93280 INDONESIA National Program for Community Empowerment in Rural Areas (PNPM Rural) Environmental Pilot Program (PNPM Green) Results Evaluation: Sustainable Natural Resource Management Through PNPM Green Investments A Rural Livelihood Analysis Canadian International Development Agency PSF Office Jakarta World Bank Satellite Office - PNPM Support Facility Jl. Diponegoro No. 72 Jakarta 10310 Indonesia Phone: (62 21) 314 8175 Fax: (62 21) 3190 3190 Printed in September 2013 Results Evaluation: Sustainable Natural Resource Management Through PNPM Green Investments is a product of staff of the World Bank. The findings, interpretation and conclusion expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the government they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomination and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement of acceptance of such boundaries. Photo credit: PNPM Green Evaluation Team INDONESIA National Program for Community Empowerment in Rural Areas (PNPM Rural) Environmental Pilot Program (PNPM Green) Results Evaluation: Sustainable Natural Resource Management Through PNPM Green Investments A Rural Livelihood Analysis Vivianti Rambe Steffen Johnsen November 2012 Table of Contents Acknowledgements iv Glossary & Acronyms v Executive Summary 1 Chapter 1 Introduction 5 1.1 Overall Objective and Indicators of Success 5 1.2 Background to PNPM Green 5 1.3 Theoretical Framework for the Evaluation 6 1.4 Organization of Report 7 Chapter 2 Design and Methodology 9 2.1 Scope of the Evaluation and Limitation 9 2.2 Research Questions 9 2.3 Evaluation Studies 11 Chapter 3 Main Results 15 3.1 Economic Viability 15 3.2 Restoration and Enhancement of Natural Assets 18 3.3 Social Acceptability 21 Chapter 4 Conclusions and Recommendations 29 4.1 Conclusions 29 4.2 Recommendations 30 References 32 Annexes 33 Annex 1. Executive Summary Of Economic And Livelihood Study 33 Annex 2. Executive Summary Of Mhp-Roi Study 35 Annex 3. Executive Summary Of Spillover Effects Study 37 Annex 4. Results Evaluation Matrix 38 Annex 5. Study Locations 40 Annex 6. Methodology For Benefit Transfers 44 Results Evaluation: ii Sustainable Natural Resource Management Through PNPM Green Investments List of Figures Figure 1. A fish aggregating device (rumpon) from South East Sulawesi, Wakambura. 16 Figure 3. Benefits of Mangrove Planting 18 Figure 4. Benefits of Tree Planting 19 Figure 5. Reported changes in fish numbers since 2010 (case study in North Sulawesi; MPA sub-project) 21 Figure 6. Changes in fish larvae and non-fish marine biota since 2010 (case study in North Sulawesi; MPA sub-project) 21 Figure 7. Changes in condition of coral reefs since 2010 (case study in North Sulawesi; MPA sub-project) 21 Figure 8. Percentage of Sub-Project Categories 22 Figure 9. Project beneficiaries 23 Figure 10. Composition of project beneficiaries 24 Figure 11. Level of skills acquired through participation in sub-project groups 27 List of Tables Table 1. Research questions and link to sustainability elements 10 Table 2. Summary of values for expected household incomes, calculated by the benefit transfer method 16 Table 3. Expected total income (IDR Millions) from all sub-projects, based on respondent report in household interviews*. 17 Table 4. GHG Emission Reductions from Fossil Fuel Displacement 20 Table 5. PNPM Green Sub-Project and Activity Categories 22 Table 6. Sub-project categories as a percentage of ‘still active’ respondents 23 Table 7. In-kind contribution to sub-project categories 26 Table 8. In-kind contribution of MHP sub-projects 26 Table 9. Role of community leaders at sub-project meetings 26 Table 10. PNPM Green Capacity Building 27 Table 1. Locations – The Economic and Livelihood Study 40 Table 2. MHP-ROI Study locations 42 Table 3. Spillover Effects Study locations 43 List of Boxes Box 1. 24 Box 2. 25 iii Acknowledgements The authors wish to thank Chloe Olliver (PNPM Green Task Team Leader) and Susanne Holste (PNPM Rural Task Team Leader) who have consistently provided guidance and support in the development of this evaluation report. Special thanks go to Timothy Brown (EAP, World Bank), Comfort Olatunji (SASDI, World Bank), Damayanti Buchori (PSF, AusAid) and Soeryo Adiwibowo (Human Ecology Faculty, IPB) who generously took the time to review, and provide comments on, the drafts of this report. The Government of Indonesia, through the Ministry of Home Affairs, has provided tremendous support for this program and the evaluation over the past years. Special thanks go to the Directorate of Village Natural Resources and Appropriate Technology (SDATTG) for their generous support of PNPM Green and the evaluation. The results evaluation report drew from three separate studies: the Economic and Livelihood Study (by LPM Equator), Micro-Hydropower – Return on Investment (MHP – ROI) Study (conducted by Castlerock), and the Spillover Effects Study (conducted by CARDS-IPB). Many reviewers provided valuable input that supported completion of these studies. These included the World Bank Office Jakarta – Environment Unit, PSF-PNPM Green Task Team (Damayanti Buchori, Prianto Wibowo and Soren Moestrup), PSF-M&E team (Lily Hoo and Yulia Herawati), PMD’s PNPM Green Secretariat, CSO and NGO partners (Operation Wallacea Trust and Wildlife Conservation Society), and also staff from National Management Consultant (NMC). Financial support for the overall PNPM Green program and this final evaluation comes from the Government of Canada and the PNPM Support Facility which consists of donors from Australia, Denmark, the Netherlands, and the United Kingdom. The findings, analyses, and conclusions expressed in this paper are entirely those of the authors and should not be attributed in any manner to the World Bank, its affiliated organizations, members of its Board of Executive Directors, or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication, and accepts no responsibility for any consequence of their use. Results Evaluation: iv Sustainable Natural Resource Management Through PNPM Green Investments Glossary & Acronyms Bt Transfer value (the current value of actual object benefits CDD Community-driven Development CO2 Carbon dioxide CSO Civil Society Organization DAS Daerah Aliran Sungai (Water Catchment Area) DPL Daerah Perlindungan Laut (Marine Protected Area) GHG Greenhouse Gas GOI Government of Indonesia Ha Hectare IDR Indonesia Rupiah IGA Income-Generating Activity KDP Kecamatan Development Project KPMD Village cadres kWh kilowatt hours LMP Lingkungan Mandiri Perdesaan MDST Musyawarah Desa Serah Terima (Handover Village Meeting) MHP Micro-Hydropower MIS Monitoring information system MPA Marine Protected Area (Daerah Perlindungan Laut) NGO Non-government organization NMC National Management Consultant NRM Natural Resource Management NVP Net present value PLN Perusahaan Listrik Negara (Government-owned electricity company) PMD Pemberdayaan Masyarakat Desa (Village Community Empowerment of Ministry of Home Affairs) PNPM Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment Program) PSF PNPM Support Facility REDD Reducing Emissions from Deforestation and forest Degradation RJPMDes Rencana Pembangunan Jangka Menengah Desa (medium-term village development plans) ROI Return on Investment SDATTG Directorate of Village Natural Resources and Appropriate Technology TP3 Tim Pelaksana Pemelihara Prasarana (Infrastructure Maintenance Team) TPK Tim Pelaksana Kegiatan (Implementing Team) TPU Tim Penulis Usulan (Proposal Writing Team) TSU Technical Support Unit UPK Unit Pelaksana Kegiatan (Activity Management Unit) UPT Unit Pelaksana Teknis (Technical Implementing Unit) USD United States Dollars v PNPM Green aims to improve environmental and natural resources management (NRM) and associated governance, while increasing household incomes in poor communities, and empowering local groups who prepare and execute the sub-projects and activities Results Evaluation: vi Sustainable Natural Resource Management Through PNPM Green Investments Executive Summary The PNPM Green program has been implemented for four years. The studies reported in summary here were undertaken to identify the benefits of the program, and to examine to what extent the program meets its objective to make the utilization of natural resources by rural communities sustainable. PNPM Green aims to improve environmental and natural resources management (NRM) and associated governance, while increasing household incomes in poor communities, and empowering local groups who prepare and execute the sub-projects and activities. To assess the effects and outcomes of PNPM Green in targeting these objectives, the Economic and Livelihoods Study applied the concepts of financial, natural, human, and social assets, as well as ‘influence and access’. The Micro-Hydropower – Return on Investment (MHP – ROI) Study analyzed Micro-Hydropower (MHP) schemes using a business assessment methodology. This was expanded by incorporating non-tangible and social benefits of MHP schemes. The Spillover Effect Study measured the extent of benefits in non-participating communities. These studies indicate that participation of beneficiaries in PNPM Green sub-projects and activities is likely to be higher if the sub-project: (a) conforms to the priority needs of participants’ livelihoods; (b) provides immediate benefits to the community; (c) directly increases household incomes in participating communities; (d) is supported by local values, local regulations, or local knowledge; and (e) is co-facilitated by community leaders and local government officials. Sub-projects with these characteristics are also more likely to be replicated by other villages. Active sub-projects generate positive results in terms of economic viability. This is related to increased direct household income, mainly from selling products related to the sub-projects, and savings related to reductions in expenditure. In the future, increased economic viability is expected to continue, as measured via household income or environmental economic methods. Some PNPM Green sub-projects and activities support income-generating activities. When these are successful, income generation mainly occurs at the household level, where households may report increased income from sales of products such as fruit or fish. Renewable energy sub-projects may reduce expenditure and thereby improve household financial assets. This may enable some small businesses to expand trading hours or extend the scope of their operations. It is expected that enhanced economic productivity will increase over time, generating significant increases in community income. The majority of MHP schemes appear to be working well and provide a valuable service to communities. The capital cost per installed capacity is comparable to other MHP schemes, and all communities are collecting more revenue than they are disbursing in operational costs. From a simple business perspective, the MHPs are not viable in generating financial return. However, MHP schemes in rural communities are not expected to be profitable investments; the primary worth of MHP schemes relates to wider social benefits, which appear to be sustainable. 1 PNPM Green sub-projects and activities are likely to generate significant benefits related to restoration and enhancement of natural assets (environment and natural resources), and improved ecosystem services. As planted trees and mangroves mature, many of these benefits will increase over time. The benefits stem from improved erosion control, improved protection against storms, increased productivity of marine food webs, and improvements in soil fertility. Many MHP schemes generate additional environmental benefits: many MHP schemes encourage communities to manage upstream forests or develop small-scale reservoirs, which can increase fish availability or support local tourism. Enhancing ecosystem services may also generate economic benefits for households, communities, and wider society. The calculated value of these is significant; incorporating this value in future analysis would enhance existing positive economic returns. Social acceptance of PNPM Green sub-projects and activities is strong only where community investments are related to individual livelihood priorities. Because economic and environmental benefits of sub- projects mostly occur in the medium-long term, most investments need to be maintained by participating communities. The capacity to maintain and manage these investments is weak; the main options to enhance local capacity are limited to participation in implementation groups and formal meetings conducted by community facilitators. In addition, natural resource governance was not been successfully strengthened by sub-project implementation; lack of networks or links with existing social groups appears to be the reason for this. Therefore, it is crucial to strengthen social assets to achieve sustainable NRM. This evaluation shows that PNPM Green has increased productivity of community investments related to NRM. These investments have created economic and financial benefits for participating communities. Short-term benefits are small, but benefits will increase over the longer term. PNPM Green has also created economic and natural benefits for non-participating communities. These positive findings demonstrate the scope of benefits that PNPM Green can bring to communities. However, without more widespread involvement of communities in managing investments, the sustainability of these NRM-related sub-projects and activities remains uncertain. In other words, sustaining NRM-derived economic gains and improvement of natural assets will be difficult unless social assets are also strengthened. Results Evaluation: 2 Sustainable Natural Resource Management Through PNPM Green Investments Executive Summary 3 Results Evaluation: 4 Sustainable Natural Resource Management Through PNPM Green Investments Chapter 1 Introduction 1.1 Overall Objective and Indicators of Success The main purpose of this evaluation is to measure whether the PNPM Green is meeting its intended objective. The development objective of PNPM Green is to make the utilization of natural resources by rural communities sustainable. Key indicators to measure program success are: 1. Increased community investment in, and improved management of, ‘green’ sub-projects; 2. Increased awareness among community beneficiaries and local government officials about the livelihood benefits associated with improved natural resource management (NRM) practices; 3. Increased capacity of local government and community representatives to further incorporate environmental sustainability into local development planning, implementation, and monitoring processes. 