PART I - THE NEW GENERATION OF FORESTRY PROJECTS: THEIR ROLE IN SUSTAINABLE DEVELOPMENT

The “new generation of forestry projects” started to grow some two decades ago, as projects focused increasingly on a great variety of issues beyond those associated with traditional industrial timber and wood products production. As indicated below, the absolute importance of the industrial component of forestry has not diminished; in fact it has grown. Rather, the relative importance of other dimensions of forestry and trees in land use has increased in terms of the agendas of development agencies, NGOs, and national decisionmakers. The importance of trees in land use and the various products and byproducts of trees and forests have, of course, been well-recognized by rural populations themselves for centuries.

Although not without growing pains, agroforestry and the broader concept of social forestry have come into their own, with a focus on rural welfare improvement and energy and food security. The important role of forests in terms of global change issues and environmental protection is becoming much better known. The use of trees in watershed management strategies and programmes is being expanded in various types of soil conservation and watershed protection programmes.

1 Forestry Projects and Sustainable Development

The Concept of Sustainable Development

In recent years there has been growing recognition that many of the actions taken in order to generate development in the immediate future fail to sustain the momentum of growth in the longer term. At best they prove to be insufficiently robust or well conceived to become self sustaining, and simply fail after a while. At worst the short term achievements result in degradation or destruction of the stock of natural capital needed in order to maintain growth in the future.

There are many definitions of sustainable development. Pezzey (1989) suggests that most contain two common elements: a concern for a lasting improvement in the well-being of people; and a concern for protecting and maintaining the capacity of the natural resource systems that provide the basis for such improvements.

Thus, within forestry sustainable development has been defined as “... development involving changes in the production and/or distribution of desired goods and services from forests and from trees which result, for a given target population, in an increase in welfare that can be sustained over time” (Gregersen and Lundgren 1990). The concept implies production of goods and services desired by people, combined with protection of the natural resource base on which such production depends.

Forestry Projects and Sustainable Use of the Forest Resource

In forestry, as in any other field, the translation of this concept of sustainable development raises a number of issues. At its simplest, it implies restricting the harvesting of wood and other physical products of the forest to levels that can be maintained through sound forest management. But demand for forest products seldom evolves in a manner consistent with an even flow of these products from the forest. Growing populations could mean that demands for wood, for example, are greater in the future. On the other hand, changes in incomes, consumption patterns, technology, etc., could mean that future generations have less need for wood products - but more of other goods and services.

The concept may therefore be interpreted more usefully as sustaining economic benefits rather than physical outputs. However, problems still arise in determining future values, or changes in relative priorities among the different benefits derived from forests. The forest is likely to have different values to different categories of user, and these are not necessarily congruent with one another. Harvesting by those in rural communities who depend on sale of forest products for their income may conflict with the interests of others in the community who depend on those products for their own use, and the concerns of both groups are likely to conflict with the interests of processing industries which depend upon raw materials from the forest, and of governments which derive revenue from forest land activities, while these in turn can differ from the interests of the broader regional and global constituencies concerned with avoiding adverse climate change or loss of genetic diversity.

Some decisions about the forest resource are made within much broader frameworks. At certain stages in the development process, exploitation of the forest resource could generate capital needed for investment in other growth sectors of the economy, and transfer of land from forestry to agricultural use may be critical in maintaining food supplies. In this situation the issue is thus one of sustaining much wider economic benefits than can be derived just from the forest resource.

With so much unavoidable uncertainty attaching to future needs and values, the concept of sustainable development may more realistically be interpreted as providing a set of guidelines; helping decision makers avoid, where possible, actions which eliminate or drastically reduce future options. This is particularly important when considering the less tangible and uncertain environmental values of the forest. Thus there is widespread agreement among scientists that biological diversity is desirable because it contributes to other goals such as increased resiliency of ecosystems, ecosystem stability, improved habitat, and the prevention of loss of genetic material that could be of value in the future. However, there is much less agreement as to what level or extent of diversity needs to be maintained. Biological diversity may refer to any of the various levels at which life is organized - genetic, species, ecosystem, biome (Hunter 1990). Thus one may be concerned about the potential reduction in genetic diversity within a particular species, the loss of a given species, the destruction of an entire ecosystem, or perhaps degradation or even loss of a major biome in the biosphere. However, it is difficult to place values on a characteristic such as biological diversity, because there is not enough known about any gene, species or ecosystem to estimate its potential ecologic or economic values for any particular level and amount of biological diversity.

Similarly, one of the problems in establishing the relationship between forestry activities and climate change is that the impacts of the latter are regional or even global, whereas development projects are usually locally focused. Each forestry project taken by itself may be an insignificant factor at the global level. However, in aggregate they may play an important role at the global level in the functioning of the biosphere.

Changes such as species extinction and damage to the atmosphere fall in to the category of developments which could have irreversible consequences, at least within any time frame relevant to human planning. Faced with the uncertainty of not knowing what consequences would follow from an irreversible loss of future options, a conservative approach to development is indicated. There is increasing recognition that the objective of preserving irreplaceable resource values may require imposing constraints on the intervention options that may be considered. At a minimum, decisionmakers should ask analysts to identify and describe any potentially irreversible biological consequences that might result from a forestry project, so that value judgements can be made if necessary on the need to circumscribe the range of project options that are considered to be acceptable.

Sustaining the Flows of Benefits from Forestry Projects

Generally, projects are designed to carry out specific activities within a well-defined target area to accomplish specific goals, with specific starting and termination dates. Planners and managers are held accountable for meeting planned goals within the time frame and budget specified. However, although they are framed for operational purposes within a narrow time frame, most projects are initiated in order to bring about changes intended to extend well beyond the lifetime of the project itself. Their role is to stimulate, catalyze or in various ways lay the basis for activities that will become self-sustaining by the time the particular input provided by the project is completed or phased out.

In practice, problems frequently arise which interrupt or distort this process:

• Continuity. - Activities initiated by the project cease soon after it terminates, or the benefits from the project's activities are no longer available to the intended beneficiaries, because the resources needed to continue the project initiatives are not available.

• Diffusion. - Activities and benefits developed in the project area are not adopted elsewhere, so that it fails to become more than a pilot exercise, because it was too narrowly focused or was located in a situation that was not representative of the population as a whole.

• Externalities. - Unforeseen side effects may occur, both inside and outside the project, because the project analysis and design did not identify the full range of impacts that would arise.

The growing concern with the sustainability of development has therefore drawn attention to a number of weaknesses in project design and practice. Some of these reflect too narrow a definition of the boundaries of the activity in question, others inadequacies in the mechanisms for project analysis and design, and others insufficient understanding of the constraints and possibilities of the institutional framework within which projects have to function.

The concept of sustainable development can be summed up as having a number of operational implications for forestry projects (derived mainly from Winpenny 1991):

• avoid damage to critical natural capital, and be wary of starting processes that are irreversible;

• where the resource can be maintained, limit exploitation to sustainable levels; where it is to be run down (e.g., to release land for agriculture), set aside and invest enough of the proceeds to produce a permanent income stream or alternative sources of supply of forest products for those who depend upon the forest;

• where possible, put economic values on social environmental costs and benefits, so that they are taken into account in decisions; and

• ensure to the fullest extent possible that impacts normally treated as externalities are internalized within the design of a project-e.g., by including compensatory measures where necessary, such as planting trees to maintain forest outputs lost.

