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Review of Implementation of the Master Plan for the Forestry Sector: Achievements and Lessons

A Synthesis Report

April 2014

The Ministry of Forests and Soil Conservation

Singh Durbar, Kathmandu

MPFS Synthesis Report

CONTENTS

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FOREWORD III

ABBREVIATIONS AND ACRONYMS IV

EXECUTIVE SUMMARY V

1 INTRODUCTION & BACKGROUND 1

1.1 The MPFS and the Forestry Sector Strategy 1

1.2 Synthesis and Peer Review 1

1.3 MPFS Outline 1

2 MPFS PROGRAMME ACHIEVEMENTS AND ISSUES 2

2.1 Community & Private Forestry 2

2.2 National & Leasehold Forestry 2

2.3 Wood-based Industries 3

2.4 Medicinal & Aromatic Plants & Other Minor Forest Products 4

2.5 Soil Conservation & Watershed Management 4

2.6 Conservation of Ecosystems & Genetic Resources 4

2.7 Forest Policy & Legal Reform 5

2.8 Institutional Reform 6

2.9 Human Resources Development (HRD) 7

2.10 Research & Extension 7

2.11 Resource Information & Planning Assistance 8

2.12 Monitoring & Evaluation 8

2.13 Climate Change and Forestry 9

2.14 Gender, Social Inclusion and Poverty Alleviation 9

3 CRITICAL FACTORS 11

3.1 Factors External to the Forestry Sector 11

3.1.1 Political change 11

3.1.2 Economic change 11

3.1.3 Demographic change 11

3.1.4 Communications and infrastructure 11

3.1.5 Other influential policies and laws 12

3.2 Forestry Sector Factors 12

3.2.1 Institutional modalities 12

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3.2.2 Forestry sector finance 12

3.2.3 International development partners 13

3.3 International Factors 13

3.3.1 Nepal’s international commitments 13

3.3.2 International best practice 13

4 LESSONS LEARNT 15

4.1 Lessons for the Management and Utilization of Forest Resources and Conserving Biodiversity 15

4.2 Lessons for the Policy and Legal Framework 16

4.3 Lessons for Forest Sector Institutions 17

4.4 Lessons for the Forestry Sector’s Contribution to Economic Development 19

4.5 Lessons for Addressing Poverty and Social Exclusion 20

4.6 Lessons for Nepal’s Climate Change Agenda 20

5 FUTURE DIRECTIONS AND OPTIONS 22

5.1 The nature of Nepal’s forestry sector strategy 22

5.2 Forestry sector governance and administration 22

5.3 Management of Forest Resources 23

5.4 Forest sector contribution to economic development 24

5.5 Forestry sector contribution to social inclusion and poverty reduction 24

5.6 Forest biodiversity and environmental conservation 25

5.7 Forestry sector response to climate change 25

6 CONCLUSION 26

6.1 Sustainable management of forest resources 26

6.2 Resource tenure and people's rights 26

6.3 Employment and economic growth 27

6.4 Partnership and collaboration among state, civil society and the private sector 27

ANNEX 1 – MASTER PLAN FOR THE FORESTRY SECTOR (OUTLINE) 28

ANNEX 2 – MPFS IMPLEMENTATION AND ACHIEVEMENTS MATRIX 31

ANNEX 3 – NEPAL’S INTERNATIONAL COMMITMENTS 41

ANNEX 4 – A FRAMEWORK FOR FORESTRY SECTOR GOVERNANCE 42

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FOREWORD

The Master Plan for the Forestry Sector (MPFS), 1988-2011 has been the major forest policy framework for conservation and management of Nepal’s forests for the last 25 years. Over this period and until the end of the MPFS in July 2011 there have been significant political, economic and environmental changes in the country. The forestry sector itself has faced a number of unfolding challenges and opportunities, resulting from changes within and outside the sector, the country as well as globally. Such issues demanded a comprehensive review of the MPFS as a basis for a new, more relevant and innovative strategy for the future. Realizing this Ministry of Forests and Soil Conservation (MFSC) undertook a thorough review of MPFS as a step in the preparation of the new Forestry Sector Strategy (FSS).

Several government and non-government organizations, associations, agencies, and persons contributed to the entire review process, and MFSC highly values and appreciates their support. MFSC would also like to extend its sincere thanks to Multi-Stakeholder Forestry Program (MSFP) and Hariyo Ban Program for supporting the review process.

MFSC would like to thank the team involved in reviewing MPFS and preparing the FSS for their sincere efforts in producing this report. MFSC acknowledges the sincere effort of Joint Secretary Mr. Ram Prasad Lamsal in coordinating the whole effort. MFSC would also like to extend its appreciation to Dr. Keshav Raj Kanel, Dr. Dhruba Prasad Acharya, Dr. Binod Bhatta, Dr. Bharat Kumar Pokhrel, Ms. Madhu Ghimire, Mr. Nav Raj Baral and Mr. Peter Branney for their respective contributions in shaping this report.

MFSC would also like to recognize Mr. Krishna Prasad Acharya, Joint Secretary, MFSC; Dr. Bishwa Nath Oli, Director General, Department of Forests; Resham Bahadur Dangi, Deputy Director General, Department of Forests; Mr. Pem Kandel, Director General, Department of Soil Conservation and Watershed Management; Dr. Maheshwar Dhakal, Department of National Parks and Wildlife Conservation; Mr. Hasta Bahadur Thapa, Department of Forest Research and Survey; Mr. Ram Nandan Sah, Mr. Tirtha Raj Joshi, Dr. Anuj Sharma and Mr. Bishal Ghimire from Department of Forests, for their support and assistance in the process.

MFSC would also acknowledge the contribution of Mr. Yajna Nath Dahal, Mr. Kumud Shrestha, Dr. Jaggannath Joshi, Mr. Pashupati Nath Koirala, Mr. Krishna Prasad Osti, Mr. Dil Raj Khanal, Dr. Bikram Tamang, Ms. Sangita Bista, Mr. Nagendra Regmi, and Mr. Injun Acharya, for collecting required data and preparing an initial draft of various sectoral program reports of MPFS. MFSC also thanks Ms. Dibya Gurung for her input in the GESI section of review report, and Ms. Surabhi Pudaseni for her contribution in editing this report.

MFSC would like to extend its sincere appreciation to Office of the Auditor General, Ministry of Finance, Financial Comptroller General Office, all departments of MFSC, Timber Corporation of Nepal (TCN), Forest Products Development Board (FPDB), Herbs Production and Processing Company Limited (HPPCL), Trade and Export Promotion Center (TEPC), Singhadurbar Vaidyakhana, Gorkha Ayurved Company, Agro Enterprise Center of Federation of Nepalese Chamber of Commerce and Industry (AEC-FNCCI) and Nepal Herbs and Herbal Products Association (NEHHPA) for providing highly needed data and information relevant to the review.

Furthermore, MFSC would also like to thank various institutions and professional associations, including Nepal Forester’s Association (NFA), Federation of Community Forest Users in Nepal (FECOFUN), Association of Collaborative Forest Users of Nepal (ACOFUN), Nepalese Federation of Forest Resource User Group (NEFUG), Himalayan Grassroots Women’s Natural Resources Management Association Nepal (HIMAWANTI-Nepal), Federation of Forest Based Industry and Trade, Nepal (FenFIT), Nepal Federation of Indigenous Nationalities (NEFIN), Dalit Alliance for Natural Resources (DANAR) and National Forum for Advocacy Nepal (NAFAN) for their inputs in the review process.

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Lastly, MFSC would like to extend its sincere appreciation to all individuals and organizations that have contributed directly or indirectly to the process of preparing this report.

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ABBREVIATIONS AND ACRONYMS

BZMG Buffer Zone Management Group

CF Community Forest

CFUG Community Forest Users Group

DFO District Forest Officer

DFRS Department of Forest Research and Survey

DFSP District Forest Sector Plan

DoF Department of Forests

DSCWM Department of Soil Conservation and Watershed Management

EIA Environmental Impact Assessment

EPA Environment Protection Act

FLEG-T Forest Law Enforcement, Governance and Trade

FPDB Forest Products Development Board

FSCC Forestry Sector Coordination Committee

FSS Forestry Sector Strategy

GDP Gross Domestic Product

GESI Gender, Equity and Social Inclusion

GIS Geographical Information System

GoN Government of Nepal

HPPCL Herbs Production and Processing Company Limited

HR Human Resources

HRD Human Resources Development

IT Information Technology

LAPA Local Adaptation Plan of Action

M&E Monitoring and Evaluation

MAP Medicinal and Aromatic Plant

MEA Multi-lateral Environmental Agreement

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MFSC Ministry of Forests and Soil Conservation

MIS Management Information System

MPFS Master Plan for the Forestry Sector

NAPA National Adaptation Plan Of Action

NFC Nepal Fuelwood Corporation

NGO Non-Governmental Organization

NRS Nepali Rupees

NTFP Non-Timber Forest Product

PA Protected Area

PES Payment for Ecological Services

PRSP Poverty Reduction Strategy Paper

REDD+ Reducing Emissions from Deforestation and Degradation

SWAP Sector Wide Approach

SWC Soil and Watershed Conservation

TCN Timber Corporation of Nepal

TFAP Tropical Forest Action Plan

VAT Value Added Tax

VDC Village Development Committee

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EXECUTIVE SUMMARY

The Master Plan for the Forestry Sector (MPFS), prepared in 1986-88, ended in July 2011. It is soon to be replaced by a new Forestry Sector Strategy (FSS). Implementation of the MPFS has resulted in many achievements, opportunities and challenges. These have been reviewed and documented in a series of papers prepared by national researchers and consultants using a process of information analysis, literature review, consultation workshops and interviews with key informants. This synthesis document is based on these detailed reviews and provides a concise summary of their main points and findings as a contribution to the preparation of a new FSS.

The MPFS itself was structured around 6 Primary Development Programs and 6 Supportive Programs each with a specific aim. These programs were separately analyzed and their achievements, implementation issues and main gaps were identified in these reviews.

Amongst the 6 primary development programs, the Community and Private Forestry Program had significant impact and largely achieved its aims. Community Forestry has contributed to halting forest loss and degradation (especially in the Middle Hills) and has enhanced the livelihoods of the large numbers of rural people. Main issues were the limited impact that community forestry has had on rural employment and the local economy and the general under-utilization of community forests as well as erosion of the legal autonomy of forestry groups by a series of administrative orders and other decisions that have hindered better forest utilization and growth of forest-based enterprises. By contrast the National and Leasehold Forestry Program made more limited progress. Although leasehold forestry which evolved into Pro-Poor Leasehold Forestry has been a successful approach (albeit on a relatively small scale) other components including lease of national forest for commercial management by private operators and implementation of sustainable forest management by state agencies has not taken place. As a result many remaining areas of unmanaged national forest suffer from degradation and deforestation (especially in the Tarai and High Mountains). Collaborative Forest Management as a potential approach for this is not yet fully operational or effective and Nepal’s wood production is still unsystematic without planned involvement or investment by the private sector. There is a thriving trade in illicit timber and ongoing threats to unmanaged national forests come from infrastructure development and urban expansion as well as open access for grazing and encroachment. The Program for Wood-based Industries has achieved very little. A huge gap still exists between demand and supply for wood and market-led economic liberalization policies for timber and other wood products were not effectively pursued as planned. Consequently the assured supply of forest products needed to sustain and enhance Nepal’s forest based industry does not yet exist although increasing supplies of raw materials are coming from sustainably managed community and private forests. Main issues include over-regulation and frequent policy changes as well as interference by other agencies e.g. police, local government etc. and promotion of timber imports. These all affect the allocation of forests and the harvest, sale and transport of forest products. This in turn creates disincentives to legitimate private investment and sustains an illegal forest product trade. Similarly the Medicinal & Aromatic Plants & Other Minor Forest Products Program has had only limited success. Although there is now much greater awareness, interest and grass-roots experience of enterprises based on these products and many rural communities and households are involved in some way, the sub-sector is still characterized by unsupportive and restrictive regulations, taxes and procedures that, coupled with inadequate phyto-sanitary and testing facilities to support international trade, adversely affect the establishment and management of such enterprises. NTFPs/MAPs-based enterprises remain small and fragile and there is only limited private investment with few products reaching international markets. Beneficiaries tend to be middle-men and traders rather than rural households and some higher value products suffer from illegal trading. There has been moderate

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success with the Soil Conservation and Watershed Management Program, which, even though it did not achieve its physical targets resulted in some important impacts – especially in specific localities. However, physical achievements of this program are relatively insignificant compared with the actual requirements for soil and watershed conservation across the country – especially as these are exacerbated by climate change effects, rural road construction and haphazard collection of building materials from river courses. A specific policy on watershed conservation lacking and there is only limited coordination between MFSC and other agencies such as local government, civil society and community groups and between MFSC and other ministries. The Conservation of Ecosystems & Genetic Resources Program has been relatively successful and there is now a network of protected areas (PAs) contributing to conservation of ecosystems and biodiversity and covering 23% of the country’s land area. Populations of several charismatic species such as tiger, rhino and wild buffalo have increased although many other species (especially birds) are in decline. Conservation policies have moved away from 'people exclusionary' and 'species focused' towards 'people-cantered’ approaches and buffer zone management groups have enabled local people to benefit from PAs. In popular national parks visitor numbers and revenues have increased significantly. Main issues include a shortage of specialized staff and a contested legal framework for PAs (including processes of PA declaration, governance, power sharing, equity and benefit-sharing). Increased visitor numbers combined with infrastructure development have had adverse effects at certain locations and human wildlife conflicts have increased. Illegal trade and wildlife poaching has not been effectively controlled despite the engagement of the Nepal Army. Climate change and infrastructure development are adversely affecting biodiversity conservation.

Of the 6 supportive programs of MPFS the Forest Policy & Legal Reform Program has proved to be highly critical. With successful policy and legal reform, individual programs under MFSP have tended to be successful but where such reforms have not been made or implemented affected programs have been far less successful. The Forest Sector Policy (1989) (included in the MPFS) and the Forest Act (1993) are considered as having been amongst the most influential, innovative and far-sighted elements of the MPFS and policy directions determined by MPFS and the subsequent legal reforms made a significant contribution to shaping the direction of Nepal’s forestry sector and the institutions operating within it. However, there have been important challenges including:

Need for deregulation to support more effective harvesting, utilization and transport of forest products (both wood and non-wood) and to reduce unnecessary transaction costs.

Need for transparency and consistency in the application of royalties and taxes to ensure that legitimate sources of government revenue are maintained whilst not stifling the activities that are being promoted.

Weak coordination and synergy of policies across different sectors and within the forestry sector itself.

Unclear policies affecting forest land use and forest management modalities and frequent ad hoc regulation and politically motivated decision-making.

Inconsistency in roles and responsibilities vis the Forest Act (1993) and the Local Government Act (1999).

Limited stakeholder engagement in policy processes at different levels. Inconsistencies between policies and legislation (including various orders, circulars and

regulations). Excessive application of regulations under the Environment Protection Act (EPA) being

applied to activities in the forestry sector (especially small-scale harvesting and enterprises). Poor policy and regulatory dissemination.

