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in the homestead rehabilitation sector,<br />

However, this was dropped in the<br />

implementation stage. Fuclwood seedlings are<br />

free of charge, but the GOB intends to charge<br />

<strong>for</strong> the cost of production later.<br />

Economic analysis. Tile economic internal<br />

rate of return (EIRR) has been estimated at<br />

16% <strong>for</strong> the project. The sensitivity test <strong>for</strong> a<br />

20% increase in cost and a 20% reduction in<br />

benefit will lower the EIRR to 11.5%. The risk<br />

on the investment has been considered minimal<br />

as the major activity of the project is the<br />

establishment of fuclwood plantations on<br />

government land with all the proceeds from the<br />

timber output accruing to the government. The<br />

project has been designed to avoid risk.<br />

Sagarnath Forestry Development Project, Nepal<br />

Economic analysis. The EIRR has been<br />

estimated at 41% <strong>for</strong> the project life of 24 years.<br />

The financial internal rate of return (FIRR) has<br />

been calculated <strong>for</strong> the project as a whole to be<br />

18%. A sensitivity test of the project has been<br />

undertaken and the result is acceptable,<br />

although under certain coaditions the rate<br />

might be as low as 13%.<br />

Uttar Pradesh Social Forestry Project, India<br />

Cost recovery. The government of UP<br />

intended to recover all the costs of the social<br />

<strong>for</strong>estry program, including capital and<br />

operating costs, over 30 years without interest,<br />

However, it was later agreed that the GOUP<br />

would recover only labor, material costs of<br />

planting and technical supervision, with<br />

overhead costs provided as a routine<br />

government service. In order to recover the<br />

cost as planned, it was decided that a plantation<br />

mix of 70% fuel/foddcr and 30% of commercial<br />

<strong>species</strong> would be feasible, wih all the fuel and<br />

fodder output <strong>for</strong> the villagers and all the<br />

commercial timber production would be sold by<br />

the Forest Service.<br />

Beneit sharing. Grass, laf fodder, flowers<br />

and fruit are to be free <strong>for</strong> the villagers with an<br />

equitable share of fuclwood <strong>for</strong> free or at<br />

nominal cost. The Forest Service would market<br />

the entire output from the commercial<br />

plantation from timber to bark and oil seeds,<br />

which would be sufficient <strong>for</strong> the goernment to<br />

recover the invcstmcnt costs over 30 years.<br />

Economic analysis. Thc EIRR wits estimated<br />

to be 13.2%. If farm <strong>for</strong>estry were excluded the<br />

rate would be 12.4£. EIRR foir all components,<br />

71<br />

including organization building, would be<br />

greater than the 10% cutoff rate. The social<br />

rate of return was 36.4%.<br />

Kandi Watershed and Area Development<br />

Project, Punjab. India<br />

Cost recovery. As the project is designed to<br />

benefit a large segment of the population, and<br />

as this area has been designated as<br />

underdeveloped, with 25% of the population<br />

living below the poverty line, there is r.o cy-t<br />

recovery planned other than tile usual<br />

marketing fees and indirect taxes.<br />

Economic analysis. Although the project is<br />

more of a social improvement type, the<br />

applicable rate of interest is the standard 12%.<br />

The EIRR <strong>for</strong> the Dholbaha watershed<br />

component has been ca;culated to be 16%; <strong>for</strong><br />

rehabilitation of the upper catchment, 12%.<br />

West Bengal Social Forestry Project, India<br />

Benefit sharing. Although the project<br />

appears similar to the project in Bangladesh, it<br />

differs in certain details. In the village woodlot<br />

component, state land would be leased to the<br />

village organization (panchayat). The<br />

government would cover the cost of<br />

establishment, recoverable after harvesting of<br />

the plantation output. In the rehabilitation and<br />

referestation component of the government's<br />

degraded <strong>for</strong>est, although the government<br />

incurred all the costs, the people would be<br />

entitled to free fodder and fuclwood.<br />

Moreover, 25% of the output would be<br />

collected free by villagers in the area. The most<br />

striking feature was in farm <strong>for</strong>estry. The<br />

landless poor would be given land <strong>for</strong> <strong>tree</strong><br />

planting. Both the landless and the poor with<br />

land holdings would be given free seedlings with<br />

a cash incentive <strong>for</strong> planting them. All the<br />

produce would belong to the planter. The<br />

government would recover nothing directly.<br />

The people would thus benefit more from this<br />

project than from the project in Bangladesh.<br />

Cost recovery. For the project life of 30 years<br />

the government would rczcivc a FIRR of 3% at<br />

constant prices.<br />

Economic analysis. The ElRR was estimated<br />

at 27 9;,.<br />

Elimalayan Watershed Management Project,<br />

Uttar Pradesh, India<br />

Cost recovery. Normally, the government

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