Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 23418

IMPLEMENTATION COMPLETION REPORT(CPL-36920; TF-20818)

ON A

LOAN

IN THE AMOUNT OF US$39.0 MILLION

TO THE

REPUBLIC OF COLOMBIA

FOR THE

NATURAL RESOURCE MANAGEMENT PROGRAM(Loan No. 3692-CO)

December 19, 2001

Environmentally and Socially Sustainable Development Sector Management UnitLatin America and the Caribbean Region

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

(Exchange Rate Effective at Completion)

Currency Unit = Peso (C$)C$= US$

US$ I = C$

FISCAL YEARJanuary - December

ABBREVIATIONS AND ACRONYMSCAR Autonomous Regional Corporation (Corporaci6n Aut6noma Regional)CAS Country Assistance StrategyCC Community Council (Consejo Comunitario)CONPES National Council for Economic and Social Policy (Consejo Nacional de Politica Econ6mica y Social)CR Regional Committee (Comite Regional)CT Technical Committee (Comisi6n Tecnica)CVC Corporaci6n del Valle del CaucaDNP National Planning Department (Departamento Nacional de Planeacion)FAO-CP Food & Agriculture Organization/World Bank Cooperative ProgramFEPS Final Executive Project SwnmaryGEF Global Environment FacilityGIS Geographic Information SystemICFES Institute for Higher Education (Instituto Colombiano para el Fomento de la Educaci6n Superior)ICR Implementation Completion ReportIEPS Initial Executive Project SummaryIGAC Instituto Geografico Agustin CodazziINCORA Agrarian Reform Institute (Instituto Colombiano de Reforma Agraria)INDERENA National Renewable Resources Institute (Instituto Nacional de los Recursos Naturales Renovables

y del Ambiente)LA Loan AgreementLRA Agrarian Reform Law (Ley de Reforma Agraria)MMA Ministry of the Environment (Ministerio del Medio Ambiente)MTR Mid-term ReviewNGO Non-governmental OrganizationNRMP Natural Resource Management ProgramPAFC Tropical Forestry Action Plan for Colombia (Plan de Acci6n Forestal de Colombia)PNDF National Forestry Development Plan (Plan Nacional de Desarrollo Forestal)POT Land Use Plan (Plan de Ordenamiento Territorial)RPF Protected Forest Reserve (Reserva Protegida ForestalSAR Staff Appraisal ReportSENA National Training Service (Servicio Nacional de Aprendizaje)SINA National Environment System (Sistema NAacional Ambiental)SPNN National Parks System (Sistema de Parques Nacionales Naturales)TFAP Tropical Forestry Action PlanTS Technical SecretariatUAE Special Administrative Unit (Unidad Administrativa Especial)

UC Coordinatiing Unit (Unidad Coordinadora)

Vice President: David de Ferranti

Country Director: Olivier LafourcadeSector Director: John Redwood

Sector Leader: Adolfo BrizziTask Team Leader: Steven Oliver

IMPLEMENTATION COMPLETION REPORT(CPL No. 36920; TF No. 20818)

COLOMBIA

NATURAL RESOURCE MANAGEMENT PROGRAM

CONTENTS

Page No.1. Project Data 1

2. Principal Performance Ratings 1

3. Assessment of Development Objective and Design, and of Quality at Entry 2

4. Achievement of Objective and Outputs 5

5. Major Factors Affecting Implementation and Outcome 20

6. Sustainability 22

7. Bank and Borrower Performance 22

S. Lessons Leamed 26

9. Partner Comments 27

10. Additional Information 27

Annex 1. Key Performance Indicators/Log Frame Matrix 28

Annex 2. Project Costs and Financing 29

Annex 3. Economic Costs and Benefits 31

Annex 4. Bank Inputs 32

Annex 5. Ratings for Achievement of Objectives/Outputs of Components 34

Annex 6. Ratings of Bank and Borrower Performance 35

Annex 7. List of Supporting Documents 36

Annex S. Summary of the Borrower's Report 37

| Project ID: P006868 Project Name: NATURAL RESOURCE MANTeam Leader: Steven William Oliver TL Unit: LCSER

ICR Type. Core ICR Report Date. Januiary 7, 2002

1. Project Data

Name: NATURAL RESOURCE MAN LIC/TFNuniber: CPL-36920; TF-20818Country/Department. COLOMBIA Region: Latin America and

Caribbean RegionSector/subsector: VM - Natural Resources Management

KEY DATESOriginal Revised/Actial

PCD. 01/23/91 Effective. 11/09/94 11/09/94Appraisal: 07/01/93 MTR: 06/30/96 01/15/97Approval: 12/23/93 Closing: 12/31/99 03/31/2001

Borrower/lImplementing Agency: The Ministry of Finance and Public Credit/The Ministry of the EnvironmentOther Partners: The Autonomous Regional Corporations, the National Renewable Resources

Institute, the Institute for Higher Education, the National Training Service, andthe Agrarian Reform Institute

STAFF Current At Appraisal

Vice President: David de Ferranti S. Shahid HusainCountry Manager: Olivier Lafourcade Yoshiaki Abe (Department Director)Sector Manager: John Redwood Nicholas Krafft (Division Chief)Team Leader at ICR: Steven Oliver

ICR Primary Author: Steven William

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likelv, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

3.1.1 The overall objective of the Natural Resource Management Program, as defined in theLoan Agreement (LA) and the Staff Appraisal Report (SAR), was to develop policies andmechanisms to contribute to the arrest, over the long term, of the degradation of naturalrenewable resources. The program was intended to be the first phase of a long-term set ofinitiatives, and had two specific subsidiary objectives: (a) to help conserve the primary moistforest and its bio-diversity in the Choc6 Region on the Pacific coast; and (b) to assist in haltingand reversing forest conversion and degradation in the Western and Central Cordilleras.

3.1.2 The overall objective was clear. It was intended to provide certain necessaryconditions - the policies and mechanisms - for the achievement of a long-term goal, that ofhalting the degradation of natural resources in Colombia. The subsidiary objectives werealso clear (although the second of them, concerning the Cordilleras, would probably have beenbetter expressed as "halting and reversing forestry conversion and the degradation of naturalresources ..."). The objectives were also realistic, because there was the implicit acceptancethat the output and products of the program were necessary but not sufficient conditions for theachievement of the ultimate goals (hence the use of qualifying expressions in the definition ofthe program's objectives - "to contribute to", "to help", and "to assist"). It should bestressed that the achievement of the objectives of the program was most emphatically not to bemeasured by the achievement (or otherwise) of the eventual goals. The objectives were (andremain) important for Colombia and for its rural sector. The preparation and appraisal of theprogram predate the Bank's formal introduction of the Country Assistance Strategy (CAS)procedures.

3.1.3 The term "natural renewable resources" should be used with care, and in this case itshould be qualified. It is not clear in the program's description precisely what constituterenewable natural resources. The emphasis in the program description is placed on forests,water and soil. Once destroyed, tropical forests can be recuperated in a time-frame measuredin decades and centuries. However, a major part of the purpose of Component B was toreduce soil erosion, and soils are not, in any useful sense, a "renewable" natural resource.Once lost, soils are renewed - if at all - only over a geological time-frame.

3.1.4 The program was very complex (in the LA, the Description of the Project extends toten pages). It had four components and twenty-two sub-components; as designed, it hadeighteen implementing agencies, but by 1998 this had grown to twenty-six. This inevitablymade significant demands on the coordinating unit and the implementing agencies. Thecoordinating unit faced a major task in administrative activity, the coordination of programactions and the definition of priorities. Some of the implementing agencies were not parts ofthe National Environment System (Sistema Nacional Ambiental - SINA), and in the latterphase of the program, when serious budgetary restrictions began to be felt, the transfer offunds to these bodies by the Ministry of the Environment (Ministerio del Medio Ambiente -MMA) was difficult.

-2-

3.1.5 As recognized in the SAR, the program was subject to broad areas of risk anduncertainty, and it was recognized that the creation of safeguards against them had contributedto the complexity of the operation, particularly in its institutional aspects. The main areas ofrisk foreseen were: the fluid institutional structure; the evolving legal framework in areasaffecting the program (i.e., land titling); the decentralization of government; the possiblecontinuation of unsatisfactory forestry policies; the need for cooperation by populationsaffected by the program; and the situation concerning security. In one important respect, theprogram was a very risky one; the "unpredictable security situation in Colombia" wasrecognized at appraisal as one of the main risks, and it is greatly to the credit of the staff of thecoordinating unit and of the implementing agencies that they were able to carry out theirprogram-related tasks even as internal security steadily worsened over the life of the program.

3.2 Revised Objective:

3.2.1 The overall objective of the program, as "reformulated" at the mid-term review (MTR) in January1997, was to develop the policy, institutional and technical base for sustainable natural resourcemanagement in the context of the decentralized framework for environmental management introduced byLaw 99 in late-1993. Within this broad objective, the program emphasized the forestry sub-sector and hada regional focus on the Choc6 Region, because of the importance of its primary moist forests, itsbiodiversity, and the predominance of ethnic minorities (of indigenous and Afro-Colombian people).

3.2.2 The two specific objectives were maintained throughout the life of the program. They wereendorsed during the MTR, when it was concluded that the program had become even more relevant to thegovernment's objectives for sustainable development than it had been when originally approved. However,the passage of Law 99 at the end of 1993, through which the MMA and the SINA were created, had theeffect of altering the relative importance of the objectives of the program. As designed, the program gaveparticular emphasis to the physical investments to be made (in Component B) in water-shed protection.With the passage of Law 99, and without diminishing the importance of water-shed investments, moreemphasis was given to institutional development and to the elaboration of policy that would allow theimplementation of the new and decentralized system of environmental management. It was concluded thatall of the components were relevant to the achievement of the objectives of the program, and noadjustments were made to the projected costs or to their distribution between or within components.

3.3 Original Components:

3.3.1 The SAR contains a confusing mixture of terms when referring to the program and itssubsidiary parts. In this ICR, the structure of "program/component/ sub-component/activity"has been used, and the term "sub-project" has been confined to the term "Part B Sub-project"as defined in the LA. The program had four components. The estimated cost of eachcomponent included the price and physical contingency provisions.

-3 -

Component A - The Development of National Forest Policy, and of a Natural ResourceManagement Strategy for the Choco Region(US$10.8 million, 16.5 percent of project costs)

The sub-components were:- the development of national forest policy;- the ecological zoning of the Choc6 region;- environmental monitoring;- demarcation and titling of indigenous reserves;- land title regularization for Afro-Colombian communities;- institutional analysis of five Autonomous Regional Corporations (Corporaci6n Aut6noma Regional'

- CAR); and- support for five Regional Committees (Comite Regional - CR)

Component B - Water-shed Protection and Rehabilitation(US$25.74 million, 39.4 percent of project costs)

The sub-components were:- micro-catchment area protection; and- community fuelwood plantations.

Component C - Management of National Parks and Buffer Zones(US$8.73 million, 13.4 percent of project costs)

The sub-components were:- the institutional strengthening of the National Park Service (Unidad Administrativa Especial del

Sistema de Parques Nacionales Naturales ) and the Corporaci6n del Valle del Cauca (CVC);- training in management of the protected areas of the Choc6 Region;- the development of park management plans for nine national parks;- the preparation of management plans for special areas selected for their bio-diversity;- community conservation and environmental education in park areas and buffer zones;- the preparation of a strategy and draft Action Plan for long-term flmding of protected areas; and- the monitoring and evaluation of protected areas.

