Colombia - Natural Resource Management Program Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12250-CO STAFF APPRAISAL REPORT COLOMBIA NATURAI. RESOURCE MANAGEMENT PROGRAM DECEMBER 2, 1993 MICROGRAPHICS Report No: 12250 CO Type: SAR Country Department III Latin America and the Caribbean Regional Office 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.  CURRENCY EALET Currency Unit = Colombian Peso (Col$) Exchange Rate (12/1/1993) US$1.00 = Col$ 907.60 WUEIGH1TS AND MEASURES Metric System FISCAL YEAR OF THE GOVERNMENT OF CQLOMBIA January 1 - December 31 GLOSSARY QF ABBREVIATIONS ACOFORE Asociacidn Colombiana de Reforestadores (Afforeters' Association) CAR Corporaci6n Regional Aut6noma (Regional Autonomous Corporation) CODECHOCO National Corporation for the Development of Choco CONIF Corporaci6a Nacional de Investigacida y Fomento Forestal (National Forestry Research and Development Corporation) CONPES Consejo Nacional de Polftica Economica y Social (National Council for Economic and Social Policy) CORNARE Regional Corporation for Rionegro-Nare CORPES Consejo Regiondl de Planificaci6n Econ6mica y Social (Regional Commission for Economic and Social Policy CORPONARINO Regional Corporation for the Development of Nariso CORPOURABA Regional Corporation for the Development of Urab6 CVC Regional Corporation for the Development of Valle del Cauca DNP Departamento Nacional de Planeacidn (Department for National Planning) DRI Desarrollo Rural Integrado (Integrated Rural Development Program) FAO Food and Agriculture Organization of the United Nations FEDECAFE Federaci6n Nacional de Cafeteros de Colombia (National Coffee Growers Association) FONADE Fondo Financiero de Proyectos de Desarrollo (Fund for Financing Development Projects) GEF Global Environmental Facility GIS Geographic Information System GPS Global Positioning System WADB Inter-American Development Bank ICAN Instituto Colombiano de Antropologfa (Colombian Inst. of Anthropology) ICB International Competitive Bidding ICFES Instituto Colombiano Para el Fomento de la Educaci6n Supenor (Colombian Institute for Higher Education) IGAC Instituto Geogrdfico Agustin Codazzi (Geographic Institute) INCORA Instituto Colombiano de Refonma Agraria (Colombian Agrarian Reform Institute) INDERENA Instituto Nacional de los Recursos Naturales Renovables y del Ambiente (National Renewable Natural Resources Institute) LCB Local Competitive Bidding MoE Ministerio del Ambiente (Ministry of the Environment) NCO Non-Governmaental Organization NRMP Natural Resource Management Program PAFC Plan de Acci.Sn Forestal de Colombia (Tropical Forestry Action Plan for Colombia) PRIDECU Programa Integral de Recuperaci6n de Cuencas (Integrated Program for Watershed Rehabilitation) SAF Secretarfa de Asuntos Financieros (Secretariat for Financial Matters in UC) SAI Secretarta de Asuntos Institcionales (Secretariat for Institutional Matters in UC) SAT Secretarfa de Asuntos Tecnicos (Secretariat for Technical Matters in UC) SEAG Secretarfa de Agricultura, Depto. de Antioquia (Agric. Secretariat, Antioquia) SecTec Secretarfa T6cnica (PAFC) (Technical Secretariat of the Tropical Forestry Action Plan for Colombia) SENA Servicio Nacional de Aprendizaje (National Training Service) SOE Statement of Expenditure UC Unidad Coordinadora (Coordinating Unit) UNDP United Nations Development Program  FOR OFCIAL USE ONLY CONTES LO AND PRojEcr sumRY ............ .............. ... 1. BACKGROUND AND SECTORAL CONTEXT ............ 1 TheCountry andPopadon ...................I heEEconomy ...... ... ....................... 1 The NataW Resour Sector . .................. 2 TheCho6 Rqon .................. 5 2. FORESTRY AND ENVIRONM[ENTAL INSTITuTIONSAND POLICIES ..... ............ 6 Legaland hLsttutoral Context ......................6 Fortes Poles. ............................... 9 Land Tenure in the Choc6 Region .................... 10 Existing Nalional Government Progams ..... ........... 11 Lessons from Previous Bank Involvement .... ........... 12 Rationale for Bankl nvolvement ..................... 12 3. THE PROJECr .......... ...................... 14 Objectives and BriefDescription .................. ... 14 DetailedFeatures . . ............................ 15 A. National Forest Policy, and Stategy Development for the Choc6 Region .... ...... 15 B. Watershed Protection and Rehabilion . ........ 21 C. Management of National Parks and Buffer Zones ... 22 D. Forestry/Environmental Education, Training, Research, Project Management, and Monitoring/Evaluation . . 23 costs ..26 Financing .. ......... ..................... 27 Procurement ................................ 27 Disbursements ................................ 30 Accounts and Audits ............................ 31 4. IMPLEMENTATION ............................. 32 Organizaton and Manaement ...................... 32 Community Participaton and Indigenous People .... ....... 34 Monitoring and Reporting .......................... 36 Program Evluadtions ........ .................... 36 his repon is based on the resWlts of a pro-appraisal in Jan./Feb. 1993, a workshop with Bank and Colombian Govement offlcials in April 1993, and the appraisa in Juneauly 1993. Main contributors to project design include: Messrs. E. Goetz (task manager), W.B. Johnson (fincial analyst), and R.M. Huber and P. Hazelton (environmentlists); and Messrs. D. Newman and T. Balaguer (consultant). Peer reviewers were Messrs. L. Consino (forest economist) and S. Davis (anthropologist). Ihe Department Diector and Sector Division Chief were Messrs. Y. Abe and N. Kraffl, respectively. 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.  -ii 5. BENEFnIS, BACr AND RISKS .......... ........ . 37 Baofts ............. ...... # ............. . .. *.. 37 L iviirom tal Impact .............. . . . .37 Risb .............. . . . . . . . . . . . 38 6. AREE S EC DAND RECODDDENATON ......................... 39 ANNFES Annel: CostandFinancingTables ............. ....... 41 Annex 2: Summary Tems of Refence for major Consultant Sevices ................................* 46 Annex 3: Key Indicators .............................. . S Ann4: 4 eientt ...n . . . ......... .. 52 Tble 1: Program ntd Implemntation Arrangements Table 2: Bank Suprvion Plan Table 3 (Chart): Program Managmenrgaizton within DNP Table 4 (Chart): SmpleentonScedue Amnn 5: Selected Dcuments and Data Available m the Project Fie 61 IBRD Map #248: Major Environmenta Featus IBRD Map 2889 Pacific Coast and WenHghlnds  COLOMBIA NATURAL RESOURCE MANAGEMENT PROGRAM (NRMP) LOAN AND PROJE4T SUMMRY Borrower. Republic of Colombia fMaa_t Coordint Unit In the National Plaing Department (DNP)1 Main Impl Regional autonomous corporations; National Renewable Resources Agendes: Institute kfNDERENA); Institute for Higher Education (1CFES); National Training Service (SENA); Agrarian Reform Instiute (NCORA). Loan Amount US$39.0 million; to be repaid in 20 years on an annuty basis, and Terms: including 5 years of grace, at the standard variable interest rate. Objecties and The kev objective of the proposed NRMP would be to develop, through the Brief Description: carryiig out of specific actions, policies and mechanisms that would conrbute to arrest the ongoing degradation of natual renewable resources over the longer term. It would be the first phase of a longer-tem program and would be expected to generate the policy, institutional and technical base for fimre forest management and land titling investments in the Choco Region. Investments under the NRMP first phase would be confined to Western Colombia. NRMP would consist of: (i) the development of a policy, information and instiuonal base for forest management, with a particular focus on the Choco Region; (ii) the rehabilitation and protection of selected water catchment areas in the highlands; (iii) the improved mnagement of national parks; and (iv) the strengthening of environmental/forestry education, training and research, and of Program management. 3enef: The main benefits of NRMP are emvironmental in nature and cannot be quantified. These regional and natloral benefits (economic externalities) include the enhanced volume, quality and stabDity of water supplih's for domestic use, irrigation, and hydro-power generation, reduced soil erosion, and a reduction of eaviromnental damages achieved through improved monitoring and control. Employment opportunities would increase in the Highlands, in particular, through services associated with reforestation and watershed maintenance. Global extrnalities include the conservation of biodiversity through the protection of humid tropical forest areas, carbon sequestration and other non-use values. bjsks: The main risks of NRMP are associated with: Oi the fluid institutional situation in Colombia (establishment of a new Ministry of the Environmen, restructuring of regional corporations); (ii) the evolving legal framework (e.g., a new envirommental system, land titling of black communities); CiUi) the process of decenalization of government responsibilities; and (iv) the possible continuation of the existing, unsatisfactory system of forest concessions and other forest policies; (v) the need for cooperation by the affected populations; and (vi) the unpredictable security situation in Colombia. 1. Tbo Coordinating Unit wil be twsferrd to the MiWsisy of the Environment (MoE) onoe the new MoE is established and operational.  - iv - While the NRMP design includes as much safeguards as possible, this has also resulted in a complex operation that involves many different institutions and numerous policy elements. In view of the uncertainties listed, the scope of infrastructure investments and of recurrent cost financing requirements (except for the national parks component) have been kept low. Nevertheless, there Is the risk that some of the implementing agencies may not perform in as timely a manner and as eficiently as expected at appraisal. The risks are pary offset by the strong commitment of the Govermment to environmental protection, the anlysis and gradual build-up of institttional capacity in the areas to be developed, the inclusion of specific indigenous peoples and community development actions, and the deferral of major investments in sensitive forest areas until after the policy, legal and institutonal framework have been clarified during the two-year policy . nd strategy development phase of the NRMP. Another manner in which the operation is designed to manage the risks is that the NRMP will be implemented as a program with a large degree of built-in flexibility for adjusting focus, scope and location of the investments and activities in response to changing conditions and opportnities. PNm~ F"ladng Total Agencies & IBRD Cental Cost Communities Loan Govenmnt Policy/Stegy Development 10.8 1.0 9.8 Watershed RchabiLiaton 25.7 12.9 12.9 National Parks I/ 8.7 8.7 Education, Tnuoing, Research and Program 20.1 3.7 16.3 IM angement__ _ _ _ _ _ _ __ _ _ _ Total 65.3 1 17.6 39.0 8.7 Al Part of the Central Govemnment commitment to finanec the national pars component may at a later stage be replaced by grant financing from the Govenment of The Netherlands. ESTIMATED LOAN DISBURSEMENIS (IMD Paw DW. Pd A 1993) a CdWM - AOWs) IBRD Pisoal Year 1994 1995S 1996 | 1997 |1998 1999 2000 2001 - I - i . =i-iMIMMiiW Profile: % of Total as per Profile 6% 18% 34% 50% 66% 82% 94% 100% USS million per year 2.3 4.7 6.2 6.2 6.2 6.2 4.7 2.3 US$ million cumulative 2.3 7.0 13.3 19.5 I 25.7 32.0[ 36.7 39.0 Economic Rate of Return: Not Applicable. Poverty Category: Program of Targeted Interventions.  COLOMBA NATURAL RESOURCE MANAGEMENT PROGRAM (NRMP) 1. BACKGROUND AND SECTORAL CONTEXT The Country and Popubltion 1.1 Colombia's populadon, estimated at 32.3 million in mid-1990, occupies an area of just over a million square kilometers. Two-thirds of the populton now lives in urban areas. Naural resources are abundant. These include agricultural land, water for irrigation, energy resources (oil, natural gas, and coal), and mineral resources such as nickel, gold, and emetalds. Colombia's location gives it a significant advantage because it is close to North America with coasts on both fte Pacific and Atlantic Oceans. Mountainous terrain, however, makes internal ran on costly and slows physical and social integtion. Rich physical resources, a literate and dependable work force, a robust private sector, competent macroeconomic management, and relative political stability are major factors explaining Colombia's good record of economic development and social improvements over the last 30 years. The Economy 1.2 Since the end of the decade of the 1980s, Colombia's economy has expeienced an impressive tansfornation. The government has abandoned its inward-oriented development model of the past, redefining the role of the state in the economy. To reverse the deterioration of factor producdtvity growth, an Economic Modenization Program (EMP) was launched in 1990. Its centerpiece was trade reforms aimed at increasing the competitiveness of the trdeable goods sector. Complementary financial sector reforms and industrial rest ring policies were designed to enhance factor mobility, improve efficiency in the use of resources, and ensure an adequate supply response of the productive sectors. Refonns in the public sector were aimed at improving the effilciency and targeting of public expenditures. Although initially scheduled to be implemented during the 1990-94 period, the tade liberaliation program was substantially accelerated by the Gavina Administration. 1.3 Solid economic growth of about 4.5% per year, for the past four decades, combined with a drop in the population growth rate to 2.0% per year, have facilitted substantial improvements in social conditions. However, povierty remains a critical problem. Sharp regional disparities in the quality of life contribute to social disintegration in large areas of the country. 1.4 The overa thrust of the govemment's development program is to develop the social, physical and regulatory infastucure needed to alleviate poverty, facilitate private-wsector led growth, and begin to address environmental degradation. The gavernment realizes that future economic growth prospects are jeopardized by a complex set of environmental -ad  natural resource manement problems. The expansion of the agicultural frontier has caused forest and habitat destruction, and disruption of indigenous communities. It also ties up resources in low- or negative-value added agriculue commodities, resulting in declining agricultural producdvity, loss of biodiversity, and the release of carbon into the atmosphere contributing to global warming. 1.5 Continued restrant in fisl policy, aided by a tax reform now under discussion, would give the government the resources necessary for its ambitious investment program in the infrastructure and social sectors. By 1994-95, the newly discvered Cusiana oil field will begin to produce large amounts of oil and gas, ensuring ample exports and domestic energy supplies for years to come. Thus, over the medium tenn, the government should be able to achieve its goal of 5%-plus growth and under 20% infon by maintaining its prudent mac.oeconouic policies and the pace of structural reforms. The Natural Resources Sector 1.6 Natural Forests. From the most recent forest area data (IGAC, 1987), it is estimated that natural forests over 54.5 million ha, or 48% of Colombia's total land area. Of this forest area, approximately 82% remains in legally constituted forest reserves. Although regulatory control is weak and land clearing for colonization is frequent, some 60% of this forest area is thought to be still undisturbed by virtue of its in ibilit (primarily in the Amazonia region). Accessible forest totals about 6 million ha, most of which is located in the Andean Highlands and along the Pacific Coast. Tlble 1 below shows the location, areas, and principal forest types by region. Table 1: Forest Regions In Colombia Reel.o Total Laod Area of X Principal Forst TO AreM Fet Forsted ('005 ha) ('000 ha) Amazonia 35,054 32,349 92 Dene mixed tr4pical high forest (THF) Orinoco 26,000 7.151 28 THF and savaMh. Pacific 9q120 6,817 75 Coastal THF, mgro. Caribbean 12,900 530 4 Dry decihuous forest. Andean 31,060 7,727 25 Nontan decifous and Highlands coniferous Other- 40 Cities, etc. Total 114,174 S41S74 48  -3- 1.7 Forest Econoimy. The ftesry subsector accounts for only 2% of the total GDP (or 12% of the agricultumal GDP). However, these figures ignore the contribution of fuelwood and non-timber products to the economy, as well as environmentl benefits. In spite of its vast panse of potentally productive forests, Colombia remains a net importer of forest products, primarily long fiber pulp and waste paper for the paper indust.ry and newsprint. The majority of Colombia's total forest production (2.6 to 2.8 million m3 out of a total production of about 4 million nm per year) comes from the natural forests of the Pacific Coast. Because of the diverse nature of these forests, relatively little direct management occurs. Most of the wood removed from the area is harvesed under a government management permit system using diameter-limit, selective harvesting of only a few species. 1.8 Although Colombia's commercial forest product sector depends heavily on nattve forests, here has been some use of planted forests for production i'puts. Industri forest plantations (around 175,000 ha of pine, cypresses, and eucalyptus species) are found mostly in the highland and valley areas on land above 1,800 meters above sea level, i.e., not in the tropical rainforet areas. Most of these plantations were established in the 1980s, primarily as a result of various forestry incentive programs. 1.9 Deforestation and Forest Degradation. Indiscriminate deforestation is considered one of Colombia's principal environmental problems. The estimates of annual deforestation vary gready, ranging from 300,000 ha estimated by INDERENA in 1984, to 600,000 ha by Colombia's Tropical Forestry Action Plan in 1989, to 820,000 ha by the World Resources Institute in 1992. Much of the variation in these estimates comes from measurement difficulties and differences in definitions of deforestation. Settlement, slash-and-burn agriculture, and land clearing for cattle pasture are considered the pnncipal causes for forest land conversion. Fu-lwood gathenng and commercial logging in many areas lead to fore degradation, rather than land use conversion. Some 40-50% of the popuation relies on fuelwood for cooking and heating. Approximately 80% of all fuelwood removals are used in households, while the rest is utilized by the sugar, brick making, and baking industries. 1.10 The causes and impacts of deforestation and forest degradation vary by region. In the western Andean highlands, deforetation is brought about mainly by shifting cultivation by firmers, particularly in the Departments of Nario, Cauca, and Antioquia. In the southern and eastern foothills (the Departments of Caquetd, Putumayo and Meta), colonists have been drawn to the area by land tenure incentives offered by government settlement projects (now discontinued). Much of this settled land has been converted to pasture and little of the removed timber was marked because of poor market access. Along the Pacific Coast, relatively little land use change has occurred because of the poor soils, very heavy rainfll and poor infrastucture. However, serious instances of forest and environmental degradation have occurred as a result of gold mining, logging, shrimp  - 4 - frming, and road construcdon. Setement pressure in this area is geneally low although substantial areas in the northern part of the region have been cleared for banana production (para. 1.14). 1.11 Economic uses of the natural forest resource itself are a causal factor only in the Pacific Coast region. While actual defoestion does occur at much higher rates in other parts of the country, changing frest management techniques there would not help much without also changing agricultural and land use policies that foster land conversion. Only in the commercially exploited Paciflic coast fors is improved forest management seen as an important tool which can contain destructive forestry activities. 