PUBLIC

NORDIC
~ DEVELOPMENT Decision per capsulam
FUND
(in written procedure)
PROPOSAL FOR FINAL CONSIDERATION
Project Fact Sheet

Partner Agency World Bank

Executing Agency Rwanda Environment Management Authority(REMA)under the

Ministry of Natural Resources(MINIBENA)

Sector Forestry development

CRS code: 31220

Country Rwanda

Budget TOTAL: USD 16.4 million (approximately EUR 15.4 million)1

- NDF NDF: EUR 3.7 million(USD 3.9 million)
- Partner Agency World Bank: USD 9.5 million(~ EUR 8.9 million)2
- Other Fonders Government of Rwanda: USD 3.0 million(~ EUR 2.8 million), of which
USD 0.4 million contributes to NDF activities.

Project Period 2017 - 2019

Mode of Finance Joint co-financing

Previous Support to Credits: EUR 12.5 million

Country Grants: EUR 9.6 million

Rio Markers Mitigation: 2

Adaptation: 2

Gender Marker 1=significant objective

Climate Screening Yes

Satisfied

Processing Schedule Pipeline - November 2016

Final - December 2016
Signature - January 2017
Effective - March 2017

'Exchange rate as of22.11.2016: 1 EUR=1.0625 USD

2 The World Bank funding is provided as a grant originating from GEF Global Environment Facility(GEF)and the
Least Developed Countries Trust Fund for Climate Change Activities(LDCF)
PROJECT SUMMARY
NDF grant EUR 3.7 million
Project Period: 2017 —2019
Partner Agency: The World Bank
Implementing Agency: Rwanda Environment Management Authority(REMA)under the
Ministry of Natural Resources(MINIBENA)

Objective
The NDF-supported activities will improve efficiency and sustainability along charcoal value
chains in Northwest Rwanda in support of forest landscape restoration and rural livelihoods.
The following outcomes are expected
• Improved woodlot management
Woodlots management will be incorporated into the Gishwati-Mukura landscape. The
activities will build upon existing plans and training, initiate local-level planning of woodlots
to improve management and increase productivity in order to reduce pressure on natural
forests.
• Improved seed quality
Support will be provided to the National Seed Centre. It will cover both productivity aspects
and the viability of climate-resilient tree seeds. NDF's support will improve and diversify the
tree seed pool. Local cooperatives will be trained in the use of new varieties and in seed
collection, handling and distribution.
• More efficient charcoal production
Woodlots and charcoal cooperatives will be assisted in gaining better market access for their
products. Cooperatives will be formed or strengthened to improve uptake of better production
techniques and also to improve the value, quality and marketing of the charcoal produced.
Mobile sawmills and furnaces that increase productivity will be tested to be managed and
maintained by the cooperatives. The training will cover business planning as well as
regulations for production. It will also improve distribution links between production and the
markets and add value through labelling and branding of certified green charcoal, if feasible.
• Support for promotion of alternative sources of energy
Two activities aiming at reducing the pressure on wood fuel demand are proposed targeting
commercial tea factories' wood consumption and households' cooking needs.
Financing
The total project cost estimate is EUR 15.4 million. NDF is providing EUR 3.7 million in
grant while the World Bank provides USD 9.5 million(~EUR 8.9 million) and the
Government of Rwanda USD 3.0 million(~EUR 2.8 million).
TABLE OF CONTENTS

1. INTRODUCTION AND PROJECT BACKGROUND................................. 1

2. RELEVANCE AND RATIONALE .............................................................. 1

2.1. Project Relevance ................................................................................. 1

2.2. Relevance to NDF's Mandate and Strategy ......................................... 2

3. THE PROPOSED PROJECT......................................................................... 3

3.1. Objectives ............................................................................................. 3

3.2. Project Activities .................................................................................. 3
3.3. Cost Estimates and Financing Plan ...................................................... 5
3.4. Nordic Interest ...................................................................................... 5
3.5. NDF's Added Value and Comparative Advantage .............................. 6

4. IMPLEMENTATION ARRANGEMENTS .................................................. 7

4.1. Technical Aspects................................................................................. 7

4.2. Institutional Aspects and Project Organization .................................... 8
4.3. Procurement and Contract Structure..................................................... 8
4.4. Risk Analysis........................................................................................ 8
4.5. Monitoring and Evaluation................................................................... 9

