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Inter-American Development Bank Megaprojects: Displacement and Forced Migration 


I.             Prologue by Oscar Chacón

II.            Introduction by Laura Carlsen and Michael Collins

III.           The IDB in Mexico: Plan Puebla-Panama, Integration, and Displacement by Laura Carlsen and Michael Collins

IV.          IDB Policy in the Development of Agrofuels: Displacement and Palm Oil Cultivation in Colombia by Paula Álvarez

V.            Financing Megaprojects and the Affected Populations: The Cana Brava Hydroelectric Project (Goiás, Brasil) by Ricardo Verdum

VI.          IDB Financing, Enclave Tourism, and Garifuna Land Loss in the Bahia de Tela by Christopher Loperena

VII.         Report Conclusions by Laura Carlsen

I. Prologue

By Oscar Chacón

The displacement of communities and forced migration in our countries as a consequence of Inter-American Development Bank (IDB) projects is an issue of greatest importance, but one that is seldom addressed. Researchers from these countries have worked yet again on this issue and will present findings at the conference of the Inter-American Development Bank to be held from the 19th to the 23rd of March, 2010, in Cancun, Mexico.

For the National Alliance of Latin American and Caribbean Communities (the English acronym is NALAAC), an organization of communities of Latin American migrants who live in the Diaspora of globalization, displacement of communities and forced migration comprise the central issue. We in Latin American migrant communities are anxious to be partners in the construction of a future in which Latin American men and women can live in countries which offer conditions worthy of life and where our political, economic, and social needs will be well met. We dream, also, of countries where material well-being will be fully reconciled with environmental equilibrium, assuring us of long term sustainability. Precisely because this is the future we dream of, it worries us enormously that alleged development comes at the costs of displacement and migration.

The great changes which are taking place in the hemisphere imply a change in the use of the land in great parts of the territory. These changes tend to make it impossible to sustain the campesino economy because the construction of huge development projects [means] less capacity to generate jobs. There are two consequences of this type of development: in the medium and long term, there is displacement and forced migration for economic reasons. In the short term, the displacement is provoked directly by so-called projects of development.

The significance of infrastructure megaprojects financed by the IDB for the purpose of an elusive development has not been subject to analysis in regard to its impact on either internal or external migration. In the context of a global economy with fewer and fewer possibilities of absorbing displaced persons in new labor markets, the problems caused by these practices are more urgent than ever.

The lives of the people in the communities who have been the object of these studies have been severely altered, perhaps irreparably. Beyond the empathy and solidarity that their stories generate, we hope that this investigation helps to minimize the repetition of these practices. The human costs of these projects are difficult to quantify precisely, and it is even more difficult to imagine that they can be remedied satisfactorily.

The study which we now present to you is a collaboration between the NALACC and the Americas Program of the Center for International Policy. It represents the results, realized and broadened, of a line of investigation which seeks to produce knowledge of the function of transformational activities with the hope that they may help us to continue to define a new version of integrated fair and sustainable development for the long term for the pueblos of the American continent.

We thank every one of the researchers who have collaborated with us in this effort, and we hope that the collective value of these investigations will animate the pueblos of the American continent, including migrant populations, to play a more active role in monitoring, resisting (when it is necessary), and impacting the policies which emerge from our respective governments, as well as those that emerge from political bodies and multinational financial companies who say they are working on our behalf. The ultimate goal will continue to be the achievement of a healthier way of life, filled with a genuine sense of the realization of our personal and community aspirations, and at the same time, viable for the long term because of its full respect for the indispensable ecological equilibrium.

II. Introduction: IDB Megaprojects: Displacement, Destruction, and Deception

As the IDB meets in Cancun this month to celebrate its 51st anniversary, its governors are expecting a major birthday present—the infusion of millions of dollars into the bank portfolio to address the global economic crisis in the region.

But is the IDB prepared to lead the charge in efforts to relieve the suffering caused by the crisis and persistent poverty in the region? What does its track record tell us?

When civil society organizations affected by bank projects met last year at the bank’s meeting in Medellín, they presented damning evidence that the IDB had become a persona non grata in much of Latin America, and that its practices have had negative environmental, social, and even economic impacts on the region. More and more citizens have organized to protest projects financed by the IDB throughout Latin America, especially when those citizens belong to a community directly affected by IDB-funded displacement.

As part of the effort to evaluate IDB practices and recommend changes, the National Alliance of Latin American and Caribbean Communities and the CIP Americas Program decided to look at the often-ignored issue of displacement in IDB projects. The regional bank’s focus on the construction of large infrastructure projects has led to the displacement or planned displacement of thousands of communities throughout Latin America over the years. Despite IDB guidelines that mandate the avoidance of displacement due to its high human, social, cultural, and environmental costs, the bank has forged ahead with projects that cause massive physical displacement and forced migration of local communities. In many cases, the displaced are indigenous or afro-descendent communities with a cultural presence on the land that stretches back for centuries.

Our report studies IDB megaprojects in Mexico, Brazil, Colombia, and Honduras and what has been termed “development-induced displacement.” Based on the results of these projects on local communities, we find the use of the term “development” perverse.

In these case studies, the inhabitants of the lands to be flooded out, plowed under, or built on play an active role. In most instances, rather than passively joining the diaspora, they have organized to defend their land and call for the suspension or modification of bank-promoted megaprojects. They have been met with threats and assassinations from interests vested in the multibillion-dollar investments, but they are making their voices heard.

1. Mexican dams and hydroelectric projects. In Mexico, plans to build a giant hydroelectric project in La Parota, Guerrero—financed by the IDB as part of the Plan Puebla-Panama regional development scheme—were highly polemical from day one. Local residents, environmentalists, and international organizations against dam-building criticized the plan to flood a jungle valley and displace more than 25,000 villagers. The lack of consultation meant that local farmers discovered that their land had been expropriated for the dam project only when heavy construction equipment began arriving. Following protests over the lack of legally-required consultation, the Federal Electricity Commission (CFE) charged with the project began faking consultation and was successfully prosecuted for falsification of documents; it still faces accusations of crimes against the environment and building on land without permission. Legal problems mounted, residents refused to leave, and the UN and International Water Tribunal lambasted the Mexican government for the project, but the IDB continued to promote it.

In a similar case, the IDB also proposed financing a hydroelectric dam project called El Arcediano on the Santiago River. The project entails the complete disappearance of the Arcediano village and has received criticism from experts who cite the lack of consultation, environmental risks, health issues related to the quality of the water, the project’s cost, and displacement as key problems. Water pollution led to the death of an eight-year-old boy who died from arsenic poisoning after falling in the river last year. Residents ask why the bank proposes damming the river to deliver its poison waters to more people, instead of helping to clean it up.

The La Parota and Arcediano dams have both been recently suspended due to public protest. They have not been definitively cancelled and there is evidence that a new round of battles will take place soon.

2. Colombian palm oil and displacement of Afro-Colombian communities. Our Colombia case study analyzes IDB participation in the active promotion of palm oil production for agrofuels. In Colombia, armed conflict and palm oil are inextricably linked, since palm oil companies backed by powerful interests have been appropriating land from Afro-Colombian communities purposely displaced by violence. There have been documented assassinations of community leaders to force the sale of land for palm oil production and forced migration has been the tactic of choice for taking over peasant land to extend the palm production. The IDB promotes palm plantations under its “climate change” and development programs, lauding them as a “transformative opportunity” and a generator of investment, development, and employment in rural areas. The displacement impact has been ignored.

3. Brazil: dam displacement and the hazards of relocation. In 1999, the IDB funded a large-scale dam known as CH Cana Brava. The project led to a devastating change in the social and environmental make-up of the area. The project had the dubious honor of being the first dam constructed entirely by a private company under a neoliberal legal and institutional framework introduced by the Brazilian government at the end of the 90s.

More than 1,000 families in the local community—mostly migrants from northeastern Brazil and descendants of African slaves—were displaced by the megaproject. Many lost their lands and livelihoods. The IDB had a key role in the resettlement and negotiation process. Town meetings were chaired in the intimidating presence of the military police, and the bank tried to negate the important role of community leaders by taking a stance—along with its partners the Brazilian Development Bank (BNDES) and the company Tractebel—refusing to negotiate collectively with the community. Over a decade later and after many adjustments in the relocation process, more than 600 families have still not been successfully reintegrated into self-sustaining communities.

4. Honduras: tourism megaproject and displacement. An IDB-funded project at Tela Bay on the coast of Honduras is leading to the displacement of Garifuna and small farm communities. The coup d’etat in that country opened the door to interests ready to move full-steam ahead on this project, despite local resistance and studies showing severe environmental damage. This study analyzes levels of displacement involved in the tourist development and IDB compliance with its own guidelines on displacement.

A final note: Despite the IDB’s commitment to transparency, we found it difficult to locate certain documents and general information on controversial projects. Email inquiries went unanswered, important documents were taken offline, officers refused phone inquiries, and official project descriptions were often vague and misleading.

We also found that the IDB too often fails to enforce its own policy on key matters. The bank has a commitment to consultation, yet many of its projects lack the deliberation the IDB promises and that is required under ILO Convention 169 and other international law. The IDB has a commitment to monitoring borrowers’ projects, yet after providing the loan the bank often shows little interest in the consequences, particularly surrounding displacement.

Massive displacement of human populations and the disruption of communities cannot be dismissed as short-term collateral damage from the war on poverty. All available literature points to the continued or increased impoverishment of displaced communities, as well as the loss of their cultural, social, and environmental heritages. The IDB must end its silence, and publicly respond to the criticism and controversy that surrounds its projects. It must also abandon its single-minded approach to megaprojects, and explore other development and energy alternatives.

III. The Inter-American Development Bank in Mexico: Plan Puebla-Panama, Integration, and Displacement

By Laura Carlsen and Michael Collins

1. Overview of IDB in Mexico

A) Portfolio

B) Plan Puebla-Panama/Mesoamerican Project

C) Megaprojects and Displacement

2.  Integrating Capital and Displacing People: IDB-Funded Dam Projects in Mexico

3.  Case Studies

A) La Parota

B) El Arcediano

4. Transparency Issues

5. Conclusions

6. Recommendations

1. An Overview of the Inter-American Development Bank (IDB) in Mexico

In recent years, the IDB has heavily financed projects in Mexico as a priority country. Four hundred ninety-three projects have been financed since 1993 and this intense activity shows no sign of letting up.[1] The IDB announced that it opened up $6 billion in credit lines for 2008 and invested in 40 projects in Mexico.[2] For 2009, Ellis J. Juan, representative of the IDB in Mexico, declared that “This is going to be the biggest IDB program in the region, along with the assistance planned for Brazil.” The IDB has stated that Mexico will receive $5 billion in loans over the next two years.[3]

A. Portfolio

This new financing for infrastructure, housing, and cash transfers to the rural and urban poor is in part a bailout from the effects of the economic crisis and rapid devaluation, but also part of a longer-term strategy. As other Latin American nations turned away from international financing institutions due to the political conditioning attached to their loans, a succession of neoliberal governments in Mexico turned that country into a veritable laboratory for the public-private financing of infrastructure that the IDB has been promoting for years. Several pilot projects, one to finance infrastructure projects directly through state governments (FORTEM) and another to draft new state legislation for private infrastructure investment, called Promotion of Public-Private Associations in Mexican States (Impulso de Asociaciones Público-Privadas en Estados Mexicanos—PIAPPEM), were announced in a Memorandum of Understanding signed between the Mexican government and the IDB in February of 2007.[4] These will be supported by further funds from Infrafund, an IDB project specifically to help prepare infrastructure projects.

At the signing of the Memorandum, Mexican President Felipe Calderon and IDB President Luis Moreno affirmed the centrality of infrastructure megaprojects to their shared concept of development. Calderon cited infrastructure development as the sine qua non of investment, stating, “Infrastructure is the best way to regional equality and justice. You can only truly fight poverty by growth and employment and the only way to generate jobs is through investment, which cannot be generated without the development of infrastructure.”[5] Moreno agreed, saying, “A robust and modern infrastructure is indispensable for competition and regional integration,” and noted that the private-public associations could mobilize as much as $8 billion in infrastructure financing between the state and the private sector over the next six years.[6]

B. Plan Puebla-Panama/Mesoamerican Project: Regional Integration, Investment, and Displacement

For the past decade the major vehicle for IDB financing in Mexico has been the Plan Puebla-Panama, later rechristened the Mesoamerican Project. This plan envisions a series of large hydroelectric dams, tree plantations, highway and electrical systems, etc. to link Mexico into the U.S. market and attract foreign investment.

The IDB’s gung-ho approach to financing megaprojects contrasts with the mounting public criticism that many of its infrastructure projects have generated. The uncritical commitment to large infrastructure projects as the central strategy of its Mexico portfolio is all the more startling given the bank’s usual attempts to keep a low public profile and avoid such controversies.

This strategy dates back nearly two decades when the IDB along with the Mexican government launched the overarching plan for changing land use and reorienting production in Mexico under the then-titled “Plan Puebla-Panama.” The plan generated massive public criticism, international organizing in opposition, and local protests due to its implications for the displacement of indigenous and peasant communities and widespread environmental damage. Planners went scurrying back to the drawing board—not to design a new plan but to design a new public relations strategy. After laying low for a period of years, the PPP was re-launched under its new guise of the Mesoamerica Project. This time around, transparency has been a major problem for citizen groups seeking to evaluate the plan, since after the public debacle with the PPP the IDB is careful not to specify which of its current and future projects come under the banner of Proyecto Mesoamerica, despite the fact that it is providing $1.3 billion in loans to the project.[7]

The question remains, in the midst of the name changes and shifting PR programs, what is the premise behind this kind of regional integration scheme? How does it affect the lives of the people who live and work in the vast swath of national territory included in the plan?

The Plan Puebla-Panama (PPP) was inaugurated by Mexican President Vicente Fox at the beginning of 2001, as an ambitious scheme for the integration of the Mesoamerican region into a region that starts at the state of Puebla in Mexico, passes through five states in Southern Mexico (Oaxaca, Chiapas, Guerrero, Campeche, Puebla), and the seven countries of Central America (Belize, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and Panama), and recently included Colombia. The IDB was a major backer of the PPP from the outset.[8] It planned a $4 billion dollar investment[9] in the regional integration project of what was originally conceived of as a $10 billion-dollar plan. Over eight billion has been spent to date.[10]

The stated goal of the PPP was to achieve the integration and development in the region within the context of what was viewed as an inevitable and desirable model of globalization. At the summit of regional leaders in 2004, it was defined as “part of a developmental strategy to strengthen economies and markets for interaction and the construction of a Mesoamerican regional identity, culminating in the inclusion of a globalized economy in the region.”[11] The PPP embodied the goals of developed countries (particularly the regional leader, the United States) and transnational corporations sought to draw Mesoamerican nations more tightly into the global economy as new markets, sources of natural resources, and a zone of cheap labor. It promised job-generating investment for the areas affected. The plan involved stimulating and deepening international economic activities such as import, export, and offshore investment and production by facilitating the north-south transit of goods and articulating investments in the zone via a modern, large-scale infrastructure.

Another objective put forward was the stimulation of “regional cooperation to sustainably make the most of the riches and comparative advantages of the Mesoamerican region, rectifying the historic dearth of physical infrastructure and reducing the poverty index, and the region’s vulnerability to natural disasters.”[12] To date there has been no comprehensive evaluation of progress in these areas.

Plan Puebla-Panama was conceived of to confront two main challenges. The first was the obvious lack of benefits generated by the North American Free Trade Agreement (NAFTA) in Southern Mexico, where most of the country’s poor and marginalized population is concentrated. This flaw was widely recognized; the World Bank published a study calling Southern Mexico “the region not reached by NAFTA.”[13] The study proposed the region’s enhanced insertion into globalization via new infrastructure, foreign investment, and exploitation of natural resources. It ran directly counter to what indigenous farm movements had diagnosed as the problem—a lack of social equity and the pulverization of traditional livelihoods as a result of globalization.

The second challenge for the globalization agenda of governments in the region was the perceived need to open the Central American countries to foreign investment, especially to facilitate international exploitation of the abundance of natural resources in the region and to link these investments to the U.S. market.

The citizen-based movements that opposed the PPP claimed it would displace them from their lands and traditional livelihoods, either directly such as through expropriation for dams and other large projects, or indirectly by making it impossible to live off traditional productive activities such as farming, fishing, crafts production, or other activities common in the communities. The PPP had become the focus of a battle over land use and development plans that pitted the modernizers and their grandiose plans for remaking the region in such a way as to attract large investors, against communities that argued that the problem was not what they were doing, but the relations of power that kept them from gaining the benefits from what they were doing.

Surprising, the local movements won round one and just a little over a year after its spectacular launch, the PPP entered into a period of stagnation and a conscious decision was made to lower its profile. On the one hand, the plan did not obtain the international financing expected because of the post-9/11 economic crisis. On the other hand, the unexpected popular resistance movement in Mexico managed to stop infrastructure projects that threatened their communities, by building local opposition movements and creating an international network to educate the public. This proved to be such a headache to the Mexican government that in 2003, then-Mexican President Vicente Fox and the IDB decided to shelve the plan, removing official websites and vanishing it from public view and official discourse.[14]

Public criticism of the PPP caused the bank and the Mexican government to withdraw the major publicity campaign for the plan and go back to the drawing board in terms of how to sell the scheme for massive infrastructure development to a leery public. After much backtracking, in a 2002 meeting between the IDB and NGOs on the subject of the polemical Plan Puebla-Panama, IDB representative stated unequivocally that, “We won’t discuss dams because we won’t fund them. We won’t fund them through the private sector department either.”[15] Yet at that very point, the bank was providing financing for several hydroelectric projects in Latin America.

According to press reports, the IDB was very involved in the phase of trying to improve the PPP public image.[16] The bank contracted a public relations firm to try to dispel the negative image around the plan through the magic of Madison Avenue. It created social programs for local inhabitants, something that had been ignored in the original plan. However, these projects continued to be a tiny fraction of the total resources. For example, on Nov. 13, 2003 the IDB, other international finance institutions, and the eight countries involved signed a Memorandum of Understanding on agricultural and livestock and rural development to emphasize economic opportunities for the indigenous and “campesino” communities of the region, but it is unclear how the money was spent or what the results were.

In the period of dormancy, many integration projects planned for the PPP continued to advance under other names and through other government programs in order to avoid attracting the public protests that had accompanied the PPP in affected communities, and among indigenous people and environmental groups.

In April 2007, the new Mexican President Felipe Calderon, despite the protests of the local communities, re-launched the PPP in the state of Campeche as a “response to the challenges and opportunities that the international community faces.”[17] The main projects included were the construction of the Central American Electrical Interconnection System (SIEPAC) that involves a transmission line from Guatemala to Panama and the construction of 381 hydroelectric dams, and a Mesoamerican road network of more than 10,209 km. The Campeche meeting announced that the PPP was actively involved in 99 projects at a cost of more than $8 million.

In June 2008, the presidents of the member countries of the PPP met again in Mexico, and with the hope of finally shedding Plan Puebla-Panama’s image problem, they rechristened the plan the Mesoamerican Integration and Development Project, or “Mesoamerican Project” for short.

C. Megaprojects and Displacement

Social Displacement

Due to widespread recognition of the problem, the IDB developed guidelines in 1998 on involuntary resettlement.[18] The guidelines state that “The objective of the policy is to minimize the disruption of the livelihood of people living in the project’s area of influence, by avoiding or minimizing the need for physical displacement, ensuring that when people must be displaced they are treated equitably and, where feasible, can share in the benefits of the project that requires their resettlement.” The guidelines list two principles:

1) “Every effort will be made to avoid or minimize the need for involuntary resettlement” including evaluating alternatives using accurate estimates of the number of people affected, the costs of resettlement, the socio-cultural impact, and the vulnerability of the affected population. It concludes, “When a large number of people or a significant portion of the affected community would be subject to relocation and/or impacts affect assets and values that are difficult to quantify and to compensate, after all other options have been explored, the alternative of not going ahead with the project should be given serious consideration.”

2) “When displacement is unavoidable, a resettlement plan must be prepared to ensure that the affected people receive fair and adequate compensation and rehabilitation. In the shortest possible period of time, that guarantees a (i) minimum standard of living and access to land, natural resources, and services (such as potable water, sanitation, community infrastructure, land titling) at least equivalent to pre-resettlement levels; (ii) recover all losses caused by transitional hardships; (iii) experience as little disruption as possible to their social networks, opportunities for employment or production, and access to natural resources and public facilities; and (iv) have access to opportunities for social and economic development.”

Under special considerations, the guidelines call for an “impoverishment risk analysis” when the project affects marginal groups, taking into account loss of employment, land, food security, means of production, social networks, and access to education. The study should include preventive measures that take into account gender, ethnicity, income, and other socio-economic factors. In the case of displacement of indigenous communities, the guidelines say that the bank will only support projects where (i) the resettlement component will result in direct benefits to the affected community relative to their prior situation; (ii) customary rights will be fully recognized and fairly compensated; (iii) compensation options will include land-based resettlement; and (iv) the people affected have given their informed consent to the resettlement and compensation measures. They call for community participation at each stage of resettlement design and implementation and compensation.

Environmental Displacement

In addition to social displacement, there is environmental displacement. In some cases, although the project itself does not displace communities, the environmental impact in effect does. For this reason no study of displacement and forced migration can be separated from the environmental impact. Most of the communities under study are indigenous or “campesino” communities that rely on a close relationship with the earth for their livelihoods.

In January 2006, the bank approved a new environment and safeguards compliance policy.[19] The policy “requires early and ongoing engagement with communities affected by a project and seeks community support before financing large projects.” The policy stipulates, among other things, that:

-          The bank will monitor the executing agency/borrower’s compliance with all safeguard requirements stipulated in the loan agreement and project operating or credit regulations.

-          All bank-financed operations will be screened and classified according to their potential environmental impacts.

-          The bank will require compliance with specified standards for Environmental Impact Assessments.

-          Projects will require consultations with affected parties and consideration of their views.

-          Bank-financed operations will include, as appropriate, measures to prevent, reduce, or eliminate pollution emanating from their activities.[20]

Nevertheless, as is demonstrated by communities in areas where projects such as La Parota were being performed, this policy has not been enforced.

The attitude of the IDB seems to be to finance the project and then look the other way, while citizens are left to deal with unresponsive or openly repressive agencies, like the CFE, that are charged with implementing the project.

2. Integrating Capital and Displacing People: IDB-Funded Dam Projects in Mexico

Michael Cernea states that:

“Forced population displacement is always crisis-prone, even when necessary as part of broad and beneficial development programs. It is a profound socioeconomic and cultural disruption for those affected. Dislocation breaks up living patterns and social continuity. It dismantles existing modes of production, disrupts social networks, causes the impoverishment of many of those uprooted, threatens their cultural identity, and increases the risks of epidemics and health problems.”[21]

The fundamental reason behind grassroots organization to reject the PPP projects was the threat of displacement of local populations that the projects entailed. The megaprojects funded by the IDB through Plan Puebla Panama and its subsequent incarnations almost all lead to some degree of displacement or forced migration. In some cases—particularly dam building, as will be discussed in the case of the La Parota and Arcediano hydroelectric projects below—the displacement is foreseen and direct. In others, the change of land use promoted by the projects either eliminates livelihoods or changes the environment in such a way that it can no longer support the communities that have lived there for years. For example, monoculture plantations promoted in the PPP, like eucalyptus or crops for biofuels, require far less labor than small farms so as land converts to this use jobs are lost and inhabitants are forced to migrate out. Large tourism projects that in many cases don’t even hire locally also tend to displace traditional livelihoods.

This is what experts have termed “development-induced displacement.” According to Michael Cernea, a World Bank analyst, the causes of development-induced displacement include water supply (dams, reservoirs, irrigation); urban infrastructure; transportation (roads, highways, canals); energy (mining, power plants, oil exploration and extraction, pipelines); agricultural expansion; parks and forest reserves; and population redistribution schemes.[22] The same author describes the principal risks as: landlessness, joblessness, homelessness, marginalization, food insecurity, increased morbidity and mortality, loss of access to common property, and social disintegration. In other words, nearly every critical aspect of human existence is potentially negatively affected by displacement.

Moreover, Courtland Robinson notes that development-induced displacement tends to exacerbate social inequality. “Not only is development-induced displacement a widespread, and growing, phenomenon, but evidence suggests that while the beneficiaries of development are numerous, the costs are being borne disproportionately by the poorest and most marginalized populations.” [23] Another author, Rajagopal Balakrishnan, went so far as to dub displacement and out-migration caused by development projects as “development cleansing,” saying that “(they) may well constitute ethnic cleansing in disguise, as the people dislocated so often turn out to be from minority ethnic and racial communities.”[24] Indeed, all the cases of displacement and forced migration analyzed in this paper most directly affect poor, indigenous communities.

