Document of The World Bank Report No: ICR2275 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-76180) ON A LOAN IN THE AMOUNT OF US$ 150 MILLION TO THE GOVERNMENT OF COLOMBIA FOR A DISASTER RISK MANAGEMENT DEVELOPMENT POLICY LOAN WITH A CATASTROPHIC RISK DEFERRED DRAWDOWN OPTION July 30, 2012 Sustainable Development Department Mexico and Colombia Country Management Unit Latin America and the Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective June 6, 2012) Currency Unit = Colombian Peso US$ 1.00 = 1791.975 COP FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan CAT DDO Catastrophe Deferred Drawdown Option CPS Country Partnership Strategy DPL Development Policy Loan DRM Disaster Risk Management NDP National Development Plan PDO Project Development Objective PNPAD National Plan for Disaster Management and Prevention PREM Poverty Reduction and Economic Management UNGRD National Unit for Disaster Risk Management Vice President: Hasan A. Tuluy Country Director: Gloria M. Grandolini Sector Manager: Anna Wellenstein Task Team Leader: Niels B. Holm-Nielsen ICR Team Leader: Paula Restrepo CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring 1. Program Context, Development Objectives and Design ............................................ 6 2. Key Factors Affecting Implementation and Outcomes .............................................. 9 3. Assessment of Outcomes .......................................................................................... 17 4. Assessment of Risk to Development Outcome ......................................................... 23 5. Assessment of Bank and Borrower Performance ..................................................... 23 6. Lessons Learned........................................................................................................ 25 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........... 26 Annex 1 Bank Lending and Implementation Support/Supervision Processes.............. 27 Annex 2. Beneficiary Survey Results ........................................................................... 28 Annex 3. Stakeholder Workshop Report and Results ................................................... 29 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 30 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 31 Annex 6. Institutional Arrangement for project implementation.................................. 32 Annex 7. Impact of La Niña 2010-2011 on the Colombian economy………………..33 Annex 8. Key outcome indicators supporting information …………………………...34 Annex 9. List of supporting documents……………………….……………………...35 MAP 1   A. Basic Information Disaster Risk Management DPL Country: Colombia Program Name: w/Catastrophe Deferred Draw Down Option Program ID: P113084 L/C/TF Number(s): IBRD-76180 ICR Date: 07/31/2012 ICR Type: Core ICR THE REPUBLIC OF Lending Instrument: DPL Borrower: COLOMBIA Original Total USD 150.00M Disbursed Amount: USD 150.00M Commitment: Revised Amount: USD 150.00M Implementing Agencies: Ministry of Finance and Public Credit Cofinanciers and Other External Partners: None B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/09/2008 Effectiveness: 06/25/2009 06/25/2009 Appraisal: 11/06/2008 Restructuring(s): Approval: 12/18/2008 Mid-term Review: Closing: 01/31/2012 01/31/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Not Applicable Implementing Quality of Supervision: Satisfactory Not Applicable Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: 2 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating: Performance (if any) Potential Problem Quality at Entry Program at any time No None (QEA): (Yes/No): Problem Program at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General industry and trade sector 50 50 General transportation sector 20 20 General water, sanitation and flood protection sector 30 30 Theme Code (as % of total Bank financing) Natural disaster management 100 100 E. Bank Staff Positions At ICR At Approval Vice President: Hasan A. Tuluy Pamela Cox Country Director: Gloria M. Grandolini Axel van Trotsenburg Sector Manager: Anna Wellenstein Guang Zhe Chen Program Team Leader: Niels B. Holm-Nielsen Niels B. Holm-Nielsen ICR Team Leader: Paula Restrepo Cadavid ICR Primary Author: Paula Restrepo Cadavid F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) To strengthen the Government's program for reducing risks resulting from adverse natural events. Revised Program Development Objectives (if any, as approved by original approving authority) 3 (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Expand the coverage of hazard monitoring network The target was met. 18 seismic stations, 95 35 seismic stations, Value volcanic monitoring Expansion of 303 volcanic (quantitative or stations and 249 hazard monitoring monitoring stations Qualitative) automatic hydro- network. and 270 automatic meteorological stations. hydro-meteorological stations. Date achieved 07/31/2008 12/31/2008 12/31/2011 Comments (incl. % achievement) Continue to address the needs of, on average, 80% of people in disaster affected Indicator 2 : areas that request support. Continue to address The target was met. The needs of 80% of the needs of, on Value people in disaster average, 80% of More than 97% of (quantitative or affected areas that people in disaster people in affected Qualitative) request support are affected areas that areas supported upon addressed. request support. request. Date achieved 07/31/2008 12/31/2008 12/31/2011 Comments (incl. % achievement) Number of municipalities that have action plans for inclusion of risk reduction in Indicator 3 : territorial development plans. Expand the number The target was met. Value 10 municipalities had of municipalities (quantitative or disaster risk that have disaster 388 municipalities Qualitative) management plans. risk management have disaster risk plans. management plans Date achieved 10/01/2008 12/31/2008 12/31/2011 Comments (incl. % achievement) Indicator 4 : Relocation of people living in the disaster impact zone of the Galeras Volcano. The target was met. Reduction in the 0% resettled people that 7.7 % resettled Value number of people used to live in the high people that used to (quantitative or living in the high hazard zone of the live in the high Qualitative) hazard zone of the Galeras Volcano. hazard zone of the Galeras volcano. Galeras Volcano. 4 Date achieved 10/01/2008 12/31/2008 12/31/2011 Comments (incl. % achievement) Indicator 5 : The Government will have a defined Framework for contingent financing. On October 24, 2008, The target was met. The Government the Government passed Value will have defined a a policy document The Government has (quantitative or framework for (CONPES 3545) a defined a Qualitative) contingent providing the basis for framework for financing. such a framework. contingent financing. Date achieved 10/24/2008 12/31/2008 10/31/2011 Comments (incl. % achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : No Intermediate Outcome Indicators Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) G. Ratings of Program Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 02/23/2009 Satisfactory Satisfactory 0.00 2 07/22/2009 Satisfactory Satisfactory 0.00 3 01/21/2010 Satisfactory Satisfactory 0.00 4 07/14/2010 Satisfactory Satisfactory 0.00 5 08/08/2011 Satisfactory Satisfactory 150.00 H. Restructuring (if any) Not Applicable 5 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal Macroeconomic policy framework at appraisal 1. From 2002 to 2007 Colombian economic growth accelerated from 2.5 percent to 6.9 percent and private investments rose from 9.9 percent of GDP in 2002 to over 16 percent in 2007. In the same period of time inflation dropped from 7.0 percent to 5.5 percent and the unemployment rate dropped from over 17 percent to 12 percent. This positive outcome was due to higher world growth, lower costs of international credit and a rise of Colombia’s primary exports; but also to the improved security situation and the stable macroeconomic policies applied by its Government in the preceding years. 2. In 2008 the Colombian economy decelerated sharply due to the Global Financial Crisis. The economy grew around 3.5 percent and was expected to slow even further for 2009. The National Association of Industry survey indicated that total industrial production dropped 0.6 percent in the January-August 2008 period and total retail sales increased only by 0.1 percent when compared to the same period in 2007. Furthermore, the fiscal position for 2009 was projected to worsen, with a possible increase of the non-financial public sector deficit. 3. At appraisal Colombia’s macroeconomic policy framework was appropriate and the Government had started taking necessary steps to mitigate the negative effects of the Global Financial Crisis. Since mid 2006 the Government had substantially tightened its monetary policy in response to possible overheating of economic growth. The Colombian authorities had a sound fiscal and monetary policy in place, with an inflation targeting mechanism established and with a medium term fiscal framework targeting a declining public debt to GDP ratio. Prior to appraisal the Central Bank kept interest rates on hold waiting further anchoring of inflationary expectations prior to considering a loosening of the policy rate. To reduce external risks, the Government reduced the foreign currency share of its public debt and the overall external debt (both public and private sector) was about 23 percent of GDP. Disaster Risk Management in Colombia 4. Over the years, natural disasters in Colombia have absorbed a growing share of the national budget and pose a serious threat to fiscal sustainability. The State has seen its responsibilities increase with each disaster setting precedents for reconstruction and recovery for the next event. In addition, beyond disasters impact on livelihoods, infrastructure and provision of essential services, disasters have an increased fiscal and economic impact. For example, the 1999 earthquake in the coffee belt affected major sectors of the economy and seriously diminished growth. The drop in coffee exports led to a reduction of fiscal revenues at a time when greater public investment was required to cover reconstruction. With the number and magnitude of disasters on the rise, and related social and economic costs with them, the State has placed a high priority on the establishment of a coherent strategy to manage risks. 