The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) REPORT NO.: RES46298 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF FOREST SECTOR MODERNIZATION AND COASTAL RESILIENCE ENHANCEMENT PROJECT APPROVED ON JUNE 22, 2017 TO SOCIALIST REPUBLIC OF VIET NAM ENVIRONMENT, NATURAL RESOURCES & THE BLUE ECONOMY EAST ASIA AND PACIFIC Regional Vice President: Manuela V. Ferro Country Director: Carolyn Turk Regional Director: Anna Wellenstein Practice Manager/Manager: Mona Sur Task Team Leader(s): Mizushi Satoh, Dinesh Aryal The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) ABBREVIATIONS AND ACRONYMS CIFOR Center for International Forestry Research CMU Country Management Unit CPCU Central Project Coordination Unit EFA Economic and Financial Analysis EIRR Economic Internal Rate of Return ENPV Economic Net Present Value EOI Expressions of Interest ESF Environmental and Social Framework FNVP Financial Net Present Value FCPF Forest Carbon Partnership Facility FIRR Financial Internal Rate of Return FS Feasibility Study GoV Government of Vietnam ha Hectare IDA International Development Association (of the World Bank Group) ISR Implementation Status Report FMCR Forest Sector Modernization and Coastal Resilience Enhancement Project MARD Ministry of Agriculture and Rural Development M&E Monitoring and Evaluation MOF Ministry of Finance NCC North Central Coast NDCs Nationally Determined Contributions NOL No-Objection Letter NPV Net Present Value PAD Project Appraisal Document PDO Project Development Objective PFES Payments for Forest Environmental Services REDD+ Reducing Emissions from Deforestation and Forest Degradation plus conservation of forest carbon stocks, sustainable management of forests, and enhancement of forest carbon stocks RRD Red River Delta SDR Special Drawing Rights SPC Shadow Price of Carbon tCO2e Tons of carbon dioxide equivalent WB World Bank All dollar amounts are US dollars unless otherwise indicated. The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) BASIC DATA Product Information Project ID Financing Instrument P157127 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 22-Jun-2017 31-Dec-2023 Organizations Borrower Responsible Agency Socialist Republic of Viet Nam Project Development Objective (PDO) Original PDO The project development objective is to improve coastal forest management in the Project Provinces. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60790 22-Jun-2017 03-Aug-2018 29-Mar-2019 31-Dec-2023 150.00 50.82 95.82 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This restructuring paper seeks a Level 2 restructuring of the Forest Sector Modernization and Coastal Resilience Enhancement Project (FMCR; Credit No. IDA-60790), involving the following changes: (i) partial cancellation of International Development Association (IDA) proceeds in the equivalent amount of SDR 60.1 million ; (ii) explicit definition of the term “coastal resilience” and inclusion of eligible species for coastal cliff planting for IDA financing under Component 2 of the project; (iii) adjustments to the project components/activities and reallocation of the remaining budget across components/activities; and (iv) revisions of the results framework, reflecting the reduced scope of the project. The restructuring is undertaken in fulfillment of the request from the Government of Viet Nam (GoV) dated December 20, 2023. These changes are expected to improve the degree of achievement of the Project Development Objective (PDO) within the remaining life of the project. A. Background 2. FMCR was approved by the World Bank (WB) Board of Directors on June 22, 2017 and became effective on March 29, 2019. The project is financed by IDA with a total credit of SDR 109.5 million (equivalent to $150 million). The PDO is to improve coastal forest management in the project provinces. By improving the management of coastal forests, the project aims to contribute to GoV’s longer-term objective of enhancing coastal resilience to climate change. The project will also contribute to delivering on GoV’s climate change and green growth strategies as well as on its Nationally Determined Contributions (NDCs), all three of which underscore the importance of restoring and managing coastal forests in a sustainable manner to augment climate adaptation and mitigation benefits. 3. The project is being implemented in eight coastal provinces—Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Thua Thien Hue, Quang Tri, Quang Ninh, and Hai Phong. The first six provinces are coastal provinces in the North Central Coast (NCC) region, while the last two are in the Red River Delta (RRD). These provinces have a total of approximately 400 km of coastline (12 percent of Vietnam’s total coastline). At appraisal, the total area allocated for the project activities was 71,496 hectares (ha), with the following PDO indicators and targets to measure achievements:  PDO indicator 1: “Area of coastal forest restored and managed according to agreed criteria,” with a target of 50,000 ha. This indicator is expected to measure overall areas that are restored and managed through protection, enrichment, and new planting;  PDO indicator 2: “Coastal protection forests, in project area, under management of local community groups,” with a target of 35,000 ha. This indicator is expected to measure only those areas that are managed by local communities / groups of households;  PDO indicator 3: “Share of target beneficiaries with rating ‘Satisfactory’ or above on project interventions (percentage, disaggregated by gender),” with a target of 80%. 