Natural resource management in Bolivia : 30 years of experience

Report No. 11891 Natural Resource Management in Bolivia: 30 Years of Experience May 19, 1993 Operations Evaluation Department FOR OFFICIAL USE ONLY MICROFICHE COPY Report No.:11891 BO Type: (IER) Title: NATURAL RESOURCE MANAGEMENT IN Author: SFEIR-7iOUNIS, ALFFEDO Ext.:31752 Room:T 9011 Dept.:0EDD1l Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS BAB Banco Agr(cola de Bolivia (Agricultural Bank of Bolivia) CBF Corporacidn Boliviana de Fomento (Bolivian Development Corporation) CLC Centro de Datos para la Conservaci6n (Center for Conservation Data) CDF Centro de Desarrollo forestal (Center for Forestry Development) CIAT Centro de Investigaci6n de Agricultura Tropical (Tropical Agricultural Research Center) CIDOB Centro Indigenista del Oriente Boliiano (Indigenous Center for Eastern Bolivia) CIPCA Centro de Investigaci6n y Promoci6n del Campesinado (Center for the Research and Promotion of Peasants) CITES Convention on International Trade in Endangered Species COMIMOL Corporaci6n Minera de Bolivia (Bolivian Mining Corporation) CORDECRUZ Corpor3cidn de Desarrollo de Santa Cruz (Santa Cruz Development Corporation) CUMAT Centro de Investigaciones de la Capacidad de Uso Mayor de la Tierra (Center for the Appropriate Use of Land) DSC Development of Santa Cruz ECLA Economic Commission for Latin America EEC European Economic Community ENDE Empresa Nacional de Electricidad (National Electricity Company) ERP Effective Rate of Protection ERR Economic Rate of Return ESF Emergency Social Fund ESW Economic and Sector Work FAO Food and Agriculture Organization FDC Fondo de Desarrollo Campesino (Peasant Development Fund) FRG Federal Republic of Germany GTZ Deutsche Gesellschaft fur Techniche Zusammenarbeit IBTA Instituto Boliviano de Tecnologfa Agrope,:uaria (Bolivian Agricultural Technology Institute) ICOR Incremental Capital-Output Ratio JDB Interamerican Development Bank IFAD International Fund for Agricultural Development IICA The Interamerican Institute of Agricultural Sciences IMF International Monetary Fund INC Instituto Nacional de Colonizacidn IRD Integrated Rural Development KFW Kneditanstalt fur Weideraufban FOR OFFICIAL USE ONLY ABBREVIATIONS (Cont'd) LIDEMA Liga de Defensa del Medio Ambiente (Environmental Defense League) M&E Monitoring and Evaluation MACA Ministerio de Asunto Campesinos v Agropecuarios (Min4stry of Agriculture and Rural Affairs) MNR Movimiento Nacional Revolucionario (National Revolutionary Movement) NEP New Economic Policy NGO Non-government Organization O&M Operation and Maintenance OAS Organization of American States OECD Organization for Economic Cooperation and Development OED Operations Evaluation Department PCR Project Completion Report PPAR Project Performance Audit Report SAFCO Sistema Integrado de Administracifn Financicra y Control (Integrated System of Financial Administration and Control) SAL Structural Adjustment Loan SAR Staff Appraisal Report SIF Social Investmerit Fund SNC Servicio Nacional de Caminos (National Road Service) SNIP Sistema Nacional de Inversiones y Polfticas (National Investment and Policy System) SNRA Servicio Nacional de Reforma Agraria (National Agrarian Reform Service) TPAF Tropical Forestry Action Plan UDAPE Unidad de Andlisis de Po!ftica Econ6mica (Political Economy Analysis Branch) UDP Unidad DemocrAtica Popular (Popular Democratic Party) UK United Kingdom UNDP United Nations Development Program UNESCO United Nations Education. Scientific and Cultural Organization USAID United States Agency for International Development WFP World Food Programme YPFB Yacimientos Petroleros Fiscales Bolivianos (Bolivian Petroleum Corporation) This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. OfMM of D1iro-Generel Opestora Evaluaon May 19, 1993 =MORANINUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Natural Reso-irce Management in Bolivia: 30 Years of E=riene Attached is a report entitled "Natural Resource Management in Polivia: 30 Years of Experience" prepared by the Operations Evaluation Department. Attachment This document has a resiced distibution and may be used by recipients only in the performance of their oMOial dules. It ocontents may not ofthewle be disclosed without World Bank authorization. NATURAL RESOURCE MANAGEMENT IN BOLIVIA 30 YEARS OF EXPERIENCE CONTENTS Pane No. PREFACE ................................................. i EVALUATION SUMMARY ....................................... iii CHAPTER 1: INTRODUCTION ................................... 1 Demography and Migration: Perceptions and Myths ......... 2 Previous Analysis of the Problem ........................ 4 Approach and Methods ............................... 5 CHAPTER 2: OVERVIEW OF NATURAL RESOURCES ........ ....... 7 Characteristics of the Ecological Zones ................... 7 Conditions in the Highlands and Valleys .................. 8 Conditions in the Lowlands ............................ 9 W ater Resources .................................... 12 CHAPTER 3: SOCIOPOLITICAL BACKGROUND .................... 13 Introduction .t.. 13 The Emergence of New Pressure Goups. 13 Highlands against Lowlands--the "March to the East" ......... 14 Political Parties and the Bureaucracy ..................... 15 Private Sector Entrepreneurs ........................... 16 Campesinos ........................................ 17 Regional Institutions ................................. 18 CHAPTER 4: COUNTRY STRATEGIES ............................. 19 Approach and Strategy in the 1960s ...................... 19 Rural Development in the 1970s ........................ 21 Bank-Supported Economic Adjustment in the 1980s ......... 23 From 1985 to 1990: the New Economic Policy ............. 25 Effectiveness of Policy Interventions ..................... 26 General Assessment ................................. 27 CONTENTS (Cont'd) hat.M CHAPTER 5: THE ROLE OF SECTOR WORK ....................... 29 O verview .......................................... 29 Poverty and Resource Use ............................. 29 Commercial Farming and the Environment ................ 32 Issues in Forestry Development ......................... 34 Transport Corridors and R-source Use ................... 36 Land Tenure and Use ................................ 38 Irrigation Potential .................................. 38 The Evolution of Sector Work .......................... 39 CHAPTER 6: BANK PROJECTS AND EXTERNAL AID ................ 41 Other Donors' Roles in Natural Resources ................ 51 Non-Governmental Organizations and Renewable Resources ... 57 CHAPTER 7: ASSESSMENT OF DEVELOPMENT INSTRUMENTS ....... 59 Poverty and Resource Degradation ...................... 9 Environmental Effects of Macro Policies .................. 61 Resource Eu titlements ............................... 64 Other Instruments Used by Donors ...................... 66 CHAPTER 8: FINDINGS AND SCOPE FOR CHANGE ................. 69 Policy-Resource Use Linkages .......................... 69 The Role of External Aid ............................. 70 Key Findings ....................................... 71 The Bank's Role .................................... 72 The Road Ahead .................................... 73 BOX 6.1 Two Forms of Bank Help for the Social Costs of Adjustment ..................................... 49 FIGURES 6.1 Total World Bank Lending to Bolivia, 1965-92 ............. 43 6.2 Natural Resource Lending to Bolivia, World Bank, Multilaterals, Bilaterals, 1965-89 ....................... 52 6.3 World Bank Lending to Bolivia Related to Natural Resources, 1965-89 ........................... 53 6.4 Multilateral Lending to Bolivia Related to Natural Resources, 1965-89 ........................... 53 CONTENTS Em No. TABLES 4.1 Bolivia Economic Memorandums and Discussion Papers ...... 20 5.1 Bolivia Sector Reports .... ........................... 30 6.1 World Bank Lending to Bolivia, 1%65-92 .................. 42 6.2 World Bank Lending to Bolivia, Completed Projects, 1965-92 ......................................... 45 6.3 Natural Resource Lending to Bolivia by the World Bank, Multilaterals, and Bilaterals, 1965-89 ..................... 52 ANNEXES A. The Literature and its Influence on Resource Management Policy ................................. 75 B. List of Studies on Bolivia's Renewable Natural Resources .................................. 79 C. Bolivia: the National Environmental Action Plan ............................................ 83 L. Table A-1: Projects Related to Renewable Resources, by Year, Sector, and Donor, 1966-89 .................... 87 Tabie A-2: Aid Commitments to Bolivia Related to Renewable Resources, by Sector, 1967-89 ................ 101 Table A-3: Aid Commitments of Major Donors Related to Renewable Resources, by Sector, 1967-89 .............. 102 Table A-4: Total Aid Commitments to Bolivia Related to Renewable Resources, by Sector, 1967-89 .............. 103 Table A-5: Aid Commitments to Bolivia Related to Renewable Resources, by Major Multilateral Donors, 1967-89 ....................... 104 Table A-6: Aid Commitments to Bolivia Related to Renewable Resources, by Major Bilateral Donors, 1967-89 .......................................... 10S E. National Plans and Resource Management ................ 107 F. Multilateral Agreements Related to the Environment to which Bolivia is a Party ................at............ 1 BIBLIOGRAPHY ............................................... 113 MAP - IBRD 20516 NATURAL RESOURCE MANAGMENT IN BOLIVIA: 30 YEARS OF EXPERIENCE PREFACE The effects of economic development on the natural environment are a subject of grov ing concern. While the effects themselves are often easily identified--pollution, erosion, and sedimentation, for example--the causes are much harder to establish. This makes it difficult to devise corrective actions. Evaluation studies can offer useful insights about changes in the environment associated with different patterns of economic development. The present study draws on the Bank's audits of completed lending operations, impact evaluation reports, and other evaluation studies, including work by the Operations Evaluation Department (OED) on sustainability (see Sustainability of Projects: First Review of Experience, World Bank, 1985, and Annual Review of Evaluation Results for 1988, World Bank, 1989). The study is part of a larger OED program of work. In its first phase, renewable resource management issues in 12 countries were reviewed (see Renewable Resource Management in Agriculture, World Bank, 1989). The second phase of the program, now in progress, consists of country studies. The first, on Nepal, has been completed (Natural Resource Management in Nepal: 25 Years of Exp 'rience, World Bank, 1992). This study, on Bolivia, is the second. The study has two main goals. The first is to evaluate the instruments used in Bolivia (such as projects, policies, and institutional reforms) to manage natural resources; the purpose is to frame recommendations that would enable the Bank to assist Bolivia in managing these resources better. The second is to derive general lessons for designing and implementing studies of the relationship between development and environmental change. The study evaluates the Bank's operational effectiveness, completed lending operations, sector work, and the recommendations offered to government agencies on macroeconomic policies. It also analyzes the development strategies pursued and advocated by different parties--government and other donors, as well as the Bank. Within the imitations posed by the data available (see chapter 1), the study seeks to offer a framework of analysis and a sense of priorities for future action. It is hoped that it will provide a basis for reassessing the concepts and strategies underlying sectoral and macroeconomic decision making in Bolivia, including assumptions about the sources of growth and areas of comparative advantage. The report focuses not only on the experience drawn from individual projects, but also on country reports, investment reviews and on the development advice furnished by the Bank during the 30-year period. Bolivia was selected for the same reasons as Nepal. First, the rate of natural resource use is relatively high, and the links between poverty, the nature of economic incentives, institutional weaknesses in government, and the depletion rate of land, water, and Iii - forests are strong. Second, it is typical of many of the world's poorest countries, where the management of resources essential to sustainable economic development has suffered serious neglect. Finally, it offers evidence of the challenges of frontier development where virgin land is drawn into destructive, highly unstable use. The study was undertaken by OED staff and local and international consultants. including Alfredo Sfeir-Younis (Task Manager) and William Panton (OEDD1), Michael Nelson, Juan Antonio Morales, Jose Guillermo Justiniano, Juan Carlos Quiroga and Gary Costello (Consultants), Francisco Leon, Economic Commission for Latin America and the Caribbean, Charles Sheerin (Researcher), and Therese Mackie (Staff Assistant). The report has benefitted from comments and reviews by Bank operational staff and managers. No comments were received from the Government of Bolivia. - iii - NATURAL RESOURCE MANAGEMENT IN BOLIVIA: 30 YEARS OF EXPERIENCE EXECUTIVE SUMMARY Purpose and Scope of the Study view such issues (chapter 6)? How was the effectiveness of the instruments used to attain 1. This report assesses the World BanK's reso,rce man3gement objectives judged contribution to the management of renewable (chapter 7)? What were the major lessons resources in Bolivia from 1960 to 1990. that emerged over the years? And did they help the Bank and the Government of Bol:via 2. Bolivia was chosen for study because of (GOB) to develop more effective strategies to its socioeconomic and environmental charac- check resource degradation (chapter 8)? teristics: ecological diversity and fragility, the linkages between population and natural Approach and Limitations of the Study resources (with its effects on the resources' carrying capacity), pervasive rural poverty, and 4. Thi. study attempts to examine two strong linkages between renewable resource complementary dimensions of the problem. management and -conomic development. The first assesses the importance given to Although in Bolivia some renewable resources efficiency, equity, and sustainability in policies appear to be abundant, the effective governing resource management and economic management of those resources is central to development. 'the second considers how the the sustainable development of the economy. Bolivian government and donors designed and implemented their policies--particularly 3. Among the questions this report seeks through projects, sector work, and to address are: how aware were the Bank and macroeconomic strategies (including socioeco- others of Bolivia's resource management nomic and institutional reforms). problems (chapter 1)? How important has ecological diversity been in enabling the 5. There are at least three important economy to attain major development limitations to this study. First, some key objectives (chapter 2)? What was the role relationships were difficult to define in played by social, political, demographic and quantitative terms. Although a go(, deal of institutional factors in determining the the literature describes the way in which devel- allocation and management of natural opment activities affected the country's natural resources (chapter 3)? How was the Bank's capital, the literature, together with the Bank's thinking translated into proposals for macro- ESW, shed little light on how analytical economic strategy and institutional reform questions were addressed (e.g., in assessing (chapter 4)? What effect did Economic and quantitatively how higher growth rates in the Sector Work (ESW), and the Bank's advice shorter term might affect natural capital generally, have on sector policies in Bolivia depletion). Second, there was not enough (chapter 5)? How dir, environmental issues data to quantify several of the cause-effect affect Bank projects, and bow did other donors relationships that could have illustrated when - iv - and how natural resources were overused or example, exchange rate depreciation may depleted. For example, little was known about increase the profitability of forestry, and this precisely how a tax increase on agricultural increases the importance of putting in place land affected land use patterns. Third, it was forestry policies, such as concession arrange- often difficult to isolate the effects of different ments and taxes, which are consistent with variables across resource uses and users. In sustainable management of the forests.) This some cases, the relationship between devel- report reviews the effectiveness of an array of opment and resource degradation was clear: policies--market and nonmarket-based--the for example, to what extent an increase in Government identified in the past to correct logging would deplete forest resources. But in for external effects. other cases, the relationship was much more complex and the impact of particular vari)bles 8. In Bolivia the links between devel- could not be calculated. opment and management of renewable resources are strong. Strategies that promote Resource Management Issues the first also promote the second, and vice versa. Some attempts at resource conservation 6. Sociopolitical changes. Rapid and have been inconsistent with the adjustment complex social changes have taken pldce in program (e.g., trying to raise large amounts of Bolivia since the agrarian revolution of 1952. foreign e-,chan,e through cash crop exports). They have had a major impact on how natural Most attempts to promote agricultural exports- resources are appropriated and used. Long -by increasing the rate of effective protection-- periods of social unrest and economic insta- have been short-lived. In addition, when large bility, disparate regional development objec- export- and production-related subsidies were tives, cultural differences, and wide ecological removed--as a result of the New Economic diversity have all played a major role in how Policy (of 1985-86)--Bolivia proved to have no property rights and user rights have been allo- real comparative advantage in the crops in cated, how economic policies have been question. The environmental degradation formulated, and how social and economic associated, for example, with the production of benefits have been distributed. The bipolar livestock and cash crops--as reflected in soil approach to development--the Altiplano versus erosion and declining soil fertility--was the Lowlands--and the strong controversies significant. about development objectives have often led to economic and social policies that have taken 9. In the past few years, the Bank has a short-term approach to problems, rather assisted GOB in developing new concepts and than ensured long-term sustainability. strategies to improve the management of natural resources. For example, assistance has 7. Country policy framework. Bolivia's been given for the establishment and consoli- experience demonstrates that macroeconomic dation of the New Economic Policy; the and sectoral policies are not neutral with formulation of a Forestry Sector Strategy (in respect to natural resource use. In formu- process); and the preparation and implemen- lating macroeconomic policies, the Govern- tation of projects in the rural sector (e.g., the ment and the Bank need to be aware of the Eastern Lowlands, Environmental Technical likely impact of these policies on the incentives Assistance Project, and the Agricultural for and pattern of use of natural resources so Technology Development Project). that corrective action can be taken. This is particularly necessary to compensate for exter- 10. With few exceptions, projects in earlier nalities or other market failures. (For years did little to establish a framework for -v- sustainable development or to ease the strvc- concerning its comparative advantages would tural constraints implicit in the country's change substantially. poverty and the weakness of its institutions. 14. The bipolar approach to development. 11. With regard to environmental and Experience suggests that, especially until the resource management policies, decision-makers mid-eighties, Bolivia's strategy for development have been aware of the need for better of the Altiplano and the Lowlands has been resource management for decades, but have based on the overly simplistic notion that the not taket effective action. One reason has carrying capacity of the Lowlands is virtually been that they have preferred shurt-term, unlimited and that demographic parity between export-led growth based on the assumption the two regions would be desirable. Instead that economic expaiision and stability are pre- the Government must strive for sustainable conditions for sustainable development and development in each region, and this will that Bolivia had abundant natural resources. require greater commitment to the develop- Recent Bank reports, however, have shown ment of human capital, knowledge, policies more clearly how the factors that promote and institutions which ensure that economic sustainable development are also those that decisions incorporate the full opportunity cost contribute to economic growth--institutional of natural resource use. Given the mixed suc- reforms, training, education, new forestry cess of colonization efforts so far, it is not strategies, and a better regulatory framework. clear how fast Bolivia's economic and social policies could change geographic, demographic 12. Currently, Government is pursuing a and resource imbalances between the two number of initiatives in this area. An regions. Even if the policies could have an environmental ministry (SENMA) and a effect, however, it is unclear whether these funding agency in support of environmental imbalances should be corrected, and if so, what projects (FONAMA) have been created, and time should be set for the goal of initiating the are being supported by the Bank through two sustainable economic development of the recently approved operations. An Environ- resources that remain. It may be possible to mental Action Plan has been formulated and derive important economies of scale from the an Environmental Law enacted. Work is also demographic congestion in the Highlands--a underway to formulate a new regulatory subject that has not been comprehensively framework and a new Agrarian Law, and to studied. The sources of growth for the strengthen land administration. Highlands may lie more in off-farm income and urbanization. 13. Exports of natural resources. Bolivia's 15. Structural constraints. As recent Bank agricultural exports have been derived mainly economic reports have pointed out, many of from its undervalued natural resources--from Bolivia's old structural constraints persist. For the extensive development of its forests and example, a Bank Economic Memorandum in farms. The record suggests that such exports, 1990 stated: often promoted with subsidies, have done little to reduce poverty. The external costs of the Basic issues remain unsolved: can the damage to soil, forests and biological diversity Altiplano support its present population at have not been considered in calculating oppor- an acceptable standard of living? Are tunity costs. There is a very real possibility there different crops or techniques which that if Bolivia's resources were valued at their could increase productivity? What are the full opportbnity cost, the assumptions benefits and costs of encouraging greater - vi - migration to the lowlands? And what are at the margin, while in the Lowlands the diffi- the appropriate roles of the government, culty is to establish a sustainable farming foreign donors, NGOs and the private system that would generate sufficient income sector (World Bank 1990k, 49)? from the family holding to decrease the present incentives to expand to new land. But 16. The problems remain partly because of throughout the country, the problems of the geographic, environmental, and economic poverty and the environment are intertwined. diversities--which embody major disparities in Poverty has been a key source of harm to the human resources and institutions. As Bank environment--for different reasons--in the documents have shown, the disparities are Highlands and the Eastern Lowlands. In the accentuated by the wide array of regional Altiplano, natural resources are severely development agencies and the diversity of degraded, demographic density is high, and agricultural enterprises and farming systems. options for intensifying agricultural devel- Regional development agencies, as well as opment are unclear. Yet as urbanization organized groups, have strongly influenced increases, agricultural productivity will need to who has access to natural resources and have be improved--in a fragile ecological system. helped define how political power has been Much more needs to be done to facilitate shared in the last three decades. agricultural resear-h, extension, training, Lnd community participation. A consensus is 17. Although the Altiplano and the needed about the most important and feasible Lowlands are often viewed separately, both actions. face a number of similar natural resource management problems that need urgent atten- 19. In the Lowlands poverty was imported tion. At the regiona! kvel, government is not from the Altiplano as settlers--most of them committed to policies and laws that encourage from inside Bolivia--transferred farming prac- the more sustainable use of resources. Insti- tices that had already proved ineffective and tutions are weak, resources of human capital unsustainable. Because land has been plentiful are inadequate, and the regulatory system is in the Lowlands, old growth forests have been inefficient. Other problems arise from the depleted at an increasing rate. Slash-and-burn fragility of the environment, the ecological cultivation is widespread. risks associated with developing virgin lands and forests, and poverty. 20. Bolivia's experience suggests that poverty can be reduced only if there is net Poverty and the Environment economic growth. Settlement programs are a good example. Initial success with settlement 18. Poverty issues in the Altiplano differ by foreigners has faced major economic and from those in the Eastern Lowlands. In the enviionmental constraints as the depletion of Altiplano, the small size of land holdings is a natural capital in settlements has influenced serious constraint, while in the Lowlands, the the productivity of other important economic main constraint is that little is known about assets (e.g., infrastructure). Reducing poverty what types of farming systems (or other non- in the short or medium term should be a agricultural uses) would be appropriate and central aim of sector work. custainable in the prevailing environmental situat;on. The rural poor face technical Human and Institutional Capital constraints that differ in each region. In the Altiplano, the problem is related to how to 21. To slow down the rate at which forest intensify agriculture and increase productivity and soil resources are being depleted, agri- - vii - cultural development will probably need to be be carefully monitored. Specifically, roads and changed from extensive to intensive produc- expanded credit allocations in frontier regions tion. The record shows that efforts to design could lead to mechanization and short-lived natural resource management policies and farming. The effects would then be similar to instruments in isolation from the need to those of slash-and-burn cultivation. intensify agriculture have yielded poor results. An agricultural intensification strategy, Key Findings however, would require modernized farming systems--preferably environmentally sound 24. A review of Bank documents shows ones--including the gradual elimination of that: slash-and-burn cultivation. Implementing the new systems would necessitate major invest- * Bolivia's ability to achieve sustainable ments in human capital and institutional development goals will depend to a signif- development. These investments would icant degree on how well natural resource include farmer training and education, research management concerns are integrated into and extension services, community participa- decision-making at all levels. This is tion, and the strengthening of national, particularly true for areas characterized by regional, and local organizations. A revised severe population pressure, widespread incentive structure is also needed--covering poverty, and fragile ecosy.tems (in the economic policies, environmental regulations, Highlands and the Lowlands). Several and property rights. development instruments--including adjust- ment operations, public expenditure and investment reviews, national environmental 22. Where institutions are weak, the action plans, and the policy dialogue with conservation of soil, water, or forests is the government--could be more effectively hampered. The impact of institutional used to help achieve such integration. weaknesses has shown up prominently during such periods as the implementation of the * The country's development policies are still Ecological Pause (1990), which suspended all influenced by the bipolar orientation of processing of new forest concessions, and the some policy-makers who see development Forestry Law of 1974, which relied on a weak as involving trade-offs between the agency to protect forests. Deficiencies of Altiplano with its high population density, human capital also hamper improvements. limited resource base, and significant levels Development organizations and their staff of poverty, and the Lowlands with almost need to be trained so that they can respond to the opposite profile. This orientation may the demands imposed by the market system, not be the most effective way to approach government, and community organizations. the country's development problems. Strong government cowmitment is essential for success. * The donor community has overestimated the readiness of institutions to implement programs that affect natural resources. 23. Although future agricultural devel- Insufficient attention has been paid to opment may first require an emphasis on institutional and human capital devel- human and institutional capital, for some areas opment. Such development would enhance physical and financial capital will remain high investment productivity in the medium term priorities. In these areas, extensive agriculture and would provide a sustainable basis for is still under way--and the expansion needs to resource management in the long term. -viii - * Many completed Bank operations have analysis that could contribute to better deci- involved extensive resource use. If natural sions on resource management. resource-based programs are to succeed in the future, policy, institutional, and other 27. The Bank now appears to be in a reforms affecting resource management better position to promote the effective use of should be designed and implemented. The renewable resources. Recent trends suggest recently prepared forestry sector strategy that the Bank is seeking a more gradual provides a framework for future actions in approach in which the development of institu- areas where major changes in land use are tions and a better information base may taking place. precede the infusion of infrastructure and financial resources. This change is evident in * The Bank's instruments of intervention operations of the last decade--public sector have proved much weaker than expected at management projects, the agricultural technol- appraisal. An in-depth study should be ogy project, and special studies undertaken conducted on the effectiveness of economic since 1987--and the extended disbursement instruments and alternate environmental periods (of up to eight years) proposed for interventions. some recent projects (Eastern Lowlands, Agro- Export, and Agricultural Technology). All * Decisions about the management of natural these suggest a commitment to greater resources have been made without effectiveness. sufficient information. In this regard, the Bank should continue to support the 28. To assure progress, the following development of information-gathering changes are recommended. systems in Bolivia and work more closely with other specialized national, regional, 29. First, sector work, development and international development agencies. programs, and policies for theAltiplano should explicitly consider poverty and environmental The Road Ahead degradation together. Most donors have concentrated their attention mainly on poverty. 25. The Bank's association with Bolivia A greater consensus is needed among Bolivian dates from 1955. The Bank's loan volume has decision-makers, donors, NGOs and the been relatively small--totaling USS734 million-- academic community about using technology, but the Bank has used its leverage to obtain or increasing productivity in a sustainable way, orient other funds. Donors, including the and alleviating poverty. It is necessary to Bank, have contributed a total of US$2 billion identify market and nonmarket-based toward 600 projects. instruments that could increase capital accumulation without compromising the natural resource base. In this respect, the 26. Compared with the size of its invest- Bank-financed agricultural research project is ment, the Bank has given a great deal of likely to make a major contribution. But other attention to Bolivia's development issues. Yet, agricultural sector services have to be it has not been particularly discerning about improved and their focus on environmental the quality of the information it has got and and sustainability issues sharpened. used on natural resource management. Because from time to time lending operations 30. Second, with regard to the Lowlands, in Bolivia were suspended, the Bank has not the traditional view--that it has abundant promoted an accumulation of information and resources and significant "carrying capacity"-- - ix - must be called into question. This is supported by a major effort to correct domes- particularly necessary now that some tic price distortions and externalities associated renewable resources--like tree crops--can be with Bolivia's renewable resources. Decision- managed in a sustainable way. Several makers in Bolivia should be encouraged to set activities are going on without anyone having prices and incentive policies that reflect the much of an idea about how they might harm full opportunity cost of the natural resources the environment. While land and forest that are incorporated into production, resources in the Lowlands are still relatively consumption, and trade. And a comparative- abundant, there are causes for concern advantage study is needed to assess the likely because: a) the pace of exploitation of these effects on Bolivia's exports of valuing resources seems to have accelerated; b) the resources at their full opportunity costs. In base of knowledge for making judgements addition, the Bank should consolidate its about sustainability of economic activities in technical assistance and intensify its efforts in the Lowlands is inadequate; c) the appropriate information gathering, studies, and resource policies and institutions (especially property assessments. Currently, major institutional rights) are not yet in place to assure that the changes are under way in Bolivia, forcing pace of exploitation is consistent with a proper regional and local organizations to redefine valuation of opportunity costs. In addition, it their roles and objectives. This is the time for must be stressed that forests, wildlife, and the Bank to help improve human capital-- biodiversity are also a public good--for Bolivia through training and education--so that the and the world. evolution of these organizations is conducive to sustainable development. Generally 31. Third, for the short term, the Bank has speaking, greater effort is needed on the to continue its efforts to emphasize envi- economic issues surrounding natural resource ronmental and natural resource concerns in management, poverty alleviation, and framing its country strategies. Here, some environmental sustainability. progress has been made, but not enough. Additional research should be undertaken on 32. Fourth, for the long term, decision- the macroeconomic policy impacts on natural makers in Bolivia should seriously consider resource allocation and use. This greater giving higher priority to the development of emphasis is needed on the environmental institutions and human capital. implications when formulating such instru- ments as public expenditure reviews, invest- ment reviews, and adjustment operations (sectoral or macro). To some extent, tradi- tional notions concerning the sources of growth and comparative advantage may also have to be revised. However, the appropriate 1/ An OED review of sustainability in nearly 600 completed rate of natural capital depletion is an issue operations pointed out that development requires a8 balance of six forms of capital: human, natural, about which there is no consensus. The institutional, cultural, physical, and financial (World Bank appropriate rate depends in part on the 19901). This has been confirmed by other studies (see assumed social rate of discount, which guides World Bank 1992c, v). the trade-off between current income and 2/ Frontie-s are defined here as areas where substantial future resources. Trade liberalization should change is under way--such as the conversion of forest continue to be encouraged, but only if land to agriculture. NATURAL RESOURCE MANAGEMENT IN BOLIVIA: 30 YEARS OF EXPERIENCE CHAPTER 1: INTRODUCTION 1.1 This study assesses the Bank's contribution to the more effective management of natural resources in Bolivia. In particular, it deals with decision-making processes in explaining what happened to the "state" (or stock) of renewable resources, determining goals and objectives of those making, implementing, and affected by policy; and establishing the linkages between policy and resource use. In addition this study emphasizes institutional questions, through a detailed review of Bank and non-Bank experience, supported by field work. Although there is much more awareness now about the impact of development on the environment, this report attempts to provide a framework to discuss the relationship in a specific country context. 1.2 Bolivia's resource management problems are intricately linked to its development process. For this reason, such factors as population growth, migration, sociopolitical influences, generation of income and employment, and poverty are central to an understanding of why very little has been done to protect the environment. The report focuses not only on the experience drawn from individual projects, but also on country reports, investment reviews and on general growth and development strategies proposed by the Bank during the 30-year period. Bolivia was selected for this case study for three main reasons. First, the rate of natural resource depletion is relatively high, and the links between poverty, the nature of economic incentives, institutional weaknesses in government, and the depletion rate of land, water, and forests are stronger than in many other developing countries. Second, it is typical of many of the world's poorest countries, where the management of resources is essential to economic development--but has suffered serious neglect. Finally, Bolivia offers evidence of the dangers of frontier development where virgin land is drawn into destructive, often highly unstable use as migration, population growth, cultural patterns and institutional weaknesses degrade the environment. 1.3 Bolivia faces three major environmental challenges./ First, managing a relatively rich natural resource base for development in the Eastern Lowlands. This frontier region is developing rapidly but wastefully, with irreversible damage to soil and forests. Wildlands, natural parks and reserves are threatened by road construction, mining, agriculture and colonization. The lands of the indigenous people who live in the forests are being invaded by logging companies with timber concessions, and by colonizers. The rights and interests of the indigenous people within those reserves and outside have yet to be properly defined and protected. y/ World Bank, Bolivia: Environmental Issues Paper. Washington, D.C., September 14, 1989. -2- 1.4 Second, managing agriculture, grazing lands and the associated biotic resources in the Alt*lano and Valleys. The dominant role of peasant agriculture, the extremely low productivity of the minifundia system, and the acute poverty in the area constitute a major development concern. Natural causes and man's mismanagement of the soil by overgrazing, over-cropping and inappropriate use of technology are accelerating erosion and reducing fertility. Erosion is threatening the stability of major watersheds, as well as of the electric power system and urban infrastructure they serve. 1.5 Third, managing scarce water resources, particularly in the arid and semi-arid regions of the Altiplano and Valleys, where there is intense competition for water for agriculture, mining and human consumption. In addition, mining operations and cocaine producers are discharging processing effluents and other pollutants into rivers and streams, contaminating irrigation and drinking water. Pollution of water is also occurring in urban areas. Demography and Migration: Perceptions and Myths 1.6 Resource management policy since the early 1950s has been based on the perception that the Altiplano and Valles were seriously overpopulated. It was argued that this would lead to a vicious circle of deepening poverty and accelerated degradation of soils and vegetation, and that the immense unexploited lands and forests in the Piedmont and Lowland plains offered the key to development and to preservation of the Highland environment, if only sufficient population could be induced to move and exploit these resources. In 1991, this view was still held by most politicians and other leaders in the public and private sectors. The vision of a vast potential in the Lowlands led to a conviction, which persisted into the 1970s, that the country was underpopulated. More recently this view has been increasingly questioned on the grounds that the high rate of population growth may jeopardize the country's economic development prospects (Carafa 1990). Thus, demography and migration have been seen as central to renewable resource management--reduce the person/land ratio in the Highlands and increase it in the Lowlands. 1.7 These perceptions led to three myths which have influenced both policy on such issues as population growth and migration, and strategy regarding renewable resource management, as related to growth. The first myth has been that there would be a net positive contribution to development from increased population. This was based on the hypothesis that there is an optimum population/renewable resources ratio. Because the ratio was low, renewable resources were not making their maximum contribution to economic growth. So, expansion of the domestic market to achieve economies of scale essential for modernization and growth required more consumers, and more people would also enable a more effective national defense. Accordingly, the policy instruments applied were the provision of lands to foreign colonists, the promotion of the return of Bolivians resident abroad, and an absence of birth control programs. 