Natural resource management in Bolivia

28353 NUMBER 44 *, ED recis Operations Evaluation Department May 1993 Natural Resource Management in Bolivia Bolivia's capacity to attain its Rural population growth has strive for sustainable development development goals depends heavily on been stable since 1950 at 1.25 percent within each region. It is not clear how well its natural resources are a year, but urban population grew at whether the geographic, demograph- managed. Some natural resources- 4.45 percent in 1976-88. Rapid ic, and resource imbalances between tropical forests and biodiversity-seem to urbanization has hastened the the two regions ought to be corrected be abundant. But recent trends in contamination of land and water and or indeed-given the mixed success resource use call for concern. To avoid diverted public investment away of projects to colonize the Low- reaching unacceptable levels of resource from efforts to improve rural resource lands-how much they can be depletion, a concerted effort will be management through research, influenced by economic and social needed to design and implement effective extension, and education. (See box.) policies. Even if policies could have policies and institutional reforms. The an effect, it is not clear how soon government is now taking important Resource management issues Bolivia should begin the sustainable steps in this direction. economic development of the re- Sociopolitical changes: Rapid and sources that remain. A new OED study analyzes the complex social changes since the projects, policies, and institutional agrarian revolution of 1952 have Both the Altiplano and the reforms that have affected the manage- strongly affected how natural re- Lowlands face a number of similar ment of Bolivia's natural resources over sources are appropriated and used. structural constraints that need 30 years.* The study is part of a larger Long periods of social unrest and urgent attention. While policies and program of OED work on renewable economic instability, differences in laws have recently been introduced, resource management issues (see also culture and ecology, and in develop- the legal and regulatory system are Precis No. 24, Natural Resource Man- ment goals across regions, have all not complete enough to implement agement in Nepal). It urges a reassess- influenced the allocation of property them. Other problems arise out of the ment of the concepts and strategies and user rights, formulation of fragility of the environment, the underlying sectoral and macroeconomic economic policies, and distribution of ecological risks associated with decisionmaking in Bolivia, including social and economic benefits. Eco- developing virgin lands and forests, assumptions about the sources of nomic and social policies have often and poverty. Sustainable develop- economic growth and areas of compara- taken a short-term approach to ment within each region will require tive advantage. problems, rather than seeking lasting strong commitment to developing solutions. human capital, knowledge, policies, In Bolivia, the rate of natural and institutions to ensure that resource use is relatively high, and the Bipolar approach to development: economic decisions incorporate the links are strong between poverty, the Bolivia's Altiplano has high popula- full opportunity cost of natural nature of economic incentives, institu- tion density, a limited resource base, resource use. tional weaknesses in government, and and extensive poverty, while the the depletion of land, water, and Lowlands, with low population forests. Bolivia is typical of the world's density, seem to have abundant 'tdiil Resource Mana8emnt m poorest countries, where the manage- resources and almost unlimited Bolivia: Thirty Years of Experi- i ment of resources essential to sustain carrying capacity. Especially until the ence, Report No. 11891, April economic development has suffered mid-1980s, Bolivia based its develop- 1993. OED reports are available to serious neglect. And it offers evidence ment strategy on the assumption that Bank Ezwutive Directors and staff of the challenges of frontier develop- the two regions should be more from? the Internal Documents Unit ment where virgin land may be drawn evenly populated. It is now clear, and fm Regiona Infonmation increasingly into unstable use. however, that the government must Sees Cemk"s  External aid: From 1960-90, Environmental Challenges external aid to Bolivia generally took little account of how renewable Bolivia faces tIhree majr environ- The lands of the indigenous people resources could be developed to mental challenges: wtho live in the torests are also efficiently supply a sustainable flow threatened by logging companies of goods and services. Though the Mhanaging agriculture, grazing with timber concessions and by donor community probably has long lands, and the associated biotic colonizers. Rights and properties of I understood the strategic importance resources in the Altiplano and the the indigenous people have yet to be of better renewable resource manage- vallevs. The dominant role of peasant properly defined and protected. ment, the goal was not enunciated till agriculture, the extremely low the late 1980s, and the statements did productivity ot the mininpindia svstem, * Managing scarce water resources, n i p and the acute poverty in the area are particularly in the arid and semi- major development concerns. Natural arid regions of the Altiplano and ment instruments to help achieve it. causes and overgrazing. overcropping, Valleys, where there is intense and inappropnate use of technology competition for water for agricul- Structural constraints: Many of are accelerahng erosion and reducing ture, mining, and human consump- Bolivia's long-lived structural con- fertility. Erosion threatens the stability tion. Mining operations and coca straints persist. Part of the reason is of the major watersheds, as well as of producers discharge processing that Bolivia's wide disparities in the electric pow er system and urban effluent and other pollutants into agricultural enterprises and farming infrastructure thev serve. rivers and streams, contamninating systems, human resources, and irrigation and drinking water. institutions are mirrored and accentu- * Nlanaging a relatively rich natural Rivers close to or passing through ated at the level of regional develop- resource base for development in the towns and other settlements ment agencies. These agencies, as Eastern Lowlands. Without proper generally serve as open sewers. well as organized groups, have policies, this frontier region could Bolivia has no master plan for water i strongly influenced who has access to develop fast but wastefully, with use and conservation. Ministries