Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-44150) ON A LOAN IN THE AMOUNT OF US$31.

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-44150) Sustainable Development Department Central America Country Management Unit Latin America and the Caribbean Region ON A LOAN IN THE AMOUNT OF US$31.0 MILLION TO THE REPUBLIC OF GUATEMALA FOR A LAND ADMINISTRATION PROJECT SEPTEMBER 28, 2007 Report No: ICR

2 CURRENCY EQUIVALENTS (Exchange Rate Effective March, 2007) Currency Unit: Quetzal 1.00 Q. = US$ 0.13 US$1.00 = 7.75 Q. FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CONAP National Council of Protected Areas (Consejo Nacional de Áreas Protegidas) CONTIERRA Presidential Commission for the Resolution of Land Conflicts (Comisión Presidencial para la Resolución de Conflictos de Tierra) ERR Economic Rate of Return FONTIERRAS Land Fund (Fondo de Tierras) GTZ German Society for Technical Cooperation IBRD International Bank for Reconstruction and Development IDAEH Anthropology and History Institute (Instituto de Antropología e Historia) IDB Inter-American Development Bank IGN National Geographic Institute (Instituto Geográfico Nacional) INAB Forest National Institute (Instituto Nacional de Bosques) INTA National Institute for Agrarian Transformation IRR Internal Rate of Return IUSI Real property tax KfW German Institute for Technical Cooperation M&E Monitoring and Evaluation MARN Ministry of Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales) MTR Midterm Review NGO Nongovernmental organization NPV Net Present Value PAD Project Appraisal Document PDO Project Development Objective PPF Project Preparation Facility PROTIERRA Inter-institutional Commission for the Strengthening and Development of Land Property Rights (Comisión Interinstitucional para el Desarrollo y Fortalecimiento de la Propiedad de la Tierra) QAG Quality Assessment Group QER Quality Enhancement Review RECTA (Red Centroamericana en Administración de Tierras) RGP General Property Registry (Registro General de la Propiedad) RIC Cadastral Information Registry (Registro de Información Catastral) SAA Secretary of Agrarian Affairs (Secretaría de Asuntos Agrarios) UNDP United Nations Development Programme

3 USAID UTJ VAP U.S. Agency for International Development PROTIERRAS Technical and Legal Unit (Unidad Técnico Jurídica) Apostolic Vicariate of Petén (Vicariato Apostólico del Petén) Vice President: Pamela Cox Country Director: Jane Armitage Sector Manager: Ethel Sennhauser Project Team Leader: Jorge A. Muñoz ICR Team Leader: Zhong Tong

4 Guatemala Land Administration Project CONTENTS Data Sheet A. Basic Information... v B. Key Dates... v C. Ratings Summary... v D. Sector and Theme Codes... vi E. Bank Staff... vi F. Results Framework Analysis... vii G. Ratings of Project Performance in ISRs... x H. Restructuring (if any)... x I. Disbursement Profile... xi 1. Project Context, Development Objectives, and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Outputs by Component Annex 3. Economic and Financial Analysis and Fiscal Impact Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Beneficiary Survey Results Annex 6. Borrower s Comments on Draft ICR Annex 7. List of Supporting Documents MAP

5 A. Basic Information Country: Guatemala Project Name: Land Administration Project Project ID: P L/C/TF Number(s): IBRD ICR Date: 09/28/2007 ICR Type: Core ICR Lending Instrument: APL Borrower: Original Total Commitment: Environmental Category: B Implementing Agencies: Registro de Información Catastral (RIC) Cofinanciers and Other External Partners: B. Key Dates REPUBLIC OF GUATEMALA USD 31.0M Disbursed Amount: USD 29.9M Process Date Process Original Date Revised / Actual Date(s) Concept Review: 06/18/1997 Effectiveness: 07/26/ /26/2000 Appraisal: 05/26/1998 Restructuring(s): Approval: 12/03/1998 Mid-term Review: 10/23/2003 Closing: 06/30/ /31/2007 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Moderately Satisfactory Moderate Moderately Satisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Overall Borrower Moderately Satisfactory Performance: Performance: Moderately Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Project No Quality at Entry Satisfactory Rating

6 at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: No Satisfactory (QEA): Quality of Supervision (QSA): None D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 96 General agriculture, fishing and forestry sector 100 Sub-national government administration 4 Theme Code (Primary/Secondary) Decentralization Secondary Not Applicable Land administration and management Primary Primary Law reform Primary Primary Municipal governance and institution building Personal and property rights E. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox Shahid Javed Burki Country Director: Jane Armitage Donna Dowsett-Coirolo Secondary Primary Sector Manager: Ethel Sennhauser Maritta R. V. B. Koch-Weser Project Team Leader: Jorge A. Muñoz Cora Melania Shaw ICR Team Leader: ICR Primary Author: Zhong Tong with Fernando Galeana Julia Wolf (FAO), Zhong Tong, Jorge A. Munoz

7 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) Increase legal security of land tenure in El Petén Department. Strengthen the legal and institutional framework for land registry and cadastre services in El Petén. Revised Project Development Objectives (as approved by original approving authority) No. (a) PDO Indicator(s) Indicator Indicator 1 : Value quantitative or Qualitative) Date achieved Comments (incl. % achievement) Indicator 2 : Value quantitative or Qualitative) Date achieved Comments (incl. % achievement) Baseline Value Original Target Values (from approval documents) Passage of law modernizing land rights in El Petén Old Petén law and INTA law n/a Formally Revised Target Values Actual Value Achieved at Completion or Target Years FONTIERRAS law FONTIERRAS passed in May operating in a 1999, regulations timely manner. passed in May Law May 1999, 03/31/2007 Regulations, May 2000 Fully achieved, law thoroughly modernizes land property rights in Guatemala (100%). Passage of law establishing cadastral institutional framework and formalizing cadastral procedures Law of the Registry Cadastre Law of Cadastral enacted, new Information (41- institution 2005) enacted in No law or institution n/a created, and August exists cadastral Publication of regulations cadastral published. regulations expected in August 2005, Dec. 2005, Regulations 03/31/2007 awaiting approval 95% achieved. RIC Law establishes new cadastral legal and institutional framework for Guatemala. RIC fully functional since December Regulations are awaiting approval, expected December 2007.

8 Indicator 3 : Value quantitative or Qualitative) Establishment of an integrated institutional structure between the cadastre and registry, particularly for El Petén Agreement Technical reached committee between between RIC cadastre and No such link exists n/a and RGP to registry established. establish Development of common technical platform technical will occur during platform. Phase II. Date achieved Feb /31/2007 Comments (incl. % achievement) Partially achieved (70%). Agreement between RIC and RGP reached. Technical teams have been working since 2005, but no joint proposal has been approved yet. Indicator 4 : Opening of Registry office in El Petén Value quantitative or Qualitative) Date achieved Comments (incl. % achievement) Indicator 5 : Value quantitative or Qualitative) Date achieved Comments (incl. % achievement) No Registry office exists in El Petén Fully achieved, early on (100%). 1 office (5 staff) Registry office open and fully operational Registry office is open and fully operational. RGP will continue to finance the office. Open May 1999, fully 03/31/2007 oper. Jan 2000 Land conflicts resolved by CONTIERRA, as percentage of cases submitted (urban, rural) 90% (urban) 78% (urban) and 0, 0 n/a and 90% 79% (rural) (rural) Periodically 03/31/2007 reported Achieved satisfactorily. At project closing, CONTIERRA met 87% (urban) and 88% (rural) of targets. (b) Intermediate Outcome Indicator(s) Indicator Indicator 1 : Value (quantitative or Qualitative) Date achieved Original Target Values (from Baseline Value approval documents) Area covered with ortho-photos (km2) Formally Revised Target Values Actual Value Achieved at Completion or Target Years 0 35,500 km2 35,000 km2 36,000 km2 Geodetic Network in 03/31/2007

9 Comments (incl. % achievement) Indicator 2 : Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Indicator 3 : Value (quantitative or Qualitative) Date achieved Fully achieved (103%) May 2004, ortho-photos & cartography in Dec Cadastral surveying of national "rural" lands in hectares (area titled) 0 11,400 km2 650,000 ha 723,983 ha surveyed and surveyed and 325,000 ha 29,889 ha titled. titled. Surveyed in March 2007, Titled, not 03/31/2007 achieved Partially achieved (60% overall). 111% of target for surveyed lands achieved (S rating) but only 9% of titling (U). Cadastral surveying of municipal "urban" lands in hectares (area titled and registered) 67,706 parcels surveyed and 0 12 areas 28,747 parcels 50,000 parcels titled and surveyed and registered. Plus 15,000 parcels 5,046 parcels titled and surveyed outside El registered Petén (in Bartolomé de las Casas, Alta Verapaz) Surveyed Feb/ 2004, Titled Sep. 03/31/ Comments (incl. % Fully achieved (HS rating). 135% (surveyed) and 192% (titled and registered). achievement) Indicator 4 : Municipal offices in the Project Area Value (quantitative or Qualitative) Date achieved May /31/2007 Comments (incl. % Fully achieved. All 12 municipalities have offices functioning (100%) achievement) Indicator 5 : Municipal boundaries measured (km) Value 0 n/a 1,100 km (quantitative 1,305 km

10 or Qualitative) Date achieved Sep /31/2007 Comments (incl. % Fully achieved (103%). achievement) G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 03/25/1999 Satisfactory Satisfactory /22/1999 Satisfactory Satisfactory /23/1999 Satisfactory Satisfactory /19/2000 Satisfactory Satisfactory /26/2000 Satisfactory Satisfactory /14/2001 Satisfactory Satisfactory /16/2001 Satisfactory Satisfactory /09/2002 Satisfactory Satisfactory /11/2002 Satisfactory Satisfactory /19/2003 Satisfactory Satisfactory /27/2003 Satisfactory Satisfactory /22/2003 Satisfactory Satisfactory /19/2004 Satisfactory Satisfactory /20/2004 Satisfactory Satisfactory /09/2005 Moderately Satisfactory Satisfactory /19/2005 Satisfactory Satisfactory /23/2005 Satisfactory Satisfactory /28/2006 Satisfactory Satisfactory /18/2006 Satisfactory Satisfactory H. Restructuring (if any) Not Applicable

11 I. Disbursement Profile

12 1. Project Context, Development Objectives, and Design 1.1 Context at Appraisal Guatemala has a long history of high rural poverty and severe income inequality. For over three decades, the country experienced civil war, with tens of thousands of people killed or displaced. In May 1996, the Peace Accords were signed and these included specific provisions related to land issues. Specifically, the Peace Accords called for the (i) promotion of access to land (through the creation of a Land Fund, FONTIERRAS, and other means); (ii) reform of the legal and institutional framework to increase tenure security and resolve conflicts; and (iii) establishment of a modern, decentralized cadastre / registry system. At the time the Guatemala Land Administration Project was appraised (1998), poverty afflicted over 75 percent of the country s population, 86 percent of the rural population, and 93 percent of the indigenous population. It was estimated that at that time, 95 percent of rural parcels in Guatemala were not registered and the country had one of the most skewed land distribution structures in Latin America. Land administration services were restricted to the main cities. The General Property Registry (RGP), for example, had offices only in Guatemala City and Quetzaltenango. Not surprisingly, at the time of project preparation, only 30 percent of the country s properties were registered, mostly in these two urban areas. Also, the country lacked a comprehensive cadastre law governing the surveying of land parcels. In 1997, an Inter-institutional Commission for the Strengthening and Development of Land Property Rights (Comisión Interinstitucional para el Desarrollo y Fortalecimiento de la Propiedad de la Tierra, PROTIERRA) was established to coordinate the Government s efforts to address land tenure issues as agreed in the Peace Accords. The Commission created a Technical and Legal Unit (UTJ) to function as its executive arm and started a number of pilot projects to regularize land in selected areas. With the purpose of modernizing the public sector, the Government supported decentralization measures to transfer responsibilities and resources from the Central Government to the regional, departmental, municipal, and local levels with the objective of improving public administration and delivery of public services. Improving land tenure security was considered a precondition for: (i) reducing land conflicts generated by unclear tenure, (ii) providing an incentive for long-term productive investments in land, (iii) improving land use planning, and (iii) supporting decision-making on landrelated conflicts and policy reforms at the Government level. Due to its importance and its effects on other land-related initiatives, the Project was considered a priority for the Government and an instrument to achieve the objectives of the Peace Accords. The Bank s Country Assistance Strategy (CAS) at the time (Report No GU, dated 14 July 1998), which was largely based on the 1996 Peace Accords, and other World Bank reports had identified the resolution of land tenure issues as key for poverty alleviation. The Bank s strategy to assist Guatemala in meeting the land-related objectives of the Peace Accords was to finance two separate but parallel Adjustable Program Loans (APLs), which was the ideal instrument for long-term reform programs. The Land Administration Project was formulated at the same time as the Land Fund Project (IBRD Loan 4432-GU). While implementation was simultaneous, the former dealt with

