Interim evaluation

Introduction

The Hills Leasehold Forestry and Forage Development Project had a total projected cost of USD 20.4 million, to be financed by an IFAD loan of USD 12.8m, a USD 3.4 million grant from the Royal Netherlands Government for the Technical Assistance component implemented by FAO, and contributions of USD 2.7 million and USD 1.5 million from the HMG/N and participant-farmers respectively. The amount of the IFAD loan has twice been reduced, most recently to around USD 6 million. HMG/N cut its contribution by 50 percent due to additional security expenses during the insurgency. The Dutch-funded TA grant eventually totalled USD 4.85 million spread over two phases. Project implementation effectively got underway in 1993, and the project is due to close in December 2003.

The evaluation mission. The IFAD Interim Evaluation of the HLFFDP is being conducted as a mandatory exercise prior to the consideration of a second phase of the project. The evaluation follows the methodological framework of the IFAD’s Office of Evaluation. Primary data was collected through: (i) a survey of 107 project households, focusing on livestock assets and forage; (ii) participatory focus-group discussions; (iii) case studies of individual households and grassroots institutions; and (iv) open-ended interviews with key informants. Preliminary conclusions were presented during a wrap-up meeting on April 4 and are due to be finalised at a workshop in Kathmandu in late September.

The insurgency. The life of the country has been dominated in recent years by the Maoist insurgency, which has demoralised the departments of government, severely restricted the movement of officials and involved the destruction of forest range posts, as well as accounting for large sums for policing and defence.

Community Forestry (CF) and Leasehold Forestry (LF). CF programmes cover over a third of the population while LF initiatives are at an early stage. CF measures target whole communities and concentrate on forest conservation. LF involves a redistribution of assets in favour of the poor by leasing degraded sites to specifically targeted groups of resource-poor farming households. LF groups are smaller and more homogenous and their legal status is as yet insecure. Earlier antagonism between the two approaches has now been replaced by more constructive ideas concerning their coexistence or integration.

Main design features and implementation results

Project rationale and strategy. The HLFFDP is an innovative project, given the lack of precedents in Nepal and the project’s commitment to the direct transfer of assets to the poor. The project combines the objectives of raising the living standards of the poor and regenerating degraded forestland. The rationale of the project was based on solving the problem of common access to forest by leasing users’ rights over plots of degraded forest to groups of five to ten poor households, who were to be in charge of their rehabilitation and entitled to the use of forest products. The lease is renewable after forty years.

Project area and target group. Project activities up to 1995 were confined to four districts, then progressively extended to a further six. The amended project target was the formation of 2,040 leasehold groups of 14,600 poor households and the rehabilitation of 13,000 hectares of degraded forestland. The basic criteria for group membership were land ownership of less than 0.5 ha and an annual income below the poverty line, with a degree of flexibility permitted. Positive discrimination was urged towards landless and near-landless groups, disadvantaged tribal groupings, and female-headed households.

Goals, objectives and components. Forest rehabilitation was to be achieved principally by a ban on grazing in the leasehold sites. Income generation for participating households was to be achieved by increasing the supply of fodder and forage for livestock and the provision of income-earning possibilities from livestock and other sources. A further objective was the empowerment of the communities concerned through the formation and training of groups, the mobilisation of savings and access to credit. The major inputs were the provision of subsidised high-yield grasses and fodder tree seedlings, improved breeds of animal, strengthened veterinary services, appropriate training programmes, and subsidised agricultural credit.

Implementation partners and arrangements. There are four implementing agencies for the HLFFDP: the Department of Forest (DoF), the Department of Livestock Services (DLS), the Agricultural Development Bank of Nepal (ADB/N), through its Small Farmers Development Project (SFDP) scheme and the Nepal Agricultural Research Council (NARC). The DoF was to identify suitable sites and to supervise forest management; the DLS was responsible for the distribution of livestock, fodder tree saplings and forage seeds; both departments were to assist in the drawing up of operational plans and to provide appropriate training. The ADB/N was initially chosen to take the lead role in group formation and the provision of credit, but its lack of competence and enthusiasm for this role caused delays in project start-up and the replacement of ADB/N by the DoF as lead implementer. NARC activities focused on the development of technologies for suitable grasses, legumes and fodder trees. With four implementing agencies working at central, district and field level, co-ordination was a key factor and coordinating committees were to be set up at each level.