1.12 Bliodiesty and rtected Areas. The ecology of Colombia is extremely rich relative to its size. Ten percent of the world's fauna and flora are repesented within its borders and the country is listed as one of the worldwide priority area 'hotspots" for conservation (World Development Report 1992). For example, Colombia has 50,000 Vpecies of phanerogam plants-compared with Brazil's 55000, a country over seven times its tritorial size. Of all bird species, 19.4% occur in Colombia (the entire continent of Africa has only 15%), and it is the richest country in species of orchids and palms, the second richest in amphibians, and the third richest in reptiles. The forest environment is an intgral part of this biodiversity, with 70% of all fauna and fora occurring in forest areas. Of special interest are the tropical moist forests of the Pacific Coast which are regarded by some ecologists as the most biologically diverse in the world. Colombia has 43 national parks and other protected areas which cover around 8% of the country, or 9 million ha. They are situated along the Pacific Coast (5), the Caribbean Coast (10), the Andean Highlands (19), Amazonia (8), and Orinoco (1). There are proposals to create an additional 107 protectd areas. In June 1993 the Govemment established an interinstitutional committee, presided by the Minister of Agriculture and with INDERENA as technical secreia, to formulate a National Biodiversity Strategy for Colombia. 1.13 Water Catchment Areas. Watershed degradation in the highlands, the areas with the highest populadon density in Colombia, is causing shortages and pollution of water supplies, altered stream flows, infastrucue dge (irrigation canals, roads and reservoirs), and loss of farm productivity. Shortages of wood for fuel and other local uses have become prevalent. In addition, land has been abandoned in some areas due to the seriousness of the erosion. Along the Pacific Coast, the degradation of the forests is causing the siltation of streams and the marine emvironment. At the national and even interational level, the loss of forest cover has caused substantial concern regarding potential changes in the hydrological cycle and decreased rainfall.  -5- The Cboc6 Region 1.14 The Biogeographic Choc6 comprises those parts of the Colombian coast that drain to the Pacific Ocean and, through the Atrato River, into the Gulf of Urab of the Caribbean Sea (see IBRD Map 24888). Three quarters of its some 9.1 million ha are tropical rain forests. More than half of these forests are considered to be commercially exploitable. About one million ha are gaztted as protected areas (national parks) and another one million ha are in legally constituted indigenous reserves. The soils are generally unsuitable for conventional agriculture. Forest use is the dominant economic activity. There are a few areas with commercial plantations of oil palm, rubber, cocoa, or banawas, but subsistence farming is the main agricultural activity. This is pcticed along the river banks by black and Indian communities who have developed sustainable agriculture and agroforestry systems suitable to the Region. The Choc6 Region will be a special focus of the proposed Program due to the importance of its biodiversity, forest economy, land tenure issues, and the poverty and diversity of its rwal population, including black communities and indigenous groups.  -6- 2. FORESTRY AND ENVIRONNTAL NSTITUTrIONS AND POLICES Legal and Intitutonal Context 2.1 Constittonal Requirements. Colombia's 1991 Constitution recognizes that a healthy environment is a fundamental human right and mandates the State to intervene in environmental management to better the life of its citizens and protect the natural resources. The Constitution is oriented towards fomenting sustinable development2. It articulates, inter alia, the State's responsibility to: plan and intervene in the management and use of natual resources; prevent, control and repair environmental damage; protect the diversity and integrity of the environment and conserve areas of special interest-national park areas, and also that communal land of indigenous groups, may not be transferred, acquired and embargoed; and involve communities in decisions that affect their environment. DecentrAized territorial entities such as municipalities and departments would regulate land use, dictate norms and defend the enviroinment in their respective areas. Indigenous cotrmunities would be expected to guard and preserve their natral resources and use them without negatively affecting their social and economic integrity. Furthermore, the Constitution includes two transitiona articles (Nos. 38 and 55) that are of relevance to the proposed NRMP areas: (i) on land regularization (ordenamiento tenitorIz; and (ii) on the recognition of collective land rights of the black communities on the Pacific Coast. Most of the new laws required by the Constitution, including on the environmental system and land regularization, were still under preparaon in mid-1993. The Law for collective titling of black communities (Law No. 70) was approved and promulgated on August 27, 1993 (see also para. 2.18). 2.2 EXst Lgal Framework. The National Code of Renewable Natral Resources and Environmental Protecdon, promulgated in 1974 as Law 2811, contains the principles for environmental management The Code delares that all renewable natural resources belong to the nation (patrimonto comnn). Their management is of public interest, and both the state and individuals must participate in their preservation and use. However, the Code lacks the coercive instruments necessary for efficient enforcement and the mechanisms for community participation have not been developed adequately. Furthermore, numerous laws and decrees have later been issued that should regulate its implementation, but that occasionaly are inconsistent and contradictory. However, the most serious constraint, apart from clear implementation guidelines, has been the weakness of State institutions to effectively implement and enforce the law (para. 2.5 below). 2. The coneept of suainable development is based on the definition of the Buntand Commisson: Sustainable development that satisdes the needs of the prent generation without comprog the apacty for future geerations to sats thder needs.  - 7- 2.3 Exsti Instltutions. As of mid-1993, the responsibility for the administration of renewable natural resources in Colombia is being shred between the National Renewable Natural Resource Institute (NDERENA) and 19 regional autonomous corporations. INDERENA, an institute within the Ministry of Agriculture, is principally responsible for Colombia's forest resources, parks, fish and wildlife, and other renewable natural resources. INDERENA administers about 65% of the national territory, including 2.6 million ha or nearly half of the natural forests in the commercially important Pacific Coast region, and the vast and largely untapped areas of Amazonas and Orinoco, the forests of San Lucas on the Caribbean Coast and 9 million ha of national parks. 2.4 In the remaining 35% of Colombia's territory, however with 65% of the country's population, INDERENA has delegated its resource management responsibilities to regional autonomous corporations. These corporations are attached to the Department of National Planing (DNP), but are administratively autonomous. They obtain their income from land taxes, natural resource taxes (forest royalties, sale of hydroelectricity), and central government transfers. The effectiveness of these corporations depends largely on the amount of revenues they receive and their institutional capacity. 2.5 There are numerous other agencies twat deal with environmental management, including the ministries of Health, Mining, and other agencies under the Ministry of Agriculture, which through their individual actions cover legal and institutional gaps and compensate for the low status and opeational weakness of INDERENA. This often creates conflicts of interpreaion of the laws and responsibilities, coordination problems, and, in general, leads to inefficient resource use and protection. A new environmental system is under preparation which attempts to elevate environmental management within the public administration and create a streamlined institutional setup. 2.6 The Proposed Environmental Law. A law proposal establishing a new environmental system has been approved by Colombia's Senate and is to be presented to the Chamber for approval.3 Under the planned reorganization, INDERENA would be phased out and INDERENA's responsibilities for national parks would be subsumed under a new Ministry of the Environment (MoE). Regional autonomous corporations (CARs) would be attached to MoE and expand in size and number to manage all of Colombia's natural forest areas. 3. Proyeaos de ie nneas 99y 129 de 1992, "por la cual se crea d MiAwlo del Medio Ambente, se meordena el Secor P4blco encargado de la Geston y Conservacn del Medio Ambzme y los Recursos Naxuraes Renovabks, se organizm el Slstna Nadonal Ambienal, SINA y se dictan otras disposidones. a Publied in: Gazeta del Congreso, No. 317, 13 do septiembre de 1993.  2.7 The new MoE would define the policies and regulations for the management of the environment and the use of natural resources to ensure sustainable development. It would coordinate and monitor the implementation of the environmental policies and functions through a new "National Environmental System' that would include all public, private or mixed entities that deal with environment and natural resource use. A "National Environmental Council" composed of representatives of the public and private sectors concerned with environmental matters would assist and advise MoE on the intersectoral coordination of environmental policies. As an exception to the general role of MoE as a policy setting entity, it will have a special unit to administer the national parks system, and will also be responsible for the National Environmental Fund. MoE would, thus, take over environmental and resource management functions previously exercised by INDERENA, the ministries of Agriculture, Health, Mining and Energy, and by DNP. Furthermore, MoE would oversee five scientific institutions that would deal with: (i) water, climate and soils; (ii) coastal and marine resources; (iii) fauna, flora and biodiversity; (iv) the Amazonas Region; and (v) the Choc6 Region. Among those entities, the proposed new "Institute for Environmental Research on the Pacific Coast 'John von Neumann'" would be of particular interest to the proposed NRMP as it would focus on the Choc6 Region, one of the major project areas included in the NRMP. 2.8 Under the proposed Law, CARs will no longer depend on Central Government. They will be decentralized corporate entities for the implementation of environmental policies and the administration of natural resources. CARs would be owned by the municipalities, departments, and other territorial entities in the areas of their jurisdiction. Five of these new corporations are located in particularly environmentally sensitive areas. Among them, CODECHOC6 in the deprtment of Choc6 and CORPOURABA in northern Antioquia, would have additional functions in technology transfer, scientific research and community participation that are of national interest. 