Loan Agreement Profit Particpation - DOC

Document Sample
Loan Agreement Profit Particpation - DOC Powered By Docstoc
          A CASE STUDY

       By Maria Teresa Vargas Ríos
            Kari Hamerschlag

                July 2001
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                                 ii


We would like to say thank you to the indigenous and farmers organizations, especially CIDOB, CEPSC,
and OICH for their support and for the time they dedicated to this research. Also, we would like to thank
all of the non-governmental organizations, municipalities, and the members of the Committee on
Particpation and Consultation who gave their time to this work. Particularly, we are grateful to Luis
Miglino and Guillermo de Oliveira for their patience in responding to all of our questions, to Jose Martin
and Richard Mancilla for their dedicated readings of this document and to Liz Sweet and Jane Garrido for
their help in editing and printing this study. Finally, thank you to BIC and Rios Vivos for the opportunity to
pursue this interesting investigation.

Maria Teresa Vargas has a masters in international relations with an emphasis on ecological economics
and sustainable development.,

Kari Hamerschlag was the former director of the Bank Information Center's Latin America Program. She
is currently working as an independent consultant in Washington.

Rios Vivos Coalition is one of Latin America's most important networks dedicated to promoting
sustainable development. In addition to local support, it counts on the help of member NGOs from
Europe and the United States. Many private and public organizations, research institutes, and traditional
and indigenous communities are involved with Rios Vivos' projects.

The Bank Information Center (BIC) is an independent, non-profit, non-governmental organization that
provides information and strategic support to NGOs and social movements throughout the world on the
projects, policies and practices of the World Bank and other Multilateral Development Banks (MDBs).
BIC advocates for greater transparency, accountability and citizen participation at the MDBs.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                                                   iii

                                                 Table of Contents

 1. Introduction .............................................................................................................. 1

 2. Project Background .................................................................................................. 2
   2.1 The Project’s Current Situation............................................................................ 3

 3. Concerns about the Potential Social and Environmental Impacts ............................ 4

 4. The Participation and Consultation Process ............................................................. 6
   4.1 Opportunities and Constraints in the Participation Process ................................. 7

 5. Consultation with Rural Communities....................................................................... 9

 6. Access to Information ............................................................................................. 11

 7. Challenges to Ensuring Effective Implementation of the Social and Environmental
 Programs: Open to Debate ........................................................................................ 12

 8. Conclusions from the consultation and participation process. ................................ 14
   8.1 General Conclusions ......................................................................................... 15

 9. Recommendations ................................................................................................. 16
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                    iv


       BIC                  Bank Information Center
       CIDOB                Confederation of Indigenous Peoples of Eastern Bolivia
       CPC                  Committee on Participation and Consultation
       CPESC                Central of Ethnic Peoples of Santa Cruz
       CRV                  Ríos Vivos Coalition
       CSO                  Civil society organization
       EIA                  Environmental Impact Assessment
       IDB                  Inter-American Development Bank
       MERCOSUR             Common Market of the South
       NGO                  Non-governmental organization
       SC-PS                Santa Cruz - Puerto Suárez
       SEA                  Strategic Environmental Assessment
       SERNAP               National Service of Protected Areas
       TCO                  Lands of Community Origin
       VAIPO                Viceministery of Indigenous Affairs and Indigenous Peoples
       VMARNDF              Viceministery of Environment, Natural Resources and          Forestry
       WB                   World Bank
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                     1

1. Introduction                                     Given the project’s magnitude, it is
                                                    anticipated that construction of the highway
The Santa Cruz-Puerto Suárez highway                will have significant environmental and
(SC-PS) is one of the Bolivian government’s         social impacts. The road will likely have
most important projects and is among the            negative impacts on three significant
most sensitive projects in the Inter-               ecosystems: 1) the tropical Chiquitano dry
American Development Bank’s (IBD)                   forest; 2) the Chaco deciduous forest; and
portfolio. The project seeks to upgrade (with       3) the Pantanal wetlands.
hard gravel) approximately 600 kilometers
of an already existing intercontinental route,      The Chiquitano forest is one of the world’s
which is only passable six months of the            largest most intact dry forest ecosystems,
year. This corridor extends from the city of        yet faces one of the highest deforestation
Santa Cruz de la Sierra in the eastern part         rates in Bolivia. The construction of this
of Bolivia to Puerto Suárez, a border town          road will likely lead to increased
with the city of Corumbá in Mato Grosso do          deforestation as a result of conversion to
Sul, Brazil. This road will be a part of the        agriculture, increased colonization, illegal
export corridor that for the first time will link   logging, and increased informal timber
the Pacific ports in Chile with the Atlantic        exploitation. The induced impacts are even
ports in Brazil.                                    more severe when considered together with
                                                    additional impacts caused by other large-
The IDB is financing all of the necessary           scale development projects in the region
studies and expects to provide a $135               such as the Paraguay-Paraná waterway,
million concessional loan to Bolivia to             the Mutún mining activities, the Bolivia-
finance the Pailón-San Jose section and a           Brazil pipeline and incipient energy and
second $25 million loan to finance the              petrochemical projects in Puerto Suárez.
Corridor’s “Social and Environmental                Finally, one must also consider the
Protection Program.”                                government's weak institutional capacity to
                                                    effectively   address    natural  resource
By constructing the SC-PS Transportation            management and ensure compliance with
Corridor, the Bolivian government hopes to:         Bolivian laws.
a) reduce costs and facilitate transport from
agricultural production zones located in the        This Transportation Corridor will also have
Central Eastern part of Santa Cruz to the           significant social impacts, especially on the
Paraguay-Paraná waterway, via the Port              local indigenous and peasant populations,
Aguirre     terminal;      b)    improve    the     the majority of whom do not have legal titles
competitiveness        of    various   sectors,     to their lands. For these communities, a well
including agriculture (especially grains and        maintained road will increase land
soybean), forestry and mining by reducing           speculation, intensify land disputes in the
transportation costs; c) establish a range of       area, and create more obstacles for
services that would enable the linking of the       consolidating     indigenous     claims    for
Atlantic coast in Brazil with the Pacific coast     territories of community origin (TCOs) in the
in Chile and thus d) promote economic and           Chiquitania. It is likely that the most
commercial      integration      between    the     vulnerable groups could undergo expulsion
countries of the Mercosur. It is important to       from this area and that social differences
point out that this corridor is particularly        between the poorer, marginalized groups
beneficial for Brazilian agribusiness, which        and those with access to economic
is interested in reaching Asia markets via          resources and power will be exacerbated.
the pacific ports. It is also advantageous for
Asian companies, who want to penetrate              It is important to recognize that the
Brazil’s market, with more than 180 million         Transportation Corridor project is being
potential consumers.                                developed in the context of an explicit
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                              2