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The MPFS contained an institutional development plan that was the basis for an Institutional Reform Program focusing on reform of government forest sector institutions in line with the requirements of the MPFS. Significant restructuring of the MFSC took place in 1989 broadly in line with this but later reforms in 1993 and 2000 were driven from outside MFSC and have not been consistent with the needs of MPFS. Other institutional reforms including the restructuring or dismantling of Government parastatals did take place with only TCN, the Forest Products Development Board (FPDB) and the Herbs Production and Processing Company Ltd. (HPPCL) remaining. Attempts to constitute standing committees enabling different stakeholders to contribute to sector governance have not been properly institutionalized and frequently lack real power to hold government agencies to account. Whilst there have been many changes in Nepal’s institutional landscape including the rise of an active and vocal civil society (including non-government forestry professionals), decentralized government, expansion of community based organizations and greater public awareness of the need for transparency and accountability amongst government institutions, reforms within MFSC have not kept pace with these and government forestry sector institutions are viewed as archaic and largely ineffective in meeting the needs of a changing society. Closely linked with this was the Human Resources Development Program that aimed at ‘reorienting and retraining of forestry professionals’. Much was achieved in terms of professional training through a comprehensive training program but entrenched cultural and attitudinal issues were insufficiently addressed and are still important constraints for forestry sector institutions. The MFSC’s Gender, Equity and Social Inclusion strategy has contributed towards a breakdown of some of these barriers but has been inadequately put into practice. Non-approval and non-implementation of the comprehensive Human Resources strategy for MFSC means that MFSC still lacks many of the key HR systems that characterize a modern and effective government agency including: guidelines and principles for recruitment, terms and conditions, code of conduct, transfer, performance appraisal, career path, counseling, training, promotion and grievance handling. An expansion of forestry education in Nepal has led to an increase in non-government forestry professionals whilst government programs lack specialist staff and MFSC generally lacks quality managers and administrators. It is questionable whether existing HR systems in MFSC can deliver the types of specialized knowledge and capacities required to administer Nepal’s forest sector.

Research & Extension Program achievements have been limited. Research itself has suffered from poor funding and frequent shifts in the status of the key government research agency whilst extension is similarly hampered by ambiguous responsibilities between different divisions and departments and also between the central HQ and Regional Centers. There is no forestry research policy identifying priority areas although there has been a shift towards the needs of community forestry – especially for natural forest management and farm-forestry although the uptake and impact of this research is not well documented. Other current research needs, especially climate change related aspects, are not well catered for and research tends to be viewed in terms of formal scientific knowledge rather than mutual exchange of information and solutions to field-based problems. There has been a rise in the relevance and impact of forestry-related research conducted outside government institutions largely cantered round community forestry that has meant that the future direction and role of DFRS is being questioned especially since many research staff have left government service or are frequently unmotivated. Despite the Resource Information & Planning Assistance Program a definitive current national forest inventory does not yet exist (although it will be produced soon with support from the Finnish Government). The sector has suffered due to a lack of disaggregated data for planning at different levels and even where data sets exist these are in different departments and offices. MFSC has institutionalized a participatory planning process (unlike most other ministries) that operates from grass roots level up through VDCs to districts and national level. A major

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achievement has been the incorporation of policy provisions for equitable representation and benefit sharing in community forestry into actual plans and constitutions at grass-roots level. The provisions of the Monitoring & Evaluation Program remain largely unimplemented. Monitoring following the requirements of the National Planning Commission has been carried out but this is insufficient to capture the intended impacts of MPFS and to guide future planning processes for the forestry sector. There has been no interim monitoring or evaluation of the MPFS – therefore mid-term changes and corrections have not happened. Consequently it is difficult to fully assess wider forest sector achievements and impacts under MPFS.

Two areas not covered in the MPFS were Climate Change and Forestry and Gender, Social Inclusion and Poverty Alleviation. A review of progress with both these has shown that there have been some important achievements including the development of climate change policies and the plans for adaptation (NAPA) and mitigation in the forestry sector (REDD+). These represent policy shifts that need to be explicit in the new Forestry Sector Strategy. Poverty, social inclusion and gender aspects of forestry have had considerable attention despite their limited emphasis in MPFS. MFSC’s GESI Strategy (2006) was an important milestone which identified key change areas but in practice implementation mechanisms are virtually non-existent and the forestry sector remains male-dominated in its government organization and, with the exception of community-based forestry, policy provisions for gender mainstreaming are not backed up by relevant legal provisions and operational frameworks. Within MFSC, pro-poor and inclusive working modalities are not generally practiced and GESI achievements remain elusive.

Key external factors contributing to or affecting the achievements of MPFS were identified as: (i) political change; (ii) economic change; (iii) demographic change; (iv) communications and infrastructure and (v) other influential policies and laws. Factors internal to the forestry sector were: (i) institutional modalities; (ii) forestry sector finance and (iii) international development partners. The review also considered the effects of Nepal’s international commitments (multi-lateral environmental agreements) and the experiences and learning from international best practice in forestry. All these factors have considerable relevance for the new Forestry Sector Strategy.

The most important lessons learnt from the implementation of MPFS are identified in the areas of: Management & utilization of forest resources and conservation of biodiversity; Policy and legal framework; Forestry sector institutions; Forestry sector’s contribution to economic development; Addressing poverty and social exclusion and Nepal’s climate change agenda. These need to be incorporated into the new Forestry Sector Strategy and detailed lessons are described.

Future directions and options for Nepal’s Forestry Sector Strategy are identified from the review process. These include identification of future directions and a series of key questions and/or options that need to be answered or agreed in the areas of:

Management of forest resources Forestry sector contribution to economic development Forestry sector contribution to poverty reduction Forest biodiversity and environmental conservation Forestry sector response to climate change Forestry sector governance and administration

In conclusion, the review process derives a few important guiding principles that can be used to underpin the approaches of the forthcoming Forestry Sector Strategy. These are: sustainable forest management; resource tenure and people’s rights; employment and economic growth and partnership

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and collaboration among the state, civil society and the private sector. The review identifies a number of approaches that have been successfully used over the past 25 years and that are consistent with these principles.

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1 INTRODUCTION & BACKGROUND

1.1 The MPFS and the Forestry Sector Strategy

The Master Plan for the Forestry Sector (MPFS), prepared in 1986-88, ended in July 2011. It is soon to be replaced by a new Forestry Sector Strategy (FSS). Implementation of the MPFS has resulted in many achievements, opportunities and challenges. These have been reviewed and documented in a series of papers prepared by national researchers and consultants using a process of information analysis, literature review, consultation workshops and interviews with key informants. This review of MPFS and its achievements and challenges represents the first stage for the preparation of the new FSS.

1.2 Synthesis and Peer Review

The component programs of the MPFS were reviewed in detail by a series of different individuals. This document is based on these detailed reviews and aims to provide a peer reviewed synthesis of their main points and findings as a contribution to the preparation of a new FSS.

1.3 MPFS Outline

The MPFS had 4 long-term and 3 medium-term goals representing local, national and international priorities and perspectives at the time of preparation:

Long-term goals

To meet the people’s basic needs for fuel-wood, timber, fodder and other forest products on a sustained basis and to contribute to food production through an effective interaction between forestry and farming practices

To protect the land against degradation by soil erosion, floods, landslides, desertification and other effects of ecological imbalance

To conserve the ecosystems and genetic resources To contribute to the growth of local and national economies by managing the forest resources

and the forest-based industries and creating opportunities for income generation and employment

Medium-term goals

To promote people’s participation in forestry resource development, management and conservation

To develop the legal framework needed to enhance the contribution of individuals, communities and institutions to forest resource development, management and conservation

To strengthen the organizational framework and develop the institutions of the forestry sector to enable them to carry out their missions

The MPFS itself was structured around 6 Primary Programs and 6 Supportive Programs each with a specific aim. These programs were described in 13 separate reports, which are listed in Annex 1.

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2 MPFS PROGRAMME ACHIEVEMENTS AND ISSUES

This section contains a summary of the achievements of each of the MPFS programs and identifies the main issues and gaps. Further details are also included in Annex 2.

2.1 Community & Private Forestry

Program Aim: ‘to develop and manage forest resources through the active participation of individual people and communities to meet their basic needs’.

The Community and Private Forestry Program of the MPFS made considerable progress and has had significant impact. Most of the physical targets were achieved or even exceeded and the concept and practice of community and private forestry has now expanded far beyond that which was originally envisaged. Key success factors were a largely supportive policy and legal environment; a willingness to innovate and pilot new approaches amongst service providers (both state and non-government) and within communities; the changing political landscape of Nepal and the availability of support from externally funded projects. As a result, there is now about 1.7 million ha of community forest in Nepal (representing about 29% of total forest) and about 2.25 million households are directly involved in the program as members of community forestry groups. The program has contributed to halting forest loss and degradation (especially in the vulnerable Middle Hills) and has enhanced the livelihoods of the rural people who have been involved whilst giving special focus to the needs of poor and disadvantaged households. Lessons from the community forestry program have influenced the development of other development programs in Nepal and also community forestry approaches in other countries. In Nepal, community forestry is now widely recognized as a successful development initiative that has achieved impacts both inside and outside the forestry sector. Other associated components of this program (see Annex 1) for seedling distribution, enhanced use of fuel-saving devices and biogas installation also made significant progress although there is less quantitative data available to substantiate this.

Despite these undoubted successes, several issues and gaps remain. The economy of community forestry remains poorly understood in terms of labor contributions and benefits accrued to different households and the overall income generated and shared has proved to be difficult to measure. In addition, community forestry has so far failed to have significant impacts on rural employment and the local economy. Community forests generally remain under-utilized and their acknowledged potential to supply more forest products remains unfulfilled. A clear policy for the allocation of national forest to the various community-based forest management regimes is lacking – especially for the Tarai (and high mountains) where handover as community forest has been subject to intermittent delays and ad hoc directives and where the role and scope for other models such as collaborative forest management are still being piloted and refined. The legal autonomy of forestry groups has been eroded by a series of administrative orders, circulars and other decisions that have increased the transaction costs of better forest utilization and has hindered the growth of forest based enterprises. Similarly, permit systems have adversely affected private tree planting and utilization of forests and trees on private land. Legal rights for community forest groups to forest tenure and access, use, harvest and management of forest products are assured through the legislation but have been tempered through various ad hoc decisions.

2.2 National & Leasehold Forestry

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Program Aim: ‘to develop and manage national forests through government agencies or private sector lessees, complementing community and private forestry’.

Progress with the National and Leasehold Forestry Program of the MPFS has been very limited. Of the 5 main components (Annex 1) only with Pro-poor Leasehold Forestry has there has been any significant achievement. No existing national forest has been leased to private parties for commercial management and utilization as envisaged in the MPFS. At the same time, the concept of leasehold forestry took a different direction from that envisaged in MPFS to become pro-poor leasehold forestry that is now characterized as being an effective complement to community and private forestry although still operating at a comparatively small scale. Partly because components for commercial management and utilization of national forest have stalled many remaining areas of unmanaged national forest (especially in the Tarai and high mountains) continue to suffer from degradation and deforestation although recent and accurate data are not available. These forests do not fulfill their potential to sustainably supply forest products. Few, if any areas of forest are being managed by government agencies on a sustainable harvest basis for commercial timber supply and earlier pilot attempts to develop sustainable harvesting systems for natural forests have not been widely applied to block forest management. Amongst government staff and also within non-government service providers, there has been an improvement in knowledge and capacity concerning silviculture and sustainable forest management although there are few opportunities available to put this into practice except in one area under Collaborative Forest Management.

Consequently, wood supplies to wood-deficit areas have not been adequately developed thus affecting the growth of wood-based industries (see section 2.3). Currently, wood production is largely unsystematic without any planned involvement or investment of the private sector and there is a thriving trade in illicit timber (mainly in the Tarai). Further threats to unmanaged national forests come from infrastructure development and urban expansion – neither are systematically planned or compensated. Unmanaged national forest tends to be treated as open access for grazing, encroachment and other uses and many forests have visibly deteriorated over the past 25 years. A classification system for forest land has not been implemented and there is continuing uncertainty over the management modality for much of the national forest (especially in the Tarai and high mountains). Conversion of national forests to Protection Forests, National Parks and Conservation Areas has in many cases antagonized local communities who feel their needs are not considered. District forest sector plans (DFSPs) have attempted to resolve such issues at local level through a consultative process but their legal status of DFSPs remains unclear and their implementation is very weak.

2.3 Wood-based Industries

Program Aim: ‘to facilitate the conversion of wood into commodities needed by the people and to contribute to economic development through industrialization’.

Under the MPFS there were to have been a series of actions incorporated into the 8 th-10th 5-year plans and the two 3-year interim plans to achieve this aim. Such actions were not effective in maintaining an effective balance between the demand and supply of timber products whilst a market led economic liberalization policy for timber and other wood products was not effectively pursued. Consequently the assured supply of forest products required to sustain and enhance Nepal’s forest based industry as envisaged did not take place. There is still a huge gap between demand and supply for wood, mainly in urban/suburban areas and in the Tarai and the supply of raw material remains the major constraint for the development of wood based industries.

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For wood based industries to develop and expand a stable and favorable policy and regulatory environment is required to attract inward investment and private sector interest. This has not been achieved for example MPFS recommended relaxing the land ceiling limits in order to promote trees on private land and suggested a subsidy to encourage private commercial nurseries – neither of these was ever implemented. It has been difficult to systematically ascertain actual progress with Nepal’s forest-based industry in the absence of an appropriate monitoring system. Sufficiently supportive policies have not been put in place to promote forest based industries. The Timber Corporation of Nepal (TCN) is still involved in the harvesting and processing of timber and this creates a disincentive to private sector investment and growth. In addition, over-regulation and frequent policy changes in allocation of forests and in the harvest, sale and transport of forest products as well as interference by other agencies (police, local government etc.) have also acted as a disincentive to legitimate private sector investment and involvement in the sector and thus stimulates an illegal forest product trade. Promotion of timber imports has had the same negative effect on Nepal’s home-grown wood using industry. By contrast there have been increasing supplies of raw material for forest-based enterprise originating from community and private forests (especially in the Middle Hills) – this was never anticipated in the MPFS – although even such supplies suffer from clumsy and often unnecessary over-regulation.

2.4 Medicinal & Aromatic Plants & Other Minor Forest Products

Program Aim: ‘to increase the supply of medicinal and aromatic plants and other minor forest products and to facilitate their conversion into useful commodities and their distribution to local and foreign markets’.

Various policies and actions on NTFPs/MAPs (non-timber forest products/medicinal and aromatic plants) were developed under MPFS with the result that there is now much greater awareness, interest and grass-roots experience of enterprises based on these products. Many rural communities and households have established or are involved with NTFPs/MAPs-based enterprises although monitoring systems are still insufficient to generate adequate data about the scale and progress of this subsector. The sub-sector is still characterized by unsupportive and restrictive regulations and procedures including regulations on establishment of such enterprises, tax, royalties, VAT, movement permits, customs permits and export regulations coupled with inadequate phyto-sanitary and testing facilities to support international trade. Efforts to address some of these issues have only had limited success. As a result NTFPs/MAPs-based enterprises remain small and fragile and there is only limited inward investment from private entrepreneurs. In general the main beneficiaries of NTFPs/MAPs appear to be middle-men and traders rather than poor rural households despite the acknowledged potential of these products for rural livelihoods and jobs. Production of many NTFPs/MAPs from both wild sources and cultivation still remains far lower than their potential whilst some high value products e.g. yarsha gumba suffer from illegal trade. Very few products have reached international markets.

2.5 Soil Conservation & Watershed Management

Program Aim ‘to protect the land against degradation and conserve its values through the mobilization of national and local resources’.

This program focused on land treatments to protect critical areas and to restore those areas already damaged. Alongside this was a component for conservation education and extension. Although the

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physical targets of MPFS were not fully achieved, the program has made some progress and has resulted in some important impacts – especially in specific localities. Additional actions (not identified in the MPFS) including focusing on the highly vulnerable Chure watersheds, climate change related actions (including people’s participation in hazard mapping, vulnerability and risk assessment and early warning systems) and training and extension activities for both government agency staff and local people have also been carried out. However, regardless of the scale of the physical achievements of this program, these are still relatively insignificant when compared with the actual requirements for soil and watershed conservation in Nepal and many areas remain untreated especially as these requirements are now exacerbated by climate change effects, widespread rural road construction and haphazard collection of building materials from river courses (especially in the Chure and Bhabar areas).