2.9 Other important factors in environmental manaeement would be the territorial entitles. Departments and municipalities can implement programs on their own or in coordination with other entities of the National Environmental System, in particular with CARs. Indigenous reserves and traditional black communities would have the same rights and obligations with regard to environmental management as the municipalities. However, natural resource use may not affect their cultural social and economic integrity, and specific consultations with representatives of these communities are required. 2.10 The National Environmenal Fund, administed initally by DNP's Coordination Unit (para. 4.4) under the IDB-supported Environmental Program (para. 2.24 (i)), would provide financial resources to support the implementation of environmental policies and the management of naural renewable resources by private sector organizations and public tefritorial entities. Priority areas for support are: national parks, special proection  - 9 - zones, watershed protecdon, environment and human health, endangered species, environmental research, decontamination, and sustainable use of native flora and fauna. Forest PoUcies 2.11 The most important edsting laws pertaining to management of forests are: Law 135 of 1961, Law 23 of 1973, and the Natural Resource Code (Law 2811 of 1974). These laws provide for: cooperation with the Colombiani Agrrian Refonn Institute (INCORA) in land use matrs (conversion of forest to agnculture), the improvement of natual frests, the establishment of plantations, the provision of credit for plantations, the management of concessions, watershed protection, the development of the forest products industry, and the creation of national parks and reserves. 2.12 Harvesting Permits and Concessions. Under the existing forestry policy, all timber harvesting in the country, whether on public or private land, is subject to management plans which stipulate species specific minimum harvest size requirements, total volume cutting limits, and the harvesting method. Harvesting is allowed on both public and private land only through government authorized permits or concessions and subject to the payment of royalties. The main enforcement mechanism is the transport permit (salvo conducto) that must accompany logs from the forest and on through the trnsformation process. The basic structure of the Colombian system of forest permits and concessions conforms with concession systems found elsewhere in the world. However, implementation suffers from substantial levels of incomplete information and administrative follow-through which hamper the effectiveness of the system. Incomplete information regarding forest inventories and land ownership frustrate the effective zoning of desired forest management activities, and inadequate adminisave capability limits the enforcement of aeistng regulations. 2.13 RoyaltIes. In addition to permits, timber harvesting is subject to the payment of forest royalties (fees) to the forest administration. The - royalty consists of two elements: a use tax or stumpage fee (panipaciOn nacional) and additional administration and environmental taxes. The stumpage fee is the price that the Government charges the permitholder for timber removed from public forest reserves. This fee varies by timber species according to wood quality (ordinary, special and very special) with more valuable species charged a higher rate. The additional taxes are earmarked to support reforestation, the provision of technical services for forest administration and supervision, and forestry research. These taxes do not vary according to the quality of the wood removed but are rather a constant rate charged per cubic meter removed. Loggers of privately owned forests pay no stumpage fee, only the technical services tax. 2.14 Royalty levels vary significantly between the different entities administering the forest resources. The degree of discretion is influenced by the need of the various institutions to rely on direct income from forests for  - 10- their operations versus other sources of income, the differing mechanisms applied to adjust the levels for inflation, and the tolerance level of forest users. As a general principle, the stumpage fee reflects a percentage (10- 30%) of the wood price in the local market. 2.15 lImber Extraction and Procesig. Loggers and sawmills exhibit considerable waste in the extraction and utidization of timber. Since the royalties become due after a log is extracted from the forest, not when the tree is felled, the logger has little incentive to apply efficient harvesting and transport techniques before royalty payment is made. In timber processing, sawmills utilize outdated technology and little capital investment. Their technology produces a high proportion of waste (i.e., large kerfs, poor quality control) and low quality output. Much of the lumber must be resawn to make it acceptable for commercial use. In addition, timber is often sawed into blocks in the field using chainsaws. Viually no wood waste is used for secondary uses such as lumber drying so that the efficiency of wood use in production (the percentage of timber harvested to actual wood product) is only 30-50%. In view of the low wood prices, partly caused by low royalty levels and collection rates, firms are clearly substituting the relatively cheap wood for more expensive capital in their production process. Currently, the market incentives are inadequate to induce wood users to improve the technologies they apply in wood processing. 2.16 Forest Policy Reform. The existing arrangements for naual forest management need reform to enhance the efficiency of resource use, lower the costs, and bring about a more equitable distribution of the economic rents generated. In principle, there should be a shift from the existing command and control approach to a more market-based redirection of incentives to forest users. Attempts to reform have so far focused narrowly on revenue aspects, administrative processes, and timber classification.4 The wider economic and social context is not yet sufficiently analyzed. A policy shift is constmined by related uncertainties in forestdand ownership, the formulation of a national biodiversity stategy (paa 1.12), the legal and institutional framework, an inadequate infrnation base (zoning of land use, geographic information system, and technological packages for forest and protected area management). Land Tenure in the Choc6 Region 2.17 Of the total area of the Choc6 Region, some 9.1 million ha, over one million ha is taken up by protected areas, mainly national parks, and over one million ha is in existing indigenous reserves (see also para. 1.14). Taidng into account existing individually titled land, areas occupied by indigenous groups for which reserves are not yet legally established, and proposals for additional protected areas, it is estimated that some four million ha, or 44% of the Choc6, is currently without clear land 4. Marla Teresa Mota Teo: Rgimen de Apwdzwnleto del Bosqu Nat4Wl y Skam de TaSaS Foresrt. Infoime Final, Ocibre de 1992.  - 11 - ownership (other than as open acess Government land) and would be available for the collective ftling of black communities under the stipuladons of the new law on the titling of such communides. 2.18 Ttling Procedure for Black Communities in the Choc6 Region. Law No. 70 of August 27, 1993 on the Ttling of Black Communides establishes that, as a first step, the interested community would prepare a formal request to the Colombian Agrarian Reform Institute (INCORA), accompanied by documentation on the following aspects of the area that is proposed for land tiding: (i) the physical description; (u) the ethnological and historical background; (iii) the demography; and (iv) the traditional production methods. The reqjests and the documentation would be reviewed by a joint commission composed of officials from INCOrA, the Geographic Institute (IGAC), and INDERENA, which will carry out the technical evaluation of the requests and determine the areas for which collective titles would be given to each community. INCORA will then have 120 days to complete the legal titling process. Existing National Goverment Programs 2.19 Forestry Action Plan for Colombia (PAFC). PAFC is Colombia's national forest development strategy for: (i) the management and conservation of forest ecosystems; (ii) the rehabilitation and protection of degraded forest areas; and (iii) the economic and institutional strengthening of the forestry sector. PAFC is part of the international Tropical Forestry Action Plan (TFAP).5 The formulation of the PAFC involved a two-year effort of analysis and consensus building among over ninety organizations and was supported technically and financially by various multi- and bilateral donors. PAFC was approved by the National Council on Economic and Social Policy (CONPES), in June 1989, and its implementation is included in Colombia's National Development Plan (1990-1994). 