13 improving land tenure security, modernizing the land administration system, and resolving land conflicts (with national legal and institutional reforms, and regional field activities restricted to El Petén), while the latter focused on establishing an effective land redistribution mechanism and supporting land reform beneficiaries 1. At the time of their preparation, both projects faced a volatile political context, an uncertain legal framework, and a complex and incomplete institutional set-up for project implementation. In hindsight, these challenging circumstances and the centrality of land issues in implementing the Peace Accords, provided an historic window of opportunity in which the Bank was able to approve both projects. 1.2 Original Project Development Objectives (PDOs) and Key Indicators The development objectives of the three-phase Program, of which this project represents Phase I, were to assist the Government of Guatemala to: (i) increase legal security of land tenure in Guatemala; and (ii) strengthen the legal and institutional framework for land registry and cadastre services nationwide. These were to be achieved through a participatory process for conflict mitigation and resolution that included indigenous and non-indigenous communities. The program was supposed to be implemented over a period of at least 12 years. Phases I and II were planned to cover six departments each, while Phase III was supposed to cover the remaining 10 departments (for a total of 22 for the country as a whole). Phase I of the Program (i.e., this Project ) had the following Project Development Objectives (PDO): (i) increase legal security of land tenure in the Department of El Petén, and (ii) strengthen the legal and institutional framework for land registry and cadastre services, particularly in El Petén. There is a discrepancy about the project area of Phase I of the program between the time of appraisal (in May 1998) as reflected in the Project Appraisal Document (Report No GU, dated November 10, 1998) and the Loan Agreement (IBRD Loan 4415-GU, negotiated on October 29, 1998, but signed on April 27, 2000). Shortly before negotiations in late 1998, the Government and the Bank agreed that only El Petén (which covers about one-third of Guatemala s territory) would be included in Phase I, since it was the only department in Guatemala at the time with a comprehensive land law which allowed land regularization activities as envisioned by the Project. The Loan Agreement explicitly restricts the project area to the Department of El Petén. Unfortunately, the PAD was not updated in time to reflect this restriction in the Project Area. Thus, for the purposes of evaluating the results of Phase I, indicators and triggers apply only to El Petén. As a result of successful results in El Petén, the Bank approved a limited project area expansion to selected municipalities in Alta and Baja Verapaz in April The original PDO indicators for Phase I were: Change in private investment in land/municipality Number of land conflicts successfully resolved Maintenance of up-to-date cadastral and registry information in El Petén Financial sustainability of the El Petén branch of the General Property Registry Community participation and conflict resolution 1 For a detailed review of the performance of the Land Fund Project, see its Implementation Completion Report (Report No , dated March 21 st, 2006). 2

14 1.3 Revised PDO and Key Output Indicators, and Reasons/Justification The original Project Development Objectives were maintained throughout the implementation period. However, the original PDO indicators determined at appraisal were a combination of impact ( change in investment ), outcome ( maintenance of information and sustainability of an institution), and output indicators ( number of resolutions) without quantified baselines or specific target values. Therefore, during the Mid-Term Review (MTR), which took place in mid-2003, the PDO indicators were redefined and quantified, and target values were agreed to (see Table 1). Although the original output indicators by component were clearly quantified at appraisal, some of these indicators were unimportant (number of staff) or actually referred to inputs (financial or staff weeks). Consequently, during the MTR some output indicators were revised as a result of the experience gained during the first three years of project implementation. This was also intended to ensure consistency with the project activities described in the Loan Agreement (see Table 2 for key output indicators and revisions). Some revisions applied only to units of measurement, such as using hectares of land and number of parcels instead of km2 or number of urban areas. Others were revised as a result of a better understanding of the issues on the ground. For example, during implementation, the use of ortho-images proved to be faster and cheaper than aerial photography. Also, since the delimitation of municipal boundaries within the Department of El Petén was recognized as fundamental to ensure land tenure security, a corresponding indicator and target value were included. Similarly, since the implementation showed that a considerable timing gap inevitably emerges between the number of parcels surveyed (urban or rural) and those eventually titled, so the titling target values were revised downward. From the MTR onward, the revised PDO and individual component output indicators from Tables 1 and 2 (and Table A2.1 in Annex 2) were used to monitor project performance and evaluation of achievement of project objectives. Table 1. Revised Project Development Objective Indicators Development Objective Indicator Baseline Target 1. Passage of Law modernizing land in El Petén 1. Old Petén and INTA laws in force 1. FONTIERRAS law passed 2. Passage of law establishing cadastral institutional framework and formalizing cadastral procedures 3. Establishment of an integrated institutional structure between the cadastre and registry, particularly for El Petén 4. Opening of Registry offices in El Petén 5. Land conflicts resolved by CONTIERRA, as percentage of cases submitted (urban, rural) 2. No law or institution exists 3. No such link exists 4. No Registry in El Petén 5. 0, 0 2. Law passed and Cadastral entity created 3. Formal agreement reached between RIC and RGP to establish common tech. platform 4. Registry office open and fully operational 5. 90%, 90% 3

15 Table 2. Key Project Component, Subcomponent, and Activity Performance Indicators Output Indicator Original Target MTR Revised Indicator and Target Component 1) Land Regularization Cartographic activities - Establishment of new basic geodetic network 40 points 40 points - Production of a 1/30,000 aerial photo over 35,500 km 2 - Production of a 1/8,000 aerial photos, and 20cmaccurate maps over 40 km 2 (urban areas) - Prod. of 1m-accurate ortho-photos over 18,500 km 2 - Demarcation of all municipal boundaries in El Petén Adjudication process of rural lands - Geo-referencing, surveying, titling, and registration of rural ( national ) lands - Geo-referencing, surveying, titling, and registration of urban ( municipal ) lands 35,500 km 2 40 km 2 18,500 km 2 n/a 11,400 km 2 12 municipal areas Ortho images instead, with maps 35,000 km2 Ortho images instead, with maps over 55 km 2 1,100 km 650,000 ha. surveyed 325,000 ha. titled 50,000 land parcels surveyed 15,000 parcels titled No target set, but - Number of urban titles with a woman (as head of household) as titled holder (number, out of total) n/a indicator tracked for monitoring purposes Social communication campaigns - Proportion of rural pop. aware of project activities n/a 75% - Proportion of urban pop. aware of project activities 75% Component 2) Land Registry - Establish a Registry office in El Petén 1 office Office established and fully functional 1.4 Main Beneficiaries The Project s primary direct beneficiaries include two principle groups. The first group includes the owners and occupants of the 67,706 urban land parcels surveyed by the Project (28,747 of which received registered titles, and 40% of which are female heads of household). The second group includes the owners and occupants of the 723,983 hectares of surveyed rural lands (2,981 properties titled and registered) in the Department of El Petén. 2 The latter included approximately 113,000 rural settlers with existing land claims resulting from the agrarian reform process pursued by the National Institute for Agrarian Transformation 2 In El Petén, the multi-ethnic groups are organized on the basis of (a) language affiliation, and (b) settlement history and length. In terms of language affiliation, there are two groups: Mayas (among them Q eqchi and Itza) and Ladinos (refer to the table below). In terms of settlement type, there are various groups including native Peteneros, colonists, settlers organized in cooperatives, and groups interested in forest concessions. The intersection of these categories results in four groups of settlers: (a) native Petén Ladinos and Itza Maya; (b) Ladino and Maya colonists, including displaced persons; (c) Ladino and Maya settlers in cooperatives, including returning refugees; and (d) Ladino and Maya groups interested in forest concessions. 4

16 (INTA). 3 These settlers benefited from either conflict-resolution regarding lands, surveying of their land parcels, or ultimately, titling of their land rights. More generally, the approximately 500,000 people living in El Petén at the time of appraisal (of which at least 210,000 were classified as extremely poor ) were primary indirect beneficiaries as users of the improved land administration services in the Department. In April 2005, the number of direct beneficiaries increased when the geographic project area was expanded slightly to include selected areas within the municipality of Fray Bartolomé de las Casas, located in the border area between the departments of El Petén and Alta Verapaz. All 12 municipalities in the Department of El Petén benefited directly from the project in terms of the demarcation of municipal boundaries, provision of municipal cadastre offices, training, institutional strengthening and capacity-building programs. Indirect beneficiaries also included the broader clientele of land administration services outside of El Petén. In these areas, the project has been instrumental in developing cadastral surveying methodologies and standards, reaching an agreement on a Cadastral Law which as approved in August As a result of these efforts, many individuals and public and private organizations have benefited from improved land administration services provided by UTJ (transformed into the Cadastral Information Registry, RIC, since August 2005). A second group of indirect beneficiaries included the users of several other public organizations, including the Land Fund (Fondo de Tierras, FONTIERRAS), the Presidential Commission for the Resolution of Land Conflicts (Comisión Presidencial para la Resolución de Conflictos de Tierra, CONTIERRA), the National Property Registry (Registro General de la Propiedad, RGP), the National Council for Protected Areas (Consejo Nacional de Áreas Protegidas, CONAP), the National Forest Institute (Instituto Nacional de Bosques, INAB), the National Geographic Institute (Instituto Geográfico Nacional, IGN), the Ministry of Environment and Natural Resources (Ministerio de Ambiente y Recursos Naturales, MARN), the Apostolic Vicariate of Petén (VAP), and other nongovernmental organizations (NGOs). Financial institutions were indirect beneficiaries of the project as well. They benefited from an increase in financial transactions where land was used as collateral. Initially, only formal banks were involved, but later regional savings and credit cooperatives also offered financial services to project beneficiaries. The target beneficiary populations of projects financed by other donor agencies and NGOs also benefited indirectly due to the project s pivotal role in providing a stable framework for coordination among the various supporters of the long-term National Land Administration Program, including the Inter-American Development Bank (IDB), United Nations Development Programme (UNDP), and several bilateral cooperation agencies. 3 In 1962, an agrarian reform law (Ley de Transformación Agraria Decreto No. 1551; INTA 1981) was enacted which contained provisions for addressing the problems of land concentration and underutilization. Unutilized lands could be legally taxed and/or expropriated. Nevertheless, these dispositions were not implemented (World Bank 1978). Nevertheless, for the following three decades (until the enactment of the FONTIERRAS Law in 1999) much land was allocated in El Petén which, in the absence of a cadastre and with an incomplete registry, over time led to the development of informal land market transactions. 5

17 1.5 Original Components Component 1 Cadastre and Land Regularization (US$31 million) The objective of this component was to carry out comprehensive cadastral surveying, conflict resolution, and titling of both rural (or national as they are legally known in Guatemala) lands and urban ( municipal ) lands for the entire Department of El Petén, excluding protected areas. The open and participatory manner in which project activities were conducted has been critical to the resolution of conflicts. Key activities supported under this component were: (a) modernizing the existing geodetic network; (b) mapping of the entire Department of El Petén with ortho-photo imaging (approximately 36,000 km2); (c) geographical and legal data acquisition, including fieldwork to measure and demarcate each parcel of land, clarify property rights, resolve on-site boundary disputes, and provide titles to landholders; and (d) conflict resolution, which included conflict identification, monitoring, and resolution in a participatory process. Component 2 Land Registry (US$2 million) This component supported the establishment of a Registry office in El Petén, the strengthening of the RGP more generally, and the design of an integrated cadastral-registry system. Activities supported under this component included: (a) Basic infrastructure, training, communications links, and operational costs of the Registry office in El Petén; (b) Scanning of land documents in El Petén; (c) Development of information technology infrastructure; and (d) Studies to improve the operational efficiency and technological compatibility of the RGP databases with those being created by the cadastral process. Component 3 (US$6 million) This component supported the establishment and operation of the Project Implementing Agency (UTJ, which in August 2005 RIC) responsible for the implementation, administration, procurement and financial management, monitoring and evaluation, and financial audits of the project. UTJ/RIC was also in charge of coordination with other projects, donors, NGOs, and civil society. Of particular importance was the component for technical assistance and training for procurement and supervision of project implementation. This component also included the issuing of studies such as: (a) legislation to improve land legal framework and scaling-up registry activities to the rest of the country; (b) an integrated parcel-based cadastre and registry system; (c) a tariff system and new systems to promote the land registry and cadastre; and (d) socioeconomic and land tenure studies. Finally, the financing of vehicles, field and office equipment, furniture, consultant services, and training were also included in this component. 1.6 Revised Components The original project objectives and components were maintained throughout project implementation. 1.7 Other Significant Changes There were no revisions in the Project Development Objectives or individual component objectives. Some changes were made in the following areas: (a) the name and legal status of the Implementing Agency; (b) the timing of project implementation; (c) the definition and 6

18 quantification of PDO and component output indicators was refined; (d) a minor expansion in geographic scope; and (e) project activities and implementation modalities. (a) Change of name and legal status of Implementing Agency The Registry of Cadastral Information (RIC) was created by Legislative Decree (RIC Law) and approved by the Guatemalan Congress on June 15, 2005 as an autonomous public institution with the objective of establishing, maintaining, and updating the cadastre. This law effectively replaced a temporary unit created by decree (UTJ) with a permanent entity created by law. RIC assumed all the responsibilities and assets of UTJ (including all those financed by the Project), and it became the implementing agency of the Land Administration Project. This change symbolized the achievement of one the Project s (and the longer-term Program s) development objectives; namely, establishing a coherent legal and institutional framework for cadastral services for the country. (b) Timing of project implementation Although the Project was approved by the Bank s Board in December 1998, it was approved by the Guatemalan Congress only in March 2000 (and signed in April 2000). This delay was due to the intense discussions in Guatemala at the time about the new Land Law (the so called FONTIERRAS law approved in May 1999, and its regulations approved in May 2000). Understandably, Guatemalan authorities were reluctant to approve a project loan until their land rights legal framework was clarified. Consequently, the significant delay in declaring the loan effective (on July 26, 2000) was due to the Government s slow approval process, unrelated to project operational matters. The project s closing date was extended three times. The first extension was granted from June 30, 2003 until May 31, The undisbursed loan in March 2003 amounted to US$17.9 million. This first extension was largely to compensate for the significant delays between Board Approval and Loan Effectiveness (more than 18 months). The extension was approved by the Bank because Government had met four critical implementation milestones agreed with the Bank in 2002, namely: (a) international bidding for works in the rural areas had taken place, (b) more than 15,000 urban lots had been surveyed, (c) more flexible mechanisms were created to facilitate payments for land at the municipal level, and (d) the technical design to integrate the cadastral with the registry system had advanced. The second extension was granted from May 31, 2005 to May 31, The Government requested this extension in order to take advantage of the Bank s recently-approved changes in financing procedures which allowed for more flexible counterpart funding arrangements. In light of the Government s overall fiscal constraints, the subsequent reallocation of expenditure categories and change in financing parameters greatly facilitated project implementation and initiation of preparatory activities for Phase II of the APL Program. A third and final extension was granted from May 31, 2006 until March 31, This extension was justified on the basis that rural titling was still to be completed and that the institutional setup and human resources needed to be maintained in place until Phase II started. (c) Better definition and quantification of PDO and component output indicators As noted in 1.3 above, in the course of the Mid-Term Review in 2003, the PDO and component output indicators were redefined and quantified in order to more accurately indicate progress in achieving the PDOs and individual component outputs, and to incorporate the lessons learned during the first 3 years of project implementation. 7