1.8 In practice, the accelerated population growth between 1950 and 1990 increased the dependency ratio ( the ratio of non-working-age to working-age numbers) to the detriment of development prospects. In consequence the provision of education, health services, housing, and formal employment opportunities to significant segments of the population has been severely limited. -3- 1.9 A second myth was that the provision of access to land, plus some supporting services, would induce the desired mass migration to the Lowlands. The policy instruments were the construction of penetration roads, directed colonization, the distribution of land and forest resources without charge, the construction of state-owned agroindustry, the provision of credit, and the nonenforcement of regulations protecting entitlements of the indigenous population or renewable resources in the Lowlands. Access to land has not proved to be the principal factor in the decision to migrate from rural areas in the Highlands, however. The motivation has been the perception of economic opportunity--which sometimes was tied to access to land, but more often was sought in urban centers in the Highlands and Lowlands or salaried rural jobs in the Lowlands. Because of migration, the urban population grew three times as fast as the rural between 1950 and 1976, and four times as fast from 1976 to 1988. More than half the migrants to the Lowlands between 1970 and 1988 went to the city of Santa Cruz. 1.10 The third myth was that the culture of the Highland communities opposed migration. This assumed resistance was cited to explain what was considered an unsatisfactory flow of colonists to the Lowlands and the high rate of abandonment in the first two or three years of settlement (World Bank 1975). In fact, the record suggests massive mobility in response to economic opportunities. Large numbers of people from the Highlands migrated to Argentina after 1930 as seasonal laborers or residents. By 1950 Bolivians in Argentina and Chile numbered 700,000, equivalent to 25 percent of the domestic resident population at that time. Furthermore, with the agrarian reform following the 1952 revolution, the traditional hold of the landowners over their workers was broken, thus opening the option of migration for the Highland campesinos. In the 1S50s migration from the Highlands to the Lowlands became more important than that to other countries, and by the 1970s rural-urban migration--within the Highlands or to the Lowlands--had become the major flow. 1.11 The selection of instruments to accelerate migration out of the Altiplano has been driven by the needed to achieve the "correct" human carrying capacity--the person/land ratio. To some extent this focus made sense, given the concerns expressed in the last 10 to 15 years about the capacity of renewable resources to support a growing population. But the concept of carrying capacity as expressed at the policy decision-making level has been, to a large extent, simplistic. There are other critical elements affecting the relationship between population and sustainability. As experience demonstrates even in the Altiplano, resource endowment does not limit population growth. Factors determining the rate of migration out of environmentally fragile areas--in Bolivia, as elsewhere--appears to be the economy's capacity to generate employment and higher levels of production and to come to grips with massive poverty.Z Certainly, higher rates of population growth complicate the effort. Thus, it is not population by itself, but a combination of poor economic performance, persistent poverty, and increasing population, that threatens sustainable development. 2/ This expanded view of carrying capacity was central to the design and implementation of most government rural development and colonization projects. Those projects were intended largely to improve the ability of the poor to accumulate capital. Sustainability could not be attained where capital was not accumulated and, therefore, where no real income growth took place. This view applies to the Altiplano and the Lowlands, although the constraints are different--land in the Altiplano and tabor/capitat in the Lowlands. -4- 1.12 The traditional view--that the Lowlands have abundant resources and significant "carrying capacity"--must be called into question. This is particularly iecessary now that some renewable resources--like tree crops--can be managed in a sustainable way. Several activities are going on without anyone having much of an idea about how they might harm the environment. While land and forest resources in the Lowlands are still relatively abundant, there are causes for concern because: a) the pace of exploitation of these resources seems to have accelerated; b) the base of knowledge for making judgements about sustainability of economic activities in the Lowlands is inadequate; c) the appropriate policies and institutions (especially property rights) are not yet in place to assure that the pace of exploitation is consistent with a proper valuation of opportunity costs. In addition, the point has been forgotten that forests, wildlife, and biodiversity are also a public good--for Bolivia and the world. 1.13 Experience suggests that Bolivia's strategy for development of the Altiplano and the Lowlands has been based on the overly simplistic notion that the carrying capacity of the Lowlands is virtually unlimited and that demographic parity between the two regions would be desirable. (This view has been changing in Bolivia since 1985.) TIstead the Government must strive for sustainable development in each region, and this will require greater commitment to the development of human capital, knowledge, policies and institutions which ensure that economic decisions incorporate the full opportunity cost of natural resource use. Given the mixed success of colonization efforts so far, it is not clear how fast Bolivia's economic and social policies could change geographic, demographic and resource imbalances between the two regions. Even if the policies could have an effect, however, it is unclear whether these imbalances should be corrected, and if so, what time should be set for the goal of initiating the sustainable economic development of the resources that remain. It may be possible to derive important economies of scale from the demographic congestion in the Highlands--a subject that has not been comprehensively studied. The sources of growth for the Highlands may lie more in off-farm income and urbanization. Previous Analysis of the Problem 1.14 The literature of the past three decades generally does not address the relationship between policy and natural resource use in the debate over Lowland or Highland resource development (see annex A). Research during the 1960s and 1970s focused more on the effects of the agrarian reform, concentrating on broader issues of social and economic change, rather than on any long-term effects on natural resource use. Particular attention was paid to the social changes occurring in the Highlands. Through the 1970s, the focus changed to the growing colonization of the Lowlands. A few researchers, including some at the Bank, questioned colonization on economic and technical grounds. Overall, however, colonization was considered necessary from the political and social viewpoints. 1.15 In the 1980s, increased attention was given to the relationship between development and natural resource management. This reflected the growing concern over environmental degradation, particularly the deterioration in the Lowlands caused by settlers and commercial farming. At the same time, there was a greater effort to understand the resource issues facing the Highlands. Some studies analyzed the relationship between economics and indigenous resource management, noting that the principal objective was risk management, not -5- yield maximization. Technical studies were written on the Lowlands and Highlands, but no attempt was made to link policy and natural resource management. 1.16 The analyses carried out during the last three decades were I irticularly weak on the relationships between public administration and natural resource use. This is relevant as Bolivia faced considerable government instubility during this period, and the general approach to resource exploitation was short-term. Similarly, little was written on the relationship between macroeconomic policies and natural resource use. The Bank did the most research, but it concentrated mainly on the impact of economic reform on prices, crop choice, yields and trade. The environmental implications of macroeconomic policy were not discussed. 1.17 Until recently the analysis was also largely descriptive, lacking quantitative support or analysis. There was little discussion of the relationship between government regulations, economic policy, and the behavior of resource users. The literature became more analytical on colonization and commercial agriculture, noting the relationship between tropical soil fertility and the decline in crop yields. This occurred as increasing attention was given to the deterioration of Bolivia's resource base and its effect on large- and small-scale farmers. Unfortunately, cause- effect relationships related to changes in resource use, declining yields, soil erosion, and deforestation, though not overly complex from a technical standpoint, appear to have eluded researchers and policy-makers in their efforts to prescribe options. Approach and Methods 1.18 This study attempts as far as possible to assess two complementary dimensions of resource management issues. The first is based on the criteria of growth, equity, and sustainability. Was growth promoted efficiently, and was the economy able to accumulate the capital necessary for further growth? As for equity, was the allocation and use of natural resources equitable, did the poor get their fair share, and were they able to accumulate capital in environmentally fragile areas? Was poverty alleviation a central concern at the operational, institutional, and policy levels? Finally, was growth environmentally sound--and therefore sustainable? 1.19 The second dimension of resource management issues considered here is: how were the actions of governments and donors designed and implemented--particularly through such instruments as projects, sector work, and country strategies 3/--and what were their ecological implications? 1.20 Among the key questions this report seeks to address are: First, how important has ecological diversity been in enabling the economy to attain major development objectives (chapter 2)? Second, what was the role played by social, political, demographic and institutional factors in determining the allocation and management of natural resources (chapter 3)? Third, 3/ The term "country strategies" is used here to include a combination of macroeconomic, socioeconomic, institutional, and other strategies. -6- how was the Bank's thinking translated into proposals for macroeconomic strategy and institutional reform (chapter 4)? Fourth, what effect did Economic and Sector Work (ESW), and the Bank's advice generally, have on sector policies in Bolivia (chapter 5)? Fifth, how did environmental issues affect Bank projects, and how did other donors view such issues (chapter 6)? Sixth, how was the effectiveness of the instruments used to attain resource management objectives determined (chapter 7)? Seventh, what were the major lessons that emerged over the years, and did they help the Bank and the Government of Bolivia (GOB) to develop more effective strategies to check resource degradation (chapter 8)? 1.21 Within this context, this report addresses such concerns as "poverty and the environment," "the incorporation of environmental concerns into macroeconomic policy-making," "environmental issues in frontier development" (the frontier areas being the ones where major changes in land use are under way), and "the role of the private sector in natural resource management." 1.22 This study does not evaluate government decisions against pre-conceived notions of what "renewable resource management" policies should be. The assumption is that the decisions made and instruments chosen by policy-makers, bureaucrats and resource users were guided by a specific set of objectives--even if some might think that the decisions and instruments were for all practical purposes ineffective. The emphasis is on analyzing the nature of decisions, how they were implemented, and their effects--the purpose being to help improve the management of natural resources in the future. 1.23 There are at least three important limitations to this study. First, some key relationships were difficult to define in quantitative terms. This is the case, for example, of the relationship between alternative levels of growth and the role of natural capital depletion. Although a good deal of the literature describes the way in which development activities affected the country's natural capital, the literature, along with ESW, shed little light on how analytical questions were addressed (e.g., in assessing quantitatively how higher growth rates in the shorter term might affect the depletion of natural capital). Second, there was not enough data to quantify several of the cause-effect relationships that could have illustrated when and how natural resources were overused or depleted. For example, little was known about precisely how a tax increase on agricultural land affected land use patterns. Third, it was often difficult to isolate the effects of different variables across resource uses and users. In some cases, the relationship between development and resource degradation was clear: for example, to what extent an increase in logging would deplete forest resources. But in other cases, the relationship was much more complex and the impact of particular variables could not be calculated. This was particularly true of many sectoral and macroeconomic policies where the effects could not be clearly and directly linked to the natural resource involved. -7- CHAPTER 2: OVERVIEW OF NATURAL RESOURCES Characteristics of the Ecological Zones 2.1 Bolivia is in the tropics, has an area of 108 million hectares--twice the size of France--and a population of about 7 million, of which 55 percent is urban. GNP per capita is estimated at US$600. The country may be divided into four zones according to their height above sea level--the Altiplano, the Valles, Piedmont and the plains. 2.2 The Altiplano is mainly above 3,500 meters and covers 24 million ha (22 percent of the country) with 10.8 million ha in grazing and cultivated lands. The rural population totals 1.7 million (50 percent of Bolivia's rural population) and an urban population of 1.6 million (50 percent of the national urban population). Annual rainfall ranges from 50 millimeters to 700 millimeters. Because of high rates of evapotranspiration, there is significant stress on the water system. The northern Altiplano is subhumid, has the best soils, and supports an extremely dense rural population. Towards the south the climate becomes more arid and, apart from a few pockets where water is available, the population is sparse and the area is dedicated to extensive grazing. 2.3 The Valles is an intermountain region at between 2,000 meters and 3,500 meters, comprising a total area of 17.8 million ha (15 percent of the country) with a rural population of 1.1 million (30 percent of the total rural population) on 0.5 million ha of cultivated and 6 million ha of grazing lands. The urban population totals 1.2 million (35 percent of the national urban population). Most of the area falls within the dry-semihumid zone; fringe are- are semi-arid and humid-subhumid. Although the situation is less critical than in the Altiplano, water supply constraints are severe. The settlement ane development of the more fertile valleys in this zone varies. The Cochabamba valley is intensively developed and densely populated with intersectoral conflicts over the use of land and water. The remaining valleys are less developed and much less densely populated. 2.4 The Piedmont comprises the lower eastern ramparts of the Andes, at an altitude of 400 meters to 2,000 meters--a strip about 100 kilometers wide, stretching from Santa Cruz to the Peruvian border and covering about 9 million ha (8 percent of the country). Rainfall ranges from 2,000 millimeters to 5,000 millimeters annually. In its natural state, the Piedmont is dense subtropical forest. The topography varies from extremely steep at higher altitudes to gently sloping alluvial fans in the transition to the Lowland plains. The area is characterized by extreme geologic instability, which, combined with heavy rainfall, renders the zone particularly susceptible to high rates of natural erosion and sedimentation, sharply accelerated rates of erosion with deforestation, and flooding from unstable riverbeds on the alluvial fans. The zone was virtually unpopulated until the mid-1900s; since 1950 an estimated 40,000 Highland families have settled there. 2.5 The Eastern Lowland Plains lie at an altitude of between 150 meters and 400 meters, and cover 60 million ha (55 percent of the country). The area has varied climate, soils, and vegetation. Three principal subregions may be identified: tropical and subtropical rainforest (25 million ha) with rainfall of 1,500 millimeters to 2,500 millimeters; subtropical savannah (13 -8- million ha) which floods for up to 8 months of the year, with rainfall of 1,500 millimeters to 2,000 millimeters; and subtropical Chaco dry forest (22 million ha) with rainfall in the range of 400 millimeters to 1,000 millimeters. The total population is about 1 million, of whom 400,000 live in the city of Santa Cruz. 2.6 No benchmark has been established for measuring change in the quantity or quality of renewable resources, but studies of selected sites provide evidence which supports the following assessments (see annex B for details). Conditions in the Highlands and Valleys 2.7 Despite a massive out-migration from rural areas of the Highlands since the early 1960s, population pressures and persistent poverty over many decades have resulted in lower soil fertility and crop yields, accelerated wind and water erosion, and loss of vegetative cover--with reduced fish stocks and a declining population of mature animals and plants. In adc*tion, increasing pressure on water resources and unresolved conflicts among water users have led to salinization, inefficiency, and inequity. The immediate causes are standard--overgrazing, overcropping, overharvesting of fuelwood, consequent loss of habitat for threatened flora and fauna, and inadequate use of modern inputs and soil- and water-management techniques. Untreated discharges into bodies of water from expanding mining operations and growing urban centers, combined with increasing demand for the urban water supply and irrigation, are said to be at the root of these water problems. 2.8 Available figures on stocking rates in the Highlands are contradictory. On the one hand, estimates by the Ministry of Agriculture and Campesinos Affairs (MACA) for the 1980s suggest the number of alpaca and llama declined from 2.1 million to 1.7 million. The census figure for 1984 is half the ministry's figure for the same year. On the other hand, an independent estimate (Cumat 1991, table 6) shows an increase in numbers from 1.1 million in 1970 to 2.4 million in 1988; more than double the stocking capacity of the region. The same study estimated that the number of vicuna increased from 1,000 to 11,000 between 1977 and 1984. Absent from these statistics are sheep, which appear to have increased from 4.7 million in 1950 to 7.8 million in 1988. These latter figures suggest that grazing pressure has increased significantly, although the capacity of the pastures to sustain these levels has not been evaluated. 2.9 The links between crop yield, erosion, and population are unclear. Data from the Food and Agriculture Organization of the United Nations (FAO) covering the twelve-year period 1975-86 show little convincing evidence of yield declines. Wheat, barley, and sorghum yields show no significant change while average potato yields for 1981-86 were 14 percent below the 1975-80 yields. Data from MACA for 1962 to 1986 suggest, however, that over the twenty-five-year period, wheat and potato yields declined 20 percent and quinoa declined 50 percent, with no change in maize. 2.10 With regard to erosion, there is a limited number of studies related to levels of erodibility and areas subject to significant erosion. For example, 44 million ha are reported to be affected by erosion in the country. But it would be reasonable to expect that most of the land in the mountainous zones--perhaps 30 million ha, 75 percent of the area in the Altiplano and Valles- is affected. A study of the Department of Cochabamba finds that 35 percent of the land is subject to moderate erosion and 30 percent to severe erosion. It ;- difficult to know however, -9- when erosion began to occur and how much may be attributed to people. It is likely that much of the observed erosion occurred decades or even centuries ago and is part of a geological process. 2.11 With regard to population changes, rural-rural and rural-urban migration from the zone is well documented. However, how much was the result of a deliberate policy to move people into the Lowlands is unclear. It is generally accepted that colonization in the Lowlands has been taking place at a rate of about 5,000 families per year in 1975-85 and provided about 300,000 immigrants to urban areas over the decade. 2.12 In spite of the zone's accelerated resource degradation throughout the past three decades, Government planning documents have asserted that significant areas remain under-used. The position is that production could be intensified and yields increased, if adequate technologies and sustainable farming systems are introduced. For example, in the late 1980s only 20 percent of the cultivable land was reportedly in crops and improved pasture. Since the early 1960s it has been shown at the demonstration plot and project level that technologies exist to alleviate restrictions on productivity and enable expanded and more intensive use of land and water in the Altiplano and Valles. Increases in yields have been attributed to existing improved techniques for weed control, crop rotation, grassland management, small-scale irrigation, and drainage. These techniques were also expected to enable production security in areas affected by frosts. Bank projects for Integrated Rural Development (IRD) in the Altiplano in the 1970s were premised on a sustainable increase in yields of 50 to 100 percent. Conditions in the Lowlands 2.13 The savannahs of eastern Bolivia have been used for extensive cattle grazing since the seventeenth century. However, the dynamic development of oil, gas, agriculture, and timber since the 1950s in a forested area that was largely unexploited--except by scattered indigenous tribes--has raised increasing concerns about resource degradation. These have centered on deforestation, "mining" of valuable timber species, soil erosion and fertility decline, and depredation of wildlife--all of which were seen as unsustainable and also harmful to the welfare of the indigenous population. 2.14 Deforestation. A survey conducted in 1975 showed 1.2 million ha had been deforested--2.6 percent of the 47 million ha of old-growth forest. Figures for the Department of Santa Cruz (DSC) indicate that between 1975 and 1989 the area deforested expanded from 0.79 million ha to 1.39 million ha, a rate of 43,000 ha per year. Indications are that the DSC has experienced significantly more expansion of the agricultural frontier than other areas in the Lowland plains. (Frontiers are defined here as those areas where major changes in land use are taking place--such as the conversion of forest to agriculture.) The total deforested area by 1990 did not surpass two million ha--with an overall annual clearing rate of around 50,000 ha over the 15-year period. 2.15 Estimates for the DSC suggest that of the total area cleared, almost two-thirds have reverted to second-growth forest. There are no figures on how much of this has been abandoned and how much is in bush-fallow rotation. Under such a rotation, parcels are cropped for three years, by which time weed invasion and fertility decline dictate fallow. The fallow period to recover the original productivity is placed at fourteen to eighteen years on flat or moderately sloping land. Under such a rotation, about one-sixth of the area deforested would be in -10 - agricultural production. Because one-third of the area is reportedly in agriculture, the inference is that about 20 percent of the deforested area is in permanent agricultural production. The proportion would be higher if part of the second growth were abandoned. 2.16 Timber extradion. In the 1960s milling was confined to relatively small operations in the DSC for extraction of a few valuable species, mainly mahogany and cedar. With improved access through the Piedmont to the Lowlands, logging expanded in the Lowlands in the 1970s and 1980s. When much of the supply of the valuable timber species in the DSC was exhausted, exploitation expanded rapidly in the 1980s to the plains area to the north in the Departments of Beni and La Paz. Between 1970 and 1990 forest concessions were granted to 173 enterprises to exploit 19.5 million ha. In 1986 it was estimated that the rate of expansion of selective logging was on the order of 200,000 ha per year. Almost all forest clearing for agriculture in the Lowlands--estimated at 60,000 ha to 70,000 ha per year in the 1980s--occurred in these logged- over areas. 2.17 Soil erasion. There are no estimates of areas in the Piedmont and Lowland plains that may have been abandoned because of irreversible damage to soils from erosion or loss of fertility. In the early 19706 it was estimated that 200,000 ha of deforested land had been severely affected by wind erosion (Derpsch 1975). Studies of fertility decline under continuous cropping have been inconclusive (D.C. Kidman and others 1980; 1. Castro 1986). Some authors maintain that the principal cause of abandonment is weeds (Cordero and others 1964), but others maintain that the cause is a failure to use fertilizers--organic or chemical--and also poor soil management (Bojanic 1986). Where mechanized farming has been practiced, soil compaction has been a problem in some areas, but can be remedied by subsoiling (Maxwell 1979). 2.18 Proteded areas and wildh(fe. The first protected area in the Eastern Lowlands, Lagunas del Beni y Pan0o, was established in 1961. In the 1960s, 2.2 million ha were set aside in reserves; in the 1970s, an additional 10.8 million ha and, by 1990, a total of 18 million ha had been placed in 20 reserves--almost a third of the plains area. Of these, four were national parks (12 percent of the plains) and seven were wildlife and biological refuges (14 percent). The remaining area is largely forest reserve--seven million ha under permanent forest protection and 6.5 million ha saved for future forestry activities (fiscal reserves). 2.19 The objectives of the protected areas include the protection of indigenous people, the preservation of genetic resources, erosion control, the protection of hydrological basins, and the provision of recreation and education. 2.20 The Center for Forestry Development (CDF), the central forestry authority, is responsible for wildlife and protected areas through its Department of Wildlife and National Parks. Because its funding is severely limited, the agency mainly hands out hunting and export permits without getting involved in enforcement of the laws protecting wildlife. 2.21 Destruction of habitat is the greatest threat to Bolivia's Lowland. To date, precise information concerning the status of individual species under threat is lacking. According to international conventions, at least 53 species of mammals, 73 species of birds, and 10 species of reptiles need to be studied to establish the degree of protection required. Some of the species are already cited in appendices 1 and 11 of the Convention on International Trade in Endangered Species (CITES) which Bolivia joined in 1974 and ratified in 1979 (see annex F). Despite the - 11 - protection that should be afforded threatened species, exports continue. For instance 10 of the 17 primate species in Bolivia are exported, in direct contravention of the convention, most of these going to Japan and the United States. Thirty-eight of the forty-one parrot species found in Bolivia are captured for export, with some of the species close to extinction although the habitat is intact. 2.22 Skins are also exported, especially of such species as the caiman (S. American crocodile). In 1984, according to the Department of Wildlife and National Parks, nearly 30,000 caiman skins were exported from Bolivia. Bolivia's wildlife is clearly an important resource, and one which, if exploited prudently within the framework of CITES, could reap revenue from scientific institutions throughout the world, from zoological gardens, and from tourism. 2.23 Despite extensive conservation efforts there is unquantified evidence of considerable degradation. Encroachments on reserves have come from commercial agricultural and forestry activities, some of which have been authorized by the government. Settlers practicing slash-and-burn agriculture have also moved into these areas, frequently following logging roads opened by the timber interests. These colonists often have moved ahead of the logging operators and, with the advent of the chainsaw, have been able to cut and sell logs--leading to excessive timber losses in the forest, and without regard to minimtum-diameter regulations. This has occurred extensively in the Chore and Chimanes reserves. 2.24 Pressure on wildlife has come from loss of habitat due to deforestation, hunting for skins and food, and from trapping birds and animals for export, something which is frequent in reserve areas. More than 100 species are said to be affected (R. Stolz and others 1986). Since the 1960s concern about these activities has increased. Seventeen decrees have been issued to restrict the hunting and export of endangered species. Hunting of animals, including six species of reptiles and 25 species of birds, is prohibited. In spiw of this, Bolivia in the late 1980s was considered the main exporter of wildlife in Latin America. Although there are no statistics on the illegal export of skins and wildlife, studies suggest that the level of exploitation has changed little over the past two decadcs--"Centro de Datos para la Conservacidn" (CDC 1974) (Center for Conservation Data). In 1988, 270 species of vertebrates were classed as endangered, of which 27 required outright protection and 39 required a specific management program (CDC 1974). 2.25 Intens(fcaton of savannahs. The large savannahs--totalling 13 million ha in the Eastern Lowlands--are generally believed to be under-used. The number of cattle in the Departments of Santa Cru2, Beni, and Pando has shown a slow-but-continuous expansion since the early 1950s--a 24 percent increase between 1950 and 1989. In 1974 it was estimated that less than half the native pastures were grazed (CORDEBENI 1974). There are divergent views on the extent to which production could be intensified. It has been asserted that with low-input technology the cattle population could be tripled, thus reducing pressure to convert forested lands to pasture (Ronco 1990). The practice of burning native pastures to improve their palatability-- viewed in some quarters as harmful--has been shown to have no effect on the composition of desirable species. The principal problem is that burning has not been well managed (Ronco 1990). No information is available on the consequences for biodiversity. - 12 - Water Resources 2.26 With several major river systems, Bolivia is well endowed with water resources.A/ It is important to understand that the Lowlands receive most of their water from the Altiplano. Therefore how the water is managed in the Altiplano will affect the low-lying tropical areas and even parts of Argentina, Brazil, and Paraguay. Nonetheless watershed management in Bolivia remains poorly developed. Rivers close to, or passing through, towns and other human settlements are treated as open sewers for the most part or as conduits into which industry can freely discharge its wastes. The result is increasing pollution--with chemicals, heavy metals, and other toxic substances from the mining areas and with human wastes. Certainly this pollution contributes to the mortality among children from gastroenteritis. 2.27 Watershed management also entails the protection of river courses and water basin areas and thus impinges on forest management and on nature reserves. To date, even though such areas may have been demarcated, in reality too little protection is given to them, with resulting soil erosion, sedimentation, and flooding. 2.28 Bolivia has no master plan for the use--and conservation--of its hydrologic resources, taking into account such factors as irrigation, drinking water, drainage systems, hydroelectricity, flood control, and provision against drought. Furthermore, ministries and departments pay little attention to the effects of water use on the environment. Confusion about responsibilities--and considerable damage--often result (Brockmann 1986). 2.29 Irrigation. According to the United Nations Educational, Scientific, and Cultural Organization (UNESCO), in 1982 the cultivated area in Bolivia encompasses 600,000 ha, of which 64,000 or 10.5 percent was irrigated. Ismael Montes de Oca (1971) gives the total area under cultivation, including fruit trees and coca, as more than 1 million ha, in which case the irrigated area would fall to around 6.4 percent. We have also seen that irrigation of pastures in the Altiplano could increase productivity from livestock. Where irrigation is used, little attempt is made to drain the soil, thus leading to loss of land from waterlogging and potentially from salinization. Most irrigation projects, according to Brockmann (1986) have been carried out with the aid of international agencies, yet none has taken environmental problems into consideration. 2.30 Watershed protection projects. Various foreign aid agencies are now cooperating with the Bolivian government to establish schemes to help protect watersheds. Germany, through its technical agency, "Gesellschaft fir Technische Zusammenarbeit" (GTZ), for instance, has been providing assistance in a project to control erosion and flooding in the watersheds of the Rio Irpavi and Rio Achumani near La Paz. The aims include control of erosion caused by man, improvement of the geomorphological conditions, flood control for tributaries and principal rivers, and control of erosion. 2.31 Norway is helping the Executive Program for the Rehabilitation of Lands in the Department of Tarija to reforest and rehabilitate the lands in the upper watershed area of the Rio Guadalquivir--beginning with some 2,090 ha. The aim is to improve the well-being of peasants through sound management of natural renewable resources. V This section is based on an unpublished repon prepared by Barbara Lauscher of the World Bank. - 13 - CHAPTER 3: SOCIOPOLITICAL BACKGROUND Introduction 3.1 The allocation and use of natural resources in Bolivia has been conditioned by the historical and cultural forces that have shaped the institutional structure--and which has few parallels in other countries. The history is particularly important to the Altiplano which supports 50 percent of the rural population with a culture dating back thousands of years. And in the semihumid tropics--the Chaco--widely dispersed indigenous groups face increasingly difficult obstacles to their cultural and economic survival as the agricultural frontier expands. The use of natural resources has also been conditioned by transport difficulties because of the country's mountainous and landlocked character. 3.2 For almost five centuries the Bolivian economy was based on mining (e.g., tin., silver). In the past three decades, the value of oil and gas exports have exceeded those of minerals and exports of industrial agricultural crops have increased significantly. These changes have altered the historical pattern of development, particularly with r-spect to urbanization. Since the 1950s, the rate of population growth accelerated from an annual average of 1 percent between 1900 and 1950, to 2.1 percent in 1950-76 and 2.8 percent in 1976-88. Since 1950, rural population growth has been stable at 1.25 percent a year. The urban rate doubled in 1950-76 (3.85 percent) over the historical rate (1.87 percent) and reached 4.45 percent between 1976 and 1988. The effects of this rapid urbanization on natural resources have been twofold. It has reduced agricultural pressure on land, particularly in the Altiplano and Valles. But it has also transferred poverty from rural to urban areas, thus simultaneously accelerating contamination of land and water and diverting public investment from activities that would be expected to improve resource management in rural areas, such as research, extension, and education. The Emergence of New Pressure Groups 3.3 In 1952, the revolutionary government--having destroyed the oligarchy and the military with support of the miners and campesinos (farmers)--sought to consolidate its position by converting groups of its armed militias to settlers, and by creating a broad-based middle class that could help transform the country to a modern, efficient state. The mines, oil industry, railways, and export interests were nationalized. Private and public lands in the Highlands were divided among the campesinos. In the 1970s--in a first step toward developing a middle class--relatively large tracts of land were distributed in the Lowlands to people expected to become cattle and timber entrepreneurs. 3.4 Government revenues became dependent on profits from state enterprises. Taxes collected on private income or assets were minimal. But difficulties in maintaining labor discipline among armed miners, the volatility of tin prices on the world market, and the inward-focused development model led to chronic fiscal deficits and balance-of-payments problems. At the same time, in order to expand the middle class, the government increased public sector employment, continued land and forest concessions in the Lowlands, and subsidized credit and tariff protection - 14 - for domestic production. The beneficiary groups, either using their power from within the bureaucracy or forming alliances with labor unions, seriously weakened the state, almost making it an institutional vacuum. 3.5 At the outset (1952-61) the National Revolutionary Movement (MNR) government took a number of relatively successful initiatives--petroleum exploration, development of a sugar industry, and an increase in food production in the Highlands. But political instability and weak and erratic economic management nullified these successes--as recurrent macroeconomic crises caused inflation, devaluations, and fiscal insolvency. To combat this instability, the government recreated the military as a political force--which ironically put an end to the MNR regime in 1964 and led to an almost uninterrupted 18-year run of military governments. Since 1965 the political scene has been characterized by the progressive emergence of well-organized pressure groups. Added to the miners, campesinos, and military, were groups based in the Lowlands--colonists and producer associations (of cattle, cotton, soya, and timber) and, more recently, indigenous tribes (see below). Highlands against Lowlands--The "March to the East" 3.6 The integratV-n of the Lowlands and Piedmont into the national economy and a changing relationship betwten the rural and urban sectors have been the major determinants of change in the use of natural resources for the past three or four decades. Ideas and projects to initiate this process date from the late 1800s but were not implemented until after the 1952 revolution. The new government completed a road link from the Highlands and Valles to Santa Cruz in the Lowlands in 1955. The link-up was connected to a policy of food self-sufficiency and export diversification--both to be based on Lowland agriculture and forestry. Since the early 1960s resource use has hinged on the relative we*ght assigned to opening up the Lowlands relative to the possibility--or impossibility--of intensifying agriculture in the Highlands. The major actors on the scene have been the MNR, the military, and the external donor community which-- for different reasons--all agreed on the importance of the so-called march to the east until 1990. 3.7 The humid tropics of Latin America--and Bolivia was no exception--in the 1950s and 1960s conjured up a mystical vision of an El Dorado. The phrase "march to the east" was coined by the government's Bohan mission in 1942, which was asked to assess the Lowlands' economic potential. Thus, the expectations of the three key actor groups were given scientific legitimacy and were reinforced by further surveys financed under technical assistance in the late 1960s and early 1970s (Cochrane 1967; Tosi 1975). But, in spite of the studies, many of the initial successes--sugar, oil, cotton, and meat--proved ephemeral. 3.8 The MNR, formed by ex-servicemen from the Chaco war in the 1930s, was convinced that national integration was the most efficient means to end territorial annexations by Brazil, Chile, and Paraguay. The integration of the Lowlands was seen as primary. The military saw settlement of frontier regions as a key to national defense. More important, such settlement offered an opportunity to move the economy away from dependence on mining exports and food imports. External aid agencies, who saw the disastrous balance of payments as a constant threat to the country's development, were willing to bet on the prospects for export diversification and growth--in oil, gas, meat, wood, and tropical industrial crops--and import substitution using tropical food crops offered by access to the Lowlands. - 15 - 3.9 Since 1960 there has been progressive crystallization of the view--held by groups within the country and by the external aid agencies--that Bolivia's development is bipolar. One pole is the Highlands--a geographic accident with harsh physical conditions characterized by poor and degrading soils. The region is seriously overpopulated in terms of the carrying capacity of the land--a problem that is exacerbated by continuing increases in the rural population. A second problem is the Highlands' dependence on mineral wealth whose future is increasingly uncertain because of unstable international markets. The other pole is the Lowlands, virtually unpopulated but holding enormous petroleum reserves, timber resources, and fertile lands suited to products with ready domestic and international markets. This bipolar view is part of the culture of the Lowlander (camba) and the Highlander (coya), but with differing perspectives. The pressure groups, including political parties, tend to identify with one pole or the other--so much that in the 1970s the country was transformed into regional pressure groups that alternated in power or in precarious alliances. This domination of one or the other group or the existence of compromise arrangements has permeated development for the past three decades. 3.10 The importance of renewable resources as a source of capital accumulation for development differed between these two poles. The Highlander emphasized the fragility of tropical soils, resisted the regional decentralization of decisions regarding appropriation and management of these resources, and placed a higher priority on national food self-sufficiency than on export-oriented production. In contrast, the Lowlander stressed the rich timber reserves, high natural fertility, exports, and the importance of maximum decentralization. This added support to a long-standing drive to reduce the influence of the La Paz government in the affairs of the Lowlands. Both poles continued to try to persuade the external aid community to support their point of view. In fact, dealing with these groups came to be seen as a part of a logical process of building alliances--which took time away from the other aspects of national development. 