2.20 The Technical Secreaiat (SecTec) in the Agricultural Development Unit of DNP has been the main agency involved in the planning process for PAFC. It coordinates the PAFC implementation through contractual agreements with various agencies, mainly the regional corporations, INDERENA and the training institutions. Between 1991 and 1993, SecTec was supported by financial and technical assistance from the Government of The Netherlands and FAO. Since its start in 1987, SecTec has been worlkng in three main areas: (i) legal and policy instruments necessary to achieve the proposed objecdves; (ii) formulation and implementation of projects, based on regional and local initiatives; and (iii) identification of financial resources to implement the PAFC projects. 5. TFAP is an international initiative launched in 1985 by UNDP/FAO, the Wodd Resources nsttut, and the Word Bank to undertk worldwide action against fiurther destuction of tropical forests.  - 12 - 2.21 Various projects and progrms have evolved as a result of PAFC, some with the coopeaon of intemadonal donor agencies, mainly The Netherlands, Germany, the European Community, and Canada. PAFC identifies six program areas (Land Use Planning, Forest Industries Development, Social Forestry, Technology Transfer, Forest Ecosystems, and Institional Strengthening) and contains 67 project profiles t to these areas. Specific activities now under way include GIS mapping, development of area mangement plans, management of natual forest, afforestation, ecological and economic evaluation of traditional systems of wood harvesting and processing, and the implementation of action plans for strategic national parks (see para. 2.24 for major programs affecting the Choc6 Region). Lessons from Previous Bank Involvement 2.22 The Bank's experience with natural resource management projects in Colombia is limited to the -Upper Magdalena Pilot Water Management Project' (Loan 2069-CO) and the integated rural development projects (DRI), of which a third phase program (Loan 3250-CO) is currently under implementation. The Upper Magdalena Pilot Project was designed to test forest production and land consenration measures. However, it did not achieve its targets or provided the basis for the prepation of a larger followup project envisaged for the entire river basin, largely because of management instability and lack of commitment in the implementing agency, INDERENA. Nevertheless, the projecct helped alter perceptions and attitudes of Colombia's decisionmakers about the importance of protecting critical watersheds, as reflected in the design of PAFC (and the proposed NRMP). To overcome the institutional problems encountered with the past project, the proposed NRMP would use mainly regional environmental corpoations for the implementation of field programs. These corporations are better suited than a central agency to enlist beneficiaries' participation because of their proximity to fte field Opeations and the reprentation of local institutions and people on their boards. The focus of the DRI projects was mainly on alleviation of poverty through multsectoral programs for rural development, which, iner alia, include reforestation and watershed protection activities. Lessons learned from these relatively successful projects bave been incorporated into the design of NRMP, in patcular the use of exisng, highly decentlized institutions, cofinancing of investments with the implementing agencies/beneficiaries, and project appraisals and management by a central Government agency. Rationale for Bank Involvement 2.23 The main thrust of Bank assistance to Colombia from the mid- 1980s has been to help establish a policy environment supportive of growth led by fte private sector. Substantial structal reforms have taken place in 1990-91. However, as long-standing policy impediments are lifted, the need to address other constaints becomes more evident. One of these major constraints relates to the degradation of the natural resource base. The new Constitution of 1991 includes environmental management among the main  - 13 - dudes of the State, and the 1990-94 development plan proposes to strengthen environmental protection agencies, including the establishment of a new ministry, and to start programs for the managenent of watersheds, forests, and natural parks. The Govermment has requested the Bank to support its natural rmource progran because of the Bank's experience witn this type of operation in the Region and elsewhere. The proposed NRMP requires complex policy actions which are relatively new to Colombia. For example, the need to: (i) improve the institudonal and regulatory framework in natural resource management; (ii) develop a sound national forest policy; (iii) clarify land rights, in particular for the Afro-Colombian population in the Choc6; (iv) involve indigenous and black communities in project planning, implementadon and environmental monitoring (para. 2.25); (v) support investments made by communities for the rehabilitation of vital watersheds on a matching grant basis; and (vi) improve the management of national parks. 2.24 Through its involvement in NRMP, the Bank can also help coordinate a range of related institution-building and development initatives which address forestry and environment issues. These include the PAFC at the national level, and the Pacific Plan (March 1992) at the regional level. Within that planning framework, NRMP activities would be complemented by: (i) the "Environmental Program," supported by a loan from the Inter- American Development Bank (IDB), which would help establish and strengthen the MoE, improve watersheds and national parks in areas different from NRMP, and establish a National Environmental Fund to support the implementation of environmental projects; (ii) the GEF/UNDP-supported -Bio-Pacfflco Project," which provides mainly technical assstance to help conserve the biodiversity in the Choc6 Biogeographic Region;" and (iii) an 1DB-supported -Pacific Plan Project" at the early identification stage that would improve the social and economic infrastructure of mainly urban areas of the Pacific Coast. As to the agreed interbank coordination on natural resource management activities, the IDB-supported Environmental Program would focus on the central and northem parts of Colombia, and would not include natural forest management nor address forest policy, land tenure and indigenous peoples issues. The Bank's regional focus under the NRMP will be the western parts (the Western Cordillera and the western slope of the Central Cordillera, and the Choo6 Region), where biodiversity, natal forest management, land titling and indigenous peoples concerns are of prime importance. 2.25 As to Indigenous peoples, 90% of the population in the Choc6 is Afro-Colombian, and 4% Amerindian. The proposed NRMP would support specific development activities for both Amerindians and Afro- Colombians through: training, education and outreach programs in the parks and buffer zone areas, reviews of their legal rights in the park areas, the titling and demarcation of both indigenous reserves (resguardos) and black communities, and financial support for the operations of regional committees of representatives of those groups.  - 14 - 3. THE PROJECT 3.1 The proposed Natural Resource Management Program (NRMP) is part of Colombia's Forestry Action Plan (PAFC). It was identified and prepared by DNP (SecTec) and the FAO Investment Center (FAO/World Bank Cooperative Program). Loan negotiations were held in Washington from October 18-21, 1993. Objectives and Brief Description 3.2 Objectives. The key objective of NRMP would be to develop, through the carrying out of specfic actions, policies and mechanisms that would contribute to arrest the ongoing degradation of natural renewable resources. It would be the first phase of a longer-term program and would be expected to generate the policy, institutional and technical base for future forest management and land titling investments in the Choc6 Region. Investments under the NRMP would be confined to the western ports of Colombia In the Choc6 Region, the specific objective would be to help conserve the primary moist forest and its biodiversity. In the highland areas of the Westen and Central Cordilleras, the specific objective would be to assist in halting and reversing forest conversion and degadation. The NRMP would pursue these objectives through: (i) the development of a policy, information, and institutional base for forest management, with a particular focus on the Choc6 Region; (ii) the rehabilitation and protection of selected water catchment areas in the highlands; (iii) the improved management of national parks; and (iv) the strengthening of environmental/forestry education, training and research, and of program management, including project preparation and evaluation, and the involvement of a panel of independent experts. 3.3 Brief Description. The NRMP, estimated to cost US$65.3 million, would support: (i) the development of a national forest policy and of a strategy for natural resource management in the Choc6 Region; specific NRMP-supported actions in the Choc6 would include: ecological zoning; the establishment of an environmental monitoring system for four ongoing forest use projects; titing and demarcation of indigenous reserves; titling of black communities; institutional analysis of five regional autonomous corporations; and support to regional committees of black and Amerindian communities (US$10.8 million); (ii) investments for the protection of selected watersheds located between the Western and Central Cordilleras (US$25.7 million); (iii) investments for the improved management of national parks and buffer zones in western Colombia (US$8.7 million); and (iv) strengthening of programs and institutions for forestry/environmental education, training, research and pilot projects, NRMP management and coordination, and of its project preparation and evaluation capacity, also involving a panel of independent experts (US$20.1 million).  - 15 - Detaied Features Table 2: Area Focus, Finan9cng Periods and Implem Agencies Pol:cy & Strategy Devd_ovmnent __ _ _ - Fores PolicY Development XX 2 DNPIERENA) - Ecological Lng - 2 DNP (IGAC) - Environmental Monitoint System XX 5 CARs:INDERENA - Titn bdieous Rmd. XX . S INCORA - Titing Black Communities XX 2 INCORA aGAC; ______________________ ______ INDERENA) L- Anlysis of CopOmtioDS XX _2 DNP - Renional Committee XX S DNP Watershed Rebabilitation - Nariiio Watersheds XX 5 CORPONARNO - Nanino Fuelwood XX S CORPONARINO - Cauca/Valle-4ndigenous Groups XX 5 CVC - Vale Watersbeds XX S CVC - Antioquia Watersheds XX S CORNARE;SEAG ___________ ___ ~~~~~~~ICORPOURABA National Parks Managent XX X 5 INDERENA: CVC E- ducadfo Traiig, S. - University Educaton - ICFES X X 5 ICFES i~ ~ ~ ~ ~ ~ ___ ______ (Universities) - Vocatonal Trainin - SENA X X S SENA - Foresky Research X X X S Vaious public and - - - ____ ~~~~~~~private - Coodin Unit- DNP/UC X X X 5 DNP - Prosect Prep./Eval. Consultants X X 5 DNP - Panel of IdEt ExpeRt s X X X S DNP A. National Forest Pocy, and Strategy Development for the Choce Region 3.4 National Forest Policy Development (US$1.0 million over two years). NRMP would help refine Colombia's national policy framework for the forest sector. NRMP-financed intenionally recruited consultants would, with collaboration from DNP, INDERENA and the regional corporations, prepare a comprehensive forest sector report for review duing the NRMP mid-term evaluation (paras. 3.22 (v) and 4.13) that would: (a) assess existing limitations on forest sector growth and sustainability; and (b) recommend policy refonns and acdons ta could be implemented to  - 16- overcome these limitations. T,he report would provide the analytical base for a drft CONPES document on forest policies, including concessions, harvesting pernits and royalties. Its prparation would involve consensus building with the affected population and take account of a number of previous studies, including the PAFC strategy and documents, a study on sustainable forest policies, that is being carried out in 1993 by INDERBNA/DNP with support from Intemational Tropical Timber Organization, and an evolving National Biodiversity Strategy (para. 1.12). The NRMe forest sector study would focus on economic and institutional aspects that have not previously been analyzed in sufficient depth, or need updating. New factors to be considered include: the impact of the more recent changes in Colombia's macropolicy orientation (apentura), the heightened awareness for community participadon and environmental issues brought about by the new Constitution, the reorganization of the legal and institutional framework for the forest and environmental sectors, titling of black communities and indigenous territories in forest reserves, and Colombia's decentralization policy. The analysis would cover the following main study areas: (i) direct and indirect causes of deforestataon and forest degradation, differentiated by region; (ii) land tenure issues that impact the production on forest lands; (iii) supply and demand for forest products; (iv) domestic market strucure for forest products; (v) factors affecting the international trade of forest products, both timber and non-timber, and opporunities for expansion; (vi) the functioning of the regulatory framework and of public and private sector institutions involved in the management of forest resources; (vii) the functioning of government policies for the management of forest reserves; and (viii) infbrmation needs. 3.5 While the above forest policy development activities (para. 3.4) have a national focus, the other planning and pilot investment activities described in para. 3.6-3.12 below would address specific issues of the environmentally fragile Chocd Region (see also Table 2 above). This Region has an incomplete data base and information system, weak environmental institutions, and inadequate populr participation. Efforts to clarify land rights in foret areas, especially for the black communities, have only recently started. The NRM-supported strategic planning and piloting activities would contribute to resolve these issues and to prepare the technical, legal and institutional base for the identification and preparation of a project intervention for improving forest and protected area management of the Choc6. 3.6 Ecological Zoning of the Chocd Region (US$1.9 million over two years). The objectives are to: (i) produce a first integrated assessment of the Choc6 Region at a scale of 1:500,000 based on available data for the region; (ii) produce a new base cartography at a scale of 1:200,000 including h;vdrology, geomorphology, and land-use and vegetation; (iii) identify critical management issues and areas, and integrate the information on environment, biodiversity and natural resources, demographic and economic processes; and (iv) develop a Geographic Information System (GIS) for the Choco with the primary information and wning results, oriented as a tool for regional  - 17- analyss, planning and decisionmaidng, based locally at the department level and accessible to different institutions and social groups. lTe subproect would be executed by DNP through a service management agreement with an appropriate service agency such as FONADE, a publicly owned enterprise with financial character linked to DNP. IGAC will be subcontracted for the photointepretaton, cartogrphy and digitizing of the 1:100,000 Intera radar images that will be used for generAng the new ctographic base. It would be a confdot of efectilveness of the proposed loan that the semvice management agreement, acceptable to the Bank, had been signed (pama. 6.1 (a)(iv)). The Ecological Zoning subproject will create the cartographic base and GIS for integrating the infmation generaed by the parailel Bio-Pacfflco project (pama. 2.24 (ii)). To ensure effective inter- agency and otlinay cordination, DNP will create a specific coordinaon committee that includes reprentatives from DNP (Environmental Pgrams Coordination Unit, PAFC, Mciflc Plan Project), INDERENA, Bio-Pacfdico, IGAC, the evironmental corporations, CORPES, and the management service agency selected. 3.7 Envromnental Monioring (US$3.7 million over five years). The objectives of this subproject are to: (i) ascertain the immediate and medium-term emvironmental and social impacts of four seected (ver different) forest use projects on the narl suoundings and the quality of life Of local inhabitants; (Ii) grate sainable forst management parameters for long-term, fIrest-based exacive activities in the Choc6 Region; and (iii) srngthen the institutonal capaity for ro l maonitoing. NRP would support the establishment, eq and oon of four-person monitoring teams within the regional evonvb atal agencies for each ft proect to be monitored. In admintat and functional matter, these teams would report to the Heads of Natural Resources in the respwective regional corporaons or INDEINA; in echnical maters they would report to speciaized staff in DNP's Coordinating Unit that would be supported by visitng internationally recruited avimental monitoring spedalists. The four fot-use prects to be monitored were selected on the basis of their potential to srve as innovative pilot or resech projects, their institutional capacity and commitment to generate new information, and their coverage of different areas in the Choc6 Region: (a) the -Naidf Palm Extraction Project" in the Guapf area, managed by CORPONARIIO; the implementation of this projct would be seprtely supported as a pilot project under the NRMP fores research component (par 3.20); (b) the "Guandal Forest Use and Consavato Poject" in the Sanquianga River area of the Nariflo departinent, which is being supported by a gant from the Government Of The Netherlands and implemented by CORPONARI1O and the National Jniversity at Medellfn;  - 18- (c) the commercial dmber extracdon opertons in the lower Ata River basin, which are being supervised by CODECHOCO; and (d) the "Intgated Forest Management Project" in the Urab region of Antioquia that is being implemented by INDERENA (Antioquia Regional Office). 3.8 Mting and Demartlon of Indigenous Reseres (Resguandos) (US$0.5 million over five years). NRMP would support: (i) the definition and legal protecdon of indigenous (Amerindian) lands in the Choc6 Region. This would include granting of land titles by INCORA, the Agarian Reform Institute, to indigenous groups (about 7,000 persons) who do not have secure land tides, and establishing about 40 new resguardos; and (ii) the marking of the boundaries of 123 existing resgpdos by INCORA with the assistance from the Ministry of Govenment, benefitting about 61,000 indigenous peoples. 3.9 Milnlg of Black Communies (US$2.0 million over two years). The objective of this subproject would be to support initial actions to regubarize and title land of black communities in the Pacific Region, under the terms of the Law No. 70 (par 2.18). Currently, most of the land in the Choc6 Region is a public forest reserve under direct State admiSon. A clarificaton of the land ownership situation is essentil for the design of resource management and consevation policies, in order to assess the convergence of interests of the parties affected and involved, the distribution of economic benefits and costs, the degree to which market-based incentives can be used successfully, and the justificaton, if needed, of compatory measures for extenal costs and benefits (see also para. 3.4). NRMP would support the following activities: (a) the establishment of coo dination mechanisms between: (i) INCORA and other public agencies involved in the land titling process: INDERENA, IGAC, ICAN (Colombian Institute of Anthopology), and the Ministry of Government; and (ii) these agencies and the black communities; (b) the preparation of a study to estimate the level of demand for titling, identifying the regional priorities, cr ical areas and potential problems; (c) a technical support and training program oriented to the public institutons and private conrfactors in order to develop fte capacity for performing the titling process using Global Positioning System (GPS) technology;  - 19- (d) field work with the communities infonning them on the tiling procedures, and supporting their organization proces an. the first phase of the titing process (clarification of community grouping, boundaries of the areas, description of demographic, ethno-historic and land-use factors); (e) the provision of logistical and financial support for the functioning of the interinstitutional and operational titling committees established under (a) above; (f) the preparation of planimetric maps of each community; (g) INCORA's core activities of land titling and registration related to the program for the black communities; and (h) INCORA's incremental coordination and supervision activities, including minor equipment purchases for the use of GIS data. 3.10 INCORA will implement these NRMP-supported activities under contract with DNP. In view of INCORA's limited capacity for implementing this net- program, INCORA would be strengthened under the Program (para. 3.09 (g) and (h)), and would subcontract activities (b) through (f) of the previous pragraph to specialized agencies (such as ICAN, IGAC and INDERENA), private firms, and to regional and departmtal committees. An indenstitutional committee composed of representatives from INCORA, IGAC, and INDERENA would evaluate the land titling requests received from the communities and take final decisions on area allocations for titling (para. 2.18). 