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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Vietnam Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 99.4 MILLION (US$150 MILLION EQUIVALENT) TO THE SOCIALIST REPUBLIC OF VIETNAM FOR THE MANAGING NATURAL HAZARDS PROJECT June 26, 2012 Report No: VN This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective November 15, 2011) Currency Unit = Vietnamese Dong (VND) VND21,500 = US$1 US$ = SDR1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS APL AusAID CBDRM CCCC CCFSC CFSC CG CPMO CPO CPRGS DARD DMC DMSFCD DMU DONRE DPI DRM DSF DSIR DSR DSU EA ECOP EIA EMC EMDP EMP EMPF EPC ESMF FS FMR GDHMS GIS GOV GDP IDRM Adaptable Program Loan Australian Agency for International Development Community-based Disaster Risk Management Commune CBDRM Coordination Committee Central Committee for Flood and Storm Control Committee for Flood and Storm Control (at Province, District and Commune levels) Consultative Group Central Project Management Office Central Projects Office (of MARD) Comprehensive Poverty Reduction and Growth Strategy Provincial Department of Agriculture and Rural Development (of MARD) Disaster Management Center Dyke Management and Storm and Flood Control Department Disaster Management Unit Department of Natural Resources and Environment Department of Planning and Investment Disaster Risk Management Dam Safety Framework Dam Safety Inspection Report Dam Safety Report Dam Safety Unit Environmental Assessment Environmental Codes of Practice Environmental Impact Assessment Emergency Management Center Ethnic Minority Development Plan Environmental Management Plan Ethnic Minority Policy Framework Environmental Protection Commitment Environmental and Social Management Framework Feasibility Study Financial Monitoring Report General Department of Hydro-Meteorological Services Geographic Information System Government of Vietnam Gross Domestic Product Integrated Disaster Risk Management i

3 IRR Lao PDR MARD MOF MOLISA MONRE MOT MPI NCSR NDMP NDRMP OM PCFSC PER-IFA PCU PIM PIP PMR PMU PPC PPMU PPR PPSC PSC RAP RPF SA SBD SBV SCP SIL SOE SRHMC STD UNDP UXO VDIC Internal Rate of Return Lao Peoples Democratic Republic Ministry of Agriculture and Rural Development Ministry of Finance Ministry of Labor, Invalids and Social Affairs Ministry of Natural Resources and Environment Ministry of Transport Ministry of Planning and Investment National Committee for Search and Rescue Natural Disaster Mitigation Partnership Natural Disaster Risk Management Project Operations Manual Provincial Committee for Flood and Storm Control Public Expenditure Review and Integrated Fiduciary Assessment Project Coordination Unit Project Implementation Manual Project Implementation Plan Project Management Report Project Management Unit Provincial People s Committee Provincial Project Management Unit Project Preparation Report Provincial Project Steering Committee Project Steering Committee Resettlement Action Plan Resettlement Policy Framework Special Account State Budget Department State Bank of Vietnam Safer Commune Plan Specific Investment Loan Statement of Expenditure Southern Regional Hydro-Meteorological Center State Treasury Department United Nations Development Program Unexploded Ordnances Vietnam Development Information Center Regional Vice President: Country Director: Sector Director: Sector Managers: Task Team Leaders: Pamela Cox Victoria Kwakwa John A. Roome Jennifer J. Sara Cuong Hung Pham and Henrike Brecht ii

4 Table of Contents I. STRATEGIC CONTEXT... 1 A. Country and Sub-Regional Context... 1 B. Sectoral and Institutional Context... 1 C. Higher Level Objectives to which the Project contributes... 3 II. PROJECT DEVELOPMENT OBJECTIVES AND INDICATORS... 3 A. PDO and Beneficiaries... 3 B. PDO-Level Results Indicators... 4 III. PROJECT DESCRIPTION... 4 A. Project Components... 4 B. Project Financing... 6 C. Lessons Learned and Reflected in the Project Design... 6 IV. IMPLEMENTATION... 7 A. Institutional and Implementation Arrangements... 7 B. Results Monitoring and Evaluation... 8 C. Sustainability... 8 V. KEY RISKS AND MITIGATION MEASURES... 8 VI. APPRAISAL SUMMARY... 9 A. Economic and Financial Analysis... 9 B. Technical C. Financial Management D. Procurement E. Social (including safeguards) F. Environment (including safeguards) Annex 1: Results Framework and Monitoring Annex 2: Detailed Project Description Annex 3: Implementation Arrangements Annex 4: Operational Risk Assessment Framework iii

