World Bank Document · 2016. 7. 16. · Escudos ERR Economic Rate of Return FAO Food and Agriculture Organization of the United Nations ... (Loan 1 853-PO)" prepared by the Europe

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 11473

PROJECT COMPLETION REPORT

PORTUGAL

FORESTRY PROJECT(LOAN 1853-PO)

DECEMBER 22, 1992

Agriculture Operations DivisionCountry Department IEurope and Central Asia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EOUIVALENTS

Currency Unit = Portuguese Escudo (Esc.)USS 1.00 (at Appraisal - 12/80) = Esc. 50

USS 1.00 (weighted average 1979-1989) = Esc. 90USS 1.00 (at closing 09/89) = Esc. 158

WEIGHTS AND MEASURES

1 kilogram (kg) = 2.205 pounds1 metric ton = 1,000 Kilograms1 metric ton = 0.98 long ton

PRINCIPAL ABBREVIATIONS AND ACRONYMS USED

CELBI Cellulose Beira Industrial S.A.R.L.CAIMA CAIMA Pulp Mills Ltd.DGF Directorate General of ForestsEC European CommunityEsc. EscudosERR Economic Rate of ReturnFAO Food and Agriculture Organization

of the United NationsFRR Financial Rate of ReturnIFADAP Government's Agricultural and Fisheries

Development Fund

MAP Ministry of Agriculture and ForestryOED Operations Evaluation DepartmentPAF Portuguese Forest Action PlanPCR Project Completion ReportPCU Project Coordinating UnitPORTUCEL Portuguese Cellulose and Paper CompanySAR Staff Appraisal ReportSOPORCEL Portuguese Pulpmill Company

GOVERNMENT OF PORTUGALFISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLYTHE WORLD BANK

Washington, D.C. 20433U.S.A.

Office of Director-GeneralOperations Evaluation

December 22, 1992

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on PortugalForestry Proiect (Loan 1 853-PO)

Attached is a copy of the report entitled "Project Completion Report onPortugal - Forestry Project (Loan 1 853-PO)" prepared by the Europe and Central AsiaRegional Office with Part II contributed by the Borrower.

The project achieved most of its afforestation objective after a three yearextension and a forestry sub-sector study was completed, but institutionalachievements were limited and the credit component failed. On balance, the projectis rated marginally satisfactory. However, its sustainability is uncertain. The projectwas overtaken by a Forestry Action Plan, implemented since 1986 with EuropeanEconomic Community grants. This changed the financial and institutional frameworkwithin which the project had been designed. Unfortunately, the project was neverrestructured.

The PCR understates the deficiencies of Bank supervision. A re-estimatedeconomic rate of return is not available. An audit will be conducted.

Attachment

This document has a restricted distribution end may be used by recipients only In the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICIAL USE ONLY


PORTUGAL


TABLE OF CONTENTS

Page No.

PREFACE .............................................................

EVALUATION SUMMARY ..................................................

PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE .................... 1

Project Identity ...................................... 1

Background ............................................ 1

Project Objectives and Description .................... 2

Project Design and Organization ................. ; ..... 3

Project Implementation .......................... , 4

Project Results ....................................... 6

Project Sustainability ................................ 7

Bank Performance ...................................... 7

Borrower Performance .................................. 8

Project Relationship .................................. 8

Consultancy Service ................................... 8

Project Documentation and Data ........................ 8

PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .... .......... 9

PART III: STATISTICAL INFORMATION

Table 1: IBRD Loans Relevant to the Project .11

Table 2: Project Timetable: Planned,

Revised and Actual Dates .12

Table 3: Loan Disbursements and Cancellations .13

Table 4: Physical Targets and Achievements 1981-1989 14

Table 5(a): Original Loan Categories ........................ 15

Table 5(b): Amended Loan Categories and Final

Withdrawal of Loan Proceeds .... ............... 15

Table 5(c): Loan Categories: Original and Amended ... ........ 16

Table 6: Project Costs: Comparison by Categories of

Planned and Actual Expenditures .... .......... 17

Table 7: Status of Covenants .18

Table 8: Use of Bank Resources - A: Missions .19

- B: Staff Time ............ 19

Annex : Ex-Post Investment Appraisal .20

Table 9A: Cash Flow Models used for Calculating

the Ex-post Internal Rate of Return .21

Table 9B: Afforested Area by Species used in

Calculating Weighted Average IRR .21

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.


PORTUGAL


PREFACE

This Project Completion Report (PCR) is for the Forestry Project inPortugal, for which Loan 1853-PO for US$50.0 million equivalent was approved onMay 27, 1980. The loan was closed officially on September 30, 1989, three yearsbehind schedule, with a total disbursement of US$37.58 million and cancellationstotalling US$12.42 million; in fact, the books were kept open until March 31,1990 to accommodate final disbursement, which occurred on March 27, 1990(Table 2).

The PCR was prepared by the former Agriculture Technical Division of theEurope, Middle East and North Africa Regional Office (EMENA) (Preface, EvaluationSummary and Parts I and III) and the Borrower (Part II). It is based on theStaff Appraisal Report, the Loan and Project Agreements, Supervision Reports,correspondence between the Bank and the Borrower, Project Progress Reports andthe Borrower's Completion Report of June 1990.

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PORTUGAL


EVALUATION SUMMARY

ObJectives

1. The objectives of the project were to:

(a) increase foreign exchange earnings (and savings) and promoteeconomic growth by increasing forest production on marginal lands;

(b) promote institution building by establishing a Forestry ExtensionService within the Ministry of Agriculture and Fisheries (MAP);

(c) prepare a long-term integrated strategy for development of theforestry sub-sector; and

(d) improve incomes of poor, smallholder forest owners.

At the outset (1980), the project comprisedt

(a) establishment of about 150,000 ha of new plantation forests byexpanding on-going afforestation programs, of which 90,000 ha wouldbe implemented by the Directorate General of Forests (DGF) and theremaining 60,000 ha by the Cellulose and Paper Company of Portugal(PORTUCEL);

(b) technical assistance and training to:

(i) establish the basis for a Forest Extension Service within DGFand training of forest extenoionists; and

(ii) prepare an in-depth study of the forestry sub-sector, withspecial emphasis on the potential, needs, and approaches forimprovement of existing private and baldios (community)forests, and define a long-term strategy for the developmentof forests and forest industries;

(c) the provision of credit for pilot scale integrated extraction,forest management and marketing operations by associations orcooperatives of small private forest owners; and

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(d) the establishment of a Project Coordinating Unit (PCU) to coordinateproject implementation, progress reporting, monitoring andevaluation functions.

