The World Bank Strengthening Coastal Resilience and the Economy (P180932) Project Information Document (PID) Concept Stage | Date Prepared/Updated: 30-May-2023 | Report No: PIDC35853 May 30, 2023 Page 1 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Parent Project ID (if any) Project Name India P180932 Strengthening Coastal Resilience and the Economy (P180932) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) SOUTH ASIA Nov 06, 2023 Jul 02, 2024 Environment, Natural Resources & the Blue Economy Financing Instrument Borrower(s) Implementing Agency Investment Project Financing India Government of Karnataka, Government of Tamil Nadu Proposed Development Objective(s) Increase coastal protection and conservation, enhance livelihood benefits, and reduce marine pollution in coastal communities of Karnataka and Tamil Nadu. PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 357.00 Total Financing 357.00 of which IBRD/IDA 250.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 250.00 Non-World Bank Group Financing Counterpart Funding 107.00 Borrower/Recipient 107.00 May 30, 2023 Page 2 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) Environmental and Social Risk Classification Concept Review Decision Substantial Track II-The review did authorize the preparation to continue Other Decision (as needed) B. Introduction and Context Country Context India’s growth is expected to moderate in FY23/24 to 6.3 percent, from an estimated 6.9 percent in FY22/23, due to easing consumption growth and global growth spillovers. Despite the global growth slowdown, real GDP is expected to have expanded by 6.9 percent in FY22/23.1 This robust growth was underpinned by buoyant private consumption in the first half of FY22/23 and strong expansion in investment activity supported by a sustained increase in public capital spending. In contrast, government consumption growth moderated due to the central government’s commitment to reduce current spending. Robust domestic demand and elevated food prices kept headline inflation above the Reserve Bank of India’s tolerance range (2 – 6 percent) in FY22/23. The growth momentum eased in the second half of FY22/23 as high inflation, higher borrowing costs and global spillovers weighed on domestic demand and dampened exports growth. Real GDP growth is expected to moderate further to 6.3 percent in FY23/24. Consumption is likely to be constrained by rising borrowing costs, slower growth in incomes and continued fiscal consolidation. The government’s sustained investment push, healthy corporate profits, and a reduction in bank NPLs will likely buoy investment despite reduced risk appetite and elevated input costs. Slowing imports growth and ongoing strength in services exports is expected to contribute to a narrowing of the current account deficit to 2.1 percent of GDP in FY23/24. Despite the increased public investment, the government is likely to continue pursuing fiscal consolidation. The general government deficit will decline to 8.7 percent in FY23/24 (9.4 percent: FY22/23), due to lower current spending and modest revenue growth, reflecting the withdrawal of pandemic-related support programs. The current level of the fiscal deficit stabilizes the debt-to-GDP ratio around 83 percent. India has made remarkable progress in reducing extreme poverty over the past two decades. The share of the population living below US$2.15 per person per day (2017 PPP) is estimated to have halved between 2011 and 2019 .2 However, the pace of poverty reduction has slowed in recent years, with key welfare indicators being slow to improve.3 These recent estimates suggest that the pandemic induced spike in extreme poverty (US$2.15), of up to 4 percentage points, moderated in 2021-22. Facilitated by widespread access to vaccines, extreme poverty rates are estimated to have declined to 13.8 percent in 2021-22, although not as low as pre-pandemic levels. More than 40 percent of India’s population lived below the lower-middle income poverty line (US$3.65 per capita per day, 2017 PPP) even before the pandemic.4 Inequality in consumption has remained stable, with a Gini index of around 35 over the past two decades. Child malnutrition has remained high, with 35.5 percent of children under the age of 5 years being stunted and 67 percent 1 World Bank real GDP forecasts published in India Development Update, April 2023. 2 Estimates are based on the methodology documented in a World Bank Policy Research Working paper by Roy and van der Weide (2022), which relies on imputed consumption from the Consumer Pyramid Household Surveys (CPHS) implemented by the Centre for Monitoring the Indian Economy, a private data company. The CPHS sample is re-weighted to make it more nationally representative. The series has been revised to incorporate recent survey years (Macro Poverty Outlook, Spring 2023). In 2004, India’s extreme poverty rate was 39.9 percent using the same international poverty line. In 2011, this rate was 22.5 percent. 