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Involuntary Resettlement

Definition and Scope

This policy covers any involuntary physical displacement of people caused by a Bank project. It applies to all Bank funded operations, in the public or private sector, whether Bank financing is directly channeled (as in investment loans) or administered by intermediaries (as in multiple works, time-slice or multisector credit programs). It excludes colonization schemes, as well as the settlement of refugees or victims of natural disasters.

Objective

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.

Principles

In order to achieve the overall objectives of this policy, operations which may require resettlement will be evaluated and prepared according to two fundamental principles.

1. Every effort will be made to avoid or minimize the need for involuntary resettlement. A thorough analysis of project alternatives must be carried out in order to identify solutions that are economically and technically feasible while eliminating or minimizing the need for involuntary resettlement. In examining the trade-offs between alternatives, it is important to have a reasonable estimate of the numbers of people likely to be affected, and an estimate of the costs of resettlement. Particular attention must be given to socio-cultural considerations, such as the cultural or religious significance of the land, the vulnerability of the affected population, or the availability of in-kind replacement for assets, especially when they have important intangible implications. 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. Compensation and rehabilitation are deemed fair and adequate when they can ensure that, within the shortest possible period of time, the resettled and host populations will: (i) achieve a 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.

Special Considerations

There are certain contextual characteristics that will affect preparation of the resettlement components of a Bank operation, as follows:

Dimension. When the number of people to be resettled is very small (a determination that depends on the particular frame of reference and the level of disruption to the community), the affected group is not vulnerable and enjoys clear title to the assets affected, or the institutional setting and the market place offer reasonable opportunities for the replacement of assets or income, and intangible factors are not significant, a resettlement plan as such may not need to be prepared. In such cases, it may be possible to address relocation prior to project advancement through mutually agreed contractual covenants.

Relocation as a Project Objective. When the primary objective of an operation is to move people from areas that are unfit for human habitation or, as in urban upgrading projects, to provide basic infrastructure or resolve problems of land tenure, the guiding principle will be to minimize the disruption of the affected population. The views of the affected population will be taken into account in the design and execution of the resettlement plan, and where feasible, voluntary procedures will be established to determine which households will be relocated. The plan will also ensure that those who are displaced will have access to equivalent or better employment opportunities and urban services.

Impoverishment Risk Analysis. When the baseline information indicates that a significant number of the persons to be resettled belong to marginal or low-income groups, special consideration will be given to the risks of impoverishment to which they may be exposed as a result of resettlement, through: (i) loss of housing, land, access to common property or other rights to real property, due to lack of clear title, economic pressure or other factors; (ii) loss of employment; (iii) loss of access to means of production; (iv) food insecurity, increased morbidity and mortality; (v) disarticulation of social networks; and (vi) loss of access to education. A detailed analysis will be carried out at the earliest opportunity, covering gender, ethnicity, income and other socio-economic factors, in order to determine the risks and design preventive measures to minimize them. In this context, cash compensation will only be offered as an option if the social and economic conditions of the affected population, the institutional setting and housing market, or the complementary services included in the resettlement plan, are such as to ensure that it can be invested in a manner that will restore the affected population´s standard of living.

Indigenous Communities. Those indigenous and other low income ethnic minority communities whose identity is based on the territory they have traditionally occupied are particularly vulnerable to the disruptive and impoverishing effects of resettlement. They often lack formal property rights to the areas on which they depend for their subsistence, and find themselves at a disadvantage in pressing their claims for compensation and rehabilitation. The Bank will, therefore, only support operations that involve the displacement of indigenous communities or other low income ethnic minority communities, if the Bank can ascertain that: (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.

Global and Sector Loans. In certain types of Bank operations, where the universe of physical infrastructure investments is not specifically identified prior to project approval, it is not possible to include the preparation of the resettlement plan(s) in the preparation of the project itself. Nevertheless, it is necessary to include in these operations, provisions designed to ensure that any resettlement eventually required is carried out in accordance with Bank policies and guidelines, as follows:

1. Global Loans. When a global operation (such as global credit, multiple works, time-slice, social investment funds, municipal development) provides funding through intermediary agencies for subprojects that are not identified ex-ante, it is not possible to prepare resettlement plans ahead of time. Likely resettlement impacts will be identified through the analysis of a sample of projects and through generic considerations regarding the types of projects expected to be financed, and will be addressed in accordance with the involuntary resettlement guidelines. When resettlement is identified as a potential impact, an analysis of the local legal and institutional framework will be carried out so that appropriate execution mechanisms can be identified and developed. The operational regulations will include procedures to identify any projects that might entail resettlement, and to apply requirements that comply with the Bank's policy and guidelines with respect to involuntary resettlement.

