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Document of The World Bank Report No: 21859 NI Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 10.5 MILLION (US$13.5 MILLION EQUIVALENT) TO THE REPUBLIC OF NICARAGUA Public Disclosure Authorized FOR A NATURAL DISASTER VULNERABILITY REDUCTION PROJECT March 8, 2001 Public Disclosure Authorized Environmentally and Socially Sustainable Development Sector Management Unit Finance, Private Sector and Infrastructure Management Unit Central America Country Management Unit Latin America and Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Cordoba (C) 1 C = US$0.08 US$1.00 = 12.9 C FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS CEPREDENAC Centro de Prevenci6n de los Desastres Naturales en America Central (Central American Center for Natural Disaster Prevention) Defensa Civil Civil Defense Agency EN Ejercito Nacional (National Army) FEMA Federal Emergency Management Agency (U.S.) FISE Fondo de Inversi6n Social para Emergencia (Social Emergency Fund) INETER Instituto Nicaraguense de Estudios Territoriales (Institute for Research and Earth Sciences) INIFOM Instituto Nicaraguense de Fomento Municipal (Institute for Municipal Development) MAGFOR Ministerio de Asuntos Agricolas y Forestales (Ministry of Agriculture and Forestry) MARENA Ministerio de Ambiente y Recursos Naturales (Ministry of Environment and Renewable Resources) MED Ministerio de Educaci6n (Ministry of Education) MIDEF Ministerio de Defensa (Ministry of Defense) MIFAMILIA Ministerio de la Familia (Ministry of Family Affairs) MIFIC Ministerio de Fomento, Industria y Comercio (Ministry of Development, Industry and Commerce) MINGOB Ministerio de Gobernaci6n (Ministry of Governance) MINHACP Ministerio de Hacienda y Credito Publico (Ministry of Finance) MINREX Ministerio de Relaciones Exteriores (Ministry of External Affairs) MINSA Ministerio de Salud (Ministry of Health) MTI Ministerio de Transporte e Infraestructura (Ministry of Transportation and Infrastructure) NOAA National Oceanographic and Atmospheric Agency (U.S.) PN Policia Nacional (National Police) PROTIERRA Proyecto Municipios Rurales (Rural Municipalities Project) UCRESEP Unidad de Coordinaci6n de Reforma del Sector Publico (Coordinating Unit for Reform of the Public Sector) USGS United States Geological Survey Vice President: David de Ferranti Country Manager/Director: Donna Dowsett-Coirolo Sector Manager/Director: Danny M. Leipziger and John Redwood Task Team Leader/Task Manager: Tova M. Solo NICARAGUA NATURAL DISASTER VULNERABILITY REDUCTION CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 6 C. Project Description Summary 1. Project components 7 2. Key policy and institutional reforms supported by the project 10 3. Benefits and target population 11 4. Institutional and implementationarrangements 11 D. Project Rationale 1. Project alternatives considered and reasons for rejection 14 2. Major related projects financed by the Bank and other development agencies 15 3. Lessons learned and reflected in proposed project design 16 4. Indications of borrower commitment and ownership 16 5. Value added of Bank support in this project 17 E. Summary Project Analysis i. Economic 17 2. Financial 18 3. Technical 18 4. Institutional 19 5. Environmental 20 6. Social 20 7. Safeguard Policies 21 F. Sustainability and Risks 1. Sustainability 22 2. Critical risks 22 3. Possible controversial aspects 23 G. Main Credit Conditions 1. Effectiveness Condition 23 2. Other 23 H. Readiness for Implementation 24 I. Compliance with Bank Policies 24 Annexes Annex 1: Project Design Summary 25 Annex 2: Detailed Project Description 28 Annex 3: Estimated Project Costs 43 Annex 4: Cost-EffectivenessAnalysis Summary 44 Annex 5: Financial Summary 47 Annex 6: Procurement and Disbursement Arrangements 48 Annex 7: Project Processing Schedule 57 Annex 8: Documents in the Project File 58 Annex 9: Statement of Loans and Credits 60 Annex 10: Country at a Glance 61 Annex 11: Summary History of Natural Disasters in Nicaragua 64 Annex 12: Institutional History of Disaster Management in Nicaragua 66 Annex 13: Comparative Vulnerability Among Nicaraguan Municipalities 73 Annex 14: Donor Activities 77 Annex 15: Gender and Disaster 78 Maps 2 NICARAGUA Natural Disaster Vulnerability Reduction Project Appraisal Document Latin America and Caribbean Region INFDM Date: March 1, 2001 Team Leader: Tova M. Solo Country Manager/Director: Donna Dowsett- Sector Manager/Director:Danny M. Leipziger and John Coirolo Redwood Project ID: P064916 Sector(s): US - Urban Environment Lending Instrument: Specific Investment Loan