4. The project has experienced significant delays for multiple reasons, including slow GoV startup processes, causing the project to reach effectiveness almost 21 months after Board approval, typhoon-induced heavy rain and flooding events that severely affected the NCC region in October 2020, and COVID-19–related disruptions during 2020–21. In light of these delays and the fact that coastal forest planting is a seasonal activity in Vietnam, with one planting season each year for different mangrove and sandy soil species (based on the local climate and soil conditions), the WB and GoV initiated a discussion on project restructuring in 2021 to determine the project activities that could be completed within the remaining project life. This restructuring paper reflects (i) the agreement reached in January 2022 on the reduced scope The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) of the project; and (ii) additional amendments to the project scope due to delays in processing the restructuring within GoV. B. Project status 5. According to the Implementation Status Report (ISR) of June 2023, the overall project implementation progress and progress toward achievement of the PDO have been rated Moderately Unsatisfactory, which reflects the cumulative implementation delays experienced to date. However, the pace of project implementation started picking up from calendar year 2022. The provinces made significant progress in coastal forest planting and rehabilitation with the total area planted/rehabilitated approaching 4,056 ha. On the other hand, progress in non-planting activities (small-scale infrastructure, technology, and livelihood subprojects) varies across the provinces—the main reason for the low level of disbursement to date (approximately $46 million). 6. Status of Component 1: Enabling Effective Coastal Forest Management. This component includes three subcomponents: (i) Modernizing Coastal Forest Planning; (ii) Expanding Quality Seedling Production; and (iii) Broadening Payments for Forest Ecosystem Services to Coastal Forests. 7. Under component 1, five consultancy assignments have been completed across the three subcomponents, including assessments on the use of nearshore coastal resources, baseline seed management, equipment and technology, seedling value chains, and valuation of ecosystem services of coastal forest ecosystems. These consultancies provided recommendations on: (i) effective and sustainable management and use of coastal forest resources; and (ii) maximizing the environmental-economic value of coastal forests in the context of coastal spatial planning. 8. Status of Component 2: Coastal Forest Development and Rehabilitation. This component includes two subcomponents: (i) Planting and Managing Target Coastal Protection Forests; and (ii) Protection of Planting Areas with Physical Measures. 9. Under subcomponent 2.1, a total of 4,056 ha of coastal forest planting/rehabilitation had been completed as of October 10, 2023, which represents approximately 52.0 percent of the original target (7,800 ha). All provinces except Quang Ninh have completed all planting/rehabilitation areas under plan agreed to in January 2022 except for small areas excluded due to unforeseen circumstances (e.g., natural regeneration of forests) and technical issues affecting the survival of seedlings (e.g., pests, changing tidal regimes). The provinces have also been conducting post-planting verification to ensure the minimum survival rate of the seedlings required under the project (75% for mangroves and 85% for terrestrial species) is achieved. The survival rates reported by the provinces to date generally meet the requirements with a few exceptions. The provinces and the Ministry of Agriculture and Rural Development (MARD) are committed to regularly monitoring the planted seedlings and conducting supplementary planting if the survival rate drops below the agreed thresholds. 10.Under subcomponent 2.2, infrastructure subprojects aimed at improving the survival rates of the planted seedlings and supporting natural regeneration of degraded coastal forests are at various stages of implementation. Of the 21 subprojects, 9 have been completed and become operational, 9 are under construction, and 3 have been cancelled. 11. Status of component 3: Generating Sustainable Benefits from Coastal Forests. This component includes two subcomponents: (i) Investment Packages for Generating Benefits from Coastal Forests; and (ii) Demand-Driven Productive Infrastructure. 12. Subcomponent 3.1 finances small-scale livelihood subprojects (average funding amount: $10,000) for community-level organizations (e.g., cooperatives) to support sustainable income-earning opportunities and thus reduce pressure on The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) natural coastal forest resources. The WB has provided a no-objection letter (NOL) to 134 livelihood packages to date, of which 41 have been implemented, 6 are under implementation, 5 have been cancelled, and the remainder will not be implemented before project closure. MARD and the concerned Departments of Rural Development (DARDs) are planning to implement these subprojects from 2024 onward using their own financing. 13. Under subcomponent 3.2, the WB has provided a NOL to 150 Expressions of Interest (EOIs) (90 small-scale infrastructure packages and 60 technology packages), totaling $58.1 million. The approved EOIs have subsequently been consolidated into 84 infrastructure and 49 technology subprojects. Of the 84 infrastructure packages, 34 have been completed and handed over, 14 have been completed and are yet to be handed over, 28 are under construction, 9 are under procurement, and 8 have been cancelled. Of the 49 technology packages, 22 are under implementation and 27 have been cancelled. Varying degrees of progress are observed for these activities across the provinces. 