Documentof The World Bank FOROFFICIAL USEONLY Report No: 37995-GT PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDLOAN INTHEAMOUNT OFUS$62.3 MILLION TO THE REPUBLICOF GUATEMALA FORA LANDADMINISTRATION I1PROJECT INSUPPORTOFTHE SECONDPHASEOFTHE LANDADMINISTRATION PROGRAM (APL) November 15,2006 Environmentally and Socially SustainableDevelopment LatinAmerica and the CaribbeanRegion CentralAmerica Country ManagementUnit This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS (Exchange RateEffectiveJuly 2006) CurrencyUnit = GuatemalanQuetzal(GTQ) 7.5 GTQ = US$1 0.13US$ = 1GTQ FISCALYEAR January 1 - December31 ABBREVIATIONSAND ACRONYMS APL Adaptable ProgramLoan BANGUAT Bank of Guatemala(Bancode Guatemala) CAS CountryAssistance Strategy CNP-Tierra PermanentNationalCoordinationon IndigenousLandRights(CoordinacidnNacional Permanentesobre DerechosRelativos a la Tierrade 10s PueblosZndigenas) COCODES CommunityDevelopmentCouncil (Consejosde Comunidadespara el Desarrollo) CONAP NationalCouncilfor ProtectedAreas (ConsejoNacional deAreas Protegidas) CONGCOOP NGOs and Cooperative Coordination(Coordinacidn de ONGsy Cooperativas) CONIC NationalPeasantandIndigenousCoordination(CoordinadoraNacional Zndigenay Campesina) CONTIERRA SpecialCommissionof LandConflict Resolution(DependenciaPresidencial deAsistencia Legal y Resolucidnde Conjlictos sobre la Tierra) DICABI NationalCadastreandValuationAgency (Direcidn Nacional de Catastro y Avaluo de BienesZnmuebles) DPL DevelopmentPolicy Loan EA EnvironmentalAssessment ECUT LandUse PotentialStudy (Estudiode Capacidadde Us0 de Tierra) EMP EnvironmentalManagement Plan FM Financialmanagement FMA FinancialManagement Capacity Assessment FMR Financialmonitoringreports FONTIERRAS LandFund(Fondo de Tierras) GoG Governmentof Guatemala GTZ GermanTechnicalCooperation(DeutscheGesellschaftfur TechnischeZusammenarbeit) IBRD InternationalBankfor Reconstructionand Development ICB InternationalCompetitiveBidding IDAEH GuatemalanInstituteof Anthropology andHistory (ZnstitutodeAntropologia eHistoria de Guatemala) IGN NationalGeographicInstitute (Znstituo GeogruficoNacional) ILO InternationalLabor Organization INAB NationalForestsInstitute (ZnstitutoNacional deBosques) INTA NationalAgrarian ReformInstitute(InstitutoNacional de TransformacidnAgraria) IPDP IndigenousPeoplesDevelopment Plan IPSAS CashBasis InternationalPublic Sector Accounting Standard IRR InternalRate of Return ISA InternationalStandardson Auditing ISR ImplementationSupervisionReport IUS1 RealPropertyTax (ImpuestoUnico SobreInmuebles) km' Square kilometers LAP I LandAdministrationProject, Phase I LOP OrganicBudget Law (Ley Organica dePresupuesto) M&E Monitoring andevaluation (monitoreoy evaluacidn) MAGA Ministry of Agriculture (Ministerio deAgricultura, Ganaderia y Alimentacidn) MARCs Alternative Conflict ResolutionMechanisms(MktodoAlternativo deResolucidnde Conjlictos) MINFIN Ministry of Finance (MinisteriodeFinanzas) MIS ManagementInformationSystem NCB NationalCompetitiveBidding NGO Nongovernmentalorganization NPV Net presentvalue OCRET Office of Territorial Reserves (Oficina de Control deAreas deReservadel Estado) OD OperationDirective OM OperationalManual OP OperationPolicy PDO ProjectDevelopmentObjective PFU Projects FinancialUnit POA Annual Work andProcurement Plan(Plan OperativoAnual) PROTIERR4 Inter-institutionalCommissionfor the Strengthening and Developmentof LandProperty Rights(ComisidnInstitucional para el Desarrolloy Fortalecimiento de la Tierra) RGP GeneralPropertyRegistry(Registro General de la Propiedad) RIC Registryof CadastralInformation(RegistrodeInformacidn Catastral) SAA Secretariat of Agrarian Affairs (SecretariadeAsuntosAgrarios) SBD StandardBidding Document SEGEPLAN Secretariatof PlanningandProgramming(SecretariadePlanificacion y Programacidn de la Presidencia) SIAF IntegratedFinancialandAdministrativeSystem(SistemaIntegrado deInformacidn Financiera) SICOIN NationalIntegratedAccounting System(Sistemade ComtabilidadIntegrado Nacional) SIGAP Guatemalan System of ProtectedAreas (SistemaGuatemaltecodeAreas Protegidas) SISERIC Sistema deSeguimientoy Evaluacidn del RIC SNIC NationalSystemof CadastralInformation(SistemaNacional deInformacidn Catustral) SNIP NationalPublic InvestmentSystem(SistemaNacional deInversidn Publica) SNIR NationalSystemof RegistryInformation(SistemaNacional deInformacidn Registral) TORS Terms of reference UACI Procurementand InstitutionalPurchaseUnit (Unidad deAdquiscionesy de Compra Institucional} UCP Project CoordinationUnit (Unidad de Coordinacidit del Proyecto) UDAF FinancialManagement Unit (Unidad deAdministracidn Financiera) UNDP UnitedNationsDevelopmentProgramme UTJ Technicaland LegalUnit (Unidad Te'cnicoy Juridica) WB World Bank Vice President: Pamela Cox Country Director: Jane Armitage Sector Manager: Mark Cackler Task Team Leader: Frederic de Dinechin GUATEMALA LANDADMINISTRATIONI1PROJECT INSUPPORTOFTHE SECONDPHASEOF THE LANDADMINISTRATIONPROGRAM CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE...................................................................... 1 1. Country and Sector Issues................................................................................................... 1 2. Rationale for Bank Involvement ......................................................................................... 1 3. Higher-level Objectives to which the Project Contributes .................................................. 2 B. PROJECT DESCRIPTION..................................................................................................... 2 1. Lending Instrument ............................................................................................................. 2 2. Program Objective and Phases............................................................................................ 2 3. Project Development Objective and Key Indicators........................................................... 4 4. Project Components (see Annex 4 for more details) ........................................................... 5 5. Lessons Learned and Reflected inthe Project Design........................................................ 7 6. Alternatives Consideredand Reasons for Rejection........................................................... 8 C. IMPLEMENTATION ............................................................................................................. 8 1 PartnershipArrangements (if applicable) ........................................................................... . 8 2. Institutional and Implementation Arrangements................................................................. 8 3. Monitoring and Evaluation of Outcomes/Results............................................................. 10 4. Sustainability ..................................................................................................................... 10 5. Critical Risks and Possible Controversial Aspects ........................................................... 11 6. LoanConditions and Covenants ....................................................................................... 12 D. APPRAISAL SUMMARY ................................................................................................... 13 1. Economic and Financial Analyses .................................................................................... 13 2. Technical ........................................................................................................................... 13 3. Fiduciary............................................................................................................................ 14 4. Social................................................................................................................................. 15 5. Environment...................................................................................................................... 16 6. Safeguard Policies............................................................................................................. 17 7. Policy Exceptions and Readiness...................................................................................... 18 Annex 1:Country and Sector or Program Background ................................................................ 19 Annex 2: Major RelatedProjects Financedby the Bank and/or other Agencies .......................... 23 Annex 3: Results Framework and Monitoring.............................................................................. 24 Annex 4: Detailed Project Description.......................................................................................... 31 Annex 5: Project Costs.................................................................................................................. 44 Annex 6: ImplementationArrangements ...................................................................................... 45 Annex 8: ProcurementArrangements........................................................................................... 57 Annex 9: Economic and Financial Analysis ................................................................................. 63 Annex 10: SafeguardPolicy Issues............................................................................................... 68 Annex 11:Legal and Institutional Background ............................................................................ 77 Annex 12: Indigenous Peoples Development Plan....................................................................... 82 Annex 13: Project Preparationand Supervision ........................................................................... 99 Annex 14: Documents in the Project File................................................................................... 101 Annex 15: Statementof Loans and Credits................................................................................. 102 Annex 16: Country-at-a-Glance.................................................................................................. 104 Annex 17: Map IBRDNo. 33413 ............................................................................................... 106 GUATEMALA LANDADMINISTRATION I1PROJECT INSUPPORTOFTHE SECONDPHASEOF THE LANDADMINISTRATION PROGRAM PROJECTAPPRAISALDOCUMENT LATINAMERICA AND CARIBBEAN Date:November 10, 2006 Team Leader: Fredericde Dinechin CountryDirector:JaneArmitage Sectors: Generalagriculture,fishingand Sector Director:LauraTuck forestry sector (100%) Sector Manager: Mark Cackler Themes: Land administrationand management(P);Other ruraldevelopment (P);Personal and propertyrights(P);Municipal governanceand institutionbuilding(S);Legal institutionsfor a market economy (S) ProjectID: PO87106 Environmentalscreeningcategory: Partial Assessment LendingInstrument: AdaptableProgramLoan Safeguardscreeningcategory: Limitedimpact [XILoan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bankfinancing(US$m.): 62.3 ProDosedterms: FSL RECONSTRUCTIONAND DEVELOPMENT Total: 41.97 20.33 62.30 FY 2008 2009 2010 2011 2012 2013 4nnual 6.853 9.968 14.329 12.460 11.214 7.476 Cumulative 6.853 16.821 31.150 43.610 54.824 62.3 loes the project requireany exceptionsfrom Bankpolicies? Pef. PAD 0.7 3ave these been approvedby Bankmanagement? :s approvalfor any policy exceptionsought from the Board? 1 ]Yes [XINO 3oes the project include any critical risks rated"substantial" or "high"? Ref. PAD C.5 [XIYes [ ]No Does the project meet the Regionalcriteria for readinessfor implementation? Ref. PAD 0.7 [XIYes [ ]No Project development objective Ref. PAD B.3, TechnicalAnnex 3 The LandAdministration I1ProjectDevelopment Objective is to foster the process of achieving landtenure security inseven new departments(Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla,Izabal, Sacatepequez, and Zacapa) and the municipality of Palachuminthe Departmentof Quiche, through the provision of efficient and accessible cadastraland land administrationservices. Projectdescription[one-sentence summary of each component] Ref. PAD B.4, Technical 4nnex 4 The project will have four components: (a) cadastral and land regularization; (b) maintenanceof cadastral information and municipal services; (c) legal reformsand institutional strengthening; and (d) project managementand monitoringand evaluation. Which safeguardpolicies are triggered, if any? Ref. PAD 0.6, TechnicalAnnex 10 The project triggers EnvironmentalAssessment (OP/BP/GP 4.01), NaturalHabitats(OP/BP 4.04), Forest(OP/BP 4.36), Cultural Property (OPN 11.03), and IndigenousPeoples (OD 4.20) Significant,non-standardconditions, if any, for: Ref. PAD C.6 Disbursement condition: Approval and publication of the specific regulations to the RIC Law for the cadastre of communal lands for disbursements under technical services (cadastral fieldwork) Boardpresentation: The project does not requireany exceptionsfrom Bank policies. Loadcredit effectiveness: -- Signingof a subsidiary agreementbetweenthe Borrower and RIC; Operations Manual adopted by RIC Board (OM was approved by Bank before negotiationsand has now to be vetted by RIC Board). Covenantsapplicable to project implementation: - Six months after signing of the loan, approval and publication of RIC general regulationsand signingof participating agreements with RGP, Land Fund, IGN, - IDAEH,OCRET, SAA andthe municipalities; Twelve months after signing of the loan, adopt a consultative system with - indigenous participation; Three years after effectiveness,furnish draft LandRegularizationLaw. A. STRATEGICCONTEXTAND RATIONALE 1. Country and Sector Issues Guatemala is the largest economy in Central America, with a population of 12.2 million and a per capita income of about US$2,000. An area of 108,900 square kilometers, the country is divided into 22 departments and 332 municipalities. The majority of the population (61 percent) still lives in rural areas, where poverty is concentrated. Extreme poverty afflicts 93 percent of the indigenouspopulation. Land is one of the most important resources in Guatemala, but land tenure is often insecure due to unreliable cadastral (exact geographic description of a parcel) and legal (certainty of legitimate owner) information, lack of coordination among land administration institutions, and weak conflict resolutionmechanisms.This problemis particularly acute inruralareas, where it is estimatedthat 40 percent of ruralparcelsare not registered.Land issues figure prominently inthe PeaceAccords. Specifically, the Social and Agrarian Accord of 1996 calledfor the establishment of a legal and institutional framework to ensure land tenure security and a decentralized, multi- user, efficient, and financially sustainable cadastral-based land registry. In addition, increased land tenure security, particularly in rural areas, is fundamental for Guatemala's growth, given that lack of secure property rights hinders investmentsand fuels conflicts. 2. Rationalefor BankInvolvement In the context of supporting the Peace Accords, in December 1998, the Bank approved the first phase of an Adaptable Program Loan (APL, Loan 4415-GU) for Land Administration, concentrating on the Department of El PetCn' (33 percent of the country's territory). Based on the successful experience of the first phase of the program and the approvalof the Cadastre Law inJune 2005, the Governmentof Guatemalahas requestedthe Bank to preparethe secondphase of the program, focusing on stronger links between the cadastre and registry, and expanding the geographic area to seven additional departments(Phase Iand Phase I1cover roughly 50 percent of the country's territory). The Government has highlighted the importance of the Land Administration I1project inthe recently approved Country Assistance Strategy for Guatemala. Because of the Bank's involvement in the initial design phase of this APL, it is seen as a long- term strategic partner in land administration reform in Guatemala, and therefore has a comparative advantage in continuing its support for this endeavor. The Bank can capitalize on the lessons learnedfrom Phase Iof the program, and those from similar Bank-supportedprojects inother countries in LatinAmerica and elsewhere. The Bank has considerable experience inthe design and implementation of land administration projects in Central America, and in other countriesinthe region. There is a discrepancy about the project area of Phase Iof the programbetween the Project Appraisal Document (November 10, 1998) and the Loan Agreement signed on April 27, 2000. At appraisal, it was agreed that Phase I would cover El Peten plus five other departments, but by April 2000, it was decided that only El Pettn would be includedin Phase I,since it was the only department in Guatemala at the time with a comprehensive land law. The Loan Agreement explicitly restricted the project area to the Department of El Pettn. Thus, for the purposes of evaluating the results of Phase I,indicators and triggers apply only to that department. In April 2005, due to successful results in El PetCn, reflected in some project savings, a limited project area expansion to selected municipalitiesin the Departmentsof Alta Verapaz and BajaVerapaz was approved by the Bank. 1 3. Higher-levelObjectivesto which the ProjectContributes The project is an integral part of Guatemala's Vamos Guatemala (Let's Go Guatemala) program, which includes three pillars: (i)Guate Soliduria (Social); (ii) CrecelCompite (Economic); Guate and (iii)Guate Verde (Environmental). Phase I1of the Land Administration Programcontributes to the economic pillar. Within this pillar, the project is the Government's main instrument for enhancing property rights. The project is also included in the Country Assistance Strategy (CAS), dated April 11, 2005, which was prepared based on the Government's program. Key priorities include technical integration of the cadastre and registry, the consolidation of the institutional framework of the cadastral (that is, geographic description of parcels) and registry (that is, legal title to parcels) functions of the land administration system, and a broad participatory framework at the local level for field activities. With the approval of the Cadastral Information Registry Law in June 2005, itself the result of Phase Iefforts, the legal foundation for a consolidatednational cadastre has been established. Thus, the proposedproject will finance implementationof many of the law's provisions at the national level, and area-specific cadastral surveying and land regularization activities in selected departments of the country. As noted in the CAS ResultsFramework2005-2008, betweenPhases Iand 11, it is expectedthat the Program will achievecadastralsurveying of approximately 50 percent of the country's territory. B. PROJECTDESCRIPTION 1. LendingInstrument The LandAdministration I1Project (the Project) is the Second Phase of the LandAdministration Program (the Program) and will therefore be financed using an Adaptable Program Loan (APL). The Project is expected to have a total cost of US$62.3million and to be implementedover a six- year period. The Government of Guatemala(GoG) has requestedthat the Project be financed 100 percent from loan proceeds. The country financial parameters, approved for Guatemala in October 2004, allow 100percent of project costs to be financedby the Bank. 2. ProgramObjectiveandPhases The Program's overarching objective continues to be to: (a) increase legal security of land tenure, and (b) strengthen the legal and institutional framework for land registry and cadastre services in the country. This is to be achieved through a participatory process for conflict mitigation and resolutionthat includes indigenousand non-indigenouscommunities. Since the Program required a long-term vision and commitment, the GoG requested that the Program be financed using an Adaptable Program Loan (APL), with three phases to be implementedover at least 12 years: Phase Iwas to cover one department, Phase I1was to cover an additional seven departments, and Phase I11was to cover the rest of the country. Each phase has, besides its geographiccoverage, national institutional and legal developments goals. Phase I,which has been in the process of implementation since July 2000 and is expected to close in March 2007, has covered the Department of El PetCn, at a cost of US$38million (out of which the Bank contributed US$31 million). Thus far, Phase I has been successfully 2 implemented, the triggers for Phase I1have been met (or will be met by March 2007), and the Programhas achievedmost of its performance indicators. It has also establishedthe institutional and legal foundations for program expansion to seven other departments in the country under Phase I1(described in detail in sections B.3 and B.4). The plan for Phase I11remains the same as envisioned in 1998, namely, to complete the geographic coverage of the country, establish national standards for the integratedcadastre and registry system (developed during Phases Iand II), strengthentheinstitutionalcapacitiesatthemunicipallevel.However,the GoGhas and asked the Bank to finance a larger share of Phase I1in the amount of US$62.9million, about 50 percent higher than envisioned in 1998, to compensate for a smaller present commitment from other donors, which currently amounts to about US$13.4 million under parallel financing arrangements.Phase I1would be implementedover a six-year period. With the approval in 2005 of the Cadastral Registry Law (the RIC Law)', the GoG expects an increased commitment from other donors for Phase I11 of the Program. In line with the Program's original financing plan, the expected Bank's contribution for Phase I11of the program would be about US$41million (in2006 price^).^ Status of Triggersfor Phase11 1)Geographiccoverage: Fully met 100percentof inter-municipal boundariesinthe Departmentof El PetCnmapped. 100percent of urbanparcelsinEl PetCnsurveyed. 90 percent of rural parcels in El PetCn already surveyed, 100 percent expectedby end of Phase I.Titling activities in rural lands are somewhat lagging behind given that these lands are regulated by the Land Fund Law, which requires a number of additional steps for issuing a titling resolution. However, titling activities are not part of the trigger. Registryoffice inElPetCnfully operationalsince first year. 2) Achievement of nationalprogram: Fully met The project's implementing agency, the Technical and Legal Unit (Unidad Te`cnico Juridica, UTJ), transformed into the Cadastral Information Registry (Registro de Informacion Catastral, RIC) in August 2005, has become a solid basis for an enhanced institutional framework for land administration in the country, and through the second phase of the project will be consolidated in a technically strong and well-respectedentity with national recognition. A communication strategy has been successfully tested and is ready for launching of Phase 11. 2Ley del Registro deInforrnacion Catastral (Decree Number41-2005) of June 15, 2005. In 1997-98, it was estimated that the three-phase program would cost about US$208 million (or about US$264 million at 2006 prices), of which the Bank would finance US$113 million (US$143 million at 2006 prices), other donors US$63 million, and GoG US$32 million. In 1998, the Bank's expected contribution for Phase I1 of the programwas US$32million (US$40.5 million at 2006 prices) and for Phase 111US$50million (US$63.3 million at 2006 prices). Thus, in real terms, the Bank's contribution to Phase I1(US$62.3 million) is about 50 percent higher than anticipatedin 1998, while the Bank's expected contribution to Phase 111has been reduced by about 35 percent to US$41.4million (in 2006 prices). 3 Regulatory changes to PetCn Law: No longer relevant, since the Land Fund Law (June 1999)replacedPetenLaw. Trigger waived. 3) Socialmonitoring: Will be met by the end of Phase IinMarch 2007 Update of Social Assessment, and compliance with applicable safeguards: Social assessment updatedfor Phase I1and safeguardscompliedwith so far. Evaluation of beneficiaries, in progress, as part of preparation of Phase 11. Eighty-five percent of public in urban areas and 89 percent in rural areas rank the project as good or very good. Follow-up to the original Social Assessment shows improvementin socialconditions and community perceptions. Social assessment for Phase I1indicates improvement in social conditions. 4) Institutional, technical, and social strengtheningat Department of El PetCn level: Fully met 80 percentof UTJ technical staff internationally certified. To date, 88 percent of technical staff has beentrained and internationally certified. 100 percent of UTJ/RIC technical staff evaluated as competent by the public. Survey shows that 97 percent of public evaluates UTJ/RIC staff as competent. Although quantitativelyshort of target, trigger can be consideredmet. Participatoryand conflict resolutionmethodology is accepted. Social monitoring assesses that the majority of the public evaluates the project as good or very good. Although the project's conflict resolution mechanisms continue being improved, this trigger can be consideredmet. 3. Project Development Objective and Key Indicators The passage by the Guatemalan Congress of the RIC Law in June 2005 allows for the definition of Phase 11's development objective more precisely than originally envisioned at the concept stage. The law creates the Registryof Cadastral Information (Registro de Informacibn Catastral, RIC) to establish and maintain the national cadastre and to coordinate its activities with key agencies dealingwith land, including the General Registry Property (RGP), the Land Fund4,and the municipalities. The new law provides for a detailed process for the establishment of the cadastre. The Land Administration I1Project Development Objective is to foster the process of achieving land tenure security in seven new departments (Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepequez, and Zacapa) and the municipality of Palachum in the Department of Quiche, through the provision of efficient and accessible cadastral and land administration services. In the context of the Project, cadastral and land administration services 4The World Bank financedPhaseIof the "Land Fund" APL, which closedinJune 2005. The development objective of the programwas to assist GoGto: (a) establisha programto facilitate beneficiaries'access to land; (b) support beneficiaries'access to technical assistance and productivesubproject financing; and (c) improvethe legal and institutionalframeworkso that land marketscouldwork more efficiently. Ratings inthe Implementation CompletionReport of PhaseIconvey a satisfactory projectoutcome, likely sustainability,and modest institutional developmentimpacts. 4 include a systematic diagnostic of beneficiaries, a communication campaign, mapping, verification of rights, delimitation of properties, field conflict resolution, notification of results, and the transfer of information into the cadastral registry, as well as day-to-day integrated cadastral and property registry services (for example, individual title registration, issuance of cadastral certificates). For those cases that fall within certain "special titling" provisions of the Cadastral Registry Law', the Project will support the titling and regularization of previously unregisteredlands. The Project will be implemented in a participatory manner to ensure broad participation of indigenous and non-indigenous beneficiaries. In particular, the Project will support broader efforts to develop methods for improving the land tenure security for indigenous communities , including through the development of appropriate participatory procedures and conflict resolution mechanisms (see annex 12 for more details). These aspects of the Project may therefore have the benefit of supporting the GoG's efforts to improve the legal framework for land regularization,which will otherwise lie outside of the scope of the Project. Under Phase 11, the Programwill expand its coverageto selected areas of seven new departments of Guatemala (Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepequez, and Zacapa) and one municipality in the department of Quiche6. This geographical coverage representsroughly 22 percent of the country's territory, bringing the total coveragefrom Phases I and I1(which includesElPetCn) to about 50 percent. The agreed development indicators are: 80 percent of new transactions inthe project area conductedwith validated and integrated cadastral and registralinformation. 80 percent of land conflicts identified during the cadastral survey are in a resolution process, out of which 50 percent are solved (see the Social Assessment for more details on the conflicts typology). Satisfactory rating (third level on a four-scale basis) by at least 50 percent of National System of Cadastral Information (Sistema Nacioaal de Informacidn Catastral, SNIC) users. At least 70 percent of the targeted population in the project area participates in the cadastral survey. A detailed descriptionof the expectedkey resultsindicatorsis includedinAnnex 3. 4. Project Components (see Annex 4 for more details) The project will have four components: (a) cadastral and land regularization; (b) maintenance of cadastral information and municipal services; (c) legal reforms and institutional strengthening; and (d) project management and monitoring and evaluation. The costs of each component are summarizedinTable 1. 'Chapter ~~ I1of Title VI1of the CadastralRegistryLaw, which is described in greater detail inAnnex 11of this PAD. 6The municipality of Palachuminthe department of Quichewas includedinPhaseI1because it forms part of a cluster of municipalities(manconiunidad) with those adjacent municipalitiesin the department of Alta Verapaz. The socioeconomic and environmental features of this municipality are similar to those found inAlta Verapaz. 5 (US$ million) (1)Cadastralandlandregularization 31.95 (2) Maintenance of cadastral information and municipal 13.32 services I Contingencies I 0.65 I Total Project Costs 62.30 Front-endfee (IBRD) 0.00 Total Financing Reauired 62.30 Component 1) Cadastral and land regularization (US$31.95 million approx.). The objective of this component is to carry out the cadastral and limited land regularization processes in the project area. This component will finance pre-fieldwork activities (socioeconomic diagnostic, geodetic and mapping work necessary for field surveys, registries investigations), communication campaigns, surveying of macro boundaries (for example, inter-municipal boundaries, communal lands, and protected areas), and parcel-levelsurveying and validation in urban and rural areas. As a result of these activities, RIC will issue cadastral notifications to inform the beneficiaries and the RGP about the regular or irregular status of the parcels. Those irregular parcels that meet the specific requirements of the special titling provisions of the CadastralRegistry Law will be regularizedthroughthe inscriptionof title with the RGP.' Given the specific requirementsfor regularizingirregular parcelsunder the special titling provisionsof the Cadastral Registry law, only a percentage of cadastered parcel that are determined to be irregular will be eligible for titling and regularization. Benefits may include the development of mechanismsthat may leadto the resolutionof certainlandconflicts, a more accurate database of information on land tenure than currently exists under the RGP, the physical identification of communal and municipal lands that are largely used and managed by indigenous peoples, and the demarcation of protected areas and sites of cultural value. The activities under this component should produce collateral benefits for the land tenure security of all Guatemalans, including historically disadvantaged groups such as women, indigenous peoples, and afro- descendants, whose land tenure should be identified through the cadastral process and reflected in the databases maintainedby the RIC. Free legal services will be provided for certain aspects of the cadastralprocess with special attention to vulnerablegroups. 