economic and financial integration policy        Assessment (SEA), 2) observation and
promoted by the international financial          direct participation in the meetings of the
institutions. The Transportation Corridor is     Committee        on     Participation    and
one more project, among a number of              Consultation (CPC), and 3) 22 interviews
infrastructure projects in South America         held with key informants in the cities of La
supported by the IDB. Although there is no       Paz and Santa Cruz, including government
reliable estimate of the cumulative and          officials, national and international NGOs,
synergistic impact of these projects when        indigenous leaders, local communities,
they are considered all together, many           municipal representatives, financial bodies,
specialists claim that this integration model    and the consultant group. Nevertheless, the
has not only failed to respond to the            opinions presented in this document are the
numerous social problems in the region, but      responsibility of the authors and do not
has accelerated the deterioration of natural     necessarily reflect the views of the
resources.                                       organizations that commissioned this study,
                                                 such as Rios Vivos and BIC.
Given the complexity and the challenges
posed by this project, this study seeks to       2. Project Background
respond to four central questions:         1)
Does the Bolivian government, as chief           The Bolivian government has been
actor in this process, have the political will   intensely promoting this project for the past
and technical and institutional capacity to      ten years. In 1997 it officially solicited a
effectively implement the social and             $135 million loan from the IDB for
environmental aspects of the plan of action      construction of the Santa Cruz-Puerto
that are deemed critical to ensuring project     Suárez highway (BO-036)1 andconvinced
viability and reducing the risks associated      the Bank to initiate the necessary economic,
with the project? 2) Does the IDB have the       engineering, social and environmental
capacity, once the project is underway, to       studies2. One year later (December 1998),
effectively supervise project implementation     the EIA was presented to the Bolivian
and perhaps most importantly, does it have       government. However, taking into account
the political will to ensure that the            the new criteria on social and environmental
government        complies      with      the    aspects of projects that it had adopted
recommended social and environmental             during this period, the Bank considered
mitigation    measures?     3)    Was     the    these studies to be insufficient,.
participation and consultation process
satisfactory and sufficient for all the          Given the complexity and breadth of this
stakeholders? And 4) How has the Bank’s          project, international and regional NGOs
approach to large-scale infrastructure           quickly reacted to the studies and called for
projects changed and what might this mean        a more detailed analysis with a specific
for future projects? The paper will explore      focus on the long-term indirect and
these critical questions and point to the        cumulative impacts. They also called for a
lessons learned and recommendations for          broad-based consultation process and
future Bank-financed projects.                   greater transparency and access to
                                                 information. In response to these demands,
                                                   It is clear that the project will require more financial
The field work done in preparation for this      resources. An initial estimate of $250 million has
document was conducted between June              been mentioned but resources have not yet ben
and December of 2000. The results of the         secured.
investigation are based largely on: 1) the       2
                                                   The IDB financed the first study of environmental
analysis of secondary information that was       impacts of the Santa Cruz - Puerto Suárez
included in the Strategic Environmental          Transportation Corridor between 1997 and 1998.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                                  3

the IDB commissioned the consultant group                 deficiencies in the participation and
Prime Engenharia (Brazil), Association                    consultation process. As a result, the
Potlatch (Colombia) and the Museo Noel                    original timelines were delayed.
Kempff Mercado (Bolivia) to develop a
Strategic Environmental Study (SEA). At the               In March 2000, after the consultant’s
same time, the Bank initiated a novel                     presentation of the first draft of the SEA, the
approach to participation and consultation                Bolivian     government       requested      an
that is described in greater detail below.                additional $15 million loan from the IDB to
                                                          implement the recommendations from the
The goal of the SEA is to evaluate the long-              Action Plan. The Bank then initiated the
term cumulative impacts of the Santa Cruz-                preparation of another loan: “Social and
Puerto Suárez corridor and develop a                      Environmental Protection Program for the
detailed environmental and social Action                  Corridor Santa Cruz-Puerto Suárez” (BO-
Plan that the government as well as the                   033), which is designed to mitigate the
Bank should use to address the potential                  project’s long-term, indirect and cumulative
impacts of the project.3 The consultant                   impacts. Since then, the focus of this loan
group was also charged with identifying the               has expanded to include the direct impacts
conditions needed to ensure the project’s                 and the amount of the loan has increased to
social     and     environmental       viability,         $25 million.
identifying     possible      resources       for         2.1 The Project’s Current Situation
implementing      the     preventative     and
corrective measures, and recommending                     The IDB had intended to approve project
the benchmarks that needed to be met prior                BO-036 in 2000 and initiate construction of
to construction. The Bank’s decision to                   the Paílon-San José section in 2001. The
finance     a     Strategic     Environmental             Bank had also hoped that the World Bank
Assessment (SEA) to address these indirect                would co-finance the project, and provide
impacts points to significant progress in the             financing for the construction of the San
way in which the Bank prepares large-scale,               José-Puerto Suárez section. However,
infrastructure projects. In the past, the Bank            project difficulties, concerns about the
has generally limited its social and                      government’s capacity for addressing the
environmental mitigation programs to the                  social     and     environmental     impacts,
direct impacts of its projects, losing sight of           unresolved issues from previous loans to
cumulative impacts and the long term.                     the government’s National Road Service
                                                          Agency4, the potential for serious social
The consultant group initiated its work,                  conflicts and internal changes inside the
including a broad-based public participation              institution, led the World Bank to officially
process, in October 1999 and had hoped to                 pull out of the project. This decision by the
finish by August 2000. As expected                        IDB’s principal project partner put both
however,     the    preparation     process               projects at risk (BO-036 and BO-033) and
encountered serious problems as a result of               left the IDB alone to deal with a highly
the social and environmental complexity of                conflictual, environmentally sensitive project
the project, conflicts of interest and
3                                                         4
  The Action Plan includes the following programs:          The Bolivian National Road Service Agency is in
1) territorial ordering and land titling, 2) indigenous   charge of the construction and the repair of
peoples development; 3) conservation and                  interdepartmental and national truck routes.
environmental management; 4) socioeconomic                Overwhelmed by denunciations of corruption,
compensation and community development; 5)                technical and human deficiencies, the cooperation has
sustainable development incentives; 6) institutional      demanded the institutional capacity building of the
strengthening; 7) regional social and environmental       National Road Service before granting it more
management system;            8) participation and        resources. This situation has placed the National
consultation.                                             Road Service in a very serious institutional crisis.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                          4

that lacked      the    necessary      financial   and technical resources for implementation
resources.                                         of the Action Plan.

The World Bank’s withdrawal from the               The are many problems affecting the forests
project and continual NGO criticisms               and especially the protected areas in the
propelled the IDB to establish a high level        road’s area of influence. And one cannot
advisory panel to review the strategic             foresee any significant changes in the
assessment and to identify the key                 government’s attitude that would improve
measures that must be taken in order to            the vulnerable situation of the forests.
avoid and mitigate the project’s negative          Among the problems which require urgent
impacts. With the advice of this panel, they       attention are: 1) weak implementation of
hope to reduce the risk of makinga bad             legally protected areas; 2) need to redefine
decision, which could be very costly to the        and consolidate the protected areas; 3) lack
Bank’s public image. Given the Bank’s need         of financial and technical resources; and 4)
for additional financial partners to finance       limited political will on the part of the
the entire project, it is clear that this panel    government to enforce environmental laws.
was also established to give a kind of
“green light” to the project, thus helping the     These     conditions    present    significant
Bank attract additional financial resources        challenges which, according to the SEA,
and reduce NGO criticism.                          could    be    addressed     in   a    broad
                                                   “conservation        and       environmental
                                                   management” program that seeks to
3. Concerns about the Potential Social             minimize and prevent the potential negative
and Environmental Impacts                          impacts on the different ecosystems in the
                                                   region. The Action Plan proposes three
The regional approach of the Strategic             main areas of action: 1) strengthen and
Environmental Assessment (SEA) is                  expand current protected areas and create
significant since it is changes the concept of     three new ones;5 2) implement conservation
mitigation of direct impacts, emphasizing          actions outside of the protected areas; and
instead the long-term cumulative impacts,          3) create a regional fund to attract
which are less visible at the actual time of       resources for conservation activities in the
construction. As a result of this focus, the       region.
SEA concludes that the “social and
environmental viability” of the project is         Accomplishing these tasks will require a
“conditioned” on the implementation of a           strong institutional framework to ensure
variety of up-front measures, which are            implementation of the country’s agrarian
intended to reduce and/or prevent potential        reform and forest laws as well as the
negative social and environmental impacts.         regional Land Use Plan. Effective
                                                   compliance of these laws will help to reduce
In the environmental arena, the project            the pressures on the protected areas and
represents a high environmental risk due to        forest lands. However, creating an effective
the expansion of the agricultural frontier and     land use plan for development of the region
other economic activities and the weak             is no easy task. It will require participation
natural     resource     and     environmental     and commitment from many actors, but
management system. In the most positive            above all it will require political will. There
scenario, assuming full implementation of          are numerous areas in which the country
the Action Plan, the study estimates that          has a comprehensive and modern judicial
five million hectares will be deforested in the
next eight years. This is a very conservative      5
                                                    The three new proposed areas include: the Serranías
estimate considering the country’s weak            Chiquitana (mountainous area), the Tucavaca valley,
political institutions and the lack of financial   and Lake Concepción.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                            5