3.11 InstIutional Anabsis of lve Regional Autonomous CorporatIons (US$0.5 million over 2 years). The objective of this subproject would be to: (i) carry out an institutional analysis of the five regional autonomous corporations in the Choc6 Region; and (ii) prepare proposals and dated action plans for the reorientation and restucturing of these corporations to improve their capacity and efficiency for the management of the environment and of natual resources.6 The corporations included are: CORPONARIRO (Dept. of Nariflo); CRC (Dept. of Cauca); CVC (Dept. of Valle del Cauca); CODECHOCO (Dept. of Choc6); and CORPOURABA (Dept. of Antioquia). The new Envirnmental Law foresees that these corporations would assume responsibility for natural resource management for the entire Biogeographic Choco Region. The institutional analysis would be carried out by a local consulting firm. The results of the analysis would be an input for future development activities in the Choc6 Region and should be available for the mid-term review of NRMP. The analysis would cover the following aspects: 6. The reorientation of CARs would also be based on the directions given by the new Environmeta Law, if enacted.  - 20 - (a) Asess current administrative structures and functions of each corpoation; inten and extemal procedures; quality and levels of pesoMnnel; capacity and efficiency in executing projects; efficiency in collecting resource use fees, apprehending violators, and delivering fines; (b) review financial and budgeting conditions; current sources and levels of corporate income; desdnation of these resources; analysis of expenditures and incomes; (c) evaluate the current and future demand for corporation (and future Ministry of the Environment) services in their future jurisdicton in relation to ongoing and planned development projects, taking into account the phasing-out of INDERENA; (d) determine and recommend the principal future lines of action, with emnphasis on forest management and natural resources conservation; (e) prepare a system for environmental monitoring across the Choc6 Region which could provide input to environmental assessments of future development activities; (f) design operating manuals for all corporations in relation to their enhanced environmental functions; and, (g) In addition, the subproject would contribute to help clarify the relationships between the corporations and the evolving MoE, in particular, in aspects of: (i) the support requirements of these corporations from the proposed Ministry and National Environmental System; (ii) coordination with regional and central agencies, e.g., CORPES and the Ministy, respectively; and (iii) firther claification of the corporations' responsibilities for protected areas, national parks, and buffer zones, and for the administation of marine and coastal resources and fisheres. 3.12 Regional Co _mitee (US$1.3 million over five years). The objective would be to support the operation of mostly existing regional committees of delegates of local communities and community-based groups from both the Amerindian and Afro-Colombian populations in the Choc6 Region. The comnuttees would monitor the implementation of NRMP projects and of other environmentally sensitive private and public projects and developments in the area. The commitees would be expected to identify environmental problems as they arise, both at the planning and implenientation stages, build consensus on the appropriaft responses that should be underaken, and support the proposed actions that would lead to mitigation or correcdon of perceived or actual environmental damages. The comumttees would also monitor the practices of hiring and training local  - 21 - people by the NRMP implementing agencies to ensure that local people are adequately represented in the decisionmaking processes. Furthernore, communities at the departmental level would be involved in the coordination of land titling activities (paras. 3.8 and 3.9). Eligible funding support under this component would include travel expenses and per diems for the delegates to attend the committee meetings, and operational expenses of the committees and their organizers (staff, consultants, materials). DNP would be responsible for managing the funding of these activities for each committee. This component would complement other community participation and indigenous peoples development activities that are included in the components of ecological zoning; titling and demarcation of indigenous reserves and black communities; and reviews of land rights, both in general and for specific parks, that would be carried out under the national parks component of NRMP. B. Watershed Protection and Rebablitation 3.13 NRMP would support local projects to protect and rehabilitate critical watersheds located between the Western and Central Cordilleras (estimated to cost US$25.7 million). The watersheds would be ranked and selected according to the benefits expected from the interventions, the size of the area and the severity of the erosion problem, and the organization and commitment of the affected populations. The detailed selection criteria are contained in the NRMP Operations Manual (para. 4.5). The projects would include tree planting and soil conservation undertaken by communities, groups, and individual farmers, that would be supported by NRMP implemnenting agencies, e.g., CARs of Nariflo, Valle del Cauca and Antioquia, and the Department of Antioquia (Secretariat of Agriculture, SEAG). The latter would also provide technical assistance to the CORPOURABA corporation for project preparation and implementation. CARs and SEAG would prepare detailed annual plans for rehabilitatng critical watersheds in their command areas for approval by DNP. They would, under contractual agreements with DNP, implement those plans with matching grants from central Government that would be reimbursable from the Loan. They would also be responsible for making arrangements with the benefiting communities and populations for the protection and maintenance of the rehabilitated watersheds, without furfther support from central Government. During the NRMP five-year financing period, a total area of about 143,500 ha is expected to be treated, which would include: (i) microwatershed protection program, principally to promote through extension-type field work improved land-use practices and reforestaion that conserve soil and water resources. A subprogram for the treatment of severely degraded microwatersheds (12,000 ha) would focus on steep, heavily eroded grazing areas m Antioquia, for which protecton through regeneration of forest cover is the most viable option. In those severely degraded areas, technical assistance and limited quantities of physical h1puts would be provided in exchange for which the lardowner would agree to maintain the forest for watershed protection; and (ii) community fuelwood plantations to produce fuelwood and other wood products on a larger scale to  - 22 - reduce pressure on remauung highland natural forests, alleviate poverty and protect the natural environment. The total area for reforestation activities of all Idnds is expected to comprise about 24,800 ha. 3.14 To induce farmers and communities to participate in watershed protecdon and fuelwood plantings, several already proven incentive mechanisms would be used, including: (i) the exchange of services, whereby the implementing agency would agree with existing community organizations to provide certain goods and services for realizing a high priority community project other than reforestation, while the community would, in exchange, provide the labor and land for the reforestation or watershed protection project, supported by agency-provided seedlings, other inputs needed for reforestation, and paid forest maintenance for a certain period; (ii) farn productivity enhancement, where agricultural production from more fertile individual farm land would be increased through greater use of improved technologies (agroforestry, fruit trees, improved seeds, fertilizers, apiculture) thereby releasing margnal land for protective tree plantings which would be supported by technical assistance, subsidized inputs, and maintenance payments from the agency. The farmer would provide land, labor and agree to follow a management plan for such protective forests; (iii) on-farm tree nurseries, whereby the implementing agency would contact selected fairm families to produce seedlings, and provide land and labor to plant trees and maintain them. The agency would provide training and technical assistance, inputs needed, and pay an additional fee for each tree produced, planted, and maintained; and (iv) the Integrated Program for Watershed Management (PRIDECU) approach, whereby communities interested in afforestation sign a contract with the implementing agency under which the latte supplies planting material, inputs and technical assistance, while the community arees to observe the technical recommendations for plantation management. In the case of commercial plantations established under PRIDECU, the community would repay at harvesting time, as is currently done, the agency's