Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 43374-BO

PROJECT PAPER

ON A PROPOSED ADDITIONAL FINANCING CREDIT

IN THE AMOUNT OF SDR 2.7 MILLION

EMERGENC’T

(US$4.40 EQUIVALENT)

TO THE

REPUBLIC OF BOLIVIA

FOR THE

RECOVERY AND DISASTER PROJECT

May 19,2008

Sustainable Development Department Bolivia, Ecuador, Peru, and Venezuela Country Management Unit Latin America and the Caribbean Region

I JAGELvfENT

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS (Exchange Rate Effective April 16,2008)

Currency Unit = Bolivianos US$ 1.00 = Bs.7.38 US$0.14 = Bs.l.OO

ECLAC ERDMP FPS

GFDRR GOB IBRD IDA ISDR MD MPD PCU PND PNRR

PRRES

SISPLAN UNDAC UPRRD

VCT VIDECICODI

VPC

VPEP

VIPFE

VPTA

WB

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

Economic Commission for Latin America and the Caribbean Emergency Recovery and Disaster Management Project National Fund for Productive and Social Investment (Fondo Nacional de Inversidn Productiva y Social) Global Facility for Disaster Reduction and Recovery Government of Bolivia International Bank for Reconstruction and Development International Development Association International Strategy for Disaster Reduction Ministry of Defense (Ministerio de Defensa) Ministry of Planning for Development (Ministerio de Planificacidn del Desarrollo) Project Coordination and Management Unit National Development Plan (Plan Nacional de Desarrollo) National Rehabilitation and Reconstruction Plan (Plan Nacional de Rehabilitacidn y Reconstruccidn) National Plan for Sustainable Rehabilitation and Reconstruction (Plan Nacional de Rehabilitacidn y Reconstruccidn Sostenible) National System of Public Investment (Sistema Nacional de Inversidn Pliblica) United Nations Disaster and Coordination Team Unit for Disaster Risk Prevention and Reduction (Unidad de Prevencidn y Reduccidn de Riesgos de Desastres) Vice Ministry on Science and Technology (Viceministerio de Ciencia y Tecnologia) Vice Ministry of Civil Defense and Cooperation for Integral Development (Viceministerio de Defensa Civil y Cooperacidn a1 Desarrollo Integral) Vice Ministry for Planning and Coordination (Viceministerio de Planificacidn y Coordinacidn) Vice Ministry of Strategic Long-Term Planning, Ministry of Planning for Development, MPD (Viceministerio de Planijcacidn Estratkgica Plurianual) Vice Ministry of Public Investment and External Financing (Viceministerio de Inversidn Pliblica y Financiamiento Externo) Vice Ministry of Territorial Planning and the Environment (Viceministerio de Planifcacidn Territorial y Ambiental) World Bank

Vice President: Pamela Cox

Sector Director Laura Tuck Country Director: Carlos Felipe Jaramillo

Sector Manager: Guang Z. Chen Task Team Leader: Joaquin Tor0

FOR OFFICIAL USE ONLY

TABLE OF CONTENTS Additional Financing Credit to the Republic of Bolivia for the Emergency

Recovery and Disaster Management Project

I . Introduction ......................................................................................................... 1

I1 . Background and Rationale for Additional Financing ......................................................... 2

I11 . Proposed Changes ................................................................................................ 5

IV . Consistency with CAS or CPS ................................................................................. 6

V . Appraisal of Scaled-up Project .................................................................................. 9

V I . Expected Outcomes ............................................................................................ 11

VI1 . Benefits and Risks .............................................................................................. 11

VI11 . Financial Terms and Conditions for the Additional Financing., ...................................... 11

Annex 1 . Results Framework and Monitoring ................................................................... 12

Annex 2: Project Risks and Mitigating Measures .............................................................. 20

Annex 3: Team Composition ..................................................................................... 22

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties . I t s contents may not be otherwise disclosed without Wor ld Bank authorization .

Additional Financing Credit to the Republic of Bolivia for the Emergency Recovery and Disaster Management Project

Latin America and the Caribbean PROJECT PAPER DATA SHEET

Date: May 13, 2008 Country: Bolivia Project Name: Emergency Recovery and Disaster Management Project Additional Financing Environmental Category: B Project ID: P109057 Borrower: Republic o f Bolivia Responsible agency: Ministry o f Planning for Development (MPD), through the Vice Ministry o f Territorial Planning and the Environment (VPTA) Revised estimated disbursements (Bank FY/US$m) FY 2008 2009 2010 201 1 2012 Annual 4.7 4.7 4.7 1.6 1.2 Cumulative 4.90 9.4 14.1 15.7 16.9 Current closing date: December 3 1, 2010 Revised closing date [if applicable]: June 30, 2012 Does the restructured or scaled-up project require any exceptions from Bank policies? X Y e s o N o Have these been approved by Bank management? X Y e s o N o I s approval for any policy exception sought from the Board? oYes X N o Revised project development objectives/outcomes [Zf applicable] The project w i l l support the implementation o f the proposed works in the National Rehabilitation and Reconstruction Plan (PNRR) to recover f rom the effects of El Ni i io and L a Nii ia in order to restore access to basic infrastructure and rehabilitate productive sector for a portion o f the affected population in the nine departments, and to strengthen the Government’s ability at the national, sectoral, and municipal levels throughout the country to respond to future disasters. Does the scaled-up or restructured project trigger any new safeguard policies? I f so, click here to indicate which one(s) [selection box like the one in the new ISR]