Principle 6 of the Guiding Principles presented to the UN Commission on Human Rights states that: “Every human being shall have the right to be protected against being arbitrarily displaced from his or her home or place of habitual residence,” and goes on to say that, “The prohibition of arbitrary displacement includes displacement in cases of large-scale development projects that are not justified by compelling and overriding public interests.”[25]

Despite criticism from non-governmental organizations and affected communities and the evident impact on displacement, the IDB’s funding for projects in Mexico has been welcomed wholeheartedly by successive Mexican governments that see the investments as a key factor in assuring a flow of credit and foreign currency to the country’s often fluctuating economy. Many Mexican companies, like BANSEFI, have benefited from the IDB’s lavish financing of private-public partnerships.[26]

However, it is becoming more and more apparent that local citizens affected by these multi-million dollar projects are mostly seen as obstacles in the face of top-down development. This section will study IDB-backed projects that have grave repercussions on Mexicans, causing displacement and forcing migration.

Mexico already holds the dubious title of the nation that expels more of its own people than anywhere else in the world. The model of economic integration locked in place under the North American Free Trade Agreement has led to a dramatic increase in out-migration because it displaces traditional livelihoods through imports, land use changes, and concentration. The PPP and projects funded by the IDB within the logic of NAFTA-style regional integration accelerate the process, while adding the direct displacement caused by infrastructure megaprojects.

The IDB has been a devout supporter of the NAFTA model in Mexico and its infrastructure investment is designed to support and extend the free-trade model as a path to development. An IDB report in 2002 noted, “Completion of a balanced and comprehensive FTAA agreement by 2005 is a crucial strategic objective for Latin America and the Caribbean. Such an agreement promises to provide more secure market access to North America, reduce trade diversion within the sub-regions, improve productivity, stimulate foreign direct investment, and strengthen cooperation with North America.”[27] When the FTAA negotiations collapsed in Mar del Plata because southern countries protested the lopsided advantages granted northern corporations under the agreement, the IDB continued to support the PPP as a form of infrastructure-led integration focused on economic integration among the Mesoamerican and Pacific Rim nations that had signed FTAs with the United States. The Campeche Joint Declaration erases any doubt about the relationship between Plan Puebla Panama’s integration and infrastructure plan and the NAFTA free trade model; one of the resolutions reads: “To respectfully urge the U.S. Congress to quickly approve the Free Trade agreements signed by the governments of this country and of Colombia and Panama.”[28]

The IDB’s latest publicly available Mexico strategy (2002-2006), has as one of its main themes “The integration of Mexico with the rest of North America through NAFTA is progressing well. Now the Puebla-Panama Plan proposes that regional integration be expanded toward Central America, emphasizing the role of the states in the south of Mexico.”

The IDB blindly continues to support infrastructure megaprojects despite the social costs and widespread public protest over the projects. The criticism that they benefit large construction companies and expel local populations has not been heard by the bank, nor do full studies exist to seriously evaluate this claim, which is a very serious one for development aims. The following cases demonstrate a strategy of shunting aside local populations, without applying even its own guidelines on displacement. It is our belief that both the IDB’s consultation process and criteria for selection of projects must be overhauled if the bank is to improve its much-maligned reputation and avoid damaging the lives and livelihoods of the very citizens it purports to benefit.

3. Case Studies


A. La Parota, Guerrero

Large-scale dam construction is among the most prominent and dramatic forms of displacement caused by development projects. A World Bank study calculated that in the dam-building frenzy of the early 90s, 300 high dams displaced over 4 million people.[29] Despite recognizing the problems involved in the massive displacement, the report concluded that displacement due to development projects was likely to increase over the coming decade.

The project entails the construction of a dam on the Papagayo river that would provide 900 MW of energy and drinking water to the Acapulco municipality.

The current financial commitments of the IDB to La Parota dam are not clear. In the 2010 list of projects appears this one to the CFE dated May 24, 2007:[30]

“Assistance to CFE on Environmental and Social Aspects of Hydroelectric Projects”

Project Description: The main objective of this TC is to assess CFE performance and management capability in dealing with environmental and social impacts of large hydroelectric projects through a practical approach that will consider the project as a pilot initiative. This assessment is a key element when conducting preparatory activities for the funding of potential CFE power generation projects.

The obtuse wording of this large (US$1,168,434) project seems to imply that the project funds an analysis of what went wrong in the attempt to impose the La Parota project. Without additional information, however, it is difficult to know for sure. The project was also listed in the March-April 2002 bulletin on PPP and IDB projects in these terms: “La Parota Dam. Storage of water from the Papagayo river, Guerrero, to produce 765 MW. Construction of a 162 meter high dam and installation of three turbo-generators.”[31]

Although officials have subsequently denied it, Plan Puebla-Panama originally included the construction of 381 hydroelectric dams to supply a regional electrical grid. Among them was a huge dam to be built in La Parota, Guerrero to feed the Acapulco resort area.[32] The 900MW dam on the Papagayo River would flood 17,000 hectares and displace, according to government estimates, some 2-3,000 inhabitants. However, local residents and non-governmental organizations estimate the real figure at closer to 25,000. The majority of those affected are indigenous farmers, who would see their lands and livelihoods taken in the name of development.

Despite being several years in the works, it wasn’t until heavy equipment was sent in 2003 to begin clearing the land for construction that the indigenous and mestizo residents learned of the plan. The Mexican Federal Electricity Commission (CFE) began work on the hydroelectric project in La Parota on communal land held by the Nahuatl indigenous population of Cacahuatepec, Guerrero. The construction implied destroying a hill and stripping the area of trees and vegetation.

When it began work in 2003, the Federal Electricity Commission still had not obtained permission from communities or the required Environmental Impact Statement (EIS) from the Ministry of Environment. Later, despite testimony on the negative environmental impact of the dam, the Ministry authorized the EIS. The report foresees the flooding of 16 towns and the partial flooding of eight towns, resulting in the forced displacement of an estimated 14,756 inhabitants (many experts say it would displace 25,000 people).[33] Despite the risks, the dam project provides no water-basin management plan as required by the national waters law for protecting, improving, conserving, and restoring water basins, aquifers, rivers, and watersheds. It does not specify how to mitigate the effects of flooding 17,000 hectares of forest and farmland. Nor does it contain specific plans for relocation of the 25,000 residents, most farmers and Nahuatl indigenous peoples whose lives and culture are inextricably tied to the land. Moreover, the organizations claim that an additional 75,000 inhabitants will be affected by factors such as increased sedimentation and salinity. As mentioned, residents put the figure of directly displaced persons at around 25,000, currently living in 21 farming communities. They say the disparity between their estimate and the government’s is due to the fact that the government failed to include communities that would be indirectly affected by the water flow. In addition to the project’s underestimation of the human costs of displacement, technical experts have questioned the estimated $800 million project due to its extremely high social, ecological, and economic costs. [34] The need for the additional generating capacity is not substantiated beyond doubt and the lack of serious studies on environmental and social impacts and seismic risks raise further doubts about the dam. Inhabitants were not consulted about the project, in violation of OIT Convention 169 on the rights of indigenous peoples, UN guidelines on internal displacement, and the IDB’s own guidelines.

Felipe Flores, the spokesman for CECOP (the Council of Ejidos and Communities Opposing the La Parota Dam) and resident of one of the affected communities, Garrapatas, has first-hand experience of the fight to stop La Parota. “They came in the dead of the night in 2003 to set up their machinery and begin work. We only discovered what was going on later. We held an assembly with the three affected communities—Arollo Verde, San Jose, and Garapatas—to see what they thought of the project. Nobody wanted it, but the CFE didn’t care. They refused to give us any information.

“When I began to organize and protest, I became a target. We visited other local towns to drum up support, and suddenly several compañeros were put in prison, and some murdered. The first was killed on the way home from meeting on La Parota with the governor. On Dec. 8, 2009, I was personally threatened. Someone arrived at my door and told me I was the only one left. He said everyone else had been bought off or killed. I was told I was next.”

Pablo Romo of Serapaz, a Mexican organization that promotes peaceful resistance and has been closely involved in the campaign against La Parota, underlined the lack of consultation, stating that, “There was never any contact from the CFE regarding the project. It wasn’t until they held an assembly in 2007, four years after the project began, that the locals discovered what the plan was. Even then, without informing us in advance, the CFE decided to hold the assembly at 6:30 a.m. We had organized a pre-assembly march and we arrived at the assembly to find that we were locked out of the proceedings. Then, other local residents began to emerge from inside the assembly. They had been invited to attend early and ‘approved’ the project, having been bought off with bags of food. When we eventually got in, the locals were given a booklet that contained pictures of the new houses they were to be given. They hadn’t even asked the locals that were to be displaced about what type of house they wanted. Instead, the CFE consulted architects from Guerrero University. It was a joke!”

A local emerges from the assembly with a bag of food

After physically blocking the entry of the equipment to stop the destruction of their lands, local inhabitants formed the CECOP. The group, made up of 5,000 men and women from 39 villages, has blocked construction of the dam for five years, filed and won legal battles to demand adequate public input, and become a key figure in international forums on the environmental and social impact of mega-dams.

The organization has had problems obtaining precise information about the project. The government has not complied with requirements for public participation in decision-making and implementation of the project, the legal and regulatory systems have blocked many of their attempts to challenge imposition of the dam, and both state and federal government agencies have used force to exclude opponents from assemblies on expropriation. Through bribes and payments, the government has divided communities into violent camps of supporters and opponents of the project. Four people have been killed to date and several leaders imprisoned or harassed.

The lack of consultation was not just an affront to the local population, it was a violation of the law. Mexico is a party to the International Covenant on Economic, Social, and Cultural Rights (ICESCR) and other international and regional human rights treaties that oblige it to refrain and protect the population from forced evictions, defined in the ICESCR as “the permanent or temporary removal against their will of individuals, families, and/or communities from the homes and/or land which they occupy, without the provision of, and access to, appropriate forms of legal or other protection.”[35]

A Civil Observation Commission formed to investigate the case noted, “We are worried that the recommendations and observations of the UN Committee on Economic, Social, and Cultural Rights, specifically referred to in ILO Convention No. 169 on indigenous people, have not been adequately responded to.”[36]

According to a brief prepared by Amnesty International,[37] the La Parota dam megaproject raises concerns about the following human rights: right to information, right to effective legal remedy, right to genuine participation, international human rights law related to development-induced displacement, and violence and intimidation surrounding La Parota project.

Moreover, the UN Commission on Human Rights has found that forced evictions are a gross violation of a range of human rights and that the International Covenant on Civil and Political Rights (ICCPR) and the American Convention on Human Rights (ACHR), contain protections of “freedom to seek, receive, and impart information”(31) and to “take part in the conduct of public affairs.”[38]

In regard to La Parota the brief by Amnesty International notes that as “a state party to International Labor Organization Indigenous and Tribal Peoples Convention (ILO Convention No. 169), Mexico is generally required to refrain from removing the peoples concerned from the lands which they occupy. As Article 16(2) of the convention states:

“Where the relocation of these peoples is considered necessary as an exceptional measure, such relocation shall take place only with their free and informed consent. Where their consent cannot be obtained, such relocation shall take place only following appropriate procedures established by national laws and regulations, including public inquiries where appropriate, which provide the opportunity for effective representation of the peoples concerned.”

The La Parota case has been presented to the UN High Commissioner on Human rights and the ICESCR has expressed concern:

“about reports that members of indigenous and local communities opposing the construction of La Parota hydroelectric dam or other projects under the Plan Puebla-Panama are not properly consulted and are sometimes forcefully prevented from participating in local assemblies concerning the implementation of these projects. It is also concerned that the construction of La Parota dam would cause the flooding of 17,000 hectares of land inhabited or cultivated by indigenous and local farming communities, that it would lead to environmental depletion, and reportedly displace 25,000 people. It would also, according to the Latin American Water Tribunal, violate the communal land rights of the affected communities, as well as their economic, social, and cultural rights.”(38)

The Special Rapporteur on the Situation of Human Rights and Fundamental Freedoms of Indigenous People included La Parota in the 2007 annual report:

“also victims of abuse and violations in Mexico are indigenous peasant farmers in the state of Guerrero who oppose La Parota dam project in their territory, which the state insists on carrying out without the population’s free consent. A court has instructed the government to desist from the construction of infrastructure works in this area until the conflict has been resolved through negotiation, but the authorities have ignored the injunction and are going ahead with road building as part of the dam project, to which many villagers are opposed.”

In June 2007, residents won an injunction based on a court finding that the local assemblies held to approve the project were not legally carried out. A statement from CECOP said that “The CFE and government had fabricated an assembly for landowners in which the expropriation of land and occupation by the CFE were supposedly authorized.”[39]

Previous large dam projects in Mexico that have displaced indigenous populations have been marked by corruption and failure to provide benefits to local residents. To this day, affected communities fight for promised compensation. In Latin America a growing movement has arisen to block large infrastructure projects promoted by the IDB and other international financial institutions because of the high social and environmental costs. CECOP quickly became a leader in the movement against large megaprojects and is an example and an inspiration to this movement. It sends out a message that it is past time to re-examine huge hydroelectric dam projects that cause irreversible damage to water systems, ecosystems, flora and fauna, and human communities.

Despite the fact that much controversy surrounded the La Parota project, it has continued to appear in IDB internal documents. In July 2009, a meeting on “Strategies, National Programs, and Industries for Climate Change: Opportunities and Challenges for Latin America and the Caribbean,” named La Parota as an ongoing approved project.[40] La Parota is mentioned in the meeting’s documents as a project in progress under the Mexican government’s national climate change program, part-funded by the IDB.[41]

In September 2009, the La Parota project was “postponed” by the CFE. The CFE claimed that in light of the global financial crisis, Mexicans were using less electricity and therefore it was revising its prognoses for future electricity demand.[42] Most observers deem the suspension and review a victory for the dam’s protestors. The CFE was involved in a lengthy and complex legal battle with the protestors, who criticized the project for, among other things, forcing displacement, causing environmental damage, and removing their water source. The CFE also remains involved in two legal processes concerning falsification of documents (relating to allegations that signatures approving the project were forged at “consultation meetings”), crimes against the environment, and building on land without permission. There is also a legal process against the author of the Mexican government’s environmental impact assessment, which approved the project.

The legal proceedings were not the only pressure that the CFE was under. A 2007 report by the UN demanded the immediate suspension of the La Parota project, stating that the project had not satisfied questions relating to the right to information, prior consultation and consent, and human rights. The report also highlighted the need to enforce the right to not be displaced, which is recognized in ILO Convention 169, Article 16,[43] and Articles 18 and 19 of the United Nations Declaration on the Rights of Indigenous People, which state:

“(18) Indigenous peoples have the right to enjoy fully all rights established under international labor law and national labor legislation. Indigenous individuals have the right not to be subjected to any discriminatory conditions of labor, employment, or salary.

(19) Indigenous peoples have the right to participate fully, if they so choose, at all levels of decision-making in matters which may affect their rights, lives, and destinies through representatives chosen by themselves in accordance with their own procedures, as well as to maintain and develop their own indigenous decision-making institutions.”[44]

The UN report also said that “they deem it necessary that the Mexican government has an exhaustive policy about the possible displacements as a result of development projects, which meets international standards.”[45] In response to the UN’s critique, the Mexican government stated that “The Federal Electricity Commission (CFE) and state authorities respectively have always insisted that the project will only be carried out if the communities approve, fully exercising their freedoms.”[46] Nevertheless, it is clear that the will of the people was something on which the Mexican government and its agencies placed little importance. The UN also criticized the lack of human and social development programs in the zone and urged the government to take action.

In 2006, a non-binding ruling by the Latin American Water Tribunal (Tribunal Latino Americano del Agua) of the project[47] stated that the CFE had begun work on indigenous lands and territories without informing the communities concerned and it criticized the Mexican government for its flawed environmental impact assessment, calling its approval of the project “illegal.” The report also affirms that the project comes at the cost of indigenous rights, given that it entails the expropriation of indigenous land and the displacements of thousands of people. The report concluded that the CFE must not carry out megaprojects that in reality have little to do with renewable energy and have a high social and environmental cost, which is borne by the inhabitants of the area where the project is planned.

Protestors gather outside the La Parota assembly

This is not the first attempt by the CFE to build a dam in La Parota. Similar efforts were spurned by local residents during the 1970s. Local community members believe that the dam project was stopped 30 years ago, and the Mexican government has purposely created conditions to remove inhabitants from the construction area. They report a pattern of cutbacks in government services and resources for the region, as part of a concerted attempt by the government to indirectly force residents to migrate to other regions.

This notion seem to be supported by statistics from the National System of Statistical and Geographical Information (INEGI), which cite Guerrero as the Mexican state with the largest number of internal migrants and the state with the fifth-largest number of external migrants.[48] A study carried out on the town of Los Huajes (pop. 3,500), which is to be affected by La Parota, revealed a steady increase in out-migration from the town in the last 10 years. The report also states that the town does not receive funding at a state or municipal level for any local projects. A case in point is the fact that the town does not have a clinic or health center—the nearest clinic is 30 km away. The previous Municipal President Alberto López Rosas (2003-2005) summed up the government’s attitude by saying, “Why are we going to provide resources, infrastructure, if the town is going to end up flooded anyway?”[49]

Although suspension of the La Parota dam is considered a victory for the local communities and has eliminated the immediate threat of displacement, many residents and others involved in the case believe that the government will try again, perhaps with IDB financing, to impose the hydroelectric megaproject. Many powerful interests, particularly of transnational construction companies, have expressed interest in the contracts.[50]

In fact, the CFE was explicit in its decision to merely postpone the controversial dam project, with a spokesman stating, “It is not cancelled. It is delayed.”[51] The Mexican government has not discarded the possibility of simply waiting until resistance dies down to again promote the dam construction. Neither the government nor the IDB have publicly acknowledged the allegations contained in the CECOP’s platform of opposition. The fear is that both will proceed by further depopulating the area, by cutting off government programs to encourage out-migration, and continue with the privatization of the Mexican electrical system. The latter will create more pressure to build the huge project as a private business and the former will reduce any local opposition.

Romo notes, “They say ‘suspension’ but the very definition of that word means that the project is not definitively cancelled. Their attitude is ‘we can wait.’ The opposing communities will now be denied resources, funds, etc. to force them to move.”

The CFE proposes restarting the project in 2018.[52] Government and investors are banking on resistance decreasing as out-migration increases and erodes local communities’ capacity to organize. Rodolfo Chavez, a leader of the CECOP, is skeptical about the suspension. “We have received no official information about this from the CFE. And, our demand is that the project be cancelled once and for all, not postponed!”[53]

IDB seems to be waiting too, since according to internal documents it has not dropped La Parota from its list of active projects.[54] For the local residents, the battle to keep their homes and their fields may not be over yet.

B. El Arcediano, Guadalajara

The Arcediano Dam, a hydroelectric project that would be situated on the Santiago River, is expected to cost US$300m and will have a capacity of 404 million cubic meters. The dam wall will measure 125 meters in height and includes a pumping station to transport water from the bottom of the canyon to the purification plant 580m above.[55]

Promoted by the Jalisco State Water Commission, the dam has come under intense criticism from experts who cite the lack of consultation, the environmental risks, the cost, and displacement as key problems.[56] The project is expected to cost US$300m and will have a capacity of 404 million cubic meters.[57] There are also health issues that relate to the quality of the water which the dam would produce, given that the Santiago River produces high levels of polluted water.[58]

The Santiago River has been nicknamed the “River of Death” because of its macabre reputation. In February 2008 an eight-year-old boy, Miguel Ángel López Rocha, died from arsenic poisoning after falling in the river.[59] Many argue that the project will not be able to solve the problem of unclean water, given that the majority of the money dedicated to the project will be used for its construction, leaving little budget to purify the water.[60]

The project is the brainchild of Alberto Cardenas, former governor of Jalisco, who is now secretary of Agriculture. When Cardenas’s administration first raised the project in Congress, it was met with vociferous opposition, due to the fact that so little of the project’s finances would go toward cleaning the river.[61] The project was later approved by the subsequent administration of Francisco Ramirez Acuña, with Cardenas calling the protestors of the project “lice and beggars.”[62]

The project then began to displace the inhabitants of Arcediano, the town principally affected by the dam. The social cost of the project is the disappearance of the entire town of Arcediano.[63] After three families refused to leave the town, the Jalisco government proceeded to demolish the house of one of the key activists in the area, María Guadalupe Lara Lara, without prior notice. The demolition took place at five a.m. on the morning of June 20, 2007.[64] Ms. Guadalupe Lara had previously attended the Chamber of Deputies, along with environmental lawyer Pedro León, to request the cancellation of the Arcediano Project.[65]

A 2005 study of the Arcediano project by the Universidad de Guadalajara found that the project was not feasible and that numerous matters involving the environmental and health implications of the project needed to be resolved before the project could go forward.[66] The Arcediano project does not guarantee the city’s inhabitants access to clean water—a basic human right, and it has also displaced more than 30 families from their homes.[67] The canyon where the dam will be built is also home to flora and fauna, as well as many endangered species, which would be negatively affected by the project. There are also 400 species of plant in the area marked for construction. The area also functions as a unique ecosystem for the surrounding communities, given that it serves as both a climate regulator for Guadalajara as well as naturally limiting the city’s growth. Indeed the canyon was declared a “Protected Natural Area” by the Guadalajara City Council in 1997.[68]

The Jalisco Water Commission has come under criticism over its selection process when approving the Arcediano project. Fifty-three alternative projects were presented to the commission in 2001, and were rejected without appropriate justification.[69] The 2005 feasibility study also found inconsistencies in the evaluation methodology used for selecting Arcediano. The study states that the main alternative project, Loma Larga, was incorrectly disregarded. There is also a lack of clarity over the precise cost of the project, given that there are inconsistencies in the budget and that the risks carried by the project were not factored into the initial cost projections. The Universidad de Guadalajara study also stated that the Environmental Impact Assessment was inadequate and that an appropriate evaluation of health risks is necessary.

Guadalupe Riviera of the NGO “Un Salto de Vida,” which campaigns for a cleaner Santiago River, spoke of the government’s ignorance when attempting to implement the project. “The government doesn’t listen to us when we say the river is contaminated. How is it possible that it is building the Arcediano Dam on the banks of a highly contaminated river?” She also spoke of the lack of consultation for those affected by the construction, commenting that, “The people found out about the Arcediano project when the companies arrived to uproot them from their land. The government wants to flood these towns so that they disappear.” Virginia Vasquez, a resident of Salto, situated on the Santiago River, spoke of the dangers of building a dam there. “There are people dying of cancer, liver problems, heart attacks, etc. My brother-in-law died last year because of the contamination. It is very serious.”

The IDB has behaved in customary opaque fashion with regard to the Arcediano Dam. There is no mention of the project on their website, and many NGOs are unsure of who is financing the project. Nevertheless, an IDB document from June 2009 reveals that part of an IDB loan, ostensibly for a “multi-phase program for investment in and strengthening of institutions and financing for states and municipalities,” has been diverted to an environmental study of the Arcediano Dam.[70] This document was subsequently taken off-line.

Mexican government documents reveal that the IDB has heavily financed the Arcediano Dam project. In a tender document, the Jalisco government looks for participants in the “Integrated Program to Supply the Guadalajara Suburbs” (PIARCG). The document states that the PIACRG is funded by the National Bank of Public Works and Services (BANOBRAS) which is in turn financed by the IDB.[71]

On Oct. 28, 2009, the current governor of Jalisco, Emilio González Márquez, appeared to announce that the Arcediano project would be cancelled due to budget cutbacks, giving way to smaller dam projects.[72] It is unclear what will happen to the funds provided by the IDB, or whether the project is postponed, cancelled, or is simply to be modified. NGOs including IMDEC (The Mexican Institute for Community Development) and International Rivers celebrated the decision as a major victory. With the experience of local resistance and organization against the La Parota project, Mexico has developed a coordinated and active network of groups opposing dams and other megaprojects.

4. Transparency Issues

Despite the IDB’s long-standing commitment to transparency, which includes a disclosure of information policy committing to “the release of all bank information to the public,”[73] many of its current projects are now shrouded in secrecy. We encountered difficulties in investigating some of these projects. After sending several emails to the IDB office in Mexico, we were eventually answered by Ellis J. Juan, IDB representative in Mexico. He initially denied that the IDB had funded any part of La Parota, but when presented with a link to an IDB project involving the CFE [74] (suspected to be La Parota), he declined to make any further comment, passing us on to the External Relations Department who ignored all of our subsequent inquiries. Mr. Juan also declined to comment on inquiries relating to IDB funding of other controversial megaprojects: Zapotillo, Temacapulin, Veracruz, Paso de la Reina, Arcediano, and La Yesca.