In the rest of this part of the study we look at some of these issues in more detail. In the next chapter we examine what developmental impacts forestry projects can have, and the lessons that are being learned about the extent to which forestry activities actually deliver these benefits. Chapter 3 reviews the spectrum of institutional issues and mechanisms that need to be considered in planning, implementing and assessing forestry projects.

2 The Nature of Forestry Projects

As is shown in figure 2.1, projects in the forest sector have linkages to a wide range of economic activities-industry, energy, agriculture, range, and soil and water conservation among them. We can note two key points about the many different outputs that result:

1. Many of the outputs (goods and services) that forests and trees produce, such as recreation and aesthetics, ecological improvement, soil and water conservation and provision of habitat, are produced by natural forests whether or not foresters practice silviculture, so long as the forest is protected.

2. Many of the outputs do not enter the market place and thus do not have market prices or monetary values associated with them. In some cases, they are not even well-defined and quantified in physical terms; and the means for quantifying them have not been developed. Some outputs have only local impacts; while others also can have global impacts.

Forest sector projects usually involve situations in which the forestry activities also influence broader measures of development, such as employment, allocation of assets, and environmental values. At the same time, most forestry activities will be affected by interventions designed to bring about broader changes, such as agricultural pricing policies and investments in expansion of infrastructure. Any assessment of the potential or actual impacts of a particular forestry project therefore needs to be designed within an analytical framework which is able to identify the more important of these linkages, and define the likely direction of the impact. The main intersectoral policy linkages of concern to forestry are summarized in table 2.1.

Many of these linkages are complex. Some of these complexities arise from special characteristics of forestry projects:

• a long production period, or a long period between investment and output;

• the tree is both the production unit and the product;

• there is great flexibility over the timing of the harvest of a tree, but once it is harvested it takes a long time to rebuild the stock from which future harvests can be taken;

• as a biological production process, it is subject to considerable variation in output, and uncertainty can be substantial; and

• forests, and even individual trees, can have multiple uses; design and assessment of forestry projects is therefore likely to be subject to problems of joint products, conflicting objectives and trade-offs between different uses.

Others of the complexities arise from the multiple roles that forests and forest based activities play in the economy-raw material for industry, inputs into agriculture, source of rural employment and income, environmental conservation, etc. Through these and other linkages forests and forest products constitute important components of food security, energy balances, farming systems, common pool resources and yet other facets of the development process.

Figure 2.1. The central role of forests in our lives. (Source: Kenya Forestry Research Institute (KEFRI) Newsletter no. 2, May-June, 1987.

Table 2.1. Matrix of intersectoral policy linkages related to forestry.

Source: de Montalembert 1992.

The task of defining these multiple interactions is not an easy one. Nor is it facilitated by the relative neglect until recently of three critical relationships: (1) the importance of natural resources for regional or national economies, (2) environmental and ecological consequences of natural resource development, and (3) the tendency to exploit resources in unsustainable ways in frontier situations (Baum 1990). Neglect is reflected in shortage of information and of analytical experience and results.

The review of linkages that follows is organized under three headings: forestry and industrial development, forestry and rural development, and forestry and environmental sustainability. Each looks at the forms forestry's links with that sector take, the influence of policy and the nature and record of some of the principal types of project intervention.

Forestry and Industrial Development

In most countries a primary role of forests is as a source of raw materials for the industries which produce wood and fibre products for use in the modern, predominantly urban, sector of the economy-lumber for housing, panel products for furniture, paper for printing and writing, etc. These forest industries can form an important part of a country's industrial sector, and of the activities which earn and save foreign exchange through exports and import substitution.

That part of the forest estate which lies in the public sector-as most of it does in the majority of countries - can provide an important source of revenue and capital to governments, through the harvesting or liquidation of the commercially valuable component of the growing stock. This revenue generating objective can conflict with the values derived from the forest through others of the linkages - environmental, non-timber products, etc. Properly managed though, industrial use of the forest can generate positive flows of developmental capital.

Most of the products of the first stage of processing wood - sawnwood, plywood, wood pulp, etc. - are used by other industries, to manufacture furniture, packaging, newsprint, etc. The presence of forests and forest industries can therefore stimulate further industrial activity, employment and income. Their presence as markets for wood raw material can similarly generate jobs and wealth in the forested areas where the wood is produced.

However, this developmental potential does not always materialize. The produce may be exported, so that the value added from further processing accrues overseas. Many of the inputs other than the wood raw material may have to be imported. The quality and dimension specifications imposed by their industrial customers tend to lock most of forest industry into use of processing technologies developed in the industrially advanced countries. These generally are highly automated and capital intensive with little scope for flexibility in factor use; most of the employment created is semiskilled and filled by urban rather than rural labour. Far from creating local wealth, the insertion of a sizeable modern sector industrial plant can, if not done in a way sensitive to the local situation, have negative impacts. An influx of higher paid outsiders places pressures on local services and prices, while the introduction of commercial logging can disrupt existing forest-based activities of critical importance locally.

Lack of markets in the producing country for the full range of outputs from primary processing means that a high proportion of what is used in industrial countries remains unused as “waste” in producing countries, lowering their competitiveness relative to their forest industries in developed countries. Export of logs can prove to be more profitable than export of processed products in these circumstances, but generate minimal value to the country of origin.

Government interventions to stimulate forest processing through subsidies, tax concessions, etc., have consequently been widespread. However, recent work has shown that such policy interventions have frequently distorted investment decisions in unproductive ways. Low royalty rates and export taxes foregone mean that only a fraction of the economic rent is actually captured by most governments, while the excessive profits that accrue to the participating companies encourage exploitation of forest resources in excess of what would otherwise be economically rational, and the high-grading of just the best timber (Repetto 1988). In addition to being inefficient in terms of short-term economic objectives of development, such patterns of use can threaten the longer term sustainability of the management of the underlying resource. The formulation of industrial projects in the forest sector has not always been sufficiently sensitive to these issues.

Where the objective of the project intervention is to create a resource for industry, through afforestation, rather than drawing on an existing resource, other issues can arise. Many forestry projects are so located that they can only dispose of their output to particular forest industries. In such cases it is difficult to take meaningful decisions about the forestry project in isolation from decisions about that industry. It is all too common in practice for plantations to be established without prior determination of what kinds of wood are required, in what locations, and in what quantities. As a consequence great difficulties are encountered later in finding outlets for their output. A recent review of World Bank forest sector operations reported that “almost every project that depended financially on the sale of wood products.... suffered from the lack of a marketing analysis, knowledge of the market, and/or the early attention to the development of markets” (World Bank 1991).

The point made earlier of the importance of ensuring that a project is defined sufficiently broadly to encompass all the related components is therefore very relevant to the successful development of many industrial forestry and forest industry projects. This applies not only to recognition of the vertical linkages outlined above, but also to lateral linkages. Analyses of forest industry projects have tended to treat such associated investments as supporting roads, power, and other services as being outside the boundaries of the project; and to give little if any attention to environmental and social consequences of the industrial activity. Conventional forest industry assessments in the past have consequently often presented only partial pictures of their developmental impacts.

