B. Analysis of Key Problems and Opportunities

of annual expenditure. Indebtedness is high and returns for labor are low as most poor fishers are locked into a system of borrowing and selling to middlemen. Microfinance is rarely available. Further, absence of clean water and sanitation leads to morbidity and low life expectancy.

10. In the lowlands, rural life is intrinsically linked to the natural, annual cycle of flooding. The communities have developed coping mechanisms to live with flooded conditions, often for up to 6 months a year. But when floods are deeper than normal, unexpectedly fast at onset, or unusually prolonged, they can tax community self-reliance and capacity to cope.

11. Poverty is also related to extended instability and conflict and the resultant harm to the population. Most of Cambodia experienced more peace and economic growth after 1993 but only since 1998 have areas northwest of the Tonle Sap enjoyed their first real respite from war. Many internally displaced persons, repatriated refugees, internal migrants, and demobilized soldiers are reestablishing livelihoods in what remains a fractured society.

B. Analysis of Key Problems and Opportunities

1. Livelihood Outcomes

12. Poverty and vulnerability are caused by declining access to assets.7 Human capital has been seriously affected by the extermination of a generation of leaders, health and education are poor, and women shoulder heavy responsibilities as a consequence of male deaths during the protracted civil war and genocide. Social capital has been severely diminished by the war and democratic processes have only recently been introduced. Natural capital, especially forests and fish, is under growing human exploitation. Physical capital is inadequate and there are few rural amenities.8 Access to financial capital is restricted: most loans are taken from relatives or neighbors, and moneylenders charge interest rates of up to 100% per month. The structures and processes that affect these assets are institutions, policies, legislation, culture, and power relations. They determine access, terms of exchange, and returns; shape the livelihood strategies of the poor; and govern their outcomes. All are weak (Appendix 1).

2. The Government's Response

13. The Tonle Sap Biosphere Reserve. In recognition of the lake's importance, a royal decree designated the Tonle Sap as a multiple-use protected area in 1993. Furthermore, the lake was declared a biosphere reserve in 1997 under the Man and the Biosphere Program of the United Nations Educational, Scientific, and Cultural Organization. The institution of the Tonle Sap Biosphere Reserve (TSBR), which entails adherence to core area, buffer zone, and transition area zoning principles, should lead to sustainable management and conservation of natural resources and biodiversity. But its management is a great challenge for the Government and few practical measures have been implemented since to protect the reserve. The Government needs to practice the tenets of biosphere reserve zoning: the existence of fishing lots in the core areas is the clearest example of failure to turn commitment into action.

14. Community Fisheries. In 2000, a prime ministerial decree released 56% of the fishing lot area and turned it over to community fisheries. In the long term, this change should benefit

7 ADB. 2003. Technical Assistance to the Kingdom of Cambodia for the Participatory Poverty Assessment of the

Tonle Sap. Manila. 8 Attention to rural amenities, e.g., schools, health posts, communal facilities, water supply and sanitation, or roads, is strongly justified for reasons of economic efficiency, social equity, cultural diversity, and sound management of natural resources and the environment.

communities, improve fish habitats, and lead to sustainable management of natural resources. But the reform process was driven by decree. It was not the result of policy planning and communities were not involved. As a result, the boundaries of community fisheries sometimes need readjusting; communities are still trying to organize themselves in the absence of legislation;9 and they have insufficient funds with which to prepare and implement community fisheries management plans. The reform process also burdens the Department of Fisheries (DOF) in the Ministry of Agriculture, Forestry, and Fisheries, which has low capacity.

15. Decentralization and Deconcentration. In 2001, to achieve democratization at the grassroots, the Government embarked on a process of decentralization and deconcentration.10 It formulated a subnational governance system that is intended to be democratic, participatory, accountable, effective, efficient, and pro-poor. The reform process culminated in the election of commune councils in 2002 and a three-tier institutional structure with central, provincial, and commune levels. The national treasury now transfers funds to commune council accounts, which are administered by provincial treasuries. These funds are to be used for administrative expenditures (30%) and development (70%).11 Decentralization and deconcentration should afford opportunities to embed peace and democracy in the Tonle Sap region as elsewhere, increase accountability and transparency, and enhance pro-poor, participatory development. Cambodians are generally well satisfied with the performance of their commune council.12 What remains to be done is to ensure efficient, effective, and relevant use of increased commune funds13 to improve livelihood outcomes, especially through investment in social infrastructure, enterprise development, and support for community fisheries.

3. The Tonle Sap Initiative14

16. In 2003, the Asian Development Bank (ADB) drafted the Tonle Sap Basin Strategy,15 giving geographical focus to ADB's Country Strategy and Program, 2005–2009. It forms the basis for setting priorities and planning assistance in the Tonle Sap basin over the next 5–10 years. It gives focus and direction to external assistance to the Tonle Sap region (Appendix 2). The Tonle Sap Initiative16 will accomplish the Tonle Sap Basin Strategy through a suite of highly integrated loan, grant, and technical assistance projects. In the Tonle Sap basin, the development objectives are to foster, promote, and facilitate (i) pro-poor, sustainable economic growth, (ii) access to assets, and (iii) management of natural resources and the environment. The strategy is based on three underpinning principles: (i) sustainable livelihoods, (ii) social justice, and (iii) a basin-wide approach. It focuses on two areas: (i) rural development and the environment, and (ii) human development. Its crosscutting themes ensure that attention is paid to vulnerable groups, governance, resource cooperation, and the private sector. The threats to the Tonle Sap must be considered from the perspective of the basin as a whole, but everything

9 The draft Fisheries Law awaits passage in the national assembly. The Council of Ministers expects this to happen before the Cambodia Consultative Group meeting scheduled in December 2005. 10 Decentralization is delegation of political and administrative authority to the commune level. Deconcentration is delegation of administrative authority from central ministries to provincial departments or district offices. 11 Commune councils are required to collect local contributions to cover at least 10% of the cost of their development projects. 12 The Asia Foundation. 2005. Commune Councils in Cambodia: A National Survey on their Functions and

Performance, with a Special Focus on Conflict Resolution. Phnom Penh. 13 In practice, own sources of revenue are very limited. 14 The Tonle Sap Initiative is a partnership of organizations and people working to meet the poverty and environment challenges of the Tonle Sap. 15 ADB. 2005. The Tonle Sap Basin Strategy. Manila, and ADB. Various years. Future Solutions Now: The Tonle Sap

Initiative. Manila. 16 Details are available at http://www.adb.org/projects/tonle_sap.