PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: PIDA24612 Public Disclosure Copy Project Name Pacific Resilience Program (P155257) Region EAST ASIA AND PACIFIC Country Marshall Islands Sector(s) General water, sanitation and flood protection sector (70%), Public administration- Water, sanitation and flood protection (30%) Theme(s) Natural disaster management (60%), Climate change (40%) Lending Instrument Investment Project Financing Project ID P155257 Borrower(s) Republic of the Marshall Islands Implementing Agency Ministry of Finance Environmental Category B-Partial Assessment Date PID Prepared/Updated 14-May-2015 Date PID Approved/Disclosed 14-May-2015 Estimated Date of Appraisal 17-Apr-2015 Completion Estimated Date of Board 19-Jun-2015 Approval Appraisal Review Decision Clearance was given to proceed to appraise the PREP. Public Disclosure Copy (from Decision Note) I. Project Context Country Context The Republic of the Marshall Islands (RMI) is one of the world’s smallest, most isolated and vulnerable nations. RMI is a lower middle-income country with a 2013 GDP of US$190 million, and a per capita GDP of US$3,627. GDP has grown at an average rate of less than 1% per annum in real per capita terms since independence in 1990. The country consists of 29 atolls and five isolated islands (24 of which are inhabited) and has a total land mass of just 181km2, which is set in an ocean area of over 1.9 million km2. The population of the Marshall Islands is estimated at about 53,000, of which over half are resident in the capital city of Majuro. The size and remoteness of RMI increase the costs of economic activity and make it unable to achieve economies of scale. Remoteness also imposes transport expenses that increase the costs of trade, and fundamentally constrains 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. Page 1 of 4 The population of RMI is concentrated on small, low-lying atolls, and this makes RMI vulnerable to natural disasters. The country is vulnerable to occasional typhoons and is already beginning to feel the effects of climate change. Like other low-lying Pacific nations, its 370km coastline (which Public Disclosure Copy is home to 99 percent of the population), renders it particularly susceptible to extreme waves and high tides. Catastrophic risk modelling indicates that RMI is expected to incur, on average, US$3 million per year in losses due to earthquakes and tropical cyclones. In the next 50 years, RMI has a 50% chance of experiencing a loss exceeding US$53 million, and a 10% chance of experiencing a loss exceeding US$160 million . These estimates do not take climate change into account, which contributes to key risks to loss of livelihoods, coastal settlements, infrastructure, ecosystem services and economic stability . Sectoral and institutional Context Despite recent progress in terms of national level plans or policy to respond to disaster and climate risk (i.e. the National Action Plan for Disaster Risk Management, 2008-2018 and the National Climate Change Policy Framework, 2011), translating national climate resilience and DRM policy into sector policies and resilient investments has been a significant challenge. The PREP will complement existing initiatives which aim to minimize the impact of climate change and natural hazards in across the Pacific Region, and in particular, support the continuation and expansion of the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) pilot insurance program, of which RMI is a participant. II. Proposed Development Objectives The objective of the Project is to strengthen the financial protection of the Republic of Marshall Islands. III. Project Description Public Disclosure Copy Component Name Component 1: Strengthening Early Warning and Preparedness Comments (optional) RMI will not be participating in Component 1 Activities during Phase I of the Program. Component Name Component 2: Risk Reduction and Resilient Investments Comments (optional) RMI will not be participating in Component 2 Activities during Phase I of the Program Component Name Component 3: Disaster Risk Financing Comments (optional) This component will build on the Pacific Catastrophe Risk Insurance pilot, which currently offers technical assistance on public financial management of natural disasters to all PICs and a parametric catastrophe risk insurance pool of five participating PICs, including RMI. This component is divided into two sub-components as follows: (i) Disaster risk financing instruments (nationally implemented); and (ii) Development of Mutual Insurance Fund (regionally implemented by PIFS). Component Name Page 2 of 4 Component 4: Project and Program Management Comments (optional) Public Disclosure Copy RMI will not implement any Component 4 activities during the program IV. Financing (in USD Million) Total Project Cost: 1.50 Total Bank Financing: 1.50 Financing Gap: 0.00 For Loans/Credits/Others Amount BORROWER/RECIPIENT 0.00 IDA Grant 1.50 Total 1.50 V. Implementation Given the simplified Project design for RMI, simplified implementation arrangements will be put in place. The Ministry of Finance for RMI and the Ministry of Finance and Economic Management for Vanuatu would act as the implementing agency for Component 3.1.2 andwould provide overall fiduciary oversight for the Project. VI. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Public Disclosure Copy Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ Comments (optional) The project involves financial assistance only. There will be no environmental or social interactions. VII. Contact point World Bank Contact: Denis Jean-Jacques Jordy Title: Senior Environmental Specialis Tel: 5740+6531 / Email: djordy@worldbank.org Contact: Michael Bonte-Grapentin Title: Senior Disaster Risk Managemen Tel: 5740+6491 / Page 3 of 4 Email: mbonte@worldbank.org Borrower/Client/Recipient Public Disclosure Copy Name: Republic of the Marshall Islands Contact: Ms. Maybelline Andon Bing Title: Secretary, Ministry of Finance Tel: 6926257420 Email: mayabing@hotmail.com Implementing Agencies Name: Ministry of Finance Contact: Ms. Maybelline Andon Bing Title: Secretary Tel: (692) 625 8311 Email: mayabing@hotmail.com VIII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Public Disclosure Copy Page 4 of 4