2. Sector Loans. Some sector loans are designed to promote growth and investment in sectors that require building infrastructure that is likely to cause involuntary resettlement (such as transportation, electricity generation, water and sewage, among others). In those cases identified above where sector loans include initiatives to strengthen institutional capacity and reform the regulatory framework, adequate provisions for sound resettlement practices will be promoted.

Temporary Resettlement. When a project requires the temporary relocation of people, the resettlement activities will be subject to considerations and criteria that are consistent with this policy while taking into account the temporary nature of the displacement. The objective continues to be to minimize disruption to the affected population. Special consideration will be given to avoiding irreversible negative impacts (such as permanent loss of employment), providing satisfactory temporary services, and, where appropriate, compensating for transitional hardships.

Criteria for Design and Appraisal of the Resettlement Plan

Once a conclusion has been reached that: (a) a project alternative that includes a resettlement component is the most desirable means to achieve project objectives; and (b) a full resettlement plan is required, the following criteria will apply:

Baseline Information. Accurate baseline information must be compiled as early as possible. It will include information on the number of people to be resettled, and on their socio-economic and cultural characteristics, including disaggregation by gender. In addition, the data will provide an important basis for the definition of eligibility criteria, and compensation and rehabilitation requirements.

Community Participation. The resettlement plan will include the results of consultations carried out in a timely and socio-culturally appropriate manner with a representative cross-section of the displaced and host communities. Consultations will take place during the design phase and will continue throughout the execution and monitoring of the plan, directly or through representative institutions and community organizations. Care will be taken to identify the most vulnerable subgroups and to ensure that their interests are adequately represented in this process.

Compensation and Rehabilitation Package. Compensation and rehabilitation options must provide a fair replacement value for assets lost, and the necessary means to restore subsistence and income, to reconstruct the social networks that support production, services and mutual assistance, and to compensate for transitional hardships (such as crop losses, moving costs, interruption or loss of employment, lost income, among others). These measures must be taken in a timely manner to ensure that transitional hardships are not unnecessarily prolonged and do not result in irreparable harm. The options that are offered should be appropriate for the people affected, and should reflect their capabilities and realistic aspirations. The compensation and rehabilitation package must take adequate account of intangible assets, especially non-monetary social and cultural assets and, particularly in the case of rural populations, of customary rights to land and natural resources. Housing and service options, when included, will be appropriate for the social and cultural context and will, at the very least, meet minimum standards of shelter and access to basic services, regardless of conditions prior to resettlement. The design of compensation packages, as well as the community consultation and decision making mechanisms included in the resettlement program, will take into account the characteristics of the resettled population as identified in the disaggregated baseline data with respect to gender, ethnicity, age, and any other factors pointing to special needs and/or vulnerability.

Legal and Institutional Framework. The resettlement plan must identify the legal and institutional context within which the compensation and rehabilitation measures have to be implemented. The first step in designing the compensation and rehabilitation package is to determine the entitlements of affected persons under applicable laws and regulations, to identify any services or social benefits to which they might have access, and to ensure that sufficient resources are available. The next step is to assess what additional measures are needed, if any, to restore the livelihoods of the affected population to the pre-resettlement standard, and to design mechanisms capable of delivering the goods or services that are needed, including effective and expeditious procedures for the resolution of disputes. This allows the compensation and rehabilitation package to work within the constraints of local laws and institutions, complementing them only as required, with project specific measures. This may lead to the identification of gaps in the local institutional and regulatory frameworks, that need not be incorporated into the resettlement plan, but which can eventually be addressed through institutional strengthening or other components if the borrower and the Bank so agree.

Environment. Resettlement plans must take environmental considerations into account in order to prevent or mitigate any impacts that result from the development of infrastructure, densification of the host area, or pressure on natural resources and ecologically sensitive areas. An environmental impact assessment, including carrying capacity and socio-economic induced impacts on the host community, will be carried out for each proposed relocation site, wherever the magnitude of the resettlement component or the nature of the affected areas so requires, and the environmental management plan will be included in the resettlement plan.