19 (d) Minor expansion in geographic scope As noted earlier, in April 2005, the geographic project area was expanded slightly to include selected areas within the municipality of Fray Bartolomé de las Casas, located in the border area between the departments of El Petén and Alta Verapaz. The additional costs from this Project Area expansion were covered by savings generated in the implementation of cadastrerelated activities in urban areas of El Petén. (e) Modifications of cadastral techniques, implementation modalities, and project activities Mapping techniques: At the beginning of the project, aerial photography was used to collect cartographic information, but this turned out to be inappropriate given the large forest cover in El Petén. The project team then decided to purchase satellite images (which is considerably less expensive) in order to produce maps that would allow the digitalization of topographic elements (roads, rivers, and so forth) and the planning of the fieldwork. Land regularization in urban areas: As a result of the considerable investments in developing and validating cadastral surveying techniques and training technical staff (field and supervisory staff) early on, by 2002 UTJ had developed the capacity to implement, on its own, land regularization activities in urban areas. It was thus decided that implementation of these urban activities by UTJ staff, instead of subcontracting foreign firms, was preferable as it was faster, cheaper, and strengthened local capacities. Municipal boundaries: The determination of the municipal boundaries was not included in the PAD as a specific project activity and thus had no indicator. But this was essential for land regularization purposes and needed to be monitored. The definition of the 1,300 kilometres of municipal boundaries with El Petén has allowed establishing legally the area under the jurisdiction of each municipality. This has also served to resolve conflicts between communities residing in bordering municipalities. Demarcation of Protected Areas: Following the successful results of a pilot implemented after the 2003 Mid-Term Review, the Bank approved in March 2005 a Government request to include the demarcation of selected protected areas under the Project. The cartography and mapping of protected areas were considered necessary to achieve one of the main objectives of the project: harmonizing El Petén s cadastral and registry information. This change was needed because under the modified legal framework, the harmonization of cadastral and registry information could not be carried out without proper demarcation of protected areas. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry During the negotiation of the Guatemala Peace Accords, the Bank was recognized as an effective partner that could play a strong coordinating and honest broker role. This was voiced during the 1997 Country and Sector Implementation Review, where the Government of Guatemala specifically requested the Bank play a coordinating and technical assistance role on land administration issues. 8

20 In a Quality at Entry Assessment (QEA) Review, overall project design was rated satisfactory. It was highlighted that the project had a strong social focus in terms of alleviating poverty and reducing exclusion. The project clearly addressed key issues identified by target beneficiaries, residents of El Petén, were land tenure insecurity and inadequate land administration services. The report appreciated that a high level of attention was given to conflict resolution. The QEA criticized the appropriateness and realism of project operations, and considered that many issues had been left as a condition of effectiveness or disbursement. Also, the QEA assessment criticized the fact that no provision had been established for direct cost recovery. The last two factors were the only ones rated as moderately satisfactory in the QEA. The design of the project was based on the Bank s experience in land-related projects throughout Latin America and on participatory consultations with various stakeholders, including high-level Government authorities such as the General Secretary of the Presidency, the Finance Commission of the Congress, the Vice-president of the Congress, the Ministry of Agriculture, the Ministry of Finance, the Secretary of the Peace Accords, and the Paritarian Land Commission of Indigenous Peoples. The social assessment carried out during project preparation identified a strong demand for land regularization services and for an open and transparent field-based adjudication process. Accordingly, the Project s adjudication and conflict resolution processes were highly participatory. The Indigenous Accord (an integral part of the Peace Accords) constitutes a framework of commitments of policy reforms and specific activities consonant with O.D The guiding principles to implement these commitments, including informed participation, consultation, access to provision or management of project services, and training of indigenous communities, were discussed with Government in March A Local Community Participation and Support Plan (Annex 12 of the PAD), which reflected all relevant concerns, was also agreed to with the Government. Mayors of the municipalities in El Petén confirmed their support for the Project by sending letters to the President of the Republic and the Congress. In sum, the Project enjoyed broad support from the Government at various levels and from civil society organizations in El Petén. Project preparation was satisfactory in terms of reaching difficult agreements with and commitments from the Guatemalan authorities at a time of high political volatility and uncertainty, particularly regarding land issues. However, project design suffered from a few weaknesses. As noted above, PDO indicators were a combination of impact, outcome, and output indicators without quantified baselines or specific target values. In particular, no baseline data was collected on beneficiaries living conditions, on land markets in El Petén, or on environmental conditions at the time. Also, the project had a difficult start during the first couple of years due to the weak legal framework. Even though this was, in a sense, inevitable and a decision was made to move ahead regardless, it limited the operational capacity of the Project s implementing agency (UTJ). 2.2 Implementation Project implementation was influenced by a number of external and internal factors, positive and negative. The project had a slow start. Between 1997 and 2000, UTJ, the Project 9

21 Implementing Agency, carried out pilot activities in the Municipality of San Francisco using resources from a Project Preparation Facility (PPF). Effectiveness was delayed by 18 months, largely as a result of a slow approval process in Guatemala at a time when debate in Congress about the new land law was still going on and the country was facing general elections in Once Loan Effectiveness was declared in July 2000, implementation accelerated. External factors outside the control of the Government Project implementation was facilitated by the advent of better, cheaper, and faster technologies required for land administration services. For example, the low cost availability of satellite images at a resolution which allowed mapping of the Project Area reduced the costs and time of this fundamental step in the land regularization process. Similarly, over time the availability of improved individual Global Positioning System (GPS) instruments considerably reduced the time required to obtain parcel coordinates in the field. Likewise, the arrival of more powerful computers, which were not available at the time of project preparation, considerably reduced the time required to process data and print the documentation needed to issue and register titles. Another important positive factor which greatly assisted project implementation was the virtually uninterrupted international support to Guatemala to meet the Peace Accords targets. In particular, explicit support by many bilateral and multilateral donors to the specific land administration provisions of the Peace Accords (such as passage of a cadastral law) provided strong incentives for most Government agencies to meet their obligations under the project (FONTIERRAS was a notable exception, see next section below). Also, between 2001 and 2005, Central American governments and the Bank promoted the exchange of experiences among different land administration projects in the region through a series of seminars sponsored by the Central American Network in Land Administration (Red Centroamericana en Administración de Tierras, RECTA) and the setting up of an Internet portal ( which contributed to the assimilation of lessons learned and avoidance of costly mistakes. Internal factors within the control of Government The most significant positive factors which helped project implementation were: (i) passage of the FONTIERRAS Law in 1999 (regulations in 2000) which revised the overall legal framework for land administration, particularly regarding adjudication of rights in rural areas ( national lands ); (ii) strong political support to UTJ (and later RIC) throughout project implementation; (iii) passage of the cadastre law in August 2005 which turned the temporary UTJ into a permanent and strong RIC, and converted into law the cadastral procedures and methodologies developed during project implementation; and (iv) after a severe credibility crisis in 2003, the General Property Registry launched a long-overdue process of institutional reforms, which is gradually leading to a more consolidated integration between the cadastral and the registry functions of land administration. On the other hand, several factors under the control of Government hindered project implementation at various stages. First, irregular and, at times, unpredictable transfers of counterpart funds to UTJ restricted some project activities at various times during project implementation. Second, the performance of FONTIERRAS, responsible for titling of rural lands, has been unsatisfactory throughout most of the Project s implementation period. Despite the clear legal mandate to perform titling activities (both under the 1999 law and the 10

22 Project s legal covenants) and direct financial support from the Project, FONTIERRAS proved unable to keep up with the rapid pace of cadastral surveying activities. FONTIERRAS disappointing performance under the Project was due to two main reasons: (i) FONTIERRAS competing mandates (one, facilitating access to land through market mechanisms and two, regularizing national lands) often resulted in the latter having only secondary importance to its constituents; and (ii) FONTIERRAS is an autonomous entity run by a Board which is not under complete Government control. Although some may argue that FONTIERRAS autonomy from Government control may have benefits related to FONTIERRAS primary functions, it clearly proved to be an impediment to the achievement of one of this Project s critical outputs, namely, the titling of rural properties. Repeated efforts by UTJ (and later RIC), the Ministry of Agriculture (which chairs the FONTIERRAS Board), and Bank supervision missions to influence the behaviour of FONTIERRAS yielded limited results. And third, approval of the RIC law took much longer than anticipated, which meant the cadastral procedures developed under the Project were in legal limbo for about 5 years. Factors within the control of the Project Implementing Agency As noted earlier, the Project Implementing Agency, UTJ (and later RIC), enjoyed strong political support throughout project implementation. This was reflected in four important ways. First, UTJ had very stable leadership throughout project implementation. Second, UTJ managed to develop strong operational partnerships with all 12 municipalities in El Petén, CONTIERRA, the General Property Registry, the Vicariate of Petén, and other important organization. Third, UTJ served as a very effective focal point for international donor coordination related to land administration. And fourth, UTJ developed and maintained a strong cadre of technical staff, particularly for field-level activities. UTJ s effectiveness was also reflected in the widespread and positive name recognition that it had in the field among residents in El Petén. The understandable initial reluctance of many people to participate in land regularization activities, for fear that this may lead to high taxation, was gradually overcome thanks to effective communication campaigns, strong partnerships with municipal governments, and strategic alliances with key stakeholders such as the Church. The single most significant shortcoming by UTJ was the long delay in launching the international bidding process for rural land regularization activities. Since this activity was critical for achievement of the rural surveying and titling targets and the international contract represented roughly one-fifth of the loan, its delay by about two years seriously handicapped the Project. By project closing in March 2007, the most significant shortcoming of the Project is the limited number of titled rural properties. The 2003 Mid-Term Review The Bank carried out a comprehensive Mid-Term Review of project implementation from May to October 2003 which resulted in the adoption of a detailed action plan to address the Project s shortcomings to date. At the time of the MTR, the Project s main achievements were: (i) well-established partnerships and institutional strengthening with all 12 municipalities in El Petén; (ii) major accomplishments in terms of cadastral surveying and tilting of urban lands; (iii) regular support and strengthening of CONTIERRA in conflict resolution throughout El Petén; and (iv) establishment and regular functioning of the Registry s office in El Petén. 11

23 The main shortcomings identified at the time were: (i) baseline data on the Project s main indicators had not been collected; (ii) land regularization activities in rural areas were seriously delayed; and (iii) the development of an integrated cadastre (ie, geographical data on land parcels) - registry (legal information on the owners of land parcels) information system was moving very slowly. The MTR resulted in the adoption of specific measures to address the Project s shortcomings identified at the time. First, during the MTR, the Project s PDO and individual component output indicators were revised and quantified (see Section 1.3 and Tables 1 and 2 above, and Table A2.1 in Annex 2). As part of the action plan agreed to at the MRT, UTJ also significantly strengthened its monitoring and evaluation functions. It established a system which reported to the Bank progress on Project performance indicators at least quarterly, and often monthly. Second, the international contract to implement regularization activities in rural lands was signed in May, 2003 and was subject to close supervision and monitoring by UTJ since then. And third, the Project increased its support to the General Property Registry in order to encourage an institutional reform process there and facilitate the development of an integrated cadastre registry information system. 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization Project design envisioned two sets of monitoring mechanisms: (i) inter-institutional coordination and information sharing on broad land administration issues and (ii) monitoring of project-specific performance indicators. Regarding the first, as noted in 2.2 above, UTJ played a pivotal role in coordinating the activities of several government and civil society organizations involved in land administration matters. In particular, it ensured that different cadastral surveying activities taking place in various regions of the country shared a minimum set of common techniques and standards. UTJ also served as an effective focal point for international donor coordination. The monitoring of project-specific performance indicators, on the other hand, was barely operational during the first 3 years, until the Mid-Term Review when reporting of Project performance indicators was significantly improved and regularized. As part of the action plan agreed to at the MTR, UTJ reported to the Bank, at least quarterly, progress on achievement of the Project Development Objectives (Table 1 above) and provided an updated detailed list of individual component output indicators (see Table A2.1 in Annex 2, a summary of which is presented in Table 2 above). The M&E unit periodically also reported data that identified the proportion of women beneficiaries (as heads of households) as the primary title holder of the land parcel (39.8 percent by project closing). In addition, starting in 2004, UTJ staff working on Monitoring and Evaluation functions devoted increased attention to the collection of data and preparation of studies to evaluate the performance of the project and assess the achievement of the agreed triggers to move into Phase II of the program (see Section 2.5 below). They commissioned an independent evaluation of the Project (which was a pre-requisite for preparation of Phase II), including a survey of land values used for the ex-post economic analysis for this ICR (see Annex 3). They also commissioned an independent project beneficiary assessment and an updated 12

24 social assessment, the results of which have been used in this ICR and for preparation of Phase II. 2.4 Safeguard and Fiduciary Compliance The project triggered OD 4.01 (Environmental Assessment), OP 4.04 (Natural Habitats), OP 4.11 (Cultural Property), OD 4.20 (Indigenous Peoples), and OP 4.36 (Forestry). Safeguard issues were correctly identified during project preparation, the safeguard measures adopted were adequate, and compliance with safeguard issues was generally satisfactory. Environmental Assessment and Demarcation of Protected Areas As required by OD 4.01, an environmental assessment was carried out in 1998 and it concluded that there were no significant environmental concerns associated with the project, given that protected areas were excluded from the land regularization activities to be financed by the Project. At the time of Project appraisal, the Bank s recommended course of action for land administration projects was to stay away from protected areas until country conditions (e.g., an improved legal and institutional framework for land issues) and project operational experience showed that the demarcation of protected areas could be carried out in compliance with Bank safeguards. In the following years, experience in several Bank-financed projects in Latin America and elsewhere showed that the demarcation of protected areas was desirable and could be incorporated into land administration projects. Therefore, to bring the Project into line with the Bank s knowledge and experience at the time, the project team decided, on a pilot basis, to include selected protected areas in the Project s land regularization activities. The 2003 Mid-Term Review evaluated project compliance with environmental safeguards and made the following recommendations: (i) the project would implement a few pilot environmental subprojects in order to assess the impact of land regularization activities (i.e., land tenure studies, mapping, physical demarcation of boundaries, etc.) in selected protected areas; (ii) the procedures for the demarcation of protected areas by the firm in charge of regularization of rural lands would be clarified; (iii) landowners obligations and rights regarding cultural sites and restrictions of use would be simplified; and (iv) an ex-post environmental assessment would be carried out at the end of the Project. These recommendations were largely implemented, except that the environmental assessment (and an accompanying strategic environmental action plan) was not completed by the time the Project closed in March Nevertheless, with an amendment to the Loan Agreement in March 2005, which allowed the demarcation of protected areas, the Project completed the demarcation of the external perimeter of the Biotopo San Miguel La Palotada (37,861 hectares), the Biotopo Cerro Cahuí (611 hectares) in the municipality of San José, and the Tikal National Park (47,523 hectares) in the municipality Flores. Demarcation of Archeological Sites In compliance with OD 4.11, the Project s Loan Agreement included a Supplemental Letter requiring the Anthropology and History Institute (Instituto de Antroplogía e Historia, IDAEH) to demarcate any archeological site discovered in the course of land regularization activities financed by the Project. The 2003 Mid-Term Review noted that the performance of IDAEH in the demarcation of archeological sites largely complied with the Bank s safeguards policies, but its operations moved considerably slower than those of UTJ. By the 13

