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Institutional Analysis of Colombia’s Autonomous Regional Corporations (CARs)

Institutional Analysis of Colombia’s Autonomous Regional Corporations (CARs). Allen Blackman Richard Morgenstern Elizabeth Topping Cartagena, Colombia August 23-24, 2004. Objectives.

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Institutional Analysis of Colombia’s Autonomous Regional Corporations (CARs)

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  1. Institutional Analysis of Colombia’s Autonomous Regional Corporations (CARs) Allen Blackman Richard Morgenstern Elizabeth Topping Cartagena, Colombia August 23-24, 2004

  2. Objectives • Broad goal: “…assess the effectiveness of the CARs … and their institutional … capacity to [set] implement and enforce policies and regulations in priority areas.” • Nine specific directives • “…make recommendations on measures that would help the…CARs better carry out their environmental mandate.”

  3. Project Team Resources for the Future • Allen Blackman: environmental economist • Richard Morgenstern: environmental economist, former EPA manager • Elizabeth Topping: research assistant Colombian Consultants • Juan Carlos García de Brigard • Angel Esterling Lara

  4. Contents of Report • Chs I-V: Introduction, Institutional History, CARs Legal Foundation, Basic Data on Environmental Quality, Institutional Performance • Ch. VI: Performance • Ch. VII: Priority Setting • Ch. VIII: Financial Resources • Ch. IX: Human/Technical Resources • Ch. X: Potential for Regulatory Capture/Corruption • Ch. XI: Potential Conflicts of Interest: Sanitation Infrastructure • Ch. XII: CARs versus other SINA entities • Ch. XIII: Conclusions • Major Findings • Overall Recommendations

  5. Background/Strengths of CARs (1) • Unlike many other Latin American nations, long history of regional environmental management in Columbia. Since 1950s environmental management effectively split between national and regional levels • Between 1960-88, 18 CARs created. • Originally, CARs focus on infrastructure development plus electricity generation and transmission, telecommunications, transportation, flood control, sanitation, potable water, cattle ranching, other functions

  6. Background/Strengths of CARs (2) • Law 99 (1993) redefined roles, functions, jurisdictions of the CARs • Law 99 also added CARs and certain other regional authorities (CDSs, AAUs) • CARs retained some economic development functions but were largely recast as environmental management authorities

  7. Background/Strengths of CARs (3) • Decentralized environmental management • Accommodates Colombia’s size and diversity • Better information at regional level • Insulates CARs from local political pressures • Insulates CARs from poor national governance • Encourages public participation and social control at regional level

  8. Background/Strengths of CARs (4) • Strong constitutional underpinnings • Collective right to healthy environment • Multiple causes of legal action for environmental protection (Acción popular, Acción de cumplimiento, Acción de tutela) • Dedicated/diversified revenue base • Property taxes • Multiple fees (retributive, compensatory, electricity, water) • Economic incentive instruments • Legal infrastructure for public participation • Non-governmental organization representation on boards/ councils • Public hearings • Emphasis on environmental education

  9. Major Reform-Oriented Findings • Great variability in CARs performance • Poor data hampers effective management • Significant jurisdictional conflicts with AAUs and municipalities • Inadequate prioritization of risks • Major inequities in financial resources • Great variability in human and technical resources; Clientelism a potentially significant issue • Regulatory capture also a potential problem • Potential conflicts of interest in sanitation management • Inadequate coordination with MAVDT • Other concerns: enforcement, voluntary programs

  10. Methodological Approach • Literature Review • Analysis of CARs’ legal underpinnings • Interviews, • mostly in 4 CARs (CRA, Cardique, Corantioquia, CAR) • 29 interviewees representing 27 institutions (in addition to stakeholders interviewed for SINA report) • Various Qualitative Analyses • Simple Data Tabulations • Econometric Analyses • Limited to 33 CARs • Small number of independent variables (GDP, Population, Land Area, Percent Urban, PreLaw99, Poverty) • Logarithmic form used to address scale issues

