Document of THE WORLD BANK

FOR OFFICIAL USE ONLY

Report No. 38482- CO

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED PURCHASE OF EMISSION REDUCTIONS BY THE BIOCARBON FUND

IN THE AMOUNT OF US$1.0 MILLION

FOR THE

COLOMBIA: Caribbean Savannah Carbon Sink Project

February 13, 2007

Environmentally & Socially Sustainable Development Sector Management Unit Colombia and Mexico Country Management Unit Latin America and the Caribbean Region

This document has a restricted distribution and may be used by recipients only inthe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENT (Exchange Rate Effective November 7, 2006)

Currency Unit = Pesos Colombianos 2200 Pesos Colombianos = US$1

Fiscal Year January 1 –December 31

ABBREVIATIONS AND ACRONYMS

A/R Afforestation/Reforestation BCF BioCarbon Fund CAS Country Assistance Strategy CCIG Climate Change Initiatives Grant CDM Clean Development Mechanism CEA Country Environmental Analysis CER Certified Emission Reduction CF Carbon Finance CIAT Centro Internacional de Agricultura Tropical CO2e Carbon Dioxide Equivalent COP Conference of the Parties CORPOICA Corporacion Colombiana de investigacion agropecuaria CVS Corporación Autónoma Regional de los Valles del Sinú y del San Jorge DNA Designated National Authority DOE Designated Operational Entity EIA Environmental Impact Assessment EMP Environmental Management Plan ER Emission Reduction(s) ERPA Emission Reduction Purchase Agreement GHG Greenhouse Gas GWP Global Warming Potential INAP Integrated National Adaptation Project IPCC Intergovernmental Panel on Climate Change IPP Indigenous People Plan LULUCF Land Use, Land Use Change and Forestry MP Monitoring Plan NGO Non-governmental Organization N2O Nitrous Oxide NPV Net Present Value NRM Natural Resource Management NSS National Strategic Study PAD Project Appraisal Document PCF Prototype Carbon Fund PDD Project Design Document SPS Sylvo-pastoral System UNFCCC United Nations Framework Convention on Climate Change

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Vice President: Pamela Cox Country Manager/Director: Makhtar Diop Sector Director: Laura Tuck

Task Team Leader/Task Manager: Walter Vergara

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COLOMBIA: CARIBBEAN SAVANNAH PROJECT

CONTENTS

A. STRATEGIC CONTEXT AND RATIONALE..................................................................... 7

1. KEY DEVELOPMENT ISSUES AND GOVERNMENT STRATEGY.................................................. 7 2. RATIONALE FOR BANK INVOLVEMENT ............................................................................... 10 3. SECTOR ISSUES TO BE ADDRESSED BY THE PROJECT AND STRATEGIC CHOICES................... 10 4. HIGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES.................................... 10

B. PROJECT DESCRIPTION................................................................................................... 11

1. PROJECT DEVELOPMENT OBJECTIVE................................................................................... 11 2. PERFORMANCE INDICATORS............................................................................................... 11 3. PROJECT COMPONENTS....................................................................................................... 12 4. SUSTAINABILITY AND REPLICABILITY ................................................................................ 13 5. ALTERNATIVES CONSIDERED AND REASONS FOR REJECTION.............................................. 14 6. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN............................................. 14

C. IMPLEMENTATION............................................................................................................ 15

1. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS................................................... 15 2. MONITORING AND EVALUATION OF OUTCOMES/RESULTS................................................... 15 3. CRITICAL RISKS AND POSSIBLE CONTROVERSIAL ASPECTS................................................. 16 4. ERPA CONDITIONS AND COVENANTS................................................................................. 17

D. APPRAISAL SUMMARY..................................................................................................... 17

1. FINANCIAL ANALYSIS ......................................................................................................... 17 2. TECHNICAL ........................................................................................................................ 18 3. ECONOMIC ......................................................................................................................... 20 4. SOCIAL ............................................................................................................................... 20 5. ENVIRONMENT. .................................................................................................................. 21 6. SAFEGUARD POLICIES. ....................................................................................................... 21

E. COMPLIANCE WITH BANK POLICIES ......................................................................... 22

ANNEX 1: DETAILED PROJECT DESCRIPTION.............................................................. 23

ANNEX 2: SELECTION OF PROJECT AREA ..................................................................... 25

ANNEX 3: IMPLEMENTATION ARRANGEMENTS.......................................................... 38

ANNEX 4: FINANCIAL ANALYSIS OF THE PROJECT.................................................... 39

ANNEX 5: PROJECT PREPARATION AND SUPERVISION ............................................ 53

ANNEX 6: EMISSION REDUCTION PURCHASE AGREEMENT / TERM SHEET ...... 54

ANNEX 7: EX-ANTE ESTIMATE OF CARBON SINKS USING THE PICO BONITO METHODOLOGY AND SCHEDULE 2 OF THE PROPOSED ERPA ............................... 55

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ANNEX 8: BASELINE METHODOLOGY............................................................................. 60

ANNEX 9: SOCIAL ANALYSIS.............................................................................................. 67

ANNEX 10: DIFFERENCES AND SYNERGIES OF CARBON SINK PROJECTS IN COLOMBIA ................................................................................................................................ 69

ANNEX 11: GEF SYLVO-PASTORAL PROJECT ............................................................... 71

ANNEX 12: SUMMARY OF INDIGENOUS PEOPLE PLAN.............................................. 74

ANNEX 13: ENVIRONMENTAL ANALYSIS....................................................................... 93

ANNEX 14: ADDITIONALITY ANALYSIS.......................................................................... 95

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PROJECT APPRAISAL DOCUMENT.

LATIN AMERICA AND CARIBBEAN REGION

Date: February 13, 2007 Country Director: Makhtar Diop Sector Manager/Director: Abel Mejia/Laura Tuck Project ID: P100738Instrument: SIL

Team Leader: Walter Vergara Sectors: Forestry (100%) Sectors: Forestry (80%); Agriculture market and trade (20%) Themes: Climate Change (P); Rural non-farm income generation (S)

Project Financing Data: [ ] Loan [ ] Credit [ ] Grant [ ] Guarantee [X] Other: Carbon Finance The project does not involve Bank financing. Gross carbon revenues are estimated at US$1 million up to 2017. Total investment cost: US$ 4.3 million (NPV, 5 years) Bio Carbon Fund: US$ 1 million. Purchase of about 0.25 Mt CO2e at a price of US$4/t CO2e maximum.

Financing Plan (US$m.) Source Local Foreign Total

BCF CVS Landowners Zenu indigenous community and others (Sylvo-pastoral) TOTAL

0.9 2.8 0.6

4.3

1.0

1.0

1.0 0.9 2.8 0.6

5.3

Responsible Agency: Centro Internacional de Agricultura Tropical (CIAT), corporación Colombiana de Investigación agropecuaria (CORPOICA); Other agencies: Corporación Autónoma Regional de los Valles del Sinú y del San Jorge (CVS) Estimated disbursements (Bank FY/US$m)

FY 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Annual 0.01 0.02 0.05 0.08 0.10 0.12 0.13 0.12 0.12 0.11 0.14

Cumulative 0.01 0.03 0.08 0.16 0.26 0.38 0.51 0.63 0.75 0.86 1.00

Project implementation period: 2006–2017 Expected effectiveness date: October 2006 Expected closing date: March 2018 Does the project depart from the CAS in content or other significant respects?

Yes No

Does the project require any exceptions from Bank policies? Have these been approved by Bank management? Is approval for any policy exception sought from the Board?

Yes NoYes NoYes No

Does the project include any critical risks rated “substantial” or “high”?

Yes No

Does the project meet the Regional criteria for readiness for implementation?

Yes No

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A. STRATEGIC CONTEXT AND RATIONALE

1. Key development issues and government strategy The Global climate is changing rapidly. The 2007 summary for policymakers of the Fourth Assessment Report of the Intergovernmental Panel for Climate Change (IPCC) has ratified the cause and the likely impacts of accelerated warming. For the next two decades a warming of about 0.2 degrees Celsius per decade is projected (for a range of IPCC Special Report on Emission Scenarios (SRES)). The mean surface temperature may increase between 1.8 and 6.4 degrees Celsius during the next 100 years. A change of this magnitude is unprecedented and will result in significant impacts to be felt at a global scale. Along with changes in mean climatic conditions, the biosphere potentially faces irreversible and catastrophic system impacts associated, for example, with the reduction of thermo-haline circulation, the melting of the Greenland ice sheet (Epstein 2005), the subsidence of small islands, increases in intensity of hurricanes (Webster et al. 2005), the elimination of permafrost in Siberia and northern Canada and affect ecosystem integrity. Climate change is the most serious challenge being faced by the global ecosystem and may further accelerate the ongoing processes of land degradation. Climate Change impacts will affect forest composition and accelerate processes of land degradation. Colombia has about 55,000 species of vascular plants, making it the country with the highest botanical biodiversity density worldwide. With the rate of increase in surface temperature far outpacing the ability of forest species to migrate to more temperate latitudes, anticipated changes can affect mountain and savannahs and impact ecosystem integrity. This will add to the on-going process of land use change, where already nearly 42 million hectares have been intervened and transformed from their original state. Further, anticipated drastic reductions in runoffs from Colombia’s high altitude moorlands, and tropical glaciers, caused by their warming and rapid retreat of ice caps will also affect the ability of mountain ecosystems in nearby areas to maintain diversity and provide environmental services. Colombia’s emissions of GHG are very modest (0.2% of global, with 0.6% of global population). Within these low intensity emissions, opportunities do exist to mitigate emissions in key sectors. Opportunities for GHG mitigation are being actively pursued in renewable energy, wastewater treatment and energy efficiency (Jepirachi, Amoya, Rio Frio and Furatena projects). Adaptation measures are also being explored and implemented through the Amoya and the recently approved Integrated National Adaptation Project (INAP). Still, the National Strategic Study (NSS) and the first National Communication estimated that 21% of GHG emissions in the country are due to land use change and that over 40% of the opportunities for GHG mitigation in the country are related to reforestation and afforestation. Yet, so far, only one carbon sink project is in the portfolio and it deals with highland ecosystems. Caribbean Savannahs face serious land degradation. Recent inventories carried out by the CVS (Corporacion del Valle del Sinu) have indicated that of the 2.5Mha of land within the Cordoba department, at least 200,000 hectares are moderately degraded pastures and 100,000 hectares are severely degraded. The entire Caribbean savannas show similar patterns of degradation. Land degradation processes yield poorer soils unable to sustain agriculture or cattle ranching, and ultimately result in the impoverishment of local farming and indigenous communities as well as biodiversity. Under a business as usual scenario, land degradation is

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anticipated to accelerate resulting in an additional 100,000 hectares of degraded pastureland over the coming decade (CVS, 2005). The net accumulated loss in income generation for producers in the Cordoba Department, resulting from soil impoverishment is estimated in the range of US$150-250 million. Further land degradation would result in a net loss of soil organic carbon of at least 1t C/ha-y which could total approximately 1 million t C in the next 10 years in the region. Indigenous and black populations in the Caribbean coastal plains have traditionally been at the margin of economic activity and have been relegated to areas that have suffered, over the last decades accelerated processes of degradation. Both groups in the area of influence of the project (Zenu Nation and afro-Colombians) have limited opportunities for economic and social improvements. The cycle of poverty and limited opportunities feeds into each other and further exacerbates the process of environmental degradation in the area. Local governments recognize that degradation is a major root cause of human displacements and social conflict in the region.

Government Strategy Colombia is a party to the Convention on Biological Diversity, the Framework Convention on Climate Change and has also signed and ratified the Kyoto Protocol (Law 629 enacted November 30, 2001). The Government has also issued two National Communications to the United Nations Framework Convention on Climate Change (UNFCCC), which highlight the challenges posed by climate change and outline opportunities for mitigation and carbon sinks in the country. In fact, Colombia has been a leading participant in the discussions on the provisions and regulations of the Clean Development Mechanism (CDM), in the context of the international negotiations under the auspices of the UNFCCC, and has developed a detailed negotiations agenda on items leading to the definition of the rules for the CDM. As part of these activities, the Government has completed, with Bank support, a national assessment for the optimal use of the CDM. The Government has, likewise, taken steps leading to the further development of institutional capacity through: a) the organization of an inter-institutional committee under the aegis of the Vice-president’s office to ensure full coordination on climate change issues; and b) the set up of a climate change office, which has now been in operation for the last three years. On the basis of the studies sponsored as part of the NSS, other inputs and the development of institutional capacity, the Government has defined the main trusts of a National Climate Change Plan, as follows:

• Strengthen the capacity to adapt to the anticipated impacts from climate change; • Promote reduction of emissions and increase the sequestration capacity for GHG; • Minimize the adverse impacts on the nation’s exports of fossil fuels; • Promote scientific capacity and the availability of information on the impacts of climate

change on the nation’s economy and ecosystems; and • Promote financial mechanisms for the adoption and funding of response actions.

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Forestry Law On April 2006, the Colombian Congress approved a new Forestry Law. The Law seeks to establish legal norms that promote the sustainable development of the Colombian forest sector within the framework of a National Plan of Forest Development, and under the coordination of a new National Forest Council. The Law states that development of the forest sector is of strategic and priority interest for Colombia. The Law introduces the concept of ‘vuelo forestal’; this allows a separation of rights to land from rights to timber and has particular application for the development of natural forests. Key aspects of the law include:

• The conservation and sustainable management of natural forests and the establishment of forestry plantations on designated soils are considered national priority and of strategic importance for the country’s development.

• Measures to stop deforestation and illegal logging, as well as the measures to promote sustainable development in the forestry sector have to be adopted and implemented in coordination between the State, the civil society and the productive sectors.

• The State will promote the development of the forestry sector in terms of its economic, social and environmental benefits. The development of the forestry sector is regarded as national priority for the peace making process.

• Forests and agro-forestry systems fulfill a fundamental function in the production of renewable energy, provision of environmental services, employment generation, national socio-economic development, etc. For these reasons the State will support its development in areas that do not have natural forest coverage.

Project eligibility The proposed project meets the selection criteria of the BioCarbon Fund (BCF) and will be the first CO2 (carbon dioxide) emission reduction project in the sector of Land Use, Land Use Change, and Forestry (LULUCF) in Colombia. The project activities correspond to a reforestation effort in accordance with the UNFCC definitions. As indicated above, Colombia ratified the Kyoto Protocol in 2000 and established a Designated National Authority (DNA), which enables the country to participate in the CDM. This allows the development of carbon sequestration activities, which can generate Emission Reductions (ERs) to be traded in the international market, once certified. All project activities will take place on land without land tenure issues. Colombia’s DNA Forest Definition: The project activity will follow the forest definition as set by the DNA in Colombia. For afforestation and reforestation project activities the DNA requires a single minimum tree crown cover value of 30%, a single minimum land area value of 1 ha, and asingle minimum tree height value of 5 meters. Eligibility under the Marrakesh Accords. The area under the program was degraded before December 31, 1989 as required by the Marrakesh Accords in order to be eligible for certification of carbon sinks. The status of land cover was established through remote (LANDSAT) sensing images taken in 1986 and 2000. The reforested areas will have at least 30% of forest cover and meet the minimal requirements as established under the Conference of the Parties (COP) -9. A monitoring plan has been prepared to measure the carbon links during implementation. The monitoring arrangements will also be reviewed during project implementation.

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2. Rationale for Bank involvement The World Bank/Bio Carbon Fund (BCF). A regional strategy for Latin America on responses to climate change identifies carbon sinks as an important element for mitigation of GHG (World Bank, 2004) and the BCF as a tool in the creation of a specific market for tCERs stemming from LULUCF. The World Bank Carbon Funds are part of a larger global effort to combat global climate change. Through the Project, the Bank has a unique opportunity to help alleviate both climate change and poverty reduction by supporting the generation of ERs. The BCF links climate with the goals of conservation and preservation of biodiversity. The development of LULUCF projects in Colombia complements the World Bank support on energy and waste management issues through carbon funds (Jepirachi, Amoya, Rio Frio, and Furatena). Development of carbon sinks in Colombia will assist both the government and the World Bank to develop experience and tools for the anticipated expansion of the scope of activities in reforestation and avoided deforestation, under consideration by the COP to the UNFCCC.

3. Sector issues to be addressed by the project and strategic choices The project contributes to arresting land degradation which is of serious concern in the Caribbean Savannah and has been recognized as a major root cause of rural poverty, human displacements and social conflict in the region. Efforts to maintain and increase soil cover will contribute to reduce soil erosion, maintain humidity and thus contribute to the recovery of soil productivity. The project contributes to sequester carbon and to strengthen the capacity in the use of the associated tools. Even though Colombia’s GHG emissions are relatively low in the global context, the project will capture carbon in a sector which is responsible for 21% of the country’s GHG emissions. At the same time the project will strengthen the capacity in the use of tools for the monitoring of carbon capture. The project will contribute to the improvement of the livelihoods of indigenous people in the project area. Activities under the project focus on the Zenu indigenous population and black populations in the area, groups that have traditionally been marginalized in social and economic programs. The enthusiastic participation of the Zenu nation in the project provides proof of the social benefits of the project. All carbon revenues under the soil component will ultimately target social welfare and economic activities for the Zenu as depicted in the Indigenous People Plan (IPP). Specifically, the project will contribute to improve the income of small landowners on a long-term basis as well as to the restoration of ecosystem integrity in coastal plains subjected to ongoing processes of land degradation.

4. Higher level objectives to which the project contributes The project is also consistent with the Country Assistance Strategy (CAS) and the Country Environmental Analysis (CEA) study. In terms of the CAS, the project is in line with the first objective (Achieving fast and sustainable growth) of the last CAS (Report Number 25129, December 24, 2002) by contributing to environmental sustainability and sustainable growth for the poor. Most project beneficiaries are rural and indigenous communities. The project will diversify their production systems and increase their income. The project would also contribute to rural employment in a region where unemployment rates are around 22%. Project related work

11

activities include establishing tree nurseries, planting, fencing and maintaining trees and managing improved pastures. The CEA shows that land degradation is among the most costly problems associated with environmental degradation. The CEA recommends the generation of alternatives to diversify non-timber forest products and improve the livelihoods of forest-dwelling communities, and the fostering of capacity for both indigenous communities and the rural poor to profit from the sustainable and productive uses of forest areas through the implementation of payments for environmental services. The project is in line with the CEA recommendations as it contributes to arrest land degradation while promoting reforestation and therefore contributes to limiting erosion and prevent floods, root causes of natural disasters in the region. It also contributes to the diversification of agro-forestry production systems. The project responds to Colombia’s strategy for the use of the CDM as outlined in the NSS study by promoting the development of carbon sinks in Colombia. It meets the objectives of the Biodiversity strategy in that it seeks to enhance biodiversity by substituting monocultures with diverse systems that favor higher faunal and microbial populations. It also meets the goals of the forestry strategy by contributing reforestation in degraded lands.

B. PROJECT DESCRIPTION

1. Project development objective The project development objective is to pilot the use of carbon sinks (through sylvo-pastoral and reforestation systems) as a tool to arrest the process of land degradation in the coastal plains of the country (focused on 2200 ha of the Caribbean Savannah ecosystem). This will be achieved through schemes that include: growing trees in pastures, introducing live fences, growing fodder banks, promote direct reforestation and secondary forest regeneration. The improved productivity will increase the storage of carbon both above- and below-ground. The carbon sinks will not change the nature of the Savannah ecosystem. The project also contributes to improvements in the quality of life of local impoverished Zenu indigenous population, and Afro-Colombian communities (“negritudes”), through the labor and forest product revenues related to the reforestation program as well as a fraction of the carbon revenues. The BCF intends to purchase around 250,000 t CO2e in carbon sinks. A letter of intention has already been signed. A letter of no objection from the DNA has also been received. The project has also the endorsement of the BCF Committee and has been vetted by the Sector Manager for LCSEN.

2. Performance indicators The primary performance indicators include: • Purchase of 250,000 tCERs by the BCF. • Establishment of 500 ha of sylvo-pastoral systems (SPS) by indigenous people on moderately

degraded lands that otherwise would become severely degraded. • Reforestation of 1500 ha with Hevea brasilensis.

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• Reforestation of 200 ha with Tabebuia rosea, Bombacopsis quinatum and the exotic species Tectona grandis.

Location. The project is located in the State of Cordoba. The project will be implemented in three municipalities: Valencia, San Andres de Sotavento, and Montelibano. Cordoba contributes with 2.2% to the country Gross National Product (GNP) mostly from livestock activities, agriculture and nickel mining. Traditionally, the department has been dedicated to extensive cattle ranching. Cordoba is the first milk and beef producer in the country. Cattle production has been decreasing in recent years, since 1998 production has had a negative growth of 4.2% per year. Agriculture has also been an important yet declining activity due to land degradation processes. Currently there are 90,000 ha of cultivated land, which has experienced a decline of 30% in ten years. The project illustrates a mechanism to arrest the process of degradation.

The area of the project was selected on the basis of the following criteria: a) the presence of low income populations that would benefit from the project (the Zenu nation which is one of the lowest income populations in the country, as well as low-income Afro-Colombians (“negritudes”); b) the availability of degraded lands with low productivity that would benefit from the restoration of soil productivity through the promotion of carbon sinks; and c) the availability of information on potential carbon sinks and how they would perform in the area. In addition, the area offers significant opportunities for replication in the wider savannah ecosystem in the region.

