Moore (UK) and Project Management (Ireland) for the Romania Forest Development Project, March 2001

Annex 2: Initial Economic Analysis of the Forestry Development Project, report prepared by Fortech, Dames & Moore (UK) and Project Management (Ireland) for the Romania Forest Development Project, March 2001

Annex 3: Environmental Assessment for the Rehabilitation of the Forest Road Valea Mare – Crizbav (Brasov County) and Environmental Assessment for the Rehabilitation of the Forest Road Paltinoasa (Prahova County), report prepared by Intergroup Engineering for the Romania Forest Development Project, May 2001.

Annex 4: Correspondence and Other Documentation regarding the Forest Development Project from civil society groups following Project Appraisal

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Romania Forest Development Project: Environmental Assessment Update

SUMMARY

INTRODUCTION

The original Environmental Assessment (EA) was prepared by ERM and Intergroup Engineering Romania. This Update has been prepared by staff commissioned by the Ministry of Agriculture, Food and Forests in close cooperation with ERM and Intergroup on the basis of additional inputs prepared for the Project Appraisal Mission and which had not been available at the time the EA was finalized.1 The Update includes all the information included in the original Environmental Assessment. It does not substantively change any of the findings from the original Environmental Assessment, but seeks to address concerns with respect to incomplete information in the original EA which were raised during subsequent consultations with Romanian NGOs. It also seeks to clarify some of the issues which were not clear in the original Environmental Assessment and draws on additional material prepared for the project.

There have been numerous consultations and public discussions about the original Environmental Assessment. In addition, the Ministry of Agriculture, Food and Forests (MAFF) sought comments on the process by soliciting these through announcements in the press. Extensive information about the project has also been made available on the project’s website (www.forestier.ro), including (and unusually) the full version of the draft Project Appraisal Document (PAD), since January 2002.

Additional concerns were raised about the project and the Environmental Assessment which had not been voiced during the initial and extensive period of consultation leading to project preparation and to preparation of the Environmental Assessment. Following various exchanges with a group of interested environmental NGOs, it was agreed that there was scope for updating the information included in the original Environmental Assessment. Suggestions for improvements were developed during an NGO consultation in Brasov in March 2002, which recommended that an update should,

· include information which was not fully reported upon, particularly with respect to fuller information about the project, the location of the initial list of roads targeted for rehabilitation or construction, changes to the legal framework which may impact project implementation, information about the consultation process which was used both to inform preparation of the project and to improve the Environmental Assessment, maps (for those roads which have preliminarily been identified for rehabilitation or construction) and other information about initiatives with respect to public activities to conserve biodiversity (including the GEF- financed Biodiversity Conservation Management Project);

(1) According to the World Bank’s Operational Policy 4.01, Environmental Assessment, a project’s final Environmental Assessment is to be released prior to Appraisal, and any substantive issues raised as a result of the Environmental Assessment are supposed to be addressed during Appraisal. Further revisions to the EA which accommodate how the Appraised project addressed the concerns raised in the EA are not usually envisaged. In this respect, this EA Update is an exception.

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· Incorporate the text and recommendations which are outlined in Annex IIA of the original Environmental Assessment ['Initial Report on Environmental Aspects of Forest Roads Component' prepared by Fortech, Dames and Moore, and Project Management (Ireland)] into the Environmental Assessment as an integral part of it, to develop binding recommendations during roads construction and rehabilitation;

· To the extent possible, examine the risks to project performance associated with illegal harvesting and problems of governance, and propose steps to reduce these risks;

· add more information about the project alternatives considered and the reasons for their rejection (particularly in the context of the National Forest Policy and Strategy).

This Update was prepared to provide this information.

SECTORAL BACKGROUND

Romania's forests cover 27 percent of the country and include some of the last and largest tracts of natural and virgin old growth forests still remaining in Europe. They constitute an extremely valuable natural resource in terms of their capacity for sustainable production of forest products, provision of environmental services, and the conservation of biodiversity. While more than half of Romania's forests are managed for protection functions (rather than for timber production), in the year 2000 the export value of forest products (including processed timber) was estimated to be around US $1 billion -- equivalent to 10 percent of all exports. In contrast, the value of environmental services associated with forests is considerably larger, and is estimated at around US$3.1 billion.

Over the last fifty years, most of Romania’s forests have been owned by the State and managed by the State-owned National Forest Administration (NFA), which has a long and distinguished history of ecologically sound management of natural forests and the wildlife populations they support. In conjunction with the more general process of democratization, there has been mounting political pressure to commercialize the NFA and to privatize a number of its non-core activities, coupled with pressures to return more than one-third of all forest lands to their pre-1948 owners through the ongoing process of restitution. Extensive forest areas have been scheduled for restitution. Most of this land is production forest, which currently generates most of the revenues needed by NFA to undertake public functions associated with management of protection forest, including forest National and Natural Parks.

While the restitution of forest lands will ultimately lead to greater democratization, empowerment, and improved distribution of benefits from forest management to their owners and to associated rural communities, there are risks associated with the restitution process. Previous experience in Romania (1991/92) and elsewhere has shown that if the restitution of forest lands takes place without adequate legal and institutional mechanisms, the almost immediate loss of forest cover is likely to result, leading to irreversible environmental degradation and significant economic losses for the country. In anticipation of the much larger-scale restitution of forest lands which is now already underway, the role of the State will need to change rapidly to reduce the potentially devastating impacts of restitution on forests, the environment, and on the sector's long-term productive capacity. At the

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same time, the ability of new forest owners to undertake sustainable forest management will be constrained by technical skills, access to markets, and investment capital.

The NFA currently manages more than 85 percent of Romania's forests. This area will be reduced dramatically after restitution. Since most of the forests which will be returned to former owners is production forest, restitution will significantly increase the proportion of non-revenue generating activities undertaken by the NFA (from the management of protection forests and National and Natural Parks, which are areas rich in forest biodiversity) as a share of its total expenditure.

In summary, there are a number of key sectoral issues which include,

· the need to implement the recently prepared National Forest Policy and Strategy (NFPS) to provide overall direction for reform of the sector and to improve the climate for increased investment in management, production, and processing; · the challenge of improving Government's supervisory, regulatory, and monitoring capacity to maintain forests under sustainable management after restitution; · the need to finance and maintain NFA's role in managing and safeguarding remaining State- owned production and protection forests following restitution in the face of the loss of a large proportion of the production forests from which it currently derives much of its revenues; · the need to establish a timber pricing policy that is transparent and fair to forest owners and wood buyers; · the low density of the forest road network in production forests causes localized negative environmental impacts from harvesting, and high harvesting and transport costs; and · the efficiency of private wood processing industries could be improved and is sometimes constrained by the use of outdated technology as well as by access to capital to finance needed improvements, and to high-value markets which could improve their market position.

THE PROJECT

The Government of Romania (GOR) requested the assistance of the World Bank to prepare and to finance a Forest Development Project (FDP) to assist it in implementing the most important medium- term needs articulated in the strategic objectives of the NFPS. The overall aim of the FDP is to maintain and to improve environmentally sustainable management of state and private forests and to increase their contribution to the national and rural economies.

In line with this objective, the FDP is intended to assist MAFF to: (a) establish systems to ensure sustainable management of private forest lands, by building the capacity of the Department of Forests and its Forest Inspectorate, supporting the development of private forest owners associations, and establishing a forest management information and monitoring system; (b) mitigate the consequences of restitution on the management of State forest lands by assisting the NFA to maintain, develop and finance its role in managing protection forests, and to reduce potential negative environmental impacts and to improve the efficiency of managing State production forests through rehabilitation and development of the forest road network, piloting an effort to introduce improved environmental standards in roads design and rehabilitation; (c) support increased productivity and competitiveness of forest industries, through establishing and operating a Forest Sector Business Information Center (ForsBIC); and to (d) build public support for sustainable forest management by implementing a public awareness program targeting key stakeholders with emphasis on new forest land owners and their associated communities.

Indicative project costs are expected to total US$ 43 million. IBRD financing will total $US 33 million over the 6-year life of the project.

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FINDINGS OF THE ENVIRONMENTAL ASSESSMENT UPDATE

One of the sources of confusion which arose from the original Environmental Assessment was whether the EA was intended to address project specific impacts or overall, sectoral and cumulative impacts of the proposed FDP. In seeking to clarify this point, a review of the project’s impacts in this Update characterized firstly, expected project-specific impacts, and then expanded upon the impacts which are likely at the sectoral level – to the extent that these could be evaluated.

Even without the incorporation of specific mitigation steps, environmental impacts of most project components in the original Environmental Assessment were expected to be positive – as the project was very much conceived of as an effort to mitigate some of the envisaged negative environmental impacts of restitution. This Update confirms the original Environmental Assessment’s findings and its recommendations. Specifically, it is unlikely that there would be any positive environmental impacts of the ‘without project’ scenario, and likely considerable negative environmental impacts, very much reflecting the view of the EA team that project activities would be quite important for mitigating some of the negative environmental impacts of the planned restitution program. A review of likely critical environmental impacts and mitigating steps which have been incorporated into the project follows.

REVIEW OF CRITICAL ENVIRONMENTAL IMPACTS AND MITIGATION STEPS, BY COMPONENT.

Component 1: Establish Systems to Ensure Sustainable Management of Private Forest Lands

The first component of the project proposes to finance the strengthening of the Department of Forests within the Ministry of Agriculture, Food and Forests, with particular emphasis on strengthening the capacity of the Forest Inspectorates; to finance measures to develop the Association of Private Forest Owners and to establish community-based Associations of Local Forest Owners, and to establish a national Forest Management Information and Monitoring System.

No negative environmental impacts of this component are envisaged, and significant positive environmental impacts are anticipated.

A larger question which has been raised is whether or not the investments proposed go far enough. Will, for example, the elements of capacity building incorporated into the project provide sufficient leverage for the Forest Inspectorates adequately to perform their tasks? Do they have enough independence to do so? Is the overall policy and legal framework adequate for supporting the institutional reforms proposed by the project? Is there the political will to tackle issues of governance which could undermine the longer term process of reform? These are difficult questions, reflect largely sectoral concerns, and extend far beyond the normal scope of an EA.

Romania, like many other countries, faces budget constraints and a need to limit the size of its civil service. In the face of these circumstances, the project is supporting the establishment, at some financial cost, of the newly constituted Forest Inspectorate. Resources to fund capacity building and institutional development of the Forest Inspectorates would not be forthcoming in the absence of the FDP. Once performance of the Inspectorates can be properly evaluated, as a result of this support, the potential for subsequent commitments can be assessed, and this should provide the framework for future action.

The body of forest legislation in Romania is also evolving, in response to many of the changes which have accompanied the political and economic transition over the last 10 years. Even with the best legal and institutional framework for forest management in Romania, experience in many countries indicates that without the support of local communities and relevant stakeholders, enforcement is not effective. The project seeks, through a combination of measures, to build ownership for sustainable forest management, to bring about effective enforcement.

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Other questions have been raised about the likely impact of corruption on the sector as a whole, as well as on project implementation in particular. There is relatively little information known about the extent of corruption in the forest sector. The failure, however, to capture revenues as a result of corruption and illegal harvesting increases the overall cost of management, and supports rates of forest harvesting which are not consistent with generally accepted norms of sustainable forest management. There is scope for developing a far better understanding of the nature and dimension of problems of forest governance in Romania.

Mitigation measures are designed to address overall sectoral concerns (which would be in place even without the project), rather than specific impacts which are likely as a result of the project, which, as we have indicated, are expected to be nil in light of the wider sectoral framework. Within this framework, the project was designed to assist in addressing the issues of legislation, enforcement, and governance. The proposed project is partly designed to build the capacity of MAFF to enforce the forest code and to provide extension and advisory services, with particular emphasis on newly restituted forest lands where the risks of illegal and unsustainable practices are greatest. The project will also assist new forest owners, at the regional and community levels, to form and establish forest owners associations in order to consolidate private forest holdings into economically viable management units that can be managed in accordance with the existing forest management planning system.

Government support for the establishment of independent certification of forest products will provide additional incentives to ensure that forest management will be environmentally, socially and economically sustainable. Certification also represents European best practice, and this operation is one of the first in Romania to support this. Government has targeted over a million ha for eventual certification. A commitment to compliance with Forest Stewardship Council (FSC) standards is an indication of Government’s interest in seeing that production forests are sustainably and transparently managed. FSC standards also include moves to account for the chain-of-custody, which should also begin to address some of the problems of the marketing of illegally harvested timber.

Steps are also underway to find ways of certifying production from private forest owners, through the forest owners association network. The project will provide support for these types of initiatives to enable private forest owners to maximize returns to forest management.

In addition to these measures, the proposed FDP tackles the problem of governance in the sector in a number of important respects. Firstly, the strengthening of the Forest Inspectorates to improve their capacity to enforce forest legislation is a key objective of this component of the project. Indeed, the Forest Inspectorate has primary responsibility for control, monitoring, and forest law enforcement in both state and private forests. Secondly, the project seeks vastly to increase the availability of information about forest harvesting and management by establishing a national forest management information and monitoring system for the Department of Forests, greatly increasing its capacity for planning and monitoring. Finally, the public awareness component is very much design to improve local governance by making owners more aware of their rights and responsibilities and the importance of sustainable forest management.

These actions will seek to engage wider civil society groups in monitoring performance of the Forest Inspectorates and of the Department of Forests in seeking to enforce the legal framework.

An additional mitigation measure which is expected to be implemented (which had not been included in the original Environmental Assessment, but which has been agreed by Government), also posed within the framework of wider sectoral concerns (regardless of project-specific impacts) seeks to develop better information about the nature and extent of corruption in the forestry sector. A diagnostic study, which follows on the results of the overall national diagnostic of corruption, will be carried out once independent financing and implementing mechanisms are mobilized. The Diagnostic will be carried out by an independent institution with financing which is not related to the FDP. The Diagnostic Study will describe the nature of corruption in the sector and will propose a number of

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initiatives to reduce, control, or otherwise to mitigate the impacts of corruption on sectoral performance. Once the Diagnostic Study has been completed, around half of the project’s unallocated physical and price contingencies will be allocated specifically to implement priority recommendations of the Diagnostic (provided these recommendations have not already been accommodated by the project).

An important institutional mechanism for ensuring the project is performing to an adequate standard with respect to this component in particular is the Project Oversight Committee. The Project Oversight Committee will consist of representatives from the Department of Forests, MAFF, the Ministry of Finance, NFA, and the NGO community, and will be advised by various consultative groups which are to be established. The Committee will be responsible for providing project oversight advice and assistance in resolving issues associated with project implementation. Representation of the NGO community on the Oversight Committee has been welcomed by Government – an option not discussed in the original EA -- but the selection of a representative remains the responsibility of the NGO community, which has, to-date, been unable to identify a suitable representative.

Component 2. Mitigate the Consequences of Restitution on Management of State Forest Land

The second project component will provide support for reform and strategic development of the National Forest Administration, and for rehabilitation and construction of the forest roads network (including a key stretch of forest railway).

The reform process is geared toward assisting NFA to change in response to the wider changes which are already underway, particularly with respect to the restitution of forest lands. They are geared toward improving NFA’s efficiency and financial viability on remaining state forest lands which will be under its control. The project will provide resources to assist NFA in developing and implementing a strategic plan to strengthen its role in managing remaining State forests. The strategic plan will focus on reforming and strengthening the NFA’s institutional capacity to improve its operational and commercial efficiency, optimizing revenue generation from production forest, while safeguarding the public interest and ecological services provided by protection and production forest. The reserve pricing system will be reviewed and revised to establish an objective and auditable process for determining reserve pricing for timber auctions.

The project will also assist NFA in defining its information management system requirements to support its strategic development and will provide an interactive link with the national forest management information and monitoring system that the project will establish within the Department of Forests.

Finally, the project is expected to provide logistical support in terms of vehicles and equipment required to manage the forest protected area network, which is being developed with the assistance of the ongoing Biodiversity Conservation Management Project.

In conjunction with the overall NFA reform process, the project will also finance, on a pilot scale, rehabilitation and expansion of the forest road network (including the rehabilitation of the only forest railway operating in Romania), by implementing a series of forest roads sub-projects, with the objective of reducing the negative environmental impacts of harvesting, against forest management plan standards, and to improve the economic viability of wood harvesting from State production forests.

The two project subcomponents are seen to be integrated actions, i.e. institutional reform by itself is unlikely to be financially viable in the absence of investment in improving the economic efficiency of timber harvesting in NFA’s production forests. Investments in roads rehabilitation and construction makes little sense if NFA fails to undergo needed reforms in its strategic approach and outlook, in its

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overall approach to financial management, and in its way of pricing timber through the auction system.

Strategic planning and reform of the NFA

No negative environmental impacts of this sub-component are envisaged, and some modest positive environmental impacts are anticipated.

The nature of the institutional reforms proposed is largely ‘environment neutral,’ that is, the objective of reform is largely to improve overall public sector management. A better environmental regulatory framework is, however, anticipated as a result of the project, and this should yield some gains in overall environmental management.

Significantly, environmental impacts of this component are expected to be far more negative if the roads component is not included in the project. In other words, the institutional reforms which are envisaged are unlikely to be sustained if a framework for economically efficient and environmentally sensible roads management is not developed, tested and introduced.

Forest roads rehabilitation and expansion

In terms of investment by the World Bank, forest roads rehabilitation and expansion is the major element of this component of the FDP, as well as the largest single subcomponent of the FDP overall. Bank 6-year financing for this component is expected to total $18.9 million, or 44 percent of total project costs, averaging just over $3 million per year. The balance of the resources required for roads rehabilitation and construction are to be financed by Government.

Forest roads rehabilitation and expansion is also the element of the FDP with the highest potential for direct negative environmental impacts (e.g., construction, maintenance and usage.

The roads component, as it has been conceived, is comprised of a series of sub-projects, which are to be implemented in 5 annual tranches. Each tranche will be geographically clustered. A partial listing of sub-projects has tentatively been identified, based on a listing provided by Government of the roads in need of investment, which were primarily roads badly damaged by recent floods. Identification of each of the 5 tranches, however, will only be confirmed during the course of project implementation. The first tranche, for example, will be selected from this listing, but will only be confirmed mid-way through the first year of project implementation. Actual civil works on any roads sub-project will not be initiated until the second year of project implementation (and this, only after various screening and assessment processes have been completed, as described below). The 5 tranches will be undertaken in the second through sixth project years.

The listing of roads sub-projects is expected to change during the course of project implementation (indeed, it has already changed considerably from the original listing of roads which were thought to be in need of investment). Sub-projects will be added to the list, and removed from it. This is the nature of an investment operation which seeks to finance individual sub-projects, and then to subject them to screening and evaluation for their likely economic benefits and environmental impacts.

The partial listing of road rehabilitation and construction sub-projects which have been identified, screened, and rescreened for their potential environmental impacts, and their locations, is indicated in the EA Update. Rescreening yielded an initial list, from which several of the 5 tranches of sub-projects will be identified, comprised of a total of 430 km of forest infrastructure (roads and railways) which are to be rehabilitated (in 53 sub-projects) and 56 km of new roads which are to be constructed (in 18 sub-projects). Funds are provided in the project to finance an additional 24 km of roads construction sub-projects (probably around 8 sub-projects), which have yet to be identified, and 88 km of roads rehabilitation sub-projects (around 11 sub-projects) which have yet to be identified. This initial list of roads will subsequently change as new information becomes available during project implementation

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as a result of more intensive review and screening, but on balance, it is anticipated that the project will finance around 80 km of new roads construction (in around 26 sub-projects) and 516 km of roads and railway infrastructure rehabilitation (in around 64 sub-projects).

Roads rehabilitation sub-projects are expected to vary in length from around 1 to 20 km, but average around 8 km each. New road construction sub-projects, which entirely comprise the extension of existing roads (i.e. spur extensions) are expected to vary in length from around 0.5 to 6.5 km, but will average around 3 km each.

As a pilot activity, the roads identified for construction or rehabilitation represent a very small fraction of the total length of forest roads or associated harvesting and extraction infrastructure in Romania. Harvesting and extraction infrastructure, at the end of the year 2000, comprised a total of 41,546 km of roads and 65 km of railway. Roads targeted for new construction by the project would increase the total road length by less than 2 tenths of one percent. Infrastructure planned for rehabilitation constitutes 1.2 percent of the total. By any standard, the fact that the project is investing in such a small percentage of the overall total (and indeed, in the face of the enormous needs for construction and rehabilitation) demonstrates that it constitutes a pilot operation. Because of this, aggregate impacts of the roads project are expected to be relatively minor.

Roads sub-projects which have been initially identified – and indeed all roads investments to be financed by the project -- all fall within production forests. All ‘Forest Fund’ production forests are managed under Forest Management Plans. All of these plans are prepared on a compartment basis by ICAS on behalf of the owner (i.e. the NFA), approved by the Directorate of Forests (now in MAFF), and revised every 10 years. Roads rehabilitation and extension sub-projects are framed in the context of Forest Management Plans.

Generally speaking, the potential direct environmental impacts related to the construction of forest roads include:

· Habitat loss/fragmentation (associated with the footprint of the road); · Alteration of drainage/natural hydrologic regime; · Stream erosion; · Soil erosion and downstream sedimentation; · Slope instability and landslides; and · Resultant secondary impacts (e.g., increased access to formerly remote areas, increased resource extraction and resultant impacts to biodiversity and physical environment, economic impacts such as employment – both temporary (road construction impacts) and permanent (ongoing maintenance and resource extraction impacts)).

Potential indirect impacts could include increased illegal harvesting, but only if enforcement and regulatory mechanisms fail.

The role of forest management planning is important to consider in the process of forest roads construction and rehabilitation. All roads (which are located in state land in Forest Fund production forests), are planned, designed and permitted in the context of a management system based on extensive experience with silvicultural practices implemented through 10-year forest management plans, and which incorporate watershed and biodiversity protection functions and other environmental aspects. Silvicultural and management programs integrate traditional forest harvest practices of local communities including wood for fencing and building repair, fire wood), and non- timber forest products (NTFPs, e.g., medicinal plants, mushrooms, nuts, honey). Roads rehabilitation, by itself, is intended to reduce negative environmental impacts from erosion.

In the context of the forest management planning process, then, roads construction and rehabilitation financed by the project will have virtually no impact on levels of harvesting because the Annual

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Allowable Cut has already been established as a result of the forest management planning process and provides the basis for auctioning timber resources in individual blocks. The Annual Allowable Cut is formally approved by the Cabinet. The primary impact of the roads rehabilitation component will be an economic one, to reduce the costs of harvesting and extraction, rather than to increase the rate of harvesting to unsustainable levels above the AAC, ensuring NFA will receive higher value for standing timber in auction markets. In the context of well-established sustainable forest management plans, the environmental impact of the roads component are expected to be beneficial: better designed roads will reduce erosion, and a more rational network will limit damage to vegetation caused by long skidding distances. The effectiveness of the management and enforcement regime will be important for limiting unintended impacts, and the project makes considered investments in strengthening these capacities.

Roads sub-projects are not expected to have any impact on protected areas and will neither pass through any protected area nor will they increase access to protected areas.

To minimize other potential environmental impacts of the road sub-component, a number of mitigation measures will be undertaken, consistent with the approach the project has taken toward investment in rehabilitation and construction sub-projects.

In the first project year, before any investments are made in any roads rehabilitation or new construction, the preparation of a Forest Roads Best Practice Manual will be commissioned. The Best Practice Manual will describe, in detail, technical specifications for the rehabilitation and construction of forest roads to acceptable international standards to minimize negative environmental impacts. Drafts of the Best Practice Manual will be made widely available for public consultation and information. The Best Practice Manual will also include further guidance with respect to environmental and social screening and assessment, and will be completed in the first project year.

During the first project year, the first tranche of roads sub-projects (which will entirely comprise roads rehabilitation) will be identified. A cumulative impacts screen will be carried out of these sub- projects, and of each subsequent tranche of sub-projects, to identify instances when two or more road projects occur in a single river basin or catchment of 1000 ha or smaller, or where roads interfere with habitats of concern. Options for management would include phasing the implementation of the road projects to avoid simultaneous construction impacts or, where this is difficult or undesirable for economic or other reasons, requiring EAs for these road projects regardless of the individual scores resulting from the screening process. Any proposed road construction sub-project or road rehabilitation sub-project which provides increased access to protected areas will automatically be dropped from the list of proposed sub-projects.

Road design will subsequently be carried out to the standards and specifications described in the Best Practice Manual. Once sub-project design is complete according to these standards, the first tranche of sub-projects will be rescreened for their potential environmental and social impacts, following the procedures and screening approach outlined in this report and incorporating any additional measures outlined in the Best Practice Manual. The screening process will involve an intensive review of road sub-project design. Screening will be carried out by the Roads Engineer with the PCT working closely with qualified personnel with the Forest Inspectorates. Road sub-projects will be evaluated for their potential negative environmental and social impact. Where these are significant, sub-project specific Environmental Assessments will be prepared. Other roads sub-projects would not require an EA. It is anticipated that, as a result of the screening process, all new roads will be subject to an EA. An identical process will be followed for all subsequent tranches of sub-projects.

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requirements, and which allows member states to establish their own thresholds with respect to when EAs would be required for the construction of new roads (making no mention whatsoever of requiring EAs for roads rehabilitation). Romanian legislation currently establishes no thresholds for roads construction or rehabilitation whatsoever.

Guidance about the appropriate scale and coverage of EAs is provided by the World Bank’s Operational Policy 4.01 Environmental Assessment which states that,

‘EA is a process whose breadth, depth, and type of analysis depend on the nature, scale, and potential environmental impact of the proposed project.’ (emphasis added)

Secondly, OP 4.01 provides explicitly for the preparation of sub-project EAs (when these are confirmed to be necessary as result of screening), during project implementation and requires the implementing institution ‘to carry out appropriate EA according to country requirements and the requirements of this policy.’

In light of this, EAs for forest road sub-projects should be focused on very clearly meeting the intent of OP 4.01 (which, compared with national requirements is the higher standard) to provide sub- project EAs of breadth, depth, and type which reflects the nature, scale, and potential environmental impact of the proposed sub-project. This intent can be met by focusing critically on the immediate scope of individual roads sub-projects, the main purpose being objectively to review the proposed road project design in light of specific field conditions and the potential and significant negative environmental and social impacts which may result.

Once sub-projects have been rescreened for their potential environmental and social impacts, sub- project specific EAs, where these are judged to be necessary, will be largely based on detailed field reconnaissance visits to the site or corridor of the road. Specific problem areas will be identified in the field and studied. The main output of the EA will be recommendations to avoid, minimize and mitigate potential impacts, during both construction and operation. A suggested outline for sub- project specific EAs follows:

(a) Summary, which discusses significant findings and recommended actions.

(b) Policy, legal, and administrative framework. Discusses the policy, legal, and administrative framework within which the EA is carried out. Explains the environmental requirements of any cofinanciers. Identifies relevant international environmental agreements to which the country is a party. It is unlikely that this section will change significantly from sub-project to sub-project.

(c) Sub-project description which describes the proposed project and its geographic, ecological, social, and temporal context. Indicates the need for any resettlement or relocation. Includes a map showing the project site and the project's area of influence.

(d) Baseline data. Assesses the dimensions of the sub-project area and describes relevant physical, biological, and socioeconomic conditions. Particularly referring to the current Forest Management Plan, takes into account current and proposed forest management activities.

(e) Environmental and social impacts. Predicts and assesses the project's likely positive and negative impacts, in quantitative terms to the extent possible. Identifies mitigation measures and any residual negative impacts that cannot be mitigated.

(f) Analysis of alternatives. Systematically compares feasible alternatives, taking account of guidance in the Best Practice Manual, in terms of their potential environmental impacts;

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the feasibility of mitigating these impacts; their capital and recurrent costs; suitability under local conditions; and their institutional, training, and monitoring requirements.

(g) Environmental management plan (EMP). Covers mitigation measures and monitoring and cross-references these to the Best Practice Manual.

Once the draft EA is completed, it will be made locally available for consultation and review for a period of 60 days, and notice of its availability will be published in a nationally circulated magazine. Written comments on the EA will be solicited in this review process, and, when needed, public consultations will be carried out. Written comments will be considered in revising road sub-projects designs.

The EA will be carried out by a qualified independent local consultant who will adhere to the disclosure practices outlined in this report. The EA will identify mitigating steps not already accounted for in roads design, and will consider other options such as re-siting, alternative routings, and dropping the sub-project altogether if adequate mitigating measures cannot be undertaken. The quality of the EA, and the standards adopted, will be reviewed by the staff with the Forests Inspectorate and with the Project Coordination Team.

Compliance with the construction and rehabilitation methods outlined in the Best Practice Manual will be a contractual obligation of all roads sub-contractors financed by the project both during the design and construction phases. Contractual compliance with the Best Practice Manual and with the recommendations and findings of any of the Environmental Assessments which are prepared for individual roads sub-projects will be monitored by the Forest Road Specialist in the PCT and by a counterpart(s) to be identified within the Forest Inspectorate.

Five tranches of roads construction and rehabilitation sub-projects are envisaged over the life of the project. Roads proposed for inclusion in each tranche will be listed by public notice annually in every project year.

There are serious capacity constraints for carrying out environmental and social impacts screening and assessment. The project will employ a Forest Roads Specialist as part of the Project Coordination Team to address these constraints. The Roads Specialist will have a good understanding of forest roads, forest road best practice, design, and operation, with experience and background in environmental assessment and mitigation. The Road Specialist will have some responsibility for commissioning and managing road sub-project EAs, as well as the review and monitoring implementation of EA recommendations. The Road Specialist will also be involved in tendering for and supervision of road construction and rehabilitation projects to ensure that design and construction management specifications of the Best Practice Manual are requirements of the construction contract; that these standards and requirements are clear to the winning bidder; and that standards are understood by the agencies charged with supervising construction and are enforced.

The Forest Inspectorate is the best positioned government agency to carry out the environmental screening and review function for forest roads when FDP is completed, but to do so, it is necessary that capacity is developed. The Forest Inspectorate will identify a staff member, with qualifications which are similar qualifications to the Road Specialist’s, and assign this individual on a full or part time basis to work closely with the Road Specialist. This individual’s responsibilities will parallel those identified for the Road Specialist and will include commissioning and managing the EAs which are carried out as well as the review and implementation of the EA recommendations and construction supervision. The intent of this liaison and shared responsibilities during the six-year implementation period of the FDP is that the necessary capacity would be developed and that these responsibilities be transferred to the Forest Inspectorate.

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Component 3. Support Increased Productivity and Competitiveness of Forest Industries

The Increased Productivity and Competitiveness component of the FDP aims to promote the establishment of the Forest Business Information Center (ForsBIC), an independent business development and advisory service, which will establish linkages and coordination within the forest industry chain (i.e., silviculture, harvesting, transport, primary and secondary processing), and provide assistance to wood and related forest industries, through review and dissemination of information on new technologies, markets and prices, export and hygiene requirements, product promotion and branding, opportunities for joint venture partnerships, certified timber uses and markets, and the availability of grants, and credit etc. This component focuses very much on the forest product industry, rather than on timber supply or private forest owners.

If industrial development of the forest sector is encouraged without adequate safeguards for the environment and people’s health and safety, negative environmental and social impacts could be the outcome. These potentially include:

· increased pollution of air and water and associated health impacts; · risks of soil and groundwater contamination from inappropriate use and/or storage of toxic materials; · increased water abstraction and associated conflicts with other water users; · increased traffic with associated noise, air pollution and accidents; · inadequate measures to protect employee’s safety at work; · inappropriate waste disposal; and · land use conflicts between other users.

These impacts will be avoided and/or considerably reduced through measures incorporated into the execution of this component. Specifically,

· support provided by ForsBIC will be premised on the use of modern, clean and efficient technologies and processes; · advice and support for the uptake of clean technologies and processes will form the basis of all component activities; · advice and support for the development and implementation of an auditable environmental management system (for example, using ISO 14001 standards as a basis) will form the basis of all component activities; · support will not be provided to businesses which are unable to demonstrate that adequate safeguards have been put in place to avoid or minimize possible environmental impacts; · activities proposed for ForsBIC support will be evaluated by the PCT to determine their potential impact on the environment and where necessary further assessment will be undertaken before support is approved; · within the framework of Romania’s regulatory structure for environmental protection, the PCT or a suitably qualified expert will review any environmental assessments undertaken for a business and ensure that all mitigation and safeguard measures are undertaken by the appropriate authority; · project monitoring will incorporate measures which consider potential environmental impacts.

Local planning requirements will play an important role in determining the environmental and social acceptability of business development. Where a project activity has the potential to impact negatively on the environment, the PCT must ensure that regulatory institutions have the capacity to monitor environmental impacts and enforce any necessary regulations where non-compliance is observed.

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Component 4. Building Public Support for Sustainable Forest Management

The project is to provide resources for preparing and implementing a public awareness strategy and campaign targeting key stakeholders, with particular emphasis on communities living in forested areas; private forest owners; Forest Inspectorate staff; NFA; Government decision makers, and other influential groups including Churches and NGOs with the objective of disseminating information about the importance and value of sustainable forest management. Implementation of the program will be supported by an inter-ministerial committee on which the Ministries of Industry and Commerce, Education, Waters and Environmental Protection, Culture, Tourism and Public Administration will be represented. Campaign strategies will include: educating mass media; providing public relations guidance to Forest Inspectorate staff; developing educational and promotional materials for use in schools and the mass media; organizing local education events; supporting APPR awareness campaigns at the local level; involvement of environmental NGOs in educational projects; and support for the PCT to develop their public relations capacity and inform key decision makers of the status of project implementation. The public awareness campaign will undertake regular assessments of stakeholder perceptions, which will be used to refine the implementation of the campaign in line with changing requirements.

The component is expected to have fundamentally quite positive environmental impacts, hopefully reducing the extent to which private and state forests are poorly managed. Performance monitoring of this component will depend on the stakeholder assessments which are to be carried out during implementation. There are no negative environmental or social impacts envisaged. No mitigation measures for this component are envisaged because no negative impacts are likely.

The component is intended to raise awareness about the importance and purpose for sustainable forest management;· methods, tools and techniques for sustainable forestry management; roles and responsibilities of forest authorities, the public and private business; policies (especially restitution), Forest Management Plans and timetables for action, advice and assistance available as part of the FDP, from forest authorities, other programs; opportunities for private business development, securing investment finance and help and advice available. The program will also ensure a sound understanding of needs, desires, expectations and capabilities of public about sustainable forestry and their expectations of the forest as a resource in developing the public awareness program. It will use tools and techniques appropriate to socio-cultural structures and circumstances and will ensure early involvement and engagement of forest authorities with the public

Component 5. Project Management and Monitoring

Project management will be undertaken by the Project Coordination Team (PCT), which has already established by MAFF under the Biodiversity Conservation and Management Project. In addition to the existing staff, the FDP will finance a roads specialist and a PA consultant to assist with procurement, management and supervision of the road and public awareness components throughout the entire period of FDP implementation.

The PCT will have an obviously important role in managing the overall project, and in particular, in implementing mitigating measures associated with other project components. Investment in the PCT by itself, however, is not expected to yield any negative environmental impacts. No mitigation measures are envisaged because no negative impacts are likely.

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The PCT will regularly review the effectiveness of the FDP in terms of environmental impacts and benefits and revise activities accordingly. It will support and promote: environmental training and capacity building of forest authorities and change management of forest authorities. It will promote leadership and ownership of FDP by forest authorities to maximize long-term sustainability.

MOVING FORWARD: THE SCOPE FOR PRIVATE SECTOR AND CIVIL SOCIETY INVOLVEMENT

Public awareness about the objectives of the FDP, and support for these goals, will be critical for the success of the project. Extensive consultations were carried out with forest sector stakeholders and public and private business interests during conception and preparation of the FDP, particularly during preparation of the National Forest Policy and Strategy (NFPS), but also in conjunction with preparation of the EA. Consultations indicated a degree of public frustration regarding future restitution of existing Forest Fund lands. The major issue of concern is the possibility that mature tracts may be harvested by NFA under existing management plan schedules prior to restitution, resulting in a potential loss of revenues to the future owner. This is partially due to a slow progress on restitution, which has been a major political issue since 1989 and one fraught with complexities and slowed to some extent by the change in elected governments and related changes in institutions and policies.

The development of the National Forest Policy and Strategy (NFPS) involved extensive public participation which was instrumental in defining the final outcome of the NFPS and the design of the FDP. The NFPS was prepared over a ten month period commencing March 2000 through a participatory process that included the involvement of over 300 representatives of different forestry sector stakeholder groups. Through this process, a substantial effort was made to identify and incorporate the concerns of stakeholders.

Furthermore, a major component of the FDP involves an extensive public awareness program designed to promote a better public understanding of the project and its goals within the framework of the NFPS and to address associated issues such as how the restitution of forest lands will take place and how sustainable forest management will be implemented. Successful implementation of this public awareness campaign – and the real impact through the projects other components -- will be crucial for addressing public apprehension.

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Romania Forest Development Project: Environmental Assessment Update

1. INTRODUCTION

This report, commissioned by the Ministry of Agriculture, Food and Forests (MAFF), Government of Romania (GOR), presents an Update to the Environmental Assessment prepared of the proposed World Bank-financed Forest Development Project in Romania. The update has been prepared by staff commissioned by the Ministry of Agriculture, Food and Forests, with the close cooperation of Environmental Resources Management (ERM) in association with Intergroup Engineering, and with valuable contributions from Fortech, Dames and Moore, and Project Management (Ireland).

1.1 P BACKGROUND

In 1998-1999, in response to a Government request, the World Bank augmented its review of the forestry sector (initially prepared in 1992/93), with a Forestry Sector Note, which outlined the status, values and need for reforms in anticipation of the planned Government program to return forested areas to their former owners.2 The 1999 Forestry Sector Note outlined a three-phase strategy for reform of the forestry sector. These included immediate, medium and long terms strategies, and presented a rationale for actions needed to address medium-term needs.

In conjunction with the National Biodiversity Strategy (1996) and the priorities outlined in the Forest Sector Note, Government has also sought to strengthen its system of protected area management, and applied for and received resources from the GEF to finance its Biodiversity Conservation Management Project (BCMP). This US$ 8.8 million project, launched in 1999, seeks to establish effective intersectoral participatory planning and sustainable management of natural ecosystems and associated landscapes at three demonstration sites in the Carpathian mountains, and mechanisms to support replication of these activities at other priority sites. BCMP is a critical element of the overall approach toward improving Romania's management of its forest resources.

The immediate and priority need identified in the Forest Sector Note was the preparation of a comprehensive forestry sector policy and strategy through an open, transparent and participatory process. As a result, Government launched the participatory preparation of the National Forestry Policy and Strategy (NFPS) over a ten-month period commencing in early 2000. The NFPS was approved by the Government in 2001. The NFPS is available on the web at http://www.forestier.ro/strategia/str0.htm.

(2) World Bank. 1999. Romania Forest Sector Note: Status, Values and Need for Reform. ECSSD Environmentally and Socially Sustainable Development Working Paper No. 18. October

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The Government of Romania (GOR) requested the assistance of the World Bank to prepare and to finance a Forest Development Project (FDP) to assist in implementing the most important medium-term needs articulated in the strategic objectives of the NFPS.

The overall aim of the FDP is to maintain and to improve environmentally sustainable management of state and private forests and to increase their contribution to the national and rural economies.

In line with this development objective, the FDP is intended to assist MAFF to: (a) establish systems to ensure sustainable management of private forest lands, by building the capacity of the Department of Forests and its Forest Inspectorate, supporting the development of private forest owners associations, and establishing a forest management information and monitoring system; (b) mitigate the consequences of restitution on the management of State forest lands by assisting the National Forest Administration (NFA) to maintain, develop and finance its role in managing protection forests, and to reduce potential negative environmental impacts and to improve the efficiency of managing State production forests through rehabilitation and development of the forest road network, piloting an effort to introduce improved environmental standards in roads design and rehabilitation; (c) support increased productivity and competitiveness of forest industries, through establishing and operating a Forest Sector Business Information Center; and (d) build public support for sustainable forest management by implementing a public awareness program targeting key stakeholders with emphasis on new forest land owners and their associated communities.

It must be emphasized that all activities of the FDP are consistent with the strategic actions of the National Forest Policy and Strategy, which was developed through an open, transparent and participatory process and approved by the Government in 2001. Indeed, FDP is very much an outcome of the NFPS process.

The project is to be implemented by the Ministry of Agriculture, Food and Forests (MAFF) over a six-year period. The activities which are to be carried out under the project are described in more detail in Section 3. The Proposed Forest Development Project of this report.

1.2 NEED FOR ENVIRONMENTAL ASSESSMENT

The FDP has been developed primarily to manage and to mitigate potential risks and to enhance beneficial effects related to reinvigorating the forestry sector in Romania. One of the key potential risks to the sector, identified early in the project development process, was the Government of Romania’s ongoing program of restitution of state land to former owners. Under this program, a significant portion of the state managed forest lands is to be returned to its former owners. Early experience with forest land restitution in Romania has illustrated the potential for unsustainable exploitation of forest resources and resultant environmental damage. In light of this, a key objective of the FDP is to strengthen public and private sector capacity to manage and mitigate potential adverse impacts and to enhance positive effects associated with both private and public sector exploitation of forest resources. The Project is

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also expected to attract a considerable degree of public interest in the forest sector in Romania.

In addition, the project is to provide resources, on a pilot basis, to rehabilitate existing forest roads, and to improve the forest road network by constructing new forest roads in forests already managed for sustainable production according to approved forest management plans. The lack of any screening or assessment process for forest roads development in Romania has more generally been a source of some concern, and it was agreed that the project should put in place mechanisms to ensure that potentially negative environmental impacts of the rehabilitation and construction process are identified and mitigated during implementation.

Because of the need better to articulate how the project seeks to mitigate some of the impacts of restitution, and because of concerns about the impact of forest roads construction and rehabilitation activities, the project was assigned as Environmental Category "A" project during the internal process in the World Bank of screening possible investment projects for their potential environmental impacts, requiring full public disclosure and consultation. Bank policy has, since 1999, stipulated that Category A projects or components of projects should undergo independent environmental assessment (EA) (OP 4.01 Environmental Assessment, 1999) and associated public consultation and disclosure.

1.3 SCOPE OF THE ENVIRONMENTAL ASSESSMENT

The Environmental Assessment aims to assess the environmental implications of the activities proposed under the FDP. In doing so, it provides recommendations to minimize any potential negative effects and to optimize any positive outcomes.

When the original Environmental Assessment was prepared, it was proposed that a Sectoral Environmental Assessment should be carried out because of the sectoral and strategic nature of the FDP.3 In retrospect, the preparation of a Sectoral Environmental Assessment would have been far more appropriate much earlier in the process, when a range of strategic choices were still under discussion (for example, during preparation of the National Forest Policy and Strategy or while the legislation with respect to restitution was being prepared), but became less relevant during project preparation because most of these choices had already been made as a result of the already completed strategic, consultative and iterative process. Indeed, the FDP must largely be seen to be an attempt to mitigate the potential negative environmental impacts of a range of policy initiatives which extend far beyond the immediate scope of the more narrowly defined investments proposed in the FDP.

(3) The term ‘Sectoral Environmental Assessment’ is often used interchangeably with ‘Strategic Environmental Assessment.’ Various reviews (cf. Donnelly et al) have pointed out the importance of undertaking these types of assessments early enough in the process in order to contribute to the development of a strategic decision, and have also pointed out that there is much confusion about whether to use SEAs to describe plan/program level impacts, or to describe policy-level impacts, leading to the growing view that SEAs will need to be rethought so as to clearly distinguish between (these) methodologically different approaches. (Ibid, 40). In some respects, the NFPS incorporated important elements of an SEA.

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The proposal that the original Environmental Assessment should have taken a strategic orientation was ultimately counterproductive because it presented a confusing picture of what the project’s likely impacts were going to be. The strategic approach implied that the wider changes in forest management which are envisaged would take place only in the presence of FDP funding, when in fact, these changes are already underway and would have taken place in any event. The strategic approach ascribed a far greater impact to the FDP than was warranted, and did not effectively follow the principle that an environmental assessment should consider the with/without project scenario, rather than ascribing sector- wide changes to what are in fact a fairly narrow range of investments. For example, the project is not going to support the restitution process itself (a process adopted in policy and already under implementation), but will instead help to mitigate the potential negative impacts of restitution on forest cover and forest management.

This Environmental Assessment Update, then, seeks to clarify the particular elements of the project which have wider sectoral relevance, focusing very specifically on those environmental impacts which can be clearly articulated in terms of their sector-wide relevance, as well as on more conventionally-defined and project-specific impacts. In this latter respect, MAFF requested that a process for environmental screening and assessment of the forest road component should be prepared as a key environmental management output of the FDP EA. The process for doing this is described in Section 5. FDP’s Critical Environmental and Social Impacts and Mitigation Measures of this document. Thus, consistent with World Bank OP 4.01, this Environmental Assessment considers some elements of both a Sectoral Environmental Assessment (where these can be defined and are relevant) and the instruments and elements specific to a project-specific Environmental Impact Assessment (see Sections 7 and 8a of the World Bank Operational Policy 4.01 – Environmental Assessment).

Without question, a major influence on the management of the forest sector in Romania in the coming years will be the proposed restitution of State owned-lands to their pre-1948 owners. Its likely impact cannot be understated. At present, around 85 percent of Romania’s 6.37 million hectares of forests are under State ownership. There has been strong political pressure to return a significant proportion of this to its original owners.(4) Application of Law No. 1/2000 will result in restitution of up to 3 million ha of forests. Previous experience in Romania (1991/92) and elsewhere suggests that if restitution of forest land takes place without adequate legal and institutional management and enforcement mechanisms, the result could be the immediate harvesting of the timber resulting in loss of forest cover, irreversible environmental degradation and significant long term economic losses for Romania (5).

(4) Project Appraisal Document (draft), Romania Forest Development Project (P067367), World Bank, 2001 (5) Following restitution of around 353,000 ha of forest lands in Romania in 1991/2, approximately one quarter of the area was clearfelled or the canopy closure index reduced below 0.6, and the remainder harvested at unsustainable rates (Project Appraisal Document, World Bank, 2001). Most agricultural … continued

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While the FDP has been conceived within the overall framework of plans for restitution, it does not set out to finance the process of restitution. Rather, FDP accepts that restitution is going to take place in any event, and seeks to put in place mechanisms better to enable restituted forest owners to manage their forests in an environmentally sustainable manner. A key indicator of the project’s success will be the extent to which private forest owners have adopted sound forest management practices.

1.4 STUDY APPROACH AND METHODOLOGY

The Terms of Reference for the original Environmental Assessment described five key tasks to be undertaken. In summary, these were as follows:

(a) Examination of the status, trends and institutional capacity for forest management in Romania together with the key issues and findings of the National Forest Policy and Strategy (NFPS);

(b) Close interaction with the MAFF and the consultants preparing the overall Project design;

(c) Assessment of the environmental impacts of the proposed FDP activities and proposal of mitigation measures which can be incorporated into the design of the FDP;

(d) Public disclosure and consultation with stakeholders at national and local levels; and

(e) Preparation of a draft and final EA report including an Environmental Management Plan.

As per World Bank Policy on EA (OP 4.01) the Summary was made available in Romanian to the public and distributed at the public consultation and disclosure meetings (see Appendix 3: Consultations and Disclosure with respect to project preparatio n and in relation to preparation of the Environmental Assessment of the Forest Development Project for details including dates, locations, listing of attendees etc.). The complete Environmental Assessment has been available via the Bank Infoshop since October 2001, and the complete draft Project Appraisal Document has been available via the project’s website since January 2002.

To meet the objectives of the study, ERM and local consultant Intergroup Engineering carried out the following activities:

land was restituted in the early 1990s. Restitution is strongly associated with the overall democratization process.

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· ERM carried out a scoping mission 2-9 May 2001 which included extensive liaison with Fortech (the firm which was responsible for assisting Government in preparing the FDP); liaison with the National Wood Institute (Institutul National al Lemnului, or INL) including field visits with the government agencies responsible for forest road design (INL) and forest management planning and operations (NFA) of several roads to be included in the FDP;

· Development of a forest road screening system which was applied to the forest roads proposed to be included in the FDP, derived in part from the Fortech report;

· Selection of two roads in conjunction with INL for which sample, project-specific EAs which were carried out by Intergroup; and

· A second ERM mission to Romania from 31 May to 10 June, 2001 to prepare the draft EA document and consult with MAFF and other relevant ministries, Fortech, Intergroup Engineering, and other consultants involved in the preparation of the FDP including the social assessment and public awareness consultants.

A draft and final Environmental Assessment was produced in June and October, 2001, respectively, both of which were publicly reviewed and disclosed, as referred to in the original EA and in Appendix 3: Consultations and Disclosure with respect to project preparation and in relation to preparation of the Environmental Assessment of the Forest Development Project to this Update. The FDP was formally Appraised in October, 2001. The Appraisal team incorporated and took account of the findings of the Environmental Assessment. Because the original Environmental Assessment was finalized prior to Appraisal (in accordance with World Bank OP 4.01), it did not reflect some of the design decisions which were taken at that stage.

This Environmental Assessment Update includes all the information contained in the original EA, but provides additional information which was not included in the original Environmental Assessment and provides fuller project information on the basis of decisions taken at Appraisal. The Terms of Reference for this Update are included in Appendix 2: Terms of Reference for Environmental Assessment Update.

1.5 CONTENTS OF THIS REPORT

This report presents in Volume I - Environmental Assessment of the Forest Development Project - the findings of the tasks outlined in Section 1.4 above, and follows World Bank requirements specified in Annex B of the Operational Policy 4.01 Environmental Assessment. The sections of the EA report, are broken down into the following components:

Section 2 - presents the Policy, Legal and Administrative Context for forest sector management and development in Romania, and for environmental assessment.

Section 3 - describes the FDP, by component and subcomponent;

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Section 4 - presents a review of Baseline Environmental Conditions in the forestry sector in Romania and in the project areas specifically;

Section 5 - identifies and discusses likely Environmental Impacts with relevance to the activities of the FDP. Mitigation Measures for each negative impact are also proposed together with anticipated responsibilities and rough cost and time requirements;

Section 6 - presents an Analysis of Alternatives to the FDP which were considered during the project development stage;

Section 7 - This section presents an Environmental Management Plan (EMP) which details the measures which need to be undertaken to enhance the success of the FDP and prevent realization of any potential negative impacts of the FDP and its associated activities. The Plan presents key responsibilities, requirements, timing and indicative costs for each measure. The section concludes with a summary of additional recommendations which have been made during the report.

The final section – Appendices – presents the list of EA report preparers, records of consultation meetings and public disclosure, maps, and other information about forested areas in Romania.

Volume II of this Environmental Assessment Update– Annexes - contains related annexes, background material, and associated reports. It also includes two examples presenting the EAs for two of the FDP forest road sub-projects undertaken by Romanian consultants Intergroup Engineering).

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2. POLICY, LEGAL, AND INSTITUTIONAL FRAMEWORK

2.1 POLICY AND LEGISLATION

2.1.1. Forest Policy

The current forestry policy environment in Romania has evolved from a number of important elements over the last 30 years:

· Law no. 12 /1974 - regarding pisciculture and fishing; · Law no. 9 /1982 - regarding the protection of under crop plants and forests and pesticides regime · 1991 – Promulgation of the Land restitution law (Law 18/1991), followed by the restitution of about 350,000 ha of forest to the pre-nationalization owners (up to 1 ha per person); · 1992/93 - GOR, with assistance from FAO and the World Bank, undertook a review of the forest sector that identified key areas for reform; · 1995 - the Government developed a Forestry Strategy that identified key actions to guide forest sector reform, but it did not address the issue of restitution of forest lands or elaborate an integrated approach to sector development; · 1996 - promulgation of the Forest Code (Law 26/24 April 1996) outlining general provisions for the protection and long term management of the national ‘Forestry Fund’ (divided into Production and Protection Forests: see Appendix 6: Protection Forests: Functional Categories and Permissible Felling Systems in Romania); · 1996 - Legislation regarding the hunting fund and protection of game (Law 103/1996) · 1998 – A series of ordinances were passed with respect to forestry [These included Governmental Ordinance No.21/1998 regarding certain measures for the improvement by afforestation of degraded grounds; Governmental Ordinance No.96/1998 regarding the forestry regime settlement and the national forestry fund management; Governmental Decision No.404/1998 regarding the approval of the maximum volume of wooden mass to be harvested; Governmental Decision No.695/1998 for the approval of the Sale Regulation by the National Forestry Administration for the wooden mass devoted to economical agents; Governmental Decision No.735/1998 for the approval of the Instructions on traffic and traffic control of the wooden masses and installations for the turning into of the round wood.] · 1999 - Forest Sector Note working paper published by the World Bank(6) which identified and described the status, values and reforms required in the Romanian forestry sector. It outlined GOR’s vision for the forestry sector, and a three phase strategy – immediate, short term and medium term – which would be developed as the FDP; · 2000 – Promulgation of Law 1/2000, according to which up to 3 million ha of forests would be restituted to the former pre-nationalization owners (individuals, communities, towns/villages, churches etc.)

(6) World Bank (1999). Ibid.

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· 2000/2001 – Development and approval of the National Forestry Policy and Strategy (NFPS): see below;

National Forest Policy and Strategy (NFPS)

The National Forest Policy and Strategy (NFPS) was developed during 2000. The NFPS, sets the policy framework within which the FDP is expected to be implemented. Having been endorsed at the Ministerial level, it was approved by the Government of Romania in 2001.

The guiding principles in development of the NFPS were:

· To build on progress (i.e. elements including the Romanian Government Development Strategy, the Forest Code, the Silvicultural Strategy, the Comprehensive Development Framework for Romania, and progress on EU Accession and EU Special Accession Program for Rural Development, or SAPARD); · Sustainability - to a) develop a national forest policy and strategy that would support sustainable forest management and b) identify and draft key policies, and schedules for their adoption or implementation, that need to be addressed prior to and during implementation of the FDP; · Partnership - to ensure that the many players in forestry and related sectors were involved in NFPS development through effective participation and consensus decision- making; · Participation - amongst key stakeholders to ensure ownership of the NFPS amongst those who were involved in preparing it, and through broader public participation to provide credibility and transparency; · Inter-sectoral - to avoid the forest sector being treated in isolation; · National policy commitment - during NFPS development and the subsequent implementation phase.

