AGENCY’S PROJECT ID:



Agency’s Project ID: P088964

GEFSEC Project ID: P087318

Country: People’s Republic of China

Project Title: Guangxi Integrated Forestry Development and Biodiversity Conservation Project

GEF Agency: World Bank

Other Executing Agency(ies): Guangxi Forestry Bureau

Duration: 6 years

GEF Focal Area: Biological Diversity

GEF Operational Program: OP3 Forest Ecosystems

GEF Strategic Priority: BD-1 Catalyzing Sustainability of Protected Areas (primary); BD-2 Mainstreaming Biodiversity in Production Landscapes and Sectors (secondary)

Pipeline Entry Date: December 21, 2004

Estimated Starting Date: September 2006

Project Executive Summary

GEF Council Submission

Contribution to Key Indicators of the Business Plan: Improved management of five clusters of protected areas totaling about 65,000 hectares. This would contribute to the sustainability of the overall protected area network by (a) improving management of a poorly represented (karst) habitat type; and (b) strengthening capacity at provincial network level by using project PAs as training centers to replicate good practice and capacity to other PA sites. Through intra-provincial training the project will also contribute to SP4 Dissemination of Good Practice.

Record of endorsement on behalf of the Government(s):

|Mr. Wang Bing |Date: September 27, 2004 |

|GEF Operational Focal Point of China | |

|Ministry of Finance | |

|Financing Plan (US$) |

|GEF Project/Component |

|Project |5,250,000 |

|PDF A |-- |

|PDF B |350,000 |

|PDF C |--- |

|Sub-Total GEF |5,600,000 |

|Co-financing*      |

|GEF IA – World Bank |100,000,000 |

|Government |99,330,000 |

|Bilateral |--- |

|NGOs |--- |

|Others |--- |

|Sub-Total Co-financing: |199,330,000 |

|Total Project Financing: |204,930,000 |

|Financing for Associated Activities If Any: |

|      |

|Leveraged Resources If Any: |

*Details provided under the Financial Modality and Cost Effectiveness section

|This proposal has been prepared in accordance with GEF policies and procedures and meets the standards of the GEF Project Review Criteria for |

|work program inclusion. |

|Steve Gorman [pic] |Project Contact Person |

|WB GEF Executive Coordinator |Robin Broadfield |

|IA/ExA Coordinator |EAP GEF Regional Coordinator |

|Date: May 1, 2006 |Tel. 202-473-4355 |

| |Email: rbroadfield@ |

1. Project Summary

(a) Project Rationale, Objectives, Outcomes, Outputs, and Activities

Rationale

China, the most populated and largest developing country, has long been a forest-poor country. The Government has done a remarkable job in increasing forest cover, mainly through an extensive plantations program, from 13 percent in 1980s to 18.2 percent today. However, the country’s forest hectare per capita ratio of 0.13 is still significantly below the world average of 0.6 and the increasing gap between timber supply and demand is a key constraint to sustainable forestry development. Currently, annual timber consumption outpaces supply by approximately 80 million cubic meters. Furthermore, most natural forest habitats have been reduced to small and isolated fragments. This is a significant threat to biodiversity, much of which is of global importance. While the launch by the Government of China (GoC) of the Natural Forest Protection Program (NFPP) in 1998 was environmentally beneficial to China, it further widened the gap between timber supply and demand. This and other factors have also led to a significant increase in the import of timber and wood products from neighboring countries, contributing to unsustainable exploitation of those natural forests and threatening their biodiversity.

To implement the shift from harvesting natural forests to plantations, in 2002, the State Forestry Administration (SFA) designated four areas of the country as key timber production bases/areas to promote forest plantation establishment. Guangxi Zhuang Autonomous Region (GZAR) is one of the areas designated because of its near perfect agro-ecological conditions for producing large quantities of timber. However, GZAR has a wood shortage; the annual timber consumption in the Region is approximately 7.8 million cubic meters, which is more than the annual production, which totals only 5 million cubic meters. The growing demands for timber in Guangxi has also increased the pressure on Guangxi’s natural ecosystems and threatened its unique biodiversity, including one of the largest and most important representatives of karst ecosystem in the world. GZAR is also ranked as one of the top three provinces (Yuannan and Sichuan being the others) in terms of endangered flora and fauna. It contains two Centres of Plant Diversity and two Endemic Bird Areas identified by WWF, IUCN, and BirdLife International. Inadequate protection from illegal logging and unsustainable use of non-timber forest products have led to loss of natural forests, critical to watershed protection, and extirpation of globally important biodiversity such as the eastern black-crested gibbon (Nomascus nasutus) and tiger (Panthera tigris). These developments, coupled with weak management of its nature reserves, have made the effective development, management and protection of forest resources and their biodiversity into a very high priority of the GZAR Government.

While GZAR government has taken positive steps towards sustainable forest management, it faces many challenges. For instance, to develop the wood producing sector, the GZAR is relying on its provincial and country level Forest Farms (FF) and a combination of private sector partnerships/concessions (APP, Stora Enzo, etc.). While the FFs are the primary vehicle for implementing the public sector’s forestry policy, they have been constrained by financial weakness, structural shortcomings, and low levels of technology. Similarly, although GZAR is an important region for protection of the Pearl River Watershed and karst biodiversity, the province lacks sufficient resources, technical and institutional capacity, and effective models for the protection of the ecological forests and forest nature reserves set aside to protect valuable biodiversity. The government has also managed the three forest types of production, protection and conservation forests separately, thus missing opportunities to enhance long term sustainability of the sector as a whole. This project, which would focus on a single-province, will be the first in China to promote an integrative and comprehensive approach to sustainable forest management and biodiversity conservation at the provincial level by supporting related technical and institutional, improvements of all the three forest categories - production forests; ecological forests; and forest nature reserves set aside to protect biodiversity. In so doing it will address all the key drivers of biodiversity loss, which is the core goal of the China/GEF Partnership Program for the Conservation and Sustainable Use of Biodiversity. Hence it will make a major strategic contribution to the development and to the evolution of that program.

Objectives

The overall project development objective is to significantly improve the effectiveness of forest management and institutional arrangements in timber production, watershed protection and nature reserves management in Guangxi Province and demonstrate this integrated approach to forest management. This objective would be achieved by supporting complementary and mutually supportive management improvements in each of the three main forest categories - production, protection (ecological), and conservation. Specifically, the project would support (a) expanding and strengthening forest resources development through the establishment of timber plantations and the development of mechanisms that would better link timber production, marketing, and processing to take pressure off natural forests; (b) improvement of the existing provincial ecological forest protection program by better linking ecological benefits with social benefits, including a carbon sequestration and trade pilot program; (c) strengthening the management of selected nature reserves established to protect globally important ecosystems and biodiversity and identifying opportunities for enhancing biodiversity outside of protected areas (e.g., in the forest protection program); and (d) supporting stakeholders in the forestry sector in GZAR through the development of a forestry strategy, guidelines and policies, and applied research needed for sustainable forest resources management, as well as for an effective project monitoring and evaluation system.

The global environmental objective is to better conserve globally significant biodiversity of GZAR by ensuring effective in-situ protection of threatened and globally important forest habitats and rare and endemic species. This objective will be achieved by: (a) supporting the development and implementation of management plans for selected globally significant, high priority nature reserves; (b) promoting enhanced biodiversity management in critical watershed forest areas near to these high priority nature reserves; (c) assisting with the implementation of comprehensive biodiversity surveys of selected karst cave systems to document and demonstrate their conservation significance and to promote their conservation; (d) strengthening the relationship between nature reserves and local human communities to mobilize community support for conservation; (e) providing in-service training to nature reserve staff and provincial staff to improve their performance; and (f) strengthening the capacity of institutions to manage natural forests and nature reserves sustainably.

Outcomes

The outcomes of the Project would include: (i) Improved effectiveness of forest management and institutional arrangements in timber production, watershed protection and nature reserves management by establishing technically and institutionally viable models in the GZAR; and (ii) improved and strengthened overall management of biodiversity in GZAR.

Outputs

The Project has four components: Expanding Timber Plantations; Increasing Ecological Forest Cover; Improving Management of Nature Reserves; and Enhancing Institutional and Management Capacity. The main outputs of these four components would be:

a) Expanding Timber Plantations: 200,000 ha of timber plantations established and a number of high quality nurseries established and/or improved.

b) Increasing Ecological Forest Cover: 118,000 hectares of watershed protection land under improved protection of which 4,000 ha established and implemented to pilot biocarbon trading.

c) Improving Management of Nature Reserves: five nature reserves totaling 65,000 hectares implementing, evaluating, adjusting and monitoring the conservation benefits of technically-sound, cost-effective management plans that involve local communities.

Enhancing Institutional and Management Capacity: Development of a GZAR forestry strategy; provincial biodiversity conservation officials promoting the conservation of biodiversity, particularly karst biodiversity, outside the provincial nature reserves; strengthened provincial conservation guidelines and regulations; and enhanced skills and knowledge of staff of GZAR Forestry Bureau, County Forest Bureau, forest farms, and nature reserve management entities, as well as communities/households, with regard to sustainable forest management and conservation.