Forestry and Rural Development

The principal linkages with the rural sector are through the contributions made by forest based products, services and activities to the livelihood systems of rural people - contributing to nutrition, income, distribution of assets and wealth, household security, etc. In addition, control and management of tree and forest resources can affect the strength of social structures and local institutions, contributing to their empowerment, decline or fragmentation.

Linkages to the household economy

For most rural people, foods derived from forests, or from trees they maintain in their farming system, add variety to diets, improve palatability, and provide essential vitamins, protein and calories (Falconer 1989). In addition to these supplemental roles, forest and farm tree foods are extensively used to help meet dietary shortfalls during particular seasons of the year, helping bridge hunger periods when stored food supplies are dwindling and the next harvest is not yet available. The third main role of forest foods in the overall nutritional system is in emergency periods such as floods, droughts, famines and wars. An overview of the linkages between forestry and household food security is provided in figure 2.2.

Where people have had relatively unrestricted access to forests, forest food is often particularly important for poorer groups within the community. They are therefore most likely to be affected by a reduction in the availability of such foods as the forest resource is reduced, degraded or becomes inaccessible to them. The impact of declining consumption of forest food varies; sometimes being offset by improved access to other foods, including purchased foods, though these changes may result in a poorer quality diet. Perhaps the worst impact is that poorer people's food options are being progressively reduced, especially during seasonal and emergency hardship periods (Falconer 1989).

Fuel shortages may influence the food situation. Many foods cannot be digested properly uncooked, and cooking is necessary in order to remove parasites, etc. However, many other factors are associated with changes in dietary customs, which should not be attributed to fuel shortages alone - in many situations the lack of food is so great that fuel shortages play only a minor role in determining diets.

Many agricultural systems continue to depend on tree cover to maintain soil productivity. As rotational agricultural systems, employing periods where the land is kept fallow under trees, give way to more continuous cultivation systems, this is achieved by drawing on nearby forests or woodland for biomass to use as green mulch or to burn to provide nutrient-rich ash, or by maintaining some tree cover as intercrops, hedgerows (alley farming) or field boundaries. Increasing pressure on such systems can reach the point where the forest can no longer sustain the repeated off take.

Elsewhere agricultural systems depend on trees to provide fodder. In dry land systems, where ploughing and sowing have to be compressed into a short rainy season, the numbers of animals needed are considerably higher than can be sustained from feed produced within the farm system, and can only be maintained if the farmer has access to grazing or fodder off-farm. Forests, woodland and areas of scrub are often the principal complementary source, and arboreal fodder is often the main source of livestock feed in the dry season and in periods of drought. Shortages of fodder widely force the poor to dispose of livestock, so reducing the amount of land they can keep in cultivation.

Forestry activities - logging, planting, etc. - can often be an important source of employment in a given locality. Most forest-based employment and income, though, derives from small enterprises operating in the traditional rather than the modern sector. Small forest based gathering and processing enterprises provide one of the largest sources of nonagricultural employment and income to rural people. At a time when rural households are having to look to non-farm employment and income for a growing share of their total livelihood (Kilby and Liedholm 1986), this forms one of the more important linkages between forestry and livelihood security.

Figure 2.2. Forestry and food security: Linkages. (From Falconer 1989.)

As with forest foods, forest based income and employment opportunities are particularly important to the poor - because of ease of access and very low thresholds of capital and skill needed to enter and engage in most of them. However, returns to labour from many forest-based activities are marginal, and markets for the products may be quite vulnerable to introduced substitutes. Thus, while these activities provide a means of income earning for a large number of rural poor, many may not be sustainable (Falconer and Arnold 1989).

Small enterprises are particularly sensitive to decline and deterioration in the forest resource situation, as they are seldom able to create or conserve their own tree resources for future use. Their forest raw material problems are often worsened by unfavourable harvesting controls, exclusive allocation to large users, complicated licensing or auctioning procedures plus demands for heavy deposits or other insurmountable preconditions, high prices due to state monopolies, and monopoly distribution systems.

Rural production systems

The links summarized above take shape in practice through production of forest products by rural people in conjunction with their agricultural and livestock systems. Production at this level has two main components. One, the incorporation into the farming system of planted and managed trees of value to the farm household. The other, management of neighbouring common pool resources to provide inputs needed in order to complement those available from on-farm resources. Within the total, there is a general trend towards greater reliance on on-farm resources, as expropriation by the state, privatization and encroachment reduce the extent of common resources available for use, and overuse degrades those accessible resources that remain. Nevertheless, the latter often still constitute a major component of the overall agricultural system - filling gaps in the resource and income flows from other resources, and providing complementary inputs often critical to the continued functioning of agricultural and household systems, particularly for the poor.

In addition to government policies which favour private property and government control, increasing population pressure, greater commercialization, and technological change all contribute to breakdown of local management systems, and to the decline in common pool resources. Possibly the most important factor in undermining communal control has been the nearly universal trend towards replacement of local leadership and authority with control by centralized political authorities - “the ever increasing tendency of the state to expropriate the initiatives and activities which belong to people” (Jodha 1991). To date governments and donors have shown little expertise in establishing new organizational arrangements that are effective in enabling local management to function within this new institutional environment.

Recent experience suggests that new or strengthened systems of local management of common pool resources are unlikely to succeed unless the state is prepared to, and can, empower the local controlling institutions. Not much attention has been paid to the acute pressures that such social forestry initiatives place on the institutions concerned. The record suggests that even where government is prepared to do so, the responsible government departments prove reluctant to implement devolution of responsibility to local level, particularly when they perceive that this could threaten their control over a timber resource (Seymour and Rutherford 1990).

The potential for successful local management also increases with the degree to which the nature of the resource is such as to make private or state control less attractive. Some recent interventions have failed in part because they shifted the nature of the resource from low value products of only local interest such as grazing and fuelwood to higher value outputs such as timber which could be profitably privatized. A characteristic of most successful local management is a set of use and protection rules which the user group can control and apply, a requirement not observed in the design of some communal forestry projects.

The balance between supplies from tree stocks off-farm and from managed and planted trees on-farm varies widely with agroecosystem, and the patterns of land use, market demand, population pressure and factor availability and employment. Recently, growth in markets for short rotation wood products have widely stimulated substantial farmer tree growing by farmers. As trees are crops which require only low inputs to establish and maintain, they can be appropriate where labour or capital are constraints.

Most trees on farms serve both to meet household needs and to provide outputs that can be sold. In the first generation of projects designed to stimulate and support private tree growing by farmers, the assumption that farmers plant trees solely to meet subsistence needs was reflected in projects designed as though they were divorced from and immune to economic forces. This was particularly the case with the projects initiated in the late seventies and early eighties in order to increase supplies of fuelwood, in response to what was perceived to be widespread shortages in the subsistence sector.

However, it has become evident that most such interventions failed to reflect how people respond spontaneously to decreases in fuelwood supplies. For those with land the adjustment process may include producing more woody material on their own land. For others, one response is the oft cited one of collecting fuelwood from resources further afield. Others include more careful and economical use of available supplies, and shifts to other readily available biomass fuels such as crop residues and dried dung (Dewees 1989, Leach and Mearns 1988). These options frequently prove to be more efficient for the users than planting and growing trees primarily to produce fuelwood.