5. Colombia is prone to a number of natural disasters that represent a serious challenge for its sustainable development. Annually Colombia suffers more than 600 natural disasters, having the highest rate of recurrent natural disasters in Latin America. Additionally, in the past three decades Colombia has suffered from six major earthquakes, four volcanic eruptions, major landslides, and extensive flooding. This vulnerability is further aggravated by continued population growth and a subsequent ever increasing 6 concentration of settlements. Furthermore, recent trends in global climate change linked to increased climatic variability will likely exacerbate the country's exposure to floods, erosion, landslides, and drought. 6. Recognizing the importance of dealing with disasters before they happen, Colombia has for the past two decades institutionalized a system for comprehensive disaster risk management. The Government’s commitment to institutionalize disaster risk dates back to 1989 when, in the aftermath of the Popayan earthquake, it established the National System for Disaster Management and Prevention. The increasing awareness of the importance of establishing a comprehensive disaster risk management strategy is reflected in the inclusion of this subject in the 2002-2006 and 2006-2010 National Development Plans NDP. The 2002-2010 NDP included the reduction of fiscal vulnerability due to natural disasters and the 2006-2010 NDP outlined a strategy with four specific areas of action to improve the effectiveness of reducing risk associated with adverse natural events. These action outlined in the 2006-2010 plan were: (i) to improve risk identification and monitoring and augment awareness, (ii) to increase measures for risk reduction (prevention and mitigation), (iii) to strengthen policies and institutions of the Nation System for Disaster Management and Prevention, and (iv) to reduce the fiscal vulnerability of the state to natural events. 7. Furthermore, the Government’s long-term vision and development strategy identifies disaster risk management as a key for achieving a more sustainable and equitable development. The National Planning Department (DNP) Vision Colombia 2019 policy- planning document included policy areas considered essential to achieve an economy that guaranteed greater levels of well-being. This policy document included, among others; strengthening of actions in disaster risk prevention and mitigation, reducing the fiscal vulnerability of the Colombian Government to natural hazards and improving decentralization and strengthening land-use planning. Rationale for Bank’s assistance 8. Improving Colombia’s disaster risk management framework has been a key pillar of the Bank’s support strategy and a central theme of the Government’s policy program. In 2005, the Bank approved a three phase Adaptable Program Loan (APL) series to support the implementation of the Government’s disaster risk management policies. The first phase APL was approved by the Board on May 10, 2005 and aimed to strengthen the capability of the national disaster risk management system to support comprehensive disaster risk reduction. The latter included, among its lending components, the development of a risk financing strategy (Subcomponent E.1) and a contingent loan facility to guarantee the immediate availability of resources in case of national disaster (Subcomponent E.2). 9. In 2008 the Bank introduced a new contingent credit line, the Development Policy Loan with a Catastrophe Deferred Drawdown Option (CAT DDO) that served to provide immediate liquidity to countries in the aftermath of a natural disaster. In September of that year the Bank approved the first DPL with a CAT DDO to the Government of Costa Rica. Following the introduction of the new contingent credit line by the Bank, the Government of Colombia requested a replacement of the contingent loan, under subcomponent E.2 of the first APL, for a DPL with a CAT DDO since the lending conditions for disbursement of the latter served development purposes significantly better. While both the contingent credit line of the first APL and the CAT DDO disbursed funds upon the occurrence of a natural disaster resulting in the declaration of a national state of disaster, disbursement of the contingent credit line (first APL) would require the Government to submit an initial recovery plan with related budget appropriations and proposed use of funds document, as well as a statement of expenses from a positive list of 7 imports. This would delay disbursements significantly1 and reduce the Government’s ability to avoid unrecoverable economic and human losses in the immediate aftermath of a catastrophic event. In addition, unlike the contingent loan facility, the Bank has designed the DPL with a CAT DDO to be renewable for up to 15 years 2 , providing a long-term contribution to the country’s catastrophe risk financing strategy. Finally, the DPL with a CAT DDO does not require the Government to continue to pay an annual commitment fee and was deemed to be more cost effective than the contingent credit line under APL1. 10. In December 2008 the Bank’s Board of Executive Directors approved the Disaster Risk Management Development Policy Operation with a Catastrophic Deferred Drawdown Option (CAT DDO) and, in May 2009, the contingent credit line of the APL1 was cancelled through project restructuring. The DPL with a CAT DDO for the Government of Colombia was declared effective in June 2009. Aligning with the Government’s development of the disaster risk management agenda, the above mentioned DPL had as prior action the inclusion of a disaster risk reduction and management strategy in the 2006-2010 National Development Plan. 1.2 Original Program Development Objective (PDO) and Key Indicators (as approved) 11. The objective of the proposed DPL with a CAT-DDO option is to strengthen the Government’s program for reducing risk resulting from adverse natural events. Five key outcome indicators were drawn from a larger constellation of indicators that the Government had established for itself to guide future implementation and strengthening of its program, these indicators were3 : a. The National System for Disaster Management and Prevention will continue to address the needs of, on average at least 80 percent of people in disaster affected areas that request support. b. Expand the coverage of hazard monitoring network from 18 seismic stations, 95 volcanic monitoring stations and 249 hydro-meteorological stations functioning by July 1, 20084. c. Expand the number of municipalities that have disaster risk management plans. On October 1, 2008, 10 municipalities have disaster risk management plans. d. There will be a reduction in the number of people living in the high hazard zone of the Galeras volcano; on October 1, 2008, 7,935 people lived in the high hazard zone5. e. The Government will have defined a framework for contingent financing. On October 24, 2008, the Government passed a policy document (CONPES 3545) providing the basis for such a framework. 1 A practice drill made in November 2008 suggested that disbursements under the contingent credit line of the first APL would require up to five weeks while the CAT DDO was designed to disburse between 24 and 48 hours after conditions were met. 2 As discussed further on (Section 2.2), although initially the DPL with a CAT DDO loan was designed to allow a revolving feature that would permit the drawdown period to be renewed up to four times, the Government’s legal framework limited this option and led to the preparation of a new operation. 3 The use of indicators without specific targets in this operation reflects state of art thinking at the time. It was considered that using specific targets could be seen as a hidden conditionality for disbursement of funds. 4 Although this key outcome indicator was not included in the PAD, it was included in the Operational Manual and monitored during the project’s implementation. 5 An update of the information by the Government after appraisal suggested that the initial number of people living in the high hazard zone was 5,737. The 7,935 number presented in the PAD was an estimate from the available information at the moment; the new estimate came from crossing the CENSUS and an available GIS system of the Galeras vicinity. 8 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification 12. The Program Development Objective (PDO) and Key Indicators were not revised. 1.4 Original Policy Areas Supported by the Program (as approved) 13. The CAT DDO instrument was designed to provide a financing bridge to funds from other sources. The program supports the following strategic areas of action for implementation of the Government’s program: a. Improve risk identification and monitoring, and increase awareness of risk b. Increase prevention and mitigation measures for risk reduction c. Strengthen National System for Disaster Management and Prevention d. Reduce the fiscal vulnerability of the state to natural disasters 1.5 Revised Policy Areas (if applicable) 14. Policy areas were not revised. 1.6 Other significant changes 15. No other significant changes were made to the project. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 16. The DPL with a CAT-DDO was a single tranche operation. The single Prior Action was fully implemented (Table 1). A declaration of a national state of disaster by the President of Colombia in accordance with Law No. 919 of 1984 was the agreed Drawdown trigger to access to funds. No specific Project Implementation Unit was created for this project but the Operational Manual defined the institutional arrangements involved in this operation (Annex 6). 17. On a December 7, 2010, a national state of disaster was declared by Presidential Decree as a result of widespread flooding associated with the La Niña phenomenon. From September 2010 to May 2011, continuous heavy rains caused mudslides and floods in 28 of Colombia´s 32 departments. Approximately 3.5 million people, representing nearly seven percent of the country´s total population, were displaced or suffered significant damages to their homes and livelihoods. Following the declaration of national state of disaster, the Colombia National Government submitted the official request for disbursement on December 24, 2010 and on December 27, 2010 the Bank disbursed the full balance of the CAT DDO. 18. There were five indicators linked to the areas of actions. These indicators (Table 1) are the basis for assessing the performance of the operation. Area of Action 1: Improved risk identification and monitoring, and increase awareness 19. Expand the coverage of the hazard-monitoring network. In July 2008, Colombia had 18 functioning seismic stations, 95 functioning volcanic monitoring stations and 249 9 functioning automatic hydro-meteorological stations. As of December 2011, the country had 35 functioning seismic stations, 303 functioning volcanic monitoring stations 6 and 270 functioning automatic hydro-meteorological stations7. In reference to this indicator, while the benchmark set in the PAD aimed to “Expand the coverage of the hazard monitoring network�, the Government went further to establish specific goals to be achieved for the above mentioned hazard monitoring networks. The 2006-2010 National Development Plan defined the following goals: 170 seismic and volcanic stations (together) and 295 hydro- meteorological stations 8 . Furthermore, the 2010-2014 National Development Plan also defined a set of benchmarks regarding the expansion of seismic and volcanic stations, reflecting the Government’s on-going commitment towards improved risk identification and monitoring. The indicator related to the expansion of the coverage of the hazard-monitoring network – as defined on the PAD - has been met. 20. Continue to address the needs of, on average; at least 80 percent of people in disaster affected areas that request support. At appraisal 80% of affected households that requested support were attended with resources from the National Fund of Calamities. According to National Unit for Disaster Risk Management (UNGRD), from 2008 to 2011 the needs of more than 97% of affected households requesting support were addressed, which indicates that the indicator was largely met and exceeded. A graphic comparing the number of requests addressed to the number of requests received can be found in Annex 8. Area of Action 2: Increased prevention and mitigation measures for risk reduction 21. Expand the number of municipalities that have disaster risk management plans. From 2008 to 2009, 123 municipalities were assisted in the development of disaster risk management plans; and between 2010 and 2011 an additional 317 municipalities were assisted. Of the total number of municipalities assisted, 388 municipalities had disaster risk management plans by the end of 2011. The 2006-2010 NDP benchmark established by the Government was to expand disaster risk management plans to 200 municipalities, which reflects that not only did they achieve the indicator as set by the PAD but also exceeded the Government’s expectations. Area of Action 3: Strengthened policies and institutions of the National System for Disaster Management and Prevention 22. Reduction of the number of people living in the high hazard zone of the Galeras Volcano. Of 5,757 people living in the high hazard zone at the time of appraisal, in December 2011 approximately 7.7% or 441 people had been resettled. The latter indicates that while the Bank’s indicator has been met, the benchmark established by the Government in 20119, of 500 resettled people, was not met. While in October 2008 the Government had already defined the guidelines and instruments to be used in the Galeras resettlement process, the very complex political economy surrounding of the area and the specific characteristics of the population involved, made it very difficult to implement. In particular, households living in the area continue to have a low perception of risk, due partly to the lack of historical memory of volcanic explosions, which affects their willingness to participate in 6 Ingeominas, Informe de Gestión 2011. 7 IDEAM, Informe de Gestión 2011. 8 While the numeric target set by the Government under the 2006-2010 NDP was not achieved, there was an overall improvement of the hydro-meteorological monitoring network in the 2008-2011 period. In fact by the end of 2011, the Government had managed to repair 25 stations that were damaged during the 2010-2011 floods and, at the same time, it upgraded or replaced some of its existing stations. 9 The Ministry of Interior and Justice included in its Strategic Plan for 2011 the benchmark of 500 resettled people. In 2010, the Government had also established a benchmark of 600 resettled people but only managed to achieve 47% of this goal with the resettlement of 286 people. 10 the resettlement process. In addition, the resettlement process has been led by the National government with little support or active opposition from local governments. In spite of these difficulties the Government has identified and started to implement a number of actions that are expected to facilitate the resettlement process. Area of Action 4: Reduced fiscal vulnerability of the state to natural events 23. Defined framework for Contingent Financing. This indicator has been met. In August 2011 the Ministry of Finance and Public Credit published “Contingent Liabilities: The Colombian Experience� which, among others, discusses contingent liabilities arising from natural disasters. The document recommends the use of a set of instruments to achieve maximum risk coverage at minimum cost and is considered to adequately define a framework for contingent financing. 11 Table 1: Prior Actions, Expected and Actual Outcomes Development Objective: Strengthen the Government’s program to reduce risks resulting from adverse natural events Prior Action Government Benchmarks for 2011 Expected Outcomes Outcomes (December 2011) The inclusion, as specific and prominent elements in Colombia’s 2006-2010 National Development Plan, enacted as Law 1151 of July 2007, of: (i) disaster risk reduction and (ii) disaster risk management strategy Areas of Action (1) Improved risk identification and Expand coverage of hazard Expand coverage of hazard The target was met. monitoring, and increase awareness monitoring network from 18 seismic monitoring network from 18 35 seismic stations, 303 volcanic station, 95 volcanic monitoring seismic station, 95 volcanic monitoring stations and 270 stations and 249 automatic hydro- monitoring stations and 249 automatic hydro-meteorological. meteorological stations. automatic hydro-meteorological stations. The National System for Disaster The target was met. Management and Prevention will More than 97% of people in continue to address the needs of, on affected areas supported upon average, 80 percent of people in request. disaster affected areas that request support. (2) Increased prevention and mitigation Expand the number of municipalities Expand the number of The target was met. measures for risk reduction that have action plans for inclusion of municipalities that have disaster 388 municipalities that have risk reduction in territorial risk management plans. On disaster risk management plans. development plans, from 20 that have October 1, 2008, 10 municipalities action plans by July 1, 2008. had disaster risk management plans. 12 Development Objective: Strengthen the Government’s program to reduce risks resulting from adverse natural events Areas of Action Government Benchmarks for 2011 Expected Outcomes Outcomes (December 2011) (3) Strengthened policies and institutions Definition and validation of the Reduction in the number of people The target was met. of National System for Disaster objectives and instruments for the living in the high hazard zone of 7.7 % resettled people that used to Management and Prevention relocation of people living in the the Galeras volcano. live in high hazard zone of the disaster impact zone of the Galeras Galeras Volcano10. Volcano. (4) Reduce the fiscal vulnerability of the Consolidate national catastrophe risk The Government will have defined The target was met. state to natural events financing strategy which facilitates a framework for contingent The Government has a defined a public sector risk transfer and financing. framework for contingent financing generates incentives for private sector risk transfer 10 An update of the information suggested that the initial number of people living in the high hazard zone was 5,737. The 7,935 number presented in the PAD was an estimate from the available information at the moment; the new estimate came from crossing the CENSUS and an available GIS system of the Galeras vicinity. 