14. Status of Component 4: Project Management. The overall project management and monitoring and evaluation (M&E) is rated Moderately Unsatisfactory in the latest ISR. Despite the hiccups experienced at the startup phase, project management has improved over time—notably, (i) progress reports are submitted in a timely manner by the Central Project Coordination Unit (CPCU) prior to WB implementation support missions; (ii) training and capacity-building activities have been organized for project staff at the central and provincial levels every year; (iii) project financial statements and procurement activities have been audited every year since 2019; (iv) compliance with the WB Environmental and Social Framework (ESF) is rated moderately unsatisfactory and regularly independently verified. C. Rationale for Restructuring 15. Implementation delay. The main causes of the significant implementation delays are the following: (i) slow GoV project startup processes (e.g., budget allocation for the project, signing of on-lending agreements), resulting in a 21- month delay in reaching effectiveness after Board approval; (ii) severe rain and flooding, caused by a typhoon in October 2020, which affected six of the eight provinces for an extended period of time; (iii) the COVID-19 pandemic, which caused severe disruptions of GoV procedures across the central, provincial, and district levels as well as significant mobility restrictions for 2021–22; (iv) delays in completing the investment mapping, a necessary step to confirm the eligibility and suitability of the project land areas for planting; and (v) administrative delays in obtaining the necessary provincial-level approvals for some provinces’ short coastal forest planting seasons. The cumulative delays necessitated a reduction in project scope through project restructuring because an extension beyond the existing closing date of December 31, 2023 was not endorsed by the IDA. 16. Restructuring process to date. Given the situation above, the WB and GoV initiated a discussion on project restructuring in 2021, leading to the submission of a restructuring proposal by MARD to the WB on November 8, 2021. This was followed by a implementation support mission in November-December 2021 to assess the technical and operational feasibility of the proposal within the remaining project life. In particular, the respective degrees of readiness and capacities of the eight provinces to conduct planting and rehabilitation activities under subcomponent 2.1 in the last two planting seasons were carefully examined. The key agreements reached between the two parties at the end of the implementation support mission were the following: (i) the total area for planting and rehabilitation is to be reduced from 7,800 to 4,671 ha; (ii) the total IDA financing amount is to be reduced from $150 million to $79.5 million and a total of $70.5 million will be cancelled; and (iii) the total forest area to be protected is to be increased from 35,000 to 37,000 ha; this activity will be supported by counterpart resources to ensure continuation of protection activities after project closure; (iv) while the PDO will remain unchanged, the results framework will be revised to reflect the reduced scope of the project; and (v) The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) following project closure on December 31, 2023, the government will continue to implement activities until 2026, with key technical staff of the CPCU and Provincial Project Management Units (PPMUs) retained to supervise the nursing and tending of the seedlings to ensure their survival. However, due to significant delays in processing the agreed project restructuring within GoV, MARD’s final restructuring proposal was only approved by the Prime Minister on October 26, 2023. The cumulative delays resulted in further reduction in the project scope and additional IDA credit cancellation as detailed below. The IDA received the official request for IDA credit cancellation from the Ministry of Finance (MOF) on December 20, 2023, as further clarified in the letter dated December 22, 2023. 17.Coastal cliff planting. It became apparent through the implementation support mission assessing the restructuring in November-December 2021 that four out of the eight provinces had conducted and/or were planning to conduct planting/rehabilitation of “coastal cliff forest”—forest located in higher elevation areas (up to a few hundred meters above sea level). The total area of planting/rehabilitation dedicated to this type of forest is 1,469 ha (31.4 percent of the reduced total). Although this type of forest is considered a subset of “coastal protection forest” as per relevant GoV regulations, it neither corresponds to the “mangrove” nor to the “sandy soil” forest explicitly referred to in Subcomponent 2.1 of the project as described in the Project Appraisal Document (PAD). Given the large proportion of planting/rehabilitation sites in this third type of forest, it was agreed during the mission that the restructuring paper would indicate: (i) the best available scientific knowledge on the suitable species for coastal cliff forest planting and application of suitable silvicultural techniques to ensure the minimum seedling survival rate of 80 percent; and (ii) how the coastal cliff planting would contribute to the achievement of the PDO and the longer-term objective of enhanced coastal resilience to climate change. The clarification of eligible species for coastal cliff planting under this restructuring will enable the financing for such activity from the project and the contribution of such activity to PDO Indicator 2 and Intermediate Indicator 2.1. 18.Economic and financial assessment (EFA). Using the methodology applied at project appraisal, an EFA was undertaken for the proposed restructured project. The analysis examined two scenarios—one with and one without the project—and made the following key assumptions: (i) a discount rate of 6 percent; (ii) a 31-year project life span; (iii) a minimum shadow price of carbon (SPC) of $40 per ton of carbon equivalent (tCO2e) in 2020;1 (iv) an 80 percent success rate for coastal forest planting and rehabilitation; and (v) a 30 percent success rate for the investments made under component 3. The EFA results show that the project remains both financially and economically feasible. The net present value (NPV) and financial internal rate of return (FIRR) were estimated to be $170,924,767 and 15.8 percent, respectively, compared to $123,263,512 and 12.0 percent respectively at project appraisal. The results of the economic analysis indicate an NPV of $905,808,611 and an economic internal rate of return (EIRR) of 48.0 percent respectively. A sensitivity analysis shows that both the financial and economic NPVs would remain positive—at $4,609,426 and $231,685,055, respectively—at a discount rate of 15 percent. The full EFA is found in the project files. 