Activities

Project costs total about US$204.58 million over six years and the financing plan includes a proposed GEF grant of US$ 5.25 million. Project activities comprise:

Component 1: Expanding Timber Plantations (total cost 171.10 million)

This component would finance: (a) the establishment of approximately 200,000 ha of fast-growing, high-yield timber plantations; and (b) the expansion and improvement of existing nurseries to produce high quality planting materials through the introduction of superior genetic materials and management technologies.

Component 2: Increasing Ecological Forest Cover (total cost US$ 18.67 million)

The component would finance the establishment of approximately 18,000 ha of multiple-use forests, including the development of a BioCarbon fund pilot plantation. This pilot would demonstrate technical and methodological approaches to carbon sequestration and test the carbon trade process. The component would also support government’s program of rehabilitating 100,000 ha of natural vegetation on Guangxi’s karst hills by protecting these areas. On about one-third of these closed forests, enrichment planting of mixed native species would be carried out. A large number of these sites are located in close proximity to the project’s nature reserves and therefore provides opportunities for closer linkages and integration between the management of these two forest types and the conservation of biodiversity within them.

Component 3: Improving Management of Nature Reserves (total cost US$ 7.02 million with a GEF grant contribution of $4.81 million)

The aim of this component is to enhance management of existing, globally-significant nature reserves; increase management capacity and knowledge of biodiversity resources, particularly in the little known and relatively rare limestone ecosystems; and strengthen cooperation between local communities and nature reserve staff to address mutual areas of interest and thereby promote biodiversity conservation. Specifically, the component would finance (a) development and implementation of management plans for five globally significant, high priority nature reserves for conservation and demonstration purposes, including staff training and capacity building; (b) targeted biodiversity survey and research to increase knowledge particularly of karst biodiversity to improve management practices across broader landscape (e.g., enhancing biodiversity management within watershed areas; and identifying biological corridors) and zoning within the nature reserves; (c) activities which will strengthen collaboration between nature reserves and local communities; and (d) development and implementation of a simple participatory monitoring and evaluation system building on the experiences of previous GEF-financed biodiversity projects in China. In addition, dissemination and replication of experience and lessons will be actively promoted within Guangxi province, with neighboring provinces, and nationally through the China Biodiversity Partnership Program

Component 4: Enhancing Forest Institutional and Management Capacity (total cost US$ 5.06 million, GEF grant contribution of US$0.44 million)

The GoC and GZAR government are strongly committed to sustainable forest management. The aim of this component is to contribute towards this goal by financing activities that would (a) strengthen the capacity of the provincial forestry bureau to develop and implement a comprehensive, sustainable provincial forest sector development and protection strategy (for production, ecological forests and nature reserves) and support priority policy studies, policy guidelines, and appropriate regulatory revisions; (b) assist with the implementation of applied research programs to generate operationally usable technologies to improve commercial forestry development, ecological forest protection, and biodiversity conservation; (c) disseminate research results, technical guidelines, and lessons learned to GFB staff and beneficiaries; and (d) establish a simple project monitoring and evaluation system to monitor project performance, achievement of the project objectives and assess the project’s environmental and socio-economic impacts.

(b) Key Indicators, Assumptions, and Risks (From Results Framework)

Key Indicators

The key indicators for the outcome of the Project are: (i) Relative productivity of timber plantations under project areas compared to non-project areas measured by annual timber volume growth per hectare; (ii) Percent of increase in vegetation cover in targeted watersheds; (iii) number of Forest Farm employees off the payroll; and (iv) Management effectiveness of five targeted nature reserves are improved, and additional high biodiversity value areas are set aside. All indicators are further elaborated in the Results Framework (Annex B).

Assumptions and Risks

The critical risks and mitigation measures that have been identified during project preparation are briefly described below. None of them have been assessed as insurmountable.

|Risk |Risk Rating |Risk Mitigation Measure |

|Key stakeholders do not support conservation |M |Plantation establishment and nature reserve plans will be developed with close |

|measures | |participation of all key stakeholders. |

|Cooperation and contractual arrangements between |M |During project preparation and through farmer and community consultation, appropriate|

|farmers and forest farms do not reflect the | |contractual arrangements were identified and model contract produced. These model |

|preference and interests of households and are not| |contracts would be used by farmers and FFs. An effective monitoring system would be |

|transparent. | |put in place. |

|The project planting entities would not perform |M |A thorough assessment of FFs (operational, financial and structural efficiency, |

|effectively and are not financially sound. | |profitability, asset and liability) was carried out during project preparation. |

| | |Regular audits of each participating FF will be used each year to monitor performance|

| | |and apply corrective measures. |

|Land of adequate productivity would not be |N |Arrangements to minimize change of use rights, and verifiable screening procedure |

|available without upsetting resource rights of | |will ensure no conversion of natural forests. |

|forest farmers and forest-dependent communities | | |

|and without converting natural forests. | | |

|Farmers would not have sufficient incentives for |M |Project will also provide payments for afforestation labor, which would generate |

|forestation activities. | |revenue for households to meet their immediate income requirements. |

|Sufficient counterpart funds would not be |N |For the nature reserves and ecological forest protection activities, most of the |

|available and project funds would not be disbursed| |counterpart funds (CFs) would be fully committed by the provincial government. For |

|in a timely manner | |the timber plantation activities, the ability to provide sufficient CFs was a |

| | |criterion for county/entities participation. |

|Institutional capacity would not be adequate and |N |The project will provide substantial training and capacity building. Guangxi has |

|project staff are not technically qualified | |extensive experience with plantation projects, implementation capacity would not be |

| | |an issue. |

|Overall Risk Rating |M | |

Risk Rating: -H (High Risk), S(Substantial Risk). M (Modest Risk), N (Negligible or Low Risk)

2. Country Ownership

(a) Country Eligibility

China ratified the Convention on Biological Diversity (CBD) on 5 January 1993. The country is also a signatory to the World Heritage Convention (1985), the Convention on Wetlands of International Importance (1992), the Convention to Combat Desertification (1997), the UN Framework Convention on Climate Change (1992) and the Convention on International Trade in Endangered Species (1981). The project responds to the Conference of the Parties to the CBD guidance in that it promotes capacity building, conservation and sustainable use of natural resources through adaptive management of natural forest ecosystems, and supports the objectives of these six international conventions.

(b) Country Driven-ness

The Government of China has made the sustainable management and development of forest resources a high priority in its national development strategy. The project approach is in line with the national government’s “Sustainable Forestry Development Strategy”. This strategy focused on “the four shifts”, as follows: (i) the shift from harvesting wood from natural forests to harvesting wood from plantation forests; (ii) the shift from deforestation for the purposes of land reclamation to conversion of steep cropland to plantation forest; (iii) the shift from non-funded management of ecological forest to funded management of this ecological forest; and (iv) the shift from giving the public sector the exclusive right to develop forest resources to widening that mandate to include the participation of other social actors. To implement the national strategy GZAR government launched a number of forestry programs to increase timber production, manage watersheds to reduce soil and water erosion, and protect natural forest and biodiversity. These programs include: (i) the Intensively Managed Timber Products Bases Development Program; (ii) the Integrated Management for the Protection Forests in the Upper Reaches of the Pearl River Program; and (iii) the Natural Regeneration of Vegetation on Karst Hill Program. The government also established a system of Nature Reserves.

The need to provide adequate protection for Guangxi’s diminishing biodiversity takes place in the context of several important national policy frameworks such as the national Biodiversity Conservation Action Plan which was published in 1994. China also became the first developing country to issue a national Agenda 21 which is used to guide the reconciliation of environmental protection and economic development. In Guangxi these policy commitments are supported by a range of laws and regulations which have been issued for wildlife and plant protection including Regulations on the Management of Nature Reserves, Animals, Water Resources and Headwater Forests (1983) and Regulations for the Protection and Management of Terrestrial Wild Animals (2004).

3. Program and Policy Conformity

(a) Fit with the relevant GEF Operational Program and Strategic Priority

The biodiversity conservation activities are consistent with the principles of GEF OP#3 - Forest Ecosystems, in affording proper protection and sustainable conservation to unique forest ecosystems of global significance and their threatened biodiversity. The GEF grant will support in-situ biodiversity conservation and maintain the biodiversity in this vulnerable ecological region which is both part of the Indo-Burma Hotspot, and also of the SE China-Hainan Moist Forests Global 200 Ecoregion. The most unique part of the Guangxi region is the extensive karst limestone landscapes which have specific biodiversity characteristics in their forests and caves.

The project is consistent with the GEF’s Strategic Priority B-1 (Catalyzing Sustainability of Protected Areas) in that it will enhance the sustainability of Guangxi Province’s nature reserve system and strengthen the management of five nature reserves or cluster of nature reserves of global biodiversity significance with a total area exceeding 650 km2. The project will contribute to sustainability of the overall national and provincial network by increasing representation of high value under-represented habitats, e.g., limestone forests in some of the top priority limestone areas in China. The project will strengthen the overall network by strengthening capacity to manage PA effectively at the provincial-level. This will be achieved through a suite of management interventions at five sites as well as through using each site as a training node to demonstrate in detail particular management responses to threats that are systemic throughout Guangxi’s reserve system. Through replication, lessons learned from (i) managing the unique biodiversity found in limestone ecosystems, which have small ranges, (ii) linking protected areas to regional development and strategic forestry interventions, and (iii) establishing training nodes to demonstrate certain activities will be extended across Guangxi province and China.