1.2 Background to PNPM Green The World Bank Indonesia Social Development Sector currently provides assistance to the Government of Indonesia (GOI) to implement the National Program for Community Empowerment in Rural Areas, or Program Nasional Pemberdayaan Masyarakat (PNPM Rural). PNPM Green is a pilot program within PNPM Rural. PNPM Green was designed to further integrate environmental issues into the local community-driven development (CDD) planning process. Operationally, PNPM Green follows the same approach as PNPM Rural; that is, block grants (investments) are disbursed through the national budget system at sub-district level, to fund sub-projects and activities. These sub-projects and activities are chosen by communities through a gender-inclusive, competitive, and participatory process. PNPM Green differs from PNPM Rural in that it is only active in specific target locations on Sulawesi and Sumatra islands (78 sub-districts, within 27 districts in 8 provinces). Block grant funding is allocated to support community investment in green sub-projects. There are four key types of sub-projects supported by PNPM Green Investments: NRM; Income Generating Activities (IGA); Renewable Energy; and Capacity Building. PNPM Green does not restrict block grant funding to specific types of green sub-projects. Eligible sub-projects are expected to demonstrate direct or indirect positive environmental impacts, with 5 an emphasis on improved NRM practices, ecological conservation, environmentally-sensitive livelihood activities, and/or increased use of renewable energy. In addition, PNPM Green funds (a) GOI-contracted facilitators/consultants who provide technical assistance to participating communities, and (b) grants to local Civil Society Organizations (CSOs), who raise environmental awareness and provide training to community beneficiaries and local government officials. To date, with financing from four annual rounds of block grants (2008, 2009, 2010, and 2011), participating communities have chosen more than 2,200 diverse sub-projects and activities to implement. PNPM Rural (and its predecessor, the Kecamatan Development Project, KDP) has been implemented over the past ten years. A number of studies have examined outcomes of these programs, measuring the economic rate of return of small-medium scale infrastructure projects financed with block grants, and surveying household income throughout the program’s target locations. However, it is more complicated to measure economic rates of return for the types of activities financed through PNPM Green block grants. For example, many funded sub-projects involve tree planting (e.g. agro-forestry, nursery development etc.) or capacity building activities. These do not always demonstrate short-term economic returns. In such a situation, measuring income in terms of cash received is unlikely to capture the full financial benefits over the longer term. Because of these issues, the current evaluation will not only focus on cash-based monetary income, it will focus on how local livelihoods are affected by participation. 1.3 Theoretical Framework for the Evaluation Three key concepts underpin the theoretical framework of this evaluation: sustainable NRM, sustainable rural livelihoods; and elements of sustainability. Firstly, sustainable NRM refers practices that support the productivity, services and activities required for livelihoods. To be sustainable, practices need to be not only economically viable, but also environmentally and socially viable (Chambers and Conway, 1992; Conway, 1985; Holling, 1993; Scoones, 1998). The Sustainable Rural Livelihoods Framework is an approach to analyzing links between livelihoods and natural resource use (Carney, 1998; Scoones, 1998). The central idea of this framework is that sustainability of livelihoods depends on the access, use and development of different types of assets. These assets are considered to be different types of capital that can be used directly or indirectly to generate livelihoods. This framework identifies several basic types of capital or assets: natural, financial, human and social (Carney et al., 1999). This approach ensures that all descriptive analysis links NRM practices with economic and social sustainability, mapping the benefits and outcomes of investments funded by PNPM Green. In order to frame objectives and indicators within the concept of sustainable NRM in rural communities (a core principle of PNPM Green), three main elements of the sustainability process were identified and used to frame the evaluation. The three elements are: a. Economic viability: this refers to economic or financial assets which are essential for the sustainability of rural livelihoods. Some economic assets may be derived from natural assets, such as planted trees producing fruit or timber (Project Indicators 1 & 2); b. Restoration and enhancement of natural assets: this includes preventing degradation of natural assets, and strengthening ecosystem services that support livelihoods and resources (Project Indicators 1 & 2); c. Social acceptability: this refers to social assets or resources that enable individuals or communities to pursue livelihoods that require collective action. This element also includes human assets, such as the skills, knowledge and abilities that enable the successful pursuit of livelihoods (Project Indicators 1, 2, & 3). These three elements of sustainable NRM were used this in this evaluation to measure the effectiveness of PNPM Green in integrating sustainable NRM into a community empowerment program. Results Evaluation: 6 Sustainable Natural Resource Management Through PNPM Green Investments 1.4 Organization of Report Firstly, this report will describe the evaluation design, highlighting methodological approaches to measuring program benefits, and describing the framework for multi-dimensional analysis that has been used in other developing countries, particularly in rural areas. Secondly, the report will present findings based on the three sustainability elements described in section 1.3. Finally, the report will present conclusions from the results evaluation, and provide practical recommendations for design of the next phase of PNPM Green and integrating NRM into CDD operations in rural communities. Chapter 1 Introduction 7 Results Evaluation: 8 Sustainable Natural Resource Management Through PNPM Green Investments Chapter 2 Design and Methodology 2.1 Scope of the Evaluation and Limitation This evaluation focuses on examining whether the program achieved its intended objectives, and identifying the benefits and costs of the program. The PNPM Green task team decided to not conduct a full evaluation of broader impacts, due to a range of methodological challenges. These include: the lack of baseline data against which to assess change; the complex relationships between availability and use of diverse natural resources; and the complexity of evaluating benefits and costs across diverse spatial scales. 2.2 Research Questions Based on the four elements of the NRM sustainability principle, these evaluations were designed to address a series of research questions. These are listed in Table 1. 9 Table 1. Research questions and link to sustainability elements Sustainability Research Questions Financial Assets Natural Assets Social / Human Elements Assets Economic 1. What are the  Identify both Viability economic and economic and livelihood benefits livelihood benefits to gained by different stakeholder investments? groups, and examine the significance of these benefits to overall livelihood of stakeholders  Estimate direct income-related earning by participants and collective community income earned from activities which may be distributed as a household dividend Restoration & 2. How do investments  Using economic  Assess the  Identify enhancement of improve ecosystem valuation, quantify effectiveness improvements in natural assets services? the benefits of of community capacity, uptake 3. How do investments ecosystem services, investments of new skills, influence capacity to and how they in enhancing and knowledge maintain and manage contribute to local ecosystem required sub-projects, and to household and services to manage optimize ecosystem community incomes investments services? and maintain ecosystem services Social 4. Who are the program  Determine the  Identify increases  Identify key Acceptability beneficiaries? type and extent of in rate of individuals or What is the level benefits achieved productivity groups affected of productivity for community by investments and participation investments and how they in community  Identify the have benefited investments? link between  Determine the 5. What are the social community effectiveness of benefits gained from investments capacity building participation in sub- and livelihood with project projects and activities? priorities beneficiaries 6. Has the investment in managing benefited villagers community beyond participating investments communities? and maintaining productivity  Assess NRM governance, local empowerment, and identify livelihood benefits.  Identify potential spillover benefits to non- beneficiaries Results Evaluation: 10 Sustainable Natural Resource Management Through PNPM Green Investments 2.3 Evaluation Studies In order to measure how PNPM Green investments generated outcomes within the three key elements of sustainable NRM, three evaluations were designed and conducted by three separate consulting firms. Reports for each of these studies are available in both Bahasa Indonesia and English, through the PNPM Support Facility (PSF) library (www.psflibrary.org). 2.3.1 General approach to evaluation The evaluations utilized a range of methods, depending on the focus of the evaluation and the context (sub-project type, village characteristics, beneficiary groups, expected benefits, etc.). Both qualitative and quantitative techniques were used to allow the study teams to triangulate findings. The three studies applied several methods of data collection. Household surveys were conducted at village level, with a total of 1,273 households from 86 villages interviewed. Focus group discussions, key informant interviews and direct observations were applied at village, sub-district and districts levels. Due to the complexity of elements that the evaluation aimed to capture, the locations studied were specifically selected to ensure comprehensive data analysis. All studies aimed to ensure that study sites represented the diversity of investments and geographical location. In addition, each study used its own tools to select sites, based on specific requirements of each study. Study locations are listed in Annex 5. The fieldwork took place from July to August, 2012. This was during Ramadhan, when most respondents were fasting. Within each village, the interviewers were able to select the most suitable interview times for respondents, by coordinating with the village cadres (KPMD). For Muslim villages, most interviews took place in the afternoon while respondents were waiting to break the daily fast. Interview responses are considered especially reliable in this sacred month. 2.3.2 The Economic and Livelihood Study Conducted by LPM Equator, The Economic and Livelihood Study was conducted in five provinces: South East Sulawesi, North Sulawesi, South Sulawesi, Bengkulu, and North Sumatra. Within these provinces, a total of 50 villages were identified for evaluation. These were selected to ensure that the geographical diversity of villages was represented in the group, and also to ensure that all four types of sub-project (NRM, IGA, Renewable Energy, and Capacity Building) were well-represented within the sample. For the household interviews, a total of 913 households were randomly selected and interviewed. In addition to the Sustainable Rural Livelihood framework, this evaluation also utilized Ostrom’s social-ecology framework (Ostrom, 2009). This holistic combination incorporates financial and economic analysis, environmental/NRM valuation, and social assessment. The Executive Summary of this study can be found in Annex 1. 2.3.3 Micro-Hydropower – Return on Investment (MHP – ROI) Study The evaluation of Micro-Hydropower – Return on Investment (MHP–ROI) was conducted by CastleRock. Due to the technical nature of this particular sub-project, only 15 villages were included in the study. These villages met the following selection criteria:  MHP schemes must have reached handover stage (Musyawarah Desa Serah Terima, MDST). This ensures that operational data is available (monthly revenue, actual data of household connection, performance data) to measure the return on investment/cost effectiveness analysis.  Schemes that received assistance from the Technical Support Unit (TSU, ‘TSU sites’) and sites that didn’t receive TSU support (non-TSU sites) were included.  A range of output scales were included (as measured by cost/kW/number of households), to enable the study to examine whether schemes require a minimum scale to be effective. Chapter 2 Design and Methodology 11  Schemes were selected to include those deemed to be working well, not working as well, and working poorly. This enabled the study to identify challenges faced by those experience poor performance, and what factors were associated with positive performance.  A range of geographical areas were included, include some remote locations.  