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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 65160-MX INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM DOCUMENT ON A PROPOSED Public Disclosure Authorized STRENGTHENING SOCIAL RESILIENCE TO CLIMATE CHANGE DEVELOPMENT POLICY LOAN IN THE AMOUNT OF US$ 300,751,879.70 TO THE UNITED MEXICAN STATES Public Disclosure Authorized January 27, 2012 Sustainable Development Department Colombia and Mexico Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank‘s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective December 7th, 2011) Currency Unit = Mexican Pesos MX$1.00 = US$0.0740 US$1 = MX$ 13.510 ABBREVIATION AND ACRONYMS AECID Spanish Agency for International Development Cooperation (Agencia Española de Cooperación Internacional para el Desarrollo) AFD French Development Agency (Agence Française de Développement) CADENA Componente de Atención a Desastres Naturales en el Sector Agropecuario y Pesquero CCCR Carbon Cities Climate Registry CCKP Climate Change Knowledge Platform CCPI Climate Change Performance Index CDI National Indigenous Peoples‘ Commission (Comisión Nacional para el Desarrollo de los Pueblos Indígenas) CDM Clean Development Mechanism CENAPRED National Center for Disaster Prevention (Centro Nacional para la Prevención de Desastres) CFAA Country Financial Accountability Assessment CICC Interministerial Climate Change Commission (Comisión Intersecretarial de Cambio Climático) CO2 Carbon dioxide CO2e Carbon dioxide equivalent CONABIO National Commission for the Knowledge and Use of Biodiversity (Comisión Nacional para el Conocimiento y Uso de la Biodiversidad) CONAFOR National Forestry Commission (Comisión Nacional Forestal) CONAGUA National Water Comission (Comisión Nacional del Agua) CONANP National Council of Protected Natural Areas (Consejo Nacional de Áreas Naturales Protegidas) CONAVI National Housing Commission (Comisión Nacional de Vivienda) COP16 16th Session of the Conference of the Parties (UNFCCC) CPAR Country Procurement Assessment Report CPS Country Partnership Strategy CSOs Civil Society Organizations CTC Consultative Technical Council (Consejo Técnico Consultivo) CTF Clean Technology Fund DOF Official Gazette of the Federation (Diario Oficial de la Federación) DPL Development Policy Loan DRM Disaster Risk Management DUIS Integrally planned urban development (Desarrollos Urbanos Integrales Sustentables) ECUVE Qualitative Evaluation of the House and the Environment (Evaluación Cualitativa de la Vivienda y su Entorno) ENACC National Climate Change Strategy (Estrategia Nacional de Cambio Climático) ESW Economic and Sector Work FAO Food and Agriculture Organization FCPF Forest Carbon Partnership Facility FONDEN Fund for Natural Disasters (Fondo para Desastres Naturales) FOPREDEN Disaster Prevention Program (Fondo para la Prevención de Desastres) FY Fiscal Year GDP Gross Domestic Product GEF Global Environment Facility GHG Greenhouse Gases GiZ German Agency for International Cooperation (Gesellschaft für Internationale Zusammenarbeit) GoM Government of Mexico GT–ADAPT Working Group on Policies and Strategies for Adaptation (Grupo de Trabajo sobre Políticas y Estrategias de Adaptación) IBRD International Bank for Reconstruction and Development IADB Inter-American Development Bank IFC International Finance Corporation IMCO Mexican Institute for Competitiveness (Instituto Mexicano de la IMF Competitividad) International Monetary Fund INE National Institute of Ecology (Instituto Nacional de Ecología) INFONAVIT National Workers Housing Fund (Instituto del Fondo Nacional de la Vivienda para los Trabajadores) JIRA Environment Intermunicipal Board for the Integral Management of the Lower Basin of the Ayuquila River (Junta Intermunicipal de Medio Ambiente para la Gestion Integral de la Cuenca Baja del Río Ayuquila) LAIF Latin America Investment Facility LULUCF Land use, land-use change, and forestry MCP Mexico City Pact MEDEC Low-carbon study for Mexico (México: Estudio sobre la disminución de emisiones de carbono) mt Million tons MOU Memorandum of Understanding PACC Program for Climate Contingencies (Programa de Atención a Contingencias Climatológicas) PECC Special Program for Climate Change (Programa Especial de Cambio Climático) PEF Federal Expenditure Budget (Presupuesto de Egresos de la Federación) PER Public Expenditure Review PET Temporary Employment Program (Programa de Empleo Temporal) PETi Emergency Temporary Employment Program (Programa de Empleo Temporal inmediato) PFM Public Financial Management PND National Development Plan (Plan Nacional de Desarrollo) PRAH Program for Prevention