[ ] Loan [XI Credit [ ] Grant For Loandcredit s/Grants :

Team Leader: Joaquin Tor0 Sector Director: Laura Tuck Sector Manager: Guang Z. Chen Country Director: : Carlos Felipe Jaramillo

For Additional Financing

Total Bank financing (US$m.):SDR 2.7 mill ion Proposed terms: 35 years maturity / 10 years grace

Financing Plan (US$m.) Source Local Foreign Total

Borrower 0 0 0 IBRD/IDA 0 4.4 4.4 Others 0 0 0 Total 0 4.4 4.4

I. Introduction

1. T h i s Project Paper seeks the approval of the Executive Directors to provide Additional Financing (AF) in the amount of SDR 2.7 mill ion (US$4.41 mill ion equivalent) to the Government o f Bolivia (GOB), to be funded with equivalent amounts o f an IDA credit and to be used for the Bolivia Emergency Recovery and Management Project (ERDMP), P106449 - Credit No. 4377-BO.

2. The Bolivia ERDMP was approved by the Board on December 20, 2007. The project development objective as stated in the project document was: “In support o f the implementation o f the National Plan for Sustainable Rehabilitation and Reconstruction (PRRES), the project wil l contribute to restore access to basic infrastructure for a portion of the affected population in five target regions, and to strengthen the Government’s ability at the national, sectoral, and municipal levels throughout the country to respond to future disasters.” These objectives are being achieved through two components: Component 1 : Strengthening the National System for Risk Management through capacity building at the national, sectoral, and subnational levels, and Component 2: Rehabilitation, Reconstruction, and Small Mitigation Works.

3. A request for the AF, received by the Bank on March 31, 2008, solicited assistance in addressing additional damages suffered as a result o f the most recent L a Nii ia (2008). An exception to OP 13.20 was obtained on April 18 2008, since the original ERDMP i s not yet effective. Upon approval o f the AF request the project’s closing date w i l l be extended by one year to June 30, 2012 to allow sufficient time to implement additional activities.

4. During the period from November 2007 to March 2008, heavy rains from L a Nifia’ caused severe flooding and landslides. These events were compounded by the damage caused by El Nifio 2006-2007. The proposed AF credit would geographically scale up investments. Under Component 1, the AF would provide the additional technical assistance support necessary to implement the activities o f the National Rehabilitation and Reconstruction Plan (PNRR) recently developed by the GOB to address L a Nii ia disaster. Under Component 2 the AF would provide funding for the geographic scaling up o f Sub-components 2.1 Execution of Rehabilitation and Reconstruction Works and 2.3 Execution of Small Mitigation and Rehabilitation Works, by expanding the geographic scope o f works to accommodate additional needs resulting from the recent L a Nii ia Emergency.

5. The AF would expand the ERDMP to i) geographically scale up small rehabilitation, reconstruction, and mitigation works to cover five prioritized areas as in the original project, and ii) rehabilitate the productive capacity to cover the communities affected by the recent floods associated with the L a Nifia event o f late 2007 - early 2008 (support to PNRR as well as PRRES).

’ L a Niiia, characterized b y unusually cold ocean temperatures in the Equatorial Pacific, i s essentially the opposite o f El Ni i io (which i s characterized by warm temperatures). I t s impacts on the global climate also tends to be opposite to El Niiio. L a Ni f ia i s usually accompanied by stronger tail winds f rom the east that push the ocean water away f rom the equator in each hemisphere (this i s caused by the rotation o f the Earth.). Cold water f rom below rises to replace the warm surface water which has moved away from the equator and acts as an impediment to the formation of clouds and tropical thunderstorms in the overlying air. This suppression o f rain-producing clouds leads to dry conditions on the equator in the Pacific Ocean from the Date Line east to South America.

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6. The following results are expected by project completion: (a) validation, identification, and implementation of small works identified in the PRRES and the PNRR; (b) development o f a draft policy framework to guide future rehabilitation and reconstruction programs; and (c) increased capacity for disaster response, reconstruction, and prevention at the national, local, and sector levels.