Villages with various availability of other energy sources (e.g. grid connection) were included For household interviews, at least 120 households (8 respondents in each village) were purposely selected and interviewed for this study. Data analysis comprises: (a) financial analysis - actual costs and benefits analysis; (b) economic impact analysis - economic modeling to calculate the net present value (NPV) and the economic rate of return; and (c) evaluation of operation and management (actual technical performance and effectiveness). Information on technical, socioeconomic, commissioning data, and site location of TSU- supported sites were obtained through site visits and sourced from existing data, via the TSU and National Management Consultant (NMC). For the selected sites without support from the TSU (‘non-TSU sites’), NMC’s monitoring data/information system (MIS) and questionnaire distribution were the main tools. The Executive Summary of this study can be found in Annex 2. 2.3.4. Spillover Effects Study The Spillover Effects Study was conducted by CARDS-IPB. The evaluation was focused at village level, in both beneficiary and non-beneficiary locations in four provinces (South East Sulawesi, North Sulawesi, South Sulawesi, and North Sumatra). Study locations were selected to represent the diversity of sub- projects and sub-project categories, and also to ensure that locations had experienced sufficient time since implementation to permit assessment of spillover effects. To ensure that the evaluation focused specifically on outcomes of PNPM Green, the study excluded locations that received other interventions or programs related to NRM during the project implementation period. A total of 21 villages, 8 beneficiaries and 13 non- beneficiaries were selected for this study. For household interviews, a total of 240 households were randomly selected and interviewed. Data analysis for this study mainly applied qualitative measures to identify how and why spillover benefits occur. Spillover benefits measures included economic, environmental/NRM and social benefits. The Executive Summary of this study can be found in Annex 3. Results Evaluation: 12 Sustainable Natural Resource Management Through PNPM Green Investments Chapter 2 Design and Methodology 13 Results Evaluation: 14 Sustainable Natural Resource Management Through PNPM Green Investments Chapter 3 Main Results 3.1 Economic Viability 3.1.1 Financial assets The three studies reveal that the PNPM Green program has contributed to the financial assets of participating communities in various ways, through direct financial benefits, indirect financial benefits, and reduced expenditures. Sub-projects and activities generate a range of direct financial benefits for communities. These may arise from selling products, such as fish or fruit, or provision of employment opportunities such as contracted labor for tree-planting activities or continued employment within the group. The Economic and Livelihood Study indicated that implementing sub-projects and activities generated direct benefits for only a small proportion of respondents (less than 20%). The size of this direct benefit is also small. For those employed in activities such as tree-planting, a typical daily income was 60,000 IDR. Employment income was not limited to beneficiaries; anyone in the village can be employed by PNPM Green activities. Less than one third of respondents said that participation in a PNPM Green activities or sub-projects increased their household income. However, across all respondents, the average annual income from this participation was reported to be 630,000 IDR. For communities participating in specific IGAs or related sub-projects, reported current household income was doubled. For example, one of the most well-known coastal community investments is a rumpon. This platform structure (see Figure 1) is placed in the open ocean. It initially attracts small fish, which then attract larger fish such as tuna. These larger fish are targeted by villagers. The beneficiaries testified that their fish catch has almost doubled in volume, and increases are expected to continue. 15 Figure 1. A fish aggregating device (rumpon) from South East Sulawesi, Wakambura. Palm leaves are placed below the float to provide protection for small fish and substrate for algal growth. This, in turn, attracts larger fish, which the villagers may then catch. The evaluation indicates that some economic benefits may emerge after a delay, such as income from the sale of timber. Such benefits are evaluated as ‘expected future benefits’ and have the potential to be significant over the medium-long term. The time frame over which benefits are generated will vary between different sub-projects and activities. For example, financial income generated from harvesting fruit trees will only be possible after the crop matures. As the crop reaches maximum yield, benefits will increase; after this maximum, benefits will then decrease over time. The income generated from harvesting timber will vary between tree species and season of harvest. Increases in fish catches secondary to mangrove planting activities will take time to emerge, but may maintain a peak once mangroves mature. Table 2 describes expected household incomes derived from two key activities over the medium and long- term. For activities and sub-projects involving planting trees and mangroves, the main expected future benefits can be ascribed to various sources. For mangrove planting sub-projects, the primary income is derived from increased catches of fish or shellfish. This is estimated to be about 15 million IDR per sub-project per year. Estimated income from timber sales is approaching half of this amount. The largest estimated direct income (approximately 200 million IDR per sub-project per year) generated from tree planting is from the sale of fruit (even though not all sub-projects concern fruit trees). Income generated from sale of timber and firewood is almost 10 times lower than estimates of fruit sales. The financial benefit of planting fruit trees is demonstrated by three early sub-projects. Planting orange trees generated an income that was double the operating costs. Planting coconuts for oil production generated an income of 11 times the operating costs, and planting lemon trees generated an income of 16 times the operating costs. Household interviews asked respondents to estimate future income from all types of sub-projects and activities. The total of these expectations is shown in Table 3. The total investment in the studied sub- projects from PNPM Green is 3.99 billion IDR, and the contribution from communities is 350 million IDR. The values exhibited in Table 3 indicate the likely economic viability of the surveyed sub-projects. It is important to note that (a) this incorporates only direct return on investment, and the actual benefits to communities may exceed these figures, and (b) only older sub-projects were surveyed, for which survival of planted trees was already established. Table 2. Summary of values for expected household incomes, calculated by the benefit transfer method Expected Income (IDR) Medium-term Long-term Activity / Sub-Project (2-5 years) (beyond 5 years) Mangrove Planting 687.000 239 million Tree Planting 25 million 236 million Source: PNPM Green - Economic & Livelihood Study, 2012 Results Evaluation: 16 Sustainable Natural Resource Management Through PNPM Green Investments Table 3. Expected total income (IDR Millions) from all sub-projects, based on respondent report in household interviews*. Reported Past Now Medium term Longer term (2009 to 2011) (2012) (2013 to 2017) (Beyond 2017) 33 73 483 899 *This table combines different incomes e.g. annual fruit harvest (which may continue for 10-20 years), and the expected income from selling teak timber after 10 years (which is divided by the 10 years). Source: PNPM Green - Economic & Livelihood Study, 2012 In addition to direct and indirect economic benefits, the Economic and Livelihood Study also measured the financial benefits derived from reduced expenditure or other savings. It is estimated that the total annual saving for all studied sub-projects or activities is 676,000 IDR per household. The main savings identified are related to the reduced need for buying kerosene or firewood. Sub-projects and activities generate a number of other benefits, such as reduced risk of landslides, storm damage, or riverbank erosion, and improvements in soil fertility or ground water resources. These were evaluated as benefits to the wider community in the form of natural assets (rather than benefits to individuals or households), and were quantified using the benefit transfer approach. Note: the largest of these ‘avoided costs’ (such as the cost of rebuilding a community infrastructure and capital after storm damage) are not included in the current analysis. 3.1.2 Net benefit after maintenance and operational costs For sub-projects that do not relate to renewable energy, costs of maintenance and operation are mainly managed by individual households. One exception to this is rumpons, where maintenance is communal and covered by a fee charged to users. Tariffs (payment for electricity generated) for renewable energy and MHP sub-projects must cover operational costs and also provide savings for future maintenance and upgrade of equipment. All communities surveyed reported that they collect more revenue than they are disbursing in operational costs. On average, the operating profit registered by the communities is 35% of the total amount collected. In all cases, the surplus is placed in a reserve fund to cover predicted and unforeseen future expenses. Together, these findings indicate potential sustainability of these sub-projects. The MHP evaluation also measured NPV. This analysis found negative values when the fuel cost saving is not included in the calculation. From a purely financial point of view, this means that the capital cost incurred in developing the MHP schemes in these communities does not produce a viable profit. Given that MHP schemes in rural communities are not intended to be profitable investments, this highlights the importance of government or other bodies providing funds to support the introduction of such schemes. Importantly, when community fuel cost savings are included in analysis, the NPV values become mostly positive. This indicates that, for the majority of communities, MHP schemes deliver significant benefits that justify the costs. 3.1.3 Economic spillover effects The Spillover Study reveals that economic benefits for non-beneficiaries in both project and non-project locations is mainly related to two sub-projects: a Marine Protected Area (MPA)(Daerah Perlindungan Laut, DPL) in North Sulawesi, and river conservation (Lubuk Larangan) in North Sumatra. The economic benefits for the non-beneficiaries generated by the MPA relate to a 68% increase in fish catches (increased catch size and catch variety). In project locations, the average household income of non-beneficiaries from fish catches has increased from around 2 million IDR per year to 19 million IDR per year, an almost 10-fold increase. In contrast, in non-project locations, the average household income of non-beneficiaries from fish catches has increased from around 7 million IDR per year to 10 million IDR per year. Chapter 3 Main Results 17 River conservation initiatives (lubuk larangan) generate benefits for non-beneficiaries via increased fish harvests. Over time, these increased from 0.5kg to 1.0-1.5kg a year (with a price of 10,000-15,000 IDR per kg fish), with total sales of 25,000-40,000 IDR. Additional benefits experienced by non-beneficiaries include increased cost efficiency related to reduced harvesting time (from one year to three months), and reduction in travel distance leading to reductions in fuel costs of up to 38%. Analysis indicated minimal economic benefits for non-beneficiaries stemming from other sub-projects. 3.2 Restoration and Enhancement of Natural Assets Overall, the enhancement of natural assets and ecosystem services is considered highly significant. Improved ecosystem services generate benefits for households, participating communities and local economies. Given the delay between initiation of activities such as tree planting and the benefits generated by mature trees, full benefits of some activities will take time to emerge. Many ecosystem services, including erosion control, protection against storms, increased productivity of marine food webs, and improved soil fertility, will be continue to benefit communities beyond the completion of sub-projects. Two primary methods were used to evaluate the economic benefits of sub-projects on natural assets and ecosystem services: the benefits transfer method (see Annex 6) was used for mangrove development and tree planting sub-projects; economic modeling was used for MHP and MPA sub-projects. The contributions of ecosystem services at village/community level are included in the economic valuation, as part of the benefits of sub-projects and activities. 3.2.1 Value of ecosystem services from mangrove development Mangrove plantings generate a range of benefits to natural assets. The greatest benefit is prevention of coastal erosion (see Figure 3). Stabilizing marine food webs, generates a smaller numerical benefit, but is estimated to provide the largest direct effect to households. Mangroves will generate benefits for communities beyond the study locations: because mangroves provide essential habitat for breeding and early development of many marine species, mangroves can enhance biomass of fish, many of which will migrate away from study sites and support local fisheries in neighboring villages and other areas. 