19. There are no pending audits for the project. II. DESCRIPTION OF PROPOSED CHANGES 20. Definition of coastal resilience. As noted above, enhancing coastal resilience to climate change is the longer-term objective of FMCR; however, the term “coastal resilience” is not explicitly defined in the PAD. While coastal resilience can be narrowly defined as physical resilience to coastal climatic hazards (e.g., moderating storm surges; preventing salinity 1 World Bank. 2017. “Guidance note on shadow price of carbon in economic analysis.” The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) intrusion into underground aquifers / agricultural land), its definition can be broadened to encompass socioeconomic resilience of coastal communities to a wider range of climate impacts. It became apparent through the discussion as part of the restructuring appraisal mission that the broader definition is more appropriate for FMCR in light of the following considerations:  Geographic characteristics of the NCC region: Six of the eight project provinces are in the NCC region—where a narrow coastal strip exists from Thanh Hoa Province in the north to Thua Thien Hue Province in the south. This zone consists of long sandy beaches and riverine estuaries divided by several eastward extensions of the central Truong Son Mountain Range that reach the East Sea, forming raised coastal cliffs. These extensions and numerous short rivers divide a narrow coastal plain that is vulnerable to riverine flooding. Coastal cliff forests are a type of vegetation typically observed on steep slopes across this coastal zone.  Ecosystem services of coastal cliff forests: Considering the specific geographic characteristics of the NCC region outlined above, coastal cliff forests are deemed to contribute to attenuating the adverse impacts of riverine flooding, slope erosion, and landslides, caused by heavy rain, on coastal communities, crops, and infrastructure. The latter includes irrigation dams, buildings, roads, bridges, and the Hai Van Tunnel at the border between Thua Thien Hue and Da Nang Provinces. Thus, coastal resilience under the FMCR Project includes resilience to these broader types of climatic hazards and their adverse socioeconomic impacts on coastal populations. 21. Eligible species for coastal cliff planting. Based on the broader definition of coastal resilience provided above, appropriate coastal cliff species were selected through expert advice, site surveys, and stakeholder consultations. The eligible species are listed in table 1. A fuller description of the species and silvicultural techniques to be applied thereto is given in annex 1. The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Table 1: Eligible Species for Coastal Cliff Planting under FMCR Local name Scientific name Province 1 Lim xanh Erythrophleum fordii Nghe An, Ha Tinh, Thua Thien Hue 2 Thông nhựa Pinus latteri Thanh Hoa, Nghe An 3 Keo Tai tượng Acacia mangium Thanh Hoa, Nghe An 4 Trám đen Canarium tramdenum Dai & Ykovl Nghe An 5 Xoan đào Prunus arborea Nghe An 6 Huỷnh Tarrietia javanica Thua Thien Hue 7 Chò chỉ Parashorea chinensis Thua Thien Hue 8 Gáo Neolamarckia cadamb Thua Thien Hue The clarification of eligible species for coastal cliff planting under the project through this restructuring does not result in any change in the project activities or project implementation arrangement. 22. Partial cancellation. The proposed partial cancellation of an amount of IDA credit of SDR 60,107,964 will reduce total IDA financing to SDR 49,392,036. This partial cancellation amount reflects (i) the outcome of the operational feasibility assessment undertaken as part of the restructuring appraisal mission; and (ii) subsequent cancellation of infrastructure/technology subprojects whose completion by the closing date of the IDA credit was deemed unfeasible. The IDA cancellation amount has been discussed and agreed upon between the IDA team and MARD during project implementation support missions. 23. Project Components and funding allocation. The titles of the components and subcomponents remain the same; the nature of project interventions also remains unchanged, except for the explicit inclusion of coastal cliff forest as a forest type eligible for project financing. It is proposed that the budget allocation for each component and subcomponent be adjusted as follows:  Component 1 activities remain the same. There is no IDA funding allocation; all activities are financed by GoV counterpart financing.  Component 2 activities have been adjusted as follows: i. Subcomponent 2.1 has been significantly scaled down because of the reduced area of coastal forest planting and rehabilitation under the project. On the other hand, agreement has been reached that MARD will continue to conduct tending of the planted seedlings following project closure, using GoV financing to ensure their survival rates will be in accordance with project design. ii. Subcomponent 2.2 has also been scaled down because of the reduced need for protection infrastructure for the reduced area of forest planting and rehabilitation.  Component 3 activities have been adjusted as follows: i. Subcomponent 3.1 is now fully financed by GoV counterpart financing. No IDA financing is used to finance community-level livelihood activities. ii. The budget for Component 3.2 has been increased in response to MOF’s request at the project feasibility study (FS) stage in 2017. This reflects confirmed demand for technology and infrastructure subprojects to support livelihood development at the provincial and district levels.  