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INTERNATIONAL TROPICAL TIMBER ORGANIZATION

ITTO

PROJECT PROPOSAL

TITLE

ALTERNATIVE FINANCING MODEL FOR SUSTAINABLE

FOREST MANAGEMENT IN SAN NICOLAS

SERIAL NUMBER

PD 54/99 Rev.1 (F)

COMMITTEE

REFORESTATION AND FOREST MANAGEMENT

SUBMITTED BY

GOVERNMENT OF COLOMBIA

ORIGINAL LANGUAGE

SPANISH

SUMMARY

This proposal is the result of joint efforts by institutions from both producing and consuming members of ITTO.

A total of 72,367 hectares in the San Nicolas Valleys sub-region have been designated as a protection and forestry-apt

area. The dynamics of this area are influenced by two main factors – the pressure of new economic activities such as

flower production and the expansion of the urban frontier due to its proximity to the metropolitan area. This project

seeks to curb the degradation of natural resources through the design of a financing model which combines the

sustainable management of natural forests with alternative financing sources such as the contribution of various

industrial sectors and the possible incorporation of the forest sector into the context of the Clean Development

Mechanism.

In addition, the proposal comprises a participatory component with the local community so as to ensure the equitable

distribution of benefits generated by the project.

EXECUTING AGENCY REGIONAL AUTONOMOUS CORPORATION OF RIO NEGRO –

NARE, CORNARE (COLOMBIA) in cooperation with the

SWISS FEDERAL INSTITUTE FOR MATERIALS AND

TECHNOLOGIES RESEARCH AND TESTING, EMPA ST. GALO

(CO-IMPLEMENTING AGENCY)

COOPERATING GOVERNMENTS SWITZERLAND

DURATION 18 MONTHS

APPROXIMATE UPON APPROVAL

STARTING DATE

BUDGET AND PROPOSED Contribution

SOURCES OF FINANCE Source in US$

ITTO 577,229

CORNARE 124,000

EMPA St Galo 88,300

TOTAL

789,529

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TABLE OF CONTENTS PART I. CONTEXT A. RELEVANCE TO ITTO 1. Compliance with ITTO objectives 2. Compliance with ITTO criteria 3. Relationship to ITTO Action Plan and Priorities B. RELEVANCE TO NATIONAL POLICIES 1. Relationship to sectoral policies affecting tropical timber 2. Relationship to sub-sectoral aims and programs 3. Institutional and legal framework PART II. THE PROJECT 1. ORIGIN 2. PROJECT OBJECTIVES 2.1 Development Objective 2.2 Specific Objectives 3. PROJECT JUSTIFICATION 3.1 Current status: problems and opportunities 3.2 Characteristics of the project area 3.2.1 Location 3.2.2 Climate 3.2.3 Water resources 3.2.4 Geology, geomorphology and erosion processes 3.2.5 Land uses 3.2.6 Social aspects 3.2.7 Biodiversity 3.3 Other relevant aspects of "pre-project situation" 3.4 Intended situation after project completion 3.5 Target beneficiaries 3.6 Project strategy 3.6.1 Reasons for selection 3.6.2 Lessons drawn from past evaluation 3.6.3 Technical and scientific aspects 3.6.4 Economic aspects 3.6.5 Environmental/ecological aspects 3.6.6 Social aspects 3.6.7 Managerial aspects 3.7 Reasons for ITTO support 3.7.1 ITTO aspects 3.7.2 Relationship to relevant actions supported by other donors 3.8 Risks 4. OUTPUTS 4.1 Specific objective 1: Investment and financing plan for the community with a view to SFM in San

Nicolás 4.2 Specific objective 2: Community-based forest resource management plan 4.3 Specific objective 3: Promoting the participation of various regional stakeholders in international

cooperation projects

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5. ACTIVITIES AND INPUTS

6. LOGICAL FRAMEWORK MATRIX

7. WORK PLAN 8. INSTITUTIONAL ARRANGEMENTS FOR EXECUTION AND OPERATION 8.1 Management structure 8.2 Key staff 9. PRIOR OBLIGATIONS AND PREREQUISITES 10. POSSIBLE FUTURE ACTIONS PART III. MONITORING, REPORTING AND EVALUATION 1. Arrangements for reporting 2. Arrangements for monitoring and review 3. Evaluation 4. Schedule of events 5. Maps PART IV. BUDGET ANNEXES I. Logical Framework Matrix II. Work Plan III. Maps IV. Budget

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PART I. CONTEXT A. RELEVANCE TO ITTO 1. Compliance with ITTO objectives This project proposal is consistent with the following objectives established in the ITTO Agreement, 1994:

Art.1 a) To provide an effective framework for consultation, international cooperation and policy development among all members with regard to all relevant aspects of the world timber economy. Since the project combines the experiences and expectations of a producing and a consuming country, it can provide an effective framework for cooperation and consultation on all relevant aspects of the tropical forest economy.

Art.1 b) To provide a forum for consultation to promote non-discriminatory timber trade practices. This project combines two elements that will promote a non-discriminatory discussion forum on sustainable forest management practices, i.e. CORNARE's experience of over 15 years in community work and the integrated management of economic, ecological and social variables which are the basis for this project. These elements will facilitate the participation of a significant group from various economic and social sectors in the planning and scheduling of SFM projects. Representatives from rural associations, Community Action Councils, reforestation associations, local industries and a wide range of non-governmental organizations will be in a position to work in a coordinated manner during the planning phase.

Art.1 c) To contribute to the process of sustainable development. Since the project involves social and economic development actions within the framework of sustainable forest management on the basis of a coordinated planning approach with the participation of the community, it will promote integrated community development and will offer real alternatives for the settlement of internal social conflicts.

Art.1 d) To enhance the capacity of members to implement a strategy for achieving exports of tropical timber and timber products from sustainably managed sources by the year 2000.

Art.1 f) To promote and support research and development with a view to improving forest management and efficiency of wood utilization as well as increasing the capacity to conserve and enhance other forest values in timber producing tropical forests.

Art.1 g) To develop and contribute towards new financial mechanisms to enhance the capacity to attain the objectives of the ITTA, 1994. This project is based on the validation of a new financial mechanism that will reduce the negative effects on sustainable tropical forest management costs. The project will significantly contribute to the achievement of the ITTO Year 2000 Objective. One of the advantages of this financial mechanism is that it may also be used by other member countries.

Art.1 j) To encourage members to support and develop industrial tropical timber reforestation and forest management activities as well as rehabilitation of degraded forest land, with due regard for the interests of local communities dependent on forest resources. Through coordinated efforts with the local community it will be possible to encourage reforestation of species with market potential as well as sustainable tropical forest management practices.

Art.1 l) To encourage members to develop national policies aimed at sustainable utilization and conservation of timber producing forests and their genetic resources and at maintaining the ecological balance in the regions concerned, in the context of tropical timber trade. This project is consistent with the national and regional policies and guidelines for the sustainable management of natural resources and forests.

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2. Compliance with ITTO criteria This project is consistent with the criteria established by ITTO, in particular criteria a), b), d), and e), and proposes a number of activities aimed at ensuring sustainable economic, social and ecological management in the area, as follows:

Natural forest management: A total of 20,516 ha of natural forests in the area will be preserved. In order to reduce the opportunity costs of preservation through a change in land use, the project will assess the economic value of mitigating CO2 emissions resulting from the absence of forest burnings. This scheme will allow for the international negotiation of an environmental service provided by the natural forests to be preserved.

Reforestation development: There are approximately 23 private reforestation companies in the area with a planted area of (a minimum of 15,000 ha). The plantations used for the local market are an average of 20-30 years old. Main species include: Pinus patula, Cupressus lusitanica, Eucalyptus spp., Pinus elliottii. This project would complement existing plantations in accordance with an establishment and management plan for the forestry-apt area.

Training of local communities: The project will promote community training so as to ensure their involvement in participatory processes of coordinated planning as well as in the proposed economic activities (conservation, reforestation and sustainable harvesting of forests).

Institutional framework: The project will promote international cooperation in relation to the transfer of technology and knowledge, with special emphasis on technological exchange. In this respect, a direct cooperation channel has been established between CORNARE, EMPA and the National Center for Cleaner Production and Environmental Technologies (CNPML), which is concerned with promoting the use of environmental technologies and the transfer of technology.