At selected sites outside these nature reserves, biodiversity considerations would be incorporated into site management plans for protection of important watershed management areas (as part of the Increasing Ecological Forest Cover Component). The selection of planting sites and species would be based on erosion hazard and rate, importance on Pearl River hydrology and ecological environment improvement in karst areas. The sites would be located near to the project nature reserves and, to enhance their connectivity potential, they would form clusters or corridors. In the areas that are completely deforested, afforestation entities will plant a variety of conifer and broadleaf species. About 15 species, most of them native species, will be used. In areas that are denuded but retain a sufficient number of healthy seed-bearing trees, the hills will be closed for the economic activities and allow the forest to regenerate naturally.

Development of small blocks of timber plantations will be supported by the Expanding Timber Plantations Component. This activity will be based on elaborate criteria for site selection and suitability, soil fertility, species composition, and pest management. The plantation sites would be located outside of intact forests, and the component would not convert or degrade any natural habitats. Environmental guidelines outline the importance of species diversification, vegetation retaining, fire breaks and riparian belts, which can serve to enhance biodiversity. Apart from eucalyptus which has exhibited no invasive characteristics in China, the plantations will be composed of at least ten other species, all but one of which is native species. Biodiversity will be enhanced by supporting selective planting of tree and bamboo species at already barren sites that can create biodiversity corridors and link with nearby nature reserves.

GEF funds would co-finance development of GZAR forestry strategy to ensure better integration of conservation/protection needs with production demands to enhance sustainability. All these activities would contribute to GEF Strategic Priority B-2 (Mainstreaming Biodiversity in Production Landscapes and Sectors).

(b) Sustainability (including financial sustainability)

Experience from previous Bank involvement in Chinese forestry strongly supports the expectation of sustainable impact. The completed Nature Reserves Management Project (NRMP) and the on-going Sustainable Forestry Development Project (SFDP) demonstrated good results in terms of not only raising the quality of staff and management, but also institutionalizing project activities into the State Forestry Administration system. The long-term institutional sustainability of this project will be achieved through a comprehensive program of technical assistance and training to strengthen existing capacity and ensure development of long-term management skills in project management units, extension institutions, nature reserve staff, and local communities involved in multiple-use activities in the nature reserves. In addition, the project will rely on existing administrative and organizational structures especially at the local levels to implement activities, which will continue after the end of the project. Financial sustainability is achievable in that the cost of sustaining activities after end of project would be low since many activities introduced under the project will only require funds to cover routine operational and maintenance costs. In addition, the sector studies/plans, policy guidelines and regulations will tackle financing gaps and explore different financing mechanisms. Ecological sustainability is being addressed through the implementation of nature reserve management plans, environmental protection guidelines for plantations, and better management regimes for ecological protection forests. Social and cultural sustainability at the community level will be addressed by ensuring representation of all ethnic minority groups and women in the development of project activities. In addition, by integrating watershed management component interventions with nature reserves management component activities in particular areas, some local communities will benefit from the livelihood enhancement opportunities that this component will provide in the long term.

(c) Replicability

The project's potential for replication is high, assuming, as expected, its experience is wholly or at least largely successful. Past experience has shown that the Government of China is highly capable of replicating and scaling up successes, as illustrated by the following examples: (a) training manuals produced under the GEF financed Nature Reserves Management Project are now being used by the State Forest Administration’s training unit; and (b) reimbursement arrangements for plantation establishment introduced in earlier WB-financed afforestation projects is now adopted by SFA for its national programs.

The project design includes activities to disseminate and promote replication of its experiences and lessons within GZAR, adjacent provinces, and nationally. For example, the improved biodiversity conservation management planning and strengthening linkages with communities approach that will be supported in the target nature reserves will be disseminated as best practice and will replicated in other nature reserves in Guangxi by the provincial forestry administration. This will be done by organizing and holding short training sessions/workshops for staff from other nature reserves in Guangxi during the later years of the project. Replication in neighboring provinces will be encouraged by inviting nature reserve managers from these provinces to the workshops. Nationally, replication will be encouraged by inviting key staff of the China Biodiversity Partnership Framework (CBPF) program to participate in the workshops also, and by sharing the training and workshop materials with the CBPF Steering Committee and Management Office.

(d) Stakeholder Involvement

The major stakeholders include:

1) Government line agencies at each level. Guangxi provincial and county forestry departments will organize project implementation and coordinate concerned authorities, academic institutions and NGOs. Other government agencies involved include finance, planning, agriculture, and environment protection departments.

2) Though the SFA will not be directly involved in the implementation of this project, the technical department of the Protection Division of the Guangxi Forestry Bureau (GFB) is linked to the Department of Nature Reserves in SFA, which means that the SFA will serve in an advisory capacity to GFB during project preparation and implementation.

3) Project nature reserve management units, planting entities and communities.

4) Professional, academic and research organizations, including Guangxi Forestry Research Institutions, Forestry Inventory and Design Institutions, Gulin Cave Research Institution, Beijing University, Southwest Forestry University, and Guangxi Forestry University. They will be involved mostly in research, education, technology transfer and other technical services provision.

5) Professional associations related to forestry, biodiversity protection and other relevant areas, and national as well as international NGOs, including FFI, WWF, and Kadoorie Farm & Botanic Garden of Hong Kong.

6) Other provincial associations, including the Guangxi Popularizing Science Association, Guangxi Forestry Association, Guangxi Animal Protection Association, and Guangxi Water Conservation Association.

During project design, consultations have been carried out with the key government stakeholders at national, provincial and local level as well as with representatives of local communities in areas adjoining the Nature Reserves. In addition, FFI, Kadoorie, and WWF have been involved in project preparation.

(e) Monitoring and Evaluation

The project M&E system will monitor and evaluate: (i) the overall performance of the project; (ii) the management performance and biodiversity richness of the participating Nature Reserves; and (iii) the biodiversity of selected watershed forest sites supported by the project’s Component 2-Increasing Ecological Forest Cover. Monitoring of project performance will be carried out against the results framework, which lists those outputs, activities and indicators that define the project. Monitoring of the Nature Reserves component will keep track of management plan implementation, management effectiveness, biodiversity status, resource use and threats to the Nature Reserves, mainly using simple scorecards and ranger- and community-based monitoring methods. Monitoring of the biodiversity and resource use of watershed forest sites will be undertaken jointly by village and county forestry office representatives using community-based monitoring methods. Technical assistance will facilitate development and institutionalization of the Nature Reserve monitoring scheme and their harmonization with existing provincial land status monitoring systems. To foster local ownership of monitoring, the specific monitoring indicators (e.g., target key species and habitat types) would be identified in a dialogue between the local communities, the nature reserve staff, and Guangxi Forestry Bureau in project year one. Experiences from other projects have indicated that this is the best practice for ensuring sustainability of M&E after project life. The project’s biodiversity monitoring and evaluation system will be linked to and consistent with that of the China Biodiversity Partnership Framework.

4. Financial Modality and cost effectiveness

     

|Co-financing Sources |

|Name of Co-financier (source) |Classification |Type |Amount (US$) |Status |

|IBRD |IA |Loan |100,000,000 |Board consideration |

| | | | |scheduled for July 2006|

|Government (national & local |Executing Agency |Budget |99,330,000 |Commitments obtained |

|and beneficiaries) | | | |before Board |

|Sub-Total Co-financing |194,676,000 | |

Cost-effectiveness

The project will better conserve the biodiversity of five key nature reserves, the combined area of which totals 65,000 hectares, and promote more effective biodiversity conservation in several relatively species-rich forest watersheds, in 1-2 biologically significant new karst cave ecosystem conservation sites, and develop awareness and capacity provincial-wide on biodiversity conservation. If all the project’s GEF costs are attributed to the nature reserve conservation gains alone, the cost to the GEF of achieving these gains is approximately $80 per hectare over the life of the project.

5. Institutional Coordination and SupporT

(a) Core Commitments and Linkages

The project is consistent with the Bank's country assistance strategy for China (2002), where it fits within the goals of (i) “improving efficiency and sustainability of the use of natural resources” by promoting sound natural resource management practices and value adding through appropriate technologies, training and modern management experience, and (ii) “reducing growing disparities and improving income in disadvantaged sectors and regions of China” by focusing, in the Expanding Timber Plantations and Increasing Ecological Forest Cover components on generating income opportunities for disadvantaged rural farmers in poor regions. The project is also consistent with the national Biodiversity Conservation Action Plan (1994), and “China’s Biodiversity – A Country Study” (1998). The Conservation Action Plan identified two of the project sites as priority areas for conservation of biological diversity. The Country Study listed conservation of Guangxi’s unique and rich biodiversity as a priority.

The project concept is also fully in line with the three overarching goals of the Bank's rural development strategy as articulated in "Rural Development: From Vision to Action (1998)" which are to: (i) enhance economic and social well-being of rural people; (ii) improve household food security; and (iii) ensure sustainable use of natural resources. The project will also promote the Bank's overall goal of poverty reduction, in which China has been identified as one of the focal countries.

