The government of Nepal and the World Bank launched Forests for Prosperity Project to advance Sustainable Forest Management (SFM) with loan and grant for US $ 24 million out of which US $ 6.1 million as grant and US $17.9 million as concessional loan.The project will contribute to transforming Nepal’s forest sector by improving Sustainable Forest Management (SFM), developing and improving forest-based industries. These activities will result in multiplebenefits for forest-dependent people in Madhesh and Lumbini Provinces, including inclusive economic benefits, ecosystem services, and climate resilience. The project is supporting 50 municipalities in both the Provinces. It will support strengthening ongoing community-based forest management and efforts through promoting inclusive sustainable use.

The Forests for Prosperity Project became effective on July 16, 2021 and will end on September 30, 2025.


To improve sustainable forest management; increase benefits from forests and contribute to net Greenhouse Gas Emission (GHG) reductions in selected municipalities in Madhesh and Lumbini Provinces in Nepal .

Project Development Component

The Project has four components: (1) Policy and capacity-building support for new government structures and processes for sustainable forest management; (2) Community-based sustainable forest management and smallholder forest plantations; (3) Forest enterprise improvement and development; and (4) Project management, monitoring and learning.

The Project is implemented in selected 50 municipalities, 25 municipalities in Madhesh Province and 25 Municipalities in Lumbini Province. These municipalities are selected for their potential for sustainable forest management, as suitable locations for forest-based SMEs, and their importance for the Emissions Reductions Programs (ER-P). For the Component 3: Forest enterprise improvement and development, additional municipalities of Lumbini and Madhesh Province, in addition to selected 50 project municipalities, will also be project areas for the component.

Project Description

The project have three interlinked yet distinct technical components, and the fourth component is dedicated to project management. The project is designed to increase the forest area under sustainable community-based productive management, public lands, and private plantations, resulting in greater supplies of woods and non-wood forest products. At the same time, investments in forest-based SMEs will be stimulated to utilize these products and generate paid employment by easing regulatory provisions and providing technical assistance and accessible credit for business and entrepreneurs.

Component 1: Policy and capacity building support for new government structures and processes for sustainable forest management

This component enables the Government of Nepal (GoN) and relevant forest sector institutions to implement Nepal’s Forest Sector Strategy by addressing the challenges of Nepal’s recent federalization process.

Component 2: Community-based SFM and smallholder forest plantations

This component improves productivity and increase the area of natural and plantation forests under community management and public management.

Sub-component 2.1: Sustainable Forest Management through Community-Based Forest Management (CBFM).

Sub-component 2.2. Forest land allocation to the poor, women, and Dalits of CBFM groups and capacity support in preparing forest management plans.

Sub-component 2.3: Smallholder plantations support farmers to establish fast-growing trees and agroforestry plantations on their private lands.

Sub-component 2.4: Plantation in the public land and promote agro-forestry

Component 3: Forest enterprise improvement and development

Under this component, Agricultural Development Bank Limited (ADBL) will provide loan to private forest-based enterprises, individual enterprises directly or through selected financial intermediaries (FIs) at a marginally commercial interest rate. This component will provide loan to be intermediated through on-lending through FIs in local currency.

Sub-component 3.1: Enabling environment for the forest-based private sector.

Sub-component 3.2: Design and piloting of a viable credit line for forest-based SME establishment and improvement.

Component 4: Project Management, Monitoring and Learning

This component will enable the operation of Project Management Unit (PMU) at the Federal level and an additional PMU in each of the Madhesh and Lumbini Provinces

Project Coverage

Madhesh Province:

Districts Municipalities
Saptari Hanumannagar Kankalini, Tiruhut, Mahadeva
Siraha Nawarajpur, Aurahi, Bariyarpatti
Dhanusha Janakpurdham, Mithila Bihari, Laxminiya
Mahottari Jaleshwor, Bardibas, Ekdara
Sarlahi Parsa, Brahmapuri, Haripurwa, Hariwan
Rautahat Durga Bhagwati, Rajdevi, Madhav Narayan
Bara Pachrauta, Devtal, Suwarna
Parsa Birgunj, Jagarnathpur, Paterwa Sugauli

Lumbini Province:

Districts Municipalities
Nawalparasi West Sunwal, Sarawal
Rupendehi Sainamaina, Kanchan, Devdaha, Lumbini Sanskritik
Palpa Bagnaskali, Tinau, Rainadevi Chahara
Kapilvastu Shivraj, Budhabhumi, Banganga
Arghakhachi Sitganga, Panini
Pyuthan Sarumarani
Rolpa Runtigadi
Dang Ghorahi, Lamahi, Rapti, Banglachuli
Banke Kohalpur, Baijnath, Khajura
Bardia Bansgadi, Badaiyatal

Project Implementation Arrangements

Ministry of Forests and Environment (MoFE) is responsible for the overall management and coordination of the project. Project activities under Components 1, 2, 3 and 4 are executed by all three tiers of Government including Ministries looking after the forestry sector in Madhesh Province and Lumbini Province and Local Governments in project municipalities in these provinces.

Three Project Management Unit (PMUs) has been established: one at Federal level by MoFE – REDD IC and one each in the two province levels by Provincial Ministry of Forests.

A credit line is established for Component 3 by the Federal Ministry of Finance (MoF) in consultation with MoFE. The funds available under the credit line will be disbursed from MoF to Agricultural Development Bank Ltd. (ADBL).

Useful Documents

Useful Link

Ministry of Forests and Environment (https://www.mofe.gov.np/)

Ministry of Finance (https://www.mof.gov.np/)

REDD Implementation Centre (https://redd.gov.np/)

Forests for Prosperity Project Website (http://ffpp.redd.gov.np/)

Contact Details

Agriculture Credit and Project Management Department

Agricultural Development Bank Limited

Phone Number: 01-4252353

Email: agriloan.div@adbl.gov.np ; pmu.adbl@adbl.gov.np

Website: www.adbl.gov.np