Document of The World Bank Public Disclosure Authorized

Report No.: 20388 CO Public Disclosure Authorized

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LEARNING AND INNOVATION LOAN

IN THE AMOUNT OF US$5.0 MILLION

TO THE

REPUBLIC OF COLOMBIA Public Disclosure Authorized FOR THE

SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

April 25, 2000

Environmentally and Socially Sustainable Development Sector Management Unit Colombia, Ecuador and Venezuela Country Management Unit Latin America and Caribbean Region Public Disclosure Authorized CURRENCYEQUIVALENTS

(ExchangeRate Effective March 2000)

CurrencyUnit = ColombianPeso 1.0 Colombianpeso= US$ 0.0005 US$ 1.00= 1957 Colombianpesos

FISCALYEAR Governmentof Colombia: JanuaryI to December31 World Bank: July I to June 30

ABBREVIATIONSAND ACRONYMS CAR RegionalAutonomous Corporation CAS CountryAssistance Strategy CORPOICA ColombianAgricultural Research Corporation (CorporacionColombiano de InvestigacionAgropecuario) DNP NationalPlanning Department (Departemento de PlaneacionNacional) FPSN FundacionPro SierraNevada de SantaMarta (Foundation) GEF GlobalEnvironmental Facility ICA ColombianAgricultural Institute (Instituto Colombiano Agropecuario) INAT National Institutefor lIrigation and Drainage (InstitutoNacional de Adecuacion de Tierras) INCORA ColombianInstitute for AgrarianReform (InstitutoColombiano de Reforma Agraria) LIL Learningand InnovationLoan M&E Monitoringand Evaluation NDP NationalDevelopment Plan NGF Non GovemmentalFund (Fund) NGO Non GovernmentalOrganization PIP ProjectImplementation Plan PMR ProjectManagement Reports PNR National RehabilitationProgram (ProgramaNacional de Rehabilitacion) UBN UnsatisfiedBasic Needs UNESCO UnitedNations Educational,Scientific and CulturalOrganization SDP SustainableDevelopment Plan for the SierraNevada de Santa Marta SENA NationalApprenticeship Service (ServicioNacional de Aprendizaje) TNC The Nature Conservancy

Vice President: David de Ferranti CountryManager/Director: Andres Solimano SectorManager/Director: John Redwood Task Team Leader/TaskManager: Elsie Garfield COLOMBIA SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 2 2. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Learnng and developmentissues to be addressed by the project 5 4. Learning and innovation expectations 6

C. Project Description Summary

1. Project components 8 2. Institutional and implementationarrangements 9 3. Monitoring and evaluation arrangements 13

D. Project Rationale (This section is not to be completed in a LIL PAD)

E. Summary Project Analysis

1. Economic 13 2. Financial 13 3. Technical 14 4. Institutional 14 5. Environment 14 6. Social 15 7. Safeguard Policies 19

F. Sustainability and Risks

1. Sustainability 20 2. Critical risks 20 3. Possible controversial aspects 20

G. Main Loan Conditions

1. Effectiveness Condition 21 2. Other 21

1 H. Readiness for Inplementation 21

I. Compliance with Bank Policies 22

Annexes

Annex 1: Project Design Summary 23 Annex 2: Project Description 29 Annex 3: Estimated Project Costs 31 Annex 4: Not applicable 32 Annex 5: Not applicable 33 Annex 6: Procurement and Disbursement Arrangements 34 Annex 7: Project Processing Schedule 40 Annex 8: Documents in the Project File 41 Annex 9: Statement of Loans and Credits 42 Annex 10: Country at a Glance 44 Annex 11: Social Assessment 46 Annex 12: Indigenous Peoples Strategy 67

MAP(S)

Map 1: Topography and Principal Rivers of the Sierra Nevada Eco-Region Map 2: Pilot Regions, Sierra Nevada Sustainable Development Region Map 3: Cultural Landscapes of the Sierra Nevada Eco-Region Map 4: Colonization of the Sierra Nevada de Santa Marta in the XXth Century Map 5: National Parks and Indigenous Reserves of the Sierra Nevada Map 6: Key Pre-Hispanic Population Centers in the Sierra Nevada Map 7: "Black Line" and Indigenous Reserves COLOMBIA SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT Project Appraisal Document

Latin America and Caribbean Region LCSER Date: April 25, 2000 Team Leader: Elsie B. Garfield Country ManagerlDirector: Andres Solimano Sector ManagerlDirector: John Redwood Project ID: P057326 Sector(s): AY - Other Agriculture, VM - Natural Resources Management Lending Instrument: Learning and lnnovation Loan (LIL) Theme(s): Environment; Rural Development Poverty Targeted Intervention: N ProjectFinancing Data Z Loan G]Credit O Grant El Guarantee El Other (Specify)

For LoanslCreditslOthers: Amount(US$m): 5.0 ProposedTerms: Fixed-Spread Loan (FSL) Grace period(years): 5 Yearsto maturity:17 Commitmentfee: 0.85% during first 4 Servicecharge: 0.00% years; 0.75% p.a. thereafter Frontend fee on Bank loan: 1.00% F:nancig PEa: & e --t Foregn T-ta.w - _. . . GOVERNMENT 0.50 0.00 0.50 IBRD 5.00 0.00 5.00 IDA AGENCE FRANCAISE DE DEVELOPPEMENT 0.28 0.00 0.28 GOVERNMENT OF THE NETHERLANDS 0.24 0.00 0.24 LOCAL CONTRIBUTION 0.22 0.00 0.22 Total: 6.25 0.00 6.25 Borrower: REPUBLIC OF COLOMBIA Responsibleagency: NATIONAL PLANNING DEPARTMENT-FUNDACION PRO SIERRA NEVADA

Estimateddisbursements ( Bank FYIUS$M):

Annual 0.1 0.8 1.2 1.2 1.1 0.5 0.1 Cumulative 0.1 0.9 2.1 3.3 4.4 4.9 5.0 Projectimplementation period: 2000-2005 Expectedeffectiveness date: 05/31/2000 Expectedclosing date: 12/15/2005 OXPADFonn- MR.c 20J A. Project Development Objective

1. Project developmentobjective: (see Annex1) Program developmentobjective: This projectwill contribute to the developmentobjective of the Foundation'ssix-year program: betterinformed and organizedstakeholders implementing jointly agreed actionsto conservethe biologicaland culturaldiversity of the SierraNevada and to use its natural resourcesin a sustainablemanner. Project developmentobjective: The project's specific development objective is to developand test in at least threeregions a participatorymethodology and operationalmechanisms for promotingsustainable managementof productionand naturalsystems which can then be used in otherregions of the Sierra Nevada.

2. Key performance indicators: (see Annex1) The followingis a preliminarylist of key performanceindicators which may be revisedand the indicators made more specificduring the detaileddesign of the M&Esystem during the first four monthsof the project. In addition,more specificmeasures of the project'sgoals, particularly the progressindicators, will be incorporatedinto the AnnualOperating Plans and the ProjectManagement Reports.

Impact: # of sustainabledevelopment projects funded in pilotregions and % successfullycompleted by the end of project;# of requestsfor participation/supportand projectproposals received by the Foundation fromorganzations and communitiesoutside the pilotregions; # and type of agreementsreached between key stakeholdersin 3 pilotregions per year and % implemented;# farm plans includingsustainable productionsystems being implemented by farmersin eachpilot region per year. Progress: strategiesand operationalmechanisms designed and testinginitiated in one regionby end of projectyear 1; M&Eand leaning systemoperating and systematicallydocumenting learning process and best practiceby end of projectyear 1; at least 12 communityorganizations in eachpilot region trained in negotiationtechniques, leadership and projectmanagement through 3 workshops/year;# of sustainable developmentprojects in pilotregions submitted (identify % receivingtechnical support under project) and % approvedfor NGF funding;# and type of agreementsbetween critical stakeholders being prepared and beingnegotiated in 3 pilotregions each year; at least3 criticalactivities in collaborativemanagement plan for the indigenousreserves/Sierra Nevada park have been implementedduring year 3.

B. Strategic Context 1. Sector-relatedCountry AssistanceStrategy (CAS)goal supported by the project: (see Annex1) Documentnumber: 17107 CO, R99-201 Dateof latest CASdiscussion: 11/18/99 Both the Foundation'sprogram and the projectfit wellwith the overarchingCAS objective:to attain sustainabledevelopment with continuousreduction of povertyand improvementof socialconditions in an environmentof peace. As indicatedin the CASProgress Report discussed by the Board,peace and developmentare centralto Colombia'sdevelopment agenda, and have becomea more growingarea of Bank assistance.Due to its multidimensionalapproach to developmentin a conflictiveand environmentally importanteco-region, the projectwill contributeto severalof the CAS's sectoralobjectives. These include: sustainabledevelopment (improve natural resource management and conservationof strategiceco-systems, taking intoaccount the needsof the inhabitants);peace and development(develop effective strategies for addressingthe socio-economicdeterminants of violenceand conflict);and rural development(improve capacityto generate,transfer and adopttechnologies that increasethe productivityand sustainabilityof smallfarmer agriculture).

-2 - 2. Main sector issues and Government strategy: Main Sector Issues: Colombia is recognized to be one of the "megadiverse" nations in the world. Despite the fact that it accounts for only 1% of the world's land area, nearly all the world's ecosystems are represented in Colombia with a correspondingly high diversity of species (10% of global biodiversity). However, Colombia's strategic eco-regions are experiencingrapid deterioration which is a major threat to their biodiversity. Where national parks were established (71% of the legally protected areas and 9% of Colombia's land area), they were created under a centralized regime, generally without regard for the social and economic conditions that prevailed in and around the parks. An enforcement/policingapproach combined with a shortage of financial and human resources,the remote location and difficult access to many of the areas, and the presence of armed groups in and around some of the key parks have been major obstacles to effective conservationand protection of biodiversityin the national parks system. Outside the protected areas, the most important direct sources of loss of biodiversity are colonization of new areas and inappropriate land use, in particular the enormous increase in the area under pasture for extensive livestock production. Many of the most important areas of the country from a biodiversity point of view are those where the State presence is weak, and insecurity and armed conflict are serious problems. Precarious living standards of culturally diverse rural populations inhabiting strategic eco-regions contrast sharply with the rich biodiversity of these places.

Despite a decline in the incidence of poverty in the last decades,poverty in Colombia remains a critical problem with strong rural and regional dimensions. Seventypercent of the people with incomes below subsistence live in rural areas. The Caribbean region (composed of 8 of Colombia's 32 departments, and 21% of the population) is one of poorest in Colombia with the highest number of inhabitants living in conditions of misery. Based on 1995 data collected prior to the erosion of some of the national gains in poverty reduction in the later half of the 1990s, the Caribbeanregion also has poverty indicators above national averages: 63% of the population vs. 55% at the national level have incomes below the poverty line, and 29% vs. 20% nationally live in misery. The situation is dramatically worse in rural areas: 79% of the rural population have incomes below the poverty line, and 42% live in misery. The Unsatisfied Basic Needs (UBN) Indicator shows a similar picture: 52% of the population in the Caribbean region have UBN vs. 37% nationally. Since the mid-1980s the level of armed conflict in the region has been increasing; land distribution is very unequal and conflicts over land have historically been acute.

Government Strategy: The Government'sdevelopment strategy contained in the National Development Plan (NDP) for 1998-2002, el Cambio para construir la Paz is conceived to promote conditions to make a viable peace and guarantee its long-term sustainability. A two track approach to the peace process is being pursued: (i) at the political, national level negotiationsfor peace with various arned groups; and (ii) at the local and regional level pursuing specific initiatives to build social capital and address the root causes of violence which have long-standing local dimensions. The NDP recognizes that while violence and conflict affect the entire country, certain areas of the country are affected particularly hard. It indicates that one of the principle factors contributing to increased levels of violence is political exclusion, poverty and inequality, and argues that peace needs to be constructedthrough an integrated economic and social policy. In the presentation of the Plan's agriculture sector strategy, it is acknowledged that the agricultural sector is the principal scenario where armed conflict is carried out, and indicated that in order to advance in a decisive manner towards the achievement of peace the conflicts in this sector must be resolved.

The NDP includes the outline of a special plan for economic, social and environmental reconstruction of zones most affected by violence. The active involvement of civil society organizations (particularly grassroots community organizations)and alliances between the public and private sectors, and international

- 3 - organizations is called for. The expectation is that this plan will generate conditions for achieving peace, by promoting a participatory model of management at the regional level which brings together the interests of society and the parties in conflict. According to the NDP, action in five thematic areas will be supported: productive processes, promotion and protection of human capital and humanitarian action, institutional development and strengthening social capital, construction of infrastructure for peace, and promotion of environmental sustainability. The critical need for a flexible approach in carrying out programs in conflictiveareas is emphasized.

The environmental policy contained in the NDP has the broad objective of: "restoring and conserving priority areas in strategic eco-regions, while fostering sustainable regional and sectoral development in the context of constructing peace." The Plan's three main objectives and seven programs for the environment include: (i) restore and conserve strategic eco-regions (water, biodiversity, forest programs); (ii) promote sustainableregional and urban development (endogenous production systems, and quality of urban life programs); and (iii) seek environmentally sustainable sector development (clean production, "green" markets). Water is treated as an inter-sectoral theme to articulate actions, and improved management of the principal watersheds is a key area for investment. The approach in the Plan is integrated, the locus of action is the region, citizen participation is emphasized, alliances between various actors in the public and private sector are encouraged, and the reconciliation of social and conservation objectives is sought with special attention to the concerns and potential contributions of indigenous and black communities.

The decisionto involve communities in collaborativemanagement of protected areas in the national parks system is an important policy change signaled in the Plan and endorsed by the National Environmental Council in August 1999. The new policy entitled "Policy for Consolidating the National System of Protected Areas on the Basis of Social Participation in Conservation" marks a significant change from the traditionalrestrictive and exclusionary approach which is inherent in Colombian laws which predate the 1991 Constitution. The new policy focuses on the social dimensions of conservation and seeks to improve the effectivenessof conservation in protected areas by involving local communities which implies a diversity of methods including collaborative management. The policy explicitly recognizes the conflicts created by the restrictive nature of the laws, arguing for transitional mechanisms which recognize that people are living in and depending on the parks and surrounding areas and that this is not necessarily incompatiblewith conservation of ecosystems. One of the important objectives of the policy is to contributeto solving conflicts over the occupation and use of protected areas and buffer zones, including those related to the overlapping areas of parks and communally titled lands of indigenous and black communities.

The Development Plan's biodiversity program is based on the National Policy on Biodiversity adopted in March 1997 and a Biodiversity Action Plan was published and presented to the Ministry of Envirommentin late 1998 (Colombia biodiversidad siglo XX). Three broad areas for action defined:

* Knowledge: characterization of the components of biodiversity; recuperation, protection and disseminationof traditionalknowledge. * Conservation: the conformation and consolidation of a national system of protected areas; reduction in processes causing a deterioration in biodiversity; restore ecosystems and recuperation of species; promotion of ex situ conservation. * Sustainable Use: promotion of systems for sustainable management of renewable natural resources; sustainabledevelopment of the economic potential of biodiversity; develop systems for establishing the economic value of biodiversity components.

The Government has designated the Sierra Nevada de Santa Marta as one of the strategic eco-regions to

- 4 - be supported under the Development Plan (see Map 1). The eco-region includes the Sierra Nevada de Santa Marta, the world's highest coastal peak that is a UNESCO-declared Biosphere Reserve, and the 35 watersheds that originate there which serve a population of between 1.0 to 1.5 million; administrativelyit includes 15 municipalities located in 3 departments, 2 national parks, as well as 2 major indigenous reserves. The Sierra Nevada eco-region falls under the wing of other Government initiatives: (i) the multi-sectoral program for development of the Caribbean region, Plan Caribe Siglo XXI, initiated by the previous Govermnent to address the region's high level of poverty, low level of public services, and high economic potential due to proximity to export markets; (ii) the initiatives, described in the Development Plan, for conflictive areas of the country; and (iii) the recently developed Strategic Plan for Displaced Persons (Plan Estrategico para el Manejo del Desplazamiento Interno Forzado por el Conflicto Armado) which identifies the Sierra Nevada and the Cesar Department as one of four regions of the country most affected by this problem. The objectives and strategies in the Sustainable Development Plan for the Sierra Nevada de Santa Marta (SDP) published in 1997 and endorsed by key stakeholders, the Foundation's six-year program and the LIL are fully consistent with the Government's strategies described above, though they do not address all dimensions of these strategies.

3. Learning and Developmentissues to be addressed by the project: The SDP and the work of the Foundation to date embody a pioneering approach which takes into account the complex and multi-dimensional dynamics of eco-regional sustainability, in particular the interaction of people with nature. The project addresses the key development issues cited above and promotesa continuous leaming process in the core areas described below. In order to allow sufficient time for learning in these areas which relate to longer-term processes of social and environmental change, a five-year LIL is required. Based on the LIL experience, the collaborative management approach would be scaled up from the 3 pilot regions to the rest of the eco-region in a follow-up project/program.

Core learning area 1: How to promote biodiversity conservation and natural resource management in a conflictive environment in a way which brings stakeholders together around common goals, thus addressingsome of the historical roots of conflict in the Sierra Nevada. The process of developing the SDP has been an educational one which has created an increased awareness of the environmentaland cultural importance of the Sierra Nevada. It has also contributed to a dialogue and maturing of relationships among various regional actors, many of whom have had long-standing conflicts particularly over land. Building on its experience in several parts of the Sierra Nevada and on some innovative experienceselsewhere in Colombia, the LIL will support the Foundation's efforts to develop and test a participatorymethodology for bringing together key stakeholders in particular localities with diverse and at times conflicting objectives and world views to agree on joint actions which address the main sources of damage to ecosystems and of social conflict. Key lessons expected from the LIL are: (i) how to build common ground that brings key stakeholders together; (ii) how to promote an intercultural dialogue and an approach to sustainable development and biodiversity conservation which takes into account different cultural perspectives on conservation and resource management; (iii) identification of win-win alternatives to improve livelihoods and conservation in specific localities and at the regional and eco-regional levels; and (iv) operational mechanisms which are sufficiently flexible to work effectively in an uncertain and rapidly changing environment.

Corelearning area 2 (a subsidiaryof area 1 above): How to make managementof protectedareas more effective and consistent with social and economic conditions. Much of the area of the eco-region is under protected status: the two national parks established in 1964 account for 20% of the land area in the eco-region and nearly 34% of the highlands. Much of the park area overlaps with indigenous reserves which also have a special legal status; the combined area of parks and reserves accounts for 28% of the

- 5 - area of the region and nearly half the area of the highlands. The Foundation'sapproach to biodiversity conservation is based on building social consensus and agreemerntbetween key actors on conservation actions, rather than creating new restricted areas or expanding e- stingones without social support. In part this is a recognition of the sociopolitical environment prevailing in the Sierra Nevada, but it also reflects a new way of thinking about conservation and natural resource management. The change in protected areas policy concerning communities living in and around the national parks, recently approved by the National Environmental Council, is an important opportunity to resolve issues which have generated considerable conflict in the Sierra Nevada. Thus, a key learning area is how to put these policies into practice. The project will support the process initiated in May 1999 and consolidatedin November 1999 between indigenous organizations and the Parks Unit to develop and implement a collaborative management plan for the Sierra Nevada park, as well as consultations and agreements with the farmers living within these territories. A particularly difficult and sensitive issue where development of a new approach is badly needed and where the LIL could make an important contribution is the voluntary resettlement of farmers living within the protected areas (see Annex 1 1, Social Assessment).

CoreLearning area 3: Identificationand promotionof sustainableproduction systems on existing farns and productionareas in the SierraNevada. There is no simpledefirution of what sustainable systems are, nor how this can be measured. The project supports an approach that views sustainability in relation to specific levels of the eco-region and locations (including specificfarms). The reconciliation and trade-offs between conservation and livelihood objectives is also an important area of learning. During project preparation, a general analysis of existing production systems in the eco-region was caried out and criteria for formulating alternative, sustainable production systems which will contribute to biodiversity conservation were defined: (i) soil conservation; (ii) water use rationalization; (iii) biodiversity conservation (reduce fragmentation of habitat, etc.); (iv) productivity (optimization of the material and energy cycles within the productive unit, etc.); and (v) socio-economicfactors (cost minimization, optimal use of family labor, etc.). Under the LIL, a methodology for farm-level "environmentalplanning" which has been developed based on the Foundation's work in several areas of the Sierra Nevada and on successful experiences elsewhere in Colombia will be tested and refined in the pilot regions. 4. Learningand innovationexpectations: 21 Economic Z Technical 1 Social 21 Participation El Financial El Institutional 1 EnvirommentalEl Other

Using the typology of LILs developed based on a review of the Bank's first year of experience with this new lending instrument, this project involves all three types of learning and innovation (depending on the scale/level at which it is working):

- consensus building at the eco-regional and pilot region level: a core group (e.g. Foundation, key actors in pilot regions) progressively draws more stakeholders into the process of establishing common beliefs, positions and behaviors in order to create broad ownership and participation in a follow-on activity;

-mutual learning in the context of specific initiatives developedwithin the zones and areas in the pilot regions and the overlapping area of the Sierra Nevada park/indigenousreserves: a relatively complete and inclusive group of stakeholders,known to each other, establish a process of mutually supportive learning, innovating and negotiation of differences to achieve a common purpose prior to initiating further action;

-prototype and capacity building which applies to the role of the project: core stakeholders progressively build the capacity and know-how to move forward with a more ambitious program (in this case, the LIL provides the basis for horizontal expansion to new areas within the eco-region similar to an Adaptable

-6 - Program Loan).

The breadth of learning and innovation being addressed by the project is another reason that a five year project is required.

Economic: * Develop and test methodologies for assessing the economic value of environmentalservices and design of incentive mechanisms to promote sustainable use and management of natural resources (such as user fees). Key issues are to establish an empirical basis and social mechanisms. * Identify promising products and markets for non-timber and organic/biodiversityfriendly goods.

Technical: * Develop indicators and methods for measuring sustainability and trends over time at different levels of the eco-systems and eco-region.

Social: * Conflict/peace: the feasibility and impact of addressing issues of ethnic conflict, social exclusion and inequality through dealing with issues related to sustainable natural resource use. * Identification of win-win solutions which promote conservationand improved livelihoods. * Conservation with people-one of first pilots of new protected areas policy. * Build on lessons of Eco-Sierra and concepts/operationalmechanisms developedin context of the land reform pilot projects in Colombia to develop pilot voluntary resettlement experience.

Environmental: o Promote intercultural dialogue and understanding of different cultural perspectives on conservation, resource management and sustainable development * Linking different levels of analysis and action, and understanding the interaction between them: eco-region, regions, zones, areas, farms. - Identification of key urban environmental issues.

Participation: * Test participatory methodology of working in an integrated way (community developmentapproach) with actors in specific geographic areas * Build on Foundation's experience in several areas of the Sierra Nevada (but adopt a more systematic approach) and other experiences in Colombia (CIPASLA in the Rio Cabuyal watershed in the Cauca Department, a documented case of working with communities on watershed managementin a complex social environment), to promote collaborative management in pilot regions.

-7 - C. ProjectDescription Summary 1. Project components (see Annex2 for a detaileddescription and Annex3 for a detailedcost breakdown):

$etr ot %of frar, cigZ** i. KnowledgeGeneration and 1.06 17.0 0.77 15.4 Dissemination 2. Participation,Organizational 2.55 40.8 2.10 42.0 Strengtheningand Coordination 3. CollaborativeManagement and 2.64 42.2 2.13 42.6 Subprojects Total Project Costs 6.25 100.0 5.00 100.0 Front-endfee 0.00 0.0 0.00 0.0 Total Financing Required 6.25 100.0 5.00 100.0

The LIL is contributingto the Foundation'ssix year program(see Annex2 for full descriptionof the programand LIL activities)by developingand testingapproaches in at leastthree pilot regionswhich can then be usedelsewhere in the eco-region.