3. Project components a) Development of Sylvo-pastoral schemes in the Zenu indigenous area. The component will support the establishment of 500 ha of sylvo-pastoral schemes. The area is located in the indigenous community of San Andres de Sotavento. The component will recuperate areas of pastures that are in process of degradation without increasing the number of cattle. The indigenous communities will receive the bulk of the carbon revenues for a social program developed in close consultation with the Zenu nation. An IPP has already been prepared with the Zenu. The component will include the planting of forage shrubs (Gliricydia sepium, Cresentia Cujete and Leucaena leucocephala), and some 40 arboreal species (Pachira quinata, Switenia macrophylla, Tabebuia rosea). Direct seeding (no-tillage) will be used for the crops. In areas where the status of the pasture is too poor, seeds of improved pastures (Brachiaria hybrids) will be used. b) Reforestation. This component will support the reforestation of 1700 hectares, where 1500 ha will be reforested by small farmers mainly with Hevea Brasilensis in small plots of no more than 5 ha, interspersed with pastures and annual crops. The reforested area is located in the “corregimiento de Uré”, Montelíbano municipality in the department of Córdoba. The remaining 200 ha will be managed by farmers with Ceiba, roble and teca and will generate wood products in the municipality of Valencia (Córdoba). The reforestation will be conducted according to procedures recommended by CVS for the region. Plantings will be grown in nurseries and transplanted at four months of age. The reforestation includes three native tree species (Hevea brasilensis, Bombacopsis quinatum, and Tabebuia rosea) and one exotic, Tectona Grandis which was introduced in the region more than three decades ago. Grasses will be established in the soils

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most devoid of vegetation, to favor rapid land cover and minimize erosion while accelerating the rebuild of soil organic matter. Priority in reforestation will be given to areas surrounding water streams and undulating terrain where soil erosion is a major concern.

4. Sustainability and Replicability Soil cover will be gradually recovered during the first three years. The project is expected to sequester about 1 million tCO2e (tons of Carbon Dioxide equivalent) in 30 years. The increasing carbon revenues over time provide an incentive to maintain the plantation and contribute to the project’s sustainability. Besides carbon revenues, each component will generate income from the sale of wood, agricultural products, resins and seeds, further improving the financial sustainability of the project. Thus, the local population has an important stake in the success of the project and is strongly behind its implementation. Training and technical assistance to project beneficiaries will be imparted by CVS with the assistance of the International Centre for Tropical Agriculture (CIAT) and the Colombian National Agricultural Research Organization (CORPOICA) to ensure sustainability of the project activities. This will include training on planting and maintenance practices, fire prevention and water management practices, conservation and replication of seedlings and monitoring of carbon capture in support of the carbon monitoring process. The environmental benefits will further strengthen the sustainability of the project through the development of stable forests in the region. Success of the project will open the door to the use of the Kyoto protocol as catalyst for initiatives to arrest land degradation.

The carbon capture can be maintained for decades after the end of the project as most of the extracted timber is expected to be converted into long lived products (furniture, structural material in constructions etc), while the Hevea stands will be kept under production for the lifespan of the trees, estimated at 40 to 50 years. The net GHG mitigation potential of the project is conservative because the following components have not been included in the estimations of C capture: • The C stored in the biomass of shrubs • Documented increases in soil organic carbon in the SPS and likely also in the reforestation area • Net reduction in entheric methane emissions by cattle due to better quality diets • Documented higher methane sinks by soils due to land rehabilitation (higher aeration and less water-logging during the rainy season) are also not included. • Net reduction in GHG emissions due to elimination of periodic fires in the areas used for the project, were not accounted. Replicability: This project is expected to serve as a catalyst for future expansion of both sylvo-pastoral and reforestation components. Once the feasibility of the approach is proven at a medium size project, involving an important group of farmers, it is very likely that other communities from the Cordoba department and neighboring provinces will follow the example. Demand for high value timber both national and international is growing rapidly and timber production could become an important economic activity in the region. Local agencies and the central

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government provide tax and other incentives to favor forest plantations. CVS and similar regional environmental agencies will continue the promotion of environmentally sound land uses to arrest land degradation and to rehabilitate degraded lands. It is very likely that the use of SPS and reforestation programs will expand to a considerable higher scale in the coming decades, and the income from carbon trading will prove to be a key component for such expansion and their sustainability.

5. Alternatives considered and reasons for rejection Project alternatives considered include: using land recently deforested (rejected as it would not meet Marrakesh Accords); and exclusive use of plantations with alien but commercial species (rejected as it would not meet the emphasis on native soil cover restoration). Major related Projects supported by the Bank and/or other development agencies Linkage with sylvo-pastoral approaches to ecosystem management projects in Colombia, Costa Rica and Nicaragua (sylvo-pastoral projects).The project will closely coordinate with sylvo-pastoral activities in those countries and use the experiences gained from sylvo-pastoral approaches, particularly with the GEF Sylvo-pastoral project in Colombia currently under formulation. The project will take advantage of the information and data generated, specifically from producers in degraded pastures improving land use in their farms as a result of payments for environmental services. The project will also take advantage of the information and data expected to be generated in the Colombia San Nicolas project which seeks to capture CO2 by creating carbon sinks (partly through the planting of endangered and vulnerable species). The project will also link with the experience and benefit from the nursery stock from the tree farm established in Filandia, Quindio (Colombia) as part of the GEF Conservation and Sustainable Use of Biodiversity in the Andes Region project. Finally the project will seek close cooperation with the Colombia CEA and with the Programmatic Development Policy Loan (DPL) for Sustainable Development in Colombia, with special emphasis on improved performance of local environmental authorities and on financial and economic incentives in the forestry sector.

6. Lessons learned and reflected in the project design The Bank’s work on environmental issues in Colombia builds upon opportunities provided under the Kyoto Protocol through sources such as Carbon Finance (CF) and the Global Environment Facility (GEF). Climate Change mitigation initiatives, supported through carbon finance include: Jepirachi Carbon Offset Project1, Rio Amoya Environmental Services Project,2 The Rio Frio Carbon Offset Project3, and Furatena Agroindustry Carbon Offset Project4. The project is the first carbon sink being implemented in Colombia under the CDM. The inclusion of SPSs will provide experience in the generation of long term carbon revenues. The participation of indigenous communities in the implementation of the project will directly contribute to the improvement of their livelihoods and to support tailored social programs. The project will demonstrate how besides supporting afforestation and reforestation activities, the BCF is also a tool to address biodiversity protection and social issues.

1 Project No. P074426, Emissions Reduction Purchase Agreement signed January 27, 2003. 2 Project No. P078220, Emissions Reduction Purchase Agreement signed June 28, 2004. 3 Project No. P088752, Emissions Reduction Purchase Agreement signed June 30, 2005. 4 Project No. P086455, ERPA pending.

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Previous CDM projects formulated with World Bank assistance in Colombia have demonstrated the need to: a) involve the local community in the ownership of the carbon asset, in the process creating a strong incentive for sustainability; b) ensure financial closure prior to completion of Emission Reduction Purchase Agreement (ERPA) discussions; c) maximize the use of tools already developed under the CDM to avoid the additional and complex process of registration of new methodologies. The project has incorporated these lessons into its design.

C. IMPLEMENTATION

1. Institutional and implementation arrangements The institutional arrangements are solid and include research organizations as well as a regional environmental authority. The project will be implemented by the Environmental Regional Government Agency (CVS). CVS’ mandate is to conserve and protect the natural resources in the basins of Sinú and San Jorge rivers. CVS covers most (up to 75%) of the project’s initial investment cost and will receive 50% of the carbon revenues. The other 50% go to the small landholders and to the indigenous community. CVS counts with the technical assistance of CIAT and CORPOICA. CIAT is part of the Consultative Group for International Agriculture Research and has an outstanding list of contributions both in scientific research and in impact to improve the livelihoods of rural people in the tropics. In the project, CIAT is responsible of the technical and methodological aspects of the project. CIAT is in the process of developing a methodology to account for sequestered carbon in the soils and is responsible for extension and technical support to the project beneficiaries. CIAT also brings substantial management and governance skills to the project. CORPOICA is the leading Colombian institution in the development and evaluation of SPSs as an alternative for recovering degraded land and pastures not only in Colombia but also in the Andean Region. In the project CORPOICA is involved in the IPP and in the sylvo-pastoral component as well as in the monitoring of the nitrogen cycle in the project activities. CORPOICA is also responsible for developing the Project Design Document (PDD). As an important outcome of the Colombian Environment DPL, the Ministry has made a recent assessment of institutional capacity of all regional corporations. The assessment made covered three key elements: Efficiency in the implementation of its objectives, financial management and overall management capacity. The CVS ranked sixth amongst all 33 regional corporations with an overall good qualification.

2. Monitoring and evaluation of outcomes/results Project supervision will be carried out by the Bank and an independent Designated Operational Entity (DOE).

Bank supervision. The Bank will supervise technical and safeguard issues for the project implementation period from the time of ERPA signature. Should any issue arise during supervision, the costs would be covered by the Bank’s Carbon Finance Unit (ENVCF). For

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example, if Bank safeguard policies are not followed, the Bank will use the mechanism provided in the ERPA to secure the return to compliance. If necessary carbon payments could be halted until the necessary actions are implemented. This is unlikely to happen given the nature of the project.

DOE validation and registration. The project sponsor may assign a CDM–accredited DOE and pay directly for the validation of the project. Alternatively, the BCF may pay and deduct the cost from carbon fund payments. Once the project is validated the DOE verifies ERs, certifies them as appropriate, and requests the CDM Board to issue Certified Emission Reductions accordingly through the registration process. The verification will be performed periodically until the end of payments. These costs are considered part of the supervision costs and will be paid directly by the project sponsor or by the BCF and deducted from carbon fund payments. Summary of monitoring methodology The Pico Bonito methodology (Honduras) is used to monitor and quantify the carbon sinks under the proposed project. An ex-ante estimate of reductions is included in the annexes.

3. Critical risks and possible controversial aspects Risk Mitigation Failure to secure commitments with individual landholders

Individual agreements will be completed with every farmer prior to planting.

Eligibility under Marrakesh accords is not proven

Project is being designed to carefully meet eligibility criteria.

Carbon sinks do not meet estimates

The current estimates and the applied methodologies will be reviewed involving staff from ENVCF and the BCF. The Pico Bonito methodology (Honduras) is used for monitoring and quantification.

Outbreaks of fires and pests The project sponsor has prepared a fire prevention and mitigation guideline and a pest management plan. Project beneficiaries will receive training on fire prevention and management, in conjunction with local firefighter units. It is thus expected that any emerging fire could be perceived and addressed rapidly. The department has firefighters divisions in each municipality. Fire prevention corridors will be traced where needed.

For SPS: risk of cattle invasion in early stages of tree growing

Fences will be raised around the project area in each farm at least the initial 5 years. Extensive maintenance arrangements will be established.

The use of fertilizers to establish and maintain proper tree and pasture growth, will result in net fluxes of N2O.

Data available from the pilot SPS suggests these additional N2Oemissions can be compensated by net increases of methane sinks in the restored soils. However, during project preparation the necessity of a N2O monitoring plan will be analyzed in order to avoid net N2O increases caused by the project.

Social conflict affects project area. Sustained participation of beneficiaries.

The area around the project has been the focus of a demobilization campaign under the peace initiative of the Government. The local authorities have confirmed that there are no armed groups operating in the area. The project is seen very positively by the local communities thus guaranteeing their long-term support. Wide agreement reached with the local community to address local needs in the course of seeking the project objectives further reduces the likelihood of social unrest in the

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area. Reports by local authorities further confirm that indicators of social unrest (absence of kidnappings, assaults) reflect very positively on the local results of the peace initiative. As a result of all these efforts, the area is being showcased by the regional authorities as an example of pacification. Also, the area of the Zenu has traditionally been devoid of social unrest. CVS has committed to carefully monitor the situation and report to the Bank on any developments that may negatively affect the ability to implement project activities, suggesting alternatives that could compensate for any potential delays or reductions in the participating area and communities. Still, the situation today and actions being taken under the peace initiative bode positively on prospects for stability and security in the area.

Sinks are not permanent. Conversion of some project areas into different land uses (e.g. high intensive agriculture) before project end.

Local landowners are aware of the multiple benefits of the improved land-use. CVS will sign contracts with each beneficiary participating in the project activities, securing long term commitments. Also, current economic analysis indicates that land use changes are not financially feasible to farmers. A share of the Carbon Revenues to farmers represents an additional incentive to secure sink permanence.

New forestry law affects the viability of the project

A legal analysis of the new law has been conducted. The Law provides greater certainty of investment for projects of the kind contemplated here. Art 25 emphasizes that products of forest plantations established by individuals on private property remain private property; property of forest plantations performed for the State with the participation of private agents will be regulated by the terms of their respective contracts. Art 29 requires, inter alia, that agro-forestry, plantation forests, and sylvo-pastoral enterprises financed by the sale of environmental services in the framework of a multilateral agreement must obtain approval of a Plan of Establishment and Forest Management from the competent authority. Art 35, the State guarantees not to modify forest contracts for a period of 20 years to give security to investments.

4. ERPA conditions and covenants Carbon finance is not part of the World Bank’s lending program. There will be no regular loan or grant disbursement. The Bank as trustee of the BCF will make direct payments in accordance with the ERPA. The generic ERPA table of contents is included as Annex 6. The Climate Change Initiatives Grant (CCIG) will be managed through a separate grant agreement.

D. APPRAISAL SUMMARY

1. Financial analysis A financial analysis was conducted for a period of 30 years. The overall project was analyzed in detail to ascertain its viability. The project shows an IRR of 20% and a NPV of US$ 7.5 million. The initial investment required was estimated at US$ 4.3 million (NPV). The revenues from ERs will be shared between CVS (50%) and the land owners (50%) in order to cover part of their

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contribution to the initial investments. In addition to the recovery from CERs, it is also necessary to include the social benefits linked to income and employment generated by the project. When such benefits are included as part of the economic analysis, the project quickly recovers the investment. (See Economic Analysis in Annex 4.) Each subcomponent was also studied, independently. The results for the rubber plantation sub-component indicate that investing in Hevea brasiliensis has an IRR of around 20%. However, the producer would face negative flows in the first five years before the production starts generating revenues. These negative flows are difficult to overcome by the beneficiaries because of the producers’ low income level. The reforestation sub-component similarly faces negative cash flows in the first six years. The sylvo-pastoral component requires an initial investment, well beyond the financial feasibility of the Zenu individual participants, during the first three years of implementation. Thus, the support from BCF facilitates the initial investments and the participation of CVS in the project as the investor is critical in this project. CVS acts as a partner in the enterprise, absorbing risks, guaranteeing a good profitability to the beneficiaries. It also partly finances complementary activities that generate immediate revenues. The initial investment costs amount to USD 4.3 million (NPV) over the first five years and will be covered by contributions from CVS, and the caucho and sylvo-pastoral landowners. Initial investments include the machinery, equipments, fences, site preparation, fertilization, soil preparation, seedling and planting. Operating cost accrue during the whole project implementation period and consist of cost for thinning, pruning, clearing, replanting, fuel and transport services, repairs and maintenance, harvesting, administration and others. Total operating cost for a period of 20 years amount to approximately USD 24 million. The project considers several revenues from ERs, wood and agricultural products, and seeds. The total revenues for 20 years are estimated at about USD 36 million.

2. Technical Baseline . The baseline scenario assumes that pastures will continue to be overgrazed beyond its carrying capacity leading to resource depletion and consequent land degradation. Baseline carbon stocks have been calculated by measuring the C accumulated in the biomass of current pastures as well as carbon stock in the degraded soils in farms representative of the land where the project will be implemented. Maximum potential carbon recovery in the region has been estimated by comparing total C stocks under a patch of undisturbed original forest, which is considered to represent the peak of C stocks under natural conditions. The contribution of the proposed project to recover C stocks has been calculated using available data for a prototype SPS in the region, where C accumulation in biomass and soils have been monitored. The contribution from the reforestation component has been estimated based on growth rates of native trees that have been measured under existing reforestation projects with the same species in the region. Although data on expected SPS project effects on soil C stocks and other greenhouse gases are available, for this project only the C storage in the biomass of planted trees was considered.

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Additionality Annex 16 presents a summary of the additionality analysis conducted following the CDM tool for demonstration of additionality in afforestation / reforestation project. A barrier analysis shows that the project could not be implemented without the existence of the CDM financial incentive due to the presence of insurmountable barriers. The following barriers were identified:

• Technological barriers such as access to planting material, lack of forestry knowledge by cattle ranchers, and lack of knowledge on management of SPS by the Zenu community.

• Investment barriers associated with long maturation times, high initial investment, access to capital markets, difficulties securing long term debt due to perceived risk of working with poor segments of the society.

• Social barrier. The beneficiary community is a well defined ethnic group, afro-Colombian, mostly low income, marginalized, that has traditionally been excluded from market economies.

It is clear that these barriers do not prevent, restrict or limit the present land use patterns. The potential registration of the project activities as an afforestation/reforestation (A/R) CDM project does not improve substantially the financial returns of the project. Nonetheless, the CDM registration has attracted diverse entities to work together in promoting the project activities, through which the barriers would be overcome. In addition, without the incentive of the CDM participation, it would have been next to impossible to get these different social groups act together nor would different institutions have come forward to support the activity. Therefore, there would not have been an effort to sequester carbon in this region. Most likely the isolated efforts of the ethnic communities Zenu and the Afro-Colombians (Negritudes) would have gone unnoticed. Leakage. The project is not expected to cause any appreciable leakage outside its boundaries. Chances of land use intensification in areas outside the project resulting from project implementation are very low. In the areas dedicated to SPSs, the land use system will not be changed but the productivity of the land will be restored. In the areas dedicated to reforestation, current animal load is extremely low due to low productivity associated to degradation. The same herds could be moved to a smaller area of more productive SPSs and consequently no net change in herd sizes are expected as a consequence of the project and therefore no net emissions from methane due to additional cattle herd size can be expected. The same productivity could be obtained with less land and consequently released degraded land could be redirected to forest plantations. Potential risk of farmers taking advantage of the more productive SPS to increase the animal load beyond its carrying capacity is internally controlled because each plot in the SPS has a fixed period for grazing and should enter into a resting period before being grazed again. If overgrazing is given to a plot, the time for grazing will be reduced and there will be periods where no plots would be available for grazing. Any potential faults to these schemes will be evidenced as a rapid decay in productivity in short periods of time and this will provide the required feedback to correct the grazing management times. The farmers will be properly trained on the timing and grazing periods that the SPS can sustain.

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Additional benefits in terms of other GHG are expected from the project given that there is documented information on increased sinks of methane in soils under SPS as compared with traditional pastureland. Additional net carbon sequestration in soils will also occur that has not being included in the C budgets.

3. Economic A socio-economic analysis has been conducted quantifying the social benefits generated through the project which consist of additional revenues and employment. The analysis concluded that the annual income will increase by USD 2185 per family. A detailed description is included in Annex 4.

4. Social The project will work with groups of farmers and the local Zenu indigenous community and provide opportunities to share experiences and build social capital. Approximately 400 farmers in 21 communities will benefit directly from the project. The project will contribute to enhance capacities of local organizations. Increased productivity and resilience of land use systems will improve financial earnings of participating farmers. Increased earnings of the project participants will have a multiplier effect in the community. Improved cash flows will enable farmers to hire local laborers, many of whom are under- or unemployed. Thus, from a social perspective, the project benefits mainly an indigenous community as well as rural communities that will diversify their production systems and will see an increase in their income and warrant the sustainability of their livelihood which is currently at risk from land degradation. The establishment of tree nurseries, planting, fencing, and maintaining trees and managing improved pastures will provide at least 270 full time jobs in the initial year and 140 full time jobs the subsequent years. Job generation is a critical bottleneck for the region, where unemployment rates are around 22%. Each job will generate annual income of around US$ 2400 and will help to improve the livelihood of an average of 5 members per family. Local indigenous ethnic groups (Zenu) located within the area of influence of the project will benefit from strengthened community organizations that will participate in the implementation of the project. Local and national authorities will benefit from reduced migration of landholders to urban settlements and from job creation. Local economies will benefit from more resources being injected in the economy through the project implementation and specially trough higher productivity. Energy and potable water suppliers will benefit from lower operational cost associated with less sediment in water streams and dams. Local and regional institutions including academic bodies will benefit from capacity building in topics related to CDM projects and SPSs. Local and regional population will benefit from less pollution from periodic burning of the pastureland vegetation during the dry season. Dissemination, awareness and training. Project implementation will also benefit from a partnership with the Universidad de Cordoba. Information products (brochures, handouts, videos) will be prepared for local authorities and policy makers to increase awareness of the potential project benefits. All farmers involved in the project will be fully trained on the

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establishment and management of a novel methodology. CIAT will fund graduate students registered at Universidad de Cordoba to conduct research aimed at monitoring changes in soil characteristics and processes resulting from the land recuperation. Aspects such as soil fauna, nutrient and soil dynamics, as well as fluxes of GHG will be monitored as part of these studies. Indigenous people: An important community of the Zenu ethnic group lives within the project. No recent population census exists for this community but it is estimated that there are around 1000 Zenus in the Cordoba department. These communities have been largely ignored in the development plans for the region and have no access to employment and very limited access to education. Lack of opportunities has forced them to become more dependent on jobs outside their territory. By involving the Zenu community, the project directly contributes to alleviate extreme poverty.

Land tenure and Project Participants. The project will take place on privately held land without land tenure issues. Essentially all the area in the region has title rights going back more than 100 years. No area under natural parks of nationally protected reserves will be included as part of this project.