The bank’s new Sustainable Energy and Climate Change Initiative (SECCI) appears to be a cover for more megaprojects.[75] As part of one of the initiative’s projects, Mexico’s Environment and Natural Resources Ministry is set to receive US$400m as part of the second operation for the Support Program for Mexico’s Climate Change Agenda.[76] The first operation comprised of a US$200m loan in November 2008.[77]

The new projects which are listed as climate change are vague, and make no real mention of what these projects entail, mentioning only the ominous term “water resources.”[78] This is despite the fact that eye-watering amounts of money are involved. It is clear that due to the negative publicity the IDB has received over certain projects, the bank wishes to project a more environmental image. Nonetheless, the change in terminology masks an increase in funding for megaprojects.

As citizen pressure in Mexico and the world has increased to re-evaluate and stop many damaging large dams, the IDB has become more guarded and less transparent. Documents relating to projects such as Arcediano and La Yesca were removed from the internet without explanation, making the investigation of them all the more difficult. Despite the fact that La Yesca has a project number (ME-L1016), it does not appear in the project section of the IDB’s website, the place where citizens would typically seek to inform themselves of the bank’s projects.

Other organizations have seen the discrepancies in the IDB’s transparency policy. In a recent publication, the non-profit Bank Information Center (BIC) states that the IDB’s recent proposal for a General Capital Increase, where it seeks to use the impact of the recent global financial crisis to boost its lending volume. According to the BIC, the proposal was “pursued in typical IDB fashion—shrouded in secrecy and apparently conflicted over the scope and methods for public consultation.” It later goes on to say that, “The area of Board Transparency remains a critical weakness in the overall quality of board oversight. Currently, it must be recognized that there exists very little exchange between IDB directors and citizens from the countries they represent. The board deliberation function is effectively a black box to the Latin American public,”[79] to describe what rules and structures are in place and how they are or are not being implemented.

It is not just the IDB’s transparency commitment that it violates; it also frequently ignores its environmental and consultation policy.

5. Conclusion

In sum, infrastructure megaprojects supported by the IDB under the regional economic integration paradigm are creating new stress on land and natural resources in localities that were formerly relatively isolated from these forces. In many of these places, human society has developed over centuries with a special relationship to the land and different ways of valuing it. These differences, rather than being seen as emotional or somehow irrational, are linked to non-marketable goods and services that will likely never be internalized in the price of agricultural products or land values. Yet they are intrinsic to human security and play hidden roles in national development and well-being. A partial list would include: cultural identity and diversity, spiritual practices, gender equity, management of local ecosystems, food security and sovereignty, social cohesion, and certain forms of traditional self-government.

In the market-based logic, displacement is often viewed as positive—or at least as a necessary evil. Yet the risks and the costs that it entails to affected individuals are among the highest of any policy-generated impacts. The La Parota and other cases demonstrate that the IDB not only is not avoiding megaprojects that cause massive displacement, but is actively promoting this type of project. The relocation of indigenous and campesino communities from regions slated for “development” is fundamental to the PPP model promoted by the bank.

Scattered among these projects the bank has also begun to include mini-projects aimed at the affected populations.[80] These remain add-ons primarily for cosmetic purposes. Most, such as support for the Mexico government’s Opportunities Program, do not establish a solid development or productive base for communities but rather provide cash transfers to alleviate the worst poverty, and social programs to patch over the general lack of services in the region.

Monitoring the IDB has become more difficult since the PPP protest movements. Projects are no longer identified with the PPP or Mesoamerica Project and often only the vaguest and rudimentary information is available. The IDB must be held responsible for the projects that it funds directly or indirectly. The IDB is fully aware of the displacement controversy at the heart of the megaprojects included in the PPP, and of the protests and the repression from state and federal government agencies.

The numerous conflicts over the years should have alerted the IDB to the fact that this was a polemical project and, at the very least, that there was scope for an all-encompassing review of the PPP. There has also been criticism regarding the lack of information available on IDB projects, a fact that arouses suspicion and ire from the affected parties.[81] More transparency would mean a healthier discussion of the repercussions of the Plan Puebla-Panama, but it seems that the IDB and its associates wish to implement the project with as little negative publicity as possible.

The consultation process carried out has been widely condemned as well, and the IDB, in its planning of the PPP, seems to have considered the indigenous communities as an obstacle rather than a priority. It is this wrong-headed stance which has left the IDB’s role in the PPP open to criticism and has ultimately jeopardized the lives of countless indigenous communities in Southern Mexico.

In terms of IDB practices the stricture to avoid displacement must be the rule to which only rare exceptions can be allowed. As our examples show, this has not been the case in Mexico and in fact there seem to be tendencies built into the IDB vision of development toward displacement of populations located in remote areas, on resource-rich lands, or in zones affected by megaprojects. These tendencies must be corrected.

Public participation and consultation in any project involving displacement is essential. Prerequisites include information, public education, legal advice, and orientation. In Mexico, too often we have witnessed processes of public consultation on issues of resource use where the representatives of the affected populations are hand-picked by the government, the range of issues to be discussed is strictly limited, information on the project is restricted, and the venues and times of the consultation are not publicly known. The law requires real consultation and input and must be respected.

The bank also should develop integrated cost-benefit analyses. The challenge is to develop cost-benefit analysis that take into account not only short-term economic gain, but also the other values and benefits to society mentioned above: employment generation, preservation of biological and cultural diversity, social cohesion, food security, health, gender equity, carbon capture, etc. This approach, whether called human security or simply an integrated interdisciplinary vision, adds in a wide variety of variables and helps to understand why economic models have so poorly predicted, let alone resolved, impacts on population movement.

It is also critical to recognizing rights. This is most obvious in the case of displacement.

The vision form on high of regional integration involves the communities in the region—indigenous and peasant—as objects, not subjects, of development.

The social organizations that oppose Plan Puebla Panama identify some key characteristics for a new development model. They all entail the search for better standards of living for local populations:

  1. Regional integration should be based on strengthening the domestic market and regional commerce, not principally in transnational commerce and capital.
  2. To stimulate the domestic market, you must raise standards of living and reduce the rate of poverty.
  3. The communication channels should be modernized, with the goal of stimulating not only transnational commerce but also local and regional commerce.
  4. Development should be based on re-evaluating the indigenous/peasant economy, not destroying it.
  5. You can re-evaluate peasant production by recognizing economically the importance of indigenous and local people in maintaining ecosystems and traditional knowledge.
  6. The development plan should be a product of the people themselves, with extensive consultation of communities.
  7. The Mexican government at all levels should direct any development project toward a scheme that responds to local and national needs and decisions and not to the demands of transnational companies.[82]

The stated mission of the IDB in Mexico is to “combat poverty and promote social equity.”[83] The bank states that these benefits should accrue not just to the nation as an aggregate but to the populations of the regions and communities where IDB projects are implemented. In Southern Mexico, IDB projects are causing displacement and the loss of culture and livelihoods and eroding local and regional economies.

The uptake in loans for 2008 undoubtedly responds in part to the global financial crisis. Mexico under NAFTA has long experience reorienting its economy toward exports and it sells over 80% of its exports to a single country—the United States. The economic crisis has hit hard, with over half a million jobs lost in the formal sector just between November 2008 and February 2009.

Instead of reducing inequality between regions of Mexico by focusing projects in the south, the type of project supported often increases it. Displacement effectively makes vulnerable populations more vulnerable and the benefits of megaprojects remain in the hands of wealthy investors. In Mexico’s unequal economy, most of the displaced lose the thin thread they used to hang on to survival. They rarely resettle in neighboring zones effectively, given their lack of resources and networks.

This means they often become migrants, either to the cities or to the United States. Eviction of poor local residents, essentially forcing them to disappear within the diaspora of globalization, cannot be considered an anti-poverty measure. Making the poor invisible is not a way to eliminate inequality.

6. Recommendations

If the IDB wishes to regain the confidence of the Mexican people for its projects, then it must alter its current behavior. The first step should involve the definitive cancellation of La Parota. The project has been a disaster from day one, and the notion that postponing the project will solve all the existing problems insults those who have spent their lives fighting against the dam. La Parota has become an emblematic case in Mexico for opponents of megaprojects, and it is time for the IDB to realize that perseverance with the project will serve only to further damage the IDB’s reputation and deepen the mistrust between the Mexican people and the IDB.

The IDB must enforce its own policy. Currently, the IDB has numerous adequate polices in place to minimize the social and environmental impact of their projects. Yet these policies merely pay lip service to the various NGOs, and human rights and environmental organizations. The La Parota project was lambasted by the UN for failure to consult the affected people and provide information, despite the fact that IDB guidelines say it will only support projects where there is community participation at each stage of resettlement design.[84] The IDB’s Environment and Safeguards Compliance Policy states that, “Bank-financed operations will include as appropriate, measures to prevent, reduce, or eliminate pollution emanating from their activities,”[85] yet the river on which IDB’s Arcediano project is to be built was criticized in 2001 for its high levels of water pollution.[86]

The IDB must also realize that it cannot hide behind the governments and organizations it funds. The IDB has been reluctant to become involved in debates over the projects it funds. Instead, it prefers to let organizations such as the CFE take the reins of the project, and to carry out the consultations and assessments necessary. As demonstrated by the La Parota case, such organizations often violate ethical commitments and ram-raid their projects through with little attention paid to those affected. The IDB is aware of the controversy surrounding many of its past, present, and future projects, yet its silence on such matters speaks volumes. One of the IDB’s Environment and Safeguards Compliance Policies states that “The bank will monitor the executing agency/borrower’s compliance with all safeguard requirements stipulated in the loan agreement and project operating or credit regulations.”[87] Once again, enforcement of existing policy is paramount.

The IDB should also organize a forum to respond to concerns over projects. Currently, any concerns are aimed at the organization implementing the project or the appropriate government. If the IDB wishes to improve its much-maligned image, then it should publicly respond to queries as opposed to remaining silent and allowing other entities to handle complaints. The IDB, when deemed necessary, should feel free to perform and publish independent social and environmental impact assessments relating to controversial projects. Such a move will buttress the idea that the bank is an independent entity that serves public interests, detaching it from the current ethos that the bank is simply a blank check for government and big business. While performing independent social and environmental impact assessments, the bank should also explore alternatives to its megaprojects. In the case of Arcediano, many other projects were dismissed by the CFE because of its single-minded approach to the project. If alternatives were explored by an independent entity acting under the IDB’s authority, then such wrong-headed decisions could be avoided. With respect to dam-building, many environmental organizations advocate the construction of small-scale dams, with International Rivers pointing out that “Small dams can be a sustainable and economic source of electricity, especially in rural areas.”[88] In light of the recent protests in Mexico, the IDB would be well advised to steer clear of large-scale dams.


Gudynas, Eduardo, “El BID a los 50: No es momento de festejos, sino de transformaciones,” Agencia Latinoamericana de Informacion (ALAI),

Internal Displacement Monitoring Center, “MEXICO: Evictions of Indigenous Communities Fuel Displacement in Chiapas, A profile of the Internal Displacement Situation,” January 22, 2008.

Martinez, Nadia, “Destabilizing Investments in the Americas II: The Inter-American Development Bank’s Fossil Fuel Financing: 1992-2004,” Sustainable Energy and Economy Network (SEEN), IPS, March 2004,

Hidalgo Ledesma, Rosalinda, Memoria del Diagnóstico Comunitario, La resistencia a la pertenencia territorial /Ejido de los Huajes, Acapulco Guerrero / Elaboracion Etnologa.

IV. IDB Policy in the Development of Agrofuels: Displacement and Palm Oil Cultivation in Colombia

Both governments and international financial institutions have made enormous efforts to promote biofuel production. Biofuels are presented as new, “green,” environmentally friendly sources of clean energy.

Many governments have subsidized the development of ethanol and biodiesel production and now mandate a blend of biodiesel and fossil fuels. A recent study from the Inter-American Development Bank shows that 27 out of 50 countries have implemented or are in the process of implementing such regulations.

The IDB promotes biofuels as a “transforming opportunity” and presents them as sources of major investment, development, and employment in rural areas. That is the framework for the bank’s “green-energy program,” which includes $300 million in lending, as well as technical assistance, for sugarcane-based ethanol production in Central America.

In Costa Rica and El Salvador the bank is financing feasibility studies and technical assistance with regulation, market development, and public education to help governments reach their goals of replacing 10% of domestic gasoline consumption with ethanol. In Brazil, the bank’s Private Sector Department is structuring senior debt financing for three ethanol production products that will have a total cost of $570 million. The department’s Brazil projects also include “loans for five biofuels transactions or projects with biofuels components” at a cost of nearly $2 billion. According to IDB President Luís Alberto Moreno, these investments will help Brazil to triple its annual ethanol production by 2020.

In Colombia, the Inter-American Investment Corporation is considering financing a $20 million enterprise that will eventually produce up to 100,000 tons of palm oil-based biofuels a year.[89]

Nevertheless, very few of the biofuel programs being promoted are economically viable since they require high protective tariffs and subsidies, not to mention the high environmental and social costs they incur, such as deforestation, increased food prices, displacement of rural populations, and land use changes, among others.[90] In Colombia the oligopoly of three conglomerates that produce a million liters of ethanol a day receives $153 million a year in subsidies through tax exemptions.[91] Meanwhile, an enormous amount of investment is needed to develop the sector: $200 billion for biofuels to represent 5% of global transport sector energy needs by 2020.[92]

International cooperation programs also provide incentives for biofuel production, particularly for African palm tree cultivation. “Plan Colombia,” financed by the United States, proposes planting 34,000 hectares of palm trees between 2008 and 2013. The European Union has financed a program to plant 5,000 hectares with palm trees in the Magdalena Medio region (Peace and Development Program of Magdalena Medio—PDPMM).

What all these feasibility studies and plans fail to mention is the fact that vast expanses of land are taken over and stripped to make way for plantations that will later generate biofuels; tropical forests are depleted to plant thousands of hectares of palm trees, sugarcane, and other crops for fuels. Colombia is already in the midst of a land use change from food production to agro-industrial plantations. This report focuses on how the bank’s biofuels strategy impacts internal displacement, which is already a serious problem in Colombia.


In 2008 the IDB approved a $1.5 million grant to promote investment in sustainable energy and biofuel projects in Colombia. The project includes the preparation of operative guidelines and information to promote investment in projects, plans, and programs. Activities include a life-cycle assessment for the biofuels production chain (ATN/JC-10826-CO y ATN/JF-10827). The Ministry of Mines and Energy signed a non-reimbursable Technical Cooperation Agreement with the Inter-American Development Bank, funded by the Japanese Special Fund ($922,000) and the Japanese Consulting Fund ($594,000) for the purpose of promoting a solid framework and information to enable investment in sustainable energy and biofuels projects, plans, and programs through a set of tools, studies, and institutional strengthening. The assessment will study the implications of the biofuel industry from the planting of crops to the end users of ethanol or biodiesel (flex-fuel vehicles and normal vehicles).

The project seeks to identify strategy needs of a long-term plan to generate renewable energy, especially through biofuels. Preliminary studies will evaluate available land, the most appropriate crops, roads and necessary infrastructure, processing plants, storage, and ports, as well as needs to strengthen human resources.

The assessment will identify obstacles in the biofuel production chain. Colombia’s Ministry of Energy and Mines is in charge of implementing the grant.

The project is included in Expanding Innovation, Science, and Technology in Bioenergy, a program of the Colombian Institute for the Development of Science and Technology (COLCIENCIAS), and is an example of IDB’s promotion of biofuel production in Colombia.

The IDB is also financing the Program to Support the Development of a Climate Change Agenda (CO-L1063), under the direction of the Ministry of Finance, in coordination with the National Planning Department. The program is intended to help the country become less vulnerable to climate change and to exploit the economic and technical opportunities offered by international mitigation through carbon emissions trading. It is the first of three possible programmatic, policy-based loan operations. The program supports the development of a national policy on climate change and promotes the implementation of a mitigation agenda and adaptation agenda across several sectors of the economy. It is based on four components: (i) macroeconomic stability; (ii) institutional policy and framework; (iii) mitigation agenda; and (iv) adaptation agenda.


Nearly 337,000 hectares were used for African palm tree production in 2008, according to Fedepalma, the National Federation of Oil Palm Growers. As shown in tables 1 and 2, as a result of government incentives to the industry, 98,000 additional hectares were added between 2004 and 2008.

Table 1. Surface Area with Palm Tree Cultivation 2003 – 2008

In Hectares

Year Planted Difference In production In development
2004 238,926   153,216 85,710
2005 270,026 31,100 163,770 106,256
2006 292,569 22,543 177,852 114,717
2007 306,878 14,309 199,704 107,174
2008 336,956 30,078 221,266 115,690

Source: Fedepalma, Statistical Yearbook 2009.

In 2007, the most active departments in the complete production chain of crude palm oil were Cesar (24.78%); Magdalena (20.97%); (Meta 19.74%); and Nariño (15.52%). Between 2004 and 2008 the greatest expansion occurred in the Eastern zone, followed by the Northern and Central zones (Table 2).

Table 2. Surface Area with Palm Tree Cultivation 2004 – 2008

In Hectares

Zone 2004 2008 Difference
Eastern 74,823 121,135 46,312
Northern 78,501 106,635 28,134
Central 57,767 87,525 29,758
Western 27,835 21,661 -6,174
Total 238,926 336,956 98,030

Source: Fedepalma, Statistical Yearbook 2009.

A significant amount of land under cultivation belongs to a small number of large-scale operations, since the industrialization of palm oil requires an optimum amount of production to justify the installation and efficient operation of a processing plant (table 3).

Table 3: Distribution of Palm Tree Plantations by Size in Hectares (Source: Fedepalma-RNP)

Size in Hectares Register Units Hectares
Number % Number %
Less than 20 2.657 81,9 20.243 9,0
Between 20 and 200 379 11.7 32.18 14,3
Between 200 and 500 108 3,3 37.61 16,7
Between 500 and 1000 63 1,9 46.013 20,4
Between 1000 and 2000 25 0,8 36.353 16,1
More than 2000 13 0,4 53.075 23,5
Total 3.245 100,0 225.474 100,0

Colombia has four palm producing regions, with 55 productive centers concentrated around extraction plants.

-          Northern Zone: Departments of Magdalena, northern Cesar, Atlántico, Guajira, Antioquia (Urabá)

-          Central Zone: Departments of Santander, Norte de Santander, Southern Cesar, Bolívar, and Magdalena Medio

-          Eastern Zone: Departments of Meta, Cundinamarca, Casanare, and Caquetá

-          Western Zone: Departments of Nariño, Cauca, and Chocó

In 2007 Colombia was the world’s fifth-largest producer of palm oil (2% of the world’s total production). The principal producers are Indonesia and Malaysia, with 44% and 42% respectively. Colombia is the largest producer in Latin America, with 38% of production. The goal of the Colombian government is to have three million hectares under cultivation for biofuel production by 2020 (two million for palm oil and one million for sugarcane).

The European Union is the largest purchaser of Colombian palm oil; the EU buys 72% of the 341,875 tons placed on the foreign market (2007 figures). In descending order, the most important consumers are the United Kingdom, Germany, and Spain, with 24%, 24%, and 18% respectively.

Palm Tree Cultivation: Land and Territory, Displacement, and Conflict

Land ownership is highly concentrated in Colombia; 14,000 landowners possess 65% of land. Meanwhile, four million people are displaced, making Colombia the country with the largest internally displaced population alter Sudan. Colombia’s Constitutional Court has found that forced displacement is not only a consequence of armed conflict, but also a result of more economic interests in land and natural resources.[93]

In addition, many groups have denounced what is effectively a reverse land-reform movement. According to the Inspector General’s Office, drug traffickers and armed groups now occupy 48% of prime agricultural land abandoned by communities that had been forced to flee; palm trees are now grown on some of the territory.

In Colombia, agrarian policy is based on rural development, which means that the land is a key element in the generation of wealth. Growing crops for biofuels is hotly debated at the national level since so much land is now used for these crops, which has caused problems that include human rights violations. Outbreaks of violence have been linked to land use disputes involving sugarcane and palm oil production for biofuels. There have been cases, such as those that occurred in Jiguamiandó and Curvaradó in Urabá Chocano, where palm oil enterprises, with the support of government institutions, and with resources and cooperation of the United States, appropriated the communal lands of Afro-Colombians who had been forced to abandon their land because of the violence. Their land was later used for palm tree plantations. In their struggle to maintain their territorial rights and return to their communal lands, an estimated 110 people have been assassinated or disappeared by paramilitary groups—on occasion with the support of members of public force.[94]

In addition to being linked to human rights violations, forced displacement, and illegal occupation or use of lands, the industry has also been linked to money laundering. As a result, the expansion of the palm tree industry has been highly debated, and violations of the rights of ethnic groups to remain on or recover their collective lands have been strongly denounced.

Palm Trees, Displacement, and Migration 

Several forms of displacement have resulted in the expansion of palm tree production. In some cases, violence has been used to force communities to leave so that the land can be appropriated for palm plantations. For example, community leaders have been killed to force the rest of the community to migrate, or force has been used to pressure communities to sell their lands at a far lower price. Another form of displacement occurs when palm oil companies take over land in regions where communities had been forced to abandon their land, which according to authorities, were recovered by public force (post-conflict); another form is to pressure campesinos to sell their land or form alliances with agro-businesses. In several regions companies try to acquire land for palm plantations at less than the commercial rate. This contrasts with the absence of state-run programs designed to help displaced families recover their land safely and with dignity. Some relocation programs condition grants of land and subsidies on participation in a “productive alliance” with an agro-business.

In addition to violent displacement, economic migration is also related to the palm oil industry. The government promotes cultivation of long-term crops for biofuel production and does not invest in small producers, except when they are linked to plantations. In sum, small growers have to accept the productive alliance model if they want their plot of land and subsidies, despite the fact that the model means the loss of independence and the end of the campesino economy, to mention just some of its implications.

This form of delivering land to displaced communities has led to scandals such as occurred with “Carimagua,” in the department of Meta. There an enormous state-owned finca of 17,000 hectares was supposed to given to displaced families. Instead the former minister of Agriculture decided to give the property to five companies for palm tree production.

Table 4: Regional Abandonment of Land through Displacement

Region Owned land Abandoned because of displacement
Atlántica 48.3% 92.9%
Andina 57.6% 94.3%
Pacifica, Orinoquía and Amazonía 64.4% 95.0%

According to the Ninth Report of the Commission to Monitor Public Policy on Forced Displacement, in 2009, a study was done of the extent and value of land and possessions abandoned or given up by internally displaced persons. The survey showed that the abandonment of land and animals was massive; 55.5% of family groups used to own land; 94% of them abandoned their lands as a consequence of displacement.

Other figures come from persons registered with the Unified Registry of Displaced Population (RUPD) and those who are not registered.

Persons registered in RUPD Declaration of land ownership Declaration of abandonment caused by displacement
  59.0% 94.3%
Persons NOT registered in RUPD  










Source: Ninth Report of the Commission to Monitor Public Policy on Forced Displacement.

In addition the survey estimated the extent of forced land abandonment. The following parameters were applied:

  • Land collectively owned or worked was excluded to avoid being counted twice.
  • Excluded from the calculation were those groups who reported having been displaced from tracts of land greater than 98 hectares.
  • The calculation considered those who had been forced to leave their lands, as well as those who were pressured to sell to third parties, forced sales, and in general lands that were expropriated through other mechanisms.

Using these criteria, the survey found that the total number of hectares given up or abandoned is in the order of 5.5 million, which is 10.8% of Colombia’s arable land. The figure of 4.3 million displaced persons is based on statistics from the Consultancy for Human Rights and Displacement (COHDES), and differs from national government figures, which list the number of displaced persons as 2.64 million as of August 2008.


The goal of the present report is to show whether there exists a relationship between the expansion of oil palm production and the increase in the number of persons displaced in the regions where plantations exist. Except for the documented case of palm tree plantations in el Chocó, no other studies have analyzed the issue.

We will look at the data by zone and by the respective departments and municipalities where palm plantations already exist and indicate the statistics for displaced population. Official data is used from Fedepalma (oil palm-growers federation); Acción Social’s (presidential office in charge of displaced population) report on displaced persons as of December 2009; the Consultancy for Human Rights and Displaced Persons (CODHES); and the Fund for Agricultural Sector Finance (Finagro), among other official sources.

In the Zona Norte 97,881 hectares of oil palms are in production in the departments of Cesar, Magdalena, and Córdoba; nevertheless there are also plantations in other departments such as Antioquia, Bolívar, Atlántico, and Sucre.

Acción Social reports that as of December 13, 2009, there were 552,402 displaced persons in Antioquia.

Municipalities that cultivate palm trees in Antioquia and displacement of ethnic communities:

Indigenous Afro-Colombians


Chigorodó 73 922
Mutata 273 738
Yondó 128 400


Acción Social reports that as of December 13, 2009, there were 5,971 displaced persons in Atlántico. The municipality where palm is grown is Repelón, which reports 16 Afro-Colombians displaced.