Project Component1. KnowledgeGeneration and Dissemination.The objectiveof this componentof the LIL is to design and put intooperation a programfor generatingand disseminatingknowledge about best practices.The LIL will supportkey activitieswhich serve as the basis for implementationof the other two components,including: (a)during the first year of the LIL, designthe methodologiesand operational mechanisms(participation strategy including the approachto collaborativemanagement, promotion of sustainableproduction systems at the farm-level,and institutionalstrengthening) which will be tested, improvedand adaptedunder components 2 and 3 to varyingsocio-economic conditions in eachpilot region duringthe remainderof the project;(b) designand implementa communicationsstrategy to enhance awarenessand generatesupport for conservationof biodiversityand sustainabledevelopment in the Sierra Nevada,including dissemination of goodpractices and experiences;(c) studytours and visits, farmer exchanges,and workshopsto promoteexchange of knowledgeand experiencebetween those in the eco-region,with others elsewherein Colombia,and, as appropriate,outside Colombia; (d) key studiesand action-researchto developnew information(for example, rapid urban environmental assessment) and methodologies/toolsin innovativeareas where knowledge and experienceare limited(for example, environmentalservices: assessmentof potential,methods for economicvaluation, and incentive mechanisms);and (e) the project'smonitoring, evaluation and learningsystem to ensurea permanent mechanismfor drawinglessons, analyzing progress and results,and documentingbest practices.

Project Component2. Participation,Organizational Strengthening and Coordination. The objective of this componentof the LIL is to: put intoplace and operateeffectively a programfor strengtheninglocal and regionalorganizations supporting sustainable development in the SierraNevada de Santa Marta.The LILwill supportthree types of activities:(i) thosewith a broadoutreach and scope;(ii) thosefocused in the pilotregions where collaborativemanagement is beingpromoted under component 3; and (iii)those

- 8 - related to the strengthening of the Foundation and project management. Under the first, a self-standing program for capacity building will be implemented which includes activities such as: (i) training and legal support to develop peasant-farmer and indigenous organizations in accord with their self-defined needs and priorities; (ii) technical and operational support to the regional entities, the Regional Environmental Council and Comite Directiva (indigenousorganizations), responsible for coordinating the implementation of the SDP; and (iii) outreach efforts to involve groups, such as business-oriented farmers and urban dwellers, in the SDP. The second kind would be specific programs in each of the pilot regions which will provide technical support and training to critical stakeholders such as business-oriented farmers, small farmers, indigneous and local organizations,and municipalitiesto enable them to effectively participate in collaborative management, reach and implement agreements,adopt sustainable production systems, and create networks for sharing informationand experience. The LIL will also finance technical support to communities and local organizations to help them prepare sustainable development project proposals to submit to the non-governmentalfund for funding. Finally under the third type, the LIL will finance the design and implementation of a strategic plan for the institutional development of the Foundation, as well as the incremental costs of project management includingthe annual external financial audit.

Project Component 3. Collaborative Management and Subprojects. This is the core investment component of the Foundation's program consisting of three interrelated sub-components: (i) development and implementation of collaborativemanagement plans (sub-component 3.1); (ii) promotion of a stewardship approach to managementof protected areas, and constitution of a network of conservation areas (sub-component 3.2); and (iii) establishment and initial operation of a non-governmental fund (NGF) managed by the Foundation which would provide competitivegrants to communities and partner agencies for a projects related to conservationand sustainable use of natural resources in the eco-region.

Under this component, the LIL will support the testing in at least three pilot regions (and in selected pilot zones and areas within these regions) of the participatorymethodology for bringing together key stakeholders to develop collaborativemanagement plans. Based on the experience of preparing the SDP, it is likely that water will be a common concern of many stakeholders.The project will promote mutually beneficial agreements between users in lowlands and urban centers, and rural populations in the Sierra, applying economic incentives to watershed recuperation and protection initiatives. It will also test a participatory methodology for developing sustainableproduction systems at the farm level which will be a central focus of investment under the LIL. The project will also offer specific support for the implementation of the collaborativemanagement plan for the overlapping territories of the Sierra Nevada park and indigenous reserves being developedby a committee composed of indigenous organizations,park authorities and the representativeof indigenous affairs in the government. This may include support for: (i) completion of the managementplan; (ii) consultationsand agreements with farmers living within these areas to support the plan; (iii) sustainabledevelopment alternatives for peasants and indigenous peoples living in these territories; and (iv) a pilot voluntary resettlement project. The LIL will also finance sustainable development sub-projects in the pilot regions with US$1.0 million which will be managed by the NGF being established with support from the GEF.

2. Institutional and implementation arrangements: ImplementationPeriod: The project will be implementedover a period of five years (2000-2005).

Selection of Pilot Regions: Recognizingthe impossibilityof initiating actions throughout the eco-region and the need to focus efforts in key areas of the eco-region in order to test approaches and to generate sufficient impact, a preliminary list of the regions where the Foundation's efforts would be focused was developed by using a cluster of criteria. The criteria clusters include: (i) cultural value, (ii) socio-economic

-9- dimensions (such as existence of conflict over land use rights, potential for improving revenues of the poor through conservation), (iii) operational considerations (including the security situation and complementarity with on-going activities), and (iv) ecological significance. Seven priority regions (large watersheds, or combination of watersheds, areas of between 50,000-100,000hectares) were identified. Based on the refinement of the ecological criteria as part of the development of the eco-regional conservation strategy, the multi-criteria process was applied and three pilot regions where LIL efforts will be focused under component 3 were selected: (i) Northwestern Sierra-Santa Marta Axis in Magdalena Department; (ii) Northeastern Sierra-Hato Nuevo and Fonseca Axis in La Guajira Department; and (iii) Southwestern Sierra-ElCopey Axis in Cesar Department. (see Map 2.) The next step in the process which will be part of the participatoryapproach being tested will be to identify within each pilot region, an initial set of zones (part of a watershed, roughly 2,000-10,000 hectares) and areas within zones (1,000 to 2,000 hectares). A Portfolio of Potential LIL Interventions (potential projects and activities for project support specifying the participants,activities, and location) will be developed for each pilot region. The Portfolio, built using a participatoryapproach which takes into account technical and social conditions, provides for flexibility in project implementation,required by the highly uncertain environment in which the project is being carried out, by providing alternatives for project support without locking into a pre-determined, set plan.

Project oversight by the central Government and at the regional level: The National Planning Department (DNP) has been designated by the Government to be responsible for the project, and DNP has designated its Plan Caribe Office to exercise project oversight responsibility with support from the technical units for Regional and Urban Planning, Rural Development, and Environmental Policy. The Fundaci6n Pro-Sierra Nevada de Santa Marta (Foundation), a private non-profit organization with thirteen years experience working in the project area, has been designated by the Govemnmentas the project implementingagency.

Key oversightand coordination mechanisms at the regional level which also include central government participation are described below. The Foundation's 22 member Board of Directors, composed of representatives of key central and regional government agencies, community organizations and prominent individuals,will provide direct oversight and policy guidance for project activities. As stipulated in the Foundation's statutes, it also has three regional boards (juntas regionales), one for each of the eco-region's three departments (the political/administrativelevel between the local-municipal governments and the national government), which are open to participation of all those interested in the Foundation's work. The regional boards meet quarterly with the Executive Director of the Foundation and have proven to be an effective means of consultation and coordination.

The Regional Environmental Council for the Sierra Nevada de Santa Marta, a broadly representative body of key stakeholderswhich is chaired by the Minister of the Environment, will also provide oversight in its capacity as the coordinating and consultative body for implementation of the SDP. Oversight and guidance by indigenous authoritieswill be ensured through the Steering Committee (Comite Directiva) created at their request in March 1998, which includes the Minister of Environment, Presidential Advisor for the Atlantic Coast, the General Director for Indigenous Affairs in the Ministry of the Interior, and leaders of the 4 indigenous organizations in the eco-region--Organizacion Gonawindua Tayrona, Confederacion Indigena Tayrona, Organizacion Yugumauin Bunkuanarrwa Tairona, Organizacion Indigena Kankuama . The Foundation serves as the Committee's technical secretary. In late 1999, the leaders of the four indigenous organizations decided to form a Council of Cabildos (Consejo Territorial de Cabildos) as their forum for developing and stating to the extemal world a unified position on matters including the developmentprojects in the Sierra; the Council's decisions will determine the specific activities to be supported by the project which will be included in the project's annual plans.

- 10 - To complement the existing oversight mechanisms, DNP has decided to create a small committee, composed primarily of technical units in DNP and chaired by the Plan Caribe Office. The committee will review the project's Annual Operating Plans, Audit Reports, Project Management Reports (when they are introduced), Annual Reports of the Foundation and project, and Monitoring and Evaluation reports.

Communities and Partner Agencies: The Foundation will be the project implementing agency, but will continue its long established practice of working in close collaboration with local community groups, NGOs, indigenous authorities, municipal and departmental govemnments,and regional and national institutions including universities, research institutes such as Alexander von Humboldt, Regional Autonomous Corporations (the regional enviromnental authorities), and the National Parks Unit The project's focus is outward to the communities and organizations in the eco-region, therefore a high proportion of the funding is destined to benefit these communities, organizations, regional entities and local governments both through provision of technical support and training, as well as direct funding, in particular through the NGF, of activities and projects proposed and implemented by them. The project aims to promote partnerships between community organizations, local govermmentsand other entities--both national and regional--present in the eco-region with the Foundation playing the role of facilitator.

ProjectImplementation Plan (PIP),Annual Operating Plans and ProjectManagement Reports: The Foundation has prepared a LIL Project Implementation Plan (PIP) which includes a description of the project's objectives, components, costs and financing plan, pilot regions, implementation arrangements (new organizational structure of the Foundation, allocation of responsibilities for project management, plan of action for financial management, procurement arrangements), and implementation mechanisms and strategies (annual operating plans, participation strategy, indigenous peoples strategy, voluntary resettlement, partnerships, M&E and learning system). In view of the learning nature of the project which requires flexibility and adaptation as it proceeds, Annual Operating Plans, and eventually the Project Management Reports (PMR), will serve as a reference point for agreeing on activities to be undertaken, the budget, procurement plan, disbursement estimates and performance indicators. The plans will serve also as a monitoring and evaluation tool, with a performance evaluation of the previous plan submitted with each new plan. The PIP includes the project's Annual Operating Plan for project year 1 (2000). Subsequent Annual Operating Plans will be presented by November 1 of each year, until such time as the Bank and Govermnent agree that the PMR system is working effectively and can replace the Annual Plans which is estimated to be by April 2001.

Non-GovernmentalFund: The NGF is being established in the second semester of 2000, with support from the GEF, as an independent account within the administrative and legal structure of the Foundation. The NGF's Operating Regulations (Reglamento Operativo), the basic framework for its establishmentand operation,have been reviewed and found satisfactoryby the Bank and were approved by the Foundation's Board of Directors in March 2000. The basic operating framework provides for a general coordinator of the NGF to handle overall management and coordination functions under the Foundation's Executive Director. A technical committee of seven independent experts and the Executive Director, Financial director, and general coordinator of the fund (the later three without a vote) will provide strategic direction, review the annual budget and decide which sub-projects should be financed. A more detailed Operating Manual for the NGF is being prepared during project year I which includes provisions concerning enviromental screening of sub-projects, procurement and fnancial management.

-11- US$1.0 million of project funds is being provided under disbursement category 5 to finance sustainable development subprojects located in the pilot regions and proposed by communities on a competitive basis. The amount of individual subprojects will not exceed US$75,000. No loan funds will be disbursed for subprojects until arrangements satisfactory to the Bank for the operation of the Fund, and for financing of LIL subprojects have been put in place, including establishment of the Fund, adoption of an Operating Manual satisfactory to the Bank, and appointment of a qualified NGF coordinator and members of the technical committee. These arrangements are expected to be in place by no later than the end of project year 1 (2000). Since the project has a relatively small budget allocation in 2000 due to the severe fiscal adjustment process underway, no LIL funding for subprojects is foreseen until early 2001.

Financial Management: Accounting, financial reporting and auditing arrangements: The financial management assessment concluded that the financial management of the Foundation is adequate to proceed with the project. The accounting and budgeting systems function well, supporting documentation is well maintained, financial and budget reports are produced in a regular and timely fashion, internal controls are sound and properly applied, and the staff of the financial unit are competent and function effectively. However, the following aspects of this system need to be strengthened in order to deal with the increased financial planning and reporting requirements under the project in particular the presentation of satisfactory Project Management Reports: recruit a procurement specialist; develop and put in place the procurement reporting system; recruit a financial analyst; put into operation the budget module of the integrated management and administrative accounting system; and revise and update the organization and procedures manual. Additional measures have been agreed which will further strengthen the Foundation's project management capacity as it expands its scope of action under the new projects, and will enhance its long-term financial viability: establish a cost accounting and cost allocation system to assure that all the costs of carrying out projects are recovered from donor agencies; and extend the on-line accounting system to the two regional offices to improve informationflow and accounting. These measures which should all be completed no later than December 31, 2000 are detailed in a Plan of Action agreed with the Foundation and included in the PIP. The audit arrangements are acceptable and the independent auditor will be appointed by effectiveness on terms and conditions acceptableto the Bank.

The project funds will flow directly to the Foundation,under terms of its contract with DNP (Subsidiary Agreement), as follows: (i) the Government (DNP and the Ministry of Finance) will authorize direct disbursements by the Bank of proceeds of the loan to a project account in US dollars; and (ii) DNP will authorize disbursements of the counterpart funds into the Foundation's local currency project account.

Procurement. The type of procurement to be carried out under the LIL is expected to be simple and follow Bank Guidelines only (see Annex 6). An assessmentof the Foundation's capacity to implement procurement actions for the project has found it to be satisfactory, and overall project risk for procurement is judged to be low (assessment was approved by Regional Procurement Advisor on December 20, 1999). However, the Foundation's Manual de Politicas y Procedimientos needs to be revised to define more formal procedures, organization and responsibilities for the procurement/contractingfunction, as well as model contracts and standard internal forms. The Loan Agreement includes as a condition of loan effectivenessthe submission of the procurement chapter of the Manual which is satisfactory to the Bank. The Operating Manual of the NGF will stipulate that procurement under subprojects would be done through comparison of three price quotations to the extent possible; direct procurement and sole-source contracting is expected due to the remoteness of most of the communities involved. The Foundation will be responsible for seeing that the agreed procedures are being followed. During the first year of the project, the Foundation will hire a procurement specialist and will develop a contract/procurementreporting system which will enable it to provide the procurement informationrequired for the Project Management Reports. The Plan of Action referred to above includes both of these commitments.

- 12 - 3. Monitoring and evaluation arrangements: The detailed design of the Monitoring, Evaluationand Learning system for the project will be completed during the first four months of project year 1, in parallel with the design of the participatory strategy and operational mechanisms to be tested. It will be part of the overall system for the Foundation's six-year program, and build on the Foundation's existing work and experience in this area which include: (i) an established M&E unit with two experts, (ii) a conceptualframework for monitoring and evaluation of sustainable development at the eco-regional level which has not yet been operationalized(Participatory and Reflective Analytical Mapping for Sustainability, IUCN, 1997), and (iii) M&Eof specific community managed sustainable development projects which is underway in the context of a Dutch financed project. The internal system for M&E will be woven into the Foundation's structure and the participatory process itself, so that rather than being a separate function carried out by a isolated group, it is part of the Foundation's regular operations and will supportcontinuous learning. It will rely on a combination of qualitative and quantitative methodologies,and utilize the excellent resources already in place (GIS mapping and data base, documentationcenter, etc.). A baseline of quantitative and qualitative indicators and maps will be developed for each pilot region as part of the process for initiating work there; for regions where the Foundation has been working for some time, past efforts and achievementswill be documented and analysed. The internal M&E system will be complementedby two external evaluations (at the end of the second year and at the end of the fourth year) carried out by an independent group of experts. The scope and focus will be broader than the on-going internal M&E, and will include an examination of issues such as: whether the LIL is generating lessons, whether the activitiesand methodology used by the Foundation will have sufficient long-term impact, and whether the monitoring and evaluation system is contributing to continuous learning and adequate adjustments in the project as it unfolds.

D. Project Rationale [This sectionis not to be completedin a LIL PAD. Rabonaleshould be implicitin paragraphB: 3.]

E. Summary Project Analysis (Detailedassessments are in the projectfile, see Anmex8) 1. Economic (see Annex 4): [For LIL, to the extent applicablel

O Cost benefit NPV=US$ million; ERR = % (see Annex 4) O Cost effectiveness * Other (specify) While an economic analysis of the LIL itself has not been undertaken, the project will take into account economic considerations in the following manner: (i) as appropriate, carry out the economic analysis of sustainable development subprojects as specified in the Operating Manual of the NGF, (ii) include economic factors such as cost minimization as criteria for formulating alternative, sustainable production systems, and (iii) carry out studies and action research in order to establish a methodological and empirical basis for the economic valuation of environmental services in the Sierra Nevada.

2. Financial (see Annex 5): NPV=US$ million, FRR= % (see Annex 4) [For LIL, to the extent applicable] The LIL, a loan to the Colombian government,is helping leverage and will complement grant funding

-13 - obtained by the Foundation, including funds for the establishment of the NGF which will serve as a long-term, sustainable funding source for conservation and sustainable development of the Sierra Nevada. Therefore, due to the small size of the loan and the mobilization of non-public funds, the fiscal impact is expected to be minor.

3. Technical: [For LIL, enter data if applicable or 'Not Applicable'] Not Applicable

4. Institutional:

4.1 Executing agencies: The NGO, Fundacion Pro-Sierra Nevada des Santa Marta, with thirteen years experience working in the project area and managing projects financed by international and national sources (including private foundations) has been designated by the Govermnent as the project implementing agency. It has proven technical and managerial capacity, and ability to work in the complex social conditions of the Sierra. Subprojectsfinanced by the NGF, being set up as an independent account within the administrative and legal structure of the Foundation, will be implementedby third parties including comnmunityorganizations and NGOs in accord with norms established in the NGF's Operating Manual. The Foundation will be responsible for ensuring that these norms are respected and has the capacity to do so. 4.2 Project management: The Foundation has demonstrated the technical and managerial capacity, and characteristics of a learning orgranizationwhich are ndeded for managing this project. In view of the evolving role of the Foundation during the project, the increased level of resources to be managed, and the increased level of formality required, it has been agreed that under the LIL a strategic plan for institutional development of the Foundation will be designed and implemented. In addition, specific measures for improving financial managementand procurement will be carried out within the first year of project implementation. The Foundation's current capacity to ensure that environmental norms are respected is considered excellent. 4.3 Procurement issues: Addressed in Section C.2 above. 4.4 Financial management issues: Addressedin Section C.2 above. 5. Environmental: Environmental Category: B 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The Sustainable Development Plan for the Sierra Nevada (SDP), published in February 1997, documents the eco-region's environmental and social situation and proposes a strategy for addressing key issues. This project is part of the Foundation'sprogram which has the objective of promoting conservation of the environmentand biodiversity as proposed in the SDP; as part of this program, an eco-regional conservationstrategy was defined in February 2000. The net envirommentalimpact is positive, with no major adverse environmental impacts expected as a result of the project. Procedures for environmental impact assessments of subprojects financed by the NGF will be incorporated into the NGFs Operating Manual which must be found satisfactoryto the Bank prior to disbursements under category 5; no sub-projectswill be financed until project year 2. The SDP and project were prepared in a highly

- 14 - participatorymanner as documented in the project file and Section 6 below. 5.2 What are the main features of the EMP and are they adequate? Not applicable. 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: No separate EA undertaken. 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Not applicable. Process of consultation concerning project described in Section 6 below. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? To be defined in detail in project year 1, as part of the project's M&E system, and of the companion GEF project to be appraised later this year which will include monitoring of the implementation of the eco-regional conservation strategy. 6. Social: 6.1 Sunmnarizekey social issues relevant to the project objectives, and specify the project's social developmentoutcomes. A summary of the social assessment is provided in Annex 11. It shows the complex situation in the Sierra Nevada, but also the positive impact that the process of preparing the SDP has had in bringing diverse actors together to recognize the perspective of others and shape common goals. The Sierra Nevada is characterized by cultural diversity. (See Map 3.) The population can be described as three broad groups: indigenous peoples, small farmers who migrated to the Sierra from the Andean region at various times, and the coastal peoples who are a very diverse group; in addition, there is a large urban population. The underlying philosophy of this project and the work of the Foundation is to continue the process of bringing together stakeholders and to move them towards agreements to carry out concrete actions considered critical for biodiversity conservation and sustainable use of natural resources.

Deep seated social conflicts around land are part of the region's history and are being taken into accountin the project design. Particular problems are faced by peasant farmers who are living within the boundaries of the national parks and indigenous reserves; a specific study by a prominent Colombian sociologist was prepared on this issue. The study shows the historical roots of social conflicts over land, starting with the arrival of the Spaniards in the 1500s which profoundly affected the indigenous peoples, to the colonization by people from other areas of Colombia beginning in the 1900s of which the period of the marihuana boom of the 1970s was particularly traumatic, resulting in a major influx of settlers and devastation of 70% of the forested area. With a downturn in the demand for this crop in the 1980s, it virtually disappeared from the Sierra, but the ecological and social damage remained. Attracted perhaps by the isolated location and social conflicts in the Sierra Nevada, over the last fifteen years various armed groups, both guerrilla and paramilitary, have established a presence in different areas of the Sierra Nevada. While violence is episodic, the presence of these groups is an important risk factor which must be taken into account, particularly as the national process of peace negotiations unfolds. So far, the Foundation has been able to work effectively in the midst of this complex situation.

The social strategy of the project, described more fully in Annex 11, addresses the main social issues and provides mechanisms for collaboration of all stakeholders. This approach will help to reduce tensions in the

-15- region by giving all actors an opportunity to work together to carry out sustainable development activities, building the basis for common understanding. The project incorporates this approach into its three components and institutional arrangements, as well as the strategies for indigenous peoples and voluntary resettlement

The Foundation's program and this project are consistent with Bank policies concerningIndigenous Peoples and Cultural Heritage (see Annex 12 for a full discussion of Indigenous Peoples). The four indigenous groups in the Sierra, though a minority in terms of population, are critical for the project's success because of their positive attitude towards conservation, rooted in their traditions, and because their lands involve areas of rich biodiversity. The project was designed in collaborationwith indigenous peoples organizations; it promotes the informed participation of the indigenous groups involved, incorporates their knowledge and preferences, and respects their rights to natural and economic resources which were recognized in the Colombian constitutional reforms of 1991. The project's Indigenous Peoples Strategy responds to the main principles of the Foundation's program: (i) recognition of the cultural plurality of the Sierra; (ii) promotion of inclusion and collaboration among stakeholders; and (iii) reduction of conflict and development of an intercultural dialogue which will support the conservation and sustainable development of the Sierra. The strategy includes four action lines: (i) acknowledgementof indigenous authorities; (ii) recognition of indigenous priorities; (iii) compatible conservationand sustainable development which takes into account indigenous knowledge; and (iv) active and continuous participation. Specific activities identified as priorities by indigenous authorities are included under each of the projects three components, such as support for: (i) dissemination of planes de vida, agreements and other papers contributing to enhancing the cultural plurality of the Sierra; (ii) the developmentof the Cabildos Territorial Council; (iii) the on-going process of developing with the Parks Unit a collaborativemanagement plan for the overlapping area of the Sierra Nevada Park and indigenous reserves; (iv) legal and fnancial support to gain access to sacred sites outside the reserves according to a priority program defined by the indigenous authorities; and (v) a pilot voluntary resettlement project to support the recovery of indigenous territory while mitigating the impact on farmer families willing to resettle. (See Annex 12 for more details.)

The Foundation's experience working with indigenous organizationsand peoples during the preparation and consultations concerning the SDP has shown their resistanceto conforming to a "western" timetable and notions of a formal written "plan." Therefore, while the project includes a strategy based on priorities determined by indigenous organizations and authorities, it will remain flexible and be developed in an interative process according to the wishes and timetable of the indigenous organizations and authorities. Thus, it has been agreed that the specific activities to be supportedeach year will be decided by the Cabildos Territorial Council and incorporated into the project's annual operating plans allowing time for the customary consultation with the traditional spiritual authorities and the community. The Foundation's program, of which this project is a part, embodies a conservationstrategy which promotes better practices through broad participation and incentives, rather than restrictions. No new restricted areas or expansion of existing ones are foreseen under the project. Nor does the project support any kind of involuntary resettlement. However, the project does envision support, in cases where this would have a positive conservation and social impact, for the recovery of indigenous territory by providing assistance to farmers wishing to resettle outside the reserves.At this time, it is envisioned that this would be restricted to a pilot project to assist a small number of farm families (possibly 7 in 2000) whose lands are being bought by the Gonawindua Tayrona Organizationwith finding from The Nature Conservancy (TNC).