Policy changes and outstanding issues. HMG/N has adopted a progressively more supportive stance towards leasehold forestry, reflected in the most recent policy directions and in the decision taken in 2001 to extend the leasehold forestry concept to sixteen new districts with the eventual aim of countrywide coverage. The ninth and tenth five-year-plans (1997 onwards) both adopted poverty alleviation as their main objective, stressing the potential role of leasehold forestry. After a decision of the National Planning Commission (NPC), all leasehold programmes are accorded a ‘Priority One’ designation in government plans. The very lengthy lease registration process will be streamlined when a new Parliament ratifies the measures approved, with the authority for the granting of the leases being decentralised to district level. Outstanding issues include the lack of formal legal status for leasehold groups and uncertainties over the transfer and inheritance of leasehold rights.

Design changes during implementation. The start of HLFFDP was delayed while the responsibility for lead implementation was transferred. The duration of the project has twice been extended, currently until December 2003. The total amount of the IFAD loan, meanwhile, was twice reduced in view of the slow rate of disbursement. Under the second phase of the TA component, 46 women Group Promoters (GPs) were recruited to assist in the formation and support of groups, and NGOs were hired for their selection and training. The GPs were later re-hired thanks to a special IFAD grant.

Flexibility in targeting. A ‘cluster’ targeting approach has been adopted in many areas. This is partly target-driven, but also addresses the need for social cohesion, physical proximity of groups and sites, and minimising conflicts. It has also served to encourage the aggregation of groups into intergroups and cooperatives. The Mission found that, when area targeting was applied, targeting ‘violation’ was generally limited and had not resulted in domination by local élites. The problem was more the absence of proper negotiation with the communities.

Emergence of intergroups and cooperatives was a very significant development, surprisingly unforeseen in project design. The formation of 120 intergroups and 18 multi-purpose cooperatives has enabled the mobilisation of savings, initiatives regarding the marketing of produce and sustainable solutions to the need for rural financial services.

Main implementation results. By February 2003, 1,729 leasehold forest groups had been formed, or 85 percent of the initial target. A total of 11,756 households were included, also in excess of 80 percent of the target at appraisal. On the other hand, only 57 percent of the targeted area was handed over, mainly due to smaller leasehold allowances per household (an average of 0.62 ha against the projected 1.0 ha). The failure of the proposed ADB/N/SFDP credit scheme meant that only 56% of the targeted loan disbursement was achieved, with only 63% of existing groups accessing external loans. Over 70 percent of groups were formed in the four years from 1997 to 2000. Infrastructural grants made to groups and intergroups resulted in the building of culverts/bridges, the renovation of schools, the completion of 160 small drinking-water supply projects, and the improvement of trails and footpaths.

Rural poverty impact

The mission found project impact to be uneven in the fifty leasehold sites visited. The main determining factors were: the productive potential of the plots, their location in terms of markets and communications, and the degree of dynamism within the groups. The latter in turn depends on group cohesion, the extent of community consensus and the nature and continuity of support.

Significant increase in goat ownership; Static buffalo numbers. Goats remain the prime source of income for most project households, and goat numbers have increased measurably throughout the life of the project. Numbers of buffalo appear to have remained more or less constant since 1999. Again, there is a clear divergence between and within districts. LF members in Kavrepalanchok earned an average of nearly NRs 14,000 p.a. from the sale of dairy products and those in Tanahun, Ramechhap and Dolakha less than 2,000. Around 70% of LF households obtain no measurable income from dairy products, while about 10% percent earn NRs 10,000- 25,000 p.a. In remoter areas, distance from markets continues to be a constraint to milk production.