Imolementation ExDerience

2. The project was prepared in January 1979 and appraised in October/November1979. The loan was negotiated in April, 1980 and the project became effectivein March 1981. The original loan of US$50.0 million could not be fully utilized.Although the physical targets were slightly reduced (plantation establishment waschanged to 130,000 ha) and some objectives were added (e.g. procurement of firedetection equipment, short-term training, activities to improve naturalregeneration and range management), the major reason for less-than-estimateddollar expenditure was that during project implementation, there was a largedevaluation of the escudo from 50 per US dollar at appraisal to about 160 by thetime the project was completed. The project closed officially in September 1989,three years behind schedule, and cancellations totalled $12.42 million.

3. Although plagued by shortages of staff, equipment and local financethroughout much of its implementation, the project achieved many of its majorobjectives but frequently only in part and, invariably, later than planned.

Result

4. Defining a long-term development strategy for forestry and forest indus-tries through the sub-sector study was a success; it resulted in theestablishment of an Interministerial Coordinating Committee for the Forestry Sub-sector that was responsible for the formulation of policy, coordination ofdevelopment activities and monitoring of progress. Creation of the PCU was alsosuccessful, but the Unit was disbanded, without warning in December 1986 before

the project ended and when there would have been advantage to retainingmonitoring and evaluation functions for activities of DGF.

5. Some 87% of the revised plantation establishment target was eventuallyachieved, but involved combining the European Community's (EC) grant funds andthe Bank's loan to meet financial shortfalls. A Forest Extension Service wasformed, but its members, although well-trained, were employed part-time andalready had full time work in forestry. The pilot credit scheme was notutilized.

6. The Financial Rate of Return (FRR) to plantation establishment wascalculated comprising costs and prices for plantations at the time of appraisal(1979) at 18.0%. The ex-vost FRR of only 9.3%, reflected timber prices risingless than the SAR anticipated and the increase in plantation establishment costswith the introduction of the EC's scheme in 1986.

Sustainabilitv

7. Management of all forestry projects is committed to sustainability. Theplantations are on marginal land and are not likely to be replaced byagricultural crops.

8. Bank performance could have been improved by greater flexibility inpreparation (e.g., more attention to the fire hazard in Portuguese forestry wouldhave prompted an earlier component for improvement of natural regeneration) andin supervision (e.g., inclusion of additional technical skills would haveprovided a further viewpoint on solutions to project problems).

9. Performance of DGF personnel was good, but would have been improved bygreater consultation with Bank staff before substantive decisions were taken.

Findings and Lessons Learned

10. (i) Careful and realistic project preparation is essential, withadequate surveys of r-sources available, full consideration oftechnical and socio-eccnomic problems, and complete assessment ofall project proposals and country institutional capabilities.

(ii) Inadequacy of complementary financing was a major cause of financialdifficulty. The possible use of executive bodies other thanGovernment, conditionality in loan agreements and constant vigilanceto ensure the budgets contain adequate funds are required to avoidthis situation.

(iii) Continuity in Bank and project management staff has a very positiveeffect on project execution.

(iv) Supervision mission staff should occasionally include additionaltechnical skills (e.g., an economist) to provide a fresh viewpointon solutions to project problems.

(v) Provisions in the Loan Agreement that require Bank approval ofchanges in project organization should be strictly followed.

(vi) A credit scheme for private farmers needs to consider everypossibility in regard to its use if it is to be successful, e.g., ifthe scheme is for purchase of equipment, one should consider howmuch the equipment will be used each year re how long the payment ofthe loan will be.


PORTUGAL


PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE

Proiect Identity

Name: Forestry ProjectLoan No. 1853-PORVP Unit: ECA RegionCountry: PortugalSector: AgricultureSubsector: Forestry

Backaround

1. The 1980 national forest inventory showed that Portugal had approximately2.97 million ha of forest (33.4% of the land area), comprising 1.37 million haof conifers (mainly Pinuj 2inaster in the north and west), 0.22 million ha ofeucalypts (primarily . lobulous in the west), 0.63 million ha of cork oak(Ouercus amber) in the south west and 0.55 million ha of holm oak (Q. ilex) inthe south east. (In the 1990 inventory, Portugal had 3.21 million ha of forest(34.0% of the land area), comprising 1.34 million ha of conifers, 0.50 millionha of eucalypts, 0.66 million ha of cork oak and 0.46 million ha of holm oak).The balance of 0.2 million ha comprised various broadleaved species and mixedforests scattered throughout the country.

2. In 1981, only 2.5% (75,000 ha) war Stated-owned, 8.7% (259,000 ha) wascommunal and 88.8% (2,634,000 ha) was private. Most eucalypts and 78.0% of thepine forest were privately owned. The wood-based industry was well-developed andappeared in balance with its domestic supply of raw materials. It made thefollowing contributions to the national economy: pulp and paper: 38%; corkproducts: 34%; sawmilling: 15%; resin products: 11%; and wood-based panels: 2%.

3. The import/export balance was positive. The value of forest productexports in 1981 amounted to Esc. 43.0 billion (US$640 million), which wasapproximately 60% of agricultural exports and 20% of total exports. Over thedecade 1971-80, the unit values of the various products had increased five timesin nominal terms, except cork, which had increased tenfold. Import substitutionduring that period generated some Esc. 19.0 billion (US$257 million) savings inforeign exchange.

4. In 1979, there were three pulpmill companies: PORTUCEL (a State-ownedmajority), CELBI (a Swedish-owned majority) and CAIMA (a British-owned majority).Each had a forestry division and the capacity to undertake afforestation, forestmanagement and exploitation. Formation of a fourth company, SOPORCEL (a privatePortuguese-owned majority), was under active consideration.

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5. In brief, Government strategy for developing the forestry sub-sectorinvolved increasing the wood supply for industry from new and existing forests.Afforestation was required for new forests or replacement of existing forests,whilst increased production of existing forests involved improving forestmanagement.

6. Government targets of 50,000 ha/year of afforestation and 120,000 ha/yearof improved forest management were regarded as too ambitious. Recentafforestation had not exceeded 15,000 ha/year and improvement of management,especially among private farmers, was considered to require a period of technicalassistance, extension and institution building before significant investmentcould be absorbed.