3.2.2 Value of ecosystem services from tree planting The estimated environmental benefits from tree planting are diverse, as can be seen in Figure 4. Many of these benefits, including erosion protection, flood protection and increased ground water resources will also generate benefits for the wider community. In contrast, an increase soil nutrients is likely to generate more localized benefits. Improved biodiversity will create local and global benefits. Figure 3. Benefits of Mangrove Planting Estimated Average per Project Value of Future Envitonmental Services from Mangrove Planting (Per year, 2012 prices) Rp. 60.000.000 Rp. 40.000.000 Rp. 20.000.000 Rp. Protection Stabilisation Carbon Protection Improved Against of marine Sequestration against Biodiversity Coastal food webs seawater Erosion intrusion Source: PNPM Green - Economic & Livelihood Study, 2012 Results Evaluation: 18 Sustainable Natural Resource Management Through PNPM Green Investments Figure 4. Benefits of Tree Planting Estimated Average Per Project Value of Future Environmental Services from Tree Planting (Per Year, 2012 Prices) Rp. 10,000,000.00 Rp. 8,000,000.00 Rp. 6,000,000.00 Rp. 4,000,000.00 Rp. 2,000,000.00 Rp. - Erosion Flood Ground-Water Carbon Storage Soil Nutrients Improved Protection Protection Resources Biodiversity Source: PNPM Green - Economic & Livelihood Study, 2012 3.2.3 Value of ecosystem services from Micro-Hydropower (MHP) MHP schemes provide clean, ‘alternative’ energy, and do not produce greenhouse gas (GHG) emissions. By replacing the use of fossil fuels (kerosene, diesel and gasoline) for electricity generation, MHP schemes reduce GHG emissions. Table 4 provides a monthly estimate of reductions in GHG by replacement of kerosene, diesel and gasoline by MHP, and estimated annual GHG reduction for each village. This includes TSU sites and non-TSU sites. Across all sites, the greatest reduction in GHG emissions was 3901kg of carbon dioxide (CO2) per year, in Buangin village (District of Tana Toraja, South Sulawesi), while the smallest reduction (32kg CO2 per year) took place in Orabua Selatan village (District of Mamasa, West Sulawesi). The average estimated annual GHG reduction for sites supported by TSU from fossil fuel displacement is 2,144kg CO2 per year; in non-TSU sites, this reduction is 565kg of CO2 per year. Overall, TSU sites exhibit a greater reduction in GHG emissions than non-TSU sites. This is largely because TSU sites also used diesel or gasoline generators (genset). Use of generators is associated with higher baseline emissions; thus, villages that use generators have greater capacity to reduce GHG emissions using alternative energies such as MHP. In contrast, non-TSU sites only used MHP to displace kerosene use, limiting the scope of GHG reduction. Chapter 3 Main Results 19 Table 4. GHG Emission Reductions from Fossil Fuel Displacement No. Sites/Vilage Name GHG reduction GHG reduction GHG reduction Estimated annual GHG from Kerosene/ from Diesel/ from Dasoline/ reduction from fossil fuel month (kg) month (kg) month (kg) (kg of Co2/annum TSU 1. Alur Kejrum 40.4 82.1 n.a 1469 2. Marapan 9.8 145.9 n.a 1869 3. Batu Basa 14.5 206.5 n.a 2652 4. Mesakada 40.4 n.a 271.3 3739 5. Masoso 53.8 n.a n.a 646 6. Salutambun Barat 43.0 n.a 22.6 788 7. Orabua Selatan 2.7 n.a n.a 32 8. Bokin 13.5 n.a 203.4 2603 9. Buangin 53.8 n.a 271.3 3901 10. Kare Penanian 40.4 n.a 271.3 3739 Averange estimated annual GHG reduction 2144 Max estimated annual GHG reduction 3901 Min estimated annual GHG reduction 32 Non-TSU 1. Timpuseng 40.4 n.a n.a 484 2. Barugae 53.8 n.a n.a 646 3. Saluburonan* 80.7 n.a n.a 969 4. Leppan 13.5 n.a 0.0 161 Averange estimated annual GHG reduction 565 Max estimated annual GHG reduction 969 Min estimated annual GHG reduction 161 Source: PNPM Green – MHP ROI Study, 2012 3.2.4. Value of ecosystem services from Marine Protected Areas (MPAs) Villagers in the pilot locations reported that MPAs implemented within the PNPM Green program have provided a number of benefits. Local fishers have observed an increase in fish numbers and varieties. Figure 5 demonstrates that a majority of respondents in a pilot village report that fish numbers have improved since 2010; in contrast, the majority of respondents in a non-pilot village indicate that fish numbers have worsened. In addition, improvements in fish catch for pilot villages have also reduced the travelling distance and working time required, providing more time for social interaction or other activities. Improvements can also be seen in the increased number of fish larvae and non-fish marine biota, as well as the improved condition of coral reefs (see Figures 6 and 7). Results Evaluation: 20 Sustainable Natural Resource Management Through PNPM Green Investments Figure 5. Reported changes in fish numbers since 2010 (case study in North Sulawesi; MPA sub- project) 40% 30% Unchanged 20% Improved 10% Worse Do not know 0% Pilot Village Non Pilot Village Source: PNPM Green - Spillover Effects Study, 2012 Figure 6. Changes in fish larvae and non-fish marine biota since 2010 (case study in North Sulawesi; MPA sub-project) 50% 40% Unchanged 30% Improved 20% Worse 10% Do not know 0% Pilot Village Non Pilot Village Source: PNPM Green - Spillover Effects Study, 2012 Figure 7. Changes in condition of coral reefs since 2010 (case study in North Sulawesi; MPA sub- project) 50% 40% 30% Unchanged 20% Improved Worse 10% Do not know 0% Pilot Village Non Pilot Village Source: PNPM Green - Spillover Effects Study, 2012 3.3 Social Acceptability Social acceptability refers to social or human assets and resources that enable individuals to pursue diverse livelihoods, especially within a community or collective setting. Within the context of this evaluation, social acceptability is indicated by high rates of participation and engagement, a strong link between type of investments and livelihood priorities, increased capacity (through empowerment) to maintain and manage the investments, and strengthened NRM governance. Chapter 3 Main Results 21 3.3.1 Sub-project participants and beneficiaries Since 2008, PNPM Green has generated a 90% increase in the number of original NRM-related investments in participating villages. In 2012, the number of community investments reached, 2,926. However, during this period, in-kind community contributions have remained weak, with the average contribution of 8% toward total sub-project costs (PNPM Green - MIS data, NMC). Based on in-depth interviews with the beneficiaries, community contribution remains low for two key reasons. Firstly, most of the participating communities are considered poor (as the target groups of PNPM Green), and therefore not able to provide substantial contributions. Secondly, respondents perceive that responsibility for funding sub-project implementation rests with the government. Although limited capacity to contribute is likely to restrict scope of community contributions, perceptions about responsibility for sub-project and activity funding may limit sustainability of investments. Table 5 describes and illustrates categories of sub-projects and activities. Findings suggest that community acceptance varies across sub-project categories. For example, the majority of sub-projects relate to NRM (45%). This is followed by IGA sub-projects (31%), Renewable Energy sub-projects (14%) and Capacity Building sub-projects (10%) (see Figure 8). This reflects livelihood priorities of participants, with 69% of respondents being farmers. Qualitative assessments confirm this finding, with NRM activities most commonly implemented by participating communities. For example, NRM activities involving tree planting enable the community to benefit from additional wages through their labor (described in section 3.1) and procurement of seedlings. In addition to the short-term financial benefits, participating communities may also see future economic benefits in tree planting (i.e. timber harvesting). Table 5. PNPM Green Sub-Project and Activity Categories Main Objective of Categories Examples Sub-Projects or Activities Natural Resource To protect, conserve and rehabilitate the Forest management, water resource Management condition of local environmental and natural management, coastal area management, (NRM) resources waste management, MPAs Income To utilise local natural resources in a sustainable Fish farming, seaweed cultivation, fish Generating way for the purpose of generating income or aggregating devices (FADs, such as Activities (IGA) improving the local economy rumpon), agro-forestry, fruit tree nurseries, fruit tree planting, organic fertiliser production Renewable To use or generate renewable energy and Micro-Hydropower (MHP), Photo-voltaic Energy reduce pollution and greenhouse gas emissions power (solar cell), bio-gas, fuel efficient stove production Capacity To improve capacities and skills in managing Training for community and local building and maintaining local natural resources. government officials Figure 8. Percentage of Sub-Project Categories 10% 14% NRM 45% Income Generating Activitit (IGA) Renewable Energy (RE) Capaciti Building 31% Source: PNPM Green – MIS Results Evaluation: 22 Sustainable Natural Resource Management Through PNPM Green Investments For all investments, the majority of respondents (76%; 696/913) reported remaining active in the sub- projects. Of those respondents who are still ‘active’, most were involved in NRM sub-projects (54%); only 10% of active sub-projects related to capacity building (see Table 6). Of the respondents who were no longer active in their sub-projects (24%), one third (34%) indicated that the sub-project did not meet their livelihood priorities. Other reasons provided include natural causes (12%) and human error (4%), while half (50%) were unsure. Table 6. Sub-project categories as a percentage of ‘still active’ respondents Number of ‘Active’ Respondents Percentage Sub-Project Categories (N=696) (%) NRM 375 54 Income Generating Activities (IGA) 155 22 Renewable Energy 94 14 Capacity building 72 10 TOTAL 696 100 Source: PNPM Green - Economic & Livelihood Study, 2012 The majority of respondents (54%) agreed that the sub-project meets their immediate livelihood priorities. This percentage includes responses from those ‘no longer active’; the actual percentage within ‘active’ respondents is likely to be higher. This suggests that overall, investments are reasonably well-matched to livelihood priorities, and that active sub-projects more successfully meet livelihood priorities. It is likely that successful sub-projects and activities actually exceed livelihood priorities, because of many longer-term or ‘hidden’ benefits, such as improved ecosystem services. Improvement in the management of community investment seems to be strong across the years of project implementation. The studies also identify key project beneficiaries. Based on surveys of ‘active’ respondents (i.e. 76% of total respondents, based on assumption that active respondents are better informed about beneficiaries), the main groups of people involved with the sub-project are: common villagers (63%); community leaders, including government officials (20%); and project facilitators (17%). Project facilitators comprise the proposal writing team (Tim Penulis Usulan, TPU), the implementing team (Tim Pelaksana Kegiatan, TPK), the maintenance team (Team Pemelihara, TP), Civil Society Organizations (CSOs), and village cadres (KPMD). Figure 8 highlights key beneficiaries. Similar numbers of men and women are represented as beneficiaries (see Figure 9). Figure 9. Project beneficiaries Perception from the ‘active’ participants (N=696) 10% 13% CSO or KPMD 7% Community leader TPU, TKP or TP 7% 63% Chapter 3 Main Results 23 Figure 10. Composition of project beneficiaries Women Men 54% 46% Source: MIS data; NMC 2012 These findings indicate that one fifth of beneficiaries are community leaders. As these leaders may be perceived as ‘local elites’, qualitative analysis examined the nature of involvement by community leaders. Findings indicated that community leaders were typically involved with ‘high profile’ parts of project implementation, such as facilitating meetings or encouraging meeting attendance. This may have skewed perceptions of respondents about the scope of community leader involvement rather than indicating that leaders usurped the benefits of participation in sub-projects (‘elite capture’) 3.3.2 Spillover benefits to non-beneficiaries Qualitative analysis reveals that PNPM Green investments generate benefits, not only for participating communities, but also for non-participating communities. Spillover benefits have been identified in the following areas: a. Increased awareness and knowledge: Increased knowledge was reported in a range of areas associated with river conservation and NRM. Specifically, these relate to the benefits of: not using poisons for fishing; not littering; production and use of organic fertilizers and pesticides; upstream conservation to ensure the water debit (for MHP schemes); preventing damage to coastal zones and mangrove areas; and forest rehabilitation to support water source (spring) conservation. Increased awareness and knowledge was reported by approximately half of non-beneficiaries in both project locations (53%) and non-project locations (47%). These outcomes appear to be stronger in villages where activities or sub-projects are consistent with local knowledge/wisdom or customary adat rules (See Box 1). Box 1. The effectiveness and success rate of some sub-projects may depend on the local customs that influence NRM. This is highlighted by the customary approach to forest rehabilitation in Lapodi village, South East Sulawesi. Villagers observe their local custom of not cutting down trees or cultivating fields within river catchment areas. This social sanction is called Pondole Sie Wata, which means that the violator will not be acknowledged by the community for a period of time determined by custom regulations. Another example of local wisdom is in South Sulawesi. The local tradition guards their forest through picnics (Manre Maccurung) and community meetings (Todang Sipulung). These traditions also provide social benefits, strengthening social interaction and collaboration among community members. Source: PNPM Green – Spillover Effects Study, 2012 Results Evaluation: 24 Sustainable Natural Resource Management Through PNPM Green Investments b. Increased