WATER ENVIRONMENTAL REGULATION IN COLOMBIA
REGULACIÓN AMBIENTAL DEL AGUA EN COLOMBIA
David Tobón-Orozco
1
Carlos Andrés Vasco Correa
2
1 Universidad de Antioquia (Colombia). Correo electrónico: david.tobon@udea.edu.co
2 Universidad de Antioquia (Colombia). Correo electrónico: carlos.vasco@udea.edu.co
Abstract
Water resources are vital to life and economic development, but in Colombia they are under threat by negative
externalities from diverse economic sectors. Water resource protection depends fundamentally on the quality and
eectiveness of environmental regulation and Colombia seems to be an international reference point on environmental
institutionalization given its completeness and comprehensiveness. However, Colombian water resources have declined in
quality and availability over the last years. is reality motivated the development of an exhaustive analysis of Colombian
water environmental regulation with an economic perspective. is article includes a review of the characteristics of
these regulations concluding that the deterioration of water quality is not only the result of increasing population and
economic development, but also of regulatory shortcomings due to institutional weakness, lack of enforcement, and the
inuence of interest groups.
Key Words
Environmental regulation, water, command and control, economic incentives, enforcement.
Resumen
Los recursos hídricos son vitales para la vida y el desarrollo económico, pero en Colombia están amenazados
por externalidades negativas de diversos sectores económicos. La protección de los recursos hídricos depende
fundamentalmente de la calidad y efectividad de la regulación ambiental y Colombia parece ser un punto de referencia
internacional en institucionalización ambiental, dada su exhaustividad e integralidad. Sin embargo, los recursos hídricos
colombianos han disminuido en calidad y disponibilidad en los últimos años. Esta realidad motivó el desarrollo de un
análisis exhaustivo de la regulación ambiental hídrica colombiana con perspectiva económica. Este artículo incluye una
revisión de las características de estas regulaciones, concluyendo que el deterioro de la calidad del agua no es solo el
resultado del aumento de la población y el desarrollo económico, sino también de las deciencias regulatorias debido a
la debilidad institucional, la falta de cumplimiento y la inuencia de grupos de interés.
Palabras clave
Regulación ambiental, agua, comando y control, incentivos económicos, aplicación.
UNIVERSIDAD NACIONAL DE CHIMBORAZO
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Vol. 4 (2021), No. 6, Primer Semestre (Enero - Junio), (82-96)
ISSN No. 2631-2743
DOI: https://doi.org/10.37135/kai.03.06.06
Recibido 09 de agosto de 2020; Aceptado 12 de diciembre de 2020
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Introduction
According to New Institutional Economics (NIE), institutions decide the functioning of a society, whether by formal or
informal rules, and its structures for compliance (North, 2008). Both requirements must be fullled since a formal rule
that is not carried out is simply a dead letter (Ostrom, 2009). Environmental policy is part of an institutionalization aimed
at regulating the behavior of actors in a market when their actions cause negative externalities for others, and the market
does not respond to it. In Colombia, this institutionalization has been envisioned in a decentralized, participative and
autonomous way, which would have certain merits: the aected parties have incentives to check its functioning and have
greater information on how resources can be better used; the regulations are clearer, more participative and eective,
and are not in conict with other levels of government (Ostrom, 2009). However, decision-making must be transparent
and democratic, and there must be clarity on the social cost of the agents’ economic activities (their externalities) and,
therefore, these agents must face exemplary sanctions.
Colombia has a complete environmental institutionalization, abundant natural resources, water resources, and an
increasingly vibrant market economy that is approaching the level of a medium-income country. However, among
rankings such as the Environmental Protection Index (EPI), Colombia was number 85 among 178 countries showing
an alarming trend in the deterioration of its ecosystems and human health (Yale University, 2015), as well as in the
extinction risk from climate change (Urban, 2015). It is therefore important to research the quality of these regulations,
which can be characterized as a hybrid of Command-and-Control policies (CAC) and environmental taxes.
