Organizational Structure of the National Forestry Financing FundEstructura Organizacional del Fondo Nacional de Financiamiento Forestal

Likewise, in subsection "D" of that same article, it is considered part of the equity the:

"Resources coming from the conversion of external debt and from the Payment for Environmental Services (Pago por los Servicios Ambientales) that, through their management, private or public, national or international organizations conduct." From the income coming from the forest tax, according to Article 43 of the Forest Law 7575, subsection i), which establishes that 40% will be administered by FONAFIFO.

Additionally, according to the provisions of the Law of Tax Simplification and Efficiency No. 8114, in its Article 5, where it is established that 3.5% of the selective fuel tax will be allocated for the Payment of Environmental Services (Pago de Servicio Ambientales) administered by FONAFIFO.

Likewise, Law No. 8058 Approval of the Loan Contract signed between the International Bank for Reconstruction and Development (World Bank) and the Government of the Republic of Costa Rica, for the financing of the Payment for Environmental Services (Pago por Servicios Ambientales). The financial contribution contract of the German Government through the KFW Bank, ratified by Law No. 8355, where financial cooperation for the Programa Forestal Huetar Norte is approved for that same purpose.

Within the framework of financial sustainability for the promotion of forest activity, efforts have been made at local and international levels, where agreements for payment for environmental services (pago por servicios ambientales) to forest ecosystems have been signed. Some of them have been signed with: Energía Global S. A., Hidroeléctrica Platanar S. A., Compañía Nacional de Fuerza y Luz (CNFL), Instituto Costarricense de Electricidad, Florida Ice & Farm, among others.

Taking current legislation as a guiding framework, it can be clearly established that the main activity of the National Forest Financing Fund (in terms of target market, product, and geographic coverage) is:

"To finance projects oriented to the development activities of forest resources and the payment for environmental services (pago de servicios ambientales)." In that sense, the services of the National Forest Financing Fund, which must be considered when organizing its structure, are:

To promote the forest development of the country using mechanisms such as credits or other instruments for the promotion of forest management (manejo del bosque), intervened or not, the processes of reforestation, afforestation, forest nurseries (viveros forestales), agroforestry systems, recovery of denuded areas and technological changes in the use and industrialization of forest resources.

To capture financing for the payment of the environmental services (pago de los servicios ambientales) provided by forests, forest plantations and other activities necessary to strengthen the development of the natural resources sector.

To execute the Payment for Environmental Services (Pago por los Servicios Ambientales) provided by forests and forest plantations and that directly affect the protection and improvement of the environment, which are defined in subsection k) of Article 6 of the Forest Law No. 7575.

It is also necessary to highlight that this organization of FONAFIFO must contemplate what is established in the National Development Plan (PND) Eng. Jorge Manuel Dengo Obregón, structured in five axes: social policy, productive policy, environmental policy, institutional reform and foreign policy; which group the 16 sectors.

Taking as a reference point the thematic axes of the PND, axis 3 "Energy and Telecommunications Environmental Policy", specifically in the environment subsector, which establishes the guidelines that FONAFIFO must comply with during the current administration.

Strategic Action 4. Program to promote a comprehensive environmental agenda that allows the international positioning of Costa Rica as a leading country in nature conservation.

Objective To promote the management, conservation and sustainable use of products, goods and services derived from forests through novel mechanisms such as CDM, avoided deforestation, "Kyoto Lands".

Indicators 230,400 has. with payment of environmental services (pago de servicios ambientales).

20,000 has. of established reforestation.

Likewise, no less important to take into account in this institutional organization is what is established by Law No. 7202 of the National Archives System and Directive R-CO-64 of July 1, 2005 (La Gaceta No. 134- July 12, 2005) on the Specific Risk Valuation System.

3. Organization of FONAFIFO a) Philosophical Framework Taking into account the framework of legal background described above, the Board of Directors of FONAFIFO approved, through the sixth agreement of Session 17 of September 25, 2003, the Philosophical Framework that should guide the new organizational structure.

MISSION (MISIÓN) We identify and mobilize financial resources to contribute to the achievement of national objectives and policies related to the management, conservation and sustainable development of ecosystems, with international projection.

We have the highest available technology and highly trained collaborators to guarantee quality service to our partners and clients.

We must start from the recognition that the institutional Mission has two elements with different facets: the first is related to the coherence between institutional postulates and national and international priorities, while the second is linked to institutional capacity. Let's look at the scope of each of these elements:

We identify and mobilize financial resources to contribute to the achievement of national objectives and policies related to the management, conservation and sustainable development of ecosystems, with international projection.

It is clear that the main function of FONAFIFO is the mobilization of financial resources. This is clearly defined in Article 46 of Law No. 7575 (Forest Law) that creates it, with the objective of "financing, for the benefit of small and medium producers, through credits or other promotion mechanisms for forest management (manejo del bosque), intervened or not, the processes of afforestation, reforestation, forest nurseries (viveros forestales), agroforestry systems, recovery of denuded areas and technological changes in the use and industrialization of forest resources." Regarding the mechanisms, we see that it is not solely about credit, but various modalities that can be used for the fulfillment of institutional purposes are indicated, including the payment for the environmental services (pago por los servicios ambientales) provided by forests and forest plantations, future purchases of products from forests and forest plantations; as well as other activities.

Although it is true that the Forest Law limits in a certain way the scope of work of FONAFIFO, in general terms, to forests and forest plantations, the various modalities specifically identified overflow that limitation, and particularly broadens them when it refers to "other activities necessary to strengthen the development of the natural resources sector." The mobilization of resources to meet the country's needs in this field is extremely broad and does not necessarily depend only on internal resources, but on the contrary, the nature of the activities we are involved in are linked to political and scientific movements of great dynamism internationally; as well as to national investment and spending policies.

Thus, for example, despite the great advances that the country has achieved in environmental services (servicios ambientales), international trends indicate that many of the resources may be captured through the commercialization of environmental goods and services in the international market, particularly those related to the rights of reduction of greenhouse gas emissions, around which a formal market has already been generated.

However, there are other areas in which the markets are in the process of identification and formation; both internally and internationally, such as biodiversity and scenic beauty issues. In the case of the environmental services (servicios ambientales) of water resource protection, although it is true that we can currently say that it is a market more focused on internal conditions, there are trends that indicate that an international market could perfectly be consolidated, especially if the trends of desertification and inadequate use of this resource persist.

A different situation occurs with the credit issue, since there is not sufficient clarity about the market's capacity to absorb resources of this nature under current market conditions, so efforts are mainly oriented to identifying opportunities that allow improving access conditions to these resources under better conditions than those prevailing in the market. For which, in addition to making financial resources available, it is believed opportune that FONAFIFO develop promotion actions in the forestry sector, which can be supported by existing financial mechanisms such as credits and payment for environmental services (pago por servicios ambientales) or to develop such as purchase of futures, securitization and other novel instruments with future potential.