Popularity of imported forage grasses; failure of imported fodder trees. Introduced grasses and legumes proved generally popular and successful, although in some sites there are problems with the increased tree canopy and competition from unpalatable plants. At higher altitudes, the problems were the traditions of open grazing, and the unsuitability of temperate pasture species for the cut-and-carry system. However, four-fifths of participating households noted that the supply of forage was now adequate, while two-thirds had found it inadequate pre-project. Incomes of NRs 2-4,000 from green forage were reported from sites in all districts. The planting of imported fodder tree species in leasehold sites, on the other hand, was not a success, as many sites are unsuitable for such plantation (insufficient topsoil, steepness of slope, lack of moisture retention, competition from noxious vegetation). In general, the project design regarding the provision of subsidised exotic varieties of forage grasses and fodder trees was too rigid, and the Mission feels that site-specific packages are essential. Many farmers gave it as their opinion that in the leasehold sites natural regeneration of forest cover following a ban on grazing was a preferable approach.

Other income generating activities. Income from other igas is so far insignificant compared to income from livestock rearing. project figures from 2000 show that whereas nearly two-thirds of lf households earned some income from goats, and nearly a quarter from buffalo, less than ten percent earned anything from bamboo, cardamom, horticulture, beekeeping etc. the only significant advance in this regard is that some 1,800 households now earn cash from the sale of seeds and seedlings, a development entirely due to project activities. More recent signs of improvement can be observed: in plain areas, broom grass, pineapple and mango have had some success, and in hilly areas, ginger, banana and sweet potato.

Impact on the availability of financial assets. Two approaches to financial services delivery can be contrasted: one was the “official” project one, through the ADB/N SFDP scheme based on the provision of subsidised credit, the other, which emerged during the project implementation without been foreseen in the design, based on savings mobilisation by informal and semi-formal organisations (groups, intergroups and cooperatives). The former has proven unsustainable, it has encouraged ‘moral hazard’ among clients and has not enforced credit discipline, resulting in a high prevalence of loan defaults. The latter has fostered institutions (particularly leasehold cooperatives) that often satisfy the pre-requisites for future sustainability and put more emphasis on credit discipline. Cooperatives provided short-term loans for agricultural productive activities but also for ‘consumption ’ purposes such as house maintenance, religious ceremonies and emergencies, contributing to consumption smoothing and small investments. Cooperative may still need to differentiate deposit services and improve bookkeeping and self-monitoring of financial activities.

Impact on human assets. The impact of the HLFFDP in terms of health, nutrition, education and literacy is indirect, but the increase of livestock numbers and household income may have a significant bearing on nutrition in particular, and women members of LHGs commented on the improvement of their children’s diet in terms of milk, fruit and vegetables in particular (still in the absence of anthropometric data it is difficult to provide conclusive evidence). A Mission survey of time saved through the stall-feeding system found that up to six hours a day may be saved in fodder and fuelwood collection in the stall-feeding season and that this time was utilised for agricultural production and kitchen gardening (and rest). Mothers also indicated that their children’s attendance at school had improved as a result of the labour saved through the cut-and-carry process.

Gender issues. Only 27% of group members are women and 11% of LHGs are all-women groups. Mixed groups tend to include one or two women members only. However, encouraging movements towards greater gender sensitivity can certainly be discerned, and many respondents (not only female) attested to a quite different attitude within LF groups towards women’s roles and capacities. Some inactive male lessees had been persuaded to transfer membership to their wives. It was also observed that, after gender training and orientation, forest rangers had started to include more women in new groups. Group promoters felt that their involvement had assisted in the formation of more all-women groups. Women hold positions as chairpersons and other office-bearers in groups, intergroups and cooperatives, and there is a general perception that all-women groups are amongst the most active of all groups.

Impact on social capital and empowerment. Clear gains were made by group members in terms of confidence and self-esteem, especially with the emergence of intergroups and cooperatives. This is reflected in the much greater readiness among very poor people to engage officials (and visiting Missions) in a discussion of their needs and problems. The group concept has also enabled them to undertake activities such as the cleaning up of village environments, improving forest trails, and constructing drinking water systems. Intergroups have played a key role in resolving conflicts between LF groups and the wider community, for example in the drawn out conflict that arose in Manahari (Makwanpur). Cooperatives, apart from the purely financial services they dispense, provide fresh experience and training, bargaining power for higher farm-gate prices, market information, as well as a forum for decision-making in which women often play a central role.