rate of adoption of PNPM Green sub-projects: the evaluations reveal that some non-project locations have adopted activities or outputs of PNPM Green. For example, the establishment of village decree (perdes) in project locations has encouraged neighboring villages (non-project locations) to adopt a similar perdes specifying rules and sanctions related to natural resource management. An increase was observed in the number of NRM-related activities included in local village development plans (RPJMDes). Qualitative analysis from the Spillover Effects Study highlighted the importance of village government officials in facilitating the adoption of PNPM Green activities or sub-projects in non-project locations. Box 2 highlights a situation where training opportunities and related benefits were extended to non- participating communities. Box 2. In Kelurahan Borong (Tanralili sub-district, Maros District, South Sulawesi), PNPM Green has trained 6 people to produce furniture from bamboo. These individuals now operate a group business, working in response to orders. They are able to produce and sell about 5-12 furniture sets (chairs and table) each year. The cost to produce one set is 2 million IDR; this is sold for 4 million IDR. If 5 sets are sold in one year, this can generate an annual income of more than 10 million IDR. Advertisements provided by national television (Televisi Republik Indonesia) assists in product promotion, and this group has been invited by local government to participate in provincial exhibitions. This group has since trained 13 individuals from other villages (2 from Kelurahan Borong, 1 from Allaere Village, 4 from Lekopancing village, and 6 from Parangbanuang Village). Source: PNPM Green – Spillover Effects Study, 2012 3.3.3 Empowerment PNPM Green is designed as a community empowerment program. Community participation in activities and sub-projects is a core concept for PNPM Green. These evaluations assess empowerment as a community- level process, indicated by (a) participation, as measured by attendance at meetings, (b) participation, as measured by in-kind community contributions, (c) capacity building through facilitation, and (d) enhancing governance. Assessing empowerment outcomes requires a longer time frame, and was considered beyond the scope of the current evaluations. a. Participation (attendance): Meeting attendance varies across each stage of the sub-project. During early planning (‘socialization’) stages, participation is high at the hamlet (sub-village) level, with the majority of respondents having participated twice or more than twice. At the village level, this is low, particularly during planning meetings (musdes perencanaan) when the village decides on a proposal for funding. This may be due to the design of sub-projects and activities, which allows village constituents to be represented by certain individuals. At the project management stage, participation is also low. This is largely due to expectations that benefits would only be observable in the longer term (i.e. post implementation), and impairs continued engagement in completed sub-projects. It is possible that the community considers some sub-projects (such as tree planting or mangrove rehabilitation) to not require the same level of engagement or maintenance than other sub-projects (such as infrastructure sub-projects). In such circumstances, participation rates may be low, but communities may remain active as project beneficiaries. Nonetheless, low participation rates reinforce the importance of effective capacity building, especially during hand- over meetings (MDST). b. Participation (in-kind community contribution): Overall assessments show that in-kind contributions vary across the types of sub-projects. As discussed earlier (Section 3.3.1), communities contribute an average of 8% of the total sub-project costs. Of this percentage, NRM activities and sub-projects had the highest contribution rate, amounting to 48% (see Table 7), while capacity building activities had the lowest contributions. Most NRM activities require land donations and labor, providing greater scope for in-kind community contribution. Chapter 3 Main Results 25 Table 7. In-kind contribution to sub-project categories Total Community in-kind Percentage of total Categories of Sub-Projects and Activities contributions in each category community contributions (IDR Million) (%) Natural Resource Management (NRM) 11,000 48 Income Generating Activities (IGA) 5,700 25 Renewable Energy 5,500 24 Capacity Building 710 3 23,000 TOTAL 100 (round up) Source: PNPM Green - MIS Data, NMC Table 8. In-kind contribution of MHP sub-projects IN-KIND CONTRIBUTION Average Minimum Maximum (as a proportion of Total Capital Cost) TSU 2% 0% 6% Non-TSU 9% 1% 28% Source: PNPM Green – MHP ROI Study, 2012 Renewable Energy sub-projects (including MHP schemes and solar power) received only 22% of the total community contributions. Interestingly, for MHP schemes, this amount varies depending on whether the site receives support from the TSU or not. As shown in Table 8, the average sub-project funding received by in-kind community contributions is 2% for TSU sites, and 9% for non-TSU sites. This indicates that non-TSU sites receive more support from the community than do TSU sites. PNPM Green should consider this finding when planning future MHP investments. c. Facilitation (role of community leaders): there is a strong link between active community leaders and effective project facilitation. This does not mean that these leaders (local elites) dominate the decision- making or control the benefits of the sub-project (‘elite capture’). Rather, it highlights the importance of their role as facilitators within their village, working to build links between community members. For example, community leaders encourage villagers to attend sub-project meetings. Table 9 suggests that the greater the presence of community leaders, the higher the tendency for community participation in sub-project meetings. Consistent with this, qualitative analysis from focus group discussions and key informant interviews indicates that these leaders (either traditional/adat and/or government) are respected and/or trusted by villagers. They play a major role in formal and informal community interaction, acting as a linking institution at the village level. For effective implementation of sub-projects and activities, it is essential to understand and respect the roles of leaders within village communities. Community leaders are also suitable for targeting capacity building initiatives, to ensure that their linking role generates empowerment for all community members. Table 9. Role of community leaders at sub-project meetings Villagers Community Project Total Attendance at Socialization Leaders Facilitators (n=913) Not participating 115 1 0 116 Once 223 3 5 231 Twice 206 4 2 212 More than twice 326 21 7 354 Source: PNPM Green - Economic & Livelihood Study, 2012 Results Evaluation: 26 Sustainable Natural Resource Management Through PNPM Green Investments d. Facilitation (capacity building and skill development): Facilitation also incorporates capacity building initiatives that are tailored to implementation of specific sub-projects and activities. Two thirds of respondents (66%) report that capacity building conducted by the sub-projects or activities team had positive effects on their involvement. Similarly, 65% reported that they had made use of the skills they acquired during the capacity building (see Table 10). To assist with new sub-projects and activities, PNPM Green established specific implementation groups. Groups selected at the village level are TPK (Tim Pengelola Kegiatan - Implementation Team), TPU (Tim Penulis Usulan - Proposal Writing Team), and TP (Team Pemelihara - maintenance team). Groups at the sub- district level are TV (Tim Verifikasi - verification team) and UPK (Unit Pengelola Kegiatan - implementation unit). However, findings indicate that participating communities obtained new skills specifically via capacity building activities rather than through participation in these specific implementation groups. In fact, the majority of respondents (70%) reported that they did not learn any new skills through these groups (Figure 10). Qualitative analysis suggests that implementing group meetings were too infrequent or lacked sufficient intensity to transfer new skills. This finding highlights the potential for more frequent or more intensive meetings, and to link these with existing local groups to ensure that benefits to participants are optimized. Table 10. PNPM Green Capacity Building Respondents following procedures learned during capacity building Total Percentage (%) Used skills, but they were inadequate 9 1.0% Did not use – found other way 312 34.2% Skills of some use 195 21.4% Skills of direct use 397 43.5% TOTAL 913 100% Figure 11. Level of skills acquired through e. Enhancing governance: Three quarters of participation in sub-project groups respondents reported that PNPM Green has low effectiveness in strengthening existing local groups or Learning of New Skills by Participating in institutions. It is likely that this finding relates to the Groups (post-capacity builading) fact that most PNPM Green implementation groups are created explicitly to implement the sub-projects, 30% and they do not always collaborate with the existing (learn new local groups. skills) This may have also influenced low participation rates observed at village level during the planning stage, 70% where meetings were conducted by village cadres (not learn (KPMD) and sub-district facilitators. These village-level anything) meetings are the main domain for these implementing groups to meet and discuss the progress of sub- projects and activities. Qualitative analysis shows that certain individuals, such as village government officials Source: PNPM Green - Economic & Livelihood Study, 2012 and CSOs, are crucial for integrating environmental and NRM issues into the village development agenda through RPJMDes. In addition, these individuals have leading roles in the strengthening of existing village decrees or regulations (perdes) by incorporating the NRM agenda into the decrees. Chapter 3 Main Results 27 Results Evaluation: 28 Sustainable Natural Resource Management Through PNPM Green Investments Chapter 4 Conclusions and Recommendations The evaluations reported here aim to examine whether: (a) PNPM Green is meeting its intended objectives; and (b) PNPM Green is strategically relevant and effective for integrating NRM into local development agendas, through the CDD approach of PNPM Rural. Three studies were conducted prior to this result evaluation by three separate working teams. The evaluations utilized a Sustainable Rural Livelihoods framework. Analysis of outcomes focused on three key sustainability elements - economic viability, restoration and enhancement of natural assets, and social acceptability. 4.1 Conclusions The majority of PNPM Green sub-projects and activities appear to be economically viable in supporting rural livelihoods. These sub-projects have direct positive effects on participating households, in terms of increased harvests of fruit, timber or aquatic resources. Renewable energy sub-projects have positive effects through reduced energy expenditures. However, very few sub-projects are profitable from a narrow business perspective, and would not attract short-term investors. When longer-term benefits to households, communities and society are considered, PNPM Green and its investments in sub-projects are highly economically profitable. PNPM Green also is likely to generate positive benefits for restoration and enhancement of natural assets. Given than many of these sub-projects and activities involve planting trees and mangroves, the benefits generated will increase over time as plants mature. The benefits include erosion control, improved coastal protection against storms, increased productivity of marine food webs, and improvements in soil fertility. Several of these activities have positive effects on the local economy, benefitting households, communities and society in general. These sub-projects and activities have not only benefitted participating communities, but also have created a range of ‘spillover’ benefits to non-beneficiaries. These benefits may be experienced by target communities or non-participating villages. The main driver of this spillover is the uptake of PNPM Green sub-projects or approaches into local development by community leaders in non-participating communities. This may involve either initiating similar types of sub-projects or activities, or endorsing village decrees with NRM- related clauses. Social acceptability of PNPM Green appears to be strong only in locations where community investments are related to livelihood priorities of individuals or communities. Some good examples are mangrove 29 planting, MPAs, MHP schemes, and tree planting. These not only protect and enhance natural assets, but also support rural livelihoods. Most of these sub-projects require ongoing community engagement to maintain and optimize longer-term benefits. For this reason, the role of social assets is crucial in the management and maintenance of sub-projects. The capacity for communities to maintain and manage the investments is weak. Within the current model, the main opportunity for capacity building is via participation in implementation groups and formal meetings conducted by project facilitators. However, frequency and intensity of meetings, and participation rates, were too low to generate significant capacity building benefits. Future strategies could strengthen community meetings by developing formal and informal links with existing local groups. Approaches to improve capacity building should also include the maintenance stage of sub-projects and activities (post- handover, MDST). The introduction of performance-based pay for group-based maintenance of sub-projects (e.g. NRM on public land) may increase group performance. Natural resource governance has not been