5. Environment. An environmental assessment was conducted for each project component following best national practices and general guidance for the Bank. Each task from all components was studied on its environmental consequences and several dimensions were quantified. Overall the results indicated that the project is overwhelmingly positive to the environment. Over 90% of all the potential impacts are positive (See Annex 15). Expected environmental benefits include: Conservation of the natural resource base, enhanced biodiversity by substituting monospecies land cover by more diverse systems that favor higher faunal and microbial populations, reduced soil erosion and consequently improved soil productivity. The project contributes to sequestration of Carbon by reducing the area that is periodically burned in the region. Trans-boundary migratory fauna (birds, butterflies) will benefit from green patches that are non-existent in the savannah during the dry season. Deforestation of natural timbers would be reduced through the production of timber species. The negative impacts are identified and characterized, and mitigation options are identified as well. Specific management plans at the farm level will be prepared for each area to guide project implementation and to minimize environmental impacts.

6. Safeguard Policies. The project is expected to trigger Environmental Assessment (OP/BP 4.01), Forests (OP/BP 4.36) because of the nature of the project, and Indigenous Peoples (OP 4.10). An important community of the Zenu ethnic group lives within the area where the project will be implemented. It is estimated that there are around 1000 indigenous people within the Cordoba department. By involving a group of at least 5 sites within the ethnic community in the project, it is expected that the whole community could benefit from new alternatives to improve their livelihoods. The borrower has prepared an Indigenous Peoples Plan (IPP) in consultation with the Zenu and support from the project team.

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Natural Habitats (OP/BP 4.04) is triggered on account of the planting of non native species. Despite current degradation, pastureland and even abandoned areas are still host of a diversity of reptiles, insects, birds etc. By converting these lands into SPS or forest plantations certain specific niches may be lost or reduced and could potentially have an impact on such species. Any potential impact is expected to be very minor given that the area of the project is very small compared to the current area of degraded land. The project is expected to use agrochemicals, such as fertilizers, pesticides and herbicides. The Pest Management safeguard (OP 4.09) is triggered. CVS, CORPOICA and CIAT have developed a manual to guide the use of pesticides, minimize the use of dangerous herbicides and pesticides, provide guidelines on the usage of agrochemicals, including transport, storage, usage, and disposal. This manual will serve also as basic training material.

Table 1: Applicability of Safeguard Policies to the Precious Wood Project Policy Applicability

Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) Yes

Natural Habitats (OP 4.04, BP 4.04, GP 4.04) Yes

Forestry (OP 4.36, GP 4.36) Yes

Pest Management (OP 4.09) Yes

Cultural Property (OPN 11.03) No

Indigenous Peoples (OP 4.10) Yes

Involuntary Resettlement (OP/BP 4.12) No

Safety Dams (OP 4.37, BP 4.37) No

Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) No

Project in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) No

OP = Operational Policy, BP = Best Practice, GP = Good Practice, OPN = Operational Policy Note, OD = Operational Directive

E. COMPLIANCE WITH BANK POLICIES This project complies with all World Bank policies.

__________________ Walter Vergara Task Manager

__________________ Laura Tuck Sector Director

__________________ Makhtar Diop Country Director

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 1: Detailed Project Description Project description and proposed activitiesThe project development objective is to pilot the use of carbon sinks (through sylvo-pastoral and reforestation systems) as a tool to arrest the process of land degradation in the coastal plains of the country (focused on 2200 ha of the Caribbean Savannah ecosystem). This will be achieved through schemes that include: growing trees in pastures, introducing live fences, growing fodder banks, promote direct reforestation and secondary forest regeneration. The improved productivity will increase the storage of carbon both above- and below-ground. The carbon sinks will not change the nature of the Savannah ecosystem. The project also contributes to improvements in the quality of life of local impoverished Zenu indigenous population, and Afro-Colombian communities (“negritudes”), through the labor and forest product revenues related to the reforestation program as well as a fraction of the carbon revenues. The BCF intends to purchase around 250,000 t CO2e in carbon sinks. A letter of intention has already been signed. A letter of no objection from the DNA has also been received. The project has also the endorsement of the BCF Committee and has been vetted by the Sector Manager for LCSEN. a) Establishment of 500 hectares of sylvo-pastoral systems to recuperate areas of pastures that are in process of degradation;

The project will expand the use of a SPS developed by CORPOICA. The SPS will be managed by the indigenous community that will receive a share of the ER revenues for social programs. The system includes the planting of 400 forage shrubs per hectare (Gliricydia sepium, Cresentia Cujete and Leucaena leucocephala) that are very well adapted to the region, and a low number (40 per hectare) of high-value timber species (Pachira quinata, Switenia macrophylla and Tabebuia rosea). The original degraded pastures are recuperated using improved grasses, fertilizer application and other interventions to correct soil compaction. By providing forage during the nearly four months of severe dry season, the SPS doubles milk production compared to traditional systems, with clear benefits to rural income (Cajas et al, 2002). To overcome establishment costs that exceed the capability of local producers, the external resources will be employed to cover initial expenses. Otherwise, the systems will not expand at a significant rate to slow the rampant process of land degradation. The overall strategy includes improvements both in the agricultural productivity and in recovering the natural resource base in approximately 400 farms. A comprehensive study by CIAT and CORPOICA (Rondon et al, 2003) shows that the SPS increases net carbon stored in soils and biomass and increases net sinks of methane by soils. Overall, a net gain is realized of approximately 15 t CO2 equivalents per ha per year when degraded grazed pastures were converted into productive SPS. Tree coverage under the SPS reaches around 50% of the total area of the plots and is maintained at that level by regular pruning.

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Considering the Carbon plant uptake alone, the SPS result in a net C accumulation rate of 7.7 t CO2 equivalents per hectare per year (BioCFsequestration Input-Sylvo-pastoral). Although increasing tree density in the SPSs will increase net C accumulation, it will also reduce the maximum cattle productivity of the system. Proposed tree density will be targeted at maximizing livestock productivity on the SPS, while trying to reach high levels of C sequestration. The project will establish 500 ha of SPS on moderately degraded lands that otherwise would become severely degraded. b) Establishment of 1700 ha with reforestation systems. In vast areas where land degradation has advanced to a severe grade, the project will reforest an area of 1700 ha with mostly native tree species such as Hervea brasilensis, Bombacopsis quinatum, and Tabebuia rosea. One considered exotic species includes Tectona Grandis which has been introduced in the region more than 3 decades ago. Grasses will be established in the soils most devoid of vegetation, to favor rapid land cover and minimize erosion while accelerating the rebuild of soil organic matter. Priority in reforestation will be given to areas surrounding water streams and undulating terrain where soil erosion is a major problem. Given the high tree number per unit area (1,111/ha) used for the reforestation, tree cover will reach 60% in the fourth year and 90% in year 10. Total carbon accumulation of 20 t CO2 equivalents per hectare per year (BioCFsequestration Input-Reforestation) could be obtained in the reforestation sites. Reforestation component will be targeted at 1500 hectares within small farms and will have a positive impact in enhancing the livelihood of poor rural communities in a region where annual income is very low and unemployment rates are very high. 200 ha will be reforested in big farms. Technology to be employed:

• Seeding and fertilization of improved pastures already known to adapt to the bioclimatic conditions of the region.

• Planting of forage shrubs and trees on areas under degraded pastures and restoration of productive pastures.

• Management of planted species to reach appropriate height and density. • Physical practices to improve the most constrained areas.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 2: Selection of project area Introduction.

The area of the project was selected on the basis of three criteria: a) the presence of low income populations that would benefit from the project. In this case, the Zenu indigenous population which is one of the lowest income populations in the country, as well as low-income, Afro-Colombians (“negritudes”); b) the availability of degraded lands, with low productivity that would benefit from the restoration of soil productivity through the promotion of carbon sinks; and c) the availability of information on potential carbon sinks and how they would perform in the area; this information is being provided by CORPOICA and CIAT, on the basis of long-term research projects in the coastal savannahs. In addition, the area offers significant opportunities for replication in the wider savannah ecosystem in the region.

The purpose of the Caribbean Savannah Carbon Sink project is to implement forestry and SPSs in areas that have low agricultural productivity but still have the potential for these new systems. The implementation of these systems seeks to contribute to carbon sequestration and at the same time to offer new alternatives to producers whose current activities do not optimize their economic, environmental, and social benefit. For this purpose, it has become necessary to evaluate the potential that these proposed alternatives have for sequestering carbon and increasing social and economic benefits in 2,200 hectares of the Córdoba region. For this evaluation, the CVS–CORPOICA–CIAT consortium has carried out the following activities: 1) Multi-temporal analysis of changes in land use to confirm that project areas are not located in zones whose coverage was forest prior to 1989. 2) Estimate of carbon accumulation rates in biomass for rubber, ceiba, teak plantations and SPSs. 3) Collection of soil samples to evaluate carbon content under different land uses. In terms of key results, it was found that none of the areas selected for the implementation of project activities corresponds to zones that were forests prior to 1989. With regard to the estimate of CO2 accumulation rates, a total of 940,926 CERs were estimated for year 30 of the project; these were calculated according to the growth rates of the project’s different tree species and the rate at which they are planted. The latter aspect is important because the 2,200 ha will be implemented gradually during the first three years. With regard to soil carbon estimates, the methodology is described as well as its principles in order to measure carbon under different soil use conditions. During project monitoring, the proposed methodology allows costs to be reduced because there will soon be curves of carbon accumulation according to the spectrum response of the soil sample. This will significantly reduce later soil analyses. In terms of the estimate of

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carbon in project soils, there is still no final result because several laboratory results have not yet arrived from the United States.

Project Area:The Colombia Savannah project area encompasses 2,200 hectares of the municipalities of Valencia, San Andrés de Sotavento, and Montelibano in Córdoba State on the Caribbean coast of Colombia. Geographically, the northern zone of Córdoba encompasses the valleys of the Sinú and San Jorge rivers, the savannahs, and the coast. It is flat and constitutes 70% of the state’s total land areas. The mountainous southern zone is formed by the Abibe, San Jerónimo, and Ayabel ranges, where the Western Cordillera ends (Figure 1).

Figure 1. Geographic location of the State of Córdoba and the municipalities involved

Recent inventories from the Corporación del Valle del Sinu (CVS) have indicated that of the 2.5Mha of land in the Cordoba State, at least 200,000 hectares are moderately degraded pastures while there are 100,000 hectares of severely degraded areas. The entire Caribbean savannas are much larger and show similar patterns of degradation. This worsening in land degradation is

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estimated to reduce income generation in the region at a rate of around 20M US$ per year. Local governments recognize that degradation is a major root cause of human displacements and social conflict in the region. Under business as usual scenario, degradation is anticipated to accelerate resulting in an additional 100,000 hectares of degraded pastureland in the coming decade (CVS). The net accumulated loss in income generation for producers in the Cordoba State is estimated in the range of 150 – 250M US$. Further land degradation would result in a net loss of soil organic carbon of at least 1t C/ha-y which could total approximately 1 million t C in the next 10 years in the region. Project Area Selection

The areas were selected for the implementation of project components (reforestation and SPSs) based on the land cover analysis. The selected areas are located in zones that were not forested in 1987 (before 1989 as required by the Marrakesh Accords).

After coverage in the State of Córdoba was classified through the use of LandSat satellite images and the areas of interest located in the municipalities of San Andrés de Sotavento, Valencia, and Montelibano were superimposed, it was concluded that forest cover in the municipalities of San Andrés de Sotavento and Valencia were not very representative in 1987. The south-west part of the municipality of Montelibano had forest areas; this region has elevations ranging from 200 to 2,500 msnm.

Materials and Methodology of Analysis

A study was conducted to characterize land use in 1987 by means of LandSat ETM+ Satellite Images in Córdoba State for the purpose of determining existing forest coverages at that time in entire Córdoba State. The work was carried out using with a simplified methodology that reduced time and costs without affecting the results of the classification. In order to characterize coverages, two types of classification were integrated: automatic and visual. The former was generated with ERDAS digital image processing software with which automatic classifications were made as supervised, unsupervised, and mixed. The visual classification used ArcView GIS and eCognition software. It was necessary to carry out a study of available satellite images for the area of interest, taking the following parameters into account:

• Date of acquisition. The images must have an acquisition date equal to or less than the

year 1989. • Spatial resolution. This resolution must allow the determination of coverages according

to the working scale established in the project, which varies from 1:75000 to 1:250.000. • Cloud cover. Selected images must have minimal cloud cover for the study area. • Cost. Basically, free images available on the net and/or in the CIAT database were

sought. To cover the total area of the Department of Córdoba with satellite images, four images were downloaded and processed. The characteristics of images selected for project development are summarized in the following table:

Table 1. Summary of Characteristics of Images Used in the Project

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CHARACTERISTICS DESCRIPTION Satellite Images LandSat, Sensor +ETM Acquisition Date Path 10 Row 54 Path 10 Row 55 Path 9 Row 54 Path 9 Row 55

March 21, 1987 March 21, 1987 January 31, 1987 January 30, 1987 Seven (7):

3 visible bands (1 red, 1 green, 1 blue)

3 visible in infrared (1 near, 1 in the middle, and1 in the thermal wavelength) Number of Bands

1 panchromatic band 28.5 meters on visible band and near and middle infrared 57 meters on thermal band Spatial Resolution

15 meters for panchromatic band

Corrections Radiometric and Geometric

Coordinate System UTM projection UTM, Ellipsoid reference WGS84, Reference datum WGS84, zone 18 North

Once the images were processed and defined, a mosaic was created with the four satellite images of the State of Córdoba. This mosaic was created to obtain an image of the entire department, for purposes of subsequent classification. The mosaic generated was of high quality because it had no serious geometric deformities, it is in agreement with the zone’s vector information, and the color throughout the mosaic is homogenous (Figure2).

Figure 2. Mosaic generated from four satellite images, combination of bands 5-4-3

.

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To improve the spatial resolution of the images, the panchromatic image was combined with the multispectral image. The principal components method was used because it modifies to a lesser percent the digital values of pixels and the nearest neighbor method. As a result, 15-meter resolution images were obtained (Figure 3).

Figure 3. LandSat +ETM Image. Bands 5-4-3, projected as R-G-B, respectively. Left, multispectral image

with a 28.5 meter resolution. Right, combined image (multispectral and panchromatic) with a 15 meter resolution. The boxes show the heterogeneity of classes.

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The methodology used to characterize coverages was based on a fusion between a automatic pixel-to-pixel classification5 and a visual one,6 replying of various sources (for example, classification of actual and potential use carried out by CVS) with the objective of having a prior understanding of the study zone and identifying the required training areas (Figure 4).

Figure 4. Basic information for the study and understanding of coverages in the study area

Different types of classifications—Supervised, Unsupervised, and Mixed—were produced, with different decision-making rules or parameters for the classification: maximum probability, Mahalanobis distance, and minimum distance, in order to establish which of them best reflected the reality of the coverages. The best result or that with the least confusion among classes was obtained with the mixed classification. This was determined by superimposing points (randomly selected and belonging to a known class) with the results of the different classifications. The more agreement there was between these and the classes, the less confusion there was in the classification. Once the automatic classification of the image was defined, a salt-and-pepper filter was used to eliminate the scattered pixels that remained within the classes. Therefore, three consecutive classifications were generated with grouping windows of 3X3 each, i.e., the final classification to be worked on would have a total grouping of pixels of 9X9. The non-automated intervention or visual classification consisted of the Manual Union of Polygon and Modification of Edges. Because the diversity of coverages present in the image and their respective areas produced a considerably segmented classification, the polygon grouping was necessary. This was possible because the study area has types of grouped or generally sector-specific crops, comprising large areas of land with the same characteristics; for project purposes, no discrimination was needed among them. This stage was supported by a segmentation performed by eCognition digital processing software which integrates parameters

5 Emilio Chuvieco. Fundamentos de Teledetección Espacial. 1996 6 Thomas M. Lillesand and Ralph W. Kiefer. Remote Sensing and Image Interpretation. 2000

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such as form, color, texture, and scale.7 It should be noted that the sizes of these segments depend on the selected scale or level of detail and that the image’s segmentation should be preceded by an image of vegetation indexes. Once the automatic and visual classification stage was completed, the coverage corresponding to the year 1987 in municipalities of interest (San Andrés de Sotavento, Valencia, and Montelibano) was determined, in order to determine whether not these areas were forested at that time (Figure 5).

7 ECOGNITION. Understanding the power of eCognition Professional. http://www.definiens-imaging.com/ecognition/pro/tour.htm

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Figure 5. Classification of Coverages for 1987 in the Department of Córdoba.

Once the automatic and visual classification stage was completed, the coverage corresponding to the year 1987 in municipalities of interest (San Andrés de Sotavento, Valencia, and Montelibano) was determined, in order to determine whether not these areas were forested at that time (Figures 6, 7, and 8).

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Figure 6. Representative coverages of the Municipality of San Andrés de Sotavento for 1987

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Figure 7. Representative coverages of the Municipality of Valencia in 1987

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Figure 8. Representative coverages of the municipality of Montelíbano in 1987

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Figure 9. Right: Photographs of coverage, municipality of Valencia. Left: Summary table of coverage for study areas.

Current Land Use

Current vegetation in the degraded areas is dominated by sparse native grasses and weeds with predominance of bare soils in the most severely degraded areas. Introduced grasses are not highly productive, Angleton grass (Dichanthium aristatum) and colosuana (Bothriocloa pertusa) and smaller areas with Panicum maximum and Brachiaria in the moderately degraded areas. Although originally most of the area was covered by forest, the land was cleared in the last century to open crop and pastureland. Unsustainable agricultural practices and cattle ranching in excess of carrying capacity further aggravated the issue of land degradation. Currently, tree coverage is very low (less than 3%) in the area with only occasional presence of Cresentia cujete and Guazima ulmifolia. The landscape is slightly undulated along the borders of the savanna but is mostly flatland in the rest of the area. The forest cover in 1990 was of similar magnitude in the degraded areas.

The uses of land in the project area are mainly agriculture and live stock (bovine). Agricultural products include rice, corn, cassava, chili, and papaya in small scale farming. Few financially feasible land uses exist for the Caribbean savannas. Access to markets is often limited, so products receive low prices. Although some 20 hectares of SPSs have been established on producer’s farms in the last years, this has been highly subsidized by Corpoica as a mechanism to promote the technology. The Institutions do not have however the resources to continue that support and therefore a different mechanism needs to be found.

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Beneficiaries The project will work with groups of farmers and the local Zenu indigenous community and provide opportunities to share experiences and build social capital. Approximately 400 farmers in 21 communities will benefit directly from the project. (For more description of the beneficiaries, see Annex on social assessment.)

Indigenous and black populations have traditionally been at the margin of economic activity and have been relegated to areas that have suffered, over the last decades accelerated processes of degradation. Both groups in the area (Zenu Nation and afro-Colombians) have limited opportunities for economic and social improvements. The cycle of poverty and limited opportunities feeds into each other and further exacerbates the process of environmental degradation in the area. Local governments recognize that degradation is a major root cause of human displacements and social conflict in the region. The project will contribute to enhance capacities of local organizations. Increased productivity and resilience of land use systems will improve financial earnings of participating farmers. Increased earnings of the project participants will have a multiplier effect in the community. Improved cash flows will enable farmers to hire local laborers, many of whom are under- and un-employed. The establishment of tree nurseries, planting, fencing and maintain trees and manage improved pastures will provide at least 270 full time jobs in the initial year and 140 full time jobs the subsequent years. Job generation is a critical bottleneck for the region, where unemployment rates are at around 22%. Each job will generate annual income of around US$ 2400 and will help to improve the livelihood of an average of 5 members per family. Local indigenous ethnic groups (Zenu tribes) located within the area of influence of the project will benefit from strengthened community organizations that will participate in the implementation of the project.

