Expanding Rural Infrastructure for Territorial Development in Chile

Challenge

Under the previously existing institutional set-ups and social and economic evaluation methodologies, it was not possible to adapt project designs to the realities of dispersed populations and small settlements.  The challenge was to put in place an effective system to attend to the unmet demand of dispersed rural communities through a multi-sector and multi-layered institutional setting, focusing on the sustainability and the productive and social impacts of existing infrastructure investments as identified through a highly participatory approach.

Solution

The project provided technical assistance to develop the concept of territorial development framework plans (planes marco de desarrollo territorial), including the development of the underlying methodology in which the plans are funded. When developing the concept, special emphasis was given to low cost, self-financing approaches to rural infrastructure interventions closely linked to income generating uses, as a way to maximize the social impact of the investments.

The project shows the increased impact of multi-sectoral investments that provide a full package of demand-driven infrastructure services, linked to productive activities, which bring greater efficiency, complementarity, and sustainability of services through cross-sectoral service bundling based on a territorial development approach.  The project’s approach also offers important insights into the process of decentralization in Chile, as it reflects the importance of the territorial planning processes, participatory approaches, and social capital dimensions in order to tailor the pace and scope of the decentralization process to particular needs.

Results

The main results achieved through this project were:

• The Ministry of Social Development formulated and adopted the new methodology for the economic evaluation of rural infrastructure subprojects to be included in territorial development framework plans.
• The project supported the mobilization of funds, other than the loan proceeds, for the financing of 27 productive activities under the program. Initiatives included studies, training and irrigation.
• The project supported the preparation of 45 territorial development framework plans (which also identified productive activities) covering 185 territories, plus the financing of 250 infrastructure subprojects: 158 road subprojects, 65 water subprojects, 7 sewage subprojects, 12 energy subprojects, 6 information and communication technology (ICT) subprojects and 2 port subprojects.
• The project supported effective mechanisms to guarantee the sustainability of the investments.

In more general terms, the project contributed to important institutional changes, including:

• Strengthening the coordination of different Government agencies for the delivery of rural infrastructure services;
• Acting as a catalyst for the mobilization and coordinated actions of different Government programs to support the development of small enterprises;
• Enhancing the capabilities of local and community actors for planning and implementing productive activities, while maximizing the use of available institutional resources;
• Actively and effectively supporting the improvement of the legal and regulatory framework of the rural water and sanitation sector;
• Revision of the classification of rural roads; and
• Introduction of new policies in the area of telecommunications for reaching dispersed rural areas with coverage and relevant content of new communication technologies.

Bank Group Contribution

The Bank contributed US$50.3 million in financing towards a total project cost of US$90.3 million. The national and local Governments allocated an additional US$75 million to the program for infrastructure and productive initiatives.

Partners

The Bank has primarily worked with the Sub-Secretariat of Regional Development as its project partner, and the regional management units. The Ministry of Planning and Coordination was also an important part of the project’s success, particularly in the development of the integrated evaluation methodology. Other important partners were the Ministry of Public Works and Transport, the Sub-Secretariat of Telecommunications, and the National Commission for Indigenous Populations.

Moving Forward

The program has become a well-established mechanism for the delivery of sustainable infrastructure to rural areas.  Demand in new regions is exploding. The program began as a pilot covering five regions, adding three new regions during implementation. This year, four new regions have been incorporated, and the program has budgetary allocations that are even higher than when the loan was under implementation. It is expected to reach full national coverage by the end of 2015.

Beneficiaries

The project benefited inhabitants of the participating rural communities. An estimated 320,000 people benefited from a better and more productive use of the infrastructure and the empowerment of their members through increased participation in the decision making process. The project delivered significant benefits to poor, indigenous communities lacking basic infrastructure and services. Specific subprojects contributed to improving the quality of life in these communities by removing bottlenecks to productive activities and making indigenous territories more habitable. The project was also instrumental in the issuance of legislation that removed obstacles to public investments within indigenous peoples’ territories.