Timeliness. A preliminary resettlement plan must be prepared as part of the Environmental and Social Impact Assessment (EIA). It must undergo a process of meaningful consultation with the affected population, and must be available as part of the EIA, prior to the analysis mission. It must include sufficient information to be evaluated along with other project components. At a minimum, it must include: (i) evidence that appropriate measures have been taken to prevent new settlements in the area subject to resettlement; (ii) a tentative cut-off date for compensation eligibility; (iii) an estimate of the number of people to be resettled based on sufficiently reliable data; (iv) a definition of the various options to be made available under the compensation and rehabilitation package; (v) an estimate of the number of people that will be eligible for each option; (vi) a preliminary budget and schedule of execution; (vii) a diagnosis of the viability of the regulatory and institutional framework, identifying issues to be resolved; and (viii) evidence of consultation with the affected populations. The plan will be summarized in the Environmental and Social Impact Report (ESIR).

A final resettlement plan will be presented for approval to Bank Management, as a supplement to the ESIR, prior to distribution of the operation documents for consideration by the Board of Executive Directors. The final plan must contain: (i) the definition of the final package of compensation and rehabilitation options; (ii) the eligibility criteria for each option; (iii) a reasonably accurate estimate of the number of people that will receive each option or combination; (iv) institutional arrangements and/or an execution mechanism that provides for the implementation of applicable local laws and regulations dealing with expropriation, rights to property, and the management of resettlement activities in a timely manner, assigns clear responsibilities for the execution of all elements of the resettlement plan, and provides for proper coordination with other project components; (v) the final budget funded within the overall project budget; (vi) a calendar for execution of activities required to provide the goods and services that comprise the compensation and rehabilitation package, linked to landmarks of the overall project so that relocation sites (or other services) are made available in a timely manner; (vii) provisions for consultation and involvement of local entities (public or private) that can contribute to execution and assume responsibility for the operation and maintenance of programs and infrastructure; (viii) provisions for monitoring and evaluation, including funding, from the beginning of the execution period through the target date for achievement of full rehabilitation of the resettled communities; (ix) provision for participatory supervisory arrangements, which combined with monitoring, can be used as a warning system to identify and correct problems during execution; and (x) a mechanism for the settlement of disputes regarding land, compensation and any other aspects of the plan.

Monitoring and Evaluation. The resettlement component of an operation must be fully and specifically covered in the reports on the progress of the overall project, and included in the logical framework of the operation. The monitoring activities will focus on compliance with the resettlement plan in terms of the social and economic conditions achieved or maintained in the resettled and host communities. The plan and the loan agreement will specify the monitoring and evaluation requirements and their timing. Whenever possible, qualitative and quantitative indicators will be included as benchmarks to evaluate those conditions at critical time intervals related to the progress of overall project execution. The final evaluation will be scheduled at a target date estimated for completion of the plan, defined as the date on which it is expected that the living standards the plan was designed to provide are achieved. In the case of global loans, the operational regulations will require Bank approval of the resettlement plan before a commitment is made to finance any subproject requiring resettlement. In all cases, independent supervision and multidisciplinary evaluation will be provided to the extent required by the complexity of the respective resettlement plan.

Coordination With Other Bank Policies and Guidelines

The application of this policy will be facilitated by comprehensive operational guidelines on involuntary resettlement to be issued by Management. It will also be applied in a manner that is consistent with all relevant Bank policies and guidelines. Some references include the Policies on Project Preparation, Evaluation and Approval (OP-302), Urban Development and Housing (OP-751), Disclosure of Information (OP-102), Women in Development (OP-761), and Environment (OP-703), among others.

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Prevailing Reference Document: GN-1979-3, July 1998.
 

 

* The operational policies of the Inter-American Development Bank are intended to provide operational guidance to staff in assisting the Bank's borrowing member countries. Over the course of the Bank's more than 40 years of operations, the approach to developing operational policies has taken various forms, ranging from the preparation of detailed guidelines to broad statements of principle and intent. Many policies have not been updated since they were originally issued, and a few reflect emphases and approaches of earlier years which have been superseded by specific mandates of the Bank's Governors, the most recent being the Eighth Replenishment mandates of 1994.

In accordance with the Bank's information disclosure policy, the Bank is making all of its operational policies available to the public through the Public Information Center. Users please note that the Bank's operational policies are under a process of continuous review. This review process includes preparation of best practice papers summarizing experience at the Bank and other similar institutions, and sector strategy papers.

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