OECS Disaster Vulnerability and Climate Risk Reduction Program Region. Latin America and the Caribbean Country

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB6619 OECS Disaster Vulnerability and Climate Risk Reduction Program Region Latin America and the Caribbean Country Member countries of Organization of the Eastern Caribbean States (OECS) Sector Infrastructure (80%); Flood Protection (20%) Lending Instrument Adaptable Program Loan (APL) Project ID P {If Add. Fin.} Parent Project ID N/A Borrower(s) - - Implementing Agency Minister for Finance, Planning, Economy, Energy and Cooperatives Financial Complex The Carenage St. George s Ministry of Finance and Economic Planning P.O. Box 608 Kingstown Environmental Screening { }A { }B { }C { }FI Category Date PID Prepared May 19, 2011 Estimated Date of Appraisal May 19, 2011 Completion Estimated Date of Board Approval June 23, 2011 Decision Project authorized to proceed to negotiations upon agreement on any pending conditions and/or assessments. I. Country Context Eastern Caribbean Sub-Regional Context

2 The six Eastern Caribbean countries: Antigua and Barbuda, Dominica,, Saint Kitts and Nevis, Saint Lucia, and, face similar and important challenges from natural hazards and the impacts of climate change. The traditional natural hazards of the sub-region are being exacerbated by the adverse impacts of climate change that is likely to intensify existing hazard patterns. The volcanic origin of Dominica,, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent means that these islands already suffer beach erosion from sea level rise and storms, rainfall-induced landslides, and coastal and inland flooding from storms. This puts great part of their coastal infrastructure, including coastal investments in the tourism sector, at direct risk. The coral reefs of the Grenadines and Saint Lucia are vulnerable to storms, tsunamis, and coral bleaching. The low-lying and relatively dry Grenadines and Antigua and Barbuda are particularly vulnerable to inundation from sea level rise, flooding from storms, and salt water intrusion of ground water. Changing weather patterns are putting increased stress on the water supply in Antigua,, the Grenadines, and Saint Lucia. If current trends continue, US$ million (m) will likely be lost in the sub-region annually between 2015 and 2050 through declining fish catches, reduced tourism, and loss of shoreline protection associated with sea level rise, storm surge, and coral reef degradation. 1 The six countries also share similar financial challenges with regards to hedging risk of external shocks, in particular little room for debt financing. They have a well developed ongoing political and financial collaboration through the OECS Secretariat and the Eastern Caribbean Central Bank, a common market and customs union, a common monetary policy (including a common currency), trade policy, maritime jurisdiction and boundaries, civil aviation, a shared scientific community and research capacity through the University of the West Indies, and collaboration with CARICOM institutions on disaster risk management (Caribbean Disaster Emergency Management Agency) and climate change adaptation (Caribbean Community Climate Change Center). Because of the region s close political, economic, and financial ties, there are negative subregional spill-over effects from any external shock to one or more of the OECS economies. If one country is devastated by an extreme climatic event such as a hurricane, it would directly affect the entire sub-region s economic and financial stability. Such an external shock would directly impact the entire union s debt-to-gdp ratio, sub-regional tourism, inter-island trade, and exports. This is confirmed by a recently released International Monetary Fund (IMF) study. The study indicates that climatic factors account for almost twenty percent of the variance of real GDP growth in Eastern Caribbean countries. 2 According to the study, the contribution to GDP variance of climatic conditions ranges from thirty six percent in Antigua and Barbuda to seven percent in. 3 Combined with other factors, this puts further pressure on the shared monetary systems (affecting international credit rating and exchange rate stability) and exacerbates existing national fiscal inequalities, 1 IBRD, IDA and IFC Regional Partnership Strategy for the Organization of Eastern Caribbean States (OECS), , May 3, 2010; p IMF, Macroeconomic Fluctuations in the Caribbean: the Role of Climatic and External Shocks, July 2009; p Ibid.; p.10.

