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Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No:

PROGRAM APPRAISAL DOCUMENT

ON A

PROPOSED TRUST FUND GRANT

IN THE AMOUNT OF EUROS 9.00 MILLION(US$ 11.21MILLION EQUIVALENT)

FOR THE

EUROPEAN NEIGHBORHOOD AND PARTNERSHIP INSTRUMENT EAST COUNTRIES FOREST LAW ENFORCEMENT AND GOVERNANCE II PROGRAM

Mar 26, 2013

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

Bank authorization.

CURRENCY EQUIVALENTS

(Exchange Rate Effective Date 08/13/2012)

Currency Unit = EuroEuro 1.00 = US$ 1.234US$ 1.00 = Euro 0.810

FISCAL YEARJanuary 1 – December 31

ABBREVIATIONS AND ACRONYMS

ECECA

European CommissionEastern Europe and Central Asia

EIRR Economic Internal Rate of ReturnENPI European Neighborhood and Partnership InstrumentEU European UnionFLEG Forest Law Enforcement and GovernanceIOIUCN

Implementing Organization International Union for the Conservation of Nature

IUFR Interim Unaudited Financial ReportM&E Monitoring and EvaluationMTR Mid-term ReviewNPAC National Program Advisory CommitteeOC Operational CommitteeORAF Operational Risk Assessment FrameworkPCT Program Coordination Team (participating country level)PMT Program Management Team (regional or Program level)POM Program Operational ManualSC Steering CommitteeSESAF Strategic Environmental and Social Assessment FrameworkWWF Worldwide Fund for Nature

Regional Vice President: Philippe H. Le HouérouDirector, Operational Services and Quality: Gerard A. ByamSector Director: Laszlo LoveiSector Manager: Kulsum AhmedTask Team Leader: Andrew M. Mitchell

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ENPI EAST COUNTRIES (Armenia, Azerbaijan, Belarus, Georgia, Moldova, Russian Federation and Ukraine)

ENPI EAST COUNTRIES FLEG II PROGRAM

Table Ofof Contents Page

I. STRATEGIC CONTEXT....................................................................................................1

A. Country Context...........................................................................................................1

B. Sectoral and Institutional Context................................................................................3

C. Higher Level Objectives to which the Program Contributes.........................................6

II. PROGRAM DEVELOPMENT OBJECTIVES........................................................................8

A. Program Development Objective.................................................................................8

B. Program Beneficiaries..................................................................................................8

C. PDO Level Results Indicators........................................................................................9

III. PROGRAM DESCRIPTION............................................................................................10

A. Program Components................................................................................................10

B. Program Financing.....................................................................................................12

Program Cost and Financing............................................................................................13

C. Program Objective and Phases..................................................................................14

D. Lessons Learned and Reflected in the Program Design..............................................14

IV. IMPLEMENTATION.....................................................................................................15

A. Institutional and Implementation Arrangements.......................................................15

B. Results Monitoring and Evaluation............................................................................16

C. Sustainability..............................................................................................................17

V. KEY RISKS AND MITIGATION MEASURES.....................................................................17

A. Risk Ratings Summary Table......................................................................................17

B. Overall Risk Rating Explanation..................................................................................17

VI. APPRAISAL SUMMARY...............................................................................................18

A. Economic and Financial Analyses...............................................................................18

B. Technical....................................................................................................................18

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C. Financial Management...............................................................................................21

D. Procurement..............................................................................................................21

E. Social (including Safeguards)......................................................................................21

F. Environment (including Safeguards)..........................................................................22

G. Other Safeguards Policies Triggered (if required).......................................................23

Annex 1: Results Framework and Monitoring........................................................................24

Annex 2: Detailed Program Description.................................................................................31

Annex 3: Implementation Arrangements...............................................................................39

Annex 4: Operational Risk Assessment Framework (ORAF)....................................................45

Annex 5: Implementation Support Plan.................................................................................49

Annex 6: Economic analysis...................................................................................................51

Annex 7: Forest Sector Data by Participating Country............................................................52

Annex 8: The St Petersburg Declaration.................................................................................82

Annex 9: ENPI FLEG Focal Point Letters of Support.................................................................91

Annex 9: Draft Steering Committee Terms of Reference.......................................................105

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PAD DATA SHEET

ENPI EAST COUNTRIES FLEG II PROGRAMPROGRAM APPRAISAL DOCUMENT

.EUROPE AND CENTRAL ASIA

ECSS3

.

Basic Information

Date: Aug, 02, 2012 Sectors: Forestry (90%), Public administration- Agriculture, fishing and forestry (10%)

Director, Operational Services and Quality:

Gerard A. Byam Themes: Biodiversity (20%), Climate change (20%), Environmental policies and institutions (20%), Rural policies and institutions (20%), Other public sector governance (20%)

Sector Manager/Director:

Kulsum Ahmed/Laszlo Lovei

EA Category:

B - Partial Assessment

Program ID: P131138

Lending Instrument: Technical Assistance Grant

Team Leader(s): Andrew Michael Mitchell

Joint IFC: No

.

Borrower: IUCN/WWF

Responsible Agency: IUCN/WWF

Contact:

Contact:

Richard W. AISHTONIUCN (International Union for Conservation of Nature)Rue Mauverney 28 1196 Gland Switzerland

Costel BUCURWWF Danube Carpathian Programme 26, Ioan Caragea Voda StreetDistrict 1, Bucharest, Romania

Title: Dr

Title: Mr

ENPI FLEG Program Coordinator

WWF Danube Carpathian Programme Forest Programme Coordinator

Telephone No.:

IUCN Tel: +41 22 999 0316WWF Tel: +40 21 317 49 96;

Email: IUCN: [email protected]: cbucur @wwfdcp.ro

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mailto:[email protected]



.

Program Implementation Period:

Start Date: October 2012 End Date: October 2016

Expected Effectiveness Date: October 22, 2012

Expected Closing Date: October 21, 2016

.

Program Financing Data(US$M)

[ ] Loan [ ] Grant [X] Other

[ ] Credit [ ] Guarantee

For Loans/Credits/Others

Total Program Cost :

US$ 11.21 M Total Bank Financing :

US$ 11.21 M

Total Cofinancing : 0.00 Financing Gap : 0.00

.

Financing Source Amount(US$M)

BORROWER/RECIPIENT

IBRD

IDA: New

IDA: Recommitted

Others: Free-standing TF for ECA US$ 11.21 M

Financing Gap

Total

.

Expected Disbursements (in USD Million)

Fiscal Year FY13 FY14 FY15 FY16 FY17

Annual 1 209 970 2 955 067 3 303 275 2 256 622 1 481 920

Cumulative 4 165 037 7 468 311 9 724 934 11 206 854

.

Program Development Objective(s)

1. The Program will support the participating countries strengthen forest governance through improving implementation of relevant international processes, enhancing their forest policy, legislation and institutional arrangements, and developing, testing and evaluating sustainable forest management models at the local level on a pilot basis for future replication. The three specific Program Development Objectives are to:

- make progress implementing the 2005 St. Petersburg FLEG Ministerial Declaration in the participating countries and support the participating countries commit to a time-bound action plan to ensure its implementation and follow-up activities (regional level);

- review or revise (or establish a time-bound action plan to review or revise) forest sector policies

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and legal and administrative structures; improve knowledge of and support for sustainable forest management and good forest governance (including the impact of related EU regulations) in the participating countries (national level); and,

- test and demonstrate best practices for sustainable forest management and the feasibility of improved forest governance practices at the field-level on a pilot basis in all participating countries (sub-national level).

.

Components

Component Name Cost (USD Millions)

1. Regional Program 1.33

2. National and Sub-National Program 8.25

3. Program Management 0.89

4. Administration fees 0.73

TOTAL 11.21

.

Compliance

Policy

Does the Program depart from the CAS in content or in other significant respects? Yes [ ] No [X]

.

Does the Program require any waivers of Bank policies? Yes [ ] No [X]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [X]

Does the Program meet the Regional criteria for readiness for implementation? Yes [X] No [ ]

.

Safeguard Policies Triggered by the Program Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Programs on International Waterways OP/BP 7.50 X

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Programs in Disputed Areas OP/BP 7.60 X

.

Legal Covenants

Name Recurrent Due Date Frequency

Description of Covenant

.

Team Composition

Bank Staff

Name Title Specialization Unit UPI

Andrew Michael Mitchell Sr Forestry Specialist TTL/Forestry ECSS3

Alexander Balakov Sr Procurement Specialist Sr Procurement Specialist ECSO2

Arcadie Capcelea Sr Environmental Specialist Sr Environmental Specialist ECSS3

Tuukka Castren Sr Forestry Specialist Sr Forestry Specialist ARD

Galina S. Kuznetsova Sr Financial Management Specialist

Sr Financial Management Specialist

ECSO3

Vladislava Nemova FLEG Secretariat FLEG administration ECSS3

Chukwudi Okafor Sr Social Development Specialist

Sr Social Development Specialist

ECSS4

Nina Rinnerberger Climate Change Specialist Climate Change Specialist ECSS3

Marina Smetanina Sr Natural Resources Specialist

Russia FLEG WB Program Coordinator

ECSS3

Alexei Slenzak Sr Operations Officer Ukraine FLEG WB Program Coordinator

ECSS3

Elena Klochan Sr Country Program Officer Belarus FLEG WB Program Coordinator

ECCBY

Gulana Hajieva Environmental Specialist Azerbiajan FLEG WB Program Coordinator

ECSS3

Arusyak Alaverdyan Operations Officer Armenia FLEG WB Program Coordinator

ECSS1

Darejan Kapanadze Sr Environmental Specialist Georgia FLEG WB Program Coordinator

ECSS3

Non Bank Staff

Name Title Office Phone City

vii

.

Locations

Country First Administrative Division

Location Planned Actual Comments

Armenia Yerevan Nationwide X

Azerbaijan Baku Nationwide X

Belarus Minsk Nationwide X

Georgia Tbilisi Nationwide X

Moldova Chisinau Nationwide X

Russian Federation Moscow Nationwide X

Ukraine Kiev Nationwide X

.

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I. STRATEGIC CONTEXT

A. Regional and Country Context1

1. The Europe and Central Asia2 region accounts for around 25 percent of the world’s forests and stores more than 45 gigatons tons of carbon. The forest sector contributes about 1 percent of GDP and if sustainably managed, the sector could notably increase its employment and contribution to GDP. Unlike other parts of the world, forests in the ECA region have been expanding steadily (0.1% annually in 2000–2010), and the potential for additional growth (both in terms of forest area and volume per hectare) is substantial. However, there are still problems associated with: (i) poor governance; (ii) the need to create the right enabling environment through sound policy and legislation, which is supervised and delivered through appropriate forest institutions; and (iii) the continued requirement for support from transition to market economies in the forest sector.

2. The Forest Law Enforcement and Governance (FLEG) II Program focuses on improving forest governance in seven countries that are included in the European Union’s European Neighborhood and Partnership Instrument3 (ENPI) East region: Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine, and the Russian Federation. The Program builds on and further develops initiatives and activities undertaken during implementation of the first EU funded FLEG Program (2008-2012, P111139).

3. Economic and political diversity among the countries is wide, yet there are common elements that justify a joint regional Program to address forest governance. In all countries most of the modernization has taken place in urban areas and rural areas have often been left behind. One area where reforms have been slow to materialize is the forest sector, where the state is still the dominant actor and many structures have not changed much after the transition processes started in the early 1990’s. In countries that have gone through reforms, these reforms have often been implemented haphazardly and without adequate assessment of their feasibility, limited stakeholder consultations and frequently without being monitored and evaluated. Where the institutional set-up within forest sectors has changed, newly evolving market forces have only partially been controlled by new forest codes. Understaffing and underpayment of forest officials and workers are almost universal issues. However, despite the incomplete reform processes there are sound foundations for improved forest management; the scientific knowledge on biophysical characteristics of forests and silvicultural practices is, in several countries, of high quality. At the same time, there are more limitations in the knowledge on forest economics and stakeholder engagement, and forests are often seen as a safety-net and – due to unclear and poorly enforced property rights – open access resource.

1 Data in this section from FAO (2011): State of the World’s Forests2 The use of the term Europe and Central Asia (ECA) refers to one of the six regional units of the World Bank. Under the FLEG II Program, limited and selected participation of central Asian representatives (public servants) as observers is possible, but will not be financed from the FLEG II-budget.3 The European Neighborhood Policy (ENP) was developed in 2004, to avoid the emergence of divisions between the enlarged EU and its nearest neighbors (16 countries excluding the Russian Federation) but to instead strengthen prosperity, stability and security of all. The ENP Eastern Region includes the six countries covered by the Program. Cooperation is open to Russia whenever relevant to the objectives of the Program. The ENPI (which includes the Russian Federation) was established to support the development of an area of prosperity and good neighborliness encompassing the EU and the countries of the ENP.

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4. The ENPI countries have received some international support to address the challenges in the forest sector. Particularly the EU and its Member States are involved in environment cooperation with the region. There are also commercial interests in the sector; in 2009 Russia was the largest exporter of wood to the EU, and an important source of pulp, paper and wood manufactured products (with the exception of furniture). Ukraine also exports manufactured wood products (exc. furniture) to the EU. Even if the timber exports of most ENPI-countries are not large in terms of share of the economy, a considerable part of their forest product exports (67%, 62% and 49% for Belarus, Ukraine and Moldova, respectively) go to the EU. The introduction of the EU Timber Regulation could therefore have a major impact on their forest product exports4 if the countries, producers and exporters/importers are not sufficiently prepared.

5. According to the FAO State of the World's Forests Report 2011, 49% of Russia's territory is covered by forests, accounting for 20% of the world’s total forest area and 15% of the world’s total growing stock, making it the most forested nation on earth and therefore of critical importance. From 2002 to 2009, the World Bank provided financing ($ 60 million) for the Sustainable Forestry Pilot Program in Russia to support among other areas, the country's sector reforms. Since 2004, the Bank has been engaged in the Europe and North Asia Forest Law Enforcement and Governance Process, which contributed to the 2005 St. Petersburg Ministerial Conference and its action Program. The Russian Forest Code was revised during 2006 and enacted in January 2007. In March 2012, the Russian Federal Forest Agency launched the process to revise and update the national level forest policy. This is scheduled to take between 12 and 18 months including a stakeholder consultation/participation process. Currently the Russia Forest Fire Response Program (USD 121.26 million) is under preparation, which includes support for additional governance, policy and sustainable forest management activities.

6. In Ukraine, the State Forestry Agency (responsible for approximately 70% of the country's forest coverage) reports that the country is committed to the pan-European negotiations for a legally binding agreement on forests in the framework of the Forest Europe process5, as well as to the European 2020 targets for forests.6 At the national level, a Forest Code from 2006 foresees the reform and development of forestry in Ukraine. However the introduction of these legislative changes have yet to achieve the intended results.7

7. Moldova, Armenia and Azerbaijan have forest coverage of between 9 and 12% of their territory, whereas Georgia has 39% forest cover8. In absolute terms, the area ranges from 2.620 km2 in Armenia to 27.420 km2 in Georgia. The Georgian forest sector has been affected by government reorganizations. The ENPI FLEG I Program has proposed principles for the new draft forest law, as well as recommendations on the zoning of forest functions and forest

4 EU Timber Regulation (EU No 995/2010) counters the trade in illegally harvested timber and timber products through three key obligations: (i) it prohibits the placing of illegally harvested timber and timber products on the EU market for the first time; (ii) it requires traders who place timber products on the EU market for the first time to exercise 'due diligence' (once on the market, the timber and timber products may be sold on and/or transformed before they reach the final consumer); and (iii) it obliges economic operators in this part of the supply chain to keep records of their suppliers and customers to facilitate the traceability of timber products. The regulation becomes effective in March 2013.5 Forest Europe (formerly known as Ministerial Conference on the Protection of Forests in Europe) is an inter-governmental process launched in 1990. The last ministerial conference in Oslo in 2011 decided to start negotiations on a pan-European legally binding agreement on forests by June 2013. 6 See http://dklg.kmu.gov.ua/forest/control/en/index and http://www.foresteurope.org/.7 See http://www.enpi-fleg.org/index.php?id=18.8 For country specific forest sector data, please refer to Annex 7.

2

http://www.enpi-fleg.org/index.php?id=18

http://www.foresteurope.org/

http://dklg.kmu.gov.ua/forest/control/en/index

harvesting guidelines. The EU Environment and Natural Resources thematic Program and the Regional Environment Centre Caucasus are financing and implementing forest Programs, e.g. 'Fostering Community Forest Policy and Practice in Mountain Regions', in all three southern Caucasus countries. In Moldova, the State Forest Agency is an active partner in the ENPI FLEG I Program. There have also been investments in reforestation by World Bank-managed BioCarbon Fund.

B. Sectoral and Institutional Context

8. The forests of the Program countries have a vital function for the global, regional and local environment. As a carbon sink, they absorb more emissions than they release. According to the Intergovernmental Panel on Climate Change9, the relative importance of temperate and boreal forests for maintaining the world climate balance is growing, while that of tropical forests is shrinking. Approximately a quarter of the world's forest biomass is situated in Europe and Russia.10 Russia alone is home to around 20% of the world's forests.11 Changes in forest cover are not uniform; in some countries (Armenia and Georgia), there has been a slight decrease while Belarus, Moldova and Ukraine have been able to increase their forest cover. In other countries, the cover has remained the same as a percentage of total land area.

Table 1 Forest area (% of land area)Country 2000 2005 2010

Armenia 10.7 9.9 9.2

Azerbaijan 11.3 11.3 11.3

Belarus 40.8 41.6 42.6

Georgia 39.8 39.6 39.5

Moldova 9.9 11.0 11.7

Russian Federation 49.4 49.4 49.4

Ukraine 16.4 16.5 16.8

Source FAO (2011)

9. The carbon balance of temperate and especially boreal forests is hard to estimate. However, it is clear that well-managed and protected forests contribute to limiting the global temperature rise. Furthermore, well-managed forest ecosystems provide local livelihoods and income for populations and the economy, stabilize water cycles, prevent fires, assure biodiversity, and protect biotopes. They can also be the resource base for modern wood processing industries and renewable energy production.

10. There have been a number of international FLEG and forest sector processes, relevant to the ENPI East Countries, including:

11. The Europe and North Asia Ministerial Conference on Forest Law Enforcement and Governance in November 2005, brought together nearly 300 participants from 48 countries representing governments, the private sector, civil society and international organizations

9 http://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4-wg3-chapter9.pdf10 Ibid, table 9.1. Growing stock (volume of living trees) in Europe and Russia in 2005 given as 107.264 million m3, out of a world total of 434.219 million m3. 11 ftp://ftp.fao.org/docrep/fao/009/ah231e/ah231e00.pdf

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including the World Bank. The Conference yielded the St Petersburg Declaration (Annex 8), an expression of commitment by 44 governments from the ENA region and other participating countries to take action to address illegal logging and associated forest crimes. The declaration included 29 specific commitments and an indicative list of actions for the implementation of the declaration.

12. FOREST EUROPE (formerly known as the Ministerial Conference on the Protection of Forests in Europe) which is the pan-European policy process for the sustainable management of the continent’s forests. FOREST EUROPE develops common strategies for its 46 member countries and the European Union on how to protect and sustainably manage forests. Founded in 1990, the continuous cooperation of FOREST EUROPE has led to achievements such as the guidelines and criteria for sustainable forest management. The collaboration of the ministers responsible for forests in Europe has been of great economic, environmental and social importance at the national and international level. High-priority topics of FOREST EUROPE are to strengthen the role of forests in mitigating climate change, secure the supply of good-quality fresh water, enhance and preserve forest biodiversity and provide forest products. Other important tasks are to develop a framework for future forest collaboration and to explore the possibilities for a legally binding agreement on forests in Europe. All the ENPI East countries apart from Armenia and Azerbaijan are signatories to FOREST EUROPE. The World Bank, IUCN and WWF are all observer organizations. Participation of the seven participating countries in relevant Forest Europe-events may also be financed through the ENPI FLEG II Program to a limited extent.

13. The European Union's Forest Law Enforcement Governance and Trade (FLEGT) Action Plan which covers both supply and demand side measures to address illegal logging, and was endorsed by the EU Council of Ministers in November 2003. The FLEGT Action Plan has led to two key pieces of legislation:

14. FLEGT Regulation adopted in 2005, allowing for the control of the entry of timber to the EU from countries entering into bilateral FLEGT Voluntary Partnership Agreements (VPA) with the EU; and

15. EU Timber Regulation adopted by the European Parliament and by the Council in October 2010, to become effective on March 03, 2013.

16. In 2008 the United States amended the 100 year old Lacey Act to include the banning of commerce in illegally sourced plants and their products, which includes logs, sawn wood, furniture, pulp and paper. This means that all wood products must be harvested, transported, processed and exported to the US in accordance with the relevant local legislation. The Lacey Act is a fact-based rather than document based statute in that no document is a 100% guarantee of legality. It is up to the US importers and traders to exercise 'due care', to ensure that all imports are produced in accordance with all relevant legislation. This has a big implication for the importation of wood and wood products originating from countries such as Russia, Ukraine, Belarus and Georgia.

17. The World Bank is collaborating on a number of complementary operations and initiatives in the region and worldwide, which the FLEG II Program will build on and/or contribute to:

18. The Forest Fire Response Program in Russia (US$ 121.6 million), has the objective of improving forest fire prevention and suppression in selected forest ecosystems, included

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targeted protected areas, and to enhance forest management in five pilot regions. The Program supports both forest fire management and sustainable forest management. The Program will provide support to the development of forest policy, legislation and silvicultural systems, given their direct important role and links to the likelihood, extent and severity of forest fires.

19. The Belarus Forest Policy Note, which is currently being prepared, builds on the work undertaken under Phase I of the FLEG Program and will contribute to the development and review of forest strategy and institutional reform in Belarus. This work will also be utilized by the FLEG II Program in the further support to developing the Belarus Forest Strategy.

20. The Program on Forests (PROFOR) was created in 1997 to support in-depth analysis, innovative processes and knowledge-sharing and dialogue, in the belief that sound forest policy can lead to better outcomes on issues ranging from livelihoods and financing, to illegal logging, biodiversity and climate change. Recently PROFOR, in consultation with FAO, have developed a forest governance diagnostic tool. Under sponsorship of the Russian Federal Forest Agency (FFA) and with funding provided by the UK’s Department for International Development (DfID), the World Bank organized application of the tool in four regions of Russia: Khabarovsk in the Far East, Krasnoyarsk in Siberia, Arkhangelsk in the European North, and Voronezh in the Southwest. This work was found to be extremely useful and could be used to establish a baseline of forest governance indicators in Russia and to monitor progress if the approach is repeated towards the end of the FLEG II Program. This process could be adapted and streamlined for application in the other ENPI East countries.

21. PROFOR has also undertaken work to better understand the role modern information and communication technology (ICT), including remote sensing and field level applications, can play in promoting good, transparent and equitable governance and in ensuring sustained implementation of reforms. Some countries have introduced systems, for example, to better track log sales and timber flows, use remote sensing technologies to track encroachment, and engage with local communities with mobile applications. Building on this work, a trail exercise on the use of ICT to improve sustainable forest management in Moldova will be undertaken.

22. The Bank also has relevant ongoing activities in: community forest management and natural resource management in Albania (including payments for environmental services); improving carbon sequestration and reducing carbon emissions in the forest sector in Bulgaria; forest management and reforestation in Kazakhstan; and sustainable forest and abandoned land management in Bosnia and Herzegovina.

23. In 2007 the World Bank teamed up with the European Union, the International Union for the Conservation of Nature (IUCN) and the Worldwide Fund for Nature (WWF) to support countries in the ENPI region improve forest law enforcement and governance (FLEG) through implementation of the EU financed the FLEG I Program. The Program (€6 million/$ 8.63 million), implemented from 2008 to 2012 (P111139), had many interventions including stimulating cooperation between forest agencies, analyzing and informing stakeholders of the reasons for forest loss/degradation and poor governance, and supporting amongst others the development of tracking systems to reduce illegal logging and loss of government revenue. It helped commence the implementation of the 2005 St. Petersburg Ministerial Declaration on Forest Law Enforcement and Governance in the participating countries. More detailed

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description of regional and national Program activities is given on the FLEG Program website www.enpi-fleg.org as well as in the bi-annual progress reports.

24. The Government of Austria provided additional financing (€ 300,000/$ 393,000) to the Program in 2011. The Program funded numerous activities in the seven participating countries as well as facilitating regional cross border collaboration.

