The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 23-May-2023 | Report No: PIDA35831 Mar 03, 2023 Page 1 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Fiji P178694 Fiji Tourism Development Program in Vanua Levu Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) EAST ASIA AND PACIFIC 10-May-2023 27-Jun-2023 Transport Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Republic of Fiji Fiji Roads Authority, Ministry of Tourism and Civil Aviation, Airports Fiji Limited Proposed Development Objective(s) The Project Development Objectives (PDOs) of Phase I MPA are to strengthen targeted infrastructure and essential services, increase coordination and private sector participation in tourism, and enhance environmental sustainability of tourism assets. Components Component 1. Overcoming Barriers and Developing Sustainable Tourism Component 2. Building Resilient Tourism Infrastructure Component 3. Tourism Capacity Enhancement and Project Management PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 61.50 Total Financing 61.50 of which IBRD/IDA 61.50 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing Mar 03, 2023 Page 2 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) International Development Association (IDA) 61.50 IDA Credit 61.50 Environmental and Social Risk Classification Substantial Decision The review did authorize the team to appraise and negotiate A. Introduction and Context Country Context 1. Fiji is considered the hub of the South Pacific, providing both economic and transportation services to the region. It is the most populous of the Pacific Island Countries (PICs), with 889,953 people (2019) spread across 110 of its 330 islands. The country encompasses 18,000 square kilometers in land size and more than 1.28 million square kilometers in its exclusive economic zone. Most of the population lives on the two largest islands, Viti Levu and Vanua Levu. Vanua Levu, the Project location, lies in Fiji’s Northern Division and hosts about 15 percent of the country’s population in just under 5,600 square kilometers of rough hilly terrain and coastline, surrounded by coral reefs. Figure 1. Map of Vanua Levu and Taveuni Islands Mar 03, 2023 Page 3 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) 2. Tourism plays a crucial role in Fiji’s economy. Fiji is one of the world’s 20 most tourism-dependent nations. The sector, directly and indirectly, contributes nearly 40 percent of the annual gross domestic product (GDP).1 It accounted for approximately FJD 3 billion (US$ 1.32 billion) of earnings in 2019.2 Tourism is a major source of income for Fijians and supports nearly one third of the labor force. In Vanua Levu, tourism is one of the few economic sectors that offers formal employment and entrepreneurship opportunities, especially for women, positioning it as a prime opportunity for growth. In addition to tourism’s direct contributions to Fiji’s economy and public revenues, linkages to other sectors stimulates growth and leads to economic spillover effects, particularly for rural livelihoods. World Bank analysis found that a one percent increase in tourism sector GDP was associated with reductions in poverty of 0.68 percent (based on the upper-middle-income poverty line).3 3. Limited economic diversity, beyond tourism on the main island of Viti Levu, has contributed to persistent poverty, especially in rural areas and communities away from tourism hubs. The Household Income and Expenditure Survey indicates a national poverty rate of 24.1 percent. Poverty is substantially higher in rural areas (36.5 percent) than in urban areas (14.0 percent), exacerbated by a lack of formal employment opportunities and limited tourism developments. There are also striking regional disparities, with the highest rates of poverty in the Eastern Division (39.2 percent)4 and Northern Division (29 percent)5, the latter predominately comprised of Vanua Levu and surrounding smaller islands. 4. Fiji is especially vulnerable to natural disasters and climate events. Frequent occurrences of tropical cyclones and high exposure to rising sea levels, floods, and landslides make Fiji one of the world’s most vulnerable nations to climate change and climate-related disasters.6 These natural hazards impose high costs on the country and impact the viability of key economic sectors, with often disproportionate impacts on Vanua Levu, given its location. The average losses due to floods and tropical cyclones are estimated at more than FJD 500 million (US$ 220 million equivalent) per year, representing 5 percent of Fiji’s gross domestic product (GDP).7 Long-term warming, continued sea level rise, and an increase in the frequency and intensity of extreme weather events are likely to lead to severe damage to infrastructure, with adverse impacts on communities and livelihoods in Fiji. 5. Since 2020, the COVID-19 crisis and tropical cyclones have severely impacted Fiji’s tourism industry. Before the COVID-19 pandemic, international visitor arrivals to Fiji grew consistently for nearly 10 1 According to 2019 estimates from the World Travel and Tourism Council. 2 Government of Fiji, Ministry of Commerce, Trade, Tourism and Transport. 2019. Fiji International Visitors Survey. 3 World Bank. 2023. The Future of Pacific Tourism. Washington DC. http://hdl.handle.net/10986/39738 4 Poverty in the Eastern Division is partially driven by migration to the capital city of Suva from rural areas such as Vanua Levu. Addressing poverty and economic opportunities in Vanua Levu will also help to reduce poverty in the Eastern Division. 5 Fiji is divided administratively into four divisions: Central (including the capital of Suva), Western (main tourism hub), Northern (including Vanua Levu), and Eastern. 6 European Commission. 2020. INFORM Index for Risk Management. Fiji Country Profile. https://drmkc.jrc.ec.europa.eu/inform-index/INFORM-Risk/Country Profile/moduleId/1767/id/419/controller/Admin/action/CountryProfile. 7 Fiji Climate Vulnerability Assessment. Mar 03, 2023 Page 4 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) years, reaching 894,000 in 2019. The pandemic caused a steep drop-off—2021 arrivals were 96 percent lower than in 2019. Real GDP contracted by 17.0 percent in 2020 and 5.1 percent in 2021. The economic impact has been devastating, with COVID-19’s effect on the tourism sector accounting for a 2.4 percentage point increase in poverty rates in Fiji.8 More than half of private tourism businesses were shuttered or fully closed by mid-May 2020. This was exacerbated by three major tropical cyclones—Harold in April 2020, Yasa in December 2020, and Ana in January 2021. Damage from Tropical Cyclone Yasa was concentrated in the Northern Division. A survey by the International Finance Corporation (IFC) and the Government of Fiji (GoF) found that Tropical Cyclone Yasa impacted 95 percent of businesses in the Northern Division and caused at least FJD 24.9 million (US$ 10.95 million) in damages. 6. Fiji’s full economic recovery is expected to be achieved over the medium term. Fiji’s border reopening in December 2021 is supporting an economic rebound. The economy is estimated to have grown by 16.1 percent in 2022. Tourist arrivals for 2022 exceeded expectations, reaching 75 percent of pre-pandemic levels, largely from Australia, New Zealand, and the United States of America. This stimulated economic activity across service-related sectors, such as accommodation, transport, wholesale, and finance and insurance. The economy is expected to reach pre-pandemic level by 2024 conditional upon tourism’s performance. Growth is projected at 5.0 percent in 2023, driven by an expected increase in tourist arrivals to 85 percent of the 2019 level, and 4.1 percent in 2024 assuming tourism’s full recovery to pre-pandemic level. Key risks to growth are natural disasters, rapid global monetary tightening, and the global cost of living crisis, each of which could impact tourism. Fiji’s economic dependence on tourism is also a risk to sustained recovery and highlights the need for diversification, including within the sector itself. Addressing core barriers in the interest of sustainable tourism recovery and development offers economic and social benefits beyond the sector, broadens economic gains, and enhances resilience. Projections indicate that economic recovery will reduce extreme poverty from 3.7 percent in 2021 to 2.4 percent in 2022.9 This is still above the 2019 pre- pandemic rate of 1.3 percent, the latest estimate based on household survey data. 7. Fiji’s women offer untapped productivity potential but face core challenges to engaging in wage employment and entrepreneurship opportunities. While educational attainment up to the secondary level is on par for females and males, women’s participation in the labor force (at 45.5 percent) is 37 percent lower than that of men—one of the largest gaps in the East Asia and Pacific (EAP) region. Unpaid domestic work and care is almost entirely done by women, a key constraint on them working outside the home. Within tourism and related sectors, women are about one third of the workforce, predominately in lower-paying jobs, and only hold a quarter of managerial and professional level positions.10 Women in the sector, especially in rural areas, are at least twice as likely to work informally and in self-employment than men. This self-employment tends to be in retail and other microenterprises, which have lower economic returns than men’s self-employment in areas such as transport services. Female business owners also face greater challenges in accessing credit, skills, and networks to start and grow their businesses.11 Addressing barriers to women’s 8 World Bank. 2023. The Future of Pacific Tourism. Washington DC. http://hdl.handle.net/10986/39738. 9 The extreme poverty line of US$2.15, based on 2017 purchasing power parity (PPP). 10 Asian Development Bank, Fiji Country Gender Assessment, 2015. 