INVESTING IN URBAN RESILIENCE Protecting and Promoting Development in a Changing World In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 1 1 © 2015 International Bank for Reconstruction and Development/International Development Association or The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: ww.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202- 522-2422; e-mail: pubrights@worldbank.org. Photo Credits photos have been sourced from the following locations with full rights: World Bank Flickr Website United Nations Flickr Website iStockphoto In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 2 2 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce 3 3 Table of Contents 8 Acknowledgments 10 Acronyms 12 Executive Summary 12 Why Do We Care About Urban Resilience? 14 Why Resilience Matters to the Urban Poor 15 What Are the Needs for and Obstacles to Investing in Urban Resilience? 16 How Can the World Bank Group Help Make Cities and the Urban Poor More Resilient? 18 1. Why Do We Care about Urban Resilience? 19 1.1 Defining Urban Resilience 22 1.2 Why is it Urgent to Invest in Urban Resilience 28 1.3 Increasing International Focus on Urban Resilience 32 2. Why Urban Resilience Matters to the Urban Poor 33 2.1 The Increasing Urbanization of Poverty 34 2.2 Factors That Increase the Risks Faced by the Urban Poor 37 2.3 A Growing Awareness of the Urban Resilience-Poverty Linkages 39 2.4 Urban Poverty Impacts In The veWorld stin 42 3 Financing Needs and Overcoming Obstacles Bank g i n |U r 44 3.1 Financing Needs for Making Cities More Resilient Investing 45 3.2 Obstacles to Financing Urban Resilience b a n Rin 56 3.3 The Potential for Private Finance e Urban silie 60 4. Opportunities: How the World Bank Group Resilience nce Can Add Value to Urban Resilience 61 4 4 4.1 What Strategies Are in Place to Help Secure Resilience Funding? 64 4.2 Where Does the WBG have Comparative Advantages? 70 4.3 World Bank Services for Supporting Urban Resilience 75 4.5 What the World Bank Will Do Differently to Make Cities More Resilient 79 4.6 In Conclusion 80 ANNEX 1: SAMPlE DEFINITIONS OF URBAN RESIlIENCE 81 ANNEX 2: World Bank Urban Resilience Portfolio 92 ANNEX 3: World Bank Instruments for Investing in Urban Resilience 92 Individual and Household Level Financing and Services 93 Community Level Financing and Services 95 City-Level Financing and Services 99 Country-Level Financing and Services 105 Leveraging Instruments 109 ANNEX 4: External and Internal Partnerships for Urban Resilience 112 Endnotes In 114 References The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 5 5 List of Tables 19 Table 1.1: Classification of Urban Hazards 74 Table 4.1 World Bank Instruments for Urban Resilience 81 Table A1: Non-core urban resilience theme codes List of Figures 23 Figure 1.1: Share of national population and GDP in selected developing cities 24 Figure 1.2: City growth rates by level of vulnerability and city size 27 Figure 1.3: Economic losses relative to GDP by income group, 1990-2013 39 Figure 2.1 umber of urban dwellers living below the USD 1.25/ day poverty line under different economic and climate scenario 40 Figure 2.2: Distribution of urban dwellers living below the USD 1.25/day poverty line in different geographic regions 64 Figure 4.1: Urban Resilience lending Commitment by Region Fy12–16 65 Figure 4.2: Urban Resilience lending Commitment by Instrument Fy12–16 76 Figure 4.3: Sample menu of options for urban resilience investments In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 6 6 List of Boxes 19 Box 1.1 Facing a Broad Set of Shocks and Stresses in Beirut 48 Box 3.1: Financing utilities with a bond for partial credit guarantee 52 Box 3.1: Public-private partnership to enhance energy resilience in zambia 62 Box 4.1: South Africa Project on Utility Driven Energy Ef ciency / SmartGrid 63 Box 4.2: Performance-based Contracting in Brazil 65 Box 4.3: Can Tho Urban Development and Resilience Project 66 Box 4.4: Istanbul Seismic Risk Mitigation and Emergency Preparedness Project (ISMEP) 69 Box 4.5: Using Analysis for Safe and Resilient Cities in Ethiopia 72 Box 4.6: Development Policy lending for Belo Horizonte 77 Box 4.7: Partnering to Enhance Resilience in Metropolitan Accra In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 7 7 Acknowledgments This flagship report was written by DRM Specialist, GSURR), Stephane Valerie-Joy Santos (Senior Urban Hallegatte (Senior Economist, GCCPT), Specialist, GSURR) and Josef Leitmann Friedemann Roy (Senior Housing (Lead DRM Specialist, GFDRR) with Finance Specialist, IFC), Lisa Da Silva inputs from David Satterthwaite (Principal Investment Officer, IFC), (Senior Fellow, IIED), Christopher J. Thierno Habib Hann (Senior Housing Chung (Disaster Risk Management Finance Specialist, IFC), William Britt Specialist, GFDRR), and Puja Guha, Gwinner (Principal Operations Officer, Swati Sachdeva and Akshatvishal IFC), Giridhar Srinivasan (Senior Rohitshyam Chaturvedi (Consultants). Operations Officer, CDPPR), Edmond Chapter 2 especially benefited from Mjekiqi (Strategy Officer, CRKDR), the work of Jorgelina Hardoy, Gustavo Ranjan Bose (Senior Consultant, Pandiella, Cassidy Johnson, Sarah GSU08) as well as external peer Colenbrander, Diane Archer, Donald reviewers: Omar Siddique (Cities Brown, and Maria Evangelina Filippi Alliance), Patricio Zambrano Barragan (IIED). Sarah Colenbrander (IIED) led (IADB), Esteban Leon and Lisa Smyth the urban analysis of the Shock Waves (UN-Habitat), Leah Flax (100 Resilient data in Chapter 2 which was kindly Cities), and Neil Walmsley (C40). provided by Stephane Hallegatte The report also benefited from inputs (Senior Economist, GCCPT) and Julie received during two international Rozenberg (Economist, GGSCE). consultations. The first was held at the This report was prepared under the Resilient Cities 2016 Conference (Bonn, guidance of Ede Jorge Ijjasz-Vasquez Germany, July 8, 2016) organized (Senior Director, GSURR), Sameh by ICLEI – Local Governments for In The Naguib Wahba (Director, GSURR), Sustainability and the second took veWorld stin Senait Nigiru Assefa (Practice place at The International Emergency Manager, GSUGL), and Francis Management Society’s 2016 annual Bank g i n |U r Ghesquiere (Manager, GFDRR). The conference on “Innovation and authors would like to acknowledge Urban Planning for Emergency Investing b a n Rin the valuable contributions to the Resilience in Large Cities” (San report from internal peer reviewers, Diego, USA, September 13, 2016). e Urban silie including Stephen Hammer (Manager, We thank the team at Lemonly, GCCPT), Maria Angelica Sotomayor Resilience including Tess Wentworth (Project nce (Lead Economist, GSURR), Catherine Manager), for the design and layout Lynch (Senior Urban Specialist, of the report and Nicholas Paul 8 8 GSUGL), Niels B. Holm-Nielsen (Lead for proofreading and copyediting services. We also thank Shaela We sincerely thank Catherine Lynch Rahman (Senior Communications (Senior Urban Specialist, GSUGL), Officer, GFDRR), Kristyn Schrader- Rebecca Ann Soares (DRM Portfolio King (Senior Communications Officer, Research Analyst GFDRR) and Jared GSURR) and their team including Phillip Mercandante (DRM Analyst, Devan Julia Kreisberg, Vittoria GFDRR) for their invaluable input and Franchini, and Swati Sachdeva for support for the portfolio review. coordinating and supporting varied Finally, the authors would also like communication products for Habitat to acknowledge the Global Facility III conference including this report. for Disaster Reduction and Recovery Special thanks are due to Lisa Da Silva (GFDRR) and Global Practice of Social, (Principal Investment Officer, CNGWM, Urban, Rural, and Resilience (GSURR) IFC), Enrique Pantoja (Operations for their generous funding and support. Advisor, OPSPQ), Stephane Hallegatte (Senior Economist, GCCPT), Thomas Moullier (Senior Regulatory Specialist, GTCIC), Janina Franco (Senior Energy Specialist, GEE04), Olga Calabozo Garrido (Underwriter, MIGOP, MIGA), Aditi Maheshwari (Policy Officer, CBDPT, IFC), Roger Gorham (Transport Economist, GTI04), Joel Kolker (Lead Water & Sanitation Specialist, GWAGP), Glenn Pearce-Oroz (Lead Water Supply and Sanitation Specialist, GWA01), Maria Angelica Sotomayor (Lead In The Economist ,GSURR), Luiz T. A. Maurer veWorld (Principal Industry Specialist, IFC), stin Montserrat Meiro-Lorenzo (Senior Bank g i n |U r Public Health Spec., GCCPT), Russell A. Muir (IFC) , Daniel Pulido (Senior Investing b a n Rin Infrastructure Specialist, GTIDR), Georges Bianco Darido (Lead Urban e Urban Transport Specialist, GTIDR), Vladimir silie Stenek (Senior Climate Change Resilience nce Specialist, CBDRR), and Sajid Anwar (DRM Analyst, GFDRR) for providing valuable inputs and comments during 9 9 our interviews with each of them. Acronyms AAL Average Annual Loss APL Adaptable Program Loan AMS Asset Management System CDD Community Driven Development CFR Code for Resilience COP Conference of the Parties CAFF Climate Adaptation Finance Facility CAT-DDO Development Policy Loans with Catastrophe Deferred Drawdown Option CERC Contingent Emergency Response Component CIF Climate Investment Funds CPFs Country Partnership Frameworks CRW Crisis Response Window DBR Doing Business Report DPL Development Policy Loan DRM Disaster Risk Management ERL Emergency Recovery Loan EMDEs Emerging Markets and Developing Economies In esMid Efficient Securities Markets Institutional Development The veWorld stin GDP Gross Domestic Product Bank g i n |U r Gemloc Global Emerging Markets Local Currency Bond Program GFDRR Global Facility for Disaster Reduction and Recovery Investing b a n Rin GSURR Social, Urban, Rural and Resilience Global Practice, World Bank GIF Global Infrastructure Facility e Urban silie GIIF Global Index Insurance Facility Resilience nce HFA Hyogo Framework for Action 10 10 HIPC Highly-Indebted Poor Countries ICR Inclusive Community Resilience IDA International Development Association IDB Inter-American Development Bank IIED International Institute for Environment and Development IFC International Finance Corporation IFFIm International Finance Facility for Immunization IPF Investment Project Finance ODA Official Development Assistance MCUR Medellin Collaboration for Urban Resilience MCPP Managed Co-Lending Portfolio Program MDB Multilateral Development Bank MIGA Multilateral Investment Guarantee Agency Nhfo Non-honoring Financial Obligation NHSFO Non-honoring Sovereign Financial Obligation PforR Program for Results PCF Prototype Carbon Fund PCG Partial Credit Guarantees PPIAF Public Private Infrastructure Advisory Facility PPP Public Private Partnership R2D2 Responding to Disasters Together In SCD Systematic Country Diagnostic The veWorld stin SDGs Sustainable Development Goals SEC Securities and Exchange Commission Bank g i n |U r SIDA Swedish International Development Cooperation Agency Investing b a n Rin SIL Specific Investment Loan SISRI Small Island States Resilience Initiative e Urban silie SMEs Small-and medium-sized Enterprises Resilience nce SNTA Sub-national Technical Assistance Program SSN Social Safety Net 11 11 TA Technical Assistance WBG World Bank Group Executive Summary Cities are the world’s engines for economic of the world’s poor, developing resilient cities growth, generating more than 80 percent of is becoming all the more critical. This report global GDP. Strengthening urban resilience 1 explores the rationale for increasing investment In globally is a key element of sustainable in the resilience of cities and their citizens to The ve development and in achieving the World Bank natural disasters and climate change, recognizing World stin Group’s twin goals of ending extreme poverty that doing so will also help them cope with a Bank and boosting shared prosperity. In this report, broader range of shocks and stresses. Failing g i n |U r resilience is defined as the ability of a system, to invest in city resilience threatens progress entity, community, or person to adapt to a made in economic growth while gains already Investing b a n Rin variety of changing conditions and to withstand made in reducing poverty may be erased. shocks while still maintaining its essential Increasingly, institutions like the World e Urban functions (World Bank 2014a). Resilience is silie Bank Group have developed more effective also about learning to live with the spectrum ways to partner with city governments to Resilience of risks that exist at the interface between nce eliminate poverty, mitigate and adapt to people, the economy, and the environment climate change and disasters as well as (Zolli 2012). As the climate continues to change 12 12 and the adverse impacts of disasters increase promote cities as engines for job creation and economic growth. However, meeting all in cities which are housing a growing number the resilience financing needs of cities in the Why Do We Care About developing world will require far more resources Urban Resilience? than exist amongst all multilateral development finance institutions combined. Significant need In recent years, losses associated with and opportunities exist for the private sector natural events have increased considerably. to invest in the resilience of cities globally. The These trends are expected to become more World Bank Group has the tools, expertise and pronounced as global population growth and experience to enable and leverage private sector rapid urbanization in the developing world capital towards urban resilience investments. threaten to reverse hard-won development gains. By 2030, 325 million extremely poor people3 Purpose and structure. The purpose of this will be living in the 49 countries that are most report is to highlight the need and potential for prone to hazards (Shepherd et al. 2013). investing in urban resilience in low and middle- income countries.2 This will be achieved by: In parallel, the world is also rapidly urbanizing. Urban areas are adding 1.4 million people per • demonstrating why the international development community should care week (UN DESA 2014). Over 60 percent of the about making cities in the developing land projected to be urban by 2030 has yet world more resilient (Chapter 1); to be developed (UNISDR 2015). Additionally, • understanding why shocks and nearly 1 billion new housing units will need to stresses disproportionately affect the urban poor (Chapter 2); be constructed to house the world’s growing population by 2060 (Bilham 2009). Much of • identifying financing needs and obstacles to be overcome (Chapter 3); and, this growth will take place in the developing • setting out a vision for how the world, with 90 percent of urban growth through World Bank Group can facilitate more 2050 expected in sub-Saharan Africa and Asia public and private sector investment (UN DESA 2014). Decisions about investments in urban resilience (Chapter 4). in urban infrastructure, buildings and land The audience for this report includes use taken now will have huge implications for stakeholders in vulnerable cities in the development outcomes in the future, and can developing world, potential investors in urban prove critical in preventing cities from being resilience as well as existing and future partners locked into unsustainable development pathways working on advancing resilience in cities that will expose them to increasingly intense In The ve and frequent urban shocks and stresses. World stin People and assets in cities are increasingly exposed to hazards. As people and enterprises, Bank g i n |U r with their assets, increasingly concentrate in cities, they become highly dependent on Investing b a n Rin infrastructure networks, communications systems, supply chains, and utility connections for their e Urban well-being. Natural and manmade disruptions silie to these highly dependent and interconnected Resilience nce systems can have a catastrophic impact on a city’s ability to meet the most basic needs of its citizens – and can, with cascading failure, become the Achilles heel of a highly efficient 13 13 and interrelated network. Rapid and unplanned of USD 1 trillion or more per year by 2050 urbanization is a particular driver of risk: without further investment in adaptation development in high-risk areas, such as hillside and risk management (Hallegatte S. 2013). slopes, floodplains, or subsiding land, is often Global Implications: Finally, the impact of local uncontrolled, as the poor and the vulnerable events can have global repercussions – crop settle in hazardous areas because they are more failure in one corner of the world can lead to affordable. Often, these impacts are felt most in political instability in another, for example, the countries least able to manage and adapt to while floods in a single city can disrupt increasing disaster vulnerability and changing supply chains of a key product globally. conditions associated with climate change. But this pessimistic scenario is not inevitable. The adverse impacts of disasters and Over the next 15 years, annual investments climate change are felt most acutely in of USD 6 billion in appropriate disaster risk cities. Cities are the drivers of economic management strategies could generate total risk development and social progress in developing reduction benefits of USD 360 billion (UNISDR countries but are also home to many of 2015a). If all countries implemented a “resilience the world’s poor. This concentration of package”, the gain in well-being would be wealth and vulnerability has its costs: equivalent to an increase in national income of Growing economic cost of disasters: Global billions per year. This package would consist average annual losses (AAL) from disasters in of better financial inclusion, development of the built environment are now estimated at disaster risk and livelihood insurance, increased USD 314 billion and can increase to USD 415 coverage of social protection and scalable safety billion by 2030, due to investment requirements nets, contingent finance and reserve funds, and in urban infrastructure (UNISDR 2015a). And universal access to early warning systems. this is a low estimate, as it does not include There is a window of opportunity for cities the impact of threats beyond tropical cyclones, and investors alike to meet the challenge earthquakes, tsunamis, and floods such as of urban resilience. Proactively investing social and economic shocks and stresses. in resilience – prior to the occurrence of a Disproportionate impact on the urban poor: catastrophic event – represents a strategic In Failure to invest in urban resilience can have shift from past development trends whereby The ve significantly adverse impacts on the urban poor. investments were largely mobilized towards World stin Disasters and the effects of climate change, recovery and reconstruction post-disaster. The Bank such as increased food prices, could reverse international community has recently begun to g i n |U r many development gains and force tens of recognize the importance of the urban resilience millions of urban residents back into poverty. challenge, through such initiatives as the Sendai Investing b a n Rin Framework on Disaster Risk Reduction (March Varying levels of impact: The impact of climate 2015), the UN Sustainable Development Goals change will be experienced in different ways e Urban (September 2015), the 21st Climate Change silie by different urban localities. Cities located Conference of the Parties (December 2015), along the world’s tidal zones as well as in Resilience and the New Urban Agenda (October 2016). In nce areas where land is already subsiding will be parallel, the World Bank Group has a mandate particularly affected. For example, the risk to invest in urban resilience through its Climate 14 14 of sea-level rise and subsidence in the 136 largest coastal cities could result in losses Change Action Plan, urban strategy and efforts to mainstream disaster risk management. Why Resilience Matters Failure to invest in urban resilience can to the Urban Poor reverse development gains by sending millions back into poverty. Up to 77 million There is a growing awareness of the urban urban residents could fall back into poverty resilience-poverty linkages. Poverty is by 2030 in a likely scenario of high climate urbanizing and the urban poor, especially those impacts and inequitable economic growth. This in informal settlements, are increasingly faced is a conservative estimate based on a USD 1.25 with risks to their lives, health and livelihoods. poverty line which is applied nationally and More than 880 million urban residents were often understates urban poverty in cities. The estimated to live in slums in 2014, an increase of primary drivers of increased urban poverty will 11 percent since 2000. Regionally, more than 30 be higher food prices and the costs associated percent of city residents in South Asia and nearly with an increase in waterborne diseases. Most 60 percent in sub-Saharan Africa live in slums. of the increase in urban poverty due to climate (UN-Habitat, 2016b). Slums generally have lower change will be concentrated in the cities and levels of infrastructure and services and are more towns of South Asia and sub-Saharan Africa. exposed to hazards of varying types. In addition, the majority of internally displaced people and What Are the Needs for refugees are increasingly settling in cities, and and Obstacles to Investing represent a special class of vulnerable people. in Urban Resilience? Risks faced by the urban poor relate to their Significant financing is needed to invest in limited economic base, location, low access to urban resilience. The global need for urban risk-reducing infrastructure and services as infrastructure investment amounts to USD well as inadequate governance and disaster 4.5 - 5.4 trillion per year, of which an estimated risk management. Firstly, the urban poor often premium of 9–27 percent is required to make cannot afford safe housing and lack assets to this infrastructure low-emissions and climate cope with shocks and stresses. Next, many resilient (CCFLA 2015). A significant proportion poor neighborhoods are located in or close of this demand is from cities in the developing to hazardous zones which impose adverse world. For example, in sub-Saharan Africa, costs on their residents. Thirdly, poor cities infrastructure spending needs (including capital and communities are usually deficient in basic and operations and maintenance) range from In The a high of 37 percent of GDP in fragile low- ve infrastructure and services that can substantially World income countries to 10 percent in middle-income stin reduce exposure to natural and manmade hazards. In this sense, the resilience of the urban countries (Briceño-Garmendia et al, 2008). Bank g i n |U r poor is heavily tied to the quality of governance However, major obstacles exist that deter and government capacity to properly plan and mobilization of private capital towards Investing manage public infrastructure required to reduce b a n Rin new investment in urban resilience. The the risks faced by their lower-income residents. argument that cities in the developing world Finally, disaster risk management requires that e Urban “just need access to global capital markets” silie local governments engage with households and to invest in resilience-increasing activities communities at risk, taking into account the Resilience fails to recognize that many of these cities nce specific concerns of the urban poor especially are constrained by other factors that reduce their access to credit for climate-adaptive or other urban infrastructure investments: 15 15 Lack of government capacity – Capacity increase their own-source revenue, improve constraints include: the inability to plan fiscal management, enhance creditworthiness, and implement resilience investments; improve capital investment planning, and inability to generate sufficient revenue to prepare investor-ready projects. The burden meet existing obligations and maintain of risk mitigation is on a scale of magnitude on-going programs, adversely impacting beyond the capacity of the World Bank Group, their creditworthiness; national legal and or governments or cities, to carry alone. For regulatory systems that deter private this reason, in the case of infrastructure, for investment; political uncertainty; and general example, the World Bank Group can play a challenges to infrastructure development. critical role in leveraging third-party financing at the downstream, midstream and upstream Lack of private sector confidence – This segments of the investment value chain. (Levy is driven by some governance constraints 2016). Downstream actions would include (financial regulations and complexity, the promoting positive change in the environment policy environment including corruption, in which projects operate as well as improving political uncertainty, absence of financeable dispute resolution mechanisms, promoting and proposals) as well as lack of data and developing local capacity for pre-development standards to benchmark asset performance. financing, risk reduction and risk-sharing Challenges in project preparation – Limited measures as well as standardizing and sharing government experience with project project information through data platforms or identification and preparation - and limited hubs. Midstream actions could entail improving resources to commit to project preparation the financial performance of investments, - means that the pipeline of well-developed, funding the incremental costs of resilience, and financeable urban infrastructure and resilience encouraging the use of innovative financing projects offered to investors is limited. techniques which source from diverse financial resources (e.g. guarantees, commercial finance Financing challenges – The issues and refinance, pension and sovereign wealth revolve around: dependence of cities on funds). Upstream, beneficial work would entail intergovernmental transfers, low capacity to providing support to embed climate risks raise revenues for investments as well as limited and adaptation in ‘traditional’ infrastructure In funding for local entrepreneurs and SMEs. The projects through more sophisticated ve Cities in the developing world also struggle planning or developing and disseminating World stin to raise resources to fund their investment tools such as fixed-income infrastructure Bank needs, and at times struggle to fund ongoing g i n |U r indexes, while understanding the regulatory provision of public services, due to unfunded constraints and fiduciary responsibilities of mandates, limited sources of locally generated asset managers and their principals. Initial Investing b a n Rin revenue, and lack of creditworthiness. results are promising: every dollar spent by the MDBs in climate-related investments has The World Bank Group can help address these e Urban leveraged three dollars of private finance. silie constraints and stimulate investment from private capital, institutional investors, donor Resilience nce aid and finance, sovereign wealth funds and other multilateral development banks. Support 16 16 for overcoming obstacles includes technical assistance to subnational governments to How Can the World Bank Group for working across sectors (see Annex 3). Help Make Cities and the Importantly, as investing in urban resilience not Urban Poor More Resilient? only requires significant amounts of capital but also forward-thinking, long-term planning, the With its depth of experience, extensive WBG (along with other multilateral development in-house financial and technical expertise finance institutions) is uniquely positioned and unique convening power, the World Bank to support visionary city leadership with the Group has the capacity to scale up urban needed financial and technical support which resilience investment globally. The Bank has can span not only years, but also decades. worked in more than 7000 cities and towns across 130 countries, committing over USD There are concrete opportunities to scale up 50 billion through more than 900 projects investments in urban resilience. Private sector with climate-related activities over the past financing can be leveraged through a strategic five years and investing over USD 5 billion expansion of co-financing, lending, guarantees annually in disaster risk management. Core and other risk management instruments, and investment in urban resilience has averaged through concessional financing. A scaled-up almost USD 2 billion per year over the last Resilient Cities Program aims to benefit a billion five years for a portfolio of 79 projects in 41 people over the next two decades, crowding countries (see Annex 2). Finally, the World in USD 500 billion in private capital to finance Bank Group has demonstrated increased resilience in 500 cities and enable 50 million capacity to work across sectors, working with people to escape from poverty. The Program partners from private investors to national and would support more than 400 World Bank subnational governments who understand the task teams that engage with cities to better scale and timeframe of the challenges faced. respond to demand for investment in urban In this role, the Bank supports improved policy resilience. This will be complemented by work environments, leverages resources, and draws in cities that is supported by the World Bank on global knowledge – all of which are critical to Group’s Climate Change Action Plan. The helping city governments identify, prepare and Bank has pursued over a dozen external and implement investments in urban resilience. internal partnerships that will be fundamental to achieving these ambitious objectives (see The World Bank Group has the powerful Annex 4). By making urban resilience a formal In The ve financing products and services to help business line, the World Bank Group can scale World stin cities and the urban poor become more up its ability to provide financing, leverage resilient. The Bank’s current urban strategy is resources from the public and private sectors, Bank g i n |U r built around five thematic areas, one of which support better policies, strengthen partnerships, is making pro-poor policies a city priority. The and develop and share the knowledge needed to Investing World Bank Group can further help leverage b a n Rin make cities and the urban poor more resilient. the private capital required through a suite of existing instruments that identify risks, provide e Urban silie mitigation solutions and facilitate investment at the household, community, city, and national Resilience nce levels. These instruments are complemented with services to support urban resilience, such as analytical tools and methods, frameworks for policy dialogue and reform, and procedures 17 17 Why Do We Care about Urban Resilience? 01 Chapter 18 18 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce 1.1 — Defining transforming systems which inhibit current or Urban Resilience future adaptive capacity. Synergies and trade- offs must also be considered in order to identify Urban resilience has many definitions most of which take into account the ability to manage Investing in resilience the wide range of shocks and stresses which contributes to long- may occur in a city. There is no standard term sustainability definition, however, and a sample of existing by ensuring current definitions is provided in Annex 1. This report development gains defines resilience as the ability of a system, are safeguarded for entity, community, or person to adapt to a variety future generations. of changing conditions and to withstand shocks while still maintaining its essential functions “win-win” situations that reduce the possibility (World Bank 2014a). Notably, resilience refers of loss and increase potential benefits (World to the ability of a system to maintain or quickly Bank 2014a).2 Beirut provides an example of return to desired functionality following a this approach to urban resilience (see Box 1.1). Box 1.1: Facing a Broad Set of Shocks and Stresses in Beirut Home to more than half of Lebanon’s population, Beirut is growing rapidly while fostering a strong and vibrant private sector. In parallel, the city faces a growing spectrum of risks stemming from climate change, natural hazards (i.e. flooding, severe earthquake and subsequent tsunami), refugees and mass migration, and poor air quality, amongst others. Recurrent social, economic, and political shocks further challenge the sustainable development of the city. In response, the Beirut City Council has launched the City Resilience Project for Beirut with support from the World Bank. This project will develop a master plan needed to make the city more resilient to current and future challenges and will serve as the first step in its commitment to implement a series of multi- In sectoral initiatives and support an effective enhancement of the city’s resilience. The ve Launched in December 2015, the project will (1) conduct comprehensive city diagnostics to identify the range of shocks and World stin stresses faced by the city and analyze its capacity to mitigate and respond to them in the event of a disaster; (2) develop an integrated implementation strategy which will identify a set of interlinked short- and long-term multi-sectoral strategies; Bank g i n |U r and, (3) initiate a capacity-building program by engaging key city stakeholders and preparing an awareness-raising strategy. Investing Source: (World Bank 2016i) b a n Rin e Urban silie Urban resilience is a critical element of disruptive event (either natural or human- sustainable development. Investing in resilience Resilience nce induced), which may not be predictable. It contributes to long-term sustainability by incorporates the ability to avoid shocks and to ensuring current development gains are manage risks, while being able to constantly adapt to change when needed and quickly safeguarded for future generations. Resilience focuses especially on learning to prepare for, 19 19 adapt to, and respond to the spectrum of risks Resilience has often been associated with that exist at the interface between people, the the capacity of communities to withstand economy, and the environment (World Bank the impacts of climate change and disasters, 2014a, Zolli 2012). At the same time, investing which represent the major development in resilience is not a substitute for broader challenges of our time. As climate change and disasters have documented and measurable Climate change negative impacts on cities, climate change is expected to adaptation and disaster risk management have increase the come to represent the core of the overall urban intensity and resilience agenda. This is especially the case frequency of as climate change is expected to increase the existing hazards. intensity and frequency of existing hazards. In more recent years, the definition of resilience approaches to sustainability. For example, it does has broadened to include key aspects involving not provide the insights into social sustainability not only natural hazards, but also technological, that are gained through the social science social, economic, political and cultural shocks and concepts of agency, conflict, knowledge, and stresses (see Table 1.1 below). Select experiences, power (Olsson et al. 2015). Given the mandate lessons and solutions from climate change of the World Bank, issues of sustainability and adaptation and disaster risk management resilience in this report are primarily focused activities may be adapted and applied to the on cities of low- and middle-income countries. other hazards detailed below (and vice versa). Table 1.1: Classification of Urban Hazards Natural Technological Socioeconomic Drought Building collapse Business discontinuity Earthquake Chemical spills Corruption Epidemic/pandemic Cyber threats Demographic shifts In The Extreme temperature Explosion Economic crisis ve Flooding Fire High unemployment World stin Insect infestation Gas leak Labor strike/unrest Bank g i n |U r Severe storm Industrial accident Massacre Tsunami Oil spill Political conflict Volcanic eruption Pollution event Social conflict Investing b a n Rin Wildfire Poisoning Supply crises (e.g. food, water, housing, Radiation energy, etc.) e Urban Transport accident Terrorism silie System breakdown (e.g. ICT, War water and sanitation, energy, Resilience nce health, education, etc.) 20 20 Source: Adapted from UN-Habitat’s City Resilience Profiling Tool and based on classification of hazards by EM-DAT and PreventionWeb The disproportionate impact of urban shocks of municipal governments to take measures to and stresses on a city’s low-income population enable households, communities and enterprises and informal settlements is clearly apparent. to manage a stress or avoid a shock, and to A growing literature is drawing attention to maintain critical services following an adverse the lack of resilience amongst the urban poor. event (e.g. getting services up and running Poor people are disproportionately affected by following a disruption, repairing damages to shocks and stresses — not only because they are infrastructure). At the regional and national frequently more exposed (and subsequently more level, key actions — whether policy reforms, vulnerable) to climate-related shocks, but also because they have fewer resources and receive less support to prevent, cope with, and adapt to Poor people are them. Climate change is expected to intensify disproportionately these shocks and stresses and further hinder affected by shocks efforts to reduce poverty (Hallegatte, et al. and stresses. 