11. Background and Rationale for Additional Financing

1. Project Background

7. The ERDMP was prepared in response to the Government o f Bolivia’s (GOB) request for assistance in financing the costs associated with the catastrophic flooding, drought, and abnormally cold weather that affected Bolivia as a result o f the El Nii io event of 2006 - 2007. The project i s being financed through an IDA Credit totaling SDR 8 mill ion (US$12.5 mill ion equivalent), with the closing date scheduled for June 30,201 1.

8. The original Project focused on the implementation of works required to recover from the El Ni i io event o f 2006 - 2007. I t also included a component intended to help the government prepare for and prevent future disasters, particularly those associated with the El Ni i io - L a Nifia phenomena. During the original project preparation, provisions were made to account for the forecasted impacts associated with La Niiia. The L a Ni i ia phenomenon occurred as expected and resulted in additional damages to the country’s infrastructure and productive capacity. However, the actual impact was far greater than predicted, since the L a Nii ia was much stronger than originally forecasted. Because the most significant impacts o f L a Nii ia were realized between January and March 2008, the original scope of works identified at project appraisal in November 2007 did not adequately account for the magnitude o f loss.

La Niiiafloods -December 2007 - April 2008

9. Heavy rains from L a Nii ia resulted in severe flooding and landslides affecting each of Bolivia’s nine departments. Damages and losses are estimated in excess o f US$500 million2. Apart from the increased volume o f rainfall, the L a Ni i ia also lengthened the normal rainy season by approximately two months. As a result o f L a Niiia, an estimated 410,000 people have been affected by floods and 81 people have died due to the flooding. Flooding also affected all of the country’s nine departments, destroying crops, housing and roads. Communities have been cut o f f from one another and thousands o f people have been temporarily displaced. While floodwaters have been receding, as o f May 1,2008, several areas throughout the country were s t i l l inundated.

10. La Nii ia has been particularly detrimental in the agricultural sector. Compared to the impact of El Ni i io last year, La Nii ia damages are much greater in the agricultural production sector (crops and livestock). Agricultural losses resulting from L a Nii ia are nearly double the losses identified in the

An UN-ECLAC / WB mission funded by the Global Facility for Disaster Risk Reduction (GFDRR, track 111) conducted a damage loss assessment in Bolivia from April 13 through April 29, 2008. The ECLAC report estimated the economic impact of l a Ni i ia in Bolivia to be at US$517 million which i s 3.7% of the GDP. Moreover, the ECLAC report highlights the recent impacts to the agricultural sector.

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infrastructure sector. Table 1 and Figure 1 below break out the losses by sector and b y geographic region.

Table 1: Distribution of damages and losses per Sector

1 BDarnaaes W Losses 1

Figure 1: M a p of the Nine Departments Affected by L a Nina Divided into 5 Prioritized Regions

Source: PNRR

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National Response

llanos

11. The original Project focused on the impact o f El Ni i io 2007 and the implementation o f PRRES. Recently, the GOB has requested additional assistance in dealing with the effects o f L a Nida, as identified in the National Plan for Rehabilitation and Reconstruction (PNRR)3. The additional assistance solicited w i l l geographically scale up the project to include additional rehabilitation and recovery activities, related to losses caused by L a Nida. Supporting the implementation o f the PNRR in a timely manner i s critical to avoiding the implementation delays of close to eight months experienced under PRRES. At this moment, there are 1,873 projects that have been identified by the local governments and prioritized by the MPD.

677

Table 2: Number of Projects Identified per Region to Date - PNRR.

Valles

I Chaco I 14 I

445

1 Total I Yungas/Chapare /Santa Cruz Integrated North I 353 I

1,873

Project Status

12. The Bolivia ERDMP, approved by the Board on December 20, 2007 and signed on February 11, 2008, i s not yet effective. The Project i s s t i l l under consideration for approval in Congress.

Rationale for Requesting Additional Financing

13. The request from the GOB for Additional Financing o f the El Nifio Emergency Recovery and Disaster Management Project stems from the need to geographically scale-up the original project. The proposed AF would support the implementation o f the National Plan for Rehabilitation and Reconstruction (PNRR), which responds to the additional impacts of L a Niiia.

14. Activities that would be financed with the proposed additional resources w i l l not affect the objectives or the design o f the project. Instead, the AF would support the geographic scaling up o f the original ERDMP and would involve the financing o f additional small reconstruction works and the further rehabilitation o f the agriculture sector aimed to promote the recovery o f communities affected by L a Nida.

Plan Nacional de Rehabilitaci6n y Reconstrucci6n. April 2008.

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15. The AF would facilitate the GOB’S ability to commit and plan for a wider recovery effort that has emerged as a result of L a Nifia. Given the availability o f IDA funds this fiscal year, and the GOB’S commitment to the original project objectives, the task team and the Country Unit believe that the Additional Financing presents the preferred option for addressing these needs.