Timber utilization: The project will promote reforestation in the area, where the main use of plantation timber is the manufacturing of containers for the Uraba banana production, which will reduce the impact on natural forests as well as supplying the national market for wood pulp.

3. Relationship to ITTO Action Plan and priorities This project proposal is consistent with the ITTO Action Plan, particularly with the goals and actions proposed in the field of "Reforestation and Forest Management" as shown below. In order to support activities aimed at securing the forest resource base, the following actions are proposed:

Participatory planning of preservation projects over 32,000 ha of natural forests in coordination with local communities.

Participatory planning of sustainable secondary forest management projects in coordination with local communities.

Joint efforts with the National Environmental System (SINA) of the Ministry for the Environment so as to implement the project in accordance with national forest development guidelines.

Organization of workshops between CORNARE and various local organizations (NGO's, town councils, community action councils, professional associations, reforestation associations, etc.) in coordination with the communities so as to ensure the participation of the different sectors concerned.

In order to improve the timber resource base, the following actions are proposed:

Development of reforestation projects for forestry-apt areas (42,226 ha).

In coordination with the local universities, promotion of research projects for the utilization of new species.

It has been agreed with the Ministry for the Environment that the outputs of the ITTO Criteria and Indicators Project in Colombia will be used so as to ensure the continuity of the process of generating indicators for the sustainable management of forests.

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In order to enhance human capacities for the sustainable management of forests, the following actions are proposed:

The participation of local communities in the planning and coordination processes is an essential element to ensure project success. Only through the commitment of the communities will it be possible to ensure the sustainable management of forests in the long term.

The project offers both CORNARE professionals in Colombia and EMPA St Galo professionals in Switzerland, the possibility to participate in a training and institutional development process aimed at ensuring efficient cooperation and transfer of knowledge and technology.

B. RELEVANCE TO NATIONAL POLICIES 1. Relationship to sectoral policies This project proposal is included within the National Forest and Biodiversity Program for Peace developed by the Ministry for the Environment with a view to designing and promoting instruments to harmonize economic growth, social equity and environmental sustainability with the establishment of favourable conditions for a lasting peace. In addition, the project is consistent with a broad legal framework aimed at the sustainable use of natural resources, which includes Law No. 37 of 3 April 1989 stipulating the formulation of a National Forest Development Plan, Law No. 99 of 1993 instructing the Ministry for the Environment to coordinate the formulation of the National Forest Development Plan and creating the National Environmental System (SINA); the National Economic and Social Planning Council (CONPES) Document No. 2834 "Forest Policy"; the establishment of 26 Regional Autonomous Corporations -including CORNARE- as the agencies responsible for implementing sustained development actions in their area of jurisdiction and the Forest Management Plan. These policies establish the institutional foundations required for the planning and implementation of specific projects. 2. Relationship to sub-sectoral aims and programs With regard to regional policies, the project is included within the Environmental Management Plan for Eastern Antioquia, which proposes regional competitiveness based on environmental sustainability, encouraging the communities to understand, harvest and conserve natural resources as a guarantee for a promising future. Within this framework, this project will promote the training of local communities through courses and workshops, encouraging the incorporation of appropriate technologies for the sustainable management of forests. 3. Institutional and legal framework The project area is under the jurisdiction of the Regional Autonomous Corporation of Rio Negro – Nare. The sub-region of San Nicolas Valleys is covered by Directive Council Resolution No. 016 of 6 August 1998, establishing guidelines and environmental regulations for land use management. The resolution designates forestry-apt areas as protection areas. The implementing agency will be CORNARE (Regional Autonomous Corporation of Rio Negro – Nare), a Colombian institution with jurisdiction over 26 municipalities of Eastern Antioquia. Given the socio-economic characteristics of the area, the CORNARE Action Plan considers forest activities as the production activities with greatest potential to ensure the sustainable development of the project area.

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PART II. THE PROJECT 1. ORIGIN AND CONCEPT This project proposal arises from the recognition of a number of factors restricting the long term funding of sustainable forest management and thus hampering constructive regional development processes. Policy and market deficiencies, such as the inadequate valuation of forest products and services, result in unsustainable practices and deforestation. In addition, the inequitable distribution of costs and benefits related to sustainable forest management acts as a disincentive for investments in the sector, particularly inequities related to forest services which, although having a regional, national and even international impact, do not lead to increased rates of return for investors. The above factors make the establishment of an adequate financing system for sustainable forest management difficult. This project seeks to test and refine, based on a pilot project, an alternative financing model for SFM in the area of the San Nicolas Valleys, Colombia. This experience will facilitate the evaluation and incorporation of the interests of both the local communities and various international investors, as well as combining traditional financing mechanisms with systems based on the valuation of the environmental services of forests, particularly those related carbon sequestration and fixing and reduction of CO2 emissions by forests. The project proposes the establishment of a Sustainable Management Area (SMA) covering 72,367 ha in the San Nicolas Valleys Sub-region, under the jurisdiction of CORNARE. This area comprises natural forests, planted or regenerated secondary forests, and forestry-apt areas which have been deforested or subject to land-use change. This SMA will be operated as a joint-stock company ("Sustainable Forest Management Society") responsible for the conservation of natural forests, the adequate management of forest resources, and improvement of the living standards of the local communities. The project seeks to test a new financing model for this SMA based on the sale of:

a. Products from secondary forests under sustainable management; b. Environmental shares; c. Carbon certificates.

Sale of products from secondary forests under sustainable management: Secondary forest

production activities are proposed on the basis of sustainable natural resource management practices. Specific projects will be jointly planned with the local communities, i.e. the formulation of sustainable forest management projects will be based on a participatory planning process with the involvement of the various stakeholders concerned. In this context, the representatives from the local communities (government and non-governmental organizations, associations and community action councils) are particularly significant. Given the difficult public order situation prevailing in the country, this element will play a key role in the regional reconciliation activities which are part of the peace negotiations.

Sale of environmental shares: The sale of environmental shares, i.e. shares of the company, will be

particularly addressed to the various industrial sectors. The purchase of a number of these shares will allow the purchaser to obtain an "Environmental Recognition", which can be used in publicity campaigns. This instrument should be of interest to many industries, particularly in Europe, as it should enhance their corporate image. In addition, the purchase of shares will allow the investor to partake in the profits generated by the sale of Carbon Certificates and forest products.

Sale of Carbon Certificates: The Clean Development Mechanism (CDM) established by the

Conference of the Parties to the United Nations Framework Convention on Climate Change offers the possibility to economically value certain forest services, particularly those related to carbon sequestration and fixing, and reduction of CO2 emissions by forests. Through the development of this project we seek to contribute to the structuring of the international market for carbon credits from a SFM perspective in the tropics. Even though the forest sector has not yet been included in the CDM,

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various initiatives implemented by multilateral and/or private investors have shown the potential and significance of the sector in this field.

Seventy percent of CO2 emissions in Colombia are caused by the burning of forests; therefore, their conservation will represent an excellent opportunity to ensure a reduction of these emissions. Our proposal is based on the negotiation of emission reductions as tradable fixed term certificates for the international industry. The cost of each carbon certificate will be determined by the direct and indirect costs related to both the conservation of forests and the international market conditions.

FLOW OF FINANCIAL RESOURCES INCOMING OUTGOING

Sale of:

- Environmental shares - Operational costs - Carbon Certificates - Infrastructure

- Forest products - Financial costs - Utilities

Finally, it is important to emphasize the pilot nature of this project, i.e. its potential for replication in other regions, which will facilitate the regional transfer of benefits obtained through its implementation. 2. PROJECT OBJECTIVES 2.1 Development objective Testing a new financing system which combines sustainable tropical forest management with the possibilities offered to the forest sector by the Clean Development Mechanism and with the participation of international investors. In order to ensure the achievement of this objective, the work to be carried out will be based on international cooperation and on a participatory project planning and coordination process at the local level. For international cooperation we understand the potential sellers and buyers of forest products and carbon credits as well as representatives from other potential international investors. This initiative should be understood as a pilot project to assess the benefits and limitations of a scheme based on the valuation of forest products and services. The project will promote a learning-from-experience process and will develop simple and effective methods that will guarantee the replication of this model in other regions. 2.2 Specific objectives i. Develop an Investment and Financing Plan for the SFM Society in San Nicolas. ii. In coordination with the community, formulate a Management Plan for the SFM Society in San

Nicolas. iii. Ensure the basic social and institutional conditions required for project implementation. 3. PROJECT JUSTIFICATION 3.1 Current situation: Problems and Opportunities The socio-economic problems in the project area are characterized by the dynamics that arise out of four fundamental aspects: the pressure exerted by new economic activities such as flower production or recreational farms; the expansion of the urban frontier; the reduction of living standards as a result of an increase in the poverty rate; and socio-political conflicts.