Component 4 activities remain the same. The budget has been reduced because of the reduced project size. The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Table 2 provides details on the budget reallocation across the components and subcomponents. Table 2: Overview of Proposed Adjustments to Funding Allocation by Component/Subcomponent (US$, millions) Component/Subcomponent Original IDA Revised IDA Note amount amount (US$, millions) (US$, millions) Component 1: Enabling Effective Coastal 0.00 0.00 No IDA funding allocation; no change Forest Management Component 2: Coastal Forest 104.86 37.36 Development and Rehabilitation 2.1: Planting and Managing Target 86.68 25.92 Reduced area of planting and rehabilitation; coastal Coastal Protection Forests cliff forest is explicitly included as an eligible forest type; budget for forest protection is shifted from IDA to GoV funding 2.2: Protection of Planting Areas with 18.18 11.44 Reduced scope of work due to the reduced area of Physical Measures planting/rehabilitation; the nature of interventions remains unchanged Component 3: Generating Sustainable 40.42 24.42 Benefits from Coastal Forests 3.1: Investment Packages for 24.04 0.00 The funding source changed from IDA to GoV Generating Benefits from Coastal counterpart financing; the nature of interventions Forests remains unchanged 3.2: Demand-Driven Productive 16.38 24.42 Increased IDA amount due to confirmed demand for Infrastructure technology and infrastructure subprojects to support livelihood development at the provincial level Request for budget allocation increase was made by MOF at the project FS stage in 2017 Component 4: Project management and 4.72 3.22 Reduced IDA amount due to the smaller project size M&E Total IDA financing (US$, millions) 150.00 65.00 Note: FS = feasibility study. 24. Impacts of GoV’s delayed processing of the restructuring proposal on project activities. As noted above, the restructuring plan agreed upon between the WB and MARD in January 2022 revised financing sources for some of the project activities between IDA and GoV counterpart financing. It was agreed that forest protection under Subcomponent 2.1 and livelihood subprojects under Subcomponent 3.1 would be fully financed by GoV financing. Subsequently, however, it took GoV almost two years to obtain the Prime Minister’s approval of said restructuring plan. In other words, no GoV financing was available to support these activities in the meantime. For this reason, the implementation of the project’s forest protection activities is yet to be initiated; livelihood subprojects have only been undertaken in only three of the eight provinces. The planned forest protection and remaining livelihood activities will only be conducted after IDA credit closing by MARD using its own financing. This situation significantly impacts the Results Framework, particularly, PDO Indicators 1 and 2, which are directly linked to forest protection. The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) 25. Results Framework: With the reduced scope of the project, some of the PDO and intermediate indicator targets have been amended as indicated below. However, the PDO remains unchanged owing to its broad nature.  PDO Indicator 1: Area of coastal forest restored and managed according to agreed criteria. The target has been reduced from 50,000 ha to 4,150 ha. MARD is nonetheless planning to achieve 40,000 ha over the three years after IDA credit closing (2024-2026) using its own financing;  PDO Indicator 2: Coastal protection forests, in project area, under management/protection of local communities (groups/individual households). The target has decreased from 35,000 ha to 0 ha. MARD is planning to achieve a total of 37,000 ha from 2024-2026 using its own financing;  Intermediate Indicator 1.1: Number of seedling producers with improved quality seedling supply capacity as the result of project intervention. The target has been reduced from 20 to 10 with a minor change in wording (see Table 3);  Intermediate Indicator 2.1: Area of coastal forest planted and rehabilitated under the project. A minor adjustment to the wording is proposed to include the area of rehabilitation, which is essentially low-intensity planting. The target has been reduced from 7,800 ha to 4,150 ha;  Intermediate Indicator 2.3: Communities/household groups involved in management/protection of coastal protection forests. The target has decreased from 350 to 0. However, MARD is planning to achieve the original target from 2024-2026 using its own financing (minor change in wording; see Table 3); and  Intermediate indicator 3.2: Beneficiaries from the project supported packages (number, disaggregated by gender). The target has been reduced from 25,000 to 7,500 with a minor change in wording (see Table 3). Table 3 below provides details on the proposed changes and their rationales. Upon the approval of this restructuring, the revised results framework will be incorporated in the Project Operations Manual. Table 3: Overview of Proposed Changes to Indicators in the Results Framework PDO indicators Original indicator Proposed change Rationale for change 1. Area of coastal forest restored and No change in indicator wording. This area includes the total area brought managed according to agreed criteria under adequate (ha) Target to be reduced to 4,150.00. management/protection, which includes the area planted/rehabilitated under the (Baseline: 0.00; target: 50,000.00) project. Given that forest protection is no longer financed under the project, only the area for planting/rehabilitation is accounted for. 2. Coastal protection forests, in project Coastal protection forests, in project Given that forest protection is no longer area, under management of local area, under management/protection of financed under the project, the original community groups (ha) local communities (groups/individual target is deemed unachievable. However, households) (ha) MARD is planning to achieve 35,000 ha in (Baseline: 0.00; target: 35,000.00) three years after IDA project closing Target to be reduced to 0.00. using counterpart financing. For this reason, the wording is also adjusted to be consistent with the latest regulations. Intermediate indicators Original indicator Proposed change Rationale for change The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) 1.1 Number of seedlings producers who Indicator wording to be changed to: It became apparent during project gain accreditation as the result of the “Number of seedling producers with implementation that the seedling project intervention (Number) improved quality seedling supply producer certification system ceased to capacity as the result of project exist due to regulatory change. The (Baseline: 0.00; target: 20) intervention (Number)” wording change is proposed to retain the Target to be reduced to 10. intent of the original indicator. 