Environmental impact. The project has performed very differently in the various leasehold plots, due to the existing level of degradation as well as to the external level of support and inputs. The most promising results have been observed in areas where the resilience of the soil-vegetation ecosystem is sufficient for the reversal of the process of soil degradation. In two regularly monitored LF sites, in Makwanpur and Kavrepalanchok, plant species increased in number by 57% and 86% between 1994 and 2000, and the number of trees and tree species also increased substantially. In some highland areas, degradation of forest continues, with declining forest cover and an increase in shrubland. Here, the production of forage is insufficient and might induce farmers to re-introduce grazing in the leasehold sites.

The sustainability of the project. Project sustainability is threatened by the following factors: the legal insecurity of the leasehold agreement; the selection of LF sites in very marginal mountain areas where regrowth is extremely slow and the sowing of introduced grasses so labour-intensive that the resultant income scarcely justifies the efforts; the lack of understanding and training in some sites concerning optimum livestock capacities; a trend of decreased productivity for stylo grass caused by the failure to re-sow after five years and the increasing tree canopy; the lack of continuing support for groups in remote locations; the lack of financial viability and incentives in ADB/N/SFDP credit operations; the failure genuinely to respect farmers’ preferences and indigenous knowledge in the preparation of operational plans; the limited results achieved by the TA component (notwithstanding other positive contributions to the project) in building an effective management unit.

Innovation and replicability. What is most innovative in the HLFFDP is the design of the LF concept itself, involving the actual transfer of land to very poor households. The specific provisions for very poor households and the exclusion from the scheme of anything but degraded areas signal a distinct progression from the concept and practice of community forestry, as well as a radical departure from commercial leasehold schemes. In terms of replicability, the project has obtained its most striking commendation in HMG/N’s decision to extend the leasehold concept to 16 new districts and the eventual aim of countrywide coverage. However, the following issues need to be addressed: (i) are some topographical zones inappropriate for leasehold forestry?; (ii) how can leasehold forestry be successfully integrated with community forestry schemes?; (iii) can LF be replicated by means of existing government personnel, skills, equipment and infrastructure?

Performance of the project

Relevance of objectives. The basic objectives of the project conformed with IFAD strategy in Nepal and with the evolving policies of HMG/N, but project design was weak in one key area. The elements of real participation by farming households were eroded by the emphasis on the provision of subsidised inputs and by the priority given to the availability of degraded land over the identification of needy communities. In other words, land was put before people.

Effectiveness of the project. In most sites, the sustainable regeneration of degraded land is being achieved. The exceptions are: sites which were so degraded that natural regrowth has not taken place and efforts at plantation have been in vain; sites overwhelmed by overcome the dense growth of unpalatable plants; sites at high altitudes where the capacity for resilience of soil and vegetation had been broken; sites where the grazing ban had been lifted or flouted. Of the fifty sites visited by the Mission, it is estimated that these categories cover around 10-20%, but the grazing ban may have been less assiduously respected in more remote sites.

Exclusive or inclusive targeting? The problem in group identification was not, as assumed at Appraisal, disappointing the ineligible but generating sufficient enthusiasm for the scheme, and the Mission was repeatedly informed by groups that lessees were largely chosen according to whether or not they were interested. Only when the local and imported grasses began to prosper, was there any real ‘competition’ for inclusion in the schemes. The ‘area targeting’ strategy frequently adopted by forestry officials was partly designed to meet district targets, since in this way large numbers of groups might be formed in a single intervention. The process of mobilisation could be more cheaply and more rapidly effected, the formation of intergroups and cooperatives facilitated and conflict minimised.

What explains slow implementation and disbursement? The answer appears to include at least six elements: (i) the failure of ADB/N leadership and the unforeseen expansion of DoF responsibilities without an attendant expansion in resources; (ii) the abrupt cessation of the TA component without leaving in place an effective management structure; (iii) the severe curtailment of the field operations of district authorities during the emergency; (iv) the funding hiatus of 2001/2; (v) the underperformance of the credit component; (vi) lengthy disbursement procedures and the mis-match between project and government budgetary categories.