5 PAD DATA SHEET Vietnam Vietnam - Managing Natural Hazards Project (P118783) PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASVS Basic Information Date: 19-June-2012 Sectors: General water, sanitation and flood protection sector (100%) Country Director: Victoria Kwakwa Themes: Natural disaster management (70%), Water Resource Management Sector Manager/Director: Jennifer J. Sara/John A. Roome (20%), Participation and Civic Engagement (10%) Project ID: P EA Category: B - Partial Assessment Lending Instrument: Team Leader(s): Specific Investment Loan Cuong Hung Pham, Henrike Brecht Does the project include any CDD component? Yes Joint IFC: No Borrower: Socialist Republic of Vietnam Responsible Agency: Central Project Office - Ministry of Agriculture and Development Contact: Mr. Cao Tuan Minh Title: Director Telephone No.: minhct@cpo.vn Project Implementation Period: Start Date: 31-Jan-2013 End Date: 30-Sep-2018 Expected Effectiveness Date: 31 January 2013 Expected Closing Date: 31 March 2019 [ ] Loan [ ] Grant [ ] Other [ X ] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost (US$M): Total Bank Financing (US$M): Project Financing Data(US$M) Terms of the Credit The credit would be on the new IDA 16 terms for blended countries, with a maturity of 25 years, including a five year grace period. Financing Source Amount(US$M) BORROWER/RECIPIENT International Development Association (IDA) Total Expected Disbursements (in USD Million) Fiscal Year iv

6 Annual Cumulative Project Development Objective(s) To increase the resilience of the people and economic assets to natural hazards in selected river basins of the project provinces within the overall framework of Vietnam s National Disaster Prevention, Response and Mitigation Strategy Towards Components Component Name Cost (USD Millions) Strengthening Disaster Risk Management Institutions, Information Systems and Planning 5.50 Strengthening Weather Forecasting and Early Warning Systems Community-Based Disaster Risk Management Priority Disaster Risk Mitigation Investments Project Management, Monitoring and Evaluation 8.00 Compliance Policy Does the project depart from the CPS in content or in other significant respects? Yes [ ] No [ X ] Does the project require any exceptions from Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ ] Is approval for any policy exception sought from the Board? Yes [ ] No [ X ] Explanation: Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 Forests OP/BP 4.36 Pest Management OP 4.09 X X X Physical Cultural Resources OP/BP 4.11 Indigenous Peoples OP/BP 4.10 Involuntary Resettlement OP/BP 4.12 Safety of Dams OP/BP 4.37 Projects on International Waterways OP/BP 7.50 X X X X X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name: Recurrent Due Date Frequency ARTICLE IV No By effectiveness N/A Description of Covenant: Approval of the Project Resettlement Policy Framework by the Prime Minister. v

7 Name: Recurrent Due Date Frequency Schedule 2. Section I. A.1 Yes December 31, 2012 On-going Description of Covenant: Establishing and maintaining a Project Steering Committee within MARD for general technical and policy guidance. Name: Recurrent Due Date Frequency Schedule 2. Section I. A.2 Yes By negotiations On-going Description of Covenant: Establishing and maintaining a Central Project Management Office within MARD provided with sufficient resources and staffed with competent personnel in adequate numbers. Name: Recurrent Due Date Frequency Schedule 2. Section I. A.4 Yes By negotiations On-going Description of Covenant: Establishing and maintaining a Project Management Office within MONRE provided with sufficient resources and staffed with competent personnel in adequate numbers. Name: Recurrent Due Date Frequency Schedule 2. Section I. A.6 Yes By negotiations On-going Description of Covenant: Maintaining a Provincial Project Management Unit in each Project Province provided with sufficient resources and staffed with competent personnel in adequate numbers. Name: Recurrent Due Date Frequency Schedule 2. Section I. A.8 Yes By Negotiations On-going Description of Covenant: MARD adopting an Operational Manual setting forth guidelines and procedures for the implementation of the Project; amendments to the OM require prior written agreement of IDA. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.1 Yes Prior to sub-project commencement On-going Description of Covenant: Preparing and implementing Resettlement Action Plans by Project Provinces in accordance with the Project Resettlement Policy Framework. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.2 Yes Prior to sub-project commencement On-going Description of Covenant: Preparing and implementing Environmental Management Plans or Environmental Codes of Practice by Project Provinces in accordance with the Project Environmental and Social Management Framework. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.3 Yes Prior to sub-project commencement On-going Description of Covenant: Preparing and implementing Ethnic Minorities Development Plans by Project Provinces in accordance with the Project Ethnic Minorities Policy Framework. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.4 Yes Prior to sub-project commencement On-going Description of Covenant: Preparing and implementing a Dredging Material Disposal Plan by each Project Province which involves the dredging of sand from harbors, in accordance with the Project Environmental and Social Management Framework. Name: Recurrent Due Date Frequency vi