SMA

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These problems tend to dramatically affect the forestry sector, and this is evidenced by the destruction of forests either through logging operations or forest fires. Moreover, there are different degrees of susceptibility to forest fires according to the size of the forests and their dissemination and proximity to urban centres. It is worth noting that one of the parallel effects to the deforestation process is a reduced hydrological potential in the region. However, there are also a series of potentialities within the area that must be recognized. The community in the area is socially highly organized, as evidenced by the presence of farmer, trade, governmental and non-governmental organizations. Similarly, the preliminary forest and biodiversity inventory carried out by CORNARE indicated that there are important forest assets in the area, as well as forestry apt areas and substantial water resources. In view of this, the project proposes to carry out the planning of sustainable forest management (SFM) activities through a regional forum based on the participation of different sectors. Thus, the SFM projects would include technical forest management aspects as well as aspects related to the generation of local employment and an equitable distribution of the benefits derived from the project. Furthermore, the project would provide the possibility of social rehabilitation for the different warring factions in the country. This forum would include national and international experts, who would be in charge of the technical aspects, as well as representatives of the various social stakeholders concerned. In order to implement this process, the project will rely on a series of technical and social instruments such as Resolution No. 016 of 11998 (establishing conservation and forestry-apt areas), ITTO publications and experience in the area of SFM, the opportunities afforded by the Clean Development Mechanism to the sector, and finally the reputation that both CORNARE and EMPA Saint Galo have at the national and international levels with regard to their technical capacity and impartiality. 3.2 Characteristics of the region or area where the project will be located 3.2.1 Location The area, which is in the San Nicolas Valley sub-region, is situated between 5° 48’ 51” and 6° 24’ 19” North and between 75° 07’ 09” and 75° 34’ 03” East, in the department of Antioquia, and is totally under the jurisdiction of the Regional Autonomous Corporation of Rio Negro-Nare (CORNARE). According to Resolution No. 06 of 1998, the project area is within the forest protection and forestry apt areas of this sub-region. The area includes the municipalities of Guame, Rionegro, Marinilla, La Ceja, El Retiro, El Carmen de Viboral and El Santuario, most of which are located in the Rio Negro Basin (see annexed map). The study area is situated in a medium to cold temperature zone; the high plateau is mainly situated between 1,700 to 2,200 meters above sea level; some sectors reach up to 2,800 meters, while in San Vicente, Carmen de Viboral, La Ceja and El Retiro, there are some areas that are located between 1,700 and 2,000 meters above sea level. 3.2.2 Climate The protection area is one of the highest rainfall areas in this sub-region, with rainfall levels of more than 2,500 mm/annually, reaching up to 3,500 mm/annually in the south of the sub-region. The rainfall regime is bimodal, which means that there are two high rainfall seasons (March–May and September–November) with two less humid seasons in between. The average annual temperature in the high plateau (Altiplano) region is 17°C, and in the rest of the area of these municipalities it becomes gradually lower as the altitude above sea level increases. 3.2.3 Hydrology The sub-region is located in the Rio Negro Basin and partially in the basins of the Nare, Porce, Samana Norte and Buey-Arma rivers. The forest protection and forestry apt areas are the areas with the greatest biophysical limitations, such as gradients of more than 50%, fragile soils highly susceptible to erosion, residual natural forests, receding water sources and unstable areas. The Rio Negro Basin supplies drinking water to a population of more than 250,000 in the municipalities of Rionegro, Guarne, Marinilla, El Santuario, El Carmen de Viboral, El Retiro, San Vicente, La Ceja and La

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Union, which extend over an area of approximately 842 square kilometers. Further downstream, 5 dams contain the waters of the Rio Negro and generate 33% of the country's energy. The Rio Negro Basin is the most problematic of all the various river basins in this sub-region, as it receives the sewage effluence from five out of the eight main towns of the municipalities in the sub-region, and it is along this river that the main industrial, economic and agricultural activities are carried out. 3.2.4 Geology, geomorphology and erosion processes The area of study is part of the Central Mountain Range. The batholite, made up of granodiorites that appear to be from the middle to the higher Cretaceous period is almost totally covered by a thick layer of volcanic ash, which constitute the source material of the soils of the area. The alluvial sediments (gravel, sands, clays) from the Cenozoic era found in the project area were transported and deposited by waterways and volcanic ash and are a product of major igneous activity, especially of an effusive nature. The project area is situated in the eastern branch of Colombia’s Central Mountain Range, which at approximately the San Miguel height (2,600 m.a.s.l.) branches off into the central and eastern sectors which are separated by the Medellin or Porce river valleys. The eastern branch is dominated by the Rio Negro high plateau, which has a flat to very undulating topography with a series of rounded hills characterizing this last phase. The forest Protection and forestry apt areas of Resolution 016, in the high plateau sub-region are found in an area characterized by a montane and, in some parts low-hills, landscape. There are very few gravity-induced land movements in the study area, while mass movements occur frequently and appearing as terraces and neat’s-foot formations, and in some areas of very broken terrain, there are signs of small landslides having occurred. The most common cause of erosion in the region is surface runoff which leads to the formation of ablation surfaces and small erosion grooves, which, unless controlled, could lead to the formation of gullies. The sectors which show clear evidence of ablation are found in hillside areas, and to a lesser extent along the slopes of mountains that have been subjected to intense agricultural exploitation with shifting crops such as vegetables, potatoes, beans and corn, without the use of appropriate soil conservation practices. 3.2.5 Land use The San Nicolas Valleys sub-region is considered to be a source of agricultural wealth in the Department of Antioquia. The production of important staple food items (corn, beans, potatoes, vegetables and dairy products), that are essential for other areas of the country, is being threatened by factors such as soil degradation in areas with steep slopes (> 25%), where the erosion process has depleted all or a great part of the arable surface or layer. The sale of agricultural farmlands for the establishment of recreational areas is another factor that is reducing the land available for agriculture and cattle raising, in addition to the industrialization and urbanization processes that are taking place in the high plateau area. An interesting land-use aspect in this sub-region is the existence of forest plantations of cypress, pine and eucalyptus tree species, as these constitute one of the most important commercial and protection reforestation programs carried out in the country in the last four to five decades. It should also be stated that the planting of native species is insignificant in this region. Out of the 30,141 hectares that make up the protection area, 20,516 hectares are covered by natural forests and 2,059 hectares by plantation forests, amounting to a total forest cover of 22,575 hectares. Natural pasturelands cover a total of 5,886 hectares. These pasturelands and other areas that are not being used for protection purposes must be converted to protection areas over time.

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Table 1: Land cover and land uses - Protection Area

COVER AREA (HECTARES)

Natural forests 20,516

Planted forests 2,059

Permanent crops 737

Shifting crops 582

Improved pasturelands 285

Natural pasturelands 5,886

Other 34

30,141

Out of the 42, 226 hectares that make up the forestry-apt area in the sub-region, 20,278 hectares are covered by natural forests and 3,776 hectares by planted forests. According to the provisions contained in Resolution No. 016, the natural forests that remain in this forestry-apt area are conservation forests. Natural pasturelands cover 12,712 hectares of this area. Most of these pasturelands are not used for cattle raising purposes; they are mostly the result of the expansion of the agricultural frontier, especially in the southern sector of the region.

Table 2: Land cover and land uses – Forestry-apt Area.

