NEPAL FOREST SECTOR SURVEY POLICY PRIORITIES AND RECOMMENDATIONS NEPAL FOREST SECTOR SURVEY POLICY PRIORITIES AND RECOMMENDATIONS Authors: William B. Magrath, Ashish Shrestha, Bhishma Subedi, Hari Bansha Dulal, and Rex Baumback Acknowledgments This study was designed to provide strategic guidance to the Ministry of Forests and Soil Conservation and other audiences on the need for concrete measures to improve mechanisms for resource mobilization, incentives, and governance in the forestry sector in Nepal. The study was prepared by a team consisting of World Bank staff and consultants W. B. Magrath (Task Team Leader), Ashish Shrestha, Bhishma Subedi (FAO World Bank Cooperative Program), Hari Bansha Dulal, and Rex Baumback. Peer reviewers in the World Bank were Andrew Mitchell and Ulrich Schmitt. The study benefited from continuous consultations with Ministry of Forests and Soil Conservation officials and forestry sector stakeholders. Resham Dangi (Ministry of Forests and Soil Conservation) provided constructive guidance and comments. The team is grateful for financial support from the Program on Forests (PROFOR), a multidonor partnership housed at the World Bank. PROFOR finances forest-related analysis and processes that support the following goals: improving people’s livelihoods through better management of forests and trees; enhancing forest law enforcement and governance; financing sustainable forest management; and coordinating forest policy across sectors. In 2013, PROFOR donors included the European Union, Finland, Germany, Italy, Japan, the Netherlands, Switzerland, the United Kingdom, and the World Bank. Learn more at www.profor.info. Disclaimer All omissions and inaccuracies in this document are the responsibility of the authors. The views expressed do not necessarily represent those of the institutions involved, nor do they necessarily represent official policies of PROFOR or the World Bank. Suggested citation: Magrath, William B., Ashish Shrestha, Bhishma Subedi, Hari Bansha Dulal, and Rex Baumback. 2013. Nepal Forest Sector Survey: Policy priorities and recommendations. Washington, DC: Program on Forests (PROFOR). Published in November 2013 Printed on recycled paper ISBN 978-0-9855195-9-9 Material in this book can be copied and quoted freely provided acknowledgment is given. For a full list of publications please contact: Program on Forests (PROFOR) 1818 H Street, NW Washington, DC 20433, USA [email protected] www.profor.info/knowledge II NEPAL FOREST SECTOR SURVEY: POLICY PRIORITIES AND RECOMMENDATIONS TABLE OF CONTENTS ACKNOWLEDGMENTS _____________________________________________________ ii ACRONYMS ____________________________________________________________ 1 EXECUTIVE SUMMARY ____________________________________________________ 3 1. INTRODUCTION ________________________________________________________ 9 2. THE ROLE OF FORESTS AND FORESTRY IN NEPAL _____________________________ 13 3. POLICY AND INSTITUTIONAL ASSESSMENT __________________________________ 19 Incentive Framework ____________________________________________ 19 Governance __________________________________________________ 24 Resource Mobilization ___________________________________________ 27 4. PERSPECTIVE, POSSIBILITIES, AND STRATEGIC IMPLICATIONS __________________ 31 Toward Strategic Reform Principles _________________________________ 31 Public Investment and Capacity Building Priorities _____________________ 35 Opportunities for International Support _____________________________ 36 APPENDIX A: DaTA ______________________________________________________ 39 Forest and Land Resources _______________________________________ 39 Forest Quality and Condition _____________________________________ 41 Production and Consumption _____________________________________ 41 Forest Management and Allocation ________________________________ 42 Contribution to Rural Livelihoods and the Economy ____________________ 45 TABLE OF CONTENTS III APPENDIX B: STRENGTHENING ACCOUNTABILITY AND CONTROL IN COMMUNITY FORESTRY IN NEPAL __________________________________ 53 Scope of This Appendix _________________________________________ 53 Background ___________________________________________________ 53 Transparency in the Forestry Sector ________________________________ 54 Technical Assessment of Community Forest Management _______________ 58 Sustainability of Harvest _________________________________________ 58 Forest Inventory Guidelines ______________________________________ 59 Community Forestry Guidelines ___________________________________ 60 Community Forest Harvest Operations ______________________________ 61 Improving Internal Controls _______________________________________ 72 Next Steps in Process Reform, Capacity Building, and Procurement _______ 72 