Logically, the needs for mobilization of financial resources depend on demand, and in this sense, the indicator that shows a growing trend on the part of landowners to offer their lands for protection, management and conservation tasks of the forest is clear. General estimates indicate that demand exceeds the current supply capacity of available resources, particularly for the payment for environmental services (pago por servicios ambientales). From the foregoing, the need to concentrate institutional efforts on the identification and mobilization of additional financial resources for this purpose is clearly evident.

As clearly deduced from Art. 47 of the Forest Law, the different sources of financing that the legislator intended to grant for the development and fulfillment of the institutional objectives and activities include a wide range of options, which undoubtedly require planned and permanent institutional action, which justifies its necessary incorporation into the different planning instruments and efforts of the institution.

Now, the possibilities of accessing additional resources for the institution's different programs are subject to the creation or generation of new financing options, both internally and externally. Internally, the current legal order and political will for the corresponding budget allocations must logically serve as a basis, but the same does not happen internationally, since available resources are limited and there are criteria for their allocation. The development of concrete actions aimed at seeking "eligibility" to access said resources is therefore fundamental.

Consequently, strategies must be developed that allow FONAFIFO to clearly identify the financing options that exist internationally and how to meet the criteria for access to international resources. Hence the need for the programs and projects that are executed to coincide with two fundamental elements: a) The trends of international cooperation in a broad sense, and b) the priorities that the country has defined in terms of management, conservation and sustainable development of its natural resources. The appropriate combination between these two criteria will be fundamental to guarantee the success of international cooperation efforts.

In summary, the fact that the strategic elements of FONAFIFO are consistent and respond to political priorities defined by the country in its area of competence, is an indispensable condition for potential access to international resources that allow strengthening the programs financed with internal resources. Hence, it is entirely correct to incorporate the international projection that the institution must have in the exercise of its work programs. The area of work that emerges from this first set of elements of the Mission can be called "substantive".

We have the highest available technology and highly trained collaborators to guarantee quality service to our partners and clients.

The second dimension of the Mission is directly related to the institutional capacities for the provision of services based on institutional objectives and goals with a view to ensuring the satisfaction of the clients or users of said services. There is an evident commitment to the quality of the service, for which it is also required to develop or update internal capacities related to human resources and the technological platform (administrative, managerial, financial) for this purpose. This would correspond to the "managerial" dimension of the institutional activity.

VISION (VISIÓN) To be the principal national financial entity that promotes sustainable development, a leader in the innovation of financing mechanisms, the improvement of productivity and competitiveness, the generation of markets for the goods and services of ecosystems, contributing to the quality of life of the inhabitants.

FONAFIFO is called to be the principal national financial entity that promotes sustainable development. Currently, there is no institution at the national level that assumes that role with complete clarity, since although it is true that both private and public banking have programs oriented to subsectors or sectors of the country's general development, it cannot be said that their main purpose is to cover the scope of sustainable development, but rather that they focus on a more general concept of economic development.

The need for a technical-financial entity to address the challenges of sustainable development, and in particular the actions derived from government policies in this field, has been felt for many years, given the particularities of both the investments and the modalities or instruments necessary to meet those needs.

It is well known that sustainable development actions in many cases require investment mechanisms that are not properly incorporated into the credit policies of ordinary commercial banking (due to terms, costs, types of funds, and guarantees); this has been attempted to be resolved, albeit partially, through various mechanisms that have been created to address the needs of particular sectors or subsectors (coffee, livestock, sugar cane, banana, etc.), in many cases as emergency measures promoted by the Government of the Republic, with greater or lesser degrees of temporality, but almost never permanent.

Recently, the need to create a Development Bank has been brought to public discussion, which also does not guarantee that sustainable development issues, particularly those that respond to national policies and objectives regarding the environment and sustainable development, will be covered in their full scope. Although this is an issue that must be followed up on due to the possible implications it may have on FONAFIFO's legal-institutional and operational framework, it cannot be interpreted as a reality either, given that the presence of a bill in the Legislative Assembly does not guarantee or necessarily imply a short-term solution to the problem described.

On the other hand, the current legal framework in force for FONAFIFO grants it a breadth that we consider appropriate for the expansion of actions into uncovered areas or sectors such as the Environmental Sector and the Forest Subsector. It may even be thought that said framework is too broad for the intended purposes, whose objective will be to finance, for the benefit of small and medium-sized producers, through credits or other promotion mechanisms for forest management, whether intervened or not, forestation processes, reforestation, forest nurseries, agroforestry systems, recovery of denuded areas, and technological changes in the harvesting and industrialization of forest resources, since its very creation law through Article 46 (Ley Forestal Nº 7575) establishes that the fund "Will also capture financing for the payment of the environmental services provided by forests, forest plantations, and other activities necessary to strengthen the development of the natural resources sector, which will be established in the regulations of this law." The interpretation of said legal norm allows inferring that the legislator wished to leave an "erga omnes" (broadly applicable) provision that would allow, in case of the existence of gaps—as is the case in which we may find ourselves—to have a mechanism that, without the need for additional legal norms, can venture into the financing of "other activities necessary" to strengthen the development of the natural resources sector. Note that it also does not limit FONAFIFO's actions to the national environmental agenda, but rather relates it more generally to the issue of natural resources.

From the foregoing, it is clear that there is sufficient legal basis for the expansion of the framework of activities, specifically in terms of financing, to other areas that can be classified as part of the natural resources sector, which is, in itself, sufficiently broad. The regulation of the forestry law is called upon to define the limits of that action, in accordance with the same articles, so it is perfectly appropriate to point out that those limits depend on the priorities one wishes to pursue; but that there is no legal restriction whatsoever to expand the framework of financing activities of FONAFIFO beyond the very definition of the forest sector.

On the other hand, FONAFIFO must orient itself towards the consolidation of its actions and maintain its position as a leader in the innovation of financing mechanisms. The innovative character of institutional management should not logically be sought in the area of financing in general, but rather in the area of financing for sustainable development.

In this sense, it is convenient to highlight the relevance of continuing to venture into the national and international financial market with efforts such as: Certificates of Environmental Services (Certificados de Servicios Ambientales), promotion of the forest sector, credit programs in combination with payments for environmental services for the promotion of reforestation, the national and international commercialization of credits for the reduction of greenhouse gas emissions, the combination of external indebtedness with donation resources and the ordinary budget to strengthen and expand the Programas de Pagos por Servicios Ambientales (PSA) programs; credit for the industrial forest sector, and the incorporation of new methodologies and criteria for the valuation and compensation of environmental services provided through the updating of amounts and their dollarization in order to reduce the risk of loss of purchasing value, as well as the strengthening of the participation of the private sector, both national and international, in the environmental services market in general.

In this regard, it must be kept in mind that, although it is not a norm of general application to FONAFIFO's activities, it is partially so due to the provisions of the Ley Forestal, which establishes the possibility of defining priority criteria in accordance with the available resources and the relative importance of the environmental services to be maximized, for the allocation of resources to the fulfillment of the different purposes. This may be a legal reference basis for the establishment of a differentiated valuation and allocation system for amounts for the respective payments of individualized environmental services, which can be another area of institutional innovation in financial matters.