COVER AREA (HECTARES)

Rural constructions 104

Natural forests 20,278

Planted forests 3,776

Permanent crops 705

Shifting crops 2,926

Improved pasturelands 1,645

Natural pasturelands 12,712

Other 23

42,226

3.2.6 Social aspects The high plateau area (Altiplano) of Eastern Antioquia has been subjected to accelerated and disorderly urbanization processes, mainly generated by the expansive pressures of the Aburra Valley region. The impacts have been mainly centered around the municipalities of Rionegro, Guarne, La Ceja and El Retiro. According to the construction densities map, the Protection Area is situated in the lowest population density sector, with a population of approximately 14,000 at an average of 4.5 inhabitants per household. In general, the area’s primary education situation is considered to be acceptable and the secondary education situation as partially acceptable. The chief towns of the municipalities have secondary school education centres, while the technical and professional education centres are based in Rionegro. Despite all this there are general deficiencies at all educational levels. Most of the rural households have access to basic services, and health services are available and have good general coverage. With regard to other demographic aspects, the tendency in the past few decades has leaned towards a sharp reduction in birth rates, mainly due to the increasing acceptance of family planning methods or programs, and to moderate falls in mortality rates as health services progressively improve. 3.2.7 Biodiversity The area which is under the jurisdiction of CORNARE has several altitudinal strata ranging from areas that are almost at sea level to areas that are 3,400 meters above sea level. These areas have a great variety of plant formations accompanied by a very high diversity of habitats and micro-habitats and a great wealth of highly endemic fauna and flora species. The natural forest in the project area is

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characterized by a high diversity of species typical to montane moist forests, with the main tree species coming from the Lauraceas, Araliaceas, Clusiaceas, Mimosaceas, Ericaceas and Euphorbiaceas families. CORNARE has carried out a series of wildlife inventories in the areas under its jurisdiction in order to develop an appropriate instrument to quantitatively evaluate the local diversity, and thus identify the strategic areas in terms of ecosystem conservation and prepare the necessary instruments to guarantee the successful achievement of this objective (see Annex on biodiversity). 3.3 Other relevant aspects of "pre-project situation"

The undertaking of commitments by a large number of stakeholders through the signing of cleaner production agreements and environmental management and development agreements with Municipal Authorities and Municipal Associations, demonstrate the interest that exists at the local level to implement sustainable resource management practices. However, no important projects have been implemented in the forest sector, so it would be timely and appropriate to do so within the regional development process.

The environmental education and awareness campaigns carried out by CORNARE and NGOs guarantee the recognition and acceptance of the implementing agency by the local community.

The active participation of the local community through the participatory planning process is regarded as a facilitating element in the peace negotiations that are currently taking place in the region.

3.4 Intended situation after project completion After the 18-month period proposed for project implementation, a series of outputs will have been achieved that will facilitate the implementation of the proposed actions:

A series of sustainable tropical forest management activities will have been identified for the San Nicolas Valley areas, including the production of timber and non-timber forest products.

The local communities will be able to identify themselves with the proposed SFM activities, as they will have resulted from a participatory and conciliation process.

The economic potential of the Clean Development Mechanism will have been identified as well as possible markets for Carbon Certificates.

The interest of the international industry in supporting sustainable tropical forest management projects to improve their corporate image will have been determined.

A training and institutional development process will have been implemented, so as to support the sustainable development of the region.

On the basis of individual and collective efforts, this project will facilitate the development of a region with a population that will have a “cleaner” approach to environmental and social issues and who will be more in touch and have more knowledge about their region. Therefore, this will allow us to jointly reach the goal of providing for the basic needs of these communities through a process of unity and cooperation, and the transformation of the environmental culture, in order to achieve a clean development region. After project completion the goal will be to have a better trained community, more capable of facing up to the challenge of sustainable development, and to have defined, through participation and cooperation, the activities within the forest sector that will facilitate the achievement of this objective. 3.5 Target beneficiaries

In Colombia:

The communities in the San Nicolas Valleys sub-region will directly benefit from the generation of primary and secondary employment opportunities and the improvement of local infrastructure, and indirectly from the establishment of a better climate for negotiations.

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The owners of lands identified for forest conservation and/or harvesting through Resolution No. 016/98 will benefit from this project as they will find sustainable and economically viable land-use alternatives.

The participating institutions will benefit from the implementation of the project as they will be part of a practical learning process.

The project will also benefit potential partners in new projects to be implemented in Colombia. At the international level:

Other ITTO member countries interested in learning from and duplicating the implementation of this idea.

The buyers of Environmental Shares, especially those who obtain the “Environmental Recognition” and use it to improve their corporate image.

The buyers of Carbon Certificates, who will be able to comply with international requirements of reducing CO2 emissions.

3.6 Project strategy 3.6.1 Reasons for selection The project represents an ideal opportunity to bring together the different local and international stakeholders who can play a decisive role in the future of sustainable forest management. These include, among others:

At the local level:

- The local communities - The regional autonomous and development corporations

At the international level

- ITTO has the possibility of jointly coordinating and monitoring a project which, because of its replicable nature, can serve as a specific model for the financing of sustainable forest management activities in other ITTO member countries.

- Industry sectors are interested in securing a two-fold benefit - to comply with the agreements reached in Kyoto (through the purchase of Carbon Certificates) and at the same time improve their corporate image (through the use of environmental recognition claims in publicity campaigns).

- Buyers of tropical forest products identified. In view of the enormous potential that this situation represents, and of the enormous acceptance that both agencies have in this sector, the agencies intend to turn this project into an efficient forum for discussion and action, which on the basis of a pilot project, will establish an efficient financing model. The reasons for selection are as follows:

The project proposes the establishment of an innovative financing instrument which will analyze the possibilities that the Clean Development Mechanism and the need for industry to improve their corporate image can offer for the sustainable management of tropical forests.

The proposed concept can be reproduced in other projects relevant to ITTO.

The project is based on a cooperation plan between two ITTO member countries representing both producers and consumers.

The project implementing agencies are highly regarded at the national and international levels and have extensive experience in the area.

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3.6.2 Lessons drawn from past evaluations Given that the project will develop in detail an innovative concept, it is not possible to draw on the evaluation of previous experiences. However, we must take into account the limitations related to timber utilization in this type of forests. Similarly, we must underscore the enormous collateral benefits to be derived from the project, such as the protection of watersheds and the improved conditions required for the establishment of a regional dialogue within the framework of the peace negotiations in Colombia. 3.6.3 Technical and scientific aspects The project deals with a series of innovative economic and methodological elements. The implementation of the project will facilitate the detailed analysis of the potential and limitations of the Clean Development Mechanism in relation to Sustainable Tropical Forest Management. This will facilitate the development of a series of technical elements that are extremely important for the evaluation of the role that the reduction of CO2 emissions can play in the development of the forest sector in the tropics. The project will seek to resolve the following issues:

The definition of the baseline, including possible filtration and losses.

Models aimed at combining the traditional forest inventory with an inventory of carbon reserves.

Verification of carbon sequestration processes. 3.6.4 Economic aspects The project will evaluate both the economic potential and market for Environment Shares and CO2 Certificates. These should provide for the financing of natural forest conservation activities and improve the profitability of sustainable secondary forest production investments. In this context, it is important to stress that the project provides for the possibility of marketing a new forest product, i.e. CO2 emission credits. Furthermore, the communities in the region will benefit from new sources of primary and secondary employment opportunities, as well as from sustainable development alternatives for reforestation and other forest related production activities. 3.6.5 Ecological and environmental aspects The proposed project will increase the profitability of sustainable forest management activities and facilitate the financing of activities aimed at the conservation of ecosystems that are considered to be particularly valuable and/or fragile. Measures will be proposed which will guarantee a 50% reduction of the uncontrolled slash-and-burn activities in natural forests. SFM projects will be proposed for the region with the aim of generating employment and ensuring the ecological sustainability of resources. One of the collateral benefits of the project will be the protection of the region’s hydrographic wealth. As was explained previously, it represents an important source of fresh water for the Rionegro-Medellin region, and it is also used to generate energy for the rest of the country. 3.6.6 Social aspects In section 3.1 we explained the complexity of the social agents present in the region and the general strategy proposed by the project vis-à-vis this situation. The main organized groups in the rural sector are the community action councils, which are the driving force in local development for the construction of roads, sporting facilities, schools, aqueducts and health centres. Other bodies such as the Rural Users Organization (Organización de Usuarios Campesinos) and the National Users Organization (Organización Nacional de Usuarios - DRI), defend the interests of their

14

members and provide institutional support for agricultural activities. The project will utilize this dynamic structure by ensuring the participation of all these stakeholders in the planning process. The project will identify and implement actions aimed at generating the following social benefits:

Establishment of a regional forum for coordinated and participatory planning

Identification of compensation mechanisms for reductions of CO2 emissions. These mechanisms will benefit the current land owners, who are mostly small local farmers.