25. The new ENPI FLEG II Program will be funded through a free-standing, single-donor, hybrid Trust Fund financed by a grant of €9 million ($ 11.21million) from the European Union. The 4-year Program will build upon the successes from Phase I, by deepening reforms in sector policy, legal and administrative matters. It will also establish pilot Programs and pay increasing attention to forest fire and climate issues. The vision for the end of the Program in 2016 is that the participating countries have clear sector policies and implementation capacity to fight against illegal logging and associated trade, take into account the full social, environmental and economic value of forests, state-of-the-art forest sector laws, and modern forest sector institutions. In addition, the Program partners (World Bank, EU, WWF, IUCN) will support these reforms through institutionalized dialogue, expert cooperation, and well-targeted financial support where needed. The ENPI FLEG Phase II is in line with the EU’s ENPI Regional East Programme 2010-2013, which mentions FLEG and strives as one of its specific objectives 'to facilitate policy development and implementation of strategies in various environment sub-sectors'.12

C. Higher Level Objectives to which the Program Contributes

26. The overall development objective of the Program is to promote sustainable forest governance, management, and protection of forests in the participating Program countries, ensuring the contribution of the region's forests to climate change adaptation and mitigation, to ecosystems and biodiversity protection, and to sustainable livelihoods and income sources for local populations and national economies.

27. ENPI FLEG II is well aligned with the strategic priorities of the Country Assistance Strategies (CAS) or Country Partnership Strategies (CPS) in all seven participating countries, specifically:

- Armenia (CAS FY09-FY13): Deepening of relations with the European Union and its member states, while continuing to maintain strong links with other traditional bilateral partners; improved emphasis on preparedness for natural disasters and climate change adaptation; fighting corruption; and reducing rural and environmental risks.

- Azerbaijan (CAS FY11-FY14): Strengthening governance and institutions (cross-cutting filter) to improve institutional capacity and introduce policy reforms to reduce corruption; promoting transparency and public debate.

- Belarus (CAS FY08-FY11): Delivering global goods including safe water services; advocacy for reforms on governance and measures to address corruption; improving inclusion, welfare and opportunities for people.

- Georgia (CPS FY10-FY13): Rural development for employment generation and poverty reduction; strengthened partnership with the EU in the environmental field; continued

12 See http://ec.europa.eu/world/enp/pdf/country/2011_enpi_nip_regional_east_en.pdf , p.40 and p.52.

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http://ec.europa.eu/world/enp/pdf/country/2011_enpi_nip_regional_east_en.pdf

http://www.enpi-fleg.org/

involvement in administering the FLEG Program to provide advice and assistance in forest management.

- Moldova (CPS 2009-2012): Minimizing social and environmental risks; building human capital, and promoting social welfare, which includes improved access to and quality of health, water, and sanitation services and reduced environmental degradation; improving public sector governance including increased transparency and accountability and increased capacity of the public sector to develop and implement public policies.

- Russia (CPS 2012-2016): Deepen Russia’s global and regional role related to the provision of global public goods; improving transparency and governance through more accountability; IBRD financing for Programs including in the area of forestry protection.

- Ukraine (CPS FY12-FY15): Supporting progress in the EU integration agenda; improved governance for sustained socio-economic progress including deepened relations between government and citizens; more transparent and accountable use of public resources; and more productive cooperation between government and businesses.

28. The Program is also well aligned with the World Bank sector strategies and is anchored in the ECA Regional Strategy, which fosters closer cooperation with the EU. The ENPI FLEG Phase II Program will increase the collaboration with the EC/EU as a program partner, but also include the involvement of the EU Member States, and also the EU delegations in the participating countries. The 2002 Forest strategy emphasizes three types of services forests provide: environmental, economic and social. The Bank’s Forest Strategy acknowledges poor forest governance as a major obstacle to the efforts of client countries to alleviate poverty, to develop their natural resources and to protect global and local environmental services and values. The revised World Bank Governance and Anti-Corruption strategy (GAC2) has a strong emphasis on State capacity and ability to deliver good service (supply of good governance).

29. The ENPI FLEG II Program will work extensively with forest authorities in the participating countries to enable them to design and implement good quality and equitable forest policies. The Program will also incorporate Bank and EU requirements with respect to addressing gender issues in the planning, design and implementation of all activities.

30. The ENPI FLEG Program complements IUCN’s “One Program” approach where linkages among the various natural resource management problems intersect. Moreover, with geographic reference to the ENPI East countries, IUCN’s membership structure has three of the six councilors (representing its constituency) situated in Eastern Europe as well as Regional Offices in Tbilisi and an “in-progress” re-opening of a Regional Office in Moscow (and a Regional Office in Belgrade, Serbia). IUCN concentrates on its flagship Program of biodiversity conservation as well as forest landscape restoration (FLR), and protected areas Program in the ENPI East region (particularly with the implementation of the EC’s BIOPAMA Program) and these Programs are implemented by the Regional Offices in Tbilisi and Moscow as well as directly supported by IUCN’s HQ and Regional Office in Belgrade Serbia. The ENPI FLEG Program is directly implemented from IUCN’s European Program Office (EP) and is a keystone of the EP Program structure for the new IUCN inter-sessional Program (2012-2016).

31. FLEG issues have been fully embedded in the past and current 5 year strategic plans (2012 to 2016) of WWF Russia, WWF Caucasus Programme and WWF Danube-Carpathian Programme offices. Since the mid-1990s, WWF has been engaged in forest policy advocacy,

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addressing illegal logging and forest governance issues in partnership with local governments, the business sector and civil society. WWF closely works with businesses to promote voluntary forest certification (e.g. the partnership with IKEA to promote the Forest Stewardship Council [FSC] work in Russia, Ukraine, etc.) and has trained journalists, customs officials, and business partners to FSC work. WWF is currently pioneering approaches on economic valuation of forest resources in close collaboration with the government of Georgia and UNEP.

II. PROGRAM DEVELOPMENT OBJECTIVES

A. Program Development Objective

32. The Program will support the participating countries strengthen forest governance through improving implementation of relevant international processes, enhancing their forest policy, legislation and institutional arrangements, and developing, testing and evaluating sustainable forest management models at the local level on a pilot basis for future replication.

33. The three specific Program Development Objectives are to:

i) make progress implementing the 2005 St. Petersburg FLEG Ministerial Declaration in the participating countries and support the participating countries commit to a time-bound action plan to ensure its implementation and follow-up activities13 (regional level);

ii) review or revise (or establish a time-bound action plan to review or revise) forest sector policies and legal and administrative structures; improve knowledge of and support for sustainable forest management and good forest governance (including the impact of related EU regulations) in the participating countries (national level); and,

iii) test and demonstrate best practices for sustainable forest management and the feasibility of improved forest governance practices at the field-level on a pilot basis in all participating countries (sub-national level).

B. Program Beneficiaries

34. The Program will be implemented in cooperation with a large set of stakeholders in the seven participating countries. There will be national and regional work Programs (to be developed during the Inception Phase) and therefore the exact number of beneficiaries cannot be defined at this stage. However, it can be assumed that the Program has indirectly positive impact on most, if not all, rural inhabitants as well as a large number of urban dwellers. In the Program countries, the share of rural population ranges between 27–48% of total population.

13 Follow-up to the 2005 St. Petersburg conference could also include organisation of and/or contribution to a new or a follow-up conference.

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Table 2 Rural population (% of total) by YearCountry 2000 2005 2010

Armenia 34.9 35.9 36.3

Azerbaijan 48.8 48.5 47.8

Belarus 30.1 27.8 25.7

Georgia 47.3 47.5 47.1

Moldova 55.4 57.4 58.8

Russian Federation 26.6 27.1 27.2

Ukraine 32.9 32.2 31.9

35. Key stakeholders of the Program are: State forest agencies; environment ministries or other ministries responsible for forest issues (e.g. agriculture ministries, institutions responsible for biodiversity conservation and protected areas); forest and environmental academia and training/education institutions, local and provincial entities; state and private forest-related and wood processing industry, other forest-related industries e.g. hunting, tourism and recreation, financial sector, trading houses, construction sector (directly and through their trade associations); local forest communities in pilot areas, including indigenous communities; media; regional, national and sub-national civil society.

C. PDO Level Results Indicators

36. Key result for Program objective 1 (regional level), ‘to make progress implementing the 2005 St. Petersburg FLEG Ministerial Declaration in the participating countries and support the participating countries commit to a time-bound action plan to ensure its implementation and follow-up activities’:

- Reforms in forest policy, legislation or other regulations supported (Indicator One, core sector indicator).

- Credible process toward the implementation of the St. Petersburg declaration launched (Indicator Two).

37. Key results for Program objective 2 (national level), ‘to review or revise (or establish a time-bound action plan to review or revise) forest sector policies and legal and administrative structures; improve knowledge of and support for sustainable forest management and good forest governance (including the impact of related EU regulations) in the participating countries’:

- Government institutions provided with capacity building support to improve management of forest resources (Indicator Three, core sector indicator).

- Forest users trained (Indicator Four, core sector indicator).

- Understanding and implementation of FLEG principles by forest practitioners and other stakeholders improved (Indicator Five).

38. Key results for Program objective 3 (sub-national level), ‘to test and demonstrate best practices for sustainable forest management and the feasibility of improved forest governance practices at the field-level in all participating countries’:

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- Uptake of best practice models on sustainable forest management and improved forest governance (Indicator Six).

- Increased awareness of decision makers of modern technology and information to improve forest law enforcement and forest governance (Indicator Seven).

III. PROGRAM DESCRIPTION

A. Program Components

39. The participating countries have shown strong ownership of the Program and consider the structure and approach from FLEG Phase I relevant for this follow-up Phase. The main changes proposed by the participating countries, donors and implementing organizations for the FLEG II Program are: strengthening impact assessment of the Program; increasing the cooperation and collaboration with the EU Member States and EU Delegations in the participating countries; focusing on the implementation of the EU Timber Regulation; and increasing collaboration with international organizations (e.g. European Forest Institute, FOREST EUROPE, European Environment Agency and the Food and Agriculture Organization). FLEG Phase II will also present a roadmap for the follow-up of the St. Petersburg ministerial conference held in 2005.14

40. The design of country and regional activities will be based on country demand and capacity. The countries and their FLEG focal points (usually a high-ranking official) have – after country consultations – presented preliminary priorities for action (cf. Paragraphs 83- 89 below). The country-specific activities will be designed in more detail during the Inception Phase (which will be completed during the first six months of the Program implementation). The detailed activities will be presented in country and regional work plans which will be approved by the Steering Committee of the Program. These activities will be largely based on the results of Phase I, analysis of stakeholders and main challenges as well as the ambition of the countries to tackle these challenges. The Program will not approve or implement any activities in any disputed territories as defined by WB OP/BP 7.60.

41. Phase I implemented a large number of activities in the countries. When planning for Phase II, success from these activities will be assessed and selectively continued as appropriate. The approach is to build on the successful initiatives and scale these up.

42. The Program components 1 and 2, are linked to objectives (i), (ii) and (iii), and are based on the geographical coverage of the activities. Additionally there will be cross cutting themes within these components for Program communication and gender issues. The final component will be for overall Program Management.

43. Component 1: Regional Program (US$ 1.33 million), will focus on:

- strengthening the policy dialogue between participating countries and institutions regarding the 2005 St. Petersburg Declaration by organizing thematic meetings on FLEG issues of shared interest,

- monitoring the implementation of the St. Petersburg Declaration in the participating countries through stakeholder reporting and preparation and regular up-dating of tracking

14 Recommendations of the ENPI FLEG Program Operational Committee, Brussels January 30-31, 2012.

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tables on implementation of the declaration; identifying areas of the St. Petersburg declaration where implementation needs more focus and support,

- conducting regional studies and developing publications in the framework of the 2005 St. Petersburg Declaration, and

- providing regional support to the implementation of the FLEG country work plans based on partner government requests,

- developing a communications strategy prepared in accordance with the EC’s Communication and Visibility Manual, and the World Bank’s Access to Information Policy, to develop and maintain the ENPI FLEG corporate branding and ensures that relevant participants and stakeholders are provided with consistent up to date Program information,

- contributing to communication activities to promote regional and national activities developed within the framework of 2005 St. Petersburg Declaration,

- maintaining a high-quality Internet site in English and Russian on state of the art forest sector governance and reform. Country work Programs (cf. paragraph 44) may also have their own, national and local communication activities, and

- regional coordination of the program through annual meetings of the ENPI FLEG focal points, donors and implementing organizations.

44. Component 2: National and Sub-National Program (US$ 8.25 million), will focus on:

a) National Level:

- Supporting, continuation from Phase I, the formulation and implementation of forest policy, legal, administrative and institutional reforms on the national and sub-national levels,

- promoting a good investment climate for credible private sector operators,

- providing capacity building, training and advice on administrative/institutional reforms and on forest governance issues more directly,

- liaising and co-operating with forest sector experts from EU member states, and

- formulating national workplans and ensuring compliance with safeguards.

b) Sub-national and Local Program:

- providing support on forest governance techniques (e.g. legal knowledge, technical knowledge of offences, how to document forest crimes, detection techniques etc.), to enable forest staff ensure law enforcement,

- documenting and communicating concrete local results on forest governance and forest law enforcement (e.g. local dedicated websites, hotlines etc.),

- supporting the use of modern technology (timber tracking, GPS, and other ICT) through pilot activities addressing FLEG issues,

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- involving local communities in policy development and in sustainable forest management as well as providing the appropriate information that is accessible, easy to use and relevant for local decision makers, and

- increasing public awareness and participation.

45. Component 3: Program Management (US$ 0.89 million), will consist of:

- overall management of the Program,

- ensuring compliance with World Bank and EU safeguard policies and directives,

- quality control of Program deliverables,

- Program reporting and monitoring of the results framework indicators, and

- organizing joint meetings for national focal points and other Program-level coordination events (such as Program Management Team tele-conferences, quarterly video conferences between the implementing partners and, as required, the relevant EU delegations), exchange of information between the participating countries and planning and coordination of national work plans.

46. Traditionally the forest sector is male dominated at all levels (professional, technical and worker/user levels), although this varies between the participating countries. Forest harvesting and processing have, in most countries, been seen as male work, due to the tough exposed conditions and the manually intensive work. With improved machinery and working conditions, the increasing opportunities for both genders in forest education, the gender balance should gradually improve. Gender issues will be monitored as part of the World Bank core sector indicator on forest users and community members trained. Gender will also be taken into consideration through the SESAF process, which will screen for gender issues. Pilot activities at the sub-national level should specifically target the inclusion of women (and other disadvantaged groups such as some ethnic minorities).The overall Program communication will include relevant gender issues as applicable (e.g. the proportion of women that participated in a training).

B. Program Financing

47. The Program will be established as a free-standing, single-donor, hybrid (Bank and Recipient-Executed) Trust Fund with a European Union grant of € 9.0 million /US$11.21million). An Administration Agreement will be signed between the EU and World Bank.15 The implementation arrangements will build on the successful partnerships established for the Phase I. Modifications will be made based on needs identified during Phase I.

48. A Bank-executed Trust Fund will be set up for the Bank-implemented portion of the Program (which will be limited to technical assistance). The World Bank will enter into grant agreements with IUCN and WWF to establish Recipient Executed Trust Funds (RETF) for their respective activities. All activities will be executed by the Implementing Organizations (IOs -World Bank, IUCN and WWF), and no activities will be undertaken by the participating countries. All Program activities will be implemented in cooperation between the IOs and EC,

15 The Administration Agreement will be covered by the Trust Funds and Co-financing Framework Agreement entered into on 20 March, 2009 between the European Commission and the World Bank Group (IBRD, IDA, IFC).

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to ensure a uniform program with results and outputs all presented as ENPI FLEG outputs with FLEG branding.

49. All financing will be grant funding and there will be no counterpart funding from the participating countries, IUCN or WWF.

50. The distribution of the operational costs of the Program budget will be agreed in the grant agreement negotiations with WWF and IUCN. It is expected that the distribution of the operational costs of the Program will differ slightly from Phase I to reflect the shift in core responsibilities between the implementing organizations and account for additional quality control and safeguards tasks.

51. Allocation of Program budget between countries will be decided during the Inception Phase, based on country progress, demand and capacity.. However, progress will be periodically reviewed and country and regional budgets reassigned according to need, capacity and rate of implementation. Overall progress will be formally assessed during the Mid-term Review, and budget reallocations undertaken at this stage.

Program Cost and FinancingTable 3 Indicative Program Budget by Component

Component 1: RegionalRegional activities 1 162 268

SC meetings 167 695Subtotal 1 329 963

Component 2: National/sub nationalNational level activities 4 881 526

NPAC meetings 117 386Sub-national and local level 3 254 351

Subtotal 8 253 264Component 3: Program management

Program management 154 175Full time coordinator 329 692Quality Control and Safeguards 406 833

Supervision costs 508 789Subtotal 1 399 490

Total Project Costs 10 982 717

Central Administration fees (2% of total financing) 224 137

Total Financing Required 11 206 854

Project Components Project cost(US$)

Note: Administration fees includes World Bank central unit fees

52. Once the administrative, program management and coordination, safeguards and quality control costs have been accounted for (including Steering Committee and National Program Advisory Committee meetings), the budget for activity implementation comes to US$ 9.30 million. From this, IUCN will receive a Grant for US$ 3.85 million and WWF

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US$ 2.45 million for activity implementation. The remaining US$ 3.00 million will be used for World Bank executed activities.

53. The mid-term review will include an analysis of both country and regional progress but also IO (including the World Bank) performance, to determine if and how there should be a reallocation of resources between the different countries and implementing agencies. Disaggregated performance based indicators will be developed during the inception phase and then monitored at least annually. The indicators could be based on country/regional workplans and also the implementing agency work plans.

C. Program Objective and Phases

54. This is the second Phase in partnership between the EU and the World Bank to improve forest governance and law enforcement in the ENPI-East countries. Phase I was implemented from 2008-2012 in collaboration with IUCN and WWF. The same arrangement will be used to implement Phase II.

55. The PDO (Overall objective) for Phase I was to ‘contribute to the achievement of legal and sustainable forest management and utilization practices, strengthened rule of law and improved local livelihoods in each of the seven participating countries focusing on environmental sustainability, human rights aspects and gender equity’. The overall approach in the Phase II will remain the same.

D. Lessons Learned and Reflected in the Program Design

56. The ENPI FLEG Phase I activities are ongoing until August 2012, and there is an end disbursement date of December 31, 2012. Consequently the Implementation and Completion and Results Report (ICR) or other final Program reports are not yet due. However, the donor (EU) carried out independent monitoring activities for the Program Phase I. The reports have recognized the progress made in the Program and have recommended continuation of the Program activities and the financing of Phase II. Continuation of the Program is seen as an EU priority to scale-up and stabilize the achievements from the Phase I.

57. Specific detailed work plans for Phase II will be prepared during a six-month Inception Phase of the Program. During this phase, country teams will review performance and achievements in individual activities carried out during Phase I. In the work plans, successful Phase I activities will be continued and scaled up. Possible less successful Program activities will be discontinued. The overall approach will be to focus on fewer but larger high-impact activities that have proved their relevance and impact during Phase I.

58. Although the Phase I Program design was complicated, with seven participating countries, three implementing organizations and the EU as the main donor (during the final year, the Austrian Development Cooperation also contributed to the Program), synergies developed between the implementing organizations, the participating countries, the donor and Program beneficiaries/stakeholders, with the result that there is enthusiasm and commitment for the FLEG processes. A significant aspect has been the increasing cooperation between the participating countries, both at government and non-government levels. The net effect has been that the Program results are greater than the sum of the individual inputs/activities with each stakeholder contributing their own expertise and specialization leading to a Program momentum

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and commitment. Phase II will build on these collaborative aspects and will emphasize the partnerships between the key stakeholders (i.e. the participating countries, the EU and the IOs).

59. Under the Phase I Program, a large number of reports, seminars, presentations and web-pages were developed and disseminated, mainly in Russian or local languages. To broaden the international understanding of depth and content of the work undertaken, every output for the FLEG II Program will have an accompanying, concise description of the content of the output in English.

60. Regular periodic reporting under the FLEG II Program will concentrate on measuring the impacts and progress towards achieving the development objectives, rather than simple reporting on the number of activities completed.

61. Phase I also demonstrated the strong regional buy-in and cooperation between participating countries, with countries frequently participating in bilateral, semi-regional and regional activities and events, making use of each others’ experience and capacity and sharing best practice knowledge. This successful feature will be enhanced in Phase II.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

62. An Administration Agreement (AA) will be agreed with the EU and World Bank. The agreement will be covered by the Trust Funds and Co-financing Framework Agreement entered into on 20 March 2009 between the European Commission and the World Bank Group (IBRD, IDA, IFC). IUCN and WWF International16 will enter into recipient executed Grant Agreements with the Bank. Terms of the agreements, including distribution of operating funds to the implementing agencies are currently being negotiated. Both IUCN and WWF executed their components during the Phase I successfully.

63. This four organization (EU, WB, IUCN and WWF) partnership is considered to be well placed for the following reasons:

- it successfully managed the ENPI FLEG Phase I Program;

- it has a broad relevant portfolio in the partner countries; and

- the participating organizations bring relevant but different and complementary sector expertise.

64. To facilitate wider European forest knowledge transfer, cooperation will be specifically sought with the European Forest Institute and FAO. Other collaborative arrangements will be developed with processes and institutions such as FOREST EUROPE, and the European Environment Agency, and will identify opportunities offered by relevant and related Programs such as the Emerald Network17.

16 Both IUCN and WWF may implement activities through their national and local Programs or chapters. The operational and fiduciary responsibility lies, however, with the international bodies.17 The Emerald network is a network of areas of special conservation interest (ASCIs), established in the territory of the contracting parties and observer States to the Bern Convention, including, among others, central and east European countries and the EU Member States. For EU Member States, Emerald network sites are those of the Natura 2000 network.

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65. In the light of the Aid Effectiveness agenda (in particular ownership and alignment), no major country activities will be implemented without the consent and buy in of local counterparts. Country work Programs will be developed during the Inception Phase and updated annually.

66. The activities identified in the country/regional work plans will be undertaken by the World Bank (as technical assistance) and by IUCN and WWF. There will be no recipient executed grants to national organizations. However, activities under the FLEG II Program will frequently be jointly implemented and always presented as ENPI FLEG Program activities rather than as different IO outputs.

67. The Program will have a full time, Moscow based coordinator and coordination bodies at national and regional levels to ensure that all activities are well prepared, managed and coordinated. The key bodies are the:

- Steering Committee (SC, previously Operational Committee in FLEG Phase I): The SC will consist of the FLEG national focal points from each participating country, the EU, World Bank, IUCN and WWF representatives. SC is the highest coordinating body ensuring coherence of Program implementation. Draft terms of reference for the Steering Committee are included as Annex 10.

- National Program Advisory Committee (NPAC): a national coordination body in each country consisting of representatives of key stakeholder groups. It is chaired by the National FLEG focal point, usually a high level civil servant or deputy minister in national forest administration.

- Program Management Team (PMT): consisting of technical Program managers from the three implementing organizations at regional level.

- Program Coordination Teams (PCT): consisting of technical Program managers from the three implementing organizations in each participating country.

68. The implementing organizations (World Bank, together with its partners IUCN and WWF), will report to the Steering Committee. The WB will directly report to the EU as agreed in the Administration Agreement. IUCN and WWF will directly report to the WB as agreed in the Grant Agreements.

B. Results Monitoring and Evaluation

69. The Program progress will be monitored through the Results Framework and Monitoring included as Annex 1. During the Inception Phase of the Program, a more detailed results framework at the country and activity level will be developed to monitor the progress of the country and regional workplans.

70. A mid-term review (MTR) will be carried out after two years of implementation. This MTR will review progress at Program, at country/regional and implementing agency (including the World Bank) levels. The review will focus on the effectiveness and relevance of Program activities. It will also make recommendations if and how Program resources should be reallocated between countries and implementing organizations.

71. The EC will monitor and evaluate the Program following its own Monitoring & Evaluation processes and as agreed in the Administration Agreement. The ENPI FLEG Program

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will utilize the lessons learnt from these processes to guide the planning and implementation of Program activities.

72. The Program will produce numerous outputs at regional, national, and sub-national levels. The World Bank will ensure adequate quality control of all products and deliverables by setting up a formalized professional screening process to ensure that deliverables meet both the technical quality requirements, are environmentally and socially sound and sustainable and are consistent with the Strategic Environmental and Social Assessment Framework (SESAF).

C. Sustainability

73. All seven participating countries have identified their tentative focal areas for the Program. These priority issues have been identified by the National Program Advisory Committees (NPAC) and reflect the views of both state authorities and non-state stakeholders. This consultative process for selecting priorities is conducive to extensive buy-in of Program activities and consequently sustainability of the Program activities.

74. The FLEG II Program is largely built on the experience gained during Phase I. Even though formal evaluation is still to be completed, the NPACs reviewed past activities prior to selecting future priority actions. One of the key criteria in selecting these priorities has been the perceived sustainability of past activities.

75. Sustainability of Program activities and achievements will also be enhanced through extensive communication of the outputs and results achieved. Many of the outreach products are of an educational and training nature and through continued use will have a continued impact over many years.

