What should IDB Invest’s Board Tell It to Do in Guatemalan Hydro Projects? (Hint: No Free Exit)

In August 2021, the IDB’s Board of Directors approved the MICI’s investigation regarding the Generadora San Mateo and Generadora San Andrés hydroelectric projects in Guatemala.For the first time, MICI’s final report on the two hydroelectric projects places the demands of project-affected communities at center stage, setting the stage for IDB Invest to responsibly divest after non-compliance with environmental and social policies.

In October 2021, the IDB’s Independent Consultation and Investigation Mechanism (MICI) published the approved final report regarding the Generadora San Mateo and Generadora San Andrés hydroelectric projects, located in the Yich K’isis micro-region (Ixquisis) territory of the Maya Chuj Indigenous Nation in Guatemala. This report was in response to a complaint submitted by communities[1] affected by both hydroelectric projects, calling on the mechanism to investigate alleged harms in both IDB Invest-financed projects. 

MICI’s final report finds non-compliance by IDB Invest with its environmental and social standards in eight areas: rights of Indigenous Peoples; lack of access to information and meaningful consultation; increased social conflict; retaliation against communities; increased  harm to women; environmental impacts; assessment of cumulative impacts; the environmental and social categorization of the projects; and the damage and destruction of sacred and ceremonial sites of Mayan Indigenous Peoples. 

The report details how the client failed to implement the Performance Standards (PSs) and IDB’s Operational Policies and how the IDB Invest failed to adequately supervise the implementation of the environmental and social standards, causing harm particularly for Indigenous Peoples (IP), women and girls. One of the most poignant findings of the MICI investigation shows that the IDB Invest failed to identify the project-affected population as Indigenous and that failure impeded a proper assessment of the impacts on this population. This led  to harm as relevant safeguards weren’t applied to protect them from adverse impacts and exclusion from project benefits. The MICI found similar non-compliance with the requirement to carry out a gender assessment to identify and address gender based risks and impacts that may disproportionately affect them. The lack of a gender impact assessment and the resulting failure to design and implement mitigation measures in consultation with women produced harm to women. These include impacts on ecosystems services, access to water, food insecurity, and gender-based violence. 

Considering the findings, the report proposed 29 recommendations that were approved by the Board of Directors in August 2019. Of those 29 recommendations, 10 propose institutional changes intended for IDB Invest to avoid noncompliance in future projects, and 18 are recommendations for corrective action aiming to bring the projects into compliance with PSs and OPs. Notably, recommendation 29, establishes that in case of exit from the Projects, IDB Invest should make the necessary provisions to ensure a responsible exit taking into account the findings, conclusions, and recommendations of the report, clarifying that the  transition plan should be done in consultation with communities.[2]

A recommendation such as number 29 in this report is unprecedented for MICI. It is the first time that a MICI investigation report includes a recommendation that goes beyond mere corrective actions and institutional reform to actually remedy the harm caused by the project and meet the demands of affected communities.  Due to the magnitude of the social and environmental harms and the heightened level of social conflict on the ground, complainants and their representatives strongly argued throughout the process that any effort at this point to bring the project into compliance was going to be insufficient to remedy harms the project caused and that no action plan will be able to comprehensively address the projects’ structural problems. Thus the community’s position had long been that a responsible exit was necessary. 

The Coordinator of the Plurinational Government of the Maya Q’anjob’al, Maya Chuj, Maya Akateko, Maya Popti Nations reaffirms that “a responsible exit is the least that the IDB Invest can do considering the magnitude of the damage generated. We hope that this does not happen again in other cases and that the Bank assumes its responsibility to protect the rights of indigenous peoples.”

For the communities, it is only through the full application of recommendation 29 that their wishes can be honored. According to the communities, a robust responsible exit plan should include the following measures: a) restore livelihoods and compensate for the harms that both projects have caused for Indigenous Peoples;[3] b) Restore the livelihoods of adversely affected women;[4] c) restore the relationship of the population with their sacred sites, guaranteeing free movement to and from sacred sites; and d) address, mitigate, and restore the environmental harms identified in the MICI report. 

The MICI report creates a new precedent for accountability in the region. It brings the IDB one step closer to responding to the needs of the affected communities. However, for the promise of this report to be met, it is critical that IDB management immediately embark on a process of collaborating with communities to develop a responsible exit plan that will remedy the harms caused by the project. 

For more information about these projects and similar hydroelectric projects supported by Multilateral Development Banks in Guatemala see the report Who pays the costs of Development? 

Photo credits: Rosa Peña, AIDA. November 2019

[1] Represented by the Interamerican Association for Environmental Defense (AIDA), Plataforma Internacional Contra la Impunidad, and the Indigenous Plurinational Government of Q'anjobál, Popti, Chuj, Akateko and Mestizo.

[2] See pages 84 and 85 of the report.

[3] Measures aimed at restoring living conditions should address the territorial, spiritual, and cultural impacts the project generated.

[4] Incorporating measures to address the increased burden of care, the negative impacts on health, and the psychosocial impacts caused by stigmatization, harassment, and threats.