PROPOSAL FOR REVIEW

PROJECT TITLE: SENEGAL: SUSTAINABLE AND PARTICIPATORY ENERGY MANAGEMENT

GEF FOCAL AREA: Climate Change and Biodiversity

GEF ELIGIBILITY: Under financial mechanism of Conventions

Climate Change and Biodiversity Conventions Ratified 10/17/94

TOTAL PROJECT COSTS: US $ 18.9 million

GEF FINANCING: US $ 4.7 million

GOVERNMENT COUNTERPART

FINANCING OF GEF COMPONENT: US $ 300,000 equivalent

COFINANCING/PARALLEL FINANCING: IDA US $ 5.2 million

Cofinanciers US $ 8.0 million

Government US $ 1.0 million

ASSOCIATE PROJECT: Same

GEF OPERATIONAL FOCAL POINT: Mr. Abdoulaye Bathily, Minister

Ministry of Environment and Protection of Nature

GEF IMPLEMENTING AGENCY: World Bank

EXECUTING AGENCIES: Ministry of Environment and Protection of Nature

Ministry of Industry and Energy

LOCAL COUNTERPART AGENCY(IES): not applicable

ESTIMATED APPROVAL DATE: September 1996

PROJECT DURATION: 7 years

GEF PREPARATION COSTS: US $ 70,000

COUNTRY AND SECTOR BACKGROUND

1. Total final energy consumption in Senegal for 1992 was estimated at some 1.5 million tons of oil equivalent. Of that total, forest-based traditional fuels (firewood and charcoal) -- mostly used for household cooking purposes -- represent 57%, petroleum fuels 37%, electricity 5% and agricultural residues 1%. The household sector is the principal energy consumer (58%) followed by transport (20%), industry (17%) and the tertiary sector (5%). Total charcoal consumption in 1992 was estimated at 330,000 tons (equivalent to 1.8 million tons of fuelwood), of which 76% is consumed in the principal urban areas. The capital city of Dakar alone is responsible for an annual consumption of more than 100,000 tons of charcoal. Total consumption of fuelwood was estimated at some 1.5 million tons in 1992, 86% of which is consumed in the rural areas.

2. The Directorate of Energy of the Ministry of Energy, Mining, and Industry (MEMI) is responsible for the administrative and technical oversight of the energy sector and for supervising five parapublic companies or mixed-capital enterprises (National Electricity Company - SENELEC, African Refining Company- SAR, GPP Petroleum Trade Group - GPP, Senegal Petroleum Company - PETROSEN, Senegal Peat Company - CTS). The Directorate for Water and Forests of the Ministry of the Environment and Protection of Nature (MEPN) is responsible for the management of woodfuels as part of its line functions within the forestry sector. The "Cellule de Combustibles Domestiques" is an inter-ministerial body created in 1993 to serve as a formal link between the different governmental institutions and operators in the sector.

3. The supply of woodfuels to the urban and peri-urban areas is based on geographically concentrated and non-sustainable forest resource management practices (clear cutting). Given the relatively low efficiency of wood-to-charcoal conversion (18%) due to inefficient carbonization, total charcoal consumption is equivalent to 1.2 times the total consumption of fuelwood. Charcoal is currently produced in the Kolda and Tambacounda regions, more than 400 km away from the principal urban (Dakar and Thies) and peri-urban markets. Until April 1995, when a new Forestry Code was approved (Decret 95-357), the forestry legislation gave the Forest Service the exclusive prerogative to assign commercial exploitation rights over forest resources nationwide. Unfortunately, these rights were historically given only to urban-based traders resulting in the creation of a vertically integrated and oligopolistic industry with widespread corruption problems. Among other issues, annual charcoal exploitation quotas were frequently surpassed with the Forestry Service lacking the manpower or monitoring mechanisms to adequately supervise and enforce them. It is estimated that out of the some 1800 legally registered "exploitant forestiers" only some 20 traders actually work and control the urban charcoal trade. The remainder registered traders buy charcoal production quotas and resell them afterwards to the traders that actually produce charcoal. As even the temporary expatriate laborers (Guinnean Fulbes, "sourghas") employed in the cutting of the wood and the production of the charcoal are brought in to the rural areas by the urban traders, it is estimated that less than 5% of the annual turnover of the charcoal trade (US $ 60 million) remains in the rural areas. The transport of the charcoal, which represents close to 20% of the final cost structure of the charcoal, is provided by independent trucking companies on a cash payment basis. Over the years, the operation of the charcoal industry has resulted in: the gradual loss of forest cover (approx. 30,000 ha/year) and thus of the ecosystem's carbon sequestration capacity and biodiversity; the degradation of the rural environment (particularly of the soils); the impoverishment of the rural areas; an acceleration of the rural exodus; and a massive transfer of wealth from the rural areas to the urban areas. In addition to these negative impacts, it is anticipated that the Niokolo-Koba National Park ("International Biosphere Reserve Patrimony", 9,130 km2), which is located in the south-eastern corner of the Tambacounda and Kolda regions and which is a declared national and international biodiversity patrimony and "Biosphere Reserve", will come under threat of encroachment within the next decade, with irreparable biodiversity and ecological consequences at the national and global levels.

4. The new forestry code clearly provides for the transfer of responsibility from the Government to the rural communities for the sustainable management and exploitation of the existing natural forest resources, and establishes that all forest resources exploitation activities must now be consulted with and approved by the affected rural communities. This fundamental regulatory change is fully consistent with the overall trend toward administrative decentralization and has the full commitment of the Government at the ministerial and technical levels. Nevertheless, the powerful charcoal oligopoly that exists cannot and should not be dismantled overnight. An organized process of gradual transition and increasing participation of the rural populations in the woodfuels industry trade will be necessary in order to avoid sudden market ruptures, and the negative energy, social and political consequences that would result from them. Such a gradual process is also necessary from environmental and energy efficiency points of view, as the rural population will need to assimilate both the sustainable management and efficient carbonization methods (30% efficiency). Not allowing for that would result in low natural resource sustainability and decreased carbonization efficiencies. While such a gradual process is necessary from the perspective of the rural communities, it will also play a significant role in the reduction and smoothing of potential social and economic conflicts of the implicit redistribution of part of the industry's profits to the rural communities.

5. The organization of the urban and peri-urban fuelwood trade (520,000 tons/year) resembles that of the charcoal trade but poses considerable smaller environmental and social conflicts. The consumption of fuelwood in the rural areas (1.5 million tons/year) is largely satisfied through sustainable subsistence practices (cutting of branches, selective felling of small trees and collection of dead branches). Women and children play a significant role in the collection of fuelwood. Rural consumption of charcoal is mostly limited to the areas where it is produced and is normally traded by the producers for food and lodging at the local communities. While rural consumption of woodfuels does not present significant environmental or energy supply-demand problems in the immediate future, it is necessary to assess the availability and accessibility of dead wood vis-à-vis the spatial dispersion of rural populations on a national basis to identify locations of potential future conflicts and develop pro-active medium-to-long term action programs.