The foregoing is also closely linked to the constant search for improved productivity and competitiveness of all the actions it promotes or develops, in the different sectors in which it becomes involved, in relation to other economic sectors of the country and activities developed by competing entities. The foregoing has both an external and an internal dimension, and it must therefore be the basis of a continuous improvement program in institutional operations and services.

Institutional leadership must have a particular focus on the generation of markets for ecosystem goods and services, as a fundamental mechanism for guaranteeing the sustainability of actions in the long term. The generation of markets must also be seen in relation to the goods and services that the entity promotes or produces, both those derived from its legal framework of responsibility and those arising from new initiatives. These markets are linked to ecosystems, which is in itself an extremely broad category that must be appropriately dimensioned.

The final element of FONAFIFO's Vision relates to the ultimate goal pursued, consisting of its contribution to the quality of life of the country's inhabitants; in other words, this is the interconnection of institutional work with the policy objectives of the institutional framework within which FONAFIFO is situated, namely the Ministry of Environment and Energy (Ministerio de Ambiente y Energía, MINAE), but it is also the appropriate framework for fulfilling its legal mandate to benefit primarily small and medium-sized forest producers.

VALUES AND PRINCIPLES The set of values and principles that must underpin FONAFIFO's ideals are:

Values Commitment to natural resources Responsibility Honesty Loyalty Mutual respect Quality Transparency Innovation Excellence Principles Integrity Ethics Morale Solidarity Acquisition of goods and services from sustainable and low-polluting sources. Recognition of forest ecosystems as producers of multiple goods and services CRITICAL SUCCESS FACTORS The following elements were identified as critical success factors for institutional management and will be incorporated as part of the criteria for developing strategic objectives and the Action Plan.

Sufficient, trained, and committed personnel Adequate financial resources and administrative mechanisms Management information systems supported by technology platforms Commitment, harmony, and communication among the Board of Directors, management, and political authorities Physical infrastructure and regionalization Relations with clients and partners Teamwork National and international positioning Transparency in technical and administrative management Commitment to achieving institutional objectives INSTITUTIONAL POLICIES Taking as a starting point the National Development Plan (Plan Nacional de Desarrollo), the National Forest Development Plan (Plan Nacional de Desarrollo Forestal), ministerial policies, and our strategic planning, as well as laws and decrees; the Board of Directors enacted the following specific policies for the institution.

Maintain FONAFIFO's positioning as the principal forestry promotion body, which supports the improvement of productivity and competitiveness in harmony with the environment, contributing to the social and economic well-being of the country's inhabitants, especially in the most depressed areas.

Provide the organizational platform that allows for rational, planned, and deconcentrated growth in favor of modernization and institutional strengthening for the optimal administration of resources, in accordance with the established objectives and goals, and taking into account continuous improvement of quality in customer service.

Aggressively manage the capture of resources at both the national and international levels.

Promote and foster the increase of reforestation, industrialization, and the consumption of wood from forest plantations, enabling the participation of producers in local and global markets, fostering increased competitiveness of said activity.

Invest FONAFIFO's financial resources in instruments that guarantee the highest profitability with the lowest risk, unless the donor stipulates otherwise.

Promote in projects participation under equal conditions, without distinction of social condition, gender, or ethnicity.

Support sustainable development and the improvement of the socioeconomic conditions of small and medium-sized producers through the promotion of the forest sector.

Involve public and private organizations representing the different sectors of society in general, related to the Institution's operations.

GENERAL OBJECTIVE AND FUNCTIONS FOR EACH ADMINISTRATIVE UNIT As this is an organization, the general objective and the functions of each administrative unit will be specified after the formulation of the proposed organizational chart.

Objective: This level is responsible for making decisions on the substantive functions necessary for the institution to achieve the goals expressed in the organizational objectives and imposed by law. It directs, coordinates, and controls the actions developed by the administrative and technical departments of the institution. It has the highest degree of responsibility, independence, and therefore risk in decision-making. For these reasons, it must have information inputs from all levels of the organization, in order to reduce the inherent risks in its management.

Functions of the Board of Directors (Junta Directiva) The main functions of FONAFIFO's Board of Directors are:

Ensure compliance with the functions determined by law for FONAFIFO.

Grant financing through credits or other promotion mechanisms for forest management, whether intervened or not, reforestation processes, forestation, forest nurseries, agroforestry systems, recovery of denuded areas, and technological changes in the harvesting and industrialization of forest resources.

Capture financing for the payment of the environmental services provided by forests, forest plantations, and other activities necessary to strengthen the development of the natural resources sector.

Ensure the transparency, timeliness, and legality of the acts and administrative procedures carried out by the General Directorate (Dirección General).

Be informed of and approve the work report that the General Director (Director General) must present within the period established by the Board of Directors.

Authorize the contracting carried out by the General Directorate and ensure the transparency thereof.

Approve the Annual Operational Plan (Plan Anual Operativo) as well as its financial expression translated into FONAFIFO's annual revenue and expenditure budget.

At the Executive Level, the figure of a General Directorate is retained as FONAFIFO's highest administrative authority, which reports to the Board of Directors and executes the agreements and directives emanating from the collegiate body.

Five Directorates and the Regional Offices report to the General Directorate, and it also has a staff body composed of: the Planning and Management Control Unit (Unidad de Planificación y Control de Gestión), which will carry out institutional risk control and assessment management, and is also responsible for internal control, the preparation and follow-up of Annual Operational Plan (PAO) commitments; the Information Technology Unit (Unidad de Informática); and the Archive Unit (Unidad de Archivo), which will be responsible for implementing the design of instruments, policies, and measures necessary to guarantee compliance with Law 7202 of the National Archives System Law (Ley del Sistema Nacional de Archivos). In addition, the General Directorate is responsible for monitoring the substantive areas of the organization, including:

Monitoring compliance with PSA contracts (by farm owners) Monitoring impacts on Biodiversity of the PSA program Monitoring of Carbon (CERs) in Clean Development Mechanism (CDM) projects Monitoring of hydrological services of the PSA program Monitoring of economic and social impacts of the PSA program Monitoring compliance with purchase-sale agreements for specific environmental services, such as: Non-CDM Carbon Purchase Contracts Monitoring of forest activity promotion management For some of these monitoring activities, the General Directorate must contract specialists and will be the counterpart for the studies.

Functions of Staff Personnel Functions of the Minutes Secretary (secretaria de actas) Coordinate the work required by FONAFIFO's Board of Directors. Ensure the fulfillment of the needs of each of the members of the Board of Directors. Convene sessions when so requested and distribute copies of the documentation and the agenda. Be present at Board of Directors meetings, taking note of the matters discussed in order to prepare the corresponding minutes and subsequently communicate the agreements reached. Keep the minute book of the Board of Directors meetings up to date. Ensure the correct processing in administrative order of matters presented to the Board of Directors. Attend to the Internal Credit Committee (Comité Interno de Crédito). Transcribe the discussions and agreements of the Board of Directors. Others necessary for the normal functioning of the Board of Directors.