Acción Social reports that as of December 13, 2009, there were 277,098 displaced persons in the department of Bolívar.

Municipalities in Bolívar where palm is cultivated and displacement of ethnic communities:

Indigenous Afrocolombian


Arjona 31 161
Mahates 31 161
Maria La Baja, (according to the *DNP, 3,513 persons were reported displaced from 2002-2005)  




San Estalisnao   45
Cantagallo 47 1174
El Peñón 2 24
Morales 26 309
Regidor 35 139
Rio Viejo 18 418
San Martin de Loba 24 309
San Pablo 130 797
Simití 16 186


Acción Social reports that as of December 13, 2009, there were 168,916 displaced persons in the department of Cesar.

Municipalities that cultivate palm and displacement of ethnic communities:

Indigenous  Afrocolombian


Agustín Codazzi 274 630
Becerril 138 199
Bosconia 400 238
Chimichagua 43 180
Chiriguana 52 171
Curumani 124 1270
El Copey 494 637
El Paso 63 131
La Jagua de Ibirico 301 396
La Paz 60 107
San Diego 211 157
Valledupar 2076 1004
Aguachica 117 271
Pailitas 90 120
Rio de Oro 15 21
San Alberto 37 102
San Martín 8 46
Tamalameque 3 71


Acción Social reports that as of December 13, 2009, there were 125,574 displaced persons in Córdoba.

Municipalities in Córdoba that cultivate palm and displacement of ethnic communities:

 Indigenous Afrocolombian


Lorica 23 93
Montería 67 674
San Bernardo del Viento   113


Acción Social reports that as of December 13, 2009, there were 66,016 displaced persons in Guajira.

Guajira municipalities that cultivate palm and displacement of ethnic communities.

 Indigenous Afro-Colombians


Dibulla 824 3624
Riohacha 1011 1599


Acción Social reports that as of December 13, 2009, there were 247,992 displaced persons in Magdalena.

Magdalena municipalities that cultivate palm and displacement of ethnic communities.

 Indigenous Afrocolombian


Algarrobo 44 238
Aracataca 82 891
Ariguaini 80 251
Ciénaga 251 2023
El Piñón 8 104
El Reten 7 329
Fundación 236 2203
Pivijay 111 1288
Pueblo Viejo 26 292
Sabanas de San Angel 476 394
Salamina 15 58
Santa Marta 474 4601
Zona Bananera 79 2992


Acción Social reports that as of December 13, 2009, there were 109,652 displaced persons in Sucre. The number of displaced persons (DNP) from 2002-2005 was 2,840.

The municipality in Sucre where palm is cultivated is San Onofre.

In the Central Zone 77,594 hectares of oil palm are in production throughout the departments of Santander and Norte de Santander.

Acción Social reports that as of December 13, 2009, there were 107,950 displaced persons in the department of Norte de Santander.

Municipalities of Norte de Santander that cultivate palm and displacement of ethnic communities:

Indigenous  Afrocolombian


Cúcuta 147 239
El Zulia 35 10
La esperanza 9 38
Sardinata 133 24
Tibú 633 276


Acción Social reports that as of December 13, 2009, there were 80,943 displaced persons in Santander.

Santander municipalities that cultivate palm and displacement of ethnic communities:

Indigenous Afrocolombian


Barrancabermeja 140 763
Bucaramanga 20 89
Puerto Wilches 5 143
Rionegro 12 96
Sabana de torres 21 74
San Vicente de Chucurí 44 121
Simacota 11 83


In the Eastern Zone 106,317 hectares of palm are in production throughout the departments of Meta and Casanare; nevertheless, there are also small plantations in Caquetá and Cundinamarca.

Acción Social reports that as of December 13, 2009, there were 118,419 displaced persons in Meta.

Meta municipalities were palm is cultivated and displacement of ethnic communities:

 Indigenous  Afrocolombian


Acacías 18 86
Barranca de Upía   11
Cabuyaro 5  
Castilla la nueva 7 2
Cumaral 3 19
El Castillo 13 85
Fuente de oro 15 4
Granada 18 77
Puerto Gaitán 51 33
Puerto Lleras 40 88
Puerto López 34 46
Puerto Rico 75 233
Restrepo 3 12
San Carlos de Guaroa   16
San Juan de Arama 24 89
San Martín 10 43
Villavicencio 31 85
Vista Hermosa 145 362


Acción Social reports that as of December 13, 2009, there were 24,900 displaced persons in the department of Casanare.

Casanare municipalities where palm is grown and displacement of ethnic communities:

Indigenous Afrocolombian


Aguazul 10 14
Maní 12 19
Monterrey 22 20
Nunchia - 5
Sabanalarga - -
San Luis de Palenque 12 6
Tauramena 6 19
Villanueva 15 32
Yopal 61 51


Acción Social reports that as of December 13, 2009, there were 158,631 displaced persons in the department of Caquetá. The Caquetá municipality that cultivates palm is Belén de los Andaquies.

In the Western Zone 34,610 hectares of palm are in production in the departments of Nariño, Putumayo, and Cauca.

Acción Social reports that as of December 13, 2009, there were 134,253 displaced persons in Putumayo.

Acción Social reports that as of December 13, 2009, there were 130,021 displaced persons in Cauca. The municipality where palm is grown is Guapi.

Acción Social reports that as of December 13, 2009, there were 146,201 displaced persons in Nariño. The municipality where palm is grown is San Andrés de Tumaco.

Unfortunately, there are no year-by-year figures from the Presidential Agency for Social Action and International Cooperation on the number of displaced persons by department. That information would show the relationship between increased numbers of displaced persons and the expansion of plantations in each department. What can be shown is that in the last five years (2005-2009), approximately 1,300,000 persons were displaced from their land. In other words, 39% of the total number of internally displaced persons in Colombia abandoned or were forced off their land within the last five years.

Palm production has steadily increased. In the mid-1960s, 18,000 hectares were in production; in 2003, that number had increased to more than 188,000 hectares. Currently around 350,000 hectares have been planted. In departments such as Meta, palm production has increased by 16,000 hectares each year for the last five years. All of this is evidence that displacement has its origin in land use. A look at palm-producing municipalities and the displacement situation allows us to reach a preliminary conclusion: as land is cleared for palm tree production, forced displacement also increases.

Meanwhile, government-created incentives that encouraged palm oil exploitation in support of an overall economic development strategy, show no evidence of stopping some large producers, with the support of illegal armed groups, from provoking the forced displacement of local communities.[95] In other words, both the incentives created from within the government and the usurpation of land for palm cultivation have been deliberate and have privileged the industry above the communities.

The Ombudsman’s Office, along with INCODER, has denounced other forms of pressure that some businesses have exerted. In early 2005 a commission was formed to investigate the disposition of land belonging to communal councils of Afro-Colombians in Jiguamiandó and Curvaradó in the department of Urabá. The commission found that as communities were forcibly displaced from their lands, agents of several large ranching businesses and oil palm producers illegally occupied more than 21,000 hectares through fraudulent sales to supposed property owners. They proceeded to cut down forests, construct roads and drainage canals, and establish cattle ranches. The commission showed how landless, displaced Afro-Colombian campesinos have been obligated to return to the homelands as cheap labor for oil palm enterprises as sharecroppers or day laborers on the plantations. A similar process has occurred in Southern Bolívar, where expropriation was used not only as a mechanism to control land but also the population.[96]


Colombia is one of the leading countries in the production of biofuels. In the Americas it is third in ethanol production after Brazil and the United States; it is fifth in world production of palm oil. The government strongly supports biofuel production and has taken major steps to further that policy, from revising rural sector legislation to providing incentives that make investment in the sector viable, favoring private businesses with public resources. Crops produced for biofuels (principally sugarcane and African palm trees) have received an enormous amount of credits and incentives that guarantee supply and demand. The government regulates the use of carburant alcohol, the oxygenating components of gasoline and diesel. Those norms provide the necessary stimulus for manufacturing, commercialization, and consumption, since the government mandates that gasoline be blended with 10% ethanol (E10) and diesel with 5% biodiesel (B5).

Law 788 in 2002, and Law 863 in 2003, exempted carburant alcohols from the value-added tax and the gasoline surcharge. Law 1004, enacted in 2005, created special free-trade zones that limit income tax to 15%. CONPES 3510, an official document of the National Planning Department, seeks to encourage certification schemes that make Colombian biofuels competitive in national and international markets. It urges the Ministry of Finance to create additional tax incentives for a period of not less than 15 years and also recommends that other authorities in Colombia creative additional tax incentives, such as exemptions from the tax on industry and commerce. More recently, Decree 1135 (2009) states that by 2012 new engines must permit an 85% blend of ethanol and gasoline.

In Colombia rural policy focuses on production of raw materials for export, therefore the production of long-term crops for biofuels is of great importance. The National Development Plans (PND) of the two administrations of President Alvaro Uribe,[97] the Rural Development Statute,[98] and the National Development Plan of Colombia 2006-2010 (PDN), incorporate direct and indirect investment to promote vegetable-based biofuels: ethanol and biodiesel. Government investment in other crops, such as food crops with a short growing season, is either non-existent or substantially reduced.


Policy documents developed by the National Council on Economic and Social Policy recognize the environmental impact of the oil palm industry with respect to water pollution, loss of biodiversity, change in ecosystems, and increased emissions caused by deforestation, among other factors.[99] There are regions of the country where palm tree cultivation has affected the rain forest, as has happened along the Pacific Coast (Urabá – Chocó, Guapi – Cauca, and Tumaco – Nariño).[100] On the other hand, several palm tree expansion projects in the advanced stage or in the planning process are located in fragile ecosystems such as the wetlands of the Magdalena Medio region and the Orinoco region of Colombia.

In addition, this is an agro-industry characterized by a large use of energy inputs (herbicides and pesticides that emit nitrous oxide) that pollute the air and sources of water. Moreover, the lack of proper waste management in the production process causes large-scale methane emissions. When you add up the amount of fossil fuels necessary to produce biofuels—taking into consideration the entire production chain—the claim that these fuels are environmentally friendly is questionable. The raw plant materials are the product of large-scale intensive agriculture, which requires enormous amounts of fertilizers and pesticides (petroleum derivatives) and machinery fueled by petroleum. Processing plants and transportation require a huge amount of energy inputs (principally obtained from hydrocarbons).

Moreover, processing plants and palm plantations usually receive free water concessions from environmental authorities in each department. In many instances monoculture has dried up marshes and wetlands, affecting not only the ecosystems, but also the quality of life of those who live there. As a frame of reference, the water footprint of one unit of energy produced by biofuels is 70 to 400 times greater than that produced by a mixture of fossil fuels. This means that depending on biofuels for energy means depending even more on water, a limited resource.

The Business of Carbon Credits, Climate Change, and African Palm

In the discourse of those who promote biofuels, we repeatedly hear the argument that these plantations capture carbon dioxide, therefore polluting industries in the North “compensate” for their global greenhouse gas emissions by financing agro-industrial projects in the South. This is done through what are known as carbon emissions markets, which basically are in the “business” of exchanging pollution rights and emission credits.

The IDB has financed a $250 million project in Colombia called the “Sustainable Energy and Climate Change Initiative” or SECCI (GN-2435-1), which is based on three pillars: (i) renewable energy/energy efficiency, (ii) increased access to carbon emissions markets, and (iii) adaptation to climate change. The project brings the private and public sectors together in program operations that emphasize: (i) climate change agenda as a pillar of public sector work, and (ii) better use of international carbon markets and reduction of vulnerability to the effects of climate change.

In this scheme, climate change is also a business. And that’s what nearly 100 Colombian enterprises that have begun developing United Nations supported Clean Development Mechanism (CDM) projects are doing. With these projects they claim to reduce levels of atmospheric contamination. Each ton of global greenhouse gas emissions is mitigated on the carbon emissions trading market and they earn profits. Among these substances are carbon dioxide and methane.

Colombia ranks eleventh in the world for countries with the most businesses linked to CDM initiatives. Already 77 enterprises, among them Autonomous Regional Corporations, refineries, and cement factories, are working on mitigation plans. Between them, they hope to make $150 million in profit by reducing 15 million tons of global greenhouse gases a year. One of these enterprises is Fedepalma, which designed a project to capture methane. With that project the Federation’s 32 member firms hope to obtain 757,000 certificates, which can earn them more than $3 million on the global carbon trading market.

The way this works is the UN issues them Certificates of Reduction of Global Greenhouse Gas Emissions, which can be converted into shares or credits valued at between five and 15 dollars. Those credits can then be sold to industrialized countries, such as Australia, Canada, or Spain, which are obligated under the Kyoto Protocol to reduce their global greenhouse gas emissions. When they account for steps they have taken to reduce those levels of emission, they can say that they bought certificates and helped to reduce pollution.

It is important to note that Fedepalma plans to trade credits that palm oil producers acquire related to the capture of methane from their own operations. In other words, on one hand international financial institutions promote the palm oil industry, which generates gases that cause climate change, and on the other hand, producers receive millions of dollars from the carbon emissions trading market to mitigate the damage they cause.

Food Situation

The Von Humboldt Institute has warned that “reorienting production toward specialization may lead to loss of biodiversity and cultural changes that affect the entire food supply system.” It adds that the situation is even more disturbing in areas where the introduction of monoculture has led to dependence on food produced in other regions. Therefore it recommends moving ahead with plans to differentiate between strategic zones for food production and for biofuel production to “avoid local or national conflicts over food security.[101]

The food crisis has become worse because, as we pointed out, Colombian rural policy focuses on long-term export crops and the production of biofuels, with little investment going toward small producers to guarantee food sovereignty and the ability to feed their families.[102]

The expansion of palm production can also have consequences at the family level. Workers under the system known as Cooperativas de Trabajo Asociado (workers’ associated cooperatives) earn nearly 45% less than those who work under a collective bargaining agreement. Meanwhile, food costs are rising. The same problem is faced by campesinos and small landowners under the productive alliance system who have stopped planting other crops in hopes of earning more with palm trees. They now have to buy—at increasingly higher prices—what they used to produce.

An example is the expansion of palm production in the region of Magdalena Medio, particularly in the municipality of Puerto Wilches—the first palm-producing municipality in the country—where palm cultivation has replaced all other forms of agriculture and fishing. The prices of fruit, yucca, rice, and fish have tripled in the last five years; local fishing stocks have almost disappeared as a result of the enormous pressure placed on water ecosystems by palm plantations.

In addition, expansion of large-scale palm production has caused conflicts with municipal authorities and even led to conflicts between businessmen. For example, vast zones of the Ariari region in the department of Meta are in dispute between palm tree entrepreneurs and those in the grain industry.[103]


The government of Colombia sees Central America as highly important in the context of regional integration, and proposes a pragmatic, far-reaching, open form of integration.[104]

Governments in the region see Plan Puebla Panama[105] as a way to strengthen economic development by integrating their economies with the international market. This is why the government of Colombia sees its entrance into the plan as part of its strategic interests. Today the plan is perhaps one of the most important goals of Colombia’s foreign policy, since it implies a market of more than 180 million inhabitants, an area of 2.1 million square kilometers, with a regional gross domestic product (GDP) estimated at $236.4 million in 2004, and approximately $10.332 million in direct U.S. foreign investment in 2005.

Colombia took its first steps toward joining the plan in 2005, claiming it would take advantage of our geopolitical position and serve as a hemispheric focal point. In that context Colombia became a significant player in the integration of Central America and Mexico.

In 2006 Colombia became a full member of Plan Puebla Panama, which proposes interconnection and cooperation with roads, energy and gas, telecommunications, sustainable human development, commerce, disaster mitigation and prevention, tourism, as well as with issues such as biofuels and climate change.

In April 2007 the presidents of the PPP countries met in Campeche, Mexico, where the president of Colombia affirmed the importance of the plan and the nation’s interest in sharing its biofuels experience with the nations of Plan Puebla Panama. He proposed the installation of two pilot plants in two countries, Guatemala and Honduras. With the signing of the free trade agreement with the nations of the northern triangle, in August 2007 El Salvador applied to be the beneficiary of a third pilot biofuels plan, which the Colombian president accepted.

Colombia was officially assigned to coordinate the biofuels group and two Colombian companies, Biogeos and Imgeomega, have been put in charge of building and operating the three biodiesel plants in Central America. In Guatemala and El Salvador biofuels will be produced with jatropha and higuerilla; in Honduras, palm oil-based biofuels will be produced.

The free trade agreement between Colombia and the United States, which is still not ratified, eliminates tariffs on biofuel exports, which is why Colombia is increasing measures that favor biofuel production by minimizing costs as much as possible. The principal way that labor costs have been reduced is through abusive contracts under the Cooperativos de Trabajo Asociado system.

This explains Colombia’s interest in joining PPP and its leadership of the regional biofuels group, in addition to the fact that it has invested in the construction of three pilot project plants in Central America, since CAFTA already allows duty-free ethanol exports to the United States.


A wide cross-section of society has expressed concern with the expansion of biofuel production. Problems related to land tenancy, the use of vast expanses of land for plantations, the change in soil use, and the effect on natural ecosystems, will no doubt have repercussions on food security at the national, as well as local, level. Given this scenario, it’s important to review the problem of displacement associated with economic interests in land.

We consider it important to reconsider all the implications, above all the increased number of displaced persons that occurs in regions where biofuels are produced. The link between large agro-industrial plantations and violations of the human rights and territories of local communities is part of our national reality and part of a national debate that can’t be avoided. Serious reconsideration is required on the part of governments, businesses, and multilateral organizations that promote this new paradigm.

We recommend that the IDB take into account the implications of this form of energy and re-evaluate its biofuel promotion policy, because the countries where these projects have been developed suffer from enormous social, environmental, labor, and human rights problems.

As to the claim that biofuels help diminish global warming, we consider that on the contrary, they are among its causes. Carrying out large-scale monoculture requires an intensive use of petroleum derivatives, which adds to the total amount of global gas emissions.

Appendix 1:

Interview with a campesino from the Magdalena Medio region who grows African palm trees and analyzes the impact of this crop on the region (February 2010).

There’s a great concern with the loss of earlier crops like yucca, cattle, fishing. In the case of Vereda la Italia, which used to produce milk for the region, it was completely transformed into palm tree cultivation, and now you have to buy milk in stores. Fishing has gone down rapidly: 10 years ago fishing nets were full and 12 to 15 trucks of fish used to leave every day. This is a result of levels of pollution in the rivers due to the use of pesticides for palm cultivation and upriver pollution from the Barracabermeja zone. We’re also concerned about the loss of forests that we’ve seen with the palm tree cultivation.

Water problems with drought and floods in the region can be connected to palm tree cultivation. Plantations didn’t respect the buffer zone of the Magdalena River. So there was no natural barrier to the growth of the river channel, which led to high social and environmental costs for the people of Puerto Wilches. In addition, palm tree cultivation requires the draining of wetlands, so the big companies have dried the marshes and wetlands for the benefit of their crops. All this, added to “El Niño” this year, has done away with water in the region.

Food Security

Palm trees are given higher priority than any other crop in the region, endangering food security at the family level. He and other campesinos are thinking about raising cows to survive. He thinks he can’t go on without money, without food: “What we have to plant is food.”

Sociocultural Changes Caused by Palm Tree Cultivation

Nevertheless campesino culture is going through major changes: “Monoculture is doing away with the word ‘campesino.’ Now you’re a palm grower or a cacao grower.” In some cases campesinos cultivate palm trees, but live in cities because of the services, principally educational, that are available. Migration is also facilitated by the fact that it’s not necessary to stay on a palm plantation, since it’s unlikely the crop will be stolen.

Migratory Movements

Labor demand has also caused migration to the zone, mainly along the coast and in Santander. Puerto Wilches has been a receiving area for the displaced population from Sur de Bolivar and los Llanos. He says it’s hard to tell who is displaced in Puerto Wilches; it’s easier to identify the ones who arrive, than the ones who are expelled.

Appendix 2: U.S. AID financed projects

Recipients of USAID Resources Hectares
  1. CIA Palmera Sur de Bolívar – interest group –business– CENTRAL REGION
  1. C.I. Tequendama S.A. – business – CENTRAL REGION
  1. C.I. Palmera San Pablo – interest group –business – CENTRAL REGION
  1. El Pórtico –interest group– CENTRAL REGION
  1. Indupalma – interest group – CENTRAL REGION
  1. Fundepalma – interest group– CENTRAL REGION
  1. Alianza Plan Tres –business – CENTRAL REGION
  1. Frupalma – - business – CENTRAL REGION
  1. ASOPAGDOS – Hacienda Las Flores – interest group – CENTRAL REGION– Closed
  1. ASOPAGDOS – Hacienda Las Flores – interest group – CENTRAL REGION
  1. Estam – Hacienda Las Flores – interest group – CENTRAL REGION
  1. Asopagdos – interest group – CENTRAL REGION
  1. Estam – interest group – CENTRAL REGION
  1. C.I. Tequendama S.A. – business – NORTHERN REGION – closed
  1. C.I El Roble S.A – business – NORTHERN REGION – closed
  1. C.I El Roble S.A – business – NORTHERN REGION
  1. C.I El Roble S.A – business – NORTHERN REGION
  1. Palmeras de la Costa – business – NORTHERN REGION – to be signed
  1. Gradesa S.A. – business – NORTHERN REGION – closed
  1. Gradesa S.A. – business – NORTHERN REGION – to be signed
  1. Corpoagrosur – interest group – NORTHERN REGION
  1. Propalma – business – NORTHERN REGION
  1. Palmaceite – business – NORTHERN REGION
  1. Palmas Oleaginosas de Ariguaní – business – NORTHERN REGION- to be signed
  1. Cordeagropaz – interest group– WESTERN REGION



The Cana Brava Hydroelectric Project (CH Cana Brava)

(Goiás, Brazil)

Ricardo Verdum[106]

1. Introduction

This document is the result of a first exploratory effort to think in a systematic manner about the relationship between the financing of megaprojects and their social, environmental, economic, and political implications at multiple levels. The case we will analyze is that of CH Cana Brava constructed in the basin of the Río Tocantins in the northern part of the state of Goiás, in central Brazil, from 1999-2001.

Map 1: Río Tocantins

The hydroelectric project Cana Brava can just as easily be classified as a large scale project (PGE)[107] as it can be as a megaproject (MP)[108] since it is characterized by the transfer of great quantities of economic, financial, political, institutional, human, and natural, etc. resources in a region of low demographic density by means of fairly harsh interventions in the ecosystems where it is installed. It is also marked by the displacement and resettlement of a human population. It is a multidimensional process which is characterized by mergers of capital on a global scale. It spans diverse agencies (states, banks, businesses, and work force, unionized or not, situated at different levels of intervention: local, regional, national, and transnational). In addition, to legitimize itself, particularly in the face of the drastic environmental and social transformations which it brings about in its area of influence, CH Cana Brava presents its work as a vehicle for generating progress and well-being through a series of presentations it has developed.

The case of Cana Brava has the special characteristic of being the first large dam constructed entirely by a private business within the new legal and institutional framework of the electricity sector. This framework is a result of the neoliberal reforms of the 1990s. CH Cana Brava is one of the first experiments by the Brazilian Electricity Sector in financing an Independent Producer of Energy (PIE), or self-generator, by means of the mechanism Project Finance.

Construction of the CH relied on the capital financing of the Inter-American Development Bank and the National Bank of Economic and Social Development (BNDES) [Banco Nacional de Desenvolvimento Econômico e Social]. Additional resources came from the Cía. Energética Meridional (CEM) pertaining to the Grupo Tractebel, which is responsible for developing, planning, financing, insuring, constructing, operating, and maintaining the CH Cana Brava, as well as from private financial agencies through the IDB.

The dam was constructed in a region dominated by the Bioma Cerrado (Sabana brasilera), with predominantly xerofilous vegetation and an extremely fragile ecology marked by the presence of a prolonged dry season (from May to September), which confines agricultural activities to the rainy season (from October to April). The soil is generally quite rocky, particularly in the plains.

Although the history of the project and the conflicts surrounding the construction of the Central Hidroeléctrica Cana Brava go back to the end of the 1980s, when the first surveys and studies of environmental impact concerning the responsibility of Furnas Centrales Eléctricas (FURNAS) were undertaken, the studies of social impact were not made until the middle of 1999. They were done by CEM, the winner of the international bidding process carried out by the National Agency of Electrical Energy (ANEEL) [Agência Nacional de Energia Elétricas] the previous year. It was only then that the people living in the area came to understand the work and the impacts it would generate on their lives and economy. At that time, the functionaries of CEM/Tractebel said that the dam would bring development for the region and that the people affected would be well compensated for the loss of land, improvements, and working conditions.