6. With assistance of the Bank's Africa Regional Program "Review of Policies in the Traditional Energy Sector - RPTES", a national inter-ministerial team conducted between 1993 and 1994, a comprehensive review of the traditional energy sector, including the evaluation of the principal inter-fuel substitution issues and options (kerosene and LPG). Within that review, the regulatory, legal, pricing and fiscal frameworks of the sector and the evolution of its structure and functioning were studied in detail. The inter-ministerial RPTES team was led by the Directorate of Energy of the Ministry of Energy, Mining, and Industry (MEMI) and was integrated by other senior staff from the Directorate for Water and Forests of the Ministry of the Environment and Protection of Nature (MEPN), Ministry of Commerce, Ministry of Women Affairs, Ministry of Finance and Plan, and inter alia, the National CILSS Commission (CONA-CILSS), which are all members of the "Cellule de Combustibles Domestiques".

7. The RPTES review concluded that given the country's present and foreseeable macroeconomic and socio-economic conditions, Senegal will continue to depend on forest-based traditional fuels to meet the lion's share of the country's urban and rural energy needs well into the next century. While ongoing demand management (improved stoves programs and consumer education campaigns) and inter-fuel substitution (LPG and kerosene) efforts need to be continued and improved to incorporate critical lessons learned, large increases of petroleum products imports cannot be sustained because of budgetary constraints and because current income levels severely limit the potential for widespread inter-fuel substitution at non-subsidized market prices. Within that context, and until economic growth allows for such substitution to take place, the principal challenge of the energy sector in Senegal will be to manage an organized transition from the existing non-sustainable commercial woodfuels supply system to one capable of supplying woodfuels -- particularly charcoal -- to the rapidly growing urban population in an environmentally sustainable manner.

8. Consistent with findings in other parts of Africa, the RPTES review also concluded that the availability of woody biomass in Senegal may have been previously underestimated both in terms of volume of stocks and yield potential. Available forest stock information (estimated on the basis of primary data collected prior to 1980) indicates that there are some 44,000 km2 of woodlands and forests, 29,000 km2 of savanna woodlands, 43,000 km2 of savannas and 32,000 km2 of Sahelian steppe grasslands. Pending confirmation by a vegetation cover inventory in the Tambacounda and Kolda regions (included in the proposed project), it is expected that Senegal should still have sufficient forest resources to sustainably attend most -- if not all -- of the demand for woodfuels for at least the next two decades if proper forest management schemes can be put in place. Implementing sustainable management would imply exploiting the existing forest stocks at or below the annual growth (yield) level and would therefore result in maintaining the original stocks over time. Yet, as both the government and the private sector lack the financial and human resources that would be necessary to adequately manage the country's forest resources, sustainable management could only be achieved through the active involvement of the rural populations. Under the new forestry code, the right regulatory framework and the necessary technical assistance and supervision from the Forestry Service (MEPN) and other Governmental agencies and NGO's with competencies on land-use and rural development issues, the Senegalese rural population should be able to assume the responsibility for the sustainable management of their forest resources. The participation of the rural communities in the commercial exploitation of the forest resources for the supply of woodfuels -- particularly charcoal -- to the urban markets would further result in the creation of significant employment and economic development opportunities in the rural areas, with a considerable developmental impact for rural women.

PROJECT OBJECTIVES

9. The objective of the project is to meet an important part of the rapidly growing urban demand for household fuels, without the loss of forest cover and the ecosystem's carbon sequestration potential and biodiversity. This objective would be met through: (i) the implementation and monitoring of 300,000 hectares of environmentally sustainable community-managed forest resource systems in the Tambacounda and Kolda regions of Senegal, creating a protection zone around the Niokolo-Koba National Park (Biosphere Reserve); (ii) the promotion of private sector inter-fuel substitution and private sector and NGO-based improved stoves initiatives; and (iii) the strengthening of the institutions involved in the management of the sector, and the promotion of the participation of the civil society (private sector, academic institutions, and NGO's community) in the operation of the sector.

PROJECT DESCRIPTION

10. The Project would be divided in two components: Sustainable Woodfuels Supply Management and Demand Management and Inter-fuel Substitution Options. The project design includes a series of components -- to be financed by the Global Environment Facility (GEF) -- designed to ensure an effective participation of the rural population ("mesures incitatives") and thus guarantee the full achievement of the environmental sustainability objective of the project. The project also includes specific monitoring and evaluation activities (forest exploitation and wildlife) designed to evaluate the achievement of its global environmental objectives (maintenance of carbon sequestration capacity, CO2 emission abatement and biodiversity conservation.

11. The Sustainable Woodfuels Supply Management component, would implement 300,000 ha of sustainable community-managed forest resource management systems (forming a buffer zone around the Niokolo-Koba National Park) within a total period of seven years. The first year of implementation would include the necessary preparatory activities (see below) followed by the implementation of annually increasing "management modules", starting at 15,000 ha in the second year up to 100,000 ha in the seventh year. The gradual increase in the module size obeys a necessary learning and capacity training curve for both government agencies and rural communities. Consistent with current Bank policy, the sustainable forest resource management systems to be implemented would be based on a broader natural resource management concept, thus ensuring the integration of the different potential land uses (agricultural, pastoral and exploitation of non-timber products) and the developmental needs of the participating rural communities. The principal preliminary and support activities to be undertaken/implemented within this component would include: (i) a comprehensive vegetation cover inventory in the Tambacounda and Kolda regions to generate the technical data necessary to design sound community-level sustainable forest management plans and to select the specific geographical areas to be included in the project; (ii) a series of participatory rural appraisals to obtain the demographic, socio-economic, and cultural information necessary to prepare, with the local communities, the specific management plans to be implemented. These PRA's would pay special attention to the identification of relevant women development issues and to the identification of specific training and capacity building needs; (iii) a national level dead wood assessment to review the situation of the rural subsistence supply of woodfuels; (iv) provision of technical support and extension services to the participating rural communities for the exploitation/production and marketing of woodfuels to ensure their capacity to compete in the woodfuels trade and materialize the expected potential revenues; (v) investment support for the realization of rural-based micro-enterprises, such as carbonization units, agro-forestry processing, etc.; (vi) forest fire control and response systems in the community-managed areas to reduce resource losses and to protect the interest of the local communities; (vii) an independent forest resources exploitation monitoring system for the Tambacounda and Kolda regions to evaluate the sustainability achieved by the community-managed systems and to supervise the operation of the non-community based woodfuels traders and their compliance with authorized exploitation plans; (viii) a rural community-based wildlife monitoring system to evaluate the compliance with and achievement of the project's biodiversity objective; and (iv) a national woodfuels trade flows monitoring system to enable the correct quantification of the market requirements and the preparation of long-term woodfuels supply strategies at a national level.