Community training.

Identification of employment generating sources.

Identification of potential partners in the sustainable development process. 3.7 REASONS FOR ITTO SUPPORT 3.7.1 ITTO aspects This project proposes the development of an instrument to support the achievement of ITTO strategic objectives, in particular the Year 2000 Objective. Furthermore, the project offers the possibility to promote timber sector growth by encouraging the support of other sectors of the economy for sustainable forest management. These measures should benefit the marketing of timber products. 3.7.2 Relationship to relevant actions supported by other donors The implementation of this project will be partly based on data generated by the Criteria and Indicators Project being implemented in Colombia with ITTO support. Since January 1999, the directors of both projects have been in contact to achieve efficient coordination. This project will also use the results of ITTO Project PD 39/95 "Institutional Strengthening for the Sustainable Management of Forest Plantations", particularly the recommendations related to the establishment of new plantations. 3.8 RISKS

Even though the project currently has a high level of institutional support, it is important to recognize that the public order situation in Colombia represents a disadvantage and a risk. This situation would be more damaging during the implementation phase than during the planning phase. It should be recognized, however, that CORNARE has an enormous credibility both at the local and regional levels and has been successful in the implementation of several projects in the area.

During project implementation, it is essential to have the support of potential buyers of both Environmental Shares and Carbon Certificates. Risk: a lack of support from the international private sector.

A lack of experience with the Clean Development Mechanism in the forestry field. 4. OUTPUTS 4.1 Specific objective 1: Develop an Investment and Financing Plan for the SFM Society in San

Nicolas.

Output 1.1: Environmental shares (ES) defined.

Output 1.2: Carbon Certificates defined.

Output 1.3: Potential investors identified. 4.2 Specific objective 2: Formulate a Forest Resource Management Plan in coordination with the

community.

Output 2.1: Forest inventory/baseline for CO2 reduction defined.

Output 2.2: Natural resource management plan developed.

Output 2.3: Training requirements for implementation phase defined.

15

4.3 Specific objective 3: Ensure the basic social and institutional conditions required for project

implementation.

Output 3.1: Authorities responsible for CDM informed and involved.

Output 3.2: Institutional development and negotiation with local communities in progress. 5. ACTIVITIES AND INPUTS

ACTIVITIES INPUTS

Output 1.1: Environmental shares (ES) defined

1.1.1 Carry out survey on status and tenure of sites for legalization

2.5 m/m – National expert (CORNARE)

1.1.2 Prepare SFM Society's bylaws 1 m/m – National expert (CORNARE)

1.1.3 Define types of environmental shares (ES) 0.75 m/m – National expert 0.75 m/m – International expert

1.1.4 Registration of SFM Society Workshop, experts (N & I), 1 m/m – National and international experts

1.1.5 Carry out market survey for the SFM Society's environmental shares (ES)

1 m/m – International expert Travel

1.1.6 Establish the conditions to obtain "Environmental Recognition" (ER)

1 m/m – CORNARE, 1 m/m – Coord. /EMPA, Travel, E-mail, Web

Output 1.2: Carbon Certificates defined

1.2.1 Define types of carbon certificates (obligations) 3 m/m – National and International experts

1.2.2 Carry out market survey for carbon certificates 1 m/m – CORNARE, 2 m/m – International expert Travel, E-mail, Web

Output 1.3: Potential investors identified

1.3.1 Contact, include and negotiate with potential buyers of Environmental Shares and Carbon Certificates at the national and international levels

1.5 m/m – EMPA Coord., Travel, E-mail, Web

1.3.2 Develop an investment plan for regional infrastructure

1 m/m – CORNARE, Travel, E-mail, Web

1.3.3 Identify potential financing sources for investments in infrastructure (national & international)

1 m/m – CORNARE and EMPA Coord. Travel, E-mail, Web

1.3.4 Publish the SFM Society's Investment and Financing Plan

2 m/m – CORNARE and EMPA Coord., Web, Publishing

Output 2.1: Forest inventory/baseline for CO2 reduction defined

2.1.1 Define methodology to establish baseline 2 m/m – CORNARE, 2 m/m – National expert, 2 m/m – International expert, Travel

2.1.2 Forest inventory 2 m/m – National expert, Travel, Literature review, GIS, local travel, data bank

2.1.3 Field work, forest inventory combined with data collection to determine baseline

2 m/m – National and International experts, Travel, 12 m/m – Workers, GPS, data bank

Output 2.2: Natural resource management plan developed

2.2.1 Summary of available information and collection of field data to prepare natural resource management plan

6 m/m – National and International experts, Travel, 12 m/m – Workers, GPS, data bank to evaluate: - structure and economics of secondary forests - forest plantation, agroforestry and sylvo-pastoral

strategies - land use in protection and forest investment areas;

new technologies (management, energy, etc.); costs-benefits

2.2.2 Prepare forest management plan 3 m/m – National expert (CORNARE)

2.2.3 Carry out market survey for proposed products 2 m/m - National expert (CORNARE)

2.2.4 Field visits, discussions with local population 3 m/m – CORNARE, 1 m/m EMPA Coord., workshop, local travel

16

ACTIVITIES INPUTS

Output 2.3: Training requirements for implementation phase defined

2.3.1 Define training requirements for implementation phase and target community

2 m/m - CORNARE, 1 m/m – EMPA Coord.

2.3.2 Prepare training method, organization and costs 4 m/m – CORNARE, workshop

Output 3.1: Authorities responsible for CDM informed and involved

3.1.1 Define security area vs. commercial area (mitigation of emissions)

2 m/m – CORNARE, 2 m/m – International expert, travel to Bonn, Switzerland and Colombia

3.1.2 Develop a verification system that is acceptable to potential buyers and to the UNFCCC Secretariat

1 m/m – CORNARE, 3 m/m – International expert (EMPA Coord.), travel, national and international guidelines related to Clean Development Mechanism

3.1.3 Establish the technology required for each verification alternative and cost analysis

1 m/m – International expert

3.1.4 Negotiate with Swiss and Colombian authorities in charge of CDM

2 m/m – CORNARE, 1.5 m/m – EMPA Coord.

Output 3.2: Institutional development and negotiation with communities in progress

3.2.1 Establish a regional forum for SFM projects discussion and evaluation

2 m/m – CORNARE, 2 m/m - EMPA Coord.

3.2.2 Establish a project monitoring network 2 m/m – CORNARE, 1 m/m - EMPA Coord.

3.2.3 Prepare project reports, administration 2 m/m – CORNARE, 1 m/m - EMPA Coord.

6. LOGICAL FRAMEWORK MATRIX 6.1 Development Objective See Annex 1.1 6.2 Specific objectives See Annex 1.2 6.3 OUTPUTS See Annex 1.3 6.4 ACTIVITIES See Annex 1.4 7. WORK PLAN See Annex 2

17

8. INSTITUTIONAL ARRANGEMENTS FOR EXECUTION AND OPERATION 8.1 Management structure The project implementing agencies will be CORNARE (Regional Autonomous Corporation of Rio Negro – Nare), a Colombian institution with jurisdiction over 26 municipalities of Eastern Antioquia, and EMPA Saint Galo (Swiss Federal Institute for Research and Testing of Materials and Technologies). In order to facilitate the implementation of this project, on 16 April 1999, CORNARE and EMPA St Galo signed an international cooperation agreement for the development of economic and financial mechanisms related to carbon sequestration and fixing and to reduction of CO2 emissions by forests. The two organizations will work in close coordination. A Steering Committee will be established to supervise the implementation of activities. CORNARE Coordinator, Patricia Tobón H., and EMPA St. Galo Coordinator, Carmenza Robledo A., will be responsible for organizing this Committee. Its members will include: CORNARE Director, EMPA Director, an ITTO representative and other invited participants. The Steering Committee will meet twice – 3 months after project start-up and in month 16 of project implementation, and will receive regular reports from the Coordinators. The detailed work plan shows the responsibility of these two institutions regarding each project activity. 8.2 Project Team CORNARE Team Coordinator: Patricia Tobón Place and date of birth: Medellín, Colombia, 5/6/57 Education:

- Degree in Forest Engineering, 1985 - Postgraduate courses in Training and Planning, GIS, Landscape Ecology, Projects, Forest

Hydrology, Management Procedures, 1991-97 Work experience in the last 3 years:

- Director, CORNARE Rio Negro Section, 06/98 to date - Coordinator, Environmental Management Program, Watershed Rehabilitation and Protection

Sub-program, External Resources IBRD and IDB – CORNARE, 1993-1998 EMPA St. Galo Team Coordinator: Carmenza Robledo A. Place and date of birth: Santafé de Bogota, Colombia, 26/11/64 Education:

- Degree in Architecture, 1987 - Postgraduate studies in Regional Development Planning and Administration, 08/87-11/88 - Postgraduate studies in Economics, 10/89-08/91 - PhD in Geography, 04/96

Work experience in the last 3 years: - Director, Sustainable Tropical Forest Development Project since 04/98 - Consultant in Regional and Urban Development, 04/96-04/98

9. PRIOR OBLIGATIONS AND PRE-REQUISITES On 16 April 1999, an international agreement was signed between CORNARE and EMPA St. Galo in El Santuario, Antioquia, ensuring the cooperation of these two institutions for a minimum period of two years for the purposes of implementing this project. Both institutions have undertaken to contribute US$100,000 (65% from EMPA St. Galo and 35% from CORNARE) and will also make prior studies and research available to the project as well as providing institutional infrastructure. 10. POSSIBLE FUTURE ACTIONS A subsequent phase for the implementation of production projects is proposed for the project area. This will require future ITTO assistance for the transfer of knowledge and technology.

18

In addition, the experience gained through the implementation of similar projects in the region will be used. In this context, ITTO would play a central role as it is the ideal institution to disseminate experiences among its member countries.

PART III. MONITORING, REPORTING AND EVALUATION The activities below will be carried out on the basis of the objectives, outputs, activities and indicators established in the Logical Framework Matrix, the Schedule of Activities and operational specifications. 1. REPORTING a) A progress report will be prepared and submitted for ITTO consideration:

- within twelve (12) months of project start-up. This progress report will provide background information for the monitoring mission and will be submitted to ITTO four months before this mission;

- at any other times as ITTO may require. b) A project completion report will be prepared and submitted to ITTO as soon as possible after

completion and in any case within three (3) months. 2. MONITORING AND REVIEW The project will be subject to monitoring by ITTO representatives within twelve (12) months of project start-up. The monitoring mission will visit the executing agency and the project location on a date to be jointly agreed by all the parties involved. 3. EVALUATION a) Taking into account the short duration of this project (18 months), a mid-term evaluation is not

considered to be necessary. b) No ex-ante or ex-post evaluation is considered to be necessary given the planning and

preparation rather than operational nature of this project. The monitoring mission, however, will decide whether an ex-post evaluation is necessary and useful for project follow-up (as an ex-ante evaluation of the next project stage).

4. SCHEDULE The following preliminary monitoring and reporting schedule is proposed:

DESCRIPTION DATE

1. First disbursement/project start-up 1 April 2000

2. Project progress report 30 December 2000

3. Monitoring mission 31 January 2001

4. Project Completion Report 31 October 2001

5. MAPS See Annex 3.

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PART IV. BUDGET 1. BUDGET BY ACTIVITY See Annex 4.1. 2. PROJECT BUDGET BY COMPONENT AND BY YEAR – ITTO CONTRIBUTION,

18 MONTHS (US$) See Annex 4.2. 3. PROJECT BUDGET BY FINANCING SOURCE, 18 MONTHS (US$) See Annex 4.3.

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ANNEXES

21

ANNEX 1.1

DEVELOPMENT OBJECTIVE

PROJECT ELEMENT INDICATORS MEANS OF VERIFICATION ASSUMPTIONS

Testing a new financing system which combines sustainable tropical forest management with the possibilities offered to the forest sector by the Clean Development Mechanism and with the participation of international investors.

Establishment of San Nicolas Valleys Forest Management and Conservation Society S.A.

Presentation of innovative financing mechanism for sustainable management and conservation of tropical forests so as to ensure the competitiveness of these activities.

Presentation of a consistent Management Plan which supports the future implementation phase.

Institutional development in international cooperation projects for SFM and CDM in progress.

Community actively participating and involved in the projects proposed in the Management Plan.

Relevant records from the Chamber of Commerce

Final report

Final report

Final report

Final report

The project is included within the framework of a number of national programs and projects: 1. National Development Plan 1998-2002,

within the Environmental Collective Project and particularly as part of the programs on water, biodiversity and forest resources, which have been designated as priority actions for the achievement of the objectives of strategic eco-regions conservation, regional development promotion and contribution to peace.

2. National Forestry and Biodiversity Program for Peace. This program is aimed at harmonizing 3 major objectives, i.e. economic growth, social equity and environmental sustainability, within a framework of favourable conditions for the achievement of a lasting and stable peace.

3. Regional Environmental Management Plan 1998-2006 by CORNARE, which is aimed at economically, ecologically and socially sustainable development and proposes regional mechanisms required to achieve this goal.

4. CORNARE Executive Council's Resolution No. 016 of 6 August 1998, establishing guidelines and environmental standards for land use management. Both protection and forestry-apt areas are designated in this Resolution.

22

ANNEX 1.2

SPECIFIC OBJECTIVES

PROJECT ELEMENT INDICATORS MEANS OF VERIFICAITON ASSUMPTIONS

1. Investment and Financing Plan for the SFM

Society in San Nicolas

Presentation of financial scenario to value the economic potential of future project implementation

Final report

Inclusion of project in National Strategic Study on Climate Change in Colombia

The public order situation makes community participation possible

2. Forest Resource Management Plan in

coordination with the community

The necessary actions at the local, regional, national and international levels are taken to ensure the future implementation of the project

Final report

Regional and national development plans


3. Ensure the basic social and institutional

conditions required for project implementation

There is an institutional framework in place which enables the implementation of the project The community has participated in the development of the project and identifies with it

Reports on international workshop and course participation

Regional Forum proceedings

Final report

There is access to training


23

ANNEX 1.3

OUTPUTS


1.1 Environmental shares (ES) defined Duration: 18 months

6.25 m/m – National experts

1.75 m/m – International Experts

Travel, E-mail, Web

Code of Commerce

CORNARE: Characterization report on San Nicolas Valleys Sub-region, 1998

Availability of information and human resources

1.2 Carbon Certificates defined Duration: 12 months

4 m/m – National experts

5 m/m – International Experts

Travel, E-mail, Web

Colombian legislation

International legislation

UNFCCC Reports on CDM


1.3 Potential investors identified Duration: 12 months

4 m/m – National experts

1.5 m/m – EMPA Coord.

Travel, E-mail, Web

List of investors

Regional Development Plan

National Development Plan


2.1 Forest inventory/baseline for CO2 reduction defined

Duration: 12 months

2 m/m - CORNARE

4 m/m – National expert

4 m/m – International Expert

12 m/m - Workers

Travel, E-mail, Web

Results of Strategic Study on Climate Change (World Bank, Gov't of Switzerland, Gov't of Colombia)

SINA documentation, Forestry and Biodiversity Program for Peace


Regional participatory forum helps to ease the tension in the public order situation

2.2 Natural resource management plan developed

Duration: 14 months

8 m/m – National expert CORNARE


Workers

GPS, GIS, Data bank

Results of ITTO Project on C&I

ITTO documentation

CORNARE Environmental Management Plan

Community participation


2.3: Training requirements for implementation phase defined

Duration: 4 months

6 m/m - CORNARE

1 m/m – EMPA Coord.