Component D - Forestry and Environmental Education, Training, Research, ProjectManagement, and Monitoring & Evaluation(US$20.06 million, 30.7 percent of project costs)

The sub-components were:- education and university research;- vocational training;- forestry research;- the project coordinating unit;- project preparation and evaluation; and- the establishment of a panel of independent experts.

-4 -

3.3.2 The components were closely related to the achievement of the objectives of theprogram, and the sub-components were well within the capacity of the multiple implementingagencies. The design of the program took into account the experience gained inBank-supported projects in the rural sector of Colombia (particularly the Upper MagdalenaPilot Watershed Management Project [Loan 2069-CO] and several integrated ruraldevelopment projects). It also incorporated lessons learned in similar projects Bank-wide,including those expressed in Forestry Development: A Review of Bank Experience (ReportNo. 9524, of 4/22/1991) and The Forest Sector: A World Bank Policy Paper (September1991).

3.3.3 The program was prepared and became operational during a period of growingawareness in Colombia of the need to protect natural resources. The Constitution of 1991explicitly recognized the responsibility of the State in environmental management, and thedevelopment plan for 1990-1994 included the significant strengthening of institutions as wellas the creation of the MMA.

3.4 Revised Components:

3.4.1 The components were maintained throughout the life of the program.

3.5 Quality at Entry:

3.5.1 The preparation of the program and the processing of the loan predated theintroduction by the Bank of the CAS process. Bank strategy at the time was based on thesound macro-economic framework and the government's objectives for economic growth andpoverty alleviation. Specifically, the program supported efforts to complete fundamentalpolicy reforms in key areas of the economy needed to achieve sustainable growth and improvedquality of growth, focusing on improving the institutional and regulatory frameworks fornatural resource management and supporting investments in rehabilitation of watersheds andreforestation of degraded areas.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective.

4.1.1 The program's overall objective was to create a mechanism (the policy framework andset of instruments) to be used throughout Colombia to contribute, over the long term, to thearrest of the degradation of natural renewable resources. The two specific subsidiaryobjectives were to apply parts of this mechanism in two geographically-defined areas:

(a) to help conserve the primary moist forest and its bio-diversity (in the Choco Region on thePacific coast); and

(b) to assist in halting and reversing forest conversion and degradation (in the Western andCentral Cordilleras).

-5 -

4.1.2 The program's outcome and the degree to which it achieved these three objectives wereall satisfactory. This is particularly true when the situation concerning security in much of theprogram's sphere of action is taken into account. There was no order of priority given to theobjectives in the SAR, rather they were seen as being complementary.

4.1.3 The program was implemented against a changing back-drop of strategy, policies andpriorities in the MMA. From its inception in 1993 and its development during 1994 into afully functioning entity, the MMA had three changes at ministerial level before 1998 withconsequent changes in priorities. The program provided a basis for continuity in activities,thereby stabilizing work in the main sub-components. However, the program was designedbefore the creation of the SINA and several of its sub-components/activities were not directedtowards the evolving priorities of a changing institutional structure.

4.2 Outputs by components:

4.2.1 The objectives of the program were concentrated in the categories of sector policies,physical objectives and institutional development. There were no financial or macro-economicobjectives. The outcome of the program was satisfactory with respect to all three of thesecategories of objectives. In certain parts of the program (for example, in the achievement ofthe physical objective of community titling for indigenous and Afro-Colombian people) theoutcome was highly satisfactory.

4.2.2 The design of the program was appropriate for the achievement of the objectives, butthe performance indicators for judging the achievement of the objectives were not wellquantified in the SAR (the "key indicators" were limited mainly to target dates for thecompletion of program activities and studies). To remedy this, the SAR specified that twoactivities would be undertaken at the beginning of the program. First, a base-line study wouldbe carried out by consultants to assemble and review all existing information related to thesphere of action of the program; assess the physical, economic, social and institutionalconditions at the start of the program; and define the relevant monitoring and evaluationindicators. Based on this work, consultants would then design and implement the monitoringsystem in the Coordinating Unit and in the implementing agencies to monitor the progress inthe implementation of all program activities and measure the results. However, the base-linestudy was initiated only in late-1996.

4.2.3 The sub-components contributed to the achievement of the objectives in varyingdegrees. The following table indicates how the sub-components and objectives were linked,and the degree of success achieved by each sub-component in contributing to the achievementof the objectives.

-6 -

ObjectivesOverall Specific Specific

Develop policies and Help conserve forest and Assist in halting and reversing forestmechanisms to contribute to bio-diversity in the Choco conversion and degradation in thethe long-term reduction in Region Western and Central Cordillerathe degradation of naturalresoutrces

Component A: Development of National ForestPolicy and Natural Resource Management Strategyfor the Choc6 regionSub-components:A. I National foTest policy development SA.2 Ecological zoning of Choc6 region HSA.3 Environmental monitoring SA.4 Demarcation and titling indigenous HScommunitiesA.5 Title regularization for Afro-Colombian HScommunitiesA.6 Institutional analysis of five CARs SA.7 Support for five Regional Committees

Component B: Watershed Protection andRehabilitationSub-components: SB.I Micro-catchment area protection SB.2 Community fuel-wood plantations

Component C: Management of National Parks andBuffer ZonesSub-components:C. I Institutional strengthening of NPS and CVC S SC.2 Management training for Choc6 protected areas SC.3 Park management plans for nine parksC.4 Management plans for special areas S(bio-diversity) SC.5 Education for parks and buffer zonesC.6 Action Plan for long-term funding of protected Sareas SC.7 Monitoring & evaluation of protected areas

S

Component D: Forestrv and EnvironmentalEducation; Training; Research; Project Management;Monitoring and EvaluationSub-components:D. I Education and university research SD.2 Vocational training SD.3 Forestry research SD.4 Coordinating unit S S SD.5 Project preparation and evaluation SD.6 Panel of independent experts U

Component A - The Development of a National Forest Policy and a Natural ResourceManagement Strategy for the Choco Region:

4.2.4 The main purposes of this component were to refine Colombia's policy framework forthe forest sector and to address the specific issues facing the environmentally-fragile Choc6region of the Pacific coast.

-7 -

Sub-component A.1 - The Development of National Forest Policy:

4.2.5 Indiscriminate deforestation was recognized in the SAR to be "one of Colombia'sprincipal environmental problems". Within the context of the international Tropical ForestryAction Plan (TFAP) initiative that began in 1985, the government of Colombia prepared itsown action plan (the Plan de Acci6n Forestal para Colombia - PAFC) between 1987-1989,and its implementation was included in the national Development Plan for 1990-1994. TheNatural Resource Management Program was considered to be an integral part of the PAFC.

4.2.6 This sub-component was intended to "help refine" Colombia's policy framework forthe forest sector. Under the sub-component, all of the studies carried out and in progressconcerning forestry policy in Colombia were to be consolidated and validated via field workand participatory meetings with local institutions and populations, in order: (a) to analyze thelimitations to growth and sustainability in the forest sector; and (b) to recommend reforms andpolicy actions designed to solve the limitations. A series of additional studies was to becarried out, including several factors hitherto excluded (e.g., the impact of macro-economicpolicy, community participation, environmental considerations in the new Constitution, thereorganization of the legal and institutional frameworks, land titling initiatives for indigenousand Afro-Colombian people, and policies directed towards decentralization), to provide theanalytical basis to produce the National Council for Economic and Social Policy (ConsejoNacional de Politica Econ6mica y Social - CONPES) draft resolution on forest policy.

4.2.7 Once the program was under implementation, however, the MMA and the DNPconcluded that, given the time elapsed between project appraisal and Loan effectiveness andthe extensive work on forestry policy that had continued in that period, sufficient informationexisted at the beginning of the program without the need for further study, and the draftCONPES resolution (No. 2834) was published in January 1996.

4.2.8 A complete review was carried out of legal measures issued between 1991-1996concerning forests, particularly the social and ecological aspects inherent in the application ofproperty rights over forested land, and this work supported the preparation of the 1996 decreeon Forest Use (Decreto 1791: October 4, 1996: Regimen de Aprovechamiento Forestal deColombia). A detailed evaluation was made of the existing policy incentives and the benefitstreams associated with them; it was concluded that, in their absence, the private sector wouldhave little incentive to change its behavior in the direction of reforestation or conservation. Apackage of modified and new incentive measures was proposed. A study was made todetermine the maximum level of extraction of individual tree species in three types of forest, inorder to provide the CARs with the technical bases for controlling extraction starting in 1996.The study proposed a restructuring of the system of extraction rates and a draft decree for thedefinition of these rates to operate throughout Colombia (a norma is currently under review bythe MMA).

4.2.9 Colonization has been the principal factor in the destruction of tropical forest inColombia. In times of peace, there has been an acceleration of occupation of forest reservesand peace per se does not guarantee the presence of govemrnent in these areas or anyrationalization of occupation. A study of colonization found that it is mainly an ad hocprocess badly in need of attention from the government. The areas of new colonization areconcentrated in the upper Cordilleras, on higher ground in the Amazon region, and on the

- 8-

Pacific coast, and are frequently based on deforestation for the establishment of extensivepastures. Since the 1980s, the introduction of illegal crops (e.g., coca, marihuana and opiumpoppies) has increased colonization of new areas, with the consequent destruction of forest andthe substitution of traditional agricultural systems. The study recommended a set ofmeasures, including community participation in the implementation of sustainable developmentstrategies and the strengthening of institutions to support them. However, it is self-evidentthat a resolution of the current internal security emergency is a necessary condition to befulfilled before any serious attempt can be made to improve the process of colonization.

4.2.10 A study of the control and monitoring of the use of forest products concluded that itwas inadequate in almost all respects, mainly because of institutional weakness, lack of staffand equipment, and inadequate budgets at the level of the CARs. External factors, especiallyviolence and the lack of security, are also important. Control has emphasized the transport ofproducts rather than the extractive process, which leads to the conclusion that it is unlikely thatthe technical parameters established in the management plans are being respected. A series ofmeasures was proposed, including the creation of a national coordinating unit in the MMA, adata base to allow the MMA and the CARs to have up-to-date information, and thestrengthening of staffing, control points and the control mechanism (including a forest"passport" and timber identification).

4.2.11 A study of inter-sectoral policies that promote deforestation concluded that forestryresources are systematically under-valued. Forest destruction as the legal means to obtain titleto land, mining that ignores the environmental externalities, and road-building (especially thatin support of petroleum extraction) which encourages migration were identified as the mainfactors. Institutionally, there is a lack of coordination and a lack of awareness of the role ofthe environmental authorities, both at the national and the regional level. The forest reserves,although legally defined and constituted, do not have a clear line of authority over them,leading to their partial illegal occupation and ex post facto legalization by means of themechanism of "Sustracci6n a las Reservas Forestales" (articles 2 and 3 of Ley No. 2 of1959).

4.2.12 A study of the system of forest extraction permits in the Pacific coastal regionidentified issues and proposed solutions for sustainable extraction. In addition, two furtherstudies were carried out: (a) a study of the domestic market for sawn-wood and other forestproducts; and (b) a study of international markets for sawn-wood and other forest products.

4.2.13 A pilot study was carried out of forest zoning as a planning and environmental controlmechanism. The 1:100,000 scale thematic maps were combined into a GeographicInformation System (GIS) and 1: 15,000 scale maps were created for the area of Tarapaca,located in Amazonian region of Colombia, with a detailed guide for methodology of forestryzoning.

