January 2019 Catalyzing Urban Resilience 1 BACKGROUND Bigger and Better Investments for a Resilient Future. Rapid urbanization is transforming the planet and the sustainable development and poverty reduction. way we live: each year, about 1.4 million people move However, the lack of financial and technical resources into cities around the globe1, and 90 percent of this could hold cities back from pursuing the vision of a takes place in developing countries. Urbanization, if more resilient future. managed well, can help reduce poverty and increase prosperity, as cities can accelerate growth, attract Established in June 2017, the World Bank Group’s investment, spur innovation and enhance productivi- City Resilience Program (CRP) is driven by the belief ty. Poorly managed urbanization, however, can exac- that a resilient future for our cities is possible. CRP erbate existing challenges and leave cities more aims to empower cities to pursue comprehensive vulnerable to natural hazards. investment programs to strengthen resilience, and to access a broad range of financing options. The greater concentration of people and assets means that the impact of natural disasters and a Strengthening urban resilience is a complicated changing climate can be devastating. The poorer process. CRP works to effectively bring in the broad segments of the economy are particularly vulnerable, set of World Bank Group’s sectoral expertise to help as they tend to settle in hazard-prone areas and lack cities integrate climate and risk scenarios into their the essential safety nets to recover from economic or upstream urban planning. Relying on the advance- environmental shocks. By 2030, without significant ment of geospatial technologies such as remote sens- investment into making cities more resilient, natural ing, CRP breaks the silos of sectors by facilitating disasters may cost cities worldwide $314 billion each spatial planning to allow visually laying out key risk year, and climate change may push up to 77 million information, and factoring climate change scenarios more urban residents into poverty2. Preparing cities into investment planning. for disaster and climate risks is thus fundamental to 1 UN DESA. 2014. “World Urbanization Prospects: The 2014 Revision, Highlights.” 2 “World Bank Group. 2016. Investing in Urban Resilience : Protecting and Promoting Development in a Changing World. World Bank, Washington, DC. © World Bank. https://openknowledge.world- bank.org/handle/10986/25219 License: CC BY 3.0 IGO.” 2 On the other hand, CRP anchors on the World Bank Along its two area of focus, CRP developed two Group’s Maximizing Finance for Development (MfD) support tracks that run in parallel: the Resilience campaign to bring in all sources of financing including Enhancement Track and the Capital Mobilization from the public, Development Finance Institutions Track. Each track takes place in three phases through- and private sectors. CRP acts as the banker of a city, out which cities receive dedicated support along and catalyzes the flow of financial resources to project identification, project design and project emerging markets while boosting the bankability of implementation. investment projects. CRP creates a system to effectively bring technical WBG experts ranging from resilient infrastructure expertise into resilience investment project design. resilience, to flooding risks, to emergency prepared- The aim is to move from the traditional sector-specif- ness connect with cities to explore improved, risk-in- ic, project-specific solution to a comprehensive solu- formed project design. tion that takes into account the interaction between different sectors that comprises resilience. Through- In Phase II, following the Resilience Planning Work- out this process, CRP starts with a spatial approach shop, CRP and WBG technical experts provide tech- and provide a platform for cities to engage with differ- nical assistance in detailed project design and prepa- ent subject matter experts. ration. The objective is to embed a broad set of expertise into the urban planning process to ensure In Phase I of this support track, CRP produces a “City that any investment program is risk-informed and Scan”-a series of maps, visualizations and analysis considers natural hazards and climate change from which spatially lay out the city’s risk information and the design phase. facilities. The “City Scan” is delivered to cities to kickstart the engagement. City leaders, World Bank The final Phase III of the engagement on the techni- task teams and subject matter experts from various cal end culminates in investment project implementa- technical working groups participate in a one-week tion, with CRP assisting the World Bank Group immersive event, the “Resilience Planning Workshop”. project teams with project execution. Figure 1: The City Resilience Scan CLIMATE MITIGATION Calculates project-specific