The key elements of the NFPS are summarized in Figure 1. Other important elements of the NFPS refer specifically to:

A. Silviculture/Management A1.4 Harmonization of the forest administration system with European practice. A2.5 Modernization of the forest management planning system. A5.1 Upgrading and consolidation of existing forest roads. A5.2 Increase the density of the forest road network. A5.3 Development of the access network within forest compartments. A8.2 Inclusion of aspects relating to biodiversity and the management of protected areas in forest management plans. B. Logging, Transport and Wood Processing B3.1 Increase the accessibility of forests, by designing an internal skidding/collection network, oriented towards reducing the average skidding/collection distance and use of environmentally-friendly methods and technologies.

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B3.2 Development of an integrated skidding/collection system in order to protec t the forest.

Figure 1: Summary of the National Forestry Policy and Strategy for Romania ______

Overall Goal The development of the forestry sector to increase its contribution to the improvement in the quality of life, based on the sustainable management of the forest resource .

Silviculture & Management Logging Transport Processing Marketing Research and Education To ensure forest management The better utilization of wood The market development of forest Development of scientific research Sector according to the principles of resources through the resources, in particular high and education for the sustainable Policy sustainable management of integration of the logging and added-value products, to management of forests, the economic natural resources, taking into wood processing activities achieve the sustainable development of the forestry sector account the diversity in within the framework of development of the sector and improvement in the quality of forest land ownership sustainable forest management the environment at national, regional and global levels

• Forest administration Strategic • Efficiency levels • Marketing infrastructure • Forest research & education • Integrity of the forest fund • Environmental practices • Market development • Career development Objectives • Degraded forests • Internal access • Added value • Extension services and • Forest ecosystems & biodiversity Actions • Accessibility of forest fund •SFM • Protected areas • Game and fish resources • Non timber forest products • Public awareness

Strategic The development of an institutional Encouragement of the association of Objectives framework to implement in a coherent The development of the legislative private forest owners, transport and Governmental and sustainable fashion, the development framework for the forestry sector processing companies in professional Level strategy for the forestry sector or patronal organisations

The principal policy statement within the NFPS concerning Logging, Transport and Wood Processing is:

‘The better utilization of wood resources through the integration of logging and wood processing activities within the concept of sustainable management of the natural resource.’

Restitution of forest lands

Under Land Law 1/2000 the GOR has committed to return a second tranche of currently state-owned land to its original owners. According to Law 1/2000 all community, town and communal forests will be restituted to their former owners. The restitution is limited to 10 ha for individuals (natural persons) and 30 ha for churches, irrespective of the size of their ownership before 1948 nationalization. Claims have been submitted for just over 3 million hectares of forest land currently owned by the state and managed by the NFA (see Table 1). When the restitution process triggered by Law 1/2000 is complete the number of private forest owners will increase to around 600,000. Private owners include individuals, communities and a variety of institutions, e.g. municipalities and churches.

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Table 1: Status of restitution of forest land under Law 1/2000 (as of May 2002) Category Area (‘000 ha) Total forest land available for restitution 4,306 Total claims 3,052 Claims validated by county commissions 1,400 Already restituted 716 Source: NFA – Information Bulletin June, 2002

The first period of forest restitution in 1991/92 restored 353,630 hectares of forest land to its former owners. The environmental impacts of the restitution were poorly monitored, but it has been suggested that many owners viewed the standing timber on restituted lands as a potential cash windfall. In some areas serious environmental damage ensued as the new owners cashed in by felling the timber (and in some cases clear-cutting), which drastically reduced forest cover and the long-term value of the forest fund (see Box 3). More than a quarter of the forest lands restituted in 1991 have been clear-felled or now have a canopy closure of less than 0.4, and harvesting in many of the remaining privatized forests has exceeded annual allowable cuts (MAFF, 2001).

The Forest Sector Note (World Bank, 1999) identified a number of policy and institutional reforms, and actions, required for restitution to be carried through in a sustainable manner. These primarily focused on establishing the policy framework and administrative procedures for restitution and management to ensure that the process is ecologically sustainable, socially just, economically efficient and administratively feasible and on creating an extension system for new owners of forest land, to advise and assist them in establishing appropriate systems for forest management. If these steps could be undertaken, it concluded that a medium-term program of forest restitution would make sense.

The institutional implications of forest restitution for the DoF and NFA are being addressed within the FDP, which will support capacity building to supervise, monitor and regulate the sustainable management of the forest resource. A range of activities within FDP components are specifically targeted at building private sector capacity for sustainable forest management.

2.1.2. Environmental Policy and Strategy

The development of environmental policy in Romania is driven primarily by the requirements of EU pre-Accession. The framing of new legislation and the modification of existing laws and regulations, to transpose the requirements of environmental Directives both logically and completely into law is a challenging task for which the Romanian government is receiving support from the EU Phare program, western European bilateral donors and others.

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The Romanian Environmental Protection Strategy was published in 1996(7) and a new Strategy was developed in 2000. It reviewed the state of Romania’s environment and established priorities and defined actions to address those priorities in the context of Romania’s national targets for transition to a market economy and pre-Accession. The majority of the measures proposed to meet the short and medium term targets in the Strategy relate to building capacity, strengthening policy and regulation, meeting obligations under various international conventions and programs, and addressing specific environmental management/pollution issues (e.g. waste management and wastewater treatment). There are, however, several measures in the Strategy which are more directly relevant to the DoF and to the FDP. The Strategy articulates the need to provide for:

· protection against natural disasters (including: development of forest belts and other drought alleviation and soil erosion measures; flood prevention; and landslide control); · increasing the role of forests in environmental rehabilitation and protection (including: enlargement of the forest fund; silvicultural management; sustainable exploitation of the timber value of the forest its maximum regenerative capacity). This measure specifically refers to the need to develop the network of forest roads; · rehabilitation of areas designated for hunting, and its maintenance ‘within the normal limits’; and · preservation of biological diversity (through extension of reserves and parks).

2.1.3. Environmental Impact Assessment

Domestic legislation: Regulations for Environmental Impact Assessments (EIA) were formally introduced by the Environmental Protection Law No. 137/1995 (and subsequent amendments). This established the principles and framework for introducing EIA to Romania, and outlined procedures, participants and their responsibilities, and a listed activities for which EIAs are mandatory. Detailed guidance on EIA methodology, procedures, report content etc. is contained in Ministerial Order No. 125/1996 Permitting Procedure for Economic and Social Activities Having an Environmental Impact.

EIAs can only be carried out by authorized EIA practitioners. Procedures for certifying EIA and environmental audit specialists are given in Ministerial Order 278/1996. Significantly, the persons or organization carrying out an EIA of a proposed development must be legally independent of the developer.

For state-level projects, the authority to issue an environmental agreement rests with MWEP. Regional and local projects are dealt with by MWEP’s county-level Environmental Protection Agencies (EPAs).

(7) Ministry of Waters, Forests and Environment Protection, 1996. Environment Protection Strategy.

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Forest roads are not listed in Appendix 2 of the Environmental Protection Law, and therefore do not require a formal EIA. Roads in ‘protected areas’ are listed, and therefore do require EIA.

Currently, the Forest Management and Research Institute (Institutul de Cercetari si Amenajari Silvice, or ICAS), has the only license to undertake EIAs on forest land. Typical activities requiring EIA in forests are mining and oil exploration. As yet, ICAS has not carried out any impact studies on proposed forest roads. Roads are very much the domain of INL (the National Wood Institute), which is almost always the successful bidder for contracts for new forest road feasibility and design studies. Feasibility Studies for new forest road construction do not require a formal environmental assessment. The INL also has authority to undertake EIAs but not specifically in forests.

Constraints to the development of EA in Romania, as seen by ICAS, include:

· lack of previous experience; · large cadre of senior staff requiring re-training, attitudinal change and awareness- building; · limited domestic capacity for postgraduate training in environmental impact assessment; · lack of private sector capacity

There is no national legislation in place relating to Sectoral Environmental Assessments.

International issues: The driving force for the new environmental policy and legislation has been the Association Agreement signed with the European Union. Consequently, in the interests of harmonization, the basis for the EIA regulations in Romania is EC Directive 85/337/EEC on Environmental Impact Assessment as amended by 97/11/EEC.

This EC Directive sets out the requirements for undertaking EIAs before consent should be granted for public and private projects which are likely to have a significant impact on the environment. Projects are classified in two groups: projects listed in Annex I to the Directive are subject to compulsory EIA while for projects in Annex II, the assessment is discretionary.

EIAs prepared under the Directive are to cover effects of projects on humans, fauna and flora, soil, water, air, climate and the landscape, material assets and cultural heritage as well as the interactions between these factors. Authorities with environmental responsibilities and the public, are expected to be properly and timely informed and have the possibility to give their opinion. Finally, all these elements are to be taken into account in the final decision to authorize the project, and the public and the environmental authorities are to be informed of the decision and the results of the assessment process.

Several institutional models exist for handling EIA procedures in EC Member States. These range from options in which the central government department or ministry is appointed the competent authority for all permitting procedures, to one in which the majority of the responsibility is delegated to regional and local authorities. This second approach would

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also make arrangements for public consultation more practical as it would bring the process closer to the main protagonists. The latter model applies in Romania, where Regional and local projects are dealt with by MWEP’s county-level Environmental Protection Agencies (EPAs).

Under the EC Directive, forestry and silvicultural operations are largely exempt from mandatory environmental assessment, i.e. no forestry or silvicultural operations (including forest roads) are listed in Annex I to the Directive. Under Annex II, EIAs may be required in the case of projects which resulted in initial afforestation or deforestation for the purposes of conversion to another type of land use [Annex II, Section 1 (d)]; or for the construction of new roads[Annex II, Section 10(e)]. The Directive leaves it to the discretion of Member States to determine whether an EIA should be required in these instances either on a case-by-case examination, or by relying on thresholds or criteria for specific types of projects or by a mixture of the two methods.

The EC Directive which relates to Sectoral Environmental Assessment (EC Directive 2001/42/EC of 27 June 2001 on the assessment of certain affects of plans and programs on the Environment) has only recently been adopted, and will come into effect 3 years from the date of adoption. The Directive (in Article 3) is specific to ‘plans and programs … which are likely to have significant environmental effects’ and which are prepared inter alia for the forestry sector ‘and which set the framework for future development consent of projects listed in Annexes I and II’ in the Directive on Environmental Assessment. Read in conjunction with Annex II of the Directive on Environmental Assessment, it becomes clear that the sectoral directive would apply, then, in the case of plans or programs which result in initial afforestation or deforestation for the purposes of conversion to another type of land use, or for a sector-wide roads program.

With respect to public disclosure, the applicable EC Directive is 90/313/EEC on Access to Environmental Information (90/313/EEC). This directive requires public authorities to provide the public with access to, and to disseminate, environmental information they hold. The Directive sets the basic conditions, but EC Member States are responsible for defining the practical arrangements under which information should be made available. According to the Directive, the information must be provided to any person at their request, without them having to prove an interest and at the latest within two months after the request has been made. The directive allows authorities to charge reasonable costs for making the information available to the public. A request for information may be refused when it affects certain interests defined by the Directive e.g. public security, commercial and industrial confidentiality or international relations. Under the Directive, Member States should provide general information to the public on the state of environment.

In 1998 Romania signed the UNECE Convention on the Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Åarhus Convention).

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EIA and water legislation

Water is managed under the Water Law (No. 107/1996). Article 31 of this law deals with forests. Paragraph (4) of Article 31 requires forests to be managed so as not to contribute to floods and soil erosion (Box 1). Developments (but not, normally, forest roads) which may affect water are subject to a permitting system. Permits are issued by local offices of MWEP, and may contain conditions relating to water quality. These conditions are, typically, water quality standards which should not be exceeded, rather than methods of construction or operation intended to prevent pollution.

The Water Law does not appear to consider sediment and other natural materials to be ‘waste’, i.e. a polluting substance within the meaning of the Act.

Regulations under the Water Law were issued in 1997 (Ministerial Order No. 277/1997). This Order specifies the documentation required to obtain a permit under the act. In response to Article 31 of the Law, Article 32 of the Order deals specifically with forest management plans. Forest management plan documents are required to cover, inter alia :

‘…the expected effects of forest management plan implementation on soil stability and on conservation of aquatic ecosystems.’

Box 1: Water Law No. 107/1996, Article 31 (1) The forests having special protection functions, from the reception of the reservoirs, those in basins of high torrential degree and prone to erosion, in major river beds, in the dam-bank areas, as well as the forest belts located along undammed rivers belong to the group of forests with special protection functions and are managed as such, through intensive treatments, the clear-cuttings or short-time regenerating treatments being forbidden. (2) The water protection forests, the soil protection ones located on cliffs, detritus areas, on eroded soil, on lands of slopes higher than 35o, and other such forests are managed under special protection regime. (3) Within the areas mentioned in paragraphs (1) and (2) works of soil erosion control and torrent annihilation shall be performed, and special rules of maintaining such works shall be applied. (4) The forests in the mountain and hill areas must be managed in such a way so as not to contribute to the development of floods and soil erosion.

Source: English translation supplied by Water Management General Directorate, Ministry of Water and Environmental Protection, 9/3/2001

2.1.4. Policies Toward Biodiversity and Protected Area Management

As a signatory to the Convention on Biological Diversity (CBD), in the mid-90s Romania developed a National Biodiversity Strategy and Action Plan (1996), with four principal biodiversity conservation priorities:

(1) development of the legal framework and capacity building; (2) organization of the national systems of protected areas; (3) in-situ and ex-situ conservation of threatened, economically-valuable species;

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(4) conservation outside formal protected areas through changes in land-use, land management, habitat restoration etc.

Within these overall strategic priorities, priority actions include:

‘Elaboration of a model administration (in 3-4 forest districts with representative bioclimatic zones and layers) for the sustainable management of forests consistent with the principles and actions required under the CBD.’

A summary of Romania’s biodiversity, threats, legal and institutional framework, and the national biodiversity strategy can be found at :

www.grida.no/enrin/biodiv/national/romania/.

Romania takes part in many regional conservation initiatives, as part of ‘The Environment for Europe’ process.

Law 5/2000 includes the list of protected areas in Romania and in 2001 the Parliament passed Law 462 regarding the management of protected areas and the conservation of natural habitats, wild flora and fauna.

The GOR is receiving assistance from the GEF through the Biodiversity Conservation Management Project which is under implementation. The project is being implemented by the NFA, and technical assistance is being provided by the international NGO Fauna and Flora International (FFI). The project is supporting conservation of Romanian forest, alpine and meadow ecosystems in the Carpathian mountains, which are among the last and largest tracts of relatively undisturbed forests in Europe.

The project was designed to develop a legal framework for a network of protected areas and to develop staff capacity to fill such roles. The project is demonstrating how biodiversity conservation can be incorporated into forest management planning, and how these efforts can be coordinated to maintain the viability of Carpathian ecosystems. The project is comprised of several sets of activities:

1. Strengthening the National Framework for Biodiversity Conservation (US$1.1 million) through participatory review and revision of the legal and regulatory framework for protected area management. This component entails the review of existing draft legislation, preparation of a national law for protected areas, and development of site specific regulations for project demonstration sites. The project is building the capacity of the Directorate of Nature and Biodiversity Conservation (DNBC) of the Ministry of Water and Environmental Protection (MWEP) to plan and lead biodiversity conservation initiatives at the national level. These activities include developing and operationalizing a prioritized national strategy for establishing an effective system of protected areas, building public support for biodiversity conservation, establishing a national biodiversity monitoring system,

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and strengthening regional initiatives to conserve Carpathian ecosystems. In addition, a strategy will be developed to mainstream biodiversity conservation in forest management planning at the level of the ecosystem, rather than in smaller "forest production units".

2. Developing Models for Protected Areas and Forest Park Management (US$6.2 million) for planning and management of biodiversity at three demonstration sites. The project is developing conservation management planning systems, and providing equipment, training and facilities, including visitor centers at all three sites. It will undertaken baseline ecological surveys and put in place biodiversity monitoring systems to provide periodic feedback on the status of ecosystems and their biodiversity, particularly as they relate to known threats such as over grazing, tourism impacts, hunting, and other forms of resource use. In addition it is establishing mechanisms to reduce the unsustainable use of shared resources such as grazing and forest products, and is developing a strategy for eco-tourism, which will focus on demonstrating links between conservation and economic benefits for local communities. The three pilot sites are,

a. Retezat National Park Biosphere Reserve in the southwestern Carpathians, which includes pristine mountain forest and alpine ecosystems. A National Park conservation strategy is being piloted here. b. Piatra Craiului-Bucegi Natural Park in the south central Carpathians includes pristine mixed and coniferous forests and alpine ecosystems, surrounded by production landscapes. Here, the European Ecological Network concept is guiding development of sustainable eco-tourism, grazing and agriculture. c. Vanatori-Neamt Forest Park in the northeast Carpathians includes natural mixed hill-forest and meadows. A strategy of biodiversity conservation through sustainable forest management is being tested here.

This component is also developing and show -casing forest management practices that address biodiversity concerns, including incorporating biodiversity in the NFA forest management planning system, and exploring and disseminating the economic rationale for independent certification of forest products. In addition a European bison reintroduction program is under implementation at the Vanatori-Neamt Forest Park, which is part of its former natural range. The bison population will provide a "flagship" for public awareness of forest ecosystems, and also a mechanism for ecological reconstruction and maintenance of the natural diversity of this areas mixed forest and meadow ecosystems.

3. Building Public Support for Biodiversity Conservation (US$0.7 million) is being achieved through preparation and implementation of both national and park level strategies and targeted action plans for raising the awareness of specific stakeholder groups and the general public about the importance of, and opportunities for, biodiversity conservation. Action plans are targeting priority groups such as national policy makers, protected area site visitors and primary school children. Possible

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delivery mechanisms for the public awareness program include mass media, formal and informal education, and networking and the development of linkages with related conservation initiatives in Romania and elsewhere. The component incorporates and encourages commercially sustainable options such as private sector development of publications, eco-tourism, and the use of eco-labeling in marketing products that are linked with conservation needs and opportunities.

2.2 INSTITUTIONAL FRAMEWORK FOR FOREST CONSERVATION AND MANAGEMENT IN ROMANIA

Institutional arrangements have changed significantly starting within the first few months of 2001, first with the removal of the forestry remit from the former Ministry of Waters, Forests and Environmental Protection (now the Ministry of Waters and Environmental Protection) to the Ministry of Agriculture, Food and Forests (MAFF), and the further reorganization of the DoF from four General Directorates subsequently to two.

This section provides a summary of the current status of the institutions relevant to management of the forestry sector, based on published and unpublished doc uments, and discussions with officials from MAFF, the National Forest Administration, FDP PPT team members and others.

The main institutions and organizations relevant to sustainable management of Romania’s forest resources are shown in Table 2. It should be noted, however, that further changes to institutional structures, linkages and responsibilities are possible.

The following section provides a brief overview of each institution, including the non- governmental sector.

2.2.1. Department of Forests

The Romanian public authority responsible for forests is the Department of Forests (DoF) in the Ministry of Agriculture, Food and Forests (MAFF). Within the MAFF, the DoF has two Directorates including a Forest Inspectorate, each reporting directly to the Secretary of State for Forests (Figure 2). All of the DoF staff, apart from the 16 Forest Inspectorate Branch Offices (spread all over the country) is based in Bucharest. The recently reorganized DoF has combined the regional offices of the Hunting and Game Management with the Forest Inspectorate into one unit with a mainly supervisory and control role. Regulatory functions are the responsibility of the Strategy, Policy and Legislation Directorate, while support functions are concentrated in the newly-formed Private Forests Management Service.

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Table 2: Institutional responsibilities of key Romanian institutions relevant to forestry and the environment Institution Areas of responsibility relevant to forestry and the environment Department of Forests · Co-ordinate development/ implementation of national sustainable forest (DoF), MAFF management strategy · Elaborate/promote technical norms re. Forestry, and collaboration with other Directorates/Ministries · Co-ordinate forest protection survey system, and realize forest protection program · Co-ordinate activities relating to protected areas · National co-ordination of ecological reconstruction activities (afforestation of degraded agricultural lands) · Propose studies/programs for ecological reconstruction and protected areas · Co-ordinate with Directorate of Private Forest Management to elaborate studies, prognosis, programs for sustainable management of forests · Approve methodology/rules to estimate game numbers, determine optimum population size and calculate annual harvesting quotas · Analyze and verify FMP implementation; · Monitor/control harvesting to prevent environmental damage · Monitor/control road construction and maintenance · Identify/follow up on illegal activities · Organize/co-ordinate Regional Inspectorates with respect to forest and hunting regime · Undertake public awareness in relation to forestry, especially private owners · Afforestation/amelioration activities · Develop national criteria/indicators for sustainable forest management · Co-ordinate with Directorate of Strategy, Policy and Legislation to elaborate studies, prognosis, programs for sustainable management of forests National Forest Administra- · Implement national forest strategy for forests under its stewardship to ensure tion (NFA) (formerly known protection, conservation, long term development of state forest assets as Romsilva) · Forest management of private and community owned forest, on agreed basis · Administer/manage protected areas, including national parks · Manage hunting and fishing territories · Ensure that state forests contribute to improvement of the environment · Provision of timber to the timber industry Forest Research and Ma- · Forest management planning (FMP) services and inventory nagement Planning Institute · Investment planning capability/services, including EIA, ecological (ICAS) reconstruction, flood control, road planning · Research: including forest protection and monitoring, biodiversity, ecology, GIS, FMP, watershed management, wildlife conservation, conservation, sustainable development Association of Private Forest · Promotion of awareness of forest ownership Owners (APPR) · Support at local level for all aspects of forest management · Sustainable use of forest resources Ministry of Waters and · Transposition of environmental legislation Environmental Protection · Review/permitting of EIAs for forestry activities (MWEP) · Water management · Responsibility for national Environmental and Biodiversity Strategies National Wood Institute · Forest road feasibility studies (INL) Source: ERM consultations with key players; Fortech, Dames & Moore, and Project Management (2001): Romania, Forest Development Project. Final Report.

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Directorate for Forest Strategies, Policy and Regulations

The role of the Directorate for Forest Strategies, Policy and Regulations is to:

· Co-ordinate the development and implementation of the national strategy for sustainable forest management, and for forest vegetation outside the forest fund (See Articles 1-9 of The Forest Code, Law No. 26/24 1996 for definitions of forest vegetation and forest fund). · Co-ordinate the development of specific strategies for the various forest sector areas and integrate with the national forest strategy; · Harmonize the national forest legislation with EU legislation; · Co-ordinate the collaboration with FAO and international forestry activities; · Elaborate and promote technical, legal and economic norms regarding forestry and collaborate with other Directorates and Ministries in this regard; · Co-ordinate the forest protection survey system and the implementation of the forest protection program; · Co-ordinate the activities related to protected areas; · Co-ordinate the ecological reconstruction activities and the afforestation of degraded agricultural lands; · Propose the development of studies and research programs for ecological reconstruction and protected areas; and · Co-ordinate the development of studies, prognosis and programs for the sustainable management of private and public forests.

Figure 2: The structure of the Department of Forests within MAFF (April 2002)

Minister for MAFF

Secretary of State for Forestry

Directorate Directorate Silvic Regime Strategy, Policy and Inspection Legislation

Control of Silvic Forest Fund, Biodiversity and Strategy, Policy Game Regime Mgmt Planning Privare Forest Ecological And Legislation Management (Inspectorate) & Accessability Management Reconstruction

Forest Inspectorate

The main role and tasks of the Forest Inspectorate are defined in Government Decision No. 12/2001 and are summarized below:

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· Organize and co-ordinate the inspection of forests for compliance with law and regulations, irrespective of type of ownership; · Analyze and verify the implementation of forest management plans; · Monitor and control the application of technical norms and standards regarding the location of the felled area, harvesting and sale of roundwood; · Monitor and control the harvesting activity and stop operations where a breach of regulations occurs (including where harvesting endangers forest vegetation, or causes environmental damage); · Monitor and control the road construction and maintenance and the adherence to technical norms and standards; · Monitor and control the provenance of reproduction material; · Carry out checks and inspections on wood trading activities; · Identify the breaches of legislation and inform police for legal prosecution; · Identify and follow up on illegal activities and determine the sanctions according to the law; · Organize and co-ordinate the activity of the regional inspectorates for forest and hunting regime; · Analyze, monitor and control the regeneration of harvested areas and afforestation of new lands; and · Monitor and control the activities related to pest and disease control.

There are 16 Branch Offices (Territorial Inspectorates) reporting to the Forest Inspectorate Headquarters. Branch Offices have responsibility for two to four whole counties depending on the degree of forest cover and geographic spread. Each Branch Office has a similar structure to that of its parent headquarters but also includes the newly formed Silvic Districts within its remit. The Branch Offices are legal entities under the law and as such are empowered to undertake legal actions. This is an innovation intended to devolve power down through the new organization.

The Forest Inspectorate is in its infancy and although it functioned under the former Ministry of Waters, Forests and Environmental Protection, in practice for most of its existence it was confined to a small staff based in Bucharest. It was not until early 2000 that its staffing was structured in anticipation of the planned restitution. There are no detailed standard operating procedures documented for staff apart from those relating to hunting and game management. There are some immediate plans to develop such procedures and become more efficient. In April 2002 staffing at Headquarters, Branch Office and Silvic District totaled 301.

The Forests Inspectorate reports to the Minister of Agriculture, Food, and Forests, but is independent of the autonomous National Forest Administration and has no reporting or financial relationship to the NFA. The NFA (as a government-owned institution which has responsibility for all production and protection forests), however, also reports to the Minister of Agriculture, Food, and Forests. This relationship between the institutions with responsibility for forest management in Romania is strikingly similar in many respects to the

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structure of forest management institutions across Europe.8 What is more important than this institutional structure is the ability of both institutions to deliver on their mandates.

2.2.2. National Forest Administration

While policy, regulatory, and oversight functions are the responsibility of the Department of Forests, Romanian state forests are under the administration and management of the National Forest Administration (NFA). The NFA was established in 1996 as a legal state- owned entity with an essentially commercial mandate. The public company had first been created by Government Decision No. 1335/ December 1990 under the name, Autonomous Forest Administration. This was reorganized as the NFA by Government Decision No. 1112/ November 1996. The NFA operates as a financially autonomous organization performing forest management, protection, and silvicultural operations, engaging in production of non timber forest products and services and providing a range of public service functions. It reports to the State Secretary for Forestry within the MAFF.

The NFA is responsible for managing State forest land (February 2002 around 85 percent of all forests), under policy and legislative direction from the Department of Forests. Government Decision No. 173/ January 2001 determines the scope and type of activities that can be undertaken by the NFA. These are broad ranging and enable the NFA to undertake, in addition to the normal range of management and silvicultural activities, the following:

· Forest management of private or community owned forests on an agreement basis; · Primary processing of wood; · Lease or rent assets; · Purchase or accept donations of private owned land for afforestation; · Process non timber forest products – forest fruits, mushrooms, medicinal plants etc; and · Organize the state owned forest inventory according to existing rules and legislation.

The NFA is responsible for the administration and management of protected forest areas including national parks. It must also ensure that state forests contribute to the improvement of the environment and ensure a steady supply of wood for the national economy.

In summary the tasks of the NFA are to (a) implement the national forest strategy for the forests under its stewardship to ensure the protection, conservation and long term development of state forest assets, (b) manage hunting and fishing territories, (c) turn to account specific forest products, (d) perform duties of public service related to forests and (e) undertake the required measures to obtain financial profit.

The organizational structure (number of Branches and Districts) is defined in the Government Decision No. 173 / January 2001. The NFA has a Headquarters, 36 County

(8) Similar structures, where forests are managed by financially independent organizations subject to oversight from a regulatory authority, exist in France, Ireland, Austria, the state of Hess in Germany, Croatia and Latvia, among others.

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Branches and 380 Forest Districts, Forest Research and Management Planning Institute (ICAS) and the forest magazine editorial board (Figure 2). The Headquarters consists of a General Manager who reports to a seven member Board of Directors, a management committee and four Directorates – forest stock, technical, production, hunting and fishing, and economic.

The Branch offices have a mainly supervisory and monitoring role. Forest Districts operate along the lines of “Profit Centers” and vary in size from up to 6,000 ha in the plains to over 20,000 ha in mountainous regions and consist of a number of sub-districts which in turn are comprised of around five forest ranges. This area -based structure is fairly traditional within State owned forest enterprises which do not operate on a truly commercial mandate or in an open market environment. Non-core activities (forest fruits, fish farms, mushrooms, wickerwork, charcoal, timber processing etc.) report to the Forest District and are not organized along business unit lines, despite their significant contribution to revenue and NFA’s mandate to undertake non-core activities on a commercial basis.

With respect for forest roads rehabilitation and construction, the NFA is the decision making and management body. The identification of need for new roads and/or rehabilitation works is made at the district level on the basis of each district’s 10-year management plan (which are prepared by ICAS). The current approval process for forest road works is illustrated in Box 2.

Figure 2. NFA Organizational Structure (April 2002)

Board of Directors

Forest Magazine Editorial Board Forest Research & Management Institute General Manager Management Committee Secretariat, Legal, PR and Safety

Forest Director Technical Director Production, Hunting Economic Director & Fishing Director

Forest Regeneration Forest Stock & Production Finance- Accounting Logging Control & Economic Analysis

Investment - Development Forest Management Hunting & Trout Planning, Protected Farming Human Resources, Areas & Silvo-tourism Organization & Programming Information Technology Marketing & Business Relationships Strategic Services Administration Forest Protection & Guarding

36 Branch Offices

380 Forest Districts

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The National Wood Institute (Institutul National al Lemnului, or INL is a formerly public agency which now operates as an autonomous public/private company, and which has the dominant share of the road design market in Romania, including forest roads. INL has its headquarters in Bucharest and has branch offices throughout the country. It works closely with the NFA branch and district offices in the design and permitting process for the majority of forest road projects.

There are two other institutions with evolving oversight responsibilities for forest roads:

· The Forest Inspectorate; and · The Forest Research and Management Planning Institute.

The Forest Inspectorate (FI) is an oversight body, the role and functions of which include monitoring conformance with the forest management plans FMPs and responsibility for regulating and monitoring environmental performance of forestry activities. One of the recommendations of this EA of the FDP is that the Forest Inspectorate should work closely with the Forest Roads Engineer in the PCT for regulating and monitoring environmental performance in the forestry sector in relation to forest roads, extraction activities and forest management plans (see Section 5. FDP’s Critical Environmental and Social Impacts and Mitigation Measures).

The Forest Research and Management Planning Institute (ICAS) reports to the general manager of the NFA, and provides ‘in-house’ services to NFA including preparation of forest management plans (FMPs) and providing other technical support which assists the NFA to carry out its remit. The services it offers are being expanded and recently included capability to prepare EIAs for forest roads. Although effectively operating under the NFA, ICAS is a financially independent entity subsisting on revenues generated; technically and scientifically, it reports to DoF.

2.2.3. Non-governmental Organizations

The Association of Private Forest Owners (APPR) is a national level umbrella organization established in 1998 representing all categories of private forest owners in Romania. It is a registered non-governmental, non-profit legal entity and its funding comes from membership fees and sponsorship. At the end of 2001 its membership included about 120 local and county associations, communes, town halls and individual members. APPR’s main aims are:

· Promotion of awareness of forest ownership; · Support for understanding of forest legislation, in particular the rights and responsibilities of private owners; · Support for association members at local level in all aspects of forest management; · Organizing and consolidation of private owners into local and county associations; and · The sustainable use of forest resources.

The association is not a member of the European Private Forest Owners Association although it has been invited to participate at a number of meetings.

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Box 2: Current approval process for forest roads

1. Forest District and/or Branch of NFA prepare short Pre-Feasibility study. Consultants (e.g., INL) may be involved. 2. NFA’s central investment office screens Pre-Feasibility studies and selects some to go forward. 3. NFA (Bucharest) prepares Terms of Reference for the Feasibility Study and Technical Report. 4. Tendering for studies (‘auction’). 5. Preparation of Feasibility Study by the successful consultant (e.g. INL), in prescribed format. 6. Circulation of Feasibility Study to concerned agencies for approval, including local authorities, 7. local Environmental Protection Dept., and Water Dept. 8. Consultant (same as at (5)) prepares Technical Report (i.e. tender documents) and ‘Execution Details (i.e. construction drawings and specifications). 9. Submission to local council for construction permit. 10. Tendering for construction. 11. Construction by the successful contractor, supervised by specialist unit of concerned Forest Branch (forest roads officer) and by Ministry of Public Works engineer(s)

Three patronizing associations officially represent most of the forest logging and wood industry operators:

· ASFOR - Association of Romanian Foresters - which includes the great majority of the logging, transport and primary processing operators; · APMR – Association of Romanian Furniture Producers - which includes the furniture and other wood industry operators; · ROMPAP – Association of Romanian Pulp and Paper Producers - which includes the pulp and paper industry operators.

The main objective of these patronizing associations is to represent members’ interests to the official authorities. The main funding of the association activities is ensured by an annual fee paid by members.

There are about 700 registered Environmental Non-Governmental Organizations (E NGOs) in Romania although it appears that less than 400 are active. However, despite their large number the involvement of NGOs in specifically forestry related issues is lower than in Western Europe or North America. Capacity is weak and there appears to be limited coordination between E NGOs.

The largest and most active E NGO involved mainly in forest related activities is Progresul Silvic. It has 12 branches all over the country and more than 1200 members. Progresul Silvic is also co-editing the only national forest magazine “Revista Padurilor” and has played an important role in the scientific life and the debate on forest sector development.

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2.3 KEY SECTORAL ISSUES

2.3.1. Overview

Romania's forests cover 27 percent of the country and include some of the last and largest tracts of natural and undisturbed old growth forests still remaining in Europe. Some 53 percent of Romanian forests are managed primarily for protection functions rather than for timber production. Romania has a strong tradition of developing and implementing biologically sustainable forest management practices. In the year 2000 the export value of forest products was estimated as US$ 1,026.8 million, equivalent to 10 percent of the value of all exports. A recent study commissioned by the World Bank (Economic Valuation and Reform of the Forestry Sector, Romania, January 1999) indicated that the annual value of all products and services provided by Romania's forests, including environmental services but excluding value-added from forest industries, is on the order of US$ 3.1 billion.

Recent sector analysis and stakeholder consultation led to the development of a comprehensive National Forest Policy and Strategy (NFPS) to address the urgent strategic choices currently facing the sector. Development of the NFPS was undertaken over a ten- month period commencing in early 2000 through a participatory process involving representatives of many forestry sector stakeholder groups. In addition to defining overall forestry policy at national level, the NFPS sets out and prioritizes a series of specific strategic actions to achieve policy goals and provides the basis for the coordinated and sustainable development of the sector. The Government has recently adopted the NFPS and the challenge is now to implement the strategic actions it proposes.

2.3.2. Restitution of Forest Lands

Government is under pressure to proceed rapidly with the restitution of forest lands as part of the broader restitution and democratization process. Under Law 1/2000, requests have been submitted by different categories of former owners for the restitution of approximately 3 million hectares of forest land. Implementation of the restitution process has recently been speeded up and it is likely that about two million hectares (approximately one third of Romanian forests) will be returned to private owners by 2003.

While the restitution of forest lands will ultimately lead to greater democratization, empowerment, and improved distribution of benefits from forest management to their owners and to associated rural communities, there are risks associated with the restitution process. Previous experience in Romania (1991/92) and elsewhere has shown that if the restitution of forest lands takes place without adequate legal and institutional mechanisms, and without knowledge or awareness of sustainable management practices by new forest owners the almost immediate loss of forest cover is likely to result, leading to irreversible environmental degradation and significant economic losses for the country.

Following the restitution of 353,000 hectares of Romanian forest lands in 1991/92 approximately one-third of the area was clear-felled within three years and many other restituted areas were harvested at unsustainable rates, leading to an overall loss in productive capacity. The total economic cost of this event – measured in terms of loss of watershed protection functions, erosion, related flooding damage, reduced timber production, and reduced wildlife habitats – has been conservatively estimated to be on the

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order of US$ 1.5 billion. In anticipation of the much larger-scale restitution of forest lands which is about to take place, the role of the State will need to change rapidly to reduce the potentially devastating impacts of restitution on forests, the environment, and on the sector's long-term productive capacity. At the same time, the ability of new forest owners to undertake sustainable forest management will be constrained by technical skills, access to markets, and investment capital.

2.3.3. Evolving Role of the National Forest Administration

Under the Ministry of Agriculture, Food and Forests (MAFF), the Department of Forests (DoF) [with the subordinated Directorate for Strategy, Policy and Legislation, and the Directorate for Silvic Regime Inspection (Forest Inspectorate)], is responsible for policy, legal, regulatory and supervisory functions on all forest lands. Management responsibility, however, rests with the NFA which currently manages, on behalf of Government, more than 85 percent of Romania's forests. This area will be reduced dramatically after restitution. Since most of the forests which will be returned to former owners is production forest, restitution will significantly increase the proportion of non-revenue generating activities undertaken by the NFA (from the management of watershed protection forests, many of which are areas rich in forest biodiversity) as a share of its total expenditure. Restitution will have the added impact of breaking up contiguous blocks of forest administered by NFA, thereby making management more difficult and costly. Consequently, NFA is expected to encounter difficulties in financing its public functions -- primarily maintaining and managing the State's protection forests -- using its own decreasing revenue generating activities.

In the year 2000, NFA's revenues were US$ 172.73 million, including an estimated US$ 32 million from non-timber forest products. The profit outturn was equivalent to 9.3 percent on sales before interest and tax, which compares poorly, for example, with returns of 24 percent and 21 percent for state-owned forest management authorities in Ireland and Sweden. This apparent inefficiency relates partly to the large number of non- revenue generating public service functions, including forest protection, which NFA finances from its own revenues. Because NFA is currently taxed on profit, there is an incentive to increase expenditure rather than to generate profits. Additionally, there is currently no obligation to pay the State a rent for the use of the forest resource or to pay dividends to its primary shareholder (i.e., the State). Under NFA's current accounting system, it is not possible to quantify and compare the economic and fiscal costs and benefits associated with NFA's public good and commercial functions in management of State forest resources. To do this is not easy, as limited harvesting is permitted in forests managed primarily for watershed protection (See Appendix 6: Protection Forests: Functional Categories and Permissible Felling Systems in Romania). Consequently, there is a risk that restitution will result in the inadequate allocation of resources to public good functions and that fiscal benefits from the management of productive State forests may not be fully captured.

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activities will be adequate for addressing financial shortfalls. The lack of clarity in accounting practice allows for allegations of inefficiency.

2.3.4. Timber Pricing Policy

Currently NFA sells timber through competitive sealed bid tenders primarily for standing timber, and also for a limited amount of timber felled and extracted to roadside. The average annual floor price for tenders is supervised by the Competition Office (which answers to the Prime Minister’s office) and is set by Government Ordinance. The average floor price is calculated by taking the total annual costs of the NFA plus an agreed profit margin, and dividing this cost by the estimated volume of the annual harvest. The floor price for individual tenders is set by local offices of NFA at a level above or below the average floor price after taking the estimated value of the wood to be sold (size, species and quality) into consideration. This method for setting the average annual floor price for timber does not take into account the market value of the wood or the harvesting costs borne by the purchaser but does include the cost of non-commercial activities undertaken by the NFA. The return to the state for the sale of its resources is included (through the provision of the public services undertaken by NFA and the profit margin) but is not quantifiable. Consequently, the current timber pricing policy may not capture the market value of the resource, and obscures State subsidies for public good functions. There is a need to introduce a floor pricing system, which would reflect both the cost of production as well as market conditions, while capturing rent for management of state forest resources. The calculation of floor prices should be revised to incorporate costs over time both better to capture the value of the resource, but also to provide greater clarity about the extent to which revenues from the sale of timber finance NFA’s provision of public goods functions such as protected area and watershed catchment management.

2.3.5. Access to Forest Resources

Forest roads are needed to provide access for harvesting and forest management. A low density of forest roads results in the need to skid (drag) logs longer distances from the point where they are felled to a road where they can be loaded onto trucks. From an environmental perspective, longer skidding distance results in erosion on arterial skidding trails. Damage to the forest floor and to standing trees increases in proportion to the distance which logs need to be dragged. A low forest road density also encourages over- harvesting in areas close to roads, since longer skidding distances also increase harvesting costs. Consequently, a sub-optimal density of forest roads results in greater environmental impacts and lower economic returns from harvesting. Typically, because of the low density of forest roads in production forests, on average, rates of timber harvesting are far below the annual allowable increment which is possible.

Romania has a network of different types of infrastructure for forest harvesting. These include: 32,500 km of forest roads; 65 km of forest railroads; 1,450 km of roads used for harvesting but provided by other sectors, such as for mining and for hydroelectric power generation; and 7,600 km of public roads in the forests on which wood collection is permitted. The network was mainly constructed during the period 1960-1985. Since 1994, when the forest roads became the responsibility of the NFA, some 365 km of forest roads have been constructed, and 294 km rehabilitated. This network of approximately 42,000 km, provides a density of 6.1 m/ha, of which only 4.7 m/ha are forest roads. As a result of heavy

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rains over the last several years, the existing road network has deteriorated and 7,000 km of forest roads have become inoperative, thereby further decreasing the degree of accessibility and reducing the effective road density to around 5.3 m/ha. This road density compares poorly with other European countries with largely similar topography (e.g., Austria 36 m/ha, Switzerland 40 m/ha, France 26 m/ha, Germany 45 m/ha). The National Forest Administration (NFA) estimates that only 65 percent of the Romania's production forests are economically accessible via the existing roads network.

In 2000, the EU funded the upgrading of some forest roads which provided access to villages under the Social Development Fund (SDF) program. Romania’s National Rural Development Plan, approved by the EU, includes the provision of Special Accession Program for Rural Development (SAPARD) funding for forest roads on private lands. Even with this investment, the road density will still be significantly less than the minimum level recommended by the FAO and by others such as the Forest Research and Management Institute. More recently, NFA has undertaken feasibility studies for rehabilitation and upgrading of 600 km and construction of 430 km of new forest roads at an estimated cost of US$ 42 million. Neither the State nor NFA have the resources for this level of investment. Road construction and rehabilitation has therefore ceased; harvesting on poorly maintained roads increases environmental damage and erosion, as do long skidding distances.

2.3.6. Low Productivity in Primary Wood Processing Industries

The timber industry has traditionally focused on supplying markets in the former Soviet Bloc and in the Middle East. One of the outcomes of this focus has been that the industry specialized in producing large quantities of low quality products -- market share which is now being met from other sources -- and so these markets have disappeared over time. The industry has never made the investment needed in new technologies to improve extraction and processing, and so remains highly inefficient, and unable to deliver product for higher value markets. There are a number of associated issues, which include the inability of Small and Medium Enterprises (SMEs) to access credit, and problems with respect to the security of raw material supply. Nonetheless, the valued-added potential of Romanian timber and timber products is substantial.

Inability of Small and Medium Enterprises (SMEs) to access credit

The inability of small and medium sized wood harvesting and processing firms to access loans for capital investment to replace outdated and inefficient equipment relates partly to how legislation treated moveable assets and inventory as collateral, and partly to lack of business planning skills and awareness of opportunities to access credit. Recent legislation (Law No. 99/2001) that allows for greater and more effective use of assets as collateral is a positive step. However, in view of the scale of investment required, and the current absence of adequate support to SMEs in identifying and accessing sources of credit, the change in legislation will have little immediate impact. The US$ 80 million World Bank Rural Finance Project is expected to provide financing which could be made available for investment in the forest industry. However, there is an additional need to improve access to information about the availability of existing and developing opportunities for financing forest industry investments.

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Security of raw material supply

Earlier, under the Forest Code (Law 26/24 of 1996), the NFA was not allowed to enter into long-term contracts with processors to guarantee raw material supply. This provision of the Forest Code was only recently changed, and a Government Ordinance allowing long term contracts (up to 10 years) was approved by Cabinet in spring 2002. Although there have been large investments in mills that utilize small wood, some investors have not proceeded with investment plans because of uncertainties about long-term supply. As restitution proceeds, a considerable proportion of the production forest will be transferred to the private sector. This would also allow forest owners associations to enter into long term supply contracts with small wood processors, which would be of benefit to the forest owners and will likely create the environment for future investment. Investors are already interested in setting up joint ventures for Small and Medium size Enterprises (SMEs) with groups of private forest owners.

Lack of coordination between growing and processing sectors: Responsibility for supervision of the timber growing (silviculture and forest management) sector rests with the MAFF, while the Ministry of Industry (MoI) is responsible for supervision of the log transport and wood processing sectors. This division of responsibility has resulted in poor communications and lack of coordination across the forest sector, acting to the detriment of the development of the sector as a whole. There is a need to bring all of the sectors together to capitalize on their potential to contribute to the national economy.

2.3.7. Legislation, Enforcement and Governance

There is relatively little information known about the extent of corruption in the forest sector. Some estimates have suggested that between 5 and 20 percent of the timber on the market in Romania had been illegally harvested, but the basis for these estimates was largely anecdotal.9 In any event, the failure to capture revenues as a result of corruption and illegal harvesting increases the overall cost of management, and supports rates of forest harvesting which are not consistent with generally accepted norms of sustainable forest management.

Corruption in the forest sector – the misuse of public power for private profit – should be distinguished from activities in the forest sector which are illegal (such as timber theft or illegal harvesting). Corruption can exist without illegality, and illegality can exist without corruption. Illegal activities can of course be facilitated by corruption, but it is important to point out that they can also take place irrespective of the prevalence of corruption.

The perception of whether or not corruption is an issue in the forest sector is heavily influenced by overall perceptions of the prevalence of corruption in Romania. A diagnostic study of corruption in Romania was carried out in 2000 and reported on the following year (World Bank, Diagnostic Surveys of Corruption in Romania, March 2001). The study concluded that corruption is perceived by the public to be widespread. About two-thirds of the Romanian public believes that “all” or “most” officials are corrupt. Public officials reported lower perceived levels of corruption, although still high: 44 percent reported that all or most

(9) See, for example, World Bank (1999). There was no empirical basis for this estimate, and subsequent reviews of the situation in Romania have discounted it.

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officials are engaged in corruption. While the perception of widespread corruption is clear, it is also clear that many people believe that corruption has achieved a state of normalcy. Half of households reported that bribery is part of everyday life, while only one in eleven reported bribes to be completely unnecessary. Enterprise managers and public officials were less negative with four tenths and a third, respectively, reporting corruption to be a part of everyday life.

Although it is important to understand perceptions about the pattern of corruption, it is equally important to understand how corruption directly impacts people, the business community, and the public officials themselves. Thirty-eight percent of public officials reported that they had been offered a gift or money during the previous year. Twenty-eight percent and 42 percent of enterprises and households, respectively, reported that they either were made to feel that a bribe was necessary or directly offered bribes or atentie (“attention”) to various public officials during the previous 12 months.

The perception of corruption in the forestry sector is no doubt fueled by the position of the NFA, which has long had control over extensive and valuable forest assets, and has remained relatively well-financed from its profits. Having said this, virtually no diagnostic work has been carried out which has adequately characterized problems in the sector.

A number of factors have posed important opportunities for the development of corrupt and illegal practices in the forestry sector in Romania. Higher prices for conventional household energy and heating have increased the incentives for the theft of fuelwood. The timber pricing policy and the auction system (through which NFA sells standing timber through competitive sealed bid tenders, and also for a limited amount of timber felled and extracted to roadside) does not take into account the full market value of timber (because floor prices are set too low and competition in the auction markets may be limited) or the harvesting costs borne by the purchaser, limiting market entry in some cases and offering greater potential for collusion where markets are poorly formed. Hedonic pricing studies (cf. Vincent et al, 1996) have shown the potential for improving the method for determining starting prices, which would in turn provide stronger incentives for wood-based industries in Romania to improve their efficiency and become more competitive. Private sector investment in processing is hindered as well because NFA is not legally able to enter into long-term contracts with processors to guarantee raw material supply.

Action on corruption in the forestry sector will have to be forward looking. The restitution of much of the revenue-producing forest lands to private owners will likely have important impacts on the behavior of both market players and the NFA. Among other things, auction behavior will likely change, with the proliferation of actors, including the proliferation of sellers of logging rights. Future action will have to be responsive to various behavioral changes likely to result from this fundamental change in ownership rights.

In any event, success in addressing administrative failures and state capture in Romania will require a broad-based program that brings transparency and accountability to political life and to public administration more generally, rather than to the forestry sector in isolation. Government has placed a high priority on tackling the problem of corruption by preparing and adopting its ‘National Program for Prevention of Corruption’ which seeks to do this.

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3. THE PROPOSED FOREST DEVELOPMENT PROJECT

3.1 PROJECT DEVELOPMENT OBJECTIVES AND OVERVIEW

The objective of the project, as it was Appraised in October 2001, is to maintain and to improve environmentally sustainable management of state and private forests so as to increase the contribution to the national and rural economies derived from Romanian forest resources.

In line with these development objectives, the FDP is expected to assist MAFF to: (a) establish systems to ensure sustainable management of private forest lands through building the capacity of the Forest Inspectorate, supporting the development of private forest owners associations, and establishing a forest informa tion and monitoring system; (b) mitigate the consequences of restitution on the management of State forest lands by assisting NFA to maintain, develop and finance its important role in managing protection forests, and will reduce the environmental impacts and improve the efficiency of managing State production forests through development of the forest road network; (c) support increased productivity and competitiveness of forest industries, through establishing and operating a Forest Sector Business Informa tion Center, (d) build public support for sustainable forest management by implementing a public awareness program targeting key stakeholders with emphasis on new forest land owners and their associated communities; and, (e) manage and coordinate all the inputs through supporting the MAFF’s Project Coordination Team (PCT).

3.2 PROJECT COMPONENTS

The project, as it was Appraised, is comprised of the following five components:

(1) Establish Systems To Ensure Sustainable Management of Private Forest Lands; (2) Mitigate the Consequences of Restitution on Management of State Forest Land; (3) Support Increased Productivity and Competitiveness of Forest Industries; (4) Building Public Support for Sustainable Forest Management; (5) Project Management and Monitoring.

The total cost and Bank financing by component/subcomponent is presented in Table 3.

Table 3: Indicative Costs and Bank financing by FDP component/subcomponent Indicative Bank percent of Costs percent Financing Bank Component/subcomponent (000 $) of Total (000 $) financing 1. Establish Systems to Ensure Sustainable Management of Private Forest Lands 1a. Forest Inspectorate: Supervisory, Regulatory and Advisory Capacity 5.2 12.0 4.3 12.8 1b. Support to the Association of Private Forest Owners 0.5 1.2 0.3 1.0 1c. Establishment of Community-based Associations of Local Forest Owners 0.3 0.8 0.3 1.0 1d. Forest Management Information and Monitoring System 6.6 15.2 5.2 15.6

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Table 3: Indicative Costs and Bank financing by FDP component/subcomponent Indicative Bank percent of Costs percent Financing Bank Component/subcomponent (000 $) of Total (000 $) financing

2. Mitigate Consequences of Restitution on Management of State Forest Lands 2a. Reform and Strategic Development of the 1.4 3.2 1.2 3.5 NFA 2b. Rehabilitation and New Construction of 25.1 58.0 18.9 56.6 Forest Roads

3. Support Increased Productivity and 1.1 2.5 0.4 1.2 Competitiveness of Forest Industries through the Establishment of a Forest Sector Business Information Center

4. Build Public Support for Sustainable Forest 1.6 3.7 1.3 4.1 Management

5. Project Management and Monitoring 1.2 2.8 1.2 3.4

TOTAL 43.00 33.0

3.2.1. Establish Systems to Ensure Sustainable Management of Private Forest Lands (Component 1)

This component is expected to focus on (a) Strengthening the Department of Forests, with an emphasis on the nationwide Forest Inspectorate and support services, within MAFF to provide extension and advisory services to meet the needs of the new private forest owners, as well as supervise, regulate and monitor sustainable forest management activities in private and state forest lands; (b)Developing the Association of Private Forest Owners (APPR), by providing core staff, logistic support and basic office needs; and by preparing a five year business development plan, which will define the profile of new members and a recruitment action plan, identify and develop the range of services needed by new members, and include a funding and cash flow analysis to ensure financial sustainability of the national APPR office and it's expanding network of new members. An essential activity of the APPR will be to facilitate the establishment of regional and local member associations of forest owners and helping them to apply for grant funding under EU SAPARD measure 3.5; (c) Supporting the establishment of community based Associations of Local Forest Owners (ALFOs) through targeted community development assistance in areas with high levels of poverty where forest lands will be restituted to individual owners, joint common owners and communal owners (at the village and commune level) who currently have limited capacity to organize; and (d) Establishing a national forest management information and monitoring system needed by the Forest Inspectorate for supervision and control to ensure sustainable management and development of the forest sector, by providing updated and integrated access to forest management plans, cadastre, laws and regulations, forest inventory and biodiversity, data on the flow of forest products, and statistics on forest industries and trade.

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(a) Strengthening the Department of Forests (DoF)

This subcomponent will give emphasis to the nationwide Forest Inspectorates as well as support services, within MAFF, to provide extension and advisory services to meet the needs of the new private forest owners, as well as to supervise, regulate and monitor sustainable forest management activities in private and state forest lands. This will be achieved through several activities:

(i) Sharing experience with governments and forest administrations in other relevant European countries (e.g., Austria, the Czech Republic, Ireland and Slovenia) will be achieved by means of a study tour to be undertaken at the beginning of the first year of project implementation in order to assist senior DoF staff to develop a vision for the future role, function and capacity needs of the DoF. Information obtained and conclusions drawn from the study tour will provide input to assessment of human resources and institutional needs undertaken under the following sub-component.

(ii) Assessing the human resource and institutional needs of the DoF, in particular of the Forest Inspectorates and developing and implementing a staff training program that will enable DoF to fulfill its role and mandate in regulating and supporting sustainable management of Romania's forest resources. This assessment will be undertaken in the first year of project implementation and will entail

(a) review and analysis of DoF staff capacity through structured interviews and meetings with staff throughout the institution; (b) identification and agreement with DoF and MAFF on the skills and staffing required for the DoF to fulfill its role and legal mandate; (c) identification and assessment of available training courses including distance learning; (d) design of course curricula for selected staff, detailing main topics, duration, location, training methods and targeted staff; (e) assessment of DoF training capacity and facilities; (f) identification of training which could be organized within DoF by their own staff; and, (g) development of a detailed, phased and costed training program including an implementation schedule.