framework. The government, however, has             recommend that about 8.9 million hectares
shown little interest in implementing and           of land need to be covered by the land
enforcing the law.                                  ordering and titling program in different
                                                    stages over the next four years.6 The
In the social arena, the situation is very          government’s proposal, on the other hand,
critical. Poverty, lack of basic services, and      is to begin the process for land situated
lack of clarity around property rights put the      directly in the highway’s right of way and
indigenous and peasant communities at               only later initiate the process in the project’s
“high risk”, especially in light of the             direct and indirect area of influence. In
unplanned development in the region. It is          reaction to the government’s proposal, the
likely that these groups will face increased        indigenous groups contend that focusing
land speculation, invasions and greater             solely on the road’s right of way puts land
difficulty in consolidating their existing land     titling for the rest of the region at significant
claims.                                             risk. This is especially true for the most
                                                    vulnerable groups. The indigenous groups
As highlighted in the findings of the SEA,          go even further to say that they will not
the situation in the region is very complex         support the construction of the road unless
and is marked by significant social                 there is a process of up-front land titling. It is
differentiation between the more vulnerable         clear that highway construction is the
groups and those who have access to                 government’s main priority. As such, it
economic        power,    information   and         wants to put its scarce resources towards
government influence. Power in this region          land titling in the area directly affected by
is primarily concentrated among the agro-           the right of way, and only focus on the
export, mining and logging sectors, groups          road’s broader direct and indirect area of
which will undoubtedly receive the greatest         influence when they are able to secure
benefits     from    construction    of  the        more resources.
Transportation Corridor.
                                                    Carrying out territorial ordering and titling of
Given this situation, the government must           8.9 million hectares would be an important
take several actions to address the social          achievement for the government and the
challenges. The studies suggest the need            Bank. However, the Bolivian experience
to: 1) initiate a process of territorial ordering   indicates that the process is very slow,
and land titling before the construction of         bureaucratic, expensive, and in some cases
the road; 2) establish a development plan           dependent on the discretion of government
for indigenous peoples and peasant                  officials. Four years after initiating the
communities (IPDP); and 3) create an                process     of   territorial   ordering,     the
indigenous fund administered jointly by the         indigenous communities have only received
government and civil society to guarantee           title to 1.7% of their current demands for
the economic sustainability of indigenous           more than 19 million hectares. This
development programs.                               experience demonstrates that the land titling
                                                    goals will be difficult to meet without an
Clarification of land rights is the most            expressed commitment of all the actors
complex issue to address before initiating          involved, as well as clear benchmarks for
road construction. The Bank, NGOs,                  compliance.
indigenous     groups,   and    even    the
government are in agreement that clarifying         Based on an extensive assessment of the
land use and ownership is a central issue           region’s indigenous communities, the
that must be addressed prior to road
construction.     However,     there      is        6
disagreement about how to move forward                The proposed area for territorial ordering and land
                                                    titling includes three provinces and seven
with the process. The studies and the Bank          municipalities.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                               6

regional Indigenous Peoples Development               and has taken some steps to address the
Program (IPDP) is one of the most                     issue of participation, but still does not have
important programs of the Action Plan. Both           an official Board sanctioned conceptual
this proposal as well as the creation of an           framework outlining its participation policies
indigenous people’s development fund                  in its lending and non-lending operations.
could represent important progress in terms           However,      the    IDB     recognizes     the
of the Bank and the government’s approach             importance and the advantages of civil
to social issues. Nevertheless, there are             society participation, believing that debate
several issues that could impede the                  between      the     different     stakeholders
success and sustainability of the proposed            significantly improves the projects by
actions. First, the financial limits of the           ensuring more effective investments,
program are problematic in light of growing           increasing the socio-political viability and
demand for services due to the historical             promoting greater local ownership of the
social neglect of these communities.                  project.
Second, the program presents a high risk
because it is linked to other actions outside         This new conceptual understanding,
of the control of the plan. The majority of the       coupled with civil society pressure and the
IPDP’s programs are dependent on outside              results of the participation process carried
resources and other projects being                    out by the IDB in the Darien Gap
implemented in the region, such as the                Sustainable      Development       Program
IPDP for the Pipeline, which have their own           (Panama 1998) and in the Bolivia-Brazil
agenda and which may not have more                    pipeline project (1998), led the Bank to
resources to dedicate to social issues7.              suggest to the Bolivian government to open
Third, the joint government-civil society             up formal opportunities for discussion
institutional framework proposed by the plan          between the government and civil society
could be a major disadvantage for                     and to transform the road project into a
indigenous groups, particularly in terms of           sustainable development project.9
their role in decision making given the
cultural differences and the inherent                 The Bank and the government then began
government authority which enables greater            the task of promoting two principal modes of
concentration of power and control.                   participation and interaction between the
                                                      government      and    civil  society:  the
4. The Participation and Consultation                 Participation and Consultation Committee,
Process                                               and direct consultation with the local
Since the 1994 Eighth Replenishment8, the             stakeholders in the project’s area of
IDB has taken various measures to promote             influence. These spaces were established
civil society participation in its investment         with the goal of accompanying the
based lending operations. The Bank has                development of the Strategic Environmental
produced a number of important documents              Assessment and ensuring that the
                                                      suggestions, contributions and observations
  The IPDPs of the Santa Cruz - Sao Paulo and Santa
Cruz - Cuiba give predetermined budget estimates
that are at the point of conclusion, which makes it      In the case of the Darién project, the Bank
difficult to determine if they are supported by the   established an advisory group made up of
financial resources of the road’s IPDP.               government officials, indigenous people, NGOs,
                                                      environmentalists and international NGOs to
  A meeting of the IDB’s Board of Governors    that   contribute feedback to the process and help to open
brought about many changes in the social       and    an official space for dialogue. The Bank considered
environmental policies of the Bank.                   the Darién experience to be very positive and along
  A meeting of the IDB’s Board of Governors    that   these lines continues to try similar methodologies and
brought about many changes in the social       and    processes in other projects in the region, such as the
environmental policies of the Bank.                   in the case of the Santa Cruz-Puerto Suárez Highway.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                           7

of all the actors were taken into account          approaches used to promote real and
during the development of the studies.             informed citizen participation.