3 which are currently blamed for constraining the development of a sound macro-economic framework conducive to growth, low unemployment, and debt sustainability. 4 Therefore, the Eastern Caribbean region benefits from any risk reduction investment carried out in a country in the region. Each country will benefit from more of its neighbors investing more in reducing their risk to natural hazards and climate change impacts. II. Sectoral and Institutional Context The Eastern Caribbean has improved its disaster management over the past decade. But Eastern Caribbean governments are not able to manage natural hazard and climate risk strategically. All six countries have, over the past decade, improved their disaster preparedness and response capacity. 5 Supported by international agencies, countries in the region have carried out a large number of vulnerability and hazard assessments that have served to increase the political understanding of the hazard challenge facing the region. The knowledge generated from these studies is unfortunately often not captured in institutional strengthening or improved policies and practices for vulnerability reduction, and the studies themselves often bring little value added due to a lack of data. In some cases countries in the region have invested in disaster vulnerability reduction through coastal protection works, retrofitting of buildings, and in specific disaster mitigation works. These works have shown to be highly beneficial and performed well in subsequent hurricanes. This type of vulnerability reduction has been carried out on an asset-by-asset basis, and limited financing has kept these investments to a pilot level only. General building practices do not appropriately reflect the existing hazard environment and construction is carried out with no regards to risk of future climate change impacts. Newer Government-financed civil works have in the best cases been constructed based on historical hazard trends and loosely integrated performance criteria to avoid foreseeable damage from hazard events. Older infrastructure, including transportation and lifeline facilities (shelters, health clinics, etc.), is particularly vulnerable since in many cases it was built with little consideration for natural hazards, and since civil infrastructure maintenance practices in the region in general are deficient. The vulnerability among private assets is high, too. Up to 40 percent of private houses in the region are built outside regulations, but even houses or businesses with titles have in many cases not been located or built taking the hazard environment into account. As part of an OECS sub-regional effort, a uniform building code was developed and presented to member states in 1992 by the United Nations Center for Human Settlement (UNCHS) and the United Nations Development Programme (UNDP). In 1993 each country accepted these as separate national building codes, but they were largely identical and derived from the CUBiC (Caribbean Uniform Building Codes) of Over time, some countries have modified and accepted these building codes and guidelines, but in practice, 4 IBRD, IDA and IFC Regional Partnership Strategy for the Organization of Eastern Caribbean States (OECS), , May 3, 2010; p See Disaster Risk Management in Latin America and the Caribbean Region: GFDRR Country Notes, 2010.

4 enforcement mechanisms have limited capacity and much of the construction in the region occurs without the benefit of a systematic inspection program. On a broader scale, there is little evidence that development decisions have integrated disaster resilience and expected climate change impacts in decision-making processes. Responsibilities are dispersed among various government agencies including Ministries of Finance, Planning, Economy, Energy, Works, Physical Development, and Agriculture. Lacking an overall structure for analyzing and integrating risks in the development process, agencies normally operate in a relative information vacuum with limited resources, particularly in their capacity to analyze and integrate risk and climate change management in the development process. Data sharing among agencies is weak, largely due to limited capacity and lack of an overall mechanism to share information with low transaction costs. Hence, a major limiting factor inhibiting strategic disaster vulnerability reduction and climate change adaptation is the lack of reliable information on which to base planning and design decisions. The underlying problem is two-fold. Firstly, there is a lack of localized data to inform climate change impact and disaster risk analysis, and a lack of capacity nationally to carry out the needed analysis. Secondly, the countries therefore do not have sufficient information, or appropriate institutional mechanisms, to make portfolio-wide or sector-wide strategic decisions on risk reduction. The first part of the problem will have to be solved by collecting the appropriate data and by developing appropriate protocols and capacity at national and regional level for data sharing and data management. The second part of the problem will be most efficiently addressed by enabling Eastern Caribbean states to access knowledge resources and services outside their countries that can address the questions the countries raise and feed the information back to the countries in a format they can use. In order to efficiently adapt to the hazard environment they live in and the potential changes brought on by a changing climate, the countries in the Eastern Caribbean are faced with two challenges. In the short term, there is a need to reduce the vulnerability of some highly vulnerable public infrastructure. This first challenge is most efficiently addressed at the national level, but has clear sub-regional benefits. In the medium term, there is a need to improve the information base on which national policy makers plan physical development and vulnerability reduction measures in order to be able to strategically guide further vulnerability reduction and to enable the Eastern Caribbean countries adapt to a changing climate. This second challenge needs to be addressed in parallel at both the national and the sub-regional levels. Sub-regionally, this can be done in part by leveraging the existing strong technical, political, and economic collaboration. III. Project Development Objectives The program aims at measurably reducing vulnerability to natural hazards and climate change impacts in the Eastern Caribbean sub-region. The objective of the Project in is to measurably reduce vulnerability to natural hazards and climate change impacts in and in the Eastern Caribbean sub-region. The objective of the Project in Saint

