The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) Combined Project Information Documents / Integrated Safeguards Datasheet (PID/ISDS) Appraisal Stage | Date Prepared/Updated: 08-Aug-2018 | Report No: PIDISDSA24779 Jul 15, 2018 Page 1 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Marshall Islands P166974 ADDITIONAL FINANCING P155257 FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM Parent Project Name Region Estimated Appraisal Date Estimated Board Date PACIFIC RESILIENCE PROJECT EAST ASIA AND PACIFIC 10-Aug-2018 27-Sep-2018 UNDER PACIFIC RESILIENCE PROGRAM Practice Area (Lead) Financing Instrument Borrower(s) Implementing Agency Social, Urban, Rural and Investment Project Republic of the Marshall Ministry of Finance Resilience Global Practice Financing Islands Proposed Development Objective(s) Parent To strengthen the financial protection of the Republic of Marshall Islands. Proposed Development Objective(s) Additional Financing To strengthen the financial protection of the Republic of Marshall Islands from natural disasters. Components Component 1: Strengthening Early Warning and Preparedness Component 2: Risk Reduction and Resilient Investments Component 3: Disaster Risk Financing Component 4: Project and Program Management PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 2.90 Total Financing 2.90 of which IBRD/IDA 2.50 Jul 15, 2018 Page 2 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 2.50 IDA Grant 2.50 Non-World Bank Group Financing Counterpart Funding 0.40 Borrower 0.40 Environmental Assessment Category B-Partial Assessment Decision The review did authorize the team to appraise and negotiate Other Decision (as needed) B. Introduction and Context Country Context 1. The Republic of the Marshall Islands (RMI) is one of the world’s smallest, most isolated and vulnerable nations. The country consists of 29 atolls (24 of which are inhabited) and five isolated islands with a total land mass of 181km2, dispersed across an ocean area of over 1.9 million km2. RMI’s population is estimated at about 53,000, of which over half reside in the capital city of Majuro. 2. RMI is a lower middle-income country with a GDP of US$179.4 million (2015), and a per capita GDP of US$3,326. GDP has grown at an average rate of around 1% per annum, in real per capita terms, since 1979. The size and remoteness of RMI increase the cost of economic activity and make it difficult to achieve economies of scale. Remoteness also imposes transport expenses that increase the costs of trade, and fundamentally constrain the competitiveness of exports of goods and services internationally. These same factors also push up the cost and complexity of providing public services and fulfilling the basic functions of Government. Exports are low, and the shallow domestic economy has brought high dependence on imports, which are funded largely by the sale of offshore fishing rights and high levels of foreign aid. Foreign aid funds a very large public sector that dominates the economy. Jul 15, 2018 Page 3 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) Sectoral and Institutional Context 3. RMI is exposed to a range of hydro-meteorological and geohazards, including tropical cyclones, earthquakes and tsunami. The likelihood that a hazardous event will have a significant impact on the Marshall Islands is rising with the increasing levels of population and assets in the urban areas of Majuro and Ebeye. The low-lying atolls are at risk from tsunamis (and storm surge), which can cause damage to roads, houses, and other infrastructure on the low-lying atolls. Tropical cyclones are expected to become more frequent with climate change. 4. Catastrophe risk modeling indicates that the country is expected to incur, on a long-term average, annual losses of US$3 million due to earthquakes and tropical cyclones. In the next 50 years, RMI has a 50 percent chance of experiencing a loss exceeding US$53 million, and a 10 percent chance of experiencing a loss exceeding US$160 million1. 5. Recognizing these challenges, the Government has developed strategic priorities for disaster risk management and climate change adaptation which are detailed in the Joint National Action Plan for Climate Change Adaptation and Disaster Risk Management 2014–2018. While the government has a contingency budget and access to the Disaster Assistance Emergency Fund, the available resources are limited. Funding support through the Project will be fundamental to strengthening RMI’s financial protection against natural disasters. Continuous access to catastrophe insurance coverage is necessary to transfer the country’s risk from cyclones, earthquakes, and tsunamis, in view of RMI’s vulnerability to both geophysical and hydro-meteorological hazards, and its limited financial capacity to prepare for and respond to the associated risks. C. Proposed Development Objective(s) Original PDO To strengthen the financial protection of the Republic of Marshall Islands. Current PDO To strengthen the financial protection of the Republic of Marshall Islands from natural disasters. Key Results 6. The Pacific Resilience Program (PREP) is a ‘Series of Projects’, with a regional approach to assisting Pacific Island Countries (PICs) to: (i) strengthen early warning and preparedness (Component 1); (ii) make prioritized investments in resilience and retrofitting of key-public assets (Component 2); and (iii) improve the post-disaster response capacity of the countries through disaster risk financing (Component 3). Under the parent project, RMI is participating in the first phase of the PREP together with Samoa, Tonga, and Vanuatu. These countries have all participated in the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI), on which the third component of PREP builds. PCRAFI successfully piloted a regional, Jul 15, 2018 Page 4 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) market-based catastrophe risk insurance pool to increase financial resilience against natural hazards and provide immediate liquidity when a major disaster hits a participating country. 7. Under the second phase of the Program (P160096), RMI is undertaking activities contributing to Component 1 (integrating governance of disaster and climate change management, and institutional strengthening; improving early warning communication systems for outer islands; and developing a roadmap and implementing priority improvements to modernize the National Disaster Management Office’s facilities), Component 2 (improving and expanding the coastal vulnerability assessment for Ebeye and Majuro; and priority coastal protection works investments including investigations, design, and construction supervision), and Component 3 (contingency emergency response). 