Watershed surveys at different levels have been conducted although unfortunately monitoring has not been regular enough to assess the overall impacts of this program. Although there is a Soil and Watershed Conservation Act (1982) and associated regulations these are not implemented nor amended to bring them up to date. In addition a specific policy on watershed conservation that could assist in bringing together different sectoral programs is lacking. This has led to reduced opportunities for coordination and collaboration between Ministry of Forests and Soil Conservation (MFSC) departments and with local government, civil society and community groups and between MFSC and other ministries. Where local groups have been established for soil and water conservation purposes they lack the legal basis of other groups such as Community Forest User Groups (CFUGs).

2.6 Conservation of Ecosystems & Genetic Resources

Program Aim ‘to protect special areas for their ecosystem and genetic resource values as well as for the provision of amenities and to promote in-situ and ex-situ conservation of plant and animal genetic resources’.

This program has been relatively successful. Nepal now has a well-developed network of protected areas (PAs) which contribute to in-situ conservation of ecosystems and biodiversity across the country. The coverage of PAs has increased from 10,798 km2 in 1988 to 34,185.52 km2 in 2011 representing 23% of the land area of the country. There has been an increase in the population of several protected animals including tiger (increased from 98 in 1995 to 198 in 2013), rhino (increased from 358 in 1988 to 534 in 2011) and wild buffalo (from 63 in 1996 to 259 in 2012). However other groups (especially birds) are still in decline. There has been a fundamental shift in conservation policies away from 'people exclusionary' and 'species focused' towards 'people-cantered and community based' approaches. Buffer zone management and the establishment of Buffer Zone Management Groups (BZMGs) have enabled local people’s livelihoods to benefit from PAs as well as biodiversity conservation. Communities, local authorities and civil society organizations are now directly involved in supporting PA management and associated livelihoods programs and an ecosystem/landscape approach are now largely followed. The private sector is also involved through the establishment of tourist facilities. Regarding the other components of this program (Annex 1), there has been an increase in the number of botanical gardens and zoos and the national herbarium has been developed and expanded. Breeding programs for a number of key species such as vultures, elephant and gharial are underway and several successful translocation programs have taken place. In the most popular national parks visitor numbers have increased and revenues have also increased accordingly.

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Whilst there have been successes, the conservation subsector suffers from a shortage of specialized staff to cope with the increasingly diverse demands placed on it. The legal framework for protected areas is still contested around issues such as the process of PA declaration, PA governance, power sharing between government authorities and local citizens and around equity aspects of benefit-sharing. The administrative structures and capacities of government agencies have not been able to change to reflect the fundamental shift in approach to conservation. Increased visitor numbers to PAs with concentration of many visitors into a few areas combined with the necessary infrastructure development to cope with them has had adverse effects. Human wildlife conflicts have also increased (possibly as a result of successful conservation initiatives) and compensation systems are inadequate. Illegal trade and wildlife poaching has not been effectively controlled even from PAs and engagement of the Nepal Army to contribute to this role places a heavy financial burden on MFSC. Climate change is also adversely affecting biodiversity especially as a result of invasive plant species whilst infrastructure development such as roads, transmission lines and urban expansion continues to erode the integrity of the PA network.

2.7 Forest Policy & Legal Reform

Program Aim: ‘to develop the policy and legal framework to facilitate and enhance the contribution of individual people, communities and institutions to forest resource development, management and conservation’.

Policy and legal reform was one of the six supportive programs of the MPFS and has proved to be a highly critical component. For components where there has been successful policy and legal reform, individual programs under MFSP have tended to be successful whereas when such reforms have not happened or where they have not been implemented then the relevant programs have proved less successful. The MPFS itself included a Forestry Sector Policy (1989) that developed the strategies for implementation of the programs outlined in the MPFS as well as outlining the legal reforms needed to ensure that each program could be successfully implemented. This policy remained in place throughout the duration of MPFS until 2000 when a revised Forestry Sector Policy received cabinet approval (although the main thrust of the 1989 policy was maintained). The policy directions determined by MPFS and the subsequent legal reforms have made a significant contribution to shaping the direction of Nepal’s forestry sector and the institutions operating within it. The Forest Sector Policy (1989) and the Forest Act (1993) are considered as having been amongst the most influential, innovative and far-sighted elements of the MPFS.

Importantly, policy has not proved to be static and numerous additional policies and legal instruments have been developed in response to particular issues that have arisen or to support positive learning based on implementation of the different programs. Despite this there are many policy-related issues and challenges that still need to be addressed. Some of the more critical policy and regulatory challenges include:

i. Deregulation to support more effective harvesting, utilization and transport of forest products (both wood and non-wood) and to reduce transaction costs and unnecessary bureaucracy in order to attract investors and encourage forest-based industries.

ii. Consistency and transparency regarding the application of royalties and taxes (and VAT) in the forest sector to ensure that legitimate sources of government revenue are maintained whilst not stifling the activities that are being promoted through policy.

iii. Better coordination to ensure consistency and synergy of policies across different sectors and even within the forestry sector itself (see also section 3.1.5)

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iv. Clarification and agreement on policies affecting forest land use and forest management modalities (including PAs and Protected Forests) and removal of ad hoc regulation and politically motivated decision-making. Policy and legislation should aim to be comprehensive, transparent and predictable so that frequent departmental directives, orders and circulars are largely unnecessary.

v. Addressing inconsistency in roles and responsibilities vis the Forest Act (1993) and the Local Government Act (1999) and developing policies within the forest sector that enhance and encourage decentralized decision-making and local involvement.

vi. Better stakeholder engagement in policy processes especially for policy preparation and to ensure better coordination within MFSC at different levels

vii. Removal of inconsistencies between forest policies and legislation (including various orders, circulars and regulations). Normally legislation is enacted to enable policies to be carried out – hence the importance of defining and agreeing on policies before legislating.

viii. Implementation of actions to make forestry parastatal organizations compete on a level basis with the private sector.

ix. Simplification of the regulations under the Environment Protection Act (EPA) requiring Environmental Impact Assessments (EIAs) to be prepared for different plans and other activities in the forest sector (see also 3.1.5)

x. Improved policy and regulatory dissemination to ensure that other agencies such as the police (outside the forest sector) are better aware of and support the implementation of forest policies.

2.8 Institutional Reform

Program Aim: ‘to strengthen the organizational framework in the sector for more efficient and effective development program implementation’.

The MPFS contained an institutional development plan that aimed to reform government forestry sector institutions in line with the requirements and provisions of the components of the MPFS and within the framework of the Nepal’s new forest sector policy and legislative reforms. The most significant achievements of this reform program were a restructuring of the MFSC and its various departments that took place almost immediately after 1989 broadly in line with the programs of the MPFS and taking into consideration their scale and staffing requirements. Further administrative reforms took place in 1993 and 2000 but these were largely driven from outside MFSC under the influence of a High Level Administrative Improvement Commission of GoN which required drastic reductions in staff numbers – especially at central level. Consequently they were somewhat inconsistent with the staffing needs of MPFS. A positive aspect of the 1993 reforms was the establishment of a new semi-autonomous entity called the Centre for Forest Research and Survey - although this did not last long and it was upgraded to a new Department of Forest Research and Survey (DFRS). Other institutional reforms proposed in the MPFS and largely put into place concerned the restructuring or dismantling a series of Government parastatals. Some of these were privatized (e.g. Bhrikuti Paper Mills, Nepal Paper Industries Ltd, Butwal Plywood factory and Nepal Rosin and Turpentine Industries Co) others were merged (e.g. Timber Corporation of Nepal (TCN) merged with the Nepal Fuelwood Corporation) and Royal Drugs Ltd. was shifted to the Ministry of Health. At the present time only TCN, the Forest Products Development Board (FPDB) and the Herbs Production and Processing Company Ltd. (HPPCL) remain as parastatals in the forest sector.

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Forestry sector administration is largely governed by the public sector administration of GoN which is characterized by over administration. Attempts have been made to constitute standing committees representing different stakeholders to contribute to sector governance at different levels e.g. the national-level Forestry Sector Coordination Committee (FSCC) and in many districts a District Forest Coordination Committee (DFCC). These have not been properly institutionalized and they frequently lack real weight to make decisions or hold government agencies to account. Other attempts made to reform institutional structures in the forestry sector these have been hampered by wider administrative regulations outside MFSC. Since 1990 there have been many changes in Nepal’s institutional landscape including the rise of an active and vocal civil society, decentralized government at district and VDC levels, expansion of community based organizations and their capacity and greater public awareness of the need for transparency and accountability amongst government institutions. In practice those institutional reforms that have taken place have not kept pace with these changes thus, despite their achievements, government forestry sector institutions are viewed as archaic and largely ineffective in meeting the needs of a changing society.

2.9 Human Resources Development (HRD)

Program Aim ‘to develop the capability of the human resources in the sector for implementing forestry development programs and operations’.

The HRD approach in MPFS was “reorienting and retraining of forestry professionals so that they will shed their traditional ‘police’ roles and adopt new ones as people’s partners in development”. A number of significant achievements were made reflecting the main components of this program (Annex 1) although importantly, the comprehensive Human Resources strategy for MFSC prepared in 2004 was never formally approved nor implemented. As a result MFSC lacks many of the key HR systems that would characterize a modern and effective government agency such as guidelines and principles for: recruitment, terms and conditions, code of conduct, transfer, performance appraisal, career path, counseling, training, promotion and grievance handling. MFSC also lacks a comprehensive and transparent human resources information database. Establishment of a Central HRD and Training Division and 5 Regional Training Centers enabled a comprehensive government-led training program to be implemented (mostly for mid-level forestry professionals) covering a wide range of topics and often with the support of donor funding. This contributed significantly towards attitudinal and capacity shifts in the forest sector. In addition, forestry education in Nepal has expanded and there are now several different institutions offering forestry-related qualifications from certificate level to PhD. This has resulted in an increase in the level of qualifications held by forestry professionals (complemented by the additional opportunities for overseas study offered through donor programs). An important change over the course of MPFS has been the rise in numbers of civil society organizations working in the forestry sector – meaning that many professional foresters now pursue their careers outside government.

Almost all programs identified that a lack of specialist staff was a constraint to more effective implementation. Forestry is a diverse and multi-faceted discipline therefore, whilst it remains GoN practice to transfer individuals between departments and divisions, it is increasingly questionable whether this can result in the development and continued application of specialized knowledge and capacity required for administering Nepal’s forest sector. Entrenched cultural and attitudinal issues are still important constraints for forest sector institutions and individuals (although the MFSC’s Gender, Equity and Social Inclusion (GESI) strategy has contributed towards a breakdown of some of these barriers). There are still significant issues relating to equal opportunities for different caste,

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gender and ethnic groups. Some of these challenges apply equally to non-government organizations in the forest sector as to government.

2.10 Research & Extension

Program Aim ‘to strengthen the research and development as well as the extension and public information capability of the forestry sector and to promote the utilization of the results of research’.

The achievements of the forestry research and extension program have been limited. Research itself has continually suffered from poor funding levels and frequent shifts in status of the key government research agency whilst extension is similarly hampered by ambiguous responsibilities between different divisions and departments and also between the central HQ and Regional Centers. Although there is no official forestry research policy identifying priority areas, there has been a shift towards the needs of community forestry (away from purely technical forestry) – especially for natural forest management and farm-forestry although the uptake and impact of this research is not yet well documented. Other current research needs, especially climate change related aspects, are not well catered for and in general research tends to be viewed in the sense of formal scientific knowledge rather than mutual exchange of information of different kinds. There has been a parallel rise in the relevance and impact of forestry-related research conducted outside government research institutions through NGOs, projects and academic institutions. These have cantered round community forestry (now a well-researched and documented sub-sector) and other socio-economic aspects of forestry. Formal partnerships in research between government, academic institutions and NGOs are largely non-existent and communication and coordination between them remains poor. Many research staff have left government service and those who remain are frequently unmotivated. It is almost impossible to assess the contribution that forest research has made towards the effective implementation of MPFS programs. Considering the availability of non-government research capacity the future direction and role of DFRS is being questioned.

Extension impacts are also difficult to assess – although forestry continues to receive good media coverage and the level of awareness at local level is good – at least partially as a result of the efforts of the actions of MFSC Extension Sections.

2.11 Resource Information & Planning Assistance

Program Aim: ‘to develop within the Ministry of Forests and Soil Conservation a forest resources information system and capability for surveys, inventories and other information generating activities and for using management information in long-term and operational planning by the government and private sectors’.

Responsibility for this program was with DFRS for resource information (mainly forest inventory) and Planning and Human Resource Development Division within MFSC, Planning Divisions of the various Departments of the Department of Forestry and Regional Forestry Directorates for planning activities. Two national forest inventories have been conducted and a third is underway (with support from the Finnish Government). The 1999 report on national forest inventory, although much quoted and used has been shown to have many deficiencies – particularly a lack of disaggregated data and the consequences of being based on data from a series of different inventories carried out by different methodologies and at different times. As a result definitive, current national forest inventory data do not yet exist (although they will be produced soon). In addition to this, DoF maintains its own MIS system and database of CFUGs whilst other data sets exist in different departments and their district offices (DFOs, Soil Conservation offices and Warden’s Offices). Increasingly these and associated

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maps are being used for preparation of DFSPs and other types of local plan. Within MFSC there is an institutionalized participatory annual planning process (unlike most other ministries) that operates from grass roots level up through VDCs, Districts and is consolidated at national level. A major achievement has been the incorporation of policy provisions for equitable representation and benefit sharing in community forestry into actual plans and constitutions at grass roots level with the support of government staff and local NGOs e.g. 33% of CFUG committee members to be women; 35% of group expenditure from their funds to be used for pro-poor activities and 25% for forest development.

2.12 Monitoring & Evaluation

Program Aim: ‘to institutionalize a system for monitoring forestry development operations and their impacts and for processing monitoring data into information to guide the development process.

The provisions of the monitoring and evaluation program of MPFS remain largely unimplemented. MFSC has carried out regular monitoring following the requirements of the National Planning Commission but this is insufficient to capture the intended impacts of MPFS and to guide future planning processes for the forestry sector. There has been no interim monitoring or evaluation of the MPFS – therefore mid-term changes and corrections have not happened. Consequently it is difficult to fully assess wider forestry sector achievements and impacts under MPFS and monitoring data cannot be readily used to contribute to better planning of the various MPFS programs. A particularly important gap has been the lack of information analysis required to fully assess the economic contribution of the forestry sector to the national economy and to achievement of national goals on poverty reduction although a series of studies and reports have tried to address this. Various departments of MFSC have established their own separate monitoring systems which remain largely unlinked. These include Department of Forests (DoF) which has an Integrated National Database system and CFUG database and DSCWM, Department of Plant Resources (DPR) and DFRS which all have monitoring systems covering their specific areas of interest.

2.13 Climate Change and Forestry

Climate change elements were not considered in MPFS although there have been many subsequent developments and considerable progress made at a strategic level over the past 25 years. The Ministry of Environment prepared a climate change policy in 2011 which has direct implications for the forest sector including (i) the proper utilization and conservation of forest resources as a means for alternative livelihoods (ii) programs for sustainable forest management and soil conservation to address the impacts of climate change (iii) encouraging carbon sequestration and emissions reduction in forestry and (iv) adoption of a basin approach for better water management. Nepal’s National Adaptation Plan of Action (NAPA), again prepared by the Ministry of Environment, develops these areas into a prioritized national plan for adapting to climate change and for building the country’s resilience. Several elements of NAPA are directly applicable to the forestry sector such as forest fire management, control of invasive species, soil and watershed conservation, water source development and flood control and management. NAPA has been followed by the preparation and implementation of district and local adaptation plans (LAPAs) that have drawn heavily on participatory processes learnt from the forest sector. At grass roots level many local forestry groups are now involved in implementing actions to enhance people’s climate resilience especially of those identified as being most vulnerable.