7The special titling provisionsprovide a narrow, specificauthorizationfor the RIC to proceedto regularize parcels throughthe RGPin situations where the parcelin question has never beenregisteredwith the RGP (i.e.these provisionsdo not apply incases where the parcelis already registeredin the name of the Republic,a municipality or a privateparty). I t should be notedthat the proceduresfor carryingout this inscriptionprocessstill need to be describedin still pending GeneralRegulationof the CadastralRegistry Law. 6 Component 2) Maintenance of cadastral information and municipal services (US$13.32 million approx.). The objective of this component is to develop the framework at the national and municipal level to support the field surveys to keep cadastral information updated and incorporate it into initiatives for local development and territorial planning. This component will finance the establishment of RIC's municipal cluster offices to cover the municipalities in the seven new departments, fieldwork to update the cadastral database, the development of the normative and technical framework for its maintenance, training to build capacity in the municipalities and for private surveyors and notaries, and implementation of land use plans based on the cadastralinformation. A percentage of the activities in this component will be implemented in El PetCn, because the municipalities in this department have the most complete cadastral databases. The experience generated in El PetCn will facilitate the implementation of this framework in the other municipalities. These activities are fundamental for the sustainability of the project's objectives and will complementthe Government's strategy for decentralizingland administrationservices. Component 3) Legal reforms and institutional strengthening for land administration (US$7.76 million approx.). The objective of this component is to improve the legal framework for land administration in Guatemala and strengthen the institutional capacity of the agencies involved in its application. It will finance (a) the formulation and promotion of legal and regulatory instruments linked to the cadastral and regularizationprocess; (b) the strengtheningof the institutions involved, including the training of their staff; and (c) the development and implementationof an integratedcadastre-registrycomputerized system. Component 4) Project management and monitoring and evaluation (US$8.62 million approx.). This component covers the costs of the Project Coordination Unit (within the existing organizational structure of the RIC), monitoring and evaluation systems, including participatory evaluation mechanisms, independent evaluations and audits, and inter-institutional coordination activities. It will finance the provision of technical assistance, equipment, training, workshops, and incremental operating costs to ensure adequate project coordination and supervision, and will also support the development and operationof the Spatial Data Infrastructure. 5. Lessons Learned and Reflected inthe Project Design Phase Iof the Program, along with parallel projects supported by other donors (Germany, the Netherlands,Sweden, and the EuropeanUnion), has yielded important lessons, which have been incorporatedinto the designof Phase 11. Inparticular: Integration of the Cadastre and Registry: This process i s already taking place gradually. The property registry is already undergoing important reforms (for example, for the first time in its history, its financial operations are incorporated and disclosed in'the Bank- supported Integrated Financial and Administrative System (Sistema Integrado de Znformacidn Financiera, SIAF) used by the Government. The project will invest in developing a technological platform to link the cadastraland registry's databases through an intranet-basedportal. Social communication and beneficiary participation: Following the successful partnership with the Catholic Vicariate in El PetCn, the project will continue establishish 7 strategic alliances with local governmental and nongovernmental organizations to disseminate information about the key aspects of the process and provide assistance to beneficiariesthroughout project implementation. Role of municipalities: The participation of municipal governments was a critical ingredient in the successful regularization of urban lands and territorial planning during Phase I.During Phase 11, RIC will sign Cooperation Agreements with participating municipalitiesto establish municipal cluster offices and develop their technical capacity. 6. Alternatives ConsideredandReasonsfor Rejection The idea of incorporatingPhase I1of the program under a series of Development Policy Loans (DPLs) was considered but rejected. Stand-alone projects, particularly long-term APLs, are appropriate instruments for land administration projects, because they require significant investments in key areas, concentrate on capacity building of key entities, and demand predictable annual budgetary allocations, which should not be subject to large swings due to fiscal constraints. Also, the idea of adding a land redistribution component to Phase 11, to compensatefor the lack of a second phase to the Land Fundproject, was consideredand rejected. This program is very complex, and adding a component which, although related, is also very complex and with a different objective (more equitable distribution of land) would seriously undermine the prospects of successful achievement of either objective. Finally, since parallel financing arrangements by other donors during Phase Iof the program worked very well (ensuring consistency of approaches through the same institutional framework, while allowing operational independence between projects), the possibility of co-financing of Phase I1 was rejectedinfavor of the continuationof parallelfinancing. C. IMPLEMENTATION 1. PartnershipArrangements(ifapplicable) The project will be implemented in seven new departments(inaddition to El PetCn) where other donors (Germany, the Netherlands, Norway, Sweden, and the European Union) supported pilot projects over the past few years. The Bank-financedPhase I1is expected to carry out cadastral works in these departments. Now that the RIC Law is effective, GoG expects other donors to increase their support to land administration efforts in the country through parallel financing arrangements, but using the same methodologies and institutional framework under the leadershipof RIC. 2. InstitutionalandImplementationArrangements RIC will be the implementation entity for this project. The RIC was created by Legislative Decree 41-2005 (RIC Law) approved by Guatemalan Congress on June 15, 2005, as an autonomous public institution, with the objective of establishing, maintaining, and updating the cadastre (both at the national and municipal level) in Guatemala. All the responsibilities of UTJ were transferred to RIC when the new law became effective on August 2005, including the management of the Bank-financed Land Administration IProject, which was Phase Iof the Program.The Projectwill be implementedbased on the successfulexperienceof Phase I. 8 RIC's organizational structure consists of a Directive Board (Consejo Directivo), a National Executive Director (Director Ejecutivo Nacional), and Municipal Offices. The Directive Board is comprised of seven members: the Minister of Agriculture (its President), the GeneralRegistrar of Property (the head of the RGP), the Director of the National Geographic Institute (Instituo Geogrufico Nacional, IGN), an appointee of the National Association of Municipalities (Asociacion Nacional de Municipalidades), and appointees of the Civil Engineering, Agronomic Engineering, and Lawyer-Notary Federations. The Directive Board has the responsibility of approvingany agreements that the RIC enters into with public and private entities and appointing the NationalExecutiveDirector. The NationalExecutive Director, under the overall supervision of his Board, will have the overall responsibility for supervising the staff of the RIC in their planning, organizing, and executing of all of the day-to-day administrative, technical, and legal activitiesof the Project. In the context of Phase 11, RIC will coordinate the various participatingagencies by means of agreements that will become effective, to the World Bank's satisfaction, before the correspondingactivitiesbegin. All implementationarrangementswill be consistent with the RIC Law, which provides for inter-institutional cooperation and arrangements with other relevant governmentministries, agencies and institutions. Phase I1 anticipates a much stronger institutionalization of the project in its administrative, procurement, financial, and technical areas. The United Nations Development Programme (UNDP) will no longer be used as the procurement and financial agent (see Annex 7.) During Phase 11, RIC will directly manage the Project's financial and administrative aspects, including loan funds, through its administrativeand financialunits (see Annexes 7 and 8). For Phase 11, RIC will create a Project Coordination Unit (Unidad de Coordinacibn del Proyecto, UCP) within its existing organizational structure to coordinate, monitor, and evaluate the Project's activities and assure overall project coordination both internally and externally, with participatingagencies and the World Bank. Internal Coordination:Internally, the UCPwill coordinatewith: 0 The RIC Administrative and Financial Direction for the procurement of goods, works, and/or services and administrativeand financial management;and The RIC Technical and Juridical Departmentswith regard to cadastral and regularization activities and technical supervision, inparticular, of internationalcadastralcontracts. ExternalCoordination RIC will also coordinate with the other key participating entities for Phase 11, which are the Property Registry (RGP) (for Components 1 and 3), the Land Fund (Fondo de Tierras, FONTIERRAS) (for Component 1: titling of national rural lands), the Secretariat of Agrarian Affairs (SAA-CONTIERRA) (for Component 1: rural land conflict resolution), the National Institute of Anthropology and History (IDAEH) (for Component 1: demarcation of historical sites), the National Council for Protected Areas (CONAP) (for Component 1: demarcation of protected areas and areas of special interest), the Office of Territorial Reserves (Oficina de Control deAreas de Reserva del Estado, OCRET) (for Component 1: demarcationof territorial reserves), and the municipalities (for Components 1and 2). RIC will enter into a "Participation 9 Agreement" with each participating agency and a "Municipality Agreement" with each municipality where the project will take place. These agreements, described below, will clearly define the roles and responsibilitiesof each participating entity and municipality. For the execution of Component 1, RIC will establish 8 Municipal Cluster Offices in zones undergoing the RIC cadastral process. Their basic purpose is to ensure inter-institutional coordination at the local level and that the project's objectives and results are met effectively and efficiently at the local level. The Project's Operational Manualwill specify the duties and responsibilities of all institutions participating in project implementation, RIC as the executing agency, and the above-mentioned agencies as participating agencies. Likewise, it will include the project's technical, legal, administrative, financial, procurement,andmonitoring procedures. 3. Monitoring and Evaluation of Outcomes/Results During Phase 11, RIC will largely build on the existing monitoring and evaluation system developedfor Phase I. The current system has provento be an efficient mechanismto report day- to-day project performance data and periodic information on intermediate project results and higher-leveloutcomesor impacts. The primary sources of data will be: (a) field reports from RIC's technical team, contractors, and so forth; (b) field reports and quarterly/annual financial statements and performance reports of executing agencies; and (c) specially commissioned assessments and surveys, including a baseline survey. This system, called the Sistema de Seguimiento y Evaluacidii del RIC (SISERIC), is being upgraded into a fully integrated management information system (MIS), combining project financial inputs, physical outputs, and results indicators(detailed inAnnex 3), which will be fully operationalby project effectiveness. In addition, the Project will implement, in collaboration with local stakeholders, participatory evaluation mechanisms to receive feedback from the final beneficiaries, including indigenous and nonindigenous peoples, and ensure that they are adequately included and consulted and receivethe appropriatebenefitsfrom the project. This evaluationwill be done through qualitative surveys and quantitative interviews with targeted group (see annex 12 for more details on participatoryevaluationmechanisms). 4. Sustainability The Government of Guatemala has shown its commitment to land administration reform by enactment of the RIC Law and successful implementation of Phase I,which establishes a solid legal and institutional foundation for cadastral works. The critical success factor for sustainability of the project is the existenceof the appropriate institutional framework created by the RIC Law, including the establishment of the RIC and the collaboration mechanisms mandatedby the law to integrate the cadastre and the registry and to coordinate demarcation and titling activities with FONTIERRAS, OCRET, IDAEH, CONAP, and the municipalities. 10 Now, the main challenges are to consolidate the new entity, further link the cadastral process with the property registry, expedite the rural titling process by FONTIERRAS, increase decentralization of land administration functions to the municipal level, implement more expedient conflict resolution mechanisms, and achieve long-term financial sustainability of RIC to cover the marginal administrative costs of providing recurrent cadastral services. I5. CriticalRisks andPossiblt ZontroversialAspects R i s k s Mitigation Measure RiskRange Loss of political will to carry out Strong support to regulatory Modest essential legal reforms, including reforms early in project the landregularizationlaw. implementation. Leverage the Peace Accords to maintaincommitment. Weak budgetary support to RIC Projectincludes strict monitoring Modest and overdependence on the of RIC budget, including an project for its overall operational institutional maturity trigger costs. measuring how RIC will recover by the end of the project the marginal costs for the new services provided (e.g., cadastral certifications). Poor integration between RIC RGP will sign a participating Modest and RGP. agreement and is one of the majorprojectbeneficiaries. Project includes an integrated information system between RIC and RGP. RIC Law imposes stricter coordination between RIC and RGP. Director of RGP is a member of RIC's Board. Severe conflicts arise during Projectprovidesfinancialsupport Substantial project implementation, to Secretariat of Agrarian Affairs including conflicts related to (SAA)/Special Commission of indigenous landclaims. Land Conflict Resolution (SAA- CONTIERRA). Project proposes alternative conflict resolution mechanisms, including the participation of local entities, which proved very successful during Phase I(e.g., agreement signed with the Catholic Church inthe PetCn). 11 Project establishes participatory evaluation and social control mechanisms with final beneficiaries. FONTIERRAS lags behind in FONTIERRASsigns a Substantial regularizing and titling of rural participatingagreement with RIC nationallands. andwill be strengthenedduring the project. RIC Law imposes stricter coordination between RIC and FONTIERRAS. Limited participation of final Project finances social Modest beneficiaries and civil society communication and education organizations. campaigns in order to establish active feedback mechanismswith key stakeholders. Project provides free legal assistance through grassroots organizations. Fiduciarv FinancialManagement Staff responsible for financial Low management under Phase I is transferred to Phase11. FM task are concentrated in a single agency (RIC). Procurement Staff responsiblefor procurement Modest under Phase Iis transferred to Phase11. Hire additionalprocurement staff with previous experience in OverallRiskRating 6. Loan ConditionsandCovenants Effectiveness conditions: - Signing of a subsidiary agreement betweenthe Borrower and RIC; - Operations Manual adopted by RIC Board (OM was approved by Bank before negotiationsand has now to be vettedby RIC Board). Disbursement condition: Approval and publication of the specific regulationsto the RIC Law for the cadastre of communal lands for disbursementsunder technical services(cadastral fieldwork) 12 Legal covenants: - Six months after signing of the loan, approval and publicationof RIC general regulationsand signingof participatingagreements with RGP, Land Fund, IGN, - IDAEH,OCRET, S A 4 and the municipalities; Twelve months after signing of the loan, adopt a consultative system with - indigenousparticipation; Three years after effectiveness, furnish draft LandRegularizationLaw. D. APPRAISAL SUMMARY 1. EconomicandFinancialAnalyses The project is economically and financially viable for Guatemala (see Annex 9 for details). The project's economic analysis shows that the expected benefits far outweigh the costs. The net present value (NPV) of benefits is US$64.3 million, and the Internal Rate of Return is 40 percent. Economic benefits should accrue from the long-term investments made in response to new opportunities to use property as collateral for loans, resolution of land disputes, and guaranteed property rights. These benefits are estimated based on the added property value observedfrom previously regularizedproperties. A financial analysis for RIC was carried out to assess the capacity of the new institution to be sustainable in the provision of services. The analysis considered the issuance of cadastral certificatesas a source of income. The results, however, estimatethat the incomegeneratedfrom this activity would not be enoughto cover the productioncost. Since the financial sustainability of RIC is vital for the strengthening of the new institution, the financial analysis will be conducted again during project implementationwith more data and exploring other alternatives for income generation. It is, however, expected that before the end of the project, RIC will recover at least the marginal costs associated to the new services provided (for example, cadastralcertifications). 2. Technical The technical design of the project incorporates the main lessons from Phase I.In particular, during Phase 11, the project will rely on: (a) a streamlined, standardized, and participatory land regularizationprocess that allows massivecadastralsurveying; (b) an integratedcadastre/registry technologicalplatformbasedon internationalbest practices(Honduras and ElSalvador are being used as examples); and (c) continued support to conflict resolutionmechanisms through SAA- CONTIERRA. To reach the goals of approximately 350,000 urban and rural parcels surveyed, the project will build on internationalbest practices. Specifically, consistent with the new RIC Law, the project will rely on systematic reconciliation of field data and existing data from RGP and the Land Fund. In addition, there will be a separation between the delimitation and investigation steps from legalization and titling to prevent bottlenecks caused by unresolved titling or contested issues. RIC already has detailedoperationalproceduresand effective quality control mechanisms that will be further strengthened as the regulations to the RIC Law are approved based on the experienceof Phase I. 13 The project will finance institutional strengthening and training of public servants in cadastrehegistry technologies, conflict resolution, and broader issues, including gender equity, social inclusion, and environmental concerns. Costs of project technical activities are consistent with similar projects inthe region. The Project Operational Manual will include a technical section that details the technical proceduresfor the cadastralsurvey and regularizationof lands. The Bank will carry out regular technical, economic, institutional, social, and environmental reviews and monitor the effectiveness of the land regularization process and the quality of institutional strengthening. 3. Fiduciary FinancialManagement The loan borrower will be the Republic of Guatemala, representedby the Ministry of Finance (MINFIN). GoG will sign a subsidiary agreement with RIC. Within RIC, the Administrative and Finance department, through its Projects Financial Unit (PFU), will be directly responsible for financial management (FM) tasks for the proposed project. These will basically include: (i) budget formulation and monitoring, (ii)cash flow management (including processing loan withdrawal applications), (iii)maintenanceof accountingrecords, (iv) preparationof in-year and year-end financial reports, (v) administration of underlying information systems, and (vi) arranging for execution of external audits. Disbursement and bank account management responsibilitieswill remainwithin RIC's Treasury Unit. The Projects Financial Unit (PFU) is located within RIC's Administrative and Finance department and is responsible for the fiduciary aspects of all externally financed projects executed by RIC. PFU reports to the Director of RIC's Administrative and Finance department and will coordinate with RIC's Project Coordination Unit (UCP) responsible for overseeing the technical aspects of the proposed project. PFU has a Coordinator and will have dedicated to the proposedproject a Budget Officer, an Accountant, and an Administrative Officer. The Financial Management Capacity Assessment was completed before appraisal and an action plan has been agreed with the Borrow (see Annex 7 for more details). The FM risk for the project is low. Procurement Procurement for the proposedproject would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits," dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers," dated May 2004, and the provisions stipulated in the Legal Agreement. The Procurement Plan agreed between the Borrower and the Bank for the six years of the project includes the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements,and time frame. RIC will update the ProcurementPlan annually and submit it to the Bank for review. Overall project coordination and administration will fall 14 under the newly created Registry of Cadastral Information (RIC). Within RIC, a Project Coordination Unit (UCP), in coordination with RIC's Procurement and Institutional Purchase Unit (Unidad de Adquisiciones y de Compra Institucional, UACI), will be in charge of the procurement tasks for the proposedproject. GoG has decidedto discontinue the use of the UNDP as procurement agent. RIC, having demonstrated it has achieved an acceptable level of capacity to implementprocurement,will carry out all procurementactions through the UACI. The Procurement Capacity Assessment was completed before appraisal and an action plan has beenagreedwith the Borrower. The procurementrisks' rating for the project is modest. 4. Social Land tenure insecurity is one of the main social problems in Guatemala affecting the indigenous and nonindigenous populations. Nevertheless, the special land problems of indigenous communities are highlighted due to their historic and traditionally close ties to their lands and other natural resources, and the absence of an inventory and appropriate legal instruments to protect their lands. To address these social issues in the project, the Government of Guatemala carried out social and environmental assessments, conducted an extensive consultation process with representatives of indigenous peoples' communities and other main stakeholders in the project area, and prepared an Indigenous Peoples Development Plan (IPDP, see Annex 12) in compliancewith OD 4.20. The IPDP allocates adequate technical, financial, and social resources for the participation of indigenous peoples in the project. However, due to the complexity of the issue and the need for further substantive and procedural clarifications in the legislation, the projectwill include legal provisionsinthe loan agreement, and the Bankwill conduct specialized supervision and specific monitoring and evaluationof the IPDP's implementationto mitigate the risks and potential negative impacts on indigenous populations. The project is an opportunity to contribute directly to improving the legal and institutional framework and to carry out field investigationsof indigenouslands. A participatory social impact assessment was carried out to: (a) analyze key socioeconomic factors, (b) identify possible risks and impacts and recommendmeasures to minimize or mitigate them, (c) analyze and characterize key stakeholders and provide recommendations for incorporating them in project design, and (d) identify and recommend mechanisms for the regularizationof indigenous peoples' lands. The assessment carried out detailed interviews with key stakeholders in the project area, including three consultation workshops held in October 2005, in Alta Verapaz, Zacapa, and Guatemala City. Also, the GoG organized an additional round of consultations with representativesof indigenouscommunities and other stakeholders in Alta Verapaz, Izabal, and Sacatepequez during November2005. For the preparationof the IPDP, the GoG carried out a round of consultations in September 2006. A summary of the main points raised during the consultations and their incorporation into project design is included in the IPDP. The environmental assessment conducted to comply with OP 4.01 also included an identification and analysis of communal lands, because many of these are still covered by native (primary or secondary) forest. Indigenous communities in Guatemala have been dispossessed of their ancestral lands as a consequence of political, economic, and social factors. During the Agrarian Reform of 1950s, the 15 State made efforts to increase the land tenure security of indigenouscommunities, but these were often insufficient or reversed by subsequent legislation. The current legal framework regarding the lands of indigenous communities is based on the National Constitution, the Peace Accords and the Framework Law of the Peace Accords (Decree 52-2005), the Law Fund Law, and the RIC Law (Decree 41-2005). They represent a new attempt to amend past injustices in that they establishthe basisfor the recognitionof indigenouscommunity lands and forests. The IPDP is based on the provisions stipulated inthe existing legal systems, particularly the RIC Law, regarding indigenous peoples, and incorporates elements from the consultation process. The IPDP includes, inter alia: (i)social communication activities to inform indigenous populations about the project before and during field activities, (ii) capacity-building activities to train indigenous peoples on general aspects regarding their rights to land under the existing framework, (iii) identification of communal lands and sacred sites previous to the cadastral field survey and the legal research and analysis necessary for their regularization, (iv) alternative conflict resolution mechanisms accessible and culturally accepted by indigenous communities, and (v) mechanisms to regularize and protect the rights of indigenous peoples on their lands. Indigenous peoples will have access to project-financed personnel that speak their native language, including bilingual technicians in the field brigades and conflict mediators. Also, the RIC Law will be translated into five native languages. A gender equity approach will be incorporatedinto the processas well. 5. Environment The only significant environmental impacts from this Category B project relate to induced changes in land use by project beneficiaries-specifically, the extent to which project activities would lead to the conservationof forests and other naturalhabitats, versus deforestationor other environmentally damaging land use practices. On balance, the overall environmental impact of this project is expected to be positive, due both to: (i) positive environmental impacts typically associatedwith land tenure security; and (ii) the EnvironmentalManagement Plan (EMP), which seeks to enhance the project's positive environmental impacts, and to mitigate and monitor any negativeones (see Annex 10for details). The EMP is mainstreamedwithin the overall project (Components 1and 2), rather than being a separate component. The EMP provides for: (i) physical demarcation of protected area boundary corners; (ii)demarcationand legalizationof indigenouscommunity lands (which will be positive from a forest conservation standpoint); (iii)demarcation of archaeological and other sites of cultural significance; (iv) delineation of natural hazard zones in municipal land use plans; (v) communication activities for environmental aspects to rural project beneficiaries; and (vi) land use impact monitoring. The activities outlined in the EMP will be included within the project's OperationalManualand inother project legal and technical documents, as appropriate. 16 6. Safeguard Policies Safeguard Policies Triggered by the Project Yes No EnvironrncntalAsscssment (OP/BP/GP 4.01) NaturalHabitats(OP/BP 4.04) Pest Management (OP 4.09) Cultural Property(OPN 11.03, being revised as OP 4.11) Involuntary Resettlement(OP/BP 4.12) IndigenousPeoples (OD 4.20, being revised as OP 4.10) Forests(OPJBP 4.36) Safety of Dams (OP/BP 4.37) ProjectsinDisputedAreas (OP/BP/GP 7.60)' Projectson InternationalWaterways (OP/BP/GP 7.50) 11 [XI `By supporting the proposed project, the Bank does not intend to prejudice the final determinationof the parties' claims on the disputedareas. The project is designed to comply fully with the letter and spirit of applicable World Bank SafeguardPolicies (see Annex 10for details). The project is classified as Category B, consistent with other land administration projects in the Latin America and Caribbean Region. In accordance with this classification, RIC prepared a free-standing EnvironmentalAssessment (EA), which was reviewed by the Bank and found to be satisfactory. The EA identifies potential direct and indirect impacts associated with the project, and concludes that the project's potential negative environmental impacts are limited and far outweighed by the project's positive environmental impacts. The EMP is mainstreamed in the Operational Manual. The project does not trigger the Involuntary Resettlement policy (OP 4.12), because no resettlement or restriction on access to resources will result from project activities. Specifically, the project will only identify and demarcate protected areas on a gross scale, and no project activity will restrict access to resourcesfor people living inor near protected areas. The project triggers the IndigenousPeoples policy (OD 4.208), because indigenous peoples will be project beneficiaries. RIC has prepared a Social Assessment and an Indigenous Peoples Development Plan (IPDP). Drawing upon informed participation, the IPDP aims to ensure that indigenous peoples are not adversely affected by the project and that they receive culturally compatiblebenefits. The project triggers the NaturalHabitats (OP 4.04) and Forest (OP 4.36) policies because the EA identifies sites in the project area that are classified as critical for conservation according to the Bank's policies. These sites include protected areas and official proposed protected areas. The OperationalManual includes special provisions for project activities in these areas to avoid any activities that may lead to significant degradation of critical natural habitats or critical forests. 8 OD 4.20 appliesbecausethe Project Concept Meetingtook placebeforeJuly 1,2005. 17 Also, the project triggers the Cultural Property policy (OPN 11.03) because the project area is known to have culturally valuable sites and artifacts. In accordancewith the Bank's Information DisclosurePolicy (BP 17.50)' copies of the EA and IPDP, in Spanish, are available for public view at the RIC office in Guatemala (21 Calle 10-58 Zona 13, ColoniaAurora 11). A copy of these documentswas sent to the Bank's Infoshop. 7. Policy Exceptions and Readiness The project does not require any exception from Bank policies. The project meets the regional criteria for readiness for implementation. The fiduciary arrangements are in place. Adequate monitoring and evaluation capacity is already in place. The EA and IPDP have been disclosed in the country and are available at the Bank's Infoshop. 