The World Bank has been involved in forestry in China for some 20 years. Previous support to forestry has been at the national level and has involved multiple provinces along sub-sector lines (e.g., plantation establishment and/or nature conservation). By now focusing on a single province and on a sector-wide basis, this project, as the next generation of projects, is expected to lead to a different type of engagement for the Bank. GEF funding is promoting a more integrated and comprehensive approach to sustainable forest management and biodiversity conservation.

The project will link with the GEF/World Bank Sustainable Forest Development Project, and will provide inputs to its policy studies. This project is being implemented in the provinces surrounding Guangxi, and both projects will collaborate to promote improved communication between provinces to enhance biodiversity, especially at sites which adjoin with nature reserves in a neighboring province. The project will also link with the Sustainable Forest Development Project through participation in national-level fora to share experiences and disseminate lessons learned and best practice.

(b) Consultation, Coordination, and Collaboration Between IAs and IAs and EXAs, if appropriate

The project is a strategically key early “action” component of the China/UNDP/GEF Partnership Program for the Conservation and Sustainable Utilization of Biodiversity in China. The Programming Framework for this Partnership anticipates at least one new World Bank/GEF project that would help strengthen protected area management at the site level and demonstrate integrated management of production, ecological and nature reserve forests. This is the role that the project will fill in the Partnership. The project will also contribute to the Partnership’s objective of integrating biodiversity into forest land management investment and decision-making at the provincial level and demonstrate how biodiversity conservation can be effectively mainstreamed into forest management at this level.

Reflecting the project’s key role in the Partnership Framework, the lead members of the Partnership have been briefed and consulted on the proposed project design. These partners will be briefed on progress with the final design work and regularly updated on the project’s implementation progress, results and lessons learned. The project’s monitoring, reporting and evaluation system will be consistent with and will be directly linked to that of the overall Partnership Framework to facilitate accurate reporting and assessment of both its and the Partnership’s overall progress and achievements and to promote the exchange and application of lessons learned from it within the Partnership Framework.

(c) Project Implementation Arrangement

Project management arrangements have been designed on the basis of successful implementation structures and models tried and proven effective under earlier Bank-supported forestry projects. In the case of the proposed GIFDCP, a Project Leading Group (PLG), Project Coordination Group (PCG) and Project Management Offices (PMOs) would be established at the provincial level. The PLG will be chaired by the Vice-Governor responsible for forestry and consist of representatives from the forestry, finance, planning and audit departments. The PCG will be located in the GFB and will be led by the Director General. It will comprise the relevant Deputy Directors and Division Chiefs including the leader of the Wildlife Management Division. The PLG and PCG will set the principles and policies for the project, approve the overall implementation plan, coordinate inter-agency discussions and resolve major issues during the project’s implementation. The PCG will regularly undertake reviews of the inter-component cooperation to foster integration and cross-fertilization of activities.

The current provincial PMO, which was established to implement the existing Bank-financed projects, is located in the GFB. It will be responsible for the ETPC, IEFC and the BioCarbon pilot program. It will also provide the financial management and procurement support to the NRMC. A Biodiversity Office (BO) has been set up in the Wildlife and Nature Reserves Management Station (WNRMS) to be responsible for the IMNRC and to ensure that biodiversity concerns are integrated with the activities of the other components. The WNRMS works closely with the Wildlife Management Division (WMD) which is responsible for biodiversity-related policies and regulations. The GFB will be responsible for ensuring close coordination between WNRMS, WMD, and provincial PMO. The BO would have a broader mandate to manage those activities included in component 3 and 4 that are financed by the GEF grant.

PLGs and PMOs would also be established at the county level for the first two components. For the third component, a Project Management Group (PMG) would be established in each of the five nature reserves directly under the nature reserve director. The PMG would be responsible for supervision of all aspects of project activities in that nature reserve. It would report to the WNRMS. The PMG would include the head of the nature reserve’s Management Planning Team, the head of the nature reserve’s Community Relationships Team, the nature reserve’s Training Coordinator, and the nature reserve’s chief financial officer. Technical advice would be sought from the Forest Survey and Design Institute and the Guangxi Academy of Forestry as required. The Department of Forest Protection in State Forestry Administration (SFA) will serve in an advisory capacity to GFB during project implementation. For instance, management plans for national nature reserves produced by the project would be submitted to the Division of Nature Reserves (DNR) in Beijing for review and comment of technical aspects.

A Technical Support Panel (TSP)consisting of members from relevant technical and research institutes has been established within the Guangxi Forestry Bureau. The TSP would be responsible for overall quality assurance and control; identification and implementation of research and extension programs, assisting Provincial PMO and BO in carrying out project monitoring, training and technical services, as well as coordinating relevant departments and institutions to undertake the forestry strategy, policy study, and the regulatory work.

Annex A: Incremental Cost Analysis

Overview

Despite having excellent agro-ecological conditions for timber production and rich forest biodiversity, China’s Guangxi Zhuang Autonomous Region is rapidly losing forest cover, and its biodiversity is increasingly threatened. The major cause of these inter-related problems is that annual timber consumption (7.8 million m3) significantly exceeds sustainable annual timber production (5 million m3), which is depleting forest cover. Inadequate capacity for and outdated methods of nature reserve management and sub-optimal integration of forest management and biodiversity conservation plans and actions are also contributing to the loss of biodiversity

The goal of the project is to address these twin problems of unsustainable forest management and increasingly threatened biodiversity. Its objective is to improve the effectiveness and integration of management and institutional arrangements for timber production, watershed protection and nature reserves management. This will be achieved by establishing and implementing technically and institutionally viable, integrated and replicable forest and nature reserve management systems and processes. Project activities will be grouped into four inter-linked components: (a) Expanding Timber Plantations; (b) Increasing Ecological Forest Cover; (c) Improving Management of Nature Reserves; and (d) Enhancing Institutional and Management Capacity.

Monitorable indicators of the achievement of its global environment objective include: (a) Management effectiveness of five targeted nature reserves improved; (b) Number of new areas with high biodiversity value identified and set aside for conservation; and (c) Number of nature reserves where abundance and conservation status of biodiversity has improved, based on implementation of integrated management plans, improved collaboration between reserve staff and local communities, and participatory monitoring.

Context and Broad Development Goals

Context

Guangxi Zhuang Autonomous Region (GZAR) is located on the southern frontier of China and neighboring Vietnam. Guangxi straddles the Tropic of Cancer, and thus spans the north tropical and southern and mid subtropical climatic zones, with elements of each in its flora and fauna. The terrain slopes generally from northwest to southeast but the topography and geology are complex, with ranges of mountains and karst hills interspersed with lowlands that are bisected by numerous rivers. Elevations range from the seaside of Beihai to the 2,141 meter peak of Maoershan, the highest peak in southern China. Guangxi supports a wide variety of forest and wetland ecosystems, including many broadleaf forest formations and mangrove forests.

These complex conditions mean that Guangxi is particularly rich in native fauna and flora. Surveys to date have recorded over 8,350 species of vascular plants, belonging to 1,717 genera and 288 families. 890 species of terrestrial vertebrates have also been recorded. This makes Guangxi the third richest province in China for biodiversity, after Yunnan and Sichuan. Despite this importance, Guangxi has not received the forest management and conservation attention that those two provinces have had, even though GZAR supports a denser human population. The result has been that most natural habitats have been reduced to relatively small isolated fragments, and this in turn has lead to a large proportion of its fauna and flora being threatened.

|Taxon |China’s total |Guangxi’s total |Proportion (%) |

|Vascular plants |27,142 |8,354 |30.8 |

|Mammals |581 |166 |28.6 |

|Birds |1,244 |483 |38.8 |

|Reptiles |376 |157 |41.8 |

|Amphibians |284 |84 |29.6 |

|Fish |3,862 |700 |18.1 |

GZAR is a particularly important area for limestone forests, especially in the tropical and southern subtropical zones. Karst limestone covers about 38 percent of the land area of Guangxi. Limestone forests in tropical China occur mainly in southern Yunnan Province and southwest GZAR while subtropical limestone occurs in a narrow north-south band in Guangxi, Yunnan, Guizhou and Chongqing. Because of the great diversity of edaphic conditions and complex topography of limestone regions, vegetation types on limestone are extremely diverse and rich in endemic and restricted-range taxa. For example, of the 669 plant genera recorded in Nonggang Nature Reserve, only 371 are shared with the limestone forests of Xishuangbanna in southern Yunnan, 465 km away. Most species found in seasonal rainforest on limestone are also found in non-limestone areas but many species, termed calcicoles, are restricted to or selective for limestone areas. In the Nonggang Nature Reserve for example, 20 percent of the plants species are characteristic of limestone areas, while 13 percent of the flora species are exclusively found on limestone.

Karst regions also support underground limestone ecosystems that are particularly rich in unique biological types. Much of this fauna is poorly known, but preliminary surveys suggest an extremely rich fauna of specialized species such as bats, fish and insects. Many of these species have extremely restricted distributions, such as the six species of blind care fish known only from the underground waters of Guangxi. Despite their global significance, these karst-dwelling species and their rare and unique ecosystems have received very little conservation attention.