successfully strengthened throughout project implementation; the basis for this appears to be lack of networking or inadequate links to existing social groups. Involvement of community leaders appears to improve processes of sub-project implementation, particularly in encouraging and co-facilitating sub-project meetings. The current studies indicate that the majority of project beneficiaries are common villagers. As such, the involvement of community leaders does not necessarily reflect ‘elite capture’ of benefits. Rather, leaders should be viewed as potential agents to develop links and co-facilitate community empowerment. In regards to natural resource governance in rural Indonesia, PNPM Green has an opportunity to optimize outcomes by strengthening the capacities of community leaders in facilitating community-based resource governance through a range of capacity building activities. The current findings demonstrate that PNPM Green has contributed to increased productivity and output via community investments in the areas of access and management of local natural resources. The increase in NRM-related investments has strengthened the economic and financial wellbeing of participating communities. In addition, PNPM Green has enhanced the restoration and enhancement of natural assets. These findings indicate that implementing PNPM Green investments generate a range of benefits for communities. Many of the economic and environmental benefits stemming from these sub-projects and activities will increase and accrue over time. Consequently, the sustainability of these sub-projects and related benefits is dependent on the commitment of participating communities to manage and maintain investments. This highlights the importance of (a) effective management and maintenance of community investments and (b) strengthening natural resource governance via empowering formal and informal local institutions. In summary, PNPM Green has partly met the intended objective, that is, to make the utilization of natural resources by rural communities sustainable. To ensure the long-term sustainability of local resource management, it is crucial to strengthen and empower natural resource governance. For example, a mangrove development investment generated short-term benefits for the economy of participating villages by providing breeding habitat for fish and crabs. However, this mangrove plantation will not generate longer-term benefits (shoreline protection, reduced coastal erosion, established breeding habitats) if local communities do not collectively manage and maintain this investment. In other words, without strengthening social assets, many NRM-derived economic gains and improved natural assets may be difficult to sustain. 4.2 Recommendations PNPM Green can be considered to be strategically relevant and effective for integrating NRM into local development agendas, through the CDD approach of PNPM Rural. This also applies when the sustainability elements of economic, natural and social assets are the main focus of the sub-project. Results Evaluation: 30 Sustainable Natural Resource Management Through PNPM Green Investments 1. PNPM Green needs to focus on activities or sub-projects with economic benefits that are relevant to communities and meet priority livelihood needs. Livelihood needs assessment in each participating community should be conducted at baseline, prior to the commencement of the activities or sub- projects. 2. The very considerable benefits for communities and wider society generated by PNPM Green (mainly related to improved ecosystem services, see section 3.2) should be maintained and expanded to other locations. These same benefits could be the starting point for better valuation and inclusion of the value of natural capital into local and regional planning and governance. 3. PNPM Green should explore how local NRM-governance could be strengthened, using village decrees (perdes), or local wisdom or customs (adat). For example, PNPM Green could work with local government officials to establish a memorandum of understanding and perdes that support the proposed activity or sub-project as a requirement in the village proposal. This study found that perdes are mostly used for MHP and solar power sub-projects; they are rarely used for NRM and IGA sub-projects. In addition, adoption of existing adat may be strengthened. It may be useful for PNPM Green to assess the existing adat within participating communities prior to sub-project implementation to ensure that adat are in accordance with PNPM Green approaches. The ‘Creative Communities’ program is a pilot program within PNPM Rural and collaboration between this program and PNPM Green may assist in promoting this traditional approach. 4. To strengthen the community group and maintenance team, this evaluation recommends that sub- project facilitation should continue beyond the handover village meeting (MDST). Here, facilitation focuses on building capacity of a ‘group of beneficiaries’ to become a ‘self-help group’. To achieve this, it will be necessary to either collaborate with a local NGO or CSO, or provide additional technical assistance. Technical assistance may be improved by establishing and supporting local champions, and establishing networks with market producers. Peer learning should be encouraged. 5. It may be advantageous for PNPM Green to apply a form of ‘performance-based payment’ for NRM activities and sub-projects. This would aim to encourage sustainable management over longer time frames, which would then strengthen groups, and improve use of local regulations for both NRM and distribution of benefits. The source of funds could be payments for ecosystem services. The NRM sub- projects produce ecosystem services of great value, both to communities themselves and to society. If communities who generate these benefits receive remuneration, and the necessary support to manage such a payment system, this would be a win-win situation. Chapter 4 Conclusions and Recommendations 31 References Carney, D. (1998). Sustainable Rural Livelihoods: What Contribution Can We Make? DFID, London. Carney, D. (1999). 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Sustainable Rural Livelihoods: A Framework for Analysis. Working Paper 72, Sustainable Livelihoods Programme, IDS, Sussex. Shiferaw, B., and Freeman H.A. (eds.) (2003). Methods for assessing the impacts of natural resource management research. A summary of the proceedings of an International Workshop, 6-7 Dec 2002, International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), Patancheru 502 324, India. Smyth, A.J. and Dumanski, J. (1993). FESLM: An international framework for evaluating sustainable land management. World Soil Resources Report 73. Food and Agriculture Organisation of the United Nations, Rome, Italy. Swift, J. (1989). Why are rural people vulnerable to famine? IDS Bulletin 20(2): 8-15 WCED (1987). Our Common Future. The Report of the World Commission on Environment and Development, Oxford: Oxford University Press Woodhouse, P. Howlett, D. and Rigby, D. (2000). Sustainability Indicators for Natural Resource Management and Policy: A Framework for Research on Sustainability Indicators for Agriculture and Rural Livelihoods. Working Paper 2. Results Evaluation: 32 Sustainable Natural Resource Management Through PNPM Green Investments Annexes Annex 1. Executive Summary Of Economic And Livelihood Study This study was commissioned to identify (a) the economic, environmental, and social benefits generated by PNPM Green over a 4-year implementation period; and (b) whether PNPM Green meets its objective of making the utilization of natural resources by rural communities sustainable. PNPM Green aims to improve sustainable NRM practices and governance, while creating income growth for households and poor communities and empowering local groups who implement the sub-projects and activities. This evaluation study uses the livelihoods concepts of financial, natural, human, and social assets as well as ‘influence and access’. The evaluation utilized extensive fieldwork. Methods included household interviews among beneficiaries, focus group discussions, and key informant interviews at village, sub-district (Kecamatan), and province levels. In addition to these sources, data were gathered via the monitoring system of PNPM Green. Expected future benefits were computed in accordance with the GOI and scientific best practices, and reported in conjunction with other findings. Active sub-projects generate positive results for household financial assets, in terms of both direct income (generated mainly from selling products related to the sub-project) and savings related to reductions in usual expenditures. Even stronger positive results for the households are expected in the future, as reported by households and as computed by environmental economics methods. Level of participation by beneficiaries is likely to be higher if a sub-project: (a) matches the core needs of participant livelihoods; (b) provides immediate benefits to the community; (c) supports increases in direct household incomes within communities; (d) is supported by local values, local regulations, or local knowledge; and (e) is co-facilitated by community leaders and local government officials. Some of the PNPM Green sub-projects support income-generating activities. These are often successful, but success is mainly observed at the household level, where households generate increased income from selling products such as fruit or fish. It appears that few viable businesses have been established. Household assets also increase through renewable energy sub-projects that reduce energy expenditure. The capacity building activities of PNPM Green are considered quite effective. These activities are appreciated by beneficiaries, who generally apply the methods and skills they have learned and report finding the materials instructive. Human assets such as knowledge and skills of beneficiaries and others involved in execution of sub-projects and activities are enhanced via participating, sharing, and formal capacity building. The study finds that two thirds (66%) of households report that PNPM Green capacity building has had positive effects on their involvement in local sub-projects, and 65% use the skills they acquired during the capacity building activity. Of these, 44% have made direct use of the new skills. An important goal of PNPM is empowerment of local communities, or improvement of social assets and ‘influence and access’. The study finds that empowerment mainly occurs via participation during the socialization stage (85% respondents have participated in socialization), and less during proposal selection and maintenance stages. Interactions with branches of government and local governance of NRM were reported to improve. Improved governance mainly occurs in locations with pre-existing local knowledge that relates to NRM. In such locations, the sub-projects are usually more successful, and sub- 33 project maintenance is more effectively organized. Elite capture is low, but involvement of local leaders in mobilization is important. This study finds that a little over 33% of respondents say that there is a positive change in women’s role in the local community, and overwhelmingly, they associate this change with PNPM Green. The positive effects on natural assets (environment and natural resources) in terms of improved ecosystem services are highly significant. Benefits will continue to increase as planted trees and mangroves mature. The benefits include erosion control, improved protection against storms, increased productivity of marine food webs, improvements in soil fertility and others. Many of these benefits generate economic benefits for households and local communities, as well as wider society. For the above reasons, the findings confirm that PNPM Green is meeting its main objective of improving livelihoods for poor, rural communities, while improving the rural environment and natural resources. Results Evaluation: 34 Sustainable Natural Resource Management Through PNPM Green Investments Annex 2. Executive Summary Of Mhp-Roi Study This report presents the study on return on investment and cost-effectiveness of MHP schemes under Program Nasional Pemberdayaan Masyarakat - Lingkungan Mandiri Perdesaan (PNPM-LMP) (hereafter referred to as PNPM Green), a pilot program within PNPM Rural. This is a GOI program that aims to assist rural villagers to benefit from improved socioeconomic conditions and local governance, conducted as Technical Assistance by GOI. Scope of the study This study covers the (a) MHP schemes developed as part of a specific block grant with the assistance of the TSU, and (b) the MHP schemes developed under the NRM block grant without TSU support. There are 155 MHP sites developed under PNPM Green, with the capacity ranging from 2 kW to 78 kW. Forty of these have been commissioned and handed over to the community. The study is focused on the ROI and cost effectiveness of schemes that have been put into operation. Fifteen sites were selected for the study; these include 10 TSU-supported sites and 5 non-TSU supported sites. Eleven sites are located in Sulawesi and 4 sites are in Sumatra. At the time of the study site visit, these sites had been in community hands for an average of 2 years and 2 months. Key Findings  In the study sample, the average capital cost per MHP installation is 545.1 million IDR (approximately 54,500 USD). The average cost per kW is 33.6 million IDR (approximately 3,500 USD/kW). From a pure capital cost viewpoint, and by comparisons with similar studies, a very favorable overall assessment may be made of the PNPM program. The average of capital cost/kW of MHP schemes within PNPM Green is comparable to the range of capital cost per installed capacity of MHP developed in other schemes (2000 USD/kW to 10,000 USD/kW for installed capacity between 5kW to 30kW). Capital cost/kW for TSU sites is slightly higher than capital cost for Non-TSU sites  The number of households connected to MHP schemes is smaller than intended in areas where other forms of energy supply are available (especially in areas with access to the government-owned electricity grid (Perusahaan Listrik Negara, PLN)  For TSU sites, the average in-kind contribution from communities is an average 2% of the total capital cost; this was 9% for non-TSU sites.  