Policy interventions have centred on provision of subsidies and other incentives for planting. However, this type of intervention can encourage planting in response to the short term returns from the cash payments provided rather than the longer term returns from investment in trees, leading to undesirable distortions in land use and household security. Another result of this orientation has been failure to match project production to market possibilities, to link producers to markets, to remove restrictions on harvesting and sale of wood products by private producers, or to adjust subsidized prices of fuelwood supplied from state forests. The idea that the shortage of wood was so acute that any supply would be absorbed by the market, leading to projects becoming exclusively supply oriented (World Bank 1991).

The other policy area which has obvious connotations for decisions about the growing of a relatively long term crop such as trees is that of security of tenure. Concern is often expressed that this receives insufficient attention in forestry project design and assessment. However, the need to increase security of tenure in order to encourage tree growing may occur less often than tends to be assumed. Where existing tenure already provides the necessary assurances of returns to capital and labour, tree growing decisions are determined more by considerations of profitability than tenure. The focus could often better be placed on adapting interventions to the existing tenure situation rather than on attempting to change it (Cook and Grut 1989, Shepherd 1990).

A major reason for mismatches between intervention and needs, which have been frequent in the early years of farm forestry and agroforestry, has been poor communication with farmers and their families due to shortages of people trained in communication and extension skills. An institutional infrastructure of extension and related services to support tree growing often has to be built up. The fact that both forestry and agriculture departments have responsibilities in this area can complicate the process of doing so. Weaknesses in support to farmers also often reflect poor choice of species, and insufficient knowledge of performance and yields.

Forestry and Environmental Sustainability

The main linkages between forests and environmental values are well-known. In brief, forest cover affects the nutrient content and water retention capacity of soils, influencing rates of soil erosion and water run-off; consequently, forests affect downstream flooding, sedimentation, etc. Tree cover can also protect land and crops against wind and sun. On a macro scale forests are of importance in terms of maintaining biodiversity, the storage of atmospheric carbon, and changes in climatic moisture distribution.

Designing and assessing forestry projects to take account of environmental objectives and consequences often requires defining project boundaries more broadly than is conventionally done. As was noted earlier, even direct impacts such as air and water pollution from industrial processing plants, or soil loss or deterioration accompanying logging or change in land use, are commonly excluded from a project's analysis. Longer term resource use issues are even less likely to be considered.

One reason for ignoring such linkages has been that the negative environmental impacts occur outside the physical boundaries of the project. Project planning may therefore need to expand its spatial as well as subject matter boundaries if it is to capture such interrelationships. Progress in planning such projects is often constrained by data and assessment problems arising from the complexity of the resulting expanded sets of interrelated inputs, outputs and impacts.

In watershed management projects, for example, protection activities upstream can be widely separated spatially from their impacts downstream, complicating the task of tracing cause and effect and of gathering the data necessary for analysis. Even within an upland area, actions on-site typically have impacts off-site, so that costs and benefits may be spatially separated and involve different participants. Moreover, the numbers of people involved can be very large, and can exhibit many different ethnic, social and economic profiles. Many of the physical relationships are imperfectly understood. In addition, some of the more important outputs and impacts are not bought and sold, and consequently do not have market values, so that they can be given economic values only indirectly, if at all. At the same time, protection has to be balanced against other project objectives, such as production and the distributional impacts on different target groups (Gregersen et al. 1988, Dixon et al. 1989).

A third dimension to setting boundaries to project planning in order to satisfactorily account for environmental aspects of development can arise where a forestry project provides environmental benefits which help offset environmental costs elsewhere. For example, it has been argued that the beneficial effects on site productivity of Acacia Senegal grown by farmers in Sudan for gum arabic, fuelwood and fodder, help compensate for the damage to the gum belt and neighbouring desert soils by mechanized agriculture and overcropping. This compensating benefit should therefore be taken into account in assessing gum planting projects (Barbier 1989).

The difficulty of quantifying many environmental values poses additional difficulties. As it is not possible to place values on biological diversity, the trade-off between conservation and the economic activities that would be eliminated or curbed in favour of reserves, buffer zones, etc., cannot be assessed in terms of economic values. The issues related to the task of minimizing global warming present similar problems. Forestry activities that have been proposed include establishing additional tree cover to capture and store atmospheric carbon to offset carbon dioxide emissions elsewhere, and measures to reduce the release through deforestation and burning of carbon stored in forests. Ingenious systems of carbon taxes and subsidies have been postulated to encourage and reward beneficial activities such as afforestation, and penalize ones like clearance and burning that have negative carbon dioxide effects. However, major problems arise in establishing the value that should be attached to carbon storage (and even greater problems in working out how to avoid the disruptions to economic activities in the forest sector that such massive changes to the supply situation could cause).

Many activities with environmental consequences are also shaped by policy interventions. The pressures which force farmers to migrate onto forest lands which cannot sustain agriculture often derive from unequal distribution of land, rooted in historical patterns of land settlement and development of cash crops, and by agricultural pricing and tenure policies and practices. More directly, rights to land are widely created by clearing it and putting it to agricultural use. Subsidies, tax incentives, and other measures induce the extension of forest clearance to areas and usages which without such intervention would not be financially profitable to the practitioners even in the short run (Repetto 1988). Dry land environments have been degraded by overuse stimulated by policies to settle pastoral populations and to expand rainfed agriculture, and a variety of pricing, subsidy and tax policies which encouraged livestock expansion (Montalembert 1991). Progress in developing projects which pursue environmental sustainability is therefore particularly dependent on there being an appropriate policy environment.

3 The Institutional Context for Forestry Projects

The present chapter focuses on the institutional context of successful design and implementation of forestry projects, and more specifically on those issues which influence the effectiveness and efficiency of project development and implementation. Furthermore, projects function effectively only if there is harmony or coherence between institutions of various types and at different levels, between the formal rules of the government services and the informal ones of local communities. Such an understanding is necessary in order to properly develop the concepts of impact assessment.

Institutions are defined as the sets of rules by which societies live. They include the formal rules established by law and official regulations and the informal ones established at the initiative of people in particular by religious and social groups, expressing the wishes and needs of their constituents. Organizations are established to help (1) focus the development of rules, (2) formalize them through codification, legalization, or social contract, and (3) enforce and implement them through incentives, persuasion or force. There are different types (public, private, nongovernmental) and levels (national, provincial, local) of institutions.

The institutional context or framework within which forestry projects are undertaken influences significantly the types, magnitudes and extent of impacts from such projects. In turn, forestry projects can over time have noticeable impacts on the evolution of institutions associated with the sector. For example, they can enable local solutions to influence what happens at the national level in the forest sector.

The success or failure of projects and the process by which they are identified, designed, chosen and implemented, thus depends to a great extent on the nature of the institutional context, and whether the relevant institutions allow the recognition of diverse interests and legitimize the participation of all major actors in the planning, implementation, management and evaluation of projects, whether they deal adequately with interproject and intersectoral aspects of project development, and whether they successfully integrate project and policy linkages and interventions.