Implementation of the training program will be undertaken through provision of:

(a) courses provided by Romanian education institutions for technical training; (b) commercial training organizations for public awareness, management, communication and IT skills training; and (c) training provided by a DoF in-house training facility that will be developed under the project, initially to cover DoF internal procedures but that will later, when the new in-house skills are developed, be expanded to include extension skills, technical and management subjects.

Internal procedures will include, for example, processes and procedures for forest management plan review and approval, and spot checks of timber trucks, etc. Inspectorate staff will need to be instructed on how to undertake this work and in the

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use of standard check lists, forms and reports. By project completion and thereafter, the bulk of training should be provided in-house by the DoF training facility.

The scope of the proposed training will in part be defined as an outcome of the proposed forest sector diagnostic on governance and corruption which is to be independently undertaken with separate financing (see Appendix 9: Draft Terms of Reference for Diagnostic Study of Corruption in the Forestry Sector ).

(iii) Developing a national standard for sustainable forest management to design and implement a participatory process to develop national level criteria and indicators for sustainable forest management. This will enable Romania to:

(a) meet its international obligations under the Lisbon Ministerial Conference; (b) facilitate monitoring and demonstration of Romania’s maintenance of sustainable forest management; and (c) implement requirements on standards stipulated by the silvicultural/policy statement of the National Forest Policy and Strategy (NFPS). The outputs from this process will guide development of the Forest Inspectorates operating procedures, in terms of the parameters to be monitored, measured and analyzed, and design of the Forest Management Information and Monitoring System.

(iv) Providing the physical resources needed by the DoF’s Forest Inspectorate to become effectively operational, including:

(a) office furniture and equipment, including computers, software, printers, fax machines etc, for headquarters and for the Inspectorates 16 branch offices and 100 silvic districts; (b) field equipment, including mensuration and survey equipment needed to enable staff to undertake necessary supervisory, monitoring and control activities; (c) vehicles needed to enable staff undertake the necessary field inspections; and (d) training equipment to support development of the in-house training capacity.

(b) Developing the Association of Private Forest Owners (APPR).

FDP will initially provide technical assistance to the APPR at the national level to prepare a five year business development plan which will clearly identify:

· the potential membership profile and actions needed to recruit new members; · the range of services needed by members that will be provided by APPR, and · a funding and cash flow analysis.

Subject to approval of the business development plan being approved by DoF and the World Bank, the project will provide the national APPR with the following investments:

(i) Human Resources, including five core professional staff, including: a Legal Expert; two Forest Management Experts; an Administrator; and, an Extension Services Expert. The core staff will be funded by the project on a sliding scale so that, by the end of the project period, staff costs will covered entirely through membership fees. The role of the core staff will be to:

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(a) catalyze and assist with the formation of member associations at the local and regional level; (b) provide technical guidance to members and member associations including: (i) assisting members to apply for SAPARD grant funding to support core financing needs; (ii) providing awareness raising information and training to members and potential members to promote sustainable forest management; and (iii) informing members of technical, policy and legal developments with relevance for the forest sector; : (c) provide technical input to APPR publications; (d) represent APPR at meetings and fora; and (e) provide administrative assistance.

(ii) Physical Resources, including basic office furniture and equipment and vehicles necessary for the National APPR staff to function efficiently.

(iii) Publications, Brochures and Newsletters, which will be developed for informational and APPR promotional purposes, targeting members and potential members rather than wider audiences. All APPR publications will be produced in close coordination with the public awareness component of the project to ensure complementarity and avoid duplication.

An essential activity of the APPR will be to facilitate establishment of regional and local member associations of forest owners. Once established, the National APPR will provide assistance to member associations in applying for grant funding under the EU SAPARD measure 3.5. This will be a significant incentive for the expansion of the APPR membership and will also provide funding to substantially expand the range of extension and management services at the local level through provision of monies for salaries of professional staff, the costs associated with establishing and operating new forest owners associations, and of preparing forest management plans. Without the assistance of the APPR at the national level or a similar intervention it is unlikely there will significant utilization of the SAPARD forestry funds locally.

This activity will focus on providing targeted community development assistance in areas with high levels of poverty where forest lands will be restituted to individual owners, joint common owners and communal owners (at the village and commune level) that currently have limited capacity to organize. Community development work to assist new forest owners to organize and establish ALFOs will be contracted competitively to a consultant or appropriately qualified community development organization, and will be undertaken throughout project implementation. The project will provide resources to:

(i) Select target areas in accordance with criteria that will be refined during an inception phase. Selection criteria will include forest lands where: (a) significant areas of forest is being restituted to individuals, joint common ownership and local communes; (b) higher levels of poverty prevail;

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(c) new forest owners have not already formed ALFOs, and (d) there is limited access to alternative sources of support for community development;

(ii) Train community development workers in the purpose and function of ALFOs and methodologies for their establishment;

(iii) Develop a manual detailing best practice procedures and processes for facilitating establishment of ALFOs, and

(iv) Facilitate establishment of about 90 ALFOs, having administrative authority for a total area of approximately 400,000 ha of private forests, during the first two years of project implementation;

(v) Assess the need for additional community development work to support development of ALFOs and expand the program to establish about 160 ALFOs, having administrative responsibility for a total area of approximately 600,000 ha of private forest land, by year six; and

(vii) Monitor the progress and effectiveness of operation of ALFOs and provide technical support where necessary.

(d) Establishing a national forest management information and monitoring system (FMIMS)

This activity will focus on developing better forest management information and resource monitoring by MAFF and the Forest Inspectorate to establish the capacity to facilitate and support sustainable development of the forest sector by providing updated and integrated access to forest management plans, cadastre, laws and regulations, forest inventory and biodiversity, data on the flow of forest products, and statistics on forest industries and trade. This will entail investment in hardware, software and training, and technical assistance with design, establishment and operation of the system. Inputs for the information and monitoring system will include the existing and comprehensive coverage of forest management plans, forest inventory and maps that are currently available with the Forest Management and Research Institute (Institutul de Cercetari si Amenajari Silvice, or ICAS). The information system would be used to enable MAFF to monitor and manage:

(i) preparation, review and approval of forest management plans - this would entail storage, retrieval, analysis, consolidation and approval of forest management plans, forest inventory, cadastre, laws and regulations and other approvals;

(ii) forest operations, including flow of forest products and statistics on forest industry and trade; and

(iii) DoF operations and administration, which will provide support, and will be responsible for the approval, supervision and monitoring of an estimated 600,000 new forest owners, their forest management plans and harvesting operations; and an annual national timber harvest approaching 17 million cubic meters (approximate standing value of $268 million at current local prices).

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Additionally, some types of stored information and data will be made available to users through dynamic interfaces to be established with the private forest owners associations and the National Forest Administration. This will allow submission of management plans, requests for permission to fell etc. and the approvals from the DoF to be transferred electronically, thereby greatly improving efficiency.

Development of the FMIMS will be initiated in the first year of project implementation and will be completed in a phased manner over the lifetime of the project and will entail:

(a) In the first year, the following consultants will be recruited: a FMIMS manager (full time in the first 3 years, part time thereafter), a systems analyst and a database designer (both part time for 4 months in year 1, then 1 month each year for the following 3 years). Their function will be to manage and supervise the implementation of the information management system on behalf of the DoF, prepare tender documents, evaluate tenders, assist DoF and private forest owners associations to prepare job descriptions for IT staff, evaluate applications, and monitor progress of IT contractors. (b) Recruitment of IT and support staff needed by DoF and APPR to manage and operate the FMIMS at the regional and central levels. (c) Appointing a main contractor to provide and install the FMIMS, including the supervision of provision of hardware and software and design and development of the custom built software, the APPR and NFA interfaces, the provision of local area networking capabilities and other communications solutions in a phased implementation schedule over the project lifetime. (d) Implementing an IT training program for all relevant staff at three levels: basic functionality, application functionality and system administration. (e) Management, maintenance and upgrading of the system on a continuous basis.

Development of the FMIMS will be informed in part by the outcome of the planned diagnostic of corruption and governance in the forestry sector.

3.2.2. Mitigate the Consequenc es of Restitution on Management of State Forest Land (Component 2)

This component will provide support for (a) Reform and Strategic Development of the NFA through preparing and assisting NFA to implement a strategic plan to develop and finance its role in managing State forests. This will be achieved through: (i) identifying, quantifying and separating the costs and benefits of the public good and economic functions of NFA, and preparing a financial accounting system to ensure that all activities are adequately resourced, (ii) preparing and assisting with implementation of a plan for reforming and strengthening the institutional capacity to improve operational and commercial efficiency, thereby optimizing revenue generation from production forest, while safeguarding the public interest and ecological services provided by protection and production forest; (iii) developing a detailed, phased and costed action plan to NFA’s non-core activities for either privatization or development, including provision of management services to the new private sector; (iv) assisting NFA define its information management system requirements to support its strategic development and providing an interactive link with the national forest

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management information and monitoring system that the project will establish within the Department of Forests; (v) establishing an objective and auditable process for determining reserve pricing for timber auctions; and (vi) providing logistical support in terms of vehicles and equipment required to manage the forest protected area network, which is being developed with the assistance of the ongoing Biodiversity Conservation Management Project; and (b) Rehabilitating and expanding the forest road network to reduce the environmental impact, and improve the economic viability of wood harvesting in State production forests. The investment in rehabilitation of old forest roads and new roads will have an important positive impact on the economic performance of the NFA and will help offset the increased costs incurred as a result of the decreasing proportion of production to protection forests. No road will be built/rehabilitated in the first year of the project, when the ‘Best Practice Guidelines for Forest Roads’ will be prepared through an open, transparent and participatory process and will be included in tender documents/contracts for international competitive bidding to ensure both competitive pricing and that environmentally sound construction techniques are utilized.

(a) Supporting reform and strategic development of the NFA

FDP will support reform of NFA through provision of technical assistance for a needs assessment and for the development of a plan, in year one, followed by additional support to implement the recommended course of action. Prior to project implementation, the NFA will (a) initiate an internal review of operational efficiency and opportunities for cost saving across the whole spectrum of its activities, identifying and prioritizing areas and activities where improvements are possible, and (b) research how change has been undertaken in forest administrations in similar European countries, and identify relevant experience and lessons learned. The project will support this process with an international study tour for senior NFA staff to selected European countries (e.g. Austria, Slovenia, Ireland and Czech Republic) at the beginning of the first year of project implementation. The study tour will be undertaken in conjunction with the DoF. The review and reform process will be advised by a consultative committee to be established by NFA and composed of senior technical level staff from NFA, MAFF, the Ministries of Industry and Commerce, and of Environment and Waters, the association of private forest owners (APPR), and the association of forest industries (ASFOR).

The project will finance technical assistance to enable MAFF to assist NFA to:

(i) Review and analyze its operational capacity including: financial performance; accounting systems; silvicultural operations; public purpose activities; non-core activities; sales and marketing systems; capacity to provide services to private forest owners; current role/functions within the context of present institutional/legal/policy framework; and, human resource capacity.

(ii) Develop and review different options for NFA’s future role and formulate and agree a plan for its strategic development. This will involve working closely with MAFF, NFA and other appropriate stakeholders. The process will take account of NFA’s public purpose activities, the planned restitution and Romania’s planned accession to the European Union. NFA staff will participate in the development of the different options through a series of workshops. Relevant experience from other forest organizations in Europe that have already undertaken similar reforms will be taken into account. A broad based financial analysis (including the implications of

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public purpose activities), time frame and schedule of major actions will be produced for each scenario/option developed. The different options will then be reviewed by NFA and MAFF with the participation of key stakeholder groups, and the most appropriate option for strategic and organizational development selected.

(iii) Develop a detailed, phased and costed strategic action plan to enable NFA to implement the strategic development option chosen under (ii). The plan will identify key actions, milestones and an implementation schedule and will detail: (a) NFA’s future functions and activities; (b) The range and cost of NFA’s public purpose activities (including management of protection forests and forest protected areas) and how these activities could be financed; (c) Existing activities and assets that should be either developed within NFA or privatized; (d) Any necessary changes in legislation and or regulations; (e) Costed recommendations relating to financial management, operational efficiency and strategic development, bench marking against similar forest companies where appropriate; and (f) A human resource development plan to assist implementation including providing support to possible transfer of NFA staff to the private sector and training for remaining staff.

(iv) Develop an objective and auditable model for the determination of reserve prices for NFA’s competitive timber sales. This will include: review of the existing systems; analysis of the historical prices achieved in comparison with costs and prices achieved in other European countries; identification of reserve pricing systems elsewhere that could be relevant to Romania; consultation with the Competition Committee, the NFA, timber buyers, the processing sector on parameters and procedures for the development of reserve pricing; development of a reserve pricing model that is auditable and capable of regular updating to reflect changes in market prices; and, analysis of the impact of the model on NFA, private owners, inward investment and the processing industry. The development of a pricing system will be partly informed by the results of the proposed diagnostic on corruption and governance in the forest sector.

(v) Develop and cost an information systems strategy that will support the chosen development option and allow for an interface with the FMIMS being developed for the DoF. This will entail: review and analysis of the current and planned IT system in NFA; development of applications, technical and data strategies; identify the requirements for data transfer between FMIMS and NFA; and, provide a costed and phased plan for implementation.

Following development of the plan for reform and development of NFA, the project will support its implementation by: (i) providing training to NFA staff and technical assistance (to be specified during the TA in year 1) to support the proposed strategic development; (ii) providing additional technical assistance (to be detailed during the TA in year 1) to support the upgrade of the IT system and to assist in the provision of new accounting software; (iii) developing the interface between the NFA IT system and the FMIMS; and,

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(iv) providing logistical support in terms of computers, field equipment, GIS software and vehicles to NFA’s protected area management function.

(b) Rehabilitating and expanding the forest road network

This component will provide support, on a pilot basis, to reduce potential negative environmental impacts and to improve the economic viability of wood harvesting in State forests. The investment in the rehabilitation of existing degraded forest roads and construction of new forest roads will have a significant and positive environmental impact by reducing log skidding distances and associated erosion and siltation of water courses, and by reducing the incentive to over harvest timber from areas adjacent to existing serviceable roads. Improvements in road construction techniques that will be developed under the project will establish standards and guidelines for mitigating environmental impacts that have formerly been associated with road construction and poor siting of new roads. In addition, improvements in the forest road network will improve the economic and ecological performance of the NFA and help offset increased costs associated with the decreasing proportion of production to protection forests.

The project will provide support, on a pilot basis, for implementing a series of subprojects for roads and railway rehabilitation and for new roads construction. The subprojects which are to be financed by the project have not been fully identified, and will be identified, in five separate tranches, during the course of the 6-year project implementation period. Project costs were determined on the basis of estimated costs for a priority list of forest roads developed by the National Forest Administration (in accordance with the NFA’s forest road construction and rehabilitation strategy and the NFPS approved by the Government). These comprised a total of 91 forest road sub-projects (80 km of new roads and 516 km of forest road and railway rehabilitation) which were initially identified for rehabilitation or construction through a process of economic, environmental and social screening.

Further screening resulted in the exclusion of 20 of these sub-projects because of the possibility that they could have increased access to protected areas – an explicit criteria for excluding a sub-project.

Prefeasibility studies for the remaining 71 roads rehabilitation and construction sub-projects are underway. Of the proposed 71 road sub-projects, 18 entail construction of new roads and 53 entail rehabilitation of existing roads and the only operational forest railway in Romania (Vaser Valley). See Appendix 5: Preliminary list of roads rehabilitation and construction sub-projects and maps.

The remaining sub-projects will be identified during project implementation, and will be subject to economic, environmental, and social screening, following Best Practice Guidelines which are to be developed during the first year of project implementation (see Section 5. FDP’s Critical Environmental and Social Impacts and Mitigation Measures). The total length of road to be rehabilitated remains 516 km, and the total length of new roads to be constructed (which are extensions of existing roads) is 80 km. These roads sub-projects will be implemented in 5 separate tranches over the life of the project.

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2000, comprised a total of 41,546 km of roads and 65 km of railway. Roads targeted for new construction by the project would increase the total road length by less than 2 tenths of one percent. Infrastructure planned for rehabilitation constitutes 1.2 percent of the total.

In order to ensure compliance with environmental safeguards, all road sub-projects will be designed and implemented in accordance with ‘Best Practice Guidelines for Forest Roads’, which will be prepared during the first year of project implementation, before road rehabilitation or construction has commenced. Reference to compliance with Best Practice Guidelines will be included in technical specifications and tender documents, and compliance will be a contractual condition of any tendered roads civil works.

For each of the 5 tranches of sub-projects, once pre-feasibility studies for roads sub-projects have been complete, and sub-project design has been undertaken -- following Best Practice Guidelines -- all road construction and rehabilitation sub-projects which are to be financed by the project will be screened for their potential environmental impacts. If these are judged to be significant, Environmental Impact Assessments for individual sub-projects will be prepared to identify appropriate mitigating steps, such as redesign, determining alternate routings, or dropping a sub-project altogether.

During the first year of implementation, the project will finance:

(i) A study tour for approximately five senior NFA staff who will be involved in supervising the design and siting of forest roads and road contractors, to a country where similar mountainous forest roads exist (e.g. Austria); (ii) Preparation of detailed ‘Best Practice Guidelines for Forest Roads’; (iii) Modification of the design of rehabilitation sub-projects that will be implemented at the beginning of year 2, in compliance with ‘Best Practice Guidelines for Forest Roads’, and the preparation of the technical specifications and tender documents;

The first tranche of road rehabilitation sub-projects will start in the second year of the project. All road sub-projects which will be undertaken in the second year of project implementation will be rehabilitation sub-projects (rather than new construction). The nature of rehabilitation works will vary in accordance with local needs and may range from limited interventions, such as resurfacing, to reconstructing seriously eroded sections of roads, bridges, drains and culverts. In some instances technical specifications have been prepared, but will be revised in accordance with Best Practice Guidelines that will be developed in the first project year.

Forest road sub-projects will implemented by contractors selected in accordance with World Bank guidelines for international competitive bidding. This will improve competition and is expected to reduce the costs of forest road construction in Romania and bring it into line with international prices. Contractors will be obliged to conform with the ‘Best Practice Road Guidelines for Forest Roads’ and the new environmental standards that they will set. Creating relatively large contracts (by local standards) will enable contractors to invest in new machinery and operator training. Joint ventures between international and local companies will also be encouraged.

The road sub-projects will be located throughout the country but have been grouped, based on geographical location. Contractors will be permitted to compete for one or more

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contracts, allowing for small local firms to bid for the smaller contracts and larger companies or consortia bid for a combination of contracts. Each individual sub-project will be implemented over a period of one to three years. Supervision of the construction of the roads will be undertaken jointly by NFA, their road consultants, the National Wood Institute (INL) and the Project Coordination Team’s road engineer. Following construction, the NFA will finance the on going maintenance and up keep of the roads with support of a fee levied on harvesting contractors.

3.2.3. Support Increased Productivity and Competitiveness of Forest Industries (Component 3)

The project will finance the establishment and initial operation of the Forest Business Information Center (ForsBIC), an independent business development and advisory service, which will establish linkages and coordination within the forest industry chain (i.e., silviculture, harvesting, transport, primary and secondary processing), and provide assistance to wood and related forest industries, through review and dissemination of information on new technologies, markets and prices, export and hygiene requirements, product promotion and branding, opportunities for joint venture partnerships, and the availability of grants, and credit etc. The Forest Business Information Center will provide a one stop knowledge / information point dedicated to the forest sector, with the objective of assisting small and medium enterprises, business interests and other stakeholders to obtain information concerning sources of finance (such as the World Bank’s Rural Finance Project), product development, technology, business development, taxation and legislation, thereby supporting the growth and development of the sector. ForSBIC will be a stand-alone, non profit entity created under a tendered competition during the first year of the FDP. It will function as an information provider / dissemination unit, providing generic advice, but will not undertake specific customer commissioned consultancies. During the first five years ForSBIC will be under the supervision of the MAFF PCT and subject to World Bank audit and review. Following completion of FDP support, a Board of Directors would regulate ForSBIC on behalf of its members.

ForSBIC should remain a non-profit organization under its original mandate. Any profits generated would be reinvested into maintaining and expanding the range and quality of services provided. The project will finance ForsBIC's costs on a sliding scale over a four year period, thereafter all costs will be derived from the sale of yearbooks, CD-ROMS, advertising, membership and research activities. There are also opportunities for cooperation with other donor organizations such as the EU, GTZ and EBRD. Revenue projections indicating that the center will be able to cover all costs within a four year period are based on current market prices for membership of similar organizations, advertising, magazines and home pages in Romania, and are conservative in comparison to potential. ForSBIC will provide:

(a) up to date forest and forest business information through yearbooks, CD-ROMs, a Web Site and quarterly magazines and a help desk, on sources of finance, products, marketing and sales, business planning, distribution and export; (b) a venue where knowledge and information concerning the forest sector and forest related business opportunities can be disseminated and shared among all domestic and international stakeholders and business interests in Romanian and other languages as appropriate. The center would make available information on

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best practice, new technologies, market opportunities and trends, product development, legislation and taxation and investment; (c) improved availability of information on sources of grant and credit financing and opportunities for joint venture partnerships for forest sector enterprises; (d) an information conduit for State, donor and other organizations on forest sector issues; (e) opportunities for promotion of forest products and services to Romanian and international interests.

3.2.4. Building Public Support for Sustainable Forest Management (Component 4)

The project will provide resources for preparing and implementing a public awareness strategy and campaign targeting key stakeholders including the general public, with particular emphasis on communities living in forested areas; private forest owners; Forest Inspectorate staff; NFA; Government decision makers, and other influential groups including Churches and NGOs. Implementation of the program will be supported by an inter-ministerial committee including the Ministries of Industry and Commerce, Education, Waters and Environmental Protection, Culture, Tourism and Public Administration. Campaign strategies will include: educating mass media; providing public relations guidance to Forest Inspectorate staff; developing educational and promotional materials for use in schools and mass media; organizing local education events; supporting APPR awareness campaigns at the local level; involvement of environmental NGOs in educational projects; and support for the PCT to develop their public relations capacity and inform key decision makers of the status of project implementation. The public awareness campaign will undertake regular assessments of stakeholder perceptions, which will be used to refine the implementation of the campaign in line with changing requirements.

The public awareness campaign, which will emphasize the importance of sustainable forest management, will be implemented through three separate but closely coordinated activities under the supervision of the PCT. These will include:

(a) Development and supply of public relations products

The project will provide resources for the design and supply all the creative products needed by the public awareness campaign, including brochures, web-site construction and maintenance, video documentaries for schools (popular science format), and the general public (popular TV format), posters, display stands for exhibitions and a traveling forest information center.

(b) Public relations support and awareness campaigns

The project will provide resources for:

(i) Media relations development, including establishment of mechanisms to improve and develop constructive dialog with the mass media; media education; monitoring, analysis and response to media reporting of forest sector and FDP related issues; (ii) Provision of short training courses for local staff of the Forest Inspectorate and the National and local private forest owners associations in media relations, organization of information and promotional events, and public communications;

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(iii) Delivery of public relations products at the national and regional level, to inform key decision makers, including Government, the church, private land owners and the general public about progress in project implementation, the needs and activities and achievements of the PCT, the Forest Inspectorate, NFA, APPR, and ForsBIC, and will develop joint educational projects with NGOs, and (iv) Delivery of Local level awareness campaigns to key stakeholders and the general public will include seminars for associated and non associated forest owners, and operation of a traveling forest information center.

The project will provide resources to assist the PCT with procurement and supervision of public awareness contracts; provide training to PCT, Forest Inspectorate and APPR staff in analysis of the impact of the public awareness activities; and will undertake surveys and analysis to assess public awareness and opinion concerning developments in the sector, implementation of the FDP, and of the impact of public awareness activities, thereby providing feedback to guide adjustment of ongoing public awareness interventions as necessary.

3.2.5. Project Management and Monitoring (Component 5)

Project management will be undertaken by the Project Coordination Team (PCT), which has already established by MAFF under the Biodiversity Conservation and Management Project. The PCT, which is responsible for managing the BCMP and also supervised preparation of the FDP, currently includes a Project Manager, a Financial Management Specialist, a Procurement Specialist and an Office Assistant. The BCMP is scheduled for completion during year 2005. At that time, the project manager, financial management specialist and the assistant would continue to be financed by the FDP until completion of the FDP, and the procurement specialist would be financed by the FDP until midway through the fourth year of implementation, by which time FDP procurement activities should have been completed. In addition to the existing staff, the FDP will finance a roads specialist and a PA consultant to assist with procurement, management and supervision of the road and public awareness components throughout the entire period of FDP implementation.

Monitoring and evaluation of project activities will be undertaken by the PCT, and will be subject to periodic review by the Bank. The PCT will establish project monitoring and evaluation procedures acceptable to the Bank during the first six months of implementation, and will furnish the Bank with biannual project progress reports, together with work programs inclusive of detailed monitoring indicators for the following six month period. A mid term review, which will focus on the effectiveness, impact and appropriateness of project activities with respect to the nature and pace of forest land restitution, will be undertaken during the third year, and restructuring of project activities would follow if appropriate. Lessons learned from implementation of project activities will be recorded in a report prepared by the borrower with the assistance of the PCT.

3.3 INSTITUTIONAL ARRANGEMENTS FOR PROJECT IMPLEMENTATION

Preparation of the FDP has been undertaken by a Project Preparation Team (PPT) composed of staff assigned from MAFF, NFA and consultants. Preparation has been coordinated and

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supervised by MAFF. Currently the following arrangements for project implementation (over a six year period) are envisaged

A Project Oversight Committee (POC) consisting of experts from the DoF, MAFF, Ministry of Finance (MoF), NFA and the NGO community will be established by MAFF. Representation by the NGO community will be on the basis of a selection process to be established by E NGOs. The committee will be responsible for providing project oversight advice and assistance in resolving issues associated with project implementation. The Secretary of State for Forests in MAFF will be the chairman of the committee. With respect to implementation of the public awareness campaign, inter-sectoral cooperation will be provided through establishment of a consultative group, composed of representatives at the technical level from MAFF, and the Ministries of Industry and Commerce; Education; Waters and Environmental Protection; Tourism; Culture; and Public Administration.

Project Management at the National Level: MAFF will have overall responsibility for the project, including procurement, disbursement, maintenance of project accounts and coordination of implementation.

Implementation of the project will be managed on behalf of MAFF by a Project Coordination Team (PCT), which will consist of a project coordinator, a procurement specialist, a financial manager, two technical specialists (one for public communications and one with expertise in forest road construction and maintenance) and an assistant.

Project Management Sharing Between the FDP and the Biodiversity Conservation Management Project (BCMP): Preparation of the FDP was supervised and coordinated by the World Bank/GEF financed BCMP Project Coordination Team (PCT), which includes a project coordinator, financial manager, and a procurement specialist who have been effectively implementing the BCMP since October 1999. In order to economize on project costs, build on the knowledge base developed during preparation and implementation of the BCMP and preparation of the FDP, and ensure staff continuity and linkages between the BCMP and the FDP, the existing PCT will continue to manage implementation of the FDP and will be financed by the BCMP until its closing date (estimated to be March 2005). The two new technical specialist members of the PCT (roads and communications) will be financed by the FDP from project effectiveness, and all PCT staff will be financed by the FDP after the closing date of the BCMP.

3.4 ANTICIPATED BENEFITS OF THE FDP

3.4.1. Environmental Benefits:

The project aims to preempt the potential harmful impacts of unsustainable forest exploitation that has previously occurred in Romania and elsewhere when forest land was restituted to private owners in the absence of adequate institutional arrangements to ensure sustainable forest management. Through providing assistance and guidance to new forest owners, and through supervision and monitoring of approved forest management plans by the strengthened Forest Inspectorates, unsustainable harvesting will be significantly reduced. This will decrease the level of degradation of private forests and hence minimize negative impacts on biodiversity and damage to vulnerable watersheds. The improvement of the forest road network in production forests will reduce negative environmental impacts from erosion and poor road design associated with long skidding distances and the

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economic incentive to over-harvest forests close to existing forest roads. At the same time, the development of Best Practice Guidelines and the incorporation of these standards into forest road design and technical specifications will ensure that the direct environmental impacts of forest road construction and rehabilitation will be minimized.

3.4.2. Economic Benefits

The sustainable productive capacity of timber and other forest products will be maintained by prevention of over harvesting due to the increased control and supervision capacity in the forest sector. Private land owners will benefit from the sustainable management of their forests in terms of a continuous stream of products rather than short term initial gains followed by either reduced returns or the potential economic liabilities associated with degraded land. The expanded and improved forest road network will improve the cost efficiency of forest harvesting resulting in increased sales revenue for the forest owner and decreased harvesting and haulage costs for producers. At the same time, no increase in harvesting is envisaged in this financial analysis – benefits come only from reduced harvesting costs resulting from the improved roads infrastructure.10 In addition, creation of independent private forest management enterprises will lead to investments in forest industries by allow for establishment of partnerships with investors that need a guarantee of the long term supply of raw materials.

Economic returns to the proposed project investment are more fully reported on elsewhere.11 In summary, by adding all the quantifiable benefits of the project and taking the total project costs it is possible to derive an estimate of the expected financial benefits. Actual benefits in economic terms are more than expected financial benefits, as there are a number of major benefits that are not quantifiable (such as improved catchment protection). The Net Present Value and Internal Rate of Return of project investments over the 17 year period of the loan, with various assumptions about management intensity (the so-called ‘likely’ and ‘prudent’ scenarios), is presented in Table 4.

Table 4: Net Present Value and Internal Rate of Return of the FDP

NPV @ 12% IRR US$ x 103

Likely scenario 69 729 77% Prudent scenario 53 211 60%

To test the sensitivity of the various assumptions used in this analysis, the key variables were altered so as to reduce the overall economic indicators of the project to give an NPV of

(10) It is important to place harvesting plans into a wider perspective. Romania’s current Annual Allowable Cut (determined on the basis of growth rates and sustainable forest management planning) is 17.0 million m3 but the actual volume harvested over the past number of years has averaged around 14 million m3. The outcome has been that the growing stock has actually increased to some extent. (11) Fortech, Dames & Moore (UK) and Project Management (Ireland). 2001. Initial Economic Analysis of the Forestry Development Project. October.

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zero at an interest rate of 12 percent, (the equivalent of an Internal Rate of Return of 12 percent). The results of the sensitivity analysis are presented in Table 5.

Table 5: Sensitivity Analysis Changing variables to reduce the NPV to zero To Likely Prudent Assumption Units From Restitution Restitution Scenario Scenario

Growth saved m 3/ha/yr 1.19 0.17 0.21 Speed of Restitution % change 100% 14% 17% Av price of timber US $/m 3 11.62 1.61 2.03

% change All variables 100% 52% 56%

The sensitivity analysis shows that the average growth saved (i.e. the reduction of the loss that would occur without the project intervention) would have to drop from 1.19 m³/ha/year to 0.17 m³/ha/year for the likely scenario for the NPV to drop to zero with the cost of capital set at 12 percent. This is unlikely as this assumption, already conservative, is based on scientific data collected comparing the impacts of the 1991 restitution program.

Similarly the areas restituted would have to fall to just 14 percent of the area assumed in the analysis. The restitution program assumed here is based on already enacted legislation and actual claims already submitted. It is extremely unlikely that the restitution program would be significantly altered at this stage in the process.

The value of the timber growth saved from forests directly affected by the project is calculated by using prices corrected to the year 2001, achieved by NFA timber sales in 1999/2000. These average prices would have to drop to just US$ 1.61/m³ for the project to just breakeven. Timber prices are an international commodity and although some fall in the price is likely due to worldwide recession, a drop of this magnitude is not feasible. If all the variables are reduced simultaneously then they would need to be reduced to 52 percent of the original assumption. The likelihood of this occurring is extremely remote. The project is therefore economically robust.

3.4.3. Social Benefits

New forest owners will benefit from assistance and supervision to ensure their forests are managed sustainably. This will help sustain the benefits of forest ownership into the future, and provide for new opportunities for rural development. Protecting the newly restituted forests will decrease the likelihood of flooding and erosion and resultant damage to agricultural lands and other rural infrastructure such as roads and bridges. The improved forest road network on state forest lands will increase access to all forest products including non timber forest products such as mushrooms, forest fruits and wild honey. Access to other important rural resources, such as upland pasture, will also be improved. By providing support to private forest owners’ associations, individual owners will benefit from reduced management costs, and improved marketing opportunities, e.g., through group forest certification schemes, consolidation of sales, better networking and market information access. Through supporting the combined efforts of the forest owners associations, the Forest Inspectorate, and Forest Business Information Center, the project will catalyze growth in forest industries, leading to increased employment and rural development.

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The results of a social assessment which was prepared for the FDP are reported on elsewhere.12 More recently, a survey of households in forested areas was commissioned by the World Bank to develop better baseline information about households living in the vicinity of project areas.13 The results from this survey are summarized in Section 4. Baseline Environmental and Social Conditions.

3.4.4. Institutional Benefits

With respect to MAFF, the project will provide the investments and training needed to develop the regulatory, supervisory and advisory capacity of the Forest Inspectorate. Regarding NFA, the project will undertake analysis necessary to guide reorganization to: (a) ensure that its public functions with respect to management of non-revenue generating protection forests continue to be adequately accounted and resourced following loss of a significant proportion of production forests through restitution, and (b) improve its organizational, operational and commercial efficiency and optimize its contribution to the national economy of from sustainable management of State production forests. It will also provide the NFA with an information systems strategy to support its strategic development, and will develop an objective and audible process for determining optimal and fair reserve pricing for timber sales. Regarding forest owners associations, the project will build the capacity of APPR to develop a national network of forest owners associations. The project will also establish the Forestry Sector Business Information Center, which will provide services to catalyze the development of forest industries.

(12) M. Preda. (2001). Social Report (draft), prepared for the Forest Development Project. University of Bucarest, June. (13) Metromedia Transilvania (2002). An Assessment of Social Issues associated with the Forestry Sector in Romania. Report prepared for World Bank and the Forest Development Project. July.

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4. BASELINE ENVIRONMENTAL AND SOCIAL CONDITIONS

4.1 INTRODUCTION

The following section presents the environmental and socio-economic context of relevance to the forest sector and in particular, of relevance to the activities of the FDP. The institutional context is presented in Section 2. Policy, Legal, and Institutional Framework.

Information has been derived from the following sources:

· Draft Project Appraisal Document, World Bank, Autumn 2001; · World Bank. 1999. Forest Sector Note. ECSSD Environmentally and Socially Sustainable Development Working Paper No. 18. October. · Romania Forest Development Program, “Harvesting and Transport”, Fortech (UK) Ltd., Spring 2001; · Romania Forest Development Program “Initial Report on Environmental Aspects of the Forest Road Component”, Fortech (UK) Ltd., Spring 2001.

4.2 THE FOREST SECTOR

4.2.1. Introduction

Romania’s forests, which cover 27 percent of the country, are internationally important in that they include some of the last and largest tracts of natural and undisturbed old growth forests still remaining in Europe. They also constitute an extremely valuable natural resource for the country.

The following section describes some key attributes of the resource and the production sector. Particularly pertinent aspects of the sector of relevance to the FDP and this study are:

· Romania’s forests are amongst the most productive in Europe in terms of their potential for sustainable harvest of timber and non-timber products; · Silviculture techniques and practice in more than 70 percent of Romania’s production forests are based on natural regeneration of native species; · As a result, Romania’s forests support a huge diversity of plant and animal species including top predators which are extinct or rare in other parts of their former range.

The forest sector is however constrained by a number of issues and could also pose a threat to the environment if management and institutional structures are not in place or effectively enforced. The most important aspects of these constraints and threats are:

· The prevalence of existing harvesting and extraction practices is in part due to old fashioned equipment and the low density of the road network. As a result, forest management is not economically efficient and has also resulted in some environmental

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damage e.g. long distance skidding of logs which increases damage to forest floor and contributes to soil erosion and river siltation);

· A potential conflict exists between profit interests of private logging companies (which are awarded the right to harvest by NFA on a competitive bidding basis) and the incremental costs of good harvesting practices. When these cost more, the incentive is to cut corners. Loggers are not allowed to move on to the next harvest tract until the NFA has given its clearance based on a review of the first harvested tract. There is a risk that failure of this management process would lead to unsustainable harvesting;

· The competitive tender process used to award forest harvest rights is not, in theory, conducive to the adoption of best environmental practice because of the incremental costs involved, i.e. if a harvester’s funds are tied up in purchasing roundwood, less funding is available to adopt improved harvesting practices. The process (together with the difficulties of securing investment finance) discourages the upgrade of harvesting equipment (e.g. investments into sky-cables and smaller, more sustainable skidding vehicles);

· The siting and design of forest roads does not take account of environmental sensitivities (e.g. the vast majority of roads are built in valley bottoms with no or a limited buffer zone between valley bottom streams and roads. Logs are skid significant distances down slope leading to soil erosion and siltation of water courses); and

· Poor maintenance of existing forest roads, the erosion of which contributes to downstream siltation, which in the longer term, could result in as many, if not more significant impacts on the environment.

4.2.2. Forest Resources

Romania has an estimated 6.4 million hectares of forest covering approximately 27 percent of its land area. Approximately 30 percent of forests are conifers, including spruce and fir. The remaining 70 percent are broad leafed and mixed forests containing high value hard woods including beech and oak. An overview of Romanian forests is given in Table 6 below.

As shown in Table 6 and Figure 3, approximately two thirds of Romania’s forests occur in the Carpathian mountains. More than half of all forests have been effectively and conservatively managed mainly for non-wood production objectives, including watershed management, conservation of seed stands, game management and research. More information about the extent of the national system of protected areas is included in Appendix 4: Protected Areas of Romania (map, location, area).

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Table 6: Overview of Romanian Forests (May 2002) Description Value Total Forest Area 6.37 million ha Forest ownership (June 1998) · State owned forests 84 percent · Private forests 16 percent Forest Types · Coniferous (especially spruce) 30 percent · Beech 31 percent · Oaks 18 percent · Others 21 percent National forest stock 1,350 million m3 Annual growth 4.6 m3/ha-year Annual Allowable Cut14 approx. 15 million m3/year Geographical distribution of forests: · Mountains 65 percent · Hills 27 percent · Plains 8 percent Functional distribution · Protection forests (not protected areas) 53 percent · Production forests 47 percent

4.2.3. Forest Management

Forests in Romania can be divided into ‘Production Forests’ and ‘Protection Forests’. Together these are known as the ‘Forest Fund’. Production Forests make up 47 percent of the forested area of Romania and are managed mainly for production purposes.

Protection forests are sub-divided into sub-groups depending on location, site conditions and management or use and are managed for specific functions. Their full title, in Romanian, implies ‘forests managed primarily for watershed protection’ - but not exclusively. At present, Protection Forests have been classified into five Sub-Groups by function as follows:

(a) Water Protection; (b) Site and Soil Protection; (c) Protection against Climatic and Industrial Threats; (d) Recreation; and (e) Scientific Interest and Protection of the Forest Genetic Fund.

Each sub-group is then divided into Functional Categories such as for example, “Forests on slopes adjacent to lakes/reservoirs” (Category 1.1b), “Forests at high altitudes with difficult regeneration conditions ” (Category 1.3f). The Sub-groups and Functional Categories are

(14) Annual Allowable Cut is defined as the amount of timber which can be harvested every year to maintain an even mix of age classes and a non-declining productive stock.

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described in more detail in Appendix 6: Protection Forests: Functional Categories and Permissible Felling Systems in Romania to this report.

Limited timber harvesting is permitted in virtually all the functional categories of Protection Forests, except Group 5: “Scientific reserves, nature reserves and core areas of national parks”. The felling systems permissible under each sub-group and each functional category are also described in the Appendix.

‘Conservation felling’ (for sanitation and/or safety) is permitted in areas prone to erosion and landslides, whilst “selection or group selection systems” is permitted in other categories of land sensitive to erosion.

All forests in the ‘Forest Fund’ are managed under a Forest Management Plan. These plans are prepared on a compartment basis by Forest Management and Research Institute (Institutul de Cercetari si Amenajari Silvice, or ICAS)(15) or private forest management planning companies on behalf of the owner (whether the state or private), approved by the Department of Forests (now in MAFF), and revised every 10 years. All forests in which roads are to be rehabilitated or constructed have management plans prepared, which guide the extent to which timber can be harvested from them.

Restituted forests will inherit their previous management plan when transferred to the private sector. Private forests of less than 10 ha require a simplified management plan.

Currently ICAS and private forest management planning companies are preparing management plans for private forest owners with funding from MAFF. However, to date only around 60,000 ha (out of about 353,000 ha) have had management plans prepared or under preparation.

4.2.4. Forest Production

Under the communist regime, Romania invested heavily in forest management and produced some of Europe’s best silvicultural technical specialists. Silvicultural practices are based on natural regeneration of native species such as oak, beech and other native deciduous tree species in more than 75 percent of Romania’s production forests. Continuous forest cover forms the basis of extraction systems.

Rotation periods between stand harvesting is typically 80+ years (the lesser period being for poplars and black locust species). Mature trees are then felled either through individual selection (managed thinning) or by group felling. Clear-felling is uncommon and is limited by law to a maximum of 3 hectares.

(15) Until recently ICAS had a monopoly on plan preparation, but this is no longer the case.

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Harvesting method

The prevailing harvesting method is the longwood system. Trees are felled by chainsaw and then extracted to roadside either as entire stems or long lengths, depending on tree size. Due to difficult terrain and poor roading infrastructure, pre-bunching in advance of extraction is a frequent occurrence. Pre-bunching may be required more than once depending on terrain and accessibility and is undertaken by either horse, ox, tractor plus winch or manually (in very steep terrain) or a mixture of these.

Figure 3: Distribution of Forests in Romania (LEGEND: Green – Forests, Red – National parks, Yellow-Natural Parks)

Extraction method

Skidding is the principal extraction method and is typically by four-wheel drive (4WD), split frame skidders of Romanian manufacture. Extraction distances reflect the limited roading infrastructure and can be in excess of 1 km. The skidders are old and require high maintenance with a high level of down time. There has been a minimum of new investment in skidders over the past ten years. Cable systems, typically fixed skyline units, are being used less and less due to their high costs. Extraction is typically downhill due to tradition of aligning roads along valley floors.

Transportation methods

Road transport is characterized by trucks of Romanian manufacture, typically with 14 ton capacity. Road transport of logs direct to the sawmill accounts for around 80 percent, with rail being used more frequently for the transport of pulpwood.

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Roading infrastructure

Forest roads are major engineering structures and can absorb a high proportion of all investments in forest management. Until 1991 forest roads in Romania were built and maintained by timber harvesting companies using central government funds. In 1992 the roads were transferred to Romsilva, and subsequently to the NFA. Funds for construction of new roads during the ’90s were scarce.

Forest roads on land managed are maintained by the NFA on behalf of the state. Funds for road maintenance are obtained by a levying a charge on wood removed by logging companies following the tender/auction process. This fee is retained by the NFA and used locally.

Forest roads on restituted forest land continue to belong to the state. If new roads are built on private forest land, they belong to the person who pays for them.

The roading infrastructure has an impact on harvesting methods, technologies and practices and on the environment. The position at the end of year 2000 was:

· 32,468 km forest roads; · 65 km forest railroads; · 1,453 km roads other sectors e.g. mining and hydroelectric; and · 7,625 km public roads in the forests, on which wood collection is allowed.

The total forest road network provides a roading density of 6.1 m/ha, 4.7m/ha being forest roads. This is well below other European countries with broadly similar topography (Austria 36 m/ha, Switzerland 40 m/ha, France 26m/ha, Germany 45 m/ha).

The network is unevenly distributed with the mountainous regions having the lowest density. As a result of heavy rains in the last 3-4 years, accessibility has deteriorated further with some 7,000 km of forest roads having become inoperative, especially in the mountainous region. The effective road density has thus decreased to around 5.3 m/ha. The National Forest Administration (NFA) which is responsible for forest roads, considers that only 65 percent of the Romanian forests or 4.2 million hectares are accessible at the technical and economic efficiency level.

In 2000, the EU funded upgrading of some forest roads which provided access to villages under the Social Development Fund (SDF) program. Romania’s National Rural Development Plan, approved by the EU, includes the provision of SAPARD funding for forest roads. Even with investment, the roading density will still be significantly less than the minimum level recommended by the FAO and by the Forest Research and Management Planning Institute (ICAS).(16)

(16) World Bank (1993). Romania Forestry Sector Review. FAO/ World Bank Cooperative Program. January.

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Harvest planning, management and operation

Harvesting is undertaken by MAFF-licensed companies and the sector is dominated by a large number of private small-scale operators. At the beginning of 2001, there were approximately 400 logging companies.

Harvest planning is based on 10-year forest management plans. Harvesting contracts are competitively tendered by the NFA. For tender sales, each lot has a harvesting plan which specifies the equipment to be used, the extraction routes and other relevant site and operational parameters. NFA Forest District staff, on a monthly basis, undertake monitoring against plan although, sites are visited weekly by the Range forester. Forest harvesting and production has traditionally been concentrated within the winter months when the ground is frozen.

Harvest volumes

The Annual Allowable Cut (AAC) is based on forest management plans and is approved annually by the Directorate of Forests (DoF) within the Ministry of Agriculture, Food and Forests (MAFF), and subsequently by the Cabinet. The AAC for 2001 is 17.0 million m3 but the actual volume harvested over the past number of years has averaged approximately 14 million m3.

The National Forest Administration (NFA) currently sells around 10.5 million m3 by tender and can harvest for its own use 1.0 million m3(17) with around 3 million m3 allocated for firewood for the rural communities. This position will change with the implementation of the planned restitution of forests to former private owners.

Health, safety and training

Although there are defined safety standards and regulations for harvesting, in practice they are more or less ignored. Safety equipment for chainsaw workers is not worn, workers adopt unsafe stance in relation to extraction and machines lack adequate safety features. The Ministry of Labor and Social Protection (MLSP) has a county-based inspectorate with a specific unit dealing with wood industry, including harvesting, whose role is to enforce safety regulations. Unsafe practices do still prevail however.(18)

There is no national or regional training facility for private machine operators or operatives. The NFA has an in-service training unit but this concentrates on technical and management personnel. Chainsaw operators must undergo a training course before being allowed to work in harvesting. There are no such requirements for skidder or cable operators.

(17) Under the Forest Code 1996 the NFA can harvest for its own use up to 1 million m³. In 2000, the NFA harvested 0.8 million m³ and for 2001 this figure was significantly reduced to 0.3 million m³. (18) These were noted during site visits by the FDP Project Preparation Team in Spring 2001.

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Roads and environmental issues

The poor roading infrastructure, and its associated long average extraction distance, results in frequently used skid trails causing excessively deep rutting. This predisposes the site to erosion, seepage to and sedimentation of water courses. Natural watercourses are used on occasion as extraction trails.

The newly established Forest Inspectorate (FI) is responsible for ensuring that harvesting activity does not harm forest vegetation, provoke soil erosion or cause other environmental damage. In practice however, the FI is under resourced and unable to fulfill this role. There is no requirement for harvesting or transport machines to carry anti-pollution kits to contain fuel and lubricant spillage and prevent seepage to watercourses. Little regard is shown at landings for the prevention of soil/road erosion and seepage to watercourses, although landings and roadsides are cleaned after harvesting is complete.

The standards for harvesting damage to natural regeneration and standing trees are adhered to in practice and are enforced.

With respect to the actual (or potential) impact of forest roads in providing access for illegal harvesting, there is almost no information, and little can be said about this without further diagnosis and analysis.

4.2.5. Trends in Resource Use

The forestry sector is a significant contributor to the Romanian economy. In 2000 the export value of wood and wood products alone was estimated as US$ 1 billion, equivalent to 11 percent of all exports. The non-pecuniary values of forests are considerably larger. A recent study (Economic Valuation and Reform of the Forestry Sector, Romania , January 1999) indicated that the annual value of all products and services provided by Romania’s forest, including environmental services but excluding value added from forest industries is of the order of US$ 3.1 billion.(19)

Recent years have however seen a decline in wood production and processing. For example, processing (excluding furniture) decreased by over 13 percent between 1993 and 1998.(20) This trend is largely due to constraints on the forest production and processing industry resulting from the inability of the private sector to invest in improved wood processing technology. This is further compounded by constraints in marketing resulting from a combination of a lack of information, banking laws that restrict access to credit, competition with state enterprises and inefficiencies in the system of wood auctioning that lead to lack of security of supply of raw materials.

(19) Fortech (2001). Harvesting and Transport, report prepared for the Forest Development Project. Spring. (20) Comisia Nationala Pentru Statistica (1999). Statistical Yearbook 1999.

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Although the annual allowable harvest of wood from Romanian forests in 1999 was 15.5 million m3 for example, wood harvests have reduced from more than 14.8 million m3 in 1996 to around 13.7 million m3 in 1999.(21) Figure 4 presents this trend and the composition of the harvest by timber type.

Figure 4: Annual Timber Harvesting in Romania, 1994-1999 ('000 m )

Note: For 1994- 1996, the AAC was set by Law and for 1997-1999, by Government Decision. AAC = Annual Allowable Cut

16000 14000 12000 AAC Total Harvesting 10000 Conifer 8000 Beech

'000 m3 6000 Oak Strong Broadleaves 4000 Soft Broadleaves 2000 0 1994 1995 1996 1997 1998 1999

Year Source: Fortech Ltd, June 2001

A similar trend towards reduced production was witnessed in furniture production which saw a decrease in production of 36 percent between 1997 and 1998 (compared to a 17 percent decrease for all industries). Half of all furniture producers recorded zero profit or losses in 1998(22) . This is despite Romania being amongst the top four largest furniture exporters in Europe and amongst the top 10 world wide during the 1980s.

4.2.6. Forest Certification

The Romanian president has announced in April 2002 that his nation’s forests will begin the process of forest certification through the Forest Stewardship Council’s scheme(23) . A trial parcel of 32,000 ha was assessed for compliance with the FSC’s Principles and Criteria for Forest Management and in June 2002 got the FSC certificate, enabling Romania to market its responsible forest management practices to the world market through an internationally recognized standard.

(21) Figures provided by Fortech. (22) World Bank. (1999). Ibid. (23) Press Release of FSC Secretariat, May 19, 2001.

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4.2.7. Illegal Harvesting

As summarized in Section 2. Policy, Legal, and Institutional Framework, there is concern about a growing “black economy” in forest products based on illegally harvested wood.(24) Currently, there is limited knowledge about the extent of this trade, and so there is almost no understanding of how much of a threat it poses, or of the policy, legal, and regulatory mechanisms which might curtail it. There is a potential for these threats to increase following land restitution if appropriate policy and institutional reforms have not been enforced.

Unofficial estimates of the scale of illegally harvested wood is around 5 percent of the legal harvest, though other estimates place this as high as 20 percent.(25) The NFA has unofficially estimated that some 150,000 m3 of Romanian timber illegally enters the market each year (or around 1 percent of the Annual Allowable Cut). The assumption is that this derives from privately owned productive forests of which there were approximately 353,000 ha in 2000.(26)

4.2.8. Forest Land Ownership

Prior to 1948, the State owned only 28 percent of forest land. Of the remainder, 23 percent was owned by almost half a million private individuals and 49 percent by more than 9,000 different categories of institution, including local municipalities, the church and public entities etc. In 1948, all forests were nationalized.(27)

Since the fall of communism however, Law 1/2000 commits the government to commercializing or privatizing some of the operations of the NFA and restituting forest lands to former owners. It is expected that this will increase pressure on the forests. As described in Section 2.3.2. Restitution of Forest Lands and Box 3, restitution of forest lands between 1991-1992 resulted in considerable environmental damage and a substantial reduction forest area.

4.3 ENVIRONMENTAL CONTEXT

4.3.1. Flora and Fauna

The territory of Romania is a meeting point between numerous bio-geographic regions. The high level of geographic diversity in Romania and the consequence of this location as a biological meeting point have produced a floral diversity that includes 3,500 species and a faunal diversity estimated to be more than 30,000 species. Many species that once thrived in

(24) World Bank (1999). Ibid. (25) World Bank (1999). Ibid. There was no empirical basis for this estimate, and subsequent reviews have discounted it. (26) M. Preda (2001). Ibid. (27) World Bank (1999). Ibid.

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many parts of Europe are now only found in Romania or found in Romania in large quantities.(28)

Forest biodiversity

Since about half of all forests in Romania (13 percent of the whole country), have been managed for watershed protection rather than production, Romania has the largest areas of undisturbed forests in Europe.(29) As a result of silvicultural practices based on natural regeneration, Romanian forests remain host to the full range of European forest biodiversity, including top predators that are either extinct or rare in other parts of their former range. Approximately 60 percent of all European brown bears and 40 percent of wolves and lynx occur in Romania. The presence of ten, of Europe’s twelve species of smaller mustelid carnivores (including polecats and martins), and all ten of Europe’s woodpecker species. There are no plans to change the management practices which have brought this about.

Although rich in biological resources, Romania’s biological resources are coming under increasing pressure from human activities. Among these, the National Biodiversity Strategy and Action Plan (1996) highlights several key threats to Romania’s natural environment. These include:

· overgrazing of alpine and forest meadows; · plowing under of contour bunds; · clear cutting of private forest bunds; · increasing tourism in highly sensitive mountain ecosystems.

Biodiversity management and conservation

Romania has shown an active governmental and non-governmental commitment to protect and enhance Romania’s biodiversity. Some 4.8 percent of the country’s land area has been designated into 17 large protected areas (biosphere reserves, national parks and natural parks –see Figure 3) and 827 reserves and natural monuments. Presently only the Danube Delta Biosphere Reserve, has a formal conservation management plan and management plans for another 3 large protected areas are expected to be finalized in 2002. A coordinated strategy for the conservation of key habitats is under preparation.

The National Biodiversity Strategy lists 20 protected undisturbed forest areas, but a recent ICAS study lists 75 such areas. These areas are presented in Appendix 7: List of Undisturbed Forests In Romania. Protected forest areas are managed by the NFA.

(28) Government of Romania (1996). National Biodiversity Strategy and Action Plan. (29) Government of Romania (1996) Ibid.