5. ECONOMIC AND SOCIAL ASPECTS ....................................................... 9

5.1. Economic Justification ......................................................................... 9

5.2. Envirorunental and Social Aspects ..................................................... 10

6. CONCLUSION ............................................................................................10

7. RECOMMENDATION ............................................................................... 11
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ABBREVIATIONS
AME Ameliorated
BAU Business-as-usual
COZ Carbon dioxide
EIB European Investment Bank
ERR Economic Rate of Return
ESMAP Energy Sector Management Assistance Program
ESMP Environmental and Social Management Plan
GEF Global Environment Facility
GHG Greenhouse gases
GoR Government of Rwanda
ha hectares
INDC Intended Nationally Determined Contribution
LAFREC Landscape Approach to Forest Restoration and Conservation
LDCF Least Developed Country Trust Fund for Climate Change Activities
LPG Liquefied petroleum gas
MINIBENA Ministry of Natural Resources
REMA Rwanda Environmental Management Authority
WB World Bank

iv
 1. INTRODUCTION AND PROJECT BACKGROUND

The Government of Rwanda(GoR)implements -with financial support from the World Bank
- the Landscape Approach to Forest Restoration and Conservation (LAFREC) in four
districts3 in Northwest Rwanda. LAFREC's general objective is to demonstrate landscape
management for enhanced environmental services and climate-resilience. The project area
encompasses the key biodiversity priority landscape Gishwati-Mukuraone, which in 2016
became Rwanda's fourth national park. The park area consists of two natural forests, small-
scale forest plantations and a buffer zone. The LAFREC project targets the management of
protected areas, landscape restoration activities and diversification of livelihoods for the local
population in the new national park and its buffer zone. LAFREC is in its second year of
implementation and progress is good. However, LAFREC is not addressing the demand for
wood fuel and ongoing forest loss threatens local livelihoods as well as accelerating soil
erosion and landslides. The changing climate will intensify such disasters.
Demand for biomass energy is one of the major drivers for forest degradation in Rwanda:
86% of primary energy comes from wood-based biomass. Wood fuel is used for household
cooking and in industries such as tea factories. Thus, improving the biomass energy value
chain is fundamental to ensuring that energy demands are met in a sustainable way without
compromising the integrity ofthe remaining forests.

2. RELEVANCE AND RATIONALE

2.1. Project Relevance

Rwanda has a relatively comprehensive and progressive legislative framework on climate
change, natural resources, energy and biomass. It also has well-established agencies with
experience of working across sectors to support natural resource management. The agencies
include the implementing agency of LAFREC: Rwanda Environment Management Authority
(REMA)within the Ministry of Natural Resources(MINIBENA).
The cooking needs in Rwanda are 99% based on biomass, consisting of firewood (86%),
wood converted into charcoal (11%)and crop waste (2%). Other types of energy total 1%.
The demand for woody biomass is predicted to increase from 4.2 million tons in 2009 to 5.7
million tons in 2020 during the "business-as usual" (BAU) demand scenario, since the
population is growing at 2.6%. Rwanda has developed an "ameliorated" (AME) demand
scenario, assuming: (i) a 30% increase in the penetration of improved stoves, (ii) a higher
efficiency in charcoal production; and (iii) a higher penetration of liquefied petroleum gas
(LPG) in urban areas; activities that are also included in the country's INDC. The AME
demand in 2020 is estimated to be 4.4 million tons. The overall supply potential is expected
to increase from 3.3 to 3.6 million tons.

3 Ngororero, Nyabihu, Rubavu and Rutsiro

1
In order to address these threats to the forests and to devise a comprehensive approach to
meeting energy needs of the growing population, additional NDF-financed activities are
proposed to be added to LAFREC. The NDF project will contribute to the original objective
of LAFREC of demonstrating landscape management for enhanced environmental services
and climate resilience. Both the World Bank and the NDF activities will help Rwanda fight
against deforestation. In addition, the NDF activities will further amplify the LAFREC
climate benefits. The proposed NDF activities will strengthen and complement LAFREC by
supporting 1) better woodlot management, 2) improved quality of tree seeds, 3) more
efficient charcoal production, and 4)promotion of alternative sources of energy.