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V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

Risk RatingStakeholder Risk MImplementing Agency Risk

Capacity HGovernance M

Program RiskDesign LSocial and Environmental L

Program and Donor LDelivery Monitoring and Sustainability SOther (Optional)Other (Optional)Overall Implementation Risk H

B. Overall Risk Rating Explanation

76. The overall risk of high is appropriate because the Program design is intrinsically complex (seven countries, four partner implementing organizations including the donor). This high risk is however mitigated by:

- the fact that the Program builds on the successful first Phase of implementation, and takes into consideration lessons learnt from the first Phase;

- the strong and demonstrated local ownership of the participating countries, resulting in local demand for the Program and its success;

- disciplined monitoring of the results indicators, and,

- locally recruited quality control and safeguards coordinators to monitor performance,

77. The implementing agency risk is stated as high due to the overall environment of fraud and corruption in some of the participating countries, rather than the capacity of the implementing agencies. Also the procurement procedures will be different for the second Phase and will need to reflect the Bank procurement guidelines of January 2011. However this will be mitigated by the procurement training to be provided during the start up period for both Program management staff and country staff of the two implementing agencies (IUCN and WWF).

VI. APPRAISAL SUMMARY

A. Economic and Financial Analyses

78. The ENPI FLEG II Program is a technical assistance Program with diverse activities, the details of which will be determined during the inception phase. Therefore, traditional economic and financial analysis methods are not applicable to assess the economic viability of the

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Program. However, the relative importance of the Program can be estimated by comparing the Program budget with the value added of the forest sector to national GDP.

79. Table 4 below, gives an estimate of the economic rate of return of the Program if the Program, and subsequently improved forest governance is able to increase (one-off) the value added in the sector 0.5% and 1% from 2006 levels. While this is an extremely rough measure, it gives an indication on the order of magnitude of the potential impact of the Program. The same table has, as a conservative alternative, a measure where increase for Russia is capped at 0.1% in order not to have the results skewed by the share size of the Russian forest sector.

Table 4 Economic Internal Rate of Return Based on Increase in Contribution to GDPEIRR by increase in GDP contribution

0.5% 1.0%

All countries 190% 329%

All countries, Russia 0.1% increase

91% 127%

80. Estimates in Table 4 do not capture the social and environmental benefits to be derived from the Program and improved forest governance. Although these are most often intangible, difficult to value and almost impossible to actually capture, the real value to society and the environment has been shown to be many times the purely economic valuation of the direct benefits.

B. Technical

81. The overall technical design of the Program is based on the successful implementation of the ENPI FLEG Phase I, which clearly demonstrated that work on improving forest governance needs to be flexible, based on country priorities and involve national stakeholders as widely as appropriate.

82. Detailed technical planning of country (national and sub-national, ref. Component 2) activities will be carried out during a six-month Inception Phase when the NPACs and three implementing organizations (World Bank, IUCN and WWF), together with the EU (both DG DEVCO and respective EU delegations), will prepare national and regional work plans for the Program period. A key priority for the FLEG II Program will be to strengthen joint activities between the three implementing organizations, the EC (as a Program partner), as well as the respective EU delegations. The NPACs have already identified tentative key themes that will be implemented during the Program. However during the Inception Phase, there will be input into the work plan from the implementing organizations, the EC and delegations, to try to broaden the scope of the activities to be included in the work plans, to encompass issues such working at the landscape level, improving participation, and genuine community forest management. This identification is based mainly on experiences from Phase I and national forest policy priorities. The level of detail of the priorities varies from country to country and the already identified priorities by country are summarized as follows:

83. Belarus

- Updating the national forest policy, improving forest legislation and law enforcement

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- Optimizing the system of forest management and forest use

- Improving the level of professional training for forestry specialists, and

- Implementing a communication strategy in the forest sector, developing forest-related and environmental education.

84. Armenia

- Legal and institutional review

- Education and experience exchange; both within country between sector specialist, journalists, academia and internationally between ENPI FLEG countries and with EU member states, and

- Public awareness and monitoring of the forest sector.

85. Azerbaijan

- Supporting young foresters locally and internationally

- Strengthening staff capacity in the forest sectors; development of training modules with Ministry of Education

- Developing and piloting efficient household energy sources to replace wood-based fuels

- Developing a long term national forest strategy, and

- Implementing ‘model forests’ in the country

86. Georgia

- Training needs assessment and capacity building of the Natural Resources Agency’s staff

- Legal work on the development of secondary legislation

- Promotion of the incorporation of SFM principles in national forestry policies

- Assessment of best international practices in the area of forest certification

- Public engagement and awareness to promote better forest governance

- Promotion of alternative livelihood activities for the forest depending rural population

- Incorporation of FLEG issues in forest related education

87. Moldova

- Promoting good forest governance in community-based and private forests, as well as community involvement in sustainable forest management

- Creation of short-rotation plantations, capacity building on forest reproduction and increased awareness on promotion of efficient forest biomass use

- Preventing illegal logging by improved forest management planning

- Conducting analytical studies on afforestation and development of community and private forestry, on valuation of forest ecosystem services, and on conflict of interests in the sector

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- Improving governance and optimizing multiple benefits of sustainable management of forestlands by applying agroforestry and silvopastoral practices, and

- Developing educational Programs for youth and awareness raising.

88. Russia

- Improving the FLEG planning and monitoring at the national, regional (local), and interagency levels

- Building human resource capacity to address FLEG issues

- Causing specific FLEG actions to be implemented by top Russian forest companies and their international trading partners

- Safeguarding the rights of local communities and small businesses to forest resource use, and

- Increasing transparency of action and raising stakeholder awareness

89. Ukraine

- Facilitating implementation of forestry reform

- Developing the timber market and creating a system to confirm timber legality

- Introduction of a model of intensive and sustainable forest management, and

- Dissemination of knowledge and training.

90. In addition, regional and communication activities will be planned during the Inception Phase. Regional activities will be broadly based on three types of rationale:

- activities that are directly linked to the continuation of the St. Petersburg Declaration and its implementation and follow-up;

- activities that are linked to implementation of EU policies – EU Timber Regulation in particular – and collaboration with EU member states; and,

- activities on common elements in national work plans, i.e. activities where two or more participating countries have shown interest in similar analytical or development work and where there are obvious cross-border elements.

91. Program Management activities (Component 3) consist of day to day management, exchange of information between the participating countries and planning and coordination of national work plans. The structures and formalities will follow the successful example set by Phase I. The highest coordination body will be Steering Committee (SC, previously Operational Committee), which consists of national FLEG focal points, and donor and implementing organization representatives. Component 3 will also provide for screening of all Program deliverables to ensure their technical quality and compliance with World Bank safeguard policies.

C. Financial Management

92. All fiduciary functions for the Program, including procurement, financial management and disbursement, will be carried out by WWF and IUCN respectively. They have acquired

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experience in World Bank fiduciary procedures during the ENPI-FLEG Phase I Program. The FM arrangements of WWF and IUCN have been reviewed periodically as part of the Program supervisions and been found satisfactory. Similar arrangements will be used for the Phase II Program, adjusted where necessary.

93. WWF and IUCN each will provide project annual audited financial statements together with the auditor’s opinions to the World Bank within six months of the end of the fiscal year. Following the Bank’s formal receipt of audited financial statements from Grant Recipient, the Bank will make them available to the public in accordance with the World Bank Policy on Access to Information through its website. In addition, WWF and IUCN will make the audited financial statements available to the public in a manner acceptable to the Bank. There are no overdue audit reports from either WWF or IUCN under Phase I.

D. Procurement

94. Draft procurement Plans for the first six months (the inception phase) for seven countries is under preparation by the two implementing agencies IUCN and WWF. During the inception phase, both agencies will produce full procurement plans for the next 12 months. These procurement plans will then be updated on an annual basis thereafter. These two agencies will be responsible for supervising procurement processes under the Program in accordance with the World Bank’s Procurement Guidelines (January 2011). Staff responsible for procurement within the implementing agencies will be trained by the Bank in Bank procurement requirements during the inception phase.

E. Social (including Safeguards)

95. Forest resources are diverse in terms of tree species, values and livelihood opportunities; and its management revolves around local and national cultures, values, beliefs and traditions. When managed in a sustainable way, forest resources provide livelihood opportunities for poverty reduction and income generation for the local population. The way and manner forest resources are managed also solicit different expectations and interests from different stakeholders, particularly on how its diverse resources can be used both at national and within local communities. The conventional forest management planning sees it as technical exercise undertaken by experts and focuses largely on state’s demand with no local consultation requirement, and with limited principles of sustainability. On the other hand, sustainable forest management approach sees stakeholders’ engagement as integral to forest management both for benefit sharing and for mitigating uncertainty/risk, particularly on resource use conflict between stakeholders. This Program aims at increasing stakeholder participation in forest management in ecologically sustainable way and incorporates social, economic and political dimensions through capacity building, technical assistance, sustainable policy review; and renegotiation of roles and tasks for the state, private sector and civil society.

96. The participating countries and their key stakeholders have participated actively in Phase I and in the preparation of the new Program. The Program’s objectives and incentives, which promote a cross-cutting review of forest sector policies and legal and administrative structures will improve knowledge of and support for sustainable forest management and good forest governance in the participating countries. These activities are envisaged to change behavior and attitudes of the stakeholders during implementation.

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97. Civil Society Organization (CSO) consultation was an integral part of the first Phase and will be enhanced during the implementation process of Phase II. CSOs will assist in discussing priorities with national and community groups, with a view to establishing fairness and social accountability in the process.

98. The Program will measure changes of forest practitioners and other stakeholders using stakeholders’ surveys with gender disaggregated indicators and will support the development of a platform for social accountability that will be tested under the Program.

F. Environment (including Safeguards)

99. While the Program does not involve support for identification or preparation of investments, which would have direct environmental and social impacts, the forest policies/laws, national forestry Programs and plans to be developed with Program support, could have a wide range of environmental and social impacts (both positive and negative). To address these issues a Strategic Environmental and Social Assessment Framework (SESAF) will be prepared, which will be applied to all outputs that have policy implications at the national and sub-national level. The SESAF would identify the types of environmental and social issues that can be expected to be associated with the policy documents that the Program will support, and provide guidance on how these aspects should be integrated into the analytical and decision-making processes. This will include the provisions for strong and effective stakeholder participation. The overall SESAF objective is that all policy documents that would be supported under the Program to be environmentally and socially sound and sustainable, and consistent with the WB safeguards policies as well as with applicable EU Directives. Pilot activities to be implemented at the sub-national level with program support, will follow guidance of the SESAF, which will include an Environmental and Social Management Framework, to screen pilot level activities to ensure that any potential impacts are identified and mitigated (if mitigation is not possible the proposed activity will be rejected).

100. Since this Program is i) executed by the Bank in partnership with IUCN and WWF; ii) does not go to the Bank’s Board for approval; and iii) is not signed by the participating Governments, the SESAF will have an advisory character only, but will be mandatory for WWF and IUCN as part of their Grant Agreements. The responsibility for ensuring that the SESAF is correctly implemented will lie with the NPACs. A Safeguards/Quality Control Specialist will be hired in each country, to review terms of reference, screen all outputs for both quality and potential safeguards issues, and if there are safeguards issues to ensure that the appropriate mitigation measures are followed.

101. To build capacities with regard to safeguards issues, special training will be given to all Safeguards/Quality Control Specialists and to selected NPAC members in all participating countries at the commencement of the FLEG II Program.

102. Since this Program does not go to the Board for approval, the requirements for Borrower-executed operations in terms of Environmental Assessment (EA) disclosure and consultation prior to Appraisal do not apply. The SESAF will be disclosed during the Inception Phase of the Program implementation with open consultation and participation of a broad range of stakeholders.

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G. Other Safeguards Policies Triggered (if required)

103. The following policies are also triggered:Safeguard Policies Triggered by the Program Yes No TBD

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Programs on International Waterways OP/BP 7.50 X

Programs in Disputed Areas OP/BP 7.60 X

104. All the triggered policies will be included in the SESAF and will be covered by the work of the Safeguards/Quality Control Specialist in each participating country.

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Annex 1: Results Framework and Monitoring

Country: Europe and Central AsiaProject Name: ENPI East Countries FLEG II Program (P131138)

.

Results Framework.

Project Development Objectives.

PDO StatementThe Program will support the participating countries strengthen forest governance through improving implementation of relevant international processes, enhancing their forest policy, legislation and institutional arrangements, and developing, testing and evaluating sustainable forest management models at the local level on a pilot basis for future replication.

The three specific Program Development Objectives are to: i) make progress implementing the 2005 St. Petersburg FLEG Ministerial Declaration in the participatingcountries and support the participating countries commit to a time-bound action plan to ensure its implementation and follow-up activities (regional level);ii) review or revise (or establish a time-bound action plan to review or revise) forest sector policies and legal and administrative structures; improve knowledge of and support for sustainable forest management and good forest governance(including the impact of related EU regulations) in the participating countries (national level); and,iii) test and demonstrate best practices for sustainable forest management and the feasibility of improved forest governance practices at the field-level on a pilot basis in all participating countries (sub-national level)..

Project Development Objective Indicators

Cumulative Target Values Data Source/

Responsibility for

Indicator Name Core Unit of Measure Baseline YR1 YR2 YR3 YR4 End

Target Frequency Methodology

Data Collection

Reforms in forest policy, legislation or other regulations supported

Yes/No No Yes annual Program reports PCTs, PMT

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Credible process toward the implementation of the St. Petersburg declaration launched

Percentage 0.00 100.00 annual Program reports PMT

Govt institutions provided w/ capacity buildg to improve mgt of forest resources

Number 0.00 7.00 annual Program reports PCTs, PMT

Forest users trained Number 0.00 annual Program

reports PCTs, PMT

Forest users trained - Female Number 0.00

Forest users trained - Ethnic minority/indigenous people

Number 0.00

Understanding and implementation of FLEG principles by forest practitioners and other stakeholders improved

Percentage 0.00 annual

repeated perception surveys of key decision makers

Uptake of best practice models

Yes/No No Yes annual Program reports

PCTs, PMT

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on sustainable forest management and improved forest governance

Increased awareness of decision makers of modern technology and information to improve forest law enforcement and governance

Percentage 0.00 annual

.

Intermediate Results Indicators

Cumulative Target Values Data Source/

Responsibility for

Indicator Name Core Unit of Measure Baseline YR1 YR2 YR3 YR4 End

Target Frequency Methodology

Data Collection

Monitoring plan for implementation of the St. Petersburg declaration designed and regularly updated in participating countries

Number 0.00 7.00 annual Program reports PCTs, PMT

Regional studies under the

Number 0.00 annual Program reports

PCTs, PMT

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framework of the St. Petersburg declaration undertaken and disseminated

EU Member States' forest sector knowledge is made available to participating countries and knowledge exchange between participatingcountries and EU Member States is ongoing

Number 0.00 annual

Sustainable forest management and improved forest governance best practice models developed, tested and used for demonstration purposes by the Program

Number 0.00

Modern technology

Number 0.00

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trialed and systems to improve forest governance developed by the Program

Awareness, ownership and capacity of key stakeholders enhanced

Percentage 0.00

Media coverage of FLEG issues has increased

Number 0.00 7.00

.

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Annex 1: Results Framework and Monitoring.

Country: Europe and Central AsiaProject Name: ENPI East Countries FLEG II Program (P131138)

.

Results Framework.

Project Development Objective IndicatorsIndicator Name Description (indicator definition etc.)

Reforms in forest policy, legislation or other regulations supported

This indicator measures whether a Program has supported forest sector reforms. This includes support to revised policies or legal and institutional reforms that have been adopted by the client. It also includes well-defined, time-bound Phased action plans that have been launched with the objective of achieving such forest sector reforms.

Credible process toward the implementation of the St. Petersburg declaration launched

This includes the preparation and implementation of a time-bound action plan for regional follow up activities for the St Petersburg declaration.

Govt institutions provided w/ capacity buildg to improve mgt of forest resources

This refers to the number of national or sub-national institutions that have received capacity building as a result of the Program. The numbers will be revised during the inception period as the number of institutions is likely to be significantly greater than 1 per country.

Forest users trained This measures the number of forest users and community members that have received capacity building through training as a result of the project. The baseline value is expected to be zero.

Forest users trained - Female See above.

Forest users trained - Ethnic minority/indigenous people See above.

Understanding and implementation of FLEG principles by forest practitioners and other stakeholders improved

As demonstrated in opinion surveys. Target level of awareness needs to be defined.

Uptake of best practice models on sustainable forest management and improved forest governance

The target values can only be assessed after the Inception Phase.

Increased awareness of decision makers of modern technology and information to improve forest law

Baseline and target levels need to be defined nationally in each participating country; should capture both officials’ access to ICT and public access to information.

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enforcement and governance.

Intermediate Results IndicatorsIndicator Name Description (indicator definition etc.)

Monitoring plan for implementation of the St. Petersburg declaration designed and regularly updated in participating countries

Component One - Regional Program.

Regional studies under the framework of the St. Petersburg declaration undertaken and disseminated

Component One - Regional Program. Targets to be established during Inception Phase.

EU Member States' forest sector knowledge is made available to participating countries and knowledge exchange between participatingcountries and EU Member States is ongoing

Component Two - National and Sub-national program. Each country should have one and larger ones more than one. This applies particularly to experience from former transition countries in Central and Eastern Europe (‘new member states’).

Sustainable forest management and improved forest governance best practice models developed, tested and used for demonstration purposes by the Program

Component Two - National and Sub-national program.

Modern technology trialed and systems to improve forest governance developed by the Program

Component Two - National and Sub-national program.

Awareness, ownership and capacity of key stakeholders enhanced

Sub-component of components One and Two - Communications. Key stakeholders include administration, private sector and civil society. This will include awareness of forest governance issues and capacity to deal with forest sector policies and related themes such as forest fires and climate change through formalized bodies. Target levels of awareness will be defined during the Inception Phase.

Media coverage of FLEG issues has increased Sub-component of components One and Two - Communications. Media monitoring plans will include media hits, number of articles, etc.

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Annex 2: Detailed Program Description

ENPI East Countries FLEG II Program

1. The Program will support the participating countries strengthen forest governance through improving implementation of relevant international processes, enhancing their forest policy, legislation and institutional arrangements, and developing, testing and evaluating sustainable forest management models at the local level on a pilot basis for future replication.

2. The three specific Program Development Objectives are to:

i) make progress implementing the 2005 St. Petersburg FLEG Ministerial Declaration in the participating countries and support the participating countries commit to a time-bound action plan to ensure its implementation and follow-up activities (regional level);

ii) review or revise (or establish a time-bound action plan to review or revise) forest sector policies and legal and administrative structures; improve knowledge of and support for sustainable forest management and good forest governance (including the impact of related EU regulations) in the participating countries (national level); and,

iii) test and demonstrate best practices for sustainable forest management and the feasibility of improved forest governance practices at the field-level on a pilot basis in all participating countries (sub-national level).

3. The Program components 1 and 2, are linked to objectives (i), (ii) and (iii), and are based on the geographical coverage of the activities. Additionally there will be cross cutting themes within these components for Program communication and gender issues. The final component will be for overall Program Management.

4. Component 1: Regional Program (US$ 1.33 million), will focus on:

- strengthening the policy dialogue between participating countries and institutions regarding the 2005 St. Petersburg Declaration by organizing thematic meetings on FLEG issues of shared interest,

- monitoring the implementation of the St. Petersburg Declaration in the participating countries through stakeholder reporting and preparation and regular up-dating of tracking tables on implementation of the declaration; identifying areas of the St. Petersburg declaration where implementation needs more focus and support,

- conducting regional studies and developing publications in the framework of the 2005 St. Petersburg Declaration, and

- providing regional support to the implementation of the FLEG country work plans based on partner government requests,

- developing a communications strategy prepared in accordance with the EC’s Communication and Visibility Manual, and the World Bank’s Access to Information Policy, to develop and maintain the ENPI FLEG corporate branding and ensures that

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relevant participants and stakeholders are provided with consistent up to date Program information,

- contributing to communication activities to promote regional and national activities developed within the framework of 2005 St. Petersburg Declaration,

- maintaining a high-quality Internet site in English and Russian on state of the art forest sector governance and reform. Country work Programs (cf. paragraph 44) may also have their own, national and local communication activities, and

- regional coordination of the program through annual meetings of the ENPI FLEG focal points, donors and implementing organizations.

5. Component 2: National and Sub-National Program (US$ 8.25 million), will focus on:

a) National Level:

- Supporting, continuation from Phase I, the formulation and implementation of forest policy, legal, administrative and institutional reforms on the national and sub-national levels,

- promoting a good investment climate for credible private sector operators,

- providing capacity building, training and advice on administrative/institutional reforms and on forest governance issues more directly,

- liaising and co-operating with forest sector experts from EU member states, and

- formulating national workplans and ensuring compliance with safeguards.

b) Sub-national and Local Program:

- providing support on forest governance techniques (e.g. legal knowledge, technical knowledge of offences, how to document forest crimes, detection techniques etc.), to enable forest staff ensure law enforcement,

- documenting and communicating concrete local results on forest governance and forest law enforcement (e.g. local dedicated websites, hotlines etc.),

- supporting the use of modern technology (timber tracking, GPS, and other ICT) through pilot activities addressing FLEG issues,

- involving local communities in policy development and in sustainable forest management as well as providing the appropriate information that is accessible, easy to use and relevant for local decision makers, and

- increasing public awareness and participation.

6. Component 3: Program Management (US$ 0.89 million), will consist of:

- overall management of the Program,

- ensuring compliance with World Bank and EU safeguard policies and directives,

- quality control of Program deliverables,

- Program reporting and monitoring of the results framework indicators, and

33

- organizing joint meetings for national focal points and other Program-level coordination events (such as Program Management Team tele-conferences, quarterly video conferences between the implementing partners and, as required, the relevant EU delegations), exchange of information between the participating countries and planning and coordination of national work plans.

7. Traditionally the forest sector is male dominated at all levels (professional, technical and worker/user levels), although this varies between the participating countries. Forest harvesting and processing have, in most countries, been seen as male work, due to the tough exposed conditions and the manually intensive work. With improved machinery and working conditions, the increasing opportunities for both genders in forest education, the gender balance should gradually improve. Gender issues will be monitored as part of the World Bank core sector indicator on forest users and community members trained. Gender will also be taken into consideration through the SESAF process, which will screen for gender issues. Pilot activities at the sub-national level should specifically target the inclusion of women (and other disadvantaged groups such as some ethnic minorities).The overall Program communication will include relevant gender issues as applicable (e.g. the proportion of women that participated in a training).

8. Design of country and regional activities will be based on country demand and capacity. The countries and their FLEG focal points (usually a high-ranking official) have – after country consultations – presented preliminary priorities for action (cf. Paragraphs 11–below). The country-specific activities will be designed in more detail during the Inception Phase (which will be completed during the first six months of the Program implementation). The detailed activities will be presented in a work Program and approved by the Steering committee of the Program. These activities will be largely based on the results of the Phase I, analysis of stakeholders and main challenges as well as the ambition of the countries to tackle these challenges.

9. The Program activities will consist on technical assistance activities. These will include organizing workshops, carrying out analytical studies, training and study tours, and ensuring appropriate follow-up activities to track impacts. Notable focus will be on publications and sharing the results and findings from these activities.

10. The preliminary list of proposed activities is as follows. These proposals have not been fully vetted vis-à-vis available resources and therefore may need to be adjusted in more detailed planning. The detail of planning has also varied among countries; all country and sub-national activities will be fully prepared and concept notes prepared prior to launching the activities.

11. Armenia

- Legal and institutional review

- Education and experience exchange; both within country between sector specialist, journalists, academia and internationally between ENPI FLEG countries and with EU member states, and

- Public awareness and monitoring of the forest sector.

12. Azerbaijan

- Supporting young foresters locally and internationally

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- Strengthening staff capacity in the forest sectors; development of training modules with Ministry of Education

- Developing and piloting efficient household energy sources to replace wood-based fuels

- Developing a long term national forest strategy, and

- Implementing ‘model forests’ in the country

13. Belarus

- Updating the national forest policy, improving forest legislation and law enforcement: Developing a Strategic Plan for the Development of Forestry in Belarus for a period

until 2030 as a national forest Program of strategic actions Developing a national roadmap for the implementation of the S t.Petersburg

Declaration and the Indicative FLEG Action Plan Deepening intersectoral cooperation and interaction between key stakeholders,

engaging the public in a process of improving the legal framework for regulating forest relations and its application, and

Implementing additional measures to prevent offenses among forestry staff and other forest actors and to prevent corruption.

- Optimizing the system of forest management and forest use: Differentiating legislative, regulation, supervision and control functions, and

management of economic activity in order to optimize forest management and forest use

Strengthening the capacity of entrepreneurs, facilitating the development of small and medium-sized business in forest services in small towns and rural areas; expanding opportunities for the sustenance of forest area population (e.g. bee-keeping, harvesting of non-timber forest products)

Facilitating access to forest resources by various actors and strengthening the functioning of forest product markets

Introducing new technologies and technical aids to increase the quality of forest inventory and timber accounting; applying more advanced methods of selling forest products and chain-of-custody, and

Reinforcing the social status and technical infrastructure of the state forest protection service.

- Improving the level of professional training for forestry specialists: Developing international cooperation in the area of the exchange of knowledge,

technologies and best practices with EU member states and ENPI FLEG Phase II participating countries

Developing and introducing the principles of professional responsibility of the forest sector staff, improving their social security, and

Professional development for managers and specialists in the forest sector on forest legislation, law enforcement, forest management, and forest use.