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At present the geographical identification of key areas for conservation in Romania is the subject of three major initiatives.(30)

(1) CORINE Important Biotopes: CORINE (Coordination of Information on the Environment) was established in 1985 by the European Council of Ministers. The CORINE Information System is a database of important biotopes (habitat types) held on an ARC/Info GIS by the European Topic Center on Nature Conservation (ETCNC) in Paris. This includes information from Romania.

(2) NATURA 2000: Romania is responding (in preparation for accession) to the EC Habitats and Birds Directives (EEC/92/43 on the Conservation of Natural Habitats and of Wild Fauna and Flora, and EEC/79/409 on the Conservation of Wild Birds). These Directives require member states to identify and establish a network of Special Areas of Conservation (SAC) for habitats, and Special Protected Areas (SPA) for birds. Together, these protected areas will form part of the internationally-recognized and ‘strictly protected’ NATURA 2000 system. In Romania the site selection process is underway. A preliminary identification based on Important Bird Areas (IBA) may be available: sixty IBAs in Romania have been identified by the Romanian Ornithological Society.

(3) Ecological Network of Romania: To help establish the Pan-European Ecological Network (PEEN) for Central and Eastern Europe (CEE) (an essential part of the Pan-European Biological and Landscape Diversity Strategy), the European Center for Nature Conservation is preparing an indicative map of ‘ecological networks’ in most of eastern Europe including Romania. Map products may be available in May 2001, at a scale of 1:2.5 million.

The importance of the various categories of Protection and Production Forests for biodiversity conservation, and their status vis-à-vis the existing and future systems of protected areas, has not been ascertained in detail. However, ICAS is coordinating a study aiming to identify, describe and map the most important undisturbed forests all over the country.

4.3.2. Geology and Soils

Soil erosion is a major problem in Romania affecting water bodies and agricultural land. Erosion is considerable on abut 3.5 million ha of agricultural land and in some counties (particularly Vrancea and Buzau along the south eastern slopes of the Carpathians). Total soil loss is estimated at about 126 million metric tons per year, corresponding to an average of 5.3 tons/ha/year.(31)

(30) Fortech (2001). Initial Report on Environmental Aspects of the Forest Road Component, report prepared for the Forest Development Project. Spring. (31) World Bank (1993). Ibid.

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Water, through sheet and gully erosion, is the main erosive process. Natural water erosion, caused by soft rocks with often unfavorable sedimentation patterns, contrasted relief with steep slopes and torrential rains has been amplified by forest clearance and unsustainable agricultural practices.

The most detrimental effect of erosion in Romania is siltation of reservoirs and rivers, dramatically reducing their capacity (in the Arges catchment for example, up to 84 percent of dams are affected by siltation).(32) Other impacts of erosion include increased flooding, landslides, changes to fluvial position and damage to infrastructure.

Certain regions of Romania are especially vulnerable to landsliding and extreme erosion due to geologic conditions. This potential is well recognized in the counties of Buzau, Cluj, Prahova and Vrancea where the tilted, marine clay (marl) sedimentary bedrock is highly prone to slope failure during road construction and when forest cover is removed.

At the forest level, downslope skidding practices, sometimes over distances in excess of 1km, can cause significant localized erosion into valley-bottom streams and culverts.

Erosion is mainly controlled by reforestation and rehabilitation of degraded lands. The Forestry Sector Review (World Bank, 1993) reported that since 1976, 50,000 ha of forest land had been reforested to control erosion. The EU’s SAPARD program is financing investment in afforestation on approximately 7,000 ha of under-productive and degraded agricultural land.

4.4. SOCIAL AND ECONOMIC CONTEXT

In 1998, the wood production and processing sector (excluding furniture) accounted for approximately 1.5 percent of total national employment. However, employment in forest industries has decreased significantly since the 1980s when Romania was among the top four largest furniture exporters in Europe. In the furniture sector, union sources report that in 1998 alone, a decline in business caused the loss of 60,000 jobs and NFA laid off 2,000 employees between November 1998 and January 1999.(33) At the beginning of 2001 there were around 30,000 people employed in forest administration and management whilst in the woodworking industry there were 67,000 employees, 20,800 in the pulp and paper industry and 104,000 in the furniture industry.

Key employment statistics are presented in Table 7 below.

(32) World Bank (1993). Ibid. (33) World Bank (1999). Ibid.

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Table 7: Employment in Forestry and Wood Processing in Romania Description Unit 1993 1995 1998 Total employed in all sectors ‘000 persons 10,062 9,493 8,813 Of which employed in: Silviculture, forestry and hunting ‘000 persons 77 78 53 percent of total 0.8 0.8 0.6 employed Wood processing (excl. furniture) ‘000 persons 80 77 81 percent of total 0.8 0.8 0.8 employed Total employed in wood sector ‘000 persons 165 155 134 percent of total 1.6 1.6 1.5 employed Source: Romanian Statistical Yearbook 1999.

Romania’s forests however also support a considerable informal sector benefiting from the collection, use and sale of Non-Timber Forest Products (NTFPs). These include the collection and sale of mushrooms, berries and honey, hunting and recreation and tourism. Local people are also able to collect brush and branches for heating and cooking.

Forest infrastructure, and in particular forest roads, also provide a vital resource for rural communities and forest production industries. Forest roads often pass through remote or isolated villages or link to village and national roads providing a vital artery of transport and communications to the wider area. Forest roads provide direct access to markets, services and administrative systems for rural families otherwise isolated.

In early 2002, a structured survey of around 1,000 households in forested areas of Romania was commissioned by the World Bank to develop baseline information for project monitoring. The report produced as a result does not constitute part of the original Environmental Assessment, but its findings are presented here as being relevant to the objectives of preparing this Environmental Assessment Update.34 The household survey was complemented by individual semi-structured interviews with key stakeholders (rural forest owners, urban owners of forests, mayors, managers, employers, and foresters), focus group interviews with civil servants involved with forest management, and a review and analysis of official statistics and documents related to the process of forest restitution and its impact.

The study reported that, in heavily forested areas, unemployment rates are around 13.9 percent, which is twice the national rate (which in 2001 was 6.4 percent). This fact notwithstanding, unemployment rates are even higher in forest scarce areas -- nearly double the rate in forest abundant areas.

(34) Metromedia Transilvania (2002). Ibid.

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Attitudes toward using the forest are heavily influenced by the prevalence of poverty. In heavily forested areas, forests are perceived as a long-term capital resource, and households indicate they would opt for finding sustainable ways of using forests following restitution. In forest-scarce areas, where the poverty incidence is higher, households think of forests as secondary resources, unimportant in the economy of the community. In these areas, households indicate a preference for immediate valorization following restitution, generally by cutting trees and selling the wood.

In terms of forest industries, in more densely forested areas, commercial activities are oriented toward primary wood processing (harvesting and extraction), with much less emphasis on secondary wood processing or on the gathering, processing and selling of Non- Timber Forest Products (NTFP). In forest scarce areas, commercial activities are oriented primarily toward secondary wood processing.

The study reported that, with regard to the NFA, survey respondents indicated that the main advantage attributed to forest management by the NFA is the technical dimension of forest maintenance. The perception is that NFA has a well organized structure, and is staffed with qualified and competent highly specialized staff. Continuity of forest management, reforestation activities, and protection and security activities were all noted as important benefits of maintaining forests under NFA management. The study also noted that households were also critical of the NFA because of local abuses, “ill-will” toward private owners, indifference, and the refusal to cooperate with other agents that have interests related to the forest (private owners, local administration etc).

Social capital defined by the dimension "trust in others" was found on-average not to be related to patterns of forest ownership. Considering the data more closely, however, the survey did point out, that trust in NFA staff is associated with forest ownership: forest owners have less trust than non-forest owners. In contrast, trust in local authorities is greater amongst forest owners, as compared to non-forest owners.

The study indicated that there is a considerable amount of uncertainty about the roles of the Forests Inspectorate and NFA with respect to management and supervision.

Despite these various criticisms, a significant number of respondents still reported that state administration remains the best solution for forest management. The limited capacity of private owners to undertake scientific forest management was one of the major reservations held by respondents against private forest management. Although this is the view held more widely amongst non-forest owners, forest owners are in general in favor of private forest management.

According to the survey, the most common use of forests is for firewood: 40 percent of respondents in forested areas stated that they have used the forest for this purpose in the last year. Less than 20 percent reported using the forest to pick mushrooms, wild berries, and around 10 percent reported using the forest for grazing and wood products. The percentage of those that use the forest for other types of activities (for economic benefits

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such as fodder or for wood as a raw material, or for game and fishing) is around 5 percent of the total respondents. Forest owners are heavier users of the forest as an economic resource than are the non-forest owners. Relatively few people earn their income largely from NTFPs collected from forests.

Most of those surveyed thought that the process of forest restitution would not influence relationships among people at the level of the community. Forest restitution has not provided any clear opportunities for fostering community cohesion, though this could be an outcome as communities seek to solve, collectively, the problems associated with restitution, or through the emergence of associative behavior of exploitation and valorization. Survey data showed that the intensity of household social interaction is not related to whether or not a household is a forest owner, or to the proportion of private forest owners in a community.

There was a deep consensus amongst all respondents that the rural poor have easier access to NTFPs collected from state forests, and that this situation would deteriorate as forests are restituted. Quantitative data sustain the hypothesis that the forest restitution process influences negatively the access of the poor to the products of the forest, and in the short and medium term is foreseeable a worsening of their life conditions.

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5. FDP’S CRITICAL ENVIRONMENTAL AND SOCIAL IMPACTS AND MITIGATION MEASURES

5.1 INTRODUCTION

The FDP is premised on supporting and strengthening the institutional and regulatory functions which will promote the expansion of sustainable forestry practices. This Section considers the potential environmental and social impacts which were taken into account during project preparation, and which will need to be taken into account during project implementation. It presents steps to enhance the project and to mitigate its impacts to strengthen FDP’s effectiveness. These recommendations are carried forward into Section 7. Environmental Management and Monitoring Plan.

One of the sources of confusion which arose from the original Environmental Assessment was whether the EA was intended to address project specific impacts or overall, sectoral and cumulative impacts of the proposed FDP. In seeking to clarify this point, the following sections characterize firstly, expected project-specific impacts, and then expand upon the impacts which are likely at the sectoral level – to the extent that these can be evaluated.35

In order to begin to describe in an overview the potential environmental impacts of the project, a modified scored checklist36 approach was taken to articulate potential positive and negative environmental impacts envisaged both with and without the project, in the absence of any mitigation measures. The results from this exercise are shown in Table 8. The checklist approach indicated that it was unlikely that there would be any positive environmental impacts of the ‘without project’ scenario, and likely considerable negative environmental impacts. This very much reflected the view of the EA team that project activities would be quite important for mitigating some of the negative environmental impacts of the restitution program. In contrast, the overview suggested the potential for a range of significant positive environmental and social impacts which would be an outcome of the project, but also suggested that institutional reform activities without the roads component would have more significant negative environmental impacts than with the roads component. In addition, the analysis pointed out that negative environmental impacts associated with the forest roads component would likely be of some concern during the project period, but could extend beyond the project period as well in the absence of mitigation measures. The scored checklist approach provides the framework for describing in greater detail some of the more specific impacts which are envisaged for each project component.

(35) There is a diversity of opinion about the appropriateness of more general sectoral or strategic approaches toward environmental assessment. The idea that Sectoral Environmental Assessments (SEAs) can produce the insights many have envisaged is under critical review, and there is a growing consensus that SEA theory and methodology, ‘could do with a prolonged spell of general rethinking’ (Dalal Clayton and Sadler, 40). (36) The checklist approach is a widely accepted methodology for describing potential environmental impacts particularly when outcomes from specific project investment activities (such as institutional development programs) are difficult to define in timers of physical environmental indicators (such as air quality or soil loss). (See, UN ESCAP, 1985)

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Table 8: Summary of Potential Impacts With and Without the FDP (excluding mitigation steps) Project Components and Subcomponents 1. Establish Systems to Ensure Sustainable Management of 2. Mitigate Consequences of Restitution on 3. Support Increased Private Forest Lands Management of State Forest Lands Productivity and 1c. Establish- Competitiveness of 1a. Forest 1b. Support ment of 1d. Forest Forest Industries Inspectorate: to the Asso- Community- Management through the Supervisory, ciation of based Asso- Information 2b. Rehabilitation and Establishment of a Regulatory Private ciations of and New Construction of Forest Sector and Advisory Forest Own- Local Forest Monitoring 2a.: Reform and Strategic Forest Roads Business 4. Public 5. Management & Capacity ers Owners System Development of NFA (With project only) Information Center Awareness Co-ordination With- With With- With With- With With- With With- With Without Execution Exploitation With- With With- With With- With Impact Area out out out out out roads period period out out out Environment -5 11 -5 7 -5 7 -5 11 -1 1 -11 -7 -3 0 0 -5 12 0 0 Biodiversity -1 2 -1 1 -1 1 -1 2 0 0 -1 -2 -1 0 0 -1 3 0 0 Erosion -1 2 -1 1 -1 1 -1 2 0 0 -3 -1 -1 0 0 -1 3 0 0 Water Quality -1 2 -1 1 -1 1 -1 2 0 0 -3 -1 -1 0 0 -1 3 0 0 Air Pollution -1 2 -1 1 -1 1 -1 2 0 0 -3 -2 -1 0 0 -1 3 0 0 Environ. Management -1 3 -1 3 -1 3 -1 3 -1 1 -1 -1 1 0 0 -1 3 0 0 Social -2 2 -2 3 -2 3 -2 4 -1 -2 -1 2 4 -2 6 -1 2 0 0 Employment -1 1 -1 1 -1 1 -1 1 -1 -2 1 3 1 -1 3 -1 2 0 0 Access to resources -1 1 -1 2 -1 2 -1 3 0 0 -2 -1 3 -1 3 0 0 0 0 Economic -1 3 -2 1 -2 1 -2 3 -3 3 -1 0 3 -3 6 -2 2 0 0 Sustainable revenue -1 3 -1 1 -1 1 -1 2 -2 2 -1 0 3 -2 3 -1 1 0 0 Economic diversification 0 0 -1 0 -1 0 -1 1 -1 1 0 0 0 -1 3 -1 1 0 0 Institutional -2 6 -2 3 -2 3 -2 4 -2 6 0 0 0 0 0 -2 6 0 0 Strengthening Capacity -1 3 -2 3 -2 3 -2 3 -1 3 0 0 0 0 0 -1 3 0 0 Empowerment -1 3 0 0 0 0 0 1 -1 3 0 0 0 0 0 -1 3 0 0 Scored ranking does not take into account mitigation steps which are proposed for inclusion in the project. Legend: Likely impacts were evaluated on a scale from –3 to +3, where –3 refers to major negative impacts, and +3 refers to major positive impacts. See notes on following page

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Notes to Table 8: Rationale for Scoring

For the assessment of the project impacts, two alternatives were considered, (a) without project, or zero alternative, and (b) with project implementation. For each alternative, the negative or positive impacts were evaluated, using a scale with minor, medium and major possible impacts. The impacts regarding the forest roads were divided into two parts, because the construction of forests roads has a different kind of impacts on the environment than the exploitation does. Environmental Impact mitigation steps were not considered.

Those impacts were analyzed and explanations about the rationale which lead to the figures shown in the Table 8 are given hereafter.

Regarding the first component- the Forest Inspectorate, it is considered that increasing its supervisory, regulatory, and advisory capacity trough the FDP will have a medium positive impact on biodiversity, erosion, water quality and air pollution, due to a better supervision of the forest management, especially in the future restituted forests, which will lead to a major positive impact on environment management. Regarding the employment and the access to resources, increasing the capacity of the Forest Inspectorate will have a minor positive impact on employment and on the access to resources, as the capacity and the role of the inspectorate is likely to increase in the future. The impact on the sustainable revenue will be major, and motivated by the induced sustainable forest management. Of course, this project component will have a major positive impact on the capacity strengthening and the empowerment of the Forest Inspectorates. All those impacts will be achieved trough training and capacity building for staff, extension services and awareness for the public/forest owners, an increased power for regulation and enforcement of the forest management plans on restituted land.

In the same manner, the support for the association of private forest owners and the community based associations of local forest owners will positively impact the environment components, because this associative form will lead to a better forest management, on wider areas, easier to assure the yearly harvesting and to be supervised by the Forest Inspectorates. The associative form will also assure a better access to resources, a raise of the owner’s awareness, and increased opportunities for local employment and local income generation.

The forest management information and monitoring system component assure the establishment of effective monitoring systems for forest management and planning, providing the feedback coming from the forest management, and also the information for its improvement. The forest management and monitoring system will also reduce the cumulative impacts of forest production activities on biodiversity, erosion, water quality and air pollution, with a major positive resultant on the overall environment management.

The reform and the strategic development of the NFA will have a minor positive impact on the environment management, due to the more effective management and administration of the sustainable forestry. This reform is likely to induce a loss of staff within the NFA, but in the same time it will increase the capacity and the empowerment of the organization.

The forest roads will improve the accessibility of the production forest areas, where harvesting is undertaken in a poor environmental and economical way. The present impacts of forest harvesting (without roads), are major and negative on biodiversity, erosion, water quality and air pollution, because of the long skidding distances induced by the lack of forest roads. The impacts caused by the skidding operations are affecting the whole forest environment, and the impacts increase with the skidding distance. This is why it can be said that the exploitation of the forest roads will impact the environmental components in a minor negative way, but will reduce the major negative impacts caused by the long skidding distances. It is true that the access to those forested areas will get easier, but we have to take into account that the forested areas in question are state owned production forest (and not protection forests or critical ecosystems), where harvesting, with or without roads, should be performed in order to extract the wood volume specified in the forest management plans.

The construction or rehabilitation process has of course a more negative impact on the environment, but those impacts will occur for a limited period of time. The possible permanent negative impacts caused by the forest roads construction will be reduced by following the provisions of the best practices manual for road construction, which will be developed in the first year of project implementation, when no roads will be built/rehabilitated, but these impacts are not considered.

The ForSBIC component will have no impact on the environment, but the social and economic impacts will be major positive, coming from the economic and employment benefits of establishing value-added industries. The increase in pollution resulting from the development of wood process industries will be counterbalanced by the promotion of the clean technology processes and techniques, the upgrade of old, inefficient and polluting equipment and by the promotion of the environmental management systems.

The public awareness component will have an overall major positive impact, trough the increased understanding and implementation of the sustainable forest management and by the increased acceptance of local people to government departments.

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5.2. E SYSTEMS TO ENSURE SUSTAINABLE MANAGEMENT OF PRIVATE FOREST LANDS (COMPONENT 1)

5.2.1. Likely Environmental Impacts

No negative environmental impacts of this component are envisaged, and significant positive environmental impacts are anticipated.

Other questions have been raised about the likely impact of corruption on the sector as a whole, as well as on project implementation in particular. As earlier sections of this report have noted, there is relatively little information known about the extent of corruption in the forest sector. Some estimates have suggested that between 5 and 20 percent of the timber on the market in Romania had been illegally harvested, but the basis for this estimate was

E NVIRONMENTAL RESOURCES MANAGEMENT 70 MINISTRY OF AGRICULTURE, FOOD AND FORESTS largely anecdotal.37 The failure, however, to capture revenues as a result of corruption and illegal harvesting increases the overall cost of management, and supports rates of forest harvesting which are not consistent with generally accepted norms of sustainable forest management. Arguably, there is scope for developing a far better understanding of the nature and dimension of problems of forest governance in Romania.

Success in addressing administrative failures and state capture in Romania will require a broad-based program that brings transparency and accountability to political life and to public administration more generally, rather than to the forestry sector in isolation. Government has placed a high priority on tackling the problem of corruption by preparing and adopting its ‘National Program for Prevention of Corruption’ which seeks to do this. Indeed, the project is being implemented within the framework of implementation of Government’s overall anti-corruption strategy.

5.2.2. Mitigation Measures

Mitigation measures are designed to address overall sectoral concerns, rather than specific impacts which are likely as a result of the project, which, as we have indicated, are expected to be nil. Within this framework, the project was designed to assist in addressing the issues of legislation, enforcement, and governance. The proposed project is partly designed to build the capacity of the MAFF to enforce the forest code and to provide extension and advisory services, with particular emphasis on newly restituted forest lands where the risks of illegal and unsustainable practices are greatest. Much illegal harvesting is reportedly for fuelwood consumption, and community involvement in developing sustainable management plans is crucial for addressing this issue, as is public awareness more broadly. The project will also assist new forest owners, at the regional and community levels, to form and establish forest owners associations in order to consolidate private forest holdings into economically viable management units that can be managed in accordance with the existing forest management planning system.

Additionally, Government support for the establishment of independent certification of forest products will provide additional incentives to ensure that forest management will be environmentally, socially and economically sustainable. Certification also represents European best practice, and this operation is one of the first in Romania to support this. With support from the GEF Biodiversity Conservation project, around 32,000 ha of forest has been certified by Woodmark (which has been accredited by the Forest Stewardship Council to certify forest management enterprises that comply with the FSC Principles and Criteria for Forest Stewardship). Government has targeted over a million ha for eventual certification. A commitment to compliance with FSC standards is an indication of Government’s interest in seeing that production forests are sustainably and transparently managed. FSC standards also include moves to account for the chain-of-custody, which should also begin to address some of the problems of the marketing of illegally harvested timber.

(37) See, for example, World Bank (1999). There was no empirical basis for this estimate and subsequent reviews have discounted it.

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The proposed FDP tackles the problem of governance in the sector in a number of important respects. Firstly, the strengthening of the Forest Inspectorates to improve their capacity to enforce forest legislation is a key objective of this component of the project. Indeed, the Forest Inspectorate has primary responsibility for control, monitoring, and forest law enforcement in both state and private forests. The Forests Inspectorates (under the MAFF) are financially independent of the autonomous National Forest Administration and has no reporting or financial relationship to the NFA.38 Secondly, the project seeks to vastly increase the availability of information about forest harvesting and management by establishing a national forest management information and monitoring system for the Department of Forests, greatly increasing its capacity for planning and monitoring. Finally, the public awareness component is very much design to improve local governance by making owners more aware of their rights and responsibilities and the importance of sustainable forest management.

These actions will seek to engage wider civil society groups in monitoring performance of the Forest Inspectorates and of the Department of Forests in seeking to enforce the legal framework.

An additional mitigation measure which is expected to be implemented seeks to develop better information about the nature and extent of corruption in the forestry sector. A diagnostic study, which follows on the results of the overall national diagnostic of corruption, is to be carried out once independent financing and implementing mechanisms are mobilized. Draft Terms of Reference for this study are included as Appendix 9: Draft Terms of Reference for Diagnostic Study of Corruption in the Forestry Sector to this EA Update. In order to maintain independence, the Diagnostic will be carried out by an independent institution with financing which is not related to the FDP.

The Diagnostic Study will describe the nature of corruption in the sector and will propose a number of initiatives to reduce, control, or otherwise to mitigate the impacts of corruption on sectoral performance. Until this study is completed, it is difficult to say which specific additional steps the project should support. Approximately 5 percent of the proposed loan comprises physical and price contingencies which are to be subsequently allocated. Once the

(38) The Forests Inspectorate, which reports to the Minister of Agriculture, Food, and Forests is financially independent of the autonomous National Forest Administration and has no reporting or financial relationship to the NFA. The NFA is a government-owned institution which has responsibility for all production and protection forests. It also reports to the Minister of Agriculture, Food, and Forests. The structure of these institutions with responsibility for forest management in Romania is strikingly similar to the structure of forest management institutions across Europe. What is far more important, however, than this institutional structure is the ability of both institutions to deliver on their mandates. The project proposes to support a number of activities for strengthening the capacity of the Forest Inspectorate to do so.

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Diagnostic Study has been completed, around half of these resources will be allocated specifically to implement priority recommendations of the Diagnostic.

An important institutional mechanism for ensuring the project is performing to an adequate standard with respect to this component in particular is the Project Oversight Committee. The Project Oversight Committee will consist of experts from the Department of Forests, MAFF, the Ministry of Finance, NFA, and the NGO community, and will be advised by various consultative groups which are to be established. The Committee will be responsible for providing project oversight advice and assistance in resolving issues associated with project implementation. Representation of the NGO community on the Oversight Committee has been welcomed by Government, but the selection of a representative remains the responsibility of the NGO community, which has, to-date, been unable to identify a suitable representative.

5.3 MITIGATE THE CONSEQUENCES OF RESTITUTION ON MANAGEMENT OF STATE FOREST LAND (COMPONENT 2)

The second project component, which seeks to mitigate the impacts of restitution on State Forest Lands, will provide support for reform and strategic development of the National Forest Administration, and for rehabilitation and construction of the forest roads network (including a key stretch of forest railway).

The reform process is geared toward assisting NFA to change in response to the wider changes which are already underway, particularly with respect to the restitution of forest lands. They are geared toward improving NFA’s efficiency and financial viability on remaining state forest lands which will be under its control. The project will provide resources to assist NFA in developing and implementing a strategic plan to strengthen its role in managing remaining State forests. Inputs to the strategic plan will identify, quantify and separate the costs and benefits of the public good from the economic functions of NFA, and will develop a financial accounting system to ensure that all activities are adequately described and resourced. The strategic plan will focus on reforming and strengthening the NFA’s institutional capacity to improve its operational and commercial efficiency, and optimizing revenue generation from production forest, while safeguarding the public interest and ecological services provided by protection and production forest. The plan is also expected to describe actions related to NFA’s non-core activities (viz either privatization or development). The reserve pricing system will be reviewed and revised to establish an objective and auditable process for determining reserve pricing for timber auctions.

E NVIRONMENTAL RESOURCES MANAGEMENT 73 MINISTRY OF AGRICULTURE, FOOD AND FORESTS

In conjunction with the overall NFA reform process, the project will also finance, on a pilot scale, rehabilitation and expansion of the forest road network (including the rehabilitation of the only forest railway operating in Romania), by implementing a series of forest roads sub- projects, with the objective of reducing the negative environmental impacts of harvesting, against forest management plan standards, and to improve the economic viability of wood harvesting from State production forests.

The two project subcomponents are seen to be integrated actions, i.e. institutional reform by itself is unlikely to be financially viable in the absence of investment in improving the economic efficiency of timber harvesting in NFA’s production forests. Investments in roads rehabilitation and construction makes little sense if NFA fails to undergo badly needed reforms in its strategic approach and outlook, in its overall approach to financial management, and in its way of pricing timber through the auction system.

5.3.1. Likely Environmental Impacts

Strategic planning and reform of the NFA

No negative environmental impacts of this component are envisaged, and some modest positive environmental impacts are anticipated.

The nature of the institutional reforms proposed is largely ‘environment neutral,’ that is, the objective of reform is largely for efficiency reasons and to improve overall public sector management. A better environmental regulatory framework is, however, anticipated as a result of the project, and this should yield some gains in overall environmental management.

Significantly, environmental impacts of this component are expected to be far more negative if the roads component is not included in the project. In other words, the institutional reforms which are envisaged are unlikely to be sustained if a framework for improved and environmentally sensible roads management is not developed, tested and introduced.

Forest roads rehabilitation and expansion

In terms of investment by the World Bank, forest roads rehabilitation and expansion is a major element of this component of the FDP, as well as the largest single subcomponent of the FDP overall. Bank 6-year financing for this component is expected to total $18.9 million, or 44 percent of total project costs, averaging just over $3 million per year. The balance of the resources required for roads rehabilitation and construction are to be financed by Government.39

(39) Despite the fact that the subcomponent accounts for a relatively larger share of total project costs, the scale of the subcomponent is relatively small, both in terms of its annual cost viz. NFAs gross revenues ($140 million in 1997) as well as in terms of its actual impact on the overall roads network (increasing the total forest road length by less than 2 tenths of one percent and rehabilitating only 1.2 percent of the total roads network).

E NVIRONMENTAL RESOURCES MANAGEMENT 74 MINISTRY OF AGRICULTURE, FOOD AND FORESTS

Forest roads rehabilitation and expansion is also the element of the FDP with the highest potential for direct negative environmental impacts (e.g., construction, maintenance and usage). A separate study of the Forest Roading sub-component of the FDP in the Romanian context was carried out by during project preparation ['Initial Report on Environmental Aspects of Forest Roads Component' prepared by Fortech, Dames and Moore, and Project Management (Ireland), March 2000.] This report highlighted a number of issues regarding the Forest Roading Sub-Component and brought about changes in the structure and implementation schedule of the FDP during Appraisal. Among other things, the report recommended the development of an environmental screening procedure for managing the potential environmental impacts of the Forest Roading Sub-Component. The Fortech et al report was appended as an Annex to the original Environmental Assessment. The March 2001 NGO Consultation on the Environmental Assessment recommended that the findings and recommendations of this report should be fully incorporated into this Update.

MAFF, in turn, requested that the process for carrying out environmental screening and assessment of individual roads sub-projects should be prepared as a key environmental management output of the FDP EA process.

As it was originally conceived, the forest road sub-component was to provide:

‘…the physical infrastructure necessary for economic and environmentally sound access to wood harvesting through construction of forest roads, to the required density and in accordance with best environmental practice, in existing production forest and facilitating competitive bidding and pricing of forest road construction.’40

Internal Bank reviews of the original project concept emphasized the importance of the forest conservation and sustainable management focus of the project, including:

‘…that forest road construction, and planning for increased density of the forest road network, will only take place in existing areas of production forest with the objective of reducing the negative environmental impacts, as well as the economic costs of harvesting operations’.41

Also of relevance to the roads sub-component, the review meeting highlighted the importance of capacity building in all key public and private sector organizations.

(40) World Bank (1999a). Romania Forest Development Project. Project Concept Document. December. (41) Minutes of the Concept Review meeting, December 1999.

E NVIRONMENTAL RESOURCES MANAGEMENT 75 MINISTRY OF AGRICULTURE, FOOD AND FORESTS project implementation. Actual civil works on any roads sub-project will not be initiated until the second year of project implementation. The 5 tranches will be undertaken in the second through sixth project years.

The partial listing of road rehabilitation and construction sub-projects which have been identified, screened, and rescreened for their potential environmental impacts, and their locations, is indicated in Appendix 5: Preliminary list of roads rehabilitation and construction sub- projects and maps. This initial list comprises a total of 430 km of forest infrastructure (roads and railways) which are to be rehabilitated, and 56 km of new roads which are to be constructed.42 Funds are provided in the project to finance an additional 24 km of roads construction sub-projects, which have yet to be identified, and 88 km of roads rehabilitation sub-projects which have yet to be identified. This initial list of roads will subsequently change as new information becomes available during project implementation as a result of more intensive review, but on balance, it is anticipated that the project will finance around 80 km of new roads construction and 516 km of roads and railway infrastructure rehabilitation.

Roads rehabilitation sub-projects are expected to vary in length from around 1 to 20 km. New road construction sub-projects, which entirely comprise the extension of existing roads (i.e. spur extensions) are expected to vary in length from around 0.5 to 6.5 km.

As a pilot activity, the roads sub-projects planned for construction or rehabilitation represent a very small fraction of the total length of forest roads or associated harvesting and extraction infrastructure in Romania. Harvesting and extraction infrastructure, at the end of the year 2000, comprised a total of 41,546 km of roads and 65 km of railway. Roads targeted for new construction by the project would increase the total road length by less than 2 tenths of one percent. Infrastructure planned for rehabilitation constitutes 1.2 percent of the total. By any standard, the fact that the project is investing in such a small percentage of the overall total (and indeed, in the face of the enormous needs for construction and rehabilitation) demonstrates that it constitutes a pilot operation. Because of this, aggregate impacts of the roads project are expected to be relatively minor.

Roads which have been tentatively identified all fall within production forests. All production forests in the ‘Forest Fund’ are managed under Forest Management Plans. All of

(42) During project preparation and in conjunction with the original Environmental Assessment, 91 roads sub-projects were initial ly identified for project investment and were screened for their potential environmental impacts (See Appendix 10: Results from Preliminary Screening of Roads Rehabilitation Sub- projects for their Environmental and Social Impacts). These roads were rescreened, and 20 of them were dropped because of the risk that they might increase access to protected areas.

E NVIRONMENTAL RESOURCES MANAGEMENT 76 MINISTRY OF AGRICULTURE, FOOD AND FORESTS these plans are prepared on a compartment basis by ICAS on behalf of the owner (i.e. the NFA), approved by the Directorate of Forests (now in MAFF), and revised every 10 years. [Restituted forests inherit their previous management plan when transferred to the private sector. Private forests of less than 10 ha require a simplified management plan. Currently ICAS is preparing management plans for private forest owners with funding from MAFF. However, by January 2001, only 3,000 ha (out of 350,000 ha) have had management plans prepared.]

Generally speaking, the primary environmental impacts related to the construction of forest roads include:

Potential indirect impacts could include increased illegal harvesting, but only if enforcement and regulatory mechanisms fail.

The potential magnitude of these issues is reduced in the Romanian forest roads context for the following reasons:

· All roads are located in state land in Forest Fund production forests; · Forest roads are planned, designed and permitted in the context of a management system based on a long tradition of silvicultural practices implemented through 10-year forest management plans, and which incorporate watershed and biodiversity protection functions and other environmental aspects. However, there are undoubtedly locations and situations in protection forests where differences of opinion in terms of preservation of biodiversity or other environmental functions versus forestry production may arise; · The Romanian GEF Biodiversity Conservation Management Project is integrated with the NFA forest program; and · The silvicultural and management programs integrate traditional forest harvest practices of local communities including wood for fencing and building repair, fire wood(43), and non-timber forest products (NTFPs, e.g., medicinal plants, mushrooms, nuts, honey). In addition, in the Carpathians, forest roads are also used by the villagers as routes for accessing mountain pastures during summer. As a result, the forest roads are of great

(43) Non-commercial wood from thinning and sanitary clearing is either made available to local villagers or, in many instances, villagers carry out the thinning and collection in coordination with NFA district offices.

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value to the local population and, based on the public consultation work carried out at multiple stages during the preparation of the FDP, have local public support.

In addition to the above, there are four major factors regarding the forest roads included in the FDP which serve to further limit the potential for significant environmental and social impacts:

· The National Wood Institute (INL) pre-screened prospective roads to exclude those with more complex or significant potential environmental issues; · In total length terms (km), 87 percent of the road sub-projects to be included in the FDP are rehabilitation works for existing roads; and · The new roads (13 percent of the total) are spur extensions of existing roads as opposed to new roads into previously remote areas (and these areas are Forest Fund lands which have been under management, and which are not isolated, undisturbed forests). · Taken together, roads targeted for construction and rehabilitation account for a very small percentage of the total forest road network – less than 1.5 percent of the total. · Roads rehabilitation, by itself, is intended to reduce negative environmental impacts from erosion.

Roads construction and rehabilitation financed by the project will have virtually no impact on levels of harvesting because the Annual Allowable Cut has already been established as a result of the forest management planning process and provides the basis for auctioning timber resources in individual blocks. The primary impact will be to reduce the costs of harvesting and extraction, rather than to increase the rate of harvesting (at least, not above sustainable levels defined by the AAC), ensuring NFA will receive higher value for standing timber in auction markets.

Similarly, roads sub-projects are not expected to have any impact on protected areas and will neither pass through any protected area nor will they increase access to protected areas.

With respect to developing forest roads, current practice in Romania focuses on five phases: Planning; Design; Construction; Use and Maintenance; and Closure. We consider current practice in Romania for these five phases, and potential implications for the environment.44

Planning

Forest road planning procedures normally include consideration of need, density, location, and impacts.

(44) NFA has indicated that the biggest problems in this phased approach are particularly with respect to planning and design (because of the need to incorporate design standards to accommodate floods and landslides) and with respect to use and maintenance considers that some of the most important problems affecting existing forest roads are: Planning and design: flood damage; landslides Use and maintenance: low maintenance inputs; use by heavy vehicles

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The need for roads is dependent on the management prescription for an area. Since some form of felling is permitted in almost every category of Protection Forest, under this management approach road access will eventually be likely in most forest compartment in Romania, for timber extraction (provided it is economically viable and timber production is an objective of management). This is not an issue for the FDP because the roads targeted for rehabilitation/construction all are in production forests. In any event, planning of the road network should be an integral part of the overall forest management planning process.

In addition, the road network should reflect the harvesting technology (and vice versa). Romania has well-established practices for wood extraction, based on ground skidding by horse and tractor and on skylines. A common feature is that most extraction is downhill from the point of felling to roads, which are almost always in valley-bottoms. This technology has a high impact on riparian values due to direct destruction of valley-bottom habitat for roads, sediment production from skid trails, and sediment inputs to streams from slope erosion.

Lower-impact harvesting and extraction techniques exist, ranging from the very cheap and simple to a higher level of investment and technology. These are likely relevant to Romanian conditions, under some circumstances. Extensive guidance on Codes of Practice for forest harvesting and extraction can be found in FAO (1996a, 1996b).

The precise location of roads in the landscape is a critical factor affecting their environmental impacts and construction and maintenance costs. Forest road locations typically have been be determined in Romania on the basis of the cheapest route, topographic maps at 1:5,000 or1:10,000 (available for the whole of Romania), and field inspection.

Current practice shows that the majority of main and primary forest roads are constructed in valley bottoms, rather than in mid-slope locations, and (b) that some primary and secondary roads have been built across steep, marginally stable slopes. Since most valleys are V-shaped, this (a) results in high liability to flood damage, and very high impacts on both watercourses and riparian values, since there are no riparian buffer strips; and (b) results in high earthworks volumes, problematic drainage, high risks of damage to the roadbench from prism and cutslope failure, and high sediment production.

According to Asmarandei and Cazan (1996), in Romania roads on slopes steeper than 60 percent have been banned since 1980, as have roads involving more than 15,000 m³ of earthworks.

It appears that the current practice of forest roads planning does not fully consider some important features normally highlighted in ‘sustainable forest management’, specifically (i) areas of high biodiversity values, especially along rivers and streams (‘riparian values and habitats’), and (ii) areas prone to erosion. Although large-scale topographic maps are used, there is no use of aerial photos for alignment planning, (presumably no geomorphological analysis and mapping), and no prior identification of fine-scale sensitive areas (habitats,

E NVIRONMENTAL RESOURCES MANAGEMENT 79 MINISTRY OF AGRICULTURE, FOOD AND FORESTS slopes). Excellent guidance on the planning and design of roads in mountain environments, directly applicable to forest roads, is however, widely available.45

The forest management planning process should also consider harvesting methods, access, and non-timber values. Explicit inclusion of these costs and benefits in compartment-level planning may result in changes in prescriptions and need for access due to recognition of the full costs of road construction and use, and the potential loss of non-timber benefits.

Currently, there are no ‘best practice guidelines’ or ‘best management practices’ to guide the road location planning process (e.g. mandatory riparian buffer strips, avoidance of sensitive slopes).

If planning practices are modified, the question of institutional responsibilities for approvals arises: who should approve the alignment - the NFA, the DoF, the Forest Inspectorate, or perhaps the county EPA? How can their skills and independence be assured?

Further questions arise in relation to forest roads in the private sector. Should there be public subsidies? [Austrian practice is that public subsidies are dependent on proof of an optimized development project based on evaluation of different extraction methods (Sedlak 1996).] How can layouts be optimized?

Design

Cross-sections and earthworks. Given a good alignment, the key to minimizing impacts and costs is to balance cut and fill, in cross-section and/or longitudinally. If the slope being crossed is less than 65 percent, it is usually possible to build part of the road on the fill prism. This greatly reduces earthworks volumes, but requires careful attention to detail during construction to ensure adequate compaction and support of the fill. On steeper slopes (if they have to be crossed), construction normally has to be in full bench. This implies removal of spoil along the completed section of road to either a fill section or to a safe disposal site. Cutslope angles should be determined on the basis of the maximum slope that will stand up in the long term, given the material being excavated.

Roads inspected during project preparation varied greatly in their design, depending on the terrain and purpose. Cutslopes were generally tidily finished, and standing up well. The clearest departure from the NFA specifications was in the general lack of provision for roadside drainage at the base of the cutslope.

Drainage. Design norms (NFA 1999) specify that all forest roads in Romania should be ‘crowned’, i.e. they should have a cross-fall both ways from the center. This implies that all roads should have some provision for drainage at the base of the cutslope. Roads inspected during project preparation indicated that there are serious problems on many forest roads

(45) TRL (1997). Principles of Low Cost Road Engineering in Mountainous Regions. Overseas Road Note 16.

E NVIRONMENTAL RESOURCES MANAGEMENT 80 MINISTRY OF AGRICULTURE, FOOD AND FORESTS relating to lack of provision for drainage (normally an open drain with culverts at appropriate intervals).

One cheap and effective method of spilling water across forest roads is the ‘rolling dip’ (see illustration in Garland 1983). These structures permit traffic to continue at reasonable speed, are not subject to blockage by debris, and are not in use on the roads inspected.

Structures. The design of drainage structures - culverts and bridges - is well-established in Romania. Standard culverts are box-section, with reinforced concrete slab decks on masonry abutments. This design is simple and not prone to blocking by debris. Designs are based on regional hydrological norms and standard runoff parameters (culverts are understood to be designed for 1 in 20 year flows). It is not known when these were established, or whether they may require updating in the light of the last decade of hydrological readings and the possibility of more extreme weather events in future resulting from global climate change.

There was little visible use of retaining or slope stabilization structures on the field trip. Examples of the application of standard designs (retaining walls, log cribs, etc.) are given in the standard specifications (NFA 1999). It is suggested that more widespread application of bioengineering techniques could provide cost-effective solutions to existing cutslope, fill prism and riverbank stability and erosion problems.

Specifications. Forest road specifications are given in the NFA’s 1999 Normativ Departamental PD 67/80: Privind Projectarea Drumuril Forestiere Pentru Circulatia Autovehiculelor. This book has the force of law under Ministerial Order No. 560 of 21.06.1999. Table 1 on p. 14 of the book presents the geometric elements of the three forest road types: I Main, II Primary (‘principal’), and III Secondary. In addition to geometric design, the book gives details of drainage structures, retaining walls, and items such as signs and safety precautions when clearing slides.

What appears to be missing from the specifications is detailed guidance on the use of geometric design in steep terrain. Depending on the slope and substrate, the location of the center line in relation to the pre-existing slope is crucial, both to reduce earthworks volumes and to ensure the stability and safety of the final formation. Also missing (is the concept of longitudinally-balance cut and fill, which implies both haulage to safe disposal sites and the use of appropriate equipment (excavator and dump truck). Internationally, guidance on forest road design is available from many jurisdictions, including, e.g., BC Forest Service (1995).

Construction

Clearing limits. Field investigations did not raise any issues in relation to clearing limits. It was apparent that every effort is made to limit clearing widths to the minimum necessary for the physical works.

Earthworks. Field visits indicated that there are considerable opportunities to improve earthworks practices, the benefits being reduced site damage, reduced earthworks volumes,

E NVIRONMENTAL RESOURCES MANAGEMENT 81 MINISTRY OF AGRICULTURE, FOOD AND FORESTS and improved stability and safety of the roadbench. There is some evidence that roads are sometimes aligned across very steep terrain (>80 percent), and are being constructed by a combination of dozer and excavator. Site damage under these conditions can be significant, largely due to mismatched equipment and lack of operator training.

Other problems include difficulties in end-hauling spoil from road sites, because of the use of inappropriate equipment, and inappropriate widening of the roadbench to permit turning side-loading, with a great increase in earthworks volumes and site damage. Under these circumstances, large volumes of excavated material can be lost accidentally downslope, resulting in significant localized damage and loss of growing areas, sediment inputs to watercourses downstream, loss of rock which could have been used for surfacing, a very unstable fill prism showing signs of failure, high costs for site stabilization, and high future maintenance costs.

Revegetation. Normally, newly-constructed surfaces are left to revegetate naturally (cut and fill slopes). Rainfall intensity in Romania appears to be high enough to result in significant erosion from unprotected earth surfaces. The use of hydroseeding be investigated to determine its relevance to Romanian conditions.

Equipment. In Romania to date virtually all roads have been constructed by dozers. On steep sites, the pushing action invariably results in loss of material downslope (‘sidecasting’), and often excessive cut and cutslope destabilization. To avoid these problems, many forest jurisdictions elsewhere have been moving towards mandatory use of excavators on steeper slopes. For example, in Austria the use of excavators on slopes exceeding 40 percent is compulsory, as is the end-hauling of surplus cut material on all slopes exceeding 70 percent (Sedlak 1996). The successful use of excavators is totally dependent on the training and professional understanding of the operator. Lack of training, knowledge and experience results in essentially no improvement over dozer construction. An excellent case study of the relative merits and performance of dozers and excavators for forest road construction can be found in FAO (1999). Other equipment changes recommended are (a) hydraulic rock breakers, and (b) dump trucks.

Health and safety. Both the road construction and timber extraction operations inspected during project preparation were notable for the lack of use of personal protective equipment (PPE) by workers. Except for two pairs of gloves, no workers were seen to be wearing or using the basics - safety footwear, gloves, and hard hats.

Blasting. There are blasting guidelines, which emphasize the use of pre-split and other controlled blasting techniques. The use of blasting could be minimized if there was a move towards use of hydraulic rock-breaking equipment (hydraulic hammers mounted on excavators).

Best management practices. To minimize environmental impacts and promote greater care, many forest jurisdictions elsewhere have developed ‘best management practices’, Codes of Practice, and guidelines for forest operations. Typical subjects covered include road planning and design, earthworks, river crossings, spoil disposal. These specify methods to be used,

E NVIRONMENTAL RESOURCES MANAGEMENT 82 MINISTRY OF AGRICULTURE, FOOD AND FORESTS rather than the standards to be obtained as a result of the methods. Such guidelines do not exist in Romania.

Contracts. Standard road construction contracts in use in Romania specify outputs rather than methods. It appears that there is scope for including descriptions of construction methods in road construction contracts (e.g. mandatory ‘best practice’ guidelines). Among other things, contracts should also include specific penalties for infringement of methods.

Equipment. Improved methods implies use of different equipment, i.e. excavators and dump-trucks rather than bulldozers. It will take a considerable effort to create a competent and effective road construction contracting industry, since this requires re-investment in both equipment and human resources. For example, use of excavators for road construction implies a significantly higher degree of training and expertise on the part of the operator, and therefore higher status and salary.

Supervision. Improved methods will not be implemented unless there is strict enforcement. One element of this is adequate understanding on the part of the supervisor, which implies training.

Safety. Contracts should include clauses relating to safe working practices and use of personal protective equipment. These should be enforced.

Use and Maintenance

Site investigations indicated that the NFA faces considerable challenges relating to both routine and periodic maintenance, specifically:

· blocked side drains and culverts · absence of side drains (completely filled by sediment) · soft road surfaces - no recent regravelling · concave road surfaces encouraging erosion · runoff from blocked or absent drains causing or exacerbating failures of the road prism

Some roads now require full rehabilitation, and periodic maintenance will not be sufficient. Roads are typically damaged in some areas by the use of oversize trucks by logging companies (30 t). Basic techniques for the maintenance of roads on private woodlots are available in, e.g. Adams (1983). Maintenance norms are given in an NFA publication under Ministerial Order 560/1999. The principal questions arising in relation to maintenance are, how to ensure that the NFA has an adequate maintenance budget; and how to ensure that roads on private forests receive adequate maintenance.

Closure

Road deactivation. Roads which are not required for forest operations or other traffic for an extended period still require maintenance. Without maintenance the road will deteriorate, and may be lost entirely if culverts block and the roadbench is washed out. These continuing

E NVIRONMENTAL RESOURCES MANAGEMENT 83 MINISTRY OF AGRICULTURE, FOOD AND FORESTS maintenance costs and/or attendant risks of loss of the road and environmental damage can be minimized or avoided by road closure or ‘deactivation’.

Deactivation considers the need for the road, the duration of closure if it is not needed (e.g. 10 years between thinnings), and the most practical physical means of avoiding continuing maintenance costs and risks of environmental damage. Typically, roads not required for a few years should receive simple treatments such as water bars , and roads not required for five or more years should have culverts removed and other treatments to ensure unimpeded, maintenance-free drainage. These treatments lower recurrent costs, and ensure that road access can be re-created at low cost when it is needed again (e.g. by grading out the water bars). In some cases roads which are inappropriately sited and environmentally risky may be partly or completely restored, by removal of culverts and partial refilling of the road bench by using material pulled up from the road prism. This reclaims some or all of the growing area and allows the site to heal itself.

These concept are not widely know in Romania. Their wide acceptance elsewhere on economic and environmental grounds (e.g. the Pacific north-west of North America), suggest that their application should be formally investigated.

5.3.2. Mitigation Measures

Strategic planning and reform of the NFA

As no negative impacts of this component are envisaged, no specific mitigation measures are included in the project.

Forest roads rehabilitation and expansion

The investment in new roads and the rehabilitation of old forest roads will have a positive impact on the economic performance of the NFA by increasing the economic efficiency of harvesting. Improved economic performance is expected to increase NFA’s ability to finance the conservation of protected areas which will remain under its mandate. This in itself has important positive environmental implications, but the immediate concern is how potential negative impacts of roads rehabilitation and expansion can be mitigated.

The tentative location of road sub-projects has been selected in the first instance through a process of environmental, social and economic screening. In the context of well-established sustainable forest management plans, the environmental impact of the roads component are expected to be beneficial: better designed roads will reduce erosion, and a more rational network will limit damage to vegetation caused by long skidding distances.

To minimize other potential environmental impacts of the road sub-component, a number of mitigation measures will be undertaken, consistent with the approach the project has taken toward the future identification of sub-projects. In summary, these mitigation steps include:

· the development and application of a Best Practice Manual for the siting, design and construction of all FDP’s roads.

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· compliance with the construction and rehabilitation methods outlined in the Best Practice Manual will be a contractual obligation of all roads sub-contractors financed by the project both during the design and construction phases; · all new roads sub-projects and all rehabilitation sub-projects will be rescreened for their potential environmental impacts and; where significant negative effects are anticipated, individual sub-project Environmental Assessments will be carried out to identify mitigation steps; · any new road construction sub-project or roads rehabilitation sub-project which provides increased access to protected areas will automatically be dropped from the list of proposed sub-projects; · a cumulative impact screen will be carried out which would involve mapping planned FDP road projects at a county level to determine when more than one project will occur in a river basin (catchment), and then managing the projects to minimize cumulative impacts; and · Contractual compliance with the Best Practice Manual and with the recommendations and findings of any of the Environmental Assessments which are prepared for individual roads sub-projects will be monitored by the Forest Road Specialist in the PCT and by a counterpart(s) to be identified within the Forest Inspectorate.

The Forestry Road Specialist and the designated FI counterpart(s) will need to take particular account of any potential cumulative impacts of the road component (as noted above). Whilst one road may not have significant environmental impacts, taken together, several new and/or rehabilitated roads in a region could add significant pressures to fragile ecosystems, existing public road systems and transit villages and towns. The cumulative footprint of several projects could therefore be far greater than the aggregate of impacts from a single road project. A useful method for assessing cumulative impacts is impact mapping. Using this approach, the various impacts of individual roads in a delineated area are mapped and laid over each other to compare and contrast the acceptability of all the impacts. More sophisticated techniques such as computer-aided Geographical Information Systems are useful tools in preparing maps of cumulative impacts.

The design and implementation schedule for the Forest Road Sub-Component of the FDP, which incorporates various mitigations steps, is shown in Table 9.

Table 9: Schedule for implementation of FDP Forest Road Sub-Component Year Activities 1 No road works will be implemented in Year 1.·The Best Practices Manual will be developed through an international tender/commission; the BP Manual will be specific to the environmental setting and institutional aspects of the forestry sector in Romania. In the latter half of Year 1, the first tranche of roads rehabilitation road sub-projects will be identified, and the recommendations and specifications of the BP Manual will be incorporated into engineering designs. Following design, sub-projects will be screened for their potential environmental impacts. EAs and mitigation plans will be prepared for roads rehabilitation sub-projects which are expected to have significant negative environmental impacts. 2 Second tranche of roads rehabilitation and new road sub-projects will be identified, and the recommendations and specifications of the BP Manual will be incorporated into engineering designs. Roads sub-projects will be screened for their potential environmental impacts, EAs and mitigation plans will be

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Year Activities for their potential environmental impacts, EAs and mitigation plans will be prepared for roads rehabilitation and new road sub-projects which are expected to have significant negative environmental impacts. Construction tendering and implementation for first tranche of roads rehabilitation sub- projects identified in Year 1. No new roads will be constructed in Year 2. 3 Third tranche of roads rehabilitation and new road sub-projects will be identified, and the recommendations and specifications of the BP Manual will be incorporated into engineering designs. Roads sub-projects will be screened for their potential environmental impacts, EAs and mitigation plans will be prepared for roads rehabilitation and new road sub-projects which are expected to have significant negative environmental impacts. Construction tendering and implementation for second tranche of roads rehabilitation and new roads sub-projects identified in Year 2. 4 Fourth tranche of roads rehabilitation and new road sub-projects will be identified, and the recommendations and specifications of the BP Manual will be incorporated into engineering designs. Roads sub-projects will be screened for their potential environmental impacts, EAs and mitigation plans will be prepared for roads rehabilitation and new road sub-projects which are expected to have significant negative environmental impacts. Construction tendering and implementation for third tranche of roads rehabilitation and new roads sub-projects identified in Year 3. 5 Fifth tranche of roads rehabilitation and new road sub-projects will be identified, and the recommendations and specifications of the BP Manual will be incorporated into engineering designs. Roads sub-projects will be screened for their potential environmental impacts, EAs and mitigation plans will be prepared for roads rehabilitation and new road sub-projects which are expected to have significant negative environmental impacts. Construction tendering and implementation for fourth tranche of roads rehabilitation and new roads sub-projects identified in Year 4. 6 Construction tendering and implementation of the final tranche of roads rehabilitation and new roads sub-projects.

All road works will be designed according to standards and specifications to be developed in a Best Practice Manual for Forest Road Design Engineering, Construction and Maintenance (the BP Manual). The BP Manual will therefore comprise one of the main mitigation measures for the minimization of potential impacts of the road works in the FDP.