The creation of these opportunities for            Convened by the Vice-Minister            of
participation signifies a change in the Bank       Environment, Natural Resources and
and government’s attitude towards dialogue         Forestry Development, the CPC is intended
and debate. The development of the SEA in          to be a permanent forum that meets once
conjunction with a broad based discussion          monthly. The CPC is made up of
prior to the beginning of the project is a new     approximately 29 representatives of civil
approach, rarely undertaken by the                 society and governmental bodies: five
governments,         international     financial   central and seven municipal government
organizations or consulting firms. In this         representatives, four civic committee and
sense, the Bolivian experience is positive         two indigenous representatives, three local
and     represents      significant   progress,    monitoring committee representatives, one
especially considering that the majority of        regional NGO, two national NGO network
projects are implemented with limited or no        and       two       international    NGO
civil society consultation or participation.       representatives.10

It is important to recognize the willingness of    The CPC has enabled different groups who
the government and bank to debate in a             are often at odds to discuss the future of the
more open and democratic manner through            region in a democratic and open way. It’s
the establishment of tripartite (government,       important to highlight the positive attitude of
IDB, civil society) or direct (civil society-      the Bolivian government, exemplified by its
Bank) opportunities for dialogue. This             willingness to make high-level government
exchange was of great benefit for all the          officials from the executive branch available
actors since it enabled them to address            to respond to stakeholder concerns.
concerns and observations about the                Through the CPC, local organizations and
studies and the participation process itself       representatives have had an extraordinary
directly to the government and Bank.               opportunity to officially question high-level
However, the participation and consultation        government authorities from different
process still faced many methodological            agencies including: environment, land,
problems, which are described below.               roads, as well as the consulting group, and
                                                   in some cases Bank personnel, among
4.1 Opportunities and Constraints in the           other people. This process represents an
Participation Process
The Participation and Consultation                    a) government: viceminister, Governor of Santa
Committee (CPC), which was established             Cruz, provincial governors of the Chiquitos, German
in November 1999, is a permanent space             Busch, Angel Sandoval, b) municipalities of Santa
                                                   Cruz, Pailón, San José de Chiquitos, Robore, el
for    discussion,     deliberation,  direct
                                                   Carmen, Puerto Suárez y Puerto Quijarro, c) Civic
communication and dialogue between the             Commitees of Santa Cruz de la Sierra, Provincias de
government, indigenous and peasant                 Chiquitos, Germán Busch y Ángel Sandoval, d), the
communities, international and national            Confederation of Indigenous Peoples of the Eastern
NGOs, municipal governments, civic                 Bolivia (CIDOB) and the Central of the Ethnic
committees, and other important actors in          Peoples of Santa Cruz (CPSC), e) monitoring
the road’s area of influence. The existence        committees of Chochis and El Carmen, f) the Central
of such a committee is without precedent in        organization of peasant workers of Santa Cruz, g) the
Bolivia and clearly constitutes significant        Natinal Environemntal League (LIDEMA) and the
progress for the Bank and the government.          Bolivian Forum for Environment and Development
                                                   (FOBOMADE), h) Probioma; and i) Bank
However, there are still many problems and
                                                   Information Center and Amazon Watch.
weaknesses in the methodologies and
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                            8

important step forward for Bolivia,                 The lack of independent facilitation and
considering that opening spaces for broad-          clear and efficient mechanisms for
based civil society participation and debate        developing a consensus agenda further
is neither state policy nor a daily practice of     diminished the value of the CPC. The
the Bolivian government.                            meetings were generally held without
                                                    developing an agreed upon agenda ahead
Nevertheless, there were many problems              of time and there was never a discussion of
and obstacles encountered in the CPC                which issues should be given priority or how
which cast doubt on the usefulness of this          much time should be given to each issue.
type of mechanism, particularly in the case         These problems were exacerbated by the
when the rules are not clear for all of the         discretional facilitation of the meetings by
participants. The CPC faced problems of             the government. These difficulties led to an
both     substance       and     process     that   unfavorable environment for promoting
significantly inhibited the efficacy of this kind   participation of the more vulnerable groups,
of participation mechanism.                         and accentuated the numerical and cultural
                                                    differences among the participants. At the
The top-down process for membership                 same time, it made it difficult to analyze in
selection, which was determined by direct           an objective manner the quality of the
invitation of the government, resulted in a         studies and to make significant contributions
skewed       social   composition     of    the     to the process. These process and
committee. A large portion of the CPC               substance problems embedded in the CPC
membership represent the local elites of the        deflated its spirit, transforming it into an
most important urban centers of the regions,        environment       which     encouraged    the
giving priority to entities with strong ties to     polarization of differences between the
the government, such as state and                   participants and excessive government
provincial governors, municipalities and            control over the process.
civic committees. This way of deciding who
participates made it difficult to expand            An indication of the ineffectiveness of the
participation to the more vulnerable actors,        CPC was the fact that in the first ten
such      as    indigenous     and     peasant      meetings, participants discussed the conflict
populations living outside of the urban             of interest that existed between the
areas, who will most likely be affected by          consultants and the highly controversial
the induced development of the road.                Chiquitano Forest Conservation Program
                                                    (PCBC) without ever arriving at a resolution
The result of this selection process is that        of the matter.11 The open wounds left from
many actors are over represented and                the Santa Cruz- Cuiabá pipeline experience
others under represented in the CPC. For            and the establishment of the PCBC, had a
example the indigenous (CIDOB and                   very negative effect on the participation
CPESC) and peasant representation is                process in the road project. The situation
limited to three positions, and the real and        turned particularly tense when it became
continual participation of the local, national
and international NGOs has also been                11
                                                       The Chiquitano Forest Conservation Program was
limited. This visible power imbalance               a condition for OPIC financing of the Cuiabá pipeline
created a significant bias in the decision          that involves an agreement between Enron and Shell
making process. In addition, it prevented the       and four international and national conservation
possibility for deepening the debate,               organizations. The program has been completely
increasing the flow of information and              repudiated by many groups because of the lack of
having a proactive synergy in the process of        timely consultation with the legitamate stakeholders
providing and incorporating comments into           including indigenous groups, peasant organizations,
                                                    national and local governments who do not believe
the SEA and ultimately the Action Plan.
                                                    that conservation activities in the region should be
                                                    delegated to the conservation groups.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                       9

