Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES23853 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE INCREASING RESILIENCE TO CLIMATE CHANGE AND NATURAL HAZARDS PROJECT GLOBAL ENVIRONMENT FACILITY GRANT TO THE REPUBLIC OF VANUATU DATE OF RESTRUCTURING: JUNE 23, 2017 ENVIRONMENT & NATURAL RESOURCES GLOBAL PRACTICE EAST ASIA AND PACIFIC REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS CBA Community Based Adaptation CBDRM Community Based Disaster Risk Management CSO Civil Society Organization DARD Department of Agriculture and Rural Development DGMWR Department of Geology, Mines and Water Resources DLA Department of Local Authorities DRM Disaster Risk Management EA Environmental Assessment ESMF Environmental and Social Management Framework EU European Union GEF Global Environment Facility GEO Global Environment Objective GFDRR Global Facility for Disaster Reduction and Recovery GoV Government of Vanuatu IRCCNH Increasing Resilience to Climate Change and Natural Hazards ISDS Integrated Safeguards Data Sheet NAP National Adaptation Plan NGO Non-Governmental Organization PDO Project Development Objective PMU Project Management Unit POM Project Operational Manual RPF Resettlement Policy Framework TC Tropical Cyclone VARTC Vanuatu Agricultural Research and Technical Centre VMDG Vanuatu Meteorology and Geohazards Department Regional Vice President: Victoria Kwakwa Country Director: Michel Kerf Senior Global Practice Director: Karin Erika Kemper Practice Manager: Iain G. Shuker Task Team Leaders: Habiba Gitay, Tevi Maltali Obed 2 VANUATU Increasing Resilience to Climate Change and Natural Hazards CONTENTS A. SUMMARY 5 B. PROJECT STATUS 8 C. PROPOSED CHANGES 9 ANNEX 1: RESULTS FRAMEWORK AND MONITORING 20 3 DATA SHEET Vanuatu Increasing Resilience to Climate Change and Natural Hazards Project (P112611) EAST ASIA AND PACIFIC REGION Environment & Natural Resources . Report No: RES23853 . Basic Information Project ID: P112611 Lending Instrument: Specific Investment Loan Regional Vice President: Victoria Kwakwa Original EA Category: Partial Assessment (B) Country Director: Michel Kerf Current EA Category: Partial Assessment (B) Senior Global Practice Karin Erika Kemper Original Approval Date: 04-Dec-2012 Director: Practice Manager/Manager: Iain G. Shuker Current Closing Date: 31-Dec-2018 Habiba Gitay, Tevi Team Leader(s): Maltali Obed . Borrower: Republic of Vanuatu Responsible Vanuatu Meteorology and Geohazards Department Agency: . Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Restructuring Level: Level 1 . Financing (as of 10-Mar-2017) Key Dates Effectiveness Original Revised Project Ln/Cr/TF Status Approval Date Signing Date Date Closing Date Closing Date P112611 TF-13694 Effective 12-Dec-2012 12-Dec-2012 22-Apr-2013 31-Mar-2016 31-Dec-2017 P112611 TF-13810 Effective 14-Dec-2012 14-Dec-2012 22-Apr-2013 31-Dec-2018 31-Dec-2018 P112611 TF-13869 Closed 12-Jul-2013 12-Jul-2013 24-Sep-2013 30-May-2014 29-Apr-2016 P112611 TF-95486 Closed 01-Jun-2009 22-Jun-2009 22-Jun-2009 30-Jun-2010 30-Jun-2012 Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P112611 TF-13694 Effective USD 2.73 2.73 0.00 2.39 0.34 88 P112611 TF-13810 Effective USD 5.58 5.58 0.00 2.58 3.00 45 P112611 TF-13869 Closed USD 2.04 1.37 0.66 1.62 0.00 118 Page 4 of 29 P112611 TF-95486 Closed USD 0.15 0.14 0.01 0.14 0.00 100 . Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] . A. Summary of Proposed Changes This Restructuring Paper seeks approval from the Board of Executive Directors to proceed with a proposed Level 1 restructuring in response to the letters received from the Government of Vanuatu (“GoV”) dated February 10, 2016, October 5, 2016 and February 17, 2017. The proposed Level 1 Restructuring seeks to i) modify the Project Development Objective (PDO); and ii) trigger the safeguards policy OP4.12 on Involuntary Resettlement. In addition, the proposed changes include: i) change in the scope of activities, costs and implementation arrangements under all components, which include, inter alia, the completion of activities already under implementation and replacement of the small grants mechanism by the micro-project mechanism; ii) updating of safeguards documents; iii) revision of the results framework; iv) changes in legal covenants to reflect the proposed revisions; and v) changes to categories of expenditures. Following Tropical Cyclone (TC) Pam, and the changed context and priorities of the Government of Vanuatu (GoV), it is proposed that the project activities be focused on piloting micro-project investments in areas heavily affected by the cyclone, as well as supporting investments that are already underway including in early warning, preparedness and water supply. The changes proposed here pertain to ongoing activities supported by the GEF (TF13810) and GFDRR (TF13694) grants; the EU grant (TF 13869) closed in April 2016 after disbursing about 67 percent of the funds, and cancellation of the remaining amount (about USD 695,000). The EU grant was not extended due to the implementation delays in 2015-2016 caused by TC Pam and uncertainties on the support that could be provided through this project to the affected communities after the disaster. With the EU grant closed, the total cost of the project has now been reduced from USD 11.52 million to USD 9.58 million (excluding USD0.44 million as in-kind contributions from the government that was reflected in the PAD). Investments aimed at strengthening disaster risk management systems (monitoring, early warning, disaster response planning and coordination, etc.) have mostly been completed. The focus of the remaining activities is proposed to be on micro-projects that enhance the resilience and adaptive capacity of the communities (or villages) affected by TC Pam and vulnerable to other climate related events such as droughts. These micro- projects are village- and provincial government-led