2.1 Area of coastal forest planted under Indicator wording to be changed to: It became apparent during project the project (ha) “Area of coastal forest planted and implementation that rehabilitation rehabilitated under the project (ha)” involves low-intensity planting. It is (Baseline: 0.00; Target: 7,800.00) therefore more logical to combine these Target to be reduced to 4,150. two categories into one. The total area is reduced based on the detailed technical and operational feasibility assessments conducted in 2021. 2.3 Communities/household groups Indicator wording to be changed to: Given that forest protection is no longer involved in community-based “Communities/household groups financed under the project, the target is management of coastal protection involved in management/protection of deemed unachievable. However, MARD forests (Number) coastal protection forests (Number)” is planning to achieve the original target (Baseline: 0; Target: 350) Target to be reduced to 0. of 350 in three years after IDA project closing using counterpart financing. For this reason, the wording is also adjusted to be consistent with the latest regulations. 3.2 Beneficiaries from the project Indicator wording to be changed to: The wording is adjusted to ensure that all investment packages (Number, “Beneficiaries from the project types of project subprojects are captured disaggregated by gender) supported packages (Number, by this indicator, including livelihood disaggregated by gender)” subprojects. (Baseline: 0.00; Target: 25,000.00; The reduced target reflects the reduced Target for female: 10,000.00) Target to be reduced to 7,500. Target for scope of project supported females to be reduced to 3,000. infrastructure, technology, and livelihood packages. NOTE: Words and numbers in bold in Table 3 indicate those changed through restructuring. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Overall Risk Rating ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Enabling Effective Coastal Forest Enabling Effective Coastal 0.00 No Change 0.00 Management Forest Management Coastal Forest Development and Coastal Forest Development 104.86 Revised 37.36 Rehabilitation and Rehabilitation Generating Sustainable Benefits Generating Sustainable 40.42 Revised 24.42 from Coastal Forests Benefits from Coastal Forests The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Project Management and M&E 4.72 Revised Project Management and M&E 3.22 TOTAL 150.00 65.00 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' Disburs S REQUEST IDA-60790- 109,500,000.0 ing&Re XDR 60,107,964.00 20-Dec-2023 49,392,036.00 FOR 001 0 paying COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-60790-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: 60790-GDS,WO,NON-CS,CS PTS. 2&3 77,190,000.00 25,351,597.74 36,157,945.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: 60790-COMPETITIVE GRANTS PT. 3 28,840,000.00 6,915,619.14 11,435,052.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: 60790-CONSULTING SERVICES PT. 4.2 3,470,000.00 1,786,055.28 1,799,039.00 100.00 100.00 Total 109,500,000.00 34,053,272.16 49,392,036.00 The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2017 0.00 0.00 2018 0.00 0.00 2019 0.00 0.00 2020 200,000.00 200,000.00 2021 1,750,000.00 1,750,000.00 2022 23,800,000.00 23,800,000.00 2023 54,000,000.00 54,000,000.00 2024 70,250,000.00 70,250,000.00 OPS_DETAILEDCHANGES_SORT_TABLE SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Moderate  Moderate Macroeconomic  Moderate  Moderate Sector Strategies and Policies  Moderate  Moderate Technical Design of Project or Program  Substantial  Moderate Institutional Capacity for Implementation and  Substantial  Substantial Sustainability Fiduciary  Substantial  Substantial Environment and Social  Substantial  Moderate Stakeholders  High  Substantial Other Overall  Substantial  Substantial . The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) . Results framework COUNTRY: Viet Nam Forest Sector Modernization and Coastal Resilience Enhancement Project Project Development Objectives(s) The project development objective is to improve coastal forest management in the Project Provinces. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 To improve coastal forest management in the Project Provinces 1. Area of coastal forest restored and managed 0.00 0.00 12,000.00 1,000.00 2,000.00 3,000.00 4,000.00 4,150.00 according to agreed criteria* (Hectare(Ha)) Action: This indicator has been Revised 2. Coastal protection forests, in project area, under management/protection 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 of local communities (groups/individual households) ** (Hectare(Ha)) Action: This indicator has been Revised 3.Share of target 0.00 0.00 0.00 75.00 75.00 80.00 80.00 80.00 beneficiaries with rating The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 ‘Satisfactory’ or above on project interventions (percentage, disaggregated by gender) (Percentage) Female (Percentage) 0.00 0.00 0.00 75.00 75.00 80.00 80.00 80.00 PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Enabling Effective Coastal Forest Management 1.1 Number of seedlings producers with improved quality seedling supply 0.00 0.00 2.00 4.00 6.00 8.00 10.00 10.00 capacity as the result of the