Project Costs Component 1. Strengthening the

National System for Risk Management Component 2: Rehabilitation,

Reconstruction, Small Mitigation Works, Goods

Total

111. Proposed Changes

Initial Additional Total IDA Increase Amount IDA Amount %

Financing 2.30 0.325 2.7 1 17.8%

10.20 14.20 4.075 39%

12.50 4.400 16.91 35%

16. No major changes are proposed to the original objectives or design of the project. Instead, the additional financing w i l l provide support for activities addressing the L a Nifia emergency in the same basic context as the original project. The proposed AF w i l l focus on Component 2, particularly Sub- components 2.1 Execution of Rehabilitation Activities and Reconstruction Works and 2.3 Execution of Small Mitigation and Rehabilitation Works, by geographically scaling up the scope of works to municipalities that have been affected by L a Nifia. T h i s w i l l include retroactive financing o f goods and rehabilitation works, which w i l l allow for a more rapid rehabilitation in view o f the current needs. Component 1 w i l l be also increased, in order to provide the necessary technical support for the implementation of the activities in the plan.

17. The AF w i l l be implemented using the same institutional framework, procurement, financial management and disbursement arrangements currently employed. These arrangements have been assessed by the Bank and have been found acceptable, and remain appropriate, to absorb the additional funds. Social and environmental issues wil l be dealt with as in the original project, in accordance with the World Bank’s guidelines and in compliance with safeguard requirements.

18. The project’s original closing date i s June 30, 2011. A 12 month project extension i s proposed, bringing the closing date to June 30,2012.

Detailed Project Costs and Deviations

19. Table 1 presents a summary o f the original project cost estimates together with the new cost estimates including the AF. Overall, the AF wi l l result in a 35 percent increase in the project allocation.

Table 1: Detailed Project Costs (in USD millions)

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IV. Consistency with CAS or CPS

20. The Project i s consistent with the I S N as described in the Emergency Project Paper o f the ERDMP.

V. Appraisal of Restructured or Scaled-up Project

21. The project team visited Bolivia in March 2008 to follow-up with the Bolivian authorities on the effectiveness of the original project, which i s s t i l l pending congressional approval. The implementing agencies have demonstrated their support for the project by working positively towards achieving the effectiveness and disbursement conditions. Congressional ratification i s expected in June 2008, by which time it w i l l be the only remaining requirement for project effectiveness.

22. A damage assessment mission visited Bolivia from April 13 to 29, 2008. The mission was conducted on an emergency basis to identify and appraise the proposed AF. The damage assessment mission was inter-institutional and included ECLAC and UN Agencies. The objectives o f the damage assessment were to: i) review the damage and assess the emerging needs; and, ii) identify and appraise the proposed geographic scaling-up o f the project. The ECLAC damage assessment was completed and presented to the GOB on April 28,2008.

23, The procedure for identification, selection and implementation o f recovery activities for inclusion in the project i s presented in the current ERDMP operational manual. The same selection criteria w i l l be followed for selection and implementation o f activities funded under the AF.

Needs assessment

24. Since November 2007, the L a Nii ia phenomenon has affected the entire country. Many areas experienced extensive flooding and landslides, which have resulted in the loss o f lives, homes, infrastructure, and production capacity. As was the case for El Niiio, some areas suffered frost, hail and other cold weather damage, which particularly affected crops. Considering the back to back occurrence o f El Nii io and L a Niiia, some rural localities have lost their annual crop harvest for two consecutive years.

25. The ESAE (Evaluation o f Food Security, World Food Program) estimates that about 30,000 flood affected families face food security problems. Among these, some 17,000 families are at risk o f losing their livelihoods, making this group the most vulnerable.

Government Response

26. On January 21,2008, the GOB issued Decree 29425 declaring a State of Emergency. Subsequently, on February 12, 2008, the GOB declared a National Disaster and put the MPD in charge of developing the PNRR. To address the emergency situation, the Ministry o f Finance (MoF) transferred to the Civ i l Defense sector the sum of 18 mill ion Bolivian pesos for the execution o f Phase 1 o f the reconstruction

6

plan. In addition, on February 22, 2008, the GOB created the US$ 600 mill ion Reconstruction, Food Security and Productive Support Fund. T h i s fund was authorized through Decree 294532, to support programs and projects related to national food security, and the rehabilitation and reconstruction of social and productive infrastructure. The Coordination Unit for the Fund was created through Decree 29470 on March 5,2008.

Lessons Learned

27. Lessons learned are described in detail in the Project Paper o f the ERDMP. These are drawn from various past projects in Bolivia and/or similar projects relating to hazard risk management. In summary, project design should be flexible in order to best respond to evolving emergency needs. At the same time, project implementation has historically been delayed because project documentation has been vague on specific interventions, so as to ensure flexibility. T h i s project seeks to strike a balance between speed and flexibility, and specificity o f interventions in order to allow for effective project implementation.