activities. It is also proposed that any further activities in agriculture and water-related components (Component 3 and 4) are integrated within the micro-projects so as to benefit the communities affected by TC Pam. It is proposed that the component focused on institutional strengthening continues without change to ensure sufficient support and links between national- provincial-village institutional structures and to facilitate effective implementation of micro-projects. The changed focus also means that going forward, all the activities will be implemented through Vanuatu Meteorology and Geohazards Department (VMGD) and supported by technical agencies including the Department of Local Authorities (DLA), the Department of Agriculture and Rural Development (DARD) and the Department of Geology, Mines and Water Resources (DGMWR). The following provides a summary of the proposed changes: Page 5 of 29 (i) Change in PDO - Original PDO: 'The objective of the Project is to help increase the resilience of communities in Vanuatu to the impacts of climate variability and change and natural hazards on food and water security as well as livelihoods.' - New PDO: 'The PDO is to strengthen disaster risk management systems and pilot investments in select villages in the Recipient’s territory to increase resilience to the impacts of natural hazards and climate variability and change.’ (ii) Change in scope of activities, component costs and/or implementation arrangements under all components - Change to Component 1: There are changes to the description of sub-component 1.3 to add an activity ‘iii) strengthen the capacity of the national multi-hazard warning and emergency operations center to manage and respond to disasters, especially from climate-related events’. This change is in response to the government’s request to ensure that the national center is strengthened following TC Pam. ⁻ Change to Component 2: Change in name, focus, scope of activities, cost allocation and implementation arrangements of Component 2. The name of Component 2 is proposed to be changed from ‘Increasing Community Resilience on Active Volcanic Islands and in Coastal Areas’ to ‘Increasing Community Resilience in Areas Affected by Tropical Cyclone Pam’. In addition: Component 2.1 – The scope of existing activities under Component 2.1 will be expanded to include support on the development, preparation, delivery and monitoring and evaluation of micro-projects. Micro-projects are community level activities to be identified and implemented by the communities and/or provincial government, monitored and evaluated by VMGD in cooperation with villages and provincial governments in accordance with the details set out in the Operational Manual. Further details on the micro-projects are described in Section B (Project Status) below. Component 2.2 - The scope of activities under Component 2.2 will be revised to support climate resilient community investments by implementing the methods, processes and protocols developed under Component 2.1 through the carrying out of micro-projects for communities affected by TC Pam. Future activities under Components 3 and 4 will be implemented through micro-projects under this component. VMGD will be responsible for the implementation of this revised Component 2.2. The references to small grant mechanism will also be removed accordingly. With the revised Component 2, costs of the component will change from USD2.43 million to USD2.61 million (excluding in-kind contributions that were included in the PAD). - Component 3: Activities implemented by VARTC under Component 3 have been completed, and there will be no further activities to be carried out under this Component 3 going forward. The remainder of the work on agriculture and crop related activities will be carried out through micro-projects implemented through VMGD under Component 2 and not carried out as a stand-alone activity by VARTC. Accordingly, cost allocated for Component 3 is proposed to be decreased from USD2.48 million to USD1.54 million. The decreased cost to this component reflects the cost of the work conducted by the VARTC to April 26, 2017. The Subsidiary Agreement between the Government of Vanuatu and VARTC will be revised accordingly, by no later than July 31, 2017, to reflect the decreased amount of Grant proceeds to be made available to VARTC for the implementation of Component 3.1. - Component 4: There will be no further stand-alone activities in this Component as the water-related activities will be delivered through micro-projects under Component 2. Accordingly, cost allocated to this component is proposed to change from USD2.24 million to USD1.06 million. This reflects the costs for the Page 6 of 29 implementation of activities up to April 26, 2017, which include the activity under implementation to repair and improve the resilience of Tongoa Water Supply System in Shepherds that has been affected by TC Pam. iii) Changes to safeguards: As a result of the proposed changes, one additional safeguards policy is triggered: Op4.12 Involuntary Resettlement. A revised ISDS has been prepared and will be disclosed as part of the restructuring process. (iv) Revise Results Framework: The Results Framework will be amended to accommodate the revised focus of Component 2 on micro-projects for resilience. This will result in revising five of the original 16 indicators, deleting seven indicators and introducing three new indicators; there will be no changes to four of the original indicators. Overall there will be a total of 12 indicators. v) Changes to legal covenants Legal covenants set forth in the legal agreements will be revised to reflect the proposed revisions. As funds will not be channeled to communities through small grants, the legal covenant on small grants will also be removed. Legal covenants on safeguards will be revised to reflect the updates on safeguards following the proposed