Theme(s): Environment; Urban (SIL) Poverty Targeted Intervention: N ProjectFinancing Data [1 Loan [X] Credit 1 Grant 1 Guarantee 1 ] Other: For Loans/Credits/Others: Amount(US$m): SDR 10.5 (US$13.5) ProposedTerms: Grace period(years): 10 Yearsto maturity:40 Commitmentfee: Standard: a variable Servicecharge: 0.75% rate between 0 and 0.5% of the undisbursed credit balance set annually by the Executive Directors of IDA BORROWER 2.53 0.02 2.55 IDA 10.01 3.49 13.50 Total: 12.53 3.52 16.05 Borrower. REPUBLICOF NICARAGUA Responsibleagency: Executive Secretariat for Disaster Prevention, Mitigation and Response Address: Av. Bolivar, Busto Simon Bolivar, 1 c. al Norte, 1 c al Este, Edificio Vice-Presidencia, Managua, Nicaragua Contact Person: Arturo Harding Tel: 505-228-6490/6504 Fax: 505-278-4843 Email: [email protected] Estimateddisbursements (Bank FYIUS$M: 2 2' '~~2 3t 2 I .5 Annual 0.80 5.80 5.00 1.90 Cumulative 0.80 6.60 11.60 13.50 Projectimplementation period: 36 Months Expectedeffectiveness date: 09/30/2001 Expectedclosing date: 03/31/2005 CS PAD FI... w.I h, ZC A. Project Development Objective 1. Projectdevelopment objective: (see Annex 1) The developmentobjective of the proposedproject is to improveNicaragua's disaster management capacity by: (a) strengtheninginstitutional capability in disastermanagement at the nationallevel; (b) buildinginstitutional capacity for disastermitigation at the nationallevel; (c) promotingdisaster awareness and "preventivethinking" through public sectoreducation and awareness programs; (d) buildinglocal capacity to managedisaster emergencies, to assessrisk and to identifymitigation measures;and (e) implementingvulnerability reduction and mitigationmeasures at the local level. 2. Key performanceindicators: (see Annex 1) Successin achievingthe project'sdevelopment objective will be assessedby trackingoutcome and impact indicatorsthat measure:increased capacity of the NationalSystem for DisasterPrevention, Mitigation and Response(hereafter "the System"or the "NationalSystem") in performingits assignedfunctions and responsibilities,improved technical knowledge, increased local government capability for disastermanagement, and reducedvulnerability of the populationin highlyvulnerable municipalities. Outcome indicators include, inter alia, a fullyoperational coordinating body for the NationalSystem, namely the ExecutiveSecretariat for DisasterPrevention, Mitigation and Response(hereafter "the Executive Secretariat"), which should have, by the end of the project,adequate human and physicalresources, full fundingof its recurrentcosts fromthe national budgetor independentsources, and clearoperational and proceduralmanuals. Performancelevels of the ExecutiveSecretariat, and the NationalSystem, will be measuredduring the life of the projectthrough the evaluationof selecteddisaster management activities (including emergency simulation exercises, management of the emergencyoperations center, organization of the localdisaster management committees, etc.), the NationalSystem's actual emergency responses (if, unfortunately,the occasionarises), and the work of the NationalSystem's intersectoral and territorial commissions. Projectimpact will be assessedthrough evaluations to measurethe successof the nationaldisaster awareness campaignand the mainstreamingof disasterthemes in formaleducation curricula, on the one hand; andthrouglh impactevaluations of preventiveplanning exercises and mitigationmeasures carried out in the eligible municipalities,on the other. The latter will lookat indicatorssuch as the total numberof peopletargetted in rural and urbanareas, total squarekilometers of hazardousareas protectedfrom future development,total numberof schoolsretrofitted, total cost of investmentper capita,etc. Key outputindicators by componentare detailedin Annex 1. These include,inter alia, the following:key staff of the Secretariatidentified, hired and trainedby the first year of project;new facilitiesfor the Secretariat, includingthe EmergencyOperations Center, readyby third year of project;vulnerability studies and mitigation strategiesdeveloped for Managua,key watershedsand a reviewof buildingcodes leading to developmentof a nationaldisaster mitigation plan by end of project;2000 schoolteachers trained in disasterawareness by end of project;at least 150 localdisaster management committees organized by end of project;hazard and vulnerabilityassessments, identification of mitigationmeasures and preventive planning activities undertaken in at least25 eligiblemunicipalities by end of project;and mitigationmeasures completed in at