8 . Schedule 2. Section I. C.5 Yes March 31, 2013 On-going Description of Covenant: Establishing and maintaining an independent Panel of Experts for the review of and provision of advice relating to dam safety, provided with sufficient resources and staffed with competent personnel in adequate numbers. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.6 Yes Prior to commencement of rehabilitation work On-going Description of Covenant: Preparing and implementing Dam Safety Plans by Project Provinces in accordance with the Project Dam Safety Framework. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.7 Yes December 31, 2012 and prior to commencement of rehabilitation work On-going Description of Covenant: Preparing and implementing Dam Safety Plans by Quang Nam Province in accordance with the Project Dam Safety Framework. Name: Recurrent Due Date Frequency Schedule 2. Section I. C.8 Yes N/A N/A Description of Covenant: No amendments to the Safeguard Instruments without prior written agreement of IDA; maintaining policies and procedures to monitor and evaluate the implementation of the Safeguard Instruments. Bank Staff Team Composition Name Title Specialization Unit Cuong Hung Pham Senior Water Resources Specialist Water Resource Management and Disaster Risk Management, Task Team Leader Henrike Brecht Steven M. Jaffee Disaster Risk Management Specialist Lead Rural Development Coordinator Disaster Risk Management, Co- Task Team Leader Natural Resource Management and Rural Development EASVS EASIN EASVS Toru Konishi Senior Economist Water Resource Management EASVS Vladimir V. Tsirkunov Senior Environmental Engineer Hydromet Modernization GFDRR Thang Toan Le Procurement Specialist Procurement EAPPR Zoe Elena Trohanis Senior Infrastructure Specialist Urban Disaster Management EASIN Pilar Larreamendy Senior Social Development Coordinator Social Safeguards EASVS Hisham A. Abdo Kahin Senior Counsel Legal LEGES Mai Thi Phuong Tran Financial Management Specialist Financial Management EAPFM Miguel-Santiago Oliveira Senior Finance Officer Disbursements CTRLN Tuan Anh Le Social Development Specialist Social Safeguards EASVS Dzung Huy Nguyen Disaster Risk Management Specialist Disaster Risk Management EASVS Son Van Nguyen Environmental Specialist Environmental Safeguards EASVS Jan Timmerman Dam Safety Specialist Dam Safety Consultant from the Netherlands Ilham Abla Senior Water Resources Specialist Water Resources Management EASIS vii

9 . Demilour Reyes Ignacio Program Assistant Administrative/Operational Support Khanh Linh Thi Le Program Assistant Administrative/Operational Support Ngozi Blessing Obi Malife Program Assistant Administrative/Operational Support Non Bank Staff Name Title Office Phone City Nick Chapman Economist, FAO Consultant EASIN EACVF EASER Selvaraju Ramasamy Takayuri Hagiwara FAO Hydro-Meteorology and Disaster Management Specialist FAO Community Based Disaster Management Specialist Locations Country Vietnam First Administrative Division Thanh Hoa Nghe An Ha Tinh Danang Quang Nam Quang Ngai Quang Binh Quang Tri Binh Dinh Ninh Thuan Location Planned Actual Comments viii

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11 I. STRATEGIC CONTEXT A. Country and Sub-Regional Context 1. Vietnam is one of the countries most exposed to natural hazards, given its geography, topography, economic structure, and population distribution. These risks present a challenge for Vietnam s quest for continued growth. While floods and typhoons are the dominant hazards, the country is also susceptible to droughts, landslides and seawater intrusion. Vietnam is highly exposed during the monsoon rainy season to a combination of river plain flooding and flash floods, and associated land-slides Almost 60 percent of Vietnam s total land area and over 70 percent of its population are at risk to the above referenced natural hazards. Over the past two decades, extreme weather events have caused more than 13,000 deaths and property damage in excess of US$6.4 billion. The average annual cost of such events has been equivalent to 1 percent of GDP, with a peak loss of 2.9 percent of GDP in The potential for losses from natural hazards are particularly high in Vietnam s Central Region, which is the targeted area of the proposed project. Some 65 percent of all recorded storms and an even higher proportion of storm-related damage and loss of life occur in this region. In 2010, of the 420,000 houses in Vietnam that were damaged or flooded, 350,000 were in the Central Region. 2 The Central Region is marked by higher than average poverty rates and the recurrent extreme weather events pose a constraint for economic growth. Because of its high vulnerability, the Central Region is regarded as a high priority for the preparation of natural hazard management plans and for investments in risk-mitigating measures. 4. Vietnam has developed a relatively efficient system for responding to natural hazards. It operates from commune to national levels and is capable of mobilizing major human, financial, and emergency relief resources in the aftermath of catastrophic events. The Government of Vietnam (GoV) has been able to carry out emergency relief and early recovery operations, making use of central and local contingency funds. In recent years, more attention has been given to disaster risk preparedness and mitigation, strategies which the proposed project will support. B. Sectoral and Institutional Context 5. Policy. In November 2007, the GoV approved a National Strategy for Natural Disaster Prevention, Response and Mitigation towards This was followed in September 2009 by the approval of the strategy s Implementation Plan. These documents emphasized a shift from ex-post disaster relief and response to ex-ante risk reduction through preparedness and resilience. 1 Vietnam is experiencing the impacts of climate change. It is premature to determine whether climate change will result in more frequent, more severe, and/or a different geographical pattern of extreme weather events affecting the country. Nevertheless, recent experience has illustrated that the country s financial risk from extreme weather efforts is increasing, along with the growing density of physical infrastructure and commercial activities in vulnerable areas. 2 Typhoon Xangsane (October 2006) resulted in over $200 million in losses for agriculture and aquaculture in parts of the Central Region. 1