8. Progress towards achieving the development objective and implementation progress have both been rated Satisfactory since November 2015, and the PDO is expected to be achieved. The PDO-level indicator for the program has been achieved, as shown in the table below. As an intermediate outcome, the regional catastrophe insurance pool has achieved premiums lower than the simulated price for a comparable coverage purchased individually in the market. Country Event / Amount Time to Payout Phase Tonga (2014) Tropical Cyclone Ian (USD 1.3 million) 10 days PCRAFI pilot Vanuatu (2015) Tropical Cyclone Pam (USD 1.9 million) 7 days PCRAFI pilot Tonga (2018) Tropical Cyclone Gita (USD 3.5 million) 7 days PREP D. Project Description Component 1: Strengthening Early Warning and Preparedness RMI is not participating in Component 1 activities during Phase I of the Program. Component 2: Risk Reduction and Resilient Investments RMI is not participating in Component 2 activities during Phase I of the Program. Component 3: Disaster Risk Financing This component offers a parametric catastrophe risk insurance pool for participating Pacific Island Countries, including RMI. Component 4: Project and Program Management RMI is not implementing any Component 4 Activities during the program. 9. The original Project included only Component 3 of PREP: Disaster Risk Financing. The proposed additional financing in the amount of USD 2.5 million will consist of national IDA of USD 0.65 million and regional IDA of USD 1.85 million (both on a grant basis) to fund disaster insurance premium payments for an additional five years of coverage, and total project financing of USD 4.0 million. There will also be counterpart funding of USD 0.4 million in increasing contributions from the government of RMI over the next 5 years, in addition to USD 0.15 million counterpart funding for the original project, taking total project costs to USD 4.55 million. Jul 15, 2018 Page 5 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) 10. The proposed additional Grants would finance part of the costs associated with scale-up of activities under Component 3 (Premiums Financing), enhancing the impact of the project by covering the payment for the disaster insurance premiums for an additional 5 years, to provide insurance cover until October 2023. This will ensure that RMI continues to have access to catastrophe risk insurance as part of strengthening financial protection against natural disasters. E. Implementation Institutional and Implementation Arrangements 11. Under the additional financing, the Ministry of Finance will continue to ensure proper and efficient implementation of the Project on behalf of the Recipient. At the regional level, the name of the Regional Steering Committee will be revised to Regional Advisory Committee (RAC). RMI is required to take all necessary measures on its part to ensure that the RAC, which oversees PREP, will remain in place until the OF closing date of November 30, 2020. After November 30, 2020, activities under the project will not be subject to oversight by the RAC’s successor committee, if any. . F. Project location and Salient physical characteristics relevant to the safeguard analysis (if known) As the project is providing funding for payment of disaster risk insurance premiums only, there are no salient physical characteristics relevant to safeguard analysis. The Implementing Agency's office is located in Majuro Atoll, Republic of Marshall Islands. G. Environmental and Social Safeguards Specialists on the Team Wolfhart Pohl, Environmental Safeguards Specialist Penelope Ruth Ferguson, Social Safeguards Specialist Ross James Butler, Social Safeguards Specialist Nicholas John Valentine, Environmental Safeguards Specialist SAFEGUARD POLICIES THAT MIGHT APPLY SAFEGUARD _TBL Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/BP 4.01 No Jul 15, 2018 Page 6 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) Performance Standards for Private Sector No Activities OP/BP 4.03 Natural Habitats OP/BP 4.04 No Forests OP/BP 4.36 No Pest Management OP 4.09 No Physical Cultural Resources OP/BP 4.11 No Indigenous Peoples OP/BP 4.10 No Involuntary Resettlement OP/BP 4.12 No Safety of Dams OP/BP 4.37 No Projects on International Waterways No OP/BP 7.50 Projects in Disputed Areas OP/BP 7.60 No KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT OPS_SAFEGUARD_SUMMARY_TBL A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: There are no safeguard issues or impacts associated with the proposed project, as it is providing funding for payment of disaster risk insurance premiums only. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Under both the parent project and the Additional Financing, the Republic of Marshall Islands is not carrying out any activities under Component 1 (Strengthening Early Warning and Preparedness) or Component 2 (Risk Reduction and Resilient Investments). The activities under the Additional Financing will remain limited to providing funding for payment of disaster risk insurance premiums under Component 3 (Disaster Risk Financing). 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N/A 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. N/A 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. N/A Jul 15, 2018 Page 7 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) OPS_SAFEGUARD_DISCLOSURE_TBL B. Disclosure Requirements (N.B. The sections below appear only if corresponding safeguard policy is triggered) OPS_COMPLIANCE_INDICATOR_TBL C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) (N.B. The sections below appear only if corresponding safeguard policy is triggered) OPS_ PDI_ COMP_TA BLE OPS_ALL_COMP_TABLE CONTACT POINT World Bank Artessa Saldivar-Sali Senior Municipal Engineer Samantha Jane Cook Senior Financial Sector Specialist Borrower/Client/Recipient Republic of the Marshall Islands Ms. Maybelline Andon Bing Secretary, Ministry of Finance Implementing Agencies Ministry of Finance Ms. Maybelline Andon Bing Secretary Jul 15, 2018 Page 8 of 9 The World Bank ADDITIONAL FINANCING FOR THE PACIFIC RESILIENCE PROJECT UNDER THE PACIFIC RESILIENCE PROGRAM (P166974) FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Artessa Saldivar-Sali Task Team Leader(s): Samantha Jane Cook Approved By Safeguards Advisor: Surhid P. Gautam 30-Jul-2018 Practice Manager/Manager: Abhas K. Jha 30-Jul-2018 Country Director: Annette Leith 09-Aug-2018 Jul 15, 2018 Page 9 of 9