7. With the aim, therefore, of "helping Government to realize the fullpotential of the sub-sector, by alleviating its different constraints", theobjectives (para. 8) were set at a combined total of 30,000 ha/year by the thirdyear of a six-year project for afforestation by both the Directorate General ofForests (DGF) and the Government-controlled pulpmills (PORTUCEL). In addition,the project would support forest management, after technical assistance, trainingand extension for DGF and private farmers, in the early half of the 1980's. Asecond phase was to follow, in which the Government would apply the experiencegained under the first (para. 12).

Proiect Obiectives and DescriDtion

8. The objectives of the project were to:

(a) increase foreign exchange earnings (and savings) and promoteeconomic growth by increasing forest production on marginal lands;

(b) promote institution building by establishing a Forestry ExtensionService within the Ministry of Agriculture and Fisheries (MAP);

(c) prepare a long-term, integrated development strategy for theforestry sub-sector; and

(d) improve the incomes of poor, smallholder forest owners.

9. The project consisted of:

(a) establishment of about 150,000 ha of new plantation forests byexpanding the on-going afforestation programs, of which 90,000 hawould be implemented by DGF and the remaining 60,000 ha by PORTUCEL;

(b) technical assistance and training to:

(i) establish a Forest Extension Service within DGF and trainingof forest extensionists; and

(ii) prepare an in-depth study of the forestry sub-sector, withspecial emphasis on the potential, needs, and approaches for

improvement of existing private and baldios (community)forests, and define a long-term strategy for development offorests and forest industries;

(c) provision of credit for pilot-scale integrated extraction, forestmanagement and marketing operations by associations or cooperativesof small private forest owners; and

(d) the establishment of a Project Coordinating Unit to coordinateimplementation, progress reporting, monitoring and evaluationfunctions.

Prolect Desian and Oraanization

10. The sub-sectoral problems which the project was to address were: (1)Fragmentation of land ownership in the private sector, which complicated roadconstruction and timber harvesting and which was to be solved by adequateincentives to form forestry associations or cooperatives; (2) Unsatisfactorymarketing organization, whereby independent logging contractors removed the besttrees with no regard to future yields, and which was to be addressed by farmersmarketing their own produce; (3) Lack of a small farmer forest extensionservices; (4) Uncertainty over the land (agrarian) reform Law at the time ofacquisition of land for afforestation; and (5) Forest fires which had been aworsening problem since 1968. Burning of older stands caused tree deaths, withlittle timber lost if salvage fellings were done speedily and naturalregeneration occurred in the burned area, but a second fire in young trees causedtotal losses. Fire losses were to be reduced by increased patrolling, morelookouts, etc.

11. These problems were more difficult to solve than expected. Thedifficulties of persuading farmers to join cooperatives or take loans forsilviculture/logging equipment were underestimated. Reduced fire losses neededthinning and pruning of naturally regenerated trees when young (5-8 years),thereby reducing the trees combustubility and enabling fire-fighters to enterthem.

12. The project was designed in two phases (para. 7). The first was to occupysix years and comprised components that were relatively easy to implement, giventhe experience and capability of DGF, e.g., expansion of the on-goingafforestation program and institution-building component for training and studiesin preparation for the more ambitious Phase II. The second phase would focus onmore complex components on which the Government had no previous implementationexperience. It would improve productivity of existing forests and was expectedto include provision of credit for forest cooperatives and associations and theactive participation of a Forestry Extension Service established under the firstphase.'

Although considered in some detail (1983-89), the Government finallyrejected Phase II of the Project. In early 1992, however, the subjectwas re-raised.

13. There was only one previous project in the agriculture sector (Table 1) andit provided no guidance on the project's preparation or implementation. Theproject concept was innovative for Portugal -- e.g., plantations were to beestablished at a wider spacing than usual (3m x 3m, primarily to enablemechanized weeding). The scope and scale of the project were commensurate withits objectives. The project was generally well-prepared and its timing was veryappropriate.

Proiect Implementation

14. In early 1981, severe cuts in public sector expenditure and a freeze ofstaff recruitment affected project implementation for the next five years. Thissituation could not have been foreseen.

15. The project's four objectives (para. 8) are related to the project's fourcomponents (para. 9) i.e., forest production on marginal lands is directlyrelated to plantation establishment by DGF and PORTUCEL. The establishment ofa Forestry Extension Service is the first outcome of the technical assistance andtraining component and the forestry sub-sector development strategy is thesecond. Every component contributed to achievement of the last objective, i.e.,Improving income of poor smallholder forest owners. This section, therefore,will deal primarily with the implementation of the four major project components.

16. The olantation establishment component was financially the most important -certainly the most time consuming. It achieved many of its revised objectives(Table 5c), but only by combining the European Community's (EC) grant funds ofthe Portuguese Forest Action Plan (PAF) and those of the World Bank's loan andextending the project by three years. Annual physical targets and achievementsfor plantations, roads and firebreaks are shown in Table 4.

17. Plantation establishment by DGF was plagued by shortages of staff,equipment and finance throughout much of its implementation. Only half of theequipment listed in the Staff Appraisal Report (SAR) was procured because of theprivate sector's unused capacity. DGF used about half its own equipment and halfprivate sector, with an inevitable increase in immediate costs because noallowance had been made for the private sector's profit margin. Approval of theGovernment budget was invariably late, particularly in 1981, the start of theproject when it was seven months late. In subsequent years approved, unusedfunds could be carried over one or more years. Although equipment operators andforemen were transferred to the afforestation brigades (in much smaller numbersthan planned in the SAR) no graduates or technicians were transferred. Passageof the Organic Law, in May 1985, confirmed that staff could not be transferredas it was against Government policyl Contractors were finally used instead, inSeptember 1985, although the idea had administrative obstacles initially. Theloan period was extended twice to September 1988. Meanwhile, the EC's grantmoney became available on January 1, 1987 and was paying 75% of the total costof the project by July 1988. Under EC regulations, it was not possible forprivate owners to reimburse EC grant funds for reforestation undertaken on theirland. After much discussion, the loan period was extended by a third and finalyear and the loan was used to finance tree planting on community land (baldios)on which cost recovery was assured.

