Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Sikkim Biodiversity Conservation and Forest Management Project
Loan Agreement: March 31, 2010
Loan Amount: 5,384 million YenBorrower: The President of India
2. Background and Necessity(1) Current State and Issues of the Biodiversity Conservation and Forest Management Sector in India
In terms of biodiversity conservation in India, as of March 2009, 4.79% of the country wasdesignated as protected area, with 99 national parks and 523 wildlife sanctuaries. However, themanagement plans of these protected areas are not well prepared based upon scientific databases inorder to conserve biodiversity. Furthermore, at the start of the 20th Century, approximately 40% of
India was covered by forest, but the India’s forest and tree cover ratio1 stood at 23.6% (2005), which
is lower than the global average of 30.3% (2005). Man-made activities within forest areas such as theuse of land for grazing and the collection of fuel wood have an influence on the degradation of forests
in some areas. Consequently, in addition to the need for strengthening capacity among related
agencies to ensure a balanced approach for sustainable ecosystem, it is also vital to improve forest andtree cover as well as the forest quality.
(2) Development Policies for Biodiversity Conservation and Forest Management Sector in India, andthe Priority of the Project
The Government of India has outlined a target of increasing India’s forest and tree cover ratio by
5% in its Eleventh Five Year Plan (April 2007-March 2010). In addition, the Plan places an emphasison participatory Joint Forest Management (JFM) to ensure sustainable forest management, thepromotion of activities by an Eco-Development Committee to ensure wildlife conservation, support
for those who rely on the forest for their livelihood to ensure alternative sources of income, and areduction of man-animal conflict. Furthermore, in order to implement sustainable forest management
and biodiversity conservation, the Government of India aims to build an information management
system and promote the training for human resources development.
(3) Japan and JICA’s Policy and Operations in the Biodiversity Conservation and Forest Management
SectorThe “Poverty Reduction and Environmental Improvement” is one of the prioritized areas in theJapan’s Country Assistance Program for India by the Government of Japan. Accordingly, JICA has set
the “Support for Environment/Climate Change Measures” as a prioritized area. More specifically,1Forest and tree cover ratio is the ratio of forest (land with a crown ratio (coverage ratio of tree leaves on the groundin a specific block) above 10% greater than 1ha that can be surveyed by satellite) and trees (land with a crown ratio
above 10% less than 1ha that can't be surveyed by satellite) within the total target area (i.e. the total area of India).

JICA will support measures to prevent soil degradation and improve soil water retention ability as
well as bio-diversity through restoration of degraded forest and improvement of forest cover andquality for the sake of sustainable forest management. In terms of Japanese ODA loans given to India,
17 projects totaling 174,612 million Yen have so far been extended in the forestry sector. JICA
Technical Cooperation Project, “Capacity Building of State Forest Training Institutions and SFS
Colleges”, has been implemented for a projected period of five years from FY2008.
(4) Other Donors’ Activities
In addition to forest management projects being implemented by the World Bank and the EU, theGlobal Environmental Facility (GEF) has been involved in supporting the preparation of India’s
biodiversity strategy and related action plans.
(5) Necessity of the Project
The state of Sikkim is known as a biodiversity hotspot, located in a particularly important area inthe Eastern Himalayas. It is considered that approximately one quarter of the total number of species
in India live in this area. Since Sikkim is located in the foothills of the Himalayas, it is geographically
far from the urban area and its environment is not suited to the development of manufacturingindustries. As a result, Sikkim has been involved in trying to develop tourism industry, including
aspects of ecotourism that utilize its rich natural environment and unique traditional culture. However,in recent years, the increasing number of tourists visiting Sikkim has negative influence on the naturalenvironment. In addition, in contrast to urban areas of Sikkim, the rural areas are still suffering frompoverty, leading to activities that have a negative impact on valuable flora and fauna, and presenting athreat to the biodiversity conservation and forest management in Sikkim. There is a need for theprovision of mechanisms to improve the livelihoods of rural people, especially those living in poverty,
with the aim of achieving sustainable socio-economic development in balance with the naturalenvironment in this region. Since the state of Sikkim is promoting participatory sustainablebiodiversity conservation and forest management, JICA assistance for the Project, with its emphasis
on appropriate biodiversity conservation and forest management, and the improvement of livelihoods
for rural people through, for example, the development of ecotourism and other forms of tourism
industry, is highly necessary and relevant.
3. Project Description(1) Project Objective(s)The objective of the project is to strengthen biodiversity conservation activities and forest
management capacity, and to improve livelihood for the local people who are dependent on forests bypromoting sustainable biodiversity conservation, afforestation and income generation activities
including eco-tourism for community development, thereby contributing to environment conservationand harmonized socio-economic development of Sikkim.
(2) Project Site/Target Area
State of Sikkim(3) Project Component(s)This is a project to implement the strategies required to strengthen management capacities withinthe Khangchendzonga National Park and the seven wildlife sanctuaries in the state of Sikkim. Inaddition, the project will implement activities to improve the livelihoods of rural people who aredependent on forest resources in each district within Sikkim, and strengthen and upgrade the activities
base of the Forestry Department. The eligible portions of the project covered by the Japanese ODA
Loan are as follows.
1) Biodiversity conservation and forest management
2) Community development and livelihood improvement activities
3) Supporting activities
4) Consulting services (support for procurement and fund management, etc.)(4) Estimated Project Cost (Loan Amount)
6,347 million Yen (Loan Amount: 5,384 million Yen)
(5) Schedule
March 2010-March 2020 (total 121 months). Project completion is defined as completion ofForest and Biodiversity Conservation and Joint Forest Management (March 2020).
(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Department of Forest, Environment and Wildlife Management, Government ofSikkim3) Operation and Maintenance System: Same as 2) above(7) Environmental and Social Considerations/Poverty Reduction/Social Development
1) Environmental and Social Considerations(i) Category: B(ii) Reason for Categorization
This project is not considered to have significant undesirable impact on the environment, given
the characteristics of the sector, the characteristics of the project and the characteristics of the project
area, under the “Japan Bank for International Cooperation Guidelines for Confirmation ofEnvironmental and Social Consideration” (established in April 2002). For this reason, this project isclassified as Category B.
(iii) Environmental Permit
The Environmental Impact Assessment (EIA) report is not required for this project under thecountry’s legal system.
(iv) Anti-Pollution Measures
No particular adverse impact on the environment is anticipated, since the executing agency will
issue appropriate guidance when agricultural chemicals and fertilizers are used.
(v) Natural Environment
Within the national park and wildlife sanctuaries, biodiversity conservation and forest
management activities will be undertaken by the Department of Forest, Environment and Wildlife
Management, Government of Sikkim. With regard to the afforestation activities, adverse impact on
the natural environment is expected to be minimal because, in this project, native species will bemainly planted with due consideration to the ecosystem by the guidance of the Department of Forest,