Workshop

CORNARE Environmental Management Plan

Availability of information and resources

24


3.1 Authorities responsible for CDM informed and involved

Duration: 13 months

5 m/m – National experts (CORNARE)

6 m/m – International experts


National and international guidelines

Travel, E-mail, Web

Proceedings and minutes of meetings The project has the necessary institutional support

Availability of information and resources

3.2 Institutional development and negotiations with communities in progress

Duration: 18 months

6 m/m - National experts (CORNARE)

4 m/m – EMPA Coord.

Travel, E-mail, Web

Regional forum proceedings

Monitoring network for implementation phase

Final report

The community participates in the regional forum

The public order situation allows for the organization of the forum

25

ANNEX 1.4

ACTIVITIES


1.1.1 Legalization of sites 2.5 m/m – National expert (CORNARE) List of legalized sites

1.1.2 Prepare bylaws for the Sustainable Development Society in San Nicolas Valleys

1 m/m – National expert (CORNARE) SFM Society's bylaws established

1.1.3 Define types of environmental shares (ES) 0.75 m/m – National expert

0.75 m/m – International expert

Type of action defined

Shares per hectare ratio

1.1.4 Registration of SFM Society in San Nicolas Workshops

1 m/m – National and international experts

Registration in Chamber of Commerce

1.1.5 Carry out market survey for the SFM Society's environmental shares (ES)


Travel

Assessment of ES price

Identification of potential buyers

1.1.6 Establish the conditions to obtain "Environmental Recognition" (ER)

1 m/m – CORNARE,

Conditions for granting ER

1.2.1 Define types of carbon certificates (obligations) 3 m/m – National and International experts Activity report

CO2 Certificates/Obligations

1.2.2 Carry out market survey for carbon certificates 1 m/m – CORNARE,


Travel, E-mail, Web

Price of carbon certificates established

Markets for carbon certificates analyzed

1.3.1 Contact, include and negotiate with potential buyers of Environmental Shares and Carbon Certificates at the national and international levels

1.5 m/m – EMPA Coord., Travel, E-mail, Web Agreements with potential carbon certificate buyers

1.3.2 Develop an investment plan for regional infrastructure

1 m/m – CORNARE, Travel, E-mail, Web List of investments by infrastructure project

1.3.3 Identify potential financing sources for investments in infrastructure (national & international)

1 m/m – CORNARE and EMPA Coord., travel, Email, Web

List of financing sources by sector

1.3.4 Publish the SFM Society's Investment and Financing Plan

2 m/m – EMPA Coord., Web, Publishing Document on "Investment and Financing Plan for the SFM Society in San Nicolas"

2.1.1 Define methodology to establish baseline 2 m/m – CORNARE, 2 m/m – National expert, 2 m/m – International expert, Travel

Methodology/model defined and results on potential emission reductions specified

2.1.2 Carry out forest inventory 2 m/m – National expert, Travel, Literature review, GIS, local travel, data bank

Comprehensive forest inventory over project area

2.1.3 Field work, forest inventory combined with data collection to determine baseline

2 m/m – National and International experts, travel, 12 m/m – Workers, GPS, data bank

Forest data processed and specified

2.2.1 Summary of available information and collection of field data to prepare natural resource management plan

Workers, GPS, data bank to evaluate: - structure and economics of secondary forests - forest plantation, agroforestry and sylvo-

pastoral strategies - land use in protection and forest investment

areas - new technologies (management, energy, etc.) - cost-benefit ratio

Information available, processed and classified

26


2.2.2 Prepare forest management plan 3 m/m – National expert (CORNARE) Management plan proposal to be discussed with local community representatives

Forest management plan agreed

2.2.3 Carry out market survey for proposed products 2 m/m - National expert (CORNARE) Description of markets and sales price for proposed products

2.2.4 Field visits, discussions with local population 3 m/m – CORNARE, 1 m/m EMPA Coord.

workshop, local travel

Workshop proceedings

List of projects agreed with local community

2.3.1 Define training requirements for implementation phase and target community

2 m/m - CORNARE, 1 m/m – EMPA Coord. Training requirements of target population assessed

2.3.2 Prepare training method, organization and costs 4 m/m – CORNARE

workshop

Training plan developed

Training program costs assessed

Potential financing sources identified

3.1.1 Define security area vs. commercial area (mitigation of emissions)

2 m/m – CORNARE, 2 m/m – International expert

travel to Bonn, Switzerland and Colombia

Area of carbon trading defined

3.1.2 Develop a verification system that is acceptable to potential buyers and to UNFCCC

1 m/m – CORNARE, 3 m/m – International expert (EMPA Coord.)

Travel

National and international guidelines related to CDM

Verification alternatives developed

3.1.3 Establish the technology required for each verification alternative and cost analysis

1 m/m – International expert List of technologies required for each verification alternative

Purchasing, installation and training costs involved in the use of new technologies

3.1.4 Negotiate with authorities in charge of CDM 2 m/m – CORNARE, 1 m/m – EMPA Coord. Negotiation of project as an advanced CDM-recognized project

3.2.1 Establish a regional forum for SFM projects discussion and evaluation

1 m/m – CORNARE, 1 m/m – EMPA SG Coord.

Travel

Training workshops and discussions with various community sectors held

3.2.2 Establish a project monitoring network 2 m/m – CORNARE, 1 m/m - EMPA Coord.

Travel

Monitoring network established and coordinated with local community and relevant national and international authorities

3.2.3 Prepare project reports, administration 2 m/m – CORNARE, 1 m/m - EMPA SG Coord. Progress report

Final report

27

ANNEX 2

WORK PLAN

OUTPUTS /ACTIVITIES

Responsible party

SCHEDULE (in months)

1 2 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Preparatory activities CORNARE - EMPA

Output 1.1: ES

1.1.1 Legalization of sites CORNARE

1.1.2 Estab. of bylaws CORNARE

1.1.3 ES definition/assessment CORNARE (L) - EMPA

1.1.4 Registration of SFM Society

CORNARE (L) - EMPA

1.1.5 ES market survey EMPA

1.1.6 Estab. ER conditions EMPA

Output 1.2: Carbon Certificates

1.2.1 Define type of certificates CORNARE - EMPA (L)

1.2.2 Cert. market survey EMPA

Output 1.3: Potential investors

1.3.1 Contacts with ES buyers EMPA

1.3.2 Regional Invest. Plan CORNARE (L) - EMPA

28

OUTPUTS /ACTIVITIES

Responsible party


1 2 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1.3.3 Financing sources CORNARE (L) - EMPA

1.3.4 Publish investment plan CORNARE (L) - EMPA

Output 2.1 Baseline

2.1.1 Define methodology CORNARE - EMPA (L)

2.1.2 Forest inventory CORNARE (L) - EMPA

2.1.3 Field work CORNARE (L) - EMPA

Output 2.2: Management Plan

2.2.1 Collection of information CORNARE (L) - EMPA

2.2.2 Develop management plan

CORNARE (L) - EMPA

2.2.3 Market survey CORNARE

2.2.4 Discussions with local communities

CORNARE (L) - EMPA

Output 2.3: Training

2.3.1 Training needs CORNARE

2.3.2 Training Program CORNARE (L) - EMPA

Output 3.1: CDM authorities

29

OUTPUTS /ACTIVITIES

Responsible party


1 2 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

3.1.1 Define security area CORNARE - EMPA (L)

3.1.2 Verification alternatives CORNARE - EMPA (L)

3.1.3 Technology required EMPA

3.1.4 CDM negotiations CORNARE - EMPA (L)

Output 3.2: Institutional development

3.2.1 Regional forum CORNARE (L) - EMPA

3.2.2 Monitoring network CORNARE - EMPA (L)

3.2.3 Project reports CORNARE - EMPA (L)

30

ANNEX 3

MAPS

31

Masa, please insert two maps

33

ANNEX 4.1

PROJECT BUDGET BY ACTIVITY

OUTPUTS/ACTIVITIES 10 Personnel 21 Sub. Colombia 22 Sub. EMPA 30 Travel 40 Capital items 50 Consumable items

