Final report : evaluation of the Upper Huallaga area development project 527-0244

The project went through three phases with mixed results. The first stage (1981-86) was unsuccessful due to extended violence in the region and the technical incompatibility between coca eradication and agricultural development. Areas planted with coca in the region progressed from 12,000-17,000 ha in 1981 to 60,000 ha in 1986. The second phase (1986-91) shifted emphasis from agricultural to community development services, recognizing that the poor living conditions and social exclusion were the most fertile grounds for narcotrafficking and subversive growth. This strategy proved to be highly successful in enhancing the presence of the Government of Peru (GOP) in the area and local community participation. However, the project setting during this phase was the most adverse to original project goals; profit levels for cocoa and levels of violence were at their highest, and GOP activity at its lowest during this period. By 1990, the area planted with coca was estimated at 70,000-90,000 ha in the project area. The final stage of the project (1992-93) was characterized by the lowest profit levels for coca production, the general desire of the population to change to licit activities and look for new viable economic crops, the decline of violence against project personnel, the increase in the level of GOP activity, and a resulting shift in project objectives and activities. The new focus was on strengthening local government and community participation in the alternative development process, improving physical and social infrastructure, and promoting agricultural activities to replace illicit crops. The new strategy was based on the improvement of local conditions both for private investment and for quality of life. The Democratic Community Development (DCD) phase, the focus of the present report, achieved strong local participation and involvement of the population in the decision and execution of small social infrastructure projects addressing basic needs. The road rehabilitation and maintenance component yielded the project"s key economic contribution by boosting agricultural production through reduced costs and travel time and integrating the Ponaza and Biabo areas. Improved transportation also helped deter narcotrafficking and subversion. Expectations for investment in the region are high, although farmers are uncertain whether the favorable conditions will continue. A current (as of 10/94) rise in coca prices is also pushing farmers to cultivate coca. In other areas: the agro-industry plants promoted and built by the GOP-financed Proyecto Especial Alto Huallaga (PEAH) through loans to farmer groups or private societies did not achieve their goals due to technical problems and lack of markets. Also, following the procedures of the DCD component, the Cuenca Integrated Development effort in the Ponaza Valley was limited to small social infrastructure and productive projects. It is recommended that the follow-on Counternarcotics Sustainable Development (CSD) include: the DCD component, the primary and secondary roads component, a marketing and agro-industry component, the Cuenca integrated development component, and a training component. It is also recommended that the GOP take action to keep coca prices low.