In addition to preparation of the Best Practice Manual, its use during design, and its use as a contractual obligation of roads construction and rehabilitation sub-contractors, all roads sub- projects (whether new construction or rehabilitation) will be subject to screening for their potential negative environmental and social impacts. Where these are considered serious, an Environmental Assessment will be carried out to develop mitigating steps, and to provide guidance to roads design and engineering in a manner which ensures negative environmental impacts are minimized.

Screening for potential negative environmental impacts

Once new roads sub-projects and roads rehabilitation sub-projects have been redesigned on the basis of the Best Practice Manual, they will be rescreened for their potential environmental impacts. New forest road sub-projects are expected to have a greater potential for negative environmental impacts and will require careful analysis of baseline conditions, a review of siting and design decisions, and the development of mitigation measures to be incorporated in the engineering design. In practice, new roads will very

E NVIRONMENTAL RESOURCES MANAGEMENT 86 MINISTRY OF AGRICULTURE, FOOD AND FORESTS likely require the preparation of individual environmental assessments. Road rehabilitation projects are likely to have fewer impacts since the road footprint already exists.

The environmental screening and assessment process which will be undertaken during implementation of the FDP Forest Roading Sub-Component is based on a screening system developed by Intergroup Engineering and ERM. This was adapted from a preliminary screening system developed by Fortech and the INL. The screen considers environmental and social impacts by reviewing nine elements, which are broken down into 26 sub-elements (see Table 10). The sub-elements are intended to reflect the adequacy (or not) of design/management measures incorporated in the road project design.46 The screening process rates the likely resolution of each potential issue according to the following rating categories:

(+) potential environmental and social issues very well resolved; (x) potential environmental and social issues partially resolved; (-) potential environmental and social issues not resolved; and (NA) not applicable.

The rating for each sub-element considers two factors:

· The significance of the sub-element as a design problem on the basis of the physical, biotic, and social setting for the road project; and · How well does the road design resolve the problem (on the basis of the feasibility study which has been completed).

Table 10: Screening Roads Construction and Rehabilitation Sub-projects for their potential environmental and social impacts Screening Category Element Sub-Element Explanation ENVIRONMENT Slope Stability Unstable Geology Unstable marine, sedimentary clays (marl) with and Erosion high landslide potential in counties of Buzau, (Landscape Cluj, Prahova and Vrancea; roads in this geologic Degradation) material often require geotechnical solutions. Slope > 60° Very steep slopes requiring blasting and associated design, construction, and maintenance measures. Erosion and High versus low potential and corresponding flooding management measures Access to degraded Road allows access to areas damaged from areas for landslides, avalanche, or other events in need of rehabilitation rehabilitation through revegetation, etc. Stream bank Siting of road away from stream banks and/or erosion prevention proper bank armoring measures employed. Nature Habitat Road potentially functions as barrier to wildlife Conservation fragmentation

(46) This method of screening sub-projects is modified from the so-called Environmental Evaluation System (EES) developed by the Battelle Columbus Laboratories (see UN ESCAP, p.22) to establish the scale of possible environmental and social impacts.

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Screening Category Element Sub-Element Explanation New access to Road creates new access to protected areas protected areas/special preserves Proper Road is sited and designed to avoid or minimize environmental physical and biological impacts planning/siting of road Aquatic Access to existing Road allows access to hydraulic structures such Resources hydraulic control as irrigation collector channels, small structures impoundments, etc. Water quality Road incorporates measures to minimize impacts on water quality (e.g., stream buffers, sediment traps) Air Quality Minimizes air Road is designed to allow more efficient travel emissions by (e.g., sufficient width or vehicle passing points, optimizing grade and surface permit efficient speed of transport travel). efficiencies Occupational Design of safe Road is designed in a manner to reduce risk of Health and roads accidents Safety Forest Access for forest Road provides adequate access for sanitary Management management purposes, clearing of fallen trees, and disease prevention Traffic capacity Road is scaled to meet expected loads from harvesting, extraction, and local communities Recreation Landscape and Clearance of trees, earthworks, blasting and aesthetic qualities other disturbances to vistas Fishing and Negative effects due to disturbance and water hunting, quality impacts SOCIAL Relocation or Construction and Road bed re-location or widening, staging areas other land take maintenance of for vehicles, equipment, and materials, road impacts roads blockages (temporary and Residences Road bed re-location or widening, staging areas permanent) for vehicles, equipment, and materials, road blockages Businesses Road bed re-location or widening, staging areas for vehicles, equipment, and materials, road blockages Alterations of Riparian zones are used for many purposes; road existing conditions works have potential to interfere with usage in riparian zones given riparian location. Other impacts Communities will Traffic, noise, nuisance and other direct and on Local be affected indirect impacts associated with road Community construction and future forestry operations on the road; also the positive impacts of improved access to NTFPs* and wood. Communities have Re the project and above impacts been consulted Approval of local Re the project and above impacts community Forest access Will the road construction result in a hiatus in continuity usage by the local communities preventing access to NTFPs and wood supplies? Notes: NTFPs are non-timber forest products such as mushrooms, honey, nuts, and medicinal or other plants.

Testing the screening method

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In order to test and evaluate the practicality of using this screening method, Intergroup Engineering carried out a screening of 62 of the 65 forest roads rehabilitation sub-projects which had been initially proposed for project investment. Appendix 10: Results from Preliminary Screening of Roads Rehabilitation Sub-projects for their Environmental and Social Impacts provides the full results of the screening exercise. While new roads sub-projects which are to be constructed by the project will be screened during project implementation, the test screening procedures did not incorporate these in this initial analysis because of the assumption that these would all require environmental assessments in any event.

Intergroup relied on sub-element responses supplied by NFA’s district offices but which were collected and compiled by INL staff in Brasov. This was done for expediency during the preparation of the original EA. Given that the NFA district offices have identified the need for the road projects in each case, and therefore have a vested interest in their approval, there is the likelihood that the responses are biased (i.e., a tendency to discount or underestimate potential environmental and social issues which may arise from a road project and/or to overestimate the adequacy of the project design to manage and mitigate the impacts). During project implementation a more neutral and objective institution will carry out the screening process to reduce bias.

Preliminary screening results were examined in two ways:

· By (x) or (-) sub-element score frequency across the 62 FDP road rehabilitation projects subjected to the screen; and · A summary of the scores by the roads.

Sub-element scoring frequency is presented in Table 11 below, but the results should be interpreted with caution, as they are based on the opinions of NFA district staff collected through telephone interviews; and because there was no independent examination of feasibility studies nor field verification. Clearly, these results are indicative and are only preliminary and are not adequate for full and transparent decision making in the environmental screening process, which will be undertaken during project preparation.

According to this screening process, feasibility studies for roads sub-projects fail most frequently to account for potential water quality impacts (in particular stream bank erosion), do not consider mitigating measures for the construction of roads on slopes of greater than 60 percent, do not consider the impacts of roads on landscape and aesthetics, and give poor attention to issues related to relocation and other negative effects on businesses.

Given the mountainous terrain and the location of the majority of the roads in narrow, valley floors adjacent to streams, water quality impacts are to be expected greatest when reconstructing gravel roads. Given variations in terrain, slope, soils and other constraints, potential water quality impacts are likely to greater for some roads than others. The potential impacts on businesses refer to the temporary closure of the roads which is required for the rehabilitation works in a number of the projects. In some cases this will impact harvesting of non-timber forest products (NTFPs) and in others it will affect general commerce when the forest road is used for travel between villages.

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Table 11: Results from testing the screening method planned for FDP forest road rehabilitation sub-projects, key issues in road feasibility studies Number of sub-projects where environmental/ Number of sub-projects social issues are where environmental/ partially, but not fully social issues are not addressed by feasibility addressed by feasibility studies (frequency based studies (frequency based Sub-element Issue on 62 roads in sample) on 62 roads) Water Quality 34 (52 percent) Slope > 60° 11 (17 percent) 18 (27 percent) Open space and visual 17 (26 percent) quality Relocation and other negative effects – 15 (23 percent) construction Increased access to 9 (14 percent) protected areas Erosion of stream banks 9 (14 percent) Difficult Geology 7 (11 percent) Relocation and other 7 (11 percent) negative effects – business Altering riparian zones 5 (8 percent) Conservation of major 4 (6 percent) undeveloped areas Erosion and flooding 3 (5 percent) Local community affected 3 (5 percent) Local community 1 (2 percent) consulted Local community 1 (2 percent) approval

The scoring results of the individual road projects are presented in the far right column of the spreadsheet in Appendix 10: Results from Preliminary Screening of Roads Rehabilitation Sub- projects for their Environmental and Social Impacts and are summarized in Table 12 below. One of the most significant results of the analysis presented in the table is that there were only 2 roads rehabilitation sub-projects where environmental or social issues were thought to be nil.

Table 12 : Results from initial environmental and social screening of proposed roads rehabilitation sub-projects Number of roads Scoring rehabilitation Outcomes sub-projects (x), (-), or receiving combination score Road reference(see Note) 1x 10 4, 5, 9, 12, 14, 21, 53, 54, 55, 77 2x 15 3, 7, 13, 17, 18, 29, 32, 45, 52, 61, 71, 73, 79, 81, 90 3x 5 41, 43, 80, 86, 91 4x 6 28, 40, 42, 68, 69, 78 0 2 20, 22

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Number of roads Scoring rehabilitation Outcomes sub-projects (x), (-), or receiving combination score Road reference(see Note) 1- 4 23, 34, 57, 58 2- 1 56 1x and 1- 5 46, 48, 50, 72, 88 1x and 2- 1 51 2x and 1- 4 15, 16, 47, 74 2x and 2- 1 30 3x and 1- 4 33, 44, 70, 87 4x and 1- 1 27 5x and 1- 2 31, 39 5x and 2- 1 26 Total 62 Note: see Appendix 10: Results from Preliminary Screening of Roads Rehabilitation Sub-projects for their Environmental and Social Impacts for detailed results and names and locations of roads

In interpreting these results, one can conclude that sub-projects with a higher number of unresolved or partially resolved environmental or social issues are likely to pose more significant problems during implementation.

Following the completion of this initial screen, maps were prepared showing the planned location of all 91 initially-proposed roads construction and rehabilitation sub-projects and their relationship to protected areas. Sub-projects which were proposed which either passed through a protected area or through a buffer zone which could have increased access to protected areas were at this stage excluded from the project because of the possibility that logging in protected areas would be an outcome. Of the initial list of 91 sub-projects, 20 sub- projects were rejected on these grounds. These roads accounted for around 90 km of the initial list of roads proposed for rehabilitation (or 18 percent of the 500 km of roads initially identified for rehabilitation), and around 25 km of the initial list of roads proposed for construction (or around a third of the 80 km of roads initially identified for new construction). Additional sub-projects will be identified during the course of project implementation which will account for the balance of road works financed by the project.

Using the screening results to determine when EAs will be prepared

One of the purposes of this proposed screening system is to establish when an environmental assessment should be carried out of a proposed roads sub-project. In these circumstances, an EA would thoroughly evaluate potential issues and would make recommendations for alternative designs and/or mitigation measures which would avoid, minimize and/or mitigate negative environmental or social impacts. In extreme cases the EA might recommend that sub-projects be dropped.

The standard practice in making this determination is to establish thresholds which would be applied to the outcome of the screening process. In reviewing the outcomes from the tested screening approach, the following thresholds have been established which would be used for determining when environmental assessments of sub-projects would be carried out:

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· Score of 4 or more (x)s; · Score of 2 or more (-)s; or · A combined score of 4 or more of the two (e.g., 3x and 1-, 4x and 1-, 5x and 1-, and 2x and2 -).

If this procedure is applied to the roads screened in this trial exercise, and if the roads sub- projects which pass through protected areas or buffer zones are dropped, there would be a requirement for 11 Environmental Assessments for road rehabilitation sub-road projects. In all likelihood, once they were screened, all of the 18 new road sub-projects identified in the initial list of roads sub-projects would also require Environmental Assessments, bringing the total number of sub-project specific EAs likely to be undertaken in conjunction with the project to 29. [It must be kept in mind that all roads sub-projects will be rescreened once they have been designed on the basis of standards described in the Best Practice Manual. Rescreening at this stage will likely reduce the number of sub-projects which will require an EA.]

An additional cumulative impact screening process will be carried out to identify instances when two or more road projects occur in a single river basin or catchment of 1000 ha or smaller. This analysis should be carried out early in Year 1 by mapping the roads county by county at a sufficient scale to identify these situations. Special attention should be devoted to such cases to minimize cumulative impacts. Options for management would include phasing the implementation of the road projects to avoid simultaneous construction impacts or, where this is difficult or undesirable for economic or other reasons, requiring EAs for these road projects regardless of the individual scores resulting from the screening process.

Preparing sub-project specific EAs

In order further to test the screening process, and as well as provide indicative EAs of FDP forest roads for future reference, two EAs of possible FDP forest road rehabilitation sub- projects were commissioned as part of the overall original EA of the FDP by Intergroup Engineering. The subject roads were Valea Mare Crizbav in Forest District Sacele, Brasov County and Paltinoasa in Forest District Campina, Prahova County.

These two roads were chosen to illustrate possible approaches toward environmental and social impact assessment. The Valea Mare Crizbav project is a relatively straightforward rehabilitation project which involves no significant issues (screening system score = 2x). Paltinoasa is located in the area of difficult geology (marl) where a high water table and landsliding potential require more complex road design and construction methods (screening system score 4x and 1-).

These two EAs were prepared in accordance with prevailing practices in Romania. The two EAs were prepared before the environmental and social impact screening and assessment process was fully developed, but still clearly demonstrate that the capacity to produce adequate EAs of forest road sub-projects exists in the private sector in Romania. It should be noted that both sub-projects were designed and developed using prevailing national standards. They will be re-designed on the basis of the Best Practice Guidelines, and

E NVIRONMENTAL RESOURCES MANAGEMENT 92 MINISTRY OF AGRICULTURE, FOOD AND FORESTS rescreened for potential environmental impacts on the basis of this redesign. The two indicative EAs for these roads sub-projects are included in Volume II (Annex 3) of this report.

The preparation of a large number of EAs during project implementation is potentially a substantial burden, both in terms of cost and time, particularly for roads rehabilitation. In some respects, it is an unreasonably high standard, exceeding the standards described in Romania’s own environmental legislation, as well as standards established in EC Directive 85/337/EEC on Environmental Impact Assessment as amended by 97/11/EEC, which exempts the forestry sector from mandatory EA requirements, and which allows member states to establish their own thresholds with respect to when EAs would be required for the construction of new roads (making no mention whatsoever of requiring EAs for roads rehabilitation). Romanian legislation currently establishes no thresholds for roads construction or rehabilitation whatsoever.

Guidance about the scale and coverage of EAs is provided by the World Bank’s Operational Policy 4.01 Environmental Assessment which states firstly that,

‘EA is a process whose breadth, depth, and type of analysis depend on the nature, scale, and potential environmental impact of the proposed project.’ (emphasis added)

In light of this, EAs for forest roads should be focused on very clearly meeting the in tent of OP 4.01 (which, compared with national requirements is the higher standard) to provide sub-project EAs of breadth, depth, and type which reflects the nature, scale, and potential environmental impact of the proposed sub-project. This intent can be met by focusing critically on the immediate scope of individual roads sub-projects, the main purpose being objectively to review the proposed road project design in light of specific field conditions and the potential and significant negative environmental and social impacts which may result.

Once sub-projects have been rescreened for their potential environmental and social impacts, sub-project specific EAs will be largely based on detailed field reconnaissance visits to the site or corridor of the road: both without and with the road design engineer. Specific problem areas should be identified in the field and studied. The main output of the EA should be recommendations to avoid, minimize and mitigate potential impacts, during both construction and operation. A suggested outline for sub-project specific EAs follows:

(h) Summary, which discusses significant findings and recommended actions.

(i) Policy, legal, and administrative framework. Discusses the policy, legal, and administrative framework within which the EA is carried out. Explains the environmental requirements of any cofinanciers. Identifies relevant international

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environmental agreements to which the country is a party. It is unlikely that this section will change significantly from sub-project to sub-project.

(j) Sub-project description which describes the proposed project and its geographic, ecological, social, and temporal context. Indicates the need for any resettlement or relocation. Includes a map showing the project site and the project's area of influence.

(k) Baseline data. Assesses the dimensions of the sub-project area and describes relevant physical, biological, and socioeconomic conditions. Particularly referring to the current Forest Management Plan, takes into account current and proposed forest management activities.

(l) Environmental and social impacts. Predicts and assesses the project's likely positive and negative impacts, in quantitative terms to the extent possible. Identifies mitigation measures and any residual negative impacts that cannot be mitigated.

(m) Analysis of alternatives. Systematically compares feasible alternatives, taking account of guidance in the Best Practice Manual, in terms of their potential environmental impacts; the feasibility of mitigating these impacts; their capital and recurrent costs; suitability under local conditions; and their institutional, training, and monitoring requirements.

(n) Environmental management plan (EMP). Covers mitigation measures and monitoring and cross-references these to the Best Practice Manual.

Once the draft EA is completed, it will be made locally available for consultation and review for a period of 60 days, and notice of its availability will be published in a nationally circulated magazine. Written comments on the EA will be solicited in this review process, and if needed, public consultations will be carried out. Written comments will be considered in preparing road sub-projects designs.

It should be noted that all FDP road projects will sited and designed incorporating the guidelines, specifications and standards which will be included in the forest roading Best Practice Manual which is to be developed by an international consultant during the first year of FDP implementation. This redesign will assist in reducing the number and significance of the potential impacts.

Summary: Procedures for Environmental and Social Impact Screening and Assessment

The procedures for environmental and social impact screening and assessment are as follows:

1. The Best Practice Manual will be completed in the first project year. The Best Practice Manual should be made widely available for public information. The Best Practice Manual will also include guidance with respect to environmental and social screening and assessment. 2. A cumulative impacts screen will be carried out in the first project year to identify instances when two or more road projects occur in a single river basin or catchment of 1000 ha or smaller, or where roads interfere with habitats of concern. Options for

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management would include phasing the implementation of the road projects to avoid simultaneous construction impacts or, where this is difficult or undesirable for economic or other reasons, requiring EAs for these road projects regardless of the individual scores resulting from the screening process. 3. Five tranches of roads construction and rehabilitation sub-projects are envisaged during the life of the project. Roads proposed for inclusion in each tranche will be listed by public notice annually in every project year. 4. Roads sub-projects will be designed on the basis of the construction methods outlined in the Best Practice Manual. 5. Once sub-project design is complete according to the standards outlined in the Best Practice Manual, sub-projects will be screened for their potential environmental and social impacts, following the procedures and screening approach outlined in this report and incorporating any additional measures outlined in the Best Practice Manual. The screening process will involve an intensive review of the road sub- project design (i.e., Feasibility Study, as well as consultation with the local NFA district office and the design engineers). Screening will be carried out by the Roads Engineer with the PCT working closely with qualified personnel with the Forest Inspectorates, and will include site visits. 6. Road sub-projects will be scored for their potential negative environmental and social impact, as described in this report, and scores falling above the threshold will be used to determine which road sub-projects require an EA. Other roads sub-projects would not require an EA. 7. It is anticipated that, as a result of the screening process, all new roads will be subject to an EA. 8. The EA will be carried out by a qualified independent local consultant who will adhere to the outline and disclosure practices outlined in this report. The EA will identify mitigating steps not already accounted for in roads design, and will consider other options such as re-siting, alternative routings, and dropping the sub-project altogether if adequate mitigating measures cannot be undertaken. The quality of the EA, and the standards adopted, will be reviewed by the staff with the FI and with the PCT.

Institutions with responsibility for implementing environmental and social impacts screening and assessment

There are serious capacity constraints for carrying out environmental and social impacts screening and assessment. It is envisaged in the short term that the project will employ a Forest Roads Specialist as part of the Project Coordination Team. The Terms of Reference for this position are in preparation. The Roads Specialist should have a good understanding of forest roads, forest road best practice, design, and operation, with experience and background in environmental assessment and mitigation. The Road Specialist will have some responsibility for commissioning and managing road sub-project EAs, as well as the review and implementation of EA recommendations. The Road Specialist will also be involved in tendering for and supervision of road construction and rehabilitation projects to ensure that:

· design and construction management specifications of the Best Practice Manual are requirements of the construction contract and that these standards and requirements are clear to the winning bidder; and · standards are understood by the agencies charged with supervising construction and are enforced.

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Sub-project specific EAs will be contracted through competitive tendering procedures consistent with World Bank Guidelines. Conflict of interest provisions specified in these guidelines will of course be adhered to.

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Table 13: Impacts, Mitigation and Management Actions for FDP Components

Impact +ve Magnitude Component Receptor Potential Impacts /-ve of Impact Mitigation/Enhancement/Management 1: Establish Systems to Ensure Sustainable Management of Private Forest Lands 1.a Forest Environment/ · Promote environmentally sustainable management + H · training and capacity building Inspectorate: Institutional of public and private forests · extension and awareness raising of public (comp. 3) Supervisory, · operational guidelines for environmental management Regulatory and Environment · Control loss of biodiversity in newly restituted + H · power to regulate and enforce FMPs on restituted land Advisory forests · promotion of environmentally sustainable management practices Capacity (extension) · public awareness raising (comp. 3) · policing forest activities in the field Environment/ · Decrease damage to vulnerable watersheds, + M · power to regulate and enforce FMPs on restituted land Economic infrastructure and agricultural land associated with · promotion of environmentally sustainable management practices unsustainable harvesting and erosion (extension) · public awareness raising (comp. 3) · policing forest activities in the field · diagnostic of corruption and governance in the forest sector to define steps to reduce impact. Environment · Control of illegal harvesting increases and systems + M · public awareness raising (comp. 3) are in place to handle problems of governance and · visible presence of FIs in forest areas corruption · collaborative relationship of FI with local communities/private business Social · Hostility to FI from local communities/forest users - L · consultation and engagement with local communities/forest users to secure buy-in and mutual understanding of needs. Economic · Increased revenue and tax from maximizing + M · clear and transparent tax and revenue collection system Romania’s sustainable forest production potential · incentives to promote investment into modern and less environmentally damaging harvesting and transport equipment · public awareness raising on tax system Economic · Preserving and enhancing Romania’s eco-tourism + M · public awareness on long-term international economic and biodiversity potential importance of Romania’s forests

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Impacts, Mitigation and Management Actions for FDP Components Impact +ve Magnitude Component Receptor Potential Impacts /-ve of Impact Mitigation/Enhancement/Management 1b,c. Support to Environment · Promote environmentally sustainable exploitation + H · advice and support on FSC certification the Association of / Economic of forest (with resultant long-term economic · training facilities and programs on sustainable forest Private Forest returns) management Owners and the · policing forest activities in the field (by FIs - comp. 1.1) local forest · operational role of FI clearly communicated owners · provide guidelines on tools, methods and benefits of sustainable forest · raise awareness (comp. 3) Social · Restrictions on access to forest land for excluded - L · training and awareness raising communities · consultation with local forest users · FMP’s to take account of local forest uses Economic · Increased opportunities for local employment and + H · training and awareness raising local income generation · advice on investment options (comp. 2.4) Economic · Induced private development for wood processing +/- H · business advice and support (comp. 2.4) industries Institutional/ · Empowerment of local people through ownership + M · training facilities and programs on sustainable forest Economic/ of forest resource management Social · policing forest activities in the field (by FIs - comp. 1.1) · business advice and support (comp. 2.4) 1.d. Forest Environment · Avoidance of cumulative environmental impacts of + H · strategic focus of management planning at watershed/ Management & Institutional forest production activities (e.g. erosion, catchment level Information and biodiversity loss, sedimentation, transportation, · strategic planning to take account of cumulative environmental Monitoring industrial pollution from process industries) impacts System · use of GIS to facilitate improved strategic planning · training and capacity building on identification and avoidance of cumulative environmental impacts · maximize access to, and enforcement of, strategic management plans

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Impacts, Mitigation and Management Actions for FDP Components Impact +ve Magnitude Component Receptor Potential Impacts /-ve of Impact Mitigation/Enhancement/Management Environment · Establishment of effective monitoring systems for + H · training and capacity building on environmental impacts of & Institutional forest management and planning forest operations · collection and tracking of data on environmental impacts of forest activities (species diversity, forest cover, recreation, erosion, sedimentation, transport volumes and industrial pollution from wood processing (air, water, soil and noise)). · establish mechanisms to respond to identification of negative impacts · maximize access to and report monitoring results 2. Mitigate Consequences of Restitution on Management of State Forest Lands 2.a. Reform and Environment/ · More effective management and administration of + H · training of NFA staff on environmentally sustainable forest Strategic Institutional sustainable forestry management Development of · dedicated Environment function within NFA the NFA · structural change to organization Economic · Reduced revenue potential from forest production - H · training and capacity building in sustainable forest management resulting from restitution (leading to potential · change management disincentives to manage forests sustainably) · implementation of NFPS · implementation of guidelines to promote sustainable forest management Economic · Promote sustainable management of private sector + H · training and capacity building forest businesses · business development advice and support services (component 2.4) 2.b.Rehabilitation Environment/ · Introduction of best practice in road siting, design, + H · training and capacity building (comp. 1.1) and Construction Institutional construction and maintenance · implement procedure to formalize use of Best Practice Manual of Forest Roads · implement screening and EA procedures (see Part II) Environment · Reduce environmental impacts of existing + H · implement Best Practice Manual production practices (e.g. associated with the need · implement screening and EA procedures (see Part II) to skid logs long distances) Environment · Increased illegal harvesting of wood and NTFPs - M · empower Forest Inspectorates to patrol forests and prosecute resulting from increased access (comp. 1.1) · public awareness raising (comp. 3)

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Impacts, Mitigation and Management Actions for FDP Components Impact +ve Magnitude Component Receptor Potential Impacts /-ve of Impact Mitigation/Enhancement/Management Environment · Increased pressure on forest biodiversity resulting - M · develop and implement a hunting license and quota system from increased access and tourism (e.g. hunting) (component 1.1) · charge for hunting rights (comp. 1.1) Environment · Induced development along access roads - L · implement screening and EA procedures (see Part II) · enforcement of local planning controls (outside remit of FDP) Environment · Sedimentation of streams (resulting in changes in - L · assessment of cumulative impacts of forest roads (comp. 1.2) streamflow and water temperature and thereby fish · implement Best Practice Manual for construction and populations) maintenance · implement screening and EA procedures (see Part II) Environment · Disturbance of wildlife through logging and - L · assessment of cumulative impacts of forest roads (comp. 1.2) transport activities · promotion of environmentally sustainable management practices (comp. 1.1, 3) · implement Best Practice Manual · implement screening and EA procedures (see Part II) Environment · Increased erosion resulting from poor siting and - H · assessment of cumulative impacts of forest roads (comp. 1.2) construction of forest roads · implement Best Practice Manual · implement screening and EA procedures (see Part II) · avoidance of unstable slopes, buffer zones, impact assessments, permitting, construction practices. · establish criteria for logging on slopes and near water to reduce erosion Environment · Increased soil compaction, puddling and erosion - L · policing implementation of FMPs (comp.1.1) from road activities and forest harvesting (leading · promotion of environmentally sustainable management practices to siltation of water courses) (comp. 1.1, 3) · implement Best Practice Manual

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Impacts, Mitigation and Management Actions for FDP Components Impact +ve Magnitude Component Receptor Potential Impacts /-ve of Impact Mitigation/Enhancement/Management Environment · Increased noise, disturbance and accidents from - M · assessment of cumulative impacts of forest roads (comp. 1.2) forestry traffic on village roads/public roads · strategic management plans to take account of potential transport conflicts (comp. 1.2) · FMPs to include transport plans to prevent impacts on local roads (comp. 1.1) · contractual conditions for harvesting transport contractors (comp. 1.1) · consultation with affected people to identify any concerns (comp. 3) Economic · Increased accessibility to forests and markets for + H · awareness raising of marketing opportunities (comp. 3) forest products (including NTFPs) (contributing to · develop links with other extension services (e.g. SAPARD) increased employment and revenue potential) (comp. 2.4) · evaluate local use of forest products to accommodate continued use and determine feasibility of developing local industries based on these goods (comp. 2.4) 3. Establishment of a Forest Sector Business Information Center Environment · Increase in pollution (air, soil, water) resulting from - M · promote use of clean technology processes and techniques unsustainable production processes and lack of · support upgrade of old, inefficient and polluting equipment controls on waste effluents from wood process · training on clean technology processes, environmental pollution, industries waste minimization, environmental management systems etc. · encourage development and uptake of environmental management systems Economic · Inability of private sector to access sufficient - H · advice and support on investment finance and business investment capital to finance business development management · develop links with other investment sources (e.g. SAPARD) Economic · Economic and employment benefits of establishing + H · advice and support on investment finance and business value-added industries management · develop links with other investment sources (e.g. SAPARD)

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Impacts, Mitigation and Management Actions for FDP Components Impact +ve Magnitude Component Receptor Potential Impacts /-ve of Impact Mitigation/Enhancement/Management 4. Build Public Support for Sustainable Forest Management Environment · Increased understanding and implementation of + H · sound understanding of needs, desires, expectations and sustainable forest management capabilities of public about sustainable forestry and their expectation of the forest as a resource · use of tools and techniques appropriate to socio-cultural structures Social/ · Increased acceptance of local people to government + H · early engagement of DoF, FIs and NFA with public/private Institutional departments sector · publicity of policies (esp. restitution), plans and timetables for action · easy access to forest management and information · raise profile (including roles and responsibilities) of forest authorities 4. Project Management Environment/ · Incidence of negative environmental impacts as a - H · monitoring role to ensure maximum implementation of Social/ result of lack of understanding and/or sustainable forest practices by forest authorities Economic/ commitment to environmental sustainability · support environmental training and capacity building of forest Institutional authorities · support change management of forest authorities · promote leadership and ownership of FDP by forest authorities to maximize long-term sustainability · develop corrective action procedures if negative impacts of FDP identified

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5.4 S INCREASED PRODUCTIVITY AND COMPETITIVENESS OF FOREST INDUSTRIES (COMPONENT 3)

5.4.1. Likely Environmental Impacts

Whilst the individual impact of one new wood processing industry on the environment may be relatively small, its impacts could be more significant cumulatively (over a wider area such as along a water course or within a restricted valley) and/or over time (e.g. if persistent contamination occurs).

5.4.2. Mitigation Measures

These impacts will be avoided and/or considerably reduced through measures incorporated into the execution of this component. Specifically,

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· support will not be provided to businesses which are unable to demonstrate that adequate safeguards have been put in place to avoid or minimize possible environmental impacts; · activities proposed for ForsBIC support will be screened by the PCT to determine their potential impact on the environment and where necessary further assessment undertaken before support is approved. Screening criteria are outlined in Appendix 8: Suggested Screening For Wood Processing Industries; · the PCT or suitably qualified expert should review any environmental assessments undertaken for a business and ensure that all mitigation and safeguard measures are undertaken by the appropriate authority (e.g. as a contract commitment by the beneficiary if appropriate); · project monitoring includes an examination of any potential environmental impacts.

5.5 BUILDING PUBLIC SUPPORT FOR SUSTAINABLE FOREST MANAGEMENT (COMPONENT 4)

5.5.1. Likely Environmental Impacts

The objective of this component is to increase national awareness of the importance of sustainable forest management. The approach taken is expected to have fundamentally quite positive environmental impacts, hopefully reducing the extent to which private and state forests are poorly managed. Performance monitoring of this component will depend on the stakeholder assessments which are to be carried out during implementation.

There are no negative environmental or social impacts envisaged.

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5.5.2. Mitigation Measures

No mitigation measures are envisaged because no negative impacts are likely.

The program will also ensure a sound understanding of needs, desires, expectations and capabilities of public about sustainable forestry and their expectations of the forest as a resource in developing the public awareness program. It will use tools and techniques appropriate to socio-cultural structures and circumstances and will ensure early involvement and engagement of forest authorities with the public

5.6 PROJECT MANAGEMENT AND MONITORING (COMPONENT 5)

Project management will be undertaken by the Project Coordination Team (PCT), which has already established by MAFF under the Biodiversity Conservation and Management Project. In addition to the existing staff, the FDP will finance a roads specialist and a PA consultant to assist with procurement, management and supervision of the road and public awareness components throughout the entire period of FDP implementation.

5.6.1. Likely Environmental Impacts

5.6.2. Mitigation Measures

No mitigation measures are envisaged because no negative impacts are likely.

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5.7 LIKELY SOCIAL IMPACTS OF PROJECT INVESTMENTS

5.7.1. Income and Employment

The sustainable management of Romania’s forests has a significant social dimension. Development of the sector is expected to result in creation of employment opportunities. The Roads component will generate local employment opportunities, but in the long-term, the ongoing land restitution process is expected to affect hundreds of thousand households and will provide new opportunities and responsibilities for this stakeholder group. The ability of the private sector to maximize the economic and employment opportunities afforded by the restitution process is however constrained by a number of factors, specifically:

· the ability to obtain financial loans for capital investments (e.g. for machinery or to develop forest processing industries). The private sector currently lacks the collateral to secure loans making investment in the sector very difficult; and · knowledge and expertise in sustainable forest management, processing and other secondary industries and business management to maximize sustainable income from sector activities.

The FDP has been designed directly to address the lack of knowledge and expertise through its support to forest owners associations (Sub-components 1b, 1c) and through ForSBIC (Component 3). In addition, various instruments are already in place (viz. the World Bank’s $80 million Rural Finance Project) which should help to ease this constraint, and ForsBIC will work with investors to link their interests with those of particular financing instruments. Other donor programs such as the EU’s SAPARD program, are also expected to assist in providing capital to support private entrepreneurs develop forest sector industries. The concern still remains however that SAPARD support is reliant upon obtaining 25 percent match funding from other sources. The ForSBIC sub-component of the FDP will assist investors in identifying and securing matching funds and SAPARD assistance.

Conversely however, reorganization of the NFA (which is already underway) as part of forest sector reforms will result in downsizing and loss of employment. Excess staff will however most likely be transferred to the Forest Inspectorate and to private sector employment.

5.7.2. Access to Resources

A potential impact of restitution is that existing informal rights of local people to enter the forest areas and collect resources such as firewood and NTFPs may be constrained if private owners restrict traditional access. Consultation and public awareness raising during the restitution process will be an important mitigating factor here in addition to the role the FDP’s sub-components 1b, 1c could play in ensuring access rights are ma intained and collaboratively managed.

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5.7.3. Additional Social Issues

A social assessment was commissioned by the PPT based on field visits to forest areas and consultation with forest stakeholders and users. It considers the impacts which planned activities in the forest sector as a whole may have on the social fabric of forest communities. As a result, the key issues of concern and the Social Assessment’s recommendations relate directly to the restitution process (rather than to the FDP) as follows:

· differences in land values between areas under protection (e.g. protected forest) and adjacent production forests and unfair distribution of values on restitution. Recommends: on restitution, swapping protected plots with those outside the protected forest areas; · delays in the forest restitution means rightful owners are unable to benefit from their resource compounded by the belief that as restitution approaches, the NFA could maximize their gains by extracting as much timber as possible before hand-over. Recommends: A timetable for restitution should be prepared without further delay and presented to affected parties showing clearly the actions and responsibilities which must be undertaken prior to restitution; · at present, the ability of private individuals and companies to get investment capital is still severely restricted. There is a belief that on restitution, restituted land could be used as collateral for industrial investment (in forest product and agricultural processing for example). Recommends: structures need to be developed to enable private owners to obtain sufficient investment capital. The FDP could support private owners in finding and accessing appropriate loan options including EU SAPARD funds; · local people currently feel alienated from the decision-making processes regarding restitution and management of forest lands. This has resulted in a feeling of distrust towards the authorities and diminishing confidence that restitution will be undertaken in a fair and collaborative manner. Recommends: Restitution must be preceded by an open and transparent process of consultation between MAFF, NFA and local authorities and local people and businesses in affected areas. The Public Awareness component of the FDP (Component 4) could also play a role in raising awareness and developing ownership for the restitution process.

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6. PROJECT ALTERNATIVES

The following section examines the alternatives to the FDP which were considered and the reasons why they were rejected during the process of project preparation. The information is largely derived from the records of consultations during the National Forest Policy and Strategy Process, the draft Project Appraisal Document (Spring 2001), and its revisions, and discussions with the MAFF.

6.1 THE PROJECT IDENTIFICATION PROCESS AND THE NFPS PROCESS

Given the changes proposed in the structure of the forest sector as a result of the transition from a centrally planned to a free market economy, a number of options for the project were considered during project preparation.

The concept of the FDP was developed through an inclusive and participatory process in Romania. During the preparation of the National Forest Policy and Strategy Process, representatives of major stakeholders in the forestry sector participated in a series of facilitated workshops. This process built consensus among stakeholders and identified the main issues facing the sector, their underlying causes, the desired changes and finally the necessary interventions to achieve the objectives identified.

A vision statement, strategy and rationale for reform of the forestry sector was then developed by senior policy and technical experts within the former MAFF and representatives of the major stakeholders through a number of participatory workshops.

Government facilitated an open, transparent and participatory process which led to preparation of the National Forestry Policy and Strategy (NFPS) over a ten-month period commencing in early 2000, which was approved by the Government in 2001. The strategic choices for the development of the forest sector in Romania were made during the NFPS process. The FDP is designed to support these strategic choices and its overall aim is to maintain and improve environmentally sustainable management of state and private forests and to increase their contribution to the national and rural economies.

6.2 STRENGTHENING THE STATUS QUO

During project identification, consideration was given simply to strengthening the status quo. This was rejected because: (a) it would put at risk the sustainable management of over 2 million ha of restituted forests and would lead to over exploitation, loss of habitat, oversupply of timber with a reduction in price, high quality timber going to low value use and significant damage to the environment including possibly protected areas; (b) decrease any chance for Romanian timber to be certified and gain access to high value export markets; (c) do nothing to address the policy and sector reform issues identified.

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6.3 OPTIONS FOR DEVELOPING THE FOREST ROAD NETWORK

Project identification considered three alternatives with respect to the development of the forest road network: (a) no roading; (b) major roading, based on FAO recommendations for upgrading 1,000 km of existing road and the construction of 1,500 km of new roads; and (c) pilot infrastructure development aimed at identifying best practices and improving efficiency in construction. Various derivatives of each of these options were also considered, primarily in terms of the extent to which institutional investments would be made. A range of alternatives were further explored and analyzed during project preparation.

The ‘no roading’ alternative would have meant that only limited public resources would be available for roads rehabilitation and construction, and that additional expertise to prepare and introduce environmentally sound roading practices would not be tapped. The development of a model of production under these circumstances would be highly problematic, as it would have to incorporate international prices for roundwood, increasing extraction costs, a reduction in silvicultural operations over time (because of inaccessibility), as well as the higher (and non-costed) environmental costs of increasingly damaging extraction methods and the soil erosion and siltation which would result. Policy variables would also have to be incorporated into the model, to account for the impact of roads on the delivery of rural services (where forest roads perform this function), as well as to take account of the extent of the process of restitution.

The ‘full roading’ option was also considered, but the costs of this approach would have far exceeded the resources available both from Government and from the World Bank. In addition, heavy investments in roading would have been pointless in the absence of substantive institutional investments, which are widely viewed to be critical for the sector to be placed on to a sound footing.

At the sectoral level, this type of analysis is only cursory. Clearly, project investments by themselves will not prevent overall losses in production. Likely outcomes will involve the mobilization of other resources, and other policy variables and influences. One can only speculate about these. Evaluating any roads option should consider the wider range of actions and variables which are likely to take place in the sector. The economic analysis for the project, reported on more fully elsewhere,47 made an effort to do this. This report incorporates these findings in the following sections.

Evaluating the likely costs and benefits of multiple different approaches is highly problematic largely because no single approach can be considered exogenously from other investment approaches. For example, an investment in roads construction and rehabilitation by itself makes little sense in the absence of other investments in institutional reform (though financial returns – as far as they could be estimated -- would probably be

(47) See Volume II to this Environmental Assessment Update, Annex 2. Initial Economic Analysis of the Forestry Development Project, report prepared by Fortech, Dames & Moore (UK) and Project Management (Ireland) for the Romania Forest Development Project, March 2001.

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quite good). Similarly, investments in institutional reform make little economic sense if the productive capacity of the reformed institution is constrained by a lack of investment in other areas. These choices are really not choices, but speculative outcomes. Underlying all of this is the ‘elephant in the living room’: what happens as a result of restitution? What would happen in the absence of any project investment? These types of questions formed the basis for a more in-depth analysis of the likely impacts of the project in light of what might happen if the status quo were maintained, and provided guidance in evaluating alternative investment options.

6.4 THE ‘WITHOUT PROJECT’ SCENARIO

The most serious comprehensive of project alternatives relates to likely outcomes if the changes supported by the project are not undertaken, i.e. the ‘without project’ scenario which features prominently in the project’s economic analysis. Despite the Romanian Government’s commitment to sustainable forest management, unsustainable exploitation of forests, similar to that which occurred after the last phase of restitution in 1991 is anticipated without the establishment of an effective supervisory and regulatory capacity. Under the ‘without project’ scenario, it is assumed that the Romanian Government is unable to commit sufficient budgetary resources to establish a functioning Forest Inspectorate and existing Government and NGO groups concerned with private forests would remain weak, ineffective, uncoordinated, and isolated.

In the analysis of the ‘without project’ scenario, we consider first, the likely impact of the first and fourth project components, which seek to ‘Establish of Systems to Ensure Sustainable Management of Private Forest Lands’ (Component 1) and to ‘Build Public Support for Sustainable Forest Management’ (Component 4). This analysis is based on comparing the likely outcome of the restitution program with and without the resources the Forestry Development Project will provide to the Department of Forests, the NFA, the new forest owners through local and central forest owners associations, and the public awareness campaign.

As we have indicated, experience with the 1991 restitution program provides guidance about the likely impacts of what would happen without this assistance. In the analysis which follows, where outcomes have been quantifiable, cost benefit analysis has been undertaken. Non quantifiable benefits have been described qualitatively.

6.4.1. Likely impacts of restitution

Impacts of the 1991 restitution program

Box 3 summarizes the impacts of the 1991 restitution which, it is feared, could be repeated if insufficient safeguards are in place. This scenario is completely unacceptable and as a result, the FDP was developed to put in place steps to mitigate the impacts envisaged as a result of restitution.

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Box 3: Impacts of the 1991 restitution of forest lands Romanian rural communities are generally poor. Consequently, the receipt of title to one hectare of forest land stocked with high volume, high quality timber, represents large windfall. For most recipients of forest land, short-term economic concerns, such as the cost of basic living essentials (food, heating, health and education) together with short-term fears concerning the possibility that the State might reclaim land or impose restrictions on its use, prevailed over longer term national goals such as watershed or biodiversity protection. As such, when land title was transferred from the NFA to individuals as part of the 1991-92 restitution program, trees were harvested extremely rapidly as individuals sought to cash-in on the windfall.

In the Damuc Valley, Neamt County for example, less than 3 percent of the restituted forest land remained intact. Forests were seriously over-harvested with significant negative environmental impacts. The Damuc river became heavily loaded with silt resulting from erosion of the denuded slopes, and further polluted with sawdust and machine oils as a result of the practice of using the river bed as a site for milling much of the timber.

In economic terms, the restitution program provided short-term cash injection into communities in the Damuc Valley. A thriving saw-milling industry developed and local people were able to sell many of their saw logs for processing. Wi th no Government controls to enable the level of timber harvested from private lands to be managed, together with access to this easy market and the lifting of export restrictions on wood further exposed restituted forests to rapid exploitation.

While in the short-term this could be viewed as a positive economic impact, in the longer term, an opportunity for sustained income generation has been lost. From a Total Economic Valuation perspective, the program had a significant negative impact on the value of the nation’s asset. For example, reduced game populations represent an economic as well as an environmental and socio-economic loss, whilst the likely future landslides from deforested areas could seriously impact downstream communities. During one week of rainstorms in June 1998 for example, deforestation in upper watersheds caused serious landslides and downstream flooding that resulted in loss of 4,000 km of forest roads throughout Romania.

Perhaps a more disturbing aspect of the changes in the Dumac Valley is the impression of anarchy. NFA staff provide accounts of threats as well as acts of physical violence against them as they have sought to prevent illegal forest clearance. New forest owners care little about the forest code and do not understand how their actions on private lands is any business of the State. Source: World Bank. 1999. Romania Forestry Sector Note: Status, Values and Need for Reform. ECSSD Environmentally and Socially Sustainable Development Working Paper No. 18.

In 1999 the Forest Research and Management Institute (ICAS) undertook a forest inventory of the forest that was restituted during the 1991 program48. This was then compared with the situation prior to restitution for the same areas of forest. The pre-restitution data were obtained from the 1992 forest management plans49. The inventory was extensive and involved measuring over 500 plots in 35 counties.

Under sustainable forest management, over a large area such as this, the average standing volume would be expected to remain more or less constant. Harvested removals are equivalent to, or less than, the net growth of the forest. The annual allowable cut (AAC) is established on the basis of keeping the standing volume of the forest constant or increasing

(48) Institutul De Cercetari Si Amenajarie Silvice (ICAS)., 1999, Studiu Inventariere A Starii Actuale A Paduilor Private, Privind Compozitia, Varsta, Starea Fitosanitara Si Posibilitatile De Recoltare De Masa Lemnoasa. (49) Although the restitution program commenced in 1991, the 1992 management plans would have been based on earlier fieldwork and therefore took no account of the initial restitution.

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over time. If the forest had remained under state management the standing volume, would have either increased or at least remained the same. Indeed, over time the standing volume of state managed forests in Romania has increased. If the forest that had been cleared or over cut in restituted forest had been restocked by either planting or natural regeneration it would not have been classified as cleared in the ICAS survey but as forest in the soc-called ‘first’ age class.

The ICAS survey revealed that the percentage of the forest in the first age class on restituted lands has dropped, demonstrating that the forests are not being re-established. Many cleared areas will, however, have been restocked naturally. It is therefore reasonable to assume that the effect of the forest in the 1991 restitution program is at least the difference between the standing volume in 1992 and that in 1999.

The ICAS inventory data only presented standing volumes and the allowable cut for the 1999 situation and did not calculate similar figures for the 1992 situation. The comparison between before and after restitution scenarios concentrated on other parameters such as species composition, age class distribution, production class, canopy closure, phytosanitary status, etc.

The area of restituted forest by year is presented as Table 14

Table 14: Area of Forest Cover of Forest Restituted in the 1991 Program, by Year Area (ha) by Year 1992 1999 Difference Forested 337 432 325 893 11 539 Cleared 20 10 575 - 10 555 Windthrow 986 - 986 Total 337 452 337 454 - 2 ICAS 1999

Table 14 shows that the forest cover dropped by approximately 11,500 ha or 3.4 percent.

Other statistics (age class distribution, species composition, production class distribution) describing the forest in 1992 and 1999 are presented in Appendix 1 to the economic analysis.

The statistic that seems to have most significantly dropped in the intervening period is canopy closure. Canopy closure class is an estimate of the crown coverage of the total area, (i.e. a score of 0.1 means that tree crowns cover 10 percent of the total area). This is presented as Table 15. This would indicate over cutting by the new forest owners which would significantly reduce the productive capacity of the forest.

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Table 15: Percentage distribution of Canopy Closure in Restituted Forest in 1992 and 1999 Canopy Closure (%) Class 1992 1999 0.1 - 0.2 0.3 - 0.4 1 4 0.5 - 0.6 3 20 0.7 - 0.8 62 62 0.9 - 1.0 34 14 Total 100 100 source: ICAS 1999

At first examination, these figures seem to indicate that the overall effects of the 1992 restitution have been fairly minor. However, this is after a period of seven years has elapsed. In some areas initial clear cutting did occur, but these areas to a large extent have reforested naturally. For example in Dolj county around 8,900 ha was clear felled after 1992, but now the area deforested has reduced to 680 ha. This then shows up in a shift in the age class distribution. At the same time due to less intensive management, the regenerating crop may be patchy (decreased canopy closure) and species composition may be changing from more valuable shade tolerant species such as beech and fir/spruce to less valuable light demanding species such as birch.

To calculate the effects of restitution, it is necessary to see the effect on the standing volume of trees in the restituted forest. This is the productive base of the forest and any reduction can be linked to a reduction in future productive capacity.

If it is assumed that species, age classes and productivity classes are evenly distributed (a fair assumption under the circumstances), then it is possible to derive the percentage distributions by species, age and productivity class for restituted forests from the 1992 management plans (pre-restitution situation) and 1999 (seven to eight years post restitution) and to consolidate the data.

In 1993 ICAS published the average standing volumes per ha of forest and also the average growth rates by species, age class and productivity class. If it is assumed that these averages apply to both 1992 and 1999 then it is possible to estimate the standing volumes in 1992 and 1999 by multiplying these per ha averages by the total forested area in 1992 and 199950 i.e.: æ m3 ö ç ÷ 3 ç ÷ * ha92 = m92 è ha ø92 æ m3 ö ç ÷ 3 ç ÷ * ha99 = m99 ] è ha ø99

(50) This is a reasonable assumption as the averages are applied to both 1992 and 1999 scenarios.

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To ensure comparability between estimates it is considered more appropriate to use this method of estimation for both before and after situations rather than using the ICAS estimation for the 1999 scenario51.

However, canopy closure has not been taken into consideration. Canopy closure is directly and proportionally related to standing volume. For example if a forest has a canopy closure score of 0.5 it will have a standin g volume of 50 percent of a forest with full canopy closure. By taking mid-range values for the canopy closure classes shown in Table 15, the 1999 standing volume can be shown to only be 89 percent of the 1992 volume.

The estimated standing volume in restituted forests in 1992 and 1999 including the difference for canopy closure are presented in Table 16 and Table 17 respectively. By subtracting the 1999 volumes from the 1992 volumes it is possible to show the effect of restitution on the standing volume on the restituted forests.

The estimated reduction in standing volume from 1992 to 1999 comes to just over 9.4 million m3 or the equivalent of just over 28 m3/ha.

Considering pricing data for the standing sale of timber for the period from 15 September 1999 to 30 April 2000,52 and if the mid range date is taken and the Consumer Price Index as published by the Institutul National de Statistica si Studii Economice is applied, the equivalent average price for January 2001 for final fellings is US$ 16.51 /m3 and for thinnings US$ 7.63 /m3. If it is assumed that the timber over 60 years will fetch timber prices and that timber between the ages of 20 and 60 will attain thinning prices then the difference in 1999 and 1992 standing values is just under US$ 107 million.

However this figure is not the economic loss. Timber may have been sold or used by the new private owners and under these circumstances would have had some economic benefit. It is likely that there was some economic loss in this process as valuable timber quality trees may have been cut up for firewood or veneer grade hardwoods used for simple construction. However, as it is not possible to estimate these losses, a precautionary approach has been adopted and they have not been included in the estimates of economic loss. It is also probable that the timber that was sold would have been sold for less than the market value due to the new private owners not having access to the best markets, to sudden localized excess timber supply, and to unscrupulous timber merchants taking advantage of the new owners. In this instance the economic loss of the new owner would be the windfall profit of the timber buyer.

(51) ICAS estimate the total standing volume in 1999 to be just greater than 57 million m³. The method used here estimates the volume to be just under 57 million m³ or 99.6 percent of the ICAS estimate, before the effect of canopy closure is taken into consideration. (52) ASFOR (2000). Bulletin Informativ Nr. 3. These data are averages across all species but are differentiated between final fellings and thinnings.

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Table 16: Derived Standing Volume of Restituted Forests in 1992 (m3 x 103) Site Age Class Species Class 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 101 - 120 121 Total Beech I 24 102 151 131 71 9 487 II 81 686 1 159 1 013 481 67 3 488 III 217 1 794 3 407 2 989 1 428 194 10 029 IV 60 299 535 457 216 30 1 597 V 14 58 100 88 43 6 310 Subtotal 397 2 939 5 352 4 678 2 239 306 0 15 911 Oak I 23 87 134 117 54 7 423 II 106 661 961 884 415 57 3 083 III 262 1 774 2 738 2 452 1 204 171 8 602 IV 53 279 410 366 183 27 1 318 V 13 59 81 70 37 5 265 Subtotal 457 2 859 4 324 3 891 1 894 267 0 13 691 Hb I 23 68 98 83 36 5 312 II 115 553 812 662 300 38 2 480 III 298 1 634 2 394 1 946 881 116 7 268 IV 61 275 392 325 156 20 1 228 V 12 55 82 67 31 4 250 Subtotal 508 2 584 3 777 3 082 1 404 182 0 11 538 Sb I 21 36 50 38 19 2 166 II 134 328 396 328 163 19 1 367 III 231 958 1 152 959 458 52 3 811 IV 42 136 184 181 68 9 620 V 8 24 39 31 14 2 117 Subtotal 436 1 482 1 820 1 537 723 84 0 6 081 Sp I 10 67 97 78 33 4 288 II 43 430 743 592 262 30 2 101 III 106 1 032 1 982 1 679 757 93 5 648 IV 23 139 278 238 111 15 804 V 4 21 43 44 22 3 137 Subtotal 187 1 690 3 142 2 631 1 184 145 0 8 978 Fir I 2 10 17 14 6 1 51 II 8 70 132 114 51 6 381 III 14 176 424 350 153 18 1 135 IV 4 25 52 48 23 3 155 V 2 4 9 9 5 1 30 Subtotal 29 285 635 535 238 29 0 1 751 Con I 5 17 33 24 10 1 91 II 15 100 256 185 81 10 646 III 40 225 538 483 217 26 1 529 IV 5 30 56 59 25 4 179 V 1 5 5 10 4 1 26 Subtotal 66 378 889 761 336 42 0 2 470

2 079 12 216 19 939 17 114 8 017 1 054 0 60 420

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Table 17: Derived Standing Volume of Restituted Forests in 1999 (m3 x 103) Site Age Class Species Class 0 - 20 21 - 40 41 - 60 61 - 80 81 - 100 101 - 120 121 Total Beech I 21 89 132 114 61 7 425 II 59 499 842 736 349 49 2 533 III 189 1 564 2 970 2 605 1 245 169 8 741 IV 56 281 502 429 203 28 1 499 V 16 63 109 96 46 7 337 Subtotal 341 2 495 4 554 3 980 1 905 260 0 13 536 Oak I 20 76 117 102 47 6 369 II 77 480 698 642 302 41 2 239 III 229 1 546 2 387 2 137 1 049 149 7 498 IV 50 262 385 344 172 25 1 237 V 14 64 88 77 40 6 289 Subtotal 389 2 427 3 675 3 303 1 611 227 0 11 632 Hb I 20 59 85 72 31 4 272 II 83 402 590 481 218 27 1 801 III 260 1 424 2 087 1 696 768 101 6 335 IV 57 258 368 305 147 18 1 152 V 13 60 89 73 34 4 272 Subtotal 433 2 202 3 218 2 627 1 198 156 0 9 833 Sb I 20 35 48 37 19 2 161 II 108 264 319 265 131 15 1 103 III 224 928 1 116 928 444 51 3 691 IV 44 142 191 189 71 9 647 V 9 29 47 37 17 2 142 Subtotal 406 1 398 1 722 1 457 682 79 0 5 743 Sp I 8 53 76 61 26 3 226 II 28 281 486 387 171 20 1 373 III 83 810 1 555 1 317 594 73 4 431 IV 20 117 235 201 94 12 679 V 4 21 42 43 21 3 134 Subtotal 143 1 282 2 393 2 009 906 111 0 6 844 Fir I 1 4 8 6 3 22 II 3 26 48 41 18 2 138 III 6 77 185 153 67 8 495 IV 2 12 24 22 11 1 73 V 1 2 5 5 3 16 Subtotal 12 121 270 228 101 12 0 744 Con I 5 19 36 26 11 1 99 II 14 91 232 168 73 9 587 III 43 245 586 527 236 29 1 666 IV 5 36 66 69 29 4 210 V 1 7 7 13 5 1 35 Subtotal 70 397 928 803 355 44 0 2 596

1 794 10 322 16 760 14 406 6 757 890 0 50 928

The real economic loss, however, is the loss of future growth due to destruction of the productive capacity of the forest. In some instances this would have been permanent where the land becomes degraded and in others temporary as the forest may recover. It is also likely that the fellings in the restituted area were uneven in that some areas were over felled reducing growth and other areas under felled, which would also reduce growth after a few years due to competition for light, nutrients and space, etc. amongst the trees.