18 Annex 1:Country and Sector or ProgramBackground GUATEMALA: LANDADMINISTRATION I1PROJECT Guatemala is the largest economy in Central America, with a population of 12.2 million and a per capita income of about US$2,000. An area of 108,900 square kilometers, the country is divided into 22 departments and 332 municipalities. The majority of the population (61 percent) still lives inrural areas, where poverty i s concentrated. Extreme poverty afflicts 93 percentof the indigenouspopulation. Rural poverty is closely linked to structural inequalities in the access to land and land tenure security. Land is one of the most important assets for the poor. Therefore, addressing these structural inequalities in land has the potential to reduce poverty. The unequal agrarian structure in rural areas and the complex ethnic makeup of the country are two of the structural causes creating land tenure insecurity. Today, Guatemalans face land tenure insecurity in part due to unreliable records of cadastral (exact geographic description of a parcel) and legal (certainty of legitimate owner) information, poorly coordinated land administration institutions, and weak conflict resolution mechanisms. This problem is particularly acute in rural areas, where it is estimated that 40 percent of rural parcels are not registered. Land issues figure prominently in the Peace Accords. Specifically, the Social and Agrarian Accord of 1996 called for the establishment of a legal and institutional framework to ensure land tenure security, and a decentralized,multi-user, efficient, and financially sustainablecadastral-basedland registry. Since the signing of the Peace Accords, the Government of Guatemala (GoG) has created commissions, institutions, and programs to addresses land-related issues and find integral solutions for the problems confronted in rural areas. In April 1997, the Inter-institutional Commission for the Strengthening and Development of Land Property Rights (Comisiorz Institucional para el Desarrollo y Fortalecimiento de la Tierra, PROTIERRA) was created through Government Accord No. 307-97 with the objective of coordinating the government efforts to implement the programs and projects regarding land property rights. The Legal and Technical Unit (UTJ) was created as PROTIERRA's operational branch. In 2003, UTJ was assigned to the Ministry of Agriculture (Government Accord No. 426-2003), with the responsibilities for planning, coordinating, leading, implementing, and administering all cadastral-relatedactivities inthe country. FirstPhaseof the GuatemalaLandAdministrationProgram In the context of supporting the Peace Accords, the GoG and the Bank agreed to implement a three-phase Adaptable Program Loan (APL, Loan 4415-GU) to implement the Guatemala Land Administration Programfor a period of 12years. The objectives of the APL were to: (a) increase legal security of land tenure in Guatemala, and (b) strengthen the legal and institutional framework for land registry and cadastral services nationwide. Phase Iof the program was approved in December 1998 for $39 million ($31 million from IBRD), and concentratedon the Department of PetCn. The Project Development Objectives of Phase Iare to: (a) increase the legal security of land tenure in PetCn, and (b) strengthen the legal and institutional framework for land registry and cadastral services in PetCn. In addition, UTJ carried out cadastral activities in selectedareas inseven other departmentswith the financing of other donors. 19 During 1997-2005, UTJ carried out cadastral activities in 33 pilot municipalities in seven departments with the technical and financial assistance of the international donor community. Table Al.1includes the municipalities and departmentscovered during this period. Department Municipalities Financing Izabal Morales. Los Amates Norwav Escuintla L a Democracia, San Jose Sweden Baja Verapaz Purulha Germany/GTZ Alta Verapaz Santa Cruz, Fray BartolomCde las Casas, Chisec Germany/GTZ and World Bank Chiauimula San Jacinto. San Jose de la Arada. hala. Chiauimula Netherlands Zacapa Huite, Estancuela, Cabaiias, Tculutin, Rio Hondo, Netherlands Usumatlin SacatepCquez San Lucas, Santiago, Jocotenango Spain PetCn San Francisco, Santa Ana, San Benito, L a Libertad, WorldBank Dolores, San JosC, Flores, San AndrCs, SayaxchC, Melchor de Mencos, Poptun, San Luis SecondPhaseof the GuatemalaLandAdministrationProgram(or LandAdministrationI1 Project) Based on the successful experience of Phase Iof the program and the need to expand the programinother areas, the GoG has asked the Bank to preparePhase I1of the program, the Land Administration I1 project, focusing on stronger links between the cadastre and registry, and expanding the geographic area to seven additional departments (roughly 29 percent of the country's territory), bringing the total coverage of Phases Iand I1to over 50 percent of the country. The GoG highlighted the importance of the Land Administration I1project in the most recent Country Assistance Strategy (approved inApril 2005). Since the approval of Phase I,the Registry of Cadastral Information (Registro de Informacibn Catustral, RIC) law, approved in June 2005, created a new institutional framework for land administration inGuatemala, and Phase I1has beenpreparedto address these new challengesand seize new opportunities. RIC Law. The approval of the RIC Law marks the beginning of a new institutional framework for land administration in the country. After four years of discussions and broad consultations, including indigenous peoples and private farmers, the National Congress approved Decree No. 41-2005 in June 2005, through which RIC was created as an autonomous and service-oriented state institution with the objective of establishing, maintaining, and updating the cadastre. The RIC Law provides a legal framework for a series of actions and processes conducted on an ad hoc basis by UTJ-PROTIERRA. The law establishes the legal framework for the cadastral establishment and inter-institutional coordination. Phase I1will be implemented according to the RIC Law (Component 1) and will support the strengthening of the legal and institutional 20 frameworks (Component 3). The implementation arrangements and inter-institutional coordination of the project will also be inserted into RIC's institutional mechanisms(Component 4). Decentralization.One of the most important sociopolitical achievementsof Guatemalatoday is the increasing state decentralization. An important reform package was approved by Congress in 2002, which included the following laws: (a) Law of Rural and Urban Community Councils (Decree 11-2002), (b) Municipal Code (Decree 12-2002), and (c) the General Decentralization Law (Decree 14-2002). The RIC Law is inaccordancewith this new decentralizationframework. The second phase will promote the active participation of the municipal and the local and traditional structures during the establishment of the cadastre (Component 1). The project will strengthen the institutional framework and finance pilot land use plans to provide land administration services at the municipal level (Component 2). Phase Iof the program, along with parallel projects supportedby other donors (the Netherlands, Sweden, German Technical Cooperation [Deutsche Gesellschaj? fur Technische Zusammenarbeit, GTZ], the European Union), has yielded important lessons. First, effective methodologies for cadastral fieldwork and conflict resolution have been piloted and developed. The project has already exceeded the cadastral surveying targets in urban parcels and is close to meeting the rural targets. However, titling (responsibility of FONTIERRAS) and registration of parcels, particularly in rural areas, have proceeded at a slower pace than anticipated. Thus, for Phase 11, a stronger emphasis on the link between the cadastre and registry is needed. On the institutional side, the role of the Technical and Legal Unit (Unidad Tkcnico Juridica, UTJ)/PROTIERRA has evolved from being just a project unit to becoming a strong national cadastre office. The approval in June 2005 of a cadastre law, creating the Registry of Cadastral Information (RIC), was a major achievement of Phase Iand sets the institutional stage for successful implementation of Phase 11. In addition, further reforms of the General Property Registry (Registro General de la Propiedad, RGP), particularly those relatedto the technological integrationof the cadastral and registry databases and its subsequent decentralized maintenance, are fundamental componentsof Phase 11. Third Phaseof the GuatemalaLandAdministrationProgram Under the original APL, Phase I11was planned for a total cost of US$60 million (IBRD: US$50 million; GoG: US$10million). Inrealterms, the Bank's contribution to Phase I11will be reduced about 35 percent to US$41.4 (in 2006 prices), because the GoG has requested the Bank's contribution to Phase I1to be larger than originally anticipated (US$62.3 million). Phase I11will cover cadastral and regularization activities in the remaining departments. As in the previous phases, special care will be devoted to continued capacity building and institution strengthening, with an emphasison quality control and monitoring systems. The triggers to move to Phase111established in theAPL are: Interms of geographiccoverage: Cadastreworks complete inthe six departmentsof this phase. Registrationoffices operatingand linked to cadastres. 21 Interms of decentralization: 0 Local governments inthe departmentsnot yet covered by the Program request its services and are active participants inthe design of subprojects. 0 Financial indicators of the General Property Registry-Departmental Branchesshow that these agencies are self-sustainable. Interms of social monitoring: 0 Fulldocumentationof the social experienceof the Program is produced. Evaluations by the communities show acceptanceof the project and ownership. Interms of capacity buildingand institutional strengthening: Departmentaloffices establish their own monitoring and evaluation mechanisms. Departmental offices establish their process protocols. Participatory and conflict resolution methodology is accepted, as assessed by social monitoring activities. 22 Annex 2: Major RelatedProjects Financedby the Bankand/or otherAgencies GUATEMALA: LANDADMINISTRATIONI1PROJECT Project Name Amount Financier IP/DO Sector Issue (US$) Ratings Land $31.0 million IBRD IP-s Land administration Administration 1DO-S (4415-GU). Closingdate: March2007 EscuintlaCadastre $2.2 million Sweden n/a Tenure security in Project selectedmunicipalities of Escuintla Zacapa- $6.9million Netherlands n/a Support to technical, Chiquimula legal, and social Cadastre Project framework for land tenure inZacapa-Chiquimula IzabalCadastre $4.1million Norway nla Support to national Project cadastralprocess and fieldwork in Izabal Sacatepiquez $0.6 million Spain nla Cadastralfieldwork in Cadastre Project selectedmunicipalities of Sacatetdauez Verapaces $1.3 million GTZ nla Cadastralfieldwork in Cadastre Project selectedmunicipalities of Alta Verapaz and Baja VeraDaz Institutional $7.6 million Switzerland n/a Topographic equipment Strengtheningof and technical assistance to UTJ and IGN UTJ and IGN Proiect 23 Annex 3: ResultsFrameworkandMonitoring GUATEMALA:LANDADMINISTRATION I1PROJECT TableA3.1. ProjectResultsFramework ProjectDevelopment Use of ProjectOutcome Objective Information The objective of the Project is to 80% of new transactions in the PY1-PY3: Ensure the technical oster the process of achieving land project area conducted with platform is properly established, enure security in the project area validated and integrated based on internationalbest practices. hrough the provision of efficient cadastral and registral Ensure effective coordination ind accessible cadastral and land information. between RIC and RGP. Ensure the idministrationservices in the project 80% of land conflicts identified quality of field-level surveying data irea. during the cadastral survey are and resultsmeet the standards. in a resolution process and out of which 50% are solved. PY2: Ensure that RIC, institutional Satisfactory rating (third level partners, and private sector have on a four-scale basis) by at least sufficient preparation to meet project 50% of National System of targets. Cadastral Information (SNIC) users. PY5: Ensure that the titling process At least 70% of the targeted in national and private landsand is population in the project area properly documented participates in the cadastral contributes to the revision of the survey (at least 40% legal framework to systematize the participating population is of procedures and make them available indigenous descent). to the populationon a large scale. PY5: Ensure that the municipalities have access to cadastral information for local land administration services. PY6: Review strengths and weaknesses, prepare remedial plans to ensure achievement of Phase I11 triggers, and preparePhase111. IntermediateOutcomes Use ofIntermediate OutcomeMonitoring Cadastraland landregularization: Cadastralprocess. PY1-PY6: Assess quality of work 80% of surveyed parcels in the and improveprocessaccordingly. project area (including national, private, and communal lands) PY3: Assess the social factors incorporated into RIC's involved in the certification of database (target: 280,000 out of communal lands. 350,000). 80% of communal lands in the PY3: Evaluate the mechanisms for project identified and certified inter-institutionalcoordination. 24 according to the process PY3: Review the regulatory establishedinthe IPDP. framework for the demarcation of 13 protected areas demarcated municipallimits. inthe project area. 250 archeological sites identified and demarcated in the project area (for sites in a protected area, only the area Land regularizationand titling. will be demarcated). 2,800 lineal km of municipal boundaries identifiedand agreed PY1: Review the programobjectives amongthe relevant parties. to ensure compliance with the legal framework in view of proposed 60% of parcels in nationallands reforms. identified as eligible for new titling are titled and registered in PY2: Review the coordination General Property Registry mechanisms between RIC and (RGP). FONTIERRA. 60% of parcels in private lands identified as eligible for the PY3: Evaluate quality and speed of special titling procedure titlinghegistration. Reallocate prescribed in the RIC Law are resources to titlinghegistration titled and registered in RGP. agenciesif necessary. 10% of identified communal lands are regularized and PY5: Systematize the regularization registeredin RGP. processfor Phase111. Maintenanceof cadastral informationand municiualservices: Establishment of RICs 8 cluster offices in the project PY3-PY4: Gradual expansion into municipalcluster offices. area issuecadastralcertificates. new municipalities. Maintenanceof cadastral 50 surveyors certified and PY2: Assess jointly with the private information. registered in RIC's Registry of sector the regulations for Surveyors. maintenance of cadastral At least 80% of new land information. transactions in Petin are incorporatedinto SNIC. PY: Design a communication campaign to inform the population Provisionof landadministration 20 municipalities have land use about the benefitsof registration. services at the municipallevel. plans based on cadastral information. 25 Legalreforms and institutional strengtheningfor land administration: A draft Land Regularization PY1-PY4: Adjust efforts to Policy framework and Law prepared by RIC, RGP, advocate policy reforms. institutionalstrengthening. LandFundand SAA. Regulations on the RIC Law PY1: Revise the indicators for the and regulations for the regularization of irregular parcels in certification of communal lands the context of an approved Land approved by RIC. RegularizationLaw. 500 technicians trained in land administration through RIC's Land Use and CadastreTraining Center. An integrated Registry-Cadastre PY2: Assess the long-term plan for 8 Integrationof the operates as per article 44 & 45 inter-institutional coordination RegistryKadastreSystem. of the Law RIC. betweenRIC and RGP. Project management, monitoring, and evaluation: 8 Project administration. 8 Budget, annual operative plans, PY6: Incorporate management and M&E issued on time as per the M&E lessons into design of Phase loanagreement. 111. Inter-institutionalcoordination. Spatial Data Infrastructure in operation (application and PY2: Ensure information sharing standards). among institutionalpartners. 26 B -E. -H v) 3 VI e! e! a m C C s. iE 3 m 8 8 . m Eis s 8 m P 8 8 % 4 E \I 8 8 gm Em *4 cE 'EC .I c E $ 8 f 0 0 s - c z8 z8 u dE z s 28 0 0 5b c Ii! U eLb c CI ea s - e! e! -H e! rn -ex. rn a C ¶ .-m E m 5 .-C 3 (PI 0 8 3 vi N W a 8 0 3 0 0 0 vi 5 9 0 0 0 $ 0 3 0 N 0 0 0 0 0 0 0 0 0 0 E 0 x U m d e B " -i?8e 2 * N5 E .- i?8, e 6" a .-e" " -ez 9 9 2 0 hl sE: E: s 0 0v, s # 5 E: s 0 0 d v1 ss sE: E 8 N 5 ss 0 0 N 8 lri s 0 sE: 5 5 0 0 I sE: s m 0 0 0 0 0 88 0 Annex 4: Detailed Project Description GUATEMALA: LANDADMINISTRATION I1PROJECT The passageby the GuatemalanCongress of the CadastralRegistry Law inJune 2005 (effective August 2005) allows for the definition of Phase 11's development objective more precisely than originally envisioned at the concept stage. The law creates the Registry of CadastralInformation (Registro de Informaci6n Catastral, RIC) to establish and maintain the national cadastre and to coordinate its activities with ke a encies dealing with land, including the General Registry Property (RGP), the Land Fund , and the municipalities. The new law provides for a detailed B g process for the establishment of the cadastre. The Land Administration I1Project Development Objective is to foster the process of achieving land tenure security in seven new departments (Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepequez, and Zacapa) and the municipality of Palachum in the Department of Quiche, through the provision of efficient and accessible cadastral and land administration services. In the context of the Project, cadastral and land administration services include a systematic diagnostic of beneficiaries, a communication campaign, mapping, verification of rights, delimitation of properties, field conflict resolution, notification of results, and the transfer of information into the cadastral registry, as well as day-to-day integrated cadastral and property registry services (for example, individual title registration, issuance of cadastral certificates). For those cases that fall within certain "special titling" provisions of the Cadastral Registry Law", the Project will support the titling and regularization of previously unregisteredlands. The Project will be implemented in a participatory manner to ensure broad participation of indigenous and non-indigenous beneficiaries. In particular, the Project will support broader efforts to develop methods for improving the land tenure security for indigenous communities , including through the development of appropriate participatory procedures and conflict resolution mechanisms (see annex 12 for more details). These aspects of the Project may therefore have the benefit of supporting the GoG's efforts to improve the legal framework for landregularization,which will otherwise lie outsideof the scope of the Project. Under Phase 11, the Programwill expand its coverage to selectedareas of seven new departments of Guatemala (Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepequez, and Zacapa) and one municipality in the department of Quiche". This geographical coverage 9 The World Bank financed PhaseIof the "Land Fund" APL, which closed in June 2005. The development objective of the programwas to assist GoGto: (a) establisha programto facilitate beneficiaries'access to land; (b) support beneficiaries' access to technical assistance and productivesubproject financing; and (c) improvethe legal and institutionalframework so that landmarketscould work more efficiently. Ratings in the Implementation CompletionReport of Phase Iconvey a satisfactory projectoutcome, likely sustainability,and modest institutional developmentimpacts. I OChapter I1of Title VI1of the CadastralRegistry Law, which is described in greater detailinAnnex 11of this PAD. 11 The municipalityof Palachuminthe department of Quichewas includedinPhaseI1because it forms part of a cluster of municipalities(rnancornunidad) with those adjacent municipalitiesin the department of Alta Verapaz. The socioeconomic and environmental features of this municipalityare similar to those found inAlta Verapaz. 31 representsroughly 22 percentof the country's territory, bringing the total coveragefrom Phases I and I1(which includesElPetCn) to about 50 percent. The expected developmentindicators are: 80 percent of new transactions inthe project area conductedwith validated and integrated cadastral and registral information. 80 percent of land conflicts identified during the cadastral survey are in a resolution process, out of which 50 percent are solved (see the social assessment for more details on the conflicts typology). Satisfactoryrating (third level on a four-scale basis) by at least 50 percent of the National System of Cadastral Information (Sisternu Nacional de Inforrnacibn Catustral, SNIC) users. At least 70 percent of the targeted population in the project area participates in the cadastralsurvey. See map of project area. 32 i f COMPONENT 1.Cadastralandlandregularization(US$31.95 million,amrox.1 This componentwill makeit possible to implementthe cadastre processes in55 municipalities of seven departments in Guatemala, through participatory approaches and local-level capacity building. These cadastral processes are in line with the cadastral efforts and processes clearly 33 defined in the RIC Law. In this institutional context, the component proposes registry research and socioeconomic diagnostic to understand landownership and support fieldwork; social communication; geodetic and mapping activities; systematic parcel-based field surveys; conflict resolution, where necessary; analysis of cadastral and legal information; and, where the legal framework so permits, the provision of legal titles for properties. The component also finances the definition of municipal boundaries and the demarcation of protected and public areas and of those indigenous or archeological areas requiring special protection. This is the project's key component; it absorbs 50% percent of financial resources in the execution of the cadastral survey of areas addressed by the project. This component is divided into the following subcomponents. Subcomponent 1.1Cadastral process 1.1.1Preparatory activities for cadastralfieldwork This activity will take place prior to the declaration of cadastral zones (zonas catastrales) where the cadastral field survey will take place. This activity is aimed at generating knowledge about landownership, socioeconomic, cultural, and linguistic aspects, and the types of organization inmunicipalities for the purposeof formulating criteria for the planning of social communication activities and cadastral field surveys. This diagnostic is based on fieldwork with interviews and participatory methods, and also on research of information stored in the General Property Registry (Registro General de la Propiedad, RGP) manual and electronic books from 1887to the present. Participatory diagnostics related to the identification and inventory of indigenous claims on lands are contemplated by the project and documented in the Indigenous Peoples Development Plan (IPDP). The project will finance: (a) consultants to carryout the registral diagnostics in the RGP; (b) consultants to carryout the participatory socioeconomic diagnostics; (c) workshops to consult with the population; (d) consultants to prepare a tract index to include information on real rights and other conveyances; and (e) technical services related to the review of maps, preparationof field services and consolidation of the geodesicnetwork. 1.1.2 Socialcommunication This activity includes the application of the RIC social communication strategy, using the media for the mass dissemination campaign of the cadastral process that will be implemented in cadastral zones (zonas catastrales). The purpose of this activity will be to create a cadastral culture and promote a favorable climate for cadastral establishment in these zones. There are plans to train local leaders and authorities and to coordinate with grassroots organizations to apply the social communication strategy and follow up on the cadastral process. Special communication aspects are contained in the indigenous development plan, including participatory evaluation mechanisms. Environmental awareness efforts are part of the project's communication process(deforestation, protected areas). 34 The project will finance: (a) consultants for the preparation and implementation of the communication campaign; (b) materials and services for the implementation of the communication campaign including, inter alia, radio spots to publicize and inform the populationon the cadastralsurvey; and (d) training of local institutions and organizations. 1.1.3 Cadastral fieldwork Systematic parcel-basedsurvev: This activity includes all the work needed for the cadastral survey, usingsupervisionand quality control mechanisms. The cadastral survey consists of a systematic visit of each parcel, urban and rural, the measurement of such parcel, and the filling out of a form for each parcel including the name of the owner/possessor and the parcel's main characteristics. The survey will be performed mainly by means of bids from private firms. In this regard, the key role of the RIC at this stage will be to supervise and verify the quality of the process. Participationof indigenous peoples: When the cadastral field activities relate to land owned by or in possession of indigenous peoples, specific procedures that ensure the active participation of the beneficiaries and their organizations must be followed. Specifically, indigenous peoples who own or possess the land to be surveyed and their neighbours will participate in the process,with the support of the local authorities and organizations, and will sign the documentvalidating the parcel's boundaries. Delimitation of administrative boundaries: Based on the experience gained in Phase I,a methodology has evolved for new working fronts, in which jointly agreed municipal and departmental boundaries will be delimitated by the municipalities with RIC and IGN technical support. Delimitation and demarcationof protected areas: In collaboration with the National Council for Protected Areas (ConsejoNacional de Areas Protegidas, CONAP), RIC will delimitate the protected areas and areas of special environmental interest with the objective of identifying and georeferencing their physical location. The protected areas and cultural/archeological sites delimitatedin the cadastral survey will be physically demarcated. No cadastral work will be carried out in the protected areas. The physical demarcation of these areas will not result inrelocation, loss of assets, involuntary restrictionsof access and it will not impact the rights of individual and communal lands. A detailed treatment of the demarcationprocessfor protectedareas and cultural/archeologicalsites is included inAnnex 10. The project will finance consultants, small works, and operational support to CONAP and IDAEHfor the physical demarcation of the protected areas and cultural/archeological sites surveyed during the field survey. Delimitation of public areas and territorial reserves: In collaboration with the Office of Territorial Reserves (Oficina de Control deAreas de Reserva del Estado, OCRET), RIC will delimitate the public areas and territorial reserves with the objective of systematically incorporatingthem inOCRET's inventory for future management. 35 Delimitation of cultural and archeological areas reauiringspecial Drotection: Incollaboration - with the Guatemalan Institute of Anthropology and History (Instituto de Antropologia e Historia de Guatemala, IDAEH), RIC will delimitate areas of cultural and archaeological value with the objective of systematically incorporating them into IDAEH's registry for future protection and management. This process will assist in the protection and enhancement of cultural and archeological sites found in the project area, mitigating the loss or damage to cultural property andbenefiting indigenouspopulation that utilize these sites. Conflict resolution: RIC will work with the Secretariat of Agrarian Affairs (Secretaria de Asuntos Agrarios, SAA-CONTIERRA) and local stakeholders (Municipalities, nongovernmentalorganizations [NGOs], communities, civil society organization) to provide on-the-ground technical and legal assistance to beneficiaries for alternative (that is, nonadministrative or judicial) conflict resolution during the survey process. There will be ongoing monitoring of the reception and perception of beneficiaries and related institutions with regardto project activities including conflict resolution. The project will finance: (a) cadastral technical services to conduct a parcel-based field survey in the seven new departments; (b) training of cadastral brigades; (c) consultants (including NGOs and local organizations) to provide assistantship to beneficiaries during the field survey (d) operational support to SAA/CONTIERRA to provide technical and legal assistance to beneficiaries for alternative conflict resolution; and (e) cadastral technical services and operational support to co-executing agencies for the delimitation of administrative boundaries (IGN), protected areas (CONAP), cultural/archeological sites (IDAEH), and territorial reserves(OCRET). 1.1.4 Analysis of cadastral information This activity will consist of analyzingand comparingsources of existing registry information and the data collected during the field surveys. This phase is extremely important and by law cannot be delegated; thus, in principle, it will be carried out by the administration. When the desk review is completed, a series of public presentations are planned to inform the population about the results and provide feedback for the analysis with additional, relevant information. The project will finance: (a) consultants and office equipment to conduct the technical analysis of the data collected during the field survey; and (b) public viewings to display the preliminary results to beneficiaries. 1.1.5 Legal analysisand investigation The objective of the legal analysis and investigation is to examine the legal status of the information collected in the field to determine if the parcel is regular or irregular. The RIC Legal Analysis Unit will examine the parcel-based report prepared by the RIC Cadastral Analysis Unit. To declare a parcel regular, it must be determined particularly during the investigation that the parcel does not overlap with a protected area, an area of special 36 protection, an area of cultural or archeological value, an area where there is an existing or potential claim from an indigenous community, or any other area where there is a restriction as indicated by the RIC Law (for example, areas prone to natural disaster). The RIC will coordinate with the relevant entity to receive its approval before determining whether the parcelsare regular or irregular. The project will finance: (a) consultantsand office equipment to conduct the legal analysis of the information collected in the field survey and rectified in the technical analysis; and (b) consultants and motor vehicles to notify the results of the legal analysis to beneficiaries. Subcomponent 1.2 Land regularization and titling The RIC Law only provides a framework for the carrying out of cadastral work that will lead to the designationof cadasteredparcelsof land as either regular or irregular and does not provide a framework for land regularization. Guatemaladoes not currently have a Land Regularizationlaw which would address all land tenure irregularities that may be identified in the cadastral process or the proceduresfor regularizing and titling such lands (see Annex 11).Under the current legal framework, the Project will be only be able to regularize parcels in cases that meet the very narrow provisionsdescribed insubcomponent 1.2.2 and 1.2.3 below. 