3 World Bank Poverty and Inequality Platform. https://pip.worldbank.org/country-profiles/IND. 4 World Bank Poverty and Inequality Platform. https://pip.worldbank.org/country-profiles/IND. May 30, 2023 Page 3 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) of children aged 6-59 months being anemic during 2019-21.5 Headline employment indicators have improved since 2020 but concerns about job quality and real wage growth remain.6 Sectoral and Institutional Context India’s 7,500 km long coastline is home to 250 million people, and its maritime resources are a major source of employment. The coast includes 77 cities and towns, including large urban agglomerations, such as Chennai, Kolkata, Mumbai, Surat, and Thiruvananthapuram. India’s Exclusive Economic Zone of over two million square kilometers is rich in living and non-living resources and creates significant economic benefits in areas that include fisheries, transport, and tourism. In coastal states, the fishing industry alone is estimated to directly employ 4 million fisherfolk, with many more indirectly employed in allied industries7. The Government of India’s ‘Vision of a New India by 2030’ includes the potential for its coastlines and oceans to power development, through the Blue Economy.8 Multiple overlapping crises have beset India and its coastlines, diminishing coastal resilience. First, Coastal regions are highly exposed to climate hazards that include cyclones and sea-level rise, bringing floods and erosion, which in turn, inflict a great loss of lives and livelihoods, especially among the mostly impoverished coastal communities. The Eastern coast is highly exposed to cyclones that travel from East to West across the Bay of Bengal. However, the Western coast has seen a growing number of cyclones, and western regions remain vulnerable to droughts. In recent decades, erosion has affected 45 percent of India’s coastline, particularly in Karnataka, Tamil Nadu, Kerala, Odisha, and West Bengal. Sea-level rise leads to saline-intrusion, which affects the groundwater needed for drinking and agriculture, exacerbating water and food insecurity. Second, India’s coastal zone is endowed with natural resources, such as mangroves, seagrass, sand dunes, mudflats, and reserved forests, but these have been degraded by human activities such as the construction of coastal infrastructure, sand extraction, and industrial fishing. Third, the Covid-19 pandemic severely affected coastal communities and the fishing sector. While losses were felt across the entire value chain, impacts were disproportionately felt by marginal fishworkers and microenterprises.9 Lastly, domestic and industrial waste pollutes the coastal environment. Mismanaged plastic waste is an enormous challenge, and India’s rivers discharge an estimated 130,000 metric tons of plastic each year into coastal waters.10 Plastic pollution degrades marine life as animals become entangled by or ingest plastics, and absorbed toxins are transferred. Marine plastic debris also damages ships and fishing equipment, affecting livelihoods.11 Coastal resilience can be achieved through the integrated management of resources. Coastal resilience is not a static goal but is a continuous process of adapting to change. An integrated approach requires decision-makers to address socio- economic and natural or physical systems. Coastal resilience can be built through supporting healthy natural capital, strong institutions, a prosperous economy, and high-quality infrastructure. Putting people at the center for these four elements is a pre-requisite. For example, natural capital provides critical ecosystem services such as protecting shorelines from erosion and creating habitats for fish and other aquatic life. Jobs in Blue Economy sectors, such as fisheries, aquaculture and tourism provide the livelihoods that can promote shared prosperity. India has also instigated national initiatives on Integrated Coastal Zone Management and the Blue Economy12. The overarching initiative is the Blue Economy Policy Framework which establishes a vision, whereby India will efficiently and sustainably use ocean resources for economic development. Below this framework, the National Coastal Mission (NCM) aims to transform the marine and coastal sectors, through adopting ecologically-sound approaches, sustainably exploiting resources, and responding to the threats of climate change and anthropogenic pressures. The Ministry of Environment, Forests and Climate Change (MoEFCC) has initiated implementation of the NCM, allocating $3 million for 2023-24, and 5 Government of India, Ministry of Health and Family Welfare, 2022. National Family Health Survey (NFHS - 5), 2019–21 report. 