Lao People's Democratic Republic: Sustainable Natural Resource Management and Productivity Enhancement Project

Sovereign Project | 37579-032

Summary

Government agencies' responsibilities for the management of natural resources have been clarified in recent years, including recent reorganization of the Ministry of Agriculture and Forestry (MAF) and establishment of the Water Resources and Environment dministration (WREA). However, the capacity to apply sound management principles and practices are still deficient, particularly in view of increasing devolution of management responsibilities to the provinces.

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Project Name Sustainable Natural Resource Management and Productivity Enhancement Project
Project Number 37579-032
Country Lao People's Democratic Republic
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0144-LAO: Sustainable Natural Resource Management and Productivity Enhancement Project
Asian Development Fund US$ 20.00 million
Grant 0145-LAO: Sustainable Natural Resource Management and Productivity Enhancement Project
LRG - Intl. Fund for Agricultural Devt. US$ 15.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development
Gender Equity and Mainstreaming Effective gender mainstreaming
Description

Government agencies' responsibilities for the management of natural resources have been clarified in recent years, including recent reorganization of the Ministry of Agriculture and Forestry (MAF) and establishment of the Water Resources and Environment dministration (WREA). However, the capacity to apply sound management principles and practices are still deficient, particularly in view of increasing devolution of management responsibilities to the provinces.

The Project will address institutional and capacity building requirements (including governance improvements) to enable improved management of the sector on a sustainable basis while contributing to the Government's overall objectives of enhancing agricultural productivity, promoting commercialization of agriculture, and protecting the country's natural resources. Project outputs comprise (i) capacity built in sector management, (ii) investment in resource management and productivity enhancement, and (iii) an effective project management structure.

Project Rationale and Linkage to Country/Regional Strategy

The Lao PDR has abundant natural resources and a small population, of which over 80% is dependent on agriculture for their livelihood. Significant numbers of indigenous peoples from a wide range of linguistic groups live in upland areas to the north and in the southern part of the Lao PDR along the border with Viet Nam. They forge their predominantly subsistence livelihoods from rotational cropping, which incorporates a heavy dependence on the natural forest and water resources. The incidence of poverty in these areas is over 60%, and is highest among ethnic groups.

The institutional and legal framework for sustainable and equitable management of agriculture and natural resources (ANR) is weak. This is evident in the ambiguity of policies and legislation, as well as inadequate professional and technically trained staff and facilities. At the provincial and district levels where most ANR management decisions are taken, there is a deficit of expertise and facilities. The situation is exacerbated by budgetary constraints (generally sufficient to meet staff salaries, but insufficient for operational and development activities).

The capacity of the ANR sector to support traditional livelihoods is coming under unprecedented pressure from the recent influx of foreign direct investment (FDI) and consequent granting of land concessions. Allowing large-scale commercial development where there is a weak regulatory and enforcement framework without adequate analysis of land capability and economic impact, and encouraged by land speculation is increasingly resulting in adverse social and environmental impacts on local people's livelihoods. It also compromises the Government's ability to preserve the country's rich and diverse forest environs (deforestation is actually increasing). Adverse impacts on ecological function and integrity include reduced recharge of aquifers and storage capacity of reservoirs and reduction in dry season irrigation areas (directly contributing to reduced agricultural production). Furthermore, the loss of forest, coupled with the expansion of economic activities, is likely to result in a positive net emission of greenhouse gases with global impact.

While trying to protect the natural resource base, the Government is conscious of the need to maximize productivity on existing arable land an area limited by topography, undeveloped water resources, and limited market access. Agricultural productivity is low by the standards of the Association of Southeast Asian Nations (ASEAN), and the recent achievement of broad national self-sufficiency in rice can only be maintained if the Government continues to improve agricultural productivity. Food insecurity remains common, especially in areas where the road network is underdeveloped.

Support for proven interventions within an existing implementation framework, which will contribute to the Government's overall sector development objectives and provide practical examples for the enhanced capacity of agency staff to manage the development process, is therefore justified.

Impact More efficient and sustainable natural resource management and improved sector productivity.
Project Outcome
Description of Outcome Enhanced institutional capacity at provincial and national levels to manage natural resource utilization in a sustainable manner.
Progress Toward Outcome All 71 subprojects are under implementation.
Implementation Progress
Description of Project Outputs

1. Capacity building for Agriculture and Natural Resource Sector management implemented

(i) National and provincial staff capable of financial and economic appraisal and safeguard analyses

(ii) Land use and suitability mapping completed in the five provinces

(iii) Producer groups trained and self-sustaining

(iv) Government and donors committed to a common agricultural development framework

2. Investment in Resource Management and Productivity Enhancement Completed

3. Efficient project management operational

Status of Implementation Progress (Outputs, Activities, and Issues)

Land concessions which have been awarded to the investors have all been reviewed by the MAF and NLMA for economic, financial and social viability. The Government has not given any land concession without the economic, financial and social viability analysis.