A study undertaken during project preparation found that many families living inside the boundaries of the Sierra Nevada park-reserves are seeking to relocate due to factors unrelated to the Foundation's program, including: (i) the legal limitation on receiving land tides; (ii) the lack of road infrastructure that makes

-16 - market access difficult; (iii) the lack of basic services that keeps living standards low; and (iv) the increasing violence in the Sierra. Though many families are willing to relocate, they are expecting the land reform agency (INCORA) to fulfill its role in providing the compensation and support foreseen under Law 160. In practice, this process stopped in 1998, because of INCORA's lack of resources. However, indigenous peoples have been using their own resources to buy farmer lands within their territories. In both cases, relocation has had several flaws affecting fanners and indigenous peoples alike. There is evidence indicating that relocated farmers face difficultiesrecovering economically; on the other hand, the re-occupation of indigenous territories by farmers whose land has been purchased is a phenomenon hindering indigenous peoples' efforts to regain control of their territories and has been mentioned by the cabildos as a concern for which they are seeking a solution.

Voluntary Resettlement Guidelines. Under these circumstances,the project aims to offer an alternative satisfactory to farmers and indigenous peoples by testing a voluntary resettlement strategy based on the following guidelines: (i) the families involved will recover or improve their living conditions; (ii) no involuntary resettlement will be carried out; and (iii) the resettlementprocess will be implemented under a participatory approach allowing the families involved to play an active role in decision-making. (Approaches tested under the Bank-supported Pilot Land Reform initiative will be an important experience to draw on in this regard.) The commitment of the Foundationto abide by these guidelines and follow specific operational mechanisms described below is included in the Loan Agreement (Section 3.01 c (iii)), as well as the Government's commitment to ensure that the Foundation does so. In addition, the Loan Agreement contains a protective clause (Section 3.04) whereby the Foundation and Government agree that they will not involuntary resettle any farmers living in the national parks and indigenous reserves during the course of the project.

The Foundation, as the executing agency of LIL and manager of the TNC project, will be in charge of this voluntary resettlement pilot. It will be responsible for carryingout the following activities: (i) identification (based on the Indigenous Organization's priorities)and socioeconomicanalysis of families willing to relocate; (ii) promotion of community organizationto facilitate the resettlement process; (iii) establishment of consultation and participation mechanisms; (iii) providing technical and legal support to buy new land and complementary resources; (iv) providing technical assistance and training to initiate sustainable economic activities; (v) providing investrnent resources from the project to re-establish or improve living conditions; and (vi) promoting agreements with public and private institutions that will contribute to the success of the voluntary resettlement. The monitoring and evaluation system of the Foundation will establish a specific monitoring system to assess compliancewith agreements, goals and expected outcomes of this pilot.

The following operational mechanisms will apply to the resettlement pilot: (i) each year of the project, the Foundation will prepare a plan for the resettlement pilot comprisingthe work program and budget; (ii) the Annual Operating Plan and/or the Project Management Reports will incorporate the resources the Foundation needs to undertake the activities under the pilot; (iii) quarterly reports will be prepared to assess progress; and (iv) an annual report will be prepared presenting the main results from the pilot, lessons learned and recommendations for improving the process. (See Annex 11.)

6.2 Participatory Approach: How are key stakeholders participating in the project? The project is another step in a highly participatory approachfollowed by the Foundation throughout the last decade to develop the Conservation Strategy and the SustainableDevelopment Plan both involving extensive consultation and collaboration at the local, regional and national level. Once published in 1997, the SDP was presented to and examined together with key stakeholders.Almost one year of discussions led

-17 - to the Forum for the SustainableDevelopment in the Sierra in March 1998 which gathered more than 600 persons from indigenous and peasant communities, public and private sectors to further analyze and prioritize actions in the Plan. Meanwhile, a project financed by the Netherlands supported 10 participatory local pilot sub-projects to initiate the implementation phase of the SDP based on priorities established by local communities.

A participatoryapproach pervades the entire preparation and design of the Foundation's six-year program and this project including: (i) involving main stakeholders during preparation; (ii) reaching agreements upon priorityactions; (iii) developing a social strategy that promotes participation; and (iv) building a partnership with the Foundation and the Colombian Government. During the project's preparation two workshops were carried out to promote stakeholders' participation. In the first one, carried out in December 1998, a draft logical framework for the project was developed based upon the inputs provided by representatives of the main stakeholders. They indicated that they wanted the SDP, with project support, to grow from its origins which emphasized a conservation strategy and the upper reaches of the Sierra Nevada (the indigenousreserves and national park) to strengthen dimensions related to improving the well-being of peoples living in the eco-region and sustainable use of its resources. The importance of an approach which respected cultural diversity and promoted the active participation of community-based organizations was also emphasized.In April 1999, the second workshop was held with a similar audience in order to: (i) review the results of the previous workshop; and (ii) reach agreement upon the priority aspects to be incorporated into the project's learning process. The workshop confinned the results of the first in terms of main issues and problems to address and provided the necessary information to identify priorities in order to define the project's components. A final round of consultations on the project was held with the key stakeholders in February 2000 to discuss the project as described in the Project Document prior to negotiationof the loan with the Government. The National Planning Department, Ministry of Environment, Parks Unit as well as municipalities and other local institutions were also involved in project preparation.

The social strategy which resulted from the workshops and consultations aims at maintaining a participatoryapproach throughout implementation by establishing different mechanisms, such as:

* Knowledge and Learning. An information and communication system will be developed to promote awarenessand knowledge about the Sierra. This system will be instrumental to enhancing the advantages of a multicultural society, disseminate successful experiences and support efforts to peacefully address disagreementsand help to modify certain negative behaviors.

* Strengthening Community Organizations to reduce weaknesses that hamper their participation in decision-makingand give them an opportunity to participate under more equitable conditions.

* CollaborativeManagement: The project has been designed to bring all the actors to collaborate in sustainable development programs in selected areas thus building consensus about common objectives. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000, this section may be left blank.

The project involves an innovative approach to develop partnerships with civil society by incorporating as its implementationagent the Fundacion Pro Sierra Nevada which has more than iirteen years experience working in the region. The project has been prepared in closed collaboration with the Foundation's staff who have played a a critical role in providing ideas and acting as an efficient intermediary with the local

-18 - actors. This project will heavily involve civil society organizations, particularly at the community level. Only local social/community organizations (if they wish--in partnership with others such as municipalities, NGOs etc.) are eligible for applying for financing of subprojects through the NGF. The consultation process is described above in section 6.2 and in Annex 11. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000, this section may be left blank.

The Government'sdecision to delegate project management to the Foundation is consistent with the realizationof the social development outcomes given the complex social situation in the eco-region. See Annex 11. 6.5 How will the project monitor performance in terms of social development outcomes? For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000, this section may be left blank.

This will be incorporatedinto the M&E and learning system for which the detailed design will be completed during the first four months of project year 1.

7. Safeguard Policies 7.1 Do any of the following safeguard policies applv to the project?

=~~~~~PC . <= > . ApI aifl, EnvironmentalAssessment (OP 4.01, BP 4.01 GP 4.01) W Yes El No El Natural habitats (OP 4.04, BP 4.04 GP 4.04) Z Yes El No El Forestry (OP 4.36, GP 4.36) 0 Yes El No El Pest Management (OP4.09) El Yes M No El Cultural Property (OPN 11.03 3 Yes El No El IndigenousPeoples (OD 4.20) K]Yes LI No El InvoluntaryResettlement (OD 4.30) K]Yes O No El Safety of Dams (OP 4.37, BP 4.37 E Yes O No El Projectsin InternationalWaters (OP 7.50,BP 7.50 GP 7.50) E Yes O No El Projectsin DisputedAreas (OP7.60, BP 7.60, GP 7.60) E] Yes K]No

7.2 Describeprovisions made by the projectto ensurecompliance with applicablesafeguard policies. Theseprovisions are describedin the relevantsections of this document.

-19- F. Sustainability and Risks 1. Sustainability: This sectionis not to be completedin LIL PAD.

2. Critical Risks (reflecting assumptionsin the fourth column of Annex 1): Risk Risk Rat-g :4RiskMinimizationMeasure FromOutputs to Objective Stakeholdersare not disposedto share M Thecriteria for choosingthe pilotregions, zones information/experiencesand to lookfor and areaswhere the projectwill focus its efforts agreement. takesinto accountthis factor. Armedactors actively discourage S The Government'sdecision to delegateproject participationand do not respectthe implementationto the Foundationrecognizes its project'sobjectives successfultrack-record in workingin the complexsocio-economic context of the Sierra Nevada. In orderto minimizerisks, this factor is a criterionfor selectingthe areasto focus projectefforts. TheFoundation maintains a low-keybut continuousdialogue with all stakeholders,and regularlymonitors the local socio-politicaldynamics. It will adjustand modulateits approachin accordwith evolving conditions;the Portfolioof LILInterventions is a mechanismfor doingso.

FromComponents to Outputs Fiscalcrisis in publicsector and S Designof the DNP-Foundationcontract and competingpriorities for scarceinvestment disbursementmechanism aims to reducethese resourcesresult in projectfunds not being risks. TheFoundation's continuous outreach made availablein sufficientquantity and effortsto keepkey stakeholdersat the central, whenneeded. regional,and locallevel informed and involved in the projectshould help maintainpolitical supportfor the project.

OverallRisk Rating S Risk Rating- H (High Risk), S (SubstantialRisk), M (ModestRisk), N(Negligibleor Low Risk) 3. PossibleControversial Aspects: Theproject is being carriedout in a situationof on-goingconflict which is very unpredictable.Supervision of smallcommunity managed subprojects (including audit of procurementand financialmanagement) must be carriedout primarilyby the Foundationand consultants,as securityconsiderations may preventregular fieldvisits by the Bank.

The Sierrastill suffersfrom the existenceof illegalcrops in someareas though it is a marginalproducer comparedto otherparts of Colombia.Farmers have expressedan interestin fmdingalternative, legal sourcesof income. The Foundation'sprogram may contributeto avoidingthe expansionof those zonesby promotingecological productive systems that providea viable alternativereturn to the rural communities, thoughit doesnot containa prominentand specificfocus on this. It is unclearwhether the UnitedStates

-20 - government's intention to increase aid to Colombia to combat drugs will result in aerial spraying in the project area which could have far-reaching negative consequences for the biodiversity there. However, this is considered to be a low risk as there has been no sprayingfor ten years, the Government has an agreement with the region to refrain from spraying in the parks and indigenous reserves, and the region is far from the main production areas targeted by the U.S. aid program.

G. Main Loan Conditions 1. Effectiveness Condition Signed contract between DNP and the Foundation delegating managementof the project and specifying flow of funds

Foundation's submission of procurement section of Manual de politicas y procedimientos which is found satisfactory

2. Other [classifv according to covenant types used in the Legal Agreements.]

Obligation to carry out Project in accord with the Indigenous Peoples Strategy and Voluntary Resettlement Guidelines

No Project funding for subprojects until satisfactory arrangements for management of NGF and for financing of LIL subprojects have been put in place

H. Readiness for Implementation [ 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [Z 1. b) Not applicable.

O 2. The procurement documents for the first six months' activities are complete and ready for the start of project implementation; and a framework has been establishedfor agreement on standard bidding documents that will be used for ongoing procurementthroughout the life of LIL 1 3. The LIL's Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 1Z 4. The following items are lacking and are discussedunder loan conditions (Section G):

Contract between DNP-Foundation (draft contract has been reviewed by the Bank and found to be satisfactory)

Subprojects: Satisfactory arrangements for management of NGF and for financing of LIL sub-projects need to be put in place (Operating Manual, appointment of NGF coordinator, and technical committee) prior to disbursements under category 5 for subprojectswhich is planned for project year 2

-21 - 1. Compliancewith Bank Policies Z 1. Thisproject complies with all applicableBank policies. O 2. Thefollowing exceptions to Bankpolicies are recommended for approval.The project complies with all otherapplicable Bank policies.

fA, ) 8-& A A A, ____ ElsieB. Garfield §t hnRedwood Jonathah Parker, Acting TeamLeader SectorManager/Director CountryManagerlDirector

-22- Annex 1: Project DesignSummary

COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

I~~~~~~~~~~~~~~~~A-tLE :W-.;vA .. L:'= iW Sector-relatedCAS Goal: SectorIndicators: Sector/country reports: (fromGoal to BankMission) CAS Goal: Attain sustainable development with reduction of poverty and improved social conditions in an enviromnent of peace. Sector related CAS CAS progress reports Goals: Sustainable development-improve natural resource management and conservation of strategic eco-systems, taking into account the needs and concerns of the inhabitants Peace and development- develop effective strategies for addressingthe socio- economic determinants of violence and conflict Rural development -improve capacity to generate, transfer and adopt technologiesthat increase the productivity and sustainabilityof small farmer agriculture

23 . ~~~~~~~~~~~~O Follow-onDevelopment Objective ProgramDevelopment Annual M&E reports Security situation in Objective: Better country substantially informedand organized improves. stakeholdersimplementing jointly agreedactions to conservethe biological and cultural diversityof the Sierra Nevada and to use its natural resources in a sustainable manner. ProjectDevelopment OutcomeI Impact Projectreports: (fromObjective to Objective: Indicators: Goal) Participatorymethodology # of sustainable Annual M&E reports; Security conditions permit and operational developmentprojects in external evaluation reports. replicationof project mechanismsfor promoting pilot regions funded and % actions to other regions of sustainablemanagement of successfullycompleted by the Sierra Nevada. productionand natural end of project systems tested in at least three regions and ready to # of requests for be used in other regions of participation/supportand the SierraNevada project proposals received by the Foundation from organizationsand communitiesoutside the pilot regions

# and type of agreements reachedbetween key stakeholders in 3 pilot regions per year, and % implemented(e.g. 60% of the agreementsreached in year l and 30% of agreementsreached in year 2 have been implemented by year 3)

# farm plans including sustainableproduction systems being implementedby farmers in each pilot region per year

24 1ndaltrs -- Evakiatin - ____v_____ Outputfrom each Output Indicators: Project reports: (from Outputsto component: Objective) 1. Program for generating 1.1 Audience, media to be Communicationsstrategy Stakeholdersare disposed and disseminating used and desired impact of document,report on survey to share knowledge about best communicationsstrategy of users and register of information/experiences practicesdesigned and identifiedin the first 4 requests for information. and look for agreement. operating months of project. 1.2 Strategiesand Foundation's annual report operationalmechanisms and project progress (participation,institutional reports. strengthening,sustainable production systems) designed and testing initiated in one region by end ofproject year 1. 1.3 Technical documents Register of reports and progress reports for prepared, and minutes of decision-makingof key meetings including entities involved in the decisions taken. SDP (Regional EnvironmentalCouncil, Foundation'sBoard of Directors,Juntas Regionales) prepared and distributedas agreed. 1.4 M&E and leaming M&E reports, record of system operating and studies, field reports, systematically disseminationnotes, documentinglearning feedback of Foundation process and best practice staff. byend of project year 1. 2. Programof 2.1 At least 12 community Workshop evaluations, strengtheninglocal and organizationsin each pilot survey of beneficiaries. regionalorganizations region trained in supportingsustainable negotiationtechniques, developmentin eco-region leadership and project is operatingeffectively managementthrough 3 workshops/year. 2.2 By year 2 and each Acts of assemblies and year thereafter, agreement documentation of activities with indigenous including videos. organizationsto support 4 specific activities (consistent with project objective) that they have defined as development priorities.

25 -~~~~~~~~~~...... : Output from each Output Indicators: Project reports: (from Outputs to component: Objective) 2.3 # of sustainable Reports of Foundationand development projects in NGF. pilot regions submitted (% receiving technical support under project) and % approvedfor NGF funding 2.4 Foundation's Foundation's annual report. institutional development Acts of the Board of plan defined and underway Directors. by project year 2. 3. Testing of methodology 3.1 # and type of Portfolio of Potential LIL Armed actors do not and operational agreements between Interventions. Official actively discourage mechanismsfor critical stakeholders being letters and agreements. participation and respect collaborationmanagement prepared and number being the project's objectives. in at least 3 pilot regions negotiated in 3 pilot (and within them in regions each year. selected pilot zones and areas) and for developing 3.2 # of fann plans sustainableproduction including sustainable systems at the farm level production systems being has been completed and prepared by farmers in found to be effective, ready each pilot region per year. to use in other parts of the eco-region. 3.3 At least 3 critical activities in Collaborative ManagementPlan for the Indigenous Reserves/Sierra Nevada park have been implemented during year 3.

26 :s_s______'''''''- indcaor Eva1 w, . ,

Output from each Output Indicators: Project reports: (from Outputsto component: Objective) 1. Knowledge Generation US$1.06 Foundation'sAnnual Timely availability of and Dissemination Report and project reports. sufficientproject funding, 1.1 Consultationwith particularlycounterpart stakeholders to agree on funds. pilot zones and areas. Identify farmers interested in participating. 1.2 Design methodologies and operational mechanismsto be tested, adapted and improved during the project: participation,institutional strengthening. 1.3 Design and implement communicationsstrategy. 1.4 Study tours and visits, farmer exchanges, and workshops. 1.5 Key studies and action research. 1.6 Design and implement project monitoring, evaluation and learning system. 2. Participation, US$2.55 million Foundation'sannual report Timely availability of Organizational and project reports. funds. Strengthening and Coordination 2.1 Capacity building program for farmer, indigenous and other organizationsin the eco- region, and for promotion of networkingamong stakeholders. 2.2 Technical and operational support to regionalentities which coordinate SDP.

27 Outputfrom each OutputIndicators: Projectreports: (fromOutputs to component: Objective) 2.3 Technical support, training program and promotion of networks for key stakeholders in the pilot regions. 2.4 Technical support to communities and local organizationsfor preparing project proposals for NGF. 2.5 Strategic plan for institutional development of the Foundation 2.6 Project management 3. Collaborative US$2.64 million Foundation'sannual report Timely availability of Management and and project reports. funds Subprojects 3.1 Developmentof collaborative management plans and activities in at least 3 regions (and in selected zones and areas within each) 3.2 Developmentand implementationof farm management plans which promote sustainable production systems 3.3 Support implementationof management plan of indigenous reserves/Sierra Nevada park, includinga possible voluntary resettlement pilot project 3.4 Sustainable development subprojectsin pilot regions

28 Annex 2: ProjectDescription COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT The LIL is being carried out in the framework of the Foundation's six year program which is described below for each component, followed by a description of the specific activities and contribution of the LIL. (rhe project description in the main text only includes the description of the LIL.) The LIL will support the development and testing of approaches in at least three pilot regions which can then be used elsewhere in the eco-region.

ByComponent:

ProjectComponent 1 - US$1.06million Knowledge Generation and Dissemnination. A critical activity under this program component is the developmentof a comprehensivestrategy of biodiversity conservation in the Sierra Nevada eco-region, including the definition of conservation targets and a baseline for monitoring. The component will also support: the design, putting in place and operation of a biodiversity monitoring system; key studies and action-researchrelated to urban enviromnental issues, sustainability of rural production systems, and economic valuation of environmental goods and services; design and implementation of a strategy for the generation, exchange (includingan intercultural dialogue) and dissemination of knowledge which will be a key underpinning for Component 3; and monitoring and evaluation of the Foundation's program and the individual projects.

The LIL will support key activitieswhich serve as the basis for implementation of the other two components, including: (a) during the first year of the LIL, the design of methodologies and operational mechanisms (participation strategy including the approach to collaborative management, farm-level environmentalplanning, and institutional strengthening) which will be tested, improved and adapted under components2 and 3 to varying socio-economicconditions in each pilot region during the remainder of the project; (b) design and implement a communications strategy to enhance awareness and generate support for conservation of biodiversity and sustainable development in the Sierra Nevada, including dissemination of good practices and experiences; (c) study tours and visits, farmer exchanges, and workshops to promote exchange of knowledge and experiencebetween those in the eco-region, with others elsewhere in Colombia, and, as appropriate, outside Colombia; (d) key studies and action-research to develop new information (for example, rapid urban environmental assessment) and methodologies/tools in innovative areas where knowledge and experience are limited (for example, environmental services: assessment of potential, methods for economic valuation, and incentive mechanisms); and (e) the project's monitoring, evaluation and learning system to ensure a permanent mechanism for drawing lessons, analyzing progress and results, and documentingbest practices.

ProjectComponent 2 - US$2.55million Participation, Organizational Strengthening and Coordination. This program component will support the continuation of the Foundation'sparticipatory approach to working with and strengthening community, local and regional organizations,with special outreach efforts for indigenous organizations and peasant farmers. Activities include: technical support to the entities responsible for coordinating implementation of the SDP; promotion of a network of stakeholders (community, business, and institutional) who are committedto conservationand collaborativemanagement of the Sierra Nevada; support for the consultation process between indigenous organizations, the parks unit and peasants living inside the parks/reservesconcerning collaborative management; and design and implementation of a strategic plan for strengtheningthe Foundation as its assumes new responsibilities.The costs associated with project managementand administeringthe NGF will be financed under this component.

-29 - The LIL will support three kinds of activities: (i) those with a broad outreach and scope; (ii) those focused in the pilot regions where collaborative management is being promoted under component 3; and (iii) those related to the strengthening of the Foundation and project management. Under the first, a self-standing program for capacity building will be implemented which includes activities such as: (i) training and legal support to develop peasant-farmer and indigenous organizations in accord with their self-definedneeds and priorities; (ii) technical and operational support to the regional entities, the Regional Environmental Council and Comite Directiva (indigenous organizations),responsible for coordinating the implementation of the SDP; and (iii) outreach efforts to involve groups, such as business-oriented farmers and urban dwellers, in the SDP. The second kind would be specific programs in each of the pilot regions which will provide technical support and training to critical stakeholders such as business-oriented farmers, small farmers, indigenous and local organizations, and municipalities to enable them to effectively participate in collaborative management, reach and implement agreements, adopt sustainable production systems, and create networks for sharing information and experience. The LIL will also finance technical support to communities and local organizations to help them prepare sustainable developmentproject proposals to submit to the non-governmental fund (NGF) for funding. Finally under the third type, the LIL will finance the design and implementation of a strategic plan for the institutional development of the Foundation, as well as the incremental costs of project management including the annual external financial audit.

ProjectComponent 3 - US$ 2.64 million Collaborative Management and Subprojects. This is the core investment component of the program. It consists of three sub-componentswhich are interrelated: (i) development and implementation of collaborative management plans (sub-component 3.1); (ii) promotion of a stewardship approach to management of protected areas, and constitution of a network of conservation areas (sub-component 3.2); and (iii) establishment and initial operation of a non-governmental fund (NGF) managedby the Foundation which would provide competitive grants to communities and partner agencies for a projects related to conservation and sustainable use of natural resources in the eco-region.

Under this component, the LIL will support the testing in at least three pilot regions (and in selected pilot zones and areas within these regions) of the participatory methodology for bringing together key stakeholders to develop collaborative management plans. Based on the experience of preparing the SDP, it is likely that water will be a common concern of many stakeholders. The project will promote mutually beneficial agreements between users in lowlands and urban centers, and rural populations in the Sierra, applying economic incentives to watershed recuperation and protection initiatives. It will also test a participatory methodology for developing sustainable production systems at the farm level which will be a central focus of investment under the LIL. The project will also offer specific support for the implementation of the collaborative management plan for the overlapping territories of the Sierra Nevada park and indigenous reserves being developed by a Committee composed of indigenous organizations, park authorities and the representative of indigenous affairs in the government. This may include support for: (i) completion of the management plan; (ii) consultations and agreements with farmers living within these areas to support the plan; (iii) sustainable development alternatives for peasants and indigenous peoples living in these territories; and (iv) a pilot voluntary resettlement project. The LIL will also finance sustainable development subprojects in the pilot regions with US$1.0 million which will be managed by the NGF being established with support from the GEF.