project intervention (Number) Action: This indicator has been Revised 1.2. PFES tools developed under the project utilized by MARD to implement No No No Yes Yes Yes Yes Yes PFES pilot (Yes/No) (Yes/No) Coastal Forest Development and Rehabilitation The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 2.1 Area of coastal forest planted and rehabilitated 0.00 0.00 0.00 1,000.00 2,000.00 3,000.00 4,000.00 4,150.00 under the project (ha)* (Hectare(Ha)) Action: This indicator has been Revised 2.2 Share of native species seedlings used in the annual total seedlings 5.00 5.00 20.00 20.00 20.00 20.00 20.00 20.00 delivered under the project (Percentage) 2.3 Communities/ household groups involved in community- based 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 management/protection of coastal protection forests** (Number) Action: This indicator has been Revised Generating Sustainable Benefits from Coastal Forests 3.1 Community investment packages that have achieved the 0.00 0.00 0.00 20.00 40.00 60.00 80.00 80.00 investment proposal objectives** (Percentage) The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 3.2 Beneficiaries from the project supported packages (number, 0.00 0.00 1,000.00 2,000.00 4,000.00 6,000.00 7,000.00 7,500.00 disaggregated by gender) (Number) Action: This indicator has been Revised Female (Number) 0.00 0.00 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 Action: This indicator has been Revised 3.3 Rural productive infrastructure supported by the project with cost- 0.00 0.00 0.00 0.00 40.00 60.00 80.00 80.00 sharing arrangement (percentage) (Percentage) IO Table SPACE The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) ANNEX 1. ELIGIBLE COASTAL CLIFF SPECIES UNDER FMCR Name Rationale for selection Recommended silvicultural techniques Note 1 Lim xanh - Through the results of site - Mix the soil in the hole, fill the hole with soil, and Planted (Erythrophleum surveys and stakeholder make the hole deep enough (1–2 cm lower than the in Nghe fordii) consultations, the afforestation top) to place the pot in. An, Ha design consultant concluded that - Tear off the pot and put it in the hole, keep the Tĩnh, and plant upright, fill the hole with soil, and compact this species was already present Thua the soil around the pot (be careful not to break the and had been successfully Thien pot); add soil around the root (2–3 cm higher than planted in the local area as part Hue the root neck). of other programs and projects - During implementation, plants that come in Provinces - The Forest Protection broken pots must be replaced with another plant. Department confirmed selection - After the seedlings’ planting, they should be of suitable plant species in regularly checked and protected. About 20 days technical appraisal report. after planting, the roots should be dug up and trees that are tilted or have fallen, or do not meet the technical requirements should be corrected. - One month after planting, verification activities should be carried out. If the seedlings’ survival rate is less than 85%, additional ones must be planted according to the acceptance regulations for afforestation; the rate of additional planting is 10%. - Maintenance in the 1st year (2023) and 2nd year (2024) should be performed twice a year—on the spring and autumn-winter crops: + 2023: Maintenance activities on the spring crop include: clearing shrubs, vines, and weeds that invade plants and target regeneration trees (cutting branches, roots under 10 cm high); tilling the soil 7– 10 cm deep, weeding, cultivating the soil holding roots to kill weeds, stimulating the growth of plants, clearing the grass, and hoeing to cultivate the turtle shell-–shaped soil around the foot with a diameter of 0.6–0.8 m. + 2024: On the autumn-winter crop, perform the same maintenance as on the spring crop, and add seedlings to holes with dead trees and poorly growing trees. The standards for planting of additional seedlings are the same as those specified above; the rate of additional planting is 5%. - Maintenance in 2025 and 2026: Performed on the autumn-winter crop; includes clearing shrubs, vines, and weeds that invade planted areas; cultivating the soil; and protecting newly planted seedlings and target regenerated trees. 2 Thông nhựa - Based on site surveys and - Seedlings should be planted on shady days or on Planted (Pinus latteri) consultations with stakeholders days with light rain or light sunshine and the soil in in Nghe implemented by the design the hole must be moist enough. When planting, the The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Name Rationale for selection Recommended silvicultural techniques Note consulting unit, it was concluded pot must be torn off and the seedling placed An and that Pinus latteri is suitable for vertically in the middle of the hole, filled with soil Thanh the site and plays a protective to a height of 2–3 cm above the root neck and the Hoa role. soil compacted around the pot to avoid breaking it; Provinces - The technical appraisal report of if the terrain is steep, fill the hole to a lower level or the Forest Protection up to the top of the hole to keep the soil moist; Department confirmed that the clean up after planting to ensure environmental selected pine tree is suitable for cleanliness. the site and plays the required - 2023: performed twice a year—the 1st time 1–2 protective role. months after planting and the 2nd time between 3 Keo Tai tượng - Through the results of site September and December. Maintenance activities Planted (Acacia surveys and stakeholder include adding seedlings to holes with dead trees; in Nghe mangium) consultations, the afforestation clearing shrubs, vines, and weeds; plowing and An and design consultant determined rooting around the hole with a diameter of 60–80 Thanh that Acacia Mangium is a cm and a depth of 4– 5 cm; pruning trees with Hoa suitable species to plant in many trunks, leaving only one trunk; when pruning, Provinces addition to the main plant. pay attention to cut