Local and national authorities will benefit from reduced migration of landholders to urban settlements and for job creation. Local economies will benefit from more resources being injected in the economy through the project implementation and specially trough higher productivity. Energy and potable water suppliers will benefit from lower operational cost associated with less sediment in water streams and dams. Local and regional institutions including academic bodies will benefit from capacity building in topics related to CDM projects and SPSs. Local and regional population will benefit from less pollution from periodic burning of the pastureland vegetation during the dry season.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 3: Implementation arrangements The project will be implemented by the Environmental Regional Government Agency (CVS). CVS’ mandate is to conserve and protect the natural resources in the basins of Sinú and San Jorge rivers. The project counts with the technical support from Centro Internacional de Agricultura Tropical (CIAT) and the Colombian National Agricultural Research Organization (CORPOICA). CIAT is part of the Consultative Group for International Agriculture Research. It was created in 1970 and has an outstanding list of contributions both in scientific research and in impact to improve the livelihoods of rural people in the tropics. CIAT was the first center of the CG system with a Climate Change project. CIAT researchers found for the first time (Fisher et al. in Nature,1994) that tropical pastures can sequester significant amounts of carbon in soils. Since then, the center has been active in research to minimize the emission of greenhouse gases from agricultural activities and to increase carbon stocks in soils and biomass. At least 30 scientific publications have been published on this theme. More recently, CIAT researchers are pioneering research aimed at the long-term carbon sequestration in soils through the agricultural use of charcoal. CIAT has collaborated with the Ministry of Environment of Colombia in the preparation of national communications to the UNFCC on national inventories of GHG. CIAT researchers also conducted studies to assess the potential of specific agro-ecosystems (such the Savannas from Colombia and Venezuela, the Amazon rainforest and the Caribbean region in Colombia) to sequester carbon and mitigate GHG emissions (Rondon et al, 2004, 2000). The center has developed strong partnerships with national and international institutions ranging from research centers to government bodies, academia and NGOs. CIAT has an international staff of 130 scientists conducting research and development activities on three continents. Corpoica is the Colombian National Agricultural Research organization with the mandate to generate and validate technology suitable for the Colombian agricultural systems. As such, Corpoica is the leading institution in the development and evaluation of SPSs as an alternative for recovering degraded land and pastures not only in Colombia but also in the Andean Region. Corpoica has also a great deal of expertise in soil conservation and water management practices and in evaluating the environmental impacts of agricultural practices. Corpoica has a regional Center in Monteria where 25 researchers are dedicated to improving livestock and crop production for the Caribbean savannas. Nationally, Corpoica has 300 researchers and maintains links with all the relevant NGOs and governmental bodies concerned with agriculture and livestock in Colombia.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 4: Financial analysis of the project Introduction A financial analysis of the project is summarized in this annex. To better understand the financial implications of the proposed carbon sink operation, and to guide the allocation of public resources to environmental and social ends, a stakeholder financial analysis was conducted. That is, each component was independently studied, some were subdivided to explore the implications among different community echelons, and the project in its entirety was also analyzed. The financial analysis was also used to guide public policy. CVS, following previous programs, initiated the design of each component under the hypothesis that the Corporation will make the whole investment required. The beneficiaries will made some commitments according to their income levels and bargaining power and the revenues from the sale of carbon ERs would be split or transferred to the CVS as payment for the investment made. The financial analyses indicated that other arrangements are possible were the investor, CVS, can recuperate the investment made, or share the revenues of its investment while minimizing the risks to vulnerable families. Financial Analysis: the Project The Project, the three components already described (see Annex 2) jointly analyzed, presents an internal rate of return of around 20%, which is marginally improved when carbon sales revenues are included (additional half a point). These results are based on the detailed analysis of costs and revenues to be expected from project activities. The following basic hypothesis were used:

1. The project costs and revenues are the sum of costs of each component and the revenues generated by the goods and services produced. Similarly, the project investment is the sum of the investment required to implement each component, and the equity corresponds to the monetary equivalent of each participant contribution.

2. A 30 year period was used for the analysis, although carbon emissions reductions are accounted only until year 2017.

3. The planting period, initial investment period, is defined as 3 years, starting 2007. In the first year 660 ha are to be benefited, For the years 2008 and 2009 the remaining area will benefit at a rate of 770 ha/year.

4. For each of the proposed alternatives, conventional financial analyses were performed using cash flows per hectare, estimating the net present value at different discount rates. Internal rates of return are also estimated for each alternative.

5. For each group of classified beneficiaries, baseline analyses are presented as well as the cash flows that would be generated for producers with the project’s implementation.

6. For those groups that require special support because their incomes are weak, to ensure project continuity complementary productive alternatives were designed; these will be financed in part by CVS.

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7. No land purchase is envisioned. Nonetheless, for purpose of the analysis, and given the long term commitment of this asset, the value of land is assumed to be contributed by the beneficiaries to the project. The value of land is count as equity provided by the farmers.

FINANCIAL ANALYSIS SUMMARY: General Assumptions:

Hectares 2,200Land Owners 50%

CVS 50%

Area (ha)

Ref Roble 3% 70Ref Ceiba 3% 70Ref Teca 3% 60

Ref Caucho 68% 1500Silvopastoril 23% 500

0

TOTAL 100% 2200

SCENARIO Revenues Carbon Credits

SCENARIO Total Planted Areas as a percentage of

the total hectares

Investments: Project start-up Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 NPV (10%)

Million

Initial Investments (including taxes if any):$ 2006-2013Land $ 627,972 732,629 732,629 0 0 1.73Machinery / Equipments $ 2,500 5,056 7,341 4,571 2,286 0.02Buildings / Fences / Site preparation$ 194,822 244,124 265,863 43,478 21,739 0.62Fertilization, Pesticides $ 212,473 241,933 241,933 0 0 0.57Soil prep., Seedling, Planting $ 507,374 549,735 551,835 8,309 1,278 1.34

TOTAL 4.277

Equity: Equity $ Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 NPV (10%)

MillionCVS 295488.86 384155.136 386255.14 8308.6957 1278.2609 0.88Landowner - Caucho 1075552.4 1077726.29 1079900.2 4347.8261 2173.913 2.68Landowner - teca,roble and ceiba 57094.126 66609.8134 66609.813 0 0 0.16Landowner - Silvopastoral$ 117069.92 245065.202 266915.93 43701.449 21850.725 0.55TOTAL 4.277

Operating cost (2007-2017) O&M Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

Operating costs (including taxes if any):Thinnings / prunning 33,061 87,243 178,270 213,178 170,687 447,530Clearing / replanting 36,522 255,854 475,557 789,117 787,957 786,613Fuel / Transport services 73,190 198,447 342,851 347,973 272,960 197,888Repairs and Maintenance 2,737 18,524 34,253 51,416 82,875 85,000Harvesting (sensibilidad) 0 29,348 70,435 117,391 126,522 126,522Administration (sensibilidad) 13,324 28,145 42,965 30,024 15,481 810Others 126,914 270,217 412,108 286,015 145,871 63,290

Totals 285,748 887,777 1,556,438 1,835,116 1,602,353 1,707,653

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O&M Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 VPV(10%)

Operating costs (including taxes if any):Thinnings / prunning 1,334,552 2,155,520 2,915,435 2,899,180 2,962,665 5,823,287Clearing / replanting 947,422 1,109,509 1,271,596 1,272,083 1,272,570 4,553,726Fuel / Transport services 197,860 197,396 196,715 196,622 196,274 1,428,636Repairs and Maintenance 80,928 58,888 61,250 94,141 96,106 343,046Harvesting (sensibilidad) 135,652 136,474 138,391 126,978 117,391 589,400Administration (sensibilidad) 554 527 479 346 213 99,172Others 125,700 191,409 203,149 213,368 223,574 1,370,548

Totals 2,822,667 3,849,723 4,787,016 4,802,719 4,868,793 14,207,815

Revenues: 8Net Revenues Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

Net Revenues - 1st Product: Aggregated wood products (sensibiliad)Production (Unit) 1.00 1.00 1.00 1.00 1.00 1.00Net Sales $ 0 391,304 939,130 1,566,783 1,582,696 2,894,745

Net Revenues - 2nd Product: Aggregated Agricultural products (sensibilidad)Production (Unit) 1.00 1.00 1.00 1.00 1.00 1.00Net Sales $ 0 46,419 156,569 290,760 338,843 352,304

Net Revenues - Carbon Credits 1Carbon generation (tCO2e) 0 2,074 5,884 11,797 17,721 24,628Carbon price $4.00 /tCO2e 8,296 23,535 47,188 70,884 98,511

Net Revenues Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 NPV(10%

Net Revenues - 1st Product: Aggregated wood products (sensibiliad)Production (Unit) 1.00 1.00 1.00 1.00 1.00Net Sales $ 4,355,714 5,907,950 6,265,839 6,553,727 6,830,745 17,285,326

Net Revenues - 2nd Product: Aggregated Agricultural products (sensibilidad)Production (Unit) 1.00 1.00 1.00 1.00 1.00Net Sales $ 352,304 352,304 352,304 352,304 352,304 1,517,711

Net Revenues - Carbon Credits 1Carbon generation (tCO2e) 27,743 32,287 28,059 28,451 25,244Carbon price $4.00 /tCO2e 110,971 129,147 112,236 113,805 100,975 440,494

TOTAL 19,243,530

Financial indicators:

8 The financial analysis considers 80% of emission reduction revenues.

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Financial Indicators With Ers Without Ers

Project IRR 20.37% 19.81%Discount Rate NPV

6% 14,229,020 13,403,94110% 7,529,504 6,986,77415% 2,775,270 2,439,984

Planting schedule: PLANTING SCHEDULE 100% Hectares 2007 2008 2009 2010 2011 2012 2013 2014 2015 TOTAL

1 2 3 4 5 6 7 8 9Ref Roble (stock) 20 25 25 0 0 0 0 0 0 70 Ref Ceiba (stock) 20 25 25 0 0 0 0 0 0 70 Ref Teca (Stock) 20 20 20 0 0 0 0 0 0 60 Ref Caucho (Stock) 500 500 500 0 0 0 0 0 0 1500 Sylvopastoril 100 200 200 0 0 0 0 0 0 500 TOTAL 660 770 770 0 0 0 0 0 0 2200 Initial Investments 0.93 0.93 0.44 0.44 0.31 0.11 0.08 0.08 2.59

The overall project shows an attractive rate of return, of 20%. This analysis supports the decision made by CVS to allocate resources to the Project, as the expected returns are larger than the investment made. Carbon revenues represent a small fraction of the expected revenue stream. However they play an important facilitating and enabling role. The preliminary results are described below. Subcomponent A. Rubber Component–Producers of ASOCUR, Ure The financial analysis for this component was executed determining the net cash flows caused by planting Hervea Brasilencis, taking into account the following specific aspects for this component:

1) Latex production will begin in year 6; 2) The implementation of the 1,500 ha of rubber tree plantation will be co-financed by CVS,

and the producers represented by ASOCUR will contribute the unskilled labor; 3) In terms of cash flow, the trade-union taxes that producers must pay according to rubber

production levels are taken into account; 4) In addition to latex production, there are other benefits of planting hervea brasilincis such

as seed production and timber at the end of the rotation (year 30); 5) The CERs enter the cash flow, but they are also discounted as they are reimbursed to

CVS for payment of the initial investment in the implementation of plantations. In any case, this reimbursement is minimal in comparison to the investment to be made by CVS. This can be observed in the financial analysis for CVS.

Taking these aspects into account, net cash flows per hectare were calculated. The component results indicate that investing in Hervea brasilencis has an IRR of around 20%. Although an IRR for the beneficiary could reach 41% for the 30-year period, as function of the arrangement to

43

share the future stream of revenues between the beneficiaries and the institutional investor. The participation of CVS is critical as otherwise the producer would face negative flows in the first 5 years. Due to this, complementary alternatives have been designed to reduce this impact. These alternative activities are proposed with due consideration of the producer income level. The proposed alternative activities are described below.

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Reforestation component–Rubber Tree Plantations

Four types of latex producers have been identified in the project area. Their main characteristics are summarized in Table .

Typology of producers: Hervea BrasilencisProducer

groupNumber Farm area Cattle Crop area

Sale workdays

Annual income

hectares heads hectares US$/year

1 39 83.5 49.1 1.16 0 12,658

2 14 47.6 14.8 6.72 177 9,455

3 56 14.5 4.84 2.87 81.8 5,034

4 63 19.7 0 1.78 46.8 3,934

Type 1 Producers. Nearly 23% of the producers selected for the project’s latex component fall within this grouping. They have over 30 heads of cattle and an average of 49. This group represents a segment of the population in a continuous process of capital formation. They have a load of 0.59 animals/ha which is much lower than the potential capacity of these lands. They generally rent their pastures and this represents 20% of their entire income. They have very little area under crops (1.16 ha) and the low productivity of the current system keeps them from raising capital at a faster rate. Their income level is around US$12,658 per year. Type 2 Producers. This group compromises 8% of producers. They have more than 13 heads of cattle and an average of 15. After several years they continue to be in a process of capital formation but have not been able to move away from farming, with a productive area dedicated to cultivation of 6.72 ha, making agricultural income the most important and higher than that from cattle-raising and pasture rental. Their available family day-labor is fully used up (they use 706 workdays per year, 470 in crops, 60 in cattle-raising, and sell 177 workdays). Their income is around US$9,500. Type 3 Producers. This group covers 32% of the latex producers. They normally own few cattle (4.84 animals on average). Despite the low amount of area under crops (2.87 ha), these are the producers who generate most income from agriculture (US$1,497/year), followed by the sale of off-farm day-labor (US$819), and income from cattle-raising (US$778). In addition, they earn US$693 from pasture rental. An average annual income for this type of producer is estimated at US$5,034. Type 4 Producers. This group encompasses 37% of producers who will participate in rubber tree planting. They have no cattle, have an average of 19 ha, and only use 1.78 for crops. Their principal source of income is pasture rental (US$1,284/year), followed by crops ($928), and the sale of day-labor ($325). The remuneration per workday in the system is US$15 and they can only use 263 workdays; this shows low employment opportunities. Annual income is US$3,934.

45

Figures 1 through 4 present the cash flows for the different types of producers identified, and incorporating CVS investment and support for the initial three-year period. As one can see, special support is required for Type 3 and Type 4 latex producers who have negative flows in the first years of planting; these negative flows are difficult to overcome by the beneficiaries because of the producers’ low income level. Although for Type 1 and Type 2 producers the project cash flow is also negative in the first years, even with new flows their income is around US$10,000/year (Figures 1 and 2), which allows them to reasonably manage the negative cash flow caused by rubber tree planting. It is worth noting that Type 1 and 2 producers in Ure correspond to those with the highest levels of capital formation as represented by cattle.

Figure 1. Comparison of cash flows for the rubber plantation

component in Ure. Type 1 producers

Figure 2. Comparison of cash flows for the rubber plantation component in Ure. Type 3 producers

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In contrast, Figures 3 and 4 show that the initial negative flows caused by the project for Type 3 and 4 producers decrease income to levels that cannot be managed adequately, because their income would dip to US$2,000/year.

Figure 3. Comparison of cash flows for the rubber plantation component in Ure. Type 3 producers

Figure 4. Comparison of cash flows for the rubber plantation component in Ure. Type 4 producers

For this reason, the project has found necessary to evaluated complementary productive alternatives for Type 3 and 4 producers that make it possible to mitigate this impact on their cash flows. The alternatives evaluated and selected include:

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1) Allowing producers in groups 3 and 4 to produce stumps for all rubber plantings, thereby capturing part of the amount corresponding to the labor needed to produce them.

2) Producing high-value crops such as chili pepper and castor beans interspaced among rubber plantations, during the initial period of rubber tree growth and before the canopy limits crop development.

With regard to complementary productive activities with chili pepper and castor beans, the plan is to establish these crops in phases during first three years so that they coincide with the rate at which rubber plantations are established. For the productive project with chili pepper, 11.5 hectares per year would be implemented; the earnings would be distributed in groups of 40 families and 25 hectares per year of castor beans that could benefit 50 families. These projects will be financed by CVS. However, the possibility that FINAGRO could provide loans to support the implementation of castor beans is being explored.

Figure 5. Comparison of cash flows for the rubber plantation component in Ure with the chili pepper productive project. Type 3 producers

Figure 6. Comparison of cash flows for the rubber plantation component in Ure with the castor bean productive project. Type 4 producers

Productor tipo 3- Caucho con cultivo de ají

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48

This would be enough to support families classified as Type 3 and 4 producers. These productive complementary activities are designed to generate earning for 262 families, slightly more than the total number of Type 3 and 4 families. However, this would allow a surplus if problems arise with regard to yields or other eventualities. Figures 5 and 6 present the changes in cash flows that will occur with these complementary activities. The impact of these activities is evident during the first three years as they significantly increase the income of these producers with respect to their baseline. This increase will make feasible to balance the negative cash flows for the first two years to levels similar to that of the baseline. Reforestation Component–Valencia Producers The financial analysis for this subcomponent was first performed for each hectare reforested with each of the proposed species (ceiba, teak, and oak). Later, the cash flow was calculated for the entire 200-hectare area to be reforested, taking into account the following aspects:

1) The plantations will be implemented gradually during the first three years. 2) CVS will finance the implementation during the first three years of the plantations. 3) Teak will be planted in 30% of the total area. The remaining area will be planted with

ceiba and oak. 4) Reforesters will reimburse part of the investment made by CVS with the CERs. In any

case, this reimbursement is minimal in comparison to the investment made by CVS. This can be observed in the financial analysis for CVS.

5) The benefits that the producer receives for the plantations are: timber, seeds, and CERs (although the latter are reimbursed to CVS).

As a result, it was found that this component with full CVS financing has an IRR of 40% for the 200-hectare area and only has negative cash flows during years 4 to 6. However, these flows may be manageable as these producers enjoy high income levels and the additional income from ranching, which is necessary in order to implement the plantations.

Figure 7 shows that the cash flow with project activities is greater than those currently obtained. This comparison is at farm level. As mentioned previously, project flows were obtained taking into account the gradual implementation of 200 reforested hectares. As can be observed, in years 5 and 6 the producer has negative cash flows which can be handled by the producer’s additional income in years 1, 2, and 3 stemming from the sale of his cattle, necessary to implement reforestation (US$80,000 approximately). Given the very high profitability of this subcomponent innovative ways for CVS to promote reforestation, create feasibility to the undertaking, and generate revenue for the Corporation were sought. Following model already established in Colombia two options were considered: CVS investment as a development loan, to be repaid as the forest is been exploited; and, CVS as a partner in the enterprise, absorbing all risks, and participating from the revenues of the sale of the

49

timber produced. It is judge that the second alternative is more convenient for the CVS, guarantees a good profitability to the beneficiaries (above 26%), reinforces the operational responsibilities of CVS as enforcer of environmental regulations, and potentially generates revenues to replicate the project and scale it up.

Figure 7. Comparison of cash flows for the reforestation component in Valencia

Ganadero en proceso de reconversion de uso de la tierra.

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Sylvo-pastoral component–Indigenous group of San Andrés de Sotavento The financial analysis for this subcomponent was performed taking into account the following considerations:

1) CVS will finance the implementation of SPSs until the third year. 2) The indigenous group will contribute half of the day-labor needed for implementation

during the first 3 years. 3) The benefits of this alternative are mainly the increased production of milk and calves. 4) The entire Zenu community, indigenous group, will receive US$200,000 in works and

services from carbon accumulation. Therefore, these are not reflected in the net cash flow. However, in the CVS flow, this disbursement is observed up to year 15, at which time the SPSs have accumulated CERs equivalent to this amount.

The principal results of this analysis show that cash flows are always positive with CVS financing. This is largely because benefits from productivity are earned since project start-up. Taking into account the cash flows of the baseline of the producers associated with this subcomponent the cash flows of the current situation were compared with those that would be produced under project activities. This comparison is made taking into account per-family cash flows. To calculate the indigenous family baseline, it was estimated that each has 3.2 ha of crops and cattle, where 70% is used for cattle, 20% for agricultural, and 10% for fallow. The family’s

50

net income minus current cash costs total US$1,217 per year/family. In addition, they earn a complementary income of US$217/year by selling day-labor. For indigenous families involved in the project, a comparison of cash flows (Figure 9) shows that flows under the project are always higher than those currently received by the families. As previously mentioned, this is largely because the improvement in productivity levels of cattle-raising systems begins to be perceived early and with CVS financing.

Figure 9. Comparison of cash flows of an indigenous family with and without project.

Sistemas silvopastoriles

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CVS as investor The financial analysis for CVS was performed, to account for the investments it will carry out during the first three years of implementation of each component. The considerations made in determining the flows of CVS are:

1) The implementation of the 2,200 ha will be done gradually (in 3 years); 2) CER payments will be received every 5 years; 3) US$200,000 will be paid to the indigenous community in the form of works and services

at year 15; 4) The investment in complementary productive projects for latex producers (chili pepper

and castor bean production) is included. There is a possibility that castor bean production may be financed by FINAGRO, since per-hectare earnings are considered to be quite high, thereby opening the way for possible payment of a loan. However, the analysis was made considering the fact that CVS is the investor in the implementation of castor beans.

Taking these considerations into account, the flows of CVS are negative, which is explained by the fact that CVS plays a role as investor in activities that promote environmental conservation and sustainable development. In general, a total investment by CVS of US$4,975,406 and a recovery of US$2,781,230 represented by CERs for a 30-year period have been calculated.

51

In addition to the recovery in CERs, it is also necessary to include the social benefits linked to income and employment generated by the project, which are ultimately the objective of this institution. As already mentioned, the financial analysis allows for further exploration of the financial consequences and opportunities for CVS, as the high profitability of the proposed interventions allow the Corporation to recuperate the investment made, or participate in the revenues of the products produced.

Economic Analysis To assess the social efficiency of the investment to be made by CVS an analysis of the social benefits produced by all the income and employment generated by the project was executed. CVS is a public entity that must make investments to promote the region’s environmental conservation and development. Thus, if the financial analysis only studies the investment made and the recovery in CERs, it does not appear attractive; i.e. if the option of no investment recovery is pursued. However, when the social benefits caused by income and employment are included, that is, all benefits not collected directly by the producers but received by society; the project recovers the investment significantly. As already indicated the IRR is 20%. To estimate these social benefits the De Janvry and Glikman methodology (1991) was used; this consists of estimating the links forward and backward for income and employment. For this purpose, direct employment created for the different types of producers was calculated, and the respective additional income was estimated. These values were multiplied by a rate of 0.8 which is similar to that used by De Janvry and Glikman (1991) for other productive systems with producers having the same income level. This rate means that each direct job produced and each additional dollar of income generated cause 0.8 more employment and income from the effect of the development dynamics generated in the zone. Although there were large producers with high levels of retribution per workday, the same rate may be applied because the labor that will be used in reforestation is from lower-income populations. The following figure demonstrates how the flow of benefits for CVS changes if the analysis includes the value of social benefits linked to employment and income generated by the Project.