35

- Implementing a communication strategy in the forest sector, developing forest-related and environmental education: Improving access to information, openness of forest sector data and transparency of

forest management systems through (i) new approaches to interacting with the public, (ii) the wider use of electronic communication media, and (iii) various forms of interactive communication with a mass audience

Raising public awareness of the legal foundations of forest management and forest use through targeted provision of information to various target groups (agricultural, timber harvesting, transportation organizations, local population) on the rules of forest use and conduct in the forests, and about liability for violating forest legislation

Further development of environmental education and experimental forest activities in school tree farms, the Small Open Forest Academy and forest sector educational establishments, and

Implementing communication strategy and developing regional information cooperation dedicated to FLEG issues.

14. Georgia

- Training needs assessment and capacity building of the Natural Resources Agency’s staff

- Legal work on the development of secondary legislation

- Promotion of the incorporation of SFM principles in national forestry policies

- Assessment of best international practices in the area of forest certification

- Public engagement and awareness to promote better forest governance

- Promotion of alternative livelihood activities for the forest depending rural population

- Incorporation of FLEG issues in forest related education

15. Moldova

- Promoting good forest governance in community-based and private forests through establishing a consultative entity for improving management of local forest and hunting fund

- Establishing of three pilot SME entities to enhance economic involvement of communities in sustainable forest management at local level

- Preventing illegal logging practices by conducting forest management planning in community and private forests, optimization of coordinated forestry and rational use of forest resources

- Conducting an analytical study on the possibility of acquiring lands for further afforestation and creating perspectives for the development of community and private forestry sectors

- Reducing pressure on natural forest ecosystems through creation of short-rotation plantations, capacity building on forest reproduction and increased awareness on promotion of efficient forest biomass use

36

- Improving governance and optimizing multiple benefits of sustainable management of forestlands by applying agroforestry and silvopastoral practices

- Conducting an analytical study on evaluation of forest ecosystem services (including value equivalent) in order to promote green economy and rational use forest ecosystems

- Developing educational Programs for youth, organizing forest schools and camps, raising awareness among young generation for promoting forest and environmental culture, and

- Conducting an analysis of conflict of interests in order to reduce illegal and corrupt practices associated to forest ecosystems.

16. Russia

- Improving the FLEG planning and monitoring at the national, regional (local), and interagency levels Mainstream FLEG activities into priorities of the Russian National Forest Policy and

Forest Policies of the Russian regions Assess and monitor the quality of forest governance at the national level and in

selected regions of Russia Improve and adapt for Russian regions the systems of interventions to combat illegal

forest use, basing on the Draft Standard Guidelines on Preventing and Reducing Illegal Logging and Illegal Timber Trade in the Russian Federation

Assess and improve forest governance and law enforcement related to key forest management operations and utilisation of forest resources at the federal level and in Russian regions (practices of forest logging and forest renewal, non-timber forest uses, forest pest and fire management)

Assess the situation in the Russian forest sector from the perspective of sustainable forest management for each Russian region; and have an independent assessment undertaken to estimate the prevalence of illegal forest use, and

Review best practices of sustainable (including alternative) forest use by local forest-dependent communities and develop a library of such best practices

- Building human resource capacity to address FLEG issues Develop and implement module-based training Programs, highlighting FLEG issues

and ways to address them at the federal level and in Russian regions, and Provide advisory support and professional development services to customs offices to

build their capacity to assess the legality of exported timber

- Facilitating FLEG actions by top Russian forest companies and their international trading partners Support the development of environmentally responsible timber business with a

focus on the conservation of biodiversity and high-value forests through encouraging: a) forest use intensification based on sustainable forest management practices in earlier developed forest regions (Arkhangelsk Oblast); and b) multiple use of forests (pilot regions in the Altai/Sayan Ecoregion)

Introduce standards of sustainable forest use in the forest bioenergy sector

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Monitor the impact of the EU’s new Timber Regulation, provide general information and advisory support for adaptation of Russian timber business to the new requirements of the EU, and

Pilot procedures established by the new European legislation (including the due diligence procedures) in the Russian North-West.

- Safeguarding the rights of local communities and small businesses to forest resource use Monitor and analyse the FLEG-related public opinion on a regular basis with a focus

on the forest resource use rights of local people and small businesses, and Replicate viable models of sustainable alternative forest uses at the local level.

- Increasing transparency of action and raising stakeholder awareness Support public involvement (including the involvement of local communities and

youth) in processes of sustainable forest management Evaluate and improve information support for forest law enforcement and governance Publish a semi-annual FLEG bulletin and support the national FLEG website, and Improve the coverage of FLEG issues in independent mass media.

17. Ukraine

- Facilitating implementation of forestry reform Prepare public authorities, business and civil society for realizing the necessity of

formation of a national forest policy of Ukraine, with a subsequent revision of forestry legislation and implementation of institutional reform, and

Work with the Ministry of Agricultural Policy and the State Forestry Agency in improving the laws and regulations governing forest relations.

- Developing the timber market and creating a system to confirm timber legality Work the development, production, testing and implementation of recommendations,

norms and standards aimed at creating an open and efficient market of timber and other forest products

On the basis of best European practices finalizing and testing a new system for timber measuring and grading: provide advice and legal framework for the qualitative improvement of the accounting system of timber; improve the legal framework and practice of foreign and domestic trade in timber; create legal and organizational conditions for the large-scale introduction in Ukraine of modern timber harvesting technologies

Develop partnerships with large, medium and small timber businesses in Ukraine and companies importing Ukrainian timber

Facilitate the work of associations of logging and timber merchants in the part of preparation and publication of information and reference materials, dissemination of information about the current situation in the timber market, promotion of new methods and technologies of communication and work, and

Disseminate information about the requirements of EU Timber Regulation and will its implementation.

- The introduction of a Model of Intensive and Sustainable Forest Management

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Dissemination of information among professionals and the public about modern methods of forest growing and international experience in organizing intensive and sustainable multipurpose forest management; developing a set of new rules and regulations governing the modes of forest management; testing new approaches to forest management and harvesting planning at pilot enterprises; and training of Ukrainian foresters in new ways of work.

- Dissemination of Knowledge and Training Monitoring and analysis of the media and statistics; conduct of targeted case studies

and expert interviews; identification and analysis of conflict, debate and development of recommendations aimed at improving the situation, preparation and publication of information and training materials; dissemination of information about forests, forestry, forest sector problems and solutions (Internet, media, roundtables, seminars), and

Interaction with the authorities in the preparation of solutions aimed at achieving the strategic objectives of FLEG; organizing and conducting training (interaction with the forest universities, colleges and training centres).

- The Involvement of Stakeholders Interacting with government agencies that deal with forest issues (Ministry of

Agricultural Policy and Food, State Forestry Agency, Committee for Economic Reform under the Presidential Administration, Ministry of Environment, Ministry of Economy and Trade, State Environmental Inspectorate and many others); environmental non-governmental organizations, business representatives, forest experts from different industrial, scientific and educational organizations, journalists and representatives of local authorities and individual forest regions, and

Involving international experts, trade representatives of the embassies, representatives of Ukrainian companies importing wood products, law enforcement officials and lawyers who specialize in land and resource law.

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Annex 3: Implementation Arrangements


Program Institutional and Implementation Arrangements

1. During the Inception Phase of the Program, a Program Implementation Framework (PIF) will be established and agreed between EU, World Bank and sub-grantees IUCN and WWF. The PIF will include a generic results framework – see also the Results Framework in Annex 1 – which will be further developed for each participating country. The PIF will establish the standard operating practices for all implementation arrangements for the Program. It will consist of a) terms of reference for all administrative bodies in the Program, ii) description of planning and reporting procedures and templates, iii) financial management manual, iv) approval and complaint resolution procedures and v) procurement manual.

Program administration mechanisms

2. The Program will be fully financed by a single-donor, hybrid Trust Fund funded by the European Union. An Administration Agreement will be agreed with the EU and World Bank. The agreement will be covered by the Trust Funds and Co-financing Framework Agreement entered into on 20 March 2009 between the European Commission and the World Bank Group (IBRD, IDA, IFC). IUCN and WWF International18 will enter into recipient executed Grant Agreements with the Bank. Terms of the agreements, including distribution of operating funds to the implementing agencies are currently being negotiated. Both IUCN and WWF executed their components during the Phase I successfully.

3. To facilitate wider European forest knowledge transfer, cooperation will be specifically sought with the European Forest Institute and FAO. Other collaborative arrangements will be developed with processes and institutions such as FOREST EUROPE, and the European Environment Agency, and will identify opportunities offered by relevant and related Programs such as the Emerald Network19.

4. In the light of the Aid Effectiveness agenda (in particular ownership and alignment), no major country activities will be implemented without the consent and buy in of local counterparts. Country work Programs will be developed during the Inception Phase and updated annually.

5. The activities identified in the country/regional work plans will be implemented by IUCN and WWF and by the World Bank (as technical assistance). There will be no recipient executed grants to national organizations. However, activities under the FLEG II Program will frequently be jointly implemented and always presented as ENPI FLEG Program activities rather than as different IO outputs.

18 Both IUCN and WWF may implement activities through their national and local Programs or chapters. The operational and fiduciary responsibility lies, however, with the international bodies.19 The Emerald network is a network of areas of special conservation interest (ASCIs), established in the territory of the contracting parties and observer States to the Bern Convention, including, among others, central and east European countries and the EU Member States. For EU Member States, Emerald network sites are those of the Natura 2000 network.

40

6. The Program will have a full time, Moscow based coordinator and coordination bodies at national and regional levels to ensure that all activities are well prepared, managed and coordinated. The key bodies are the:

7. Steering Committee (SC, previously Operational Committee in FLEG Phase I): The SC will consist of the FLEG national focal points from each participating country, the EU, World Bank, IUCN and WWF representatives. SC is the highest coordinating body ensuring coherence of Program implementation.

8. National Program Advisory Committee (NPAC): a national coordination body in each country consisting of representatives of key stakeholder groups. It is chaired by the National FLEG focal point, usually a high level civil servant or deputy minister in national forest administration.

9. Program Management Team (PMT): consisting of technical Program managers from the three implementing organizations at regional level.

10. Program Coordination Teams (PCT): consisting of technical Program managers from the three implementing organizations in each participating country.

11. The implementing organizations (World Bank, together with its partners IUCN and WWF), will report to the Steering Committee. The WB will directly report to the EU as agreed in the Administration Agreement. IUCN and WWF will directly report to the WB as agreed in the Grant Agreements.

Financial Management

12. The overall FM risk is assessed as moderate. Similar to Phase I, the headquarters of WWF and IUCN will resume the full fiduciary responsibility under their respective grants. Annual project budgets will be prepared on the basis of the annual procurement plans. IUCN and WWF will use their respective internal control procedures to ensure that funds are spent in accordance with the provisions of the grant agreements and Program Operation Manual (POM). These controls were reviewed periodically as part of previous Program supervision and have been found acceptable. The internal control procedures for the Program will be detailed in the financial management sections of the POM.

13. Both IUCN and WWF will submit semester interim unaudited reports within 45 days after the end of the respective calendar quarter. The formats of financial reports will constitute an integral part of the POM. The Bank will receive one consolidated report from each implementing agency covering each participating country and Program-wide activities.

14. The project audits will be conducted by independent private auditors acceptable to the World Bank, using International Standards on Auditing. The audited financial statements together with the auditor’s opinions and the management letters will be provided to the World Bank within six months of the end of the respective fiscal year. Following the Bank’s formal receipt of project audited financial statements from the implementing entities, the Bank will make them available to the public on its website in accordance with the World Bank Policy on Access to Information. In addition, the implementing entities will make the project audited financial statements available to the public in a timely manner acceptable to the Bank.

Disbursements

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15. Disbursement Arrangements. The proceeds of the grants will be disbursed in accordance with the traditional disbursement procedures of the Bank and will be used to finance project activities through the disbursement procedures currently used: i.e., Advances, Direct Payment, Reimbursement and Special Commitment accompanied by appropriate supporting documentation (Summary Sheets with records and/or Statement of Expenditures (SOEs)) in accordance with the procedures described in the Bank’s Disbursement Guidelines. Further details will be specified in the Disbursement letters.

16. Designated Account. Similar to Phase I, WWF and IUCN will each open a pooled Designated Account in a Commercial Bank acceptable to the Bank in US dollars.

Procurement

17. By negotiations of the Grant Agreements with IUCN and WWF, final adjustments will be introduced into Procurement Plans for the Inception Phase (the first six months). The procurement function will be undertaken by implementing agency (IUCN and WWF) staff with experience in World Bank procurement policy and procedures. The capacity assessment has been carried out. The Program foresees a large number of contracts for procurement of goods, non-consulting services, consulting services and training (including logistical services). The overall Program risk for procurement is high due to the overall environment of corruption in some participating countries. Mitigation measures include: the use of Bank procurement procedures (January 2011); preparation of a Procurement Manual - including a detailed complaints handling system - (agreed with the Bank) as a part of Program Operational Manual (POM) before signing of Grant Agreements; draft Terms of Reference (TORs) for consulting assignments for implementation during the first 6 month Inception Phase, and technical specifications for procurement of goods (if required in the inception phase) before effectiveness; and, will be included in Program Operational Manual (POM).. All staff involved in procurement activities (including participation in evaluation process, preparation of TORs, Bidding Documents, Invitations to Quote, Requests for Proposals, evaluation reports, justifications for Direct Contracting and Single-Source Selection method, etc.) will receive procurement training (training will be given in both in Russian and English.

18. Procurement of Goods and Non-Consulting services will be carried out in accordance with the World Bank’s relevant Guidelines: “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011 (Procurement Guidelines), while consulting services will be procured in accordance with the World Bank’s "Guidelines: Selection and Employment of Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers" dated January 2011 (Consultants Guidelines), and the provisions stipulated in the Grant Agreements. For each contract to be financed by the Program, different methods, estimated costs, prior review requirements, and time frames will be agreed between the Recipients and the Bank in the procurement plan. The procurement plan will be updated at least annually or as required to reflect the actual Program implementation needs and improvements in institutional capacity.

19. The Bank’s standard bidding documents will be used for international competitive bidding (ICB) as well as sample documents for shopping agreed with or satisfactory to the Bank. Goods and non-consulting services estimated to cost US$ 100,000 equivalent and more will be procured through ICB. Contracts procured under shopping procedures shall not exceed US$ 100,000 equivalent. Direct Contracting (DC) method will be used for the procurement of goods

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and non-consulting services which the Bank agrees meet the requirements for Direct Contracting.

20. Procurement of works: Procurement of works is not envisaged under the Program.

21. Selection of Consultants and training: Consulting services will be procured for implementation of various tasks, among them, for example: development of recommendations, experts’ studies, development of technical specifications, development of training modules and provision of training, etc.

22. The following methods will be used for selecting consulting firms depending on the nature and complexity of assignments, attractiveness to foreign firms and need for international expertise, estimated budget of the services: Quality- and Cost-Based Selection (QCBS), Quality-Based Selection (QBS), Least Cost Selection (LCS), Selection Based on Consultant’s Qualification (SBCQ) and Single-Source Selection (SSS). A number of individual consultants will be hired for implementation of simple assignments. Contracts procured through SBCQ shall not exceed USD 300,000. Contracts estimated to cost USD 300,000 equivalent and more will be advertised internationally. Short lists of consultants for services estimated to cost less than USD 200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

23. Training activities which will be carried out other than through service providers’ contracts, will be procured through procedures agreed with or satisfactory to the Bank, including travel expenses of the trainees, trainers, representatives of ministries and administrations and other relevant organizations, which are involved in Program implementation. These procedures will be described in details in the POM. The PIUs will prepare annual training plan indicating the type of training, estimated number of trainees, estimated cost of training, etc.

24. Operating Costs: Operating costs of the PIUs will be financed from the Grants’ proceeds and will include all expenses necessary to ensure proper implementation of the Program. The PIUs will prepare annual operating plan indicating the name and estimated cost of expenses to be covered as part of operating expenses.

25. Procurement Plans: The procurement plans shall be agreed between the Recipient and the Program team and will be finalized during negotiations. After signature of the Grant Agreements, the procurement plans will be available in the Program’s database and in the Bank’s external website. The procurement plans will be updated in agreement with the Program team annually or as required to reflect the actual Program implementation needs and improvements in institutional capacity.

26. Frequency of Procurement Supervision: Procurement supervision will be on-going through the review of procurement documents and day-to-day contacts with the implementing agencies. Supervision missions, which will include post-reviews and contract administration reviews, will be conducted on a regular basis but not less than at least once a year, depending on the success of the Program, number of post-review contracts and other factors. At least 20% of the post review contracts shall undergo the reviews. The proposed thresholds for prior review would be the following: all ICB contracts for goods and non-consulting services, the first three contracts under shopping procedure for goods and first three contracts under shopping procedure for non-consulting services, all contracts equal to or above USD 300,000 equivalent

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for consulting firms, first three contracts less than USD 300,000 equivalent, all contracts equal to or above USD 50,000 equivalent for individual consultants, fist three contracts less than USD 50,000 equivalent for individual consultants, each DC and SSS contract and the first three contracts with a firm to organize training.

Environmental and Social (including safeguards)

27. It is not expected that the Program would have specific social and environmental risks that would not be captured in comprehensive safeguard implementation. The overall development objective is to improve quality and implementation of forest policies and make them socially, environmentally and economically more sustainable and more inclusive.

28. While the Program does not involve support for identification or preparation of investments, which would have direct environmental and social impacts, the forest policies/laws, national forestry Programs and plans to be developed with Program support, could have a wide range of environmental and social impacts (both positive and negative). To address these issues a Strategic Environmental and Social Assessment Framework (SESAF) will be prepared, which will be applied to all outputs that have policy implications at the national and sub-national level. The SESAF would identify the types of environmental and social issues that can be expected to be associated with the policy documents that the Program will support, and provide guidance on how these aspects should be integrated into the analytical and decision-making processes. This will include the provisions for strong and effective stakeholder participation. The overall SESAF objective is that all policy documents that would be supported under the Program to be environmentally and socially sound and sustainable, and consistent with the WB safeguards policies as well as with applicable EU Directives.

29. Since this Program is i) executed by the Bank in partnership with IUCN and WWF; ii) does not go to the Bank’s Board for approval; and iii) is not signed by the participating Governments, the SESAF will have an advisory character only, but will be mandatory for WWF and IUCN as part of their Grant Agreements. The responsibility for ensuring that the SESAF is correctly implemented will lie with the NPACs. A Safeguards/Quality Control Specialist will be hired in each country, to review terms of reference, screen all outputs for both quality and potential safeguards issues, and if there are safeguards issues to ensure that the appropriate mitigation measures are followed.

30. To build capacities with regard to safeguards issues, it is proposed that special training will be given to all Safeguards/Quality Control Specialists and to selected NPAC members in all participating countries at the commencement of the FLEG II Program.

31. Since this Program does not go to the Board for approval, the requirements for Borrower-executed operations in terms of Environmental Assessment (EA) disclosure and consultation prior to Appraisal do not apply. The SESAF will be disclosed during the Inception Phase of the Program implementation with open consultation and participation of a broad range of stakeholders.

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Monitoring & Evaluation

32. A mid-term review (MTR) will be carried out after two years of implementation. This MTR will review progress both at Program (implementing organizations) and at country-level. The review will focus on the effectiveness and relevance of Program activities. It will also make recommendations if and how Program resources should be reallocated between countries. It is expected that that this stage there will be adequate knowledge on country performance and if some countries have been able to make more progress than others have.

33. The Donor, European Union, has its own evaluation and monitoring processes. The ENPI FLEG Program will utilize the lessons learnt from these processes to guide the planning and implementation of Program activities.

34. The Program will produce several outputs at both national and regional level. The World Bank and Program management will ensure adequate quality control of all products and deliverables by setting up a formalized professional screening process to ensure that deliverables meet both the technical quality requirements set forth by the World Bank as well as compliance with World Bank safeguards.

Role of Partners

35. ENPI FLEG Phase II is effectively being implemented by a four organization partnership comprising the EC, the World Bank, IUCN and WWF. All the organizations have a specific niche and value added to the Program.

36. National partners are represented in the National Program Advisory Committee (NPAC), which is a national coordination body in each country, consisting of representatives of key stakeholder groups. It is chaired by the National FLEG focal point, usually a high level civil servant or deputy minister in national forest administration. The members of the NPAC are usually from the public sector, private sector and civil society.

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Annex 4: Operational Risk Assessment Framework (ORAF)

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Annex 5: Implementation Support Plan


1. The Program will require technical support from the Bank side in the form of a) technical forest sector and policy development skills and b) Program management (FM, procurement) throughout the life time of the Program. The Program may also require –on ‘as needed’-basis – technical support in areas like communication, public awareness and media skills. Fiduciary oversight will be provided by Bank financial management and procurement specialists. Safeguards support will be provided by Bank environmental and social safeguards experts.

2. Formal supervision and field visits will be undertaken on recurrent basis by both headquarters and country office staff and consultants. These will focus on review of Program progress in terms of meeting Program indicators and milestones, technical review of completed work and of planned work for the coming period. Frequent contacts with national counterparts at various levels of government will allow mitigating and preventing risks related to national ownership of Program objectives.

3. The implementation support will include strong coordination between the implementing agencies (IUCN and WWF), national counterparts in the seven countries, EU (both Brussels and country delegations) and the World Bank. A flexible approach will be followed to ensure responsiveness to unfolding events, whilst ensuring key Program objectives are met. The World Bank’s particular experience in convening various stakeholders on regional policy processes will be particularly valuable.

4. The World Bank – together with IUCN and WWF – is in a good position to support national policy development by bringing in international best practice also from other regions and countries where the Bank has been supporting forest policy processes.

5. The Program structure has two bodies which are specifically geared towards providing a platform for sharing experiences and supporting sustainable uptake of Program outcomes. At national level, the National Program Advisory Committee (NPAC) provides a platform for the Bank, EU, other partners (IUCN and WWF) as well as national counterparts to support the implementation through oversight and strategic guidance. The Steering Committee (previously Operational Committee) provides the same functions at regional and Program-level.

6. The main requirement of the implementation support are indicated in the following table:

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Focus Skills NeededResource Estimate

(staff weeks)year 1 years 2-4

Financial management FM specialist

Procurement Procurement specialistPreparing ToRs for TA, supervision of contract implementation, Program supervision

TTL, forestry specialist, procurement specialist, forest governance specialist

Communications Public awareness and media specialist

Monitoring of data collection for Results Framework

TTL, forestry specialist, forest governance specialist

Quality control and safeguards TTL, quality control specialist

7. IUCN and WWF will be provided extensive training and on-going support in financial management and procurement to ensure their compliance with World Bank requirements and due diligence.

8. All country teams will be provided with guidance on the special requirements coming from the framework agreement regarding EU funded trust funds in the World Bank. Particular attention will be paid requirements regarding EU visibility in Program activities and outputs.

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Annex 6: Economic analysis

1. The economic analysis for a TA Program like ENPI FLEG Phase 2 provides rough and indicative results and it is able to only provide information on the order of magnitude of the potential impact of the Program.

2. The key parameters and sources of data were as follows:

- country information on forest sector’s contribution to GDP in 2006 were based on FAO (2011): State of the World Forests.

- calculation was done in 2011 price level expect for inputs which were based on nominal Program budget. Deflator to 2011 price level was from the World Bank.

- calculation based on 30 yrs.

- benefits were based on the assumption that improved forest governance as a result of the Program would contribute to increased GDP contribution of 1% above 2011 level.

- sensitivity was assessed through an alternative increase of 0.5%. Another sensitivity analysis was done by capping the increase in Russia to only 0.1%. This was to avoid having skewed results as a result of the large size of the Russian forest sector. Russia alone contributed to 79% of the total forest value added in the seven ENPI FLEG countries.

- increase in GDP contribution was Phased in: year 2 0.25%, year 3 0.50%, year 4 0.75% and year 5 1.00%.

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Annex 7: Forest Sector Data by Participating Country

1. This annex provides a sector description by country under standardized headings, and then presents a number of different forest sector indicators by the participating countries.

Armenia

Forest Policy and Strategy Forest Legislation The Forest policy strategy was approved on September 30, 2004 (for 15

years, till 2019), covering climate change issues, rural development, landscape and gender issues, but not reflecting FLEG issues.

This was one of the first documents prepared and processed according to new requirements in the country with prior discussions with all interested stakeholders.

In 2005 an action plan to implement the policy was approved but full funding is not available.

In 2-3 years time it is expected to update and amend the forest policy.

A New Forest Code was adopted in 2005 (previous version – from 1994) (Link to the document in Russian http://base.spinform.ru/show_doc.fwx?rgn=31137)

There is a system to monitor compliance and enforce legislation No obvious short-comings creating perverse incentives that are driving IL but in

other related to forestry field legislation, for example in env legislation A need for revision of related by-laws

Existing forms of tenure include: private forest ownership, communal forest ownership/management long term leases, Concessional forest management

Allowed timber sales: standing forest, sales by permit, sales from the lower stock (at the gates of the forest – roadside sales).