known that one of the members of the                  Information Center (BIC) identified several
consultant consortia was part of the                  problems in the methodology which
controversial PCBC and that a big part of             hindered the quality of the consultations.
the environmental conservation program                Among others, these included: 1) failure to
associated with the road would be carried             distribute any written information regarding
out with PCBC funds.12 The complaints                 the project; 2) over reliance on local
continued and the denouncements of                    authorities to invite participants, thus
conflict of interest between the consultant           excluding important local stakeholders and
group and the PCBC dominated the debate,              failing to reach more distant communities; 3)
undermining the study’s and consultant                overemphasis on people’s current problems
group’s credibility. Most importantly, it             in general, and less emphasis and
changed the focus of attention of all the             discussion of potential impacts and
participants. After ten months of endless             mitigation measures; 4) lack of coordination
debates, the NGOs, the government and                 with indigenous organizations and local
the Bank came to an agreement to remove               NGOs in the organization of the
all connections between the conservation              consultations.
programs and the PCBC. However, in the
process, the CPC lost the opportunity for             In response to the complaints about the
carrying out a quality analysis of the studies        consultation process from BIC and other
and the government took advantage of the              organizations,      the   consultant      team
situation to assume more control over the             redesigned its strategy and expanded the
process and to avoid difficult, substantive           second round of consultations to include
issues.                                               more distant communities and to carry out
                                                      workshops       solely    with     indigenous
5.  Consultation               with         Rural     communities. As a result of these changes,
Communities                                           the second consultation round improved
                                                      significantly, both in structure and
Between November 1999 and December                    substance. 225 versions of the SEA were
2000, three rounds of consultations were              distributed with a reasonable amount of lead
carried out, While there was significant              time (30 days), and information was made
progress, there were also problems that               available in 6 municipalities, as well as to
needed to be addressed in the process. The            NGOs and indigenous and peasant groups.
IDB’s requirement for the SEA was that                In addition, information about the reports
there be “informed, timely and effective              was disseminated via local and regional
participation of civil society in all stages of       media outlets, including radio, television and
project     preparation     and     execution.”       newspapers. In terms of the scope of the
However, the initial participation plan               second consultation, eleven workshops
presented by the consultant group13 was               were carried out, 6 in urban centers and 5
insufficient to reach this objective. The plan        with indigenous organizations. In terms of
included a first round of stakeholder                 reaching indigenous communities, this
meetings to inform communities and seek               certainly showed progress from the first
general input, followed by a second round of          consultation round.
meetings limited to provincial capitals to
review the first draft of the action plan.            Nevertheless, the second consultation
During the first consultation round, the Bank         round was insufficient in reaching the more
                                                      distant communities. The lack of translation
                                                      of documents into a culturally appropriate
12                                                    and understandable language for the people
   The consortia member involved in the PCBC is the
                                                      who have a lower level of formal education
Noel Kempf Mercado Museum.
    Prime Engenharia, Potlatch, y el Museo Noel
                                                      was also a problem. The highly technical
Kempff Mercado.                                       language and the numerous volumes of
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                          10

information contained in the Plan of Action      was to accompany and support the work of
hindered any real possibility for analysis not   the facilitators in their communities and in a
just on the part of communities but also by      designated area within the project’s area of
NGOs. In addition, the time dedicated to         influence, while the facilitators were charged
each workshop (two days) and the                 with actually carrying out the consultation
methodology employed continued to                process in the communities. 14
present significant barriers to creating an
appropriate     structure     for   profound     The third positive aspect was the effort to
discussion and analysis and for prioritizing     develop more socially and culturally
the measures recommended in the Plan of          appropriate documents. The NGO, Proceso,
Action.                                          together with the promoters developed an
                                                 educational booklet, which was discussed
Given these deficiencies, the local and          with and agreed upon by CIDOB and
international     NGOs,      especially   BIC,   CPESC and the CPC representatives
recommended that the Bank support an             before beginning the training process with
extensive third round of consultation which      the community promoters and facilitators.
would be less superficial and more               The process of reaching an agreement on
extensive in order to make up for some of        the contents of the booklet delayed the
the problems encountered in the first and        timeline of the consultants but it was
second consultation rounds. At the same          beneficial in that it enabled different actors
time, BIC suggested that the design of the       to give their input in a meeting held, in
consultation process be developed with full      November 2000, expressly to revise the
participation of the local groups. In response   consultation materials.
to these concerns, the Bank and
government finally agreed to support a third     The fourth relevant aspect was the training
round of consultations, which was carried        process and participation of 60 community
out in November and December 2000 with           leaders. The process began with the
some important modifications in terms of         development of the consultation materials,
methodology and approach.                        followed by a 10-day course on the contents
                                                 of the Action Plan, the mitigation measures
The first positive change was the                and the institutional framework for project
replacement of the consultant group as           implementation, using the booklet as an
technical experts, with a local NGO,             instrument for learning. Despite the
Proceso, which had extensive experience in       subjectivity15 of the process, the result was
participation processes, as well as              that a significant number of people from the
knowledge in the region and relationships        communities now have a more extensive
with indigenous and peasant organizations.       understanding of the project and its
                                                 potential implications.
The second novel aspect in this approach
was the effort to build local ownership by       Fifth, the consultant group made an effort to
promoting the involvement of more than           expand the consultation process in order to
sixty community representatives in carrying      reach the more distant communities with the
out an important part of the consultations in
their respective localities. Ten promoters
and fifty facilitators, about 50% of which          The promoters worked for approximately two
were indigenous, were selected in the            months and the faciliators worked about five weeks,
workshops during the second round of             earning remuneration for their time.
consultations and approved by the                   For some actors, the process has been considered
indigenous organizations, the CPC and the        subjective because the participants were elected and
                                                 qualified by the consultant group and not by an
municipalities before the beginning of the
                                                 independent petition or by the initiatives of the local
third consultation round. The promoter’s role    communities themselves.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                         11

help of the facilitators and promoters.16               the government entities, but rather provoked
Twelve consultations were held in the                   unnecessary resistance to the proposals
municipalities and indigenous communities,              presented     in   the studies.      Another
similar to the second consultation round.               consequence of this lack of consultation is
However, this time, the process culminated              that government officials have not
with two larger meetings: an indigenous                 developed ownership of the studies, in spite
plenary and a workshop in the city of Santa             of the extensive information that the studies
Cruz to discuss the final document.                     could provide to help them design and
                                                        develop development programs.
The consultant group’s willingness to
actively include the local actors in all                During the consultation process, the
aspects of the development of the third                 criticisms and timely suggestions of NGOs
round of consultations gave much more                   and indigenous organizations helped to
solidity and legitimacy to the process. The             deepen, broaden and significantly improve
reorientation of the process led to much                the methodology used in the consultation.
better geographic coverage and helped                   As a result of their pressure, changes were
generate capacity and local knowledge                   made in the SEA, especially in the
about the project. It also increased the                conservation and environmental protection
confidence of the local actors and led to               program. In addition, their pressure brought
significant progress in local community                 about support for a third consultation round
participation. In spite of these advances, the          and the convening of the indigenous
consultation encountered difficulties in the            general assembly, which provided an
municipality of Puerto Suárez where local               opportunity for the indigenous groups to
opposition by the authorities to the                    incorporate their suggestions into the Action
consultants, who they believed were the                 Plan.
principal cause for the delay in road
construction, made it difficult to carry out the        6. Access to Information
consultations in full.
                                                        In general, the government and the Bank
It is important to mention that there was               have shown a predisposition to reducing the
inadequate       consultation     with  the             barriers to information access and
government throughout the process. In spite             improving the consultation process. The
of the fact that many government agencies               first positive step was making documents
are responsible for implementation of the               publicly available on the IDB’s web page.
programs outlined in the Action Plan, the               This was insufficient however, considering
programs were designed without the direct               that the majority of communities in the
and     informed    participation    of the             project’s area of influence, including the
government officials. Many of the proposals             mayor’s offices, did not have access to
in the Action plan, such as the creation of             electronic communication. In this sense, the
the conservation fund and the indigenous                local     communities      faced    significant
fund, were not consulted from the beginning             problems with access to socially and
with SERNAP17 and VAIPO18 and there are                 culturally appropriate information. According
many other examples. As a result, the                   to the Bank Information Center, at the
consultants did not take advantage of the               beginning of the project, the consortia did
accumulated experience and knowledge of                 not take a proactive approach to information
                                                        dissemination and did not distribute their
16                                                      work plan or other information to local
   According to Prime, the promoters and facilitators
carried out roughly 200 consultations in different
                                                        stakeholders. They also failed to make
communities in the project’s area of influence.         information accessible to the indigenous
   National Service of Protected Areas                  groups prior to consultation meetings.
   Vice Minister of Indgenous People and Affairs        However, after complaints from NGOs and
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                     12