- 30 - Annex 3: Estimated Project Costs COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

Fore-gn Tota-' =ct_ Co US$mition US S 1 Knowledge Generation and Dissemination 1.06 0.00 1.06 2. Participation, Organizational Slrengthening and Coordination 2.55 0.00 2.55 3. Collaborative Management and Subprojects 2.64 0.00 2.64 Total Baseline Cost 6.25 0.00 6.25 PhysicalContingencies 0.00 0.00 0.00 PriceContingencies 0.00 0.00 0.00 Total Project Costs 6.25 0.00 6.25 Front-endfee 0.00 0.00 Total Financing Required 6.25 0.00 6.25

'Local' Freign Totat

1. Works 0.23 0.00 0.23 2. Goods 0.32 0.00 0.32 3. Consultant Services (including auditor's services) and 3.25 0.00 3.25 Training 4. Operational Costs 1.10 0.00 1.10 5. Subprojects 1.35 0.00 1.35 Total Project Costs 6.25 0.00 6.25 Front-endfee 0.00 0.00 Total Financing Required 6.25 0.00 6.25

- 31 - Annex 4 COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT Not applicable.

- 32 - Annex 5: Financial Summary COLOMBIA: SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

Not applicable LIL.

- 33 - Annex 6: Procurementand DisbursementArrangements COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

Procurement

A) Procurement Arrani-ements

Procurement for the proposed project would be carried out in accordance with World Bank Guidelines: Procurement Under IBRD Loans and IDA Credits", published in January 1995 (revised January/August 1996, September 1997 and January 1999); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" published in January 1997 (revised in September 1997 and January 1999), and the provisions stipulated in the Loan Agreement.

1) Procurement methods: The methods described below and their estimated amounts, are summarized in Table A. The threshold contract values for the use of each method are fixed in Table B.

Procurementof Works

Contracts for civil works would be awarded through shopping procedures requiring comparison of three price quotations. Individual amounts are would range between US$5,000 and US$20,000, with an aggregate amount of US$230,000.

Procurementof Goods

Goods to be procured for the Foundation's project management activities include two vehicles, 15 computers and minor office equipment and furniture. Other goods would include items such as seeds, tools and other small equipment needed in implementing specific community activities (kind of subprojects) administered by the Foundation itself; items to be fnanced will be identified as such activities are defined with communities during project implementation.

Contracts for goods estimated to cost less than US$50,000 per contract, up to an aggregate amount of US$330,000, may be procured using shopping procedures based on a model request for quotations satisfactory to the Bank.

Selection of Consultant Services and Trainin!

Consulting services include technical assistance and provision of training and workshops. Most of these services are expected to be carried out by individual consultants, others by NGOs and only a couple, if at all, by private firms. The technical assistance required is mainly directed to assist communities with organization, institutional development, adoption of acceptableenvironmental practices, preparation of subprojects, etc. Training would include the financing of rents, materials, meals and travel expenses for participants.

Firms and NGOs

Contracts with NGOs and private finns would be procured using Selection on Base of Qualifications procedures for contracts estimated to cost US$100,000 or less. Due to the

- 34 - community onentation of the project which requires specific knowledge and familiaritywith local conditions, it is expected that some of these contracts would be sole-sourced. The aggregate amount for sole source is set at US$400,000.

Individuals

Specialized advisory services would be provided by individual consultantsselected in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.

Suborojects: Non-Governmental Fund (NGF). The Project includesUS$1 million (disbursement category 5) which will be managed by the NGF to provide funding for subprojects proposed by communities on a competitive basis. The amount of individualsubprojects will not exceed US$75,000. An operating manual for the NGF is being prepared and would be a condition of disbursements for subprojects. Such a manual will stipulate, in addition to eligibility, selection criteria and conditions applicable to the subprojects, the requirementthat procurement would be done through comparison of three price quotations to the extent possible. Direct procurement and sole-source contracting is expected due to the remoteness of most of the communitiesinvolved. The Foundation would be responsable for seeing that the agreed procedures are being followed.

Most of the subprojects funded by the NFG are expected to be community-executed. The conunuiity will cofmance the subprojects in cash or kind.

OperationalCosts: Operational costs include sundry items such as, office rental, utilities, office supplies, fuel, communications, and transportation expenses incurred by the Foundation in carrying out the project. These items would be procured according to the Foundation's Manual de Politicas y Procedimientos which is being revised to require shopping proceduresfor supplies and other services to the extent that is practical.

2) Prior review thresholds: The proposed thresholds for prior review are based on the procurement capacity assessment of the project implementing unit and are summarized in Table B. In addition to this prior review of individual procurement actions, an Annual Operating Plan and budget for the Project will be reviewed and approved by the Bank annually.

B) Assessment of the agencvy'scapacity to implement procurement

Procurement activities will be carried out by the Foundation which will administer project funds. The Foundation is adequately staffed to initiate procurement/contractingactivities. The Financial and AdministrativeDirector who has procurement/contracting responsibilitiesin the Foundation is well qualified and informed of Bank requirements; an administrativeassistant and a systems expert would be contracted to work with him. The Foundation's Manual de Politicas y Procedimientos is not adequate to meet the increased work volume that the Project would bring. It is currently being revised to include more formal procedures, organization and responsibilitiespertaining to the procurement/contracting function, as well as model contracts and standard internal forms.

An assessment of the capacity of the Foundation to implement procurementactions for the project has been carried out and was approved by the Regional Procurement Advisor on December20, 1999. The assessment reviewed the organizational structure of the Foundation and its intemal processes.

- 35 - Most of the issues concerning the Foundation are being addressed, and a plan of action has been agreed. The risks identifiedin the assessment relate to the rapid expansion and responsibilities that the Foundation is taking on and the need to institutionalizeits procedures. Presentation to the Bank of the Chapter on Procurementof the Foundation's revised Manual de Politicas y Procedimientos would be a condition of Loan Effectiveness.

To ensure the Foundation's autonomy on procurement/contractingprocess, it is recommended that the Loan Agreement statesthat Bank Guidelinesonly will be followed.

The overall project risk for procurement is Low.

Although the overall risk resulting from the Foundation's capacity assessment is low, a system for monitoring and reporting procurement actions is not in place. Around the fourth month of project implementation, a consultantwould be contractedto develop such a system; it is expected to be ready towards the end of year 2000. Consequently,the Foundation is not eligible for PMR-based disbursements on procurement reporting grounds. However, this situation should be re-assessed when the consultant's work is completed.

C) Procurement Plan

The Foundation has developedan indicative plan for the 5-year period of project implementation which provides the basis for the aggregate amounts for the procurement methods (per Table A). As part of the Annual Operating Plan for 2000 included in the PIP, a Procurement Plan was prepared for the first year of project implementationand has been found satisfactory. Subsequent plans will be submitted yearly as part of the Annual Operating Plan.

D) Freouency of Procurement Supervision

In addition to the prior review, it is recommendedthat one full supervisionmission visit the field to carry out post review of procurement actions six months after Project initiation and yearly thereafter. Such post-reviewfield analysis should cover a sample of not less than 1 in 5 contracts signed.

-36 - Procurementmethods (Table A)

TableA: ProjectCosts by ProcurementArrangements (US$ million equivalent)

Ex dtur CaIt ory .-T C

1. Works 0.00 0.00 0.23 0.00 0.23 (0.00) (0.00) (0.20) (0.00) (0.20) 2. Goods 0.00 0.00 0.32 0.00 0.32 (0.00) (0.00) (0.30) (0.00) (0.30) 3. Services 0.00 0.00 3.25 0.00 3.25 Consultant and Training (0.00) (0.00) (2.55) (0.00) (2.55) 4. Operational Costs 0.00 0.00 1.10 0.00 1.10 (0.00) (0.00) (0.90) (0.00) (0.90) 5. Front-endfee 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Subprojects 0.00 0.00 1.35 0.00 1.35 (0.00) (0.00) (1.00) (0.00) (1.00) Total 0.00 0.00 6.25 0.00 6.25 (0.00) (0.00) (4.95) (0.00) (4.95)

' Figures in parenthesis are the amounts to be faianced by the Bank Loan. All costs include contingencies 2 Category I Works, Category 2 Goods, and Category 5, Subprojects would utilize Shopping (national and international). Category 3 for Consultant Services-Contracts awarded to firms or NGOs to utilize Selection Based on Consultants' Qualification (CQ), and Sole Source (up to an aggregate amount of $400,000). Individual consultants would be selected in accordance with paragraphs 5.1 and 5.3 of the Consultants Guidelines.

- 37 - Prior reviewthresholds (TableB)

Table B: Thresholds for Procurement Methods and Prior Review

X ~ ~ ~~~h~so4Powmn PriorR.i:

1. Works <100 Shopping First contract ($0.02) 2. Goods <50 Shopping First contract ($0.02) 3. Services Firms > 100 QCBS All (None expected)

<100 Consultants Qualification First two contracts ($0.20) Individuals >50 Section V of Guidelines All (None expected)

>20 and <50 Section V of Guidelines Key consultants ($0.30) Others TOR only

<20 See Section V of Guidelines None (Post Review) 6. Miscellaneous

Total value of contracts subject to prior review: US$0.54 m.

Overall Procurement Risk Assessment

Low

Frequency of procurement supervision missions proposed: One every at six months after project initiation and thereafter every 12 months (includes special procurement supervision for post-review/audits)

'Thresholdsgenerally differ by country and project. Consult OD 11.04 "Reviewof Procurement Documentation" and contact the Regional Procurement Adviser for guidance.

- 38 - Disbursement

Allocationof loan proceeds (Table C)

Table C: Allocationof Loan Proceeds

.xpendittire C~ategQn- Amount in U$m lion Financi Pe=.tang 1. CivilWorks 0.20 1 85 2. Goods 0.30 85 3. Consultant Services and Training 2.55 90 4. Operational Costs 0.70 85 5. Subprojects 1.00 100 of amounts disbursed under Transfers 6. Unallocated 0.25

Total ProjectCosts 5.00 Front-endfee 0.00 Total 5.00

The project funds will flow directly to the Foundation, under terms of its contract with DNP. The loan funds will be disbursedby the Bank into the Foundation's account opened in US dollars. The Foundation's Account will be opened in a commercialbank, on terms and conditions acceptable to the Bank. The counterpart funds will be disbursed into the Foundation's project account opened in pesos.

Upon effectiveness, disbursementwill be based on Statement of Expenditures (SOE) for expenditures for: (a) contracts of individual consultants valued less than US$50,000; (b) contractsfor consulting firms valued less than US$100,000; and (c) all works, goods, operating costs, training costs and grants. All other expenditures will be supported by acceptabledocumentation. Supportingdocumentation will be held at the Foundation, for at least one year after the end of the fiscal year in which the last disbursement would take place, for review by the Bank and auditors.

By April 30, 2001, the Foundation should be able to produce in a timely fashion the Project ManagementReport (PMR) that can be used as a basis for disbursement. The PMRs should be received by the Bank within 45 days from the end of each quarter, starting the first quarter of the year 2001.

- 39 - Annex 7: Project Processing Schedule COLOMBIA: SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

Timetaken to preparethe project(months) 6 13 FirstBank mission (identification) 12/01/98 12/01/98 Appraisalmission departure 09/15/99 01/17/2000 Negotiations 10/18/99 03/27/2000 Planned Date of Effectiveness 05/31/2000

Preparedby: Fundacion Pro Sierra and World Bank team, with support from the National Planning Department, and in consultation with key stakeholders. This project was prepared in parallel with a proposed GEF financed project, both to be implemented in the context of the Foundation's six-year program which was defined during the preparation of the two projects.

Preparationassistance:

Bankstaff who workedon the projectincluded:

Elsie Garfield Team Leader, Rural Development Maria Elena Castro Social Scientist Juan Pablo Ruiz Natural Resource Management Anders Rudqvist Sociologist, Monitoring and Evaluation (consultant) Manish Bapna Economics, Management Howard Jones Financial Management (consultant) Carmen Palacio Nielsen Procurement Natalia Gomez Institutional Arrangements German Andrade Biodiversity (consultant) Jose Augusto Carvalho Country lawyer Patricia de la Fuente, Livio Pino Financial Management Issam Abousleiman Disbursements Enrique Sanchez Sociologist (consultant) Comelis de Haan Peer reviewer Ethel Sennhauser Peer reviewer Shelton Davis Peer reviewer Karim Gigler Team Assistant

- 40 - Annex 8: Documentsin the ProjectFile* COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

A. ProjectImplementation Plan Proyecto de Aprendizaje e Innovacion Desarrollo Sostenible en la Sierra Nevada de Santa Marta, Plan de Implementacion del Proyecto (PIP) y Plan Operativo para el Primer Ano, March 29, 2000.

B. Bank StaffAssessments Maria Elena Castro, Social Assessment, March 2000.

Howard Jones, Financial Management Assessment, March 2, 2000.

Carmen Nielsen, Procurement Capacity Assessment: Summary of Findings and Actions, February 2000.

C. Other Plan de Desarrollo Sostenible de la Sierra Nevada de Santa Marta: Estrategia de Conservacion de La Sierra Nevada de Santa Marta, Proyecto de CooperacionColombo-Aleman, FPSN, Febrero 1997.

Foro para el Desarrollo Sostenible de la Sierra Nevada de Santa Marta: Memorias, Santa Marta, 19 y 20 de Marzo de 1998, FPSN and Ministerio del Medio Ambiente, 1998.

Enrique Sanchez y Mirta Bosoni, Los Campesinos de la Sierra Nevada de Santa Marta Ocupantes de Resguardos Indigenas y Parques Naturales, Informe final de consultoria, Junio 1999.

Politica de Consolidacion del Sistema Nacional de Areas Naturales Protegidas, con base en la Participacion Social en la Conservacion, Ministerio del Medio Ambiente, Unidad Administrativa Especial del Sistema de Parques Nacionales Naturales, Agosto de 1999.

LineaonientosInterculturales para la Elaboracion del Plan de Manejo del Parque Sierra Nevada de Santa Marta, Unidid Administrativa Especial del Sistema de Parques Nacionales Naturales, Parque Nacional Natural Sierra Nevada de Santa Marta, 1999 (novembre).

Bases tecnicaspara laformulacion de una estrategia de conservacion ecoregional, FPSN, 5 de Febrero del 2000.

Ejercicio de seleccion de regiones pilot, FPSN, 17 de Febrero del 2000.

Fondo Medio Ambiental para la Sierra Nevada de Santa Marta (Fondo Masinsa),Reglamento Operativo, FPSN, Febrero de 2000.

Informe Presentacion de los Avances del Programa de la Fundacion Pro-Sierra Nevada de Santa Marta, Proyecto de Desarrollo Sostenible (PAI), Tobias Ramirez Rangel, Febrero 15, 2000.

*Includingelectronic files

-41 - Annex 9: Statementof Loans and Credits COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT

Differencebetween expected and actual OriginalAmount in US$ Millions disbursements ProjectID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig FrmRevd

P006880 1995 Colombia AGRICULTURETECHNOLO 51.00 0.00 0.00 34.16 25.46 8.86 P044140 2000 Colombia CARTAGENAWATER SUPPLY & 85.00 0.00 0.00 84.15 4.62 0.00 P006891 1998 Colombia SEWERAGEENViRO 40.00 0.00 0.00 37.42 9.97 0.00 P006854 1993 Colombia COANTiOGUIAEDUcATION 50.00 0.00 0.00 2.12 0.63 -0.38 P045112 1998 Colombia COMUNICIPALHEALTHSER 7.20 0.00 0.00 5.16 2.01 0.00 P050578 2000 Colombia CO PASTOEDUCATION 20.00 0.00 0.00 20.00 0.00 0.00 P006866 1994 Cobmbia CO RURALEDUCATiON 90.00 0.00 0.00 0.82 -4.13 -22.82 P050576 1999 Colombia CO SECONDARYEDUC 5.00 0.00 0.00 3-79 1.29 0.00 P063643 2000 Colombia CO YOUTHDEVELOPMENT 506.00 0.00 0.00 228.07 0.00 0.00 P065263 2000 Colombia CO-FSAL 225.00 0.00 0.00 225.00 0.00 0.00 P006893 1995 Colombia EARTHQUAKERECOVERY 11.00 0.00 0.00 2.94 2.94 0.00 P008884 1997 Colombia ENERGYTA 15.00 0.00 0.00 12.33 9.07 0.00 P046031 1998 Colombia RNANCIALMARKETS DEVELOPMENT 5.00 0.00 0.00 2.22 0.84 0.00 P006852 1991 Colombia MAGDALENAMEDIO 60.00 0.00 0.00 3.76 3.76 0.00 P006868 1994 Colombia MUNIC DEVT 39.00 0.00 0.00 16.23 12.75 15.53 P053243 1998 Colombia NATURALRESOURCE MAN 5.00 0.00 0.00 4.09 0.79 0.00 P06887 1996 Colombia PEASANTENTERPRISEZ 249.30 0.00 0.00 30.87 0.97 -36.59 P006889 1994 Colombia POWERMARKEr DEVELOP 30.00 0.00 0.00 2.01 2.01 0.00 P040102 1997 Colombia PUBLICFINANCIAL MAN 12.50 0.00 0.00 9.85 4.35 0.00 P006894 1996 Colombia REG.REFTA 145.00 0.00 0.00 74.87 65.35 0.00 P039082 1999 Colombia SANTAFEI(WateriSupply) 137.10 0.00 0.00 100.00 70.00 0.00 P039291 1996 Colombia TOLL ROADCONCESSON 20.00 0.00 0.00 10.94 10.94 0.00 P006861 1998 Colombia URBANENVIRONMENT TA 75.00 0.00 0.00 62.82 3.82 0.00 P006872 1996 Colombia URBANINFRASTRUCTURE 65.00 0.00 0.00 29.36 22.36 9.86 URBANTRNSPRT

Total: 1948.10 0.00 0.00 1002.98 249.80 -25.54

-42 - COLOMBIA STATEMENT OF IFC's Held and Disbursed Portfolio 3 1-Jul-1999 In Millions US Dollars

Committed Disbursed I1FC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1969/85/88193/95 CF del Valle 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1963/90 Coltejer 6.32 0.00 0.00 0.00 6.32 0.00 0.00 0.00 1995/99 Corfinsura 25.00 0.00 25.00 0.00 0.00 0.00 25.00 0.00 1999 Harken 20.00 0.00 0.00 25.00 0.00 0.00 0.00 0.00 1995/97 Icollantas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1981/85187/89191/92/9 Leasing Bolivar 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 4 PRODESAL 0.00 0.59 0.00 0.00 0.00 0.59 0.00 0.00 1987 Promigas 8.13 0.00 0.00 18.75 8.13 0.00 0.00 18.75 1977/89/92/94/96 Promisan 0.00 0.23 0.00 0.00 0.00 0.23 0.00 0.00 1994/95 Proyectos 0.00 5.00 0.00 0.00 0.00 5.00 0.00 0.00 1996 Suleasing 25.05 0.00 0.00 0.00 2.48 0.00 0.00 0.00 1997 Surenting 0.00 5.10 0.00 0.00 0.00 2.50 0.00 0.00 1999 Total Portfolio: 87.50 10.92 25.00 43.75 19.93 8.32 25.00 18.75

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 1999 Harken 0.00 10000.00 0.00 0.00 Total Pending Commitment: 0.00 10000.00 0.00 0.00

-43 - Annex 10: Country at a Glance COLOMBIA:SIERRA NEVADA SUSTAINABLE DEVELOPMENT PROJECT Latin Lower- POVERTY and SOCIAL America middle- Colombia & Carib. income Development diamond' 199a Ponulation mid-vear (millionsI 40 8 502 908 Life expectancy GNP oer caoita (Atlas method. US$1 2.600 3.940 1.710 GNP eAtlas method. USS biliions) 1061 1 078 1 557 Averace annual arowth. 1992-98 PnnIatinon t%) 1 A 1 6 1 1 Laborforce f%) 2.7 2.3 1.5 GNP Gross per primary Most recent estimate Ilatest vear available. 1992-981 capita -1nn-llment Povertv f% of ooDulationbelow national oovertvline) 18 Ilrhan nnnnuation f1 of total DoDulation) 74 75 sa Life exoectancv at birth fvears) 70 70 68 Infant mortalitv /eer 1 000 live births) 24 32 38 Crhid malnatritior 1% of children under 5) a 8 Arcess to safe water Accessto safe water (' of DoDulation) 75 75 75 Illite.r.v (% of ooDulationaoe 15+1S 13 14 Gross orimarv enrollment (t' of school-aae oDoulation) 113 113 103 Colombia MaIr 113 105 Lower-middle-income group Female 119 10n

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1977 1987 1997 1998 Economic ratios' GDP1USS billions) 19.5 36,4 108.6 102 9 Gross domestic investment/GDP 18.7 19.1 23.0 22.3 Exrorts of onods and services/GDP 16.9 17.0 139 13.9 Trade Gross domestic savinoslGDP 22.3 231 15.0 16.6 Grnss nati.nal savin.s/GtrP 91 1 21 2 176 16 5.

Current account balancelGDP 1.9 -0.1 -5.4 -5.7 .oesi Interest oavmentslGDP 0.8 37 1.5 1 7 Domestic . Investment Total debtlGDP 26 0 46.8 31.2 351 Savings Total debt service/eroorts 10.7 39.1 467 47.3 + Present valuer nf debhtlrtfP 27 9 Present value of debtlexoorts 1984 Indebtedness 1977-87 1988-98 1997 1998 1999-03 (averaae annual arowth) G n P 3 4 40 31 0 6 3 Colombia C3NPncr -Anita 07 728 1 1 -1 3 1 7 Lower-middle-income mrou ExDorts of coods and services 5.0 71 81 -4.8 8.3

STRUCTURE of the ECONOMY 1977 1987 1997 1998 Growth rates of output and investment (Y) 1M of GDP) 4s rrinulltujrr 2 5n 17 4 141 14 S Industrv 30.3 34.8 29.0 27.1 30 Mana-Mturinn 239 203 142 138 ns Senwices 44.7 47.8 57.0 58.4 o

Private nn-nsamntion 70 n Ra5 6R5 672 4g15 93 94 9n 96 97 98 -eneral.n1ver me-nrnst- mntinn 77 87 182 16 3 GDI - *GDP ImDorts of aoods and services 13.3 12.9 19.4 19.6

1977-87 1988-98 1997 1998 Growth rates of exports and imports (') faveraoe annual arowth) ,riou1t-urr 2 5 1 7 02 0n sn Industrv 41 2.3 13 -2 3 4 o Msmfanutanrrino 2 s 1 7 5 n0n 3t Gervices 3 4 57 3is 9 4 2

Private c-ns,motion 29 4 0 3 7 1 9 nnvrrnment.eneral -nnr,mntinn 5 1 5 3 47 03 Gross domestic ihvestment 2.3 14.0 35 .. -i. 93 94 95 96 97 98 I-norts of noods and ervi,es 25 1Rn 44 1 S Exports -- imports Gross national oroduct 2.9 3.9 3.1 -2.5

Note: 1998 data are preliminary estimates. 'The diamonds show four kev indicators in the countrv (in bold) comDared with its income-arout averaae If data are missina. the diamond will he incnmnlete

-44 - Colombia

PRICES and GOVERNMENT FINANCE 1977 1987 1997 1998 Inflation [%) Domestic prices 30 (% change) Consumer prces 32.7 23.3 18.6 18.7 20 Implicit GDP deflator 29.2 23.4 17.0 17 5 In Govemment finance (% of GDP, includes current grants) 0 Current revenue . 22.2 27.7 27.6 93 94 95 96 97 98 Current budget balance . 5.5 6.5 5.7 -GDP deflator 2CPi Overall surplusaldeficit . -2.3 -3.8 -3.7 --

TRADE 1977 1987 1997 1998 Export and import levels (USS millions) (US$ millions) Total exports (fob) 2,660 5,254 11,680 11,331 160W Coffee 1,498 1,633 2,259 1,915 Hydrocarbons 105 1,342 2,707 2,387 12,0W - Manufactures 1,025 1,556 5,293 5,614 06._ Total imports (ci) 1,970 3,793 14,409 14,836 Food1724, Fuel andenergy 136 148 240 Capitalgoods 664 1,381 5,561 5,680 92 93 94 95 96 97 se ExDort once index 0995=100) 6 26 126 112 0 t ImoortDriceindex(1995=1001 3 26 123 116 Exports lmports Terms of trade f1995=t00) 178 103 102 96

BALANCE of PAYMENTS 1977 1987 1997 1998 Current account balance to GDP ratio (%) (USSmni)lions) Exports of goods and services 3,378 6,421 14,238 13,339 4 Imports of goods and services 2,736 5,751 18,399 17,468 2 Resource balance 642 670 -4,161 4,1129

Net income -313 -1,692 -2,371 -2,187 92 Netcurrenttransfers 49 1,001 640 407 -2-

Current account balance 378 -21 -5,892 -5,909 -4

Financing items (net) -1,280 43 5,982 4,454 6 Changes in net reserves 902 -22 -90 1,455

Memo: Reserves includino cold (USS millionsl 3 197 3.587 9.611 8 397 Conversion rate (DEC. localkUS ) 36.8 2426 1142.6 1,426.0

EXTERNAL DEBT and RESOURCE FLOWS 1977 1987 1997 1998 (USS millions) Composition of total debt, 1998 (USS millions) Total debt outstanding and disbursed 5,053 17,023 33,865 36,084 IBRD 716 4,111 1,723 1,740 |A 1,740 IDA 22 17 10 9 G:6,403 B:9

Totaldebtservice 379 2,830 7,131 6,853 D 5,451 IBRD 93 618 573 347 IDA 0 1 1 1 ~ 1,397 Composition of net resource flows Officialgrants 15 18 85 Official creditors 65 232 -456 107 Private creditors 121 -318 4,053 566 Foreign direct investment 65 319 5,574 3,192 Portfolio equity 0 0 593 -286 F: 21,084

World Bank program A-IBRD E- Bilateral Commitments 281 180 28 227 B-IDA D-Otlrermutilateal F -FPvate Disbursements 85 395 152 184 C IMF G - Short-term Prncipal repayments 41 279 380 232 Netflows 45 116 -228 -48 Interest payments 53 268 150 115 Net transfers -8 -152 -378 -163

Development Economics 9/8/99 -45 - Annex 11: Social Assessment COLOMBIA: SIERRA NEVADA SUSTAINABLE DEVELOPMENT

I. Background: The Sierra

The Sierra Nevada de Santa Marta, a UNESCO-declaredBiosphere Reserve, and the Sierra Nevada eco-region (including 15 municipalitieslocated in 3 departments, 2 national parks, and 2 major indigenous reserves) is a place of great importancefrom an ecological, cultural and economic point of view, and a complex region which has experiencedvarious forms of violence and social conflict which have afflicted much of Colombia. The central feature of the eco-region is the Sierra Nevada de Santa Marta, an isolated mountainthat is set apart from the Andes chain that runs through Colombia. Reaching an altitude of 5,684 meters above sea level just 46 kilometers from the Caribbean coast, the Sierra Nevada is the world's highest coastal peak, and encompasses an area of about 12,600 square kilometers(accounting for 60% of the eco-region's total area). Because of its altitudinal variation as well as its location at 11 degrees north latitude, the Sierra Nevada contains a mosaic of biomes of global significance(nearly all the climatic zones that can be found in tropical America).