Another characteristic of the country’s institutions is the asymmetry among them. ere are better institutional
allocations in the center and precarious allocations in the peripheries, as well as factors which are counterproductive to
their proper functioning, such as a complex geography, territories controlled by illegal armed groups, political cronyism,
and a socioeconomic context rife with income inequality (Rodríguez, 2012).
e aim of this article is to show the advances made in environmental regulation in an emerging country such as Colombia,
in which apparently there is a great regulatory development, and which is a model of institutional involvement for other
nations in the application of a hybrid between command-and-control standards and economic instruments. However,
according to the authors' criteria, this complexity does not guarantee shielding the protection of water resources since it
is dicult to enforce both for the regulator and the regulated.
Regarding the methods for regulating environmental externalities, it was believed that economic instruments (Pigouvian
taxes, pollution permits, payment for environmental services) were more proper than CAC (technical and quantity
standards) to adopt the social costs of pollution, encourage to reduce this pollution at eciency levels and adopt cleaner
technologies. ese economic instruments provide exibility to nd the best solutions for each agent's restrictions,
nding a lower tax payment or new market opportunities. However, these results are subject to the assumption of a
rst best world” in which there are no additional failures such as: uncertainty and unequal distribution of information,
limited wisdom, capital restrictions, undesirable behavior by the regulator (shortsightedness, lack of commitment and
enforcement diculties, being subject to capture or corruption), heterogeneity and market power of regulated agents,
research and innovation activities with public-good characteristics, and dierent types of reduction technologies. For
example, Bergek et al. (2014) show that CAC are preferred for their political acceptability or when there is uncertainty
about the measurement of environmental costs; hybrid instruments are recommended as an immediate solution.
Prior to this paper, several studies have explored Colombian water legislation (Blackman, 2009; Kathuria, 2006; OECD,
2014; e World Bank, 1999) and argued that the eectiveness of environmental regulation is partially successful in only
some watersheds due to problems such as: limited implementation, widespread refusal by municipal sewerage authorities,
and a confused relationship between discharge fees and emission standards (Blackman, 2009); the need to make sectoral
ministries accountable for the environmental impacts of their policies and strengthen the system of environmental
management involving dierent levels of government and the environmental information system (OECD, 2014).e
combination of environmental policy instruments including license fees, standards, charges, and subsidies reinforced by
active enforcement led to an overall improvement in environment compliance (Kathuria, 2006).
is article provides an exhaustive review of Colombian environmental water regulations main characteristics and
a conceptual answer to the question of whether a broad combination of instruments helps or impairs the quality of
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regulations. It is based on the economics of regulation and environmental economy, as well as certain recent evaluations,
highlighting institutional weakness, enforcement diculties, and the generalized inuence of interest groups.
The complex regulatory institutionalism
In Colombia, laws are dened by Congress, are the general frameworks that dene environmental policies and are
subject to compliance as per the 1991 Political Constitution. e Presidency of the Republic has the power to issue
decrees as long as they are within the guidelines of the law. Ministries, which dene sectoral policies, are part of the
executive branch together with the Presidency and other government units at the regional (department) and local levels
(municipalities, districts, and metropolitan areas). e Ministry of Environment and Sustainable Development (MADS
for its acronyms in Spanish) oversees environmental regulation and is responsible for overseeing the management of the
environment and renewable natural resources. e 33 regional autonomous corporations (CARs) are responsible for
enforcing regulations, conducting surveillance and control activities, imposing nes and making investments to expand
or maintain the supply of natural resources for the provision of ecosystem and water services to feed the aqueducts.
Regional and local governments should support the functions of CARs (Tobón & Vasco, 2019). is organizational
model, which dierentiates those who design the regulation from the regulatory compliance ocials, is motivated by the
idea of reducing the capture and control of institutions by increasing the number of agencies that fulll the regulatory
task, specializing in each activity, and generating checks and balance sheets between them, even if the cost of regulatory
work increases (Kugler & Rosenthal, 2000).
e judiciary also supports environmental policy through the Public Prosecutor's Oce, together with the executive
(Presidency, ministries and regional government units) and legislative powers (Congress). Fiscal accountability also
includes valuation of environmental management and environmental costs and advancing processes of scal responsibility
for damages to natural resources.