11 Women and Business in the Pacific, ADB, August 2018- https://www.adb.org/sites/default/files/publication/445821/women- business-pacific.pdf Mar 03, 2023 Page 5 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) entrepreneurship and employment could support a more robust workforce and increase productivity. Targeted support to women-led micro-businesses has the potential increase productivity and sales, reducing the gap between men and women's economic returns from these businesses. Sectoral and Institutional Context 8. Tourism is the backbone of Fiji’s economy, but the lack of diversity in its offering has limited tourism’s potential for long-term sustainable growth. In 2019, Fiji attracted 40 percent of all tourists to the Pacific, 64 percent of them short-haul, mass-market arrivals from Australia and New Zealand.12 Reliance on these relatively low-spend markets, and concentrating tourism spend in a few well- developed regions (67 percent of total visitor nights were spent in the Western Division), has limited the sector’s benefits to Fiji’s economy.13 Overreliance on these regional source markets and the limited spread of tourism in the country has also resulted in stagnating spending growth—tourism revenue per arrival grew only 0.12 percent between 2012 and 2018.14 The homogenous nature of Fiji’s tourism sector also makes it vulnerable to external shocks, such as the COVID-19 pandemic and country specific impacts on source markets (e.g. recessions, conflict, etc.). 9. The Government’s aim is for a more sustainable, inclusive, and resilient tourism sector. To better enable Fiji’s recovery from the pandemic and to build high-value arrivals, the Government has adopted a long-term strategy to grow the value of the tourism sector and ensure that Fijians throughout the country benefit from tourism. It focuses on boosting arrivals from high-value, long- haul markets, facilitating coordination among the many stakeholders, increasing the share of revenue retained in the local economy, and spreading the benefits of tourism throughout the country. Vanua Levu is well positioned to support this strategy as it already attracts a larger share of high-value tourists than the national average (55 percent versus 23 percent).15 10. To achieve its long-term strategy, the Government is working to diversify its tourism sector by increasing its geographic spread and the type of experience on offer, with a focus on Vanua Levu. Vanua Levu’s abundant and untapped nature- and culture-based tourism resources offer great potential to help achieve this. While only 4 percent of international tourists visited Vanua Levu in 2019, they are Fiji’s highest-spending visitors (between 70 percent and 200 percent more than the average traveler to Fiji). Detailed market demand analysis and project assessments show that the main barriers to Vanua Levu’s development as a tourism destination are four-fold: a) insufficient transport infrastructure and essential services; b) uncoordinated plans and institutions; c) limited entrepreneurship support, especially for community engagement in tourism; and d) vulnerability to natural and climate-related hazards. These interlinked challenges are summarized in paragraphs 12Short-haul visitors from Australia and New Zealand spend FJ$2,503 and FJ$2,237 per trip, respectively, while higher value markets spend significantly more, such as the United States of America (FJ$4,673), Canada (FJ$7,868), Europe (FJ$5,893), and China (FJ$4,805). 13 Traditionally, Fiji has been promoted to regional markets as a mid-level destination and to long-haul markets (such as North America, Europe, and China) as a luxury or adventure destination. While this has allowed growth from both market segments, it has created a counter-branding effect in Australia and New Zealand, limiting the number of high value visitors from these two countries as they view Fiji as a budget or family destination. 14 World Bank. 2023. The Future of Pacific Tourism. Washington DC. http://hdl.handle.net/10986/39738 15 IFC, Vanua Levu Tourism Market Demand Assessment, 2020 Mar 03, 2023 Page 6 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) below. Addressing them will boost sustainable and resilient tourism development, enhance the livelihoods of local communities, and improve entrepreneurship for both tourism and non-tourism private sectors—benefitting both the population of Vanua Levu and international tourists. This Project Appraisal Document (PAD) presents the first phase of a 10-year, 3-phase program that supports a whole-of-government approach to addressing these challenges and unleashing Vanua Levu’s tourism potential. Insufficient Transport Infrastructure and Essential Services 11. Infrastructure and tourism-enabling services are essential to incentivize the growth of the sector. A detailed IFC analysis, conducted as part of the preparation for this proposed development project, concluded that improving Vanua Levu’s infrastructure and essential services are priorities for its growth as a tourist destination and to stimulate private sector investment, both of which are catalysts for job creation.16 The limited convenient, regular, affordable, and quality air access to Vanua Levu has constrained tourism growth and inhibited investment on the island. Essential services for solid waste and wastewater management are insufficient for current demand, posing an environmental threat that will only increase as tourist numbers grow and impact livability of key tourism areas. Water supply infrastructure is inadequate and outdated and requires modernization to reach the required level of visitor readiness. Most tourism businesses in Savusavu and Labasa rely on expensive, air polluting, and high carbon-emitting diesel-generated power, and climate-friendly energy solutions are cost-prohibitive and in limited supply. Although information and communications technology (ICT) connectivity improved in 2019 with the landing of the submarine cable, some areas still lack adequate last mile connection. 12. Infrastructure development must be carefully managed. Tourism development can generate new, or worsen existing, environmental issues impacting the health and livelihoods of the current population and the viability of the destination. Negative environmental issues associated with tourism are the potential destruction of ecosystems, depletion of natural resources (water, forests), and pollution from litter, sewage, energy generation, and increased traffic. This stems both from the increased number of tourists in a destination using essential services, and from unmanaged growth of local populations. For example, in 2019, troubling levels of human fecal coliform (bacteria) were reportedly detected in Savusavu Bay. Constructing tourism infrastructure can also lead to the loss of, or alteration to, ecosystems and habitats. Social risks generated by increased numbers of tourists also need to be effectively managed. These include impacts on cultural heritage and the possible increased risk of gender-based violence due to both a possible influx of works and changes to family economic models. On the other hand, well planned tourism investments can help protect fragile ecosystems and cultural practices, improve livelihoods for women, and provide benefits to support community- led conservation and development. Uncoordinated Plans and Institutions 13. Institutional tourism coordination and destination level planning need to be harmonized to address gaps and create a single pathway to development. Fiji’s tourism industry is led by several agencies including: the Ministry of Tourism and Civil Aviation (MTCA), with a mandate for tourism policy, research, and development; Tourism Fiji,17 a statutory body with a mandate for marketing; Investment 16 Ibid. 17 Tourism Fiji is increasingly engaging in investment promotion and destination development activities. Mar 03, 2023 Page 7 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Fiji, the country’s investment promotion agency; and the Fiji Hotel and Tourism Association, the peak industry association. There is no permanent cross-ministerial committee supporting coordination of the sector.18 Line ministries do not always coordinate their activities in the tourism sector or fully recognize the holistic or market-driven nature of tourism. In some cases, this has led to contradictory policies and regulations created by different ministries, or inappropriate investments at sensitive tourism sites. There are multiple plans for sustainable tourism at the national, regional, and town level that align with the GoF's commitment to sustainable economic development. Tourism is recognized as a transformative sector in the GoF's National Development Plans and its long-term Look North Policy. However, these plans were often developed in isolation from each other, vary in forecasting and infrastructure capacity planning, and have gaps in coordinating public-private investments. This includes the detailed community plans developed by the iTaukei Land Trust Board (TLTB) and the Ministry of iTaukei Affairs and Culture, Heritage and Arts.19 There is a compelling need for coordinated planning across the numerous agencies, organizations, and businesses involved in the development of Vanua Levu, including Town Council plans, the infrastructure and essential service plans developed by the Fiji Roads Authority (FRA), Water Authority of Fiji (WAF) and Energy Fiji Limited (EFL), and private sector investment and marketing plans managed by Investment Fiji and Tourism Fiji. 14. Coordinating destination and investment planning will help address the first constraint by rectifying gaps in Vanua Levu’s infrastructure, marketing, and tourism services. The current lack of a structured approach to tourism development impacts the long-term viability and environmental sustainability of its tourism offering. The Blue Town plan for Savusavu, supported by the local community and the Government, is the only recent integrated and sustainability-focused concept to support economic development and tourism growth.20 Marketing efforts for Vanua Levu have also been minimal, particularly when compared with Fiji’s main tourism areas. The GoF has recognized the importance of valuing natural resources and developing blue economy approaches for economic growth. It is driving the focus on protecting Vanua Levu’s natural assets, with development agency support. Increased formal management and coordination of targeted marketing, and formal product development, will be necessary for the island to align with the Government’s new national sustainable tourism framework and attract greater investment and higher-spending visitors. Limited Entrepreneurship Support, Especially for Community Engagement in Tourism 15. Coordination and development of private sector entrepreneurs is required to increase community benefits from tourism, especially for women. While Vanua Levu’s natural and cultural assets provide an ideal foundation for sustainable tourism, there are limited formalized tourism businesses providing reliable market-driven experiences and services. The IFC study found only 15 formalized tourism experiences being offered on a consistent basis in 2019, from a limited number of businesses. Opportunities exist to expand tourism into communities, who own and manage most of Vanua Levu’s tourism assets. However, as micro-, small- and medium-sized enterprises (MSMEs),21 these business 18 A tourism action group was established during COVID-19 to deal with response and recovery planning and a working group has been established for the new national sustainable tourism framework, which is under development. 