The importance of institutions in shaping the forestry sector in a country cannot be over-stressed. Thus, FAO's State of Food and Agriculture Report stated back in 1969 that the principal reason the forest sector had not made its expected contribution to economic development was institutional weaknesses. The major weaknesses identified included: inadequate training to equip forestry personnel for their new tasks; the obsolescence of forest administrative machinery; the inappropriate structures of many forest organizations; and the frequent irrelevance of the legal provisions under which the sector operated (FAO 1969, King 1972).

Several recent World Bank reports (OED's review on sustainability, the Sfeir Younis report on forestry projects and other studies) have concluded that: the nature and structure of the existing institutional frameworks are critical determinants of the extent, magnitude and sustainability of forestry project impacts. Furthermore in the 1990s and beyond many developing countries will be faced with difficult choices. On the one hand they will have to deal with the problems of diminishing areas of natural forests, declining timber and fuelwood supplies, and constant or possible decline (in real terms) of financial and human resources available to the public sector. On the other hand forestry institutions will have to cope with increasing political and public pressure to do more in basics (e.g. protection, management, harvesting of forests) and in new agenda items (e.g. biodiversity, conservation, etc.). Thus institutional considerations are of direct concern in this discussion.

A number of common weaknesses related to institutional constraints at various levels need to be considered in estimating future project impacts and the sustainability of project benefits. The more common of these can be summarized as follows (Gittinger 1982, Baum and Tolbert 1985):

• Lack of continuity, because of changes in government, policy, budget or personnel. A particular weakness is failure to make sufficient allowance for recurrent costs, or to avoid delays in disbursement to projects.

• Overambitious: expectations of success are unrealistic; resources are spread too thinly; insufficient allowance is made for the time it takes to do everything; new projects are started at the expense of completing or maintaining existing projects.

• Costs are consistently underestimated and benefits overestimated - the costs of essential support components such as training and extension are left out; negative side effects such as pollution are overlooked or not accounted for; etc.

• Projects are too large, subsuming component activities which should better be assessed separately, or not large enough, so that critical linkages are excluded (e.g., production forestry projects which fail to examine the needs of the user industries).

• The practice of creating a separate unit to manage a project defeats continuity and sustainability because, though it may temporarily insulate the project from some of the problems of the government bureaucracy, it incorporates salaries and other measures which cannot be maintained beyond the lifetime of the project.

• The tendency for both government and donor programme targets and monitoring procedures to give greater weight to delivery than to performance and to attach more importance to efficiency than to effectiveness often hides project and institutional weaknesses.

• Rural development projects tend to suffer from failure to involve participants until after the design is in place, so that project designs all too often fail to accurately reflect their concerns and possibilities.

It is quite evident from past experience, that many of these institutional weaknesses can have a direct impact on project outcomes and thus on the impacts of projects in terms of national, regional and local objectives.

As indicated in chapters 1 and 2, forestry projects are characterized by increasing complexity, not only in terms of the array of objectives and outputs considered, but also in terms of the involvement of groups other than traditional forest services and commercial users of the forest. Thus, we find increasing involvement of local populations and NGO's, coupled with increasing involvement of the global environmental community in what used to be regarded as local forestry problems and projects. Further complexity is added by the growing interactions between forestry and other sectors and the institutional linkages that are created, e.g., between forestry and agriculture, and forestry and energy and transportation sectors, as discussed in the previous chapter.

In essence, three broad sets of concerns exist at the management level: revenue generation, management to meet local needs, and environmental benefits. As earlier chapters make abundantly clear, forestry has evolved from tree management to management of a complex resource system, one that involves direct linkages with agriculture, energy, and other sectors. The major challenge for forestry related institutions is how to address the diversity and complexities of forest management for multiple uses and multiple users for which few proven implementation strategies are presently available.

Government forestry institutions and the policy framework for forest development and utilization in most developing countries were not established to address the complex and difficult range of tasks demanded by forestry programmes. In many countries, forest departments are short of funds and of the range of technical specialists or skills to cope with traditional responsibilities e.g. planning, protection, management of forest resources and to deal with the “new agenda” items e.g. non-timber forest products, biodiversity, agroforestry. Often the linkages between forest departments and related technical agencies are not well-established, and intersectoral programmes are difficult to implement. Skills needed to interact with local people and encourage them to participate in forest development are weak. The ground rules and working relationships to expand the roles of the private sector or local groups and organizations are usually not well established. Systematic efforts to understand the local institutional set-up and to assess the need to match national level rules and regulations with local level responses to evolving local situations are usually differed.

On the policy side, there also are many concerns. First there are many situations of conflict between sustainable economic development and the preservation of social equity (Wiens 1992), between forestry policy and fundamental social goals, between public goals and private interests. Second forest legislation and policies are not always consistent with policies and legislation for other sectors, particularly industrial and agricultural development policies, environmental policies, and land legislation. For example, national priorities for achieving food security, or for maintaining affordable prices for particular goods, have undermined the incentives and economic efficiency of forest development. Stumpage fees for timber are too low and the economic values of non-timber forest products and environmental services are ignored thus unwittingly leading to discouraging forest conservation and management. Many countries have introduced numerous protective regulations and subsidies designed to preserve natural forest resources or encourage tree planting that in the aggregate generate negative effects on the forestry situation and fail to meet local expectations. In addition, policy-makers usually find it difficult to consider the real costs of soil erosion, nutrient and resource mining, deforestation, forest degradation, or marine pollution or to accurately weigh the benefits of corrective actions (FAO 1989). At the same time, advances are being made in this area (cf. Repetto 1992).

A number of countries have introduced institutional changes to address these recognized problems. Solutions have often been too partial to address the underlying problems or too ambitious without their feasibility and likely impacts having been adequately assessed. One solution is to transfer more responsibilities to local organizations and the private sector. This is a new area for government agencies in general, and progress has been slow. There begins to be a solid understanding of the conditions under which local institutional involvement in forestry can be successful. There is increasing awareness that sustainable systems of forestry and agroforestry management and utilization often exist under customary regulations prior to Government or project intervention. Effective systems consist of use rights and agreed rules enforced by local groups to manage their natural resources. In some cases they are formally established as organizational structures. Much remains to be learnt about ways and means of supporting and strengthening the self-regulating and -organizing capabilities of local groups to encourage collective forestry action and initiative and simultaneously to enhance higher productivity.

NGOs can play key roles in mobilizing local people for forest management and development, in training local people and training foresters in participatory approaches. There is still uncertainty as to the desirable scope of NGO involvement, the extent to which NGOs with community mobilization skills can expand their coverage to forestry initiatives, and how to establish the necessary linkages between NGOs and forestry departments and local government institutions.

In general, the constraints facing forestry bureaucracies are often linked to broader administrative problems in the government. Table 3.1 itemizes a number of generic institutional problems countries face in strengthening public institutions for today's forestry and preparing them to work in partnership with local people and the private sector.