Most MHP schemes within PNPM Green deploy an operations and management team that consists of the manager (head of the team), secretary, finance/accounting (bendahara), and operators. All surveyed communities report collecting more revenue than they are disbursing in operational costs. On average the operating profit registered by communities is 35%.  Villages with an established tariff and management team (UPT) are aware of the importance of keeping financial records, but are not aware of the importance of keeping technical records  An assessment of the operational status of surveyed MHP schemes indicates positive outcomes. These outcomes relate to the number of households connected, electricity consumption patterns, planned vs. actual electricity connection, installed capacity and delivery of power output. The majority of schemes appear to be working well and provide a valuable service to communities. Some communities report experiencing some operational difficulties and there is a number of planned connections that were never completed. The survey identified a number of important operational issues including: a mismatch of design and actual water flow capacity resulting in under delivery of power output; a lack of monitoring and recording of technical performance such as kWh generated; and regular maintenance of MHP infrastructure (e.g. power house, weir, access to weir and reservoir). Annexes 35  Simple cash flow analysis suggests that, excluding fuel savings and costs of major repair, most of the MHP schemes (both TSU and non-TSU) show a negative NPV. When savings from fuel costs are included in the calculation, 13 out of 14 sites show positive results. This indicates that these MHPs are not viable in generating financial return. In general, MHP schemes in rural communities are not expected to be profitable investments. This reinforces the importance of government involvement and provision of grant funding.  Many households are able to enjoy significant fuel cost savings due to the electrification of their village. Moreover, electricity has also generated other economic benefits via increased shop opening hours, or launch of new businesses (e.g. bakery, games rental). This economic productivity is expected to increase over time, and significantly enhance community income. It should be noted that there are also some economic costs associated with the scheme, although these are limited. For example, households that previously sold kerosene and other fuel experience a negative effect on income. However, these same households will usually experience benefits that outweigh these costs. Overall benefits significantly exceed overall costs of MHP schemes.  The MHP schemes have generated many other benefits to participating villages. For example, better electricity supply has improved the light quality available to connected households; this enhances the social interaction of the community and enables children to study for longer periods. Results Evaluation: 36 Sustainable Natural Resource Management Through PNPM Green Investments Annex 3. Executive Summary Of Spillover Effects Study The Spillover Effects Study has three goals: 1. To identify the type of improvements generated by PNPM Green, especially related to socioeconomic performance, natural resources, environmental management and quality of life for communities. It also aims to promote medium-term village development plans (RPJMDes); 2. To analyze how PNPM Green generates benefits for communities; and 3. To assess the overall impact of PNPM Green sub-projects and activities, and make recommendations about future PNPM Green investments. In this study, non-beneficiaries in pilot and non-pilot locations were invited to complete questionnaires. These employed qualitative and quantitative approaches. The scope of economic spillover effects on financial assets of non-beneficiaries is determined by adoption of PNPM Green practices and non-beneficiary involvement in sub-projects and activities. Involvement in river conservation (Lubuk Larangan) provides an additional income for households and an additional source of fish-derived protein for the family. MPAs generated increased fish populations and decreased fishing costs, travel distance, and fishing time. MHP schemes have generated minimal benefit for non-beneficiaries due to the limited turbine capacity. Training programs generated no economic benefits because they were discontinued. The study found that economic spillover provided relatively small increases in household income. In terms of natural assets, diverse benefits are experienced by non-beneficiaries: increased number and variety of fish (river conservation and MPA sub-projects), improved upstream ecosystems with more tree planting (MHP sub-projects), improved coral reef quality (MPA sub-projects), and less coastal erosion (mangrove planting). The study also revealed that PNPM Green enhanced social assets for non-beneficiaries. This relates to increased knowledge about environment conservation, sustainability and NRM. The scope of increased knowledge for non-beneficiaries could be increased if PNPM Green linked its sub-projects and activities with existing local knowledge or wisdom, or existing community activities. Increased knowledge also depends on the empowerment approach, and the effectiveness of village leaders and facilitators. In terms of natural resource-related governance, the study reveals that only limited benefits are generated for non-beneficiaries. Only two study locations exhibited improvements in their natural resource governance. The application of village regulations in the participating communities (beneficiaries) has encouraged the non-beneficiaries to adopt similar regulations. The success of river conservation, MPA and MHP sub-projects for participating communities has encouraged the adoption of these types of sub-projects by the non- beneficiaries. In addition, qualitative analysis suggests that an ecosystem unit approach may increase the rate of sub-project uptake by non-beneficiaries and encourage inter-village collaboration. The sustainability of the PNPM Green depends on the success in strengthening institutions at both the village and district level. Finally, the study recommends that:  Social and environmental factors should be considered when determining types of sub-projects and sub-project locations;  Local wisdom and knowledge of relevant sub-projects should be identified and supported during implementation;  Informal village-level meetings should be conducted more frequently to encouarge sharing of information and ideas between beneficiaries and non-beneficiaries;  Financial assets should be considered during the design and implementation of sub-projects;  Sub-projects and activities that need technical support should focus on strengthening local communities (rather than relying on external facilitation); and  Capacity building initiatives should also be targeted at the district and provincial level. Annexes 37 38 Annex 4. Results Evaluation Matrix SUSTAINABILITY NATURAL ASSET FINANCIAL ASSET HUMAN ASSET SOCIAL ASSET ELEMENTS Economic N/A Theme: Economic costs and N/A N/A Viability benefits. Results Evaluation: Findings: Most sub-projects appear to be economically viable in supporting rural livelihoods. Sub-projects create direct benefits for participating households, in terms of increased harvests of fruit, timber or aquatic resources. Renewable energy sub-projects create benefits through reduced expenditures. Very few sub- projects are profitable from a narrow business perspective, and would not attract short-term investors. When longer-term benefits to households and Sustainable Natural Resource Management Through PNPM Green Investments society are considered, PNPM Green investments are highly economically profitable. Restoration and Theme: Ecosystem services Theme: Economic valuation of N/A N/A Enhancement of through community ecosystem services. Natural Assets investments. Findings: Estimated annual Findings: benefits to community over the  The benefits to natural medium-long term (assuming assets in terms of improved adequate maintainance): ecosystem services (e.g.  Tree planting: 267,000-42 erosion control, protection million IDR. against storms, increased  Mangrove planting: 12 productivity of marine food million-107 million IDR. webs, improved soil fertility)  Increased number of fish are highly significant, and larvae and non-fish marine will continue beyond the biomass, and improved coral completion of the sub- reef condition. project (>5 years maturing time).  The estimated annual GHG reduction for MHP schemes is 565kg of CO2 (non-TSU sites) and 2,144kg of CO2 (TSU sites). SUSTAINABILITY NATURAL ASSET FINANCIAL ASSET HUMAN ASSET SOCIAL ASSET ELEMENTS Social Theme: Community N/A Themes: Project beneficiaries and Themes: NRM governance, acceptability investments, livelihood capacity to maintain and manage empowerment, spillover effects. priorities, and project investments. Findings: beneficiaries. Findings:  Participation: both Findings:  Uptake of capacity building attendance at meetings,  90% increase in the number through formal meetings for sub- and in-kind contribution of NRM-related investments project beneficiaries is 44%. (averaging only 8% of total since 2008, reaching  Community leaders have an costs) are low; key issues up to 2,926 community important facilitation role, limiting sustainability include investments by 2012. encouraging participation and the representative approach,  76% respondents are still supporting effective project and over-reliance on active in sub-projects and implementation. government support. activities; but may not be  Inclusion: 54% of beneficiaries actively maintaining the are women; involvement of investment. The community community leaders is only perceives that NRM sub- 20% of beneficiaries. projects require minimal  NRM governance: the role maintenance, indicating of implementation groups is inadequate facilitation at limited to group members, post-MDST stage. with limited benefits to  54% of respondents indicate those outside these groups; that investments are related these groups are not linked to livelihood priorities. to existing local groups and are not benefiting from local institutions. Annexes 39 Annex 5. Study Locations Table 1. Locations – The Economic and Livelihood Study Province District Sub-District Village Sub-projects and Activities 1 Watubangga Peoho Tree planting (teak tree) 2 Watubangga Watubangga Training on briquettes manufacturing 3 Watubangga Lamunde Manufacturing cooking oil 4 Kolaka Watubangga Gunung Sari Manufacturing biogas 5 South East Ladongi Raraa Tree planting (white teak, durian otong tree) 6 Sulawesi Ladongi Pembiyoha Water purification 7 Ladongi Gunung Jaya Tree planting (teak, mahoni, durian) 8 Mawasangka Mawasangka Rumpon 9 Buton Mawasangka Oengkolaki Tree planting (mangroves) 10 Mawasangka Banga Tree planting (mangroves) 11 Mallawa Ulu Daya Planting on Critical Land/Reforestation 12 Tanralili Kurusumange Training on Biogas and composting 13 Mallawa Samaenre Hot springs agro-tourism 14 Mallawa Wanua waru Developing sewerage system Maros 15 South Camba Timpuseng Microhydro/solar power plant 16 Sulawesi Tanralili Toddopolia Training on Compost making 17 Tanralili Purnakarya Training on Biogas 18 Camba Cempaniga Construction of riverside retaining wall 19 Bola Pasir Putih Tree planting (mangroves) Wajo 20 Tanasitolo Wajoriaja Tree planting (fruit, citris) 21 Wori Tiwoho Bricket 22 Wori Budo Mangrove rehabilitation 23 Wori Darunu Mangrove rehabilitation 24 Dimembe Laikit Water source protection (fruit plant, bamboo) 25 Dimembe Pinilih Water source protection (fruit plant, bamboo) and Renewable Energy North Minahasa 26 Dimembe Warukapas Waste processing (eco-friendly) and Natural Sulawesi Utara Resource Management 27 Dimembe Klabat Waste processing (eco-friendly) and Natural Resource Management 28 Likupang Barat Palaes Watersheed rehabilitation (durian) 29 Likupang Barat Maliambo Water source reforestation (pala) 30 Likupang Barat Bahoy DPL management and eco tourism 31 Putri Hijau Pasar Sebelat Planting Trees along the beach 32 Lais Balam Penghijauan dan Ekowisata Air Terjun 33 North Putri Hijau Air Putih Planting Trees in Village Land Bengkulu 34 Putri Hijau Air Muring Pelatihan pengelolaan limbah pasar 35 Putri Hijau Suka Baru Planting Trees Along the River Bank Bengkulu 36 Nasal Ulak Pandan Tanggul penahan longsor 37 Kaur Utara Padang Manis Conversion of Chemical Fertilizer to Organic 38 Kaur Nassal Pasar Baru Planting trees along the beach 39 Kaur Utara Guru Agung I Training on agricultural commodity 40 Kaur Utara Guru Agung II Manufacturing biogas Results Evaluation: 40 Sustainable Natural Resource Management Through PNPM Green Investments Province District Sub-District Village Sub-projects and Activities 41 Kerajaan Pardamuan Solar cell 42 Salak Salak 1 Solar cell 43 Pakpak Barat Salak Salak 1 Penanaman Jeruk dan Durian 44 Salak Singgabur Penghijauan das (mahoni , sengon, aren, pinus) 45 Salak Boang Manalu Penanaman Jeruk dan Durian 46 North Batangtoru Hutabaru Kolam ikan deras 47 Sumatra Batangtoru Hapesong Biogas Tapanuli lama Selatan 48 Batangtoru Padang Lancat Pelatihan Pembuatan Pupuk Organik dan Sisoma Pestisida Organik 49 Muara batang Sundutan Tigo Reef rehabilitation (cross-district to share costs) Mandailing gadis Natal 50 Natal Setia Karya Perlindungan mata air Annexes 41 Table 2. MHP-ROI Study locations Province District Site location MDST Data Installed capacity and Non- TSU number of Household TSU connected Kec Mehalaan/ December 2010 78 kw, 305 household 1 Mesakada Kec Sesena Padang/ November 2011 in operation, 14 kw, 99 2 Orabuan Selatan household West Sulawesi Mamasa Kec Bambang/Masoso January 2012 in operation, 22 kw, 70 3 household Kec Aralle/Salutambun October 2011 in operation, 20 kw, 40 4 Barat household Kec. Rantebua/Bokin March 2012 in operation, 6 kw, 46 5 household Toraja Utara Kec. Rantebua/Buangin October 2011 10 kw, 20 household 6 Kec. Nanggala/Kare June 2012 12 kw, 20 household 7 Pennanian South Kec. Saluputti/ November 2010 30 kw, 77 Household 1 Sulawesi Saluburonan Tana Toraja Kec. Malimbang December 2010 30 kw, 168 Household 2 Balepe/Leppan Kec Camba/Timpuseng April 2010 20 kw, 66 Household 3 Maros Kec Mallawa/Barugae March 2011 20 kw, 77 Household 4 Aceh Kec. Kluet Tengah/Alur June 2012 6.7 kw, 50 Household 8 Aceh Selatan Kejrun Padang Kec IV. Koto Aur June 2012 11 kw, 70 Household 9 Pariaman Malintang/Batu Basa West Sumatera Kec Mapat Tunggul/ May 2012 11 kw, 70 Household 10 Pasama Manapunapan/ Marapan Kec. Padang Bano/ July 2012 Operation only 6 5 Benteng Besi months after MDST, it is Bengkulu Lebong currenrly run by Diesel. 