3.11 Coincident with the emergence of bipolar politics was the consolidation of power at the departmental level--which occurred in the form of development corporations and civic committees in each department in 1974. This further distorted central government decision- making away from focusing on a national plan. 3.12 After 1965 the national governments accelerated an indiscriminate process of granting land and forestry concessions in the Lowlands. This was accompanied by road-building and credit programs that were advantageous to the concessionaires. In none of these activities was sustainability of renewable resources used as a criterion. In fact, the few relevant studies of resource capability were ignored. During this process, fiscal exigencies in 1968-77 and 1978-87 necessitated reductions of credit flows to concessionaires to about one-third the usual level. The frequent response was to replace financial capital with natural capital. For example, timber was extracted to finance the expansion of cattle herds--the best wood, such as mahogany, was extracted and the rest destroyed. Political Parties and the Bureaucracy 3.13 Between 1964 and 1982 Bolivia was under military government almost continuously. The priority of the parties during those years was to reintroduce a democratic system, and natural resource management was not on the agenda. With the return to democratic government in 1982, the consuming concerns were stability and economic growth. Once again, at - 16 - least until the 1989 elections--when none of the parties included environmental issues in their platforms--the topic went by default. 3.14 The government bureaucracy gave resource management differing levels of importance, as shown by the national plans (see chapter 6). The relative importance assigned to the subject reflected the views of the technical advisors assisting with preparation of the plans; a pragmatic reaction to international and domestic pressure groups, which wanted evidence that something was being done about the environment; and perceptions of how to address certain immediate problems related to renewable resources. The concept of resource management was not incorporated into decision-making by government enterprises--neither those whose activities directly affected renewable resource use--for example, "Corporacion Boliviana de Fomento" (CBF) (Bolivian Development Corporation), "Corporacion Minera de Bolivia" (COMIBOL) (Bolivian Mining Corporation), and "Yacimientos Petroleros Fiscales Bolivianos" (YPFB) (Bolivian Petroleum Corporation)--or agencies concerned with implementation of policies to control or provide incentives to resource users--for example, "Banco Agricola de Bolivia" (BAB) (Agricultural Bank of Bolivia), 'Centro de Desarrollo Forestal" (CDF) (Center for Forestry Development), Hacienda (Ministry of Finance), MACA, Reforma Agraria (Agrarian Reform), and "Servicio Nacional de Caminos" (SNC) (National Road Service). The bureaucracy had its own agenda, part of which involved responding to the interests of the other key players. Private Sector Entrepreneurs 3.15 Following the 1952 revolution, private business interests played little role in public policy until the mid-1960s. With the coup in 1964 which brought General Rend Barrientos Ortuhlo to power, the government encouraged participation by entrepreneurs in policy-making. Since then, except during the General Juan Jos6 Torrez GonzAlez and General Alfredo Ovando Cardia governments (1969-71), private entrepreneurs have played an increasingly important role. They have effectively organized as a pressure group through producer associations. In the administrations of Colonel Hugo Banzer Suirez (1971-78) and Victor Paz Estenssoro (1985-89), they participated directly in the cabinet. In other regimes, such as that of HernAn Siles Zuazo (1982-85), business groups were able to take advantage of erroneous policies or government weakness to obtain access to rcsources--capital, land, forest, and minerals--or to render ineffective policies that threatened their interests. 3.16 The orientation of this segment of the private sector has, in general, been to maximize short-term gains. This focus has been intensified by the perception of high levels of risk associated with the country's history of social, economic, and political instability. The consequences of this orientation, combined with the entrepreneurs' capacity to manipulate policy implementation, have meant accelerated degradation of resources. In the Altiplano and Valles, mining and other industries--public and private--have paid little or no attention to the water quality effects of their discharges. Although the entrepreneurial group has had little effect on the way renewable resources are used in other sectors in the Highlands, in the Lowlands the effects have been significant. Capital accumulation has been closely linked to the mining of forests and soil fertility. Cheap land, low-cost access to forests, inoperative taxes, subsidized credit, price control, and access to lucrative contracts with state agroindustries have engendered an exploitive approach to development of what was seen as an infinite land base. The appreciation of land associated with these policies, plus public investment, has accrued to the owners. - 17 - 3.17 Land, much of it unsuited to agriculture, was cleared indiscriminately without any technical evaluation of soil capability or appropriate management techniques. This may be attri- buted to a lack of knowledge and the producers' understandable desire to maximize profits where resources were essentially free. The insurance policy for continued capital accumulation was the acquisition of forest lands for future agricultural development. So, financial capital has been attracted to the Lowlands, particularly during sequential bonanzas in sugar, cotton, and soya--aside from the minimal cost of forested land. Campesinos 3.18 Campesino unions--in the Highlands and Lowlands--have been a significant lobby since 1952. Since then the lobby has essentially controlled the Ministry of Agriculture and Campesino Affairs. Despite this control, erroneous or ineffective policies have limited the material benefits. The main goals of the campesinos were access to lands and forests in the Piedmont and Lowland plains, improved working conditions for salaried workers, access to credit, increased state investment in colonization, exemption from taxation, assurance of continued support to communal arrangements for resource use in rural areas, and preservation of their right to grow coca. At times the campesinos have posed a threat to stability in the rural sector--such as in 1952-58, when they had their own militias. Between 1980 and 1985 they again became militant and invaded large properties in the Department of Santa Cruz. During this period they also engineered the government distribution of tractors worth US$30 million, essentially free of charge. 3.19 Any efforts by the campesinos in the Highlands to have investments channeled to human and physical capital or to develop agricultural techniques that might enable them to absorb a substantial amount of credit met with very limited success. This failure may have contributed to resource degradation and certainly contributed to persistent poverty and low levels of productivity. In contrast, campesino action in the Lowlands has had a significant effect on the condition of renewable resources. Like the entrepreneurial groups, the campesinos have adopted a short-term view of resource exploitation--fueled by uncertainty and the perception of an infinite stock of land. And government agencies charged with protection and development of renewable resources were unable to control campesino exploitation of land because of the campesinos' geographic dispersion, the limited area connected with their operations at any one time, and the political influence alluded to above. At the national level, the position was adopted that the forest belonged to all Bolivians and therefore was available for exploitation as an open-access resource regardless of licensing requirements. With the ready availability of chainsaws and a market for logs in the expanding commercial forest industry, settlers became interested in obtaining several 50-hectare parcels for logging, regardless of any plans for agricultural use. It also quickly became evident that after two or three years in annual crops the labor requirement to control weeds and second-growth forest exceeded that required to fell a new forest area, which had the added bonus of still-unspoiled fertility. 3.20 In a chaotic pattern of frontier expansion through spontaneous settlement, cznpesinos invaded national parks such as Isiboro-Secure and forest reserves such as Chore. Hunting for skins and trapping wildlife to sell to contraband traders added to their incomes. In the process the campesinos inevitably clashed with indigenous tribes whose livelihood depended on extremely extensive use of the renewable resources which were being destroyed by campeEinos and other commercial enterprises. - 18 - Regional Institutions 3.21 The degree of governmental decentralization in Bolivia is an outgrowth of the disjointed mining and petroleum enclave model of development that provided most of the funding to support the central government. The reaction to this pattern of development was to promote reinvectment in the region of origin of the funds. The increasing importance of the departmental institutions--the civic committees and regional development corporations--during military rule (1964-82) was a civil expression of democracy that could not be manifested through the central government. In spite of the return to democracy, institutions at the departmental level have been able to retain their influence on government policy. 3.22 These agencies strongly reflect the interests of their local business sector. The strategy has been to maximize businesses' share of the public investment pie, particularly in state industry, roads, and energy. These pressures have distorted policy decisions and led to wasteful expenditures such as the simultaneous construction of a road and rail link between Santa Cruz and Beni; initiation of a sugar mill in the Lowland area of La Paz Department, which proved both economically and technically inviable; and the building of agroindustries such as milk and vegetable-oil processing in areas unsuited to production of the required raw materials. 3.23 The role of these regional institutions in managing renewable resources is most evident in Lowland forestry. Regional pressure, responding to local forest enterprises, has resulted in virtual removal of the central government's authority to implement the forestry law. In the departments of La Paz, Tarija, and Beni, quasi-autonomous entities have been set up to adjudicate areas for exploitation and establish and collect the licensing fees. The Center for Forestry Development, the central forestry authority, essentially rubber stamps the procedure. A notable case in 1986 was the pressure brought to bear by the Beni Department to change the status of the Chimanes forest from reserve to production. Despite considerable opposition by domestic and international non-governmental organizations (NGOs) concerned with the environment and the rights of the Chimanes tribe, the government granted the request. The ensuing furor forced the government to backtrack in 1990. 3.24 The dominance of local vested interests has not been conducive to improve the allocation and use of natural resources which should be one result of decentralization. One example is that of the Development Co - oration of Santa Cruz, which has spent US$700 million in the Department of Santa Cruz since 1974. Because of the dominance of construction interests, heavy emphasis was placed on agroindustry, road construction, and urban services. Opportunities were missed to improve resource management through investment in research, resource surveys, rural development, watershed protection, and road maintenance. 3.25 Thus, over the years, emerging pressure groups have been able to appropriate natural capital and gain preferential terms for their use--subsidized credit, tariff protection, price supports, and freedom from taxation. The state, for its part, has been obliged by circumstances to seek external aid to fund most public investment and even some current expenditures. External agencies have been obliged to look upon the central government as orchestrating the orderly transfer of financial and technical assistance in the use of natural resources for development. Yet, the government has actually been distributing natural resources to those who then have demanded from it credit, infrastructure and protection from imports. - 19 - CHAPTER 4: COUNTRY STRATEGIES Approach and Strategy in the 1960s 4.1 The first official Bank economic report was published in September 1961 (see table 4.1). The report contains a largely negative view of Bolivia's overall development performance and focuses mainly on defining the extent to which Bolivia could become a "viable" economy. On the fiscal side, the preoccupation was with the finances of the mining company (COMIBOL)--and ensuring that the economy could improve its investment effectiveness and productivity in the medium and long term. 4.2 Most reports in the 1960s emphasized that Bolivia was nearly twice the size of France but with a population of fewer than 4 million people (compared with France's 56 million). This apparent low population density suggested that the country was abundant in natural resources--particularly land and forest--and that the central question was how to create nationwide demographic uniformity or parity; that is, to move people from overpopulated areas--that have exceeded their area's carrying capacity--to areas underpopulated but rich in natural resources. 4.3 Except for some industrial products, the proposed strategy did not foresee another sector with great comparative advantage. Two determinants of such advantage were identified: the role of transport, and the importance of increasing the scale of economic activities through the expansion of domestic markets and communications. The strategy proposed by the Bank recognized severe weaknesses in the institutional environment, and it stated that after the revolution of the early 1950s (see chapter 3), Bolivia's main obstacle to exploiting its comparative advantages was the limited quality of its human capital and institutions. Correspondingly, policy- makers and donors--interested in accelerating growth in the short term--chose to promote activities that required the least institutional and human capital. As a result, a large share of spending went to transport and infrastructure.5/ Although somewhat justified economically--as a source of growth--the spending was skewed by political and social considerations, such as the need for regional integration and national security and the fear of losing borderland to neighboring countries. 4.4 The government strategy began to be questioned as the economy confronted a number of unfavorable external shocks--from changes in international prices of metals in the early 1960s and, later, of hydrocarbons. Thus, reports began to address the development of agriculture and the rural sector, and export promotion of cash crops was given a high priority. In this context the Bank advocated, for example, that the rate of effective protection for sugar production had to be kept deliberately high for the production of that crop to become sustainable financially and economically. This was also true for other export crops. In 1967, a Bank economic report stated that "the government may, therefore, concentrate its scarce administrative and financial resources on strengthening much needed infrastructure investments [physical capital] and on attacking more vigorously the deep-seated development problems in traditional agriculture" (World Bank 1967b, iii, para. 6). - 20 - Table 4.1: BOLIVIA ECONOMIC MEMORANDUMS AND DISCUSSION PAPERS Report Report Year type number Title 1955 DP WH-38 Report on Mission to Bolivia 1961 EM WH-112 The Economy of Bolivia 1963 EM WH-129 Current Economic Position and Prospects 1964 EM WH-138a Current Economic Position and Prospects 1967 EM WH-168b Current Economic Situation and Prospects 1969 EM WH-189a Current Economic Position and Prospects 1970 EM WH-199 Current Economic Position and Prospects 1970 DP .----- Country Program Paper 1971 EM WH-209b Current Economic Position and Prospects 1972 EM WH-213a Current Economic Position and Prospects 1973 DP ----- Country Program Paper 1975 EM 786a Current Economic Position and Prospects 1976 EM 1376 Economic Memorandum 1977 EM 1546 Economic Memorandum 1978 EM 2195 Economic Memorandum 1983 DP 4194 Structural Constraints and Development Prospects 1984 DP .-.-- An Assessment of External Debt 1985 EM 5680 Economic Memorandum 1986 DP -.-.- Division Country Brief 1986 EM 6455 Updating Economic Memorandum 1988 EM 7278 Updating Economic Memorandum 1988 DP ----- Resource Mobilization in Bolivia under the New Economic Program 1989 EM 7645 Country Economic Memorandum 1989 DP ----- Country Strategy Paper 1990 EM 8623 Updating Economic Memorandum EM is economic memorandum and report; DP is discussion paper. Note: Several other Bank reports and internal documents that deal with Bolivia are not classified as ESW, EMs or DPs--but cover such issues as public investment, poverty alleviation, and the social dimensions of macroeconomic strategy. These are listed in the bibliography. - 21 - 4.5 Another element of the strategy was related to equity and income distribution--and intimately related to the question of comparative advantage--because most food for domestic consumption was produced in the Altiplano. Based on project experience, it was recognized that land could not be further redistributed in that region and that the only choices left to increase growth rates were agricultural intensification and increased migration into the Lowlands. One constraint to agricultural intensification was the inability of the poor to accumulate capital. This was explained in several ways: the complexities inherent in accelerating technical change, inadequacies of institutions, and the role of cultural values and beliefs. Indigenous values and belifs were said to determine most behavior towards work and leisure, land management, adoption of new techniques, and the ability or willingness to participate in development. The Bank identified the lack of adequate institutions, the low level of human capital, and the native cultural values as key constraints to increasing growth rates and alleviating poverty./ 4.6 Only at the end of the decade was there a recognition of environmental risks. Bank reports pointed out that because there was little knowledge about the natural resource base, the expansion of the agricultural frontier by commercial agricultural enterprises, colonization, and settlements was risky. It was also recognized that regional and local institutions were weak and incapable of guiding agricultural transformation; farmers migrating from the Altiplano were less than enthusiastic about living in the Lowlands; intensive agriculture would require more skills than the settlers had; there was little, if any, support from the government to rationalize the allocation and use of land and water; and the conditions for sustainable development were not met. Perhaps the most articulated expression of this strategy was presented in the economic reports of 1967 and 1969 (World Bank 1967b, 1969d). Rural Development in the 1970s 4.7 In the 1970s, the Bank became more realistic regarding the identification and assessment of Bolivia's structural development constraints--the complexities of bipolar development, an inability to get people out of poverty, and uncertainties about the most effective and sustainable ways to deal with the Lowlands. In most cases, several projects were proposed, but their scale and effectiveness proved too small compared with the country's imperatives. 4.8 A review of public expenditure and investment in 1971 responded to those recommendations (World Bank 1971b). That report shows how skewed public investment was, favoring mining, hydrocarbons, transport, and power--these four sectors got more than 75 percent of all public sector resources in 1965-70, and more than 50 percent in 1971. In contrast, agriculture got only 3 and 8 percent of the resources, respectively. Unless export expansion was expected to materialize at very low cost,2/ these allocations represented an absolute minimum for a sector that is expected to be prosperous and export-oriented. Attempts to change public 6/ This position has been confirmed by several studies by the Operations Evaluation Department, including a recent one on rural development. In addition, in a recent review of experience about poverty and environmental degradation for the Annual Review of Evaluation Results for 1991, OED confirmed that projects that do not increase net income are usually not favored by beneficiaries. 2/ In fact, this may have been the implicit assumption all along. Given that "fertility' could be extracted at a relatively low "private cost"--through the exploitation of forests and vegetation (pastures for livestock)--this created an added incentive to increase natural resource depletion. - 22 - expenditure patterns met with little success, even when education and human resource development had been given a higher priority.&/ 4.9 In the 1970s, the Bank paid increasing attention to the role played by the incentive structure to attain the growth and export targets. Several economic reports discussed existing distortions that constrained international trade: administrative obstacles, elimination of permits, quotas and prohibitions, substitution of income taxes for export taxes on nontraditional exports, contraband trade, unfavorable trends in capital outflows, and weaknesses in the government capacity to plan and implement. Part of the main theme was to eliminate excessive government intervention and to improve government effectiveness (World Bank 1970a, 1971b). 4.10 In linking the macro strategy with sectoral conditions and constraints, country reports recognized the increasing importance of improving pricing policies, increasing the effectiveness of marketing structure and performance, and expanding the capital market and credit system. Modernization of agriculture--a major goal--was seen to depend mainly on the introduction of those economic reforms. Experience shows, however, that very little was done to establish an adequate pricing policy for such natural resources as land, forest, water, and vegetation. Natural resources were still assumed to be "abundant," which meant prices did not matter. The strategy embodied a significant undervaluation of natural resources and gave a false sense of comparative advantage; and it still does. Several macro reports emphasized the effectiveness of subsidies on credit and agricultural inputs and services, cheap concessions, low or nonexistent land taxes, and practically no constraints to trade. In some cases, the undervaluation appears to have been substantial. As the demand for tradable natural resources is often price- elastic, and the supply response requires minimal capital investment, those subsidies may have significantly increased the use rates of such natural resources as land, forest, and vegetation. 4.11 The establishment of those incentives--far from what the market probably could afford--provided an effective framework for rent-seeking behavior. This behavior was reinforced by the creation of several regional development agencies or organizations representing different interest groups (such as, forest, sugar, cotton, and cattle). To benefit their constituencies, each group had to get as much out of the subsidies as it could.2/ The creation of these single-issue lobbyist organizations delayed policy change and increased pressure to deplete natural resources to attain short-term objectives. 4.12 Some views about natural resource management expressed at the country level should be noted. With regard to forest resources, reports emphasized in the early 1970s that the lack of roads and adequate transport was the main constraint to forest development. The view was that the value added per unit of volume was not high enough to push the subsector into exports. Only in the late 1970s was the comparative advantage of forest exports fully recognized. With regard to water resources, there was a renewed interest in the growth and expansion of irrigation in the Valleys and Piedmont. The approach to water resources was not explicitly addressed. The only statement at the time was that, despite several attempts at minor irrigation 8/ Agricultural sector contribution to GDP fluctuated between 16 and 26 percent during the period. Capital accumulation was seen as minimal from agriculture, whose growth rate could at best keep up with that of the population. 2j A number of these associations are listed in 'The Economic Memorandum of Bolivia" (World Bank 19764). Examples are the Cotton Growers Association (ADEPA), the Beni Cattlemen's Association (FEGAbd), and the National Rice Growers Federation (FENCA). - 23- schemes, growth rates of agricultural output in the irrigated areas were less than expected. And, with regard to pastures and vegetation, the economic reports only emphasized that Bolivia had large areas suitable for livestock development. 4.13 It is important to note that country reports were more explicit about the natural resource constraints of the Altiplano and the difficulties in succeeding with development programs, due to poverty and to the slow pace of technical progress. Human resource development and institution building were emphasized. But, unfortunately, very little was done-- except, perhaps, in the implementation of rural development projects (see chapter 6). 4.14 Later in the decade, the Bank was more explicit in addressing Bolivia's social and institutional constraints, and the limits to sustainable development. For example, the Economic Memorandum of 1977 stated, "It is recognized that intensified support for traditional agriculture will require institutional reforms in public agencies servicing the sector and upgrading their professional staffs (World Bank 1977e, iii and 15)." 4.15 The Economic Memorandum issued in 1978 went a step further, by linking sources of growth and sustainability to the expansion of institutional and human capital. The memorandum stated that "improvements in health services and education will also be necessary to achieve increased [agricultural production] as well as other development objectives. It is recognized that support for traditional agriculture will require institutional reforms (World Bank 1978a, v)." Bank-Supported Economic Adjustment in the 1980s 4,16 The early 1980s was a time of crisis and the Government of Victor Paz Estensoro decided to implement major reforms--including adjustment operations, with the first one supported by the Bank in 1980. The operation was clearly to support the balance of payments with little explicit effect on issues relating to natural resource management. The SAL recognized the need to realign agricultural prices, but the primary orientation was exports and not sustainable development. It was most important for the economy at that point to restore stability --and then to approach the reform process systematically. Unfortunately, the Bank-financed SAL performed unsatisfactorily--partly because of design and partly because of its implementation in a politically unstable time. 4.17 In addition to the program initiated in 1979, Bolivia attempted to implement at least six stabilization packages between 1982 and 1985. Although the 1979 program contained well-defined and comprehensive stabilization policies, the subsequent six economic packages were ad hoc. The public sector was responsible for some 65 percent of mineral production, 80 percent of hydrocarbon output, 70 percent of energy production, more than half of the assets of the banking system, and more than 70 percent of air passenger transportation. Capital accumulation was thus heavily influenced by the government, which was responsible for more than two-thirds of all such accumulation since 1952. Government investment decisions, however, gave little weight to economic considerations. Many projects were prepared after major lobbying from regional interest groups. The weaknesses of the economic management system did not become fully evident until the lenders withdrew, internal political instability increased, and the economy entered into a steady decline. A new economic package had to be assembled. - 24 - 4.18 Despite all efforts, the Bank, again, saw no major progress. The theme of "structural constraints" became prominent, as best discussed in a report issued in January 1983. The report stated: Structural constraints have hampered the development of the sector [agriculture]. The principal structural problem affecting the sector is the imbalance between demographic and natural resource endowments.... These problems have been compounded by inappropriate agricultural policies as well as a lack of support services. In particular, unrealistic pricing policies for major tradeable agricultural products, lack of competitively priced inputs and cumbersome procedures for export shipments have been real constraints to increased production and exports. The agricultural credit system has been unable to provide in a timely and efficient fashion the financial resources needed by farmers..., and there are severe management and financial problems in public credit agencies.... Producer prices have been particularly low in relation to international prices for items such as coffee, beef, wheat and oilseeds (World Bank 1983b, 23-4)..1O/ 4.19 Several structural issues, some of which related to the sustainable management of agriculture, were also identified. For example, in the case of forestry, the Bank alerted decision- makers about the irrational use of forest lands, which posed serious problems in timber production and difficulties in developing and implementing adequate policies for natural resource preservation.11 Other issues were the lack of an adequate pricing policy on agricultural inputs, such as fertilizers, tractors, pesticides, and seeds. All of these inputs were said to be essential to intensify agricultural development in the Lowlands and, thus, decrease the pressure from slash-and-burn cultivation. 4.20 Perhaps the most important change in the early 1980s was the increased attention paid to economic policies and instruments for natural resource management. For example, it was reported that exports of forest products were subject to the following regulations: log exports were prohibited; sawnwood was exempt from export taxes, but received no special tax benefits; and plywood, sliced veneer, and other forms of processed wood were entitled to a tax rebate equivalent to 25 percent of the FOB value of the merchandise exports. This tax incentive was made effective through tax certificates (certificados de compensacion impositiva), which were used to pay taxes. It was stated that, given the costs of transport at the time, it may have paid a forest company to export logs cut at or near the border, instead of after processing. Transport costs explain the large amount of smuggling at the time. In most instances, the acid test of the effectiveness of these economic instruments continued to be economic efficiency and their 10/ Annex A of this 1983 report emphasizes pricing and marketing policies for major tradable agricultural products. See also Chapter III in that report on "Major Sectoral Issues and Problems." 1/ With regard to timber and what was happening in the Lowlands, the report stated that about 40,000 ha of land had been taken over by spontaneous settlers. The report also noted that firms in the forestry sector had complained that squatters were seldom forced to leave the lands they occupied and that timber concessionaires indulged in substantial "high grading" of the forest, in an effort to recover their investments in the shortest possible time. (High grading is selecting the most valuable items--such as mahogany--and disregarding the rest.) Annex A of the report had a section on timber which is worth summarizing. It stated that "the volume of forest products marketed in the period 1970-80 more than tripled from 21.1 million square feet in 1970 to 67.7 million square feet in 1980. Over the same period, the share of exports in total production increased from 31% in 1970 to over 50% by 1980. Sawn wood represents abkut 80% by volume of wood product exports.... Although difficult to quantify, illegal trade in forest products is believed to be at least as large as the legal trade..., aided by the price differential between Brazilian and Bolivian markets and high transportation costs within Bolivia (World Bank 1983b, 46)," -25- contribution to exports. Almost nothing was assessed in relation to sustainable development or the environment. From 1985 to 1990: the New Economic Policy 4.21 The New Economic Policy (NEP)--issued by a supreme decree on August 29, 1985--was a major landmark in Bolivia's macroeconomic management. The main actions advocated were a freed foreign-exchange rate market, a simplified tariff structure, fiscal reform, public enterprise reform, deregulation of the financial sector, and deregulation of prices (World Bank 1988n). The exchange rate was freed to be set by auction, which resulted in an immediate devaluation of the official rate by 93 percent. Initially all prohibitions and licensing requirements for imports were abolished and the tariffs were set at 10 percent of the previous tariff. In 1986, the system was further simplified by introducing a 20 percent across-the-board tariff. The government attempted to control the fiscal deficit in order to reduce inflation. Strict budget controls were introduced and public investment was temporarily prohibited. Revenues were increased--for example, through adjusting upward the price of hydrocarbons, which became the main revenue source in 1986. Several public enterprises were to be restructured, the prime candidate being COMIBOL, the mining corporation. The liberalization of the financial system consisted of removing some regulatory constraints on financial transactions and freeing the determination of interest rates. The NEP also tried to move towards a more market-oriented economy through the deregulation of most prices, particularly those in agriculture. 4.22 In this context, the Bank for the first time allocated a section of an economic memorandum to discuss Bolivia's natural resource management issues and constraints. Several statements should be noted. First, tlat the forests of the Lowlands contain a number of animal species that could be exploited commercially on a sustainable and environmentally sound basis; and large areas of Bolivia contain fertile agricultural land. Second, that exactly this richness has led to widespread abuse of the resource base. Agricultural yields had been dropping because of poor farming techniques; forests had been cut down without regard for the consequences of erosion, the ground water level, or the future fertility of the land. Third, that it was important to understand the relationship between poverty alleviation and the environment. This represented a change in Bank thinking regarding such notions as "sources of growth" and "comparative advantage." Although natural resource management issues were treated separately from the reform process, the Bank economic report stated: The choice is not between poverty alleviation and the preservation of natural resources. Slash-and-burn (barbecho) farmers of the low lands will remain poor as long as they are not given the opportunity and incentive to use the land in a resource efficient way. Under the present pattern, the farmers come into an area, burn the forest (destroying most nutrients as well as economically beneficial timber), and grow one good crop of rice. Already by the second year, the crop drops to one third, and by the third year there is hardly a crop. So they have to move on. Compounding the problem is the lack of a clear title and tenure system. With proper training and secure tenure, the farmers could grow sustainable crops, take care of the soil, and would be able to climb out of their abject poverty--at the same time saving the area's resources (World Bank 1988n, 27). 4.23 The report added: -26- The problem of natural resource management is multifaceted, [because it includes] ... legal questions ... land titling ... wildlife preservation ... watershed management ... agricultural sustainability and reforestation. ... establishing the necessary laws, regulations and supporting institutions takes many years and, if not started now, could cause serious damage to Bolivia's rich resource base in the long term. Effectiveness of Policy Interventions 4.24 Bank views about the selection and implementation of macro instruments began to evolve in the mid-1980s (see also chapter 7). Several Bank reports began to question the effectiveness of instruments used, for example, to change the population-natural resources imbalances--the carrying capacity constraints faced by the economy--or to change the ways natural resources were being used. For example, a 1983 report stated that "land redistribution by itself has not reduced the uneven distribution of the population vis-a-vis available land, and investments to remove supply constraints have not been made (World Bank 1983b, 2)." 4.25 With regard to the effectiveness of policy interventions, Bank staff reported that the NEP had very little effect on subsistence farming in the Highlands; that no change in productivity took place in spite of price and tariff reforms; and that the 20 percent uniform tariff on imports hurt commercial farmers in the Lowlands who were used to previous tariff levels of only 2 percent on agricultural inputs. In addition, it was reported that the one instrument that induced significant productivity changes was the tax rebates on exports--applicable only to export- oriented farms, such as soybean producers. 4.26 Moreover, price reforms encountered several limitations: Production has shown little response so far to the removal of price controls and increased export incentives provided since 1985. Productivity, incomes and welfare in the Altiplano countryside remain depressed, and production is close to subsistence levels. While considerable potential may exist in the eastern Lowlands, development is hampered by difficult access, lack of information, destructive cropping practices, and poor infrastructure (World Bank 1988b, 17). 4.27 These remarks were coupled with comments on the lack of effectiveness of public sector institutions and on the country's weak absorptive capacity. As a result, despite the national plan's allocation of US$71 million for agriculture, the government was only able to spend US$26 million. It is not clear, however, how the public investment program affected the management of natural resources in Bolivia. 4.28 Taxes were also perceived as having little influence on the allocation of natural resources. A tax on "presumed income of property owners," established through the NEP, stipulated a rural land tax which depended on land use (cultivable land, cattle raising, or pasture), on location (in accordance with the agrarian reform classification), and on the size of the estate. The taxation rate fluctuated between US$.01 and US$.94 per hectare. Because these rates were considered extremely low, there was no expectation that the tax would have much effect on resource allocation. Several limitations were encountered. First, local government tax collections ran into difficulties, partly because of a lack of land surveys. Second, the tax contained a disincentive for land improvements because no tax reduction was allowed for the extra costs associated with investment and improvements to the land brought tax rate increases. This was to - 27 - a large extent unavoidable as long as accurate cadastral surveys were not available. Third, despite the very low rates, the tax faced considerable political opposition (World Bank 1989j).12/ General Assessment 4.29 The macro strategies. There are several noteworthy aspects to the Bank approach to the macro-management of natural resources and the environment. First, environmental concerns were incorporated into the macroeconomic framework slowly, despite having been identified in the early 1970s. As late as the early 1980s, the assessment of sources of growth for the whole economy and for the agricultural sector were never linked to the nature and extent of Bolivia's natural capital. Growth was said to depend mainly on the expansion of infrastructure and financial markets, in the hope that institutions and human capital would adjust to the expansion process. But, as the Bank now recognizes, the Bolivian economy was unable to adjust and may not be able to in the immediate future. 4.30 Second, most macroeconomic reports emphasized the short term: the main aggregates of the analyses were income, employment, the balance of payments, and fiscal resources. As a result, the approach used to assess development performance--or to define the extent of the economy's improvement--was also short-term in focus, excluding the full opportunity costs (across regions and time). 4.31 Third, no attempt was made to measure the effects of macro policies on rent seeking, land use, access to and use of natural -:zources, or any change in the physical use-rate of resources. For example, when identifying the agricultural sector potential at the macro level, the Bank failed to link economic productivity with natural resource use until the early 1990s. Similarly, the effects of fiscal policy--such as taxes, subsidies, concessions, and stumpage fees--on resource use were never detailed because they were assumed to be negligible. As is now understood, macroeconomic policies do have a major impact on the access, use, and management of natural resources. 4.32 On structural adfusment. Four issues should be noted. First, the program proposed no actions that were directly relevant to managing natural resources at the macroeconomic level. Instead, most actions were related to monetary, financial, fiscal, and trade policies, with the aim of accelerating growth in its narrowest sense--by increasing GDP per capita. Second, the adjustment framework did not directly incorporate environmental concerns into macroeconomic policy. In fact, some price and trade policies may prove ineffective in the long run because natural resource management has been glossed over. So the adjustment operations should be carefully monitored for their effects on the allocation and use of natural resources such as land, water, forest, and vegetation. Third, given what has been stated in several macroeconomic and sector reports and their previous references about sources o growth, comparative advantage, and structural constraints, the adjustment program appears somewhat detached from the underlying constraints in Bolivia's economy. Last, the evaluation of the first operation completely ignored natural resource management issues and constraints (see World Bank 1984d). Instead, the underlying framework continued to be economic prices that appear to be far from the real opportunity cost to the Bolivian economy. IV In most insancs, mes had no impact on resource allocation because vested interests made sure they were not implemented. - 29 - CHAPTER 5: THE ROLE OF SECTOR WORK Overview 5.1 The earliest Bank sector report on Bolivia was written in 1972, five years after the first loan to Bolivia. Most of the sector reports--20 of 25--were written in the 1980s, although most Bank lending to Bolivia occurred in the 1970s (twenty-two credits or loans out of fifty-one). All seven of the agricultural sector reports, which are those most concerned with rural poverty, were written between 198& and 1992. Yet eight of eleven agricultural and rural development loans or credits to Bolivia were already in place in the 1970s, with the remaining three in the 1990s (this does not include two Emergency Social Fund credits, which had agricultural components). Of the five sector reports written in the 1970s (table 5.1), two dealt with the mining sector, which was considered the main engine of growth. 