4.2.14 The preparation of the National Forestry Development Plan (Plan Nacional deDesarrollo Forestal - PNDF) was aimed at establishing a strategic framework to incorporateforestry into Colombia's economic development, using its comparative advantage andpromoting competitivity consistent with the sustainable use of both natural and planted forests.The PNDF is based on: (a) a significant level of state support for the promotion anddevelopment of forestry in recognition of its multifaceted role in the economy; (b) the centralprinciples of sustainable use and recuperation of degraded areas, in support of biodiversity and

-9-

conservation of ecosystems; and (c) the importance of market forces in an open commercialenvironment to guide development and to reveal comparative advantage. Although a coherentand well-articulated forest policy exists, its level of implementation is low. Whilst theprogram's objectives were to provide the tools for the eventual achievement of the resourceprotection goals (see paragraph 3.1.2) with the benefit of hind-sight it can be argued thatprovision could have been made for support for its implementation. However, this would havemade for an even more complex program.

Sub-component A.2 - The Ecological Zoning of the Choco Region:

4.2.15 The purpose of the sub-component was: (a) to provide the instruments at the regionallevel to plan and implement the use of natural resources in a sustainable manner, withemphasis being given to community participation; (b) to produce new cartography of theregion and, based on available data, identify critical natural resource management issues; and(c) to integrate the cartography and base information into a GIS. The basic work was carriedout by the Instituto Geografico Agustin Codazzi (IGAC), which is the mapping authority ofColombia and, in addition, is renowned for its remote sensing and GIS capabilities. As aresult of this work, the following products were obtained:

(a) a base-line study (Sintesis Integrada Regional) of actual and potential land use,together with the main constraints on future development;

(b) the results of the agro-ecological zoning and the methodology used, with mapping at1: 100,000 scale;

(c) detailed agro-ecological zoning in the pilot areas of Bajo San Juan, and the catchmentareas of the rio Guapi and the rio Mira, with mapping at 1 :100,000 scale;

(d) a series of publications including a description of the methodology used, the digitalcartography and thematic mapping generated, and a Final Report.

4.2.16 The Choc6 Region is extremely heterogeneous in terms of ecosystems. It ischaracterized by high rainfall (up to 10,000 mm in an exceptional year) and humidity,associated with soils generally of low fertility and high acidity. The zoning is a useful tool;however, for it to be fully taken advantage of at the level of municipalities (through theirPlanes de Ordenamiento Municipal), indigenous reserves and community-titled lands the levelof detail would have to be increased.

Sub-component A.3 - Environmental Monitoring:

4.2.17 The purpose of the sub-component was to identify the short- and medium-term impactsof four selected forest-use projects, to generate technical parameters for sustainable forestproduct extraction, and to strengthen institutional capacity for environmental monitoring. Inpractice, only one of the four forest-use projects identified in the SAR was studied. The studyof environmental impact in forest areas included three types of forest. The study in the areaknown as Balsa II (in the lower rio Atrato basin) encompassed 24 parcels in four predefinedstages of inter. ntion of the natural forest and place emphasis on the Catival forest. Inaddition, a study was carried out on 28 parcels located in five municipalities, 24 monitoringNadi palm extraction and four monitoring areas in which Guandal timber extraction had been

- 1 0 -

practiced earlier. Measurements were made between 1997-1999. The study planned for thearea of Uruba could not be carried out because of its poor security status.

Sub-component A.4 - Demarcation and Titling of Indigenous Reserves:

4.2.18 The purpose of the sub-component was to support the definition and legal protectionof lands of indigenous Amerindian people in the Choc6 region. This included the granting ofland titles to groups lacking secure title, establishing new reserves (resguardos indigenas) andmarking the boundaries of existing reserves. In November 1995, the MMA signed anagreement (Convenio Interadministrativo Marco, no.45. November 17, 1995) with theAgrarian Reform Institute (Instituto de Reforma Agraria - INCORA) to implement thissub-component and that of titling of black communities.

[N.B. In March 1998, an Action Plan was established (through the inter-institutionalcooperation of MMA, the Red de Solidaridad and INCORA with the indigenous andAfro-Colombian communities' organizations) conceming Sub-components A.3, A.4 and A.7and defining the resources necessary to complete the collective titling. By the end of theprogram, the Action Plan had been fully implemented.]

4.2.19 In this sub-component, 46 indigenous reserves were created and 10 were expanded,significantly exceeding the target of 40 reserves established in the SAR. In total, they covered324,287 ha (representing 16.3 percent of the total area of indigenous reserves in the Pacificregion) and include 9,272 people in 2,561 families. A further 10 reserves are in an advancedstage of processing (they were presented to the Junta Directiva of INCORA in early 2001) and8 have been the subject of up-dated socioeconomic, legal and land tenure studies for theconstitution of new reserves. In addition, 128 reserves have had full boundary demarcation (cfthe SAR target of 123).

Sub-component A.5 - Land Title Regularization for Afro-Colombian Communities:

4.2.20 The collective titling of land to Afro-Colombian communities is, arguably, the singlemost important achievement of the whole program. A total of 2,359,204 ha was titled to 497communities, to the benefit of 113,954 people in 22,132 families. Under the program,community leaders were trained and the community organizations and councils wereresponsible for carrying out the studies that are required by law before a given extension ofland can be recognized as being of collective property.

4.2.21 The purpose of the sub-component was to support initial actions to regularize and toprovide title to traditionally-occupied land to the black communities. The Constitution of1991 and the subsequent law (Ley 70, 1993) recognized the rights of black communities to thecollective ownership of the lands that they have traditionally occupied in the Pacific coastalregion and elsewhere in the country. This constitutional and legal provision had as itsprincipal objective the legalization of these lands, recognizing that prior to 1991 there hadexisted significant legal obstacles to this.

4.2.22 The Pacific Watershed (Cuenca del Pacifico) covers 10.08 million ha and has a widevariety of coastal ecosystems and humid tropical forest. In 1959, it was declared to be aProtected Forest Reserve (Reserva Protegida Forestal - RPF). The Natural Resources Code(C6digo Nacional de Recursos Nacionales) of 1974 forbade the individual or collective titling

- 11 -

of the unoccupied land (terrenos baldios) in the areas of forest reserve. However, the Law135 of 1961 (the Ley de Reforma Agraria - LRA), through the mechanism of "removal ofareas" (Sustracci6n a las Reservas Forestales) from the forest reserve, actively encouragedthe creation of colonies of peasant farmers, both local and migrants from other parts ofColombia, over large parts of the region. In the thirty years following the approval of theLRA, close to 1.5 million ha were removed from the forest reserves and given individual titles,and in 1993 a further 0.5 million ha were the subject of title applications. Law 135 of 1961provided for indigenous communities of the region the opportunity to have their collectiverights legalized over their ancestral lands via the establishment of indigenous reserves (resguardos indigenas) in unoccupied land and the establishment, expansion and legalization ofthe reserves.

4.2.23 By 1993, when Law 70 came into effect, INCORA had legalized in the Pacific area137 indigenous reserves with 1,681,963 ha benefiting 9,673 families, and was processing afurther 44 reserves with 324,288 ha. Applications were expected to expand and create newreserves covering a further 500,000 ha. In 1991, eight National Parks with an area of580,500 ha were in existence, and eleven "special natural areas" with an area of 346,200 hahad been created for a wide range of purposes (ranging from national defense to universityresearch). Thus, at the beginning of the 1990s a process of territorial definition was welladvanced in the Pacific region in favor of a range of institutional actors and individuals whichignored the rights of the black communities as an ethnic group settled in the region and with"ancestral" occupation of land but lacking any title of ownership (in spite of the efforts madeby their organizations for the legalization of their lands). By 1993, when Law 70 waspromulgated, the status of land tenure in the Pacific region was as follows:

Area (ha)Private property 1,820,000Resguardos Indigenas in existence 1,681,963Resguardos Indigenas and Reservas in formnation 824,288National Parks 580,500Special Natural Reserves 346,200Urban Areas 140,205Area available for collective titling to black communities 4,686,844Total area of the Pacific watershed area 10,080,000

4.2.24 The sub-component was designed to "support initial actions to regularize and title landof black commnunities in the Pacific Region" and, as described in the LA and the SAR, it wasclearly seen as facilitating or paving the way for such titling; there were no quantitative targetsset for the number of titles to be granted or the area to be covered. In the Convenio betweenthe MMA and INCORA, however, six specific commitments were agreed upon:

(a) the dissemination of information on ethnic legislation and training of communities intheir new rights;

(b) the strengthening of organization and processes in the black conmmunities to improvetheir management and communication capacity;

- 12 -

(c) the achievement of advances in the agreed and participatory definition of the territorialrights of ethnic groups in the Pacific and other regions of Colombia;

(d) the institutional development of INCORA to serve as a facilitator in the solution ofintra- and inter-ethnic conflicts;

(e) the promotion of collective titling as a strategy for conservation and sustainable use ofbio-diversity in the Pacific region; and

(f) the collective titling of 2.3 million ha of land during the five-year life of the Convenio.

4.2.25 During the period 1996-2000, INCORA succeeded in establishing 58 collective titlesover 2,359,204 ha of land, benefiting 497 communities (with 22,132 families and 113,954people in total). In addition, a further 91 applications for collective titles are being processedand the average state of advance is approximately 70 percent. These 91 applications cover2,541,923 ha and will benefit 31,234 families.

4.2.26 In the achievement of these results, numerous obstacles were overcome and asignificant number of collateral benefits was generated. These included the resolution of legalrestrictions on the inclusion of areas of coastal mangrove forests in collective titles, theprocessing of titles for communities displaced by violence, and the resolution of problemsoriginating in the over-lapping of areas defined for National Parks and other state entities withthe ancestral lands of black communities.

4.2.27 In the course of the implementation of the land titling program, there was a significantincrease in the intensity of the violence along the Pacific Coast and the displacement of boththe black and indigenous populations. In February 1997, for example, at the height of theland titling program, a major displacement took place along the lower rio Atrato in theDepartment of El Choc6. Many of the intemally displaced families were resettled in anencampment in Pavarandosito and in the sports stadium in the municipio of Turbo,Department of Antioquia. The Catholic Church and several human rights organizations, alongwith the Red de Solidaridad Social, played an important role in the resettlement process, andhave since assisted the displaced families to return to their homes and communities along therio Atrato where, as a result of the land titling program, they now have secure collective titlesto their lands.

4.2.28 The sub-component made important advances, in particular, in training andorganizational strengthening. The Regional Committees of the program were planned as thefocal points of meeting with the black and indigenous communities on the subject of collectivetitling. During the life of the Convenio, six Regional Committees and two Inter-ethnicRegional Committees were established. Under the Convenio, 36 training exercises werecarried out to support black communities in the establishment of their Community Councils (Consejos Comunitarios - CC) and in the formulation and presentation of their applications forcollective titles. More than 150 CCs were formed, which all presented their titling requestsfor an area of 4,546,497 ha benefiting 74,446 families. In May 2000, the first NationalAssembly of Community Councils of the Pacific region was held, with the participation of 148CCs.

- 13 -

4.2.29 In terms of institutional development, INCORA created first a Division and later aProgram of Support to Black Communities in order to meet its responsibilities under theConvenio and with respect to Law 70. The Loan and the Convenio made a fundamentalcontribution to the functioning of the Technical Committee (Comisi6n Tecnica - CT) whichwas created under Law 70. The CT was composed of delegates from INCORA, IGAC, andMMA, and was responsible for the technical evaluation of the applications for collective titlingand for delimiting the area to be titled. The CT did not have the financial resources tocontract personnel, and it was agreed that the operation of the Central Support Unit of the CTwould be financed from the Loan via the Convenio between MMA and INCORA.

4.2.30 In order to overcome the serious deficiencies in mapping and related thematicinformation available to the CT, a GIS was created by INCORA for the black and indigenouscommunities. The basic levels of information include the areas covered by collective titlesgiven and under study, indigenous reserves, municipalities, and national parks. This GIS isbased on the GIS developed under Sub-component A.2 by the IGAC.

