Deal #10825

The project includes plans to bring forest land under community-based forest management with new sustainable forest management plans. The target for this is 15,900 hectares. The project aims to establish smallholder forest plantations on public and private lands. The target area for private smallholder plantations is 5,000 hectares. The target area for public land managed by disadvantaged groups for plantation/agroforestry is 1,350 hectares. The project documents do not specify a total land area for the project, but based on the targets for the individual components, it can be estimated that the project will cover at least 22,250 hectares of land.

The Forests for Prosperity Project in Nepal has three main components: ● Policy & capacity building support for new government structures and processes for sustainable forest management: This component focuses on strengthening the policy and institutional framework for sustainable forest management in Nepal, particularly in light of the country's transition to a federal system. It involves providing training and technical assistance to government agencies at the federal, provincial, and local levels to enhance their capacity to manage forests sustainably. This component has a cost of $2.90 million. ● Community-based sustainable forest management and smallholder forest plantations: This component aims to promote community-based forest management and increase the area of forest plantations in Nepal. It involves working with local communities to develop and implement sustainable forest management plans, providing training and support for smallholder forest plantations, and promoting the sustainable harvesting and marketing of forest products. This component has a cost of $10.76 million. ● Forest enterprise improvement and development: This component focuses on developing and improving forest-based enterprises in Nepal. It involves providing financial and technical assistance to small and medium-sized enterprises (SMEs) involved in the forestry sector, promoting value addition and market linkages for forest products, and supporting the development of sustainable business models for forest-based enterprises. This component has a cost of $7.35 million.

While the Forests for Prosperity Project (FFP) in Nepal has a central focus on improving sustainable forest management and increasing benefits from forests, it doesn't have a specific component solely dedicated to carbon sequestration. However, several project activities are expected to significantly contribute to carbon sequestration and emission reduction. According to the "Nepal Forests for Prosperity Project" (P170798) appraisal document: ● Estimated total carbon sequestration: Over a 30-year period, the project is expected to sequester a total of 17.74 million tons of carbon dioxide equivalent (tCO2e). ● Average annual carbon sequestration: This translates to an average annual sequestration of 5.6 tCO2e per hectare. ● Sources of carbon sequestration: The sequestration is expected to come from two main sources: ○ Afforestation: Planting trees on degraded lands is estimated to sequester 2.19 million tCO2e over the project period. ○ Improved forest management: Implementing sustainable forest management practices in existing forests is estimated to contribute 15.55 million tCO2e over the project period.

The project aims to establish smallholder forest plantations on public and private lands. ● Transfer of National Forests: The project mentions handing over user rights of national forests to communities for their management Plantations on Public and Private Land: The project also supports the establishment of plantations on both public and private land ● Public Land: The project aims to establish plantations on degraded public land managed by Public Land Management Groups (PLMGs). The exact extent of available public land will be determined during the project implementation ● Private Land: The project will support farmers to establish plantations on their private land. It's implied that farmers will retain ownership and management of their land while receiving project support.

There is no info available on negotiations for forest plantation, however there is info on negotiation of loan for the country from World Bank The Executive Directors approved on July 8, 2020 a Strategic Climate Fund (SCF) Loan in the amount of US$17.9 million and a proposed SCF Grant in the amount of US$6.1 million to Nepal for a Forests for Prosperity Project on the terms and conditions set out in the President’s Memorandum (IDA/R2020-0269, dated June 26, 2020). https://documents1.worldbank.org/curated/en/696791598148022578/pdf/Minutes-of-a-Virtual-Meeting-of-the-Executive-Directors-of-the-Bank-and-IDA-and-the-Boards-of-Directors-of-IFC-and-MIGA-held-on-July-16-2020-and-Record-of-Approvals-July-1-thru-16.pdf KATHMANDU, March 19, 2021 – The Government of Nepal and the World Bank today signed loan and grant agreements for the $24 million Forests for Prosperity Project ($6.1 million as grant and $17.9 million as concessional loan) that will help Nepal advance sustainable forest management. https://www.worldbank.org/en/news/press-release/2021/03/19/government-of-nepal-and-world-bank-sign-24-million-financing-agreement-to-support-sustainable-forestry-and-boost-green-r

Based on the latest (published on 30 June) Disclosable Implementation Status and Results Report Components 1 and 2, focusing on policy and capacity building and community-based sustainable forest management, have made significant progress. Component 3, aimed at forest enterprise improvement and development, faced initial delays due to the amendment of the Subsidiary Loan Agreement (SLA) between the Public Debt Management Office (PDMO) and the Agricultural Development Bank Limited (ADBL). However, this issue has been resolved, and the Component Implementation Manual (CIM) has been approved, enabling on-ground activities to commence.

There is no outright purchase involved.

There is no leasing involved.

Although the project appraisal document does not use the term contract farming, there are some elements that could signify contract farming: ● Results-Based Payments for Plantations: The project utilizes a results-based payment system for both private and public land plantations. Local governments will distribute grants to farmers and Public Land Management Groups (PLMGs) in installments, contingent upon the successful growth and survival of the planted trees. ● Engagement of Service Providers: The project relies on service providers who act as intermediaries between the local governments and the participating farmers. These service providers offer a range of services, including technical assistance, plantation monitoring, and verification of benchmarks for grant payments. ● Collaboration with Forest-Based Enterprises: The project aims to strengthen linkages between community-based forest management and forest-based enterprises. This involves supporting SMEs in developing sustainable business models and sourcing raw materials from sustainably managed forests, including those under CBFM and private plantations.