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Forest Institutions Private Sector Issues Institution responsible for developing forest policy and legislation:

Forest Department in Ministry of Agriculture (http://www.minagro.am/am/) (No of employees:3)

State owned forests are managed by State Non Commercial Organization Hayantar ( http://hayantar.am/) (No of employees:1000)

Institution responsible for monitoring and control : Environmental Inspect in Ministry of Environment (http://www.mnp.am/); and State Forest Monitoring Center (MOA)

There is no clear separation of the management/ownership functions and regulatory/supervisory/policy formulation functions.

The forest enterprises are state owned, and get partial support from the state budget. They also have to generate their own income, which is insufficient for any kind of new investments.

Inadequate staffing and compensation in forest institutions.The last institutional restricting was realized in 2004

Annual allowable cut (AAC) in Armenia makes about 50-60 thousand cubic meter, it comes from the state forests, which are managed by “Hayantar” under the Ministry of Agriculture. The AAC is determined on the basis of sanitary cutting and is not the result of forest inventory or forest management planning

Private wood-processing sector is not well developed in Armenia. The quality timber is no more than 5-10% out of AAC.

The voluntary certification process is supported by SNC Hayantar and is participating in the regional working group of Armenia, Georgia and Azerbaijan

Protected Areas Community Involvement and Participation The mapping of borders of some PAs is on going so at the moment there

is no precise data on % of the forest areas designated as PA There are 4 categories of protected areas in Armenia: state reserves (3),

national parks (4), state sanctuaries (26), and natural monuments (230). In general, the state reserves and national parks are better supported

and protected in comparison with the sanctuaries, especially those out of the MoNP subordination. One state reserve (“Khosrov Forest”) and 3 national parks (“Sevan”, “Dilijan” and “Arpi Lake”) have approved management plans, which are implemented given available financial resources. Some other PAs have no approved MPs (sometimes draft management plans are available); they are managed on the basis of annual plans.

The local population has access to the fuel-wood and NTFPs. Recently a law was passed, according to which the population of forest adjacent communities will be able to receive up to 8 cubic meters per year fuel-wood (fallen wood) free of charge.

Joint “Hayantar” and UN pilot project on “Preventing and Combating Forest Fires” was implemented in two regions of Armenia. The pilot includes a communication and information component, through which posters, leaflets, banners were produced, and site visits implemented.

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Forest Fires, Protection and Prevention “From FLEG I to FLEG II” Forest fires have become more of a problem for the last 10 years. Main causal factor is human: farmers are burning pastures and fields of

crop residues and leave them unattended. A law was passed in 2011 which prohibits burning the crop residues and pastures (perverse incentive!).

No adequate system of detection/monitoring is in place. The Ministry of Emergency Situations has a special department responsible for fire fighting. It is adequately equipped and staffed to implement designated tasks. Addressing fires by the Forest enterprises would be more efficient, rather than waiting for the emergency groups to arrive.

“Hayantar” (forest agency) does not have adequate capacity to fight fires. And except for the above-mentioned pilot projects by UN and Hayantar, no public notification is carried out.

Within the Regional ENPI FLEG Program (Phase I): One of the activities of WWF under FLEG 1 program was a review of Forest Legislation

of Republic of Armenia and preparation of guideline. In the frames of the FLEG program a number of information campaigns and road

shows were organized for all the stakeholders and community members. They became more proactive in engaging in forestry sector issues.

For the Regional ENPI FLEG Program (Phase II ) human resources and capacity building should be tackled more.List of priorities under Phase include:o Need for Legal and Institutional Review and Reforms (currently there are quite big

discrepancies in different legislative documents regarding the forestry field). o Need for education and experience exchange: the need for training and educating

forestry specialists, journalists, university lecturers and students in the field of forestry was highlighted during the meeting. Inviting relevant specialists, as well as sending local specialists for the training of trainers is very important at this stage, as lack of well educated specialists is obvious. Experience exchange with FLEG member countries and EU member states can play a positive role in amending sustainable forest management and governance issues in Armenia.

o Public awareness and public monitoring: although a huge work has been done in the first phase of the Program still public awareness is an issue which needs constant follow up and enhancement.

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Azerbaijan

Forest Policy and Strategy Forest Legislation Development of the forest policy is just launched in the country with

involvement of ecological organizations at the initial stage. Launched in July 2012 with the support of FAO.

The adoption of new forest policy may take 2 years.

For more English version available environment and forest legislation and programs , please refer to http://www.enpi-fleg.org/index.php?id=legislation_az/

Azerbaijani Forest Code was adopted in 1997 and while last 10 years got 7 amendments and changes (English version of the document is available at http://www.enpi-fleg.org/index.php?id=legislation_az)

It has a number of flaws and shortcomings which hinder effective law enforcement

The term “forest” covers only the State Forest Fund not all country’s forest There is only biological determination of the forest with no specification of crown

height, density, minimal size, etc Adoption of new forest policy may trigger the change in the current forest

legislation, which is currently imperfect easing ways for corruption and violations of the forest legislation

Problem with allowed cattle-breeding and illegal logging in the forests. MENR does not have enough influence on the government and Parliament for

promotion of new legislation. Forest development department of MENR conducts monitoring of compliance

with legislation but the work carried out very ineffective. No private property for forests in Azerbaijan. Forests as a collective property as well as public and community-based

participation and management of the forests. 3 types of forestland rent: short-term where lands are used up to 1 year, middle-

term when lands are used up to 10 years and long tern when land are used for recreational purposes.

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Forest Institutions Private Sector Issues Institution responsible for developing forest policy and legislation: Head

staff of Forest Development Department of MENR (65 employees) http://www.eco.gov.az/en/meshe-struktur.php

System for managing state owned forest: Forest Development Department of MENR include regional branches (3000 employees)

Institution responsible for monitoring and control :Monitoring Department of MENR (52 employees)

Set up of forest common state policy and monitoring is carried by Environment protection department.

Shortage of forest specialists exist, state forest enterprises ale financed through the state budget and they do not have enough resources for implementation of important investments.

MENR took over its functions from Forest Productin Association “Azerforest” after restructuring in 2001.

Forests relate to First Group, industrial cuttings are forbidden.Only sanitary cuttings are allowed in Azerbaijan.Limited sale of timber to the population according to officially adopted tarrifs.Firewood is supplied to the local population in the regions which are not covered by gaz

and to the state owned institutions (schools, hospitals, libraries, etc).There would be a need to consider essence of EU Timber regulation for preventing of IL in

the country: diligence systems for operators, the explicit prohibition of the sale of the IL timber in the EU, traceability though all the supply chain.

Country’s forest sector lack the adequate organizational and institutional resources for forest certification but the country’s forest sector and private sector is ready to apply Certification.

Private sector is using mainly semi-processed goods and imported timber

Protected Areas Community Involvement and participation PA’s cover 10,2% of forest land None of the forest management functions are implemented at these

territories in practice 8 new national parks were set up while last 10 years, they account for

14% of the territory. NP lack adequate funding.

No consultations during the development of the forest management plans Local population has fair access only to utilization of NTFR and firewood for the

heating purposes Within the framework of implementation of the ENPI FLEG Regional Program in

the country as well as moderate informational and educational work which is being conducted by local NGOs the population get information on problems and challenges in the forest sector and PAs, but it is not enough.

Forest Fires, Protection and Prevention “From FLEG I to FLEG II”Wildfires have become an issue during the last 10 years due to the increasing impact of climate change, development of the agriculture in the regions and the tourism developmentMain Reasons: i) farmers’ burning the fields after harvesting ii) drough periods and abnormal weather conditions iii) irresponsible fire mismanagement by tourists iv) broken transportation means and mechanization while moving close MES of Azerbaijan plan to set up the detection and monitoring systemsMES and Forest Department regularly educate its regional staff on wildfire prevention and fight means, but no work with local popoulation

In 2011-2012 within the framework of ENPI/FLEG Program a comprehensive analysis of country’s forest legislation and a number of crucial recommendations handed over to the forest development department were made. Among them: Four functions (policy, management, control and support function) are to be distinguished in the process of institutional arrangement of the forestry sector. That strict separation of functions has to be duly considered during the whole process of forest law making (Forest Code, as well as related sub-legal acts!). With respect to violations of the Forest Law, administrative, criminal and private legal provisions have to be strictly separated! Concepts of the meaning of "public", and consequently "public interest", are immanent to the Azerbaijan Republic legislation. There is, however, no definition of these terms. One of the core concepts of the Forest Code is the protection of forests in the public interest, thus safeguarding a broad range of public interests in forests (cf. Chapter 1.5., Forest

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Functions, above). Forest policy makers therefore have to be very clear about any related decisions. The issue of collection and marketing of forest reproductive material needs to be regulated in the Forest Code (and related sub-legal acts) or due to its high relevance possibly even in a separate Law on "Forest reproductive material". Confiscation of illegally pastured livestock would help to secure fines as well as compensatory requests (including compensation payments for damages as well as additional costs, e.g. for feeding and housing of confiscated livestock). In the Republic of Azerbaijan, such community involvement would possibly be organized on community level where former Kolchoz/Sovchoz forests could be used for establishment of commonly managed forests on a long term lease basis, and at a later stage common property, too. Effective protection of afforestations of former pastureland will directly rely on the (former) users of that pastureland. Involvement of local structures in decisions on allocation of pastureland for afforestation therefore is strongly recommended. Thanks to realization of communication plan and regular publication of the quarterly newspapers, set up of the national web-site in Azerbaijani as well as series of publications and issuing of dozen of articles and programs wider audience got familiarized with the forest problems in the process of implementation of the first phase of the ENPI FLEG Program. There are no consultations during development of the forest management plans. A local population has fair access only to utilization of non-timber forest resources and firewood for the heating purposes.MENR management has repeatedly mentioned importance of more focus that Program has to put on work with the local population in the regions as well as widely use Program resources for work in educational and institutional components. Also necessity of practical activities on forest rehabilitation in the pilot regions and development of the alternative heating sources in the forest-dependent regions was noted.

Belarus

Forest Policy and Strategy Forest Legislation The Forest Policy Strategy (FPS) was approved in 1997 (1997-2015). The

new version of the Forest Policy Strategy is currently under preparation, and its first chapter has already been drafted and discussed.

In 1997 some limited participatory procedures were applied. The current preparation process implies a wide use of stakeholder consultations

Although the FPS is still relevant, there any shortcomings in related to FLEG, rural development and gender issues. The FPS provisions served as a framework for and were included as an integral component into the 5-year state forestry development programs, State Scientific and Technical

The Forest Code was passed in 2000. (The link to the Russian version of the document: http://base.spinform.ru/show_doc.fwx?rgn=1882) .The most recent amendments were passed in December 2011. The Forestry Code is still up to date and relevant.

There are some short-comings that create inefficiencies. E.g. the excessive concentration of functions (law enforcement, economic management, and control) in the Ministry of Forestry (MoF), creates the conflict of interest and perverse incentives. Illegal timber sale are spurred by improper valuation of logging sites and poor recording of harvested timber.

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Programs, the concept of the sustainable forestry development, sectoral programs and other important documents.

There is the Government Program of Forest Sector Development in Belarus for 2011-2015. (Link to the document in Russian) http://www.mlh.by/ru/official/docs.html . The funding for planned activities is provided by the state budget and forestry enterprises. However, there are financing gaps, and some planned activities fail to be implemented.

There is a regular monitoring and reporting system for the implementation of the forestry policy maintained by the Ministry of Forestry( http://www.mlh.by/ )

A decision-making for amending/renewing the legislation requires between one to one and a half years in Belarus.

The system for monitoring compliance and enforcement is in place. The Department for Supervision and Auditing and State Control with 29 staff in the Ministry of Forestry.

The forest sector in Belarus, representing around 42 percent of the total land, is all state-owned and managed primarily through the Ministry of Forestry and State Forest Enterprises (lezkhoz) (85.8%), Department for Presidential Affairs (8.0%), Ministry of Emergency (2.3%), Ministry of Defense (1.0%), local authorities (0.4%), National Academy of Science (0.4%), Ministry of Education (0.3%) and “Vitebskdrev” Open Joint-Stock Company (2.1%.).

There are no community managed forests. Forests plots have been available for lease since 2009 (Decree of the President №444 of 9 Sept 2009) for cultural, recuperative, tourist, recreational and sport purposes as well as for hunting and forest utilization by enterprises owned by the Bellesbumprom Holding. Lease at a fixed stumpage fee provides favorable access to forest resources for enterprises of the Bellesbumprom Holding and distorts market conditions.

There are no concessionary contracts for the use of forest resources.

Forest Institutions Private Sector Issues Institution responsible for developing forest policy and legislation :

Ministry of Forestry (62 employees) System for managing state owned forest: 95 Forest Enterprises (13 800

employees) Institution responsible for monitoring and control : Department for

Supervision and Auditing and State Control (29 employees)

Belarus has a centralized forest administration system. It involves concentration of the functions pertaining to legislative and regulatory control, administration of economic and production activities and state forest control at a single center – the Ministry of Forestry, with some of these functions (economic management and control) mirrored by its territorial bodies, as well as some other ministries and agencies (economic management and state control).

Such a concentration of functions has both strengths and weaknesses. Centralized administration is effective for achieving long-term strategic goals due to sustainable exploitation of forest resources and enhancement of their productive and environmental capacity (proved by the positive trends in key productivity and quality forest indicators and by increasing forest cover). At the same time, in market environment which requires flexible and prompt decision-making to achieve short-term commercial goals, centralized administration, with its lengthy decision-making processes, is inefficient.

In 2006-2011 standing wood sales gradually moved to market-based pricing based on demand and supply. Decree of the President № 214 of 7 May 2007 introduced the cutting stock sales through a bidding process. In 2008 the country started to sell standing wood through a Commodity Exchange (except volumes to be sold at a fixed rate). Outside the Commodity Exchange logged timber is sold exclusively to meet the needs of the government programs and local needs. The timber sales methods have negligible impact on the incidence of illegal harvesting. In 2012 versus 2009 the volume of illegal logging decreased by 3.7%. Illegal logging amounts to 0.07 – 0.1% of total logging volume. In 75 – 85% of cases the offenders are identified.

There is a very thorough approach to transforming the rector, and lessons learnt in other countries of the region are fully taken into account.

While Belarus' forests are largely well-managed, the state-control of the sector creates obstacles for the development of the private timber industry and causes conflicts of interests within state structures which manage, control, and actively use forest resources. Effective 1 January 2011 timber logging and processing in Belarus is not subject to licensing. This enables to involve small businesses in forest works, development of forest services as well as to reduce corruption risks associated with licensing.

The country/private sector is in the process of preparations for the introduction of the EU Timber regulation.

Two international forest certification systems – the PEFC and the FSC system - are used in Belarus. The area of PEFC certified forests 86.1% of the total forest land. The area of

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Centralized administration is very conservative in streamlining its institutional system. The focus is exclusively on expanding the commercial activities of its principal operating unit – a state-owned forestry enterprise.

A peculiar feature of the existing system is that the while the Ministry of Forestry does not have the industrial forest activities within its mandate, by their scope these activities are dominating (the annual timber processing volume is close to 1 ml m3).

These activities require the establishment of specialized units in the Ministry of Forestry central and regional offices. The government budget supports maintenance of the state forest/forestry

administration body and its territorial bodies, forest regeneration and cultivation, forest conservation and forest fire control, forest protection, seed breeding, forest monitoring, maintenance of the state forest cadastre and forest reserves accounting, and forest management, R&D works, personnel training, retraining and advanced training, social functions.

Commercial activities are self-financed. The key sources of revenues include: revenues from sales of timber, normally at auctions, revenues from sales of products (works, services); non-tax payments for short-term exploitation of the forest reserves when selling standing timber, budget allocations for production of products (works, services) under state orders. As of 1 January 2011 the forestry sector employed 35 thousand people

(including 5.6 thousand women). In the last five years the number of employees decreased by а 7% as a result of restructuring of inefficient woodworking production units of forestry enterprises, technical upgrading, reduction of the number of unskilled workers, demographic trends in rural areas and staff outflow to the associated sectors. Staffing of forestry sector entities is stable. Over 55% of employees have the length of services of more than five years. However, a certain increase of staff outflow has been reported in the recent years in forestry enterprises, particularly foremen and foresters.

The level of skills in the forestry sector is well-developed: per one employee with a higher education there is 1,4 employees with secondary special education, 1,7 – with vocational education and 2,8 – with secondary education. The age structure is well-balanced: 78% of employees are below 50 years. The average age of a manager is 47.3 years.

All forestry sector executives have higher education. Managerial staff has either higher or secondary special education. Staff qualification has been improving

The State Program of Forest Sector Development for 2011-2015 plans for piloting the institutional improvements on the basis of six forestry enterprises: pilot-testing of possible options of improvement of the existing forest sector administration system on the basis of six forestry enterprises (one in each of the oblasts) with provision for separation of the operations into forest management

FSC certified forests totals 47.1% of the total forest land. The intention is to continue certification of the Belarusian forestry enterprises for compliance with both the PEFC and FSC standards.

Forestry enterprises are interested in utilizing up-to-date timber tracking technology in order to comply with international standards as timber is an important export item of the country. They understand the importance of modern timber tracking technologies in the context of European Parliament and Council Regulation 995/2010 laying down the obligations of operators who place timber and timber products on the market.

As Belarus does not have customs borders with Russia, WTO accession of Russia implications will have a serious impact on both the private and public sector enterprises.

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and production activities (logging and wood processing). The mechanism for conducting such an experiment has not yet been determined, but it is envisaged that its outcomes will be used to create new production entities having the status of legal entities of the forest sector and tasked with timber procurement and wood processing functions.

Protected Areas Community Involvement and Participation The forest area having a special protection status is increasing and

currently amounts to 14.3% of total forest area or 7.7% of the country’s territory. All protected areas have a legal status and management plans. A new scheme of rational allocation of specially protected natural areas was developed for the period 2005-2015.

However, there are problems threatening ecological functions of forests associated with climate trends, forest utilization modes, natural and man-made impacts and result from inefficient institutional system.

The most significant of them include: (i) weakening of forest ecosystems’ sustainability as a result of destabilization of regional and global climate in combination with local impacts and considerable share of artificial forests (23.0%) and forests created on previously non-forested areas; (ii) exhausted peat bogs at forest lands which have been inefficiently dried during forest hydrotechnical drainage or slightly dried as a result of drainage of agricultural lands thus increasing the risk of forest fires and loss of forests; (iii) high degree of forest fragmentation; (iv) slow introduction by the forestry sector of machinery, technologies, methods and techniques aimed at conservation of biotopes and forest elements which are especially valuable for the environment; (v) inappropriate system of groups and categories of forest protection, presence of duplicating or ill-defined categories of specially protected areas; and (vi) a need for conservation and enhancement of biological and landscape diversity and principles of sustainable forest management and utilization.

Local people do have access to forest to meet their own fuelwood and NTFP requirements. There is room for improving community and stakeholder participation in the forest sector. The new Forest Policy Strategy which is under preparation will involve intensive consultation process.

There is room for improvement in local communities and general public adequately being informed about forest sector issues e.g. forest fires, illegal logging, climate change, PAs etc.

Forest Fires, Protection and Prevention “From FLEG I to FLEG II” The strong state control on forests ensures low levels of illegal logging

and protects forests from disastrous fires. Due to the measures undertaken in 2010 to improve the system of forest protection and availability of resources large-scale forest fires have been prevented during fire-risk seasons (the new Rules of Fire Safety in Forests of the Republic of Belarus came into force on 1 November 2010).

Human factor is named as main causal factors attributed to the fires. There no forest or agricultural policies that would contribute to causing

The National forestry legislation was reviewed in the context of ENA-FLEG priorities. Amendments and revisions proposed to the Forestry Code and other sector regulations cover: (i) the management system of forest use and protection; (ii) liability for damage resulting from the violation of forestry legislation; (iii) regulation of forest use relations; (iv) enforcement of administrative and criminal liability for offence of forest use law; (v) trade in forest products; (vi) forest protection; (vii) enforcement of administrative and criminal liability for offence of forest products trade law, and (viii) forest ownership rights.

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fires. Fires are caused by people’s negligence or sometimes nature phenomena (e.g. lightning).

The number of forest fires and burnt area have decreased over the past years. In spite of unusually hot summer in 2010, the area of fire-affected forests decreased almost four-fold from 1,240 hectares in 2009 to 343 hectares in 2010. It is the evidence of efforts to improve the efficiency of the country’s fire protection systems.

The forestry sector has 209 chemical fire-protection stations, 681 point with fire protection equipment, and 176 visual surveillance systems for continuous monitoring and early warning. The Ministry of Emergency has specialized trained fire-fighting units including aviation equipment and teams.

In FLEG II versus FLEG I the focus on openness, transparency and wide engagement of all stakeholders should be stronger.

List of key priorities for the ENPI FLEG Phase II program:

Updating the forest policy and improving forest legislation and law enforcement through (i) the development of the Forestry Strategic Plan until 2030 and a road-map for the implementation of the Saint-Petersburg Declaration and the Indicative FLEG Action Plan; (ii) deepening intersectoral cooperation and interaction between key stakeholders, and the public, (iii) preventing offenses among the staff of the forest sector and other participants of forest relations, and to counter manifestations of corruption.Optimizing the system of forest management and forest use by (i) differentiating the functions of regulation, supervision and control; (ii) promotion of entrepreneurial activity and small business development in rural area; expanding opportunities for the sustenance of populations residing in forest areas (the development of bee-keeping, harvesting of minor forest products, etc.); (iii) improving the market mechanisms of selling forest products; and (iv) improving the quality of forest inventory and timber accounting.

Improving the professional skills of forestry specialists based on international knowledge exchange with EU member-states and the participating countries of of ENPI FLEG-2.

Implementing a communication strategy in the forest sector, developing forest-related and environmental education focusing on openness, transparency and wide engagement of all stakeholders including the public, and developing regional information cooperation on FLEG issues.

Georgia

Forest Policy and Strategy Forest Legislation62

No approved forest policy strategy as of 2012; From 2005-2007 several attempts were made to launch this work

including funding provided by FAO; At present no immediate plans have been announced by relevant

government entities to start up a work on forest policy strategy; A recommendation to develop a forest policy document was even made

within the ENPI FLEG Program, however no practical steps have been made in this direction by government.

Forest Code was passed in June 2009, several amendments were made later The development of new Forest Code was postponed to March 2012 and later it

was delayed to the Fall of 2012 The Forest Code had a limited public review and discussion resulting in a negative

response both from the general population and international community; There is a system of monitoring compliance but the other issue is effectiveness of

such monitoring.Current legislation contains some drawbacks that create a ground for illegal logging and other forms of forest crimes. Namely:a. Transfer of Land to Investors without carrying out Inventory in the first place.The law provides for transfer of forest land into long term leasing to private investors. The transfer is implemented on the basis of old inventory data that may or may not give a real info on available resources. The government decided to implement transfer of forest land into long term lease without carrying out inventory in the first place and by assigning this responsibility to prospective lessees. b. Compensation Concept for Damages Recently the government passed an amendment to the law on environment protection which introduced a so-called compensation concept. An innovation makes it legal for the Georgian government and private entity to agree on the amount of compensation and so to forgive for afflicted damages to the environment. It must be said that there is no indication of a methodology of calculation of either damages or criteria of determining when the government shall enter into negotiation with a private entity.c. Limited Number of Forest Rangers with too much ResponsibilityAnother area that potentially may create favorable conditions for forest fires is a limited number of forest rangers on the territories that they control. At present moment there are forest units where a ranger is often responsible for a territory with over 4000 ha.

In Georgia there is no provision for private forest ownership; Communal forest ownership/management (municipal and also real community

management involving groups of villagers/farmers/traditional owners); long term leases; other forms of tenure and management are provisioned by the forest legislation.

The current timber sales methods involve: a) for commercial wood - transfer of long-term wood use rights by the state

(usually for 20 years) to private companies on the basis of auctions, b) for fuel wood and small-sized wood for personal consumption - marking

trees in the forests located near population centers by the state forestry authorities; the local villagers then obtain a permission to cut this wood, make payments and conduct wood harvesting operation themselves or by hired workers.

In terms of combating against illegal harvesting, auctions are usually a better option as it

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is a more transparent wood sale method. However, the problem of illegal logging still exists mainly due to the lack of capacities of the state forestry authorities in terms of law enforcement and still high demand for fuelwood by local population, due to rural poverty.

Apparently international organizations have some leverage to influence on the government when it comes to the passage of legal acts.

The other factor that can be concluded as well is a limited ability of a general public and its limited interest to have an influence over environmental legislation.

