EXECUTIVE SUMMARY OF EPM S REDD+ PROJECT

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EXECUTIVE SUMMARY OF EPM S REDD+ PROJECT Made by MGM Innova Address: Cra 43ª # 1-50. San Fernando Plaza. Torre 4 Oficina 315 Phone: 57.4.3260584 Web Site: www.mgminnova.com Date: Wednesday, 03 de April de 2013

Table of Contents INTRODUCTION... 3 G3.Project Design and Goals... 5 G3.1. Main Climate, Community and Biodiversity Objectives of the Project.... 5 G3.2.Main Project Activities.... 7 G3.3. Limits and Location of Project Activities... 9

INTRODUCTION Over the years, Empresas Públicas de Medellín (EPM) has carried out a number of actions aimed at managing environmental impacts and promoting better environmental practices and community development in the regions in which it operates. These activities are currently performed under the framework of the company s Environmental Policy, approved by EPM s Board on July 7 th, 2008 (Board Minutes #1489). The policy of EPM has always been to exceed regulatory requirements with regards to protection and conservation of natural resources. Thus, for example, the company currently owns tracts of land with forest cover the size of which significantly exceeds that required under Colombian law - in which a project aimed at Reducing Emissions from Deforestation and Forest Degradation (REDD+) under the framework of EPM s Environmental Policy, which focuses strongly on climate change mitigation, is being developed. It should be noted that the border areas in which the EPM REDD+ project is located are currently threatened by land use change, with a shift towards agricultural crops and pasture, which provide local smallholders with an interesting opportunity to improve their income. An additional threat in the border areas adjacent to the Porce III Reservoir is the change in land use of forested areas to illicit crops, specifically in the Municipality of Anori, which has one of the highest rates of illicit plantations in the province of Antioquia. The areas in which the EPM REDD+ project is being developed were selected in line with an internal analysis conducted by EPM, based on the following criteria: the area should i) not be subject to any legal commitment, ii) not include plantations, iii) only include areas with clear and recent mapping, iv) be demonstrably threatened by deforestation or degradation; v) not be included in a buffer area of 100 m around the four reservoirs. It is understood that in addition to the areas included in the REDD+ project there are other wooded areas (both within the project area and elsewhere) that belong to EPM and are also under threat of deforestation and degradation, notwithstanding which they also play an important role in carbon storage and conservation of biodiversity. EPM s REDD+ project aims to ensure the protection of natural forests surrounding the Miraflores, Riogrande I Porce II and Porce III hydroelectric projects (5,648.42 hectares), through the strengthening of the following activities: monitoring and surveillance, planting of trees, promotion of reforestation for timber and firewood, silvihorticulture, sustainable agroforestry or silvopasture, efficient stove program, environmental education program and proposed biological corridor. This Project Design Document (PDD) has been developed following the rules and guidelines set forth in the Climate, Community and Biodiversity Alliance s Standard (CCBS). The CCBA is a unique partnership of leading international NGOs that was founded in 2003 and promotes forest protection and restoration and agroforestry projects through land-based carbon projects such as REDD+. The PDD is structured in five sections: General (with 5 subsections), Climate (with 3 subsections), Community (with 3 subsections), Biodiversity (3 subsections) and an optional Gold Level section, which emphasizes exceptional benefits in terms of climate change adaptation, biodiversity and community.

The document is accompanied by five annexes that include supporting documentation on the reporting process and on the structuring of the socio-environmental management plan under the framework of the methodology, the location of the permanent plots in the various project areas, EPM Group s Declaration on Climate Change and the executive summary of the inventory of flora and fauna of the natural forest cover located in the surroundings of the Riogrande and Miraflores reservoirs.

G3.PROJECT DESIGN AND GOALS G3.1. MAIN CLIMATE, COMMUNITY AND BIODIVERSITY OBJECTIVES OF THE PROJECT. Due to the geographical and climatic characteristics of each of the project areas, the woodland areas surrounding Empresas Públicas de Medellín (EPM) s reservoirs are some of the most biodiverse areas in the North and Northeastern regions of the Department of Antioquia. Over the years, however, the forest cover has diminished as a consequence of the peasants crop and cattle raising activities, as well as intensive collection of firewood and timber harvesting. The reduction of forest cover not only affects the water cycle a key issue given the type of services EPM provides but also leads to the loss of habitats for both animal and plants species. The overall aim of the project is to contribute towards emission mitigation as well as with the national climate change strategy, through prevention of degradation and deforestation of the forests included in the project, in line with EPM s corporate social responsibility policy, and, in particular, its climate change strategy. EPM s specific aims and goals with regards to the development of the REDD+ project, resulting from the logframe matrix developed on the basis of workshops carried out with the communities located at the project zone are listed below. In some cases the goals have been defined for the first five years of implementation of the project, at which point they shall be redefined for the remaining project period on the basis of success to date and other specific conditions. Climate Global climate mitigation: by avoiding GHG emissions due to forest degradation and deforestation. The Project shall lead to an estimated reduction in GHG emissions of 109,241.83 tco 2 e over a 20 year period. Contribute towards the regulation of the water cycle, through conservation of the forest cover. Community Implementation of sustainable productive systems: greater diversification of the farming systems of families in the neighborhood of EPM s forest in the REDD+ project, in order to reduce pressure on the forests and prevent further deforestation or degradation through the expansion of the farming frontier and removal of firewood. The quantitative goals that have been set in order to achieve this aim are: - Over the first five years of the Project, sustainable productive systems have been established in the municipalities of Amalfi, Guadalupe and Anorí, with at least 175 ha of gum tree and 50 ha of cocoa plantations, as follows:

Table 1. Establishment of sustainable productive systems. Gum tree (Hevea brasiliensis) Municipality 2014 2015 2016 2017 2018 Total Ha Ha Ha Ha Ha Ha Amalfi 0 25 0 25 0 50 Guadalupe 0 0 25 0 25 50 Anorí 25 0 25 0 25 75 TOTAL 25 25 50 25 50 175 Cacao (Theobroma cacao) Municipality 2014 2015 2016 2017 2018 Total Ha Ha Ha Ha Ha Ha Anorí 10 10 10 10 10 50 Provision of efficient firewood stoves: Over the first five years of the Project, at least 354 efficient firewood stoves have been installed in municipalities within the Project s area of influence, as follows: Table 2. Efficient firewood stoves to be installed in municipalities in Project zone Municipality 2.014 2015 2.016 2.017 2.018 Total Amalfi 30 30 30 30 30 150 Anorí 24 24 24 24 24 120 Carolina 12 12 0 0 0 24 Guadalupe 12 12 12 12 12 60 TOTAL 78 78 66 66 66 354 Strengthening of control and surveillance of forests: As from the second year of the Project, reports of illegal extraction of forest products in Project forests have not increased in terms of number of events and critical sites. Communities with environmental education: Over the first five years of the Project, every year at least two radio programs have been emitted on a quarterly basis, as well as radio slots focused on environmental education, on radio stations with coverage in the municipalities of Anorí, Amalfi, Guadalupe and Carolina del Príncipe. Biodiversity Reduced deforestation and degradation in EPM forests with natural cover involved in the REDD+ Project in the surroundings of the energy-generating reservoirs: As from the fourth year of the Project, reports of illegal extraction of forest products in Project forests have not increased in terms of number of events and critical sites.

Establishment of forest cover for use of wood-based products: Over the first five years of the Project, at least 110 ha of forest have been planted in order to provide families in the Project area with wood-based products, as follows: Table 3. Forest covers for wood-based products. Municipality 2014 2015 2016 2017 2018 Ha Ha Ha Ha Ha Total Ha Amalfi 14 14 14 14 14 70 Anorí 3 3 3 3 3 15 Guadalupe 3 3 3 3 3 15 Carolina del Príncipe 2 2 2 2 2 10 TOTAL 22 22 22 22 22 110 Establishment of silvihorticulture: Over the first five years of the Project, at least 354 silvihorticulture plantations have been established, each consisting of 150 trees, in the municipalities within the Project s area of influence, as follows: Table 4. Silvihorticulture plantations to be established Municipality 2014 2015 2016 2017 2018 Total Amalfi 30 30 30 30 30 150 Anorí 24 24 24 24 24 120 Carolina 12 12 0 0 0 24 Guadalupe 12 12 12 12 12 60 Total 78 78 66 66 66 354 G3.2.MAIN PROJECT ACTIVITIES. With the aim of protecting and increasing the forest cover included in the REDD+ project, in addition to strengthening the currently ongoing socio-environmental management activities, EPM shall focus its efforts on those regions found to have greater risk of deforestation and forest degradation. The activities to be developed by EPM were identified by the communities located in the project zone in the logframe matrix developed as from the results of the workshops on deforestation and forest degradation. It is important to note that these activities shall be carried out on the basis of EPM s experience in the areas of influence of its energy-generating projects. Table 5 below includes a description of the activities to be carried out under the framework of EPM s REDD+ Project.

Table 5. Main socio-environmental management activities of the Project. Objective Implementation of sustainable productive systems: Establishment of forest cover for use of woodbased products Establishment of silvihorticulture Activities Selecting beneficiaries Production or acquisition of plant material Major and minor transportation of plant material, supplies and tools Production or acquisition of plant material Site preparation (plating, hole digging) Planting and replanting Maintenance (cleaning) Fertilization Pruning Control of pests and diseases Fence maintenance Training and technical assistance EPM s follow up Selecting beneficiaries Production or acquisition of plant material Major and minor transportation of plant material, supplies and tools Production or acquisition of plant material Site preparation (plating, hole digging) Planting and replanting Maintenance (cleaning) Fertilization Pruning Control of pests and diseases Fence maintenance Training and technical assistance EPM s follow up Selecting beneficiaries Production or acquisition of plant material Major and minor transportation of plant material, supplies and tools Production or acquisition of plant material Site preparation (plating, hole digging) Planting and replanting Maintenance (cleaning) Fertilization Pruning Control of pests and diseases Fence maintenance Training and technical assistance EPM s follow up