19 Ministry responsible for the preservation of iTaukei culture and the economic and social development of indigenous Fijians. 20 The Blue Town plan is a public-private development model that promotes income generation for the town while conserving the marine environment. 21 For the purposes of the Project, MSMEs are defined per the Micro, Small and Medium Enterprise Fiji Policy Framework 2020. Tourism MSMEs are those enterprises engaged in providing services and goods directly to tourists or to enterprises that provide services and goods directly to tourists. Mar 03, 2023 Page 8 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) face market failures that prohibit them from reaching success, including: lack of coordination across the sector to market and advocate for their businesses; information asymmetries on tourism product and market knowledge; information asymmetries with consumers on products, risks and logistics; and a concentration of market power with accommodation owners and cruise companies who often control access to tourists. Native land is also tightly controlled by the iTaukei Land Trust Board (TLTB), which manages leasing terms for all private sector activities. At the community level, these issues are exacerbated by insufficient industry-specific skills to develop community-based enterprises or to fully engage in wage work in the industry. 16. MSME recovery and expansion is core to achieving private sector development in tourism. Most tourism services in Fiji are provided by MSMEs. MSMEs create diverse, authentic experiences that add value to destinations and spread the economic benefit of tourism throughout the economy. MSMEs are usually locally owned, use less foreign labor, and are more likely to be women-led (particularly micro enterprises focusing on cultural products and crafts), generating more direct economic and social impacts. The COVID-19 pandemic disproportionally affected tourism MSMEs. Survey evidence in Fiji shows that, although large tourism businesses lost twice as much revenue as large businesses in other sectors, tourism MSMEs lost seven times more than those in other sectors.22 Although the return of tourists has begun, MSMEs resuming operations generally face additional costs before earning revenue. This is especially true for small and medium enterprises because large enterprises were better placed to access funds upon reopening, and micro enterprises typically have lower operating costs and fewer assets. The World Bank’s Future of Pacific Tourism23 study found that a decline in MSMEs in Fiji may lead to negative impacts on visitor satisfaction, and in term visitor spend. 17. Nearly a third of women’s employment is estimated to be in tourism and retail, predominantly in the informal sector. In Vanua Levu, a sizeable share of women’s self-employment is in the manufacture of handcrafts and cultural products, as well as micro enterprises focused on retail food and accommodation services. While gender statistics on women-led enterprises in the tourism sector are largely missing, women’s tourism businesses face disproportionate barriers in accessing finance and business development support. In addition, traditional decision-making structures related to land use and the management of natural resources within communities often exclude women. While gender norms are evolving, cultural and religious attitudes towards women’s role in social and economic life continue to limit their participation in work outside the home, as well as their role in community-level decision-making.24 In relation to cultural products and handcrafts, there is limited support for quality enhancement, market-driven product design, promotion, and developing market value chains. Support to community-based enterprises focused on crafts and cultural products, including for product enhancement, branding and marketing, has the potential to increase women's incomes, reducing the gap between women and men’s economic returns from the sector. 22 Government of Fiji, 2020. “Fiji COVID-19 Business Survey: Tourism Focus. Washington, DC: IFC and Fiji Ministry of Commerce, Trade, Tourism and Transport.� 23 World Bank. 2023. The Future of Pacific Tourism. Washington DC. http://hdl.handle.net/10986/39738 24 See Chattier, P. (2013) Does schooling and work empower women in Fiji? Or have gender inequalities persisted and why? Global Change, Peace & Security, 25:1, 61-76. And Vuki, V & Vunisea, A. (2016) Gender issues in culture, agriculture and fisheries in Fiji, Women in Fisheries Information Bulletin, 27, 15-20 Mar 03, 2023 Page 9 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Vulnerability to Natural and Climate-related Hazards 18. Natural and climate change-related hazards are the fourth significant challenge facing Vanua Levu’s development as a tourist destination. The island is highly exposed to tropical cyclones, coastal and riverine flooding, earthquakes, and tsunamis. Climate change is expected to intensify these events, posing a significant threat to the island's livelihoods, infrastructure, and human well-being. In addition, the degradation of natural resources, such as coral reefs and associated fisheries, due to climate change is impacting the island's marine biodiversity and its tourism industry. The cyclone season, which runs from November to April, is a particular concern, as Fiji is vulnerable to tropical cyclones during this period, causing widespread damage and disruption to infrastructure, airports, roads, resorts, and hotels. For instance, in 2016, Tropical Cyclone Winston, the strongest tropical cyclone to hit Fiji, caused significant damage and destruction across the country, resulting in loss of life, damage to infrastructure, and disruptions to the local economy. The rising sea levels are affecting coastal communities on Vanua Levu, leading to erosion and inundation of low-lying areas. These impacts are not only affecting the livelihoods of local communities but also the tourism industry, which heavily relies on the island's natural beauty and marine ecosystem. Cyclones can also negatively affect tourists' perceptions of safety and security in the destination, leading to reduced demand for travel and negatively impacting the local economy. This vulnerability disproportionally affects Fiji's poor, remote communities, and critical natural resource-dependent sectors, such as tourism. Mar 03, 2023 Page 10 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) B. Multiphase Programmatic Approach Key Results a) Program Results Chain 19. The 3-phase MPA will help address the challenges in developing resilient and sustainable tourism in Vanua Levu over a 10-year period by investing in government implementation of activities as outlined in the following Program Results Chain. Mar 03, 2023 Page 11 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) b) Program Development Objective 20. The Program Development Objective (PrDO) of this MPA is to develop resilient and sustainable tourism infrastructure and services in Vanua Levu. 21. Resilient and sustainable tourism is defined but not limited to, accounting for current and future economic, social and environmental impacts; addressing the needs of visitors, the industry, the environment and host communities through destination management; promoting environmental sustainability of tourism assets and business; resource management of waste and emissions; and anticipating risks and mitigation measures of potential long- and short-term shocks and changes.25 22. Program activities will take place in Vanua Levu and its surrounding islands, including Taveuni. Technical assistance activities may benefit other regions of the country, especially national level reforms and capacity building of institutions. 23. The following PrDO level results indicators will measure the achievement of the PrDO. a. Tourism-related jobs created (gender disaggregated). b. Number of people with improved, resilient essential services. c. Number of people with improved, resilient infrastructure connectivity to tourism destinations in Vanua Levu. d. Percentage of locally managed marine areas (MMAs) and other effective area-based conservation measures (OECM) established in Vanua Levu. C. Project Description Project Development Objectives of Phase I 24. This section of the Project Appraisal Document (PAD) is focused on Phase I of the MPA. Separate PADs will be developed for Phases II and III. 25. The Project Development Objectives (PDOs) of Phase I of the MPA are to strengthen targeted infrastructure and essential services, increase coordination and private sector participation in tourism, and enhance environmental sustainability of tourism assets. 