Reducing Emissions from Deforestation and Degradation (REDD+) in Nepal coordinated by MFSC has followed a process for developing and implementing a strategy for reducing forest carbon

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emissions and enhancing forest carbon capture to mitigate climate change and benefit from international markets for carbon. The process of developing a national REDD+ strategy is still underway. Although both NAPA and REDD+ represent significant shifts in emphasis for the forestry sector – in practice they tend to reinforce policy directions that were already present i.e. sustainable forest management and halting forest loss (in REDD+) and enhancing the livelihoods and resilience of poor rural people (in NAPA).

2.14 Gender, Social Inclusion and Poverty Alleviation

Forestry has a strong gender dimension which in recent years has received considerable attention both in Nepal and internationally, although it was little emphasized in the MPFS. Likewise, poverty and social inclusion concerns were not well highlighted in MPFS although these have since come to the fore in the form of Nepal’s Poverty Reduction Strategy Paper (PRSP) and the country’s Millennium Development Goals in the late 1990’s. MFSC has made considerable progress in its commitment and mainstreaming of gender and social inclusion issues across the various programs and institutions. Critical to this is the MFSC’s GESI Strategy (2006) which identifies 4 change areas for achieving the aim of making MFSC ‘...a gender and social equity sensitive and socially inclusive organization…’. These include: (i) GESI sensitive policy and strategy; (ii) good governance and institutional development; (iii) GESI-sensitive budgeting, programming and monitoring and (iv) equitable access to resources and benefits. This represents a major achievement in institutional reform (beyond the provisions of MPFS). At present, women make up about 31% of CFUG committees and for other group-based forest management modalities they represent 39% (Leasehold Forestry); 12% (Collaborative Forest Management) and 19% Buffer Zone Management. Within institutions of MFSC women comprise only 3.3%.

Although gender and social inclusion issues have been clearly identified and priorities for addressing them have been clearly spelled out, in practice implementation mechanisms are virtually non-existent. The forest sector remains male-dominated in its government organization and with the exception of community-based forestry, policy provisions for gender mainstreaming are not backed up by relevant legal provisions and operational frameworks. Within MFSC, pro-poor and inclusive working modalities are not generally practiced and GESI achievements remain elusive. Across the sector, progress with social inclusion has been uneven and both women and men from socially excluded groups and from remote areas lag behind in terms of their access to resources, voice and effective representation in national and local level institutions and processes that influence development decisions. Despite the progressive sectoral policies represented by GESI, the challenge is still to put these into action.

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3 CRITICAL FACTORS

This section summarizes the critical factors that have led to the achievements and challenges of the MPFS and their contribution to its overall impact.

3.1 Factors External to the Forestry Sector

3.1.1 Political change

Nepal experienced major political changes over the duration of the MPFS. In 1990 absolute monarchy ended with the establishment of a multi-party system and a constitutional monarchy. The new parliament was at first enthusiastic to devolve powers to communities. This had an important influence on the thrust and scope of the Forest Act (1993) which assigned considerable rights to local groups (later reinforced by the 1995 Forest Rules). This also made possible the development of participatory approaches for pro-poor leasehold forestry, buffer zones and watershed management. Further devolution was strengthened by the Local Self Governance Act (1999). Although this introduced some contradictions in terms of jurisdiction over forests it did reinforce the principles of bottom-up planning and consultation that have since driven planning processes in the forest sector and which continue today in the form of DFSPs and community-based adaptation plans at VDC level (LAPAs). Another important effect of the 1990 political changes was the liberalization of civil society which resulted in large numbers of civil society organizations (NGOs) being formed. These have become powerful advocates for reforms in the forest sector as well as providing a range of associated services.

From 1996-2006 the Maoist insurgency severely hampered the functioning of government agencies across much of the country although CFUGs were able to continue to function (albeit with some disturbance) and their legitimacy was enhanced through this. The inability of government officials to reach rural areas during this period developed a key role for NGOs who were able to continue to support and provide services to community groups. Another effect of the insurgency period was to enhance people’s awareness of democracy and their rights. This empowered them to become more vocal in their resistance to prevailing social and gender discrimination. This has had a major effect on the way that community groups (of all kinds) operate and is now institutionalized (for community forestry) in the latest version of the CF Guidelines.

3.1.2 Economic change

The national economic structure has altered significantly over the MPFS period. The contribution of agriculture (including forestry) to GDP has reduced from 60% in 1989 to about 33% today. The past two decades have seen a huge out-migration of mostly young men to work overseas or to urban areas and their remittances have now become a major income source for the country and for many rural families. This has been reflected in an overall reduction in the percentage of people living in poverty from 42% in 1996 to 25% today and an increase in average per capita income from NRS 43,700 to 62,510 over the same period.

3.1.3 Demographic change

Nepal’s population increased from 18.5 million in 1991 to 26.5 million in 2011. There have also been distributional changes with the urban population increasing from 5% to 17% and the proportion living in the Tarai increasing from about 40% in 1991 to over 50% in 2011. The population of many hills districts has declined over the past 10 years. This has decreases pressure on hill and mountain forests

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for subsistence use and has allowed forest to expand into marginal agricultural land that has been abandoned whilst conversely the shift in population to the Tarai has increased deforestation and forest degradation in this region.

3.1.4 Communications and infrastructure

Expansion of the road network into almost all districts has improved the accessibility of formerly remote rural areas creating markets and commercial opportunities for many forest products. Expanded phone and internet networks have enabled better communications and information flow between rural and urban areas and between communities. This has enabled greater spread of awareness and ideas and whilst improved road access increases the possibilities for commercialization of forest management, it also introduces the potential for greater levels of illicit use. Road construction itself has contributed to forest loss and soil conservation issues.

3.1.5 Other influential policies and laws

The forestry sector is directly affected by the policies and laws of other sectors (invariably prepared and implemented by other ministries). In a number of critical cases there are contradictions between these and the forest policies implicit in the MPFS. Critical inconsistencies lie with:

The Environment Protection Act (1997) and Rules (1997) which require environmental impact assessments to be undertaken for a variety of situations and actions within the forest sector. Whilst the aims of EPA are valid, these requirements hinder the establishment of forest-based enterprises and the harvesting and trade of various forest products.

The Local-self Governance Act (1999) gives authority to local government to sell forest products, to collect revenue and impose local tax over forest products. They can also formulate forest management plan and implement programs to manage forests within their jurisdiction. This overlaps with the provision of the Forest Act (1993) leaving a number of unresolved ‘grey’ areas which favor inaction or non-compliance with either one of these laws.

Some of the most contradictory policies and political agendas concern landlessness and land reform. The High-level Land Reform Commission (2065) and High-level Scientific Land Reform Commission (2066) both recommend land reform as a strategy to control forest encroachment particularly in the Tarai and Chure Regions. This sometimes implies resettlement within forests. This contradicts with the principles of the Forest Act (1993) which aims to keen an intact forest estate. However it has become clear that protection of the remaining forest in these regions is not possible without addressing the issues of landlessness and migration.

3.2 Forestry Sector Factors

3.2.1 Institutional modalities

MPFS was the driving force behind the reorganization of MFSC institutions into its various divisions and departments which were intended to be the main implementing agencies for the different programs. Subsequent institutional reforms have tended to scale-down government institutions with little recognition given to effects of these changes on performing the tasks required under MPFS. Whilst the nature of Nepal’s society has altered fundamentally over the past 25 years – these changes have not yet been reflected in a reformed institutional structure. Critical factors and changes affecting institutional modalities that have taken place include:

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A proliferation of civil society organizations of many kinds – often with a range of capacities and skills to operate in the forest sector.

A shift towards decentralization and local government – to which many government institutions have already responded by decentralizing their own structures. MFSC is lagging behind with this.

A demand for stakeholder representation at different levels (local, district national) to contribute to decision-making processes and to hold government institutions to account.

Public demand for better governance, efficiency, accountability and transparency from government institutions.

An expansion of the private sector as providers of various services and functions formerly only available from government.

The politicization of government institutions and government staff (reflecting the wider influence of politics in Nepali society).

3.2.2 Forestry sector finance

The MPFS contained a projection of the necessary financial resources required to implement the planned programs consisting of funds from government, international development assistance and the private sector. Without considering the inputs from the private sector (which are difficult to assess although are unlikely to represent the 35.4% proposed in MPFS) total actual expenditure was only about 35% of that projected. Although it is estimated that forestry contributes to about 8% of Nepal’s GDP the allocation to different programs of MPFS was substantially lower than that projected and the percentage share of government allocation to forestry has decreased over time. The critical issues arising from analysis of forest sector finance are that: (i) overall funding for the forest sector has been insufficient to meet the demands placed on it; (ii) funds have not been allocated in accordance with program priorities; (iii) much of the international development co-operation funding has been channeled outside the systems of GoN (direct funding) and is less transparent and (iv) the effective financial contributions of communities and the private sector (although possibly substantial) have not been adequately tracked or recorded through financial monitoring systems.

3.2.3 International development partners

From the start of the MPFS Nepal’s international development partners were expected to play a crucial role in supporting the proposed programs. As in many other development sectors, a multiplicity of bilateral and multi-lateral donors have been involved in forestry although often in an uncoordinated and sometimes geographically isolated way. Coordination efforts by MFSC have been lacking and the concept that donors would coalesce and effectively mesh their respective development programs around a common strategy (MPFS) has not materialized. However there have been some critical recent developments including: (i) an overall reduction in donor support and in the number of international agencies involved in the forest sector – initially as a result of the period of conflict when many donors left the sector completely and in some cases closed their programs; (ii) a more recent emphasis amongst donor agencies on better coordination around a common government program driven partly by the Paris Declaration on Aid Effectiveness (2005). Examples in the forest sector include NAPA, REDD+ and the current Multi-Stakeholder Forestry Program and sector wide approaches (SWAPs) in the education and local government sectors. Since the end of the MPFS in 2011 a common framework around which donors can offer their support and develop their respective programs has been lacking and the new FSS is now urgently needed to ensure this.

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3.3 International Factors

This section summarizes progress against Nepal’s international commitments over the past 25 years and identifies key challenges and opportunities for the future relating to these.

3.3.1 Nepal’s international commitments

Nepal has ratified, accessed or signed in more than 20 core Multilateral Environmental Agreements (MEAs) (Annex 3) and is thus required to fulfill them by integrating them into domestic policies and laws. Whilst national legislation has been enacted covering some of these, others remain unaddressed. Even where these MEAs have been brought into policy and law, implementation remains weak. For example despite being a signatory to CITES since 1973, Nepal has an international reputation as being a conduit on the trade route for illicit wildlife whose final destination is often China. Similarly, several of Nepal’s wetland sites identified as being important under RAMSAR are under threat from various causes.

3.3.2 International best practice

The MPFS was designed with considerable influence from the global Tropical Forest Action Plan (TFAP) which at that time was seen as a vital tool to halt forest degradation. Since then the international development discourse on forests has shifted its emphasis and into several new directions. These contribute to a new set of driving forces and influences on forest sector development and they represent best practice for the future. Whilst Nepal has been an international leader in best practice vividly demonstrated by its implementation of participatory forest management programs other best practice areas in the forestry sector that Nepal has not yet embraced include:

An emphasis on forest law enforcement and forestry sector governance (FLEG-T) – especially relating to trade in forest products. For Nepal this has implications for the widespread illicit trade in timber and wildlife and the effects this is having on vulnerable forest areas, especially in the Tarai.

Reform of government forestry institutions with particular emphasis on greater efficiency, good governance and accountability, institutional down-sizing and out-sourcing, redefining roles and responsibilities (from being implementing agencies to regulatory authorities) and to becoming more financially sustainable through establishing autonomous agencies with greater control over their own financial resources. Annex 4 gives a generic framework for forest sector governance that if applied to Nepal’s situation leads to the conclusion that many challenges still need to be addressed.

Securing forest tenure for local and indigenous communities has created more incentives for local people to sustainably manage their local resources.

Systems for payment for ecological or climate-related services and their application in the forest sector. In Nepal this is happening in relation to REDD+ and other pilot PES initiatives but there are still many missing links such as the relationship between the hydro-power sector and those who manage forested water catchments.

Closer consideration of the involvement of the private sector in international development in a variety of roles.

A shift away from monolithic and largely inflexible ‘master plans’ for forestry towards strategies agreed by all stakeholders, that represent clear directions, approaches and priorities for different aspects of forest sector development that are flexible enough to respond to changing circumstances and learning experiences.

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4 LESSONS LEARNT

This section summarizes key lessons learnt from 25 years of implementation of the MPFS. These lessons can be learnt equally from those factors that have contributed to successes and achievements under the MPFS as to those that have contributed to failures. They provide important reference points for a new Forestry Sector Strategy (FSS).

4.1 Lessons for the Management and Utilization of Forest Resources and Conserving Biodiversity

a. Participatory approaches have proved to be highly effective for ensuring local commitment, local benefits and local awareness of plans and processes. They have been applied to community forestry, pro-poor leasehold forestry, collaborative forest management, buffer zones, watershed management and other forest and land management modalities as well as to other national and local planning situations e.g. for MFSC annual bottom-up planning, DFSPs and VDC level forest sector planning, LAPAs and even for national processes such as REDD+ and NAPA.

b. There is improved growing stock in many forests (particularly community forests) that have been effectively protected and managed over the past 25 years. There is now potential to utilize this through sustainable harvesting. This would increase the availability of forest products beyond purely local and subsistence requirements. Thus there is now potential for commercial utilization (not just from national forests) which can be the basis for forest-based enterprises, rural jobs and cash incomes for poor rural households.

c. A critical factor for the success of CF is that CFUGs and other forest user groups need to operate as autonomous, independent and self-governing entities. The legislation that provides this (mainly the Forestry Act 1993) needs to be ensured in future. Anything that adds to this level of autonomy is likely to have a positive impact on the functioning and effectiveness of local forestry groups.

d. The broad aims of two priority programs under the MPFS (Community & Private forestry and National and Leasehold forestry) have converged. Since both these programs now aim to meet subsistence needs for forest products as well as commercialization, expansion of forest-based industries, revenue generation and employment and both give priority to poor and disadvantaged people they could be merged to create an expanded program that will benefit the rural poor.

e. Improved coordination between the primary development programs of MPFS is needed. This would lead to better achievement across all programs. For example, community and private forestry can supply raw materials for wood and non-wood based industries and they can also contribute to the conservation of ecosystems and watersheds. Unfortunately the programs are administered by different departments in MFSC and a ‘silo’ mentality has tended to prevail that needs to be addressed in future.

f. Ineffective implementation of supportive programs of MPFS. The supportive programs of MPFS (see Annex 1) have suffered from being largely under-resourced and poorly implemented (especially when compared with the primary programs). The term ‘supportive’ has been interpreted to mean less important or low priority – whereas in fact these are all vital for the successful implementation of the whole MPFS.

g. A large part of the government-managed forest estate lacks effective forest management and stakeholder participation. This leads to unmanaged forests that are effectively open-access. Coupled with past political instability and lack of a rule of law, large parts of the national forest

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are being converted to agriculture and for human settlement or are subject to illicit timber harvesting and forest degradation.