Sub-component A.6 - Institutional Analysis of Five CARs:

4.2.31 The purpose of the sub-component was to prepare proposals and action plans for therestructuring of the five CARs to improve their capability and efficiency in the management ofnatural resources. The original design had anticipated the hiring of specialized consultants tocarry out this work; however, the CU of the program (in coordination with the EnvironmentalInstitutional Development Project of the MMA) revised the work that had been done in thepreparation of this sub-component in order to ensure that there was no duplication with workthat had already been done. The five CARs, also consulted, were of the opinion that sufficientdiagnoses had already been done, that the weaknesses of the CARs were already well-definedand, therefore, that specific actions should be implemented immediately to improve theiradministrative and financial functions, their ability to formulate and monitor projects, and theirinstitutional capability for environmental management. As a result, the program oriented itsresources to consolidate (from the administrative, financial and technical point of view) theCARs of the Pacific. It provided computer equipment, hired consultants to identify thestrengths and weaknesses observed in the process of environmental planning of each of them,and designed and implemented an application for the management of the information in thedata bases of Regional Investment Projects. The program did not include resources for actualinstitutional strengthening of these CARs; without it, several of them remain weak and, whilstit can be argued that by not going further than the diagnosis the program did little in practice todevelop the CARs, the inclusion of such resources would have made the program even morecomplex.

Sub-component A.7 - Support for Five CRs:

4.2.32 The purpose of the sub-component was to support regional groupings ofrepresentatives of the indigenous and Afro-Colombian communities, and the main mechanismused by the program to promote community participation in the Pacific region, particularly inthe sub-components of collective titling, was the CRs. They were mainly involved in theresolution of conflicts and the facilitation of decision-making. A number of self-supportingstructures were created, both inter-ethnic and intra-ethnic. Participation continues to be

- 14 -

strengthened within the Social Solidarity Network (Red de Solidaridad Social) and forms animportant part of the social policy of the government in the Choc6 region. More than onehundred meetings and workshops were held. Between 1994-2000, and particularly after 1996,this sub-component operated very closely with sub-components A.4 and A.5 and themethodology used assisted greatly in the achievement of the results.

Component B - Water-shed Protection and Rehabilitation:

4.2.33 The purpose of the component was to support local activities: (a) to protect andrehabilitate critical micro-catchment areas in the Western and Central Cordilleras; and (b) toestablish community fuelwood plantations to reduce pressure on the remaining highland naturalforests. It was projected that a total area of 143,500 ha of micro-catchments would be treatedand that 24,800 ha of reforestation activities of all kinds would be carried out. Theimplementation of the component was principally the responsibility of the CARs, of which 18participated, in addition to one Departmental government and two non-governmentalorganizations (NGOs). In practice, the implementation of the component did not draw adistinction between micro-catchment area protection and fuelwood production.

Sub-component B.1 - Micro-Catchment Area Protection, and Sub-component B.2 -Community Fuelwood Plantations:

4.2.34 Work was carried out in 176 micro-catchment areas distributed in 123 municipalities.Using Loan proceeds, 5,000 land-owners and tenants were involved, benefitting an estimated131,000 people in the areas in which the work was carried out. Interventions included theplanting of forest species, ranging from purely protective stands to those used in conjunctionwith livestock pastures or for the production of fuel, and "bio-mechanical" control (i.e.,physical structures and planting of barriers) of erosion courses. An area of 19,267 ha wasreforested, of which 49 percent was combined protection & productive use, and 3,200 habenefited from physical erosion control alone. Agro-forestry and pasture-forestry covered3,376 ha whereas forest for purely protective purposes reached 2,943 ha and that for fuelwoodpurposes 2,745 ha.

4.2.35 Publicity, training and organization for community participation were of greatimportance, and the CARs emphasized the role of local communities in the identification ofproblems and the preparation of the activities. Participation, in effect, involved those affectedby the degradation of resources and those actually responsible for the degradation, andstimulated a collective commitment to solving the problems and changing destructive practices.The degree of participation and the level of success in these activities were closely related.The activities carried out were an important source of employment, and the first three years ofestablishing tree plantings are very labor intensive; it is estimated that over the period1994-1999 about 4,700 person-years of employment were generated for unskilled labor.Although the full benefits of tree-plantings will not be realized for many more years, there havebeen many collateral benefits from tree planting including the use of foliage in animal feeding,the impact of shade in coffee production, and an increase in land values. The activities havealso generated a number of extemal benefits, some of them foreseen at the time of preparationand appraisal. For example, surface water flows from micro-catchment areas for domesticpurposes have been increased and stabilized in some areas, and land-slides have been reducedin number. The activity has also served to change the mentality of many peasant farmerstowards the use of tree planting and in natural resource management in general.

- 15-

Component C - Management of National Parks and Buffer Zones:

4.2.36 The purpose of the component was to strengthen the capacity of the AdministrativeUnit (Unidad Administrativa Especial - UAE) of the National Parks Service (Sistema deParques Nacionales Naturales - SPNN). The UAE was created as part of the MMA inDecember 1995 to protect some of the most threatened and diverse ecosystems in the westernpart of Colombia. (The Parks Unit - Unidad de Parques - is responsible for theadministration of the whole of the Protected Areas System - Sistema Nacional de AreasProtegidas - in Colombia.) The activities of the component were directed at the nine nationalparks and one Special Management Area in the Choco region of the Pacific coast (Choc6Biogeografico Colombiano), which cover a total of 1,007,987 ha. Through the component,efforts were made to strengthen technical and administrative management at the central andregional level and to improve inter-institutional coordination. Three decentralized regions ofthe SPNN were involved: the north-west, with six parks; the south-west, with three; and thesouthern Andean, with one. A separate MTR was carried out for this component in early2000.

4.2.37 Although the component as described in the SAR nominally contained sevenmutually-reinforcing sub-components (see Section 3, paragraph 3.3.1), in practice theactivities carried out cannot be compartmentalized easily and it is analytically more helpful toconsider them not as sub-components but as separate, related activities within one component.Its implementation began in October 1996. A master plan (Matriz L6gica del Plan OperativoGeneral) was prepared for the parks in the Pacific region, the approval of which, in mid-1997,allowed the government of The Netherlands to proceed with full funding of the component.(Of the total of US$7.12 million, only US$4.57 million of the grant was actually spent as aresult of budgetary ceilings imposed.) The plan provided a clear guide for annual planningand for implementation. Beginning in 1998, detailed management plans were prepared inconjunction with the communities affected for each of the nine parks in the component.

4.2.38 In terms of the achievements of the component as a whole, the National Parks Servicehas been significantly strengthened; its professional capacity has been increased and it is verycommitted to the objectives of the program. A basic minimum level of equipment has beenestablished, to enable the program to function at the levels of the regional and individual parks.There has been considerable interaction with local communities, where in conjunction with themunicipalities in the formulation of their zoning plans (Planes de Ordenamiento Territorial -POTs) the national parks have been included as conservation and environmental protectionzones. The policy of social participation for resource conservation has helped to overcomeconflicts in the protected areas, and in the buffer areas of the marine parts of certain parks thedefinition of artisanal fishing areas have been pragmatic solutions to potentially difficultproblems. There were significant advances in consolidating an increase in income fromecotourism for the Parks System, at least until the upsurge in the level of violence whichoccurred in 1999. The promulgation of Decree No. 1124 in June, 1999 has provided theParks Service with the legal basis to implement mechanisms to achieve a sustainable financialsystem for itself. However, it must be concluded that satisfactory progress was not made withthe preparation of the strategy and action plan to achieve the long-term funding of the protectedareas.

- 16 -

Component D - Forestry and Environmental Education, Training, Research, ProjectManagement, and Monitoring and Evaluation

4.2.39 The purposes of the component were: (a) to provide skills and knowledge throughresearch, education and training for the forestry sector in particular and for environmentalmanagement in general; (b) to support the implementation of the program through aCoordinating Unit; and (c) to establish an independent "panel of experts" to provide reviewsand advice in the implementation of the program.

Sub-component D.1 - Education and University Research:

4.2.40 The educational results achieved in this sub-component are shown below:

Institution Total Students Students Students Number ofnumber of financed graduated retired places

students offeredNational University: Forestry 50 48 39 9 50Technology ProgramIndustrial University of Santander: 72 46 39 7 40Forestry Technology ProgramNational College: Forestry 163 83 83 6 80Technicians ProgramUniversity of Tolima: M.Sc. in 10 3 0 0 10Hydrogeological BasinsNational University: M.Sc in 5 1 0 0 10Tropical Forest ManagementTotal 300 181 125 22 190

Students benefiting from financial support were required to provide 800 hours of service to anyinstitution within the SINA, either during or at the completion of their studies.

4.2.4] The institutions participating restructured their programs of studies and invested in there-equipment of laboratories and field equipment for research. In order to improve thecapacity for research at universities and in the agencies that make up the SINA, between1996-1998 the MMA, universities and others undertook a series of measures to identify thesubjects and areas for research. A Technical Committee (Comite Tecnico Operativo) wasestablished and two priority subjects were identified, for which terms of reference wereprepared for the presentation of research proposals. However, because of problems with theincorporation of the resources into the budget of the Colombian Institute for the Developmentof Higher Education (Instituto Colombiano para el Fomento de la Educacion Superior -ICFES) no further work was carried out under this sub-component.

Sub-component D.2 - Vocational Training:

4.2.42 The purpose of the sub-component was to train semi-skilled staff and workers inforestry and environmental protection, and was applied to both the Pacific and Amazonregions. It was implemented in three phases: diagnosis of problems and publicity of thetraining activities, training in specific areas identified at the community level, and the

- 17 -

implementation of a training strategy through small projects. In total, 1,275 people weretrained under the sub-component. The training activities were complemented by practicalactivities including the establishment of nurseries and agro-forestry parcels. In several cases,community organizations were created or strengthened for the purpose of managing forestryresources.

Sub-component D.3 - Forestry Research:

4.2.43 The sub-component was designed to support a small number of forestry research anddemonstration activities, to be implemented by both private and public entities to improvetechnical knowledge for plantation forestry, to monitor the environmental impact ofplantations, and to manage natural forest resources in the Choc6 region. Nine activities weresupported:

(a) the production of species of high commercial value for industrial-scale reforestation;

(b) the conservation of forest genetic resources in the Andean region;

(c) specimen selection from two tree species of high commercial value in thecoffee-production region;

(d) the establishment of a technical and statistical information system for industrial-scaleforestry plantations;

(e) the evaluation of the environmental impact of forestry plantations;

(f) identification of methods of protection of forestry plantations;

(g) the control, management and sustained utilization of Naidi palm forest in the Pacificcoastal region;

(h) community management of forest in areas of settlement; and

(i) the conservation and management of humid tropical forests in north-east Antioquia.

Sub-component D.4 - The Program Coordinating Unit:

4.2.44 The Coordinating Unit (Unidad Coordinadora - UC) for the implementation of theprogram was created at the central level attached to the General Sub-directorate (Subdirecci6nGeneral) of the National Planning Department (Departamento Nacional de Planeacion -DNP). The UC was transferred to the MMA in January 1995, as projected in the SAR,shortly after the Loan became effective. The financial resources of the program wereincorporated into the investment budget of the MMA and were utilized by public and privateentities via annual operating contracts. The UC played a pivotal role between the MMA andthe Bank in ensuring compliance with the conditions of the LA, as well as ensuring that thecomponents of the program were in accordance with the environmental directives of thenational development plans in effect during the implementation of the program. It also

- 18 -

operated as a source of advice and training for staff of the implementing agencies in bothtechnical and financial aspects of the program.

