document of the world bankdocuments.worldbank.org/curated/en/116561468282846163/pdf/nonas… ·...

Document of

The World Bank

Report No: 73042-HN

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR19.5 MILLION

(US$ 30 MILLION EQUIVALENT)

TO THE

REPUBLIC OF HONDURAS

FOR A

DISASTER RISK MANAGEMENT PROJECT

November 7, 2012

Sustainable Development Central America Country Management Unit Latin America and Caribbean Region 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.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

(Exchange Rate Effective October 24, 2012)

Currency Unit = Honduran Lempira HNL 19.65 = US$1

US$1.54 = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AECID Agencia Española de Cooperación Internacional para el Desarrollo (Spanish

International Cooperation Agency) AMHON Asociación de Municipios de Honduras (Association of Honduran Municipalities) CAH Colegio de Arquitectos de Honduras (National Association of Architects) CAPRA Central American Probabilistic Risk Assessment CAT DDO Disaster Risk Management Development Policy Loan with Catastrophe Deferred Draw

Down Option CCIVS Comisión de Control de Inundaciones del Valle de Sula (Flood Control Commission of

the Sula Valley) CICH Colegio de Ingenieros Civiles de Honduras (National Association of Civil Engineers) CERC CODEL

Contingency Emergency Response Component Comité de Emergencia Local (Local Committee for Emergency Response)

CODEM Comité de Emergencia Municipal (Municipal Committee for Emergency Response) COMOT Comité Municipal de Ordenamiento Territorial (Municipal Land Use Committee) COPECO Comisión Permanente de Contingencias (Honduran Disaster Risk Management Agency) COSUDE Swiss Agency for Development and Cooperation CPS Country Partnership Strategy DDI Disaster Deficit Index DPL Development Policy Loan DRM Disaster Risk Management ESMF Environmental and Social Management Framework FMA Financial Management Assessment FONAPRE Fondo Nacional de Preparación y Respuesta a Emergencias (National Fund for the

Prevention and Response to Emergencies) GDP Gross Domestic Product GNI Gross National Income GoH Government of Honduras ICR Implementation Completion and Results Report IDA International Development Association IDB Inter-American Development Bank INE Instituto Nacional de Estadística (National Statistical Institute) IP Instituto de Propiedad (Property Institute) IPPF Indigenous Peoples Planning Framework

IRM Immediate Response Mechanism JICA Japan International Cooperation Agency MCPTGR Metodología de Caracterización y Planeamiento Territorial para la Gestión de Riesgos

(Characterization and Territorial Planning with Disaster Risk Management Methodology) MNIGRD Mesa Nacional de Incidencia de la Gestión de Riesgos (National Table for Promoting

DRM) PATH Programa de Administración de Tierras de Honduras (Honduras Land Administration

Program) PCC Project Coordination Committee PCU Project Coordination Unit PEM Plan de Emergencia Municipal (Municipal Emergency Plan) PMDN Proyecto de Mitigación de Desastres Naturales (Natural Disaster Mitigation Project) PMGR Plan Municipal de Gestión de Riesgos (Municipal Disaster Risk Management Plan) PMOT Plan Municipal de Ordenamiento Territorial (Municipal Land Use Plan) RENOT Registro Nacional de Normativas de Ordenamiento Territorial (Territorial Planning

Norms Registry) SDR Special Drawing Rights SE Secretaría de Educación (Ministry of Education) SEDINAFRO Secretaría de Desarrollo de los Pueblos Indígenas y Afrohondureños (Ministry of

Indigenous and Afro-Honduran Peoples) SEFIN Secretaría de Finanzas (Ministry of Finance) SEIP Secretaría del Interior y Población (Ministry of the Interior and Population) SEPA Sistema de Ejecución de Planes de Adquisiciones (Procurement Plans Execution System) SEPLAN Secretaría Técnica de Planificación y Cooperación Externa (Ministry of Planning and

External Cooperation) SERNA Secretaría de Recursos Naturales y Ambiente (Ministry of Natural Resources and

Environment) SIAFI Sistema de Administración Financiera Integrada (System for Integrated Financial

Administration) SINAGER Sistema Nacional de Gestión de Riesgos (National System for Risk Management) SINAP Sistema Nacional de Administración de la Propiedad (National Property Administration

System) SINIT Sistema Nacional de Información Territorial (National Territorial Information System) UEPEX Módulo Especial para Unidades Ejecutoras de Proyectos con Financiamiento Externo

(Special Module for Project Implementing Units with External Financing) UNAH Universidad Nacional Autónoma de Honduras (National Autonomous University of

Honduras) UNDP United Nations Development Program UNISDR United Nations International Strategy for Disaster Reduction USAID United States Agency for International Development

Regional Vice President: Hasan A. Tuluy

Country Director: Carlos Felipe Jaramillo Sector Director: Ede J. Ijjasz-Vasquez Sector Manager: Anna Wellenstein

Task Team Leaders: Enrique Pantoja / Ana Campos García

HONDURAS

Disaster Risk Management Project

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT .................................................................................................1

A. Country Context ............................................................................................................ 1

B. Sectoral and Institutional Context ................................................................................. 2

C. Higher Level Objectives to which the Project Contributes ............................................ 3

II. PROJECT DEVELOPMENT OBJECTIVES ................................................................3

A. PDO............................................................................................................................... 3

B. Project Beneficiaries ...................................................................................................... 4

C. PDO Level Results Indicators ........................................................................................ 4

III. PROJECT DESCRIPTION ..............................................................................................5

A. Project Components ...................................................................................................... 5

B. Project Financing .......................................................................................................... 7

C. Lending Instrument ........................................................................................................ 7

D. Project Cost and Financing ............................................................................................ 7

E. Lessons Learned and Reflected in the Project Design .................................................. 8

IV. IMPLEMENTATION .......................................................................................................9

A. Institutional and Implementation Arrangements .......................................................... 9

B. Results Monitoring and Evaluation .............................................................................. 9

C. Sustainability............................................................................................................... 10

V. KEY RISKS AND MITIGATION MEASURES ..........................................................10

A. Risk Ratings Summary Table ..................................................................................... 10

B. Overall Risk Rating Explanation ................................................................................ 10

VI. APPRAISAL SUMMARY ..............................................................................................12

A. Economic and Financial Analyses .............................................................................. 12

B. Technical ..................................................................................................................... 12

C. Financial Management ................................................................................................ 13

D. Procurement ................................................................................................................ 13

E. Social (including Safeguards) ..................................................................................... 13

F. Environment (including Safeguards) .......................................................................... 15

ANNEXES

Annex 1: Results Framework and Monitoring…………………………………………………...17

Annex 2: Detailed Project Description…………………………………………………………..23

Annex 3: Implementation Arrangements………………………………………………………...32

Annex 4: Operational Risk Assessment Framework………………………………………….....54

Annex 5: Implementation Support Plan………………………………………………………….60

Annex 6: Sectoral and Institutional Context……………………………………………………..62

Annex 7: Strategic Approach for Improving Honduras’ Emergency Response Capacity……….69

Annex 8: Economic, Financial and Fiscal Analyses......................................................................73

Annex 9: Map IBRD 39653 and Map IBRD 39654……………………………………………..83

.

PAD DATA SHEET

Honduras

Disaster Risk Management Project (P131094) PROJECT APPRAISAL DOCUMENT

.

Latin America and Caribbean Region

LCSDU

Report No.: PAD361 .

Basic Information

Project ID Lending Instrument EA Category Team Leaders

P131094 Specific Investment Loan

B - Partial Assessment Enrique Pantoja / Ana Campos Garcia

Project Implementation Start Date Project Implementation End Date

01-May-2013 30-Oct-2018

Expected Effectiveness Date Expected Closing Date

01-May-2013 30-Apr-2019

Joint IFC

No

Sector Manager Sector Director Country Director Regional Vice President

Anna Wellenstein Ede Jorge Ijjasz-Vasquez Carlos Felipe Jaramillo Hasan A. Tuluy .

Borrower: Republic of Honduras

Responsible Agency: Comision Permanente de Contingencias (COPECO)

Contact: Lisandro Rosales Banegas Title: Minister-Commisioner

Telephone No.: 504-2229-0606 Email: [email protected] .

Project Financing Data(US$M)

[ ] Loan [ ] Grant [ ] Other

[ X ] Credit [ ] Guarantee

For Loans/Credits/Others

Total Project Cost (US$M): 30.00

Total Bank Financing (US$M): 30.00

.

mailto:[email protected]

Financing Source Amount(US$M)

BORROWER/RECIPIENT 0.00

International Development Association (IDA) 30.00

Total 30.00 .

Expected Disbursements (in USD Million)

Fiscal Year 2013 2014 2015 2016 2017 2018 2019 0000 0000

Annual 0.30 2.00 3.20 4.00 5.00 4.20 11.30 0.00 0.00

Cumulative 0.30 2.30 5.50 9.50 14.50 18.70 30.00 0.00 0.00 .

Project Development Objective(s)

The Project Development Objectives are to support Honduras to: (a) continue strengthening its capacity for integrated disaster risk management at the municipal and national level; and (b) improve its capacity to respond promptly and effectively to an Eligible Emergency.

.

Components

Component Name Cost (USD Millions)

Strengthening of National-level DRM Capacities 2.20

Strengthening of Municipal and Community-level DRM Capacities

2.90

Implementation of Mitigation Measures 13.05

Project Management, Monitoring and Evaluation 1.85

Contingency Emergency Response Component 10.00 .

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects?

Yes [ ] No [ X ]

.

Does the project require any waivers of Bank policies? Yes [ ] No [ X ]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X .

Legal Covenants

Name Recurrent Due Date Frequency

Establishment of Project Coordination Unit (PCU)

X Yearly

Description of Covenant

Sch. 2, Section I, A.1 (a) The Recipient shall cause COPECO, to operate and maintain during the Project implementation, a Project Coordination Unit (“PCU”), with functions, staffing (including but not limited to a national coordinator), and responsibilities satisfactory to the Association and set forth in the Operational Manual.


PCU Staff Hiring and Performance Evaluation

X Yearly


Sch. 2, Section I, A. 1(b) The Recipient undertakes that, unless the Association may otherwise agree, the PCU personnel shall only be hired based on professional criteria and shall only be replaced for reasons related to performance.


Establishment of Project Coordination Committee

01-Nov-2013


Sch. 2, Section I, A.1 (c) No later than six months after the Effective Date, the Recipient shall create and thereafter operate and maintain throughout the implementation of the Project, a committee (“Project Coordinating Committee”), chaired by COPECO, and with composition, functions and responsibilities acceptable to the Association and specified in the Operational Manual


Participation Agreements between COPECO and selected municipalities

X Yearly


Sch. 2, Section I, C.2 (a) With respect to the implementation of Parts 2 and 3 of the Project, prior to the carrying out of any Project activity in any given Selected Municipality, the Recipient shall cause COPECO to enter into an agreement ("Participation Agreement") with such Selected Municipality under terms and conditions satisfactory to the Association, as set forth in the Operational Manual


Safeguard Instruments X Monthly


Sch. 2, Section I, G.1 The Recipient shall carry out Parts 1 through 4 of the Project in accordance with the Resettlement Policy Framework, the Environmental and Social Management Framework and the Indigenous Peoples Planning Framework


Retroactive Financing X Yearly

Sch. 2, Section IV, B.1(a) Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement, except that withdrawals up to: (i) an aggregate amount not to exceed 20% of the amount allocated to Category (1) may be made for payments made prior to this date but on or after September 1, 2012 for Eligible Expenditures under Category (1); or (ii) an aggregate amount not to exceed 40% of the amount allocated to Category (2) may be made for payments made prior to this date but on or after September 1, 2012, for Eligible Expenditures under Category (2). .

Conditions

Name Type

Credit Effectiveness Effectiveness

Description of Condition

Art. V, 5.01 – The Additional Conditions of Effectiveness consist of the following: (a) The Subsidiary Agreement (to be signed by the Ministry of Finance and COPECO) has been executed on behalf of the parties thereto; (b) The Co-execution Agreements have been executed on behalf of the parties thereto; and (c) The Additional Legal Matter consists of the following, namely that the Subsidiary Agreement has been duly authorized or ratified by the Recipient and COPECO, and is legally binding upon the Recipient and COPECO in accordance with its terms.

Name Type

Withdrawals for Part 5 Disbursement

Description of Condition

Sch. 2, Section IV, B(2) – No withdrawal shall be made under Category (2), for Emergency Expenditures under Part 5 of the Project, unless and until the Association is satisfied, and notified the Recipient of its satisfaction, that all of the following conditions have been met in respect of said activities: (a) the Recipient has determined that an Eligible Emergency has occurred, has furnished to the Association a request to include said activities in the CER Part in order to respond to said Eligible Emergency, and the Association has agreed with such determination, accepted said request and notified the Recipient thereof; (b) the Recipient has prepared and disclosed all safeguards instruments required for said activities, and the Recipient has implemented any actions which are required to be taken under said instruments, all in accordance with the provisions of Section I E. 3 F of this Schedule; (c) the Recipient’s Coordinating Authority has adequate staff and resources, in accordance with the provisions of Section I E. 2 of this Schedule, for the purposes of said activities; and (d) the Recipient has adopted the CER Operational Manual in form, substance and manner acceptable to the Association and the provisions of the CER Operational Manual remain - or have been updated in accordance with the provisions of Section I F of this Schedule 2 so as to be appropriate for the inclusion and implementation

of said activities under the CER Part.

Team Composition

Bank Staff

Name Title Specialization Unit

Teresa M. Roncal Operations Analyst Operational Planning LCSAR

Jelena Pantelic Senior Operations Officer

DRM and Urban Planning

AFTN2

Patricia De la Fuente Hoyes

Senior Finance Officer Financing Arrangements and Disbursements

CTRLN

Ketty Morales Language Program Assistant

Program Support LCSAR

Enrique Pantoja Sr Land Administration Specialist

Co-Team Leader LCSAR

Jason Jacques Paiement Social Development Specialist

Social Development LCSSO

Anemarie Guth Proite Procurement Specialist Procurement LCSPT

Zoe Elena Trohanis Sr Urban Spec. Peer Reviewer LCSUW

Noris Janeth Salinas Reyes

Team Assistant Program Support LCCHN

Jose Simon Rezk Financial Management Specialist

Financial Management LCSFM

Ana Campos Garcia Senior Disaster Risk Management Specialist

Co-Team Leader LCSDU

Jimena Garrote Counsel Legal LEGLE

Tuuli Johanna Bernardini

Environmental Specialist Environment LCSEN

Vica Rosario Bogaerts E T Consultant Peer Reviewer GFDRR

Non Bank Staff

Name Title Office Phone City

Reina Altagracia Zavala Castro

Municipal Strengthening Tegucigalpa

Margarita Arguello Inter-Institutional Coordination

Managua

Sandramaria Sanchez Environmental Safeguards

Managua

Silvia Rocha Social Safeguards and Gender

Managua

Maria Manuela Faria Communication Washington, DC

Carlos Gallegos Operational Planning Tegucigalpa

Gisela Durand Budgeting and Planning Washington, DC

Pablo Pastor Donor Coordination Tegucigalpa

Stamatis Kotouzas Technical and Operational Analysis

Washington, DC

Fernando Galeana M&E Specialist Washington, DC

Omar Dario Cardona Peer Reviewer Manizales

Tova Solo Peer Reviewer Washington, DC .

Locations

Country First Administrative Division

Location Planned Actual Comments

Honduras Departamento de Yoro

Departamento de Yoro

X

Honduras Departamento de Santa Barbara

Departamento de Santa Barbara

X

Honduras Departamento de Cortes

Departamento de Cortes

X

Honduras Departamento de Atlantida

Departamento de Atlantida

X

.

Institutional Data

Sector Board

Urban Development .

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Water, sanitation and flood protection Flood protection 35

Public Administration, Law, and Justice

Sub-national government administration

35

Public Administration, Law, and Justice

Central government administration

20

Information and communications Telecommunications 10

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. .

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Social protection and risk management Natural disaster management 60

Public sector governance Decentralization 20

Urban development Other urban development 20

Total 100

1

I. STRATEGIC CONTEXT

A. Country Context

1. Honduras is a lower-middle income country (GNI per capita of US$1,970 in 2011)1 facing significant poverty and development challenges, which are aggravated by its high vulnerability to natural disasters. The country is the second largest in Central America with an area of 112,492 square kilometers and the second most populated with approximately 8.0 million people, almost half of whom live in urban areas. In 2010, 66.2 percent of the country’s population lived in poverty, and 45.3 percent lived in extreme poverty (based on income measures).2 Since the 2008-2009 global economic crisis Honduras has experienced a moderate recovery, propelled by public investments, exports, and higher remittances. Economic recovery is reflected in GDP growth of 2.8 percent in 2010 and 3.6 percent in 2011. Despite global uncertainties, Honduras’ growth outlook remains positive and the economy is expected to grow 3.6 percent in 2012. 2. Government efforts to reduce poverty and sustain economic growth have been hindered by the country's high vulnerability to disasters, especially hurricanes, tropical storms and associated impacts such as flooding and landslides. In addition, earthquake activity has not been uncommon in the country. Globally, Honduras ranks 9th among countries at relatively high mortality risk from exposure to two or more natural hazards.3 Hurricane Mitch in 1998, the worst natural disaster in the country's recent history, affected 90 percent of its territory, resulting in over 5,700 dead and 8,000 missing, and almost half a million people displaced. Mitch’s overall damage amounted to nearly 40 percent of GDP, including agricultural losses of 70 to 80 percent. Subsequent extreme meteorological events4 seem to suggest that Honduras’ disaster vulnerability is on the rise. Importantly, Honduras is among the countries in the region with highest economic losses due to smaller and more geographically concentrated disasters. Between 1980 and 2010, over 15,000 people were killed and over 4 million were affected by disasters in the country, while economic damage amounted to US$4.5 billion.5

3. In addition to poverty levels, rapid urbanization6 and environmental degradation7 render the country particularly vulnerable to natural hazards. The effects of increasing climate variability further aggravate Honduras’ disaster risk. The combined effect of the aforementioned challenges is reflected by the indicators of disaster risk and risk management developed by the Inter-American Development Bank (IDB).8 For example, Honduras was ranked first in the Disaster Deficit Index (DDI) with a score of 6.96, which means that extreme disasters may

1 Estimate in current US$ (Atlas Method), World Development Indicators database 2 Honduran National Statistic Institute (INE), http://www.ine.gob.hn/drupal/node/123 3 World Bank Group. Natural Disasters Hotspots: A Global Risk Analysis. 2005. (DRM Series No. 5). 4 These include Hurricanes Michelle (2002) and Beta and Gamma (2005), tropical depression 16 (2008), and tropical storm Agatha (2010). 5 EM-DAT: The OFDA/CRED International Disaster Database, Université catholique de Louvain, Brussels, Belgium 6 The average urban population growth rate for 2010-2015 is expected to be 3.03 percent (UN Habitat). 7 Environmental degradation has been intensified by deforestation, farming of marginal lands, soil erosion due to haphazard development, and mining activities in environmentally sensitive areas. 8 Inter-American Development Bank. “Indicators of Disaster Risk and Risk Management, Program for Latin America and the Caribbean”, Technical Note: IDB-TN-169, September 2010.

http://www.ine.gob.hn/drupal/node/123

2

overwhelm the Government’s economic ability to cope with losses by seven times.9 At the same time, Honduras’ Risk Management Index (RMI), which measures progress on policy related to risk identification, reduction, management, and governance and financial protection, was estimated to be 30.24 (in a scale of 0 to 100). Overall, these indices highlight the country’s need to continue strengthening its national and local disaster risk management (DRM) capacity, and the important role that development institutions like the World Bank can play in this effort.

B. Sectoral and Institutional Context

4. Honduras has demonstrated its commitment to improving DRM capacity, including preparedness and reducing disaster vulnerability. At the national level, there are advances in institutional capacity and coordination, building on a more consolidated legal framework for DRM. With support from the Bank-financed Natural Disaster Mitigation Project (PMDN, P064913)10 and other donors, key agencies such as the Honduran Disaster Risk Management Agency (COPECO) and the Ministry of Natural Resources and Environment (SERNA) have been strengthened. PMDN also assisted the preparation and passage of the 2009 law establishing Honduras’ formal disaster risk management system (SINAGER). At the same time, the country has made progress in risk information and knowledge by improving its hydrometeorological forecasting accuracy and timeliness through the integration of national monitoring, forecasting and decision support systems. 5. Honduras has also made progress in DRM at the local level through the participation of local officials and communities in relevant risk analyses and preparation of Municipal Land Use Plans (PMOTs), Municipal Disaster Risk Management Plans (PMGRs), and Municipal Emergency Plans (PEMs) based on an innovative participatory methodology. Coordination between the national, municipal, and local level, as well as information exchange within the national emergency response network, has been effectively promoted through the establishment of Municipal Committees for Emergency Response (CODEMs) and Local Committees for Emergency Response (CODELs).

6. The above progress notwithstanding, Honduras still faces several challenges, which, as detailed in Annex 6, include: (a) furthering institutional and policy consolidation within the framework of the SINAGER law and the new regional planning approach based on watersheds, especially considering the capacity strengthening needs of COPECO and the recently created Ministry of Planning and External Cooperation (SEPLAN); (b) focusing attention on environmental sustainability issues for DRM in the light of increasing climate variations which demand a more holistic understanding of the factors affecting disaster risk; (c) generating information and knowledge on disaster risk and vulnerability at the regional and local level to facilitate decision making and community engagement; (d) improving local capacity for DRM and promoting it within a forward-looking territorial planning framework that ensures sustainability of DRM investments and prevents settlement of high-risk areas; (e) adopting risk financing strategies and mechanisms to reduce fiscal vulnerability; and (f) developing risk

9 A DDI greater than 1.0 reflects the country’s inability to cope with extreme disasters even by going into as much debt as possible. A higher DDI denotes a greater gap between losses and the country’s economical ability to face them. 10 PMDN was implemented between 2000 and 2010 at a total cost of US$24.0 million, including two IDA Credits, several trust funds and government counterpart financing.

3

reduction strategies for key economic and infrastructure sectors to promote sustainable development. The Project will help Honduras address these challenges, in close coordination with complementary efforts supported by the Bank and other development partners.

C. Higher Level Objectives to which the Project Contributes

7. The proposed Project is consistent with the World Bank Group’s Country Partnership Strategy IDA/R2011-0309 (Report No. 63370-HN) discussed by the Executive Directors on December 6, 2011. The CPS, covering the FY2012-2014 period, has three strategic objectives: (i) improving citizen security, (ii) expanding opportunities through reducing vulnerabilities, and (iii) enhancing good governance. The proposed Project falls primarily under the second strategic objective, but also contributes to good governance by promoting citizen participation in local planning and decision-making. The Bank is uniquely positioned to support DRM at national and local levels, considering its global knowledge and experience as well as the strong DRM partnership it has forged with Honduras since Hurricane Mitch. Accordingly, the proposed operation follows the CPS emphasis on local planning capacity building to promote decentralization, while also financing relatively small yet high-impact DRM measures. 8. The Bank’s engagement in Honduras takes into consideration overlapping risks such as climatic, crime and violence, poverty, and social exclusion. The proposed Project would complement the country program, building on PMDN’s satisfactory outcomes and on ongoing efforts such as the Bank-financed Second Phase of the Land Administration Program (PATH II, P106680) and Barrio Ciudad Project (P088319), as well as the proposed Safer Municipalities Project (P130819). The Project would, at the same time, complement sectoral and regional initiatives such as the Central America Probabilistic Risk Assessment (CAPRA); the Climate Change Adaptation Planning in Latin American and Caribbean Cities; the DRM assessment of safe drinking water and sanitation in Central America; and agricultural risk management including technical assistance on the design of weather index insurance.

9. The proposed Project is also aligned with the Country Vision for 2010-2038 and the National Plan for 2010-2022, both of which build on the 2003 and 2008 Poverty Reduction Strategy documents. The Honduran Congress approved in January 2010 both the Country Vision and the National Plan, each of which contain pertinent provisions for DRM, elevating them to national laws. The Vision and the Plan recognize the links between environmental degradation, high poverty levels and increased vulnerability to natural disasters. The National Plan includes goals and objectives directed to strengthening resilience, mitigating risks, and strengthening the DRM legal, institutional and planning frameworks as well as enforcement mechanisms. The Country Vision seeks to achieve these objectives by consolidating regional development under an environmentally sustainable process.