The productive capacity for the 1992 situation is estimated by multiplying the average growth figures by the area for each species, and productivity class and then summing the

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results. (For example in 1992 the derived area of Beech in productivity class IV is just over 10,850 ha; the mean annual increment for this species and productivity class us 6 m3/ha/yr; the annual growth for Beech productivity class IV in the restituted forest in 1992 therefore was 6 x 10,850 = 65,100 m3. Summing the growth figures for all species and productivity classes gives an annual growth of around 2.56 million m3/year for the whole restituted area in 1992. If the same proportion of thinnings to final felling as was assumed in the standing value calculation is assumed then this has a value of US$ 9.75 million at January 2001 equivalent prices. By following the same method for the 1999 scenario it is shown that by 1999 the productive capacity of the forest had reduced to 2.16 million m3/year with an equivalent value of US$ 25.07 million / year. This gives an estimated economic loss of US$ 4.68 million per year. These figures are, however, gross and include the costs of management. Nevertheless, management costs are more dependent on area rather than productivity53. Essentially the costs of management will be the same for both the 1992 and 1999 forests as the area is the same. Therefore the 1991 restitution program over a period of seven years reduced the economic productivity of the forest by 403,000 m3/yr total or 1.19 m3/ha/year. At January 2001 prices this is the equivalent of US$ 4.68 million per year total or US$ 13.87 /ha/year.

It is likely that this reduction in fact was higher in the early years of restitution, as many new owners would want to make a quick profit from their newly acquired assets. It is also likely that this figure has reduced as some of the forest naturally recovers.

This analysis is based entirely on the productive commercial timber capacity of the forest. The forest has many additional benefits that are also likely to have been impacted. These include such items as the production of non timber forest products, the recreational, educational and scientific use of the forests and indirect benefits of prevention of erosion control, protection of watersheds and non use values such as the existence values of biodiversity. Without major research it is not possible to estimate these values. For example production of wild forest fruits may have increased in some areas where there has been a moderate opening of the canopy. In other areas the production may have ceased completely due to over cutting and resulting degradation. Similarly some areas may have lost forest cover in areas of steep terrain and be subject to erosion causing loss of soil, downstream flooding and other associated losses. This would have impacts of much greater significance than the simple loss of forest cover. For example, it was estimated in 199854, that the indirect benefits of forest cover ranged from US$ 356 to US$ 647 /ha/year. If it is assumed that all the area classified as cleared in 1999 (11,539 ha) was at the lower end of the range, this would have an additional reduction in the value of services provided by the forest of over US$ 4.1 million/year.

(53) It can be seen that management plans for the same area need to be prepared, and that tending operations and harvesting operations will be the same etc. The only real difference would be that in the 1999 situation costs may be increased to allow for re-establishing forest in degraded areas. (54) World Bank (1999). Ibid.

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6.4.2. Establishing Systems to Ensure Sustainable Management of Private Forest Lands and Building Public Support for Sustainable Forest Management: Analysis of Components 1 and 4

Components 1 and 4 of the FDP are aimed at ensuring that the forest is managed sustainably during and post restitution. To analyze the impact of the FDP, it is necessary to estimate what will happen if the FDP is not implemented. This is the ‘without project’ scenario. For both scenarios though it is necessary to predict the speed and size of the current restitution program.

The restitution program

Under Law 1/2000, nearly 3 million ha of forest have been claimed by former forest owners. The claims by type of ownership are presented as Table 18.

Table 18: Area of Forest Claimed by Type of Ownership under Law 1/2000

Type of Ownership Area (ha)

Private Individuals 900 961 Communities/undivided private Ownership 725 857 Churches, education institutions 65 407 Municipalities, towns, communes 1 280 763 Expatriate Romanians 15 075 Total 2 988 063

Of this 161 thousand ha had already been restituted by mid-2001.

To estimate the speed and area of restitution a scenario has been developed based on the following assumptions:

· 95 percent of the forest claimed by municipalities, towns, communes, churches and education institutions will be approved and 90 percent will be approved within the first two years; · For communities and undivided private ownership 80 percent will be eventually approved and 40 percent will be approved during the first 2 years; · For private individuals a total of 75 percent of the claims will be approved, but only 25 percent of the claims will be approved in the first two years; and, · The whole process will take eight years to complete.

This gives a total area to be restituted of 2.55 million ha or 75 percent of the total area claimed. This scenario is presented graphically as Figure 5.

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Figure 5: Graph showing predicted area restituted by year and type of ownership

3 000

2 500

2 000

1 500 Private Individuals ha x 1000

1 000 Communities/undivided private ownership Churches, education institutions 500 Municipalities, towns, communes

0 Total 0 1 2 3 Years 4 5 6 7 8 source: derived This scenario is considered likely because: · Once claims have been approved at the local and county levels, physical handing over of the forest should proceed rapidly; · Local community, church and other institution claims are likely to be approved quickly because the title and ownership details are well documented; and, · For private and joint claims, a longer period of verification will be required and it is more likely in these cases that claims will be rejected due to a lack of evidence.

However, as this scenario is fairly rapid, a second scenario has been developed which may be more prudent for the purposes of this analysis.

Under the second scenario, it has been assumed that the pace of restitution is slower and that the final percentage of the total claimed area restituted drops to 75 percent (as opposed to 85 percent). A comparison of the two scenarios is presented graphically in Figure 6.

Without the project

Without the project the following assumptions are made:

(1) The new restitution program will have the same associated loss of forest production as the 1991 program, with the loss of production starting already in the first year for individual forest owners. This is reasonable as the calculated losses from the 1991 restitution estimate the losses after eight years. In the early years the losses would have been greater with the forest subsequently recovering partially. With current and proposed low level of resources to be provided to the Inspectorate and the more or less non functioning state of the Association of

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Private Forest Owners it is likely that these organizations will only have a marginal effect on the impact of restitution.

Figure 6: Comparison of the Restitution Scenarios, Total Area Restituted by Year

3 000

2 500

2 000 Prudent 1 500 Likely

ha x 1000 1 000

500

0 1 2 3 4 5 6 7 8 9 Years

(2) The municipal, town, communal, church and institutional owners will be more responsible than the individual owners will. Most of the forest restituted in 1991 was restituted to individual forest owners. It has therefore been assumed that in this case the communal owners forest will loose only a quarter of the equivalent loss of the 1991 program. It is also more likely that these owners will try to seek professional help to manage their forests.55 (3) By definition of the without project scenario the effect the losses of the largely unregulated private sector will continue indefinitely. The Inspectorate will not be functional without the support of the FDP and there are no other projects to support the establishment of management and control mechanisms for private sector forestry.].

The loss in production of timber without the project for the likely restitution scenario is presented as Table 19.

Table 19: Volume of Annual Loss in Production – Without Project, Likely Restitution Scenario 3 3 Ownership Type Loss / yr in Production by Year Without Project Likely Scenario (m x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 1 137 273 383 474 561 647 734 820 Communities/undivided private ownership 18 173 347 416 474 529 584 638 693 Churches, education institutions 0 9 18 18 18 18 18 18 19 Municipalities, towns, communes 43 172 344 347 350 354 357 360 363 Total 62 491 982 1 164 1 316 1 461 1 606 1 751 1 895

(55) This is reasonable as without the project there will be insufficient resources to provide the necessary support to these new owners and they are liable to under manage the forest with resulting loss in production. The loss in production assumed here is only 0.3 m³/ha/year.

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If the estimated standing value of the crop is then applied to this table then economic losses, shown in Table 20, can be derived.

Table 20: Value of Annual Loss in Production – Without Project, Likely Restitution Scenario

3 Ownership Type Value of Annual Loss by Year Without Project Likely Scenario (US $ x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 12 1 588 3 177 4 448 5 507 6 513 7 519 8 525 9 531 Communities/undivided private ownership 209 2 014 4 028 4 833 5 505 6 142 6 780 7 418 8 056 Churches, education institutions 3 102 204 206 208 210 212 214 215 Municipalities, towns, communes 501 1 999 3 998 4 035 4 072 4 109 4 146 4 183 4 220 Total 726 5 703 11 406 13 522 15 291 16 974 18 656 20 339 22 022

This shows, using fairly conservative assumptions, that the cost of proceeding with restitution without taking any precautionary steps, in terms of the loss of timber production alone, would be around US$ 22 million per year in real terms if it is assumed that all the production would be utilized.

This assessment excludes the loss of Indirect forest values. If the total area cleared after 8 years is in the same proportion as the area cleared in the 1991 program this would have an additional annual cost of US$ 31 million to US$ 56 million per year.

The estimated loss in timber production without the project under a more prudent restitution scenario is presented as Table 21. This shows that the annual loss in production is still 1.6 million m3/year at the end of year 8.

Table 21: Volume of Annual Loss in Production – Without Project, Prudent Restitution Scenario

3 3 Ownership Type Loss / yr in Production by Year Without Project Prudent Scenario (m x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 1 73 146 219 306 394 481 569 656 Communities/undivided private ownership 18 92 185 277 335 392 449 506 563 Churches, education institutions 0 6 11 17 17 17 17 17 18 Municipalities, towns, communes 43 109 218 327 330 334 337 341 344 Total 62 280 560 840 988 1 136 1 285 1 433 1 581

The value of the loss of this production is show n in Table 22.

Table 22: Value of Annual Loss in Production – Without Project, Likely Restitution Scenario

3 Ownership Type Value of Annual Loss by Year Without Project Prudent Scenario (US $ x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 12 847 1 694 2 542 3 558 4 575 5 591 6 608 7 625 Communities/undivided private ownership 209 1 074 2 148 3 222 3 887 4 551 5 216 5 881 6 545 Churches, education institutions 3 65 129 194 196 198 200 202 204 Municipalities, towns, communes 501 1 266 2 532 3 798 3 838 3 878 3 918 3 958 3 998 Total 726 3 252 6 504 9 755 11 479 13 202 14 925 16 648 18 372

Even allowing for a prudent restitution scenario the cost still amounts to US$ 18.4 million / year after year

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With the project

It is assumed that the FDP will reduce economic losses by supporting new forest owners, through the supervision of management planning and forest operations, and the public awareness campaign. The FDP will reduce the loss of production by at least 50 percent in the first two years and this reduction will increase evenly with time to 80 percent by year six and 95 percent by year 8. These assumptions are reasonable, given that the support is pragmatic and in line with the requirements of the sector and that the assumed reduction in loss is very small when taken in the context of the total area restituted. In other countries, private sector managed forests (where they have the appropriate support) are frequently more productive, in terms of sustainable timber production, than state managed forests.

The reduced volume and value of the losses for the likely restitution scenario with the project are presented as Table 23 and Table 24 respectively.

Table 23: Volume of Annual Loss in Production – With Project, Likely Restitution Scenario 3 3 Ownership Type Loss / yr in Production by Year With Project Likely Scenario (m x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 1 103 137 163 166 154 129 92 41 Communities/undivided private ownership 18 130 173 177 166 145 117 80 35 Churches, education institutions 0 7 9 8 6 5 4 2 1 Municipalities, towns, communes 43 129 172 148 123 97 71 45 18 Total 62 368 491 495 461 402 321 219 95 Table 24: Value of Annual Loss in Production – With Project, Likely Restitution Scenario 3 Ownership Type Value of Annual Loss by Year With Project Likely Scenario (US $ x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 12 1 191 1 588 1 890 1 927 1 791 1 504 1 066 477 Communities/undivided private ownership 209 1 510 2 014 2 054 1 927 1 689 1 356 927 403 Churches, education institutions 3 77 102 88 73 58 42 27 11 Municipalities, towns, communes 501 1 499 1 999 1 715 1 425 1 130 829 523 211 Total 726 4 277 5 703 5 747 5 352 4 668 3 731 2 542 1 101

The reduced volume and value of the losses for the prudent restitution scenario with the project are presented as Table 25and Table 26respectively.

Table 25: Volume of Annual Loss in Production – With Project, Prudent Restitution Scenario

3 3 Ownership Type Loss / yr in Production by Year With Project Prudent Scenario (m x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 1 55 73 93 107 108 96 71 33 Communities/undivided private ownership 18 69 92 118 117 108 90 63 28 Churches, education institutions 0 4 6 7 6 5 3 2 1 Municipalities, towns, communes 43 82 109 139 116 92 67 43 17 Total 62 210 280 357 346 312 257 179 79

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Table 26: Value of Annual Loss in Production – With Project, Prudent Restitution Scenario

3 Ownership Type Value of Annual Loss by Year With Project Prudent Scenario (US $ x 10 ) 0 1 2 3 4 5 6 7 8 Private Individuals 12 635 847 1 080 1 245 1 258 1 118 826 381 Communities/undivided private ownership 209 806 1 074 1 369 1 360 1 252 1 043 735 327 Churches, education institutions 3 48 65 82 69 54 40 25 10 Municipalities, towns, communes 501 949 1 266 1 614 1 343 1 066 784 495 200 Total 726 2 439 3 252 4 146 4 018 3 631 2 985 2 081 919

Benefits of Components 1 and 4

The benefit of the project can be seen as being the difference between the without and with project scenarios. This is presented as Table 27 for the likely restitution scenario.

Table 27: Gross Economic Benefit of the Project – Likely Restitution Scenario 3 Summary of Losses Value of Annual Loss by Year Likely Scenario (US $ x 10 ) 0 1 2 3 4 5 6 7 8 Without project 726 5 703 11 406 13 522 15 291 16 974 18 656 20 339 22 022 With project 726 4 277 5 703 5 747 5 352 4 668 3 731 2 542 1 101 Project Benefit 0 1 426 5 703 7 775 9 939 12 306 14 925 17 797 20 920 Table 28: Gross Economic Benefit of the Project – Prudent Restitution Scenario 3 Summary of Losses Value of Annual Loss by Year Prudent Scenario (US $ x 10 ) 0 1 2 3 4 5 6 7 8 Without project 726 3 252 6 504 9 755 11 479 13 202 14 925 16 648 18 372 With project 726 2 439 3 252 4 146 4 018 3 631 2 985 2 081 919 Project Benefit 0 813 3 252 5 609 7 461 9 571 11 940 14 567 17 453

Table 27 and Table 28 show that the project has significant benefits for both restitution scenarios. However these benefits are gross and in order to estimate the net benefits, it is necessary to deduct the costs to give a net cash flow.

A summary of project costs for the FDP less the road component and the Business Development Service is presented as Table 29.56

(56) Note that the expenditure includes the physical contingencies but excludes the price contingencies. The price contingencies are applied to the costs of a project to account for inflation, but economic analysis is undertaken in present day values, with all costs and benefits being discounted to present day terms.

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Table 29: Projected Cash Flow For FDP less Roads and Business Development Components 3 Expenditure US $ x 10 by Year 1 2 3 4 5 6 7 8 9 10

Investment 4 231 2 317 1 020 613 520 29 Recurrent 206 557 657 657 657 657 657 657 657 657

Total 4 437 2 873 1 676 1 270 1 177 686 657 657 657 657

Benefits Likely scenario 0 1 426 5 703 7 775 9 939 12 306 14 925 17 797 20 920 20 920 Prudent scenario 0 813 3 252 5 609 7 461 9 571 11 940 14 567 17 453 17 453

Cash Flow Likely scenario - 4 437 - 1 447 4 027 6 506 8 762 11 620 14 269 17 140 20 264 20 264 Prudent scenario - 4 437 - 2 060 1 576 4 340 6 284 8 886 11 284 13 911 16 796 16 796

The economic analysis of these cash flows gives the results shown in Table 30.

Table 30: Net Present Value at a Cost of Capital of 12 percent and the Economic Internal Rate of Return over 17 year period (the loan period) NPV @ IRR 12% US$ x 103

Likely scenario 69 729 77% Prudent scenario 53 211 60%

This analysis clearly shows that these components of the FDP will yield significant benefits. One reason for high rate of return is because the benefits stem from the prevention of damage rather than the usual investment in a productive process. For example the installation of traffic signals at a junction notorious for accidents could generate income many times its costs in the first year simply by preventing accidents that otherwise would have occurred.

6.4.3. Mitigation of the Consequences of Restitution on Management of State Forest Lands: Analysis of Component 2

Supporting reform and strategic development of the NFA

FDP is to support strategic reform of the NFA through the provision of technical assistance for a needs assessment and for the development of a plan, in year one, followed by additional support to implement the recommended course of action. Prior to project implementation, the NFA will (a) initiate an internal review of operational efficiency and opportunities for cost saving across the whole spectrum of its activities, identifying and prioritizing areas and activities where improvements are possible, and (b) research how change has been undertaken in forest administrations in similar European countries, and identify relevant experience and lessons learned. The review and reform process will be advised by a consultative committee to be established by NFA and composed of senior technical level staff from NFA, MAFF, the Ministries of Industry and Commerce, and of

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Environment and Waters, the association of private forest owners (APPR), and the association of forest industries (ASFOR).

The project will finance technical assistance to enable MAFF to assist NFA to review and analyze its financial performance, accounting systems, silvicultural operations, public purpose activities, non-core activities, sales and marketing systems, capacity to provide services to private forest owners, and its current role/functions within the context of present institutional/legal/policy framework; and, human resource capacity. This will lead to a review of different options for NFA’s future role and to formulate and agree a detailed, phased, and costed plan for its strategic development.

In addition, resources will be used to develop an objective and auditable model for the determination of reserve prices for NFA’s competitive timber sales. The development of a pricing system will be partly informed by the results of the proposed diagnostic on corruption and governance in the forest sector.

In conjunction with these steps, the project will provide the resources to develop and cost an information systems strategy that will support the chosen development option and allow for an interface with the FMIMS being developed for the DoF. This will entail a review and analysis of the current and planned IT system in NFA; development of applications, technical and data strategies; identify the requirements for data transfer between FMIMS and NFA; and, provide a costed and phased plan for implementation.

Following development of the plan for reform and development of NFA, the project will support its implementation by: providing training to NFA staff and technical assistance to support the proposed strategic development; providing additional technical assistance to support the upgrade of the IT system and to assist in the provision of new accounting software; developing the interface between the NFA IT system and the FMIMS; and providing logistical support in terms of computers, field equipment, GIS software and vehicles to NFA’s protected area management function.

The benefits of this sub-component are likely to include:

· the probable increased return to the state for the sale of its timber resources; · cost reductions and increased operational efficiency of the NFA; and, · the continued management of protection forest and other public goods services.

At this stage it is not possible to quantify these benefits, although they are likely to be substantial.

Forest roads and infrastructure rehabilitation and construction

The costs and benefits of the forest roads subcomponent were evaluated for each of 91 sub- projects originally identified, and then these were aggregated to determine the likely costs and benefits of the entire sub-component. These with/without project costs and benefits are

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taken to be indicative , rather than conclusive, because of the fact that sub-projects will be dropped and added during project implementation and as a result of subsequent screening and rescreening.

For the purposes of this Assessment, the costs and benefits of one road sub-project are worked out here, simply as an example of how these were evaluated at the micro-level, before aggregation into the overall analysis. The example used here is for the proposed reconstruction and repair of 8.5 Km of the Valea Ruzii forest road in the Alba Iulia Forest District in Alba County. Costs were estimated at 3.6 billion Lei on 01 January 2001. At an exchange rate of Lei 25,930 to the US dollar this is the equivalent of US$ 293,000. The road serves an area of 577 ha which from the management plan has a sustained yield production of 840 m3/annum. This is a mixed beech and spruce forest.

It is important to point out that production will not actually increase as a result of roads rehabilitation or construction, because the amount of timber harvested is a function only of what is possible in the management plan -- which is the sustained yield production.

To assess the benefits of constructing a forest road, two scenarios were developed, i.e. what would happen if the road were not constructed (without road scenario) and what would happen if the road were constructed (with road scenario).

Under present conditions in Valea Ruzii the following costs are incurred to harvest timber from the forest. In the absence of a proper road it is necessary bulldoze a total of 9 km of skid trails.

Table 31: Extraction Costs Without the Road, Valea Ruzii Quantity Item Units / Rate

Annual production 840 m 3 Average Extraction Costs 5.40 $/m 3/km Average Extraction Distance 6.3 km Distance of skid trails Required 9 km Cost of skid trail construction 8000 $/km Cost of skid trail maintenance 250 $/km source: Forest Management Plan; Average data from harvesting companies and forest road design document Note: average extraction distance is the average distance skidded per cubic meter of logs. The distance of the skid trails is the length of skid trails that need to be constructed. It can be seen that the logs located near the road have an extraction distance of less than the logs further found away, even though the skid trail needs to construc ted out to the far edge of the compartment.

It would not be necessary to construct 9 km of skid trails all at one time. If it is assumed that the forest would, on average, be entered once every ten years for thinning or felling operations, then one tenth of the forest would require skid trail access each year, until the eleventh year when the old skid trails can be reused. The maintenance of the skid trails will similarly increase each year until the tenth year when the complete 9 km will require maintenance annually. This cost will then continue in perpetuity under this scenario.

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Once the timber has been brought to the roadside it has to be hauled by lorry to the sawmill. Most of the sawmills that purchase timber from this forest are on average 35 km from the current loading area.

Current average hauling costs (taken as the mean of the costs reported by 5 harvesting companies) come to US$ 0.10 /ton/km. This gives the costs estimated for the first eleven years shown in Table 32. In subsequent years the costs will be the same as for year 11.

Table 32: Estimated Extraction and Haulage Costs by Year Without the Road, Valea Ruzii (US$ ) Year Operation 1 2 3 4 5 6 7 8 9 10 11

Extraction 28 577 28 577 28 577 28 577 28 577 28 577 28 577 28 577 28 577 28 577 28 577 Skid trail construction 7 200 7 200 7 200 7 200 7 200 7 200 7 200 7 200 7 200 7 200 0 Skid trail maintenance 0 225 450 675 900 1 125 1 350 1 575 1 800 2 025 2 250 Haulage 2 940 2 940 2 940 2 940 2 940 2 940 2 940 2 940 2 940 2 940 2 940

Total 38 717 38 942 39 167 39 392 39 617 39 842 40 067 40 292 40 517 40 742 33 767 source: derived

This gives an average haulage and extraction cost in year 1 of US$ 46 /m3, which, although high, is not unreasonable by international standards.

Once the road has been constructed, the costs of extraction are significantly reduced. These costs are shown in Table 33.

Table 33: Extraction Costs With the Road, Valea Ruzii Quantity Item Units / Rate

Annual production 840 m 3 Average Extraction Costs / 1 5.40 $/m 3/km Average Extraction Distance 0.3 km Distance of skid trails Required 0.5 km Cost of skid trail construction 8000 $/km Cost of skid trail maintenance 250 $/km source: forest management plan, average data from harvesting companies and forest road design document. 1 Note: / Although intuitively it would seem that the unit rate for extraction should increase for shorter length extraction as more time is spent loading and unloading the logs, work study research has shown that longer extraction distances have many more problems due to repeated use of the same track. In this instance it has therefore been assumed that the extraction costs remain constant.

The road is not constructed instantly in the first year but over a number of years. In the first year, no road is built, as the first year is needed to refine the design. The extraction costs in the first year are the same therefore as the extraction costs if no road is built.

Actual construction takes place over the subsequent two to four years (depending on the individual sub-project). It has been assumed that the road is used as it is made or repaired.

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For example, if by the end of the second year, 30 percent of the road has been constructed then the benefits of reduced extraction costs will begin in that year proportional to the amount of road constructed. If at the end of the second year, 30 percent of the road is complete, then it has been assumed that there is an average benefit of 15 percent of the new road’s length throughout the year. The funding and assumed annual average completed road is for the example road is presented in Table 34.

Table 34: Investment and average completion of the road by year, Valea Ruzii Year Total 1 2 3 4 5

Investment (US$ x 1000) 7.71 123.41 119.55 42.42 0.00 293.10 Completed Road (km) 0 1.84 5.46 7.87 8.50 8.50 source: derived

Similarly in the first year there is still the need to construct skidding trails and to undertake all the other forest operations while the road is being constructed. It is assumed that the cost figures without the road reduce proportionally with amount of road constructed until they reach the figures in Table 33. The proportional decline in extraction costs are included in Table 34.

Once logs have been brought to the roadside they have to be taken by road transport to the mill. Once the road has been constructed these costs will increase marginally as the haulage distance to the mill will have increased by the length of the new road. Unit prices have been assumed to remain the same.

This gives the harvesting costs by year as shown in Table 35. The figures remain constant after year 11.

Table 35: Estimated Extraction and Haulage Costs by Year With the Road, Valea Ruzii (US$ ) Year Operation 1 2 3 4 5 6 7 8 9 10 11

Extraction 28 577 22 692 11 107 3 384 1 361 1 361 1 361 1 361 1 361 1 361 1 361 Skid trail construction 7 200 4 577 1 272 438 400 400 400 400 400 400 0 Skid trail maintenance 0 225 404 493 521 533 533 533 533 533 533 Haulage 2 940 3 013 3 156 3 251 3 276 3 276 3 276 3 276 3 276 3 276 3 276 Road Maintenance 0 919 2 728 3 934 4 250 4 250 4 250 4 250 4 250 4 250 4 250 Total 38 717 31 426 18 667 11 499 9 808 9 820 9 820 9 820 9 820 9 820 9 420 Source: derived

By year eleven the average haulage and extraction costs have reduced from US$ 46 / m3 to US$ 11 / m3 . Clearly this is a significant saving, a significant portion of which will be transferred to the NFA through increased prices paid for standing sales.

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The estimated cost of this example road sub-project comes to US$ 293,096.00. This is spread over four years. The cost by year is given in Table 19.

The net benefit of the road is therefore the saving in reduced extraction and haulage costs less the cost of the investment. This gives the net cash flow as shown in Table 36. After the eleventh year the net undiscounted benefit and cash flow remains constant at US$ 24.3 thousand per year.

Table 36: Cash Flow for first Eleven Years, Valea Ruzii US $ x 1000 by Year Cost 1 2 3 4 5 6 7 8 9 10 11

Without road 38.7 38.9 39.2 39.4 39.6 39.8 40.1 40.3 40.5 40.7 33.8 With road 38.7 31.4 18.7 11.5 9.8 9.8 9.8 9.8 9.8 9.8 9.4 benefit 0.0 7.5 20.5 27.9 29.8 30.0 30.2 30.5 30.7 30.9 24.3

Construction cost 7.7 123.4 119.6 42.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net cash flow - 7.7 - 115.9 - 99.1 - 14.5 29.8 30.0 30.2 30.5 30.7 30.9 24.3 Discounted @ 12% - 7.7 - 103.5 - 79.0 - 10.3 18.9 17.0 15.3 13.8 12.4 11.2 7.8

The cost of capital also has to be taken into consideration. For example if US$ 7.7 thousand is invested today at an annual interest rate of 12 percent, after ten years have passed it will be worth US$ 22.9 thousand. Therefore US$ 22.9 thousand in year ten is only worth US$ 7.7 thousand in present day terms. If the cash flow is then projected into the future and the sums added, this derives the net present value (NPV) of the project. With the cost of capital set at 12 percent this particular road project has an NPV of US$ -35,352 over a project life of 50 years. The internal rate of return is 9.7 percent.

These are gross costs and include the costs of VAT. If the VAT is removed the NPV rises to US$ -554 with a cost of capital set at 12 percent over a project life of 50 years. The IRR is 11.96 percent.

The World Bank has suggested that the EIRR should be around 12 percent. Clearly in the case of this particular roading sub-project in Valea Ruzii, it would be viewed as marginal as to whether the project should proceed or not.

Costs and benefits were evaluated in this manner for each of the 91 sub-proj ects originally identified during project preparation. When the results are aggregated, the roading subcomponent as a whole has an NPV of just under US$ 14 million over a 50 year period at a cost of capital of 12 percent. The EIRR is 24 percent. This analysis is entirely based on the assumption that benefits come from reducing extraction costs, rather than from increased harvesting, which would not be possible in any event under the existing forest management plan process. The rate of return for individual road sub-projects is reflected in the table in Appendix 5: Preliminary list of roads rehabilitation and construction sub-projects and maps.

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In evaluating this sub-component, then, because of the clear needs for a revived forest road network, Government placed a priority on developing investments in these areas. Although a major new road network is needed in the long-term, two concerns mitigated against financing a larger roads component. Firstly, in the face of the restitution program, the viability of the roads program had to be placed in the framework of a wider institutional reform effort. With a declining resource base under the control of the NFA, the financial viability of forest management and protection had to be strengthened through careful investments which linked institutional reforms with their financial viability. A large investment program would likely have overwhelmed any effort at institutional reform. Secondly, because of the lack of experience in developing standards and approaches toward environmentally sound roads rehabilitation and construction, a pilot approach which focused on developing and implementing best practices would set important precedents.

As a pilot activity, the roads identified for construction or rehabilitation represent a very small fraction of the total length of forest roads or associated harvesting and extraction infrastructure in Romania. Harvesting and extraction infrastructure, at the end of the year 2000, comprised a total of 41,546 km of roads and 65 km of railway. Roads targeted for new construction by the project would increase the total road length by less than 2 tenths of one percent. Infrastructure planned for rehabilitation constitutes 1.2 percent of the total. By any standard, the fact that the project is investing in such a small percentage of the overall total (and indeed, in the face of the enormous needs for construction and rehabilitation) demonstrates that it constitutes a pilot operation. As a pilot operation, the project recognizes the need for good Monitoring and Evaluation which can provide information about the successes and failures of the pilots.

6.4.4. Support for Increased Productivity and Competitiveness of Forest Industries: Analysis of Component 3

The inability of small and medium sized wood harvesting and processing firms to raise loans for capital investment was identified as a significant blockage to future development in the participatory process of project identification. During preparation, Government considered establishing a separate facility for investing in small and medium-sized enterprises. Past experience with rural financing initiatives, however, has suggested that sectoral approaches are far less successful in addressing these types of constraints to small- business development than are systemic approaches. The US$ 80 million World Bank Rural Finance project (P046020), which was recently declared effective, was designed in part to provide resources for this type of investment, and FDP includes support for actions to establish the necessary linkages between rural forest-based industries and this mechanism. ForsBIC will seek to provide these linkages. Wood processing sector is also going to benefit from EU SAPARD Program.

The objective of the Forest Sector Business Information Center (ForSBIC) is to provide a one stop knowledge / information point dedicated to the forest sector which will assist small enterprises and small and medium enterprises (SMEs), business interests and other stakeholders obtain information concerning sources of finance, product development,

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technology, business development, taxation and legislation and in so doing support the growth and development of the sector.

The benefits of this program will be:

· increased access to financing through grants and other favorable funding instruments; · more joint ventures and foreign investment; · investment in small and medium sized enterprises at the local and regional level, creating more rural employment; · increased investment in the sector which will lead to a higher degree and better quality of in country value added wood processing; and, · increased market share and better prices for Romanian products in higher value international markets.

It is not possible to estimate in quantitative terms the value of these benefits.

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7. ENVIRONMENTAL MANAGEMENT AND MONITORING PLAN

7.1 INTRODUCTION

The FDP has been prepared to maintain and improve environmentally sustainable management of state and private forests so as to increase the contribution to the national and rural economies derived from Romanian forest resources. However, as described specifically in the previous sections of this EA, there are a number of key issues which will affect the long term sustainability of the FDP and activities within the forest sector as a whole.

This section presents the actions which we recommend should be implemented, firstly within the wider institutional arena of forest sector management and exploitation, and secondly, in terms of the preparation, implementation and management of the FDP.

The section is therefore divided into two, namely:

· institutional actions presented in Table 37; and

· project specific actions presented in Table 38.

Both tables appear at the end of this section.

7.2 MEASURES RELEVANT TO IMPLEMENTING THE ENVIRONMENTAL MANAGEMENT PLAN

This section describes additional measures which are of relevance in implementing the Environmental Management Plan. It considers the critical involvement of the public in the preparation and implementation of the FDP; and institutional recommendations which are beyond the scope of the FDP but are critical to ensure long-term, effective and sustainable management of Romania’s forest sector.

7.2.1 Involvement of the Civil Society and the Private Sector

Consultation with forest sector stakeholders and public and private business interests during conception and preparation of the FDP has suggested that the following measures are crucial for the success of the FDP.

· the public are currently excluded from key decision-making processes (in particular with respect to restitution) and are becoming increasingly hostile to public authorities at regional and national level. This presents a threat to sustainable forest management in Romania which the FDP should address. It requires the forest authorities to actively raise their profile amongst the public and private forest industries through implementing a policy of openness, engagement and awareness raising;

· During project implementation, public consultations will: - ascertain the most appropriate methods and tools for raising public awareness depending on socio-cultural systems;

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- identify and understand the expectations and existing capacities of the public and private sector organizations to manage the environment sustainably and also to understand their existing use of, and interactions with, forest resources; - ensure that existing public uses of the forest are not compromised in the development of FMPs and that these uses are also taken into account as appropriate in strategic forest planning; and - ensure that the construction/rehabilitation and use of forest roads will not lead to conflicts with communities affected by the roads (though this outcome is apparently unlikely on the basis of public consultation work carried out to date).

The public awareness campaign planned as a sub-component of the FDP, will have a significant role to play in improving the understanding of public/stakeholders on sustainable forest management. It is however also clear that for this knowledge to be sustained over time and put into practice, there is a need for the Government and forest authorities to work more openly and be more responsive to public/private business desires. This may require a step change in the existing operating practices of many of the institutions involved, but it is one which is crucial to sustain into the long-term the benefits of the FDP.

7.2.2. Institutional issues

Institutional issues which are relevant to, but which cannot necessarily be implemented by the FDP in isolation from the wider social, political and economic context can be summarized as follows:

1. Responsibility for the policy and strategic approach for integrating environmental and social issues into the forestry sector should rest with the Department of Forests (specifically, in the Directorate for Strategy, Policy and Legislation - DSPL): a. an environmental focal point should be appointed in DSPL; b. the environmental training needs assessment which FDP will support should consider also DSPL and other DoF staff (see Section 2. Policy, Legal, and Institutional Framework); c. environmental issues should be included in DoF’s standard reporting format(s); d. linkages and information flows to other key institutions with responsibilities for the environment should be established and/or formalized. These will include other parts of MAFF (such as the SAPARD unit) and MWEP (environmental inspectorate, local EPAs, and those responsible for transposition of environmental legislation as part of the pre-accession process); The roles and responsibilities of the environmental function in DoF should make explicit reference to the need to ensure effective communication and co-ordination with the SAPARD unit in MAFF. e. environmental data should be included as a matter of course in the formal and informal information flows between DoF and other public and private sector institutions in the forestry sector.

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2. The Forest Inspectorate should take lead responsibility within the Government of Romania for regulating and monitoring environmental performance in the forestry sector, especially in relation to forest roads, extraction activities and forest management plans. This is consistent with EU standards for Environmental Assessment and reflects best practice amongst other forest institutions in Europe. a. The Forest Inspectorate should be maintained at its existing staffing levels, and further personnel should recruited to fill authorized staff position. b. Capacity building (formal and on-the-job training, awareness raising, etc) should be implemented within the context of FDP support to the Inspectorate. c. For forest roads and FMPs, the Inspectorate should develop environmental compliance monitoring and simplified environmental audit training capacity. This could be either in-house or through call-down contracts with suitably qualified institutions. d. Environmental screening should be part of the FMP review/approval process, with procedures put in place to attach auditable environmental ‘conditions’ to the approval of FMPs where these are necessary and appropriate.

3. Access to cleaner production and environmentally sustainable technology/practice advice and contacts should be available via the Forest Sector Business Information Center (ForSBIC) . The FDP should raise the awareness of ForSBIC staff in this respect, and provide guidance and support as appropriate.

4. NFA’s mission statement and policy should clearly and explicitly commit to sustainable management of the forest land under its administration (whether for timber, other forest products or for beneficial uses such as watershed protection and biodiversity values). a. Institutional responsibilities for environmental management within the NFA should be more clearly established. These responsibilities should include collating information on NFA’s environmental performance and reporting it to management, internal environmental training and awareness-raising, and coordination of technical assistance (expertise external to NFA as appropriate) to review and address issues arising from performance against environmental standards set down in the FMP environmental conditions and other screening and guidelines. b. The FDP should provide awareness raising and training to NFA staff in forest road engineering best practice, and sustainable forest management best practice more generally.

5. As ICAS staff build their capacity in EIA, FDP should support their efforts by offering opportunities for ICAS staff to participate in environmental awareness raising and training activities.

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6. APPR awareness raising and training should include coverage of environmental and social issues. Emphasis should be given to the importance of public participation, and consultation techniques which will facilitate involvement of a broad range of stakeholders in sustainable forest management.

7. INL staff should receive training to help them address environmental and social issues, and to support their uptake of the forest roads Best Practice Manual which will be prepared under the FDP.

8. The regulatory framework for the private operating companies should explicitly require that operating standards take full account of all applicable environmental legislation, regulations and other guidance (such as the forest road Best Practice Manual).

9. The FDP should provide awareness raising and training to private management company staff in forest road engineering best practice, and sustainable forest management best practice more generally.

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Table 37: Recommended Institutional Actions to Improve the Effectiveness of the FDP in environmental terms

Barriers/Challenges to FDP effective implementation Cost Component Institution of the FDP and Effect Recommended Actions [1] Responsibility Timing [2] [3] MAFF Lack of awareness in DoF of DoF not fully qualified or equipped to Environmental DoF; FDP During FDP M 1a,1d, 4 (Directorate of environmental and promote sustainable forest mainstreaming support implementation Forests) sustainable development management Training As above issues and responses Study tours As above

Forest Resistance of private forest Conflict between Inspectors and forest Consultation/ FI, supported During FDP M 1a, 4 Inspectorate owners (and NFA) to managers and users will divert Engagement by FDP implementation regulatory role of Inspectorate resources from their Inspectorate primary function of regulating and Raise profile of FI As above promoting sustainable forest management Raise awareness of As above sustainable forest management benefits Incorporate environment As above into technical standards and norms National Forest Restructuring of NFA as Downsizing and job losses; Change management NFA, Before and M 2a Administration restitution progresses Adoption of new management goals supported by during FDP (NFA) and techniques; FDP implementation Adoption of new sustainable management principles; Environmental As above Reduced revenues and increased mainstreaming pressure to return a profit (thereby increasing pressure for unsustainable forest management and diversion of Study tours As above resources from management of ‘unproductive’ protected areas).

Resentment of private sector Potential for serious conflict during the Transparent, equitable GOR Before and M 2a, 1b and 4 and rightful forest owners restitution process as rightful owners restitution program during FDP towards NFA fear that the NFA will diminish their implementation entitled resources prior to restitution

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Barriers/Challenges to FDP effective implementation Cost Component Institution of the FDP and Effect Recommended Actions [1] Responsibility Timing [2] [3] Association of Low institutional capacity Sustainable forest management Awareness raising; APPR (support During FDP L 1b,1c,4 Private Forest of national association; principles and practices not being establish channels for from FDP) implementation Owners (APPR) regional associations not yet promoted effectively via the main APPR to access set up ‘trade association’ environmental expertise Key: [1] Recommended Actions: Refer to Section 5. FDP’s Critical Environmental and Social Impacts and Mitigation Measures for more detailed description. [2] Costs : This refers to the relative cost of implementing the action where it is considered relevant for FDP support. Costs are presented as H (High), M (Medium) or L (Low) [3] FDP Component: Where it is considered relevant for the FDP to support this action, the most suitable component of the FDP has been recommended for inclusion of the action. The Component numbers refer to the following:

Component 1: Establish Systems to Ensure Sustainable Management of Private Forest Lands Sub-component 1.a: Forest Inspectorate: Supervisory, Regulatory and Advisory Capacity Sub-component 1b: Support to the Association of Private Forest Owners Sub-component 1c Establishment of Community -based Associations of Local Forest Owners Sub-component 1d: Forest Management Information and Monitoring System Component 2: Mitigate Consequences of Restitution on Management of State Forest Lands Sub-component 2a: Strategic Development of the NFA Sub-component 2b: Road Rehabilitation and Construction Component 3: Establishment of a Forest Sector Business Information Center Component 4: Build Public Support for Sustainable Forest Management Component 5: Project Management

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Table 38: Environmental Management Plan for the Romania Forest Development Project

Component Impact +ve relevant to Responsibility/ FDP Component Receptor /-ve Action Action Recipient Time Cost* 1. ESTABLISH SYSTEMS TO ENSURE SUSTAINABLE MANAGEMENT OF PRIVATE FOREST LANDS 1a Forest Environment + 1. Training and awareness raising in the following is required: 1.a DoF & FI ongoing M Inspectorate: /Institutional · environmental impacts of forest activities and how they can be Supervisory, avoided/mitigated Regulatory and · tools and methods for sustainable forest management and planning Advisory (including GIS) Capacity · methods and tools for public consultation, mediation and marketing · the NFPS Environment 2. Preparation of Operational Guidelines/Procedures for environmental 1.a DoF & FI Y1 L /Institutional protection and management to be implemented by DoF and FI Environment 3. Completion of Diagnostic on sectoral governance 1.a DoF & FI Y1/2 L /Institutional Findings used to increase capacity of FI to: Independent · prosecute against i llegal harvesting; financing of · enforce FMPs on restituted land diagnostic Environment 4. Ensure sufficient financing and support mechanisms to enable the FI to 1.a DoF & FI Y1/2 M /Institutional have a visible presence in forest areas to regulate forest activities Environment 5. Awareness raising and extension on: (see also Component 3) 1.a & 4 DoF, FI, NFA & ongoing H · role of forest authorities in managing and enforcing sustainable forest PMT practices; · promotion of environmentally sustainable management practices; · environmental impacts of forest exploitation; · importance of sustainable management of forests; · long-term international importance of Romania’s forests; · tax and revenue system for private forest exploitation Social + 6. Develop and foster a collaborative relationship between FI and local 1.a & 4 DoF & FI ongoing L communities/private businesses to ensure local co-operation in preventing illegal harvesting Social - 7. Consult and engage with local communities/private forest owners to 1.a & 4 DoF & FI ongoing L secure buy-in and mutual understanding of the role of the FI, the need for sustainable management and the needs of local forest users

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Component Impact +ve relevant to Responsibility/ FDP Component Receptor /-ve Action Action Recipient Time Cost* Economic + 8. Establish (through consultation) a clear and transparent tax and 1.a DoF & FI Y1/2 L revenue pricing and collection system for forest resources. Include incentives to promote sustainable harvesting and investment into modern and less environmentally damaging harvesting and transport equipment 1b. Support to the Environment + 9. Provide advice, support and incentives to private forest owners 1b, 1c DoF, APPR & ongoing L Association of associations for sustainable forest management (SFM) and FSC PCT Private Forest certification Owners (APPR) & Environment 10. Training programs and materials on: 1b, 1c APPR, DoF ongoing L 1c. Establishment / Institutional · sustainable forest management (techniques, practices, management of Community- / Economic planning etc.) based Associations · environmental impacts of forest management and exploitation of Local Forest · operational role of FI Owners (ALFO) · purpose of FMPs · business management Environment + 11. Develop guidelines, tools and methods for sustainable forestry and DoF ongoing L make available to APPR and ALFOs Environment + 12. Enforce implementation of FMPS and provide help and support to 1.a, 1b, 1c DoF /FI ongoing L APPR and ALFOs to facilitate this Social` - 13. APPR, ALFOs and FMPs should take account of the interests of local 1a, 1b, 1c DoF/FI & NFA ongoing L forest users through consultation to avoid conflicts 1d. Forest Environment/ + 14. Strategic planning for forest management should: 1d, 1a DoF & FI ongoing M/H Management Institutional · be undertaken at a watershed/catchment level; Information and · consider and take account of cumulative environmental impacts of Monitoring forest management, harvesting and extraction plus the cumulative System effects of secondary processing industries; · utilize GIS to assist in identification and monitoring of cumulative effects; · co-ordinate and be consistent with regional economic and development planning undertaken at the Local/District/Judet levels · be made accessible to private forest owners and the public and facilitate their comments · be enforced through the DoF/FI

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Component Impact +ve relevant to Responsibility/ FDP Component Receptor /-ve Action Action Recipient Time Cost* Environment + 15. Training and capacity building in: 1d, 1a DoF & FI ongoing L / Institutional · the identification and avoidance/mitigation of cumulative environmental impacts · monitoring environmental impacts (including data collection and analysis as appropriate) · use and application of GIS for environmental management planning Environment + 16. Monitoring: 1.d & 4 DoF & FI ongoing M / Institutional · should include the collection and analysis of data on environmental impacts of forest activities including: species diversity, forest cover, recreation, erosion, sedimentation, transport volumes and industrial pollution from wood processing (air, water, soil and noise) · results should be analyzed and mechanisms should be established within the appropriate authorities (DoF/FI or NFA) to respond to any negative environmental impacts identified; · results should be reported and made accessible to the public. 2. MITIGATE CONSEQUENCES OF RESTITUTION ON MANAGEMENT OF STATE FOREST LANDS 2a. Strategic Environment + 17. Training and capacity building of NFA staff on: 2a NFA ongoing L Development of / Institutional · environmentally sustainable forest management (including impacts/ the NFA mitigation) · business management · the NFPS · public consultation and engagement Environment - 18. Implement the NFPS and guidelines to promote sustainable forest 2a GOR, NFA Before L / Institutional management FDP start Social - 19. Raise profile of NFA through wider publicity, policy of openness and 2a & 4 NFA ongoing L public awareness Institutional - 20. Support institutional change within the NFA to ensure efficient and 2a NFA/PCT ongoing H sustainable management and planning of forest resources 2b: Rehabilitation Environment + 21. Training and Capacity Building in: 2b, 2a, 1.a,1b, DoF, FI & NFA ongoing L and Construction / Institutional · best practice in road siting, design, construction and maintenance 1c, 1d of Forest Roads · environmental impacts of roads (including cumulative impacts), 5. environmental screening and assessment FDP’s · use of Best Practice Manual Critical Environment + 22. Implement screening and EA procedures 2b, 1a DoF, FI & NFA ongoing L Environmental and Environment - 23. Empower Forest Inspectorate to patrol forests and prosecute illegal 1a DoF, FI & NFA ongoing L Social Impacts activities and Mitigation

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Component Impact +ve relevant to Responsibility/ FDP Component Receptor /-ve Action Action Recipient Time Cost* and Mitigation Environment - 24. Public awareness raising on the importance of preserving and 4 DoF, FI, NFA & ongoing L Measures) sustainably managing Romania’s forests and preventing illegal PCT harvesting/activities Environment - 25. Police and enforce implementation of FMPs 1a FI ongoing L Environment - 26. Ensure Strategic Management Plans take account of potential transport 1d, 2b DoF, FI & NFA ongoing L conflicts with local people Environment - 27. Include transport plans and guidance in FMPs to prevent negative 1a DoF, FI & NFA ongoing L impacts on local/village roads Environment - 28. Ensure that extraction contractors follow contractual conditions for 1a DoF, FI & NFA ongoing L transportation of forest products Environment/ - 29. Consult with local people to identify any concerns regarding forest 2.b FI ongoing L Social roads (as part of EA) Environment/ - 30. Develop and implement a hunting license and quota system including 1a, 1d & 2a DoF ongoing L Institutional charges for hunting rights Economic + 31. Promote establishment of secondary and processing industries (See 3 DoF ongoing M Component 3) Institutional + 32. Implement a procedure to formalize use of the Best Practice Manual 2b DoF, FI & NFA ongoing L and ensure its implementation after the project closes. 3. ESTABLISHMENT OF A FOREST SECTOR BUSINESS INFORMATION CENTER 3. Establishment of Environment + 33. Promote, support and provide advice on: 3 DoF, PCT ongoing M Forest Sector / Economic · use of clean technologies, processes and techniques; Business · upgrade of old, inefficient and polluting equipment and processes; Information Center · development and implementation of environmental management systems (EMS); · investment finance and business management. Environment/ + 34. Training and capacity building on: 3 DoF, NFA ongoing L Economic · clean technologies and processes, environmental pollution, waste minimization, EMS · business management and development. Economic - 35. Develop and build links with other investment sources (e.g. EU 3 DoF, PCT ongoing L SAPARD) 4. BUILD PUBLIC SUPPORT FOR SUSTAINABLE FOREST MANAGEMENT

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Component Impact +ve relevant to Responsibility/ FDP Component Receptor /-ve Action Action Recipient Time Cost* 4. Build Public Environment + 36. Raise awareness on: DoF Ongoing M Support for / Social / · importance and purpose for sustainable forest management; Sustainable Forest Economic / · methods, tools and techniques for sustainable forestry management; Management Institutional · roles and responsibilities of forest authorities, the public and private business; · policies (especially restitution), FMPs and timetables for action · advice and assistance available as part of the FDP, from forest authorities, other programs; · opportunities for private business development, securing investment finance and help and advice available. Social - 37. Ensure sound understanding of needs, desires, expectations and PCT, DoF FDP L capabilities of public about sustainable forestry and their expectation of prep. the forest as a resource in developing the public awareness program Social - 38. Use tools and techniques appropriate to socio-cultural structures and PA contractor ongoing L circumstances Institutional - 39. Ensure early involvement and engagement of forest authorities with the 1.1, 2.3 & 4 DoF/FI, NFA, Y1 L public PCT 5. PROJECT MANAGEMEN T 5. Project Environment - 40. Regularly review the effectiveness of the FDP in terms of environmental 4 PCT ongoing L Management impacts and benefits and revise activities accordingly Environment - 41. Support and promote: environmental training and capacity building of 4 PCT ongoing L / Institutional forest authorities and private forest owners associations and change management of forest authorities Institutional - 42. Promote leadership and ownership of FDP by forest authorities to 4 PCT, DoF, NFA ongoing L maximize long-term sustainability * Costs : This refers to the relative cost of implementing the action where it is considered relevant for FDP support. Costs are presented as H (High), M (Medium) or L (Low) See also Notes to Table 37

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APPENDICES

APPENDIX 1: RESPONSIBILITIES FOR PREPARATION OF ENVIRONMENTAL ASSESSMENT OF THE FOREST DEVELOPMENT PROJECT APPENDIX 2: TERMS OF REFERENCE FOR ENVIRONMENTAL ASSESSMENT UPDATE APPENDIX 3: CONSULTATIONS AND DISCLOSURE WITH RESPECT TO PROJECT PREPARATION AND IN RELATION TO PREPARATION OF THE ENVIRONMENTAL ASSESSMENT OF THE FOREST DEVELOPMENT PROJECT APPENDIX 4: PROTECTED AREAS OF ROMANIA (MAP, LOCATION, AREA) APPENDIX 5: PRELIMINARY LIST OF ROADS REHABILITATION AND CONSTRUCTION SUB- PROJECTS AND MAPS APPENDIX 6: PROTECTION FORESTS: FUNCTIONAL CATEGORIES AND PERMISSIBLE FELLING SYSTEMS IN ROMANIA APPENDIX 7: LIST OF UNDISTURBED FORESTS IN ROMANIA APPENDIX 8: SUGGESTED SCREENING FOR WOOD PROCESSING INDUSTRIES APPENDIX 9: DRAFT TERMS OF REFERENCE FOR DIAGNOSTIC STUDY OF CORRUPTION IN THE FORESTRY SECTOR APPENDIX 10: RESULTS FROM PRELIMINARY SCREENING OF ROADS REHABILITATION SUB- PROJECTS FOR THEIR ENVIRONMENTAL AND SOCIAL IMPACTS APPENDIX 11: BIBLIOGRAPHY

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A 1: RESPONSIBILITIES FOR PREPARATION OF ENVIRONMENTAL ASSESSMENT OF THE FOREST DEVELOPMENT PROJECT

The Environmental Assessment was prepared by Environmental Resources Management, UK and Intergroup Engineering, Romania. The EA preparation team comprised:

Name Organization Eamon Barrett Environmental Resource Management, UK Reed Huppman Environmental Resource Management, USA Silviu Novac Intergroup, Romania Nicolae Lesnic Intergroup, Romania

This Environmental Assessment Update was prepared by staff commissioned by the Ministry of Agriculture, Food and Forests, in particular, Dr. Ioan Abrudan, Transilvania University Brasov, who participated extensively in project preparation, and Mrs. Alina Istodor and Mr. Mihai Musetescu, with EPC Bucarest who worked with Intergroup and ERM to ensure that key concerns were addressed in this Update.

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APPENDIX 2: TERMS OF REFERENCE FOR ENVIRONMENTAL ASSESSMENT UPDATE

Background

1. The Government of Romania (GOR) has requested the World Bank's assistance in preparing and financing a Forestry Development Project (FDP), to be implemented over the course of a six year period through the Ministry of Agriculture, Food and Forests (MAFF).