LF – a relevant but so far costly approach. The HLFFDP was a costly project, with an average expenditure of approximately USD 800 per household or USD 1,400 per hectare of degraded land. This begs the question as to whether the objectives of the project might not more efficiently have been achieved through ‘bolting on’ to existing community forestry arrangements specific provisions for the poorest. Many CF users’ groups do make such provisions, including allowing the cultivation of grasses or the planting of cash crops such as bamboo in allocated areas, and the discounted sale of fuelwood. Some DFOs deny approval to CF plans in the absence of such measures. However, CF does not possess the mechanisms to target poorer households and control of CF may be abrogated by a caucus of powerful members. The Mission proposes the following ways to reduce the costs in leasehold forestry: (i) identification of the poorest by the community itself; (ii) strategic targeting of a ‘critical mass’ of poor households; (iii) the exclusion of sites where the resilience of the ecosystem seems broken; (iv) a reduced level of subsidised inputs by allowing for natural regeneration and reducing plantation schemes, especially of the unsuccessful fodder trees.

The role of partners

The role of IFAD. IFAD should be commended for a bold and innovative project and, more recently, for contribution to policy dialogue. The following specific weaknesses, however, need to be addressed in a second phase: (i) the neglect of the need to build or strengthen grassroots organisations (such as intergroups and cooperatives); (ii) the rigidity of the technical packages of land improvement; (iii) the lack of clarification concerning the primary function of TA; (iv) the failure to insist on the strengthening of line agencies to cope with the requirements of the project; (v) the failure to insist on a regular audit and a smoother disbursement procedure. A second phase should also consider options for establishing a physical focus for the multiplicity of interventions, activities, sites and agencies in project areas.

The role of the cooperating institution. The supervision of the project was carried out by UNOPS, with yearly supervision missions and reports. Two interventions were of particular importance: firstly, the revamping of the project during the first two years (1991-3); secondly, persuading IFAD to extend the life of HLFFDP after the hiatus of 2001, at which time the project seemed destined to come to a premature end. The limitations of some UNOPS reports may be due to an insufficient time in the field, and a corresponding concentration on certain districts, such as Makwanpur, Chitwan and Kavre. In general, the conditions in the higher hills are more problematic, but Ramechhap was visited only twice, Dolakha, Gorkha, Sindhupalchok and Tanahun only once, and Sindhuli not at all.

Government and its agencies. The growing commitment of HMG/N to LF and its readiness to extend its implementation countrywide should be stressed. The reduction of the government contribution to the HLFFDP budget was caused by circumstances beyond its control. However, the Project Management Unit, now a permanent LF unit within the DoF, relied heavily on the TA component until July 2001 and has not since been given the strong leadership that it requires. The DoF for its part has proved to be a worthy lead implementer. The DLS was able to direct forage development activities for which they had not previously had the resources, but appears to have missed the opportunity for a collaborative inter-sectoral approach, preferring to maintain its independence of action. ADB/N-SFDP was an unsustainable approach in the process of phasing out until resuscitation on the insistence of donors, including IFAD. NARC carried out a variety of research activities, but appears ill-fitted for the kind of extensive and site-specific coverage required.

Capacities and incentives in the DoF. Very much is demanded of DoF staff at district level, and the Mission is concerned about the lack of incentives (financial or other) and the wide disparity in conditions of employment between government staff and staff hired by grant-funded programmes and NGOs. Daily allowances are less than a quarter of what is paid by grant-funded projects. Study tours and in-service degree courses are much appreciated but opportunities are rare. Range posts lack amenities and equipment, and rangers are required to be responsible for excessively large territories. Although HMG/N will baulk at the prospect of across-the-board increases in salaries and DSAs, it should be strongly encouraged to give serious consideration to performance-related bonuses in poverty alleviation programmes.