26. The following results indicators have been identified to measure the achievement of Phase I’s PDOs. a. Number of people with access to resilient infrastructure (air and road transport). b. User satisfaction with essential services provision (disaggregated by gender). c. Whole-of-government Integrated Tourism Master Plan developed and endorsed. d. Number of tourism MSMEs with increased or new sales (gender-disaggregated). e. Number of new locally managed marine areas established in Vanua Levu. 25Definition informed by UNWTO and the Global Sustainable Tourism Council (https://www.gstcouncil.org/gstc-criteria/gstc- destination-criteria/) Mar 03, 2023 Page 12 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Project Components 27. Phase I of the MPA (the Project) will focus on setting the foundational framework for sustainable tourism in Vanua Levu. It includes three integrated components, each of which targets a key constraint to unlocking tourism potential in Vanua Levu. The three components of the Project are described in the following paragraphs, and greater detail on each is provided in Annex 2. The Project will support resilient and sustainable tourism development in Vanua Levu through integrated destination development and private sector growth, enhanced connectivity and essential services infrastructure, enhanced community engagement, and improved biodiversity and natural resource management. The Project provides an organizing framework to help address coordination failures between MTCA and other line ministries and agencies engaged in different aspects of tourism in Vanua Levu, and mobilize their resources towards common objectives anchored in an Integrated Tourism Master Plan (ITMP). The preparation of the ITMP, together with strong project management support, will help align existing government programs. Investments have been prioritized in consultations with Government, the private sector, and community stakeholders, and are expected to collectively increase destination competitiveness, contribute to attracting more high-value tourists to Vanua Levu, increase enterprise revenues from tourism, and support more tourism employment. The Project will benefit the local economy through community-based tourism and private sector development. Component 1. Overcoming Barriers and Developing Sustainable Tourism (US$12.45million) 28. This component aims to address three out of the four main barriers to developing Vanua Levu into a sustainable and resilient tourism destination, namely: i) uncoordinated plans and institutions; ii) limited entrepreneurship support, especially for community and women’s engagement in tourism; and iii) vulnerability to natural and climate-related hazards. It will also protect and restore ecosystems through strengthening natural resource management and biodiversity conservation. Component 1 will support Pillar 3 of the Global Crisis Response Framework (GCRF). It will be implemented by MTCA with technical partners Tourism Fiji (1a), Ministry of Trade, Co-operatives, Small and Medium Enterprises (MTCSME) (1b), National Trust (1b), Department of Environment (1c), Ministry of Forestry (1c), Ministry of Fisheries (1c), and Ministry of Rural and Maritime Development and Disaster Management (MRMD) (1d). 29. Subcomponent 1a) Integrated Tourism Master Planning and Destination Development: The investments under this subcomponent are essential to sustainable and resilient destination development in Vanua Levu and will set the foundation for long-term tourism growth and community benefit. They will address the key coordination failures present in Vanua Levu that are prohibiting destination growth. 30. To address these challenges, this subcomponent will finance investments in improved tourism planning and coordination and destination management and marketing. It will finance technical assistance to develop and implement an integrated tourism master plan for Vanua Levu and Taveuni,26 26Taveuni, a smaller island close to Vanua Levu, is part of the Northern Division, the project target area. It also has tourism appeal for nature-based tourism markets, particularly scuba diving, and could be incorporated into Phase 2 of the project. Mar 03, 2023 Page 13 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) including the development of a strategic environmental and social assessment, a coordination and sustainable financing mechanism for destination management, and the design and implementation of a strategic tourism marketing plan for Vanua Levu. 31. Subcomponent 1b) Tourism MSME Recovery, Expansion and Skills Development: The objective of this subcomponent is to strengthen private sector, community-businesses and women-owned businesses in the tourism sector, enabling these groups to compete with higher value-added experiences and services including for the market segments being targeted with the ITMP. This subcomponent will finance i) Technical assistance for designing a Pilot Tourism MSME Development Program; (ii) a Pilot Tourism MSME Development Program to enable access to selected business development services and selected small-scale works for Selected Beneficiaries to enhance tourism skills, facilitate community benefit from tourism, and support development of private sector delivered tourism related goods and services; and (iii) upgrading priority infrastructure and management capabilities in Waisali Rainforest Reserve. 32. Subcomponent 1c) Strengthening Natural Resource Management and Biodiversity Conservation: Subcomponent 1c will support addressing climate change issues by improving the capacity of communities to effectively manage and maintain the sustainability of locally managed marine areas (LMMA)27 within their locale. It will finance technical assistance for (i) supporting the development of protected area management plans to manage the locally managed marine areas, awareness raising activities for communities, non-governmental organizations, and tourism operators about environmental conservation; and (ii) providing technical assistance for the protection of biodiversity of Natewa Bay and Peninsula. 33. Subcomponent 1d) Emergency Management and Preparedness for Tourism: This subcomponent will help Vanua Levu improve disaster preparedness, contingency planning, and recovery for a safer and more competitive tourism sector. Investments will be based on the World Bank–developed Emergency Preparedness and Response (EP&R) Program that includes a series of well-established tools to assess and design comprehensive system improvements. It will finance: Improving disaster preparedness, contingency planning, and recovery for a safer and more competitive tourism sector, though: (i) disaster risk reduction planning, development of early warning systems, safety and security systems, purchase of weather monitoring equipment, development or revision of emergency response plans, and capacity building; and (ii) strengthening the emergency response capacity of local medical staff and the tourism private sector, through capacity building activities and provision of emergency equipment in the government medical facilities. 27 The Fiji Locally Managed Marine Area (FLMMA) network consists of members representing village communities, research institutes, and nonprofit organizations, convened to share information and ideas about conserving ocean life and engaging communities in decisions about resource management. https://www.itaukeiaffairs.gov.fj/index.php/divisions/development- services-division/fiji-locally-managed-marine- areas#:~:text=The%20Fiji%20Locally%20Managed%20Marine,in%20decisions%20about%20resource%20management. Mar 03, 2023 Page 14 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) 34. Collectively, the Project adopts a multifaceted approach to boosting Fiji's resilience to climate change and natural disasters by focusing on destination management, conservation, climate-resilient tourism infrastructure, natural resource management, emergency preparedness, and capacity building. Component 2. Building Resilient Tourism Infrastructure (US$40.05million) 35. The investments under this component address the remaining key barrier to tourism in Vanua Levu— namely, insufficient infrastructure and essential services in Vanua Levu. The component will focus on: (a) investments in improving existing air and land transport connectivity infrastructure and services; (b) essential facilities upgrades and investments in local population services and natural resource protection to meet urgent needs and resilience standards; and (c) improving the cityscapes of key tourism hubs in Vanua Levu through interim and permanent interventions. The Project will finance planning and direct investments in all three areas, which will be expanded during future program phases. Phase I will give immediate attention to urgent infrastructure and essential service gaps that benefit the local population and increase Vanua Levu's capacity to sustainably accommodate a growing number of tourists. All new and upgraded infrastructure will take a people-centric approach and be designed considering the specific needs of women; women will be targeted in engagement processes to ensure their perspectives are incorporated. Component 2 will support Pillar 4 of the GCRF. The component will be overseen by MTCA and subcomponents will be implemented by Airports Fiji Limited (AFL) (2a), Fiji Roads Authority (2a, 2c), and MTCA in coordination with Ministry of Local Government (MoLG) and Savusavu and Labasa Town Councils (2b, 2c), and in consultation with technical partners including the Water Authority of Fiji (2b), Department of Environment (2b) and Energy Fiji Limited (2b). 36. Subcomponent 2a) Connectivity Infrastructure Investments: This subcomponent will address the critical issue of connectivity to and around Vanua Levu, which has been a binding constraint on the island's tourism and investment potential. Investments will be made in two domestic airports in Vanua Levu, Savusavu and Labasa, as well as the road connecting these two towns. 