Statistics describing effects on the population and compensation for their losses are still disputed today by the affected local population, The Movement of those Affected by Dams (MAB—Movimento dos Atingidos por Barragens), a group of NGOs advising the business responsible for the project (CEM/Tractebel), and the financiers, particularly the IDB. Because they found it impossible to have their claims attended to, overshadowed as they were by the business, the affected population exerted pressure on the IDB to put its operations directives into practice, particularly the Operation Policy of Involuntary Resettlement (OP-710). To do this, they had to employ the tactic of invading bank installations several times.

Pressure on the IDB had positive results: a Social Audit of the Plan of Resettlement and some demands made by the affected populations concerning issues connected to the business were recognized, and the bank was obligated to install the Mechanics of Independent Investigation (MII) which looked into the demands and claims of the population. It also had to evaluate the bank’s actions in light of its policies and norms, or, rather, regardless of whether or not the operational policies were followed by the functionaries of the institution.

As we shall see, at present, more than 10 years from when the work associated with the installation of CH Cana Brava began, the framework for a broader economic policy for the region is still being drawn up. In December 2009 CEM/Tractebel was still compensating families who had land titles. Even today, 600 families who did not have title to property are without any alternative or solution. The business also has not restored the vegetation, as they said they would, on about 14,000 hectares of cerrado (enclosed land) that were flooded by the increase in the water level of the river which was forecast for the project, and which caused a large fish kill; the business did not complete construction of the sanitary system for the city of Minaçu, and two cemeteries in the city of Avalcante remain under water.

Since the business repaid the IDB the loan for the work, the IDB claims today that it doesn’t have any further responsibility for the project’s damage to the environment and its impact on the lives of the local populations.

2. The Brazilian Electricity Sector: from a State that Generates to a State that Regulates

Starting in the second half of the 1960s, the tendency in the Brazilian electricity sector toward growing centralization, already present in previous years, dominated operations planning and the sector’s distribution of financial resources. The centralized model was justified at that time as much for technical reasons related to the extensive geography of the country and the emphasis on generating hydroelectric energy as for economic policy reasons based on notions of efficiency and on the need for the state control of strategic sectors for reasons of development and national integration.[109]

In this period there was a clear government orientation and effort to integrate the different regional systems and units dispersed throughout the territory of Brazil into a single system. According to analysts at that time, to create a national integrated system for the generation, transmission, distribution, and commercialization of electricity meant continuously increasing demand for energy as a basic requirement for the country’s industrial advancement.

In addition to the strong presence of the state in the generation and distribution of electricity, international credit was available at low cost, both of which served to facilitate the implementation of a centralized model.

The BNDE (later the BNDES) was created in 1952. It was concerned with administering resources from the FRE [Fundo de Reaparelhomento], which arose from an agreement of cooperation signed by the Brazilian government, the World Bank (BIRD), and the Export-Import Bank (Eximbank), with the purpose of financing the importation of machinery and equipment considered necessary for the development projects suggested by the Mixed Brazil-U.S. Commission for Economic Development (MBEU) [Comissão Mista Brasil-Estados Unidos para o Desenvolvimento Econômico]. The BNDE was to have a central role in what was then understood to be the appropriate strategy for modernizing and expanding the Brazilian Electricity Sector.[110]

In the period 1956-1961, for example, around 46.3% of the growth of the installed capacity of the sector was the result of BNDES financing. Among the principle projects contracted for by the bank through the end of 1962 were the hydroelectric projects of Rio Bonito (ES), Funil (BA), Salto Grande do Santo Antônio (MG), Paulo Afonso II (AL/BA), Lavrinhas (GO), Maurício (MG), Tronqueiras (MG), Euclides da Cunha (SP), Três Marias (MG), Cachoeira Dourada (GO), Peixoto (MG), Jacuí I (RS), Jurumirim (SP), and Cubatão Subterrânea (SP); the thermoelectric plants of Sobral (CE), Charqueadas (RS), and Piratininga (SP); the distribution networks in the municipalities of Lagoa Santa (MG), Mossoró (RN), Itabaiana (SE), Estância (BA), Massapé (CE), Aracaju (SE), and São Joaquim (SC); and diverse transmission lines with various tensions adding up to a total length of 6,363.5 km located in a variety of municipalities.

Characterized as a monopoly, in the decades of the 1960s and 1970s the governmental electricity sector planned, implemented, and operated projects whose purpose was to meet the demands of the electricity market. The Ministry of Mines and Energy (MME) [Ministério de Minas e Energia] had the responsibility for designing and coordinating the country’s electricity policy; the state holding company, ELETROBRAS, had the responsibility for its execution.[111] In this period, the businesses controlled by Eletrobrás, state and municipal businesses, private businesses, and independent producers participated in the system. All had to conform to the federal directives in their work of producing, transmitting, and distributing electricity.

It was in this period that the construction of the CH Tucurui on the Rio Tocantíns (Pará) took place. Tucurui was the first giant hydroelectric project introduced in the Brazilian Amazon. Studies examining its feasibility and resource availability date back to 1972. It was inaugurated in 1984. Its construction led to the flooding of about 250,000 hectares affecting the indigenous pueblos of Gavião and Parakanã. Its transmission lines, at the same time, affected the pueblos of Guajajara and Krikati. The electricity generated at Tucuruí was intended principally to meet the energy demands of the mining-iron-steel complex being developed in the region. In addition, its surplus energy was to supply the southeast region of the country where the most dynamic sectors of the Brazilian economy were concentrated. According to studies of the CH Tucuruí coordinated by Professor Emílio Lèbre La Rovere (1999), the project has requested that the World Commission of Dams (WCD) [Comissão Mundial de Barragens], undertake

“the planning of hydroelectric projects to establish [at this time] in principle, the methodology which was initiated with the so-called Studies of Canambra, completed at the end of the 1960s by an association of American, Canadian, and Brazilian businesses. Those studies had as an objective improving the ability to take advantage of the hydroelectric [possibilities] of the rivers situated in the east and south of the country as well as to propose a protocol for the projects following the criterion of least cost for implementation and energy produced. The evaluation of the Rio Tocantins was completed a short time later by Brazilian businesses.”

The federal government contracted with the Canambra Consulting Engineers Consortium, Ltd., in 1962—the same year in which MME and ELETROBRAS were created—counting on the financial support of the World Bank for this project. The consortium, with the original function of arriving at solutions for the problems of supplying electricity in the cities of Sao Paolo and Rio de Janeiro, ended up consolidating as the principal planning agent for the governmental electricity sector. It was in charge of the development of the Program for Economic Action of the Government (PAEG, 1964-1966) and the Strategic Plan of Development (PED, 1968-1970).[112]

Between the end of the 1970s and the end of the 1980s, the BNDES financed various public and private electricity [dealers] projects, principally by means of the Special Agency for Industrial Financing (FINAME), a line of credit intended for the financing of machinery and equipment. The hydroelectric plants built during this period include Paulo Afonso IV (1979); Itumbiara (1980); Foz do Areia (1980); Salto Santiago (1980); Tucuruí (1984); Itaipu (1984); and Itaparica (1988).[113]

At the beginning of the 1980s, the centralized model began to show signs of economic and financial weakness. The decline of the sector’s ability to self-finance and the rise of sector costs had increasingly limited the availability of resources for its maintenance. Additionally, there was the so-called fiscal crisis of the state, which drastically reduced the federal and state governments’ capacity to maintain sufficient apportionments of resources to the financial section. Daniela de Carvalho Pinheiro (2006) calls attention to the problems of a political-administrative nature which are already beginning to appear and worry sector analysts; she emphasizes, for example, the visible fragility of the regulating organ, the National Department of Waters and Electricity (DNAEE), the frequent lack of planning, local political and economic interests, and the pressure from interest groups linked to construction businesses. This context created a fertile environment for the introduction and development of liberal or neoliberal ideas and models into the electricity sector which would become predominant in the next decade.

Along with the prediction of crisis for the system, the social and environmental impacts of the giant energy and transportation works of the 1970s in the Brazilian Amazon and in other regions of the country led civil society and Brazilian academia to advocate for the need for better evaluations of the social and environmental costs of the giant projects.

The process of democratization occurred in the 1980s in Brazil, along with the rise of the environmental movement and the spread of concerns about preservation of the environment. Organized resistance by populations affected by dams also arose, which meant that the electricity sector increasingly had to incorporate environmental and social concerns into its agenda. The environmental costs became yet another element of pressure on the sector’s costs, so that it had to answer to a growing mobilization of movements of those affected as well as of environmental and social-environmental NGOs.

The first administrative policy act which revealed some desire for change was Federal Law No. 6.938 of August 31, 1981, which established the National Environmental Policy and created the National Environmental System (SISNAMA) and the National Environmental Council (CONAMA).

The year 1986 was very significant for people and groups pressing for changes in the policies of the electricity sector. So that dams would be included on the list of potentially contaminating activities subject to environmental licensure, the CONAMA would publish Resolution 01 in 1986. This resolution made it obligatory that the Studies and Report of Environmental Impact (EIA/RIMA) be undertaken for the purpose of licensing projects. The obligation to undertake studies/reports signified the possibility that the social and environmental costs previously ignored or not presented in their actual magnitude would be revealed. The results of the studies would become the subject of conflict negotiations involving the government, business, financiers, local populations, and Organizations of Civil Society (OSC). In 1986, the Consulting Council on the Environment (CMA) of ELETROBRAS was created, and it produced the sector’s first documents oriented toward the environmental issue: the Director Plan for Environmental Improvement in the Works and Services of the Electricity Sector and the Manual of the Environmental Effects of Electricity Systems.

In the following year, 1987, the Division (previously Department) of the Environment of ELETROBRAS was created. At the same time, Resolution 06 of CONAMA was approved which established regulations and environmental licensing [requirements] for large scale works, especially electricity projects. In 1988, the same year that the present Federal Constitution of Brazil was approved, the MME created the Coordinating Committee for Environmental Activities of the electricity sector (COMASE) to signal the deliberative character with which ELETROBRAS, the National Department of Waters and Electricity (DNAEE), and the federal and state concession businesses would participate.

Thus the 1980s brought significant advances in legal and institutional fields. In contrast to the previous situation, there were now instruments for attempting to guarantee the rights of the affected populations and to prevent environmental damage of major proportions.

But if on the one hand the Federal Constitution of 1988 defined and reaffirmed a series of social and environmental norms, it also left room for institutional and legal changes in the world of sector policy for electricity, changes which were not always aligned with what had been obtained in respect to the treatment of social and environmental problems. Excessive centralization in the development of the sector could be seen in the militarization of the Brazilian state starting in 1964 with the absence of transparency and social control over policies, with denunciations of corruption, and with the use of public equipment for private ends. Criticism of this centralization led to changes strengthening positions which advocated for the state to renounce its efforts to be the planner and executor of sector policy.

Although the Federal Constitution of 1988 can be considered to mark the beginning of this change (in Articles 21 and 175), in reality it was Law No. 8.031 (April 12, 1990) which did this. This law instituted the National Program of Privatization (PND) and created the National Fund of Privatization (FND), added to Laws No. 8.987 (of February 13, 1995) and No. 9.074 (of July, 1995) all of which, together, established the legal foundations for a new model of management and provided the conditions for the creation of a competitive electricity market in Brazil. Environmental and social sustainability as a guiding principle in the process of planning and decision making is practically absent in the Law for [granting concessions] for Public Services (Law No. 8.987/95). This law establishes new conditions for the participation of private capital in the sector and defines the parameters of the competitive process in the generation and commercialization of electricity. The same can be affirmed with relation to Law No. 9.074/95, which establishes the bidding process for the services of generation and transmission of electricity, establishing the rights and obligations of the concessionaires.

Carlos Vainer (2007: 123), says both laws grant the concessionaire the power to expropriate, that is, “to create means to clear the land for the implementation of the project.” If Law No. 8.987 gives the power to the concessionaire to expropriate, Law No. 9.074/95 completes the process, determining that it is incumbent upon the power granting the right to expropriate to declare the utility public for the purpose of expropriation, whether it be destined for public services, self production, or independent production. In the case of Cana Brava, the Declaration of Public Utility for the purpose of expropriation was made through Resolution No. 150, May 18, 2000, in favor of CEM.

The new legal model was formally put into effect with the creation of ANEEL on December 26, 1996, through Law No. 9.427. Among other things, this law attributed to the committee the responsibility of regulating and financing production, transmission, and commercialization of electricity in Brazil, in tune with the new political and leadership tendencies concerning the role of the state, which would pass from being executor to being essentially regulator and financier.[114]

The transformations took place in the electricity sector starting in the mid 1990s imprinting a dynamic of near irresponsibility on the part of the state regarding the damaging effects of the establishment of large-scale projects. Until then, for good or evil, there had been a clear definition of who was responsible, in general manifested empirically in the regional state businesses: Centrales Eléctricas S.A. (ELETROSUL), Centrales Eléctricas del Norte de Brazil (ELETRONORTE), FURNAS, and CH de São Francisco (CHESF). In the 1990s the privatization of state distributors of electricity began; to this end, in the same year the Federal Program of Support for Restructuring and Fiscal Adjustment of the States was created. The BNDES participated in 20 operations in anticipation of resources committed to the state through the sale of the concessions of distribution and of all the state privatizations; CEEE (RS); Eletropaulo, CPFL, and Cesp (SP); Cerj (RJ); Coelba (BA); Energipe (SE); Celpe (PE); Saelpa (PB); Cosern (RN); Coelce (CE); Cemar (MA); Celpa (PA); Cemat (MT); Enersul (MS); and Cachoeira Dourada (GO).

With the new fundamentals of the electricity sector and the process of dismantling the state model for generation and distribution of electricity concluded, the private concessionaires became the priority for credit for modernizing and expanding the system of generation and distribution of electricity. A new model of “support for the sector,” Project Finance, was adopted by the BNDES to finance the new projects of energy generation.

3. CH Cana Brava

CH Cana Brava is located on the Rio Tocantins between the municipalities of Minaçu and Cavalante in the northern part of the state of Goiás, approximately 250 km from Brasilia. The Rio Tocantins has a total length of approximately 2,500 km, and is formed primarily by the Almas and Maranhão Rivers, whose headwaters are located in the Altiplano o Goiás, at an altitude of more than 1,000 meters in the most central region of Brazil. The name Cana Brava is taken from an igarapé, (a small tributary) of the Rio Tocantins located next to the dam.

The Bureau of Reclamation was the first to recognize the hydraulic potential of the basin of the Rio Tocantins in 1964. The studies were sponsored by the U.S. Agency for International Development (USAID), in collaboration with the now-defunct Interstate Commission of the Valleys of Araguaia-Tocantins (CIVAT), with the objective of evaluating the conditions and navigation potential of the basin.[115]

Figure 1: Location of the Dam of Cana Brava

Source: Bartolomé in Verdum (2007).

The first studies of the viability of constructing CH Cana Brava were undertaken in the 1970s and the final design was drawn up by FURNAS in March, 1984. FURNAS developed the preliminary studies of the project which included the Studies of Environmental Impact (EIA) sent to the state of Goiás Environmental Agency (FEMAGO) in 1987. The EIA and the Report on the Environmental Impact (RIA) were approved by FEMAGO in 1990 and revised in 1995. In September, 1998, the environmental body of the state of Goiás granted a License of Installation and in January awarded the License of Operation to the Cana Brava project.[116]

In March 1998 the concession for the work was given to the Belgian business Tractebel Energy, S.A., through the intermediary CEM, which won the international bidding process conducted by ANEEL. Tractebel was controlled at that time by the international group SUEZ, and it controlled the business, Central Generator of Southern Brazil S. A. (GERASUL), which had a history of conflicts with indigenous pueblos, family farmers, and other local communities in the state of Santa Catarina in the southern region of Brazil.

The contract of concession established between the ANEEL and the CEM (Con. No. 185/1998 and dated August 7, 1998) regulated the CH’s rights to use the hydraulic potential in the Rio Tocantins for a period of 35 years. It said also that the concessionaire had to comply with the demands of the environmental legislation, assuming responsibility for environmental accidents and for the resettlement of families in the affected areas.

Construction of CH Cana Brava was undertaken via a contract for Engineering, Supplies, and Construction [Engenharia, Suprimento, Construção-EPC] with the consortium formed by four businesses: the construction firms of Norberto Odebrecht S.A. and Andrade Gutierrez S.A., and the equipment supply firms of Voith Máquinas e Equipamentos S.A. and Siemens Ltd. Tractebel Energy had the responsibility for the operation and maintenance of the dam in accordance with the concession contract. The work on construction of the dam began in 1999 and was finished in December, 2001. The filling of the reservoir began in January of the following year and commercial operations began shortly thereafter.

The CH Cana Brava has an installed capacity of approximately 450 MW, a basin of about 139 square kilometers, and a transmission line of 230 KV with a 50 km extension which connects Cana Brava with the Hydroelectric Dam of Serra da Mesa; this last is found upstream also on the Rio Tocantins. The dike is 66 meters high, and the formation of the basin approximately 139 km2, which resulted in the flooding of a land area of approximately 125 km2.

Map 2: The Project Zone

Hydroelectric Potential for São Félix Power Plant Cana-Brava

Report on Environmental Impact

4. Financing Cana Brava

CH Cana Brava was one of the first projects privately developed after the establishment of the new regulatory and institutional framework which came into effect in 1995. It was the first project of the Independent Production of Energy (PIE) financed through Project Finance, in Brazil.[117] In the vision of the IDB, says Vivian C. S. Faria (2003: 85), “The configuration of this project represented an important step for the creation of a competitive electricity market in Brazil and its [Project Finance's] participation would represent the support necessary for its implementation.”

Negotiations for the financing of the CH Cana Brava began in December, 1998 and ended in December, 2000. Initially the project was financed solely by the BNDES through two contracts signed May 19, 1999. The initial composition of the financing was BNDES (60%) and CEM (40%). Work on CH Cana Brava was initiated shortly after the BNDES financing was contracted for. The IDB approved financing for the CH Cana Brava on August 9, 2000 and the contract was signed on September 11, 2000.

The total cost of the project of CH Cana Brava was approximately US$426,000,000, of which US$138,000,000 were provided by the BNDES. In addition to Cana Brava, the BNDES participated in the financing of the hydroelectric plants of Serra da Mesa (GO) with 1.293 MW; Lajeado (TO), with 902 MW; and in the second stage of the hydroelectric plant of Tucuruí (PA), with 4,125 MW—all situated along the Rio Tocantins.

The financing of the IDB[118] was accomplished through the action of the Department of the Private Sector (PRI)[119] and consisted of a loan of US$75 million originating in the common capital of the bank and an associated loan of US$85.2 million through the IDB together with the following financiers: the Belgian insurance company and investment bank Fortis Bank; the Australian financial institution ANZ (Australian and New Zealand Banking Group); and the German investment bank DrKW (Dresdner Kleinwort Wasserstein). The remaining amount came from Tractabel Energía S.A.’s own funds.

Below we present a table with information on the projects of the energy sectors which received IDB financing between 1996 and 2000.

Table 1: Energy Projects Financed by the IDB in Brazil between 1996 and 2000.   

Project   Characteristics Investments in $US Millions IDB Participation Location


UHE Itá   1450 MW 978

Self-financed: 248

A-Loan: 76


RS/SC 1997
Interconexión Norte-Sul   1030 KM 936 307 N-S 1997
UTE Uruguaiana   600 MW 350 N.D. RS 1998
VBC Energía   N.D. 345 US$ 100-200 SP 1999
UHE Cana Brava   450 MW 426

Self-financed: 128

A-Loan: 75

B-Loan: 85,2

GO 2000
UHE Dona Francisca   125 MW 118

Self-financed 41,3

A-Loan: 16

B-Loan: 25

RS 2000
Light   - 270 [Guaranteed] 100-200 RJ 2000-2001
Proyecto Energía Norte   125 MW N.D. A-Loan: 23,7

B-Loan: 37,2

PA/RO/AC 2000
UTE Pernambuco   520 MW 403,5 192,4 PE 2000


5. The Affected Population

The population which lives in the region affected by the CH Cana Brava is composed primarily of migrants from northeastern Brazil and of descendents of African slaves who fled and settled in quilombos, remaining isolated there for a considerable amount of time. These descendents of slaves, like the Kalungas, came to make up very closed communities separate from national Brazilian society. The population which self-identifies as indigenous is limited to only one family which pertains to the pueblo Ava-Canoeiro.

According to Leopoldo J. Bartolomé (2007) who [shared] the team of the MII of the IDB, the population in the region is noticeably young. Although practically all the children were students, the percentage of illiterates hovered around 12%, concentrated in older groups.

The construction of the dam and the installation of the hydroelectric dam of Cana Brava caused a coming together of changes in the way both urban and rural populations made their livings, particularly in the municipalities of Minaçu, Cavalcante, and Colinas do Sul.

In the Socio-Economic and Census Analysis undertaken by the CEM between March and September 1999 in a period marked by dry weather, the population living in the area and directly affected by the CH dam amounted to 258 families, including land owners and people who didn’t own land, both rural and urban, living on 231 properties. Of this total, 32 resided in the urban area of Minaçu, in the barrios Rio Bonito and Vila Manchester, and 226 lived in rural areas of the municipalities of Minaçu, Cavalcante, and Colinas do Sul. The total area directly affected by the CH would be approximately 13,900 hectares.

According to the MAB in Goiás, 1,000 families were affected at the time by the construction of the CH. The MAB answers that studies undertaken by the CEM did not consider the different forms of livelihood on the land and the different uses of natural resources adopted by the local population, nor did they consider the reasons for some of the activities, such as for instance, the mine, including support of the economy and local socialization. They also challenged the way the concept affected population is generally used in impact studies of infrastructure projects. From Movimiento MAB’s point of view, affected population does not describe the population which directly occupies the area impacted by the works of the CH and which occupies the territory covered by the waters of the lake formed by the dike on the river.

Leopoldo J. Bartolomé (2007) confirms that the business was negligent regarding the population affected by the installation of the CH:

The job of relocating the population was outsourced and left as the responsibility of various consulting companies and to ad hoc solutions. The services included the completion of population censuses, analysis of different conditions of concern, and the implementation of the plan of resettlement, involving the execution of activities of social support (courses, etc.). It is not surprising that there exists divergence in the estimations of the affected populations and in the compensation payments, not only among the CEM and the community organizations, but also among different consultants and persons responsible for those estimates.

In the rural area, the affected families came from diverse social groups: owners of large and medium-sized ranches (hacendados); proprietors of small haciendas (normally with right of possession); proprietors (principally with rights of possession) of small properties where they practiced subsistence agriculture and livestock-raising; some peri-urban dwellers; and people without property. Some families had permanent residence in the houses, others housed their families in Minaçu or in small populated areas such as Vila Vermelho and Vila Buriti, which were not directly affected by the dam.

There were also workers who were not considered permanent residents in the CEM census, but who, confirmed Leopoldo Bartolomé (2007: 116), lived in the region adopting multiple strategies such as mixing subsistence agriculture with unsalaried work in rural areas and/or the city and with other activities such as mining. In the urban area, the population affected was basically poor and occupied lots on the banks of urban rivers; some urban farms located on the periphery of Minaçu were also affected.

6. Conflicts, Negotiations, Priorities, and Interests

Although it can be said that the IDB was as conniving as the BNDES in the treatment of the affected population since both acted as if they had nothing to do with the social and environmental problems generated by the financing, only the IDB involved itself and was involved in the negotiations concerning the compensation owed to those affected. This is basically because of the pressure to which it was subjected by the union of organizations of civil society which formed around the case which caused the bank to accept the responsibilities established in OP-710.[120]

The OP-710 of the IDB applies to all the bank’s financial operations in the private and public sectors, whether the financing is channeled directly (as investment loans) or administered by intermediaries (as in multiple works, credit programs granted in stages, or multi-sector programs). It has as its objective to minimize the impact of the project on the people in the area affected by the project, avoiding or minimizing the necessity for physical displacement; it seeks, furthermore, says the document, to assure that when people have to migrate, they are treated fairly and, as much as is possible, can participate in the benefits of the project that requires their resettlement.

The BNDES was at the time an invisible agent: it did not appear nor was it identified on any check by the organizations of civil society which participated in the Cana Brava case. Only recently the BNDES became the subject of questions with the creation of the Plataforma BNDES, a group of social organizations and movements which demands greater transparency from the bank concerning the financing which it grants as well as the adoption of adequate indicators for the evaluation of environmental and social sustainability of the projects which it finances.