12 The strategy highlights the importance of both structural (i.e., river dykes, rescue roads, flood diversion structures) and non-structural measures (i.e., disaster risk forecasting and early warning, contingency planning), as well as making social and economic infrastructure more resilient to extreme weather and floods. In 2009, based on the successful outcome of pilots undertaken in the Bank-funded Natural Disaster Risk Management Project (NDRMP), the GoV established a national program to support community-based disaster risk mitigation (CBDRM). 6. Institutional Framework. The Ministry of Agriculture and Rural Development (MARD) is the main ministry charged with disaster risk management (DRM) in Vietnam. Within MARD, the Department of Dyke Management and Flood Control (DDMFC), within the Directorate of Water Resources, plays the lead role. A national disaster risk management agency, the Central Committee for Flood and Storm Control (CCFSC), is chaired by the Minister of MARD and includes representatives from the Office of Government, the Ministry of Defense, and other agencies. The CCFSC formulates all flood and typhoon related policies and mitigation measures. The National Hydro-Meteorological Services (NHMS), within the Ministry of Natural Resources and Environment (MONRE), carries out meteorological, hydrological and environmental observations, provides weather and hydrological forecasts and delivers other specialized services in support of disaster prevention and preparedness. At the national level, the NHMS has several operational centers for hydromet forecasting. There are nine regional hydro-meteorological centers linked to provincial hydro-met stations. 7. Forecasting and Early Warning Systems. A timely and reliable flood and drought warning and forecasting system is one of the basic conditions for improving the protection against disasters. Hydro-met networks provide vital information for advanced warnings that save lives and reduce damage to property. Studies have shown that in addition to the incalculable benefit to human well-being, every dollar invested in meteorological and hydrological services produces an economic return many times greater. In Vietnam, efforts have been made to develop a comprehensive hydro-meteorological system through the implementation of monitoring equipment. However, the initiatives remain fragmented which threatens to undermine the longterm sustainability of past investments. This project seeks to improve the integration and usage of existing infrastructure through the installation of automated systems at the regional level and through the improvement of communication lines between hyrdomet services and users. For example, computer systems will be installed that combine information from various sources within the river basin with the aim of delivering location-specific forecasts in a very short time period. 8. Administrative versus Basin Boundaries. Vietnam has developed administrative zones that do not coincide with river basin boundaries. Yet, water and watershed management require an integrated basin-wide approach. As storm and flood waters may pass freely from zone to zone, their management and mitigation need to be addressed in a coordinated manner. Uncoordinated activities not only affect the sustainability of water use and the health of natural resources within tributary basins, but may actually exacerbate the risks posed by storms and floods, particularly in downstream locations. This project promotes the move towards a river basin approach in Vietnam by creating basin risk maps and mainstreaming DRM into all river basin plans in the targeted provinces. River basin planning will also be promoted in this project through the development of hydromet databases at basin levels. 2

13 9. Coordination between MARD and MONRE. This project seeks to improve the collaboration between MONRE and MARD, particularly at the provincial level, in the following areas: (a) developing and sharing hydro-met databases, which will form the basis for river basin planning, identifying vulnerable areas, and planning engineering standards for infrastructure; and (b) timely communication at all levels (from the center to communities) in the event of extreme weather to improve forecasting and early warnings; and (c) development of sample joint DRM and Climate Change Adaptation (CCA) plans at provincial level. 3 C. Higher Level Objectives to which the Project contributes 10. The project will enhance the resilience of the Central Region to the impacts of natural hazards. It will assist the GoV in implementing its national DRM strategy, with special attention to enhancing disaster mitigation and preparedness within highly vulnerable river basins, scaling up existing initiatives on community-based DRM, supporting priority structural investments, and better integrating the national, provincial, and local early warning systems. Lessons from these efforts of integrated disaster risk prevention and planning could then be applied elsewhere. The project will complement parallel technical assistance from the Global Facility for Disaster Reduction and Recovery (GFDRR) in strengthening the capacity of DRM staff in government line ministries, and in supporting national awareness raising efforts. 11. This operation is consistent with the World Bank Vietnam Country Partnership Strategy (CPS) for 2012 to 2016, and will make a major contribution to the realization of results under Outcome 2.3 on enhanced preparedness for natural hazards and climate change, under the Sustainability pillar of the CPS. The project also contributes to the realization of the CPS s cross-cutting strategic objectives related to (a) governance, through strengthening of commune level stakeholders in planning and managing disaster preparedness measures, (b) gender equity, and (c) resilience, especially as the project will also contribute to the priorities set out in the Climate-Resilient Development in Vietnam: Strategic Directions for the World Bank (January 2011). II. PROJECT DEVELOPMENT OBJECTIVES AND INDICATORS A. PDO and Beneficiaries 12. The project development objective is to increase the resilience of people and economic assets to natural hazards in selected river basins of the project provinces within the overall framework of Vietnam s National Disaster Prevention, Response and Mitigation Strategy Towards Efforts are also now being made to better link Vietnam s programs for disaster risk management with those supporting climate change adaptation. The National Target Program to Respond to Climate Change (NTP-RCC), covering the period , seeks to identify and assess the intensity of climate change and develop scenarios of responses; to promote scientific and technological activities to respond to climate change; and to integrate climate change issues into development strategies, programs, and plans in all sectors via a unified platform. 3