Dealing With the Institutional Issues

To deal with these increasingly complex issues, the institutional framework needs to evolve in such a way that it facilitates:

• effective response to the changing nature and composition of the political constituency for forestry, and the means for reconciling tensions between environment and development - between policing and protecting forests and developing them for the production of products;

• appropriate placement of forestry and agroforestry activities within the larger governmental and nongovernmental organizational structure of the country; appropriate placement implies that the expanding concerns for the sector are effectively dealt with, both by public and private institutions, and at the local, regional and national levels. Some specific issues which need to be considered here include how to deal effectively with the complexity of the institutional issues associated with (1) tenure and legal rights, related to both land and to trees, (2) open access and common property resources, and (3) recognition of rights of local users and sharing responsibilities with local groups and the private individuals; and

• project planning and implementation mechanisms that can be used effectively within the existing institutional structures and constraints to deal with: (1) increasingly complex intersectoral issues and conflicts; (2) conflicts between local and higher level interests and objectives; and (3) implementation of activities in the field that conform to the norms established by an increasingly complex set of policies associated with environment and development.

Table 3.1. A problem list of forestry related-institutional constraints.

Each of these three requirements is discussed below, together with the issue areas that are particularly relevant in terms of influencing forestry project impacts.

Expanding Political Constituencies for Forestry to Reconcile Environment and Development

In most countries there is a changing and growing constituency in the forestry sector. There is also a growing number of public and private groups and formal organizations active and often times competing in forestry-related activities. Such competition rather than the search for collaboration can, of course, lead to both positive and negative results.

On the positive side, a World Bank study on institutional strengthening found that most organizations that were exposed to some form of competition had a higher level of institutional performance than those that were not (Israel 1987). The definition of competition used was expanded beyond the traditional economic one of external competition from others attempting to provide the same or similar goods or services to include:

• external pressures derived from clients, beneficiaries, and suppliers;

• external pressures derived from the political establishment or from the controlling or regulatory agencies; and

• internal competition among different people or units within an institution.

This finding supports the importance of building a constituency for an organization and its activities, encouraging participation, and underscoring the agendas of the different interest groups. Equally, it underscores the importance of institutional linkages, both horizontal and vertical.

In the case of forestry, the constituency is presently in a state of flux. Realizing the complexity of the tasks, forestry departments are beginning to share management and control with other government departments, private sector, local organizations and interest groups and NGOs. Major commercial interests have always been rather well-represented but now feel unduly criticized by the environmental lobby, both national and international; privatization increases the influence of market forces on forestry. International and national environmental organizations are becoming more active participants in overall forestry activities, being concerned about a number of forest related issues - biodiversity, carbon sink functions, indigenous population rights, and so forth. This state of flux is not unique to forestry. However, because of the strong and increasing interest in environmental and social issues, the complexities and changes are given greater recognition.

Placement of Forestry in an Organizational Context

The institutional framework for forestry must address the multiple ecological, economic and social roles of forests and trees and the combination of public goods and intangible values and market products. It must increasingly cope not only with state property and private property, but also with all of the gradations of open access and common property resources which lie in between. This requires a wide mix of institutions and linkages between such. It requires organizations and laws that can deal with issues of sustainable development, or the delicate balance between protecting the resource and providing opportunities to use the resource, especially for the poor. Those functions that are to be performed by public administrations, such as regulatory, control, information collection and analysis functions should be clearly spelt out.

Legislation, regulations, and local institutional mechanisms are needed to define which areas of the forest would best be leased to or left under local groups' management and which should remain under the control of government authorities. The critical issue in the recognition of local control over the resource use is whether the local institutional set-up can internalize the vested interests of local populations which encourage collective action. At the same time government policies and programmes will need to recognize use rules which are compatible with local needs and capacities.

The question of linkages between the diversity of interest groups and various levels of institutional set-ups is a critical one for policy-makers to consider and resolve. The trend towards expanded involvement of various groups in the sector - and the consequent expanded constituency that has to be dealt with - increases the organizational complexity of forestry activities.

Table 3.2 outlines a number of the above mentioned institutional/organizational issues and the comparative advantages and disadvantages of different institutional/organizational options. The following three subsections look at specific issues related to public sector institutional developments, the role of the private sector and local development and participation in the management and evolution of forestry institutions.

Public sector institutional development

The organization of the public sector forestry institutions and their location in government structures have a significant influence on the types of forestry and agroforestry projects that are undertaken and, therefore, influence the type and magnitude of project impacts in the sector. This has important implications in terms of the dynamics of forestry development and use of the sector's resources in a given country and the nature of the benefits or impacts sought from the sector.

Public sector responsibility for forestry is commonly entrusted to one of four types of national agencies. These are (1) a parastatal body, (2) a department within a ministry of agriculture, (3) a separate ministry of forestry or natural resources, or a (4) ministry of environment and natural resources. Complicating these arrangements in most countries is the fact that, irrespective of where the main responsibility for forests is placed, the various functions may be split between two or more entities. It is still rather common for the forest department to be divided into a forest authority responsible for advising the government on forest policy and administering its implementation, and a state forest enterprise, often a parastatal, responsible for managing the state forests and marketing the products (Velay 1976). Nevertheless, the conventional wisdom was that many countries, particularly in the developing world, should combine, in the interests of economy, the two functions in a more holistic approach to forest management and conservation (Hummel 1984).

The creation of a parastatal often reflected the distribution of resources within a country, particularly when a small minority - either economic, social, or ethnic - holds an inordinate amount of power. By removing control of forest resources from popular pressure, such groups are allowed to extract the wealth, virtually unaccountable and often at great cost to the natural resource base (Honadle 1989). This results in a narrow distribution of the positive impacts of forestry projects. More recently structural adjustment programmes and macroeconomic reforms are giving a much larger share of forest management responsibilities to the private sector and to local communities.

When placed within a ministry of agriculture, forestry must usually play a subordinate role. This has led to several widespread problems (Miranda et al. 1990). First, since agriculture - in marked contrast to forestry - involves a very large and often powerful clientele, ministers often put agriculture far ahead of forestry. Second, the financial connection between timber proceeds and agriculture is sometimes quite direct. Adeyoju (1976) notes that in many African countries agricultural extension was financed by timber harvesting and concession proceeds when the forestry departments were under the ministries of agriculture. Third, when placed under the jurisdiction of some larger ministry, the forestry department often loses the battle for larger budgetary allocations. In these cases, the impacts of forestry projects that are of interest to decision-makers tend to be those associated with agricultural populations, rather than the landless poor. Agricultural sustainability impacts (e.g., through introduction of agroforestry technologies) may take on particular importance along with efficiency impacts.

The third option, the creation of a separate ministry, does have the advantage of providing foresters with some status and independence, since they are no longer second-class citizens in their own organization. However, this alternative tends to isolate forestry from its rural development context and to divorce it from other institutions active in natural resource management and other sectors of the economy. Intersectoral impacts tend to be of less interest. If the make-up of the forestry ministry staff consists mainly of traditional foresters, the impacts that will dominate the decision-maker's concern will be those associated with efficiency in management and in wood production. Technical or resource sustainability impacts of forestry projects also may likely be of special interest to the ministry. Impacts on rural people and particularly on the most vulnerable (distributional impacts) will tend to be of less concern.