6 World Bank Macro Poverty Outlook. Spring 2023. Estimates from PLFS data. 7 https://www.teriin.org/article/blue-economy-ocean-livelihood-opportunities-india 8 The Blue Economy is defined as the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health. 9 FAO, 2020. Impacts of COVID-19 Pandemic and Lockdown on the Fisheries Sector in India. Report for the World Bank. 10 Meijer, L. J., Van Emmerik, T., Van Der Ent, R., Schmidt, C., & Lebreton, L. (2021). More than 1000 rivers account for 80 percent of global riverine plastic emissions into the ocean. Science Advances, 7(18), eaaz5803. 11 United Nations Environment Programme (2021). From Pollution to Solution: A global assessment of marine litter and plastic pollution. Synthesis. Nairobi. 12 The Blue Economy is defined as the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health. May 30, 2023 Page 4 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) submitting a request to the World Bank for $150 million. The request is currently under evaluation by the Government’s Department of Economic Affairs (DEA) under the Ministry of Finance. Furthermore, the Union Budget of 2022-2023 highlighted green growth as a priority pillar. The budget launched the Mangrove Mission (the Mangrove Initiative for Shoreline Habitats and Tangible Income or MISHTI), to facilitate intensive mangrove afforestation. Lastly, the Government has recently prepared a National Marine Litter Policy. The GoI has been successful in piloting Integrated Coastal Zone Management (ICZM) models through the ICZM Project (P097985). The project (2010 to 2020) strengthened capacity to implement an ICZM approach at the national and state levels (in Gujarat, Odisha, and West Bengal). The project also developed institutional capacities, advanced structural reforms, and supported the creation of scientific data sets, to improve the enabling environment for coastal zone management initiatives. Nevertheless, misaligned functions and financing models mean that coastal states need to build capacity to enact a transformative coastal resilience agenda.13 Working at the State and local levels is essential to improve the resilience of coastal zones . State governments are central to the implementation of coastal initiatives but are currently unequipped to do so. Policy, regulatory, and institutional frameworks, and technical and management capacities are not sufficiently developed to manage coastal areas. The states need to undertake holistic shoreline planning and management with an emphasis on nature-based solutions to reduce long term risks. The health of natural systems must be sustained by addressing plastic pollution through an integrated ecosystem-based approach. Sectoral investments in sectors like tourism, fisheries, aquaculture, and infrastructure must be developed through a wider Blue Economy lens, to reduce cross sectoral conflicts, provide transformative capacity and enhance the resilience of the coastal communities. Unlocking private capital is essential to improve the management of coastal resources. Unlocking private capital is essential to improve the management of coastal resources. India’s Blue Economy Policy Framework highlights that private financing could be increased by incentive schemes and regulations to aid the ease of doing business. The potential for private finance could be improved by exploring innovative finance and business models, together with institutional reform and public investments, making the financing environment more amenable. Private Capital Enabling (PCE) activities such as a single window clearance system14. PPPs, tax incentives, and performance-based contracts can enhance plastic circularity15. Another PCE emerging area relates to Blue Carbon finance, where projects restoring or conserving mangroves and other ecosystems generate “credits� based on the tonnes of carbon captured and stored, which can be sold to global buyers such as businesses that want to offset their own carbon emissions. Plastic Circularity in India is underdeveloped, and the private sector and coastal communities have a role in managing plastics waste. There is a great opportunity to enhance the plastics value chain by, for example, promoting entrepreneurship around municipal waste. Catalyzing demand for and the value in recycled plastics would enhance waste collection and recycling, enabling “market creation� by private-sector players16. National Plastic Waste Rules were established in 2011, with key amendments from time to time, including Extended Producer Responsibility (EPR), and the ban on single use plastics. The EPR aims to make producers, importers and brand owners responsible for the proper disposal of plastic waste. There is a need to improve infrastructure, mechanisms, innovations, awareness and institutional capacity to foster plastic circularity, thereby preventing leakage of plastics into coastal ecosystems. Relationship to CPF The proposed project is fully aligned with the World Bank Group’s (WBG) Country Partnership Framework (CPF) for India FY18-2217. It supports all three Focus Areas - Promoting Resource Efficient Growth, Enhancing Competitiveness and Job Creation and Investing in Human Capital. Integrated Coastal Zone Management initiatives and enhancing ecological services from coastal resources will contribute to the efficient use of country’s natural (Blue) resources towards growth (CPF Pillar 1). Increased ecosystem productivity and health will lead to enhanced carbon sequestration. Livelihood 13 Coastal resilience is defined here as ability for social, economic and environmental systems in coastal regions to cope with hazardous events, trends or disturbances, in ways that maintain essential functions, identities and capacities for adaptation, learning and transformation. 14 The Tamil Nadu Climate Change Mission has announced a single window clearance system for green projects (including plastic value chains and eco-tourism projects 15 The Circular Economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. Plastic circularity is a subset of the circular economy, relating to plastic products. 16 Nikam, J., Ddiba, D., & Njoroge, G. (2022). Analysis of the plastic waste value chain in India: a scoping study. Stockholm Environmental Institute. 17 Report Number 126667-IN May 30, 2023 Page 5 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) generation through investments in sectors like tourism, fisheries, the plastic value chain, the circular economy will include the private sector, creating economic opportunities for coastal communities, especially women (CPF Pillar 2). Skill development among frontline staff and coastal communities will improve human capital (CPF Pillar 3). The project will strengthen the effectiveness of state level implementing agencies. Intense state engagements and capacity building initiatives will mainstream coastal zone management skills locally and strengthen the coastal governance regime. State level initiatives will also pave the way for replicating successful models in other coastal states. The project will be developed to align with the successor CPF currently being developed. C. Proposed Development Objective(s) Increase coastal protection and conservation, enhance livelihood benefits, and reduce marine pollution in coastal communities of Karnataka and Tamil Nadu. Key Results (From PCN) The program level outcomes will be measured through the following indicators: a) People in targeted coastal areas with reduced exposure to coastal erosion due to the program (disaggregated by sex; income groups) b) Land and marine area where sustainable coastal management practices were adopted as a result of the project (ha) c) People in targeted coastal areas with reduced exposure to marine pollution due to the program (disaggregated by sex; income groups) d) Share of target beneficiaries with rating ‘Satisfactory’ or above on program interventions (%) D. Concept Description Karnataka and Tamil Nadu are coastal states in Southern India. Tamil Nadu’s coastline of 1076 km, stretches along the Bay of Bengal, extending into the Arabian Sea.18 The largest delta in Tamil Nadu is the Cauvery Delta and the rivers bring considerable sediments, which influences coastal processes.Tamil Nadu has two major ports at Chennai and Thoothukudi, and the corporate port of Ennore. Tamil Nadu ranks 2nd nationally in marine fish production, contributing 10-12 percent of the national total. Karnataka’s coastline of 320 km has an Exclusive Economic Zone of 87,000 square km and 27,000 square km of continental shelf.19 The state is bestowed with 14 rivers that drain more than 50 billion m3 water into the Arabian Sea every year. The coastal areas of Karnataka are rich in marine, estuarine and riparian resources, and the fisheries sector has been the mainstay of its coastal economy. Karnataka and Tamil Nadu have shown leadership on climate action and plastic pollution. In 2022, Tamil Nadu became the first state to launch its own Climate Change Mission, aiming to achieve carbon neutrality ahead of India’s national deadline of 2070. Tamil Nadu has also set up a Governing Council on Climate Change which will provide policy guidance to the Mission. In 2019, Tamil Nadu was the first state to ban single-use plastics, preceding the national ban in 2022. Karnataka was the first state to propose an approach to plastic waste management that considers the whole plastic value chain. Karnataka has also worked with the World Bank to understand the Blue Economy’s potential. The program will have four components. The scope of activities under components will differ in each participating state: a) Strengthening institutions for integrated coastal management. The objective of this component is to strengthen the capacity of state institutions to build coastal resilience, through the development of integrated coastal zone management