Functions of the Service Comptroller's Office (contraloría de servicios) Evaluation of the services provided by FONAFIFO. Quality assurance of services. Reception of complaints (internal and external users). Guidance to users on the location of the different FONAFIFO offices, requirements for different procedures, as well as their rights and duties. Preventively ensure the provision of services at the Central Headquarters and the regional offices, identifying deficiencies to derive recommendations and proposals leading to the modernization of services. Discriminate among different complaints to elevate to the head those that warrant their intervention. Promote the establishment of accessible information instruments and procedures for filing complaints. Promote surveys that allow for regular and systematic consultation of the users' point of view about the services provided by the institution. Present proposals to the head for the adoption of policies, norms, and procedures in pursuit of timely and effective service delivery. Establish a system for control, follow-up, resolution, and timely response to complaints and suggestions submitted by clients. Promote modernization processes in service delivery. Promote the creation of comptroller functions in physically deconcentrated units. Establish institutional coordination mechanisms that facilitate the resolution of complaints.

The functions assigned to the General Directorate are as follows:

Formulate plans and strategies for the development of FONAFIFO's projects in accordance with the guidelines issued by the Board of Directors. Notify the agreements and resolutions issued by the Board of Directors and the different Council units to the corresponding parties. Prepare the Agenda with Instructions from the General Director and in coordination with the President of the Board of Directors. Prepare documentation for the sessions and send it to the members of the Board of Directors, as well as all activities generated from said sessions. Prepare and communicate the agreements of the Board of Directors. Follow up on the fulfillment of Council agreements. Process the certifications of agreements. Direct and coordinate all actions related to the dissemination of the Institution's activities. Promote the search, at the national and international level, for financing for the execution of FONAFIFO's projects. Formulate directives for the establishment of Inter-institutional Agreements (Convenios Interinstitucionales) of FONAFIFO. Approve the contracting of technical studies required to certify the execution of projects. Advise the Board of Directors on the initiative for bills of law, decrees, agreements, regulations, agreements (convenios), and draft the same; in addition to analyzing, drafting, correcting, expanding, and recommending on the various provisions related to FONAFIFO's work. Direct and coordinate the functions of the different units that make up FONAFIFO. Render periodic reports to the Board of Directors on the activities carried out or when so requested. Develop the human factor of FONAFIFO, through the necessary training, formation, and instruction, so that this Body can best face the constant changes in the environment and determine the optimal solutions to the different problems and matters within its competence.

Functions of Staff Personnel Planning and Management Control Unit Advises the General Directorate in the direction, coordination, and supervision of the implementation and development of a Quality Management System. Plan and implement follow-up, measurement, analysis, and improvement activities to ensure that each unit defines, plans, and implements follow-up, measurement, analysis, and improvement activities consistently throughout the organization. Plan, execute, report, record, and follow up on internal audits of the Quality Management System. Initiate, execute, and document the corrective and preventive actions taken in response to deficiencies in the quality system. Advise the General Directorate on issues related to Directive R-CO-64 of July 1st, 2005 (La Gaceta Nº 134-12 of July 2005) on the Specific Risk Assessment System (Sistema Específico de Valoración de Riesgo). Advise the General Directorate on Internal Control matters in accordance with the Internal Control Law (Ley de Control Interno) and the Law on Illicit Enrichment (Ley de Enriquecimiento Ilícito). Maintain a database that allows for follow-up or monitoring of the activities developed by its institution to fulfill its programmatic objectives (evaluation and follow-up). Generate strategic reports and information inputs that serve as a basis for the formulation of public policies guiding institutional action. (National Development Plan, Investment System, International Cooperation, and Institutional Reform). Take part in the actions developed by the Ministry of National Planning and Economic Policy (Ministerio de Planificación Nacional y Política Económica) for the coordination of institutional programs. All MIDEPLAN links. Evaluate the results in its institutions related to the fulfillment of the outlined programs and organizational objectives. (Evaluation and Follow-up). Advise and coordinate the preparation of the Institutional Operational Plans (Planes Operativos Institucionales).

Information Technology Unit Coordinate, execute, control, and supervise FONAFIFO's own computerized data processing systems and applications. Advise the General Directorate on the establishment of institutional IT policies that guide the institution at the forefront of the field. Administer the computer systems supporting the management of the different FONAFIFO units. Perform periodic backups of institutional information. Ensure the updating of programs and computer licenses that FONAFIFO must have. Advise the General Directorate to develop training programs for FONAFIFO personnel aimed at developing good use of the different computer applications, in order to achieve the optimization of equipment and systems. Advise in the development of preventive and corrective maintenance programs for the institution's computer resources. Present periodic reports to the General Directorate on the work performed. Perform any other functions related to its general objective that may be assigned.

Functional Administrative Area The Administrative Directorate (Dirección Administrativa) of FONAFIFO will be in charge of the functions that serve as support so that the units of the Functional Technical Area perform their work effectively and efficiently. The following organizational chart is being proposed for this Directorate.

This Directorate will be divided into the following functional areas: Financial Accounting Department (Departamento Financiero Contable), which will contain the Treasury Unit (Unidad de Tesorería) and the Accounting and Budgets Unit (Unidad de Contabilidad y Presupuestos); and the Administrative Department (Departamento Administrativo), which will contain the Institutional Procurement and General Services Unit (Unidad de Proveeduría y Servicios Generales), the Human Resources Unit (Unidad de Recursos Humanos), the Archive Unit (Unidad de archivos), and the Occupational Health Unit (Unidad de Salud Ocupacional).

Objective of the Administrative Directorate: direct, coordinate, control, and evaluate the financial-accounting administrative support activities, in order for the Institution to fulfill the planned objectives.

Functions of the Administrative Directorate Plan, direct, coordinate, execute, supervise, and evaluate the administrative, financial, and accounting tasks necessary for the proper functioning of FONAFIFO's programs. Issue norms and procedures for the efficient and effective fulfillment of FONAFIFO's administrative, financial, and accounting tasks. Administer FONAFIFO's accounting, financial, and budgetary control systems. Formulate and execute the Budget and Operational Plan assigned to the Council and evaluate its compliance. Administer Human Resources, as well as apply established disciplinary norms, including contracted personnel. Plan, organize, execute, control, and evaluate the training plans and programs for FONAFIFO personnel. Plan, direct, coordinate, execute, and evaluate the programming, acquisition, provisioning, and storage of goods and services required by FONAFIFO. Administer FONAFIFO's General Services. Present periodic reports to the General Directorate on the work performed. Verify that financial, material, and human resources are used as stipulated by law, with criteria of economy and public good. Perform any other functions related to its general objective that may be assigned.