Sub-component D.5 - Project Preparation and Evaluation:

4.2.45 The purpose of the sub-component was to carry out a number of specific tasks:

(a) the preparation of the base-line study referred to in paragraph 4.2.2;

(b) the design of the monitoring and evaluation system referred to in paragraph 4.2.2;

(c) the identification and preparation of a future program for natural forest managementand land titling in the Choc6 region;

(d) the preparation of specific sub-projects under the program;

(e) the preparation of the report providing the basis for the MTR; and

(f) the preparation of the final report and contribution to the ICR process.

4.2.46 Under the sub-component, four principal studies were carried out: (a) the preparationof the policies, plans and programs for the long-term development of the Pacific region ofColombia - the Agenda Pacifico XXI; (b) the preparation of the macro land-use zoning (Ordenamiento Territorial) of the Pacific region; (c) the preparation of a development programfor the Amazon region - the Agenda Amazdnica XXI, and (d) the strengthening andconsolidation of the National Parks system in Colombia. This was a significant departurefrom what had been intended at program design. Whilst some of the changes can properly beattributed to pragmatic decisions taken in the light of the actual experience of implementing theprogram, others resulted in gaps in knowledge and information that hindered the achievementof the objectives. The preparation of the base-line study began late and did not generate theinformation needed. As a result, the monitoring and evaluation system was not implemented,and it was left to Bank staff working with the UC to prepare a set of rudimentary indicators tofollow implementation. The required report by consultants in preparation for the MTR wasnot prepared, and the final reports (which were presented with a wealth of detail - see Annex 8)were prepared by the UC itself.

Sub-component D.6 - The Panel of Independent Experts:

4.2.47 The purpose of the sub-component was to establish a group independent of thegovernment to carry out annual reviews of the program, to recommend adjustments, to helpresolve conflicts, and to facilitate coordination with other projects both in the area of influenceof the program and in the rest of Colombia. The Panel was established only after a delay, andin effect never functioned as it was designed to do. It was available during the period of theMTR, but appears not to have functioned thereafter.

- 19-

4.3 Net Present Value/Economic rate of return:

4.3.1 No ex ante economic analysis was made of the program or of any of its components.As stated in the SAR, the main benefits were expected to be environmental and could not bequantified.

4.4 Financial rate of return:

4.4.1 No financial analysis was made of any of the components or activities carried out under theprogram.

4.5 Institutional development impact:

4.5.1 The program had a significant impact on several of the participating institutions,particularly on the MMA. However, the impact on institutional development of the CARswas low.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

5.1.1 The program was seriously affected by the lack of intemal security in Colombia whichsteadily worsened as the program's implementation progressed. This affected the achievementof the subsidiary objectives in particular, because both of the geographical areas concemedsuffered a lack of security and actual violence and displacement of people that restricted travelby technical staff and disrupted the lives of the local populations, in some cases makingintemal refugees of the very people that were the target beneficiaries of the program.

5.2 Factors generally subject to government control:

5.2.1 The most important factors affecting the program were the budget problems and fiscalausterity measures that began in 1995. In that year (the first full year of implementation)budgetary resources were not actually made available until the very end of the year, andbeginning in 1996 the government limited both the amount budgeted for investment under theprogram and the proportion of that budget actually made available (the authorized monthlyexpenditures - PAC) to the implementing agencies. As a result of this constraint, US$15.4million from the total amount of the Loan of US$39.0 million (39.5 percent) was eventuallycancelled at the request of the government. A major complication was introduced in theBudget Law of 1997, which prohibited one public sector agency from transferring resources toanother without modification of the Budget law itself by Congress. This rendered theimplementation arrangements unworkable, and a pragmatic solution, devised in mid-1997, wasnot made effective until near the end of that year, and only at that point could contracts for thatyear's activities be signed. The negative impact was particularly marked in Component B(investment in micro-catchment areas).

5.2.2 The transfer of the program's UC from the DNP to the MMA at the beginning of the

- 20 -

implementation period was made without the administrative problems that might have beenforeseen in such a move. The commitment and professionalism of the UC was exemplary.The level of government commitment to the program was variable. With the changes ingovernment, conmmitment was weak at least until the importance of the program for thedevelopment of the SINA was fully appreciated. Changes in relative priorities by differentadministrations contributed to unnecessary delays in the implementation of somesub-components.

5.3 Factors generally subject to implementing agency control:

5.3.1 The UC was a small but technically qualified unit that made judicious use of consultantsto carry out its functions. It was faced with a significant task inherent in coordinatingeighteen implementing agencies. In most of the sub-components where it was relevant, the UCplaced considerable emphasis on the participation of program beneficiaries and those otherwiseaffected by the program. The UC went to considerable lengths to prepare the progressreports, but the monitoring and evaluation of the program were significantly affected by theincomplete base-line study and the apparent failure to transform the study into a workablemonitoring and evaluation (M&E) system.

5.4 Costs and financing:

5.4.1 The total cost of the program estimated at appraisal was US$65.34 million, of whichUS$39.0 was to be financed from the Bank's loan and U$26.34 million was to be financed bythe central government and local agencies. As anticipated at appraisal, a grant was made bythe government of The Netherlands which made up part of the counter-part financing; thegrant, for US$7.12 million, became effective in July 1996 (20 months after the effectiveness ofthe Bank's loan) and was destined to finance the whole cost of Component C; in practice, onlyUSS4.45 million of the grant was disbursed (the balance of US$2.56 million being cancelled)and this was complemented by US$1.91 million of the govemrnent's own resources. At theend of 1998, as a result of its severe fiscal crisis, the government took the decision to utilizeonly part of the loan and to reduce counter-part funding proportionally. The amount ofUS$15.4 million was cancelled from the loan and the proposed counter-part funding wasreduced to US$15.75 million. In practice, the whole of the reduced amount of the loan wasutilized and counter-part funding reached US$22.33 million.

Components Appraisal ImplementedEstimate Cost

(US$ million) (US$ million)A - The Development of National Forest Policy and a Natural 10.80 9.23Resource Management Strategy for the Choco Region

B - Water-shed Protection and Rehabilitation 25.74 17.40

C - Management of National Parks and Buffer Zones 8.73 6.47

D - Forestry & Environmental Education, Training, Research, 20.06 12.20Project Management, and Monitoring & Evaluation

Total 65.33 45.30

- 21 -

6. Sustainability

6.1 Rationale for sustainability rating:

6.1.1 The sustainability of the program's achievements is considered likely, assuming that thegovernment of Colombia, and the MMA in particular, remain committed to the objectives ofsustainable management and protection of natural resources. The greatest impediment iswithout doubt the lack of security and the levels of violence to which very large parts of thenational territory are subject. The program's achievements are necessary but not sufficientconditions for the achievement of the ultimate goals; to a large extent, the products of theprogram represent the enabling environment in which these ultimate goals can be sought, butby definition the application of even the soundest policy cannot be extended to areas that arenot under government control. The achievements of the program with respect to the titling ofland of indigenous Afro-Colombian peoples should lead to sustainable management of theseareas, although the program was not able to go as far as necessary in the preparation of plansto this end.

6.2 Transition arrangement to regular operations:

6.2.1 The program represented an investment in the creation of a mechanism (of policy andinstruments) to be applied throughout Colombia and a series of interventions in two separateand geographically-defined areas. These basic tools remain in the MMA and the otherparticipating agencies and there is no specific "transition arrangement to regular operations"; inthis sense, the program was implemented within the regular operations of the differentagencies. In practice, there are no M&E perfonnance indicators generated as a result of theprogram.

6.2.1 There are, theoretically at least, numerous opportunities for the Bank to work with thegovernment of Colombia in the areas of rural development and sustainable use of naturalresources. Colombia has a wealth and heterogeneity of natural resources which are the envyof many countries and which, under other conditions, would generate significant opprtunities,inter alia, for eco-tourism. However, the poor and worsening status of internal securityseverely circumscribes the scope for these necessary project interventions.

7. Bank and Borrower Performance

Bank7.1 Lending:

7.1. 1 The process of identification, preparation and appraisal of the program took fiveyears, and, although this apparent "delay" was criticized by the government in early 1993, inretrospect it can be seen as an example of close cooperation between the government, the Bankand the FAO-CP in the design of a coherent and appropriate operation set against a changinginstitutional and policy background. The Bank's processes of internal review functioned well,and resulted in major changes to the program's design in two key aspects.

7.1.2 Identification of the program began in June 1988, and there were four identification

- 22 -

missions by the Bank and/or FAO-CP in the period up to August 1989. Preparation of theprogram began in early 1990 with an FAO-CP mission to define an operation in support of thePAFC, and its revised Project Brief was dated April 10, 1990. In July and December 1990,FAO-CP carried out short missions to support the local preparation team. The InitialExecutive Project Sumrnary (IEPS) of January 25, 1991 (for what was then called the Forestryand Environmental Protection Project) emphasized the strengthening of institutions andtechnical capacity as essential contributions for the establishment of a new institutionalstructure for natural resource management in Colombia. Many of the components andactivities which eventually made up the program were defined at that time, although a forestplantation incentive scheme, which was a major component of the proposed program, was laterdropped, as was a sizeable Global Environment Facility (GEF) component. The issuesfocused on: (a) the transitional institutional requirements before the new structure could beinstalled; and (b) the extensive work and collaboration needed to prepare the policy framework.Preparation was expected to be costly. Two requests for Japanese Grant Funds for theEnvironment (in February and September 1990) were rejected, although it is not clear from therecord why this was the case. An application by the govemnment of Colombia for a BankProject Preparation Facility advance was also proposed in January 1990, but was notproceeded with.

7.1.3 The Interim Preparation report prepared by FAO-CP was dated May 1991. TheBank carried out a final preparation mission in April 1992, with the objective of taking overfrom FAO-CP any further required preparation work, based on its Final Preparation Report ofOctober 1991, and initiating the processing of a loan. At that time, it was expected that theFEPS and (white cover) Staff Appraisal Report would be prepared by June 30 1992, andappraisal was scheduled for July 1992. A detailed review of the preparation report byspecialized Bank staff concluded that the design of the project should focus moresystematically on incorporating indigenous people (and Afro-Colombian people) into theproject design because of their importance in the area; this "quality at entry" contribution byBank staff was to have far-reaching and highly beneficial consequences in projectimplementation.

7.1.4 The "updated" EPS of July 1992 described the proposed project as the first phase of along-term program, and part of a wider range of institution building and developmentinitiatives aimed at forestry and environmental issues. At this stage, the three major issuesconcemed indigenous people, forestry planting incentives and the project's institutionalstructure. The major risks were felt to be the evolving institutions (given the then-currentprocess of decentralization), the commitment of the govemment to take stronger measuresconcerning forest policies and taxes, and the issue of intemal security. A lively intemal debateensued in the Bank, one result of which was to drop the Forest Plantation Incentive Schemecomponent from the project; at this point, the project's name was changed to the NaturalResource Management Program

7.1.5 A "pre-appraisal/appraisal" mission was carried out in August 1992, and wassubsequently reclassified as a pre-appraisal. An appraisal mission was planned forJanuary-February 1993, but following Departmental review was reclassified as a furtherpre-appraisal mission, charged with clarifying a number of pending issues including: the legal,institutional and policy frameworks; the appropriateness of the proposed interventions relativeto the causes of deforestation; and forestry policy. This mission found that the investmentcomponents of the program had been fully prepared; having agreed on the basic principles of

- 23 -

forest policy reform, a time-frame was established by which the drafting and approval of aforest policy document would proceed pari passu with the processing of the loan. At thisstage, forest research, forestry education and training, a base-line study, forest policyevaluation for the mid-term review, and an indigenous peoples & community development planwere all introduced into the program.