5 kw, 30 Household Results Evaluation: 42 Sustainable Natural Resource Management Through PNPM Green Investments Table 3. Spillover Effects Study locations Pilot study location Non-pilot No Province Pilot District Sub-district Village Villages 1 North Lubuk Larangan Tapanuli Batang Toru Padang Lancat Hutabaru Siagian Sumatra Selatan (n=40) Sisoma Sianggunan Batu hula Organic fertiliser Tapanuli Batang Toru Padang Lancat Wek I (training) Selatan (n=30) Sisoma Batu hula 2 South Micro Maros Camba Timpuseng Pattiro Deceng Sulawesi Hydropower (n=35) Baji Pa’mai Mangrove Wajo Takkalala Pantai Timur Soro (n=35) Lagoari 3 South East Training Buton Pasar Wajo Saragi Wasaga Sulawesi (n=35) Kahulungaya Agroforestry Buton Pasar wajo Lapodi Warinta (n=35) Waangu-angu 4 North Marine Protected Minahasa Likupang Bahoi Munte Sulawesi Areas (DPL) Utara Barat Mubune (n=30) Total N=240 9 13 Annexes 43 Annex 6. Methodology For Benefit Transfers Overall approach Economic valuation was conducted by using two types of methods: a. Economic benefit using household interview: Economic benefit, which can be assessed using questionnaires, is a simple income and savings analysis. Questions are posed to respondents who are involved in IGA or in renewable energy sub-projects and activities. All respondents were asked about increasing income related to sub-projects and activities regardless of the type of sub-project. Future economic benefits were calculated as the expected future benefit of the sub-project, and were based on the estimates provided by respondents. b. Natural resources and environmental economics valuation using benefit transfer: Economic valuation of NRM sub-projects and activities aimed to determine the economic value generated by PNPM Green investments. This assessment included both natural resources that can be harvested and marketed, and ecosystem services provided by these natural assets. The approach used in the assessment of environmental and resource economics is referred to as benefit transfer. Rationale of the benefit transfer method The benefit transfer method estimates the economic value of ecosystem services. It does this by transferring available information from completed studies in other locations or contexts. The basic goal of benefit transfer is to estimate benefits for one context by estimating benefits from a different context. Benefit transfer is often used when a measure of benefits is required but finances or time are too limited to conduct a full valuation study. It is important to note that benefit transfer calculations are only as accurate as the original study or source data, and require conditions to be similar across both sites and contexts (http:// www.ecosystemvaluation.org/benefit_transfer.htm#over). Calculating benefit transfers The current benefit transfer calculations use Indonesian Rupiah (IDR). To calculate the economic benefits of PNPM Green in selected villages, the researchers multiply the transfer value (Bt) with the actual project size (W) and the discount factor (1+r)n, where r is the discount rate and n is number of years. Bt is defined as the current value of actual object benefits (directly generated from the object in the sub-project location). If the ‘current value of object benefits’ could not be found or was too difficult to calculate, the values of various Bt used for this study were selected from The Ministry of Environment Decree No. 13 in 2011. However, this decree does not cover all benefits of ecosystem services provided by PNPM Green investments. In such cases, values of Bt were obtained by using the value of benefits in other places as a reference value. This means using studies from reputable researchers who have estimated direct and indirect benefits from secondary forest production and mangrove rehabilitation in several Indoneisan provinces such as South East Sulawesi, Sumatra, or West Java. If the price generated is from previous years, a discount factor (inflation) is used to obtain the current value of Bt. Assessment of future environmental and natural resource benefits usually is calculated for 5 years into the future; the interest rate used is the average inflation rate over the last 10 years, which in this case is equal to 6%. The formula for calculating the benefit transfer is: Vm=Bt(1+r)n.W Note: Vm = Benefit Value Bt = transfer value (current object benefit value or the value of benefits in other places as a reference value) R = interest N = year W = The area of PNPM Green sub-projects Results Evaluation: 44 Sustainable Natural Resource Management Through PNPM Green Investments Type of sub-projects for which benefit transfers were calculated In this study, the benefit transfer method was used to estimate the economic value of ecosystem services with NRM sub-projects. This economic valuation focuses on planting trees and mangroves. This approach was used to estimate current and future benefit from the trees and mangroves. Data required for benefit transfer calculation The main data used for this calculation is the actual amount/volume of the trees which have been planted. Depending on the available data, this is measured in either hectares (Ha) or ‘number of trees’. Data were collected in two ways: (a) direct field observation was conducted if the location was easy to access and it was possible to obtain an overview. The researcher estimated the amount/volume of planted trees and verified this estimate by asking local people for their assessment; and (b) if the location was inaccessible, data were obtained from key informant interviews. In some areas, planted fruit trees generated measurable prices on marketable fruit and goods. In these cases, key informant interviews were used to estimate production from fruit trees planted as part of PNPM Green sub-projects and activities. Similarly for mangrove rehabilitation, key informant interviews provided information on fish price and fish production, which was used to cross check information obtained from house hold interviews. Accuracy of the calculation The accuracy of calculations are dependent on the accuracy of the above data and on the transfer value (Bt) being used. If the Bt is the current value of actual object benefits or Bt from The Ministry of Environment Decree No. 13 in 2011, then the accuracy will be high. If the Bt used is derived from the the value of benefits in other places as a reference value then it may be less accurate. This is because the conditions in the study from which the Bt value is selected (e.g. species, planting density, soils, rain, competition) may not be comparable to the conditions of the PNPM Green sub-project area. For example, a Bt value used derived from a study (Nurfatriani F, 2005) where most tree plantings used mahogany (mahoni). However, if this was used to calculate the wood value for teak, the value would be underestimated, since the price for teak is higher than mahogany. On the other hand, the value of Bt may be overestimated if the same Bt was used to calculate the timber value of fruit trees such as durian, where the price for durian wood is lower than mahogany. Value of Ecosystem Services created by Tree Planting Direct Use:  Timber: The value of timber benefits was derived from the research of Nurfatriani F (2005) in a Region of Rehabilitation (Forest and Land) Sub-district Nglipar Gunungkidul Regency, Yogyakarta Province. The value generated through the technique of production values is 3,933,294,737 IDR/harvest or 3,070,487.69 USD/Ha.  Firewood: The value of firewood was estimated based on the research of Roslinda, E (2002) in Educational Forest Mount Walat Kab. Sukabumi, where the value generated through the technique of production values is 683,338,887.40 IDR/harvest or 1,903,450.94 USD/Ha.  Animal fodder from trees: Values of animal fodder were estimated based on the research conducted by Roslinda, E (2002) in Educational Forest Mount Walat Kab. Sukabumi, where the value generated through the technique of production values was 229,354,144.80 IDR/year or 638,869.48 USD/Ha.  Value for household water resources: In research by Roslinda, E (2002) in Educational Forest Mount Walat Kab.Sukabumi the value of tree planting for household water was estimated be 2,084,018,810.00 IDR/ year or 5,805,066 USD/Ha.  Value for agricultural water (irrigation): In research by Roslinda, E (2002) in Educational Forest Mount Walat Kab.Sukabumi, the value of tree planting for water for agricultural production was estimated to be 190,227.85 IDR/year or 3112.00 USD/Ha.  Wild birds: The value of wild birds were calculated based on Normawati M. Said (2006), in which the values obtained through the techniques of production value were 2,233,000.00 IDR/year or 5071.00 USD/Ha. Annexes 45 Indirect Use:  Erosion prevention: Tree planting and forests can prevent soil erosion. The value of this was obtained from the Minister of Environment Decree No. 13 Year 2011, which provides a value of 1,225,000.00 IDR / Ha.  Flood prevention: Forest may also prevent flooding. The value of this was derived from research by Sumangunsong, B (2002), who reported a value of 316.56 USD/Ha for secondary forests.  Carbon sequestration: The value of carbon sequestration provided by forests was obtained from the Minister of Environment Regulation No. 13 of 2011, in which a value 90000.00 IDR/Ha is provided.  Natural nutrients: The value of forests in supporting soil nutrients was obtained from the Minister of Environment No. 13 Year 2011. This value is to 4,610,000.00 IDR/Ha.  Waste breakdown: The value of the forest as waste decomposer was obtained from the Minister of Environment Regulation No. 13 of 2011, where the forest waste decomposition is valued at 435,000.00 IDR/Ha.  Biodiversity: Value of forests in supporting diversity was obtained from the Minister of Environment Regulation No. 13 of 2011. The value is set at 435,000.00 IDR/Ha.  Natural seed value: The value of forests as providers of natural seeds is based on research by Roslinda, E (2002) in Educational Forest Mount Walat Kab. Sukabumi. Here the value of natural seeds is assessed to be 75,000,000.00 IDR/year or 600,000.00 USD/Ha. Value of Ecosystem Services created by Mangrove Rehabilitation Direct Use:  Timber: The value of mangrove wood was obtained from the research by Aprilwati, S. (2001) conducted in the mangrove ecosystem in the area of Batu Ampar Pontianak regency. This reference provides a value of 855,141,900.00 IDR/year or 61,521.00 USD/Ha.  Firewood: Value of mangrove firewood was estimated by Alfian, M (2004) in the mangrove forest conservation in South East Sulawesi Tinanggea District. This was valued at 9,504,000.00 IDR/year or 1441.00 USD/Ha.  Fisheries: mangroves support fisheries via increased fish catch production. Data estimates of this value was obtained from key informant interviews.  Wild birds: the value of wild birds was based on Normawati M.Said (2006) in which the values obtained through the technique of production value estimates the value of birds to be 2,233,000.00 IDR/year or 5071.00 USD/Ha. Indirect Use:  Biodiversity: the value of biodiversity is referenced from the findings of Aprilwati, S (2001) at the Mangrove Ecosystem in the Area Batu Ampar Pontianak regency. Here, the value of biodiversity is estimated in the research of Ruitenbeek (1991) in Bintuni Papua using benefit transfer techniques. The value of biodiversity is estimated at 15 USD/Ha/year (Rupiah Against Dollar: 1 USD = 8250 IDR) and research value of 1,720,125,000.00 IDR/year or 123,750.00 USD/Ha.  Nutrient provision: the value of enhanced nutrients is estimated from the findings Alfian, M (2004) on mangrove forest conservation in the district Tinanggea South East Sulawesi, via the transfer benefit. This was valued at 5,105,007,722.00 IDR/year or 773,955.00 USD/Ha.  Erosion reduction: reducing coastal erosion was valued based on the research of Husni, S (2001) in the West Lombok regency of West Nusa Tenggara Province. The value of reducing erosion and erosion repair costs is 2,286,687,500.00 IDR/year or 5,095,123.00 IDR/Ha.  Protection against waves and storm surges: this value was estimated by Normawati M. Said (2006), in which the values obtained via the technique of replacement cost value when building retaining walls was valued at 30,870,873,596.00 IDR/year or 70,111,520.00 IDR/Ha.  Prevention of seawater intrusion: the value of preventing seawater intrusion was referenced from research by Alfian, M (2004) on the conservation of mangrove forests in the district Tinanggea South East Sulawesi, using opportunity cost techniques, was valued at 11,728,219,620.00 IDR/year or 1,778,081.00 USD/Ha.  Carbon sequestration: the value of carbon sequestration was referenced by Suryono, T. (2006), in Forest Angke Kapuk North Jakarta, using benefit transfer techniques derived from Hilmi (2003) on carbon sequestration potential for Rhizophora mucronata. This was estimated to 3258.34-3957.44kg/ha, with an estimated value of 103,722,011.00 IDR/year or 1,486,415.00 IDR/Ha. Results Evaluation: 46 Sustainable Natural Resource Management Through PNPM Green Investments Canadian International Development Agency