2.2. Relevance to NDF's Mandate and Strategy

The project will help Rwanda with adaptation and mitigation of climate change, and it
meets NDF's screening criteria. The improved woodlot management and more efficient
charcoal production are expected to reduce and sequester CO2e emissions by around 35,000
tons annually, according to NDF's estimate. The trees increase climate resilience: trees, for
example, help control erosion, reduce ecological sensitivity to floods and drought, increase
agricultural productivity as they conserve and regulate soil, water and microclimate in
agricultural lands, and provide a safety net for local communities when agricultural crops fail.
Further, the project is in line with of the following NDF strategic focal areas.
The project will support private sector development with a focus on helping poor farmers
organise their commercial activities into charcoal producing cooperatives. This will enhance
sustainable productivity, distribution and marketing and lead to improved market access for
the end products. The more efficiently produced charcoal will also increase income of local
charcoal producers.
The project will pilot innovative management and production techniques, which can be
duplicated in other rural districts in Rwanda and elsewhere. The activities will, in an
innovative and practical way, demonstrate interlinkages between climate change, ecosystem
restoration, improved biodiversity, and enhanced natural capital.
The intervention seeks to leverage bigger investments as it prepares a technical basis for
larger investment for deployment of successful technologies and approaches throughout the
country. Improved seed varieties with better climate resilience, for example, will provide the
technical rationale to invest in planting improved varieties and will help Rwanda define
investments in these areas better. Improved kilns deployed in the LAFREC region can be
scaled up nationwide.
The project will benefit vulnerable groups. The beneficiaries are poor, and more than a
quarter of area residents are extremely poor. They farm marginal land highly vulnerable to
natural disasters. The NDF support will reduce the workload of women, improve women's
and children's health, and provide better economic opportunities for women.

i
3. THE PROPOSED PROJECT

3.1. Objectives
The NDF-supported activities will improve efficiency and sustainability along charcoal value
chains in Northwest Rwanda in support offorest landscape restoration and rural livelihoods.

3.2. Project Activities

Activity 1: Improved woodlot management
This NDF activity will strengthen WB-supported forest restoration by incorporating woodlots
management into the Gishwati-Mukura landscape. It will build upon existing plans and
training, initiate local-level planning of existing woodlots to improve management and
increase productivity in order to reduce pressure on natural forests.4 The NDF activities will
include:
a) Baseline assessment of existing woodlot management plans and training needs for soil
conservation, wood production and climate-resilience.
b) Development of training modules based on the assessments.
c) Training of 500 farmers in woodlot management, including in-field exercises. The
training will be designed and implemented in a way that the responsible authorities
can continue the training after project activities have been completed.
d) Support for implementation of improved woodlot management practices (production
of seedlings from improved seeds, plantation, erosion control measures and general
maintenance ofthe woodlots) in 800 ha in the LAFREC districts.
e) Assessment and improvement of existing field evaluation methods for better
effectiveness.
fl Hands-on and follow-up support to field evaluations.
The training modules and the baseline assessment of woodlot management interventions will
add value to woodlot management approaches throughout the country.
Activity 2: Improved seed quality
The NDF activity will complement LAFREC support of the use of native species in forest
restoration activities by providing support to the National Seed Centre. The support will
cover the viability of climate-resilient tree seeds that may withstand, for example, increased
temperatures and floods. Another aspect to be considered is productivity where present
evidence points to genetic degradation affecting plantations' yields. NDF's support will
improve and diversify the tree seed pool. Local cooperatives will be trained in the importance
and use of new varieties as well as in seed collection, handling and distribution. The NDF
activities will include:

4 Image-based inventory completed by 2012 using aerial orthophotos indicates that forests (natural montane
forests, savannah forests, and tree plantations) cover about 673,636 ha(of which 125,889 ha are natural forests
and 547,747 ha forest plantations of which 60% are smallholder woodlots, 12% are district forests and 28% are
state forest.