7.1.6 In March 1993, an impasse was reached with the government over the issue ofappropriate policies and investments for tropical forest management in theenvironmentally-sensitive Choc6 region. A high-level delegation visited Washington DC inApril 1993 for the express purpose of deciding on the next steps, which included the possibilityof the Bank disengaging from the program. The proposed investments in the Choc6 regionwere clearly inconsistent with the Bank's Forest Policy, and the Bank's preferred position,which was essentially agreed upon with the government, was to help develop forest policies,including the regulatory framework, the land information data base, and the clarification ofland rights of the Afro-Colombian people who predominate in the area. At this point,agreement was also reached in principle with the governnent of the Netherlands to finance theNational Parks component. The Final Executive Project Summary was prepared in June andan appraisal mission was carried out in July 1993. The Departmental review of the programtook place in August, negotiations were held in October, and the Loan was approved by theBoard in December 1993.

7.2 Supervision:

7.2.1 The program was intensively supervised by the Bank, and general supervisionmissions were supplemented by smaller visits by specialists whose responsibilities lay at thelevel of individual components (and occasionally sub-components) of the program. Twosupervision missions were carried out prior to Loan Effectiveness, and between June 1994 (theproject launch) and April 2000 a further twenty-one supervision missions were undertaken.

7.2.2 The MTR was carried out in January 1997, in accordance with the Loan Agreement.This occurred barely two years after Loan Effectiveness and three years before theoriginally-defined Closing Date of December 31, 1999 (and more than four years before theactual Closing Date of March 31, 2001). The MTR recognized that the implementingarrangements of a coordinating unit operating through annual work programs and contractswith 26 implementing agencies were difficult, especially when the complexities of theColombian budget allocation and management system were taken into account. When thepossibility grew of the loan amount being reduced as a result of pressure by the government toreduce public expenditure, the Bank did not accept the proposal made by the MMA to re-directpart of the Loan's resources to the CARs with the guarantee of the central government, and noagreement could be reached on any other alternative.

7.3 Overall Bank performance:

7.3.1 The overall performance by the Bank is considered to have been satisfactory.Although the time elapsed between initial identification and Board approval was over fiveyears, the Bank was responsible for a significant number of design changes, particularly at thelater stages, and was required to take a firm stand on important issues of policy.

- 24 -

Borrower7.4 Preparation:

7.4.1 The preparation of the project was carried out in Colombia by a local teamcoordinated by PAFC/TS in DNP and including CARs, ICFES, and the National RenewableResources Institute (Instituto Nacional de los Recursos Naturales Renovables y del Ambiente- INDERENA) (see FAO-CP May 1991). In mid-February l991, some US$1.0 million wasmade available to Colombia by the government of The netherlands (through FAO) tostrengthen the PAFC Technical Secretariat over a three-year period (1991-1993) and to carryout studies necessary for project preparation (some of which had already been started).

7.5 Government implementation performance:

7.5.1 The program was designed and implemented against a back-drop of changing sectorpolicies, designed to improve environmental controls and management of natural resources, butdeteriorating macro-economic policies which resulted in budgetary pressures and a defactoreduction in the size of the program. The government remained committed to the programthroughout its life, and this was emphasized at the time of the MTR.

7.6 Implementing Agency:

7.6.1 The management of the program was effective, and the UC worked well incoordinating a complex set of activities and a large number of implementing agencies, in spiteof the significant budgetary limitations which operated over the entire life of the program. Atthe time of the MTR in early 1997, a separate evaluation was made of the financialmanagement of the program which found that, while further improvements were required, itwas satisfactory and that significant progress had been made in 1996 to address the issuesraised in the audit for 1995, especially on internal controls. A key recommendation of theevaluation was to strengthen accounting and to integrate the financial management system, inorder to be able to use it as a management tool. The audit of the 1995 fiscal year's accountsand procedures was determined by the Bank not to have been in conformity with Bank norms,and a private audit firm was contracted to be responsible for the audit of the remaining part ofthe program. Delays in implementation were mainly beyond the reach of the UU; the delay indeclaring the Loan effective, which was immediately followed by budget restrictions andprocedural obstacles, exacerbated the difficulties inherent in a complex project.

7.6.2 The program was intensive in its use of technical assistance, and the hiring ofconsultants and consulting firns was carried out efficiently. As described elsewhere, the lackof a proper M&E system was a serious handicap. Large parts of the program were absolutelydependent on the participation of potential beneficiaries, and in some sub-components (forexample, the collective titling of land and the organization of the Regional Committees thatsupported it) the performance was exemplary. In general, the compliance with the covenantsof the LA was good, as was procurement and the preparation of progress reports; if anything,the progress reports and the final report were rather too voluminous and densely packed withinformation, and would have benefited from summary. As attested to by Annex 7, a largenumber of studies was carried out particularly in Components A and C.

- 25 -

7.7 Overall Borrower performance:

7.7.1 The overall performance by the Borrower is considered to have been satisfactory.

8. Lessons Learned

8.01 In the implementation of the program, a number of important lessons have beenlearned or reinforced. These include the following:

(a) It is essential to have an M&E system in place at the beginning of a project, and thisimplies that the preparation of the base-line study and the design of the M&E system itselfshould occur as early as possible in the project cycle. In the program, the study and designwere supposed to take place early in implementation, but even though the Loan becameeffective in November 1994 the preparation of the base-line study did not begin until late in1996. An adequate M&E system is, in practical terms, of equal importance to a properlyfunctioning accounting system for project management.

(b) Flexibility and pragmatism in implementation should be encouraged when anopportunity presents itself. In the sub-component of titling for Afro-Colombian communitiesin the Choc6 region, the program moved swiftly beyond merely providing the enablingenvironment for titling and, in the space of a few years, was able to establish (or provide thebasis for establishing) collective titling for all the land available for these communities.

(c) The experience of the early years of implementation with respect to accounting,financial management and audit strongly endorses the Bank's recent initiatives to require theinstallation of a proper accounting system as a necessary condition for the processing of aloan.

(d) The implementation of the National Parks and Buffer Zones component generated twospecific lessons:

(i) The conservation of natural resources depends crucially upon communityparticipation and partnership, especially in those areas where community territories (in thiscase, those of the Afro-Colombian and indigenous populations) adjoin or overlap theboundaries of national parks or other protected areas. The program supported and emphasizedthe need for appropriate, locally-supported (i.e., participatory) park management plans. Thiscreated a higher degree of local identification with the parks, reversing long-standing feelingsof exclusion and prejudice against them.

(ii) The effectiveness and impact of international cooperation, technical assistanceand partnerships are enhanced when cooperation goes beyond the supervision and auditing ofprogress, and extends to participation in the launching of the programs they finance. In thismanner, the international partners assume some responsibility for the outcomes and results.

- 26 -

9. Partner Comments

(a) Borrower/implementing agency.

9.1.1 Comments were received from the implementing agency and have been incorporated into the text ofthe ICR.

(b) Cofinanciers:

(c) Other partners (NGOs/private sector):

10. Additional Information

- 27 -

Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome I Impact Indicators:

Indicator/Matrix Projected In last PSRl ActuaULatest Estimate

Production of national forest policy see paragraphs 4.2.5 - 4.2.14. A series ofstatements policy studies and statements was made

during the life of the program.Modification of national forest see paragraph 4.2.8. The Regimen destatutes/regulations Aprovechamiento Forestal de Colombia was

issued in October 1996.Number of new indigenous reserves titled see paragraph 4.2.19. 46 reserves wereand demarcated created and 10 were expanded.Number of Afro-Colombian communities with see paragraph 4.2.20. 497 communitiescommunity titie received Utles to their land.Performance of regional corporations (CARs) see paragraph 4.2.31.in key areas of responsibility

Output Indicators:

Indicator/Matrix Projected in last PSR ActuaVLatest Estimate

End of project

- 28 -

Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)Appraisal Actual/Latest Percentage ofEstimate Estimate Appraisal

Project Cost By Component US$ million US$ millionA The Development of National Forest Policy and a 8.50 9.23 108.6Natural Resource Mmanagement Strategy for the Choc6RegionB Water-shed Protection and Rehabilitation 19.07 17.40 91.2C Management of National Parks and Buffer Zones 7.08 6.47 100.6D Forestry & Environmental Education, Training, 15.58 12.20 78.3Research, Project Management, and Monitoring &Evaluation

Total Baseline Cost 50.23 45.30Physical Contingencies 2.31Price Contingencies 12.80

Total Project Costs 65.34 45.30Total Financing Required 65.34 45.30

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Procurement MethodExpenditure Category ICB NCB Other N.B.F. Total Cost

1. Works 2.00 2.10 4.10() (1.10) (1.20) 0 (2.30)

2. Goods 0.50 2.50 2.00 5.00

(0.30) (1.50) (1.20) 0 (3.00)3. Services 12.80 12.80

_______________________ o 0 (8.30) 0 (8.30)4. Materials, supplies and 7.40 11.10 18.50local transport 0 (3.60) (5.30) 0 (8.90)5. Salaries and labor 25.10 25.10

0 0 0 (16.50) (16.50)Total 0.50 11.90 28.00 25.10 65.50

(0.30) (6.20) (16.00) (16.50) (39.00)

"Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii) re-lending project funds to local government units.

- 29 -

Project Financing by Component (in US$ million equivalent)Percentage of Appraisal

Component Appraisal Estimate Actual/Latest EstimateBank GovL CoF. Bank Govt. CoF. Bank GoVt. CoF.

A - The Development of 9.80 1.00 7.10 2.13 72.4 213.0National Forest Policy anda Natural ResourceManagement Strategy forthe Choco Region

B - Watershed Protection 12.90 12.90 7.51 9.89 58.2 76.7and Rehabilitation

C - Management of 8.70 6.47 0.0National Parks and BufferZones

D - Forestry & 16.30 3.70 9.01 3.19 55.3 86.2Environmental Education,Training, Research,Project Management, andMonitoring & Evaluation

- 30 -

Annex 3. Economic Costs and Benefits

No ex ante economic analysis was made of the program or of any of its components.