Forest Institutions Private Sector IssuesThere is a clear separation in the management / ownership functions.Institution responsible for developing forest policy and legislation- Ministry of Energy and Natural Resources (No of employees 120)System for managing state owned forest- Agency of Natural Resources of Ministry of Energy and Natural Resources ( No of employees 1 036) Institution responsible for monitoring and control - Monitoring department of Agency of Natural Resources ( No of employees 172)

However there are problems with regulatory/supervisory/policy formulation functions. The institutions at present are much better staffed than in the past. However the staffing is still not adequate. The rangers in the Forest FA typically have no means of transportation and have no living quarters in the forest area.The last institutional restructuring took a place in 2011 when the forest agency was subordinated to the Georgian Ministry of Energy and Natural Resources (prior to that Forest Agency was subordinated to the Georgian Ministry of Environment Protection). The change was perceived negatively from NGO community and apparently from several international organizations. Apparently there is a demand for restructuring though it will be very hard to convince the government to do so.

There are no state forest enterprises in GeorgiaThere is only private sector in Georgia with respect to forest resource productions. There is no interest from the side of international investors to enter the Georgian forest

sector and this fact points to unfavorable investment climate in Georgia.At present only an insignificant amount of timber is exported from Georgia to the EU.

However, the situation may change in the future, if export volumes to the EU increaseAt present moment there is an ongoing consultation with respect to involving private

sector in voluntary certification process.

Protected Areas Community Involvement and participationAt present around 10% of forest area is designated as PA.

National parks in Georgia definitely lack adequate funding. Some of the parks have a better funding than others, including from international donors. PA management plans have only few of them and those that have quite often fail to follow PA management plans.

The government is usually very unwilling to involve NGOs and general public in consultation. Only once pressed by international organizations, the government imitates the process of public consultations.

In 2012 the government introduced a new legal act by which the limit on personal fuel wood consumption was rescinded. On paper population can have an access to forest to meet its own fuel wood requirements. However the situation in practice requires a further study.The information support of local communities and general public is not adequate.

Forest Fires, Protection and Prevention From FLEG I to FLEG II64

There have been several incidents of forest fires during the last ten years.Human factor is one of the key causes of fires in the forests.Climate change (e.g. prolongation of draughts) may also create more favorable conditions for triggering forest fires, especially for coniferous forests.The forest authorities and responsible agencies have adequate systems in place to notify the public during high risk/high hazard periodsResources are not adequate and the staff training desired to be much better

There has been some review of a forest legislation including of forest code under the ENPI FLEG Regional program. The main conclusion is that due to frequent change of legislation the forest code contains several deficiencies and requires an update. Indeed in the Fall, 2011 the government initiated the review of a new Forest Code which ultimately failed to get passed and was later postponed for the Fall 2012.The following priorities for FLEG II were suggested by the focal point:

Training needs assessment and Capacity Building of the Natural Resources Agency’s staff;

Legal work on the development of the secondary legislation; Promotion of the incorporation of sustainable forest management (SFM)

principles in national forestry policy of Georgia; Assessment of best international practices in the area of forest certification Public engagement and awareness to promote better forest governance; Promotion of alternative livelihood activities for the forest depending rural

population; Incorporation of FLEG issues in forest related education;

The following priorities may be considered: Assessment of Georgian regulatory framework of the forestry sector with

regards to its correspondence with the norms and spirit of EU legislation (with the pocus on legislation discussed within framework of EU-Georgia association agreement);

Study of administrative procedures and cost determination system for legal timber harvest and logging license, provision of advice on simplification and streamlining;

Analysis of existing regulations and development recommendations for improving methods of forest protection (including measures aimed at preventing illegal grazing) based on the best international practices;

Demonstration of economic viability of certified SFM; Demonstration of the economic values of forest ecosystems and biodiversity; Work with mass media for high quality coverage of FLEG issues and support

positive local initiatives.

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Moldova

Moldova

Forest Policy and Strategy Forest Legislation In Moldova the “Strategy on sustainable development of forestry sector” was

adopted by the Parliament Decision in 2001 (nr. 350-XV from 12.07.2001). The document was developed in 1999-2001 by State Forest Service (Moldova)

under financial and consultancy support from the Ministry of Environment of Finland. Before submission to the Parliament, many consultations and a participatory process involving stakeholders (Ministries, Academy of Sciences, LPAs, and NGOs) was ensured.

There is a need to improve actual strategy as then there were not such visible environmental changes and FLEG was not into agenda. Actual social-economic conditions, especially among local communities, imply new approaches to be tackled in the forestry policy documentation.

State Forestry Agency Moldsilva (http://www.moldsilva.gov.md) (According to the GD nr. 739 from 17.06.2003) is responsible for implementation and monitoring of activities of the “Strategy on sustainable development of forestry sector”, through Forest Research and Management Institute.

In 2012, Agency Modlsilva (the central public authority in forestry and game management in the country) with assistance from the ENPI FLEG Program have launched a process of developing the “Forestry Institutional Reform Strategy of Moldova” (FIRSM), the first concept-draft was developed and consultations with stakeholders are still taking place.

Forest Code (the link to the Russian version of the document is available at http://base.spinform.ru/show_doc.fwx?rgn=3323) was adopted in 1996 by Parliament Decision Nr. 887 from 21.06.1996, it was then published on 16.01.1997 in the “Monitorul Oficial” Nr. 4-5 art Nr 36, and entered into force from 16.01.1997. Amendments of Forest Code in 2001, 2003, 2005 and partially in 2009 and 2011 (only some clauses).

Legislation is not that imperfect, but rather enforcement of law is a problem. Poverty and lack of forest (natural) resources are also among drivers of illegalities.

Amendments and/or renewing legislation in Moldova take usually from 1 to 2 years, depending on the case and modifications per se.

The Government of Moldova has recently requested from all authorities to re-evaluate and/or harmonize national legislation to EU legislation.

Forest Institutions Private Sector Issues Institution responsible for developing forest policy and legislation : Agency All these provisions - private forest ownership, communal forest

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Moldsilva( 22 staff); System for managing state owned forest : under 25 State Forest Entities, LPAs,

private (4190 employees); Institution responsible for monitoring and control: State Ecological Inspectorate,

in Ministry of Environment (310 employees).

Currently there is not clear separation of management/ownership functions and regulatory/supervisory/policy formulation functions, but the FIRSM intends to separate these functions.

Forest institutions are partially adequately staffed and resourced. Moldsilva is 98% self-funded (from wood/timber felling) and practically not financially supported from the budget, so some of existing state forest enterprises do require support from the budget for regeneration and forest extension (afforestation should be a separate budgetary program).

The last attempt of institutional restructuring was in 2010 without FLEG intervention, but failed. The new concept of “Forestry Institutional Reform Strategy of Moldova” (FIRSM), initiated in 2012 with the help of ENPI FLEG, is already presented to the large public using workshops, mass-media, professional discussions, involving stakeholders. Moldsilva created a working group to develop FIRSM and an Expertise Committee to analyze the proposed FIRSM concept, and then Moldsilva will submit it to the Government of Moldova.

ownership/management (municipal and also real community management involving groups of villagers/farmers/traditional owners), long term leases,and other forms of tenure and management - are in the national legislation, including forest legislation, but it does require clear mechanisms of establishing new forests (N.B. Actual legislation does not allow privatization of forests). Forest lease of state forests is allowed for recreation and game management activities, for a period from 5-49 years

Harvested wood/timber is sold as standing timber as processed products. According to official data (www.moldsilva.gov.md), actual harvest in forests is 40% of annual growth, and harvested volumes do not affect the condition of the national forest fund due to the regeneration processes undertaken in all harvesting sites meant for main felling products. Harvested wood are produced to satisfy domestic needs and can be purchased by the local population and various companies.

Wood is available for purchasing/sale through either auctions of directly from forest enterprises. Moldilva has launched first auctions of standing timber sale for private and public sector only in 2010. Since 2012, Moldsilva attempted to externalize other forest activities (exploitation, plantations, regeneration etc.) through 2 pilot units.

Legal frame for voluntary certification is ready. However, there is no stringent need for implementing such certification because the harvested wood is of low quality and there is almost no export of domestic wood.

The country private sector is prepared for the introduction of the EU Timber regulation.

Protected Areas Community Involvement and participationActual PA coverage is 4,65% of country’s territory. Most PAs (circa 80%) are managed by Moldsilva, the rest by LPAs mostly. Moldsilva does invest some funds (in guarding/management, protection, regeneration etc.), but LPAs do not have such. Overall financing is inadequate; a current GEF/UNDP PAS project will re-evaluate PAs and first National Park Orhei will be established soon. The three Ramsar sites are paper PAs, some do not really correspond to wet area type.

Community and stakeholders are sufficiently participating in the forestry sector, and the forest management planning works are consulted with experts from outside Moldsilva, such as Ministry of Environment and Academy of Sciences. Almost 90% of Moldsilva’s annual harvest is to ensure energetic/households needs of communities. Everybody can have access to forests, but relations are controlled and entrance to PAs is limited.

Forest Fires, Protection and Prevention “From FLEG I to FLEG II” Cases of fires in area covered by forest vegetation and/or other vegetation have

increased over last decade. Most fires are caused by people, either incidentally or deliberately. Overall, fire

pre-conditions are amplified by severe droughts and/or other environmental changes (climatic).

Actual legislation does not allow and even fines those to provoke/cause fires. However, there are cases of illegal burning of lands caused by local population.

Each forest district within enterprises of Moldsilva has (i) ensured that their

Recommendations regarding the new structure of the Forest Code were developed in 2011 under FLEG1. It consists of 23 chapters divided into 136 articles, of which 5 chapters and 42 articles are new.

There has been a general lack of awareness about forests sector, which was improved since 2009 when ENPI FLEG entered into action. Most publicity materials (reports, analyses, video/films, radio, leaflets) within FLEG were jointly produced by Moldsilva, ONGs, other experts and ENPI FLEG team.

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personnel’s job assignment includes responsibilities of prevention and fire management duties, (ii) ensured for vegetation season a number of special fire staff, and (iii) ensured notification through fire boards on roads or forest roads to inform the public about this kind of hazard.

In case of fires there are special units (cars, staff trained) of Emergency Service within the Ministry of Interior, whom Moldsilva cooperates and have joint plans of fighting fires at local level (in forests or other lands in vicinity to forests, agricultural, private lands).

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Russia

Forest Policy and Strategy Forest LegislationUntil now, Russia had no forest policy document of a defined status. Instead, agency strategies and programs were developed on a regular basis.

1) By now, Russia’s Forest Policy Document has been drafted without any definite status, so far.

The draft is being discussed by way of broad public consultation (website: http://lp.vniilm.ru/). The feedback from all consultation participants is reviewed by a working group established specifically for this purpose (and consisting of representatives from the FFA, academia, business community and NGOs). Russia’s Forest Policy Document (a draft) is substantively relevant and up-to-date; it embraces all key issues related to how to ensure sustainable forest management. There is a plan of activities to discuss Russia’s Draft Forest Policy as approved by the FFA in June 2012. Russia’s Forest Policy will be updated as needed. The Draft Forest Policy document reads: “The government will provide opportunities to develop and adapt provisions of the forest policy”.Regarding monitoring Russia’s Draft Forest Policy reads: “The forest policy will be evaluated on the basis of targets for indicators specified in strategic planning documents, forest planning documents and results of monitoring the execution of delegated powers to govern forest relations by Russian regions. The forest policy evaluation arrangements will include professional and public hearings and reviews with involvement of all stakeholder groups and broad layers of civil society”.The execution of legislative powers to govern the forests of Russian regions are also

The history of Russia forest legislation development: The Basic Decree on Forests: 1918; The Forest Code: 1923; The Forest Code of the Russian Soviet Federal Socialist Republic: 1978 ; The Framework Forest Legislation: 1993 ; The Forest Code: 1997.

Currently effective is The Forest Code 2006: (link to Russian version http://base.spinform.ru/show_doc.fwx?rgn=14602)

About 17 packages of amendments were made to the effective Forest Code, with the latest of them made in June 2012. According to a number of experts, the Code needs to be drastically revised because it fails to support sustainable forest management

Examples of the shortcomings current Forest Code are: (i) The Code had abolished the Forest Guard Service (which was re-

established in 2012); (ii) Forest management functions were vested on forest lessees but

they fail to perform them in a proper manner, and the remaining (i.e. not leased) areas do not receive silvicultural activities of appropriate scope and scale;

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already monitored; EVALUATION CRITERIA FOR RUSSIAN REGIONS’ PERFORMANCE RELATED TO THE EXECUTION OF DELEGATED POWERS TO GOVERN FOREST RELATIONS were adopted and made effective. They were approved by Resolution of the Government of the Russian Federation # 194 of March 6, 2012.

2) The Forest Sector Development Strategy of the Russian Federation for the Period up to 2020 was approved as of October 31, 2008 by Order of the Ministry of Industry and Trade of the Russian Federation and Ministry of Agriculture of the Russian Federation # 248/482.

Currently, this document is under review by the Government of the Russian Federation. It had not been subject to prior public consultation. Now it was published at the FFA’s website for public review, some stakeholder proposals were taken into consideration. (http://www.rosleshoz.gov.ru/activity/finance/docs/302 ). This is important to note that the FSDS has partially lost its relevance because forest governance functions were transferred from the Ministry of Agriculture of the Russian Federation and the institutional framework of forest management was changed (August 2010). It does not make any tangible effect on forest management and use.

Neither the Forest Sector Development Strategy, nor Draft State Forestry Development Program for the Period up to 2020 covers such issues as climate change, rural development, landscapes or gender issues. The Draft State Forestry Development Program for the Period up to 2020 partially addresses FLEG issues

3) The State Forestry Development Program for the Period of 2012-2020 was designed pursuant to Resolution of the Government of the Russian Federation # 588 of August 2, 2010 On Approving the Development and Evaluation Procedures for State Programs in the Russian Federation. This is a program complete with funding.

4)The previous program titled the Concept of Forestry Development in the Russian Federation for the Period of 2003-2010 (approved by Ordinance of the Government of the Russian Federation # 69-р of January 18, 2003) was completed in 2010.

(iii) There is no equitable legal access to/allocation of forest resources especially for local citizens and forest-dependent communities;

(iv) The centralised forest fire management system was abolished; timely and high-quality inventory of forest resources is not ensured; employment issues of forest-dependent communities remain neglected, etc.

In Russia the legislation may be revised and improved fairly quickly; there is adequate capacity to do it. But it was chosen to make amendments to the existing legislation rather than to replace the effective Forest Code with a new one. As regards forest governance, the unceasing reforms and uncertainty as well as lack of expert inputs into the legislation are the main hurdles for the development of better laws.

Oversight of the legislation rests with prosecutor’s offices and respective executive authorities (administrative oversight). Official forest inspection and oversight may be effected by regional executive authorities in charge of forest relations vested with the powers delegated to the regions in accordance with Article 83 of the Forest Code. The established requirements are excessive, non-transparent and contradictory: inspection/monitoring powers (investigations/studies, surveys, reviews, primary information analyses) are twinned with oversight powers (checks, penalties, issuance of permits, and suspension of operations).

Provisions in the legislation for different types of ownership:a) private forest ownership : Article 8 of the Forest Code sets forth that forest parcels within the forest estate (also referred to as ‘the Forest Fund’) are federally owned. Forests on land of settlements may be in municipal ownership. b) communal forest ownership/management (municipal and also real community management involving groups of villagers/farmers/traditional owners ): Regional and local PAs may be also in municipal ownership. The Forest Code defines preferential rights of small-numbered indigenous peoples (Article 48).c) long term leases, d) other forms of tenure and management: Article 9 of the Forest Code governs the right to permanent and limited use of forest parcels - forest lease for periods from 10 to 49 years (with the possibility to resume the lease for up to another 50 years). Forests may be made available for permanent use without time limits to public authorities and local self-governance bodies.

Timber sales methods that are currently allowed under the law and currently practiced:Article 29 of the Forest Code: Wood Harvesting

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Para. 8. Citizens and legal entities shall harvest wood under lease agreements for forest parcels. Para. 8.2. In exceptional cases, specified in regional laws, it shall be admissible to harvest wood to meet public or municipal needs under sale/purchase contracts for forest stands.Article74. A lease agreement for a publicly-owned or municipally-owned forest parcel shall be concluded based on the results of an auction for the right to conclude such an agreement. Imperfection of the auctioning arrangements and sub-optimal access to forest lease rights are a major cause of illegal logging.

All Russian forest laws and regulations are relevant and defining for the situation in the forest sector. E.g., the currently effective Forest Code is regarded by many experts as an underlying cause of the decline in forestry and a serious obstacle for promoting efficient and sustainable forest management.

Forest Institutions Private Sector IssuesSince June 2012, the functions of management/ownership and regulatory/supervisory/policy formulation functions are divided.

Possession: federal ownership; Forest policies and legislative initiative: the Ministry of Natural Resources and

Environment of the Russian Federation http://www.mnr.gov.ru/; Forest governance and management: Russian regions; The Federal Forestry Agency ( http://www.rosleshoz.gov.ru/agency) monitors the

execution of the delegated powers, establishes the ages of cutting and procedures for estimating the allowable cuts; establishes the list of tree and shrub species which are not permitted for wood harvesting; approves the form of the Forest Declaration and procedures for its completing and submitting; sets rules for wood harvesting; (Article 81 of the Forest Code contains 42 powers).

The 2006 Forest Code separated the forest management/administration functions from forestry operations. Within leased forests, the lessees are obligated to fight and prevent forest fires, construct, reconstruct and maintain fire roads, and perform sanitary, salvage, reforestation and silvicultural care (thinning, etc.) operations.Within the other areas, forest management operations are conducted by contracted business entities, which receive funds from the public (regional) budgets. In both cases, actual expenditures and capacities are not sufficient to support sustainable forest use.

Now, 4 times fewer people are employed in forestry compared with the year 2000.

The restructuring Russia is facing now is not the first one while last decades: the change of

There are no private forests in the Russian Federation; however, most forest resource utilisation and processing operations are private. All forest loggers are private business entities.The need to ensure equitable access to resources does exist, there are numerous corruption scandals related to making parcels of the forest estate available for use to designated companies.

This issue of the new EU Timber regulation was discussed and explored, in particular, under the ENPI FLEG Program. At the government level, an attempt was made to adapt to the new EU timber regulation through drafting a Law on Round-Wood Trade.Many Russian private companies, acting as wood suppliers to various markets, are certified and can be considered to be fairly well prepared to comply with the new regulation. But so far, it is unclear how fairly voluntary certification procedures will match the “due diligence” requirements of the EU Timber regulation. The EU legislation development is not yet completed - preparation of by-laws is underway. Therefore, additional efforts will be needed to inform, as well as to monitor the situation when the system is made effective. Particularly, it pertains to the regions oriented to export to the EU’s countries.

The area of certified Russian forests is about 30 million ha. Russia is the second in the world in this respect after Canada (39 million ha). The geography of certified forests has been ever expanding to cover 16 Russian regions by now.There are some inconsistencies between the Russian forest legislation and certification requirements, especially with regard to conservation of biodiversity and high conservation value forests.

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subordination of FFA happened for the second time. During the same period, this federal forest agency was under the Ministry of Agriculture of the Russian Federation; and was a self-standing agency. The reform resulted into the loss manageability and continuity in statistical reporting, lack of reliable data, drain of expertise and skills (for the aerial forest fire service, forest pest management, forest information and land use planning, etc.), impaired scientific support, and degradation of forest communities.

For the large-scale business the utilizing modern timber tracking technology is interesting to consider but with reasonable costs of such systems. But small- and medium-sized business is not fully ready in view to expected additional burdens.

Russia’s accession to WTO might have implications for the forest complex. According to Ernst & Young, due to lowered import barriers, pulp and paper outputs as well as wood-working outputs may be expected to reduce. E.g., in the Far East, manufacturers of wood-based (and potentially pulp and paper) products may be affected and forced to reduce their outputs.

Protected Areas Community Involvement and ParticipationRussia's nature reserve system (PAs) covers nearly 6 percent of the country. It is the largest, one of the most important, and until recently one of the best organized systems in the world. It consists of strict nature reserves (zapovedniks) used for research and biosphere conservation, occupying 1.42 percent of Russia; national parks which are protected, but allow limited tourism, agriculture, and grazing, occupying 0.38 percent of Russia; special purpose reserves (Zakazniks), established to safeguard certain flora or fauna populations, usually for a specified period, occupying 4 percent of Russia; and natural monuments (pamyatniki Prirody).According to the state forest registry, as of January 1, 2010, total terrestrial forested area is 1,183.7 million ha, out of which the Forest Fund area is 1,143.6 million ha, defence and municipal forests – 6.1 million ha, PAs - 26.9 mln ha, other categories – 7.1 million ha. Hence, 2.3% of the country’s forest area is designated as PAs.

Overall, the conservative approach to protection of wilderness areas has failed to prove effective: The existing system of Russian PAs needs improvement to conserve populations of endangered wildlife and plant species and reference communities; it is neither adequately effective for monitoring and studies in support of their conservation. PAs have not managed to become an integral part of the economy and culture in Russia but positive trends and initiatives of certain PAs could be observed over the past decade.Protected areas usually have management plans but in many cases, they fail to match the conservation and development objectives and needs.

As regards the public involvement in forest management, the Forest Code of the Russian Federation is only calling on ‘citizens’ and civil society organisations to contribute to sound use, protection and renewal of forests. Unfortunately, the Forest Code does not contain any guidance or mechanisms, except for the statement that people “may participate”.As regards community forestry, there is a notion of “traditional natural resource management areas” in Russia. These are PAs, set aside for traditional natural resource management and adherence to traditional lifestyles of small-numbered indigenous peoples of the North. The law declares that small-numbered indigenous peoples of the North have the right to use natural resources, including forests, in order to adhere to their traditional lifestyles.Article 30 of the Forest Code reads: Citizens shall have the right to harvest wood for purposes of heating, construction and for other subsistence needs. Citizens shall harvest wood for their subsistence needs under sale-purchase contracts for forest stands. Procedures and norms for wood harvesting by citizens for their subsistence needs shall be established in laws of the Subjects of the Russian Federation (i.e. Russian regions) Access to fuel wood for local communities is highly bureaucratic, and in many Russian regions, it is not yet defined how to get it officially. Rules governing access to non-timber forest resources for local communities exist but only formally and are not applicable in practice.

The situation is often dependent on forest authorities’ attitude at the level of regions, but as a rule, local communities and general public are not adequately informed about forest sector issues e.g. forest fires, illegal logging, climate change, PAs etc.

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Forest Fires, Protection and Prevention “From FLEG I to FLEG II”Forest fires inflict substantial economic and environmental damage. Annual direct timber losses to forest fire are usually underestimated, but in any case, they are many a time greater than the costs of forest fire control. In 2010 alone, the total volume of fire-killed standing forests amounted to 93.1 m3, and the area of destroyed young forests was 126,600 ha. Spending on forest fire fighting in the same year amounted to RUR 2.3 billion (approximately EURO 55 million). Vast areas and high frequency of forest fires lead to substantial transformations and impoverishment of natural ecosystems of high-yield forests; changes in hydrothermal processes and hydrochemistry of rivers and streams, soil cryogenesis disturbance, etc., which eventually result into irreversible modifications of vegetation types, lost biological productivity of forest habitats, lost biotopes and biodiversity. In Russia, forest fires continue to develop following catastrophic scenarios.

Listed below are key causes of high fire incidence in the country: Imperfection of the forest legislation, non-existence of laws and regulations on forest fire prevention. Low level of culture and fire discipline in forests. Degradation of the fire-preventing and fire-fighting infrastructure. Destruction of the old regulatory framework and technical and human resource capacity to ensure fire safety in forests and the failure to create new effective frameworks and capacity for this purpose Lack of well-structured forest fire management at the federal and regional levels Poor coordination and lack of systemic interagency cooperation Lack of funding and equipment

A major cause of forest fires is wide-spread use of agricultural burnings of grass on forest-adjacent areas, unextinguished camp fires of tourists, hunters and other forest visitors. Criminal arsons also happen. Overall, anthropogenic fires account for more than 90% of forest fires in Russia.

The availability of equipment for fire prevention, early fire detection (including early warning systems), and fighting is insufficient though the recent 2 years have seen a significant increase in resources made available for these purposes.In 2011, the total amount of forestry financing from the federal budget was RUR 36 billion, including RUR 5 billion of earmarked subventions for Russian regions for procuring forest fire fighting machinery and equipment. The amount of RUR 3.5 billion for the year 2012 will enable to equip Russian regions with additional 1,340 units of fire machinery. According to V.N. Maslyakov, Chief of the FFA, in 2013-2014, the program will help to reach the standard level of equipment availability for the regional forest fire services; and RUR 6.5 billion, budgeted for 2013 (2,490 units), and annual allocation of RUR 5 billion in 2014-2015 (3,797 units) will enable to meet the needs in full

There have been review of the existing forest code under the ENPI FLEG Regional Program (Phase I) on a repeated bases for different purposes. The Key conclusions are:

Weak economic mechanisms of effective forest management and forest use;

Contradictions of the Forest Code with some other legislation (e.g. the Land Code);

Destroyed controls and records of forest resources; Increased corruption in the forest sector; Ruined system of forest fire management and forest protection; Lost human resource capacity; Impaired competitiveness and investment attractiveness of the forest

sector Complicated access to information about forests and lack of

transparency in forest resources use.What is also relevant to relevant to the design and implementation of the Phase II is the mainstreaming of FLEG activities into priorities of Russia’s Forest Policy and Forest Polices of Russian regions

List of key priorities for the ENPI FLEG Phase II:Assessment and monitoring of forest governance at the country level and at the level of a Russian region (including such processes based on the FAO/PROFOR Framework))

Refinement and region-specific adaptation of illegal forest use controls

Review and improvement of governance and law enforcement as applicable to key forest management operations at the federal and regional levels, in particular, forest logging and reforestation practices, use of non-timber forest products, forest pest management, and fire management systems

Support for the development of responsible timber business with a focus on a) the conservation of biodiversity and high conservation value forests through encouraging to take new approaches to ensure sustainable forest management practices; and b) multiple use of forests Introduction of standards of sustainable forest use in the forest bioenergy sectorCollection and replication of best practices of legal and sustainable forest use by local people and small businesses (with a focus on PAs integration into such activities as growth points).Increased transparency of forest management decision-making.