  11. Performance (1) • Literature Review and Interview Data • Enforcement • Licenses • Effluent Fees • Permitting • Voluntary Agreements • Quantitative Analysis • 4 environmental performance measures (water, forestry, etc) • 10 environmental mgmt measures (fines, permits, planning, etc) • Simple, transparent indices adopted • Econometric analysis focused on economic, demographic, financial, other variables

  12. Performance (2): Findings • Literature Review and Interview Data: poor performance in some areas • Quantitative Analysis • Limited statistical power of independent variables: data? omitted variables? • Yet, some interesting results: • Prelaw99 (+) • Poverty (-) • Land area (-) • negative results: staffing, computers, budget per capita, national contributions

  13. Priority Setting (1) • SINA study addresses national level issues: • Intra-sectoral vs cross-sectoral focus • Emphasize ‘green’ vs ‘brown’ issues • CARs study examined one year (2001) of CAR investment data (524 projects). • Projects placed into 21 categories and then aggregated into 4 meta-categories: • Flora and fauna conservation • Industrial pollution control • Water quality • other • Additional analyses conducted for 4 case study areas

  14. Priority Setting (2): Findings • Analysis of aggregated CAR investment data • Evidence of green bias • Aside from 11 extremely expensive wastewater treatment plants, only 5% of total investment in industrial pollution control • Versus 28% spent on flora and fauna conservation • Despite clear evidence that air and water quality monitoring, solid and hazardous waste treatment all inadequate • Evidence of misclassification of operations expenditures as investment (11% funds)

  15. Priority Setting (3): Findings • Analysis of CAR-level investment data • For each CAR, compare: • the severity of different 6 types of the environmental risks in within jurisdiction (soil erosion, air pollution, water pollution, etc.) • the extent to which CAR’s focus their investment funds on these risks. • Poor correlation between severity and spending • Analysis of whether actual investment spending comports with planned investment spending (PATs) for 4 case-study CARs • Mixed results • CRA and Cardique perform relatively well • Corantioquia and CAR perform less well

  16. Financial Resources (1) • Distribution of financial resources among CARs • Sources of self-generated revenues • Trends in national contributions, especially 2002-3 • Analysis of dedicated Environmental Funds

  17. Financial Resources (2): Findings • Distribution funds is highly unequal: 2/3 total funds for all 33 CARs accrue to 7 of the CARs • Spending per capita vary by factor of 10 • Self-generated revenues dominate (92%), but large variation • National contributions decline dramatically in recent years • 3/4 of budget for investment, 1/4 for operations, but large variation

  18. Financial Resources (3): Econometric results • Total self generated revenues • GDP: (+) • Poverty: (-) • Prelaw99: (+) • Components of self generated revenues • Property taxes, water fees linked to GDP • other revenue components not readily explicable • National contributions to CARs • Variation not readily explainable BUT some Robin Hood type reallocation 2002-3

  19. Human/Technical Resources (1) • Qualitative Analysis • Literature review • Interview data • Focus on issue of ‘clientelism’: practice of obtaining votes via promise of gov’t jobs • Quantitative Analysis • Distribution of staff, contractors among CARs • Distribution of technical resources among CARs

  20. Human/Technical Resources (2): Findings • Various studies link personnel quality and CAR performance • Average staff size: 113, but large variation • Average contractors: 67, but large variation • Staff per capita varies by factor of 10 across CARs • Contractors per capita varies by factor of 100 across CARs

  21. Human/Technical Resources (3): Additional Findings • 60% complete college (or more), but large variation • Educational levels of CARs staff, contractors tied to GDP • Staff size statistically related to operations budget • Number of contractors NOT statistically related to either operations or investment budgets • Average computers/staff: 1.2, but large variation • Many CARs lack any serious capacity to measure, monitor, test for pollution • Poverty and lack of technical infrastructure likely contribute to variation in technical capacity among CARs

  22. Human/Technical Resources (4): Additional Findings (Clientelism) • Although evidence based mostly on interview data, a number of findings emerge • High turnover of staff and contractors cited as problem • In hiring and promotion of staff, politics often trumps merit • Evidence from diverse sources • Also, some optimism about recent reforms cited • Evidence of excesses in contracting • Supported by diverse sources and quantitative analysis • Recent reforms also cited but concerns about Law 617 • Concerns raised about professional qualifications of CAR directors • Some optimism about recent reforms (Decree 3345) • ‘the jury is still out’

  23. Regulatory Capture/Corruption (1) • Regulatory capture denotes undue, albeit legal, influence of interest groups. Corruption involves violation of law. • Strong evidence on regulatory capture and corruption difficult to obtain. • Our findings tied to literature review plus interview data.