- 31 -

Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle No. of Persons and Specialty Performance Rating

(e.g. 2 Economists, I FMS, etc.) Implementation DevelopmentMonth/Year Count Specialty Progress Objective

Identification/PreparationJune 1988 2 FAO/CP: Forester, EconomistJanuary 1989 1 Bank: EconomistApril 1989 3 FAO/CP: Forester, FMS,

EconomistAugust 1989 4 Bank and FAO/CP: 2

Economists, 2 ForestersFebruary 1990 2 FAO/CP: Forester, AgronomistMay 1990 1 Bank: EconomistJune 1990 2 FAO/CP: Forester, EconomistDecember 1990 2 FAO/CP: Forester, FMSDecember 1990 2 Bank: 2 EconomistsFebruary 1991 7 FAO/CP and Bank: 2 Foresters,

FMS, 2 Economists, WatershedManagement and ConservationSpecialists, EnvironmentalEconomist

July 1991 4 2 Foresters, Project Analyst,Economist

April 1992 7 Bank and FAO/CP: 3Economists, FMS, 2 Foresters,Conservationist

Appraisal/NegotiationAugust 1992 5 Bank: Economist, FMS,

Environmental andWatershed Specialists,Forester

January-February 5 Bank: 2 Economists,1993 FMS,Environmental and

Watershed SpecialistsJune-July 1993 4 Bank: Economist, FMS, 2

Environmental Specialists

SupervisionJanuary 1994: 3 Economist, FMS, S Sprior to loan Environmental SpecialisteffectivenessMarch 1994: 1 Environmental Specialistprior to loan

effectivenessJune 1994: 5 3 Environmental Specialists, S Sproject launch Tropical Forest Specialist,

Sociologist,September 1994 1 FMSDecember 1994 3 Environmental Specialist, S S

- 32 -

Sociologist, FMSApril 1995 3 Environmental and (2) Forest

Policy SpecialistsJune 1995 1 FMSJune-July 1995 5 (2) Environmental and Forest S S

Policy Specialists, MarineBiologist, Forestry Specialist

October 1995 2 Forest Policy SpecialistsOctober- 2 Environmental Specialist, FMS S SNovember 1995February 1996 2 Environmental Specialist, U S

SociologistJune-July 1996 3 Environmental Specialist, 2 S S

ForestersSeptember 1996 2 Environmental and National

Parks SpecialistsJanuary 1997 6 Economist, Environmental S SMid-term Review Specialist, Sociologist, 2 Forest

Policy Specialists, FMSApril-May 1997 1 Watershed Management

SpecialistMay 1997 2 Environmental Specialist

Netherlands Govt. OfficialDecember 1997 1 EconomistJanuary 1998 5 Economist, 2 Environmental S S

Specialists, Sociologist,Environmental Economist

October 1998 6 Economist, Sociologist, 2 S SEnvironmental Specialists,Environmental Economist,Netherlands Government Official

February 1999 2 Environmental SpecialistsOctober 1999 1 Environmental SpecialistDecember 1999 1 Environmental SpecialistApril 2000 1 Agricultural Economist S S

ICRMarch-April 1 Agricultural Economist S S2001

(b) Staff:

Stage of Project Cycle Actual/Latest Estimate

No. Staff weeks US$ ('000)Identification/PreparationAppraisal/NegotiationSupervisionICRTotal

- 33 -

Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)Rating

El Macro policies OH OSUOM ON *NAE Sector Policies OH *SUOM ON O NAE Physical OH *SUOM ON ONAEl Financial O H OSUOM O N * NAEl Institutional Development 0 H * SU O M 0 N 0 NA

E Environmental O H *SUOM O N O NA

SocialE Poverty Reduction O H OSUOM O N * NAEl Gender O H OSUOM O N * NAZ Other (Please specify) 0 H O SU O M 0 N 0 NACollective titling of lands of indigenous

and Afro-Colombian communities

E Private sector development 0 H O SU O M 0 N * NAE Public sector management 0 H O SU O M 0 N * NAE Other (Please specify) 0 H O SU O M O N * NA

- 34 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bankperformance Rating

El Lending OHS OS OU OHUE Supervision O HS * S OU OHUO Overall OHS OS Ou OH U

6.2 Borrower performance Rating

El Preparation O HS * S O U O HUEL Government implementation performance 0 HS 0 S 0 U 0 HUEl Implementation agency performance 0 HS 0 S 0 U 0 HUO Overall OHS OS O U O HU

- 35 -

Annex 7. List of Supporting Documents

1. Staff Appraisal Report (Report No. 12250-CO): December 2, 1993

2. Loan Agreement (Loan No. 3692-CO): August 9, 1994

3. Progress Reports (Informes Semestrales): Unidad Coordinadora, Ministerio del MedioAmbiente: Bogota

4. Individual Reports of the Members of the Panel of Experts: February, 1997

5. Mid-term Review Report on Financial Management (Informe sobre la Evaluaci6n deAdministraci6n Financiera del Prestamo 3692 - CO: April 1997

6. Manual de Procedimientos Contables: Unidad Coordinadora: Bogota, September 1996

7. Informe Final Preliminar 1994-2000: Programa de Manejo de Recursos Naturales (pp. 452):Unidad Coordinadora: Bogota, February 2001

8. Informe Final 1994-2000: Programa de Manejo de Recursos Naturales (pp. 196): UnidadCoordinadora: Bogota, June 2001

9. Zonificaci6n Ecol6gica de la Regi6n Pacifica Colombiana: Instituto Geografico AgustinCodazzi, Ministerio del Medio Ambiente: BogotA, December 2000

10. Componente de Titulaci6n Colectiva de Tierras para Comunidades Negras - Informe Final:Convenio 045/1995 INCORA/Ministerio del Medio Ambiente: Credito BIRF 3692-CO: Bogota,2001

11 Revisi6n de Politicas Sectoriales que Promueven la Deforestacion en Colombia: InformeFinal: Ecoforest Ltda. Bogota, November 1997

12. Incentivos Econ6micos para la Conservacion en Colombia: Informe Final: AmbientalConsultores/Gaitan y Uribe Consultores/Econ6mica Consultores: Bogota, December 1996

13. Investigaci6n de Mercados Intemacionales para Productos Forestales Maderables yNo-Maderables, sus Derivados y Manufacturas: Informe Final: Econometria Consultores -ACOFORE: Bogota, May 1999

14. Plan Nacional de Desarrollo Forestal: Ministerio del Medio Ambiente, Direcci6n General deEcosistemas: Bogota, December 1998

15. Diagn6stico, Estrategia Nacional e Instrumento de Negociaci6n de Recursos de Credito parael Desarrollo de la Gesti6n Ambiental en Materia de Fauna Terrestre y Acuatica en Colombia:Convenio Ministerio del Medio Ambiente/Instituto de Ciencias Naturales: Bogota, November 1998

- 36 -

Additional Annex 8. Summary of the Borrower's Report

Introduction

8.1 Colombia participated fully in the Tropical Forestry Action Plan led by FAO and others since1985, and the Forestry Action Plan (Plan de Accion Forestal de Colombia - PAFC), formulated between1987-1989, has been the central pillar of government policy since then. Deforestation in Colombia hasbeen concentrated in the accessible areas of better soils destined for agricultural purposes, but theirinadequate use and management has provoked erosion, degradation, loss of biodiversity and thedestabilization of catchment areas with the consequent increase in flood risks. The cost of implementingthe PAFC was estimated at US$232 million.

8.2 For the implementation of Colombia's Environmental Policy and its PAFC, the Government ofColombia authorized the use of funding from the multilateral institutions up to US$140 million. Based onthis, in August 1994 the Loan Agreement No. 3692-CO was signed with the IBRD for Natural ResourceManagement Program (NRMP) for US$39.0 million and counter-part funding of US$26.29 million wascommitted, including US$7.12 million of grant funds from the Government of the Netherlands.

8.3 The NRMP was principally aimed.at conserving the forests and biodiversity of the Pacific coastalregion, stimulating the recovery of degraded areas in the Central and Westem Cordillera, and improving themanagement of natural resources through institutional and technical strengthening. The NRMP had fourcomponents: (a) Policy and Strategic Development; (b) Rehabilitation of Micro-catchment Areas; (c)Management of National Parks; and (d) Education, Training and Research. During the implementation ofthe Program, several new activities were introduced to respond to the needs of environmental policies andregional initiatives; these included the regional for a created under the Agenda XXI for the Pacific and theAgenda XXI for the Amazon.

The Natural Resource Management Program

8.4 Objectives: The central objective was to develop the national forestry policy in the frameworkof the application of environmental policy and to establish the technical and institutional basis to slow downthe degradation of natural resources , promote their sustainable use and to protect and recuperate thoseareas which were degraded or fragile, or otherwise of strategic importance for regional and localdevelopment. There were seven specific objectives:

(a) to complete the agro-ecological zoning of the Choc6 bio-geographic zone and begin thedevelopment of appropriate forestry and agro-forestry activities;

(b) to promote community titling of forest land;

(c) to define national policy and lines of action to make compatible forestry development, conservationand sustained use;

Note: This translation and precis of the Borrower's Report was made by the ICR author. The Borrower's Report isa long document (of 196 pages) and is itself a condensed version of an earlier report by the Borrower of almost 500pages.

- 37 -

(d) to promote reforestation, with community participation, in critical areas of vulnerable forest land;

(e) to strengthen the system of Protected Areas in the western part of Colombia;

(f) to strengthen institutional capacity in planning and implementation of projects and in monitoringand control of the use of natural resources; and

(g) to strengthen research, technology transfer, training and education in environmental matters, withemphasis on community participation.

8.5 The evaluation of the achievement of the objectives is closely related to the results of thecomponents and sub-components of the program, most of which were consistent with the targets. In somesub-components and activities, the achievements were limited by several powerful restraining factors,including for example the internal security problems of large parts of the country and budgetary restrictionsresulting from the fiscal crisis. On balance, program implementation was satisfactory and the objectiveswere largely achieved.

8.6 Forest Policy and the National Forestry Development Plan (Plan Nacional de DesarrolloForestal - PNDF): the program supported the formulation of the Forest Policy (Politica de Bosques(CONPES 2834 of 1996) and the PNDF approved by the National Environmental Committee (ConsejoNacional Ambiental) in December 2000.

8.7 Agro-ecological Zoning of the Pacific Region: the basic biophysical and socioeconomicinformation supported by thematic cartography was provided for the area as an instrument ofagro-ecological zoning, and was particularly useful in collective titling and the preparation of the AgendaPacifico XXI.

8.8 Collective Titling of Land to Indigenous and Afro-Colombian Communities: 58 titles wereprovided, covering 2.38 million ha and benefiting 113,200 Afro-Colombian people in 22,100 families. Afurther 2.54 million ha are in process. In indigenous people's reserves, 46 new reserves were established,ten reserves were expanded, and the definition of boundaries of a further 126 reserves was achieved. Atotal of 181 reserves now covers 2.06 million ha, benefiting 66,300 people in 12,100 families. Throughthe Regional Committees coordinated via the Social Solidarity Network (Red de Solidaridad Social - RSS)support was provided to the consolidation of organization of both Afro-Colombian and indigenous peoplein the Pacific Region.

8.9 Recovery of Micro-Catchment Areas: the program promoted the recuperation of 176 catchmentareas in 123 municipalities and covering 20,000 ha.

8.10 Research and Environmental Monitoring: the program initiated research and monitoring onboth natural and planted forests of economic importance to the country.

8.11 Sustainable Management of Nine National Parks in the Pacific Region: the programstrengthened the institutional capacity to manage selected priority areas of high biodiversity, to preserveunique eco-systems, promote the protection of natural resources, and to promote eco-tourism,environmental education and community participation in management.

- 38 -

8.12 University-level Research and Education: under the program, improvements were made to thecurricula of Forest Programs, 168 degree-level students were trained, three educational modules werepublished for training teachers in the incorporation of the environment in higher education, and 166professional staff of the SINA were given diploma-level training. Investment were made in laboratoryfacilities in three university teaching and research facilities.

8.13 Vocational Training: the program trained 1275 people in a wide range of vocational subjects, suchas the establishment of agro-forestry systems, nurseries, carpentry, accounting and marketing; implementedseven community projects on natural resource management; and created a system of continued educationfor extensionists.

Principal Factors that Affected the Outcome of the Project

8.14 Factors beyond the control of the Government: a number of sub-components (e.g., collectivetitling, agro-ecological zoning) were dealing with issues where there was no prior experience in Colombiato guide the implementation of the program. This was particularly the case with the environmentalmonitoring of the Catival, Guandal and Naidi forests and with the collective titling of land to the blackcommunities where Colombia itself has been a pioneer. In the constitution of 1991, participation became afundamental right of all the population, and this was recognized most emphatically by the people of theChoc6 region of the Pacific coast. However, the customs of these people did not permit rapiddecision-making conceming their role in the program and the program of work to be followed. In the caseof the environmental monitoring of the Choc6 and Narifio regions, a process requiring between 6-8 monthswas necessary simply to decide if the communities would participate in the activities of the project.Similar circumstances affected the implementation of the components of ecological zoning and collectivetitling for indigenous and black communities.