plans, capacity development and training, establishing a network of knowledge institutions, and project management. b) Shoreline management, and coastal protection and conservation. The objective of this component is to support the protection of coastal ecosystems and communities from environmental degradation and climate 18 State of Tamil Nadu, Coastal Mission Concept note. 19 Government of Karnataka, Project Concept Note, Blue Economy Transformation through Plastic Management in Coastal Karnataka. May 30, 2023 Page 6 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) hazards through improved planning and monitoring, together with the implementation of green and grey infrastructure. c) Improving livelihoods for natural resource dependent communities. The objective of this component is to align economic development opportunities with managing natural resources. This will foster low-carbon and resource-efficient growth, creating sustainable livelihoods for coastal communities, and reducing pressure on coastal ecosystems. d) Reducing plastic waste and pollution through enhanced circularity. The objective of this component is to improve the management of plastic waste by assessing plastic flows, identifying accumulation hotspots, and strengthening plastic circularity, through efforts to facilitate private capital. Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts . The overall risk of the project is Substantial, based on the fiduciary, environmental and social (E&S) risks. The fiduciary residual risk (Financial Management and Procurement) is Substantial. This rating is due to agencies with diverse capacities and legal structures. During project preparation, detailed assessments will be conducted for key implementing agencies, and suitable risk mitigation measures will be agreed upon. Environment and Social risks are rated Substantial: The E&S risks are assessed to be Substantial based on the following criteria/considerations: (i) the project interventions are environmentally and socially-positive in nature that are prioritized through the Integrated Coastal Zone Management Plans (ICZMPs) and thus are expected to bring about long term benefits to the coastal environs; (ii) majority of the targetted interventions are small to medium scale, largely community-driven and nature-based solutions with limited physical footprints, with some grey coastal protection interventions also expected to be medium scale and implemented only in areas with severe coastal erosion problems; (iii) priority interventions will be largely on public land and land acquisition of private land, if any, will be small-scale; (iv) labor influx during construction is expected to be small; (v) mitigation measures for the priority investments are mature and readily available; and, (vi) the Implementing Agencies at the State level have the experience in implementing the safeguard policies of ADB and JICA, and are fully committed to implement safeguards and risk management. However, the capacity, of District level Implementing Agencies to assess and manage environmental risks are weak and some interventions, aimed at improving the health and management of sensitive coastal ecosystems and biodiversity hotspots may lead to a temporary increase in access to the sensitive ecosystems/habitats. In addition, there could be loss of access to common property and temporary relocation and loss of livelihood, but then again due to small to medium scale and positive nature of investments coupled with early screening and embedding strategic E&S assessment and planning in ICZMPs, risks and impacts are expected to be localized, manageable and reversible. The project will adopt an Environmental and Social Management Framework to screen subprojects and guide the assessment/preparation of sub-project specific risks, impacts, plans, and management measures. The ICZMP will also embed strategic E&S assessment to identify hotspots and screen and prioritize interventions to avoid and minimize E&S risks and impacts. May 30, 2023 Page 7 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) . CONTACT POINT World Bank Pablo Cesar Benitez Ponce, Chabungbam Rajagopal Singh Senior Environmental Economist Borrower/Client/Recipient India Mr. K. Manicka Raj Joint Secretary manickraj.k@nic.in Implementing Agencies Government of Karnataka Jawaid Akhtar Additional Chief Secretary, Department of Forest, Ecology an prs-fee@karnataka.gov.in Government of Tamil Nadu Supriya Sahu Additional Chief Secretary, Department of Environment, Clima forsec@tn.gov.in 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 Task Team Leader(s): Pablo Cesar Benitez Ponce, Chabungbam Rajagopal Singh Approved By APPROVALTBL Practice Manager/Manager: May 30, 2023 Page 8 of 9 The World Bank Strengthening Coastal Resilience and the Economy (P180932) Country Director: Anne-Katrin Arnold 20-Jun-2023 May 30, 2023 Page 9 of 9