2. The objective of the FDP is to increase the contribution to the national economy from sustainable management of Romania's forest resources by: (a) establishing effective institutional arrangements and capacity to support sustainable forest management on public and private lands, and a national network of forest protected areas; (b) aiding forest sector development by establishing a business development and advisory service, improving the efficiency and profitability of the National Forest Authority (NFA), supporting the development of private forest owners associations, and improving forest infrastructure, including forest roads; and (c) building public awareness and support for sustainable management of forest resources. The project was screened for its potential environmental impacts, and because of the possibility that the project may have negative environmental impacts, and the public interest associated with some of the proposed activities, the World Bank assigned the FDP an environmental category "A," which requires a full environmental assessment, including public disclosure and consultation.

3. In order to set the policy framework for the FDP, MAFF worked with a broad range of sector stakeholders, through a facilitated participatory process, to develop a National Forest Policy and Strategy (NFPS), which was completed in 2000. In addition, MAFF received a Grant through the World Bank from the Government of Japan (PHRD Grant), which was used to hire consultants to assist in preparing the FDP. Following completion of the NFPS, the PHRD Grant was used to finance the following three separate consultant contracts: (a) overall preparation of the FDP; (b) preparation of a public communications strategy to build support for implementation of the FDP; and (c) preparation of a category A environmental assessment (EA).

4. The overall preparation of the FDP was guided by an analysis of the potential environmental impacts of proposed FDP activities and was informed by a separate Environmental Assessment which was commissioned. The EA was undertaken after preliminary preparation work had identified likely project activities, and was conducted in close consultation with MAFF and the consultants engaged to undertake overall project preparation. The original Environmental Assessment was prepared by ERM Ltd. (UK) in cooperation with Intergroup Engineering SRL (Romania), and was completed in early October 2001, prior to the project’s formal Appraisal by the World Bank.

5. Additional concerns, however, were subsequently raised about the project and the Environmental Assessment following Appraisal, which had not been voiced during the initial and extensive period of consultation leading to project preparation and to preparation

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of the original Environmental Assessment. In December 2001, the Romanian project preparation team met with concerned local NGOs to discuss these issues more fully. Subsequent correspondence from CEE Bankwatch and a group of 17 Romanian NGOs with World Bank President James D. Wolfensohn indicated continuing concern about the project and the Environmental Assessment.

6. During another NGO consultation convened in Brasov, on March 21, 2002, it was agreed that there was scope for improving the original Environmental Assessment, and that this task should be completed with urgency prior to the project’s eventual negotiation and approval by the World Bank’s Board of Executive Directors.

7. These Terms of Reference describe the areas of the original Environmental Assessment which should be updated and improved.

Objective

8. The objective of preparing this Environmental Assessment Update is

· to provide additional information about the proposed Romania Forest Development Project which was not available at the time when work on the original Environmental Assessment was completed and made available in October 2001, · further to inform and where appropriate, improve, project design and data presentation and · to identify any subsequent modifications, risks, or changes to the Environmental Management Plan needed to address the project’s potential negative environmental impacts.

9. It is being prepared on the basis of additional inputs prepared for the Project Appraisal Mission (which took place from October 14 to 26, 2001) and which had not been available at the time the original EA was finalized and in response to the feedback provided at the NGO consultation on March 21, 2002.

Scope of Work

10. The Environmental Assessment Update should be carried out in close collaboration with the consultants who were responsible for overall project preparation, and through a process that includes consultation with major stakeholders and which provides for comment and input from interested parties. The following regulations and guidelines should guide the EA process and assist in defining the content of the updated final EA report:

· Relevant Romanian environmental legislation. · World Bank Operational Policy (OP) and Bank Procedure (BP) 4.01: Environmental Assessment; · World Bank Operational Policies on Forestry (4.36 ), Natural Habitats (OP 4.04), and Cultural Heritage (OP 4.11);

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· World Bank Environmental Assessment Sourcebook (1991) and the October 1993 Environmental Assessment Sourcebook Updates;

Tasks

11. Under the supervision of the MAFF, and in close collaboration with consultants engaged to undertake overall preparation of the FDP, the EA update consultant team will:

· Familiarize themselves with the status, trends and institutional capacity for forest management in Romania, together with the key issues and findings of the NFPS. Familiarization will entail reviewing background documentation, including: i. the 2001 FDP draft Project Appraisal Document (PAD), and associated documentation, including the draft Project Implementation Plan; ii. 1999 MWFEP/World Bank Forestry Sector Note; iii. the 1994 World Bank/FAO Forestry Sector Review; iv. the FORTECH report on forest certification; v. relevant existing and draft legislation and regulations, including the 1996 Forest Code, together with progress in adapting Romanian forest related legislation for compliance under the EU Acquis Communitaire; vi. EU documentation with significance for development of the forestry sector; vii. the Romanian Medium Term National Development Strategy, which was submitted to the EU in March 2000, and the EU Forest Strategy; viii. the original EA prepared by ERM and Intergroup in 2001; ix. the Quality Assessment of the FDP EA commissioned by Bankwatch in 2002, as well as other documentation about the project prepared by Bankwatch and posted on its website (www.Bankwatch.org), including Bankwatch’s correspondence with Government and with the World Bank; x. the minutes and recommendations of the meetings with ENGOs organized by the MAFF and held in Brasov in December 2001 and March 2002. · Consult with counterparts and key forestry sector stakeholders, including MAFF, NFA, private and state forest industries, the academic and environmental communities, NGOs and private forest land owner associations, local communities (both at the project sites and the potentially affected neighboring areas); · Review technical and strategic development processes and solutions adopted by other countries facing similar forestry sector reform issues, including, inter-alia, consultation and collaboration with World Bank consultants undertaking the ongoing regional review of the experience of forest land restitution; and · Review the findings and conclusions of the NFPS preparation process.

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· Interact closely with MAFF and consultants engaged to undertake overall preparation of the FDP and collaboratively review the environmental, social, economic and technical analysis undertaken to provide the rationale for activities that would be funded under the FDP.

12. The consultants will prepare an updated, improved, and strengthened EA. The consultants will give particular attention to clarifying the differences between the role of a Strategic Environmental Assessment and an assessment of the environmental impacts of project-specific impacts. The EA will consider very specifically those impacts which can be clearly articulated in terms of their project impacts, and will distinguish these from potential sector-wide impacts of the proposed investment. In particular, the consultants will:

· Include information which is not fully reported upon, particularly with respect to fuller information about the project, the location of the initial list of roa ds targeted for rehabilitation or construction, changes to the legal framework which may impact project implementation, information about the consultation process which was used both to inform preparation of the project and to improve the Environmental Assessment, maps (for those roads which can be identified at this stage and as appropriate) and other information about initiatives with respect to public activities to conserve biodiversity (including the GEF-financed Biodiversity Conservation Management Project); · Incorporate the text and recommendations which are outlined in Annex IIA of the original Environmental Assessment ['Initial Report on Environmental Aspects of Forest Roads Component' prepared by Fortech, Dames and Moore, and Project Management (Ireland)] into the Environmental Assessment as an integral part of it, to develop binding recommendations during roads construction and rehabilitation; · Consider more fully the likely direct and indirect impacts of project investments on harvesting, based on information which is available, and will develop and describe actions to mitigate these impacts where they are not consistent with sustainable forest management practices; · To the extent possible, examine the risks to project performance associated with illegal harvesting and problems of governance, and propose steps to reduce these risks; · add more information about the project alternatives considered and the reasons for their rejection (particularly in the context of the National Forest Policy and Strategy). · Describe in detail the steps taken to publicly disclose information about the project, as well as the steps taken to disclose and consult with key stakeholders during preparation of the original Environmental Assessment.

13. The consultants will prepare a revised draft and final EA report which will include an Environmental Management Plan (EMP).

14. The updated EA report will be structured in a manner which fully incorporates the information provided in the original EA:

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i. Summary. Concisely discusses significant findings and recommended actions. ii. Policy, legal, and administrative framework. Discusses the policy, legal, and administrative framework within which the EA is carried out. Explains the environmental requirements of any cofinanciers. Identifies relevant international environmental agreements to which the country is a party. iii. Project description. Concisely describes the proposed project and its geographic, ecological, social, and temporal context, including any offsite investments that may be required (e.g., raw material and product storage facilities). Indicates the need for any resettlement plan or indigenous peoples development plan. Includes relevant maps showing the project sites and the project's area of influence. iv. Baseline data. Assesses the dimensions of the study area and describes relevant physical, biological, and socioeconomic conditions, including any changes anticipated before the project commences. Also takes into account current and proposed development activities within the project area but not directly connected to the project. Data should be relevant to decisions about project location, design, operation, or mitigatory measures. The section indicates the accuracy, reliability, and sources of the data. v. Environmental impacts. Predicts and assesses the project's likely positive and negative impacts, in quantitative terms to the extent possible. Identifies mitigation measures and any residual negative impacts that cannot be mitigated. Explores opportunities for environmental enhancement. Identifies and estimates the extent and quality of available data, key data gaps, and uncertainties associated with predictions, and specifies topics that do not require further attention. vi. Analysis of alternatives. Systematically compares feasible alternatives to proposed project sites, technology, design, and operation in terms of their potential environmental impacts. The feasibility of mitigating these impacts; their capital and recurrent costs; their suitability under local conditions; and their institutional, training, and monitoring requirements. For each of the alternatives, quantifies the environmental impacts to the extent possible, and attaches economic values where feasible. States the basis for selecting the particular project design proposed and justifies recommended emission levels and approaches to pollution prevention and abatement, as needed. vii. Environmental management plan (EMP). The EMP will describe a set of mitigation, monitoring, and institutional measures to be taken during implementation and operation to eliminate adverse

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environmental and social impacts, offset them, or reduce them to acceptable levels. The plan will also include the actions needed to implement these measures. The EA design team will (a) identify the set of responses to potentially adverse impacts; (b) determine requirements for ensuring that those responses are made effectively and in a timely manner; and (c) describe the means for meeting those requirements. More specifically, the EMP includes the following components: (i) mitigation, (ii) monitoring, (iii) capacity development and training, (iv) integration of EMP with project and (v) implementation schedule and cost estimates. viii. Appendixes 1. List of EA report preparers-individuals and organizations. 2. References-written materials both published and unpublished, used in study preparation. 3. Record of interagency and consultation meetings, including consultations for obtaining the informed views of the affected people and local nongovernmental organizations (NGOs). The record specifies any means other than consultations (e.g., surveys) that were used to obtain the views of affected groups and local NGOs. 4. Tables presenting the relevant data referred to or summarized in the main text. 5. List of associated reports (e.g., resettlement plan or indigenous peoples development plan). 6. Other Appendices needed to assist in implementing the Environmental Management Plan.

15. The draft Environmental Assessment will be submitted to MAFF and to the World Bank for its initial review. On the basis of the draft updated Environmental Assessment and in consultation with MAFF, the World Bank will advise Government of its recommendations with respect to the period required for disclosure and public consultation, in order to ensure that these are credible and effective at disseminating information included in the EA and gathering additional feedback needed to develop the final EA.

16. On the basis of this recommendation, the consultants will make available a draft for consultation and disclosure (consistent with the guidance offered in World Bank Operational Policies), will carry out the required public consultations, and will finalize the EA on the basis of this consultation.

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APPENDIX 3: CONSULTATIONS AND DISCLOSURE WITH RESPECT TO PROJECT PREPARATION AND IN RELATION TO PREPARATION OF THE ENVIRONMENTAL ASSESSMENT OF THE FOREST DEVELOPMENT PROJECT

The FDP conception and preparation process has involved seven distinct stages of public consultation. The purpose, date, participants and key outcomes of these activities are summarized in Table 39.

In particular, FDP is very much an outcome of some of the consultations which were undertaken during preparation of the NFPS.

Table 39: Key Public Consultations and Their Results Purpose Date Participants Key outcomes 1. Preparation and 1998/99 GOR and various · importance of capacity building for all discussion of World ministries and authorities key public and private sector Bank Program organizations; concept · importance of forest road network; · concerns over sustainability of forests after restitution; 2. Preparation of NFPS 2000 key forestry sector · agreement on forest policy, strategic stakeholders: objectives and actions; government/ministry representatives, private sector, research and academic community, NGOs, general public etc. 3. Preparation of TOR 2000 Government ministries · importance of forest roads; for EA key forest sector · agreement on focus of EA; stakeholders, local communities, NGOs 4. Informal consultation April 2001 local communities · complete distrust of authorities in dealing as part of Social business groups with restitution fairly; Study during FDP local authorities · lack of any effective communication preparation between authorities and local people; · no information about when restitution will happen and what land people will get; · no involvement of local people in decision-making; · very difficult to obtain private finance without collateral; 5. Preparation of draft June and Individuals and · and Final EA September institutions who 2001 responded to published notices of consultation meetings: included government/ministry representatives, private sector, research and academic community, NGOs, general public etc.

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Purpose Date Participants Key outcomes 6. Development of ongoing Government agencies · on-going; Public Awareness involved in FDP Strategy and Program other organizations to be incorporated associated with forest into FDP sector, local communities, implementation NGOs 7. Post-Appraisal From Environmental NGOs · EA Update consultations November concerned about potential 2001 on environmental impacts

As a result of these formal consultation activities and following informal consultation with forest sector stakeholders and authorities during preparation of the FDP and the EA, the following key conclusions can be drawn:

· many forest sector stakeholders and the public perceive considerable benefits from the FDP (than without it) particularly with regard to ensuring restitution is undertaken fairly and that long-term economic gains will be possible;

· the public are for the most part currently excluded from key decision-making processes (in particular over restitution) and are becoming increasingly hostile to public authorities at the regional and national level. This presents a threat to sustainable forest management in Romania which the FDP should address. It requires forest authorities actively to raise their profile amongst the public and private forest industries through implementing a policy of openness, engagement and awareness raising;

· there are substantial benefits to be gained from raising the awareness of the public on the importance and long-term value of forest resources in Romania.

During project preparation and implementation however, there is a need for public consultation to:

· ascertain the most appropriate methods and tools for raising public awareness depending on socio-cultural systems; · identify and understand the expectations and existing capacities of the public and private sector organizations to manage the environment sustainably and also to understand their existing use of, and interactions with, forest resources; · ensure that existing public uses of the forest are not compromised in the development of FMPs and that these uses are also taken into account as appropriate in strategic forest planning; and · ensure that the construction/rehabilitation and use of forest roads will not lead to conflicts with communities affected by the roads.

It is also clear from the consultations that the public awareness campaign planned as a subcomponent of the FDP, will have a significant role to play in improving the understanding of public/stakeholders on sustainable forest management. It is however also clear that for this knowledge to be sustained over time and put into practice, there is also a responsibility on the Government and forest authorities to work more openly and be more responsive to public/private business desires. This may require a step change in existing operating

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practices of many of the institutions involved, but one which is crucial to sustain into the long-term, the benefits of the FDP.

Consultations about the project generally, particularly within the framework of the NFPS, should be isolated from statutory responsibilities for consultation during preparation of the EA TORs and the draft EA.

Consultations on preparation of the National Forest Policy and Strategy

These consultations were extensive, and contributed importantly to the design and development of the Forestry Development Project. The process of consultation and public information dissemination which coincided with preparation of the NFPS is described here. None of this consultation, however, should be construed to have substituted for statutory requirements with respect to consultation during preparation of the TORs for the Environmental Assessment, or for the review of the first draft (which are described subsequently).

Stakeholders Consulted During NFPS Planning Process (January-March 2000) Name Organization Mr. Romica Tomescu, Minister MWFEP; Mr. Ministry of Waters, Forests and Anton Vlad, Secretary of State; Mr. Florea Trifoi, Environmental Protection Advisor Secretary Of State; Mr. Mihai Cozariuc, EU Integration and International Programmes Dept.; Mrs. Adriana Baz, Nature and Biodiversity Conservation Dept.; Mr. Adrian Popa, Strategy, Policy and Legal Dept. Mrs. Viorica Rabotea, Head of Unit Ministry of Industries Mr. Dorin Ciuca, General Manager National Forest Administration Mr. Mihai Ionescu, Prime Vice-President Association of Private Forest Owners Mr. Ion Sbera, President; Mr. Tiberiu Nitescu Romanian Foresters' Association (ASFOR) Mrs. Liliana Mona Elisa Mihai, Technical Advisor Association of Romanian Furniture Producers (APMR) Mr. Ion Marinescu, Vice President General Association of Hunters and Fishermen (AGVPS) Sevastitia Radulescu, Advisor National Authority of Tourism Mr. Mihail Dumitru, Rural Development Manager EU Mission Mr. Gheorghe Man, General Manager; Dr. Ovidiu Forest Research and Management Badea, Deputy Director Institute (ICAS) Professor Gheorghita Ionascu, Dean University of Brasov Mr. Dan Runceanu, RNP Brasov Union Leader Union (Consilva) Mr. Iurie Maxim, President Pro Natura Professor Dumitru Tarziu, President Progresul Silvic

The bulk of the consultations on the NFPS were carried out during a series of workshops in mid-2000. The themes of these workshops, which were held in Brasov, and their participants are outlined in the following Tables.

Date: 3-4 July 2000 Workshop on Forest Administration Name Organization Botarca Gheorghita Asociatia “Stejarul” Topoloveni Corduneanu Constantin RNP Bucuresti Georgescu Filip DS Pitesti

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Date: 3-4 July 2000 Workshop on Forest Administration Name Organization Ionescu Mihai APPR Brasov Pupeza Luca DS Bistrita Voiculet Ioan OS Zarnesti Zotta Andrei OS Brasov

Date: 3-4 July 2000 Workshop on Forest Management and Planning Name Organization Buzea Valeriu Ambras Top S.R.L. Brasov Iacob Danut MWFEP, Bucuresti Marin Gheorghe ICAS Bucuresti Nastasa Liviu DendroProiect S.R.L. Bacau Seceleanu Ioan RNP Bucuresti

Date: 3-4 July 2000 Workshop on Environment, Water, and Protected Areas Name Organization Biris Iovu ICAS Bucuresti Enescu Vlad APM Brasov Ioanitescu Anca APM Brasov Maxim Iurie "Pronatura" Bucuresti Palancean Ion Ministry Of Environment, Republica Moldova Popa Mirel Constantin Consiliul Judetean Brasov Stanciu Erika National Park Retezat Verghelet Mircea Natural Park Piatra Craiului

Date: 5-6 July 2000 Workshop on Forest Harvesting and Transport Name Organization Boghean Petru INL Bucuresti Gotea Ovidiu Concordia S.R.L. Reghin Kruch Johann University of Oradea Scurtu Marius IST Timisoara Taporea Constantin APASCO SA Maneciu

Date: 5-6 July 2000 Workshop on Forest Industries Name Organization Bodea Vasile Viorel SC MDF Sebes Frati SA Sebes-Alba Carculea Ioan Esparo SRL Arad Han Cornel ASFOR Sibiu Rasnoveanu Constantin INL Bucuresti Tohaneanu Liviu SC Brafor SA Brasov

Date: 5-6 July 2000 Workshop on Market Development and Quality Standards Name Organization Baban Adrian MaxMobila SRL Bucuresti Cioaca Dorel MWFEP, Bucuresti

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Date: 5-6 July 2000 Workshop on Market Development and Quality Standards Name Organization Comsit Gheorghe DS Brasov Gheorghe Adrian Ministry of Industry and Commerce, Bucuresti Iorgu Oliviu Parcul Forestier Vanatori Neamt

Date: 7-8 July Workshop on Hunting and Fishing Name Organization Androne Sterian MWFEP, Directia juristica Dinca Lucian Asociatia Ecologica Mileniul 3 Ianopol Bogdan AGV Bacau Ionescu Ovidiu ICAS Brasov Ioriatti Adolf MWFEP, Brasov Isuf Constantin MWFEP, Bucuresti Marinescu Viorel AGVPS Bucuresti Negrutiu Aurel Universitaty ofTransilvania, Brasov Sarkany Arpad Abies S.R.L. Selaru Nicolae AGVPS Bucuresti

Date: 7-8 July Workshop on Tourism, Non-timber Forest Products and Other Forest Services Name Organization Buciu Aurel DS Suceava Cadar Virgil S.C. CMV IMPEX Vaslui Mihul Maria RNP Bucuresti Promberger Christoph Carpathian Large Carnivore Project Simon Tamara Autoritatea Nationala pentru Turism

Date: 7-8 July Workshop on Research, Education, Training and Safety Name Organization Badea Ovidiu ICAS Bucuresti Chitea Gheorghe Universitatea Transilvania din Brasov Giurgiu Victor Academia Romana Istratescu Constanta INL Bucuresti Parnuta Gheorghe ICAS Bucuresti

Media Representatives in Attendance Name Organization Manolache Dumitru Curentul, Bucuresti Moroianu Luminita Ziua, Bucuresti Unturica Andreea Mediafax, Bucuresti Vela Adriana Adevarul, Bucuresti

Organisation, Co-ordination and Facilitation of Workshops Name Organization Popa Adrian MWFEP, Bucuresti Candea Rodica Technical University, Cluj-Napoca Candea Dan Technical University, Cluj-Napoca Trifoi Florea MWFEP, Bucuresti Abrudan Ioan Vasile University of Transilvania, Brasov Henry Phillips Project Management Ltd., Dublin, Ireland

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After these workshops, a meeting was convened to consider how conflicting issues would be harmonized.

List of Participants at Sub-sector Harmonization Meeting, (Brasov 17-18 July 2000) Name Organization Badea Ovidiu ICAS Bucuresti Boghean Petru INL Bucuresti Cadar Virgil S.C. CMV IMPEX Vaslui Giurgiu Victor Academia Romana+Societatea Progresul Silvic Han Cornel ASFOR Sibiu Ioanitescu Anca APM Brasov Ionascu Gheorghita Universitatea Transilvania din Brasov Ionescu Mihai APPR Brasov Ionescu Ovidiu ICAS Brasov + Fundatia Carpati Iorgu Oliviu Parcul Forestier Vanatori Neamt Kruch Johann Universitatea Oradea Marinescu Viorel AGVPS Bucuresti Maxim Iurie Pronatura Bucuresti Mihul Maria RNP Bucuresti Nastasa Liviu DendroProiect S.R.L. Negrutiu Aurel Universitatea Transilvania din Brasov Parnuta Gheorghe ICAS Bucuresti Rasnoveanu Constantin INL Bucuresti Seceleanu Ioan RNP Bucuresti Stanciu Erika Parcul National Retezat Tarziu Dumitru Societatea Progresul Silvic Verghelet Mircea Parcul Natural Piatra Craiului Voiculet Ioan OS Zarnesti Lungu Sorin Silva Brasov

Press Representation at the Sub-sector Harmonization Meeting Name Organization Becheru Cristian Revista Padurilor, Bucuresti Dumitrescu Rodica Revista Padurilor, Bucuresti Popa Cristian Ziua, Bucuresti

Harmonization Meeting Coordination, Organization and Facilitation Name Organization Popa Adrian MAPPM, Bucuresti Candea Rodica Universitatea Tehnica Cluj-Napoca Candea Dan Universitatea Tehnica Cluj-Napoca Trifoi Florea MAPPM, Bucuresti Abrudan Ioan Vasile Universitatea Transilvania din Brasov

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Written submissions to the NFPS were sought from a range of stakeholders. Three sets of submissions were solicited: comments at the initiation of the process, comments on the initial NFPS draft, and comments on the final NFPS draft.

Subsectoral Recommendations provided prior to National NFPS Workshop, May-June 2000 Name Locality/County Abrudan Traian Cluj Anonim - Badea Victoria Buzau Balut Alexandru Piatra Neamt Bancila Florian Targoviste Barbatei Radu Sibiu Benceu Ioan Arad Bouriaud Laura Universitatea Suceava Candescu Ilie Alba Iulia Cherciu Ionica I.C.A.S. Bucuresti Chirila Florin Piatra Neamt Ciobotar Emilian Suceava Cismaru C. Cristinel Bucuresti Ciurea Vasile Tulcea Codrean Nicolae Deva Coste Ioan Oradea Craciun Ioan Hurezani, Gorj Crizboi Ioan Alba Iulia David Gheorghe Targu Mures Diaconescu Gheorghe Pitesti Dogaru Ioan Anton Targu Mures Dragos Aurel Arad Dumitrache Laurentiu Focsani Dumitrescu Nicolae Asoc.Econ. Silvo-Dominiala, Oravita Dumitrescu Vladimir Rm-Valcea Farcas Iosif Arad Filip Ioan Baia Mare Filip Stefan Suceava Fodor Gyorgy Miercurea Ciuc Gabor Dragos Bucuresti Gavrilescu Nicolae Nehoiu, Buzau Gherghel Doru Piatra Neamt Ghirda Bucurel Brasov Ilica Alexandrina Alba Iulia Iosif Ioan Cluj Napoca Jurcau Adrian Oradea Karacsi Maria Covasna Macinic Ioan Arad Mihailescu Alexandru Deva Mihalca Ioan Oradea Mitran Ioan Rm.Valcea Moiceanu Gheorghe Ploiesti Moisa Madear Oradea Neamtu Ioan Sibiu Neamtu Valerian Ioan Valenii de Munte,Prahova Nicolau Constantin Slobozia Nicolescu Ioan Targu Jiu

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Subsectoral Recommendations provided prior to National NFPS Workshop, May-June 2000 Name Locality/County Oprea N. Ion Iasi Orandaru Relu Bacau Parascan Corneliu Piatra Neamt Pasca Costel Tulcea Patrascu Maria Bucuresti Paun Romeliu Targoviste Pauna Ioan Pitesti Penescu C-tin Tg.Jiu Petre Vasile Ploiesti Petrovai Ioan Baia Mare Popa Constantin Miercurea Ciuc Popa Ionel Bacau Popa Valentin Focsani Popoiu Dumitru Bacau Prof. Stanescu Gheorghe Universitatea Pitesti Radulescu Petru Com. Valea Mare, Valcea Ridiche Gheorghe Rm.Valcea Ruxandra Maria Marcela Targu Jiu Santimbrean Gheorghe Resita Sbera Ioan ASFOR, Bucuresti Scortescu Vasile Ghe. Com. Curbita, Vrancea Serb Anghel Buciumeni, Dambovita Sipos Ernest Sf. Gheorghe Smocot Eminovici Marin Suceava Stanescu Ion Pitesti, Arges Statescu Silviu Bucuresti Stefan Cornel Dr. Tr. Severin Tasic Ion Com. Priponesti, Galati Titu Ana Slobozia Vaduvoiu Stelian Resita Vesa Vasile Cluj Napoca Vezeteu Stefan Bacau Vieru Paul Sf. Gheorghe Vladuti Silviu Brasov Voda Petru Suceava Zaharia Florin Piatra Neamt

Additional comments were sought on all drafts of the NFPS.

Comments received on the first draft of the NFPS Name Organization Boghean Petre INL Bucuresti Candea Dan Universitatea Tehnica Cluj-Napoca Constanta Istratescu INL Bucuresti Giurgiu Victor Academia Romana si Progresul Silvic Ionescu Mihai Asociatia Proprietarilor de Paduri din Romania Parnuta Gheorghe ICAS Bucuresti Rasnoveanu Constantin INL Bucuresti Sbera Ioan ASFOR Simon Tamara Autoritatea Nationala pt. Turism, INCDT Bucuresti Taporea Constantin APASCO SA Maneciu - Prahova

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Comments received on the second draft of the NFPS Name Organization Giurgiu Victor Academia Romana si Progresul Silvic Machedon Ioan MAPPM Bucuresti Popa Adrian MAPPM Bucuresti Radulescu Ionut ANTREC Piatra Neamt Simon Tamara ANT Bucuresti

Public Information and Media Coverage of the NFPS Process

Official Launch: 10th May 2000 · Radio Romania 1, (life - Ioan Abrudan - 1 hour (15.00-16.00); · Newsagency: Mediafax 11th May 2000 · Articles in national newspapers: Economistul, Curentul, Cotidianul, Jurnalul National 12th May 2000 · Ziua, Adevarul 16th May 2000 · TVR 2 - Talk-show: State Secretary (Anton Vlad) and General Manager of NFA (Dorin Ciuca). An interview with Ioan Abrudan also included May 2000: · Article in forestry magazine "Padurea Noastra"

Invitation for Public Submissions: · 25th May 2000 : Adevarul (the newspaper with the largest circulation in Romania); · 26th May 2000: Adevarul, Jurnalul National · May 2000: forestry magazine "Padurea Noastra" · June 2000: forestry magazine "Padurea Noastra"

Coverage in Association with Workshops: · Week 3-8 July: TV interviews (Florea Trifoi, Ioan Abrudan, Henry Phillips, John Fraser Stewart, workshop participants) for PROTV, ANTENA1, TVS · articles in the national newspapers: Curentul, Ziua, Adevarul · articles in local newspapers: Gazeta de Transilvana, Monitorul · Newsagency: Mediafax · 11th July - TVS Brasov - Talk-show (Ioan Abrudan) · July 2000 - Two articles in forestry magazine "Padurea Noastra"

Public Consultation Process: Announcement of Public Consultation Meetings: · 30th September 2000 - Monitorul de Neamt (Piatra Neamt); · 3rd October 2000 - Observator (Arad); · 5th October 2000: PROTV and Radio Contact Bucharest.

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Articles / Interviews on Public Consultation Meetings: · 2nd October 2000 - Monitorul de Neamt (Piatra Neamt); · 4th October 2000 - Observator (Arad); · 6th October 2000 - PROTV, ANTENA 1, Mediafax

Publication of the Draft Policy and Strategy: · Draft 1 - July 2000 - forestry magazine "Padurea Noastra" · Draft II - October 2000- - forestry magazine "Padurea Noastra

Consultations on the draft TORs for the Environmental Assessment

In compliance with World Bank OP 4.01 (para 15), public comment on the draft TORs for Environmental Assessment was solicited through two mechanisms:

· four public meetings were convened (3 regional meetings and one at the national level) to review the TORs. Notice of these meetings was published in two national newspapers ("Adevarul" and "Romania Libera"), and in the forestry magazine ("Padurea Noastra"); · written comments were solicited by announcement in two national newspapers ("Adevarul" and " Romania Libera"), the forestry magazine ("Padurea Noastra") and on the Ministry's website.

The first public consultation on the draft TORs was held in Piatra Neamt on October 2, 2000 in the County Council Meeting Room. The meeting started with a description of the FPD components made by Mr. Florea Trifoi, Project Preparation Team Leader (MWFEP). Draft EA TORs were presented in detail by Dr. Ioan Abrudan (Transilvania University of Brasov). Comments and suggestions were solicited from participants. The following comments and recommendations were made:

· in general, World Bank procedures for EA are more strict than Romanian national regulations (EPA, RNP, local authorities, representatives); · the consultation process for the draft EA report is very wide and more participatory than for EAs carried out before in the region (representative of Romanel Ltd.); · not only should the stakeholders and public from project areas be consulted before the draft report is finalized, but also the neighboring communities, especially in the case of road building, as trucks will have to use their roads [Mayors of 3 communes from Neamt county, recommendation included in the EA TORs - paragraph 5(ii) and 5(d)]; · RNP expressed willingness to support the process as they have had previous experience with EU Phare funded projects (RNP representative).

Participants in the Piatra Neamt Consultations, October 2, 2000 Name Organization 1 Iovoaia Viorel S.C. Euroforest 2 Munteanu Ioan Primaria Neamt 3 Marlena Manta Prefectura 4 Nita Vasile O.S.Varatec 5 Humulescu Traian O.S.Tg. Neamt 6 Arsinte Neculai D.S. Piatra Neamt + Progresul Silvic

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Participants in the Piatra Neamt Consultations, October 2, 2000 Name Organization 7 Bursuc Corneliu A.P.M. Neamt 8 Ciuca Neculai A.P.M. Neamt 9 Corfu Mona D.S. Piatra Neamt 10 Geana Gheorghe D.S. Piatra Neamt 11 Domnica Vasiliu Ziarul Ceahlaul 12 Trifan Ion Primaria Damuc 13 Menhart Alexandru Primaria Tarcau 14 Ionut Radulescu Antrec 15 Soimaru Mitrica Directia Agricola 16 Schioru Constantin Primaria Ceahlau 17 Vantu Vasile O.S.Tazlau 18 Cojocaru Niculina Primaria Tg.Neamt 19 Simsensohn Edith Grup Scolar Forestier 20 Florea Trifoi M.A.P.P.M. 21 Abrudan Ioan Universitatea Transilvania Brasov 22 Iorgu Oliviu Parcul Forestier 'Vanatori' Neamt 23 Cozma Lucian Parcul Forestier 'Vanatori' Neamt 24 Dumitrascu Ionel Forestar Tarcau 25 Irina Alexandrescu Tele 7 ABC Neamt 26 Camelia Varvara Ziarul Monitorul 27 Constantin Melinte Tele M-PRO TV 28 Lupu Gavril Primaria Harpu

The second consultation was held in Targoviste on October 3, 2000 in the RNP Conference Room. The meeting started with a description of the FPD components made by Mr. Florea Trifoi, Project Preparation Team Leader (MWFEP). Draft EA TORs were presented in detail by Dr. Ioan Abrudan (Transilvania University of Brasov). The participants (representing 20 forest districts) were asked for any comments and suggestions related to the draft TORs (into which the recommendation from Piatra Neamt had been incorporated). There were no suggestions for further improvement.

Participants in the Targoviste Consultations, October 3, 2000 Name Organization 1 Bogdan Nicolae D.S. Oradea –Vascau 2 Colciar Vasile D.S. Cluj -O.S.Zalau 3 Giurgiu Timoftei D.S. Baia Mare- O.S. Mara 4 Dusa Ilie D.S. Miercurea Ciuc - O.S. Tulghes 5 Bara Aurel O.S. Codlea + Progresul Silvic 6 Popescu Emil O.S. Buzau 7 Greere Ion O.S.Calimanesti- Valcea 8 Preda V. Gheorghe O.S. Topoloveni - Arges 9 Prodan Sveatoslav R.Moldova, I.S.S. Iargarov 10 Glavan Ilie R.Moldova, I.S.S. Chisinau 11 Bogorin Ioan D.S. Suceava -O.S.Vama 12 Parvu Nicolae D.S. Mehedinti -O.S.Orsova 13 Barbu Marian D.S. Slobozia -O.S.Lehliu 14 Totoescu Adrian D.S. Suceava -O.S.Marginea 15 Nevoie Ilie D.S. Piatra Neamt –O.S.Borca

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Participants in the Targoviste Consultations, October 3, 2000 Name Organization 16 Rotariu Gheorghe D.S. Resita -O.S.Resita 17 Tanase Gheorghe O.S. Tecuci 18 Vasiliu Petrea O.S. Galu 19 Fufezan Augustin O.S. Hunedoara 20 Abrudan Ioan Universitatea Transilvania Brasov 21 Trifoi Florea MAPPM 22 Bucsan Codruta D.S. Sibiu -O.S.Avrig + Progresul Silvic

The third consultation was held in Arad on October 4, 2000 in the RNP Conference Room. The meeting started with a description of the FPD components made by Mr. Florea Trifoi, Project Preparation Team Leader (MWFEP). Draft EA TORs were presented in detail by Dr. Ioan Abrudan (Transilvania University of Brasov). The participants (representing the main regional stakeholders) were asked for any comments and suggestions related to the draft of TORs. The following comments and recommendations were made:

· the draft TORs are very good and there is no further improvement to be made (RNP and logging companies representatives); · the World Bank procedures for EA are more open and participatory than the Romanian ones as these required only written approval from some agencies and no public meetings to discuss the draft report (RNP representatives); · RNP will support the process, especially on the aspects related to road construction, based on the experience gained in this field (RNP representatives); · this is a new approach in Romania in terms of EA and the process is welcome (University representative)

The fourth consultation was held in Bucharest on October 6, 2000, in the MWFEP Meeting Room. The meeting started with a desc ription of the FPD components made by Mr. Florea Trifoi, Project Preparation Team Leader (MWFEP). Draft EA TORs were presented in detail by Dr. Ioan Abrudan (Transilvania University of Brasov). The participants (representing main national stakeholders and media) were asked for any comments and suggestions related to the draft of TORs. The following comments and recommendations were made:

· this is a new approach in Romania in terms of EA and the process is welcome (MWFEP representative). · the consultation on the EA draft report is too wide (but admitted that the WB guidelines and procedures in this respect should be followed) (NIW deputy director) · RNP has experience in other internationally funded projects and is ready to get involved in the process (RNP director); · ICAS has previous experience with EA studies and is ready to assist (ICAS deputy director) · target groups for the local consultation on the draft EA report should be chosen according to a clear identification strategy (Dr. Abrudan answered that there is another consultant preparing the public awareness/communication strategy which includes this aspect) and NGOs are ready to assist (representative of TER NGO, recommendation included in the TORs - paragraph 5(d)).

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Based on the comments received, the draft TORs were finalized, and were included in the Request for Proposals for Shortlisted Firms to provide assistance in preparing the Environmental Assessment.

Consultations on the draft and final Environmental Assessment (held in Poiana Brasov in July 2001 and in September 2001)

Two additional consultations on the draft and final Environmental Assessment were carried out. The first one was in compliance with World Bank OP 4.01 (para 15) which requires consultations on the draft EA, and the second was carried out before Appraisal, in compliance with Bank disclosure requirements also outlined in World Bank OP 4.01 (para 15). The second consultation focused very much on the environmental impacts and mitigation measures associated with the forest roads component.

Participation in these consultations was solicited by invitation and by public notice, published in the national newspaper ("Adevarul"), and on the MAFF website.

Participants at the Poiana Brasov Consultation, July 26 to 28, 2001 Name Organization 1 Florea Trifoi MAAP-UIP 2 Ioan Abrudan MAAP-UIP 3 Viorel Marinescu MAAP-Dept.of Forests 4 Viorica Rabocea MIR - General Division of Consumer Goods 5 Mihai Ionescu APPR 6 Antoaneta Bugheanu APPR 7 Dejica Petru APPR 8 Monica Secareanu MFP-Division of Foreign Public Finances 9 Cornel Han ASFOR 10 Danut Chira ICAS 11 Olimpia Dumitru RNP Romsilva 12 Blaj Tbofil RNP Romsilva- DS Brasov 13 Constantin Rasnoveanu INL 14 Marian Dragoi University of Suceava 15 Mihai Ieremia Forestry Division of Brasov 16 Dan Ardeleanu CSC 17 Dana Manu FIMAN 18 Petre Pau FIMAN-PR & Comunication Strategy 19 Valeria Micu PR and Comunication 20 Gheorghe Florian Borlea Timber Committee EEC/United Nations 21 Ovidiu Ionescu ICAS 22 Vasile Lupu INTERGROUP ENGINEERING 23 Doru Irimie MAAP-Dept.of Forests

Participants at the Brasov Consultation, September 22, 2001 Name Organization 1 Bondici Petru Forestry Division-Hunedoara 2 Bondici Elena Forestry Division-Hunedoara 3 Rasnoveanu Constantin Institutul National al Lemnului 4 Viorica Rabocea MIR - General Division of Consumer Goods 5 Dejica Petru APPR 6 Prahoveanu Ioan APPR

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Participants at the Brasov Consultation, September 22, 2001 Name Organization 7 Ionescu Mihai APPR 8 Ungureanu Doina APP "Stejarul" Topoloveni-Arges 9 Antoaneta Bugheanu APPR 10 Cornel Han ASFOR 11 Viorel Marinescu MAAP 12 Hanganu Horatiu National Park of "Piatra Craiului" 13 Cojocaru Ovidiu Forestry Division Brasov 14 Florea Trifoi MAAP 15 Secareanu Monica Ministry of Public Finances, Division of Foreign Public finance 16 Naiana Zestran Ministry of Public Finances, Division of Foreign Public Finance 17 Blaj Teofil Forestry Division Brasov, MAAP-RNP Bucarest 18 Feroiu Iancu APPR (ING NEDERLANDEN) Brasov Agency 19 Ioan Vasile Abrudan Brasov University 20 Silviu Novac Intergroup Engineering

Particularly with respect to the roads component, these two consultations as well as solicited comments suggested that there is wide consensus about the economic value associated with rehabilitation and construction of forest roads. Costs of the companies operating in forest area decrease significantly decreasing when access is improved. This was widely mentioned amongst particular stakeholders with interests in forest management. Some cases show that forest roads are of a regional importance ensuring the communication between two basins counties or across a mountain barrier.

Some concerns were raised about the impact of forest roads on community access, especially where forest roads play an important role in this respect, and where traffic from timber transporters might negatively affect communities. There were concerns raised as well about the negative environmental impact of earthworks on riverine systems. Indeed, there was widespread consensus that current methods of roads construction can be environmentally damaging, and scope for reducing these specific types of impacts through better construction methods which use more friendly solutions, and which do not harm flora, rivers and fauna.

Local mayors support the rehabilitation of the forest roads and building of new ones because they want to be seen by their communities as creating opportunities for new jobs, and for improving communications with neighboring villages.

The concerns of several NGOs active in the field of biodiversity and habitats protection were noted, particularly with respect to the alteration of the environment and impacts of forest roads construction and rehabilitation on populations of protected species such as large carnivores and herbivores. Road construction and rehabilitation should not be allowed in big isolated basins, and this should be regulated by legislative initiatives to control and limit the permits for building new infrastructure in these areas.

Finally, and in addition, during preparation of the sample Environmental Assessments which were prepared by Intergroup Engineering (reported on in Annex 3 of Volume II),

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additional local consultations were held with communities in the vicinity of planned roads rehabilitation sub-projects in Valea Mare–Crizbav and in Paltinoasa (in Brasov and Prahova Counties, respectively).

During these two consultations, which involved focus group discussions and interviews, most of those consulted were fairly positive about roads rehabilitation activities, because of the perception that local benefits will be generated as a result of this investment. Communities in these areas are deeply involved in the forestry sector, particularly in harvesting and transporting timber, and so roads rehabilitation will yield obvious benefits in terms of reduced costs of extraction. Mayoralties in the zone (Campina, Valea Doftanei, Brebu, Bertea, Halciu) also reported that they are keen to see the proposed project implemented. Intergroup concluded that further information dissemination, for example through the Public Awareness component of the FDP, about the economic value of the proposed roads would be valuable.

Disclosure of the draft and final Environmental Assessments and Project Information

The draft and final Environmental Assessment was made available in Romania via MAFF, the PCT, and local NFA offices in counties likely to be affected by roads rehabilitation and construction (identified from the initial list of priority roads.) Notice of the availability of the draft and final Environmental Assessments was published in the main national newspaper ("Adevarul"), and on the project’s website (www.forestier.ro).

The final Environmental Assessment was posted on the project’s website, as well as through the World Bank Infoshop (where it was posted on October 31, 2001).

The World Bank Project Information Document was originally posted in December 1999, and was updated in March 2002.

Government released the draft Project Appraisal Document to institutions or individuals requesting it, from December 2001, and subsequently posted it on the project website in January 2002.

Consultations following Project Appraisal, held in Brasov on March 21, 2002

In response to correspondence with President Wolfensohn and following contacts with CEE Bankwatch initiated by the Bank, it was agreed that a further NGO consultation should be convened in Brasov to provide an opportunity for further discussion about the project and concerns which have been raised. CEE Bankwatch provided a list of NGOs who should be invited. Correspondence to President Wolfensohn from a group of 17 Romanian NGOs followed, and these NGOs were also invited to the consultation. The invitation to attend the consultation was issued on behalf of the Ministry of Agriculture, Food and Forests by the GEF-financed Biodiversity Conservation Management Project Unit. (The full correspondence with Bankwatch and concerned NGOs is included in Volume II of this Environmental Assessment Update, Annex 4.)

The consultation was held on March 21 at the Forestry Faculty in Brasov. Participants included representatives from Romanian NGOs, CEE Bankwatch, the Ministry of Agriculture, Food and Forests (MAFF), the National Forest Administration, the Romanian

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Research Institute for Forestry, and the World Bank. The meeting was moderated by Professor Dan Manoleli, president of the Foundation for the Development of Civil Society.

The objective of the meeting was to provide an opportunity for further consultation about the project; to enable the Project Preparation Team to explain the objectives, components, and implementing modalities of the Forest Development Project; to provide clarification about preparation of the Environmental Assessment, the public consultation process which accompanied project preparation, and to review the EA's findings and recommendations; to provide an opportunity for concerns about the project to be discussed (in particular with respect to forest roads construction and rehabilitation, institutional aspects of the project, the quality of the EA, and public consultation processes); and to identify whether or not solutions supported by the project are adequate, and areas and approaches which could be strengthened or otherwise improved.

The meeting was divided into four sessions. In the first session, Prof. Ioan Abrudan from the Project Preparation Team, presented the overall project objectives, structure, and implementing modalities. The second session was used to identify the key issues of concern, and to seek clarification about which issues were already addressed by the project and which issues required further discussion. During the third session, the plenary broke into 3 working groups to examine and discuss these issues in greater detail, and to propose further steps which could usefully address specific concerns which had been raised. The discussion and recommendations were presented to the plenary in the fourth session, which was followed by brief closing remarks from a representative from the World Bank and from a Romanian NGO.

The main concerns raised were the following (presented here in the order they were tabled to the meeting during the second session, and recorded on transparencies):

· new forest roads will facilitate the cutting of more trees, especially now when controls are weak and forest law enforcement is not ensured; the institutional set-up for law enforcement has to be in place first, before new forest roads construction begins; (Unesco Pro-Natura) · the exact perimeters of protected areas are not determined yet; in this situation, there is a risk that the rehabilitation of old roads will facilitate access to protected areas; (Amicii Salvamont) · why should funds and resources be spent to develop a new Roads 'Best Practice Manual' for Romania, instead of "importing" one already completed from another country; (CCT Cluj -Napoca) · what are the modalities for ensuring that project information is made available and rural communities are more fully consulted with respect to the construction of new forest roads in to be built in their neighborhood; (CCEG Galati) · the quality of the environment assessment is questionable and the environmental impact of forestry roads construction is not adequately reflected; (Bankwatch) · the institutional framework in which the FDP will operate is not strong enough to address the possibilities of illegal logging, corruption and state capture; (Bankwatch) · public participation and consultation during project preparation was insufficient; (Bankwatch) · how does the size of forest road construction and rehabilitation under the FDP compare with the size of the current Romanian forestry road network, and with the

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size of the forestry roads to be built using budgetary, extrabudgetary and other donors resources; is the FDP forestry road component a pilot operation or not; · what are the consequences of doing nothing for rehabilitation of roads, considering that the long skidding distances on non-rehabilitated roads lead to increased losses and damage of forests; (ICAS) · what is the current status and control capacity of the Forestry Inspectorates of the MAFF, what is the endowment that the FDP provides to strengthen their capacity, and is this enough to make them effective; will the Forestry Inspectorates ensure also the functions of a Forestry Police; · what are the multiple functions of the forestry roads, and what their quality should be in the conditions of a sustainable silviculture; (Faculty of Silviculture) · what is the impact of forestry roads on biodiversity; · what are the economic returns of the FDP, from which the loan will be paid back; are these economic returns coming from increased wood harvesting or something else; · the concept of "sustainable forest development" needs to be put in the larger context of "sustainable national development"; there are winners and losers in any change process, and one needs to assess whether the change (brought by the FDP in this case) will have a positive overall impact after all.

A subsequent discussion ensued during the plenary to clarify the issues which had been tabled, and to provide more information about the project. The moderator proposed, and the plenary agreed, that the issues identified could be grouped into three areas which could help to guide group discussions. The group discussions focused on three main topics: (i) forest roads; (ii) environmental assessment and public participation; and (iii) institutions and corruption. The main ideas and suggestions were the following (summarized from the transparencies presented to the plenary):

Forest roads.

· The 'Best Practice Manual,' used to guide forest roads rehabilitation and construction, would be developed in a manner which would be specific to Romanian conditions. The experience from other countries would be incorporated into the Manual if these were thought to be appropriate and could strengthen it. The building practices outlined in the Manual would be incorporated as legally-binding commitments with contractors responsible for construction and rehabilitation.

· The impact of the forest roads rehabilitation program needs to be considered carefully. NFA reiterated that it expected to rehabilitate these roads anyway, even without IBRD financing. The objective is largely to pilot new approaches toward roads rehabilitation and construction to provide a model and a demonstration with potentially positive impacts on future forest roads construction and rehabilitation.

· The meeting agreed that no roads should be built until steps had been taken to strengthen the Forest Inspectorates. Roads development is not expected to start until the second or third year of the project, while the strengthening of Forest Inspectorates is expected to begin in the first project year. This should be an important prior condition before roads work begins.

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· Information about forest roads rehabilitation and construction should be available to rural communities which might be affected by them. The negative impacts of the roads program on protected areas should be minimized. The Best Practice Manual will include guidance with respect to how public consultations should be convened. All roads, whether rehabilitated or newly constructed, will be subject to an environmental screening process, and those with likely significant environmental impacts will be subject to an environmental assessment and the development of mitigation steps. No roads will be built in protected areas.

Environmental Assessment and Public Participation

It was agreed that the Environmental Assessment needs to be improved. The primary areas which need to be strengthened in the Environmental Assessment include:

· The differences between the role of a Strategic Environmental Assessment and an assessment of the environmental impacts of project-specific impacts needs to be substantially clarified, and the EA needs to consider very specifically those impacts which can be clearly articulated in terms of their project impacts, and sector-wide impacts of the proposed investment.

· The Environmental Assessment must be improved by adding substantial additional information which is not fully reported upon, particularly with respect to fuller information about the project, the location of the initial list of roads targeted for rehabilitation or construction, changes to the legal framework which may impact project implementation, information about the consultation process which was used both to inform preparation of the project and to improve the Environmental Assessment, maps (as appropriate) and other information about initiatives with respect to public activities to conserve biodiversity (including the GEF-financed Biodiversity Conservation Management Project).

· The text and recommendations which are outlined in Annex IIA of the Environmental Assessment ['Initial Report on Environmental Aspects of Forest Roads Component' prepared by Fortech, Dames and Moore, and Project Management (Ireland)] should be incorporated into the Environmental Assessment as an integral part of it, and should be used to develop binding recommendations during construction.

· The impacts of project investments on harvesting should be considered and incorporated into the Environmental Assessment, and used to develop mitigation actions, as information allows.

· More information should be provided about the project alternatives considered, and the reasons for their rejection.

Institutions, Governance, and Corruption

The meeting sought further information about plans to strengthen the capacity of Forest Inspectorates and investments in equipment to improve their ability to do their job. More information was provided to those requesting it, and it was agreed that they would further

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consider if the investments and capacity strengthening provided by the FDP will be sufficient for them to perform their functions.

The meeting discussed the relationship between the National Forest Administration (NFA) and the Forest Inspectorates in MAFF, and whether they are genuinely independent from one another, or if there are possible conflicts of interest between the two institutions. The meeting discussed the scope for placing the Forest Inspectorates under an alternative institution, such as the Ministry of Water and Environmental Protection (MWEP) to maintain an arms-length distance between the Inspectorate and the NFA. The meeting recommended that the component of the project dealing with restructuring of the NFA should include a study to improve the institutional structure which considers the need for clearer separation between controlling and administrative functions.

The meeting questioned why the Association of Private Forest Owners had been specifically identified for support through the project. The Association was identified as one of the only stakeholder groups, at the time of project preparation, with interests in improving the capacity of private forest owners to undertake sustainable forest management. The meeting recommended that clear eligibility criteria to benefit from FDP should be established for other associations with interests in improving the capacity of private forest owners to undertake sustainable forest management.

The meeting discussed concerns about corruption in the sector and illegal harvesting, and recommended that the impact of the project on corruption should be more fully assessed. The Bank countered that because proper diagnostic work had not been carried out with respect to corruption, it would be impossible to assess the project's likely impact in this regard. The Bank agreed that it would seek resources to carry out a diagnostic study of corruption in the forest sector, and that the results from this study should be used to inform future actions to address it within the wider framework of Government's anti-corruption strategy.

In closing remarks, the Bank indicated that it viewed this consultation as one of many, and that it would seek to support future consultations, in partic ular noting that Government had agreed to include a representative of the NGO community on the Project Oversight Committee. The Bank also agreed that it would support any Government initiative which sought to improve the Environmental Assessment, which should be viewed (in conjunction with the Environmental Mitigation Plan) as a dynamic document subject to change as experience during project implementation is gained.

A representative from Clubul Ecologic Transilvania was invited also to make closing comments. He welcomed the opportunity for consultation and indicated that it was not the intention of the NGO's represented at the meeting to stop the project, but simply to find a way to improve it.