25 end of the Project a total of 22 sites were demarcated in 7 municipalities in El Petén (a detailed list of these sites is presented in Annex 2). Indigenous Peoples In compliance with OD 4.20, a Social Assessment was carried out during project preparation (Annex 11 of the PAD). It identified some Mayan groups, mostly Qéqchi and Itzá, comprising 44.5 percent of the population of the Department of El Petén. The remaining 55.5 percent were considered ladinos, mostly settlers who migrated from various regions of Guatemala. The Project signed an important collaboration agreement with the Apostolic Vicariate of El Petén (Vicariato Apostólico del Petén) to offer free bilingual (Spanish and Qéqchi) legal services to indigenous peoples benefiting from land regularization activities financed by the Project. Typically, indigenous peoples communities benefited from a higher frequency of meetings and other communication efforts in order to address their questions and concerns about the Project. The lessons learned during the Project, in particular the importance of involving a high-credibility interlocutor between project officials (government and contractors) and indigenous peoples, have been incorporated into the design of Phase II of the APL Program, which will cover selected areas in seven new departments of Guatemala, some of which have higher proportions of indigenous peoples (see Section 2.5 below). Financial Management and Audits Financial Management functions were carried out by UTJ with the assistance of UNDP. At the request of Government, the Project used UNDP as a financial agent. Bank loan proceeds and Government counterpart funds were deposited in a UNDP account monitored by UTJ. Although UTJ carried out the financial management functions including conciliation of accounts, inventories of project assets, contracting of external audits and procurement processing, payments were made by UNDP which provided monthly statements to UTJ. Financial Management was considered satisfactory throughout most of Project implementation, but was downgraded to moderately unsatisfactory in the last year of implementation due to a 13-month delay in submitting the 2005 audit report. Except for these two years, annual audits were submitted on time, and no major issues were identified by the auditors. UTJ was staffed with a team of experienced financial management specialists and benefited from the assistance of UNDP. The project maintained proper internal controls (including segregation of fiduciary responsibilities) and oversight throughout implementation, and management of project funds (including management of bank accounts, maintenance of supporting documentation for project expenditures, and production of interim financial reports) was satisfactory. Therefore, overall, financial management functions receive a rating of moderately satisfactory. Procurement Procurement functions were also carried out satisfactorily throughout most of project implementation. However, during the transition period resulting from the approval of the RIC law (in August 2005) some project staff, including the most experienced procurement specialist, left UTJ and were not promptly replaced when RIC was being consolidated. Since these changes occurred at the tail end of project implementation, this loss of procurement capacity did not negatively affect achievement of the Project Development Objectives or compromise the use of project funds. One important procurement issue which arose at the end of the project was the complaint raised by the Project s single largest contractor, the Tracasa-Novotecni Consortium, in charge of carrying 14

26 out the cadastral surveying of rural parcels in most of the Project Areas in El Petén. The complaint centered on a dispute over whether the payments for the contractors services were exempt from taxes or not. The contractor wrote to the Bank regarding this dispute and, in accordance to the Procurement Guidelines and other applicable Bank policies, the Bank promptly referred the issue to Government and facilitated the dialogue between the two parties until a final agreement to resolve the dispute was reached in March Overall, procurement functions receive a rating of moderately satisfactory. 2.5 Post-completion Operation/Next Phase The Project had several positive outcomes in terms of achieving its Development Objectives, namely, increasing land tenure security in the Department of El Petén through the establishment of new legal and institutional framework for land registry and cadastre services. The enactments of the FONTIERRAS Law in 1999 and the RIC Law in 2005, the establishment of a Registry office in El Petén, and the agreement reached in 2004/2005 between RGP and RIC to integrate the cadastral (i.e., geographical) and registry (i.e., legal) databases of land parcels are major positive outcomes of Phase I of the three-phase Land Administration Program. By the time Phase I closed in March 2007, the status of Triggers for Phase II of the Program had been met as follows: 1) Geographic coverage: Fully met 100 percent of inter-municipal boundaries in the Department of El Petén mapped 100 percent of urban parcels in El Petén surveyed 100 percent of rural parcels in El Petén surveyed. Titling fell considerably behind. However, titling targets were not part of the trigger. Registry office in El Petén fully operational after the first year. 2) Achievement of national program: Fully met The project s implementing agency, UTJ, was transformed into RIC in August 2005, thereby establishing a strong institutional foundation for cadastral services for the entire country. A communication strategy has been successfully tested and is ready for launching of Phase II of the Program. Regulatory changes to Petén Law: No longer relevant, since the 1999 FONTIERRAS Law replaced the Petén Law. Trigger waived. 3) Social monitoring: Fully met Update of Social Assessment, and compliance with applicable safeguards: Social Assessment updated for Phase II and safeguards complied with. Evaluation of beneficiaries, as part of preparation of Phase II. 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, as part of preparation for Phase II, shows improvement in social conditions and community perceptions. 4) Institutional, technical, and social strengthening at Department of El Petén level: Fully met 80 percent of UTJ technical staff internationally certified. By project closing 88 percent of UTJ/RIC staff has been trained and internationally certified. 15

27 100 percent of UTJ technical staff evaluated as competent by public. Survey shows that 97 percent of the public evaluates UTJ/RIC staff as competent. Although quantitatively short of target, the trigger can be considered met. Participatory and conflict resolution methodology 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 considered met. Accordingly, Phase II of the Program 4 was prepared in and approved by the Bank s Board on December 14, 2006; it is expected to become effective by the end of The Program s long-term development objectives remain unchanged. The Project Development Objective for Phase II is to foster the process of achieving land tenure security in seven new departments (Alta Verapaz, Baja Verapaz, Chiquimula, Escuintla, Izabal, Sacatepéquez, and Zacapa) and the municipality of Pachalum in the Department of Quiché, through the provision of efficient and accessible cadastral and land administration services. This geographical coverage represents roughly 22 percent of Guatemala s territory, bringing the total coverage from Phases I and II to about 50 percent of the country. Phase II PDO indicators are: 80 percent of new transactions in the project area conducted with validated and integrated cadastral and registral information. 80 percent of land conflicts indentified during the cadastral survey are in a resolution process, out of which 50 percent are solved. Satisfactory rating (third level on a four-scale basis) by at least 50 percent of National System of Cadastral Information (Sistema Nacional de Información Catastral, SNIC) users. At least 70 percent of the targeted population in the project area participates in the cadastral survey. Phase II of the Program is to be implemented over a six-year period and has a total cost of US$62.3 million, 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 5. Phase II will have four components: (i) Cadastral and land regularization, (ii) Maintenance of cadastral information and municipal services, (iii) Legal reforms and institutional strengthening, and (iv) Project management and monitoring and evaluation. 4 For a detailed description of Phase II of the Program, see its Project Appraisal Document, Report No GT, dated November 15, In , it was estimated that the three-phase Land Administration 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 Government US$32 million. In 1998, the Bank s expected contribution for Phase II of the Program was US$32 million (US$40.5 million at 2006 prices) and for Phase III US$50 million (US$63.3 million at 2006 prices). Thus, in real terms, the Bank s contribution to Phase II (US$62.3 million) is about 50% higher than anticipated in 1998, while the expected contribution to Phase III has been reduced by about 35 percent to US$41.4 million (in 2006 prices). 16

28 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation Rating: High overall relevance The Project s objectives were highly relevant and consistent with the priorities of the Government of Guatemala s commitments under the 1996 Peace Accords. The reform of the legal and institutional framework to increase land tenure security and the establishment of a modern, decentralized cadastre / registry system were two of the most important political commitments reached by Guatemalan society under the Peace Accords. They are fundamental ingredients for the resolution of conflicts and the reduction of poverty, particularly in rural areas. The Project was also consistent with the Bank s Country Assistance Strategy (CAS) at the time (dated July 14, 1998), which aimed at consolidating peace, supporting programs designed to end the exclusion that has characterized Guatemala s dualistic society and economy. The Project was also consistent with the new Government s strategy (2004 to 2008 period) Let s Go Guatemala (Vamos Guatemala), under implementation since early 2004, which includes three pillars: (i) Guate Solidaria (social), (ii) Guate Crece/Compite (economic), (iii) Guate Verde (environmental). The Bank s strategy for Guatemala for (dated April 11, 2005) supports these three pillars. The Project was primarily relevant to the second pillar, but it also contributed to the social and environmental pillars. The Project was highlighted for its strategic importance within the Bank s assistance program to Guatemala during the visit of several Bank Executive Directors to the country in October As noted earlier, project design was satisfactory in terms of reaching agreements at a time of high political volatility and uncertainty in Guatemala, particularly regarding land issues. The participatory nature of the land regularization methodologies implemented under the Project and the emphasis on reaching broad political support for needed legal reforms have also been highly relevant, as demonstrated by the successful approval of the RIC Law in August The Land Administration Program s overall objectives continue to be of high relevance for achieving the commitments under the Peace Accords, as confirmed by the strong support provided by the Guatemalan authorities in the preparation of Phase II of the Program. 3.2 Achievement of Project Development Objectives Rating: Moderately Satisfactory Increase legal security of land tenure in the Department of El Petén When the Project was designed, Guatemala did not have a unified law that regulated land property issues in a comprehensive way. Most of the country was regulated then by the INTA Law (named after the Instituto Nacional de Transformación Agraria) which addressed a broad range of issues related to the redistribution of land to reduce concentration and underutilization of land, but was not considered a land property rights law per se. On the other hand, the Department of El Petén had its own land law (passed in 1971, amended in 1972 and 1973) which laid out specific procedures for adjudication of land rights. Likewise, 17

29 the country did not have a comprehensive cadastre law governing the surveying of land parcels, nor did it have a credible institutional set-up for resolving land conflicts. The enactments of the FONTIERRAS Law in 1999 and the RIC Law in 2005 provided a strong foundation for increasing legal security of land tenure in the entire country. Achievement of the PDO is rated moderately satisfactory because the RIC Law regulations have not been approved yet approval is expected by the end of In addition, the Project facilitated the opening of three new regional branch offices of CONTIERRA, the Presidential Commission for Resolution of Land Conflicts, to increase the outreach to project beneficiaries. The offices provided bilingual and free legal assistance to municipalities and beneficiaries. In addition, participatory conflict management programs for municipal mayors and beneficiaries were organized. As a result of these efforts, between 1998 and 2007, 1,266 land conflict cases in the project area were submitted to CONTIERRA, of which 78 and 79 percent of urban and rural cases, respectively, were satisfactorily solved. Strengthen the legal and institutional framework for land registry and cadastre services, particularly in El Petén Enactment of the RIC Law also provided for the legal recognition of the cadastral surveying methodologies, standards, and actual field results achieved during project implementation. Moreover, the RIC Law mandates that the General Property Registry and the Cadastral Information Registry develop procedures to integrate their respective databases. Under the auspices of the Project, these two institutions are already in the process of developing a common technological platform to integrate cadastral (geographic) and registry (legal) functions of land administration. Obviously, these two Project outcomes are for the benefit of the entire country and are not restricted to the Department of El Petén. And finally, the establishment of a fully functional Registry office in El Petén greatly facilitated the transfer of information and documentation between the Project-sponsored cadastral activities in the field in El Petén and the Registry s headquarters in Guatemala City. A total of 29,251 land titles from the Department of El Petén (28,747 urban and 765 rural) were registered by the Project. In a single year (July 2004 to June 2005), over 1,500 property sales and over 1,700 mortgages were registered in the Petén branch of the Registry. Before 1999, when the Registry office in El Petén was opened, Petén residents had to travel all the way to Guatemala City in order to register any land-related transaction. These Project-supported activities clearly resulted in a stronger legal and institutional framework for land administration in El Petén. A project beneficiary assessment was carried out by an independent firm in The evaluation showed that beneficiaries appreciated the fact that the Project had introduced knowledge management and a culture of land administration in El Petén and that they had been able to participate in the process. The evaluation also found that 78 percent of the rural beneficiaries participating in the survey had made improvements in better seeds, fencing, pasture management, and watersheds; and that 68 percent of urban beneficiaries reported to have upgraded their houses and garden fences, and even started new construction. There was also considerable increase in requests for loans by project beneficiaries between 2000 and 2007, as reported by rural banks in El Petén. These behavioural changes surely must be correlated with a greater sense of land tenure security by El Petén residents. 18