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Figure 17. Flow of Social Benefits linked to CVS investments

RETRIBUCION A LA INVERSION DE CVS

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Flujo Neto de Efectivo Flujo Neto de Efectivo con Beneficios por Encadenamientos

BIBLIOGRAPHY De Janvry, A. and Glikman, P. 1991. Encadenamientos de la producción en la economía campesina en el Ecuador. FIDA and IICA. Estrategias para mitigar la pobreza rural en América Latina and el Caribe. 529 p.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 5: Project preparation and supervision

Planned Actual PCN review 06/05/2006 06/05/2006 Initial PID to PIC 05/29/2006 06/02/2006 Initial ISDS to PIC 05/29/2006 06/02/2006 Appraisal 11/27/2006 11/27/2006 Negotiations 02/05/2007 12/04/2006 Sign ERPA 02/19/2006

Bank staff and consultants who worked on the project included: Name Title Unit Walter Vergara Engineer and TTL /Environmental Spec. LCSSD Saima Qadir Deal Manager ENVCF Alejandro Deeb Hydrologist LCSSD Seraphine Heussling Economist LCSSD Javier Blanco Financial analyst LCSSD Rama Chandra Reddy Carbon sinks/forestry specialist ENVCF Gerardo Segura Forestry specialist LCSSD Alonso Zarzar Senior Social Scientist LCSSD Natalia Gomez Rural specialist LCSSD Keiko Ashida Operations Analyst LCSSD

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 6: Emission Reduction Purchase Agreement / Term Sheet

A generic ERPA table of contents is shown below. Thee actual document is expected to be signed by December 2005. ARTICLE I: APPLICATION OF GENERAL CONDITIONS Section 1.01 Application of General Conditions Section 1.02 Inconsistency with General Conditions ARTICLE II: PROJECT DETAILS Section 2.01 Description of the Project ARTICLE III: CONDITIONS FOR SALE AND PURCHASE Section 3.01 Preconditions to be fulfilled Section 3.02 Conditions for benefit of Trustee Section 3.03 Termination of the Agreement ARTICLE IV: PURCHASE AND SALE OF EMISSION REDUCTIONS Section 4.01 Contract ER Volume and Unit Price Section 4.02 Transfer of Contract ERs Section 4.03 Advance Payment Section 4.04 Annual Payment ARTICLE V: CALL OPTION Section 5.01 Call Option provisions do not apply Section 5.01 Call Option Volume and Exercise Price ARTICLE VI: PROJECT DEVELOPMENT AND MONITORING Section 6.01 Project Development Section 6.02 Monitoring Plan ARTICLE VII: REPRESENTATIONS AND WARRANTIES Section 7.01 Additional Project Entity Warranties Section 7.02 Notices ARTICLE VII: TERM Section 8.01 Term ARTICLE IX: NOTICES Section 9.01 Notices

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SCHEDULE 1: CONDITIONS FOR SALE AND PURCHASE SCHEDULE 2: ANNUAL AMOUNTS SCHEDULE 3: MONITORING PLAN

COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 7: Ex-ante estimate of carbon sinks using the Pico Bonito methodology and Schedule 2 of the proposed ERPA

GHG removal by stands to be created with the Caribbean Savannah Carbon Sink project (CN-P100738-LEN-BBCBF) was calculated using the approved Pico Bonito methodology (AR-AM0004). The stand types of this project are related to: rubber, ceiba, roble and teca plantations and SPSs. The ex ante calculation of actual net GHG removals by sinks considered changes in carbon stocks in the carbon pools within the project boundary, minus the increase in greenhouse emissions by sources measured in CO2 equivalents within and outside (leakages) of the project boundary. C AR-CDM = c ACTUAL – c BSL – LK c BSL = Due to baseline strata is without growing trees and therefore is not significantly accumulating carbon due the degradation processes in some areas and other with grazing activities, the value of this parameter is 0. c ACTUAL = This parameter was calculated using the sum of the changes in living tree biomass carbon stocks (above and below ground). To this value was not subtracted any decrease in the carbon stock in the living biomass carbon pools of non-tree vegetation in the year of site preparation since this is expected to be not significant (e.g burning will not occur). To calculate the changes in living tree biomass stocks the method 2 (stock change method) of the Pico Bonito methodology (section 5, B) was used. The carbon stocks in above ground biomass were calculated using allometric equations. In the case of rubber plantations, also allometric equations were used to calculate below-ground biomass. For the other components a root-shoot ratio of 0.2 was applied. In addition, commercial harvesting, fuel wood gathering and mortality were taken into account, being reflected in the number of trees and volumes per year, which are variables used in the allometric calculations. In addition, to the changes in living tree biomass carbon stocks, the GHG emissions were deducted. Two GHG emissions were calculated: the ones that will occur inside the project boundary and those that will be cause by the project implementation but outside of it (leakages). GHG emissions inside the project: These emissions will be caused by burning of fossil fuels resulting from site preparation, thinning, and logging, and N2O emissions caused by N fertilization. Emissions factors, fuel consumption and distances are specified in the Excel attached file.

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GHG emissions outside the project (Leakages): The project leakage will be caused by vehicle fossil fuel combustion due to the transportation of seedling, harvest products, inputs (fertilizers, manures, wire, etc). Displacement of pre-project agricultural activities will not occur. Also, due to the quality of wood that will be harvested (and with higher prices in the furniture sector), it is not expected any leakage related with the use of the project wood for fencing. The obtained values are:

Project Stand Carbon stocks

Rubber 800753.7Teca 38180.32Roble 44302.95Ceiba 49382.64Sylvo-pastoral system 102760.9Total 1035381

Fuel Burning

Project Stand GHG emissions1

(T CO2 eq) Rubber 2112.73 Teca 265.34 Roble 309.55 Ceiba 386.34 Sylvo-pastoral system 33.29 Total 3107.23

1(GHG emissions inside and outside the project due to the burning of fossil fuels)

N2O from fertilizers

Project Stand GHG emissions (T CO2 eq)

Rubber 16157.9 Teca 7.0149 Roble 8.1840 Ceiba 8.1840 Sylvopastoral system 263.0571 Total 16444.36

Thus, the net anthropogenic GHG removals of the project are 1015829 t CO2-e.

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Annual GHG removals by the project activities, first period (2007-2017)

t CO2-e.

YEAR

C stock change in tree biomass

Fuel Burning Fertilizers

GHG removal

2007 2452 112 197 2143 2008 6805 20 394 6390 2009 13430 28 583 12819 2010 19764 24 563 19178 2011 27073 24 560 26488 2012 29989 105 566 29318 2013 34418 34 575 33809 2014 29465 90 575 28801 2015 30057 34 557 29466 2016 26769 35 557 26176 2017 33007 37 566 32404

Annual GHG removals by the project activities, period (2007-2036) t CO2-e.

YEAR

C stock change in tree biomass

Fuel Burning Fertilizers

GHG removal

2018 34999 37 575 34388 2019 36738 35 575 36129 2020 38952 35 557 38360 2021 34247 144 557 33546 2022 19686 250 566 18871 2023 17004 37 575 16393 2024 24178 35 575 23568 2025 39681 35 557 39089 2026 41144 36 557 40551 2027 42447 37 566 41844 2028 43601 37 575 42989 2029 45148 35 575 44538 2030 47240 35 557 46648 2031 48856 36 557 48263 2032 50419 37 566 49816 2033 51964 37 575 51352 2034 53690 35 575 53081 2035 55405 35 557 54813 2036 56751 1599 557 54595

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YEAR GHG removal (t CO2-e.)

2007 2143 2008 63902009 128192010 191782011 264882012 293182013 338092014 288012015 294662016 261762017 32404

Schedule 2 (ERPA) Reporting

Year Period Annual Amount of

Contract ERs to be transferred in this

Reporting Year

Cumulative Amount of Contract ERs which must be transferred by this Reporting

Year 1 2006 2 2007 2143 2143 3 2008 6390 8533 4 2009 12819 21352 5 2010 19178 40530 6 2011 26488 67018 7 2012 29318 96336 8 2013 33809 130145 9 2014 28801 158946 10 2015 29466 188412 11 2016 26176 214588 12 2017 32404 246992

Total 246992 246992

YEAR

GHG removal t CO2-e.

2018 34388 2019 36129 2020 38360 2021 33546 2022 18871 2023 16393 2024 23568 2025 39089 2026 40551 2027 41844 2028 42989 2029 44538 2030 46648 2031 48263 2032 49816 2033 51352 2034 53081 2035 54813 2036 54595

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 8: Baseline Methodology Approved afforestation and reforestation baseline methodology AR-AM0004: Reforestation or afforestation of land currently under agricultural use

Section I. Summary and applicability of the baseline and monitoring methodologies 1. Selected baseline approach from paragraph 22 of the CDM A/R modalities and procedures “Existing or historical, as applicable, changes in carbon stocks in the carbon pools within the project boundary” 2. Applicability This methodology is applicable to the following project activities: • Afforestation or reforestation of degraded land, which is subject to further degradation or remains in a low carbon steady state, through assisted natural regeneration, tree planting, or control of pre-project grazing and fuel-wood collection activities (including in-site charcoal production). • The project activity can lead to a shift of pre-project activities outside the project boundary, e.g. a displacement of agriculture, grazing and/or fuel-wood collection activities, including charcoal production; The conditions under which the methodology is applicable are: • Lands to be afforested or reforested are degraded and the lands are still degrading or remain in a low carbon steady state. • Site preparation does not cause significant longer term net decreases of soil carbon stocks or increases of non-CO2 emissions from soil. • Carbon stocks in soil organic carbon, litter and dead wood can be expected to decrease more due to soil erosion and human intervention or increase less in the absence of the project activity, relative to the project scenario. • Flooding irrigation is not permitted; • Soil drainage and disturbance are insignificant, so that non CO2-greenhouse gas emissions from these types of activities can be neglected; • The amount of nitrogen-fixing species (NFS) used in the AR CDM project activity is not significant, so that greenhouse gas emissions from denitrification can be neglected in the estimation of actual net greenhouse gas removals by sinks. • The AR CDM project activity is implemented on land where there are no other on-going or planned AR activities (no afforestation/reforestation in the baseline).

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3. Selected carbon pools

Table 1: Selection and justification of carbon pools

Carbon Pools Selected (answer with yes or no)

Justification/Explanation

Above Ground Yes Major Carbon pool subjected to the project activity Below Ground Yes Major Carbon pool subjected to the project activity Dead Wood No Conservative approach under applicability condition Litter No Conservative approach under applicability condition Soil Organic Carbon No Conservative approach under applicability condition

4. Summary Description Baseline methodology steps i. The project boundary is defined for all eligible discrete parcels of land to be afforested or reforested that are under the control of the project participants at the starting date of the project activity or expected to become under the control of the project participants during the implementation of the project activity during the crediting period. ii. Stratification of the AR CDM project area is based on local site classification map/table, the most updated land-use / land-cover maps, satellite image, soil map, vegetation map, landform map as well as supplementary surveys, and the baseline land-use / land-cover is determined separately for each stratum. iii. The baseline scenario is determined by the following steps: Step 1. Demonstration that the proposed AR CDM project activity meets the conditions under which the methodology is applicable and that baseline approach 22(a) can be used. Step 2. Delineation of the project boundary Step 3. Analysis of historical land use, local and sectoral land-use policies or regulations and land use alternatives. Step 4. Stratification of the AR CDM project area: • Stratification according to pre-existing conditions and baseline projections; • Stratification according to the planned AR CDM project activity; • Final ex ante stratification; Step 5. Determination of the baseline land-use / land-cover for each stratum Step 6. Determination of baseline carbon stock changes in each stratum. iv. The ex ante calculation of baseline net GHG removals by sinks is performed by strata. For strata without growing trees or shrubs, the methodology assumes that the carbon stock of the baseline scenario remains constant, i.e., the baseline net removal by sinks is zero, which is conservative due to the prevailing environmental conditions or anthropogenic pressures that are degrading the land and impeding spontaneous forest regeneration.

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For strata with growing trees and/or shrubs, the baseline carbon stock change is estimated based on methods developed in IPCC 2003 Good Practice Guidance (GPG) for Land Use, Land-Use Change and Forestry (LULUCF). Only the carbon stock change in living biomass is estimated. The omission of the other carbon pools is considered as a conservative approach because these pools are likely to decrease or remain constant in the absence of the proposed AR CDM project activity, relative to the project scenario. v. Additionality is demonstrated using the latest version of the “tool for demonstration and assessment of additionality for afforestation and reforestation CDM project activities” approved by the CDM Executive Board. vi. The ex ante actual net GHG removal by sinks is estimated for each type of stand to be created with the AR CDM project activity. Stand types are represented by ‘stand models’ that are a description of the species planted or regenerated and the management prescribed (species, fertilization, thinning, harvesting, etc.). Carbon stock changes and the increase of GHG emissions resulting from fertilization, site preparation (biomass burning) and fossil fuel consumption are estimated using methods developed in IPCC GPGLULUCF. vii. Leakage emissions, including carbon stock decreases outside the project boundary, are accounted for the following sources: fossil fuels consumption for transport of staff, products and services; displacement of pre-project croplands, grazing and fuel-food collection activities; increased consumption of wood posts for fencing. Monitoring methodology steps i. The project implementation is monitored, including the afforested/reforested area, forest establishment and forest management. ii. Stratification of the project area is monitored periodically as the boundary of the strata may have to be adjusted to account for unexpected disturbances, changes in forest establishment and management, or because two different strata may become similar enough in terms of carbon to justify their merging. iii. Baseline net GHG removals by sinks are not monitored in this methodology. The ex ante estimate is ‘frozen’ for the entire crediting period. iv. The calculation of ex post actual net GHG removals by sinks is based on data obtained from permanent sample plots and methods developed in IPCC GPG-LULUCF to estimate carbon stock changes in the carbon pools and increase of project emissions due to fossil fuel consumption and nitrogen fertilization. v. Leakage due to activity displacement (crops, grazing and fuel-wood collection activities), increased fossil fuel and fencing post consumption are monitored. Section II. Baseline methodology description

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Project boundary The boundary of the proposed AR CDM project activity shall be defined as follows: a) The project boundary shall geographically delineate and encompass all anthropogenic GHG emissions by sources and removals by sinks on lands under the control of the project participants that are significant and reasonably attributable to the proposed AR CDM project activity. The sources and gases included in this methodology are listed in Table 2 below.

Table 2: Gases considered from emissions by sources other than resulting from changes in carbon pools

b) The A/R CDM project activity may contain more than one discrete parcel of land. Each discrete parcel of land shall have a unique geographical identification. The boundary shall be defined for each discrete parcel. The discrete parcels of lands may be defined by polygons, and to make the boundary geographically verifiable and transparent, the GPS coordinate for all corners of each polygon shall be measured, recorded, archived and listed as an attachment of the CDM-AR-PDD. c) Discrete parcels of land not under the control of the project participants at the start date of the proposed AR CDM project activity but expected to come under the control of the project participants during the crediting period may be included within the project boundary if all of the following conditions are met: • The total area (hectares) of these parcels of land not yet under the control of the project participants is clearly defined in the CDM-AR-PDD; and • A justification of how these parcels of land will come under the control of the project participants is provided in the CDM-AR-PDD; and • The candidate land areas among which the particular parcels of land will be chosen have been identified and are unambiguously identified in the CDM-AR-PDD with GPS coordinates and maps; and • All candidate land areas have been included in the baseline assessment and it can be shown that they are not different from the land areas already under the control of the project participants at

Sources Gas Included/Excluded Justification/Explanation CO2 No Not Applicable CH4 No Not Applicable Use of fertilizers N2O Yes Main gas of this source CO2 Yes Main gas of this source CH4 No Potential emission is negligibly small

Combustion of fossil fuels used in on-site vehicles N2O No Potential emission is negligibly small

CO2 No

However, carbon stock decreases due to burning are accounted as carbon stock change

CH4 Yes

Non-CO2 gas emitted from biomass burning

Burning of biomass

N2O Yes

Non-CO2 gas emitted from biomass burning

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the start of the proposed AR CDM project activity in terms of land eligibility, baseline net greenhouse gas removal by sinks, actual net greenhouse gas removal by sinks, leakage, socio-economic and environmental impacts. Procedure for selection of most plausible baseline scenario The baseline scenario is determined by the following steps: Step 1: Demonstrate that the proposed AR CDM project activity meets the conditions under which the proposed methodology is applicable, and that baseline approach 22(a) can be used. Step 2: Define the project boundary as described in Section II.2 above3 Step 3: Analyze historical land use, local and sectoral land-use policies or regulations and land use alternatives a) Analyze the historical and existing land-use / land-cover changes in the context of the socioeconomic conditions prevailing within the boundary of the proposed AR CDM project activity and identify key factors that influence the land-use / land-cover changes over time, using multiple sources of data including archives, maps or satellite images of land use/cover data prepared before 31.12.1989 (reforestation) or at least 50 years old (afforestation) and before the start of the proposed AR CDM project activity, supplementary field investigation, landowner interviews, as well as studies and data collected from other sources. b) Show that historical and current land-use/land-cover change has led to progressive degradation of the land over time including a decrease or steady state at a reduced level of the carbon stocks in the carbon pools. Provide indicators of land degradation and carbon stock decrease/steady state that can be verified and sustain the choice of these indicators using appropriate and credible sources of information, such as scientific literature and studies or data collected in the project area or similar areas. The historical degradation feature can be indicated by: 1. Vegetation degradation. For example: • The land was forest at time points in the past and non-forest at more recent time points; • There was a forest at time points in the past, but attempts to re-establish the forest through seeding have failed; • There was higher crown cover of non-tree vegetation at time points in the past and lower crown cover at more recent time points. 2. Soil degradation. For example: • Lower soil erosion at time points in the past than in more recent time points; • Higher soil organic matter content at time points in the past than in more recent time points; • Less desertification at time points in the past than in more recent time points.

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These indicators do not represent all cases of land degradation but are appropriate for the proposed methodology. Other indicators may be used. c) Identify and briefly describe national, local and sectoral land-use policies or regulations adopted before 11 November 2001 that may influence land-use / land-cover change and demonstrate that they do not influence the areas of the proposed AR CDM project activity (e.g., because the policy does not target this area, or because there are barriers to the policy implementation in this area, etc). If the policies (implemented before 11 Nov 2001) significantly impact the project area, then the baseline scenario cannot be ‘degraded land’ and this methodology cannot be used any further. d) Identify alternative land uses including alternative future public or private activities on the degraded lands including any similar AR activity or any other feasible land development activities, that are not in contradiction with the identified local, national and/or sectoral land use policies and regulations and that could be implemented within the boundary of the proposed AR CDM project activity. In doing so, use land records, field surveys, data and feedback from stakeholders, and other appropriate sources. e) Demonstrate that land use/cover within the boundary of the proposed AR CDM project activity would not change and/or lead to further degradation and carbon stock decrease in absence of the proposed project activity, e.g., by assessing the relative attractiveness of alternative land uses in terms of benefits to the local economy and communities’ subsistence, consulting with stakeholders for existing and future land use, and identifying barriers for alternative land uses. If the analyses above indicate for the baseline land use that the land area within the boundary of the proposed AR CDM project activity is likely to change its current status (i.e. degraded and/or subject to further degradation), then this methodology is not applicable. . However, if the analysis shows that a change can only occur as a result of the implementation of the proposed AR CDM activity, continue with the next step. Step 4: Stratify the AR CDM project area as explained in section II.3 above Step 5: Determine the baseline land-use / land-cover scenario for each stratum Analyze the possibility of self-encroachment of trees4 under the current conditions by, e.g.: • Survey and identification of trees growing on site. • Identification of on-site or external seed pools/sources that may result in natural regeneration. • Identification of the possibility of seed sprout and growth into trees with the potential height, crown cover and area crossing the threshold values used in the national definition of forest, under the current conditions. If no or only sparse natural regeneration with no potential to become a forest can be identified, continue with calculation of ERs. Otherwise, the proposed AR CDM project activity is not different from the baseline scenario5. Estimation of baseline net GHG removals by sinks

Baseline strata without trees or woody perennials The baseline net greenhouse gas removals by sinks is the sum of the changes in carbon stocks in the carbon pools within the project boundary that would have occurred in the absence of an AR

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CDM project activity. As per the conditions under which the proposed methodology is applicable (described in section I.2), lands to be afforested or reforested are degraded lands, either abandoned or subjected to pre-project grazing activity or agricultural crop activity, with vegetation having area, crown cover and tree high values below the thresholds used in the national definition of forest, and the lands are still degrading or remaining in a low carbon steady state. For this reason, in all baseline strata where: a) No growing trees or woody perennials exist, and b) No trees or other woody perennials will start to grow at any time during the crediting period, or c) No trees or other woody perennials will reach the threshold for the national definition of forest due to ongoing cutting and burning cycles that are part of shifting cultivation systems, the baseline net greenhouse gas removals by sinks are expected to be negative due to ongoing degradation. For these strata the methodology conservatively assumes that baseline net greenhouse gas removal by sinks is zero:

Equation ( 1 )

Where, CBSL = baseline net greenhouse gas removals by sinks; t CO2-e. t* = number of years elapsed since the start of the AR project activity; yr tcp = year at which the first crediting period ends; yr

This baseline methodology accounts for above-ground and below-ground biomass only. Therefore, for all strata that do not satisfy the conditions listed above, the baseline net greenhouse gas removals by sinks can be calculated by: CBSL = CB,LB Equation ( 2 )

Where: CBSL = baseline net greenhouse gas removals by sinks; t CO2-e.