h. DSCWM cannot itself fulfill the entire demand for soil conservation and watershed management services. Despite localized successes with this program, a more realistic approach to achieving wider coverage would be to leverage such services from other agencies also concerned with watershed management and ensure that the sectoral strategies of Forestry, Agriculture, Irrigation, Roads, Local Development, Environment and Hydropower and others all include soil and water conservation components. DSCWM need not be the sole implementing agency for such actions. It needs to re-invent itself from implementer to facilitator with a critical role to play in planning, research and technology development, development of appropriate techniques, technical backstopping, facilitating, and policy influence. At local level its resources are perhaps better used for coordinating and planning with local authorities (districts and VDCs) and seeking to leverage funds from other sectors. A clear institutional, legal and policy arrangement is require for the management of critical watershed areas (including the Chure) that does not place sole responsibility on DSCWM.

i. Poaching and illegal trade in forest products continues to be a critical issue. The successful establishment of PAs and the successes with participatory forest management have done little to curb levels of illegal activity in the forestry sector. This has been exacerbated by civil unrest and poor rule of law during and after the conflict - despite the resources set against them (such as the Nepal Army and forest guards). The solution appears to lie elsewhere – through effective management of resources, reducing poverty, coordinating with law-enforcement agencies and enhancing good governance.

j. Successes in biodiversity conservation can have adverse impacts. The concentration of visitors to certain spots in PAs and the need to develop associated visitor facilities is welcome in terms of Nepal’s economy and growth but needs to be carefully managed to avoid environmental damage. Improved numbers of certain species e.g. elephants and tigers has the downside of increasing the level of human wildlife conflict. For this, compensation processes for loss of life or property need to become meaningful and more responsive.

k. Forest planning and resource information systems need to be improved. Current levels of forest resource information (and data management systems) are insufficient for effective and transparent planning in the forestry sector. In the past forest resource data was generated at regional level (districts) but not disaggregated based on districts or physiographic regions e.g. Tarai, Siwalik, Mid-hills and High Mountains, nor based on forest management regimes e.g. government forests, protected areas, private forests, community forests, leasehold forests, religious forests and protection forests. Without such disaggregated data forest cover change analysis and planning at macro, micro, watershed, basin and forest level is inadequate. MFSC has too few qualified staff responsible for updating and analyzing such MIS systems and, a result, data analysis for forest sector planning and management is weak. Outsourcing data generation, analysis and synthesis to private agencies within the country could mitigate this shortfall.

l. There is a need to balance natural resource conservation with the needs of development. Roads, hydro-schemes, power-lines and urban expansion are all necessary for Nepal’s development but at the same time they adversely affect forests and protected areas resulting in habitat fragmentation, higher levels of illicit use and pressure for over-use of resources and land. Conservation cannot be tackled in isolated way through a process of exclusion but by involving and informing decision-makers, planners and civil society in decisions.

4.2 Lessons for the Policy and Legal Framework

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a. The policy framework must be backed up by supportive legislation. Nepal’s 1989 Forest Policy, strengthened by the powerful legal provisions of the 1993 Forest Act was fundamental to the successes achieved with the Community and Private Forestry Program and also to a large extent with the Conservation of Ecosystems and Genetic Resources Program. However, legal reforms (and changes in the legal framework) are a means to implement policies and as such they should follow and support agreed policies not pre-empt them. Where supportive legislation was not put in place (in the case of the National and Leasehold Forestry Program) or where policy and legal provisions were not fully implemented (as in the case of the Wood-Based Industries and Soil Conservation and Watershed Management Programs) programs have failed to deliver.

b. Policy process is critical. To be effectively implemented policies need the consensus of those who are affected by them or of those who will be responsible for their implementation. A deliberative and open policy development process will ensure that this happens.

c. Other sector policies and laws affect the forest sector. A better understanding of the linkages between different sectors and a coherent and overarching approach to forest policy development can contribute to better achievement of policy goals. Without coordination sectoral policies may contradict, undermine or be inconsistent. An adequate architecture of the forest sector policy and legal framework must include sound analysis of linkages across sectors. Recently Nepal’s NAPA and REDD+ processes are starting to recognize this necessity. Further, this approach needs to be continued beyond policy making to policy implementation and to the development of a supportive and unambiguous legal framework to ensure that policies can be implemented.

d. Various government orders, directives, circulars and regulations are inconsistent with forest policy and laws. All programs of MFSP have been adversely affected by excessive and unclear regulation and issuance of frequent and ad hoc policies, orders, directives and circulars. This has particularly affected the Wood-based Industry Program and the National and Leasehold Forestry Program where government restrictions on collection, transportation and marketing of forest products and price controls on them have been frequently issued. This results in individual field staff interpreting government circulars according to their own understanding – especially where there are ambiguities creating uncertainty, undermining formal legal processes and working against the rule of law and principles of good governance. For investment and effective implementation purposes a transparent and predictable regulatory framework and operational environment are essential. The following steps may be useful for limiting regulatory proliferation and inconsistencies, and enhancing the operational environment in future: Ensure that a coherent and sound forest policy is in place prior to law-making Reduce the number of rules after legal analysis to identify overlaps and inconsistencies i.e. by

not creating more rules. Adapt the remaining rules to ensure consistency with other existing laws, including those

within and amongst different sectors. Translate new legislative acts into working norms and regulations as soon as possible after

new laws have been approved to ensure correct implementation and to avoid uncertaintye. Implications of the Local Self Governance Act (1999) need to be considered. There is a

critical need to engage with local government at all levels (local, district and national) to enhance accountability and to follow the spirit of decentralization legislation. Inconsistencies between this Act and the Forest Act (1993) need to be removed or clarified.

f. The application of environmental regulations for the forest sector needs to be reviewed. According to EPA (1997) IEE/EIAs are legally binding for a range of forest management operation as well as for wood-based and NTFP-based enterprises. Not only is this an expensive

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and time consuming process it is also beyond the capacity of local people or communities. It is questionable as to whether these regulations that were intended for environmental protection are really necessary if applied to a sustainable forest management situation and this needs to be reconsidered.

g. Stakeholder representatives can be given a voice in various coordination committees at local, district and national level. However for these to be effectively able to hold government institutions to account they need to have legitimacy and clearly recognized powers. Otherwise they simply pay lip service to the principle of participation. The quality of representation is also a key issue – since this hinders the voice of disadvantaged groups in many of such forums. Capacity development needs to be linked with stakeholder participation to address this.

4.3 Lessons for Forest Sector Institutions

a. A constraint for most programs is a lack of specialized staff. Despite wide-ranging training and educational opportunities that have been provided there is an ongoing need to continue to develop new knowledge and skill-bases amongst forestry professionals and for institutional arrangements to evolve in new ways to accommodate this. For example: Forestry staff need training in technical, managerial and communication aspects of forestry.

As actual forest management becomes gradually more decentralized to entities outside government, government staff should be more skillful in regulation, monitoring and facilitation.

Nowadays many forestry skill areas are available outside government institutions. There have been successful experiences of utilizing these through contractual, service provider or other arrangements. This approach can be extended to cover other areas of activity in future.

Within government institutions there is a need to adapt HR systems so that specialized staff can if necessary be retained in key positions.

b. The strongly protection-orientation and command and control attitude of MFSC administration has not shifted significantly over the period of the MPFS. Such attitudes are inconsistent with policies (which are largely people-oriented) and with the increased capacities and capabilities of individuals and in government, civil society and communities and with the needs of a modern democratic society. Policy shifts need to be matched by fundamental institutional reforms and changes in attitude amongst individuals if they are to be effective.

c. Government forestry institutions are characterized by weak management and outdated or non-existent HR systems. Many individuals within MFSC are skilled and highly competent but they work within an unmanaged and unorganized institutional structure and follow HR management systems that are inconsistent with present-day needs. Key issues are: Lack of overall HR policy or set of operational guidelines covering the critical procedures for

recruitment, appointment, terms and conditions, performance appraisal, career path development, codes of conduct, counseling, training, promotion and grievance handling (in accordance with Nepal's Civil Service Act).

Lack of a comprehensive and readily available HR database. Particularly weak recruitment, placement and transfer systems resulting in decisions that are

unpredictable, untimely and subject to ad hoc influence. Promotion systems that do not encourage innovativeness, productivity or demonstrated

performance. Training and staff development that are not based on individually assessed needs. Weak

linkage between training and job performance.

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Poor representation of women and other disadvantaged groups at all levels (although this is true for all government organizations not solely MFSC).

Loss of quality staff to international organizations and projects (implying that motivation and incentives to stay within the government system are insufficient).

d. Forest sector institutions are becoming increasingly diverse. It was assumed that most aspects of implementation of MPFS would be via government forestry institutions. However, despite the continued predominance of government institutions the rise of civil society, community groups and the private sector has been spectacular. There are now many organizations and individuals outside government with capacities and skills to fulfill a wide range of roles and services that were formally exclusively carried out by government. The challenge is to capitalize on these and maintain a balance between the capacities and varying roles of different types of organization working in the forestry sector. Clear roles and opportunities need to be created for all types of forestry sector institutions including civil society (NGOs), academia, community-based organizations, the private sector and government itself. This has implications for government forestry institutions and the extent to which they need to continue to perform all their existing functions.

e. MFSC staff are overburdened with administrative tasks. The focus for most field-level forest sector activity lies at the District Forest Office. DFOs have largely become administrators rather than sector specialists and they are expected to undertake a very broad range of administrative tasks – often beyond their management capability. This is not sustainable and some functions of DFOs need to be altered or assigned to other parties to address this issue (as in other technical ministries such as Roads and Telecommunications).

f. The forestry sector lacks insufficient political engagement and support. Despite the internationally recognized achievements of community-based forest management in Nepal, political leaders rarely acknowledge these. Forest legislation does not give enough space for local level government leaders and political parties in the decision-making process in the forestry sector in general and at local level in community forestry. New institutional mechanisms taking into account the concept of federalism and power-sharing in natural resource management need to be developed during formulation of new forest sector strategy.

4.4 Lessons for the Forestry Sector’s Contribution to Economic Development

a. Over-regulation is a constraint. Whilst the Forest Act (1993) and associated rules diversify the management regimes for national forests they also over-burden forest managers with excessive regulation on the harvest, transport, process and sale of forest products. Similarly over-regulation on the harvest and utilization of forest products from private forests reduces the incentive for private forest or tree owners to produce and grow more of these products.

b. Fiscal policy is a constraint. MPFS proposed that royalty rates for forest products would be adjusted to make them compatible with production costs. This did not happen and revisions of royalties have taken place on a rather ad-hoc basis. Wood traders and consumers feel that the present royalty rates for wood are set too high and comparison of Nepal’s royalty rates with those of other countries seems to confirm this. 13% VAT is imposed on timber sales and some NTFPs produced from private land whereas there is no VAT on the production and sales of agricultural

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commodities thus stifling private farmer involvement in commercialization of such forest products.

c. Sufficient supplies of raw materials are not being generated from government-managed forests. Whilst MPFS sought to sustainably utilize government-managed national forests to promote the forest industry, due to weakness and ineffective management of TCN coupled with lack of proper management planning and harvesting control this has not happened. Considering the large forest area concerned, only comparatively small quantities of forest products are legitimately supplied to industry from government-managed national forest and overall supplies of forest products are far less than could potentially be produced. Not only does this reduce government revenues, it also limits the expansion of the wood-using industry and the commercialization of the forest sector with associated benefits such as cash incomes and jobs.

d. TCN has a distorting impact. Although TCN and NFC were merged and the role and functions of FPDB were drastically reduced the government still gives preferential treatment to TCN for the supply of timber (logs) at reduced rates. Despite this, TCN is unable to operate on a fully commercial basis and its role in distorting markets and creating a dis-incentive for private sector investment is increasingly being questioned.

e. Coordinating mechanisms for the wood-using industry are lacking. The wood using sector is becoming increasingly diverse as governmental/semi-government agencies, private industries and forest user groups and their cooperatives are now operating wood and other forest product based industries supplying timber and NTFPs into the market. The private sector, although recognized as being critical to the achievement of economic goals in the forest sector is rarely engaged in a meaningful and productive way and this coordination gap hinders the engagement of this diverse group in developing strategies and directions and using their business skills for the wood-based industry. A representative body with expertise and knowledge of the commercial aspects of the forest sector is lacking at present.

f. There is a need for a stable regulatory environment to attract investment. For the more than 5,000 wood based industries registered and in operating in Nepal, impractical environmental standards, dual taxation, inconsistency in the auction system, lack of private sector participation in policy-making process and lack of transparency in decision-making processes resulting on erratic and confusing regulations creates uncertainty and challenges to the growth of wood based industries. A considerable amount of unregulated trade and utilization of forest products exists. This is partly a consequence of the excessive regulatory restrictions placed on the wood-using sector.

g. Sources of finance for small-scale forest-based industries are inadequate. Also taxation, loan regulations and land-related laws are also not favorable for the establishment of small-scale private and community-based enterprises. They need bank loans and tax breaks to enable them to become established. Compared with this, larger scale industries have easier access to finance, taxation opportunities and banking facilities.

h. Commercial leasehold forestry has failed. The MPFS aimed to stimulate private sector investment in forestry through commercial leases on forest land. The Forest Act (1993) did not make any provision for this (for natural forest areas) and as a result the approach has failed. Even where provision does exist for lease of degraded forest for re-afforestation schemes or ecotourism to private lessees, many factors including high rental fees and uncertain security of tenure contribute to act as disincentives to uptake of this.

4.5 Lessons for Addressing Poverty and Social Exclusion

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a. The sector provides good opportunities for addressing poverty and social exclusion. Nepal’s national development policies focus on poverty reduction as an overarching goal. A high percentage of people in Nepal still live in poverty and still depend on forests for their livelihoods. Experience has shown that there are good opportunities for the forest sector to contribute to their livelihoods – and that such opportunities can be enhanced through prioritizing and expanding those programs that have the greatest impact such as community-based forestry (of all kinds), job creation (through wood-based industry) and climate resilience.

b. There is an imbalance in roles, responsibilities and powers. Even though an important lesson has been learnt regarding the need for participatory process across the sector and even though forestry sector stakeholders do work collaboratively, there still exists a disparity in roles, responsibilities and power between government and other actors. Key sector stakeholders such as women, poor people and disadvantaged groups (including Dalit and other marginalized indigenous communities), although usually nominally represented in various decision-making forums, have little genuine power and voice and there is still a tendency towards unilateral decisions and lack of transparency on the part of government and more powerful civil society actors.

c. Governance is the key to addressing issues around poverty and social exclusion. Early experiences with community based forestry appeared to show that elites would continue to predominate and exclusion of others would continue. Poverty and social exclusion weren’t explicitly recognized at the time of MSFP preparation. This issue was partially addressed by focusing on enhancement of group governance i.e. changes in the way such groups make decisions that affect all their members. As a result of this local forestry groups are now amongst the most inclusive and pro-poor in the country. The MFSC GESI strategy attempts to do this amongst MFSC institutions – however many elements are have not yet been implemented.

d. Supportive regulations based on field-based learning can contribute to poverty reduction and social inclusion. Whilst it is not normally possible to legislate against entrenched attitudes and behaviors, there are examples such as the evolution of CF Guidelines that show that when based on field-based experience and good practice, regulation can have a positive impact - in this case on benefit sharing and representation in CFUGs.