According to Daniel de Caralho Pinheiro (2006: 64), the affected population first mobilized following the discovery that the announced development would not benefit everyone equally; many families would be subject to the loss of their land and means of survival. In the case of Cana Brava, the MAB had a prominent role as much in pointing out the gravity of the situation of the affected population as in the negotiations with CEM/Tractebel, the IDB, organs of the Brazilian government, and the Public Ministry of Goiás.[121]

At that time there was a constant effort on the part of the functionaries of the CEM/Tractebel to delegitimize the action of the MAB. They treated MAB’s leaders as intruders and outsiders, as persons unfamiliar with the local realities and thus as people who shouldn’t interfere in the relationship between the business and the affected population. The business followed the same practice with the social leaders and the resistance movement which was emerging in the region, as creators of disorder and exploiters.

The business also used the police force as a tool to intimidate the population and influence the process of organizing resistance among the affected populations. Meetings between the business and the affected population for the purpose of negotiation were even attended by military police, a clear demonstration of intimidation. Owing to the domineering behavior and climate of insecurity generated by the daily presence of the police force in the region, the affected population met in secret, in isolated locations, and used different strategies to throw the business’s system of control off their scent.

The business consistently refused to recognize the legitimacy of the leaders who emerged from the resistance movement’s organization. The purpose of this refusal was to delegitimize any type of action or collective negotiation by the affected population in favor of individualized negotiations. This attitude persisted through the entire process of negotiation, including on the occasion of the presentation of the results of the Social Audit of the Plan for Resettlement of the CH de Cana Brava, released in March of 2004. According to what members of the movement reported, the principal criterion for eligibility for the claimants would not have been the presentation of documentary or testimonial evidence, but instead demonstration of a connection with the MAB. It was clearly a political move by the business.

The IDB also did not behave ethically at that time. It made efforts to weaken the organization of the affected population’s resistance movement and to avoid having either itself or MAB respond to the bank’s internal requests for the power to question the procedures adopted by specific functionaries of the bank regarding the population affected by the works of the CH as is the case of the MII of the IDB.

As in other cases, the construction and the start of the operation of the CH Cana Brava produced mergers on a global scale, spanning diverse social agents (NGOs, rural unions, associations, the Church) situated at different levels of action (local, regional, national, and transnational) which developed a discourse of responses, counter-hegemonies, which challenged the discourses that tried to gain legitimacy for the work on progress and well being.

At the time the local population counted on the support of the MAB which had close ties with the Pastoral Commission of the Earth and the Unions of Rural Workers (STR) in the region. Also participating were the Brazil Network of Multilateral Financial Institutions (Rede Brasil), the Alliance Living Rivers [Coalizu0103o Rios Vivos], the American NGO International Rivers Network (IRN), the Catholic organization Aid and Fraternity, the Network of Information and Action for the Right to Nourishment (FIAN), and the 11.11.11, this last one a Belgian organization focused on the analysis of North-South relations and on the themes “reduction of poverty” and “social injustices.” A rapid review of the documentation available about the Brazil Network shows that this alliance has emerged without tensions and disputes over who “would represent” the interests of “those affected,” such as between the MAB and the STR in the region; something which was duly noted and used by the IDB and by Tractabel for their own purposes and interests.[122]

In January 2003, starting with contacts with the national coordination of the MAB, a team was created made up of representatives of this last group of entities in the municipalities of Minaçu and Cavalcante. Its purpose was to gather statements and revealing the drama of people affected by the dam at Cana Brava. The objective of the visit was to collect information and to organize an international campaign to condemn the situation the affected population found itself in and to use this campaign to attempt to influence the financial agents and share-holders of Tractebel in Belgium.

Some months after the dam became operational and after successive frustrations in the negotiations with the business, in November 2002 the resistance movement, together with leaders of the MAB and advisers from the entities of support sought to initiate a dialogue directly with the IDB. These leaders and advisers saw a window of opportunity for modifying the IDB’s alliance with CEM/Tractebel. Since it was one of the principle financiers of the project and possessed an internal directive (the OP-710) which could be the object of the fulfillment of cash objectives on the part of the bank. A window of opportunity was seen for modifying its alliance with the CEM/Tractebel.

The declaration embraced by Daniele de Carvalho Pinheiro (2006: 94) is sufficiently representative of the process of becoming aware of the complexity of the institutional arrangements which make feasible the construction of the dam and of methods used to gain access to and restrict the actors who could put pressure on the business:

“When we began, our activities here were all directed against Tractebel. Then we noticed, became aware, that not all the resources were from Tractebel. Tractebel had constructed the dam, but there was a financier. The BNDES had financed a part of it as much as IDB had. Thus there would be an IDB contract which meant that since they provided the money to construct the dam, they would also have to be considered responsible for social and environmental impacts” (Interview of August 31, 2006 with Sr. G.).

Until then:

“The OP-710 sought to insure that within its norm, the environmental and social impacts would have to be taken care of. And none of this had been done. All that the business had wanted and had the nerve to do, it did. Then, as the IDB seemed to be operating the same way, we woke up: if the IDB financed and did not control the resources for construction of the dam, we were going to look for the people of the bank and have a conversation with them about why there wasn’t supervision” (Interview of August 31, 2006 with Sr. G.).

Initially they sought to contact IDB through the intermediary of Tractebel. Noting that it did not produce the desired effect, they went for more direct contact with the institution:

“We first tried to reach the personnel of the bank through business channels, but they told us no, that it was the role of the bank to settle matters. We had to go directly to the bank. Then we tried to talk with the bank personnel there in Brasilia, and it wasn’t possible. We went there in a committee and they wouldn’t meet with us. It was then we realized that the way we could talk to them would be to occupy the bank’s headquarters and thus to open a direct discussion. That’s what we did. We left here in nine buses, we went directly to the bank, and we occupied it. And then we opened the first contact” (Interview of August 31, 2006 with Sr. G.).

The occupation of IDB’s headquarters in Brasilia took place in 2002. On that occasion, the IDB and the MAB signed a protocol of intentions in which the bank promised to divulge the value of the financing and to undertake a Social Audit of the Plan of Resettlement and Indemnifications owed to the population considered affected. The principal objective of the audit was to review the claims related to the resettlement and the compensation associated with the Cana Brava enterprise to (i) determine the merit of the claims related to eligibility and resettlement; and (ii) determine the merit of the claims in light of the inadequacy of already implemented resettlement or of compensation already realized. The work of the Social Audit’s team, which was composed of independent specialists in resettlement and social issues, began in April 2003. The field work included the investigation of a list of 800 claims prepared by the MAB. Of this total, 123 more families were included in the Plan of Resettlement and Indemnification of Cana Brava. Of the 123, 31 were eligible for resettlement; 62 received the right to a revision in compensation or indemnification; and 30 gained the right to other forms of individual compensation, within the scope of the Plan of Resettlement and Indemnification.

The Social Audit suggested, in addition, (i) the development and implementation of a Micro-regional Program of Socioeconomic Development (PDMR) focused on the Cana Brava region; (ii) the creation of an Economic and Social Development Fund (FDES) to support the implementation of the PDMR; and (iii) the identification of government programs for social and economic support which could be applied to or have an incremental application in the region.

Two other occupations of the IDB headquarters occurred in the following three years. The first took place in May, 2004, for the purpose of pressuring the executive board of the IDB to deliver in response to the request to undertake an investigation of project Cana Brava for the MII. Once more the result was positive: the investigative panel was opened about a month later, in June 2004.[123] The panel began its work on March 7, 2005, and submitted its final report on the July 14 of the same year. It recommended, among other things, a specific policy of economic and social development to complement the Cana Brava project and recommended that this type of policy should be integrated with the operations of the PRI from the start, and “not as a belated response to the claim of citizens.”

The second occupation by the MAB occurred in May 2005, when Tractebel anticipated the payment of the debt incurred with the IDB and sought to free itself from the pressure which the bank put on the business to assume the agreements signed with the affected population.

Below we present the commentaries and analysis of Daniele de Carvalho Pinheiro (2006: 58-62) regarding what he heard and saw of the situation of the resettled rural population during 2005:

“The first collective rural resettlement was established on the banks of the Rio Cana Brava around 1 km from the city of Santo Antonio de Cana Brava, with relatively easy access to school, health centers, churches, and commerce. It also had a regular bus line to the city of Minaçu. It is made up of 16 individual lots, each one with a brick house, with a tile roof, kitchen, bath, living room, and three bedrooms, plus a storage area, irrigation equipment, and a fence along the length of the perimeter of the lot. Highlighted is the fact that, in interviews conducted in this resettlement, the resettled families complained about that the quality of the irrigation equipment whose water pumps had little power and not enough force to bring water from the river to the fields.

“A second rural resettlement collective was begun in July 2002, after the dam began functioning, for 13 families who had solicited a minimum of 30 hectares for the creation of a dairy. Each one of the families received R$32,000.00 for land and construction materials. With the money, the families acquired part of a hacienda which had been divided into lots and used the rest, about R$11,000.00, for building fences and brick houses and for drilling wells. This second settlement faced more precarious conditions than the first. The land was of low quality, composed of up to 92% sand in some places, with a high concentration of aluminum, which meant it was attractive to a species of termite which destroyed plant roots. According to the farmers, at the time of resettlement, the business had promised so-called ‘help with the land, which included deforestation, plowing, setting aside, and composting the soil.’ The promise was not honored, and the low quality of the lands, along with the limited availability of water—the wells have to be very deep and the majority of the farmers do not have a means for drilling, the water is withdrawn in insufficient quantity and is of doubtful quality—imposed difficulties for farming and, consequently, compromised the families’ means of support.”

In a meeting between representatives of the MAB and the business in August 2003 at the office of the CEM in Minaçu, the people who had been resettled demanded the construction of three artesian wells for nine of the lots; the installation of an electricity network in the resettlement area; the preparation of five alqueires of land for resettlement for cattle and subsistence farming; as well as the provision of basic food baskets until a harvest from the five alqueires was obtained; technical assistance for a period of at least three years; additional resources for the completion of the houses and support structures like garages, corrals, and henhouses; additionally, they sought improvements in internal access and a bus line two times a week to the city of Minaçu. As of the present moment, none of these demands has been attended to.

The fragility of the conditions of life for the families who opted to transfer to urban centers does not appear to be much different from that which affects those who opted to stay in a rural environment.

Regarding the families who chose to live in an urban area, the resettlement was initially made in the Vila de Furna, a condominium [jointly controlled group] of houses located on the outskirts of the city of Minaçu, constructed for housing engineers and technicians of Furnas during the construction of the CH de Serra da Mesa, situated upstream from Cana Brava. It had an infrastructure of water storage, light, and a sewer system. The houses are constructed almost entirely in wood, with three bedrooms, living room, kitchen, and inside bathroom. Later it was verified that this option did not meet the demands of the majority of the families, primarily because of the costs of maintaining the units and the relative distance to the center of the city of Minaçu. According to statements collected in the field, the majority of the houses presented problems with termites and cockroaches, and the occupants claimed that they could not afford the charges for fumigation which had to be done periodically. Unhappy with this first option, the solution accepted by the majority of the families (and the one preferred by the business) was the acceptance of contracts of purchase for the acquisition of living places in various areas of the city of Minaçu.

There was also the case of families whose land was not affected directly by the CH, but who found their conditions more precarious for economic activities and for the continued education of their children:

Regarding the construction of the reservoir, the locality designated as Villa Vermelho in the Muncipio of Cavalcante, formed by 46 resident families, had its access roads flooded. The isolated situation caused the living conditions of the families to deteriorate, and they lost the possibility of [negotiating/selling] their surplus production owing to the difficulty with drainage. As there was no school in the community, the school-age children found it impossible to attend classes. In July 2002, the location was the subject of an agreement signed by the Municipality of Cavalcante, the government of the State of Goiás, and the CEM. In this agreement, the parties committed to distributing an amount of money of approximately 1.2 million Reales for the resettlement of the families, including the construction of homes and schools and credit for the development of agriculture (Final Report of the Social Audit, 2004). The agreement was not finalized.

In a letter sent to CEM in January 2004, the Association of Small Rural Producers of the Region of the Vermelho (APROV) stressed the totally isolated condition in which the population found itself and sought “the construction of a mobile bridge in the old port that joins Minaçu [with] the Sierra Blanca in the Rio Tocantins, today a crossing made up of stopped-up water, formed by the lake of the CH Cana Brava.” And he continues:

“According to our information, another highway will be constructed to facilitate access between the two cities, coming from the old port (previously mentioned) which will be very welcome. The APROV, for its part, [badly needs this very important highway] and seeks to give its share of the contribution as a way of imploring that the construction of this bridge take place in the shortest possible time.”

It also sought via a temporary [permit], to make rafts available for crossing:

“[…] I would suggest that in the worst case scenario, 10 simple rafts like those they already have, in addition to what they have, would immediately resolve this crucial problem. We want, furthermore, to put ourselves at your service to discuss the question referring to viable technical conditions for this most important development which will restore a better quality of life for everyone in the region […] Of course only those who live in the region know how real our necessity is for movement by this possible route.”

The truculence in the manner of treating the affected communities can be seen in the following statements, as much in Daniele’s as in that of quilimbo Kalunga. It calls attention to the use of police force and of specialists in the field of psychology in the negotiation meetings.

After the reservoir was filled, the only improvements realized in Vila Vermelho were the construction of a primary school, the construction of bathrooms in some residences, and the installation of a community garden. The population designated as Limoeiro, also in the municipality of Cavalcante, was comprised of about 40 families remaining from the quilombos, called Calunga, who were completely flooded by the creation of the reservoir. There, the removal and mode of reparation to the families most frequently adopted was the promise of buying/selling rural or urban properties in the amount of R$5,300.00. According to a former inhabitant of Limoeiro, only one meeting was held for the purpose of negotiating with the community, at which the director and a psychologist of the CEM, a [promoter of justice] from the municipality of Cavalcante, and two military police were present, in addition to the inhabitants. The terms of the conversation were presented as follows in an interview:

“[…] we are here today to negotiate. Your value is 5,000 per family, or resettlement of 10 acres, or a house in the Vila de Furna: you choose. But we have to leave here today with this decided, and this is the proposal. If [we don't come to an agreement today], you will have to deal with the water itself when it comes” (Interview on August 30, 2006, with Sr. F., a small proprietor, farmer, and ex-prospector of metals and precious stones, a remaining quilombo—Calunga resident of the municipality of Cavalcante).

In conversations with some of the families from Limoeiro who opted for urban houses, their principal claims related to the fact that it was difficult to adapt to the new way of life. Not having been prepared for the change in their reality, and once the resources received as reparations were used up, the families were left without a single source of income. They now had to confront, because of this, major expenses such as for electricity, water, and food. Without land to cultivate, everything necessary to sustain the family has to be bought, while the low level of instruction and the restrictions in the urban labor market mean that many of the families survive mainly on the basic food baskets sent to the MAB by the federal government for distribution after the tough negotiations.[124]

The following narrative leaves clear just how inconsiderate of local culture the agreement was. It did not even include that the dead were to be respected because of the necessity of “fulfilling” the timeline.

There were two cemeteries on the outskirts of Limoeiro, one for adults with about 200 bodies buried, and one for children—the angels’ cemetery—with 32 bodies. According to interviews with older inhabitants, before the reservoir was filled, at a meeting in the community mentioned above, it was agreed that all the bodies would be exhumed and buried in another location. The agreement, however, was not complied with, and not one body was exhumed before the reservoir was filled. Finally in April 2006, after four years of operation of the dam and of growing pressure on the part of the population, a dike was constructed which made possible the deviation of the water and the exhumation of 38 bodies from the adult cemetery. The rest, because they are at greater depth, remain submerged.

Months later, in February 2006, the IDB formally recognized that there were errors and deficiencies in the construction of the Cana Brava Dam. The IDB said it was mistaken because it had not “closely monitored” the work of identifying the families affected by the concession for resettlement. They were mistaken because they did not consider the population indirectly affected, as is the case of the prospectors of metals and precious stones, fisherman, and others who used natural resources in the flooded area. The PRI (the Department of the Private Sector of the IDB) in Washington recognized that it was slow to respond to the demand arising from the completion of the Social Audit of the project. Finally, the bank recognized that it was mistaken in approving a resettlement plan for the population which was very clearly deficient and incomplete. At that time, according to documents consulted and to brief interviews, the IDB made gestures to involve the big businesses which operated in the region in an effort at “corporate social responsibility.”

The businesses involved in the program called Promotion of Social Responsibility by Business through the Support of Local Productive Initiatives in the State of Goiás (Technical Contribution Not Reimbursed No. ATN/ME-9941-BR) are CEM/Tractebel (proprietors of the CH de Cana Brava), the Mining Company of Amianto (SAMA) (proprietor of the Amianto mine), the Paulista Company of Power and Light, and FURNAS (proprietor of the CH of Serra da Mesa).

Also included in this initiative are the MME and the MAB. This initiative includes the contracting of consulting services and the acquisition of goods necessary for the completion of a program of technical cooperation meant to strengthen and give support to the actions and projects in the entire area of the reservoir of the dams of Serra da Mesa and Cana Brava. The geographic focus of the project includes the municipalities of Minaçu, Cavalcante, Colina do Sul, Campinaçu, Niquelândia, Uruaçu, Barro Alto, Campinonorte, and Santa Rita do Novo Destino, all located in the state of Goiás.

The executive body of this program is the SEBRAE/GO, which will integrate an executive council in conjunction with the Inter-American Development Bank, the Ministry of Mines and Energy (MME), the Movement for the Victims of Dams (MAB), and the private businesses mentioned above.[125]

The total cost of the program is estimated to be US$2,740,899. Around US$1.1 million will come from the IDB for the shares; another US$1 million will be from the businesses producing electricity energy; and the SEBRAE will share about US$525 thousand—these are the principle financiers.

This past December, 22 displaced families were beneficiaries of the program. They were relocated to the old Hacienda São José with 72 hectares. It is not in the municipality of Minaçu (513 km from Goiâna). Segundo Luiz Álila Montelo, solicitor for multisector projects of the SEBRAE/GO, said that these 22 Family Units of Sustainable Agricultural Production are the first of 800 families to benefit, which they are supposed to do by 2011.

In reality, of the total of 700 families identified by the group CEM/Tractebel, with purposes of resettlement in a rural collective, only 44 families have benefited from this type of project and the rest, more than 600 families, today form a broad belt of poor people in the City of Minaçu.

Segundo reports that the lawyer Júlio Cavalcante Fortes—who presently works on behalf of the rights of the 600 families—the CEM seeks with this to “economize” saving 10 million Reales for not removing the bush and cleaning the area forming the lake; 40 million Reales for not resettling the 600 families directly affected; 10 million Reales by not creating rural entrances, 30 million Reales by not compensating prospectors who would lose their areas of exploration; and more than 5 million Reales with the failure to conclude the infrastructure works of the sewage system of the city of Minaçu.

What started out as the installation of a dam operating in conjunction with the reservoir of the CH Serra da Mesa, is today part of a complex process of social, economic, and environmental transformation occurring inside the region, a multidimensional process which produces mergers of capital on a global scale and which embraces diverse agents (states, banks, businesses, and work forces, unionized or not) situated at different levels of activity (local, regional, national, and transnational).

7. Final Considerations

Because the company paid back the loan the IDB made for the completion of the work, the bank affirms today that it has no responsibility for the damages caused to the environment or for the pressing problems of the local populations. Today the bank wants to erase from history its responsibility in having approved a loan filled with problems and error and without a consistent plan for the settlement of the group of those affected by the construction of the hydroelectric center and the lake which was formed by the dam.

The CEM/Tractebel, on its side, for 10 years has barely compensated the families with titles to land, leaving more than 600 families (who had no title to ownership of the land at that moment) without solutions or alternatives, who even today have not been resettled, are living in precarious situations, and are dependent on basic food baskets (“basic baskets”) donated by the federal government. The business also did not deforest around 14,000 acres of the area which was flooded, as was planned in the original approved project, causing a large fish kill; it did not complete construction of the sewer system of the city of Minaçu; and two cemeteries of the city of Cavalcante remain under water.

At present, the Inter-American Development Bank and the private business CEM/Tractebel are trying to minimize the impact of the work by supporting a project of local development which only benefits productively some displaced families, but leaves behind more than 600 families, the great majority of which live precariously on the outskirts of Minaçu.

VI. Whose Development? IDB Financing, Enclave Tourism, and Garifuna Land Loss in the Bahia de Tela


The “Los Micos Beach and Golf Resort” is a major tourism development currently under construction in Tela Bay, Honduras. The project, which is located within the limits of the Jeanette Kawas National Park (JKNP), will eventually include an 18-hole golf course, 600 hotel rooms, a convention center, a marina, an equestrian center, a shopping plaza, and over 400 private villas. Paradoxically, this project is couched within the framework of the National Sustainable Tourism Development Strategy (ENTS), elaborated by the Tourism Ministry (Secretaria de Turismo, SETUR) in collaboration with the Inter-American Development Bank. SETUR defines sustainable tourism development as “development that is equitable, socially and environmentally responsible, and oriented toward the betterment of local livelihoods.”[126] The idea that tourism development will benefit all Hondurans has been widely touted, but ultimately the “development for all” model is deeply flawed, since the benefits to local populations, in this case the Garifuna and ladino communities surrounding the project site, are marginal in comparison to the long-term environmental and cultural destruction caused by the project.

The trajectory of the Tela Bay project “Los Micos Beach and Golf Resort” stretches back to the 1970s, when it was first conceived under the name “Tornasal.” However, it did not materialize into a viable development project until receiving the backing of the Inter-American Development Bank, which in 2005 approved a government loan for US$14.5 million to complete the basic public works infrastructure for the tourism complex. This infrastructural investment, which is being carried out by Italian construction company Astaldi Columbus, is meant to increase competitiveness and spur private sector investment in the burgeoning tourism industry. Indeed, tourism has been designated by the government of Honduras (GoH) as one of four dynamic production areas.[127]

Now, with the basic infrastructure nearing completion, the Los Micos mega-project may finally become a reality. But the project has already produced detrimental impacts on local livelihoods, transforming traditional socio-economic activities in the neighboring Garifuna communities of Tornabe and Miami, and placing unprecedented pressures on the surrounding ecosystem, the Jeanette Kawas National Park.

The extreme impacts of this project on the environment and local populations lead to legitimate questions as to why the bank, which has promoted environmental protection measures for the Mesoamerican Biological Corridor, would support the construction of a major tourist enclave in the heart of the Jeanette Kawas National Park, and why it has approved financing for a project that is being constructed on lands that form part of the “functional habitat” of the Garifuna communities Tornabe and Miami.

Through an analysis of the Bahia de Tela project, this report will formulate a critique of the bank’s broader development model, specifically addressing the issue of “displacement” and Garifuna territoriality. Although displacement has been narrowly defined as the physical relocation of peoples,[128] in this paper displacement is conceptualized as loss of territory, taking into account the particular implications of territory for indigenous people. A number of communities, both ladino (mixed race) and Garifuna, will be affected by the Los Micos project, however, this report will focus primarily on the Garifuna communities of Tornabe and Miami.

“Sustainable” Tourism Development: IDB Lending Policies and Plan Puebla Panama (PPP)

The IDB’s National Sustainable Tourism Program is backed by a US$35 million loan to the government of Honduras and organized into two components: 1) public investments to support sustainable tourism development; and 2) foment private investments in the sector.[129] The loan advances the bank’s country strategy, which aims to support the achievement of poverty reduction goals in Honduras and simultaneously promotes the bank’s regional economic strategy known as Plan Puebla Panama.

Plan Puebla Panama, or Plan Mesoamericano, is a regional economic strategy that seeks to integrate the economies of Southern Mexico and Central America through major infrastructure projects and private investments designed to catalyze export-oriented industries. The PPP is inextricable from regional free trade agreements, NAFTA, and CAFTA. The rationale behind the PPP is that each country in the region can achieve materialized real economic growth by improving its global market positioning vis-à-vis the development of key economic products: tourism, manufacturing, maquilas, etc. linked to the international market.

In Honduras tourism has become the third largest source of income, after maquilas (offshore factories) and remittances; from 1998-2001 the tourism sector grew 18.3%.[130] These economic indicators have positioned the tourism industry as one of four “dynamic production areas” to be supported through IDB lending policies listed in the IDB Honduras Country Strategy of 2006.[131] In addition to bank loans, the growth of the tourism industry has been aided by a series of legislative initiatives, which promote a “secure” investment climate through land tenure regulation, government modernization, and increased safety nets for would-be investors.

The Los Micos project is a private-public venture under the auspices of the mercantile society “Desarrollo Turistico Bahia de Tela, S.A de C.V.” (DTBT). The DTBT is composed of the Honduran Institute for Tourism (HIT) and the Honduran Tourism Investment Fund (HTIF), a consortium of private investors. These investors include some of the most powerful men in the country among the business elite: José Rafael Ferrari, Juan Canahuati, Camilo Atala, José Lamas, Fredy Násser, Jacobo Kattán, Yankel Rosenthal, Guillermo Lippman, and Rafael Flores.[132] The basic infrastructure is to be funded by the government of Honduras with financing under IDB loan HO-0195, and the HTIF will provide private investment to construct hotels and other components of the resort. The Los Micos project fits neatly within the logic of Plan Puebla Panama, particularly when situated within the regional development context.