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

10. The Project Development Objectives (PDOs) are to support Honduras to: (a) continue strengthening its capacity for integrated disaster risk management at the municipal and national level; and (b) improve its capacity to respond promptly and effectively to an eligible emergency.

4

On the foundations of PMDN, the first objective will be achieved through DRM mainstreaming and consolidation of institutions and policy-making, and enhanced coordination between central institutions and key local actors, with a focus on community participation and social inclusion, technical quality, and environmental sustainability. Moreover, to meet the first objective, the Project will initially focus on municipalities within Region 1 (Sula Valley),11 reflecting the National Plan’s regionalization based on the country’s main watersheds.12 In addition, the second objective will be achieved through a specific Contingency Emergency Response Component (CERC) and by helping to make operational the Immediate Response Mechanism (IRM) that would enable Honduras to have fast access to financial resources in the event of an emergency.

B. Project Beneficiaries 11. The Project’s direct beneficiaries include: (a) local, mainly poor communities from participating municipalities, which would benefit from emergency preparedness and response capacity strengthening, knowledge on local risks, emergency and risk mitigation plans, and mitigation investments; (b) selected municipalities, which would receive support for disaster preparedness and response, risk and vulnerability mapping, preparation of land use plans, identification and prioritization of mitigation measures, and design, supervision and financing of mitigation measures; and (c) national agencies dealing with DRM such as COPECO, SEPLAN, and SERNA, which would benefit, inter alia, from technical assistance, equipment, and training. 12. More generally, the Project is expected to benefit the population of the country through the strengthening and institutionalizing of DRM, and the increased financial capacity to respond to emergencies through the CERC and the IRM.

C. PDO Level Results Indicators 13. The Project will result in increased local and national DRM capacity and coordination, and by improving disaster risk knowledge and awareness, will help consolidate a culture of prevention in selected municipalities. It will also help reduce local vulnerability through a proven participatory methodology including ecosystem-based risk and vulnerability analysis, territorial planning, and prioritizing and investing in mitigation. Accordingly, the following key results are expected:

• Total number of direct project beneficiaries (including % of women) [CORE INDICATOR].

• At least 70% of a representative sample of direct project beneficiaries (and 70% of sampled female beneficiaries) are satisfied with COPECO’s DRM Project activities.

• At least 16 selected municipalities have adopted Municipal Disaster Risk Management Plans (PMGRs), Municipal Land Use Plans (PMOTs) and Municipal Emergency Plans (PEMs) based on the Project’s participatory methodology.

• At least 90% of mitigation measures financed by the Project are evaluated independently

11 In 2010, this region’s population was estimated by the Honduran National Statistical Institute (INE) to be over 2,000,000 (or 25.3 per cent of total population) living across 20 municipalities, including San Pedro Sula, the country’s second largest city. 12 Additional municipalities may be considered during project implementation if agreed between the Government and the Bank based on the municipal participation criteria described in the Operational Manual.

5

as technically, economically and environmentally sound. • Time taken to disburse funds requested by Government for an eligible emergency (target

of four weeks).

III. PROJECT DESCRIPTION

A. Project Components

14. The Project consists of the following five components (see Annex 2 for further details): Component 1: Strengthening of National-level DRM Capacities (US$2.20 million) 15. Sub-Component 1.1: Strengthening SEPLAN’s territorial planning capacity, through, inter alia: (a) the provision of training and acquisition of equipment and software for territorial planning; (b) the consolidation and connectivity of the National Territorial Information System (SINIT) and the Territorial Planning Norms Registry (RENOT) under the National Property Administration System (SINAP); and (c) the update and dissemination of a standardized methodology for territorial planning. 16. Sub-Component 1.2: Strengthening COPECO’s coordination and promotion capacity for DRM, through, inter alia: (a) the carrying out of assessments, policy analysis, training and South-South knowledge exchanges to consolidate Honduras’ DRM policy and strategy; (b) the development and implementation of a Communication Strategy; (c) the establishment of a grievance redress mechanism and carrying out of social audits of relevant Project activities; and (d) the establishment of new offices, including the carrying out of works, and the acquisition of software, hardware, and computer and office equipment.

17. Sub-Component 1.3: Strengthening COPECO’s technical quality assurance and environmental sustainability capacity, through, inter alia: (a) the preparation and dissemination of a good practice environmental code for DRM; (b) the development of a proposed update of the national construction code; (c) the establishment of an environmental management unit within COPECO; and (d) the carrying out of studies in connection to climate change and environmental sustainability.

18. Sub-Component 1.4: Strengthening Honduras’ DRM monitoring and modeling capacity, by: (a) supporting COPECO, through, inter alia: (i) the consolidation of early warning systems for landslides and of the metropolitan wireless network, including: (A) the acquisition of monitoring and communication equipment; (B) the provision of training; and (C) the development of early warning protocols; (ii) the establishment of a seismic monitoring network; and (iii) the provision of training on probabilistic hazard and disaster risk modeling; and (b) supporting SERNA, through, inter alia, the acquisition of software and equipment, and the provision of training on hydrological and hydraulic modeling. Component 2: Strengthening of Municipal and Community-level DRM Capacities (US$2.90 million)

6

19. Sub-Component 2.1: Enhancing municipal and local DRM capacity, through, inter alia: (a) the strengthening of the institutional capacity of the selected municipalities’ emergency committees, including the provision of training and acquisition of equipment; (b) the strengthening of the technical and environmental units within the selected municipalities, including the provision of training and acquisition of software and equipment; and (c) the carrying out of emergency simulation exercises to monitor and evaluate local preparedness and response capacities. 20. Sub-Component 2.2: Developing territorial planning and characterization for local risk management, through, inter alia: (a) the update, revision, and/or development of risk and land use characterization studies and territorial planning in the selected municipalities, including the preparation of PMGRs, PMOTs and PEMs; and (b) the development of COPECO’s DRM information system and database management, including the provision of training and acquisition of software and equipment.

21. Sub-Component 2.3: Institutionalizing local risk management, through, inter alia: (a) the validation of municipal plans and other related information with relevant stakeholders in selected municipalities; and (b) the carrying out of outreach activities with local authorities, civil society and private sector associations to promote the Project’s DRM approach and its sustainability, including workshops.

22. Sub-Component 2.4: Updating and implementing local and regional early warning systems, through, inter alia: (a) the acquisition of monitoring and communication equipment; and (b) the provision of training and development of early warning protocols. Component 3: Implementation of Mitigation Measures (US$13.05 million) 23. Sub-Component 3.1: Design of prioritized structural works and prioritized non-structural measures. The mitigation measures to be financed under the Project will be identified and prioritized through the participatory methodology implemented under Component 2 (and summarized in Annex 2, Section B). 24. Sub-Component 3.2: Carrying out of prioritized structural works, including their supervision. Structural works would include physical construction to reduce or avoid possible impacts of hazards, or application of engineering techniques to achieve hazard-resistance and resilience in structures or systems (i.e., small riverbank protection, drainage canal-bridges, and rain water drainage.)

25. Sub-Component 3.3: Carrying out of prioritized non-structural measures, including their supervision. Non-structural measures are activities which do not involve physical construction and use knowledge or practices to reduce risks and impacts (i.e., awareness raising, management plans, training and education). Component 4: Project Management, Monitoring and Evaluation (US$1.85 million) 26. Sub-Component 4.1: Supporting Project Management, through, inter alia: (a) the

7

provision of training and workshops; (b) the carrying out of the fiduciary aspects of the Project, including audits and (c) the oversight of the implementation of a communication strategy and a gender strategy for the Project. 27. Sub-Component 4.2: Supporting Project monitoring and evaluation, including the collection of base line data to assess the Project's social, environmental, and economic impacts. Component 5: Contingency Emergency Response Component – CERC (US$ 10.00 million) 28. Providing immediate response to an eligible emergency. 29. This component will finance public and private sector expenditures on a positive list of goods, both domestic and imported, and/or specific works, goods, services (including audit costs) and emergency operation costs required for Honduras’ emergency recovery. A specific Operational Manual will apply to this component, detailing financial management, procurement, safeguard and any other necessary implementation arrangements. In addition, the Project will help to make operational the IRM explained in detail in Annex 7, Section D.

B. Project Financing

Lending Instrument 30. The Project will be financed through an IDA Credit, including 100 percent financing of total eligible Project expenditures. At the request of the Government, the Credit will also include retroactive financing of up to 20 percent for Components 1 through 4, and up to 40 percent of the total amount allocated to Component 5 (as per OP/BP 8.00 – Rapid Response to Crises and Emergencies). Project Cost and Financing

Project Components Project cost

(US$ m) IDA Financing

(US$ m) % Financing

1. Strengthening of National-Level DRM Capacities 2. Strengthening of Municipal and Community-Level DRM Capacities 3. Implementation of Mitigation Measures 4. Project Management, Monitoring and Evaluation 5. Contingency Emergency Response Component

2.20

2.90

13.05

1.85 10.00

2.20

2.90

13.05

1.85

10.00

100 100 100 100 100

Total Project Costs

Total Financing Required

30.00 30.00

30.00 30.00

100 100

8

C. Lessons Learned and Reflected in the Project Design

31. The proposed Project design has been developed through workshops with central and local government representatives, and meetings with communities and development partners, on the basis of the lessons learned from PMDN and the ongoing PATH and MITIGAR projects, among others. PMDN represented a pioneering approach adopted by Honduras after Hurricane Mitch, which has been mainstreamed in many subsequent Bank-financed DRM projects in other countries, as well as in ongoing projects supported by other donors. Importantly, the success of PMDN is rooted in the development and successful implementation of a participatory methodology to help local authorities and communities understand disaster risk and vulnerability, introduce this knowledge in their territorial planning, and prioritize mitigation activities. Respectively, the main lessons reflected in project design include: (i) Disaster risk management pays off in the long term, especially when it is coupled with

flexibility and responsiveness to country needs and conditions to reflect the evolving legal and institutional framework.

(ii) Small-scale DRM interventions across multiple localities can have a substantial country-level impact provided these are developed within a strategic framework and adequately balanced with capacity building at the central level. Striking the right balance between centralizing some key activities and resources in national-level agencies and decentralizing others to municipalities and local communities is a demanding yet rewarding process, which the Bank has already successfully supported in Honduras.

(iii)To ensure ownership and sustainability of results, it is fundamental to include local governments and communities in DRM decisions and processes that affect their lives through a consultative and participatory approach.

(iv) To ensure smooth implementation, the organizational structure of a project seeking to balance central and local capacity building should have clear and simple lines of accountability and resource management. PMDN and other Bank-financed operations in Honduras such as PATH have applied this model successfully, ensuring efficient management by centralizing administrative and fiduciary functions in the implementing agency while assigning responsibility for technical aspects to relevant co-executing agencies.

(v) Adequate monitoring and evaluation, complemented by sound economic analysis are critical to measure results and identify key lessons. Although the importance of prevention and mitigation is broadly recognized today, there is still a need for reliable evaluations of DRM efforts to ensure their prioritization in a development context of budget constraints and competing priorities. The monitoring of specific indicators on women's participation and inclusion, and on their access to and understanding of training and information, will benefit project evaluation.

32. Project design is also aligned with efforts supported by other development partners. A major partner will be IDB, which is financing the MITIGAR Project (US$19.0 million) and a US$100 million contingency loan for catastrophic events (with some features similar to the Bank's instrument CAT DDO available to IBRD countries).13 Other key partners include UNDP, European Union, Spanish International Cooperation Agency (AECID), Japan International

13 The IDB Contingency Loan is designed to provide funds for specific catastrophic events, such as hurricanes, with disbursement conditions based on type, intensity and location of the event. Honduras, an IDA country, is ineligible to access the CAT DDO.

9

Cooperation Agency (JICA), US Agency for International Development (USAID) and Swiss Agency for Development and Cooperation (COSUDE).

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

33. The Project’s implementing agency for components 1 through 4 will be COPECO, which carried out PMDN satisfactorily and is currently in charge of the MITIGAR Project. The implementation arrangements for Component 5 (CERC) will be detailed in a specific Operational Manual (which is a disbursement condition for this component). A Project Coordination Unit (PCU) has been established within COPECO under a Coordinator with operational and administrative autonomy, reporting directly to the Minister-Commissioner of COPECO. The PCU will include the necessary technical, social, environmental, administrative, and procurement staff for the Project's effective implementation. As was the case under PMDN, this PCU will administer all of the Credit’s resources. There will be no direct transfer of resources from COPECO to other agencies or participating municipalities. As required, the Ministry of Finance (SEFIN) and COPECO will sign a Subsidiary Agreement. 34. The Project will include the following co-executing agencies: SEPLAN, SERNA and AMHON. The representatives of these agencies, as representatives from the Regional Council of Sula Valley and of the National Table for Promoting DRM (MNIGRD) will integrate a Project Coordinating Committee (PCC), which will be presided by COPECO’s Minister-Commissioner or his delegate. SEFIN will participate in the PCC depending on the issues at hand. When necessary, the PCC will establish a Technical-Operational Committee (TOC) to follow up on specialized issues. COPECO will sign agreements by component with the co-executing agencies to promote coordination and collaboration.

35. Based on implementation needs, COPECO will also engage with collaborating agencies including, among others, the National Autonomous University of Honduras (UNAH), the Ministry of the Interior and Population (SEIP), the Ministry of Education (SE), the Flood Control Committee of the Sula Valley (CCIVS), the Property Institute (IP), and the national associations of architects and engineers (CAH and CICH). When necessary, a Memorandum of Understanding will be signed between COPECO and a collaborating agency.

36. Municipalities that will benefit from the Project will sign a Participation Agreement with COPECO describing, inter alia, their role and responsibilities, and operation and maintenance commitments related to any mitigation investments financed by the project. Finally, coordination with other projects and initiatives would be facilitated through the DRM coordination committee of development partners.

B. Results Monitoring and Evaluation

37. COPECO, through the PCU, will be responsible for monitoring and evaluation (M&E). Accordingly, the PCU will (a) collect, consolidate and report on project performance data (including physical and financial progress); and (b) provide periodic information on intermediate

10

project results and progress toward higher level outcomes. Co-executing agencies and participating municipalities will assist the PCU by providing relevant information. Throughout project implementation, COPECO will prepare bi-annual progress reports. The credit will finance gathering of baseline data to assess social, environmental and economic impacts of key activities, including gender-differentiated impacts. Project indicators and impacts will be assessed by independent consultants during the Mid-Term Review and final evaluation.

C. Sustainability

38. Sustainability will be ensured by promoting ownership of investments and project results at the municipal and community levels. Maintenance requirements should be low given the relative small scale of mitigation measures. In this respect, the final evaluation of PMDN showed the effectiveness of the close partnership and intensive participation promoted through the core methodology that will be implemented under Component 2. Full engagement of local authorities and communities in identifying, prioritizing, and supervising mitigation measures will help ensure the quality of materials and construction as well as beneficiaries’ satisfaction and sense of ownership. These factors, along with community awareness of the importance of the mitigation measures and activities to help prevent loss of life and property should help promote adequate operation and maintenance levels. More specifically, at the end of the process, mitigation works will be formally transferred to local authorities and community committees. Through the Participation Agreement, each target municipality will accept its responsibility for the mitigation measure, including provision of a local supervisor during construction and final acceptance of the work at completion. Involvement of communities will help provide oversight of these arrangements.

V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

Risk Rating

Stakeholder Risk Moderate

Implementing Agency Risk

- Capacity Moderate

- Governance Substantial

Project Risk

- Design Low

- Social and Environmental Moderate

- Program and Donor Low

- Delivery Monitoring and Sustainability Moderate

Overall Implementation Risk Substantial

B. Overall Risk Rating Explanation

39. Overall implementation risk is considered Substantial (for a detailed analysis, see Annex 4 – Operational and Risk Assessment). The Project is founded on the strong commitment and

11

broad consensus that exists in the country regarding the importance of DRM for inclusive growth and poverty reduction. It also builds on a long-standing partnership between Honduras and the Bank. Nevertheless, as described below, the Project faces several key risks: 40. Broad Stakeholder Support. In the past, some of the Afro-Honduran communities living within the Project area have opposed Bank-financed projects due to lack of information, difficulty in establishing a desirable level of representation of their organizations, and internal tensions. These communities and other indigenous peoples in the 20 project municipalities were consulted about the project during the Social Assessment. Their views and suggestions have been reflected in the project design and will continue to be considered during implementation. The Project will only operate in indigenous communities where a process of free, prior and informed consultation results in broad community support. As described in Annex 3, a Communication Strategy and an Indigenous Peoples Planning Framework (IPPF) have been prepared and will be implemented to help ensure adequate engagement with all potential beneficiaries. Moreover, the Communication Strategy will also include outreach activities such as workshops and other events for local authorities, civil society and private sector associations. 41. Political cycle: Forthcoming presidential and congressional elections are scheduled to take place in November 2013, which could result in a reassessment of DRM policy and strategy, and at the operational level could slow down project implementation and bring changes in PCU staff. These risks are mitigated by (a) the broad consensus that exists in Honduras on the importance of DRM for inclusive growth and poverty reduction goals, and the experience gained through PMDN; and by (b) including in the Financing Agreement a covenant to minimize unjustified firing of PCU staff, and in the Operational Manual objective performance evaluation procedures for such staff.

42. Governance: governance in the country, perceived as weak, may also be affected by the political cycle. At the country level, the Bank has been helping to strengthen national systems for financial management and procurement (including recently through a public sector modernization operation, P110050). At the Project level, this risk will be mitigated by (a) establishing a grievance redress mechanism within COPECO to enhance transparency and accountability; (b) carrying out social audits of key activities during project implementation; (c) promoting participation of civil society in the Project Coordination Committee; (d) ensuring that Project investment decisions are based on a participatory process, developed under PMDN, that involves local authorities and communities, including prioritization of mitigation measures through open town hall meetings; and (e) carrying out independent technical audits during the project mid-term review and final evaluation.

43. Security Situation: The country faces a precarious security situation and some of the municipalities in the Project area are among the most violent in the country. This risk is mitigated by the CPS strategic focus on security, and the concrete support provided through a Development Policy Loan (DPL) as well as the ongoing Barrio Ciudad Project (P088319) and the proposed Safer Municipalities Project (P130819) (which will target at least two of the same municipalities included under this project). These are complemented by technical assistance and similar efforts supported by other development partners.

12

44. Disaster Vulnerability: Considering Honduras’ vulnerability, it is likely that a major disaster could occur during the Project’s six-year implementation period. To mitigate this country risk, the Project includes a specific CERC and will also facilitate the implementation of the IRM in Honduras. The CERC and IRM will complement the contingency loan provided by IDB, which applies only to specific catastrophic events. At the same time, the foundations of disaster management culture already inculcated in the country, together with Government plans to establish a fund for disaster emergencies will help manage this risk.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analyses

45. Results of the economic and financial analyses indicate that the Project is economically feasible. Overall, the analysis yields positive net present values (NPV) with acceptable indicators even after submitting it to various extreme scenarios. For the specific analysis, which considered the costs and benefits of Project activities specifically related to disaster risk mitigation measures, the results are favorable with a positive Internal Rate of Return (IRR) of nearly 13 percent. The financial analysis indicates that municipalities will in general benefit with the increase of investment, depending on their revenue capacity. The new mitigation measures represent 6.6 percent of the average municipal budgets, which suggests that the mitigation measures are sustainable. The net fiscal impact in municipalities will be about 0.9 percent of the total municipal budget. This is significantly low, indicating that there will not be significant burden on municipal revenues. Specific details of these analyses and their methodology are presented in Annex 8.

Economic Cost-Benefit Analysis

Present Value of Flows

Expected Benefits:

Project Costs:

Net Present Value:

US$ 10.77 Million

US$ 7.90 Million

US$ 1.89 Million

Internal Rate of Return 12.89%

B. Technical

46. The Project builds upon the technical designs and quality assurance experience of PMDN. Based on this experience, the PCU has updated operational procedures and quality assurance mechanisms. Moreover, specific international and national expertise will be provided as needed. Specifically, (a) for Component 1, the Project will provide technical assistance to help promote state-of-the-art knowledge and capacity building; (b) for Component 2, the design of activities benefited from international experts under PMDN, who reviewed Terms of Reference (ToRs) and guided implementation. During Project preparation, the methodology has been updated in compliance with new national planning guides and requirements, as well as current DRM international experience; and (c) under Component 3, participating municipalities and communities will be involved in the design and supervision of mitigation measures, and will be

13

responsible for operation and maintenance. These practices have been successfully implemented under PMDN. Engineering designs will follow international good practice in integrating DRM and hazard-resistant factors to make the works more disaster-resilient.

C. Financial Management

47. COPECO, through its PCU, will be directly in charge of financial management (FM) tasks, which will include: (i) budget formulation and monitoring, (ii) cash flow management (including processing payments and submitting grant withdrawal applications to the Bank), (iii) maintenance of accounting records (including the administration and maintenance of an inventory of project assets), (iv) preparation of in-year and year-end financial reports, (v) administration of underlying information systems, and (vi) arranging for execution of external audits. Moreover, the PCU will oversee the administrative aspects of the proposed Project and coordinate with the co-executing agencies. Finally, based on an assessment carried out on September 2012, overall FM risk is rated as Moderate (see mitigation measures in Annex 3).

D. Procurement

48. COPECO, through its PCU, will also be in charge of procurement under the Project. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011and the provisions stipulated in the Financing Agreement. The Bank’s capacity assessment of the PCU to implement procurement actions under the project is based on the institution’s satisfactory performance to date in implementing the ongoing IDB-financed MITIGAR Project. The same team that satisfactorily implemented PMDN has been hired during the Project’s preparation phase. In order to supplement the capacity of the PCU, additional fiduciary analysts (for procurement and FM) will be hired within a year of Credit effectiveness. 49. Based on an assessment carried out in September 2012, overall procurement risk is considered High (see mitigation measures in Annex 3). While the PCU appears to be prepared to handle procurement according to Bank guidelines, the overall public procurement system in Honduras still requires further strengthening. Despite reforms in the procurement legal and institutional framework, the country still needs more skilled personnel with knowledge of international norms, while having limited planning and contract management capacity, as well as insufficient use of standard documents and procedures. A Procurement Plan dated October 31, 2012 has been prepared. Additional procurement details are provided in Annex 3.

E. Social (including Safeguards)

50. The Sula Valley, one of the most economically and socially dynamic areas of the country, is characterized by high vulnerability to natural disasters. The population of the two biggest cities in this region, San Pedro Sula and Choloma, has increased tremendously since 2001, with average annual growth of 4.1 and 8.5 percent respectively. The region is also one of the most violent in the country with 159 homicides per 100,000 people recorded in the San Pedro Sula

14

metropolitan area in 2011.14 There is a relatively high variation with respect to human development between the twenty municipalities that are within the Sula Valley. San Pedro Sula is the municipality with the highest human development index (.768); while municipalities in Santa Bárbara are ranked poorly. These relative differences in human development levels will inform operational details of the Project. 51. Through its participatory methodology, the Project will seek to engage communities in the identification, analysis, implementation, monitoring and evaluation of disaster risks in order to reduce vulnerabilities and enhance capacities. This methodology will also facilitate the proactive inclusion of indigenous and Afro-Honduran peoples. A Social Assessment (SA) was carried out to analyze DRM-related issues, identify possible social risks and impacts, and identify and characterize key stakeholders. The SA collected primary data through interviews with key stakeholders, and focus groups with male and female residents and municipal authorities of Afro-Honduran and indigenous decent, among others. 52. The Project triggers social safeguards policies for Indigenous Peoples (OP 4.10) and Involuntary Resettlement (OP 4.12). As the exact location of the proposed project interventions will be determined during implementation, an Indigenous Peoples Planning Framework (IPPF) and a Resettlement Policy Framework (RPF) were prepared for inclusion in the Operational Manual. Both instruments, along with the SA, were consulted with representatives of Afro-Honduran and indigenous groups – more specifically with federations and community leaders and other interested stakeholders – during public consultations held in San Pedro Sula on October 5, 2012. In accordance with the Bank’s Information Disclosure Policy (BP 17.50), the IPPF and RPF were made public on the Borrower’s and the Bank’s websites on October 17, 2012.