5.2 One overriding concern of sector work has been to demonstrate that the agriculture sector could make a major contribution to export diversification away from mining and hydrocarbon. Thus, sector reports identified and assessed the attempts at diversification in such cash crops as sugar, cotton, and livestock (see section on commercial farming below). An analysis of three decades shows shifts in supposed comparative advantage of export commodities and how the government promoted these, although the analytic foundation in assessing comparative advantage was weak. At first, the Bank recommended subsidies on inputs--such as fertilizers, pesticides, and agricultural services--and additional incentives on exports. The main arguments to justify those distortions were basically related to "infant industry" and, in some ways, to equity concerns. The infant-industry argument was built on the need to make Bolivia a viable economy, expand its markets and help the country to adopt better and more effective technologies. The second argument was related to equity compared with other countries--to help Bolivia to have a larger share of international markets--and domestically, as severial groups would benefit from the diversion of economic activity highly concentrated in the mineral sector. 5.3 The review of sector work shows that the Bank was indeed aware of the nature and magnitude of several resource management issues, although the Bank was not able to integrate them into sector strategy formulation. The ESW discussions suggest that the Bank was also willing to accept a level of resource depletion as a trade-off for the promotion of economic diversification and export promotion. Without a comprehensive resource assessment of Bolivia's renewable resources, the underlying premise was that those res3urces were abundant. Only very recently have the Bank and the government attempted to put together a countrywide natural resource management strategy. A draft National Environmental Action Plan is now available (see annex C). A final draft is under preparation. Poverty and Resource Use 5.4 The Altiplano. ESW has followed an implicit "life-cycle" approach for the Altiplano's future. The first part has been to encourage massive migration to the Lowlands. The - 30 - Table 5.1: BOLIVIA SECTOR REPORTS Sector Year Title Reprt No. Agriculture 1980 Agriculture Sector Survey 3029 1984 Pricing & Investment Policies in Agricuiture 5198 1987 Agriculture Sector Review 6852 1988 Regional Development Strategy for the 7158 Eastern Lowlands 1989 Agricultural Asst. Strategy Brief 8020 1990 Poverty Report: Agriculture 9181 1992 Agricultural Sector Review 9882 Environment 1989 Environmental Issues Paper 8063 Mining 1972 Diagnosis and Recommended Development PI-14a Program 1976 Present Position and Prospects of the Mining 1251 and Metallurgical Sector Energy 1983 Issues and Options in the Energy Sector 4213 1987 Basis for Formulation of a Bolivian Energy 9273 Plan Transportation 1977 Transport Sector Report 1598 1982 Intermodal Transport: A Regional Survey 3310 1983 Transport Sector Memorandum 4530 1984 Transport Sector Memorandum 5034 1987 Transport Sector Strategy Paper 6882 Water Supply 1975 Water Supply and Sanitation Sector Study 712 1990 Strategy for the Water Supply and Sanitation 8483 Sector Population, Health 1987 Population, Health and Nutrition Sector 6965 Memorandum Telecommunications 1977 Sector Memorandum 1261 Finance 1988 Banking Sector Study Revised Edition 6765 Public Expenditures 1988 A Review of the Public Investment Program 7248 and Financing Requirements, 1987-1990 1989 Public Sector Expenditure Review with a 7746 Speciai Emphasis on the Social Sectors - 31 - main belief--the carrying capacity argument--was that any population reduction in the Altiplano would relieve the stress on the resources in the Highlands. The second part would result from relieved pressure on land and other natural resources--resource productivity, output per unit of land, would be expected to increase in the Highlands. The third part was to be a concerted strategy of intensification of land use--a stage that has not been reached yet. 5.5 Because poverty has been closely linked to inadequate land tenure arrangements, discussion of land tenure problems pervades sector work. The land reform of 1952 is seen as exacerbating the resource depletion problem. Although the redistribution of land--based mainly on equity concerns--was also viewed as a contributing factor to agricultural productivity, constraints placed by both the Agrarian Reform Law and the growth in population contributed to a new land tenure pattern, but still with environmental problems: the minifundia (World Bank 1980a). The Agrarian Reform Law forbade the sale of land or the use of land as collateral for credit. In addition, obtaining formal title to the land is a lengthy and tedious process. Policy- makers believed that tenure problems are a primary reason for reduced investment in the land. 5.6 ESW has considered the lack of investment in the resource base a primary cause of continued poverty and resource degradation. Altiplano farmers practice subsistence agriculture based on rainfed crops. Yields are low, relying on organic fertilizer and long periods of fallow-- of sometimes three or more years. Demographic pressures are reducing fallow periods and endangering an already precarious ecological equilibrium established through centuries of crop rotations, ESW believes chemical fertilizers could intensify production, but an inability to obtain financial capital for inputs stymies this initiative (World Bank 1990d, 12-13). However, there have been ESW concerns that chemical fertilizers in some areas could lead over the long term to greater pollution cf water resources. These concerns have been raised only very recently. Changes in water quality have become of greater concern now because of the increasing pollution from mining and human wastes of both surface and groundwater sources. The pollution problem is compounded by a growing competition for scarce water resources between agricultural, mining, and human activities. Added to the problem is the destruction of watersheds through overgrazing and an almost complete absence of vegetative cover. The subsequent erosion has caused serious siltation downstream.1J3 5.7 To deal with the above-mentioned problems, ESW has continually recommended improved research into farming systems, an increased use of improved seeds, better use of farm inputs, and increased availability of credit. In addition, the ESW analysis has recognized the difficulties in changing traditional production patterns--modern techniques might expose the small farmers to unacceptable risks--and the fact that any policy designed to change the traditional patterns will require time (World Bank 1984c, 2).14/ Not until recently had the role of human and cultural capital constraints in the Highlands been acknowledged. 5.8 The Lowlands. In contrast to the Altiplano, the Lowlands have been viewed-- particularly in the 1970s--with essentially limitless potential because of the vast amount of unexploited resources. Despite a greater understanding of the resource degradation facing the Lowlands, sector work has continued to be biased toward the potential for commercial agricultural ly Discussion of watershed degradation comes from the 1990 Poverty Report (1990d) and the 1989 Environmental Issues Paper (19891). 14/ This report (1984c) disputes the myth that farmers' resistance to change is cultural, maintaining instead that the Altiplano farmer actually reacts to environmental and ecunomic conditions in an economically rational way. - 32 - production, especially production of nontraditional exports. This becomes both the focus of and the problem with the Bank's approach to the Lowlands. ESW has difficulty reconciling the nature of production in the Lowlands, recognizing ecological degradation and the poverty engendered for smallholders that result from settlement, but almost acceding to the excessive erosion and deforestation caused by commercial farming for exports. 5.9 Recent ESW, however, has become increasingly concerned with the degradation occurring in the Lowlands. The area's poten,ial agriculturel production has been tempered with a growing concern about sustainability. Discussions about expansion of the agricultural frontier are now combined with statements for comprehensive land-use assessment studies. The Bank has struggled with this apparently contradictory policy of sanctioning a certain amount of degradation, while pushing for sustainable methods. 5.10 ESW has encouraged the Bolivian concept and approaches to settlement schemes, although the Bank never directly financed them. However, by the time of the first agricultural sector report in 1980, the Bank worried about the loss of fertility and soil erosion caused by slash- and-burn agricultural practices of the settlers. By the mid-1980s, ESW was less inclined toward new settlements, but more toward establishing the colonizers into stable farming communities. Unfortunately, this required sizable resources--that were not available to develop institutions and expand infrastructure. As with the Altiplano, ESW bemoaned the inadequate infrastructure, inadequate technical services, insufficient support services, such as education and health, inadequate selection of sites, and a failure to train settlers in appropriate production systems (World Bank 1987a, 31). The settlers who moved to the Lowlands brought their traditional agricultural practices with them, essentially transferring poverty from one region to another. 5.11 A noticeable difference in colonization patterns observed by early sector work was in those settlements run by the Japanese and Mennonites (see chapter 7). These were perceived to be more successful than other government-sponsored or spontaneous settlements. The distinguishing features were that these settlements were more able to transfer traditional social and cultural institutions, but also incorporate modern farming systems. These groups also had better research on appropriate farming systems and techniques and had access to monetary resources unavailable to other settlers (World Bank 1980a, 14-15). However, more recent ESW has begun to question how well these settlers manage their resources. Commercial Farming and the Environment 5.12 ESW has also seen the expansion of commercial agriculture into the Lowlands as a potential source of mismanagement of natural resources. But, driven by the view that agricultural exports must be increased in the short term and the reality that such exports could only be produced in the Lowlands, the Bank saw little alternative to continuing the process. On balance, the programs of land clearing, preferential credit (for sugar, cotton, and cattle), road building, and extension in the Lowlands were considered quite successful. In addition, manipulation of these implicit and explicit subsidies by pressure groups was recognized. And the Bank did notice that the preferential credit allowed greater land clearing on lands unsuitable for cultivation and that the roads brought more settlers from the Highlands (World Bank 19894). But the subsidies were implicitly sanctioned as a necessary condition for increased exports. 5.13 This implicit Bank consent is evident in the description of the main export commodities in Bolivia of the last forty years: cotton, sugar, soybeans, and livestock. Each commodity had its own resource management issues. - 33 - 5.14 Cotton. Through the early 1980s cotton was one of four main nontraditional export commodities along with sugarcane, coffee, and timber (World Bank 1984c, 34). This position changed quickly, with cotton producing only 50 percent of domestic demand by 1987. Early ESW favored cotton, because it was one of the few commercial crops that used relatively modern techniques, with a progressive producer lobby willing to experiment (World Bank 1980a). 5.15 Sector reports identified the difficulties faced by the commodity: the institutional framework and infrastructure were unable to handle the rapid increase in cotton production; yields were high, but so were costs; and farmers were not able to adjust production patterns accordingly because they were largely urban entrepreneurs attracted to the high potential profits (World Bank 1984c, 31). The largely short-term profit motives meant there was little commitment to working the land once the returns on the original investment diminished. Poor soil management of cotton-producing lands and of sugar-producing areas is believed to have created-- through erosion--the 200,000 ha of dunes outside the city of Santa Cruz. The 1992 Agricultural Sector Review, however, believes cotton production could still expand (World Bank 1992a). 5.16 Sugarcane. The Bank followed tb' sugar industry closely, given its export potential and its distorted institutional structure The most recent sector report refers to the sugar industry as a textbook example of a vert ly integrated cartel (World Bank 1992a, 45). ESW has long considered the sugar industry it-ificient from the standpoints of economics and resource use. The industry has strict control over pricing, area planted, quantity production quotas, and entry into the industry. Originally, these controls were not seen as a problem, as increased production of sugar served two purposes, both benefitting balance of payments: domestically produced sugar was an import substitute and a possible export. The commodity boom of the early 1970s gave further impetus to the growth of the sugar industry. The Santa Cruz area was seen as perfect for the industry because of favorable ecological conditions, cheap land and labor, and government support (World Bank 1984c, 50-51). 5.17 The end of the commodities boom did not end the controls over the industry; in fact, the power of the cartel grew as it protected an increasingly inefficient industry. The Bank disparaged the low productivity levels, the lack of incentives to improve quality, and the financial cost to the government. The industry was also considered wasteful in resource use: it was estimated that the same quantity of sugarcane could be obtained from half the land being used, releasing the remainder for other purposes (World Bank 1984c, 58). In addition, the mechanization of the industry without yield-enhancing inputs has contributed to the loss of fertility of the land. This has led to what is viewed as an economically and technically undesirable practice of monoculture (World Bank 1987a, 25). 5.18 Soybeans. Concern has been expressed in ESW that soybeans may become the new monoculture (World Bank 19890). The remarkable growth in exports of the soybean industry in the last decade has quieted the Bank, however. Soybeans were initially supported as an import substitute, to replace imported refined edible oils (World Bank 1980a, 38). They then became an important export crop as the world market expanded. The value of soybean exports has increased from about US$7 million in 1980 to roughly US$50 million in 1989-90. The cultivated area has expanded from about 5,000 ha in 1974 to around 170,000 ha in 1990 (World Bank 1992a, 45). 5.19 This rapid expansion has naturally raised several questions. The Environmental Issues Paper written on Bolivia in 1989 states that in 1988 alone, between 15,000 and 20,000 ha of forest land were cleared in the Department of Santa Cruz for soya production, and the -34 - government's ten-year strategy projects that cultivated area will increase to 300,000 ha (World Bank 19890). The report does acknowledge that soya has nitrogen-fixing capabilities that are more beneficial than most commercial crops. This does not negate the fact that the profitability of the crop will result in greater land clearing. The report recommends that credit be conditional on clearing only land that is suitable for production (World Bank 19891, 5). 5.20 These multiple concerns are addressed in the Eastern Lowlands Project, which encourages the expansion of soybeans but, at the same time, promotes sustainable agriculture and natural resource planning and management. The concern in the Eastern Lowlands is with the amount of land already cleared and apparently abandoned. In Santa Cruz, one 100,000-h2ctare area previously cleared for mechanized cultivation is now in various stages of reversion to secondary forest. About 50 percent of this land had been abandoned because of fertility, drainage and soil-compaction problems. These are the types of problems that cause hesitation in ESW recommendations for expansion of agricultural production. The apprehension over the danger to the resource base has grown in recent years with recognition of the need for plans to improve management of natural resources, mitigate negative environmental effects, and make agricultural deve'opment sustainable. At the same time, a stated objective of the Bank is the rational and environmentally sound expansion of production of agricultural export and import substitution commodities--to obtain new sources of foreign exchange (World Bank 1990c, 12). 5.21 Livestock. Livestock development has had a considerable effect on resource use in the Lowlands. This is a sector where the Bank has been relatively confident in its knowledge. By the time of the first agricultural sector report, the Bank had implemented four livestock projects. Early sector work believed Bolivia had considerable potential for expansion of its beef-cattle industry. ESW stated that the Department of Beni had about 9 million ha of natural grasslands and an additional 10 million ha of forests which, with appropriate investment, could also be used for livestock production systems (World Bank 1980a, 25). 5.22 Early sector work saw significant potential for improved beef cattle production through better forage conservation and introduction of improved breeding stock (World Bank 1980a, 32). The Bank viewed cattle farmers as progressive and willing to experiment with new techniques. The Bank was not happy, however, with constant government intervention in the sector--through banning of exports and an overvalued exchange rate--which was seen as reason for the unwillingness of producers to invest appropriately in the sector (World Bank 1984c, 12). 5.23 By the mid-1980s, ESW was less concerned with the cattle industry. More discussion was about how commercial farmers were converting large abandoned crop areas into pastures. It was suggested that this was why the growth in agricultural production has not kept pace with land clearing. The area under pasture was increasing more rapidly than were livestock population and production--largely because of a lower tax rate for cattle ranches than for agricultural production (World Bank 1988k, 27). Issues in Forestry Development 5.24 Until recently forestry issues were discussed solely in the context of agricultural development in the Eastern Lowlands. The main concern was increasing soil erosion as a result of deforestation caused by slash-and-burn agriculture. This resulted in rapid degradation of the soils in fragile tropical forests. Because many of the farmers were given large tracts of land (40- hectare plots), it was observed that once the productivity of the original cleared 2 to 3 ha gave out, the farmers simply cleared more land. Productivity, therefore, essentially stayed the same. - 35 - No incentives were available to encourage soil conservation and thus prevent further deforestation. 5.25 Commercial forestry. Although more than 50 percent of the country's territory is covered by forest (51 million ha), the sector's importance in terms of its contribution to GDP and employment is modest--less than 2.5 percent in 1990 (World Bank 1992c, 1). This has been seen to be a consequence of low domestic demand and a lack of competitiveness of Bolivian products in the world markets. High transport costs have meant it only pays to export a few products with a high value/weight ratio, such as mahogany, oak, and Brazil nuts. Although sector work recognizes Bolivia's apparent comparative advantage in exports of primary and semiprocessed products, developments in the processed-wood industry have been geared to the domestic market. 5.26 The major concern has been that current logging or exploitation patterns disregard the future availability--or lack thereof--of the timber. But because there are almost no comprehensive forest inventories, or studies on regeneration capacity on any of the most-exploited species, it has been impossible to assess the extent to which current practices are endangering future supplies. Regardless, there is apparently a wide disparity in how the future availability of these resources is valued by society and the private sector. It has been suggested that a contributing factor to the gap between the private and social values has been government-induced uncertainty about tenure--through the granting of short-term cutting rights and pervasive overlapping rights to exploit forest areas for alternative uses. The allocation of cutting rights-- granted free of charge through nontransparent administrative procedures--has been noncompet- itive and has benefitted few. In addition, several market interventions that are part of the existing Forestry Law have translated into effective barriers to entry. Examples include the ban on log exports and the "minimum"--unspecified--capital requirements necessary for access to a concession. This has been seen to restrict entry, excluding small- and medium-size firms, logger's cooperatives, indigenous groups, and the like. A result of this has been the operation of these groups in a growing illegal and uncontrolled informal sector (World Bank 1992c, 2-3). 5.27 Fortunately, recent reports suggest that the environmental effects of logging activities have been relatively small. The relative effects of selective logging practices on deforestation have been minimal. In terms of wildlife and biodiversity, the direct impact of commercial activities is also believed to be low (World Bank 1992c, 2). Still, ESW believes that policies to protect biodiversity need to be complemented by a forestry policy that also enhances protection in the nonprotected areas. To some extent, the same policies that promote added efficiency and sustainability by limiting access to the forest are key instruments for biodiversity protection. 5.28 ESW has stated that the forest industry develop largely beyond effective government control. The industry has not been subject to prudent regulations or incentives that bridge the gap between the private forester's interest and the public interest. In principle, the sector--including wildlife and protected areas--has been regulated by provisions in the 1974 Forestry Law, which are monitored or executed by the Center for Forestry Development (CDF). The agency, however, has consistently been viewed as ineffective. - 36 - 5.29 The incentive structure.1&/ ESW has explicitly recognized the importance that an adequate incentive structure has to attain sustainable development objectives in the forestry sector. This includes providing users with a reasonable return on logging of public lands. Measures designed to increase public sector revenues can improve the ways that forest areas are used over the long term. Low fees and tenure insecurity c,irrently promote inefficient exploitation of resources. Care must be taken, however, about the design of incentives. For example, high concession fees could reduce the overall amount of land demanded for concessions, but would not affect logging practices within concessions. Nevertheless, the current system of forest fees and charges in Bolivia fails to collect significant revenue because tax rates are low and widely evaded. The inequities associated with tax evasion are seen in the economic rent that is being captured by the industry and its regulators, rather than by the public. One estimate indicates that the stumpage value of the trees felled for wood production annually in the Santa Cruz Department may reach US$9 million. By contrast, the combined annual revenue for stumpage-value-based taxes oriented to capturing rent (derechos de monte and regalias) is roughly US$1.2 million. 5.30 Recommended reforms. ESW suggests that policies to promote sustainability be based on four areas: the awarding of concessions through competitive bidding (which should enhance security of tenure); improved land-use allocation policies to protect certain areas; limits on extraction rates through area control; and the introduction of forestry management plans. A competitive allocation process would eliminate the need to assess the current stumpage-value- based taxes, thus permitting the expansion of activities of the CFD, which relies on these taxes for operations. Other suggestions include a forest depletion levy on land that is denuded or otherwise degraded within a concession, thereby giving the logger an incentive to maintain post- harvest forests. This levy would not raise revenues but likely would discourage depletion. A final recommendation is an adequate roads policy intended to phase in the development of new road infrastructure at a rate consistent with maintaining good land-use practices (World Bank 1992a, 1992c). 5.31 The government is now en- Ad in the difficult task of establishing a set of incentives, regulations, and enforcement n,. hanisms to guide sustainable and equitable development. A major problem, however, is that the country does not have a forestry policy or a set of objectives on which to base laws or regulations that will support such goals. Congress believes the 1974 Forestry Law is still a good guide, leading to legislation that reflects a lack of understanding of the economic forces that drive sector behavior. The proposed regulatory or enforcement approach puts all responsibilities on the extremely weak government apparatus-- without consideration of enforcement costs or capacities or regard for the potential role of the private sector in helping the Government achieve its objectives (which are undefined) (World Bank 1992c, 6). Transport Corridors and Resource Use 5.32 Transportation has always been seen as a key sector for the acceleration of growth. Sector work often stated that high transport and marketing costs were the main constraints to the development of commercial agriculture. ESW has identified four deficiencies: poor links between urban areas, poor links for the export trade, a lack of domestic links for rural L5/ Discussions on the incentive structure come from the 1992 Agriculture Sector Review (1992a) and the 1992 Back-to-Office Review on the Forestry Sector (1992c). - 37- communities, a lack of access to vast areas of the country, barring the potential exploitation of "abundant" natural resources. The connections between transport infrastructure and international trade were well understood by the Bank and the government (see chapter 7 for more details). These deficiencies were also seen as inhibiting the improvement of the balance between population and natural resources--the resources' carrying capacity (World Bank 1977k, 1984e, 19874). 5.33 The Bank also justified allocations into a road network system based on the potential for alleviating poverty. The roads built in the Lowlands were intended to open up the agricultural frontier to settlers from the Highlands, and the roads in the Altiplano would increase access to markets. With little modification over time, the Bank has recommended four areas for investment: maintenance and rehabilitation of the existing road and rail network, integration of the three main population centers through improved roads, upgrading the two export corridors to the Atlantic and Pacific oceans, and limited construction of penetration roads into areas of high agricultural potential in the Lowlands. Because of major institutional deficiencies the Bank is now consistently opposing unplanned further road construction when so many of the existing roads are in disrepair (World Bank 1977k, 1984e, 19870). 5.34 The Bank mainly has supported an upgrading of the export corridors, consistent with its objective of improving exports. ESW states that the most promising products for future exports (aside from natural gas, which will move by pipeline) are soya and soya cake (produced in the Eastern Lowlands), wood and wood products (grown in the Northern Lowlands), minerals (mined in the Altiplano), meat (from cattle raised in the Lowlands), and other food and agricultural products (grown in the Valleys). The principal markets for these exports are expected to be Europe and the US (one-quarter each), Argentina and Asia (about one-sixth each), and 3raLil, Chile and Peru (the remaining one-sixth, combined) (World Bank 1988e, i).16] 5.35 Soya exports depend on low-cost transport if they are to compete with soya grown i,i Argentina, Brazil, and Paraguay. The road network is so poor that the Bank has estimated that more than 87 percent of soybean flour was exported by train. For soybean exports the current railway transport rates from Santa Cruz to the exporting ports of Santos or Paranagua, Brazil-- about US$46 per ton and US$49 per ton, respectively--have been estimated to represent more than 30 percent of the FOB value of exports. This is seen as a key future constraint: the (nominal) international price of soybeans prices is expected to range between US$285 and US$300 per ton, and therefore the international inflation-adjusted price is expected to decrease, albeit slightly, from its current level. For this reason, the Bank believes that efficiency gains in transportation could make up for this decline and could ensure the continued profitability of the crop (World Bank 1992a, 50). 5.36 The ports on either ocean are each more than 2,000 kilometers away. Although speed and reliability of transport were always considered important, sector work noticed that none of the current land routes is quick or reliable. The Bank has, therefore, decided that the best investment in Bolivia would be on upgrading the export corridors, primarily the rail routes, which are seen as more economically viable than road investment. The Bank has also recognized the ecological damage that could be done through the construction of more roads. It is believed that the plans for the Pacific corridor will not do much ecological damage (World Bank 1989c). There is concern, however, about the routes to the Atlantic, especially with any construction of a L6/ Much of the information on the export corridors comes from 1988e and 1989c. - 38 - pipeline to Brazil. The proposed route would go through virgin territory which would be changed substantially by an influx of settlers during and after construction (World Bank 19891). Land Tenure and Use 5.37 Despite important land tenure issues affecting the management of natural resources in the Lowlands, this region was not included in the Land Reform Act. This has complicated settlement schemes and commercial agriculture. Conflicts have increased in recent years over who owns the land, instances of double titles, a lack of titles, and land speculation. Early sector work believed that if land titling was adequate, it could create more stable communities, especially in migrant settlements. Over time, the Bank recognized that the insecurity of land tenure created serious environmental problems in the Eastern Lowlands. Land speculators were clearing land in the hopes of future profits. Insecure tenure in forestry concession areas prevented sustainable resource management. In addition, the Bank realized that little was known about land-use capacity in the Lowlands: ecological data began to show that parts of the Lowlands should not be used for agriculture at all. Recommendations called for land use studies to be followed by development plans that would protect fragile areas from encroachment and provide for careful economic development in other areas. Unable to use market forces to determine land use because of the Agrarian Reform Act, the government must rely on zoning. But the government lacks the necessary knowledge of land capability or the appropriate enforcement measures, further complicating the land a situation. 5.38 Land use has also been affected by the location of the transportation system. The Bolivian government has not built roads with an eye to agricultural development. Roads have been built to connect the various regions of the country, but also to satisfy special interest groups, such as forestry and cattle interests in the Eastern Lowlands--without recouping the expenses. In effect, the forestry and cattle industries have access to land at virtually no cost. This results in uncontrolled logging and grazing in fragile areas, followed by erosion and fertility decline. Recent sector work calls for improved land taxation and capital gains taxes to be applied to users of the Eastern Lowlands as a way to control the de% elopment and recover public expenditures. The Bank hopes that by introducing these taxation policies the government could gain greater control over the tropical Lowlands. Irrigation Potential 5.39 Early sector work advised against large-scale irrigation investments. Bolivia did not have the institutional capacity for developing the irrigation sector and much of the investment was ad hoc. In this context, the Bank made two important statements: that other agricultural investment in areas with appropriate rainfall would likely lead to better economic returns than would irrigation investment, and that any investment in irrigation would be best spent on rehabilitation of existing schemes and construction of small-scale irrigation in areas with good potential--if the users participate in operations and maintenance and there are better institutional capacities. 5.40 There has been an increased interest in irrigation by the Bank. The 1992 Agricultural Sector Report present a thorough discussion of the potential returns from investments in public or private small-scale irrigation. The schemes already in place have operated successfully because of effective community participation. In the Highlands, irrigation is sought to stabilize food production. The Altiplano is susceptible to long dry periods and droughts which could be mitigated through irrigation. Irrigation in the valleys has even greater potential as - 39 - it would allow double cropping and harvest flexibility. Sector work has stated that irrigation investment is worthwhile in the Lowlands because of favorable weather and land conditions. ESW also notes the importance of hydrologic and soil studies in all regions (World Bank 1992a, 19891, 1990d). The Evolution of Sector Work 5.41 Throughout the last three decades the Bank has maintained a consistent stance that in dealing with the priority issues of balance of payments and fiscal deficits, production for export must diversify and expand from natural resources. This was seen as necessary to offset the poor export performance of the mining sector and the weakening of the hydrocarbons sector. The list of promising renewable commodities varied somewhat with market conditions, but stressed sugar, cotton, oil seeds, coffee, timber, beef, livestock, and sheep and alpaca wool. This stance dovetailed with a second less-explicit recommendation that the government continue to promote migration from the Highlands to the Lowlands, albeit taking into account the negative aspects apparent from the early years of resource degradation, wasteful use of resources, continued inequities, and unnecessary social costs. 5.42 The recommendations stemming from the Bank's environmental missions in the late 1980s were wide-ranging. One was that, in the Lowlands, land use planning should be undertaken, another that the land tax should be applied and modified as necessary to become an effective instrument of management. In addition, the capacity to apply the existing Forestry Law should be strengthened, and an operation program for the protection of biodiversity through incentives and regulations should be developed. And research should be focused on the needs of agriculture in a specific zone. Steps also should be taken to counteract pollution of water resources while preparing plans for watershed management. 5.43 Overall, the sector work has improved in its discussion and recognition of the resource management problems facing Bolivia. Whereas the first agricultural sector report does not even acknowledge the use of land in the Lowlands by indigenous people nor discuss the forestry sector, both issues are discussed in the most recent report. The weakness in the early reports is more one of lack of knowledge of the country than willful neglect. As the issues become known, they are discussed. The main difference in the reports is the constant belief in the early work that change in government macroeconomic policies will be the necessary spur to economic development. Once the changes are accomplished, however, the sector work recognizes the weakness in institutions and the stagnant nature of human capital. In addition, the most recent reports are more forthright in recommending the use of economic policies to affect resource conservation. Before the economic reforms, sector work bemoaned the lack of soil conservation and forestry management, but the proposed solutions were technical rather than policy-oriented. The most recent report, as mentioned, also more forcefully argues that poverty alleviation in the Highlands needs to be dealt with separately from expansion of the commercial sector for exports. - 41 - CHAPTER 6: BANK PROJECTS AND EXTERNAL AID 6.1 From the 51 projects approved by the Bank between 1965 and 1992, five lines of lending may be identified as directly related to resource management: four livestock projects between 1967 and 1975;17/ four integrated rural development projects between 1975 and 1979; five urban services projects between 1976 and 1991;18/ two projects in credit, research, and technical assistance for agriculture between 1990 and 1992; and three hydroelectric power projects. A sixth line may be considered to have been initiated in Lowland resource management with the 1990 Eastern Lowlands Project. Other lines of lending with indirect implications for resource management are five mining projects between 1974 and 1989; six tnergy (gas, oil, and thermalelectric power) projects between 1969 and 1987;19 two highway projects, plus support to transport sector planning, in 1968-89; and seven public sector management projects between 1980 and 1991, including technical assistance. The remaining 12 projects--including the 1989 Export Corridors project--in industry, education, health, nutrition, railways, and aviation appear to have been only marginally related to renewable resource use. World Bank loans and credits amounted to US$734 million (see table 6.1 and figure 6.1).2J0 6.2 Livestock. In the late 1960s the Bank embarked on a program to develop a major export beef industry based on the under-used natural pastures of the Beni Plains. The first two projects (1967 and 1969) cost US$3 million for 250 cattle ranchers in the Beni. Under the third project (1971) the area for beef development was expanded to incorporate 40 ranches (average size 4,000 ha) in the Piedmont requing forest clearing and pasture establishment; 210 cattle ranches in the savannah were also included. The project also contained an import-substitution component to expand mutton and wool production in the Altiplano on 135 cooperative farms and 17 medium-size individually owned farms, with a total of about 3,000 beneficiary families. The fouth project (1975) was oriented to finance expansion of production of cattle, sheep and crops in selected areas of the Lowlands and uplands at a cost of US$11 million (see World Bank 1973b). 6.3 The audit reports of completed operations in the livestock sector provide virtually no insights into the effects of the projects on renewable resource management. One can assume that considerable land clearing was necessary to reach 4,000 ha, the size of the average ranch. A land titling provision was a condition of loan approval and would suggest that the project was to employ intensive rather than extensive land use. 17/ This includes one agricultural credit project in 1975. J/ This includeb three water supply and/or sewerage projecL. V2/ This includes one gas pipeline project which the Bank considers a transport project. LO/ The total is defined here as the amount disbursed as of June 1992, and it includes any cancellations from project completed earlier. →－一一．•■■■•■■■■•．■．.. ,’鸚遭－＿莖螂望一＿___＿一一一一旦勉遝蠱壘一一一一一一一－一一一－－一 仔儲一Ug開‘《開以黝戶州」’闐S細•中叫叼戶紹 fO一0&d開么峽排黝戶州」悶解吧細目斗饑唱 戶牌•觔“必劇煙 才計亂，L，必開亂做萬亂．必I&C紼瞌綢神以。州戶紹 r一O0’弱馴細斗細誕亂．C》”必梯刈開開以冷州 間細．•網咖司 亂勻一一66亂似變才必》予尼戶闖劇吃 以螂糾閑‘卜戶〞擊州掬e 仔19’。一開。細望寶黝館即么州”叫憚細 『•L&6頗細一戲·d&dO州訕閑騙知州’鬨日 F。一。‘必開。楓狗‘’黝鄴矗州’叫悶陣州 ．神開戶率勾闐人 嘗讓一以頗婦鳥切神r黝‘編口‘神頗六”d煎 頃狗編 你，0鸞0開斗槍亂常必）罕間叫絮”唱么平馴 n LC FL配6亂幼緘叮黝戶頗」’向細’啊門下N 夠了9妒」鳥嗡帕力》彬”C斗荊劉 魚學馴 仔亂斗·9取開日斗《屹斗才必）&A闖訓」’啊翅 6’亂0斗6·闖亂飼e斗他彷亂‘必）‘必’卜．戶吃‘叫 •馴頗權，’開p悶圈間戶司 O才0’闐伐田斗頃寫必）戶澗」絮開〝綢戶問馮 i,0’戈）唱亂h閔•必》’編口硼闕馴澗 •憚織4，團甲叩祕州 守•亂0·9亂綢6亂他‘L亂·必》‘戶細州開勺啊亂•柏間，『A 中•亂O’排偶唱斗懺久叮必》‘加」叩，&C 超緬州」 9·99&gL開亂伯亂9亂’必》’齋，荊唱開吃月叨。d O奮0&9申」亂楓計叮必》開目。d啊叫日p率扯 仔9會·9馴細亂嘛私0’黝劇闢d馴叩日戶閱劍吃 0&.0&9g開亂切以幼．C）月目必d Od伯 l鸞亂斗Z亂g開‘《亂馴沁．心》細〝。d啊訕」 勵州M 0&O0&0e夜州奉似認才必》’．啊州戶偽口併必 『•亂O’勰開日亂切亂戈．JOI勵啊叩月O卯以日 你個0&．以戲慟贓方必》A以磚叫 紼紹劉糾么 L鸞0·彌弘66亂（L9亂了C)&dns網•M馴幣fO糾州 0&.O&．價吧斗慚悶勵．黝‘頗叩，’自吃月神M訪心‘S 州細開娥開•，你岫”月•閉 中09鸞才馴幼斗勿粤才d’繡O紼遜唱勰輪 .’鳥0’取丰‘e6斗協斗7d’鴣口‘梯論么’勻 『計0’館復吧亂細斗亂才必》啊，月州〞】．調購柑 O鸞0’斗o&C日d6斗如間洶·黝”併卹付神納陰劉叩 C個o&．•鑰擊切寫加．黝’繡O響m審馴1 合·L卜，O9·L伯屹日卜權亂9卹’C）婦”必’黝 馴•『O『．亂牌奉《斗馴叮黝闖吧叩劇n戶州亂 方l『亂O喊61《‘L亂0’黝’觸O’犢“j妒月唱戶紹 俗鸞『O，才乙開亂怔O斗0’砌’編O和網網叫1戶開唱 ______’卻戶〞”，吧雙吧扯 兩啄柑j爾戶祕畸一州啊必內•嘛一•“•N州扣細網馮“唱 一嘛兩申刁一一 開馴謝州寫論心啊啊”勺 開唱弱亂魚州戶伯併訕戶∥n舉騰日卻。M：亂’9卹調么 一乙吵－ - 43 - Table 6. 1: (continued) World Bank Lending to Bolivia, 196r>92 LO~ An~ W~--- So~ Pr~ Närm yoff A~ C~*~ Ag~ & nod dov. k~ R" Dev. (Ln. 1211) 1978 9.5 3.1 &4 Una Lem Dov. (Ln, 1510) 1978 9.0 5.0 4.0 & W~ S~ & 9%. (Ln.1324) 1977 11.5 8.8 4.7 Tw~ C~ P~ (Ln-06^ 1970 23.3 23.3 P&May (Ln. 1121) 1975 32.0 3.3 2L7 Avk~ Dov. I ^1423ý 19" 25.0 1.4 2" Thircl ~ (Ln.1422) 1977 35.0 0.0 3&0 H~ ~ (Ln.1587) 1978 25.0 0.0 au P*~ Fo~ P*~ (Ln. 1238) 1978 25.0 0.0 2LO Educ~ Educ. & Vac. Train. (Ln. 1404) 1977 15.0 4,5 10.5 Dovmo~ & 8~ h~ Mhiry (Ln. 1 29q 1978 10.0 0,1 9.9 Sm. 6~ Min. Dev. (län. 1331) 1977 12.0 0.2 11.8 Dov. (Ln.14" 1978 17.0 0.1 18.9 SCMILM 4. kw wik F~ SAL (LnA 665l 19w 50.0 50.0 Loan Total 299.25 274.7 GrwW Totid 1094.1 734.2 -dub~mot~INZ So~ World Ser* Firm~ Dam b~. Fig~ 6. 1: ToW World to El~ M5-92 Aqftdlli~ Ciff. (1 I.ON Teak -44- 6.4 The last two projects, the Bolivia Third Livestock Project and the First Agricultural Credit Project, expanded the scope of the initial projects through lending to less privileged regions and the rural poor. These projects also included an important institution- building component to remedy the main problems that had been identified at the completion of the first two projects: inadequate meat pricing and marketing and the deteriorating financial situation and poor management of BAB (see table 6.2). The results detailed in the Audit Report point to both success and failure. On the positive side, although the original appraisal expected returns of 18 percent for the Third Livestock Project and 22 percent for the First Agricultural Credit Project, levels achieved were somewhat lower--at 10 and 15 percent. The First Agricultural Credit Project succeeded in increasing lending to less privileged regions and increased smallholder participation through the acceptance of chattel mortgages in place of land titles, but was less successful in achieving its equity objectives--the total number of beneficiaries proved to be much lower than expected. On the more negative side, the institution-building objective of the two projects fell far short of expectations. Very little progress was achieved getting commercial banks involved in agricultural lending or reforming agricultural credit policy. 