Agua Zarca Hydroelectric Project INDEPENDENT FACT FINDING MISSION: Report and Recommendations Prepared by Julian Burger Margarita Escartin Nataly Ponce Leo Valladares Lanza September 2016 2 Agua Zarca Hydroelectric Project Table of Contents List of acronyms ................................................................................................................................................................................................ 4 Executive summary .......................................................................................................................................................................................... 5 Chapter 1: Background .................................................................................................................................................................................... 7 Purpose and scope of the Mission ......................................................................................................................................................... 7 General background ................................................................................................................................................................................. 7 Chapter 2: The Agua Zarca Hydroelectric Project .................................................................................................................................... 11 Project Design ......................................................................................................................................................................................... 11 Legal framework and environmental standards ................................................................................................................................. 11 The consultations and FPIC ................................................................................................................................................................. 12 Second and Final Project Design ......................................................................................................................................................... 13 Access, use and health of river ............................................................................................................................................................. 14 Impacts on other natural resources ..................................................................................................................................................... 15 Cultural and spiritual value of the Gualcarque River ........................................................................................................................ 15 Loss of livelihood ................................................................................................................................................................................... 16 Engagement and Relationship with Local Communities ................................................................................................................. 17 Implementation process ........................................................................................................................................................................ 17 Chapter 3: The Communities in the Project Area ..................................................................................................................................... 19 Indigenous/non-indigenous composition .......................................................................................................................................... 19 The communities and the consultation process ................................................................................................................................ 20 Position of Community Members regarding the Project ................................................................................................................. 21 Root causes of the Conflict ................................................................................................................................................................... 22 Perspectives of Gender and the situation of Women in the Project Area .................................................................................... 23 Expected Impacts of Project Abandonment ..................................................................................................................................... 23 Chapter 4: Other Actors ................................................................................................................................................................................ 24 Meetings with representatives of DESA ............................................................................................................................................. 24 Meeting with Local and National Authorities .................................................................................................................................... 25 Meeting with the United Nations ........................................................................................................................................................ 25 Chapter 5: Security and Human Rights Issues ........................................................................................................................................... 26 Allegations of Violence, Intimidation and Corruption ..................................................................................................................... 26 Women, Children and the Elderly ....................................................................................................................................................... 27 Berta Cáceres ........................................................................................................................................................................................... 28 Investigation into Allegations within a context of Impunity ........................................................................................................... 28 FMO’s Policies and Processes (PS 4: Safety and Security) .............................................................................................................. 29 3 Agua Zarca Hydroelectric Project Chapter 6: Conclusions and Lessons Learned ........................................................................................................................................... 30 Chapter 7: Recommendations ....................................................................................................................................................................... 33 Exit by FMO with continuation of the Project ................................................................................................................................. 33 Exit by FMO without continuation of the Project ........................................................................................................................... 34 Annex 1 – Biographies ................................................................................................................................................................................... 35 Annex 2 – List of Meetings / Interviews .................................................................................................................................................... 36 Annex 3 – Methodology and Documents Reviewed ................................................................................................................................ 38 Methodology ........................................................................................................................................................................................... 38 Documents Reviewed ............................................................................................................................................................................ 38 Annex 4 – Terms of Reference..................................................................................................................................................................... 42 A. Background ................................................................................................................................................................................ 42 4 Agua Zarca Hydroelectric Project List of acronyms CABEI Central American Bank for Economic Integration COPINH Consejo Cívico de Organizaciones Populares e Indígenas de Honduras (Civic Council of Popular and Indigenous Organizations of Honduras) DESA Desarrollos Energeticos S.A., the owner developer of the Project DINAFROH Dirección de Pueblos Indígenas y Afrohondureños ESAP Environmental and Social Action Plan FinnFund Finnish Fund for Industrial Cooperation FMO Nederlandse Financierings Maatschappij voor Ontwikkelingslanden FPIC Free, prior and informed consent GAI Gerencia Ambiental Internacional IFC International Finance Corporation ILO International Labour Organisation ILO 169 Indigenous and Tribal Peoples Convention, C169 MFC Monkey Forest Consulting Mission Independent Fact-Finding Assessment NGO Non-Governmental Organisation OAS Organisation of America States Project Agua Zarca Hydroelectric Project PS Performance Standard SERNA Secretaria de Recursos Naturales y Ambiente SP Document “Socialization: Compliance with ILO Convention