13 2.2 Major Factors Affecting Implementation: External factors 24. Continuous heavy rains due to the 2010-2011 La Niña caused mudslides and floods in 28 of Colombia’s 32 provinces (departments). Approximately 3.5 million people, which represent nearly seven percent of the country’s total population, were displaced or suffered significant damages to their homes and livelihoods. It was one of the worst disasters caused by a natural event in the country’s history; according to the national Government, the damage caused by this event was equivalent to around two percent of Colombia’s 2011 GDP. The average precipitation in some parts of Colombia in the middle of 2010 was five to six times above the average. In addition, rain-saturated mountain’s soil crumbled away, causing daily landslides as well as sedimentation, which raised water levels in rivers. While floods are very common in Colombia, the country had not expected to be affected at this scale by this type of event. An estimate of the economic impact of La Niña can be found in Annex 7. Factors under Government control 25. Although this type of operation does not require an Operational Manual according to Bank’s procedures, the Government opted to prepare one to guide during project implementation. The Operational Manual defined the disbursement roadmap and the monitoring practices to be implemented in order to follow the project’s performance. In addition it outlined the institutional arrangement and specified responsibilities of each of the agencies. As the Operational Manual clearly defined the exact procedures and identified the institutions involved for credit disbursement, it allowed mitigating the risks of delays in disbursement due to changes in the administration. Furthermore, during the APL implementation internal simulations were made to evaluate the time needed for the disbursement of the contingent loan and identify possible bottlenecks. During the project’s supervision a disbursement drill was scheduled but given that the declaration of state of disaster occurred shortly thereafter, the drill was canceled. 26. Following the election of Juan Manuel Santos as president, a number of ministries and agencies were reorganized, merged or divided, which led to changes in the institutional mapping of agencies dealing with the DRM agenda. In particular, the Directorate for Disaster Risk Management– which at appraisal was under the Justice and Interior Ministry – was reassigned and reformed to become the National Unit for Disaster Risk Management (UNGRD) under the direct responsibility of Presidency. This new organizational structure intended to give the UNGRD a higher level of autonomy and visibility allowing it to play a more active role in DRM. Furthermore, in December 2010, the Government launched an ambitious National Development Plan, called Prosperity for All 2010-2014. The latter highlighted four cross cutting themes that included “Environment and Disaster Risk Management�, reflecting the commitment of the Government to the continuation and improvement of the disaster risk management agenda as an important element to a more sustainable development. 27. The delays of formal information flows from disaster-affected areas to the Government delayed the declaration of the national state of disaster and therefore also delayed the request and disbursement of the funds under the CAT DDO. Given the type of hazard that struck the country11 and the scale of the flooding it was difficult for the Government to obtain formal information of the magnitude of the disaster and exact location of the affected 11 As Colombia´s typical rainy season was overlapped by the Niña phenomenon, it was debated if the floods occurring were the normal annual floods or a less recurrent event. 14 areas that would support the declaration of national state of disaster. Prior to 2010, only one declaration of national state of disaster had been made and it was due to the Eje Cafetero earthquake in 1999, in which identifying affected areas and the magnitude of the disaster was more easily done due to the type of hazard. The latter reflects the importance of having in place a solid information system that allows the Government to identify and respond efficiently to disasters generated by different hazards. 28. Although initially the DPL with a CAT DDO loan was designed to allow for a revolving feature permitting the drawdown period to be renewed up to four times, the Government was legally prevented from making use of it. In July 2011 the Bank was informed that due to legal constraints once the CAT DDO disbursement was made, the authorization of indebtedness would be exhausted and a new authorization would need to be requested to pursue new disbursements. Since the CAT DDO was a new lending instrument to the Government and a revolving feature loan had not been applied previously, there were no precedents for the Government. This led the Government to close the existing CAT DDO and request a new operation at the same time, leaving a gap in time between the two projects, in which the Government was not covered. The second CAT DDO was approved on July 10, 2012 and is discussed in Section 2.4. Financial bridge for support from other sources 29. The timing in which the 2010-2011 La Niña struck allowed the Government to reallocate unspent budgets of the 2010 Calendar year12 to help respond to the disaster. In December 2010, as the magnitude of the disaster became more apparent, the Government asked all of the Ministries to provide unspent budget and reallocated it for disaster response. Furthermore, the country had faced an encouraging financial situation in 2010 having quickly recuperated from the 2008 Global Financial Crisis. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: 30. The indicators selected to monitor the progress towards the achievement of the PDO correctly reflected the defined areas of action and corresponded to the expected outcomes of the prior action. In fact, four of the five indicators included, were part of the 2006-2010 NDP and had specific benchmarks to be achieved under the latter. This was intended to make the collection of the information easier, since the same indicators were being used by the Government to monitor progress in the NDP. While it was not required for this type of operation the Government prepared an Operational Manual. 31. As defined in the Operational Manual the borrower would issue a yearly report to inform of progress in the national disaster risk management agenda and to follow progress in project indicators. Two yearly reports were issued covering the June 2009- 2010 and June 2010-2011 periods and the Government’s Completion Report is expected to cover the June-December 2011 period. However, while these reports did provide a rich overview of the disaster risk agenda in the period of analysis, the progress made on each of the indicators was not consistently included13. 32. The Bank team conducted regular supervision missions and followed project implementation closely. Most of the supervision missions for the CAT DDO were done in 12 In Colombia the calendar year corresponds to the fiscal year. 13 While it is understandable that some project indicators cannot be updated for every year of the project’s implementation, it would be good practice to explain missing information. 15 conjunction with those for the APL, which was beneficial given synergies between these two operations regarding the development of the national disaster risk management framework. 2.4 Expected Next Phase/Follow-up Operation 33. As previously mentioned, a Second Disaster Risk Management Development Policy Loan with a CAT DDO was recently prepared with the Colombian Government and approved by the Bank Board on July 10, 2012 . The aim of the next DPL with a CAT DDO is to strengthen the Government’s program for reducing risks resulting from adverse natural events. This objective will be achieved by supporting three strategic policy areas of action for implementation of the Government’s program. These policy areas are: (1) strengthen disaster risk management institutional and planning capacity; (2) strengthen the institutional framework and capacity for including disaster risk management in land use planning; and (3)strengthen policies and tools to reduce risk in the housing sector. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 34. The objectives, design and implementation of the DPL with a CAT DDO were highly relevant to Colombia’s current development priorities. The DPL with a CAT DDO was appropriate at the time of appraisal and provided a better instrument to reduce the country’s fiscal vulnerability to natural disaster than the contingent loan under subcomponent E.2 of the first APL, since the lending conditions for disbursement of the first served development purposes significantly better. Furthermore, the operation was also consistent with the Bank Country Partnership Strategy and complementary to other Bank activities in Colombia, namely the APL series and other knowledge and convening services (see Figure 1). 16 Figure 1: Stages of Engagement in Colombia on Disaster Risk Management by Type of Services Provided. Foundations & Strengthening Consolidation Early Support (2004–2009) (2010– 2012) (1998 - 2003)  PHRD Grant for Colombia  Colombia Country Disaster Risk Management Analysis Disaster Vulnerability Reduction (TF098966) Project (TF052529)  Probabilistic Risk Information Technical Assistance Projects  PHRD Grant for Bogota Disaster (TF09324) Knowledge Services Vulnerability Reduction Project  Publication. Preventative Resettlement of Populations at Risk (TF053759) of Disaster: The Case of Nueva Esperanza, Bogota.  Report on Seismic Risk Retention  Colombia Disaster Risk Financing Strategy (P128518) and Transfer for Colombia.  