The fourth institutional option - placement within a ministry of environment and natural resources-tends to emphasize the conservation objectives. The focus on conservation and on nature protection can have positive effects on dealing in a more holistic sense with land use issues and with ecosystem impacts of alternative investments. But forestry project impacts will tend to be looked at in ecological perspective rather than rural development, such as soil and water conservation, wildlife, and other natural resource areas of concern. Impacts on the economy and on rural people will receive less attention.

There are, of course, other variations on the above models. For example, the Republic of South Korea started its ambitious fuelwood/community forestry programme in the late sixties and moved forestry from the Ministry of Agriculture to the Ministry of Home Affairs. This was done primarily because the latter ministry controlled local police and there was a general feeling that strong policing action would be needed in the early stages of the forestry programme to protect the newly established village plantations and other tree planting activity. The success of the Korea programme was due to a number of interrelated institutional and technical factors (see box 3.1).

Table 3.2. Institutional issues and options.

Placement of forestry within the national organizational structure can have a significant influence on how projects induce development, how other sectors are affected, and, most importantly, how they affect the welfare of rural people. Even within the sector, different functions need to be considered in terms of different sets of institutions. For example, policymakers need to consider what level of research capacity should be retained by government forest organizations vs. universities and the private sector. The same sets of questions can be applied to such functions as marketing, information and extension services, and forestry industry development functions.

The role of the private sector

In a number of countries, the private sector can play a greater role in forestry than have been allowed until now. This is also in line with structural adjustment programmes and greater orientation of macroeconomic policies toward the market which are increasing the role of the private sector in economic development. In many former centrally planned countries the transition to a market economy has led to a general trend for the private sector to increase its importance as a partner in forestry development. However, in most countries concern for the long-term sustainability of forest resources and related environmental services is reflected in reluctance to privatize public lands on which forests grow. The tendency is to privatize forestry operations on those lands such as harvesting, afforestation and reafforestation and other silvicultural operations. Contractual arrangements fix the conditions under which the forest is managed, its sustainability safeguarded and revenues distributed. Privatization of forest industries and of forest products marketing organizations do not raise similar concerns and the competitive market context stimulates higher productivity and more effective management.

Projects that promote market approaches to forestry development should not raise major conceptual and policy problems when they deal with marketable commodities. However special attention will be needed when dealing with goods and services which are not traded, or which are related to public services such as conservation and protection, whose values are difficult to assess, so that they are not adequately reflected in decisions determined by market forces. Examples of such goods and services are biodiversity, wildlife habitat, microclimate, and water supply. Hence in projects related to the management and utilization of forests on public lands the institutional arrangements under which private enterprises are to operate will require careful examination. In relation to communal and private forests, projects are likely to address the needs to strengthen the technical and managerial capacities of the owners to sustainably and comprehensively manage the resource.

The other important concern relates to the extent to which the focus on private forestry could conflict with community forestry and the new dimension of people's participation. Undoubtedly the impact of private business development on local people must be assessed with care particularly in the extent to which vulnerable groups depend on forests for food and income. Privatization of traditionally managed common lands may profoundly affect the access of local groups to the supply of important goods such as food, fodder or fuel. On the other hand small scale forest based enterprises are typical examples of small but important private business which in some countries constitute a major source of off-farm employment. It is therefore essential to assess the impact of private business development in forestry on local communities in order to ascertain that those who are more dependent on the forest resource or on activities related to access to its products are not marginalized but actually benefit from the new opportunities.

Local Institutional Development and Participation

The current debate on how to involve local institutions and NGOs in forest development pays much more attention than in the past to the objectives underlying the involvement of such institutions. First, local level institutions have an important role to play in increasing the level of participation by target groups, and moving management responsibility closer to the resource base. Second, local institutions often encourage new directions in forest development, directions that are less likely to be identified by government agencies.

Involving local people's institutions, mobilizing their indigenous knowledge of forest and tree resource and giving precedence to their perspective on forestry problems, has implications in terms of empowerment of local people. Encouraging them through their institutions to initiate as well as undertake forestry activities leads to the possibility of their redefining the scope and goals of those activities and the long-term use of the forest resource being developed. This, of course, influences directly the nature and distribution of the impacts from forestry project investments.

This in turn also has implications for the kind of support that public administrations and technical forest agencies must provide. On the one hand, agencies must change the skill base of their personnel to provide new services: training of local people in new technologies and resource management as well as organizational and decision-making skills. On the other, the government must identify and correct policies and regulations that undermine the freedom and incentives of local people and local institutions to direct and undertake activities. One area is rules and regulations regarding tree growing, forest management, and product extraction and use. Another area is legislation underlying land and forest tenure. A third regards channelling of financial resources to governmental and nongovernmental bodies and local people. A fourth relates to giving people the ability to organize and then to recognize those organizations.

There is only a spotty understanding of the mechanisms and conditions which result in effective institutional development for forest management, development, and use. In principle that local institutions must have a dynamic rather than passive relationship with forest resource management - initiating activities and shaping directions and decisions rather than simply implementing government objectives and programmes.

The development of dynamic local institutions is often risky - local institutions may prove unable to undertake the activities or develop the organizational mechanism to sustain the activities. In addition, forestry activities can generate other political forces out of tenure or resource use rights issues that run counter to a government's desired objectives and goals, also posing a threat to the existing local power structure.

In forestry there are a number of examples of institutional arrangements for local forestry development and/or management. These include:

• joint management arrangements, whereby local user groups become partners with a forest department in managing public forests and sharing products;

• allocation of usufruct rights on forest areas, including protected areas, to indigenous peoples for sustained extraction of selected products, ecotourism development or processing industry development;

• providing forest development funds to the local administration and shifting the role of forest departments from active forest development to providing extension advice to these local bodies;

• providing community development funds to enable local communities to practice agroforestry and other forms of sustainable resource management;

• allocating state forest or other lands to targeted groups, usually the resource poor, for forest or pasture development and management, sometimes with the agreement of local administrative bodies; and

• providing technical support to self-regulating groups of users that collectively manage and use a common forest resource.

The above are all alternatives to privatization of forest development and resource management. The choice among these options again depends upon the context in a particular country and the nature of the resource base.

Other local issues that have important implications for the development of appropriate organizations and institutional arrangements are (1) the dependence of marginal and marginalizing populations on non-private land and water resources, often times government owned, but also open access and common property lands; (2) the constraints to women's involvement in forestry development in many societies. Institutional strengthening must include measures that increase women's involvement in forestry activities, that increase their participation in decision-making processes at local and higher levels, ensure their access to training and assets or tenure created, and that evaluate the appropriateness of participatory management arrangements for them.

The Institutional Context for Project Planning, Implementation and Impact Assessment

Intersectoral Institutional Issues Related to Forestry Projects

Identification and formulation of projects has become much more complex as projects have to deal with the wide variety of socioeconomic and environmental dimensions of forestry and agroforestry. Many of the factors which drive the issues with which forestry is now trying to grapple, such as deforestation due to encroachment by the land hungry poor, lie in other sectors (see table 2.1). Solutions, therefore, often have to be found outside forestry - in changes in patterns of land use, agricultural pricing, etc. Development within the forest sector therefore increasingly rests on being able to understand how it is linked to decisions elsewhere within the economy, and how the intersectoral institutional issues can be resolved. However, these strong intersectoral linkages often are ignored. There are very few countries that have any sort of formal mechanisms to routinely integrate forest sector work with work in other sectors or in the economy as a whole (World Bank 1991).