14 13. The anticipated beneficiaries from the proposed project are an estimated 2.0 million people, half of whom are female. The beneficiaries live in about 122 rural communes and vulnerable urban areas of ten provinces in the Central region. B. PDO-Level Results Indicators 14. The expected specific outcomes of the project will be measured by the following indicators (with target values specified in parentheses). Details are provided in Annex 1. Hectares of land protected by enhanced flood protection measures (50,000 hectares) Number of people protected by enhanced priority infrastructure built by the project (550,000) Number of communes covered by storm and flood early warning services and with increased awareness of emergency management (100) Number of provincial river basin plans updated or prepared integrating DRM and approved (10) III. PROJECT DESCRIPTION A. Project Components 15. The proposed project has been designed based on the experience of the NDRMP, and supports the government s initiatives to increase effectiveness of DRM. The majority of investments will be in four major river basins (Ca, Ma, Vu Gia-Thu Bon, and Tra Khuc-Tra Bong), spanning the six provinces of Thanh Hoa, Nghe An, Ha Tinh, Da Nang, Quang Nam and Quang Ngai. The rest will be implemented in the other four provinces with smaller river basins. 16. The project consists of the following five components (see Annex 2 for details): Component 1: Strengthening Disaster Risk Management ( DRM ) Institutions, Information Systems and Planning (a) Strengthening DRM Institutions. Strengthening capacity of DRM institutions, including: (i) facilitation of inter-ministerial coordination, policy dialogue and knowledge-sharing mechanisms; (ii) establishment of provincial disaster management centers in Project Provinces where such centers are needed; and (iii) provision of technical assistance for government agencies at different levels. (b) Improvement of DRM Information Systems. Improving the capacity, harmonization, coordination and sharing of DRM databases and information, including: (i) harmonizing and integrating existing DRM databases and information systems; (ii) development of an inventory of existing medium and small scale reservoirs in Project Provinces, their safety standards, safety guidelines, and operational procedures; (iii) development of software for the management of reservoirs to be used at national and Provincial levels; and (iv) provision of technical assistance on the use of the databases and software and the implementation of safety guidelines. 4

15 (c) Support for the Integration of DRM in River Basin Planning: integrating DRM in river basin planning, including: (i) provision of support for data collection and assessment of exposure, risks and vulnerability at the basin scale; (ii) provision of support for identification of vulnerable areas, and possible structural and non-structural measures to mitigate natural hazard risks; and (iii) provision of capacity building on the use of hydrological models and geographic information systems to DRM staff at provincial level. Component 2: Strengthening Weather Forecasting and Early Warning Systems (a) Technical Assistance for Development and Implementation of an Integrated National Hydromet Forecasting and Early Warning Systems and End-to-End Applications: provision of technical assistance for the design and implementation of a nation-wide integrated system including (i) the preparation of hydromet implementation plan at the national level and for central region; (ii) the design of a nation-wide communication system; and (iii) strengthening end-to-end communication system. through provision of support for the training on interpretation of early warning products for relevant staff and communities, improvement of products and services and communication between hydromet services and users, application of forecast interpretation tools, and development of user-tailored products in areas such as agriculture, tourism, energy, transport and water resource management. (b) Strengthening Hydromet Observation and Monitoring Networks, Computer Hardware and Information and Communication Technology Infrastructure: provision of support for the establishment of multi-hazard early warning systems, including the provision of support for: (i) installation of automated hydromet observing networks and communication systems; and (ii) relevant capacity building activities. (c) Monitoring and Evaluation. Establishment and implementation of a monitoring and evaluation system for Component 2 of the Project. Component 3: Community-Based Disaster Risk Management ( CBDRM ) (a) Commune Institutional Strengthening: strengthening the capacity of participating commune-level stakeholders and agencies in planning and engaging in a broad range of risk reduction measures, including provision of support for: (i) improving commune-level flood and storm risks management procedures; (ii) capacity building for commune-based institution leaders; (iii) the development of inter-communal support platforms; (iv) development of community resilient planning; and (v) enhancement of private sectorcommune partnerships. (b) CBDRM Investments. Provision of support for risk reduction measures, including for: (i) non-structural measures such as evacuation drills, public awareness raising, communication and early warning systems, relevant equipment, and participatory workshops; and (ii) structural measures, including small-scale multi-purpose shelters and evacuation roads, and the preparation of plans and designs for the management, operation and maintenance of each structural unit. 5