28. Another lesson i s that in Bolivia even emergency projects can take a long time to gain congressional approval. Bank management recognized this reality in providing a waiver o f policy on additional financing, allowing to process this operation before the parent project became effective.

Objective, description and cost

29. The additional financing w i l l geographically scale up activities in the Emergency Recovery and Disaster Management Project (ERDMP), to support the implementation of the proposed works in the National Rehabilitation and Reconstruction Plan (PNRR) to recover from the 2007-2008 L a Ni i ia floods. T h i s support i s designed to assist with the restoration o f access to basic infrastructure and the rehabilitation o f agricultural productive capacity for a portion o f the population in the nine affected departments.

30. The original ERDMP included a specific section designed to mitigate damages anticipated from the L a Nii ia event that was developing at the time o f project preparation (November 2007). Component 1 of the original project stated that a contingency plan, including a l i s t o f small mitigation works relating to the effects o f L a Niiia, would be identified as needed. L a Ni i ia related interventions would be implemented under th i s component, following the same screening, selection, and implementation arrangements originally developed.

3 1. The AF would geographically scale up Component 2 o f the original project by including damages made by la Ni i ia - (particularly Sub-components 2.1 Execution of Rehabilitation Activities and Reconstruction Works and 2.3 Execution of Small Mitigation and Rehabilitation Works). A series of rehabilitation activities and reconstruction works wil l be undertaken in an effort to restore damaged infrastructure and to recover productive capacity. These works w i l l be financed in specific locations determined to have been particularly affected by L a Niiia. The average cost o f the proposed works i s estimated to be less than U S $ 100,000, with a large quantity of the identified works costing less than US$ 20,000. Rehabilitation activities wil l include the retroactive financing o f works rehabilitation executed in response to the emergency.

7

32. Works to be financed include, inter alia: rehabilitation o f water and sewage systems; repairs to basic infrastructure in small schools, housing, and small health centers; bridge and road repairs; and investments in water intakes, small earthen irrigation structures, riverbank protection, filtration galleries, and related activities.

33. Physical works have been identified by local communities and submitted by municipalities, prefectures, and related sectoral agencies. To ensure full compliance with environmental guidelines and to ensure the quality o f the work, the project w i l l also finance the Accompanying Technical Supervision for the Execution o f the Works.

34. The Borrower has asked that up to 40% of the additional financing amount (up to US$1.76 million) be used to finance priority retroactive expenditures made between the date o f the declared emergency (January 21, 2008) and project signing. I t i s expected that the majority o f these expenditures were incurred to cover rehabilitation works necessary for the recovery effort in the aftermath o f the disaster. The Bank i s reviewing the updated proposed l i s t o f retroactive expenditures to assess whether they meet the criteria for financing under the loan, both from the point o f view o f their relevance to the recovery effort (direct link to priority reconstruction/ recovery needs) and the efficiency and economy in executing such expenditures (use o f procurement practices acceptable to the Bank).

Institutional arrangements

35. The institutional arrangements for the AF remain the same as the original project. The AF w i l l be coordinated and managed by the Ministry o f Planning for Development (MPD), through the Unit for Disaster Risk Prevention and Reduction (UPRRD) at the Vice Ministry o f Territorial Planning and the Environment (VPTA). The Vice ministry o f Civ i l Defense (VIDECICODI) wi l l be a co-executor o f the project, but their role w i l l be limited to providing technical expertise in the design and supervision o f small reconstruction and mitigation activities, with no direct financial involvement. An Inter- ministerial Steering Committee including the VPTA and VIDECICODI created in the original project w i l l be used to allow for better coordination between the various agencies involved in the project.

36. The project w i l l continue to use the same two implementing agencies o f the original project, the UPRRD and Productive and Social Investment Fund (Fondo Nacional de Znversidn Productiva y Social, FPS). The UPRRD w i l l implement Component 1. The unit w i l l also coordinate, supervise, and monitor the execution o f Component 2, implemented b y FPS. The FPS, which operates under a Subsidiary Agreement signed with the MPD, wil l be responsible for administrative aspects o f project implementation, such as accounting, procurement and disbursement.

37. For the retroactive finance, the UPRRD wi l l be responsible to collect the necessary documentation and provide i t to the FPS for the processing o f disbursement. The Financial Agreement includes the items for the retroactive financing activities. The details and procedures for the retroactive finance wil l be described in the Operational Manual.

38. The implementation arrangements for activities under both the FPS and UPRRD are described in detail in Annex 6 of the original project document, and in the Operational Manual.

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Appraisal of Project Activities

Economic 39. An economic analysis o f the operation i s not possible until the investments to be financed through the operation are known. Subprojects to be financed under this operation would be limited to the most urgent and effective prevention works, and all reconstruction projects to be approved, w i l l be evaluated on the basis o f an established economic cost-benefit analysis.