12. The Demand Management and Inter-fuel Substitutions Options component would include a series of activities to support the implementation of the supply management component and to reduce pressure on the forest resource base. Those activities would be implemented in parallel and would rely on the active participation of the private sector and NGO community. Within this component, the following principal activities would be undertaken/implemented: (i) the setting-up of a charcoal reserve stock to stabilize the flow of charcoal to the principal urban centers and to reduce the risk of artificial supply shortages; (ii) providing support for the re-organization and modernization of the urban charcoal trade to establish long-term contract supply agreements between rural communities and selected urban traders -- to guarantee the unconstrained entry of community-produced woodfuels to the urban markets -- and to permit the standardization of the marketing units and the cleaning of the urban environment (charcoal bagging); (iii) providing technical assistance and limited support for the diversification of existing urban charcoal traders ("exploitants forestiers") in accordance to the proposals that have been submitted (January 1996) to the GoS by the National Federation of Woodfuels Traders (FENOFOR). This activity would significantly contribute to reduce possible friction to the gradual entry of rural communities in the industry; and (iv) providing support for the continuation of inter-fuel substitution options (kerosene and LPG) and dissemination of improved stoves by the private sector and the NGO community.

13. In addition to the above -- and within the two main components -- the project would provide institutional development support to strengthen the planning and policy formulation and operational capabilities of the relevant sector institutions. Development of and support to community institutions would be provided within the implementation of the management modules and through the micro-enterprises support activity (Component I). The project would also include a comprehensive project implementation communication strategy to promote an increased participation of civil society (community, NGO's and private sector) in the management and operation of the sector.

14. Project Benefits. The project would: (i) sustainably produce some 860,000 tons of fuelwood (equivalent to 258,000 tons of efficiently produced charcoal) during the implementation period and would establish a permanent system capable of producing more than 300,000 tons of fuelwood (equivalent to 90,000 tons of efficiently produced charcoal or 27% of total consumption) per year on a sustainable basis; (ii) reduce woodfuels-related deforestation in the Tambacounda and Kolda regions by some 20,000 ha/year, and as a consequence reduce net CO2 emissions by 510,000 tons/yr. and reduce the loss of biodiversity by the establishment of sustainable forest systems and the establishment of a protective buffer zone around the Niokolo-Koba National Park; (iii) generate gender-balanced employment and economic development opportunities in 250 rural villages in the Tambacounda and Kolda regions through their involvement in the management and marketing of woodfuels and other related income generating activities; (iv) generate a total of more than US $ 10 million in direct revenues to 250 villages from the trade of woodfuels, and generate additional revenues to the communities from related natural resource management and exploitation activities (Agroforestry, livestock keeping, non-fuelwood forest products, etc.); (v) on a sustainable annual basis after the end of the project, generate direct revenues in excess of US $ 3 million to the participating villages from the trade of woodfuels, and generate additional revenues from related natural resource management and exploitation activities; (vi) reduce CO2 emissions by 420,000 tons/yr. by the distribution of 225,000 improved charcoal stoves; (vii) increase the availability and access of low income households to more reliable and efficient charcoal stoves and to modern fuels; and (viii) strengthen the planning, policy making and implementation supervision capacity of the traditional energy sector institutions, while increasing the participation of the civil society (private sector, academic institutions, and NGO's community) in the management and operation of the sector.

15. Rationale for IDA Involvement. IDA participation in the project is required to support the implementation of the new traditional energy sector development strategy developed with the Bank's assistance (RPTES Program). The objectives of this project are fully consistent with the agreed Country Assistance Strategy (CAS). Its implementation would result in advancements in key areas of the Bank's development assistance agenda for Senegal, including -- but not limited to -- the rationalization and stabilization of the energy sector, promotion of sustainable forest and natural resource management practices, creation of participatory and gender-balanced rural development opportunities, private sector development, NGO community participation and reduction of environmental degradation. Further, the project would be fully consistent with the principles and recommendations of the Agenda 21, the Convention to Combat Desertification and the Beijing Declaration.

RATIONALE FOR GEF INVOLVEMENT

16. The sustainable woodfuels supply management component qualifies for GEF support under the short term projects window of the operational strategy for climate change. The component is a country sustainable development and global environment priority, likely to succeed and highly cost effective in the short term (US $ 4.30/t CO2 after 7 years and US $ 1.04/t CO2 after 15 years). Its objective is carbon sequestration, which the strategy flags as a possible future operational program and on which early experience is sought. The participation of GEF in the project is necessary in order to assist the GoS in the financing of community-participatory activities ("mesures incitatives") and monitoring and evaluation systems designed to generate and/or guarantee the materialization of incremental global environmental benefits (climate change and biodiversity agendas). It is justified because, under the present non-sustainable woodfuels supply systems, the annual harvest and carbonization of wood results in significant net CO2 emissions. Likewise, as deforestation advances irreversible biodiversity losses are accrued annually. Through the implementation of sustainable forest resources management systems, the project will provide -- within the project area and dimension - for the production of 300,000 tons/year of fuelwood with a zero net emission effect, thus significantly reducing ongoing CO2 emissions. In addition, the project would establish a buffer zone around the Niokolo-Koba National Park, increasing the protection to biodiversity. Without GEF financing the GoS will lack the necessary funding to cover the proposed activities and thus the global environmental benefits would not be realized. In addition to the above, a highly cost effective improved charcoal stoves program activity (unit abatement cost of US $ 0.34/t CO2 after 7 years) will be included within project's Demand Management component. While this activity will not be supported by GEF its implementation is fully consistent with GEF's operational program for removing barriers to energy conservation and energy efficiency. The barriers in this case are shortage of up-front capital and lack of knowledge. Attachment A presents a descriptive summary of the Niokolo-Koba National Park and its national and global biodiversity significance. Attachment B presents a summary of the monitoring and evaluation activities of the GEF components. Annex 1 presents a detailed discussion and calculations of the project's GEF incremental cost and expected global environmental benefits. Annex 2 contains the letter of country endorsement by the designated GEF Focal Point and Annex 3 contains the report of the independent Technical Review.

17. Beneficiary Participation. The proposed project was identified and prepared by the National RPTES team as an integral part of the activities of the RPTES review. The sectorial development strategy and investment proposals identified through the RPTES were widely discussed at all levels of Government and with the civil society, including the private and academic sectors and the NGO community, during national participatory seminars and workshops. A special national workshop for "exploitants forestiers" was held in 1994 and periodic consultations were sustained since with key sector entrepreneurs to ensure their support for the implementation of the envisaged policies and investments. Three regional workshops (including delegations from Burkina Faso, Gambia, Niger, Mali & Senegal) were held to promote a regional discussion of country policy findings and investment proposals and cross-country comparisons and to allow for a direct exchange of experiences. In December 1995 three "Project Design Workshops" (Government agencies, NGO's & private sector and donor community) were held in Dakar to further review the proposed project's design concept. A series of direct beneficiary consultation meetings are scheduled to take place in several villages (Tambacounda and Kolda) in March 1996 to discuss final project design issues with the rural community. The first year of the implementation plan will be based on numerous rural community participatory activities as the detailed forest and natural resource community-management plans will be prepared through direct beneficiary involvement.