3
 a) Assessment of seeds appropriate for supporting climate resilience in LAFREC area.
b) Rehabilitation of seed trial stands for sustainable production of seeds of improved
varieties.
c) Training of local cooperatives in seed collection and handling.
d) Upgrading of laboratory equipment in the Seed Centre for improved functioning as
well as collection and handling of new seed varieties.
e) Establishment of a seed collection centre in the Eastern province.
This activity will facilitate the use of improved tree varieties in the entire country.
Activity 3: More efficient charcoal production
The NDF activity will strengthen LAFREC by helping the woodlots and charcoal
cooperatives to gain better market access for their products.
Most of the private woodlots are small and charcoal is produced by individual producers.
Some of these are organised in cooperatives, but others are not yet organised, which makes
adoption of advanced technologies, and wider distribution and marketing of charcoal
challenging. There is a need to form new cooperatives or strengthen existing ones to improve
uptake of improved production techniques and also to improve the value, quality and
marketing of the charcoal produced. Mobile sawmills and furnaces that increase productivity
will be tested to be managed and maintained by the cooperatives. The training will cover
business planning as well as regulations for production. It will also improve distribution links
between production and the markets and add value through labelling and branding of certified
green charcoal, if feasible.
The NDF activities will include:
a) Baseline assessment of existing charcoal producers technical and organisational
capacity.
b) Training of 500 charcoal cooperative members in cooperative management, improved
charcoal production technologies, licensing and permitting for tree cutting and
charcoal production, and marketing of certified green charcoal, if found feasible.
c) Market analysis to better understand the demand and supply of charcoal in the project
area, and to design activities that will boost the value and accessibility to the potential
markets.
d) Supply wood and charcoal processing equipment (mobile sawmills, improved mobile
kilns and storage/transport facilities)
e) Field evaluation on uptake of improved technologies, on operational experiences and
the efficiency ofthe kilns and quality test of the charcoal
~ Follow-up to secure uptake of improved kilns
At present, 12 Charcoal cooperatives have been registered with Rwanda Cooperative Agency.
These cooperatives have a total of 248 members, of which 29 are female. Also in the project
area, the female participation in charcoal production is about 10%. The NDF activities
propose to actively promote raising this figure to at least 20% through training and other
activities. The assessments and evaluations performed through the NDF activities will be
useful for the improving charcoal production in the entire country.

4
Activity 4: Support for promotion of alternative sources of ener~v
Two activities aiming at reducing pressure of wood fuel demand are proposed targeting
commercial tea factories' wood consumption and households' cooking needs.
There are two commercial tea factories in the LAFREC area that use wood-powered boilers
for tea-drying processes, and these compete for fuelwood with domestic users. The project
will assess the feasibility of using alternative sources of energy such as solar or geothermal
energy, briquettes or electricity from small hydro to relieve pressure on wood fuel.
The NDF project proposes to analyse and assess alternatives that could meet households'
cooking needs in a sustainable way. The study will cover the AME alternatives as well as
additional renewable forms of energy, except those that have been found infeasible in
previous studies. The recommendations will be based on overall energy sector scenario
analyses, detailed cost-benefit analysis of life-time costs of the different alternatives,
including externalities, as well as the methodology used in the ESMAP technical report
007/15 (The State of the Global Clean and Improved Cooking Sector)5. The study will
include technical and economic analysis of a CO2 price based on shadow pricing of carbon
used by EIB. The study will include recommendations on alternatives to be promoted, and the
NDF support will cover promotional activities relating to the best alternatives.
In addition to reducing demands on forest resources for energy in LAFREC areas, this
activity will pave the way in the country for promotion and wider penetration of alternative
energy sources.

3.3. Cost Estimates and Financing Plan

The tentative budget for the NDF activities is:

CATEGORY EUR
Al Improved woodlot management 1 038 000
A2 Improved seed quality 857 000
A3 More efficient charcoal production 914 000
A4 Promotion of alternative energy 296 000
Local monitoring and management 277 000
World Bank fee 169 000
World Bank supervision, monitoring and
evaluation 89 000
Contingency 60 000
TOTAL NDF GRANT 3 700 000

5 https://o~enknowledge.worldbank.org/bitstream/handle/10986/21878/96499.pdf

5
 The total project costs of LAFREC are estimated to be financed as follows:
FINANCIER EUR MILLION USD MILLION
NDF 3.7 3.9*
World Bank** 8.9* 9.5
Government of Rwanda 2.8* 3.0
TOTAL 15.4* 16.4*
* Estimate based on the exchange rate as of22.11.2016: 1 EUR = 1.0625 USD
** The World Bank funding is provided as a grant originating from GEF Global Environment Facility(GEF)
and the Least Developed Countries Trust Fund for Climate Change Activities(LDCF)