5 Vincent and the Grenadines (SVG) is to measurably reduce vulnerability to natural hazards and climate change impacts in and in the Eastern Caribbean sub-region. IV. Project Description The proposed lending instrument for the sub-regional program is a horizontal Adaptable Program Loan (APL) implemented in parallel in the countries of the Eastern Caribbean region. Currently, there are three confirmed participating countries:, Saint Lucia, and. Country projects in and Saint Vincent and the Grenadines form the first phase (APL 1). Saint Lucia constitutes the second phase (APL 2) of the program, and the third phase would allow for the option of the remaining OECS countries, namely Antigua and Barbuda, Dominica, and Saint Kitts and Nevis, to participate in the program, if requested. This regional program will support regional agencies and interested government agencies in 6 island states (Antigua and Barbuda, Dominica,, Saint Kitts and Nevis, Saint Lucia, and ) in the OECS to develop capacity and tools to assess and communicate disaster risk to the general public and to decision makers in different sectors. Furthermore, for, Saint Lucia, and SVG, the country-specific projects will finance investments in disaster vulnerability reduction for public infrastructure. Civil works to be financed would focus on retrofitting and climate-proofing existing infrastructure as well as the construction of key infrastructure designed to protect the most vulnerable assets, including infrastructure linking the sub-region. Collectively, these interventions will mitigate the adverse affects of future economic and natural shocks in the sub-region and, at the same time, create an enabling environment for sustained economic development better adapted to a rapidly changing climate. The four components of the Program are as follow: Component 1: Prevention and Adaptation Investments. The participating countries would implement a broad spectrum of interventions aimed at building resilience in public buildings and infrastructure. Component 2: Regional Platforms for Hazard and Risk Evaluation and Applications for Improved Decision Making. This component would support building the regional capacity for assessment of natural risks and integration of such assessment into policy and decision making process for the development of investments, disaster risk mitigation and disaster response across sectors, through the provision of technical advisory services, training and acquisition of goods. Component 3: Natural Disaster Response Investments. This component would finance emergency recovery and reconstruction subprojects under an agreed action plan of activities designed as a mechanism to implement a country s rapid response to an emergency. Following an adverse natural event, and subject to a Government s declaration of emergency in accordance with national law and the submission of a recovery action plan satisfactory to the Association, a participating Government would be able to request the World Bank to re-

6 categorize financing or provide additional financing to cover early recovery and rehabilitation costs. Component 4: Project Management and Implementation Support. Activities under this component would support strengthening and developing the institutional capacity for Project management, including: (a) preparation for designs and tender documents; (b) preparation of project reports; (c) processing of contracts and tender evaluation; (d) coordination of participating line ministries; (e) supervision of the quality of works; (f) training of staff in Project management and implementation support; (g) capacity building for accreditation to the United National Framework Convention on Climate Change (UNFCCC) Climate Adaptation Fund; and (h) related activities on Project management and implementation, all through the provision of technical advisory services, training, operating costs and acquisition of goods. V. Financing : Total Project Cost: Source Financing Plan (US $m) US$32,200,000 Total Amount Parallel Financing: GFDRR Climate Investment Fund (PPCR-regional) Borrower (in kind): Total World Bank Financing: Climate Investment Fund (PPCR) Grant Concessional IDA National Regional US$1,000,000 US$2,000,000 US$3,000,000 US$26,200,000 US$16,200,000 US$8,000,000 US$8,200,000 US$10,000,000 US$3,500,000 US$6,500,000 : Source Financing Plan (US $m) Total Amount