Since pre-hispanic times, the indigenouspeoples of the SierraNevada have possessed a world view, social organization and living patterns revolving aroundthe management and conservation of this unique environment. The Sierra is the source of 35 watersheds,which makes it the "water factory" that supplies the Cienaga Grande (a complex deltaic estuary and mangrove system which is a unique habitat for birds, fish, reptiles, amphibiansand invertebrates) and the 1.0 to 1.5 million inhabitants of the eco-region, underpinningeconomic activities on the surrounding lowlands including commercial agriculture, cattle ranching,coal mining, tourism, fishing as well as three cities with populations of more than 100,000people. Altogether, these characteristics make the Sierra Nevada de Santa Marta unique in social, ecological and cultural terms. (See Map 1.)

In 1988, the Fundaci6n Pro Sierra Nevada de Santa Marta (Foundation) initiated a participatory process that produced a SustainableDevelopment Plan for the Sierra Nevada de Santa Marta (SDP), published in February 1997 and endorsed by key stakeholders including the municipal, departmental and central governments, as well as communitiesand other local actors. The long- term development objective of the SDP is to improvethe quality of life of the inhabitants of the Sierra Nevada, while maintaining and restoring the region's eco-systems and cultural heritage. The SDP consists of five programmatic areas (conservationof eco-systems, strengthening of indigenous cultural identity, stabilization of the peasant population, strengthening of fundamental rights, and modernization of institutions),an educationalcomponent which covers all the areas, and a management component.

The process of developing the SDP has been an educational one which has created an increased awareness of the environmental and cultural importanceof the Sierra Nevada. It has also contributed to a dialogue and maturing of relationshipsamong various regional actors, many of whom have had long-standing conflicts particularlyover land. The project builds on these efforts and aims to contribute to the implementationof the Plan and its objectives. During project preparation, key stakeholders indicatedthat they want the SDP to grow from its origins which emphasized a conservation strategy and the upper reaches of the Sierra Nevada (the indigenous reserves and national park) to strengthen dimensionsrelated to improving the well-being of the people living in the eco-region (including the lowlands)and sustainable use of its natural resources.

-46 - II. Social Analysis

The Sierra's most distinctive feature is its socioeconomicand cultural diversity resulting from the mix of three different cultures and socioeconomicgroups which can be broadly described as: (a) indigenous peoples of pre-hispanicorigin occupyingthe highest areas of the Sierra; (b) small farmers who migrated to the Sierra from the Andean region at various times and colonists who arrived in the mid-70s and 80s during the marihuanaboom who occupy the middle slopes; and (c) a diverse group of people includingsmall farmers, traditional landholding families, and business- oriented farmers occupying the flat coastal zone (Zona Plania).In addition, urban residents constitute another distinct group which accounts for a majority of the eco-region's population. (See Map 3.)

(a) Indigenous Peoples

An indigenous civilization,the Tairona, was well established and developed long before the arrival of the Spaniards to Santa Marta's shores in 1502. They were semi-nomadicand practiced an extensive, shifting agriculturemoving betweenthe ecosystems at different altitudes--from sea level to the highlands-according to the seasons and a ritual calendar thus obtaining a variety of products. The Conquest destroyed this civilization,and the majority of its population, forcing the survivors to flee to the higherareas of the Sierra thus upsetting the balance of their productive system. Indigenous people lived in relative isolation until the end of the nineteenth century which helped them to maintain their traditions and social structure.During the twentieth century, several migration waves,brought colonists into indigenousancestral territories, progressively reducing indigenous peoples' access to the warmer areas by the coast. This situation affected not only living standards, but also the social and spiritual equilibriumof the indigenous society. The indigenous population is comprisedof four ethnic groups, Kogis, Wiwas, Arhuacos and Kankuamos totaling 32,000 inhabitants,around 15 % of the rural population in the Sierra.

Table 1. IndigenousGroups in the Sierra Nevada of Santa Marta

Ethnic Group Inhabitants Percentage Arhuacos 13,383 56.16 Wiwas 1,857 7.79 Kogis 8,590 36.04 Other 7,917 24.9 Total in the Sierra 23, 830 100.0 National Total 603, 280 3.95 Source:El SaltoSocial; Volume 1, 1994-95.This figuredoes not includethe Kankuamowho were not officially registered in 1994-95 as an ethnicgroup. If they are included,the total is 32,000,roughly 15%of the ruralpopulation.

Traditional indigenous groups maintain in general an efficient use of natural resources based on their particular knowledge of soil quality, climate and ecosystems. They are semi-nomads who move between different altitudesto cultivate crops accordingto the seasons. However, market production has been increasing,mainly coffee growing and cattle-rearing thus changing the traditional ritual approach towards land use. (See Annex 12 for a fuller description.)

- 47 - (b) Farmers and Colonists in the Middle Slopes of tle Sierra

Migration to the Sierra has been common since coloi .al times, however the migratioi flows that have had a major impact occurred in the last half of the twentieth century. In the 50s and 60s, a massive in-flow of farmers from the Andean region arrived, fleeing violence affecting the Coffee Belt at the time, resulting in a tripling of the rural population from 4,000 to 12,000 families by the mid-i 960s. Their economy depends on coffee growing and cultivation of crops such as maize, beans, banana, and pancoger (local food crops such as maize) for self-consumption.Though the Sierra contributes only 1% of Colombia's coffee production, this crop is very important for the regional economy. There are 26,198 hectares cultivated with coffee producing nearly 20 million kilos per year. The coffee crisis of the 90's has contributedto a deteriorating situation for these farmers, aggravatedby lack of infrastructure,credit and technical assistance.

During the seventies, international demand for marihuana spurred a production boom that caused a major negative social and environmental impact, resulting in the destruction of 70% of the forested area. Marihuana sold between $100-300 per kilo compared to $12.50 per kilo of coffee. The marijuana boom of 1975-1980attracted another flow of colonists, larger than the total number who had arrived in the previous fifty years combined. Though many left when the boom was over in the mid-80s, some stayed engaging in legal cultivation or illegal crops such as coca. In 1997, farmers and colonists occupying the middle slopes of the Sierra were estimated to be 168,339 persons or 80% of the rural population. They are one of the most important groups.

Table 2. Colonist and Farmer Population in the Sierra in 1997

Total Rural Colonists and % of Total % of Rural Municipality Population Population Farmers Population Population (a) (b) (c) (c/a x 100) (c/a x 100)

Aracataca 39,353 22,086 21,586 54.9 97.7 Barrancas 21,619 10,596 3,013 13.9 8.4 Cienaga 125,746 58,195 57,615 45.8 99.0 El Copey 31,834 10,568 Fonseca 26,778 7,846 5,847 21.8 74.5 Fundacion 42,981 11,528 10,098 23.5 87.6 Riohacha 107,329 18,002 14,545 13.6 80.8 San Juan 21,013 5,346 4,536 21.6 84.8 Santa Marta 279,958 38,372 36,537 13.1 95.2 Valledupar 247,942 28,117 14,562 5.9 51.8 Total 944,553 210,656 168,339 17.8 79.9 Source:Plan de DesarrolloSostenible de la SierraNevada de SantaMarta, 1997.

(c) Coastal Groups

The inhabitants of the coastal zone (la zonaplana) are dominated by traditional landholding families and business-oriented farmers of European and African descent. Strong family groups are the basis of their social structure in order to maintain control upon a socially recognized territory. The coastal zone comprises four main cultural groups: (i) La Guajira: occupying formerly indigenousWayuu territory comprising Riohacha with a strong African influence and closely related to trade and smuggling activities, and mestizo population in southern Guajira with important political ties; (ii) Vallenata:evolving around Valledupar that maintains its colonial

-48 - tradition with elite families of European origin ruling over the majority of the mestizo population; (iii) Cienagas: developed through several migrations flows mainly of farmers from other areas of the country and structured around big banana or palm oil plantations owned by landlords from Santa Marta and Valledupar; and (iii) Santa Marta that keeps its colonial structure comprising a majority mestizopopulation dominated by an elite of landlords of hispanic descent, owners of palm oil and banana plantations. Land distribution is highly unequal and some high potential land is being underutilized mainly for extensive livestock production. Some small farmers live in the lowlands, including some banana growers.

The main economic activity of the dominant groups in the lowlands is agriculture, highly technical and labor intensive, oriented towards agro-industrial transformation and export. The most important products are bananas and palm oil. Market fluctuations and diminishingwater supplies have been affecting these activities. However, in the last few years, the main problem has been increasing insecurity provoked by the presence of various armed groups. Frequent kidnappings and armed attacks have forced many landowners (big, medium and small) to leave their lands in the hands of hired managers or simply to abandon them.

Table 3. Use of Land per Type of Crop Production in the Sierra

Crop Hectares African Palm Oil 29,695.0 13.95 Banana 17, 600.0 8.27 Coffee 26, 319.5 12.36 Sugar Cane 1, 527.9 0.72 Cocoa beans 772.4 0.37 Other products 801.4 0.38 Seasonal 4,882.1 2.29 Associated crops 1,360.9 0.63 Grass 44,482.7 26.89 Untilled land 79,343.0 47.27 Forestry 4,953.1 2.32 Other use 1,110.1 0.52 Total 212, 848.0 100.00 Source:National Coffee Federation; National Survey, Phase 1, 1993. Surveycovered the followingmunicipalities in the Sierra:Valledupar in Cesar;Riohacha, Barrancas, Fonseca, S. Juandel Cesarin La Guajira; SantaMarta, Aracataca, Cienaga and Fundacionin Magdalena.

Other important activities in the lowlands are coal mining and tourism. Coal mining mainly has developed in La Guajira department where there are important projects to exploit coal, natural gas and salt. The development of infrastructure for coal production and export has had a negative environmental impact. Tourism comprises a formal sector of large hotels around Santa Marta and the Tayrona National Park, and an informal sector providing services to visitors to the Lost City (CiudadPerdida or Teyuna) and excursions to Bolivar and Colon mountains, the tallest peaks in the Sierra. Logging has also been relatively important for: production of implementsfor transporting bananas (pallets and boxes) and export to Venezuela. Manufacturing is just beginning, mainly related to agricultural products such as palm oil, coffee mills, and dairy and food production.Valledupar has a relatively important textile production.

- 49 - Table 4. Economic Activities in the Sierra

Establishments Employees Activity Number _ _ Number % Trade 12 740 57.08 27 559 67.05 Industry 1275 5.78 5 532 13.46 Services 7459 33.85 7,459 18.14 Other 555 2.53 555 1.35 Total 22 029 100 27 559 100 Source:Plan de DesarrolloSostenible de la SierraNevada de SantaMarta, 1997.

(d) Urban Population

The urban population is concentrated in the three most important cities in the region which are the departmental capitals: Santa Marta (Magdalena Department),Riohacha (La Guajira Department) and Valledupar (Cesar Department). Each has a populationof more than 100,000 inhabitants and a distinctive cultural and economic background.Political decision-makingaffecting the region takes place in these cities where the regional government,central governmentagencies such as INCORA,Red de Solidaridad Social, and all major national organizationsare represented such as the National Federation of Coffee Growers, Rice Growers Association and the Textile Industry Association, among others. There is also an important population living in smaller cities and small urban centers such as municipal capitals which are growing in size in particular because of increasing numbers of displaced persons fleeing rural areas.

Table 5. Sierra Nevada Region Urban Structure

Category Cities Included Range of Population Regional Cities Santa Marta; Valledupar;Riohacha 100,000-300,000 Main Cities Cienaga, Fundacion, San Juan del Cesar and 50,000- 100,000 Maicao Secondary Cities Aracataca, Fonseca and Barrancas 30,000 -50,000 Small Cities Copey, Bosconia and El Pasco 20,000 - 30,000 Urban Centers Minca, Guachaca, Don Diego, Palomino, Less than 20,000 Mingueo, San Pedro de la Sierra,Palmor, Maria Angola, Pueblo Bello, SabanaCrespo, Atanquez, Tomarrazon,Las Juntas and Cotoprix Source:Plan de DesarrolloSostenible de la SierraNevada de SantaMarta, 1997.

III. Main Social Issues

Violence played a central role in the colonizationof the Sierra. The struggle for access to land and water, involving traditional landholding families,big business-orientedfarmers, small farmers, poor peasants, colonists, indigenouspeoples, and urban dwellers is perhaps the major social issue in the region. Several well-intentionedlaws and decrees intended to protect the Sierra's natural resources have aggravatedthe situation,marginalizing peasant farmers who can not get their lands titled. Attracted perhaps by the isolated location and social conflicts in the Sierra, over the last fifteen years various armed groups,both guerrilla and paramilitary, have established a presence. Certain areas of the eco-regionare dominated by certain armed groups and periodic disputes between these groups for control of territory results in episodic violence which has worsened recently with the initiation of peacetalks by the national government.

- 50 - (a) Social Conflicts: Strugglefor land

Land OccupationPatterns

During the twentieth century, several migration waves brought colonists into indigenous ancestral territories, progressively reducing indigenouspeoples' access to the warmer areas by the coast. (See Map 4 below.) This situation affected not only living standards, but also the social and spiritual equilibrium of the indigenoussociety. The importanceof market production has been increasing among some indigenousgroups and has been changing the traditional ritual approach towards agriculture and has modified land tenure from communal to private property; in some cases, land has been progressively concentratingin the hands of a few prosperous families. Likewise, colonization affected landholdingelites with periods of land invasion in the 1960-80s, and subsequently,the abandonmentof properties and prevalenceof absentee landlords due to insecurity and violence in the region.

The first wave of migration in the twentieth century, from 1900 to 1940, was fairly dispersed. In the 50s and 60s, a massive in-flow of farmers fleeing violence in other areas of the country, mainly coffee growers coming from the Andean region, occupied the areas of the Sierra which are suitable for coffee production resulting in a tripling of the rural population, from 4,000 to 12,000families, by the mid-I 960s. Many settlers establishedtheir homes on top of archaeological sites (stone terraces), and the practice of guaqueria (stealing artifacts in particular offerings from indigenous sacred sites) began during this period. In an effort to reduce this in-flow and control its negative effects, Law 2 of 1959 established a Forest Reserve in a large area of the Sierra, thus limited the possibility for many of these farmers to obtain land titles. Coffee farmers have faced instabilitythrough contradictory regulationsthat facilitatecoffee cultivationbut limit their possibilities to obtain land titles.

The third wave of colonizationbetween 1960-80,was the most destructive and affected the whole Sierra. The construction of the main highway along the coast between Santa Marta and Riohacha, between 1960-80 generated instabilitythrough land invasions particularlybetween 1971 and 1975. Road workers, farmers and land speculatorsoccupied large extensions of land along the road in order to develop cattle rearing orjust to benefit from increasing land values. This process continued until 1987 when the last invasion took place. The indigenouspeoples lost their access to the sea as a result. Many of these farmers and colonistsoccupied indigenous peoples' lands and found an excellent source of income in stealingofferings from indigenous sacred sites (guaqueria) which became so importantthat a "GuaqueroUnion" including more than 1000 members was created in the mid-70s, and gained official recognitionby the Ministry of Labor of the time.

The most destructive part of the third wave of migration was the marihuana boom of the seventies with an influx of more people than in the previous fifty years combined, causing a major negative impact on indigenous peoples, food production and labor markets. Between 1975-80,at the peak of the boom, 70% of the Sierra's forest, around 150,000hectares, were destroyed to cultivate marihuana. Violence and corruption increased,further deterioratingthe weak economy of indigenous peoples and small farmers. Many of the colonistshad a "get rich quick" mentality and no respect for indigenous culture.Indigenous peoples also became the target of marihuana dealers, because they refused to collaborate in its cultivation.The end of the boom in the early 1980s caused a major economic crisis that affectedthe cities and the communities in the Sierra. Violent gangs of ex-producers,called combos, terrorized the whole population in the Sierra and led to the presence of the guerrillamovement FARC in the region in 1987.Many of the colonists left, but the social and environmentalscars remained.

- 51 - Map 4. Colonization of the Sierra Nevada de Santa Marta in the XXth Century

MAR CARIBE Z>

^ % ONIP/{ f Cabeceramunidpal~5e

|8;t g *~~~~~~~~~~~Asenta,niento \sX| ~~~~~~~~~Viapavimentada

. 9 J _ _ __~~~~~~~- Via no pavimenhada t | | se se \ )~~~~~~~~~~*4+~Ferrocarril

Source:Fundacion Pro-Sierra Nevada de SantaMarta 1995, based on MargaritaSerje, 1990.

The result of the colonization process was a substantialincrease in the numbers of farmers and colonists living in the Sierra and occupying indigenousterritories, the introduction of cultivation patterns that have contributedto the deterioration of the eco-region, and deep scars due to the disrespect of indigenousculture and sacred sites. During the marihuana boom, violence and corruption increased and control over land was imposed through terror, spurring land conflicts among the various groups. The entry of guerrilla forces led to an increasing presence of other armnedgroups in the region.

- 52 - Overlapping Territories:National Parks-IndigenousReserves-Farmers

Protected areas in the Sierra Nevada were established as early as 1959under Law 2 which declared a large area of the Sierra a Forest Reserve. In 1964, two national parks were created presently accounting for 20% of the land area of the eco-region and 34% of the area of the highlands. The SierraNevada National Park presently comprises 383,000 hectares (including area added in 1977) that extend from sea level to the peaks of Colon and Bolivar, more than 15,000 feet high. The Tayrona National Park has 15,000 hectares including a coast line of 55 kilometers. The Regional Office of the Special Administrative Unit of the National Parks System (Parks Unit) within the Ministry of the Environment is in charge of managing both parks. According to the agreements that created both parks, no economic activity is permitted within their boundaries (Decree-Law2811 of 1974); land titling within the parks and a buffer zone of 5 kilometers around is also forbidden under Article 67 of Law 160 of 1994. However,this restriction does not apply to indigenous people whose way of living is considered compatible with national parks (Article 7 of Regulatory Decree 622 of 1977).

In December 1974, after a long struggle for recognition of their rights over their ancestral territory, INCORA (Colombian Institute for Agrarian Reform) established the Arhuaco Indigenous Reserve comprising 185,000 hectares. In 1983, this resguardo incorporated an additional 10,900 hectares for a total of 195,900.In October 1980, INCORA created the Kogi- Wiwa Indigenous Reserve comprising 364,840 hectares. In 1994, this reserve was expanded an additional 19,200 hectares including a strip between the Palomino and Don Diego rivers which allowed this group to regain their traditional access to the sea. This was an important achievement as it signaled a process of reclaimingterritory in the lowlands of the Sierra. In spite of this progress, indigenouspeoples continue to claim their rights over their so-called ancestral territory, delineated by the "Black Line" demarcated by various sacred sites which comprises most of the Sierra Nevada eco-region including the city of Santa Marta. An official resolution issued by the Ministry of the Interior in 1995 recognized indigenous rights over their ancestral territories (Resolution 837 of August 28, 1995 modifying Resolution 004 of August 4, 1973) without conveying any legal property rights. Through this process, the three major indigenous groups, Kogui, Arhauco and Wiwa have obtained legal recognitionof their rights over lands which are now officially their territory. In the case of the Kankuamo group, which is the less traditional one, the struggle to recover its identify and establish its own indigenous reserve continues. All four indigenous organizationsas well as their spiritual leaders have indicated repeatedly that their critical concern is to regain access to sacred sites, a condition for re-establishing the equilibrium of their communities.

Table 6. Indigenous Peoples Reserves

Reserve Hectares % of the Sierra Arhuaco 195,900 9.2 Arhuaco de Busichama 128 0.0 Kogui-Wiwa-Arhuaco(Kogui-Malayo) 384,040 18.1 Total Actual Reserves (a) 580,068 27.4 Proposed Kankuamo Reserve (b) 32,956 1.6 Total (a) + (b) 613,024 28.9 Total Sierra Nevada Eco-region 2,115,800 100.0 Source:Enrique Sanchez, 1999 based on DNP:Ethnographic Base Listof Colombia, 1997 and Fundaci6nPro-Sierra.

- 53 - The main indigenous reserves overlap almost completely with the national Parks. (See Map 5 below.) However, this has not been a big source of conflict because legall itional pa s and indigenous peoples' reserves are compatible and in practice indigenouspeoples in the Sierra have been managing these lands because of the limitedresources of the Parks Unit and their recognition that indigenous management could contributeto conservation. However,there have been on-going tensions about who has the ultimate authority and about how best to manage these extensive territories. In May 1999, the national Parks Unit and the GonawinduaTayrona Indigenous organization agreed to initiate a process of preparing a collaborativemanagement plan for the Sierra Nevada Park and reserves. This process culminated in November 1999 with the presentation of a paper summarizing the agreements reached by the Parks Unit and Gonawindua Tayrona Indigenous organization concerning the principleswhich would guide the preparationof the management plan, of which respect for indigenousknowledge and culture was fundamental. Later in November in a meeting in Valledupar, the three other indigenous organizationsin the Sierra endorsed these principles and agreed to join the process of preparing the collaborative management plan for the overlapping territories.

However, the problem remains of the several hundred small farmers who live within the area of the parks and indigenous reserves. According to some estimates, there were 446 farm families living inside the area of the reserves when they were established. Accordingto Colombian law, such families should be relocated outside the reservesthrough a process led by INCORA which entails covering the value of land improvements (mejoras). However,when the two main reserves were established, it was the middle of the marihuana boom when a large in-flow of migrants came to the Sierra. There was virtually no control over settlementof colonists inside the reserves and parks. As a result, it is nearly impossibleto establish with certainty the families who have particular rights to compensation because they had possession of the land prior to the establishment of the parks and reserves.