Of Government of Rwanda's in-kind contribution of USD 3.0 million, USD 0.4 million will
be linked to the NDF activities.
The Government of Rwanda will top up their in-kind contribution from USD 2.6 million to
USD 0.4 million if NDF financing is approved. This illustrates the government's commitment
to NDF's activities. Furthermore, Rwanda has demonstrated additional engagement by taking
an active role in the preparation of the NDF activities.
The farmers and charcoal producers will contribute to the project by providing their own
input for management of woodlots and production of charcoal such as their time, the site and
raw materials. Specific figures on the value of these contributions are currently not available.
The NDF project will thus only provide technical assistance such as advice on how the
charcoal kilns can be better constructed and managed and some limited investments on a
demonstration basis.

3.4. Nordic Interest

The Nordic countries have a strong resource base in the forestry and energy sectors. Biomass
is increasingly an important part of the energy systems in the Nordic countries. In Finland,
for example, biomass accounted for 20% of total final energy consumption in the country in
2013, as well as for over 40% of commercial heat generation. Likewise, there is a growing
body of Nordic research on increasing biomass production through species and management
intensity of forest plantations. There are also Nordic consultants with biomass expertise: one
of them, with experience of the NDF biomass projects in Senegal and Benin, was contracted
by the World Bank to formulate the proposed NDF project.
In Rwanda, Sweden supports the Scaling up Off-Grid Energy through SIDA that aims to
grow sustainable off-grid renewable energy markets by supporting private sector companies
to deliver energy access to 77,000 people in poor rural areas. At present, SIDA is also
preparing a new programme together with SNV on fuel-efficient cookstoves in Rwanda. This
cookstove initiative will complement and have clear synergies with the present NDF
proposal.
Through the Nordic Climate Facility (NCF), NDF supports a number of projects with Nordic
organisations that are relevant for the present proposal and have been used during project
preparation including the following: CARE Denmark: Fuel Efficient Stoves in East Africa
(Rwanda, Uganda, Kenya, and Tanzania); Green Resources AS, Norway: The Bukaleba

6
Charcoal Project, Uganda; C.F. Nielsen, Denmark: Biomass Green Briquette Fuel
Production, Ghana; Pöyry Management Consulting Oy, Finland: Efficiency Enhancement
and Entrepreneurship Development in Sustainable Biomass Charcoaling in Ghana.

3.5. NDF's Added Value and Comparative Advantage

NDF had a strong role in contributing to the design of the NDF activities: a consultant was
engaged specifically for this purpose. The envisaged NDF contribution to the LAFREC
project provides an opportunity to take advantage of lessons learnedin similar NDF projects
in other countries. This is particularly relevant for the NDF contributions to the WB projects
in Senegal and in Benin, where experiences from introducing improved charcoal production
techniques can be useful for the proposed NDF project. The project may also benefit from
several NDF-funded NCF projects in the region. The Implementing Agency REMA is also
involved with the Lake Victoria Environmental Management Project, which NDF is
supporting.

4. IMPLEMENTATION ARRANGEMENTS

4.1. Technical Aspects

The technical approach to improving the charcoal value chain will build on the findings and
recommendations in the recent World Bank feasibility study6 on how to improve and green
the charcoal value chain in Rwanda. The feasibility study found that the optimisation of
carbonisation technologies ensures a higher quality of charcoal, but also reduces production
times and the physical effort of charcoal burners. A carbonisation efficiency increase of 15%
to 28% corresponds to a productivity increase of 86%. This means that modern carbonisation
technologies contribute to increased local incomes.
The WB study furthermore points to efficiency gains through reduction of loss, improved
packaging and marketing, and organisation of producers. Individual charcoal producers(men
and women) often suffer from the price dictate of regional charcoal traders, especially those
in "remote" areas due to bad road conditions. Therefore, the NDF component will support the
creation of cooperatives and strengthen the existing ones in order to enforce the negotiating
power of charcoal producers' vis-å-vis the traders. Increasing income will also open up the
possibility of purchasing a truck and engaging in direct marketing by entering into contracts
with large consumers.
During the charcoal production process and handling, there isa 5-10% loss through charcoal
dust. This dust can be compactly massed by a binder into charcoal briquettes. As fuel,
charcoal briquettes have higher heating value than wood or plain charcoal. They are almost
smokeless when burning and give off intense and steady heat. In the short term, briquettes
made from charcoal dust provide an efficient use of wasted resources and could be
competitive in price as well as usage.