4.6 Lessons for Nepal’s Climate Change Agenda

a. The forest sector is critical to Nepal’s climate change agenda. The progress of developing Nepal’s response to climate change has enhanced public awareness of the important role that forests play. This is strongly conveyed in Nepal’s NAPA as well as in the strategic processes being followed for REDD+.

b. Strategic climate change processes need to be integral to Nepal’s forestry sector strategy. Considerable progress has already been made in developing strategic processes as well as local planning processes to tackle climate change related problems. Strategies for climate change relevant to the forest sector (whether for climate change adaptation or for mitigating climate change) must be integral to future forest sector strategy and the processes being followed e.g. for developing REDD+ strategy and for NAPA need a direct link for FSS processes. Climate change is a cross cutting issue and must therefore be considered across all programs not confined to a specific program in the forestry sector.

c. REDD+ is fully compatible with forestry sector goals. Reducing forest degradation, controlling deforestation, forest conservation and strengthening sustainable forest management (i.e. REDD+) are the underlying aims for a healthy and vibrant forestry sector. Expansion of forest, carbon, soil

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and watershed conservation measures using systems for Payment for Ecological Services (PES) to leverage funds is a potentially viable approach for Nepal but it requires much more action-oriented piloting and testing.

d. Local forest groups provide a strong institutional base for community-based adaptation planning and implementation. As inclusive and well-governed local institutions, community forest groups of various kinds can be effective for implementing actions to enhance the climate resilience of the most vulnerable households.

e. Climate change is already affecting Nepal’s forests. These effects include invasive species, forest fire, effects on forest regeneration and growth, soil and water conservation, floods and water source depletion. Although quantitative data are mostly lacking there is sufficient local experience to demonstrate these effects at present and actions are needed to address them.

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5 FUTURE DIRECTIONS AND OPTIONS

This section synthesizes the main future directions for Nepal’s forestry sector based on suggestions from the MPFS review and on the preceding analysis. Future directions are determined by the need to address current and future issues and gaps and by the need to capitalize on learning that has taken place. For strategic planning it is particularly important to plan for future anticipated needs rather than solely for the present. Future directions are affected by Nepal’s national and international development commitments. In many areas a number of different options are possible – these options require further consultation and discussion before finalizing a forestry strategy.

It has been useful to group future directions and options into a number of key themes representing the main areas towards which Nepal’s National Forestry Strategy will to contribute. Key themes identified include:

Forestry sector governance and administration Management of forest resources Forestry sector contribution to economic development Forestry sector contribution to poverty reduction Forest biodiversity and environmental conservation Forestry sector response to climate change

5.1 The nature of Nepal’s forestry sector strategy

Nepal’s new FSS will differ from the MPFS in its content and structure. FSS will not be an all-encompassing plan but will be a much shorter document - setting out strategic vision, goals, approaches and priorities for achieving them as well as identifying key responsibilities.

It should be ‘owned’ across the sector – thus achieving sufficient commitment for it to be implemented by all relevant stakeholders including those in other sectors affected or affecting the forest sector.

The mode of implementation need to address the many cross-cutting issues such as governance, gender and social inclusion, climate change.

The forestry sector stakeholders to be involved in monitoring and assessing performance of the strategy and any necessary future changes in direction.

A multi-stakeholder entity needs to be established to finance the future forestry programs in an intensive way. An institutional structure needs to be devised to best use the bilateral development funds to support implementation of the new FSS. Similarly, the future role of Forestry Sector Coordination Committee need to be clarified for all forestry stakeholders to articulate their concerns, and responses.

The disadvantaged groups need to be provided with an effective voice in various levels of coordination committees and in sector governance more generally.

Criteria and indicators need to be developed as part of FSS that will enable regular monitoring and changes of direction if needed.

The FSS need to be harmonized with other strategies such as: REDD+ strategy, Biodiversity Strategy, Conservation strategy, Agriculture Development Strategy, Low Carbon Strategy, Biomass Energy Strategy and also NAPA.

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The proposed themes and programs needs to be linked within FSS and become mutually supportive.

The forthcoming FSS to be made compatible with the upcoming constitutional provisions such as new state structures.

5.2 Forestry sector governance and administration

Suggested future directions include:

Reorganize MFSC institutions to (a) better utilize the capacity and potential of non-government actors in the forest sector by promoting Private-Public-Community Partnership, (b) reduce the administrative burden on government forestry sector staff, (c) enhance technical skills and management capabilities, (d) minimize bureaucracy and (e) to bring into MFSC better communication and management skills to enhance the image and performance of the forestry sector.

Revisit and implement the MFSC HRD strategy. Bring it up to date and use it to put in place HR systems appropriate to the needs of a modern government organization.

Improve the gender and social balance within MFSC institutions in accordance with GESI and institutionalize GESI within the new FSS.

Align MFSC institutions with local government (at different levels) thus reducing centralized control and improving linkages with accountable bodies. Formalize district forest coordination structures and plans.

Draft new legislation to increase clarity, transparency and consistency of legislation ensuring that it is unambiguous, based on tested approaches and allows for minimal discretionary powers. Also ensure the role of private sector in the management of forests and the development of forest enterprises.

Revisit the regulatory framework – especially that which consists of government orders, circulars and directives with the aim of deregulating these and removing inconsistencies and contradictory messages.

Investigate social, economic and political causes of non-compliance (with policies and laws) and adopt strategies to address these causes.

Develop partnerships between academic institutions and MFSC to ensure the provision of sufficient numbers of professionally qualified staff to meet the future needs of the forest sector.

Carry out a detailed study to determine which of Nepal’s commitments under international law are not yet implemented and identify ways in which compliance with these can be improved.

Build on international best practice by pursuing a program for forest law enforcement (and trade) in Nepal’s forest sector.

The role and function of the MFSC departments and divisions clarified as whether they should primarily implement the FSS or they create and support the enabling environment that will enable others to implement.

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The DSCWM need to evolve into an enabling agency to provide technical support for soil and watershed conservation actions implemented by other departments, local government and communities.

The future role and function of DFRS and parastatals need to be clarified. It needs to be explored whether DFRS can function as a semi-autonomous entity. The parastatals- TCN, HPPCL, and FPDB needs to made competitive and productive by privatizing.

5.3 Management of Forest Resources


Develop a forest land-use strategy for Nepal to identify the most appropriate management modality for each patch of forest. Possibly do this at district level – but recognize the need for this land-use strategy to be agreed by all sectors (not just MFSC) and especially for the Tarai, Chure and High Mountains where allocation under different modalities is still contested.

Bring all forest areas under the remit of a management plan. Promote active sustainable harvesting and management of forests in good condition to generate forest products for forest-based industries (both small and larger scale)

Merge the pro-poor leasehold forestry with the community forestry program for administrative purposes – whilst recognizing the unique evolution and potential for both of these models

Strengthen the regulatory environment to enable patches of national forest not demanded by communities to be leased to private entrepreneurs, or managed under Private Public Partnership (PPP) for commercial sustainable utilization.

Develop a cross-sectoral watershed conservation policy as part of FSS to integrate soil and watershed conservation actions into the strategies and plans of other sectors (roads, hydropower, agriculture, local government and environment) and utilize climate change adaptation funds for their implementation.

Identify appropriate forest management modality for forests in High mountains and Chure, and forests that are not community based, or protected areas.

5.4 Forest sector contribution to economic development


Place more emphasis on commercialization of forest products. Develop strategies to support and foster forest-based enterprises – especially small-scale enterprises in rural areas. Focus on strategies to create sustainable jobs, cash incomes and legitimate forest based enterprise that will benefit poor people and disadvantaged groups such as women, social discriminated people, geographically isolated households, rural based people and youth.

Work closely with the private sector to identify viable investment opportunities, sources of finance and by providing a stimulating and supportive enabling environment for investment and growth in the forest sector.

Take advantage of the high demand for forest product-based commodities to follow a more strongly commercial direction for the forest sector but at the same time recognize that there

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are many poor dependent on subsistence forest products for their livelihoods. Maintain a balance between local needs, commercial interest and economic growth.

Deregulate harvesting and transport of forest products and enterprise establishment rules to create a more supportive environment to enable private tree and forest owners, community based forest management groups and others to use their available sustainable forest production for ‘green jobs’ and forest enterprise and cash incomes.

Promote Nepal’s forest products internationally and remove barriers to the export of niche products and high value (but low volume) to international markets.

Promote the commercial cultivation of medicinal and aromatic plants on private lands through extension and demonstration. This will reduce pressure on wild resources.

Develop and manage information and monitoring systems for Nepal’s forest-based industry sector.

Forest products coming from private land or cultivated NTFPs/MAPs products need to be dealt like agricultural products with no VAT.

Permit regime for private forest and trees need to be simplified to stimulate greater levels of planting and management of forest and trees in private land.

5.5 Forestry sector contribution to social inclusion and poverty reduction


Continue to support local forest groups in governance and targeted actions to address the needs of their poor and socially disadvantaged members. Enable the local forest groups to develop opportunities for jobs and cash incomes in rural areas.

Strengthen any necessary legal provisions by revising the Forest Act to ensure that the legal autonomy of local forest groups is strengthened and ensured.

Ensure intellectual property rights/ patent rights/ genetic resources and knowledge about community and other community-based forestry approaches that Nepal has generated be used to benefit poor people.

5.6 Forest biodiversity and environmental conservation


Develop a scientific basis with participatory and open process for the establishment of new PAs and botanical gardens. Creating new protected areas need to take into account local needs as well as national and international needs of biodiversity conservation.

Explore opportunity for biodiversity conservation outside formally protected areas through land-use management incentives and regulation.

Develop a fairer and more transparent compensation system for the effects of human wildlife conflict.

Work closely with the private sector to continue to promote Nepal’s PAs as tourist destinations whilst at the same time spreading the pressure of visitors and infrastructure more

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widely and away from critical habitat areas. Also rejuvenate the critical habitats to reduce the pressure.

Develop a workable mechanism for investing a part of hydro-power royalty for the conservation of concerned watersheds.

5.7 Forestry sector response to climate change


Harmonize Nepal’s REDD+ strategy fully into the framework of the new FSS. Ensure that REDD+ does not become separate from other forest sector strategies focusing on poverty alleviation, economic growth or biodiversity conservation.

Promote the use of local forest groups as implementers of LAPA. Build climate resilient actions into management plans for forests under all management modalities.

Integrate adaptation actions defined in NAPA into forest sector planning and administration.

Explore the future options for the compliance market for carbon in Nepal’s forest sector – for example focusing more on other climate-related services such as water or biodiversity.

Continue to pilot PES activities with a view to expanding this approach to financing for forest management and conservation in future (including carbon finance and other environmental services)

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6 CONCLUSION

Review of the MPFS has provided an enormous opportunity to learn from the rich and varied experiences of its implementation over the past 25 years. This learning will considerably enrich the forthcoming Forestry Sector Strategy.

Only one of the six primary programs of MPFS (Community & Private Forestry) can be said to have been an overwhelming success (in that it exceeded most of its stated goals) whilst two others (Soil Conservation & Watershed Management and Conservation of Ecosystems and Genetic Resources) have also shown significant achievements over the past 25 years. Nonetheless, the achievements of private forestry program have been very limited. Similarly, the remaining three primary development programs (National & Leasehold Forestry, Wood-based Industries and Medicinal & Aromatic Plants and Other Minor Forest Products) have achieved very little. The six supportive development programs of MPFS, despite their importance, have been somewhat neglected have thus had little impact – possibly because responsibility for their implementation was less clearly defined. Nowadays, their importance is, if anything, greater than it was in 1988. Policy & Legal Reform, Institutional Reform and Human Resources Development are especially important to ensure the effective implementation of most other aspects of forest policy. It is also apparent that aspects of climate change & forestry and gender, social inclusion and poverty alleviation were rather overlooked in the MPFS. Despite this there have been some important achievements in these areas and this needs to continue into the future by ensuring their explicit incorporation into the new Forestry Sector Strategy.

In addition to describing, reviewing and analyzing the main achievements and the main failings of the MPFS, this synthesis document has enabled some important guiding principles to be identified. Guiding principles can be defined as critical approaches or philosophies that can be applied to a range of different implementation situations. Past experience has shown that unless this happens, the actions themselves or the directions taken will prove to be less effective. In the context of the forthcoming Forestry Sector Strategy it is concluded from this analysis that these important guiding principles should underpin or be applied to all aspects of the strategy including policy directions, strategic priorities and implementation modalities. The FSS therefore needs to be designed and implemented with these principles firmly in mind. Considering their critical importance for the FSS they are briefly described here:

6.1 Sustainable management of forest resources

This guiding principle is nothing new and in fact was pivotal to the MPFS. However, after 25 years much of Nepal’s forest resource remains unmanaged and without a clear management modality. Unmanaged forests are subject to unsystematic exploitation and unsustainable use and as a result are rapidly becoming degraded. They contribute very little to national or local economic development or to the sustainable livelihoods of adjacent populations and their environmental services are unlikely to be sustained into the future. By contrast, sustainably managed forests (under a range of proven management modalities) are able to contribute significantly to Nepal’s national and sectoral development goals. This leads to the conclusion that for Nepal, the default scenario for many forests i.e. a continuation of their unmanaged status is not a sustainable or desirable option. In future, significant effort is needed to bring all forests under an identifiable and sustainable management regime – reflecting a range of location-specific management objectives including local and national economic growth, biodiversity conservation, supply of forest products and sustainable provision of environmental services.

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6.2 Resource tenure and people's rights

The fundamental importance of upholding and enhancing people’s rights is unchallenged in the country’s ongoing and lively constitutional debate. However, in the forestry sector it is in the interpretation and in the application of these principles that there is still considerable diversity and deficiency. The principle of upholding people’s rights can be applied very widely to cover many aspects in the forestry sector including: rights to a share of productive resources, to environmental services, to economic benefits and jobs and to establish, manage and benefit from environmentally sustainable enterprises. Furthermore, experience of the MPFS implementation has shown that right of people to have voice and influence over all aspects of resource tenure, use and decision-making affecting their own livelihoods is a critical factor for effective development – especially for those groups in society that have and continue to be disadvantaged or marginalized. The forthcoming FSS needs to encapsulate the principle of people’s rights and ensure a common understanding of them across all implementation activities to shift entrenched and outdated attitudes and to ensure that strategic sectoral goals are met.

6.3 Employment and economic growth

Whilst employment and economic growth was always an underlying aim of the MPFS – it tended to suffer from being segregated into only certain specific parts of the overall strategy (i.e. into certain programs). Experience of the MPFS has shown that (a) all programs have a potential contribution to make towards national and local employment and economic growth and (b) that this broad area needs to be more pro-actively pursued in future. The forestry sector’s real contribution to employment and economic growth is still not fully recognized although it is clear that the actual contribution at present is considerably less than the potential. Forests represent a natural resources that can be sustainably managed to produce a range of outcomes all of which can directly or indirectly affect economic growth. This need not be limited to ‘commercial’ forest management – but can be applied to all parts of the sector in terms of environmental and climate services, biodiversity and habitat conservation, local forest management to meet local people’s needs and forest-based enterprises.

6.4 Partnership and collaboration among state, civil society and the private sector

Possibly the most important lesson that has emerged from this review concerns the importance of the relationships between different actors in the forestry sector and their contribution to effective achievement of goals. There has in the past tended to be an element of polarization of the roles of different actors e.g. community forests as the sole responsibility of local people, protected areas as solely under DNPWC, the private sector being required only for commercial logging and forest product utilization. However, over the past 25 years the capacities and roles of all forestry sector actors have become greater and broader. Mechanisms are now needed to capture this change and to apply it the conservation, management and utilization of forest resources and decision-making processes in the forestry sector in a way that has not previously happened. The analysis has shown that where effective partnerships and collaborative mechanisms can be established – these are far more effective than single institutions or individual organizations acting independently. The scope of partnerships between the three principal groups of actors (state, civil society and the private sector) is very broad and a variety of different collaborative arrangements have been tested and applied in the past. Partnerships and collaboration therefore represents an important guiding principle for the approaches and modalities of the forthcoming Forestry Sector Strategy.