natural resources and have helped to irreversible damage to soil and forests. and departments pay little attention define how political power has been Wildlands, natural parks, and reserves to the effects of water use on the shared in the last three decades. are threatened by road construction, environment. Confusion and mining, agriculture, and colonization. considerable damage often result. Poverty and the environment Coultnty policy framework: The taxes-that are consistent with the The effectiveness of resource negative effects of not enforcing sustainable management of forests. management policies depends conservation regulations-forest heavily on poverty, which has been management plans, reserves, or Recent Bank reports show how an important cause of harm to the wildlife protection-are clearly the factors that promote responsible environment in both the Altiplano visible. Though Bolivia's economic management of renewable resources and the Eastern Lowlands. To reduce policies have tended to emphasize are also those that contribute to poverty in either region will require quick-yielding measures to encourage economic growth: institutional net economic growth, but poverty export-led growth, assuming that reforms, training, education, new issues and the technical constraints on economic expansion and stability are forestry strategies, and a better improving living standards differ preconditions for sustainable develop- regulatory framework. between the regions. ment and that natural resources were abundant, today's policy makers are Exports based on natural resources: In the Lowlands, little is known increasingly aware of the need for Bolivia's agricultural exports come about what types of farming systems better environmental and resource mainly from undervalued natural (or other nonagricultural uses) would management, and are now beginning resources-from the extensive be appropriate and sustainable. The to take effective action. development of its forests and farms. difficulty is to establish sustainable The record suggests that such exports, systems that can generate enough For a country such as Bolivia, often promoted with subsidies, have income from a family holding to heavily dependent on natural re- done little to reduce poverty, while reduce the present incentives to source extraction, macroeconomic and the external costs of the damage to expand to new land. sectoral policies are not neutral with soil, forests, and biological diversity respect to natural resource use. For have not been considered in calculat- In the Altiplano, natural resourc- example, exchange rate depreciation ing opportunity costs. If Bolivia's es are severely degraded, population may make forestry more profitable, resources were valued at their full density is high, and landholdings and this increases the importance of opportunity cost, assumptions small. Options for intensifying putting in place forestry policies- concerning the country's comparative agricultural development and such as concession arrangements and advantage might change substantially. increasing productivity at the margin May 1993  are unclear. Yet as urbanization the market system, government, and increases, agricultural productivity community organizations. Strong Recent Government Actions will need to be improved-in a fragile government commitment is essential ecological system. for success. Recently the government has made considerable efforts to Much more needs to be done to In areas where extensive agricul- improve the management of facilitate agricultural research, ture is practiced, the expansion of natural resources, especially in the extension, training, and community agriculture needs to be carefully Lowlands. They include: participation. Agreement is needed monitored. Policies for roads and * Formulating an environmental about the most important and feasible credit in frontier regions need to be action plan. actions. Reducing poverty in the implemented in a manner consistent short or medium term should be a with the land use plans now being * Enacting an environmental law. central concern of agricultural sector developed. Otherwise they could work. lead to shortlived farming. * Creating an environmental ministry (SENN1A) and an agencv Knowledge, institutions The Bank's role to fund environmental projects (FON AMA). To slow down the depletion of The Bank's association with forest and soil resources will probably Bolivia dates from 1955. Though its * Developing an environmental require a change from extensive to own lending volume has been management structure dowvn to the intensive production. Efforts to relatively small-totaling $734 regional level. design natural resource management million-the Bank has used its policies and instruments without leverage to help Bolivia obtain or * Formulating a land use plan tor reference to the need to intensify orient other funds. agriculture have yielded poor results. Establishing a national system of To intensify farming would require The Bank has given much protected areas. more modern farming systems- attention to Bolivia's development preferably environmentally sound issues. Yet it has not been particularly The government has taken mea- ones-including the gradual elimina- discerning about the quality of the sures to stop the inequitable tion of slash-and-burn cultivation. information it has obtained and used allocation of land, and is formulat- on natural resource management. ing a new agrarian la w and a To implement such systems Because from time to time lending project to support a more effective would require large investments in operations in Bolivia were suspended, land administration. Legal work is human capital and institutional the Bank has not sufficiently promot- in progress in the areas of environ- development. These investments ed information gathering and analysis mental regulations. forestry, and would include farmer training and that could contribute to better deci- indigenous people. education, research and extension sions on resource management. services, community participation, cial resources. This approach is and the strengthening of national, In the Bank's sector work, the visible in public sector management regional, and local organizations. recognition and discussion of Boliv- projects, the agricultural technology Changes would also be needed in the ia's resource management problems project, and special studies undertak- incentive structure produced by has improved over time. Early en since 1987-and in the extended current economic policies, environ- reports reflected the belief that better disbursement periods (of up to eight mental regulations, and property government macroeconomic policies years) proposed for some recent