Technical 40. As in the original project, subprojects to be financed w i l l follow local technical and environmental standards to strengthen, rebuild, or rehabilitate infrastructure. They would also follow current economically acceptable practices to ensure their ability to withstand similar events in the future and to minimize their environmental impact. The selection criteria i s spelled out in more detail in the Project Operational Manual. Proposed investments w i l l have to meet these criteria.

Institutional 41. A critical goal of the project i s to continue strengthening the institutional capacity of the government, at the central and local levels, to both ensure effective implementation o f the current recovery effort and prepare for future events.

Financi a1 Man a gemen t 42. The proposed additional financing would use the same financial management arrangements agreed for the original ERDMP project, both under the Ministry o f Planning through the VPTA and under FPS. The project's overall FM risk rating i s substantial. Thus, as agreed under the original project, the Bank team wi l l continue monitoring the effective implementation o f the strengthening action plans under both entities, including the adoption o f the Operational Manual.

Procurement 43. The activities financed by the Additional Financing (goods, works and consulting services) w i l l follow the same procurement and implementation arrangements as under the original credit for the ERDMP. The procurement for the proposed activities wi l l be carried out in accordance with the Bank's most recent Guidelines (World Bank Procurement and Consultant Guidelines published May 2004, and revised in October, 2006) and the provisions stipulated in the Financing Agreement. In the case o f the retroactive financing, up to a maximum of $1.76 mill ion (40% o f the additional financing amount), related to repair and rehabilitation o f c iv i l works resulting from the emergency, the Bank wil l review the respective contracts (executed after the emergency January 21, 2008) to verify that they comply with the principles o f economy and efficiency as stipulated in the Bank's Emergency Policy. The Operational Manual and the procurement plan w i l l be updated to reflect the additional financing.

Environment & Social Safeguards

44. The same safeguards frameworks as under the original ERDMP wi l l remain in place.

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Safeguard Policies Triggered Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04)

Yes No TBD X

X Forests (OP/BP 4.36) Pest Management (OP 4.09)

X X

Physical Cultural Resources (OP/BP 4.1 1) Indigenous Peoples (OP/BP 4.10)

Environmental

X X

45. This project i s considered Category B (partial assessment). Currently, works proposed under the project are considered Category C; however, additional works may be proposed for inclusion that w i l l require environmental screening, such as the small mitigation works if necessary. Works envisioned under the project wil l be aimed at repairing damaged infrastructure and improving flood protection. Impacts resulting from these projects are limited to the construction period, and environmental impacts relate to recovery o f damaged systems. These impacts are largely positive but w i l l be managed within the environmental framework presented under original project, which continues to be valid for the AF.

Involuntary Resettlement (OP/BP 4.12) Safety o f Dams (OP/BP 4.37)

46. Apart from the environmental framework, the Project Operational Manual includes the guidelines and requirements for environmental management within the project.

X X

Social

Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

47. Subprojects have been identified by local communities, municipalities, prefectures, and the national government. Projects are prioritized under a process involving an open dialogue between the affected parties, technical feasibility, and availability o f funds. T h i s i s managed under the PNRR, with input from local communities. The small works have been identified based on the processes presented in Annexes 1 and 6 or the original project. These works wil l be implemented nationwide and w i l l have a positive impact on those affected by the rehabilitation efforts.

X X

48. All works w i l l be undertaken on public lands, so the acquisition of private land w i l l not be necessary.

49. N o involuntary resettlement i s planned under this AF, and no such plan exists within any o f the relevant ministries o f the Government o f Bolivia (GOB). During implementation, the project w i l l explore the possibility o f helping the Government develop a resettlement framework for people l iv ing in non-mitigable risk areas as a project activity within the subcomponent on territorial planning. The

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Government i s in the early stages of territorial planning and lacks the capacity to carry out a well- defined resettlement plan as a risk-reduction strategy. The Government w i l l benefit from hazard and vulnerability mapping for i t s future territorial planning exercises.

Indigenous Peoples Framework and Social Assessment (OP/BP 4.101 50. All reconstruction and rehabilitation works w i l l benefit the indigenous populations and municipalities within the Project area, given that according to the 2001 National Census, 67% of the Bolivian Population identifies itself as belonging to some indigenous group. The remaining 33% o f the population w i l l also benefit from the emergency works, and those persons l iving within the project area w i l l benefit equally from the project. (Annex 8 of original project provides a more detailed Environmental and Social Safeguards Assessment).