revisions to the project. Additionally, a covenant requiring the Recipient to ensure that the Subsidiary Agreement between the Government of Vanuatu and VARTC is amended, by no later than July 31, 2017, to reflect the decreased financing to VARTC will be added. vi) Changes to categories of expenditures Category of expenditures for Component 2.2 (i.e. Category (3) of the withdrawal table in Section IV.A.2 of Schedule 2 to the GEF Grant Agreement and Category (2) of the withdrawal table in Section IV.A.2 of Schedule 2 to the GFDRR Grant Agreement) will be deleted along with their disbursement conditions; the funds under such deleted category are proposed to be reallocated to Category (1) for the GEF Grant Agreement and Category (1) for the GFDRR Grant Agreement; and reallocation of a portion of funds under Category (2) to Category (1) under GEF Grant Agreement. Change in Implementing Agency Yes [ X ] No [ ] Change in Project's Global Environmental Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ X ] No [ ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ X ] No [ ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ ] No [ X ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [X ] Change in Financial Management Yes [ ] No [ X ] Page 7 of 29 Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] . B. Project Status The project has been effective since April 2013, but overall progress has been very slow, with both the PDO and implementation progress currently rated as Moderately Unsatisfactory. Progress has been made on several components over the last 12 months. This includes support to increase the resilience of communities under Component 2 which has shown some progress in the last 6 months. The GoV started the process of identifying and prioritizing an initial set of proposals for pilot climate and disaster resilient activities from villages in March 2016. By November 2016 four have been completed and the fifth is well under implementation. Component 1 (Institutional Strengthening for Climate Change Adaptation and Disaster Risk Management): The Project Management Unit (PMU) is operating at full capacity with all positions filled; construction of two Provincial Disaster Centers was completed in May 2016; a customized curriculum for Provincial Disaster Officers has been developed and the National Disaster Act reviewed; the construction of the housing to accommodate seismic sensors has been completed and seismic sensors procured; they were tested and installed in May 2017. Component 2 (Increasing Community Resilience on Active Volcanic Islands and in Coastal Areas) (the proposed new Component name is ‘Increasing Community Resilience in Areas Affected by Tropical Cyclone Pam’): Government agencies have developed planning processes and methodologies for disaster risk management and climate adaptation. Given that existing structures in Vanuatu do not allow for efficient and effective use of the small grant mechanism, and given the lack of access to material in the cyclone affected areas, the government has opted to drop the small grant mechanism. Instead, based on the proposals received from the villages and the Provincial government in cyclone affected areas in the islands of Tanna and the Shepherds, the PMU will procure the goods and services identified by the villages and the provincial government to implement the micro-projects. The cost of each of the micro-projects, including transport of the material to the sites, is capped at VT5.0 million (approximately USD 46,000). To ensure timely procurement and based on lessons learned from the pilot activities, the PMU will bundle the procurement of goods, small works (if needed) and services for micro-projects focused on similar activities, e.g. rain water harvesting systems. A manual to guide implementation of micro-projects has been drafted and circulated for feedback amongst stakeholders. It is now being incorporated as part of the Project Operational Manual (POM). The government has agreed on a process for identifying, reviewing and endorsing the selected activities which is being included in a revised POM and includes the following elements: • The micro-project proposals will be selected and approved using the existing provincial government and village structures in place and reviewed and assessed by the PMU and the relevant government agencies (for example the Ministry of Water Resources for water-related investments) against the eligibility criteria agreed with the World Bank in November 2015 and re-confirmed in June 2016. These criteria will be Page 8 of 29 included in the revised POM. The criteria for selection of the micro-projects will include: (i) the sites are in TC Cyclone Pam affected areas; (ii) the proposed activities would reduce the climate related risks and enhance resilience of the people in the area; (iii) they would aim to target a large number of beneficiaries that are particularly poor, relative to the surrounding communities; and (iv) they would not exceed the funding ceiling of VT5.0 million per micro-project. • The micro-project activities will be endorsed by the National Advisory Board that acts as the project steering committee. • The Non-Governmental Organizations (NGOs) that are part of the village structure as well as the Civil Society Organization Consortium that was procured to collect the baseline data for the villages and conduct sensitization will continue to support the villages and the provincial government in the identification, preparation and implementation of the investments. The NGOs will work closely with the relevant line agencies at the local level to support the villages. • NGOs and the line agencies at the national and provincial level will guide the integration of climate resilient agricultural practices/crops and water resource issues into micro-projects to help meet the goals of water and food security, particularly on the