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ANNEX 1 – MASTER PLAN FOR THE FORESTRY SECTOR (OUTLINE)

MPFS: Project Reports

1. Executive summary2. Main Report

Sub-plans

3. Forest development plan for the supply of main forest products4. Forest-based industries development plan5. Wood-based industries

a. Medicinal and aromatic plants and other minor forest productsb. Soil conservation and watershed management plan

6. Plan for the conservation of ecosystems and genetic resources7. Forest resources information status and development plan8. Forestry research development plan9. Human resources development plan10. Forestry sector policy11. Institutional development plan12. Impacts and monitoring plan

a. Environmental impact assessmentb. Financial and economic analyses

Supporting Report

13. Country background

MPFS: Programs and Components

For development program (including the supportive development programs) separate components were identified in MPFS. Physical and financial targets for the period 1998-2010 were included for the programs and their components. These are not reproduced here but are readily available in the original MPFS documents.

Primary Development Programs

1. Community & Private ForestryMain components:

Management of natural forests and enrichment planting of degraded forests, both as community forests

Establishment and management of community forests in open and degraded areas Distribution of seedlings, initially at a subsidize rate, but later through private

commercial nurseries to encourage the establishment of private tree farms

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Encouraging the use of fuel-efficient stoves of fuel-wood substitutes like biogas by supporting their development production and distribution.

2. National & Leasehold ForestryMain components:

Forest land classification study Establishment and management of national production forests in suitable places to supply

wood to urban and wood-deficit areas Leasing of forest land that is available and suitable for industrial plantations Trial planting and, where trials are successful, larger-scale plantations on degraded lands Silviculture and yield regulation in natural forests

3. Wood-based IndustriesMain components:

Securing and increasing the supply of wood through: (i) rationalizing the system for allocating wood (ii) reducing wastage and better utilization of residues (iii) improving management of national forests (iv) establishing industrial plantations

Improving and expanding existing industries through: (i) more supportive industrial policies (ii) more detailed studies and planning (of market potential and products) (iii) increased financing and (iv) expertise and training

Promoting foreign trade and developing marketing capability through: (i) improving marketing skills, marketing intelligence services, trade policies etc. (ii) encouraging export of high value products and (iii) relaxing import of raw materials and wood products in short supply

Developing the Forest Products Development Board from merely being a timber harvesting agency to being one that can effectively backstop wood-based industrial development

4. Medicinal & Aromatic plans & Other Minor Forest ProductsMain components:

Establishment of regional herbal centers Systemizing the collection of minor forest products such as lokta, pine resin, and sal

seed Establishment of plantations based on minor forest products to provide secure raw

materials Follow-up measures to address problems relating to collection, marketing etc. Cultivation of medicinal and aromatic plants and selected minor forest products Development of industries based on medicinal and aromatic plants and other minor forest

product5. Soil Conservation & Watershed management

Main components: Land treatments in areas of critical importance through preventive measures Land treatments in areas of critical importance through rehabilitative measures Conservation education and extension

6. Conservation of Ecosystems & Genetic ResourcesMain components:

Protected area management through: (i) developing infrastructure (ii) building relationships with adjacent people by conservation education and developing alternative energy sources (iii) habitat management (iv) paying better attention to population

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dynamics (v) visitor management and tourism and (vi) protection of natural and cultural values

Genetic resources conservation Visitor use and tourism in protected areas Preservation of natural and cultural values Institutional strengthening for effective program implementation

Supportive Development Programs

7. Policy & Legal Reform Main components/commitments:

Legislation to facilitate the introduction of socially and economically sustainable forestry to accommodate the needs of primary users such as women and ‘woodcutters’ in accordance with government policies on basic needs and decentralization

Application of law enforcement to forest protection will be clearly defined and limited to areas of priority national interest

Involving industries in decision-making, investment and management Parastatals will be provided with appropriate roles that will enhance their social and

economic contributions DFOs will take over implementation of development programs in the field The responsibilities of the forestry sector in regard to pasture development will be

defined Forestry legislation will be publicized

8. Institutional ReformMain components/commitments (selected items only):

Reorganization proposal for the Ministry of Forests accepted by government in 1988. This restructured the Ministry of Forests and Soil Conservation broadly in line with the component programs of MPFS

Continuing reforms will be undertaken to: (i) strengthen the ministry as the primary implementing agency within the forestry sector (ii) find an appropriate place for law enforcement as a complementary strategy (iii) define the role of forest sector parastatals with special attention to their socio-economic obligations and their positive and negative effects on national development (iv) integrate projects within permanent implementing organizations without establishing separate project entities (v) review coordination arrangements between ministry and other government agencies and (v) consider the need for a new environmental authority in response to national and international concerns

Move towards the long-term organizational model described in the MPFS (various points are described) and whilst observing a number of key principles (also defined)

9. Human ResourcesMain components:

Assessment of manpower and training needs Improvement of forestry and forestry-related education and training Development of vocational forestry training Establishment of a network of national and regional training centers Training programs for extension workers and community leaders Provision of career opportunities for staff

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10. Research & ExtensionMain components:

Research in support of forest management Research in support of utilization Research in support of protection and conservation Research in support of policy research Related extension, information, publication components

11. Resource Information & Planning AssistanceMain components:

Establishment and support for the National Land Resources Centre through acquisition of remote sensing data, digital image processing, development of GIS network in forestry and other ministries and acting as a central exchange for resource information

Establishment and support for the Forest Survey and Statistics Division through computerization, image processing and remote sensing facilities, map production and other resource information

12. Monitoring & EvaluationMain components:

Design of M & E system Measuring indicators, cross checking and external evaluation Data processing, analysis and recording of information

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ANNEX 2 – MPFS IMPLEMENTATION AND ACHIEVEMENTS MATRIX

MPFS Program Policy, legal and regulatory framework achievements

Synthesis of MPFS program implementation

Synthesis of Achievements & Impacts

Synthesis of Gaps & Failures

1. Community & Private Forestry

Forest Act (1993) provided considerable autonomy to CFUGs

CF Guidelines and Bylaws (various editions) have strengthened the implementation modalities, sharing arrangements and equitable targeting of CF under this Act.

Priority program with a planned 46.6% share of allocated financial resources

MPFS estimated that 1.8 m ha (mainly in the Middle Hills) would be brought under local management.

Actual area of CF increased from 57,000 ha (1988) to 1.7 m ha (2013)

65.7% of forests in Middle Hills have been handed over as CF and membership of CFUGs has reached 2.24 m households or 64.7% of households in the Middle Hills (2013)

700,000 improved stoves installed

228,000 biogas plants installed.

Increased numbers of trees on private land (but quantitative

About 59% of the real program costs were borne by communities and private forest owners.

CFs now have an estimated mean volume increment of 2 m3/ha/yr. i.e. CFs have increasing their growing stock substantially.

2.2 million m3 of fuel-wood and timber sustainably supplied from CFs and private forests per year (2011).

Percentage of household fuel-wood collectors using CFs increased from 12% (1995) to 44% (2011) and using private forest from 19% (1995) to 24% (2011).

Percentage of fodder collectors using CFs (as opposed to government forests) increased from 10% (2004) to 17% (2011).

About 164,000 m3 of round

Employment generation by CFs is low – estimated at 2 person years per CFUG.

MFPS did not foresee sales of forest products outside CFUGs. The importance of this has increased as Nepal moves towards a cash economy and as dependency on subsistence forest products declines e.g. agriculture contribution towards GDP reduced from 60% (1988) to 335 (2013).

Lower rate of handover of CF in high mountains and Tarai/Inner Tarai.

Dilution of rights of CFUGs as provided for under the Forest Act (1993) especially relating to use, management and sale of forest products from CFs by a sequence of circulars, administrative orders and other decisions. These

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data not available). wood supplied from CFUGs (2010). This is 58% of the total timber supply. 27% came from private forests and 12% from government forest.

Various environmental impacts reported e.g. increased water discharge from sources, increased dry season water discharge, increased biodiversity, reduced but rarely quantified.

Reduced incidences of forest forests, grazing and encroachment of CF – but rarely quantified.

Enhanced social capital through (i) effective and increasingly equitable community based institutions (CFUGs) (ii) local and national networking of CFUGs and (iii) proliferation of grassroots NGOs providing supporting services to CFUGs.

Enhanced physical capital (community infrastructure) financed through CFUGs.

have increased transaction costs and hampered the growth of small-scale forest based industries.

Permit regime for utilization of trees on private land acts as a disincentive for further planting and nurturing of such trees for commercial and employment objectives. This is compounded by charging VAT on private forest products which adds to the transaction costs.

Various cases of illegal harvesting in CFs have compelled action to be taken against forest officials and executive members of CFUGs.

Many CFs have underutilized potential for sustainable harvesting of timber and other products (sometimes several times greater than current levels).

The overall increased level of tree cover on private land is more likely to be due to rural-urban

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migration and conversion of marginal agricultural land to forest rather than sponsored tree planting initiatives and extension services.

2. National & Leasehold Forestry

Forest Act (1993) made provision for lease of degraded forest (less than 20% canopy density) for commercial and scientific purposes.

Rules (under Forest Act) only permit corporate sector involvement in new plantations (not existing forests).

Procedures were developed (2011) for pro-poor leasehold forestry under the provisions of this Act.

Land Use Policy has recently (2012) been prepared by the Ministry of Land Reform and Management but it is rather general when applied to forests and lacks an implementation mechanism.

About 14% of the total forest land available as leasehold forest has been allocated for tree-based forestry purposes.

To date 82% of leased forest land is for non-forestry purposes e.g. army, police, hydro-power development.

Operational forest management plans (OFMPs) have been prepared for 19 Tarai districts (but have not been implemented).

District Forestry Coordination Committees (DFCCs) have been established to ensure multi-stakeholder engagement in forest planning and conflict resolution at local levels.

District-wise forest development funds have been established – but operational modality for these is not yet agreed.

Under the pro-poor leasehold forestry program (not originally envisaged in MPFS) about 41,300 ha of degraded forest land have been leased to poor families for their use. Almost 7,000 leasehold forestry groups have been formed.

A model of collaborative forest management (not envisaged in MPFS) was developed for

Land-use classification system for forests (or zonation) has not yet been operationalized.

Very little progress has been made with management of National Forest (Government-managed) for commercial production.

No national forest has been leased to private parties for sustainable utilization.

Tarai forests continue to degrade and are largely unmanaged.

High altitude forests are still largely unmanaged.

Conflicts over use-rights especially between distant and adjacent users continue (especially in the Tarai)

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involving local government/DFO and distant/local users in forest management.

3. Wood-based Industries

Provisions were initially developed to require parastatals e.g. TCN to compete on equal terms with private enterprise. However these provisions were soon relaxed and TCN retains its effectively subsidized status.

The MPFS envisaged that revenue would be generated to support forest development and management from the payment of economic prices for forest products from national forest. Royalty has recently been increased but it is not linked with the costs of production and management and sufficient investment support for national forest management is still lacking.

About 20 billion NRs is invested by the private sector in about 5,000 industries/establishments in timber and non-timber based forest industries.

Community and private forests have become significant sources of timber and wood products.

A number of forest-based enterprises based around community forest user groups have arisen.

There has been a significant increase in imports of timber (from Myanmar, Malaysia, Vietnam, Nigeria) to meet national demand, and substitution of timber products by steel, aluminum, PVC etc.

Small-scale wood processing e.g. for plywood veneer has expanded as the road network has developed (based mainly on trees on private land).

About 200,000 persons are directly or indirectly employed in the sector.

The MPFS proposed a strategy to free internal trade and transport of timber and fuel-wood from all restrictions. However there are still various restrictions in place that restrict this free trade.

Low cost financing is not available for forest-based industries (for renovation, improvement of productivity, expansion, and pollution control facilities) despite the provision made in the MPFS.

Import of raw materials for forest-based industries was not liberalized (as proposed in the MPFS)

There is still a strong requirement for support for technical and vocational training in forestry.

National forest resources are still not fulfilling their productive

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potential (especially in the Tarai).

Supportive policies and regulations are required to stimulate the growth and survival of forest based industries.

4. Medicinal & Aromatic plans & Other Minor Forest Products

NTFP Policy developed (2004). This also identified and prioritized MAPs for trade.

10 new herbal centers and 4 new herb processing centers were established. Data is somewhat limited on other aspects of this program under MPFS.

The MPFS placed production targets on some key NTFPs such as lokta, pine resin, sal seed and herbs. Actual production has fallen far short of these targets (and sal seed production has ceased altogether).

There are increased numbers of enterprises based on NTFP/MAP processing although monitoring data and systems are still insufficient.

Increasing numbers of community groups and households are engaged in aspects of the trade in NTFPs/MAPs and some products are having a significant impact on rural incomes e.g. yarsha gumba, lokta, chiraita. Govt revenues from some high value products e.g. yarsha gumba have also increased, and about 8% of the total export value accrues from this sub-sector.

Although there have been some achievements in development of the sub-sector, this program has failed to achieve its envisaged potential.

There are still numerous regulatory challenges to the registration of NTFP enterprises and sourcing, harvesting and transporting various products (including many arbitrary fees being imposed). Beneficiaries tend to be agents and middle-men rather than poor rural households.

Arbitrary royalties and VAT applied to various products (including those sourced on private or community land) act as a disincentive to enterprise

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development and job creation.

Trade barriers, lack of phyto-sanitary standards and capacity to process products to export quality are major limitations that have yet to be addressed.

5. Soil Conservation & Watershed Management

Soil and Watershed Conservation Act (1982) predated the MFPS (and protection and regulatory measures have not been implemented).

Relevant policies include Water Strategy (2000), Water Plan (2005) and Land Use Policy (2012)

A Soil Conservation and Watershed Management Plan has been developed focusing on interventions at sub-watershed level. Recently, programs have started to link watershed management with river basin systems.

413 watershed management plans, 304 sub-watershed management plans and 1,167 community development plans prepared by 2010.

Conservation activities have included 5,746 ha (on-farm conservation); over 10,000 ha of degraded land restored; 1,600 gullies and over 1,000 landslides stabilized; 1,489 water sources protected and 847 conservation and run-off harvesting ponds constructed.

More than 412,000 copies of various extension materials have been distributed and 150 adult education packages have been implemented.

Awareness of watershed protection needs and of techniques has been enhanced. However, the lack of regular watershed monitoring has not allowed program impacts over time to be properly assessed.

DSCWM staff have worked closely with communities and civil society organizations for implementation of conservation actions.

There is an increasing awareness amongst government agencies and other participating organizations of the need to mainstream disadvantaged groups in soil and watershed conservation program activities.

The scale of actions being implemented is small compared with actual requirements. Interventions tend to be limited to relatively small areas.

Climate changes (especially the more frequent occurrence of extreme weather events) has exacerbated problems relating to soil and watershed conservation.

New approaches – such as Payment for Ecological Services, have been piloted in a few locations although they are still poorly understood and their wider-scale potential has still to be fully explored.

6. Conservation of There has been a fundamental Increase in PAs from 10,798 km2 Buffer zone management and the Despite policy shifts, the legal

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Ecosystems & Genetic Resources:

shift in conservation policies away from 'people exclusionary' and 'species focused' to 'people-cantered and community based' approaches.

An ecosystem/landscape approach is now largely followed.

A new Wetlands Policy has recently been approved (2013).

in 1988 to 34,185.52 km2 in 2011 representing 23% of the land area of the country.

Increase in the population of several protected animals (tiger from 98-198; rhino from 358-534; wild buffalo from 63 to259).

Other species have fared less well e.g. number of threatened bird species has increased from 133-149 between 2004-10. Wetlands are particularly threatened.

Increase in the number of botanical gardens and zoos (from 5-11)

The national herbarium has been developed and expanded. Successful breeding programs for key species such as vulture, elephant and gharial are underway

Successful translocation programs (rhino, blackbuck) have taken place.

establishment of Buffer Zone Users Groups have enabled local people’s livelihoods to benefit from PAs as well as conserving biodiversity.

Communities, local authorities and civil society organizations are involved in supporting PA management and associated livelihoods programs.