51. More specifically, i f some of the c iv i l emergency works are executed in Territorios Comunitarios de Origen (TCOs), the OPBP 4.10 and the national law which it establishes w i l l apply. Within the framework o f ILOs Convenio 169, there w i l l be an indigenous people consultation process, for which the unit implementing the project w i l l draft a Rapid Social Assessment to establish the area’s characteristics, carry out a stakeholder analysis and prepare elaborate adequate measures to ensure that the indigenous people receive culturally appropriate benefits. Should there be any potential negative effects, these must be identified and avoided, minimized or mitigated.

VI. Expected Outcomes

52. The project w i l l aim to achieve the same project results as in the original project, however with the additional damages resulting from L a Nifia more resources are needed to obtain similar results. See Annex 1 for an updated result framework and monitoring framework.

VII. Benefits and Risks 53. The AF w i l l increase the size of population expected to benefit from the original project and wil l also provide a flexible instrument to the GOB to respond to the current agricultural losses caused by L a Nifia.

54. The r i sks for this AF remain the same as the original project because both projects’ design and implementation arrangements remain the same. For the risk matrix see annex 2.

VIII. Financial Terms and Conditions for the Additional Financing

55. The AF to the ERDMP would be provided as an SDR 2.7 mill ion IDA credit with 35 years of maturity and 10 years grace.

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Annex 1. Results Framework and Monitoring

In support to the implementation of the National Plan for Sustainable Rehabilitation and Reconstruction (PRRES) and National Plan for Rehabilitation and Reconstruction (PNRR), the project wi l l contribute to (i) restore access to basic infrastructure4 for a portion of the affected population in five target regions, and (ii) strengthen capacity for the government to respond to future disasters.

Component 1 : Strengthening the National System for Risk Management

(a) Inter-institutional coordination for disaster reconstruction and rehabilitation supported. (b) Risk management incorporated within territorial planning processes.

(a) Number of infrastructure facilities restored and number of beneficiaries with restored access. (b) Disaster Risk Management Units established in nine target sectors and nine departments; staf f trained; staf f of units fully paid by respective entities; submission by all nine sectors of sectoral risk management strategies to MPD.

Recommendations (see Comp 1.1) for a National Risk Management System submitted to the MPD for consideration.

~ ~~~~~

- Number of territories implementing pilot projects that integrate risk management concepts. - Draft of legislation for

To allow midterm review to monitor for application and relevance of PRRESPNRR plan implementation.

To inform the midterm review o f the success of training and workshops held to strengthen capacities within sectors in future recovery operations.

To inform the national government of progress on the implementation o f validated activities of the PRRES/ PNRR.

To track progress of plans, strategies, and institutional norms relating to reconstructionhehabilitation and risk mitigation in response to natural disaster, and to strengthen the institutional capacity of the country for the long-term integration of improved procedures and mechanisms for disaster reconstruction and rehabilitation.

Including, inter alia, rehabilitation of water and sewage systems; repairs to basic infrastructure in schools, housing, and small health centers; bridge and road repairs; and investments in water intakes, small earthen irrigation structures, riverbank protection, filtration galleries, and related activities

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(c) Risk management incorporated in public sector

investments.

(d) Development support provided for the National

Information System (SNID) and the National Meteorology

and Hydrology Service (SENAMHI).

(e) Preliminary studies for risk-financing strategy

developed. (0 The National Risk Management System strengthened (through

implementation of Component 1.1 recommendations). (g) Risk management

strengthened in sectors.

Component 2: Rehabilitation, Reconstruction, and Small

Mitigation Works

(a) Rehabilitation and reconstruction of prioritized

works in the five regions executed.

(b) Accompanying technical support for works execution

provided.

incorporation of risk management in territorial planning submitted to the MPD for consideration.

- Draft legislation for implementation o f vulnerability

reduction strategies in public investments submitted to the

MPD for consideration. - % trainees scoring above 75% in

sk i l l s test administered post training in risk prevention and vulnerability reduction at the

sectoral and departmental levels - % of trained territorial planning

vice ministry personnel and personnel in nine target sectors responding above 75% to s k i l l s test administered post training

- Draft of national risk-financing strategy submitted to the MPD for

consideration. - Draft legislation to formalize

recovery operations responsibilities and authorities

submitted to the MPD for approval.

- % trainees scoring above 75% in s k i l l s test administered post

training in r isk prevention and vulnerability reduction in the

sectoral risk management units

To implement the Plan for Sustainable Rehabilitation and Reconstruction

relating to damage caused as a result of the 2006-08 El Niiio event and La

Niiia - % of affected population

reporting improved access to basic infrastructure in five regions

(through standard citizen report cards issued once works

implementation has begun). - Citizen report cards (see above)

and team supervision visits to random sample sites wi l l also

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report on quality of improved infrastructure.

Monitoring and evaluation has been mainstreamed into all project components and w i l l be conducted at three levels: (a) contract compliance, (b) impact monitoring, and (c) project implementation. With the assistance o f the Bank team, the Vice Ministry o f Territorial Planning and Environment (VPTA) w i l l assess the progress achieved on a semiannual basis.