2015). The importance of resilience for the urban poor is explored in greater depth in Chapter 2. investments, or financial protection strategies — can be pursued to enhance urban resilience in Resilience should be measured on different a specific city, vulnerable area or set of cities. scales — from the individual and household, to the community, municipal and national Resilience must also consider cities as levels. Prescriptive actions will also differ complex systems. Any approach to urban according to these scales. At the individual and resilience must take into account the household levels, for example, resilience would functional (e.g. municipal revenue generation), include the capacity to take action to manage organizational (e.g. governance and leadership), stresses and avoid the impact of shocks (e.g. physical (e.g. infrastructure), and spatial (e.g. living in safe households or locations protected urban design) dimensions, which are interrelated. Urban shocks follow a disruption or breakdown of individual or multiple parts of the urban system, whether economic recession, social upheaval, epidemics, or a failure of governance to deal with inefficiencies of the system. Resilience In The ve strategies and investments need to consider World stin these underlying relationships across multiple sectors (UN-Habitat,UNEP and UNISDR 2015). Bank g i n |U r The scope of urban resilience often extends beyond the administrative boundaries of a Investing b a n Rin single municipality due to regional, national by risk reducing infrastructure); to take action and global factors. A focus on overall resilience before the occurrence of a shock; to cope e Urban silie capacity rather than on only risk management with the impact when it does occur; and to and adaptation stems from a recognition bounce back or progress to a more resilient Resilience nce that a city’s functionality depends on goods state. At the community level, in addition to and services (including ecosystem services) these, resilience includes the capacity to work originating from beyond its own administrative together to manage a stress or avoid a shock. At the city level, resilience entails the capacity boundaries. This draws attention to regional, 21 21 Rapid urbanization 1.2 Why is it Urgent and increasing to Invest in Urban exposure to hazards Resilience threaten to drive the risk of stresses and Investing in urban resilience is critical in shocks to dangerous achieving sustainable development as well as and unpredictable the World Bank Group’s twin goals of ending levels with systemic extreme poverty and promoting shared global impacts. prosperity by 2030. Rapid urbanization and increasing exposure to hazards threaten to drive the risk of stresses and shocks to dangerous and national and global supply chains and financial unpredictable levels with systemic global impacts. flows as well as the socio-economic-political- In the built environment, global expected average cultural crises which originate from outside a annual loss (AAL) associated with earthquakes, city and thus the jurisdiction of its government. floods, tsunamis, storm surges, and wind from For example, a city’s water, food and energy tropical cyclones is now estimated at USD 314 resources are generally supplied from beyond a billion (UNISDR 2015a). A recent projection city’s administrative boundaries, and this should states that 325 million extremely poor people be taken into account when considering its will be living in the 49 countries most prone to resilience. Similarly, safeguarding against floods hazards by 2030 (Shepherd, et al. 2013). Since entails not only flood protection works within a many of these poor and vulnerable people will be city but also effective watershed management, living in urban environments, eliminating poverty which is often upstream of a city’s jurisdiction. and safeguarding development gains cannot be In addition, a city’s resource consumption achieved without addressing disaster impacts patterns have upstream consequences while and climate events in urban settings. its emissions of waste have downstream impacts. Examples of inter-connections, such as these therefore demonstrate the exposure of a city to events beyond its borders. In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 22 22 Figure 1.1: Share of national population and GDP in selected developing cities 100 Share of national GDP (%) Share of national population (%) 80 60 40 20 0 Abidjan Addis Ababa Bangkok Bogota Brasilia Buenos Aires Cairo Cape Town Chittagong Dar es Salaam Dhaka Hanoi Jakarta Kabul Karachi Khartoum Kinshasa Lima Manila Mumbai Nairobi Rio de Janeiro Santiago São Paulo Shanghai Yagon Source: UN-Habitat, 2011 Rapid urbanization Unprecedented urbanization has The world is rapidly urbanizing, with up transformed the planet to 1.4 million people per week moving into from 30 percent urban in urban areas. Unprecedented urbanization 1950 to over 54 percent has transformed the planet from 30 percent urban today, and this urban in 1950 to over 54 percent urban today, will reach an estimated and this will reach an estimated 66 percent by 66 percent by 2050. 2050. Over 60 percent of the land projected to In The ve become urban by 2030 has yet to be developed. the country’s population living in cities by 2050. World stin (UNISDR 2015a). And nearly 1 billion new In sub-Saharan Africa, similar growth rates will housing units will need to be constructed to result in 56 percent of the region’s population Bank g i n |U r house the world’s growing population by 2060 living in urban areas by 2050, compared to 40 (Bilham 2009). Currently, the majority of the percent today (UN DESA 2014). As cities grow Investing world’s 3.9 billion urban dwellers reside in b a n Rin and grapple with uncertainties and challenges developing countries, where most future urban like climate change, it is becoming increasingly growth is also expected (UN DESA 2014). e Urban urgent for municipalities and their partners silie to address urban resilience (Carmin 2012). A significant portion of new urban expansion Resilience nce will occur in South Asia and sub-Saharan Some of the fastest urban growth in the Africa. In India alone, the number of urban developing world will be experienced in small dwellers is expected to increase by 404 million over the next 35 years, with nearly 50 percent of and medium-sized cities.3 By some estimates, populations are expected to rise by more than 32 23 23 Figure 1.2: City growth rates by level of vulnerability and city size City growth rates, City according growth to relative rates, according vulnerability to relative and proportion vulnerability of urban and proportion population of urban (2000–15) population (2000–15) Very high Urban vulnerability classes Urban vulnerability classes High CITY SIZE Small Moderate Medium Big Low Mega Very low 0 0.5 1.0 1.5 2.0 2.5 3.0 Annual Annual average average urban urban population population growth growth rate rate (%) (%) *Vulnerability is measured by the Urban Vulnerability Index in five classes (very low to very high). Source: Birkmann et al, 2016 The greatest opportunity Growing concentration of lies in effectively economic activity in cities addressing the interplay In low- and middle-income countries, rapid between risks and urbanization is generally associated with urban development in rapid economic growth. This, in turn, leads to a manner that enables a higher concentration of people, assets and better management economic activity in urban environments.4 of current challenges Cities in the developing world often account while accounting for for a much greater share of GDP than of future scenarios. the national population (see Figure 1.1). percent between 2015 and 2030 – equivalent to But a city’s economic success does not In The ve 469 million more residents (Birkmann 2016). In necessarily lead to greater resilience. Many World stin Asia and elsewhere, rapidly developing second- rapidly growing cities have neither the required and third-tier cities already face a daily struggle Bank infrastructure and services nor the risk-informed g i n |U r to deliver infrastructure and services to both planning and land use management measures in new and existing settlements, given limited place required to safeguard all their inhabitants, Investing b a n Rin institutional capacities and constrained finances. assets and activities. Similarly, an economically Yet it is these cities that still have major successful city does not equate to a healthy, investment, land and planning decisions ahead inclusive or sustainable city. In many low- and e Urban silie of them. Here, the greatest opportunity lies in middle-income countries, cities are usually effectively addressing the interplay between risks characterized by unequal access to urban space, Resilience nce and urban development in a manner that enables infrastructure, services, and security. This better management of current challenges while generates new patterns of risk, particularly in 24 24 accounting for future scenarios (Brown, Dayal and Rio 2012). informal settlements, with deficient or non- existent infrastructure and social protection and high levels of environmental degradation. Increasing exposure of people more likely to live in hazard-prone areas and and assets to climate change have less financial capacity to proactively invest and disaster impacts in risk-reducing measures. A lack of insurance The growing exposure of cities to natural and An economically man-made hazards represents a real challenge successful city to the global sustainable development does not equate to agenda. Increasing climate and disaster risks, a healthy, inclusive together with poverty and inequality, undermine or sustainable city. sustainable urban development. A significant portion of developing country cities considered coverage and social protection mechanisms to be in a “very high” urban vulnerability class further hinders their capacity to cope with the are small- and medium-sized cities growing at an impacts of climate change and disasters. annual average rate of approximately 2 percent and 2.6 percent, respectively (see Figure 1.2). Urban systems The scale of population growth in most towns As more people, with their assets, move to cities, and cities has overwhelmed the capacity of they become highly dependent on infrastructure many municipal governments. Larger and more networks, communications systems, and urban densely populated cities mean not only that service delivery for their well-being. With sea- more people and assets are exposed to hazards, level rise, changing rainfall patterns, more intense but also that the characteristics of the urban storms, increasing temperatures and other ecological system or environment are changed, climate-related shocks and stresses, a broad potentially increasing the level of disaster risk spectrum of interdependent effects on people (GFDRR 2016 , Donner and Rodriguez 2008). and infrastructure results. The vulnerability of People and assets are exposed to climate change the urban systems as a whole is increased by and disasters in a number of key dimensions: urban development in high-risk areas where the Urban lives and livelihoods Shocks impact all Shocks impact all aspects of development aspects of development and are felt directly through the loss of lives, and are felt directly In The ve livelihoods, and infrastructure, and indirectly through the loss of World stin through the diversion of funds from development lives, livelihoods, to emergency relief and reconstruction (DFID and infrastructure. Bank g i n |U r 2004, World Bank 2014a). A recent risk analysis of 616 major metropolitan areas — home to 1.7 urban poor can afford to live (e.g. hillside slopes, Investing b a n Rin billion people, or nearly 25 percent of the world’s flood plains, or subsiding land) (Jha, Bloch and total population, and generating approximately Lamond 2013). The construction of infrastructure half of the global GDP - found that flood risk e Urban silie to connect these high-risk areas further adds to threatens more people than any other natural the vulnerability of the urban systems as a whole. hazard. River flooding poses a threat to over 379 Resilience nce million urban residents, with earthquakes and Global supply chains strong winds potentially affecting 283 million and 157 million, respectively (Swiss Re 2014). As elaborated in the next chapter, the urban With the globalization of the world economy and increased reliance on global supply chains, a 25 25 poor are more likely to be impacted as they are disaster in one city or region can impact another city or region. Risk itself becomes globalized as Increase in Expected Losses both the causes and impacts are increasingly in Urban Environments interconnected and affect other sectors. This is especially the case with foreign investments Global average annual losses (AAL) from flowing into cities offering comparative disasters in the built environment are now advantages (e.g. lower labor costs, closer estimated at USD 314 billion and can increase proximity to export markets), but also higher to USD 415 billion by 2030. This figure is levels of vulnerability to shocks and stresses due only for disaster impacts, and underestimates to lower levels of investment in risk-reducing the economic consequences of inadequate infrastructure. Investment decision-making is resilience because: a) damages and losses rarely able to take the hazard level in these from other hazards are not included (e.g. locations into account, and large volumes of conflict, pollution, congestion, epidemics, capital continue to flow into hazard-prone cities, accidents, building collapses, and terrorism) leading to significant increases in the value of and b) the assessment does not include exposed economic assets (UNISDR 2015a)5. An economic impacts on the informal economy. In The example of this was the disruption of global ve However, this growth in expected losses is not supply chains for hard drives following floods in World stin inevitable. Annual investments of USD 6 billion in Thailand and for automobiles after the Tohoku appropriate disaster risk management strategies Bank g i n |U r earthquake and tsunami in Japan. Understanding could generate risk reduction benefits of USD these linkages, flashpoints, and potential 360 billion over 15 years. This is equivalent to chokepoints are essential when considering Investing an annual reduction of expected losses by more b a n Rin enhancing urban resilience (World Bank 2014a). than 80 percent. Such an annual investment in disaster risk reduction represents only 0.1 e Urban Risk itself becomes silie percent of the USD 6 trillion per year that will globalized as both the have to be invested in infrastructure over the Resilience causes and impacts nce next 15 years (UNISDR 2015a). However, for are increasingly many countries, that small additional investment interconnected and 26 26 affect other sectors. could make a crucial difference in achieving the national and international goals of ending Figure 1.3: Economic losses relative to GDP by income group, 1990-2013 0.18 0.16 0.14 0.12 % of GDP 0.10 0.08 0.06 0.04 0.02 Low Income Lower middle Income Upper middle Income high Income Source: UNISDR with data from EM-DAT and the World Bank poverty, improving health and education Increasing resilience is good economics. outcomes, and ensuring sustainable and According to a recent World Bank report, if all equitable growth. For example, in Ethiopia, countries implemented a “resilience package,” an investment of USD 10 million in improving the gain in well-being would be equivalent to compliance with building regulations in cities an increase in national income of USD 100 could result in a net reduction of losses of USD billion per year. This package would consist 600 million through 2050 (World Bank 2016a). of better financial inclusion, development of disaster risk and health insurance, Increasing disaster loss and impacts, increased coverage of social protection and magnified by climate change, will undermine scalable safety nets, contingent finance and the capacity of many low and middle-income reserve funds, and universal access to early countries to make the financial investments warning systems (World Bank 2016c). and social expenditures necessary to achieve the Sustainable Development Goals (SDGs). These losses also represent a serious erosion If all countries implemented a In of public investment in countries with the least The ve capacity to invest (see Figure 1.3). In Madagascar, “resilience package,” World stin for example, the average historical annual the gain in well-being losses from disasters since 2001 are equivalent would be equivalent to Bank g i n |U r to around 75 per cent of annual average public an increase in national investment in the same period6. Investing income of USD 100 Investing billion per year. b a n Rin in climate change adaptation and disaster risk reduction is thus a critical precondition for promoting sustainable development. e Urban silie Resilience nce 27 27 1.3 Increasing actors to leverage and crowd-in essential International private finance and investment to support Focus on Urban government efforts in strengthening investment Resilience climates toward achieving the SDGs. MDBs can support governments in designing and Investing in urban resilience is critical implementing climate actions that generate to ending extreme poverty by 2030 resilience co-benefits through project and promoting shared prosperity. Poverty- preparation support and pooled vehicles, as focused urban resilience investments, as well as credit enhancement and risk mitigation, discussed in Chapter 3, promote these goals by: which will be further discussed in Chapter 4. • protecting development gains so that WBG Climate Change Action Plan urban residents do not fall back into poverty after facing shocks and stresses; Investing in urban resilience is identified as a key • making poor households and communities contribution to the World Bank Group Climate more resilient, and thus, in a better position to move out of poverty; and Change Action Plan’s Priority 2: Leverage Resources and Priority 3: Scale up Climate • strengthening urban economies that can grow with equity. Action. “Sustainable and Resilient Cities” is identified as a priority theme, as it is an area where: WBG aims to • transformation is imperative in order to better integrate meet client and global climate goals; climateinto urban • the WBG has a comparative development projects. advantage, a successful track record and can make a difference; and Despite their geographic spread, the urban • client demand and appropriate market conditions have already been observed poor face common challenges.7 Addressing in many countries and regions. extreme poverty and promoting shared prosperity will require solutions to these As part of its work to promote this theme, the challenges — and these solutions are inextricably WBG aims to better integrate climate into urban bound to the issue of urban resilience. development projects and to promote multi- In sectoral approaches to integrating infrastructure The Linkages to the broader ve development, land use planning, disaster World stin World Bank Group agenda risk management, institutions/governance, Bank g i n |U r Importantly, investing in urban social components, and infrastructure resilience is fully aligned with the investment. Importantly, investing in urban broader World Bank Group agenda. resilience provides significant amounts of Investing b a n Rin climate co-benefits in multiple sectors. Post-2015 Financing for Development: WBG Urban Strategy e Urban Multilateral Development Finance silie During the April 18, 2015, Development Through its lending and technical assistance Resilience nce Committee meeting, participants which in urban areas, the World Bank Group aims to included all the major MDBs,8 identified their build sustainable communities, end extreme poverty and boost shared prosperity by 28 28 institutions as being uniquely positioned to serve as innovators and co-investors, as well supporting urbanization that is green, inclusive, as honest brokers between public and private well-governed, resilient, and competitive. Linkages to global mandates A series of recent global mandates has propelled urban resilience as top priority amongst development practitioners – from the local to the global. The prioritization is a reflection of growing consensus amongst Key thematic areas of work include: national governments, civil society organizations, • low-income communities and housing; donors, international organizations and • urban strategy and analytics; • city management, governance and financing; Resilience has increasingly become a • sustainable infrastructure and services; and priority theme in country • resilience and disaster risk management. partnership strategies at World Bank Group Progress Report on the World Bank Group. Mainstreaming Disaster Risk Management in World Bank Group Operations the private sector on the need to ramp up efforts in strengthening urban resilience Resilience has increasingly become a priority across the developing world. The following theme in country partnership strategies at global mandates reflect this increased the World Bank Group, and this is reflected in importance placed on urban resilience: policies and investments in the most recent IDA17 round (Fiscal Year 2015 – 2017). To this United Nations Sustainable Development end, an assessment of climate and disaster Goals (SDGs, 2016-2030). risks has been included in all new IDA Country Partnership Frameworks (CPFs) prepared SDG No. 11 calls on the world to “make during this period, ensuring that resilience cities inclusive, safe, resilient and is embedded in sectoral projects – including sustainable.” To this end, two main target those focused on urban development. Some of action items have been identified: the more innovative project areas range from • Substantially increasing the number of In cities and human settlements that adopt The early warning systems to post-disaster social ve and implement integrated policies and plans World safety nets as well as disaster risk financing towards resilience (including holistic disaster stin and insurance. The general opportunities risk management at all levels) by 2020; Bank g i n |U r identified for further mainstreaming disaster • Taking actions to significantly reduce the number of deaths, the number of risk management in project operations include: people affected and the direct economic Investing • Strengthening DRM tools and expanding losses caused by disasters, with a b a n Rin financial solutions for fast-growing cities focus on protecting the poor and other in the context of rapid urbanization, people in vulnerable situations. population growth and climate change; e Urban Related to these are the United Nations silie • Working with the private sector to address gaps in risk financing and Development Goals, particularly UN SDG 1.5, Resilience nce enabling countries to transfer risk to which aims to “build the resilience of the poor markets through the intermediation of risk management transactions; and and those in vulnerable situations and reduce their exposure and vulnerability to climate • Working with the humanitarian community to address some of the most pressing needs. related extreme events and other economic, 29 29 dialogue on climate risk serving as the main Investment decisions driver of losses from natural disasters; more taken now will have than 75 percent of disaster losses are related huge implications to extreme weather (Hoeppe 2016). It was for development concluded at COP21 that curbing climate change trajectories in the and efficiently funding adaptation efforts future and will prove would be essential to the resilience agenda. critical in preventing cities from being locked New Urban Agenda (Habitat III, October 2016) into unsustainable development pathways. The New Urban Agenda to be adopted at the Habitat III Conference envisages cities that ”adopt and implement disaster risk reduction social and environmental shocks and disasters” and management, reduce vulnerability, build and UN SDG 9, which seeks to “build resilient resilience and responsiveness to natural and infrastructure, promote inclusive and sustainable man-made hazards, and foster mitigation and industrialization and foster innovation.” adaptation to climate change” (UN Habitat Sendai Framework for Disaster 2016). One of the three pillars of the Quito Risk Reduction (2015 – 2030) Implementation Plan for the New Urban Agenda is entitled “Environmentally Sustainable and At the Third United Nations World Conference Resilient Urban Development” and calls for, on Disaster Risk Reduction (Sendai, 14-18 March inter alia, resilient urban spatial development, 2015), a new global framework was generated, infrastructure and building design, reduction serving as the successor to the Hyogo Framework of vulnerability to hazards, proactive use of for Action (HFA). The Sendai Framework calls risk-based approaches, and climate for efforts to reduce exposure and vulnerability adaptation in cities. in general, while identifying unplanned and rapid urbanization as key underlying drivers of The issue of urban resilience is one of increasing disaster risk. To this end, the Framework calls urgency for the World Bank Group and is fully for integrating hazard and risk considerations aligned with the development objectives of the in all stages of the urban development cycle, broader development community. Investment The In including the investments made by multilateral decisions taken now will have huge implications The vWorld and bilateral development assistance programs. for development trajectories in the future and eWorld s t iBank Within the framework, international financial will prove critical in preventing cities from nBank institutions such as the World Bank Group being locked into unsustainable development g in committed to increasing investments in pathways, or being exposed to increasingly | |U disaster risk management and resilience, intense and frequent urban shocks and stresses. Investing rInvesting b a n in while systematically working to incorporate In the next chapter, we will explore resilience disaster and climate risk into its operations. as a priority for the urban poor and the Rin e Urban growing and dynamic cities they call home. Urban s i l iResilience United Nations Climate Change Conference of the Parties (COP21, December 2015) e Resilience nce During the Conference of Parties, participants emphasized the key role that urban areas 30 30 30 play, in mitigating emissions and in adapting to climate change. This is part of the wider 31 31 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce Matters to the Urban Poor Why Urban Resilience 02 Chapter 32 32 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce 2.1 The Increasing Displaced people and refugees are increasingly Urbanization settling in cities. Many cities already facing of Poverty systemic challenges to the delivery of basic services, security, and welfare now also have Poverty is increasingly urban. Globally, there large and often growing populations of refugees is both an increase in the number of people and/or the internally displaced to contend facing poverty who live in cities and an increase with. Estimates suggest there are at least in the proportion of the world’s poor in urban 19 million10 internally displaced persons and areas. Case studies for particular cities or for more than 10 million refugees living in urban nations’ urban populations provide evidence areas globally (Global Alliance for Urban Crises that the scale of urban poverty or aspects of 2016). Both groups are often excluded from poverty has increased, or that the proportion access to services, for a number of reasons. of the population in poverty has grown. For For example, without official status, refugees example, documentation suggests that the frequently face language barriers and difficulties proportion of the urban population with water in earning adequate incomes. Many live with piped to premises did not increase from 1990 host populations that are themselves in poor to 2015 (WHO/UNICEF 2015) – and in fact went quality housing without adequate services. The backwards in many nations (Satterthwaite 2016). targeted support refugees may receive can Informal settlements around city peripheries create tensions with these hosts. In addition, and other non-urbanized areas are expanding. extraordinary influxes and outflows caused by The expansion of informal settlements can create crises – for example war or natural disaster - patterns of sprawl to which it is difficult and can reshape cities and stretch the absorption expensive to extend risk-reducing infrastructure capacity of host communities and existing urban and services (Hardoy et al 2001, Carruthers services and infrastructure. Thus, the urbanized and Ulfarsson, 2003). It may also create new displaced people become part of the urban poor environmental and health risks for a city – for or face many of the same resilience challenges. instance, informal settlements in watersheds increase exposure to flooding both within these settlements and for urban areas downstream. Estimates suggest Urbanization can also contribute to changing there are at least 19 million internally In The precipitation and temperature patterns within the ve displaced persons and World city region (Seto et al. 2011; Linard et al, 2013). stin more than 10 million A growing number of urban residents are refugees living in Bank g i n |U r living in slums. UN-Habitat statistics show that urban areas globally. globally the percentage of the urban population Investing b a n Rin living in slums has decreased steadily in most regions from 1990 to 2014, with the exception of Western Asia. However, the numbers have e Urban silie increased. Globally, more than 880 million urban residents were estimated to live in slums in 2014, Resilience nce an increase of 11 percent since 2000. Regionally, more than 30 percent of city residents in South Asia and nearly 60 percent in sub-Saharan Africa live in slums. (UN-Habitat, 2016b). 33 33 2.2 Factors That Limited economic base Increase the Beyond the daily challenges associated with Risks Faced by poverty, a limited economic base prevents the Urban Poor families from achieving stability in several ways: The urban poor face risks to health, income Limited ability to invest in housing. One and livelihoods and to sudden increases in consequence of having a low income is a limit costs or decreases in income. These risks on what can be spent on housing. Incomes range from eviction to natural disaster. Some may in fact be so low for some that they can are constant or everyday, some are frequent afford no accommodation at all – as with (e.g. seasonal) and some are present rarely but those living on pavements or construction may have major consequences. workers sleeping on site. Similarly, a lack of tenure security amongst urban dwellers either Incomes may in fact occupying land without title or on land not be so low for some permitted to be sub-divided can hinder efforts that they can afford and sometimes even disincentivize individuals no accommodation from securing financing for renovation. at all – as with those living on pavements or Lack of access to credit for housing finance. construction workers Low or irregular incomes usually preclude sleeping on site. access to credit to invest in improved housing conditions. This is exacerbated by the A growing literature points to a range of factors monetization of the informal housing market. In that create or exacerbate these risks for low the past, in many cities, there was some scope income urban dwellers. Some of the major for low-income groups to illegally occupy land factors increasing the vulnerability of the urban for which they did not pay – but in most city poor to risk, include those that relate to: contexts, informal settlements develop within monetized land markets, some of them illegal • individuals’ and households’ limited economic base including inadequate and and in many of which land developers often irregular incomes and lack of assets; and landlords operate. In • local contexts with dangerous livelihoods, The ve housing, fuel use, and house sites; No “buffer” of assets against shocks and World stin stresses. Most of the people in informal • lack of or deficiencies in infrastructure and services (deficits in provision often settlements lack assets or other means to Bank g i n |U r exacerbated by rapid population growth); cope with shocks or stresses. They may • inadequacies in local governance that help also have less access to assistance before explain the deficiencies in infrastructure Investing b a n Rin and service provision and that include and support after a disaster, either because lack of voice for low income groups and they are not ‘legal’ residents, or because local government accountability; they are not informed about or otherwise e Urban silie • lack of attention to disaster risk reduction, able to navigate social services. Most also including knowledge among those at risk as face insecure tenure, because they rent Resilience to how to reduce risk, cope nce with it and adapt accommodation, or because residents of the settlement are at risk from eviction – or both. 34 34 Location Low or irregular incomes usually preclude access to One of the greatest challenges facing credit to invest in improved the urban poor is the range of hazards housing conditions. that are endemic to the areas where they are forced to settle. These include: governments find it difficult to manage land use on the periphery to avoid either urban sprawl Dangerous or disaster-prone areas. Many or informal development in hazardous zones; poor neighborhoods are located in or close to moreover, integrated land management relating risk-prone areas, imposing severe social and to watersheds may be outside their jurisdiction.11 economic costs on urban populations. One common feature amid the widely diverse cities of Hazards vary from location to location and are the developing world, is that low-income groups difficult to anticipate. Within and around a city, are often concentrated in informal settlements risk types and levels for informal settlements on dangerous sites (Hardoy, Mitlin and vary. The connection between high risk and low Satterthwaite 2001, Hope 2009, Silva 2012, Baker cost can be seen within informal settlements 2012). Residents accept these risks because accommodation is cheaper here, because of access to income-earning opportunities or Many poor because they do not want to leave a settlement neighborhoods are that they have invested in. These sites are located in or close also usually ones that are facing greater risks to risk-prone areas, from climate change (Revi, et al. 2014). imposing severe social and economic costs A lack of planning by cities for disasters in on urban populations. these areas. These impacts are inadequately planned for by authorities and disproportionately where the rents for accommodation are lower felt by the urban poor. Exposure to shocks in those areas most at risk from flooding, for and stresses is linked in large part to urban example Korail in Dhaka (Jabeen, Allen and land pressures and exclusionary urban Johnson 2010). On the other hand, the better- planning systems (Hallegatte, et al. 2015). City In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 35 35 located informal settlements are often at risk Poor infrastructure now threatens a broader from eviction due to planned development. cross-section of society. For many cities, Assessments of risk and vulnerability need to deficiencies in infrastructure and service recognize the diversity of physical contexts, provision and in land-use management are so of resident and community capacities, and of severe that risks threaten large sections of individual or household appetites for risk. non-poor groups and even the functioning of the whole city.12 Climate change often exacerbates Inadequate infrastructure local risks and may also result in implications and services for the whole city – the economy, health (and The adverse effects felt by poor communities disease control), infrastructure, food security, without access to sufficient infrastructure and water supplies (Lwasa, et al. 2014). One is obvious and well-documented. However, example is urban flooding where a combination poor infrastructure poses a greater range of factors have increased risk: climate change of threats to cities – and puts obstacles results in more intense rainfall; urbanization in the way of achieving resilience. reduces the retention capacity of the soil; channelizing rivers increases water runoff and A global decline in adequate infrastructure. velocity; and poor solid waste management Basic infrastructure and services can and lack of maintenance impede drainage. substantially decrease exposure to hazards or reduce physical and social risk significantly. This The cost of improving infrastructure. includes piped water, sanitation and drainage Infrastructure-based solutions to these risks can networks, all-weather roads, grid electricity, be extremely expensive. The cost of protecting health care, emergency services, solid waste the 100km coastline of Dar es Salaam with a sea collection, schools, policing/rule of law, and social wall would be USD 270 million, for example (J. Kithiia 2011). Costs like this may be unaffordable to both the local and national economies in Basic infrastructure poorer countries. It is imperative to develop and services can accountable and responsive governance substantially systems that can reduce risk through capacity decrease exposure building and land use planning, rather than to hazards or reduce investing in large construction projects. In The physical and social ve risk significantly. Inadequacies in local World stin governance Bank g i n |U r protection. Yet there is evidence that provision Some threats do not come in the form of of these essential public services has actually external shocks or a lack of resources: They Investing b a n Rin declined in recent decades: between 1990 and are internal to the governments of cities, 2015, the proportion of the urban population with and avoidable. Yet they can pose just as e Urban access to water piped on premises declined in 21 severe a threat to achieving resilience. silie countries, for example (Satterthwaite 2016b). This Poor local government exacerbates poor Resilience can in part be attributed to rapid urban growth, nce service delivery. Conversely, good local as change is faster than the ability of local governance reduces the impact of risks. Well- authorities to supply adequate infrastructure 36 36 and basic services to the population. governed cities that provide for risk reducing infrastructure and services to all those in their jurisdiction have much lower levels of ill-health 2.3 A Growing and premature death from everyday risks (Mitlin Awareness of the and Satterthwaite 2013) and from small and Urban Resilience- large disasters (United Nations 2009). These cities thus have the institutional and governance Poverty Linkages capacity to extend their resources to disaster Disaster risk management is increasingly risk reduction and climate change adaptation geared to address the lack of resilience – and to assess how these agendas mesh among much of the low-income population (Bartlett and Satterthwaite 2016). In this sense, and settlements to hazards. There is a deficiencies in the provision of infrastructure growing literature on how the lack of disaster and services are both characteristics of urban risk management contributes to urban poverty as well as of local government or poverty – and how the global databases on governance failure. A lack of public participation disasters miss much of this due to the small- in planning processes as well as non-inclusive scale and localized nature of the hazards.13 regulatory frameworks can further impede the provision of urban infrastructure and Deficiencies in service delivery to low-income communities. the provision of Weak city government is often unaccountable infrastructure and to residents, especially the poor. Resilience services are both for the urban poor is tied to the quality of characteristics of government capacity and accountability. This urban poverty as well begins with a willingness to listen to, work with, as of local government support, and serve those who lack resilience or governance failure. in their homes and livelihoods. Weak and unaccountable city and municipal governments In the climate change community, the IPCC’s contribute to the lack of basic infrastructure Fifth Assessment included a much more and services, the dynamics of land markets and detailed coverage of urban issues, including lack of access to safe land by the poor (Pelling urban poverty. It demonstrated a more nuanced 2003, Merlinsky, Tobias and Ayelén 2015). Clearly, understanding of the many ways in which other factors are also at play which include In urban poverty and discrimination exacerbate The ve political economy, cultural and ethnic issues vulnerability to climate impacts, and reflected the World stin and distortions in the legal system. Globally, growing literature on the drivers of vulnerability: most urban governments lack the capacity and socioeconomic, cultural and gender inequalities, Bank g i n |U r resources to address deficits in infrastructure as in limited access to health services, education and services; many are unwilling to extend these and labor markets (Ayers 2011, Romero, Qin and Investing b a n Rin to informal settlements (Satterthwaite 2013). In Khulna in Bangladesh, for example, political Resilience for the urban systems are not accountable to – and thus do not poor is tied to the quality e Urban silie serve the needs of – the inhabitants of informal of government capacity settlements (Roy, Hulme and Jahan 2013). and accountability. Resilience nce 37 37 The links between poverty and risk reduction A growing body of are also found in the literature on urban evidence demonstrates poverty. One important theme in the literature that risk reducing has been how assets can give low-income infrastructure and households a greater capacity to cope with services can not only stresses or shocks (Moser 2006, Moser 2007). alleviate poverty, but While this study focused initially on economic also improve individual shocks, it came to include disaster risks, and it and household resilience integrated well into climate change adaptation and for neighborhood concerns. Similarly, a growing body of evidence and city resilience. demonstrates that risk reducing infrastructure and services can not only alleviate poverty, Dickinson 2012, Mérida and Gamboa 2015). The but also improve individual and household Assessment also described how the framework resilience and for neighborhood and city of urban resilience should be related to wider resilience. (Tanner, et al. 2015) The below diagram sustainability challenges, including the increasing summarizes the key messages from much of this social inequalities in cities (see also Chelleri, literature with their description of the “triple et al. 2015). In particular, it discussed how dividend” for urban poverty from resilience: upgrading informal settlements by reducing basic service deficits and improving housing conditions could reduce hazard exposure, especially of the poor and vulnerable. URBAN POVERTY and RESILIENCE: The Triple Dividend In The ve RESILIENCE = Disaster resilience + Wider economic, social and environmental development World stin RESILIENCE = Dividend 1 + Dividend 2 + Dividend 3 Bank g i n |U r Dividend 1: saving lives and avoiding losses Investing This is of particular relevance since an increasing share of damages b a n Rin and losses are sustained in rapidly growing urban areas in low and middle income countries. Dividend 2: unlocking economic potential e Urban silie There is evidence that reduced background risk and effective risk management allow poor households to build up savings, invest in productive assets and improve their livelihoods. Resilience nce Dividend 3: generating development co-benefits Co-benefits can be classified as economic, social and environmental, and may either be deliberately 38 38 designed into DRM investments or incidental. 