rights. were the necessary spur to economic projects. All these features suggest a development. But once these policies commitment to greater effectiveness. Where institutions are weak, the were introduced, the sector work conservation of soil, water, or forests reflected the recognition of weakness- The road ahead is hampered. The impact of institu- es in institutions and in human tional weaknesses showed up during capital. The most recent reports are Reflecting efforts by Bolivians, such periods as the implementation of more forthright in recommending the donors, NGOs, and the academic the Ecological Pause (1990), which use of economic policies to affect community, the environmental suspended all processing of new resource conservation. aspects of development are being forest concessions, and in the Forestry more systematically addressed and Law of 1974, which relies on a weak Over the last decade the Bank has several projects and policies are being agency to protect forests. Develop- pursued a gradual approach in which formulated to improve natural ment organizations and their staff the development of institutions and a resource management. The opportu- need to be trained so that they can better information base precede the nity now exists to reorient part of the respond to the demands imposed by infusion of infrastructure and finan- policy dialogue and build safeguards OED Prcis  carrying out public expenditure Main Findings reviews, investment reviews, and designing adjustment operations. Bolivia's ability to achieve sustain- management in the long term. More research is needed on how able development goals will depend macroeconomic policy affects natural strongly on how well natural resource * The Bank's uistruments ot resource allocation and use. The management concerns are integrated intervention, including investment results may show that traditional into decision making at all levels. projects, have proved much weaker notions about the sources of growth than expected. An in-depth study is a . The country's development needed on the effectiveness of . - polides still have a bipolar orienta- economic instruments and alterna- be revised. tion. This approach should be tive environmental interventions. Realistic pricing: Decision makers replaced by a goal of sustainable development in both parts of the * If natural resource-based in Bolivia should be encouraged to set country. programs are to succeed in the prices and incentive policies that reflect future, policy, institutional, and the full opportunity cost of the natural * The donor community has other reforms affecting natural resources that are incorporated into overestimated the readiness of resource management should be production, consumption, and trade. institutions to implement programs designed and implemented. This is especially true of land, water, that affect natural resources. Not and forests. For some time, these enough attention has been paid to * Decisions about natural resource natural resources have been under- developing institutions and human management have been made i valued, leading to extensive land use capital. Such development would without enough information; the and relatively rapid opening up of make investment more productive in Bank should support the develop- the frontier. There is no consensus on the medium term and provide a ment of information-gathering how fast natural capital ought to be sustainable basis for resource systems in BoLivia. Idepleted, but this issue deserves to be -_-- ------- analyzed. A comparative advantage study would be needed to assess the to avid unnecessary degradation of Lowlands: The traditional view that likely effects on Bolivia's exports of natural resources in the Altiplano the Lowlands have unlimited "carrying valuing resources at their full oppor- and the Lowlands. Actions are capacity" must be questioned: tunity costs. Bolivia should continue needed on several fronts: to liberalize its trade regime, but only * The pace of exploitation of these if liberalization is supported by an Altiplano: Sector work, develop- resources seems to have accelerated. effort to correct the domestic price ment programs, and policies for the * Too little knowledge is available distortions and externalities associat- Altiplano should explicitly consider to judge the sustainability of economic ed with its renewable resources. poverty and environmental degradation activities in the Lowlands. together. Closer agreement is needed * The potential public benefits of * Technical assistance: The Bank among Bolivian decision makers, Bolivia's forests, wildlife, and biodi- should consolidate its technical assistance donors, NGOs, and the academic versity have begun to be clearly to Bolivia and intensify its efforts in community about suitable technolo- recognized by policy makers in Bolivia information gathering, studies, and gies, ways to achieve lasting increas- and outside. resource assessments. Major institu- es in productivity, and ways to * Current policies and institutions tional changes are underway in alleviate poverty. Market and (especially property rights) do not Bolivia, forcing regional and local nonmarket-based instruments need assure that the pace of exploitation is organizations to redefine their roles to be identified that can increase consistent with a proper valuation of and objectives. This is the time for capital accumulation without opportunity costs. the Bank to support training and compromising the natural resource education, so that these organizations base. In this respect, the Bank- Macroeconomic policies: The evolve in a way that is conducive to financed agricultural research government and the Bank need to be aware sustainable development. project is likely to make a major of how proposed macroeconomic policies * Institutional development: For the contribution. But other agricultural will affect the incentives for and pattern of long term, decision makers in Bolivia sector services need to be improved use of natural resources, so that necessary should seriously consider giving higher and their focus on environmental corrective actions can be taken. These priority to the development of institutions and sustainability issues sharpened. effects need to be taken into account in and human capital. OED Precis is produced by the Operations Evaluation Department of the World Bank to help disseminate recent evaluation findings to development professionals within and outside the World Bank. The views here are those of the Operations Evaluation staff and should not be attributed to the World Bank or its affiliated organizations. Please address comments or enquiries to the managing editor, Rachel Weaving, E-1204, World Bank, telephone 473-1719. May 1993