1.2.1 Annotation of titles in the RGP If the legal analysis and investigation determines that the parcel is regular, the RIC will register the property inthe RGP, assigningit a unique cadastralcode. This code will become part of the property's identification data. If the legal analysis and investigation determines that the parcel is irregular, the parcel holders will be notified. They will have 30 days to request a technical review before the designationof irregularity becomes permanent. Once this period has expired or if no solution is found, the RIC will notify the RGP to make a special annotation noting the property's irregularity. This irregularity will not affect the sale or rental of the property. The project will finance the operationalcosts for the inscription of regular or irregular status inthe RGP. 1.2.2 Implementation of special titling Special titling refers to the titling and registration of those properties that, following legal analysis, have the sole irregularity of not having been previously recorded in the Property Registry. Special titling does not apply in cases where the parcel is covered by an existing registrationwith the RGP regardless of the person in whose name it is registered (Le. the Republic, any municipality or any private person), the circumstances surrounding such registration(e+ the date of the initial registration), or any rights or claims that the current tenant or possessor of the land may have against the registeredowner. Incases where special titling can apply, Decree 41-2005 requires the RIC to prepare the documentation for inscription in the RGP, and publication in the Official Gazette of the Republic of Guatemala (Diario de Centroame'rica) of the edict indicating that the property is in the processof being registered. If there is no opposition, the RIC will record ownership in the RGP. If there is 37 opposition, the RIC will send the documentation to the relevant court and should notify the interestedparties. In this regard, these activities will be aimed at determiningthe legitimacy of landownership by individuals and communities, including indigenous lands, recognizing possessionthat is peaceful, ongoing, in good faith, and under ownership title, to consolidate the right of ownership for public purposes that are mandatory for all inhabitants of the country. Due to the country's limited experience with the special titling process, especially for private lands, spaces will be provided for reflection, learning, and systematizationof the experiencesof this process. The project will finance: (a) operational costs for the preparation of the files for the adjudication process; (b) publication of the edicts in the official diary; and (c) operational costs for the inscription of the new titles inthe RGP. 1.2.3 Regularizationand titling ofnationalareas (LandFund) In the project zone, RIC will coordinate with the Land Fund the regularization of lands handed over, or in the process of being handed over, by the State to indigenous and nonindigenous peoples, as was the case for the LAP I.The project will in particular provide specific logistical and managerial support to the Land Fund so that it can carry out this task ina muchmoreefficient mannerthan during the LandAdministration Iproject. The project will finance: (a) consultants to assist the Land Fund in the adjudication process and digitizing of paper information related to the adjudication process; (b) office equipment and vehicles; and (c) training activities. 1.2.4 Certificationand registrationof communallands (RIC and RGP) In accordance with RIC Law, RIC will make an administrative declaration (declaratoria administrativa) and issue a certificate for each of the communal lands identified during the cadastral survey that was declared as regular or irregular by the legal analysis (Art. 65). The certificate of communal landwill be registeredin the RGP inthe cases where it is applicable. The process for the declaration and registration of communal lands is included in the IPDP (see annex 12for more details). The project will finance operational costs for the certification of communal lands and their inscriptioninthe RGP. COMPONENT2. Maintenanceof cadastralinformationand municiDalservices (US$13.32 million,aDprox.1 The aim of this component is to create the local capacity to coordinate the cadastre and regularization process in each municipality. This includes the mechanisms and human skills needed to ensure the maintenance of cadastral information, develop cadastral information products and services, and establish-initially inmunicipalities of the department of PetCn-land administration services aimed at land use planning and management. This component is divided into three subcomponents. 38 Subcomponent 2.1 Establishment of RIC's municipal cluster offices The RIC Law envisions the installation of offices in municipalities undergoing the cadastral process. For project purposes, "cluster" offices will be established in zones undergoing the cadastral process, with the infrastructure needed to carry out institutional tasks and supervision of the processes of establishing and maintaining the cadastre. The minimum structure of these offices in zones undergoingthe cadastral process i s described in the institutional arrangements for project implementation. The project's aim is to establish eight offices for zones undergoing the cadastralprocess. The project will finance: (a) civil works; (b) office equipment; (c) salaries of incrementalstaff; (c) vehicles; (d) consultants for the supervision of cadastral activities; and (d) incremental operatingcosts. Subcomponent 2.2 Maintenance of cadastral informationvia private intermediaries The maintenance of cadastral information is the essence of the RIC's medium- and long-term efforts. This maintenance requires unique work with various actors in the real estate transaction systeminorder to identify changes inrealestate ownership. The RIC has the power to authorize technicians and/or professionals who have graduated with degrees related to land surveying, to carry out cadastral operations, for which it will keep records. Incadastralmaintenanceoperations, separationplans must be presentedto the Cadastral InformationRegistryto ensure that they comply with quality standardsinorder to be includedin the cadastre. The project envisions training and building the capacity of civil engineers and agronomiststo beginthe operationof cadastralmaintenance. The RIC Law also substantially changes the activities of notaries with regard to ownership transactions. In order to draw up deeds on the unification or separation of properties, notaries must have the certificate issued by the Cadastral Information Registry, containing graphic and alphanumeric informationon the parcel in question. The project envisions training and building capacity of notarieson new proceduresindicatedinthe RIC Law. The projectwill finance: (a) technical assistance for the elaborationof norms and proceduresfor cadastral maintenance and the creation of a technological-operational platform for cadastral maintenance, including exchange of information with municipalities, private surveyors, and notaries; (b) consultants for the implementation of the platform; and (c) training activities for municipalities, private surveyors, and notaries. These efforts will be concentrated in the Peten and the seven new departments. Subcomponent2.3 Provision of land administration services at the municipal level It is essential that municipalitiesbe users of cadastralinformationfor their own needs, especially for local development and land use planning in their respective jurisdictions. The expected output is 20 municipal land use plans based on cadastral information. The strengthening of 39 municipal capacities to produce the land use plans and use the cadastraltool will require training and the development of pilot applicationsbased on cadastral information. The project will finance: (a) technical assistance for the formulation of the land use plans and modernizationof the municipal cadastreoffices; and (b) training activities to municipalities. COMPONENT 3. Legal reforms and institutional strengthening for land administration [US$7.76 million, amrox.) The aim of this component is to strengthen the legal framework and institutional capacity of the institutions involved inthe cadastral and land regularizationprocess, including the RIC, SO itcan efficiently and effectively perform its duties and legal mandates, particularly in terms of coordinatingwith the GeneralPropertyRegistryto implementthe RegistryKadastresystem. The component is structured in two subcomponents: (a) review of legal and institutional frameworks, and (b) integrationof the cadastre and registry systems. Subcomponent 3.1 Review of legal and institutional framework 3.1.1 Legal and institutional framework As indicated inAnnex 11,12 and subcomponent 1.2, it is necessaryto review and complete the legal and institutional framework related to the regularization and titling of lands in Guatemala. This subcomponentwill focus on two key legal reformsinthis area. First, it will support the preparationand approval of the general RIC regulationsand specific regulations for the regularizationof the communal lands mandated by Article 65 of the RIC Law. These regulationswill help clarify the cadastral processfor communal lands claimed by indigenous peoples. They will have to be based on the Guatemala Constitution and the International Labor Organization (ILO) Convention No. 169 with regard to the inclusion of and respectfor indigenousrights. Second, the project will help develop and pilot methodologies to regularize lands, in particular indigenous lands, including appropriate participatory procedures and conflict resolutionmechanisms,The results and findings of these activities will feed into the process for the preparationof the draft LandRegularizationLaw by RIC. The project will finance: (a) civil works in RIC's office in Guatemala; (b) consultantsfor the elaborationof RIC's normative and proposals for legal reforms; (c) publication of materials; and (d) training activities to disseminatethese proposal. 3.1.2 Capacity building This activity is aimed at facilitating and promoting technical and professional training and skills updatingprocesses to achieve scheduled objectives and targets in this second phase of the project. A results-oriented vision will be promoted at all levels of work. Training is 40 planned not only for the RIC but also for the various other actors involved in cadastral maintenance, especially at the local level. In this context, this activity will be aimed at supportingand strengtheningthe cadastre school that the RIC Law mandates. The project will finance: (a) training activities, including the provision of scholarships, to RIC staff to upgrade their knowledge of land administration; and (b) training programs to build the capacity of municipalities,local organizations, and private companies to participate inthe cadastralprocess. Subcomponent3.2 Integration of the registry/cadastre system 3.2.1 Technological and operational platform of an integrated registry and cadastre system These activities are aimed at strengthening coordination and negotiation mechanisms between the RGP and RIC for the smooth functioning of the integrated registryhadastre system. The intention is to define the informatics and communication structure between the databases of the GeneralProperty Registry and the RIC. The systemwill be developedon the basis of the following components: Intranet: It is proposed that a dedicated data link be established between the central offices of the RGP and the offices that the RIC opens nationwide. This link will serve as a means to share information. Thus, an internal network (intranet) will be formed to allow users to have easy, efficient access to the informationcontainedinthe RGP's electronic system and the cadastralinformationsystem. Large-scalecollectionof registrydata: The recent RIC Law obliges the RIC to issue a declaration of the zone to be cadastred, the zone cadastred, and cadastred regular or irregular properties. These declarationsrequire a prior registry investigation.For this purpose, it is essential to have large-scale, easy, quick, and efficient access to the informationthat the GeneralPropertyRegistryprocesses and maintains. Coordinationof RGP and RIC informationsystems: the RIC and RGP have their own information systems, both of which are based on a single identifier. For the RGP, the identifier is the number of the property, page, book, and denomination(FFLD). For the RIC, it is the Cadastral ClassificationCode (CCC) consisting of the department, municipality, polygon, and correlate of the property. To maintain access in both systems, a model will be created based on a table of relationshipsthat will store the relationships betweenfarms and properties as stipulated in Articles 44 and 45 of the RIC Law. The project will finance: (a) technical assistance for the development of the technological platform; (b) office and technological equipment for the installation of the platform in RGP's and RIC's central and regional offices; (c) collection of data in the RGP; and (d) training of RGP and RIC staff inthe use of the platform. 3.2.2 Modernization of the RGP 41 The project will support the modernization of the RGP with the aim of creating optimum conditions for the implementationof the registry/cadastre system. The modernization of the RGPwill address the following aspects: Clean-up of Registry Information: For purposes of the RGP and to meet the obligations established for the RIC, a mechanism will be created to allow both institutions to establish, analyze, and rectify inconsistencies detected during registry investigationand analysis. Virtual Library: Plans are underway for a virtual library the components of which stem from the provision of 30 computers that will facilitate user searches, and the modification and remodeling of the place where books will be stored. The virtual library will allow users to check the content of ledger books through the use of the nationalbankingsystem. Technical Data Sheet Project: Efforts are aimed at the creation of a technical data sheet which, together with the creation of the registry's database (Fhix I11 internal project), aids the current understanding of the status of each registered farm, thus facilitating registry operations and strengthening the principle of legal security. The project's development requires a systematic study of the records of each farm registeredinthe system(2,000,000 farms). The project will finance: (a) office equipment for the installation of a virtual library at the RGP; and (b) consultants to provide technical assistance for the modernization of the RGP's database. 3.2.3 Development of FUCbusiness plan A strategy should be defined to allow RIC self-financing inthe long term, containing a long- term plan (RIC business plan) in which cadastral products and services (for example, cadastral certifications) are the source of such financing. This strategy requires the formation of a users' committee and of specific pilots with various users, such as the banking sector, to define products and services. The project will finance consultants to develop a customer-service plan, develop specific products and services for the financial sector, and define a marketing strategy for cadastral products. Component 4. Proiect management, monitoring, and evaluation (US$8.62 million, approx.) This component covers the costs of the Project CoordinationUnit (within RIC), monitoring and evaluation systems, independent evaluations and audits, and inter-institutional coordination activities. It will finance the provision of technical assistance, equipment, training, workshops, and incremental operating costs to ensure adequate project implementation(Subcomponent 4.1 Project administration). It will also support the inter-institutional coordination, via UCP, to implement the project at the central and local level and will seek coordination among different public entities to implement a parcel-levelspatial data infrastructure system (Subcomponent 4.2 Inter-institutional coordination). 42 The project will finance: (a) the project's management costs including incremental salaries, technical assistance, equipment, training, workshops, and operating costs; and (b) technical assistance, equipment, and workshops for the establishment of a spatial data infrastructure system. 43 Annex 5: Project Costs GUATEMALA: LANDADMINISTRATION I1PROJECT Local Foreign Total Project Cost By Component and/or Activity US$ US$ US$ Million Million Million 1.Cadastralandlandregularization 1.1.Cadastralprocess 16.15 13.71 29.86 1.2. Land regularizationand titling 1.94 0.15 2.09 Subtotal Component 1 18.09 13.86 31.95 2. Maintenance of cadastral information and municipal services 2.1. Establishmentof RICs municipal cluster 8.75 2.54 11.29 offices 2.2. Maintenanceof cadastralinformation 1.27 1.27 2.3. Provision of land administrationservices 0.76 0.76 at the municipal level Subtotal Component 2 10.78 2.54 13.32 3. Legal reforms and institutional strengthening for land administration 3.1 Review of legal and institutional 1.66 0.18 1.84 frameworks 3.2. Integrationof the Registry/Cadastre 4.95 0.97 5.92 System Subtotal Component 3 6.61 1.15 7.76 4. Project management, monitoring, and evaluation 4.1. Project Administration 5.72 2.16 7.88 4.2. Inter-institutionalCoordination 0.61 0.13 0.74 Subtotal Component 4 6.33 2.29 8.62 Total Baseline Cost 41.81 19.84 61.65 PhysicalContingencies 0.04 0.12 0.16 Price Contingencies 0.12 0.37 0.49 Total Project Costs 41.97 20.33 62.30 Interest during construction Front-endfee (not included) 0.00 Total FinancingRequired 41.97 20.33 62.30 44 Annex 6: ImplementationArrangements GUATEMALA: LANDADMINISTRATION I1PROJECT The project will be implemented following the successful experience of the Guatemala Land Administration Project, Phase I. Unlike Phase I,the Registry of CadastralInformation (Registro de Informaci6n Catastral, RIC) will be the overall implementation agency for this project, replacingthe Technical and Legal Unit (UTJ) of the Ministry of Agriculture. RIC was created by Legislative Decree 41-2005 (Ley RZC) approved by Congress on June 15, 2005, publishedinthe Official Gazette N22, Volume N277 on July 20, 2005, and in force since August 20, 2005, as an autonomous public institution, with the objective of establishing, maintaining, and updatingthe cadastreinthe nationalterritory. RIC's organizational structure consists of a Directive Board, a National Executive Office, and Municipal Offices. The Directive Board is the entity in charge of defining cadastral policies, overseeingthe organization and functioning of RIC, and coordinatingwith the public institutions and social organizations involved in the cadastral process. The Directive Board is comprised of seven members: the Minister of Agriculture, the General Registrar of Property, the Director of the National Geographic Institute (IGN), an appointee of the National Association of Municipalities, and appointees of the Civil Engineering, Agronomic Engineering, and Lawyer- Notary Federations. The Minister of Agriculture is the President of the Board, and in his or her absence, the Vice-Minister is assigned. The Directive Boardwill approve all the agreementsthat RIC enters into with other public and private entities, appoint the National Executive Director, approve the operational manual and annual operative plans, and enact the official declarationfor cadastralfieldwork inthe project areas. The National Executive Director, under the overall supervision of his or her Board, will be in charge of planning, organizing, and executing all the administrative, technical, and legal activities of the project. Inthe context of Phase 11, RIC will coordinate the various participating agencies by means of agreements that will become effective, to the World Bank's satisfaction, before the corresponding activities begin. All implementationarrangementswill be consistent with the Ley RZC. Unlike Phase I,Phase I1 anticipates a much stronger institutionalization of the project in its administrative, procurement, financial, and technical areas. The United Nations Development Programme (UNDP) will no longer be used as the procurement and financial agent (see Annex 7). During Phase 11, RIC will directly manage the project's financial and administrative aspects, includingloanfunds, through its administrativeandfinancial units(see Annex 7 and 8). For Phase 11, RIC will create a Project Coordinating Unit (Unidad Coordinadora del Proyecto, UCP) (see Figure A6.1 for the UCP organizational chart), to coordinate, monitor, and evaluate the project's activities and assure overall project coordinationboth internally and externally, with participating agencies and the World Bank. The UCP will include, among others, a project coordinator, a procurement officer, and a financial officer placed in the Administrative and 45 Financial Direction. UCP is also responsible for preparingthe progress report and coordinating with and reportingto the Bank, includingfacilitating the Bank supervision. InternalCoordination Internally,UCPwill coordinatewith: The Administrative and Financial Direction in the procurement of goods, works, and/or servicesand administrativeand financial management;and The Technical and Juridical Directions with regard to cadastral and regularization activitiesand technical supervision, inparticularof internationalcadastralcontracts. Annexes 7 and 8 detail the roles of the UCP and the Administrative and Financial Direction for the managementof ProcurementAdministrative and FinancialFunctions.For technicalactivities, the UCP will coordinate the work betweenthe Technical and Juridical direction and the private companiescontractedto carry out the field survey. The Unit for Cadastral Analysis within the Technical Direction will be responsible for comparingthe data from the Registry's past recordswith the data comingfrom the field surveys. The personnel in this unit will prepare parcel-based reports and deliver them to the Unit for Legal Analysis, within the Juridical Direction, which will examine the legal situation of the property and its relation with the subject. The results of the cadastral and legal analyses will be usedto establishwhether the propertyis regularor irregular. ExternalCoordination(see FigureA6.2 for the external coordinationbetweenRIC and the other agencies). RIC will enter into a "Participation Agreement" with each participating agency, and into a "Municipality Agreement" with each respective municipality where the project will take place. These agreements, described below, will clearly define the roles, responsibilities, and management of funds for each of the participatingentities and municipalities. For Component 1with the GeneralPropertyRegistry(Registro General de la Propiedad, RGP): RGP was created by Article 230 of the Constitution. It is regulated by Legislative Decree 106 and by Article 1124of the Civil Code. Its main functions are to register, annotate, and cancel all acts and contractsrelatedto landand real estate propertiesand movable assets. RIC will notify the RGP about the areas that have been selected for the cadastral process to initiate the inter-institutionalcoordination. RIC will compile the registralinformationrelative to ownership and other rights over properties inscribed in the RGP, which will be used in the preparation of the property diagnostics, and the cadastral and legal analyses. Decree 41-2005 guarantees RIC free access to RGP records. After an area has been selected to undergo the cadastralprocess, RGP will notify RIC about any modification in its records. In the case of any incongruencein the registral records, RIC will deliver this informationto the RGP to verify the results of the analysis and make the respective amendments. After RIC has conducted the cadastral-legalanalysis and concludedwhether the property is regular or irregular, RGP will be 46 notified to makethe respectiveinscription inits records.The registralinscriptionwill include the cadastral classification code assigned by RIC and the property's territorial data that were collected in the field. RIC will be responsiblefor the administrationof information relatedto the physicaldescriptionof properties, and RGPwill continue to be responsiblefor the administration of information related to ownership and other rights, preventive annotations, limitations, and any other legal situation of the properties. For Component 1with the National Geographic Institute (InstitutoGeogrufico Nacional, IGN): IGN (Instituto Geografico Nacional Ing. Alfred0 Obiols Gomez) was created on December 28, 1964, by Executive Decree as a dependency of the Ministry of Public Works and Communications, renamed on January 1, 1998, as the Ministry of Public Works, Transport, Communicationsand Housing, and currently the Ministry of Communications,Infrastructureand Housing. IGN's regulations were approved by Governmental Accord No. 114-99. It is responsible for establishing and maintaining the country geodetic framework and basic topographic maps. RIC will coordinate activities with IGN for: (a) densification and use of the geodesic network, (b) drafting terms of reference for the execution and supervision of aerial photography and the generation of other photographic products, and (c) exchanging information referring to the identificationof departmentaland municipal boundaries. For Component 1with the LandFund(Fondo de Tierras,FONTIERRAS): FONTIERRAS was createdby Legislative Decree 24-99 (Ley del Fondo de Tierra) approvedby Congress on May 13, 1999, published in the Official Gazette N 77, Volume N CCLXI on June 16, 1999, as an autonomous and decentralized public institution, with the objective of (i) supporting access to land for poor people, and (ii) regularizing state lands that had been adjudicatedor inprocessof adjudication, incoordinationwith the rural developmentpolicy. RIC will coordinate with FONTIERRAS for the surveying of parcels in areas prone to adjudication and the regularizationof parcels under the responsibility of this agency. For Component 1with the National Council for ProtectedAreas (CONAP) and the State Reserve Control Office (Oficina de Control deAreas de Reserva del Estado, OCRET): CONAP: On February 7, 1989, Legislative Decree No. 4-89 (Ley de Areas Protegidas) created the GuatemalanSystemof ProtectedAreas (Sistema Guatemalteco deAreas Protegidas, SIGAP) modified by Decrees No. 18-89, 110-89, and 117-97. Article 1states that biological diversity is an integral part of the natural patrimony and therefore its conservation through the creation of officially established and adequately administered ProtectedAreas is of national interest. Article 59 creates the National Protected Areas Council (Consejo Nacional de Areas Protegidas, CONAP) with its own legalpersonality under the Presidencyof the Republic. CONAP is the superior body in charge of inventorying, managing, and coordinating the GuatemalaProtectedArea System(Sistema Guatemalteco deAreas Protegidas, SIGAP). 47 OCRET was created by Legislative Decree No. 126-97 (Ley Reguladora de las Areas de Reservas Territoriales del Estado de Guatemala) and is the superior body in charge of inventorying and managingthe country's public areas and reserves. RIC will coordinate with CONAP and OCRET all activities related to the demarcation of lands under their jurisdiction. For Component 1 with the History and Anthropology Institute (Instituto de Antropologia e Historia de Guatemala, IDAEH): IDAEHis a PublicAgency under the Ministry of Cultureand Sport that was createdon February 23, 1946,by Legislative Decree No. 22, which was amended in 1996(Leypara la Proteccibn del Patrimonio Cultural de la Nacidn). IDAEH is the official institution in charge of inventorying and managingthe areas of archaeologicalor cultural value, including the indigenousones. RIC will coordinate with IDAEH all activities related to the demarcation of lands under their competence. For Component 1with the SMSAA-CONTIERRA: SAA/SAA-CONTIERRA: The Secretaria de Asuntos Agrarios de la Presidencia de la Republica was created by ExecutiveDecree No. 136-2002dated April 29, 2002. Article 2 states that the following two agencies are transferred to SAA: (a) the Technical and Legal Unit of the Institutional Commission for the Development and Strengthening of Property Rights (Comisidn Institucional para el Desarrollo y Fortalecimiento de la Propiedad de la Tierra), and (b) the Presidential Dependency for Legal Assistance and Conflict Resolution on land issues (CONTIERRA). CONTIERRA was createdby Executive Decree No. 452-97, publishedinthe Official Gazette on June 25, 1997, and Stara operating on June 15, 1997, under the Private Secretariat of the Presidency. CONTIERRA is the official body for managing land conflict resolution and coordinating such activity with other national or local agencies, NGOs, and civil society stakeholders. RIC will coordinate with SAA-CONTIERRA on conflict resolution. SAA-CONTIERRA has already established two inter-institutional regularization tables (mesas de regularizacidn) in Izabal and Zacapa-Chiquimula. In Alta Verapaz, SAA-CONTIERRA is a member of an autonomousregularizationtable that includes municipal and traditional authorities and members from civil society. SAA-CONTIERRA also has a presence in Baja Verapaz, Escuintla, Sacatepequez, and PetCn. If an agreement is reached between the affected parties, SAA- CONTIERRA will notify RIC to issue a conciliatory act and include the agreedboundariesinthe field report. If no agreement is reached within 60 days, RIC will declare the property as irregular.'* '*SAA-CONTIERRAis not the only entity available to provide services for conflict resolution; a number of other public and private entities also provide these services. Decree 41-2005 states that community authorities can be 48 For Components land 2 with Municipalities: The Constitutiondesignatesthe Municipalities as autonomous. The Municipal Code (Legislative Decree No. 12-2002) regulates the municipalities, The municipal code gives power to municipalities to delimitate their boundaries and coordinate with local stakeholders in any mattersrelatedto municipal development, including land activities. RIC will coordinate with municipalities with respect to: (a) design and implementation of the social communication campaign and accompaniment of field activities and public viewing; and (b) demarcation of the municipal boundaries, in coordination with the surrounding municipalities. For Component 3 with the GeneralPropertyRegistry(RGP): RIC will work with the RGP to develop an integrated registry-cadastretechnological platform that will allow RIC and RGP to jointly input, analyze, and rectify parcel-level data in their databases usingthe respectiveidentification systems. Finally, for the executionof Component 1: RIC will establish eight Municipal Cluster Offices in zones undergoing the RIC cadastral process. Each cluster will cover five to eight municipalities, and will be composed of social, technical, and legal specialists. Their basic purpose i s to ensure that the project's objectives and resultsare achieved effectively and efficiently at the local level. The agency's key functions are: 0 Local-level inter-institutional coordination with government entities, municipalities, and communal organizations. Ensuring the execution of efforts and processes to establish land surveys, including the coordinationof local-level socialcommunicationprocesses. Execution of jointly formulated operating plans, implementing technical actions at the local level. The Project's Operational Manual will specify the duties and responsibilitiesof all institutions participating in project implementation, of RIC as' the executing agency, and of the above- mentioned agencies as participating agencies. Likewise, it will include the project's technical, legal, administrative, financial, procurement, and monitoringprocedures. FigureA6.1 illustrates the structureof RIC, including the UCP position indicatedwith a red dot. invited by the affected parties to participateas mediators, and indigenouspeopleshave the right to choose resolution mechanismsthat are traditionally usedby them. 49 .. 1............, !1 ...)., ...j CadastraX Zones ~ ~ ~ i cCluster Offices i p a ~ Local support offices Figure A6.2. External Coordination between RIC and the other Agencies RIC'sDirective Board Strategic Federationof Federationof guidelines, political support, verification for management,and institutionalization Federation of Civil of coordination mechanisms. Provide the AGREEMENTS institutional I support for the II L I 1 lnstitutinnalixatinn executionof the Project in their Coordination - Operationalplans, inter-institutional operational coordination, I supervision, and CoordinateProject * I Reonrts AttendProject COORDINATION - Executeaccording Demands to Action Plans monitoring, report I Activities to RIC's Directive Board through the IFieldoperations I EXECUTION 'Municipal Cluster Offices in Caclastral zones 'r r I I coordinationat the locallevel, implementation of cadastral activities, operative plans 51 Annex 7: FinancialManagementandDisbursementArrangements GUATEMALA:LANDADMINISTRATION I1PROJECT SummaryConclusionof FinancialManagementAssessment. On the basis of the assessment performed, the financial managementteam presentsthe following conclusions: The executingagency, the newly-createdRIC, will be responsiblefor managingthe fiduciary aspects of the proposedproject. Inessence, RIC is the re-embodiment of UTJ, which was the entity assignedby the Ministry of Agriculture to manage the LandAdministration Iproject financedby the World Bank. The fiduciary aspects of the proposedprojectwill be managedby RIC's Administrative and Finance department, through its ProjectsFinancial Unit (PFU). The fact that RIC has ongoingexperience managingprojectsfinancedby donors and the World Bank, for which it has basic administrativestructureand systemsinplace, puts it in a good position to take over the financial management functions of the proposedproject. However, the FMAssessment (FMA) has identified project-specific actions inorder to strengthenthe financial management (FM) capacity of RIC and enable to it to carry out the financial activities of the proposedproject effectively. Therefore, assumingthat RIC carries out the proposedaction plan presentedinthis assessment, it would have inplace adequate financial managementarrangements that meet the Bank's minimumfiduciary requirementsto manage the specific financial activities of the proposedproject. OrganizationalArrangements The loanborrower will be the Republic of Guatemala, representedby the Ministry of Finance (MINFIN).Overall projectcoordinationand administrationwill fall under the newly created Cadastral Information Registry (RIC). Within RIC, the Administrative and Finance department, through its Projects Financial Unit (PFU), will be directly responsiblefor financial management (FM)tasks for the proposedproject. These will basicallyinclude: (i) formulation and budget monitoring; (ii) cash flow management (including processingloanwithdrawal applications); (iii) maintenanceof accountingrecords; (iv) preparationof in-year and year-endfinancial reports; (v) administrationof underlying information systems; and (vi) arrangingfor executionof external audits. Disbursementand bank account managementresponsibilitieswill remainwithin RIC's Treasury Unit. The ProjectsFinancial Unit (PFU) is locatedwithin RIC's Administrative and Finance department and is responsiblefor the fiduciary aspects of all externally-financedprojects executedby RIC. PFUreportsto the Director of RIC's Administrative and Finance department and will coordinatewith the RIC's PCUresponsiblefor overseeingthe technical aspects of the proposedproject (see organizationalchart below). PFUhas a Coordinator andwill have dedicatedto the proposedproject, a Budget Officer, an Accountant and an Administrative Officer. 