53. Importantly, evidence from Honduras and other countries indicates that women are more vulnerable to the impacts of disasters. At the same time, women play important roles in building a culture of disaster prevention and their active participation is imperative to successful DRM. In this respect, the Project seeks to integrate gender dimensions from the earliest possible stage of project development and throughout project implementation and completion. Considering findings from the SA, the Project’s Gender Strategy will (a) mainstream a gender-sensitive approach within the existing DRM institutional framework, (b) conduct gender-sensitive capacity-building for DRM policy makers and public servants, and (c) improve women’s participation in DRM and raise awareness at the community level. More specifically, gender issues will be mainstreamed in the participatory methodology at the core of Project design. Several specific indicators have also been included in the Project’s results matrix to help monitor and evaluate the Project’s gender equity aspects (Annex 1). 54. The Communication Strategy and the Grievance Redress Mechanism complement each other. The strategy has three main objectives: (i) to position COPECO as the agency responsible for disaster risk mitigation; (ii) to promote a culture of disaster prevention; and (iii) to support project implementation. Further, it entails three cross-cutting goals in order to promote: (i) social and environmental sustainability; (ii) gender equity; and (iii) transparency and accountability.

14 Source: http://www.citymayors.com/security/latin-american-murder-cities.html. Consulted on 9/22/2012.

http://www.citymayors.com/security/latin-american-murder-cities.html

15

The grievance redress mechanism will be critical to achieving this last goal and as such will be embedded in the Communication Strategy. The strategy will disseminate the existence of the mechanism, its various entry points, and also the ways complaints received will be handled. In addition, the mechanism will seek to go beyond grievances by promoting a two-way communication channel (“beneficiary service” system) that will complement the social audits included under the Project.

F. Environment (including Safeguards)

55. The Project is classified as category B. It triggers the following environmental safeguard policies: Environmental Assessment (OP 4.01), Natural Habitats (OP 4.04), Physical Cultural Resources (OP 4.11), and Forests (OP 4.36). An Environmental and Social Management Framework (ESMF) was finalized through consultations with a wide range of stakeholders that took place on October 5, 2012. In accordance with the Bank’s Information Disclosure Policy (BP 17.50), the ESMF was disclosed in the Borrower’s and the Bank’s websites on October 17, 2012. Copies of the ESMF, as well as the RPF and IPPF, are available to the public in COPECO offices in Tegucigalpa and San Pedro Sula. 56. The environmental impacts of the Project are generally expected to be positive. In particular, the Project design focuses on environmental sustainability beyond environmental management of the Project activities through an ecosystem-based approach to vulnerability analysis and strengthening resilience to increasing climate variability and change. As such, at the central level, the Project will support the establishment of an Environmental Management Unit within COPECO, which will collaborate directly with SERNA and SEPLAN, while providing it with technical assistance in connection to climate change and environmental sustainability. At the local level, the Project will work closely with municipalities to support the strengthening of Municipal Environmental Units and the mainstreaming of environmental sustainability practices in the functions performed by CODEMs and CODELs. Throughout the implementation of the mitigation works, environmental sustainability issues will be addressed through capacity building and technical assistance, and supervision by the PCU’s Environmental Specialist. 57. The mitigation works financed by the Project are in general expected to be small. However, adverse environmental impacts could arise. These impacts may include e.g. short-term noise pollution and debris in the areas adjacent to mitigation works. Further, municipalities and other stakeholders could add co-financing to Project investments and thus increase their scope. All proposed investments will be screened by the PCU’s Environmental Specialist, and any major investments will need to prepare a pertinent environmental assessment and apply for an environmental authorization from SERNA. No Category A investments will be financed under this Project, and a negative list included in the ESMF and the Operational Manual will strengthen overall mitigation of negative social and environmental impacts. 58. To prevent or minimize any adverse social or environmental impacts by the Project, the ESMF outlines mitigation measures, most of which are included in the Project activities, and indicates actions, budget estimates, and responsibilities to ensure the appropriate implementation of these measures. Additionally, the ESMF provides internal instruments to be used to coordinate the environmental management of the mitigation works, including: (i) cooperation protocols between SERNA and municipalities, (ii) operational steps of environmental management within

16

the Project intervention cycle, and (iii) a Good Practice checklist for the site selection, design, construction, supervision, and delivery of a particular mitigation work. The ESMF also provides guidelines for cross-cutting issues such as worker health and safety, and environmental monitoring, including contractually-binding guidance to contractors. Finally, in regard to natural habitats, the Project will not finance or otherwise support mitigation works within protected areas, unless the works are consistent with approved management plans for such sites.

17

Annex 1: Results Framework and Monitoring

Country: Honduras

Project Name: Disaster Risk Management Project (P131094) .

Project Development Objectives

PDO Statement

The PDOs are to support Honduras to: (a) continue strengthening its capacity for integrated disaster risk management at the municipal and national level; and (b) improve its capacity to respond promptly and effectively to an eligible emergency.

.

Project Development Objective Indicators

Cumulative Target Values Data Source/ Responsibility for

Indicator Name Core Unit of Measure

Baseline YR2 YR3 YR4 YR5 End

Target Frequency

Methodology Data Collection

[1] Direct project beneficiaries Number 0.00 70,000 150,000 400,000 600,000 850,000

Mid-term and end of project

Population projections from the Honduran National Statistical Institute (INE)

PCU-COPECO in collaboration with SEPLAN

[1(a)] Female beneficiaries Percentage 0.00 51.00 51.00 51.00 51.00 51.00


Population projections from the Honduran National Statistical Institute (INE)


[2] At least 70% of a representative sample of direct Project beneficiaries are satisfied with COPECO’s DRM Project activities (third level on a four-level scale)

Percentage 0.00 0.00 0.00 60.00 65.00 70.00


Beneficiary survey Independent consultants; PCU-COPECO

[2(a)] At least 70% of sampled female beneficiaries are satisfied with COPECO's DRM Project activities

Percentage 0.00 0.00 0.00 60.00 65.00 70.00 Mid-term and end of project

Beneficiary survey Independent consultants; PCU-COPECO

18

[3] At least 16 participating municipalities have adopted DRM Plans (PMGRs), Land Use Plans (PMOTs) and Emergency Plans (PEMs) based onthe Project's participatory methodology

Number 0.00 2.00 8.00 12.00 14.00 16.00 Mid-term and end of Project

COPECO's and SEPLAN databases and municipal records

PCU-COPECO in collaboration with SEPLAN and selected municipalities

[4] At least 90% of mitigation measures financed by the Project are evaluated independently as technically, economically and environmentally sound


Independent assessment

Independent consultants; PCU-COPECO in collaboration with selected municipalities and beneficiary communities

[5] Time taken to disburse funds requested by Government for an eligible emergency

Weeks 0.00 4.00 4.00 4.00 4.00 4.00 n/a SEFIN, World Bank systems

SEFIN

.

Intermediate Results Indicators

Cumulative Target Values Data Source/ Responsibility for

Indicator Name Core Unit of Measure

Baseline YR2 YR3 YR4 YR5 End Target

Frequency

Methodology Data Collection

Component 1: Strengthening of National-Level DRM Capacities

1.1 Standard methodology for municipal development and territorial planning developed and disseminated

Number 0.00 0.00 0.00 1.00 1.00 1.00 Mid-term and end of project

SEPLAN and project progress reports


1.2 Environmental Management Unit operating effectively in COPECO

Number 0.00 0.00 0.00 1.00 1.00 1.00

Mid-term review and end of project

Progress Reports;; time taken to obtain environmental permits or licences for mitigation works

PCU-COPECO in collaboration with SERNA

1.3 Seismic monitoring network established and functioning

Percentage 0.00 0.00 25.00 55.00 70.00 100.00 Yearly Progress Report; Mid-Term Report; Field visits

PCU-COPECO in collaboration with UNAH

19

Component 2: Strengthening of Municipal and Community-Level DRM Capacities

2.1 CODEMs and CODELs established and functioning effectively

Number 0.00 0.00 10.00 20.00 40.00 60.00 Yearly

Progress Reports; Simulation excercises: Mid-Term Review; Final Evaluation

Independent consultants; PCU-COPECO in collaboration with municipalities

2.1 (a) Women participating actively in management committees of CODEM and CODELs

Percentage 0.00 0.00 35.00 35.00 35.00 35.00 Yearly

Focus groups; Progress Reports; Mid-Term Review; Final Evaluation

Independent consultants; PCU-COPECO in collaboration with municipalities

2.2 At least 70% of sampled technical staff from municipalities rate training received under the Project as Satisfactory


Progress Reports; Mid-term; Final Evaluation

Independent consultants; PCU-COPECO in collaboration with s municipalities

2.3 Database of risk and vulnerability analyses and municipal plans is publicly available


Reports from consultants working on participatory methodology; final maps from each selected municipality

PCU-COPECO in collaboration with AMHON, SEPLAN and municipalities

2.4 Participants in consultation activities during project implementation

Number 0.00

To be assessed during implementation

Yearly

Minutes of meetings and other consultants' reports; Progress Reports; Mid-term Review; Final Evaluation

PCU-COPECO in collaboration with selected municipalities and beneficiary communities

2.4 (a) Participants in consultation activities during project implementation – female / indigenous and afro-Honduran

Number 0.00

To be assessed during implementation

Yearly

Minutes of meetings and other consultants' reports; Progress Reports; Mid-Term Review; Final Evaluation

PCU-COPECO in collaboration with s municipalities and beneficiary communities

20

Component 3: Implementation of Mitigation Measures

3.1 Prioritized mitigation measures implemented

Number 0.00 7.00 15.00 25.00 40.00 60.00 Yearly Progress Reports, Mid-Term Review; Final Evaluation

PCU-COPECO in collaboration with selected municipalities

3.2 At least 70% of sampled direct beneficiaries agree that mitigation measures implemented under the Project reflect their priorities


Mid-Term Review; Final Evaluation


3.2 (a) At least 70% of sampled direct female beneficiaries agree that mitigation measures implemented under the Project reflect their priorities


Mid-Term Review; Final Evaluation


Component 4: Project Management, Monitoring and Evaluation

4.1 Baseline for Project impact, Mid-Term Report, and Final Evaluation Report completed in a timely fashion

Number 0.00 1.00 1.00 2.00 2.00 3.00 Mid-term and end of project

Reports submitted to the Bank

Independent consultants; PCU-COPECO in collaboration with co-executing agencies and participating municipalities

Component 5: Contingency Emergency Response Component

5.1 CERC established and ready to provide access to financial resources to Honduras in case of an eligible emergency

Number 0.00 1.00 1.00 1.00 1.00 1.00 As needed SEFIN files, Operational Manual

SEFIN, World Bank

.

21

Description of Indicators

.

A. Description of Project Development Objective Indicators

Indicator Name Description (indicator definition etc.)

Direct project beneficiaries Direct beneficiaries are people or groups who directly derive benefits from an intervention (i.e., children who benefit from an immunization program; families that have a new piped water connection). Please note that this indicator requires supplemental information. Supplemental Value: Female beneficiaries (percentage). Based on the assessment and definition of direct project beneficiaries, specify what proportion of the direct project beneficiaries are female. This indicator is calculated as a percentage.

Female beneficiaries Based on the assessment and definition of direct project beneficiaries, specify what percentage of the beneficiaries are female.

At least 70% of a representative sample of direct Project beneficiaries are satisfied with COPECO’s DRM Project activities (third level on a four-level scale)

This indicator is a proxy to assess institutional strengthening and policy consolidation of COPECO

At least 70% of sampled female beneficiaries are satisfied with COPECO's DRM Project activities

Gender-disaggregated indicator to measure COPECO's institutional strengthening, including implementation of gender strategy

At least 16 participating municipalities have adopted DRM Plans (PMGRs), Land Use Plans (PMOTs) and Emergency Plans (PEMs) based on the Project's participatory methodology

Indicator will measure preparation and adoption of main results (new or updated set of plans) of participatory methodology promotedby the Project.

At least 90% of mitigation measures financed by the Project are evaluated independently as technically, economically and environmentally sound

Independent evaluator will assess technical, economic and environmental aspects based on a stratified sample of mitigation measures.

Time taken to disburse funds requested by Government for an eligible emergency

This indicator will measure effectiveness of the instrument to provide rapid access to financing to Honduras after an emergency. Time will be measured from the moment the Bank receives Government's request for assistance.

.

B. Description of Intermediate Results Indicators

Indicator Name Description (indicator definition etc.)

Standard methodology for municipal development and territorial planning developed and disseminated

This indicator will measure effectiveness in strengthening territorial planning

Environmental Management Unit operating effectively in COPECO This indicator will help measure the Project's integration of environmental sustainability issues into DRM investments and overall DRM activities.

Seismic monitoring network established and functioning This indicator will measure the results of the technical assistance and equipment provided to strengthen seismic monitoring capacity

22

CODEMs and CODELs established and functioning effectively This indicator will help measure local disaster emergency preparedness and response capacity.

Women participating actively in management committees of CODEM and CODELs

Gender disaggregated indicator to measure the active participation of women in emergency committees.

At least 70% of sampled technical staff from municipalities rate training received under the Project as Satisfactory

Indicator will measure effectiveness of training provided under the project to technical staff in selected municipalities, including planning and environmental staff.

Database of risk and vulnerability analyses and municipal plans is publicly available

This indicator will help measure effectiveness and sustainability of technical assistance for disaster risk information and knowledge.

Participants in consultation activities during project implementation (number)

This indicator measures the level of community engagement in project implementation.

Participants in consultation activities during project implementation – female

No description provided.

Prioritized mitigation measures implemented This indicator will measure main results from Component 3

At least 70% of sampled direct beneficiaries agree that mitigation measures implemented under the Project reflect their priorities

This indicator will allow to measure effectiveness of the prioritizing phase of the participatory methodology

At least 70% of sampled direct female beneficiaries agree that mitigation measures implemented under the Project reflect their priorities

Gender disaggregated indicator to measure effectiveness of participatory methodology and gender strategy

Baseline for Project impact, Mid-Term Report, and Final Evaluation Report completed in a timely fashion

This indicator will help measure progress and effectiveness of M&E activities. To ensure objectivity, independent consultants will be contracted for the preparation of the Mid-Term and Final Evaluation reports.

CERC established and ready to provide access to financial resources to Honduras in case of an eligible emergency

This indicator will measure the effectiveness in making the CERC operational through finalization of the Operational Manual and agreement on overall arrangements.

23

Annex 2: Detailed Project Description

HONDURAS: Disaster Risk Management Project

1. The Project Development Objectives (PDOs) are to support Honduras to: (a) continue strengthening its capacity for integrated disaster risk management at the municipal and national level; and (b) improve its capacity to respond promptly and effectively to an eligible emergency. On the foundations of the previous project, the first objective will be achieved through DRM mainstreaming and consolidation of institutions and policy-making, and enhanced coordination between central institutions and key local actors, with a focus on community participation and social inclusion, technical quality, and environmental sustainability. In addition, the second objective will be achieved through a specific Contingency Emergency Response Component (CERC) and by helping to make operational the Immediate Response Mechanism (IRM) that would enable Honduras to have fast access to financial resources in the event of an emergency. 2. As agreed with the Government, to achieve the first part of the PDO, the proposed Project will focus initially on municipalities within Region 1 (Sula Valley), reflecting the National Plan’s regionalization based on the country's main watersheds. Along with national priority considerations, the decision to focus on the Sula Valley is based on: (a) the high vulnerability of the region, which at the same time is one of the most economically and demographically dynamic areas of the country; (b) readiness for implementation based on previous work conducted and experiences gained in the region under Bank-financed projects, such as PMDN and PATH, and other donor-funded efforts; and (c) the strategic objective to maximize impact and feasibility of starting mitigation measures in 2013. Nevertheless, the Project area may include any other municipality based upon the future agreement between the Government and the Bank and reflected in the Operational Manual, which will specify the criteria for municipalities’ participation in the Project. If deemed necessary by the Bank, social and environmental analyses will be carried out before project activities can start in the proposed additional municipalities. 3. The population of Region 1 (Sula Valley) is estimated to be 2,033,702 in 2010 (or 25.3% of the country's population), according to the Honduran National Statistical Institute (INE). The region comprises 20 municipalities across four departments, including all 12 municipalities from Cortés, whose total area is within Region 1, as well as one municipality of Atlántida, three of Santa Barbara and four of Yoro. The proposed Project’s beneficiaries are thus concentrated mainly in Cortés (estimated population of 1,570,285), which includes San Pedro Sula, the second largest Honduran city (population of 719,447). Under PMDN, preparatory work was carried out in all but five of the region’s municipalities. More recently, PATH II15 has been working with most of the municipalities in Cortés. Moreover, PMDN helped to strengthen the hydrometeorological network within the Sula Valley, and especially along the Ulúa and Chamelecón rivers.

15 PATH II has been carrying out municipal strengthening activities related to cadastral information and territorial planning.

24

A. Project Components

4. The PDOs will be achieved through the following five components: (1) Strengthening of National-level DRM Capacities (US$2.20 million); (2) Strengthening of Municipal and Community-level DRM Capacities (US$2.90 million); (3) Implementation of Mitigation Measures (US$13.05 million); (4) Project Management, Monitoring and Evaluation (US$1.85 million); and (5) Contingency Emergency Response Component (US$10.00 million). The Project will be implemented over a six-year period and will help address, among others, floods, landslides, forest fires and seismic risks. Component 1: Strengthening of National-level DRM Capacities (US$2.20 million) 5. The objective of this component is to help consolidate the institutional and policy DRM framework within the overall territorial and regional planning efforts of the country. Under the current Country Vision and National Plan, the country has been organized into 16 regions, and SEPLAN is adapting the territorial development methodology to the new approach. SERNA will also be a key partner in efforts such as hydrometeorological monitoring capacity strengthening and hydrological and hydraulic modeling. Activities related to the consolidation of the National Territorial Information System (SINIT) and the Territorial Planning Norms Registry (RENOT) will be carried out in collaboration with the Property Institute (IP), which has developed the national system (SINAP) that includes these modules. 6. Consistent with the component’s objective, the Project would promote (i) coordination capacity of key agencies, (ii) technical capacity for quality assurance and environmental sustainability of DRM investments, and (iii) disaster risk monitoring and modeling applied to a specific risk management process or development program that contributes to the definition of public policies and programs for disaster risk reduction. An important aspect of institutional strengthening will be the promotion of transparency and accountability for DRM by supporting, inter alia, the establishment of a grievance redress system in COPECO linked to a Communication Strategy.

7. Accordingly, the component will comprise the following sub-components and activities:

8. Sub-Component 1.1: Strengthening SEPLAN’s territorial planning capacity, through, inter alia: (a) the provision of training and acquisition of equipment and software for territorial planning; (b) the consolidation and connectivity of SINIT and RENOT under SINAP; and (c) the update and dissemination of a standardized methodology for territorial planning.

9. Sub-Component 1.2: Strengthening COPECO’s coordination and promotion capacity for DRM, through, inter alia: (a) the carrying out of assessments, policy analysis, training and South-South knowledge exchanges to consolidate the Recipient’s DRM policy and strategy; (b) the development and implementation of a Communication Strategy; (c) the establishment of a grievance redress mechanism and carrying out of social audits of relevant Project activities; and (d) the establishment of new offices, including the carrying out of works, and the acquisition of software, hardware and computer and office equipment.

25

10. Sub-Component 1.3: Strengthening COPECO’s technical quality assurance and environmental sustainability capacity, through, inter alia: (a) the preparation and dissemination of a good practice environmental code for DRM; (b) the development of a proposed update of the national construction code; (c) the establishment of an environmental management unit within COPECO; and (d) the carrying out of studies in connection to climate change and environmental sustainability.

11. Sub-Component 1.4: Strengthening Honduras’ DRM monitoring and modeling capacity, by: (a) supporting COPECO, through, inter alia: (i) the consolidation of early warning systems for landslides and of the metropolitan wireless network, including: (A) the acquisition of monitoring and communication equipment; (B) the provision of training; and (C) the development of early warning protocols; (ii) the establishment of a seismic monitoring network; and (iii) the provision of training on probabilistic hazard and disaster risk modeling; and (b) supporting SERNA, through, inter alia, the acquisition of software and equipment, and the provision of training on hydrological and hydraulic modeling. Component 2: Strengthening of Municipal and Community-level DRM Capacities (US$2.90 million) 12. The objective of this component is to support the strengthening of DRM at the municipal and community level, applying models and methodologies developed under PMDN, which continue to be applied and improved under the IDB-financed MITIGAR project. Activities under this component will help implement a participatory methodology including ecosystem-based risk and land use characterization, institutionalizing of municipal risk management, and prioritization of mitigation measures. This methodology, summarized below in Section B, will be detailed in the Operational Manual. Some the main results of the methodology include Municipal Emergency Plans (PEMs), Municipal Land Use Plans (PMOTs) and Municipal Disaster Risk Management Plans (PMGRs). For the implementation of this component, COPECO will work closely with the Association of Honduran Municipalities (AMHON) and the selected municipalities, and in consultation with beneficiary communities. Municipal and local emergency committees (CODEMs and CODELs) and local authorities and technical staff will play a central role in ensuring achievement of results. 13. The component will include the following sub-components and activities:

14. Sub-Component 2.1: Enhancing municipal and local DRM capacity, through, inter alia: (a) the strengthening of the institutional capacity of the selected municipalities’ emergency committees, including the provision of training and acquisition of equipment; (b) the strengthening of the technical and environmental units within the selected municipalities, including the provision of training and acquisition of software and equipment; and (c) the carrying out of emergency simulation exercises to monitor and evaluate local preparedness and response capacities.

15. Sub-Component 2.2: Developing territorial planning and characterization for local risk

26

management, through, inter alia: (a) the update, revision, and/or development of risk and land use characterization studies and territorial planning in the selected municipalities, including the preparation of PMGRs, PMOTs and PEMs; and (b) the development of COPECO’s DRM information system and database management, including the provision of training and acquisition of software and equipment.

16. Sub-Component 2.3: Institutionalizing local risk management, through, inter alia: (a) the validation of municipal plans and other related information with relevant stakeholders in selected municipalities; and (b) the carrying out of outreach activities with local authorities, civil society and private sector associations to promote the Project’s DRM approach and its sustainability, including workshops.

17. Sub-Component 2.4: Updating and implementing local and regional early warning systems, through, inter alia: (a) the acquisition of monitoring and communication equipment; and (b) the provision of training and development of early warning protocols. Component 3: Implementation of Mitigation Measures (US$13.05 million) 18. The objective of this component is to reduce local vulnerability by supporting the implementation of structural and nonstructural measures as identified and prioritized through the participatory methodology supported under Component 2, and particularly through the PEMs, PMGRs and PMOTs (see Section B for a summary of the methodology). Based on PMDN and ongoing experience, it is estimated that the financing range of a mitigation measure will be between US$60,000.00 and US$200,000.00, and that between two and four mitigation measures will be implemented in each municipality. The Operational Manual includes the criteria for municipal participation and describes the process for identification and prioritization of mitigation measures. Technical quality assurance of the mitigation measures will be promoted through triangulated supervision and control, including a municipal engineer, the emergency committee (CODEL) of the beneficiary community, and the engineer and Environmental Specialist of the PCU.

19. Accordingly, this component will include the following sub-components and activities:

20. Sub-Component 3.1: Design of prioritized structural works and prioritized non-structural measures. See below for definition and examples of structural works and prioritized non-structural measures.

21. Sub-Component 3.2: Carrying out of prioritized structural works, including their supervision. Structural works would include any physical construction to reduce or avoid possible impacts of hazards, or application of engineering techniques to achieve hazard-resistance and resilience in structures or systems. Examples of structural works that may be considered are small riverbank protection, drainage canal-bridges, and/or rain water drainage.

22. Sub-Component 3.3: Carrying out of prioritized non-structural measures, including their supervision. Non-structural measures are activities which do not involve physical construction

27

and use knowledge or practices to reduce disaster risks and impacts. These may include, among others, public awareness raising activities, development of management plans, and provision of training and education. Component 4: Project Management, Monitoring and Evaluation (US$1.85 million) 23. The objective of this component is to support Project management as well as the monitoring and evaluation of its results. It will help finance consultants in charge of coordination, supervision, and fiduciary aspects of the Project and necessary support personnel. It will also support the establishment of an integrated Monitoring and Evaluation (M&E) system covering financial and physical progress and the preparation of bi-annual, mid-term and final project evaluation reports. The baseline data will be collected in a manner that ensures the measurement of gender-differentiated Project impacts. 24. As such, the Component includes the following sub-components and activities:

25. Sub-Component 4.1: Supporting Project Management, through, inter alia: (a) the provision of training and workshops; (b) the carrying out of the fiduciary aspects of the Project, including audits and (c) the oversight of the implementation of a communication strategy and a gender strategy for the Project.

