87531 Issue #10 April 2014 Projecthighlights Addressing Climate Risk: The Sri Lanka Climate Resilience Program Overview Project (CRIP) (US$110 million) to reduce the immediate physical risks and improve the understanding of Located off the southern coast of the Indian disaster risks so that future investments are targeted subcontinent in South Asia, Sri Lanka is highly to their best use and (ii) a Development Policy Loan vulnerable to natural hazards. This was brought into with a Catastrophe Deferred Draw Down Option sharp focus by the Indian Ocean tsunami in 2004, with (CAT-DDO) (US$102 million) to strengthen the country’s a death toll of around 35,000. Despite the enormity of fiscal resilience to events. this event, routine flooding and drought are the natural To address long-term flood and drought problems, hazards that present the most significant threats to the recommendations from risk modeling studies under long-term growth and development of Sri Lanka. In CRIP will be used to inform US$1 billion of investments addition, landslides and high winds frequently destroy in comprehensive and sustainable basin-wide flood and or damage thousands of houses every year. drought risk mitigation. This is expected to encompass Sri Lanka has embarked on a comprehensive both the mitigation of physical structures and the disaster risk management (DRM) program to reduce improvement of the country’s water management the adverse impacts of climate change and to adapt system. Based on the results of this analysis, a third, the stock of infrastructure to extreme climate shocks. much larger, project is envisioned to be financed To increase both short-term and long-term resilience, within the next four years. This project is expected to the government is engaged with the World Bank on improve the country’s physical resilience to extreme several fronts. climate events in the future by incorporating projected Physical investments will be financed to address climate changes in modeling work to ensure long-term short-term infrastructure weaknesses, coupled with sustainability. a contingent line of credit to safeguard against the In parallel, a Fiscal Disaster Risk Assessment, immediate fiscal impacts of a disaster. The program supported by the Global Facility for Disaster Risk comprises (i) the Climate Resilience Improvement Reduction and Recovery (GFDRR), is under way. This Photo above: People fleeing flood in Sri Lanka assessment will develop a disaster risk financing and Photo by: Wikimedia Commons insurance (DRFI) program that will, in the long term, www.gfdrr.org Projecthighlights help the government and private institutions to improve their a 4°C (degree centrigade) increase in temperature would ability to manage the financial risks posed by disaster. adversely affect the South Asia region. The major impacts of Complementing these activities is an extensive Open climate change in the region are expected to be extremes of Cities initiative in selected regions in Sri Lanka, which will water scarcity and excess. The region is highly vulnerable, develop data on risk exposure that will be integrated under even at warming of less than 2°C, given the significant areas the CRIP and used for a more detailed risk analysis. In its first affected by droughts and flooding at present temperatures. phase, the Sri Lanka Open Cities engagement mapped the city In Sri Lanka, where water is used by various sectors, of Batticaloa, to better understand and visualize multi-hazard including the energy sector, projected increases in variability risks in this highly vulnerable city on the eastern coast. and long-term decreases in river flow are expected to heighten Within three months, all 30,000 buildings were mapped and the competition for water across sectors. For example, the visualized on a Web-based geospatial platform that is well uncertainty in precipitation in the central highlands of Sri suited for understanding the risk of floods, tsunamis, and Lanka may affect water use in the Mahaweli Scheme, which storm surges. provides 15 percent of national power generation and 23 Figure 1 illustrates the comprehensive engagement percent of irrigation water. Going forward, this uncertainty between the World Bank and the government of Sri Lanka to is expected to pose a major challenge for the design and increase the country’s financial and physical resilience. operation of hydropower plants and irrigation schemes. Climate Change Risks Physical Resilience Climate-related hazards are a significant threat to economic The CRIP will benefit approximately 11.5 million people and social development in Sri Lanka. Climate projections living and working in districts where these projects will be indicate trends of increasing rainfall in the wet zone and implemented. The project has two main components. The first decreasing rainfall in the dry zone, meaning that the risks component is a US$13 million analytical activity and long- associated with water-related climate variability are likely to term basin development planning. The second component intensify and worsen. is a US$90 million urgent rehabilitation investment to A World Bank study published in June 2013 on the increase resilience to climate risks. It also has two additional regional impacts of extreme climate events highlights how components: US$5 million to support project implementation Figure 1. Comprehensive Climate and Disaster Resilience Program Financial Resilience Physical Resilience Budget support Analytical work to inform investments Create Basin Identify Identify Level Mitigation Development Current Risk Future Risk Investment of Fiscal Mechanisms Plans Advisory services Physical investments Implementation of Comprehensive Approach Establish DPL with Immediate to Climate Resilience – CAT DDO Risk Mitigation Basin Investment Plans Data/information Management and Risk Assessment 2 and US$2 million to provide flexible funding to help the The analytical work will be Projecthighlights country to recover from a flood event that occurs during project implementation. undertaken by government engineers, Basin-Wide Investment Plan guided by international experts as The analytical component involves a detailed modeling required, to build capacity and to promote a similar approach across the of flood and drought risk in nine major river basins. The purpose of the modeling is to develop comprehensive basin- wide investment plans that incorporate the competing risks country in the coming years. of both flood and