52 It is importantto note that PFUwill be staff mainly with personnelwho were responsible for the fiduciary aspects of the LandAdministration Iproject (IBRD Loan No.4415-GU), which had a Satisfactory Financial Managementrating inthe latest ISR. However, due to the entity's decision not to use UNDP as the funds administrator (UNDP was the funds administrator for the pervious LandAdministration project) andthe resulting increase infiduciary workload, it was agreedthat an additionalAccounting Officer would be added to the Treasury unit of RIC (within the UDAF). The personwill be dedicatedto the project, but be locatedwithin RIC's UDAF(inthe Treasury unit). BudgetPlanning BetweenJanuary and April of each year, RICwill prepareits investmentprogramfor the next year. The program shouldbe consistent with the budget policy providedby MINFINand be incorporatedinto the nationalpublic investmentsystem(SNIP). This budget, inturn, will be incorporatedby MINFIN into the general state budget for its submittalto Congressin September. On the basis of the approvedbudget, RIC will adjust as neededits project annualwork and procurementplan(POA), which will be reviewedby the Bank. AccountingandFinancialReporting Accounting PoliciesandProcedures.The main FMregulatory framework for the project will consist o f (i)the Organic Budget Law (LOP) and its Regulations, which norm the public sector FMsystems, (e.g., budget, accounting,treasury, andpublic credit); (ii) annualLaw of the the GeneralState Budget; and (iii) MINFIN's manualsbased uponthe cited laws. Project-specificFMarrangementsthat are not contemplatedinthe documents cited above will be documentedin a conciseFMsection of the project's operationalmanual. Among others, specific referencewill be made to: (i) the internalcontrols applicableto the project and (ii) formats of the project financial and audit reports. Information Systems. Incompliancewith internal regulations, RIC will operatefinancial transactions usingthe government-wideintegratedaccountingsystem (SICOIN). It will be the responsibilityof the PFUto maintainaccountingrecords specificto the project and ensure that project implementationinformation is recordedinto SICOIN, incoordinationwith the UDAFof RIC. RIC has a computerizedfinancial management system(designed specifically for the accountingof externally-fundedprojects), which was adequate for the accountingof the previous project(IBRD Loan No.4415-GU). However, some necessarymodifications were identified during the evaluationof the project, such as the ability to monitor expendituresbasedon project componentsand sub-components,the implementationof a procurementmodule, as well as the ability to producecertain financial reports automatically. The improvedsystemwill be implementedand operational beforethe effectivenessdate of the project. FinancialReports.On a quarterly basis, RIC will prepareand submit to the WB an unaudited interimfinancial report (formerly calledFMR) containing: (i)statement of sources and uses of a funds and cash balances(with expendituresclassified by subcomponent); (ii) a statement of budget executionper subcomponent(with expendituresclassified by the major budgetary 53 accounts); (iii)projectionreport; (iv) a designatedaccount activity statement (includinga copy a of the bank statement); (v) a summary statementof designatedaccount expenditures for contracts subject to prior review; (vi) a summary statementof designatedaccountexpendituresfor contractsnot subject to prior review; (vii) a physicalprogressreport; and (viii) a procurement report.The unauditedinterimfinancial reportwill be submittednot later than 45 days after the end of each quarter. The unauditedinterim financial reportwill be usedfor monitoringand disbursementpurposes. On an annual basis, RICwill prepareprojectfinancial statementsincluding cumulative figures, for the year and as of the end of that year, of the financial statementscited inthe previous paragraph.The financial statements will also includeexplanatorynotesinaccordancewith the Cash BasisInternationalPublic Sector AccountingStandard(IPSAS), and RIC's assertionthat loanfunds were usedinaccordance with the intendedpurposesas specified inthe Loan Agreement.These financial statements, once audited, will be submittedto the WB not later than six monthsafter the end of the Government'sfiscal year (whichequalsthe calendar year). The supportingdocumentationof the quarterly and annualfinancialstatementswill be maintainedinRIC's premises, and made easily accessibleto WB supervisionmissionsand to externalauditors. Flow of Funds WBDisbursementMethod. Note that since no new advances can be providedto Designated Accounts inGuatemalauntil the unrecoveredbalanceof a PHRDgrant from another project has been reimbursedto the World Bank, initially only the reimbursement and direct payment methodswill be availableto the project. Once this situationhas been resolvedand the reimbursementreceivedby the World Bank, loanproceedswould bewithdrawnby RIC using the advance methodwith supportingdocumentationbased, at least inthe beginning, on statement of expenditures(SOE) (the SOE methodwill be utilized for a period of six months to one year to enable the testing of the systemfor the preparationof IFRs). Once the preparationof IFRshas beentested and with the agreement of the World Bank, unauditedinterim financial reportsor IFRs(formerly calledFMRs) couldbe usedas supportingdocumentation. During implementation, RIC will: (i)maintain satisfactory FM arrangements; (ii)submit unaudited interim financial reports consistent with the agreed form, content and due date; and (iii) acceptableauditedfinancialstatementsbytheirduedate.IfRICdoesnotcontinueto submit meet these criteria, the supportingdocumentationrequirementswill be changed to statements of expendituresor records only (provided the WB does not suspend disbursementsbecause of non- compliancewith the obligation to maintainan adequate FMsystem). Other Procedures.The use of direct paymentwill probablybe neededfor the cadastraltechnical servicescontract. Under this modality,the Borrowerwill follow the guidelinesprovidedinthe DisbursementLetter. WBDesignatedAccount. Once the situationwith the reimbursementof the unrecoveredbalance from a PHRDgrant has beenresolved, MINFIN'sNationalTreasury Directorate(Treasury) would open and maintaina segregated account inUS Dollars inthe Bank of Guatemala 54 (BANGUAT), called a designatedaccount, to be used exclusivelyfor deposits and withdrawals of loanproceeds for eligibleexpenditures.After the conditions of effectivenesshave beenmet, and the designatedaccount has beenopened, RICwould submit its first disbursement requestto the WB, together with the expenditure and financingneedsforecast for the next six months. For subsequent withdrawals, RICwould submit the disbursementrequest, alongwith the appropriate documentation(SOEor IFR), the DAbank statement anda reconciliation of thisbankstatement.. Flow of Funds - I n General. RICwould open an operationalaccount ina commercialbank in local currency (Quetzales), funded on the basis of advances from the designatedaccount inorder to execute payments in localcurrency. RICwill recordexpendituresthrough a regularization process in SICOIN. WB Table ofLoanProceeds Expenditure Amount Loan % of Expendituresto Category (US$) be Financed 1.ComDonent 1 31.95 100% 2. Component 2 13.32 100% 3. Component3 7.76 100% 4. ComDonent 4 8.62 100% 5. Unallocated 0.65 Total 62.30 Audit Arrangements Internal Audit. Inthe courseof its regular internal audit activitiesvis-&vis the institutional budget,RIC's internal auditorsmay includeproject activities intheir annualwork plans. RIC will provide the WB with copies of internal audit reportscoveringproject activities and financial transactions. External Audit. As stated earlier, RICmanaged the previousLandAdministrationproject (IBRD LoanNo.4415-GU),for which no audit complianceissues have been identified. The audit reportsfor the above mentionedproject were receivedon time and presentedunqualified opinions. The annualproject financial statements preparedby RICwill be auditedfollowing International Standards on Auditing (ISA), by an independentfirm (or the Controller Generalof Accounts, subject to prior agreement with the Bank) and inaccordancewith terms of reference(TORS), bothacceptableto the WB. The audit opinion coveringproject financial statements will contain a referenceto the eligibility of expenditures. Inaddition,memorandaon internal controls("management letters") will beproducedon a semi- annualbasis. 55 The audit work described above canbe financedwith loanproceeds.RICwill arrange for the first externalaudit within three months after loaneffectiveness.Eachaudit engagement is expectedto cover at least two years. RiskAssessment Summary The FMrisk assessment for this project has been assessedat Low since financial managementof the project is concentratedinone agency (the CadastralInformationRegistryor RIC), which has prior experiencewith the fiduciary aspects of Bank-financedprojects and which hada SatisfactoryFinancialManagementratinginthe latest ISR. FinancialManagementAction Plan Entity Date 1.Finalizethe format of unauditedinterim RIC/WB Before financial reports(formerly calledFMRs). negotiations 2. Finalizethe FMsectionof the project RIC Before operationalmanual. negotiations 3. Finalizeaudit TORSand short list of RIC Before externalauditors. negotiations 4. Present a planfor the implementationof the RIC Before modifiedfinancial management system. negotiations 5. Modified financialmanagement system RIC Before implementedand operational. effectiveness 6. Contract the additional personneeded inthe RIC Before Treasurvunit of RIC. effectiveness 7. Contract externalauditors. I 3 monthsafter effectiveness WB FMSupervisionPlan.A WB FMSpecialistshouldperforma supervisionmissionprior to effectiveness to verify the implementationof the unit and the FMsystem. After effectiveness, the FMSpecialistmustreviewthe annualaudit reports, shouldreviewthe financial sectionsof the quarterly unauditedinterimfinancial reports, and shouldperformat least one supervision missionper year. 56 Annex 8: ProcurementArrangements GUATEMALA: LANDADMINISTRATION I1PROJECT A. General Procurementfor the proposedproject would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits," dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers," dated May 2004, and the provisions stipulated in the Legal Agreement. The general description of various items under different expenditure categories are described below. For each contract to be financed by the Adaptable Program Loan (APL), the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementationneeds and improvementsininstitutional capacity. Procurement of Works: Works procured under this project would include: establishment of RIC's municipal cluster offices (premises) in at least seven departments, strengthening of the institutional framework of the Registry of Cadastral Information (RIC), the General Property Registry (RGP), and other entities involved (remodeling or construction of offices), opening of cadastraloffices, and so forth. The procurementwill be done using the Bank's Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) and the National Standard Bidding Document (SBD) agreed with or satisfactory to the Bank. For Shopping the invitation document shall be agreed with or satisfactoryto the Bank. Procurement of Goods: Goods procured under this project would include: vehicles, motorcycles, computers, printers, office equipment, communication equipment, furniture, and hardware and software. To the extent possible, contracts will be grouped in bidding packages of more than US$250,000 and procured following ICB procedures using Bank-issued SBDs. Contracts with values below US$250,000 per contract may be procured using National Competitive Bidding (NCB) procedures using bidding documents agreed by the Bank. Contract for goods that cannot be grouped in larger bidding packages and estimated to cost below US$50,000 per contract may be procured using Shopping (National and International) proceduresbased on a model requestfor quotations satisfactoryto the Bank. Technical Services: Technical services under the project amount to approximately US$17.8 million, and these include land regularization activities covering areas such as geodesy and mapping, field data acquisition, and quality control activities. Land regularization contracts typically combine physical activities (that is, aerial photography, satellite imagery and/or field surveys) with complex logistics, legal tasks, and social actions (that is, analysis of existing land information, resolution of land-related conflicts, and social campaigns to secure residents' and local community cooperation). GoG and the Bank agreed to use the customized documents preparedunder the Land Administration IProject inEl Salvador. Contracts for technical services estimated to cost US$1million or more will be procured following ICB procedures using the customized document. Contracts estimated to cost between US$lOO,OOO and US$1 million may be procured following NCB procedures using the customized document. Contracts estimated to 57 cost below US$lOO,OOO may be procured under lump-sum fixed contracts awarded on the basis of quotations obtained from three qualified domestic contractors in response to a written invitation. Procurement of Nonconsulting Services: Nonconsulting services to be procured under the Project include: advertising in general (notifications, edicts, and so forth), design of radio campaigns, radio advertisements, national campaigns, and communication services in general. Contracts estimated to cost US$250,000 or more will be procured following ICB procedures. Contractswith values below US$250,000 may be procuredusing NCB proceduresusing bidding documents agreed by the Bank. Contracts estimated to cost below US$50,000 may be procured on the basis of quotations obtained from three qualified contractors in response to a written invitation. Selection of Consultants: Consulting services from firms and individuals required for the project include impact evaluation studies, financial and procurement audits, advisory services from individual consultants on land administration services, supervision, mapping, legal framework, land regularization and titling, supervision and monitoring of data transfer and linkage, staff, and so forth. Short lists of consultants for services estimated to cost less than US$200,000per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. In case of engaging Universities, the Project is going to finance scholarships paid directly to students. Probably there will be no direct contracting of Universidad de Sun Carlos de Guatemala and Universidad Rafael Landivar, since "subsidies" will be provided directly to students. Sometimesteachers from specific areas are going to be financed (including travel costs) to provide training, which will be considered as direct contracts. Operating Costs: Operating costs will be identified in the procurement plan. These costs must be reviewed and found acceptable to the Bank (they will include security services for regional premises,phone payments, Internet services, and so forth). Others: The procurement procedures and SBDs to be used for each procurement method, and model contracts for works and goods procured, will be included as annexes in the Project OperationalManual. 58 Summary communication) Consulting >loo QCBS (firms) 100L e50 QCBS/QBS/FB S/LCS/CQ/SSS f 50 LCS/CQ All processes for each contract above $100,000 and all single-source contracts; first two processes each calendar year for each selection method Consulting SectionV in All cases above US$50,000 and all single-source - (individual) the Guidelines contracts Direct Allcases regardlessof the amountsinvolved contracting Agreements Allcasesregardlessof the amountsinvolved policy and the parameters approved for Guatemala in October 2004. A transition plan for RIC project staff will be agreed upon prior to loan effectiveness. Some current civil servants will be identified as direct contractswithin the ProcurementPlan, and ajustification must be provided. The procurement team that was part of the Land Administration Project, Phase Iwas composed of a procurement officer andtwo assistants. An assessment of RIC's capacity to implement procurement actions for the project was carried out by Procurement Specialist Luis Prada in July 2006. The assessment reviewed the organizational structure for implementing the project and the interaction between the project's staff responsible for the Procurement Officer and RIC's relevant unit for administration and finance. The assessment reviewed the organizational structure for implementing the project, previous performance under LAP I,the volume and complexity of procurement actions for the new project, and the new arrangementsof the project procurementfunction. RIC, having achieved an acceptable level of capacity to implement procurement, will carry out through the Procurement and Institutional PurchaseUnit (Unidad deAdquisciones y de Compra Institutional, UACI) all procurementactionsexcept for the bigcontracts (ICB > US$l,OOO,OOO). The procurement function within RIC is staffed by only one person with knowledge of Bank procedures.The key issues and risks concerningprocurement for implementationof the project have been identified and include new procurement staff with no experience in Bank procedures. Due to the entity's decision not to use the United Nations Development Programme(UNDP) as procurement agent (UNDP was the funds administrator and procurement agent for the previous Land Administration Project), and the resulting increase in the fiduciary work, it was agreed to finance at least one Procurement Coordinator, and to finance one procurement assistant (by negotiations) and two other procurement assistants that need to be contracted during the first six months after effectiveness, in order to obtain the minimum capacity required to carry out all the procurement processes programmed (including at least 15 technical services contracts). In the case of technical services, RIC could negotiatewith UNDP to get their support on these specific activities. The cost of UNDP serviceswill be coveredby counterpart funds. The overall project risk for procurementisModest. ProcurementAction Plan TableA8.2. ProcurementActionPlan Action I Responsible 1 CompletionDate Entity 1.Havemonitoringsystem(physical andfinancial) in RIC 2 months after place effectiveness 2. The Sectionon Procurement-relatedissues within RIC By negotiations the OperationManualfor the project to be approvedby the Bank 60 3. Hire the procurement staff (1procurementofficer RIC By effectiveness and 1procurementassistant) 4. Prepareagreements betweenRIC and other RIC By negotiations concernedagencies if needed (including universities) 5. Projectlaunch RIC Immediately after effectiveness C. Procurement Plan The Borrower, at appraisal, developed a procurement plan for project implementation that provides the basis for the procurement methods. This plan will be reviewed by the Bank and agreed prior to negotiations. The Borrower has agreed to send a draft to be reviewed by September 18, 2006. It will be available in the project's database and in the Bank's external website after approval. The Procurement Plan will be updated in agreement with the Project Teamannually (preferably inDecemberof the previousyear of implementation) or as requiredto reflect the actual project implementationneeds and improvementsin institutional capacity. D.Frequency ofProcurement Supervision In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the ImplementingAgency has recommended yearly supervision missions to visit the field to carry out post-reviewof procurement actions. E.Details of the Procurement Arrangements Involving International Competition 1.Goods, Works,Technical Services, andNonconsultingServices (a) List of contract packages to be procuredfollowing ICB and direct contracting: 1 2 3 4 5 6 7 8 9 Ref. Contract Estimated Procure- P-Q Domestic Review Expected Comments No. (Description) cost ment Preference by Bank Bid- (US$) Method (yedno) (prior/post) Opening Date 1 Vehicles $982,500 ICB No Prior 2 Computer $2,773,44 ICB No Prior equipment, software, GPS equipment 5 Land $17,308,848 ICB No Prior regularization and cadastral (b) ICB contracts of Goods estimated to cost over US$250,000 per contract, ICB contracts of technical services estimated to cost over US$1million per contract, and all direct contracting will be subject to prior review by the Bank. 61 2. ConsultingServices (a) List of consultingassignmentswith short list of international firms. 1 1 2 3 4 5 6 7 Ref. Description of Estimated Selection Review Expected Comments No. Assignment cost Method by Bank Proposals (US$) (prior/post) Submission - Date 1 Diagnosticof $1,890,000 QCBS Prior properties 2 Land $200,000 QCBS Prior administration database 3 Cadastral $250,000 QCBS Prior applications (a) Most consultingassignmentsare estimatedto cost under US$200,000. (b) Consultancy services estimated to cost over US$200,000 for firms and US$50,000 for individual consultants per contract and all single-sourceselection of consultants (firms) or sole- source selectionof individual consultantswill be subject to prior Bank review. (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$200,000 per contract may be composed entirely of national consultantsinaccordance with the provisions of paragraph2.7 of the Consultant Guidelines. 62 Annex 9: Economicand FinancialAnalysis GUATEMALA: LANDADMINISTRATION I1PROJECT EconomicAnalysis Summary The project is the second phase of the long-term strategic program of land regularizationunder the PeaceAccord. The first phase of the program, as a pilot, was implementedinthe Department of Petento test the methodology and model. A comprehensiveeconomic analysiswas carried out for the first phase. For this analysis, the actual data from Phase Iin Peth are used as a reference to estimate the internalrate of return(IRR) and net present value (NPV). The results are shown inTable A9.1. PresentValue (US$) Benefits $364.4 million costs $103.5 million Net Benefit $263.4 million Net PresentValue $64.3 million IRR 40% Summary of BenefitsandCosts Phase I1of the project will cover 8 departments with 55 municipalities. The project areas cover 18 percent of the national territory, and about 280,000 rural and 62,000 urban parcels would be in the cadastral survey. The following economic analysis includes an estimate of benefits and costs, mainassumptions, methodologyapplied, and analysisof the results. Costs. The costs used in the economic analysis include all costs related to land regularization activities, titling, and registry and cadastre maintenance activities during the project implementation period (six years), and maintenance operations for 16 years, which will be carriedout by the Registry of CadastralInformation (RIC). The total project costs are $62.3 million, including direct and indirect costs. The direct costs include all activities related to land regularization: cadastral activities, titling, and registration, and transfer of data to the RIC system. The estimated average cost of conducting the cadastral surveying in a rural parcel is US$67 and in an urban parcel US$23. The indirect costs cover all other related activities including supporting policy reform and strengthening the legal and regulatory framework, strengtheningthe institutional capacity of RIC, and incrementaloperating costs of the project's administrative activities. The cadastral maintenance costs for the period between years 7 and 20 are estimated based on RIC's operationalcosts, which would be $1.9 million per year. Benefits. The main benefits expected to be generated by the project include: (a) improving the security of tenure and therefore increasing property value, (b) increasing private investment in land, (c) facilitating the integrationof land markets,(d) access to credits/loans, (e) incentives for 63 environmentalconservation,(f) reducingsocial conflict, and (g) assistinglocal governmentswith economic development planning. Improving security. As already shown inPetCn, farmers consider tenure security to be extremely important since land is the main source of a family's livelihood. It has been shown that more than 90 percent of farmers were willing to pay for titling. The same situationis expectedto occur inthe project areas under Phase11. Increasing land value. Land regularizationwill have an impact on land value. Three major types of benefits are associatedwith it: improved investment in land, marketability, and ability to use land as collateralfor credits/loans. Estimatingthe magnitudeof the expected increasedvalue for a national program is very complex and difficult because multiple factors, such as location, access to public service, size, value of construction, and use of property, would affect land value. Based on Phase I,it was estimated that the value of rural land (tierra nacional) increasedby 17 percent, and the value of urbanland (tierra municipal) increasedby 35 percent. Increasing private investment in land. As a result of improved tenure security, farmers are likely to make long-term investments to improve land productivity. These investments were made in land infrastructure, such as feeder roads, irrigation ditches, and new crop patterns (planting tree crops, improving pasture, and increasing the intensity of agricultural production). Since the process of titling and registration in Phase Iis still going on, only a few farmers have made investment in their land, the major activities of which were land infrastructure. This trend will undoubtedlycontinueduring implementationof Phase I1of the project. Facilitating integration of land markets. Land regularizationand titling provide landownerslegal certainty and formal rights of land trade with the proper documents. This means that titled land can be more easily exchanged in the formal land market, and landowners would obtain a significantly different price-ne that matches the quality of their regularizedland. According to the GuatemalanConstitution, the rights of private property are recognized and guaranteed, as are the inheritance rights of eligible people under the law. In 2004, 136 of 538 land lots were circulated in the land market (buying and selling) in PetCn. With registered land and titling, the transaction costswould also be reduced. Improving access to creditslloans. Experience in San Francisco, PetCn, has already shown that a very high percentage of titled properties were used as collateral for credits/loans. This implies incremental financing through formal and informal systems. However, the financing system must still overcome numerousweaknesses. Providing an incentive for environmental conservation. On-farm land regularization is likely to result in sustainable resource use by removing the incentive to clear forests from farmers' own land instead of retaining forest cover on their land, and increasingthe planting of tree crops. In addition, they would improve pasture for increasing the sustainability of livestock production. Off-farm, the project will help alleviate the environmental impact of existing migration flows in protectedareas by discouragingsettlement inthe core and multi-usezones of protectedareas and helping channel migration into less sensitive areas. 64 Reducing social conflict. Land disputes are one of the main causes of social conflict in Guatemala. Under the Peace Accord, the Government has established an institute, the Special Commission of Land Conflict Resolution (Dependencia Presidencial de Asistencia Legal y Resolucibn de Conflictos sobre la Tierra, SAA-CONTIERRA), to handle land conflict cases. Phase Ihas supported SAA-CONTIERRA in strengthening capacity and equipment. More than 900 cases (82 percent of 1,140 cases) were resolved by May 2005. Phase I1 will continue to support SAA-CONTIERRA. Land regularizationmakes land dispute cases transparent, and there are fewer cases over unclear ownership, propertyboundaries, and so forth. Assisting local government in economic planning. The cadastral result will assist local governments in economic development, especially in identifying those residential and commercial properties that receive municipal services. Municipal governments will generate revenue from collecting fees from selling urban land to residents and commercial entities, at US$O.Ol per square meter (/m2) to US$0.13/m2, and then from collecting property taxes. In addition, incremental income with legal certainty would be attractive to businesses, which eventually increase revenueto the municipal governmentfrom collecting taxes. Net Present Value (NPV) and Internal Rate of Return (IRR) The NPV of net economic benefits was calculated taking into consideration direct measurable benefits from incrementalland value and costs. The main assumptions were: (a) incremental land value in urban areas was 35 percent, and 20 percent in rural areas; (b) the costs were for information maintenance by RIC and for General Property Registry (RGP) in the operatingperiod after project completion; (c) about 40 percent of the cadastre was inprocessof titling; and (d) proportionalparcelsare distributedto the urbanand ruralpopulation. Actually, the experience of land value increases in Pet& has shown that the value of urban land parcels increases by 1,500 percent, and that the price of land increases from US$0.13/m2 to US$1.96/m2.However, the incremental value changes frequently from 20 percent to 50 percent of the original price inurbanareas, and 15 percent to 20 percent inrural areas. The discount rate applied in the analysis is 12 percent. The economic IRR was estimated at 40 percent, and NPV was estimatedat US$64.3million. Sensitivity Analysis The purpose of a sensitivity analysis is to test the variation of benefit and discount rate. The assumptions are: By reducing the assumed annual benefit by 10 percent and 20 percent, the IRR will decrease to 34 percent and 28 percent, respectively, and the NPV will decrease to US$51.1million andUS$38.8million, respectively. 65 0 By changingthe discount rate to 10 percent and 15 percent, the IRR remains unchanged, while the NPV will be US$79.9million and US$46.6 million, respectively. The results show that the project is profitable and is fairly robust in terms of changes in the assumption.The key assumptionis to changethe benefits. Financial Analysis of RIC Introduction A financial analysis of RIC was conducted to test the financial viability and sustainabilityof the new institution. The intention of the analysis was also to provide a reference for setting a reasonablerate of charges to the users of cadastral information. IncomeProjection The analysis assumed the generation of income through the issuance of cadastral certificates, estimated at US$2.50 per certificate. The price of US$2.50 was selected based on the internationalexperience that shows that land administrationservices should be available at a cost accessible to the general public. It is assumed that the demand for cadastral certificates would result from the effort to promote land regularization. Cost Projection The analysis included investment costs and operation costs for establishing RIC, which occur during project implementation(six years) and operation(16 years afterward). The investment costs included the establishment of RIC municipal cluster offices (8 offices), staff as consultants working on project implementation activities, operational costs, and integrating cadastral and registry information. Total investment costs were estimated at $27.25 million. The operational costs for maintaining the information included personnel, updating information, and other administrative costs. An annualtotal of $1.68 million was estimated. Financial Sustainability The financial analysis indicates that in order for RIC to cover the total costs of issuing certifications at a price of US$2.50, the institution would have to issue at least 672,000 certificates per year. A financial analysis of the marginal cost of issuing certificates would have been more appropriate to determine the financial sustainability of RIC. Nevertheless, the marginal cost is difficult to estimate because currently no existing market price is available as a reference. In addition, RIC cannot depend solely on the issuance of certificates as a source of revenue. The institution could diversify the products it could offer to the public for remuneration. This income could allow the institution to cover their operational costs. In conclusion, the financial sustainability of RIC needs to be tested during implementation, because there are insufficient data to conduct an assessment. 