6.5 Overall, there was very little to show in productivity or efficiency. Exports did not materialize, nor did the quantity or quality of the Beni cattle improve appreciably. The same might be said for the sheep flock on the Altiplano. Resource degradation was probably nil, except on the forty piedmont ranches where deforestation may have had negative results. Because there are 13 million ha of under-used native pastures in the Beni and Pando and 7 million to 8 million sheep on the Altiplano, the Bank would appear to have struck a rich vein to explore. In fact, the fourth project was closed in 1979 and nothing further has been mentioned on the Beni beef potential or sheep in the Altiplano. 6.6 Integrated rural development. Between 1976 and 1987 the Bank supported three projects in the Altiplano through four loan operations, with a total cost of US$32 million, and 13,000 direct and 9,000 indirect beneficiaries on about 700,000 ha. The projects were seen as consistent with government strategy to improve the welfare of the rural poor and were considered "the basis for a long-range program to develop the Altiplano (World Bank 1977d, iii)." 6.7 The Ingavi project was based on the premise that, with improved seeds and breeding stock (sheep and dairy cattle), fertilizers, mechanization, and supplementary irrigation, yields could be more than doubled with economic rates of return (ERRs) of about 15 to 20 percent (World Bank 1976j). The Ulla Ulla project was based on three premises. The first was that, with improved animal husbandry and range management, carrying capacity for alpaca could be increased by 25 percent and the production of fiber expanded 250 percent (World Bank 1977d). The second was that, with improved management and introduction of dehairing technology, llama-carrying capacity could be doubled and the production of llama fiber increased 20 times. The third assumption: with technical assistance and credit, handicraft production could be increased 150 percent. The overall ERR was placed at about 25 to 30 percent. In addition, the project included a component for conservation and development of vicuna as a first step in evolving a systematic management program for income generation throughout the Altiplano. The premise underlying Omasuyos - Los Andes were similar to those applying to Ingavi: cropping intensity could be increased 10 to 20 percent and yields doubled to give an ERR of 36 percent (World Bank 1979d). - 45 - Tble 6.2: Wodd Bank Landing to Bolivia, Completed Projcts, 1965-92 Toal Report Rpot amumt Canu"atin Approval Ckouän# ca Secor OED ID number t Proct name Rat (S min) (milions) dat datt (S millon) Agriculture 0107 W - 'PAR Beal Lath. Div. S 2. 0.01 1967 1972 4.0 o171 0537 PAR 2nd eal LatL Dov. 8 1.4 0.00 1969 1974 2.3 C0261 3996 PAR 'l~iad Lva& Dev. S 61 0.17 1971 1980 15.9 561 3996 PAR Agreiduura l 8 7.5 0.06 1975 1960 11.3 G933 7574 PAR OmUy Les Ad U 3.0 1.01 1979 1986 5.2 Public utiliti Co4 8713 PCR S. Cru Water Supply S 9.0 0.00 1979 196 20.4 Transport C0346 3261 PAR Ra~uy1 S 8, 0.00 1972 1976 15.9 Energy Co433 2733 PAR ENDE Pow 3 S 6.0 0.00 1973 1977 9.7 M148 14% PAR ENDE Pomw 2 s 7.4 0.00 1969 1975 11. CS025 8127 PcR Gus and oEg. 16A 0.00 1980 1964 53M DevL fia. redit G55 5655 PAR Mii Credit s 6.2 0.00 1974 1961 66.3 (940 89 PCR Natl MiA. ExpL. Pund U 7.5 3.66 1979 1967 14.5 Educ~tion C1829 8449 PAR Emergecy Smc. Fund 10. 0.00 1917 1969 53.1 Total Report Report amount Can, Uation Approval Cloing cost Sector OED ID number & Proect name Rati S millions) million) dat date (S millionm) Aguicutue L1211 7574 PAR Ingevi Rural Dev. U 9.5 3.07 1976 1984 .4 .1518 7574 PAR Ulla Ulla Dev. U 18 5.01 1978 1986 18 Public ut~ities L1324 6936 PCR Watr Sup.& Sew. U 11.5 6.78 1976 1985 13.0 Tranepout Lo635 0593 PAR Gas Pipeline S 233 0.00 1969 1972 57.3 L1121 3268 PAR Raway 2 S 320 3.30 1975 1982 51.1 L1422 6109 PCR Raway 3 U 35. 0.00 1977 1964 59.5 L1423 5714 PCR Aviation Dev. U 254 1.36 1977 1985 301 LISV 8673 PCR Highway Main. u 25. 0.01 1978 1966 31.6 Energy L1238 3715 PAR ENDE Power 4 s 25. 0.00 1976 1980 36.2 Devl. li. ardit L1290 5655 PAR Baco InduL. S.A. S 10.0 0.12 1976 1982 19.4 L1331 5712 PCR Sm. Scal Min. Dov. s 124 0.22 1976 1982 13.4 Education L14 7239 PCR Edur. A Vor. Tra. S 15.* 4.52 1977 1985 13,6 Nou.~cor speuific LINS 5155 PAR Sructurl Ad. Loa U 50.* 0.00 1980 1961 50 Sou OED dat be -46- 6.8 The rural development projects included a wide variety of activities--credit, technical services, roads, health facilities, water supply, sewage disposal, and electrification. All were expected to have positive environmental effects by reducing the rate of soil erosion, limiting fuelwood depletion, and improving human health. 6.9 Several environmental studies were done during the pre-appraisal and appraisal stages of the projects. Recently completed audits of the three projects concluded that implementation was delayed by a lack of final design for several components, lack of counterpart funds, shortagcs and frequent changes of staff, and technical difficulties. Political instability and an economic crisis in the early 1980s caused turnover at the ministerial and project management levels. The vicuna component was considered the most successful part of the projects. Government activities in irrigation, forestry, research, and extension under all three projects fell short of projected levels and the achievements still have to be proved sustainable at present input levels. The conclusions in the audit report also emphasize that the projects suffered from weak design, awkward management structures and implementation arrangements, and inadequate or untested technologies--and thus parallel findings in a survey of 200 World Bank-financed rural development projects. An environmental review of Bolivia concluded that, "poor management led to continued environmental degradation, both in pasture mismanagement and poor water-sanitary conditions" (Idea Center 1988, 8). Furthermore, overall project design should have included input from local community leaders. 6.10 Resource management was not a major objective in the design of the projects. On the technical side there was inadequate understanding of the soil and climatic constraints on production, and technologies were largely untested with respect to acclimatization of dairy cows, irrigation, pasture management, and intensive use of agrochemicals. On the institutional side the opportunities for and constraints to changing campesino organizational arrangements to manage the new production systems were not well understood. In addition, there was a serious shortfall in the quality, quantity, and timing of the government's counterpart contribution. 6.11 The Ulla Ulla project deserves special attention, in light of its success on matters related to the conservation of the vicuna. The project area is nearly 5,000 meters northeast of Lake Titicaca, near the Peruvian border. Small farms are supported by the grazing of vicunas, llamas, and alpacas. At the time of design and appraisal, it was noted that animal production suffered from a low carrying capacity, poor range management techniques or depleted range, low animal fertility rates, high animal mortality rates, and primitive shearing techniques (see Idea Center, 1988). It was stated that one of the most valuable resources to be preserved was the vicuna habitat, which was poached for the vicunas' fleece. In 1977 an ecological or preservation plan was drawn up, where the carrying capacity was studied in light of improved management practices. The plan included also an animal science plan for the experiment station, a good year- round range management plan (with an inventory of cover and ecological conditions, soil mapping, and monitoring), and socioeconomic studies on communication with indigenous people. This ecological component of the project was rated as successful. International treaties were signed for the protection of the vicuna, the habitat is now managed in a more sustainable fashion, and the long-term effects are expected to be large. In addition to these benefits, this conservation program also demonstrated how the proper management of natural capital can benefit the poor directly. The rate of depletion of natural capital was reversed and the poor's ability to accumulate capital was enhanced. - 47- 6.12 The poverty orientation of the rural development program cannot be overemphasized. In particular, all the rural development projects were conceived to deal with a particularly important clientele from a national development viewpoint--300,000 poor rural families on the Altiplano who handled significant natural resource assets--12 million ha in native pasture, 2.2 million llamas, 200,000 alpacas, and 7 million to 8 million sheep. Furthermore, the planners expected that it would be economically viable to increase production from these assets by 50 to 100 percent on a sustainable basis. In spite of the lessons learned over twelve years, the Bank apparently determined that there was nothing salvageable from the experience. As is the case with the 12-year commercial livestock line, nothing further has been heard since 1987. 6.13 Resource management in the Lowlands. Although one project, the Eastern Lowlands Natural Resource Management and Agricultural Production Project (1990), is not a line of lending, it deserves attention as a new departure by the Bank--into an area that has attracted significant foreign financing from Germany, IDB, Japan, UK, and USAID in the last 25 years. The objectives of the project are to "support the expansion of non-traditional agricultural exports and import substitution to cushion the decline in export earnings from hydrocarbons and minerals and ... support the long-term, rational development of the eastern Lowlands (World Bank 1990c, 14)." Thus, the Bank in 1991 entered into a process of development that has become progressively more dynamic since the early 1960s in a part of the country that has nlways been, and still is, identified by Economic and Sector Work (ESW) as "the largest and most promising area of untapped agricultural potential (World Bank, 1990c, 14)." The purpose of entry at this stage is to "help ensure the sustainability of production" through a comprehensive long-term approach to protection of the resource base (World Bank 1990c, 14). 6.14 The primary goal is expansion of soya production--in rotation with wheat and other crops--on 70,000 ha--of which 15,000 will be converted from other crops, 30,000 ha from bush- fallow and 15,000 ha from forest. But the project is a multiobjective, multicomponent exercise aimed at a wide range of resource management issues. Among other things, it is a pioneer effort to implement agroecological zoning--US$5 million is allocated to natural resource planning and management. Other components include a price policy for state lands, production credit, marketing credit, research, extension, roads, demarcation and management of tribal lands, and demarcation and management of national parks and forest reserves in the Department of Santa Cruz 6.15 At this stage, the Bank favors a gradual phased approach focused on the development potential of land resources in the Department of Santa Cruz. Of the Department's 37 million ha, 15 million ha are considered suited to agriculture, of which only 2 million ha have been developed. To set the stage for progressive expansion of the agricultural frontier, the project will prepare a reconnaissance-level soil map, an agroecological zoning map, and a land use plan at scales of 1:250,000 covering the 37 million ha. The land-use plan will be supported by five special studies: protected areas, to determine wildland areas that should have protected status; indigenous lands, to demarcate areas allocated to indigenous groups and assess the legal framework that conditions their entitlement to use these areas; forestry sector, to examine forest management procedures, mihIng efficiency, options to use a greater variety of timber species, options for increasing value added, and the structure and implementation of logging concessions; livestock, to assess the potential of natural grazing lands and options for development of improved pastures; and water resources, to evaluate the opportunities, constraints, and conflicts that may -48- arise from intensified use of ground and surface waters for irrigation, hydroelectricity, urban and rural drinking water, industrial processing, or conveyance of waste discharges. 6.16 The project is a modest start to the expansion of cultivated area. Only 55,000 ha of new lands will be brought into production over eight years, within a 2.2 million-ha zone. In preparation for a second phase the project will identify from the land use plan about 800,000 ha on which detailed soil mapping would be done at a scale of 1:25,000. 6.17 Highways. Since the early 1970s the Bank has supported activities in the transport sector including highway maintenance and rail and aviation development. Highway projects focused on maintenance, construction of workshops and warehouses, training and technical assistance to "Servicio Nacional de Caminos" (SNC) (National Road Service). Direct environmental impact appears to have been negligible. Drainage improvement in mountainous areas can have positive offsite environmental effects, such as reducing land erosion and flooding during the rainy season. These issues were not, however, raised in the audit and project completion reports. 6.18 Bank support for railroads has been largely confined to track rehabilitation and upgrading of telecommunications equipment and rolling stock, and training in workshop management. These activities had a negligible effect on resource management because no new rail lines were established and no new land was appropriated. Operations with potentially large effects on resource use were the two transport sector planning studies for which the Bank was executing agency (1969 and 1981). Thus, although the financing of highway construction has mainly been supported by IDB and USAID, the Bank was at least partially instrumental in determining where such construction was done. 6.19 The recent approval of the "Export Corridors Project" (1990) (World Bank 1989b, 1989c) is a shift in approach for the Bank in support of the transport sector in Bolivia. In addition to supporting maintenance and institutional development, new investments are under way to help Bolivia achieve its export objectives through the construction of an all-weather gravel surface road (with cofinancing from IDB) and the construction of a new rail and intermodal freight terminal in Santa Cruz. Resource management and environmental issues were briefly mentioned in the appraisal report. Appropriate safeguards are to be incorporated into the relevant components of the project--the rehabilitation of the Santa Cruz-Corumba rail line and the Patacamaya-Tambo Quemado road. 6.20 Credit, research support, and other operations. Between 1987 and 1990 the Bank supported three emergency relief projects--the Emergency Social Fund (ESF), the Second Emergency Social Fund, and the Social Investment Fund (SIF) Project (box 6.1). These projects are multisectoral and attempt to address basic needs among groups most affected by the economic collapse and the austerity measures introduced in 1985. Three components of the ESF would affect renewable resuurce management: social infrastructure, which includes water and sewerage and community construction projects; economic infrastructure, which includes road maintenance, irrigation and drainage, and erosion control and forestation; and support to production, which includes cooperative and small-manufacture development. The appraisal report expects economic infrastructure activities to have a positive environmental effect (World Bank 1990j). Other components were not expected to have negative environmental consequencer. What is not clear is - 49 - Bw U.1: Two Form of Bank Help for the Social Costs of Ajastmeat The Emergncy Social Fead 'te World Bank Initiated the Emergency Social Fund (ESF) in 1986 ia response to the social instability brought about by the introduction of the drastic stabilization program introduced in 1985. The ESF was designed to cushion the negative ffectis of stabilization on the most vulnerable population roups, The fund was only to last four years (1987*91) and finance grants for small-scale employment- and income-generating projects and social assistance programs for those hardest bit by the economic crisis. The projects and programs were to be proposed and implemented by local government , cooperatives and community groups-.both public and private. The fund gave priority to those projects most likely to have multiplier effects and those whose sponsors were able to ensure rapid, efficient, and honest implementation. The ESF was run competently and free from political influence by virtue of the protection and support of the Office of the President. The ESF staff was noted for its competence and commitment. Project identificatloll was determined by demand and projects were subjected to stringent cost controls and effective monitoring and evaluation. TIls produced some notable achievements including 7,000 km of road improvements, 3,000 city blocks paved, the installation of 1.1 million meters of sewerage canals and 230,000 meters of water supply lines, 30,000 ha of irrigation permeters and 1,700 ha of reforestation, and 200,000 cbm of erosion or flood control. Although quantifying benefits of social assistance is difficult, the fund contributed to the expansion of primary health care and education through the construction of nearly 400 health posts, the administration of about 2 million Inoculations, and the provision of about 640,000 tetbooks and nearly 64,000 desks for primary school children. The Bank supported the ESF through two emergency credits for a total of about $37 million. The Social InVstmeUt Fund The Social Investment Fund (SIF) was proposed to absorb the best of the BSF and attack long-term structural poverty through Investment In health and education. Investment In the social sectors was deemed critical because of the continuing high levels of malnutrition, infant mortality, widespread disease, and a weak education system. As the ESF ended, it was obvious Ihat Bolivia had structural weaknesse in the social sectors. The SIF was desined to strangthen these sectors by complementing rather than duplicating the efforts of the line ministries involved in health and education. The objectives were to increase eternal assistance to the social sectors, extend coverage ot prevetWe health, primary education, and water and sanitation services to reach more of the poor, and provide coordination for the many agencies active in the social sectors, including them as participanti The Bank supported the fund through a $20 million credit in 1990 and took the lead in mobilizing additional eternal - 50 - whether resource management was considered during the design of subprojects. Such consideration is needed because it affects project benefit sustainability. 6.21 Another operation--Agricultural Technology Development (1991)--is intended to improve the relevance and efficiency of agricultural technology and its dissemination to farmers, especially in the Highlands (World Bank 1991a). It thus responds to two of the constraints to effective resource management noted in economic and sector work since the 1960s and must be viewed as a very positive contribution to the process. 6.22 Structural adjustment. The Bank approved a Structural Adjustment Program in May 1980. The main rationale was to help the Bolivian economy to lift four important structural constraints: economic dominance by mineral exports and subsistence agriculture, excessive intervention by the public sector, inadequate marketing and access to inputs hampered by the difficult terrain and underdeveloped roads, and major exports through unofficial channels, despite the economy's openness (World Bank 1984d). In addition to addressing supply constraints, the Bank also attempted to strengthen institutions. The Structural Adjustment Loan (SAL) translated, however, into a macrostabilization program with the most visible instruments being a viable exchange rate, a reduction of the public sector deficit, revised--more realistic--public sector rates and prices, a consistent monetary policy with balance-of-payment targets, and a controlled set of external debt operations of the public sector and the banking system. Higher prices were implemented in the hope of creating the necessary incentives to improve efficiency and expand the supply of several products--for example beef, poultry, and coffee. 6.23 The audit assessed the effectiveness of these policies in the agricultural sector: The aim of diversifying Bolivia's exports by increasing agricultural exports was also not realized.... It was probably optimistic at the design stage to expect the Government to operate an effective system of support to producers' prices without a clearly defined mechanism supported by funds and institutional arrangements including marketing, credit, transport and storage.... The Government also failed to reform the agricultural credit system as to improve the flow of credit to producers.... As with many other countries faced with similar problems, the authorities, in the interest of 'political realism' have tended in their pricing policies to defer to consumer groups, especially in the urban centers, to the detriment of producers' interests (World Bank 1984d, 12). 6.24 Because agriculture intensification--in the Altiplano and in the Lowlands--is central to reducing renewable resource depletion in the Lowlands, the performance of the SAL might have indirectly maintained or increased the use rate of land and forest resources in the frontier areas. Inflation, coupled with a significant undervaluation of those resources, provided the right milieu for land appropriation and speculation. Appropriation of natural assets was an important instrument to hedge for inflation. Tracing those effects in quantitative terms, however, is difficult and this opinion comes from interviews with a sample of commercial farmers., 6.25 Since the introduction of the New Economic Policy (NEP) in 1985 the Bank has made a major effort to assist the government in its efforts to restructure and stabilize the economy (see chapter 4). Between 1988 and 1991 a total of US$123 million in loans was approved to support activities budgeted at US$154 million. This represents 13 percent of total lending over the 27 years of Bank operations in Bolivia. Specific reforms called for in the three SALs provided in 1988 and 1989 involved policies on exchange rates, trade, public investment, fiscal management, and development of specific sectors--particularly energy, mining, and agriculture. Expansion of nontraditional agricultural exports was a high priority. - 51 - 6.26 The second SAL was approved in 1991, following a financial sector adjustment. The loan recognized the importance of environmental work in the lending program but did not include environmental considerations in the adjustment process. The policy matrix did not address the resource management issues facing the Bolivian economy, perhaps because of an assumption that the policies would not harm the environment, that natural resources have been priced at their opportunity cost, and that environmental projects can be successfully implemented despite the differences in resource valuation and macroeconomic incentives. In addition, the "public-good" nature of some of the tradable commodities was never taken into account--although it would require a different set of prices to reflect spatial and intertemporal externalities that are expected to inject growth in the economy (for example, forestry). An environment technical assistance project is expected to focus on some of these issues. 6.27 Urban services. One important activity to affect renewable resources was the Urban and Rural Water Supply and Sewerage Project which began in 1976. The project benefitted 70 rural communities, and its performance--especially the physical components--achieved, and in some cases surpassed, expectations. Progress with institutional development and strengthening, a key factor in achieving sustainability, was considered less than satisfactory, however. Apparently, the project's design was limited to improving the supply of water for domestic use and there was no attempt to improve water resource management for nondomestic uses. 6.28 Energy and power. The Bank has supported energy and power sector development since the early 1960s. The review of audit reports from the Yabog Gas Pipeline Project (World Bank 1974d) and the Second and Third "Empresa Nacional de Electricidad" (ENDE) (National Electricity Company) Power Projects (World Bank 1977h, 1979a) suggests that these projects were well designed economically and technically. Although environmental issues were not mentioned in the audit reports, interviews with former ENDE staff suggest that the hydroelectric dams were sited in areas of relative scarcity of natural and human resources and, thus, had little environmental impact; trees were planted around the electrical generating plants in an effort to reduce noise pollution; and the gas turbine generators that were installed are less harmful to the environment than other energy sources. If these assertions are valid, Bolivia's energy sector development has been far more environmentally neutral than that of most of its Latin American neighbors. 6.29 Table 6.2 summarizes the performance indicators of the 26 Bank-financed completed projects. Of that total, seven were in agriculture, two in public utilities, six in transport, four in energy, four in development finance, two in education and one was an adjustment operation. Except for the energy, education and development finance related projects, the rate of unsatisfactory performance was nearly 50 percent. Moreover, several of the projects in agriculture rated satisfactory at completion deserve a closer look; an impact evaluation report of the livestock projects may be particularly instructive. It is important to note also that the large majority of the poverty-oriented rural development projects showed very poor results. Finally, OED also rated the adjustment lending operation as unsatisfactory. Other Donors' Roles in Natural Resources 6.30 Overview. Since 1973 the United Nations Development Programme (UNDP) has compiled annual statistical data on foreign aid projects in Bolivia (see table 6.3 and figures 6.2- - 52 - Table 63: Natural Resource Lending to Bolivia by the World Bank, Multilaterals, and Bilaterals, 1965-89 ($ millions) World Bank Other Multilaterals Bilaterals Forestry & Other 0.0 19.0 25.8 Transport 85.3 443.6 171.7 Institutional 50.0 75.1 37.1 Social 72.5 142.9 30.1 Agricultural 48.8 460.1 529.5 Energy 82.5 38.0 2.6 Total 339.1 1,178.7 796.8 Note Agriculture includes rural development and irrigation. Social leading includes education, health, population, and water supply and sewerage. Forestry and other includes fisheries and other environmental projects. Source: UNDP, World Bank data. Figure 6.2: Natural Resource Lending to Bolia World Bank, Multilaterals, BUJtersls 1965-89 Agriciukural J rattutonal Transport Forestry & other 0 100 200 300 400 500 600 Smillions -53- �р.�. ыз: W0 w R�'�"0wа�гоw�явь�е� �««а�, ь аг,« ю.ати � � f�4•�7Ч тгаирогt R�.�) � АРiр+Ми� i11.4liQ =- _ - ____ - - _ �� � - -- - � , --- _ - - - -- - - � _ \ = миеи►+иоп++ (1в.rэ�) 3асiвl С21.4%) fipurв 8.4: Mu1�lateral ler►dinq Оо Bdivls F4e{efed W NaLxa1 Неsо�иоев, 196589 Егигqу (3,2%) Faввiiy б о1Ми (1.89L) Trarrport (97,896) � � / �а+�. (эо.оуw \ � .� .� � _ � - � , _- й,rоа�огмi (влчс) soгdN (1г1мь) -54- 6.4).2X 2,21 Ile selection of data inputs (sec Annex D, Projects Related to Renewable Resources, by Year, Sector, and Donor) was based on the perceived relevance of a project to renewable resources.23J & Because over the years data collected underwent qualitative changes--which made it difficult to differentiate whether an activity was exclusively technical assistance--no attempt was made to analyze the technical assistance components. Budget information provided by UNDP was converted to 1990 dollars using the IMF deflator. 6.31 From 1966 to 1990, donors committed more than US$2 billion in aid to Bolivia for nearly 600 projects related to natural resources.25 lbesc projects were supported by 16 multilateral and 18 bilateral agencies and numerous nongovernmental organizations (NG0s).Z6 Multilateral agencies contributed 62 percent, bilateral agencies 31 percent, and NGOs 2 percent. Bank commitments to projects related to natural resources accounted for a little over US$300 million, or 17 percent of the total. The UNDP estimates that in 1990 approximately US$900 million was committed by all donors, including NGOs, and approximately US$700 million was disbursad.27 The broad category of renewable resources accounted for almost 50 percent of the aid in 1990 dollars and 74 percent of the projects for the period under study. Infrastructure projects accounted for 40 percent of aid commitments and 15 percent of projects. All other sectors (for example, education, institutional development and population) accounted for only I I percent of the commitments and 10 percent of projects which can be said to relate to activities that affect renewable resources. LJ The UNDP Office in La Paz has produced statistical tables for 1976, IM, 1978, 1980, 1981, 1982, 1983, 1984, 1985, 1986, and 1988, Statis.ics prior to 1976 were not available. However, some project data from as far back as 1967 were provided in the 1976 report. The methodology used to compile the tables has evolved over the years, as has the overall presentation and quality of the data. The sectors chosen by UNDP are agriculture, fisheries, forestry, and livestock; culture, social, and human sciences; education; policy, development, and economic and social planning; health; industry; internation3l trade; labor and employment; natural resources; population; social security and social services; and transport. For the preparation of the annexes, all sectors have been included except culture, industry, international trade, labor and employment, and social security/services. Di Often projects were listed under a particular UNDP sector heading that was too general. For analytic purposes, additional sector headings were selected and included; irrigation, watershed, environmental, energy, hydroelectric, and institutional. This additional breakdown of the sectors provides for a more precise data base on donor support for renewable resource activities. L4 Excluded project areas were industrial and urban development, mining, urban health, telecommunications, urban education and training, and construction, Although it could be argued that sectors such as industrial and urban development can affect renewable resources through the use of land and water, these sectorswere considered to be of less importance generally, given the serious nature of problems such as soil erosion and deforestation facing Bolivia. ZV A billion is 1,000 million. ?6J Reliable data on both international and Bolivian NGOs are cifficult to obtain. To show consistency with the data on bilateral and multilateral agencies, this study relied on statistics provided by UNDP. Tbe UNDP acknowledges that the information is incomplete. L/ These figures were provided by the UNDP office in La Paz and include all sectors. The sectoral breakdown of the figure for 1990 was not yet available. It is our understanding that the methodology used by UNDP in calculating donor assistance in 1990 includes overhead. -55- 6.32 Donors' sectorl strategie. Although the roles of the major donors have varied in the last 25 years, all have devoted considerable support for renewable resources and to infrastructure. The World Bank and UNDP were the lead multilateral agencies making contributions to strengthen institutions. The Inter-American Development Bank, the World Bank, the Germans, and USAID all provided support for education projects related to renewable resources (see annex tables D-1 to D-6 in annex D). Among the bilaterals only Germany and USAID provided support for education and institutional development. 6.33 Donor agency support for Bolivia in terms of sectoral focus and levels of support reflect not only their changing geographical and political priorities, but also how they viewed frequent change., !f government and institutional instability in Bolivia. Especially in the case of some of the major 4onors like Germany, a total withdrawal of aid in some periods was related to the political instability.28 Other donors (for example, Switzerland and the United Kingdom) have targeted their renewable resource programs to specific geographic regions such as Beni, Cochabamba, and Santa Cruz. Existing information suggests that changes of government and political instability did not seem to have affected the level of program support. 6.34 The 1960s was a period of limited direct support to renewable resources. IDB and USAID, the major donors then, supported projects in road building and maintenance, school construction, public works, sugar processing (USAID 1991a), industry, mining, higher education, urban water supply, and nonrenewable energy. During the 1970s and 1980s virtually all donors considered support for the rural poor a top priority. The management aspects of resource use were rarely identified as well as goals that could have enhanced and sustained an invest- ment.29 At the same time the low level of support to forestry, fisheries, and resource conservation suggests that some donors viewed Bolivia as well endowed and able to withstand some significant level of natural resource depletion. Awareness of sustainability has increased; it has been customary for major donors to indicate that all projects must now have an environmental impact assessment prior to approval. 6.35 In the 1970s, the United Nations agencies and regional organizations like the Organization of American States (OAS) and the Interamerican Institute of Agricultural Sciences have specialized in programs directly affecting renewable resources. Loans and grants to agriculture, rural health, community development, colonization, and rural roads dominated USAID's portfolio. Most bilateral donors focussed on these sectors too. Denmark and Switzerland led the way with support for the livestock and dairy development. The Japanese made their first grants in the late 1970s to the health and agriculture sector, although to a large extent these programs were limited to donations of equipment, fertilizer, and seed. The Unitcd Kingdom was a key player with its support to tropical agricultural research and extension. 6.36 Political instability, economic crises, and the growth of the coca economy helped to shape some of the donors aid programs in the 1980s. The Canadians through the International Development Research Centre (IDRC) directed their efforts towards Highland agricultural 29/ Tlis information was provided dunng an interview wth German aid officiab in La Paz Stiatstical information in the UNDP publications sppears to corroborate it. 22/ Donor agencies interviewed in La Paz stressed rural poverty and development ai important priontmes. in general, donors believed that projects developed in the last few years had a stronger resource management locus. - 56 - research. The Netherlands began a program with a strong agriculture and rural development focus. Germany suspended its aid program in the early years of the decade, but reintroduced a larger program with a heavy emphasis on renewable resources in the mid-1980s. Although the total amount of assistance from USAID declined substantially in the late 1980s, an increasing percentage of USAID's funds went to support programs of coca substitution. The Japanese aid program increased substantially and now accounts for almost 20 percent of total aid (JICA 1990). Between 1985 and 1990 most bilateral donors devoted some of their resources to activities that would help Bolivia pursue economic reform and structural adjustment. Some of these funds helped support multilateral agency projects. 6.37 Following the economic crises of the mid-1980s and Bolivia's agreement to implement stabilization and structural adjustment, multilateral lending and grants increased. FAO, IICA and UNDP incresed their portfolios in activities related to renewable resources.30/ For instance, the FAQ and UNDP funded projects in small-scale irrigation, renewable resource management, land reclamation, reforestation, and various technical assistance activities including an FAO tropical forestry action plan (FAO 1989). IDB substantially increased its lending to agriculture. Support for inultisectoral projects such as integrated rural development and regional development also increased. 6.38 Over the pzst 30 years, the activities of external aid donors in Bolivia have been influenced in varying degrees by changing approaches to economic development. In the 1960s and early 1970s the Prebisch/Economic Commission for Latin America (ECLA) school dominated with a focus on protectionism and active state participation in the economy. In the late 1970s the monetary school, promoted by the IMF, found favor. In the 1980s the neoliberal approaches adopted by the IMF, the Bank, and the Organisation for Economic Co-operation and Development (OECD) came to the fore. In the case of renewable resources--particularly agriculture--there have also been changes in thinking, in part related to the changing development approaches. The 1960s witneFsed the green revolution and consolidation of the agrarian reform. In the 1970s the focus was on integrated rural development. In the 1980s the preference was for liberalization of macroeconomic policies, with privatization and with equal conditions applied to all sectors. Since the late 1980s, the environment and its threat to global security has been a dominant theme. 6.39 These changes, particularly the cycles associated with changes in Bolivia's government and the relative weights assigned to different objectives by the donors, have resulted in the aid community reflecting very much the same short-term approach adopted by Bolivia's governments. In general, the tendency among major donors has been to focus more attention on fiscal policy, balance of payments, and debt servicing than on the use of renewable resources. The result is that the aid community has not played the stabilizing role in resource management that might have been expected. Donors have not dealt consistently with the government nor have they built a single strategic framework to guide their activities in resource management. There have been extended periods of inaction. And, despite complaints about inequality in the regional distribution of development benefits, aid programs barely exist in some zones. In addition, a 3 Bciween 1986 and 1989 these donors supported 60 projects totalling more than $22 million compared with 27 projects ($7.3 million) in 1981-84. It should be noted, however. tmat dunng the later penod vanous UN agencies acted as executing agency for IDB and the World Bank. The met percentage of support is difficult to determine from the data, but donor support levels likely were substantialiy nigher than for th, previous period. - 57 - plethora of studies and plans since the Bohan mission has not produced the information base needed for resource management. Non-Governmental Organizations and Renewable Resources 6.40 UNDP estimates that more than 300 NGOs are operating in Bolivia. The Liga de Defensa del Medio Ambiente (LIDEMA), an association of environmental NGOs, estimates that about 30 are actively involved in undertaking renewable resource and environment projects. Although there are some statistical data on their various programs, the quality is uneven and not useful for analysis. The limited participation of the 30 NGOs in a recent survey that attempted to develop a project data base demonstrated that NGOs are still uneasy about providing information about their activities (LIDEMA 1991). 6.41 Funding for NGO projects increased dramatically in the 1980s. This has been due partly to the growth of indigenous NGOs--in numbers and in capacity to implement projects.31 Because of a lack of coordination and intense competition among the NGOs for external resources, reliable estimates of NGO funding are difficult to obtain. But Bolivia is believed to have one of the highest per capita levels of NGO support in the world and receives more than US$100 million per year, according to UNDP officials in La Paz (UNDP 1991).@' Support for Bolivian NGOs comes from a variety of sources including Canadian, European, and U.S. NGOs and foundations and programs attached to multilateral and bilateral aid agencies. Most programs focus on rural development--especially agriculture, forestry, and water supply. Institution building, community organization, education, and training are strongly emphasized. Most of these activities tend to be small-scale, but are generally thought to be effective.33J 3/ The increase in the number of NGOs in Bolivia and elsewhere in Latin America results from three factors First, there have been very limited career opportunities in the public sector Second, the growth of higher education opportunties both in Latin America and overseas has increased the supply of qualified individuals. Third, funds available from NGOs in the industnal countries have increased. In Bolivia, the democratization process that began in the early 1980s and the absence of guerrilla movements and political violence have also contributed to the increase in funding 2/ In light of the lack of reliable data the author has some concerns about the accuracy of the figure. Nevertheless there is a general consensus that NGO funding continues to grow and that it could make up as much as 10 to 12 percent of total aid in 1990 Because a large proportion of NGO support goes toward renewable resource sectors, the NGO role in these sectors is considerable. 33/ An interesting example is the reconstruction of raised-platform fields in the Altiplano around Lake Titicaca--funded by the Dutch government and the Inter-Amencan Foundation. The system, which was perfected by the Tiwanaku civilization almost 2000 years ago, yields five to seven times the potato crop that can be produced using more conventional [arming methods (Chicago Tribune 1988). These encouraging results have helped to reopen the debate on the agricultural potential of the Altiplano and could result in an increase in major donor resources to areas once thought to have little potential. - 59 - CHAPTER 7: ASSESSMENT OF DEVELOPMENT INSTRUMENTS Poverty and Resource Degradation 7.1 Land tenure. The Agrarian Reform Law of 1952, modeled on the Mexican experience, established the entitlements of those who own and use land, and has not changed in the past 40 years. The original owner of land is the state, which can sell or grant it with title. Entitlements apply to users classed as smallholders, indigenous communities, medium holders, and large enterprises. Land rental and sharecropping are prohibited, properties classed as small may not be mortgaged, and working of the land is a means to acquiring title. In addition, all land entitlements revert to the state if any citizen can demonstrate that property is not in full produc- tion. In practice, the agrarian reform only applied to the Altiplano and Valles. Although the law recognized four classes of farm enterprise, after 1952 virtually all land in the Highlands was distributed to those qualifying as smallholders or as indigenous communities. Because of complex judicial procedures and a lack of funding for the agency charged with implementing the reforms (the Servicio Nacional de Reforma Agrdria, or SNRA), however, the titling process was painfully slow--15 years after the enactment of the law only 25 percent of eligible owners in the Highlands had received title. By 1990 this figure had grown to 60 percent. 