2.4 Urban Ignoring urban resilience can reverse Poverty Impacts development gains by sending millions back into poverty. The Shock Waves model suggests The main determinant of future levels of that, with widespread prosperity and low climate income-poverty in low- and middle-income impacts, 8.5 million additional urban residents countries will be the type and rate of will move below the poverty line by 2030 economic development. Universal access to because of climate change. This rises to 32.2 basic services and a reduction in inequality, million with high climate impacts (see Figure 2.1). underpinned by inclusive and accountable However, under conditions of widespread poverty, governance structures, would deliver much 20.3 million urban residents will slip below the greater rates of poverty reduction than will poverty line even with low climate impacts, be achieved under business-as-usual patterns while 77.3 million face a return to poverty with of development. It is these wider conditions higher climate impacts. The primary climate- that will determine urban residents’ resilience related drivers of increased urban poverty are to climate change, rather than the scale of higher agricultural prices, which mean that discrete investments in adaptation, as shown in low-income groups have to spend more on food, the World Bank’s flagship report, Shock Waves: and increased incidence of diarrheal diseases. Managing the Impacts of Climate Change on Most of the increase in urban poverty due to Poverty (Hallegatte, et al. 2015). The other determinant is the extent of climate change: a For cities, the larger global temperature increase of 3-4°C would lead the increase in to more frequent and severe extreme weather temperatures, the events, more rapid sea level rise, declining less the capacity of agricultural productivity and a greater disease even comprehensive burden than an increase of 1.5°C. In addition, for adaptation to cities, the larger the increase in temperatures, keep down risk. the less the capacity of even comprehensive adaptation to keep down risk (Revi, et al. 2014). In The ve FIGURE 2.1: Number of urban dwellers living below the USD 1.25/ World stin day poverty line under different economic and climate scenarios Bank g i n |U r Prosperity Low climate impact Investing b a n Rin High climate impact e Urban silie Poverty Low climate impact Resilience nce High climate impact 0 10 20 30 40 50 60 70 80 Agriculture Labour productivity Health Disasters 39 39 The estimates therefore downplay the number 20.3 million urban of urban residents likely to slip back into residents will slip poverty due to the impacts of climate change. below the poverty line Nonetheless, the model does provide valuable even with low climate insights into the likely drivers and distribution impacts, while 77.3 of urban poverty under different economic and million face a return climate conditions. Additionally, the model does to poverty with higher not consider the current economic consequences climate impacts. of disaster impacts on urban poverty (just the additional impact brought by climate climate change will be concentrated in South change). This is being assessed by a separate Asia and sub-Saharan Africa (Figure 2.2). World Bank report that is under preparation. The actual impact of inadequate resilience In this chapter we have seen the importance on urban poverty is likely to be much higher. of city resilience for the urban poor. It has First, the model underestimates the extent of the potential both to mitigate the effects of urban poverty by using a now-outdated poverty shocks and stresses, and to protect the gains line of USD 1.25/day to indicate the severity of already made in the alleviation of poverty climate impacts. While the currently accepted globally. We have also seen the growing global poverty line (now at USD 1.90/day) may importance placed by institutions on the be appropriate for rural areas, urban poverty resilience agenda. In the next chapter, we needs to be understood in real terms: inadequate shall examine the role of public finance and access to reliable, safe drinking water, secure private investment in driving this agenda. tenure, durable and permanent housing etc..14 FIGURE 2.2: Distribution of urban dwellers living below the USD 1.25/day poverty line in different geographic regions PROSPERITY POVERTY 45 In The ve 40 World stin 35 High climate impact 30 Low climate impact Bank g i n |U r 25 20 15 Investing b a n Rin 10 5 e Urban 0 silie -5 East Asia & Pacific Europe & Central Asia East Asia & Pacific Europe & Central Asia South Asia Sub-Saharan Africa South Asia Sub-Saharan Africa Latin America & Caribbean Latin America & Caribbean Middle East & North Africa Middle East & North Africa Resilience nce 40 40 41 41 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce Overcoming Obstacles Financing Needs and 03 Chapter 42 42 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce Shocks and stresses threaten the prosperity Enhancing infrastructure generated by cities. In many low- and middle- investment is critical income countries, cities are hubs of economic to achieving the World growth, jobs and innovation, fueling their national Bank’s twin goals as economies. The sustainability of this growth is well as to increasing at risk, however, from unplanned-for shocks and the resilience of cities. ongoing stresses that erode long-term economic, environmental and social sustainability. these challenges have been met by the successful Infrastructure is a key driver of development and use of various instruments provided by the World social progress, creating jobs, improving health Bank Group and other institutions. Finally, we outcomes, and facilitating trade. Enhancing examine some city-specific case studies where infrastructure investment is critical to achieving public finance, private investment or a blend of the World Bank’s twin goals as well as to both have been successfully used to make cities increasing the resilience of cities. Thus financing more resilient while offering a return to investors. urban infrastructure to adapt to and prepare for these shocks and stresses has emerged as one The returns to a society that invests of the most urgent challenges in development. in infrastructure are well-established. An alignment of political will, institutional Infrastructure investments can increase potential capacity, and access to financing are imperative economic growth through promoting capital in order to make sometimes difficult choices to accumulation and higher productivity. A one align policies and to allocate precious financial, percent increase in spending on infrastructure human and political resources towards activities leads to an average of 1.5 percentage points that promote cities’ long-term resilience. in GDP growth over four years. In countries where infrastructure is well planned and well Estimates of the infrastructure gap vary by executed, the return was even greater — 2.6 city, by sector and by country. For example, percentage points over four years (IMF 2014). in sub-Saharan Africa, infrastructure spending This difference suggests the importance needs (including capital and operations and of the role of government in ensuring that maintenance) range from a high of 37 percent infrastructure delivers the biggest possible of GDP in fragile low-income countries to 10 economic and social dividend. As was explored percent in middle-income countries (Briceño- In in a 2014 World Bank report on Prioritizing The ve Garmendia et al, 2008). But consensus exists Projects to Enhance Development Impact, the World stin regarding the need to increase infrastructure potential benefits of infrastructure are even investment and activities that would increase larger when network and cross-sectoral impacts Bank g i n |U r the resilience of cities. Given that urban areas and synergies are accounted for. Investments are more vulnerable to shocks such as economic in a platform of resilient urban services may Investing b a n Rin downturns, social upheaval, public health produce economic returns greater than the epidemics, or the failure of infrastructure to sum of individual investments, as infrastructure meet demand (World Bank 2014a), there is also e Urban investments may change land usage, increase silie consensus about the urgency of identifying viable productivity levels, change settlement strategies to address these needs for investment. Resilience patterns, and enhance property values. nce In this chapter we explore some of the opportunities for both public finance and An alignment of political private investment in funding urban resilience. will, institutional 43 43 We also look at the limitations of and constraints capacity, and access to upon each of these, and consider examples where financing are imperative. 3.1 Financing Needs systems (that primarily benefit very low-income for Making Cities areas) or recidivism-prevention programs. More Resilient Investments that generate below market-rate returns. For such projects, project cash flows Significant additional financing is required might not be sufficiently predictable or high to make urban infrastructure more resilient, enough to attract private capital, based on the especially in the developing world. The global market’s perception of risks. In this space, MDBs need for urban infrastructure investment or donors can help lower certain political and amounts to USD 4.5 - 5.4 trillion per year, of financial risks to catalyze private investment, which an estimated premium of 9 – 27 percent for example through political risk insurance or is required to make this infrastructure low- credit guarantees. Another approach is blended emissions and climate resilient (CCFLA 2015). or concessional finance, which seeks to crowd A significant proportion of this demand is from in private capital by shifting the investment cities in the developing world. And this is only risk-return profile and reducing the risk with a partial estimate of the investment needed to flexible capital and favorable terms. Such make cities ‘resilient’ as this number focuses investments might include public transport. only on urban infrastructure. The marginal costs of enhancing urban resilience through Investments that generate market-viable investments in public health, more robust urban rates of return. Such investments can attract systems, anti-terrorism measures, and other additional, private investment if a project building blocks of social and environmental has been well-prepared and the regulatory resilience have yet to be estimated. and institutional context is stable and investor-friendly. These types of projects Infrastructure can be catalyzed by government or donor investments can increase financing of project preparation, or the use potential economic of targeted guarantees. Examples of these growth through promoting types of urban resilience investments include capital accumulation and concessions to construct a water treatment higher productivity. plant or to upgrade street lighting citywide to greener light-emitting diodes (LEDs). In The ve Investments in resilience deliver varying In the case of the first of these, financing World stin levels of return. Resilience investments can needs are met largely by governments and Bank be broadly split into three categories: development partners. In the case of investments g i n |U r generating below-market returns, they may be Investments that are pure public goods. These met by a blend of public and private financing, Investing investments do not generate market-viable b a n Rin while the investment opportunities represented returns, and require direct investment by either by the third modality may be attractive for governments or donors. Indirectly, however, e Urban private investors if certain conditions are met. silie such investments can help to support social stability and have a positive impact on economic Resilience nce growth and government treasuries. Examples of public goods might include flood control 44 44 3.2 Obstacles to and creditworthiness of city governments is as Financing Urban critical as the ability (or lack thereof) of local Resilience governments to generate needed revenue to maintain existing programs. A more enabling Obstacles to unlocking significant public and/ environment is also conducive to identifying or private investment in urban resilience and preparing investments that will help fall within four broad categories: leverage private sector financing. These range from their national regulatory environment • Lack of government capacity; to city-specific creditworthiness, which may • Lack of private sector confidence; limit access to credit for climate adaptation • Challenges in project preparation; and or infrastructure investment, generally. • Financing challenges The solution to each of these obstacles varies by Cities in the developing sector and depends, of course, on whether the world need much more investment is market-viable (i.e., could attract than “access to global private capital), a public good (i.e., requiring capital markets” in order government or donor finance) or whether it to invest in resilience- generates a below-market rate of return. The increasing activities. sections below give examples of where the World Bank can offer solutions to help cities and Many cities struggle with the planning and private investors meet each of these challenges. implementation of resilience investments. Among the challenges faced by cities are insufficient urban planning capability, inadequate local project assessment and planning processes, and limited implementation and enforcement capacity. At the basic level, many cities in the developing world do not engage in long term planning for infrastructure and lack capital investment plans. Further, cities may lack data about risks to which they are subject and/ In The ve or capacity to understand how to incorporate Lack of government capacity World stin such data into their urban planning and capital investment strategies. Cities may fail to take Despite increasing interest from private Bank g i n |U r investors in infrastructure investment into account climate mitigation and adaptation opportunities, there are multiple obstacles goals in urban land use and strategic investment Investing b a n Rin to private sector participation. Cities in plans, and local decision-makers may be unaware the developing world need much more than of how to prioritize among projects so as to maximize risk reduction and what types of e Urban “access to global capital markets” in order to silie invest in resilience-increasing activities, as they projects to undertake to further their resilience- related goals and promote long-term growth. Resilience are constrained by other factors. The private nce sector can help make markets more efficient, Or the government may lack an understanding but governments provide the regulatory about how to evaluate specific policy or structure and institutional capacity in which investment decisions they are considering against a range of consequences in the future. 45 45 markets function. In addition, the solvency these types of investments. Further, the public The World Bank Group sector inevitably struggles to balance multiple can support and competing policy priorities; infrastructure, incentivize cities to which offers longer-term benefits, can often get improve capacity in cut in favor of more urgent constituent needs. project assessment Also, political interference in large-scale urban (including hazard and infrastructure projects can cause misallocation risk assessments) as of resources. Further, although governments in well as better structuring emerging markets have traditionally assumed and implementing most of the burden, the scale of infrastructure resilience investments. required makes attracting private investment critical. Long term borrowing from commercial Solutions: The World Bank Group can support bank or capital markets is appropriate where the and incentivize cities to improve capacity in infrastructure (e.g., roads or water) will provide project assessment (including hazard and risk benefits for a long period, e.g., over a 30+ year assessments) as well as better structuring horizon. Other ways to access private capital and implementing resilience investments. The include through public-private partnerships. World Bank Group maintains a global knowledge Impact fees charged to developers can also base, financial and technical expertise as provide needed funds to pay for upgrades well as grant resources to support cities in or expansion of existing infrastructure. incorporating resilience into their planning and investment strategy, builds capacity for Solutions: One established tool for providing preparing financeable projects, and leverages grant-funded technical assistance to subnational development assistance and has worked with governments to address regulatory and many government around the world to help institutional obstacles that might be preventing them incorporate risk information into public private investment in infrastructure is the investment. This type of technical support Public Private Infrastructure Advisory Facility can help governments prioritize among capital (PPIAF). Technical assistance provided through projects, and determine which would be PPIAF can support governments in preparing appropriate to be funded by public funds vis-à-vis and structuring infrastructure investments. other potential capital sources, such as private In The investors, development banks or donors. The World Bank Group veWorld stin Historically, most infrastructure in emerging can provide in-depth technical advisory support Bank g i n |U r markets has been financed with public funds, given the nature of public goods and positive to governments to help externalities generated by such investments. assess and compare Investing service delivery options. b a n Rin Existing revenue sources (e.g., property taxes, local user fees, and intergovernmental Another resource is a recently created trust e Urban transfers) are unlikely to be sufficient to meet silie fund, “Project Development Facility to Support the infrastructure needs, much less the broader Infrastructure to Build Resilience,” whose seed Resilience ‘resilience’ needs, of municipalities. Public nce funding of USD 10 million was provided by the deficits, increased public debt-to-GDP ratios and, Rockefeller Foundation for use by the IFC for the too frequently, the low capacity of the public 46 46 sector to deliver efficient spending has limited purpose of catalyzing financing for infrastructure projects that would support increased economic, the capital governments have committed to social, and/or environmental resilience. National legal and regulatory systems can The private sector can deter potential private sector investors. Capital help make markets more inflow controls, tax policies, labor policies, and efficient, but governments inconsistent tariff policies can build complexity need to provide the into a transaction and reduce the attractiveness regulatory structure and of investment. Some countries’ regulatory institutional capacity in frameworks require international firms to partner which markets function. with local investors as co-financiers, for example, which can add complexity, introduce uncertainty Policy uncertainty can limit investor interest. and increase cost of doing business. In other Many developing and middle-income countries countries, national regulations may not explicitly are still developing concrete policies for resilient allow subnational entities to engage in public development. This lack of certainty about future private partnership (PPP) structures that can be regulatory policies or subsidies – e.g., tariff used to leverage private capital and expertise. structures related to service delivery — can deter private investors. In addition, political and social Solutions: Through engaging in an assessment instability can further dissuade private investors. of the “subnational cost of doing business,” a proven methodology deployed in Colombia, Solutions: Different types of guarantees offered Egypt, Mexico and Nigeria in the past few by the World Bank Group can help to reduce both In years, the World Bank can help governments the actual risk and perception of risk to investors. The ve understand the differences in their business For example, MIGA can provide political risk World stin regulations and enforcement within a single insurance (PRI) for private sector investments country and within a comparator group and to mitigate and manage the risk associated with Bank g i n |U r identify opportunities to address obstacles an uncertain political environment (e.g. adverse that may be impeding desired private sector actions – or inactions – by governments). Such Investing b a n Rin investment. This tool provides data to local tools help create a more stable climate for and national governments on the ease of investments, and hence, unlock better access e Urban doing business, and recommends reforms to to finance. Specific risks covered include: silie improve performance in each of the indicator • currency inconvertibility and Resilience areas. These reports have been done as well transfer restriction; nce to highlight challenges in specific sectors or • expropriation; policy areas, such as contract enforcement or measuring the cost of red tape. • breach of contract; and • war, terrorism and civil disturbance. 47 47 The World Bank can, but the local government has the authority over through investment zoning and land use. Or the national government project financing, directly may hold policy and budget authority over finance infrastructure. provision of social housing, while municipal governments are responsible for ongoing provision of local infrastructure to public housing. In post-civil war Cote d’Ivoire, for example, MIGA is providing USD 145 in insurance covering Solutions: The World Bank Group can provide in- the equity investor and all of the project’s private depth technical advisory support to governments sector lenders as well as FMO, the development to help assess and compare options. A number finance institution of the Netherlands. Specific of WBG teams, including those specialized in infrastructure investments covered include governance, work with governments to improve the Henri Konan Bedié Toll Bridge over transparency, accountability and service delivery. Abidjan’s Ebrié Lagoon, which was initially The team focuses on helping strengthen public shelved following the outbreak of civil war. sector management systems, including the management of public finances. The Second Obstacles cities face in investing in Lagos State Development Policy Operation ‘resilient’ infrastructure largely overlap Program (SLSDPO), for example, supports the with the obstacles cities face with respect state government in the implementation of to infrastructure generally. In many cases, a reform program meant to further increase such barriers are structural. A not uncommon value-for-money in budgetary spending, challenge, for example, is a misaligned division improve the business climate, maintain fiscal of urban management functions and powers sustainability, and properly monitor, and across institutions and levels of government. manage financial risks. As such, it represents For example, a national or provincial level the start of a new series of programmatic government entity may have the power and development policy lending in Nigeria. resources to make urban transit investments, Box 3.1: – Financing utilities with a bond for partial credit guarantee (Dirie, 2005) In The city of Johannesburg had large capital expenditure plans to address service backlogs, deferred maintenance The ve payments, and population growth. Johannesburg’s borrowing needs were too large for a traditional bank World stin loan, and the city needed to diversify financing sources and extend the maturity of debt to match the life of assets. Given these circumstances, they had to come up with an alternative financing scenario. Bank g i n |U r Capital finance was required for capex expenditures planned by the city and its utilities - including water programs, urban streets, and electricity distribution - and for retiring some existing high cost debt. To raise the capital required, the City of Johannesburg developed a central treasury bond that was backed by Investing b a n Rin aggregate revenues, with a negative pledge clause on major assets. Successful outcomes included: • An enhanced AA bond (Fitch), a three-notch upgrade from e Urban Johannesburg’s standalone rating of A. silie • The bond issue was oversubscribed 2.3 times, demonstrating market endorsements Resilience of both the issuer and the structure with the credit enhancement. nce • Strong investor demand allowed for tightening the spread over time and the long tenor of the bond issue has improved the City’s debt service profile. 48 48 This type of capital fundraising has developed a new class of fundraising as a benchmark in South Africa for municipal debt that requires a long tenor, with the possibility of application in other cities Lack of private licensing regimes, establish competition law sector confidence and mechanisms of enforcement of competition regimes as well as implementing risk-informed Apart from the issues of government land use and building regulations. For urban capacity and a threatening regulatory infrastructure, in particular, government needs environment, there are several factors which to be able to serve as a competent regulator, can discourage the private sector from to prepare a project for investor-readiness, and investing in infrastructure projects. Among in many cases to fund some portion of project these is the lack of benchmarking data and conceptualization and preparation process. global standards for measuring ‘resilience’. Developing countries still grapple with issues Several factors contribute to a low percentage such as poor governance framework, perceived of investment by institutional investors. rampant corruption, and political uncertainties These include the complexities in the investment – all of which increases investors’ perception decision making process15, the inherent diversity of risk and commensurate returns. While and intricacies of large assets, country-specific these obstacles can be addressed on one-off financial regulations, lack of well-developed bases, such as through credit enhancements, financeable projects, risk return equation, lack unless and until the core issues are addressed, of robust benchmarking data, and the lack of private sector investments will not freely flow. experience of fund managers. Another factor Also, many developing countries – much less is the relatively long time it takes for funds to subnational governments — do not yet have deploy capital in infrastructure: 3.5 years versus robust, investor-friendly processes for soliciting 2 years for real estate assets, for example investor interest and/ or procuring large projects. (Invesco, 2016). Another problem is that benefits from resilience are often unobservable Governments, investors, and difficult to capture: there is no additional and operators alike would cash flow for firms or households each time a benefit from sharing more storm does not result in disastrous damages. information and in more structured ways. Solutions: One way forward is to generate the conditions required to substantially Large investors seek data benchmarks to track In The increase private investment in resilient performance of assets, a challenge beyond ve urban infrastructure. Logically, government World the scope of cities to address. For institutional stin should focus on pure public goods, which and sovereign wealth funds, investing in long- would remain unaddressed in the absence Bank g i n |U r term, illiquid infrastructure assets is a strategic of government or philanthropic investment. asset-allocation decision. Ideally, investors However, financial resources from government, would make the decision based on benchmarks Investing b a n Rin international development assistance and that allow them to take a robust view of the MDB sources should also be concentrated on expected performance of these investments. e Urban generating the local institutional capacity and silie Without the feedback of market prices, it is regulatory conditions necessary to facilitate difficult to formulate reasonable expectations Resilience nce private investment in resilience-increasing of risk and return, however, as track records of investments that do generate market-viable such projects are limited. This often means that returns. Doing so often requires a government proxies are used as benchmarks. In general, maintain effective start-up and operating governments and businesses aren’t in the habit 49 49 of sharing best practices or benchmarks with partners over the past several years to agree each other with respect to infrastructure assets, on common principles on climate finance, much less the details of what went wrong. and other resilience-related categories of Governments, investors, and operators alike investment. A number of concepts or systems would benefit from sharing more information have been put forth as contenders for global and in more structured ways. Many governments standards. In September 2016, for example, recognize that investors can be a valuable the fund labelling agency LuxFLAG launched source of ideas — for example, about which a Climate Finance label, intended to identify projects would have the best economic returns funds financing climate change mitigation and/ or how to attract private investment. The OECD or adaption measures. Four fund managers – notes that a prerequisite task for increasing East Capital, Finance in Motion, Luxembourg participation of market-based instruments in Microfinance and Development Fund and infrastructure, would be to establish industry- Nevastar Finance – have since announced they wide reporting standards, consensus definition will be seeking labelling of their products using and metrics for ‘resilience,’ and benchmarking this new certification standard. This standard is of comparable projects (OECD, 2014). Basically, a practice effort to create a more transparent private investors have knowledge gaps which financial environment and provide investors impede their understanding of the investment with the necessary trust in climate finance opportunities in often unfamiliar, ‘frontier’ investments, and respond to commitments markets. Investors’ demand for performance made through the Paris Agreement on climate monitoring is a challenge that governments change. Another system that has been put have not yet been able to address. forth is the SuRe® Standard, jointly developed by GIB Foundation and the French investment Solutions: The Global Emerging Markets bank Natixis, for the purpose of defining Local Currency Bond Index (GeMX) reflects sustainability and resilience principles for the the performance of emerging market local credit rating and insurance of infrastructure. currency denominated debt from countries qualifying for the World Bank Gemloc program. The index tracks 360 bonds from 24 countries, providing accurate and objective benchmarks to assess the performance of In The ve bond markets and investments. Such data can World stin be used to help crowd in private financing for resilience investments (World Bank, 2012). Bank g i n |U r Currently, no universally accepted, global standards exist for metrics of what makes Investing Challenges in project b a n Rin a project “sustainable” or “resilient.” There preparation is general consensus among investors that e Urban silie such promulgation of common standards could There are compelling reasons that many potentially unlock significant amounts of capital. resilience projects do not get out of the Resilience nce starting gate. For governments, the high Solutions: The World Bank Group has been upfront costs of project preparation can be engaged, through multiple formal and an insurmountable barrier to such projects. 50 50 informal working groups, with various types of Similarly, a lack of capacity amongst municipal private sector, development bank, and donor and national governments to conduct long-term require cities to have access to resources to fund planning (e.g. prepare capital investment plans) program design, implementation and monitoring. or to incorporate hazard and risk considerations Many city governments cannot afford to pay in project design and preparation further for costly feasibility studies, and may lack the challenge the long-term sustainability of not only experience and institutional capacity to identify the project itself, but also of the investment. The a “business case” for investment-ready projects. ability to maintain services and rebound following Solutions: The World Bank Group can provide a disaster event or to withstand the prolonged technical and grant financing support for feasibility impacts of shocks and stresses are often studies across resilience investments: for example, determined by the initial planning and design of for the Port of Cartagena, the IFC supported such infrastructure. Similarly, accurate long-term In USD 200K in preparatory studies to unlock USD The budget planning for operations and maintenance ve 10 million in private sector financing for overall World of such infrastructure is largely determined by stin rehabilitation of the port starting in 2011, including the incorporation of the full range of hazard and risk considerations in the project climate adaptations such as improved drainage Bank g i n |U r systems. The Bank’s Global Infrastructure Facility preparation stage. (GIF) seeks to enable mobilization of private Investing b a n Rin Budgetary constraints limit many cities from sector and institutional investor capital for investing in resilience, even in the preliminary infrastructure. For “public good” investments, the stages. Most initiatives that promote social World Bank Group can provide direct financing to e Urban silie resilience – community-driven literacy programs, support programs, such as the Global Program nutrition campaigns or crime-reduction for Safer Schools which provides financing to Resilience nce initiatives, for example – do not generate assess the hazard and structural risk profile of a immediate economic returns, even if they offer portfolio of schools and advises on investment measurable social and fiscal benefits over the long-term. Such “public good” investments and intervention strategies to make schools more resilient to natural hazards (World Bank, 2016d). 