66 FiscalImpactAnalysis To analyze the fiscal impact under APL I, Government of Guatemalawould collect property- the related taxes on land. In Guatemala, the Real Property Tax (Impuesto Unico Sobre Inmuebles, IUSI) is the most important tax. The basisof the tax was propertyvalue assessedby the National Cadastre and Valuation Agency (DICABI) under the Ministry of Finance. However, before 1994 there were three problems: (a) low tax rates, (b) low effectiveness of tax collection, and (c) incomplete information. In 1995, tax administration started to be decentralized to municipal governments. In December 1997, a new IUSI law (Decree 122-97) was approved, with the intention of further strengthening the decentralization process and simplifying the calculation of the IUSI. The tax base was changed to the property's area instead of its value. Rates were determined on the basis of relative location (urbadrural) and use (residential, commercial, and industrial). The main fiscal impact would be at the municipal level, where the governments are expectedto collect fees and taxes. During Phase Iimplemented in Peth, the municipality collected fees of US$0.1/m2 to US$0.13/m2from selling urban land to the people, also collecting IUSI. The statistics data showed that during the 1980s, only two municipalities (Flores and San Benito) generated income from selling urban land, and total revenue for 10 years was Q55,lOO. From 1991to 1998, prior to project implementation, 6 municipalities generated income from the same source, and the total revenuegenerated for 8 years was Q431,425. From project implementation in 1999until 2003, all 12municipalities in Pet& sold urbanland, the total revenue of which for 7 years jumped to Q11,644,398. The incentive for municipal governments to collect taxes is that, based on the Constitution, the more revenue municipal governments generate, the higher the budget the central government allocates to the municipal government. According to DICABI, in 2005, Q307 million of tax revenue was generated, of which Q134 million, representing44 percent of the total, corresponded to the municipalities. Now more and more municipal governments are interestedincollecting and administeringthe IUSI. The Capital Municipality collects more than one-third of this revenue source at the national level. By May 2005, 8 municipal governments negotiated to collect the IUSI. By then, 121municipalities were pendingfor not collecting the IUSI, but by December2005, the number hadfallen to 104. The total area coveredby the 55 municipalities inPhase I1is 31,096 km2.Approximately 12%of this area is urbanland. It is expectedthat moremunicipal governmentswould apply to collect the IUSI. 67 Annex 10: SafeguardPolicyIssues GUATEMALA: LANDADMINISTRATION I1PROJECT EnvironmentalAnalysis 1. The Guatemala Land Administration I1Project is Phase I1of an Adaptable ProgramLoan (APL),intendedto improve land tenure security within the ruraland urban areas of Guatemala. This Phase I1project is intendedto extend the systematiccadastre and associated land titling and registry activities from the Department of Pet& (the main focus of the Phase Iproject) to the departments of Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepkquez, and Zacapa. The Land Administration I1project would primarily work through, and also strengthen, the new Registry of CadastralInformation (RIC), legally established in 2005. It would have the following four components. Component 1. Establishment of cadastral and land regularization processes in seven departments, including aerial photography, surveying of inter-municipal and other macro boundaries, parcel-level surveying and validation in urban and rural areas, demarcation of protected area boundary corners, conflict resolution services, titling of private individual and indigenouscommunity land parcels, and title registration. Component2. Maintenanceandupdatingof cadastralinformationwithin the RIC. Component 3. Legal and institutional strengthening, including strengthening the institutional framework of RIC, the General Property Registry (RGP), and other land-tenure- related entities including municipalities; legal, regulatory, and policy reforms related to land administration and the cadastral process; technological improvements in the cadastre-registry system; and developingan institutional strategy for RIC. Component 4. Project managementand monitoring and evaluation, including the project unit within RIC, monitoring systems, independent evaluations and audits, and inter-institutional coordination activities. 2. The only significant environmental impacts from this project would relate to promoting sustainablechanges inland use by project beneficiaries-specifically, the extent to which project activities would lead to the conservation of forests and other natural habitats, versus deforestation or other environmentally problematic land use practices. On balance, the overall environmental impact of this project is expected to be positive, due both to: (a) the generally positive environmental features of improved land tenure security; and (b) the Environmental Management Plan (EMP), which seeks to enhance the project's positive environmental impacts and to mitigate and monitor any negative ones. PositiveEnvironmentalImpacts 3. Longer-termLand Management.The increased land tenure security expected to result from the project's cadastre, titling, and registry activities is expected to encourage some rural landholders to invest in reforestation, forest management, agroforestry, perennial crops, and 68 other land uses with a relatively long-term payoff. These uses are almost always more environmentally friendly than those with a short-term payoff, such as annual field crops and pastures on deforested lands. Moreover, individuals and indigenous communities that receive secure land titles will become eligible to receive financial incentives for reforestation and forest conservation activities (particularly in the departments of Alta Verapaz, Baja Verapaz, and Izabal), under an ongoing program of Guatemala's National Forests Institute (NAB). The project-supporteddemarcation and titling of indigenous community lands (which, according to the Environmental Assessment [EA] Report, remain largely forested) also implies that these lands are more likely to remain under forest than if they were broken up into relatively small, individual parcels. 4. Reduced Deforestation to Prove Use and Possession, or from Land Invasions. In rural Guatemala, the traditional means of demonstratingpossession and use of a parcel of land has often been to remove the forest through cutting and burning. Conversely, forested land lacking demarcation and a clear owner is perceived as being available for settlement and clearing. Thus, landholders who receive legally secure titles as a result of the project-for lands with boundaries that have beenverified and physically demarcatedthrough the cadastre-will no longer perceive a need to clear their remaining forest to demonstrate their possession to other potential settlers. Lands with clear private ownership and demarcatedboundaries are also much less likely to be invaded or settled by outsiders. A case in point i s the mangrove forests of Guatemala's Pacific coast, which cannot legally be titled and (according to the EA report) are often viewed by local people as areas "without owners" that are thus available for unrestricted exploitation or clearing. 5. Facilitating Private ReserveEstablishment. Secure land tenurewith clear boundaries is also a de facto preconditionfor those landowners wishing to establish Private Natural Reserves, a special category of protected area that i s legally recognized by the National Council for Protected Areas (Consejo Nucionul de Areas Protegidus, CONAP), but privately owned and managed. According to the EA Report, some 50 private reserves exist today throughout the country, many of them conserving important remnants of threatened natural habitats. The project-supportedexpansion of land tenure security within seven Guatemalan departments may encouragefurther private reserveestablishment. 6. Appropriate Intensification of Agricultural Land Use. The project is intended to improve land tenure security through cadastre, titling, and registry activities; it might also indirectly lead to increased property taxation and increased access to capital by newly titled landowners. These changes are likely to encourage more intensive use of those lands with good agricultural potential, particularly in the Department of Escuintla (which has a relatively high percentage of Class Iand I1soils). Such lands are often underused as extensive cattle pastures, which provide relatively low employment and income per hectare. In the Guatemalan context, agricultural intensification on these (already deforested) lands could be environmentally beneficial by: (a) reducingthe land area needed to produce a given amount of food or income; and (b) providing additional employment to the rural poor, some of whom might otherwise migrateto forested areas as new settlers. 69 7. Empirical Evidence. Although there is still much to be learned about the relationship betweenland tenure security and land use changes, empiricalevidence suggests that, on balance, increasedland tenure security (through cadastre, titling, and registry) reduces deforestation. The EA Report cites a 2003 study by Loening and Markussen ("Pobreza, Deforestacih y sus Implicaciones para la Biodiversidad en Guatemala," in Econorniu, Sociedud y Territorio, Vol. IV, No. 14, pp. 279-315) that conducted regression analysis on rural Guatemalan lands and found reduced deforestationinareas with more secure land tenure (and inthose areas with higher educationlevels and more nonagriculturalemployment opportunities). Potential Adverse Environmental Impacts 8. Although the project's environmental impacts are expected to be, on balance, largely positive, there are some potential adverse environmentalimpacts (principally deforestation) that could result from improved land tenure security. Where feasible, these potential adverse impacts will be mitigatedand monitoredthrough the project's Environmental ManagementPlan. 9. Deforestation in Anticipation of the Cadastre. Some landholders might be inclined to accelerate their land clearing activities in advance of the arrival of the cadastre field teams, in order to demonstrate their occupation and use of the maximum possible area of land. To minimize this risk, the project will implement communication campaigns emphasizing that deforestation practices will not influence the final cadastre analysis of the property, and that deforestation is not sufficient to claim possession of, or obtain title to, a piece of land (details below). 10. Increased Land Clearing from Greater Access to Capital. By receiving secure land titles through the project, many landowners might obtain increased access to capital, resulting from: (a) improved access to credit (because the titled land could be used as collateral), and (b) the "wealth effect" due to the higher price of titled versus untitled land. It is reasonableto expect that some landowners would use part of their increased access to capital for clearing the remainingforest on their property to expandtheir area of pastureor cropland. 11. Increased Migration to Forest Frontier Areas. By increasing land tenure security and improving cadastre and registry services, the project might lead to increased dynamism in land markets, with more frequent land sales and purchases.As a result, some rural landownersmight be more inclined to sell their fully titled land for a profit, and use the proceeds to migrate and clear more land at the forest frontier (although relatively little unclaimed forested land, outside protectedareas, still remains availablefor settlement). EnvironmentalManagement Plan 12. The Environmental Management Plan (EMP) is intended to enhance the project's positive environmental impacts and prevent or mitigate the negative ones. The EMP is mainstreamed within the overall project (Components 1 and 4), rather than being a separate component. The activities outlined below in the EMP will be included within the project's Operational Manual (to be finalized prior to negotiations), and other project legal and technical documents, as appropriate. 70 13. Demarcation of Protected Area Boundary Corners. Existing protectedareas comprise nearly 17 percent of the combined land area of the project departments of Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepkquez, and Zacapa. Under Component 1,prior to the parcel-level cadastral survey, the project will delimitate and physically demarcate (with permanentmarkers called rnojones)the corners of the land boundaries of existing protected areas within the project departments. A social communicationcampaign will be conducted prior to the physical demarcation to inform the local population. In this manner, when the cadastre teams arrive, they (by noting, with their global positioning system [GPS] equipment, the vectors between the markers) will recognize the special status of those parcels located partially or entirely within protected areas; under existing Guatemalan law, lands within protected areas cannot be privately titled. The cadastreand resolutionof land tenure issues within the boundaries of Guatemalanprotectedareas is a desirablebut complex activity that is outside the scope of this particular project. The Operational Manual will specify the procedures to avoid potential disputeswhere privatelandholdings appear to overlap with the protectedarea boundaries. 14. Demarcation of Proposed Protected Areas. Inthe case of officially proposedprotected areas that have been identified by CONAP for protected status (listed in the EA Report), the project will delimitate the area and demarcate the boundary corners. The project will not support any cadastral, titling or regularization activities within these proposed protected areas. The EA Report identified seven proposed protected areas in the project area (called Areas de Proteccibn Especial). An up-to-date list of proposed protected areas has been included in the EA. The project activities will provide geographic delimitation for CONAP to complete the steps to officially declare the areas protected. Also, by excluding any cadastral and regularization activities in these areas, the project will avoid compromisingthe future conservationoptions for these areas, consistent with Guatemalan law (Article 90 of Decree 4-89). In this manner, the project will avoid activities that might lead to the degradationof existing and proposedprotected areas, which correspond to Critical Natural Habitats and Critical Forests under, respectively, the Bank'sNaturalHabitatsandForestspolicies. 15. Demarcation of Archaeological and other Sites of Cultural Significance. Guatemala is endowed with numerous archaeological sites, some of which are world-class tourist attractions, while many others remain poorly known or still undiscoveredby scientists. The EA Report confirms that all of the seven project departmentsharbor significant archaeologicalsites. Under Guatemalanlaw, archaeological sites are considered to be part of the public heritage, and are not supposed to be titled to private individuals. Accordingly, the project will promote the identification and demarcation of archaeological sites during the cadastre process, so that these sites will be separated from the lands eligible for titling to individuals. RIC will enter into (or renew, as needed) an operating agreement (convenio) with the Guatemalan Institute of Anthropology and History (IDAEH), to facilitate inter-institutional coordination during the cadastre process. This operating agreement will include: (a) the technical criteria for classifying which types of archaeologicalremains (or historical, paleontological, or other relics of cultural interest) merit recognition as significant (enough to warrant special land tenure status); and (b) consistent procedures to be followed in the field and subsequently in the offices of RIC and IDAEH. Since most of the cadastre fieldwork in Component 2 is expected to be contracted out, the bidding documents for this work will need to specify the presence of an adequate number of 71 qualified archaeologistsor other specialists (as needed) to work with the field teams during the cadastre process. 16. Delimitation of Territorial Reserves. Guatemalan law designates the 3-kilometer area adjacentto the ocean coastlineand 300 meters aroundthe lakes as state landunder the Regimeof Territorial Reserve. These areas are important for conservation because many mangroves grow in the coastline. Territorial reserves also constitute a potential source of economic revenue for their tourism potential. The project will finance the delimitation of the perimeter and conduct cadastral surveys within selected territorial reserves. RIC will enter into an agreement with the Office of Territorial Reserves (OCRET) for the execution of these activities. No titling or regularization is expected from the cadastral activities within the territorial reserves, because only concessionsare allowed in these areas. OCRET will use the cadastralinformationcollected by the project for better landuse planningwithin the selectedterritorial reserves. 17. Delineation of Natural Hazard Zones. Many areas in Guatemala are vulnerable to natural disasters, such as floods, coastal storms, earthquakes, and volcanic eruptions. In this regard, areas of highest risk for human dwellings include floodplains, wetlands, steep slopes, lavaflows, andbeaches. Currently, Guatemalanlaw does not prohibit the titling of urbanor other lands inareas of naturallyhigh risk, except for coastalzones within 3 kilometers of the high-tide line. As part of subcomponent 2.3 (provision of land administration services at the municipal level), the projectwill finance the formulationof 20 land use plans for selected municipalitiesin the project area. These plans will delineate the zones of very high risk on detailed maps (using existing data). This informationwill be disseminatedas part of the land use plans, and will thus be available for more informed decisionmakingby both the private and public sector (such as regardingwhere to locate new housingor infrastructure). 18. Social Communication for Environmental Sustainability. As discussed, the project's support of increased land tenure security is likely to reduce deforestation in net terms. Nonetheless,the projectwill implement a social communicationprogramthat will have as two of its objectives to: (a) minimize deforestation, and (b) promote environmentally sustainable behavior change as part of the cadastre and titling process.Inparticular: As part of the Social Communications Subcomponent of Component 1.1.2, the project will design and implement communication activities prior to the arrival of the cadastre teams to a particular area in order to inform the beneficiaries about the process and to reinforce the message that deforestation is neither necessary nor sufficient to claim possessionof, or obtaintitle to, a pieceof land. Appropriate communicationactivities and tools shouldbe designed, taking into considerationthe culture, language, and social codes of the communities and groups. Also, the communicationactivities implementedprior to the cadastral work must be viewed as the crucial starting point for building or strengthening trust in the overall process. These activities are intended, among other goals, to minimize any potentialinducedaccelerationof landclearingor forest cuttingby landholders seeking to demonstrate their occupation and use of the maximum possible area of land. Under Component 1, the project will support the preparation of simple written/visual/ audio materialsto be disseminatedthroughout the cadastralsurvey and titling process.An 72 analysis of the most appropriate material for the audiences will be conducted during project implementation. These materials would cover environmentaltopics related to the cadastral process and guaranteeing sustainable land tenure security, such as forest management (including INAB incentives), soil and water conservation, appropriate land use (corresponding with the Land Use PotentialStudy [Estudio de Cupacidad de Us0 de Tierra, ECUT] classifications), procedures to follow if archaeological relics are discovered, and/or integratedpest management. 19. Land Use Impact Monitoring. As noted, many of the linkages among improved land tenure security, changedlandholderbehavior, and beneficial or adverseenvironmentaleffects are impossibleto quantify a priori. Dueto these uncertainties, good monitoring and evaluation of the project's environmental effects (particularly concerning land use changes) are all the more important. Under Component 4, the project will support a study of sample rural project beneficiaries, to evaluate the land use changes and other environmental and socioeconomic impacts attributable to cadastre and titling activities (including deforestation, reforestation, and forest management; changes in cropland and pasture area and choice of crops; and relative frequency of post-titling land sales). Baseline data for the sample rural plots will be obtained duringYear 1of the project. Compliancewith SafeguardPolicies 20. The Guatemala LandAdministration I1Project is designed to comply fully with the letter and spirit of applicable World Bank SafeguardPolicies, as indicatedbelow. 21. Environmental Assessment (OP 4.01). This project is classified as Category B, consistent with other land administrationprojectsinthe LatinAmerica and CaribbeanRegion. In accordance with this classification, a free-standing Environmental Analysis Report has been prepared by RIC, reviewed by the Bank, and found to be satisfactory. In accordance with the Bank's Information Disclosure Policy (BP 17.50), copies of this report (inSpanish) are available on request from all RIC offices in Guatemala and at the Bank's InfoShop in Washington. The findings and relevant recommendations from this report are reflected in project design. Consistent with OP 4.01, project preparation included extensive public consultation (about the project's environmentaland other aspects) with a broad rangeof stakeholders, including national and local government entities, producer associations, indigenous and peasant organizations, and environmentaland other nongovernmentalorganizations(NGOs) (see the EA Report, pp. 93-95, for details). 22. NaturalHabitats(OP4.04) and Forests(OP4.36). Although it is impossibleto predict the project's site-specific induced impacts on forests and other natural habitats, the project's net effects are likely to be positive from a forest conservation standpoint, for the reasons noted above. The EA Report also identifies the areas within the project departments of Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, SacatepCquez, and Zacapa that qualify as Critical Natural Habitats (under OP 4.04) and Critical Forests (under OP 4.36); they comprise both (a) existing protectedareas (EA Report, pp. 25-30), and (b) officially proposedprotectedareas (EA, pp. 8-9 and 22-23). By demarcating the boundaries and conducting a topographical survey within these areas, the project will contribute to their improved legal recognition. To avoid 73 compromising their legal status from a conservationstandpoint, the project will not support any titling or regularizationactivities inthese areas. This approach is consistentwith Guatemalanlaw and with OPs 4.04 and 4.36, which prohibit Bank support for activities leading to the significant degradationof Critical NaturalHabitatsor Critical Forests. 23. Pest Management (OP 4.09). The project does not trigger the requirements of this policy. As noted, project-supportedincreased land tenure security is likely to result in the more intensive use of already deforested (mostly pasture) lands with good agricultural potential. Such intensification, while mostly positive from a social and environmental standpoint (especially as an alternativeto agricultural expansioninforested areas), is sometimes associatedwith increased pesticide use, dependingon the type of production system involved. However, the project is not expected to lead to substantially greater pesticide use on a departmental or national scale. Nonetheless, the project is expected to include information on safer and more environmentally responsible pesticide use and integrated pest management in the environmental information packetsthat would be providedto rurallandtitle recipients. 24. CulturalProperty (OPN 11.03). Under this project, the cadastre field teams will work with IDAEH to identify and demarcate significant archaeological sites, so that they will (in accordance with Guatemalan law) remain under public ownership, separated from the lands eligible for titling to individuals. The cadastre process is also expected to generate considerable new scientific knowledge about the location and characteristics of archaeologicalsites within the Guatemalan departments to be covered under the project. The project-supported titling and demarcationof indigenouscommunity landswill also be beneficial from a cultural standpoint, by helpingto maintainthe integrity of sacred sites for local indigenouspeoples. 25. Involuntary Resettlement (OP 4.12). The project will neither require nor support the physical displacement or relocation of any people. Furthermore, although the project will physically demarcatethe outer boundary comers of protected areas (to keep cadastral teams from inadvertently entering them), it will not carry out any activities within the protected areas, nor impose new restrictions on natural resource use upon the people living within or near them. Accordingly, the Bank's Involuntary Resettlement Policy is not triggered. However, during negotiations, it was agreed, that while the demarcation of Protected Areas and Proposed ProtectedAreas under the Project is not expected to result in the loss of access to resources by people living inor near such ProtectedAreas and ProposedProtectedAreas, in the event that any activity under the Project involving a Protected Area could lead to such a loss of access, RIC, prior to initiation of such activity, will develop a processframework, acceptableto the Bank, and thereafter carry out such activity inaccordancewith the terms of such processframework 26. Disputed Areas (OP 7.60). No activities will be carried out in the areas where the boundaries are not demarcated. Inareas where the boundariesare not demarcated, property rights and parcels limits will not be verified within 500 meters of the boundaries represented in the official documents and cartography. 74 Consultation and ParticipationProcess. The social assessment (SA) was carried out during project preparation. Among its main objectives are the following: (a) identify key stakeholders and establish an appropriate framework for their participation in the project selection, design, and implementation; (b) ensure that project objectives and incentives for change are acceptable to the range of people intended to benefit and that gender and other social differences are reflectedinproject design; (c) assess the socialimpact of investmentprojects and, where adverse or negative impacts are identified, determine how they can be overcome or at least substantially mitigated; (d) develop ability at the appropriate level to enable participation, resolve conflict, permit service delivery, and carry out mitigation measures as required. An Indigenous Peoples Development Plan (IPDP, see Annex 12) was also carried out during project preparation with the objective of ensuring that indigenous peoples will benefit from the Land Administration Project and to avoid or mitigate potentially adverse effects on indigenous peoplescaused by the project and its activities. The priority given to the indigenouspeoples is in line with the Constitutionof the Republic of Guatemala, InternationalLabor Organization(ILO) Article 169, the RIC Law, and the World Bank Operational Directive (OD 4.20) to ensure that the development process fosters respect for their dignity, cultural integrity, and human and property rights. Consulted People. The consultation and participation process included a wide variety of stakeholderssuch as the following; 0 Indigenous peoples and farmers. This social and ethnic group comprises those households and communities occupying, using, and/or possessing communal, municipal, and individual lands. The objective has been to include both genders as much as possible despite the fact that indigenous women, particularly, are not much involved in community leadership. Monolingualism and illiteracy are widespread among the poor, vulnerable, indigenous, and ruralfarmers, but are even more extensive among indigenous and rural women. Community-basedorganizations.Among these are includedelderly groups, community councils, assemblies, community leadersfrom all forms of local organizationsthat decide on landproperty rights and land management. Second- andThird-degreeOrganizations. Institutions. These involve central, autonomous, and decentralized institutions in both centraland local governments (municipalities). ConsultationProcess. The consultation process began in 2005 with the preparation of the SA and continued in 2006 in Septemberwith the first IPDP consultation phase. The second phase is scheduled from October to December 2006. For the SA, three consultation workshops were conducted on October and November 2005 in Cobin (Alta Verapaz), Rio Hondo (Zacapa), and Guatemala City to inform stakeholders in the project area about the project and the results of the social and environmental assessments. Participants included representatives from indigenous organizations, Municipal Development Councils (COCODES), and second- and third-tier organizationsinvolved inland issues. In addition, three consultation workshops were conducted 75 in November2005 in Morales (Izabal), Coban (Alta Verapaz), and San Lucas (Sacatepequez) to discuss the Projectwith representativesof indigenouscommunities and organizations. Systematic Participatory Process. It i s recommended that there be a systematic consultation and participatory process during project execution involving key stakeholders (households, community leaders of both genders, community based authorities; Municipalities). This process i s statedclearly in ILO Article 169,endorsedby Guatemala,and inArticle 31of the RIC LAW. Consulted indigenous peoples confirmed their interest in being consulted and included in all project execution phases from dissemination, survey, and identification to monitoring and evaluation. They expressed the position that each community will decide and exercise their rights regarding communal lands. During consultations carried out to prepare the IPDP, almost 100 percent of the consulted indigenous peoples manifested their preference to keep forestlands and water reserves under communal regimes. Some expressed their preference for keeping under communal regimes lands used for production and harvest, while others expressed their preference for desegregating these lands into private parcels. There seems to be a collective agreement regarding residential lands. The consulted population prefers to keep private their residential lands. Finally, consultedpeople clearly expressed the view that decisions must be taken by the entire community usingtheir own governanceand decisionmakingprocesses. Land Tenure. Inthe project area, 89 percent of surface i s private property and 11percent is held under other arrangements (rent, sharecropping, usufruct, occupation). The lack of reliable cadastral information in the country makes it difficult to estimate the surface area occupied by communal lands. The social assessment estimates that only 0.4 percent of surface inthe country i s under communal land regime (comunidades campesinas, comunidades agrarias, or comunidades indigenas), but this percentage could be significantly higher once lands traditionally occupied by indigenous and ladino communities are fully regularized. Communal lands can be classified as: (a) collective property if the community has a title registeredin RGP, and (b) collective-public possession if the communities use the land but it belongs to the municipality or State. Vulnerable Population. Poverty is generalized in the project area, with over 55 percent of the population living under the poverty line. Poverty rates are higher in the departments with the highest concentration of indigenouspopulation; for instance, 76 percent of the population inAlta Verapaz live in poverty and 37 percent live in extreme poverty. Sacatepequez is the department with the highest level of humandevelopment(65) and Alta Verapaz is the lowest (55). Alta Verapaz, Baja Verapaz, and Izabal are the departments with the highest number of land conflicts. Some of the conflicts in these three departments are related to the uprooting of communities or groups of settlers from estates owned by large landowners. There are a number of mechanismsfor conflict resolutionaccessible to the population inthe project area provided by government agencies, municipalities, and NGOs. CONTIERRA has helped establish three inter- institutional mesas (forums) for conflict resolutionwith the participation of government agencies and civil society. Also, some Municipalities use consuetudinary (customary) Maya Law as conflict resolutionmechanisms. 