Development Goals

Since the late 1970’s, the Government of China has been implementing an aggressive program of reforms and interventions that have resulted in rapid rates of economic growth. Investment in China’s physical infrastructure has mushroomed, which has led to the development of considerably improved systems of transportation, energy and other services that have improved overall competitiveness. Economic policy reforms in the context of general domestic and international trade liberalization have created enhanced incentives for private sector investments. Increased social sector spending in health, education and basic water and sanitation requirements have targeted the amelioration of poverty; and, in the political field, institutional reforms have been directed at the stream-lining of existing government institutions and to the devolution of decision-making authority to local governments. All of these development initiatives – infrastructure improvements, economic liberalization, poverty alleviation, and decentralization of authority and decision-making – are being actively supported by multilateral and bilateral agencies, as well as by international NGOs.

Guangxi is one of China’s poorest provinces with a large number of ethnic minorities. In line with national priorities, provincial government spending is focused principally on economic development and poverty alleviation. In the forestry sector, funding is inadequate and most is used for production-oriented activities and increasing the timber supply through plantations and improved watershed management initiatives. Although it is recognized that the maintenance of Guangxi’s biodiversity – the individual species as well as the habitats that support them – could be an important feature of the province’s overall development strategy, there is currently limited effort and incentive to enhance its conservation status.

Baseline Scenario

Scope

Much of Guangxi’s remaining biodiversity is located in a network of nature reserves that cover 6.5 percent of the province’s land area. However, a large rural population who use the resources of these areas for their subsistence needs surrounds all of the nature reserves. Direct threats to the forests of the province’s nature reserves take the form of agricultural encroachment, logging, fuelwood collection and livestock grazing. Other associated factors which have had a negative impact include fire, hunting, and harvesting and trade in particular species of wild animals and plants. Despite a strong commitment to biodiversity conservation, few if any of Guangxi’s nature reserves are able to control these threats effectively.

Under the baseline scenario, GZAR government will take the following steps to help address its timber supply deficit and to rehabilitate some of its natural forests and watersheds: (a) establish approximately 200,000 ha of fast-growing, high-yield timber plantations and expand and improve its tree nurseries to produce high quality planting materials through the introduction of superior genetic materials and management technologies (cost $171.10 million); (b) establish approximately 18,000 ha of multiple-use forests, rehabilitate 100,000 ha of natural vegetation on Guangxi’s karst hills, and develop a pilot BioCarbon fund plantation (cost $18.67 million); and (c) strengthen production and ecological forest management capacity and applied commercial forest management research programs and disseminate their results (cost $4.59 million).

The Guangxi government recognizes that its protected areas are important for ensuring the effective functioning of essential ecological processes and life-support systems on which human survival and development depend. It also recognizes that they protect species and populations that are highly sensitive to human disturbance. However, without new approaches to nature reserve management and closer integration of commercial, ecological and nature reserve planning and management, the baseline forest management activities will not halt the deterioration of natural forest habitats and the biodiversity of Guangxi’s nature reserves.

Under the Baseline Scenario its nature reserve management initiatives can be grouped into three sets of activities. These are: (a) Nature Reserves Planning and Management which includes some modest management plan development and implementation (e.g. Maoershan), field level management systems (such as patrolling), and investment (civil works, equipment, vehicles); (b) Nature Reserve Relationships with Local Communities which includes limited community conservation education and public awareness activities conducted in local villages; and (c) Training and Capacity Building which involves general staff training. And under the baseline scenario, no action will be taken to conserve biodiversity in ecological forests or to integrate conservation considerations into forest development plans to promote sustainable forest conservation and management.

Costs of the baseline nature reserve management program

Under the Baseline Scenario, GZAR government would maintain management activities at the project’s proposed nature reserve sites at historical levels (based on expenditure trends over the last six years). For the project period (2006-2011) it is expected that these expenditures will be U.S $ 4,900,000. In addition, in some of the proposed nature reserve sites, research projects will be financed under a range of local university programs (U.S. $ 200,000). There are no donor programs in any of the project nature reserves. The total cost of the baseline nature reserve management activities is therefore estimated to be U.S. $ 5,100,000, as summarized below:

|Project NR |Anticipated GoC expenditure during project |Anticipated research institute expenditure |

| |period |during project period |

| |($ million) |($ million) |

|Nonggang |0.79 |0.01 |

|Damingshan |1.23 |0.08 |

|Longshan |0.14 |0 |

|Mulun |1.32 |0 |

|Maoershan |1.42 |0.11 |

|TOTAL |4.90 |0.20 |

Benefits

Under the Baseline Scenario, most nature reserve expenditure will be directed towards staff salaries and the construction of HQ buildings and protection stations. Comparatively few resources will be expended on important applied nature reserve management activities, such as the development and application of ecological planning tools, community liaison work, and staff capacity development in these fields. Research at the project’s proposed sites will be conducted mostly by professional scientists with very limited involvement of nature reserve staff, and the results of this research will be little used to modify existing management regimes. Thus, although implementation of the Baseline Scenario will result in some improvement to the protection and management of global biodiversity at the target nature reserves, the limited expenditure levels and the traditional way the resources will be allocated will not result in significant, sustainable, long-term conservation benefits. In addition, opportunities to promote biodiversity conservation through more integrated forest plantation and natural forest planning and investments will be foregone. As a result, much of Guangxi’s rich biodiversity will continue to be adversely effected by weak nature reserve management, timber and fuelwood harvesting, overgrazing and associated vegetation disturbance, illegal hunting, and habitat loss and fragmentation. Without GEF support, a unique, strategically valuable and replicable opportunity to demonstrate integrated forest management and biodiversity conservation at the provincial level, for the benefit of the China Biodiversity Partnership Framework, will also be lost.

Global Environmental Objective

Nine percent (55 species) of the animals and 16 percent (82 species) of the plants that are red-listed by IUCN for China occur in the project’s nature reserves.

Red-listed animals by IUCN Category

| |EX |

|Nature Reserves Planning and |(a) Baseline ecosystems map production; (b) management plan development; and (c) management |

|Management |plan implementation and nature reserve staff training |

|Conservation Management of Sites |(a) Cave biodiversity conservation; (b) Guangxi/Vietnam transboundary conservation; and (c) |

|Outside the Existing Nature Reserve |watershed forest conservation |

|System | |

|Community Relationships with Project |(a) Local communities’ engagement in nature reserve management; (b) community conservation |

|Nature Reserves |education and public awareness; (c) community skills enhancement; and (d) local project |

| |greening and training of village committees |

|Monitoring and Evaluation |(a) Nature reserve monitoring scheme; (b) management plan reviews; and (c) replication |

| |activities |

|Enhancing Institutional and Management|(a) Forest sector strategy, priority policy studies, and guidelines/regulations development;|

|Capacity |(b) research and extension programs; (c) training and technical services; and (d) Project |

| |Monitoring and Evaluation program |

Costs

Total expenditures under the GEF Alternative Scenario are estimated at $ 12.60 million, detailed as follows:

|Project sub-component |Additional Cost in US$ million |

|Nature Reserves Planning and Management |2.89 |

|Conservation Management of Sites Outside the Existing Nature |1.80 |

|Reserve System | |

|Community Relationships with Project Nature Reserves |1.83 |

|Monitoring and Evaluation |0.50 |

|Enhancing Institutional and Management Capacity |0.48 |

|TOTAL |7.50 |

Benefits

The project would (a) have a positive global benefit by conserving biodiversity in five Chinese sites which are of acknowledged international significance for biodiversity conservation purposes; (b) benefit local communities living around the project’s nature reserves by enhancing community skills and facilitating access to programs that address threats to the nature reserves; (c) strengthen the capacity of human resources and biodiversity conservation sector institutions.

Incremental Costs

The difference between the cost of the Baseline Scenario (US $ 5.10 million) and the cost of the GEF Alternative (US $ 12.60 million) is estimated at US $ 7.50 million, of which US $ 5.25 million would be supplied by GEF financing and US $ 2.25 million from the Government of China. This represents the incremental cost for achieving sustainable global environmental benefits.

Annex B: Results Framework and Monitoring

|PDO/Global Environment Objective |Outcome Indicator |Use of Outcome Information |

|The DO is to improve the effectiveness |Project-supported timber plantations achieve higher |1.1. PY2-3 – Evaluate plantation quality |

|of forest management and institutional |annual timber volume growth per hectare than |(success rates) and improve technology as |

|arrangements for integrated timber |non-project plantation areas. |relevant. |

|production, watershed protection and |1.2. Project forest farm employees are able to engage| |

|nature reserves management in selected |in self employment |1.2. PY6 – Evaluate achievement and find other |

|areas of GZAR. | |avenue of self employment, if needed. |

| | | |

| |2.1. Increase in vegetation cover in targeted |2.1. PY4-5. Monitor impact of forest closures |

| |watersheds at project completion. |and ecological forest plantations to document |

| | |results and guide ecological forest management |

| | |and policy. |

| | | |

|The GE objective is to better conserve |3.1 Populations of key indicator species (e.g., |3.1. PY3-6. Changes in biodiversity, resource |

|globally significant biodiversity of |primates & turtles) or areas of limestone forest in |use and threats used to guide local |

|GZAR |at least 4 out of 5 nature reserves remain stable or |decision-making and to adjust nature reserve |

| |increase. |management plans |

|Intermediate Results |Results Indicators for Each Component |Use of Results monitoring |

|One per Component | | |

|Component One: |Component One: |Component One: |

|(Expanding timber plantation) |1.a Afforested area increase by 200,000 ha with a |PY2-5. Plantation establishment goals are |