  24. Regulatory Capture/Corruption (2): • Recent survey finds incidence of capture of legislative, executive and [particularly] regional authorities higher than other countries in the region. (Saez 2003) • Vargas (2003) finds ‘medium’ or ‘high’ risk of corruption in CARs • Licensing and permitting also areas vulnerable • In some cases mayors and Boards allegedly focus more on private (vs public) interest • Claims that some CAR Directors direct contracts based on non-meritocratic factors • Proposed reforms languishing

  25. Regulatory Capture/Corruption (3): Non-governmental organizations • Potentially important in combating capture/corruption • Constitution, Law 99 encourage NGOs • NGOs growing: 5000+ (2001) • Yet very limited NGO participation in some CARs • Also, cronyism rampant (Controlaria Gen’l) • Allegations that ‘spurious’ NGOs created by local political, business interests

  26. Conflicts of Interest: Sanitation Infrastructure • Although Law 99 assigns primary for sanitation infrastructure responsibilities to territorial governments, CARs retain some responsibility for infrastructure development. • But CARs are also responsible for regulating such infrastructure. Thus, potential for conflicts • A large % of CAR investment devoted to sanitation infrastructure (largest % of any type of investment in 2001) • Nat’l Development Plan mandates assistance • Some CARs have big revenue streams • Mayors sit on CAR Boards • Options to reduce conflicts of interest • Ban CARs investment in sanitation • Require major municipal co-funding • ‘Chinese wall’ between operations/regulation

  27. National-regional coordination (1) • “…each component of the system is working in an independent and [dispersed] manner…this dispersion generates... inconsistency in decisions on environmental matters…and ambiguous and contradictory administrative action…[and] the absence of a…sectoral policy.” Booz-Allen and Hamilton (1997) • Other studies, interviews support this view

  28. National-regional coordination (2) • Claim is that reform is hindered by strong links between CARs and Congress • Many CAR directors not responsive to MAVDT • Rationale for CAR autonomy: • CARs can operate independent of municipal and departmento pressure • Shields CARs from ‘unreasonable’ MAVDT • Geographic, economic diversity makes strong central control impractical • In practice, Columbian system may compare favorably with more centralized mechanisms

  29. National-regional coordination (3) • Coordination mechanisms already in place between MAVDT, CARs • Formal planning process • CARs can be sued for non-compliant plans • Nat’l Planning Dept reviews (but does not approve) investment projects • Controlaria monitors CARs for poor implementation • CAR directors can be removed from office • Top salaries of CAR staff can be reviewed • Some funds (8%) still come from Ministry • Yet, many mechanisms not effective

  30. CARs, AAUs and Municipalities • Significant conflicts exist among CARs, AAUs and municipalities • Jurisdictional battles over permits, other issues not uncommon • Financial conflicts sometimes contentious • Claim that all mandated revenues not paid to CARs • Several major court battles pending • Some legal clarifications probably needed

  31. Recommendations (1) • Improve data collection, management, dissemination • Improve priority setting by mandating use of comparative risk assessment • Strengthen participation of civil society on CAR Boards • Require minimum professional criteria, financial disclosure for top CAR managers, Board members

  32. Recommendations (2) • Reconstitute CAR Boards • Hold annual public meeting of CAR, MAVDT officials • Improve national-regional coordination • Rationalize distribution of financial resources among CARs

  33. Recommendations (3) • Develop guidelines governing CAR involvement in sanitation infrastructure • Take action to resolve jurisdictional, financial disputes among CARs, AAU, municipalities • Develop national guidelines for staffing, use of contractors • Merge chronically poor performing CARs with better performers to improve overall management

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