The project is located in the in the Palas Valley, Pattan Tehsil, District Kohistan (Annex 9, Map 1). This incorporates the entire area covered by the Revised Forest Working Plan for Palas Forests (excluding the valley of Kolai), a map area of c.1300 sq km. A field headquarters will be built in or near Palas.

Palas Valley lies east of the River Indus among the front ranges of the western Himalaya. Altitudes range from c. 1000 m to 5151 m and the topography is mostly rugged and precipitous. The main river, the Musha'ga, c. 75 km long, enters the River Indus at 73o05'E, 35o08'N. Climatic figures are not available. Lower altitudes experience dry sub-tropical conditions, higher altitudes temperate conditions. Summers are generally warm to hot, winters cold to severe. Estimated mean annual precipitation is 900 mm to 1350 mm, falling mostly as winter snow; Palas receives sporadic summer rains, being somewhat sheltered from the monsoon by mountains to the south.

The forests of the Western Himalaya - particularly the temperate forests - have been reliably identified as a `biodiversity hotspot', a global priority for the conservation of biodiversity. Surveys between 1987 and 1995 leave little doubt that the Palas forests represent Pakistan's most outstanding remaining tract of temperate forests. Over 140 bird species have been recorded in Palas, including seven of the eight `restricted range' West Himalayan species. Palas contains the largest known population of the globally threatened western tragopan Tragopan melanocephalus. Palas also contains many rare and/or threatened mammal species of the Western Himalaya, including Kashmir grey langur Presbytis entellus, brown bear Ursos arctos , black bear Selenarctos thibetanus, wolf Canis lupus1, snow leopard Panthera uncia1, common leopard Panthera pardus1, leopard cat Felis bengalensis, musk deer Moschus crysogaster and markhor Capra falconeri. Many other species occur, many in abundance. Palas also exhibits a rich diversity of reptiles, amphibians and invertebrates. IUCN identify the Western Himalaya as a region of high floral endemism, and surveys indicate that Palas is also an area of outstanding botanical importance. Surveys have so far identified over 400 plant species, including three species new to science and many rarities; the total number of plant species in Palas probably exceeds 600. Palas contains the largest known population of the threatened West Himalayan elm Ulmus wallichiana.

The Palas forests provide a wide range of non-timber forest products with subsistence or cash value. Some villagers rank NTFPs as a more important source of income than agriculture, livestock or timber harvesting. The morel mushroom Morchella spp. and the plants Geranium wallichianum and Valeriana jatamansii together generate an estimated Rs 6 million/year from Bar (Upper) Palas alone. Preliminary ethnobotanical surveys have so far listed over 130 plant species having customary uses among the Palasis. Of these, almost 70 are said to have medicinal properties; the remainder are valued for a wide range of uses including food, `tea', animal fodder, firewood and tinder, `chewing gum', cosmetics, attracting honeybees, `paper' and dye. Many of these plants may have potential for sustainable economic development.

The temperate forests provide vital browsing for cattle, sheep and goats, particularly during the early summer and early autumn migrations. The alpine rangelands provide summer grazing. Foliage from the subtropical oak Quercus forests provides vital winter fodder for stall-feeding. A wide variety of grass, herb, shrub and tree species are utilised.

The temperate forests of Palas are an important and potentially sylviculturally sustainable source of timber - deodar Cedrus deodara, silver fir Abies pindrow, spruce Picea smithiana and blue pine Pinus wallichiana - for Pakistan's construction industry. However, current timber harvesting practices are not sylviculturally sustainable. The Palas forests are currently managed under the Revised Working Plan for Palas Forests (RWP), which divides the forested area of 400.43 sq km into 235 compartments. Of these, 101 compartments comprising 42.5% of the area are placed in Selection Working Circle and 134 compartments comprising 57.5% of the area in Improvement Working Circle. The RWP prescribes a total annual yield of 812,000 cft over a 15 year period (1988-89 to 2002-2003), worth c. Rs 162 million per year at current prices. However, costs are high in relation to this return, particularly for the more remote compartments, and particularly if the adverse impact of timber harvesting on non-timber forest values (both direct and indirect values) is properly included in the analysis.

The Palas forests provide important watershed protection against soil erosion, landslides, river siltation and flooding. This protection has substantial economic and environmental security implications for Pakistan. The Palas watershed drains into the River Indus. Tarbela reservoir, Pakistan's largest and a major source of power generation, is just 180 km downstream from Palas. The local impact of watershed deforestation can also be economically and socially damaging. Deforestation in the neighbouring valley of Kaghan is thought to have exacerbated severe landsliding, with high social and economic costs, during the heavy rains of September 1992. Kohistan is prone to earthquakes; studies after the major earthquake of December 1974 showed that the watershed forests helped mitigate damages and loss of life by reducing landslides and rockfalls.