76 Annex 11:Legal and InstitutionalBackground GUATEMALA:LANDADMINISTRATIONI1PROJECT The 1985 Constitution and the 1963 Civil Code provide the overall legislative framework for land administration in Guatemala. The Constitution recognizes the right to private property (Article 39) and providesthe basis for the creation of a property registry (Article 230). The Civil Code sets forth the general legal principles on possession, use, and ownership rights over real property, includingland, and their registration. The 1996 Peace Accords and the Macro Law of the Peace Accords approved in 2005 contain several specifically land-related provisions. These include commitments relating to the establishment of a decentralizedcadastral-basedland registry, the creationof a CadastralAgency (2005 RIC Law), the creation of a Land Fund (1999 Land Fund Law), the creation of a specific agrarianjurisdiction (still pending), and the development of land conflict resolutionmechanisms (SAA-CONTIERRA). ThePropertyRegistry The creation of a real estate registry dates to 1877, when the Property and Mortgage Registry was established through Decree 175. The current registry system is regulated by Law 106 of 1963,which was incorporatedinthe Civil Code and which establishesthe norms and structure of the Registry. More recent reforms in the early 1980s, a new set of registry regulations in 1987 and 2005, and a variety of other legislation form the legal framework upon which the General Property Registry (RGP) operates. There is one central Registry in Guatemala City and another inQuetzaltenango. The purpose of the Registry, which is an autonomous institution under the Executive Branch, is to provide legal security to property holders by publicly recording their rights and interests. It is the institution responsiblefor the inscription, notation, and cancellation of all acts, contracts, and rights over real property. It is also responsiblefor keepingproperty records updated and accurate by tracking changes in ownership rights and other interests in land. Records are maintained accordingto the Folio Real system, which tracks transactionsas they relate to specific parcels of property. Guatemala's registry systemis declarativerather than constitutive: the Registry records rights but does not create them. For property rights to be enforceable against third parties, they must be recordedthrough presentationof a legal title. The Cadastre Although since 1940the Registry has requiredeach owner to provide a cadastral plan to register land transactions, until very recently, a cadastre organization as a technical component to the PropertyRegistryhadnot beenestablishedinGuatemala, and a current geographic cadastralmap has not been developed. To date, the National Geographic Institute (IGN) has been at the center of the mapping efforts. The focus of its work has been on the gathering of geographic information, which could then be usedto create accurate maps. On June 14, 2005, the Congress passed a new law (Decree 41-2005), creating the Registry of Cadastral Information (RIC), thereby fulfilling a key commitment of the Peace Accords. The new cadastre agency is an autonomousgovernment institution with a board of directors presided 77 over by the Ministry of Agriculture, and including representativesof the Property Registry, the IGN, and the association of municipalities, engineers, and lawyers. Its functions include the establishment, maintenance, and updating of the national cadastre through the gathering of the physical information on all parcels in the national territory. In addition, its responsibilities include providing assistance in the resolution of boundary-related land conflicts through conciliatory activities(see section on Conflict Resolution). Although the RIC and the Registry remain separate autonomous agencies with clearly separate functions-the management of a parcel's physical and legal information, respectively-the law requiresthe new cadastre agency to closely coordinate its activities with the Property Registry to ensure the provision and maintenance of updated and accurate basic registry-cadastre information for the country. Integrationis therefore expected at the data level and not (yet) at the organizational level. Coordinationis also requiredwith: (a) the IGN and the municipalities with regard to mapping and surveying activities; (b) the Land Fund created by the Peace Accords (FONTIERRAS) in those areas where the Fund is responsiblefor land tenure regularization; and (c) any other entity, such as the OCRET, IDAEH, and CONAP, which may have a specific mandaterelatedto cadastralactivities. Thenew law providesfor a detailedprocessfor the establishmentof the cadastre, including: (a) a preliminary diagnostic and intensive consultation and participatory process, (b) the carrying out of field surveys, (c) the analysis of the physical information gatheredduring the field activities to verify its consistency with the legal information contained in the Registry, and (d) a legal analysis to determine whether there are any irregularities in the surveyed parcel. When the cadastral field activities relate to land owned by or in possession of indigenous people, specific procedures that ensure the active participation of the beneficiaries and their organizations must be followed (Article 33b). Specifically, indigenous people who own or possess the land to be surveyed and their neighbors will participate in the process, with the support of the local authoritiesand organizations, andwill sign the document validating the parcel's boundaries. The law identifies two cases of standardirregularities (Article 38). Specifically, irregularities can arise from: (a) lack of registration in the Property Registry, and (b) inconsistency between the area as inscribed in the Registry and that surveyed during the field activities (although some exceptionsapply; see Article 38b). The inability to locate the parcel, and inconsistenciesbetween the title holder as recorded in the Registry and the title holder as identified during the cadastral activities, are considered special irregularities (Article 39), which are annotated in both the Cadastreand the Registry. However, with the exceptionof one case, the law does not provide for any solution to these irregularities(see sectionon LandTitling). Article 23 of the RIC Law gives an official definition of communal lands, and Article 65 of the law asks for specific regulationsfor the identification and certification of communal lands based on and consistent with the Guatemala Constitution and ILO Convention No. 169. Such regulationsare beingpreparedby the RIC. The 2002 Municipal Code identifies municipality responsibilities with regard to cadastre acitivities. Specifically, municipalities are responsible for establishing and maintaining municipal cadastres through the relevant municipal planning office, which is also responsible for 78 maintaining up-to-date geographic information for territorial planning purposes (Articles 35x, and 96c and 96i). Similarly, it is the responsibility of the representatives of the communities (alcaldias comunitarias) to cooperate in the surveying activities and updating of the municipal cadastre (Article 58e). Finally, the legal framework for identification and demarcation of protected areas (CONAP), territorial reserves(OCRET), and cultural or archaeologicalsites (IDAEH) is appropriate for the project. Land Titling From the 1960s through the 1980s, the Instituto Nacional de Transforrnacion Agraria (INTA) was the government agency primarily responsiblefor (rural) land titling and for distributing state land to state-organized peasant cooperatives. In 1999, the Land Fund (FONTIERRAS) was establishedby the Ley de Fondo de Tierras (Decree 24-99 and its Regulation 199-2000), with a twofold objective: (a) to purchase (rural) land from the State or on the open market and then facilitate the "transfer" of these lands to beneficiariesvia the extensionof low-interest loans and technical assistance, and (b) to regularize the tenure of those state lands transferred to the agrarianbeneficiariesand issue landtitles accordingly. Municipalities are responsiblefor titling urban areas that they own. They are also responsiblefor developing mechanisms for the use, conservation, and administration of the common lands (tierras comunes) that have traditionally been assigned to their administration (Article 109, Municipal Code). Municipal Councils are further responsible for approving requests for "supplementary title" (Article 16%). Since 1945, when Decree 70 was passed by the Government, it has been possible to obtain ownership of land through possession without having a formal title. In 1979, the rules for acquiring "supplementary title" (adverse possession) were reformed through the Ley de Titulacion Supletoria (Decree 49-79). This law was modified slightly in 1982 and again in 1985, but the basic legal requirementsandthe processby which a possessor of landwho lacks title may acquire ownership set forth inthe 1979legislation remainunchanged. Guatemala does not currently have a Land RegularizationLaw (Ley de Regularizacidn), which is supposed to address land tenure irregularities, especially those identified in the RIC Law (Articles 36, 38, and 39), and set forth the procedures to issue titles. As a temporary measure, and until the Land RegularizationLaw is drafted and approved, the RIC Law (Articles 68-72) gives the cadastre agency the mandate for titling ex officio those lands the only irregularity of which is lack of an existing registrationinthe RGP (titulacion especial). With regard to regularization and titling of indigenous lands, the Constitution (Article 67) recognizes special protection of indigenous community land, including both individual and communal ownership. Similarly, indigenous identity and rights were included in the agenda of the Peace Accords, through which the Government undertook a series of commitments to regularize indigenous land tenure, to guarantee the right of indigenous communities to participatein nationalresourcesmanagement, and to improve the legal protectionof the rights of indigenous communities. As a result of the Peace Accords, a joint commission of government 79 and indigenous representativeswas created to propose legal and administrative reforms relating to indigenous land rights. In addition, Guatemala is also a signatory of International Labor Organization (ILO) Convention No. 169 on Indigenous and Tribal Peoples. The RIC Law includes provision, through specific regulations under preparation, for the regularization of communal lands under certain circumstances, and requires that the process be consistent with Article 67 of the Constitution and ILO 169. A draft land regularization law, including the regularizationof indigenous lands, is being prepared by the GoG, which intends to consult and proposethe law for considerationby the Congress in2007. Conflict Resolution Guatemala faces a variety of disputes related to property ownership. This remains an important issue and is of particular relevance for the efficiency and long-term success of land registration efforts. Within the Guatemalanjudicial system, a land dispute can be resolved through: (a) the regular court system, (b) the parallel indigenous justice system, or (c) an alternative conflict resolution mechanism. Under Guatemalan law, most real property disputes are subject to the ordinary process before a civil tribunal, given that an agrarian tribunal has not yet been e~tab1ished.l~ In 1997, as a result of the Peace Accords, the Special Commission of Land Conflict Resolution (Dependencia Presidencial de Asistencia Legal y Resolucion de Confzictos sobre la Tierra, CONTIERRA) was created by GovernmentAgreement 45-97, to address conflicts relatedto land in Guatemala, through the provision of legal assistance and mediation. In 2004, CONTIERRA was transformed into the Secretaria de Asuntos Agrarios-CONTIERRA (SAA-CONTIERRA). The RIC Law provides for the cadastre agency to play a conciliatory role in coordination with the SAA-CONTIERRA when a dispute over land boundaries arises during the field survey activities (Article 41). If the conciliation efforts are not successful, the irregularity is recorded and the dispute will be subject to the regular court system. When indigenous peoples are part of the dispute, the indigenous justice system, which is a legally recognized noncodified system operatedby indigenousleaders, is applied. When a dispute involves one or more municipalities, the resolution procedure is determined by the Municipal Code. Specifically, conflicts related to the delimitation of boundaries between municipalities are addressed by the Ministerio de Gobernacidn, and finally by the President, who, ifdeemed necessary,will submit the issueto the Congress for final resolution. Conflicts of jurisdiction between communities within a municipality will be resolved through mediation of the Municipal Council. Alternative Conflict Resolution Mechanisms (MARCs) have, in recent years, played an important role. There exist two types of MARC mechanisms in Guatemala: those that are institutionalized and for which the Secretaria de Asuntos Agrarios is responsible, and those informal ones that have been developed and applied by a number of NGOs. Although these informal mechanisms have been fairly successful in solving land disputes, no mechanisms exist to legally recognize the settlements and record them into the Registry. In addition, a set of uniform criteria for resolutionof land conflicts does not yet exist. Rather, the criteria usedby the entities operating conflict resolution mechanisms are not consistent-either with those applied ~ 13Progesspreparingthe AgrarianTribunal Law, under the responsibility of the SupremeCourt, has beenslow. 80 by the Secretaria de Asuntos Agrarios or among themselves-thereby creating more insecurity and instability. The project will therefore help systematize and harmonizethese experiences, and thus help improvethe legalframework relatedto conflict resolution. Decentralization One of the most important results of Guatemala's contemporary sociopolitical process (1986/2000) is state decentralization. In line with constitutional provisions and the Peace Agreements, Guatemala is a multiethnic,multicultural, and multilingual nation that requires legal provisions to enable greater opportunities for participation and decisionmaking on issues of public interest incommunities. As stipulated by the Constitution, the country's municipalities are autonomous entities that regulate their operations in accordance with provisions of Decree 12-2002, approved by Congress, which contains the Municipal Code. This Code represents a substantial step forward on the subject of recognitionof local authorities, as indicatedinArticles 8, 66 clause 2, 162, 164, and 165, and is fully in line with the provisions of the RIC Law with regard to the participation of these authorities in the cadastral survey in areas with indigenous populations (Article 33 clause b) and in the conciliatory resolutionof controversiesby their own methods (Article 41). Under the cadastre process, municipalities will be directly involved in the following aspects (Article 50): Design of the socialcommunicationcampaign Delimitation of municipal boundaries Adjustment of municipal cadastredata to RIC regulations Establishmentof the cadastre Definition of the physicalclassificationof urbanand ruralparcels. Stemming from the General Decentralization Law contained in Decree 14-2002, which was approvedby Congress, legally organized communities have the right to participate in and make decisions on local public affairs, incoordinationwith the respectivemunicipality. The Law on Urban and Rural Development Councils, contained in Decree 11-2002,approvedby Congress, regulates these powers through the provisions established for Community Councils (Articles 13 and 14) which, as indicated, participate in the cadastral survey in areas with indigenouspopulations(Article 41 of the RIC Law). 81 Annex 12: IndigenousPeoplesDevelopmentPlan GUATEMALA:LANDADMINISTRATIONI1PROJECT The overall impact of the project on indigenous people is expected to be positive. The project, through fosteringthe processof improving land tenure security, will support the establishmentof operational, legal, and institutional bases to ensure that indigenous peoples and peasants' rights to landare respectedduring the cadastre process. 1.- IndigenousPeoples DevelopmentPlan Objectives. On the basis of the Social Assessment and on the consultationswith indigenous peoples' communities, the Borrower preparedan IPDP that sets out measures through which the Borrower will ensure that: (a) indigenous peoples affected by the project will receive culturally appropriate social and economic benefits; and (b) when potential adverse effects on indigenous people are identified, those adverse effects are avoided, minimized, mitigated and/or compensated. Design and executionof the IPDP specific actions is the responsibility of RIC, the implementing agency. Other participating agencies such as the Secretary of Agrarian Affairs, CONTIERRAS, FONTIERRAS and municipalities would have to follow the requirements of the IPDP. For that purpose each participating agency would sign an agreement with RIC where their role and responsibilitieswould be agreed on. Inpreparingthe IPDP, the Borrower,through RIC, consultedand communicatedwith indigenous peoples about: (a) their land tenure rights as established in the Constitution; the RIC Law, and the ILO article 169; (b) the World Bank Operational Directives on Indigenous Peoples 4:2014 (OD 4.20), Cultural Property 11.03, and NaturalHabitats 4.36; and (c) the objectives, scope and activities of the LandAdministration I1Project. Inthe context of this IPDP and as per OD 4.20, "Indigenous peoplesare best defined as groups which are traditionally regarded, and self-defined, as descendants of the original inhabitants of lands with which they share a strong, often spiritual bond." Indigenouspeoples are, and desire to be, culturally, socially and/or economically distinct from the dominant groups insociety. 11. Background.Guatemalais a multi-culturalmiddle-incomecountry wherein poverty is high - and deep. The country has remarkably unequal distributions of income, resources and opportunities particularly within indigenous peoples, farmers and vulnerable rural populations. About 61 percent of the population still lives in rural areas; in 2000 about 56 percent of all Guatemalans(and 76 percent of indigenouspeoples) lived inpoverty, and about 16 percent lived inextreme poverty. Guatemala's social indicators often fall below those of countrieswith lower per-capitaincomes. After the signing of the Peace Accords (1994-1996), Guatemala is still striving to create a more inclusive society and strengthenpublic institutions, including with regard to land tenure security. Land tenure insecurity has been and remains one of the key causes of poverty amongst 14OD 4.20 applies since Concept Reviewwas heldbeforeJuly 2005 82 Guatemala's indigenous and peasant populations and also one of the major sources of conflicts where landtenure is highly unequal. In 1997, the Judicial Technical Unit (UTJ-PROTIERRA) was created under the Ministry of Agriculture to carry out the cadastral process through the implementation of pilot projects, including the Land Administration Project Phase Iin the Department of Peten financed by the World Bank". Land AdministrationI1project (LAP 11):In 2005, the Government of Guatemala requested the cooperation of the World Bank to implement the LAP I1in 55 municipalities. The LAP I1 will be implemented by the RIC, the national Cadastral Information Registry, created by legislative decree in 2005. RIC took over UTJ functions to implement the cadastre nationwide and coordinate the activities for landtitling and registrationinthe country. The Land Administration I1Project development objective is to foster the process of achieving land tenure security in seven new Departments and one municipality in the Department of Quiche through the provision of efficient and accessible cadastral and land administration services. In the context of the project, cadastral and land administration services include a systematic diagnostic of beneficiaries, a communication campaign, mapping, verification of rights, delimitation of properties, field conflict resolution, notification of results, transfer of information into the cadastral registry, and titling and registrationof lands rights, as well as day- to-day integrated cadastral and property registry services (for example, individual title registration, cadastralcertificate emissions). The project will have four components: (a) cadastral and land regularization; (b) maintenance of cadastral information and municipal services; (c) legal reforms and institutional strengthening; and (d) project managementand monitoring and evaluation. The project will be implemented in a participatory manner to ensure broad participation of indigenous and non-indigenousbeneficiaries. In particular, the project will identify and develop methodologies to regularizeindigenous lands, including appropriate participatory proceduresand conflict resolution mechanisms, which are described in detail in the Action Plan and monitoring andevaluation system. 111. Beneficiaries - When the Spanish conquerors arrived, Guatemala was characterizedby a diverse socio-political and ethnic landscape. The Mayas were the original permanent inhabitants of this region. According to the linguistic experts, the origin of the Mayan language could be dated back to 7,000 years ago. The geographic isolation resultedin the development of a variety of languages: the proto-K'iche and Mam, and in the west, the proto-Q'anjob and proto-Tzeltal. The 30 languagesthat are currently spoken in Guatemaladerive from these two branches. 1.5The Guatemala Land Administration Phase Iwas approved by the World Bank's Boardin 1998. The expected closing date is March 2007. The Bank's contribution to the project is a loan of US$ 31million. 83 Guatemala was home of the K'iche, whose dominions reached their maximum expansion in the middle of the fifteenth century, extending from the Soconusco into the lowlands of the Pacific, until the highlands of what is today known as the Verapaces. During this time, the K'iche controlled about 25,000 squaredkilometers of territory and a population of about 1million. The Mayas Kaqchikeles and the Tz'utujiles split and formed their own respective states. The K'iche state extended from the north to the east, while the Tz'utujiles and the Kaqchikeles extended from the south to the east. The current total Guatemalan population is estimated in 11.2 millions16.According to the latest Census, the Mestizos or ladinos -- who are the result from the mix between Amerindian and Spanish/European -- account for 59.4 percent of the total population, while indigenous populations accountsfor 40.6 percent. There are 23 officially recognizedAmerindian languages, including Quiche, Cakchiquel, Kekchi, Mam, Garifuna, and Xinca. The K'iche represents 9.1 percent, Kaqchikel 8.4 percent, Mam 7.9 percent, Q'eqchi 6.3 percent, other Mayan 8.6 percent, indigenousnon-Mayan 0.2 percent and other 0.1 percent (2001 census). Interms of the language spoken, about 60 percent of the population is Spanish speaker and 40 percent speaks indigenous languages. In the project area, there are 2,595,884 inhabitants of which 43 percent are indigenous peoples. Main indigenous groups are Q'eqchi (790,000 people); Poqomchi (100,000 people); Achi (100,000 people); Kaqchiquel (104,000 people); Poqoman (30,000 people); and Chorti (45,000 people). The beneficiaries are rural indigenous and non-indigenous populations residing in the Departments of Alta Verapaz, Baja Verapaz, Izabal, Zacapa, Chiquimula, Escuintla, and Sacatepequez, and the Pachalummunicipality, locatedinthe Department of Quiche". Ethnically, the project geographic area includes: (a) 3 Departments with high percentage of indigenous populations such as Alta Verapaz (93 percent), Baja Verapaz (58 percent) y Sacatepkquez (41 percent); (b) 4 Departments with high proportion of ladinos or non-indigenous population such as Zacapa (99 percent), Escuintla (94 percent), Chiquimula (85 percent) and Izabal (77 percent); and (c) Pachalumgathers higherpercentageof ladinos(86 percent). Poverty. In general, indigenous peoples register lower social and economic indicators, even lower than the national, in areas such education, health and income. Departments with higher percentage of indigenous population show higher poverty rates. The Departments of Alta and Baja Verapaz show the higher extreme poverty rates, 41 and 23 percent of extreme poverty, respectively. The Departments with higher non-indigenous populations register lower poverty rates, such as Chiquimula and Escuintla, showing 7.0 and 5.3 percent of extreme poverty, respectively. 16InstitutoNacionalde Estadisticasand SEGEPLAN. Census 2002 17The municipalityof Pachalum,inthe Departmentof Quiche, is also includedin the project as it belongsto a cluster of municipalitieswith those locatedinthe adjacent departmentof Alta Verapaz. 84 Sacatepequez 248,019 84.2 15.9 41 59 36.1 5.3 Escuintla 538,746 47.7 52.3 06 94 47.6 7.8 Pachalum 7,655 14 86 Municipality Map of indigenouslanguagesinthe project area: Land tenure. According to the fourth National Agrarian Census, land tenure regimes include: (a) farmer's ownership: the farmer who works the land has a property title to it; (b) ownership: a property title exists; (c) rent: the farmer pays a fee or in nature to use the land; (d) "colonato": the farmer has the right to a pieceof the landfor its own use in exchange of labor in the owner's fields; (e) "usufructo": the land is given for use by the owner, but cannot be transferred; (f) 85 occupation: the land is used by others without the consent of the owner (this category includes those lands that hace beeninvaded)." In the project area 78 percent of properties for which some kind of land tenure regime is available is private property, namely 136,740 parcels. These represent 88.6 percent of the total territory, equivalent to 1,415,989 manzanas. Other land tenure regimes(rent, colonato, usufructo and occupation) account for 22 percent of total properties, namely 38,795 parcels, which represent 11.4 percent of the total territory (181,587 manzanas). Despite the fact that the National Agrarian Census identifies a number of categories of property legal regime, it however does not include the indigenous factor. As a result, specific information on indigenous peoples property tenure is not available. RIC will carry out, as one of its priorities, a specific assessment of communal lands and religious sites. Using secondary sources, the social and environmental assessments gathered some information on communal lands, presentedbelow. CommunalLands.Article 23, incise (y) of the RIC Law establishesthat "Communal Lands are those in property, possession or tenancy of indigenous or peasant communities as collective entities with or without legalentity. Inaddition, are part of these lands those propertiesregistered inthe nameof the State or inname of the Municipalities, which have traditionally possessed or have beenunder the communal regime." Communal lands are under two major tenure regimes: (a) collective property if the community has a title registeredin RGP, and (b) collective-public possession if the communities possess or use the land but it i s legally owned by the municipality or State. Also, communal lands can be found to a lesser degree in other types of land regimes such as private property, protected areas, and territorial reserves. Not all communal lands are solely used or occupied by indigenous peoples. These are also used or occupied by farmers and/or by both (indigenous and non- indigenouspeoples) simultaneously. In the project area the farmers legal status is available for 203, 278 parcels, representing 1,662,464 manzanas: 86 percent are individual producers (174,441 parcels), representing 77 percent of the total area (1,275,820 manzanas). According to the 2003 NationalAgrarian Census, 1.413 parcels, representing0.69 percent of total parcels and 0.41 percent of the total area (6,967 manzuizas) are under communal regime. Sociedad de hecho, cooperatives, sociedad de derecho, state lands account for 13.31percent of total parcels (27,426 parcels) and 22.59 percent of total area (379,677 munzanas). Communal Tenure. Previous studies report that in the project area there are approximately 97 municipal areas, 51 communal areas, and 9 state areas distributed in 58 municipalities. It is estimatedthat, Itotal, they represent 63,000 hectareslg. 18Estudio de Evaluaci6n de Impact0 Social. Proyectode Adrninistracion de Tierras 11. 2005, pp. 40-42. Plan de Acci6n Forestalpara Guatemala and Plan de Acci6n ForestalMaya. 86 Table 2. Distributionof municipal,communalandstate landsinthe Projectarea Source: Guatemala.LandAdministrationI1Project. EnvironmentalAnalysis The department with the greater extension of municipal, communal, and state lands i s Alta Verapaz, with an estimated 31,946 hectares, followed by Baja Verapaz with 18,365 hectares. These two departments represent about 70 percent of the territory in the project area, while Zacapa represent about 9 percent, Escuintla 4 percent, Izabal and Chiquimula 3 percent each, and Sacatepkquez 1percent. Of the 157 areas included in the project area, 62 percent are municipal lands, 32 percent are communal lands, and 6 percent are state lands; 28 percent of all these areas are located in Alta Verapaz, 26 percent in Sacatepkquez, 17 percent in Baja Veracruz, 15 percent in Zacapa, 6 percent each in Chiquimula and Izabal, and 3 percent in Escuintla. Porcentajeof comunallandper department inthe Project Area At least 30 sacred sites are located in the project area, 27 of which are of Mayan origin and 3 Garifunas. They are part of the following linguistic communities: Q'eqchi (20), Poqomchi (7), Achi (2), and Garifunas(3). These sites are used as ceremonialcenters. Indigenousspirituality is an essential part of the indigenousvision of the cosmos, as emphasizedin the PeaceAccords and other internationalinstruments. IV. Methodology - The Borrower used an integral methodological approach, which combined qualitative and quantitativedata, to plan the consultations for the preparationof the IPDP. Literature Review. Academic literature prepared by local and international scholars was reviewed. Review of lessons learned from the Land Administration Project Phase Iand other projects implemented by other donors and NGOs in Guatemala as well as other World Bank experiences in Land Administration Projects in Central America were carried out. Demographic and socioeconomic data and socioeconomic diagnosis of indigenous peoples' communities were also reviewed. Participatory Consultation Phases. The participatory consultation process began during the preparation of the Phase I.For the Phase 11, the consultation process began in 2005 with the preparation of the Social Assessment and continued in September, 2006 with a round of consultations to prepare the IPDP. Consultations with beneficiaries of indigenous peoples are expected to continue with an additional round scheduled from October to December 2006 to update information on communal lands and to review proposedregulations and proceduresbeing developed during project execution. These additional consultationswill help improve the project design throughout the process, learning from the experience acquired during project implementation, and permanently monitoringthe project impact on indigenouspeoples. Consultation Techniques. A combination of techniques was used, which included: (1) semi- structured interviews provided to key stakeholders such as municipal and community-based authorities, and to NGO and RIC personnel and consultants; (b) workshops held with direct beneficiaries including community leaders, community members of both gender, municipal authorities and judges; and (c) case studies illustrating land administration and tenure experiencesamongindigenouspeoples. Analysis. The IPDP includes a systematic analysis of the information gathered during the entire consultationprocessfrom 2005 to 2006. V.