PROJECT SUSTAINABILITY

18. The sustainability of the project would be achieved by the following key design factors: (i) the effective transfer of responsibility for the management of the forest resources from the Government to the rural communities; (ii) the effective opening-up of the woodfuels trading system; (iii) the implementation of a new woodfuels fiscal and pricing policy and mechanism that promotes long-term sustainable management of forest resources, strongly discourages non-managed resource exploitation and maximizes direct revenues at the producer level (rural communities); and (iv) strengthening of the long-term capacity of the rural communities to manage their forest resources sustainably. Specific activities and monitoring systems have been included in the project design to address all these issues (see Project Description and Monitoring and Evaluation sections).

LESSONS LEARNED AND TECHNICAL REVIEW

19. The proposed project incorporates the principal lessons learned over the past two decades in "household" energy and participatory natural resource management interventions in West Africa, including projects in Burkina Faso, Gambia, Mali and Niger. The lessons incorporated include but are not limited to the need to: (i) focus the priority for action in the traditional energy/household energy sector on the establishment of sustainable woodfuels supply systems capable of satisfying the growing and concentrated urban markets; (ii) enact a legal and regulatory framework that provides for the effective transfer of the control over natural resources from the Government to the rural populations; (iii) implement a simplified fiscal and pricing regulatory framework which avoids loopholes and opportunities for market distortions and "corruption"; (iv) follow a natural resource and rural development approach to the implementation of community managed woodfuels supply schemes to ensure the materialization and sustainability of social and economic development under the project; (v) re-orient the role of governmental agencies towards policy formulation activities and away from actual project execution, and promote an increased participation of civil society (community, NGO's and private sector) in the implementation of non-subsidized project activities (inter-fuel substitution, improved stoves, etc.); and (vi) promote and maintain ample consultation/participation of all the "stakeholders" throughout the entire policy-project cycle, and implement a sound communication strategy.

PROJECT COST AND FINANCING

20. The total Project cost is estimated at US $ 18.9 million equivalent (1995 prices), with a foreign exchange component of about US $ 17.9 million (94%). The financing plan includes US $ 5.2 million from IDA, US $ 5.7 million from GEF, US $ 1 million from GoS and the remaining US $ 8.0 million from donor co-financing. Several donors, including The Netherlands, Norway and Denmark, expressed interest in the draft investment proposals (revised into the proposed project) presented by the GoS at the RPTES Donor Experts' Conference held in Maastricht, The Netherlands, in May 1995.

GEF INCREMENTAL COSTS

21. The incremental cost of the GEF Alternative scenario within project Component I is US $ 4.66 million. This represents the cost for the implementation of acitivities related to community-participation, integrated natural resources management, institutional development and the monitoring and evaluation of global environmental benefits.

22. It is estimated that over the project duration of 7 years the GEF Alternative Scenario would achieve a total CO2 emission abatement of 1.1 million tons at an incremental cost of US $ 4.30/ t CO2. Over 15 years, the GEF Alternative scenario would result in a CO2 emission abatement of 4.5 million tons at an incremental cost of US $ 1.04/t CO2. Within Annex 1 (Incremental Cost and Global Benefits) Table 1 presents a summary of the cost of project Component I under the Baseline and GEF Alternative scenarios and Tables 2, and 3 present a detailed comparison of the cost structures.

ISSUES AND ACTIONS

23. Prior to negotiations the borrower would be required to complete the ongoing re-organization of the Forestry Service to strengthen the regional offices and commit to the re-orientation of the Service away from its current policing role and towards a pro-active forestry extension role. During negotiations, assurance would be sought that the government will: (i) establish satisfactory institutional and staffing arrangements for the implementation of the project; (ii) enact prior to credit effectiveness the necessary policy and regulations to introduce differential taxation arrangements for managed and non-managed areas, including provisions for the local collection and administration of applicable tax revenues. Such arrangements would remain in effect until the fiscal and pricing studies included in the project are completed and their recommendations are implemented to IDA's satisfaction; and (iii) agree to prepare and enact, within the first two years of project implementation, a new woodfuels fiscal and pricing policy and mechanisms which would: promote sustainable management of forest resources by rural communities; discourage non-managed resource exploitation; maximize direct revenues at the producer level; gradually eliminate the existing charcoal exploitation quota system; and eliminate the need for the any woodfuel-related "special fund" at the Forestry Service.

PROJECT RISKS

24. While it is expected that in the process of transferring part of the industry's activity to the rural communities the project will affect a small portion (~27%) of charcoal traders and of expatriate charcoal laborers ("sourghas"), that impact cannot be seen in isolation from the ongoing Africa-wide process towards democratization and local community empowerment. Senegal is no different than other countries in the region, and numerous instances of change are already underway throughout the economy. Nevertheless, recognizing that opposition by some of the charcoal traders and "sourghas" could delay the project's implementation, special attention was given to their inclusion in the project's identification and preparation process. Furthermore, two project activities were specifically designed to support the existing traders to adjust to the new situation (see "Project Description" section). Also, other activities were designed to monitor and prevent possible implementation interference (see "Monitoring and Evaluation" section). Finally, the project would be only one of numerous government-lead developmental activities which would be supported by official regulatory and legal measures.

25. While the project would restrict the exploitation of fuelwood in the project area to the participating rural communities, the possibility that charcoal production by traditional traders could switch to other areas of the country has been raised. This, however, is not expected to occur as charcoal production is regulated by government and is now subjected to the new provisions of local community approval. Should traditional traders attempt to relocate their activities, the affected local communities would be legally empowered to stop them and -- contrary to the past -- the Government would be obliged to protect the communities. In addition, the project design includes a forest resource monitoring system which, operated independently from the Government and with international donor supervision, would be responsible for reporting non-regulated forest exploitation. Furthermore, the project disbursement schedule has been designed to follow the same pattern of the implementation of sustainable management modules. In that way, annual disbursements would be contingent to the completion of the previous year's target as well as to the compliance with all project regulatory provisions, including the strict adherence to the established exploitation quotas and locations.

26. Finally, the risk that the rural populations might not be able to achieve full sustainable management of the forest resources cannot be entirely ruled out. Nevertheless, even in that case, the project would result in a considerable transfer of welfare to the rural communities with unquestionable economic development opportunities and social benefits and in significant national and global environmental benefits.

PROJECT IMPLEMENTATION

27. The Ministry of Environment and Protection of Nature (MEPT) and the Ministry of Industry and Energy (MIME) through the appointment of a National Project Director would be jointly responsible for the overall implementation of the Project. The National Water and Forest Directorate (NWFD/MEPT) would be responsible for the implementation of the Sustainable Woodfuels Supply Management component of the Project. The Energy Directorate (DE/MIME) would be responsible for the implementation of Demand Management and Inter-fuel Substitution Options component. The existing "Cellule de Combustibles Domestiques" would serve as an official "Steering Committee" of the project and would provide the institutional conduit for multi-agency coordination. In addition, a number of private sector enterprises and NGO's would actively participate in the implementation of several components of the project.