Wildlife poaching control measures continue. 2011 was celebrated as a zero poaching year for rhino.

framework around PAs is still contested including PA declaration, PA governance, power sharing between government authorities and local citizens and equity aspects of benefit-sharing.

Wildlife poaching and trade remains a serious challenge despite establishment of wildlife crime control committees.

Human-wildlife conflict is increasing around many PAs.

High concentrations of visitors have threatened habitats in some well-visited areas.

Expansion of alien invasive species has taken place in some PAs and other areas.

Working style of concerned government agencies have not evolved sufficiently in accordance with now policy directions (people focused and gender sensitive)

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Visitor numbers and revenues have increased in the more popular national parks.

7. Policy & Legal Reform

Forest Policy (1989) and revised Forest Policy (2000).

Forest Act (1993) has been instrumental for achieving the goals and objectives of MPFS. A series of regulations, guidelines and directives were subsequently developed as legal instruments for effective implementation of the Act.

Additionally, the 8th-10th Five Year Plans and the subsequent 3-year interim plans have made provision for actions in the forest sector that contribute to Nepal’s wider development goals.

MFSC has prepared a gender and social inclusion strategy (GESI) many aspects of which are being implemented through regular planning processes (especially at grass roots level)

Whilst there have been important forest policy and legal reforms these have not been implemented evenly across all the program components of MPFS. Where such reforms have taken place, they have been fundamental for the successes of the concerned programs e.g. with Community and Private Forestry; Soil Conservation and watershed Management and Conservation of Ecosystems and Genetic Resources. The reforms that were required to enable similar success with National and Leasehold Forestry (with the exception of pro-poor Leasehold Forestry) and Wood-based industries have not taken place and these programs have suffered in consequence.

The Forest Policy (1989) and Forest Act (1993) have been instrumental for achieving the goal and objective of MPFS. The Forest Regulation (1995) and subsequent guidelines and directives have significantly determined the direction and impact of various programs, most notably the Community and Private Forestry Program. The impact of this has been to contribute to bringing 1.7 m ha of forest under sustainable community management and enhancement of the livelihoods of about 2.24 million households in rural areas.

Despite the policy and legal reforms that have taken place, after 25 years there have been numerous social, political and economic changes in Nepal necessitating further reforms in the policy and legal framework to ensure consistency with these whilst some of the original requirements are still unmet.

Critical new policy areas that need to be addressed include the forest sector’s response to climate change; greater emphasis on jobs, enterprise, private investment and product commercialization as Nepal develops economically and greater consistency and complementarity between forest sector policies and those of other sectors and national development policies.

8. Institutional Major MFSC institutional Broad restructuring in 1989 As a result of 1989 reforms Reforms failed to capture the

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Reform reforms at Department level took place in 1989. However, further downsizing (across all government) led to drastic reduction of staff and divisions within MFSC.

A Forest Research and Survey Centre (FORESC) was created to promote and target forestry research within MFSC, but it was later reconverted to a Department.

followed by further reforms in 1993 and 2000 (driven by GoN Administration Improvement Commission).

The 1989 reforms focused on renaming or creating of departments, divisions and sections and changes in staff positions and posts. 1993 and 2000 reforms were more focused on staffing. 5 Regional Forest Directorates were taken out from DoF and kept directly under the MFSC to supervise all sectoral activities

Efforts were made to restructure, dismantle or privatize the parastatals.

MFSC departments and divisions better placed to implement MPFS programs.

MFSC’s GESI strategy has been a significant new factor in institutional reform – especially by highlighting social and equity issues within MFSC institutions

Reducing the number of parastatals reduced the overall size of MFSC. Although TCN still remains as a key player.

Some new opportunities have been created for stakeholder participation on sector governance.

spirit of MPFS and could not address the more fundamental issues of sector governance, the forestry sector's social image, working environment, attitudes and culture of forestry organizations.

Institutional reforms have taken place – but government continues to predominate in the forest sector and the sector is over-administered whilst non-government institutions could be given a more significant role.

Government forestry sector institutions are viewed as old-fashioned and ineffective and are characterized by over-administration.

Sector governance issues are still widespread – compounded by disorganized functioning and mismanagement.

Inadequate efforts were made to strengthen governance, foster a more conducive working

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environment, change established mind-sets and commitment and enhance staff motivation.

Implementation of GESI has been weak.

Genuine and effective participation of sector stakeholders in decision-making and holding government to account do not exist except perhaps at the lowest (grass-roots) level.

TCN continue to be provided with subsidized access to forest products that undermined private sector involvement.

9. Human Resources Civil Service Act (1993) with various subsequent amendments (not part of MPFS)

Comprehensive MFSC HRD strategy prepared (2004) – but never approved or implemented.

5 Regional training centers established and implementing a comprehensive series of training courses.

Several institutions (in Nepal) now offering a range of forestry-

Overall skills levels and capacities of MFSC staff and of staff and individuals within civil society organizations enhanced significantly.

Enhanced capacities at community level.

Increasing numbers of forestry professionals pursuing their

Many aspects of HR systems and procedures within MFSC still inadequate. Non-implementation of the HRD strategy has been partly the cause. Issues include: include: weaknesses in recruitment, appointment, terms and conditions, performance appraisal, career path development, transfer,

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related qualifications from certificate level to PhD.

careers outside of government institutions.

promotion, codes of conduct, counseling, training, promotion and grievance handling; lack of a comprehensive readily available HR database; lack of individually assessed training needs and weak link between training and job performance.

Poor representation of women and other disadvantaged groups at all levels (despite GESI strategy)

Loss of quality staff to international organizations and projects

10. Research & Extension

No official research policy for forestry. Research strategy has been prepared but is awaiting approval.

Overall progress with both research and extension has been limited by resources and lack of a clear direction.

Extension program has contributed to awareness and support for community forestry. Research has shifted towards the demands of community forestry.

A wide range of research and associated publications focusing on socio-economic aspects is now available (largely produced outside government research institutions).

Research and extension inadequately resourced and with unstable institutional bases (frequent changes)

Extension outreach is duplicated across different departments of MFSC and nowadays is limited to the publication of annual reports and some radio programs

There is limited outreach of some parts of MFSC e.g. TCN,

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HPPCL etc.

Lack of an extension coordination mechanism with local government.

Limited numbers of specialized forestry researchers are employed by government institutions.

Research is still largely viewed as ‘scientific knowledge’ rather than information sharing to address key issues.

11. Resource Information & Planning Assistance

Institutionalization of a participatory and bottom-up planning process within MFSC.

Policy provisions for gender and social inclusion being implemented at grass roots levels in community organizations.

Plans of various types have been produced including District Forest Sector Plans; Park Management Plans, Watershed Management plans and Community Forest Operational Plans – mostly with involvement of local communities and local administration.

The proportion of Nepal’s forest covered by management plans has undoubtedly increased although data on this is not properly monitored.

GIS capacity exists at different levels – including at many district offices and is used for local planning.

District Forest Sector Plans (DFSPs) have been prepared for many district in collaboration with local authorities and different line departments.

Bottom-up and participatory planning process (for annual planning) is institutionalized and being implemented within

There is a great need for a comprehensive national forest resource assessment and the disaggregated datasets for planning at different levels and for national REDD+ processes. Project is underway to deliver this.

Although management plans of many kinds have been prepared they frequently become outdated and are often not implemented.

Shortages of qualified staff to

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Currently a National Forest Inventory is underway. Otherwise, earlier national level inventory data is patchy and outdated.

MFSC MIS system and CFUG database system have been established and are updated.

MFSC planning processes are streamlined and inclusive.

MFSC. analyze a range of data types and to conduct specific studies (in practice many such studies are outsourced)

Although participatory processes are in place there is some imbalance between different stakeholders and also a tendency to loose transparency and for govt. to take unilateral decisions.

13. Monitoring & Evaluation

All the line agencies and MFSC carry out input output monitoring as specified by the National Planning Commission. But this is not linked with outputs nor specifically with MPFS.

MIS systems have been established by different departments in MFSC.

MPFS suggested periodic review of the Plan but this was not carried out except during the preparation of some periodic plans.

CFUG database is maintained by MFSC and is comprehensive whilst other departments maintain separate databases – but these are not specifically linked with MPFS.

No mid-term or interim monitoring of MPFS took place over 25 years.

There are insufficient monitoring systems within MFSC focusing on economic aspects of the forest sector.

Departments and some divisions of MFSC such as Community Forest Divisions have databases but these are not integrated at the sectoral level

Forest sector monitoring is driven by National Planning

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Commission requirements rather than those of MPFS

GESI-focused monitoring is not actually implemented systematically.

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ANNEX 3 – NEPAL’S INTERNATIONAL COMMITMENTS

This Annex lists the international treaties and conventions relevant to the forest sector to which Nepal is a signatory.

1. International Plant Protection Convention (IPPC) 1952 2. Plant Protection Agreement of the Asia and Pacific Region, 19563. Convention on Wetlands of International Importance Especially as Waterfowl Habitat

(Ramsar Convention), 19714. Convention on for the Protection of the World Cultural and Natural Heritage, 19725. Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES),

19736. A series of agreements on various dates 1986–1994 under the auspices of what was then the

WTO GATT (the General Agreement on Tariffs and Trade) including:a. Trade Related Intellectual Property Rights (TRIPs)b. Agreement on Agriculture (AoA)c. Agreement on application of sanitary and phyto-sanitary measures

7. ILO convention No. 169, (Indigenous and Tribal Peoples Convention) 19898. Rio Declaration on Environment and Development 1992 (Rio Principles)9. United Nation Convention on Biological Diversity, 199210. United Nation Framework Convention on Climate Change, 199211. International Tropical Timber Agreement (ITTA), 199412. Convention to Combat Desertification in those countries experiencing drought and or

desertification, particularly in Africa 199413. Kyoto Protocol to the UNFCCC, 199714. UN Millennium Development Goals (MDGs), 200015. Cartagena Bio-safety Protocol to the CBD, 200216. UN Non-legally binding instrument on all types of forests, 200617. 16th Summit (2010) Thimphu Silver Jubilee Declaration “Towards a Green and Happy South

Asia” 18. Rio+ 20 declaration 2012 (Future we want)

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ANNEX 4 – A FRAMEWORK FOR FORESTRY SECTOR GOVERNANCE1

Governance components

Sub-components Quantifiable Indicator

Transparency, accountability and public participation

Transparency in the forest sector

Public availability of forest data, plans, laws, budgets and other information relevant to forest use and management Public notice of an pending forest agency actions Transparent allocation of timber and NTFP concessions and forest services

Decentralization, devolution and public participation in forest management

Forest communities have institutional roles in creating public forest management rules and plans Accessibility to forest resources by local communities Supporting framework for participatory forest management Forest agencies are responsive to public input Participatory processes structured to promote consensus

Accountability of forest officials to stakeholders

Feedback to stakeholders about forest resources and their management Presence of autonomous organization for monitoring activities Influence and interest of civil society organizations on forest issues

Accountability within forest agencies

Management in the forest agencies/departments is oriented towards accountability Clear statement of forest management strategy or goals Goals and objectives of forest management disseminated to rank and file officials Forest officials evaluated and held accountable for failures to meet stated goals

Stability of forest institutions

General stability of forest institutions

Risk posed to forest management from changing forest agency budgets, leadership or organization Risk posed to forest management from changing or inconsistent laws and policies and their implementation Risk posed to forest management due to unreliability of tenure insecurity

Management of conflict over forest resources

Perceived fairness of distribution of rights Level of conflicting claims over public forests Prevalence of violence or use of arms by forest users

Quality of forest administration

Willingness to address forest sector

Commitment to legality, certification, and sustainable management of forests Support for adoption of forest practices code

1 World Bank (2009) Roots for Good Forest Outcomes: An analytical framework for governance reforms

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issues Support for private certification Support for codes of professional conduct among foresters and civil servants Institutional separation of key functions – legislative, administrative and control Signatory to and quality of implementation of international commitments related to forestry Maintenance of workable forest policies Collaboration with regional partners to harmonize forest policies and legal frameworks Cross-sectoral policy coordination Ability to revise and respond to change

Capacity and effectiveness of forest agencies

Public confidence in forest agencies Capacity of forest agencies Human resources, skills, and knowledge Equipment and tools Stability of budgets and quality of budget process Quality of forest resource management Quality of information about the forests Quality of planning and impact assessment (including cross-sectoral coordination) Activities in the forest are in accord with plans Commitment to sustainability Effectiveness of enforcement institutions Fairness and responsiveness of forest officers (and police, if involved in forest enforcement) Effectiveness of prosecutors and courts in forest matters Forest extension and environmental education efforts Independence of civil service from political pressures Taxes on forest products and services uniformly applied and collected Availability of incentives to practitioners of responsible forest use and management

Corruption control within the forest sector

Revenues from forests accounted for Budget transparency Audits of forestry projects Existence of government anticorruption institutions and measures, including channels for reporting corruption and

whistle-blower protection Effectiveness of anticorruption institutions and measures

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Clear code of business conduct for forest industries Presence of strong nongovernmental watchdogs

Forest monitoring and evaluation

Continuous forest inventory of plots established and measured regularly Documentation and record of forest management and forest activities to facilitate monitoring Results of M&E are incorporated into new forest management plans Result of monitoring are readily available to the public Local people are involved in monitoring of forest resources

Coherence of forest legislation and rule of law

Quality of domestic forest legislation

Forest legislation effectively and efficiently implemented by forest agencies Avoids legislative overreaching Avoids unnecessary and cumbersome requirements Enhances transparency and accountability Informal rules, where present, are consistent with formal rules Forest legislation is consistent with participatory governance Gives local actors a stake in good management Developed with public involvement Clearly states how local people can play a meaningful part in planning, management, and allocation of forest resources

Quality of civil law implementation

Forest laws are actually applied Labor, safety, environmental, human rights, and other laws are applied in forest settings

Quality of criminal law implementation

Suppression: Credible and graduated sanctions, consistently applied Detection: Capacity to detect illegal activity Prevention: Number of forest-related crimes Organized crime General crime

Quality of forest adjudication

Access to courts or arbitrators Fair, honest, and independent Affordable, rapid Enforceable outcomes

Property rights recognized/honored/enforced

Formal and informal rights to forest resources in harmony Security of property rights to forest resources, including carbon Quality of forest surveys, records, and cadastral maps

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Contracts and agreements honored/enforced Legality of land-lease contracts with international investors Support for community/small/medium enterprises

Economic efficiency, equity and incentives

Maintenance of ecosystem integrity: sustainable forest use

Knowledge of supply and demand for forest products and their alignment sustainable forest use Minimum safeguards for sustainability included in forest management plans Forest stakeholders have reasonable share in the economic benefits from forest use

Incentives for sustainable use and penalties for violations

Payments for protecting environmental services from forests Forest law enforcement should target illegitimate operations Expected returns from illegal use lower than the expected penalties imposed for illegal use

Forest products pricing

International market prices used as reference prices for traded products Internalization of effects of social and environmental externalities arising from forest resources use Removal of distortionary subsidies within the forest sector Forest resource allocation based on market prices

Commercial timber trade and forest business

International market prices used as reference prices for traded products Internalization of effects of social and environmental externalities arising from forest resources use Removal of distortionary subsidies within the forest sector Forest resource allocation based on market prices

Equitable allocation of forest benefits

Equitable pattern of land and forest resource tenure Adequate access and use rights where ownership is with the state (or contested) Equitable share of timber and NTFPs

Market institutions Competitive forest sector Use of appropriate incentives in forest management

Forest revenues and expenditures

Efficient system of revenue collection for timber and NTFPs Taxes, levies, and charges based on ensuring normal profits Efficient system of public expenditures for forestry Public expenditure tracking system operational in the sector

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