other groups, the consultant group                 the average were still unable to participate
distributed numerous copies of their work          meaningfully in the consultation.
plan and committed to broadly distributing
all of the documents throughout the                7. Challenges to Ensuring Effective
preparation of the project.                        Implementation of the Social and
                                                   Environmental Programs: Open to
In the first consultation round, information
access and dissemination to local groups
was quite poor. This was supposedly due to
                                                   The social and environmental viability of
the fact that the consultants treated the
                                                   Santa Cruz -Puerto Suárez highway is
process as an opportunity to meet with local
                                                   conditional on the effective implementation
groups, rather than a real consultation in the
                                                   of mitigation measures up-front, during and
strictest sense of the word. In the second
                                                   after the project. Among the key up-front
round, the consultants did a much more
                                                   measures are territorial ordering and land
extensive distribution of information, a
                                                   titling; consolidation and creation of
month in advance of the consultation, and
                                                   protected areas; and the development of
used media communications, such as the
                                                   programs that promote the sustainable
radio, to disseminate the information.
                                                   development of the region, especially for the
Nevertheless, problems with information
                                                   most vulnerable indigenous groups and
access arose again when only eleven
                                                   local communities.
copies of the first draft of the final report of
the SEA were distributed, primarily just to
                                                   The      studies    propose     a    regional,
the Bank and the government. NGOs had to
                                                   decentralized and highly participatory
go to various government offices to gain
                                                   management model in order to implement
access to the documents and the local
                                                   those measures. According to this proposal,
communities and indigenous groups simply
                                                   the Ministry of Sustainable Development
didn’t have access to this information.
                                                   and Planning (MDSP) is the organization
                                                   responsible for ensuring the implementation
Apparently the consultants did not have the
                                                   of the environmental and social measures,
responsibility or the resources to distribute
                                                   while the National Road Service would
the documents. Since the bank and
                                                   execute the actual road project. The model
government didn’t assume the initiative to
                                                   also requires the participation of and
facilitate access to the information, in
                                                   coordination with other programs and
general no one assumed this responsibility.
                                                   projects in the region as well as the creation
After extensive pressure and criticism from
                                                   of implementation units for each program.
various organizations, the Bank finally
                                                   The management proposal is very novel in
agreed to finance the printing and
                                                   the way in which it proposes to bring
distribution of some additional copies for
                                                   together     diverse    knowledge,       skills,
NGOs and the municipalities in the project’s
                                                   experience, financial resources, and political
area of influence.
                                                   will, in order to implement the Action Plan.
Finally, before beginning the third                However, it is important to point out that this
                                                   management model could be very risky
consultation round, there was a significant
step forward: the production of a 30 page          considering the institutional weaknesses
                                                   referred to earlier, as well as the incipient
educational booklet which summarized the
SEA in a more appropriate language for             decentralization process that is being
                                                   promoted in the country.
rural communities with an average
schooling of 2.5 years. This effort was
                                                   Many of the actions proposed in the Action
important, though insufficient since many
                                                   Plan require a decentralized model, with
communities with a schooling level below
                                                   good coordination between the central,
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                     13

departmental       and     local    authorities.    In general, uncertainty surrounds the
However, the relations between these                Transportation Corridor. Serious doubts
entities are still very weak and excessively        exist as to whether the government has the
political. This reality puts in doubt the           capacity and political will to implement the
implementation of the Action Plan especially        measures proposed by the Action Plan and
if the communication channels and lines of          if the Bank has the political will to require
responsibility are not completely explicit in       compliance of the environmental and social
the Action Plan’s programs. Nevertheless,           conditions. These doubts arise from the
the difficulties posed by the current reality of    following concerns:
the institutional framework should not be
overcome by contracting an array of private         First,      the     country’s    decentralized
organizations       (consulting    firms)     to    institutional framework faces both top-down
implement the program, but rather by                and horizontal coordination problems, which
identifying the barriers in the current             makes it difficult to apply a complex
system, correcting these problems and               organizational model and also diminishes
strengthening the existing government               the responsibility for enforcement of laws,
agencies.                                           which is already lax. In addition to these
                                                    structural problems, there are also technical
An integral aspect of the management                and financial constraints, and most
system is the proposal for an independent           importantly the lack of political will to
monitoring program. The studies propose             implement a program that demands high
contracting an environmental auditor and an         environmental and social standards. The
ombudsperson. The role of the former will           government’s        strong     opposition    to
be to monitor and ensure compliance with            implement an extensive program of
the environmental and social mitigation             territorial ordering and land titling prior to
measures while the latter will be responsible       initiating the project is one example of these
for ensuring that community concerns are            constraints.
conveyed and addressed in a timely matter.
Undoubtedly, the role of both of these              It is clear that a conflict exists between the
positions will be critical for ensuring the         priorities of the government and the
success of the project. In spite of these           measures proposed by the Action Plan.
advances, the monitoring system still suffers       Throughout this process, the Bolivian
from some problems. For example, it is still        government and many local actors have
unclear how civil society groups and project-       expressed their interest in getting the
affected people will be included in the             highway constructed as fast possible. Thus,
proposed      structure.    Considering      the    naturally they want to avoid all the barriers
experience of previous projects such as the         that would prevent the achievement of that
Bolivia Brazil pipeline, an effective               objective. Therefore, they have been very
monitoring mechanism must establish                 resistant to accepting the environmental and
communication channels that promote and             social mitigation measures, whose only
ensure the participation of NGOs and local          purpose, they believe, is to delay the
groups in on site monitoring of the project,        construction of the highway.
in such a way that enables them to provide
valuable feedback to the process. In the            Second, the financial resources are
case of the Bolivia-Brazil pipeline, after          insufficient to carry out all the measures
significant pressure, the Banks and project         recommended by the Action Plan, which
sponsors agreed to include civil society            suggests the need for approximately $85
groups in all regular site visits of the project,   million. Currently, the Bank is only planning
a step which greatly enhanced the                   to finance a $25 million loan to cover all the
transparency of the process.                        social and environmental programs and
                                                    mitigation measures related to the highway.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                      14