37. The limited convenient, regular, affordable, and quality air access to Vanua Levu has hindered the growth of the island's tourism industry. Currently, Savusavu and Labasa domestic airports offer direct flights connecting to Nadi (the tourism hub) and Suva (the business hub). However, both airports face infrastructure challenges that impact the safety, frequency, and weight limits of flights. Labasa Domestic Airport, located near the divisional capital and business hub of Labasa, primarily services domestic and business travelers and can receive ATR 72s with weight restrictions. However, air capacity and flight services to Labasa are limited due to the runway's length, limited approach caused by nearby hills, and the lack of automated weather reporting systems. Additionally, AFL has reported issues with the stability of the land and regular flooding of the access road. Savusavu Domestic Airport serves mostly international leisure tourists and residents and can only receive Banderaintes and Twin Otters with significant weight restrictions. Currently, both airports lack real time weather reporting, which can result in plane reroute, circling the airport in air, and even return to the departure airport due to unreported bad weather conditions. Mar 03, 2023 Page 15 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) 38. To address these challenges, this subcomponent will finance investments in improving connectivity infrastructure and services, to and around Vanua Levu, through: (i) upgrading domestic airports in Savusavu and Labasa and supporting a feasibility study for air connectivity infrastructure investments for Vanua Levu; (ii) upgrading the cross island road linking Labasa and Savusavu (through Seaqaqa); and (iii) providing technical assistance to establish a climate-informed road accident database and for the design and supervision of works. 39. Subcomponent 2b) The Resilient Essential Facilities and Services Investments: This subcomponent aims to invest in essential facilities and services in tourism hotspots in Vanua Levu to ensure that the island's success as a tourist destination is sustained and livelihoods of the local population are improved. This subcomponent will support essential facilities and services in tourism hotspots in Vanua Levu, through (i) the construction of a new solid waste management facility and rehabilitation of the existing dump site in Savusavu; (ii) the development of a feasibility study for wastewater management infrastructure and systems and a small-scale pilot of a sewerage treatment facility in Savusavu; (iii) the development of one or more water-sector related strategies; and (iv) development of a renewable energy pilot program through installing roof-top solar panels on targeted public buildings in Savusavu and Labasa. 40. Subcomponent 2c) Cityscape Improvement of Savusavu and Labasa: This subcomponent will enhance the functionality and attractiveness of both towns, improve livelihood options for locals, and increase visitor satisfaction. It will finance carrying out a program of activities to enhance the functionality and attractiveness of the Savusavu and Labasa cityscapes through selected urban upgrade measures in selected locations. The nature and scale of improvements will be determined in the proposed Integrated Tourism Master Plan. 41. By investing in connectivity, essential services, and cityscape improvements in Savusavu and Labasa, the Project aims to bolster the built environment's physical resilience and local communities' capacity to withstand climate change impacts and natural disasters. Component 3. Tourism Capacity Enhancement and Project Management (US$9million) 42. The investments under this component will address capacity challenges to improve institutional coordination between implementation agencies and enhance the enabling environment for private sector-led sustainable tourism. Component 3 is assigned to Pillar 4 of the GCRF. It will be implemented by MTCA with technical partners iTaukei Land Trust Board (3a), FRA (3a), WAF (3a), and National Trust of Fiji (3a). 43. Subcomponent 3a) Institutional Strengthening and Capacity Building: Supporting policy and regulatory enhancements and institutional capacity enhancements for tourism investments, development and management of sustainable infrastructure, and coordination mechanisms. 44. Subcomponent 3b) Project Management: Supporting day-to-day project management and implementation capacity, including, inter alia, for financial management and procurement administration, monitoring and evaluation, and management of environmental and social risks Mar 03, 2023 Page 16 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) through a Central Project Management Unit (C-PMU). 45. The component aims to improve the enabling environment for tourism and capacity building through institutional strengthening, capacity building, and developing policies and strategies that promote climate-resilient practices and infrastructure within the tourism sector. Project Beneficiaries 46. Approximately 60,000 people are expected to benefit directly from project activities, including staff from relevant ministries and agencies, government (national and divisional) and town councils, residents and communities (particularly women), landowners, local jobseekers and workers in the tourism industry, local tourism enterprises in Vanua Levu, visitors, and residents of the wider Pacific. 47. Component 1 delivers for most of the beneficiaries listed above. These include: 1) relevant ministries and agencies involved in integrated tourism master planning, destination development, management and marketing, and the monitoring and preservation of natural and cultural assets, including the MTCA, MTCSME, Tourism Fiji, the National Trust, Ministry of Forestry, and Ministry of Fisheries and MRMD; 2) tourism MSMEs and their employees; 3) jobseekers and workers in the tourism industry; and 4) local communities and landowners. The MSME development, skills capacity building, and community-based tourism development activities will especially benefit women. Nearly one third of women’s employment in Fiji before the pandemic was in tourism, hospitality, and retail, and the vast majority are self-employed in micro to small enterprises. In Vanua Levu, a sizeable share of women’s self-employment is in the production of handcrafts and cultural product. Component 1 also supports existing MSMEs to increase their sales of tourism and tourism-related products and services, and will boost their competitiveness, the quality of their offer, market access, and access to business development services. Community-based tourism activities and the rehabilitation of the Waisali Rainforest Reserve (on community-owned land) will improve knowledge of tourism and conservation, build business and tourism skills and, ultimately, increase incomes into communities from tourism. 48. Investments under Component 2 to improve connectivity and essential services will directly benefit the local population, visitors, and businesses. They will primarily benefit residents of Vanua Levu who currently suffer from significant lack of access to quality essential services. Related benefits for the tourism industry will come through enhanced environmental sustainability, health and hygiene, and cleanliness, which will increase the destination’s attractiveness. Transportation investments planned in the Project will enhance road safety for residents and visitors, reduce transport times for trade and business activities, and improve opportunities to use environmentally friendly non-motorized forms of transportation (for example, through new bicycle paths and sidewalks). Investments in essential service provision, especially solid waste management and wastewater management, will improve overall environmental sustainability by preventing waste leeching into terrestrial and marine environments, which will benefit agriculture, aquaculture, and fishery MSMEs, who will have access to more pristine resources. 49. The technical assistance and project management investments under component 3 will benefit ministries and agencies by building their capacity. This includes the lead implementing agency (MTCA), the two other implementing agencies (FRA and AFL), as well as MoLG, STC and Labasa Town Council Mar 03, 2023 Page 17 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) (LTC), who will coordinate the implementation of activities at the town council level. It will also benefit technical partners who will receive capacity building, including MTCSME, the National Trust of Fiji, TLTB, Tourism Fiji, Department of Environment, MRMD, WAF, and EFL. 50. The increased tourism spending in Vanua Levu will translate into significant additional revenue for national and divisional governments and town councils. In Fiji, tourism-related taxes include VAT on tourism services (including accommodation and tour products) at 14.6 percent and the airport departure tax, currently at about US$ 50. This will directly accrue to the national government. In addition, town councils will receive increased payments from rate payers as their services expand and improve. 51. The Project has been designed to specifically address gender gaps and constraints faced by women in accessing economic opportunities offered across the tourism value chain. To address the identified gender gaps, the Project embeds gender-sensitive approaches across proposed interventions, notably by: (a) incorporating gender mainstreaming activities as part of the integrated tourism master planning process; (b) supporting women-led MSMEs in tourism value chains through customized technical assistance aimed at strengthening women´s skills, knowledge, confidence, and access business development services, and with targeted support to women’s cultural industries enterprises at the community level; (c) piloting on-the-job training/mentorship, particularly for women in the sector; (d) ensuring infrastructure upgrades are designed considering women’s specific needs, and that women beneficiaries are actively involved in the planning and decision-making steps; and (e) supporting the collection of gender-sensitive statistics in the tourism sector that are currently missing (for example, the share of businesses owned or led by women). The Project will also mitigate the possible risk of increased gender-based violence through targeted prevention and response services. 