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p. -1 of 18 BACK | NEXT Executive Summary I. Introduction II. Long-Term Vision and Strategy for ADF III. Operational Priorites IV. Use of ADF VII Resources to Date V. Financial Management VI. Conclusions

Asian Development Fund VII: Progress Report (1999)

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A. Bangladesh: Sundarbans Biodiversity Conservation

35. The first example for which an ADF loan was approved during 1997-1998 directly addresses one of the priority areas identified by donors for Bank environmental lending: environmentally sound forest management and conservation of biological diversity. A sustainable management and biodiversity conservation system for Bangladesh’s Sundarbans Reserved Forest (SRF), part of the world’s largest remaining contiguous mangrove area, will be supported by a $37 million ADF loan approved in November 1998.¹⁴ A globally significant ecosystem, the SRF contains habitats for fish, shrimp, birds, and other wildlife, including the world’s largest remaining population of the highly endangered Bengal tiger. The 6,000 square kilometer mangrove area provides a subsistence living to 3.5 million people, offers protection from cyclones in southwest Bangladesh, and is rich in biodiversity and natural resources. It has significant ecotourism potential.

36. The resources of the forest are being depleted with increasing use by commercial wood processors, rural communities bordering the forest, and subsistence fisherfolk from the Bay of Bengal. The government-owned Khulna Newsprint Mills complex contributes to the problem through the nonsustainable use of a key mangrove species as pulp in newsprint manufacture and by disposing of untreated effluent upstream of the forest. The Bank is providing a TA grant of $570,000 to determine options, including the financial viability and environmental sustainability of Khulna Newsprint Mills continued operations. Strict loan conditionalities have been agreed with the Government to ensure that the environment will be protected; these include sustainable limits on the use of the SRF and phasing out of commercial users.

37. Reversing the trends of deforestation and biodiversity loss requires financial resources; a significant improvement in the institutional capacity of the Ministry of Environment’s Forest Department; and a new management approach based on research, community participation, greater environmental awareness, scientific planning, and applied research. Modern management systems will be introduced that will involve all stakeholders in the 17 subdistricts around the forest. A participatory system will conserve and manage the forest and its biodiversity as a multidimensional resource. A Sundarbans Stewardship Commission has been established and environmental monitoring of the SRF will be done by the World Conservation Union.

38. The total project cost is $82.2 million. Apart from the Bank, financing will also be provided by the Government. A $12.2 million grant from the Global Environment Facility (GEF) has been approved by the GEF Council, the first time that the GEF has supported a Bank-financed loan. The GEF will support:

1. priority biodiversity conservation initiatives and improved forest management;
2. increased institutional capacity;
3. measures to reduce poverty of the 3.5 million people living in the impact zone bordering the SRF through expanding economic opportunities, improving social infrastructure, improving organization for resource-users, and facilitating stakeholder participation in resource management; and
4. adoption of a supportive set of policies, especially related to the pricing for access to SRF resources.

NGOs have also indicated their intention to provide funds. The Palli Karma-Sahayak Foundation (the Poverty Foundation in Bangladesh) will provide microfinance for sustainable resource use and alternative income-earning opportunities for the users of the SRF.

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