In Colombia more agencies were created from the 1991 Constitution to support the three traditional branches of public
power, called autonomous bodies, complementing the work of CAR. e Comptroller general, in the exercise of his
work, ensures the scal and managerial accountability of the public agencies and of agents or entities that manage public
resources, and the Attorney general and the Oce of the Ombudsman should watch and support compliance with
environmental regulation.
e Ministry of Environment was merged with the ministries of Housing and Territorial Development in 2002 for "reasons
of scal austerity and administrative eciency" (Law 790 of 2002 of the Congress), reducing its management capabilities
by entailing a reduction of resources and personnel to fulll its environmental work, which is increasingly extensive and
complex. In 2011 the functions of Environment and Housing were again separated under the name of MADS (Law 1444
of 2011 of the Congress). e MADS's management of environmental licenses, permits and formalities was then split
to create the Environmental Licensing Agency (ANLA), as an autonomous and independent body (Presidential Decree
3573 of 2011). ANLA has become one of the most controversial institutions because it launched the licensing process
through "express licenses" and by generating the social belief that obtaining environmental licenses became a simple
requirement rather than a duty, and because of the extension of its functions, as well as the control and monitoring of
rms’ compliance with the management plans (Tobón & Vasco, 2019).
Other public bodies enter the scene of Colombian environmental regulation of water resources, considering that
the political decentralization established since the 1991 constitution also led to a decentralization in environmental
management, and that regulation begins with the establishment of information systems on the territory, its environmental,
economic, and social resources, development plans, land management and water uses. e above as a prelude to the
application of technical regulations on the quantity, quality, and price of water, which are grouped into CAC policies
and economic instruments. is is what is called the National Environmental System, to which the following entities
are added: e National Planning Department (DNP), corporations and research institutes on environmental issues
(IDEAM, Humboldt Institute, SINCHI, Invemar and IIAP), Colombian National Natural Parks, autonomous bodies
and environmental and ecological police, citizen environmental authorities and non-state actors such as NGOs,
environmental movements, and ethnic-territorial organizations.
e organization of special environmental areas involves the Ministry of Justice and the Constitutional Court, addressing
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conicts between the interests of various ministries, by setting up prohibitions or limits on mining activity. In addition,
environmental crimes were brought into such category in the reform of the Penal Code (Law 1453 of 2011). Some of the
exceptional areas are managed by Colombia's National Natural Parks while others are managed by regional governments.
Transfers from the electricity sector to regional local governments are some of the most signicant sources of income,
and they are a compensation for the opportunity benets of water uses by hydroelectric plants. ese transfers were
created in environmental law (Law 99 of 1993), but their interpretation and calculation are moderated by the Energy
and Gas Regulatory Commission (CREG). In the precision of CAC policies on the use and quality of water discharged by
agribusiness, there is a complementary or substitute role to the work of MADS and CARs of the ministries of health and
agriculture, and the body in charge of technical standards and quality certications —Colombian Institute of Technical
Regulations and Certication (ICONTEC) —.
While subsidy types are dened by Congress and range from better technologies and production processes to the
promotion of private initiatives such as payments for environmental services to those who protect environmental and
aquifer reservoirs, companies must be registered in the National Science and Technology System and subsidy caps are
set up by the Ministry of Finance.
Since the 1991 constitutional reform in Colombia, both the regulations and the institutions in charge of the regulation of
the water resource have been increasingly expanded. e nancing of these organizations is limited by the growth of the
nation's overall budget; as the resources of these organizations do not depend on regulatory management, they must be
shared among all of them, and their tasks and technical complexity increase. As will be explained later, the taxes collected
by the application of all economic instruments are ridiculously small. Decisions on the strictness of the national water
environmental policy should strike a ministerial balance, as is the case with the ongoing feud between the Ministries of
Mines and Energy and the Ministry of Environment on issues such as mining exclusion zones, the Ministry of Finance's
support for obtaining scal resources in an emerging country that focuses on accelerated growth with pressing needs
such as poverty reduction, and the medium-term scal rule to be met (Wijen & Tulder, 2011). All this sets a limit to
environmental policy along with the pressure of stakeholders in the design of regulations and in the management of
the dierent regulatory and territorial bodies. e deterioration of strategic water resources has led the Constitutional
Court to mandate that these be dened as subjects of rights, ordering the various institutions to take coordinated action
to protect them (Sentence 622 de 2016).
1
Water environmental policy in Colombia
Water environmental policy can be analyzed based on the restrictions faced by rms that create impacts on water resources.