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Ukraine

Forest Policy and Strategy Forest LegislationUkraine country's forest policy so far has not been formulated in explicit form. Although Ukrainian legislation expressly provides for the development of forest policy (Forest Code, Statute of the Ministry of Agrarian Policy and Food, etc.) and also defines the authorities responsible for its formulation and implementation. It is believed to be replaced by:

The Forest Code of Ukraine, 2006 /Parliament / (in Ukr http://zakon2.rada.gov.ua/laws/show/3852-12, in Russian http://meget.kiev.ua/kodeks/lesnoy-kodeks/)

The Concept of Forestry Reform and Development, 2006 /Cabinet of Ministers / The state program Forests of Ukraine, 2002, 2009 / Cabinet of Ministers /

The preparation of legal documents that contain some provisions of forest policy was carried out by specialists of the State Forestry Committee out of alignment with each other and without regard to the policy of rural development. The documents were cleared by other agencies and passed legal review. No public discussion of the bills was held, or held as a matter of form.

There is a need for developing a forest policy, and after that for a radical change in the forest legislation, institutional reform, update of strategic plans for the forest sector.

The state program Forests of Ukraine was developed in the absence of forest policy; it was launched in 2002 and is being funded out of the budget.

There is no specialized system for monitoring the progress of the state program Forests of Ukraine. Its implementation is monitored through periodic audits by the relevant authorities (Financial Inspectorate, Accounting Chamber)

In the course of administrative reform (late 2011 - early 2012), the Ministry of Agrarian Policy and Food (http://www.minagro.gov.ua/ru)was made responsible for the formulation of state forest policy. To date, the Ministry has not started this work.

Ukraine adopted the Forest Code in 1994 (http://zakon2.rada.gov.ua/laws/show/3852-12, link to the document in Russian http://meget.kiev.ua/kodeks/lesnoy-kodeks/), which is currently in effect. In 2006, its amended version was approved. The law inherits many provisions of Soviet forest law, is at variance with other laws of Ukraine and does not meet modern standards of forest management relations in a market economy.

The Forest Code and numerous regulations that develop it contain a number of shortcomings, which: (i) prevent the introduction in Ukraine of best practices for sustainable forest management; (ii) provoke not rational or criminal actions; (iii) create favorable conditions for the existence and development of corruption. For example: there is no general regulation on forest protection, which fact puts the companies of different types of ownership and different departmental subordination at a disadvantage; felling rules allow for unreasonably designing salvage felling; lack of provision for temporary long-term use encourages corruption in the assignment of forest areas for use.

The process of revising the legislation will be complex and may take at least two years. The main problem lies in the absence of lawyers specializing in forest law, and forest senior executives who understand the need for and the tenor of legislative reform.

The system of monitoring law compliance exists, but it is not effective. Its main drawbacks include: lack of a unified approach to the rule of law in all forests of the country, regardless of ownership and departmental subordination; redundancy and duplication of government control; no equity in determining penalties for forest offenses.

All the types of ownership and use of forests exist, but have certain specific features.

For example, communal property is bounded by the boundaries of the community, and private by the area of the forest land (not more than 5 hectares within farms). The legislation focuses on forest management of state property. Regulation

of temporary use has a number of features related to the fact that land and forests in Ukraine are considered independent objects of title. Rent for forest harvesting is not prohibited by law, but not practiced.

In order to make use of a growing forest (hunting, recreation, harvesting of minor forest products), forest areas are assigned for short-term (up to 1 year) and long-term (50 years) use.

The following facts are important for understanding the specifics of forest

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legislation of Ukraine: Work on the legislation in most cases was limited to the translation into

Ukrainian of legislative acts of the Soviet period and harmonizing them with the already existing laws of Ukraine. In this regard, the structure and content of modern forestry legislation of Ukraine is in many respects similar to the legislation of the Soviet period.

The legislation was developed by specialists of the forest department, at the same time regulating the economic activity of forest enterprises and carrying out state control over forests. In this regard, many of its provisions are opportunistic and short-sighted (situational). For example, many of the provisions restricting felling were included in the legislation during the crisis of the mid 90s, when wood in Ukraine found no sales. The situation has changed but the law remains the same.

The legislation was developed "from document to document" in the absence of a strategic vision of forestry development, with minimal involvement of lawyers and without broad public discussion. This predetermined its extremely cumbersome and generally poor quality.

Forest Institutions Private Sector Issues Institution responsible for developing forest policy and legislation: Forest

Department in the Ministry of Agrarian Policy ( 5 employees) System for managing state owned forest: under State Forest Resources Agency

(89 employees) Institution responsible for monitoring and control: State Ecological Inspectorate,

State Forest Protection, Service in Forest Resources Agency (Inspectorate: 60-100, Forest Protection Service: 18500 staff)

Until the end of 2011, the State Forestry Committee (SFC) performed all functions (lawmaking, management of economic activities of enterprises, control, support), with a focus on forest enterprises under its direct supervision. In fact, the departmental management system typical of the Soviet period persisted.

In the course of administrative reform at the end of 2011, the SFC was converted into the State Forest Resources Agency (SFRA)http://dklg.kmu.gov.ua/forest/control/ru/index. In this case, the lawmaking function was passed to the Ministry of Agrarian Policy and Food. The function of state control is now vested in the environmental and, partially, agricultural inspectorates as well as in the forest service of public institutions and enterprises subordinated to the SFRA. The reform however has not led to any marked change in the forest sector.

There is no problem of staffing. The number of forest specialists graduated from universities and colleges is significantly higher than the actual need, but the quality of their training leaves much to be desired. This is due to the fact that the

Concession, long-term rental and sale of standing timber in Ukraine is not practiced, although there are no direct legislative bans on these types of sale of timber. The main types of trading include:

quarterly futures exchange auctions (domestic market) direct contracts (export and sale of timber not sold at auction) sale of firewood to the public (for cash)

In the domestic market, wood is supplied mainly from lower depots. Transportation costs are borne by the buyer. Export sales are of different types ("at the border", "in a port", etc.). The volume of timber sales "on the roadside" as well as the volume of products delivered to "the buyer`s yard" are constantly growing, but their share in total sales is still insignificant.

The current system of trade in timber is aimed at meeting the priority needs of importers as well as large and medium domestic consumers. Access to the resources of small local consumers is difficult, which indirectly stimulates the search for other ways to obtain raw materials and, as a result, illegal logging and corruption.Improving timber trade is a crucial issue for Ukraine. The analysis and discussion of this matter was given particular attention under FLEG1.

In many ways, the competitive environment is not homogeneous, not only for entities of different types of ownership but also for the state forest enterprises subordinated to various authorities.

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master and bachelor degree training programs are currently offered by more than 20 universities (there were two of them at the time Ukraine gained its independence), most of which lack qualified teachers and appropriate material resources.

For the purposes of the forest sector, the government each year allocates funds (about US$90 million), most of which the SFRA distributes among forest enterprises. The volume of finance allocated to specific enterprises depends on their resource capacity and varies over a very wide range - from 0 to 80%. The number of companies not receiving budgetary funding is gradually increasing.

The average profitability of forest enterprises is some 4%, which determines the low level of their own investment opportunities. Funds for modernization and new technologies are chronically lacking. Periodically, the government provides targeted subsidies for capital investment, which are mainly used for the purchase of fire-fighting and road equipment and construction of forest roads.

There is an objective need for institutional reform aimed at separating business functions from the functions of state control and lawmaking, as their combination is a systemic corruption risk, inhibiting the development of forestry and provoking numerous violations.

Discussion of the need for institutional reform does not go beyond a scientific debate. The SFRA is ill-disposed towards the idea. The government so far has paid no heed to the issue. There are virtually no NGOs specializing in matters of the forest sector in Ukraine.

For example: Forest enterprises subordinated to the SFRA must obey its orders

regulating economic activities and trade, while all other forest market entities may not do that.

Wood processing units of state forest enterprises are able to get cheaper raw materials without participation in the auction, which puts them at an advantage over other consumers of wood.

Budget support to the state enterprises subordinated to the SFRA is significantly greater than to similar enterprises of other subordination, many of which do not get it at all.

The system of timber sales is the same for all, but is not equally acceptable to all. For example, small businesses cannot be on an equal footing with large enterprises to participate in auctions held every three months in the regional center, which requires Internet access and large preliminary expenditures of time and cash.

The authorities represented by the Ministry of Economic Development and Trade and the State Forest Resources Agency underestimate the importance of purposeful preparations for adopting the EC Regulation. The efforts of FLEG1 to explain the nature of the problem and develop possible ways of addressing it have been noticed mostly by representatives of big business who are preparing for the adoption of the EC Regulation through certification of supply chains and development of their own technologies to ensure legality.In that case, if the state fails to take adequate steps in the remaining period to create a nationwide mechanism to confirm legality, a significant part of Ukrainian exporters of wood products may face problems.

FSC certificates are held by SFRA enterprises in several regions of Ukraine. The total area of certified forests is 1.2 million hectares (12-13%). Many companies have been audited repeatedly. A number of large wood processing companies hold certificates for wood supply chains. However, their share is not large.

The main obstacle to expanding the area of certified forests is the lack of funds for certification. In most cases, forest certification in Ukraine is carried out with the financial support of international projects and other sponsors.

The SFRA in the last three years has been trying, for account of forest enterprises (lishosps), to implement a system of electronic registration of timber, based on the use of labels with bar codes. The project is facing many difficulties and it is not clear whether it will be implemented. The private sector`s attitude to the

76

introduction of electronic record keeping can be defined as "moderate skepticism."

Protected Areas Community Involvement and ParticipationIn Ukraine, assets of the natural reserve fund (NRF) are identified with the special protection natural territory (SPNT) which is not entirely true. There are significant areas of forests in other categories whose mode of cultivation is similar to the cultivation of forests referred to the NRF (principal felling is prohibited, restrictions are imposed on certain activities, etc.). The forests referred to the NRF occupy 13% of their total area. The proportion of forests excluded from the calculation of principal felling (parks, urban forests, protection forests, special protection areas, windbreaks, etc.) is 45%.

Targeted government funding is only provided to the assets of NRF having the status of legal entity (nature reserves and national parks), but its volume is not sufficient. Other sites (reserves, reserve tracts, natural monuments) are funded by companies in whose territory they are, most often far inferior to need. Many of them are not in satisfactory state. In 2009, a strategy to strengthen the financial sustainability of protected areas was worked out, but it is not being carried out in full.

In 2009-2010, the President of Ukraine (Victor Yushchenko) created by his decrees a large number (40) of new sites of NRF, mostly national parks. However, the budget did not provide sufficient funds to carry out this work, so most of the established national parks are just parks on paper.

For all sites of NRF with the status of legal entity and receiving government funding, plans for territory management (10 years) and plans for ongoing work are a must. Implementation of the plans is usually limited to the funds allocated.Management of other sites of NRF is determined based on their current condition and is normally limited to sanitary logging.

The participation of the public and target groups in activities that determine the development of the forestry sector is not enough, though in recent years, mainly thanks to FLEG1, the situation is improving. The main obstacles to the democratization of forest management relate to the traditional closeness of the forest industry and the lack of or poor preparedness of organizations that express these or other interests in the forestry sector.

Representatives of local government, NGOs and the public are invited to take part in the discussion of forest management plans, but it does not always happen. Following the adoption of a new forest management manual the process of public discussion of forest management plans will become mandatory.

Currently, the attention of the public and the media is often focused on issues related to the transfer of forests, change of their purpose, their assignment for long-term use. The decisions are frequently made behind closed doors, which subsequently leads to conflicts and social protests. In many ways, this practice becomes possible because of lack of regulations governing the procedure for disposal of forests.

By law, access to the forest is not limited, but in fact the number of conflicts is growing related to the fact that persons, who took forest areas for temporary long-term use, enclose them or in some other way prevent entry on the forest areas taken for use.With minimal resources, the acquisition of fuel wood does not cause any problems. However, the poorer rural population in some areas continues practicing illegal logging.

Public awareness is steadily improving. This is due to the rapid spread of Internet, the emergence of a number of specialized forest websites, the improvement of the press services of SFRA and its regional offices and the increasing number of journalists covering the forest theme.

Forest Fires, Protection and Prevention “From FLEG I to FLEG II”The majority of lowland regions and the Crimea have forests in which pine saplings and middle-aged stands predominate, with the risk of fire during the dry periods of the year being very high. Before 2010, large (1000 ha) head fires in the pine forests occurred every 2-3 years. In this regard, protection of forests against fire is now under the government`s supervision and is a top priority of the SFRA and the Ministry for Emergency Situations

The analysis of the current forest law has revealed numerous and varied risks of corruption, as well as provisions that do not meet the current level of knowledge about sustainable forest management. In the course of the Phase I of the Program the need was demonstrated for:• a fundamental change in the law regulating the activities of the state forest

77

(MES).

The disastrous fires in recent years in Russia were no doubt the example demonstrating the importance of ensuring the appropriate protection of forests against fire to the public and the authorities.

The main cause of fires is human activity, in particular: • burning of grass and stubble • careless handling of fire during trips to the forest for recreation and tourism • deliberate arson

Under the law, burning dry grass and stubble in Ukraine is prohibited and severely punished. However, this has little effect on the situation: agricultural burning is traditionally used by people to improve pastures and hayfields. Agricultural burnings occur every year, over large areas in all regions of the country. Quite often they are the cause of wildfires.

Controlled burning is not used in Ukraine (in fact, prohibited by law), although it could potentially serve as effective method for preventing fires.According to foresters on the ground, intentional arsons are quite common, but to prove this and identify the perpetrators rarely works.

In the past two years, an active modernization of forest protection units engaged in the detection and extinguishing of fires has been underway: monitoring is increasingly carried out by means of video surveillance, modern forest fire stations, mobile fire nodules and fire extinguisher backpacks are being purchased. Cooperation has been established between the forest service, MES units and the resident population.

he level of training and equipment to fight fires in this country is average. It is considerably worse than in Europe and the U.S., but much better than it was 5-10 years ago in Ukraine.

service and assessment of the damage caused by unlawful forestry operations;• review of approaches to the regulation of felling;• changes to the rules governing long-term use of forest areas;• harmonization of forest and land laws;• filling the gaps of legislation, in particular in the regulation of afforestation and providing confirmation of the legality of timber.

Issues relevant to the FLEG 2 design and implementation have in general been covered in proposals submitted along with the Focal Point Letter. They will be discussed with stakeholders in detail during the inception phase of FLEG 2.

Key priorities for FLEG 2 include:Support to the Ministry of Agrarian Policy in establishing itself as the authority

responsible for forest sector policy Creating favorable conditions for initiation of the development of the National

Forest Strategy and facilitating involvement of all stakeholders Taking part in the review of the forest legislation Support to the State Forest Resources Agency in strengthening continuation of

the formal official ENA FLEG processSupport the formation of a transparent timber market and development of a

system to confirm legality of timberImplementation of a pilot project to introduce methods of intensive and

sustainable forest managementDissemination of knowledge and training

78

Armenia Azerbiajan Belarus Georgia Moldova Russia

1 Area of Country mill ion of ha 2.97 8.66 20.76 6.97 3.38 1 709.822 Population mill ions 3.09 9.17 9.5 4.50 3.56 142.91

3 Area of Forest Fund mill ions of ha 0,345 1.21 9.43 3.01 0.42 1 144.10

4 Area of Forest Cover (2012)

mill ions of ha 0,332 1.02 8.06 2.82 0.42 1 183.30

5Area of Forest cover change over last 20 years 1850 ha less + 32 000 ha

from 37,6% of total land area to 38,8% 0.00 +6000 ha +140 100 ha

6 Area of state owned forest mill ions of ha all 1.21 8.07 same as above 0.36 1 144.10

7 Area of Protected Areas thousands of ha 1 3 858 313 157 26.948 Standing Forest Volume mill ions of m3 41,000,000 m3 149 1 598 450 46 79.909 Average Standing Volume m3/ha 125 m3/ha 172 199 159 124 10510 Annual Allowable Cut mill ions of m3/year 0.0466 0.06 8.282 n/a 0.51 667.00

11 Average actual annual harvest mill ions of m3/year 0.06 0.06 16.10 0.653 0,5-0,6 175.00

12 Area certified (FSC or PEFC)

mill ions of ha n/a not yet 7.52 0.00 no area 30.0 (FSC)

13Year National forest policy and Strategy adopted 2004 not yet 1997 n/a 2003

Starting 2011 - an on-going process of formulation of new Russia Forest Policy initiated by NGOs and supported by the Federal Forestry Agency. There is State program of Forestry Sector Development until 2020

14 Primary forest legislation 2005 1998 President's Decree

No.214 dated 07.05.2007 1999 Forest Code adopted 1996

New Forestry Code was adopted in December 2007, and entered into force in January 2007

Legislation and Policy

COUNTRYINDICATOR Units

General

Forest Statistics

79


13Institution responsible for developing forest policy and legislation

Forest Dept in Ministry of Ag

Head staff of Forest Development Department of MENR

Ministry of ForestryMinistry of Energy and Natural Resources Agency Moldsilva

Per Presidential Decree dated May 21, 2012 N636 (amended on June 25, 2012) “On the structure of federal executive bodies, FFA is moved under the MNRE which now is responsible for developing and implementing government policy and regulations concerning forestry (Governmental Resolutions dated June 30, 2012 on the statute of MNRE and on the statute of FFA)

13.1 No of employees in 13 3 65 62 120 22 NA

14 System for managing state owned forest

State Non Commercial Company, Hayantar

Forest Development Dept of MENR include regional branches

95 Forest Enterprises

Agency of Natural Resources of Ministry of Energy and Natural Resources

25 State Forest Entities, LPAs, private

The Administrations/ Governments of Russian regions are authorised to manage the forests within their areas. The federal level devolved to the regional level practically 14.1 No of employees in 14 1 000 3 000 13 800 1 036 4 190 67.82

15 Institution responsible for monitoring and control

Enviromental Inspect, in Min of Env; State Forest Monitoring Center (MOA)

Monitoring Departt of MENR

Department for Supervision and Auditing and State Control

Monitoring department of Agency of Natural Resources

State Ecolog Inspectorate, in Min of Envir

The Federal Forestry Agency (Rosleskhoz) is a federal executive body whose responsibilities include:oversight of forestry affairs, with the exception of forests in specially protected natural areas; providing public services and administering government property in the sphere of forestry affairs.

15.1 No of employees in 15 25; 23 52 29 172 310NA ( to be offi cially requested from FFA)

Institutional arrangements

INDICATOR UnitsCOUNTRY

80


16 Annual revenue from state owned forest to budget

$ equivalent per yr 1 000 000 942 000 661 125 000 4 000 000 3 900 000 16.4 bln Rubls

17 State Budget support to forest sector

$ equivalent per yr 1 900 000 12 410 000 442 500 000 8 200 000 672 000 21.3 bln Rbls

18 Annual turnover of state owned forest companies

2 855 000 12 410 000 1 662 500 000 In Georgia no state owned companies exist

19 400 000.00 NA ( to be offi cially requested from FFA)

19Annual profit of state forest companies 210 000

942 00 , al l amount transferred to the fund for administrative needs

343 750 000 n/a, see pp 18 655 000.003281 mln Rbls of 15 600 organizations involved in timber harvesting

20Activities undertaken by state forest agency/enterprises

Preservation, protection, a-forestation, re-forestation, exploitation

forest protection and management, forest planting and reforestation, growing of planting material, preparation of non-wood products and timber at expense of sanitary fel l ing

Forestry, hunting, tourism & recreation, PA management

n/a, see pp 19

Forestry, forest lease for hunting & recreation, PA management, forest area extension

see item 14

21 Annual imports volume 2010 year in 2010 total imported 2538.7 mln USD

21.1 Round wood m3 4 409 200 n/a 23 200.00 61 256.70 20,3 mln8.5 Sawn wood m3 465 100 n/a 14 690.00 119732,1* 8.5 thousand

8.6 wood panels m3 60,000 m3 107 100 275 700.00 101 501.00 6851,4**Chipboard 96.7 thousand

m3, MDF 170.1 mln m2

8.7 plywood m3 99 000 20.8 thousand21.5 pulp and paper 7 795 100 26 700.00 58 978.00 2 241.20

22 Annual Exports volume in 2011 total exported 4839.7 mln USD

22.1 Round wood m3 2 217.30 31.00 3 708.60 990.3022.2 Sawn wood m3 115 m3 471.2 20 344.00 1472,5*** 1 652.20

22.3 wood panels m3 37 036.70 19 216.00 101,4**** Chipboard 54.2 , MDF 44.0

22.4 pulp and paper n/a 3 396.00 1 646.90

23 Annual imports value US$ 139 765 470 for 2010 201 217.00 in 2010 total imported2538.7 mln USD

23.1 Round wood 9 143 100 n/a 4 754.00 3 932 400.00 na23.2 Sawn wood 91 416 600 n/a 21 566.00 15 610 700.00 na23.3 wood panels 370 $/ m3 22 133 400 67 915 000.00 53 597.00 462 600.00 na23.4 plywood 2 112 160 na23.5 pulp and paper 12 848 050 19757000 121 299.00 87 934 400.00 na

Economic


81


24 Annual Exports value US$ 1 053 250 for 2010 25 372.00 in 2011 total exported 4839.7 mln USD

24.1 Round wood (for Russia applied raw wood)

101.10 3.00 1 272 900.00 na

24.2 Sawn wood 63.5 11 426.00 731 300.00 na24.3 wood panels 32.10 175 700.00 na24.4 pulp and paper 180 $/m3 1 053 250 n/a 3 730.00 na24.5 Charcoal 7 815 600.00

25 Climate change/adaptation policy and measures in place

Adaptation projects being implemented in Syunik region

Projects on planting of fast-growing artificial forests as well as country-wide forest rehabilitation projects , INCREASING THE RESILIENCE OF FOREST ECOSYSTEMS AGAINST CLIMATE CHANGE IN THE SOUTHERN CAUCASUS THROUGH FOREST TRANSFORMATION (WWF/BMU), Mitigating Impacts of Climate Change through the Restoration of Forest Landscapes in the Southern Caucasus (WWF/kfW/BMU), Adoptation of the agrobiodiversity to Climat Change in the South Caucasus (RECC/EU)

President's Decree No.625

na The Climate Doctrine of the Russian Federation (RF’ President Order # 861-rp of December 17, 2009)

26 Party to the UNFCCC Yes, since 1994 Yes , from 1995 Signed on Jun 11 1992, ratified on May 11, 2000

yes 1995 Signed 13 June 1992, ratifictaed 28 December 1994, enterd into force 28 March 1995

27 Party to the Kyoto Protocol (specify if Annex I or Non-Annex I)

Yes, since 1997 Party to Kyoto ptotocol, Non- Annex1 from 2000

Yes, since 2005(Annex 1)

Non-Annex 1 2003 (Non-Annex I) Signed 11 March 1999, ratificated 18 November 2004, entered into force 16 February 2005 Annex 1 Party for which there is specific COP and/or CMP decision

28 Carbon stock in forests (total above and below ground, including deadwood and litter, and soil carbon)

mill ion metric tonnes Not calculated official ly but based on international standards is approximately equally to 74.4

na 56.51 49 451.98

Climate Change and Carbon


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29

GHG Emissions and Removals in LULUCF (land use, land-use change, and forestry)

According to GHG inventory the LULUCF sector net removal of CO2 in 1990 was 736 Gg, 2000-1563 Gg

na

29.1 Emissions, 2007 (2009 for Russia)

thousand tons CO2e 50 635 11.75 4.19 GHG net emissions/removals by LULUCF = -656.477.6 GHG net emissions/removals with LULUCF = 1 502 792.6

29.2 Emissions, 1990-2007 (1990-2009 for Russia)

thousand tons CO2e 383 899 287 024 1 497 GHG net emissions/removals by LULUCF =na GHG net emissions/removals with LULUCF = -56.2%

29.3 Removals, 2007 thousand tons CO2e -3 769 na 3 47129.4 Removals, 1990-2007 thousand tons CO2e -26 948 na 70 90730 Share of wood energy in

total energy consumptionpercent 3,8% not calculated offi cially 4.8% (2009) na 3-12% (official data) 12%

31 Land area covered by drained wetlands

thousands ha na 12.30 na na Difficult to assess NA

31.1 Land area covered by wetlands

thousands ha na 237.10 na 60.00 30.00 NA

32 Average area burnt each year (last 10 years)

thousands ha 0,2 ha 36.6 ha 0.00118 0.04 0.13 1 459.40

33 Average no of fires (last 10 years)

17 7 1774 28.5 25 24, 6 thousand

34 Area burnt last year ha 472 ha 3.75 424 7 46.9 1344.1 thousand

35 No of fires last year No 53 5 607 4 12 19.5Annual reports, Forest inventory, National statistics, National Statistics

Data of Forest Development Department, Annual report of State Statistic Commeety, Annual report of State Ministry of Custom. Second National Communication to the UNFCCC

National Statistics Committee, Report of the Ministry of Forestry, etc.