Financial - Accounting Department Fulfill FONAFIFO's financial requirements and guarantee efficiency and effectiveness in the administration of resources as established in the Financial Administration and Public Budgets Law (Ley de Administración Financiera y Presupuestos Públicos) and related norms. Guarantee the timely and adequate fulfillment of all stages related to the management of FONAFIFO's financial resources, which are: programming, formulation, execution, control, and budgetary evaluation.

Treasury Unit Preparation and approval of payment orders to suppliers of goods and materials and payment of environmental services. Coordinate with banking entities the transfers of funds required for financing the institution's obligations. Management and control of institutional revenues. Programming of financial resource requirements. Requesting funds from financiers. Custody of Participation and Performance Guarantees. Others related to its substantive work.

Accounting and Budgets Unit Review of financial statements and investment reports provided by banking entities. Special project accounting when deemed pertinent or necessary. Preparation of information for public institutions (such as the Ministry of Finance (Ministerio de Hacienda), the Central Bank (Banco Central), National Accounting (Contabilidad Nacional), and National Treasury (Tesorería Nacional)). Review of accounting reports submitted by the organizations benefiting from payments for environmental services. Preparation of FONAFIFO's Financial Statements. Carry out the electronic registration of accounting operations conducted during FONAFIFO's budget execution process, in the information systems authorized by the governing body of the Financial Administration System (Sistema de Administración Financiera), according to the competence defined for this purpose in the Procedure Manuals of the Integrated Financial Administration Management System (Sistema Integrado de la Gestión de la Administración Financiera) and the legal norms in force. Propose, formulate, execute, and control the budgets and annual operational plans of FONAFIFO, and guarantee that execution is carried out taking into consideration the guidelines established in the Financial Administration and Public Budgets Law, as well as the directives issued by the Comptroller General of the Republic (Contraloría General de la Republica), the Technical Secretariat of the Budgetary Authority (Secretaría Técnica de la Autoridad Presupuestaria) of the Ministry of Finance, and the Board of Directors of FONAFIFO. Coordinate, prepare, evaluate, and follow up on institutional budgets.

Administrative Department Plan, direct, coordinate, and execute administrative processes related to procurement, asset control, general services, and human resources aspects, contributing to the fulfillment of FONAFIFO's objectives.

Institutional Procurement and General Services Unit Provide the goods, supplies, and services required by FONAFIFO for the achievement of institutional objectives, complying with established laws, regulations, and procedures, maximizing resources in an agile and timely manner. Execute the Institution's administrative contracting processes. Control institutional assets. Registration of information in the SIBINET system. Preparation and follow-up of the Acquisition Plan for Trusts (Fideicomisos). Acquisition of goods, supplies, and services to support all areas of the institution. Control of the Supplier Registry. Registration of information in the Unified Electronic Public Procurement System (Sistema Unificado Electrónico de Compras Públicas) (*) of the Ministry of Finance. (*) (Its name was modified by Article 5 of Decreto Ejecutivo N° 37943 of September 17, 2013, "Creates the Unified Electronic Public Procurement System as a technological platform for use by the Central Administration for processing administrative contracting procedures", previously indicated "CompraRed") Control the use, maintenance, and repair of assets.

Keep control of fuel and mileage.

Control of general services contracts and institutional publications.

Provide messenger service support.

Execute event logistics.

Carry out institutional travel allowance (Viáticos) procedures.

Human Resources Unit (Unidad de Recursos Humanos) Carry out the basic necessary Human Resources activities focused on the planning, organization, development, coordination, and control in order to promote the efficient performance of FONAFIFO personnel.

Carry out the institutional personnel selection process.

Prepare and follow up on the Training Plan for officials to provide them with tools for their better performance.

Coordinate and follow up on the performance evaluations of FONAFIFO's human resources.

Control vacations, sick leaves (incapacidades), personnel files (expedientes), performance evaluations, and everything related to the specialty of each of the current and former officials of FONAFIFO.

Archive Unit (Unidad de Archivo) Direct, coordinate, and supervise the implementation and development of an Institutional Archive System.

Gather, conserve, organize, and facilitate the consultation of documentation with administrative and legal value, produced and received by the institution, regardless of its medium (manuscripts, printed matter, graphics, audiovisuals, computer files, etc.) complying with articles 40 and 46 of Law 7202 (Ley 7202) and 61 to 46 of its regulation.

Advise the General Directorate on matters related to Law No. 7202 of the National Archive System (Ley Nº 7202 del Sistema Nacional de Archivos) Occupational Health Unit (Unidad de salud ocupacional) Plan, administer, and make the necessary changes in FONAFIFO's occupational health program.

• b)Report the state of safety in the Institution to the Administrative Director.
• c)In the event of accidents, must investigate and maintain a record of them, as well as take the necessary corrective actions. Must present their observations and recommendations to the director.
• d)Coordinate safety training programs.
• e)Develop and coordinate a medical care program.
• f)Conduct inspections for the purpose of discovering and correcting unsafe practices.
• g)Review and approve, from a safety standpoint, the acquisition of new equipment and structural facilities.
• h)Supervise fire prevention and first aid activities.

Carry out safety checks in relation to techniques and materials in the performance of laboratory tests.

• j)Contribute to monitoring cases of illness or work absence among laboratory personnel, in case they might be related to work.

Objective of the Environmental Services Directorate (Dirección Servicios Ambientales): Direct, coordinate, execute, control, and supervise matters related to the environmental services inherent to the substantive work of FONAFIFO.

Functions of the Environmental Services Directorate Propose to the Executive Directorate the institutional policies on environmental services that guide the institution at the forefront of the field.

Coordinate activities related to the payment for environmental services (Pago de Servicios Ambientales) in projects of forest management (manejo forestal), reforestation, forest protection, agroforestry systems, and natural regeneration, among others.

Carry out the studies of contract applications submitted by the different regional offices, under the modality of reforestation, forest protection, watershed protection, agroforestry systems, and natural regeneration, among others.

Coordinate with other directorates for the smooth running of projects with Payment for Environmental Services.

Prepare information for the calculation of metric tons of carbon that can be traded nationally and internationally, as well as for the other environmental services.

Carry out joint actions with the different actors of the system in the field of environment and conservation.

Coordinate and promote a close relationship with the National System of Conservation Areas (SINAC), the Ministry of Environment and Energy (MINAE), and other institutions interested in environmental protection.

Submit periodic reports to the General Directorate on the work carried out.

Perform any other functions related to its general objective that may be assigned to it.

Department of Payment for Environmental Services Management (Departamento de Gestión de Pago por Servicios Ambientales) Propose the institutional policies, guidelines, and criteria on environmental services that guide the institution at the forefront of the field.

Develop efficient mechanisms for the implementation of policies concerning the payment for environmental services.

Carry out the planning and monitoring activities for everything concerning the contracts and payments for environmental services for projects submitted to FONAFIFO, and coordinate with the relevant areas for the smooth running of this work.

Propose priority areas for the Payment for Environmental Services.