- MainFindings Definition of Communal Lands. According to consulted people, these lands are those where ownership and use rights are shared by the members of the community. Communal lands are such based on their form of management, possession, and use rather on the fact that they have 88 beenlegally registeredas communallands. Based on the findings of the field work, the following typology is identified: (a) Possession or tenure. Communal possession refers to the collective tenure of land, where a community (indigenous or nonindigenous)has customary rights and actual rights on a territory regardless of whether these rights are registered or not in the Property Registryinthe name of the community. (b) Administration.The administrationof communallands is a function of the following: (i) customary law; (ii) form of social organization; (iii) form of social capital; (iv) the the the form of communitariancohesion and (v) the form of social relations with external actors. (For more details on the typology please see the IPDP). (c) Land use. Lands are defined as communal when a community uses the soil, water and forest collectively. In the case of communal lands aimed at agricultural production, the land is worked individually. However, the rules for transferringthe land can be set by the community (JuntasDirectivas and/orAsociaciones Comunitarias). A variety of land uses can be developed, either independentlyor simultaneously, within the communal lands: Communal forests and water sources are indivisible. The members of the community have use rights and the obligation to ensure the maintenance of the resources. Consulted people requestedthat these resourcesremainunder communaltenure. Agricultural land.The majority of land for agricultural production has been subdivided among the households of the community. According to the consultations carried out, these lands are worked individually. In the majority of cases, these lands cannot be sold or transferred to outsiders. Findings from the field work reveal that the preference to maintainthese lands under individual or communaltenure varies amongcommunities. Residential land. The majority of people consulted expressed a preference for individual/propertytitles. (d) Cultural identity. Communal lands are a territorial space where processes of ethnic identity and social cohesion occur. The ethnic identity is observed in the management of specific areas for the development of religious/ritual and cultural activities. Innonindigenous communal landsprocesses of territorial identity andterritorial defense are also observed. Gender Participation. In most indigenous societies women's direct access to land through purchase or inheritance is often limited. Participation of women was limited during consultations. Without specific attention to gender inclusiveness,women may be excluded from the benefitsof land administration, management, and development schemes. ConsuetudinaryLaw. There is no uniqueconsuetudinarylaw. It varies amongcommunitiesand ethnic groups. 89 Conflict Resolution Mechanisms. Conflict resolution mechanisms vary among communities. Indigenous peoples' preference is that their conflict resolution mechanisms are respected and taken into account inproject execution. Local Forms of Organizations. There are indigenous, non-indigenous (farmers) and other organizationsgatheringboth indigenousandnonindigenouspeasants. Indigenous Forms of Organization. There are: (a) community based-organizations such as the Cornite de Anciunos (Elderly Committees). In some K'iche communities (Totonicapan) persists a pre-colonial organization named Parcialidudes, in charge of protecting forests, natural resourcesand land use. There are also the Cofrudias and the leadership of theAnciuno; (b) Non- Indigenous and' Ethnically Mixed Organizations. Among these are the cooperatives, local non-governmental organizations, and Community Development Councils (COCODES, CODEDES and COMUDES); and (c) National and RegionalCoordinating Organizationssuch as the "Coordinadora de OrganizacionesMaya de Guatemala" or Coordinadora Nacional Zndigena y Campesina (CONIC). Participation and inclusion of these organizations is explained in detail inthe ParticipatoryMonitoringandEvaluationSystem(SEP). Institutional and Organizational Arrangements. At the local level, some of the key institutions during project execution are: (a) Government institutions such as RIC local offices, municipalities, and COCODES; (b) Indigenous and non-indigenous traditional and community based organizations; and (c) regionalandnational organizations("coordinadoras"). VI.- PotentialAdverse Impacts a) Legal framework for the regularization of indigenous peoples' lands There is a risk that communal lands identified during the cadastral survey cannot be regularized inthe name of the indigenouspeoples.This riskcan be classifiedas follows: 0 Low risk. There is a low risk that communal lands owned by indigenous communities are not regularized, given that a title registeredin the Public Registry exists. These lands will be declared as regular by RIC and the Public Registry will be able to proceed with their registration. Medium risk. For those communal lands registered in the name of the state or the municipality, or whose only irregularity is the lack of registration in the Public Registry. Regulations establishing legal mechanisms to transfer ownership from the State or the municipality to the communities do not exist. These lands will be declaredas irregular by RIC until they are registered in the name of the indigenous communities following proceduresto be determined under new regulations. High risk. There is a high risk that communal lands currently subdivided into parcels and registeredinthe name of privatecitizens could not be regularized.A Land Regularization Law identifying the cases and mechanismsfor regularizationdoes not yet exist. b) Institutional capacity to dealwith indigenousissues 90 Currently, there is not enough institutional capacity within RIC and other participating agencies to handle and foster indigenous participation in project implementation. It is expected that conflicts could arise if RIC and other participating agencies do not have the adequate capacity to (a) properly communicate the project, (b) sufficiently foster the participation of indigenous people and; (c) identify indigenous claims and recognize consuetudinary laws that regulate indigenous rights to their lands. c) Indigenouspeoples' participation Due to lack of reliable information on indigenous peoples land tenure and an inventory of communal lands, the RIC will carry out an assessment of these lands, as one of its first activities, to ensure the p[articipation and inclusion of indigenous peoples. The participation of indigenous peoples in formal procedures to regularize land tenure has been limited, mainly due to social exclusion. Given the current asymmetry of information available to project beneficiaries, it is essential that the project promote a better communication toward and participation of all potential beneficiaries, including the marginalized groups who have traditionally less access to information andfewer spaces for participation than large land owners. d) Conflicts' increase In Guatemala, there are many conflicts that are derived from land tenure disputes. The cadastral process would face new and already existing irregularities in land ownership and tenure. Disputes can occur in the following cases: (a) within indigenous communities; (b) among indigenous communities; (c) between indigenous peoples and ladinos, including large land owners; and (d) between indigenous peoples and authorities (Municipal, RIC, etc).There is the risk that the existing institutional and local capacity for conflict resolution is not enough to handle the potential increase of cases resulting from irregularities. Also, there is the risk that consuetudinary conflict resolution mechanisms are not recognized as conflict resolution instruments, e) Sequencing of implementation There are some areas of Guatemala that historically have had more acute land conflicts than others. If RIC conducts the cadastral fieldwork in some of these areas before testing and validating its instruments, there is the risk that the project exacerbatessocial conflict and fails to recognizethe land rights of indigenous peoples. VII. Mitigation Measures - a) Legal framework for the regularizationof indigenouspeoples' lands The project will includethe following mitigation measures: 0 Support to the preparationof the General Regulations to the RIC Law, that provides the rules and proceduresfor, inter alia: (a) the special titling (titulacion especial) of lands by the RIC pursuant to chapter I1of title VI1 of the RIC Law; and (b) the inter-institutional 91 arrangement involved of the process of facilitating the regularization of lands, including, inter alia, communalland (tierras comunales). Support to the preparationof the Specific regulations for communal lands (article 65 of the RIC Law) that: (i) has been consulted with the peasant and indigenous communities in the Project Area; and (ii) forth the cadastral process that will be followed for sets identifying and defining communal lands (tierras comunales) in accordance with ILO 169, including, inter alia, the concept of possessionthat each community exhibits based on its ancestral form of possession;Comments to the draft Land Regularization Law for the regularization of the types of land described in Articles 36, 38 and 39 of the RIC Law;. Preparation of a methodological guide (Guia Metodoldgico) for documenting and systematizing the experiences of the cadastre, regularization and management of communal lands(tierras comunales) as specified inthe IPDP; b) Institutionalcapacity to deal with indigenousissues The RIC will establish a participatory evaluation system (sistema de evaluucion y monitoreo participativo or SEP) which will promote the participation of final beneficiaries, local, regional and national instances, including indigenous organizations, academia and civil society Organizations. To ensure that RIC has the capacity to benefit indigenous people in a culturally adequate way and that it respects their rights, the project will hire indigenous specialists for the implementationand monitoringof the IPDP. c) Indigenouspeople's participation To guaranty the appropriate inclusion and participation of indigenous peoples during the entire process, RIC will (a) implement a strategy of social communication based upon the characteristicsof each municipality; (b) consult indigenouscommunities before, during and after cadastral survey; (c) select and train cadastral technicians to carry out cadastral activities following the Manual or Guide, and; (d) provide legal assistance to indigenous communities during cadastral activities. This assistance could be executed by NGOs and other social organizations. d) Conflicts' increase To mitigate conflicts that could arise during cadastral activities the RIC would have to conduct the following activities: (a) prepare a socioeconomic diagnosis to identify conflict typology in each of the municipalities; (b) provide legal assistance to indigenous peoples communities during cadastral activities; (c) require the signature of all parties, non indigenous as well as indigenous, during the field survey to verify their participation and to confirm the agreement on the outcome of the field survey; (d) facilitate alternative mechanisms for conflict resolution and/or respecthecognizetraditional forms of conflict resolution; and (e) seek community approval for measuring and surveying within communal lands. The cadastral teams would certify conflict resolutionthrough the signature of all parties. As explainedinthe Action Plan,, RIC will work in 92 close collaborationwith civil society, government institutions and existing local mechanisms to allow peoples' participation ("mesas de dialogo", CODEDES, COCODES y COMUDES2'). . e) Sequencing of implementation As mentioned in the Action Plan, the project cadastral activities will be executed under a pilot strategy during the first two years of implementation, to refine the methodology designed in the methodological guide, and provide inputs into the reform to the existing regulatory framework. The project will generatelessonsand recommendationson how to scale up implementationinthe rest of the Departmentsincluded inLAP 11. VII. IndigenousPeoplesDevelopmentPlan - The IPDP action plan has the five following components to avoid, minimize, mitigate or compensate for the above mentionedpotentially adverse impacts. a) Improvement of the legal framework for the regularization of indigenous lands (US$1.5 millionapprox.) The Project will contribute to improving the legal framework for the regularizationof communal landsthrough (for more details see table 3): Disseminationof and training on the general regulationsfor the RIC Law; Advice, support for the consultations, dissemination and training on the specific regulationsfor the communallands. Support to the Commissionincharge of preparingthe draft Land RegularizationLaw. Preparation and dissemination of the Methodological Guide for documenting and systematizing the experiences of the cadastre, regularization and management of communal lands (tierras comunales) as specified inthe IPDP; b) Institutionalstrengthening(US$2 millionapprox.) Definitionof Roles andResponsibilities.Giventhe number of institutional agenciesthat will be involved in executing the project it is recommended to work on defining roles and responsibilities for each of the parties under: (a) a Subsidiary Agreement between the Government of Guatemala, as a borrower, and the RIC; (b) Participation Agreements between RIC and each the governmental participating institutions (FONTIERRAS, CONAP, RGP, SAA-CONTIERRAS, IDAEHand OCRET) and (c) Municipal Agreements. MainstreamIndigenousPeoples Participation.The institutional capacity of the implementing agency should be strengthened to ensure indigenous peoples participation in cadastral process. The following actions will be conducted: - Communal Lands Assessment: RIC will carry out an assessment of communal lands and religious sites. 20These are participatory local spaces created by the Decentralization Law. 93 - Participatory Evaluation and Monitoring: RIC will establish a participatory monitoring and evaluation system (SEP) to ensure the participation of beneficiaries, local, regional and national organizations and institutions, including indigenous communities, academia and civil society organizations. The system will have two modules: i.Monitoring:indicatorswillincludeinteralia:(1)numberofparcelssurveyed with indigenous occupants, (2) percentage of communal lands identified, (3) percentage of communal lands certified and registered, and; (4) percentage of participationof indigenouspeople. ii.Consultationandsocialauditing: thiswillprovidethesocialspacefor the participation of beneficiaries and key stakeholders in monitoring and evaluationactivities. Three levelsof participation have beenidentified: 1. Local level. Direct beneficiaries will participate in the steps for establishing the cadastre, with the support of the local organizations and institutions. 2. Municipal and regional level. Participation in the discussion on the progress of the implementationof the IPDP inthe Municipal Councils for Development(COMUDES). 3. National level. A participation space will be created within the Monitoring and Evaluation system of RIC to allow the participation of indigenous organizations and other civil society organizations in the - implementationof the IPDP. Operational level: RIC will finance under the project indigenous specialists for the implementationof the IPDP. The specialists will work in the following units: M&E, communication, field brigades, planning, process and strategy unit and in the legal andtechnical cadastralunits. c) Participativecadastralprocess (US$12 millionapprox.) The cadastral process will be implemented through a participatory framework that includes consultations with indigenous peoples before, during, and after the cadastral field survey. The project has provisionsto take into account traditional land regimes and consuetudinary practices to make sure that indigenous peopleshave their rights safeguardedand receivebenefits in a way culturally acceptable to them. The processwill include the following activities: - Social Analysis: Elaboration of socioeconomic assessments to collect specific information about each municipality to propose an appropriate strategy for each area where the cadastral survey will be conducted. The assessments will be carried out through a participatory methodology and will collect, inter alia, relevant ethnic, - linguistic, organizational, cultural, and land tenure information. Social Communication: Elaboration and implementation of a social communication strategy that takes into account the recommendations from the socioeconomic assessments to inform the population about the project. The project will make strategic alliances with NGOs and organizations with presence in the communities to assist in the dissemination. The communication strategy will also include training 94 activities to build the capacity of the indigenous communities on the land-related - legalframework. Cadastral Activities: The project will conduct an investigation of the existing land records (including individual and communal land regimes and religious/ceremonial sites) to identify any registered titles to indigenouscommunities. Then, it will conduct a cadastralfield survey to gather important information about each parcel. Inthe case of indigenous lands, the cadastre technicians will demarcate the outside boundaries. Only upon the explicit request of the communities, the project will conduct the cadastralsurvey within the communal lands. The information collected inthe records and the field will be analyzed in order to determine if a parcel is regular or irregular. Community members will have opportunities to participate during the cadastral survey to verify their land rights and certify the rights of their adjacent neighbors, and - duringthe public viewings to confirm that the analysisperformedby RIC is accurate. Cadastral Brigades: Selection and training of the people who will integrate the cadastral brigades to ensure that they speak the language of the community, possess knowledge of the traditional land tenure systems, and can carryout the survey in - accordance with the project's operationalmanual. Assistance to stakeholders: Provision of operational and legal assistance to ensure community members are well informed of the process and have their rights safeguarded. RIC social unit, NGOs and/or local organizations will provide this assistance to the communities. In this context, and according to article 33 of the RIC Law, the beneficiarieshave the right to be accompanied by technical or legal advisers that they consider suitable. d) Provision of specific Conflict Resolution Mechanisms (US$1million approx.) Provisionof alternative conflict resolutionmechanismsto treat the conflicts identified during the cadastral survey. The project will assist communities in conflict mediation. The indigenous communitieswill have the right to use their own traditional mechanismsto solve land disputes if that is their wishes. The project would also provide spaces and instrumentsfor conflict resolution which also inform beneficiaries and parties involved of their rights. To achieve that, RIC will work in close collaboration with SAA-CONTIERRAS and will use existing local mechanisms such as the "mesas de dialogo" with representation from indigenous communities and public institutions and the Municipal DevelopmentCouncils (CODEDES, COCODES y COMUDES). e) Designed of Sequenced Implementation Strategy Implementationof cadastral activities would be executed under a pilot strategy during the first two years of the Project to polish the methodology designed in the methodological guide and provide inputs to suggest reforms to the existing regulatory framework. During the first two years, the Project will carry out the systematic land survey in areas with low density of indigenous communities, in area of low conflict or in area where pilot cadastral activities had been carried out in the past. The project will generate lessons and recommendations for how to scale the process in all the Departments of the Project. 95 i 13 C 0 Annex 13: ProjectPreparationand Supervision GUATEMALA: LANDADMINISTRATION I1PROJECT Planned Actual PCNReview February 15,2005 February 10,2005 Initial PID to PIC March15,2005 March 24, 2005 Initial ISDS to PIC March 15,2005 April 1,2005 Appraisal September 30,2005 November 1,2006 Negotiations October 30,2005 November 10,2006 Board/RVPApproval November 30,2005 December 14,2006 PlannedDate of Effectiveness January 31,2006 June 1,2007 PlannedDate of Midterm Review January 2008 June 1,2010 PlannedClosingDate December2009 December 1,2013 Key institutionsresponsiblefor preparationof the project: RIC, under the leadership of its Executive Director, Ing. Luis Alberto Castafieda, and its InternationalCooperationDirector,Ing. Eddy Diaz, preparedthe project with inputsfrom several participatingagencies. Bankstaff andconsultantswho workedonthe project include: Name Title Unit Fredericde Dinechin Task Team Leader, Sr. Land LCSER Administration Specialist Jorge A. Mufioz FormerTTL, Sr. Land LCSER Administration Specialist GeorgeLedec LeadEcologist LCSEN FranciscoPich6n Sr. NaturalResource LCSER ManagementSpecialist Jorge Uquillas Sr. Sociologist LCSEO Mary LisbethGonzalez Sr. SocialScientist LCSES FernandoGaleana Junior ProfessionalAssociate LCSES ZhongTong Agricultural Economist LCSER MariaAlejandra Bouquet RuralDevelopmentSpecialist LCSER Anna Corsi LandAdministration LCSER Specialist Teresa Roncal OperationsAnalyst LCSER Jorge Kamine LegalCounsel LEGLA SolangeAlliali Sr. LegalCounsel LEGLA MartaMolares-Halberg LeadCounsel LEGLA Alberto Ninio LeadCounsel LEGEN Xiomara A. Morel Sr. FinanceOfficer LOAGl 99 Patriciade la FuenteHoyes Sr. Finance Officer LOAGl Gus Raposo FinanceAnalyst LOAGl ManuelVargas Sr. Financial Management LCOAA Specialist FabienneMroczka Financial Management LCOAA Specialist Keisgner De Jesus Alfaro Sr. ProcurementSpecialist LCSPT Luis Prada Sr. ProcurementSpecialist LCOPR Monica Lehnhoff ProcurementSpecialist LCOPR Neeta Sirur GuatemalaCountry Manager LCCGT Waleska Garcia-Corzo Country Economist LCCGT John Kellenberg Sector Leader LCSES Karla Chaman CommunicationsOfficer EXTCD Kettv Morales TeamAssistant LCSES EdgardoMosqueira Peer Reviewer LCSPS Lynn Holstein Peer Reviewer ECSSD James Smyle Peer Reviewer LCSER Victoria Stanley Peer Reviewer ECSSD Bankfunds expendedto date on project preparation: 1. Bankresources:$150,000 2. Trust funds: $493,000 3. Total: $643,000 EstimatedApproval and Supervisioncosts: 1. Remainingcoststo approval: $40,000 2. Estimatedannual supervisioncost: $95,000 100 Annex 14: Documentsinthe ProjectFile GUATEMALA:LANDADMINISTRATIONI1PROJECT eGovernment project document (Documento Oficial del Proyecto) eDetailedproject cost table eProcurementPlan eEnvironmentalAssessment e SocialAssessment e Economic and FinancialAnalysis e IndependentEvaluation of Phase I e IndigenousPeoplesDevelopmentPlan (Plan de ParticipacionIndigena) e Law of the CadastralInformationRegistry(Decree 41-2005) e LandFundLaw e PeaceAccords 101 Annex 15: Statementof Loansand Credits GUATEMALA:LANDADMINISTRATION I1PROJECT Difference between Expectedand Actual OriginalAmount in US$Millions Disbursements Project ID FY Pumose IBRD IDA SF GEF Cancel. Undisb. Ong. Frm. Rev'd PO55085 2003 GT SECOND RURALAND MAIN 46.70 0.00 0.00 0.00 0.00 46.23 14.53 0.00 ROADS PROJ. PO76853 2002 GT FinancialSector TA Loan 5.00 0.00 0.00 0.00 0.00 4.17 3.99 0.00 PO74530 2002 GT FinancialSector Adjustment Loan 150.00 0.00 0.00 0.00 0.00 50.00 50.00 0.00 PO66175 2002 GT INTEGRATEDFINANCIAL MNGT 29.75 0.00 0.00 0.00 0.00 20.18 8.59 0.00 I11-TA PO48652 2001 GT UNIVERSALIZATION OF BASIC 62.16 0.00 0.00 0.00 0.00 42.78 35.91 0.00 EDUCATION PO55084 2001 GT COMPETITIVENESSPROJECT 20.30 0.00 0.00 0.00 0.00 18.12 16.72 0.00 PO49616 1999 GT LANDADMINISTRATION (APL) 31.00 0.00 0.00 0.00 0.00 8.05 8.05 8.05 PO49386 1999 GT RECONSTRUCTION& LOCAL 30.00 0.00 0.00 0.00 0.00 14.40 14.40 0.00 DEV. PO47039 1999 GT JUDICIAL REFORM 33.00 0.00 0.00 0.00 0.00 12.00 12.00 0.00 P048655 1998 GT TAX ADMIN. TAL 28.20 0.00 0.00 0.00 0.00 14.80 14.80 0.70 PO35737 1998 GT RURAL & MAINROADS 66.70 0.00 0.00 0.00 0.00 17.39 17.39 0.00 Total: 535.61 0.00 0.00 0.00 0.00 280.92 202.08 8.75 GUATEMALA STATEMENT OF IFC's Heldand DisbursedPortfolio InMillionsof U.S. Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2003 CuscatlanGuatem 0.00 0.00 10.00 0.00 0.00 0.00 10.00 0.00 1994 Fabrigas 0.00 0.00 1.00 0.00 0.00 0.00 1.00 0.00 2000 Frutera 3.50 0.00 0.00 0.00 3.50 0.00 0.00 0.00 2002 GDO 14.26 0.00 0.00 11.45 14.26 0.00 0.00 11.45 2002 Interforest 6.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 La Fragua 12.63 0.00 0.00 0.00 12.63 0.00 0.00 0.00 2004 Montana 45.00 0.00 0.00 0.00 45.00 0.00 0.00 0.00 2002 Occidente 0.00 0.00 10.00 0.00 0.00 0.00 0.00 0.00 1997100 Orzunil 1.89 0.00 0.00 0.00 1.63 0.00 0.00 0.00 1996 Pantaleon 1.25 0.00 0.00 0.00 1.25 0.00 0.00 0.00 Total portfolio: 84.53 0.00 21.00 11.45 78.27 0.00 11.00 11.45 102 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pending commitment: 0.00 0.00 0.00 0.00 103 Annex 16: Country-at-a-Glance GUATEMALA: LANDADMINISTRATION I1PROJECT Latin Lower- POVERTY and SOCIAL America middle- Guatemala & Carib. income Development diamond* 2003 Population, midyear (millions) 12.3 534 2,655 Lifeexpectancy GNiper capita (Atlas method, US$) 19m 3,260 1,480 GNI (Atlas method, US$ billions) 23.5 1741 3,934 Average annual growth, 1997-03 Population (%) 2.6 15 0.9 Laborforce (?.A) 3.5 2.1 12 GNi Gross per primary Most recent estimate (latest year available, 1997-03) capita nrollment Poverty (96of populationbelownationalpovertyline) 56 Urbanpopulation (%of totalpopulation) 46 77 50 Lifeexpectancyatbirth (years) 65 71 69 Infant mortality (per looolive births) 36 28 32 Childmalnutrition (%ofchildren under5) 24 11 Access to improved water source Access to an improved watersource (%ofpopulation) 92 86 81 Illiteracy(56ofpopulationage 151) 30 11 m Gross primaryenrollment (SAofschool-age popularion) x)3 129 112 y--Guatemala Male m7 0 1 10 Lower-middle-incomegroup Female 99 126 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 1 GDP (US$ billions) Economic ratios* 9.1 11.4 23.3 24.7 Gross domestic investmentlGDP 111 i7.2 8.7 16.7 Exportsof goods andserviceslGDP I 0.0 7 . 7 16.5 16.3 Trade Gross domestic savings/GDP 9.5 8.9 7.4 5.1 Gross nationalSavingslGDP 8.6 m.7 14.6 12.4 Current account balancelGDP -2.5 -6.6 -5.1 -43 Interest paynentslGDP 1.0 0.8 0.6 0.6 savings Domestic Investment Total debtlGDP 20.2 28.0 20.1 B.8 Total debt serviceiexports '6.5 0.8 7.4 7.2 1 Presentvalue of debtlGDP 8.3 Presentvalue of debtiexports 82.3 indebtedness 1983-93 1993-03 2002 2003 2003-07 (averageannualgrowth) GDP 2.9 3.7 2.2 2.1 3.6 --Guatemala GDP percapita 0.3 1.0 -0.4 -0.5 0.7 Lowr-middle-incomegroup STRUCTURE of the ECONOMY 1983 1993 2002 2003 (% of GDP) Growth of investment end GDP (%) Agriculture 25.3 24.9 22.5 22.3 Industry 20.5 8.9 8.3 8.3 Manufacturing '6.9 14.5 12.8 t?.8 Services 54.2 55.3 58.2 58.5 Private consumption 82.9 84.8 85.0 90.0 Generalgovernmentconsumption 7.6 6.4 7.6 4.9 Imports of goods andservices 14.6 26.1 27.8 27.9 1983-93 1993-03 (averageannualgroWh) Agriculture 2.7 2.5 industry 2.7 3.5 Manufacturing 1.8 2.3 Services 3.0 4.2 Privateconsumption 2.9 3.8 Generalgovernment consumption 3.8 5.3 Gross domestic investment 6.1 5.9 Imports of goods and services 6.9 -----Exports -Inports 7.5 7.6 4.2 I 104 Guatemala ~ ~ PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices I (%change) 10 Consumer prices 45 lt8 8.4 5.3 8 Implicit GDP deflator 6.6 l4.5 8.0 5.8 6 4 Government finance 2 (%of GDP,includes currentgrants) 0 Currentrevenue 8.9 116 11.2 98 99 00 01 02 0 Currentbudget balance 0.5 3.O 2.1 Overallsurplusideficlt -2.0 -0.3 -1.6 -GDP defiaor -CPI TRADE 1983 1993 2002 2003 (US$ millions) Total exports (fob) 1,462 2,622 2,707 Coffee 267 262 Sugar 153 227 Manufactures 855 1,670 1,750 Total imports (cif) 2,599 6,078 6600 Food 452 1,496 Fueland energy 315 647 Capitalgoods 759 1,547 1,483 1 Export price index(895=iOO) 11 81 150 152 97 98 99 00 01 02 Import price index (895-00) 14 87 142 144 I I Exports elworts Terms of trade (1995=WO) 81 92 0 5 0 6 BALANCE of PAYMENTS 1983 1993 2002 2003 (US$ millions) Current account balance to GDP (%) Exports of goods andservices 1,n2 2,015 3,786 4,025 Imports of goods andservices 1,314 2,970 6,628 6,885 Resourcebalance .142 -954 -2,842 -2,860 Net income -10 - 0 7 -277 -350 Net currenttransfers 30 311 1,942 2,U6 Current account balance -225 -750 -1,V7 -1,074 Financingitems (net) 234 955 1,154 1,454 Changesinnet reserves - 0 -206 23 -380 Memo: Reserves includinggold (US$ millions) 232 600 2,287 2,667 Conversion rate (DEC,iocaNUS$) 1.0 5.6 7.8 7.9 EXTERNAL DEBT and RESOURCE FLOWS I 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstandinganddisbursed 1,824 3 , m 4,676 4,658 18RD 8 3 ne 400 428 IDA 0 0 0 0 A 428 Total debtservice 189 306 405 440 IBRD 27 56 36 37 IDA 0 0 0 0 Compositionof net resourceflows Official grants 22 83 152 F 585 D 1603 Official creditors 87 -40 157 -62 Privatecreditors 145 P -50 -48 Foreign direct investment 45 #3 1x) Portfolio equity 0 0 0 E 1,W9 World Bank program Commitments 73 52 238 30 A . IBRD E- Btlaterd Disbursements 20 1 83 45 B .IDA 0. OtMmiltilatetd F. Private Principal repayments 14 40 0 18 C-IMF G. Short-ter 105 IBRD 33413R1 GUATEMALA 91°W 90°W 89°W 88°W SELECTED CITIES AND TOWNS DEPARTMENT CAPITALS NATIONAL CAPITAL M E X I C O RIVERS GUATEMALA PAN AMERICAN HIGHWAY MAIN ROADS 18°N RAILROADS 18°N DEPARTMENT BOUNDARIES PaxbánPaxbán INTERNATIONAL BOUNDARIES 92°W Carmelita San Pedro P E T É N TikalTi El Naranjo El Naranjo Melchor Melchor de Mencos de Mencos L. Petén Itzá BELIZE 17°N 17°N Flores Flores Usumacinta opán La Libertad La Libertad M To M E X I C O Tuxtla Gutiérrez PasióSayaxché n Sayaxché Machaquilá Salinas Gulf San Luis San Luis of 16°N Cancuén Honduras 16°N cxáIn Sarstún Barillas Barillas Chiyú Modesto Modesto Lívingston Lívingston Méndez Méndez HUEHUETENANGOHUEHUETENANGO Puerto Puerto AL ALTA VERAPAZVERAPAZ nta Cruz Barrios Barrios Cahabón Cahabón SaIZABAL IZABAL QUICHQUICHÉ QUICHÉ Mts. Sierra de Selegua El Estor El Estor Chajul Chajul Chamá Cahabón L. de CobCobán Cobán Izabal Morales Morales Huehuetenango Huehuetenango Los Amates Los Amates SANSAN Sierra Negro Polochic de MARCOSMARCOS los Motagua BAJA VERAPAZ BAJA VERAPAZ Tajumulco ajumulco TOTONICAPANTOTONICAPAN Santa Cruz Santa Cruz Chuacús Salamá SalamSalamá Z A C A P A 15°N (4220 m) (4220 m) Del Quiché Del Quich Quiché ELEL San Marcos San Marcos Totonicapán otonicap otonicapán Motagua Zacapa Zacapa 15°N To PROGRESOPROGRESO To Tonalá S El Progresso Suchia i NQuetzaltenango GO e El Progreso El Progreso Quetzaltenango Sololá SololSololá ANGO GUATEMALAGUATEMALA Chiquimula Chiquimula et UETZATLLT rENAr SOLOLSOLOLÁ SOLOLÁ a CHIQUIMULACHIQUIMULA MazatenangoL.Atitlan M ALTENANGO TENChimaltenango Chimaltenango QRetalhuleu GUATEMALAGUATEMALA Jalapa Jalapa Esquipulas Esquipulas HONDURAS Retalhuleu Mazatenango M SACATE-SACATE- Antigua Antigua JALAP JALAPA Ocós a CHI CHIMAL PEQUEZPEQUEZ Guatemala Guatemala d RETALHULEU RETALHULEU Cuilapa Cuilapa Jutiapa Jutiapa Champerico SUCHITEPEQUEZSUCHITEPEQUEZ r e Escuintla Escuintla SANT SANTA JUTIAP JUTIAPA ESCUINTLAESCUINTLA ROSAROSA 14°N 14°N Sipacate San José EL SALVADOR EL SAL ADOR Las Lisas 0 20 40 60 Kilometers To La Unión 0 10 20 30 40 50 Miles To La Unión This map was produced by the Map Design Unit of The World Bank. PACIFIC OCEAN The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any 13°N endorsement or acceptance of such boundaries. 13°N 92°W 91°W 90°W 89°W 88°W NOVEMBER 2006