The Bank w i l l closely coordinate with the VPTA and retain the services o f experienced environmental and social specialists to ensure that the respective frameworks are adhered to at all times. In addition, the Bank team wil l conduct frequent supervision missions to assess progress made in the implementation o f project activities. Supervision missions w i l l draw lessons learned to date and provide guidance to the project team. In addition, the Bank w i l l conduct a midterm evaluation o f project execution. The midterm review w i l l be conducted no later than a year and a half after the first project disbursement. The midterm review w i l l focus on (a) progress in achieving project outcomes, (b) institutional arrangements for project implementation, (c) effectiveness and suitability o f the monitoring system, and (d) review o f both the project implementation plan and the Project Operational Manu a1 .

A final evaluation w i l l be conducted in the last semester o f project execution. The key objectives of this evaluation w i l l be to assess attainment o f the expected project results and to draw lessons learned from project implementation.

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Annex 2: Project Risks and Mitigating Measures

Critical R isks Country level Country’s Public Financial Management (PFM) and Procurement risk rating (including sub-national level) i s s~bstantial.~

The drastic salary reduction in the public sector l imi ts i ts capacity to attract and maintain qualified staff.

There i s an ongoing struggle between the national government and prefectures over who should be in charge of prevention, preparedness, and rehabilitation.

Project level The implementation of small works (less than $20,000), dispersed in different rural municipalities-most with

Proposed Measures

Implementation arrangements have been discussed and evaluated. As a result, and in compliance with current institutional framework, the largest component will be implemented through the FPS, which has experience in WB- financed projects and i s currently going through an integrated institutional strengthening plan. Regarding the UPRRD, specific arrangements are discussed to strengthen the UPRRD in terms of staffing, and with the design of simplified processes and procedures to quickly undertake the required tasks.

The UPRRD, currently now under VPTA, was established under the VPEP with the support of UNDP and will be strengthened with the proposed Credit with technical and fiduciary professionals to be selected following Bank procedures. Therefore, the terms of reference for key staff will be approved by the Bank. Although the salary levels will be similar to the ones applied for the rest of the public sector, having an external source of financing can ensure staff stability. Regarding the FPS, key financial management-experienced staff has remained at the Central Office during the last years. The strengthening action plan includes specific training on Bank processes and procedures.

This struggle may be clarified once the Constitutional Assembly settles on the autonomy of regional governments. The most likely outcome will be that the central government will be in charge of national government policies and of rules and regulations for sectoral work. To distance i tse l f from the political constraints, the project will focus on implementation of the National Plan for Sustainable Rehabilitation and Reconstruction (PRRES) - National Plan for Rehabilitation and Reconstruction (PNRR) for the Additional Financing, which as per Supreme Decree 29049, i s under the Ministry of Planning and Development (Supreme Decree 29425 for AF). By focusing i t s position in th is context, the project should be able to avoid excessive politicization, although we do notice a delayed effectiveness of the original project.

FPS i s designing specific and streamlined processes and procedures in coordination with the UPRRD, including the definition of roles and responsibilities of both entities and the municipalities. Detailed work plans will be reviewed and agreed on with the Bank.

Risk Level

S

M

S

S

2004 Bolivia Country Financial Accountability Assessment

20

scarce capacity-may pose several difficulties and challenges in designing procedures that on the one hand ensure the quality of the work and adequate use of resources, but on the other hand are simplified, smooth, and easy to monitor.

Close supervision and FPS strengthening as part of the project, combined with a GFDRR grant for technical assistance, will ensure strong support in project implementation.

A set of eligibility criteria has been pre-approved. A l i s t of

appraisal mission. priority recovery interventions was also developed during the

Implementation of capacity building at FPS.

M

M Delays in the selection of recovery works and vulnerability reduction activities.

Entity Level With the support of the WB, a thorough Operational Review o f the FPS has been carried out. Key recommendations of such review, including mitigating measures, have been included in a time-bound action plan. The Bank has arrangements in place for the supervision of FPS’ Action Plan.

FPS: Several weaknesses in the internal control environment and other deficiencies on FPS performance identified as part of the supervision and other specialized reviews conducted within the last year.

S

Overall Risk

Additional verification and oversight mechanisms are also being discussed.

I

I s

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Annex 3: Project Team Composition

Joaquin Tor0

Fabiola Altimari

Maricarmen Esquivel

Lourdes Linares

Ruth Llanos

Gerald Meier

Nara Me l i

Xiomara Morel

Patricia Hoyes

Luis Tineo

Task Team Leader

Legal

Junior Professional Associate

Sr. Financial Management Specialist

Social Specialist

Environmental Specialist

Monitoring and Evaluation Specialist

Sr. Financial Management Specialist

Sr. Finance Officer

Procurement Specialist

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