In 1991, a recount carried out by the Foundation estimated that around 750 families were living or had property inside the reserves: 290 in the Arhuaco Reserve and 462 in the Kogui-Wiwa Reserve (Enrique Sanchez, 1999). During the fifteen years from 1984-98,INCORA had bought 421 farmer plots (mejoras) accounting for 45,000 hectares, but because of lack of resources has bought no farms since then. Since indigenous authoritieshave also been directly buying land since 1994 using fiscal transfers from the central government,and since there has been no monitoring of families whose lands were purchased to ensure that they moved permanently outside the reserve-park area, there is no definite count of the families still living in reserve-parks areas. In addition, many farm families have also left under the pressure of increasingviolence, inability to receive land titles and poor living conditions. The current rough estimate of the number of farm families inside the reserves and parks is 450. Though the majority of these families are willing to relocate, they seek better conditions and support to do so. (For more information see Enrique Sanchez, 1999 and Annex 12.)

- 54 - Map 5. NationalParks and IndigenousReserves of the Sierra Nevada

MAR CARIBEX

Santa_.<

RoarhuacdoBsnhm

(b) Social~Exclusion ~ ~ ~ ~ ~ ~ ~ Va notablyasin reflected the lwlands, inhighGinicoefficientsforthemunicipaliti Arhuactde laSierra ( > / 5 \ _ ~~~~~~~~~~~Arhuacode Businchama

Source: Fundacion Pro Sierra Nevada, Plan de Desarrollo Sostenible, 1997.

(b) Social Exclusion

Indigenouspeoples, and farmers/colonistsliving in the middle and upper slopes of the Sierra suffer from social exclusion. Economicand politicalpower are concentratedin the urban areas in the lowlandsof the Sierrawhere key decisionsare made. Lanidis concentratedin few hands notably in the lowlands,as reflected in high Gini coefficientsfor the municipalitiesin the Sierra (rangingbetween 0.60 and 0.87, with 4 out of 11 municipalitiesabove 0.80; FundacionPro- Sierra, 1996). New palm oil plantations,tourism and coal infrastructurehave consolidatedthe economyof the coastalzone, while in rural areas unemploymentis widespreadas a result of lower banana and coffee prices. Illegal crops contributeto insecurityand violence.The recent economiccrisis and violencehave affected all groups, but have been particularlyhard on small farmers.

- 55 - The establishment of indigenous reserves and the official recognition of their rights and culture in the 1991 Constitution have been changing their situation. Presently, indigenous organizations are stronger than ever and in a process of unifying to pursue common goals. While indigenous peoples have been gaining recognition, particularly among small farmers who share similar poverty conditions, they are still undervalued and neglected. Inter-ethnic tensions and conflicts are ever-present with new social patterns and lack of respect for indigenous sacred sites and traditions contributing to their mistrust and resentment towards farmers and colonists.

The most vulnerable group in the Sierra is small farmers and colonists (particularly those living inside the reserves and parks). They are perceived as alien to the local coastal culture and as a source of conflict. Many are affected by the stigma of the "colonists" of the marihuana boom and have had difficulties integrating into society. They do not enjoy the legal protections and support available to indigenous peoples, and those living inside the reserves and parks are particularly vulnerable since they can not get land titles. Few resources are allocated by municipalities to benefit people living in the middle and upper slopes of the Sierra, most public investment and provision of services are focused on the municipal capitals and lowlands. Occupation of the SierTa by armed groups has led to high levels of social fragmentation and weak cam?1pesino organizations which are presently in crisis.

(c) Violence

Although violence is not a new phenomenon in the Sierra, in the last decade it has been increasing constantly, due to the following factors: (i) disputes over land and control of other resources; (ii) illegal crop production; (iii) corruption and mismanagement in public affairs; (iv) inefficiency in the justice system and impunity that promote retaliation and self-justice; and (v) efforts of armed groups to position themselves militarily and politically as the government attempts, starting in mid-1998, to initiate peace talks. The region is divided up into territories controlled or under the influence of various armed groups, including 3 guerrilla movements and several paramilitary groups, with massacres and major violent events occurring periodically when one group tries to invade or take over the territory of another, or to punish the "supporters" of an opposing group. Unfortunlately, the civilian population is the main victim of this difficult situation.

Guerrilla groups first arrived in the Sierra in the late 1980s to fight thl combos, gangs related to the marihuana trade. The deterioration in small farmers living standards and the lack of government support, gained popular support for guerrilla groups. Paramilitary groups, initially created to protect rich landlords, have became a political and military movement to oppose the guerrillas. Some of the most active paramilitary groups in the Sierra presently control some urban areas and portions of the rural areas. The involvement of the regular army to combat the armed groups has also contributed to increasing violence and insecurity. Violations of human rights by all groups are widespread. Reports and interviews with staff of the Red de Solidaridad indicate that the Sierra is a region expelling population due to armed conflict. Data from 1999 slhowthat all municipalities in the Sierra, particularly the municipal capitals, are receiving population displaced by violence (estimated at 8,000 families in 1999). Though not all of the persons are displaced from locations inside the Sierra region, many are.

IV. Institutional Assessment and Legal Framework

(a) Institutions and Organizations

The multiplicity of institutions, with overlapping functions and lack of coordination, is an issue affecting the general development of Sierra Nevada eco-region. Three departments, fifteen

- 56 - municipalities,two indigenous reserves, two national parks, and several representatives of the central government in the region, claim the right to decide upon the Sierra's future. Various social organizations struggling to express their views and participate in decision-makingcomplete this panorama. This makes it challengingto reach basic agreements on common objectives and to coordinate actions to preserve the Sierra. However, there is a precedent for considering the Sierra Nevada as a region: the National RehabilitationProgram (PNR) considered it a special rehabilitation district in the late 1980s. Likewise, as a result of the SDP, several eco-regional coordinatingmechanisms have been introduced: the Regional Environmental Council and the Steering Committee for the SDP.

Indigenous organizations. The indigenous peoples in the Sierra have survived five hundred years of social violence because of their persistence in maintaining social cohesion and traditional values. The moral and spiritual power of the group over economic and social factors have been a strength. More recently, under the pressures of modern life, each ethnic group has developeda political organization in charge of managing relations with the external world, including government,NGOs and other social organizations.Four such organizations are presently organized: (i) Arhuacos in the Indigenous Tayrona Confederation (CIT); (ii) Kogis, Arhuacos and Wiwas in the Gonawindua Tayrona Organization;(iii) Wiwas in the Wiwa Yugunaiun BunkwanarwaTayrona Organization;and (iv) Kankuamos in the Kankuama Indigenous Organization.In November 1999, the leaders of the four indigenous organizationsagreed to establish the Cabildos Territorial Council as a unified body through which they will speak with one voice to the government and external organizationsabout matters of concern to them; this is a major achievement.

Farmers Organizations.Farmers do not have a unified strong organization due in part to the disparity of their origin and cultural background, and also to their scattered occupation of the region. Several farmer sub-regions, each one with its own characteristics, were identified during the PNR: Minca-La Tagua, Troncal del Caribe, Mingueo-Dibulla,Tomarrazon-Los Gorros, Caracol Marocaso; Atanquez, Pueblo Bello; Villagermania; Chimila-Copey; Santa Clara; Rio Piedras- La Ye; Palmor y San Pedro de la Sierra. Each sub-region has developed a certain type of organization though not strong enough to have regional representation.However, there have been several attempts to develop a unified farmers' organization that have been partially successfuland continue to develop.

Local Governments:Local governments comprise three departments (Cesar Guajira, and Magdalena) and fifteen municipalities: Santa Marta, Aracataca, Fundacion, El Copey, Valledupar, San Juan del Cesar, Fonseca, Cienaga, Pueblo Bello, Barrancas, Riohacha, Hatonuevo,Dibulla, Distraccion and Zona Bananera. Each department manages extensive territories in which the Sierra accounts for a part: 26% for Magdalena, 31% for Guajira and 18% for Cesar. However, local governments at both levels have not paid much political or economical attention to the Sierra, as indicated by low levels of public investment and public programs for these areas. In the case of the municipalities,attention is focused on the urban population in the municipal capitals that represent on average around 70% of the total, and on the rural areas of the lowlands rather than on the rural population of the middle and upper slopes of the Sierra.

National Parks: The National Parks account for 20% of the land area of the eco-region and 34% of the area of the highlands. The Sierra Nevada National Park was created in 1964 and expanded in 1977, comprises 383,000 hectares that extend from the Caribbean Sea to the Colon and Bolivar peaks. The Tayrona National Park created in 1964 has 15,000 hectares including a coast line of 55 kilometers.The Regional Office of the Special AdministrativeUnit of the National Parks System (Parks Unit) under the Ministry of the Environment is in charge of managing both parks.

- 57 - The Park Unit's new policy towards protected areas managementis critical to addressing the issue of overlapping territory with indigenous reserves.

Regional Institutions. Under the National EnvironmentalSystem established in 1993 by Law 99, three Regional Autonomous Corporations (CARs), one in each of the three departments in the Sierra, have responsibility for handling environment matters (except for national parks): Corpomagdalena, Corpoguajiraand Corpocesar. Additionally,under Law 99, a CAR for the Sierra Nevada was created on paper (Corposierra),but was later eliminatedwhen the Regional Environmental Council for the Sierra Nevada was created in 1996 (Article42 of Law 344 of 1996). The Council is presided by the Minister of Environmentand responsiblefor coordinating the implementation of the SDP. A Steering Committee (Comite Directiva)was established in March 1998 to ensure full participation of the four indigenousorganizations in overseeing the SDP.

Central Government Institutions. Several central governmentinstitutions operate in the Sierra including agencies related to the Agriculture Ministry (INCORA,INAT, CORPOICA, ICA, and Caja Agraria now known as Banco Agrario) related to land tenure, extensionand technical services, rural development and credit. Other central government institutions involved in the Sierra are the Labor Ministry's training agency SENA,the Interior Ministry through the Indigenous Affairs Department, FINDETER the lending agency to municipal and departmental governments, and the Presidency through the Red de SolidaridadSocial intended to improve living standards of poor communities. The performanceof these entities has been intermittent and weak due to budgetary constraints, lack of coordinationamong them, and overlapping functions. This has contributed to local peoples' lack of trust in public institutions.

(b) Legal Framework

The most important regulations directly influencingthe situation in the Sierra Nevada are: (i) Decree 2811 of 1974, the National Code for RenewableNatural Resourcesand Protection of the Environment that contains regulations concerning the national parks; and (ii) the Agrarian Reform Law 160 of 1994. According to Decree 2811 all productiveactivities are forbidden within national parks and protected areas. Later, Article 7 of Decree 622 of 1977 recognized that indigenous peoples' activities are compatible with protected areas and established a special management regimen; other groups however should move. Resolution 0199 of October 8, 1980 which established the Kogui-Malayoand Arhuaco reserves in the SierraNevada specifically indicates that no land occupation or labor activities are permittedfor persons not belonging to these ethnic groups. The Agrarian Reform Law 160 and complementarydecrees establish the process for establishment and expansion of resguardos, proceduresfor relocating persons from resguardos and protected areas including payment for land improvements,as well as subsidies to buy land and support to carry out relocation for those eligible as land reform beneficiaries or those displaced by violence. In practice, INCORA's lack of resources to pay for the relocation process means that many families are living in a vacuum, illegally located within protected areas but unable to move.

VI. Participatory Approach

A. Background: Sustainable Development Plan for the Sierra Nevada

The project builds on a more than ten year participatoryprocess initiatedby the Foundation in 1988 to develop a conservation strategy for the Sierra Nevada. The process involved the key stakeholders in the Sierra including: indigenous peoples, small farmers,large producers (gremios), urban inhabitants, local and central governmentagencies, and organizations and

- 58 - political groups with influence in the Sierra. The process culminated with: (i) in February 1997, the publicationof the SustainableDevelopment Plan (SDP) which was endorsed by central, regional and local government authorities, communityand other organizations; and (ii) the creation in 1996 of the Regional EnvironmentalCouncil to coordinate and the Environmental Fund in the Ministry of the Environment to finance implementationof the Plan. In March 1998, a Forum involving600 persons representing the Plan's main stakeholders took place in Santa Marta in order to: (i) analyze and review the Plan and define priorities; (ii) obtain financial and technical support from national and international sources;(iii) initiate the implementationof the Plan in collaborationwith all institutional,social and political sectors in the Region; and (iv) install the Regional Environmental Council. The main results of the Forum were confirmation of the Plan's five programmaticareas (conservation of eco-systems,strengthening of indigenous cultural identity, stabilizationof the peasant population, strengtheningof fundamental rights, and modernizationof institutions),and establishmentof the Steering Committee as a mechanism for indigenous organizationsto oversee the Plan and regional development.. The LIL has been designed to support implementationof the SDP, taking into account its "living" and evolving nature.

B. Project's Participatory Approach

The project continues the participatory process described above and has been prepared by: (i) directly involvingmain stakeholders during preparation; (ii) reaching agreements upon priority actions; (iii) developing a social strategy that promotes participation; and (iv) building a partnership with the Foundationand the Colombian Government. During project preparation, two workshops were carried out to promote stakeholders' participation. In the first one, carried out in December 1998, a draft logical frameworkfor the project was developed based upon inputs provided by representatives of the main stakeholders. In April 1999, the second workshop was held with a similar audience in order to: (i) review the results of the previous workshop; and (ii) reach agreement upon the priority aspects to be incorporated into the project's learning process. The workshopconfirmed the results of the first in terms of main issues and problems to address, and providedthe necessary information for identifyingpriorities in order to design the project's components.A final round of consultations on the project was held with key stakeholders (Cabildos TerritorialCouncil, farmer leaders and representatives, local authorities and regional organizations) in February 2000 to discuss the project as described in the project document prior to negotiationsof the loan with the Government. The consultations confirmed previous agreementsand priorities, and the willingnessof the main actors to participate in the project.

The Foundation, with more than thirteen years experience working in the region, will be implementingthe project within the framework of its six-year program. The project has been prepared in close collaborationwith the Foundation's staff who have played a critical role in providing ideas and acting as an efficient intermediarywith the local actors. Preparation has also involved representatives of the Colombian Governmentthrough the Plan Caribe Office in DNP, the Ministry of the Environment,Parks Unit, CARs, municipal authorities and other local institutions.The process has helped to develop a partnership that will be useful in facing the challenges ahead.

The project has been designed to promote collaborationand ownership of all actors involved. Therefore, rather than addressing specific sectors and/or social groups, the project includes participatorymechanisms for achieving common goals during implementation. The Foundation's program,through the eco-regional strategy for biodiversity conservation, will provide the frameworkfor sustainable activities to be carried out under the LIL. Both the LIL and proposed GEF project include a component for strengtheningcommunity organizations and participation, and bringingkey stakeholders to work together on collaborative management plans. For

- 59 - implementationof the participatory approach, three tools were developedwhich are described below: (i) a multicriteria analysis used to select the pilot regions and to be used in conjunction with the participation strategy to select the target zones and areas within these regions; (ii) cultural landscapes map; and (iii) a participation strategy.

Multicriteria Analysisfor Selecting Pilot Regions. As opposed to the traditionalconservation approach which tends to focus exclusively on ecological criteria, the selectionof the target regions for the project took into account the following criteria: (i) socioeconomicaspects such as poverty levels and type of economic activities; (ii) cultural aspects mainly social capital development and cultural diversity; and (iii) operational aspects by identifyingopportunities for partnerships and collaboration. To these factors were added conservationpriorities based on the eco-regional conservation strategy. Each criteria received a value based upon existing information and technical discussions in order to prioritize the seven regions initially identifiedand select three to serve as pilot regions under the LIL. A sensitivity analysis was carried out to take into account the impact that changes in weighting of the criteria would have on the outcome. Three regions, one for each one of the Sierra's three departments, were selected:(i) Northwestern Sierra-SantaMarta Axis in the Magdalena department; (ii) Northeast Sierra-HatoNuevo and Fonseca Axis in the Guajira department; and (iii) Southwestern Sierra-ElCopey Axis in the Cesar department. (See Map 2.)

Cultural Landscapes Map. The map resulted from a stakeholder analysis carried out by the Foundation to identify "cultural units" i.e. specific cultural groups, their production systems and their pattem of land occupation.The landscape map is constructed by overlappingthe cultural units on vegetation maps containing information on the production and land occupationpatterns such as areas of cattle-rearing, business-oriented agriculture, coffee production,and illegal crops. This map will facilitate the participatory approach by providing both technical,cultural and economic information to guide collaborative management activities under component 3. (See Map 3.)

Participation Strategy. This strategy aims to: (i) strengthen stakeholdersparticipation in decision- making related to the conservation and development of the Sierra; (ii) promote partnerships and collaboration to carry out sustainable development activities; and (iii) develop mutual understanding to avoid and/or reduce conflicts. The strategy will be more fully developed during the first four months of the LIL and then tested in the pilot regions during the remainder of the project. It will be used to identify, through ajoint analysis with a broad array of participants, the pilot zones and areas within each region where the project will provide support, and, together with the cultural landscapes map (see Map 3), will be used to develop specific guidelines for promoting participation of each cultural unit. The strategy has four steps: (i) agreement on participation mechanisms; (ii) participatory diagnosis and agreement upon priority activities and contributionsof beneficiaries; (iii) work program and implementationof activities agreed; and (iv) monitoring and follow up activities.

IV. Social Strategy

The social strategy will contribute to the project's objectives by addressingmain social issues and providing mechanisms for collaboration of all stakeholders. This approach will also help to reduce tensions in the region by giving all actors an opportunity to work together, building the basis for common understanding.Accordingly, the project's incorporatesthis approach into its three components (see a-c below) and institutional arrangements(see f below), as well as the strategies for indigenous peoples and voluntary resettlement (see d and e below).

- 60 - (a) Knowledge Generation and Dissemination

The project will continue promoting awareness about the need to preservethe Sierra by carrying out several studies that will improve knowledgeabout the Sierra's biodiversityand identify better practices for a sustainable use of its resources. This process will integrate traditional and non traditional knowledge in the Sierra, namely indigenousand non indigenous,by promoting an inter-cultural "knowledge dialogue" (dicilogode saberes) and by building consensus. Dissemination of best practices, education programs,and promotion of collaborationand understanding between rural and urban areas will complementthis effort.

(b) Participation, Organizational Strengthening and Coordination

Strengthening local organizations is critical to promoting equity and reducing social exclusion in the Sierra, particularly in the case of poor farmers and indigenousgroups. The project will support local organizations with technical assistance,training and legal advice, if necessary, to enable them to play a more active role in decision-makingaffecting their interests. Special effort will be made to promote participation of the business-orientedproducers of the lowlands and some other interest groups in the urban areas that are critical for a comprehensivestrategy of conservation and sustainable use of the Sierra's natural resources.A participationstrategy will be tested in the pilot regions, under the third component,where different groups will work together to achieve common goals. The strategy includes providing incentives to promote collaborationfor biodiversity conservation, and adoption of sustainable production systems.

(c) Collaborative Management and Subprojects

The main activity of the project will be promoting collaborativemanagement of natural resources to contribute to sustainable development, includingan improvementin the living conditions of the people. From the social point of view, this collaborativemanagement builds on three principles: (i) collaboration of different groups working together to achieve common goals; (ii) focusing on pilot regions, zones, and areas, selected through a participatoryprocess complementedby the multicriteria methodology; and (iii) providing incentivesto develop sustainable production systems in selected areas.

Through collaborative management, the project aims to overcomelongstanding conflicts of interest by building consensus among different groups to address commonproblems and by providing incentives to carry out a whole range of actions considered critical for biodiversity conservation and sustainable use of natural resources in selected locations.The zones and areas within each pilot region will be selected through the participatoryprocess complemented by the multicriteria methodology which takes into account technical, social and political factors to ensure feasibility. The pilot regions include the full range of lands in the Sierra: parts of the national parks and other protected areas, indigenousreserves, private landsand public lands.

The project also offers supportto the effort of the Parks Unit and indigenousorganizations to develop a collaborative management plan for the overlappingareas of the SierraNevada Park and the indigenous reserves. Instead of an approach based on restrictions, the project will promote participation and offer incentives to incorporateimproved practices within these areas. The new policy of the Parks Unit to consolidate protected areas on the basis of social participation in conservationpolicy provides legal and technical support for this approach.The project, in conjunction with the proposed GEF project, will comply with the Bank's OP 4.04 Natural Habitats by including actions to recover endangerednatural habitats in the Sierra Nevada and promote sustainable development alternatives to ensure the protectionof its natural resources.

-61 - (d) Indigenous Peoples Strategy

The four indigenousgroups in the Sierra,though representing only 2.5 % of the total population and 15%of the rural population in the Sierra, are critical for the project's success because of their positive attitude towards conservation, rooted in their ancestral traditions, and their contribution to preserving the cultural heritage and diversity of the Sierra. Moreover, their reserves occupy around 28% of the Sierra's highlands comprisingareas of rich biodiversity. It is also important to address social exclusion issues that have affected indigenouspeoples, as well as the issue of overlapping territories with the national parks and farmers living inside the reserves in order to reduce social risks and to achieve conservationobjectives. Based on these considerations and in compliance with Bank's OD 4.20, the project includes an Indigenous Peoples Strategy. (See Annex 12 for a full discussion.)

The project was designed in collaborationwith indigenouspeoples organizations. It promotes the informed participation of the indigenousgroups involved, incorporates their knowledge and preferences, and respects their rights to natural and economic resources. The initial point in defining this strategy has been the identificationand recognition of laws and regulations related to indigenous peoples' rights in Colombia namely: (i) the 1991 Constitution which recognizes cultural plurality, indigenouspeoples rights over their territory, and their right to have their own authorities; (ii) the decrees issued to create the two indigenous reserves for the main indigenous groups in the Sierra as communal lands subject to special protection; and (iii) the acceptance (Law 21 of 1991) of the ILO Treaty 169 which recognizesancestral territories as the cultural habitat of indigenous peoples' groups. This strategy also takes into account indigenous peoples' priorities expressed during the preparationand review of the SDP, and in direct consultations with indigenouspeoples' organizationsthrough their participation in two workshops carried out during preparationof the LIL and a final consultation in February 2000 prior to loan negotiations with the Government.The Foundationalso undertook consultations with the Mamas, spiritual leaders of the indigenous groups. Finally, the role the four indigenous organizations play in the Sierra as environmentalauthorities within their territories and as the principal members of the Steering Committee of the SDP have been also taken into account.

The project's Indigenous Peoples Strategy responds to the main principles of the Foundation's program: (i) recognitionof the cultural plurality of the Sierra; (ii) promotion of inclusion and collaboration among stakeholders;and (iii) reduction of conflicts and development of an intercultural dialogue which will support the conservation and sustainable development of the Sierra. The strategy includes four action lines: (i) acknowledgementof indigenous authorities; (ii) recognition of indigenouspriorities; (iii) compatible conservation and sustainable development which takes into account indigenousknowledge; and (iv) active and continuous participation. Specific activities identifiedas priorities by indigenous authorities are included under each of the project'sthree components, such as support for: (i) dissemination of planes de vida, agreementsand other papers contributingto enhancing the cultural plurality of the Sierra; (ii) support for-the dev.elopmentof the Cabildos Territorial Council; (iii) the on-going process of developing with the Parks Unit a collaborativemanagement plan for the overlapping area of the Sierra Nevada Park and indigenousreserves which incorporates traditional and modern knowledge; (iv) promoting agreementsbetween indigenous peoples and farmers to establish sustainable developmentpractices within indigenousreserves; (v) legal and financial support to gain access to sacred sites outside the reserves according to a priority program defined by the indigenous authorities; and (v) support for the recovery of indigenous territory by providing assistance to farmers wishing to resettle outside the reserves through a pilot project. (See below, and Annex 12 for more details.)

-62 - The Foundation'sexperience working with indigenousorganizations and peoples during the preparationand consultationsconcerning the SDP has shown their resistance to conforming to a "western"timetable and notions of a formal written "plan." Therefore, while the project includes the above strategy based on priorities determined by indigenous organizations and authorities, it will remain flexible and be developed in an iterative process according to the wishes and timetable of the indigenousorganizations and authorities. Thus, it has been agreed that the specificactivities to be supportedeach year by the project will be decided by the Cabildos TerritorialCouncil and incorporatedinto the project's annual operating plans allowing time for the customary consultation with the traditional spiritualauthorities and the community.