16 Component 4: Priority Disaster Risk Mitigation Investments The component will support identification, prioritization, and implementation of major DRM investments (sub-projects) within the four selected river basins to mitigate risks posed by natural hazards. These structural measures respond to agreed prioritization criteria. Six project provinces covering four major river basins will each receive US$8-12 million for eligible investments, while the other four provinces will receive US$4-6 million each. Investments will be implemented in two phases and include rehabilitation of selected dams and reservoirs to improve their safety, rescue roads and bridges, river bank protection, and safe harbors at river mouths for fishing boats. Component 5: Project Management, Monitoring and Evaluation (a) Project Management. Provision of support for the Project Steering Committee ( PSC ), the Central Project Management Office ( CPMO ), the Project Management Office ( PMO ), the Provincial Project Management Units ( PPMUs ) and other implementing agencies for effective Project management, implementation, and supervision. (b) Monitoring and Evaluation. Provision of support for the establishment and implementation of an effective monitoring and evaluation system. B. Project Financing 17. Lending Instrument and Project Cost. Information on costs and financing sources is provided in the Table 1 below. Project Components Table 1. Project Costs by Component and Source of Financing GOV (US$M) IDA Financing (US$M) % IDA Financing 1. Strengthening DRM Institutions, Information Systems and Planning Strengthening Weather Forecasting and Early Warning Systems Community-Based Disaster Risk Management Priority Disaster Risk Mitigation Investments Project Management Total Project Financing Note: includes contingencies. C. Lessons Learned and Reflected in the Project Design 18. The proposed project incorporates lessons learned from NDRMP, the on-going GFDRR program, and from other similar projects financed by the Bank. 6

17 Engagement of local communities. Local stakeholders have experience and knowledge of the hazards and are able to identify critical areas and possible measures. Engagement of the local stakeholders will be scaled up under the proposed project: infrastructure investments under Component 4 are based on the priorities identified by the respective provinces; communes within the target provinces will be responsible for identifying and supervising structural and non-structural measures under the close guidance of the Disaster Management Center. Integrating structural and non-structural measures through geographic clustering of investments. The benefits of greater synergy among components are an important lesson from NDRMP, e.g., in Hai Lang, Quang Tri Province, with an integrated flood management sub-project, physical investments were linked with community DRM activities and with hydro-met data and early warning services. The proposed project will apply the clustering approach throughout the project and take it further to support initial efforts to apply integrated disaster risk planning on a river basin level. Decentralized implementation. It is the GOV s policy to give greater responsibility to the provinces for DRM. NDRMP provided significant capacity building to provincial agencies and communes in all aspects of disaster mitigation and response. The proposed project will further build provincial institutions to plan and implement integrated approaches to suit their specific DRM needs. Stronger M&E arrangements. M&E activities of NDRMP were affected by a weak conceptual framework and poor indicator specification. Under the proposed project, much greater attention has been placed on recruiting suitable M&E personnel in the CPO, identification of achievable indicators that can be readily monitored within the project timeframe, and in contracting competent M&E consultancy support. Project implementation arrangements. Under NDRMP, the CPMO under MARD was unable to procure hydromet equipment in a satisfactory manner due to complications in the procurement of these highly technical equipments. Under this project MONRE will be responsible for such procurement given their relevant technical capacity and hydromet experience. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 19. The project will be implemented by two ministries: MARD will be in charge of implementing Components 1, 3, 4 and 5; and MONRE will be in charge of implementing Component 2. A Project Steering Committee will be established to provide policy guidance and technical support as needed. 20. Project management units will be established at the ministry level to be in charge of dayto-day project implementation. The project management unit at MARD will be its existing Central Project Management Office (CPMO), the entity currently in charge of implementing the NDRMP. MONRE will establish a project management office to implement Component 2. Hydromet centers at regional and provincial levels will participate in the identification of investment and capacity needs, and in planning and supervision. 7

18 21. Project implementation, other than for Component 2, will be delegated to the provinces acting through their existing project management units (PMUs). Participating communes will be in charge of coordinating, planning and supervising activities under Component 3. They will be assisted by community facilitators hired by the project. B. Results Monitoring and Evaluation 22. The CPMO and the PMO will be responsible for monitoring and evaluation of implementation progress and the project components for which they are responsible (see Annex 1 Project Results and Monitoring Framework) They will recruit dedicated staff to monitor project progress and update the monitoring indicators. Semi-annual reports will be sent to the Bank summarizing progress, financial and procurement information, as well as updated indicators. An independent baseline survey, a mid-term review timed to assess results from Phase I sub-project investments, and an independent final evaluation will be conducted covering both Phase I and II investments. Prior to the mid-term review, the CPMO and the PMO will send the Bank a report containing a summary of progress, updated results indicators (as stated in Annex 1), updated project estimated costs, and plans for completion. In addition to the semiannual reports, the CPMO and the PMO will prepare relevant environmental and social safeguards implementation reports related to their areas of responsibility. C. Sustainability 23. Sustainability of the investments will depend mainly on additional government budget support for operation and maintenance under MARD and MONRE. For Component 3, the small-scale structures will be maintained by the commune-level government drawing on local funding and voluntary labor from the local population benefiting from the DRM measures. Commune committees will be trained in the maintenance of DRM structures. For Component 2, MONRE has committed to allocate sufficient budget resources to maintain the hydromet equipment to be purchased and installed by the project. The O&M budget will be part of the hydromet business plan to be reviewed and approved annually. Infrastructure rehabilitated or upgraded under Component 4 will continue to be maintained by the respective entities through their annual maintenance budget. Provincial Irrigation Management Companies (IMCs) will be in charge of operating and maintaining the dams rehabilitated under the project. Local communities are in charge of maintaining roads, bridges and river dykes running through their jurisdiction by mobilizing labor from their annual contribution to maintain public infrastructure within their administrative boundaries. The project will strengthen the capacity of the national DMC and the provincial DMCs, where established. V. KEY RISKS AND MITIGATION MEASURES Stakeholder Risk Low Project Risk: Implementing Agency Risk Design Moderate - Capacity Moderate - Social and Environmental Moderate - Governance Moderate - Delivery, Monitoring and Sustainability Moderate - Overall Implementation Risk Moderate 8