National Statistics Service, Natural Resource Agency, Georgian Ministry of Environment Protection, Georgian Ministry of Energy and Natural Resources, Georgia’s Second National Communication to the UNFCCC

National Bureau of Statistics, Forestry Reports (5 years), Annual Envir Reports, National Communications to the UNFCCC

Rosstat, FFA official reporting, presentations of the FFA management at Forums, Roslesinforg, Ministry of Trade of RF, Ministry of agriculture, UNFCC website, FRA 2010, FAO reports

Data Sources

Fires


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Annex 8: The St Petersburg Declaration

We, the representatives of the Governments from Europe and North Asia (ENA region countries) and from other participating countries20 as well as the European Commission present at the Ministerial Conference on Forest Law Enforcement and Governance in St. Petersburg, are:

1. Underlining that countries are responsible for sustainably managing their forests and enforcing their forest laws and that good governance and law enforcement are prerequisites of sustainable forest management;

2. Further underlining that, while taking into account their international obligations, all countries have the sovereign right to manage and utilize their forest resources to meet their national policy objectives, and that forest law enforcement and governance are internal matters for each country;

3. Recognizing that forest law enforcement and governance issues have local, national, transboundary, regional and global implications;

4. Convinced that all countries that export and import forest products, including timber and timber products, have a shared responsibility to undertake actions to eliminate the illegal harvesting of forest resources and associated trade;

5. Emphasizing that within the Region, forest law enforcement and governance is a cross-sectoral, complex as well as an economically, environmentally, socially and politically sensitive issue, requiring effective cooperation amongst many government agencies and other stakeholders;

6. Recognizing that the forests of the ENA-Region, comprising more than one-third of global forest cover, are of global importance and constitute a significant component of the Regional and global life support systems;

7. Deeply aware that in this Region, forests are directly as well as indirectly critical to the livelihoods of hundreds of millions of people, provide long-term economic, social, cultural and environmental benefits, and play a vital role in meeting the energy needs of local populations;

8. Conscious that good governance fosters a positive business investment climate for social and economic development and responsible private sector actors;

9. Emphasizing the fundamental role of governments to provide effective governance, including laws, policies and institutional capacity to enforce those laws, in order to eliminate illegal logging, associated trade and corruption in the forest sector;

10. Deeply concerned that crime related to forests is a significant problem in many countries in the Region, undermining efforts towards sustainable forest management;

11. Recognizing that the scale of illegal logging activities ranges from unauthorized extraction of fuel wood by the rural population to illegal commercial timber harvesting operations to supply domestic and international markets;

12. Further recognizing that the unauthorized extraction of fuel wood in some countries in the Region, especially by the rural poor, is often related to lack of adequate social and economic provisions or lack of access to appropriate resources and over regulation in a situation where the rural people have little or no alternative sources of affordable energy;

13. Profoundly concerned about criminal actions, including corruption within and impacting on the forest sector, that are having significant negative impacts including: a general weakening of the rule of

20 Albania, Armenia, Austria, Azerbaijan, Belarus, Bulgaria, Bosnia and Herzegovina, Canada, China, Croatia, Denmark, Estonia, Finland, Georgia, Germany, Greece, Hungary, Italy, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Former Yugoslav Republic of Macedonia, Moldova, Mongolia, the Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Turkey, Ukraine, United Kingdom, United States, Uzbekistan

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law; loss of revenue to governments and the private sector and local livelihoods; the degradation of forest ecosystems, biodiversity and wildlife habitat, including in protected areas; and increased incidence of forest fires and loss of carbon stocks;

14. Noting that illegal forest-related activities also impact negatively on the contribution of forests towards the fulfillment of internationally agreed development goals aimed at enhancing human well-being by reducing poverty;

15. Conscious of the development of market economies, changes in energy supply arrangements and the changing role of public and private sectors in many countries in the Region that bring new challenges for institutions responsible for forest management and often require a review and adjustment of their policy, legal and institutional frameworks;

16. Considering that effective forest law enforcement requires that information on forest management, policies and legislation, and their implementation, be readily available and communicated to the public;

17. Aware that many countries in the Region have inadequate capacity to enforce their existing forest laws and forest policies and face a challenge to review and update their present legislation and strengthen their institutions and administrative systems which allocate forest resources and monitor and control their utilization;

18. Convinced of the urgent need to secure high-level political commitment and support which is critical to combat illegal logging, associated trade and corruption in the Region and trade beyond the Region;

19. And further convinced that cooperation among countries between their judicial, law enforcement, forest, trade, customs and development authorities, is essential to strengthen the effectiveness of forest law enforcement and governance in the Region;

20. Underscoring the urgent need by countries to undertake collective actions to combat illegal logging, associated trade and corruption;

21. Recognizing opportunities for significant synergies of the ENA FLEG process with other regional FLEG processes and with international forest-related institutions and forest policy processes;

22. Conscious of the critical contribution that the private sector and civil society can make to address the FLEG-related issues;

Hereby affirm and declare that we will:

Nationally, within the ENA region

1. Mobilize high-level political commitment and establish Forest Law Enforcement and Governance (FLEG) as an area of concern within the broader national governance and development agenda;

2. Review and as needed update forest legislation and regulations, ensuring their coherence and harmonize these with legislation and policy in natural resource management and with relevant obligations under international agreements;

3. Strengthen, as needed, inter-agency cooperation as well as human and institutional capacity, particularly among law enforcement and judicial authorities to enforce forest-related legislation;

4. Assess, identify and develop strategies to address the underlying causes of illegal logging, associated trade and corruption, the unauthorized extraction of wood for local consumption as well as the unauthorized exploitation of protected forest areas, threatening biodiversity;

5. Formulate, within a reasonable timeframe, concrete actions under clearly defined targets, including monitoring of progress in implementation, e.g. by taking into account the recommendations of this

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Ministerial Declaration and annexed indicative list of actions in the national forest Programmes or equivalent frameworks;

6. Recognize the rights of forest dependent communities by taking into consideration customary laws and practices, and the respect of their traditional knowledge, and encourage and promote the participation of indigenous people and the local population in the management of forests with the objective of providing for rural socio-economic and cultural development and the protection of their natural resources;

7. Engage stakeholders, including indigenous people, local communities, private forest owners, NGOs and the industry, in formulation of forest laws and policies and in their implementation through an open and participatory process, thereby promoting transparency, reducing corruption, facilitating equity and minimizing undue influence of privileged groups;

8. Develop and implement anti-corruption tools dealing with corruption in and impacting on the forest sector in line with general anti-corruption efforts, including codes of conduct and best practices, and professional responsibility, and apply internationally recognized principles to combat organized crime;

9. Collect and disseminate transparent information on forest resources, their allocation and exploitation, in a form readily accessible to the public;

10. Monitor and disclose data on domestic and international trade flows of timber and timber products and promote, as appropriate, the establishment of third party audited traceability systems;

11. Inform and engage all stakeholders to enhance public awareness on the scope, scale and significance of illegal logging, associated trade and corruption, and their negative impacts on the benefits forests provide to society;

Internationally,

12. Strengthen cooperation, using as much as possible existing structures, for forest law enforcement and governance and timely exchange of information and experience among countries, in particular, those involved in exports and imports of timber and timber products;

13. Encourage cooperation and strengthen national capacity in monitoring trade in timber and timber products;

14. Support cooperation to combat poaching and illegal trade in wildlife associated with illegal logging, including through cooperation with CITES;

15. Integrate within existing mechanisms the systematic monitoring, assessment and reporting of progress on FLEG;

16. Promote and develop cooperation and partnerships with and among the private sector and civil society in order to effectively combat illegal logging, associated trade and corruption;

17. Give priority to and strengthen transboundary cooperation between countries with border areas which require coordinated actions and effective control in order to combat illegal logging and associated trade;

18. Enhance international capacity for monitoring, assessing and reporting on areas such as trade flows and customs data to increase transparency on trade activities and to promote trade in legally harvested timber;

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19. Strengthen international cooperation to build and enhance national institutional and human capacity as well as to facilitate technology transfer and information sharing to combat illegal logging and to promote trade in legally harvested timber;

20. Enhance awareness of information about legality of products including their origin through means such as voluntary chains of custody and forest certifications systems, so as to promote marketing of legally harvested timber

21. Cooperate with civil society including the private sector to inform consumers of the problems caused by illegal logging, associated trade and corruption;

22. Work with other regions and with multilateral instruments and processes on FLEG related issues.

Hereby further affirm that we:

23. Endorse the indicative list of actions associated with this Declaration which sets a framework of possible actions by Governments as well as civil society, including the private sector, to implement the intentions expressed in this Declaration;

24. Urge relevant international and regional organizations, institutions and processes, and scientific organizations, as attached (Annex I), to support the St. Petersburg Declaration, consistent with their mandates, and the implementation of the indicative list of actions;

25. Invite the International Steering Committee (ISC) to extend its role in facilitating the ENA FLEG Process by focusing on implementation of the St. Petersburg Declaration and the indicative list of actions;

26. Request the World Bank to continue its important role by facilitating the implementation of the St. Petersburg Declaration and its indicative list of actions;

27. Agree to meet at the appropriate level, together with civil society including the private sector, within two to three years to exchange experiences on implementation and lessons learned and to identify areas where further actions and cooperation are needed;

28. Agree to convene the next Ministerial Conference within five years to assess progress made in forest law enforcement and governance including the implementation of the indicative list of actions and decide on further actions needed;

29. Invite other countries to associate themselves with the Declaration and to support the implementation of the indicative list of actions.

This Declaration is accepted by Acclamation by: Albania, Armenia, Austria, Azerbaijan, Belarus, Bulgaria, Bosnia and Herzegovina, Canada, China, Croatia, Denmark, Estonia, Finland, Georgia, Germany, Greece, Italy, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Former Yugoslav Republic of Macedonia, Moldova, Mongolia, the Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Turkey, Ukraine, United Kingdom, United States, Uzbekistan and the European Commission. St. Petersburg, Russia November 25, 2005

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Europe and North Asia Forest Law Enforcement and Governance Ministerial Process Indicative List of Actions (ILA) for the implementation

of the St. Petersburg Declaration

This indicative list of actions (ILA) is intended to serve as a general framework for possible actions to be undertaken by governments as well as civil society (including NGOs and private sector). The choice of the elements would depend on the specific areas of priority concern in a country. The elements of this ILA would also facilitate the mobilization of support from donors and multilateral organizations.

1 National Level within the ENA Region

(i) Policy framework

Formulate and implement in a reasonable timeframe national plan of actions that is integrated in the national forest policy framework and comprises clearly defined targets, activities and indicators of success to address the issues identified in the Declaration;

Establish a national mechanism for effective interagency, cross-sectoral and multistakeholder cooperation to develop and implement the national plans of actions in a structured and transparent manner;

Periodically report nationally on progress according to agreed targets and indicators; • Based on the agreed targets and indicators, implement a baseline assessment so that the first assessment will be available in 2010 for the next Ministerial meeting to be held for assessing in a participatory manner the effectiveness of the implementation of national plans of actions;

Identify development and implementation of national plans of action as priorities in national requests for assistance from international financial institutions and other international organizations and bilateral donor agencies;

(ii) Legislation System

Develop a common understanding of the concepts, definitions and terms related to FLEG among various stakeholders;

Review and update, as appropriate, the forest law and related legislation to combat illegal logging and corruption and build, as necessary, appropriate capacity to effectively implement and enforce such legislation. Consider, in this respect, the risks of “perverse incentives” by raising too much the costs of “legal” forest products; and the need to ensure access of rural populations, especially the rural poor, to basic forest products, such as fuel wood;

Promote well-defined and full recognition of property and resource rights, in particular private rights, through the provision and communication of:

- Clear requirements and obligations for land tenure and use rights;

- Clear and unambiguous legal definitions and regulations covering forest resources and forestry practices;

- Open and transparent processes for allocating and pricing harvesting rights;

(iii) Institutions and Capacity Building

Ensure the appropriate application of customs codes to facilitate accurate monitoring flow of timber and forest products trade;

Establish open and transparent data base on domestic and international trade in wood and forest products to monitor and report progress;

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Support the collection and dissemination of information in a form readily accessible to the public on management of parks, protected areas, forest concessions and other forest areas;

Provide enhanced opportunities for forest stakeholders, including the private sector as well as the environmental, social and development NGOs and indigenous people’s organizations, to raise public awareness on the significance of forest crimes and to participate in the formulation and implementation of public policies related to forest management and law enforcement;

Strengthen institutional mechanisms and capacity building and support the monitoring, assessment and reporting of progress with the participation of representatives of various stakeholder groups including civil society and, private sector;

Capacity building in the implementation of anti-corruption tools;

(iv) Sustainable Forest Management

Provide information on regulations governing the allocation of forest resources and sustainable management of forests to all forest-related stakeholders;

Assign high priority to control illegal logging and wildlife poaching and to strengthen law enforcement in forest management areas and in protected forest areas;

Create enabling conditions for and promote the use of tools and methods relating to sustainable forest management and forest use, that permit flexible, cost effective solutions, which may include

Responsible purchasing of wood by private and public sector;

Environmental Management Systems and forest management guidelines and plans according to the respective forest types;

Private sector traceability / tracking systems and including GIS surveys and independent verification systems;

Chain of custody certification for selected sources;

Codes of conduct applicable to producers and purchasers;

Certification systems for sustainable forest management;

Satellite information and GIS data;

Monitor and assess forest resources and operations in forests and make information on methods and results readily available to the public in a timely and accessible format;

Evaluate the adequacy of funding and management of state forests, and as needed identify ways to strengthen the sustainable management of state forests;

Take measures to help ensure that there is adequate support and effective management of protected forest areas, forest biodiversity and of non-state forests;

(v) Rural Development, Livelihoods and Poverty Alleviation

In collaboration with broader rural development efforts; identify and promote better alternative economic opportunities for forest dependent communities so as

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to reduce illegal forest-related activities and to lessen the pressure on forest ecosystems, this may include:

Investment promotion and alternative employment and income creation;

Development of forest based and alternative sources of energy;

Develop opportunities for increased income generation from sustainably managed forests by local communities;

(vi) Trade and customs

Identify the most vulnerable transboundary areas in relation to illegal timber trade and reduce their vulnerability;

2 International level

(i) Forest-related Policies

Integrate, where appropriate, elements of the Ministerial Declaration into other international forest policy initiatives, in particular in the on-going international initiatives such as G8, MDG, C&I processes, UNFF, FAO and ITTO;

(ii) Trade and customs

Facilitate the gathering, synthesis and sharing of import/export data on wood and forest products and their integration into international open databases (for example from FAO, ITTO);

Ensure the appropriate application of customs codes to facilitate accurate monitoring flow of timber and forest products trade;

Support cooperation in identifying the most vulnerable transboundary areas in relation to illegal timber trade and reduce their vulnerability to cross border trade in illegally harvested forest products, among other activities, through:

- Customs law enforcement training;

- Timber tracking systems;

- New or improved public databases on cross-border trade;

(iii) Research

Support multidisciplinary research on the main causes of illegal logging, associated trade and corruption;

(iv) Collaborative Implementation Actions

Strengthen coordinating actions to combat illegal logging and transboundary illegal trade, for sharing information and experience and for reporting progress on implementation, including e.g. through a peer review mechanism, of the St. Petersburg Declaration and indicative list of actions;

Secure cooperation and support towards the implementation and monitoring of the indicative list of actions, and of the consecutively developed regional and/or national strategies or action plans, from multilateral organizations including the World Bank, FAO and other relevant CPF members, UNECE, and MCPFE, as well as the European Community and bilateral donor

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agencies, and mainstream the actions being taken into the Programmes of work of these organizations through their governing bodies;

Share best practices on forest governance and law enforcement;

Establish collaboration with the UN Convention on Transnational Organized Crime and other relevant multilateral mechanisms to support the implementation of the indicative list of actions;

Supporting countries in their efforts to enhance transparency and access to information, to facilitate exchange of information between public and private sector and financing institutions on illegal financial transactions and money laundering related to illegal logging and associated trade;

Cooperate with interested countries in the implementation of their regional and/or national strategies or action plans, including the provision of training to forest law enforcement officials, customs officials, prosecutors and for representatives of the private sector and of the civil society in order to build capacity to apply tools to monitor forest activities and conditions;

Encourage, adopt or extend public timber procurement policies that favor legal timber, where they can influence the private sector to use legally sourced timber and share experiences of this with others;

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Annex I: List of selected international and regional organizations, and institutions and processes:

1 CIFOR Center for International Forestry Research

2 CBD Convention on Biological Diversity

3 CITES Convention on International Trade in Endangered Species of Wild Flora and Fauna

4 EBRD European Bank of Reconstruction and Development

5 EFI European Forest Institute

6 FATF Financial Action Task Force

7 FAO Food and Agriculture Organization

8 GEF Global Environmental Facility

9 ITTO International Tropical Timber Organization

10 IUFRO International Union of Forest Research Organizations

11 MCPFE Ministerial Conference on the Protection of Forests of Europe

12 OECD Organization for Economic Cooperation and Development

13 UNCTOC United Nations Convention on Transnational Organized Crime

14 UNCCD United Nations Convention to Combat Desertification

15 UNDP United Nations Development Programme

16 UNECE United Nations Economic Commission for Europe

17 UNEP United Nations Environment Programme

18 UNFF United Nations Forum on Forests

19 UNFCCC United Nations Framework Convention on Climate Change

20 ICRAF World Agroforestry Center

21 IUCN World Conservation Union

22 WCO World Customs Organization

23 WB World Bank

24 WTO World Trade Organization

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Annex 9: ENPI FLEG Focal Point Letters of Support

30. Armenia

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31. Azerbaijan

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32. Belarus

May 28, 2012

Ref. No. 02-3-5-214

Attn.: The World Bank Country Office in the Republic of Belarus

On participation in the ENPII FLEG-2 program

The Ministry of Forestry of the Republic of Belarus presents its compliments to the World Bank Country Office in the Republic of Belarus and at the request of the Secretariat of the ENPII FLEG regional program presents a brief outcome assessment for the implementation of the first phase of the Country Plan for the ENPII FLEG program in the Republic of Belarus, along with a rationale for the areas and prospective participants of ENPII FLEG-2.

The Ministry of Forestry of the Republic of Belarus takes this opportunity to reaffirm its very high regard for the World Bank Country Office in the Republic of Belarus.

Annex: the said materials – one copy on five pages.

First Deputy Minister/National Coordinator for the ENPI FLEG program in the Republic of Belarus

Signed F.D. Lisitsa

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33. Georgia

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34. Moldova (the response letter submitted by e-mail)

35.

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36. Russia

37.

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UNOFFICIAL TRANSLATIONJune 25, 2012

To: Mr. Philip Mikos, European Union, Mr.Gerhard Dieterle,World Bank# АП-08-45/7114

Dear Messrs. Mikos and Dieterle,

Please accept assurances of high esteem and appreciation to the European Union and the World Bank for efficient cooperation under the first stage of the ENPI FLEG program.

Pursuant to your request, please find attached a brief evaluation of the activities implemented under the first stage of the country program in Russia, as well as agreed proposals regarding the identification of the ENPI FLEG priorities in the Russian Federation (Phase 2).

Attachment: 38. aforementioned materials, 5 pages ,

39. meeting minutes dated June 22, 2012 # АП-13/312-пр 2 pages

Sincerely,

A.Panfilov,State Secretary-Deputy Head,

Russian National FLEG Focal Point 40.

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41. Ukraine

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Annex 10: Draft Steering Committee Terms of Reference

Background

1. The regional program “European Neighborhood and Partnership Instrument East Countries Forest Law Enforcement and Governance Phase II Program” (“Program” or “ENPI-FLEG II Program”) will be carried out over a four-year period from October 2012 through October 2016. It will cover seven countries of the EU European Neighborhood and Partnership Instrument (ENPI) East Countries: Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova, Russian Federation and Ukraine (“Participating countries”).

2. The Program will support selected pilot activities to be implemented with the active involvement of governments, civil society and the private sector. Activities will be at a country and sub-national, complemented by strategically targeted regional actions.

3. The Program supports the participating countries to strengthen forest governance through improving implementation of relevant international processes, enhancing their forest policy, legislation and institutional arrangements, and developing, testing and evaluating sustainable forest management models at the local level on a pilot basis for future replication.

4. The Program is supported by the European Union contributing to a trust fund administered by the World Bank (WB). Implementation of the Program is led by the World Bank, working in partnership with the International Union for Conservation of Nature and Natural Resources (IUCN) and the World Wide Fund for Nature (WWF) (all three collectively referred to as the “Implementing Organizations”, or “IO’s”) and in close coordination with governmental and nongovernmental stakeholders of the participating countries.

5. A Steering Committee (the “SC”) will be established, to include representatives from each Participating Country, EU, World Bank, IUCN and WWF. The SC will meet at least annually to discuss the Program's progress, and review and approve work plans and reports.

Functions

6. The SC is the highest decision making body the Program and will approve annual country work plans and annual reports. It will also approve the annual workplan for regional activities.

7. The other functions of the SC are to provide annual policy guidance and expert advice to the Program Management Team on the implementation, relevance, and impact of the Program, and to broaden the scope of information and perspectives that inform direction-setting and priorities for the Program.

Specific Responsibilities and Deliverables

8. The SC will have the following responsibilities in relation to the Program:

a) Annual decision making and overall supervision of the Program

- Approve annual work plans for country and regional activities21

- Approve annual reports for country and regional activities

- Establish subsidiary Program management bodies and approve their terms of reference (e.g. NPAC, PMT, PCT)

b) Strategic direction

21 Financial reporting will not be subject to SC approval. The Trust Fund Administration Agreement between EU and World Bank as well as Grant Agreements between the World Bank and IUCN and WWF define financial reporting procedures.

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- Provide advice on the policy and strategic directions of the Program;

- Help the Program Management Team understand the social, political and economic factors that influence Program implementation and uptake into policy;

- Provide advice on emerging issues.

c) Effectiveness

- Review Program performance against the result areas;

- Review the external evaluations and mid-term review (MTR) of the Program and provide an appropriate response. This includes reviewing the recommendations of the MTR.

d) Uptake of the Program

- Review the overall features and comprehensiveness of forest governance reform action plans (identification of national priorities) developed in the Participating Countries;

- Provide advice on regional, national and local priorities, opportunities, and constraints relevant to Program implementation;

- Identify opportunities and measures for broadening the impact and uptake of the Program into policy reform;

- Identify opportunities for dialogue with sub-regional, regional, and national policy makers;

- Assist in the promotion of partnerships with government and other key stakeholders, and act as a link with relevant players in their respective countries for specific initiatives;

- Explore how to maximize funding opportunities for the Program and implementation of national forest governance reform priorities.

e) Profile of the Program

- Act as “champions” for the Program, to maximize the impact and profile of the Program both within and outside of the Participating Countries;

- Assist with developing an appropriate identity, profile and vision for the Program in the region;

- Participate in developing and implementing public engagement strategies including profiling the Program among stakeholders, organizations and networks;

- Consider the effectiveness of, and provide recommendations on, the Program materials and website.

Membership and Functioning

9. The SC will consist of the following members:

- one representative from each Participating Country;

- one representative from the European Union (co-chair);

- one senior-level representative from each of the IO’s – World Bank (co-chair), IUCN, WWF. The members are not expected to be involved in day-to-day Program management or implementation. PMT22 members (as observers).

10. The SC will be chaired jointly by the EU and World Bank. 22 Project Management Team, technical team leaders from each IO.

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11. Decisions will be taken by consensus. The SC can make decisions when half of the members (including both co-chairs) are present.

12. The Program coordinator located in the World Bank Moscow office will act as the secretary to the SC. S/he will:

- Liaise with the SC chairs and issue invitations to SC members to join the SC and to participate in its sessions;

- Convene and coordinate all SC meetings as required;

- Inform the donor pro-actively, as well as on the donor's request, about strategic news and on-going and planned developments within the project and within the forest sectors or participating countries;

- Provide administrative support for the meetings including proposal and circulation of agendas to all members at least one month in advance, preparation of supporting documentation, production and distribution of minutes, and making all other necessary arrangements, including those related to travel and venue.

13. The costs of the SC will be covered by designated funds from the Program budget. Travel costs and compensation for members representing IOs and EU will not be covered by these funds.

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