(e) Voluntary Resettlement

The Foundation's program, of which this project is a part, embodies a conservation strategy which promotes better practicesthrough broad participation and incentives,rather than restrictions.No new restricted areas or expansion of existing ones are foreseen under the project. Nor does the project support any kind of involuntary resettlement. However, the project does envision support for the recovery of indigenousterritory by providing assistance to farmers wishing to resettle outside the reserves through a small pilot project in cases where this would have a positive conservationand social impact. At this time, it is envisioned that this would be restricted to a very small number of farm families (possibly 7 in the year 2000) whose lands may be bought by the GonawinduaTayrona Organizationwith funding from The Nature Conservancy (TNC).

A study undertaken during project preparation found that many families living inside the boundariesof the SierraNevada park-reserves are seeking to relocate due to factors unrelated to the Foundation's program,including: (i) the legal limitation on receiving land titles; (ii) the lack of road infrastructurethat makes market access difficult; (iii) the lack of basic services that keeps living standards low; and (iv) the increasing violence in the Sierra. Though many families are willing to relocate, they are expecting INCORAto fulfill its role in providing the compensation and support foreseen under Law 160. In practice, this process stopped in 1998, because of INCORA's lack of resources.However, indigenous peoples have been using their own resources to buy farmer lands within their territories. In both cases, relocation has had several flaws affectingfarmers and indigenouspeoples alike. There is evidence indicating that relocated farmers face difficulties recoveringeconomically; on the other hand, the re-occupation of indigenousterritories by farmers whose land has been purchased is a phenomenon hindering indigenouspeoples' efforts to regain complete control of their territories and has been mentioned by the cabildos as a concern for which they are seeking a solution. VoluntaryResettlement Guidelines. Under these circumstances,the project aims to offer an alternativesatisfactory to farmers and indigenouspeoples by testing a voluntary resettlement strategy based on the following guidelines: (i) the families involved will recover or improve their living conditions; (ii) no involuntaryresettlement will be carried out; and (iii) the resettlement process will be implementedunder a participatory approach allowing the families involved to play an active role in decision-making.(Approaches tested under the Bank-supported Pilot Land Reform initiativewill be an important experience to draw on in this regard.) The commitment of the Foundationto abide by these guidelines and follow the specific operational mechanisms describedbelow is included in the Loan Agreement, as well as the Government's commitment to ensure that the Foundationdoes so. In addition, the Loan Agreement contains a protective clause wherebythe Foundation and Government agree that they will not involuntary resettle any farmers living in the national parks or indigenous reserves during the course of the project.

- 63 - Legal Framework. As established by Colombian law, the ruling regulatory framework is Law 160 that defines the legal rights prevailing within protected areas and indigenousreserves. According to Law 160: (i) it is mandatory to compensate farmers established in good faith within protected areas or indigenous reserves; (ii) without this compensation, farmer can not be forced to relocate; and (iii) a compensation package includes paying for land improvements and, if the farmer is eligible as a land reform beneficiary which should apply to the affected farmers in the Sierra, a subsidy of 70 % to buy new land can be provided. There is no provision for support after resettlement. In practice, this process has been blurred by bureaucracy and, in some cases corruption, directly affecting the resettled population.

New Parks Policy. In addition to the provisions of Law 160 is the new policy of the Parks Unit, "Parks with People," which recognizes that the socially and culturally sustainable approach to management of national parks and protected areas is to involve the local population. Therefore, instead of restrictions which are difficult to enforce, the new policy provides for support of environmentallyfriendly activities inside and around the protected areas. Implementationof this policy will take into account the local population's: (i) historical links with the protected area; (ii) cultural and socioeconomic background; (iii) land occupation patterns and use of natural resources; (iv) legal situation; and (v) environmental vision and expectations.Based on this analysis, the conservation strategy for the park or protected area is to provide alternatives for sustainable development, through negotiations and agreements, for the local populationliving within these areas thus reducing the need of resettlement.

Parks Unit's Agreement with Indigenous Organizations.Prior to the announcementof this new policy, the Parks Unit, the Gonawindua Tayrona Indigenous Organization (representingKogi, Arhuacos and Wiwas), and the Indigenous Affairs Department of the Interior Ministry had agreed to develop a collaborative managementplan for the overlapping area of the SierraNevada park and indigenous reserves. They established a Working Group that completed in November 1999 a document entitled "General Guidelines for the Inter-CulturalManagement of the Sierra Nevada de Santa Marta National Park." The other three indigenous organizations, Tayrona Indigenous Confederation (CIT), Wiwia Yugunaium BunkwanarwaTayrona Organization(OWYBT) and Kankuamos Indigenous Organizationendorsed this approach in late November 1999 and agreed to join in the preparation of a collaborative intercultural management plan for the Sierra Nevada Park. This agreement will facilitate the eventual incorporationof farmers living within the overlapping area of the park-reserves into these intercultural arrangements.The project will provide resources for the completion and implementationof the collaborativemanagement plan.

Limits of Resettlement. The availability of resources to pay compensation for land improvements according to Law 160 is a critical constraint to carrying out resettlement of farmers from indigenousterritories. By the end of 1998, INCORA,the legal entity in charge of this process, had bought 421 plots within indigenous reserves during the previous fifteen years. The process stopped in 1998 due to lack of resources, and there are few possibilities that this will change in the near future. Indigenous people have been directly buying land though their resources are also limited. The other source of resources to buy land inside the reserves are those provided by The Nature Conservancy (TNC) through an agreement signed with the GonawinduaTayrona Organization in 1999 and managed by the Foundation. This two year programwill allow the Organization to buy land according to their priorities,while taking into account TNC's condition that the lands be in areas of high priority for conservation. According to these priorities, last year three farms were bought, all from absentee owners so no relocation was involved. This year, the initial indication from the GonawinduaTayrona Organization is that possibly seven families might be affected by the purchases. The Foundation, in its role of managingthe TNC project, will play a critical role in minimizing resettlement, ensuring it is a voluntary process, and monitoring all transactions financed under the TNC project.

- 64 - The Role of the Foundation. The Foundation, as the executing agency of LIL and certain management aspects of the TNC project, will be in charge of this voluntary resettlement pilot. It will be in charge of carrying out the following activities, as needed: (i) identification(based on the indigenous Organization's priorities) and socioeconomicanalysis of families willing to relocate; (ii) promotion of community organization to facilitate the resettlement process;(iii) establishment of consultation and participation mechanisms;(iii) providing technical and legal support to buy new land and complementary resources; (iv) providingtechnical assistance and training to initiate sustainable economic activities; (v) providing investmentresources from the project to re-establish or improve living conditions; and (vi) promoting agreements with public and private institutions that will contribute to the success of the voluntaryresettlement. The monitoring and evaluation system of the Foundationwill establish a specific monitoring system to assess compliance with agreements, goals and expected outcomesof this pilot.

Operational Mechanisms. The Foundation will use the following operational mechanismsto carry out the pilot: (i) each year of the project, the Foundationwill prepare a plan for the resettlement pilot comprising the work program and budget; (ii) the Annual Operating Plan and/or the Project Management Reports will incorporate the resourcesthe Foundationneeds to undertakethe activities under the pilot; (iii) quarterly reports will be preparedto assess progress; and (iv) an annual report will be prepared presenting the main results from the pilot, lessons learned and recommendationsfor improving the process.

(f) Institutional Arrangements

The project's institutional arrangements have been designedto face the difficulties and institutional weaknesses affecting the Sierra. For this reason, the Foundation will be in charge of implementingthe project, because is an experienced and well respected institution which is recognized and respected by all actors in the Sierra and has a good track-record working in the complex conditions of the region. The Foundationwill maintain a direct link with the National Planning Department through its Office for the Caribbean Region (Oficina Plan Caribe) which will oversee the project on behalf of the Government and be responsiblefor ensuring that the Foundation carries out the project in accord with the Government's agreements with the Bank. On the other side, the Foundation will be the bridge to reach grass roots organizationsof farmers and indigenous peoples, the private sector, NGOs and local governmentsto ensure broad participation in the project. The Non Government Fund (NGF) to be established with support from the GEF and through which LIL funds for subprojectswill flow will be an important vehicle for supporting community based initiatives in the pilot regions. The decision to establishthe Fund within the Foundation was in order to benefit from its capacity, and international experience and reputation. However, to maintain transparency and avoid any political bias, a Technical Committee, comprising well-recognizedexperts in biodiversity,sustainable development and local cultures, will be in charge of selecting subprojectsto receive funding in accord with provisions in the Fund's Operating Manual.

VII. Monitoring, Evaluation and Learning System

The Foundation has experience and information that will be very useful in setting up the monitoring, evaluation and learning system for the project including:(i) an archive of information about the Sierra; (ii) a GIS mapping system; (iii) an existing Monitoringand Evaluation Unit; (iv) a process of community participation through community-basedmonitoring and evaluation committees for ten pilot projects under an on-going Dutch financed project; and (v) a system to document and analyze past experiences. These experiences and the Foundation's participatory approach, with some adaptations, is the basis for the LIL's Monitoring, Evaluation and Learning

- 65 - System. The main indicatorsto be tracked will be the ones proposed in the logical framework (Annex 1) which will be adjusted in accord with: (i) the detailed design of the M&E system to be completed in parallel with the definition of the participatorystrategy during the first four months of project implementation;and (ii) experiences and learningduring project implementation.

- 66 - Annex 12: Indigenous Peoples Strategy COLOMBIA: SIERRA NEVADA SUSTAINABLE DEVELPMENT

The four indigenous groups in the Sierra Nevada de Santa Marta (Sierra) though representing only 2.5 % of the total populationare critical for the project's success, because of their positive attitude towards conservation of natural resources rooted in their ancestraltraditions and their contribution to preserving cultural heritage and diversity in the Sierra.Their territories occupy around 28% of the eco-region and nearly half the area of the highlands, overlappingto a large extent with protected areas in the national parks system. The Colombian Constitutionof 1991 recognizes the compatibility of indigenous managementof territory and conservationobjectives, and the positive conservation impact of traditional indigenousmanagement practices in the Sierra Nevada has been documented. The four indigenous organizationsare a critical force as members of the Steering Committee (Comite Directivo) for the implementationof Sustainable Development Plan for the Sierra Nevada de Santa Marta (SDP). In spite of these strengths, it is also important to address social exclusion issues that have been affecting indigenouspeoples and resulted in their being one of the poorest groups in the Sierra. All these factors have been taken into account in incorporating into the project an indigenous peoples strategy.

This strategy is intended to ensure that indigenous peoples benefit from the project by taking into account their priorities and cultural background particularly their close attachmentto ancestral territories, their approach to protecting natural resources which is deeply rooted in their traditions, as well as their customary social and political institutions.

1. Socioeconomic Background

An indigenous civilization, the Tairona, was well established and developedlong before the arrival of the Spaniards to Santa Marta's shores in 1502. The Tairona built around 260 "pueblos" and five important "cities"--Teyuna or the Lost City, Pueblito, Noanasangui (El Congo) and Pocigueica --well connected through an extensive road network and water systems. (See Map 6 below.) They were semi-nomadicand practiced an extensive, shifting agriculture moving between the ecosystems at different altitudes--from sea level to the highlands--accordingto the seasons and a ritual calendar thus obtaining a variety of products. The Conquest destroyed this civilization, and the majority of its population, forcing the survivors to flee to the higher areas of the Sierra thus upsetting the balance of their productive system. Indigenous people lived in relative isolation until the end of the nineteenth century which helped them to maintain their traditions and social structure.

During the twentieth century, several migration waves brought colonists into indigenousancestral territories, progressively reducing indigenous peoples' access to the warmer areas by the coast. This situation affected not only living standards, but also the social and spiritualequilibrium of the indigenous society. According to indigenous traditions, four indigenous groups-Kogis, Wiwas, Arhuacos y Kankuamos--werecreated to guard the Sierra Nevada, their "mother." For them, the Sierra Nevada is a sacred place, the heart of the world; the mountains and nature are perceived as living bodies, vital for harmony with the environment and the universal equilibrium. The "antique law" rules indigenous people's behavior under the surveillanceof the Mamas, their spiritual leaders, to guarantee the vital cycle of men, animals and plants. Presently,these indigenous groups still maintain some of their traditions and are struggling to regain control over their territories and social groups. They number around 24,000 inhabitants,II % of the Sierra's rural population.

- 67 - Table I Indigenous Groups in the Sierra Nevada de Santa Marta

Ethnic Group Inhabitants Percentage Arhuacos 13,383 56.16 Wiwas 1,857 7.79 Kogis 8,590 36.04 Other 7,917 24.9 Total in the Sierra 23, 830 100.0 National Total 603, 280 3.95 Source: El Salto Social; Volume 1, 1994-95.This figure does not include the Kankuamo who were not officially registered in 1994-95 as an ethnic group. If they are included,the total is 32,000, roughly 15% of the rural population.

Map 6. Key Pre-HispanicPopulation Centers in the Sierra Nevada

| _ /S * BI~~ORTHW65TCORNER OF SE S * )_n St~~15CRRKA NCVADA DE SANTA tiARTA

0 WCArO OTPY KCHALO61CAL SITU5 5VD75CT

Source: Historia Sierra Nevada de Santa Marta, Fundaci6nPro Sierra, 1995.

- 68 - Each group has its own language, clothing and architecture and relates in different ways with the other inhabitants in the Sierra called " the little brothers" (non-indigenous).

The Kogis are the most traditional group paying high respect to their traditions, ancestral organizationsand authorities.Many of them do not speak Spanish and money circulationwithin their territories is limited. Kogis presently occupy the mid and upper areas of the valleys of the Jerez, San Miguel, Garavito, Palomino, Don Diego and Buritaca rivers in the north; the catchments of the Sevilla and Tucurinca rivers to the west and the Rancheria, Cesar, Guatapuri and Badillo rivers to the southeast.

The Arhuacos have been the best-organized group in defending their territory and getting resources from the government.However, Arhuacos have been exposed to external influences;as a result, they are not a homogenous group. Though some of them speak their language and keep closely to traditions, others are in more contact with the general trends of Colombian society. There are also some Spanish-speakingmestizo groups who nevertheless keep in contact with Arhuacos and Kogis and participate in their political decision-making.Arhuacos inhabit their own reserve at the upper catchments of the Aracataca, Fundacion and Araguani rivers in the west; the lower areas of the resguardo at the Palomino and Don Diego rivers in the north; and the upper catchments of the Azucarbuenaand Guatapuri rivers in the southeast.

The Wiwashave been the most affected by invasions, loss of territory and external influences and presently they are highly mixed. However, they identifyculturally with the Kogis and have recently recovered some of their territory and traditional practices.

The Kankuamos have lost almost entirely their indigenous identity to the extent that they are not officially registered as an ethnic group. However, in recent years, they have been in the process of recoveringterritory and culture.

The most traditional indigenous groups, the Kogis and Arhuacos, are very respectful of natural resources using their traditional knowledge of soil quality, climate and ecosystems. They are semi-nomads, moving to different altitudes to cultivate crops according to the seasons. Through this process, indigenous people obtain a diversity of products that guarantee their food needs. Moreover, this allows for soil rotation that helps to maintain its fertility. Cultivation is a sacred activity regulated by the "mamas" in which myths, social, and agricultural factors converge accordingto a ritual calendar. Allocation of tasks and distribution of products are based on a system of reciprocity according to the ecological and social conditions of each family.

In the last decades, this pattern of production has been changing due to the reduced access to the warmer ecosystems. As a result, soil rotation is not that frequent and some groups, such as the Arhuacos, have established permanently in the warmer lowlands. Production is oriented to subsistenceand tasks are distributed according to gender and age. The most important products are beans, banana, maize, malanga, sugar cane, avocado and yucca for food, and coca leaves. More recently, Kogis and Arhuacos have incorporated into their activities organic coffee production for the market. Cattle rearing has also developedas an activity oriented to market or to exchange for tools and domestic utensils.

The importance of market production has been increasing among some groups and has been changing the traditional ritual approach towards agriculture and has modified land tenure from communal to private property; in some cases, land has been progressively concentrating in the hands of a few prosperous families. Some activities such as cattle rearing have had a negative impact on the environment, particularly in the paramo, and affected the traditional balance with

-69 - nature. In most cases, indigenous communitiescombine a traditional economy with production of certain products for the market. Balancing these two types of production is critical to maintaining indigenous traditions, while improving living standards.

2. Impact of Colonization Process on IndigenousPeoples Lands

Indigenous territories have been affected by severalcolonization waves since colonial times. However, in recent times the colonization has been particularly destructive for indigenous groups. (See Map 4 in Annex 11.) The first wave of migration in the twentieth century, from 1900 to 1940, was fairly dispersed. In the 50s and 60s, a massive in-flow of farmers fleeing violence in other areas of the country, mainly coffee growers coming from the Andean region, occupied the areas of the Sierra which are suitable for coffee productionresulted in a tripling of the rural population, from 4,000 to 12,000 families, by the mid-I960s. Many settlers established their homes on top of archaeological sites (stone terraces),and the practice of guaqueria (stealing artifacts in particular offerings from indigenoussacred sites) began during this period. In an effort to reduce this in-flow and control its negative effects,Law 2 of 1959 established a Forest Reserve in a large area of the Sierra, thus limited the possibility for many of these farmers to obtain land titles.

The third wave of colonization between 1960-80,was the most destructiveand affected the whole Sierra. The construction of the main highway along the coast between Santa Marta and Riohacha, which was particularly intense between 1967-72,attracted small farmers, laborers and speculators who illegally occupied lands along the road. Between 1971 and 1975, around 57 illegal invasions by campesinos were carried out near Santa Marta, Aracataca, Cienaga, Fundacion, Riohacha and Valledupar. The indigenous peoples lost their access to the sea as a result. This process continued at different rates until 1987 when the last peasant invasiontook place. Many of these farmers and colonists occupied indigenous peoples' lands and found an excellent source of income in guaqueria which became so important that a "GuaqueroUnion" including more than 1000 members was created in the mid-70s, and gained official recognitionby the Ministry of Labor of the time.

The most destructive part of the third wave of migration was the marihuana boom of the seventies with an influx of more people than in the previous fifty years combined, causing a major negative impact on indigenous peoples. Between 1975-80,at the peak of the boom, 70% of the Sierra's forest, around 150,000 hectares, were destroyed to cultivate marihuana.The boom broke agriculture patterns affecting food and coffee production,and labor markets. Violence and corruption increased, further deterioratingthe weak economy of indigenous peoples. Many of the colonists had a "get rich quick" mentality and no respectfor indigenous culture. Indigenous peoples also becamnethe target of marihuana dealers, because they refused to collaborate in its cultivation. The end of the boom left behind violent gangs, called "combos" that spurred violence and terror in the Sierra and led to the presenceof the guerrilla movement FARC in the region. When the boom ended in the early 1980s,many of the colonists left, but the social and environmental scars remained.

The result of this process was a substantial increasein the numbers of farmers and colonists living in the Sierra and occupying indigenousterritories, the introduction of cultivationpatterns that have contributed to the deteriorationof the eco-region,and deep-seated scars due to the disrespect of indigenous culture and sacred sites. Indigenous peoples believe that the equilibrium of the world was destroyed and that this is the source of evil and disasters.

- 70 - 3. Indigenous Peoples Reserves (Resguardos)

After a long struggle for recognition of their rights over their ancestral territory, INCORA (Colombian Institute for Agrarian Reform) established two indigenous reserves: (i) the Arhuaco Reserve; and (ii) the Kogui-Wiwa Reserve. The Arhuaco Reserve, created in 1974, comprised initially 185,000 hectares in Pueblo Bello, Nabusimake (formerly San Sebastian de Rabago) y Atanquez within the municipality of Valledupar in the Cesar Department, and the municipalities of Fundacion and Aracataca in the Magdalena Department. In 1983, the Arhuaco Reserve incorporated an additional 10,900 hectares for a total of 195, 900. The Kogui-Wiwa Reserve established in October 1980, comprised 364,840 hectares on the border of the Arhuaco Reserve in Magdalena and Guajira departments. In 1994, the Kogui-Wiwa reserve was expanded an additional 19,200 hectares including a strip between the Palomino and Don Diego rivers which allowed this group to regain their traditional access to the sea. This was an important achievement as it signaled a process of reclaiming territory in the lowlands of the Sierra.

Table 2 Indigenous Peoples Reserves

Reserve Hectares % of the Sierra Arhuaco 195,900 9.2 Arhuaco de Busichama 128 0.0 Kogui-Wiwa-Arhuaco (Kogui-Malayo) 384,040 18.1 Total Actual Reserves (a) 580,068 27.4 Proposed Kankuamo Reserve (b) 32,956 1.6 Total (a) + (b) 613,024 28.9 Total Sierra Nevada Eco-region 2,115,800 100.0 Source:Enrique Sanchez, 1999 basedon DNP:Ethnographic Base List of Colombia, 1997and FundacionPro-Sierra.

Through this process, the three major indigenous groups, Kogui, Arhauco and Wiwa have obtained legal recognition of their rights over lands which are now officially their territory. In the case of the Kankuamo group, which is the less traditional one, the struggle to establish its own indigenous reserve continues. In spite of this progress, indigenous peoples continue to claim their rights over their so-called ancestral territory, the one they had before colonial times, which comprises most of the Sierra Nevada eco-region including the city of Santa Marta. The so-called "Black Line" conformed by various sacred sites demarcate this territory (see map below). An official resolution issued by the Ministry of the Interior in 1995 recognized indigenous rights over their ancestral territories (Resolution 837 of August 28, 1995 modifying Resolution 004 of August 4, 1973). Though this resolution does not provide any legal property rights, it has helped to reinforce the claim of indigenous organizations. In practice, indigenous organizations have indicated repeatedly that their critical concern is to regain access to sacred sites, a condition for re-establishing the equilibrium of their communities.

- 71 - 54

i X g S f g~~~~~~~~~~~~~~~~~~~~~~~ . i at S

B55W

------

U w II:,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~......

rj ~~~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~c

A...1x...E...... 4 ...... 4. Indigenous Peoples Organization

Indigenous peoples organizations have overcome five hundredyears of social violence,because they have been able to maintain social cohesion and traditional values. The moral and spiritual power of the group over economic and social factors has been a factor of strength that has yet to face new challenges.

Though with some differences, the three main ethnic groups, Kogis, Arhuaco, and Wiwas,share an organization based on a strict social hierarchy headed by a Mama and his apprenticeswho concentrate the political and religious power and the traditional knowledgeof the group, including medicine, history and natural sciences. Each communityhas a "commisario"in charge of political and administrative matters within the community, under the higher authority of the Mama. The life of the community evolves around the principles dictated by the Mamas, both for general guidance and for daily life decisions. The Kankuamos do not have this sort of traditional organization and they are still struggling to recover their identity.

More recently, under the pressures of modem life, each ethnic group has developed a political organization in charge of managing relations with the external world, includingthe government, NGOs and other social organizations.Four such organizationsare presently organized:(i) Arhuacos in the Indigenous Tayrona Confederation (CIT); (ii) Kogis, Arhuacosand Wiwas in the GonawinduaTayrona Organization; (iii) Wiwas in the Wiwa Yugunaiun BunkwanarwaTayrona Organization; and (iv) Kankuamos in the Kankuama Indigenous Organization.Each one of these organizationshas a Cabildo Gobernador at the top and several leaders in charge of specific tasks such as negotiating territories, health and education programs, and the managementof fiscal transfers from the central government. Cabildos should report periodicallyto their communities and keep them informed; they can be removed at any time by consensus of the group. In all groups, decision-making relies on the general assembly, including the whole community, where agreementsare reached under the advice of the Mamas as the supremeauthority.

The establishment of indigenous reserves, as independent territories underthe rule of indigenous authorities, and the recognition in the 1991 Constitution of indigenouspeoples right to maintain their own traditions and use of their territory, and their right to receive fiscal transfers from the central government, has strengthened indigenous people organizations.They are among the most important and well recognized organizations in the Sierra.However, they have been facing some difficulties such as: (i) disagreements and disputes among the various groups; (ii) a long process of consultation and decision-makingthat affects timely participation in the political process; (iii) an extremely hierarchical structure that limits participation of youth and women; and (iv) periodic tensions and disagreements between cabildos gobernadoresand mamas. These issues might weaken indigenous organizations.Despite this, efforts to strengthenthe organizationscontinue.