6 World Bank 2012: Establishing a Green Charcoal Value Chain in Rwanda: A Feasibility Study. Financed by
Finland and Norway through the Trust Fund for Environmentally and Socially Sustainable Development.

7
The WB feasibility study has been followed by other relevant studies on improving the
charcoal value chain in Rwanda, which have identified practical actions and technical
modalities to be undertaken for improved management, which the NDF-financed components
can build on.
In addition, LAFREC and other projects have provided training so experience and lessons
learned from this will be studied and used, to further improve the training that is expected to
continue by the responsible agencies after the completion of the NDF-financed activities.
The NDF funds will finance further improved approaches relating to woodlot management,
deployment of improved mobile kilns, marketing, technologies and approaches for better
seed production and handling. The aim will be to give a technical basis for deployment of
successful technologies and practices throughout the country.

4.2. Institutional Aspects and Project Organization

REMA will be in charge of implementation of the proposed NDF activities including
procurement and payments. The management structure for the NDF project will thus be the
same as for LAFREC. There is a project implementation unit in place in REMA that has
experience not only from implementing the LAFREC project but also the NDF and Bank-
financed Lake Victoria Environmental Management Project. The unit is ready to start
launching the proposed NDF activities in 2017, subject to funding approval. Project
Implementation Manuals prepared for LAFREC will provide guidance on the formats for
planning, reporting, monitoring and evaluation, and fiduciary management procedures.
The project will support capacity-building for farmer groups and cooperatives. Within the
project area, some farmer groups and charcoal cooperatives are already established, and many
have significant capacity to manage group activities and finances. The NDF activities will
assess the best ways to provide additional support to build organisational, technical, financial
and business capacities.

4.3. Procurement and Contract Structure

A draft procurement plan has been prepared and procurement will be carried out in
accordance with the World Bank's and the Government of Rwanda's guidelines. A number of
goods, works and consultancy contracts are foreseen. Procurement will be carried out by
REMA,and the World Bank will supervise and oversee the activities.

4.4. Risk Analysis

The key risks and mitigation measures for NDF activities are expected to be the same as
those for LAFREC project; a few important ones for NDF activities are presented below:

Republic of Rwanda, Ministry of Infrastructure and Belgian Development Agency: Complementary Study on
Charcoal Value Chain in Rwanda,2016.

8
Risk factor Mitigation measures
Complex stakeholder LAFREC project has already established a basis of engagement with local and
environment government stakeholders. Key stakeholders have been actively consulted and
involved with the desi n ofthe NDF activities, creatin ownershi and readiness.
Capacity, fiduciary and REMA is experienced in implementation of natural resource management projects.
execution risks It has experience of implementing LAFREC as well as the Bank-financed Lake
Victoria Environmental Management Project. It has been involved with the
preparations ofthe proposed NDF activities, which has created commitment and is
ex ected to facilitate execution.
Social and environmental Activities are intended to improve the livelihoods and environmental management.
risks NDF activities will follow the World Bank safeguard policies. The project is not
likely to have significant adverse environmental and social impacts that are
sensitive, diverse, or unprecedented; it is classified as a Category B project. An
Environmental and Social Management Plan has been prepared for LAFREC,
which will be a lied also to the NDF activities.
Integrity risks Specific aspects on the assessment of fraud risks have been included in the external
audit Terms of References. The internal auditor reports directly to the Ministry of
Finance as well as present quarterly audit reports to the World Bank. The project
has designed a payment checklist to ensure compliance. Strong financial
mana ement anan ements have been ut in lace

4.5. Monitoring and Evaluation

The existing World Bank monitoring and evaluation framework for the LAFREC project will
be used for the NDF activities. The framework has, however, been updated to include
indicators for the contribution from NDF, making it possible to clearly review progress.
Indicators of special importance for NDF have been included in the monitoring framework,
such as estimated reductions in greenhouse gas(GHG)emissions and gender-segregated data.
World Bank will share all progress and technical reporting on the LAFREC project including
the NDF-financed components on a setui-annual basis. NDF will participate in supervision
missions as needed.