19 24. The overall risk is rated as moderate (see ORAF in Annex 4). MARD and MONRE, as well as the provinces, are familiar with Bank procedures and the required technical aspects. Mitigation measures have been incorporated during project implementation: (a) training on procurement and safeguards; (b) engagement of independent technical auditors for construction quality; (c) engagement of independent monitoring consultants for safeguard measures; and (d) preparation and implementation of a project specific Governance and Transparency Action Plan (GTAP). VI. APPRAISAL SUMMARY A. Economic and Financial Analysis 25. Economic benefits of the project were estimated for the six sub-projects of Component 4 to be financed under Phase I. To the extent possible, economic benefits of Components 2 and 3 were also considered. The main economic benefits are reduced likelihood of flood events and associated damages through infrastructure investment, capacity building (e.g., evacuation drills), and early warning. Net incomes per crop/activity have been estimated to be higher by percent in the with project scenario due to reduced production losses. Household models showed that the project will increase family incomes by 8 to 25 percent. In addition, the models also confirm significant project benefits for poor households. 26. The overall economic rate of return (ERR) was estimated at 15.8 percent, and the net present value (NPV) at VND648 billion (US$32.4 million) at a discount rate of 10 percent. The ERR for the individual sub-projects vary between 11.8 and 24.6 percent, with all showing positive NPVs. 27. Sensitivity analyses were carried out for the following scenarios: (a) reduction of losses (which is the project benefit) by 20 percent; (b) increase in investment cost by 20 percent; and (c) delayed implementation by two years. In all cases the ERRs of the proposed investments were found to be robust. To overcome these scenarios. The results of the economic analysis are summarized in the table below. Summary of the economic analysis EIRR (%) Base case 15.8 Decrease project benefit by 20 percent 11.5 Increase project cost by 20 percent 12.3 Delay in Construction by 2 years Fiscal Impact. The project will have positive fiscal impacts through: (a) reducing operation and maintenance cost of flood prevention infrastructure through rehabilitation works; and (b) reduction of flood-related expenditures, including relief, response, and post disaster reconstruction. Rehabilitation works will likely reduce the cost from 10 percent of the asset value 9

20 to 6 percent. Infrastructure investments under Component 4 could, therefore, yield annual savings of about US$40 million. 29. Investment in hydromet data collection network will increase the operation and maintenance cost by US$1.5 million a year. The GoV has already appropriated this amount in the budget. Government will also explore the possibility of selling weather forecast information to the private sector. Investments under Component 3 will not substantially increase incremental operating and maintenance costs, as the work will be carried out by the communities free of charge. B. Technical 30. Component 1: Strengthening DRM Institutions, Information Systems, and Planning. Component design benefitted from a team of international experts who will continue to review ToRs and outputs and guide implementation. The proposed activities conform to stateof-the art DRM practice. 31. Component 2: Strengthening Weather Forecasting and Early Warning Systems. Government and development partners have invested heavily in hydromet equipment, often in a fragmented way, without close coordination amongst various stakeholders and without considering the technical and human capacity of the National Hydro-meteorological services of Vietnam. The project will provide technical assistance to design and implement a synchronized, connected and state-of-the-art integrated national system. A comprehensive review of the entire hydro-met sector will be carried out to identify bottlenecks and provide suggestions for improvement, with emphasis given to the integration and management of the national hydro-met system. A number of automatic weather stations, rain gauges and water level measurement stations will be built to enable automatic data recording and transfer to hydro-meteorological forecasting centers at the provincial, regional and central levels. International consultants will be hired to conceptualize and oversee the integration of the national hydro-met system. 32. Component 3: Community-Based Disaster Risk Management. Community-based DRM activities vary from structural to non-structural measures. Many community-scale infrastructure investments are provided by higher administrative authorities, some of which do not correspond to the needs of communes or deteriorate quickly. The project will create an opportunity for local villagers to identify and select priority infrastructure that will help them mitigate the risks to natural hazards. Communities will be accountable for the selection of investment activities, involved in the supervision of their implementation, and will be responsible for O&M. These practices have been successfully piloted under NDRMP and successful local experiences are available for scaling up. 33. Component 4: Priority Disaster Risk Mitigation Investments. Structural disaster risk management measures will be carried out under the component, including the construction of dykes and embankments, rescue roads and bridges, and repair works to dams. Vietnamese dam safety standards were revised in 2002 and will be adopted in the project. In addition, a new set of standards for dam safety, introduced under the ongoing Bank-financed Vietnam Water Resources Assistance Project (VWRAP) will be applied where there is discrepancy between Vietnamese 10