When water taken directly from natural sources is used in production, rms must allocate 1% of their investments for
recovery, preservation, oversight of the watershed and a closure plan. Although it is impossible to leave the site exactly as
it was found when the activity began, it should be le such that in a “reasonable” period, it will recover (Decree 1541 of
1978). In addition, rms must make compensation plans for one unit of new coverage for each aected unit and between
two and eight trees planted for each tree cut down following Resolution 1503 of 2010 by the Ministry of the Environment
and Sustainable Development (MADS), which presents the method to perform environmental impact studies, showing
that “in order to compensate for the impact generated, it is necessary to compensate an equivalent ecosystem.” And
while a rm must have an environmental license and there are various methodologies for that (Resolution 1478 of 2003)
(MADS, 2010), conict resolution by judicial organizations has not been possible given the lack of criterion unity, the
subjectivity of environmental evaluation, and implementation diculties.
2
Information systems and territorial organization
Another limit is the scope of regulatory institutionality as there are ways of organizing water use and providing aqueducts. ese abound in rural areas and
coexist with agribusiness, and with public utility companies where these do not have coverage. ere is a tension between the state force that seeks to institutionalize
these ways that escape compliance with regulation and the market logic of giving water a price, and which can be more eective in achieving cooperative solutions
(community water self-management). Institutionality has made positive progress in universal access to the resource by ensuring a vital minimum and for the most
vulnerable not to be cut o when they do not pay; actions that have been promoted by citizen mobilizations (Water Referendum) (Moncada et al., 2013). However,
increasingly scarce water quality and quantity increase illegal and violent appropriations of the resource that violate the constitutional right to water use by anyone
who requires it (Guerrero et al., 2016).
Also, anyone who does not comply with legislations in force incurs sanctions between 140 and 50000 legal minimum monthly wages, prison sentence of 55 to 112
months and additional administrative sanctions (article 34 of the Criminal Code – Law 1453 of 2011).
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From the regulator's perspective, the environmental policy can be classied in terms of information systems, CAC policies,
and economic instruments. e rst are the basis for both the knowledge of economic actors and the organization and
administration of a territory, as well as regulation and oversight, environmental auditing, and control. ey include the
Water Resource Information System (Decree 1323 of 2007), the models for classifying priority implementation zing
watersheds, and calculating groundwater scarcity, and actor registries (Decrees 303 of 2012 and 1324 of 2007).
3
ey
also include the limiting of riparian buer zones and protected areas or aerent conservation areas, watershed and
aquifer planning, policies and regulations on land use, control and monitoring systems on the quality of water for human
consumption, among others.
Water resource management has its origins in Decree 1381 of 1940, but it was made concrete through Decree-Law
2811 of 1974, which denes a watershed as a “special management area” and establishes that “watershed management is
understood as the planning of coordinated use of the land, water, ora, and fauna, as well as the execution of projects and
treatments.” rough Law 99 of 1993, which created the MADS as the body responsible for overseeing the management
of the environment and renewable natural resources, the National Environmental System (Sistema Nacional Ambiental)
was appointed to set guidelines for watershed management, as well as the scope of the CARs in managing the watersheds
in their authority. In 2010, the MADS issued the National Integrated Water Resources Management Plan (PNGIRH),
dening watersheds as special units in which water interacts with other renewable natural resources, ecosystems, and
anthropogenic actors (public organizations and residential, industrial, and commercial users)
.
Law 1523 of 2012, which adopts the “National Disaster Risk Management Policy” and establishes the National Disaster Risk
Management System (SNGRD), ordered that CARs must support territorial entities within their authority by integrating
them into the WMPs. Decree 1640 of 2012 implements the instruments for planning and managing watersheds, aquifers,
and others, supplying greater clarity in the CARs’ management and the dierent responsible entities and actors. In
addition, municipalities must incorporate the conditions of these WMPs into their LMPs.
Finally, Decree 3600 of 2007, which regulates Law 388 of 1997, considers restrictions on human settlements and the
possibility of urbanizing an area if it is protected as rural land (conservation and environmental protection areas,
agricultural and shing production, cultural heritage, public utility services, among others).