26. Sub-Component 4.2: Supporting Project monitoring and evaluation, including the collection of base line data to assess the Project's social, environmental, and economic impacts. Component 5: Contingency Emergency Response Component - CERC (US$10.00 million) 27. Providing immediate response to an eligible emergency. 28. More specifically, this component would finance public and private sector expenditures on a positive list of goods, both domestic and imported, required for Honduras’ emergency recovery. A specific Operational Manual will apply to this component, detailing financial management, procurement, safeguard and any other arrangements to ensure that funds are disbursed in a rapid and efficient manner following an eligible emergency. In addition, the Project will help make operational the IRM by facilitating agreement on requirements and arrangements, and by finalizing the Operational Manual necessary to ensure proper coordination and implementation of the IRM in the country. For further details see Annex 7.

B. Participatory Methodology for Risk and Vulnerability Analysis, Territorial Planning

with DRM approach, and Prioritization of Mitigation Measures

29. The Project will continue to develop and implement the participatory methodology developed under PMDN and currently applied under MITIGAR. More specifically, the characterization and forward-looking territorial planning within the parameters of disaster risk management methodology (MCPTGR) will include data collection and analysis with the objective of establishing a baseline of the territory, and the preparation of planning instruments that contribute to vulnerability reduction of a municipality and its population within a

28

comprehensive framework for sustainable development. This approach recognizes that social, political and economic factors are closely linked to biophysical aspects that make certain populations, infrastructure and natural resources more or less exposed to natural hazards. Thus, the methodology integrates scientific information and technical criteria with local experience and historical knowledge. Moreover, by involving local authorities and communities, the process also raises awareness about hazard and vulnerability, and the importance of DRM. The Communication Strategy and Gender Strategy will strengthen this approach by promoting social inclusion and ensuring adequate two-way information communication activities and processes. 30. MCPTGR is implemented through five interrelated phases, following a unified methodological framework including SEPLAN’s guidelines and the accumulated experience under PMDN and MITIGAR. These phases include: (1) Preparation, promotion and organization of MCPTGR; (2) Territorial characterization (baseline and territorial diagnosis, including hazard, vulnerability and risks assessment); (3) Vision and development; (4) Policies, strategies, plans and projects; and (5) Disclosure, validation and integration of community vision and approval. Phase 1: Preparation, Promotion and Organization of MCPTGR 31. In this phase, a process of information dissemination and advocacy for the implementation of MCPTGR is conducted with civil society, governmental and non-governmental organizations, as partners in the process. The participatory process starts with a municipal workshop that helps to review activities at municipal and community-level institutions and to define a quality control model through the CODEM and the Municipal Land Use Committee (COMOT). The results of this workshop are presented in an open forum to launch the MCPTGR at municipal and community level, to inform the residents about territorial planning and disaster risk management. 32. In addition, stakeholder mapping is used to identify and analyze the role of governmental and non-governmental organizations, charities, academia, and private sector in carrying out land use management, disaster risk management, and climate change adaptation activities at the municipal and community level. This step also assures the involvement of all the relevant stakeholders needed for effective implementation and sustainability of actions and impacts of the Project.

33. The results of Phase 1 are: (i) MCPTGR work plan agreed and initiated at the municipal and local level (includes the methodology, roles of different actors, data collection instruments, calendar of activities and products), (ii) a mapping of key actors of territorial management, disaster risk management and climate change adaptation, taking into account gender and indigenous communities’ specific concerns, and (iii) preliminary identification of existing information shared with key stakeholders. Phase 2: Territorial Characterization – Baseline and Territorial Diagnosis, including Hazard, Vulnerability and Risk Assessment 34. The diagnostic phase is organized in two sub-phases: baseline and characterization, both of which contribute to building a Territorial Multidimensional Integral Diagnosis. The baseline

29

sub-phase, as the backbone of territorial planning, is founded on a risk management approach to natural hazards. It includes, firstly, the collection, digitization, processing and analysis of data related to adverse natural events at local and municipal level, as well as the identification of hazards and vulnerabilities. The results of the baseline sub-phase are entered into COPECO’s DRM information system at the municipal level, comprising the following modules and sub-modules: Administrative system (physical-territorial), biophysical (including geology, geomorphology, climate, and hydrography, among other aspects), social, economic, hazard zoning, vulnerability and risk, and planning.

35. Secondly, the baseline identifies planning objectives, capacities, and constraints, as well as the criteria to evaluate and rank municipal resources such as: (a) Tangible Capital: economic, demographic, biophysical, infrastructure and equipment; and (b) Intangible Capital: cognitive, symbolic, cultural, social, civic, organizational, human, media, psychosocial. 36. The characterization phase analyzes population, social, economic and institutional resources and their interactions, and identifies potential constraints for municipal development. 37. A multidimensional Integral Diagnosis (DIM) helps to identify risks at local and municipal level for different types of adverse natural events (such as floods, landslides, earthquakes, droughts, and wildfires). The vulnerability and risk assessments integrate technical criteria with the experience and historical knowledge of local actors, through community participation, to identify critical sites (hotspots), their conditions, positive and negative features and solutions to potential challenges.

38. Community participation is crucial at this stage since this phase identifies the strategic sectors of territorial development, the available municipal capacities, and as well as the performance criteria for disaster risk management.

39. The results of Phase 2 are: (i) Territorial baseline at municipal and local level developed as platform of MCPTGR and COPECO’s DRM information system and subsequent phases, (ii) hazard, vulnerability and risk assessment at local and municipal level, (iii) critical sites with potential measures identified, (iv) Multidimensional Integral Diagnosis developed, (v) disaster risk management indicator evaluated at the municipal level, and (vi) a Land Information System with diagnosis mapping completed. Phase 3: Territorial Prospective and Vision 40. Based on the results of Phase 2, this phase articulates a number of planning scenarios developed in at least two participatory workshops, Current plans are evaluated in light of the results of the proposed zoning, and the opportunities and constraints of the DIM, to establish territorial trend scenarios for 5, 10, 15 and 20 years. The development of a program of actions in the territory, will allow municipalities effectively to manage critical sites, land use conflicts and development proposals. They will also generate a set of regulatory measures (restrictions and constraints for the use and occupation of specific areas and / or production activities) and a draft plan of intervention to consolidate a territory’s strategic objectives related to location and safe construction of buildings and infrastructure, as well as safe activities in the territory.

30

41. The results of Phase 3 are: (i) Spatial Scenarios for current and future growth trends completed with community participation, (ii) critical sites socialized and prioritized, (iii) regulatory provisions (restrictions and constraints of land use) proposed, and (IV) preliminary plan for territorial intervention proposed. Phase 4: Policies, Strategies, Plans and Projects 42. This phase defines a set of policies and strategies for municipal investment, land development, and disaster risk management. This phase coordinates and consolidates the information provided by the technical team (composed of consultants, technicians, institutions and municipality representatives) and other actors involved in the participatory process, to develop risk management instruments for territorial planning at municipal and local level: (i) Development plans to focus on disaster risk management with regulations for special management areas (Administrative Management Tools), (ii) Disaster Risk Management Plan with prioritized portfolio of measures, and (iii) Emergency Plans. In this context, the integration process and drafting of these instruments are conducted in open work sessions, where the technical team may invite outside technical experts and stakeholders to collaborate and provide feedback on each of the proposed components to integrate risks into territorial planning. This phase includes a round of at least three municipal workshops. 43. As a result, a digital atlas will be prepared at municipal and local level in digital format (ARCGIS) containing the following modules and sub-modules: Administrative system (physical- territorial), biophysical (which includes geology, geomorphology, climate, and hydrography, etc.), social, economic, hazard zoning, vulnerability and risk, and a territorial planning proposal.

44. The results of Phase 4 are: (i) territorial planning instruments prepared by the technical team with public participation defining: Plan objectives, vision, policies, measures, programs and projects/measures, Municipal Investment Plan, and proposed land use regulations, (ii) a local and municipal Digital Atlas. Phase 5: Disclosure, Validation and Integration with Community Vision and Endorsement 45. This phase comprises the final stage in the presentation and adoption of risk management instruments for territorial planning (policy, strategy, plans and projects). 46. The planning tools, maps, models and future vision will be displayed for a period of 30 days, during which people will be able to verify the agreements and make suggestions, recommendations and possible changes in a book of suggestions, while the COMOT and CODEM will be established. Also in the last workshop the results of the territorial planning for identified risks will be presented and agreements will be made for later approval by the Municipal Corporation and governmental instances.

47. The results of Phase 5 are: (i) risk management instruments for territorial planning disclosed, and concluded for their approval by the municipal corporation and Government; (ii) integration / reorganization / evaluation of CODEM-Municipal record; (iii) Prioritization of

31

critical sites – municipal certification; (iv) Socialization and agreement of the proposed PMOT and PMGR (3 Aid -Memories of workshops); (v) Municipal Training of technicians and CODEMs on issues related to disaster risk management and land use planning; (vi) the official approval by each municipality of hazard, vulnerability and risks assessments, the PMOT and PMGR in open town council session (Certified Municipal Act); (vii) monitoring implementation plan, and (ix) notification to SEPLAN (RENOT) about land use plan approval.

32

Annex 3: Implementation Arrangements


I. Project Institutional and Implementation Arrangements

1. This Annex refers to Components 1 through 4. Implementation arrangements for Component 5 (CERC) will be reflected in a specific Operational Manual (for more details on this component see Annex 7). COPECO will be the Project’s implementing agency for Components 1 through 4, and through its Project Coordination Unit (PCU) will be responsible for overall coordination, administration of the Credit funds and monitoring and evaluation (M&E) related to these components. COPECO will sign a Subsidiary Agreement with the Ministry of Finance (SEFIN) in representation of the Republic of Honduras, through which it will commit to the main objectives and principles of the Project, and to carry out the Project with due diligence and efficiency and in accordance with sound technical, economic, financial, managerial, environmental and social standards and practices satisfactory to the International Development Association (IDA), and with all the terms and conditions agreed between Honduras and IDA for the implementation of the Project in the Financing Agreement.

A. Project-Specific Arrangements and Administration Mechanisms for Components 1 through 4

2. The PCU, under the leadership of a Coordinator, will directly manage the Project’s technical, legal, administrative, financial, procurement, and monitoring activities. The core staff of the PCU will include at least a Procurement Specialist, a Financial Specialist, a Monitoring and Evaluation Specialist, a Communication Specialist, a Social/Gender Specialist, and an Environmental Specialist. The Coordinator will have the overall responsibility of supervising the staff of the PCU in their planning, organizing, and executing of all day-to-day administrative, technical, and legal activities of the project. The PCU’s organizational structure and duties and responsibilities of Project staff are described in the Operational Manual, along with the Project’s technical, administrative, financial, procurement, and monitoring procedures. 3. The co-executing agencies include SEPLAN, SERNA, and AMHON (see Table 1 below for agencies’ roles by component). Multi-institutional Co-Execution Agreements by component will specify the roles and responsibilities of these agencies under the Project. In addition, Participation Agreements will be signed by each selected municipality. Moreover, COPECO may seek advice from other agencies to facilitate project implementation. These Collaborating Agencies may include, inter alia, IP, UNAH, CCIVS, SEIP, national associations of engineers and of architects (CAH and CICH), SE, and SEDINAFROH. If necessary, COPECO may sign memoranda of understanding (MoU) with these agencies. 4. The Project will have a Coordination Committee (PCC), chaired by the Minister-Commissioner of COPECO (or his delegate), and comprised of the regional deputy for Sula Valley, senior representatives of each of the co-executing agencies and of CCIVS, as well as a representative of MNIGRD (which is an umbrella organization of NGOs interested in DRM issues).

33

Representatives of SEFIN will be invited to the PCC depending on the agenda. The PCC will meet at least every six months to help promote overall inter-institutional collaboration, monitor compliance with the co-execution and participation agreements, provide policy and operational guidance, and discuss manuals and other outputs of the Project. The PCC, at the same time, will establish a Technical-Operational Committee (TOC) when deemed necessary to follow up on specific matters. Collaborating Agencies will be invited to meetings of the TOC depending on the issues to be discussed.

Table 1

Formal Project Partners Collaborating Agencies

Other Partners

Component Co-Executing Agencies

Local Level

1. Strengthening of National-Level Capacities

SEPLAN, SERNA

IP, UNAH, SE, CAH, CICH

COHEP

2. Strengthening of Municipal and Community-Level Capacities

AMHON, SEPLAN

Selected Municipalities

SEIP, IP, CCIVS Local communities /patronatos16 / organizations

3. Implementation of Mitigation Measures

SERNA, AMHON

Selected Municipalities

Local communities / organizations; private sector organizations

4. Project Management and M&E

Co-executing agencies will provide inputs for M&E

Municipalities will collaborate in M&E

Civil Society groups (social audits)

II. Financial Management and Disbursements Arrangements

5. On the basis of the FM Assessment performed, the following conclusions are presented: (a) COPECO executed a previous project financed by the Bank (Natural Disaster Mitigation

Project or PMDN, Cr. 3361; Cr. 3361-1, Cr. 3361A, TF 026865, TF052879 and TF055127), and is currently implementing the Disaster Risk Prevention and Mitigation Project (MITIGAR) financed by IDB HO-L1031/2052. COPECO-PCU has in place adequate FM arrangements that meet the Bank’s minimum fiduciary requirements to manage the financial activities of the proposed Project.

(b) The FM capacity assessment (FMA) has identified project-specific actions in order to

enable COPECO to carry out the financial activities of the proposed project effectively. (c) The Project will use country systems (SIAFI and UEPEX) for accounting and reporting

purposes, as these systems would provide adequate information for monitoring specific

16 In Honduras, the patronato is a local social organization that can officially and legally represent a given community, and is comprised by members of the same community.

34

project expenditures and budget execution. The combined use of these systems will allow the proper record and identification of each payment made to the beneficiaries. In addition to the use of country systems, the Project will also use an accounting system to generate detailed financial statements. A. Organizational Arrangements and Staffing

6. Overall project coordination and administration will fall under COPECO through its PCU. The PCU will be directly in charge of financial management (FM) tasks. These will include: (i) budget formulation and monitoring; (ii) cash flow management (including processing payments and submitting grant withdrawal applications to the Bank); (iii) maintenance of accounting records (including the administration and maintenance of an inventory of project assets), (iv) preparation of in-year and year-end financial reports, (v) administration of underlying information systems, and (vi) arranging for execution of external audits. 7. The PCU will be reinforced to include two additional FM positions: an Accountant and an Administrative Assistant that will, jointly with the FM Specialist complete the FM Staff.

B. Budget Planning

8. Between April and May of each year, COPECO will prepare its tentative investment program for the upcoming year (including the investment program for the proposed project) and submit it to the Ministry of Finance (SEFIN) for review and approval. The program should be consistent with the budget policy provided by SEFIN, and be incorporated into the national budget for its submittal to Congress in September. 9. On the basis of the approved budget, COPECO will adjust as needed its project annual work plan (POA) and procurement plan, which will be reviewed and cleared by the Bank.

C. Accounting and Financial Reporting

10. Accounting Policies and Procedures. The main FM regulatory framework for the project will consist of: (i) Honduras’ laws governing budget management; and (ii) COPECO-PCU Operational Manual. Project-specific FM arrangements that are not contemplated in the documents cited above will be documented in a concise FM section of the project’s Operational Manual. Among others, specific reference will be made to: (i) the internal controls appropriate for the Project; (ii) the formats of project financial reports; and (iii) auditing arrangements.

11. Information Systems. The Project will utilize country systems for budgeting, budget execution and financial reporting. The financial activities of the project (especially budget and budget execution) will be recorded in SIAFI. In addition, to meet the reporting requirements of the proposed project, the Bank has evaluated the use of UEPEX, which is a module of SIAFI specifically designed for the accounting and reporting of externally-financed projects. The Bank will support COPECO-PCU and SEFIN to request and ensure the proper implementation and operation of UEPEX for the proposed project.

12. Treasury System. It is important to note that with the use of country systems (SIAFI) comes the use of the single treasury account. As expenditures/commitments arise, they will be

35

recorded in SIAFI; and funds will be converted into local currency by the National Treasury in SEFIN and channeled through the single treasury account to make payments to suppliers, contractors or consultants.

13. Financial Reports. On a semester basis, COPECO-PCU will prepare and submit to the Bank an unaudited interim financial report (IFR) containing at least: (i) a statement of sources and uses of funds and cash balances; (ii) a statement of budget execution per activities (with expenditures classified by the major budgetary accounts). The interim reports will be submitted not later than 45 days after the end of each semester. In this case, the IFRs are not expected to be utilized for disbursement purposes (at least at the beginning). If at a later date, the IFRs are used for disbursement purposes, the following annexes would be required: (i) a Designated Account activity statement (including a copy of the bank statement); (ii) a summary statement of Designated Account expenditures for contracts subject to prior review, and (iii) a summary statement of Designated Account expenditures for contracts not subject to prior review.

14. On an annual basis, COPECO-PCU will prepare project financial statements including cumulative figures, for the year and as of the end of that year, of the financial statements cited in the previous paragraph. The financial statements will also include explanatory notes in accordance with the Cash Basis International Public Sector Accounting Standard (IPSAS), and COPECO’s assertion that credit funds were used in accordance with the intended purposes as specified in the Financing Agreement. These financial statements, once audited, will be submitted to the Bank not later than six months after the end of the Government’s fiscal year (which equals the calendar year).

15. The supporting documentation of the semester and annual financial statements will be maintained in the PCU’s premises, and made easily accessible to Bank supervision missions and to external auditors.

D. Flow of Funds

16. Disbursement Method. Credit proceeds will be withdrawn by COPECO using the advance method supported by documentation showing that the credit proceeds previously withdrawn have been used to finance eligible expenditures. Supporting documentation will be in the form of Statement of Expenditures (SOEs), at least initially, with the exception of payments related to contracts above the SOE threshold, which will be reimbursed against full supporting documentation. The SOE thresholds for the project have been set at US$100,000 for Works and Goods, US$20,000 for Non-Consultant Services and training, US$100,000 for Consultant Services with firms; US$50,000 for Consultant Services with individual; and all operating costs.

17. Other Procedures. By appraisal, no need has been identified for the use of special commitment procedures. Should the need arise during implementation, the Bank will evaluate it and if granted, agree to their use via an amendment to the Disbursement Letter. The project may use reimbursement or direct payments.

18. WB Designated Account. COPECO will open a segregated Designated Account in Banco Central of Honduras in US dollars, to be used exclusively for deposits and withdrawals of Credit proceeds for eligible expenditures. After the conditions of Effectiveness have been met, and the Designated Account has been opened, COPECO will submit its first disbursement request to the

36

Association, together with the expenditure and financing needs forecast for the next six months. For subsequent withdrawals, COPECO will submit the disbursement request, along with the supporting documentation (SOEs). At any time, the undocumented advance to the designated account cannot exceed the authorized ceiling, as established in the Disbursement Letter.

19. Disbursement Deadline Date. Four months after the Closing Date specified in the Financing Agreement.

20. Retroactive Financing. The Bank will finance up to 20 percent of eligible expenditures for Category 1 (Components 1 through 4), and up to 40 percent of the amount allocated under Category 2 (Component 5), for expenditures incurred on or after September 1, 2012 (but no more than one year from signing.)

E. Audit Arrangements

21. Internal Audit. In the course of its regular internal audit activities vis-à-vis the institutional budget, internal auditors for COPECO may include project activities in their annual work plans. If such audits occur, COPECO will provide the Bank with copies of internal audit reports covering project activities and financial transactions.

22. External Audit. The annual project financial statements prepared by COPECO will be audited following International Standards on Auditing (ISA), by an independent firm (or the Controller General of Accounts, subject to prior agreement with the Bank) and in accordance with terms of reference (TORs), both acceptable to the Bank. The audit opinion covering project financial statements will contain a reference to the eligibility of expenditures.

23. In addition, memoranda on internal controls (“management letters”) will be produced on a semi-annual basis.

24. The audit work described above can be financed with credit proceeds. COPECO will arrange for the first external audit within three months after Credit Effectiveness. Each audit engagement is expected to cover at least two years.

25. Disbursement Schedule is as follows:

Category Amount of the Financing Allocated (expressed in

SDRs)

Percentage of Expenditures to be Financed

(inclusive of Taxes)

(1) Goods, minor works, consultants’ services, Non-Consultant Services, Training/workshops and Operating Costs for Parts 1, 2, 3 and 4 of the Project

13,000,000 100%

(2) Emergency Expenditures under Part 5 of the Project

6,500,000 100%

TOTAL AMOUNT 19,500,000 100%

1 SDR= US$1.54057 (October 31, 2012)

37

F. Risk Assessment Summary

26. The FM risk for this project has been assessed as Moderate. During implementation, the level of FM risk for the Project will be re-assessed and revised accordingly. The following table presents the risk assessment, as well as the risk mitigating measures incorporated into the design of the project and the financial management implementation arrangements.

Risk Risk Rating Risk Mitigating Measures Incorporated into Project Design

Inherent Risk Country Level17

M The Bank is supporting the reform of the public finance management system (SIAFI) and the strengthening of the Honduran procurement national system and platform (Honducompras). Furthermore, close dialogue with civil society has been ongoing—GAC initiative, open government initiative, social auditing methodologies and experiences— and the Bank is helping foster south-south dialogue on best practices in good governance, and anti-fraud and anti-corruption policies and practices. Close Bank supervision of project procurement and financial management will address the governance risk in the use of Bank project funds.

Entity Level M

COPECO has prior experience in managing Bank-financed projects with satisfactory FM performance.

Project Level M

The FM aspects of the project will be concentrated in the PCU (institutionalized within COPECO), staffed with personnel with adequate qualifications. The Credit Agreement will include a covenant that COPECO will be required to maintain adequate implementation arrangements at all times.

Control risk Budgeting, Accounting, Internal Control

M Project budget and accounting will be registered in the national system (SIAFI) and COPECO will utilize UEPEX (module of SIAFI developed specifically for project reporting). The project will operate under an operational manual approved by the Bank.

Funds Flow M

The Project will use the single treasury account to make payment to suppliers, contractors and consultants.

Financial Reporting, Auditing

M The project will utilize country systems (SIAFI and UEPEX) for accounting and financial reporting. An annual audit to be carried out by an eligible audit firm and under ToRs, both acceptable to the Bank will be required

FM Risk M

G. Financial Management Action Plan

28. The FM Action Plan is proposed as follows:

Action Responsible Entity Completion Date

1. Finalize the FM sections of the project operational manual. COPECO Completed

2.Finalize FM Staffing (hiring the Accountant and Administrative Assistant)

COPECO After effectiveness

3. Finalize the proposal in relation to the chart of account and incorporation of the project into SIAFI’s structure and the utilization of UEPEX.

COPECO Completed

4. Finalize draft audit TORs and short list. COPECO Completed

5. Receive a FM “on the job” training focused in Disbursements. WB / COPECO After Effectiveness

17 PFM Diagnostic (PEFA 2011 and PEFA 2011 Update).

38

6. Include project in the national budget. COPECO After Credit signing

7. Contract external auditors, based on short list satisfactory to the Bank.

COPECO After Effectiveness

H. World Bank FM Supervision Plan.

29. After effectiveness, the FM Specialist might perform additional field visits to reconfirm that adequate arrangements are in place. The FMS will also review the audit reports, the financial sections of the IFRs, and perform at least two supervision missions per year.

I. Disbursement Arrangements for Contingency Emergency Response Component (Component 5)

30. Implementation arrangements for the CERC will be detailed in a specific Operational Manual (see Annex 7 for more details). This component would finance public and private sector expenditures on a positive list of goods, both domestic and imported, and/or specific works, goods, services (including audit costs) and emergency operation costs required for Honduras’ emergency recovery required for Honduras’ emergency recovery. These expenditures will be in accordance with OP8.00 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. III. Procurement Arrangements

A. General 31. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011 and the provisions stipulated in the Financing Agreement. The general description of various items under different expenditure category is described below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan, dated October 31, 2012. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 32. Procurement of Works: The proposed operation is expected to finance an estimated amount of US$11.0 million in mitigation works, with an initial average cost per civil work of around US$120,000. These works will be procured by National SBD agreed with or satisfactory to the Bank or shopping method following the procedures stipulated in paragraph 3.5 of the Procurement Guidelines, using Solicitud de Comparación de Precios: Obras Civiles documents acceptable to and agreed with the Bank. 33. Procurement of Goods: Goods procured under the Project would include emergency equipment and tools, specialized equipment (i.e. seismograph, national seismic equipment),

39

vehicles, computers, office equipment (i.e. scanners, photocopy machines, data shows), software and/or software licenses, and furniture. The Bank’s SBD will be used for all ICB, and National SBD acceptable to and as agreed with the Bank for all NCB. For procurement of small value goods, shopping procedures will be followed using the standard facsimile named “Solicitud de Cotizaciones” or Request for Quotations acceptable to and agreed with the Bank and in accordance with paragraph 3.5 of the Procurement Guidelines.