CBLB = baseline sum of the changes in living biomass carbon stocks (above- and belowground); t CO2-e. Note: In this methodology Eq. 2 is used to estimate baseline net greenhouse gas removal by sinks for the period of time elapsed between project start (t=1) and the year t=t*, t* being the year for which baseline net greenhouse gas removals by sinks are estimated. For further details on the equations used in the methodology please consult approved Methodology number AR-AM0004, version 01 published in the UNFCCC Webpage, WWW.cdm.unfccc.int/

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 9: Social Analysis The project will benefit two social groups that are among the poorest in Colombia: the Zenu Indigenous Peoples of the Resguardo of San Andres de Sotavento and the Afro Colombian in the Corregimiento of Ure in the Municipality of Montelibano. The project does not entail adverse social impacts and therefore no mitigation measures would be required. On the contrary, the project is expected to bring benefits to these communities through soil improvements, pastures cultivation and Hevea cultivation as well as investment in small infrastructure for their fincas,and also social and community projects for the Zenu. For this purpose, and following Bank safeguard policies, the implementing agencies (CVS and CORPOICA) have prepared an Indigenous Peoples Plan in compliance with OP 4.10 in consultation with the Zenu, as well as a socio economic survey of the Afro Colombian population in Ure. This annex provides a summary of the most relevant aspects taken from the IPP and the survey. The Zenu and their participation in the project.The Zenu population in the project area is estimated at around 6,000 people. They are committed to participate with 500 ha of moderately degraded land for the SPSs of the project. This participation is expected to benefit at least around 100 indigenous families. The Zenu is a highly acculturated indigenous people that have lost their original language but who have been granted legal territory by the GOC as a Resguardo after decades of a long struggle to recover their original territory. They are involved in cattle raising and some agriculture in lands which range from moderately to severely degraded. Around 70% of their land is devoted to cattle and 30% to agriculture using the traditional method of slash and burn. The project will support the recuperation of pastures that will improve the livelihood of the Zenu. The Zenu are well known in Colombia due to their production of a typical straw hut called “vueltiao”. Despite the process of acculturation, the Zenu are well organized in a political system that has its origin in the colonial times. The Cabildo Indigena has been recognized by the current Colombian Constitution and is acknowledged as the special public authority that represents the community and acts on its behalf. Preparation of the IPPThe IPP (included in the project files) has been prepared through a process of intense consultation with the Cabildo Mayor del Resguardo de San Andres de Sotavento. This process had entailed the preparation of 9 workshops during two months in 2006 which included the participation of the Cacique Mayor and his main collaborators (Capitán Mayor, Alguacil Mayor,

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and Advisor on agriculture and cattle). A total of around 300 people participated in these workshops which outcome was the commitment of 285 ha for sylvo-pastoral activities and 75 ha for reforestation. After which the implementing agencies carried out a diagnostic of the fincas which yielded a larger number of hectares for the sylvo-pastoral component, having reached 475 committed ha. The process of consultation was replicated by the Capitanes Menores (community leaders) in each community which allowed for further disseminating the project and securing the required number of hectares. Agreement and benefitsAs a result of the consultation process a letter of intent was signed between the Zenu authorities and CVS, CORPOICA and CIAT. In accordance with this agreement the project will support the costs requiring the preparation of nurseries, as well as all expenses for the implementation of the sylvo-pastoral component (including payment for jobs), the fertilization and cultivation of pastures as well as bush and tress. The indigenous families will be trained as to be able to determine the best options for soil management, selection of germ plasma, and the implementation of the SPS. The income generated by the SPS will be distributed by the Cabildo Mayor between each community and finca. The money paid by the ERPA for ERs will be invested in projects to benefit the community. This will require further coordination between the implementing agencies and the Cabildo Mayor. The agreement has established that this will be around 200 thousand dollars. These resources will be invested in sanitation, community strengthening, management and conservation of biodiversity and environmental education. For this type of investments CVS and the Cabildo Mayor will open a joint bank account and CVS will be in charge of all biding that the program might require. In reciprocity the Cabildo Mayor commits to provide the project at least with 500 ha for the sylvo-pastoral component, provide partial work force for project activities, ensure commitment to the SPS for 30 years, and support the project in monitoring activities and ensuring compliance with the agreements. The Afro Colombian peoples and their participation in the projectThe Afro Colombian population of the Corregimiento of Ure in the Municipality of Montelibano represents around 1,343 people. Around 57% of them own their land and 43% rent it. Around 40% of the population have between 1 and 10 ha, 30% between 11 and 20 ha, 9% between 21 and 50 ha, and 4% between 51 and 100 ha. Around 52% of the household heads are farmers, 17% rural workers and 13% are ranchers (cattle). The farmers cultivate maize (19%) and rice (18%) for subsistence of their families and the local and regional markets and rubber trees (13%). The Afro Colombian people of Ure are organized under ACOSUR, the Association of Farmers of Ure. It has around 300 members. They are currently implementing a rubber tree project sponsored by USAID that will benefit 180 farmers. They are committed to provide 1500 ha for rubber trees plantation for the project, which is expected to benefit 250 small farmers. Each farmer will contribute with 4 ha for this purpose. ACOSUR expects to enlarge its membership to be able to establish 500 ha of rubber trees in the long run as to have direct links to the markets avoiding middle men and improving income and the living conditions of their farmers.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 10: Differences and synergies of carbon sink projects in Colombia

San Nicolas Caribbean Savannah

Differences Ecosystems

Mid altitude Andean forest. Area originally under forest cover and converted first into agriculture and then into pastures in a process of gradual degradation. Area of high endemic biodiversity

Caribbean Savannah. Area is under severe degradation after years of unsustainable practices, with current limited productive value.

Recovery of soil cover includes the use of native vulnerable and endangered populations of arboreal species, involving the development of nurseries, planting and monitoring protocols and the actual reintroduction in the region of these endangered arboreal species.

Recovery of soil cover through the use of native tree species with commercial value for timber and non timber products, such as Albizia saman, Guazuma ulmifolia, Anacardium excelsum, Tabebuia billbergii and Hevea brasiliensis. Grasses will be established in the soils most devoid of vegetation as an interim and complementary measure..

Forestry and agroforestry systems Sylvo-pastoral and forestry systems Social and partnership aspects

Active involvement of farmers and local communities: The project will be implemented by low and medium income farmers. The project will help implementing a forest management program (developed through a participatory community process) through which individual landowners voluntarily and partially forest their land.

Active involvement of indigenous people and afro Colombian people:

The borrower has prepared an IPP in consultation with indigenous people in which their involvement in the project and benefits has been established.

Partnership of local community, NGOs, municipalities, business organizations and academic institutions. .

Partnership involves international and national applied agriculture research institutions linked to impoverished indigenous community and settlers.

Carbon Finance Methodology New methodology has been proposed and is under CDM review. Approval will benefit future carbon sink projects in the context of the particular characteristics of land use in Colombia.

The project will apply an already approved methodology (Pico Bonito) thereby reducing transaction costs.

Synergies Contribution to arrest land degradation

Both projects contribute to arresting land degradation one of the most intractable issues associated with environmental degradation. Both projects follow the CEA recommendations by

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generating alternatives to diversify non-timber forest products with the benefits reaching directly rural communities. They both improve the livelihoods of forest-dwelling communities, and the fostering of capacity for both indigenous communities and the rural poor to profit from the sustainable and productive uses of forest areas and the implementation of payments for environmental services. BCF as an instrument to link climate change with the goals of conservation of biodiversity

and poverty reduction Both projects restore biodiversity in degraded lands and generate additional revenues for local communities.

Involvement of CARs In both projects the local environmental authorities play an important role, technically as well as financially. In San Nicolas, Cornare will provide 90% of the required resources. In Caribbean Savannah CVS will contribute with an important share to the investments. At the same time being the first carbon sink projects in Colombia, the projects will further strengthen the capacity of local environmental authorities in this field.

Diversification of agro-forestry production systems Both projects contribute to diversifying agro-forestry production systems and to creating new sources of revenues as well as capacities for local communities. Fit into an overall strategy: Projects initiate the use of carbon sinks under the Marrakesh accords in Colombia. Projects complement the previous experience with GHG mitigation, adaptation and institutional development on climate issues in the country, thus representing a comprehensive strategy on climate change in the region. Both projects will provide valuable experience with tools and processes under the CDM, preparing the country for eventual expansion of carbon sinks as envisioned under the COPs to the UNFCC. Project seeks to pioneer carbon sinks as a tool to protect biodiversity and to use it for selective recovery of endangered arboreal species in their original range.

Project aims at recovery of severely damaged ecosystem (Caribbean Savannah) and to involve a marginalized indigenous and afro Colombian population in the process.

Vocation and cattle raising Projects will not change the vocation of land. No attempt or indirect effect is expected on cattle raising. There is no cattle raising activity in the project area.

The project will not contribute to displacing cattle raising activities. The project will not increase the number of cattle.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 11: GEF Sylvo-pastoral project A - PROJECT SUMMARY The project seeks to arrest the environmental impact of loss of soil cover in Caribbean Savannahs, which includes land degradation, loss of soil fertility, and the transformation of numerous natural habitats, including tropical, sub Andean and Andean forests, wetlands and páramos. The project would achieve this by: (i) partnering with the national cattle ranching association (Fedegan), government second-tier bank FINAGRO and the Ministries of Environment and Agriculture to mainstream biodiversity considerations into the sector; (ii) implementing biodiversity-friendly land use changes in cattle farms, including live fences, intensive SPSs and planting trees in pastures; (iii) supporting the liberation of lands for conservation and forest restoration purposes, and (iv) supporting the commercialization of certified organic and environmentally friendly beef products, to incentivize investments in environmentally sustainable production practices. The project would offer an integrated farm management package to low and middle income cattle ranchers consisting of: (i) attractively-priced loans for conversion to SPSs and for making biodiversity-friendly land use changes; (ii) a GEF donation transferred to producers via payments for environmental services (PES) to support environmental services and liberation of lands for biodiversity conservation activites, and (iii) technical assistance through 27 Fedegan centers to promote cost-effectiveness and sustainability. The project would finance the following components: (i) Establishment of SPSs; (ii) Improved Watershed Management; (iii) Biodiversity Conservation Incentives; (iv) Green Markets Development, and (v) Employment Generation. The Government of Colombia regards the sector’s sustainable development as a priority, as demonstrated by the operational focal point’s project endorsement, and supports the sector’s Strategic Plan 2004 – 2019 led by Fedegan. In the plan, 10 million hectares of SPSs will be incorporated into existing cattle ranching farms by 2019. Such systems would improve competitiveness and promote value-added meat and milk products in the wake of the free trade agreement to be signed with the United States. Additionally, the new Forestry Law provides incentives for commercial tree plantations in agricultural landscapes, which would be favorable to the proposed project. Three Bank/GEF initiatives underway contribute valuable lessons to this project: the El Salvador Environmental Services Project, the Mexico Environmental Services Project and the Costa Rica Mainstreaming Market-based Instruments for Environmental Management Project. Additionally, this project would scale up results from the Regional and Integrated Sylvo-pastoral Approaches to Ecosystem Management project (P072979), whereby a pilot PES scheme supports land use changes in Colombia, Costa Rica and Nicaragua. This project was recently rated by the GEF one of the most successful in the OP 15 portfolio. PES have led to the implementation of SPSs, live fences and trees in pastures, improving biodiversity, carbon sequestration and water quality indices. However, the scale of the operation is limited by the size of the project area in Colombia

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and by its experimental nature. The project lacks an assessment of the opportunity costs to producers of implementing changes in land use, which is critical to define optimal levels of PES. The new proposal would include this analysis and increase the cost – effectiveness of transaction costs. B – Project Objective The proposed project's global environmental objective is to safeguard Colombia’s globally important biodiversity by supporting environmental services associated with sustainable cattle ranching and incorporating biodiversity and environmental sustainability considerations into the sector. Preliminary key performance indicators include: (i) 61,500 hectares under biodiversity-friendly production and conservation use; (ii) 4,000 kilometers of forests, live fences and watershed corridors established; (iii) 50 globally important plant species conserved and multiplied in cattle ranching farms; (iv) 10 small to medium producer organizations and 5 large agribusiness companies selling organically certified products coming from cattle farms, and (v) water quality improved 40% in project intervention zones. C– Global environmental benefits expected Globally important biodiversity would be safeguarded in the following five regions: (i) the traditional livestock production region in the northern Cesar River; (ii) the adjacent lower Magdalena River region; (iii) the region surrounding Bogotá and its northern mountains; (iv) the coffee producing region and upper Cauca river, and (v) the buffer zone with the eastern Llanos region. All regions were selected for their high levels of biodiversity and their nearness to strategic ecosystems and protected areas. Zones 1 and 2 contain the last remaining fragments of dry tropical forest, considered one of the Neotropical zone’s most endangered ecosystem types and with degradation in 98.5% of its surface area in Colombia. Another strategic ecosystem is the wetlands between the Magdalena and Cauca rivers, considered of high priority by IUCN and TNC due to the existence of migratory birds and endemic species. Colombia is among the world’s five richest countries in terms of biodiversity (Mittermeier, 1998). With an area of 1.1 million square kilometers, Colombia represents 0.8% of the world’s surface and is home to 15% of all known terrestrial species. The country possesses 18 ecological regions (WWF/World Bank Report, 1996), the second highest in Latin America, and 65 ecosystem types (Humboldt Institute, 1998). The project would be focused in areas with high biodiversity and globally important species. E – POTENTIAL RISK AND MITIGATION 1. Risk: The project unwittingly supports additional expansion of cattle ranching. Mitigation Activity: The GEF’s involvement is crucial to support conservation agreements and the integrated management of farms, and to permeate existing sectoral growth strategies. Without PES and clear incentives for conservation, SPSs alone may not contribute to preserving biodiversity and natural habitats. Use of SPSs increases carrying capacity and decreases the pressure of surface expansion of cattle ranching. 2. Risk: Beneficiaries are not willing to adopt sustainable

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productive practices Mitigation Activity: PES and incentives, in addition to technical assistance and participation, should ensure that beneficiaries understand the long-term economic, social and ecological benefits of adopting sustainable practices. 3. Risk: Lack of coordination between agencies responsible for project implementation Mitigation Activity: Project preparation activities will include a detailed institutional assessment and detailed implementation procedures, which would be included in an Operational manual. Clear roles and responsibilities for each actor have already been defined to support institutional complementarities and greater project impact.

F – ADDITIONAL COMMENTS The project would involve various national and international organizations, including: (i) Colombia’s private sector livestock producer’s association (FEDEGAN), as executing agency; (ii) the Environmental and Childhood Action Fund, which would provide the technical team to coordinate project activities and provide financial support; (iii) FINAGRO, a government second-tier bank to offer specialized credit lines and incentives to cattle farmers; (iv) the Ministries of Agriculture and Rural Development and of the Environment, which would support the implementation of norms and public policies supporting incentive application, and mobilize regional autonomous corporations for additional counterpart contributions; (v) CIPAV and CATIE, to support with research and training, and (vi) The Nature Conservancy, which would contribute to private conservation agreements, integrated land planning and to monitoring and evaluation. This project has found a strong promoter in FEDEGAN to the extent that they, as agriculturalists and cattle ranchers, have committed their own resources and are considering leading execution of the proposal. One strength of the proposal is that the World Bank would work directly with the cattle ranchers in supporting the conversion of cattle ranching systems to an integrated productive system that is more environmentally friendly. To support the social sustainability and benefits of project outcomes, the proposed project will focus its efforts on small and medium farms. Some large landowners may be included in the project, but maximum limits on payments for environmental services will be imposed, as is being done in the Regional Sylvo-pastoral project.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

ANNEX 12: Summary of Indigenous People Plan

Indigenous Peoples Plan under the "Rehabilitation of degraded areas through the implementation of sylvo-pastoral systems and reforestation of the Savannas of Cordoba Department" Project. 1. Introduction

This document was drawn up on the basis of the criteria established in the World Bank Indigenous Peoples Policy OP 4.10 and following the outlines of Annex B to the Policy, to create a viable instrument for a cultural rapprochement capable of dealing with the problems of degraded areas in the Zenu Indigenous Reservation of San Andrés de Sotavento, Cordoba Department, and those of the Indigenous communities whose 500 hectares of cattle pastures are to be intervened, which will benefit directly a population of 6,468 individuals (adults and children). This Project will not produce any negative impacts on the Indigenous communities living in the areas selected for the Project, nor on the territories that form part of the Zenu Reservation. On the contrary, the Project is designed to improve the Indigenous peoples' quality of life by recuperating degraded areas and implementing an economically, biologically, environmentally and socially sustainable system. 2. The "Recovery of degraded areas" Project (RDAP) The purpose of the RDAP is to increase the productivity of 500 hectares of degraded pastures, promoting the use of tree and shrub germplasm consonant with the niches of the existing agro-ecological units in the zone. Improved productivity will also increase carbon storage both above and below ground, improve income and provide more manual labor jobs for the Indigenous community. Specifically, the Project will introduce a SPS developed by CORPOICA (Cajas-Giron and Sinclair, 2001). The system includes planting 575 shrubs (Leucaena leucocephala and Cresentia Cujete) per hectare, species which adapt to the region very well, combined with 39 tree species (Albizia saman, Casia grandis and Guazuma ulmifolia), and 39 high timber value tree species (Pachira quinata, Swietenia macrophylla and Tabebuia rosea per hectare). The grasslands originally degraded will be recuperated using grasses with a higher nutritional value and which are more drought resistant, vertical cultivation and fertilizers, as well as other interventions to correct soil compacting (meadow rotation, grazing pressure management). Because it provides forage during the almost six months of severe drought, the SPS increases milk production to twice that of the traditional systems, with clear advantages for the net rural economy income (Cajas et al., 2002). To cover the establishment costs that the local producers cannot afford, external resources provided by the Regional Autonomous Corporation of the Valleys of Sinu and San Jorge (CVS) will be used to pay the initial costs. Without the use of SPSs, the productive capacity of 500 hectares of cattle pastures on the recovered land of 33 farms on the Indigenous Reservation of San Andrés de Sotavento (Cordoba Department), could

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not be recovered and it will serve as a model to be adopted by the producers of the region in the medium term. 3. Legal Framework

Colombia has a series of regulations to protect the collective rights of the Indigenous peoples and Afro-Colombian communities, ranging from international treaties, such as the ILO Convention 169, the Biological Diversity Convention and decisions issued by the Andean Community of Nations, to the Constitution and its subsequent regulatory development. Colombia is a social State under the rule of law, organized as a decentralized Unitary Republic, with autonomous territorial, democratic, participative and pluralist entities9. The 1991 Constitution recognized ethnic and cultural diversity as one of this Nation’s fundamental characteristics, as well as a series of ethnic, cultural, territorial and political rights that are vital to the different ethnic groups. It recognized the Indigenous and Afro-Colombian communities’ right to territory; it established the nature of the Indigenous reservations and collective territories of the Afro-Colombian communities as inalienable, perpetual and free from any encumbrance, as well as these communities’ right to be consulted and to participate in any decisions that might affect them. It also established the strategic significance of their natural resources, as well as the political concept of citizen participation in public administration, including the environment, and recognized the strategic value of regional, cultural and biological diversity10.

In addition to the Constitution, the ILO Convention 169 on Indigenous and Tribal Peoples11 refers to a specific recognition of peoples and cultures and created spaces for their participation and consultation. The following are among the commitments assumed, among others, by Colombia on ratifying the Convention: a) to put in place, with the cooperation of the stake holders, measures to protect the environment in the territories in which they live; b) to respect the importance of these peoples’ relationship with the lands and territories they occupy and use12;c) To recognize their right to ownership and possession of the lands traditionally occupied by them and to safeguard their right to use the lands to which they have had access for their traditional and subsistence activities, especially in the case of nomadic and itinerant peoples; and d) to ensure special protection of these peoples’ rights to the natural resources existing on their lands, including that of participating in the use, administration and conservation of such resources. Procedures for citizen participation in environmental management are specifically established under Heading X of Law 99 that created the National Environmental system. It also established

9 Article 1 of the Constitution. 10 Articles 7, 10, 13, 63, 68, 70, 72, 171, 246,286, 287, 329, 330 and 357 of the Constitution. 11 Ratified by Colombia under Law 21 of 1991. 12 According to Article 13 of this Convention, use of the term "lands" in the provisions cited "includes the concept of territories, covering covers the entire habitat of the regions occupied and used, in one way or another, by these stakeholder peoples."

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the right of any natural or legal, public or private person to intervene in environmental administrative procedures13.

For its part, the Convention on Biological Diversity14 recognized "the close and traditional dependence of many local communities and Indigenous populations who have traditional life systems based on biological resources, and the need for their equitable participation in the benefits resulting from the use of their traditional knowledge and innovations, as well as the relevant practices for the conservation of biological diversity and the sustainability of its components". Article 8 (on Conservation in situ) established that: Each Contracting Party, as far as possible and as appropriate: j) In accordance with their national legislation, shall respect, preserve and maintain the knowledge, innovations and practices of Indigenous and local communities who have traditional life styles pertinent to the conservation and sustainable use of biological diversity and promote their broader application, with the approval and participation of those who possess such knowledge, innovations and practices, and encourage them to share equitably the benefits arising from their use. 3.1 Specific Legal Framework for Indigenous Populations

In addition to establishing the nature of the reservation lands as inalienable, perpetual and free from any encumbrance, as well as their peoples’ right to participate and be consulted, the Constitution recognizes their autonomy and special Indigenous jurisdiction, as well as assigning resources for their economic and social strengthening. It likewise provides the foundations for the establishment of their own territorial entities, granting them the powers to establish and administer their own taxation, all of which is within the framework of participation and democratic decentralization15.

For the purposes of the functions involved in administering the Indigenous reservations’ environmental and natural resources, they are treated as municipalities and the environmental functions of the Indigenous Councils are equivalent to those of mayoralties16.

An Indigenous Council is defined as a special public authority whose members belong to an Indigenous community, elected and recognized by it, with a traditional socio-political organization, whose function is that of legally representing the community, exercising authority and undertaking the activities for which it is responsible under the law and according to their own practices and customs and the internal regulations of each community17.