18. Plantation establishment by PORTUCEL fell short of targets because ofdifficulties in obtaining sufficient land on which to plant trees, either byrenting or outright purchase. Legislation existed to ease land acquisition forafforestation, but Government was reluctant to enforce it as it was consideredtoo coercivel 2 SOPORCEL (the Portuguese Pulpmill Company) was offered a Bankloan to plant some 12,000 ha, to boost the PORTUCEL total, but in December 1985SOPORCEL finally withdrew as the conditions were considered too onerous. At theend of the original loan period (September 1986), PORTUCEL repaid its loan andthe unallocated portion to the Government (US$12.0 million) to avoid assumingfurther foreign risks. The Government then cancelled this sum from the loanagreement.

19. Technical assistance and training was a partial success for the ForestryExtension Service and a more complete success for the Forestry Sub-sectordevelopment strategy. The extension consultant trained 11 forest technicians,which included a tour to Scandinavia, and they served as the nucleus of theForestry Extension Service. He also prepared papers on the organization of theService, of Forestry Associations and use of credit in forestry. Formation ofthe Service was delayed by the Organic Law but, finally, in late 1984, the schemewas launched with most of the trained extensionists (two had been employed by thepulpmill companies) and a coordinator in Lisbon. By October 1986, approximately50 extension workers were employed in forestry (they were trained for 6 monthsat the Lousa Training Center) but they continued to be employed only part-time,i.e., they had full-time jobs in forestry. By January 1987, the EC was paying65% of the cost of extension.

20. An FAO Trust Fund, supported by the project, was used to finance thePortuouese Forestry Sub-sector Study for which local and overseas consultantsprepared some 21 papers. In spite of an initial six months' delay in funding,the Portuguese and English versions of the study were published in November 1982.It was widely circulated to other Government Departments and the forest industryand was very well received. The recommendations on sub-sector development,

institution strengthening, sector planning, industrial development, forestrycooperatives, pricing policy and multiple use formed the basis for Forestry II.As a result, an Interministerial Coordinating Committee for the Forestry Sub-sector was established in March 1983, and was responsible for the formulation ofoverall policy, the coordination of development activities and monitoring ofprogress. The Committee still exists, although its name has changed. It hasachieved very little and requires reactivating.

21. By any standards, the Dilot credit scheme to purchase equipment forextraction, management or marketing by Forest Cooperatives or Associations wasa failure. Following various studies by Government's Agricultural and FisheriesDevelopment Fund (IFADAP), the scheme was launched in early 1984. Variousinquiries, by potential borrowers, were made for sizeable loans (Esc. 4.7-6.4million), but no loans were made. IFADAP staff considered that the comparativelyhigh rate of interest was not a deterrent. A subsequent study (the results of

2 Limited afforestation by PORTUCEL after 1986 suggests that landacquisition has continued to be constraint: 1986/87: 1,877 ha; 1987/88:3,265 ha; 1988/89: 3,668 ha; 1989/90: 3,562 ha; 1990/91: 1,766 ha.

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which the writer of the PCR fully accepts) suggests that the loan repaymentperiod (five years) was far too short, relative to the use of the equipment underPortuguese conditions.

22. The Proiect Coordinatina Unit was established on July 9, 1980. Itcomprised six professionals and two support staff. It coordinated and monitoredthe project, prepared progress reports, arranged for auditing project accounts,pursued the pilot credit scheme, in 1985-86, and prepared the document, inPortuguese, on Forestry Phase II (January 1986). No further action was taken toobtain a loan for the latter as EC money for forest development was available asa grant. The PCU was unexpectedly disbanded, in December 1986, because PORTUCELhad withdrawn from the project and "no further coordination was required". TheDirector was re-instated for a few months at the end of the present project toprepare a combined progress report for the period that was not covered and acompletion report, published in June 1990.

Prolect Results

23. Although the project implementation period was increased from six to nineyears and PORTUCEL withdrew in March 1987, the project achieved most of itsobjectives. The notable exception is the pilot credit scheme (para 21), which,in fact, was the predecessor of the recently approved scheme of the EC forpurchase of forest exploitation equipment. The exchange rate US Dollars/Escudosincreased substantially during the project period so that the amount of Escudosavailable was greatly increased. As a result, project financing in escudos wasadequate to cover additional goods and services and, in particular, equipment forfire detection, short-term training, treatment of natural regeneration and rangemanagement. Table 5(c) lists the project components at the start and end of theproject.

24. The economic rate of return (ERR) was estimated, in the SAR, at about 19%.It was not possible to calculate an ERR at the end of the project to compare withthis figure as PORTUCEL's cost data for the period had been destroyed. Toprovide an indicative comparison of ex-ante and ex-post performance, financialrates of return (FRR) were calculated at cost and prices at appraisal (1979)compared to figures for 1989. The ex-ante FRR (1979) was 18.0% compared to theex-post figure of 9.3% (Annex, Part III). The difference is explained by timberprices rising less than the SAR had anticipated and the increase in costs ofplantation establishment following the introduction of the European Communitiesscheme (PAF) in 1986.

25. Foreign exchange earnings and forest production on marginal lands willundoubtedly be increased but it is too early (eucalypts have rotations of 10-12years and pines of 30 years) to say by how much. Institution building has beenpromoted and an integrated strategy for the development of forestry sub-sectorhas been prepared, but incomes of smallholder forest owners have been improvedby rural employment for afforestation rather than use of the pilot credit schemefor procurement of forest exploitation and management equipment (para. 21). Inspite of the effect of forest fires, the creation of some 75,770 ha of conifers,35,560 ha of eucalypts and 8,200 ha of other broadleaved species has had a verypositive effect on forest development in Portugal.

26. Although the project may not have achieved all of ito objectives in atimely manner, it did provide the basis for several subsequent initiatives inPortuguese forestry, namely:

(a) the formation of Forestry Associations for Afforestation and therecently-approved European Community scheme for purchase of forestexploitation equipment;

(b) development of the DGF extension service since late 1984;

(C) the formation of the forest sapeur-DomDier's (fire-fighter's)brigade in DGF and its operations to control forest fires; and

(d) establishment of the Monitoring Groups in the five regionalheadquarters and in the Planning Division, in Lisbon, for theEuropean Community's action program for Portuguese Forestry (PAF).

Proiect Sustainabilitv

27. Both DGF and PORTUCEL are committed to sustainability of yields of theirforestry plantations, which for conifers will be spread over 30 years and foreucalypts will be four rotations, spread over 48 years. The yield will varyslightly but is expected to be acceptable throughout the plantation's life. Theplantations are on marginal land and not likely to be displaced by agriculturalcrops. on the contrary, some Portuguese crop land is likely to be afforested,in accordance with the European Community's policy.