This neglect of the broader context within which they are located underlies many of the weaknesses of early social and environmental forestry projects. The problem of project formulation in isolation from related pricing, tax, trade and other policies outside forestry has been exacerbated by the tendency to focus on a single narrow issue, such as fuel wood. Tree growing and fuelwood use are usually embedded in complex resource and social systems, within which most of the factors that determine what can be achieved through forestry solutions are of a non-forestry nature. Failure to understand this led to attempts to solve what are essentially broader problems of rural poverty through plantation projects.

Effective identification and planning of projects is facilitated if there is a well functioning set of institutions that are connected and coordinated in national forest sector planning, investment and management system, through which sectoral and national priorities are identified and resources allocated. Experience to date is not good. For example, a recent World Bank study of 335 completed agriculture and forestry projects in 92 developing countries reported that “countrywide assessments of the state of resource management, or of developments that were affecting the use of renewable resources, were rarely made. Since this wider context was often lacking the selection of projects tended to be opportunistic” (World Bank 1989). In other words, the national sector wide planning that is needed to make sense out of project priorities is missing in most countries. This, in turn, is partly because the institutional linkage mechanisms have not been created.

At the same time, some projects do logically and appropriately originate within a much more limited framework - in response to particular needs, bottlenecks or opportunities; or in follow up to an earlier project; etc. The danger with developing projects in isolation is that they may preempt a potentially better project, or, more fundamentally, be in conflict with higher level objectives, be incompatible with the policy context, be poorly or wrongly designed because information available only at a higher level was not taken into account, or may be trying to apply a project approach where some other form of intervention would be more appropriate.

In addition to intersectoral issues, there also are issues related to geographic linkages for projects within the forestry sector. Some local project linkages to the rest of the world can be assessed effectively only within the framework of a region or some other broader spatial unit. This would be the case, for example, for downstream impacts of interventions in land use practices in upland areas. These are impacts that are more likely to be understood looking at the whole system rather than by trying to separate out and trace the impact of particular projects in their own region of activity. Such a narrow focus would result in an underestimation of impacts. Yet, often times the institutional framework and coordination for action within such a broader view of linkages is missing.

Integrating Project and Policy Interventions

Another reason for ensuring that project planning is closely linked with the broader institutional context of development, is to ensure consistency of project interventions with existing policy. Project interventions should complement and be compatible with policy interventions, and need to be compatible with the policy framework within which the project has to operate.

It is said that a “good policy beats a good project” any day. In other words sometimes a policy intervention or change will be more effective than investment in additional projects. For example, an increase in the growing of trees by farmers might be much more effectively achieved by removing restrictions on wood prices (thus increasing the potential returns to growers) or by eliminating regulations which restrict private producers' access to markets, than by investment in a project to establish rural nurseries. If the latter is required, it is unlikely to succeed if the incentives and constraints created by policy interventions discourage tree growing. Thus, most often combinations of policy and project interventions are required to achieve positive and effective results.

Project planners therefore need to consider the policy context within which their projects will operate, and which policy variables are likely to affect performance, and in what manner. Project design needs to be consistent with, and sensitive to, prevailing policy measures, or may need to incorporate conditions which remove existing policy constraints. Where the influence of policy is particularly strong, it could prove that a project approach would be ineffectual, and that sectoral or programme aid, to reinforce policy reform would be more appropriate (Winpenny 1991).

Project planners also need to be alert to the possible impacts of policy changes of a macroeconomic nature, as are happening at present in many countries as part of the process of structural adjustment. For example, devaluation, reduction in export taxes and removal of price controls, could result in increased prices to agricultural producers, a change that could in turn have a number of effects on forestry. Some crops, cultivation or livestock practices promoted in this way could encourage further clearance of the forest. On the other hand, higher agricultural prices could lead to increased profits being invested in improved agricultural productivity, and more intensive use of land already under cultivation rather than more clearance of forest on marginal agricultural land (Markandya and Robinson 1990).

Improving the Institutional Framework for Forestry Projects

Since forestry institutions must face certain endemic issues, together with the contemporary problems outlined above, the need for good institutional analysis is acute, particularly if the forestry sector is to successfully complete the transition to the new generation of forestry projects and programmes. Within the field of natural resource management and rural development in general, there is increasing interest and pressure to improve the level of institutional analysis. Various analytical approaches are available, ranging from the more conventional audit of organizational capacity, which examines what the institution has, to the internal dynamics of the institution, which focuses on leadership and management, to the more dynamic assessment of the policy environment, which focuses on incentives, performance, and sustainability (VanSant 1989). There is also increasing evidence that local organizations of beneficiaries have a key role to play in achieving sustainable development (Korten 1990). In considering ways of making the institutional framework for forestry projects more effective, the following key questions need to be considered:

Is there a favourable political environment? The relevant political context in which the programme will operate needs to be assessed in terms of how it will constrain or enhance institutional behaviour and effectiveness, particularly in relation to the proposed programme activities and goals. Of particular importance here are the extent to which the government is committed to forestry for sustainable development in its economic, social, and environmental dimensions and the ways in which it supports the participatory approaches necessary for achieving such goals. This should include support for community forestry, gender issues, and the rights of minorities. Identifying this context is crucial to understanding the likely impacts of a project and its feasibility.

What are the internal dynamics of the key institutions? It is essential to understand the internal decision contexts of institutions and who has the authority to make decisions and implement changes. Equally important is an understanding of what the organizational incentives and disincentives are for undertaking programme activities and for achieving alternative impacts.

What is the level of institutional capability? An assessment is required of the capability and willingness of the participating institutions to undertake the activities proposed under the planned intervention, together with the identification of the principal constraints in fulfilling their present mandates. Of particular importance is the extent the involved institutions can attract and mobilize necessary financial resources and manage them effectively over time. The assessment should specifically focus on the activities that each institution and organization will be responsible for under the planned intervention; and on how consistent local and sectoral institutions are in actual fact.

Is there a hospitable institutional environment? An organization must adapt to external conditions in order not only to achieve its goals, but also to survive. Planners and implementers must focus on the demands such external conditions make on an organization and the constraints they place on organizational action (Rondinelli, Middleton, and Vespoor 1989). A particular function of management is mastering these external conditions. One aspect of this is forging productive linkages with other institutions whose support or cooperation is necessary. Mechanisms for coordination with other institutions may be formal, for example, joint committees, task forces, staff transfer, report sharing, or informal, for example, ad hoc meetings, personal interaction, or exchange of services. These external linkages enhance or ensure access to resources critical to the institution. These links may be horizontal or vertical and can be forged by coalition building, claim making, or building political and bureaucratic support. Information should be provided only on those local and sectoral organizations - public, private, and nongovernmental - that have affected previous development interventions and may throw light on those proposed under the programme (Bennett 1985).

Analysis of these types of questions should form an integral part of the overall social feasibility analysis which - in its most practical form - is a methodology which provides guidelines for studying and identifying the social and political factors that may affect project impacts on people involved with the project. On the basis of this assessment, potential problems that may arise during project implementation can be identified.