Agricultural Risk Management (TF050595 ) Risk Management and Insurance  Strengthening Governance for Social Risk Management  First GFDRR disaster risk (P123616) management Country Note  Reference Book on Probabilistic Catastrophe Risk Modeling (TF091242)  Technical Support for identification of Barranquilla Urban Flood Risk Management project (TF096323)  Colombia  Disaster Risk Management DPL  National Macroproyectos Social Interest Project (P110671) Earthquake with a CAT DDO (P113084)  GFDRR Grant for Preparation of Barranquilla Urban Flood Recovery Project  National Disaster Vulnerability Management Project (TF096015) Financial Services (P065263) Reduction Project (P082429)  First Programmatic Fiscal Sustainability and Growth  Bogota Disaster Vulnerability Resilience DPL (P123267) Reduction Project (P085727)  Second Disaster Risk Management DPL with a CAT DDO (P126583)  National Disaster Vulnerability Reduction Project Phase Two (P130456)  Barranquilla Urban Flood Management Project (P120159)  GFDRR Grant for Consolidation of Colombia Disaster Risk Management  Yearly participation at National  Participation and presentation at International Convention on Insurance Association Insurance (September, 2010) (FASECOLDA) Annual Meetings  Support and helped convene Andean Regional Workshop on  International Conference on Disaster Risk in the Water Sector hosted by the Disaster Vulnerability Reduction Colombian Association of Sanitary and Environmental (March 2009). Engineering (October 2010) (TF097821)  Support to and presentation at  National Workshop on Preventive Resettlement and DRM Convening Services Colombian Association of (October 2010) Sanitary and Environmental  Interministerial Consultative Workshop on Disaster Risk Engineering Annual Conference Management (March 5-9, 2012) (September 2009).  National Workshop on Urban Disaster Risk Management  Support to and key note speech at (June 13-15, 2012) SNPAD 20 year anniversary  Public launch of Colombia Country Disaster Risk conference (September 2009). Management Analysis (June 25, 2012)  Support to and presentation at  Improving the Assessment of Disaster Risks to Strengthen High-Level National Disaster Risk Financial Resilience (G20 Publication): Contingent Liability Financing conference (May 2009). Management in Colombia. (June 2012)  Workshop on Preventive Resettlement and Safeguards (December 2 – 4, 2009) 17 Consistency with Government Priorities 35. Disaster risk reduction continues to be a priority for the Government of Colombia. Since the mid-1990s, Colombia has moved from disaster response to disaster risk management. In 1998, by Decree 93, the Colombian Government ratified the National Plan for Disaster Management and Prevention (Plan Nacional para la Prevención y Atención de Desastres, PNPAD) which shifted the focus from emergency response to a comprehensive disaster risk management strategy. Most recently the reduction of fiscal vulnerability was included in the National Development Plan 2002–2006, and disaster risk management has been broadly considered in the last four National Development Plans, including President Santos’ Plan 2010-2014. Furthermore, in April, 2012, President Juan Manuel Santos signed into law the National Disaster Risk Management Act. The new Act replaces a system previously focused entirely on disaster response, that is, all emergency systems were mobilized in the event of a disaster. Disaster risk management in Colombia will now be organized according to four key pillars: i) a new national framework led by the Disaster Risk Management Unit, as a subordinate to the Office of the President, ii) territorial planning which mandates local authorities to incorporate risk and hazard analysis in regional land-use plans to prevent further construction in areas unsuitable for human habitation, iii) funding from the newly established National Disaster Risk Management Fund, and iv) special procedures which allow for faster and more effective response to natural emergencies and natural disasters. 36. The 2010-2014 NDP included disaster risk management as a development priority and recognized that the latter is essential to consolidate the objectives of poverty reduction. Furthermore, the Government’s long-term vision and development strategy, laid in the Vision Colombia 2019 policy- planning document, identified the following policy areas needed to be addressed to achieve greater levels of well-being: (a) strengthening actions in disaster risk prevention and mitigation and (b) reducing the fiscal vulnerability of the Colombian Government to natural hazards. Relationship with Bank Strategy 37. Disaster risk mitigation is a high priority for the Bank’s engagement under the current Country Partnership Strategy for FY12-FY16. The latter includes disaster risk management under the Sustainable Growth with Enhanced Climate Change Resilience thematic area and identifies the following outcomes: (1) strengthening technical capacity for disaster risk management at the national and regional levels, and (2) having a national policy for disaster risk management formulated. 38. The inclusion of the disaster risk management agenda in the two past CPSs reflects the continued engagement of the Government and the Bank in regard to this thematic area and the agreed importance of pursuing this agenda in order to achieve higher development objectives. Colombia is experiencing increasing economic losses as a result of natural hazards and natural disasters which represent a substantial fiscal contingent liability given potential losses to publically owned assets and the private assets of low income groups (which the Government would be compelled to partially compensate). The first CAT DDO and second CAT DDO, are part of the broad spectrum of the Bank’s catastrophe financing instruments available to assist borrowers in planning efficient responses to catastrophic events. 39. In addition, the DPL with a CAT DDO indirectly supports the continuity of other activities of the Bank portfolio in the country as it reduced the risk of reallocation of funds to respond to a national level catastrophe. In 1999, the scale and magnitude of the impacts caused by the Eje Cafetero earthquake led, to a declaration of national state of 18 disaster and, to the need to restructure four ongoing Bank operations in order to reallocate funds for disaster response and reconstruction. The first CAT DDO and the follow-up operation would continue to provide the Government with a rapid source of funds in the event of a major disaster triggered by a natural event, enabling a quicker response to address disaster needs and reducing the risk of having to halt or divert resources from other development priorities in its NDP. In fact compared to the 1999 Eje Cafetero earthquake, in which four Bank loans for a total amount of US$93 million were restructured to finance the start-up of the reconstruction program, no Bank financed operation was restructured with the purpose of providing emergency recovery due to the 2010-2011 floods. Complementarities with Other World Bank Activities 40. The DPL with a CAT DDO is part of the Bank’s portfolio of activities seeking to have a broader disaster risk management strategy. The disaster risk management portfolio in Colombia included financial, knowledge and convening services. These include, apart from the Second CAT DDO previously mentioned, the following activities: (1) the Natural Disaster Vulnerability Reduction APL1 signed in 2005 (7293-CO); (2) the Disaster Vulnerability Reduction APL2 (7365-CO) which consisted of a subnational loan to the District of Bogota; (3) ongoing technical assistance using an open source risk assessment platform to integrate probabilistic risk information into specific policy-making processes; and (4) a Programmatic Fiscal Sustainability and Growth Resilience DPL (8080-CO) that will support the development of a National Financing Strategy to reduce the fiscal vulnerability of the state to various risks, including disasters triggered by natural events. For more information please refer to figure 1. In addition, the Colombia Country Disaster Risk Management Analysis was launched in 2012, which provides the basis for future Bank assistance regarding this thematic line and identifies areas where Colombia could improve institutions and policies for a better disaster risk management. Alignment with Good Practice Principles on Conditionality 41. The DPL with a CAT DDO was aligned with the Bank’s five Good Practice Principles of Conditionality. The DPL with a CAT DDO reinforced ownership by aligning with Government goals, as outlined under the 2006-2010 NDP , using existent indicators to follow up on implementation progress and supporting a set of prior actions in conjunction with the Government. 3.2 Achievement of Program Development Objectives 42. The DPL with a CAT DDO supported the Government’s disaster risk management program outlined under the 2006-2010 National Development Plan and aimed at strengthening the Government’s program for reducing risk resulting from adverse natural events. 43. Establishing a direct causal relationship between the CAT DDO and progress made in the Government’s disaster risk program is complex since it is part of a larger disaster risk management portfolio of the Bank. As previously mentioned the DPL with a CAT DDO originated from the contingent credit line of the APL 1, and therefore some of its key indicators are linked to this operation. The CAT DDO supported the policy dialogue and provided a source of liquidity following the 2010-2011 floods, which was complemented with technical assistance and financial resources provided under APL1 and 2. 