34. Procurement of Non Consultant Services: Technical services provided by firms for satellite images, aerial photography, publications and communications services will be procured as non-consultant services. The Bank’s SBD will be used for all ICB, and National SBD acceptable to and as agreed with the Bank for all NCB. For procurement of small value non-consulting services, shopping procedures will be followed using the Request for Quotations documents acceptable to and agreed with the Bank.

35. Selection of Consultants: Contracts for employment of firms will include services for different types of studies such as environmental impact, promotion and communication campaign of the project, design of works, characterization studies, project monitoring and evaluation, and financial audits. Selection methods for consultants would include: QCBS, QBS, FBS, LCS, QCS,and SSS. Contracts for employment of individuals will include hiring of the PCU technical and administrative staff, and technical services provided by individuals for specialized expertise (hydrologist, geologist, environment, and civil engineering, among others). Selection procedures of individuals for these services will be in accordance with Section V of the Consultant’s Guidelines. Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Methods to be used for Selection of Consultants are described in Section E (Thresholds for Procurement Methods and Prior Review). 36. Operational Costs: The project will finance Operational Costs consisting of expenses required for managing and supervising the Project, such as office supplies and consumables; utilities, Internet, maintenance of vehicles and equipment; car and equipment insurance; travel; subsistence; and per diems. These items will be procured using comparison procedures described in the Operational Manual. In addition, Project support personnel costs (such as assistants, cleaners, and drivers) will be financed under operational costs. Selection procedures of individuals for these services will be indicated in the Operational Manual.

B. Assessment of the agency’s capacity to implement procurement

37. On September 17-18, 2012, the Bank carried out an assessment of the procurement capacity of the PCU for the proposed Project. The Bank assessed the PCU’s resources and internal procedures, as well as its understanding and familiarity with the Bank’s guidelines, procedures, documents, as well as the System for Procurement Plan Implementation (SEPA).

i. COPECO and DRMP Organization in relation to Procurement actions:

40

38. The procurement staff hired for the Project during its preparation phase has acquired experience under the previous Bank-financed project (PMDN). The Procurement Specialist has eight years of experience implementing Bank-financed operations. Although the staff’s past experience was highly considered during the selection procedures to carry out the procurement activities for the Project, which includes similar activities to those undertaken in the previous project, it is highly recommendable that she receives training in order to update her with the new Bank’s Guidelines applicable to this operation.

ii. PCU Organization and Functions

39. The PCU includes operational and technical staff that will be responsible for specific areas of the project. The Procurement Unit is responsible for all procurement transactions, as well as for the preparation and monitoring of the procurement plan, while the technical staff is responsible for providing inputs for the procurement of goods, works, consulting and non-

41

consulting services and the Financial Management Unit will be responsible for the financial transactions and auditing. All procurement decisions will be approved by the Project Coordinator, upon recommendations received from the Procurement Specialist (unit coordinator) and the relevant technical coordinator, prior to submit to Bank for the appropriate actions.

iii. Procurement Flow Chart

40. The PCU Procurement area is currently staffed officially with one person, but it is expected that one year after Credit effectiveness one procurement analyst will be added. Although the recently hired Procurement Specialist indicated past experience in SEPA and Bank’s procurement procedures, it is recommended that she participates in updated training provided by the Bank, due to the lapse of time she has been away from implementing Bank’s procurement rules and procedures. With respect to the Procurement Analyst, it is expected that the incumbent will have a minimum of three consecutive years of experience in all Bank’s procurement procedures, as he/she will be handling all shopping procedures, filing system and contract monitoring. The fact of having a Project Coordinator with 10 years of experience as a Procurement Specialist handling Bank procurement procedures is of a great advantage to mitigate procurement risk during implementation. 41. The number of staff and the organization structure for procurement activities is considered adequate at the moment. Each of the procurement staff has a defined list of tasks to be undertaken in the procurement cycle, and the Procurement Specialist is the one in charge of supervising that all the procurement processes that are described in SEPA and the documents to be used are in compliance with the Bank’s guidelines and procedures. Also, the Procurement Specialist will make sure that the prior review contracts are dully registered and/or advertised in Client Connection.

iv. Risk Assessment 42. Despite the capacity indentified in the PCU, the overall procurement risk assessment for the Project is considered High. This rating is based on (i) the country high risk procurement

42

environment characterized by limited planning and contract management capacity, and insufficient use of standard documents and procedures; and (ii) the possibility of turnover of procurement staff during government transitions in which this new project will be implemented. 43. To mitigate these risks the following measures have been agreed: (i) the current staff should continue to work for the implementation of the project (to minimize staff turnover); (ii) the quality control system will be improved, focusing specifically on the quality of terms of reference, request for proposals, technical specifications, standard bidding documents and request for quotations. This will be accomplished through training and close Bank supervision; (iii) regular procurement training will be provided to the procurement specialist as well as to relevant technical staff throughout Project implementation, starting within six months of effectiveness; and (v) the Operational Manual shall include procedures to hire the support staff as well as all other expenditures under operational costs’ category, and templates and samples of the agreed procurement documents, such as request for proposals, and any other bidding documents most commonly used in the Project.

v. Action Plan

44. Most of the Project implementation issues/risks concerning procurement have been identified and the timeframe to mitigate these risks proposed as follows:

Action Time Frame 1. The PCU should provide for the Bank’s no objection the Project’s Operational Manual and should maintain it updated for the entire project’s cycle. The sample documents shall also be part of it.

Completed

2. Finalize the procurement plan in “excel sheet” and, after effectiveness provide it through SEPA prior to any procurement. Completed (first part)

3. Procurement staff should receive continuous training on Bank’s procurement procedures as well as be familiar with ONCAE data base.

During implementation

4. Provision of a better, separated and independent physical space to the Procurement Unit, a reserved and separate area for the bidding opening ceremonies as well as installation of proper filing place.

During Implementation

C. Procurement Plan 45. The Government presented a final copy of the procurement plan for the first eighteen months of Project implementation before Negotiations, providing the basis for the procurement methods that apply to the Project. The procurement plan will be made available in the project database and on the Bank’s external website. In agreement with the Project Team, the procurement plan will be updated annually or as required to reflect actual project implementation needs and improvements, and institutional capacity. D. Details of the Procurement Arrangements Involving International Competition 46. Goods, and Non-Consulting Services:

43

Contract

Description Estimated Cost

(US$) Procurement

Method P-Q Domestic

Preference Review by

Bank (Prior/Post)

Expected Bid

Opening Date

1. Procurement of specialized tools for CODEMs

US$200,000. ICB – Goods No No Prior

2. Procurement of vehicles

US$200,000. ICB – Goods No No Prior

3. satellite images, aerial photography

US$200,000 ICB – Non-Consulting Services

No No Prior

E. Summary of Consultant’s Contract Packages for the First 18 Months of

Implementation. 47. Consultant’s Contract Packages:

Contract Description Estimated Cost

(US$) Selection Method

Review by Bank

(Prior/Post)

Estimated receipt of Proposals

Date

Estimated contract

signing date Comments

Characterization’s Study & Territorial Planning

US$500,000 QCBS Prior July 2014 Sept. 2014

Structural & Non-structural Works designs

US$79,600 CQS Prior April 2013 May 2013

48. All training and terms of references (TORs) of contracts estimated to be more than US$100,000, as well as all amendments of contracts raising the initial contract value by more than 15 per cent of original amount or above the prior review thresholds will be subject to prior World Bank review. All contracts not submitted to the prior review, will be submitted to the World Bank for post review in accordance with the provisions of paragraph 4 of Annex 1 of the World Bank’s Consultants and Procurement Guidelines.

F. Threshold for Procurement Methods and Prior Review Threshold for Procurement Methods and Prior Review (in US$ thousands)

44

WORKS US$ Equiv. (thousands) Prior Review

Método de Adquisición

ICB International Competitive Bidding

> 3,000 ALL

≥ 3,000 -1,500 First Two NCB National Competitive

Bidding > 100 - 1,500

First Two Shopping Shopping ≤ 100 First Two

SS Sole Source (Direct Contracting)

Regardless of Value ALL (1)

GOODS and/or NON-CONSULTING SERVICES US$ Equiv. (thousands)

Prior Review Método de Adquisición

ICB International Competitive Bidding > 300 ALL

≥ 150 - 300 First Two NCB National Competitive Bidding > 50 - 150 First Two

Shopping Shopping ≤ 50 First Two

SS Sole Source (Direct Contracting) Regardless of Value ALL (1) (1) Justification must be placed when preparing the Procurement Plan. Reasonable price should be verified at contract signature.

SELECTION &

EMPLOYMENT OF CONSULTANTS

US$ Equiv. (thousands) Prior Review

FIRMS Threshold

QCBS Quality and Cost Based Selection

Equal/Above $ 100 ALL Equal/Below $ 100 First Two

QBS Quality-Based Selection


FBS Selection under a Fixed Budget


LCS Least-Cost Selection Equal/Above $ 100 ALL Equal/Below $ 100 First Two

CQS Selection Based on Consultants' Qualifications


SSS Single-Source Selection

Regardless Contract Value

IC Individual Consultants (*)

Equal/Above $ $35 ALL

Equal/Below $ $35 TOR by Task Team Leader

Rendered Services (**) Regardless Contract Value None (*) In accordance with Section V of the Consultants Guidelines (**) In accordance with Operational Manual

45

Procurement Filing

49. Procurement documents must be maintained in the project files and archived in a safe place until at least two years after the closing date of the project. COPECO, through the PCU Procurement Specialist and Officers will be responsible for the filing of procurement documents. G. Frequency of Procurement Supervision

50. In addition to the prior review supervision to be carried out by the Bank, the capacity assessment indicated the need to carry out annual post reviews. IV. Environmental and Social (including safeguards)

51. The Project has been designed to comply fully with the content and objectives of the relevant World Bank safeguards. In accordance with IDA’s Information Disclosure Policy (BP 17.50), the Environmental and Social Management Framework (ESMF), the Indigenous People’s Planning Framework (IPPF) and Resettlement Policy Framework (RPF) were disclosed in-country and in the World Bank’s website on October 17, 2012. In country, all safeguards documents are available to the public, in Spanish, in COPECO’s offices in Tegucigalpa and San Pedro Sula and the Project’s website.

A. Environmental Assessment (OP 4.01) 52. The Project is classified as Category B and requires development, approval and disclosure of a partial environmental assessment. In general, Project activities will most likely be relatively minor and no negative large, significant or irreversible environmental impacts are expected. On the contrary, the proposed Project will promote environmental sustainability in the DRM sector by establishing appropriate practices within existing institutions, assure that risk reduction works are implemented in a sustainable manner, contemplate potential works on environmental restoration, and prevent further environmental degradation. Taken that the specific investments to be financed by the Project are to be determined after Project approval by the Bank’s Board, an ESMF sets out the principles, rules, guidelines and procedures to assess the Project’s environmental and social impacts. The ESMF describes and analyses the key socio-environmental characteristics of the Sula Region and the expected socio-environmental impacts of the Project. It contains measures and plans to enhance positive impacts and to reduce, mitigate and/or offset adverse impacts, as well as provisions for estimating and budgeting the costs of such measures. Further, it provides detailed information on the applicable environmental management procedures and on the respective institutional responsibilities. 53. The Project design focuses on environmental sustainability beyond environmental management of the Project activities through an ecosystem-based approach to vulnerability analysis and strengthening resilience to increasing climate variability and change. At the national level, the Project will promote the consolidation of the policy and institutional framework by establishing an Environmental Management Unit within COPECO that will collaborate directly with the Ministry of Natural Resources and Environment (SERNA) and the Ministry of Planning and External Cooperation (SEPLAN). Furthermore, the Project will support COPECO in the

46

elaboration of a Code of Environmental Good Practice and provide the agency with technical assistance in connection to climate change and environmental sustainability. These activities aim at strengthening technical quality assurance and environmental management capacity, and are consistent with Honduras’ National Plan, which recognizes the links between environmental degradation, high poverty levels, and vulnerability to disasters. 54. At the local level, the Project will work closely with municipalities to support the strengthening of Municipal Environmental Units and the mainstreaming of environmental sustainability practices in the functions performed by CODEMs and CODELs. Throughout the implementation of the Project’s mitigation works, environmental sustainability issues will be addressed through capacity building and technical assistance combined with supervision and control by the PCU’s Environmental Specialist. Overall, the Project will support management practices that are environmentally sustainable, strengthen local preventative planning and build capacity at the community level. Expected Positive Environmental Impacts 55. It is expected that the Project will have highly positive environmental impacts. First, the structural and non-structural works will prevent and/or mitigate disaster risks caused by the high vulnerability in Sula Valley (Region 1) especially to floods, landslides, and forest fires. Second, technical quality assurance and environmental management capacity will be integrated in the overall capacity building and training activities and especially addressing the Municipal Environmental Units to promote awareness of ecosystem-based disaster risk reduction and environmentally sound territorial planning. Ultimately, the Project aims at contributing to reduction of resource degradation and water contamination of the communities in the Project area. For example, as inappropriate solid waste management has been identified as a threat also to the long-term viability of the disaster mitigation works, and related campaigning and capacity building will be promoted at community and municipal level to address the problem. Potential Adverse Environmental Impacts 56. Given that the Project will use a Code of Environmental Good Practice and that the works are considered relatively small, no major indirect and irreversible negative impacts are expected. Despite the small scope of the structural and non-structural mitigation works, it is possible that adverse environmental impacts could arise. These impacts may include e.g. short-term noise pollution and debris in the areas adjacent to the mitigation works. However, municipalities and other stakeholders could add co-financing to Project investments and thus increase their scope. All proposed investments will be screened by the PCU’s Environmental Specialist, and any major investments will need to prepare a pertinent environmental assessment and apply for an environmental authorization from SERNA. No Category A investments will be financed under the Project, and a negative list included in the ESMF and the Operational Manual will strengthen overall mitigation of negative social and environmental impacts.

B. Natural Habitats (OP 4.04) and Forests (4. 36) 57. There are 13 protected areas in Region 1 under distinct management categories (see

47

Table below). Although the Project will not implement infrastructure works inside protected areas,18 certain region-wide planning and DRM tools will encompass natural habitats. The Project will recognize all the areas with a special environmental status and will comply with the relevant national laws and Bank’s safeguards policies. N° Protected Area Municipality Category Watershed Area (ha) 1 Water Production Zone of

San Pedro Sula, Cofradía and Naco (Merendón)

San Pedro Sula, Cofradía and Naco

Water Production Zone

Rivers Chamelecón and Motagua

35,182.22

2 Punta Sal (Blanca Jeannette Kawas)

Tela Marine National Park Rivers Mezapa, Ulúa and Chamelecón

34,576.96

3 Cerro Azul Meámbar Meámbar, Santa Cruz de Yojoa and Taulabé

National Park River Ulúa 21,324.13

4 El Cajón San José de Potrero, Sulaco, Victoria, La Libertada, Las Lajas, Ojos de Agua, Meámbar and Santa Cruz

Resource Reserve River Ulúa 48,055.20

5 Fortaleza de San Fernando de Omoa

Omoa Cultural Monument 1.00

6 Cusuco San Pedro Sula, Cofradía and Quimistán

National Park River Motagua 17,704.30

7 Yojoa Lake Santa Cruz de Yojoa, San José de Comayagua and Las Vegas

Multiple Use Area River Ulúa 30,151.62

8 Ticamaya Lake Choloma Multiple Use Area River Chamelecón 442.66

9 Lancetilla Tela Botanical Garden River Lean 2,255.31

10 Mountain of Mico Quemado y Las Guanchías

El Progreso, El Negrito and Santa Rita

Ecologic Reserve Zone

River Ulúa 15,621.27

11 Santa Bárbara Santa Bárbara, Las Vegas

National Park River Ulúa 7,670.96

12 Cuyamel Omoa Puerto Cortés and Omoa

Biological Reserve River Motagua 30,002.90

13 Punta Izopo Tela National Park River Lean 15,633.62

Total Area (ha) 258,622.16

Total Area (km2) 2,586.22

58. Certain Project activities may be conducted in forest areas. The Sula Valley includes considerable forest land and there have been concerns for increased deforestation in El Progreso, Santa Rita, and El Negrito. Moreover, the Project may involve planning and mitigation measures that include the development of forest plantations. In order to safeguard these areas, when contemplating DRM activities involving forests, the Project will adhere to the applicable national laws and Bank safeguards policies.

18 Unless the works are consistent with approved management plans for such sites.

48

C. Physical Cultural Resources (OP 4.11)

59. The Project will support conservation of all cultural and archaeological physical resources within the Project area. The works might take place in locations that have not already been screened for physical cultural resources. The country's laws and procedures regarding physical cultural resources will be applied for addressing potential “chance finds” encountered during construction. The ESMF defines the processes that would need to be followed in case archaeological objects are found in work sites within the Project area. Any site considered as social or cultural heritage will not be applicable area for mitigation works.

D. Involuntary Resettlement (OP 4.12) and Indigenous Peoples (OP 4.10) 60. Mitigation measures may affect some people physically or economically. Although the probability of such cases to occur is considered low based on similar previous Bank experience (PMDN) and the relatively small scale of the Project’s eligible mitigation works – between U$60,000 to U$200,000 – the Project will apply social safeguards policies for Indigenous Peoples (OP 4.10) and Involuntary Resettlement (OP 4.12). As the exact location of the proposed project interventions will be determined during project implementation, an Indigenous Peoples Planning Framework (IPPF) and a Resettlement Policy Framework (RPF) have been prepared for inclusion in the Operational Manual. Both instruments (IPPF and RPF) set out guidelines, procedures and criteria to be used for screening all activities identified post-Appraisal and ensuring that they maximize social benefits and avoid causing any potential large scale, significant and/or irreversible adverse impacts. 61. The participatory methodology of the proposed Project for risk and vulnerability analysis as well as decision making will facilitate the proactive inclusion of indigenous and Afro-Honduran peoples. Both instruments were consulted with representatives of Afro-Honduran and indigenous groups during the Social Assessment, more specifically with federations and community leaders from the municipalities of the Sula Valley. Their views and suggestions have been reflected in the project design and will continue to be sought during implementation. The project will only operate in indigenous communities where a process of free, prior and informed consultation results in broad community support for project activities.

E. Social Assessment 62. The Sula Valley is characterized by high vulnerability to natural disasters, while being one of the most economically and socially dynamic areas of the country. The population of the two biggest cities in this region, San Pedro Sula and Choloma, has increased tremendously since 2001.19 The region is also one of the most violent in the country with 159 homicides per 100,000 people recorded in the San Pedro Sula metropolitan area in 2011.20 In terms of human development there is a relatively high variation between the twenty municipalities of the Sula Valley. San Pedro Sula is the municipality with the highest human development index (.768);

19 In 2012, total population in San Pedro Sula is estimated at 687,000 and in Choloma at 261,000, with average annual population growth rates of 4.1% and 8.5% respectively 20 http://www.citymayors.com/security/latin-american-murder-cities.html. Consulted 9/22/2012

http://www.citymayors.com/security/latin-american-murder-cities.html

49

while municipalities in Santa Bárbara are ranked poorly (Petoa received a score of .631). These relative differences in human development levels will inform operational details of the Project, including the Communication strategy. According to the Index on Gender Inequality all but one of the departments that comprise Region 1, are performing better than the national average of .313 in regard to gender equality.21 Gender inequality is less skewed in the departments of Cortés (.095) and Santa Bárbara (.179), while gender inequality is higher in Atlántida (.263) and substantially higher in Yoro (.327). 63. The Project will seek to actively engage at risk communities in the identification, analysis, implementation, monitoring and evaluation of disaster risks in order to reduce vulnerabilities and enhance capacities. A Social Assessment (SA) was carried out to analyze DRM-related issues, identify possible social risks and impacts, and identify and characterize key stakeholders. The SA collected primary data through interviews with key stakeholders, and focus group discussions with male and female residents and municipal authorities of Afro-Honduran and indigenous decent, among others. The findings of the SA, including draft versions of the proposed safeguard instruments, were discussed with interested stakeholders and potential beneficiaries during public consultation held in San Pedro Sula on October 5, 2012. Participants in the public consultations represented relevant stakeholders from the various municipalities located within Region 1. In accordance with the Bank’s Information Disclosure Policy (BP 17.50), copies of the IPPF and RFP have been made available to the public on COPECO’s offices in San Pedro Sula and Tegucigalpa, as well as the Project’s and Bank’s websites. 64. The Social Assessment evaluated existing safeguards management capacity within COPECO and recommended hiring a Social/Gender Specialist to ensure adequate implementation of the safeguard frameworks and gender strategy, as well as focus on overall social sustainability issues related to the Project. The PCU will be responsible for ensuring that all applicable Honduran legislation and Bank safeguards triggered by the Project are complied with, and that all works under implementation comply with RPF and IPPF. The PCU will also provide support to the selected municipalities on the preparation of specific social assessments, public consultations and preparation of resettlement / indigenous peoples’ plans, whenever they may be required. Moreover, the Project’s Communication Strategy will also support outreach activities such as workshops and other events for local authorities, civil society and private sector associations. This will help promote, among other things, the understanding of the benefits and potential implications of disaster risk mapping and its introduction into local planning. In the past, private sector associations in particular have opposed the Project due to lack of understanding of the relevance and implications of these tools.

F. Consultation Framework

67. The PCU will convene meetings with the following actors in Region 1: the twenty municipalities of Region 1, COPECO (central agency and regional seat), CODEMs and CODELs, Technical Municipal Unit (UTM), Municipal Women’s’ Issues Offices, the National Table for Promoting DRM (MNIGRD), Organization for Ethnic Community Development (ODECO), Transparency Commission, patronatos, Secretariat of Environment (DIMA),

21 As per health, education and participation in public affairs.

50

Honduran Social Investment Fund (FHIS), Cadastral Offices, Red Cross Associations (Honduran, Italian, Spanish), NGOs (Medicos Mundi), faith-based organizations (Commission on Menonite Social Action), local chambers of commerce and industry, local teachers, and members of the police force and fire brigade.

68. The Project has been prepared in consultation with other donor-supported efforts for institutional and policy strengthening. A legal and institutional analysis has been carried out, taking into consideration the proposed changes to the SINAGER law. The Project will consult regularly with relevant development partners, and take into consideration key projects such as the IDB-financed MITIGAR and other relevant Bank-financed operations such as the ongoing PATH II and the proposed Safer Municipalities Project.

G. Communication Strategy and Grievance Redress Procedures

69. The Project Communication strategy will seek to support implementation and sustainability of project activities by focusing on three main objectives: (a) to position COPECO as the agency responsible for disaster risk mitigation; (b) to promote a culture of prevention; and (c) to support project implementation. In this regard, activities will be tailored to the communication needs of project components and activities, as much as to the relevant stakeholders. The Environmental and Social Assessments, and the baseline survey, will provide important inputs to the design of the Communication strategy. This Strategy will also seek to promote three crosscutting aspects: gender equity, environmental sustainability, and transparency and accountability. 70. At various Project levels, there are provisions which will promote transparency and accountability for DRM, including the implementation of an institutional grievance redress mechanism, and carrying out of at least two social audits of relevant Project activities. The grievance redress mechanism embedded in the Project Communication strategy will be the main instrument to promote transparency and accountability in Project activities. This system will seek to go beyond grievances by establishing two-way communication processes (similar to a “customer service” system), offering various channels for beneficiaries to present complaints as much as to seek additional information about the Project. The grievance redress mechanism will thus seek to strengthen the project’s and COPECO’s relationship with the beneficiaries. Communication activities will inform stakeholders of the existence of the mechanism, its various entry points, and how complaints received will be handled by COPECO. In addition, a gender strategy and participatory methodologies will enhance transparency and accountability and reduce social and economic vulnerabilities, which are correlated with crime and violence. Finally, Project evaluation includes independent technical audits for the Mid-Term review and final evaluation.