Objective Provision of efficient firewood stoves Activities Selecting beneficiaries Purchase of materials Transport of materials Stove construction Training in management of efficient stoves Strengthening of control and surveillance of forests Communities with environmental education Critical points assessment Increased frequency of surveillance activities at critical points Keeping a systematic record of illegal extraction events of forestry products. Content design Design of radio programs Emission of radio programs The project s activities mentioned will generate the following benefits to the communities surrounding the project areas: Economic benefits: The project will improve the household s income levels of the communities through the implementation of activities aimed at more efficient use of natural resources such as those mentioned in Table 5. There will be an economic incentive represented in the delivery of an efficient stove for cooking, technical assistance, and some inputs to improve productivity agroforestry. Positive changes in land use practices: The project expects to help the reduction of illegal logging, the firewood collection and the destructive extraction of natural forests, to improve the protection of endangered species habitats, and improve the soil and water management to achieve the sustainable productive systems. Although it is expected that the promotion of the reforestation and the establishment of silvihorticulture mitigate and reduce the problems associated with the need of forest timber for the communities and the land use changes, the mentioned activities will also serve as barriers to reduce pressure on natural forests in the project area, and will contribute with the establishment of the biological corridor to restore the connectivity between different patches of forest and thus contribute to the conservation of wildlife species in the project zone.

G3.3. LIMITS AND LOCATION OF PROJECT ACTIVITIES The project area of EPM s REDD+ Project is located on different water basins, in the surroundings of EPM Group s Miraflores, Riogrande I, Porce II and Porce III hydroelectric projects. The Project area does not consist of a single block of land, but rather of multiple discontinuous patches of forest, interrupted by mixtures of grassland, crops, infrastructure, bodies of water (reservoirs) in different water basins and municipalities. Each of these basins has specific and unique features, as a result of which the Project involves a wide variety of environmental and socioeconomic conditions (see Figure 1, Table 7). Project areas by reservoir and by municipality are shown in Table 6.

Figure 1. Location of the project area of EPM s REDD+ Project

Table 6. Project areas of EPM s REDD+ Project by reservoir and by municipality Reservoir Municipality Forest Total Area cover area (ha) Miraflores Carolina 1977.26 1,977.26 Porce II Amalfi 384.56 1,883.68 Gómez Plata 904.74 Guadalupe 0.071 Yolombó 594.31 Porce III Amalfi 473.76 1,558.46 Anorí 903.99 Gómez Plata 18.09 Riogrande I Guadalupe 162.62 Donmatías 220.95 229.03 Santa Rosa de Osos 8.076 TOTAL 5,648.42 Table 7. UTM Points for the project areas Reservoir Point X - Coordinate Y - Coordinate 1 894,945 1,268,100 Porce III 2 875,492 1,248,650 3 877,942 1,248,010 4 891,852 1,269,810 5 864,733 1,239,440 Miraflores 6 855,802 1,240,090 7 859,090 1,243,390 8 863,403 1,235,760 Riogrande I 9 857,359 1,214,280 10 854,158 1,214,830

Reservoir Point X - Coordinate Y - Coordinate 11 857,849 1,215,620 12 856,801 1,215,920 13 878,514 1,250,830 Porce II 14 891,250 1,239,900 15 882,632 1,235,450 16 883,495 1,235,150 According to CCB 2008, the project zone is defined as the project area and the land within the boundaries of the adjacent communities potentially affected by the project. The project zone of EPM s REDD+ Project was defined according to the sub-districts of the various municipalities (Carolina del Príncipe, Amalfi, Gómez Plata, Yolombó, Anorí, Donmatías and Santa Rosa de Osos) (see Table 8), which are located in the North and Northeastern regions of the Department of Antioquia. Furthermore, the project area is defined as the land within the carbon project boundary and under the control of the Project proponent; based on this definition, the project area of EPM s REDD+ project is the forest cover found in the areas of influence of the reservoirs owned by EPM. Table 7 shows the UTM grid points corresponding to the project areas. Table 8. Sub-districts with a direct influence on EPM s REDD+ Project Reservoir Municipality Sub-districts Porce III Anorí La Casita, Pajonal, Monte Frío, el Limón, El Roble, Hondoná, Roble Arriba, Medias Faldas El Roble, El Retiro, El Zafiro, Villa Fátima. Porce II y III Guadalupe Plan de Pérez, Morrón, Guadual, Puente Acacias, Malabrigo, El Machete, El Mango, La Casita, Montañita, San Julián, Patio Bonito, Guanteros. Porce II y III Amalfi La Manguita, La Cristalina, Mangos Calentura, La Guayana, María Teresa El Guaico, El Encanto, Guayabito, El Retiro. Miraflores Carolina del Príncipe La Camelia, La Herradura, Tenche, Claritas, La Vega, La Granja. It not expected offsite impacts to be mitigated, therefore it is not considered leakage areas, but EPM will keep monitoring the wildlife around the project areas of Porce II and Porce III (at the request of their environmental licenses) to analyze the dynamics of the area which may affect other forests different to the REDD project s forests and to take corrective measures.