fbpx 52022-002: Forest Sector Development Program | Asian Development Bank

Mongolia: Forest Sector Development Program

Sovereign (Public) Project | 52022-002 Status: Approved

Project preparation will be supported through a transaction technical assistance (TA). The TA is estimated to cost $800,000 which will be financed on a grant basis by the Japan Fund for Poverty Reduction. The project will be aligned with the following impact: forestry development for Mongolia economically and environmentally sustained (Mongolian Action Plan of State Policy on Forest, 2017).

Project Details

Project Officer
Robertson, Suzanne Kay East Asia Department Request for information
Country
  • Mongolia
Sector
  • Agriculture, natural resources and rural development
 
Project Name Forest Sector Development Program
Project Number 52022-002
Country Mongolia
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9899-MON: Forest Sector Development Program
Japan Fund for Poverty Reduction US$ 800,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development / Forestry

Gender Equity and Mainstreaming Effective gender mainstreaming
Description Project preparation will be supported through a transaction technical assistance (TA). The TA is estimated to cost $800,000 which will be financed on a grant basis by the Japan Fund for Poverty Reduction. The project will be aligned with the following impact: forestry development for Mongolia economically and environmentally sustained (Mongolian Action Plan of State Policy on Forest, 2017).
Project Rationale and Linkage to Country/Regional Strategy

Sector performance. Mongolia has about 18.5 million hectares of forest land which accounts for approximately 11.8% of the country's land area. There are two types of forest, the northern boreal forest accounting for about 85% of the national forest estate across fourteen aimags with 145 soums and about 154,000 households. The southern saxual forests are in the southern Gobi Desert and desert steppe regions. They consist of scattered trees and are limited in growth and biomass yet are important for stabilizing arid zone land and reducing desertification. All forest resources in Mongolia are state property. The Ministry for Environment and Tourism (MET) provides oversight for forest development and conservation, while aimag and soum administrations are responsible for forest management at the local level. Private forest enterprises (PFE) and community forest user groups (FUG) by law may have some contract forest management and use rights. Currently, only approximately 2.9 million hectares of boreal forest, less than 30% of the total area, is managed by about 100 PFEs and 900 FUGs.

The forest sector is conventionally defined as commercial activities relating to the extraction, production, processing, sale, and consumption of wood products and sometimes non-timber forest products. In 2017, revenue generated from the forestry sector was around $78 million, of which approximately 26% is captured by the government, and the rest is net profit for the private sector. This limited economic contribution can be attributed to the dominance of livestock and mining sectors, the lack of statistics on forestry, as well as the inclusion of only formal commercial activities and the exclusion of the informal activities where the value added by the forest sector takes place outside formal markets and is not reported. As a result, official statistics underestimate massively the actual value of the forest sector to the national and local economy. The net value-added from boreal forests may be in the range of $310 million a year, from timber and fuelwood, non-timber forest products and hunting, pasture, tourism, carbon sequestration, disaster mitigation, water regulation, and pubic revenues of which only around 8% of this is accrued as public revenue while the remainder is received from key users of forest goods and services. Recent policy changes have indicated an interest to build a stronger forest industry and increase forest utilization, however this is currently constrained by lack of investment, unclear development pathway and low quality of forest resources and management.

Core development problems. The institutional issues involve several interrelated areas such as policy, institutional structures, legislation, decentralization, research and extension, human resource development, and inter-sectoral coordination. Organizational structures that define the institutions and/or agencies required for translating policy directions into action on the one hand, and the authority for enforcing legislation on the other are constrained due to policy conflicts and gaps, limited qualified staff with technical capacity, institutional fragmentation and lack of clear mandates, and poor coordination. As a core function in sector management, this negatively influences on the operational quality and the sector development potential.

The depleted forest resource base is due to limited management which increases the risk from forest fire, deforestation, and damage from insect pests. The constraints which inhibit proper management include: (i) shortage of financial sources to invest in forests for government, PFEs, cooperatives and FUG activities; (ii) limited technical knowledge and skills; (iii) unclear policy and regulatory framework for benefit sharing and livelihood opportunities; (iv) insufficient technical skills and capacities at the local level for forest management planning and forest mapping; (v) limited support from local governments to FUGs and PFEs in the implementation of forest management plans; (vi) weak cooperation between FUGs and local government organizations in forestry activities; and (vii) natural resources conflicts between pasture lands in forest areas for management and responsibilities. As a result, there is limited effective engagement across all levels for forest planning, management, application of good silviculture practices, law enforcement, and opportunities for improving livelihoods.

Presently, the productivity, modernization, and commercialization of the Mongolian forest industry is limited, with the equipment and technology used being inefficient and outdated or obsolete due to lack of operation and maintenance and without investments during the past 10 15 years. The limited interest has been driven by industry insecurity due to unstable supply of raw materials due to unstable harvest quotas and unclear forest development strategy which has caused frequent interruptions in production. Mongolian forest products have limited market opportunities due to low quality products caused from bad equipment, lacking skilled tradespersons, and without having certified products are excluded from certain high-value markets. Furthermore, investment in the sector has been constrained due to two key external factors namely, (i) cheap and high-quality imports of timber and other wood based raw materials from Russia; and (ii) cheap imports of processed wood products.

Opportunities. Sustainable forest management (SFM) is important to address several of Mongolia's development challenges, promote green development and deliver the Sustainable Development Goals as it aims to maintain the economic, social, and environmental value of all types of forests for the benefit of the present and future generations. At the social level, sustainable forest management contributes to livelihoods, income generation, and employment. At the environmental level, it contributes to important services such as carbon sequestration and water, and soil and biodiversity conservation. SFM requires a comprehensive approach covering inter-alia the following aspects: (i) forest land use and management; (ii) forest protection and land rehabilitation; (iii) forest resource and product utilization; (iv) socio-economic contributions from forestry; (v) adequate institutional arrangements including institutional restructuring; changes in laws, rules, and regulations; planning, monitoring, and evaluation; investment and financial matters; (vi) human resource development focusing on forestry; and (vii) forestry research. Against this context, the Mongolian forest sector development problem requires a comprehensive policy and fiscal response in the form of a properly sequenced institutional reform, as well as investment for improved forest management and protection and industry development actions.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The assignment will be carried out by a consulting firm. ADB will require a minimum of nine key experts, one of which will be expected to act as team leader. The following are the required key experts: International Forestry sector specialist and team leader, Forestry industry development specialist, Economist (natural resources), Forestry information and monitoring specialist, Social development specialist and National Social development specialist/deputy team leader, Forestry management specialist, Environmental impact assessment specialist, and Project management and procurement specialist. The engagement of the consulting firm will follow the Asian Development Bank's (ADB) Procurement Policy (2017, as amended from time to time and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).
Responsible ADB Officer Robertson, Suzanne Kay
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
Ministry of Environment and Tourism
Government Building II, United Nation's
Street 5/2, Chingeltei District,
Ulaanbaatar 15160, Mongolia
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 10 Dec 2019
Last Review Mission -
Last PDS Update 30 Mar 2020

TA 9899-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Dec 2019 - - 30 Jun 2021 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 800,000.00 0.00 0.00 0.00 0.00 800,000.00 10 Dec 2019 0.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Title Document Type Document Date
Forest Sector Development Program: Technical Assistance Report Technical Assistance Reports Dec 2019
Forest Sector Development Program: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Dec 2019

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Forest Sector Development Program Firm - Consulting Closed 05 Dec 2019 19 Dec 2019

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.