H. Gender Analysis and Strategy

71. Research indicates that impacts from disasters are not uniformly distributed within a population and tend to disproportionately affect the poorest and most marginalized groups.22

22 “Making Women’s Voices Count: Integrating Gender Issues in Disaster Risk Management in East Asia and Pacific”,

51

Moreover, evidence from Honduras and other countries suggests that women are more vulnerable to the impacts of disasters, particularly regarding their livelihoods. At the same time, women play important roles in building a culture of disaster prevention and their active participation is imperative to successful DRM.23 In this respect, it is important to take into account that women tend to have more limited literacy levels and time availability to participate actively in the awareness raising, training and community organization activities required for strengthening DRM due to socially and culturally assigned gender roles. On the other hand, as learned during PMDN implementation, migration of males to the US and other countries, which accelerated in the Post-Mitch period, has resulted in Honduras in an evolving re-negotiation of gender roles providing an additional opportunity to implement a gender equity approach. In this respect, during the previous project, work focused also on men to promote a gender approach that attempted to balance their assumed role as “protectors” – which has often resulted in higher mortality among males as was the case during Hurricane Mitch – and the building of community wide support systems more inclusive of women. 72. Accordingly, the Project seeks to effectively integrate gender dimensions from the earliest possible stage of project development and throughout project implementation and completion. To achieve this, as informed by the gender analysis of the Social Assessment, a Gender Equity Strategy has been prepared to: (a) Mainstream a gender-sensitive approach within the existing DRM institutional framework. The Project is informed by and draws heavily on Honduras’ existing development policies and strategies. Bank experience suggests that mainstreaming gender into DRM policy and legal frameworks requires governments to identify policy entry points to further improve gender equality in DRM.24 As part of mainstreaming gender in DRM, the Project will collect gender-disaggregated data during needs assessments, develop gender-specific indicators, and support an up-to-date and gender-sensitive M&E. Finally, the Project will encourage the adoption of hiring and administrative processes that take into account gender dimensions. (b) Conduct gender-sensitive capacity building for policy makers, technical and other government staff, and other relevant actors. The Project will develop and use advocacy material and guidance tools on gender issues and DRM, targeting key policy-makers (e.g. factsheets, policy notes, and briefing sessions). It will focus on raising awareness among policy makers (women and men) about the benefits of integrating gender issues into DRM. The Project will underline lessons learned and data available on gender and disasters for policy making. More interactive forms of capacity building, such as workshops, trainings, and South-South exchanges may be organized for current and potential women leaders, with a focus on upgrading their skills to assume project management and monitoring tasks. (c) Improve women’s participation in DRM and raise awareness at the local community level. The Project will underline the importance of gender equal participation in DRM both through a rights perspective as well as by highlighting the operational advantages of women’s active

Operationalizing the World Development Report 2012 on Gender Equity, World Bank publication 65841. 23 “Making Disaster Risk Reduction Gender-Sensitive: Policy and Practical Guidelines” ISDR, UNDP, IUCN (2009), p. iv. 24 “Integrating Gender Issues in DRM Policy Development and in Projects”, Operationalizing the World Development Report 2012 on Gender Equity, World Bank publication 65834.

52

participation in DRM. The Project will identify and support regional, municipal and local women’s advocacy groups. The Project has requirements for female participation in the consultation process as well as in CODEMs and CODELs. At the community level, the Project will seek to engage women actively in the identification, analysis, implementation, monitoring and evaluation of disaster risks in order to reduce their vulnerabilities and enhance their capacities.25 It is expected that by promoting a gender-sensitive community-based approach positive impacts in both women’s and men’s lives will be enhanced.26

I. Capacity for Safeguards Implementation 73. COPECO has considerable experience in project implementation with Bank’s safeguards policies. The former DRM project with similar components was executed by COPECO, which built its capacity for safeguards implementation and has operational knowledge of the safeguards requirements. Additionally, COPECO is the executing agency of the IDB-financed MITIGAR project, which adheres to comparable safeguards policies. The fact that COPECO is present in Region 1 through a regional office increases the agency’s capacity to monitor works and their safeguards implications at the municipal level in a more time-efficient and continuous manner. Finally, for each component COPECO will sign agreements with co-executing agencies that will describe their responsibilities regarding environmental licensing, technical assistance and supervision. COPECO will also sign participation agreements with municipalities that will also describe these responsibilities. 74. Capacity for Safeguards Implementation will be further ensured by including in the PCU a Social/Gender Specialist and an Environmental Specialist, along with creating an Environmental Management Unit (EMU) within COPECO. A Communication Specialist will complement this team. EMU design and creation is being carried out in close consultation with the Office of Environmental Assessment and Control (DECA) of SERNA with the aim of getting it officially endorsed by SERNA. This will not only allow expediting necessary environmental authorizations, but also promote institutionalization of environmental management within COPECO. The national-level institutional strengthening along with the enhancement of municipal capacities not only aims at securing satisfactory fulfillment of the ESMF, but also creating more longer-term and broader awareness rising and enabling environment for integrating holistic approach and sound environmental practices to DRM within the country. V. Monitoring & Evaluation

65. COPECO, through the PCU, will be responsible for monitoring and evaluation (M&E). An M&E Officer in the PCU will lead the effort to collect, consolidate and report on project performance data as well as to provide periodic information on intermediate project results and progress toward higher level outcomes. Co-executing agencies will assist the PCU by providing relevant information. The participating municipalities will also collaborate in the collection of information and data related to the Project progress and impacts in their respective jurisdictions.

25 Based on Community-based DRM lessons learned in the East Asia and Pacific Region. “Integrating Gender Issues in Community-based DRM”, Operationalizing the World Development Report 2012 on Gender Equity, World Bank publication 65836. 26 Ibid, p. 2.

53

Periodic monitoring of project progress will be used to adjust activities, budget and procurement plans. Moreover, throughout project implementation, COPECO will prepare bi-annual progress reports. 66. Data on PDO outcome indicators will be collected through secondary sources (such as population census and projections), independent technical audits, representative surveys of project beneficiaries and focus groups. Moreover, the credit will finance collection of base line data to assess social, environmental and economic impacts of key activities, including gender-differentiated impacts. Project indicators and impacts will be assessed in depth during the Mid-Term Review and final evaluation, both of which will be carried out by independent consultants.

VI. Role of Partners

67. There is no co-financing for the Project. Given the importance of coordinating DRM efforts in the country, during Project implementation COPECO will remain engaged with the DRM coordination Committee of development partners. During preparation, a stocktaking of ongoing efforts was carried out to ensure that Project activities built upon and complement other projects and initiatives planned or under implementation in the country (Summary Matrix available in Project files). The main development partners supporting Honduras’ DRM strengthening efforts include IDB, UNDP, European Union, Spanish International Cooperation Agency (AECID), Japan International Cooperation Agency (JICA), US Agency for International Development (USAID) and Swiss Agency for Development and Cooperation (COSUDE). 68. Taking into consideration their resources and level of implementation, the Project will particularly complement the IDB-financed MITIGAR Project – which is also implemented by COPECO, the Bank-financed PATH II (P106680), and support from the Government of Spain (AECID). In this respect, the Project complements MITIGAR’s national level DRM institutional strengthening activities, by inter alia, building on the support that MITIGAR is providing to develop COPECO’s prevention and mitigation capacity including the preparation of a comprehensive national disaster risk management plan; and MITIGAR’s local strengthening activities by applying the participatory methodology described in Annex 2, including prioritizing and investing in mitigation, in Region 1 (Sula Valley) while MITIGAR focuses mainly on the Western area of the country.

69. With respect to PATH II, the Project will coordinate the strengthening of capabilities for land use planning in order to achieve greater technical and logistical integration between municipalities and state authorities that can help the implementation of municipal land use plans within the overall framework of local development, and to incorporate in SINIT and RENOT the information related to municipal land use plans. In the same way, the Project complements AECID’s support to hydro-meteorological and seismological network expansion and the consolidation of a National Monitoring Center, by among other things, providing technical assistance and capacity development in these areas.

54

Annex 4: Operational Risk Assessment Framework (ORAF)

Honduras: Disaster Risk Management Project (P131094)

.

.

Project Stakeholder Risks

Stakeholder Risk Rating Moderate

Description: Changes in local authorities after elections may weaken support for the Project and affect implementation. In the past, some of the Afro-Honduran communities living within Region 1 have opposed Bank-financed projects due to lack of information, difficulty in establishing level of representativeness of their organizations, and internal tensions. Private sector may see identification of disaster risk areas contrary to their economic interests, particularly if such risk mapping is perceived as affecting property values.

Risk Management:

The Project will implement a local participatory approach that has been effective in establishing an educated and engaged public which is more likely to demand attention to DRM issues despite government changes. Moreover, annual workshops with local authorities and civil society will be carried out, including a “re-launching” event after local elections.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Client Not Yet Due Implementation Yearly

Risk Management:

Based on lessons learned, Project consultation mechanisms for indigenous communities will rely on existing structures and organizations. The Project includes an Indigenous Peoples Planning Framework, based on a social analysis, and a Communication Strategy. The PCU will have a Social/Gender Specialist. Moreover, the project will only operate in indigenous communities where a process of free, prior and informed consultation results in broad community support.


Client Not Yet Due Implementation Quarterly

Risk Management:

Project will engage with private sector associations and ensure adequate information sharing through the Communication Strategy.


55


Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Moderate

Description: Risk Management:

COPECO lost some of its capacity for project implementation after the Bank-financed PMDN closed. As such, COPECO’s technical and fiduciary capacity needs to be re-established to ensure readiness for project implementation.

Implementation capacity was rapidly reestablished. COPECO implemented PMDN satisfactorily, and is currently executing the IDB-financed MITIGAR Project. For the proposed Project, a Project Coordination Unit (PCU) will be established within COPECO for which key fiduciary staff has already been contracted. The Bank carried out capacity assessments and found initial fiduciary capacity adequate. The Operational Manual was ready for negotiations. Technical staff should be contracted by January 2013. SEFIN will provide funds for these staff, which will be reimbursed through retroactive financing. Terms of Reference (ToRs) and Technical Specifications for many of the key activities will also be ready when project implementation stars since these were also developed under PMDN and are being applied under MITIGAR. During implementation, the Project will provide technical assistance and training.


Client Completed Implementation 15-Aug-2012

Governance Rating Substantial

Description: Overall governance issues in the country which may be affected by the electoral cycle (oncoming elections of November 2013), are of concern. Although PMDN did not experience it, the overall trend in the country after elections is high turnover of technical and management staff of government institutions and projects, which disrupts implementation.

Risk Management:

Although requiring some improvements, the legal framework is clearer regarding the national DRM framework and fully consistent with the Country Vision and National Plan. The Government, and specifically COPECO and co-executing agencies, have demonstrated strong ownership and commitment to the Project's objective and activities. Given the broad consensus around DRM issues, and based on PMDN experience of 10 years, no major sectoral or Project changes should be expected after elections. Nevertheless, the Bank will ensure adequate Bank supervision and DRM policy and strategy dialog during the electoral cycle.


Bank Not Yet Due Implementation Monthly

Risk Management:

The Financing Agreement, as in other recent projects in Honduras, will include a covenant to minimize unjustified firing of PCU staff and the Operational Manual will include objective

56

performance evaluation procedures.


Both Not Yet Due Implementation Monthly

Risk Management:

Under PMDN there were no instances of fraud and corruption, thanks to a great extent to the Project’s dedicated and largely autonomous fiduciary unit. Also, under PMDN the general problem of political interference related to procurement processes and hiring of project staff did not emerge, although it has been an issue in other projects in Honduras. However, to mitigate this risk, under the proposed Project a PCU, led by a Coordinator, will be established with adequate operational and fiduciary autonomy. The Special Module for Project Implementing Units with External Financing (UEPEX) will be used as a framework for FM and financial reporting, and the Procurement Plans Execution System (SEPA) for procurement.


Client Not Yet Due Implementation 01-Jan-2013

Risk Management:

Project investment decisions will be based on a tested participatory process that involves local authorities and communities that includes prioritizing mitigation measures through, among other mechanism, an open town hall meeting. The Project will also support the establishment of an institutional grievance redress system and the carrying out of social audits of relevant project activities. The Project Coordination Committee will include representatives of civil society. Moreover, project evaluation includes independent technical audits for the Mid-Term review and final evaluation.



Project Risks

Design Rating Low

Description: Climate change introduces additional factors and uncertainty that should be considered for the overall DRM strategy and

Risk Management:

The Project will rely on tested technology, methodologies and processes. Project design also incorporates lessons learned from PMDN and other Bank-financed projects, and is focused initially on a specific region. More particularly, Project design emphasizes environmental

57

specific measures. Technical quality assurance is challenged by the widespread nature of mitigation investments.

sustainability beyond environmental management of the Project activities through an ecosystem-based approach to vulnerability analysis and strengthening resilience to increasing climate variability and change. The Project will support the establishment of an Environmental Management Unit within COPECO, which will collaborate directly with the Ministry of Natural Resources and Environment (SERNA), which leads the national level work on climate change, and the Ministry of Planning and External Cooperation (SEPLAN). Cooperation will also be sought with NGOs such as the Red Cross and WWF that have initiated community-based work on climate change adaptation within Region 1.


Client Not Yet Due Implementation Monthly

Risk Management:

Technical quality assurance of the mitigation measures will be promoted through triangulated supervision and control, including a municipal engineer, the CODEL of the beneficiary community, and the engineer and Environmental Specialist of the PCU.



Social and Environmental Rating Moderate

Description: Overall, the Project is expected to result in positive social and environmental impacts. Mitigation measures will be of a small scale, which will also provide employment opportunities for local beneficiaries. COPECO, however, will require stronger capacity to deal with social and environmental issues. On the social side, it will be important to manage expectations and ensure transparency of investment decisions through participatory characterization and territorial planning processes. The Project will not support resettlement of people living in high risk areas. However, even if it is of a relative low likelihood, implementation of some mitigation measures may affect some people economically and/or physically. Project activities should take into account the indigenous

Risk Management:

In the past, some of the Afro-Honduran communities living within the Project area have opposed Bank-financed projects due to lack of information, difficulty in establishing level of representativeness of their organizations, and internal tensions. Representatives of these communities and other Indigenous Peoples in the 20 project municipalities were consulted about the project during the Social Assessment. Their views and suggestions were reflected in the project design and will be considered during implementation. The project will only operate in indigenous communities where a process of free, prior and informed consultation results in broad community support for the project. A Communication Strategy, an Indigenous Peoples Planning Framework, and a Gender Equity Strategy were prepared and will be implemented to help ensure adequate engagement with all potential beneficiaries. The Communication Strategy will also support outreach activities such as workshops and other events for local authorities, civil society and private sector associations, which will complement information dissemination through various media included in the communication strategy.

58

communities that are likely to live within the Project area. Ensuring environmental sustainability is a major and central challenge to any DRM Project especially due to the increasing challenges and underlying uncertainties of climate variability and change.

The PCU will have a Social/Gender Specialist, an Environmental Specialist, and a Communication Specialist, and the Bank will provide safeguards training at the beginning of Project implementation and as needed basis.


Both In Progress Both Monthly

Risk Management:

An Environmental Management Unit will be created within COPECO in close cooperation with SERNA in order to strengthen the role and performance of the PCU’s Environmental Specialist. This will fundamentally streamline processing of environmental authorizations for Project’s investments, and it will promote institutionalization of environmental management within COPECO. A list of activities that cannot be financed under the Project (Negative List) has been agreed upon to strengthen the mitigation of potentially adverse social and environmental impacts. To further ensure sustainability of the mitigation works, municipal and community-level risk and vulnerability analysis will apply an ecosystem-based and climate-sensitive approach to promote understanding of the importance of environmental conservation and restoration and key criteria for maintaining/improving critical ecosystem services.


Both In Progress Both Monthly

Program and Donor Rating Low

Description: Risk Management:

The Project is consistent with the DRM efforts of the country, but its success will not be generally dependent on other agencies’ supported projects or initiatives. It is important, however, to coordinate project preparation and implementation with key partners such as IDB, UNDP and others.

The Project was prepared in close consultation with relevant development partners, and taking into consideration key projects such as IDB-financed MITIGAR and others. A stock-taking exercise of projects and initiatives was carried out to inform Project design. Further coordination will be promoted through the donors’ DRM coordination committee.


Both In Progress Both Quarterly

Delivery Monitoring and Sustainability Rating Moderate

Description:

Risk Management:

COPECO will have a dedicated PCU, with adequate capacity for contract planning and

59

Not major or difficult contracts are expected under the Project, so no major delivery risks from contractual or market conditions are expected. Nevertheless, the Project area includes municipalities where crime and violence has increased, which may inhibit implementation of some mitigation works. In general, DRM Projects have suffered from weak M&E, to some extent reflecting the difficulty in measuring impacts based on probabilistic assumptions. Sustainability of project results may be hindered by lack of clear responsibilities or resources for maintenance of mitigation works, and in the case of capacity building, due to turn over of staff, particularly after elections.

monitoring. Project design paid special attention to the results framework and M&E. A baseline to assess social, environmental, and economic impacts will be prepared during the first year of the Project, including gender-differentiated impacts when relevant.


Client Not Yet Due Implementation 30-Apr-2014

Risk Management:

As PMDN’s experience shows, having local authorities and communities fully engaged in identifying, prioritizing, and supervising mitigation works ensures materials and construction quality and beneficiaries’ satisfaction and strong sense of ownership. These factors, in time, help to promote adequate operation and maintenance. Final evaluation surveys carried out as part of PMDN evaluation also indicated that to a great extent local authorities have understood the importance of keeping qualified technical staff.



Overall Risk

Implementation Risk Rating: Substantial

Comments:

This rating considers that the proposed Project will operate in a risky country environment, which will face elections in November 2013 and is vulnerable to disasters, crime, and external shocks. Building on COPECO’s experience with externally-funded projects, implementation capacity is being rapidly re-established. Stakeholder risks could materialize if not adequate attention is paid to the implementation of the communication strategy and safeguards instruments. On the other hand, COPECO and PMDN are generally well regarded, and primary stakeholders have an interest in the success of the Project.

60

Annex 5: Implementation Support Plan


Strategy and Approach for Implementation Support 1. The strategy for Bank implementation support is based on the nature of the Project and its risk profile. As per the ORAF, overall implementation risk is rated as substantial, considering stakeholder, political and governance risks. Accordingly, the implementation support will focus initially on ensuring that stakeholder engagement mechanisms such as the project information/launch workshops, the Communication Strategy, and the Gender Equity Strategy are adequately implemented. At the same time, to promote transparency and accountability, technical assistance will be provided during the design and establishment of COPECO’s grievance redress mechanism and the design and carrying out of social audits, while following up on the participation of civil society in the Project Coordination Committee. Finally, the Bank will pay close attention to the selection of key consultants and will provide refresher/ updating training as needed on procurement, financial management and safeguard compliance. 2. Missions will be scheduled every three or four months, including at least two full implementation support missions during the fiscal year, and specialized / follow up missions of particular team members depending on project implementation challenges and needs. The Bank team will continue to coordinate with other development partners supporting DRM in Honduras to promote learning and sharing of implementation experience. The Bank Task Team will maintain a close interaction and will share mission findings promptly with relevant authorities, and foremostly with the implementing and co-executing agencies.

3. The above strategy is proposed as an indicative and flexible instrument which will be adjusted during Project implementation and as part of the Implementation Status and Results Reports (ISR) and adjusted based on project and field conditions. Implementation Support Plan 4. Task team leadership, safeguards and technical aspects will be managed from the Bank’s Washington office. Bank implementation support for procurement and financial management will be provided from the Bank office in Honduras. International and national consultants will be hired to provide advisory services as needed. 5. The main focus of implementation support is summarized below.

61

Time Focus Skill Needed/Resource Estimate Partner Role

First 12 months (SWs/year) (days/year)

Technical and procurement review of documents for initial activities to ensure accelerated implementation start

DRM Specialist 4 SWs Technical Specialists 40 days Procurement Specialist 4 SWs

NA

FM supervision FM Specialist 4 SWs

Social Safeguards – Supervision and Training Social Dev. Specialist 5 SWs Gender Specialist 2 SWs

Environmental Safeguards - Supervision and Training

Environmental Specialist 5 SWs

Project Management / Operational Support and Communication/Information

Task Team Leader 8 SWs Operations Analyst 5 SWs Communication Specialist 3 SWs

Months 13-48 (SWs/year) (days/year)

Risk Analysis / Mapping Territorial Planning Mitigation Investments

DRM Specialist 3 SWs Municipal Strengthening / Territorial Planning Specialist s 40 days Procurement Specialist 3 SWs

NA

Environmental Sustainability and Safeguards Environmental Specialist 4 SWs

Social Sustainability and Safeguards Social Specialist 3 SWs Gender Specialist 20 days

Financial management disbursement and reporting

FM specialist 3 SWs

Project Management / Operational Support and and Communication/Information

Task Team Leader 14 SWs Operations Analyst 5 SWs Communication Specialist 2 SWs

Note: SW – Staff-Week

6. Skill mix required is summarized below.

Skills Needed Average Number of Staff

Weeks per Year Number of Trips Comments

Environmental Specialist 3 SWs Field trips as required Social Specialist 3 SWs Field trips as required Gender Specialist 15 days Field trips as required Communication Specialist 30 days Field trips as required DRM Specialist 4 SWs Municipal Strengthening / Territorial Planning and other Technical Specialists

30 days each Field trips as required International and local consultants

Procurement Specialist 3.5 SWs Minimum two field trips Country office based Financial management Specialist

3.5 SWs Minimum two field trips Country office based

Operations Analyst 5 SWs Field trips as required Task Team Leader 8 SWs Minimum two field trips

62

Annex 6: Sectoral and Institutional Context


A. Sectoral Context

1. In addition to poverty levels, rapid urbanization and environmental degradation render Honduras particularly vulnerable to natural hazards. The urban population growth rate for 2010-2015 is expected to average 3.03 percent, almost five times higher than the rural population growth rate for the same period. According to UN Habitat, Honduras’ population will predominantly live in urban areas by 2025 (61.6 percent of the total projected population of 10.7 million). On the other hand, deforestation resulting from logging and improper land use soared with an annual deforestation rate of 2.5 percent between 1990 and 2005. This trend has led to 37 percent decline in the country’s forest cover, reducing natural prevention capacity against landslides. In parallel, disaster risk management challenges have been intensified by farming of marginal lands, soil erosion due to haphazard development, and mining activities in environmentally sensitive areas. Finally, the effects of increasing climate variability further aggravate Honduras’ disaster risk. 2. The Government of Honduras has demonstrated its commitment to improving local and national capacity for disaster risk management (DRM) and to reducing disaster vulnerability.27 With support from the Bank-financed PMDN (P064913 – see Box 1 below) and other donors, national capacity for DRM has improved considerably and the country has shifted towards a culture of prevention. Indeed, PMDN represents a pioneering approach adopted by Honduras after Hurricane Mitch, which has been mainstreamed in many subsequent Bank-financed DRM projects in other countries, as well as in ongoing projects financed by other donors in the country. As detailed in PMDN’s Implementation Completion and Results Report (ICR),28 a key feature of this approach was the development and successful implementation of a participatory methodology to help local authorities and communities in 81 municipalities to identify main risk and vulnerability issues, to introduce these into their territorial planning, and to prioritize mitigation activities. 3. At the national level, there are advances in institutional capacity and coordination, building on a more consolidated legal framework for DRM. PMDN strengthened key agencies such as COPECO and SERNA. PMDN also assisted the preparation and passage of the 2009 law establishing Honduras’ formal disaster risk management system (SINAGER),29

27 Disaster risk is a function of the characteristics and frequency of hazards experienced in a specific location, the nature of the elements at risk, and their inherent degree of vulnerability or resilience. Disaster Risk Management represents a comprehensive approach including preparedness and response, prevention and mitigation. In this context, (a) preparedness is defined as the knowledge and capacities developed to effectively anticipate, respond to and recover from the impacts of a hazard event; (b) prevention would be the avoidance of adverse impacts of hazards and related disasters; and (c) mitigation would be the lessening or limitation of the adverse impacts of hazards and related disasters. (UNISDR Terminology on Disaster Risk Reduction, 2009). 28 World Bank. Implementation and Results Completion Report for the Natural Disaster Mitigation Project. Report No. 000089. June 2011. 29 Other legal building blocks include, among others, the 2003 Territorial Planning Law, the 2009 Water Law, and the adoption of the recommendations of the strategic objectives and priority actions of the 2005-2015 Hyogo Framework for Action (HFA), the primary international agreement for disaster reduction.

63

which aims to develop capacities for risk reduction, preparedness, response and recovery from disasters. The law defines national DRM activities in Honduras, provides the overall framework for disaster risk reduction and its coordination, and regulates the relationship between relevant institutions. Moreover, the law addresses disaster risk reduction as a social process and provides for active citizen participation in the system’s decision-making process. The law also incorporates the DRM strategy within a national development context and prioritizes gender equity and attention to vulnerable groups. Importantly, the law makes provisions to ensure that the DRM system becomes functionally, technically, and financially independent.