Environment and Wildlife Management, Government of Sikkim.
(vi) Social Environment
Since the project will be implemented mainly in national forests, it will involve neither landacquisition nor involuntary resettlement.
(vii) Other/Monitoring
The executing agency will monitor for noise, water quality, dust, etc.
2) Promotion of Poverty Reduction
While the proportion of Sikkim people living in poverty (19.2%) is lower than the national
average (27.8%), there are disparities between regions (Scheduled Tribes live in the northern area, forexample) and therefore there is a need to consider poverty reduction when selecting target villages forthe implementation of community development and livelihood improvement.
3) Promotion of Social Development (e.g. Gender Perspective, Measures for Infectious Diseases
Including HIV/AIDS, Participatory Development, Consideration for the Person with Disability,etc.)
Under the project, participatory forest management through Joint Forest Management Committees(JFMC) will be implemented. In addition to paying consideration to the gender balance of participantsof these committees, Self Help Groups (SHGs) will be formed comprising mainly women andmembers of Scheduled Tribes, which will engage in activities to improve livelihoods such as theprocessing and sale of non-timber forest products. Environmental education will also be carried out atthe biodiversity visitor center, etc.
(8) Collaboration with Other Donors
This project will collaborate with local NGOs in implementing regional development andlivelihood improvement activities, etc.
(9) Other Important Issues
This project will contribute to the biodiversity conservation and sustainable forest management, aswell as countermeasures to climate change.
4. Targeted Outcomes(1) Performance Indicators (Operation and Effect Indicators)
Indicator

Baseline

Target (2022)(Actual Value in 2009)[Expected value 2 years
after project completion]2

Total Protected Area (km )

2,183

2,400

Total Number of Protected Areas

810Afforestation and Regeneration Area (ha)

-

4,300

Number of Target JFMC, EDC & PSS*

-180

Number of Self Help Groups (SHGs) Formed-540

Number of Trainees of Forest Department Staff-769* JFMC: Joint Forest Management Committees, EDC: Eco-Development Committees, PSS: Pokhri
Sanrakshan Samitis

(2) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate of Return (EIRR) is 15.80%.
[EIRR]
Cost:
Project costs (excluding tax), operation and maintenance/management expenses,
renewal expenses
Benefit:
Income from forest produce, income from tourism, livelihood improvements throughjoint forest management, etc.
Project life: 50 years
5. External Factors and Risk Control
Political and economic stagnation/deterioration as well as natural disasters in India and the areasurrounding the project sites
6. Lessons Learned from Past Projects
From the ex-post evaluations of similar projects in the past, the lesson learned is that in order tosmoothly implement JFM, it is important (i) to prepare, in comprehensive and easy-to-understandlanguage, guidelines that indicate, among others, the scale of JFM, the basis of the wood-lot selection,
the basis for operating JFMCs, and a system for getting people to take responsibility, then (ii) toimplement the project in accordance with those guidelines. This project aims to implement JFM
smoothly through employing experts thoroughly versed in India’s JFM and management of protectedareas, and having them prepare a manual for making micro plans and for managing the JFMCs.
7. Plan for Future Evaluation(1) Indicators for future evaluation
1) Total Protected Area (km2)2) Total Number of Protected Areas
3) Afforestation and Regeneration Area (ha)4) Number of Target JFMC, EDC & PSS
5) Number of Self Help Groups (SHGs) Formed
6) Number of Trainees of Forest Department Staff
7) Economic Internal Rate of Return (EIRR) (%)(2) Timing
2 years after project completion(End)