drought. The objective is to identify up to US$1 billion of investments in the form of basin investment plans. These models will take into account climate risks such floods. These interventions have been determined based on as expected extremes of water scarcity and excess, increased historical losses and field survey assessment by the Irrigation inter-annual and intra-seasonal variability of monsoons, and Department (ID) and the Mahaweli Authority of Sri Lanka longer-duration droughts. These impacts are all expected (MASL). Investments will not involve the construction of new to affect livelihoods and human lives adversely in the near infrastructure, but instead will reinforce critical structures to future. help them to withstand future floods. The interventions will The analytical work will be undertaken by government improve the carrying capacity of canals and reduce flooding engineers, guided by international experts as required, to due to overtopping of flood bunds. build capacity and to promote a similar approach across the The transport continuity investment (US$36 million) country in the coming years. In particular, the growing Special aims to reduce direct loss to transport infrastructure, reduce Projects Unit (SPU) inside the Ministry of Irrigation and Water indirect economic losses due to detours, and increase the Resources Management will benefit from technology transfer effectiveness of post-disaster response. Rapid expansion and technical assistance. In the medium term, the SPU will of the road network has led to greater road failures due to bring in additional sectoral experts and evolve to become a landslides, while low bridges or causeways constructed in Climate Resilience Planning Unit. Investments to be financed flood plains are flooded on a regular basis. A total of about include (i) acquiring a digital elevation model; (ii) conducting 3 kilometers of unstable, high-risk roadside slopes will be flood and drought risk modeling; and (iii) identifying feasible stabilized to improve the corridor’s resilience. To mitigate basin investment programs. the flood risk to low-lying bridges, 12 key vulnerable river or canal crossings with a combined span of approximately 260 Immediate Rehabilitation and Strengthening meters will also be strengthened. This will include raising and The rehabilitation component provides resources to reduce lengthening narrow bridges and causeways to ensure that short-term risks in three sectors. The first subcomponent they are capable of handling sufficient water flow. rehabilitates and strengthens hydraulic structures in irrigation The school protection investment (US$7 million) aims systems that have been identified as highly vulnerable to to improve slope stability around 18 schools serving about floods. The second strengthens the transport network to ensure 30,000 students and identified as highly vulnerable to connectivity during rainy seasons. The third stabilizes 18 landslides. Given the high risk of landslides, these schools landslide-prone schools that have been identified as high risk. have to close during periods of heavy rainfall, shortening the The flood risk mitigation component (US$47 million) school year by two to four weeks annually. Improvements in aims to rehabilitate irrigation and drainage infrastructure slope stability will promote education continuity as schools damaged by recent floods or particularly at risk of future will not need to close. Weak bridge to be reconstructed, Batticaloa, Sri Lanka Slope stabilization in schools, Kandy, Sri Lanka Photo by: Suranga Kahandawa Photo by: Suranga Kahandawa 3 Projecthighlights Online Data Sharing Disaster Management Center, Sri Lanka is particularly well placed to provide bridge financing while other sources of funding (for example, bilateral aid and reconstruction loans) are being mobilized following a state of emergency. The financial features are similar to those available for the Deferred Drawdown Option for Development Policy Loans (DDO DPLs), with one exception: the DPL with a CAT-DDO will have a revolving feature; that is, amounts repaid prior to the closing date will be available for subsequent drawdown. This DPL with a CAT-DDO will facilitate three key prior actions needed to operationalize a comprehensive DRM program in Sri Lanka: (i) adopt a national policy and program on disaster management, which will improve institutional capacity for managing disaster risks and DRFI, (ii) approve the Financial Resilience National Disaster Management Plan (NDMP) to increase the The CAT-DDO seeks to enhance the capacity of the government government’s capacity to manage disasters efficiently and to manage the impacts of natural disasters, in order to build ensure climate-resilient development, and (iii) approve the physical and financial resilience. This will be achieved by establishment of a steering committee to monitor the national providing immediate liquidity to the government in the event program for the common use and sharing of spatial data and of a disaster. The funds will be delivered within a policy information and to ensure that disaster information is used to framework designed to improve the overall capacity of the inform policy making. government to implement its DRM program. Based on the results of the ongoing fiscal disaster risk The government will be able to access funds from the assessment, recommendations will be made to strengthen facility upon declaring a state of emergency following an the fiscal resilience of the country. These may include (i) adverse natural event. The funds may be drawn down over a improving the administration and execution of budgets; (ii) three-year period, which may be renewed up to four times for developing an annual disaster fund to finance rehabilitation a total of 15 years. The signing of the CAT-DDO was contingent following small and medium events; (iii) managing the upon Sri Lanka developing a comprehensive disaster implicit fiscal liability to support vulnerable populations; management program. (iv) developing sovereign risk transfer instruments; and (v) The DPL with a CAT-DDO instrument is designed to supporting the development of a private catastrophe risk be a quick and flexible source of financing. The instrument insurance market. n Disclaimer: The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruction and Development, The World Bank 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 informa- tion 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.