In response to the four indigenous organizations' request to play an active role in decision- making concerning the SDP and activities in the Sierra, the Steering Committee (Comite Directivo) for the SDP composed of the four cabildos gobernadores, Ministerof the Environment, General Director for Indigenous Affairs in the Ministry of the Interior, and a representative of the Presidency was established in 1998. In November 1999 in their meeting in Valledupar, the four indigenous organizations prepared a joint declaration indicatingtheir agreement to establish the Cabildos Territorial Council (Consejo Territorialde Cabildos) as a unified body that will guide and regulate programs, projects, actions and activities affecting their territory, and speak with one voice in dealing with the government and other external organizations. Other agreements reached were to: (i) request that the governmentelevate the

- 73 - Steering Committee to a permanent body which would be the main forum for the involvement of the indigenous in the decisions concerningthe Sierra and for their relations with the government; (ii) establishment of a permanentworking group, supervisedby the cabildos, for national and international projects to be implemented in the Sierra; and (iii) sign an agreement with the Parks Unit and other environmentalauthorities to prepare managementplans in which their knowledge and authority are recognized.These agreements are an important achievement which should contribute to consolidating indigenouspeoples' organizationsand to a positive outcome for the project because they facilitate collaboration.

5. Overlapping Territories: National Parks-IndigenousReserves-Farmers

Protected areas in the SierraNevada were established as early as 1959 under Law 2 which declared a large area of the Sierraa Forest Reserve. In 1964, two national parks were created presently accounting for 20% of the land area of the eco-regionand 34% of the area of the highlands. The Sierra Nevada National Park presently comprises 383,000 hectares (including area added in 1977) that extend from sea level to the peaks of Colon and Bolivar, more than 15,000 feet high. The Tayrona National Park has 15,000hectares including a coast line of 55 kilometers. The Regional Office of the Special Administrative Unit of the National Parks System (Parks Unit) within the Ministry of the Environmentis in charge of managing both parks. According to the agreementsthat created both parks, no economic activity is permitted within their boundaries (Decree-Law2811 of 1974); land titling within the parks and a buffer zone of 5 kilometers around is also forbidden under Article 67 of Law 160 of 1994. However, this restriction do not applies to indigenouspeople whose way of living is considered compatible with national parks (Article 7 of Regulatory Decree 622 of 1977).

Indigenous leaders claim their right over an ancestralterritory delineated by the so-called "Black Line" demarcated by geographicpoints such as river mouths and sacred sites comprising most of the land in the Sierra. However,the officially recognized indigenous territory is a much smaller portion under the jurisdiction of the indigenousreserves (resguardo). The main indigenous reserves overlap almost completely with the national parks (see Map 5, Annex 11). Legally, national parks and indigenousreserves are compatible. In practice, indigenous peoples have been managing these overlappingareas due to the lack of capacity of the Parks Unit to exert control and to their recognition in the case of the Sierra that indigenousmanagement could contribute to conservation. However, there have been on-goingtensions about who was the ultimate authority and about how best to managethese extensive territories.

In May 1999, the national Parks Unit and the GonawinduaTayrona Indigenous organization agreed to initiate a process of preparing a collaborativeManagement Plan for the Sierra Nevada Park and the reserve. This process was bolstered by the National Environmental Council's adoption in August 1999 of a new protected areas policy prepared by the Parks Unit which emphasized working with communities living in and around protected areas, with particular recognition of the role of indigenousauthorities. Thus, the Parks Unit's work with the indigenous organizations in the Sierra became a pilot for applying this policy. The collaborative process initiated in May culminated in November 1999 with the presentation of a paper summarizing the agreements reached by the Parks Unit and GonawinduaTayrona Indigenous organization concerning the principles which would guide the preparationof the management plan, of which respect for indigenousknowledge and culture was fundamental. Later in November in a meeting in Valledupar, the three other indigenousorganizations in the Sierra endorsed these principles and agreed to join the process of preparing the collaborative management plan for the overlapping territories.

- 74 - However, the problem remains of small farmers who live within the area of the parks and indigenous reserves. When the parks and indigenous reserves were established,there were already farmers living within these areas (estimate of 446 farmers living in the reserves). However, when the two main reserves were established it was the middle of the marihuana boom when a large in-flow of migrants came to the Sierra. There was virtually no control over settlement of colonists inside the reserves and parks, nor were adequate records kept by INCORA or monitoring done when lands were purchased from colonists inside the parks and reserves to ensure that they moved permanently outside the area. As a result, it is difficult to determine the number of families currently living inside the reserves and parks, and impossibleto establish with certainty the ones who have particular rights to compensation because they had possession of the land prior to the establishment of the parks and reserves.

The Foundation estimated in 1991 that around 800 families were living or had property inside the reserves and parks (Enrique Sanchez, 1999). According to Colombian law, such families should be relocated outside the indigenousreserves and parks, through a process that involves INCORA buying land improvements (mejoras). Since the reserves were established, from 1984-1998 INCORA bought 421 farmer plots accounting for an area of 45,000 hectares, but because of lack of resources no farms have been bought since then. The Plan Eco-sierrawhich involved a coordinated effort of the three regional corporations, the Parks Unit, INCORAand the indigenous organizations, with support from the Presidency,made a major effort to buy farms in the indigenous reserves between 1993-95 (the numbers are included in INCORA's figures), prioritizing the farms to purchase with the indigenous organizations while also taking into account conservation priorities. Given the priority indigenous organizationsgive to gaining control over their territory, they have also been directly buying land using fiscal transfers from the central government which began in 1993/94. The current rough estimate of the number farms inside the reserves and parks is 450, but there is no data on the number of abandoned properties or those bought by the indigenous.

The process of relocating people from the parks and reserves, has many flaws, because farmers usually do not receive any support to re-establish their living conditions after their farms have been bought and some eventually re-occupy lands in other restricted areas. Farmerswho are eligible as land reform beneficiaries under Law 160 of 1994 may receive through INCORA a subsidy of 70% to buy new lands; however, the few examples of this have also not been successful in part because farmers have not been adequately prepared and in part because of weaknesses of INCORA and other institutions involved in the process. The Cabildos have expressed concern about the problem of ensuring that those farmers whose land is purchased find an acceptable living situation outside the reserve, so that they do not return and in order to reduce social tensions in the Sierra. Likewise, there are farmers who are anxiousto leave, but in satisfactory conditions.

Taking into account these circumstances the project aims to offer an alternative satisfactoryto farmers and indigenous peoples by testing a voluntary resettlement strategy under the following principles: (i) the families involved will recover or improve their living conditions; (ii) no involuntary resettlement will be carried out; and (iii) the resettlement process will be implemented under a participatory approach allowing the families involvedto play an active role in decision-making. Through this initiative it would be possible to reduce conflicts and promote new means of collaboration between these two groups. (See Annex 11 for a fuller discussion.)

- 75 - 6. Social Issues: Social Exclusion and Violence

Indigenous peoples, forced since colonial times to move to higher, less fertile areas in the Sierra to survive, suffered yet another big divestment under the pressure of the in-flow of colonists, particularly during the fifties and seventies.The loss of territory destroyed the basis for their subsistenceand forced them to adapt to more precarious conditions. This situation caused a major impact on their social and cultural structure that revolves around the communal, ritual use of land and natural resources. Newcomers brought new social patterns opposed to indigenous traditions and sickness such as tuberculosis. The lack of respect for indigenous sacred sites that were constantly robbed of their treasures contributedto an attitude of mistrust and resentment towards farmers and colonists.

The establishment of indigenousreserves in the mid-seventiesand the official recognition of indigenous rights and culture in the 1991 Constitutionhave been changing slowly this situatior. In 1995, the Colombian government recognized indigenouspeoples claim to their ancestral territory delimitated by the so called "black line" which has contributed to reinforcing the cultural and political role of indigenous peoples in the Sierra though it may also have contributed to increased land disputes and social conflicts.

The disputes over land spurred by illegal crop production,the lack of government support, corruption and mismanagement in public affairs propitiated the development of violent factions. Guerrilla groups first arrived in the late 1980s to controlthe gangs of ex-marihuanaproducers, locally called "combos," that terrorized the whole population in the Sierra. The critical deterioration of living standards among small farmers and the lack of government support, facilitated the arrival of other guerrilla groups and growthof those already there. Paramilitary groups, initially created to protect rich landlords, got strongerand became a political and military movement to oppose emerging guerrillas.The presence of armed groups has complicated the social situation in the Sierra as they take -sidesand aggravate various conflicts, and add enormous uncertainty.

Though indigenous organizationsclaimed neutrality towards these forces, which has been in general respected, violence has directly affected them. The strength of indigenous organizations, the legal support they have and an increasing recognitionof their cultural values have helped to overcome these problems though violence is a constant risk. The project aims to strengthen indigenous peoples organizationsand disseminate their culture in order to gain public recognition and support as a mechanism that has proved adequateto mitigate violence against them.

7. Legal Framework

The Colombian Constitution of 1991 (Articles 7 and 8) not only recognizesthe cultural and ethnic diversity of Colombia, but establishes as a duty the protection of the country's cultural and natural richness through mandates such as the following: (i) indigenous peoples languages are official within their territory; (ii) collective property rights over land in resguardos;(iii) rights over archeological heritage; (iv) the recognition of indigenousterritories as public entities (entidad territorial indigena); (v) the right to receive fiscal transfers from the central government; and (vi) the recognition of the right of indigenousauthorities to function according to their own norms and procedures. Colombia ratified, via Law 21 of 1994,the ILO's Convention 169 on "Indigenous and Tribal People."

- 76 - The 1991 Constitution reinforcedrights of indigenouspeoples over their territory as an essential element of their culture as previouslyrecognized in other laws (for example, Article 2 of Decree 2001 of 1988). In Article 21, Decree 2164 of 1995, "ResguardoIndigena" is defined as: "a legal and socio-political institution with a special character,composed of one or more indigenous communities that with a collective land title enjoy the guaranteesof private property, possess territory and control its managementand the internal life of the community through an autonomous organizationgoverned by the indigenouscommunity's own normative system." (Reserva indigena is a transitional stage prior to becoming a resguardo.) Property rights in the lands of the resguardo are permanentand cannot be mortgagedor sold (Constitution, Articles 63 and 329).

In Article 286, the Constitutionincorporates the concept of "Resguardo Indigena" within the national territorial structure defined as a decentralized entity with political and administrative autonomy, therefore giving indigenousauthorities the right to manage their territory. In article 357, the Constitutionestablished the right of the indigenousresguardo to receive fiscal transfers from the central government,a practice initiated in 1994 with funds passing through municipalities in accord with Decree 1809 of 1993. Article 330 of the Constitution indicates that indigenous territories will be governed by councils (consejos)formed and regulated in accord with the practices and customs of their communities. Decree 1088 of 1993 recognizes as a public entity the establishmentof "asociacionesde cabildos". In November 1999, the four indigenous organizations in the SierraNevada agreed to constitute such an organization (Consejo Territorial de Cabildos) in order to present a unified position to the government and other external organizations.

The most important regulations directly influencingthe situation in the Sierra Nevada are: (i) Decree 2811 of 1974, the National Code for Renewable Natural Resources and Protection of the Environment that contains regulations concerningthe national parks; and (ii) the Agrarian Reform Law 160 of 1994. Accordingto Decree 2811 all productive activities are forbidden within national parks and protected areas. Later, Article 7 of Decree 622 of 1977 recognized that indigenous peoples' activities are compatible with protected areas and established a special management regimen; other groups however should move. Resolution 0199 of October 8, 1980 which established the Kogui-Malayoand Arhuaco reserves in the Sierra Nevada specifically indicates that no land occupationor labor activities are permitted for persons not belonging to these ethnic groups. The AgrarianReform Law 160 and complementarydecrees establish the process for establishment and expansion of resguardos,procedures for relocating persons from resguardos and protected areas including payment for land improvements, as well as subsidies to buy land and support to carry out relocation for those eligible as land reform beneficiaries or those displaced by violence. In practice, INCORA's lack of resources to pay for the relocation process means that many families are living in a vacuum, illegally located within protected areas but unable to move. (See Annex 11 for a fuller discussion of this issue.)

The development of this legal frameworkhas had a positive impact on indigenous peoples organizations in the Sierra. They have been pro-active in seeking recognition of their rights and taking advantage of all possibilitiesoffered in the Law, particularly in relation to territory and autonomy. The four indigenouspeoples organizationswhich united their efforts by establishing the Consejo Territorialde Cabildos in late 1999 have the ability to defend their rights and exert control and are the recognizedauthorities over their territories.

- 77 - 8. Consultation and Participation

The project builds on more than ten years of consultation initiated in 1988 by the Foundationto develop through a participatory process a strategy for the conservation of the Sierra Nevada that culminated in 1997 in the publication of the Sustainable Development Plan (SDP) and the subsequent efforts to implement it. From the beginning, indigenous peoples have been consulted recognizing their ancestral rights and their importance for the preservation of the Sierra. However,the consultation process with indigenous peoples involves their own proceduresthat are lengthy and difficult because they involve reaching consensus at the community level and spiritual guidance from their traditional authorities. Reaching western style agreements is difficult, because of this process and indigenous peoples' decision to participate on their own terms as a continuous exercise has been fully respected by the Foundation.

Indigenous peoples directly participated in preparing the SDP through their Cabildos Gobernadoresand a series of community meetings. Consultations with traditional authorities were also carried out following traditional rites called "pagamentos" which are offerings specially designed for the occasion. Their complaints and priorities were included in the final version of the Draft Plan in 1996 mainly: the loss of ancestral territory, contamination and deforestation affecting the Sierra, the imposition of the "little brother" (the way non indigenous persons are referred to), the lack of government assistance, the lack of recognition of traditional management of natural resources and the impact of "guaqueria" (robbery of sacred offerings from ritual sites). However, before formally endorsing the Plan, indigenous authorities requested yet another round of consultationsdirectly with their communities. The Foundation promoted, funded and carried out this consultation process including the meeting in Bonga in which traditional authorities and the Kogi and Arhauaco Cabildos Indigenas and the whole community participated. One important outcome of this process was the delimitation of the ancestral indigenous territory, delineated by sacred sites, which comprise the so-called Black Line (Linea Negra).

The SDP was published and endorsed by various central, regional and local government authorities in February 1997. In December 1997, an agreement was reached by the Foundation and Indigenous Affairs Department of the Ministry of the Interior with the four indigenous organizationsin the Sierra to carry out an official round of consultations on the published version of the Plan; this would include a meeting in the region of each indigenous organization and a final, joint meeting of the four groups to agree on the indigenous response to the Plan. Four consultation meetings took place in Achintukwa (Organizacion Wiwa Yugumain Bukanarrua Tayrona);Sabana Crespo (ConfederacionIndigena Tayrona); Guatapuri (OrganizacionIndigena Kankuama); and Bonga (OrganizacionGonawindua Tayrona). Selected leaders from each organization presented and explained the Plan to their communities in their own language. Indigenous peoples expressedtheir priorities in the joint meeting carried out in Bonga in March 1998 including: (i) the problem of the overlapping territory National Parks-Resguardos-farmers; (ii) traditional authority and autonomy; and (iii) the need to prepare Planes de Vida (life plans) for each ethnic group. They indicated that more time was needed for consultation with the Mamas (traditional authorities) on the Plan, that they considered the preparation of Planes de Vida to be a top priority, and the need for a mechanism which honoredtheir right to be consulted about any activities and plans to be carried out in the region.

In March 1998,the Forum for the Sustainable Development of the Sierra Nevada took place to continue the participatory process and validation of the SDP involving more than 600 participants including indigenous leaders. One session was specifically dedicated to SDP's programmaticarea of strengthening indigenous cultural identity. The priority of preparingplanes de vida was

- 78 - reiterated and recommendationsincluded the need to analyze different models of land use and the disseminationof indigenouspeoples knowledge. On the request of indigenous organizations during the Forum, the Steering Committee for the SDP (Comite Directiva) was established comprisingthe four Cabildos, the Minister of the Environment,Indigenous Affairs Department from the Ministry of the Interior, and a representative of the Presidency with the Foundation acting as the Technical Secretariatwith voice but no vote. The decision to create the Committee arose in response to the concern of indigenous authorities expressed in the Bongo meeting and reiterated during the Forum that they should be consulted regarding all matters related to the region's development. The Committee is in charge of overseeing SDP activities and ensuring that the concerns and priorities of indigenous authorities are fully taken into account; it can present proposals and recommendationsto the Regional Environmental Council and municipalities.

The consultation process around the SDP and related issues has continued influencingpositively and strengthening indigenousorganizations. Presently, the rights of indigenouspeoples and the value of their culture are broadly recognized among all groups in the Sierra. Consultations between the four indigenous organizations in the context of the Steering Committee has probably contributedto their decision in late 1999 to establish the Consejo Territorialde Cabildos so that they can speak with a unified voice which will substantially strengthen their influence. As of February 2000, the process of preparing the planes de vida was reaching the final stages with a proposal of the Consejo Territorialde Cabildos (Consejo de cabildos) to share them with non- indigenous authorities throughout the region in March 2000. In addition, the Foundation is seeking support for SDP activities for which indigenouspeoples are the main beneficiariessuch as the agreement with The Nature Conservancy (TNC) and the Organizacion Gonawindua Tayronato finance the purchase of lands to build the indigenous territory which will also contribute to conservationin critical areas.

The project fits within this framework, benefits from the previous process and continuesthe participatory approach. Two consultative workshops were carried out during the project's preparation (December 1998 and April 1999) in which indigenous peoples' leaders and their representatives shared their views with other stakeholders and expressed their priorities such as: (i) to continue the recovery of their territory, including access to sacred sites; (ii) strengthening indigenous organizations and developing leadership;(iii) to gain recognition and disseminate their culture; (iv) to advance in preparation of theirplanes de vida; and (iv) to reach agreements with the Parks Unit on preparationof a collaborative plan to manage their overlappingterritory. These priorities have been incorporated into the project design. However,respecting the cultural procedures of indigenouspeoples, it has been agreed that consultation will be a "work in progress" to incorporate the views of the whole communityinto the decision-makingprocess. In February 2000, a final round of consultations prior to negotiation of the loan agreementwith the Government was carried out with the Cabildos Territorial Council. During this meeting,the cabildos reiterated their main concerns and expressed their goodwill towards the project. (The consultation process is fully documented with minutes, agreements, and videos in the project file.)

- 79 - 8. Indigenous Peoples Strategy

This Indigenous People Strategy (IPS) respondsto the main principles of the Foundation's program, including the LIL and proposed GEF project, namely: (i) recognition of the cultural plurality of the Sierra; (ii) promotion of inclusionand collaboration among stakeholders; and (iii) reduction of conflicts and development of an interculturaldialogue which will support the conservation and sustainable developmentof the Sierra.Accordingly the IPS evolves around four action lines:

* Acknowledgment of Indigenous Authorities:The project promotes recognition and support of indigenous peoples' traditional authoritiesthe Mamas and their four cabildos gobernadores. In accord with the decision of the indigenousorganizations, the contact point for discussions and agreements concerning the projects will be the Cabildos Territorial Council (Consejo Territorial de Cabildos) comprised of the cabildos of the four indigenous organizations.

* Recognition of Indigenous Priorities: Indigenouspriorities have been incorporated into the project's design and receive special attention in its three components. The project's annual operating plan will incorporate specificactions yearly agreed with indigenous organizations in accord with their Planes de Vida.

• Compatible Conservation and SustainableDevelopment: The conservationstrategy embodied in the Foundation's program and the two projects is fully compatible with indigenous peoples traditions, productive system and holistic vision of the environment.Indigenous peoples' knowledge will be fully incorporated into the collaborativemanagement plan for the Sierra Nevada park, being jointly prepared with the Parks Unit. The project aims to more broadly disseminate indigenous knowledgeand to promote an intercultural dialogue.

* Active and Continuous Participation:The project incorporatesmechanisms for indigenous peoples participation throughout project implementationthrough a process established by indigenous organizations themselves which takes into account their customary process of consultation and decision-making.

These principles have been incorporated into the project's components along with specific actions identified as priorities and agreed on through the consultationprocess carried out during project preparation. However, the specific activities to be supportedeach year will be decided by the Cabildos Territorial Council and incorporatedinto the project's annual operating plans allowing time for customary consultation with the Mamas and the community. The Foundation, which is the implementing agency of the project, has the social, technical and legal skills to carry out the consultation process and the activities describedbelow, and an established track-record that demonstratesthis capacity.

(a) Knowledge Generation and Dissemination

This component comprises activities to disseminate indigenouspeople's values and promote recognition and understanding of their culture and the role they play in preserving the Sierra, such as the following:

- 80- (i) Dissemination notes about the four indigenousgroups, their cultural background and views about the Sierra, their relationshipwith and management of natural resources and the environment as part of promoting an interculturaldialogue;

(ii) Preparation of studies to document and disseminate indigenous peoples' conservation strategy and its impact;

(iii) Dissemination, on the request of indigenousorganizations, of planes de vida, agreements and other papers contributing to enhancingthe cultural plurality of the Sierra;

(iv) Public events to analyze and discuss indigenousculture and its present and future role in conservation of the Sierra;

(v) Exchanging experiences with other projects involvingindigenous people's organizations in conservation activities.

(b) Participation, Organizational Strengtheningand Coordination

Stronger indigenousorganizations are critical to overcome exclusion and better protect them from violence. Activities under this componentrespond to indigenouspriorities and are intended to strengthen their role as a critical actor in the Sierra, and may include the following:

(i) Support for the development of the Cabildos Territorial Council providing upon request legal advice, training etc.;

(ii) Support to develop indigenous leadersby providing training and opportunities to participate in exchanging experiences with other projects;

(iii) Advice and support to access national and intemational donors providing resources for preservation of the Sierra's cultural and natural riches;

(iv) Support to carry out traditional ceremoniespresided by Mamas and other customary consultation processes within communitiesto promote active participation in the LIL and GEF projects.

(c) Collaborative Management

This component responds to indigenousorganizations main priority: to gain control of their ancestral territory. However, it has been designedto reduce conflicts with other interest groups by promoting understandingand reaching mutual agreements, including mitigation measures if necessary. Under this component the project will undertake activities such as the following:

(i) Support, through legal and technical advice, for preparation of the collaborative management plan (intercultural managementplan) for the overlapping area of the Sierra Nevada park and indigenous reserves;

(ii) Technical and financial support to carry out specific actions to implementthe intercultural management plan (see i above) and document its results;

- 81 - (iii) Implementation of a pilot voluntary resettlement project to support the recovery of indigenous territory while mitigating impact on farmer families willing to resettle;

(iv) Legal and financial support to gain access to sacred sites according to a priority program defined by the indigenousauthorities;

(v) Testing of alternative sustainable production activities within indigenous territory compatible with their cultural background.

(d) Monitoring and Evaluation

The project's monitoring, evaluation and learning system is being prepared under component I with an approach involving active participation of indigenous peoples.

- 82 - It - -

i ~zi~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 = ~ ~~~ ~~~UEThE1~~~~~~~~~~~~EIUEUUUNfl~~~~~~~~~~~~~~~.

~~~~ ~ ~ ~ ~ ~ ~ ~~ ~~~~~~~~~ I......

...... ~~~~i------

tl: ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~- ......

......

C~ ~~ ~ ~ ~~~~~......

Map 2. Pilot Regions, Sierra Nevada Sustainable Development Project

~~~~~~~~~~~~/<

-PR

;Of,--n ' V ' '<. 0 " '' --- 4 ., ,' ~I . . PR,A41arJ I'n.12 1

ikr

N.-- A.- X'~~-0 i"' N. ':

-. -. . c ~ ~'. ~ ~~ 4R91 -~:J.D I -

Al ~ ~ ~ ~ -% Soutrce udc6 Pro-v.Sie~- rraqX '.. PlJanC de Dearol Sosenibe, 199

t t_, P~~~~~~~~~~~~~~~~~~~~~~~~R: iotRgionesSloioeo sAr;cuans~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .o O _nooeis Sa' Ots...... ,__

Souree:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Plan deen Desrrll So non) 99 Fungacio PronSierra

C~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C

C)~~~~~~~~C

------~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ------

, ...... , , . - -'.t-...... -'-- . ------. -- ' ------z...... - .... --- '--