In addition to funding the basic infrastructure for the Los Micos project, the bank is investing in the Mundo Maya, a regional tourism initiative tied to the development aims of Plan Puebla Panama. Also part of the packet for integrating the Atlantic Coast region into the global economy, in October of 2007 the IDB approved a US$40 million loan to support construction of the Caribbean Tourism Corridor (CA-13). The first phase of construction will create a four-lane highway connecting the cities of El Progreso and Tela. This project is designed to facilitate the increased movement of people and goods between San Pedro Sula (the industrial capital and airport) and the Caribbean coast. CA-13 and CA-5 (the Dry Canal) are key components of the Central American Highways Network and the regional economic integration strategy articulated in PPP. The Caribbean Tourism Corridor will enable the movement of visitors between Honduras’s principal Caribbean tourism nodes: Tela, La Cieba, and Trujillo, thereby generating private sector investments in the tourism sector.

PPP Honduras: Highway Corridors[133]

These development schemes are created without taking into consideration the fragility of local ecosystems, and certainly often conflict with the interests of Garifuna communities, expressed in numerous interviews with the author. The communities have been included under the rubric of “cultural tourism.” In the Country Sector Strategy of the Project Proposal, Strategic criterion #2 reads:

Take steps to reach demand segments that have greater growth potential, match the country’s special features and existing tourism resources, and distinguish Honduran tourism from that of other countries in the area. This involves a combination of nature, adventure, and cultural tourism, generating authentic experiences for visitors by enabling them to participate in their leisure time in daily Honduran life.[134]

While Garifuna cultural difference is used to promote a unique Honduran brand of tourism that distinguishes Honduras from other regional tourism destinations and promotes the competitive advantage of the national tourism industry, the “Garifuna Coast” is not just a marketing ploy. The Garifuna people have lived in the region for generations and developed a strong culture based on their ties with the land and sea there. Today many Garifuna communities are engaged in a critical struggle to defend their ancestral rights over land and natural resources.

Garifuna Territoriality and Resistance to Los Micos

Garifuna ancestry can be traced back to the year 1635, when two Spanish vessels carrying enslaved Africans to the Americas shipwrecked off the coast of Yurumei (St. Vicent).[135] The survivors took refuge on the island, where they intermarried with the Carib Indians, adopting their language and many of their cultural practices. The Garifuna inhabited St. Vincent for over a hundred years, but as French and English colonizers vied for control of the island, conflict erupted and in 1797 the Garifuna were deported to the island of Roatan. From Roatan, many Garifuna migrated to the Atlantic Coast of the Central American isthmus. They eventually established 46 communities in Honduras, and several additional communities on the Caribbean Coast of Guatemala, Belize, and Nicaragua. Today the Garifuna constitute the second largest of Honduras’s nine indigenous peoples.

The cultural integrity of the Garifuna and the physical integrity of their territories has come under threat for years due to poverty and out-migration. In recent decades Garifuna have become part of the global diaspora; it is estimated that there are 300,000 Garifuna in the world—100,000 in Honduras and nearly the same number, around 90,000, in the United States clustered in the cities of Chicago, Houston, Los Angeles, Miami, New York, and New Orleans.

Garifuna territoriality is rooted in shared cultural, spiritual, and economic practices. Diverse land use activities including agricultural production, hunting, the harvest of medicinal plants, and collection of firewood, construction materials, logs for fishing boats, and materials for artisan production depended on the protection and management of reserves in the territory. In the case of Tornabe, the reserves were located to the west of the principal residential area and extended all the way to the present-day fishing community of Miami. The entire region formed one cohesive territory, or “functional habitat,” for the local Garifuna population, including the Caribbean Sea.

The notion of indigenous territory has been widely discussed in anthropological writings, but only recently did this discussion enter into debates over development practices in areas populated by indigenous peoples. In part, this debate is tied to International Labor Organization Convention 169, which was ratified by Honduras in 1994. As an international treaty, ILO 169 has precedence over national law. However, the government has not guaranteed compliance with the convention, as demonstrated by the Los Micos project.

Friction between Garifuna communities in Tela Bay and the tourism industry has been exacerbated by the Los Micos project, raising important critiques that must be taken into account by international lending institutions, such as the IDB and the World Bank, implicated in promoting aggressive tourism development policies on the Caribbean Coast of Honduras. Indeed, Garifuna territoriality challenges the very foundation of Western notions of property rights, understood in terms of individual property ownership, and oblivious to notions of collective resource management.

The Los Micos Resort has long been on the cusp of development, a dream for Honduran business leaders who hoped to capitalize on Tela Bay’s spectacular white sand beaches. However, the anticipated development was mired by unfavorable legislation, such as Article 107 of the constitution, which prohibited the sale of coastal lands to foreigners. The first environmental impact studies connected to the Tela Bay project were completed by the United Nations Environmental Program in 1977.[136] In 1994, the Punta Sal National Park was formally inaugurated by means of Legislative Decree 154-94.[137] Consequent to the designation of the area as a national park, PROLANSATE (Fundacion para la Proteccion de Lancetilla, Punta Sal and Texiguat) and COHDEFOR (Cooperacion Hondureño de Desarrollo Forestal) established a series of environmental ordinances to protect the park’s fragile ecosystem.

The Jeannette Kawas National Park is a massive national park covering over 70,000 hectares in Tela Bay.

The park lies on the marine coastal zone, northeast of the port city of Tela, in the northern region of the Honduras. It covers 781.45 square kilometers, made up of 36% ocean area and 497.45 Km² (64%) land, including 6.5% freshwater. This makes it one of the largest national parks in Central America.[138]

The location of the Los Micos Resort in a protected area—the Jeanette Kawas National Park—and the overlapping land claims of neighboring Garifuna communities presented serious challenges to eager developers.

At the time of the project’s conception, the community of Tornabe was not in possession of a land title, but the testimonies of community members consulted for this study demonstrate that the lands where the project is being constructed are indeed vital to the livelihoods of the local population. One resident who asked to remain anonymous because of the tensions that exist in the region as a result of the development and local opposition to it asserted, “These lands have always belonged to the community. The only thing is that back then our community did not have a title of dominion, but they have always belonged to the community.”

To demonstrate ancestral possession of the lands, Mr. L. provided specific examples of land use for production of basic foods: “These lands have been used for growing yucca, rice, and sugar cane …”

In addition, the community used these lands for hunting, and other forms of food collection, activities that have been nearly eliminated as a result of the Los Micos project, according to the source and others. “The most direct effect on our community is that back then the community went to the mountains and hunted, always with moderation. The Garifuna didn’t exploit like the ladinos. We did it out of necessity, not for business.”

He recalled hunting for crabs, turtles, and other animals in the project zone. In this vein, although the community lacked a legal title to the land, community members did have rights to the lands and they exercised these rights long before the emergence of the Los Micos project.

Because they viewed these rights and livelihoods as threatened by the project in Tornabe, community members actively opposed the imposition of the Los Micos project. A Tornabe community member recounted his memories of the struggle to defend their land rights in the face of the mega-project:

“Back then the Garifunas of Tornabe and San Juan along with Rio Tinto were in danger because noises were being made about the fact that they would have to remove us from the beach to carry out the project. The communities got together and organized a committee called In Defense of Our Lands. The group’s goal was to defend the lands of San Juan, Rió Tinto, and Tornabe. But the new government (of President Rafael Vallejas) responded that the plans were going to provide a lot of opportunity to the towns’ inhabitants, saying they were to be trained for hotel work, kitchen work, to learn English, and for other jobs. He said that the Garifunas had to be the first employed in this sector and would be kept in mind for the project” (Mr. V., interview conducted on 2/14/2010).

Employment promises were used to convince the community that they would be beneficiaries of the project. HIT, with financing from the IDB, promised the local population participatory and sustainable development, and through various means convinced some community members and not others, creating internal divisions between those in favor of “el turismo” and those opposed.

A small group of community representatives eventually yielded to the pressure coming from the HIT, and in 1993 an agreement was reached wherein the community ceded control of 512 hectares to the HIT, and in return Tornabe received a collective (dominio pleno) title for 723.6 hectares. In his study Tornabe ante el Proyecto Turistico, Virgilio Lopez explains:

“Community members who had agricultural plots or houses on the land earmarked for the Los Micos development were paid for investments on the land (i.e. constructions, etc.), but not for the land itself, purportedly ‘national lands.’ The land-titling process was carried out by the National Agrarian Institute (INA), which in the early 90s provided legal titles to the majority of Honduras’s coastal Garifuna communities. By and large, these titles only included lands in the residential area (casco ubrano), and completely excluded areas for resource extraction.”

Many community members critical of the negotiation process, argue that the community was not fully consulted; and that they feel deceived by the final agreement.

“They did things behind the town’s back. When the tourism came, they [the members of the tourist board] had their meetings at the president’s residence behind closed doors […] and when we noticed, it was already all done” (Mr. M., interview 2/15/2010).

The government of Honduras did not follow through with the proper consultation process mandated by ILO Convention 169 in developing the Los Micos project. As indicated by community members, the consultation lacked transparency, and was limited to “closed door” meetings between the local community council (patronato) and HIT authorities. Although the Honduran state deems the patronato to be the highest community-level authority, traditional community authorities were completely omitted from the discussion, as was the Fraternal Black Honduran Organization (OFRANEH), a representative body with members in all 46 Garifuna communities in Honduras.

OFRANEH has opposed the Tela Bay project since its inception. In a January 2005 communiqué, Garifuna activist Miriam Miranda states:

“OFRANEH has maintained a clear policy regarding our territories. In our opinion, you do not negotiate land and it does not belong intrinsically to the Garifuna people. At the same time we have a marked individualism proclaimed by neoliberalism toward the dissolution of collective titles, imposing the concept of private property, which will intensify the pressure oriented toward the sale of the coastal strip.”

The organization has also played a pivotal role in the fight against Decree 90-90, which modified Article 107 of the constitution in order to permit the sale of coastal lands to foreigners. This decree is a key legislative measure used to promote tourism development and increase foreign investments; it also constitutes a serious threat to the territorial integrity of coastal Garifuna communities through privatization and foreign ownership.

OFRANEH reiterated their stance against the Los Micos mega-project on March 11, 2009 when hundreds of Garifuna paralyzed traffic on the main highway connecting Tela and La Ceiba. Among the numerous demands placed before the government, OFRANEH insisted on the immediate cancellation of the Los Micos project.

“Bearing in mind the importance of the wetlands and the global awareness of the effects of climate change, it is unthinkable that the Honduras government continues to support the construction of a tourist megaproject like Tela Bay. We demand that the state adheres to the international agreements (Biodiversity Convention, The International Treaty for the Protection of Wetlands, RAMSAR) and proceeds with the immediate cancellation of this project that is murdering the natural resources of Tela Bay.”

These demands have been unmet, but the organization has remained at the forefront of the opposition to the project, particularly because of the potential for environmental destruction and threats to Garifuna land tenure security.

On March 11, 2010—the 213th anniversary of the arrival on Roatan of Graifuna survivors, considered the anniversary of the founding of the Honduran Garifuna culture—the OFRANEH issued a statement describing what to them is at stake in the recent “explosion of megaprojects promoted by the national elite in partnership with foreign investors.”

“Our people currently suffer enormous pressure because of the dominant culture that culturally homogenizes, turning us from Garifuna into simple Afro-descendants, that seek to incorporate us so that we reject our cultural heritage. In spite of the existence of international conventions and treaties that protect indigenous peoples, the state of Honduras persists in diluting community property in the name of an individualism that has a domino effect on the sale of ancestral territory.

“The northern coast of Honduras is considered the place with the second-most potential to suffer the effects of global warming, and it is a sure science that this is due to unsustainable ‘development’ practiced by the colonial powers. Meanwhile, the coastal erosion devours our beaches at worrying pace, the prominent tourist investors appropriate natural wetlands conserved by our people and which have been sustainably looked after.”

Loss of Territory: Implications for Local Livelihoods and Territorial Displacement

Territorial displacement encouraged by the Los Micos project has most seriously impacted the communities of Tornabe and Miami, but it has had ripples throughout the entire Tela Bay region. In this study displacement is defined as loss of territory, although there is great likelihood for future displacement in the traditional sense, both voluntary and involuntary. Loss of territory in Miami and Tornabe has had negative economic and cultural impacts on the local population, aiding the transformation of Garifuna villages into tourist outposts. This process has been facilitated by IDB lending policies, and national legislation designed to kick-start private investments in the tourism sector.

Despite IDB claims to support local populations through the creation of economic opportunities, the Los Micos project has had the opposite effect. In fact, the loss of territory has translated into reduced economic productivity for Garifuna communities bordering the project zone, as fishing and agricultural work has nearly halted and tourism emerges as the only viable option. This is a particularly worrisome outcome considering the centrality of economic, social, and cultural activities in the maintenance of Garifuna identity.

In the case of Miami, study participants expressed little hope that the community will retain its Garifuna roots. “Miami is going to disappear. Fishing will no longer be carried out here” (Don. I, interview 3/05/2010). Miami, a fishing community founded in 1973, falls within the ancestral territory of Tornabe. At its peak, nearly 300 people called the community home, but due to Garifuna out-migration, the Los Micos project, and land privatization, the population of Miami has dwindled to 36 families, of which only 10 are Garifuna.

The fate of Miami was sealed in 2003, when the HIT transferred a portion of its land holdings within the boundaries of the Kawas National Park to the DTBT at a cost of US$19 million. Since then, due to land speculation, the community of Miami has experienced rapid land loss. In 2004, the community received a land title from the national Agrarian Reform Institute, but the land grab was irreversible.

 ”A businessman came and tried to buy land from Tela in order to build their houses. They would rather negotiate with other foreigners who wish to build hotels and restaurants. That is what will happen” (Don I., Interview 03/05/2010).

With scarce opportunities for alternative economic activities, the remaining Garifuna population is hopeful, yet skeptical, that international tourism can fill the employment gap.

Traditionally men from Tornabe traveled to Miami to fish in the Laguna Los Micos and in the fishing banks along the Punta Sal National Park. Women traveled to and from Miami to gather the fish, which they sold in Tela, Progreso, and San Pedro Sula. Today, this back and forth economic and social interaction has nearly ceased, negatively impacting the territorial integrity of both Tornabe and Miami. Indeed, one fisherman told me that the Garifuna families who lived in Miami have resettled in Tornabe, or migrated to find work in Tegucigalpa, San Pedro Sula, and in the United States.

The over-exploitation of fishing resources was another reason prompting out-migration. Doña C. explained, “El Garifuna doesn’t destroy, it uses only what it needs. But everything that is touched by foreigners is destroyed. The fishing methods used by them have had serious consequences and that is the reason why resources are coming to an end” (Doña C., interview 3/5/2010). Doña C.’s critique of ladino culture extends to the Los Micos project, which nearly all community members identified as environmentally unsustainable. The construction has seriously decreased fish populations in the area.

In Barra Vieja, a mixed Garifuna and ladino community located between the Los Micos tourism project and Miami, there are equally powerful forces impelling out-migration. Don G., a Garifuna elder, provided a brief history of the community, which was founded by a ladino family in the 1940s. This community is located along the ancestral road linking Tornabe and Miami, and remains integral to the functional habitat of the local Garifuna population, as illustrated through ancestral land use patterns. According to Don G., “Rice, yucca, and other crops were sown, but fishing was the main activity here” (interview 3/05/2010). The community was also an important site for the collection of coconut, a key element of Garifuna diet and culture.

Today, Barra Vieja has a population of approximately 100 people, some who live there on a permanent basis and others who are semi-permanent residents. Don G. explained that many of the community members are forced to leave Barra Vieja to find employment. This statement resonated with the testimony of Don J., who lives between Barra Vieja and Tornabe. The community is seeking a collective land title, to defend their interests in the face of the Los Micos project, which some fear will expand into Barra Vieja, forcing them to leave indefinitely.

“They came here and acted as if people’s lives were of no value. They wanted to build a motorway [from the project] across our community but we didn’t allow them. They also wanted to introduce electricity and gas, but when we asked them if they would allow us the use of these facilities in our community they said ‘no.’ This is the reason why we didn’t allow it [...] We are going to continue fighting until we die. We are not going to abandon our town” (Don G., interview 3/05/2010).

Barra Vieja’s resistance to the project has been critiqued widely by community members in Miami, and by many in Tornabe. Some community members in Miami are upset, because the impasse between Barra Vieja and the tourism developers has prevented the passage of the electricity and potable water system.

Even though many community members in Miami and Tornabe are pleased with the public works component of the Los Micos project, residents in both communities are highly skeptical about the employment opportunities to be generated by the project. The public works infrastructure began in 2007, but very few community members have been employed directly.

“The project started and they fired workers. People were hired at the beginning but only for two or three months. After that they argued that people were not suitably qualified to work, so [these people could later be fired]. This is an example of what will happen when the next stage of the project starts, jobs will not be given to the people from the community” (Snr. J., interview 3/7/2010).

In part, Sr. J. blames the HIT and the IDB for not fulfilling promises to train the local population in skills that are needed to work on the construction of the public works component, or to fill other employment niches opened by the Tela Bay project.

Meanwhile, traditional avenues for income have been closed, such as agricultural production and fishing. Don M. said:

“Tourism is not focused on changing the Garifuna way of life. Those that did not attend training will not be able to work there. Opportunities to work are going to be limited because many foreign people will come here from other areas to work [...] they are the ones who will gain lots of money” (Don M., 2/15/2010).

In this vein, community members are articulating a double critique, on the one hand they critique the lack of interest on the part of the government to follow through with employment promises, and on the other, they point to issues of racial discrimination against the local Garifuna population. The need for semi-skilled labor at the Los Micos project is expected to be filled mostly by ladinos from neighboring cities.

Ladino in-migration is an important issue of concern for community members in Tornabe. The current president of the community council said:

“There were people and still are people that disagree with [Los Micos], because it is thought that this project will affect our territory in terms of security, land, health, and education. This is because we have seen that when the project was being built, migrants came to work on the construction of the hotels, gulf camps, and now we feel that our territory has been invaded. This is the reason why several people opposed the project” (2/15/2010).

There are still many unknowns with reference to the impact of the project in Tornabe.

Although the HIT has not delivered on the promise of employment, many community youth still harbor hope that the project will spur local tourism, and thereby create new ways to generate income. One cannot ignore the drastic changes in local economic production, which has turned sharply in the direction of tourism. The community has several small hotels and local restaurants, including a project funded by the World Bank Nuestras Raises Program at the Honduran Social Investment Fund (FHIS).

There is a range of opinions with regard to the benefits of tourism development, but all study participants associated the entrance of the project with loss of territory. Many hope tourism can fill the employment gap, but until now, employment at the Los Micos project has been very limited, and lack of employment may further accelerate displacement vis-à-vis out-migration to neighboring cities. In addition to the loss of traditional modes of livelihood, population growth presents another challenge to community members in Tornabe, which has approximately 4,000 inhabitants. The community is densely concentrated along the beach and extends inward to the south, but lands for future population expansion are in limited supply now that the DTBT claims ownership over nearly half of the community’s ancestral territory.

The IDB loan will ensure that Tornabe and Miami have a sewage system, paved roads, a system for disposable solid waste, and general improvements to the electrical system. In large part, community members view these works as “development.” The basic community infrastructure has definitely improved, but at what cost?

Environmental Impact

In 2006, PROLANSATE (Foundation for the Protection of Lancetilla, Punta Sal y Texiguat) published a scathing response to the Environmental Impact Assessment (EIA) completed by ECOMAC-CINSA under the Honduran Secretary of Natural Resources, File No. 220-A-96. In this report, PROLANSATE identifies numerous shortcomings in the EIA; chief among these is the lack of a transparent consultation process with neighboring communities and civil society organizations. PROLANSATE cautions:

“The filling in of the wetlands will have negative repercussions on Tornabé, Miami, Marión, and other communities surrounding Los Micos Lake as well as Tela city, with a greater risk of flooding during the rainy season hurricanes, tropical storms, and even more with high tide.”

Despite the serious limitations in the EIA, and numerous critiques from civil society organizations, the government of Honduras decided to proceed with the Los Micos project, which involves filling in a sensitive environmental wetlands area. Community members in Tornabe have already begun to experience the consequences of the land leveling completed for the public works component of the IDB-funded project. Lands previously unlikely to flood are more susceptible to flooding, and floodwaters take longer to recede.

With very little land available for territorial expansion and rapid population growth, the area for agricultural production is increasingly restricted, fishing resources are strained, and employment in the tourism sector is dismal. The development also creates larger populations in vulnerable coastal areas, with less of a natural buffer zone. A study released during the Copenhagen climate change meeting noted that Honduras is among three countries that have suffered the most from extreme weather events in the past decade that are likely to increase with climate change.[139]


In sum, IDB lending policies in Honduras are implicated in the promotion of unsustainable tourism development that negatively impacts the local ecosystem and advances the territorial displacement of Garifuna communities in the Bahia de Tela. Moreover, the project has been carried out without adequate consultation as required under international law.

IDB documentation makes little reference of the local Garifuna population, and there is scant mention of the resistance to the project prior to the loan approval. In the DCP, Section D. Social and Environmental Impacts, the bank addresses very briefly the negative impacts that may surface from the project.

“If the potential negative impacts are not stopped and if preventive measures are not incorporated [into the project] the impacts could result in significant losses and/or changes to the quality of the environment, (e.g. pollution of surface and coastal waters, loss of the integrity of protected areas, loss of biodiversity ,and undesirable social process […]” (DCP, National Program of Sustainable Tourism).

There appears to be little or no discussion of what is even meant by “undesirable social processes.” In the end, the bank sidelines these environmental and social concerns in favor of promoting mass tourism development. The results of our study indicate that the local Garifuna population will not benefit significantly from the Los Micos mega-tourism project. Employment opportunities are likely to continue to be far fewer than what has been promised, with large numbers of outsiders coming into the region to fill newly created tourism-related jobs.

At the same time the Garifuna are losing or have lost traditional livelihoods of fishing, hunting, and farming as a result of the project. This not only affects livelihoods but has a heavy impact on cultural survival, tied up with traditional economic activities and use of the land.

The transformation of Garifuna villages into tourist outposts has generated various responses from community members—some recognize the potential benefits of incoming tourist dollars, especially in light of declining agricultural production and scant employment opportunities, while others oppose the project on the basis of the loss of traditional activities and land. What this study shows is that at least up until now the Los Micos project has had very few direct benefits to the Garifuna community and many indirect negative impacts.

It is still too soon to have a clear measure in numbers of displacement caused by the IDB project. The three communities studied here are clearly at risk and have already experienced loss of lands and territories, as well as concomitant out-migration and displacement. The longer-term environmental impacts of the project will exacerbate displacement, particularly of Garifuna dedicated to land-based activities. These consequences of the project have been given short shrift by the bank and require serious investigation, as well as the development of mitigating programs or major modifications in the project, in conjunction and close consultation with local communities.

VII. Report Conclusions: Case Studies for IDB Megaprojects: Displacement and Forced Migration

By Laura Carlsen

The purpose of the project “Inter-American Development Bank Megaprojects: Displacement and Forced Migration” was to analyze the impact of the financial strategy of the Inter-American Development Bank on a phenomenon which gravely affects all the countries of the region of Latin America: the displacement of populations. The dynamic of displacement has profoundly changed the societies and the economies affecting the families.

The Selection of the Cases

In this report we present the results of four case studies concerning the constructions of megaprojects financed directly by the IDB in four countries: Brazil, Colombia, Mexico, and Honduras. These cases make it possible for us to analyze the strategies of the bank and their impacts on the lives of the people who live in the zone of [project] execution. These zones share the characteristics by being places of high marginalization and poverty, of being communities which are basically campesino, indigenous, and descendents of Africans.

The cases were chosen to cover the subject from different perspectives and different fields. Since the cases deal with cases in different countries, we can compare similarities and differences in the design and implementation of the global strategies of the IDB, and the possible differences which arise from different national policies.

Also, the four cases represent a variety of types of project. In the cases of La Parota, El Arcediano, and CH Cana Brava, we address hydroelectric megaprojects which flood communities and territories. In the case of Brazil, we analyze a finished project which continues to present serious problems of resettlement and adaptation. In Mexico, we look at two projects which have been temporarily suspended. In Colombia, we examine the case of the palm oil monoculture because this is a strategy of development that is relatively new for the IDB, one of great reach, and it implies a giant-scale change in the use of the land. Honduras exemplifies for us a case of the development of tourism infrastructure, also a priority of the bank, which brings with it consequences of a different sort, but with very similar results.