30 3.3 Efficiency Rating: Satisfactory Although it is too early to measure the full economic impact of project activities, an ex-post economic analysis of the Project (using a time horizon of 20 years and a discount rate of 10%) estimated a Net Present Value (NPV) of US$12.48 million, an economic rate of return (ERR) of 27 percent. These figures are considerably higher than those estimated at appraisal (NPV of US$7.1 million, IRR of at 12.3 percent). A financial analysis of the Registry office in El Petén was also carried out. The financial sustainability of this office was found to be satisfactory, with an NPV of US$702,922 and a cost-benefit ratio of 2:7. In addition, a fiscal impact analysis for the 12 municipalities in El Petén showed that their revenues had increased from Q24,931 in 1996 (approximately US$4,100 at the time) to Q1,297,000 in 2005 (approximately US$167,000), as a result of Project activities. 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory The Project achieved its two Development Objectives (see Section 3.1 above). Although some challenges remain, particularly regarding the continued reforms needed at the General Property Registry and the full integration of RGP and RIC databases, which are key objectives of Phase II of the Program, Guatemala now has a much more solid legal and institutional framework for land administration services than it did in The Project has also achieved most of its intermediate outcome indicators (some exceeding its targets), showing the viability of the cadastral methodologies developed and implemented under the Project, which can now be applied to other regions of the country (see Annex 2). Moreover, the Project reached all the agreed triggers for successful preparation of Phase II of the Program (see Section 2.5 above). The truly disappointing result has been the slow pace of titling of rural lands by FONTIERRAS, but this is a limitation that can be resolved during the implementation of Phase II of the Program. Finally, the Project has also shown that it is possible to build strong political support (over three different administrations) for a long-term program of strategic national interest and fundamental importance for achieving the goals of the Peace Accords. 3.5 Overarching Themes, Other Outcomes, and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Poverty Impacts: According to a 2004 World Bank Study, 3.3 percent of the population of Guatemala lived in El Petén, of which 68 percent are estimated to be poor and 12.9 percent live in extreme poverty. The intended direct beneficiaries of the Project were the inhabitants of the 12 municipalities in El Petén, which amounted to close to 500,000 people in the late 19

31 1990s. In these municipalities, the latest estimated poverty rates range from a relatively low 26.7 percent in the Municipality of San Benito to a high of 71.4 percent in San Luis. The Project has had a positive impact on direct beneficiaries, as measured by the increase in value of their landholdings. Different sources have estimated the increase in urban land values as a result of land regularization activities to be 28 percent on average for surveyed-only plots and up to 40 percent when titled. The figures for rural areas are 14 percent and 20 percent, respectively. Considering the total area of surveyed, regularized, and titled lands, the value added generated by the Project is in the order of approximately US$144.7 million (see Annex 3). In addition, the Project afforded the residents of El Petén with other immediate benefits arising from reduced land conflicts and lower transaction costs in many land administrationrelated issues, such as transfers, subdivisions, certifications, etc. Yet the analysis presented in Annex 3 could assess only the short-term economic impacts. In most cases, people who obtained land titles were not new settlers, but people already living on those lands and producing, thereby regularizing and formalizing their land tenure. In the medium term, benefits are likely to increase even more as longer-term investments on land parcels (urban and rural) show returns. Also, over time a more dynamic land market will result in efficiency gains and increased factor mobility. Similarly, as FONTIERRAS and the 12 municipalities continue to issue new titles, additional economic benefits will be accrued to the region. Gender Aspects: Historically, women were not given much of a role in public discussions related to land issues in El Petén. Traditionally, women were expected to let their husbands take title to their land, which over time led to countless cases of improper documentation due to a husband s or father s death. The massive communication campaigns implemented by the Project, coupled with the highly public nature of Project events, allowed women to have greater access to information and to become more aware of their rights. Project staff made special efforts to ensure that women benefited from project activities and to monitor project impacts. By project closing, some 39 percent of titles issued by the Project were issued to women as heads of household. This proportion varied by municipality, with a range between 23 percent in San Luis to 43 percent in Melchor de Menchos. (b) Institutional Change/Strengthening Institutional strengthening was a key aspect across the three project components. The most important institutional change achieved by the Project was, of course, the enactment of the Cadastral Information Registry (RIC) Law in August The project team was dedicated to this goal for many years until it finally paid off. The creation of a strong, autonomous RIC will greatly facilitate implementation of Phase II of the Program. The Project also supported important institutional changes and strengthening of capacities in other organizations at the national level (CONTIERRA, RGP, FONTIERRAS, and Universities) and the local level (municipalities, the Registry office in El Petén, Apostolic Vicariate of Petén). Through the Project, many public and private agencies have been strengthened in terms of building up a human resource and knowledge base to deal with present and future land administration issues. Similarly, many technical staff trained by the Project are now working in the private sector providing land administration services, the demand for which has increased significantly over the past decade. 20

32 4. Assessment of Risk to Development Outcome Rating: Moderate At the time the Project was appraised, the single most significant risk that threatened achievement of the Project development objectives was uncertainty regarding legal reforms, particularly a new land law and a new cadastre law. With the enactment of the FONTIERRAS Law in 1999 and the RIC Law in 2005, this major risk has been removed. Guatemala now has a solid legal and institutional foundation for increasing legal security of land tenure. Implementation of the RIC Law in the coming years by a well established RIC is likely to further reduce this risk to the Project s development outcomes. Nevertheless, some of the Project s intermediate outcomes are exposed to other less determinant factors which may threaten the sustainability of the investments made. In the short-term, there is the substantial risk that FONTIERRAS may not title all the rural land parcels that were surveyed under the Project. This would reduce the longer-term benefits of the Project for those people still waiting for a title. There is also the moderate risk that RIC and the RGP do not move forward on the integration of their databases, which would threaten the reliability of some of the cadastral information obtained through the Project. Over time, this could lead to a reinformalization of land transactions, as people lose faith in the accessibility, reliability, and overall value of registering transactions. However, the high levels of project beneficiary satisfaction observed during Phase I and the valuable experiences gained by national and municipal level entities reduce the above risks in the short-term, particularly since implementation of Phase II of the Program will deliver benefits to a broader constituency for next half-decade. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory Although a Quality at Entry Assessment (QEA) Review gave the Project a Satisfactory rating, with hindsight, the Bank had only a moderately satisfactory performance during the identification, preparation, and appraisal of the Project. As noted in Section 2.1 above, project design suffered from a few weaknesses related to readiness for implementation, monitoring arrangements, and a weak legal framework which limited the operational capacity of the Project s implementing agency. In addition, the time frame envisioned for the Project proved to be highly unrealistic. However, to compensate, the Bank supported Government with valuable advice and understanding from a highly qualified team during the almost twoyear delay between project appraisal and effectiveness. (b) Quality of Supervision Rating: Moderately Satisfactory Bank supervision of the Project was likewise moderately satisfactory. On the positive side, the various Bank supervisory teams were very supportive during critical periods, particularly 21

33 during the pre-effectiveness period ( ), through the Registry crisis in 2003, and during the transition from UTJ to RIC (2005 to 2006). Bank supervision missions took place on a regular basis. In almost every mission task team members traveled to El Petén to talk directly to field office staff, co-executing agencies, and beneficiaries themselves. The 2003 Mid-Term Review was also an important achievement from a supervision standpoint. The MTR took stock of where the Project was at the time, assessed all aspects of design and implementation (technical, operational, fiduciary, environmental, and financial), and concluded with a clear action plan which, in a sense, re-launched the Project with a crisper sense of direction. Monitoring of project performance indicators improved considerably after the MTR. In addition, the MTR reoriented some Project resources to ensure the triggers for Phase II of the Program would be met and the Program would continue. On the other hand, Bank supervision suffered from some short-comings. The Project was led by four different Task Team Leaders during its 8-year implementation. This reduced the Bank s effectiveness in identifying problems early on. For example, the UTJ team gradually came to the conclusion that its staff had developed the capacity to carry out land regularization activities more cheaply and faster than through big international contracts. UTJ took advantage of this built-in capacity to regularize urban areas, but it could only do so by drawing on its operating costs expenditure category. It took a while before remedial actions were taken to correct this imbalance in expenditure categories. Likewise, it could be argued that Bank approval of three extensions of closing date, amounting to almost four years, may reflect supervision shortcomings. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory In retrospect, Bank performance was very good during preparation in terms of seizing the window of opportunity to assist Guatemala in implementing the 1996 Peace Accords during the crisis periods in 2003 and , when project agencies needed high-level technical support and guidance. On the other hand, the Bank could have performed better during the first year of implementation to ensure the Project s M&E arrangements were adequate. It could also have performed better during the last couple of years when implementation slowed down considerably during preparation of the Phase II. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory The Project received strong political support (from three different Government administrations) throughout its implementation. Although approval of the RIC Law took almost seven years, the fact that it was enacted and that RIC is now a strong and well structured institution is testimony of the Government s commitment to modernize Guatemala s land administration system. On the other hand, Government performance could have been better on a number of issues. Three were particularly important: (i) higher and more regular provision of counterpart funds, (ii) increased efforts to ensure FONTIERRAS complied with its commitments under the Project, and (iii) increased efforts to encourage 22

34 greater cooperation between RGP and RIC in developing an integrated cadastre registry database. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory Implementing Agency Technical and Legal Unit (UTJ) Cadastral Registry (RIC) General Property Registry (RGP) Presidential Commission for the Resolution of Land Conflicts (CONTIERRA) Land Fund (FONTIERRAS) Anthropology and History Institute (IDEAH) National Geographic Institute (IGN) Municipalities United Nations Development Programme (UNPD) Performance Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory Unsatisfactory Moderately Satisfactory Moderately Satisfactory Satisfactory Moderately Satisfactory In the early stages of project implementation, Government was very keen to use UNDP as a financial agent for payments and processing of contracts, in order to enhance the credibility of the program and isolate project transactions from political interference. As UTJ fiduciary capacities developed, the need for UNDP services was questioned by Government, particularly considering the relatively high management fee charged by UNDP (3.5 percent of amounts managed). And although UNDP s performance under the Project was generally satisfactory, under Phase II of the program it will no longer serve as a financial or procurement agent on RIC s behalf. (d) Justification of Rating for Overall Borrower / Implementing Agency Performance The Project s implementing agency, initially UTJ, RIC at the end, consistently displayed a strong commitment to achieving the Project Development Objectives. It enjoyed strong leadership with continuity throughout most of project implementation, it developed a qualified technical and administrative team, both at the central level in Guatemala City and in El Petén, and it played an effective coordinating role, particular with other donorfinanced land projects. Inter-agency coordination and monitoring was particularly challenging, but except in the case of FONTIERRAS (and at times RGP), UTJ managed to keep all participating agencies relatively well-engaged. UTJ-RIC also performed well with regards to engagement of project beneficiaries, through extensive communication campaigns, strategic alliances with municipalities, CONTIERRA, and the Apostolic Vicariate of Petén. Approximately US$1 million was spent on capacity building and communication to develop a culture of land administration at the beneficiary and municipality level, and to train local staff. UTJ also had some shortcomings, the most significant being its inability to prepare the international bidding package for rural cadastral works early on in the Project. It also could have performed better in terms of conducting baseline surveys early on in the Project. 23

35 6. Lessons Learned The Project yielded important lessons, namely: Political commitment is fundamental for legal and institutional reforms: The Project has shown that meaningful legal and institutional reforms on land issues only take place when there is strong political support at the highest levels of government in both branches, the Executive and the Legislative. When political support is present, land administration projects can be an effective instrument to develop sound technical proposals, facilitate exchange of experiences with other countries, and build public support for agreed reforms. Once legal changes are in place, implementation also requires political support. The consolidation of RIC is a good example of this. Social communication and beneficiary participation are fundamental to get buy-in early on: From the outset, UTJ relied quite heavily on extensive communication campaigns to get its messages across. The understandable initial reluctance to participate in land regularization activities that people often have can be overcome by appropriate and persistent communication. In addition, UTJ s use of strategic partners, particularly the municipalities for the case of urban lands and the Apostolic Vicariate of Petén for the case of rural lands, was very successful in encouraging public participation in project activities. Identification of common interests and building trust among different stakeholders are also fundamental. Integration of the Cadastre and Registry may take some time: The integration of cadastral and registry functions under one institution is very rare; only a couple of countries in the region have done it. The Project has shown that Guatemala is not ready at this time for a full institutional integration between the Cadastre and the Registry; otherwise the law that created RIC could have just as well created an integrated Registry. Under these circumstances, the second-best approach is a gradual integration, as currently planned under Phase II of the Program. Cadastral surveying, conflict resolution, and legal validation cannot all be subcontracted without strong local participation: The Project has shown that, with proper training, piloting and experienced external technical support, many land administration capabilities can be developed locally fairly quickly. Since international contractors inevitably need to rely on local subcontractors for the extensive field work required for land surveying, for knowledge of local laws and customs, and for alternative conflict resolution mechanisms, it makes more sense to rely on several smaller contracts than on one large contract. This new approach is the one being pursued under Phase II of the Program. Baseline data collection should take place during project preparation: Baseline data collection should have taken place shortly after the basic design of the Project had been agreed (mid-1998). This could have been accomplished by taking advantage of the PPF facility, and would have resulted in considerably better evaluation of project impacts at the household level. 24

36 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Borrower highlighted the following issues in its Completion Report and comments to the draft ICR: Achievement of Project Objectives. The Borrower considers the enactment of the RIC Law as the Project s most significant achievement because it strengthens the institutional framework for land administration in Guatemala and mandates social participation in the various steps of the cadastral process. Until August 2005, this legal foundation to the cadastral process simply did not exist in Guatemala. Strengthening of Municipalities. The Project strengthened local governance by establishing 12 cadastral offices in El Petén (one in each municipality) which are now maintaining the cadastral databases in the Department. Municipalities are committed to updating their respective databases at least bi-monthly. This has considerably strengthened the formalization of land market transactions and increased land values. Strengthening of CONTIERRA. Likewise, the Project s support to CONTIERRA, the main mechanism for conflict resolution over rural lands, is highlighted. The Project established three CONTIERRA offices and one mobile unit which have greatly facilitated the coordination between cadastral activities (responsibility of UTJ/RIC) and conflict resolution (CONTIERRA/SAA). Establishment of a Registry Office in El Petén. This Project outcome has significantly reduced the turnaround times for registering properties (urban and rural). By Project closing, this process was reduced from several months to about 4 to 6 weeks. Design of the Integrated Cadastre-Registry System. Some progress was achieved under the Project in the design of an integrated system. The experience under Phase I of the program suggests that full integration requires close coordination among several public entities besides RIC and RGP, that is, the National Council for Protected Areas, the Anthropology and History Institute, the Forestry National Institute, the Ministry of Environment and Natural Resources and others. The participation of civil society organizations has also shown to be important for promoting better understanding of land administration issues and mobilizing public support for institutional reforms. Bank Comments. The Bank team largely concurs with the Borrower s assessment of the Project s main achievements. Indeed, as argued throughout this ICR, Phase I of the program was fundamental for establishing a solid legal and institutional framework for land administration in Guatemala. Under Phase II, the APL program will expand vertically (through further institutional reforms, of the RGP especially, and the technical integration of land regularization processes) and horizontally (through wider geographical coverage). However, the Bank s team considers that closer institutional coordination, although necessary, is not sufficient to achieve full integration between the cadastre and registry. Considerable compromises by both RIC and RGP, involving some loss of autonomy from each, will be needed if the integration of their databases is to succeed. Also, continuous technical support 25