|Timber production by FFs and HHs |tree survival rate above 90% |monitored and implementation and techniques |

|increases in the project area. |1.b 100 percent of all contractual arrangement per |improved to achieve targets |

| |type (operations models) recorded in project M&E |PY2 farmer preference for different contractual |

| |database.. |arrangements used to adjust participatory design|

| |1.c. Number of participating farm household reached |manual |

|Component Two: |Component Two: |Component Two: |

|(Increasing Ecological Forest Cover) | | |

|Watershed protection land and water | | |

|conservation improved and carbon |2.a Number of ha of multiple protection forest |PY2-3.Forest/vegetative cover is monitored |

|sequestration increased |established |systematically to define best combination of |

| |2.b Tons of carbon sequestered |soil and water conservation practices |

|Component Three: |Component Three: |Component Three: |

|(Strengthening Nature Reserves | | |

|Management) | | |

|Management effectiveness of five target |3.a Average Nature Reserve Management Effectiveness |PY2-3. Nature reserve management plan |

|nature reserves improved. |Tracking Tool (METT) score for five target reserves |implementation performance and outcomes |

| |improves from 43 to 60 at mid-term and 70 at |evaluated and plans strengthened as needed. |

|New sites with high biodiversity value |completion. | |

|identified and protection initiated. | |PY4-5: Biodiversity values of new sites |

| |3.b Two new high biodiversity value sites identified,|confirmed. Status/threat analysis guides |

| |threats analyzed, conservation plans prepared and |management plan design. |

| |implementation begun. | |

|Component Four: |Component Four: |Component Four: |

|(Enhancing Institutional Capacity) |4.a Provincial forest strategy formulated and adopted|PY3-4. Project monitoring system and indicators |

|Provincial Forest Bureau, County Forest|by Guangxi authorities |evaluated and results used to improve project |

|Bureau, FF, HHs and nature reserve |4.b Number of forest staff and households trained. |implementation, focus and impact. |

|management entities have the skills |4.c Number of guidelines, technical advisory | |

|needed to formulate strategy, develop |bulletins developed and disseminated. | |

|and sustainably manage forest |4.d Monitoring and evaluation system performance | |

|plantations and nature reserves. |evaluated periodically and improved. | |

Arrangements for Results Monitoring

| | |Target Values (in Cumulative numbers) |Data Collection and Reporting |

|Outcome Indicator |Baseline |YR1 |YR2 |

|Results Indicator |Baseline |YR1 |YR2 |YR3 |

Annex C: Response to Project Reviews

STAP Roster Technical Review

Andrew Grieser Johns, Forests and Biodiversity Conservation Specialist and Regional Representative (East Asia), FRR Limited

Endorsement

This project is an important attempt at integrating forestry management and biodiversity conservation at provincial level while promoting participatory management and monitoring, includes an innovative BioCarbon pilot, and shows strong evidence of participatory design and GoC commitment. The proposed GEF component has clear incremental benefits in enabling nature reserve protection and biodiversity conservation within the overall landscape management approaches; actions proposed are strategic and replicable, and likely to make an important contribution to biodiversity and endangered species protection in the region. Reviewer considers the GEF component as globally and regionally important, and well conceived, and strongly recommends its support.

Key issues

1. Scientific and technical soundness of the project

The project is a first attempt at a provincial level integrated planning approach across production and protection forests, using landscape ecology approaches to include the human population and populated areas within overall forest and land management strategies. It is a new venture for WB forest sector support in China, which has previously concentrated on national level policy development and relied heavily on self-driven replication. This holistic approach to sustainable forest and biodiversity management is in line with GoC policies for sustainable development and management of forest resources and involvement of communities in natural resource management. The project focus is in line with GoC policies for expanding timber and forest plantation and management in GZAR.

A key issue in rolling out Agenda 21 and in the planning of forestry interventions within this project is the integration of forestry goals within general socio-economic planning for the GZAR. Forestry is high on the agenda of the GZAR: this is clear. The extent to which project planning and implementation review is meshed (and prioritised) within socio-economic development planning of the GZAR is not entirely clear[1], but the Assumptions and Risks analysis and PMO structure would appear to ensure adequate consultation at all planning levels.

Component 1 (non-GEF) of the project focuses on the establishment of a large area of timber plantations, not pulpwood plantations, although the latter will also be required in the future if the GZAR is to develop ‘several paper mills’ (Project brief p.28). Considerable effort has been expended in project design in determining appropriate planting approaches, requirements for nurseries, new technologies, financing tools, etc. The planting will be undertaken by many smallholders, under various financial mechanisms but primarily through partnership agreements (Project brief p.21), as a requested and sensible means for smallholders to minimise their own financial risks.

Component 2 (non-GEF) focuses on improvement of forest cover in karst areas. Project interventions to increase the area of protection forests with ultimate long-term benefits for carbon sequestration and biodiversity are sound and funded entirely by GoC. The component includes a BioCarbon fund pilot plantation, which is excellently conceived and will provide valuable regional experience, including testing the market approaches for wider scale environmental benefits from carbon trading. There mare likely to be additional benefits of connectivity through mixed-species planting between natural forest areas, referred to in the project proposal, although this is a long-term benefit that will be linked to development of a mature forest structure and microclimate in these connecting corridors.

Component 3 (GEF) is important in that it aims to establish protected area management as an integrated part of the landscape management strategies, rather than set-asides. It aims to develop approaches that will enable local communities to interact with the protected areas and obtain some benefits from them, and also extends biodiversity protection principles outwards from the protected areas into the wider landscape. The latter is expressed both in terms of improving forest cover (Component 2) and in defining new protected areas where there is a high biodiversity value or occurrence of endangered species. The landscape level interventions of the project also give scope for integrating biodiversity protection in other forms of forest management – especially where the biodiversity concerned is underground and therefore where the critical factor is the control of local climate and water regimes through establishing and maintaining forest cover above ground. (Some of the component 3 activities in surveying cave fauna are at first sight a little divergent from the rest of the project, but this can be considered in the above light and Reviewer agrees with the decision to adopt the single project approach rather then separating off cave conservation into a different project: Project brief p.12).

Component 4 (part GEF) is designed to develop the capacities needed among stakeholders at all levels to adopt the integrated management and production technologies proposed, and to institutionalise them within stakeholder organisations. The areas of training indicated within the proposal appear comprehensive, but Reviewer has some reservations concerning the proposed M&E system and its institutionalisation post-project. The envisaged local staff contribution to environmental impact monitoring and mitigation, expressed as a major challenge to the project, appears minimal (Project brief p.85) – but on the other hand this may be sufficient (based on previous experience) and there is little point in establishing monitoring structures that are unsustainable post-project.

An over-arching theme of the project is that forestry approaches envisaged will assist in forest protection and conservation by a) improving livelihoods of the rural poor to reduce the need to generate additional income by dubious means and b) supplying a market for timber that would otherwise be supplied through illegal wood extraction. Environmental education and various other interventions to help lessen reliance on natural resources, such as on-farm NTFP production perhaps are also designed to reduce the need or inclination to exploit wild biodiversity resources. The project documents have not quantified actual threats on wild timber and biodiversity resources, but generally these threats are considerable and fuelled by a very large urban market in south China[2]. Ethnic minorities in particular, who are less easily reached by project benefits, can be expected to respond primarily to continuing opportunities to market forest products illegally rather than to project aims unless project efforts are successful in mainstreaming these remote communities (which seems quite unlikely). Adequate monitoring and enforcement of linkages between project benefits, and community conformance to project and GZAR rules, is crucial in this respect as the high monetary value of biodiversity products in particular is hard to resist, should opportunities arise. Project experience to date is that it is quite difficult to develop a linkage mechanism between receiving project benefits and monitoring/enforcement of rules, and for different parties to agree on such a mechanism. The NORDECO-type participatory monitoring mechanisms suggested for this project are perhaps the most appropriate system to attempt to establish this vital link.

2. Identification of global environmental benefits

The global environmental benefit is foreseen as an enhanced enabling environment for biodiversity conservation and management. This would be achieved through improved management capacity and a reduction of conflict in the use of biodiversity resources between stakeholders. The GIFDCP provides livelihoods alternatives through development of the forest sector. Incremental benefits of GEF support are expected to be enablement of active conservation programmes through providing the background (baseline) information required for management decision making, the training required to make and enact these decisions, and some level of financial support for field operations.

In effect the enabling environment for conservation is improved and the GZAR staff, which are currently provided only basic salary and some infrastructure, are provided with the means to take advantage this. Much of the biodiversity and forest resources of the target area are currently unmanaged or provide only domestic benefits unrelated to environmental protection – the project provides the opportunity for these areas to begin providing measurable global benefits.

The importance of this approach in this location is clear. The region is extremely rich in biodiversity and so far has received less attention than neighboring regions of similar importance (Project brief p.97). The GZAR has two Centres of Plant Diversity and two Endemic Bird Areas defined by WWF, Birdlife, IUCN, etc. There are also important aspects of trans-boundary conservation through synergy with Vietnamese initiatives in biodiversity conservation (Project brief p.47) – some of these initiatives likely to be supported through WB-GEF support for the up-coming Vietnam Conservation Fund.

