Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
South Asia Section 1, South Asia Department
Japan International Cooperation Agency
1. Name of the ProjectCountry: India
Project: Project for Community-Based Forest Management and Livelihoods
Improvement in Meghalaya
Loan Agreement: March 27, 2020
2. Background and Necessity of the Project(1) Current State and Issues of the Forest Sector in India
In India, the forest area has been declining due to disordered logging andchanges in land use, with the forest coverage rate declining to 19.2% in 1997.
However, by afforestation and other forest conservation activities, the rate
improved to 21.5% in 2017 (Indian State of Forest Report 2017). Based on thestandards set by the Government of India, in 2017 the percentage of Very Dense
Forest whose tree crown density is 70% or over was 13.8%, that of Moderately
Dense Forest whose tree crown density is 40% or over but under 70% was
43.5%, and that of the Open Forest whose tree crown density is under 40% was
42.7% (Indian State of Forest Report 2017). The percentage was high in Open
Forest, in which quality is degraded by illegal logging and excessive extraction.
Many people including poor people live around forests, and they are dependent
on forests for their living materials, such as fodder and firewood, and income
sources. The deterioration of forests threatens their lives and causes a decline inforest functions including water source retention and soil conservation. It also
results in a decline in the yield of crops due to floods and other natural disasters
or a lack of agricultural water. These conditions have become more apparent
with the population increase in recent years. Improving forest deterioration is anurgent issue.
In the Green India Mission (formulated in 2014), the Government of India set
the following goals for sustainable forest management and ecosystemconservation: increase in the forest area by five million ha over 10 years,improvement in the quality of forest in 500,000 ha, biodiversity conservation andwatershed conservation over 10 million ha, and improvement in livelihoods ofthree million households located around forests. The Government also specified
the capacity development of the Joint Forest Management Committees, acommunity-based forest management organization, and the establishment of an
appropriate forest management system through cooperation between local
communities and public organizations.
Meghalaya is a state having a population of 2.96 million (Census of India,2011) and is located in the northeast region of India. The per-capita income in
Meghalaya is ranked 24th among 33 states in India, and fifth among sevenstates in the northeast region where economic development lags (PreparatorySurvey). In Meghalaya, the forest area accounted for approx. 76.4% of the totalarea (22,429 km2) in 2017. However, forests have been deteriorated as theforest area decreased by 142 km2 (approx. 1.2%) and the rate of the Open
Forest increased by 157 km2 to approx. 42% from 2013 to 2017 (Indian State ofForest Report 2017). Direct causes of recent deforestation and forest
degradation are: shortening of the cycle of slash-and-burn shifting cultivation
due to the population increase, forest fire due to open burning before grazing,
cutting trees for quarrying, and non-compliance with regional customary law.
These phenomena are caused by a lack of a land use plan, lack of an alternativemeans of livelihood, and vulnerability of management systems of publicorganizations and local communities. Deforestation and forest degradation
cause a decline in the production of timber and non-timber forest products, soil
erosion, and sedimentation in rivers, which leads to the deterioration of local
communities' livelihoods and access to water resources. To prevent
deforestation and forest degradation, the Government of Meghalaya specified
the promotion of forest conservation, including sustainable land planning andmanagement, in the Meghalaya Vision 2030.
In Meghalaya, approx. 90% of the forest (forest land) ownership rights belong
to communities and individuals (Preparatory Survey). These forests (forestlands) are administratively managed by the Autonomous District Council(hereinafter referred to as "ADC"), a community-based administrativeorganization established in accordance with the Sixth Schedule of theConstitution of India. To sustainably use forests and other natural resources andimprove livelihoods of local communities in rural areas, the Government ofMeghalaya has established the Meghalaya Basin Development Authority(hereinafter referred to as "MBDA") under the Planning Department tocoordinate and integrate administrative services, which have been provided byvarious departments to local people, and make efforts for sustainable
management of natural resources and support for livelihoods improvement.