Evaluate the contracts submitted by the different regional offices, under the modality of management, protection, or reforestation for the Payment for Environmental Services.

Control and Monitoring Department (Departamento de Control y Monitoreo) Coordinate activities related to the control and monitoring of projects with payment for environmental services for forest protection, forest management, reforestation, and agroforestry systems.

Establish the necessary mechanisms for the monitoring required by international organizations, donors, lenders, and benefactors of the different programs, and will feed the Management and control system with the data.

Coordinate the work as a counterpart in special studies contracted by the Environmental Services Development and Commercialization Directorate in case of necessity.

Execute the agreements for the Payment for Environmental Services in projects of reforestation, forest protection, among others.

Administer FONAFIFO's Geographic Information System.

Provide service to both internal and external clients who require information from the Geographic Information System.

Locate in the Geographic Information System the projects that receive payment for environmental services, including the location of farms with overlaps.

Elaboration of maps and support materials for the other Directorates, Regional Offices of FONAFIFO, as well as for other Institutions that request them.

Objective of the Forestry Promotion Directorate (Dirección de Fomento Forestal): Plan, direct, and execute actions for the promotion of forestry activity in terms of forest management, whether intervened or not, reforestation processes, afforestation, forest nurseries, agroforestry systems, recovery of denuded areas, and technological changes in the harvesting and industrialization of forest resources.

Functions of the Forestry Promotion Directorate.

Plan, direct, and execute actions that foster the competitiveness of the Costa Rican forestry sector, including financing actions and the design of innovative financial instruments.

Plan, direct, coordinate, execute, control, and supervise matters related to forestry promotion activities generated from the substantive work of FONAFIFO.

Promote and disseminate the institution's institutional policies on forestry promotion and everything related to this field.

Propose to the Board of Directors the institutional policies on forestry promotion.

Coordinate with other related entities the planning, definition, and execution of actions relating to the promotion of forestry activity.

Submit periodic reports to the General Directorate on the work carried out.

Coordinate the preparation of periodic studies and research aimed at understanding the situation of the forestry and financial sector in the country to propose promotion actions related to the forestry sector.

Perform any other functions related to its general objective that may be assigned to it.

Credit Management Department (Departamento de Gestión Crediticia) Plan, direct, coordinate, evaluate, and follow up on the state of the credit portfolio and the debtor's payment status, as well as the compulsory collection (compulsión) actions carried out by the fiduciary entity.

Execute, promote, and disseminate the institution's institutional policies on credit and everything related to this field.

Analyze technically and financially the credit applications that by law are established for forestry financing.

Carry out all preparatory activities for the documentation so that it can be approved by the authorized bodies.

Carry out the corresponding technical follow-up and control to maintain the respective state of the credit and the debtor's payment status, as well as the compulsory collection actions carried out by the fiduciary entity.

Coordinate all preparatory activities for the documentation so that it can be approved by the General Directorate and the Board of Directors.

Coordinate the preparation of appraisals of credit guarantees.

Carry out all the steps involved in the administrative collection of credits when appropriate, in coordination with the Legal Directorate (Dirección Jurídica).

Forestry Promotion Department (Departamento de Fomento Forestal) Develop financial and technical instruments aimed at promoting forestry activity in Costa Rica.

Support the forestry sector in the introduction of new technologies, including those related to the reduction and utilization of waste, more efficient energy use, and linking the activity with initiatives related to climate change mitigation.

Support, with the development of technical information, forest management and reforestation in Costa Rica.

Prepare periodic studies and research aimed at understanding the situation of the forestry and financial sector in the country to propose promotion actions related to the forestry sector.

Coordinate with other related institutions.

Objective of the Environmental Services Development and Commercialization Directorate (Dirección Desarrollo y Comercialización de Servicios Ambientales): Plan, direct, coordinate, execute, control, and supervise matters related to activities generated for the development and commercialization of environmental services.

Functions of the Environmental Services Development and Commercialization Directorate Establish the institutional policies on development, commercialization, and resource management for the institution and everything related to this field.

Identify sources of resources, both national and international, for the financing of Fonafifo's projects.

Coordinate action plans for obtaining financial resources.

Coordinate the dissemination, promotion, and marketing of Fonafifo and its projects according to the guidelines established by the Board of Directors and the General Directorate.

Submit periodic reports to the General Directorate on the work carried out.

Carry out negotiations for Payment for Environmental Services projects, in the national and international spheres.

Manage the execution of agreements with companies, organizations, and institutions that are making use of natural resources so that they pay fees for their protection.

Coordinate strategies for the development of financial instruments aimed at increasing resources for the Payment for Environmental Services Program, among them the Environmental Services Certificates and sale through telematic means.

Perform any other functions related to its general objective that may be assigned to it.

Project Development Department (Departamento de Desarrollo de Proyectos) Carry out activities related to resource mobilization as part of the substantive work of FONAFIFO, both nationally and internationally.

Establish the institutional policies on resource mobilization and everything related to this field.

Identify possible sources of national and international resources for the financing of FONAFIFO's projects.

Carry out activities related to resource mobilization as part of the substantive work of FONAFIFO.

Preparation, negotiation, and follow-up of resource mobilization projects at a national and international level.

Design, develop, and execute promotion actions to attract financing.

Marketing Department (Departamento de Mercadeo) Coordinate the dissemination, promotion, and marketing of FONAFIFO and its projects according to the guidelines established by the Board of Directors and the General Directorate.

Market research and development of new products related to environmental services of forest ecosystems.

Development of promotion actions for the sale of environmental services.

Development of promotion and dissemination material for the commercialization of environmental services.

Legal Affairs Directorate (Dirección de Asuntos Jurídicos) Although, according to MIDEPLAN guidelines, in the document called Nomenclature Guide for the internal structure of public institutions (Guía de nomenclatura para la estructura interna de las instituciones públicas), legal advisory offices are typically staff structures; in the case of FONAFIFO, given that it executes and collaborates in processes such as: analysis and preparation of contracts and administrative contracting, participation in resource mobilization negotiations, administrative collection actions, among others, it has been considered that the structuring of the Legal Advisory Directorate (Dirección de Asesoría Jurídica) is necessary.

(Corrected by Errata Sheet (Fe de Erratas), published in La Gaceta No. 16 of January 23, 2008) Objective: Direct, coordinate, execute, control, and supervise the legal matters inherent to the substantive work of FONAFIFO.

Functions of the Legal Affairs Directorate Establish the institutional policies on legal management that guide the institution at the forefront of the field.

Provide legal advice to the Board of Directors regarding queries on legal matters related to the work of the Institution.

Issue the necessary corresponding technical-legal opinions so that the Board of Directors can take the pertinent measures.

Coordinate with the General Directorate the updating of laws, decrees, agreements, regulations, resolutions, and any others related to the work of the Board of Directors of FONAFIFO.

Supervise, in legal matters, all contracts and agreements that FONAFIFO maintains both for the payment of Environmental Services and those generated from the obtaining and management of economic resources.