3. How does the project fit within the context of the goals of GEF

The project is rooted in principles of GEF OP#3. It focuses on integrated and sustainable management of timber production, watershed protection and set-aside (nature reserve) forests as a tool towards poverty alleviation and livelihood improvement. Landscape (especially karst landscape) and biodiversity conservation (including cave systems) are integrated within the overall approach as a necessary component to achieving sustainable management of the overall ecosystem and ultimately in conferring various environmental and social benefits. The above relates specifically to GEF Operational Strategy Priority BII, and is an important model in this respect. Furthermore, the inclusion of the BioCarbon pilot in the overall GIFDCP is an opportunity for biodiversity conservation implications of carbon sequestration plantations and set-aside forests also to be explored within the context of Priority BII.

At the protected area level, the intervention also relates specifically to GEF Operational Priority BI and again provides model approaches for wider replication.

The project is also in line with planning outputs of previous GEF interventions in China and strategy documents produced by WWF and others (Project brief p.8).

4. Regional context

The project is restricted to GZAR but has wider implications for China as a whole and has aspects of trans-boundary conservation with Vietnam. Its specific focus is necessary to pilot an integrated landscape approach in depth and Reviewer supports the decision not to take a wider national-level approach in this respect (Project brief p.12). The target nature reserve areas are wholly in need of support and GEF intervention here assists with realisation of national-level biodiversity conservation strategies and with priorities of eco-regional approaches.

5. Replicability of the project

A key feature of the project as a whole is to pilot means of small scale timber plantation and management systems as a livelihoods improvement approach which also addresses a supply-demand gap that is heavily impacting on natural forests. There are concerns as to the efficiency of quality control and monitoring systems for plantations spread in small lots over a very wide area, but if the project manages to address some of these inherent problems it will provide widely applicable models of small-holder plantation approaches consistent with the local absorptive capacity for new technologies.

Specific GEF interventions in piloting of national-level management planning approaches and their integration with communities around the nature reserves, and capacity building to achieve this should also be replicable. Any success developing local-level community-driven planning processes that link delivery of donor project and Government programme benefits around nature reserves with achievement of conservation objectives for the reserves would be particularly important to replicate.

Reviewer notes and supports the intention for a wider dissemination of capacity building during some project trainings (Project brief p.15 and p.43).

6. Sustainability of the project

GIFDCP interventions are carefully designed to be consistent with local needs, absorptive capacity and environmental concerns, all of which are likely to ensure sustainability of approaches if the support of Government is maintained. Institutionalising of approaches is likely, given the stakeholder support expressed (Project brief p.14). The extent to which benefits reach remote communities, particularly of ethnic minorities, is perhaps a cause for concern since these communities may be a focus of illegal activities during and post-project.

While GEF interventions are designed to be cost-effective and replicable, the sustainability of implementation of management plans is questionable, since these appear to be dependent to some extent on further external (national or international) support post-project. Means of prioritising and funding basic operational activities need to be defined post-project. As an intention of the project is to identify further potential protected areas, which will also require GZAR funds, already in short supply, this shortage of operational funding could be exacerbated. (See specific comments.) A focus of the GEF intervention should perhaps be to develop means of re-focusing existing funds, perhaps through re-evaluation of priorities through the Guangxi protected area system as part of a provincial protected area planning exercise.

Secondary issues

7. Linkage to other focal areas

The project as a whole focuses on reversing land degradation through forest development, for land cover and biodiversity protection, and for livelihood improvement. There is a clear link with the focal area ‘climate change’ in that reforestation and forest protection increases carbon sequestration – inclusion of a BioCarbon pilot emphasises this link.

8. Linkage to other programmes and action plans at the regional or sub-regional level

The GIFDCP has been developed through a comprehensive consultation process and is in line with all relevant aspects of PRCs Sustainable Forestry Development Strategy and other central Government instruments (Project brief p.27). It is also in line with GZAR plans to increase timber plantations by 870,000 ha and bring 667,000 ha of watershed areas under effective protection. Model forestry approaches to be used in GIFDCP have to some extent been developed by previous and on-going projects and programmes such as SFDP.

GEF interventions apply tools and lessons learned from previous GEF projects at national level and selected provinces, notably NRMP (Project brief p.31-32). Site selection and overall focus is consistent with the goals of the GoC Biodiversity Conservation Action Plan. Conservation objectives are also linked to WWF and FFI action plans, particularly for nature reserves and key species such as primates, and to regional action plans for karst landscape conservation in particular.

9. Other beneficial or damaging environmental effects

Environmental issues are discussed and potential environmental impacts are adequately summarised in the project proposal (Project brief Annex 10).

The key issue for the project as a whole is the extent to which project benefits generated by GIFDCP reach the more remote communities who are most proximate and rely to the greatest extent on natural resources from the key nature reserves. Successful execution of project capacity building initiatives, strengthened control of the nature reserves and better enforcement of legislation would result in reduced access and potential hardship for already marginalised communities. The project clearly aims to support these communities through a variety of appropriate instruments, but may need to clarify at an early stage more precisely how these benefits will be delivered or facilitated by the project on an individual community basis. Experience from elsewhere in the region is that it is hard to develop financial benefits for communities adjacent to protected areas at a level that compensate for a closure of access to valuable (if illegal) resources.

Concerning the plantation programme, the species mix for planting appears to have been very well researched. It is several times stated that GZAR presents near ideal agro-ecological conditions for timber production, so it might be said that the use of Eucalyptus and perhaps some other species which are most useful in harsh environmental conditions could be considered as over-emphasised. Reviewer understands, however, that Eucalyptus will not be planted on karst and not in mixed species plantings, which is acceptable in environmental terms.

10. Degree of involvement of stakeholders in the project

The involvement of stakeholders in project design, aimed at ensuring that project goals meet local stakeholder needs, has been exhaustive.

Plantation component institutional arrangements are complex, with PMO direction and management by FFs in line with their restructuring to private entities and with an aim to improve their currently very low contribution to development of the forest sector. A large number of households will be involved in joint partnership arrangements with FFs for establishment of plantations on their own land (their preferred option). The focus of the project on development of participatory forest management mechanisms will ensure the continuation of this large-scale involvement.

Remote communities in the vicinity of nature reserves, to remote to be easily engaged in timber plantation work, will be facilitated to engage with Government programmes and Component 2 activities supporting forest rehabilitation. The capacity of the envisaged ‘community co-management committees’ will need to be created, as they do not currently exist. Alignment of these new committees with existing village planning and administration structures, as proposed, will ensure that various activities undertaken by the village are coordinated – and this forms the basis for a mechanism to ensure linkage between development benefits coordinated by the project and the achievement of conservation goals as set jointly by the village and the nature reserve authority.

11. Capacity building aspects

The project pays considerable attention to capacity building which will be extremely complex due to the number of stakeholders involved. Capacity building initiatives are clearly presented, however, and appear comprehensive. Reviewers only comment relating to GEF component would be that project should ensure adequate attention is paid to community liaison and deployment skills for nature reserve guards (including ‘forest police’ – mentioned once, Project brief p.45), and particularly that attention be paid to experience from other countries which face the common problem of patrolling large areas with few staff and which have long ago determined that central and unpredictable deployment and the management skills for this are very important (see Specific comments).

12. Innovativeness of the project

The project as a whole is highly innovative in China in representing a provincial level in-depth sector-wide approach to forestry, where GoC programmes are used as the basis for integrating the management of production and protection forests, with overall themes of watershed protection, livelihoods development and biodiversity conservation. Considering both livelihoods development and biodiversity conservation priorities across an entire landscape presents problems in terms of the legal basis for co-management and extractive use of protection forests and nature reserves, the incorporation of biodiversity considerations into production forestry and overall land use planning, inter-departmental responsibilities, jurisdictions and financial support. However, lessons learned in this project will be of major importance in guiding similar holistic approaches.

The mechanisms proposed for small-scale plantation development, management and monitoring are to a large extent tried and tested (although the species mixes envisaged are perhaps innovative) and use existing Government structures. The main variations of the project are a particular effort at stakeholder involvement in planning the financing mechanisms and distribution of benefits (i.e. joint partnership arrangements with FFs). Quality control and environmental monitoring will be difficult, however, due to the wide distribution and small size of individual forest plantation lots and some innovative mechanisms remain to be developed here.

The BioCarbon pilot is of major significance and approaches adopted here will provide guidance for similar initiatives throughout the region.

The landscape focus of the project on karst is in itself highly innovative, and its consideration of below ground biodiversity even more so. Technical aspects of support planned for nature reserves to a large extent put into practice planning and management models developed under previous programmes. The primary innovative aspects mentioned here concern the engagement of local communities and definition of benefits to support this process. Reviewer’s opinion is that management planning models proposed are perhaps not innovative enough and need to more forcibly address the issue of linkages with Government planning and financing processes. There are risks here in that nature reserve managers will not see good reasons to adopt management processes and activities that are project-driven and not requested by Government, and this should be addressed at policy level by relevant stakeholder organizations.

Specific comments on Project Brief

p.5 (Alternatives considered and reasons for rejection.) Last point.