The Project for Community-Based Forest Management and Livelihoods
Improvement in Meghalaya (hereinafter referred to as “the Project") willconserve natural resources in communities in Meghalaya by carrying out
afforestation and water and soil conservation activities against deforestation andforest degradation as well as carrying out livelihood improvement activities for
local people and strengthening the institutions. The Project is placed as animportant project in the forest sector in India.
(2) Japan and JICA’s Policy and Operations in the Forest Sector in Meghalaya,
India
Under the Country Development Cooperation Program for India (March 2016),
support for sustainable and inclusive growth was defined by the Government ofJapan as one of the priority sectors. The Country Development Cooperation
Program specified the promotion of support for the forest sector to develop
programs for increasing incomes of the poor and to address environmental andclimate change issues. JICA Country Analysis Paper for India (April 2018)
analyzed that it was important to take measures that lead to appropriate
conservation and use of forest resources. Thus, the Project is consistent with theprogram and analysis. The Project is also consistent with the development
policies of the Government of India and the policies of Meghalaya as well ascooperation policies and analyses of the Government of Japan and JICA andcontributes to the improvement in local communities’ livelihoods and sustainable
management of forest resources. The Project will therefore contribute to Goal 1(No poverty) and Goal 15 (Sustainable use and management of forests) of theSustainable Development Goals.
In Japanese ODA loans for India in the forest sector, there are 27 projects withloans totaling 269.9 billion yen as of February 2020.
(3) Other Donors’ Activity
In India, the Global Environment Facility has provided support for theestablishment of a biodiversity conservation plan and its activity plan. InMeghalaya, the World Bank (WB) has implemented a project for improving thecapacity of community-based natural resource management under theMeghalaya Community-Led Landscapes Management Project (2018–2023). Inaddition, the International Fund for Agricultural Development (IFAD) has
implemented a project for improving local communities’ living conditions andlivelihoods in rural areas under the Meghalaya Livelihoods and Access toMarkets Project (2015–2024).

3. Project Description(1) Project Objectives
The objective of the Project is to restore and conserve natural resources within
the villages by sustainable forest management, livelihood improvement, andinstitutional strengthening, thereby contributing to conservation of environment,
biodiversity, and uplifting of socio-economic conditions of people in the State ofMeghalaya.
(2) Project Site/Target Area: Meghalaya(3) Project Components
1) Sustainable forest management (e.g. development of a participatory land
use plan, raising nurseries, afforestation, registration with the forest
conservation system, and water and soil conservation activities in approx.
500 communities)2) Community Development and Livelihood Improvement (e.g. community
infrastructure development, production and processing of forest products,
horticulture, livestock raising, and startup support for approx. 500 localcommunities)
3) Institutional Strengthening (e.g. capacity development for communities andinstitutions concerned)
4) Consulting Services (e.g. implementation management)(4) Estimated Project Cost (Loan Amount)
13,076 million Yen (Loan Amount: 10,397 million Yen)
(5) Schedule
Planned between March 2020 and March 2030 (total of 121 months).
Project completion is defined as the completion of all the activities (March 2030).
(6) Project Implementation Structure1) Borrower: President of India
2) Guarantor: N/A
3) Executing Agency: Meghalaya Basin Development Authority, Governmentof Meghalaya
4) Operation and Maintenance System: Concerning activities carried out
directly by the MBDA and related departments, the MBDA and related
departments will take their budgetary steps to continuously maintain andmanage the activities after the completion of the Project. As for activities
led by local communities, local communities will continuously manage arevolving fund to be set during the Project period, and will manage,maintain, and operate the activities after the completion of the Project. To
ensure local communities’ continuous activities, the Project Management
Unit will provide training to strengthen their maintenance and management
capacity.
(7) Collaboration with Other Donors
1) Japan's Assistance Activity: N/A
2) Other Donors' Assistance Activity: In Meghalaya, the WB and the IFAD
have implemented projects. Necessary adjustments have already been
made to prevent overlap in the target area between their projects and theProject.
(8) Environmental and Social Consideration/Cross-Sectoral Issues/GenderCategory1) Environmental and Social Consideration① Category: FI② Reason for Categorization: The Project is classified as FI because it isimpossible to specify subprojects for the Project before loan agreement,
and the subprojects may have an undesirable impact on theenvironment as defined by the JICA Environmental and Social
Guidelines (established in April 2010).
③ Other/Monitoring: Under the Project, MBDA should categorize each
subproject so that the necessary measures are taken in each category.
The categorization should be implemented according to India's domesticlaws and ordinances as well as the JICA Environmental and Social
Guidelines (established in April 2010), with the help of consultants hired
using funds borrowed in the form of the Japanese ODA loan.
Subprojects include no Category A projects.
2) Cross-Sectoral Issues: Under the Project, local communities will form theVillage Project Implementation Committee and voluntarily carry out
community-based activities for the development of a sustainable forest
management plan and a livelihood improvement activity plan. Since theProject is expected to reduce 92,724 tons of CO2 a year, it will contribute tomeasures against climate change (measures for climate mitigation andadaptation).
3) Gender Category: GI (S) Gender activity integration project<Details of Activities/Reason for Categorization> After launching the Project,gender awareness training will be provided for the MBDA, Forests andEnvironment Bureau, Water and Soil Conservation Bureau, ADC, and localcommunities. Through the collection of gender-related information andissue analysis, activities will be carried out from the gender perspective.
Self-help groups composed mainly of women will carry out livelihood
improvement activities so that women's opinions can be reflected in theplans.
(9) Other Important Issues: N/A4. Targeted Outcomes(1) Quantitative Effects
1) Outcomes (Operation and Effect Indicator)
Baseline