28. Project Monitoring and Evaluation. Three major monitoring systems have been included in the project to systematically evaluate the implementation process of key components and the realization of the expected national and global benefits. These are: (i) a forest resources exploitation monitoring system for the Tambacounda and Kolda regions, to supervise compliance with established exploitation plans and to evaluate the achievement of resource sustainability and to assess the impact of the project activities in the adjacent areas (Niokolo-Koba National Park and other open forests); (ii) a wildlife monitoring system, to evaluate the realization of the intended biodiversity objectives and benefits, with particular emphasis on the monitoring of endemic and threatened species; and (iii) a national woodfuels trade flows monitoring system, to evaluate compliance with established woodfuels transport and market quota regulations (source, volume and destination). In addition to these activities, the project would include a systematic monitoring and evaluation of the: (i) promotion and penetration of kerosene and LPG as a substitute household fuels; (ii) dissemination and cooking performance of improved stoves; (iii) participation of civil society (with emphasis on women) in design, decision making and implementation activities within the project; (iv) developmental impacts on women; and (v) realization of institutional development and capacity building objectives. All monitoring and evaluation activities will be based on an ex-ante assessment, will be carried out through implementation to allow for necessary design adjustments, and will be followed-up after completion to evaluate the long-term sustainability of the project's national developmental and global environmental achievements. A more detailed description of the monitoring and evaluation activities of the GEF component is presented in Attachment B.

29. Overall implementation of the project would be supervised on an annual basis by IDA and periodic disbursements would be contingent on the satisfactory compliance with all project conditions and achievement of modular targets. In addition to annual supervision, the project would be evaluated in accordance with established IDA procedures at mid-implementation (first semester of the fourth year) and at its completion.

30. Environmental Aspects (Category C). The project is expected to: (i) reduce deforestation and soil degradation through the implementation of sustainable forest management practices on a large scale; (ii) contribute to reducing the loss of carbon sequestration capacity and of biodiversity that results from prevailing non-sustainable exploitation of forest land and from uncontrolled forest fires ; (iii) reduce CO2 emissions through the promotion of better carbonization techniques and the promotion of more fuel efficient household stoves; (iv) reduce urban charcoal pollution and contamination (soil and water) and reduce incidence of respiratory diseases (continuous exposure to charcoal dust) among charcoal handlers and retailers (which are mostly women) through the modernization of the charcoal marketing standards (charcoal dust recovery and use of sealed bags); and (v) reduce indoor air pollution and reduce health risks to women through the promotion of improved woodfuel stoves.

ATTACHMENT A

The Niokolo-Koba National Park is located on the border of the administrative regions of Tambacounda and Kolda, on the Gambia River, near the Guinnean border on the South-East of Senegal. It is located inside a slightly undulating region with chains of hills reaching an altitude of about 200 meters, separated by vast areas of lower situated floodplains that are covered by water during the rainy season. The Gambia river and its two main tributaries, the Niokolo-Koba and the Koulountou, pass through the park. The vegetation is constituted of mainly dry forests, wooded savannas, Sudanian trees and shrubs with principal species such as Pterocarpus erinaceous, Bombax costatum, Erythrophleum africanum, Sterculia setigera and a number of Combretum species. According to FAO/UNEP (1981), 78% of the country's "forêt galeries" are located inside this park. About 1,500 plant species have been registered inside this park. An example of the region's valuable flora can be found in the laterite zones. Here several species reside at their most western limit of distribution, for example Eragrostis popeguini, Adelostigma perrottetii, Andropogon felicis, Cyathula pobeguini and several species of Lepidagathis. Around 80 mammal species , 330 bird species, 36 reptile species, 2 amphibious species and 60 fish species are found in the Park, along with numerous invertebrates. Carnivores include the panther Panthere pardus, the lion P. leo and the African wolf Lycaon picturs. The Park's three main water streams are the habitat for the buffalo Syncerus caffer, the antelope Hippotragus equinus, the eland of Derby Taurotrogus derbianus (some 1,000), the Colobus badius temmincki, the three African crocodiles: the Nile crocodile Crocodylus niloticus, C. cataphractus and Osteolaeomus tetraspis, four turtle species and the hippopotamus Hippopotamus amphibiu. The park is the last refuge in Senegal for the elephant Loxodonta africana. About 150 chimpanzees Pan troglodytes live in the forest galeries of the park and vicinity of Mount Assirik (the North-West limit of their distribution). Among the birds, we find the bustard of Denham Neotis cafra denhami, the Bucorvus abyssinicus, the Dendrocygna viduata and the eagles Polemaetus bellicouss and Terathopius ecaviatus.

ATTACHMENT B

Component I: Sustainable & Participatory Woodfuels Supply Management

1. Specific GEF monitoring and evaluation activities integrated in Component I: Sustainable & Participatory Woodfuels Management concern (i) the forest resources exploitation, (ii) the wildlife distribution, (iii) the socio-economic situation of the target group and (iv) the community-participation and institutional involvement.

2. The actors involved in these monitoring and evaluation activities will be the "Centre de Suivi Ecologique", the Forest Service, the villagers, some technical assistance and NGO's (yet to be identified) which are involved in natural resources management. Although the final evaluation of the impact of this component of the project will be a joint effort of the different actors, not all monitoring activities will always be undertaken by all actors. The exact role of each actor within the different activities will be discussed in the field.

3. Before the project interventions start, actual trends in land use in the districts of Kolda and Tambacounda will be investigated through satellite remote sensing, statistics and field trips. The focus will be on the:

- location of villages, roads, water streams, watershed areas, arable land, forest land, grazing land, fallow land cultivated land and severely degraded land,

- human population densities,

- composition and densities of wildlife and livestock,

- composition and productivity of crops,

- identification of forest types and their condition (maturing state, clear-cut, burnt etc.),

- identification of grazing land types and their condition (perenial, overgrazed, burnt etc.).

4. Participatory Rural Appraisal's (PRA) will be undertaken to verify the above obtained data and to gather more specific information on the present situation of:

- delimitation of village territory borders

- land tenure practices and conflicts (e.g. who decides where and when forest land will be cleared for agricultural expansion),

- village community structures,

- NGO's active in natural resources management,

- collaboration between village-communities, the Forest Service, Centre de Suivi-Ecologique, and NGO's,

- variety of income resources,

- composing elements of the agro-ecosystems (e.g. is hunting an important source of income, and so yes for whom?),

- identity of important non-fuelwood products present in the forests.

- identity of various stakeholders (with gender specification) involved in different components of the agro-ecosystems with special attention for the forest component (both fuelwood and non-fuelwood products)

- location and practice of subsistence fuelwood collection

- interest of different villages in collaborating with the project.

5. From these data the so-called "baseline situation on a regional level", not to confuse with the "Baseline Scenario" mentioned before will be described. This document will (i) represent an improved comprehension of the interaction of the different components of the agro-ecosystems, (ii) facilitate the selection of villages that will take part in the project and (iii) enable evaluation of the projects impact later on.