island of Tanna where water scarcity and food availability are being further exacerbated by changing climate. Thus most of the remaining project activities under Components 3 and 4 will be well integrated into the micro-projects. Component 3 (Promotion of Improved Technologies for Food Crop Production and Resilience to Climate Change): As part of increasing the cultivation of new crop varieties and cultivars, and conducting training, VARTC has established field plantings on its main site on Santo (to represent the climate of the north of Vanuatu) and collaborated with a research institution for testing and multiplication near Port Vila (to represent the climate for the south of Vanuatu). In addition, improved food crop varieties have been tested and multiplied for distribution to farmers in various islands. This component, as needed, has and will continue to facilitate the multiplication of climate-resilient food crop varieties through the village- and provincial-government led micro-projects under Component 2 and help enhance food security. Component 4 (Rural Water Security: Increased Access to Secure Water Supply): Water inventories for Torba and Penama provinces have been completed and 20 water tanks have been placed in identified sites in Efate. The contract for the repair and improvement of the Tongoa Water Supply System in Shepherds has been signed as of November 2016. Further activities under the water component would be integrated with the micro-projects under Component 2. . C. Proposed Changes . Change in Implementing Agency Please describe the change and explain the reason for change: Following the restructuring, the Vanuatu Meteorological and Geohazards Department (VGMD) will be solely responsible for the implementation of components 1.1, 1.3, and 2, which are components under which the remaining activities under the project will be carried out. With the revised activities, DLA will no longer be responsible for the implementation of component 2.2. No further activities will be carried out by VARTC, as the Project Implementing Entity under component 3.1. Similarly, there will be no further activities to be carried out by NDMO under Component 1.2; DARD under Component 3.2; and DGMWR under Component 4. This simplification of the implementation arrangement is being done at the request of the government. Reasons include increasing effectiveness and reducing the costs for activities outside those that directly benefit the communities affected by TC Pam. It also allows the work that has been done by VARTC to effectively reach the most vulnerable and the poorest communities who also need support to enhance their food security. In addition, this means that all procurement will be done through the oversight of VMGD and PMU and not be constrained by the limited availability of goods and services in remote islands. The change Page 9 of 29 in the implementation arrangement also means that all remaining funds will be returned to VMGD from the VARTC account, acquitted and the VARTC-IRCCNH Bank account closed. The government has sent the necessary evidence of this to the Bank. The government technical agencies are members of the NAB which also functions as the project steering committee) and collectively oversee the implementation of the Project. This process will continue. The NAB will also endorse the micro-projects that are to be selected and approved by the provincial and local councils with inputs from the Nakamals/villages and their development committees. DLA, DARD, VARTC and the DGMWR will provide technical inputs through staff at the Provincial level supported through those at the national level for the preparation and selection of micro-projects. Implementing Agency Name Type Action Vanuatu Meteorology and Geohazards Implementing Agency No Change Department Vanuatu Agricultural Research and Implementing Agency No Change Technical Centre (VARTC) . Development Objectives/Results Project Development Objectives Original GEO The objective of the Project is to help increase the resilience of communities in Vanuatu to the impacts of climate variability and change and natural hazards on food and water security as well as livelihoods. Change in Project's Global Environmental Objectives Explanation The proposed changes in the PDO accommodate the GoV’s altered priorities following TC Pam to focus on supporting micro-projects that will enhance the resilience of people highly affected by Tropical Cyclone Pam and other climate-related risks. The communities in these areas are amongst the poorest in Vanuatu and the proposed investments will contribute to decreasing poverty and reducing vulnerability to climate and disaster risks. In addition, the progress in delivering support to communities (part of component 2) has been slow. The proposed approach of focusing on specific islands and piloting a delivery mechanism based on good practices elsewhere (e.g. Samoa and Solomon Islands) can help ensure that the project development objectives are met and a model piloted that can be scaled up in the future for other parts of Vanuatu. These changes were proposed and agreed to in the mid-term review discussion held in October 2015, chaired by the Environment and Natural Resources Practice Manager for East Asia and the Pacific prior to the mid- term review mission of November 2015. Proposed New GEO The PDO is to strengthen disaster risk management systems and pilot investments in select villages in the Recipient’s territory to increase resilience to the impacts of natural hazards and climate variability and change. Change in Results Framework Explanation: The proposed changes to the results framework reflect the revised scope of activities and the revised PDO. Page 10 of 29 Revised indicators: Five indicators are revised to reflect the support for micro-projects under the revised Component 2. More details are provided in the table below and the reasons