37 from both entities to municipal level cadastral offices and registry branches will be needed for several more years until they fully develop their own local capacities. (b) Cofinanciers The Project did not have any cofinanciers. However, several other donors had parallel financing arrangements in different regions of the country, all of which were coordinated by UTJ. These are summarized below. Table 3. Major Related Projects Financed by Other Agencies Project Name Escuintla Cadastre Project Zacapa-Chiquimula Cadastre Project Izabal Cadastre Project Sacatepéquez Cadastre Project Verapaces Cadastre Project Institutional Strengthening of UTJ and IGN Project Amount (US$) Financier IP/DO Ratings Sector Issue 2.2 mill. Sweden Tenure security in selected municipalities of Escuintla 6.9 mill Netherlands Support to technical, legal, and social framework for land tenure in Zacapa- Chiquimula 4.1 mill Norway Support to national cadastral process and field work in Izabal 0.6 mill Spain Cadastral field work in selected municipalities of Sacatepéquez 1.3 mill GTZ Cadastral field work in selected municipalities of Alta and Baja Verapaz 7.6 mill Switzerland Topographic equipment and technical assistance to UTJ and IGN (c) Other partners and stakeholders The Borrower s assessments in Section 7(a) above include the inputs of the main partners which participated in the Project, including FONTIERRAS, RGP, CONTIERRAS, IDAEH, and municipalities from El Petén. 26

38 Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$ million equivalent) Components Appraisal Estimate (US$ million) Actual/Latest Estimate (US$ million) Percentage of Appraisal CADASTRE AND LAND REGULARIZATION % LAND REGISTRY % PROJECT MANAGEMENT UNIT % Total Baseline Cost % Physical Contingencies Price Contingencies Total Project Costs % Project Preparation Fund Front-end fee IBRD Total Financing Required % (b) Financing Source of Funds Type of Cofinancing Appraisal Estimate (US$ million) Actual/Latest Estimate (US$ million) Percentage of Appraisal Borrower % International Bank for Reconstruction and Development % 27

39 Annex 2. Outputs by Component Outputs under the Project Preparation Facility (PPF) Rating: Satisfactory Between 1998 and 1999, preparatory activities in the municipality of San Francisco in the Department of El Petén were financed by a PPF amounting to US$2.2 million. During this period, the cadastral surveying on procedures were developed and tested, resulting in 367 surveyed land parcels with a total size of 50,455 hectares. Also, the municipal boundaries of San Francisco were demarcated and the Petén branch of the Registry was opened in May Those early experiences showed that local authorities and beneficiaries were very supportive of the cadastral surveying and titling methodologies being developed by UTJ and provided an early indication of the potential impacts that a massive land regularization program could have, in terms of increased land tenure security. Component 1: Cadastre and Land Regularization (US$31 million) Overall Rating: Moderately Satisfactory This component included the most significant investments made by the Project. To evaluate the component s performance, one must disaggregate investment activities by each of its eight subcomponents (see Table A2.1 below). 1.1 Cartographic activities Rating: Highly Satisfactory This subcomponent was highly successful in achieving its goals. The Project financed: Establishment of a new basic geodetic network with 41 points in the Department of El Petén (currently awaiting validation by the National Geographic Institute), reaching 103% of target. Purchase of satellite images (spot images with 4 channels and resolution of 10 meters) over an area of 36,000 km2 (103% of target), which was the basis for updating the basic cartography of the entire Department of El Petén. Satellite images were used instead of aerial photography because they were cheaper, readily available, and more practical, given that aerial photography is more difficult to obtain due to the extended periods of cloud coverage in El Petén. Production of municipal urban maps covering km2 (212% of target). Definition of all inter-municipal boundaries within the Department of El Petén, with an extension of 1,305 km (119% of target), although these are still awaiting approval by the Guatemalan Congress. 28

40 Table A2.1. Project Component, Subcomponent, and Activity Performance Indicators Component / Subcomponent / Original Target MTR Revised Indicator and Target Actual Value Achieved at Completion (% of target) Activity Performance Indicator Rating Component 1) Land Regularization MS Cartographic activities - Establish. of new basic geodetic network 40 points 40 points HS 41 pts. (103%) - Production of 1/30,000 aerial photos over 35,5000 km 2 (rural) - Production of a 1/8,000 aerial photos and 20cm-accurate maps over 40 km 2 (urban) - Production of 1m-accurate ortho-photos over 18,500 km 2 35,500 km 2 40 km 2 18,500 km 2 Ortho images instead, with maps 35,000 km 2 Ortho images instead, with maps over 55 km 2 36,000 km 2 (103%) km 2 (212%) - Demarcation of all municipal boundaries in Department of El Petén Adjudication process of rural lands - Geo-referencing, surveying, titling, and registration of rural ( national ) lands Adjudication process of urban lands - Geo-referencing, surveying, titling, and registration of rural ( municipal ) lands - Establishment of municipal cadastral offices 1,100 km 11,400 km 2 650,000 ha. surveyed and 325,000 ha. titled 12 municipal áreas 12 50,000 land parcels surveyed and 15,000 titled 12 1,305 km (119%) MU 723,983 ha. (111%) 29,889 ha. (9%) HS 67,706 parcels (135%), plus 5,046 outside El Petén 28,747 titled (192%) 12 (100%) - Number of urban titles with woman (as head of household) titled holder (number, out of total) Conflict resolution - Cases resolved in rural areas - Cases resolved in urban areas Design and implementation of social communication campaign - Proportion of rural population aware of project activities - Proportion of urban population aware of n/a n/a 90 % 90 % n/a n/a No target set, but indicator tracked for monitoring purposes 75% 75% project activities Improvement of national cadastral technical standards n/a Rural and urban manuals adopted 39.8% S 79% 78% S 95% (127%) 65% (87%) S Both manuals adopted (100%) 29

41 Creation of a cadastral database to be integrated with Registry Demarcation of special areas - Demarcation of archeological sites Constitution of cadastral information system n/a Cadastral database created and functioning No targets set, as these are done on chance-find basis MU Cadastral database created, but not integrated with Registry S 22 sites in 7 municipalities - Demarcation of protected areas Component 2) Land Registry No targets set, as these were done on a pilot basis Three protected areas covering 85,996 ha. MS - Establish a Registry office in El Petén - Registration of Titles in RGP - Design of an integrated cadastre - registry database Component 3) Project Management 1 office Office established and fully functional 65,000 20,500 Integrated database design completed S Office fully functional (100%) S 29,512 (144%) MU Only an agreement b/w RGP & RIC to develop joint platform was reached (30%) MS - Financial management, audits, procurement, inter-institutional coordination, etc. n/a n/a FM/audits MS Proc. MS Coord. MS Overall Outputs Performance MS 1.2 Adjudication process of rural ( national ) lands Rating: Moderately Unsatisfactory The targets of this subcomponent were only partially completed. On the one hand, the targets for geo-referencing and surveying rural land parcels, under the responsibility of UTJ were met. A total of 723,983 hectares of rural lands was surveyed (111% of target), of which 193,735 ha. were completed by UTJ staff and 530,248 ha. by an international contractor. But field work by the contractor (Consortium Tracasa-Novotecni) started very late, due to long delays in preparing the international bidding package and adjudicating the contract. This was the Project s single largest investment (about US$6 million), and it was not signed until May Given this delay, this activity s rating can only be moderately satisfactory. The titling of surveyed parcels, on the other hand, under the responsibility of FONTIERRAS, was the Project s most significant short-coming. The performance of FONTIERRAS has been unsatisfactory throughout most of the Project s implementation period. Despite the clear 30

42 legal mandate to perform titling activities (both under the 1999 law which created it and the Project s Loan Agreement) and direct financial support from the Project, FONTIERRAS proved unable to keep up with the rapid pace of cadastral surveying activities. FONTIERRAS disappointing performance under the Project was due to two main reasons. First, FONTIERRAS is a Land Fund whose main purpose is to redistribute large farms to smallholder farmers. The titling of already settled lands in the Department of El Petén is of secondary importance to its constituents. And second, FONTIERRAS is an autonomous entity run by a Board which is not under complete Government control. Although some may argue that FONTIERRAS autonomy from Government control may have benefits related to FONTIERRAS primary functions, it clearly proved to be an impediment to the achievement of one of this Project s critical outputs, namely, the titling of rural properties. Repeated efforts by UTJ (and later RIC), the Ministry of Agriculture (which chairs the FONTIERRAS Board), and Bank supervision missions to influence the behaviour of FONTIERRAS yielded limited results. By project closing, only 29,889 ha. of rural lands were titled (9% of target), and only 765 new rural titles were registered, a clearly unsatisfactory outcome. Thus, combining the moderately satisfactory rating for surveying activities with the unsatisfactory rating for titling activities gives an overall rating for this subcomponent of moderately unsatisfactory. 1.3 Adjudication process of urban ( municipal ) lands Rating: Highly Satisfactory In sharp contrast with the rural subcomponent, the regularization of urban lands was the Project s most successful subcomponent. The Project established 12 municipal offices, trained municipal and project staff, and provided continuous operational support for implementation of field data collection, desk reviews, conflict resolution, and legal verification of surveyed parcels. These capacity building efforts resulted in the successful geo-referencing and cadastral surveying of 67,706 urban land plots (135% of target), and the titling and registration of over 42 percent of these (28,747 land titles, or 192% of target). In addition, the Project also surveyed 5,046 parcels, covering km2, in the municipality of Bartolomé de las Casas in the Department of Alta Verapaz. It is worth noting that close to 40 percent of these registered titles were issued to women as heads of household. The success of this subcomponent can be attributed to three important factors. First, from the outset, during the preparatory phase financed by the Project s PPF, UTJ prioritized the establishment of strong and effective partnerships with municipal authorities in El Petén. The Project signed participation agreements with each municipality, provided training to project and municipal staff operating in the 12 municipal cadastral offices, and established a permanent presence in each municipality. Second, UTJ invested considerably in social communication campaigns. It took advantage of popular local events, weekly fairs for example, to inform the public about the benefits of the cadastral surveying process and to strengthen its institutional partnerships with local governments and civil society organizations. And third, municipalities ended up playing a more significant role in mobilizing the local populations, given the considerable and immediate benefits to them. Municipal authorities agreed to charge project beneficiaries only a social price for land adjudication rights. Although this price varied by municipality, it was roughly US$0.25 per sq meter of urban land, quite affordable to the great majority of beneficiaries. In some 31

43 municipalities, it was reduced on a couple of occasions to accelerate the process titling and registration. The definition inter-municipal boundaries and the production of urban maps facilitated the zoning of urban areas, providing a sound technological basis for territorial planning and development. Also, the inscription of beneficiaries into the municipal registry enabled municipal authorities to start collecting property taxes on municipal land (see Annex 3 on fiscal impact). 1.4 Conflict resolution Rating: Satisfactory As part of the Peace Accords, a Presidential Commission for the Resolution of Land Conflicts (Comisión Presidencial para Resolución de Conflictos, CONTIERRA) was created in The Project facilitated the opening of three new regional branch offices of CONTIERRA, to increase the outreach to project beneficiaries. The offices provided bilingual and free legal assistance to beneficiaries and municipalities. In addition, participatory conflict management programs for municipal mayors and beneficiaries were organized. In 2004, CONTIERRA was transformed into the Secretariat of Agrarian Issues (Secretaría de Asuntos Agrarios, SAA-CONTIERRA). CONTIERRA concentrated its efforts in officially registered serious conflicts. A number of softer cases, such as disputes over property boundaries, missing or incomplete identity or tenure documentation, were solved by project staff who had received training in conflict resolution techniques. As a result of these efforts, between 1998 and 2007, 1,266 land conflict cases in the project area were submitted to CONTIERRA, of which 78 and 79 percent of urban and rural cases, respectively, were satisfactorily solved (compared to a target of 90%). In addition, the role of the Catholic Chuch has also been important in conflict resolution activities financed by the Project. In late 2003, the contractor responsible for rural land regularization activities dramatically increased its field presence in rural Petén. It became obvious at the time that UTJ needed to find a credible partner to act as an honest broker between beneficiaries, particularly indigenous communities, on the one hand, and the contractor s technicians and project staff on the other. Consequently, in January 2004 a landmark collaboration agreement was signed between UTJ and the Apostolic Vicariate of El Petén to provide free and bilingual legal advice, orientation and guidance to project beneficiaries during the land regularization process. 1.5 Social communication campaigns Rating: Satisfactory The project implemented extensive communication campaigns in both urban and rural areas. UTJ regularly contracted communication specialists for the design of campaigns and for monitoring project impacts. A beneficiary assessment survey carried out at the end of the project showed that 95 percent of those surveyed in rural areas, and 65 percent in urban areas in El Petén, were aware of project activities. Accordingly, this subcomponent is rated satisfactory. 32