Target (2031)(Actual Value in2019)【Expected value 2
years after projectcompletion】

Area under forest management(ha)-22,500

Increase of accessibility to water(%) (Note 1)(Note 2)40 (Note 3)

Decrease of soil runoff (%)(Note 2)50 (Note 3)(Note 2)500

Increase of household income(%)(Note 2)30 (Note 5)

Number of Enterprises
developed-

22

Representation of women inVPICs (%)-(minimum) 33

Ratio of female participation inthe project activities (%) (Note 6)-(Note 2)

Use of GIS for planning andmonitoring (%)(Note 2)100

Indicator

Registrations with the forest
conservation system (Note 4)(Note 1) Households that have access to tanks, chambers or water sources
within 500 m radius from their dwelling are regarded as having access towater.
(Note 2) The baseline and target are based on the results of the baseline
survey conducted by the SPMU after launching the Project.
(Note 3) The percentage of decrease in the amount of soil outflow. The target
communities in the first batch will be subject to the evaluation at thecompletion of the Project (communities that will be subject to batches, ofthe three batches, which carry out activities in the first two years after thepreparation period of the Project).
(Note 4) The number of forests registered with a legal registration system forforest

conservation possessed by the Forests and Environment

Department and the ADC.
(Note 5) The percentage excludes the effect of the price escalation.
(Note 6) The rate of participation in each activity will be calculated.
(2) Qualitative Effects: Forest ecosystem conservation, women's participation in
the workforce, etc.
(3) Internal Rate of Return
Based on the conditions below, the Economic Internal Rate of Return (EIRR)of the Project was calculated as 14.0%. Since the Project does not produce any
income through MBDA, the Financial Internal Rate of Return (FIRR) was notcalculated.
【EIRR】
Cost: Project cost, operation and maintenance expenses (excluding tax)
Benefit: Incremental net return by timber, non-timber forest products,
income generation activities, prevention of soil erosion, water use, and CO 2
reduction
Project Life: 50 years
5. External Factors and Risk Control(1) Preconditions: N/A(2) External Factors: The deterioration of political and economic situations andlarge-scale natural disasters will not be caused in the surrounding area of theProject.
6. Lessons Learned from Past Projects
A lesson learned from the results of the ex-post evaluation of the Gujarat
Forestry Development Project, a Japanese ODA loan for India, was that it iscritical to strengthen the facilitation capacity of local forest officers. This isbecause the participation of local communities in sustainable forest
management after project completion greatly affects the expression of theproject effect. To implement the Project according to the local peoples’ needs, itis necessary to encourage local communities’ participation in developing adetailed activity plan in the target communities and selecting activities based on
the plan.
For the smooth implementation of the Project, the Project will encourage

proactive participation of local communities from the project planning stage insustainable forest management and livelihood improvement activities carried out
through the Village Project Implementation Committee. The Project will also
provide training for the capacity development of local employees incommunity-based forest management.
7. Evaluation Results
The Project is consistent with the development policies of the Government ofIndia and the policies of Meghalaya as well as cooperation policies and analysesof the Government of Japan and JICA. The Project contributes to theimprovement in local communities’ livelihoods and sustainable management offorest resources and contributes to Goal 1 (No poverty) and Goal 15(Sustainable use and management of forests) of the Sustainable Development
Goals. Consequently, JICA's support for the Project is highly necessary.
8. Plan for Future Evaluation(1) Indicators to be Used
As described in 4. (1) through (3)(2) Timing
Ex-post evaluation: Two years after the completion of the Project