51 51 Financing challenges Solutions: A systemic solution to this issue would be for governments to shift to a formula-based, Subnational and city governments in the presumably more stable transfer system. The developing world struggle to raise finance World Bank Group, together with a number of for infrastructural projects for a number other donors provides technical assistance that of reasons. These include constraints upon can help cities to implement such a system. their regulatory and institutional capacity. They in turn struggle to provide meaningful However, even subnational governments incentives for private sector investments, and empowered to raise revenue through taxes to support the smaller local businesses which and fees lack sufficient funding to support could participate in their resilience projects. ongoing public service delivery needs. Over the last twenty years, a number of countries Most cities in emerging markets rely on have increased the powers and responsibilities intergovernmental transfers for the majority of local government; however, revenues at of their operating and capital budgets. (UN the municipal level have not kept pace with Habitat, 2009) This can make it difficult to the increased expenditure requirements of manage a budget when such fiscal transfers are devolution of responsibilities (UN Habitat, either unreliable or insufficient. The design of 2009). In most countries in the developing such transfer schemes and the level at which world, municipal own-source revenues are cities depend on national governments vary generally based on property taxes and user by country, but some schemes can subject fees — and not on more lucrative taxes such their cities to highly unpredictable flows, with as income, sales, and fuel taxes. Property tax ad hoc or discretionary transfers (e.g., where is typically the largest source of own-source the amounts of transfers are negotiated on revenues for cities, and the low amount of an annual basis). An effect of this is that revenue collected may be due to combination cities struggle to budget accurately and are of factors, including: low value of local real reactive and risk-averse when deciding on estate market; very low property tax rates the deployment of resources for long-term (cities often have little control over the actual resilience planning or project preparation, rates); lack of a complete, annually updated unless it’s clear that national funding will property registry; and/or weak enforcement be made available for ongoing support. of collections. In addition, even cities with In The veWorld stin Bank Box 3.1: Public-private partnership to enhance energy resilience in Zambia g i n |U r The World Bank’s PPP advisory team recently supported an effort to add power capacity in Zambia, where only one fifth of the population has access Investing b a n Rin to electricity and two years of drought have crippled existing hydropower facilities, causing a national electricity crisis. In this context, Zambia signed up to try Scaling Solar, a program designed to make it easier for governments e Urban silie to procure solar power quickly and at low cost through competitive tendering and pre-set financing, insurance products, and risk products. The results Resilience of the first auction, which took place in May 2016, surpassed the most nce optimistic expectations, with seven of the world’s leading renewable energy developers competing for the opportunity to build Zambia’s first large-scale 52 52 solar plants. The winning bids, for 6.02 cents per kilowatt hour and 7.84 cents per kilowatt hour, represented the lowest prices for solar power to date in Africa, and among the lowest recorded anywhere in the world. functional property registries underutilize reform state-owned infrastructure and/or partner alternative mechanisms for raising revenue. with the private sector to improve access to public services such as education, electricity, Solutions: In countries where fiscal healthcare, and sanitation (see Box 3.1). decentralization has already occurred (e.g., Brazil, Philippines, South Africa), one solution Limited funding and support stands in is to support local governments in enhancing the way of local entrepreneurs and SMEs their capacity to generate own-source revenue. whose business concepts serve to increase This enables governments to invest in resilience- urban resilience. Private sector engagement increasing initiatives directly or to invest in on making private assets more resilient has enabling local environment to attract private been generally opportunistic rather than the investors to specific projects. The World Bank result of strategic actions aimed to lead to Group can support governments interested transformational change. The inability to cluster in creating enabling regulatory environments projects limits learning and impact. Small and and addressing capacity constraints in order to Medium Enterprises (SMEs) and State Owned unlock financing for infrastructure development. Enterprises (SOEs) are often unable to benefit PPIAF, for example, recently helped several large from global initiatives to increase financing for municipalities in South Africa and Colombia resilience and climate adaptation for a variety build their capacity in expanding sources of of reasons, including the scale of financing financing for urban infrastructure by including arrangements, and lack information on financing tax increment financing. Another solution is to help governments identify and compare various business models for delivering revenue- The World Bank Group generating public services. Governments, can support governments particularly in emerging markets, need to realize interested in creating value, when possible, from cash-generating enabling regulatory assets, such as owned real estate portfolios environments and and infrastructure. The World Bank’s Public addressing capacity Private Partnerships (PPP) team has deep constraints in order experience supporting governments in making to unlock financing for good decisions regarding whether and how to infrastructure development. In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 53 53 opportunities. SMEs, in particular, often have The development of limited access to coping strategies, and are innovative business more likely to be non-compliant with industry practices and business norms and regulations, which can lead to a models that help to lowered capacity to adopt risk management address ongoing stresses tools (Ballesteros and Domingo, 2015). Yet SMEs as well as natural are vital contributors to the national economies hazards is essential to of disaster-prone regions across the world. For building resilience. example, the proportion of SMEs amongst all enterprises can be as high as 90 percent in to attract private sector investment. The countries like Japan and Thailand (UN World common challenge of insolvency amongst Conference on Disaster Risk Conference, 2015). municipal governments due to an inability to The development of innovative business practices generate sufficient revenue to meet existing and business models that help to address obligations and maintain-ongoing programs ongoing stresses as well as natural hazards is further increase the risk associated with essential to building resilience. For example, in municipal lending. These constraints add to Indonesia LiveOlive, whose founder describes the cost of project preparation, contribute to it as a “money management startup,” builds investors’ perception of excessive risk, and financial resilience among middle and low income generate or exacerbate below-market returns. women, helping them cope with financial shocks and business cycles through guided personal Solutions: Technical assistance programs investments. Small-scale enterprises like this such as the City Creditworthiness Initiative can one need different kinds of capital, mentoring help support cities’ creditworthiness, as can and support at different stages of their growth guarantees (see Box 3.1). But to address the need – although below what funds and institutional for ‘sponsor equity’ for infrastructure projects, investors would be interested to provide. the World Bank Group and other development banks can also help to fill the equity gap. The IFC already invests approximately USD 1 billion SMEs are vital annually in infrastructure. The recent launch contributors to the of the WBG’s Global Infrastructure Fund will national economies of In The increase the amount of equity available for disaster-prone regions ve resilient urban infrastructure: the Fund’s mandate World across the world. stin is to make equity and equity-related investments Bank g i n |U r alongside IFC in a broad range of infrastructure Solutions: The World Bank is currently sectors in developing countries. The Fund raised evaluating the feasibility of creating a “Global a USD 1.2 billion round of financing in late 2013, Investing b a n Rin Resilience Infrastructure Fund,” a market- exceeding its target of USD 1 billion, receiving based hybrid private-public Fund with a core capital commitments from 11 investors, with focus on generating strong multipliers between e Urban IFC and GIC (previously known as Singapore silie investment by the public sector and investment Government Investment Corporation) as anchor by private investors. The Fund objective would Resilience nce investors, and including nine other sovereign be to crowd-in private capital in resilience and pension fund investors from Asia, the Middle infrastructure and SME projects/funds. East, Europe and North America. The value 54 54 Many cities lack the funds or creditworthiness proposition of this Fund is to offer institutional investors a cost-efficient platform to make credit that can address such risks as well. direct infrastructure investments in markets Foreign investment in infrastructure in where barriers to entry and transaction costs emerging markets can involve exposure to for investors can be a significant deterrent. foreign exchange risk. Foreign financing can The type and scope of public sector create a mismatch between income obtained engagement required to design and deliver an from providing infrastructure in local currency, urban infrastructure project opens categories and payment of debt in foreign currency. Hedging of risks for which mitigation is sought by must be paid for. The currency mismatch has investors. These risks might include regulatory been, for some projects, a source of instability uncertainty, political instability, and lack of and has even resulted in the renegotiation of institutional capability. Urban services that are long-term contracts. For many “frontier” markets, provided under natural monopolies, such as currency swaps are not commercially available. roads or water and wastewater treatment, are Solutions: The World Bank Group can subject to greater government oversight and provide such swaps. For example, in the therefore susceptible to political intervention case study below, the Asian financial crisis risk of which is clearly outside the control of resulted in major issues for a number of private investors. To address these perceptions private power projects provided by IFC. of risk, a government would need to have in place a clear regulatory framework, established Cities struggle to access finance In and transparent procurement procedures, for resilience. To increase resources available The ve and the technical capacity to engage and for investment in resilience, cities could borrow World stin transact effectively with the private sector. from commercial banks or capital markets. But few cities in emerging markets are able to Bank g i n |U r Solutions: MIGA guarantees can help to do so, lacking the legal authority to borrow, address these risks. For example, in 2014, MIGA independent of a sovereign guarantee or Investing issued a non-honoring guarantee for USD b a n Rin approval from the national government. Poor 361 million to Banco Santander SA of Spain. creditworthiness is another constraint where, This guarantee provided specific coverage of e Urban in some cases, there is a history of sub-national silie Santander’s loan to the State of São Paulo for government defaults. Cities in emerging the São Paulo Sustainable Transport project Resilience markets that are legally able to borrow often try nce that enabled the state to invest in transport to raise capital through the local banking sector infrastructure and related activities. Additionally, whose loan terms are typically unsuitable for 55 governments themselves can issue different funding new infrastructure. While capital markets types of guarantees or revolving lines of 55 offer an alternative source of cheaper and 100 million loan to China’s Minsheng Bank to longer-term finance, less than 20 percent of the develop lending for energy efficiency projects, 500 largest cities in developing countries have to help the Government of China achieve access to local capital markets and only 4 percent its ambitious goals with respect to energy have access to international capital markets. use. As part of this initiative, Minsheng Bank committed USD 500 million equivalent of its Solutions: The City Creditworthiness own resources to finance energy efficiency Initiative provides technical assistance and renewable energy projects. Another more and training to cities seeking to recent example is a partial risk sharing facility enhance their creditworthiness by: for energy efficiency, created by the World Bank • strengthening financial performance; and the Government of India in 2015, a pilot • developing an enabling legal and regulatory, operation whose objective is to address various institutional and policy framework for market barriers that impede energy efficient responsible sub-national borrowing; practices and financing, by providing coverage • improving the demand side of to reduce the risks perceived by commercial financing by developing sound, climate-smart projects; and institutions in financing demand-side energy efficiency projects. The project, as designed, • improving the ‘supply’ side of financing by engaging with private sector investors. has the potential to unlock private sector financing at 3 to 1 ratio of World Bank funds. Increasing urban resilience will require investment of all kinds: public and private, MDB lending and development assistance, domestic and foreign direct investment. Since the program’s launch several years ago, the Creditworthiness initiative has worked with more than 260 local authorities convened at academies in Tanzania, Colombia, Jordan, 3.3 The Potential In The for Private ve Rwanda, Turkey, among other countries, World Finance stin towards a goal of assisting 300 cities on the path to improved fiscal management and Bank g i n |U r Public investment alone, even when combined creditworthiness. Another category of solution with ODA, is inadequate. Given the scale of the to this challenge is to strengthen local capital estimated funding gap for urban infrastructure Investing b a n Rin markets and/or to set up local facilities in and other resilience investments, increasing partnership with local banks with the purpose urban resilience will require investment of all of increasing cities’ access to financing for e Urban silie kinds: public and private, MDB lending and “resilient” infrastructure investment. The development assistance, domestic and foreign World Bank Group has sponsored a number Resilience nce direct investment. Resilience investing will of successful comparable initiatives to unlock need to make the best possible use of each private sector financing with this model, most public sector dollar, including the USD 164 56 56 notably related to energy efficiency. In 2010, for example, the World Bank approved a USD billion in net annual ODA (DAC/OECD 2014). Private financing can flow directly into used during operational phases (when projects resilience-increasing urban infrastructure in can generate cash flows and risks are lower). the form of project equity; or indirectly by Investment capital seems to be abundant lending to projects or to a service-providing yet little is flowing towards resilient urban company. The importance of each channel varies infrastructure, particularly to projects in across countries, depending on the degree of the poorest countries. There is large funding development of the domestic capital market, potential among traditional as well as non- regulatory framework, sector, and investor traditional investors for urban infrastructure. sophistication. However, several characteristics Long-term-investors such as pension funds distinguish infrastructure assets from other and insurance companies have expressed types of fixed capital: significant upfront willingness to increase their allocation to construction costs; high initial risks (e.g. politics, this asset class (OECD, 2014). And USD 106 policy changes, unexpected construction cost trillion of institutional capital, in the form overruns, demand uncertainty); and timeframe of pension and sovereign-wealth funds, is of revenues (which tend to be decoupled from available for potential investment (McKinsey, period when capital investment is required). 2016). On the public side, only 6.4 percent These characteristics imply that, arguably, the of registered public financial flows in 2014 most viable way to pay for urban infrastructure went to climate adaptation; this amounted to is through a project finance approach of USD 22.5 billion in developing countries while long-term financing, such as long-term bond estimated needs for investment in adaptation issuances and financing from institutional range from USD 140-300 billion between 2015 investors (e.g., sovereign wealth funds). and 2030 (Climate Policy Initiative 2015). The largest share of project finance typically consists of debt, which is usually provided by creditors with no direct control over managing the project. They try to protect their investment through collateral and contracts, known as the security package, to help ensure that their loans will be repaid. The quality of the security The package is closely linked to the effectiveness In The v World of the project’s risk mitigation. Because project eWorld To date, most private capital flowing into s tBank financing relies on the project’s cash flows and in infrastructure projects has gone into debt the contractual arrangements that support and Bank g i| instruments, which has made sense in the ensure those flows, it is essential to identify the n |Investing context of predictability of cash flows (e.g., security available in a project and to structure Ur negotiated tariffs, toll roads) (McKinsey 2015b). Investing b a n inR the security package to alleviate the risks Equity for infrastructure has come primarily perceived by participants. Some projects may from “infrastructure funds,” which – unlike Urban in need additional support—in the form of sponsor e Urban s i lResilience pension or sovereign wealth funds - specialize or government guarantees—to bring credit risk in these types of investments. While debt capital ie to a level that can attract private financing. Resilience nce has been comparably plentiful, sponsor equity Equity (sponsor, vendor, private investor) is more scarce. A 2015 McKinsey report on and bank loans are more common during the infrastructure notes, for example, that Brazil construction phase of a project (when risks are higher), while bonds are more commonly will have a surplus of debt but a shortfall in 57 57 The past several years defined as having annual per capita income have seen a steady rise under USD 1,215, only 9 had private infrastructure in infrastructure as projects closed in 2015. Those projects – 16 in an asset class in its total – were focused on energy, transport and own right. water & sanitation, representing investments of only USD 4.6 billion in value. In contrast, USD 111.6 billion in private infrastructure investment equity financing for infrastructure in coming was committed across all emerging markets years due to public indebtedness, a devaluing in 2015, according to the Private Participation currency, and highly leveraged corporate balance in Infrastructure database released in 2015. sheets. In this context, potentially viable urban infrastructure projects will be unable to secure In this chapter, we have looked at some of financing if there isn’t enough equity to attract the obstacles to securing finance, both public the debt required to complete the transaction. and private, for urban resilience projects. We have explored some of the specific ways in Nevertheless, given the current global low- which the World Bank Group and its partners growth forecasts, institutional investors have sought to overcome these obstacles. In and sovereign funds have indicated strong the next chapter, we will detail the strategies interest in considering a broader universe of developed by the Bank to help cities fund investment opportunities. These include illiquid their resilience agendas, and the services, infrastructure assets in ‘frontier’ emerging programs and instruments it provides. markets as a means of enhancing otherwise poor returns (Invesco 2016). The past several years have seen a steady rise in infrastructure as an asset class in its own right. As sovereign funds have continued to receive new funding, they are taking a long-term view of their investments by increasing their average time horizons for investing and by diversifying their positions, including through increasing their allocation to infrastructure. This deepens the pool of In The capital available for infrastructure (Sovereign veWorld Wealth Fund Institute, 2016). According to stin Invesco’s 2016 annual survey of sovereign funds, Bank g i n |U r for example, the average sovereign investor portfolio exposure to infrastructure grew from 1.4 percent in 2012 to 2.8 percent in 2015 – a Investing b a n Rin compound annual growth rate of 25 percent. An ongoing, concerted effort by the e Urban silie development community and private sector is needed in order to create a pipeline of bankable Resilience nce projects in emerging markets, particularly in the poorest countries. As noted in a July 58 58 2016 World Bank blog about public private partnerships, among the 66 IDA countries, 59 59 The In veWorld stin Bank Investing b a n Rin g i n |U r e Urban silie Resilience nce 04 Chapter Opportunities: How the World Bank Group Can Add Value to Urban Resilience In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 60 60 Scaling-up urban resilience investments — Multilateral development particularly infrastructureinvestments — is finance institutions such critical to achieving the World Bank Group’s as the World Bank Group twin goals of ending extreme poverty and can play a critical role in promoting shared prosperity. Given the helping prepare resilience development gains at risk and the increasing investments, and growth and complexity of urban systems, the anchoring and leveraging World Bank Group provides financing as well private capital to bridge as technical and advisory services to city and the gap in needed finance country clients interested in investing in urban to scale up resilient resilience. As seen in the previous chapter, the project interventions. need for urban resilience financing is massive. This is particularly relevant in the context of decentralized countries where subnational has achieved a number of successes in the governments’ current spending levels are often developing world, as we have seen, the level not sufficient to address the demand for urban of risk associated with such investments public services, let alone the ‘additional’ costs is often too high for private financiers. In associated with investing in adaptation and addition, municipal and national entities lack resilience. Multilateral development finance the capacity to prepare and structure projects institutions such as the World Bank Group on a large scale so as to make them appealing can play a critical role in helping prepare to private capital. The World Bank Group can resilience investments, and anchoring and help to overcome some of the obstacles to leveraging private capital to bridge the gap resilience finance identified in the previous in needed finance to scale up resilient project chapter through financial instruments, advisory interventions. This is in line with the World Bank services, and technical assistance that helps Group commitment to stay at the forefront of lowers risk and facilitates sound and effective this growing field and to deliver financial and project design to strengthen investor confidence technical assistance that proactively supports in potential urban resilience investments. city resilience as a whole, in addition to addressing specific threats (World Bank 2014a). 4.1 — What In The Strategies Are ve This commitment represents a great in Place to Help World stin opportunity for private investors interested in financing urban resilience projects. Here, Secure Resilience Bank g i n |U r we will highlight the ways in which the World Funding? Bank Group can help to mobilize private capital, While financing needs vary by city and Investing b a n Rin institutional investors, sovereign wealth funds, sector, there are some common threads. First, and donor aid to ensure that the billions in reforms are needed to create a more conducive available development finance can crowd in the e Urban climate for pro-poor investment in urban silie trillions in additional finance required to meet resilience. This requires addressing institutional these needs. A critical consideration for any Resilience nce bottlenecks, regulatory reform, capacity for private financier is the balance between risk and public-private engagement, and better resilience return on a potential investment opportunity. planning. Increased and dedicated financing While purely privately-financed infrastructure 61 61 Box 4.1: South Africa Project on Utility Driven Energy Efficiency / SmartGrid In late 2006, an accident resulted in the shutdown of the Koeberg nuclear plant in the Cape Town area. Because of the accident’s magnitude and limited generator reserves or transmission capacity to meet this shortfall, the area would have suffered from several months of chronic black outs. The power company (ESKOM) supported a program to reduce energy demand and avoided a catastrophic black out. Two years later, ESKOM faced a second blackout, this time at a national scale. The World Bank was requested to help mitigate the power crisis given that the system was both energy and peak capacity constrained. The Bank supported three fronts of work. The first included a rapid design of a rationing program that mirrors a program instituted in Brazil in 2001. In Brazil this program helped the country save 20 percent of energy over nine months without any black or brown outs. Such programs are considered one of the most effective utility interventions to manage power rationing on the demand side. The second aspect of the Bank program was a simplified demand management program that enabled large customers to reduce/displace off-peak consumption. The third initiative was to establish a standard offer model where the utility could “buy” energy efficiency and load reduction resources at an agreed price. As such this is equivalent to a tariff in the energy efficiency space. Based on this program, the concept has been able to manage 700 MW of peak capacity that ESKOM can use to manage their power system. This model has also been adapted to improve energy efficiency in a number of other countries. for operations and maintenance is needed to MDBs’ climate related investments leverage rehabilitate existing infrastructure and sustain three dollars in private finance (IFC 2013). In new investments. Also, there is a need to focus the case of the World Bank Group, this can on demand-side investments to increase access be multiplied several times as every dollar it to infrastructure and services, especially for mobilizes through bond sales results in five the urban poor. Technical assistance programs dollars of lending. In relation to IBRD/IDA and offered by the World Bank Group can provide MIGA guarantees, every dollar in guarantees has support to help enable such investments at resulted in more than four dollars of commercial the city, country, community, and household capital mobilized toward investments. In addition, levels. For example, in 2006, the World Bank the World Bank Group’s extensive experience in supported a demand management program facilitating public private partnerships (PPPs) in Cape Town to reduce the peak energy serves as an effective way of increasing private In The ve load on the utility grid (see Box 4.1 above). investment through innovative risk-sharing World stin offering. For example, by integrating output The unique capabilities of MDBs, and of the performance-based contracting, the World Bank Bank g i n |U r World Bank Group in particular, can provide has helped to ensure that financing is available the catalytic resources and technical support for operations and maintenance in addition to required to leverage and crowd-in private Investing capital expenditures (see Box 4.2 for example). b a n Rin capital, institutional investors, sovereign wealth funds and donor aid. The World Bank e Urban Group’s combination of in-house capacities, Studies show that silie knowledge and financial resources can play a every dollar spent by Resilience the MDBs’ climate nce critical role in reducing the ‘matching’ gap, and thereby start the private capital flowing for related investments sustainable and resilient urban infrastructure. leverage three dollars 62 62 Studies show that every dollar spent by the in private finance. Box 4.2: Performance-based Contracting in Brazil In an effort to explore new options for road financing, the World Bank provided through performance-based contracts for rehabilitation and road maintenance (cReMa). The project consists of components to support institutional strengthening for road financing and management, and other investments to support sustainable road accessibility and safety. The project’s second component investment supported a performance-based state highway rehabilitation and maintenance ‘program’ for improved sustainability and safety. This component includes investments in performance-based contracts for the maintenance and rehabilitation of 1685 km of identified roadways in Bahia, along with rehabilitation and maintenance works under CREMA contracts of an additional 685 km of highways. By including road rehabilitation and maintenance in the performance-based contract, the project investment better supported the long-term resilience of the roadways. As such the provision was made to ensure that the rehabilitated roads would be able to withstand the impact of high intensity climate events such as excess rainfall and floods. Additional investments under the project included feeder road improvements, improved drainage systems, etc. Such investments also support the long term resilience of the Bahia road network. Further, concessional finance offered and sectors can provide infrastructure, only the enabled by the World Bank Group can fund the public sector can plan and regulate it. The incremental costs associated with ‘resilience challenge of increasing private investment in proofing’ infrastructure investments urban resilience — particularly in infrastructure — and for technical assistance and project requires simultaneous action on multiple fronts, preparation work. Even if the incremental including: strengthening planning and regulatory costs associated with making infrastructure capacities as well as institutional capacity to more resilient to climate change and disaster create a pipeline with well-prepared, investor- impacts result in savings later and are cost- ready projects; and encouraging infrastructure efficient overall, financing higher upfront costs as an asset class (to channel private investment may be challenging, and there is a strong case into infrastructure). This also applies for non- for this funding to be made concessional in infrastructure investments in urban resilience, In The ve the smallest, poorest, and more vulnerable e.g. measures to protect public health and reduce World stin countries. A key element will be to facilitate the vulnerability of the urban poor to country access to a menu of external climate socio-economic shocks. Bank g i n |U r finance instruments and work with partners and donors to harmonize, simplify, and rationalize Investing access to concessional finance. (World Bank The challenge of b a n Rin 2016b) For example, the IFC Blended Climate increasing private Finance team is developing a range of products investment in urban e Urban silie and structures which will help to facilitate wider resilience — particularly access to concessional financing. (IFC n.d.) in infrastructure — Resilience nce requires simultaneous Ultimately, achieving the goal of increasing action on multiple fronts. urban resilience will require addressing the root causes of the basic infrastructure and 63 63 other gaps. While both the public and private FIGURE 4.1: Urban Resilience Lending Commitment by Region FY12–16 4% Africa 12% 26% East Asia and Pacific Europe and Central Asia 18% Latin America and Caribbean 37% Middle East and North America 3% South Asia 4.2 Where Does Depth and breadth the WBG have of experience Comparative The World Bank Group maintains a global Advantages? knowledge base, demonstrated experience and a successful track record of delivering high An emerging portfolio of quality urban resilience solutions. The Bank is projects in urban resilience able to draw on several decades of international From 2012 – 2016, the World Bank Group experience with development policies, projects financed 79 core urban resilience projects and programs in urban development, disaster in 41 countries, amounting to USD 9.72 risk management and climate change adaptation. billion. Over this five-year period, investment This has involved billions of dollars of lending averaged a little over USD 1.8 billion per as well as policy dialogue in thousands of cities year (see Figure 4.1). The majority of urban and towns working across a range of sectors. resilience financing was in East Asia and Specifically, the Bank has worked with cities on a the Pacific (38.3 percent) and Africa (27.2 range of projects, policies, and programs to build percent), as depicted in Figure 4.2. The primary social, fiscal, and physical resilience, through lending instrument has been investment In disaster risk management and climate adaptation The ve project finance (87 percent), which includes approaches, municipal finance capacity building, World stin specific investments, emergency recovery, resilient urban infrastructure, and risk sensitive technical assistance, adaptable programs, and Bank land-use planning, as well as hedging and g i n |U r financial intermediary lending. Program for Results (PforR) represented 7 percent, while Investing development policy lending represented 6 The Bank is able to draw b a n Rin percent of the urban resilience portfolio. A full on several decades of list of core urban resilience lending can be found international experience e Urban silie in Annex 2. This is a conservative estimate of with development policies, financing, as an additional 151 non-core urban projects and programs in Resilience nce resilience projects were supported with financing urban development, disaster of USD 17.5 billion during the same period. An risk management and 64 64 example of an urban resilience project in Can Tho, Vietnam is summarized in Box 4.3. climate change adaptation. 11% FIGURE 4.2: Urban Resilience Lending Commitment by Instrument FY12–16 84% 6% 11% Investment Project Finance (IPF) Program for Results (PforR) 84% Development Policy Loan (DPL) Investment Project Finance (IPF) de-risking public Program for Results and private investments The Bank’s portfolio in (PforR) in cities through MIGA, IFC, and World Bank Treasury. urban development has Development Beyond their development Policy Loan (DPL) effects, these grown in response to initiatives have made a substantial contribution increased demand from to the body of knowledge on financing innovative client countries. and multi-sectoral initiatives generally. than 7000 cities and towns across more than Urban Development: The Bank’s portfolio in 130 countries (World Bank 2010). The urban urban development has grown in response portfolio has included investments in shelter, to increased demand from client countries. infrastructure, slum upgrades, municipal Since its first urban lending operation was development, local economic development, approved in 1972, the Bank has financed natural disaster management, environmental investments and technical assistance in more BOX 4.3: Can Tho Urban Development and Resilience Project Can Tho has a population of approximately 1.25 million and an annual growth rate of five percent. As the fourth largest city In in Vietnam and the largest in the Mekong Delta, it is an engine of economic growth for the region and has a strategic role The ve in promoting food security in the Delta. Although the City is growing dynamically, it faces multiple threats to sustainable World stin development that are caused primarily by seasonal flooding, sea-level rise, land subsidence, and rapid urbanization. A USD 322 million investment has been prepared to address the economic, social, environmental Bank g i n |U r and financial dimensions of resilience by strengthening the capacity of the City to manage flood and other risks on multiple fronts. The project consists of components for: Investing b a n Rin • flood risk management and environmental sanitation; • urban corridor development to increase intra-city connectivity and encourage compact, e Urban mixed-use, pedestrian and public transport-oriented urban development; and silie • financial and social protection instruments to improve spatial planning, data and information management, Resilience nce post-disaster budget execution, and the responsiveness of safety nets to flood events. The investment is co-financed by the Government of Vietnam and the Swiss State Secretariat for Economic Affairs, and was informed by the results of a CityStrength diagnostic. 