Bank Performance

28. Bank performance throughout the project was consistent, but there werethree subjects in which the situation could have been improved:

(a) The need to improve the source of raw material and combat theforest fire hazard in Portugal should have prompted at least someeffort in a component for improvement (thinning and brashing 3) ofnaturally regenerated pine.

(b) There would have been merit in occasionally including additionaltechnical skills in supervision missions, e.g., an economist, whocould have provided an economic dimension to project problems andsolutions.

(C) Long delays in implementation resulting from shortages of staff,finance and equipment for planting, could have been circumvented byearly use of private contractors.

Pruning the lower branches of a tree.

Borrower Performance

29. Performance by DGF/PORTUCEL/IFADAP/PCU was generally of a high standard,as a result of the continuity and competence of project management. An exceptionwas the haste with which DGF disbanded the PCU in December 1986 before theproject was closed. The Unit had numerous on-going functions and there wouldhave been advantage in retaining a monitoring and evaluation function for DGF'soperations. A second issue, to which there is no simple solution, concerns thedisparity in incomes between personnel of DGF and the pulpmill companies (thelatter were some 40% higher). Members of DGF were attracted to the companies(some 8-10 members of DGF transferred during the project period) and made projectplanning more difficult.

Proiect Relationship

30. The relationship between the Ministry, DGF, PCU and the Bank's staff wasexcellent. The consistency of staff representation of both the Borrower (theProject Manager was a member of the PCU staff throughout the project period) andthe Bank (one member of the staff had been consistently associated with theproject throughout supervision) proved especially useful throughout theimplementation up to and including preparation of this PCR.

Consultancv service

31. The standard of consulting services (both nationally and internationally)was generally good. It included assistance with the sub-sector study, theproject outline for Forestry II and training under the project. Contractors usedfor land preparation and plantation maintenance by both DGF and PORTUCEL andsuppliers of equipment and vehicles, mainly in the initial stages of the project,performed well.

Proiect Documentation and Data

32. Preparation and standards of project documentation (i.e., the six monthlyprogress reports and terms of reference for consultants) were generally good.There were delays in progress reports towards the end of the project. Reprintingof the Loan Agreement, following revisions of 1984/85, took an inordinate amountof time. The SAR was satisfactory, but would have been improved if background/supporting data had been included in an implementation volume.

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PORTUGAL


PART II: KEY PROJECT ISSUES FROM THE BORROWER'S PERSPECTIVES

(a) We have checked through the factual information contained in Part III ofthe draft Project Completion Report and confirm that we are satisfied with theaccuracy and adequacy of the data that it contains.

(b) We have also checked carefully through the analysis of Part I of the draftProject Completion Report with the author and have the following comments tomake.

(i) Para, l. The results of the 1980 national forest inventory areaccurate but do not, of course, convey the extreme changes confirmedby the 1990 figures. We consider that there would be advantage toincluding the data from the 1990 national forest inventory forcomparison.

(ii) Para 14 There were severe cuts in expenditure and staffrecruitment in 1981, but the month is unclear and we suggest that"August 1981" be replaced by "early 1981".

(iii) Para 18 PORTUCEL's failure to have met its planting targets underthe project may have been caused in part by its disenchantment withthe Loan's conditions. It is suggested that its annual plantingachievements for 1986/87, 1987/88, 1988/89 and 1989/90 be includedfor comparison as a footnote.

(iv) Para, 20. The Interministerial Coordinating Committee for theForestry Sub-sector still exists and has the same terms ofreference, although it has changed its name. It has, however,achieved very little and needs reactivating.

(v) Para 21 The reasons given for the failure of the Pilot CreditScheme are correct, but may have been further influenced by the highrate of interest. This point should be checked with the IFADAFpersonnel.

(vi) Para 23 Although the project may not have achieved all of itsobjectives in a timely manner it did provide the basis for severalsubsequent initiatives in Portuguese forestry, namely:

V This section was prepared by the Government of Portugal, Directorate General.

- 10 -

1. the formation of Forestry Associations for Afforestation andthe recently approved European Community scheme for purchaseof forest exploitation equipment;

2. the DGF's Extension development since late 1984;

3. the Sapeur-Pompier's formation in DGF and its operations tocontrol forest fires; and

4. the Monitoring Groups in the five regional headquarters and inthe Planning Division, in Lisbon, for the European Community'saction program for Portuguese Forestry (PAF).

Reference to these developments should be made under Project Results.

(vii) Para 24 It was explained that the content of this paragraph willprobably require a complete revision when the forest economist hascalculated the project's economic rate of return .

(viii) Para 25 The data and observation are correct but this paragraphshould include reference to the area of forest (broken down intoconifers, eucalytps and other broadleaved species) destroyed by fireduring the project period (1981-89). This information will be sentto the World Bank by fax at the end of the week v/.

(ix) Para 26 A penultimate sentence should be inserted to state: "Onthe contrary, some Portuguese farming land is likely to beafforeated, in accordance with the European Community's policy".

(c), (d) and (e). We have nothing further to add to the remarks alreadymade in the draft Project Completion Report on these subjects and that have ourcomplete agreement. We would suggest two further lessons from the Bank and theBorrower's performance:

(i) Supervision missLon staff should occasionally include an additionaltechnician to provide a fresh viewpoint on solutions to projectproblems.

(ii) As stated in the Loan Agreement, in projects that are financed bythe World Bank, changes should not be made that will affect theproject's organization without first consulting the Bank.

Fernando Pereira NunesAssessor Principal DGF

Jos6 Ant6nio Neiva VieiraDirector de Servigos de FFSP

Msabel RobaloTecnica Superior

LisbonApril 8, 1992

The Forest economist could not calculate an economic rate of return forthe project as PORTUCEL's cost data were not available (para. 24).

V The information was not broken down as stated and, therefore, was notused.