6. When, after a number of meetings, the collaborating villages are selected, a more detailed description of the baseline situation of these villages will follow. The information will be particularly detailed on the forest condition in regard of both flora and fauna species which are highly valued either by local and/or global standards. (e.g. the tree Pterocarpus erinaceus is of interest for timber, fuelwood and fodder production but is threatened in the region)

7. "Monitoring in the field at the regional level" will continue annually throughout the project cycle and will be concentrated on forest exploitation and wildlife and livestock distribution and density.

8. Concerning forest exploitation, the monitoring will include the location and seize of the deforested areas, the type of forest concerned and the apparent cause for deforestation (agricultural expansion, charcoal production, forest fire or other). If the cause was "clear-cut for charcoal production" the logging technique practised will be recorded (species harvested, height of cutting etc. ). If the cause was forest fire, the damage will be described. Subsequently, the villages where deforestation took place - excluding those which are selected within the project and therefore will have special treatment - will be visited to verify the apparent cause and to inquire whether the villages were in control and if so why, how and by whom the decision was made.

9. The forest exploitation monitoring will primarily be undertaken by the Centre the Suivi Ecologique in collaboration with the Forest Service. The visits to the villages will strengthen the collaboration between these services and the local communities while creating environmental awareness. Also the villages will be inspired to contact these services in case they are confronted with deforestation within their territory beyond their control.

10. In regard to wildlife and livestock distribution and density the monitoring will be undertaken seasonally as to cover the movements of the animals. This activity will most likely be executed by NGO's (e.g. IUCN) in collaboration with the Centre the Suivi Ecologique and the villagers. This again will strengthen the collaboration between services, NGO's and villagers while creating environmental awareness and discouraging illegal hunting.

11. "Monitoring in the field at the village level" in the selected villages will continue annually after the implementation of sustainable forest management. The monitoring will again be focused on forest exploitation and distribution and density of wildlife and livestock.

12. During forest exploitation monitoring, the parameters to be investigated are:

- location, seize and condition of severely degraded parcels which are put aside and receive regeneration treatment

- location and seize of deforested area for agricultural expansion

- location and timing of forest fires

- location and timing of forest grazing

- location and amounts of wood harvested for charcoal production

- harvesting techniques practised (clear-cut, or selective logging)

- height of logging, diameter and identity of species harvested

- forest damage caused by other reasons such as natural disasters

13. Within the village community, the results will be compared with the original sustainable forest management plan and if necessary the management plan for the next year will be adjusted accordingly. If, based on the results, the new forest management appears to create a need for adjustment in other areas of the agro-ecosystem, assistance in these areas will be provided by the project (e.g. intensification of agriculture). This process of regular adjustment of forest management planning will be a learning process for both the forest agencies and the villagers, while strengthening their collaboration and making them independent of technical assistance after the project period.

14. In regard to the monitoring of wildlife and livestock density and distribution, the number per species (with distinction of common, endemic or threatened species if it concerns wildlife) and the location and the vegetation type where they were encountered will be recorded seasonally. As in the regional monitoring, this activity will strengthen collaboration between services, NGO's and villagers while creating environmental awareness and discouraging illegal hunting.

15. After the project period of 7 years, the compilation of data resorting from the annual monitoring and evaluation activities on both regional and selected villages level, will be used to evaluate the impact of the project on forest resources exploitation, biodiversity conservation, socio-economic situation, community-participatory and institutional strengthening within the region.

Component II: Demand Management and Inter-fuel Substitution Options (Non-GEF Component)

16. Within Component II: Demand Management and Inter-fuel Substitution, the monitoring and evaluation activity relates to the improved woodfuel stoves.

17. The monitoring and evaluation will be a joint action between the producers, the retailers, the users, technical assistance and NGO's (yet to be identified) with particular interest for issues related to women and either health or environment. The exact organisation of the monitoring and evaluation will be designed by the actors in the field.

18. Before starting the use of improved stoves, monitoring of potential users will focus on:

- number of people constituting one household

- number and type of woodfuel stoves used

- daily cooking tasks of these stoves

- daily amount of woodfuels used per household

- how and from where woodfuels are obtained

- woodfuel prices and mode of payment (how, who)

- average lifetime of woodfuel stoves

- price paid for woodfuel stoves and mode of payment ( how, who)

- where is being cooked, indoors or outdoors

- symptoms of respiratory problems within the household related to the smoke of cooking

- complaints about traditional woodfuel stoves

- interest in improved woodfuel stoves

19. These data will be used for the description of the baseline situation and for the selection of potential users interested in collaboration in the monitoring procedure.

20. When a traditional woodfuel stove is to be replaced by an improved woodfuel stove the user will be asked to record: (i) the daily woodfuel use since using the improved woodfuel stove, (ii) whether the situation in regard to respiratory problems has been improved in case there were such problems prior to the use of improved stoves, (iii) the appreciation of the improved stove in general and (iv) suggestions for modification of the improved stove if considered important.

21. The results will be used to (i) verify the claimed burning efficiency of the improved stoves (ii) to verify its supposed mitigation power related to respiratory problems and (iii) to consider users comments in the production of new stoves.

Broad Development Goals

1. Senegal's traditional energy sector policy is directed towards meeting the rapidly growing urban demands of traditional forest-based fuels by the development of community based sustainable forest management, by the introduction of efficient carbonization of fuelwood , by the promotion of improved woodfuel stoves -- essentially charcoal -- and by promoting inter-fuel substitution. This strategy is expected to minimize further environmental degradation and to foster rural development.

I. Business-as-Usual Scenario

2. At this point in time, the Tambacounda and Kolda regions (located in the southeastern part of the country, Figure 1) are the only regions of the country which have sufficient resources to be able to supply non-local demand (urban) for woodfuels, estimated in 1992 at some 520,000 tons of fuelwood and 330,000 tons of charcoal (equivalent to some 1.8 million tons of fuelwood). Within these regions some 30,000 ha of forested land is annually clear-cut for the commercial production of urban woodfuels while no measures are undertaken to allow regeneration. This non-sustainable deforestation takes place in addition to continuous destruction of forest by uncontrolled forest fires and relentless agricultural expansion. Due to inefficient carbonization of fuelwood toward charcoal (18% vs. 30%), the exploitation pressure on forests is unnecessary high. Presently, the charcoal business is effectively in the hands of some 20 urban families with little participation in the production activities or the sharing of the profits by the rural communities. Although specific governmental regulations exists to orient and monitor the exploitation of the forest resources and the Forestry Service (Ministry of Environment and Protection of Nature) is responsible for the conservation of the country's forest patrimony, the Government does not have the financial resources or manpower capacity to control the situation on the ground let alone to implement government-run sustainable forest resource management in the country.