Traditional Authorities are defined as members of an indigenous community who exercise, within the respective culture’s structure, the power of organization, government, administration and social control. The Indigenous communities’ traditional authorities have the same representative status and attributes within the State as those of Indigenous Councils.

13 Article 69 14 Ratified by Colombia under Law 65 of 1994. 15 Fajardo, D. 2002 16 Article 67 of Law 99 of 1993. 17 Article 2 of Decree 2164 of 1995 that regulated matters of the endowment of, and title deeds for Indigenous communities’ lands.

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Decrees 1396 of 1996 and 1397 of 1996 created and regulated spaces for Indigenous participation, the former through the Indigenous Peoples’ Human Rights Commission and the latter through the National Indigenous Territories Commission and Permanent Consensus Table. These are national level Indigenous participation organizations, whose purpose is to ensure consensus on any administrative and legislative decisions that might affect Indigenous peoples, and to follow up implementation of the State Indigenous peoples policy. As far as the title deeds of their land are concerned, not only is the right of the Indigenous communities that inhabit forestry reserve zones or live on Indigenous reservations that overlap national parks to remain on them recognized, but they are also granted collective ownership of the reservations under the respective title deeds18.

In the case of expansion, restructuring or disencumbrance of Indigenous reservations, the Ministry of the Environment is responsible for verifying and certifying compliance with the Ecological Function of ownership of the reservation19.

Regarding the relationship of the Indigenous reservations with national parks, their compatibility is recognized and a "special administrative regime that benefits the Indigenous population, under which the community’s continued presence shall be respected, as well as the right of its members to exploit the respective renewable natural resources using technologies compatible with the purposes of the system assigned to the respective area"20 has been established. 4. Description of the Zenu People 4.1 Geographic location

The Zenu people live in the municipalities of San Andrés de Sotavento in Cordoba and El Volao in the Urabá area of Antioquia. There are also small settlements in the Departments of Antioquia, Choco and Sucre, as well as the south of Bolivar Department, within a 16,796 hectare perimeter. 4.2 Demographic characteristics

The San Andres de Sotavento Indigenous reservation has a population of 36,000 inhabitants, grouped in 290 communities. The majority are between 15 and 40 years of age, making this a very young Indigenous population. There is a high average number of births per year, but there is also a relatively low mortality rate, as these Indigenous people are long lived in spite of their diseases and unhealthy conditions.

18 Article 3 of Decree 2164 of 1995. It is noteworthy that, while the Indigenous reserves recognized the right to use the land, the reservations also recognize their collective ownership. 19 Article 10 of Decree 2164 of 1995. 20 Article 7 of Decree 622 of 1977.

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There is both emigration and immigration. Nowadays, numerous people displaced by violence in other areas of Colombia come to live on the reservation. Indigenous people also emigrate because of the lack of jobs in the community. They usually return home after a few months, although some only do so many years later. There are others who leave the community in search of work and then organize their families where their work is and only return to visit. 4.3 Language

Their original Zenu language has not been preserved and the people now speak only Spanish. 4.4 Social and cultural characteristics

The Indigenous population has been gradually losing its cultural identity as a result of excessive penetration by other cultures and, consequently, their way of life has changed as they gradually absorb western culture. Cultural damage has been very strong in this people, who no longer speak their own native language, although some members do preserve many of the ancient social customs and traditions. Nevertheless, great efforts are now being made to rescue all aspects of the Zenu culture, through, for example, an educational system based on curricula that promote local identity and rescue memorial history. There is now a group of traditional Indigenous shamans who are working, together with the communities and the Principal Council to restore their own medical treatment values. From the organizational point of view, the councils have been strengthened by native government processes, although there is no lack of infiltration of political movements extraneous to their reality. Where handicrafts are concerned, the children weave hats and other items with fiber (ñapa) to help maintain their families or to buy the few utensils they take to school. Some of the young people have begun to feel ashamed of weaving handicrafts and so schools are now giving them incentives to do so, encouraging them and providing materials in an effort to prevent this tradition from disappearing. This people’s cultural identity is being reinforced through different types of community work in mingas or collective groups, which promotes a sense of belonging to the community they were born in and that looks on them as its children. The recuperation of several farms within the reservation has led the Indigenous communities to become more clearly aware that they own the land and have every right to fight for and preserve it, maintain it and make it prosperous for the good of the community and their families. In spite of a certain degree of acculturation of the Zenus, their culture is, in fact, very extensive. They preserve their ancestors’ legends, myths and traditions and project them onto their own present day lives. It will be worth while going into this subject in more detail later on in order to enhance this knowledge with the Zenu intrinsic cultural wealth.

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There is much collaboration within the community and the people like to carry out works jointly with their companions.

4.5 Feast days On August 30 each year the Zenu celebrate the Feast of Saint Rosa of Lima, their patron saint. They celebrate with chicha (naturally fermented alcoholic drink), music and drums. Another significant holiday for them is November 2. Those with relatives buried in the cemetery go there, taking their tamales and chichi with them. They remain for a day and a half, drinking and dancing, allowing the dead to participate in the celebration. 4.6 Customs and beliefs

While they are very reserved about others watching them, the following are some of the customs we observed: They blow a cow’s horn or play a drum to call people together. Burials are held in the evening hours and they celebrate the novena with chichi, playing games in the deceased person’s house. Whenever there is an eclipse of the moon, they shout to frighten it; they believe it is a punishment from God because 20 of their children once died during an eclipse. Summer thunder presages terrible storms; they call it the encorvado (hunchback). The lagoon is enchanted. A rainbow is a sign of "summer" (dry season). A black sheep appears from behind the Rock and, if anybody catches, they disappear. Stars are called comets and presage war for the world. If a husband and wife refrain from sexual relations while planting food crops (cassava, plantain and yam), they are assured of a good and plentiful harvest. A daughter may not be punished while menstruating, because the blood might flow to her head and kill her. The dead follow in the footsteps of where they spent their lives. Curanderismo (tribal medicine) is tending to disappear among the communities, but many Zenu still take an interest in it.

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Some customs have lost credibility owing to abuse. Today, health workers take part in these medical practices in the different communities, combining western medicine with the Indigenous practices that are valued and practiced within the reservation. Communities are at present making efforts to recover this cultural value. 4.7 Beliefs on origins The Zenu believe themselves to be the descendants of a common ancestry formed by a man called MELXION and a woman named MANEXCA, who had only one breast from which the milk from both was taken, so she gave it much more strongly and abundantly to her children, making the Zenu both tall and brave. According to their mythology: "Our father MELXION, with the beauty of the sun, taught us to respect promises, care for our animals and to hate lies; he taught us that work is the song most pleasing to the gods"; the myth tells that MELXION and MANEXCA, the Father-Mother God, are of divine provenance; they are eternal and it was they who created a series of protecting, loving relationships to guarantee the survival of the Zenu people. Harmony with their origin is a present reality and is latent in the entire process of recuperation of their identity, where God’s scheme maintains the validity, strength and abundance of his/her children, the Zenu. 4.8 Religious aspect 4.8.1 Cosmovision, Myths and Beliefs

The Zenu believe in the existence of supernatural, subterranean and aquatic beings who adopt the appearance of humans or animals. These beings, whom they call "weavers of charms", control water levels, winds, thunder and lightning (1), they can trap a person’s spirit and carry it to their underground caves and labyrinths, where there are a great number of animals, such as rabbits, armadillos, "ñëque" (Dasyprocta sp.) and the "guatinaja" (Agouti paca). According to this mythology, the "weavers of charms" own the animals and occasionally offer pieces of game animals to human beings. Many men claim to have seen "weavers of charm" who were beautiful tall women, white and blonde. The women, for their part, have seen "weavers of charms" who were black, naked men whistling to them from the edges of the lagoons. When a child falls ill, the Zenu are certain that its spirit, captured by a "weaver of charms", must be recovered by the child’s godparents, who must go to the lagoon and call his or her name out loud until the spirit returns. The principal "weaver of charm" is the golden alligator in an underground river. Its body is as large as the reservation itself. Any who dare to drill the ground to remove the alligator are devoured by the beast and transformed into a man-alligators. If the alligator should be taken from its refuge, the entire reservation would sink under a deluge. The Zenu believe that thorny plants are a kind of threshold that both joins and separates the world of man from the world of the "weavers of charms. When the latter leave their grottos and lagoons, they are trapped by the thorns tangling in their hair. When the spirit of a child goes with

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the "weavers of charm", his or her relatives find the body on one of these thorny plants (2). The architecture of Zenu houses reflects this image of the world. The highest beam of the roof is called the "alligator" because it "supports the house". Some roofs have two beams: the "iguana" and the "alligator". The walls are made of "lata" reeds (Bactris minor), from which the thorns are removed. On the day the house is inaugurated, the six posts that form the rectangular floor are baptized. Each one is assigned a godfather and receives either a male or a female name. The earth floor is compacted with four mallets, two "male" and two "female", depending on the size of the mallet head. The "weavers of charms" live in the underworld and take anthropomorphic or zoomorphic forms, but are also in the sky in the form of thunder, rain, winds, etc. On analysis of the houses’ structure, we find that the posts represent human beings (they have their names) and the "alligator" (the main beam) which, according to the myth, is found beneath men, is placed on them. The houses are a "back-to-front world", or rather "a world that bends down" because the alligator continues to exist below the earth. The function of the thorny cane of which the walls are made is to communicate the underworld with the "alligator" that is in the heights, as the walls are both buried in the soil and rise to form the roof frame. Just as the golden alligator protects Zenu territory, the main beam of the roof supports the house and keeps its inhabitants safe (Turbay, 1993).

Charmer: Thunder, Rain Iguana and alligator Roof: winds and lightning Beams

Men/Women,,, Posts

Charmers: human or animal Gold appearance alligator

Animals were of great importance in the Zenu region in pre-Columbian times. The Spanish found large numbers of offerings in temples and tombs on the coast and the savannas. Chronicler Juan de Castellanos wrote: "They were square tombs and with enormous riches, so much so that there are documents that say that the gold was weighed with 100 pound weights; there was an enormous variety of figures of all types of aquatic and land animals and birds, down to the smallest minor creatures." (Castellanos, 1944). Archeologists have found birds, mammals, reptiles, amphibian animals and gold fish in the Sinu area. They consider that certain animals, such as alligators, jaguars, eagles and king vultures must have impressed the Indigenous people with their strength and aggressiveness, which propitiated their magic and religious connotations. (Legaste, 1980).

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Alligators, iguanas, turtles and toads are "anomalous" animals, "neuter", because they can live on land or in water. This fact, together with their fertility and aggressiveness (in the case of alligators), they inspired numerous comments, observations, stories and legends that add interest to day lives of the present Zenu people. During Holy Week, they prepare special dishes of baby alligators, called "babillas" (Caimán Fuscus), and turtles. In January, the Zenu of the Palmito municipality practice a cult to Saint Anthony who, according to myth, is the man-alligator into which a White man who tried to steal the gold alligator was transformed (in fact, this was an American engineer drilling wells to search for oil, natural gas and coal at the beginning of the last century) (3). Toads are dangerous to women, because they can drink their menstrual blood and cause a uterine conjuelo. This species of toad can grow in their womb and feed on the woman's embryos. Stories in which the main character is the toad have strong sexual connotations and witchcraft is associated with the use of poisons derived from the toad. The importance of animals is also outstanding in stories about "Uncle Rabbit", a clever, intelligent, deceitful and cannibalistic animal. It deceives others, including the tiger and the alligator, which, in spite of their size and strength, are defeated by the quick witted rabbit. In addition, most of the geometric designs that decorate the vegetal fiber hats made by the Zenu have animals' names (they also "draw" plants and manufactured items). These are schematic representations of animals: a tooth representing the "ñeque" (Dasyprocta sp.), an eye of a cock, a bush master snake, the footprint of a dog, butterflies, a cow’s rib, a fishbone, a spider, etc. Archeologists have found geometric motifs similar to the designs on the pottery made by the inhabitants of the San Jorge river in the X Century C.E. (Plazas and Falchetti, 1981, 1990). 4.9 Recreation and sports

There are no sports or recreation areas (grounds, pitches, courts or recreational parks) to encourage people to enjoy healthy activities in their free time. There is a deficit of recreational and sports infrastructure in the schools and there are no facilities to satisfy this basic children’s and young people’s. The Indigenous population has been gradually losing its cultural identity because of excessive penetration by other cultures. Their children and young people do, however, have their own culture’s games to entertain them. Among non-native sports, they love football, but lack incentives to develop their interest in the game. The Missionary Sisters support them by finding some sports implements through the respective municipal Institute or other entities to promote the increasing number of sports groups in the different communities. The young people of Cerro Vidales have built a small rustic park for the local children, which serves as a meeting place and a space for enjoyment. 4.10 Housing

Although they have now introduced traditional "white" housing elements, the Zenu formerly lived in houses built on artificial platforms on the banks of river channels, at the ends of which they buried their dead.

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4.11 Socio-political organization The Zenu people’s political organization is based on local councils. They constitute a very complex process characterized by the desire for reorganization, as the majority of the communities lack territorial unity. Therefore, in the Sucre and Cordoba regions, the communities are grouped round the Principal Council of the San Antonio de Sotavento Reservation. The local councils function in the Upper San Jorge zone. The organized communities are members of the Antioquia Department Indigenous Organization. 4.12 Productive system On the recuperated farms, there is cultivation of cassava, interspersed with corn (maize) and associated with yams by individual families, and collective work, to which each family contributes part of its land and manual labor. Due to the risk of crops being destroyed by the long periods of drought and phytosanitary problems, the work collectives have been going over to a high percentage of cattle farming. This has been increasing in recent years, because loans are easier to obtain and profits are higher. Today, 70% of Zenu land is used for cattle and 30% for subsistence crops farmed by the cut and burn system. 4.13 Industrial arts Handicrafts made with vegetal fiber, such as hats, mats, baskets, handbags, purses and carpets, among others, are a very ancient Zenu tradition and fundamental to their economy. The "vuelteado" (turned around) hat has been part of this ethnic group’s men’s clothing ever since pre-Columbian times and is shown in some of the gold pieces in the Banco de la República (Central Bank) Gold Museum in Bogota. They are made of arrow reeds (Gynerium sgitatum),from which is extracted and then dried. It is becoming more and more difficult to find this reed or palms within the reservation due to the scarcity of land on which to grow it and so it is now brought in from other regions, such as San Jorge and Lower Cauca. There are two settlements specialized in "vueltiao" hat production inside the reservation; the finest and most handsome are made in Tuchin and Cerro Vidales. It can take a single person from five to eight days to weave one, depending on hisor her skill and the amount of time they are able to dedicate to the process, that consists of manually interspersing pairs of palms, one white and one black, from right to left and vice versa, dividing the two colors into portions. The designs are created by superimposing black fibers on white. The hat's quality also depends on the number of pairs of palms it is made of; the more pairs, the more difficult it is to weave and, therefore, it fetches a higher price. On the local market, the hats are classified according to the number of pairs of palm used, that is, fifteen, eighteen, twenty-one or twenty-three pairs. One same artisan does not always weave the entire product. Work may be divided among the members of a family. The mother or adults plait the designs, which are the most complex and onerous part of the finished product, and the rest is plaited by the other members of the family group. Some people specialize in the production of one part and sell it to other artisans, because they need to make money every day to buy food.

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5. Consultation process with the Zenu Community of San Andrés de Sotavento Consultation meetings were held as part of the legal and institutional framework to present the main aspects of the Project: objectives, benefits, components and principal areas of intervention, with special emphasis on degraded areas. Among the activities required for the presentation of the proposed Clean Development Mechanism (CDM) project entitled "Rehabilitation of degraded land using SPSs and reforestation in marginal areas of Cordoba", which involves the intervention of 2,500 degraded hectares with sylvo-pastoral, rubber-tree and/or reforestation systems, consensus was reached with the community regarding the viability of its implementation. Socialization workshops were held, in which the participants were Indigenous people, who were given detailed information on the proposal, and they defined their priority intervention areas. During the months of January and February 2006, the team implementing the proposal held nine participative workshops in different areas of the San Andres de Sotavento Reservation Zenu settlement; organization of these workshops had the support of the Principal Council, led by the Great Chief and his immediate collaborators (First Captain, First Sheriff and the Indigenous technical adviser on agricultural and livestock, among others), with whom the first approach to this community had been made (see Table 1).

Table 1. Socialization Workshops and participation of Indigenous people

Date Event Place No. of

participants

January 27-06 Socialization Workshop

San Andrés de Sotavento (Finca Celeste) 46

February 1-06 Socialization Workshop

San Andrés de Sotavento (Finca Majagual) 19

February 2-06 Socialization Workshop

San Andrés de Sotavento (Finca San José) 17

February 3-06 Socialization Workshop

San Andrés de Sotavento (Bella Cecilia) 44

February 7-06 Socialization Workshop

San Andrés de Sotavento (Campo Bello) 37

February 8-06 Socialization Workshop

San Andrés de Sotavento (La Esmeralda Sur) 19

February 16-06 Socialization Workshop

Montería (Cadena Forestal) 25

February 21-06 Socialization Workshop

San Andrés de Sotavento (Mochalito) 19

February 23-06 Socialization Workshop

San Andrés de Sotavento (Celeste) 51

The Project was presented at each workshop, including its title and implementation methodology, for both reforestation and the SPSs, as well as the project’s commitment to the community and the latter’s commitment to the Project. The concept of the SPSs was explained, as well as their importance and that of reforestation in the degraded land recuperation process. All the participants’ questions were answered. The most efficient methodology for informing the entire community of the Project was agreed on and received the approval of all the participants.

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This was for each second captain to bring his/her respective community together to take their decision on participating in the Project. It was agreed that, after each second captain had held such a meeting with his/her community, encounters would then be held on different farms chosen as venues for meetings with the proponents’ team, at which the Principal Council, the second captains and representatives of the communities surrounding each venue would be present. For example, the communities of the El Cabildo Recuperación, San Isidro, California, Sanquirra, Celeste Imperio, Los Andes Recuperación, Venecia, Bella Isla and San Francisco farms, which had recently been granted title deeds, met at the Majagual venue. The proposal was explained once more at these meetings and any doubts as to the components of the Project were clarified as necessary; as a result, the area that would be available under the Project to each community for both reforestation and SPSs was duly registered. The community was free to decide whether or not to participate in one or both Project components and also to decide not to participate in the Project at all. The representatives of each community reported the respective decisions taken by their communiteis as to the number of hectares and the Project component in which they wished to participate. A potential of 285.5 hectares was initially registered for the sylvo-pastoral component and 75 hectares for reforestation (Table 2). Table 2. Initially potential farm to participate in the Project

Farm Sylvo-pastoral (ha)

Reforestation (ha)

Majagual I Recuperación 20 0 Majagual I Recuperación 10 0 El Cabildo Recuperación 10 10 San Isidro II 20 0 California 15 0 Celeste Imperio 10 10 Los Andes Recuperación 10 10 Venecia 40 0 Bella Isla 20 0 Cuesta Abajo 10 0 Bella Cecilia 10 10 Nueva Colombia 10 10 Naranjal (Sabanal) 10 5 El Pereque 10 10 Pajonal 10 5 Cerro Vidal Technical Agricultural Institute 5 5 Brasilia 10 0 Cerro Bomba 10 0 El Bosque (Silencio) 15 0 Esmeralda Sur/ La Oportunidad 2

16

No Hay Como Dios 7.5 Aurelio Nova 7 TOTAL 285.5 75

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Having defined the potential areas for intervention, the proponent team made diagnostic visits to all the farms, accompanied by representatives of the respective communities and the members of the Principal Council. They decided which of the proposed areas fulfilled the requirements for inclusion in the Project, such as cattle ranches and forest areas undergoing degradation processes and with low tree cover (less than 10%). During the visits, when further doubts of the Indigenous participants were clarified, additional areas were included in the proposal. The following Table shows an increase in the total area to be intervened with SPSs and a reduction in the reforestation component, because regional production in the zone is based on dual purpose cattle ranching rather than forestry production (Table 3) Table 3. List of diagnostic visits to farms to be intervened by the Project with FPS.

Farm Sylvo-pastoralha

Comments

Celeste Imperio 32 TOTAL 162 hectares, 62 cultivated, 200 head of cattle, 4 fields, 50 families. electric fence

Majagual I Recuperación 10 TOTAL 80 hectares, 10 cultivated, 50 head of cattle, 3 fields, 20 families. electric fence

Majagual II Recuperación 12 TOTAL 161 hectares, 25 cultivated, 36 head of cattle, 36 families, 7 fields, electric fence, 5 dams

Bella Isla 40

TOTAL 185 hectares, 35 cultivated, 85 community owned head of cattle y 35 individually owned head of cattle, 44 families,4 fields,3 dams, barbed wire fence.

San Antonio Recuperación 10 TOTAL 14 hectares, all used for cattle, 30 head of cattle, 7 families,14 fields, electric fence

Venecia 10 25 families, only 3 beneficiaries, 1 dam, 15 head of cattle, barbed wire fence

Mojosa II Tolima NOT CLASSIFIED: because of 10% tree cover at 10%

La Uvita 11

Privately owned by son of a councilor, 6 children, 17 head of cattle, 6 year tenure, 1 dam, cassava grown in entire area, mechanizable.

Mojosa I 12

TOTAL 45 hectares, community owned, 10 partners, 40 head of cattle, 10 hectares cultivated, 30 year tenure, (weeds predominate 90% coscuelo, hectares cleared twice a year). suggestion: not to break ground but facilitate taconeó and chemical, with change of grass, barbed wire fence.