Table 1: Main instruments for managing renewable resources to be considered in WMPs
Source: (MADS, 2014)
In December 2015, the Law on Areas of Interest for Rural, Economic, and Social Development (ZIDRES) was approved.
e demarcation of the Santurbán Moor stands out, as it is a point of reference for the declaration of other moors. Constitutional Court decision C-035 of 2016,
which prohibits mining in moor areas, and C-367 of 2011, which modied the Mining Code (Law 685 of 2001), extended mining exclusion areas (natural parks,
forest reserves, moors, and wetlands). Territorial entities must invest 1% of their income in increasing the oering of strategic areas (Decree 1900 of 2006) and areas
of interest for aqueducts (article 11 of Law 99 of 1993), along with the investments made by the CARs, which are territorial organizations responsible for applying
environmental regulations dened by the MADS at the central level. e serious problem is that other economic resources are required to the eectiveness of control
and management.
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is law looks to develop areas that demand inated costs for productive adaptation, have low population density and
extreme poverty rates, and lack transportation and product commercialization infrastructure, such as waste-land areas.
ese projects must be registered in the MADS and follow LMPs and Basic Land Management Plans (PBOTs) with
property productive and social management criteria dened by the Agricultural Rural Planning Unit (UPRA). is has
created some controversy since, in addition to promoting land concentration, if the projects do not follow these plans,
environmental sustainability can be aected due to the fragility of some areas such as high plains and the large-scale
projects being promoted (El Espectador, 2015).
Water Use Tax (WUT)
e WUT is charged for the use of water from a natural source and is subject to a water concession (Decree 2811 of
1974). It is a management instrument for conservation and ecient water use, and a nancial source of investments to
guarantee its renewability.
e value to be paid (
Vp
) is calculated as:
Vp FopWUT v= ..
(1)
where
Fop
is a factor of opportunity cost,
v
is the volume of water; in turn, the WUT is dened as follows:
WUTFTRM
in
=
.
(2)
T
Min
is the minimum tax dened by the MADS,
F
R
is a regional factor calculated by the respective RAC.
FCkCeCsR 
(3)
where Ck is an investment factor, which should add the total costs of the LMP and the WMP not included in the
T
Min
and the largest limit of seven to twelve for groundwater and surface water, Ce is the scarcity index of the watershed, and
there is a socioeconomic factor (Cs), calculated using the Unsatised Basic Human Needs (UBN).
4
However, Decree 4742 of 2005 established that for 2006
WUTT USD
Min
= = $
0 00016.
/
m
 arguing a foundation in
Resolution  of  “based on an estimated average per cubic meter of the annual investments in which the competent
environmental authorities have participated in the last three  years for the effects of preventing or controlling
depreciation of the resource” and for  it defined the Unit Tax for water use UT Unit Tax instead of the WUT
Water Use Tax as follows:
UT UT XIPC
tt
tt

11
11.( ).
()
(4)
where
X
WUT
UT
n
t
t
t
n

1
1 2017,t
is a factor of real increase calculated as follows:
X
WUT
UT
nt
t
t
n


1
1 2017
,t
and
WUTFTtR
Min
1 .
(5)
Finally, beginning in 2017, the
UT WUTtt=
. e Fop considers whether the user creates opportunity costs for consumers
downstream (Decree 155 of 2004) and is calculated as follows:
F
VV
V
op
CV
v
for those who return the water to the same
watershed or hydrological unit.
F
op
=1
, in other cases.
e Fop
(0,1) and relates only catchment volume (Vc) and discharged volume (Vv). In addition, a consumer can stock
from multiple sources and discharge in a single source, which would express that Vv > Vc, with an extremely low Fop
and a lesser value to be paid. It is also probable that the consumer may have been granted several water catchment and
As Cs = (100-UBN)/100 it would attract consumers of water that would encourage employment in less developed areas.
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discharge permits, which imply a dierent cost, but make it possible to add up all catchment and discharge costs and
nd a single Fop. It is also possible that some discharge volumes may not be declared, or that groundwater catchment is
carried out with no later discharge in watersheds, causing changes in the value to be paid. And, unfortunately, the Fop
is unrelated to the use made of the resource or the opportunity cost of not having it. As a result, in Colombia, negligible
amounts are charged for water use, although new regulations are expected to increase its value.