3. In the absence of any form of integrated land-use planning and/or strategies, the forest areas that are clear-cut are not allowed to regenerate because after the forest is removed the land is immediately used either for agriculture, grazing or subsistence fuelwood collection. The situation of Senegal follows the same destructive land-use pattern consistently observed throughout other developing countries. The continued non-sustainable (clear-cut) commercial exploitation of forest for the supply of woodfuels and particularly of charcoal, results in a continuous loss of carbon sequestration capacity

(decrease of forest stocks) and hence an increase in net CO2 emissions. In addition to the resulting generalized environmental degradation, the current geographic location and the expected exploitation expansion path poses a considerable risk to the Niokolo-Koba National Park, which is located in the intersection of the Tambacounda and Kolda regions, and which has been classified as a national and international "Biosphere Reserve".

II. Baseline scenario

4. The Forestry Service would implement a traditional free standing forestry management project. Very little collaboration would take place with the population residing in the project area. Sustainable forest management would be mostly undertaken by the Forestry Service. Ideally, they would partially clear-cut the forest based on the regeneration cycle of the forest ecosystem and allowing for fallow periods, prevent forest fires and protect the area against other uses such as agricultural and grazing activities. However, because of the Government's limited manpower, they would only be able to achieve these goals partially (50%). Only Forestry Service agents would receive training in sustainable forest management. The project would cover a non-contiguous and dispersed target area of 300,000 ha within the Tambacounda and Kolda regions, most likely close to existing roads to facilitate the access. As the rural population would have a minimal involvement in the implementation of the project and in the sharing of the resulting economic benefits, the project - being mostly dependent on continuous and direct governmental management, would only have a limited effect within the specific target area and for the duration of the project. No improved charcoal production would be introduced because this has been tried earlier by the Government through the promotion of the "Cassamance kiln" and did not work due to poor program design and implementation. On the other hand, an improved stove dissemination program by the private sector and NGO community would be supported to reduce woodfuels demand. At the end of the implementation of the free-standing forestry management project -- and in the absence of a follow-up project -- the sustainable management practices introduced in the target area would not be self-sustainable, the area's forest stock would be prey to the traditional non-sustainable exploitation and land-use patterns and, thus, the accrual of global environmental benefits would end. Furthermore, as carbon sequestration capacity, CO2 emissions and biodiversity are directly related to the state of conservation of the forest stocks, in the long-term, the Baseline Scenario would equal the Business-as-Usual Scenario in terms of global environmental benefits.

Global Environmental Objective

5. The global environmental objective of the proposed GEF financing would be to bring the net CO2 emission associated to the production of charcoal in the project area to zero, to maintain and expand the existing carbon sequestration capacity, and to protect and maintain the biodiversity in the Niokolo-Koba National Park which would be endangered by both the Business-as-Usual and the Baseline scenarios.

III. GEF Alternative Scenario

6. Under the GEF Alternative Scenario, sustainable forest management, by selective logging, would be implemented by transferring the responsibility for the management and exploitation of the forest resources to the rural communities, and the project area would be specifically established to form a protective buffer zone around the Niokolo-Koba National Park (Figure 2). Sustainable forest management plans would be designed together with the rural populations taking into account the multifunctionality of the existing agro-ecosystems and thus the socio-economic parameters and interests of the local community. Integrated forest fire strategies would be developed instead of total forest fire prevention by exclusion. Rural and community development activities would be undertaken and support for the establishment of rural micro-enterprises would be provided in order to motivate the local populations to adequately manage and develop the rural environment. Improved carbonization, reaching 30% efficiency, would be introduced. All these actions together would reduce losses in carbon sequestration capacity and in biodiversity and would result in zero net CO2 emission from the woodfuels-related activities in the project area. Institutional development of and capacity building at the governmental agencies and community structures would also be included to support sustainability and proliferation of the project's achievements after the completion of its implementation. Monitoring activities would be implemented to evaluate the effects and, if necessary, to adjust management strategies.

Costs

7. The difference in cost of the project between the Baseline and GEF Alternative scenarios is US $ 4.66 million for the implementation of activities related to community-participatory activities, integrated natural resources management, improved carbonization and monitoring and evaluation of global environmental benefits in the project's Component I. Table 1 presents a summary of the cost of project Component I under the Baseline and GEF Alternative scenarios.

Costs Effectiveness

8. It is estimated that over the project duration of 7 years the GEF Alternative Scenario would achieve a total CO2 emission abatement of 1.1 million tons at a unit abatement cost of US $ 4.30/ t CO2. Over 15 years, the GEF Alternative scenario would result in a CO2 emission abatement of 4.5 million tons at a unit abatement cost of US $ 1.04/t CO2.

Additional Domestic Benefits

9. In addition to a direct transfer of welfare to the rural communities resulting from the management and commercial exploitation of woodfuels, it is expected that the rural population will be able to obtain additional benefits and revenues from other activities such as Agroforestry, livestock keeping and exploitation of non-fuelwood forest products. While quantification in monetary terms is not possible, the protection and maintenance of the Niokolo-Koba National Park would enhance the country's and the project area eco-tourism prospects. Attachment A presents a descriptive summary of the Niokolo-Koba National Park.

CO2 emission abatement

10. Under the Business-as-Usual Scenario (clear-cut followed by grazing, crop growing and/or continuous subsistence wood collection) no forest re-growth would occur. Therefore, the net emission of CO2 would equal the total amount emitted by the burning of wood harvested (100% of CO2 emission level). The Baseline Scenario (sustainable forest management achieving only 50% of sustainability) would result in a net CO2 emission level of 50% during the life of the project. The GEF Alternative Scenario (achieving 100% forest regeneration during and after project implementation) would result in a zero net CO2 emission level.

11. The productivity of the savanna woodlands in the area is estimated at 30 m3 of fresh wood per ha equaling 15 ton of fuelwood. Under effectively sustainable forest management, 1 ton of fuelwood/ha/year can be harvested. This is the harvest intensity simulated under the GEF Alternative Scenario. For the Business-as-Usual Scenario and the Baseline Scenario an annual harvest intensity of 1.7 t/ha is simulated in order to arrive at an equal amount of charcoal production in each of the different scenarios, given a carbonization efficiency of 30% in the GEF Alternative Scenario and of 18% in the other scenarios. Thus, the comparison of the scenarios is based on differences in amounts of fuelwood harvested and the corresponding net CO2 emissions resulting from varying degrees of forest management sustainability. The amount of carbon sequestered in 1 ton of harvested fuelwood equals 1.7 t of CO2. The impact of possible natural hazards such as drought, windstorms or diseases was not taken into account.

12. The total area managed during the implementation of the project increases as follows:

year 1: none (detailed studies and preparation of management plans)

year 2: 15 000 ha

year 3: 40 000 ha

year 4: 80 000 ha

year 5: 130 000 ha

year 6: 200 000 ha

year 7: 300 000 ha

13. A comparison was made between these scenarios during the 7 year project - starting wood harvest in the second year- and over 15 years. The 15 year time period was chosen because it equals the period after which any fixed area in the region under an exploitation of 1 t of fuelwood/ha harvested by clear-cutting without regrowth, would be totally clear-cut.