Participants at the Brasov Consultation, March 21, 2002 Name Institutional Affiliation 1 Daroczi Szilard NGO – Grupul Milvus Tg. Mures 2 Zeitz Robert NGO - Grupul Milvus Tg. Mures 3 Done Tatiana NGO – Fundatia de Speologie Bucovina 4 Negrea Ion NGO – Cerotin Tg. Jiu 5 Cornoiu Sabin NGO – Amicii Salvamont Tg. Jiu

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Participants at the Brasov Consultation, March 21, 2002 Name Institutional Affiliation 6 Lengyel Peter NGO – Unesco Pronatura Bucuresti 7 Kelemen Andrei NGO – Clubul Ecologic Transilvania Cluj Napoca 8 Mititean Radu NGO – Clubul de Cicloturism Montan Cluj Napoca 9 Rachita Doina World Bank, Bucuresti 10 Ionescu Mihai Romanian Asoci ation of Private Forest Owners 11 Borlea Florian NGO – Pro Silva Europa, Timisoara 12 Marinescu Viorel Ministry of Agriculture, Food and Forests 13 Manu Dana NGO – FIMAN, Bucuresti 14 Cazan Ioan National Wood Institute, Brasov 15 Ionescu Ovidiu Forest Research and Management Planning Institute, Bucuresti 16 Trifoi Florea Ministry of Agriculture, Food and Forests 17 Florescu Ion NGO – Progresul Silvic 18 Mihai Dragos National Forest Administration, Bucuresti 19 Predoiu George NGO – Societatea Cinegetica Romana 20 Ionescu Georgeta NGO - Fundatia Carpati, Brasov 21 Bischoff Casandra World Bank, Bucuresti 22 Verghelet Mircea Piatra Craiului National Park 23 Petrescu Dan World Bank, Bucuresti 24 Dewees Peter World Bank, Washington 25 Bontempo David World Bank, Washington 26 Feiler Jozsef NGO – CEE Bankwatch Network, Budapest 27 Malbasic Ivona NGO – CEE Bankwatch Network, Budapest 28 Moisi Petruta NGO – Centrul de Consultanta Ecologica, Galati 29 Manoleli Dan NGO – Fundatia pentru Dezvoltarea Societatii Civile, Bucuresti 30 Savulescu Alexandru NGO – ARZM / Perspective, Bucuresti 31 Parvulescu Iulian NGO – Asociatia Speologica Exploratorii Resita 32 Paranici Bogdan NGO – Alianta pentru Natura, Bucuresti 33 Stan Victoria NGO – Fundatia Edelweiss, Sibiu 34 Abrudan Ioan Transilvania University of Brasov

Individuals consulted during preparation of the Forest Development Project

In addition to formal public consultations which were undertaken, the following individuals were consulted during preparation of the Environmental Assessment:

Individuals consulted during preparation of the FDP Name Organization Viorel Ghelasa Ministry of Agriculture, Food and Forests- Secretary of State Viorel Marinescu Ministry of Agriculture, Food and Forests- Director Adrian Popa Ministry of Agriculture, Food and Forests- Director Florea Trifoi Ministry of Agriculture, Food and Forests – Director PCT BCMP Mihai Costache Ministry of Waters and Environmental Protection Valerica Grigoras Ministry of Waters and Environmental Protection Monica Secareanu Ministry of Public Finance Viorica Rabocea Ministry of Industries and Resources Mihai Daia National Forest Administration, Bucharest Dragos Mihai National Forest Administration, Bucharest Ion Bara National Forest Administration, Codlea Ovidiu Cojocaru National Forest Administration, Sacel-Sibiu Anca Ioanitescu Environmental Protection Agency

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Individuals consulted during preparation of the FDP Name Organization Mihai Ionescu Association of Private Forest Owners, Brasov Ion Sbera Association of Romanian Foresters Gheorghita Ionascu Transilvanai University of Brasov, PPT Ioan Abrudan Transilvania University of Brasov, PPT Stefan Vasile University of Bucharest Nicolae Geambasu Forest Research and Management Planning Institute Ioan Cazan National Wood Institute, PPT Verghelet Mircea Piatra Craiului National Park Administration Sevastel Mircea SAPARD Agency, Bucuresti Gheorghe Gavrilescu NGO-Progresul Silvic, Bucuresti Ion Florescu NGO-Progresul Silvic, Brasov Jeno Ferko NGO-Grupul Verde, Oradea Georgeta Ionescu NGO-Fundatia Carpati, Brasov Sorin Lungu NGO-OSS Silva, Brasov Ionut Gondos NGO-OSS Silva, Brasov Radu Kubinski NGO-The International Management Foundation, Bucuresti Petre Paul NGO-The International Management Foundation, Bucuresti Dana Manu NGO-The International Management Foundation, Bucuresti Alexandru Marinescu NGO-Asociatia Generala de Sprijin Pentru Dezvoltare Rurala Gheorghe Dragomir NGO-Asociatia Culturala Romania in Lume, Bucuresti Stelian Popescu NGO-Asociatia Forest Consulting Romania, Bucuresti Tincuta Ciubotariu NGO-Asociatia Nemteanca, Tg. Neamt Lucian Ionescu NGO-Asociatia Terra Nostra, Bucuresti Mircea Facas NGO-Fundatia pentru Dezvoltare Locala Partner, Tg. Neamt Florian Borlea NGO-ProSilva Romania, Timisoara Elena Cucu NGO-Fundatia de Dezvoltare Locala Speranta, Tg. Neamt Dan Ionescu NGO – Romanian Ornithological Society Cristiana Pasca NGO-Fauna and Flora International, Romania Niegel Coulson NGO-Fauna and Flora International, UK Zbigniew Karpowicz NGO-Fauna and Flora International, UK Radu Paunescu Intergroup, Bucuresti Andrew Mitchell Fortech Dames&Moore, UK, PPT Henry Phillips Project Management, Ireland, PPT James Ramsey Fortech Dames&Moore, UK, PPT

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APPENDIX 4: PROTECTED AREAS OF ROMANIA (MAP, LOCATION, AREA)

There are 18 formally protected Biosphere Reserves and National and Natural Parks in Romania covering a total area of 1.1 million ha. Their locations are identified by number in Figure 7. The legend for the map in Figure 7 follows:

Map National International Approximate Reference Name Status Status Area (ha) 1. Muntii Rodnei National Park Biosphere Reserve 46,399 2. Cãlimani National Park 24,041 3. Vantatori Neamt Natural Park 4. Ceahlãu National Park 8,396 5. Cheile Bicazului - National Park 6,575 Hamas 6. Balta Micaa Braila Natural Park Ramsar Site 17,529 7. Muntii Mãcinului National Park 11,321 8. Delta Dunarii National Park Biosphere Reserve 580,000 Ramsar Site World Heritage Site 9. Bucegi Natural Park 32,663 10. Piatra Craiului National Park 14,800 11. Cozia National Park 17,100 12. Grãdistea Natural Park 10,000 Muncelului - Cioclovina 13. Retezat National Park Biosphere Reserve 38,047 14. Domogled-Valea National Park 60,100 Cernei 15. Portile de Fier Natural Park 115,655.8 16. Cheile Nerei – National Park 37,100 Beusnita 17. Semenic Cheile National Park 36,664 Carasului 18. Muntii Apuseni Natural Park 75,784 As described in Law 5/2000

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Figure 7: Romania Biosphere Reserves, National, and Natural Parks

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In addition to these 18 National Parks, Natural Parks, and Biosphere Reserves, there are a large number of additional scientific and natural reserves, and natural monuments which have a different legal status. Many of these are quite small. Formal boundaries for the vast majority of these sites have not been identified or demarcated. Assistance which is being provided through the GEF Biodiversity Conservation Management Project is partly designed to assist Government in completing this task. These 827 sites account for a total of 232,076 ha. Of these, 134 sites (accounting for 56 percent of the total area) are found within the boundaries of National Parks, Natural Parks, and Biosphere Reserves. A map showing the number and area of these sites, by County is shown in Figure 8.

Figure 8: Number/ Area of Scientific Reserves, Natural Reserves, and Natural Monuments, by County

BT MM 8/274 ha SM 33/5415 ha SV 6/128 ha 25/3948 ha BN SJ IS 25/3309 ha 13/87 ha 24/5024 ha BH NT 60/1133 ha 23/24580 ha CJ MS 21/6425 ha 14/14128 ha VS HR BC 8/228 ha AR 36/5168 ha 15/201 ha 15/563 ha AB 82/822 ha CV GL TM VN HD SB BV 1/48ha 16 14/3454 ha 18/2878 ha 42/2488 ha 15/18760 ha 25/15401ha 1185 ha BZ CS VL AG 15/1780 ha GJ BR 47/32092 ha 29 28 PH TL 36/4522 ha DB 2/931 ha 614 ha 17032 6/5034 ha 24/46096 ha 11 MH 1581 ha IL 32 0/0 ha OT 2106 ha CL 6 CT DJ GR 1/75 ha 654 ha TR 27/12701 ha 18/545 ha 4 0/0 ha 559

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APPENDIX 5: PRELIMINARY LIST OF ROADS REHABILITATION AND CONSTRUCTION SUB-PROJECTS AND MAPS

A list of the roads which have been initially identified as sub-projects for rehabilitation or construction follows. This is a preliminary list, which was used to establish the potential costs and benefits of the forest roads program, to evaluate economic impacts of reduced extraction costs, and to assist in developing a means of screening proposed roads for their environmental and social impacts. An earlier list of 91 roads was rescreened, and 20 of these roads were rejected because they did not meet the criteria for investment. These roads accounted for around 90 km of the initial list of roads proposed for rehabilitation (or 18 percent of the 500 km of roads initially identified for rehabilitation), and around 25 km of the initial list of roads proposed for construction (or around a third of the 80 km of roads initially identified for new construction). Additional sub-projects will be identified during the course of project implementation which will account for the balance of road works financed by the project. No new sub-projects have been identified since the project was Appraised.

As part of the environmental and social screening process during project implementation, the Project Management Team will prepare a notice in June of every year for publication in the national press of additional sub-projects which are identified for financing by the FDP and will seek public comment as part of the regular cycle of screening and review which is to be established.

The roads in the following list, as well as other subprojects identified for construction or rehabilitation will be subject to further environmental screening during project implementation. A full EA of each road which is judged to have the potential for significant adverse impacts will be undertaken to identify how these impacts can be mitigated. These proposed road-specific EA procedures are fully consistent with World Bank OP 4.01 which allows for the preparation of subproject-specific environmental assessments during the preparation of each proposed subproject.

The list of roads identified for rehabilitation and construction remains simply a list. Subprojects will be further evaluated and prepared during implementation of the full project. The project will finance the development of a Best Practice Manual which outlines environmental standards (including screening and environmental assessment procedures) to be followed during identification, rehabilitation, and construction. Compliance with the Best Practice Manual will be a contractual obligation. Road works are only expected to be launched in the second year of the project to ensure that the Best Practice Manual is completed to an acceptable standard. The standard of requiring environmental screening and assessment of forest roads in Romania, and the preparation of the Best Practice Manual, meets EU standards for forest road construction in Western Europe as well as Romanian national standards for environmental assessment.

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Preliminary List of Roads Rehabilitation and Construction Sub-projects, and Map References Estimated Distance (km) Map New or Economic Number County Name Rehabilitation New Rehab Return 1 Alba Paraul Calul ui New road 2.0 65% 2 Alba Rosioara New road 2.3 14% 3 Alba Valea Ruzii Rehabilitation 8.5 10% 4 Alba Valea Galatiului Rehabilitation 7.0 16% 5 Arad Latesti Rehabilitation 3.6 59% 6 Arad Daboaca New road 6.3 35% 7 Arad Valae Rehabilitation 4.3 17% 8 Arad Valea Cioltului New road 1.3 29% 9 Arad Valea Iuga Rehabilitation 3.8 8% 10 Arges Bunea New road 1.7 6% 11 Arges Fiasu Olanele New road 2.0 14% 12 Arges Brateasa Rehabilitation 3.0 18% 13 Arges Zigoneni Rehabilitation 6.0 19% 14 Arges Dobroneagu Rehabilitation 10.5 22% 15 Arges Cumpenita Rehabilitation 4.6 24% 16 Arges Valea Satului Rehabilitation 6.3 19% 17 Vaslui Duraceasa Rehabilitation 3.0 59% 18 Bacau Rotaru Slanic Rehabilitation 2.7 23% 19 Bacau Limbar prel. New road 2.3 29% 20 Bacau Ghedeon Rehabilitation 1.9 14% 21 Bacau Covata Rehabilitation 4.3 25% 22 Bacau Casoasa Frasin Rehabilitation 4.0 15% 23 Bacau Larga Rehabilitation 3.3 56% 24 Bihor Sub Baceasa New road 3.8 12% 25 Brasov Pojorata Rehabilitation 1.7 29% 26 Brasov Cremenea Cr. Rehabilitation 3.3 14% 27 Brasov Crizbav Rehabilitation 2.3 25% 28 Buzau Basca Mare Rehabilitation 7.0 31% 29 Buzau Basca Mica Rehabilitation 23.0 28% 30 Caras Bistra Maru Rehabilitation 12.1 26% 31 Cluj Dudaie New road 3.3 42% 32 Cluj Caprita New road 1.3 17% 33 Covasna Darnaul Mic Rehabilitation 2.4 12% 34 Dambovita Priboiu Rehabilitation 2.4 24% 35 Dambovita Buturoaia Rehabilitation 5.6 11% 36 Dambovita Ruda Seaca Rehabilitation 11.8 23% 37 Dambovita Negoaia Valea Ma Rehabilitation 8.3 14% 38 Gorj Motru cu Apa Rehabilitation 12.8 19% 39 Gorj Oltet Rehabilitation 19.7 26% 40 Gorj Gilort Rehabilitation 18.0 26% 41 Hunedoara Tomnatec New road 5.6 32% 42 Hunedoara Dobra Rehabilitation 15.0 24% 43 Maramures Vaser Rehabilitation 54.0 27% 44 Maramures Bercului Rehabilitation 14.5 48% 45 Maramures Puturoasa Rehabilitation 5.5 102% 46 Maramures Socalau Rehabilitation 11.6 39% 47 Mehedinti Valea Mare Rehabilitation 7.8 34% 48 Mures Fancel Lapusna Rehabilitation 5.0 47% 49 Neamt Cirestului New road 4.5 24% 50 Neamt Pr. Grajdului pr New road 1.7 19% 51 Neamt Cuejdel ob. New road 2.8 26% 52 Prahova Vulpea Rehabilitation 3.2 11% 53 Prahova Paltinoasa Rehabilitation 7.8 15%

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Preliminary List of Roads Rehabilitation and Construction Sub-projects, and Map References Estimated Distance (km) Map New or Economic Number County Name Rehabilitation New Rehab Return 54 Prahova Limbasel Rehabilitation 17.9 14% 55 Sibiu Izvoru Florii Rehabilitation 2.3 11% 56 Sibiu Mancu Sulita Dra Rehabilitation 7.2 37% 57 Sibiu Sadurel Porcu Rehabilitation 18.3 22% 58 Suceava Valea Colibei New road 2.5 5% 59 Suceava Dubul New road 4.5 31% 60 Suceava Mlaca Rehabilitation 3.5 7% 61 Suceava Ehriste Rehabilitation 2.1 12% 62 Timis Hamos Rehabilitation 5.1 37% 63 Timis Carliontu Rehabilitation 3.5 22% 64 Timis Drinova Rehabilitation 8.0 19% 65 Valcea Mihaescu New road 3.8 10% 66 Valcea Cerna Rehabilitation 4.0 23% 67 Vrancea Valea Neagra Rehabilitation 5.0 20% 68 Vrancea Motnau Rehabilitation 12.0 13% 69 ICAS Rapa Fetii New road 1.9 20% 70 Harghita Pod Pantec Rehabilitation 1.0 25% 71 Harghita Barasau Rehabilitation 9.2 35% Total identified Sub-projects 55.9 428.4

To assist in the preliminary sub-project screening process, nine maps were prepared showing the roads which have been initially identified for rehabilitation or construction. These maps follow. The first map (Figure 9) gives an approximate orientation of each of the nine detailed maps which follow. Roads on the detailed map which have been identified for rehabilitation appear in grey and new roads are identified in pink (for black and white maps, refer to the above listing). The maps were originally prepared at a scale of 1:700,000, but this scale has been altered because of reproduction in this report.

The location of the Vaser Railway is also identified, which has initially been targeted for rehabilitation, and is marked as number 43 on Figure 15.

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Figure 9: Approximate Orientation of Detailed Maps Showing Location of Roads Identified in Preliminary Screening for Rehabilitation or Construction

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Figure 10: Location of proposed rehabilitation and construction, Valcea (Map 1)

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Figure 11: Location of proposed rehabilitation and construction, Suceava (Map 2)

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Figure 12: Location of proposed rehabilitation and construction, Prahova (Map 3)

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Figure 13: Location of proposed rehabilitation and construction, Neamt (Map 4)

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Figure 14: Location of proposed rehabilitation and construction, Mehedinti (Map 5)

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Figure 15: Location of proposed rehabilitation and construction, Maramures (Map 6)

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Figure 16: Location of proposed rehabilitation and construction, Bucarest (Map 7)

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Figure 17: Location of proposed rehabilitation and construction, Hunedora (Map 8)

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Figure 18: Location of proposed rehabilitation and construction, Cluj (Map 9)

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APPENDIX 6: PROTECTION FORESTS: FUNCTIONAL CATEGORIES AND PERMISSIBLE FELLING SYSTEMS IN ROMANIA

Classifications Of Silvicultural Systems And Felling Regimes Coding Classification TI No felling TII Conservation felling (sanitation and/or safety) TIII Selection or group selection system felling TIV Selection or group selection system felling and restricted shelterwood system felling

Functional Group 1: “Protection Forests”

Functional Subgroup 1.1: Forests With Water Protection Function Subgroup Description Silvicultural system 1.1.a) forests in well and water source protection areas, mapped based on (TII); relevant studies and approved by the Ministry of Silviculture 1.1.b) forests on slopes adjacent to lakes/reservoirs (TIII); 1.1.c) forests on slopes in mountain and hilly regions up to 15 - 30 km (TIV); distance from the lakes/reservoirs and in their collection watershed 1.1.d) forests along Danube river banks and Danube Delta and along the (TIV); interior rivers 1.1.e) forests in the vicinity of river floors (TIII); 1.1.f) forests in the area between the river floor and river bank area (TIV); 1.1.g) forests in watersheds with active torrents (TIII); 1.1.h) forests for protection of water sources (wells) for trout farms and on the slopes surrounding trout farms (minimum 100 ha); 1.1.i) dwarf pine in the vicinity of alpine meadows (TII).

Functional Subgroup 1.2: Forest With Site And Soil Protection Function Subgroup Description Silvicultural system 1.2.a) forests on stony slopes, debris with slopes steeper than 40o, flisch (T ?) [colluvium?] with slopes steeper than 35o, sandy soils with slopes steeper than 30o, and any steep slope with high erosion 1.2.b) forests (entire compartments) adjacent to public roads and (TII); railways in broken terrain 1.2.c) forests surrounding alpine meadows, in strips 100 - 300 m wide (TII); (width according to the site conditions and structure of stands) 1.2.d) forests surrounding industrial and hydrotechnical structures at a (TII); minimum radius of 50 m and at a maximum radius depending on the erosion/landslide conditions 1.2.e) forest plantation on degraded/eroded lands (TII); 1.2.f) forests in areas where avalanches are originating or run-off (TII); 1.2.g) forests on moving sands (TIII); 1.2.h) forests in landsliding areas (TII); 1.2.i) forests in swamp areas (TII); 1.2.j) forests around open mines in strips 100-300 m wide (width (TII); according to the site conditions and structure of stands) 1.2.k) forests in karst areas (TIV); 1.2.l) forests on land with erosion/sliding vulnerability, with slopes (TIV).

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Subgroup Description Silvicultural system lower than those mentioned at 1.2.a

Functional Subgroup 1.3: Forest With Protection Function Against Climatic And Industrial Threat Factors Subgroup Description Silvicultural system 1.3.a) steppe forests, forests situated at the limit between steppe - silvo- (TIII); steppe, except riverine forests 1.3.b) forests near Black Sea and seaside lakes, at a radius of 15 km (TII); 1.3.c) oak forests under conservation in plain areas (TII); 1.3.d) forests from the surrounding compartments of reservoirs and fish (TII); lakes 1.3.e) alignments and hedges protecting agricultural lands, (TII); communication ways, industrial objectives and localities 1.3.f) forests at high altitudes with difficult regeneration conditions (TII); 1.3.g) scattered forests in the plain region with an area smaller than 100 (TIII); ha 1.3.h) forests in areas with high air pollution, identified by studies (TII); approved by the Ministry of Silviculture 1.3.i) forests in areas with low air pollution, identified by studies (TIII); approved by the Ministry of Silviculture 1.3.j) forests surrounding ash, sterile and waste heaps at a radius of 2 km (TII); according to the threats to the environment 1.3.k) forest edges (limits) situated in plain regions, in strips up to 20 m (TII). wide

Functional Subgroup 1.4: Forest With Recreation Function Subgroup Description Silvicultural System 1.4.a) park forests and other high recreation value forests, as established (TII); by the Ministry of Silviculture 1.4.b) peri-urban forests, of size established based on criteria of number (TIII); of inhabitants (as set by the Ministry of Silviculture) 1.4.c) forests with very high functional value surrounding resorts or (TII); hospitals, approved by the Ministry of Silviculture 1.4.d) forests with medium and high functional value surrounding resorts (TIII); or hospitals, approved by the Ministry of Silviculture 1.4.e) forests of landscape value around cultural sites (established by law) (TII); at a radius of up to 1km, according to the importance of the site 1.4.f) forest strips around hotels, motels, camping sites etc., at a radius of (TII); up to 1 km and an area of up to 50 ha, according to the importance of the place 1.4.g) forests around co-operatives and agricultural farm centres, at a (TII); radius of up to 1 km and an area of up to 50 ha 1.4.h) forests situated at a distance up to 2 km from villages in the plain (TII); region, and of an area up to 50 ha 1.4.i) entire compartments along the communication ways of high (TII); tourism interest 1.4.j) forests managed for game conservation or intensive management (TIV); 1.4.k) forests protecting special locations, approved by the Ministry of (TII); Silviculture

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Functional Subgroup 1.5: Forest Of Scientific Interest And For The Protection Of Forest Genetic Fund Subgroup Description Silvicultural system 1.5.a) core areas of the national parks established by law (TI); 1.5.b) natural parks, aiming to preserve the natural landscape (TIII); 1.5.c) nature reserves (TI); 1.5.d) scientific reserves (TI); 1.5.e) landscape reserves established by law (TI); 1.5.f) natural monuments (TI); 1.5.g) forests where scientific research /experimental permanent plots are (TII); located 1.5.h) seed reserves (TII); 1.5.i) forests designated for the protection of fauna species (capercaillie, bear, (TII); chamois), established by the Ministry of Silviculture 1.5.j) old-growth forests of high value and forests of very rare species, (TII); delineated by the Ministry of Agriculture 1.5.k) dendrological parks and arboreta (TII)

The extent of felling in each silvicultural system will be determined on the basis of site conditions and the condition and stocking of the stand in question so that any harvesting is consistent with principles of sustainable forest management.

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APPENDIX 7: LIST OF UNDISTURBED FORESTS IN ROMANIA

The National Biodiversity Strategy and Action Plan for Romania (1996) listed 20 forests which were deemed to be important for their biodiversity. These are presented in the table below.

Forests of Importance for their Biodiversity Value No. Name of Forest Surface area Type of forest (ha) 1 Piatra Craiului* 1932 + 1459 Spruce forest, mixed beech and coniferous 2 Runca-Grosi 932 Quercus sessiliflora forests 3 Vorona 150 Mixed forest of Quercus sessiliflora, beech and lime 4 Tudora 120 Mixed forest of Quercus sessiliflora, beech and lime 5 Bucegi 1634 + 3748 Larch, spruce forests; mixed beech and fir forests 6 Izoarele Nerei 6261 Beech forests 7 Domogled 2743 Black pine (Pinus nigra var. bannatica) forest; Beech forest on limestone 8 Dognecea Forest 316 Mixed forests of Q. sessiliflora, Q. cerris, Q. frainetto, lime and beech 9 Rachiteanu Forest 1200 Montane beech forest 10 Humosu 73 Hill beech forest 11 Slatioara 854 Mixed forest of beech, fir and spruce 12 Giumalau 314 Spruce forests 13 Letea 2825 Oak, ash and poplar forest on maritime sands 14 Caraorman 2250 Oak, ash and poplar forest on maritime sands 15 Latorita 7 Larch forests 16 Retezat*+ 13,000 Spruce forest; Mixed beech, fir and spruce forest; Beech forest; Pine forest 17 Calimani - Mixed forest of spruce and Pinus cembra; spruce forests 18 Polita cu Crini 370 Mixed spruce, larch, spruce, beech forest; Larch and spruce forests 19 Cozia - Beech forests; mixed beech- coniferous forest; Q. sessiliflora forest 20 Vidalm - Larch forests * National Park + UNESCO Biosphere Reserve.

A separate study, recently completed by the Forest Management and Research Institute (Institutul de Cercetari si Amenajari Silvice, or ICAS), identified 75 forests which it maintained were ‘undisturbed’ and were worthy of protection. These are listed in the following table.

Undisturbed Forests of Importance for their Conservation Value Location Area (ha) 1 Abruptul Nordic al Bucegilor 850 2 Abruptul Nordic al Fagarasului 5000 3 Abruptul Pietrei Craiului 630,4 4 Abruptul Prahovean al Bucegilor 1521 5 Aries 751

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Undisturbed Forests of Importance for their Conservation Value Location Area (ha) 6 Bargau 500 7 Belareca 309.5 8 Bila-Lala 250 9 Bistra Mica 1150 10 Bota Mare-Zabratau 70 11 Calimani 507.5 12 Cantoria 39.45 13 Carligu Mare 480 14 Cazanele Dunarii 200 15 Cetatea Radesei-Izvoarele Somesului 1179.7 16 Cheile Bicazului-Lacul Rosu 600 17 Cheile Nerei-Beusnita 1612.6 18 Cheile Oltetului 150 19 Cheile Sohodolului 350 20 Cheile Susarei 246 21 Cheile Tatarului 144.3 22 Cheile Topologului (Valea Sutu, V. Cloaca) 600 23 Cheile Zarnestilor 109.8 24 Ciucas 1042 25 Ciucevelele Cernei 680 26 Ciuha Neamtului 850 27 Codrul Secular Ciuria 327 28 Codrul Secular Giumalau 309.5 29 Codrul Secular Slatioara 369.3 30 Comorisnita 2750 31 Cormaia 687 32 Coronini Bedina 1917.7 33 Defileul Jiului 1800 34 Defileul Muresului 601.3 35 Doisprezece Apostoli 100 36 Domogled 2000 37 Dosul Cernei 850 38 Ducin 150 39 Durau 1100 40 Gradistea Muncelului-Cioclovina 1073.7 41 Hasmasu Mare-Piatra Singuratica-Hasmasu Negru 250 42 Iardasita 253.3 43 Iauna Craiovei 1350 44 Ieselnita 764.8 45 Ineu-Lala 981.1 46 Izvoarele Doftanei 600 47 Izvoarele Gilortului 750 48 Izvoarele Nerei 5028 49 Izvoarele Rebrei 500 50 Izvorul Bigar 150 51 Izvorul Muntelui -Neagra 350 52 Lacauti 775 53 Masivul Postavarul 250 54 Mraconia 3458.9

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Undisturbed Forests of Importance for their Conservation Value Location Area (ha) 55 Narutiu- Foarfeca 1200 56 Oslea 100 57 Padurea Gorganu 70 58 Padurea Gosmanu 175 59 Padurea Latorita 187 60 Padurea Milea-Viforata 534 61 Parcul National Retezat 5183 62 Penteleu 1050 63 Piatra Closanilor 1150 64 Piatra Mare 450 65 Pietrosul Mare 850 66 Piscul Cainelui 205 67 Runcu-Grosi 261.8 68 Sipotelul Sihastrului 800 69 Stancariile Zarnei 335 70 Tarcu 2000 71 Valea Ciclovei 1004.2 72 Valea Mare 400 73 Valea Vinului 785.7 74 Zona carstica- Cheile Dambovitei- Dambovicioara- Brusturet 1154.4 75 Zoruleasa -Cheile Valsanului 228.3 Source: ICAS

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APPENDIX 8: SUGGESTED SCREENING FOR WOOD PROCESSING INDUSTRIES

Component 2.4 of the FDP proposes to provide support and assistance for Small and Medium-sized Enterprises (SMEs) to process and add value to forest products. There are risks that ForsBIC could support the establishment of potentially polluting and environmentally damaging industries. In order to prevent support to potentially polluting activities, all projects which will support the establishment or upgrade of forest processing industries are first screened to determine the likelihood of negative environmental and social effects.

The following screening criteria will be used:

1. Type of activity 2. Nature of support from the project. 3. Location of the Project in relation to Protected Areas, ground and surface waters, local population, raw materials, transport links etc. 4. Use or generation of potentially polluting substances (e.g. chemicals, solvents, oils, gas, liquid and gaseous effluents, hazardous wastes including type and volume generated or stored); 5. Proposed management techniques (e.g. for containment, storage, pollution control, waste management, health and safety); 6. Anticipated generation of traffic; 7. Permits and approvals required.

Further screening, Assessment, and mitigation will be in the framework of the national and local regulatory framework for environmental assessment.

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APPENDIX 9: DRAFT TERMS OF REFERENCE FOR DIAGNOSTIC STUDY OF CORRUPTION IN THE FORESTRY SECTOR

Background

The Forest Sector

Romania's forests cover 27 percent of the country and include some of the last and largest tracts of natural and undisturbed old growth forests still remaining in Europe. They constitute an extremely valuable natural resource in terms of their capacity for sustainable production of forest products, provision of environmental services, and the conservation of biodiversity.

Although more than half of Romania's forests are managed for protection functions (rather than for timber production), in the year 2000 the export value of forest products was estimated at around US $1 billion, equivalent to 10 percent of all exports. The value of environmental services associated with forests are, however, considerably larger. Recent studies have indicated that the annual value of all products and services provided by Romania's forests, including environmental services but excluding value-added from forest industries, is on the order of US$3.1 billion.

Separate institutions under the Ministry of Agriculture, Food and Forests (MAFF) -- principally the Department of Forests (DoF) with its Directorates of Silvic Regime Inspection (i.e. the Forest Inspectorates) and of Strategy, Policy and Legislation -- are responsible for regulatory, monitoring, enforcement, and supervisory functions on all forest lands.

There is mounting pressure to return more than one-third of all forest lands to their pre-1948 owners through the on-going process of restitution. Most of the forests scheduled for restitution are production forests, which currently generate most of the revenues needed by NFA to undertake public functions associated with management of protection forest (53 percent of Romania's forest estate). The restitution of forest lands will ultimately lead to greater democratization, empowerment, and improved distribution of benefits from forest management to their owners and to associated rural communities. Having said this, the role of the State will need to change rapidly to reduce the potentially devastating impacts of restitution on forests, the environment, and on the sector's long-term productive capacity.

The NFA currently manages around 85 percent of Romania's forests. This area will be reduced dramatically after restitution. The restitution of approximately 3 million hectares of forest land is being sought by a range of former owners. Of these, claims representing more

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than 1.4 million hectares have been validated by county commissions for restitution, and 755,000 hectares had already been returned to their original owners by the end of June 2001. It is likely that about two million hectares will be returned to the various categories of private owners by 2003.

Since most of the forests which will be returned to former owners is production forest, restitution will significantly increase the proportion of non-revenue generating activities undertaken by the NFA (from the management of protection forests, which are areas rich in forest biodiversity) as a share of its total expenditure. Restitution will have the added impact of breaking up contiguous blocks of forest administered by NFA, thereby making management more difficult and costly. Consequently, NFA is expected to encounter difficulties in financing its public functions -- primarily maintaining and managing the State's protection forests -- using its own decreasing revenue generating activities.

The forest sector is a significant provider of rural employment and income. In the year 2000, approximately 30,000 people were employed in forest management; 67,000 in logging and primary processing; 21,000 in pulp and paper industries, and over 100,000 in furniture manufacturing. Forest-based tourism and the collection and sale of non-timber forest products also provides employment for large numbers of the Romanian rural population. There are significant opportunities to increase the scale, competitiveness and profitability of Romanian wood industries, and employment supported by the sector, while maintaining public and private forests under sustainable management and while protecting Romania's rich forest biodiversity.

Corruption and illegal harvesting

There is relatively little information known about the extent of corruption in the forest sector. Earlier estimates suggested that between 5 and 20 percent of the timber on the market in Romania had been illegally harvested, but the basis for this estimate was largely anecdotal.57 The failure, however, to capture revenues as a result of corruption and illegal harvesting increases the overall cost of management, and supports rates of forest harvesting which are not consistent with generally accepted norms of sustainable forest management.

(57) See for example,. World Bank (1999). There was no empirical basis for this estimate, and subsequent reviews have discounted it.

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(World Bank, Diagnostic Surveys of Corruption in Romania, March 2001). The study concluded that corruption is perceived by the public to be widespread. About two-thirds of the Romanian public believes that “all” or “most” officials are corrupt. Public officials reported lower perceived levels of corruption, although still high: 44 percent reported that all or most officials are engaged in corruption. While the perception of widespread corruption is clear, it is also clear that many people believe that corruption has achieved a state of normalcy. Half of households reported that bribery is part of everyday life, while only one in eleven reported bribes to be completely unnecessary. Enterprise managers and public officials were less negative with four tenths and a third, respectively, reporting corruption to be a part of everyday life.

Administrative corruption and state capture

Corruption poses a significant constraint on firms in Romania, with almost two out of three firms reporting that corruption is an obstacle. Other related ills, such as bureaucracy, red tape, clientelism, and sluggish courts also pose significant problems for businesses. Many of the most important obstacles to business development are significantly correlated with state capture -- corruption associated with the formation of laws, rules, and decrees. It is important to distinguish state capture from administrative corruption – which refers to corruption surrounding the implementation of laws, rules and decrees. State capture is perhaps the more prevalent concern in the forestry sector in Romania, though administrative corruption likely plays a role as well.

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shown the potential for improving the method for determining starting prices, which would in turn provide stronger incentives for wood-based industries in Romania to improve their efficiency and become more competitive. Private sector investment in processing is hindered as well because NFA is not legally able to enter into long-term contracts with processors to guarantee raw material supply.

NFA is currently taxed on its profits. Because of this, there is an institutional incentive to increase expenditure rather than to generate profits. Under NFA's current accounting system, it is not possible to quantify, compare, or separate the economic and fiscal costs and benefits associated with NFA's public good functions from its and commercial activities in the management of State forest resources.

Faced with the loss of large areas of production forests through restitution, NFA is considering further diversification of its economic activities to include more non-core forest management activities which might be more effectively undertaken by the private sector. In the absence of a comprehensive and transparent accounting system, which separates public good functions from commercial economic costs and benefits, it is impossible to assess whether cross-subsidies from NFA's existing and new diversified activities will be adequate for addressing financial shortfalls. The lack of clarity in accounting practice allows for allegations of inefficiency, and these inefficiencies can mask opportunities for corruption in public expenditure management.

One outcome of the various inefficiencies in timber markets, and the pricing and marketing regime, is low productivity and low quality among private wood processing industries. The industry has never made the investment needed in new technologies to improve extraction and processing, and so remains highly inefficient, and unable to deliver product for higher value markets.

Objectives

This study proposes to develop a clearer perspective on the problem of corruption and governance in Romania by carrying out diagnostic work on the patterns, prevalence, and perceptions of corruption and illegal activities in the forest sector. Consistent with the priorities identified in the National Program for Prevention of Corruption, the objective is to identify legal, institutional and policy changes which can contribute to limiting problems of corruption and illegal activity in the sector. The diagnostic study is expected to provide recommendations which can be implemented with support from the Forest Development Project.

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This analysis will provide the basis for specific and detailed terms of reference for prevention, detection and suppression measures, which the national, provincial and district governments and other stakeholders could realistically implement to curb illegal logging in Romania. It will also generate awareness-raising materials of two types: specific information for important target audiences such as local government officials and legislators and more general materials that could be disseminated by way of public awareness programs.

Scope of Work

The diagnostic study is expected to be comprised of 6 sets of tasks and activities, and is focused on legal and enforcement effectiveness, as well as on perceptions, and actual experiences with corruption in the sector.

· A Legal, institutional and enforcement effectiveness review will be carried out to review the legal framework with respect to forestry and its relevance in controlling problems of corruption and illegal harvesting. Enforcement efforts will be examined, in particular, records of fines and arrests for illegal harvesting and corruption. · International Trade statistics will be reviewed to capture the extent to which Romania’s export statistics for timber and timber products match the statistics of importing countries. Disparities in these data tend to highlight the nature of cross-border trade in forest products. · A Firm and Enterprise Survey will be carried out of timber harvesting, extraction, and processing industries to explore the extent to which corrupt practices characterize the sector. Standard diagnostic surveys and interview techniques will be used in developing this task. A robust data set will be generated which will provide a view of perspectives and experiences with sectoral governance issues. · A Public official survey will be carried out in order to determine the perspectives of civil servants on the problem of corruption and state capture. · A Household Survey will examine common perceptions of corrupt practices at the local and community level, including perspectives on the illegal harvesting of firewood, and the use of illegally harvested timber by local industries, as well as on the role of the NFA in forest management. · A Hedonic pricing study will be carried out based on actual auction market prices and floor prices to examine evidence of collusion between buyers and between buyers and sellers of timber. This will be based on the methodology established by Vincent et al (1996) and will update the findings from this earlier work.

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The diagnostic is expected to produce various outputs. These outputs will be peer reviewed, and will include

A Concise overview of the political, governance and legal/regulatory setting for forest law enforcement. This would cover the general legal and political economy of Romania; the agencies that have a mandate for law enforcement generally and for forest law enforcement in particular; the legal basis, regulations and procedures for those agencies; opportunities and constraints for community participation in forest management; the heritage of corruption, cronyism and nepotism, etc. and how this has specifically shaped the illegal logging problem; and trends in all of the above under the move to a more decentralized governmental structure. What are the institutional incentives which reinforce corrupt practices?

An Evaluation of Enforcement Effectiveness. What are Government and the private sector doing (at all levels) by way of prevention, detection, suppression? Where are the operational responsibilities for enforcement and what are the constraints on effective forest law enforcement? What budgets and accountabilities are there? What is the record of arrests, convictions and penalties? Are there perverse incentives, conflicting programs, or other constraints that may be counteracting enforcement efforts? What are forest adjacent communities doing, and what is their potential to prevent illegal activity?

An assessment of the perceptions of corruption, based on survey findings, basically to establish the patterns of corruption as perceived by households, enterprises and public officials. Even though perceptions of the level of corruption may be different from the reality, and understanding of these perceptions is extremely important, since perceptions form the basis for decision making.

Experiences with corruption, and public sector performance. While an understanding of perceptions of corruption is important, it is equally important to understand how corruption directly affects people, the business community, and public officials.

Consequences of corruption. What is the impact of corruption on service delivery, on the cost effectiveness of the timber industry, and on competitiveness in the sector? Which firms are affected most by corrupt practices?

Causes of corruption. A climate of excessive or poorly implemented regulation opens the door for corruption among public officials called to implement and verify regulations. The links between regulation and state capture and administrative corruption will be explored to test the hypothesis that firms which spend more time dealing with bureaucracy are more likely to engage in state capture.

Reducing corruption: formulation of recommendations. The diagnostic will examine the prospects for reducing problems of sectoral corruption in the face of vested interests, and will consider likely impacts of restitution on institutional and personal behaviors, both corrupt and non-corrupt. Recommendations will be prepared for consideration by the wide

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variety of actors and audiences: central government, regional and local government, the NGO community and the industry. The recommendations will be as specific and operational as possible and will be outcome-oriented. Because of the recognized importance of buy-in by forest communities, the recommendations will include incentives for implementation by local officials and by communities. They will also include measures to mitigate projected short-term impacts on local communities that may be associated with reducing illegal activity in the forests. Proposals will focus particularly on the scope for involving local forest owner associations in monitoring, and for building the capacity of NGOs and other civil society organizations in this area.

Design and Implementation of a Communications Strategy. Since one objective of the study is to identify ways of changing behaviors with respect to corrupt practice, it will be important to consider how findings and recommendations can best be disseminated during and after the technical work, in ways that improve the probability of acceptance and implementation. Communications specialists will be consulted, and reports will be prepared in an accessible manner.

Financing Mechanisms

Independent sources of financing for this study are expected to be mobilized by the World Bank and other partners in order to maintain independence of its findings from the FDP project implementation process.

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APPENDIX 10: RESULTS FROM PRELIMINARY SCREENING OF ROADS REHABILITATION SUB- PROJECTS FOR THEIR ENVIRONMENTAL AND SOCIAL IMPACTS

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Results from Preliminary Screening of Roads Rehabilitation Sub-projects for their Environmental and Social Impacts Environmental Screening Social Screening Elements and Sub-elements Elements and Sub-elements Occu- pa- tional Slope Stability and Health Operation and Potential relocation Erosion(Land Nature Aquatic and Maintenance and other negative Other impacts on Road Severance) Conservation Resources Air quality Safety of Forest Recreation effects local communities Total EA Number County Location 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 scores likely? 1 ALBA Pârâul Calului Yes 2 ALBA Rosioara Yes 3 ALBA Valea Ruzii + NA + + + NA + + NA x + + + + 0.84 x NA NA + + x + NA + + + 2x No 4 ALBA Valea Galatiului + NA + Na + NA + + NA x + + + + 0.72 + + NA + + x + NA + + + 1x No 5 ARAD Latesti + NA + Na + NA + + NA x + + + NA 1.08 + + NA + NA + + NA + + + 1x No 6 ARAD Daboca Yes 7 ARAD Valaie + NA + + + NA + + NA x + + + NA 0.62 x NA NA + NA + + NA + + + 2x No 8 ARAD Valea Cioltului Yes 9 ARAD Valea Iuga + NA + Na + NA + + NA x + + + NA 1.19 + + NA + + x + NA + + + 1x No 10 ARGES Bunca Yes 11 ARGES Fiasu Olanele Yes 12 ARGES Brateasca + NA + Na + NA + + NA x + + + NA 1.36 + NA NA + + + + NA + + + 1x No 13 ARGES Zigoneni + NA + Na + NA + + NA x + + + NA 1.52 x NA NA + NA + + NA + + + 2x No 14 ARGES Dobroneagu + NA + + + + + + NA x + + + + 5.87 + + NA + NA + + NA + + + 1x No 15 ARGES Cumpenita + - + Na + NA + + NA x + + + + 11.62 x + NA + NA + + NA + + + 1- 2x No 16 ARGES Valea Satului + - + Na + NA + + NA x + + + + 4.27 x NA NA + NA + + NA + + + 1- 2x No 17 BACAU Duraceasa + NA + Na + NA + + NA x + + + + 6.64 + + NA x NA + + NA + + + 2x No 18 BACAU Rotaru - Slanic + + + Na x + + + NA x + + + + 2.44 + NA NA + NA + + NA + + + 2x No 19 BACAU Limbar (prelungire) Yes 20 BACAU Ghedeon + NA + + + NA + + NA + + + + + 4.56 + NA NA + + + + NA + + + 0 No 21 BACAU Covata + NA + + x NA + + NA + + + + + 6.36 + NA NA x + + + NA + + + 1x No 22 BACAU Casoasa Frasin + + + + + NA + + NA + + + + + 2.59 + NA NA x + + + NA + + + 0 No 23 BACAU Larga + - + + + NA + + NA + + + + + 3.97 + NA NA + + + + NA + + + 1- No 24 BIHOR Ciripu Stâna de Vale 25 BIHOR Sucobeasa Yes

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Results from Preliminary Screening of Roads Rehabilitation Sub-projects for their Environmental and Social Impacts Environmental Screening Social Screening Elements and Sub-elements Elements and Sub-elements Occu- pa- tional Slope Stability and Health Operation and Potential relocation Erosion(Land Nature Aquatic and Maintenance and other negative Other impacts on Road Severance) Conservation Resources Air quality Safety of Forest Recreation effects local communities Total EA Number County Location 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 scores likely? 26 BIHOR Valea Draganului + - x Na + NA - x NA x + + + + 29.75 x NA NA x NA + + NA + + + 2- 5x 27 BRASOV Pojorta + - x Na + NA + x NA + + + + + 1.88 x NA NA x NA + + NA + + + 1- 4x Yes 28 BRASOV Cremenea + NA x Na + NA + x NA + + + + + 7.65 x NA NA x NA + + NA + + + 4x Yes Cremenuta 29 BRASOV Valea Mare + + + Na + NA + x + x + + + + 4.75 + NA NA + + + + x + + + 2x Crizbav No 30 BUZAU Basca Mare et II - - + + + NA + + + x + + + + 21.69 + + NA x + + + x + + + 2- 2x Yes 31 BUZAU Basca Mica et II X - + + x NA + + + x + + + + 44.3 + + NA x + + + x + + + 1- 5x Yes 32 CARAS Axial Bârzava + x + Na + NA + + + x + + + + 4.88 + + NA + + + + + + + + 2x SEVERIN No 33 CARAS Mehadica + x + Na + NA - + + x + + + + 19.45 x + NA + + + + + + + + 1- 3x SEVERIN 34 CARAS Pod Peceneaga + NA + + + NA - + NA + + + + NA 2.6 NA NA NA + NA + + + + + + 1- SEVERIN 35 CARAS Valea Lunga SEVERIN 36 CARAS Zlatnai Potoc SEVERIN 37 CLUJ Dudaie Yes 38 CLUJ Caprita Yes 39 COVASNA Damaul Mic X X + + + NA + + + + + + + + 2.32 x NA NA + NA + + NA + + + 1- 5x Yes 40 DÂMBOVITA Proboiu + NA + Na x NA + + NA x + + + x 2.34 x NA NA + NA + + NA + + + 4x Yes 41 DÂMBOVITA Buturoaia + NA + Na + NA + + + x + + + + 2.33 x NA NA x + + + + + + + 3x No 42 DÂMBOVITA Ruda Seaca + NA + Na + NA + + + x + + + x 2.71 x + NA x + + + + + + + 4x Yes 43 DÂMBOVITA Negoaia Valea + NA + + x NA + + + + + + + x 1.91 x NA NA + + + + NA + + + 3x Mare No 44 DÂMBOVITA Aninoasa + x + + NA + - + NA x + + + + 4.88 x + NA + + + + NA + + + 1- 3x No 45 GORJ Motru cu Apa + x + + NA + + + + x + + + + 13.73 + + NA + + + + + + + + 2x

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Results from Preliminary Screening of Roads Rehabilitation Sub-projects for their Environmental and Social Impacts Environmental Screening Social Screening Elements and Sub-elements Elements and Sub-elements Occu- pa- tional Slope Stability and Health Operation and Potential relocation Erosion(Land Nature Aquatic and Maintenance and other negative Other impacts on Road Severance) Conservation Resources Air quality Safety of Forest Recreation effects local communities Total EA Number County Location 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 scores likely? 46 GORJ Oltet + - + + NA + + + + x + + + + 13.81 + + NA + + + + + + + + 1- 1x No 47 GORJ Gilort + - + + NA + + + + x + + + x 18.06 + + NA + + + + + + + + 1- 2x No 48 HUNEDOARA Murgus + x + Na NA + - + NA + + + + + 2.4 + + NA + + + + + + + + 1- 1x 49 HUNEDOARA Tomnatec Yes 50 HUNEDOARA Dobra + - + - NA + + + + x + + + + 25.3 + + NA + + + + + + + + 1- 1x No 51 HUNEDOARA Anica Strambu + - + Na NA + - + NA x + + + + 6.2 + + NA + + + + + + + + 2- 1x Ceata 52 MARAMURES Waser + x + + NA + + + + x + + + + 99.96 + + NA + + + + + + + + 2x No 53 MARAMURES Bercului + x + + NA + + + + + + + + + 51.42 + + NA + + + + + + + + 1x No 54 MARAMURES Puturoasa + - + + NA + + + NA + + + + x 12.59 + + NA + NA + + NA + + + 1x No 55 MARAMURES Socolau prelung et + x + + NA + + + NA + + + + + 24.46 + + NA + + + + + + + + 1x No I 56 MEHEDINTI Paraul Lung + - + Na NA + - + + + + + + NA 3.18 + + NA + + + + NA + + + 2- 57 MEHEDINTI Valea Mare + - + + NA + + + + + + + + NA 2.82 + + NA + + + + + + + + 1- No 58 MEHEDINTI Lutita Mare + + + Na NA + - + NA + + + + NA 1.82 + + NA + + x + + + + + 1- 59 MEHEDINTI Olanel - 60 MEHEDINTI Balames - - 61 MURES Fancel Lapusna + x + + NA + + + + x + + + + 60.43 + + NA + + + + + + + + 2x No 62 NEAMT Ciresului Yes 63 NEAMT Plostina 64 NEAMT Culeasa Brusturi 65 NEAMT Paraul Gardului prelung Yes 66 NEAMT Cuejdel Obarsie Yes 67 NEAMT Pod Bouletul Mare - 68 PRAHOVA Vulpea + x + + NA + + + NA x + + + x 1.09 + + NA + NA x x NA + + + 4x Yes 69 PRAHOVA Valea Rea X + + + NA + + + + x + + + + 6.2 x + NA + + + x NA + + + 4x

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Results from Preliminary Screening of Roads Rehabilitation Sub-projects for their Environmental and Social Impacts Environmental Screening Social Screening Elements and Sub-elements Elements and Sub-elements Occu- pa- tional Slope Stability and Health Operation and Potential relocation Erosion(Land Nature Aquatic and Maintenance and other negative Other impacts on Road Severance) Conservation Resources Air quality Safety of Forest Recreation effects local communities Total EA Number County Location 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 scores likely? 70 PRAHOVA Paltinoasa X + + + NA + - + + + + + + x 2.64 x + NA + + x + + + + + 1- 3x Yes 71 PRAHOVA Limbasel + + + + NA + + + + x + + + + 3.14 + + NA + + x + + + + + 2x No 72 SIBIU Izvorul Florii + - + Na NA + + + NA NA + + + + 0.81 + + NA + + x + NA + + + 1- 1x No 73 SIBIU Mancu Sulita + x + Na NA + + + + NA + + + + 3.56 + + NA + x + + + + + + 2x No Dragan 74 SIBIU Sadurel Porcu + - + + + NA + + + + + + + + 19.61 + x NA x + + + NA + + + 1- 2x No 75 SUCEAVA Valea Colibei Yes 76 SUCEAVA Dabul Yes 77 SUCEAVA Mlaca (drum+pod) + + + Na + NA + + NA + + + + + 2.06 + NA NA + + x + + + + + 1x No 78 SUCEAVA Ehriste + + + Na + NA + + NA + + + + + 1.55 + NA NA x + x x x + + + 4x Yes 79 TIMIS Hamos + + + Na + NA + + NA + + + + NA 2.65 + NA NA + NA + x x + + + 2x No 80 TIMIS Carliontu + + + + x NA + + NA + + + + NA 6.98 + NA NA + + + + + x x + 3x No 81 TIMIS Drinova + + + Na x NA + + NA + + + + NA 5.64 + NA NA x NA + + + + + + 2x No 82 VÂLCEA Cabuzul Mare 83 VÂLCEA Mihaescu Yes 84 VÂLCEA Lotrisor prelung 85 VÂLCEA Muieresita 86 VÂLCEA Cerna + + + Na x NA + + NA x + + + NA 2.36 + NA NA x + + + NA + + + 3x No 87 VRANCEA Valea Neagra x - + + + NA + + NA + + + + x 16.7 + NA NA x + + + + + + + 1- 3x Yes 88 VRANCEA Motnau x - + + x NA + + NA + + + + x 6.34 + + NA + + + + + + + + 1- 1x No 89 IASI Rapa Fetii Yes 90 HARGHITA Pod Pintec + + + Na NA NA + + NA NA + + + + 10.5 + NA NA x + + x + + + + 2x No 91 HARGHITA Barasau + + + Na + x + + NA X + + + + 9.2 + NA NA x + + + + + + + 3x No

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Notes about classification of marks + Environmental issues VERY WELL solved by the proposed sub-project X Environmental issues SOLVED BUT NOT VERY WELL by the proposed sub-project - Environmental issues NOT solved by the proposed sub-project NA No negative environmental impacts associated with this element, and so no environmental issues have to be solved. Proposed roads rehabilitation sub-projects f or which screening information could not be obtained Proposed new roads construction sub-projects (not screened for potential environmental impacts) Proposed new roads construction and roads rehabilitation sub-projects rejected on environmental grounds, because of their proximity to protected areas. Yes Indicates that, subject to rescreening during project implementation, road sub-project exceeds screening threshold and will likely require preparation of an Environmental Assessment.

Guide to Screening Sub-elements 1. Geologically difficult conditions 2. Slope more than 60° 3. Plans seek to prevent future erosion and downstream flooding 4. Plan provides for access to degraded areas for rehabilitation 5. Plan provides for prevention of further erosion of stream banks 6. Separation-("fencing")-Effects 7. Road will provide no new access to protected areas or to special preserves 8. Road plans provide for the conservation of major undeveloped natural areas, the adaptation of the road to the landscape, and the conservation of characteristic areas or objects in the natural environment 9. Road provides access to watershed protection works 10. Impact on water quality 11. Reduction of air quality emissions by optimizing speed and by reducing the number of start/stop cycles 12. Noise levels in various sensitive areas and representative locations 13. Safety driving and reducing the risks of accidents 14. Economic access to fallen trees for sanitary purposes and prevention of diseases 15. Expected total traffic and lorries 16. Open space and visual quality 17. Area of zoological and hunting interest 18. Area with historic sites 19. Buildings will be affected by road rehabilitation or construction. 20. Homes will be affected by road rehabilitation or construction. 21. Business will be affected by road rehabilitation or construction. 22. Altering to riparian zones 23. Local community will be affected 24. Local community has been consulted 25. Approval of road proposals by local community 26. Local community will continue to have access to forest

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A 11: BIBLIOGRAPHY

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NFA. 1999. Normativ Departamental PD 67/80: Privind Projectarea Drumuril Forestiere Pentru CirculaÛia Autovehiculelor. National Forest Administration, Bucharest. Oregon State University Extension Service. 1983. The Woodland Workbook. Oregon State University, Corvallis. Preda, M. 2001. Social Report (draft), prepared for the Forest Development Project. University of Bucarest, June. Sedlak, O.K. 1996. Forest Road Construction Policies in Austria, in, FAO (1998), p. 240-251. Spinelli, R. and E. Marchi. 1996. A Literature Review of the Environmental Impacts of Forest Road Construction, in, FAO (1998), p. 261-275. TRL. 1997. Principles of Low Cost Road Engineering in Mountainous Regions . Overseas Road Note 16. Transport Research Laboratory, Crowthorne, UK. UN ESCAP (Economic and Social Commission for Asia and the Pacific). 1985. Environmental Impact Assessment. Guidelines for Planner and Decision Makers. ESCAP, Bangkok. Vincent, J., Dragoi, M., Marocico, N., Pacurari, D., Tarhoaca, C., and Zinnes, C. 1996. Final report: Transactions analysis of stumpage auctions in Suceava, Romania. Report prepared by the Harvard Institute for International Development. July. World Bank. 1993. Romania Forestry Sector Review. FAO/ World Bank Cooperative Program. January. World Bank. 1999. Romania Forest Sector Note: Status, Values and Need for Reform. ECSSD Environmentally and Socially Sustainable Development Working Paper No. 18. October World Bank. 1999a. Project Concept Document. Romania Forest Development Project. December. World Bank. 2001. Project Appraisal Document (draft), Romania Forest Development Project. October. World Bank. 2000. Biodiversity Toolkit. World Bank, Washington DC.

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