Follow up on the notarial work contracted to carry out the respective encumbrances (afectaciones) of the projects.

Prepare the contracts generated from FONAFIFO's relationship with the different bodies.

Carry out the agreements with companies, organizations, and institutions that are making use of natural resources.

Process the administrative appeals filed before the institution and draft the corresponding resolutions in accordance with what is established in the laws and regulations, as well as participate in internal administrative procedures when so requested.

Propose or recommend legal modifications that improve the performance of the Institution and of the projects.

Advise on the legal processes required for the administrative contracting procedure.

Prepare draft resolutions and recommendations for administrative sanctions.

Submit periodic reports to the General Directorate on the work carried out.

Perform any other functions related to its general objective that may be assigned to it.

Contract Formalization Department (Departamento de Formalización de Contratos) In Environmental Services Carry out the legal study of the Environmental Services applications submitted by the different regional offices of FONAFIFO.

Carry out the formalization of contracts derived from the payment for environmental services.

Issue the legal resolutions requested on the specific matter.

Advise on everything concerning environmental services from a legal standpoint.

In Credit Support the Credit Management Department in the legal documents generated as a result of a credit.

Support the pertinent legal procedures for judicial collection on behalf of FONAFIFO before the respective bodies.

Advise the Credit Department on the legal instruments applicable to the different types of credits.

Legal Department (Departamento Legal) In Legal/Administrative Aspects Carry out all pertinent legal procedures generated by the Administrative Directorate (Dirección Administrativa).

Issue the legal opinion on the different contracts.

Review the tender documents (carteles de licitación) ensuring they comply with current legislation.

Keep the Financial Administrative Director informed about the modifications made in everything concerning administrative contracting.

Keep the Directorates informed on all legal guidelines on the different subjects worked on there, for example: labor, administrative, disciplinary measures, etc.

In Special Contracts Carry out the legal studies of the special contracts generated by FONAFIFO.

Prepare all types of special contracts and follow up on them as support for the different directorates.

Regional Offices As stipulated in the Forest Law (Ley Forestal) 7575, in its Article 5, it is established that the organic structure of the State Forest Administration will be regionalized, for which the country is organized into forest regions.

For this purpose, the structuring of nine regional offices is proposed, which would execute the substantive actions of FONAFIFO at the regional level.

These offices are physically located in the following places:

| Regional Office | | | --- | --- | | FONAFIFO | Physical Location | | San José Occidental | B Amón Av. 7 C 3 y 5 San José. FONAFIFO Central Offices | | San José Oriental | B Amón Av. 7 C 3 y 5 San José. FONAFIFO Central Offices | | Cañas | Cañas Sub-Regional Office of the Arenal Tempisque Conservation Area. | | Nicoya | Sub-Regional Office of the Tempisque Nicoya Conservation Area | | San Carlos | SINAC Arenal Huetar Norte Regional Directorate Office - Ciudad Quesada. | | Sarapiquí | North Sub-regional Office of the Cordillera Volcánica Central Conservation Area (La Chaves de Sarapiquí) | | Pococí | SINAC Tortuguero Conservation Area Regional Directorate Office | | | Limón | SINAC Amistad Caribe Conservation Area Regional Directorate Office | | | Palmar | Palmar Subregional Office, SINAC Osa Conservation Area Regional Directorate. | The following are the functions of said deconcentrated offices:

Receive, process, and coordinate the sending of administrative procedures and project information to the different central units that make up FONAFIFO.

Submit periodic reports to the General Directorate on the activities carried out or when so requested.

Disseminate the guidelines and directives that the General Directorate and its Directorates establish, related to FONAFIFO's projects.

Send for processing the payment applications for the benefits stipulated by law, as pertinent and after prior review of requirements established by central offices.

Monitor, in coordination with FONAFIFO's Directorates, the projects under execution.

• d)Main Changes in the Structure and in the Services With the proposed structure, it would be complying with what is established in the Forest Law, and related legislation. It must be considered that a complete structuring of the public body FONAFIFO is required, and that after the review of the legal framework and the responsibilities assigned therein, it has been considered that in order to efficiently comply with quality service to the Costa Rican citizenry, the presented structure becomes an indispensable requirement, all of this without prejudice that a Modernization Plan for MINAE is being developed.
• e)Distribution of Human Resources per Administrative Unit The following table establishes the quantity of personnel required for the proposed organizational chart, and in that way, to satisfactorily fulfill the objectives established for FONAFIFO in current legislation.

• f)Justification of the Budgetary Impact It has been estimated that for the implementation of the proposed organizational chart, a budget is required for the first semester of 2008 of ¢313,946,977, for the second semester of 2008 ¢378,218,950, for a total for the year 2008 of ¢692,165,927, which would be provided by the budgetary transfer established in the Tax Simplification and Efficiency Law No. 8114 (Ley de Simplificación y Eficiencia Tributaria Nº8114), in its Article 5, wherein it is established that 3.5% of the selective tax on fuels will be allocated for the Payment for Environmental Services administered by FONAFIFO. It will be necessary to modify the current regulation so that it authorizes adjusting the permitted amount for personnel and administrative expenses.

CURRENT ORGANIZATIONAL SITUATION It is important to mention that the National Forestry Financing Fund does not have a structure formally approved by MIDEPLAN, because since its creation through Law 7575, it has operated through the figure of Trusts (Fideicomisos), which initially were with BANCOOP and as a result of its bankruptcy were transferred to Banco Nacional de Costa Rica.

Within the trusts, the administrative structure has been very simple, made up of a hierarchical superior level (Board of Directors), an Executing Unit headed by an Executive Director, and five mega-processes: Environmental Services, Credit, Resource Management, Legal, and Administrative. These structures are made up of 52 people responsible for fulfilling the objectives established by the Law and the Regulation.

To date, said mega-processes are supported by the structure of Banco Nacional de Costa Rica. For this reason, the current structure does not include units such as treasury, accounting, credit formalization, administrative and judicial collection, investment execution, internal audit, asset administration, and other services.

This operating scheme has allowed the efficient fulfillment of the objectives established by Law, at a cost that has not exceeded 7% of the annual budgetary allocations of the Payment for Environmental Services Program, also allowing the existence of a favorable work environment, since there are, among other facilities, adequate physical installations, suitable equipment, and agile and timely administrative processes.

At the regional office level, the Trust figure has also made it possible to provide the necessary means that allow personnel adequate work performance. This results in an adequate and functional organizational climate.

However, in compliance with the provisions issued by the Comptroller General of the Republic (Contraloría General de la República), it becomes pertinent to rethink this functional scheme, which will inevitably lead us to an increase in the payroll. It has been estimated that just for payroll purposes, 22% of the budgetary allocations will be required. This is because it is necessary to incorporate into the proposed organizational chart the functions that the fiduciary currently executes. It should also be noted that the increase in the number of officials is also derived from the fact that the institution is moving from a private contracting scheme to a public scheme, where the workday decreases, vacation periods increase, among other aspects.