for the change are included under “Comment” in the Results Framework. Current Indicators Proposed Revised indicators 1 Farmers in areas targeted under the Number of beneficiaries directly supported by the project have adopted climate resilient food project (disaggregated by gender, water- and crop production practices, such as agriculture-related investments) planting of improved cultivars adapted to disease/ salinity etc. Target: 3,000 Target: 10,000 2 Capacity in the Secretariat/PMU to Strengthened institutional structures and capacity to provide effective oversight and deliver climate-resilient investments at the provincial implementation guidance for climate to local levels change adaptation and disaster management Target: High Target: Satisfactory 3 Climate resilience activities are Number of villages receiving climate and disaster implemented in up to four sites (for resilient investments CBA/CBDRM planning and implementation) using NAP resourced Target: 65 grants Target: 4 4 Percentage of households in areas People provided with access to improved water targeted by the project satisfied with the sources quality and security of water supply. Target: 1500 Target:70 5 Guidelines/manuals/tools based on Guidelines/manuals/tools based on good local and good local and international practices international practices developed for guiding CBA in developed for guiding CBA in Vanuatu Vanuatu being used at national and provincial level being used widely Target: Text Target:3 Three new indicators are introduced. Changes reflect the project's contribution to TC Pam response (‘Investments in post TC-Pam recovery needs’, Number of water systems repaired and ‘Number of early warning system stations established and/or repaired). Deleted indicators: It is proposed that 7 indicators be deleted. This is due to the GoV’s request to streamline the results measurement system, ensuring focus is on climate resilience and disaster risk management collectively as well as on the micro-projects. They include: 1) ‘Number of households in the 4 targeted sites (for CBA/CBDRM planning and implementation) incorporating climate considerations in their decision making’; 2) ‘Number of national and sub-national institutions with functioning DRM arrangements’; 3) ‘Effective collaborative research and extension between VARTC and DARD as measured by set up of multiplication and delivery mechanisms in main food areas’; 4)‘Farmers / farmer leaders trained and /or contacted on ways to improve cropping practices’; 5) ‘Technologies demonstrated in the project areas Page 11 of 29 (number)’; 6) ‘NGOs/churches involved with rural water supply adopt RWS standards’; and 7) National and sub-national DRM strategies, plans and standard operating procedures developed and tested’. . Compliance Change in Safeguard Policies Triggered Explanation: The proposed restructured project will focus resources on delivering support to increase resilience of vulnerable communities (especially those heavily affected by TC Pam). The support will be delivered through micro-projects selected by villages from a list of eligible options, which may include water micro- projects (such as rainwater harvesting systems and gravity-feed water systems); improvement of short sections of secondary, steep, non-paved roads to provide all season access to services and markets to remote villages; and agriculture micro-projects (such as deployment of climate-resilient cultivars and crop diversification). Based on assessment of the potential impacts, the scale and scope of the activities being such that the probability and potential magnitude of impacts is low on natural habitats and physical cultural resources. The Environmental and Social Management Framework (ESMF) has been updated to reflect the new Components. The updated ESMF was disclosed on May 24, 2017. It is proposed to trigger the OP4.12 Involuntary Resettlement policy. For the original project, the Involuntary Resettlement policy was not triggered, but a Land Acquisition Framework was prepared and disclosed prior to appraisal of the original project; 23 March, 2012. The Land Acquisition Framework - now referred to as Resettlement Policy Framework (RPF) - has been updated to reflect the new components and disclosed on June 6, 2017. Costs associated with the implementation of the RPF and any Resettlement Action Plans prepared in accordance with the RPF are to be financed by the Recipient. Implementation of the micro-projects will take place under a revised Operational Manual and safeguards instruments. Current and Proposed Safeguards Policies Triggered: Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Natural Habitats (OP) (BP 4.04) No No Forests (OP) (BP 4.36) No No Pest Management (OP 4.09) No No Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) No Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP 7.50) No No Projects in Disputed Areas (OP) (BP 7.60) No No . Change in Legal Covenants Explanation: It is proposed to revise legal covenants to reflect the proposed changes to the project. 1. Remove the term ‘Small Grants to Communities’ and references to ‘Sub-projects’ to reflect the government’s request not to provide small grants to communities, but instead add provisions on Page 12 of 29 micro-projects which will provide communities with goods, small works and services to implement activities to enhance their resilience to climate change and natural hazards. 2. A dated covenant is added for the Recipient to ensure that the Subsidiary Agreement is amended, by no later than July 31, 2017 or such later date as the Bank may notify the Recipient, to reflect the decreased funds provided to VARTC through the Project. 