PART III: STATISTICAL INFORMATION


PORTUGALFORESTRY PROJECT (LOAN 1853-PO)

Table 1: IBRD Loans Relevant to the Project

Project Titie Yearand Loan Nuwber Approved Purpose of Project Status Comments

1. Agricultural and Fisheries Credit for farm devetopment, agro- Project conmteted in Inptementation difficulties; inexperiencedCredit Project 1978 industries and construction of June 1984. institutions and land tenure problems. UsedLoan 1603-PO fishing vessels. commercial banks instead of operational coops.(US$70 million)

2. Tras-Os-Montes Rurat Rehabilitation of 150 irrigation schemes Project compteted in Integrated rural developnent was difficult to -'

Development Project covering 15,200 ha; agriculturat credit December 1989. inptement. Non-agriculturaL cowponents andLoan 2175-PO 1982 to farmers; buitding 109 cooperative irrigation schemes successful. More monitoring(USS51 million) milking parlors, 80km new roads. 60 class & evaluation needed. More studies to determine

rooms and 56 vitlage water suppties. feasibility of schemes after pilot operations.

3. Tras-Os-lontes Regional Components included strengthening of Project operational Project expected to run until 1996; there isDevelopment Project agricultural services; provision of a shortage of financing due to lack of budgetLn. 3035-PO 1989 credit for agro-industries and replanting and comTtunity financing.(US$90 million) 5000 ha vineyards; rehabilitating 220

Irrigation schemes; and establishingrural infrastructure.

H

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Table 2: Proiect Timetable: Planned. Revised and Actual Dates

Planned Revised ActualItem Date Date Date

Identification January, 1979

Preparation/Pre-Appraisal June-Sept, 1979

Appraisal Oct-Nov, 1979

Loan negotiation March 31, 1980 April 09, 1980

Board approval May 27, 1980

Loan signature October 02, 1980

Loan effectiveness January 2, 1981 March 2, 1981 March 02, 1981

Loan closing Sept. 30, 1986 Sept. 30, 1989 sept. 30, 1989

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Table 3: Loan Disbursements and Cancellations

Disbursements (USS Millions)IBRO Fiscal

Year Actual X of cancettationsEstimated Actual Original Loan (a)

Semester ending Cumulative Cumjulative Final Loan (b) (USS Millions)

(a) (b)FY 81Dec. 31, 1980 0.3 0.0 ..June 30. 1981 9.5 0.2 2.1

FY 82Dec. 31, 1981 15.7 1.2 7.4Jure 30, 1982 20.6 7.1 34.3

FY 83Dec. 31, 1982 22.8 9.1 39.7June 30, 1983 28.8 11.1 38.4

FY 84Dec. 31, 1983 31.2 12.1 38.6June 30, 1984 36.3 13.5 37.1

FY85Dec. 31, 1984 38.3 14.2 37.1June 30, 1985 44.3 14.9 33.7

FY 86Dec. 31, 1985 47.7 17.9 39.0June 30, 1986 50.0 18.6 38.4

FY 87Dec. 31, 1986 (38.0) 19.3 50.9 USS12.0 mil. (03/87) 1/June 30, 1987 20.1 52.8

FY 88Dec. 31, 1987 21.7 56.9June 30, 1988 27.7 72.9

FY 89Dec. 31, 1988 29.1 76.4June 30, 1989 30.3 79.7

FY 90Dec. 31, 1989 32.4 85.3Mar. 31, 1989 37.6 98.9

jj ActuaLLy paid in March 1987 but back dated, by previous agreement,to December 1985.



Table 4: Physical Targets and Achievements 1981-1989

1981 1982 1983 1984 1985 1986 1987 1988-1989 Total

Achie- Achie- Achie- Achie- Achie- Achie- Achie- Achie- Achie- X

SUBJECT Target ved Target ved Target ved Target ved Target ved Target ved Target ved Target ved Target ved

AFFORESTATION(ha) 1

D.G.F 15,300 1,441 17,100 9,447 19,800 10,940 19,800 13,330 11,000 10,776 13,042 6,145 14,640 83,000 79,761 96.1

PORTUCEL 9,000 3,136 10,500 7,025 12,000 9,034 13,500 8,042 10,000 7,679 4,858 55,000 39,775 72.3

TOTALS 24,300 4,577 27,600 16,472 31,800 19,974 33,300 21,372 21,000 18,455 17,900 6,145 14,640 138,000 119,538 86.6

I NFRASTRUCTURENew Roads (kmn)

D.G.F 228 306 436 316 377 418 66 1,133 3,280

PORTUCEL 175 350 425 328 590 81 1,949

Totals 403 656 861 644 967 499 66 1,133 5,379

Road Upgrades (kim)0.G.F 92 186 316 313 413 355 164 1,839

PORTUCEL 150 280 320 _ 2901 1,040

Totals 242 466 636 603 413 355 164 2,979

Firebreaks (km)D.G.F 128 199 283 218 229 173 64 462 1,756

PORTUCEL 170 295 228 256 949

Totals 298 494 512 474 229 173 64 462 2,709

Notes

1/ PAF (European Consunity Forestry Action Program) afforestation activities were countrywide, not only in project area, shoun as 1988/89 but, in fact, 1986-

89. In addition, it accounted for 41,522 hectares of improvements to young naturally regerated woodland (mainly pine) such as thiming and pruning. Aended

Loan Agreement stated DGF should establish about 3,750 km of access road and firebreaks (actually did 5,036 km or 134.3X of target) and PORTUCEL should do

2,200 kim (actually did 2,898 km or 131.7X of target).

2/ Excluding PAF, the category of Land ownershiD afforested by DGF and PORTUCEL was as follows:

COMINITY LAND PRIVATE LAND O(M LAND TOTAL

DGF 43,326 ha 21,764 ha - 65,122 ha

PORTUCEL 5.124 hha8 25.94 ha 39.775 ha

TOTALS: 48.482 ha 30.521 ha 25.894 ha 104.897 ha

Excluding PAF, the species groups used by DPF and PORTUCEL in afforestation were as follows:

CONIFERS EUCALYPTS OTHER BROADLEAVED SPP. TOTAL

DGF 48,443 ha 8,505 ha 8,174 ha 66,122 ha

PORTUCEL 12.688 ha 27,056 ha 32 ha 39,7 ha

TOTALS: 61,131 ha 35,561 ha 8,206 ha 104,897 ha

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Table 5(a): Original Loan Categories

(US Dollars equivalent)

Original Loan: USS50,000,000

% of ExpenditureOriginal Loan To be Financeed

Category AllocationLoan

1. Equipment 13,900,000.00 100% Foreign& Local

2. Civil and 28,400,000.00 32%Afforestation Works

3. Technical 1,000,000.00 100% ForeignAssistance

4. Sub-Loans(Pilot Credit) 1,300,000.00 50%

5. Unailocated 5,400,500.00

TOTAL 50,000,000.00

Table 5(b): Amended Loan Categories and FinaL Withdrawat of

Loan Proceeds

(US Dollars equivalent)