14. For the sake of simplicity, this approach ignores the influence of the different scenarios on the sequestration capacity of the forest ecosystem as a whole by not taking into account the varying influences of selective logging and clear-cutting on aspects such as forest age, species composition, underground biomass, soil condition, herbaceous vegetation, fauna and alternative land use. However, since under both the Business as Usual Scenario and the Baseline Scenario all forested land will finally be converted in either pasture or agricultural land, the GEF-alternative Scenario would appear even more favorable on the long term in regard of CO2 emission abatement because the carbon sequestration capacity of forest land is generally much higher than that of pasture or agricultural land.

15. In summary, the approach has been very conservative for several reasons since (i) the sustainable fuelwood harvest intensity of 1 ton per ha in the GEF-Alternative Scenario represents the lowest limit within a range of 1 to 3 ton per ha., (ii) the Baseline Scenario is maintained at 50% sustainability throughout the 15 years, while a gradual drop is expected after the 7 years, (iii) the positive influence of controlled forest fires is not included, (iv) conversion of forest land to pasture or agricultural has not been included and (v) no multipliers were applied to account for expected positive influence on forest management in the whole districts of Kolda and Tambacounda.

16. Figure 3 presents the cumulative amounts of fuelwood harvested to produce equal amounts of charcoal under the carbonization efficiencies of the different scenarios over the 15-year period. The carbonization efficiency under the GEF Alternative Scenario is 30% and under the Baseline Scenario and the Business as Usual Scenario is 18%.

17. Figure 4 presents the cumulative amounts of net CO2 emission under the different degrees of harvest sustainability of the different scenarios over the 15-year period. The harvest sustainability is zero in the Business as Usual Scenario, 50% in the Baseline Scenario and 100% in the GEF Alternative Scenario.

Cost

18. The difference in cost of the Component I between the Baseline and GEF Alternative scenarios is US $ 4,660,000. This difference results from the implementation of: (i) technical activities design to enlarge the project from a simple free standing forestry project to a natural resource management project and to include monitoring and evaluation systems and mechanism for the GEF Alternative Scenario's forest resource sustainability and biodiversity objectives; (ii) activities designed to increase the participation of the rural community in the strict enforcement of sustainable forest management and, thus, expected to result in the achievement of the global environmental benefits. Tables 2 and 3 respectively present a detailed descriptive cost structure of the Baseline and GEF Alternative scenarios for the project's Component I.

Cost effectiveness

19. The unit abatement cost of the project's Component I under the GEF Alternative Scenario is US $ 4.30/t CO2 after 7 years and US $ 1.04/t CO2 after 15 years.

CO2 emission abatement

1. The Government of Senegal has long sought to promote the use of improved stoves. However, it has been unable to make the use of improved stoves either operational or sustainable. This is so because most stove programs implemented until now were run as Donor-Government managed activities, which invariably collapse as soon as donor financing and technical supervision ran out. As a rule, these projects worked on the basis of large consumer price subsidies, whereby there was little long-term incentive for the private sector to produce stoves outside direct donor financed pilot programs. When the cost of the expatriate technical assistance is considered, it is estimated that the cost per disseminated stove elevates well beyond the US $ 100 level. On the other hand, during recent policy analysis work (RPTES Program), the Government reached the conclusion that a new generation of consumer-accepted improved charcoal stoves (Sakanal, Diambar, etc.) exists and is already being successfully produced and marketed at full cost by several NGO's in the principal urban centers of the country. Those new initiatives are severely constrained in volume of operation (10,000 to 20,000 stoves/year) by a lack of investment and working capital. Thus, lack of access to credit or other financial instruments is the principal constraint to the successful market-based dissemination of the promising new generation of improved charcoal stoves by small scale and micro-enterprises and NGO's. GEF financing of this activity would contribute to the elimination of market barriers.

2. Within that context, the Baseline Scenario would be limited to the promotion by Government of the improved stove concept within its general consumer education activities and campaigns. No other investment or technical assistance activities would be carried out.

3. Within an "Environmentally enhanced" scenario - parallel to the GEF Alternative scenario -- the project would promote for a period of five years (shorter than the life of the project) the production and marketing of improved stoves by the private sector (small and micro-enterprises) and/or NGO's at full factor cost by establishing a rotatory working capital fund (US $ 300,000) for small and micro-enterprises and NGO's which have market-proven stoves but lack the necessary resources to invest in the expansion of their production capacities. Additionally the project would undertake basic monitoring and evaluation of the improved stove programs and would set up a professional improved stove promotion campaign.

4. Within the GEF Alternative scenario, a total of 225,000 improved charcoal stoves would be produced and sold through the market during the first five years of the project. Stove production and sales would reach the following cumulative schedule:

year 1: 2,700

year 2: 8,300

year 3: 25,000

year 4: 75,000

year 5: 225,000

5. The CO2 emission abatement of this activity was calculated for the project period of seven (7) years and for over a 15-year period (following the same standard used for the GEF funded activities). The underlying assumption for extending that calculation to the 7 and 15 year periods is that once the project manages to "kick-start" the private sector/NGO based production of improved stoves and the consumers have had a five year cycle of stove usage, there would be a continuously increasing market demand for stoves, without the need for continued governmental support. Based on the results of the evaluation of the 5-year program, the Government will either continue to use the rotatory fund as such or will apply the funds towards consumer energy education and awareness programs.

6. The new generation of improved charcoal stoves reduces the consumption of charcoal by 1.6 kg per day per household. Burning 1 kg of charcoal equals the emission of 3.2 kg CO2. In line with those assumptions, the implementation of the improved charcoal stove activity within the GEF alternative Scenario would result in a net total CO2 emission abatement of 1.5 million tons over 7 years and of 4.8 million tons over 15 years. Figure 5 presents the cumulative net CO2 emission abatement expected to result over a 15-year period from the implementation of 225, 000 improved stoves. It was assumed that a permanent park of 225,000 improved stoves would remain in use by households through continuous reposition after the project target is met at the seventh year of implementation. If the improved charcoal stoves result to be less efficient than what has been estimated (and documented) thus far, the CO2 abatement benefit of this activity may be slightly lower than anticipated.

FIGURE 5

Cost

7. The total cost of the proposed 5-year improved stoves activities is US $ 500,000. This cost would be divided between: (i) a research and analysis funds to review and evaluate private sector and NGO investment proposals; (ii) a rotatory investment fund (US $ 300,000) to support selected private sector/NGO initiatives; (iii) support to pilot sales and promotion campaigns (US $ 100,000); and (iv) monitoring and evaluation of the impact of the improved stoves (US $ 50,000).

8. The difference in cost of the Component II between the Baseline and the enhanced scenario (US $ 500,000) is exclusively attributed to the implementation of the improved stoves activities. Tables 4 and 5 respectively present a descriptive cost structure of the Baseline and the Environmentally Enhanced scenarios for the project's Component II.

Cost effectiveness

9. The unit abatement cost of the project's Component II under the Environmentally Enhanced Scenario is US $ 0.34/t CO2 after 7 years and US $ 0.10/t after 15 years.

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