52. Several activities under this Project also support the Government of Fiji’s national climate change policy objectives, benefitting the residents of Vanua Levu, Fiji and the wider Pacific. For climate mitigation, component 1 will contribute to the continued protection of native forests in the Waisali Rainforest Reserve, which is in line with Fiji’s REDD+ agenda, the increased protection of marine areas, and the sustainable use and conservation of community-owned and managed natural assets and resources. Support to community-led initiatives will increase community resilience and capacity to deal with and adapt to climate change impacts and shocks. Component 2 will also promote renewable energy solutions and improved facilities for public transportation and non-motorized transport, including bicycles and pedestrian mobility, supporting the policy goal of overall reduction in greenhouse gas emissions from energy and transport use. For climate change adaptation, component 1 will integrate climate resilience considerations into the Integrated Tourism Master Plan and the monitoring and preservation of natural and cultural assets, where appropriate. Component 2 will contribute to reducing the climate vulnerability of residents and visitors in Vanua Levu by investing in the betterment and rehabilitation of roads and foreshore areas, especially in Savusavu, thus ensuring all-weather physical access to the destinations and continuity of basic services in both high and low tourism season. Such investments are consistent with the Fiji National Climate Change Policy (2018 – 2030), which aims to build a socially inclusive, equitable, environmentally sustainable, and net-zero emissions economy. The investments in sustainable solid waste management and wastewater management will address vulnerabilities to climate change exacerbated natural disasters and increase resilience towards water-born and vector-borne diseases. Mar 03, 2023 Page 18 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Rationale for Bank Involvement and Role of Partners 53. Following a 50-year partnership with Fiji, the World Bank can bring a unique combination of support to the country through this Project. The World Bank’s deep engagement with, and knowledge of, economic opportunities and operational challenges, gained through decades of work, will be indispensable for the success of this project. The World Bank has considerable experience in Fiji and recently launched the first Country Partnership Framework with Fiji. Since 2018, the World Bank Group (WBG), especially through IFC, has become the GoF’s key development partner in tourism. Together, the World Bank and IFC led the first baseline assessment of tourism in Vanua Levu, providing a foundation of evidence to design this project. IFC also supported tourism planning and statistics capacity by assisting in launching the Fijian Tourism 2021 tourism strategy and modernizing the international visitor survey. The WBG team is also equipped to design the project with a focus on growth strategies that: a) protect the environment as the core basis for the sector; and b) generate employment and better entrepreneurship opportunities for women. 54. The success of this project will depend on a coordinated well-designed approach that brings together multiple technical disciplines. The World Bank can mobilize multiple technical disciplines and expertise across the organization to design and implement tourism development in Vanua Levu. The success of the Project will depend on this coordinated well-designed approach. This includes tapping the Global Sustainable Tourism Solutions Group—which combines expertise from Global Practices of Finance, Competitiveness, and Innovation (FCI), Urban, Resilience, and Land (URL), and Environment, Natural Resources, and the Blue Economy (ENB)—to create holistic tourism development projects that address market failures across the complex tourism value chain. Specifically, the Solutions Group brings expertise in: (i) tourism strategy, growth, and competitiveness; (ii) environment and natural assets; (iii) destination development and sustainability; (iv) transport and connectivity; (v) supply chains and rural tourism; and (vi) private investments in tourism and hospitality. The Social Sustainability and Inclusion (SSI) Global Practice’s expertise in women’s economic empowerment and community-based tourism will also be mobilized. 55. On the private sector side, IFC brings together important expertise. IFC can tap into expertise in tourism destination development, hotel and resort investment, and green building investments through its teams—Creating Markets Advisory (CMA), Manufacturing, Agribusiness, and Services (MAS), and Green Buildings. IFC has positioned itself as the central player in Fiji through the Fiji Tourism Project (602336), in which IFC conducted a feasibility study for large-scale tourism development in a new geography and worked with investors to scope and plan the project. The current Fiji Sustainable Tourism Project (605801) is improving the enabling environment for sustainable tourism, with a focus on creating private investment opportunities, and working with MTCA on the development of the new national sustainable tourism framework. Additionally, IFC’s Environmental and Social Diagnostic Study (607716) is assessing the environmental and social risks to opening tourism markets in Fiji, including Vanua Levu, by examining specific sites with tourism investment potential. Mar 03, 2023 Page 19 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) 56. The World Bank will bring specialized expertise in building climate adaptation and resilience, including specialist knowledge about small island developing states. The multi-sectorial GRID approach to this project will support Fiji in building a strong, resilient recovery. The multi-phased approach aims to help Fiji become more resilient to climate change and natural disasters by focusing on ecosystem services, climate-resilient infrastructure, and essential services. The World Bank has core expertise in resilience building for adaptation in small island developing states that it will apply to this Program. Brief Description of Methodology and Scope, and Next Steps 57. The design of the MPA and the Project is based on robust analytical work of the World Bank Group and coordinates WBG interventions in Fiji. The IFC’s Vanua Levu Tourism Market Demand Assessment, developed in preparation of the MPA under the IFC Fiji Tourism Project 2017–2020, informs the Project’s development and its scope.28 The Project will also use analytical work from the Pacific Oceans Advisory Program (POAP), specifically the “Assessment of Needs and Opportunities to Improve Ecosystem Resilience and Sustainable Tourism in Fiji�. IFC’s analytical work also provided evidence for a national-level strategy on targeting high-value market segments that could help the wider Fijian tourism sector recover from the COVID-19 pandemic. By focusing on high-value markets, the GoF can achieve higher-than-previous revenue from the same number of arrivals. Follow-up work by the IFC is providing more detailed information on potential private sector investment opportunities in Vanua Levu. As part of the Project’s methodology, a second piece of analytical work will generate robust evidence for the GoF to use to inform policy and planning activities. The body of knowledge will include information that will feed into the design of investments that support coastal resilience, climate change mitigation, and environmentally smart changes to economic activities in Fiji, including sustainable tourism. Further, analytic work planned under the Gender Programmatic Advisory Services and Analytics (PASA) focused on barriers to women’s economic empowerment will inform approaches to supporting women’s MSME’s. These analytical works constitute a package of background data and information that will guide the evidence-based design of this operation, tailoring it to the specifics of the socioeconomic and biophysical characteristics, challenges, and sensitivities of Fiji’s Northern Division. 58. Technical assistance implemented during the preparation period will also assist in refining investments for Phase 1. As part of its methodology, the World Bank is implementing two technical assistance studies with the support of the Public Private Infrastructure Advisory Facility (PPIAF) and the Climate Resilience and Environmental Sustainability Technical Advisory (CREST). The first study focuses on understanding air access connectivity constraints, including infrastructure, pricing, routing, and scheduling, along with exploring options for infrastructure expansion to increase air capacity (both domestic and international). The second study will identify, scope, and provide recommendations on public-private partnership (PPP) investments in critical sustainable tourism 28IFC (International Finance Cooperation). 2020. Vanua Levu Tourism Market Demand Assessment. Washington, DC: IFC. https://www.ifc.org/wps/wcm/connect/747dcc26-65c4-4abf-b388-d2c0c15ae547/Vanua+Levu- Handout.pdf?MOD=AJPERES&CVID=nmmu6yh. Mar 03, 2023 Page 20 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) infrastructure in Vanua Levu, and the minimum climate adaptation requirements for those investments. Further, the regional Future of Pacific Tourism29 report provides key policy guidance for long-term sustainable tourism development across the Pacific. Key among the study’s recommendations are taking a whole-of-government approach to tourism planning, supporting MSME development, and investing in resilient and resource efficient infrastructure, aligned with the investments in the Project. 