inlation-adjusted contribution, but expenses for purely protective plantations would not be recovered. C. agement of National Parks and Buffer Zones 3.15 NRMP would strengthen the capacity of the National Parks Service, currently under INDERENA, to protect some of westemn Colombia's most diverse and threatened ecosystems (estimated total cost US$8.7 million). Specific actions would include: (i) development of the institutional capacity of the National Parks Service, and of CVC for the eastern part of the Farallones National Park (see para. 3.16), through funding of incremental staff, infrastructure and technical assistance at the central and regional levels, to ensure satisfactory execution of the park prcjects included under the NRMP; (ii) training in the management of protected areas in the Choc6 Region of: (1) National Parks Service headquarters and regional personnel, and (2) local field staff of public and private entities involved; (iii) development of park management plans that would oe prepared in close consultation with local communities, and the provision of infrastructure and  - 23 - personnel needed to adequately manage nine existing national parks covering some 900,000 ha (Sanquianga, atama, Munchique, Utrfa, Farallones de Call, Katios, Gorgona, Paramillo, and Las Orqufdeas); (iv) establishment (through surveys, boundary establishment and legal gazetting) and preparaton of management plans for additional special management areas that would be selected by INDERENA on the basis of their extraordinary biodiversity value; (v) community conservation and environmental education in the park areas and buffer zones; (vi) development of a stwategy and a draft action plan for the long-term funding of protected areas; and (vii) specific monitoring and evaluation of protected area developments using biophysical and socioeconomic indicators. 3.16 The component, during its first year, would include a pilot phase to adapt the existing design to field conditions as they develop and information becomes available. Environmental non-governmental organizations (NGOs) and local community groups, in particular those representng indigenous and Afro-Colombian populations, would be involved in the planning and implementation of the various activities of the National Parks component to ensure that their rights and interests are intgrated in the development plans (see also para. 4.7). Over time, most local management responsibilities may be assumed by departnental governments, or regional corporations in partnership with local communites. However, centralized decisionmaking would prevail until the parls system is deemed safe from unauthorized exploitation. The eastern part of the Farallones National Park, as an exception, would continue to be managed by CVC, since this park was established by CVC prior to the creation of INDERENA and the national parks system. For each protected area, core and buffer zones would be selected. Use of naual resources in the core zones would be strictly controlled by the National Parks Service. In the buffer zones, traditional activities, st-ch as the sustainable extaction of wildlife, fruits, nuts and wood products would be allowed to continue, as long as these are not damaging the environment or contrary to area objectives and regulations. 3.17 Under NRM, the National Parks Service would be supported by funding at the central level: (i) a coordination and planning team consisting of a project coordinator and about eight technical and legal staff; and (ii) an administrative support team of about four staff. To implement NRMP activities in the nine existing national parks and buffer zones, and the special management areas to be selected by the mid-term evaluation of NRMP (para. 3.22 (v)(2)), an additional 88 technicians (extensionists, rangers, and guards) would also be needed. D. Forestry/Environmenl Education, Training, Resarch, Project Mement, and Monltoring/Evaluation 3.18 Education and University Research (US$8.2 million over five years). NRMP would contribute to increase the availability of trained manpower for the forestry/environment sector by: (i) improving the fcilides of existing training institutions through the provision of civil works  - 24 - (workshops, classrooms, laboratories, documentation center) and equipment; (ii) strengthening the teaching capacity through funding of postgraduate studies and workshops for teachers and research fellows, and contracting for the first two to truee years additional teaching staff at the forestry schools; (iii) funding allowances for trainee technicians to stimulate interest in technical training; (iv) funding in-service training (refresher courses) for professionals and technicians; (v) funding PAFC-related reach programs (theses, research seminars) at universites with degree training in forestry; and (vi) strengthening of the Colombian Institute for Higher Education (ICFES) to administer and monitor the NRMP-supported education and university research activities through the provision of funds for travel and subsistence expenditures, the purchase of equipment and materials, and for consultancies to modify training curricula and incorporate environmental moduli. ICFES would implement the component on a competitive basis, appraising and selecting proposals from iterested universities and forestry schools, and entering into contractual agreements with each agency. The following higher educational institutions are expected to participate: National University Medellin; University of Tolima; University of Garcia Rovira, Mgga; District University Bogott; Forestry College Caldas; Forestry School Piedras Blancas; and Centro de Estudios Superiores Maria Goreti (CESMAG), Tuquerres (Narihlo). 3.19 Vocational Trainig (US$2.7 million over five years). The National Training Service (SENA) would, under contract with DNP, provide vocational waining for semi-skilled staff and workers in forestry and environmental protection, with priority given to personnel from the Cnoc6 Region. 3.20 Forestry Research (US$5.4 million over five years). NRMP would support about nine selected forestry research and demonstration projects that would be implemented by a variety of public and private institutions under contract with DNP. Five of the nine identified projects would enhance the technical base for plantation forestry; one would monitor the environmental impact of plantations; and three would be pilot projects for natural forest management in the Choc6 Region. Support under NRMP would be for the following research operations: (i) species and management trials with ten high value tropical timber species--to be implemented by FEDECAFE, the National Coffee Growers Federation; (ii) management and conservation of forest genetic resources of the Andean Region-also to be implemented by FEDECAFE; (iii) establishment and operation of a technical and statcal data base and information system for industrial plantations-to be implemented by ACOFORE, the Colombian Association of Reforesters; (iv) development of methods for the protection of industrial plantations against diseases, physiological damages and forest fires-to be implemented by CONIF, the National Forest Research Corporation; (v) genetic improvement of high value forest species-to be implemented by FEDECAFE; (vi) evaluation of the environmental impacts of industa plantations-to be implemented by CONIF; (vii) improved regenation of 2,500 ha of nahtual Guandal forest in the Departnent of Choc6-to be  - 25 - implemented by a private foret comVany, P6aderera Cental Ltda.; (viii) i of naidf palm production in the southern Choc6 Region- to be lemented by the CORPONARIAO coroxation. These natural palms are used for the production of palm hearts, mainly for export Current naidf foest management practc are inefflcient and not suinable. NRMP will analyze and develop impved prduco sytms tough seed seon, nursy production, plantation site slectdon, sivil treatments, and the compleot utiibtion of the palms. In conjunctio with the development of improved chnology, tdis proect will also prwvide oueach ervices to local communties t transfer these advanes to local farmes; and (ix) the inegrated oest management poject in the Urabi area of Antoquia, which addresses issues of defoestation, frontier settlemnt and participatory frestry-to be iml d by INDEREN.7 impacts of projects (viii) and (ix) woul be sefically monitored under NRMPs emironmental montoring subproect (pam 3.7 above). 3.21 Coordh Jding Unit (US$2.6 million over five years). NRMP would provide support to smngte the capacty of the Colombian Govenment to coordinate, manage, partly implement, and monitor the Program. The Coordinating Unit would initially be located ithmin DNP, as part of the DNP Subdircton, but tansrred to the Minstry of the Environment once it becomes operaional. Ihe C inating Unit would atend the coofinato and management needs of the World Bank-supported NRMP as wel as of the IDB-suported 3Environmental Pagrm, and funded from both bank loans in proporto to the manpowerd specific focus of their respective programs. The Cdinating Unit wod consit of the offil of the kGneral Coodio and four sealized sbunt (secretariats) reportng to him/her that would deal with legl and financial matters (SAP), thnic m (SM, istuonal matt (SA" and the Natonal n m Fund (see the program management stuctue in Annex 4, Tible 3 (chart)). Tne Crnatig Unit would have up to 41 sta, and its own offIlces and office ment. About 15 staff, mostly those assined to SAP and SAT wouwd be financed under NRMP, and about 26 staff in all subunits woudd be finand under the 1IDB-spported progrm. Specificaly, NRMP would finance, with reated office and operatonal and taining costs: (i) in SAT the posto of the head of the SAT, three of the fiur specialists (fet policies, consrvato, and lnd egularizdion), three of the eight prfsical assstants, and one of the t scretaies; (i) in SAP the posito of head of SAF, the legal counsel, a procuremt speialisf (i.e., one of the two financial analysts), and t of ithe four financial assisnts; (' in SAI the postons of one of the four profesional assistants; and (iv) in the Office of the General Codinator one codinati assisa It woudd be c_m of