65 65 Source: (World Bank 2016f) BOX 4.4: Istanbul Seismic Risk Mitigation and Emergency Preparedness Project (ISMEP) With 15 million inhabitants, Istanbul is not only the most populous province, but also Turkey’s financial, cultural and industrial heartland, accounting for 28 percent of national GDP, generating 38 percent of the national industrial output and 44 percent of its tax income. With 188 of Turkey’s 500 largest industrial companies located in Istanbul, and as the center of production, import and export, USD 82.5 billion of Turkey’s GDP is at risk from Istanbul’s exposure to multiple hazards, primarily earthquakes. Over the past decade, ISMEP has helped improve Istanbul’s preparedness for a potential earthquake by enhancing its institutional and technical capacity for disaster management and emergency response, strengthening critical public facilities for earthquake resistance, and supporting measures for better enforcement of building codes. The investment has resulted in: • 1258 high-risk buildings, including schools and hospitals, being strengthened, directly benefitting about 1.5 million people; • added value and service life to those buildings in retrofitting to the value ofUSD 227 million; and • a difference between the undamaged asset value ‘with’ and ‘without’ the project of avoided direct damages in the amount of USD 728 million. Initially supported with a € 415.26 million (USD 550 million) IBRD loan and additional financing, ISMEP has leveraged another € 1.36 billion from the European Investment Bank, Council of Europe Development Bank and Islamic Development Bank, which will continue financing risk reduction for critical public facilities until 2020 under ISMEP implementing arrangements. Source: ( World Bank 2016g) Three times as much income countries (IDA commitments) are financing has gone to screened for disaster and climate risks using support ex-ante measures sector-specific tools (Development Committee such as early warning 2016). An example of investment in urban systems and resilient DRM can be found in Box 4.4, which presents infrastructure compared the results of a seismic risk mitigation and with expenditure on post- emergency preparedness project in Istanbul. disaster recovery. Climate Change Adaptation: The World Bank Group has become a specialist in climate improvements and social services. The urban change as this is the main challenge to its portfolio now consists of 397 active projects core mission. Sustaining long-term poverty valued at USD 26.8 billion with 70 percent reduction requires the achievement of global of projects located in the Africa, East Asia/ climate objectives, including assistance to In The Pacific and Latin America/Caribbean regions. ve help countries adapt. From FY11-15, the World World stin Disaster Risk Management: At the core of the Bank Group committed an average of USD 10.3 billion a year, or around 21 percent of all Bank portfolio is a robust and growing disaster risk g i n |U r management program. Annual financing for commitments, to help developing countries disaster risk management (DRM) has increased mitigate the effects and adapt to the challenges Investing b a n Rin from USD 3.7 billion in FY12 to USD 5.7 billion of climate change. In that period, over USD in FY15. These investments cover both specific 50 billion was committed through more than disaster risk management activities and the 900 projects with climate-related activities e Urban silie mainstreaming of DRM in other sectors such as with 73 percent for mitigation and 23 percent agriculture, water, energy, and transport. During for adaptation (World Bank 2016b). Resilience nce this period, three times as much financing has gone to support ex-ante measures such as early The World Bank Group has become a specialist in climate 66 66 warning systems and resilient infrastructure compared with expenditure on post-disaster change as it is the main recovery. In addition, all financing for low- challenge to its core mission. “The World Bank Group has become a specialist in climate change as it is the main challenge to its core mission.” Capacity to meet the urban The World Bank Group resilience challenge is well-placed to Making cities resilient will require a multi- enable a cross-sectoral sectoral approach. As we have seen, cities approach to making are made up of complex and highly-dependent cities resilient. networks of systems. Shocks and stresses can impact a range of different sectors, while building resilience also requires proper policies; good resilience involves coordination across different policies and effective regulatory frameworks services, functions and stakeholders. The World are also needed to promote resilient cities, e.g. Bank Group is well-placed to enable a cross- appropriate implementation mechanisms for sectoral approach to making cities resilient. One building regulations. The World Bank Group of the largest of the Bank’s new global practices assists client countries with policy analysis In is focused on sustainable communities and and helps identify opportunities for reform. The ve includes teams that cover urban development This is backed up with development policy World stin as well as disaster risk management, social lending where countries receive financing for development and land use. While the institutional budget support in recognition of progress Bank g i n |U r leadership for urban resilience is based in this that is being made in policy reforms. practice, there is coordination and joint work with Investing b a n Rin other relevant practices such as water, energy, The World Bank transport, finance and markets, and cross-cutting Group assists client e Urban areas such as climate change and poverty. countries with policy silie An improved policy environment is also analysis and helps Resilience nce needed to facilitate change. As noted in identify opportunities Chapter 3, mobilizing development finance for reform. is critical but is only part of the puzzle. An enabling environment for investing in urban 67 67 A capacity to leverage resources is critical. potentially USD 29 billion per year. The Bank’s As climate changes and the world urbanizes, ensuing Climate Change Action Plan has laid out the percentage of WBG commitments going how this increase can be achieved on a sector- In The ve to climate change, disaster risk management by-sector basis while simultaneously rebalancing World stin and urban development is increasing. These its portfolio to put a greater focus on adaptation commitments then leverage additional and resilience. A specific example of leveraging Bank g i n |U r resources from other donors, the private sector, resources in Istanbul is presented in Box 4.4. foundations, and civil society. For example, Drawing on a global knowledge base facilitates Investing since 2009, the IFC has mobilized USD 4.7 billion b a n Rin good practice and sharing of experience. from core private sector sources and catalyzed Several hundred professional staff spread across an additional USD 30 billion in co-finance for e Urban six regions are currently working on issues of silie total climate-related private co-financing of USD urban resilience. They represent a networked 34.7 billion (World Bank 2016b). At COP21, the Resilience nce repository of experience and knowledge about World Bank made a commitment to increase various aspects of what makes cities resilient. the climate-related share of its portfolio from Internal and external partnerships, which are 68 68 21 percent to 28 percent by 2020 with total financing (including leveraged co-financing) of elaborated below, are another pathway for BOX 4.5: Using Analysis for Safe and Resilient Cities in Ethiopia Ethiopia has one of the fastest growing urban populations in the world. It is projected to triple from 15 million in 2012 to 42 million in 2034, growing at 5.4 percent a year. The CityStrength Diagnostic approach that was developed and successfully piloted in Addis Ababa in early 2015 informed the Government of Ethiopia’s decision to scale up the urban resilience technical assistance (TA) program to nine other regional capitals - Adama, Assossa, Bahir Dar, Gambella, Harar, Hawassa, Jigjiga, Mekelle, and Semera-Logia, and Dire Dawa City Administration. This program builds on the CityStrength Diagnostic approach, while improving the rigor of the approach by adding hazard mapping, a review of building framework and a quick assessment of emergency response management capacity in urban areas. The initial assessment found that all those regions are facing increased exposure to floods and fire. A majority of them are exposed to earthquake risk but are not taking any actions to prepare for an earthquake event. They are all facing a number of urban stresses, including acute water shortages, a housing shortage, an increasing number of traffic accidents, and unemployment. Moreover, these cities are projected to triple in population by 2037, more than tripling their current built up area. These regional capitals are at a crossroads where decisions made today about the type and location of infrastructure, services and buildings will affect the overall safety of the cities and increase in exposure and climate impacts. Consultative analysis found that substantial savings could be made in lives and future economic losses if investments are made to improve urban resilience. These relate both to the long term cost savings in urban services and resilient infrastructure development, and the safeguarding of hard earned development gains. For example, improved flood management practices (involving compliance with regulatory requirements for land use) would reduce the average annual loss to about USD 93 million from the current level for a net annual savings reduction of about USD 230 million each year. As a result, five main priorities areas and investments were identified to enhance resilience in these regional capitals: • Effective management of rapid urban growth in a risk-sensitive manner focusing on the most vulnerable; • Better management of floods and water scarcity; • Improvement of disaster preparedness including fire safety and response; • Improvement in building a regulatory framework to mitigate seismic risk; and • enhancement of overall safety of the built environment, and support towards key sectoral priorities. Source: (World Bank 2016 h) identifying and sharing good practice. Finally, The Bank can use its the Bank can use its convening power to bring convening power to diverse partners at the international, national In bring diverse partners The ve and sub-national levels together to share at the international, World stin knowledge, as well as to link demand for urban national and sub- resilience with supply of finance and know-how. national levels together Bank g i n |U r Importantly, the World Bank Group has to share knowledge, as demonstrated capacity to pull it all together. well as to link demand Investing b a n Rin With its experience, global knowledge and for urban resilience financing capacity, the Bank is well-positioned with supply of finance and know-how. e Urban to address many of the financing gaps silie identified in Chapter 3. It has the capacity Resilience nce to crowd in additional private financing by the preparation of bankable investments, and identifying attractive risk/return opportunities, advising on complementary policy reforms that understanding the range of appropriate financial instruments, assisting clients with are needed for investments to be effective. 69 69 4.3 — World Cities. Bank Services This includes their capacity to provide risk- for Supporting reducing infrastructure and services, such Urban Resilience as drainage and sanitation systems, all- weather roads, drinking water supply and Strengthening the resilience of cities – health care and emergency services. It also especially of the urban poor – requires includes the potential to quickly repair or interventions at different levels ranging restore these in the aftermath of disaster. from the individual and household to the Implementation of effective land use planning national. This includes taking action to reduce and building code regimes further contribute impacts or exposure before the shock occurs; to the resilience of the built environment. it also includes supporting coping capacities immediately afterwards and improving the ability Countries. to bounce back, or forward to a more resilient To support city-level interventions, countries state, in the aftermath. To this end, resilience can secure and provide the needed financing needs to be understood at different scales: for urban resilience investments as well as Individuals and households. create the policy and institutional environment required to promote private sector investment in This includes their opportunities to minimize urban resilience. As a sovereign, national exposure to risk by living in safe locations governments are sometime better able and in safe houses, and to enhance their to secure financing for urban resilience adaptive capacity through improved health, investments – be it through multilateral knowledge and access to safety nets. development finance, bonds and guarantees. Communities. This framework is applied below to identify This includes a community’s capacity to work relevant technical assistance and financing together on risk reduction – for instance to options the World Bank Group can offer to share information about local risks, to use bolster urban resilience. The World Bank Group infrastructure and services (including natural offers a wide range of specialized financing ecosystems) in ways that do not jeopardize products and services which contribute to In The ve their risk-reducing functions, or to provide this urban resilience on the individual / household, World stin infrastructure where governments fail to do so. community, municipal, and national levels. Importantly, these financial products and services Bank g i n |U r provide opportunities to leverage private capital in order to fill the gap between client needs and The World Bank Group Investing available financing from multilateral development offers a wide range of b a n Rin institutions like the World Bank Group. specialized financing products and services e Urban The Bank also offers interested cities silie which contribute to and countries a suite of urban resilience urban resilience on the Resilience nce financing through several instruments, individual / household, advisory services and analytics (ASAs), community, municipal, reimbursable advisory services (RASs) as 70 70 and national levels. well as technical assistance. Importantly, these leverage private capital in order to meet the by the Cities Alliance (http://resiliencetools.org/ gap in availability of multilateral development tools-overview). Institutional knowledge of and finance to city needs. A summary of the experience in urban resilience is consolidated technical assistance, financing, insurance, as by the Global Lead on Resilience so that it can well as bonds and guarantees available for be used throughout the institution. An example urban resilience purposes is provided below. A of the application of multiple tools to benefit more detailed description of these financing Ethiopian cities is presented in Box 4.5. products and services is given in Annex 3. Technical Assistance The World Bank Group has been integrating There is a global practice at the World Bank successful approaches that unites urban and resilience/disaster risk into “tools” that can be management teams. To fully assist cities in utilized to better serve being prepared to cope with shocks and stresses, city partners. the task teams collaborate with other Global Practices (e.g. with Health on epidemics, Energy The World Bank Group offers technical and Water on urban service delivery, Transport support and resources to aid subnational on sustainable mobility). This collaboration governments in strengthening their capacity has resulted in the creation of a Community to capture own-source revenue, improve of Practice around urban resilience to enable fiscal management, and enhance their cities to identify their vulnerabilities and develop creditworthiness. It also provides grant funding and finance investments to mitigate and adapt. to support project preparation and provide The Bank also has several instruments which in-depth technical support to build capacity promote dialogue within the institution to help amongst larger cities, in particular, to prepare serve cities and development partners better, technical and pre-investment studies needed e.g. on urban flooding, fragility and conflict, to create investor-ready projects. The Bank disaster response, and resilient recovery. further supports governments as they consider A number of analytical tools and methods various structures for service delivery, so as to have been developed for assessment and improve alignment of service delivery and capital The investment decisions and resource allocation. In prioritization. The World Bank Group has been The v World integrating successful approaches into “tools” e Financing Approaches World s tBank that can be utilized to better serve city partners. and Modalities Most of the tools related to disaster risk have inBank g i| been tested and developed with support from To unlock a greater amount of third-party n |Investing Ur GFDRR,16 while tools and services related to financing, governments need various kinds of Investing b a n inR energy use, land value capture, tax increment support that the World Bank is well-positioned financing and municipal finance have been to provide. This includes: pre-development Urban in e Urban tested in the context of the World Bank’s urban financing; and technical assistance for capacity s i lResilience engagements.17 The Bank also has access to building to conceptualize, plan, prepare and ie Resilience the full range of urban resilience tools that negotiate investor-ready resilience projects. nce have been developed by external partners and Better technical capacity in the public sector classified through work by UN-Habitat and Joint would reduce uncertainty and, therefore, the Work Program on Urban Resilience supported cost of capital for private investors. Support 71 71 BOX 4.6: Development Policy Lending for Belo Horizonte Belo Horizonte, Brazil’s sixth largest city, has a high poverty rate which is unevenly distributed throughout the city and is highly correlated with housing conditions, inequality, access to jobs, and gender. The World Bank provided a USD 200 million development policy loan (DPL) to the city in 2013 in support of inclusive urban development to reduce vulnerability of the poor, promote green and sustainable practices, and enhance socially and fiscally sustainable urban governance. The loan built upon ongoing reforms in housing development, resettlement, social programs, climate change adaptation and mitigation, disaster risk management, and results-based management. During the loan implementation period, the Municipality adopted ambitious participatory decision-making mechanisms to foster direct citizen inclusion and ownership of budget allocation, policy decisions, and planning. The city also embraced state-of-the-art resettlement policies and practices. It spearheaded an innovative approach to reach the most vulnerable families, designing a specific development action plan for those families not reached by existing social programs by tailoring to their specific needs. Finally, the city developed and implemented a municipal climate change action plan and strengthened its disaster early warning and reporting system. Source: (World Bank, 2015c) Investment Project Financing (IPF): The World Bank Group and its partners Investment project financing (IPF) allows the have been working World Bank to finance projects that aim to to enhance the promote poverty reduction and sustainable efficiency of financial development of member countries. Borrowers flows, by reducing may choose the IPF instrument based on their delivery time and/ or objectives, the results they expect to achieve, and costs, especially for the risks they face. IPF supports projects with emergency needs and defined development objectives, activities, and in crisis situations. results, and finances a specific set of expenditure transactions and disburses the proceeds of is required to help governments understand Bank financing against eligible expenditures. the conditions required to attract and retain In Development Policy Lending (DPL): The private capital, and to understand the costs ve Development policy lending can support policy World of certain government policies or actions (or stin reforms that emerge from dialogue. Through inaction, as the case may be). The World Bank Bank development policy operations, the Bank g i n |U r Group and its partners have been working to supports a country’s program of policy and enhance the efficiency of financial flows, by institutional actions that promote growth and Investing reducing delivery time and/or costs, especially b a n Rin sustainable poverty reduction. This type of for emergency needs and in crisis situations. financing typically provides budget support in e Urban There are various approaches and modalities recognition of policy and institutional reforms silie of structuring urban resilience projects to improve, for example, the investment climate, Resilience with World Bank Group resources. However, diversify the economy, create employment, nce the financing itself is offered through one of improve public finances, strengthen service three specific instruments: Investment Project delivery, and meet applicable international 72 72 Finance (IPF), Development Policy Loans commitments. Some of these reforms, e.g. (DPLs) and Program for Results (PforR). improving the investment climate in urban areas, can contribute to enhanced resilience. Insurance Conceivably, a development policy operation could be defined with a primary focus on urban The World Bank Group offers a number of resilience. An example of urban resilience insurance products aiming to enhance the policy lending in Brazil is provided in Box 4.6. resilience of individuals and households, cities and countries. By offsetting the risk associated Program for Results (PforR): Similarly, with not only the occurrence of adverse climate Program for Results (PforR) lending can events and disasters, but also project-specific also support positive policy reform, which risks which concern private investors interested promotes urban resilience. By utilizing a in financing urban resilience projects, World country’s own institutions and processes, and Bank Group insurance products enable more linking disbursement of funds directly to the resilient outcomes. Such insurance instruments achievement of specific program results, the include disaster responsive social safety nets, PforR approach helps build capacity in-country, city risk transfer and risk sharing facilities as enhances effectiveness and efficiency and well as multi-country catastrophe risk pools leads to achievement of tangible, sustainable and credit enhancements play a significant role program results. PforR is available to all World in bolstering the overall resilience of cities. Bank member countries. Since its creation in 2012, there has been a steady increase in the Bonds and Guarantees use of PforR. Between FY12-16, there were 5 Bonds and guarantees offered by the World approved urban resilience PforR operations Bank Group are effective ways of incentivizing totaling USD 1.03 billion of Bank financing. An and raising private capital for urban resilience example includes the Results-based National projects. Examples include guarantees on Urban Development Program – Northern resilience financing for individuals, households Mountains in Vietnam (USD 250 million). The and businesses as well as project bonds and program development objective is to strengthen project-based guarantees. At the national the capacity of participating cities to plan, level, country clients interested in raising implement and sustain urban infrastructure. funds for urban resilience projects are able to issue sovereign bonds with MIGA guarantees Through development as well as access partial credit guarantees policy operations, In The and policy-based guarantees provided by ve the Bank supports a IBRD. The Global Emerging Markets Local World stin country’s program of Currency Bond Program within the IFC provides policy and institutional advisory services to countries interested in Bank g i n |U r actions that promote developing a local currency bond market. growth and sustainable Doing so can be an effective tool for raising Investing b a n Rin poverty reduction. capital for urban resilience investments. e Urban silie Resilience nce 73 73 TABLE 4.1: World Bank Instruments for Urban Resilience Technical Assistance Financing Approaches Insurance Bonds and and Modalities Guarantees Individual/ • Resilient Retrofit of • Housing Finance • Disaster • Resilience Household: Informal Housing • Climate Adaptation Responsive financing (with Financing and (GSURR) Finance Social Safety MIGA guarantee) services available Nets to individuals or households which contribute to urban resilience Community: • Inclusive Community • Community-driven Resilience (GFDRR) development Financing and • Safer Schools (GFDRR) services which • Code for Resilience contribute to urban (GFDRR) resilience, available to communities/ Community-level financing and services which contribute to urban resilience City: • City Creditworthiness • Sub-sovereign lending • City Risk Transfer • Project bond Initiative for urban resilience (GFDRR/GSURR/ • Project-based Financing and • Sub-national Technical project (with Treasury) Guarantees (i.e. services which Assistance Program Sovereign Guarantee) • Risk Sharing loan guarantees contribute to urban (SNTA) of Public Private • Performance-based Facilities and payment resilience, available Infrastructure Advisory Contracts guarantees) to cities Facility (PPIAF) (MIGA) • CURB: Climate Action for Urban Sustainability—Tool for Rapid Assessment of City Energy (TRACE) - ESMAP In • Public Private • Long-term Finance • Multi-country • Sovereign Bonds The Country: ve Infrastructure Advisory (IDA/IBRD) Catastrophe Risk (with MIGA Financing and World Facility (PPIAF) • Blended Finance Pools Guarantee) stin services which • Efficient Securities (IDA/IBRD/MIGA/IFC/ • Global Index • Social Impact contribu te to Markets Institutional Donor and Private Insurance Facility Bond Bank urban resilience g i n |U r Development (esMid) Capital) – GIIF • Partial Credit available to Program • Development • CCRIF / PCRAFI Guarantees countries • Innovation Lab (GFDRR) Policy Loans with • Non-honoring (IBRD) • Building Regulation Catastrophe Deferred of Sovereign • Policy-based Investing for Resilience (GFDRR/ Drawdown Option Financial Guarantees b a n Rin GSURR) (CAT-DDO) Obligation (IBRD) • Program for Results (NHSFO) – credit • Global Emerging (PforR) enhancement Markets Local e Urban • Crisis Response (MIGA) Currency silie Window (CRW) • Private Equity Bond Program • Contingent Fund (Gemloc) Emergency Response Resilience nce Component (CERC) • Debt convergence (including debt swaps and debt buy-backs) 74 74 In addition, the World Bank Group has various vehicles through which it is able to crowd-in and raise private capital for urban resilience purposes for country clients. A more detailed description can be found in Annex 3. World Bank Group Methods of Attracting Additional Capital for Urban Resilience Financing Bond Issuance Investment Platforms Donor TA and Analytics Partnership Building · Green Bonds and Pooled Vehicles Contributions · Small Island States · Medellin · Infrastructure · Asset Management · Climate Resilience Initiative Collaboration for Bonds Company (IFC) Investment (SISRI) Urban Resilience · Sukkuk · Global Funds · Doing Business (MCUR) (Islamic Bonds) Infrastructure · Concessional Report (DBR) · Frontloading Facility (GIF) Financing (ex. · Managed Co- Facility (CFF) International Lending Portfolio Finance Program (MCPP) Facility for (IFC) Immunization) · Prototype Carbon Fund (PCF) 4.5 What the World Bank Group Will Do Differently to Make Cities More Resilient Resilient Cities Program rather than a dream. The low-to-negative interest rate climate currently experienced The World Bank Group has launched a globally adds incentive for private capital, Resilient Cities Program, which will serve institutional investors and sovereign wealth as a ‘one stop shop’ within the Bank for any funds to invest in urban resilience – provided business or organization wishing to invest risk is brought to manageable levels and returns in urban resilience. The Program objective is on investment can be better assured with MDB to enable 50 million people to escape poverty financing, and the insurance of guarantees. In over the next two decades by improving the The ve disaster and climate resilience of the cities World stin where they live and work. This will be achieved Many cities around by building cities’ technical, regulatory, and the world have enough Bank g i n |U r financial capacity to integrate disaster risk economic value that management in territorial and financial can be tapped to make Investing investing in resilience a b a n Rin planning, and in their investment programs. strategic choice rather Leveraging private investment will enable the than a dream. e Urban silie Program to scale up. Achieving higher levels of climate resilience is almost always presented Resilience nce as an insurmountable financing challenge for Over the next two decades, the Program cities. In fact, many cities around the world have aims to crowd in USD 500 billion in private enough economic value that can be tapped to make investing in resilience a strategic choice capital to finance resilient infrastructure and services that will contribute to the elimination 75 75 Figure 4.3: Sample menu of options for urban resilience investments INFORMATION AND DATA MANAGEMENT public asset valuation mapping of regulatory RISK TRANSFER AND MANAGEMENT STRATEGIES SOLUTIONS VULNERABILITY AWARENESS-BUILDING TOOLS environment emergency management and building code response implementation disaster reserve funds damage and loss system lifeline quality establishment of city infrastructure balance sheet systems cadaster development vulnerability reduction disaster response spacial data safety nets investments infrastructure and data collection private property land value catastrophe risk capture physical risk assessment pools contingent governance liability and systems citystrength measurement assessments fiscal risk diagnostic strategy geospatial and tubular data catalog VULNERABILITY AWARENESS-BUILDING TOOLS of poverty and adaptation to climate change These activities will be directly linked to ongoing in 500 cities, benefitting one billion people. and planned infrastructure investment programs or regulatory reforms, to ensure scale and To achieve these ambitions of leveraging long-term impact. A menu of options in each and impact, the World Bank Group would of these areas is presented in Figure 4.3. need to make more use of efficient financial instruments and double its current level of A phased approach will be used during lending for urban resilience to something the first ten years of the Program. on the order of USD 4 billion per year. In the first five years, the program seeks The Cities Resilience Program will help to engage 40 cities in the development of create an enabling environment. comprehensive resilience plans or to help implement existing ones, integrated with their The core of the program provides grant In other major planning instruments. It will help The ve resources for technical assistance them match these plans with a viable financing World stin activities to city governments to create an enabling environment for: Bank g i n |U r In the first 10 years, • risk reduction; the program will • improvement of implementation leverage USD 4 billion Investing b a n Rin mechanisms of building regulations and construction practices across sectors; in MDB financing, • inclusion of risk management in crowd-in USD 4 billion e Urban in private capital and silie territorial planning, and regulatory and financial enhancements to enable city access to credit; and put at least 20 cities Resilience nce on the path to access • the preparation of resilience-boosting projects so that they are bankable and private capital for resilience investments. 76 ready for investment by the private sector. 76 BOX 4.7: Partnering to Enhance Resilience in Metropolitan Accra The 4.4 million people living in the Greater Accra Metropolitan Area (GAMA) in Ghana face resilience challenges ranging from floods to inadequate solid waste management. These are exacerbated by fragmentation across 16 jurisdictions. After the disastrous floods in June 2015, which affected more than 50,000 people in Greater Accra, the World Bank developed a technical assistance program to help the Government in achieving greater urban resilience in the GAMA region. This assistance is being provided with a range of internal and external partners: the Global Facility for Disaster Reduction and Recovery is providing financing; the International Finance Corporation is assisting with risk insurance; the Climate Investment Readiness Partnership is supporting a dialogue on climate change adaptation, disaster risk reduction and an investment framework; and the Rockefeller Foundation - 100 Resilient Cities Initiative, the Japan International Cooperation Agency, Cities Alliance and UN-Habitat are also coordinating technical support. (World Bank 2016e) strategy. In the first 10 years, the program for Urban Resilience, and Columbia Business School. Informal conversations will leverage USD 4 billion in MDB financing, on potential partnerships have begun crowd-in USD 4 billion in private capital and with Stanford University, Blackrock, JP Morgan, Credit Agricole, Veolia, SwissRe, put at least 20 cities on the path to access and Arup International. An example of private capital for resilience investments. partnership in action is provided in Box 4.7 for Metropolitan Accra, Ghana and a description of existing internal and external The first year of the Program will focus on partnerships is provided in Annex 4. four areas. The key activities will be to: • Develop and refine tools for the Program. Climate Change Action Plan These include developing indicators to measure poverty and welfare and The World Bank’s Climate Change asset risks at city level, and a city-level Action Plan supports the integration poverty-DRM survey instrument. of climate into urban planning. • Leveraging private capital. This means In The engaging with investment industry ve The WBG will support cities directly and by groups and cities to define resilient World stin infrastructure investments, and developing tools and knowledge products constructing a global overview of cities on through the Global Platform for Sustainable the basis of their financial and regulatory Bank g i n |U r readiness to access capital markets. Cities, and roll these out in at least 30 cities by 2020. In addition, the WBG will develop and • Building a pipeline of city engagements. Investing Several cities in the developing pilot a city-based resilience approach in 15 cities b a n Rin world have already been identified; by 2020 to integrate infrastructure development, more will soon be added. land use planning, DRM, institutions/governance, e Urban • Creating value from existing partnerships silie and establish new partnerships. The social components, and investment. It will following formal partnerships are expected also use its multi-sectoral capacity to support Resilience nce to start supporting the program in 2017 and 2018: Rockefeller 100 Resilient Cities, integrated urban water management (water C40, Bloomberg Philanthropies, City resource management, sanitation planning, Climate Finance Leadership Alliance, International Code Council, Transparency International, ICLEI, Medellin Collaboration urban drainage, and related investments). Finally, to ensure consistency between 77 77 infrastructure development and urbanization, costs of investing in resilience. Improved the WBG will develop and pilot approaches urban management, combined with better for transit-oriented development in at governance, can help ensure that services and least five cities by 2020 with support from infrastructure reach the poor and vulnerable. IFC and MIGA (World Bank, 2016b). Mainstreaming will enable the scaling up of a more significant urban resilience portfolio. Doing Business Differently The 79 core urban resilience projects that have The World Bank will commit resources to make emerged over the last five years (see Annex 2) urban resilience a business product line. have grown organically and not strategically. A more strategic and comprehensive approach to In order to mobilize full institutional support investing in resilient cities can be achieved by: for addressing the challenge of resilience in • Mainstreaming the analysis of urban cities, the World Bank will recognize investment resilience in SCDs, CPFs, national in urban resilience as a standard business urbanization strategies, and climate strategies by using, for example, product. This recognition can then ensure that the CityStrength diagnostic. resources are available for various aspects • Using the full range of instruments of work: systematic country diagnostics and outlined in Annex 3 to scale up WBG country policy frameworks, analytic and advisory assistance for making cities and the urban poor more resilient. services, lending and other financial instruments, and knowledge management. It would also • Mobilizing resources to create a project preparation facility to assist clients involve the expansion of disaster and climate with the additional costs of preparing risk screening from IDA to IBRD projects to investments in urban resilience. ensure that all investments are risk-informed as • Creating an internal Community of Practice well as continued use of the resilience screen on urban resilience to facilitate the sharing of knowledge, expertise and good practices employed by the IFC. Resources have already for analyzing, identifying, prioritizing, been committed by GFDRR to support the scaling preparing, supervising, and evaluating investments and other activities for making up of the Resilient Cities Program and the cities and the urban poor more resilient. consolidation of external partnerships through • Developing guidance and other knowledge the Medellin Collaboration on Urban Resilience. products with internal and external partners for preparing investments In The and leveraging resources across ve Support for broader urban development different sectors for city resilience. World stin is needed and will continue. • Developing new partnerships with other Bank financiers and sources of technical excellence g i n |U r An enhanced focus on urban resilience does not mean that the World Bank will reduce its while strengthening existing relationships. support for urban development in other areas. Investing b a n Rin In fact, making cities more productive, efficient and better governed are critical to enhancing e Urban overall resilience. Economic growth and shared silie prosperity will help increase incomes of the Resilience nce urban poor and reduce their vulnerability to shocks and stresses. Better fiscal and financial management can increase the ability of cities 78 78 and their partners to meet the additional 4.6 In Conclusion Bank Group has the capacity and mission to serve as an honest broker to help meet the challenge. Building resilient cities is a multi-decade task, demanding considerable commitment Use the resources provided by and resources, but offering exceptional the World Bank Group. In The ve opportunities to cities and investors alike. Access these through the City Resilience World stin Here are some critical first steps: Program at http://www.worldbank.org/en/topic/ Use this report. urbandevelopment/brief/resilient-cities-program. Bank g i n |U r It is a useful reference to the issues which Start now. Investing b a n Rin affect the resilience of cities and the urban City resilience is as we have seen an urgent poor, and a guide to the information, capacity- priority. Building it into our planning processes building and investment tools provided by the e Urban will preserve the development gains already silie World Bank Group and other organizations. achieved, lift millions out of poverty and Resilience nce Partner with the World Bank. help sustain urban development. Whether you are in a city that seeks to become more resilient or are an investor looking for 79 79 opportunities to build urban resilience, the World Annex 1 — Sample Definitions of Urban Resilience Resilience refers to the ability of any urban system to withstand and to UN-HABITAT recover quickly from multiple shocks and stresses and maintain continuity of service. 