energy and emissions by sector and benchmarks ENABLING ENVIRONMENT for PPPs performance to other cities globally for risk-informed prioritization and planning. Draws upon existing frameworks and policies to identify enabling CITY COMPETITIVENESS & environment for PPPs ECONOMIC GROWTH Identifies the specific nature of opportunities and constraints to city HAZARD RISK INFORMATION growth, competitiveness and poverty reduction Overlays global flood risk data with various information pertaining to the built form and critical infrastructure to identify POPULATION TRENDS risk hotspots for future development Presents some of the key demographic trends of the city –including growth, BUILT FORM density, age and distribution City’s state of infrastructure and service delivery and challenges regarding solid waste management, water and sanitation, and urban public transportation, among others 3 City leaders sometimes lack the expertise to capitalize spectrum of private capital instruments available and on existing assets or take advantage of risk-mitigating to identify key barriers that cities face in accessing the and capital enhancing mechanisms. As a result, different types of private capital instruments. This although there is strong interest to invest in infra- first phase of preliminary analyses culminates in the structure in emerging markets, investors face difficul- participation of city delegations in a one-week “Finan- ties in deploying their capital because of the cial Solutions Marketplace” where city officials expand perceived risks, high transaction costs and a scarcity their toolbox of financial instruments, exchange ideas, of well-prepared projects. CRP works with multilateral and most importantly, develop and refine viable trans- development banks and other Development Financ- action options for city resilience with private capital ing Institutions to crowd in financial resources for experts and financial advisors. cities. In addition, CRP facilitates access to private sector financing, through three modalities: borrowing In Phase II , CRP contracts cities with a sufficiently from capital markets and commercial sources (direct mature investment idea. Cities receive dedicated lending), concessions /PPP and mobilizing equity and financial advisory services to help with project priori- innovative financing instruments through Land Value tization, market sounding and pitching, valuation and Capture (LVC). CRP is further expanding the applica- financial modeling; review of regulatory gridlocks and tion of risk mitigation tools such as guarantees to institutional environment, etc. provide incentives for private sector participation. During the final stage Phase III, CRP assists project In Phase I, CRP conducts a benchmark analysis- the teams with the private capital transaction execution, “Rapid Capital Assessment” - that outlines a city’s and focuses on increasing investors’ confidence by underlying conditions and enabling environment for exploring a suite of risk-mitigation tools such as guar- accessing private sector financing. It serves as a antees or credit enhancements to boost the “bank- conversation starter with city officials to describe the ability” of projects. Figure 2: Capital Mobilization Mechanism CRP ect Investors Proj on t or ati Pa pp fic rt ne ure Su denti r uct l I Str Dea re ctu Stru eal World Bank Financial D Project for Advisors ns ing p tio Rais Pro O ital p je ct Ca n re Ide tio n ructu Fin a nti n saccatio ast nce Inf fica tio Tra ntifi Infr ra str n Ide ance uct Fin ure Cities World Bank project BAU* City capital raising BAU CRP added value *Business As Usual 4 In FY17, CRP has developed active engagements with engage the city and respective World Bank Group 45 cities in all regions across the globe. Two cohorts projects teams in a more detailed investment identifi- of about 20+ cities each were directly engaged in cation process. Phase I of the Capital Mobilization Track, of which 12 across Latin America, Asia and Africa have already In FY18, a cohort of 11 African cities engaged in moved to Phase II where dedicated financial advisors Phase I of the Resilience Enhancement Track. work together with CRP private sector experts to In 2017, CRP secured financial contribution from the Spanish Agency for International Development Coop- Swiss (SECO) and Austrian government, as well as the eration (AECID) successfully partnered on a program Global Facility for Disaster Reduction and Recovery proposal to access resources from the EU External (GFDRR). CRP further formalized a partnership with Investment Plan (EIP) to source, originate and execute the Global Covenant of Mayors with the official transactions in Sub-Saharan Africa and the European partnership announcement at the One Planet Summit neighborhood. in Paris on Dec. 12, 2017. In 2018, CRP and the For more information: https://www.gfdrr.org/en/city-resilience-program