59. By supporting the sustainable use of ecosystems and preserving ecosystem services, the Project’s scope addresses the role of healthy ecosystems in mitigating the impacts of climate change and natural disasters, such as acting as natural buffers to storms and floods, and providing resources for local communities. Enhancing the resilience of tourism infrastructure, such as airports and roads, involves integrating sustainable practices into their design and construction to withstand extreme weather events and sea level rise. Additionally, the Project emphasizes the importance of essential services, including the incorporation of solar energy systems into the region's tourism infrastructure to reduce greenhouse gas emissions and strengthen adaptive capabilities to climate change. Solid waste management is another critical aspect, with best practices proposed to minimize waste generation, promote recycling, and ensure the safe disposal of waste. Sustainable cityscapes are promoted through urban planning practices, such as green spaces and low-impact development, to mitigate the urban heat island effect, absorb stormwater runoff, and minimize the environmental impact of new infrastructure. By addressing these key development areas, the Project contributes to a more resilient and sustainable future for Fiji, particularly as climate change and natural disasters continue to pose significant challenges. The Project will ensure that tourism development in Vanua Levu is sustainable and ready to deal with the challenges of a rapidly changing climate and its associated disasters. . . Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Assessment of Environmental and Social Risks and Impacts . D. Environmental and Social 60. The Environmental and Social (E&S) Risk Classification for the Project is Substantial. The Project is expected to provide considerable E&S benefits through the promotion of sustainable, community and 29 World Bank. 2023. The Future of Pacific Tourism. Washington DC. http://hdl.handle.net/10986/39738 Mar 03, 2023 Page 21 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) nature-based tourism, job creation, protection of marine and terrestrial areas, improved solid waste and wastewater management, and the promotion of renewable energy sources. Key E&S risks and impacts associated with the Project are direct, indirect/downstream (i.e. from implementation of the ITMP and other technical assistance outputs) and potentially cumulative and include land clearance for construction and agriculture; generation of solid waste, waste water, dust, and noise; potential land and water pollution impacts from landfill construction and Savusavu dump rehabilitation; resource consumption; inequitable benefit sharing; exclusion of or discrimination against disadvantaged or vulnerable people; negative social and economic impacts to community members from changed land use; destruction of cultural heritage; and increased gender based violence or sexual exploitation and abuse and sexual harassment (SEA/SH). 61. Environmental and social risk will be managed through implementation of the following instruments: 1) An Environmental and Social Management Framework (ESMF) to screen project activities and reduce, mitigate, and/or offset adverse risks and impacts. 2) A Strategic Environmental and Social Assessment (SESA) to systematically examine the risks and impacts associated with the implementation of the ITMP and activities and investments directly financed under the project. MSMEs will also be considered in the SESA which will, in turn, inform the inclusion of relevant mitigation measures and strategies into the ITMP. 3) A Land Acquisition and Resettlement Framework (LARF) to guide land acquisition, physical and economic displacement including with respect to involuntary resettlement, land acquisition, restrictions and use. 4) A Stakeholder Engagement Plan (SEP) and grievance mechanism (GM) to establish and guide a structured approach for community outreach and two-way engagement with stakeholders. 5) A Labor Management Procedures (LMP) to identify key aspects of labor planning and management including how the project will protect and support i) working conditions and management of worker relationships, ii) protecting the workforce, iii) receive and address grievance mechanism, iv) include a COVID safety protocol v) a code of conduct for prevention and mitigation of Gender Based Violence, SEA/SH and Sextually Transmitted Infections, vi) incident reporting and vii) a mandated age verification procedure for all workers; and 6) An Environmental and Social Commitment Plan (ESCP). Investments into MSMEs are considered under two project typologies, technical assistance and small-scale physical investments (community works). E&S risks and impacts will be managed through the integration of E&S aspects into TORs and technical assistance outputs to ensure compliance with ESF requirements and GIIP and use of the ESMF E&S screening process for physical investments. The ESMF, LARF and LMP were disclosed on the Bank’s website on April 25, 2023. The ESCP and SEP were disclosed on the Bank’s website on May 19, 2023. 62. The SESA will be developed during project implementation and inform the ITMP. The activities that will be supported under the following MPA phases have not yet been determined but will be guided by the ITMP and technical assistance work supported under this project ensuring the integration of suitable environmental and social risk management measures. 63. The Project will finance installation of rooftop solar panels at the office buildings of STC and LTC under sub-component 2(b). To address potential forced labor risks associated with solar panel suppliers, the Project incorporates specific measures. Bidders will be required to provide two declarations: a Forced Labor Performance Declaration regarding their past performance and a Forced Labor Declaration outlining their future commitments to prevent, monitor, and report on any forced labor within their supply chains. The procurement contracts will also include enhanced language on forced labor. In Mar 03, 2023 Page 22 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) accordance with Environmental and Social Standard 2 (ESS2), if significant forced labor risks are identified among primary supply workers, the IA will work with suppliers to address and remedy these issues. If remediation is not possible, the Project will shift to alternative suppliers that comply with ESS2 requirements. Prior to the procurement process, market analysis will be conducted to identify solar panel sellers, and bidding documents will emphasize the importance of avoiding forced labor in solar panel production. The Bank will review solar panel procurements to ensure compliance with these enhanced provisions. 64. Gender. The Project will pursue opportunities to foster women’s economic empowerment. In line with the EAP Regional Gender Action Plan and the priorities for Fiji identified in the Country Gender Action Plan, the Project will address gender gaps in access to economic opportunities. Specifically, subcomponent 1a) will ensure adequate integration of gender equality considerations and targets within the Integrated Tourism Master Plan. In subcomponent 1b), one of the target groups of the MSME activities will be community-based micro enterprises that are at least three times more likely to be run by women, particularly those focused on cultural industries. Capacity development activities will focus on business development and product enhancement and branding to increase the price points of products and services and ultimately the income of local women. Pilots on job placements and skills training will also be tailored to the needs of women. These livelihood opportunities arising within the community will be paired with community awareness programs to address normative barriers and care responsibilities that are found to prevent women from working outside their homes, identified based on analysis conducted under the Pacific Gender Equality PASA. The Project will include community awareness programs in relation to project opportunities, as well as skills development and access to business development services. Increasing women’s economic role in the community, through greater engagement in income–generating activities, combined with community education and outreach to create the environment at the community level for them to do so, is expected to foster progress towards women’s economic empowerment. The planned Strategic Environmental and Social Assessment (SESA) will identify risks to women and other socially vulnerable groups that may arise from expanding their tourism and employment opportunities- including possible increases in gender base violence and sexual harassment- and develop actions to mitigate such risks. The closure of these gender gaps will be monitored by the following indicators in the results framework: (i) User satisfaction with essential services provision (disaggregated by gender) (Percentage), (ii) Number of tourism MSMEs with new or increased sales (gender-disaggregated) (Number), (iii) Number of women owned cultural industry enterprises with new or increased sales (Number), (iv) Share of tourism and tourism-related MSMEs satisfied with the project interventions (disaggregated by gender) (Percentage), and (v) MSMEs with improved tourism products and services (of which, number that are women-owned) (Number). 