18 The capacity of a social or ecological system and its component parts to cope with hazardous shocks and stresses in a timely and efficient manner ICLEI by responding, adapting, and transforming in ways that restore, maintain, and even improve its essential functions, structures, and identity while retaining the capacity for growth and change.19 Disaster Resilience is the ability of countries, communities and households to manage change, by maintaining or transforming living standards in DFID the face of shocks or stresses - such as earthquakes, drought or violent conflict - without compromising their long-term prospects. 20 Resilience is the capacity of individuals, communities and systems to ROCKEFELLER survive, adapt, and grow in the face of stress and shocks, and even FOUNDATION transform when conditions require it. 21 NYC, A A resilient city is one that is: first, protected by effective defenses and STRONGER adapted to mitigate most climate impacts; and second, able to bounce back MORE more quickly when those defenses are breached from time to time. 22 RESILIENT NEW YORK A Resilient City is one that has developed capacities to help absorb future shocks and stresses to its social, economic, and technical systems and RESILIENTCITY. infrastructures so as to still be able to maintain essentially the same ORG functions, structures, systems, and identity. 23 A resilient country is “one that has the capability to 1) adapt to changing contexts, 2) withstand sudden shocks and 3) recover to a desired WORLD equilibrium, either the previous one or a new one, while preserving the ECONOMIC continuity of its operations.” FORUM, GLOBAL *New term from Global risks report, 2016: RISKS ‘Resilience imperative’ – an urgent necessity to find new avenues and more opportunities to mitigate, adapt to and build resilience against global risks and threats through collaboration among different stakeholders. 24 “Adaptation focuses development resources on mitigating specific risk In JEB BRUGMANN, The factors, often without a clear connection to the overall performance of ve FINANCING THE the area as a functioning urban unit or system. Resilience focuses on the World RESILIENT CITY stin reliability and efficiency of performance.” 25 Bank g i n |U r Resilience is “the ability of people, households, communities, countries and systems to mitigate, adapt to and recover from shocks and stresses USAID in a manner that reduces chronic vulnerability and facilitates inclusive growth.26 Investing b a n Rin Urban Resilience is the capacity of individuals, communities, institutions, businesses, and systems within a city to survive, adapt, and grow no matter 100 RESILIENT what kinds of chronic stresses and acute shocks they experience.27 e Urban CITIES silie Resilience nce Resilience is the capacity of a social-ecological system to absorb or withstand perturbations and other stressors such that the system remains ­­­­ RESILIENCE within the same regime, essentially maintaining its structure and functions. 80 80 ALLIANCE It describes the degree to which the system is capable of self-organization, learning and adaptation (Holling 1973, Gunderson & Holling 2002, Walker et al. 2004).28 Annex 2 — World Bank Urban Resilience Portfolio The Urban Resilience portfolio analysis and investment project financing for FY12-16 is divided into two parts: on IDA and IBRD terms. • core29 urban resilience projects and 3. A primary list of urban resilience projects • non-core30 urban resilience projects. was developed that mainly focus on disaster risk management and climate change In total, the WBG provided USD 26.77 billion adaptation (Source: GFDRR 2016b) in 86 countries that is either directly or indirectly contributing towards improving 4. A secondary list of urban projects was urban resilience over the last five years. 79 derived from a search of 23 selected themes core urban resilience projects were financed (see Table A1) from the World Bank theme in 41 countries, accounting for USD 9.7 billion coding system for their possible connection between FY12-16. In addition, 151 non-core urban to urban resilience (World Bank 2014a). resilience projects were supported with financing of USD 17.5 billion during the same period. 5. The master list (primary + secondary list) was filtered for projects that are based in Methodology: ‘urban’ areas. The ones that are primarily based in urban areas are referred as ‘core’ 1. The time period was for lending operations urban resilience projects and the ones that approved in fiscal years 2012-2016 (i.e., are either partially based in urban area or between July 1, 2011 and June 30, 2016). are regional/ national projects, are referred 2. Lending operations included both as ‘non-core’ urban resilience projects. development policy financing Table A1: Non-core urban resilience theme codes In 55 Vulnerability Assessment and Monitoring 68 HIV/AIDS The ve (Social Protection and Risk Management) World 88 Non-Communicable Diseases and Injuries stin 71 Urban Services and Housing for the Poor (Urban Development) 89 Malaria Bank g i n |U r 82 Environmental Policies and Institutions (Environment 92 Tuberculosis and Natural Resources Management) 93 Municipal Finance Investing Water Resource Management (Environment b a n Rin 85 and Natural Resources Management) 72 Municipal Governance and Institution Building Public Expenditure, Financial Management and Procurement 73 City-Wide Infrastructure and Service Delivery e Urban 27 silie Micro, Small and Medium Enterprise Support 102 Urban Economic Development 41 Improving Labor Markets 103 Global Food Crisis Response Resilience nce 51 Other Social Protection and Risk Management 91 Pollution Management and Environmental Health 56 Conflict Prevention and Post-Conflict Reconstruction 84 Other Environment and Natural 58 Social Inclusion Resources Management 81 81 100 Other Communicable Diseases 64 Nutrition and Food Security S.no Approval Project Name FY 1 Adaptable Program Loan Sao Bernardo Integrated Water Management 2 Coastal Cities & Climate Change 3 Disaster Risk Management and Reconstruction 4 Jakarta Urgent Flood Mitigation Project 5 Medium Cities Development Project 2012 6 Metro Colombo Urban Development 7 Municipal Infrastructure Development Project (Additional Financing) 8 Second National Urban Water Sector Reform Project (Additional Financing) 9 Second Urban Upgrading (VUUP2) 10 Stormwater Management and Climate Change Adaptation Project 11 Upgrading and Greening the Rio de Janeiro Urban Rail System (Additional Financing) In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 82 82 Country Country Total Commitment ($m) Sao Bernardo Brazil 20.82 Maputo; Beira; Nacala Mozambique 120 Port-au-Prince Haiti 60 Jakarta Indonesia 139.64 Lao Cai Vietnam 210 Colombo Sri Lanka 213 Vose Tajikistan 11.85 Lagos Nigeria 99.6 Can Tho Vietnam 292 Dakar Senegal 55.6 Rio de Janeiro Brazil 600 In The veWorld stin Bank g i n |U r Investing b a n Rin e Urban silie Resilience nce 83 83 S.no Approval Project Name FY 12 Anhui Xuancheng Infrastructure for Industry A1:F81 13 Belo Horizonte Urban Development Policy Loan 14 China: Nanchang Urban Rail Project 15 Cities Support Program 16 Danang Sustainable City Development Project (SCDP) 17 Donsin Transport Infrastructure Proj 18 Emergency Infrast Rehab Add Financing 19 Guangxi Laibin Water Environment 20 Integrated Solid Waste Management Project 2013 21 Jiangxi Poyang Lake Basin and Ecological Economic Zone Small Town Development Project 22 Jiangxi Wuxikou Flood Management Project 23 Liaoning Coastal Economic Zone Urban Infrastructure and Environmental Management Project 24 Ma'anshan Cihu River Basin Improvement Project In The ve 25 Managing Natural Hazards Project World stin Bank 26 National Community Empowerment Program In Urban Areas For 2012-2015 g i n |U r 27 Productive and Sustainable Cities Development Policy Loan Investing b a n Rin 28 Rio de Janeiro Strengthening Public Sector Management Technical Assistance Project e Urban silie 29 Safer Municipalities Resilience nce 30 Second Urban Infrastructure Project (Additional Financing) 84 84 31 Sao Paolo Climate Change, Disaster Risk Management and Transport City Country Total Commitment ($m) Xuancheng (Anhui) China 73.5 Belo Horizonte Brazil 200 Nanchang China 250 Cotonou; Kandi Benin 60 Danang Vietnam 202.5 Ouagadougou Burkina Faso 85 Lome Togo 14 Laibin (Guangxi) China 80 Baku Azerbaijan 47.1 Jiangxi China 150 Jingdezhen (Jiangxi) China 100 Donggang, Kuandian, Lingyuan, Longcheng, Panjin and Suizhong. (Liaoning) China 150 Kuandian, Lingyuan, Longcheng, Panjin and Suizhong. Ma'anshan (Anhui) China 100 In The ve Tỉnh Ninh Thuận; Tỉnh Quảng Bình Vietnam 150 World stin East Nusa Tenggara; East Java; Bali; Sulawesi; Kulimantan; Maluku Utara; Papua Indonesia 266 Bank g i n |U r Barat; Maluku; Nusa Tenggara Barat Nationwide Colombia 150 Investing b a n Rin Rio de Janeiro Brazil 2.754 e Urban silie San Pedro de Sula; La Ceiba; El Progreso Honduras 15 Resilience nce La Paz; El Alto; Santa Cruz Bolivia 24 85 85 Sao Paulo Brazil 300 S.no Approval Project Name FY 32 Benin Emergency Urban Environment Project (Additional Financing) 33 Cusco Regional Development 34 Drina Flood Protection Project 35 Greater Maputo Water Supply Expansion Project 36 Haiti - Urban Community Driven Development Project (Additional Financing) 37 Ibadan Urban Flood Management Project 2014 38 Kosovo Energy Efficiency and Renewable Energy Project 39 Niger Disaster Risk Management and Urban Development Project 40 Nigeria Lagos Second State Development Policy Credit 41 Oaxaca Water Supply and Sanitation Modernization 42 Results-based National Urban Development Program - Northern Mountains In 43 Second Kampala Institutional and Infrastructure Development Project The veWorld stin 44 Second Urban Poverty Reduction Project (PREPUD II) Bank g i n |U r 45 Sri Lanka Strategic Cities Development Project Investing b a n Rin e Urban silie Resilience nce 86 86 City Country Total Commitment ($m) Cotonou Benin 6.4 Cusco Peru 35 Bijeljina; Goražde Bosnia and Herzegovina 24 Maputo Mozambique 178 Hinche; Mirebalais; Dondon; Milot Haiti 4.5 Ibadan Nigeria 200 Ferizaj; Gjakovë; Gjilan; Mitrovicë; Pejë; Pristina; Prizren Kosovo 31 Niamey; Diffa Niger 100 Lagos Nigeria 200 Oaxaca Mexico 33 Huyen Dien Bien; Tinh Bac Kan; Tinh Cao Bang; Tinh Hoa Binh; Vietnam 250 Tinh Thai Nguyen; Tinh Tuyen Quang; Tinh Yen Bai In Kampala Uganda 175 The veWorld stin Djibouti Djibouti 5.6 Bank g i n |U r Digana; Galle; Jaffna; Kandy; Katugastota; Madawala Sri Lanka 147 Investing b a n Rin e Urban silie Resilience nce 87 87 S.no Approval Project Name FY 46 Bangladesh Urban Resilience Project 47 Benin Emergency Urban Environment Project (Second Additional Financing) 48 Bukhara and Samarkand Sewerage Project (Additional Financing) 49 Chongqing Small Towns Water Environment Management Project 50 Cities And Climate Change PPCR (Additional Financing) 51 Dar Es Salaam Metropolitan Development Project 52 Earthquake Housing Reconstruction Project 53 Goma Airport Safety Improvement Project 2015 54 Second Dushanbe Water Supply Project (Additional Financing) 55 Second Integrated Growth Poles And Corridor Project 56 Senegal Urban Water and Sanitation Project In 57 Shaanxi Small Towns Infrastructure The veWorld stin 58 Stormwater Management and Climate Change Project (Additional Financing) Bank g i n |U r 59 Tamil Nadu Sustainable Urban Development Program Investing b a n Rin 60 Vanuatu Aviation Investment Project e Urban silie 61 Qinghai Xining Water Environment Management Project Resilience nce 88 88 City Country Total Commitment ($m) Dhaka; Sylhet Bangladesh 173 Cotonou Benin 40 Bukhara; Samarkand Uzbekistan 102.9 Chongqing China 100 Beira Mozambique 15.75 Dar es Salaam Tanzania 300 Madhyamanchal Nepal 200 Goma DR Congo 52 Dushanbe Tajikistan 8.7 Antananarivo; Antsiranana; Fort Dauphin; Toliara Madagascar 50 Dakar Senegal 70 In Shaanxi province China 150 The veWorld stin Dakar Senegal 35 Bank g i n |U r Chennai India 400 Investing b a n Rin Luganville; Port-Vila; Tafea Province Vanuatu 59.8 e Urban silie Xining China 150 Resilience nce 89 89 S.no Approval Project Name FY 62 Addis Ababa Urban Land Use and Transport Support Project 63 Bamako Water Supply Project (Additional Financing) 64 Can Tho Urban Development and Resilience 65 Flood Risk Management Support Project for the City of Buenos Aires 66 Hebei Air Pollution Prevention and Control Program 67 Infrastructure and Local Development Project II 68 Infrastructure, Urban Development and Mobility Project 69 Integrated Disaster Risk Management and Resilience Program 70 Morocco Urban Transport Project 2016 71 Strategic Cities Development Project (Additional Financing) 72 Teresina Enhancing Municipal Governance Project (Additional Financing) 73 Urban Development and Poor Neighborhood Upgrading Project In The veWorld 74 Urban Development Project stin Bank g i n |U r 75 Urban Development Project Investing b a n Rin 76 Urban Infrastructure and Violence Prevention e Urban 77 Urban Water and Sanitation Project (Additional Financing) silie Resilience nce 78 Urban Water Supply and Wastewater Project (Additional Financing) 90 90 79 Zanzibar Urban Services Project (Additional Financing) Total City Country Commitment ($m) Addis Ababa Ethiopia 195 Bamako Mali 50 Can Tho Vietnam 250 Buenos Aires Argentina 200 Hebei China 350 Libreville; Port Gentil; other cities Gabon 99.75 Ouagadougou; Bobo-Dioulasso; other cities Burkina Faso 35 Tanger; Tétouan; Fès; Meknès; Rabat; Casablanca; Marrakech; Morocco 200 secondary cities Casablanca; Agadir; Marrakech; Rabat; Tangier; Fes Morocco 200 Jaffna; other northern cities Sri Lanka 46.75 Teresina Brazil 87.78 Brazzaville; Pointe Noire Congo 80 In The veWorld Kigali; secondary cities Rwanda 95 stin Bank g i n |U r Balykchy; Kerben; Suluktu; Toktogul Kyrgyz Republic 12 Investing b a n Rin Guatemala City Guatemala 44.89 e Urban Niamey; other cities Niger 70 silie Resilience nce Secondary cities (nationwide) Vietnam 119 Zanzibar Tanzania 46.75 91 91 TOTAL: 9,720.934 Annex 3 — • building housing finance markets; Individual and • funding housing finance; Household • housing finance for the poor; Level Financing • supplying affordable housing; and and Services • housing finance crisis response. Technical assistance Each of these areas is critical in the building of a sustainable and efficient housing finance Resilient Retrofit of Informal system — a system that will benefit people Housing TA (GSURR / GFDRR): from many income levels and will help them obtain affordable housing. The most As local governments and national programs important aspect of the work, though, is have often been unable to fully address the lack creating systems that address the needs of of compliance with building or construction households at different income levels, while codes to reduce risk exposure of individuals building a system that can be sustained, scaled and households that have opted for informal up, and oriented to the private sector. housing solutions, the World Bank Group is able to provide various technical assistance Climate Adaptation Finance (IBRD/IDA/CIF): activities, offering services which include: In an effort to incentivize individuals, households • development of a typology of informal housing and associated risk profiling; and businesses to proactively invest in climate adaptation, an intermediary financing institution • preparation and design of a home retrofitting product to mitigate disaster risk while can leverage a concessional loan from the World enabling title deed formalization; Bank Group, or a concessional fund managed by • enabling regulatory environment to simplify the World Bank Group (e.g. Climate Investment property formalization processes; Funds) and provide more affordable financing for • identifying viable financial instruments households and businesses interested in investing for resilient retrofit of informal housing. to enhance their resilience. Examples of investments could include hurricane-proof roofs, Currently, a resilient retrofit of informal drainage, rainwater harvesting and structural housing technical assistance activity In The retrofits. This modality has been piloted in ve is being implemented throughout the World Saint Lucia, through the Climate Adaptation stin Latin America and Caribbean region. Finance Facility (CAFF) managed by the Saint Bank g i n |U r Financing Lucia Development Bank and financed by the Pilot Program for Climate Resilience (PPCR) Housing Finance (IBRD/IDA): managed by the Climate Investment Funds (CIF) Investing b a n Rin The World Bank Group housing finance team Insurance works in coordination with other parts of the e Urban silie World Bank and IFC to provide a comprehensive Disaster Responsive Safety Nets: approach that reaches across the entire Resilience nce Social safety net (SSN) programs are engaged housing value chain. The team’s focus is on in providing enhanced protection to poor five strategic areas to provide governments households that have been affected by 92 92 in client countries the tools to tackle the challenges listed above. These include: natural disasters. They have been designed to buffer individuals from shocks and equip financing urban infrastructure investments. them to improve their livelihoods and create Findeter financing was channeled towards the opportunities to build a better life for themselves “Sustainable and Competitive Cities Program” and their families. Examples of SSN programs and is expected to finance between 20-30 sub- include emergency cash transfers, which help projects ranging from urban transportation, break the cycle of poverty and increased level social housing, water and sanitation as well of socio-economic vulnerability experienced as health and education infrastructure. by many poor households post-disaster. Currently, the Responding to Disasters Together Community of Practice (R2D2) brings together Community World Bank staff across three separate Global Level Financing Practices: Social Protection and Labor; Social, and Services Urban, Rural and Resilience; as well as Finance and Markets, while the Inclusive Community Technical assistance Resilience (ICR) thematic program at GFDRR provides grant financing for technical assistance Inclusive Community Resilience (GFDRR): initiatives which assist client countries in The Inclusive Community Resilience program establishing and enhancing in-country social was established in 2014 to enhance the World protection systems. Technical assistance is Bank’s engagement with civil society, promote being provided to establish disaster responsive community-led disaster and climate risk social protection systems in Fiji, Jamaica, management, and to integrate social inclusion the Philippines, Tonga, and Vanuatu. and gender into DRM investments. It emphasizes Bonds and guarantees the underlying socio-economic drivers of vulnerability, such as poverty, marginalization, Resilience Financing (backed and accountability, and supports governments’ by a MIGA Guarantee): efforts to strengthen local level resilience at a national scale. Examples of technical assistance In an effort to enable individuals, households activities include capacity building for inclusive and businesses to access affordable financing disaster risk management globally; developing for resilience investments, a financial social inclusion and resilience frameworks in In intermediary such as a development bank The ve Karachi, Pakistan; community-based hazard can leverage financing (either from private or World stin and risk mapping in the Philippines; as well as public investors)31 made more affordable with a leveraging Japanese best practice to empower MIGA guarantee. In the case of the Financiera Bank g i n |U r elders, women and people with disability for de Desarollo initiative in Colombia (Findeter), resilience in the Philippines and Nepal. MIGA issued USD 95 million in guarantees Investing b a n Rin to provide coverage against the risk of non- Safer Schools (GFDRR): honoring of financial obligations for a period of The objective of this program is to make e Urban up to 10 years for a non-shareholder loan from silie KfW Bankengruppe. This was the first time school facilities, and the communities they serve, more resilient to natural hazards. Key Resilience MIGA provided guarantees to a state-owned nce enterprise, without a sovereign guarantee. components of technical assistance activities The more competitively priced financing was carried out under this program include: passed on to end borrowers which included • building an enabling institutional, policy, and regulatory environment for risk reduction; 93 93 municipalities and other intermediary banks • improving school construction practices; and disaster risk management challenges; • adapting existing tools or developing • monitoring global progress on school safety. new tools to address locally identified problems; and Through the Safer Schools program, GFDRR • creating communities amongst disaster risk works with national and sub-national agencies, management experts and local technology including Ministries of Finance, Public Works, communities to promote the use of open source technologies, open data, open and Education, to integrate risk considerations standards and open platforms. into new and existing education sectors. The Facility also collaborates with a wide range of international partners, including United Nations Financing agencies such as UNICEF, UNESCO, and UNISDR; Community-driven development financing: international NGOs such as Build Change, Save the Children, and Plan International; and private Community Driven Development (CDD) programs sector companies such as Arup. The Safer operate on the principles of transparency, Schools Program is currently implementing participation, local empowerment, demand- technical assistance activities in eight countries responsiveness, greater downward accountability, across five regions which include: Armenia, and enhanced local capacity. Experience has El Salvador, Indonesia, Jamaica, Mozambique, shown that when given clear and transparent Nepal, Peru and Turkey. Programs in small rules, access to information, appropriate capacity, island states (Saint Lucia, Samoa, Tonga and and financial support, poor people can effectively Vanuatu) are currently in the pipeline. organize to identify community priorities and address local problems by working in partnership Code for Resilience: with local governments and other supportive To strengthen community resilience to natural institutions. The World Bank recognizes that disasters through innovation, Innovation Lab CDD approaches and actions are important supports Code for Resilience (CfR), an initiative elements of an effective strategy for poverty that partners local technologists with disaster reduction and sustainable development. The risk management experts to create digital Bank has supported CDD across a range of low to and hardware solutions for DRM and other middle income, and conflict-affected, countries civic-minded activities. Code for Resilience to support a variety of urgent needs. These In The include water supply and sanitation, post-conflict ve first identifies country partners willing to World stin commit financial and technical resources to school and health center construction, nutrition co-invest in developing capacity and tools which programs for mothers and infants, rural access Bank g i n |U r leverage technological innovations meant to roads, and support for micro-enterprises. One strengthen community resilience to natural such project financed by the World Bank Group Investing disasters. Examples of activities include: is Rekompak, the Community-based Settlement b a n Rin Rehabilitation and Reconstruction Project which • identifying a list of technical challenges related to disaster risk assessment and financed the rebuilding of homes following a e Urban identification, disaster risk reduction silie volcanic eruption in 2010 close to the town of and disaster preparedness; Yogyakarta in Java Indonesia. Another is the Resilience • building capacity by providing tailored nce Kapitbisig Laban sa Kahirapan — Comprehensive training on the use of open source tools and open data to address specific disaster and Integrated Delivery of Social Services Project risk management problem statements; 94 94 • investing in expertise to refine (KALAHI-CIDSS), which financed the completion of close to 6,000 projects worth USD 265 million, technology-based solutions to local benefitting over 1.6 million households in the Within a few years the community has been poorest municipalities and provinces in the able to secure tenure of its land. Community Philippines since 2002. Sub-projects financed representatives sit on a committee with through this project include small-scale water local officials. Infrastructure is improving systems, school buildings, day care centers and and houses are being renovated, while funds health stations, as well as roads and bridges. are kept available for residents of this and other poor communities in the city to take Case study: Community development out further home improvement loans. finance support (Archer 2012) The Asian Coalition for Community Action City-Level provides seed funding for community Financing and development finance. In the Nong Duang Services Thung community in Vientiane, Lao PDR, the ACCA conducted its first pilot project, a Technical assistance community housing program. The money was City Creditworthiness Initiative: provided through a district savings group allowing for a district-wide mechanism that Cities in the developing world are unable to facilitated development and assisted in land fund their growing infrastructure demand negotiations for squatters. This was the first by relying on traditional sources of financing case of squatters being granted a long-term from central governments and international lease on publicly owned land. Given the threat aid organizations alone. Thus, the need to of eviction, the community developed an innovate and access private sources of long- upgrading project with the help of community term financing through local capital markets and architects. These architects helped to survey commercial partnerships is becoming a priority. and map the settlement, expand the savings However, in order to access such financing, group to include all the squatter households, cities must first prove themselves creditworthy, and develop a new development plan. by managing finances, planning development and engaging citizens using methods that The development plan brought in water supply, emphasize sustainability and transparency. drainage, and electricity and provided for the Currently, only 20 percent of the largest 500 In construction of homes that realigned the onsite The ve cities in the developing world are creditworthy lanes. The ACCA provided a budget of USD 40K, World stin – severely constricting their capacity to of which the community committed USD 10K as finance investments in public infrastructure. a grant for infrastructure upgrading, with the Bank g i n |U r Supporting cities towards creditworthiness is remainder revolved into home improvement a crucial first step in unlocking larger, longer- loans. To enable the funds to revolve more Investing term sustainable investments that provide b a n Rin quickly, and to increase the number of critical services to resident populations households who could access the money, the through climate-smart urban development. e Urban community decided that the loans should be kept silie The City Creditworthiness Initiative helps small, to a maximum of USD 500, and repaid cities achieve higher creditworthiness by Resilience within a six-month period. The interest rate was nce eight percent, with four percent remaining in • strengthening financial performance; the community savings group and four percent • developing an enabling legal and regulatory, moving to the district community development institutional and policy framework for responsible sub-national borrowing; 95 95 fund to increase its overall lending capital. • improving the demand side of SNTA’s ultimate target is financial transactions financing by developing sound, involving bonds or bank loans to help utilities climate-smart projects; and or municipalities access market-based finance • improving the ‘supply’ side of financing by without sovereign guarantees to tackle the engaging with private sector investors. urbanization problem developing countries face. To help achieve these aims, the Initiative has CURB: Climate Action for Urban Sustainability: established City Creditworthiness Academies and Implementation Programs. The initiative A new planning tool launched by the World Bank has a goal of assisting 300 cities in 60 low- and in partnership with C40 Cities and the Compact middle-income countries to enhance own source of Mayors and other partners, Climate Action revenues, implement climate-smart capital for Urban Sustainability (CURB) is a decision- investments plans, improve their credit ratings, support tool meant to provide tailored analysis structure their PPPs projects, and utilize tax to help identify, prioritize, and plan cost-effective increment financing. Implementing partners and efficient ways to reduce carbon emissions. include: C40 Network, UN-Habitat, Findeter, Relying on city-specific data to estimate cost, Municipal Institute of Learning (MILE), and the feasibility and impact of a range of climate Korean Development Institute. Core funding actions under different scenarios, CURB: partners include the Public Private Infrastructure • explores an array of climate-smart Advisory Facility (PPIAF), Korean Green Growth options — from more efficient transport systems to retrofitted buildings; Partnership, and the Rockefeller Foundation. Cities participating in the Initiative should see • defines what goals are realistic; improved municipal services; strengthened • simulates technology and policy changes fundamentals; improved creditworthiness; to assess the best course of action; and and increased access to local financing. • analyzes project financials to determine cost- savings and returns on investment. Sub-national Technical Assistance Program (SNTA) (PPIAF)32: These smart investment decisions can in turn help cities create jobs, improve livelihoods, PPIAF helps build the capacity of government and build up resilience to climate risks — officials to prepare and enter into PPP especially for the poor and vulnerable. One of arrangements with private partners. This work the notable features of CURB is proxy data: if a In The ve can include reforms to institutions, policies, city is missing data or other specific information, World stin and legal/regulatory frameworks necessary it allows officials to use data from peer cities for sustainable PPPs. PPIAF’s Sub-National or countries to plan targeted approaches. As a Bank g i n |U r Technical Assistance (SNTA) Program under result, all cities can use CURB’s capabilities to PPIAF is uniquely qualified to help municipal their full potential, regardless of size or income Investing officials and cities respond to some of the key level. It is one of the first free tools of this sort b a n Rin challenges associated with urbanization and that can be applied comprehensively across a decentralization. Through SNTA, PPIAF supports range of sectors for cities in both developing e Urban silie sub-national entities’ access to private financing and developed countries. More than 100 cities — for example, through Municipal Bonds. These across the work have plans to deploy the CURB Resilience nce are a powerful capital allocation tool used by tool including Buenos Aires, Johannesburg, cities in many developed countries to build and Bangalore, and Chennai – amongst others. 96 96 maintain urban infrastructure, but have so far been untapped in many developing countries. Tool for Rapid Assessment of City is responsible for guaranteeing the loan will Energy (TRACE) – ESMAP: be repaid. An example of such is the Buenos Aires Infrastructure Sustainable Investment A decision-support tool utilized by the Energy Development Project (USD 264 million), whereby Sector Management Assistance Program the borrower was the Province of Buenos (ESMAP), TRACE is a decision-support tool Aires with a guarantee from the Argentine designed to help cities quickly identify under- national government. The development performing sectors, evaluate improvement and objectives (PDOs) of this project were to: cost-saving potential, and prioritize sectors and • enhance the provision of water and actions for energy efficiency (EE) intervention. sewerage services for the benefit of low- It covers six municipal sectors: passenger income people, in particular for those people living in highly vulnerable areas; transport, municipal buildings, water and waste water, public lighting, solid waste, and • improve high priority road segments of the Borrower’s road network; power and heat. It consists of three modules: • mitigate urban flooding; and • an energy benchmarking module which compares key performance • support the reactivation of the indicators (KPIs) among peer cities; Borrower’s economy and strengthen its regional competitiveness. • a sector prioritization module which identifies sectors that offer the greatest potential with respect to energy-cost savings; and Performance-based Contracts: • an intervention selection module which The use of performance-based contracts can help functions like a “playbook” of tried-and- tested EE measures and helps select locally ensure that the maintenance and rehabilitation appropriate EE interventions. of a road or transport system is included and budgeted for in the construction contract to TRACE is designed with the intention to incentivize better developer performance. This involve city decision makers in the deployment can help cities mobilize additional financing process. It starts with benchmark data collection, to support long-term rehabilitation of such goes through an on-location assessment investments. An example of a successful involving experts and decision makers, and performance-based contract is the Bahia Road ends with a final report to city authorities Rehabilitation and Maintenance Project. In an with recommendations of EE interventions effort to explore new options for road financing, In tailored to the city’s individual context. The the World Bank provided financing and technical veWorld assistance to rehabilitate and maintain work stin through performance-based contracts for Financing Bank g i n |U r rehabilitation and road maintenance (CREMA) Sub-sovereign lending (with on about 1685 km of identified roads, leveraging Sovereign Guarantee): Investing the investment to secure private capital to b a n Rin pay for continued operation, maintenance and While IBRD and IDA generally tend to lend to rehabilitation of the infrastructure. Provision was e Urban national governments, the World Bank Group silie made to ensure that the rehabilitated road would also lends directly to sub-national government be able to withstand the impact of high intensity Resilience such as states in federal republics and some nce climate events such as excess rainfall and local governments. However, in such cases, floods. The International Finance Corporation while financing or loan agreements are signed 97 (IFC) provided technical advisory support in directly between sub-national governments and the World Bank, the sovereign government structuring the contract and in defining the detailed specifications of the CREMA contract. 