44. The presence of a non-national actor like the Bank has served as a catalyst for the development of a more integral disaster risk program in the country. The Government of Colombia has recognized that the continuous involvement of the Bank in this area has 19 strengthened the Government’s program and influenced its sustainability. The synergies provided by the different activities of the disaster risk management portfolio in the country have led the Government to develop a more holistic view of the disaster risk management agenda. In this sense, the DPL with a CAT DDO contributed to the dialogue for the development of a broader strategy to reduce the fiscal vulnerability of the state to natural disasters. While a National Catastrophe Risk Financing Strategy is not yet ready, in August 2011, the Ministry of Finance and Public Credit produced a first publication entitled “Contingent Liabilities: the Colombian Experience� which underpins a future risk financing strategy. The latter, included a chapter on covering contingent liabilities arising from natural disasters and recommended the use of a set of instruments – that go from contingent credit lines to collective insurance programs – to achieve maximum risk coverage at minimum cost. Furthermore, the broad portfolio of World Bank activities related to disaster risk management has allowed the opportunity to bring new institutions and sectors (i.e. the Ministry of Transport, Ministry of Education and the Ministry of Agriculture) that were previously absent from the dialogue to discuss the disaster risk management agenda. 45. A significant improvement in risk identification and monitoring was achieved through a considerable expansion of the hazard-monitoring network. The DPL with a CAT DDO, along with the APL1, supported the goals set out under the 2006-2010 NDP, to improve of the hazard-monitoring network of Colombia. As a result, at closure of this operation, the country had significantly expanded the number of seismic, volcanic and hydro- meteorological stations. Furthermore, a number of additional goals to further expand the coverage of the network were set out under the 2010-2014 NDP, and will be partially financed under the APL1 operation. Also, despite the widespread floods that affected the country, the National Disaster Risk Management System was able to increase its respond rate to the needs of people in affected areas that requested support. Information regarding these key outcome indicators can be found in Annex 8. 46. The Government has made remarkable progress in strengthening local disaster risk management capacity. Both the DPL with a CAT DDO and the APL1 supported the development of activities to increase prevention and mitigation measures for risk reduction as outlined in the 2006-2010 NDP. For this purpose, the UNGRD led a national program to assist municipalities in their development of local disaster risk management plans. While in 2010 the UNDGR set a goal to reach a total of 200 municipalities, by the end of the year it had already reached 226 municipalities and in December 2011 there were 388 municipalities with disaster risk management plans. Furthermore, the success of this program led the Government to include it in the 2010-2014 NDP and set more ambitious goals to reach a total of 790 municipalities. 47. Although during the operation there was a reduction in the number of people living in the high hazard zone of the Galeras Volcano, and the key outcome indicator was met, the resettlement process has been very complex. In December 2011 7.7% of people living in the high hazard zone had been resettled. The negative perception of the local population in relation to resettlement as well as problems in communication between the entity in charge of the resettlement process and the affected population contributed to the slow rate of progress. However the Government has recently established an action plan to improve its communication with the affected population and tackle some of the legal aspects that were deterring the resettlement process. 48. In order to reduce the fiscal vulnerability of the State to natural disasters the Government defined a framework for contingent financing (August, 2011) and started working on the consolidation of a national catastrophe risk financing strategy. In May 2012 released a conceptual framework for the design of a national catastrophe risk financing 20 strategy. In addition, following the project’s implementation, the Ministry of Finance and Public Credit recognized the importance of having a Disaster Risk Financing and Insurance Strategy to support the identification and selection of appropriate financial instruments based on fiscal circumstances and available resources. As previously mentioned, when widespread floods due to the 2010-2011 La Niña started to affect vast territories of the country, Colombia was in a good fiscal situation having quickly recuperated from the 2008 Global Financial Crisis and was able to redirect unspent budgets for emergency response. 49. The CAT DDO proved to be able to disburse in a timely manner and respond to the requests of the Government in an efficient way. The scale and magnitude of the disaster justified the declaration, in November 2010, of a national state of calamity 14 and, on December 7, a declaration on national state of disaster. As the Government had been implementing the disaster risk management program outlined under the DPL, on December 24, 2010 the Government submitted the official request for disbursement and on December 27, 2010 the Bank disbursed the full balance of the CAT DDO. The latter revealed that both the Bank system and those in Colombia function well for the rapid disbursement of funds. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 50. The DPL with a CAT DDO is rated Satisfactory. The operation’s objectives, design and implementation, and outcomes were relevant to Colombia’s development priorities and country circumstances as defined by the 2006-2010 and 2010-2014 NDP. The operation is also fully consistent with the previous and current CPS reflecting the continued engagement of the Government and the Bank in regard to this thematic area. The Country’s disaster risk management program made considerable progress during the project’s implementation, especially in the four areas of action supported by the project. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 51. The DPL with a CAT DDO supported indirectly the most vulnerable segments of the population by addressing disaster risk issues that affect them disproportionately. As has been extensively documented, disasters triggered by natural events disproportionately affect the poor populations living in slums and squatter settlements on steep hillsides, in poorly drained areas, and in low-lying coastal zones. The poor are the most vulnerable to economic and human capital losses from disasters triggered by natural event and are victims of both rare catastrophic events and of frequent low-intensity events, and their adverse cumulative impacts. 14 Upon the declaration of national state of calamity, the Ministry of Finance expressed the desire to the Bank to use this mechanism to access the CAT DDO. However, the Bank team considered that this option was neither possible nor deemed desirable from the Ministry of National Planning and the Ministry of Interior, given that the defined trigger was carefully selected and clearly understood. Actually in Colombia there are three levels of perturbations due to the occurrence of national disasters that trigger specific response mechanisms: the declaration of calamities whose responsibility lies within sectional authorities and the declaration of disaster which can only be done by the President. They were each designed to respond to different scales of disasters and trigger different response mechanisms. For instance, it is only with a declaration on national state of disaster that the Government is allowed to make contracts without using Ley 80 de 1993. 21 (b) Institutional Change/Strengthening 52. The DPL with a CAT DDO supported the dialogue among sectors in subjects related to disaster risk management and the expansion of this agenda to lower levels of government. Both of these impacts have been discussed in the previous section (see paragraph 44 and 46). For instance, it supported the assistance for the development of disaster risk management plans in municipalities. As a result a total of 388 municipalities were counted with disaster risk management plans by the end of 2011, compared to 10 in 2008. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) 53. As articulated in statements made by the Government, the CAT DDO instrument had additional value added due to the comforting signal it transmitted to capital markets and population in adverse circumstances. The Ministry of Finance and Public Credit brought to light that having access to a contingent credit line had diminished the negative effects of a declaration of national state of disaster on markets and provided a strong message to the Colombian population that the Government was prepared to respond to large scale natural disasters. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable 4. Assessment of Risk to Development Outcome Rating: Negligible to low 54. The risks facing the project were satisfactorily assessed, as were the factors that would help to mitigate them. The creation of the Operational Manual which specified procedures for disbursement, among others, served to mitigate risks associated with delays in disbursement. In addition, the strong ownership and commitment of the Government for the decentralization of capacities for disaster risk management and the early involvement of local and departmental authorities served to diminish the risk deriving from inter-institutional arrangements. 55. As the memory of the most recent disaster fades away the Government might redirect its efforts toward other priorities. Although the current NDP (2010-2014) and the CPS have identified this thematic area as a priority and an essential step for the achievement of higher development objectives, there is a risk that reform attention will be diverted as other priorities rise on the political agenda. However, the risk of this happening is considered low as the Government has asked the Bank to be its strategic partner in moving reforms forward. Furthermore, the second DPL with a CAT DDO, the second National Disaster Vulnerability Reduction project and the Programmatic Fiscal Sustainability and Growth Resilience DPL will allow the Bank and the Government to work together and continue developing the disaster risk management agenda. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 22 56. The replacement of the contingent credit line under APL 1 for the DPL with a CAT DDO was consistent with the Government’s needs and the introduction by the Bank of a new contingent credit. The Bank responded rapidly to the request for the replacement of the contingent credit line under APL1 (September 2008) with the DPL with a CAT DDO (approved by the Board in December 2008 and declared effective in June 2009), which served development purposes significantly better. 57. Quality of entry was ensured through a high level of consistency between the operation and the NDP. The approach followed the Bank’s good principles on conditionality into programs design and implementation. Furthermore, at appraisal, the Bank correctly evaluated the country’s macroeconomic framework and identified implementation risks to be mitigated by mobilizing a team that involved experts from Disaster Risk Management, World Bank Treasury and the Poverty Reduction and Economic Management department. In addition, the key outcome indicators selected were clearly linked with the four areas of actions included in the disaster risk management program of the government and supported by this operation. (b) Quality of Supervision Rating: Satisfactory 58. The Bank guided the Government in the preparation of an Operational Manual15 that served to mitigate implementation risks identified at appraisal. The Operational Manual, which was prepared after the loan became effective, allowed the identification of disbursement protocols and legal frameworks, and outlined the monitoring system to be implemented to assess progress toward development objectives. 59. The Bank’s team made regular supervision missions and kept itself informed on project implementation by having a continuous dialogue with the government. Apart from the supervision missions, the two yearly reports produced by the Government allowed the team to follow progress towards the achievement of its PDOs. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 60. Both the Bank’s performance for quality at entry and quality of supervision was satisfactory, therefore the overall performance is rated as satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory Refer to paragraph 61. (b) Implementing Agency or Agencies Performance Rating: not applicable (The Government and the implementing agency were the same) (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 15 Operational Manuals are not required by the Bank for this type of operation. 23 61. Overall Government performance is rated satisfactory in accordance with the following criteria: i. The enabling environment included supportive macro, sectoral, and institutional policies that were appropriate to country circumstances. Despite the Global Financial Crisis the government maintained a sound macro-economic policy and was committed for the development of the disaster risk management program. In the aftermath of the widespread floods the Government decided to rearrange the main agency in charge of developing the disaster risk management agenda giving it higher levels of authority and autonomy. ii. The Government’s implementation arrangements were aligned with the project’s needs. While no specific implementation unit was created for project implementation and the Government’s existing institutions were used, the Operational Manual identified which agencies or ministries needed to take an active role in the project and defined specific responsibilities for each. iii. The Government’s Operational Manual and yearly reports allowed adequate M&E of the project’s progress towards achieving PDOs. iv. Implementation issues were resolved in a timely manner, resulting in a timely disbursement of funds. v. The Government was overall committed to the development of the disaster risk management agenda. vi. The Government did not manage to clarify in a timely manner the existing legal framework that constrained the revolving mechanism of the CAT DDO, which delayed transitional arrangements towards a new operation. 6. Lessons Learned 62. The Operational Manual presented by the Government, which was a first for this type of operation, proved to be an efficient instrument to guide project’s implementation. The Operational Manual accurately identified institution’s responsibilities, disbursement and monitoring procedures. The latter served, among others, to mitigate the risks due to changes in the administration and of delays in disbursement. 63. In order to rapidly respond to a disaster it is as important to have measures in place for identification of affected areas and disaster response priorities, as it is for a timely disbursement of funds. The natural disaster that led to the declaration of national state of disaster in Colombia in December 2010 revealed how the impacts caused by widespread flooding were more difficult to assess that those generated by other types of hazards, which are concentrated in a given territory. The delays in identifying affected areas and the magnitude of the disasters led to delays in the declaration on national state of disaster and therefore, in the request and disbursement of funds under the CAT DDO. 64. The lack of a detailed plan to follow in the aftermath of a catastrophic event can affect the efficiency of the Government to respond to the disaster. While at the time of the widespread floods the Government was able to collect sufficient funds, spending them rapidly, in order to efficiently respond to the catastrophe, was problematic. The latter was due, in part to the difficulty in identifying the exact needs of the affected territories as well as setting rules to prioritize response actions. This along with the delays of formal information flows demonstrates the importance of having a solid information system and suggests that having a roadmap to execute resources might be useful for the borrower. 24 65. This operation confirmed that apart from its “bridging capacities�, the DPL with a CAT DDO is a valuable instrument to provide comforting signals to financial markets and the population. The borrower highlighted that having access to a contingent credit line, like the CAT DDO, had reduced the negative effects on markets of the declaration of national state of disaster and provided a strong message to the Colombian population that the Government was prepared to respond to a large scale natural disasters. Furthermore, during the catastrophe there was no need to restructure ongoing Bank operations to reallocate funds for disaster response. The previous suggests that, as in the case of other Deferred Drawdown Option loans of the Bank, when uncertainty is high but a country’s macroeconomic fundamentals are strong, the Bank can be an effective partner in helping to reassure the markets. 66. A diagnostic of the country’s legal framework at appraisal and a constant dialogue with the government’s legal department during supervision can be an effective tool to identify legal constraints that would allow the country to benefit from the revolving feature of this type of loan and act accordingly. As previously mentioned, in this operation, due to legal constraints it was not possible for the government to benefit from the revolving mechanisms permitting the Government to repay the original loan amount and continue the use of the DPL with a CAT DDO. The latter resulted in the need to prepare a second DPL with a CAT DDO that left a gap in time between the two projects, during which the Government was not covered. 67. The CAT DDO should be part of a country’s broader disaster risk financing strategy. There is a need to include this type of instrument in a broader fiscal strategy for the protection to natural disasters that will allow the Government to make decisions about whether or not they need to access funds at a given point. Having a consolidated fiscal strategy enhances the efficiency of this type of instruments and the benefits that the Government can obtain with this contingent credit line. 68. Given the revolving option of this credit line, the Bank needs to develop a more consistent result framework to correctly assess achievement of development objective for the possible total time of implementation. Although the DPL with a CAT DDO in Colombia did not benefit from the revolving option, the outcomes and benchmarks identified at appraisal would not have permitted to evaluate further progress in the government’s disaster risk management program for longer periods of implementation. The latter suggest that a more long-term results framework needs to be developed for this type of operation in order to allow an assessment of progress for each period of implementation, if the revolving mechanism is used. 69. The implementation of the DPL with a CAT DDO along with other lending and non- lending activities, such as the first APL, was beneficial for the development of a more integral approach to disaster risk management in the country. The combination of technical assistance, specific investment lending and the DPL with a CAT DDO served to strengthen the policy dialogue with the government and assist them in the strengthening both their technical expertise and institutional capacities. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners The Government and the implementing agency were the same. A summary of the Borrower’s ICR can be found on Annex 4. There were no major comments made or issues raised by the Borrower on the Bank ICR. 25 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Lending Niels B. Holm-Nielsen TTL - Senior Disaster Risk Management Specialist LCSUW Francis Ghesquiere Lead Urban Specialist LCSUW Carlos Costa Consultant LCSUW Edward Anderson ET Consultant LCSUW Ana Maria Torres Consultant LCSUW Armando Guzman Senior Disaster Risk Management Specialist LCSUW Emma Phillips Consultant LCSUW Joaquin Toro Disaster Risk Management Specialist LCSUW Ana Daza Program Assistant LCSUW Maricarmen Esquivel Consultant LCSUW Christian Yves Gonzalez Economist LCSPE David Rosenblatt Lead Economist and Sector Leader LCSPE Manuel Vargas Sr Financial Management Specialist LCSFM Supervision Eric Dickson Disaster Risk Management Specialist LCSUW Ana Campos Garcia E T Consultant LCSUW Francis Ghesquiere Program Manager SASDU Olivier Mahul Program Coordinator FCMNB Ulrich Cedric Myboto Consultant CCAVP-LVL Ana Maria Torres Consultant BDM (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY 2009 2.4 28.0 Total: 2.4 28.0 Supervision/ICR FY 2009 5.03 19.7 FY 2010 8.89 34.2 FY 2011 7.32 18.0 FY 2012 19.38 59.8 Total: 40.62 131.7 26 Annex 2. Beneficiary Survey Results Not applicable 27 Annex 3. Stakeholder Workshop Report and Results Not applicable 28 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR 1. The Government believes that the DPL with a CAT DDO achieved its objectives since it allowed the Government to benefit from a rapid flow of resources following the declaration of national state of disaster. Furthermore, when compared to the disbursement procedures of the contingent credit line under the first APL, the DPL with a CAT DDO was considered a better option since it allowed for a quicker disbursement and more flexible use of funds. 2. The Government considers that the declaration of national state of disaster is an adequate trigger and recommends using the same trigger for the follow up operation since this type of declaration is only used in exceptional circumstances due to the possible consequences it may have on the country’s risk ratings or in the level of confidence of investors. 3. The Government highlighted the importance of having systematically robust instruments for information management that allow a prioritization of actions for emergency response. It considers that having robust evaluation instruments of the level of damage will allow having a faster prioritization of actions, and lead to a more efficient use of the available resources. Strengthening information flows between the different levels of governance was considered a key component for a better information management. 4. The implementation of the project along with the current portfolio of Bank operations in Colombia is considered to be essential for the development of an integrated disaster risk management approach in Colombia. In addition, the assistance provided by the Bank was considered fundamental for the achievement of the project’s objective and key indicators. The expansion of the disaster risk monitoring system and municipal disaster risk management plans were considered among the most relevant results. 5. Finally, the Government acknowledges that there is a higher level of awareness of risk and its consequences on the country’s development. This is reflected in the inclusion of disaster risk management activities in a number of sectoral plans, although resources are not always assigned for the development of these activities. The 2010-2014 National Development Plan as well as the follow up operations (second DPL with a CAT DDO and second phase of the Disaster Vulnerability Project) are expected to further promote the development of sectoral instruments for a better disaster risk management. 29 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 30 Annex 6. Institutional Arrangements for Project Implementation Figure 1 presents the Government institutional arrangement for project implementation. Each of these institutions had specific responsibilities described by the Operational Manual. Ministry of Justice and Interior: For this operation the Ministry of Justice and Interior was in responsible for programming and executing disbursement drills, revising and adjusting disbursement protocols and providing information for the operation’s yearly reports to the National Planning Department. National Planning Department: The National Planning Department was responsible for coordinating and updating the Operations Manual, consolidating information, writing annual reports, and following up on the program supported by this DPL to assure the achievement of objectives. Ministry of Finance and Public Credit: The Ministry of Finance and Public Credit was responsible for of developing the additional budget decree that will allow incorporating funds from the CAT DDO and developing the framework for contingent financing in coordination with the National Planning Department. Figure 1: Institutional Arrangements National Government Ministry of Justice National Planning Department Ministry of Finance and Public Credit and Interior Disaster Risk General Sub-direction General Public Credit and General Public Management National Treasury Budget Direction Direction Direction Credit Sub- Risk Sub- Social direction direction Development Sub-direction Sustainable Operations Sub- Development direction Sub-direction Multilateral Credit Financing Sub- direction 31 Annex 7. Impact of La Niña 2010-2011 on the Colombian economy Impact of the 2010-2011 Flooding The impact of the 2010-2011 La Niña event reflects the complexity of hazard risk in Colombia and the gaps and deficiencies facing disaster risk management. When compared with recent records of reported disasters from 2000-2009, the recent flooding affected approximately 3.5 million people and resulted in accumulated damages and losses amounting to 25% of the previous decade’s totals (see Figure 2), one-third of reported deaths and affected persons, and approximately 50% of houses damaged. The floods emphasized to a large degree what was already known: there is a need to strengthen the national system for a more efficient management of hazard risk. Figure 2: Estimated Economic Losses from La Niña 2010-2011 Losses: US$4.5 billion (to February 2011) Source: BID – CEPAL 2011 32 Annex 8. Hazard Monitoring and Response Data The following figures refer to progress made in key indicators during project’s implementation. Figure 3: Volcanic Hazard Monitoring Network Expansion for Calendar Year 2011 70 60 Installed Stations 50 40 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Programmed Executed  Source: Ingeominas, Informe de Gestión 2011 Figure 4: National Calamities Fund: Requests from affected population against requests addressed 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* Number of requests Requests addressed Source: Ministerio del Interior y de Justicia – Dirección de Gestión del Riesgo. Information for 2012 is from January to May. 33 Annex 9. List of Supporting Documents World Bank IBRD, Project Appraisal Document, Natural Disaster Vulnerability Reduction Project in support of the first phase of the Natural Disaster Vulnerability Reduction Program, April 11, 2005. IBRD and IFC, Country Partnership Strategy for the Republic of Colombia for the period FY2008-2011, March 4, 2008. IBRD, Program Document, Proposed Disaster Risk Management Development Policy Loan with a Catastrophic Risk Deferred Drawdown Option, November 13, 2008. Treasury, Catastrophe Deferred Drawdown Option Product Note, April 26, 2011. IBRD and IFC, Country Partnership Strategy for the Republic of Colombia for the period FY2012-2016, June 11, 2011. IBRD, Program Document, Second Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option, June 2012. Government Ministerio de Hacienda y Credito Publico, Ministerio del Interior y de Justicia, Departamento Nacional de Planeacion, Manual Operativo: Politica de Desarrollo para la Gestion del Riesgo de Desastres Naturales, Contrato de Prestamo BIRF 7618- CO, Septiembre 2010. IDEAM, Informe de Gestion 2011, Febrero de 2012. Ingeominas, Informe de Gestion 2011, Febrero de 2012. 34 IBRD 33388R 75°W 70°W Puerto Bolívar C a r i bb e an S e a J IR A Ríohacha UA G To Santa Marta LA Maracaibo Barranquilla Pico Cristóbal Colón AT L � N T I C O (5,775 m) COLOMBIA A Cartegena Valledupar N LE DA 10°N Maganqué CESAR Lago de AG Maracaibo M Sincelejo PA NA El Baneo SU Monteria M CR AR Acandí NORTE DE E Ocaña A SANTANDER L�V Turbo A D OB To R.B. DE BO ÓR Mérida Cúcuta C VENEZUELA uca To Ca Cord Guasdualito Bucaramanga Yarumal le na Arauca iller da Socorro ANTIOQUIA Ma g ARAUCA C� Atra ER a O AND Casanare PAC IF IC SANT to YA Medellin Puerto cci BO Carreño OCEAN dental Quibdo Chiquinquirá Puerto S CASANARE CHOCÓ LDA Tunja Nueva CA Manizales CUNDINA- Yopal 5°N RISARALD� Santa Rita 5°N Cartago Pereira MARCA BOGOT� VICHADA Atacavi ta Armenia Me QUINDIO tal San Pedro Gaviotas Ibaque Giradot en Villavincencio Chaviva Vich a da ri al Buenaventura Buga M A O ntr VALLE DEL LI a DISTRITO Puerto TO Palmira Inirída Ce er CAPITAL ill CAUCA Cali M E TA rd a San Juan er Co de Arama ill Neiva Guaviare GUAIN�A rd CAUCA HULA Mapiripana Tabaquén Co San José Guapí Popayan del Guaviare Brujas San Vicente Garzon del Caguán Calamar Patía Tumaco Neg Florencia G U AV I A R E NARIÑO ro San Rafael Miraflores Mitu Pasto Cagu Mocoa Vau pés án Yavarate To Ipiales PUTUM CAQUET� VA U P É S Puerto AY Ibarra Asis O Macujer Puerto Huitoto 0°N Puerto 0°N Leguízamo Puerto Lérida E C U A DOR Pizarro Caq u etá Puerto Santander Locas de Ptu Cahuinari ma y CO LOMB I A o La Pedrera AMAZONAS El Encanto SELECTED CITIES AND TOWNS BRA ZI L DEPARTMENT CAPITALS NATIONAL CAPITAL PERU RIVERS This map was produced by the Map Design Unit of The World Bank. The boundaries, MAIN ROADS 0 80 160 240 320 Kilometers colors, denominations and any other information shown RAILROADS on this map do not imply, on Leticia the part of The World Bank 0 40 80 120 160 200 Miles Group, any judgment on the DEPARTMENT BOUNDARIES legal status of any territory, or any endorsement or INTERNATIONAL BOUNDARIES acceptance of such 75°W 70°W boundaries. FEBRUARY 2009