of Risks in Human Settlements (Prevención de Riesgos en los Asentamientos Humanos) PROCAMPO Farm-support program (Programa de Apoyos Directos al Campo) PROGAN Livestock support program (Programa de Estímulos a la Productividad Ganadera) PSIA Poverty and Social Impact Analysis PSV Local Social Promoters (Promotores Sociales Vecinales) REDD+ Reduced Emissions from Deforestation and Forest Degradation, Conservation of Forest Carbon Stocks, Sustainable Management of Forest and Enhancement of Forest Carbon Stocks in Developing Countries SCCP State Climate Change Plans SAGARPA Ministry of Agriculture and Rural Development (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación) SEDESOL Ministry of Social Development (Secretaría de Desarrollo Social) SEGOB Ministry of Interior (Secretaría de Gobernación) SEMARNAT Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) SEP Strategic Engagement Program SFLAC Spanish Fund for Latin America and the Caribbean SFP Ministry of Public Administration (Secretaría de la Función Publica) SHCP Ministry of Finance (Secretaría de Hacienda y Crédito Público) SHF Federal Mortgage Corporation (Sociedad Hipotecaria Federal) SINAPROC National Civil Protection System (Sistema Nacional de Protección Civil) TA Technical Assistance TESOFE Treasury of the Federation (Tesorería de la Federación) UN United Nations UNDP United Nations Development Program UNEP United Nations Environment Program UNFCCC United Nations Framework Convention on Climate Change URA Urban Risk Assessment UTTP Urban Transport Transformation Program WDR World Development Report WII Weather Index Insurance Vice President: Hasan A. Tuluy Country Director: Gloria M. Grandolini Sector Director: Ede J. Ijjasz-Vasquez Sector Manager: Maninder Gill Sector Leader: Alexandra Ortiz Task Team Leader: Rodrigo Serrano-Berthet Co-Task Team Leader: Angélica Núñez Co-Task Team Leader: Laurent Debroux THE UNITED MEXICAN STATES STRENGTHENING SOCIAL RESILIENCE TO CLIMATE CHANGE DEVELOPMENT POLICY LOAN TABLE OF CONTENTS LOAN AND PROGRAM SUMMARY ........................................................................................ I I. CLIMATE CHANGE ENGAGEMENT IN MEXICO .......................................................... 1 II. COUNTRY CONTEXT .......................................................................................................... 8 A. Recent Economic Developments 8 B. Macroeconomic Outlook 11 C. Context for Sustainable and Resilient Development 16 III. THE GOVERNMENT PROGRAM AND PARTICIPATORY PROCESSES .............. 21 A. The Government Program 21 B. The Participatory Process 30 IV. BANK SUPPORT TO THE GOVERNMENT PROGRAM ............................................ 33 A. Link to Country Partnership Strategy 33 B. Collaboration with IMF and Other Development Partners 33 C. Integrated World Bank Engagement on Social Resilience, Forest Policies and Climate Change 34 D. Analytical Underpinnings 39 V. THE PROPOSED OPERATION ......................................................................................... 42 A. Operation Description 42 VI. OPERATION IMPLEMENTATION ................................................................................. 59 A. Poverty and Social Impacts 59 B. Environmental Aspects 62 C. Implementation, Monitoring and Evaluation 63 D. Fiduciary Aspects 64 E. Disbursements and Audit 66 F. Risks and Risk Mitigation 66 ANNEXES ................................................................................................................................... 69 ANNEX 1. LETTER OF DEVELOPMENT POLICY ............................................................ 69 ANNEX 2. POLICY AREAS, PRIOR ACTIONS AND OUTCOMES ................................. 73 ANNEX 3. FUND RELATIONS NOTE ................................................................................... 76 ANNEX 4. LONGER-TERM CLIMATE CHANGE .............................................................. 77 ANNEX 5: NATURAL DISASTERS AND UNPLANNED URBAN GROWTH ................. 80 ANNEX 6: FOREST MANAGEMENT .................................................................................... 84 ANNEX 7 – PARTICIPATORY PROCESSES ....................................................................... 86 ANNEX 8 - LESSONS LEARNED ........................................................................................... 88 ANNEX 9 – MEXICO AT A GLANCE .................................................................................... 92 ANNEX 10. MAP OF MEXICO ...............................................................................................
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