close to the trunk. In the 2nd, - The technical appraisal report of 3rd, and 4th years (2024, 2025, and 2026): tending the Forest Protection activities are carried out twice a year—the 1st time Department also confirmed that from February to April and the 2nd time from the design unit’s selection is September to December. Specific activities include appropriate. clearing vines, shrubs and weeds, cutting off shoots Two species (Pinus latteri và and regenerated trees combined with pruning and Acacia Mangium) are mixed thinning (for trees with more than one trunk); planting (Pinus latteri is the main plowing and rooting around the hole with a crop, while Acacia Mangium is the diameter of 40–50 cm and a depth of 4–5 cm. secondary crop) - Forest protection: Planted forests need to be regularly checked and protected to prevent livestock destruction; pay attention to prevention of crickets (Dế) and termites (Mối) at a young age (that is, under 2 years old) - Forest fire prevention: Burning vegetation is strictly prohibited; the area around the planting plot should be cleared to prevent forest fires and facilitate patrol and protection activities; regular patrols and timely detection of forest fires are necessary; in close coordination with local authorities and Forest Protection Departments, develop plans for forest fire prevention and control, and at the same time prepare the necessary equipment and tools to fight a forest fire 4 Trám đen - Through the results of site Technical solutions for mixed planting (50% of Planted (Canarium surveys, the afforestation design Canarium tramdenum Dai & Ykovl, 50% of Prunus in Nghe tramdenum Dai consultant concluded that arborea): An & Ykovl) Canarium tramdenum Dai & - Level clearance is carried out by tape, chopped Province The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Name Rationale for selection Recommended silvicultural techniques Note Ykovl is already present in the - Digging a hole of 30 x 30 x 30 cm, plowing grass project area and has been with a diameter of 1 m around the hole successfully planted as part of - Fertilizing and making holes 1–2 weeks before other projects. planting - The technical appraisal report of - Forest plantation: tearing off the potting cover, the Forest Protection digging a small hole to fit the size of pot, placing the Department also confirmed that pot and straightening the tree, filling it with soil the design unit’s selection is from 2–3 cm higher than the root neck, compacting appropriate. the soil around the pot to avoid breaking the pot; where the terrain is steep, fill the hole lower or 5 Xoan đào - Through the results of site with the top of hole to keep moisture; Clean up (Prunus surveys, the afforestation design after planting to ensure environmental sanitation. arborea) consultant concluded that - Additional planting will be caried out after 1 Prunus arborea is already on-site month of planting, the maximum number of plants in the project area and has been for additional planting is 10% of the main crops, successfully planted through ensuring the survival rate is more than 90% and other projects. evenly distributed - The technical appraisal report of - Maintenance activities are implemented in the the Forest Protection next 3 years after planting, twice a year (1st time: Department also confirmed that from February to April; 2nd time: from August to the design unit’s selection is October). Maintenance measures include clearing, appropriate. rooting, fertilizing, additional planting… - Management and protection: preventing destruction from grazing animals, preventing pests and diseases, and fighting forest fires. 6 Huỷnh Based on site surveys and - Planting once a year from September to Planted (Tarrietia consultations with stakeholders December in Thua javanica) conducted by the design consulting - Planting density is 400 plants/ha (5 x 5 m Thien unit, it was found that there are distance) Hue 7 Chò chỉ many mature and regenerated - Planting technique: mix the soil in the hole, plant (Parashorea Tarrietia javanica, Parashorea about 20 cm deep from the top of the potting chinensis) The World Bank Forest Sector Modernization and Coastal Resilience Enhancement Project (P157127) Name Rationale for selection Recommended silvicultural techniques Note 8 Gáo chinensis and Neolamarckia bag, tear off the potting cover and put it vertically (Neolamarckia cadamba trees in the field. in the hole, fill it with soil and compact it tightly cadamba) However, in some areas vacant around the pot, do not break the pot. After due to exploitation, trees are planting, cultivate the root in a turtle shell– broken due to windstorms and shaped hole with a diameter of 50 cm to keep degraded forests need additional moisture and avoid wind shaking trees to be planted to improve - After planting from 25–30 days, check the forest quality, increase its survival rate and plant additional seedlings (if protection value, and protect survival rate is < 85%) environmental landscapes. These - Maintenance: To be performed twice a year in vacant areas should be filled with a 2023, 2024, and 2025—the 1st time from April to mix of plants in the following June, the 2nd time from September to December: proportions: 20% of Green Lim, clearing vines and weeds, plowing the soil, 20% of Tarrietia javanica, 20% of cultivating the roots in a hole in the shape of a Parashorea chinensis, 40% of turtle s shell with a diameter of 0.8–1 m to kill Neolamarckia cadamba. weeds and stimulate plant growth. - Maintenance in 2026 and 2027 should be performed once a year—from April to June, and untargeted regenerated trees should be pruned; vines, not shrubs and fresh carpets, should be distributed; crooked, diseased, and dead trees should be cut down; keep the healthy, growing trees to nourish the forest. - Forest protection: the forest should be regularly inspected and its destruction by people and livestock prevented; pests and diseases should be prevented; forest fires should be prevented and fought when they occur.