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         Forest Sector Development

The Forest Sector Development Project (FSDP), supported by Credit 2043-CE in the amount of SDR15.5 million (US$19.9 million equivalent), was approved in FY89 and closed on December 31, 1996, one year later than planned. Cancellations totaled SDR7.51 million (US$10.4 million equivalent). Cofinancing was provided by the UK Overseas Development Administration, Finnish International Development Agency, and the United Nations Development Program. The Implementation Completion Report (ICR) was prepared by the FAO/World Bank Cooperative Programme and finalized by the South Asia Regional Office. Comments by the borrower are included in an appendix; comments from the cofinanciers were taken into account in the preparation of the final version of the report.

FSDP was the second Bank-assisted forestry project in Sri Lanka. The project was to implement the first five-year time slice (1990–94) of the Forestry Master Plan, the groundwork for which was laid during the first Bank-assisted forestry project (Forest Resources Development Project (Cr. 1317-CE). Explicit project objectives were the (i) intensive management of plantations and natural forests; (ii) establishment of an environmental management system; (iii) expansion of the resource base by establishing new plantations; (iv) expansion and augmentation of professional and technical education and training; and (v) strengthening of the institutional base.

Achievement of objectives was mixed. Though the environmental goals were substantially achieved, the physical, sector policy, and institutional development objectives were only partially achieved. The Forest Department (FD) was strengthened and restructured, an Environmental Management Division was successfully established within FD, and a National Conservation Review was satisfactorily completed. However, there were serious delays in the preparation of management plans—largely prepared by international consultants—for the plantations and selected natural forests. In addition, proposals for reform of the State Timber Corporation did not make significant progress. Plantation establishment and maintenance targets also could not be achieved. This was largely due to staff shortages and security problems in some areas. Moreover, lack of certified seed sources, improper attention to seedling production, and inadequate water harvesting techniques in the dry zones had a negative impact on plant survival rates.

The ICR rates project outcome as satisfactory, sustainability as likely, institutional development impact as modest, and Bank performance as satisfactory. The Operations Evaluation Department (OED) endorses these ratings. Assured support for the development of the forestry sector over the long term is likely with the strengthening of the FD and progress made under the education and training component. However, as the ICR notes, integrating the work of the consultants and counterpart staff to ensure correct transfer of technology will be a major challenge.

The ICR draws some familiar lessons, the most important of which are: the need for a rigorous institutional capacity analysis of the main implementing agency at appraisal prior to setting physical targets to ensure a realistic project design; and the need for continuous long term support to important basic policy issues addressed by the project in future investments in the forestry sector to ensure maximum returns.

The ICR is satisfactory, providing sound analysis supported by clear evidence. However, it could have been improved if it had provided information on lessons learned from beneficiary participation in plantation establishment and maintenance.

No audit is planned.

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