Technical assistance and M&E. The work of the Dutch-funded and FAO-implemented TA component of the HLFFDP has been widely commended in supervision reports and elsewhere. The near-demise of the HLFFDP in mid-2001 is widely attributed to the cessation of TA. The papers produced under the TA component provide the documentary framework for the leasehold concept in Nepal. However, the Mission is concerned that TA did not establish an effective project management structure, either because of the abrupt fashion in which the TA was terminated or the lack of a proper exit strategy. Moreover, the TA tended to act as an autonomous parallel project implementation body, without operating a "capacity and knowledge transfer" to the benefit of the line agencies: it was not “owned” by the project. A typical example of this two-sided aspect of TA was the M&E system. The TA sponsored a number of studies, repeated surveys and two-censuses of the leasehold groups (1997 and 2000), which resulted into an abundance of information (an unusual case in IFAD projects), at least until 2001. But this monitoring system was not ‘owned’ by the line agencies which continued along their customary bureaucratic pyramidal lines with little gain in terms of capacity to conduct field impact assessments and to use knowledge for more effective management.

The role of NGOs. There may be a role for NGOs in certain specific aspects of leasehold forestry, in particular in the training of trainers. HMG/N should identify which tasks are presently beyond the capacity of its own departments and outsource these functions to suitable NGOs until such time as the relevant capacities of line agency staff exist. The demands of sustainability may best be met by the expansion and intensification of existing government networks, and IFAD-funded loans should be utilised to this end. The lifespan of even the most committed NGOs is ephemeral in comparison to the departments of government, and a government which takes seriously its leading role in the eradication of poverty must be prepared to provide the necessary skills and incentives to its staff.

Overall assessment and conclusions

HLDFFP can best be seen as a ten-year pilot scheme for LF. Its coverage is very limited, and the cost of its interventions expensive. If these costs can be reduced, its reach can be enormously expanded to all districts of the country where suitable areas of degraded land exist. Estimates suggest that there might be as much as one million hectares of such land in the mid-hills alone. What the LF concept requires to become more than a partial, piecemeal and rather expensive intervention lying uneasily in the shadow of CF is a simpler, cheaper, sustainable programme within the implementing capacity of government services.

Insights and recommendations

Six steps towards a more effective and efficient leasehold programme. The Mission proposes the following amended timetable/model for future projects of this kind, as follows:

(i) Initial activity: training of trainers and motivators focusing on forest rangers and guards, livestock JTAs and group promoters. (ii) Poorer communities to be identified in areas where degraded forest land is located. Suitability of communities and land to include the criterion of a ‘critical mass’ of households, and a process of ‘self-identification’ of the poorest. (iii) Leasehold sites allowed to regrow naturally for 12-18 months and during this initial period, main focus on the selection and training of group leaders, community mobilisation and savings discipline. (iv) The land development plan must be the outcome of genuine consultation between the community and the relevant officials, and the necessary group-level (and inter-group) workshops facilitated. (v) Federation of groups into intergroups encouraged, with appropriate training provided in self-evaluation skills, nutrition, health and hygiene. (vi) Formation of cooperatives with training programmes in book-keeping and banking activities. ‘Seed money’ for community projects (subject to performance benchmarks), might replace the present infrastructural grant and continue to serve the purpose of reducing the potential for conflict between leasehold groups and the wider community. Cooperatives should progressively take in charge the costs of group promoters. Moreover, cooperatives that wish to do so and have a solid financial track, could be linked to financially healthy banks, or to microfinance wholesale funds, to increase their loan portfolio size. The eventual aim would be for cooperatives to be federated at district and regional levels, and for the creation of an apex organisation similar to that of CF.

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The Interim Evaluation Mission was composed of: Professor Roger Norman, Team Leader; Dr. Peter Stromgaard, Natural Resources and Forestry Consultant; Dr. Naba Raj Devkota, Livestock Consultant; Ms. Kanta Singh Manandhar, Gender and Grassroots Institutions Consultant; Mr. Fabrizio Felloni (APO, IFAD), evaluation coordination and microfinance issues. The Mission would like to thank Mr. Shree Prasad Baral, HLFFDP Planning Officer, Mr. Bijay Kumar Singh for their help during field visits, and Dr. Ganesh Rauniyar for a preliminary desk study of statistical data. The Mission is grateful to government officials, field staff and representative of donors, NGOs and project clients for their collaboration.