The MCAH-funded segments of the CA-5 upgrade will affect about 300 families, 30 businesses, and 11 other entities such as schools or churches. Of these, only about 20 families will actually have to move their homes; others will be affected in terms of land or small businesses that border the road expansion. Many respondents argued that the MCAH and MCC are raising the bar on resettlement policies in Honduras. In the words of one respondent, they are "going to the mat" on sound principles and high standards for resettlement.
The MCAH is using World Bank guidelines on resettlement that include six steps: a socioeconomic survey of affected people; estimation of costs; negotiation with affected families, business and public facilities; payment of compensation; relocation of affected people; and monitoring of affected people for one year after resettlement to ensure equal or better quality of life. According to a number of respondents, the Government of Honduras (and the World Bank itself) has a poor track record on the fourth and fifth steps, and never does the last. The MCC and MCAH are raising the bar in two ways--insisting on appropriate and timely compensation payments and completing steps one through five before road construction begins.
In many donor-funded programs that have required resettlement (and in the World Bank-funded segment of the CA-5), the Government of Honduras (GoH) has had the responsibility of funding compensation payments to affected people. These payments tend to be low because the GOH calculates compensation using a formula that pays an amount in between the cadastral price of land and the market price. In contrast, The MCC has agreed to fund these payments and will require that MCAH pay compensation for real estate based on market prices, compensate for other losses to income (e.g. payments for lost work days due to construction and relocation) and ensure that compensation payments are timely and fair.
Unlike other donors, the MCC is insisting that road construction not begin on a segment until resettlement for that segment is complete. This obliges the MCAH to pursue a more complicated approach to implementation, starting construction in waves rather than all at once.
The MCAH’s approach to resettlement is correct and principled, but it also comes with risks. Because it is a deviation from the traditional GoH approach, it requires a Congressional decree to exempt the MCAH from standard practice. The MCAH expects the decree to be passed by June 2007, thus allowing the MCAH to start negotiating with affected people. But if there are delays, the MCAH will face tough tradeoffs between program progress and program principles. These complex dynamics make the MCAH resettlement plan one of the key things to watch over the next year. The MCAH seems determined to adhere to its high standards, but is not blind to the risk of time pressure that could jeopardize its ability to do so.
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