A fully functional web-mapping application aligned to the Project's land use planning needs has been developed and serves as a platform for geographic data visualization and to assist the project sub-offices in 5 target provinces in land use planning and production of land use maps for subprojects. LUP completed in 68 villages. Land suitability and broad zoning maps produced for all 42 districts.

Seventy-one subprojects have 672 production groups, 80% of which are considered financially independent as the Project only has limited support to promote their existing productions.

The Project is working closely with the Policy Facilitators Team of Dept of Planning, MAF for policy development. The following papers have been produced:(a) Policy Gap Analysis of MAF Agricultural Modernization Thrust in Relation to its Devt Strategy for 2015; (b) Sugarcane Contract Growing Policy Gap Assessment Report; (c) Policy Gap Assessment of Farmers' Land Certificate Issuance; (d) Policy Gap Assessment on Lao PDR Agricultural Commericialization Thrust Towards Meeting WTO Food Safety Requirements, and (e) Concepts for the Private Public Community Partneryship.

Sixty-five, out of 71 subprojects, are considered satisfactory in performance. The total subproject investments provision is about $18.1M. About $18.18 M has been availed. The physical progress of subprojects is estimated at 96%.

Geographical Location 5 Southern provinces covering Attapeu, Champassak, Salavan, Savannakhet and Sekong
Summary of Environmental and Social Aspects
Environmental Aspects None anticipated.
Involuntary Resettlement None anticipated.
Indigenous Peoples Ethnic groups in upland areas are the primary beneficiaries. Women are also a target group. The Project has developed guidelines for ensuring women's involvement in the planning, implementation and sharing of benefits from the implementation of subprojects supported. To support mainstreaming of gender issues in subproject design and within MAF in general,specific methodologies are being developed for engaging women at the community level in subproject planning in coordination with the Advance Women Unit of MAF.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation Multistakeholder consultations have been conducted with NGOs (WWF and national civil society groups), womens groups (Lao Womens Union), and multilateral/bilateral orgns (UNDP/UNEP on the Poverty Environment Initiative), The Lao-German Land Management and Registration Project (LMRP), the FINMAP project supported by Finland and the The Programme for Forest Resource Information Management (DoF/JICA), et al.
Business Opportunities
Consulting Services Consulting services will be required at the national level to ensure effective implementation and at the provincial level to assume responsibility for identification of potential subprojects and their implementation. Staff will also be needed for training in safeguards, appraisal techniques and geographic information systems/information management. The Project will finance a total of 722 person months of consulting services, including 84 person months of international expertise and 638 person months of national specialists and will be recruited by the Project Management Office (PMO) through a firm, in line with ADB's Guidelines on the Use of Consultants by Asian Development Bank and Its Borrowers (2007, as amended from time to time) and the Project's Procurement Plan.
Procurement Goods and works financed by ADB and IFAD will be procured in accordance with ADB's Guidelines for Procurement. Packages for works valued at less than $1 million or equivalent but more than $100,000 or equivalent, shall be procured using National Competitive Bidding (NCB) procedures acceptable to ADB with a one stage, two-envelope system. For works below $100,000 equivalent, shopping procedures acceptable to ADB may be used. Goods costing less than $500,000 equivalent but more than $100,000 shall be procured through NCB procedures using a one stage, two-envelope system acceptable to ADB. Smaller packages for goods valued at less than $100,000 may be procured through shopping procedures acceptable to ADB.
Responsible ADB Officer Hidefumi Murashita
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SERD
Executing Agencies
Ministry of Agriculture & Forestry-Irrigation DepVinoth Vansyvinus_lao02@yahoo.comVientiane, Lao PDR
Timetable
Concept Clearance 31 Mar 2011
Fact Finding 05 Aug 2008 to 31 Mar 2011
MRM 31 Mar 2011
Approval 23 Feb 2009
Last Review Mission -
PDS Creation Date 23 Oct 2009
Last PDS Update 31 Mar 2015

Grant 0144-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
23 Feb 2009 23 Mar 2009 08 Sep 2009 31 Dec 2015 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 20.00 Cumulative Contract Awards
ADB 20.00 23 Feb 2009 19.55 0.00 98%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 23 Feb 2009 20.00 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

Grant 0145-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
23 Feb 2009 08 Jul 2009 23 Jul 2009 30 Sep 2016 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 15.00 Cumulative Contract Awards
ADB 0.00 23 Feb 2009 0.00 14.79 99%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 15.00 23 Feb 2009 0.00 0.00 0%

Evaluation Documents

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