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Implementation Completion Report (ICR) Review - Environment and national resources management

1. Project Data:   
ES Date Posted:
Project Name:
Environment and national resources management
Project Costs(US $M)
 369  331.89
Loan/Credit (US $M)
 Loan 158 Credit 66  Loan 145.67 Credit 66
Sector, Major Sect.:
Cofinancing (US $M)
 OECF 100 GEF 20 Gov Japan 4.6 NDF 1  OECF 100 Gov Japan 4.3 GEF ongoing
L/C Number:
C2277; L3360      
Board Approval (FY)
Partners involved
Japan, Netherlands, GEF 
Closing Date
12/31/1998 12/31/1999
Prepared by: Reviewed by: Group Manager: Group:  
Nalini B. Kumar
Ridley Nelson Ridley Nelson OEDST

2. Project Objectives and Components:

a. Objectives
The project was an hybrid operation with two mutually supporting parts. The objectives of the quick disbursing sector adjustment program were to preserve the biological diversity of the Philippines, re-establish natural resources that had been degraded and introduce sustainable land use practices. The objectives of the investment project were to develop, over a period of seven years, an effective protected areas system, improve enforcement of logging regulations, provide secure tenure rights to users in return for sustainable resource use, offer extension service to upland dwellers and develop mechanisms to support small scale community based resource management and livelihood projects in upland areas.

b. Components
a) Sector adjustment component aimed at implementing major reforms in the incentives, policy and legal structures governing the management of the country's natural resources.

b) Investment component aimed at strengthening central and local public institutions charged with monitoring or managing the natural resources. There were three subcomponents: i) Monitoring and Enforcement; ii) Regional Resources Management; iii) Conservation of priority areas.

c. Comments on Project Cost, Financing and Dates
As appraised, total project cost was US $ 369 million. The adjustment component was US $ 266 million of which IBRD was US $ 100 million; IDA US $ 66 million equivalent; OECF US $ 100 million. The investment component was US $ 103 million of which IBRD was US $58 million, GEF US $ 20 million; Japan WB TA Grant US $ 4.6 million; NDF US $ 1 million and Govt and beneficiaries US $ 19.4 million. The subcomponent for conservation of priority areas has not been assessed by the ICR as it is still under implementation and is expected to close in December 2001. The GEF grant that supports it was declared effective only in October 14, 1994, almost three years after the target date. Minus this subcomponent, actual project cost amounted to US $ 331.89 million, 96 percent of the appraisal estimates. US $ 9.6 million (9 percent) of the IBRD loan was cancelled. The NDF participation did not materialize. The project originally scheduled to close in December 1998, was extended by a year.

3. Achievement of Relevant Objectives:

Though the design was complex, ambitious and innovative and project activities were geographically dispersed, the project was successful in meeting most of its objectives (not considering the GEF component still to be evaluated). All major legal covenants of the loan/credit were satisfactorily complied with.

4. Significant Outcomes/Impacts:

(i) There is significant increase in local awareness on forestry and environmental issues.
(ii) Critical stakeholders were brought together in partnership to manage natural resources. Community based forest management has been recognized as the principal strategy in sustainable resource management. By 1998, 297 multi sectoral forest protection committees had been formed in 15 regions, 49 provinces, 9 cities, 206 municipalities and 35 barangays.
(iii) Significant policy, legal and institutional reforms that support sustainable natural resource management were introduced for example implementing rules and regulations for Industrial Forest Management Agreement were put in place including profit sharing mechanisms between investors and the government.
(iv) Institutional strengthening of Department of Environment and Natural Resources (DENR), local government units (LGUs), and forest communities for effective forest resources conservation and development was undertaken. DENR has been transformed from a purely regulatory agency into an organization providing extension services and technical assistance.
(v) There is improved and more effective monitoring of illegal forestry activities. Numerous cases were filed against illegal loggers which resulted in the conviction of several forestry criminals. There has been noticeable reduction in illegal logging activities in hot spot areas.
(vi) Estimates of global benefits in terms of incremental carbon sequestration are reported to be considerable.

5. Significant Shortcomings (include non-compliance with safeguard features):

(i) An effective fund flow mechanism from DENR to LGUs to support the decentralized mode of implementation was not provided for in project design.
(ii) Weak financial management capabilities of LGUs and communities were not adequately addressed in the design of training programs.
(iii) Institutional and working relationship between DENR and forest protection committees still need to be worked out.
(iv) Project design failed to adequately identify the need for proactive and integrated involvement of other agencies and institutions in supporting various project activities.
(v) Integration among various subcomponents of the investment component was poor in terms of location and operational modality.
(vi) Shortage of government counterpart funds and restrictive contracting and bidding procedures affected the pace of project implementation.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Institutional Dev.:
Bank Performance:
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

The lessons identifed by the ICR are interesting and have important implications for the future management of the country's natural resources. Four lessons from the ICR are repeated here. (i) Sectoral reforms in themselves cannot be entirely effective without the accompanying investments needed to support the transition into a new policy environment. (ii) Monitoring and evaluation systems need to be in place shortly before or right at the start of project implementation. (iii) Strong and committed partnership among various stakeholders are critical for sustainable natural resource management. (iv) Involvement of NGOs does not automatically lead to successful community involvement and action--NGOs need to be qualified and also acceptable to the communities they will be working with.
This Evaluation Summary adds the following further lessons: (i) There is a need for the Bank and the borrower to give sufficient attention upfront to sustainability issues and identify alternative sources of financing that may be available on project closure---royalties, fees, private sector investments. (ii) Given the potential of natural resource development to impact the lives of the rural poor it is important to make natural resource development in general and forest sector development in particular, an essential part of the poverty alleviation strategy of the Bank in the country.(iii) Establishment of a sound policy and legal foundation and clear benefit sharing arrangements are essential for the sustainability of a forest managment program based on community participation. (iv) Project design and the implementation time frame need to be realisitic and give sufficient attention to the absorptive capacity of key participants. (v) Effective coordination between cofinanciers not only in terms of implementation of project activities, but also timing of their approval is essential. In the current project the subcomponent for conservation of priority areas could not be completed during the time frame of the project.

8. Audit Recommended?  Yes

          Why?  (i) To assess the actual impact of the project on natural resources in the country. (ii) To verify the sustainability of activities begun under the project. (iii) To learn lessons for design and implementation of similar projects in other countries.

9. Comments on Quality of ICR:

The ICR is satisfactory. It gives a frank account of the project's experience. However given the complex and innovative nature of the projects, co-financer's comments would have been very valuable.

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