65. Climate Co-Benefits. The Project intends to address climate change vulnerability in the tourism sector and improve infrastructure resilience in Vanua Levu. Particularly, under Component 1, the Integrated Tourism Master Plan will be climate informed and consider potential impacts of climate change in Vanua Levu and the implications for the tourism sector. Climate risks will be assessed, and climate resilient designs will be integrated into the zoning and building reforms. Skills and capacity will be built in government agencies, private sectors, and communities to improve climate resilience and disaster preparedness, contingency planning, and recovery for a safer and more competitive tourism sector. Component 2 will incorporate climate-resilient design standards into the development and maintenance of airport and road infrastructure, reducing expenses associated with repairs and Mar 03, 2023 Page 23 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) replacements due to climate-induced damages. The component also includes slope stabilization measures to address vulnerabilities to rainfall-induced landslides, coastal inundation, and cyclone- induced storm surges, lessening potential infrastructure damages. The rehabilitation of the Savusavu solid waste management facility will materialize climate mitigation benefits through leachate storage and treatment. Additionally, a rooftop solar installment pilot program will promote renewable energy development in Savusavu and Labasa by targeting public buildings such as municipal council buildings and the Savusavu market. Component 3 will include the capacity building of statutory bodies in Fiji to develop and manage resilient infrastructure. The Project is expected to generate significant climate change mitigation and adaptation co-benefits. 66. Citizen Engagement (CE). Inclusion of and participation by communities is integral to the Project design, notably in subcomponents 1c) and 2c). The objective is to connect beneficiaries’ perceptions of the interventions' social impacts with tourism development, natural resource management, and business management skills. The Project will finance the implementation of the Stakeholder Engagement Plan (SEP) that includes a feedback and grievance redress mechanism (GRM). The SEP and SESA will provide measures to facilitate inclusive engagement and participatory decision-making at various national, sub-national, and local levels, especially for the inclusion of vulnerable groups, particularly women. 67. Private Capital Enabling (PCE). The Project is strategically designed to promote private sector participation through robust PCE activities. It addresses critical barriers that hinder private sector investment, placing emphasis on improving transport connectivity and enhancing the enabling environment for private sector-led tourism. By strengthening governance frameworks, regulations, policies, and infrastructure, the Project aims to create an attractive and conducive climate for private capital mobilization. These efforts will unlock the potential for sustainable and green tourism investment in Vanua Levu, enabling the sector to access high-value markets and promote economic growth. The Project also prioritizes capacity building and knowledge transfer to empower the private sector, ensuring its active engagement and contribution to the tourism industry. Furthermore, close collaboration with the International Finance Corporation (IFC) allows the project to leverage their expertise and network in mobilizing private sector investment, fostering a more robust and sustainable private sector engagement in Vanua Levu's tourism industry. 68. During implementation, consultation methods will be designed with attention to different social groups and sociocultural norms that impede participation by and input into decision-making by socially disadvantaged people in a community. The engagement of communities and all interested stakeholders will be vital to guarantee that the Project meets the needs of all potential beneficiaries and is supported. As much as possible, stakeholder engagement will utilize engagement structures within the national and local system (for example, community, village, chiefdoms, events, and meetings). The C-PMU will explore the opportunity to conduct a beneficiary feedback survey at baseline, before midterm review and before project closure for an all-inclusive CE process. The Results Framework would include the following intermediate indicators: (i) beneficiaries who believe project- financed activities respond to their needs (disaggregated by gender); and (ii) time for registered project-related grievances to be addressed through the GRMs). Mar 03, 2023 Page 24 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) E. Implementation Institutional and Implementation Arrangements 69. The Ministry of Tourism and Civil Aviation (MTCA), established following the Legal Notice 4 of 2023,30 with the mandate for oversight and management of Fiji’s tourism sector and civil aviation, will be the Lead Implementation Agency. MTCA will have the overall responsibility for the Project’s execution, oversight, and coordination with other key stakeholders. The Project has two other Implementing Agencies (IAs)—the FRA, established and operating under Fiji Roads Authority Act 2012; and AFL, established and operating under the Public Enterprise Act 2019 (No 6 of 2019). MTCA will take charge of implementing Parts 1, 2(b), 2(c), and 3 of the Project. For activities to be carried out in Savusavu Town Council (STC) and Labasa Town Council (LTC), the town councils and the Ministry of Local Government (MoLG) will act as partnering entities. Within three months after the project's effectiveness, MTCA is expected to establish a service agreement with STC, LTC, and MoLG to facilitate this collaboration, as mandated by Fiji's governance framework. In addition to the Financing Agreement between Fiji and IDA, AFL and FRA will each enter into a Project Agreement with IDA. In addition, Subsidiary Agreements will be required between Government of Fiji (through the Ministry of Finance) and each of FRA and AFL, to make the proceeds of the IDA credit available to FRA and AFL, as the Project IAs. 70. A Central Project Management Unit (C-PMU) will be established under MTCA, comprising hired consultants with expertise in project management, procurement, financial management, environment and social risk (E&S) management, and monitoring and evaluation (M&E). The core positions, including project manager, procurement officer, and financial management officer, will be recruited using retroactive financing by project effectiveness. The E&S risk management officer and M&E officer positions should be filled within two months after effectiveness. AFL and FRA, as the other implementing agencies, will have their own Project Implementation Units (PIUs) responsible for overseeing relevant investments. The AFL projects team will be expanded to pre-COVID levels to accommodate the increased capital program, while FRA will utilize its dedicated in-house resources for its PIU. The C-PMU, in collaboration with each PIU, will handle the day-to-day management of their respective parts of the project. MTCA will oversee the creation and management of an overarching procurement strategy, ensuring close coordination among the three implementing agencies. 71. The C-PMU will play a central role in implementation, supported with technical backstopping in specialized areas from various technical agencies as required (see diagram below).31 MTCA will play a strong coordination role with the other implementing agencies overseeing specific investment and technical agencies engaged in specific activities. The technical agencies will not assume legal or 30 The LN 4 of 2023 assigned ministerial duties to Mr. Viliame R Gavoka as a Deputy Prime Minister and Minister for Tourism and Civil Aviation. 31 These technical agencies include the Department of Environment, Water Authority Fiji (WAF), Ministry of Fisheries and Forestry (MFF), National Trust, Ministry of Trade, Co-operatives, Small and Medium Enterprises (MTCSME), Ministry of Local Government (MoLG), Savusavu Town Council (STC), Labasa Town Council (LTC), Ministry of Public Works, Transport and Meteorological Services (MoPWTMS), iTaukei Land Trust Board (TLTB), Ministry of Rural and Maritime Development and Disaster Management (MRMD), Ministry of Land and Mineral Resources (MLMR), Energy Fiji Limited (EFL), and Tourism Fiji. Mar 03, 2023 Page 25 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) fiduciary responsibility for the Project. Each agency will have a customized relationship with the MTCA as defined in a Service Agreement or memorandum of understanding (MOU) that outlines the roles and responsibilities of each partner. Figure 2. Implementation Arrangements 72. MoF and MTCA will ensure strong coordination among the various GoF institutions involved in the Project through a multiagency Project Steering Committee (PSC). The PSC will play a crucial role in the Project by providing strategic oversight, reviewing progress and periodic reporting, and approving the consolidated annual work plan and budget. It will also ensure that project implementation aligns with the government's strategic national development plan and facilitate interagency coordination to ensure the cohesion of project implementation. The PSC will be co-chaired by the Permanent Secretaries of MoF and MTCA and include, at a minimum, representatives from FRA, AFL, and MoLG. The full roles and responsibilities of the PSC will be specified in the Project Operation Manual (POM). Stakeholder engagement will be a strong activity under the Project implementation arrangement. This is critical due to the nature of Fiji’s land tenure system and the role that TLTB plays in land administration and investments at the community level. . CONTACT POINT World Bank Fei Deng Mar 03, 2023 Page 26 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Practice Manager Iretomiwa Olatunji Senior Natural Resources Management Specialist Borrower/Client/Recipient Republic of Fiji Implementing Agencies Airports Fiji Limited Rowan Chalmers CEO ceo@fijiairports.com.fj Fiji Roads Authority Kamal Prasad CEO info@fijiroads.org Ministry of Tourism and Civil Aviation Viliame Rogoibuli Gavoka Hon. emeline.tuleca@govnet.gov.fj FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Fei Deng Task Team Leader(s): Iretomiwa Olatunji Mar 03, 2023 Page 27 of 28 The World Bank Fiji Tourism Development Program in Vanua Levu (P178694) Approved By Practice Manager/Manager: Country Director: Paul Vallely 24-May-2023 Mar 03, 2023 Page 28 of 28