7.2 The results of this land tenure structure in the Altiplano and Valles--measured by productivity, equity, and conservation or degradation--have been the subject of a prolonged inconclusive debate for the past 30 years. The upshot is that policy-makers and donors have no basis on which to promote change in land tenure arrangements in order to improve management of land, biotic, and water resources in the Highlands. It is clear that the relationship between land tenure and the performance of peasant agriculture--particularly with respect to its sustain- ability and productivity--has not been high on the agenda of academics or the actors who may have been in a position to influence resource management (see chapters 2 and 3). Blame for poor performance has fallen almost exclusively on the allocation and quality of public expendi- tures that could have altered the physical capital, knowledge embodied in human resources (human capital), and availability of modern inputs--and thus could have increased welfare and reduced damage to the environment. 7.3 Settlement. The march-to-the-east policy was adopted in spite of increasing doubts about the sustainability of the process from the mid-1970s onward. The policy relied on penetra- tion roads associated initially with directed colonization projects and subsequently with support to directed and spontaneous colonization. There were three axes for penetration into the Piedmont and the Lomwland plains. First, the link between La Paz and the Yungas-Alto Beni in the Department of La Paz. The road to Caranavi in the lower Yungas was completed in 1953 and reached the Alto Beni in 1959. Construction has been continuous since then to extend the road to the edge of the Beni plains, thence on to Trinidad in the central plains region. In the late 1980s projects were launched to connect with Puerto Heath on the Peruvian border to the north and Riberalta on the Brazilian border to the northeast, thus opeuing up the whole of the northern plain. Second, the road from Cochabamba to Santa Cruz was opened to traffic in 1954 and paving completed in 1957. The road network in Santa Cruz has since been extended to connect with Chapare to the west, Yacuiba on the Argentine border to the south, and Trinidad to -60- the north. The road east to Corumba on the Brazilian border was commenced in 1990. Third, the Cochabamba-Chapare road has existed since 1939 but was reactivated in the early 1960s because of the Chimore colonization project. The road was subsequently realigned and paved and, as a result of completion in 1989 of the Chimore-Yapacant stretch (Department of Santa Cruz), has become the major transport route to Santa Cruz. 7.4 In the late 1950s and early 1960s the Bolivian Corporation for Development (the CBF) undertook five directed settlement projects in Santa Cruz; several other projects followed in the 1960s and early 1970s (see box 7.1). In the Yungas, all settlement was spontaneous. In the Alto Beni and Chapare, the state supported semidirected projects in the 1960s. However, land and forest development associated with the extensive road-building programs of the 1970s and 1980s has predominantly been spontaneous--by settlers, some larger investors, and private forestry interests. 7.5 Public investment. During 1960-90, transport in most years received 25 to 35 percent of total public investment, with agriculture accounting for 3 percent in the 1960s and 8 to 10 percent thereafter. But how much resource users in the rural Highlands--comprising 40 percent of the total population and 75 percent of the rural--benefitted from these investments is unclear. An answer may be approximated from the 1987-90 investment allocations to the five departments that predominate in this zone. Of the total spending on transport and agriculture, 30 percent and 60 percent, respectively, went to those five departments (see Justiniano 1992, table 14)--although some investment went to urban transport and the Lowland areas of the departments of La Paz and Cochabamba. 7.6 Questions have been raised, however, about whether public investment in agriculture has been sufficient and effective to increase productivity and sustainability in the Altiplano. The Bolivian Corporation for Development (CBF) invested major amounts--US$250 million--in wholly uneconomic agricultural processing industries in the Highlands, particularly milk and wool. 7.7 Efforts in integrated rural development accounted for about half of total public investment in agriculture in the zone in the 1970s with limited results in resource management by any measure (see chapter 6). With the increasing role of the regional corporations after 1970-- which also explains the increase in agriculture's share of public investment--investments were widely dispersed into small agricultural production projects instead of focused on the infrastructure and services needed to mobilize other resources in the sector (see chapter 4). Information from the newly created Information System on Investments shows that in 1987-90 many of the projects cost less than US$1,000. This dispersal, with execution by unsupervised agencies without ex-post evaluation, likely had limited effectiveness. 7.8 Credit. Of the 675,000 farm households in the Altiplano and the Piedmont, 380,000 (56 percent) are considered below subsistence, 140,000 (21 percent) at subsistence, 140,000 (21 percent) able to accumulate limited capital, and only 15,000 (2 percent) viable enterprises. The Agricultural Bank of Bolivia has been the only effective source of credit to the Highlands. Using data from five departments in the Highlands, the regional distribution of loans by the Banco Agricola de Bolivia varied widely over 25 years--40 percent in the 1960s; 15 to 20 percent in the 1970s; and 60 percent in the 1980s, when the absolute volume was reduced so - 61 - much that it was of marginal importance. Measured by loans to the dominant activities in the Highlands,3J4 an average of 30 percent of loans by the BAB were allocated to the zone between 1970 and 1990, ranging from 10 percent (1971-74) to 50 percent (1983-86). Loans by the BAB totaled about USS20 million annually in the 1960s, increasing to US$140 million in the mid-1980s, and sharply declining thereafter to an average of US$80 million. Applying a 30 percent average allocation to the Highlands, the per-family availability of credit appears minimal using any of the size classifications--an average of about US$45 per year for all families, or US$200 for those above the subsistence ILvel. 7.9 Throughout the period under review, the BAB has been criticized for its inability to service smallholders; a lack of loan supervision, with diversion of funds to nonagricultural uses; high overhead; excessive delays in disbursement; and a poor loan repayment record. These shortcomings have in all probability been more harmful to farmers in the Highlands than in the Lowlands, mainly because most highland farmers are smallholders. The distortion in credit allocation between the Highlands and Lowlands is further exacerbated when commercial bank credit is considerable. Until 1986 commercial banks loaned about the same amount as the BAB and since then have lent at double those levels. But virtually all of this credit has applied to the Lowlands (see Morales 1992, table "Cr6dito 5"). Environmental Effects of Macro Policies 7.10 Public expenditures.35 Throughout the period under review it has been widely recognized that there has been underinvestment in human capital in the Highlands, notably education, health, and appropriate agricultural research and extension. Furthermore, infrastructure investment has not been oriented to improving the competitiveness of renewable resource users in this region. This situation may be attributable, however, to the perception of the government, supported by external donors, that Bolivia has no comparative advantage in products originating from the Highlands. Although a few sporadic efforts were made (e.g., integrated rural development projects), no systematic attention was given to facilitating capital accumulation by those whose livelihood largely depended on exploitation of land and water in the Highlands. The consequence has been continuing poverty and accelerated resource degradation. 7.11 Because the comparative advantage of commercial agriculture in the Lowlands rested on low production costs--high yields and low inputs--the attainment of sustainability hinges largely on the allocation of public investment. A detailed assessment has not been done of how much investment should be put into improving the efficiency of road transport to external markets, the development and extension of technology which would reduce costs of reincorporating bush-fallow areas into a permanent crop rotation, or the transaction costs of developing the information base for land-use zoning and implementing such zoning. Addressing these allocation decisions should be a top priority in the future. Ni The dominant agricultural activities were potatoes, maize, wheat, forage crops, fruit, vegetables, poultry, and livestock (excluding cattle). .V/ Annex E provides a broader context for the discussion presented here. There, the National Plans are presented and reviewed from the perspective of natural resource management. - 62 - 7.12 Land classification. In the Lowlands the decision about capital substitution depends on the opportunity cost at the margin of retaining land in forest as a source of tree-based goods and services--timber, biodiversity, tourism--instead of converting it to agriculture. In the past 20 years, the discussion in Bolivia has centered on the classification of lands as suited or unsuited to agriculture and the demarcation of these areas on the ground in such a way as to make the classifications a workable basis for road alignment or for restricting entitlements to use-- zoning. The classification suited to agriculture, by definition, rests on the assumption that up to the limit of the area prescribed, the diminishing marginal opportunity cost of land in agriculture is higher than in forestry. 7.13 In the last two decades most sector reports have asserted that the data simply do not exist to develop this opportunity cost curve and that in its absence both policy-makers and resource users have consistently overestimated the agricultural potential of land and under- estimated the opportunities from keeping the land under forest. The debate became sharply focused in the Department of Santa Cruz with the publication of the "Morawetz report" in 1985 proposing rapid transformation of 1 million ha of forest into soya. Interpretations of the opportunity cost vary over a wide range. A 1992 estimate says 600,000 ha of fertile lands remain undev--loped between the Rfo Grande and the Brazilian border (Justiniano 1992, 42); another suggests that the unexploited agricltural area in the department is on the order of 14 million ha (World Bank 1990c, 11). Public investment policy (and use of regulatory mechanisms) would be expected to differ markedly depending on which two of these extremes is accepted. If the expec- tation is that over the long run--hundreds of years--it may be economically viable to convert millions of hectares from forest to agriculture, the present marginal opportunity cost of keeping the land under forest would be lower than a situation in which all eligible forest land may be cleared in 15 to 20 years. There is little indication from the record, however, that the government has made any significant move to improve the knowledge base regarding agricultural potential or to help conserve natural resources in the Lowlands. 7.14 Taxation. The system of taxation in agriculture--as an incentive to productivity or conservation or as a source of public revenue--remained unchanged from the early 1960s until 1986. The main taxes in this period were a property tax totaling 1 percent of the cadastral value of urban and 0.64 percent of rural lands; an export tax on cotton, sugar, coffee, and wood; a sales tax on chicha; and licensing fees for hunting, fishing, and exploitation of forests. A technical assistance mission in 1976 concluded that the costs of collecting rural taxes were almost as great as the amount collected (Musgrove 1976). Export taxes totaled 96 percent of the sum collected. The mission recommended abolishing export taxes and adopting a unified system applicable to all rural properties. It would be intended first to encourage high productivity and, second, to collect revenues that could be reinvested in services to the sector and in education and agricultural extension. No action was taken on these recommendations until 1986, when a new law was passed (Ley 843). Regulations for implementation of the law were not completd until 1988. In practice these regulations amounted to a significant change in the law. The basis for valuing land was changed and small farms and campesino communities were exempted. 7.15 Taxation as an instrument to better allocate and use natural resources has had an effect by its non-use. Even before export taxes were abolished, they essentially did not apply to products from the Highlands. In the Lowlands many of the exports were unrecorded and there- fore untaxable--timber, cattle, wildlife, and wildlife skins. On those products that were taxed-- - 63 - sugar, coffee, cotton, soya, and timber--the effect was to prejudice the country's comparative advantage in international markets. Land taxes were not implemented before 1988; and since 1988 it has proved impossible to apply the new system to the 140,000 medium and 15,000 large farms in the Highlands. Taxation of larger timber and agricultural enterprises in the Lowlands has also proved difficult to implement; the small increase in revenues from land taxes since 1986 is obtained from this source. Thus, none of the potential benefits called for by the Musgrove mission in 1976--productivity, capital accumulation, or reduced resource degradation--have been achieved because of weak regulatory and administrative control. 7.16 The New Economic Policy and resource management. The New Economic Policy (NEP) represented a major change in focus and approach (see chapter 4). In theory it changed taxation; in practice there has been little change. Export sectors were favored by the floating exchange rate, the orientation of public expenditures to roads and export corridors, reduced railway freight rates, and preferential credit for land clearing and other activities relaied to expansion of area in export crops. 7.17 Again, the question is whether these changes in economic instruments--notably the floating exchange rate, unified tariffs, the threat of taxation, the reorientation of investments in physical infrastructure, and reduced or modified subsidies, particularly credit--have influenced resource user behavior in ways that are more or less efficient or damaging to the environment. A related question is whether the changes yield a distribution of costs and benefits that is more or less equitable. In the Altiplano, Valles, and Piedmont, there has probably been little change in the use of land, water, and forest resources that can be attributed directly to these instruments. No statistical evidence supports an assertion of direct influence. In the Lowland plains, however, there is more room for plausible speculation on the linkage between change in economic policy instruments and resource management performance. 7.18 The reduction of subsidies and a floating exchange rate have provided an inccntive for accelerated private investment in more efficient agricultural production. Double cropping has been necessitated to clear land and begin operating a farm, and the increased level of financial commitment of private enterprises has created greater concern about the durability of their assets, including natural resources. Thus, the enterprises have tended to improve technology-- windbreaks, reduced tillage, greater soil coverage, and better weed control--oriented to conservation. 7.19 At the same time, however, clearing of forest has accelerated. The soya boom dates from 1981. At that time sowing amounted to 41,000 ha; by 1990 it had increased to 171,000 ha as a summer crop rotated with wheat, sunflower, sorghum, or beans in the winter. Almost 100,000 ha of the increased area was derived from forested lands--mostly since 1986. As in the case of cotton, the process has been promoted through government provision of special credit lines for machinery, land clearing, infrastructure, and operating costs--with a clear focus on the generation of export earnings. Another factor has been the complementary investment in road building in central Santa Cruz. 7.20 At some point expansion of the agricultural frontier is bound to reach a threshold where the marginal social opportunity cost of retaining land in forest exceeds that of converting it to agriculture. In the view of many environmental groups, this threshold may have already been -64- exceeded, in which case sustainable development cannot be attained. This is clearly a key issue which has not been conclusively resolved by the government, external aid agencies, or the environmental movement. The NEP has liberalized the markets for foreign exchange, labor, and capital. It still has not addressed the land question nor complementary actions in areas where resource management cannot be left to the market. Resource Entitlements 7.21 The land entitlement policy, with others--road building, taxation, and credit--has shaped much of the resource use pattern that has emerged in the Lowlands in the past two decades. Large-scale land distribution as an instrument of resource management was not applied in the Lowlands until the early 1970s. Between 1971 and 1978 the government undertook a massive program for distribution of lands and forest concessions. In 1955-70 when agrarian reform was being consolidated, 1.2 million ha of state lands were distributed nationwide. In the following eight years--about half the time--six million ha in the Lowlands were distributed without charge. Of this area, 3.2 million ha were allocated in parcels of more than 500 ha. The forest law passed in 1974 established the basis for a similar--but more prolonged--process for allocating forest concessions, many of which were not completed until the 1980s. By 1990 rights to 19.5 million ha had been granted to 173 logging companies. A good example of the process and its effects on renewable resources is the cotton boom of the mid-1970s. 7.22 The cost of these new lands in the 1970s was the expenditure required to apply for them and process title. In 1983 forested lands 80 km east of Santa Cruz could be sold for US$4 to US$6 per hectare; by 1990, with good road access established, prices ranged from US$30 to US$60 per hectare. In the absence of any effective land tax, a behavior pattern emerged in two stages. First was a purely speculative response under which the new owner would maximize economic rent from "free" land and "free" road access by holding the land idle. Second, after the sale of the land to cash in on the economic rent, buyers still view the cost of land as irrelevant to investment decisions to bring the land into production. Even at US$30 to US$60 per hectare, the price of land only amounts to 4 to 5 percent of what would be the total investment in land clearing and preparation, infrastructure, and equipment. By mining the natural fertility, good returns could be obtained from developing the land, cropping it for three to five years, and then converting it to pasture. At that stage the next step would be to buy additional virgin land from a speculator. The process is clearly nonsustainable with a finite land base. 7.23 Another aspect of land acquisition is its role in providing access to subsidized credit. The level of indebtedness, and therefore the gross subsidy obtained, has been a direct function of the area owned. A number of untested implications for resource management may be hypothesized. First, the acquisition of cheap land and holding it idle provides a convenient vehicle for obtaining credit for other uses. Second, cheap credit may also facilitate the clearing of land that otherwise might have been left in forest. Third, the inefficiency and delays in disbursing of credit discourage borrowing for intensive high-value crops where the timing of operations is critical and encourages borrowing to acquire new lands for extensive--rather than intensive--use. 7.24 The policy of "free" land also has had perverse effects on resource management in the smallholder sector. Colonists generally have received 50-hectare farms, which they operate on a slash-and-burn basis maintaining 2 ha to 3 ha in production. But the taxation and land grant - 65 - policies have enabled many colonists to acquire more than one parcel. Although this pattern clearly increases income, which also may be sustainable for someone using a 14-to-18-year bush- fallow rotation, it is not sustainable for society beyond the limit of the available land base. 7.25 The management of forest concessions is based theoretically on the rules laid down by the 1974 Forestry Act. These rules are designed to ensure efficient use and orient log extraction towards sustainable production. This presupposes an efficient public sector which can maintain a dialogue with timber companies and campesinos--to establish the measures by which the quality of management will be judged--and which can effectively monitor and evaluate ongoing use. In practice neither the dialogue nor the monitoring and evaluation have occurred. Contracts have been granted for enormous areas--the largest being 300,000 ha and the average more than 100,000 ha. Many experts have asserted that sustained-yield management of tropical forest requires 40 years. But the long-term contracts--only 5 percent of the total--last only 11 to 20 years. Eight percent of the contracts are considered medium-term--up to 10 years--and the remaining 87 percent are one to three years. The sizes and terms of the concessions have provided every incentive to deplete the resource despite a contractual requirement to submit a sustained-yield management plan and plant two trees for every one cut. Only 5 percent of the concessionaires have submitted the required management plan. There is no monitoring and evaluation of compliance with plan requirements or the obligation to plant trees. The combination of the uncertainty resulting from short-term contracts and the lack of monitoring and evaluation has encouraged a mining mentality in the industry. 7.26 In recent years recognition of potential rights of indigenous forest tribes and demands by conservation movements for a moratorium on logging have introduced additional uncertainty. In the case of forest tribes, a number of critical conflicts have arisen. A dramatic case is the Yuquis. As a result of the construction of a penetration road which was followed by a combination of logging operations and spontaneous settlers, the tribe was forced to lehve an area. Such events clearly damage the public image of the industry--inside and outside Bolivia. The most widely publicized case has been the Chimanes, who have claimed that the reclassification of the Chimanes reserve into a production forest in 1986 threatened their livelihood and culture. Under a 1990 decree, part of the reserve reverted to the tribe at the expense of some forest concessionaires. In response to pressure the government in 1990 decreed a historic ecologic pause ("pausa ecoldgica hist6rica"), which suspended all processing of new forest concessions for five years. Because about 90 percent of operators have contracts for less than five years, and, on average, could not expect to exploit more than 5 to 10 percent of their concessions at current rates, there is a strong incentive to accelerate cutting. 7.27 Another dilemma is the use of land, mainly in the Piedmont area, for coca production. Few countries confronting renewable resource management issues have had to cope with a phenomenon that directly employs about 10 percent of all households--or 20 percent of the rural labor force--and accounts for almost 30 percent of agricultural output, but at the same time is illegal under international conventions. Because coca is banned, it is not susceptible to resource management by any of the instruments that have been discussed. Its importance from a resource management standpoint rests on the generally fragile nature of the land on which it is grown--the Yungas and Chapare in the Piedmont--and the equity implications: the growers are campesinos whose alternative opportunities are economically far inferior. -66- 7.28 In the 1960s the area of coca cultivation was stable at around 3,000 ha. The area expanded to 23,000 ha in 1980 and to 71,000 ha in 1986. Chapare became the dominant area, increasing from 1,000 ha in 1969 to 51,000 ha in 1989 and accounting for 85 percent of production. 7.29 The potential for resource degradation associated with this coca expansion stems from the deforestation of 70,000 ha to 80,000 ha, some of which is on sloping land susceptible to erosion and some of which is in reserves such as the Isiboro-Secure National Park. There is no evidence that the crop is more damaging than others. But the income generated per hectare is five times the next-best traditional crop, oranges. Thus, the management questions are what and where these 61,000 families would produce if they were not growing coca and what policy options there have been to alter the pattern of resource use. Without the opportunity to plant a highly labor-intensive crop that yielded a value-added approaching US$4,000 per hectare (the average area of coca per farm is one hectare), the rate of deforestation might have bcen orders of magnitude greater. 7.30 In sum, command-and-control instruments have been useless in the Lowlands. Although the government set aside almost a third of the area as reserves, no effort has been made to control forestry activities, expel colonists or cattlemen, or orient settlement away from areas unsuited to agriculture. In addition, the distortions imposed by "free" land, forest, and credit, and the absence of taxation led to a pattern of resource use that was entirely rational for the individual user but irrational from a long-term social viewpoint. Productive lands were held idle for speculative reasons. The economic rent attributable to former state lands, state-financed highways, and subsidized credit accrued to the landowners. Land was seen as unlimited, so productivity and sustainability were non-issues. Thus, the application and nonapplication of economic or noneconomic instruments have reinforced each other in contributing to resource management where production has been inefficient; where little, if anything, has been done to improve equity; and where, in the absence of an analysis of biological change and its economic consequences, it appears that natural capital has been unnecessarily depleted. Other Instruments Used by Donors 7.31 Information. Bank reports have referred to the unsatisfactory data base for planning, and its lack of reliable information on renewable resource potential. There is general agreement that the government has progressively developed sophisticated data processing systems and fed such systems with highly questionable material. Given the vagueness of the plans, virtually any investment project could be claimed to be fully consistent. In spite of all their shortcomings, however, the National Plans from 1960 to 1989 did set in motion a type of resource management-the emphasis on the Lowlands and the transfer of population to them. Unlike many donors, the Bank--at leavt until the Eastern Lowlands Project in 1990--has dissociated itself from the economic planning exercises. 7.32 USAID and the Bank have both used the preparation of special reports on the environment as a means of introducing information to decision-makers. USAID produced two "environmental profiles" (1979 and 1986), and the Bank has prepared an environmental action plan (World Bank 1980f), an environmental issues paper (World Bank 1989t), and has been collaborating with other donors in the preparation of a second environmental action plan. These -67 - documents have been intended to generate dialogue in the country and among donors. For example, the Bank's environmental issues paper was circulated to participants in the 1989 Paris Club meeting on Bolivia. Other agencies have used the preparation of reports as a vehicle for integrated development of the Amazon region (OAS 1987), and FAO assisted in the preparation of the Forest Development Action Plan for 1990-95, through which 75 project proposals were submitted to a donors' pledging meeting (FAO 1989). In principle the two environmental action plans are also intended as a structure for obtaining external funding in support of environmental management. These are all relatively recent initiatives and it is too early to assess their effectiveness in improving renewable resource management. 7.33 Public sector management. A wide range of initiatives by the external aid community in the past 30 years have focussed on public sector management, as well as helping to support planning (see above). Agencies have been active over a relativ.ly long period of time-- notably, in agriculture (USAID) and in water supply and Lowland agriculture, the two German agencies (GTZ and KFW). A number of agencies such as the Banco Agricola de Bolivia and the Bolivian Development Corporation were seen as key vehicles for technology transfers. Efforts to strengthen their capability for this function were made by several agencies such as COTESU, the Danish International Development Agency (DANIDA), and IDB. IDB made the first move to introduce environmental impact assessment into government procedures through its loan for the Chimore-Yapacani highway in the Piedmont. The same loan also supported the creation of a subsecretariat for environment in the Ministry of Agriculture and Campesino Affairs. Over the years UNDP has provided foreign experts and training in a wide array of government agencies and has on occasion paid salaries or topped-off salaries of staff in order to upgrade managerial and technical capacity. In the late 1980s the Bank became the major actor in strengthening public sector management. 7.34 In two areas there has been a government move to replace the public sector by NGOs. For example, much of the extension work in the Altiplano and Valles has been left in the hands of such agencies. In addition, it has been proposed that the management of at least some of the national parks and nature reserves be transferred to NGOs--on the assumption that strengthening the CFD is not viable in the short run. 7.35 Community development. Except for activities of the International Fund for Agricultural Development and the Campesino Action Program of the European Economic Community, community development in the rural Highlands has been largely the preserve of NGOs. Such activities have important implications for land use, but the NGOs' operations and effectiveness essentially remain a mystery. The NGOs' approaches differ widely (many are politically or religiously motivated), they do not cooperate with each other, and the government has no mechanism for coordinating--or even receiving information on--their activities. If information is generated through social studies, resource surveys or monitoring and evaluation, there is no way to build on or replicate the experience. Despite this lack of information, it is widely accepted that the NGOs have improved resource management. They work on small uncomplicated projects and generally adopt a farming systems approach to their research and extension activities, which has been much more effective than the crop-specific model applied by the Bolivian Agricultural Technology Institute. - 69 - CHAPTER 8: FINDINGS AND SCOPE FOR CHANGE 8.1 From 1960 to 1990, external aid strategies for Bolivia were generally designed and implemented without properly taking account of how renewable resources could be developed to efficiently supply a sustainable flow of goods and services--and to improve equity patterns in the distribution of the costs and benefits of the process. Although the donor community probably has long understood the strategic importance of renewable resource management, the objective was not enunciated until the late 1980s. And the statements did not identify projects or other development instruments as appropriate tactics for its achievement. 8.2 Any inference about the Bank's past influence must be tempered with the realization that the Bank has not been the main actor in resource management. Nevertheless, it does point up a need for the Bank to involve itself more actively in renewable resource management, although a valid concern is that the Bank--like other donors--is relying on limited information to promote systems that may prove unsustainable. Policy-Resource Use Linkages 8.3 Information. The record on resource management suggests that the quality and quantity of information has been inadequate for sound policy and for decisions by resource users. This is not unique to Bolivia. The Operations Evaluation Department has raised this information issue in several instances. It may be argued, however, that the information was adequate but was not used because of institutional and capital constraints. The evidence suggests that commercial farmers in the Lowlands were unaware of differences in land quality and, thus, the damage that would be caused by mechanized land clearing and continuous monocropping. If techniques exist for a sustainable and significant increase of yields and income per capita in the Altiplano, this information was not effectively transmitted to the campesinos. 8.4 For 25 years, a variety of external agencies have sought to strengthen public sector management by helping Bolivia to develop information systems to enable better accounting, investment, public financial management, tax collection, land titling, and project monitoring and evaluation. But the acute inadequacy of information persists. 8.5 Institutional context. A basic constraint to improved resource management has been the chronic weakness of the central government in its dealings with regional pressure groups. As a result the short-term private rent-seeking focus of renewable resource users has predominated. This situation has been exacerbated by widely held perceptions among donors and policy-makers that there are huge unexploited fertile land resources available to the nation's small population and that Bolivia, as a poor country, must initially mine its natural capital. 8.6 In spite of formal institutional arrangements (laws and regulations), the institutional arrangements that influenced changes in resource use were mostly informal--minimal or zero licensing fees to use forests, water, or fisheries; state lands titled to private owners without charge; no control over resource use in reserve areas or harvesting of wildlife; no regulation of water use and quality; no taxation on resource assets and little tax on income earned from such - 70 - assets; and the allocation of credit. These, combined with the allocation of public investment to physical infrastructure (roads, irrigation and hydro-power), were the main instruments of resource management. 8.7 Capital constraints. The solution to many of Bolivia's natural resource management problems lies on the economy's ability to accumulate human capital, although other forms of capital are important too. Human capital in the Highlands was seen to be constrained by "quality," which was believed to limit the possibilities for introducing new technology and to induce cultural resistance to migration. In the Lowlands, the human capital issue was "quantity"-- not enough people to exploit the natural resources. Moreover, the prevailing view was that no more infrastructure (physical capital) would be useful in the Highlands because of the natural and human capital constraints. In the Lowlands, physical capital in the form of access roads and roads from the farm to market and storage were seen as the constraint to mobilization of natural capital. Financial capital for the Lowlands, to catalyze the whole process, was to come initially from state enterprises and external aid. Mobilization of private savings on any scale did not materialize until the 1980s. 8.8 Policy effects on resource use. The Bank's policies have clearly oriented the paaern of resource development (see chapters 4 and 7). However, the implementation of many policies, or the lack of, may have contributed to the resource degradation--of soils, forests, and wildlife (see chapter 7). The negative effects of nonenforcement of conservation regulations-- forest management plans, reserves, or wildlife protection--are clear. In the case of expansion of the agricultural frontier, the problem lies more with an institutional inability to take careful consideration of all forms of capital than with the policies. Within this context, the granting of nonrecoverable credit, the noncollection of taxes, or the granting of huge tracts of land without any obligation to pay or use the resources on some rational basis is not justifiable. But the contribution of such policies to resource degradation would be hard to quantify. 8.9 The application of these policies in the Highlands can be assessed in terms of what they have not done. Again, there is no quantitative evidence to assess the net environmental effects. Nor can any economic and social costs be neasured. Still, it is clear that the policies did not contribute to an increase in productivity--which might have slowed the rate of migration to the Lowlands. (Such a result would have been counter to the objective of encouraging migration.) The urgency of Bolivia's economic crisis dictated that there was never time to start some of the long-term programs that might take a generation or two to affect resource use in the Highlands. One might speculate that if more investment had been made in human, institutional, and physical capital in the Highlands in the past twenty-five years, resource degradation would have slowed. Conversely more physical and financial capital allocated to the Lowlands would have accelerated the rate of degradation. The Role of External Aid 8.10 The larger donors had broader objectives with diversified portfolios and a definite interest in policy; these donors included the Bank, GTZ, IDB, UNDP, and USAID. Each of the small bilateral donors focused on areas where it had a comparative advantage consistent with its concept of development, which was generally a poverty orientation. These donors included Canada, Denmark, the Netherlands, Switzerland, and the Urited Kingdom. They had limited - 71 - aspirations for influencing policy at the national level. With few exceptions--for example, Conservation International and Liga de Defensa del Medio Ambiente, the association of environmental NGOs--the NGOs similarly focused on community development and avoided association with government policy. 8.11 The history of economic mismanagement in Bolivia has long dictated a dependence on foreign aid to deal with monetary stability and chronic foreign exchange deficits. Since introduction of the New Economic Program in 1985, the economy has showed a marked improvement in stability. Because of the role of the public investment program, in which conflicting regional political interests participate actively, and the importance of the project pipeline in maintaining the flow of money, the need for foreign technical and financial aid has resulted in a strong external influence on policy. This influence is manifested through the selection and design of projects that directly or indirectly affect the use of renewable resources, technical assistance in the formulation of plans and policies, the conceptual orientation for resource development, the training of professionals for the public and private sectors, and conditionalities attached to lending. 8.12 For years, donor agencies, including the Bank, have espoused greater coordination in order that this influence be more responsive to the country's needs. The Consultative Group has partly fulfilled this role. Regardless of the degree of coordination, it must be accepted that donors as a group have tacitly approved many of the de facto resource management policies that were implemented. Key Findings 8.13 A review of Bank documents shows, among o ..er things, that: * The ability of Bolivia to achieve sustainable development goals will depend to a significant degree on how well natural resource management concerns are inte- grated into all levels of decision-making. This is particularly true for areas char- acterized by severe population pressure, a large number of people under the pov- erty line, and fragile ecosystems (in the Highlands and the Lowlands). Several development instruments--including adjustment operations, public expenditure and investment reviews, national environmental action plans, and policy dialogue-- could be more effectively used to help achieve such integration. * The country's development policies are strongly influenced by a bipolar orientation of policy-makers--seeing development as involving trade-offs between the Alt:plano with its high population density, limited resource base, and significant levels of poverty, and the Lowlands with almost the opposite profile. The bipolar orientation, however, may not be the most effective way to approach the country's development problems. * The donor community has overestimated the level of readiness of institutions to implement programs that affect natural resources. This has led to insufficient attention to institutional and human capital development. Such development - 72 - likely would enhance investment productivity in the medium term and would provide a sustainable basis for resource management in the long term. * The completed Bank operations have involved extensive resource use. If natural resource-based programs are to succeed in the future, policy, institutional, and other reforms affecting resource management should be designed and imple- mented. The recently prepared forestry sector strategy provides a strong framework for future actions in areas where major changes in land use are taking place. * The Bank's instruments of intervention have proved much weaker than expected at appraisal. An in-depth study--using better information than is now available-- should be conducted on the effectiveness of economic instruments and alternate environmental interventions. * The decisions about the management of natural resources have been made without sufficient information. In this regard, the Bank should continue to support the development of information-gathering systems in Bolivia and increase its ability to network with other specialized national, regional, and international development agencies. The Bank's Role 8.14 The Bank'i association with Bolivia dates from 1955. Three economic missions were undertaken before the first loan in 1964. Since 1986 the Bank has been dealing with a very different Bolivia than the one it became accustomed to in the previous two decades. So, the positive actions taken in the past five years might have been undertaken earlier if the right institutional conditions had arisen. Nevertheless, a number of changes have occurred --like the New Economic Policy--which characterize the learning process and, at the same time, offer guidance for the future. 8.15 The information base for action. In the past, the Bank has not been particularly discerning about the quality of information available for decisions on resource management. Furthermore, because of discontinuities in the lending program, it has not been concerned with promoting the cumulative collection and analysis of information that could have contributed to better decisions. This situation has changed with the line of lending in public sector management and the Eastern Lowlands Project. 