Annex 1: GUIDELINES FOR CONTRACT PREPARATION AND ADMINISTRATION _________ 74 REFERENCES _________________________________________________________ 103 IV NEPAL FOREST SECTOR SURVEY: POLICY PRIORITIES AND RECOMMENDATIONS ACRONYMS CFUG Community Forest Users Group DDC District Development Committee DFO District Forest Office EIA Environmental Impact Assessment FMU Forest Management Unit GDP gross domestic product GPS global positioning system ha hectares IEE Initial Environmental Examination LFP Livelihood and Forestry Programme MFSC Ministry of Forests and Soil Conservation NTFP nontimber forest products NVC National Vigilance Centre PROFOR Program on Forests REDD Reducing Emissions from Deforestation and Forest Degradation TCN Timber Corporation of Nepal ACRONYMS 1 2 NEPAL FOREST SECTOR SURVEY: POLICY PRIORITIES AND RECOMMENDATIONS EXECUTIVE SUMMARY Forests are among Nepal’s most important natural resources. Forests are critical to rural livelihoods for wood energy, their role in compost-based farming systems, and valuable marketable and subsistence nontimber forest products—herbs, fungi, resins, aromatics, and so forth. They are a major component of environmental stability, supporting a rich biodiversity and unique wildlife populations, slope stability, and hydrologic functions. Forest resources support Nepal’s appeal as a tourism destination and, of course, there is the value of timber production for domestic consumption and value added for export. Recently, attention has come to the as-yet-unknown potential for forests to yield economic benefits from trapping carbon emissions that could otherwise contribute to global climate change. Despite the importance of forestry to Nepal, and a long history of international development assistance to the sector, there are large gaps in knowledge about the resource itself, and about the policies and institutional arrangements needed to make it perform up to its potential. Nepal’s forests must be better managed if they are to fuel sustainable economic development and poverty reduction. FORESTS AND FORESTRY IN NEPAL There is a marked dualism in Nepal’s forestry sector. In the Middle Hills, the community forestry approach, through which local people are organized to protect, manage, and benefit from forests that are otherwise prone to degradation and overuse, has reached nearly complete penetration and is accepted by most observers as having led to recovery of the Hill forests over the past 20 years. Community forestry now accounts for some 1.2 million hectares, approximately 20 percent of the country’s total forest area, and benefits 1.6 million households, making it perhaps the country’s most important antipoverty program. It is clear that the community forestry approach generates substantial and measureable livelihood benefits to the involved local populations. Social problems arise within Community Forest Users Groups (CFUGs), including exclusion and marginalization of particularly low-income people and minority groups, capture of benefits by local elites, and ineffective use of community revenues from forestry. There is great scope for increasing the technical quality of community forest management and strengthening systems for the delivery of technical advice to users groups, particularly from government agencies. Second-generation needs and opportunities for the development of forests in the Middle Hills (technology, marketing, conflict resolution, and value-addition) are not being adequately addressed, although there is strong interest from Nepal’s international development partners in providing EXECUTIVE SUMMARY 3 continued support and assistance. Therefore, the fundamental sustainability of the Middle Hills forests is not seriously challenged, but they face issues of development and maximization of their contribution. The other main components of Nepal’s forest resources, the Terai forests, are at much greater risk. The Terai forests account for approximately 25 percent of Nepal’s forest area and more than 30 percent of standing wood volume. By virtue of topography, the Terai forests’ access and composition has much greater commercial value than forests elsewhere in Nepal, and the land under forests tends to have greater potential for supporting viable agriculture. In addition, the Terai forests are the hosts of important wildlife resources, including rhinoceros and tiger, which, in addition to their intrinsic importance, contribute to Nepal’s potential as a tourist destination. Unfortunately, the Terai forests are being managed poorly, if at all, and are increasingly at risk of illegal logging, encroachment, and degradation from poorly executed logging. Some important progress has been made of late in strengthening protection of National Parks and wildlife resources,