5. ECONOMIC AND SOCIAL ASPECTS

5.1. Economic Justification

The World Bank's analysis of the LAFREC project interventions suggests a significant net
benefit and healthy Economic Rate of Return (ERR) will be generated for the economy. The
ERR over a 20-year period is 35 %,and net present value net benefit of USD 25.41 million.
The economic benefits generated by the project are expected to result from avoided illness
and premature death for women and children switching from wood fuel for cooking to
cleaner alternatives; economic opportunities provided to the beneficiaries and the associated
forest product revenues such as improved charcoal production, handling and sales; increase in
forest productivity through sustainable woodlot management activities and reduction in soil
degradation; reduction in soil erosion through better land management and planting of more
climate-resilient trees; and increased knowledge base of natural resource management
approaches that can be integrated into Rwanda's national forest management strategy.

D
The NDF activities positively contribute to economic growth in the four LAFREC districts.
Half of the population of the Western Province lives below the poverty line, with 27% of the
poor suffering from extreme poverty (2010/11 figures). Rural residents in targeted districts
will benefit from improved production of wood, protection of assets from extreme events due
to better woodlot management, more efficient production of charcoal and stronger charcoal
cooperatives will help the local residents receive better value for their products.

5.2. Environmental and Social Aspects

The World Bank Environmental and Social Safeguard Policies will apply to the NDF-
financed activities.
The safeguards assessment carried out during the appraisal of LAFREC led to the elaboration
of an Environmental and Social Management Plan (ESMP). The ESMP identifies especially
vulnerable groups, including, women and female-headed households and includes special
actions to mitigate possible negative impacts from the project. The project makes a special
effort to include and increase the number of women in organised training activities. The
project is also collecting gender-segregated data, where feasible, for use in the monitoring
framework. This includes the number of men and women benefitting directly from improved
livelihoods, as well as accounts for the number of women and men benefitting from the
training. At present, female participation in charcoal production in the project area is about
10%. The NDF activities propose to actively promote raising this figure to at least 20%
through training and other activities.
The proposed NDF activities are also expected to contribute to improved access to clean, safe
and reliable household energy, which generally also decreases health risks$ for women and
children, and their time spent gathering wood fuel. This will give more time for women and
children for other activities such as obtaining education and enhancing other income-
generating opportunities.

6. CONCLUSIONS

The proposed activities will reduce pressure on the scarce forest resources. The activities will
contribute to increasing resilience and reduce GHG emissions through energy efficiency and
carbon sequestration. By diversifying tree species and implementing erosion control
measures, the project will contribute to reducing loss of assets and livelihoods in rural
Rwanda. Activities will also optimise production from the woodlots and improve market
access for the products especially related to charcoal boosting local income.
In addition, the project will, in an innovative and practical way, demonstrate the links
between climate change, ecosystem restoration (e.g. through tree planting), improved

8 See, for example: http://www.who.int/indoorair/publications/burning-onnortunities/en/

10
biodiversity (by providing better options for native flora and fauna), and enhanced natural
capital(by tree cover rehabilitation, erosion control and soil quality improvement).

7. RECOMMENDATION

The Board approved grantfinancing ofup to EUR 3.7 million to the project C 95
R WANDA -IMPROVING CHARCOAL VALUE CHAIN
Helsinki, 8 December 2016

.~. ~~----_
Pasi Hellman
\~ ~
Martina Jägerhorn
Managing Director Country Program Manager

11
 Annex 1 —Monitoring Framework for LAFREC;the additional impact of the proposed NDF project hi~hli~hted and bolded
Project Development Objective(PDO):

To demonstrate landscape management for enhanced environmental services and climate resilience in one priority landscape.