8.15 The macro-economic policies adopted by the government towards the end of the 1990s to face upto the world economic recession introduced budgetary restraints for central government entities andtherefore the programming of disbursements agreed for the NRMP could not be complied with. The policyof the government at the end of the 1990s adopted to control the level of external indebtedness obliged theDNP to request the cancellation of US$15,395,738 from the Loan. During 1994-1996 the resourcesdisbursed by the Bank were justified completely by the payments that the project executing agency made tothird parties which gave rise to a delay of about seven months in the rotation of funds through the SpecialAccount because of the large volume of information that had to be revised in the process of completingdisbursement requests. The US$2.0 million limit on the size of the Special Account proved a constraint.The availability of resources was also affected by the exchange rate "loss" generated by the Bank'streatment of the timing of the accounting entry of the exchange between pesos and the US dollar at the timeof making payments to third parties. This generated a "loss" of US$250,000 which could not be justifiedas a cost, and thus reduced the real availability of the loan's funds.

8.16 The negotiations between the governments of Colombia and The Netherlands concerning the latter'sgrant, and subsequently between the government of The Netherlands and the Bank for the administration ofthe funds was somewhat drawn out and ended only in September 1996; the effect was to delay theimplementation of the Pacific Parks component by about two years.

8.17 Factors within the control of the national and local governments: the armed conflict that grewduring the 1990s affected areas that had previously been unaffected, such as the Pacific coastal region, andthis affected the program's implementation in multiple ways.

- 39 -

8.18 The lack of experience of the staff of the UC in the management of loans from multilateral banksslowed implementation during the first two years, especially because the program had support from boththe IDB and the IBRD and because the program was complex and covered the whole of the nationalterritory. The UC was never able to reach the designed structure and size, which meant that a very largeeffort had to be made by a reduced number of people.

8.19 The fiscal crisis intensified beginning in 1995; this affected the implementation of the program andwas reflected in reduced budgetary allocations and continuous cuts and delays. The crisis meant thatinstruments designed as tools of administrative and fiscal efficiency (such as the Programa Anual de Caja- PAC) ended up being used instead as mechanisms of control and budgetary restriction. In 1997, thebudgetary rules contained in the decree controlling the General Budget (Presupuesto General) obliged theUC to adopt a mechanism of resolutions of budget distribution instead of the Convenios between the MMAand the executing agencies. This caused delays because it meant that new financial regulations had to beintroduced and additional training had to be given to the executing agencies concerning the management offinancial resources and the preparation and maintenance of accounts.

8.20 The loan became effective in November 1994; the resources provided for implementation in thatfull year could only begin to be spent in the first quarter of 1995. The program was erroneously classifiedin the Budget Law for 1995 and this caused delays in expenditures. Resources could be committed only atthe end of 1995 for expenditure in 1996, and the cumulative delay in implementation was two years. Thefinance available for the micro-catchment areas component was too large for the limited number ofexecuting agencies in the Pacific coastal area; this was resolved in 1997 with the addition of new executingagencies in other parts of the country.

8.21 Colombian legislation provides that the resources of international loans must be included in theGeneral Budget Law (Ley de Presupuesto General de la Naci6n) and thus to use such funds requires thatthe norms and procedures of the Estatuto Organico de Presupuesto Puiblico Nacional and those of themultilateral institution concerned must be made compatible. As a result, the program was subject to thelabyrinthine complexities of the Colombian budget process; for example:

(a) because of the limitations imposed by the size of the PAC, on average only 39% of the budgetallocation for the program was actually made available in any given year, the balance was paid as apriority in the following year together with the resources allocated in the budget of that year (which were,of course, subject to the PAC restrictions);

(b) the Direcci6n del Tesoro Nacional needs at least three months to issue a certificate for any financialresources returned unspent by executing agencies which impeded their use in other parts of the programand forced the processing of new disbursement requests even while funds were technically still available;

(c) the Direcci6n General de Credito Publico requires one month to process a disbursement request andissue the required authorization fro funds transfer. In addition, a series of procedures must be made withthe Direcci6n del Tesoro to actually achieve the physical payment of commitments, each taking about twoweeks.

8.22 Factors within the control of the executing agency: this includes the MMA as the executingorganization as well as the individual entities that were the executing agencies. At the central level, thetransfer of the program from the DNP to the MMA at the time when the latter was beginning to create itstechnical structure made difficult the incorporation of the UC. Most of the executing agencies were CARs,some of which were in the process of being created and others were modifying their structures in line with

-40 -

the Law 99 of 1993; their limited administrative and technical capacity required dedicated attention fromthe UC. These agencies also had limited capabilities concerning budgetary management and accountingwhich was exacerbated by the frequent change in staff which required continual retraining by the UC. Theprocesses of consultation with the base organizations and the communities generated considerable delayswhich, for example, in the micro-catchment area component caused delays of six months.

Sustainability of the Program

8.23 Forestry Policy Component: Beginning with the formulation of the Forest Policy (CONPES#2834) in 1996, the Consejo Nacional Ambiental approved the PNDF on December 5, 2000, theobjectives of which are to "to establish a strategic framework which actively incorporates the forest sectorinto national development, optimizing comparative advantage and promoting the competitivity forestproducts (timber and others) in both domestic and export markets, starting from the sustainablemanagement of both natural and planted forests". In pursuing this objective, it is expected that in 25 yearsthe Colombian forest sector will have been consolidated as a strategic part of the development of thenational economy.

8.24 Micro-catchment Area Component: To give continuity to the experience acquired through theimplementation of this component, the MMA has formed strategic alliances with many organizations andlocal communities to implement the Plan Verde, the main objective of which is to promote the restorationof degraded ecosystems through the establishment and maintenance of vegetation cover. The goal for 2002is to achieve 100,000 ha of cover; however, the PNDF has been reformnulated with goals for the year 2007of: (a) restoring 245,000 ha and establishing 271,000 ha of protective forest; and (b) establishing 332,000ha of protective-productive forest.

8.25 Environmental Research Component: Projects advanced by CONIF andCENICAFE-FEDERACAFE have been given priority in the research component of the Plan Verde and thePNDF. The MMA and the implementing agencies have made a commitment to give continuity to five ofthe research activities carried out under the program. The results of research on existing plantations havebeen given to the MMA and the Ministry of Agriculture, and will be perrnanently up-dated by the CARs,the SIAC, and others. The sustainability of forest management activities is guaranteed by the executingagencies and communities, particularly CORANTIOQUIA. The efforts made by CORPONARINO andCORPOURABA may be frustrated by a lack of resources, given the poor financial status of these bodies.

8.26 Ecological Zoning of the Pacific Component: This component was carried out to give the regiona development planning instrument. The information was given to the Instituto de InvestigacionesAmbientales del Pacifico and to the CARs of the region which will be responsible for the arrangementswith the relevant bodies (e.g., IGAC) for maintaining the information up-to-date.

8.27 Environmental Monitoring Component: This is one of the most important components of theprogram, through which data was generated on forest use in three types of forest with the highest potentialfor sustainable extractive use: the Cativales, Guandales and the Naidizales. The validation of this type ofinformnation requires continuity over time, the MMA and CONIF (plus other agencies) have established theEnvironmental Monitoring Network for Forest Use in the Pacific Forest Area. CONIF, CODECHOCOand CORPONARINO have prepared second phases of these projects for inclusion in the project data baseof Planeaci6n Nacional; however, the financial status of these bodies is such that continuity is far fromassured, and firm support is needed from research institutions, SINA, the national govemment andintemational technical cooperation to ensure continuity.

- 41 -

8.28 Collective Titling for Indigenous and Black Communities Component: Apart from their mainpurpose, the collective titles exercise a powerful influence over the conservation of biodiversity and naturalresources of the region. The MMA has included in the "Colectivo Ambiental" project, the EnvironmentalPolicy statement in the National Development Plan, and in the PNDF , support for the formulation ofmanagement plans for the black and indigenous communities to ensure that the areas in question cansimultaneously be conserved and provide for the livelihood of the commnunities inhabiting them. INCORAhas formulated a proposal for sustainable production projects in the collectively-titled areas as well as tofinish the work in progress to increase by one million ha the area titled to black communities.

8.29 Regional Committees Component: The sustainability of this component lies in the consolidationof the territorial rights of the ancestral ethnic groups, in the strengthening of their organizations, and intheir capacity to communicate with the authorities of the state.

8.30 Pacific Parks Component: This will enjoy continuity through the second phase that is currentlybeing negotiated between the Parks Unit and the government of The Netherlands in order to use the US$2.5million unutilized under the program. It is also expected that the activities carried out under thiscomponent will also receive resources in the framework of implementation of the new policies to strengthenand consolidate the National Protected Areas System.

8.31 University-Level Education and Research Component: In addition to continuing with thetraining of forestry technicians, the CINOC is evaluating the feasibility of implementing the cycle oftraining in other municipalities of the department of Caldas. The Universidad Nacional (Medellin camnpus)has terminated the training activities in Piedras Blancas but is studying the possibility of training forestrytechnologists in other parts of the department of Antioquia. The Universidad Industrial de Santander, theUniversidad de Tolima, the Universidad Distrital Francisco Jose de Caldas, and the Universidad Javerianahave all maintained the course developments achieved in recent years.

Performance of the Bank

8.32 Beginning with the presentation in the first International Round Table of the PAFC, the Bankdemonstrated its interest in financing part of it and this eventually was made concrete in the NaturalResource Management Program, Loan No. 3692-CO. It is important to emphasize that from identificationthrough preparation, implementation and ex post evaluation the Bank has accompanied the process throughthe different missions that helped to advance the program and to make the necessary adjustments. Thetechnical contributions made by different missions to sub-components A. 1, A.2, A.3, A.5, B. 1, D.3, and tothe whole of component C should be emphasized. In the case of agro-ecological zoning, in 1997 the Banksupported the revision, adjustment and fine-tuning of the methodology as well as the whole scope of theactivity. Valuable support was also given in the forestry policy, environmental monitoring and forestryresearch activities of the program. Special recognition is due to the interest shown by the Bank's missionsrelated to the collective titling of land for the indigenous and black communities, which support wasimportant in consolidating these processes.

Performance of the Borrower

8.33 The implementation of the program covered three periods of government and saw five Ministers ofEnvironment. The objectives of the program were maintained throughout this period, which responded tothe outlines of the National Environmental Policy. The MMA had to fund the program which includedsome activities which, although environmental in nature, from a functional point of view were the

- 42 -

responsibility of other entities of the national government; this had the effect of directly influencing theMMA's ability to fund certain activities that come directly under its responsibility. The TechnicalDirectorates of the MMA involved themselves in the implementation of the program and worked closelywith the UC.

Performance of the Implementing Agencies

8.34 The program had 33 implementing agencies, including nineteen CARs and Corporaciones deDesarrollo Sostenible, three NGOs, eight public entities and three private companies. During the earlyyears of implementation, there was considerable weakness in the capacity to identify, formulate andmonitor projects, especially in the CARs, mainly because many of them were in the process ofconsolidating their technical structures and functions. The problems were overcome through a process ofconstant support from the UC and the MMA, and the interest which was maintained by the agencies inimproving their performance and complying with their obligations under the program should beemphasized. In some of the entities, however, and in spite of the training given, there was a continuouslack of compliance with the requirements concerning accounting and the preparation and use of the POA;this had serious effects on implementation and compliance with contractual obligations. A significanteffort was made by the MMA and the UC, on the one hand, and by the executing agencies, on the other,which resulted in the creation of an installed capacity that can be consolidated as the SINA matures.

-43 -