97 Insurance and other capital expenditures. IFC’s USD 2.8 million in loans is intended to improve access to City Risk Transfer (GFDRR/GSURR/Treasury): medium term lending for the education sector. Building on the success of on-going national-level Bonds and guarantees engagements on catastrophe risk pooling and transfer, the proposed technical assistance will Project bond: engage municipalities interested in transferring At the request of the Brazilian Government, the catastrophic risk to the private reinsurance World Bank developed a new “Project Bond” market, with the World Bank Group as an concept to help attract capital market financing intermediary. By engaging at the sub-national to infrastructure projects such as roads, level in up to six cities globally, the technical railways, airports and ports. The project bond assistance will work with credit-worthy cities has been developed at a time when Brazil seeks in the developing world with strong national- to leverage twenty years of successful private level backing to pursue this agenda. It aims to: sector involvement in operating infrastructure • enhance understanding of a city’s resource assets and concessions to increase the role of needs to effectively respond to a disaster; the capital market in financing infrastructure. • strengthen ex-ante planning and management It is aimed at encouraging greater risk sharing in response to emergencies and disasters; and creating new opportunities for domestic • strengthen the management and execution and international investors, operators and of budgetary resources post-disaster for emergency response, recovery, and builders. The bond is expected to be piloted reconstruction of public infrastructure; and in the coming months to raise financing for • enhance coordination of emergency a selected number of concessions under the response and management from the national Government’s logistics investment program to municipal levels of government. (Programa de Investimento em Logística). The World Bank is ready to consider supporting the Risk Sharing Facilities: pilot issue with new financial commitments of These financing mechanisms allow a client up to USD 500 million. The pilot will be open to sell a portion of the risk associated with a to the participation of other IFIs, such as the pool of assets. The assets typically remain on Inter-American Development Bank (IDB). In the client’s balance sheet and the risk transfer The ve Project-based Guarantees (MIGA): comes from a partial guarantee provided by World stin the IFC. In general, the guarantee is available Currently, the World Bank Group offers two types Bank for new assets to be originated by the client g i n |U r of project-based guarantees: (1) loan guarantees, using agreed upon underwriting criteria, but in whereby the loan related to debt service default certain situations may also be used for assets caused by Government’s failure to meet specific Investing b a n Rin that have been already originated. Typically, payments and/ or performance obligations in the client’s enters into a risk sharing facility relation to a project; and, (2) payment guarantees with the IFC to help increase its capacity to e Urban cover defaults on non-loan related payment silie originate new assets within an asset class in obligations by the Government. For example, in Resilience which the IFC is interested in increasing its nce 2014, MIGA issued USD 361 million in guarantees own exposure. An example here is the Kenya under this product line to Banco Santander SA of School Risk Sharing Facility which the IFC Spain. This guarantee provided specific coverage 98 98 extends to eligible private schools financing for of Santander’s loan to the State of São Paulo construction, purchase, of educational materials, for the São Paulo Sustainable Transport Project, which consists of investments in the state’s Efficient Securities Markets Institutional transport infrastructure and related activities. Development (esMid) Program: Total project financing includes a USD 300 million Under the ESMID program, the Swedish IBRD loan, USD 129 million in State of São Paulo International Development Cooperation funds as well as financing from Banco Santander. Agency (Sida), the IFC and the World Bank are jointly working on a project to support Country-Level the better functioning of securities markets in Financing and Africa. ESMID is working with central banks, Services securities regulators, stock exchanges and other stakeholders to: simplify regulations and procedures for issuing, investing in, and Technical assistance trading bonds; establish and strengthen Public Private Infrastructure market infrastructure; build capacity of market Advisory Facility (PPIAF): participants; facilitate the regionalization of securities markets; and support demonstration PPIAF provides technical support to and replicable transactions. To date, ESMID governments in three primary avenues: has facilitated USD 950 million in new bond • creating enabling environments for private issues in East Africa, by streamlining approval sector participation in infrastructure projects; and regulatory processes. The time taken to • addressing the lack of capacity to approve bond issues in Kenya and Tanzania transact ‘bankable’ projects that can has reduced to 45 and 60 days respectively. attract private investments; and Such improvements can help to better • growing capacity and awareness through incentivize urban resilience investments. knowledge sharing with developing country governments on key issues and opportunities with private sector infrastructure Innovation Lab (GFDRR): development. To meet the needs of a rapidly changing world, Importantly, PPIAF’s relevance lies in its work Innovation Lab supports the use of science, on the upstream enabling environment for technology, and open data in promoting new public-private partnership projects, early stage ideas and the development of original tools to project conceptualization, and pre-feasibility In empower decision-makers in vulnerable countries The ve project development. These are key entry points to strengthen their resilience. Recent innovations World stin for integrating climate change sensitivities if in the field have enabled better access to the private sector is to invest in infrastructure- disaster and climate risk information and a Bank g i n |U r related climate change mitigation and greater capacity to create, manage, and use this adaptation in developing countries. Specifically, information. Initiatives within the Innovation Lab Investing government officials need help to plan and b a n Rin which can inform decision-making and positively prioritize climate-friendly projects, design legal influence the design and planning of urban and regulatory environments that facilitate e Urban resilience investments include the Open Data for silie the development of such projects, incorporate Resilience Initiative (Open DRI), which applies the specific climate change responses into project Resilience concepts of the global open data movement to nce designs, find and justify subsidy funding to pay the challenges of reducing vulnerability to natural for costs or mitigate risks that make private hazards and the impacts of climate change. participation non-viable, and regulate project implementation after contract closure. 99 99 Activities include: Financing • GeoNode, a free and open source catalogue of risk data and visualizations; Long-term Finance (IDA/IBRD/IFC): • Community mapping and OpenStreetMap; The World Bank Group provides long-term, • inaSAFE, a tool providing realistic disaster concessional and non-concessional financing scenarios and their potential impacts; to governments interested in investing in • Spatial Impact Assessment which uses urban resilience. It offers this financing at both satellite imagery and local spatial data sets concessional and non-concessional rates, through to efficiently evaluate the entire extent of damage from a disaster and facilitate the the International Bank for Reconstruction and development of a financial estimate for Development (IBRD) as well as the International a country’s recovery. This work supports GFDRR’s Resilient Recovery efforts Development Association (IDA). Country process by providing information before clients have tapped into both these funding a damage assessment is undertaken and by providing independent validation. sources when implementing urban resilience • ThinkHazard!, a new online tool for the projects. In addition, IFC has made equity development community, developed in investments and offered venture capital to collaboration with BRGM (the French geological survey), Camptocamp, and private firms implementing resilience projects. Deltares, which enables development specialists to identify natural hazard The International Development information for a given area and incorporate Association (IDA) measures to reduce it into project design. offers financing to low-income countries, extended on terms with substantially more Building Regulations for Resilience generous interest rates and with typically Initiative (GFDRR / GSURR): longer grace periods than are available from This new initiative is working to promote a the private finance market. Such generous new building policy and regulatory strategy for terms have often enabled country clients to the World Bank Group. Specifically, it seeks to invest in urban resilience. IDA often charges develop and promote a new stream of activities little or no interest and repayment periods can to increase regulatory capacity and promote be stretched over 25 to 38 years, including a healthier, and safer built environment. By a 5- to 10-year grace period. Over the last leveraging good practice in building regulation five years, IDA has provided financing to In The ve as part of a strategy to reduce both chronic risk 14 countries towards 47 urban resilience World stin and disaster risk, it will set developing countries projects in the amount of USD 4.54 billion. on the path to effective reform and long-term Bank g i n |U r An example of an IDA-financed urban resilience. Technical assistance activities include resilience investment includes the Bangladesh developing appropriate building standards Investing Urban Resilience Project (USD 182 million). for all building structures, including homes, b a n Rin The project development objective is to and a focus on the effective implementation strengthen the capacity of the Government of of building regulation. Having completed its e Urban silie Bangladesh to respond to emergency events first pilot in Ethiopia, the Initiative will soon and to strengthen systems to reduce the provide technical assistance in countries Resilience nce vulnerability of future building construction ranging from Armenia, Jamaica and India. to potential disasters in Dhaka and Sylhet. 100 100 The International Bank for Reconstruction private finance with a MIGA guarantee. The and Development (IBRD) objective of the project is to improve the state’s transport and logistics efficiency and safety offers financing to middle-income countries while enhancing its capacity in environmental and some creditworthy low-income and disaster risk management. It consists governments at a market-based interest rate. of investments by the State of São Paulo in While middle-income countries are able to sustainable transportation infrastructure and borrow at non-concessional terms, these are related activities, specifically the rehabilitation still less expensive and have longer grace of about 800 kilometers of roads selected periods than commercial loans. Over the for their proximity and connectivity to inland last five years, IBRD has provided financing waterway and railways, reconstruction of two to 28 countries towards 31 urban resilience bridges to enhance the navigability of the Tiete projects in the amount of USD 4.76 billion. inland waterway corridor complex, and other An example of an IBRD-financed urban works to improve road safety. The national resilience investment includes the Istanbul government of Brazil was the intermediary, Seismic Risk Mitigation Project (USD 400 allowing for on-lending to the State of Sao Paulo. million). The project is aimed at improving the The project combines USD 300 Million in IBRD city’s preparedness for a potential earthquake, financing, USD 129 Million in Client financing enhancing the institutional and technical capacity and USD 361 in private financing backed with for disaster management and emergency a 12-year MIGA non-honoring of sovereign response, strengthening critical public facilities financial obligations (NHSFO) guarantee. for earthquake resistance, and supporting The Can Tho Urban Development and measures for better enforcement of building Resilience Project is aimed at reducing codes. Importantly, this project modality enabled flood risk in the urban core area, improve the government to leverage an additional 1.5 connectivity between the city center billion Euro from other international financing and the new low risk urban growth institutions including the European Investment areas, and enhance the capacity of city Bank, the Islamic Development Bank, the authorities to manage disaster risk in Council of Europe Development Bank and the Can Tho City. Components include: Reconstruction Credit Institute of Germany. In The Flood risk management and ve Blended Finance (IDA/IBRD/MIGA/ World environmental sanitation; stin IFC/Donor and Private Capital): Urban corridor development; and Bank g i n |U r At times, country clients have blended their own resources with IDA and/or IBRD Management systems to improve spatial Investing financing as well as with donor contributions planning, flood risk management and transport. b a n Rin to finance a single project. MIGA guaranteed The project combines financing from IDA, commercial financing can also be blended e Urban IBRD and the Client, while also leveraging silie with other sources of financing. donor finance from SECO. The project brought Resilience nce The Sao Paulo Sustainable Transport Project, together USD 125 million in IDA finance; USD for example, brought together USD 300 Million 125 million in IBRD finance, USD 62 million in IBRD finance, USD 129 Million from the Client in Client finance and USD 10 million in SECO (State of Sao Paulo), and USD 361 Million in finance, for a total of USD 322 million. 101 101 Development Policy Loans with Catastrophe results. PforR is available to all World Bank Deferred Drawdown Option (CAT-DDO): member countries. Since its creation in 2012, there has been a steady increase in the use of CAT-DDOs enable countries to plan efficient PforR. As of June 7, 2016, there are 46 approved responses to natural disasters – by serving as a PforR operations, totaling USD 11.6 billion of critical source of immediate liquidity following a Bank financing and supporting USD 55.1 billion “soft” trigger such as the declaration of a state of government programs. An example is the of emergency like a natural disaster. CAT-DDOs USD 250 Million Results-based National Urban provide bridge financing to maintain important Development Program in the Northern Mountains development programs, while funds from other in Vietnam. The program development sources such as donor aid or reconstruction objective is to strengthen the capacity of loans are being mobilized. Importantly, CAT- participating Northern Mountains cities to plan, DDOs can only be implemented in countries with implement and sustain urban infrastructure. a disaster risk management program in place, which helps ensure better managed emergencies Crisis Response Window (CRW): in cities. An example is the Colombia Disaster Crisis Response Window serves as a source of Risk Management Development Policy Loan emergency financing of the last resort, providing with a Catastrophe Risk Deferred Drawdown IDA countries with resources based on country- Option (CAT-DDO) (USD 150 Million). Here the specific circumstances such as the severity of development objective was to strengthen a crisis or the absence of alternative sources of the Government’s program for reducing risks financing. Such resources are critical in enabling resulting from adverse natural events. Key countries to respond to severe economic outcomes of the loan include expansion of a crises, major natural disasters or public health hazard monitoring network (e.g. seismic, volcanic, emergencies and epidemics, by financing safety hydromet); resettlement of people living in high nets for affected populations or reconstructing hazard zone of the Galeras Volcano; and the basic physical assets destroyed by a natural successful development of local DRM plans for disaster. For more information, refer to http:// 338 municipalities. This led the Government ida.worldbank.org/financing/crisis-response- of Colombia to develop plans for reaching a window. A specific example in which resources total of 790 municipalities in its 2010-2014 from the Crisis Response Window were accessed National Development Plan. Following its close In The in the aftermaths of a natural disaster was ve in 2014, the CAT-DDO proved to be a valuable World the Nepal Earthquake Emergency Response stin financial instrument, reassuring both financial (USD 300 Million). An emergency line of credit markets and the population by reducing the Bank g i n |U r of USD 200 Million was provided for housing negative effects on markets following the reconstruction and USD 100 Million for budget declaration of national states of disaster. support was extended to Nepal following the Investing b a n Rin Program for Results (PforR): devastating April 2015 earthquake. The housing reconstruction credit will provide grants to low- e Urban PforR’s unique features include using a silie income homeowners to rebuild roughly 55,000 country’s own institutions and processes, and homes in rural areas, while budget support Resilience linking disbursement of funds directly to the nce credit will help the Government of Nepal expand achievement of specific program results. This relief and recovery efforts as well as support approach helps build capacity within the country, policy measures to strengthen the country’s 102 102 enhances effectiveness and efficiency and leads financial sector. Another example was the to achievement of tangible, sustainable program Ebola Emergency Response Project (USD 390 In general, such a mechanism helps countries Million). The project development objective is bring their debt to sustainable levels, while to contribute in the short-term to the control of better enabling them to meet their Sustainable the Ebola Virus Disease (EVD) outbreak and the Development Goals targets. To this end, the IDA availability of selected essential health services, Debt Reduction Facility provides grants to eligible and mitigate the socio-economic impact of EVD HIPCs to buy back – at significant discount – the in Guinea, Liberia, and Sierra Leone. Project debt owed to external, commercial creditors. components are geared to help operationalize For more information, refer to http://www. the WHO-led Ebola Response Roadmap and the worldbank.org/en/topic/debt/brief/debt-relief National Response Plans complementing and Debt Swaps working in coordination with other international agencies involved in the emergency response. These serve as an innovative way to replace As such, the support provided under this high interest debt with lower interest IBRD Project is part of a multi-partner emergency or IDA financing. Swaps with a policy-based response effort led by the respective countries guarantee can be utilized as a means to promote and coordinated with WHO and the UN. positive policy change for resilience. In addition, savings resulting from a swap can be used Contingent Emergency Response towards financing a specific urban resilience Component (CERC): investment. More recently, clients have been These provide almost immediate access to bridge approaching the World Bank with interest in financing for recovery and reconstructions needs. pursuing a debt-for-resilience swap. A potential As such, they are integrated into World Bank debt-for-urban-resilience swap could emulate a investment projects as a window to allow for similar debt-for-nature swap implemented in the quick reallocation of remaining project balances Seychelles, whereby The Nature Conservancy after an eligible emergency has occurred or mobilized a USD 30 million debt-swap in is about to occur. Importantly, CERCs can be exchange for the Government of Seychelles’ integrated in any type of investment operation, commitment to promote marine conversation and not just disaster risk reduction or climate and climate change adaptation. To this end, change adaptation projects. Since 2011, 63 the Indian Ocean’s second largest marine IBRD and IDA projects in 20 (+11) countries have reserve is expected to be established (roughly In The included an emergency response component. 200,000 square kilometers to be classified veWorld as ‘replenishment zones’) and will improve stin Debt convergence: protection of the marine resources that fuel the Bank g i n |U r Serving as a way to refinance higher interest island nation’s fisheries and tourism sectors. loans, debt conversions can be an effective Insurance Investing way of freeing up capital for urban resilience b a n Rin investments. These can take the form of debt Multi-country Catastrophe Risk Pools: swaps or debt buy backs provided through e Urban Multi-country risk pools enable countries to silie the IDA Debt Reduction Facility. Similarly debt bundle their risk to select types of natural buy-backs are available for highly-indebted Resilience nce hazards and access disaster insurance from the poor countries (HIPCs) experiencing very high private reinsurance market. Like a group health debt repayments, leaving little left in their plan, pooling catastrophe risk results in reduced own budgets to finance critical development programs, including urban resilience investments. premiums and greater access to reinsurance 103 103 markets for participating countries. A successful payment obligation is unconditional, irrevocable example of multi-country catastrophe risk and not subject to defenses. To date, the primary pooling is the Caribbean Catastrophe Risk beneficiaries of this coverage are commercial Insurance Facility (CCRIF), a multi-country lenders that provide private loans to government program bringing together 17 Caribbean states entities for infrastructure projects are the. and territories and up to 6 Central American For example, NHSFO is covering a brownfield countries and the Dominican Republic. CCRIF metro rail expansion project in Turkey, which offers its members parametric insurance is intended to reduce the traffic congestion, coverage, which provides immediate payouts air pollution, and enhance the access of the upon exceedance of pre-determined thresholds public transport for the urban population. of a natural hazard event such as a hurricane Private Equity Funds: or earthquake. Thus CCRIF member countries are provided with fast-disbursing liquidity for Insurance is provided against the risks faced relief and recovery efforts in the aftermath by private equity investors in developing of disasters generated by natural events. An frontier market economies. These risks example of the efficiency of such risk insurance include: government stability, civil unrest, pools was seen in Haiti following the January and fragile regulatory framework. 2010 earthquake, where the first external money to enter Haiti was a CCRIF payout. Bonds and guarantees Global Index Insurance Facility (GIIF): Sovereign Bonds (with MIGA Guarantee): The Global Index Insurance Facility (GIIF) is a multi-donor trust fund supporting the A bond issuance is an effective tool for raising development and growth of local markets capital for project investments. Doing so helps (including farmers, pastoralists and micro- diversify sources of financing as well as enables entrepreneurs) for weather and disaster access a broader investor base. However, a index-based insurance in developing countries, challenge faced by many clients stems from the primarily Sub-Saharan Africa, Latin America attractiveness of the bonds to private investors. and the Caribbean and Asia Pacific. Index To increase the marketability of a bond, the insurance is an innovative approach to insurance issuing entity can utilize MIGA guarantees (e.g. In The provision that pays out benefits on the basis non-honoring of financial obligations) to enhance ve the credit quality of the issue. In Hungary, for World of a pre-determined index (e.g. rainfall level, stin seismic activity, livestock mortality rates) for example, the Exim Funding Coverage (USD Bank g i n |U r loss of assets and investments, primarily working 575 million) was a MIGA guarantee aiming to capital, resulting from weather and catastrophic increase ExIm’s long-term lending capacity and events, without requiring the traditional services promote the export activity of mostly small Investing b a n Rin of insurance claims assessors (World Bank 2012). and medium Hungarian companies. This was the first purely “public market” bond issue e Urban Non-honoring of Sovereign supported by MIGA coverage and the first silie Financial Obligations (NHSFO) – time MIGA used its NHSFO coverage for a Resilience credit enhancement (MIGA): nce capital markets transaction. This was also the first time bonds backed by MIGA were rated MIGA’s NHSFO coverage provides credit AAA. And while this focused on SMEs, this 104 104 enhancement in transactions involving sovereign and sub-sovereign obligors, when the financial modality could be applied to raise capital for an urban resilience investment through a public launched in October 2007 by the World Bank bond issuance – be it of a sovereign or sub- Group together with private partners. Gemloc sovereign entity, provided it is creditworthy. supports the development of local currency bond markets in developing countries, and Social Impact Bonds: as such helps increase attractiveness of the Social Impact bonds help to convert intractable overall markets for local and global investors. social issues into investible opportunities. Under this model, impact investors rather than governments provide capital for NGOs and Leveraging social enterprises to scale programs to help Instruments poor and vulnerable populations. Payment to investors is based on achievement of a set of predefined outcomes measured with an Bond issuance impact evaluation. If the outcomes are not The World Bank Group (WBG) utilizes its achieved, the government is not required to AAA rating and callable capital to issue a repay investors; as such, the performance number of bonds to raise funds inexpensively risk is transferred to the private sector. in financial markets, and offers this low- Partial Credit Guarantees (IBRD): cost capital as development finance to its clients. The Bank can raise capital to finance Partial Credit Guarantees (PCGs) catalyze urban resilience investment projects through private financial flows to developing countries green bonds, infrastructure bonds and sukuk by mitigating critical government performance (Islamic) bonds. In addition, countries can risks that the private financiers are reluctant raise capital for urban resilience projects to assume. Guarantees cover private debt by issuing bonds with MIGA guarantees or against a government’s (or government entity’s) advisory support from the World Bank Group. failure to meet specific obligations to a private project or to meet debt service payments for Green Bonds: a public project. They are designed to extend The World Bank Group is one of the largest maturity and improve market terms. These issuers of green bonds, and provides clients guarantees can provide coverage against a In The with this low-cost capital to finance climate- ve number of risks, which are government-related related projects. To date, World Bank Treasury World stin and not of a purely commercial nature, including has raised over USD 6.3 billion with 66 green contractual, regulatory, currency and political. bonds in 17 currencies, supporting 50 projects Bank g i n |U r Policy-based Guarantees (IBRD): in 17 countries. Similarly, the IFC launched a green bond program in 2010 to help catalyze Investing b a n Rin Policy-Based Guarantees covers a specific the market and unlock investment for private portion of commercial debt defaults linked to a sector projects supporting renewable energy and Government’s policy and program implications. e Urban energy efficiency. As of FY15, the IFC’s portfolio silie Global Emerging Markets Local of climate-smart investments has reached USD Resilience nce Currency Bond Program (Gemloc): 13 billion supporting USD 115 billion worth of projects, with over USD 2 billion of new projects Gemloc is a USD 5 billion local currency bond for invested in the fiscal year ending June 2015. investment in up to 40 emerging bond markets, 105 105 Infrastructure Bonds: markets and leverage immediate resources for development assistance. An example of the IFF Infrastructure bonds can be offered to finance includes the International Finance Facility for urban resilience infrastructure projects in Immunization (IFFIm) supported by long-term, client countries. Eligible investments include legally binding grants from sovereign donors transportation and communication systems, (e.g. France, Italy, Norway, South Africa, Spain, public buildings, public institutions, water and Sweden, and the United Kingdom). Established electricity networks. Currently, the World Bank in 2006 and having paid some USD 5 billion Group is exploring structures to integrating this in assets over 20 years, IFFIm issued the first source of financing early in the project cycle. triple-A rated USD 1 billion bond for immunization One option, for example, is to structure a World programs of the GAVI Alliance. The World Bank bond that bridges investors throughout Bank serves as IFFIm’s Treasury Manager. the construction phase to project refinancing. An investor buys the bond that mandatorily converts, at maturity, to a long-term project Investment platforms bond (issued by the construction company) upon and pooled vehicles successful completion of the construction phase. Asset Management Company (IFC AMC): Should the project not reach completion, the investor will receive a small minimum The Asset Management System (AMC) is the coupon amount. third-party capital manager of the International Finance Corporation (IFC). Bringing together Sukkuk (Islamic) Bond: commercial capital with development finance, Sukkuk refers to the Islamic equivalent of AMC utilizes its strong governance structure bonds, whereby investors own a share of and innovative business model to mobilize an asset – rather than a share of the debt. and scale-up investment. AMC investors Partial ownership of the asset comes with include sovereign wealth funds, pension funds, commensurate cash flow and risk. The World bilateral and multilateral development finance Bank Group has previously raised USD 500 institutions as well as commercial investors. As million from issuing sukkuk bonds to finance of December 2015, AMC’s global Infrastructure immunization programs and health systems. Fund had USD 1.2 billion in equity commitments, In This modality can be similarly applied to USD 443 million of it committed towards 8 The ve raise capital for urban resilience financing. infrastructure investments. These services are World stin primarily available to middle-income countries. Frontloading: Bank g i n |U r Global Infrastructure Facility (GIF): Frontloading makes public funds for development purposes available earlier by issuing bonds Operational since April 2015, the Global Investing b a n Rin on the international capital markets – based Infrastructure Facility (GIF) facilitates the upon future expected long-term contributions. preparation and structuring of complex e Urban Examples include the International Finance infrastructure public-private partnerships (PPPs) silie Facility for Immunization (IFFIm). The IFF in emerging market and developing economies. Resilience nce serves as a frontloading instrument of future By serving as a global infrastructure platform, development aid by the United Kingdom. It relies GIF can mobilize private sector and institutional on long-term ODA commitments as assets that investor capital towards urban resilience projects. 106 106 underpin bond issuance in international capital Currently in its three year ‘pilot phase,’ GIF is expected to undertake 10-12 project support specific climate change challenge or sectoral activities. Applications for project preparation response. The SCF finance the Program for and transaction structuring support are currently Scaling-up Renewable Energy in Low-Income underway. Projects must be aligned with two Countries (SREP), and the Pilot Program for thematic focus areas, requiring they be climate- Climate Resilience (PPCR). The program provides smart and trade-enabling. Eligible sectors grants and highly concessional financing (near- and sub-sectors include energy, water and zero interest credits, with a grant element of sanitation, transport and telecommunications. 