3. The remaining legal covenants will stay in place. Finance Agreement Description of Ln/Cr/TF Date Due Status Recurrent Frequency Action Reference Covenant Maintain until the establishment of the National Advisory Board (by 13-Jan- GEF Grant 2014 or later date as Agreement: TF-13810 the World Bank may GFDRR Grant Frequency Complied No & inform the : Monthly with TF-13694 Agreement, Recipient), the Change Schedule 2, National Advisory Section I.A.1 Committee on Climate Change as the project steering committee. Establish within three months of GEF Grant effectiveness and Agreement: TF-13810 thereafter maintain GFDRR Grant Frequency Complied No & within VMGD and : Monthly with TF-13694 Agreement, until the completion Change Schedule 2, of the Project, the Section I.A.2 Project Management Unit. Establish within three GEF Grant months of TF-13810 Agreement: effectiveness and Frequency Complied No & TF-13694 Schedule 2, thereafter maintain a : Monthly with change Section I.A.3 project management team within VARTC. Endorse or cause to endorse, execute or GEF Grant cause to execute Agreement within three months Schedule 2, TF-13810 of effectiveness and Section I.A.4: Frequency Complied No & thereafter maintain or : Monthly with TF-13694 GFDRR Grant cause to maintain Change Agreement, MOAs with the Schedule 2, project's Section I.A.3 implementing entities. Page 13 of 29 GEF Grant Agreement, Make Small Grants Schedule 2, TF-13810 for Sub-projects Frequency Marked Section Not yet & under Component 2.2 : for TF-13694 I.D.1/GFDRR of the Project to Quarterly due Deletion Grant Agreement, Communities. Schedule 2, Section I.C.1 The Recipient shall prepare and implement Micro- GEF Grant Projects under Agreement Component 2 in Schedule 2, TF-13810 accordance with the Section I.D.1/: Frequency Not yet & eligibility criteria and biannually New TF-13694 GFDRR Grant procedures due Agreement, acceptable to the Schedule 2, World Bank, as Section I.C.1 further detailed in the Operational Manual and in Section I.D.1. GEF Grant Agreement, The Recipient shall Schedule 2, TF-13810 carry out the Project Section I.E.1(a): Frequency Complied & in accordance with : Monthly with Revised TF-13694 GFDRR Grant the Operational Agreement, Manual Schedule 2, Section I.D.1(a) The Recipient shall, GEF Grant and shall cause the Agreement, Project Implementing Schedule 2, TF-13810 Entity to, carry out Section Frequency Complied & the Project in Quarterly with Revised TF-13694 I.F/GFDRR Grant accordance with the Agreement, provisions of the Schedule 2, Safeguards Section I. E Instruments. Page 14 of 29 The Recipient shall monitor and evaluate the progress of the Project and prepare GEF Grant Project Reports in Agreement: accordance with the TF-13810 GFDRR Grant provisions of Section Frequency Complied & TF-13694 Agreement, 2.06 of the Standard : Yearly with Schedule 2, Conditions and on Section II.A.1 the basis of the indicators acceptable to the World Bank and set forth in the Operational Manual. The Recipient shall ensure that the Subsidiary Agreement is amended, by no later than July 31, 2017 or such later date as the World Bank shall notify to the Recipient, so that the GEF Grant amount of Grant TF-13810 Agreement: proceeds to be made By July Not yet New Schedule 2, available to the 31, 2017 due Section V.2 Project Implementing Entity does not exceed the amount allocated to Category (2) of the table set forth in Section IV.A.2 of this Schedule, in a form and substance satisfactory to the World Bank The Recipient shall ensure that interim unaudited financial GEF Grant reports for the Project Agreement: are prepared and TF-13810 Frequency GFDRR Grant furnished to the Complied No & : TF-13694 Agreement, World Bank not later Quarterly with Change Schedule 2, than forty-five (45) Section II.B.2 days after the end of each calendar quarter, covering the quarter, in form and substance Page 15 of 29 satisfactory to the World Bank The Recipient shall have its Financial Statements for the Project audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. GEF Grant Each such audit of Agreement: TF-13810 the Financial GFDRR Grant Frequency Complied No & Statements shall : Yearly with TF-13694 Agreement, cover the period of Change Schedule 2, one (1) fiscal year of Section II.B.3 the Recipient, be audited for each such period and shall be furnished to the World Bank not later than six (6) months after the end of such period. Carry out jointly with the World Bank and GEF Grant the Project TF-13810 Due Date: Agreement: Implementing Entity, Complied No & 30-Dec- with TF-13694 Schedule 2, a mid-term review of 2015 Change Section V the implementation of operations under the Project. Establish the GEF Grant National Advisory Agreement: Board to provide TF-13810 Due Date: GFDRR Grant oversight of the Complied No & 12-Mar- with TF-13694 Agreement, Project within 12 2014 Change Schedule 2, months after Section I.A.1 effectiveness (by the due date). Maintain the National GEF Grant Advisory Board to Agreement: provide oversight of TF-13810 GFDRR Grant the Project, starting Frequency Complied No & : Monthly with TF-13694 Agreement, from the date of Change Schedule 2, creation, for the Section I.A.1 remainder of the project. TF-13810 GEF Grant Maintain a financial Frequency Complied No & Agreement: management system : Monthly with Change Page 16 of 29 TF-13694 GFDRR Grant for the duration of the Agreement, project in accordance Schedule 2, with the provisions of Section II.B.1 Section 2.07 of the Standard Conditions . Financing Reallocations Explanation: GEF Grant (TF13810): Category 1: Include Components 1, 2, 3.2 and 4 of the Project and increase funding from USD 3,781,000 to USD 5,265,000. Category 2: Reduce the level of funding from USD 478,000 to USD 315,000. Category 3: Remove this category. There have been no disbursements against this category. GFDRR Grant (TF13694): Category 1: Include Components 1 and 2 of the Project; amount increases from USD 2,530,000 to USD 2,730,000 Category 2: Remove this category. There have been no disbursements against this category. Reason: The GoV has decided to drop the use of small