Cumulative Target Values

PDO Level Results Indicators Base- Data Source/
Unit ~~ne 2015 2016 2017 2018 Comments
2019 Methodology

1. Area of protected forests Enhance biodiversity protection to be assessed on the basis of a significant
(Gishwati-Mukura Reserves / Assessment
Ha 0 0 increase in mean METT score for reserves or single score for Gishwati-
0 0 0 3428 based on
National Park) under enhanced Mukura National Park once established. Baseline score is 21. A significant
METT score
biodiversity rotection increase is interpreted to involve reaching a threshold of at least 50.
Aggregate of areas subject to establishment of silvo-pastoral systems and
2a. Land area where sustainable 3000 improved micro-catchment management through enhanced forestry,
land management practices have NDF: Project agroforestry and sustainable land management techniques supported by the
Ha 0 0 0 500 1500
been adopted as a result of the additional reports project.
project 800ha
NDF: A re ate will include areas of im roved woodlot mana ement.
2b. Of which, new areas outside Subset of project treatment areas outside of reserves which are subject to
Ha Project reforestation activities based on use of native species — e.g. silvo-
protected areas managed as 0 0 0 200 600 1200
reports pastoralism, protection forest strips, rehabilitation of natural forest in
biodiversit3'~'tendlY northern Gishwati.
3. Households in the project area Project
with access to advanced warning reports and
Number 0 0 0 0 90 90 surveys
of individual major rainfall ar
flood events
NDF: The target figure is based on the assumption that two representative years of
t COZe normal operating capacity of two activities (improved woodlot management
4 GHG sequestration/reductions additional
estimated at 11000 tCO2 per year and improved charcoal production
70000 t
estimated at 24000t COZ per year) have been completed by 2019.
Beneficiaries
Number of household members within the project area benefiting from
directly improved livelihoods (increase in income as a result of livelihood
diversification activities or increase in agricultural productivity) and
indirectly improved livelihoods (e.g. through access to better flood warning
12,000
systems).
4a. Project beneftciaries Number 0 0 2,000 6,000 10,000 NDF: The target 5000 represents the overall number of household
Addtional eports
members within the project area benefitting directly from improved
5000
livelihood as a result of the NDF activities. Gender-segregated sub-
targets will be established and monitored for the different NDF
activities, for example taking into consideration the aim to increase
female artici ation in charcoal roduction from 10% to 20%.
4b. Ofwhichfemale (beneficiaries) % 0 50 50 50 50 50
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 Intermediate Results and Indicators
Base- Target Values Data Source/
Intermediate Results Indicators Unit ~~ne Comments
2015 2016 2017 2018 2019 MethodologY
Intermediate Result 1: Forest-friendly and climate-resilient restoration of Gishwati-Mukura landscape
5. UNESCO Biosphere Reserve
I
,/N N N N N N Y Proposal
proposal submitted
2500 Including areas rehabilitated within reserves and buffer zones, and new or rehabilitated
NDF: production or protection forests outside of reserves.
project
6. Area restored or re/afforested. Ha 0 0 500 1000 1500 additi
reports
onal NDF: Including areas under improved woodlot management.
800ha
Total members of households involved in land use management activities under the
7. Land users adopting sustainable project, including micro-catchment rehabilitation in corridor and silvo-pastoral
land management practices asa Number 10,000 Project
0 0 1,000 4,000 8,000 activities.
NDF reports
result ofthe project. NDF: Including woodlot and charcoal cooperative members adopting improved
mana ement.
Profitability will be assessed according to business plans and bookkeeping of the
Farmer group
8. SubPro'ects groups. The expected climate vulnerability of each livelihood subproject will be graded,
J generating pro.Tits Percent 0 0 0 0 20
records/
~~ and at least 30% of the target number are expected to be in the low vulnerability
from new or enhanced livelihoods. project
category.
reports
NDF: Includin rofitabili and business lans of coo eratives.
9. Flood risk mapping and
hydrological model developed for Y/N N y y y Project
N N
reports
at least 1 tar et basin.
Intermediate Result 2: Improved coordination, science and management
10. Impact monitoring study on
land rehabilitation techniques Y/N N y Project
N N N N
reports
roduced
Knowledge products will be made publicly available on-line and some are expected to
be published in peer-reviewed journals, but the primary target audience will be relevant
I1. Number ofknowledge products 12 decision-makers, agencies and technical staff within Rwanda, and dissemination will be
on landscape management Number 0 0 Project
0 0 6 NDF: through a mix of policy notes, workshops and incorporation into relevant manuals.
reports
disseminated to target audience 10 NDF: Training modules and manuals for seed collection, woodlot management will
be included. Assessments and analysis on marketing of efficiently produced
charcoal and other cleaner alternatives will be included.
13