44 1.6 Creation of a cadastral database to be integrated with the Registry Rating: Moderately Unsatisfactory The Project was instrumental in developing cadastral surveying methodologies, standards, and information databases. These were implemented by UTJ quite independently from the General Property Registry, which is one of the most autonomous entities in Guatemala (see Section 2, below). The Project s land regularization activities generated a wealth of information requiring a fairly sophisticated data management system which was gradually developed and adjusted to the needs of various institutional users, including RGP. UTJ was successful in developing a parcel-based geographical cadastral database, but it was not integrated with RGP s deed-based registry database. During project implementation, adjustments were made to facilitate the interaction between the two databases, but full integration was not accomplished. By February 2004, an agreement was reached between UTJ and RGP to establish a common technical platform to integrate their respective databases. Enactment of the RIC law in August 2005 made it a legal imperative for the two institutions to cooperate more closely, with an eventual integration of their databases. During 2005 and 2006, RGP and RIC made significant progress towards this integration. Unfortunately, by project closing in March 2007, the common platform had not been developed yet. This integration is now a central objective of Phase II of the program. Thus, this subcomponent output (which is related to an activity under Component 2) deserves a rating of moderately unsatisfactory. 1.7 Improvement of national cadastral technical standards Rating: Satisfactory Given the considerable political support UTJ (and subsequently RIC) has enjoyed since its creation, it has been successful in developing national cadastral technical standards that have now been officialised with the enactment of the 2005 RIC Law. UTJ developed, tested, and officialised both rural and urban cadastral manuals. Therefore, this particular subcomponent has a satisfactory rating. 1.8 Demarcation of special areas Rating: Satisfactory In compliance with OD 4.11 (Protected Areas), the Project s Loan Agreement included a Supplemental Letter requiring the Anthropology and History Institute (Instituto de Antroplogía e Historia, IDAEH) to demarcate any archeological site discovered in the course of land regularization activities financed by the Project. Accordingly, the Project demarcated 22 sites in 7 municipalities in the Department of El Petén (see Table A2.2 below). In addition, the Bank responded positively to a Government request to include, on a pilot basis, selected protected areas in the Project s land regularization activities. This was not originally envisioned at project design, but emerged in the context of the Mid-Term Review. Table A2.3 below lists the three protected areas demarcated by the project, comprising 85,996 ha. 33

45 Table A2.2. Archeological Sites Demarcated Municipality Site San Luís Dolores San José La Libertad Flores Sayaxché Melchor de Mencos Naj Tunich Ixtutz, Ixtontón, Ixkún, Sacúl, El Chal Motúl El Tamariz, Zapote Bobal, Itzinté, El Polol, San Joaquín Tayasal, Uaxactún, Ixlú Parque Nacional El Rosario, El Ceibal (pending completion), Aguateca, Dos Pilas, Sayaxché La Blanca Table A2.3. Demarcated Protected Areas Name of Protected Area Location Area (ha) Biotopo San Miguel La Palotada (El Zotz) San José 37,861 Tikal National Park Flores 47,523 Biotopo Cerro Cahuí San José 611 Total 85,996 Component 2: Land Registry (US$2 million) Overall Rating: Moderately Satisfactory This component was much smaller than Component 1 and it focused exclusively on those activities related to the General Property Registry. The component basically supported the establishment of a Registry office in the Department of El Petén, but it also supported the strengthening of the RGP more generally, and the design of an integrated cadastral-registry system. 2.1 Establishment of Registry office in El Petén Rating: Satisfactory The Registry office initially opened in el Petén in 1999 as a window to receive documents from project beneficiaries and forward them to the RGP s headquarters in Guatemala City for final approval. The office collected fees for registering land sales, subdivisions of parcels 34

46 (desmembraciones), mortgages, title cancellations (arising from court judgements, FONTIERRAS resolutions, or other causes), liens, pledges, issuance of certifications, and other land-related transactions. In June 2005, the office assumed additional functions and established a digital connection with the Registry s headquarters, so duplicate documents were immediately fed into the official registry system at the central office. Paper copies of the documents, however, still have to be transported between El Petén and Guatemala City. It is expected that a digital signatures will be introduced in late 2007, making the physical transport of documents unnecessary. Also, the Registry has provided direct online access for tracking documents. This can be done directly through RGP s website ( Direct access by project beneficiaries to the Registry has reduced the processing time of documents from about six months in the late 1990 s to just a few weeks. Also, the Registry office in El Petén offers guidance to users on how to prepare and submit documents. Through an agreement with BANRURAL of Petén, project beneficiaries were able to make Registry fee payments at this local bank. The successful experience with the Registry s Petén branch is being used to open three new Registry branches in the departments of Escuintla, Zacapa, and Alta Verapaz, where Phase II of the Program will operate. 2.2 Titles registered in RGP Rating: Satisfactory All new titles issued under the auspices of the Project were immediately registered at RGP before delivery to the beneficiary. This proved to be an important feature of the land regularization process, because it eliminated the possibility of project beneficiaries having unregistered titles. By closing in March 2007, the Project supported the registration of 29,512 titles (144% of target), meriting a satisfactory rating for this subcomponent. 2.3 Design of an integrated cadastral registry database Rating: Moderately Unsatisfactory As noted earlier, Guatemala s General Property Registry, created in 1877, is one of the most autonomous entities in the country. The Registrar is appointed by the President of the Republic, and because the institution does not receive regular budget transfers (it operates with its own revenues), it is not subject to the standard fiduciary controls of other public entities. This special status by the RGP has been partly responsible for the limited integration that has taken place between its deed-based registry database and UTJ s parcel-based geographical database. After a severe credibility crisis in 2003, RGP launched a long-overdue process of institutional reforms, including administrative reforms and a review of standards and practices. In 2006 the Registry was incorporated into SIAF, the Government s integrated financial and administrative system which received considerable Bank support. These reforms, coupled with the enactment of the RIC Law in 2005, are allowing closer cooperation between RGP 35

47 and RIC. Phase II of the Program has, as one of its objectives, the development and implementation of an integrated cadastre-registry computerized system. Because the design of such a system was supposed to have taken place under this Project, and this did not occur, this subcomponent has a moderately unsatisfactory rating. Component 3: Project Management (US$6 million) Overall Rating: Moderately Satisfactory Formally, the Project Implementing Agency was the Ministry of Agriculture and Livestock, but in practice the Project was run by UTJ, which enjoyed considerable political support and autonomy. Moreover, UTJ played a pivotal role in coordinating the activities of several government and civil society organizations involved in land administration matters. In particular, it ensured that different cadastral surveying activities taking place in various regions of the country shared a minimum set of common techniques and standards. UTJ also served as an effective focal point for international donor coordination. Two important shortcomings in UTJ s performance were (i) the long delay in the preparation of the international bidding package and awarding of the contract for rural cadastral works, (ii) its inability to exert more preasure on FONTIERRAS to expedite the titling of rural land parcels. Therefore, UTJ s performance as project implementing unit receives a rating of moderately satisfactory. Throughout most of the Project s life, fiduciary compliance has been satisfactory. Financial Management functions were carried out by UTJ with the assistance of UNDP, as a financial agent. Bank loan proceeds and Government counterpart funds were deposited in a UNDP account. Although UTJ carried out the financial management functions including conciliation of accounts, inventories of project assets, contracting of external audits and procurement processing, payments were made by UNDP which provided monthly statements to UTJ. Financial Management performance was downgraded to moderately unsatisfactory in the last year of implementation due to a 13-month delay in submitting the 2005 audit report. Except for these two years, annual audits were submitted on time, and no major issues were identified by the auditors. The project maintained proper internal controls (including segregation of fiduciary responsibilities) and oversight throughout implementation, and management of project funds (including management of bank accounts, maintenance of supporting documentation for project expenditures, and production of interim financial reports) was satisfactory. Therefore, overall, financial management functions receive a rating of moderately satisfactory. Procurement functions were also carried out satisfactorily throughout most of project implementation. However, during the transition period resulting from the approval of the RIC law (in August 2005) some project staff, including the most experienced procurement specialist, left UTJ and were not promptly replaced when RIC was being consolidated. Since these changes occurred at the tail end of project implementation, this loss of procurement capacity did not negatively affect achievement of the Project Development Objectives or compromise the use of project funds. One important procurement issue which arose at the end of the project was the complaint raised by the 36

48 Project s single largest contractor, the Tracasa-Novotecni Consortium, in charge of carrying out the cadastral surveying of rural parcels in most of the Project Areas in El Petén. The complaint centered on a dispute over whether the payments for the contractors services were exempt from taxes or not. The contractor wrote to the Bank regarding this dispute and, in accordance to the Procurement Guidelines and other applicable Bank policies, the Bank promptly referred the issue to Government and facilitated the dialogue between the two parties until a final agreement to resolve the dispute was reached in March Overall, procurement functions receive a rating of moderately satisfactory. 37

49 Annex 3. Economic and Financial Analysis and Fiscal Impact Analysis Table A3.1. Summary of Economic Analysis Phase I, Land Administration Project NPV US$ million ERR 27% I. Economic Costs of the Project As shown in Annex 1, the actual Total Financing for the Project was US$35.5 million. Of this, US$21.7 million was spent on Cadastre and Land Regularization, US$1.2 million on Land Registry and US$10.9 million on Project Management. Additionally, the total financing includes US$2.2 million for the Project Praparation Facility (PPF) and US$0.3 million for the IBRD Front-end Fee. Operational costs are calculated from 2008 onward and are not expected to exceed US$2,852,000. They are accrued until II. Estimation of Benefits It is relatively difficult to estimate the real financial benefits of the investments in terms of an increase in household income due to the fact that no baseline survey was conducted at the beginning of the project. Similarly, a number of land titles have been submitted since efforts to evaluate the economic impact were completed. Nevertheless, some indicators exist and show that through the establishment of a land regularization and titling system, the project has generated a number of benefits in both rural and urban areas. An evaluation conducted by an external party showed that beneficiaries of the project appreciate the introduction of a land administration system in Petén, especially since they were able to participate in the development process. The evaluation states that 78 percent of the beneficiaries queried in rural areas made investments in productive assets. This includes the purchase of improved seeds, fencing, pasture management, and watersheds, among other investments. Likewise, 68 percent of urban beneficiaries queried reported having made improvements to their houses and garden fences, or starting new construction. There was also a considerable increase in access to credit. Out of 169 households surveyed in El Petén, 9% of those from rural areas and 29% from urban areas had obtained loans using their land title as collateral. In contrast, of those without land titles, only 2% and 15%, respectively, obtained loans from financial institutions. Interestingly, 100 percent of the urban loans reported had taken place in the last 4 years, and 78 percent of the rural loans in the lasat 8 years, when the Project started. Impact of the land surveying and regularization process on property values Increases in property value due to land surveying and regularization primarily generally come about for two reasons: (a) land tenure security provides an incentive to invest in land improvements and/or construction on the land; and (b) secure land can be used as collateral for access to credit. At the same time, property values are influenced by a wide range of 38

50 factors such as location, size, neighbouring infrastructure, value of construction on the land, and potential uses of the property. Since estimating the impact of these factors separately can be rather complex, the economic benefits of the project were estimated based on the land value differential between unregularized land, regularized land, and titled land. In theory, this increase is an economic indicator of the future flow of net benefits that can be obtained from the induced investments on the land (either by current or future owners) as a result of greater security of ownership and the ability to sell the property later on. Estimate of the increased value of land Two sources of information were used in order to determine the incremental value of the land that was regularized under the project: (a) a survey of project beneficiaries; and (b) information received from BANRURAL. (i) Estimated increase of land value by the beneficiaries (through a survey) As part of an external evaluation, 170 people were surveyed. Of the 85 beneficiaries living in rural areas, 15 responded (Table A3.2). Of the 83 beneficiaries living in the urban areas, 16 gave quantifiable information (Table A3.3). Table A3.2. Comparison between Land Prices of Rural Beneficiaries of the Project Between 1999 and 2005 Beneficiaries Interviewed Price of Land Before Project Price/Hectare of Surveyed Land Price/Hectare of Titled Land Q/ha Q/ha Q/ha 1 1,250 2,344 3, ,005 5,409 6, ,250 1,563 2, ,563 2,813 3, ,172 1,563 3, ,563 2,344 3, ,563 2, ,116 2, ,136 1, ,563 3, ,339 1,674 2, , ,042 2,083 3, ,115 1,302 2, ,157 2,315 3,472 Averages Q/ha 1,666 2,222 4,444 Q/m² US$/m² Difference 0% 38% 181% Source: Ing. Raúl Maas, Evaluation of economic benefits in Petén, Guatemala. 39

51 Table A 3.3. Comparison between Increases of Land Values of Project Urban Beneficiaries between 1999 and 2005 Beneficiaries Interviewed Price of Land Before Project Price/Hectare of Surveyed Land Price/Hectare of Titled Land Q/ha Q/ha Q/ha 1 5,000 7,500 15, ,000 40,000 50, ,000 35,000 40, ,000 25,000 50, ,000 2,000 5, ,000 10,000 10, ,000 90, , ,000 10,000 25, ,000 50,000 60, ,000 12,000 18, ,000 5, ,000 10,000 20, ,000 75, , , , , ,000 50,000 75, , , ,000 Averages Q/ha 28,206 60,531 82,375 Q/m² US$/m² Difference 0% 115% 192% Land Value Estimated by the RIC Office in Petén Values indicated by the RIC office in the department of Petén for urban areas that have not yet been surveyed,vary between US$0.65/m 2 to US$2.58/m 2 (Q5.00/m 2 to Q20.00/m 2 ). Prices depend largely on the level of development of each municipality. For example, the current prices for the municipality in San Francisco are US$2.0/m 2 (Q16), whereas in the less developed municipalities of Santa Elena, Flores and San Benito they are around US$3.2/m 2 (Q25.00). In rural areas, land values vary between Q0.17/m 2 for areas without any cadastral information and Q0.45/m 2 for areas with titles. Reported prices vary between Q60,000 to Q100,000 per caballería (45 ha) equivalent to Q0.13/m 2 to Q0.22/m 2 in unsurveyed areas, and Q200,000 to Q400,000 per caballería (Q0.44/m 2 to Q0.89/m 2 ) for titled land, although a plot of land with water would cost up to Q600, per caballería (Q1.33/m 2 ). 40