Neither the Bank nor the government has             an effort to maintain positive relations with
yet identified other sources of funds to meet       the government. Given this reality,
all the needs of the programs identified in         significant participation of central office
the Action Plan. For example, in terms of           personnel in project supervision it is critical.
the protected Areas, the possibility of
negotiating the GEF III is very remote,             8. Conclusions from the consultation
considering that the National Service of            and participation process.
Protected Areas (SERNAP) has just
finished a negotiation for GEF II for Bolivia.      Many significant advances have been
On the social side, most of the programs            identified in the participation process. For
lack sufficient resources to guarantee the          example, the establishment of the CPC has
sustainability of the programs. Even in the         been a positive step and demonstrates the
case of territorial ordering and land titling, a    proactive attitude towards participation by
program that is a priority for everyone, there      the Bank and to a certain extent on the part
are insufficient financial resources to carry       of the government. Thus, experiences such
out this difficult process.                         as these must be repeated, expanded and
                                                    improved. The establishment of “permanent
Third, there are doubts about the Bank’s            forums for dialogue” between civil society
political will to adequately enforce the social     and the government can help to increase
and environmental conditionalities once the         the flow of information, improve the quality
loan has been approved. Until now, the              of the participation in cases when the
Bank has demonstrated a clear interest in           participants      can     make    substantive
addressing the environmental and social             contributions to the process. Nevertheless,
issues. The Bank’s project team has said            one must be clear about the limitations of
that there will be cross conditionalities           this type of forum, especially when the rules
between the corridor loan (BO-036) and the          are not clear, the cultural differences
environmental loan (BO-033). Nevertheless,          between the participants are great, and the
faced with extreme political pressure from          conflicts of interests are unmanageable.
strong proponents of the project, many
governments will be reluctant to withhold           Particularly in the case of the Export
financing once the project is approved.             Corridor project, the CPC didn’t have the
Given this likelihood, it is critical that there    success that was hoped for because of
be ample time between approval of BO-033            substance and process problems in the
and BO-036 so that progress can be made             establishment          and         subsequent
on the environmental and social issues, in          consolidation of the committee. In order to
particular land titling and clarification of land   overcome these problems, it is crucial to
rights in the project’s area of influence and       ensure the independence of the committee
the consolidation of protected areas in the         from the project’s promoters and financiers
region.                                             in the process of conducting the meeting
                                                    and selecting participants. An entity of this
Fourth, if experience from past projects is         nature must be based on an extensive
any indication, the Bank lacks the time,            consultation with civil society, rather than a
resources and clear and effective guidelines        top-down decision by the government. In
to supervise project implementation,                addition, an independent facilitation process
particularly compliance with social and             and a mutually agreed upon agenda is
environmental conditions. The Bank usually          critical to preventing the concentration of
assigns this responsibility to the local IDB        power by a few participants and for ensuring
office, which does not always participate in        quality participation by everyone. Also, it
project formulation and is thus not as aware        should be clear that this type of mechanism
of possible problems. In addition, the local        should not substitute broad-based local
offices may be more lax in their approach in        consultation, but should enrich such a
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                 15

process by ensuring the participation of         This    means     that    the    format    for
multiple stakeholders.                           environmental impact studies must be
                                                 seriously reexamined based on the needs of
On the other hand, the CPC has been an           the people. From the beginning, they should
underutilized space by civil society             be presented in a summary that enables
organizations, since for the most part, they     people to read and understand the content.
did not make substantial comments on the         In the case of the road project, the
process and the quality of the studies. Most     production of a 30 page educational booklet
of the organizations were worried about          was certainly a positive step, but it was only
making their specific demands heard, (a          developed in the final stage of the project
legitimate concern in some cases), rather        when the studies were already concluded,
than presenting a broad unified vision, thus     thus leaving out many people who were
diminishing the power and quality of civil       below the average regional schooling level.
society participation. The government
effectively took advantage of this weakness.     One of the most important lessons from the
In the future, in order to strengthen their      consultation is related to the position of the
position, civil society organizations should     local communities, NGOs and indigenous
try to agree upon a minimum agenda that          peoples. These groups do not want to be
allows them to present unified positions,        objects of the consultation, but participants
thus strengthening their position vis a vis      with an active role in the process. By
the government and the Bank.                     promoting greater local ownership, and
                                                 reducing opposition, this approach can be of
In spite of all the problems encountered in      great benefit for the project. In the case of
the CPC, this experience that began with         the road project, the consultation process
the Santa Cruz - Puerto Suárez road project      improved significantly when NGO opinions
must be a requirement for all future             were considered and local NGOs and
investment projects in the region. Civil         community leaders were included in the
society gained an important place at the         design and implementation of the third
negotiating table that they surely do not        consultation round. The participation of
want to loose.                                   these groups facilitated the work of the
                                                 consultants      and      enabled     broader
The     local    community      consultations    community participation. This kind of
improved      gradually,    but    still  face   initiative should be developed and
methodological problems that are difficult to    supported by the Bank and government in
overcome using the current technical             all stages of the projects.
approaches to participation. It is impossible
to ask a small producer that lives on a          8.1 General Conclusions
meager daily wage to read 16 volumes,
almost 2000 pages of the SEA. Not even           There are many rich lessons and
the NGOs have the time and capacity to do        recommendations that can be drawn from
this kind of work. Also, the workshops           this experience. This project raises many
unfold at a rate that is not conducive to the    extremely difficult questions for the Bank
time a farmer needs in order to make a           and other potential lenders. On the one
substantive, independent contribution to the     hand, there is no doubt that this project is a
discussion. Given this situation, the Bank       priority for Bolivia and that the government
and the governments should invest more           and many of its people would like to see it
resources in researching approaches that         built as quickly as possible. There is also no
promote substantive participation of local       doubt of the serious environmental and
people, taking into account their situation.     social consequences if the government
                                                 does      not     effectively  mitigate    the
                                                 environmental and social impacts.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                   16

This paper has demonstrated that effective       community       participation     in  project
mitigation does not appear likely at this time   implementation. All of these steps are very
for many reasons. Despite this fact, this        positive and should significantly increase
paper is not arguing that the project should     the likelihood for success, as long as there
be cancelled altogether. However, both the       is an institutional and political commitment
Bank and the government must assume the          on the part of the country to comply with the
responsibility for identifying the principal     recommended measures.
obstacles      and    defining      minimum
benchmarks for the development of the            Despite the Bank’s, and to a certain extent
project. The appropriate parties must then       the government’s effort to apply a
comply with these commitments. For               theoretically effective approach to this
example, clarity on the issue of property        project, both parties need to be aware of the
rights, especially for indigenous people,        cultural, political and social limitations
must be achieved and agreed upon by the          presented by the current reality, which is
Bank, government and other stakeholders,         clearly not without flaw. Given the situation,
before implementing such a large-scale           it is most useful to identify the barriers and
project and they must then work to achieve       to work on these, establishing minimum
this goal.                                       benchmarks on which it is possible to
                                                 develop this type of a project, before trying
This is certainly not the first, nor the last    to construct a complex model whose
time the Bank will be in the situation of        application is difficult. For example, if land
financing large-scale projects in countries      titling is a crucial factor that must be
which lack institutional capacity. In this       achieved prior to project implementation,
particular case, and in future projects, there   then there must be capacity to identify
are ways that the Bank can at least increase     where the barrier to progress is, whether its
the likelihood for successfully meeting the      political or technical, and to make
project’s environmental and social goals         agreements and realistic goals for all parties
and ensuring that the most vulnerable            in terms of the timing, the breadth and the
groups actually benefit rather than suffer       resources necessary. Finally, until minimum
impacts from the project. In this case, the      conditions are met, the Bank should not
Bank has taken the following steps to            disburse funds for construction because if
enhance the chances for success.                 the project goes forward without ensuring
                                                 effective up-front compliance with some
First, it supported the use of a strategic       minimal      social      and      environmental
assessment to identify and develop plans to      measures, it runs the risk of causing
address long-term indirect and cumulative        irreparable harm to fragile ecosystems and
impacts.     Second,    it    supported      a   the most vulnerable social groups.
comprehensive         participation       and    Otherwise, the Bank would violate its own
consultation program. Third, it separated out    policies and its public obligation to ensure
the environmental and social aspects into a      that public monies do not finance
separate loan to enhance the likelihood of       ecologically    and      socially    destructive
timely up-front mitigation. Fourth, it has       projects.
committed to including           social and
environmental benchmarks in the loan             9. Recommendations
agreement to ensure that these are met
prior to loan disbursement. Fifth, the Bank is   Given these lessons learned, this study
supporting the idea of contracting an            suggests the following recommendations to
independent monitor and ombudsperson to          the Bank when financing projects that have
verify compliance and help resolve               a significant social and environmental
community conflicts. Sixth, the management       impact.
structure recognizes the importance of
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                  17