60 Miscellaneous Grand Total

-

Output 1.1: ES -

1.1.1 Legalization of sites 12,500 800 3,000 16,300

1.1.2 Estab. of bylaws 5,000 5,000

1.1.3 ES definition/assessment 6,000 10,500 16,500

1.1.4 Registration of SFM Society 2,500 7,000 9,500

1.1.5 ES market survey 14,000 3,500 17,500

1.1.6 Estab. ER conditions 2,000 4,450 6,450

-

Output 1.2: Carbon Certificates -

1.2.1 Define type of certificates 12,000 21,000 3,500 36,500

1.2.2 Cert. market survey 2,000 8,000 4,450 14,450

-

Output 1.3: Potential investors -

1.3.1 Contacts with ES buyers 6,675 7,500 14,175

1.3.2 Regional Invest. Plan 2,000 1,200 3,200

1.3.3 Financing sources 2,500 2,225 600 5,325

1.3.4 Publish investment plan 2,000 4,450 500 6,950

-

Output 2.1 Baseline -

2.1.1 Define methodology 4,000 8,000 28,000 7,500 47,500

2.1.2 Forest inventory 14,000 800 8,000 22,800

2.1.3 Field work 11,000 8,000 7,000 3,500 7,000 36,500

-

Output 2.2: Management Plan 3,000 3,000

2.2.1 Collection of information 12,000 21,000 7,000 7,500 62,000 3,000 112,500

2.2.2 Develop management plan 15,000 800 29,000 44,800

2.2.3 Market survey 10,000 10,000

2.2.4 Discussions with local communities

6,000 4,450 2,900 13,350

-

Output 2.3: Training -

2.3.1 Training needs 4,000 4,450 1,000 9,450

2.3.2 Training Program 8,000 1,000 14,000 4,000 27,000

-

34

OUTPUTS/ACTIVITIES 10 Personnel 21 Sub. Colombia 22 Sub. EMPA 30 Travel 40 Capital items 50 Consumable items

60 Miscellaneous Grand Total

Output 3.1: CDM authorities -

3.1.1 Define security area 4,000 28,000 3,500 35,500

3.1.2 Verification alternatives 2,000 42,000 7,000 51,000

3.1.3 Technology required 14,000 3,500 17,500

3.1.4 CDM negotiations 4,000 8,900 8,000 4,000 24,900

-

Output 3.2: Institutional development

-

3.2.1 Regional forum 4,000 8,900 4,000 4,000 20,900

3.2.2 Monitoring network 4,000 4,450 1,200 7,000 16,650

3.2.3 Project reports 4,000 4,450 2,000 7,000 17,450

-

Costs not divided by activity -

Project allocation, 27 months 13,500

Sundry 8,000 10,000 18,000

Office equipment 16,000 12,000 28,000

Steering Committee 8,000 4,000 12,000

Total 150,000 63,000 236,350 79,800 158,000 41,000 6,000 734,150

Total CONARE 54,000 - - 9,000 57,000 4,000 - 124,000 Total EMPA - - 59,300 9,000 16,000 4,000 - 88,300 Total ITTO 96,000 63,000 177,050 61,800 85,000 33,000 6,000 521,850 Total 734,150

CONARE, project staff US$ 2000/month, US$500 project allocation, 27 months CONARE, technical consultants US$ 250/day National technical consultants US$400/day International technical consultants US$700/day EMPA, Project Coordinator US$ 4450/month, 14 months EMPA, Project Coordinator, additional consultancy work: 3 months

35

ANNEX 4.2

PROJECT BUDGET BY COMPONENT AND BY YEAR

Components Total 2,000 2,001

10 Project Personnel - CORNARE 11 Project Coordinator, 9 months 4,500 2,000 2,500

Forest Engineer, 14 months 7,000 3,000 4,000 Sociologist, 4 months 2,000 500 1,500

12 Technical consultant, lawyer, economist, plan. 73,000 48,000 25,000 13 Local forest workers 8,500 2,500 6,000 14 Fellowships and training 1,000 1,000

Component Total 96,000 57,000 39,000

20 Sub-contracts 21 Technical consultancies in Colombia, CONIF, etc. 55,000 21,000 34,000

22 Contract - EMPA

Technical consultancy - CDM Coord. 42,000 28,000 14,000 Other international consultancies 143,050 88,000 55,050

Component Total 240,050 137,000 103,050

30 Travel DSA 12,800 5,800 7,000 National and international transport 49,000 27,000 22,000

Component Total 61,800 32,800 29,000

40 Capital Items 43 Vehicle 31,000 31,000 44 Capital equipment 54,000 35,000 19,000

Component Total 85,000 66,000 19,000

50 Consumable Items 51 Field equipment 21,000 13,000 8,000 52 Office equipment 12,000 8,000 4,000

Component Total 33,000 21,000 12,000

60 Miscellaneous

Sundry 6,000 4,000 2,000

Total - Project 521,850 317,800 204,050

80 ITTO Monitoring and Evaluation

Monitoring 15,000

Administrative Costs (5 %) 40,379

Grand Total 577,229 317,800 204,050

36

ANNEX 4.3

PROJECT BUDGET BY FINANCING SOURCE

Components OIMT CORNARE EMPA

10 Project Personnel - CORNARE 11 Project Coordinator, 9 months 4,500 18,000

Forest Engineer, 14 months 7,000 28,000 Sociologist, 4 months 2,000 8,000

12 Technical consultant, lawyer, economist, plan. 73,000 13 Local forest workers 8,500 14 Fellowships and training 1,000

Component Total 96,000 54,000

20 Sub-contracts 21 Technical consultancies in Colombia, CONIF, etc. 55,000

22 Contract - EMPA

Project Co-Coordinator, 14 months 56,300 Secretary, 25% during 18 months 3,000 Technical consultancy - CDM Coord. 42,000 Other international consultancies 143,050

Component Total 240,050 - 59,300

30 Travel DSA 12,800 6,000 2,000 National and international transport 49,000 3,000 7,000

Component Total 61,800 9,000 9,000

40 Capital Items 43 Vehicle 31,000 31,000 44 Capital equipment 16,000

Computer Network, photocopier 12,000 9,000 Inventory equipment 8,000 2,000 Geographic Information System 15,000 15,000 Plane surveying/mapping of area 6,000 Priser Project 13,000

Component Total 85,000 57,000 16,000

50 Consumable Items 51 Field equipment 21,000 52 Office equipment 12,000 4,000 4,000 53 Steering Committee

Component Total 33,000 4,000 4,000

60 Miscellaneous

Sundry 6,000

Total - Project 521,850 124,000 88,300

80 ITTO Monitoring and Evaluation

Monitoring (5.5%) 15,000

Administrative Costs (5 %) 40,379

Grand Total 577,229 124,000 88,300

37

ANNEX 4.4

RESPONSE TO EXPERT PANEL RECOMMENDATIONS

The following amendments have been made in accordance with the recommendations of the Expert Panel: 1. Clearly state CORNARE as the Implementing Agency and EMPA ST. GALO as the Collaborating

Agency (ITTO procedures only allow one agency to be responsible for the execution of the project. If other agencies are to be involved in the project implementation, these are to be considered as collaborating agencies)

EMPA St. Galo has been incorporated to the project as the collaborating agency.

2. Withdraw the reference made to the Government of Switzerland as cooperating government, since

the Panel noted that this government had not presented a letter of endorsement for the implementation of this project

The necessary actions have been taken to rectify this omission and the relevant “Letter of Endorsement” will be submitted in due course.

3. Concentrate on properly developing the activities required for achieving specific objectives 1 and 2.

Defer specific objective 3 activities for a later stage

Objective 3 is considered to be a support element to objectives 1 and 2. The purpose is to ensure the support and participation of social and institutional stakeholders involved in the project, which is the basis for the implementation phase. In order to comply with the recommendation made by the Expert Panel, both the number of expected outputs related to specific objective 3 and the number of activities required to achieve them have been reduced. Furthermore, it should be stressed that the implementation of activities related to specific objective 3 will be integrated with CORNARE’s regular activities in the region.

4. Estimate ITTO monitoring and evaluation costs at US$ 10,000 per year; and 5. Recalculate ITTO’s Programme Support Costs specified in the budget so as to conform to the

standard 5.5 % of total Project costs

The amendments related to items 4 and 5 have been made as recommended by the Expert Panel.

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