Cancellations: USS12.0 million (12/85);

X of ExpenditureAmended Loan To be Financed

Category Allocation Final Amount DisbursedLoan

1. Equipment 8,155,000.00 100% Foreign 6,457,276.38& Local

2. Civil and 21,184,000.00 34% 30,069,357.34Afforestation Works

3. Technical 1,326,000.00 100% Foreign 1,091,629.28Assistance

4. Sub-Loans(Pilot Credit) 264,000.00 50%

5. Range Management 1,053,000.00 75% 3,597.02

6. SpeciaL Account 2,600,000.00

7. Unallocated 3,418,000.00

TOTALS: 38,000,000.00 37,621,860.02

- 16 -



Table 5(c): Loan Categories: Original and Amended

Original: Sub-category Amended: Sub-catecorvCATEGORY (October 1980) (ApriL 1989) j/

1. EQUIPMENT 1.A Equipment for DGF for afforestation, fire 1.A Equipment for DOF for *fforestation, firecontrol, extension, Sub-sector study controt, extension, Sub-sector study

1.8 Equipment for PORTUCEL for afforestation 1.8 Equipment for PORTUCEL for *fforestation1.C Vehicles for Forest Research Station /1.D Equipment for DGF Louss Training Center

1.C Equipment and Vehicles for PCU 1.E Vehictes for PCU

2. CIVIL WORKS & 2.A DGF: 90,000 ha afforestation; construction of 2.A DGF: 83,000 ha afforestation; constructionAFFORESTATION 3,300 km of access roads, firebreaks and fire 3,750 km of access roads, firebreaks and fire

look-outs took-outs and treatment of naturally regen-rated forest In burned-over areas

2.8 PORTUCEL:60,000 ha afforestation and cons- 2.1 PORTUCEL: 55,000 ha afforestation and cons-truction of 2,200 km of access roads, fire- truction 2,200 km of access roads, firebreaksbreaks and fire Look-outs. and fire look-outs

3. TECHNICAL 3.A DGF Consultants re Extension Service and 3.A DGF Consultants re Extension Service andASSISTANCE Sub-sector study Sub-sector study

3.3 DGF Consultants re receptivity to intensiveforestry and preparing Forestry 11

3B3 DGF FeLlowships re Forestry Associations J 3.C DGF FeLLowships re Forestry Associations i/3.D DGF FeLLowships re university training

4. SUB-LOANS PiLot scheme for purchase of extraction, Pilot scheme for purchase of extraction,(PILOT CREDIT) management or marketing equipment it management or marketing equipment it

5. RANGE --- Pasture improvement by DGF itMANAGEMENT

Date of Last amendment to Loan Agreement.

v Not inplemented or, in range management, hardly implemented.

- 17 -



Table 6: Project Costs: Comnarisons by Categories of Planned and Actual Expenditures

Planned Expenditures Actual Expenditures

Category Local Costs Foreign TotaL Local Costs Foreign Total(Esc.) (USS) (Esc.) (Esc.) (USS) (Esc.)

1. Equipment 35,700,000 13,900,000 723,500,000 43,509,586 6,457,276 588,608,726

2. Civil and / 2,934,900,000 28,400,000 4,359,100,000 10,472,655,934 30,069,357 14,610,889,674Afforestation Works

3. Technical 29,300,000 1,000,000 79,600,000 32,349,645 1,091,629 123,701,835Assistance

4. Sub-Loans(Pilot Credit) 72,500,000 1,300,000 137,700,000 -

5. Range Management

6. PCU Functioning - 19,014,732 19,014,732

7. Unallocated 2,933,800,000 5,400,000 3,204,600,000 - -

TOTALS: 6,006,200,000 50,000,000 8,504,500,000 10,567,529,897 37,618,262 15,342,214,967

j/ Includes under Actual Expenditures Esc. 8,779,073,086.00 of European Community funds (PAF).

Average Annual Exchanae Rates (USS1.10 = Portugese Esc.)

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Esc. 50.60 65.55 79.47 110.78 146.39 170.40 149.59 140.88 143.95 157.46

ActuaL Proiect Costs: Basis for Estimates

Most of the equipment and technical assistance expenditure occurred at the beginning of the project.Civil and Afforestation Works are based on afforestation achievements (TabLe 4). PCU functioned throughoutthe project period.

EstimatesPlanned Expenditure Actual Expenditure(USS equivalent) (USS equivalent)

Equipment 14,814,000 7,120,000Civil and Afforestation Works 145,964,000 119,377,000Technical Assistance 1,592,000 1,380,000PiLot Credit 2,754,000 -PCU Functioning 164,000Unallocated 64.092.000

TOTALS 229.216.000 128.041.000



Table 7: Status of Covenants

SectionBrief Description of Covenants applicable CoEitiance Remarks

GOP to provide funds for DGF afforestation LA 1/ 3.01(a) Yes Original coaptiance date was 10/81; all unused funds in 81-86 to beused by 9/30/88. The European Community (EC) provided increasing fundsfrom 1986 onwards.

Submit findings of subsector study LA 3.02 Yes Orginalty to be submitted by 2/82, but received 11/82.

Done partialty; from May 1985, DGF used only contractors for afforest-

Recruit DGF's additional staff LA 3.03(a) Partially done ation (as per new Organic Law).

Employment of consultants for Sub-sector study LA 3.03(b) Yes All consultants recruited by 6/81, and study was prepared and submitted

11 foresters trained in extension by 07/82. Late 1984, Service formed

Establish Forest Extension Service LA 3.04(b) Yes with nine extensionists and coordinator in Lisbon. 50 trained exten- cosionists transferred to Service in October 1986, but only part time.

Study proposed no change to existing policy, but no cost recovery pro-

study on cost recovery, with recommendation LA 3.05(b) Yes vision in afforestation since start of PAF (Jaumuary 1987); projecteventualty paid for afforestation of baldios tand, where cost recoveryassured.

To secure land for next ptanting season by October LA 3.06(b) Partially done Done in targe part, but proved impractical to secure tand from private

of preceeding year. owners over one year in advance.

Govt. to authorize PORTUCEL for revenue sharing LA 3.06(c) No Agreement possible but not accepted by PORTUCEL, which used renting

agreements with farmers and furnish evidence agreement instead.