8.16 The link between projects and renewable resource management. The Bank has criticized national plans for failing to link projects with renewable resot, ce management. But the Bank itself did not establish a clear link between its projects in various tectors (particularly agriculture) and the larger strategy issues in resource development faced by the country. This situation has now changed. 8.17 Discontinuity. Because of the complex interface between natural and social systems, renewable resource management does not lend itself to short-term approaches. For this reason the Bank's brief forays into beef exports and integrated resource development contributed - 73 - little to the strategic resource issues. Recent developments suggest the Bank is seeking a more gradual approach in which the development of institutions and an information base may be a prerequisite to the infusion of financial capital. The manifestations of this cha-nge are the structural adjustment loans, public sector management projects, the agricultural technology project, the range of special studies undertaken since 1987, and the extended disbursement periods proposed in recent projects (Eastern Lowlands). 8.18 Recognition of the complexity of the problem. An Economic Memorandum issued in 1990 stated: Basic issues remain unsolved: can the Altiplano support its present population at an acceptable standard of living' are there different crops or techniques which could increase productivity? v Are the benefits and costs of encouraging greater migration to the Lowla.-,? and what are the appropriate roles of the government, foreign donors, NGOs and the private sector (World Bank 1990k, 49)? 8.19 The fact that such basic issues are listed as unresolved after 600 projects and US$2 billion in foreign aid provides food for thought. The Bank is in a good position to emphasize the urgent need to develop a long-term strategy for the effective management of renewable resources. The Road Ahead 8.20 The Bank and Bolivia clearly appear to be moving in the right direction. The environmental aspects of development are being addressed more systematically, and several projects and policies are being formulated to improve natural resource management. This is the result of efforts by Bolivians, donors, NGOs and the academic community. The opportunity now exists to reorient part of the policy dialogue and build some safeguards to avoid unnecessary degradation of natural resources in the Altiplano and in the Lowlands. Four actions are suggested here. 8.21 First, in the Altiplano, development programs and policies need to explicitly address the two main concerns: poverty and environmental degradation. Most donors have dealt mainly with poverty, and paid little attention to the environment. The two, however, are intimately related. Measures are needed to build a consensus among decision-makers in Bolivia, donors, NGOs and the academic community on ways of promoting sustainable development. The Bank-financed agricultural research project (World Bank 1991a) is a step in the right direction, but other agricultural sector services also have to be improved and their focus on environmental issues sharpened. Greater attention by the Bank to the Altiplano is essential. 8.22 Second, the traditional assumption that the Lowlands have abundant resources and carrying capacity needs to be seriously questioned 'or at least three reasons. One, recent soil surveys have demonstrated that land is not abundant in terms of either quantity (the hectares of land that can yield sustainable income over the long term) or quality. Two, the potential public benefits of several of Bolivia's natural resources (forests, wildlife, and biodiversity) have begun to be clearly recognized by policy-makers in Bolivia and outside. The Bank may, therefore, face critical scrutiny about the scale and nature of the development effort in the lowland Plains. This -74 - may also be the case in the Piedmont, which is experiencing substantial soil erosion, sedimentation, and changes in soil texture. Three, the instruments used by the government are not effective enough, particularly because the quality of human and institutional capital is inadequate. If natural resources in the area are to be conserved, intensive agriculture has to be practiced in a sustainable way. 8.23 Third, the Bank has to make stronger efforts tu ensure that environmental concerns influence macroeconomic and sectoral strategies. The two need to be considered together in formulating such instruments as public expenditure and investment reviews, adjustment operations (country- or sector-wide), and national environmental action plans. Bolivia's experience demonstrates that macroeconomic and sectoral policies are not neutral with respect to natural resource use. In formulating macroeconomic policies, the Government and the Bnak need to be aware of the likely impact of these policies on the incentives for and pattern of use of natural resources so that corrective action can be taken. This is particularly necessary to compensate for externalities or other market failures. For example, exchange rate depreciation may increase the profitability of forestry, and this increases the importance of putting in place forestry policies, such as concession arrangements and taxes, which are consistent with sustainable management of the forests. This record shows that an array of such policies, market- and nonmarket-based, identified in the past to correct for external effects were not effectively implemented. 8.24 In this context, traditional notions concerning the sources of growth and comparative advantage also have to be revised. Decision-makers in Bolivia need to adopt pricing and incentive policies that recognize as far as possible the full opportunity cost of the natural resources used in production, consumption, and trade. For several decades, most natur.- resources in the Bolivian economy have remained excessively undervalued. The result has been that, essentially, Bolivia has been exporting its undervalued natural wealth. Reference prices and comparative advantage indicators have been based on false notions of the economic value of those resources. And because of a lack of adequate arrangements the unofficial transactions and trade levels have appeared to be large. The Bank could help by providing more technical assistance on these matters. Greater effort should be made to develop economic indicators of natural resource use and management, poverty alleviation, and environmental sustainability. The Bank should also intensify its effort in information gathering, studies, and resource assessment activities. 8.25 Fourth, for the longer term, decision-makers in Bolivia should seriously consider giving higher priority to the development of human and institutional capital. Trade-led adjustment can indeed benefit the economy, although many structural constraints, like domestic price distortions and externalities, have reduced its effectiveness. But, while trade liberalization should continue to be encouraged, it should not be allowed to damage resources that are important to Bolivia's future generations and to the world community. ANNEX A - 75- Pac.-e I of !4 THE LITERATURE AND ITS INFLUENCE ON RESOURCE MANAGEMENT POLICY This appendix analyzes how the communities benefitting from land reform. academic literature saw the relationship The research found that favorable climate and between economic development and changes ecology were a necessary but not sufficient in the use of natural resources--and the condition for success. A small body of relevance of the literature to policymaking. literature did emerge from this period The literature of the 1960s and 1970s made a challenging many of the commonly held limited contribution to an understanding of the perspectives of the development potential of dimensions of natural resource use. Most of the Altiplano. A study supported by the U.S. the literature describes land reform, land Agency for International Development tenure, and colonization, but offered little (USAID) on the range potential of the analysis linking the issues to resource Altiplano found the ambient conditions of the management The literature of the 1980s went area favor a quadrupled production of range further in analyzing the interactions between vegetation. In addition, pilot projects development and resource use--identifying demonstrated the potential for native forages institutional constraints, inappropriate policies, to control soil and watershed erosion. It and cause-effect relationships. As in the appears, however, that neither the government earlier period, however, little quantitative nor donors paid serious attention to this work. analysis was done. Research and Resource Use 1965-80 Policy-makers and donor organizations focused more attention during this period on The early research from this period the vast development potential of the focussed mainly on issues related to the underpopulated and resource-rich tropical development of natural resources, particularly lowlands or Oriente. The literature of the colonization of the tropical lowlands and land 1970s was dominated by studies on reform in the Altiplano and Valleys. The colonization and resettlement. One of the literature of 1965-70 concentrated on agrarian more interesting studies to be undertaken in reform and its effect on small farmers. The the late 1960s was an evaluation financed by main concern was with the economic, social, the Inter-American Development Bank (IDB) and institutional impediments to increased of tropical colonization projects. The report agricultural production and an improved noted considerable gaps in information on standard of living for Bolivian campesinos. tropical forests and soil management, The literature suggested that the strong social questioning the potential for development of and economic justifications for land reform tropical lands from technical and economic overrode all other considerations such as the perspectives. The report discussed the long-term effects on natural resources. The political reasons behind colonization as being main assumption of this literature was that the more important than the economic or land parceled out to small farmers was technical viability of such plans. Other studies productive. Little analysis was directed at the suggested that settlement planning would change in the resource base resulting from benefit from a better understanding of the land reform. ecosystems in tropical environments. These studies were complemented by research on soil In the 1970s, studies continued to erosion and forest management resulting from analyze the effects of agrarian reform in the the recognition that soil erosion was Bolivia's highlands. Case studies found that certain key biggest constraint to increased food factQrs contributed to the economic success of production. ANNEX A - - Paze 2 of 4 Studies of tropical settlements degradation. A recurrent theme was the undertaken during the 1970s cited evidence impact of colonization on natural resources. that spontaneous settlements tended to be Two studies noted the rapid deforestation, soil economically more successful than planned erosion and flooding due to settlers. But the settlement projects. However, lack of regula- literature noted that official policy tended to tion over these settlements may have ignore the adaptive requirements of the contributed to the destruction of the natural colonists. It was suggested that colonization resource base. A comparative study of was part of grander strategies of national spontaneous and directed colonization on the security and the avoidance of land reform in slopes of the Andes and the lowlands of areas already settled. At the same time Eastern Bolivia undertaken in 1970 identified important constraints that affected production key production and planning problems and resource management were identified, associated with these projects, such as including lack of scure land tenure, inappropriate farming methods and a failure to inadequate system of roads, absence of soil properly address climate, hydrological and surveys and soil mapping, inadequate health morphological factors. Other studies supported and education services and insufficient by the Food and Agriculture Organization capitalization. (FAO) and UNESCO concluded that a better use of Latin America's financial resuurces Research based on field studies in the would be investmenting in established farming most important settlement areas--Yungas, areas. Chapare, and Santa Cruz--suggested that the spontaneous settlements did not achieve the Research and Resource Use 1980-90 same level of economic success as the independent or directed colonies. Success was The breadth and volume of research measurtd in terms of short-term economic on natural resources increased dramatically in profitability rather than in terms of sustainable the 1980s. The first comprehensive study on agricultural systems, with much of the so-called natural resources and the environment in successful spontaneous settlements due to the Bolivia was carried out in 1980 with support high marginal productivity of cattle ranching. from USAID. The study identified the extent Research carried out in the late 1980s helped of resource degradation, and the institutional to gain a more precise understanding of the constraints and weaknesses facing resource economic losses associated with current management. USAID subsequently undertook agricultural and timber harvesting practices. a more rigorous look at the relationship between its development programs and natural In addition to the environmental resouice management. Other studies were problems, one study found that the done on the role of non-governmental development of the tropical lowlands has been environmental organizations and on biological characterized by violent conflicts as contending diversity. The FAO supported scientific groups struggled to control land, labor and reports on soil conservation, forest resources, capital. The contours of the new frontier irrigation and watershed management, and societies were shaped by preexisting forms of land rehabilitation. These reports were social and political organization as well as the technical providing little insight into the rela- geographical, ecological and demographic tionship between policy and natural resource characteristics of a given area. The study management. pointed out that the continued presence of virgin jungle land makes it possible for peasant Research during the 1980s reflected households to reestablish themselves in more the growing concern over the relationship remote zones when yields decline. This in turn between development and environmental benefits large scale cash crop and livestock AN EX A Pave 3 of 4 producers who occupy the already cleared reserves, the short duration of timber land. These prevailing forms of social and concessions, and an overall disinterest in forest political organizations have a negative impact management. Despite the 1974 decree which on renewable resources and lead to less than empowered CDF to establish and manage five optimum uses of land and forest in the categories of forest, CDFs role has been little Oriente. more than the government's fiscal agent for the sale of timber. Literature on highland resource management and development also emerged Another area that has not attracted during the 1980s. These studies analyzed the much attention but has important implications relationship between economics and for resource management is the structure of indigenous resource management systems, government in Bolivia, especially the legal and noting the principle economic organization administrative relationship between the regions strategy in arid areas is risk management, not and the central government in La Paz. yield maximization. The farmers diversify Modern Bolivian political history is production, spatially distribute settlement characterized by government instability and patterns, develop social networks to share risk, weakness at the "center" and increasing and develop special productive techniques to economic and political strength in some of the insure the stability of the resources. Contrary regions, notably Santa Cruz. This situation has to the generally accepted "tragedy of the important implications for policy development commons" argument, research among and implementation and donor organization pastoralist in Bolivia demonstrated that strategies. strategies were adopted to reduce resource degradation. The studies also show that Macroeconomic Policies present practices in the Altiplano of cooking with animal dung or the t'ola bush, while being Despite the important role played by economical, contribute to the depletion of soil macroeconomic policies, structural adjustment fertility and erosion. and economic reform. the relation between policies and natural resource utilization has Public Administration received little attention in the literature. The most relevant work is contained in World There were few studies on the role Bank ESW. The analyses focused on the played by government institutions in managing impact of economic reform on prices, natural resources, and no systematic effort has production costs, crop choice, yields and trade. been undertaken to identify specific Environmental problems such as deforestation, institutional and public policy constraints. The soil and wind erosion, and misuse of pesticides Bank's Economic and Sector work (ESW) has associated with colonization and coca probably contributed the most, especially in production has been mentioned, but not within identifying the institutional constraints that the context of macroeconomic policy. Finally, have been impediments to implementation of the well publicized debt-for-nature swap development projects and policies. The undertaken by Conservation International has USAID-funded Environment and Natural attracted a fair amount of interest from the Resource Profile drew attention to the policy research community. The analysis has and institutional weakness of the Centro de primarily focused on the problems of Desarrollo Forestal (CDF), the government implementation and political liabilities. agency charged with forest management. The Suggestions of possible economic effects of the report highlighted CDFs abdication of deal have been put forward (i.e. higher responsibility for sustained production cf inflation) but have not been subject to timber from the Chor and Guarayos forest rigorous analysis. - 7P - X A "are 4 of 4 Relevance of the Literature largely descriptive in character and lacked quantitative support and analysis. Important The literature prior to 1980 was far relationships between law, economic policy, more focussed on broader issues of social and and the behavior of resource users were rarely economic change than on resource use. The discussed. A basic framework to evaluate underlying and usually unstated assumption policy options at both the macro and micro was that land reform would put the Altiplano level and to assist donors or governments in and valleys on the road to modest economic decisionmaking was never fully elaborated. At development with increased income, the same time, there was some question as to employment and equity. At the same time whether better analytic work would have made there were concerns about the "carrying much difference given the predisposition and capacity" of the highlands that suggested the short-term horizon held by most need for either demographic change or administrations during this period towards technological changes in production. The resource development in the Oriente. relationship between poverty and resource degradation in the Altiplano have largely been One is struck, however, by the growing ignored. body of literature that draws attention to the continuing deterioration of the resource base Some of the research undertaken in the Altiplano and the increasing problems during this period questioned the development faced by both small- and large-scale of the Oriente on economic and technical agriculturalists in the Oriente. Cause-effect grounds, it appeared to have been insufficient relationships related to changes in resource to convince policy makers and some donors to use, declining yields, soil erosion, and change their policies on, or approach to deforestation while not overly complex from a lowland development. The one exception to technical standpoint, appear to elude this was the World Bank which up until researchers and policy maKers in their efforts recently had not funded any colonization or to prescribe policy and management options at tropical lowland development projects. The the community, regional, and national level. literature did become somewhat more Research that challenged prevailing policy and analytical in its treatment of colonization and opinions on development in the Altiplano and commercial agricultural and livestock valleys was never pushed to center stage in the development in the Oriente. Research began debate over lowland vs. highland development. to see the relationship between tropical soil fertility and the decline in yields for cotton, sugar cane and rice. Other findings included a lack of rational land use planning, the extensive nature of slash and burn agriculture, 1/ In 1990 the Bank approved the Eastern Lowlands Natural Resource Management and Agricultural and an increased destruction of habitat and Production project. In addition to the productWo biological diversity. opportunities in the region, the project will address important resource issues including a land-use plan, research on soil conservation, rural road Conclusions improvement, and support for the indigenous peoples Irving in the regino. The Bank believes that the goals Despite the increasing volume and of this project are consistent with the Bank's strateg of assisting the government in its effort to increase conceptual rigor that characterized the last growth, diversify productive activity, and improve three decades of research on renewable public administration. resource issues in Bolivia, the analysis was ANNEX B Page 1 of 3 LIST OF STUDIES ON BOLIVIA'S RENEWABLE NATURAL RESOURCES Soil Studies 1. Caracterización de los Suelos de la Amazonia Boliviana (Ing. Marcial Mactas, Trinidad, Bolivia, 1984, 153 Páginas, anexos y mapas). 2. Recursos de la Tierra de un Sector Boscoso: Provincia Vaca Diez Departamento Beni. (Ing. Roberto Sanchez; Riberalta, Beni, Bolivia, 1982, 118 páginas en dos secciones). 3. Estudios de Suelos: Area del Proyecto Vaca Diez. (Ing. José Iporre; Trinidad, Bolivia, 1984. 59 páginas, anexos y mapas.) 4. Estudios de Suelos: Area del Proyecto Marban. (Ing. Marcial Macías; Santa Cruz, 1985. 73 páginas y mapas). 5. Estudios de Suelos: Area del Proyecto Ballivián Sur (Ing. Marcial Macías; Santa Cruz, Bolivia; 1985. 73 páginas y mapa). 6. Estudio de Suelos: Area del Proyecto Palma Africana. (Ing. Marcial Macías; Santa Cruz, Bolivia, 1985, 67 páginas y mapas). 7. Estudio de Suelos:Area del Proyecto San Ignacio de Moxos. (Ing. José Iporre; Santa Cruz Bolivia, 1985. 48 páginas, anexos y mapa.) 8. Estudio de Suelos: Area del Proyecto Santa Rosa del Abuná (Ing. José Iporre; Santa Cruz, Bolivia, Marzo '85, 46 páginas, anexos y mapas.) 9. Estudios de Suelos:Area del Proyecto Ballivián Norte. (Ing. Marcial Macías; Mayo de 1985, Santa Cruz. 59 págs. y mapas). 10. Estudios de Suelos: Area del Proyecto Federico Román (Ing. José Iporre; Santa Cruz, Bolivia, Abril de 1985. 43 páginas, anexos y mapas.) 11. Estudio de Suelos: Provincia Itenez-Mamoré (Ing. Marcial Macías é Ing. José Iporre; Santa Cruz, Bolivia, 1986. 65 páginas y mapas.) 12. Estudios de Suelos: Area Santa Rosa de la Roca. (Ing. Marcial Macías é Ing. José Iporre, Santa Cruz, Bolivia, 1986. 65 páginas y mapas). 13. Informe Técnico: Proyecto de Asentamientos Area Yucumo (Ing. Marcial Macías é Ing. José Iporre; Santa Cruz, Bolivia, 1987. 53 páginas y mapas.) 14. Informe Técnico: Proyecto de Recuperación de Tierras Desmontadas de CORDEPAZ. (Ing. Marcial Macias é Ing. José Iporre; Santa Cruz, 1987. 27 páginas, anexos y mapas.) 15. Estudio de Suelos: Santa Rosa de la Roca-Piso Firme. Forestry Studies 1. Recursos Forestales de un Area de la Provincia Vaca Diez, Beni. (Ing. Federico Bascopé, 1981. 33 páginas, anexos y mapas.) 2. Report on the Botanical Resources of the Riberalta Area. (Dr. James Solomon; 1981, Riberalta. 22 páginas y anexos). 3. Evaluación de Barbechos y Plantaciones de Goma (Ing. Jaime Magne, 1982. 11 páginas, anexos y mapas.) 4. Plan de Ordenación Forestal: Area de Reserva Forestal Florida- Yata y Area de Asentamientos. (Ing.Federico Bascope: 1982. 48 páginas, anexos y mapas). - 80 - ANNEX B Pare 2 of 3 5. Evaluación Forestal y Posibilidades de Aprovechamiento de los Bosques de Chive, Santa Rosa y Federico Román del Departamento de Pando. (Ing. Jaime Magne; Abril, 1985, Santa Cruz-Bolivia. 54 páginas, anexos y mapas.) 6. Inventario Forestal y Perspectiva del Aprovechamiento: Río Geneshuaga, (Ing. Jaime Magne; Santa Cruz-Bolivia, 1985. 20 páginas y anexos). 7. Evaluación Forestal de la Región de Bella Vista, Beni y sus Posibilidades de Aprovechamiento. (Ing. Jaime Magne; Diciembre, 1987, Santa Cruz, Bolivia. 35 páginas incluyendo 2 anexos y mapa.) Studies and Projects for the Highliands 1. Proyecto de Aprovechamiento de Aguas Subterráneas, Pozos de Hundimiento Tipo Ranney para Micro Riegos en el Valle Alto I de 1990. 2. Proyecto de Riego Pajpani-Ucurena, 1988. 3. Estudio de Proyección de Aguas Subterráneas en el Valle Alto-Bases de Trabajo e Información Complementaria, octubre 1972. 4. Análisis del Recurso Hídrico para el Distrito Agrícola del Valle Alto (Subsector Riego) H. Espinoza, 1983. 5. Estudios Hidrológicos del Valle Alto. Julio Zabaleta, 1977. 6. Clasificación taxonómica y capacidad de uso de los suelos del Valle Alto de Cochabamba. MACA, 1974. 7. Plano Hidrográfico Cuenca Valle Alto, CORDECO-Prefectura 1:100.000. Enero, 1973. 8. Posibilidades de aprovechamiento de Recursos Hídricos con fines de riego en los Valles Alto, Mizque y Aiquile de Cochabamba, Secretaría de Desarrollo del Trópico Boliviano. Ing. Colque, 1987. 9. Proyecto de riego del Valle Alto - Propuesta para la elaboración del estudio de prefactibilidad. Ing. F. Amurrio, 1985. 10. Proyecto de riego en diferentes zonas del Departamento de Cochabamba. J. Zabaleta, 1977. 11. Prospección Geofísica de resistividad para aguas subterráneas a lo largo del Valle de Cochabamba - GEOBOL, 1970. 12. Presa regeneradora de embalse del Río Cliza en el sitio Lagunitas al Sud de la población de Foco - Informe Preliminar Ingeniería Global, 1965. 13. Presa de embalse de la Laguna Chaquicocha para el Riego de la zona de San Benito - Ingeniería Global, 1965. 14. Resumen de proyecos y construcciones de unidades de riegos. Ing. F. Amurrio, 1979. 15. Información sobre el desarrollo del riego por bombeo en el Valle de Cochabamba, basado en la experiencia obtenida en el sistema de riegos por bombeo de Banda Arriba MACA, 1971. 16. Programa de Irrigación Altiplano Valles - Proyecto de Riegos Punata. Estudio de Factibilidad. MACA-GTZ, 1980. 17. Proyecto Galería Filtrante Zona Tarata, 1987. 18. Clasificación detallada de suelos y tierras con fines de riego de Tambillo, 1985. 19. Clasificación de Suelos y Tierras con fines de riego de Villa Mercedes, 1985. 20. Reconocimiento detallado de suelos de las áreas tradicionales trigueras del Departamento de Cochabamba. MACA, 1975. 21. Clasificación detallada de suelos y tierras con fines de riego de Villa Copacabana, 1988. 22. Clasificación detallada de suelos y tierras con fines de riego de Comunidad Flores Rancho, 1989. 22. Clasificación detallada de suelos y tierras con fines de riego de Río Seco, 1989. ANNEX B Pace 3 of 3 23. Clasificación detallada de suelos y tierras con fines de riego de Copapujgio, 1989. 24. Clasificación detallada de suelos y tierras con fines de riego de Sunchal, 1991. 25. Programa del Satélite Tecnológico de Recursos Naturales - Proyecto Centro y Sud Bolivianos, ERTS-GEOBOL, 1982. 26. Escurrimeintos Superficiales del Departamento de Cochabamba, 1990. 27. Clasificación de Suelos y Tierras del Valle Alto (parte plana), 1991. 28. Proyecto Presa Laka Laka, Esteban Arze, 1989. Studies on the Development of the Southern District 1. Estudio Semidetallado de suelos, Calsificación de Tierras para agricultura bajo riego, secano y salinidad de Omereque (sector Mesada-Pucara), 1984. 2. Estudio detallado de suelos y clasificación de tierras para agricultura bajo riego, secano y salinidad de Tarco Pampa Alto, 1984. 3. Estudio de factibilidad Unidad de Riego Novilleros, 1991. 4. Proyecto Unidad de Riego Omereque, 1985. 5. Estudio semidetallado de suelos y clasificación de tierras con fines de riego de Omereque (parte plana), 1985. 6. Estudio detallado de suelos y clasificación de tierras con fines de riego de Comunidad Cercado (Aiquile), 1989. 7. Informe del estudio detallado de capacidad agrológica de las tierras del Valle de Mizque, MACA, 1972 8. Estudio Agrológico Valle de Mizque, 1972. -93 - ANNEX C Page 1 of 3 BOLIVIA: THE NATIONAL ENVIRONMENTAL ACTION PLAN The Environmental Action Plan ronment. Increased mining activity, was designed to offer advice to however, will generate greater water Bolivia on how to counteract the pollution, damaging water supplies overuse of natural resources within for agricultural and human activi- the context of economic development. ties. In addition, expanded mining The draft referred to here was activities will also increase demand written in 1988, and has since been for charcoal for smelting, causing revised. After a quick overview of further deforestation in the the economic history of the country lowlands. after the Revolution of 1952, the report provides brief descriptions of the agricultural sector, geographical The medium-term outlook for divisions, and the socio-economic agricultural productivity levels in situation. the highlands and valleys show continuing decline. Exhausted soils The second part of the report and degraded watersheds will worsen provides an overview of the country's the endemic poverty of the regions. medium-term growth strategy as set The economic strategy calls for out by the 10-year Economic and institutional and legislative changes Social Development Strategy for the to improve land use, the tenure period 1988-97. The backbone of this situation, and boost production. The strategy relies on revenue generation report calls for major policy through export promotion from initiatives that include incentives traditional and non-traditional and educational programs designed to sectors, and import substitution. reduce destructive resource Growth is expected from the hydro- practices. carbons, minerals, agriculture and manufacturing sectors. Much of the anticipated growth is dependent on The economic strategy calls for the efficient management and use of major road and other transportation the country's natural resources. The developments into the lowlands to report therefore states that the expand commercial agriculture and impact of Bolivia's economic strategy trade with Bolivia's neighbors. The on the country's natural resources report notes the degradation that has and environment should be explicitly already occurred in the region due to recognized and accounted for in roads and colonization raising advance of major new initiatives. concern over the direction of future investments. The report calls for Planned Investments and Environmental strategic planning for road Implications development that will direct settlers to areas where permanent agriculture The economic strategy is feasible. concentrates on four main sectors for planned investment: mining, highland The final investment plan is in and valley agriculture, forestry. Presently, forests are transportation, and forestry. being commercially exploited virtual- Investment in each sector entails ly without control. The rate of numerous environmental implications. commercial forest exploitation is The mining sector has stagnated for piojected to increase by a factor of years which, ironically, has lessened four over the medium term, signif- its harmful effects on the envi- icantly accelerating the rate of -84 - ANNEX C Page 2 of 3 forest land degradation. The report for allocating water resources for calls for significant investments in protection, conservation, sewage strengthened institutional arrange- treatment, water supply, flood ments and associated policies, such control, and effluent discharge as improved concession policies that control. The plan would also capture a greater amount of economic determine the best source of water rent for the public and discourage for various users. The next step wasteful practices. In addition, the would be establishing appropriate report recommends greater areas be regulatory controls for use and set aside for protective purposes. quality of water supplies. This would There should also be a concerted involve strengthening the Ministry of effort to protect the indigenous Health, local and regional groups residing in many of the institutions, and the Ministry of forests. Mines and Metallurgy to better monitor the mining industry. Major Enviromental Priorities The third part of the report A similar strategic plan is discusses four environmental areas recommended for soils that would that need priority attention: air, identify and plan new areas best water, soil, and forests. For Bolivia suited for agricultural production. to make the transition from economic Areas inappropriate for agricultural stabilization to sustainable growth, use would be set aside. The measures are needed to control the Department of Soils should enlarge human activities that contribute to and rejuvenate its efforts to map and natural resource degradation. Better classify the country's s0.1s. use must be made of existing Restoration of degraded areas should government resources and new be attempted, with pilot projects investments must be made in testing different techniques for institutions, infrastructure and the different areas. Incentives should be productive sectors. The report provided to small farmers to encourages the government to incor- encourage the use of improved seeds, porate natural resource management tools and fertilizers. This would and environmental protection actions also necessitate improved extension into economic and social development and more secure land rights. strategies in order to anticipate and avoid irreversible damage to the Forest management and conser- resource base on which the economic vation also suffer from poor resource recovery and welfare of Bolivia's assessments that take into account people depend. the wide variety of uses and values flowing from the forests. Forestry The problems with air pollution production, agricultural production, are considered localized and and transportation development therefore, receive little attention. decisions may not be undertaken in Water is discussed largely in the the best long-term economic or context of mining activities, since environmental interests of the this sector has the greatest country. They may also conflict with potential impact on water quality and the objectives of other development quantity. The report calls for a decisions. The report recommends a strategic plan that assesses the strategic plan that would identify country's water resources in the the main goals and objectives for the context of current and projected use of forest resources in Bolivia. demand on quality and quantity. This The plan should include guidance on information would provide the basis how to achieve and balance the need ANNEX C "age 3 of 3 for wood products, watershed study and reform existing laws and protection, wildlife and biological institutions for environmental diversity conservation, and refores- protection and in the major areas of tation. Areas must be better identi- water, forests, agriculture, fied as to their present condition fisheries and mining. and designated for production, protec- tion and conservation purposes. Most importantly, Bolivia's forest conces- Conclusion sion and taxation policy should be appraised and where necessary amended The Environmental Action Plan to gain tight control of the logging is primarily a description of the process and better capture the eco- main resource issues and how the nomic rent involved. Appropriate government investment plan will incentives and institutional mecha- affect those resources. The main nisme need to be established to argument of the report is that control and regulate concessionaires Bolivia lacks a full understanding of and minimize negative environmental its natural resources, and therefore impacts. Other incentives include recomends resource inventories, and giving fruit and nut trees commercial accompanying institutional strength- or food value to farmers in order to ening to effectively mana,e those encourage planting among timber resources. Little time is spent on trees. the relationship between poverty and the environment. There is also little Finally, the report re,!ommends discussion of how to iLtegrate strengthening public institutions environmental concerns into the involved in conservation. Linkages economic strategy. The Environmental between the various national, region- Action Plan is more a document on how al and local levels are almost non- to conserve natural resources than existent on environmental matters. how to manage them in a sustainable The report recommends that major way. However, the report is effective actions be taken to improve in relaying concerns over the coordination. Regional departments possible resource degradation caused should strengthen those responsible by the investment plan, and the institutions to deal more effectively weakness of institutional capital to with natural resource management, affect the plan. land use planning, development con- trol and environmental protection. At the national level, a government task force should be formed to coordinate the several separate efforts now underway to ANNEX D `7- Table A-1: Projects Related to Renewable Resources, by Year, Sector, and Donor, 1966-89 Bilateral $US 1990 $US Year Sector Donor Project (thousands) (thousands) 1967 Agriculture Germany Cooperative Development 1,700 6,667 1969 Education UK Agricultural Training 1,300 3,881 Livestock Switz. Meat Production 1,700 5,075 1970 Livestock Switz. Cattle Production 320 880 1971 Institutional Germany Regional Planning 1,859 4,648 Education Germany Hydrology Training 2,340 5,850 1972 Livestock Denmark Milk Production 7,080 16,351 1973 Agriculture Switz. Olive Production 390 823 Forestry Germany Forest Management 921 1,943 Livestock Switz. Milk Cow Production 400 844 Livestock Switz. Milk Production 25 53 Transport Germany Road Construction 2,516 5,308 1974 Agriculture USAID Food Production and MktIng. 