We look at the four megaprojects as they exist at different points in time. The construction of the hydroelectric dam CH Cana Brava in Brazil has been completed for 10 years and illustrates a series of grave defects in the bank’s policies of resettlement. The affected population had to employ methods of direct pressure to succeed in getting the IDB to pay attention to its claims about the conditions of its relocation. Even so, of the 1,000 families affected, a decade later, 600 families have not been successfully relocated.

In Colombia, the active promotion of palm oil takes time. However, new projects for financing palm oil are being developed without serious studies being made about its social and environmental impacts. In addition, the bank now promotes monoculture as a part of its environmental portfolio addressing the mitigation of climate change and the generation of resources in the carbon market. As this case clearly shows, when one takes into account the entire process of cultivation and processing of palm oil, the industry is not exactly kind to the environment nor does it mitigate climate change.

The other examples are at the beginning stages of development, and thus offer an opportunity to rethink the bank’s strategy. In the case of La Parota, the project must be cancelled completely because of the displacement and the environmental harm it causes. Furthermore the study of energy demand which was utilized to justify the megaproject is highly questionable, and no real alternatives were examined. In Honduras, the construction of the megaproject is in process. Whether the bank is serious or not will be determined by whether it enters into serious dialogue with people’s organizations in order to arrive at agreements regarding hiring/contracting, conservation, and preservation of the environment, the culture, and traditional activities.

A Point of View about Development which Privileges Global Integration above Local Communities

Megaprojects financed by the IDB in the framework of the IIRSA and the PPP have, as an organizing principle, continental integration to facilitate foreign investment on a large scale, exploitation of natural resources in the region, and the transfer of goods on a transnational level. Consideration of the effects of consolidation of the local and regional market which are essential for the survival of the traditional communities of the region takes second place or are even completely ignored, while the generation of local jobs and funds for compensation or development are generally mere annexes to the projects. The majority of the projects lack concrete plans, adequate resources, and long term impact studies.

As various authors have pointed out, the displacement caused by “development” has certain particular characteristics which merit special attention. This displacement presents grave risks to the affected populations, among them, being uprooted from their land, loss of jobs and livelihood, marginalization, food insecurity, greater consequences of illness and mortality, loss of access to collectively-held property, and social disintegration.

In this context, it is fundamental to understand the relation between the model of development promoted by the IDB and other international finance institutions and the displacement [of people]. The financial policies of these institutions influence the elaboration of national policies of development, because the lines of finance and credit provided by these institutions are an indispensable necessity for governments that have few resources of their own in relation to the challenges they face. However, to obtain these resources, the international institutions, including the IDB, demand the adoption of certain economic strategies in the name of development through the use of specific conditions and terms. For decades, the bank has promoted a strategy of regional development oriented toward the international market. The conversion of national production to the external market has had very complicated and contradictory results, at times created by the strategies themselves. On the one hand, without doubt certain sectors have benefited, especially transnational economic actors and the national economic elites. Their objective of increasing exports and modernizing the sector which produces goods and services for the international market has in general succeeded. They have also increased foreign capital.

On the other hand, the social and environmental costs of this strategy have been very high. One of the social impacts less studied is the displacement of populations and forced migration caused by megaprojects. With the purpose of analyzing the root of this subject, we have presented four cases, in four countries of the region. The cases all meet the following criteria: 1) they are projects which receive or have received IDB financing; 2) they are projects which have caused or will cause displacement or will bring about forced migrations; and 3) they form part of the global strategy of the IDB which promotes the model of regional integration oriented toward the international. All the cases are described in the grand international project, the Plan Puebla Panama (Mesoamericano) for Mexico, Central America, and Colombia, [or in the IIRSA.]

Principals of Internal Displacement: Only on Paper

As a result of criticism in recent decades there exists greater awareness of the high cost of displacement and of the great obstacles to successful adaptation that face the affected families. International organizations have recognized the importance of providing an adequate framework for regulating and protecting the rights of the displaced. In this sense, “The Principles Governing Internal Displacement” formulated by the High Commission of Human Rights of the United Nations marked an advance in the systematization of these rights.[140]

This document establishes three fundamental points regarding internal displacement caused by megaprojects: 1) the necessity to avoid it whenever possible; 2) the right to consultation; and 3) the special rights of protection for vulnerable populations (women, indigenous, etc.) including the right to [at least] minimal [adequate and enforceable] conditions in the resettlement. The case studies in this book raise questions about performance, including the commission of grave violations of these principles by the IDB.

The Obligation to Avoid Displacement and Explore Alternatives

Principle 6 explicitly recognizes the impact of megaprojects on internal displacement. The chapter begins by establishing that “Every human shall have the right to be protected against arbitrary displacement from his home or customary residence,” and immediately defines as arbitrary displacement caused by “c) cases of development projects on a large scale which are not justified by a superior or primordial public interest.”

Of course, this definition is subject to debate about the criteria and conditions which justify a project “by superior or primordial public interest.” However, it establishes the responsibility for the state and the entities promoting such projects to justify them including by taking into account the right of those displaced. In every case presented in this book, one finds a lack of sustained justification which incorporates the impact of displacement in a complete cost/benefit analysis. Furthermore, in various cases there exist technical investigations and expert opinion which put in doubt the “superior public interest” of the megaprojects.

Principle 7 of the same Governing Principles goes further in establishing criteria for megaprojects or other measures which lead to displacement:

1. Before deciding on the displacement of people, competent authorities will assure themselves that all viable alternatives for avoiding this have been explored. When there remains no alternative, all measures necessary to minimize displacement and its adverse effects will be taken.

2. The Operative Sectoral Policies of the IDB in the matter of involuntary resettlement reiterate this basic principle:[141]

“All possible measures to avoid or reduce to the minimum the necessity of involuntary resettlement will be taken. A thorough analysis of the project must be undertaken to identify solutions which may be viable from the economic and technical point of view, eliminating at best or at least diminishing the necessity for involuntary resettlement.”

The following IDB policy begins, “When displacement is inevitable …” and establishes a series of steps to assure that displaced persons receive compensation and [suitable] conditions for their relocation. In the policies and especially in practice, the definition of “inevitable” has not been well established, and it lacks criteria integral for its application. Owing to the fact that the megaprojects which combine IDB financing, state funds, and private investment (which almost all of them do), involve large and powerful economic interests, it is predictable that those interests of potentially displaced populations will bear less weight, and their voices will be ignored, or in more extreme cases, as is happening with increasing frequency, violently suppressed.

In the case of the hydroelectric project La Parota, serious studies indicate that the calculations employed to justify its construction, which were based on future electricity demands, were inflated. In fact, one of the reasons given for halting the project was that the demand did not justify it at that time, although it was the struggle of affected people and the irregularities found in the plan’s implementation that played the principal roles in the decision.

In any case, the criteria for giant megaprojects like CH Cana Brava and La Parota must be much stricter, starting with what the World Council of Dams concluded:

“Dams have made a significant contribution to human development and the benefits derived from them have been considerable … In too many cases displaced people, communities downstream, contributors, and the natural environment have paid an unacceptable and often unnecessary price to obtain these benefits, especially in social and environmental terms.”

There are seven steps necessary for the construction of dam megaprojects, the majority skipped or distorted by the IDB in the cases of La Parota and Cana Brava. They are: to gain public acceptance, evaluate all the options, reconsider the use of existing dams, conserve the river and the sustenance of the local communities, recognize obligations and share benefits, assure compliance, and share the rivers for peace, development, and security.

Violations of the Law, the Principle of Broad Consultation, and the Obligation to Provide Complete Information

Point three also applies to cases of displacement caused by megaprojects.

If, in specific situations, the displacement is caused by states of exception owing to armed conflicts and catastrophes, the following guarantees will be respected:

a) Adequate measures will be provided to make accessible to future displaced persons complete information about the reasons and procedures of their displacement, and in its case, over compensation and resettlement;

b) Free and informed consent will be obtained from future displaced persons;

c) Competent authorities will try to involve the affected people, in particular the women, in planning and bringing about their resettlement;

d) Competent legal authorities will apply measures to assure compliance with the law when necessary; and

e) The right to effective recourse will be respected, including the right of competent judicial authorities to review the decisions.

It was found that in none of the cases did the financial process by the IDB comply with these principles. In La Parota the courts came to the conclusion that the consultations, completed after the fact in the region, were not only insufficient but manipulated. In Honduras, only the heads of the Garifuna communities have been involved, leaving out other organizations of people who were affected who took a critical position regarding the Los Micos tourist megaproject. In Brazil, the bank and the business agreed to negotiate with the affected parties only after they were subject to direct pressure. Even so, they chose negotiators who would act in their interest, leaving the organizations out.

Violation of the Rights of Displaced and Vulnerable Populations

All the cases studied have a major impact because of the displacement of vulnerable populations—the indigenous Naha in Mexico, the Garifuna in Honduras, the campesinos and indigenous populations in Colombia, and the campesinos of African descent in Brazil. Principle 9 formally recognizes that the state has a special obligation toward these populations in cases of displacement:

“The states have the specific obligation to take measures of protection against displacement of indigenous pueblos, minorities, campesinos, shepherds, and other groups who have a special dependency on their land or a particular affection for it.”

It is not accidental that the megaprojects analyzed in our cases affect precisely these populations. Courtland Robinson has shown that the displacement caused by development affected for the most part these populations all over the world. “Not only is [this displacement] an extensive and growing phenomenon, but there is also evidence that indicates that although the development benefits a great number of people, the price the poorer and more marginal populations pay is disproportionate.

As has been demonstrated in these cases, the populations have a close relation with the land and with religious, cultural, nutritional, and productive ties to it. Their cultures, often thousands of years old, are based on this relationship. Furthermore, these populations have little political power to defend their interests and rights.

Internal Displacement and Forced Migration

Little has been said in respect to the relationship between internal displacement caused by development projects and forced migration. The principles and policies described above are directed only to involuntary resettlement which is a direct result of the construction or implementation of the project.

However, the megaprojects financed by the IDB which we are examining here, show the relationship between the changes in the use of the land, which IDB’s strategies of integration and development promote, and the aggravation of the problem of the expulsion of migrants. Since this relation lacks more documentation, we describe it as pending work.

In all of our countries, migration for work has increased exponentially in the decades of globalization. Mexico, pioneer in the model of economic integration starting from the signing of NAFTA in 1992, now has the title of the country which has expelled the largest number of its own people—an average of 500,000 a year. The impacts of forced migration can be very negative: among them, separation of families, danger of death on the road and in crossing the U.S. frontier, and risk of kidnapping and slavery. Owing to this situation and to a contraction of hiring in receiving countries, especially the United States, many countries are developing special programs in the areas of high expulsion.

Against this current, the IDB projects which we analyze here tend to expel families and entire communities. In Mexico, the La Parota project promoted and financed by the IDB as part of its agreement with the Plan Puebla Panama considered expelling between 14,756 (official count) and 25,000 (independent count). In Honduras, there still are no reliable figures. However, that has to do with a region which has lost half its population due to migration, principally to the United States. As far as the residents are concerned, they continue to lose their traditional work such as fishing and farming because of the megaproject, and the promised jobs don’t materialize. These people will face great pressure to migrate.

In the case of Colombia, the second-placed country in the world for the rate of internal displacement, the situation is a little different. There the displacement in zones of expansion of palm oil is owed principally to the fact that the cultivation has spread into land occupied by local populations who in many cases have had to flee, and in others populations which have had to tie themselves to plantations as day workers. Another characteristic is the role that illegal armed groups play. Cases are known in which they aid the palm industry to displace these populations, thus generating strong conflicts over the acquisition of territories.

Internal displacement and forced migration generated by the megaprojects becomes doubly problematic in these cases because the affected population is made up precisely by the groups identified by the IDB itself. The Garífuna in Honduras and the indigenous people and campesinos of Guerrero have confronted strong pressures to migrate for a long time. In the case of La Parota, indications exist that the state itself is promoting the expulsion of these communities from the zone in order to facilitate the imposition of the megaproject.

Until now, the bank and human rights organizations have not developed criteria for the megaprojects which take into account forced migration, which is usually a long term indirect impact. In general, one sees them as distinct processes without relationship to each other. It is urgent to broaden the investigations and to define criteria for the imposition of megaprojects which also take into account the impact on forced migration.

The results of the case studies included in this book highlight the grave implications for local populations in the places studied as a result of the megaprojects financed by the IDB. The negative impacts have the aggravating circumstance of falling on vulnerable populations, such as women, indigenous pueblos, those of African descent, and campesinos.

The bank has the obligation to continue studying these implications and to work together with civil society and the affected populations. In the cases studied, the answers by the IDB to the accusations of these groups have been inadequate, given the seriousness of those accusations.

Below we present some recommendations for the development of better practices on the part of the megaprojects to minimize their consequences in displacement and forced migration.

Some Recommendations:

1. The IDB should avoid financing megaprojects which imply displacement, due to their high social costs.

It is written in the policies of the IDB and other international documents that displacement is a grave consequence which affects the lives of the displaced as well as the rest of the area. For this reason, all alternatives must be explored, and displacement should be considered the last recourse in strategies of development.

2. It is necessary to perform complete and transparent cost/benefit analyses.

The cost/benefit analyses and the justifications for the megaprojects often don’t take into account the dimensions and repercussions of displacement. The unquantifiable aspects, such as the division of ethnic communities and the loss of culture and social cohesion, are recognized in declarations but given little importance at the time of making decisions. They ought to have the same weight as the macroeconomic aspects, and they ought to incorporate important considerations dealing with the protection of a vulnerable population and the guarantee of their human rights.

3. The IDB must rethink the strategy of financing giant hydroelectric dam projects.

The literature dealing with the social and environmental damage provoked by this type of project points out that it should not only be avoided, but also that in the majority of cases better options on a small or medium scale exist. The IDB should investigate these alternatives and promote other sources of energy in addition to following practices to reduce the consumption of energy.

4. It is necessary to adopt mechanisms that ensure that consultation is broad, inclusive, and binding.

In spite of the fact that directives exist to this effect, the consultations in practice leave much to be desired in complying with these requirements. In many cases the right to consult is flagrantly violated because it is not even acknowledged.

5. The IDB must develop criteria for financing that gives a central place to the protection of human rights.

Human rights should be a fundamental element in all stages of IDB projects—design, financing, implementation, and follow-up.

6. The processes of resettlement must be designed with the consent of the affected populations.

Displaced persons have the right to participate in the decision-making which affects them. It is necessary to establish mechanisms of permanent dialogue in which they themselves can choose their spokespeople and participate in the definition of compensation, conditions, and other aspects of resettlement.


Laura Carlsen (lcarlsen(a) is the director of the Americas Program ( for the Center for International Policy in Mexico City.

Michael Collins ( is the Program Associate for the Americas Program

Oscar Chacón is the director of NALAAC (The National Alliance of Latin American and Caribbean Communities).

Paula Álavrez is a reasearcher and political commentator in Colombia.

Ricardo Verdum (verdum(a) is an advisor at the Institute of Socioeconomic Studies (INESC) in Brasilia, Brazil.

Christopher Loperena is a PhD candidate in social anthropology at Texas University in Austin.

The report was translated by Esther Buddenhagen and Barbara Belejack..

The report would not have been possible without the generous support of the CS Mott Foundation.

For more information

IDB Megaprojects: Displacement, Destruction, and Deception

Plan Puebla-Panama Advances: New Name, Same Game 

The IDB—50 Years, Zero Reflection





















[21] Michael Cernea, 1995, “Social Integration and Population Displacement,” In International Social Science Journal, 143/1.

[22] Michael Cernea, 1999, “Why Economic Analysis is Essential to Resettlement: A Sociologist’s View.”


[24] Balakrishnan Rajagopal, August 9, 2002, “The Violence of Development,” Washington Post, Quoted in Robinson, ibid.





[29] World Bank Environment Department, 1994, Resettlement and Development: The Bankwide Review of Projects Involving Involuntary Resettlement, 1986-1993 (Washington, DC: World Bank).


[31] Supplement E-bulletin: Inter-American Development Bank—Civil Society Initiative Update on Plan Puebla Panama March-April 2002.


[33] SGPA-DGIRA.-DDT.-0718/04, “Proyecto Hidroeléctrico La Parota,” Pages 147-149.


[35] The right to adequate housing (Art.11.1): forced evictions: 20/05/97, CESCR General Comment 7 (General Comments), contained in UN Doc. E/1998/22, annex IV.


[37] Mexico—Human Rights at Risk in La Parota Dam Project, August 5, 2007,

[38] ICCPR, Article 25(a) and Article 21(1)(a) of the ACHR.











[49] Memoria del Diagnóstico Comunitario, La resistencia a la pertenencia territorial /Ejido de los Huajes, Acapulco Guerrero / Elaboracion Etnologa, by Rosalinda Hidalgo Ledesma.





















[70]  (offline but can be viewed as Google doc).












[82] En Andrés Barreda, GDAE.








[90] Alvarez, Paula, “The Agrarian Question Today in Colombia: Land Without Campesinos,” Publications ILSA, January 2008.

[91] Cited by Senator Jorge E. Robledo during the debate on biofuels in the Colombian Senate on December 5, 2007.

[92] “A Blueprint for Green Energy in the Americas,” Garten Rothkpf/Inter-American Development Bank, 2007.

[93] Constitutional Court, Writs 005, 007, and 008 from 2009, enforcing Judgment T-025 from 2004, which declared forced displacement to be unconstitutional.

[94] The communities of Jiguamiandó and Curvaradó are under protection orders from the Inter-American Court for Human Rights.

[95] Goebertus, Juanita, Universidad de los Andes, Revista 67, “Palm Oil and Forced Displacement,” Jan. 2008.

[96] Fajardo, Dario, Territorios de la agricultura colombiana, Cuadernos del CIDS, Universidad Externado de Colombia, 2009.

[97] Law 812 of 2003: PND (National Development Plan) 2002 – 2006 and Law 1151 of 2007.

[98] Law 1152 of 2007, declared unconstitutional by the Constitutional Court.

[99] CONPES 3510 (2008), p.24.

[100] National Labor School (2008), p. 38.

[101] Instituto Von Humboldt, “The Environmental Sustainability of Biofuel Policies, Plans, and Programs in Colombia,” 2008.

[102] El Conpes issued Document 113 in March 2008, approving the Food Security and Nutrition Plan. Nevertheless, no resources have been designated to implement the plan.

[103] Statement of Arturo Infante in the workshop carried out by the National Environmental Forum in March 2009.

[104] ARDILA et al, Editores, “Colombia and its Foreign Policy in the Twenty-First Century,” Bogotá: CEREC, June 2005, p.100.

[105] The PPP currently comprises eight countries: Mexico, Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua, Beliz, and Colombia.

[106] Doctor of Anthropology, Centro de Pequisa e Pós-Graduação sobre as Américas, Universidad de Brasilia, and Adviser, Instituto de Estudos Socioeconômicos (INESC), Brasilia, Brazil.

[107] The concept of Large Scale Projects (PGE) was developed by Gustavo Lins Ribeiro (1985, 1987, 1991, 2008) on the occasion of the studies undertaken concerning the construction of the city of Brasilia, the present capital of Brazil, and of the Hydroelectric [plant] of Yasyretá in northeastern Argentina.

[108] We call projects megaprojects when we refer to projects of considerable cost which attract a high level of public attention or political interest because of their substantial direct or indirect impact on population, the environment, and income. See Bent Flyvberg: http://flyvbjerg.plan.aau.kd/.

[109] It shouldn’t be forgotten that in 1964 Brazil went from being governed by a military regime to one which had among its objectives the removal of the material, political, and ideological obstacles to modern capitalist expansion as a nation in an international political context of political-ideological polarization (the so-called Cold War). A historical description of the processes, interests, and conflicts which marked the trajectory of the Brazilian Electricity Sector, from its origins, through the consolidation of Centrales Eléctricas Brasileras S.A. (ELETRPBRAS) [Centrais Elétricas Brasileiras S.A.] and of the state system, until its restructuring and privatization in the 1990s is found in Daniele de Carvalho Pinheiro (2006).

[110] On the participation of the BNDES in the development of the Brazilian Electricity Sector see

[111] ELETROBRAS was created in 1962 as a public business with a national scope and authority to realize studies and projects and to construct and operate hydroelectric centers and transmission lines by means of regional subsidiaries.

[112]In the decade of the 1960s in Brazil, the BIRD continued to emphasize financing of the electricity sector. In that decade, the bank supported 11 hydroelectric construction and energy systems modernization projects, which added up to around 76.4% of the contracted resources by the Brazilian government together with the BIRD. See Manoel Rodrigues dos Santos Júnior (1990).

[113] Regarding social and environmental impacts of some dams constructed in the 1970s and 1980s, see Lygia Sigaud et. al. (1987), Ana Luiza B. Martins Costa (1990), and Luiz Pingueli Rosa, et al (1995).

[114] On the “restructuring” of the electricity sector in the 1990s see Ildo Sauer (2002) and Ildo Sauer, et al. (2003). For another perspective, it is worth the effort to take a look at the analysis that Maria Soledad Etcheverry (2005) makes of the workers’ narratives who experienced this process of reforms during a transition in the trajectories of their professional lives.

[115] A retrospective of the expansion of the system of electricity in the basin of the Rio Tocantins can be found in the work of Rubens Milagre Araújo (2003).

[116] The environmental licensing process includes the Preliminary License Previa (LP), applied for at the beginning of the studies of viability; the License of Installation (LI), to be obtained before the tender for construction; and the License of Operation (LO) to be obtained before the closing of the dam and the filling of the basin.

[117] Through this method, the process of evaluation, organization, and concession of resources is based, principally, on the financial capacity of the project to generate the financial resources necessary to pay off its debts and to give a return on the capital, independent of assets and cash flows of other projects controlled by the guarantor of the loan. For more details see Viviane Cardoso de Sá y Faria (2003).

[118] In the portfolio of the IDB, the financing of Cana Brava is called Planta Hidroeléctrica Cana Brava (BR0304):

[119] Private Sector Department (PRI) of the Inter-American Development Bank created in 1994 with the objective of mobilizing financing for private infrastructure works. For more details about the PRI, consult the IDB home page at the following web address:

[120] The OP-710 of the IDB is available at the following address:

[121] On the emergence and growth of the Regional Commission of those Affected by Dams (CRAB) [Comisu0103o Regional de Afetados por Barragens] in the states of Paraná, Santa Catarina, and Rio Grande do Sul, which later served as a foundation and model for the creation of the MAB in 1991, see Leopoldo Bartolomé (1999).

[122] The studies developed by Joviles V. Trevisol (2007) and by Omara Arach (2003, 2008) are good examples of the criticisms of transnational networks of organizations of civil society oriented toward the objective of defending environment rights and the populations affected by mega projects involving water resources. Insofar as the former makes an effort to illuminate the dimensions and the formation of this type of social institution, Omar Arach, taking as a reference his experience with the case of the CH Yasyretá uses the case of the Hydrovia Paraná-Paraguay, and arrives at their internal structures, seeing them as a field of relations of forces and specific powers.

[123] The MII report is available at

[124] According to Pinheiro (2006: 62), the MAB of Cana Brava received 1,350 basic food baskets from the National Supply Company (CONAB) [Companhia Nacional de Abastecimento] at that time; the distribution was made from the seat of the secretariat in Minaçu for families [constants—registered as permanent by the movement]. In March, 2006 the distribution of baskets was interrupted on a national level because of the allegation that arose from the delay by the minister of Social Development in the purchase of items for the baskets.

[125] The Letter of Agreement of Non-Reimbursable Technical Cooperation between the IDB and the Sebrae/GO can be found at

[126] IDB, PNTS Documento Conceptual del Proyecto.

[127] IDB Country Strategy, pg. 19.

[128] “Involuntary Resettlement in IDB Projects: Principles and Guidelines,” Dec. 1999. See “resettlement” entry in glossary.

[129] PNTS, Documento Conceptual del Proyecto.

[130] Estudio Sobre Tourismo Rural en Honduras, 2009.

[131] The four areas slated for expansion are: forestry, tourism, maquila industry, and agroindustry.

[132] Calderon, Manual Torres, El poder de los Señores Mediáticos,”

[133] Honduras Country Strategy, IDB, pg. 18.

[134] IDB, PNTS, Project Proposal, pg. 6.

[135] Suazo, E. Salvador, Los Deportados de San Vicente, (1997, 19).

[136] OFRANEH website, retrieved on March 8, 2010: The UNEP study addressed the fragility of the local ecosystem, which is comprised of humid forests and wetlands. Ultimately they proposed low impact, natural resource-oriented development for the area.

[137] In 1995, the park was officially renamed Jeanette Kawas National Park in honor of environmental activist Jeanette Kawas (see Legislative Decree 43-95).

[138] Prolansate, Plan de Manejo 2004.


[140] Principles Governing Internally Displaced People,


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