The project beneficiaries will be about 60,000 villagers of the Palas Valley, plus emigrant Palasis (number unknown) who retain rights to land and forest and often return to Palas. This population is dominated by the Shin `quom' or tribe, who speak a dialect of Shina. The Shin are divided into two `main tribes' (the Dharma and Kuk Manka) which are further divided into many sub-tribes. There are small numbers of ethnically distinct, marginalised, groups including the Sarkheli, Shamoga, Gujars and Akhars. The people of Palas tend towards a strictly orthodox Sunnite interpretation of Islam, and are much influenced by the Tableeghi Jumat.

Property regimes in Palas derive from the `wesh', an historical division of resources among the Shin; no formal land entitlement has taken place. Agricultural land is held freehold and is fairly equitably distributed among the Shin families. There are no big landowners; indeed Shin society discourages any one individual gaining a significant economic advantage. Legally, the temperate forests of Palas are classified as guzara forests. The local owners enjoy an 80% share of commercially harvested timber, against the government's 20% share. However, under the current harvesting system, the local community realise only a small fraction of the value of this share. Customarily, the temperate forests of Palas are the common property of the Shin quom. The forests of Bar Palas (or `Upper' Palas, which incorporates those parts of Palas lying north of the Musha'ga together with those parts lying south of the Musha'ga and east of the Sharial Valley) belong either to the Dharma or to the Kuk Manka, while those of Kuz Palas (or `Lower' Palas, which incorporates the remainder of Palas) are subdivided among their sub-tribes. Shares in forest royalties are linked to the freehold ownership of agricultural land; each man, woman and child of each owning sub-tribe has a share. Oak Quercus trees - valued for fodder - in the sub-tropical forests are also subdivided among the Shin. Alpine rangelands, and land at the edge of the village (`khil'), are managed under traditional common property regimes. Non-timber forest products and wildlife are open access resources.

The marginal groups - Gujars, Akhars, Sarkheli, Shamoga, etc. - do not own land. They live as tenant farmers or practice specialist occupations (graziers, blacksmiths, millers, carpenters), have no share in forest royalties, but enjoy various rights of access to non-timber forest products, rangeland and wildlife.

Palas does not suffer the problem faced in many parts of Pakistan's mountainous north of an `institutional vacuum' at the village level; the customary institution of the `jirga' (tribal council) is very active. The Shin jirga differs in two important respects from the Pashtun jirga. First, while the Pashtun jirga is generally a fixed group of representatives, the constitution of the Shin jirga is situational, ie. it is determined by the parties involved in the matter at hand. Second, the Shin jirga, unlike the Pashtun jirga, is a council of equals, not of elders; Shin society in Palas is relatively egalitarian. Decisions are customarily taken by consensus among all the interested parties. Most often constituted to resolve disputes, the jirga can also have a pro-active or planning aspect, and is able to implement communal tasks through the mechanism of `hashr' (community labour).

A striking feature of Palas society is the frequency and severity of inter-family disputes. These can persist for many years, having severe economic repercussions, in particular disrupting agriculture and livestock herding.

With a shortage of cultivable land, and a short growing season, the Palasis cannot survive by agriculture alone; traditionally, they practice a mixed agro-sylvo-pastoral subsistence economy, which makes use of the diversity of natural resources in Palas. The traditional lifestyle involves seasonal transhumance, in which most of the population move annually with their livestock between winter villages and summer pastures. Crop yields are low due to poor seed, inadequate irrigation and fertiliser, poor cropping practices, and uncontrolled pests and diseases. The staple crop, maize, is supplemented by milk products from goats, cows and buffalo, and by cultivated and wild (forest) vegetables. Livestock perform an important function in cycling nutrients from the forests and rangelands on to the agricultural land, and are an insurance against crop failure. However, livestock are of poor genetic stock, and suffer uncontrolled diseases. The people are not self-sufficient, and buy food to meet shortages, particularly prior to the harvest. Non-timber forest products (NTFPs) make a major contribution to local subsistence and cash incomes (forest mushrooms alone contribute c.Rs 10 million/year to the Palas economy). Commercial timber harvesting, government service and wage labour increasingly contribute to the local economy.