52 The borrower s final report indicated that in some cases, they observed price increases of more than 300 percent for surveyed land and an additional 100 percent when the land is titled, in both urban and rural areas. Values Estimated by BANRURAL Local experts (including real estate agents, credit agents, and cadastral technicians) value titled and surveyed land at a much lower level. A baseline study undertaken for Phase II of the Project consulted with BANRURAL and produced a conservative estimate. For land within the Department of Izabal (which has similar socioeconomic and ecosystem characteristics as Petén), they estimated only a 25 percent value increase per hectare with respect to the original value for titled property in rural areas and a 50 percent increase for urban properties. BANRURAL estimated that surveyed land in the area of the Petén would increase in value by 35 percent in urban areas and 17.5 percent in rural areas, and that titled land would increase in value by 50 percent in urban areas and 25 percent in rural areas. Net Present Value and Economic Rate of Return Estimated In light of the above, the NPV of net economic benefits is based primarily on BANRURAL estimates. Additional adjustments are made for the incremental value generated through the titling of land (50 percent in urban areas and 25 percent in rural areas) and the cadastering of the land (35 percent in urban areas and 17.5 percent in rural areas) It is also assumed that considering the level of poverty Petén, only one-third of beneficiaries with surveyed land would be in the position to move forward with the registering and titling process (which involves paying a registration fee and other costs). The baseline prices of land are based on information provided by municipalities for the urban areas and by FONTIERRA for the rural areas. The discount rate used for the analysis is 10 percent (Table A3.4). Table A 3.4. Base Data for Calculation of NPV, ERR Surveyed and Titled Initial average price (US$) per m² ** Increase in value of land due to surveying*** Increase in value of land due to titleing *** Total benefits due to land surveyed Total benefits due to titles Total Area (m²)* Surveyed Peten 7,356,197,933 Urban 116,367, % 21.34% % 15.0% 2,773, ,380 Rural 7,239,830, % 3.25% % 7.5% 53,064,738 2,291,733 Total in ('000) 59,098 *Information Received by UTJ/RIC ** The initial average price were given by the municiplaities for the urban and by FONTIERRA for the rural areas. *** Information on % of the increase of value of land were given by BANRURAL Exchange rate used is: Q7.7 for US$1.00 To simulate a situation where the increased value of land is the NPV of a future stream of net benefit flows, the increased value of land was decomposed in 20 annuities (with interest rate equal to the discount rate, and a payment period of 20 years) the same methodology used for the economic analysis in the PAD. The NPV estimate based on the above-mentioned assumptions is US$13.9 million and the associated ERR is 27 percent (Table A3.5). 41

53 Table A3.5. Estimates of NPV and ERR of the Land Administration Project (table 2.4&2.5) Costs Bank commission 304 PPF 1, Loan 452 2,705 3,275 6,150 5,681 5,310 3, Counterpart Funds ,867 1,200 1, Contributions RIC for OM 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 Total Costs 1, ,802 5,142 7,350 6,707 6,176 3, ,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 2,852 Discounted Costs 1, ,105 3,512 4,564 3,786 3,169 1, ,100 1, ,852 Added value of cadastred and titled land 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 Total Benefits ,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 6,942 Discounted Benefits ,741 4,310 3,918 3,562 3,238 2,944 2,676 2,433 2,212 2,011 1,828 1,662 1,511 1,373 1,249 1,135 1,032 Net Benefits -1, ,802 1, ,242 6,720 4,089 4,089 4,089 4,089 4,089 4,089 4,089 4,089 4,089 4,089 4,089 Discounted Net Benefits -1, ,105 1, ,513 2,850 1,577 1,433 1,303 1,184 1, Discount Rate 10% NPV 12,480 ERR 27% 42

54 II. Financial Analysis of the General Property Registry Office in Petén The Registry office in Petén was inaugurated in 1999 during the pilot phase (under the PPF) and set up in its full capacity of operation during Phase I of the project, in March The project allocated US$2 million to Component 2, which supported institutional strengthening, the opening of a Registry office in Petén, and consultancy services to design an integrated system of registry-cadastre. Initially, as mentioned in the PAD, the office was designed as a fully decentralized thirdregistry which would have included a fully autonomous process from the central registry. During project implementation, however, the office was first used as a transition office, receiving and sending physical (and later scanned) documents between Petén and Guatemala City. Services were then extended to include, amongst others, electronic consultations. The registry office sells its services according to a tariff system agreed in the Governmental Agreement (Acuerdo Gubernativo, Arancel General para los Registros de la Propiedad) No , signed on 22 August 2005 (Table A3.6). Table A3.6. Schedule of Fees According to Agreement , for RGP Type of Transaction Fee in Q Fee in US$ Buying and selling (for a value of less than Q10,000) $20.65 Tax cancellation $20.65 Division of land (for a value of less than Q10,000) $27.10 Certifications (up to 4 pages, Q5.00 for each additional page) $6.58 Electronic consultations (up to 4 pages, Q2.00 for each additional page) $1.29 Remote consulting (US$1.00) 7.70 $0.99 The income generated through the selling of public services was captured automatically to the Registry office in Guatemala City. Monthly office operational costs of approximately US$6,245 (Q48,088) were paid by the project during implementation, but beginning in April 2007, regular transfers are guaranteed by the central office. As mentioned in the PAD, one of the project objectives was to establish a regional office of property registry that would be financially sustainable. The objective of this analysis was to evaluate the financial sustainability of the Registry office based on its operational costs and income. Operating Costs: Monthly operational costs of the Registry office are estimated below (Table A3.7). 43

55 Table A3.7. Operational Costs of the Petén Office Categories Amounts per Months (Q) Office Rent 2,400 Services 8,210 Staff Salary: Head of Office 8,155 Assistant of Head of Office 6,524 Accountant 6,417 Administrator 5,885 Assistant Administrator 4,928 Cashier 4,113 Cleaning services (half time) 1,453 Total monthly in staff 37,478 Total 48,088 Total Annual 577,063 Total Annual in US$ 74,943 Source: Developed by national consultant based on information received by RGP Central office. Revenue stream: The office receives payments through (a) buying-selling transactions; (b) splitting of lots (desmembraciones); (c) mortgage (hipotecas); (d) cancellation (letters of payment, judicial notice, resolutions of Fund of Lands); (e) land detentions; (f) agrarian security/pledge; (g) certification requests of the registered operations; (h) long-distance consultations: and (i) all other documents related to the registry operation. Fees are based on those stipulated in Governmental Agreement , dated 18 July Also, there are additional agreements between the RGP in Petén, the Land Fund, and the UTJ/RIC, with specific costing arrangements. According to the information received, seven staff are currently working on a full-time basis, four in the Petén office and three in the Central Registry office. The Petén has a supervisor and two cashiers. Income generated by the RGP in Petén: Between July 2004 and January 2007, the Regional Office in Petén generated an average income of approximately US$12,775 (Q99,005) monthly, or US$639 (Q4,950) daily. Out of this income, approximately 52 percent of the total documents inscribed and transactions undertaken were facilitated through the project activities (Table A3.8). 44

56 Table A 3.8. Transaction of Documents in the Registry Office, Petén Regional Registry Office in the Peten Income per registered document and contribution through the project Observation time: July January 2007 Month through through other and Year project users Total in Q in US$ Jul-04 36,400 36,400 4,697 Aug-04 37,863 37,863 4,886 Sep-04 43,840 43,840 5,657 Oct-04 44,445 44,445 5,735 Nov-04 44, , ,536 28, Dec-04 43,734 17,268 61,002 7, Jan-05 40,027 7,356 47,383 6, Feb-05 33,406 52,082 85,488 11, Mar-05 58,055 66, ,893 16, Apr-05 45,863 45,863 5,918 0 May-05 32,865 25,803 58,668 7, Jun ,014 60, ,347 33,851 1,578 Jul-05 32,325 30,969 63,294 8, Aug ,240 65, ,328 33,978 1,862 Sep-05 48,986 81, ,491 16, Oct-05 46,975 11,873 58,848 7, Nov-05 38,460 38,460 4,963 Dec-05 35,995 35,995 4, Jan-06 36,633 20,842 57,475 7, Feb-06 33,417 14,989 48,406 6, Mar-06 30,200 66,279 96,479 12, Apr-06 59,018 59,018 7,615 May-06 41,301 36,920 78,221 10, Jun-06 68,821 68,821 8,880 Jul-06 59,306 59,306 7,652 Aug-06 40,112 16,068 56,180 7, Sep-06 38,555 29,851 68,406 8, Oct-06 39,989 54,112 94,101 12, Nov-06 37,090 69, ,458 13, Dec ,530 96, ,430 65,733 1,964 4,192 Jan ,210 5, ,730 14, Total 1,595,864 1,473,311 3,069, ,023 11,033 11,033 Average month ,775 Day Source: Sede Regional de Petén, del Registro General de la Propiedad. Number of documents UTJ/RIC Documents per year 45

57 To estimate the financial sustainability of the RGP office in Petén, investment costs were excluded. The analysis took into consideration regular cost flows and income streams and calculated the following scenario. Assumptions made for calculations: Average income per month of US$12,775 Average operational costs per month as of April 2007 Period of the analysis: 10 years Discount rate of 10 percent Part of the costs for the trimester in 2007 was still covered by the Project. Table A3.9. Calculations of Financial Sustainability of the Petén Registry Office Costs Operations costs 41,739 74,943 74,943 74,943 74,943 74,943 74,943 74,943 Total costs ,739 74,943 74,943 74,943 74,943 74,943 74,943 74,943 Discounted costs ,359 51,187 46,534 42,304 38,458 34,962 31,783 28,894 Benefits Direct Benefits 154, , , , , , , , , , ,29 5 Discounted Benefits 154, , , , ,385 95,805 87,095 79,177 71,980 65,436 59,487 Net Benefits 154, , , ,556 79,351 79,351 79,351 79,351 79,351 79,351 79,351 Discounted Net Benefits 154, , , ,556 72,138 65,580 59,618 54,198 49,271 44,792 40,720 Discount Rate 10 percent NPV 796,888 Source: Elaboration of national consultant based on information received from RIC and RGP. As shown in Table A3.9, the RGP in Petén is already managing a scale of operations that covers operational costs. The income stream is generated through transactions facilitated through the project and through other activities. Based on a sensitivity analysis, even with 25 percent of reduced transaction, the office would still be covering its recurring costs. This would produce an NPV of US$521,295 and a costbenefit factor of 2.7. For the rural areas, while only 26 percent of the total number of titles facilitated through the project has been submitted to the registry, there is still a large number that need to complete the regularization process. Therefore, in a scenario with a 25 percent increase in transactions, the NPV would amount to US$702, with a cost-benefit ratio of

58 III. Fiscal Impact Analysis The project facilitated an increase of fiscal income at the municipality level in Petén through the formal registration of landholders, since they were liable to pay the real property tax (IUSI), according to the IUSI law, approved in In Petén, the IUSI collection was among the lowest in the country, Q24,931 in 1996 (Table A3.10). Parallel to the start of the land administration project in 1998, the municipalities progressively subscribed to the Program for fiscal decentralization and strengthening of municipalities, promoted by the Ministry of Finance. The project did not directly promote the collection of tax revenue since this was outside its mandate, as explained and discussed during the social communication campaign. Flores was the first municipality to start collecting tax. In 2000, San Benito joined; in 2001, La Libertad, Sayaxché, Dolores, Poptún, and Melchor; and in 2002, the remaining municipalities San José, Santa Ana, San Andrés, San Francisco, and San Luis joined. In 2005, Q1,297,000 in tax revenue was collected. The efficiency of tax collection varied across municipalities, as presented in Figure A3.1. Figure A3.1. Proportion of Property Tax Collected in the Petén Municipalities up to 2005 Flores 24.73% San Benito 20.74% La Libertad 25.36% Poptun 6.90% San Jose 4.59% Melchor 4.33% San Luis 3.81% Sayaxche 3.27% Dolores 3.15% Santa Ana 0.14% San Francisco 0.88% San Andres 2.09% Source: DICABI, Ministry of Finance (2006). 47

59 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Names Title Unit Responsibility/ Specialty Lending Cora M. Shaw Sr. Agricultural Economist ECSSD Former TTL Supervision/ICR Jorge A. Muñoz Sr Land Administration Spec. TTL Frederic de Dinechin Sr Land Administration Spec. LCSAR Former TTL Nadim Khouri Sr. Technical Spec. ARD Former TTL Maria Alejandra Bouquet Rural Development Specialist LCSAR Land/Legal Zhong Tong Agric. Economist LCSAR Economist Fernando Galeana Junior Professional Associate LCSAR Land/Operations Ann Jeannette Glauber Environmental Spec. LCSEN Environment George Campos Ledec Lead Ecologist LCSEN Environment Irma Yolanda Avila Consultant LCCGT Social Waleska Garcia-Corzo E T Consultant LCCGT Operations Virginia Barrios E T Consultant LCCGT Operations Antonio Blasco Financial Management Spec. LCSFM FM Fabienne Mroczka Financial Management Analyst LCSFM FM Manuel Vargas. Sr Financial Management Spec LCSFM FM Monica Lehnhoff Procurement Analyst LCSPT Procurement Luis R. Prada Villalobos Sr Procurement Spec. LCSPT Procurement Ketty Morales Language Program Assistant LCSAR Administrative 48

60 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle Number of Staff Weeks USD Thousands (including travel and consultant costs) Lending FY FY FY FY FY FY FY FY FY FY FY FY Total: Supervision/ICR FY FY FY FY FY FY FY FY FY FY FY Total:

61 Annex 5. Beneficiary Survey Results In late 2006, the Borrower commissioned an independent survey of Project beneficiaries in El Petén. Results of the survey (including information of beneficiary perceptions, land values, access to credit, and other subjects) were used by the Borrower in preparing its Completion Report (summarized in Section 7 of the main text) and by the Bank in preparing this ICR. Table A5.1 below shows the sample distribution by municipality. The consultant s report of the survey, along with the questionnaires used and statistical tables of responses are available in the Project files. Table A 5.1 Distribution of Beneficiary Households In Survey Municipality Urban Rural TOTAL San Luis Poptún Dolores Santa Ana San Francisco Flores San Benito San Andrés San José Melchor de Mencos La Libertad Sayaxché Total

62 Annex 6. Borrower s Comments on Draft ICR 51

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