Box 1: Natural Disaster Mitigation Project (PMDN)

PDO: to improve the national capacity of the country to reduce its vulnerability to natural disasters at the municipal level. Total Project Cost: US$22 million (including Additional Financing) Implementation Period: May 2000 to December 2010 Project Components: (a) Monitoring, Forecasting, Early Warning and GIS based Information Management; (b) Strengthening of National Capacity to Support Emergency Response at the Municipal Level; (c) Building Capacity in Disaster Mitigation at the Municipal Level; and (d) Project Management. Specific Project results include: 30 • The legal and institutional framework for DRM was improved through support to the preparation and

passage of the 2009 SINAGER Law that established a formal DRM system for Honduras; strengthening of key agencies such as the Disaster Preparedness and Response Agency (COPECO) and the Ministry of Environment (SERNA); and implementation of a disaster awareness campaign.

• National capacity for hydro-meteorological and geophysical monitoring, and for flood forecasting was improved through consolidation of the original old and small-scale flood early warning system covering four of the main watersheds in the country; adoption of early warning systems for landslides (8 municipalities); adoption of a monitoring system for droughts (18 municipalities); establishment of community-based early warning systems (7 municipalities); and production of close to 3,500 layers of geo-spatial information.

• Local vulnerability was reduced through the establishment of 95 municipal disaster emergency committees and 375 local emergency committees that actively engaged a total of 6,000 people; completion of participatory DRM programs in 81 municipalities; preparation of engineering designs for priority structural and non structural mitigation measures in 61 municipalities; completion of structural mitigation measures in 58 municipalities which benefited over 500,000 people, including close to 130,000 directly protected (according to the 2001 Census); and completion of drought mitigation measures in 8 municipalities.

4. Honduras also enhanced hydro-meteorological forecasting accuracy and timeliness by integrating national monitoring, forecasting and decision support systems. An improved early warning system is able to provide timely and reliable information to vulnerable populations, businesses and farmers in several parts of the country as demonstrated in recent extreme events.31 Positive synergy of technological and scientific improvements, better collaboration across key agencies, and clearly defined protocols for data sharing and dissemination of warning messages have made the system in place more effective. There are also noteworthy improvements in access to disaster risk information and knowledge useful for policy making and public education.

30 For further details see Project’s Implementation Completion and Results Report (ICR, June 2011). 31 These events include tropical depression 16 and tropical storm Agatha.

64

5. Finally, Honduras has made progress in DRM at the local level through the participation of local officials and communities in relevant analyses and preparation of and Municipal Territorial Development Plans (PMOTs), Municipal Risk Management Plans (PMGRs), and Municipal Emergency Plans (MEPs). PMOTs include land use guidelines and have been frequently used to inform and engage public and private investments decisions about disaster risks. Coordination between the national, municipal, and local level, as well as information exchange within the national emergency response network, has been made more effective through the Municipal Committees for Emergency Response (CODEMs) and the Local Committees for Emergency Response (CODELs).

Main Challenges in the DRM Sector

6. Despite the above progress, Honduras continues to face several challenges in the DRM sector: Furthering institutional and policy consolidation while implementing the SINAGER Law 7. SEPLAN is a new ministry and the implementation of the regional planning approach based on watersheds is in its initial stages. At the same time, COPECO’s mandate has continued to broaden without commensurate growth in capacity and budget allocation. The SINAGER law, although representing progress, needs improvements to facilitate the achievement of overall DRM institutional and policy objectives. A proposal has been recently prepared to introduce such changes, which will require attention to ensure consistency with other laws such as the 2009 Water Law. Some of SINAGER Law’s key provisions need to be made operational. The Project will help address this challenge, mainly through Component 1. In this respect, in addition to overall institutional strengthening, this component includes key activities such as helping SEPLAN finalize and disseminate a standard methodology for territorial planning, and COPECO consolidate DRM policy and strategy. During supervision, special attention will be paid to the evolution of the legal and institutional framework for DRM. Increasing attention to environmental sustainability issues for DRM, particularly in the light of climate change. 8. Better understanding of the underlying factors of increasing disaster risk and vulnerability is still needed. The watershed management approach introduced recently in the country is a positive development, as is the National DRM Strategy that is being prepared under the IDB-financed Disaster Risk Prevention and Mitigation Project (MITIGAR). Since climate change has introduced additional factors to be considered for DRM strategy and measures, considering these factors will result in better understanding of natural hazards and their associated vulnerabilities. These issues will be addressed by the Project by promoting environmental sustainability beyond environmental management of the Project activities through an ecosystem-based approach to vulnerability analysis and strengthening resilience to increasing climate variability and change; and by strengthening environmental sustainability

65

capacity through, inter alia, preparation and dissemination of a Good Practice Environmental Code for DRM, establishment of an Environmental Management Unit in COPECO and strengthening of the UMAs in participating municipalities, and by provision of technical assistance related to climate change. Generating information and knowledge on disaster risk and vulnerability 9. The need for updated and robust information and knowledge on disaster risk and vulnerability remains substantial in Honduras. This need is particularly important at the regional and local level in order to facilitate decision making and community engagement. The Bank, through PMDN, helped to produce information – including geo-spatial information – for 81 municipalities, and MITIGAR Project will provide it for 20 more municipalities. However, there are 298 municipalities in the country, most of which face different types of natural hazards and require a better understanding of their disaster risk and vulnerability. The Project will help to update and/or produce new information in about 20 municipalities within Region 1 (Sulla Valley), while supporting COPECO and SEPLAN to make this information publicly available, especially at the local level.

Improving local capacity for DRM and investing in mitigation within a territorial planning framework.

10. The country’s fragile infrastructure is highly vulnerable to adverse climatic conditions. A large proportion of the population faces severe risks from hydro-meteorological and associated extreme climatic events, such as floods, droughts and landslides. Seismic risk is also significant in many areas of the country, but thus far it has not been sufficiently analyzed. Despite the substantial progress made through PMDN and the ongoing efforts of MITIGAR and other initiatives, the need for improving DRM capacity at the local level while investing in mitigation remains substantial. Helping to address these challenges are central to the Project, principally through the local capacity strengthening and participatory methodology that will be implemented under Component 2, and the corresponding mitigation investments under Component 3. These investments will be identified on the basis of adequate risk and vulnerability analyses, and prioritized on the basis of partnership with local authorities and community consultation and participation. 11. A major challenge at the local level remains the need to protect large number of people living in high-risk areas. Implementation of a major program to promote voluntary relocation to safer places and minimize the resettling of freed-up high-risk sites faces social and fiscal constraints. Preventing future settlements in this type of sites through inter alia, risk identification, territorial planning, increased awareness, and social “common good” oversight, would nevertheless have a substantial impact in promoting sustainable development. Adopting disaster risk financing strategies and mechanisms to manage fiscal vulnerability.

12. Considering its disaster vulnerability, it is critical for Honduras to adopt disaster risk financing strategies and mechanisms that help to manage the resulting fiscal vulnerability. As

66

initial steps, Honduras has obtained from the IDB a Contingency Loan of US$100 million (with some features similar to the Bank's instrument CAT DDO)32 to ensure rapid access to financial resources in case of a national disaster. This Contingency Loan, however, is specific to a certain type of disasters and event parameters. In the longer run, the proposed changes of the SINAGER Law include the establishment of a National Fund for the Prevention and Response to Emergencies (FONAPRE) with an annual budget allocation of at least Lps. 30 Million (over US$1.5 million). Additionally, five per cent of non-executed funds in any fiscal year would be transferred to FONAPRE through channels to be determined by the Ministry of Finance (SEFIN).33 In the short run, the Project will provide rapid access to funds after an emergency through the CERC and by helping Honduras make use of the IDA IRM mechanism, eventually through windows in new or restructured projects across the country portfolio (see Annex 7 for details). Developing risk reduction strategies that mainstream prevention and mitigation issues into key sectors such as transport, water and sanitation and energy.

13. In addition to understanding risk and vulnerability at the local level, it is critical for a country like Honduras to analyze the vulnerability of key sectors and develop DRM strategies for these. Recognizing the importance of this issue, through the MITIGAR Project the Government will update the strategic plans of at least two key sectors to introduce DRM components. Moreover, the Bank is also contributing to this effort through a regional initiative that will assess the vulnerability of the water and sanitation sector. B. Institutional and Legal Framework Key Agencies 14. COPECO is the organization responsible for coordinating public and private actions related to DRM at the national level. In addition to COPECO, other key agencies for DRM in the country are SEPLAN, SERNA, and AMHON. COPECO was created by Decree 990-E on 12 December 1990,34 and is led by a Minister-Commissioner. Although originally created as a disaster response agency, its mandate has evolved to include disaster risk prevention and mitigation. 15. SEPLAN was established by Decree No. 286-2009 (published in La Gaceta No. 32,129 of February 2, 2010.) SEPLAN reports directly to the President’s Office. It is in charge, among other things, of overseeing implementation of the National Plan, and specifically territorial planning in the country and of setting standards and norms. The Country Vision and National Plan assign SEPLAN the responsibility for planning early warning systems and early recovery (Art. 2) in addition to designing a general methodology for regional planning. SEPLAN is

32 CAT DDO stands for Disaster Risk Management Development Policy Loan with Catastrophe Deferred Draw Down Option. Honduras, an IDA country, is ineligible to access this instrument, which is only available to IBRD countries. 33 Although less feasible to accomplish the proposed changes also would mandate that all public institutions that belong to SINAGER include in their budgets at least 1 per cent of their resources to finance prevention, mitigation and response activities. 34 Relevant reforms to COPECO Law include: Decree 217-93 of 13 October 1993 and reforms to its Regulations (Reglamento), Decree 121-99 of 18 May 1999.

67

finalizing eight regional plans, including in Region 1 (Sula Valley).

16. SERNA was established by Executive Decree 218-96, Art. 29 and it is responsible for the formulation, coordination, implementation and evaluation of policies related to (i) the protection and use of water resources; (ii) new and renewable sources of energy; (iii) transformation of hydropower and geothermal energy; (iv) all matters relating to mining; (v) exploration and exploitation of hydrocarbons; (vi) coordination and evaluation of environmental policies, ecosystems, the Honduras National System of Protected Areas (SINAPH), the protection of flora and fauna and (vii) research and pollution control. SERNA is also in charge of leading climate change issues in the country, and of continuing the improvement of the country’s hydro-meteorological capacity.

17. AMHON is a non-profit entity representing the interests of the country’s 298 municipalities. As such, it is a valuable partner in facilitating local level DRM and territorial planning efforts. AMHON was created by the Ministry of Interior and Justice (now Ministry of Interior and Population or SEIP, per resolution 16/11 04/62.) It is the organization driving the decentralization process in Honduras. The Board is comprised of 21 members including a President, three Vice-Presidents, a Secretary General, two pro-secretaries and a prosecutor Legal Framework 18. The legal framework for DRM is regulated by the Constitution of the Republic of Honduras (Articles 106, 360). As per the analysis carried out during project preparation, Honduras has more than 15 laws pertinent in various degrees to DRM. The most relevant of these is currently the National System for Risk Management Law (SINAGER Law), which was approved by Executive Decree 151-2009, and its Regulation (Executive Number 032-2010). The Law created the National Risk Management System (SINAGER), which is Honduras’ legal framework aimed at the country’s developing and having the capacity to prevent and reduce risks, and to prepare, respond and recover from natural as well as man-made disasters. Other pertinent laws include the National Territorial Planning Law (2003), Municipalities Law (Legislative Decree 134-90), General Law of the Environment (Decree110044—9933), and General Law of Water (Decree 181-2009). In addition, SEPLAN has recently completed a new Decentralization Policy, reiterating the Government’s commitment to this issue. 19. SINAGER is led by a Board whose Executive Secretariat is COPECO (which also represents the Executive Power in its absence). The Board is comprised of 25 members (20 on a permanent basis and 5 temporary members.)35 The SINAGER Board meets at least three times a year and it can meet under extraordinary circumstances any other time as needed. Recent experience has shown that the current structure of the Board makes it difficult to coordinate activities. Thus, as part of the proposal to review the SINAGER law, the Board will be simplified and given a higher profile.

20. After the initial experience implementing the SINAGER law, there is a proposal to

35 These members include relevant ministries, AMHON, the Honduras Council of Private Enterprises (COHEP), labor organizations, producers’ organizations, and representatives of civil society and academic institutions.

68

improve it to continue strengthening DRM policy and strategy in Honduras. Whereas these changes are not critical for Project implementation and PDO achievement, they would help to make the national DRM system and its actions more effective in the long term. Specifically, the key issues that these changes seek to address are:

• Further clarifying the nature and roles of SINAGER within the structure of the State and the legal system

• Need to provide regulations / guides on risk management activities such as: risk assessment, roles of the risk prevention officers, responsibilities of SINAGER members, resettlement of vulnerable populations, and early recovery

• Simplifying SINAGER’s structure, which constraints the system operationally, and assigns very little power to Ministries for coordination of activities.

21. Consequently, the most relevant changes proposed include:

• Eliminating the duality between SINAGER’s Board and COPECO • Elevating the profile of the Executive Secretary of the Board, who would be appointed

directly by the President of the Republic with same level and responsibilities of a Minister

• Establishing two new Secretariats, with their Directors appointed by the Executive Secretary of COPECO: (i) Permanent Commission on Contingencies (COPECO) and (ii) the Risk Management Permanent Coordination Directorate (COPEGER)

• Making ministers the authorities directly responsible for the implementation of DRM policy and strategy

• Requiring all public entities to coordinate their actions and participate in SINAGER • Requiring all public institutions to appoint one Prevention Officer who will be the chief

of a Prevention Technical Unit. Among the responsibilities of the Prevention Officer are to be the liaison between the institution, municipality or group of municipalities (mancomunidad) and the Executive Secretariat of the SINAGER and guarantee the appropriate communication and information flow for the application of norms and regulations issued by the SINAGER’s Board and the Executive Secretariat

69

Annex 7: Strategic Approach for Improving Honduras’ Emergency Response Capacity


1. Honduras is highly vulnerable to disasters, especially hurricanes, tropical storms and associated impacts such as flooding and landslides, while earthquake activity has not been uncommon. Globally, Honduras ranks 9th among countries at relatively high mortality risk, especially considering that 62 percent of the country’s territory and 92 percent of the total population are at risk from two or more hazards.36 Between 1980 and 2010, over 15,000 people were killed and over 4 million were affected by disasters in Honduras, while economic damage amounted to US$4.5 billion.37 The country’s vulnerability is also reflected in indices developed by the IDB such as the Disaster Deficit Index (DDI) and the Prevalent Vulnerability Index (PVI).38 Specifically, Honduras ranked first in the DDI39 with a score of 6.96, which means that extreme disasters may overwhelm the Government’s economic ability to cope with losses by seven times. Likewise, the expected annual loss, or the average loss of future disasters, was estimated at almost 30 percent of capital/investment costs. 40 At the same time, Honduras ranked sixth out of 23 countries in the region with respect to the PVI, which considers predominant vulnerability conditions by measuring exposure in prone areas, socioeconomic fragility and lack of social resilience. Importantly, Honduras also has a high propensity to experience small and recurrent disasters. Under these circumstances, not only catastrophic events but also relatively smaller disasters can affect public administration, finances and productive sectors and have a cumulative impact on development at the national, regional and local levels.

A. Objective 2. The proposed Project will support Honduras to improve its capacity to respond promptly and effectively to emergencies. This objective will be achieved through a strategic approach that combines the strengthening of emergency preparedness and response capacity at the national and local levels with the provision of rapidly accessible IDA financial resources in the aftermath of a crisis or emergency. The latter will be supported by including a specific Contingency Emergency Response Component (CERC) with an allocation of US$10.0 million under the Project (Component 5), and by helping to make operational the Immediate Response Mechanism (IMR) at the country level. As a result, not only would financial resources be available to Honduras before an emergency, but importantly the time for accessing these resources after the emergency would be significantly reduced. 3. This approach builds on the flexibility provided by OP 8.00 that allows using simplified

36 World Bank Group. Natural Disasters Hotspots: A Global Risk Analysis. 2005. (DRM Series No. 5). 37 EM-DAT: The OFDA/CRED International Disaster Database, Université catholique de Louvain, Brussels, Belgium 38 Inter-American Development Bank. “Indicators of Disaster Risk and Risk Management, Program for Latin America and the Caribbean”, Technical Note: IDB-TN-169, September 2010. 39 A DDI greater than 1.0 reflects the country’s inability to cope with extreme disasters even by going into as much debt as possible. A higher DDI denotes a greater gap between losses and the country’s economical ability to face them. 40 This figure illustrates the portion of a country’s annual Capital Expenditure (CE) that corresponds to the expected annual loss or the pure risk premium. In other words, it shows the percentage of the annual investment budget that would be needed to pay for future disasters.

70

procedures and for rapid restructuring of project portfolios to meet crises and emergency needs. Accordingly, implementation arrangements and fiduciary and safeguards requirements, which will be detailed in an Operational Manual, will seek to ensure smooth implementation of post-emergency response based on rapid and effective disbursement of available funds. The CERC and IRM will complement the IDB-funded Contingency Loan (US$100 million) which is an instrument designed for specific catastrophic events that fall within contractually agreed upon parameters relating to their type, location, and intensity.

B. Preparatory Steps 4. The Project’s CERC has a defined allocation of funds while the IRM will be made operational by including a contingent window with zero allocation under new or restructured projects. In case of an eligible emergency or crisis, as defined in the Operational Manual for the CERC and IRM, Honduras will be able to access funds, depending on financing needs, through this operation and eventually through IRM windows under other projects in the country portfolio. The Project will support the preparation of the Operational Manual and any other required documents, including the Environmental and Social Screening Assessment Framework (ESSAF) that will be part of the manual. 5. Taking into account the approach’s objective, the Government and Bank will agree on the definition of eligible emergencies, implementation arrangements, and fiduciary and safeguard requirements. These will be reflected in a specific Operational Manual, which will have the endorsement of the Government and the Bank’s no objection.

C. The Project’s CERC (Component 5)

6. The Project’s CERC will finance public and private sector expenditures on a positive list of goods, both domestic and imported, and/or specific works, goods, services (including audit costs) and emergency operation costs required for Honduras’ emergency recovery. These expenditures will be in accordance with OP8.00 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. 7. The positive list will be defined in the Operational Manual, but it may include, inter alia, (i) construction materials and industrial machinery; (ii) water, land and air transport equipment, including supplies and spare parts; (iii) school supplies and equipment; (iv) medical supplies and equipment; (v) petroleum and fuel products; and (vi) communications equipment.

8. Other eligible expenditures to be defined in the Operational Manual (a) for specific works may include urgent infrastructure works (repairs, rehabilitation, construction, etc.) to mitigate the risks associated with the disaster for affected populations; (b) for goods may include construction materials and equipment, agricultural inputs (excluding pesticides), and telecommunication equipment among others; (c) for services may include studies (technical, social, environmental, etc.) necessary as a result of the effects of the disaster for identification of priority works, feasibility assessments, or delivery of related analyses; and (d) for emergency operation costs may include incremental expenses such as additional transport costs, increased

71

electricity bills for the public sector, staff overtime, and rental of light and heavy machinery. In the case of works, a sequenced approach to safeguards, as per OP 8.00, will be followed.

Operational Manual 9. An Operational Manual will be prepared describing the actions to be taken by the Government when a crisis or emergency occurs. In the case of Honduras, it will be practical to follow the definition of emergency and the declaration procedures described in the SINAGER Law and its regulations (Decree 151-2009, Articles 42 and 43 especially). The Manual will also describe the country’s Coordinating Authority, as well as roles and responsibilities of implementing and oversight bodies in the context of emergency response and the Project’s CERC; arrangements on procurement, financial management, safeguards, and disbursements; eligible expenditures; and the monitoring and evaluation, and reporting arrangements. The Bank’s corporate policies on financial management, procurement, safeguards and disbursement will apply, with the added flexibility provided under OP 8.00. 10. The Manual will be referred to in the Financing Agreement (FA) and will be reviewed and cleared by Legal, Procurement, FM, CTR, and safeguards staff before it is approved by the Country Director. The Manual may be updated periodically to reflect evolving country conditions.

Implementation 11. Following an eligible emergency, the Government may request the Bank for funds available in the Project’s CERC to meet emergency needs. If these needs outstrip the funds available under the CERC, the Government could also request funds from the IRM contingent windows from other projects, and/or a reallocation of funds within the Project to increase the amount of CERC’s funds. 12. To access funds under the Project’s CERC, based on the process described in the Operational Manual, the relevant Government authority should have declared the state of emergency and the Bank agreed and notified the Government. Any required safeguards instruments should have been finalized and disclosed.

13. Goods purchased up to 12 months from the date that CERC’s implementation is triggered will be eligible for financing, while retroactive financing (as provided under OP 8.00) will also be made available under the Project’s CERC.41

41 OP/BP 8.00 provides for retroactive financing up to 40 percent of the Credit or Loan amount for payments made by the Government no more than 12 months prior to the expected signing of the legal agreement. Under an IRM Component, the 12-month retroactive period is from the date when the implementation of the contingent component is triggered.

72

D. Immediate Response Mechanism (IRM)

14. The IRM will be made operational at the country-level by:

(a) Adding to the Project Development Objective (PDO) of new operations or restructured ones the specific IRM objective of supporting Honduras “to improve its capacity to respond promptly and effectively to an eligible emergency;”

(b) Including an IRM Contingent Component (CC) with zero funds through which an agreed amount of Credit funds from the respective project would be reallocated to finance post-emergency needs.

(c) Adding to the Project Results Matrix a PDO outcome indicator and an intermediate

indicator related to the IRM Component. These would be: (i) at PDO level, “Time taken to disburse funds requested by Government for an eligible emergency (target of four weeks); and (ii) at component level, “IRM established and ready to provide access to financial resources to Honduras in case of an eligible emergency.”

(d) Finalizing the IRM Operational Manual, reflecting agreements on implementation

arrangements, fiduciary and safeguard requirements, according to OP 8.00.

(e) The IRM Operational Manual will be referred to in all the Financing Agreement (FA) of the Operations including an IRM CC and will be reviewed and cleared by Legal, Procurement, FM, CTR, and safeguards staff before it is approved by the Country Director. The Manual may be updated periodically to reflect evolving country conditions.

(f) The initial Disbursement Letter for all the Projects with an IRM CC should identify the

disbursement methods and corresponding supporting documentation requirements for disbursement under the component, if known. Alternatively, a revised Disbursement Letter may be issued once the arrangements become clearer or the circumstances change.

15. As part of country dialogue and Country Performance Portfolio Reviews, the Government and the Bank will periodically identify the amount of funding that may be reallocated from the list of projects with an IRM window, and the list and indicative amounts reflected in the IRM Operational Manual.

16. The IRM for Honduras will provide financing for a positive list of goods including public and private expenditures, both domestic and imported and/or for specific works, goods, services (including audit costs) and emergency operation costs, required for emergency response and recovery. These expenditures will be in accordance with OP8.00 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. The eligible expenditures will be defined in the IRM Operational Manual,

73

Annex 8: Economic, Financial, and Fiscal Analysis

HONDURAS: Disaster Risk Management Project 1. One of the major challenges of promoting disaster mitigation and prevention is to demonstrate that its potential benefits in terms of saved lives and property far exceeds its costs. Cost estimation of disaster risk reduction activities is relatively straightforward, while the estimation of their benefits is complicated by their probabilistic nature. In the end, the actual level of benefits will be realized depending on the degree of severity of the disaster event occurring over the life of the investment. Although the economic effects cannot be fully ascertained, there are indications of positive economic efficiency with respect to the Project’s mitigation investments. 2. Accordingly, the specific analyses undertaken include: (a) economic feasibility or cost-benefit analysis under different scenarios; (b) financial sustainability analysis, and (c) fiscal impact analysis. It should be noted that the economic analysis considered the costs and benefits of Project activities specifically related to disaster risk mitigation measures. These include the costs and benefits of measurable strengthening capacities at the national level (Component 1), the municipal and community levels (Component 2), and of mitigation investments (Component 3). For the latter, the analysis considered the costs of a sample of 18 different types of structural mitigation works, reflecting the costs of the preparation of PMGRs and PMOTs that are necessary to identify and prioritize mitigation measures, and operation and maintenance. Costs were estimated taking into account the information generated by PMDN and MITIGAR.