A consequence of the above will be that as spending increases, financial resources to execute the Environmental Services Program will decrease, which could eventually have negative consequences on the preservation of forest ecosystems, and consequently would cause a decrease in environmental services, which could weaken the national strategy for climate change.

Current structure under the Trust scheme The institutional work of FONAFIFO, specifically in the technical aspect, falls on the Areas of Environmental Services, Credit, and Resource Management. It should be noted that the Legal and Administrative Areas fulfill a logistical support function to comply in an integrated manner with the pre-established objectives and goals.

ACTIONS BY TECHNICAL AREA Below are detailed the main actions related by the technical areas.

Environmental Services.

This area is responsible for coordinating and executing the Payment for Environmental Services Program (Programa de Pago de Servicios Ambientales), which began operating in Costa Rica in 1997. Until 2002, this program was administered jointly with the National System of Conservation Areas (Sistema Nacional de Áreas de Conservación, SINAC). At the end of 2002, through Executive Decree MINAE 30762, the full responsibility for allocating, processing, and approving applications for Payment for Environmental Services (Pago por Servicios Ambientales) was transferred to FONAFIFO; for this purpose, it was necessary for FONAFIFO to open eight regional offices(2).

(2) Regional Offices of San José Oriental, San José Occidental, Guápiles, Limón, Sarapiquí, Nicoya, Palmar Norte, Cañas, and San Carlos.

However, even today, SINAC retains the responsibility for controlling and supervising the approved projects, for which FONAFIFO annually refers the information related to the Payment for Environmental Services contracts that are being formalized.

To date, this program has not been able to satisfy the supply of those interested in submitting their farms to the PSA, as shown in the following chart; between 1997 and 2005, FONAFIFO identified a land supply for the environmental services program of 1,281,980.03 ha. This figure represents nearly 25% of the national territory, which gives an idea of the program's great acceptance.

Annual Area in hectares offered by owners for each PSA modality

On the other hand, a demand exceeding 650 thousand trees per year has been identified in the Agroforestry Systems modality (Sistemas Agroforestales, SAF). Likewise, the area effectively contracted per year for the Payment for Environmental Services must be taken into consideration. According to the following chart, between 1997 and 2006, FONAFIFO had sufficient resources for the payment for environmental services program to incorporate 458,861.90 ha, involving a number of beneficiaries exceeding 6,000.

Areas in hectares contracted under PSA. 1997-2006 Source: www.fonafifo.com It is also important to remember that starting in 2003, the modality called agroforestry systems (SAF) was incorporated. This modality emerged with the purpose of supporting small farmers, with an integrated farm vision, recognizing the environmental services provided by trees planted in combination with crops and pastures.

During the course of the PSA program, some modifications have been made to the procedure manuals in order to simplify the process, to the extent permitted by legal norms and security in the use of resources.

Forest Credit The National Forestry Financing Fund (Fondo Nacional de Financiamiento Forestal, FONAFIFO) was established as one of the most important bodies in the financing of forestry activities in the country. Its contribution has been very important in the development of this sector in the country, especially in supporting the technological changes required in the transformation of the forestry industry.

However, in the last seven years (since the change in the way the forest tax is collected), this contribution has been limited, fundamentally because FONAFIFO has received very few fresh resources from the forest tax, which by legal provision are those destined for credit. The reasons for this situation have been based on the legal problems that have made collection impossible by the authorities of the National System of Conservation Areas (SINAC) of the Ministry of Environment and Energy. Despite FONAFIFO's joint efforts with the National Forestry Office and SINAC to reactivate said tax, the complexity with which it was drafted by the legislators and the lack of legal mechanisms to penalize those who do not pay make the recovery of this tax almost impossible.

This reason further obliges FONAFIFO to be very efficient in the use and recovery of the resources that will be available for credit, coming fundamentally from loan repayments.

The following chart shows the amounts placed through credit from 1999 to date.

Resource Management Based on Paragraph i) of Article 47 of the Ley Forestal 7575, published on April 16, 1996, the National Forestry Financing Fund (FONAFIFO) is instructed to explore new options offered by the market, whether national or international, to access additional financial resources that guarantee the medium-term and mainly long-term sustainability of the programs developed by the Fund, prominent among them the Payment for Environmental Services (PSA); the foregoing is supported by the existence of a supply of farms throughout the national territory that go unattended due to the lack of financial resources to include them in the Program.

Under the aforementioned context, different instruments have been developed for attracting resources from private enterprise, among them: Agreements, Environmental Services Certificates, and Carbon Environmental Services Certificates.

▪ In the case of Agreements, these are established when companies are interested in the recognition of a single Environmental Service, such as the protection of water resources (Recurso Hídrico). ▪ In the case of Environmental Services Certificates, the value is based on the opportunity cost provided by the area of the issuance. ▪ In the case of Carbon Environmental Services Certificates, the value is based on the international voluntary market interested in the reduction of Greenhouse Gases.

Strategically, the FONAFIFO Board of Directors issued the directive to strengthen the Management Area, which has allowed participation in dissemination and positioning activities at both the national and international levels, resulting in the possibility of accessing other sources of financing in the national and international spheres.

FONAFIFO's purpose is to increase, in the greatest proportion possible, the participation of the private sector through commitments that establish shared environmental responsibility at the national and international levels.

Likewise, the aim is to develop the options offered by the international markets that develop as a product of the obligations established by the entry into force of the Kyoto Protocol, based on projects under the concept of Clean Development Mechanisms (Mecanismos de Desarrollo Limpio, MDL). Therefore, taking advantage of the responsibility that industrialized countries have to reduce Greenhouse Gas (Gases de Efecto Invernadero, GEI) emissions, the proposal is the elaboration of Project Design Documents (Perfiles de Proyecto, PDD), using as a basis the potential that the country presents for the implementation of forestry projects; trying to position FONAFIFO with pioneering programs and projects that are viable to execute and with sufficient credibility before investors in the international community.

On the other hand, there are other external initiatives on which work has been done jointly, always oriented towards attracting financial resources for strengthening FONAFIFO's programs. Among these is the entry into force of the "Documento de Canon por concepto de Aprovechamiento de Agua", which contains a component of great importance for the internalization in tariffs of the environmental service of protecting water resources, which will mean an important contribution of financial resources to the Payment for Environmental Services. Similarly, work is being done with the Campaña Osa Committee, which seeks through different initiatives to attract financial resources internationally to direct them toward the conservation of biodiversity in the Osa Peninsula (Península de Osa). Through a commitment of interest, the goal is to place new hectares using the financial attraction instrument called Environmental Services Certificates (Certificados de Servicios Ambientales, CSA).

As a product of the interest expressed by the private sector, a significant number of agreements and conventions have been signed, justifying a real interest in investing in the improvement of environmental conditions, closely linked in many cases directly to the protection of basins and aquifers that guarantee providing the natural resources necessary for the development of their productive activities, mainly in the private electricity generation and agricultural sectors, among them melon and sugarcane producers.