This is entirely valid, but the enabling environment also extends away from the immediate physical environment to the socio-political environment and the project as a whole will need to address this through consultative processes and policy adjustment at higher levels to achieve aims of GEF component. The project appears able to do this through its management structures and should ensure this happens. Common problems are not always solvable at the level of interaction between the nature reserves and local communities.

p.14 (M&E)

Reviewer emphasises the importance of not only ‘integrating biodiversity conservation initiatives into forest resource and land management’ but in ensuring feedback through the M&E system to ensure that land use is actually decided on the basis of both conservation values and production potential.

p.44, (Management plan implementation)

Reviewer strongly recommends Guard Post construction (provision of equipment, etc.) be dependent on a staff deployment analysis. There is a regional tendency to distribute Guards in small numbers in different guard posts with individual patrolling areas, rather than organise a centrally deployed guard force that can be much more unpredictable in its management activities. A lesson learned elsewhere is that unpredictability is as important as capacity in apprehending forest violators.

p.49 (Community conservation education and public awareness)

The programme as elaborated here seems rather unfocussed and needs a consultation process at an early stage in implementation to determine the most useful approaches and methods to be applied.

Bank Task Team's Responses to STAP Reviewer Comments

A. KEY ISSUES

1. SCIENTIFIC AND TECHNICAL SOUNDNESS OF THE PROJECT:

The Reviewer believes that the project is scientifically and technically sound. He finds that the GEF-funded Component and activities are important in that it aims to establish protected area management as an integrated part of the landscape management strategies, rather than set-aides. It aims to extend biodiversity protection principles outwards from the protected areas into the wider landscape. The landscape level interventions also give scope for integrating biodiversity protection in other forms of forest management, especially where the biodiversity concerns is underground and therefore where the factor is the control of local climate and water regimes through establishing and maintaining forest cover above ground. He queried the extent to which project planning and implementation review mesh with socio-economic planning for GZAR and expressed some reservation about the M&E system and its institutionalization post-project.

The project will assist in the development of provincial-level forest sector development and conservation strategy. This strategy would be approved by the provincial government and therefore will need to consistent with the provincial socio-economic development plans. The overall project M&E system will be implemented through existing government structures and staff at different levels supplemented by participation of local communities in the case of the nature reserves. Not establishing new or parallel systems will ensure continuation of the monitoring post-project.

2. IDENTIFICATION OF GLOBAL ENVIRONMENTAL BENEFITS:

The project area is extremely rich in biodiversity and so far has received less attention than neighboring regions of similar importance. Much of the biodiversity and forest resources of the area are currently unmanaged or provide only domestic benefits unrelated to environmental protection. The project provides the opportunity for these areas to begin providing measurable global benefits.

The Task Team agrees.

3. HOW DOES THE PROJECT FIT WITHIN THE CONTEXT OF THE GOALS OF GEF:

The project focuses on GEF OP#3 (Forest Ecosystems) but also fits within the context of GEF Operational Strategy Priorities BI and BII.

The Task Team agrees.

4. REGIONAL CONTEXT:

The project is restricted to Guangxi but has wider implications for China as a whole and has aspects of trans-boundary conservation with Vietnam. In addition, the project fits with priorities of eco-regional approaches.

The Task Team agrees.

5. REPLICABILITY OF THE PROJECT:

The project activities are replicable. For instance, GEF interventions in piloting management planning approaches and their integration with communities around the nature reserves, and capacity building to achieve this can be replicated in other areas. A key feature of the project is to pilot means of small scale timber plantation and management systems as a livelihoods improvement approach which also addresses a supply-demand gap that is heavily impacting on natural forests. The reviewer is however concerned with the efficiency of quality control and monitoring systems for plantations spread in small lots over a very wide area, but if the project manages to address some of these inherent problems it will provide widely applicable models of small-holder plantation approaches consistent with the local absorptive capacity for new technologies.

The Task Team agrees that the project activities are replicable. With regard to quality control and monitoring of plantation lots, there is already experience with this from a previous project on forestry development in poor areas, and no major issues on M&E have been identified with regard to working with small holders.

6. SUSTAINABILITY OF THE PROJECT:

All the proposed project interventions are consistent with local absorptive capacity to assist sustainability. As an intention of the project is to identify further potential protected areas, which will require government funds, shortage of government operational funding for protected areas could however become a constraint. The Reviewer suggests that the GEF intervention should develop means of re-focusing existing funds, perhaps through re-evaluation of priorities through the Guangxi protected area system as part of a provincial protected area planning exercise.

The Task Team agrees that the project activities can be sustained and that re-focusing of existing government funds could further assist sustainability. The Forestry review under Component 4 will include a provincial protected area planning exercise to rationalize the provincial protected area (PA) system. Degazetting low value PAs would free up funds for other more important sites.

B. SECONDARY ISSUES

7. LINKAGE TO OTHER FOCAL AREAS:

The reviewer describes that the project as a whole focuses on reversing land degradation through forest development, for land cover and biodiversity protection, and for livelihood improvement. In addition, he describes linkages to the climate change focal area.

The Task Team agrees.

8. LINKAGE TO OTHER PROGRAMMES AND ACTIONS PLANS AT THE REGIONAL OR SUB-REGIONAL LEVEL:

The reviewer believes that the project links well with other programmes and action plans including for instance all relevant aspects of China’s Sustainable Forestry Development Strategy and other central Government instruments. He also describes that GEF interventions apply tools and lessons learned from previous GEF projects at national level and selected provinces. Site selection and overall focus is consistent with the goals of the Government Biodiversity Conservation Action Plan, and conservation objectives are also linked to WWF and FFI action plans and to regional action plans for karst landscape conservation.

The Task Team agrees.

9. OTHER BENEFICIAL OR DAMAGING ENVIRONMENTAL EFFECTS:

The reviewer believes that potential environmental impacts are adequately considered in the project proposal. However, the key issue for the project as a whole is the extent to which project benefits reach the more remote communities who are most proximate and rely to the greatest extent on natural resources from key nature reserves. The project clearly aims to support these communities but may need to clarify at an early stage more precisely how these benefits will be delivered or facilitated by the project on an individual community basis. .

The Task Team agrees. The Community Relationships with Nature Reserves Sub-component aims to work with local communities to solve key problems which will include community skills enhancement.

10. DEGREE OF INVOLVEMENT OF STAKEHOLDERS IN THE PROJECT:

The involvement of stakeholders in project design, aimed at ensuring that project goals meet local stakeholder needs, has been exhaustive.

The Task Team agrees.

11. CAPACITY BUILDING ASPECTS:

The project pays considerable attention to capacity building. Capacity building initiatives are clearly presented and appear comprehensive. The project should ensure adequate attention is paid to community liaison and deployment skills for nature reserve guards as well as experiences from other countries facing common problems of patrolling large areas with few staff.

The Task Team agrees. The project will use curriculum developed under previous GEF-financed Nature Reserves Management Project which includes modules for forest guards. The curriculum built on international experiences of FFI, WWF, WCS, etc.

12. INNOVATIVENESS OF THE PROJECT:

The project as a whole is highly innovative. Four examples are provided. The Reviewer felt that proposed management planning models are not innovative enough and therefore need to link with government planning and financing processes.

The management planning process proposed is based on experiences of the two previous GEf-financed biodiversity projects in China of what worked and did not work. The proposal to develop an overall strategic management plan for the reserve which includes details of the baseline conditions, management strategy and objective, and proposed zonation and management activities, and an operational management plan which includes detailed budget specifying one-time and recurrent expenditures is one key lesson learned to better link with government’s own planning and budgeting process.

C. SPECIFIC COMMENTS

13. ENABLING ENVIRONMENT EXTENDS BEYOND IMMEDIATE PHYSICAL ENVIRONMENT:

The reviewer pointed out that common problems are not always solvable at the level of interaction between the nature reserves and local communities.

The task team agrees. The Community Relationship Subcomponent will also support facilitation and fostering of closer working relationships between nature serves, local communities and district and provincial government.

14. integrating findings from MONITORING into decision-making:

The Reviewer emphasizes the importance of not only “integrating biodiversity conservation initiatives into forest resource and land management” but in ensuring feedback through the monitoring and evaluation (M&E) system to ensure that these two considerations are given appropriate weighting in deciding land use options.

The Task Team agrees. The importance of using data from monitoring to give recommendations for project adjustments and improvements will be emphasized in the description of the M&E Programme (Component 4).

15. staff deployment analysis

Reviewer recommends Guard Post construction (provision of equipment, etc.) in Nature Reserves be dependent on a staff deployment analysis. He describes a regional tendency to distribute Guards in small numbers in different guard posts with individual patrolling areas, rather than organize a centrally deployed guard force that can be much more unpredictable in its management activities.

The Task Team agrees. Preparation of a Staff Deployment Analysis will be included as part of the training plan.

16. community conservation education and public awareness

As written, the program seems to be unfocused and there is a need for a consultation progress at an early stage of implementation to determine the most useful approaches and methods to be applied.

The Task Team agrees. A situation analysis and conservation education/public awareness plan will be developed during year 1 of implementation.

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[1] Industrial development planning of the GZAR is mentioned only once (PAD p.28), but no major industrial development is planned that is likely to impact on the project.

[2] See World Bank, 2005, The illegal and unsustainable trade in animals and plants in East Asia: why the World Bank should care. A. Grieser Johns and J. Thompson. Available online at biodiversity

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