7 Total Project Cost: Parallel Financing: GFDRR Climate Investment Fund (PPCR-regional) Borrower (in kind): Total World Bank Financing: Climate Investment Fund (PPCR) Grant Concessional IDA National Regional US$24,920,000 US$1,000,000 US$2,000,000 US$1,000,000 US$20,920,000 US$10,000,000 US$7,000,000 US$3,000,000 US$10,920,000 US$4,420,000 US$6,500,000 VI. Implementation Each project under the program will be implemented by a designated entity under the country s Ministry of Finance. In the case of, Saint Lucia, and Saint Vincent and the Grenadines, the Ministries of Finance have specialized project management units with appropriate fiduciary- and safeguards-handling capacity built from a long experience in managing World Bank-financed projects. For the implementation of civil works, each project management unit will rely on technical support for the descriptions for the bidding documents and for some of the implementation supervision from relevant line ministries, including the Ministries of Works, Education, Health, Physical Planning, and the national disaster management agencies. More complex civil works will rely on the services of an independently contracted supervising engineer. The respective project implementation units will manage environment and social safeguard aspects of country-specific projects under the program structure. These units already have project management capacity and have managed safeguards aspects of several World Bank projects investing in public infrastructure. The World Bank has worked closely with the and project management units to assess their capacity and possible needs for capacity strengthening to appropriately handle safeguards. For subsequent phases of the program, the World Bank will work closely with the project management units during project preparation to assess capacities and, when needed, measures to strengthen capacity will be described in the technical annex for each project. VII. Safeguard Policies (including public consultation) Program-level Environmental Assessment and Management Framework Reports and Resettlement Policy Frameworks have been developed for each country. Appropriate sub-

8 project specific Environmental Assessment(s) will be conducted for any component and investment that may require a stand-alone EA. Similarly, in the event that project activities lead to land acquisition and/or resettlement, Abbreviated Resettlement Plans (ARPs) and/or Resettlement Action Plans (RAPs), as may be applicable, will be prepared for specific subprojects in accordance with the project s Resettlement Policy Framework. Safeguard Policies Triggered by the Project Yes No Piloting the Use of Borrower Systems to Address Environmental and Social Issues in Bank-Supported Projects (OP/BP 4.00) Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60) * Projects on International Waterways (OP/BP 7.50) not eligible for piloting under OP 4.00 not eligible for piloting under OP 4.00 VIII. Contact point at World Bank and Borrower World Bank Contact: Mr. Niels B. Holm-Nielsen Title: Senior Disaster Risk Management Specialist Tel: +1 (202) nholmnielsen@worldbank.org Borrower/Client/Recipient Contact: Mr. Timothy Antoine Title: Permanent Secretary, Minister for Finance, Planning, Economy, Energy & Cooperatives Tel: (473) timothy.antoine@gov.gd * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas

9 Contact: Ms. Laura Anthony-Browne Title: Director of Planning, Ministry of Finance and Economic Planning Tel: Implementing Agencies Contact: Minister for Finance, Planning, Economy, Energy and Cooperatives Mr. Timothy Antoine Financial Complex The Carenage, St. George s Tel: +1 (473) ; +1 (473) finance@gov.gd Contact: Ministry of Finance and Economic Planning Ms. Laura Anthony-Browne P.O. Box 608 Kingstown Tel: ; office.finance@mail.gov.vc I. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web:

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