7
Electricity Sector Transfers (ESTs)
Electricity Sector Transfers are a tax for water use which substitute payment of WUTs by hydroelectric power generators
with an installed capacity greater than 10000 kW (Article 45 of Law 99 of 1993 and Decree 1933 of 1994) and are equal
to 6% of gross electricity sales, the result of multiplying the amount generated by the block sales rate calculated by
the Gas and Energy Regulation Commission (CREG). ese transfers are distributed among the municipalities that
provide or hold a reservoir (3%) and the CARs in authority (3%)
5
8
OB
J
e former must be earmarked for projects
including priorities of basic sanitation and environmental improvement in their development plans; only up to 10%
should be assigned to functioning
6
8
OB
J
CARs contributions are allocated to environmental protection and defense of
the watershed and the hydroelectric projects area of inuence.
Debates on this tax suggest it should be extended to hydroelectric plants with a capacity between 500 and 9999 KW,
which should pay 5% of their gross sales; the National Parks should receive the income given that in their jurisdiction
there are also supplier watersheds; and the tax should be raised to 7%. While gross sales are an amount that discounted
from the transfer of some payments made by the generators for the price of nancing equity funds in the electrical sector
and the administration and regulation of the electrical system, there is an even greater dierence between the spot price
of electricity and the gross sales value, where the opportunity benets for water use are not transferred, especially when
the spot price increases abruptly in anticipation of situations of water scarcity.
CAC Policies
Some indices have been developed to reduce the lack of available information and gure out a way the identify of changes
in water quality in cases of discharge. e National Sanitation Foundation Water Quality Index (NSF-WQI) presented
by Brown et al. (1970) suggests that 9 of 44 substances should be included in it.
10
Despite the ease of using an index, the
non-specicity of components leads to mistaken conclusions. For example, if eight obtain scores greater than zero but
the pH obtains an extremely low value, the global index will be “good,” but a body of water with an extreme pH value
will not be able to support certain forms of aquatic life or productive and recreational activities (Wills and Irvine, 1996).
In Colombia, CAC policies include some of the NSF-WQI and Pratti Index
11
components such as BOD5, pH, temperature,
and TSS (Total Suspended Solids). e others are subject to analysis and report by the CARs. ese norms date from
Decree 1594 of 1984 and were updated by Resolution 631 of 2015 of the MADS.
12
is decree set up discharge limits
as a total percentage of pollutants (Table 2). It also distinguished between new and existing users, being laxer with the
latter, and determined xed values for cyanide, mercury and lead, among others. e percentage removal of 80% is not
arbitrary but follows a technical study that showed if an environmental tax of USD$100/ton were set up, industries would
seek to reduce their discharge by 80% (e World Bank, 1999).
In Ecuador $0.11009 is charged per m3; in Peru, USD$ 0.01573; and in Brazil, USD$ 0.17300 (2015 COP).
ermoelectric plants are charged 4% of electricity sales, distributed into 2.5% for the RAC and 1.5% for the municipality where the plant is located.
It has been found that municipalities allocate many of these resources for other purposes including fiscal consolidation public debt electrification and others;
they are diverted for councilor pay life insurance fuel and automobile fleet maintenance Recommendations include applying management indicators associated with
environmental results and basic sanitation and making municipal fiscal effort a condition for access to the ESTs Hernández et al  Decree  of  dictates that
municipalities must allocate these resources to investments that counteract and mitigate disaster situations and social economic and ecological emergency situations
caused by winters that lead to the intervention by the central government.
 The components and their weights are: O  fecal coliform  pH  day biochemical oxygen demand BOD  Nitrate NO  phosphates 
temperature  turbidity  and total suspended solids TSS 
 The Pratti Index requires dissolved oxygen as a crucial parameter in water selfpurification and it is made up of pH O BOD Chemical
Oxygen Demand (COD), TSS Ammonia NO and Chlorine
 Previously Decree  had been modified by Decree 3930 of 2010 of the Presidency and Decree 4728 of 2010 of the MESD
Kairós, Vol. (4) No. 6, pp. 82-96, Enero - Junio 2021, Universidad Nacional de Chimborazo, Riobamba-Ecuador - ISSN No. 2631-2743
http://kairos.unach.edu.ec