Trapichito (Fabio Guebara) 10

Privately owned, 5 children, 20 hectares, 2 hectares cultivated, 14 head of cattle, 15 year tenure, (mechanizable) 10% vara blanca weeds, need for taconeó, 3 dams, barbed wire fence

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Nuevo Estilo (Climaco Vertel) 10

TOTAL 40 hectares, 4 hectares for cultivation,15 head of cattle, private within the reservation, there is a lot of underbrush (2 years) 35 year tenure, 7 children, manual labor available: 2 personas, barbed wire fence (assumed commitment to clear underbrush)

Abimael Calderon 10

TOTAL 22 hectares, all used for cattle, 1 dam, 40 head of cattle, 4 children dependent on father. Most is not mechanizable because terrain is very uneven, barbed wire fence.

1/Los Andes Recuperación 10

TOTAL 105 hectares, very uneven terrain and so not mechanizable, 30 hectares cultivated, 28 families; 23 head of cattle, 23 year tenure, 2 springs of water, farm complicated to work, but there is experience of reforestation, barbed wire fence, independent farm.

San Isidro II 12

Total 90 hectares, 12 cultivated, 70 head of cattle, 8 years' tenure, 2 dams, 30 families, colosuana grass, 70% mechanizable. pasture can be changed. electric fence, reforestation area left pending.

San Isidro I 10

TOTAL 52 hectares, 10 cultivated, 3 fields, 2 dams, 22 families, 70 head of cattle, community owned, 20% of area is mechanizable, electric fence.

Cerro Vidal Technical Agricultural Institute

5Agricultural Technical College

Bella Cecelia 23 Pajonal 10 Lot left with weeds cover.

La Esmeralda 20

Nueva Colombia 25

The lot has a small dam on the boundary and farm borders the road. Total Area 134 hectares, 250head of cattle, 30 families. community owned, middle lot has low areas, Escobillas rodillera,.

1/Naranjal 3 10

Along edge of roads, the two lots are contiguous. The reforestation lot floods, but has good surface drainage. It has a dam, an open area, exposed rocks and sandstone.

Brasilia 10

Has a dam. Entrance through Campo Bello, there are Toloya, escobilla, lata macho, coroza weeds (3 plants), colosuana grass, surface drainage. TOTAL 105,75 hectares cultivated, 30 families, 80 animals

Bosque Silencio 15

Medium underbrush, access difficult at 300 m, dam with water in dry season, Toloya… Total 130 hectares, 29 families, 149 head of cattle. Name of lot is Retrato.

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1/Venecia 10

Flatland farm with very degraded colosuana,. many hectares barren. Good natural soil condition. Degrading is result of poor management. Has a dam and weeds such as Toloya, Escobilla, Lata, 80 animals, 21 families, 48 hectares and floods in rainy season.

San Francisco 15

Access difficult, approximately 400m, hilly terrain, very degraded with muñeco shrub weeds. Total Area 35 hectares + 11 hectares. 14 cows with calves + escoteras of total of 35. Has a dam

California 15

Alongside main road, has a dam, medium underbrush on half the lot. Total area 84 hectares, 72 animals, 26 families. Part of farm is on a hill.

Cabildo Recuperación 20

Area divided into 5 and 15 hectares at approximately 300 m. Severely deforested with no trees at all, 2 dams, weeds such as Muñeco, Escobilla, total area 145 hectares, 300m from the main road, 70 animals, 38 families, land is hilly and has easy front access.

Celeste Imperio-Santa Elena 50

Celeste Imperio-Santa Elena, 5 hectares which are part of the 30 Hectares listed. Sylvo-pastoral. It is important for them not to be left out as they are very deteriorated, hilly terrain, which can be recuperated with right type of work (from moderate to severe). AREA: 6.

San José 10 Total area 132 hectares, 31 families, 162 animals, (mechanizable) community owned, dams, electric fence.

Bugre-Berlín 10

Total area 110 hectares, 33 families, 33 hectares cultivated, 198 head of cattle, mild underbrush, 2 dams, stream of spring water. All mechanizable, 33 manual workers, barbed wire fence.

MocHectarelito 18

Total area: 279 hectares, 80 cultivated, 120 head of cattle, 28 families, all mechanizable. planted with bitter cassava. 2 dams, 100% de escobilla. electric fence

Bugre-MocHectarelito 10

Total area: 42 hectares, 6 hectares cultivated, 40 head of cattle, 10 families, all mechanizable (was a cattle farm), 11 year tenure, only 4 head of cattle per partner in the farm.

Oportunidad I

Total area: 66 hectares, 9 hectares cultivated and 10 reforested. 36 families, 60 head of cattle, weeds 100%, 5 covered with muñeco, 4 dams, barbed wire fences, 3% cover of lata de corozo. not mechanizable because of muñeco roots on many hectares.

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Oportunidad II

Total area: 82 hectares, 30 hectares cultivated, 30 families, 30 head of cattle. 25 % of soil cover is underbrush of 1-2 years growth. not mechanizable, barbed wire fence, 2 dams

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1/ The Los Andes Recuperación, Naranjal 3 and Venecia Farms also have 10, 5 and 10 hectares for the reforestation component.

6. Description of the type of activities with Indigenous peoples to be financed by the Project

As shown in Table 3, as a result of consensus with the Indigenous community of the San Andres de Sotavento Reservation, the great majority of the Indigenous communities participating chose the Sylvo-pastoral component option. The Sylvo-pastoral component of the Project for "Rehabilitation of degraded areas by implementing SPSs and reforestation in marginal areas of Cordoba Department" is a multiple strata system, whose components are: Herbaceous component (grass to be selected by the Indigenous people from among the options of the bracearía and panicum) Bush component (Leucaena leucocephala and Crescentia cujete), with a density of 575 bushes per hectare-1 Tree component (Albizia saman, Guazuma ulmifolia and Casina grandis), with a density of 39 trees per hectare-1 Timber yielding component (Sweitenia macrophylla, Pachira quinata and Tabebuia rosea), with adensity of 30 timber yielding trees per hectare-1.

The Project includes an evaluation of the bio-physical soil indicator baseline and, depending on this, vertical cultivation and fertilization treatments will be applied as part of the recuperation of the soil. Once the forage components (herbaceous, bushes, trees and timber yielding) are established, the Project will revise the field divisions for subsequent introduction of a rotating pasture system and pasture pressure management. According to the letter of intention signed with the Indigenous Reservation and the CORPOICA - ICA Convention and CVS, the Project is committed to paying the establishment expenses (costs of soil preparation, establishment of nurseries, inputs, agricultural materials and a percentage of the manual labor required for establishment and maintenance). Likewise, the Project undertakes to provide training for the Indigenous community involved in the Project in all aspects of sylvo-pastoral technology. A further commitment of the Project is to monitor carbon sequestration and system permanence. The income from and benefits gained as a result of implementing this SPS will be distributed equitably, by mutual agreement with each community on every recuperated farm. It will be the

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responsibility of the Indigenous Reservation authority to carry out the distribution according to its own regulations. It was agreed that any excess from the sale of Certified Emission Reductions (CER) granted to the Indigenous communities will be invested in social and community works, following consensus between the Convention Coordination Committee and the Principal Regional Council. These resources will be from regular drafts following the scheme that is to be defined for the Project after signature of the Emission Reduction Purchase Agreement (ERPA) and the validation and verification of carbon sequestration carried out be the designated entity. These resources may not be either more or less than 200 thousand dollars, as agreed in the ERPA, if and when it is signed. The permanence of the SPSs established by the Project, following a verification process, is a condition for CVS to disburse resources. The 200 thousand dollars from the transfer of CERs by the Project to the beneficiary Indigenous Communities will be used for the following activities: basic disencumbrance, community strengthening, biodiversity management and conservation and environmental education. A joint account will be opened and administered by the Principal Council and CVS and the latter will be responsible for the of the Project. For its part, the Indigenous Reservation undertakes to: Place a minimum total of 500 hectares at the disposal of the Project, taking into account that the minimum area for a farm to participate is the 10 hectares necessary to establish a SPS. Contribute a percentage of manual labor to the Project field activities in the establishment phase and maintenance of the intervened areas. Comply with the requirement to maintain the SPS introduced by the Project for 30 years. As of the third year, each community will be responsible for maintaining the Project area using the training they receive from CORPOICA, CVS and CIAT. The Principal Council, as the Reservation’s only authority, assumes the commitment to control and supervise the Project to ensure optimum development and permanence. The "Rehabilitation of degraded areas through the implementation of SPSs and reforestation in the savannas of Cordoba Department" Project will not cause any negative effect or impact onthe cultural, social or political organization of the Indigenous Reservation, nor on the flora and fauna of both the Project area and its areas of influence. On the contrary, the project will include a series of beneficial impacts that will be reflected in a contribution to improving the standard of life of the communities where the Project is implemented and will have an impact on the Reservation’s entire area of influence, because its implementation will included training the community in the following aspects: • Conservation of natural resources, soil, water and biodiversity: • Stimulation of biodiversity by replacing the cover of single crops with more varied covers

that promote an increase in the macro-fauna and micro-fauna populations.

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• Mitigation of climatic change through atmospheric carbon sequestration and reduction in greenhouse gases.

• Reduction in soil erosion with the beneficial effect on water quantity and quality, as well as reducing the sedimentation of reservoirs and estuaries.

• Reduction in burnings regularly carried out in the region, thereby reducing greenhouse gases. • Recuperation of habitats for migratory species (birds, butterflies) and connection of forest

remnants. • Reduction in deforestation and pressure on the woodlands used for firewood and wood in the

SPS.

Issues and concerns discussed during the consultation with the Zenu Community

Community Concerns

Project Sponsors Response

Soils are much degraded and their pastures (Bothriocloa pertusa) for cattle disappear during the dry season, creating stress in the cattle.

Project will provide better quality pastures and will implement a system to improve soil productivity, including rotational grazing and capacity building for managing cattle health.

Communities wanted to know the period during which the selected areas cannot be used for grazing.

In the areas where the new technology is implemented, that period could be around 8 months depending on rainfall behavior, but this is compensated with the better productivity of the new system.

Communities considered that reforestation yielded only in the long run and requires areas more extensive than the silvopastoral system. Communities also expressed frustration with previous reforestation experiences for lack of support and technical advice.

Project sponsors gave up the idea of introducing reforestation in the Zenu territory, and instead went on discussing the silvopastoral system.

Some communities expressed doubts regarding the various kinds of supports the project was to bring about. They found hard to believe that the project was going to bear all costs regarding technical equipments, seeds, and other inputs. They asked in several occasions if they were being involved in some kind of loan they would have to pay later on. Something that scared them.

Project sponsors stated clearly that the project will bear all costs, including paying for labor if community support was not sufficient. It was explained that these costs were going to be recovered from the emission certificates. It was further explained that all outputs produced with the implementation of the new technology were the property of the community.

Communities wanted to know for what Project sponsors stated that the communities were

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type of activities their labor was being required.

going to participate in all project activities, such as the production and maintenance of the nursery, the lay out of the soil and pasture baselines, in soil preparation and cultivation of pastures, in the rotational system and the monitoring of biophysical indicators. It was explained that the concept was to learning by doing and that their involvement in all activities was to create a better sense of ownership.

Bibliographic References

Cajas-Girón YS and Sinclair FL (2001) Characterisation of multistrata sylvo-pastoral systems on seasonally dry pasture in the Caribbean region of Colombia. Agroforestry Systems 53 :215-225.

Cajas-Girón YS (2002) Impacts of tree diversity on the productivity of sylvo-pastoral systems in seasonally dry areas of Colombia. PhD thesis, University of Wales, Bangor. UK. 214 pp.

Castellanos J (1944) Elegías de Varones ilustres de Indías, Altlas, Madrid, p, 38.

Legaste A (1980) La Fauna en la Orfebrería Sinú. Litografía Arco, Bogotá.

Plazas C y Falchetti AM (1990) Una cultura anfibia. la sociedad Hidráulica Zenú. En: Medio Ambiente y Desarrollo, Edit. por Ernesto Guhl, Tercer Mundo - Ediciones Uniandes: 146-156.

Plazas C y Falchetti AM (1981) Una Cultura Anfibia. La Sociedad Hidráulica Zenu. En: Medio Ambiente y Desarrollo, (Ed. Ernesto Guhl). Tercer Mundo – Ediciones Uniandes: 146-156

Turbay, S (1993) Croyances et pratiques reliqueuses des Tenues de la plaine caraibe colombienne. Tesis doctoral.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

Annex 13: Environmental Analysis Summary An environmental assessment was conducted for each project component following best national practices and general guidance for the Bank. Each component was carefully described in tasks, each task was studied on its environmental consequences, and several dimensions were quantified. Overall the results indicated that the project is overwhelmingly positive to the environment. Over 90% of all the potential impacts are positive, and the negative impacts have been identified, characterized, mitigation options identified, and specific management plans will be prepared for each area to guide project implementation and to minimize environmental impacts. The project is expected to use agrochemicals, such as fertilizers, pesticides and herbicides. The Pest Management safeguard (OP 4.09) is triggered. CVS, CORPOICA and CIAT have developed a manual to guide the use of pesticides in the project area, minimize the use of dangerous herbicides and pesticides, provide guidelines on the usage of agrochemicals, including transport, storage, usage, and disposal. This manual will serve also as basic training material on the adequate use of tools, utensils, machinery, cloths and health protection practices. Reforestation Activities Reforestation activities are contemplated in an area of 200ha. Teca, Tectona grandis, and Roble, Tabebuia rosea, are the two main species under consideration. The Tectona grandis is exotic to Colombia, although it is common among small to medium forest plantation due to its adaptation, reduced invasiveness, and good commercial value. Stands of Tectona grandis are not new to the area and no significant negative environmental impacts have been reported. The reforestation component was described as composed of 11 main activities, each of which was studied on its potential impacts to the environment. Of a total of 41 possible environmental impacts 39 are found to be positive and only 2 were judged to be negative. A minor negative impact is to be expected as transportation is projected to increase. This impact is graded low. The second negative impact is associated with fito-sanitary control activities. As already mentioned a manual to guide the use of agrochemicals has been developed to minimize the expected risks in the usage of dangerous pesticides and herbicides. All reforestation activities will be guided by specific forest management plans that require approval by the local environmental authority. As key element of the forest resource management plan a fire protection strategy will be devised and agreed before land preparation activities start. Hevea Brasilescis Plantations

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This component will support the reforestation of 1500 ha by small farmers mainly with Hevea Brasilensis. The reforested area is located in the “corregimiento de Uré”, Montelíbano municipality in the department of Córdoba. The reforestation will be conducted according to procedures recommended by CVS for the region. Plantings will be grown in nurseries and transplanted at 4 months of age. Hevea Brazilencis is already being exploited in the area, where the main constraints to increased production are the collection of germoplasm and its development in specialized nurseries, and the financial burden of a long maturation period before latex production starts. A detailed description of the sub-project activities was made, including the development of the forest plantation and the collection and processing of latex. In all 61 impacts were found, 52 of which are considered to be positive. Six are without classification, as they were not classified as positive or negative. Only 3 were judged to be negative, that is less than 5% of the identified impacts. As in the previous case, the negative impacts are associated mostly to the use of agrochemical for pest control for which a well defined mitigation strategy exists. Sylvo-pastoral systems The component will support the establishment of 500 ha of sylvo-pastoral schemes in indigenous lands in San Andres de Sotavento. The component will include the planting of forage shrubs (Gliricydia sepium, Cresentia Cujete and Leucaena leucocephala), and some 40 arboreal species (Pachira quinata, Switenia macrophylla, Tabebuia rosea). Direct seeding (no-tillage) will be used for the crops. In areas where the status of the pasture is too poor, seeds of improved pastures (Brachiaria hybrids) will be used. An agreement has already been signed with the Zenu communities, which will receive the bulk of the carbon revenues for a social program developed in close consultation. The combined use of grasses, shrubs and trees for cattle ranching has been recognized as an important agro-development of the last few decades. If adequately selected the vegetation species will develop synergistic cycles, escalating production, improving soils, and increasing cattle growth. In the degraded lands of the Zenu community cattle is already being raised, although with very low productivity. The sylvo-pastoral schemes will generate greater revenues through increased cattle productivity and new marketable products. Following the EIA methodology adopted by the Ministry of the Environment, Housing and Territorial Development, an analysis was made of each subactivity required for the implementation of these systems, and of its operation. The results are positive for all but few potential impacts, as the possible increase in cattle density (land degradation) and the possibility of increased enteric methane release. Recent research on this last impact has indicated that the use of legumes to feed the cattle, a change in diet, as it is being recommended is associated with a net reduction of enteric methane.

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COLOMBIA: Caribbean Savannah Carbon Sink Project

Annex 14: Additionality analysis

The demonstration and assessment of additionality is a formal exercise to prove that the net actual GHG removals by sinks are the increased above the sum of changes in carbon stocks in the carbon pools within the project boundary that would have occurred in the absence of the registered CDM afforestation or reforestation project activity. A tool to demonstrate additionality has been design for afforestation reforestation activities seeking certification by CDM. The application of this tool calls for 5 steps. The steps and the additionality arguments are here summarized. Step 0. Preliminary screaming based on the starting date of project implementation The project has to show that: (i) the activity will start after 31 December 1999; (ii) The land within the planned project boundary is eligible as the A/R CDM project activity; and, (iii) The project activity is directly human induced. Project participants have information that shows land use prior to 1990 indicating that the land had no forest cover making it eligible as A/R CDM activity. Project activity will start in 2007 and is human induced. Step 1. Identification of alternatives consistent with current laws and regulations This step seeks to identify credible and realistic land use alternatives available to project beneficiaries upon which to select a baseline scenario. The procedure includes: (i) Define alternatives to project activity; (ii) Verify compliance with applicable laws and regulations; and, (iii) Selection of a baseline scenario. Although there may be many opportunities to other land uses, the previous local development history serves as the basis to indicate that in the business as usual scenario no mayor land uses changes should be expected. The potential for more profitable uses is being hampered by myriad of barriers that prevent many land use changes. The baseline scenario selected is the projection of existing land activity in the project area. This land use and the proposed under the CDM project activity comply with existent laws and regulations. Step 2. Investment analysis The purpose of this step, which might or not be presented, is to show that without the revenue from the sale of ERs is economically or financially less attractive than other alternatives. For the purpose of demonstrating additionality no financial analysis is discussed. Step 3. Barrier analysis (Barrier analysis may be performed as a stand alone additionality analysis or as an extension of investment analysis.) This analysis is used to show whether the project faces barriers that prevent the implementation of project activities, and do not prevent at least one of the alternatives –the baseline scenario. The procedure includes: (i) identify barriers that would prevent the implementation of the proposed project activity (from a long list of possible barriers grouped as follows: investment barriers, institutional, technical, related to local traditions, due to prevailing practice, due to local ecological conditions, due to social characteristics, due to land tenure; etc.); (ii) show that the barriers identified are sufficient to prevent potential project

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beneficiaries from carrying out the proposed activities; (iii) provide transparent and documented evidence of set barriers; and, (iv) show that the identified barriers would not prevent the implementation of at least one alternative besides the project activity (the project baseline). Briefly the following barriers were identified for each component: Reforestation activities: The main barriers identified include:

• Investment barriers represented in long waiting periods for investment to produce revenues; difficulties securing long term debt

• Technological barriers, associated a the lack of forestry knowledge by cattle ranchers • Local tradition barrier as reforestation represents a departure from traditional cattle

ranching, the main activity in the area. Hevea Brasillencis Plantations: The identified barriers include:

• Investment barriers associated with long maturation times, high initial investment, difficulties securing long term debt

• Technological barriers such as access to planting material, and lack of knowledge on management and exploitation of rubber plantations

• Local tradition barrier as rubber plantation is a departure from agriculture and cattle ranching, the main activities in the area.

• Social barriers, as the beneficiary community is a well defined ethnic group, afro Colombian, mostly low income, marginalized, that have traditionally been excluded from market economies.

Sylvo-pastoral activities confront many barriers among then the following are mentioned in the CDM tool to demonstrate additionality:

• Investment barriers represented in lack of access to capital markets, high perceived risk of working with poor indigenous communities.

• Technological barrier associated with implementing a new management strategy to their land, also their more prized possession; lack of knowledge of SPSs.

• Local tradition barrier as beneficiaries would need to change their land exploitation strategy and implement a production model new to their communities.

• Social barriers, as indigenous groups represent a very poor segment of the community, with little or no access to government institutions, and lack of adequate knowledge to implement the system independently from the project.

It is clear that these barriers do not prevent, restrict or limit the present land usage. Step 4. Impact of CDM registration The potential registration of the project activities as an A/R CDM project does not improve substantially the financial returns of the project. Nonetheless, the CDM registration has been glue to attract diverse entities to work together in promoting the project activities, through which the barriers are surpass. Additional incentives are brought by the pilot nature of the activities, with the interest of the participants by allowing for future scaling up of the land use changes promoted. In addition, without the incentive of the CDM participation, it would have been next to impossible to get these dissimilar social groups together for purposes of the project, nor would

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have the different institutions come together to support the activity and therefore there would not have been an effort to sequester carbon in this region. Most likely the isolated efforts of the ethnic communities Zenu and the Afro-Colombians (Negritudes) would have gone unnoticed. Conclusions The project has demonstrated that it is additional to the business as usual scenario, defined as the continuation of the existing land use. It also opens the way for scaling up the scope of the project, subject to the initial positive results of the implementation of the proposed CDM activities.