75 percent) supporting investments related to Three projects are currently in the planning urban development, infrastructure, enabling phase: a logistics infrastructure project in Brazil environment (e.g. capacity building, policy, (e.g. federal-level road, airport, port and rail regulatory work), coastal zone management, and projects); a dry ports development program climate information systems and disaster risk in Egypt; and a deep-sea port in Georgia. The management, amongst other critical sectors. Inter-American Development Bank, European Concessional Financing Facility: Bank for Reconstruction and Development and Asian Development Bank are technical Launched in October 2015, the Concessional partners in these project respectively. Financing Facility provides a source of concessional financing for Syrian refugees Managed Co-Lending Portfolio and host communities in Jordan and Lebanon. Program (MCPP): After receiving USD 140 million in initial The Managed Co-Lending Portfolio Program grant contributions, and USD 1 billion pledged (MCPP) can create a pre-agreed and customized loans to IBRD that will generate further grant loan portfolio for investors interested in investing contribution, grants are being offered to support in urban resilience. For passive investors seeking refugee and host communities with two projects to diversify their portfolios and leverage IFC’s totaling over USD 340 million. One of these experience and capabilities in originating and aims to improve job opportunities for over structuring emerging market senior loans, 200,000 Syrian refugees while financing urgent the IFC identifies eligible transactions. It then rehabilitation of municipal infrastructure in commits investor funds alongside its own Jordan. Internally, the design of the facility brings investments, provided on the same terms and together colleagues from Development Finance, In The conditions. The first MCPP investor was the Legal and Treasury. Externally, the facility brings veWorld People’s Bank of China, which signed on in together representatives from multilateral stin September 2013, with a pledge of USD 3 billion. development banks (e.g. European Investment Bank g i n |U r Bank, European Bank for Reconstruction and Development, Islamic Development Bank) and Donor contributions the United Nations. The Concessional Financing Investing b a n Rin Climate Investment Funds (CIFs): Facility further brings together financing from eight donors: Japan, the United Kingdom, e Urban The Climate Investment Funds (CIFs) consists of silie the United States, Germany, Canada, the two windows. The Clean Technology Fund (CTF) Netherlands, Norway and the European Union. Resilience nce finances renewable energy, energy efficiency and transport projects. The Strategic Climate Fund pilots new approaches with potential for scaled-up, transformation action aimed at a 107 107 Technical assistance and analytics Small Island States Resilience Initiative (SISRI): Launched by the World Bank in September 2014, the Small Island States Resilience Initiative (SISRI) assists small island states in accessing scaled up and more effective financing for resilience. It also aims to reduce the fragmentation of the financial landscape, provide technical assistance to overcome capacity challenges in fiduciary and technical aspects of investments. As 59 percent of SIDS inhabitants live in urban settlements (slightly above the global average), investing in urban resilience will be key to ensuring the twin goals are achieved in SIDS. Doing Business Report (DBR): The Doing Business Report series includes annual reports going back to 2004 and provides a wide variety of subnational studies and a number of special reports covering specific regions or topics. The most recent Doing Business 2016: Measuring Regulatory Quality and Efficiency is a World Bank Group flagship publication which measures the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators In The ve on business regulations and the protection World stin of property rights that can be compared across 189 economies — from Afghanistan to Bank g i n |U r Zimbabwe — and over time. Doing Business measures regulations affecting 11 areas of Investing b a n Rin the life of a business. Countries interested in increasing their ratings in the Doing Business Report can also receive technical assistance e Urban silie from the IFC to improve the general business climate within their respective country. Resilience nce 108 108 Annex 4 — C40 Cities Climate Leadership Group: External The World Bank is a partner of C40, a network and Internal of the world’s megacities committed to Partnerships for addressing climate change. C40 supports cities Urban Resilience to collaborate effectively, share knowledge and drive meaningful, measurable and sustainable External partnerships that have action on climate change. Created and led been developed to date include: by cities, C40 is focused on tackling climate 100 Resilient Cities (Rockefeller Foundation): change and driving urban action that reduces The Cities Resilience Program has coordinated greenhouse gas emissions and climate risks, closely with the 100 Resilient Cities (100RC) while increasing the health, wellbeing and initiative pioneered by the Rockefeller economic opportunities of urban citizens. The Foundation. Upon signing a MoU between Group focuses on topics such as adaptation 100RC, World Bank Treasury and the World and water; energy; finance and economic Bank in November 2015, World Bank task team development; measurement and planning; leaders have been identified as focal points solid waste management; transportation; for potential collaborations in nearly 30 cities. and urban planning and development. Collaborations have already begun in cities City Climate Finance Leadership Alliance: including Accra, Ghana, and are expected to increase with the recent announcement of The World Bank is a member of this alliance of 35 new cities joining the 100RC network. over forty leading organizations, comprising governments, foundations, aid agencies, and Bloomberg/City Creditworthiness Initiative: multilateral development banks, which actively The City Creditworthiness Initiative has work to mobilize investment into low-carbon partnered with Bloomberg Philanthropies and climate-resilient infrastructure in cities (amongst other partners) to support developing and urban areas internationally. Its mission is country cities and sub-national authorities to catalyze and accelerate additional capital successfully structure and close market- flows to cities, maximize investment in climate based financing transactions for climate- smart infrastructure, and close the investment In smart infrastructure projects. The primary gap in urban areas over the next fifteen years. The ve objective of the initiative is to enhance the World stin Compact of Mayors: financial performance and overall capacity of city clients to deliver better infrastructure Launched by UN Secretary-General Ban Ki-moon Bank g i n |U r services. This will be achieved through: and Special Envoy for Cities and Climate Change • city creditworthiness academies meant to Michael R. Bloomberg, the Compact of Mayors Investing b a n Rin provide hands-on learning programs that works under the leadership of the world’s global teach city leaders the fundamentals of creditworthiness and municipal finance; and, city networks including C40, ICLEI, and the e Urban United Cities and Local Governments (UCLG) silie • city creditworthiness implementation programs meant to provide in-depth, – with support from UN-Habitat. The Compact Resilience multi-year, on-the-job customized technical nce establishes a common platform to capture the assistance programs. impact of cities’ collective actions through standardized measurement of emissions and climate risk, and consistent, public reporting of 109 109 their efforts. Through the Compact, cities are Consortium of European encouraging direct public and private sector Building Controls (CEBC): investments by meeting transparent standards CEBC is a European group of building that are similar to those followed by national regulators working towards achieving best governments (amongst other actions). The World practice and improved building safety in Bank is an endorsing partner of the Compact. Europe. Its member organizations include Medellin Collaboration for Urban Resilience: leading national regulatory agencies and organizations with a stake in building controls. During the 7th World Urban Forum in Medellin CEBC is providing knowledge support to BRR, (April 2014), a new alliance of ten UN and while individual institutional members of non-UN organizations joined forces to build CEBC contribute to technical assistance and urban resilience and to strengthen the advisory interventions of the BRR program. social, economic and environmental fabric of the world’s urban spaces. Both the World US National Fire Protection Bank Group and GFDRR are partners in this Association (NFPA): Collaboration, whose objectives include: NFPA is a global nonprofit organization • fostering harmonization of approaches established in 1896 and devoted to eliminating and tools available to help cities assess their strengths, vulnerabilities death, injury, property and economic loss and exposure to multiple hazards due to fire, electrical and related hazards. and threats to build resilience; The partnership between the BRR initiative • catalyzing access to existing and innovative finance mechanisms, including risk- and NFPA involves joint research efforts and based instruments to reduce exposure operational and knowledge support from and vulnerability to shocks and increase cities’ adaptive capacity; and, the NFPA for technical assistance projects. The program is currently collaborating in • supporting capacity development of cities to achieve their goals by facilitating direct Ethiopia and Andhra Pradesh, India. sharing of best practice and knowledge enhancement. Transparency International (TI): International Code Council (ICC): With a Based in Berlin, TI has chapters in 100 countries. membership of 50,000 people, the ICC It gives voice to the victims and witnesses In is a prominent nonprofit partner of the The of corruption and works with governments, ve Building Regulations for Resilience initiative. businesses and citizens to stop the abuse World stin It works with the World Bank’s Building of power, and bribery. The BRR and TI are Bank g i n |U r Regulation for Resilience (BRR) initiative in currently assessing potential opportunities for developing a building regulatory assessment collaboration at the country level, with a focus methodology to review the quality of on practices related to the construction industry. Investing b a n Rin design and implementation mechanisms of Internal partnerships help strengthen land use and building code systems. Joint the WBG’s capacity to scale up its e Urban communications events are organized within silie support for urban resilience. the framework of ICC’s “Global Forums.” Resilience nce 110 110 The City Resilience Program and related work help identify, develop, and mobilize financing to enhance urban resilience is also being for transformational investment programs in supported by a number of internal partnerships: urban energy efficiency. Its activities include: • financial and technical support; Pilot Program for Climate Resilience: • capacity building and e-learning; and The USD 1.2 billion Pilot Program for Climate • knowledge creation and exchange. Resilience (PPCR), is a funding window of the Climate Investment Funds. Using a two-phase, The initiative builds on ESMAP’s extensive work programmatic approach, the PPCR assists on urban energy efficiency, including support national governments in integrating climate towards city energy diagnostics conducted resilience into development planning across with ESMAP’s Tool for Rapid Assessment sectors and stakeholder groups. Importantly, of City Energy in nearly 70 cities to help PPCR provides additional funding to put the quickly identify potential energy efficiency plan into action and pilot innovative public improvements, target underperforming and private sector solutions to pressing sectors, and prioritize interventions. climate-related risks. A significant portion of PPCR finance has been mobilized towards Disaster Risk Financing and urban development and infrastructure Insurance Program (DRFIP): investments in developing countries. DRFIP is a leading partner of developing Global Platform for Sustainable Cities: countries seeking to develop and implement comprehensive financial protection strategies. In an effort to promote urban sustainability, while A joint initiative of the World Bank Group’s recognizing the unique window of opportunity Finance and Markets Global Practice and that comes with rapid urbanization, the GEF- GFDRR, DRFI was established in 2010 to supported Sustainable Cities program works improve the financial resilience of governments, with mayors in developing countries seeking to businesses, and households against natural transform cities as inclusive and resilient hubs of disasters. The initiative supports governments growth. The Sustainable Cities program will invest in the implementation of comprehensive USD 1.5 billion over five years, initially engaging financial protection strategies, and brings 23 cities in Brazil, China, Cote d’Ivoire, India, together sovereign disaster risk financing, In The ve Malaysia, Mexico, Paraguay, Peru, Senegal, South agricultural insurance, property catastrophe World stin Africa and Vietnam. The objective is to promote risk insurance, and scalable social protection sustainable urban development through better programs. Often, it also helps governments Bank g i n |U r integrated models of urban design, planning work with the private sector to facilitate and implementation, and will contribute towards public-private partnerships. The four main Investing avoiding or reducing more than 100 million b a n Rin areas in which the DRFIP works are: metric tons of CO2 in greenhouse gas emissions. • sovereign disaster risk finance; e Urban City Energy Efficiency • market development; silie Transformation Initiative: • analytics; and Resilience nce A technical assistance program with an initial • knowledge management and global budget of USD 9 million. Led by the World Bank’s partnerships. Energy Sector Management Assistance Program (ESMAP), the initiative provides support to 111 111 Endnotes 1 Cities account for 82 percent of today’s global GDP 5 Thirteen of the most populated cities in the world are and will account for an estimated 88 percent by 2025 coastal trading hubs that are vital in global supply (CCLFA 2015). chains, and many of them are exposed to flooding and storms. For example, the estimated exposure of 2 Thus, this report is not intended to be an in-depth economic assets is expected to increase from its 2005 guide for making cities more resilient. This guidance level of USD 8 billion to USD 544 billion in Dhaka and already exists in the form of several excellent from USD 84 billion to USD 3.6 trillion in Guangzhou. publications including: (UN-Habitat,UNEP and UNISDR 2015, UNISDR 2013) 1. Building Urban Resilience : Principles, Tools, and 6 In a recent survey conducted by the Carbon Disclosure Practice (World Bank,2013) http://documents. Project, nearly 70 per cent of company respondents worldbank.org/curated/en/320741468036883799/ identified concerns with business continuity risks to pdf/758450PUB0EPI0001300PUBDATE02028013. their supply chains and thus risks to their revenue pdf streams due to climate change and the resulting 2. Building Regulation for Resilience : Managing Risks extreme weather events (CDP, 2013). More than for Safer Cities (GFDRR, World Bank 2015) - https:// half these risks have either already impacted these www.gfdrr.org/sites/default/files/publication/ companies or are expected to do so within the next BRR%20report.pdf five years 3. How To Make Cities More Resilient : A Handbook For Local Government Leaders (UNISDR, 7 Public investment was calculated as an average of the 2012) http://www.unisdr.org/files/26462_ annual percentage of public investment in relation to handbookfinalonlineversion.pdf GDP from 2001 to 2011, based on data from the World 4. Integrating Climate Change Into City Development Bank Strategies (UN Habitat, UNEP, World Bank, Cities 8 These include: (i) limited access to income and Alliance and HIS,2015) - http://unhabitat.org/books/ employment; (ii) inadequate and insecure living integrating-climate-change-into-city-development- conditions; (iii) poor infrastructure and services; (iv) strategies/ vulnerability to risks, particularly those associated 5. Local Governments’ Pocket Guide to Resilience with living in slums; (v) spatial issues that inhibit (UN Habitat and Cities Alliance 2015) - http://www. mobility and transport; and (vi) inequality closely citiesalliance.org/sites/citiesalliance.org/files/ linked to socio-economic exclusion as well as crime and Resilience%20handbook%20LOW%20RES.pdf violence. 6. Building Resilient Cities : From Risk assessment to redevelopment (Ceres, The Next Practice, and the 9 The African Development Bank, Asian Development University of Cambridge, 2013) http://icleiusa.org/ Bank, European Bank for Reconstruction and wp-content/uploads/2015/06/Building-Resilient- Development, European Investment Bank, Inter- Cities_FINAL.pdf American Development Bank, International Monetary Fund and the World Bank Group 3 At the time of publishing the Shepherd et al. study In The (2013), extremely poor was defined as living on less ve 11 As they assimilate into urban populations, however, than USD 1.25 per day. World it is likely that these numbers are conservative. And stin with many governments failing to recognize or support 3 While similar to the 2009 UNISDR definition included Bank these groups, there are strong disincentives to being g i n |U r in the Sendai Framework: “the ability of a system, counted – from discrimination to forced removal by the community or society exposed to hazards to resist, authorities. absorb, accommodate to and recover from the effects Investing of a hazard in a timely and efficient manner, including 12 This is illustrated by the experiences of Pralab, a b a n Rin through the preservation and restoration of its suburb in Khon Kaen city in Thailand. The expansion essential basic structures and functions,” the definition of the city’s built-up area had increased flood risks to of resilience is slightly broader to address a wider e Urban the extent that when Pralab experienced a very heavy silie subset of shocks and stresses included in Table 1.1. This flood in 2011, more than half the area’s population was includes stresses generated by natural phenomena, evacuated and ended up living in temporary shelter technological hazards, and socio-economic risks. Resilience along the highway for two months (Promphakping, et nce al. 2016). 4 Small- and medium-sized cities are defined as between 300,000 and 500,000 and 500,000 and 5 million 112 112 respectively. 13 For instance, the health costs and productivity losses City-Final.pdf associated with congestion are estimated at 1.5% of regional GDP for London, 4.8% for Jakarta, 7.8% for 27 http://reliefweb.int/sites/reliefweb.int/files/resources/ São Paulo, and up to 15% for Beijing (Gouldson, et al. USAIDResiliencePolicyGuidanceDocument.pdf 2015). 14 This is evident from analyses of impact and from the 28 http://www.100resilientcities.org/resilience#/-_/ risk analyses done with the DesInventar methodology that captures the impacts of ‘small’ disasters that do 29 http://www.resalliance.org/resilience not get included in disaster databases (ibid, (United Nations 2011). (United Nations 2011, United Nations 30 Core projects are based primarily in urban areas 2009). Non-core project are either partially based in urban 31 15 If an income-based poverty line is to be used, it needs areas or are national / regional scale resilience to be adjusted in each city or district to reflect the projects. local costs of non-food needs. USD 1.25/day (adjusted for purchasing power parity) does not cover the costs 32 MIGA is able to provide guarantees on government of non-food needs in many urban contexts. lending, provided that the covered loan is extended on commercial terms. 16 According to McKinsey, a knowledge deficit exists among fund managers regarding what “investing in 33 Public Private Infrastructure Advisory Facility infrastructure” actually means and prevents investors (PPIAF) is a multi-donor project preparation facility from examining such long-term investment decisions that helps governments of developing and middle- at the relevant strategic asset-allocation level. Various income countries develop infrastructure projects in research papers have demonstrated the primacy of partnership with the private sector. asset allocation in investment management, and asset- allocation decisions explain most of the variability of investment outcomes. Examples include Building Regulation for Resilience 17 program, the CityStrength methodology, Fiscal Risk Assessment, City Risk Profiles, the Climate Action for Urban Sustainability (CURB) tool, and Preventive Resettlement. 18 Examples include the Tool for Rapid Assessment of City Energy (TRACE), the Creditworthiness Academy, cadaster development, and land value capture as part of transit-oriented development. 19 http://cityresilience.org/CRPP In 20 http://resilient-cities.iclei.org/resilient-cities-hub-site/ The ve resilience-resource-point/glossary-of-key-terms/ World stin 21 https://www.gov.uk/government/uploads/system/ Bank uploads/attachment_data/file/186874/defining- g i n |U r disaster-resilience-approach-paper.pdf 22 https://www.rockefellerfoundation.org/our-work/ Investing topics/resilience/ b a n Rin 23 http://s-media.nyc.gov/agencies/sirr/SIRR_singles_ Lo_res.pdf e Urban silie 24 http://www.resilientcity.org/index. cfm?pagepath=Resilience&id=11449 Resilience nce 25 http://www3.weforum.org/docs/Media/ TheGlobalRisksReport2016.pdf 26 http://resilient-cities.iclei.org/fileadmin/sites/resilient- 113 113 cities/files/Frontend_user/Report-Financing_Resilient_ References Archer, Diane. 2012. Finance as the key to unlocking community potential: savings, funds and the ACCA programme. Manchester: Environment and Urbanization. Ayers. 2011. “Resolving the adaptation paradox: Exploring the potential for deliberative adaptation policy- making in Bangladesh.” Global Environmental Politics 11 (1): 62-88. doi:10.1162/GLEP_a_00043. Baker, J. 2012. Climate Change, Disaster Risk, and the Urban Poor: Cities Building Resilience for a Changing World. Washington DC: World Bank. https://openknowledge.worldbank.org/handle/10986/6018 License: CC BY 3.0 IGO.” Bartlett, S., and D.Satterthwaite, 2016. Cities on a Finite Planet; Towards Transformative Responses to Climate Change. London: Routledge. Bhattacharya A., J. Oppenheim and N. Stern. 2015. “Driving sustainable development through better infrastructure: Key elements
of a transformation program.” Working paper 91 , Brookings Institution,Global Commission on the Economy and Climate,New Climate Economy and Grantham Research Institute on Climate Change and the Environment. https://www.brookings.edu/wp- content/ uploads/2016/07/07-sustainable-development-infrastructure-v2.pdf. Bilham, R. 2009. “The Seismic Future of Cities.” Bulletin of Earthquake Engineering: Official Publication of the European Association for Earthquake Engineering (Springer Netherlands) 7 (4). doi:10.1007/ s10518-009-9147-0. Brown, A., Dayal, and C. Rio, 2012. “From practice to theory: Emerging lessons from Asia for building urban climate change resilience.” Environment and Urbanization, October. Birkmann, J., T. Welle, W. Solecki, S. Lwasa, and M. Garschagen. 2016. “Boost resilience of small and mid-sized cities.” Nature 537. Brugmann, Jeb. 2011. Financing the Resilient City. Toronto: ICLEI. Briceño-Garmendia, Cecilia, Karlis Smits, and Vivien Foster. 2008. “Financing Public Infrastructure in Sub- Saharan Africa: Patterns, Issues, and Options.” AICD Background Paper 15, Africa Infrastructure Sector Diagnostic, World Bank, Washington, DC. Carmin, JoAnn, Nikhil Nadkarni, and Christopher Rhie. 2012. “Progress and Challenges in Urban Climate Adaptation Planning: Results of a Global Survey.” Urban Studies and Planning, Massachusetts Institute of Technology, Cambridge, M. Carruthers, J, and G Ulfarsson. 2003. “Urban sprawl and the cost of public services.” Sage; Environmental Planning B: Planning and Design 30 (4 503-522 ). In The ve CCFLA. 2015. State of City Climate Finance 2015. New York: Cities Climate Finance Leadership Alliance World stin (CCFLA). Bank CCFLA. 2015. State of City Climate Finance 2015. Cities Climate Finance Leadership Alliance. g i n |U r Chelleri, L, J Waters, M Olzabal, and G Minucci. 2015. “Resilience trade-offs: addressing multiple scales and temporal aspects of urban resilience.” Environment and Urbanization 27 (1). Investing doi:10.1177/0956247814550780. b a n Rin City and County of San Francisco. 2014. “2014 Earthquake Safety and Emergency Response Bond: Safeguarding San Francisco.” San Francisco. e Urban silie Climate Policy Initiative. 2015. The Global Landscape of Climate Finance 2015. CPI, Venice. Resilience nce 2014. DC Stormwater Credits. September. http://doee.dc.gov/src. Da Silva. 2012. “Shifting agendas: response to resilience. The role of the engineer in disaster risk reduction,.” 9th Brunel International Lecture Series, The Institution of Civil Engineers. London. 43. 114 114 DFID. 2004. “Disaster risk reduction: a development concern.” A scoping study on links between disaster risk reduction, poverty and development, Overseas Development Group, School of Development Studies, Norwich, UK. Dirie, Ilias. 2005. Municipal Finance: Innovative Resourcing for Municipal Infrastructure and Service Provision. Municipal Finance. Dodman, D, and D Mitlin. 2011. “Challenges for community-based adaptation: discovering the potential for transformation. Journal of International Development.” International Development 25(5) (640- 659). Donner, William, and Havidan Rodriguez. 2008. “Population Composition, Migration and Inequality: The Influence of Demographic Changes on Disaster Risk and Vulnerability.” Social Forces. Ebi, K. 2008. “Adaptation costs for climate change-related cases of diarrhoeal disease, malnutrition, and malaria in 2030.” Globalization and Health (Globalization and Health). Elmqvist T., M. Fragkias et al. 2013. Urbanization, Biodiversity and Ecosystem Services: Challenges and Opportunities. Global Assessment report - A Part of the Cities and Biodiversity Outlook Project, New York London: Springer Dordrecht Heidelberg. Escribano, Alvaro, J. Luis Guasch, and Jorge Pena. 2008. Impact of Infrastructure Constraints on Firm Productivity in Africa. Washington DC: Infrastructure Sector Diagnostic, World Bank. Garrido, Olga Calabozo, interview by Christopher Chung, Puja Guha and Swati Sachdeva. 2016. GFDRR. 2016. “The making of a riskier future.” Washington DC. GFDRR. 2016 b. “DRM and CCA co-benefits portfolio analysis FY12-16.” Gouldson, A., S. Colenbrander, A. Sudmant, N. Godfrey, J. Millward-Hopkins, W. Fang, and X. Zhao. 2015. Accelerating Low-Carbon Development in the World’s Cities: Seizing the Global Opportunity- Partnerships for Better Growth and a Better Climate. Working Paper, London and Washington DC: New Climate Economy. Gray, David, and Claudia Sadoff. 2006. “Water for Growth and Development: A Framework for Analysis.” Theme Document of the 4th World Water Forum. Mexico City. Gray, R. David, and John Schuster. 1998. “The East Asian Financial Crisis - Fallout for Private Power Projects.” Public Policy for the Private Sector. Hallegatte S., C. Green, R. Nicholls, and J. Morlot. 2013. “Future flood losses in major coastal cities.” Nature Climate Change. Hallegatte, S., M. Bangalore, L. Bonzanigo, M. Fay, T. Kane, U. Narloch, J. Rozenberg, D. Treguer, and A. Schilb. 2015. Shock Waves: Managing the Impacts of Climate Change on Poverty. Washington, DC: World In Bank. The veWorld Hardoy, J., D. Mitlin, and D. Satterthwaite. 2001. Environmental Problems in an Urbanizing World: Finding stin Solutions for Cities in Africa, Asia and Latin America. lONDON: Earthscan. Bank g i n |U r Heathcote, Christopher. August 2016. “Sending the Right Infrastructure Message: How governments can encourage private-sector infrastructure investment.” Global Infrastructure Initiative. McKinsey & Company. http://www.mckinsey.com/industries/capital-projects-and- infrastructure/our-insights/ sending-the-right-infrastructure-message Investing b a n Rin Hicks, Chelsea. 2015. Mental Health and Urban Resilience. July 10. http:// www.100resilientcities.org/blog/ entry/mental-health-urban- resilience#/-_/. e Urban silie Hoeppe, Peter. “Trends in weather related disasters – Consequences for insurers and society” Weather and Climate Extremes. Volume 11, March 2016, Pages 70–79 Resilience nce Hope, K.R. Sr. 2009. “Climate Change and Poverty in Africa.” International Journal of Sustainable Development & World Ecology. Howden, S. Mark, Jean-Francois Soussana, Francesco Tubiello, Netra Chhetri, Michael Dunlop, and Holger Meinke. 2007. Adapting agriculture to climate change. Proceedings of the National Academy of Sciences of the United States of America. 115 115 Ibish, Hussein. 2012. “Was the Arab Spring Worth It?” Foreign Policy Magazine. IDB. 2016. Transfers for Development. http://www.iadb.org/en/topics/ remittances/remittances/transfers-for- development,1551.html. IFC. n.d. Blending Donor Funds for Climate-Smart Investments. Accessed September 12, 2016. http:// www.ifc.org/wps/wcm/connect/ topics_ext_content/ifc_external_corporate_site/cb_home/ mobilizing+climate+finance/blendedfinance. —. 2013a. IFC: A Global Leader in Local Capital Market Development. November. Accessed September 12, 2016. http://www.ifc.org/wps/ wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/ IFC+Finance/Our+Finance+Products/Local+Currency+Financing/. IFC. 2013. “Mobilizing Public and Private Funds for Inclusive Green Growth Investment in Developing Countries.” A Stocktaking Report Prepared for the G20 Development Working Group. IMF. 2014. Is it Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment. Washington DC: IMF. IntellCap. 2010. “Opportunities for Private Sector in Urban Resilience Building.” IntellCap. https://wbg.app.box. com/files/0/ f/8542337641/1/f_71313590673. Invesco. 2016. “Invesco Global Sovereign Asset Management Study.” Working study. Jabeen, H. Allen, and C. Johnson. 2010. “Built-in resilience: learning from grassroots coping strategies to climate variability.” Environment and Urbanization, 415-431. Jha, K. Abhas, R. Bloch, and J. Lamond. 2013. Cities and Flooding: A Guide to Integrated Urban Flood Risk Management for the 21st Century. Washington DC: World Bank and GFDRR. Johnson, C., and S. Blackburn. 2014. “Advocacy for urban resilience; UNISDR’s Making Cities Resilient Campaign.” Environment and Urbanization 26 (1): 29-52. Junghans, Lisa, and Lukas Dorsch. 2015. Finding the Finance: Financing Climate Compatible Development in Cities. Bonn: Germanwatch. Kawarazuka, N. 2016. “Building a resilient city for whom? Exploring the gendered processes of adaptation to change: a case study of street vendors in Hanoi.” ACCR working paper 34. http://pubs.iied. org/10786IIED.html?k=acccrn. Kithiia, J. 2011. “Climate change risk responses in East African cities: need, barriers and opportunities.” Current Opinion in Environmental Sustainability, 176-180. doi:10.1016/j.cosust.2010.12.002. Kithiia, Justus. 2010. “Old notion – new relevance: setting the stage for the use of social capital resource in adapting East African coastal cities to climate change.” International Journal of Urban Sustainable In The Development Page 17-32. doi:http://dx.doi. org/10.1080/19463131003607630. veWorld stin Kiunsi, Robert. 2016. Cities on a Finite Planet: Towards transformative responses to climate change. Edited by David Satterthwaite Sheridan Bartlett. London: Routledge. Bank g i n |U r Linard, C., J. Tatem, and M. Gilbert. 2013. “Modelling spatial patterns of urban growth in Africa.” Science Direct : Applied Geography 44: 23-32. Investing Lwasa, S., F. Mugagga, B. Wahab, D. Simon, J. Connors, and C. Griffiths. 2014. “Urban and peri-urban b a n Rin agriculture and forestry: Transcending poverty alleviation to climate change mitigation and adaptation.” Urban Climate 7. doi:10.1016/j.uclim.2013.10.007. e Urban Lwasa, Shuaib. 2010. “Adapting urban areas in Africa to climate change: the case of Kampala.” ScienceDirect silie - Current Opinion in Environmental Sustainability 2 (3): 166–171. doi:http://dx.doi.org/10.1016/j. cosust.2010.06.009. Resilience nce Maurer, Luiz, interview by Valerie Joy-Santos and Puja Guha. 2016. (March). McKinsey. 2015b. “Rethinking Infrastructure: Voices from the Global Infrastructure Initiative.” 116 116 McKinsey. 2015. “Making the most of a wealth of intrastructure finance.” McKinsey Global Infrastructure Initiative.
McKinsey. 2015. New Horizons for Infrastructure Investing. Rethinking Infrastructure.
McKinsey. 2015. New Horizons for Infrastructure Investing. McKinsey. Meiro-Lorenzo, Montserrat, interview by Valerie Joy-Santos. 2016. (June). Mérida, M., and A. Gamboa. 2015. “Pobreza en México: Factor de vulnerabilidad para enfrentar los efectos del cambio climático.” Revista Iberoamericana de Bio-economía y Cambio Climático 1 (2): 1-19. Merlinsky, M. Tobias, and M. Ayelén. 2015. “Inundaciones en Buenos Aires. ¿Cómo analizar el componente institucional en la construcción social del riesgo?” L’Ordinaire des Amériques 218: 16. Mitlin, D., and D. Satterthwaite. 2013. Urban Poverty in the Global South: Scale and Nature. London: Routledge. Moser, C. 2007. “Asset accumulation policy and poverty reduction.” In Reducing Global Poverty: The Case for Asset Accumulation, 83-103. Washington DC: Brookings Institution Press. Moser, C. 2006. “Assets, livelihoods and social policy - Assets, Livelihoods and Social Policy.” (World Bank and Palgrave). Muir, Russell, interview by Valerie Joy-Santos and Puja Guha. 2016. (March). Munich Re. 2010. “Geo Risks Research, NatCatSERVICE.” Munich. Munich Re. 2012. “Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE, from presentation entitled “Natural catastrophes in economies at different stages of development.” OECD. January 2015. “Fostering Investment in Infrastructure.” Olsson, A., H. Thoren, J. Persson, and D. O’Byrne. 2015. “Why resilience is unappealing to social science: Theoretical and empirical investigations of the scientific use of resilience.” Science Advances 1(4). Patel, S. 1990. “Street children, hotels boys and children of pavement dwellers and construction workers in Bombay: how they meet their daily needs.” Environment and Urbanization 2 (2): 9-26. Pelling, M. 2003. The Vulnerability of Cities: Natural Disasters and Social Resilience. London: Earthscan from Routledge. Price Waterhouse Cooper. 2014. “Unlocking investment in infrastructure.” Promphakping, B., Y. Inmuong, W. Photaworn, M. Phongsiri, and K. Phatchanay. 2016. “Climate change and urban health vulnerability.” ACCR working paper 31. http://pubs.iied.org/10774IIED.html?k=acccrn. Pulido, Daniel, and Georges Darido, interview by Christopher Chung, Valerie Joy-Santos and Puja Guha. 2016. (April). In The ve Revi, A., D. Satterthwaite, F. Durand, J. Morlot, R. Kiunsi, M. Pelling, D. Roberts, W. Solecki, S. Gajjar, and A. World Sverdlik. 2014. 8. Urban areas - Climate Change 2014: Impacts, Adaptation, and Vulnerability. stin Part A:Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, United Kingdom and New York,NY,USA: Cambridge University Press. Bank g i n |U r Romero, P., H. Qin, and K. Dickinson. 2012. “Urban vulnerability to temperature- related hazards: A meta- analysis and meta-knowledge approach.” Global Environmental Change 22 (3): 670-683. Investing b a n Rin Roy, M. Hulme, and F. Jahan. 2013. “Contrasting adaptation responses by squatters and low-income tenants in Khulna, Bangladesh.” Environment and Urbanization 25 (1). e Urban silie Rozenberg, J., and S. Hallegatte. 2015. The Impacts of Climate Change on Poverty in 2030 and the Potential from Rapid, Inclusive, and Climate- Informed Development. Policy Research Working Paper 7483, Washington, D.C: World Bank. Resilience nce Satterthwaite, D. 2016b. “Missing the Millennium Development Goals targets for water and sanitation in urban areas.” Environment and Urbanization, April. 117 117 Satterthwaite, D. 2013. “The political underpinnings of cities’ accumulated resilience to climate change.” Environment and Urbanization 25 (2): 381-391. Seto, K., M. Fragkias, B. Güneralp, and M. Reilly. 2011. “A Meta-Analysis of Global Urban Land Expansion.” PLOS 6 (8, E23777). http://dx.doi.org/10.1371/ journal.pone.0023777 . Seto, K., S. Dhakal, A. Bigio, H. Blanco, G. Delgado, D. Dewar, L. Huang, et al. 2014. Human Settlements, Infrastructure and Spatial Planning In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report. Cambridge, United Kingdom and New York, NY, USA: Cambridge University Press. Shepherd, A., T. Mitchell, K. Lewis, A. Lenhardt, L. Jones, L. Scott, and R. Wood. 2013. “The geography of poverty, disasters and climate extremes in 2030.” Overseas Development Institute (ODI),UK Met Office and Risk Management Solutions (RMS). Sitathan, Tony. 2003. Singapore’s economy: SARS gloom and doom. Asia Times Online. Stenek, Vladimir, interview by Christopher Chung and Puja Guha. 2016. Swiss Re. 2014. “Mind the risk: A global ranking of cities under threat from natural disasters.” Tanner, T., S. Surminski, E. Wilkinson, R. Reid, R. Rentschler, and S. Rajput. 2015. The Triple Dividend of Resilience: Realising development goals through the multiple benefits of disaster risk management. London: Global Facility for Disaster Reduction and Recovery (GFDRR) at the World Bank and Overseas Development Institute(ODI). www.odi.org/ tripledividend. The Lancet Commissions. 2013. Global health 2035: a world converging within a generation. The Lancet Commissions. UN DESA. 2014. “World Urbanization Prospects: The 2014 Revision, Highlights.” UN Habitat. 2009. “Guide to Municipal Finance.” Nairobi. UN Habitat. 2016. Habitat III: New Urban Agenda (Draft). July 28. UN-Habitat. 2016b. “World Cities Report 2016: Urbanization and Development; Emerging Futures, United Nations Human Settlements Programme.” Nairobi, 247. UN-Habitat,UNEP and UNISDR. 2015. “Urban Resilience.” Habitat III Issue paper, New York. http://unhabitat. org/wp-content/uploads/2015/04/ Habitat-III-Issue-Paper-15_Urban-Resilience-2.0.pdf. UNICEF and WHO. 2015. “Progress on Sanitation and Drinking Water : UNISDR. 2013. Global Assessment Report on Disaster Risk Reduction 2013,From Shared Risk to Shared Value: In The Business Case for Disaster Risk Reduction. Geneva, Switzerland: United Nations Office for The Disaster Risk Reduction (UNISDR). veWorld stin UNISDR. 2015a. Global Assessment Report on Disaster Risk Reduction. Making Development Sustainable: The Future of Disaster Risk Management. Geneva, Switzerland: United Nations Office for Disaster Risk Bank Reduction (UNISDR). g i n |U r United Nations. 2009. “Global Assessment Report on Disaster Risk Reduction: Risk and Poverty in a Changing Climate.” ISDR, United Nations, Geneva, 207. Investing b a n Rin United Nations. 2011. Revealing Risk, Redefining Development: The 2011 Global Assessment Report on Disaster Risk Reduction. Geneva: United Nations International Strategy for Disaster Reduction,, 178. e Urban silie Weltz, J. Krellenberg, and K. Muzzio. 2016. “ Vulnerabilidad frente al cambio climático en la Región Metropolitana de Santiago de Chile: posiciones teóricas versus evidencias empíricas.” Vols. 42,Nbr. 125. EURE. 251- 272. Resilience nce World Bank. 2014a. “An expanded approach to Urban Resilience :Making Cities Stronger.” Washington DC. 118 118 World Bank and AFD. 2010. Africa’s Infrastructure: A time for transformation. Washington DC: World Bank. World Bank. 2008. “Daiwa Securities Group offers the first CER-Linked Uridashi Bond Created in Collaboration with the World Bank .” World Bank Treasury. June 9. http://treasury.worldbank.org/cmd/htm/ CO2LBond.html. World Bank. 2015a. “Doing Business 2015: South Africa.” World Bank. 2012. “Financial Risk Management Instruments.” http://pubdocs. worldbank.org/ en/191551428418817665/FFD-risk-management.pdf. World Bank Global Infrastructure Facility. 2015. Global Infrastructure Facility 2015. Washington DC: World Bank. World Bank. 2016d. “Global Program for Safer Schools.” Washington DC. World Bank. 2014b. Green and Resilient Cities: The Energy Dimension. Washington DC: World Bank. World Bank. 2012. “Helping Morocco Mitigate Currency Risk on Liabilities Owed to a Third Party.” World Bank. http://treasury.worldbank.org/ bdm/pdf/Case_Study/Morocco_NonIBRDHedge_2015.pdf. World Bank. 2012. “Helping Small Island States Cope in the Aftermath of Natural Disasters.” http://treasury. worldbank.org/bdm/pdf/Case_ Study/Pacific_Islands_PCRFIpilot_2015.pdf. World Bank. 2015b. “JP-GFDRR Mainstreaming DRM in Peru’s Education Sector (TF018246): Implementation Status Report.” World Bank. 2011. Project Appraisal Document: Regional Disaster Vulnerability Reduction Projects. World Bank. World Bank. 2012. “Results-Based Financing Instruments.” http://pubdocs. worldbank.org/ en/133401428418817245/FFD-results-based-financing. pdf. World Bank. 2016a. “Strengthening City Resilience in Ethiopia: Review of Building Regulatory Framework.” World Bank. 2016c. “Uruguay Partners with the World Bank to Reduce its Exposure to Oil Price Volatility.” June. http://www.worldbank.org/ en/news/press-release/2016/06/15/uruguay-se-asocia-con-banco- mundial-para-reducir-su-exposicion-a-volatilidad-del-precio-del- petroleo. World Bank. 2016b. World Bank Approach and Plan of Action for Climate Change and Health. Washington, DC: World Bank. World Bank. 2009. World Development Report 2010: Development and Climate Change. Washington, DC: World Bank. World Bank. 2016e. City Strength Diagnostic in the Greater Accra Metropolitan Area (GAMA) (Draft Document 1) - Pre-Diagnostics Report. In World Bank. 2016f. Vietnam - Can Tho Urban Development and Resilience Project. Washington, DC: World Bank The ve Group. http://documents. worldbank.org/curated/en/316951467987903833/Vietnam-Can- Tho- World Urban- Development-and-Resilience-Project stin World Bank. 2016g. Istanbul Seismic Risk Mitigation and Emergency Preparedness project. Implementation Completion Report (IBRD- 47840 and IBRD-80330). SURR GP,Turkey Country Management Unit, Bank g i n |U r ECA : World Bank Group. Report No: ICR00003698.http:// www.wds.worldbank.org/external/ default/WDSContentServer/ WDSP/IB/2016/06/30/090224b08441aa4e/1_0/Rendered/PDF/ Turkey000Seismic0Risk0Mitigation0Project.pdf Investing b a n Rin World Bank. 2015c. Brazil - Belo Horizonte Inclusive Urban Development Policy Loan Project. Washington, DC: World Bank Group. http:// documents.worldbank.org/curated/en/895071467986288007/Brazil- Belo-Horizonte-Inclusive- Urban-Development- Policy-Loan- Project e Urban silie World Bank. 2016h. Safe and Resilient Cities in Ethiopia - City Strength Diagnostics in Nine Regional Capitals & Dire Dawa City Administration (Draft copy) Resilience nce World Bank. 2016i. Comprehensive Urban Resilience Masterplan for the City of Beirut Report. Zolli, Andrew. 2012. “Learning to bounce back.” www.nytimes.com. November 02. http://www.nytimes. com/2012/11/03/opinion/forget-sustainability- its-about-resilience.html?_r=0. 119 119