Progress Reports LA 3.08(b) Done until 1986 Agreement to aggregate last 3 years (done by 9/30/89).

Monitoring and completion report LA 3.08(c) Yes Project closing date (9/89). PCW submitted completion report June 1990

Audit reports PORTUCEL and DGF LA 4.02 Yes

1/ IFADAP had no cause for audit.

- 19 -.



Table 8: Use of Bank Resources

A: Missions

S U P E R V I S I O NNo. of Persons

Mission Month/Year and Speciali- staff Weeks Project Types of Majorzation 1/ in field Status Problems 2/

IDENTIFICATION 01/79 unclear

PREPARATION 06-07/79 6(3Ec/2For/Fin) 17.1

09/79

APPRAISAL 10/79 4 (Ec/2For/Fin) 7.0

SUPERVISION I 10/80 1 (Ec) 1.0 1 ---II 05/81 1 (For) 1.5 1

III 02/82 1 (For) 1.4 1 F,MIV 10/82 2 (Ec/For) 3.0 2 M,F

V 05/83 I/ 1 (For) 1.5 2 MNFVI 12/83 1 (For) 1.5 2 M,FVil 06-07/84 1 (For) 1.8 2 M,F

VIII 12/84 1 (For) 1.1 2 M,FIX 04-05/85 _/ 1 (For) 0.4 2 M,P,F

X 02/86 1 (For) 1.5 2/3 F,MXI 09-10/86 1 (For) 1.5 2 MXII 03-04/87 1 (For) 1.6 2 MXiII 12/87 1 (For) 1.0 3 M

XIV 06-07/88 1 (For) 0.6 3 MXV 07/89 2 (For/Fin) 3.0 3 M

I/ Specialization: Ec: economist; For: forester; Fin: Financial Analyst

f M - Managerial; F - Financial; P - Political

J Two partial supervisions (resulting in a memo not a report) were undertakenin July 1983 and November 1985.

B: Staff Time (in the fieLd and the office)

Staff Weeks (Estimate)

FY7 FY80 FY81 FY82 FY83 FY84 FY85 FY FY87 fl FY90 TOTAL

Preparation 6.2 35.3 41.5

Appraisal 41.2 41.2

Supervision 13.2 7.6 15.4 9.8 11.6 8.0 14.4 7.2 4.4 14.0 105.6

TOTAL 6.2 76.5 13.2 7.6 15.4 9.8 11.6 8.0 14.4 7.2 4.4 14.0 188.3

- 2n _

Annex


PORTUGAL

FORESTRY PROJECT (LOAN 1853-PO)

Ex-Post Investment Appraisal

It is not pcssible to calculate ex-post economic indicators that arecomparable with the ex-ante values presented in the Staff Appraisal Report(para.5.09). Actual costs are not available, year by year, for the PORTUCELcomponent, and the level of aggregation is so high as to make it impossible toapply the shadow wage rates and border cost equivalents used in the ex-anteappraisal.

In order to provide an indicative comparison of ex-ante and ex-postperformance, financial rates of return have been calculated using the followingdata.

For the ex-ante cash flow:

- the forecast expenditure for the DGEF and PORTUCELcomponents of the afforestation program and related works(SAR, Annex 1, Table T-4)

- the forecast timber harvest (SAR, Annex 1, Table T-10)

- the farmgate prices given in paragraph 5.07 of the SAR (Eac.1,210/st ub for pine and hardwood roundwood, and Esc. 1.680/st ubfor eucalyptus), but excluding the project real price rise of 1.5%per year, which seems dubious on present evidence.

For the ex-post cash flow:

cash flow models (Table 9A), based on actual afforestation costs in1989, and current farmgate roundwood prices of: Esc. 3,000/st ub forEucalyptus plywood; Esc. 2,000/st ub for conifer pulpwood and Esc.6,000/m3 for conifer sawlogs; Esc. 5,000/ton for hardwood fuelwood,Esc. 6,000/m3 for small hardwood sawlogs, and Esc. 15,000/m3 forlarge hardwood sawlogs;

- the actual areas afforested (PCR, Table 9B)

Rates of return on these assumptions were 18.0% ex-ante and 9.3% ex-post

- 21 -

Tables 9(a) and 9(b)


PORTUGAL

FORESTRY PORJECT (LOAN 1853-PO)

Table 9(a): Cash Flow Models used for Calculatingthe Ex-Post Internal Rate of Return

Year Operations Value (Esc/ha)

EucalvDtus alobulus

1 Ground preparation, planting, fertilizing,infrastructure - 148,200

2 Replacement of failures - 6,4003 Weeding - 8,10012 Felling .. . 201.6 st ub @ Esc 3,000/st ub + 604,80024 Felling .. . 242.4 st ub e Esc 3,000/st ub + 727,00036 Felling .. . 201.6 st ub a Esc 3.000/st ub + 604,8001-36 Protection - 2,000/yr

Pinus pinaster

1 Ground preparation, planting, fertilizer,infrastructure - 167.000

2 Replacing failures 8,0003 Weeding - 8,10010 Cleaning - 35,10020 Thinning ... 53.2 st ub pulpwood O Esc 2,000/st ub + 106,40030 Felling ... 33.4 st up pulpwood * Esc 2,000/st ub + 66,800

... 179.7 m3 sawlogs @ Esc 6,000/m3 + 1,078,2001-30 Protection - 2,000/yr

Castanea sativa

1 Ground preparation, planting, infrastructure - 126,3002 Replacement of failures, fertiliser - 22,4003 Weeding - 8,10020 Thinning .. . 30 m3 fuelwood I Esc 5,000/m3 + 150,000

Thinning .. . 40 m3 sawlogs f Esc 6,000/m3 + 240,00030 Felling .. . 20 m3 fuelwood I Esc 5,000/m3 + 200,000

Felling ... 200 m3 sawlogs I Esc 15,000/m3 + 3,000,0001-30 Protection - 2,000/yr

Table 9(b): Afforested Area by Species used inCalculating Weighted Average IRR

(Areas in hectares)

DGF Portucel Total

Eucalyptus 8,429 27,056 35,485

Conifers 53,987 12,683 66,670

Broadleaves 9,492 32 9,524

Total 71,908 39,771 111,679

Documents

World Bank Document · 2016. 7. 16. · Escudos ERR Economic Rate of Return FAO Food and Agriculture Organization of the United Nations ... (Loan 1 853-PO)" prepared by the Europe