Audit of USAID/Costa Rica"s northern zone infrastructure development project (no. 515-0191)

Audit covers the period 7/83-9/87 and is based on document review, site visits, and interviews with Mission and Governement of Costa Rica (GOCR) officials, contractors, and beneficiaries. Although the project"s community development component will likely exceed its target of 65 small infrastructure projects, the other three project components - road construction, area development studies, and land purchase/titling - have suffered significant shortfalls. The largest component was to finance 152 km of all-weather road. Due to an overly optimistic original schedule and cost estimate, the number of km built was reduced to 89. (According to the Mission, a more direct route was chosen that actually serves a greater number of residents; the auditors disagree.) Nonetheless, road construction in an area which had previously been almost inaccessible during the rainy season perhaps stands as the project"s principal accomplishment. Another major problem is that the project has contributed to environment degradation of the Zone. Planned studies which were expected to lead to the establishment or expansion of protected areas and preserves have not been undertaken because neither project staff nor USAID/CR gave them sufficient priority. Moreover, the land purchasing/titling component has actively contributed to deforestation by converting forested land to agricultural uses. The chief factors constraining the project have included limited managerial capacity in the implementing institutions and lack of interest on the part of some project staff. In addition, USAID/CR did not supervise the project coordination and area development studies component and the land purchase activity closely enough, and goals for land titling and and purchase component were established without sufficient participation by the implementing agency. The Mission"s attempts to correct the project"s problems included the replacement of two project directors in two years. It is recommended that USAID/CR ensure that the GOCR maintain the roads built under the project; deobligate or reprogram $82,000 from the project coordination and area development studies component; and ensure that the Agrarian Development Institute (IDA) has a viable plan for signing agreements with settlers specifying loan repayment terms before financing the proposed Northern Zone Consolidation project. It is further recommended that the Mission obtain a GOCR commitment to carry out the required environmental studies and approve no further land purchases until the IDA adopts procedures that protect forested lands.