grants, which were previously financed under Component 2.2. Agriculture and water components (previously financed through Components 3 and 4) are being integrated into micro-projects (revised Component 2.2) as part of the revised delivery model. As such, GEF and GFDRR resources will continue to fund agriculture, water, village-level adaptation activities and improving short sections of secondary roads for all season access but through Component 2.2. All activities will be implemented through VMGD, including any need for multiplication of crop or crop varieties, water harvesting or storage. DLA, DARD, the Department of Geology, Mines and Water Resources will provide technical support; VARTC’s role as the Project Implementing Entity for Component 3.1 will not continue as stand-alone activities and the remaining funds allocated to Component 3.1 are to be reallocated expenditure category 1. Page 17 of 29 Actual Pending Ln/Cr Cat. Current Category Disbursement % Currency Allocation Disburse Commit Allocation /TF No. of Expenditure (Type Total) ments ments Current Proposed Current Proposed TF- GO WRK CS 2,530,000. 2,094,978. 2,730,000. 13694 USD 1 NONCS TRNG 00 37 0.00 00 100.00 100.00 -001 OC COMP 1, 2 GO WRK CS FOR COMMUNITY 200,000. 2 LED MICRO 00 0.00 0.00 0.00 100.00 100.00 PROJECTS- COMP 2.2 2,730,000. 2,094,978. 2,730,000. Total: 00 37 0.00 00 G W NCS CS TRG OC COMP1, TF- 2.1, 3.2,4 AND 3,781,000. 2,037,234. 5,265,000. 13810 USD 1 COMMUNITY 00 65 0.00 100.00 100.00 00 -001 LED MICRO- PROJECTS, COMP 2.2 G W NCS CS 478,000. 2 TRG OC 00 315,000 0.00 315,000 100.00 100.00 COMP3.1 DELETE THIS 1,321,000. 3 00 0.00 0.00 0.00 100.00 100.00 CATEGORY Total: 5,580,000 4,356,246.20 0.00 5,580,000.00 TF- G W NCS CS 860,180. 860,180. 1,198,750. 13869 EUR 1 TRG OC COMP1, 72 72 0.00 00 100.00 100.00 -001 2.1, 3.2,4 G W NCS CS 444,682. 444,682. 450,000. 2 TRG OC 86 86 0.00 00 100.00 100.00 COMP3.1 G W CS FOR 248,257. 3 SMALL GRANTS 0.00 0.00 0.00 00 100.00 100.00 COMP2.2 Total: 1,304,863.58 5,661,109.78 0.00 1,897,007.00 TF- CS, Trng and 94403 USD 1 0.00 0.00 0.00 0.00 100.00 100.00 Wshops, IOC -001 Total: 0.00 0.00 0.00 0.00 TF- TF 95486 CS, 139,645. 139,645. 139,645. 95486 USD 1 Trng & WS and 16 16 0.00 16 100.00 100.00 -001 IOC Total: 139,645.16 139,645.16 0.00 139,645.16 Page 18 of 29 . Components Change to Components and Cost Explanation: The GoV requested a simplification of the project and focus on the micro-project investments to be led by communities and provincial government for areas affected by TC Pam. Reason: Given the changed context and priorities after TC Pam, the project was considered to have components operating in isolation. The proposed changes take an integrated approach focused on access to water and improved agriculture (among others) to meet the needs of affected and vulnerable communities in the islands of Tanna and the Shepherds. The proposed changes in the component costs reflect this approach. Current Current Cost Proposed Proposed Component Name Action Component Name (US$M) Cost (US$M) Institutional Strengthening for Climate Change 4.37 4.37 No Change Adaptation and Disaster Risk Management Increasing Community Increasing Community Resilience in Active Resilience in Areas Affected 2.43 2.61 Revised Volcanic Islands and by Tropical Cyclone Pam in Coastal Areas Promotion of Improved Technologies for Food Crop No change 2.48 1.54 Revised Production and Resilience to Climate Change Rural Water Security: Increased No change 2.24 1.06 Revised Access to Secure Water Supply Total: 11.52 9.58 Page 19 of 29 Results Framework Project Increasing Resilience to Climate Change and Natural Project Restructuring Status: DRAFT Name: Hazards (P112611) Stage: Team Requesting Leader(s) Habiba Gitay, Tevi Obed EACNF Created by: Habiba Gitay on 25-May-2016 Unit: : Product Responsible Global Environment Project GEN2A Modified by: Habiba Gitay on 30-May-2017 Line: Unit: Country: Vanuatu Approval FY: 2013 Financing Region: EAST ASIA AND PACIFIC Specific Investment Loan Instrument: . Global Environmental Objectives Global Environmental Objective (from Appraisal Document): The objective of the Project is to help increase the resilience of communities in Vanuatu to the impacts of climate variability and change and natural hazards on food and water security as well as livelihoods. Proposed Global Environmental Objective (from Restructuring Paper): The PDO is to strengthen disaster risk management systems and pilot investments in select villages in the Recipient’s territory to increase resilience to the impacts of natural hazards and climate variability and change. Results Core sector indicators are considered: Yes Results reporting level: Project Level . Global Environmental Objective Indicators Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate Revised Number of beneficiaries Number Value 0.00 570.00 3000.00 directly supported by the Date 01-Sep-2016 01-May-2017 28-Dec-2018 Page 20 of 29 Results Framework project (disaggregated by Comment The targeted gender, water- and agriculture- beneficiaries related investments) are not just farmers but individuals/ho useholds in the villages. Thus the proposed revisions would measure the number of direct beneficiaries disaggregated by gender and different sectors. The proposed changes are aligned with the PDO and the sectors that have been identified as priorities by the communities in the islands affected by TC Pam. The reduced target reflects the beneficiaries in the two islands affected by the cyclone. Page 21 of 29 Results Framework compared to the original target areas with larger populations around Port Vila. New Beneficiaries disaggregated by Number Value 0.00 0.00 1400.00 gender Sub Type Date 01-Sep-2016 01-May-2017 31-Dec-2018 Breakdown Comment New Beneficiaries from water- Number Value 0.00 0.00 1800.00 related investments Sub Type Date 01-Sep-2016 01-May-2017 31-Dec-2018 Breakdown Comment New