546 1,048 Agriculture USAID Agricultural Development 73 140 Livestock Italy Cattle Production 120 230 Livestock SwItz. Milk Production 580 1,113 Livestock Switz. Milk Cow Production 1,080 2,073 1975 Agriculture Italy Crop and Vegtable Production 65 114 Agriculture Italy Species Improvement 470 823 Agriculture Nethedands Cooperative Development 518 907 Agriculture Netherlands Small Holder Development 25 44 Agriculture Switz. Agricultural Services 140 245 Agriculture USAID Project Design 133 233 Education USAID Education Administration 2,200 3,853 Education USAID Administrative Reform 350 613 Health USAID Rural Health Services 485 849 Health USAID Rural Health Services 200 350 Irrigation Germany Water Resource Developmant 885 1,550 Irrigation Netherlands Feasibility Study 18 32 Natural Res. Germany River Regulation 1,462 2,560 Natural Res. Italy Watershed Mgmt/Hydroelectric 140 245 Transport Belgium River Dredging 25 44 Transport Belgium River Dredging 25 44 1976 Agricukre Canada-IDRC Quinua Research 316 513 Agriculture Germany Tarwi Production Agriculture Italy Production and Marketing 1,310 2,127 Agriculture Netherlands Small Scale Agriculture 160 260 - 88 - Agriculture Swltz. Cooperative Development 220 331 Agriculture Switz. Fruit Production 660 1,071 Agriculture Switz. Fruit Production 30 48 Agriculture SwItz. Agricultural Services 275 446 Agriculture UK Research and Extension 1,000 1,623 Agriculture UK Agricultural Research 155 233 Agriculture UK Tropical Development Agriculture USAID Food and Nutrition planning 500 812 Agriculture USAID Cooperative Development 7,500 11,295 Agriculture USAID Farming Systems Evaluation 435 OS5 Agriculture USAID Cooperative Developmont 3,425 5,158 Agriculture USAID Farming Systems 500 812 Education Netherlands Rural education 53 80 Education USAJD Ethnic Development 100 151 Health Canada-CIDA Water and Sewage Plan 1,058 1,717 Institutional USAID Nutrition PaInning 500 812 Livestock Brazil Livestock Credit 7,000 10,542 Livestock Switz. Milk Production 120 181 Natural Res. UK River Port Development 91 137 Transport USAID Rural Roads 8,500 12,801 1977 Agriculture Brazil Rice Drying 202 304 Agriculture Canada-lr;C Quinua Production 190 286 Agriculture China Tea Development 95 143 Agriculture China Oil Plantation 70 105 Agriculture China Oil Plantation 70 105 Agriculture China Tea Development 130 196 Agriculture China Pineapple Production 120 181 Agriculture China Rice Production 90 136 Agriculture Italy Crops and Livestock 92 139 Agriculture Switz. Small-Scale Milk Production 140 211 Agriculture Swttz. Forrage Seed Production 329 496 Agriculture Switz. Extension Services 280 422 Agriculture USAID Small Scale Agriculture 2200 3,313 Agriculture USAID Credits for Small Scale 8,500 12,801 Agriculture USAID Small Farmer Production 1,400 2,108 Agriculture USAID Project Implementalon 11,300 17,018 Development Brazil Regional Development 1,099 1,655 Development italy Colonization Development 138 208 Education Netherlands Rural Education 100 151 Education Netherlands Non Formal Education 130 196 Education USAID Decentralization of Education 1,785 2,688 Energy italy Geothermal Dev. 250 250 Forestry Canada-IDRC Reforestation 175 264 Health Japan Hospital Construction 3,500 5,271 Irrigation China Cotton Development 42 63 Irrigation Germany Small Scale Irrigation 724 1,090 Irrigation Netherlands Program development 100 151 Livestock Austria Cattle Improvement 112 169 Livestock China Hog Production 100 151 Livestock Denmark Milk Production 7,080 10,663 - P9 - Livestock Denmark Livestock Development Cre4xt 6,667 10,041 Livestock Denmark Livestock Development Credit 942 1,419 Transport UK Air Navigation Equipment 600 904 1978 Agriculture Germany Land and Water Policy 1,402 1,976 Agriculture Japan Food Production 2,500 3,521 Agriculture Netherlands Small Scale Agriculture 62 87 AgIculture Swiltz. Technology Diffusion 225 317 Agriculture SAItz. Training/Extension 1,400 1,972 Agriculture SwItz. Seed Production 1,000 1,406 Agriculture USAID Rural Development 2,500 3,521 Agriculture USAID Small Farmer Production 6200 8,732 Agriculture USAID Small farmer Credit 11,300 15,915 Agriculture USAID Agricultural Policy 1,115 1,570 Education Germany Ecology Research 2,390 3,360 Forestry Germany Forestry School 1,44 Z175 Institutional Canada-CIDA Forestry/Agdc. Feasibility 5.000 7,042 Institutional USAID Community Development 15,300 21,549 Livestock Denmark Milk Production 400 563 Population USAID Community Development 300 423 Transport Brazil Road Building 6,200 8,732 Transport USAID Rural Roads 13,000 18,310 Transport USAID Rural Roads 300 423 1979 Agriculture Canada-CIDA Extension Training 500 664 Agriculture ftaly Integrated Rural Developmert 138 183 Fisheries Japan Titicaca Fisheries Development Fisheries UK Resource Evaluation 50 66 1980 Agriculture Canada-CIDA Extension 452 571 Agriculture Canada-CIDA Training 41 52 Agriculture Canada-IDRC Food Marketing 67 85 Agriculture Switz. Cooperative Development 400 506 Agriculture UK Food Marketing 30 38 Agriculture UK Food Marketing Research 120 152 Agriculture UK Food Marketing 120 152 Hydroelectric Japan Feasibility Study 467 590 Irrigation Canada-CIDA Feasibility Study 2300 2,906 1981 Agriculture Canada-IDRC Qulnua Research 353 430 Agriculture Japan Food Production 1,200 1,463 Agriculture Japan Rice Development Agriculture USAID Colonization 8,000 9.756 Agriculture USAID Sector Development 11,300 13,780 Agriculture USAID Agricultural Production 3,700 4,512 Fisheries France Resource Evaluation 108 132 Livestock Denmark Milk Machinery 5,900 7,195 Livestock Japan Livestock Development Transport USAID Road Construction 2,372 2,893 Transport USAID Access Roads 9,000 10,976 Transport USAID Road Maintanence 1,999 2,438 - 90 - Transport USAID Road Mairtanence 4,995 6,091 Transport USAID Road Construction 7,189 8,767 Transport USAID Road Construction 4,750 5,793 Transport USAID Road Construction 33.200 40,488 Transport USAID Road Construction 9,374 11,432 1982 Agriculture Japan Machinery/Fertilizers 3,377 4,011 Environment Spain Ecosystem Research 84 100 Forestry Canada-IDRO Agroforestry 1983 Agriculture Belgium Agricultural Development 33 38 Agriculture Canada-IDRC Potato Proouction 200 233 Agriculture Korea Machinery 215 251 Agriculture Switz. Integrated Rural development 2,000 2,331 Agriculture USAID Crop Substitution 10,000 11,655 Agriculture USAID Crop Substitution 10 12 Agriculture USAID Crop Substitution 4,400 5,128 Development Switz. Rural Infrastructure 2,126 2,478 Forestry South Africa Seeds 2 2 Forestry Switz. Social Forestry 780 909 Health USAID Rural Water Supply 2 2 Uvestock Canada-IDRC Cameliod Information System 45 52 Uvestock Canada-IDRC Information Systems 86 100 Uvestock Denmark Research and Training 879 1,024 Transport Belgium River Improvement 4,000 4,662 Transport Switz. Rural Roads 433 505 1984 Agriculture Canada-IDRC Fertilizer Research 250 287 Agriculture Germany Agricultural Production 4,754 5,452 Agriculture Japan Donations-Machinery/Seeds 147 169 Agriculture Switz. Potato Seed Production 2,000 2,294 Development Switz. Regional Development-Beni 320 367 Development Switz. Rural Development-Beni 397 455 Energy Sweden Pre-Feasibility 45 52 Forestry Canada-IDRC Species Conservation 235 269 Forestry Switz. Reforestation 500 573 Irrigation Germany Capacity/Institution Building 1,148 1,317 Watershed Germany Erosion Control 1,607 1,843 1985 Agriculture Canada-IDRC Quinua Research 461 519 Agriculture Italy Traditional Technology 49 55 Agricultbre Italy Cooperative Development 1,385 1,560 Agriculture Japan Equipment 174 196 Agriculture Switz. Coffee Improvement 272 306 Agriculture Switz. Seed Development/Marketing 314 354 Agriculture Switz. Training 940 1,059 Development Germany Integrated Rural Oevelopment 5,500 6,194 Development Spain Rural Development 70 80 Development UK Community Development 200 225 Fisheries UK Fisheries Pathology 25 28 Forestry SwItz Social Forestry 488 550 - 91 - Institutional Swltz. Regional Planning 224 252 Irrigation Germany Program Loan/Altiplano 6,600 7,432 Uvestock Canada-IDRC Farming Systems Research 339 382 1986 Agriculture France Agronomy Research 65 65 Agriculture Italy Sector Development 4,250 4,696 Agriculturp Italy Agricultural Production 370 409 Agriculture USAID Producer Organizations 4,299 4,750 Development Canada-CIDA Small Scale Projects 266 293 Development Netherlands Rural Develpment 108 119 Development Spain Integrated Rural Development 1,500 1,657 Environment USAID Agroecosystems/Producer Ass. 4,000 4,420 Forestry Spain Institutional Development 45 50 Irrigation Germany Various Irrigation Projects 6,522 7,207 Transport Belgium River Transport 2,000 2210 1987 Agriculture Germany Small-Scale Irrigation 2,112 2,286 Agriculture Italy Food Production 6,011 6,505 Agriculture Italy Seed Production/Diffusion 1,900 2,056 Agriculture Italy Coffee Production 395 427 Agriculture Italy Oil Seed Production 4.593 4,971 Agriculture Italy Improved Seed Varieties 1,807 1,956 Agriculture Japan Food production 5,50 6,331 Agriculture Netherlands Coca Substitution 817 884 Agriculture Netherlands Food Production 306 331 Agriculture UK Agricultural Marketing 500 541 Agriculture UK Tropical Agriculture 500 541 Agriculture USAID Credit 10,000 10,823 Agriculture USAID Credit 10,000 10,823 Agriculture USAID Small-Scale Producer Credit 886 959 Development Italy Integrated Rural Development 4,375 4,735 Development Italy Integrated Rural Development 481 520 Development Italy Integrated Rural Development 4,148 4,489 Environment Germany Training In Ecology 543 588 Fisheries Japan Construction/Equipment 4,200 4,450 Fisheries UK Fish Marketing 500 541 Forestry Japan Forest Utilization Research 267 289 Institutional Germany Advisors-Planning 1,087 1,178 Institutional Germany Institutional Support-Planning 951 1,029 Institutional Germany Regional Development 543 588 Population Canada-IDRC Population Research 170 184 Transport Japan Road Maintanence 3,500 3,788 1988 Agriculture Italy Cacao Production 388 411 Agriculture Japan Food Production 1,330 1,407 Agriculture Netherlands Fertilizer Importation 2,764 2,925 Agriculture Netherlands Export Agriculture 961 1,01 Agriculture Netherlands Wheat Production 809 85L Agriculture UK Tropical Agriculture 500 52t Development Italy Integrated Rural Development 372 394 Development Italy Rural Development 143 151 - 92 - Development UK Alternative Development 4,000 4,233 Energy Germany Dam Building 1,086 1,149 Energy Germany Dam Construction 543 575 Environment Germany Institutional/Program Support 5,163 5,463 Health Sweden Rural Water Supply 240 254 Uvestock Japan Species Improvement 500 529 Population Netherlands Migration to Coca Areas 224 237 Transport Japan Road Improvement 1,500 1,587 Transport Japan Road Maintanance 3,500 3,704 Trnsport Japan Road Improvement 1,500 1,587 1989 Agriculture Japan Food Proauction 5,600 5,767 A0riculture Japan Food Production 5,600 5,767 Development Netherlands Integrated Rural Development 213 219 Irrigation Germany Altiplano/Valleys Irrig 5,103 5,255 Transport Japan Road Improvement 8,000 8,239 Transport Japan Rural Roads 9,650 9,938 - 93 - Multliateral $US 1990 $US Year Sector donor Project (tuands) (thouad 1971 Agriculture UNDP Agro-Industry Abapo-izozog 3.959 9,898 Agriculture UNDP Agro-Industry Development 4,000 10,000 1972 Livestock WFP Milk Production 5,681 13,120 ivestock WFP Dalry Production 5,574 12,873 1973 Institutional UNDP Rural and Regional Planning 2305 4,863 Institutional UNDP Regional Development 1,028 2,169 1974 Agriculture UNDP Animal Health 1,010 1,939 Agriculture UNDP Hydrological resources 961 1,845 Development UNICEF Rural Development-Tarija 1,090 2,092 Development UNICEF Integrated Rural Development 1,090 2092 Health UNDP/WHO Extension 994 1,908 Health UNICEF National Health Plan 432 911 Livestock UNDP Sanidad Animal 1,165 2236 Population UNFPA National Housing Census 1,317 2,528 1975 Agriculture UNDP Small Scale Production 220 422 Agriculture UNDP Extension 12 21 Development UNDP Integrated Agricultural Devel. 203 356 Education UNESCO Technical Training 48 84 Forestry UNDP Forest Industry Development 749 1,312 Health PAHO Malaria Eradication 46 81 Health WHO/PAHO Environmental Health 46 81 Health WHO/PAHO Environmental Health 64 112 Institutional UNDP Project Administration 157 275 Institutional UNDP Management and Planning 236 413 Uvestock UNDP Milk Production 93 163 Transpot UNDP Rural Roads 80 154 Transport WFP Rural Roads 1,278 2,238 Transport WFP Rural Roads 6,913 12,107 1976 Agriculture CAF Tea Production 60 97 Agdculture 10B Research and Extension 42 68 Agriculture IICA Regional Dev. Corporations 10 16 Agriculture IICA Extension and training 18 29 Agriculture IICA Agricultural Information 2 3 Agriculture OAS Rural Development 68 110 Agriculture OAS Potato Production 20 32 Development CAF Water Resource development 1,760 2,651 Development World Bank Integrated Rural Development 9,500 15,422 Education IICA Agricultural Education 5 8 Education World Bank Sector Loan 366 594 Education World Bank Rural Education 15,000 24,351 Education World Bank Aftiplano Education 15,000 24,351 Energy UNDP Energy Sector Evaluation 1109 1,800 Forestry UNDP Forest Resource Inventory 341 554 - 94 - Forestry UNDP Forest inventory 600 974 Health UNICEF Water and Sanitation 1,060 1.721 Health UNICEF Environmental Health 1,058 1.718 Health World Bank Potable Water 11,500 18,660 Hydroelectric World Bank Gas Turbine 25,000 40,584 Institutional IDB Organizational Development 600 974 Institutional IICA Agricultural Planning 10 16 Institutional IICA National Forestry Plan 3 5 Institutional OAS Economic Studies 17 28 Transport CAF Road Construction 400 602 Transport IDS Road Building 45,000 73.052 1977 Agriculture CAF Crop Research 38 57 Agriculture EEC Agricultural Credit 1,000 1,506 Agriculture FAO Agricultural Census 106 160 Agriculture IDB Research and Development 288 434 Agriculture IDB Agricutural Administration 4e 63 Agriculture IDB Food Marketing 258 389 Agriculture IICA Research/Extension Planning 24 36 Agriculture IICA Agricultural Information 2 3 Environment UNESCO Ecology and Land Use 619 932 Forestry IICA Forest Sector Workshop 5 8 Institutional IDS Rural Development Planning 221 333 institutional UNDP Rural Development Planning 138 208 Irrigation IDB National Irrigation Plan 30 452 Uvestock 1DB Uvestock Development Credit 5,000 7,530 Uvestock IICA Livestock Feasibility 110 166 Livestock WFP Milk and Butter Plant 1,258 1,896 1978 Agriculture FAO Food Marketing 31 44 Agriculture FAO Land Rehabilitation 90 127 Agriculture 1DB Various Agricultural Projects 4,200 5,915 Agriculture IDB Various Agricultural Projects 2,700 3,803 Agriculture IDB Various Agricultural Projects 3,200 4,507 Agriculture IICA Regional Development 220 310 Agriculture UNDP Irrigation Planning 585 824 Development Worid Bank Integrated Rural Development 9,000 12,676 Education IDB Higher Education 9,700 13,662 Fisheries UNDP Feasibility Study 10 14 Health IDS Potable Water 332 468 Health IDS Water Supply 32,600 45,915 Institutional OAS Regional Development 172 242 Institutional UNDP Development Planning 179 252 Uvestock FAO Virus Control 125 176 Livestock IICA Milk Production 107 151 Natural Res. OAS Watershed Management 229 323 Natural Res. UNDP Water Resource development 400 563 Population UNFPA Population Policy 484 682 Population UNFPA Population Policy 479 675 Transport IDB Road Building 86,000 121,127 Transport World Bank Road Maintanence 25,000 35,211 - 95 - 1979 Agricultuie IDS Irrigation Planning 300 398 Agriculture UNDP Qulnua Research 180 239 Agriculture UNDP Sol Conservation 669 68 Institutional UNDP Integrated Rurai Development 1,574 2,090 1980 Agriculture IDB Small-Scale Irrigation 550 695 Agriculture IDB Research 288 364 Agriculture IICA Integrated Deve;oprrent 75 95 Agriculture UNDP Project Preparation-Tarija 22 28 Forestry FAO Social Forestry 100 126 Institutional OAS Development Planning 57 72 Irrigation IDB Small-Scale Irrigation 550 69S Natural Res. 1D Remote Sensing 320 405 Natural Res. 1D Remote Sensing 320 406 1981 Agriculture CAF C.ain Storage 1,224 1,493 Agriculture CAF Food Oil Production 195 238 Agriculture IDS Milk/Fruit Production 4,200 5,122 Agriculture IDB Research and Extension 8,500 10,366 Agriculture IICA Project Preparation 130 159 Agriculture World Bank Agricultural Development 7,500 9,146 Development IDB Integrated Rural Development 6,448 7,863 Development 1DB Integrated Rural Development 435 530 Development World Bank Integrated Rural Development 3,000 3,659 Development World Bank Integrated Rural Development 12,000 14,634 Development World Bank Integrated Rural Development 9,500 11,585 Education UNICEF Integrated Rural Development 1,800 2,195 Forestry UNDP Plantation/Agro-Forestry 104 127 Hydroelectric CAF Agricultural Development 1,623 1,979 Hydroelectric World Bank Hydroelectic Development 12,063 14,711 Institutional World Bank Structural Adjustment 50,000 60,976 Irrigation CAF Dam Constuction 234 285 Irrigation IDB Agriculture Development 12,200 14,878 Uvestock IDB Livestock Development 5,969 7,279 Livestock 1D LIvestock Credit 24,000 29,26 Livestock World Bank Uvestock Develoment-Seni 1,602 1,954 Uvestock World Bank Uvestock Develoment-Beni 2402 2,929 Transport CAF Road Building 551 672 Transport CAF Road Building 392 478 Transport IDS Road Building 4,000 5,000 Transport IDB Road Building 86,000 104,878 Transport IDB Road Building 35,000 42,683 Transport World Bank Road Maintanence 25,000 30,488 1982 Agriculture r 4o Training 3 4 Agriculture FAO Training and Extension 105 125 Agriculture UNDP Small-Scale Agriculture 1,053 1,251 Development OAS Integrated Amazon Development 616 732 Forestry IDB Pre-Feasiblity 17 20 Population UNFPA Population Policy 356 423 - 96 - 1983 Agriculture FAO Feasibility Study 19 22 Agriculture FAO Land Reclamation 250 291 Agriculture FAO Drought Control 250 291 Agriculture IDB Agricultural Diver :fication 42 49 Agriculture IDB Projects Loan 32,000 36,296 Agriculture IDS Research/Tech. Generation 120 140 Agriculture IDB Potato Marketing 65 76 Agriculture IICA Agr. Educ. & Tech. Transfer 453 528 Agriculture UNDP Soil Conservation 118 138 Development EEC Rural Development 15.000 17,483 Education IICA Technical Training 262 305 Fisheries FAO Trout Development 63 73 Forestry FAO Training 5 6 Forestry FAO Land Rehabilitation 729 850 Forestry FAO Reforestation 23 27 Institutional IICA Project management 153 178 Livestock FAO Disease Control 1,000 1,166 Livestock FAO Disease Control 120 140 1984 Agriculture CAF Seed Production 9,000 10,321 Agriculture FAO Agricultural Census 88 101 Agriculture FAO Traditional farming Practices 180 206 Agriculture 108 Potato Marketing 65 75 Agriculture IICA Technology Diffusion 131 150 Agriculture ICA Soil Conservation 84 96 Agriculture IICA Technology Diffusion 131 150 Agriculture IICA Feasibility Studies/Training 244 280 Agriculture IICA Technology Diffusion 113 130 Agriculture UNDP Project Preparation 1,421 1,630 Agriculture UNICEF Food Production 271 311 Development EEC Rural Development 15,000 17,202 Development UNICEF Integrated Rural Development 3,314 3,800 Development UNICEF Integrated Rural development 1,067 1,224 Energy Andean Fund Renewable Energy Supply 50 57 Energy OAS Energy Mapping 84 96 Irrigation IICA Training 53 61 Livestock IDB Cameliod Research 70 80 Livestock IICA Fesibility Studies 46 53 Livestock WFP Milk Production 7,182 8,236 Trarsport CAF Road and Bridge Building 10,500 12,041 Watershed UNFDC Land and Water management 632 725 1985 Agriculture UNFDAC Crop Diversification 11,370 12,804 Development FAO Training 8 9 Energy OAS Project Design 500 563 Energy UNDP Geothermal Feasibility 7,230 8,142 Energy UNDP Electricty Generation 7,230 8,142 Fisheries FAO Fish Marketing 19 21 Forestry UNIDO Technology Transfer 87 98 Forestry WFP Food for Work/Social Forestry 9,093 10,239 - 97 - Hydroelectric UNDP Feasibility Study 173 196 Institutional UNDP/IDB Planning and Policy Dev. 1,269 1,429 Irrigation FAO Small-Scale Irrigation 19 21 Irrigation UNDP Small"cale Irrigation 60 68 Livestock UNIFEM Cattle and Milk Production 182 206 Population UNFPA International Migration 26 29 Transport Andean Fund Feasibility Study 1,100 1,239 Transport FONFLATA Road Building 720 811 1986 Agriculture FAO Land Reclamation 200 221 Agriculture FAO Small-Scale Agriculture 105 116 Agriculture FACI Disease Control 125 138 Agriculture FAO Reorganization of MACA 60 66 Agriculture FAO Women in Agriculture 100 110 Agriculture FAO Agricultural Pricing 105 116 Agriculture FAO Fish Marketing 19 21 Agriculture I(CA Food Marketing 14 16 Agriculture IICA Training/TachnoloWy Diffusion 518 572 Agriculture IICA Marketing Studies 14 15 Agriculture IICA Project Managem~ent 131 145 Agriculture IICA Training 33 36 Agriculture UNDPD Training 1,306 1.443 Agriculture UNDID Renewable Resource Mngmt. 250 271 Agriculture UNDP Watershed Management 150 188 Agriculture UNDP Farming Systems/Infra3tructure 1,700 1,878 Development IDB Rural Development-Benl 16,900 18,674 Development OAS Small Rural Projects 15,000 16,575 Development OAS Regional Dev.-Amazon 516 570 Development UNDPD Regional Development 99 109 Development UNFDAC Community Development 1,200 1,326 Development UNFDC Integrated Rural Development 1,200 1,326 Energy PNUMA Fuel Wood Utilization 29 32 Environment OAS Ecological Research 20 22 Forestry UNFDC Paper Processing 835 941 Institutional OAS Regional Development-Chaco 128 141 Institutional UNDP Regional Development 390 431 Irrigation OAS Small-Scale Irrgation 54 60 Livestock IICA Tralning/Research 67 74 Livestock IICA Milk Production 267 296 Livestock IICA Project Identification 13 14 Livestock IICA Project Design 13 14 Transport UNDPD Sector Study 200 221 1987 Agriculture FAO Fertilizer Feasibility 1,058 1,145 Agriculture FAO Input Pricing Policy 20 22 Agriculture FAO Input Pricing Policy 20 22 Agriculture FAQ Technical Assistance 40 43 Agriculture FAO Systems for Food Security 75 81 Agriculture FAO EducationiTraining 120 130 Agriculture FAO Fertilizer Assessment 2,317 2,508 Agriculture FAO Womens Organization 60 65 Agriculture FAO Food Security 150 162 Agriculture FAO Reorganization of MACA 98 106 Agriculture FAO Fertilizer Feasibility 519 562 Agriculture IDS Seed Production 20.855 22,570 Agriculture IDS Credit 11.806 12.777 Agriculture IDB Research/Extenalon 1,051 1,137 Agriculture IICA Vegtable Program Support 17 S Agriculture IICA Training 45 19 Agriculture IICA Regional Development 302 327 Agriculture IICA Agricultural Marketing 90 97 Agriculture IICA Project Design 5 5 Agriculture IICA Appropriate Technology 41 44 Agriculture IICA Institutional Strenthening 150 162 Agriculture UNDP Small-Scale Irrigation 1,703 1,843 Agriculture UNDP Small-Scale Irrigation 1,461 1,581 Agriculture UNDP Small-Scale Production 173 187 Agriculture UNDP Agricultural Planning 2,110 2,284 Agriculture UNDP Small-Scale Irrigation 156 169 Agriculture UNDP Small-Scale Production 265 287 Agriculture UNDP Institutional Support-MACA 24 26 Agriculture UNFDC Potato Marketing/Processing 400 433 Education FAO Rural Training/Education 100 108 Energy IDS Sector Development Credit 162 175 Fisheries FAO Fish Marketing 8 9 Forestry FAO Land Reclamation/Reforestation 508 550 Forestry FAO Reforestation 1,344 1,455 Forestry FAO Land Rehabilitation 241 261 Forestry IICA Forest Information Systems 10 11 Irrigation UNDP Small-Scale Irrigation 1,800 1,948 Livestock FAO Desease Control 850 920 Livestock IDB Development 972 1,052 Livestock IICA Animal Health 107 116 Population UNFPA Rural-Urban Migration 187 202 Transport UNDP Road/Bridge Construction 73 79 1988 Agriculture IDB Technical Assistance 300 317 Agriculture IDB Tech Asst. Environment 100 106 Agriculture UNFDAC Alternative Development 1,199 1,269 Development OAS Integrated Development-Chaco 151 160 Development OAS Amazon research 2,168 2,294 Development OAS Amazon Research Studies 100 106 Energy World Bank Sector Rehabilitation 2,000 2,116 Forestry UNDP Tropical Forestry Action Plan 127 134 Forestry UNDP Forestry Action Plan 102 108 Health UNFDAC Community Development 151 160 Health UNFDAC Rural Water Supply 510 540 Livestock WFP Dairy Development 10 11 Population UNFPA Migration/Colonization 71 75 Population UNFPA Migraton/Colonizaton 47 50 Population UNFPA National Census 291 308 1989 Agdculture IDB Quinua-Techncal Asst. 20 21 Aguicultur IFAD Technica Assistance 170 175 Agriculture IFAD Technica Asulstance 268 276 Agriculture UNDP Irrigation/Producton 125 129 Agiculture UNOP Sector Strategy-MACA 637 553 Transport Wodd Bank Export Corridorm 500 515 - 100 - NGO *Us 19NOus y Seto dono Prcot ( d (oun 1976 Agricu~re CAS Cooperav development 1,000 1.m Educadon CR8 Rurl Health Educaon 50 81 Educdon CRS Rurl H ~ 50 75 Healh CARE Wa~e Supply 640 877 CRS Mother/CNld Heai eor 4 8 1977 Agriculture CARE Food Diktrbuton 3,300 4,970 Agdcultue CARE Food importa~on 3,600 14,458 Agdouture CRS Food for Work/School 5,000 7,530 Agriyuure CRS Colon~zaUon end Food Prod 30 45 Agriculur CRS Ounua Produck 1 50 75 Agcuture Cs C~ao Produ~#on 70 15 Development CAPE Rural Watar Sukply 157 236 Ho~ih CARE Rura Wate Supply 450 678 Heahh CARE Water Suppky 370 557 He~Wh CARE Wa~e Supply and krd~on 157 236 Heath CARE Watr Supply 476 717 1983 Agricutture CARE Agriculturai Credit 200 233 Agricutur CRS Ouinua improvement 12 14 Agricultur CRS Small Pro~ects 7 8 Agiculture Switc.-NGO Coffe Producton 104 121 Development Swt.-NGO Community Trainng 141 184 h~gaßon CARE Wa~e Supptylrr~gon 2,750 3,205 Namal Re. CARE Eroeion ControVForectry 250 291 1984 Agriculture CARE Food Marketing 100 115 Agdculture CARE Food Marketing 100 115 1985 Educadon CARE Rural Health Educaton 213 240 1987 Agdculture Belgium-NGO Agiculturl Development 35 38 Agdculture Belgium-NGO Agricultural Development 80 87 Agiculture Belgm-NGO Agricultural Development 52 56 Agriculturk FraneNGO Flower Production 15 16 Agdculture Fraoe-NGO Food Producdon 31 34 Agduure Frn~ce-NGO Fruit and Cheee Producton 39 42 Agdeufure Frun~-NGO Rura Development 35 38 Agdlulture taly-NGO Appropdat. Technology 250 278 198 Agdcuture Belgum-NGO BolWan NGO Support 1,000 1,058 Agdculture CARE-NGO Agd~cuural Credit 400 423 Development Canada-NGO Support for Bouvan NGO 2,100 2, Forestry CARE-NGO Cormunty Re^ur^e Mngmt. 550 582 Foreetry/lrrg. CARE Social Forety/"dgaon 350 370 H~eah CARE-NGO Rual Watr Supply 900 952 - rriga5ln CARE Agr~foreetry 250 285 Note: Proects relad to renewab r@sourcus iclude ag excet t~ municaioe, urbha, iduy and pdmary, econdary and un"ve~ . mducation. Source: UNOP - 101 - Table A-2: Aid Commitments to Bolivia Related to Renewable Resources, by Sector, 1967-89 (1990 $ millions) Renewable Year Resources Infrastructure Education Population Other Total Percent 1967 6.6 - - - 6.6 0% 1968 -- - - - 0.0 - 1969 5.1 3.9 - 9.0 0% 1970 0.9 - - - - 0.9 0% 1971 19.9 - 5.9 - 4.6 30.4 2% 1972 42.2 - - - - 42.2 2% 1973 3.6 5.3 - - 6.9 15.8 1% 1974 18.3 2.8 - 2.5 - 23.6 1% 1975 8.5 16.0 4.5 - C.' 29.7 2% 1976 52.5 154.5 49.7 - 1.8 258.5 13% 1977 106.5 10.4 3.0 - 0.5 120.4 6% 1978 70.8 220.0 17.0 1.8 29.1 338.7 18% 1979 2.0 - - 21 4.1 0% 1980 6.9 0.6 - - - 7.5 0% 1981 157.5 289.7 2.2 - 60.9 510.3 27% 1982 6.2 - - 0.4 - 6.6 0% 1983 86.8 5.1 0.3 - 0.1 92.3 5% 1984 63.0 12.2 - - 75.2 4% 1985 42.4 19.3 - - 1.6 63.3 3% 1986 67.5 2.4 - - 0.5 70.4 4% 1987 129.6 4.0 0.4 0.4 2.6 137.0 7% 1988 22.4 13.5 - 0.7 - 36.6 2% 1989 18.0 18.6 - - - 36.6 2% Total 937 774 87 6 112 1916.3 Percent 48.9% 40.4% 4.5% 0.3% 5.8% 100.0% Not: Renewab resources iudes agricuture, fisheries, foretry, irrigation, veelock, watershed, ewironmeit and rural development; infrastructure includes health, hydroelectric, transport and energy projects. Source: UNOP. - 102 - Table A-3: Ajd Commitments of Major Donom Related to Renewable Resources, by Sctor 1967-9 (1990 $ millions) Renewable Resources Infrastructure Education Institutonal Population Total $ % $ % $ % $ % $ % $ % Muftliaterats CAF 15.1 2% 15.8 2% 0.0 0% 0.0 0% 0.0 0% 30.9 2% EEC 36.1 4% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 36.1 2% FAO 12.8 1% 0.0 0% 0.1 0% 0.0 0% 0.0 0% 12.9 1% IDB 194.8 21% 393.2 51% 13.6 16% 1.3 1% 0.0 0% 602.9 31% OAS 20.9 2% 0.6 0% 0.0 0% 0.5 0% 0.0 0% 22.0 1% UNDP 48.6 5% 20.6 3% 0.0 0% 11.7 10% 0.0 0% 80.9 4% UNFDAC 15.4 2% 0.7 0% 0.0 0% 0.0 0% 0.0 0% 16.1 1% World Bank 71.9 8% 142.3 18% 49.3 57% 60.9 54% 0.0 0% 324.4 17% WFP 46.3 5% 14.3 2% 0.0 0% 0.0 0% 0.0 0% 60.6 3% Total 461.9 49% 587.5 76% 63.0 72% 74.4 66% 0.0 0% 1186.8 62% Bilateral$ Brazil 12.5 1% 8.7 1% U.0 0% 0.0 0% 0.0 0% 21.2 1% Denmark 47.2 5% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 47.2 2% FRG 60.9 6% 7.0 1% 9.1 10% 7.4 7% 0.0 0% 84.4 4% Italy 37.7 4% 0.2 0% 0.0 0% 0.0 0% 0.0 0% 37.9 2% Japan 33.8 4% 34.7 4% 0.0 0% 0.0 0% 0.0 0% 68.5 4% Swiss 30.1 3% 0.5 0% 0.0 0% 0.3 0% 0.0 0% 30.9 2% USAID 161.7 17% 121.6 16% 7.3 8% 22.3 20% 0.4 7% 313.3 16% Total 383.9 41% 172.7 22% 16.4 19% 30.0 27% 0.4 7% 603.4 31% NGOs CARE 25.3 3% 4.0 1% 0.2 0% 0.0 0% 0.0 0% 29.5 2% CRS 9.4 1% 0.0 0 0.2 0% 0.0 0% 0.0 0% 9.6 1% Total 34.7 4% 4.0 1% 0.4 0% 0.0 0% 0.0 0% 39.1 2% Noe: Maor donor ar hem defined as those who contrbutd a total of 10 mon or m~r; rnewable resuroea include agriculture, fluherles, foressy, irigaon, k~ vetock, w haershed, environment, natural resoure an rural development proe.ta; rcutr wids he~th hydroelect, transport, and en~ergy proets; and perm~tages given twoughout 0 o he total id comn~t (reted to remnwble resourmes) by blaterale, muM~atera, and nongovermental organzaions. Sour~e: UNDP. - 103 - Table A-4: Total Aid Commitments to Bolivia Related to Renewable Resources, by Sector, 1967-89 (1990 $ millions) Commitments Projects 1990$ millions % Number % Land 490 52% 253 59% Fisheries 5 1% 10 2% Forestry 26 3% 32 7% Irrigation 49 5% 21 5% Lvestock 162 17% 50 12% Resource conservation 19 2% 16 4% Rural Development 186 20% 47 11% Total 937 100 429 100 Infrastructure Health 85 11% 25 29% Hydroelectric 58 7% 5 6% Transport 608 79% 44 51% Other 23 3% 13 15% Total 774 100 87 100 Social Education 87 42% 20 34% Institutional 112 55% 27 46% Population 6 3% 12 20% Total 205 100 59 100 Grand total 1,916 575 Note: Resource oonervation include watershed, envWronment end naura resource projects; oter includes energy projects. Source:UNDP - 10 - Table A-5: Aid Commitments to Bolivia Related to Renewable Resources, by Major Multilateral Donors 1967-89 (1990 $ millions) Year CAF EEC FAO IDB OAS UNDP UNFDAC WFP World Bank Total 1967 - - - - - - - - 1968 - - - - - - * - 1969 - - - - - - 1970 - - - - - - * - 1971 - - - - 19.9 - - - 19.9 1972 - - - - - - 25.9 - 25.9 1973 - - - - 7.0 - - - 7.0 1974 - 7 - - 7.9 - * 7.9 1975 - - - - - 3.1 14.3 - 17.4 1976 3.4 - 74.1 0.1 3.3 - - 124.0 204.9 1977 - 1.5 0.2 9.2 - 0.2 - 1.9 - 13.0 1978 - - 0.3 195.4 0.5 1.7 47.8 245.7 1979 - - 0.4 - 3.2 - - 3.6 1980 - 0.1 2.6 0.1 - - - - 2.8 1981 5.1 - - 227.8 - 0.1 - - 150.1 383.1 1982 - 0.1 - 0.7 1.3 - - - 2.1 1983 - 17.5 2.8 36.4 - 0.1 - - - 56.8 1984 22.4 17.2 0.3 0.1 0.1 1.6 - 8.2 - 49.9 1985 - - 0.1 - 0.6 17.9 12.8 10.2 - 41.6 1986 - - 0.8 18.7 17.4 4.5 1.3 - - 42.7 1987 - - 8.1 37.7 - 8.4 - - 54.2 1988 - 0.4 2.6 0.2 1.9 - 2.1 7.2 1989 - - - - 0.7 - - 0.5 1.2 Total 30.9 36.2 12.8 602.8 22.1 81.1 16.0 60.5 324.5 1186.9 Percent 2% 2% 1% 31% 1% 4% 1% 3% 17% 62% Note: Major donors ae here defined as te who contribuled a total of $10 millions or more; the peroentge given twoughot i of the total aid commiument (related to renewable resources) by bilaterals, mulilaterals, and nonrgovernmental organizalons. Source:UNDP - 105 - Table A-6: Aid Commitments to Bolivia Related to Renewable Resources, by Major Bilateral Donors 1967-89 (1990 $ millions) Year Brazil Denmark FRG Itaty Japan Switz. USAID Total 1967 - - 6.7 - - 6.7 1968 - - - 1969 - - - 5.1 - 5.1 1970 - - - - 0.9 - 0.9 1971 - 10.5 - - - 10.5 1972 - 16.3 - - - - - 16.3 1973 - - 7.3 - - 1.7 - 9.0 1974 - 0.2 - 3.2 1.1 4.5 1975 - - 4.1 1.3 - 0.2 5.9 11.5 1976 10.5 - 1.1 21 - 2.1 32.4 462 1977 2.0 22.1 7.5 0.6 5.3 1.1 37.9 76.5 1978 8.7 0.6 - - 3.5 3.7 70.4 86.9 1979 - - - 0.2 - - - 0.2 1980 - - - - 0.6 0.5 - 1.1 1981 - 7.2 - 1.4 - 116.9 125.5 1982 - - - 4.0 - - 4.0 1983 - 1.0 - - - 6.2 16.8 24.0 1984 - - 8.6 - 0.1 3.7 12.4 1985 - - 13.6 1.6 0.2 2.5 - 17.9 1986 - - 7.2 5.1 - 9.2 21.5 1987 - - 5.6 25.7 14.9 - 22.6 68.8 1988 . - 7.2 1.0 8.8 - 17.0 1989 - - 53 29.7 - 35.0 Grand Total 21.2 47.2 84.7 37.8 68.5 30.9 313.2 603.5 Percent 1% 2% 4% 2% 4% 2% 16% 31% Now: Major donors are hee defined as toee who contributed a total of $10 millions or more; tho percentage given throughout is the total aid commient (related to renewable eecources) by biaterals, muttilateral & nongovemmental organization. Source: UNDP. - 107 - ANNEX E Page 1 of 3 NATIONAL PLANS AND RESOURCE MANAGEMENT 1. Planning has been a key instrument--to economy, particularly towards industrialization, set operational objectives, assess the insti- food-import substitution, expansion of mineral tutional and resource constraints, determine exports and improved welfare. The improved the relationship between public expenditures welfare--largely for the rural poor in the (particularly capital investment) and achieve- Highlands--was to be achieved by upgrading ment of objectives, and match resource require- health and education services and ments with domestic revenues and foreign implementing measures to increase food borrowing. This premise was accepted by the consumption. donor community, which from the outset has piomoted and provided technical assistance for 3. In terms of renewable resources, the the five development plans produced by the objective was to expand crop area in the Bolivian government in the past three decades- Highlands by 140,000 ha and open up 270,000 -covering 1961-71, 1971-91, 1976-80, 1984-87, ha for new settlement in the Oriente--part of and 1989-2000. From the government pers- the Lowlands--by constructing roads. pective, planning was, first, a partial Migration from the Highlands was to be prerequisite to foreign financing; second, a promoted through road construction. At that source of useful information; and last, an time no surveys of soil capacity were available operational instrument of policy. to guide selection of the best sites for such expansion and intensification. The plan The 1961-71 Plan reflected the general theme adopted by plans until 1988--the need to exploit the huge 2. The 1961-71 plan was prepared with untapped renewable resource wealth of the support from UNDP to meet a condition for Lowlands and the Piedmont. In addition a technical and financial assistance through the series of directed and semidirected Alliance for Progress. Latin American coun- colonization projects were to catalyze a tries receiving the U.S. aid had to implement process of spontaneous colonization that agrarian and administrative reforms and would produce a net transfer of 100,000 initiate development planning. In the U.S. and families in the decade. Aside from soil surveys elsewhere, the perceived threat of guerilla for directed colonization projects, no need was insurgency-- inspired by the Cuban revolution-- seen for basic studies of natural resource motivated efforts to offset these pressures capability. It was assumed that an unexploited through structural change. The Bolivian resource endowment measured in the tens of revolution of 1952 had already made many of millions of ha would be virtually untouched by these changes. However, those behind the the modest transmigration objectives. Alliance for Progress wanted to see deep social reform in a capitalist framework-but The 1971-91 Plan with the state playing a major role. Accordingly, the plan called for consolidation 4. The 1971-91 plan was drawn up with of agrarian reform and the simultaneous assistance from the Economic Commission for promotion of the movement of poor Latin America. The engine for economic campesinos from the Highlands to the growth was to be a massive increase in Lowlands. It also sought to diversify the consumer goods under a model of private ANNEX E Page 2 of 3 production in which the military would interdepartmental highway network, and orchestrate necessary structural change with massive expansion of the agricultural frontier support from the productive sectors. Regio- in the Lowlands. With respect to management nal development based on political subdivi- of land and water resources in the Altiplano sions--and ecological zones was emphasized. and Valles, the plan reinforced the previous The aim was to increase the efficiency of policy of attempting to alleviate population resource use through specialization--in order pressure by promoting the emigration of to exploit comparative advantage, particularly 100,000 people (21,000 families) to settle over to increase the domestic food supply. The a million ha in the Lowlands, laying the implication of this plan for resource manage. groundwork for employment generation in 1.8 ment was agroecological zoning, for which million ha of forest in the Lowlands, and there was no adequate information base. And developing 22,000 ha of irrigation in the the creation of such a base was not contem- Highlands to employ an additional 20,000 plated in the plan. families. For the first time, conservation of natural resources and the environment was 5. Colonization of the Lowlands conti- explicitly mentioned as a development nued to be a major part of the strategy. The objective. This mention was noteworthy; three government was to play a major role in earlier national resource surveys--available in restricting the takeover of large blocks of the 1960s and early 1970s--had failed to specify resources by potentially monopolistic private resource development objectives for the investors. At the same time, the government development process (Cochrane 1973; Tosi was to prevent a proliferation of minifundia in 1975). the Lowlands. The information base for the plan was drawn from the soil capability studies The 1984-87 Plan done for the Piedmont colonization projects in the early 1960s covering 600,000 ha in 7. The plan covering 1984-87 was Chapare, 40,000 ha in the Alto Beni, and prepared during the administration of Hernin 70,000 ha in Santa Cruz. In addition, there Siles, the first democratic regime after 18 years was a semidetailed map of soil potential of military rule and extreme political instability. covering 5 million ha in the central Piedmont High priority was placed on agriculture and and Lowland Plains region and a generalized agroindustry as the basis for full occupation of map of soil groups over a 19-million-hectare the national territory and development of area. resources whose potential is virtually untouched. Again, a major thrust was The 1976-80 Plan redistribution of the population towards the Lowlands through colonization. Despite 6. The 1976-80 plan was a reversal of the greatly increased information on the resources inward focus of previous plans in which import of the Low!ands between 1976 and 1987--a 1.7 substitution and the state had been considered million-hectare reconnaissance soil survey in the prime sources of capital and initiative. Santa Cruz, a geologic map of the country, and Petroleum revenues were to provide financing. 11 studies of soils, forest, and water resources The main thrusts were export promotion, in Chapare--no reference was made to encouragement of foreign investment, and sustainability. general support for private initiative. The plan also held major implications for resource The Development Strategy for 1989-2000 management--in its objective of territorial integration through identification of regional 8. The development strategy for 1989- development options, extension of the 2000 was prepared in the last year of Victor - 109 - ANNEX E Page 3 of 3 Paz Estensoro's government and reflected the reclamation ana rehabilitation, and neoliberal economic context that had charac- restructuring of the public sector to deliver terized the regime. Not surprisingly, it these services effectively. reflected many of the currents of international development thinking of the late 1980s--strong emphasis on environmental management as The Bank's Response integral to socioeconomic development; an open-market economy dedicated to interna- 9, Over the years the Bank's reaction to tional trade and, therefore, high priority for these plans has been mixed. Some economic export corridors to neighboring countries, memorandums have merely listed plan instead of penetration roads to the interior; objectives without comment, thus implicitly and an emphasis on development of a giving approval. Most ESW doesn't comment competitive export agriculture subsector in a on plans, but some has been highly critical. general program of export diversification. In The 1967 economic memorandums considered contrast to all previous plans, the plan the plan unre listic, based on unreliable proposed to slow the rate of migration from statistics and investments unrelated to resource the Highlands to Lowlands in recognition of availability. Similar observations recurred a the need to reduce the rate of resource number of times over the next two decades: degradation in the Lowlands. The crux of this objectives were not defined in operational strategy was improved management of water terms, no connection was made between and land resources in the Altiplano and Valles, planning objectives and projects, in some which would simultaneously rehabilitate cases, plans appeared to be a rationalization of depleted areas and enable a reversal of annual prepared projects, and there was lack of yield dcclines--from about 1 percent to yield realism about the resource constraints in increases approaching 7 to 10 percent annually meeting plan objectives. This latter aspect, by the end of the planning period. The combined with an inability to set priorities in approach heavily emphasized resource infor- the plans, resulted in a wide scattering of mation, research, extension, education, land underfunded projects. - 111 - Meihrd Agan R~kt t the Enwvlønoet eg WMh Bo~M Is u Party Cottventi and StatWI on the Regime of NavIak Waieways at Intna al CoOcern 1921 Cow~ton on Namre Ptr~ and WUd Life PreUvatom in the Water. Hemiapherc, 1940 Convenidn an the Inter-AmerIcan stiule of Agicuhural Sdeces 1944 CoMvendn o- Ilternat~ona Cvil AviadO, An~ 16, Arnaf Nao, 1944 ConveMton on the Internatuina Maidime Organiaom, 1948 Innational ~ Pkn: Proecdon Co~venon (Rvsd Tea), 1951 Satute of the Internatiol AtomIc Enrg Agency, 1956 Conventao on the Territorial Sea and the Conu Zone, 1958 Covendon on the Coniinemal Shel, 1958 Comtion on the High Sea 1958 Convent.ion on FIshing and Conmervation of the LMng Reources of Lhe High Ses, 1958 Convention on CM4 LAabifIty for Nudear Damage, 1963 Treaty Banning Nudear Weapon Tema in the Aumoaphere, in Outer Space and under Water. 1963 Treaty for the Prohibifion of N~cear Weapon in Latin America, 1967 Treaty on the Non-Proberatioa of Nuclear Weapons, 1968 Coanvend~n for the Cnservation of 1h Vicuna, 1969 Treaty oan the Probibailon of the Emp~em of Nudear Wcapons aud otfher Wcapons of Mass Destrucuion on the Sea- Bed and the Ocean Floor and in the Subaoil Thereof, 1971 Convenio Cancerning Proction again~l Hazards of Posoning Ar~uing from Benzene, 1971 Convention n the Prevendon of Marine Poliution by Dumping at Wautea and och«r Matter, 1972 Canvenda n the Prohibitao of the Developmeus, Praducdon and Sockpli~ng of Biokogical and Tai Wapons and om their DnamaN 1972 Convndon Concernig the Proedan of the World Cultun and Neur~ Heritage, 1972 Cmeti~m on Internutioal Trade In Endangered Speces of Wd Fauna and Plora. 1974 Comventm on the PmecDon of the ArdbeolagkaL Hiatarial and Auimtic Heritage of the American Nadaom, 1976 Convendo on te Prohiiion of Mibiiy or any other Hosie Use of Envronmenal Moddcation Technques, 1977 'ety far Amanian Caoperato, 1978 Conwentioa frr the Caervadan and Management of te Vicuna, 1979 United Natios Covention on the Law of the Sea, 1982 Internationi Tropical mber Agreemen, 1983 Source: IUCN 1988. - 113- BIBLIOGRAPHY Aeppel, T. 1987. 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Washington, D.C. --. 1979a. "Bolivia - Ende - Third Power Project (Cr. 433-BO)." PPAR No. 2733. Washington, D.C. --. 1979b. "Bolivia - National Mineral Exploration Fund Project (Cr. 940-BO)." President's Report No. P-2591-BO. Washington, D.C. --. 1979c. "Bolivia - National Mineral Exploration Fund Project (Cr. 940-BO)." Staff Appraisal Report No. 2309-BO. Washington, D.C. -. 1979d. "Bolivia - Omasuyos-Los Andes Rural Development Project." Staff Appraisal Report No. 2475-BO. Washington, D.C. - 139 - -. 1979e. "Bolivia - Santa Cruz Water Supply and Sewerage Project (Cr. 948-BO)." President's Report No. P-2573-BO. Washington, D.C. --. 1979f. "Bolivia - San Jacinto Multipurpose Project." Staff Appraisal Report No. 2564-BO. Washington, D.C. --. 1979g. "Bolivia - Santa Cruz Water Supply and Sewerage Project (Cr. 948-BO)." Staff Appraisal Report No. 2409c-BO. Washington, D.C. --. 1980a. "Bolivia - Agricultural Sector Survey." Report No. 3029-BO. Washington, D.C. ---. 1980b. "Bolivia - First and Second Railway Projects (Cr. 346-BO/Ln. 1121-BO)." PPAR No. 3268. Washington, D.C. --. 1980c. "Bolivia - Gas and Oil Engineering Project (Cr. S-25-BO)." President's Report No. P-2630). Washington, D.C. --. 1980d. "Bolivia - Structural Adjustment Le n (Ln. 1865-BO)." President's Report No. P- 2811-BO). Washington, D.C. ---. 1981a. "Bolivia - Ende Fourth Power F ject (Ln. 1238-BO)." PPAR No. 3715. Washing- ton, D.C. --. 1981b. "Bolivia - ENDE V Power Project." Staff Appraisal Report No. 3617380. Washington, D.C. --. 1982. "Bolivia - Third Livestock Project (Cr. 0261-BO) - First Agricultural Credit Project (Cr. 561-BO)." PPAR No. 3996. Washington, D.C. --. 1983a. "Bolivia - Issues and Options in the Energy Sector." Report No. 4213-BO. Washington, D.C. --. 1983b. "Bolivia - Structural Constraints and Development Prospects." Report No. 4194- BO. Washington, D.C. -. 1983c. "Bolivia - Transport Sector Memorandum." Report No. 4530-BO. Washington, D.C. --. 1983d. 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"Bolivia, Division Country Brief." Washington, D.C. -. 1986b. "Bolivia - Reconstruction Import Credit Project (Cr. 1703-BO)." President's Report No. P-4253-BO. Washington, D.C. -. 1986c. "Bolivia - Third Railway Project (Ln. 1422-BO)." PCR No. 6109. Washington, D.C. -. 1986d. "Bolivia - Updating Economic Memorandum." Report No. 6455-BO. Washington. D.C. -. 1986e. "Bolivia - Vuelta Grande Gas Recycling Project (Cr. 1719-BO)." Staff Appraisal Report No. 6181-BO. Washington, D.C. --. 1986f. "Bolivia - Vuelta Grande Gas Recycling Project (Cr. 1719-BO)." President's Report No. 4309-BO. Washington, D.C. -. 1987a. "Agricultural Sector Review." Washington, D.C. -. 1987b. "Bolivia - Emergency Social Fund Project (Cr. 1829-BO)." President's Report No. P-4594-BO. Washington, D.C. -. 1987c. "Bolivia - Financial Sector Study Analytical Report." Report No. 6765-BO. Wash- ington, D.C. -. 1987d. "Bolivia - La Paz Municipal Development Project (Cr. 1842-BO)." President's Report No. P-4609-BO. 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"Bolivia - Urban and Rural Communities Water Supply and Sewerage Project (Ln. 1324-BO)." PCR No. 6936. Washington, D.C. --. 1988a. "Background Paper for Environmental Action Plan." Washington, D.C. -. 1988b. "Bolivia - A Review of the Public Investment Program and Financing Requirements, 1987-90." Report No. 7248-BO. Washington, D.C. --. 1988c. "Bolivia - Economic Management Strengthening Operation." Staff Appraisal Report No. 7474-BO. Washington, D.C. --. 1988d. "Bolivia - Economic Management Strengthening Operation." President's Report P- 4947-BO. Washington, D.C. --. 1988e. "Bolivia - Export Corridors Study." Report No. 7298-BO. Washington, D.C. --. 1988f. "Bolivia - Financial Sector Adjustment." President's Report No. P-4741-BO. Washington, D.C. -. 1988g. "Bolivia - First Education and Vocational Training Project (Ln. 1404-BO)." PCR No. 7239. Washington, D.C. - 142 - -. 1988h. "Bolivia - Ingavi Rural Development Project (Ln. 1211-BO), Ulla Ulla Development Project (Ln. 1510-BO/Cr. 762-BO), Omasuyos-Los Andes Rural Development Project (Cr. 933-BO)." PPAR No. 7574. Washington, D.C. -. 1988i. "Bolivia - Second Emergency Social Fund Project (Cr. 1882-BO)." President's Report No. P-4708-BO. Washington, D.C. -. 1988j. "Bolivia - Second Emergency Social Fund Project (Cr. 1882-BO)." Staff Appraisal Report No. 7066-BO. Washington, D.C. --. 1988k. "Resource Mobilization in Bolivia under the New Economic Program." Washington, D.C. --. 1988f. "Synthesis Paper for Preparatory Phase of Environmental Action Plan." DRAFT. Washington, D.C. -. 1988m. "Updating Economic Memorandum." Report No. 72780-BO. Washington, D.C. --. 1988n. "Voluntary Debt-Reduction Operations: Bolivia, Mexico, and Beyond." Washington, D.C. -. 1989a. "Agricultural Assistance Strategy Brief." Washington, D.C. ---. 1989b. "Bolivia - Export Corridors Project." Staff Appraisal Report No. 7700-BO. 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