3. The financial analysis considered the average municipal budgets and the average costs for the new mitigation works. The fiscal analysis considered estimates of the average maintenance costs of the mitigation works and their impact on average municipal budgets. 4. Overall, as detailed below, the Project is economically feasible, yielding positive net present values (NPV) with acceptable indicators even after submitting to various extreme scenarios, and with a positive IRR of close to 13.0 percent, greater than the assumed opportunity cost of capital (10 percent). The Net Present Value is estimated in US$1,893,026.72 while the expected benefits are estimated in US$10,773,634.16.

Table 1 – Economic Cost-Benefit Analysis Present Value of Flows

Expected Benefits:

Project Costs:

Net Present Value:

US$ 10.77 Million

US$ 7.90 Million

US$ 1.89 Million

Internal Rate of Return 12.89%

5. The financial analysis indicates that municipalities will generally benefit with the increase of investment, depending on their revenue capacity. Maintenance costs of mitigation works and non-structural measures to be undertaken are relatively low compared to the average

74

budget of the selected municipalities. The average municipal budget for new mitigation works is estimated to be US$ 1,961,533.93. The average cost of the mitigation works was estimated to be US$ 130,000 and was used to estimate the rate between the cost of the works and the average municipal budgets. The new mitigation measures would represent 6.6 percent of the average municipal budgets, which indicates that mitigation measures are sustainable. 6. The net fiscal impact analysis was undertaken by estimating the rate between the average maintenance costs for each individual type of mitigation works (US$ 2,574.00) and the average municipal budget of US$289,066.22. This rate is represented by close to 0.90 percent of the total municipal budgets. This is significantly low, indicating that there is no significant burden on municipal revenues.

A. Economic Analysis 7. Methodological Considerations. The CBA was done considering two different scenarios: with and without project. The first one considers previous conditions before the implementation of the Project. The evaluation includes damage to people, property, and public goods such as road infrastructure, drinking water systems, rainwater drainage canals, sewage, and bridges. The second one considers the measurable impacts and benefits of Project implementation. Consistent with economic theory, the basis for this analysis is that: (i) establishing early warning systems help reduce the exposure of communities to disasters by increasing forecast and response capacity at local and national levels; (ii) reducing vulnerability and risk through mitigation measures, improves the recovery capacity of the affected population, usually the poorest, in the case of an event; (iii) implementing mitigation measures reduce the vulnerability of key facilities that provide social services to the general public, such as schools, hospitals, health centers, emergency shelters, vital roads and evacuation routes, as well as water systems; (iv) preventing unsustainable human settlements in vulnerable areas reduce their exposure to disasters, as well as economic and human losses; (v) improving administrative structure for risk management by defining the responsibilities of central and local governments and the commitments of the various agencies operating at the national, regional and municipal level increases the effectiveness and transparency of mitigation activities. 8. The CBA was performed from an economic standpoint. The net benefit of the Project was considered as being equal to the difference between the incremental benefits and incremental costs of two scenarios (with and without the project.) The “without project” scenario assumed that mitigation works are not implemented, so the situation remains the same. For the “with project” scenario, the analysis considered the effects of the implementation of the project including all of its activities.

9. The economic analysis of the mitigation works was performed with a sample of six types of works at three different budget levels. The selection criteria included the type of work, investment amount, and number and type of beneficiaries. It was also assumed that all mitigation works would be located within the communities in the municipalities that belong to Region 1 (Sula Valley), according to the Vision and National Plan of Honduras. The economic costs and benefits were estimated according to the expectations for each mitigation work and the mitigation solutions they provide through the costs associated with each of the works and the

75

benefits that might be measurable by such works in the 18 cases studied. The list of mitigation works and budgets for the analysis of the mitigation works are shown in Table 2:

Table 2 – Type of Mitigation Work and Selected Budget for Cost-Benefit Analysis Type of mitigation work Budget in US$ 01 Drainage canal-Bridge 60,000 02 Drainage canal-Bridge 130,000 03 Drainage canal-Bridge 200,000 04 Bridge 60,000 05 Bridge 130,000 06 Bridge 200,000 07 Channel and riverbank protection 60,000 08 Channel and riverbank protection 130,000 09 Channel and riverbank protection 200,000 10 Small river bank protection 60,000 11 Small river bank protection 130,000 12 Small river bank protection 200,000 13 Rainwater Drainage 60,000 14 Rainwater Drainage 130,000 15 Rainwater Drainage 200,000 16 Lined ditches 60,000 17 Lined ditches 130,000 18 Lined ditches 200,000

10. The variables and assumptions considered in the CBA are described in the table below:

Table 3 – Variables and Assumptions for Cost-Benefit Analysis

Quantitative variables Definition Description Source

Benefits

Traffic and its effects on employment and relief for affected people

Number of days when traffic is interrupted due to natural events (annually)

Indicates a benefit because the project improve existing conditions, allowing people to pass through uninterrupted

Municipalities, beneficiaries

Population benefiting directly and indirectly by road work or road work protection

Number of beneficiaries of the works

The condition of maintaining roads after the construction of the mitigation works

Municipalities, beneficiaries

Damage to private property Impact of disasters on households

Benefits of reducing the number of households impacted by continuous disasters

Municipalities, COPECO, beneficiaries

Replacement cost of household supplies

COPECO estimates for restoring of furniture, equipment and other valuable belongings per housing unit of $635.09 per event

As long as damage is avoided in households, there is a reduction of monetary provisions

COPECO

Displacement costs Costs required for shelter / housing by COPECO . This cost is estimated at US$ 4233.90

Serves as an indicator of vulnerability reduction before the project existed by reducing the number of homes affected by natural disasters

Municipalities, COPECO, beneficiaries

76

Damage to public property Designated budgets for reconstruction and for mitigation works maintenance

Benefits generated when infrastructure reconstruction is avoided or at least less budget is required for a replacement

Municipalities

Costs

Construction costs Budget for civil works. They were defined using minimum, average and high allocation under the project. They are USS$60,000, 130,000 and 200,000 respectively

Costs financed by the project that influence the determination of minimum number of beneficiaries to make the project feasible.

DRMP

Maintenance costs The budget allocated for maintenance of civil works equivalent to 1.98 percent of their total work cost

Costs financed by the beneficiary municipalities

Municipalities and DRMP consultancy works

Costs of non-structural mitigation measures

Designed budget for the implementation and construction of works and rules. It was defined as 4.79 percent of the works cost

Costs financed by the project MITIGAR project

Costs of design of mitigation works

Average budget needed for planning and design of works estimated at US$9,000.00 each.

Costs financed by the project DRMP

Costs of updating or preparing municipal plans for disaster mitigation and territorial planning (PMGrs and PMOTs)

Average budget needed for development of activities related to plans. It was assumed as 5 percent of the budget for the two municipal plans, with respect to the actual costs of works

Costs financed by the project DRMP

Quantitative Variables Definition Description Source

Indicator

Economically active population

Is the proportion of the population of a country that has legal capacity to enter the labor market (defined as 40.42 percent of the total national population)

Calculates the amount of persons who may be affected by interruption of their business activities

INE

Annual national population growth

Measures the increase in the number of people living in a country. It is assumed to be 2 percent

Population is projected every year

INE

Daily rural minimum wage Is the minimal remuneration that has been legally established in a country for its rural labor force (equivalent to US$7.74)

Calculations are done to set the number of people whose economic activities are affected

Ministry of Labor and Social Security of Honduras

Annual increase in rural wage Annual increase in the minimum wage in a country cottage (defined in 5.4 percent)

The inter-annual increase in wage has to be considered

Ministry of Labor and Social Security of Honduras

77

Annual inflation Variation of an increase in consumer prices of goods and services with respect to a currency during a period of time (calculated at 5.6 percent)

Prices and salaries must be adjusted with respect to annual inflation

Honduras Central Bank

Exchange rate Rate of relationship between two currencies. It was defined at October, 1, 2012 by 19.8735 lps. per 1 US$

It is necessary to keep the exchange rate updated during the project cycle

Honduras Central Bank

Project discount rate It is a financial indicator that is applied to the present value of future capital flows. It was assumed at 10 percent

Net Present Values should be calculated using the established discount rate

World Bank

Variables Considered under each Component 11. The initial CBA of the project was performed by analyzing measurable impacts within each component, which then were broken down into subcomponents in order to conclude with an overall assessment. 12. Component 1, Strengthening of National-Level DRM Capacities, refers to building capacity of national institutions and policies on disaster risk management. For this component, impacts are considered to be general, mainly in institutional improvement in the central government, specifically in SEPLAN and SERNA, and in COPECO and the UNAH, as well as the National Building Code users. All these activities are geared to the purpose of: (i) reduction of deaths; (ii) reduction of property damage (including physical structure and basic goods, furniture and equipment); (ii) reduction of interruption in service provision, such as water and transport; (iii) less interruption of economic activity; and (iv) environmental protection and sustainability in general. 13. One of the major challenges of promoting disaster prevention and mitigation is to demonstrate that its potential benefits in terms of saved lives and property far exceeds its costs. For the economic estimates related to human life, estimations include the reduction in numbers of people killed, affected, sheltered, evacuated, and any other category of injury, through estimates of expected savings in costs by COPECO at the municipal level. The ways of estimating damages to public and private property in a qualitative way are described in the section below. 14. Component 2, Strengthening of Municipal and Community-Level DRM Capacities seeks to strengthen DRM capacity at local level. For this component it is thus assumed that the greatest impacts are in prevention of deaths, reduction in the number of affected people, and reduction in property losses and livestock production. For all aspects, with the exception of livestock production, the measurements are made equal to those of Component 1. To estimate livestock production losses, interviews were conducted with municipal officials in 14 of the 20 municipalities targeted by the project.

78

15. As detailed in the next section, in the case of Component 3, Implementation of Mitigation Measures, the cost-benefit evaluation includes cost of feasibility studies, designs, construction and supervision, and maintenance. Estimates of the Implementation Cost of Mitigation Measures 16. The cost of each mitigation measure was estimated considering the Project’s expected direct investments in them (design, construction, and supervision), accompanying operating and maintenance costs, as well as costs of PMGRs and PMOTs. It was considered that the mitigation works would have costs between US$ 60,000.00 and US$ 200,000.00, which results in an average of US$130,000.00. 17. The costs of non-structural mitigation measures were estimated using data from MITIGAR Project, and proposals for the Project. This resulted in an estimated average cost of a non-structural work of US$ 7,059.00. Non-structural measures include studies, training, organizational strengthening, and community campaigns, among others, that help to improve municipal capacity al the local level reducing and mitigating disaster vulnerability. 18. Maintenance costs were estimated based on those of PMDN as 1.98 percent, and projected for the Project considering the average cost of mitigation works, resulting in an estimated average maintenance cost of US $ 2,574.00. 19. The costs of feasibility studies and designs were estimated at US$ 9,000.00 for all works, both for updating and preparation of new designs. The costs for the same designs in PMDN were US$ 6,773.52, which with an increase of 25 percent resulted in a present value of US$ 8,466.90. 20. The cost of preparing the PMOTs and PMGRs, which will help to identify and prioritize mitigation works, was estimated at 5 percent of the total cost of the plans. The individual cost per plan was thus estimated at US $ 2,182.54, for a total of $ 43,650.70 for 20 plans. Profit Estimate or Avoided Damage Cost 21. As with other similar projects,42 the economic benefit stream was calculated through the avoided damage cost method assessed as the cost of direct damage likely to be caused by the disaster event that the mitigation work would help avoid within its area of influence. These avoided costs vary by type of work and expected benefits, whether they are for example for flood prevention and / or improvement of access to roads in communities. The benefits studied included: (i) reduction of property damage; (ii) decreased damage to household and vehicles; (iii) minor losses in the public and private services, such as water and road systems; (iv) reduction in losses to agricultural production and forestry; (v) avoided loss of human lives; (vi) decrease in number of affected people; (vii) increase in productive investments; (viii) increase in employment, equivalent to less disruption in economic activities; (ix) reduction in outmigration, as a sign of improvement in local general conditions; and (x) improved conservation and preservation in areas of direct and indirect influence of the mitigation works.

42 See for example, Project Appraisal Document for the Argentina Urban Flood Prevention and Drainage Project, The World Bank, Report No. 34001. May 9, 2006.

79

22. Information sources for calculating costs were Project officials, COPECO and authorities and technical staff of each municipality. In the case of avoided damages to real property, the internal rate of return of each project was calculated to be close to 20 percent. For each case, COPECO reported expenses in 2011 per affected household to be US$ 635.00 for replacement of household goods, which is considered for two events. It is assumed that a third event will cause to relocate the house, for which COPECO reported expenses of US$ 4,234. These costs have been adjusted for inflation. 23. As for the avoided damage costs of public services as a result of the construction of mitigation works, the only hypothetical analyzed case was of a waste water treatment plant by protection works with gabion (cost of US$ 200,000). The benefits were accounted as cost savings for not having to rebuild 90 percent of the water treatment plant.43 24. The average period of days that vehicles and people could not transit estimated for PMDN was used to estimate the reduction in economic damage resulting from the construction of mitigation works (such as riverbank protection, drainage canal, drainage canal-bridges, rainwater drainage, bridges). This average was multiplied by the number of beneficiaries, who are part of the economically active population according to the national average of 40 percent.44 These results were then multiplied by the rural daily minimum wage of the country (US$ 7.74.)45 25. All costs and benefits estimates were projected to 25 years, which is the return period that was used for mitigation works. These figures were adjusted considering annual inflation increases of 5.6 percent46 for the replacement cost of household goods and construction and maintenance costs; the population data was updated according to the projected national annual increase of 2 percent, and finally the wage was adjusted annually to 5.4 percent.47 26. Regarding environmental issues, the economical analysis included those related to the preservation and conservation of areas of direct and indirect influence of the mitigation measures. Qualitative information was obtained, with the objective of using it as guiding criteria for the definition of non-structural measures to be applied in potential construction sites. Results of Economic Analysis 27. Initially each mitigation work was analyzed individually, taking into account the relevant variables for each case. Subsequently, the NPV of the sum of the benefits, costs and net divided by the number of 18 cases were estimated to be US$ 4,544.08, US$ 2,793058.72, and US$ 1,761,495.36, respectively, for an IRR of 20.17 percent. The overall benefits show a NPV of $ 4,931,497.08 and costs with an NPV of US$ 3,038,045.36

43 Other data that was not used in this analysis included those related to the services provided by roads created for the only purpose of constructing a civil work that later on served as evacuation route. Quantitative information related to the reduction of damage to agricultural and forestry production as well as outmigration was obtained and not used in this study. This database may be used in future for further benchmarking. 44 National Statistical Institute (INE) 45 Ministry of Labor and Social Security 46 Central Bank of Honduras 47 Ministry of Labor and Social Security

80

28. In addition, the costs and benefits were calculated for the CBA using between 2 and 4 works for municipality. When calculating the total possible number of works, the result is 60 mitigation works, the average of 3 works per municipality representing an increase of 333.33 percent over the 18 types of mitigation works studied above. On the cost side, the calculation of the annual cost of Component 4 corresponds proportionally to Component 3. To perform this task, 65 percent of the budget of consulting services corresponds to Component 3, and 65 percent of the budget operating expenses. The respective annual results were US$15,730, US$159,770, US$171,470, US$194,220, US$168,220 US$161,720, and US$99,450.

29. The results of the economic and financial analyses undertaken indicate that the project is economically feasible when analyzed using civil works under different scenarios by yielding positive NPV of US$1,893,026.72, with acceptable indicators even after submitting to various extreme scenarios. The internal rate of return (IRR) is 12.89 percent, which is greater than the assumed opportunity cost of capital at 10 percent.

30. A sensitivity analysis was conducted with respect to the different scenarios. The figures indicate that increasing the value of benefits by 50 percent, the NPV becomes US$ 62,254,763.58, with an IRR of 19.69 percent. On the other hand, if the costs are reduced by 35 percent, the NPV results become US$ 41,739,655.72, and the IRR of 20.19 percent. The results are shown in Table 4. Table 4 – Summary of results in US$ Analysis NPV Benefits NPV Costs NPV Net IRR%

Sum of Individual Works 4,544,554.08 2,793,058.72 1,761,495.36 20.17

Total Benefits of Individual Works 4,931,497.08

Total Costs of Individual Works 3,038,045.36

Component 3 10,773,634.16 7,901,186.15 1,893,026.72 12.89

Sensitivity Component 3

Benefits Increased by 50 percent 62,254,763.58 19.69

Cost Reduction by 35 percent 41,739,655.72 20.19

B. Financial Sustainability Analysis 31. Methodological Considerations. Budgets of the visited municipalities were studied to perform this analysis, especially items related to the funds available for new projects, which in turn were compared with the estimated amounts for the construction of the works analyzed. This was done to estimate the burden that these works would represent to the budgets of such municipalities. 32. Results. The average municipal budget for new mitigation works is estimated to be US$ 1,961,533.93. Out of the reported budgets, the two major municipal budgets correspond to the two largest municipalities (average budget of US$ 10,984,476.82). However, the average budget of the rest of municipalities is US$ 457,710.12. The average cost of the mitigation works was estimated to be US$ 130,000 and was used to estimate the rate between the cost of the works and the average municipal budgets.

81

33. The results indicate that the average cost of new works correspond to 6.63 percent of the average total budget. When analyzing the two highest values, this percentage drops to 1.18 percent. Consequently, for all other values, this percentage rises to 28.40 percent. The same analysis was performed for non-structural mitigation measures with an average cost of US$ 7,059 which means a 24.84 percent of the average municipal budget. C. Fiscal Impact Analysis 34. Methodological Considerations. Assessment of budgetary impacts on public finances is important to governments, especially in times of budget constraints. Thus, the fiscal impact of the Project was calculated based on 14 estimated municipal maintenance budgets. The cost of maintaining structural works was calculated by the percentage that such costs affect the maintenance municipal budgets. To estimate this percentage, the average cost of US$ 2,247.59 was calculated based on 19 projects reported by PMDN. This value of US$ 113,791.56 was divided by the average value of the 19 works analyzed, resulting in a value of 1.98 percent. Economic variables used include Currency exchange, Average cost of new works, Average annual maintenance costs, and Average cost of non-structural measures. This percentage is then multiplied by the value of each of the works analyzed, then averaged to obtain a value for maintenance of US$ 2,574.00. 35. Results. In this particular case, the result of fiscal impact is 0.89 percent of the average budget of US$ 289,066.22. The estimations are presented in Table 5. This significantly low result indicates that maintenance costs do not represent a significant burden for the average revenue per municipality. Table 5: Region 1 – Average Cost Indexes vs 2012 Municipal Budget (in US$)

Municipality New Works Maintenance Non-structural measures

1 12076,383.12 226,432.18 20,127.31

2 9892,570.51 1532,191.11 56,306.14

3 588,224.22 414,943.94 25,159.13

4 704,455.68 603,819.16 22,643.22

5 0.00 75,477.39 0.00

6 1207,638.31 98,623.80 15,095.48

7 805,092.21 181,145.75 125,795.66

8 504,581.47 125,795.66 60,381.92

9 517,145.28 218,962.50 22,037.39

10 474,337.36 287,756.90 10,063.65

11 362,971.80 127,301.60 5,031.83

12 247,565.85 112,209.73 5,031.83

13 80,509.22 30,190.96 20,127.31

14 0.00 12,076.38 10,063.65

Total 27461,475.03 4046,927.05 397,864.49

Average 1961,533.93 289,066.22 28,418.89

% Average cost/Total budget average

0.0663 0.0089 0.2484

82

Average Budgets 1 and 2 21968,953.63 Average Budgets 3 to 14 5492,521.40

10984,476.82 457,710.12 % Average Cost/ Average budgets 1 and 2

0.0118 % Average Cost/ Average budgets 3 to14

0.2840

Variables Currency exchange 19.8735 Average cost of new works 130,000.00 Average annual maintenance costs 2,574.00 Average cost of non-structural measures 7,059.00

Percentage Calculation of maintenance on the value of new constructions

0.018404908

0.134111429

0.3715

0.461538462

1

0.07550077

0.183673469

0.199556189

0.297459838

0.377587023

0.259654308

0.311888112

0.272727273

1

Yuscarán

Nacaome

Choluteca

Juticalpa

PuertoLempira

Trujillo

Roatán

La Ceiba

Yoro

San PedroSula

Santa Bárbara

Santa Rosa de Copán

NuevaOcotepeque

Gracias

La EsperanzaLa Paz

Comayagua

TEGUCIGALPA

B E L I Z E

G UAT E M A L A

E L S A L V A D O R

N I C A R A G U A

Yuscarán

Nacaome

Choluteca

Juticalpa

PuertoLempira

Trujillo

Roatán

La Ceiba

Yoro

San PedroSula

Santa Bárbara

Santa Rosa de Copán

NuevaOcotepeque

Gracias

La EsperanzaLa Paz

Comayagua

TEGUCIGALPA

REG. 16 - SANTA BÁRBARA

REG. 15 - ARRECIFE MESOAMERICANO

REG. 14 - RÍO LEMPA

REG. 13 - GOLFO DE FONSECA

REG. 12 - CENTROREG. 11 - EL PARAÍSO

REG. 10 - LA MOSQUITIA

REG. 9 - BIOSFERA RÍO PLÁTANO

REG. 8 - VALLES DE OLANCHO

REG. 7 - NORTE DE OLANCHO

REG. 6 - CORDILLERA NOMBRE DE DIOS

REG. 5 - VALLE DEL AGUÁN

REG. 4 - VALLE DE LEAN

REG. 3 - OCCIDENTE

REG. 2 - VALLE DE COMAYAGUA

REG. 1- VALLE DE SULA

B E L I Z E

G UAT E M A L A

E L S A L V A D O R

N I C A R A G U A

C a r i b b e a n S e a

PA C I F I C O C E A N

Gulf ofHonduras

Golfo de Fonseca

86° W86° W

16° N

14° N

16° N

14° N

86° W

86° W86° W

86° W

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

IBRD 39653

NOVEMBER 2012

DEPARTMENT CAPITALS

NATIONAL CAPITAL

DEVELOPMENT REGION BOUNDARIES

INTERNATIONAL BOUNDARIES

HONDURASDISASTER RISK

MANAGEMENT PROJECTHONDURAS

Yoro

San PedroSula

Santa Bárbara

SanManuelVillanueva

Petoa

El Progreso

Choloma

Puerto Cortés

San Franciscode Yojoa

Santa Cruzde Yojoa

LasVegas

El Negrito

Santa RitaPotrerillos

San Antoniode Cortés

San Pedro Sula

Tela

Quimistán

La Lima

Morazán

Omoa

Pimienta

G U A T E M A L A

VillanuevaMorazán

Petoa


San Manuel

El Progreso

Puerto Cortés

Santa Rita

Omoa


La Lima

Pimienta

El Negrito

Choloma

Tela

Las Vegas

Quimistán

Potrerillos

Santa Cruz de Yojoa

R E G I O N 1 6

R E G I O N 2

R E G I O N 6

R E G I O N 5

R E G I O N 4

R E G I O N 3

VillanuevaMorazán

Petoa


San Manuel

El Progreso

Puerto Cortés

Santa Rita

Omoa


La Lima

Pimienta

El Negrito

Choloma

Tela

Las Vegas

Quimistán

Potrerillos

Santa Cruz de Yojoa

Yoro

San PedroSula

Santa Bárbara

SanManuelVillanueva

Petoa

El Progreso

Choloma

Puerto Cortés


Santa Cruzde Yojoa

LasVegas

El Negrito

Santa RitaPotrerillos


San Pedro Sula

Tela

Quimistán

La Lima

Morazán

Omoa

Pimienta

R E G I O N 1 6

R E G I O N 2

R E G I O N 6

R E G I O N 5

R E G I O N 4

R E G I O N 3

G U A T E M A L A

G u l f o f

H o n d u r a s

Laguna deLos Micos

LakeYojoa

Ulua

R.

Sulaco R.

Ulua

R.

Ulua

R.

Motagua R.

87° W87.5° W88° W88.5° W

87° W

87.5° W88° W88.5° W

15.5° N

15° N

15.5° N

15° N

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

IBRD 39654

NOVEMBER 2012

REGION 1

SECONDARY ROADS

MAIN ROADS

MUNICIPALITY CAPITALS

DEPARTMENT CAPITALS

MUNICIPALITY BOUNDARIES

DEVELOPMENT REGION BOUNDARIES

INTERNATIONAL BOUNDARIES

HONDURASDISASTER RISK

MANAGEMENT PROJECTREGION 1 - VALLE DE SULA

document of the world bankdocuments.worldbank.org/curated/en/116561468282846163/pdf/nonas… ·...

Documents