Beneficiaries from agriculture- Number Value 0.00 0.00 1000.00 related investments Sub Type Date 01-Sep-2016 01-May-2017 318-Dec-2018 Breakdown Comment Revised People provided with access to x Number Value 0 0.0 1500 improved water sources Date 01-Jan-2013 01-May-2017 31-Dec-2018 Comment The indicator changed to align with Corporate Results Indicator Marked for Number of households in the 4 Number Value 0.00 50.00 600.00 Deletion targeted sites (for Date 01-Jan-2013 01-May-2017 31-Dec-2018 Page 22 of 29 Results Framework CBA/CBDRM planning and Comment A new implementation) incorporating proposed climate considerations in their indicator decision making. focused on investments in villages is included. The government and the team also considered that it is difficult to measure incorporation of climate consideration in decision- making. Marked for Number of national and sub- Number Value 1.00 5.00 10.00 Deletion national institutions with functioning DRM Date 01-Jan-2013 01-May-2017 31-Dec-2018 arrangements Comment This indicator is considered to be appropriate as intermediate results indicator, related to a component. It is revised and linked to broader institutional strengthening. . Page 23 of 29 Results Framework Intermediate Results Indicators Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate Revised Strengthened institutional Text Value zero Low High structures and capacity to deliver climate-resilient Date 01-Jan-2013 01-May-2017 31-Dec-2018 investments at the provincial to Comment Indicator local levels revised and to go beyond the capacity in the Secretariat and capture broader capacity and institutional arrangements. This indicator is also a replacement for a GEO- level indicator that is being deleted to measure the number of national and sub-national level institutions with functioning DRM arrangements. New Number Value 0.00 2.00 65.00 Page 24 of 29 Results Framework Investments in post TC-Pam Date 01-Sep-2016 01-May-2017 31-Dec-2018 recovery needs Comment New indicator to capture the support after TC Pam New Number of water systems Number Value 0.00 2.00 8.00 repaired Sub Type Date 01-Sep-2016 01-May-2017 31-Dec-2018 Breakdown Comment This indicator captures the work on larger water systems repaired/rehabi litated post TC Pam on the islands of Tanna and Shepherds. New Number of early warning Amount(USD) Value 0.00 0.00 8.00 system stations established and/or repaired Date 01-Sep-2016 01-May-2017 31-Dec-2018 Comment No Change Availability of Operational Text Value None 2 Manuals Manuals providing procedures / Available protocols for Climate Change Date 01-Jan-2013 01-May-2017 31-Dec-2018 adaptation & Disaster management projects/programs Comment The Project Operational manual is continuously being updated to guide the operations for both World Page 25 of 29 Results Framework Bank funded projects and PMU administration. Revised Guidelines/manuals/tools based Number Value 0.0 1 3 on good local and international practices developed for guiding Date 01-Jan-2013 01-May-2017 31-Dec-2018 CBA in Vanuatu being used at Comment The indicator national and provincial level is revised to a numerical target. The guidelines/man uals are expected to be used in targeted provinces. Revised Number of villages receiving Number Value 0.00 4.00 65.00 climate and disaster resilient investments Date 01-Sep-2017 01-May-2017 31-Dec-2018 Comment Proposing that this be revised to focus on the villages that will be supported through small investments and were affected by TC Pam Marked for Effective collaborative research Number Value 0.00 5.00 Deletion and extension between VARTC Date 01-Jan-2013 23-May-2017 31-Dec-2018 Page 26 of 29 Results Framework and DARD as measured by set Comment This indicator up of multiplication and is being delivery mechanisms in main deleted to food areas reflect the focus on the villages and micro-projects, the crop distribution is linked to these and not just on the agencies which have completed their work. Marked for Farmers / farmer leaders Number Value 100.00 164.00 1500.00 Deletion trained and /or contacted on ways to improve cropping Date 01-Jan-2013 23-May-2017 31-Dec-2018 practices Comment The improved cropping practice forms an integral part of the proposed indicator in the number of villages supported through investments. Thus, it is proposed that this indicator be deleted. Number Value 0.00 22.00 50.00 Page 27 of 29 Results Framework Marked for Technologies demonstrated in Date 01-Jan-2013 23-May-2017 31-Dec-2018 Deletion the project areas (number) Comment The improved technologies form an integral part of the proposed indicator in the number of villages supported through investments and thus it is proposed that this indicator be deleted. No Change Number of people in rural areas Number Value 0.00 500.00 6000.00 provided with access to improved Water Sources under Date 01-Jan-2013 01-May-2017 31-Dec-2018 the project Comment Marked for NGOs/churches involved with Percentage Value 0.00 0.00 75.00 Deletion rural water supply adopt RWS standards Date 01-Jan-2013 23-May-2017 31-Dec-2018 Comment These stakeholders are part of the process for village level investments and form part of a wider non- governmental organization is Page 28 of 29 Results Framework an input measure. Marked for National and sub-national Number Value 0.00 0.00 10.00 Deletion DRM strategies, plans and standard operating procedures Date 01-Jan-2013 23-May-2017 31-Dec-2018 developed and tested Comment The proposed deletion is because of focus on DRM-adaption collectively and also on investments rather than plans and strategies. No Change Provincial Disaster Centers Number Value 0.00 2.00 2.00 Fully Equipped and Operational Date 01-Jan-2013 14-Oct-2016 31-Dec-2018 Comment No Change Data communication links Percentage Value 0.00 3.00 100.00 established to volcano monitoring sites Date 01-Jan-2013 14-Oct-2016 31-Dec-2018 Comment . Page 29 of 29