1) Address indirect and cumulative               should only approve BO-036 when there is
impacts utilizing a regional approach.           significant progress on the implementation
                                                 of the environmental and social measures in
The SEA has demonstrated the critical need       the first loan. When the Bank is dealing with
to take a regional approach. This enables a      just one loan, disbursements should be
better understanding of the regional             made in different stages linked to
dynamic and a full consideration of the long-    compliance with previously established
term induced and cumulative impacts of           goals. In this way, the Bank can ensure that
large-scale infrastructure projects. This        projects only go forward when appropriate
project represents a new approach for the        social, environmental and institutional
Bank, in that it is not only evaluating these    conditions prevail, thus creating much better
impacts but also developing a regional,          conditions for       the achievement        of
integrated plan to ensure that these impacts     responsible,      economically      efficient,
are addressed and that local people benefit      equitable and environmentally sustainable
from the project. Undoubtedly, there are         development.
significant challenges in this approach: 1)
Significant institutional barriers are often     3) Refrain from financing projects in
present; 2) Participation processes are          areas where indigenous lands are not
more complex; 3) Defining project’s scope        clearly demarcated and legally titled
of influence can be difficult. And 4)            unless it can be done prior to or as a
Resources are often scarce, forcing a            condition of the loan.
prioritization process where there are many
urgent needs. However, these constraints         In the case of the Transportation Corridor,
can be partially overcome by working             the SEA clearly recommended the need to
together with other donors and government        demarcate and title indigenous lands before
agencies and seeking to integrate regional       the construction of the road. While there is
plans with ongoing development projects.         general agreement among all the actors on
                                                 this issue, there are key differences
2) Mitigate the direct and indirect              regarding the timing and scope of the
impacts prior to project implementation          proposal. Demarcation and titling of
and condition loan disbursements on the          indigenous lands should be a priority
achievement of measurable benchmarks             requirement with realistic goals. This
that demonstrate compliance with the             requires that the government have a clear
agreement. Impacts can also be                   policy with respect to TCOs, protected
mitigated by approving a prior loan              areas and other factors. With respect to
solely for implementation of social and          new agreements, the government should
environmental measures.                          define a clear, consistent policy regarding
                                                 the use of the soil and not solely consider its
In the case of the Export Corridor, the          economic and social function. This should
Bank’s decision to create a separate loan        be the case not just in this project but in all
operation to address the environmental and       future Bank investments. Otherwise, these
social impacts of a project is a promising       kinds of projects will be extremely
new approach since it increases the              hazardous to the most vulnerable groups
likelihood of success of the project by          who do not have secure titles or sufficient
creating an incentive for the government to      power to defend their land.
address the social and environmental
issues in a timely and responsible fashion.      Along these lines, the National Parks should
However, in order for this approach to           also be clearly demarcated and properly
achieve the desired result, there must be        administered, to ensure their preservation.
sufficient time between approval of BO-033
and the road project (BO-036) and the Bank
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study                    18

4) Improve Bank supervision and                     institutional issues, the Bank should support
establish    Independent   Monitoring               the implementation of projects through
mechanism to ensure compliance with                 existing entities, and provide the needed
environmental and social policies and               technical assistance and training in order to
mitigation measures.                                increase the institutional capacity over time,
                                                    rather than creating parallel implementation
When       government        capacity      for      structures, managed by private consulting
implementation     of   the     social    and       firms.
environmental mitigation measures is
questionable, the Bank should establish a           6) Establish clear mechanisms to ensure
monitoring system that includes an                  that civil society organizations and
independent environmental and social                locally affected groups can play an
auditor who can provide accurate and timely         active and on-going role in project
information on environmental and social             monitoring and evaluation.
compliance as well as monitor unforeseen
project impacts. This system should include         While there has been great rhetoric about
an ombudsperson to help maintain a                  the role of civil society in all phases of the
healthy dialogue among all the project              project cycle, their role in monitoring and
stakeholders and to assist in identifying and       evaluation is rarely promoted by the Bank.
resolving community concerns throughout             However, in the case of the road project, the
the life of the project. Of course, it is           management structure calls for constant
extremely important that both the auditor           and continual civil society participation in
and the ombudsperson have the full                  the monitoring and evaluation of the project.
confidence of the local communities. In             However, to make this participation
addition, the Bank should invest more               effective, the organizations will need: 1) a
resources in project supervision.                   constant flow of information about the
                                                    project; 2) technical and financial resources
5) Strengthen institutional capacity of             and 3) clear procedures which will ensure
governments and ensure compliance                   that their opinions are taken into account in
with clear benchmarks before pursuing               the decision-making process.
large-scale investments that could cause
irreparable harm.                                   7) Expand and Improve participation and
                                                    consultation processes
The Bank’s experience has shown that
projects often fail to meet their social,           In order to expand and improve participation
environmental       and    even     economic        and consultation processes, the Bank must
objectives in cases where governments lack          take into account the lessons from the CPC
institutional capacity or political will to         experience. This requires establishing a
implement and enforce institutional reforms.        forum for permanent dialogue among civil
In countries with weak environmental                society, the government and financial
enforcement, such as Bolivia, large-scale           institutions.   The    forum    should    be
infrastructure projects are particularly risky.     established after a broad based consultation
The Bank must therefore help to develop             with civil society and it should have an
and strengthen government’s capacity and            independent facilitation process. It is also
political will for enforcement of social and        critical that agendas are agreed upon in
environmental laws before approving large           advance by all the participants in a
investments.19      Despite    the     difficult    transparent way. It is also important to
                                                    promote participation of local civil society
                                                    organizations     in    the   design    and
   This suggests that the Bank should require the   implementation of the consultation and
government to make use of its mechanisms for
invesitgation and enforcement.
                                                    participation processes.
The Santa Cruz- Puerto Suárez Transportation Corridor Project: A Case Study   19

8) Reconsider the methodologies and
approaches used in the consultation

There are many methodological barriers in
projects which must be overcome in order to
promote meaningful citizen participation.
Apparently there is no one correct recipe for
addressing this issue. Thus more resources
need to be invested to develop participatory
processes that take into account the
situation of the local people. It’s clear that a
one or two day consultation meeting is
insufficient to analyze proposals and to
make substantial recommendations.

Finally and perhaps most importantly,
relevant     documents      should      be
disseminated in local languages at least
60 days prior to the consultation, and the
Bank and governments must ensure that
EIAs and other important documents are
summarized in a culturally appropriate
way to make them accessible to those
with limited educational background.

Description: Loan Agreement Profit Particpation document sample