21 and VWRAP standards. An independent dam safety panel will be established to provide an independent review of proposed safety measures and to ensure the use of international standards. 34. Rehabilitation of dykes will follow Vietnamese technical standards introduced by MARD and additional measures will be taken to improve the safety of dykes, e.g., termite treatment, slope protection and under-dyke gated sluices for flexible drainage operations. Technical engineering design for the dyke system will also consider the complexity of extreme flood events and include free-board structure to handle overtop flow and erosion protection on the dyke to avoid dyke break during a high-velocity flow regime. A routine inspection and maintenance plan will be prepared and budgeted to ensure the integrity of the dyke system throughout the year. The works can be satisfactory implemented by readily available local contractors, with appropriate supervision. 35. Evacuation roads and bridges will be designed and constructed to current Vietnamese standards, with some improvements designed to integrate DRM and hazard-proofing factors. Engineering designs for roads and bridges used as evacuation infrastructure will follow international good practice in integrating DRM and hazard-proofing factors to make the roads more disaster-resilient. C. Financial Management 36. An assessment of the financial management (FM) arrangements for the proposed project identified the main FM risks to be: (a) sub-optimal use of project funds; (b) ineligible expenditure; and (c) late submission of periodic reports and withdrawal applications. The main actions taken to address these risks are: (a) appointment of qualified personnel for financial management of the Project at all implementing units; (b) training for FM staff of the implementing units on Bank FM and disbursement requirements and procedures; (c) completion of the Project Implementation Plan, including the Operational Manual with an FM section; and (d) assignment of internal auditors to the Project by MARD and MORE. More details are given in Annex 3. D. Procurement 37. Procurement financed by the Bank under the proposed project will be carried out in accordance with the World Bank s Guidelines: Procurement of Goods, Works, and Non- Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers dated January 2011; Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers dated January 2011; as well as the relevant provisions under the Financing Agreement. 38. A Procurement Capacity and Risk Assessment (PCRA) of the central PMO under MARD, the PMO under MONRE, and the PPMUs at the provincial level was carried out in April The main procurement risks for the proposed project are: (a) delays in procurement actions, particularly for procurement of specialized hydromet equipment; and (b) possible noncompliance with Bank procedures (including governance and corruption issues) at the provincial level. Procurement delays could occur at all stages of the procurement cycle, including planning, preparation of procurement documents, bid evaluation, approval of bid evaluation reports, award 11

22 recommendation, and contract management. Possible governance and corruption issues may emerge at different levels due to the decentralized procurement under the project. 39. In order to mitigate the risks, the following measures will be implemented: (a) intensive capacity building and procurement training for procurement staff at the CPMO, the PMO and the PPMUs, particularly during the first two years of project implementation; (b) appointment of qualified government officials as procurement staff at all implementation units, plus experienced procurement consultants; (c) close Bank supervision and prior review of the first contract for each implementing unit; and (d) regular Bank procurement post reviews. More details are presented in Annex 3. E. Social (including safeguards) 40. The overall social impact of the project, as indicated by the Social Assessment, is generally positive, especially in high vulnerability areas. Negative impact on houses, assets, crops, perennial trees, tombs, businesses and livelihoods of local people may result from land acquisition and construction, but these impacts are manageable and can be compensated and mitigated on the basis of consultation with potentially affected communities. Of the 1,284 households that might be permanently or temporarily affected, only 3.2% will experience severe impacts. There are also approximately 210,000 ethnic minority households present in the project area. Therefore, the project triggers the Bank s OP 4.12 (Involuntary Resettlement) and OP 4.10 (Indigenous Peoples). 41. Involuntary Resettlement (OP 4.12). A Resettlement Policy Framework (RPF) has been prepared in accordance with OP 4.12 to guide the preparation of Resettlement Action Plans (RAPs), including the RAPs for the six first-year sub-projects. The RPF was disclosed before appraisal. During the first year of project implementation, RAPs for the Phase II will be prepared. 42. Indigenous People (OP 4.10). An Ethnic Minority Policy Framework (EMPF) has been prepared in compliance with Bank OP 4.10 to guide the development of Ethnic Minority Development Plans (EMDP), where needed, for sub-projects to be identified during project implementation. EMDP(s) will set forth measures to ensure that ethnic minority people receive appropriate social and economic benefits and that an action plan is in place to avoid, minimize, mitigate, or compensate for adverse effects, if any, on their livelihoods. Participatory planning and implementation under Component 3 will ensure that EM people receive socio-economic benefits from these sub-projects. Preparation of Phase I investments showed no ethnic minority affected. 43. Social Safeguards Implementation. Implementation of the RAPs and EMDPs will be the responsibility of the respective provincial PMUs, with technical support and guidance from the CPMO. Government will finance the costs for land acquisition and other mitigation measures associated with the implementation of the RAPs and EMDPs. Social staff appointed at each PPMU and the CPMO will ensure compliance with the RPF. An independent monitoring agency will be hired by the project to carry out periodic and ad-hoc monitoring of social safeguards implementation. Both the RPF and the EMPF specify a grievance redress mechanism. 12