Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB1522 Project Name Bogotá - Disaster Vulnerability Reduction Project (Phase 2 APL) Region LATIN AMERICA AND CARIBBEAN Sector Flood protection (34%); Non-compulsory pensions, insurance and contractual savings (33%); Sub-national government administration (33%) Project ID P085727 Borrower(s) SUBNATIONAL, BOGOTA Implementing Agency Environment Category [ ] A [ ] B [ ] C [ ] FI [X] TBD (to be determined) Date PID Prepared March 15, 2005 Estimated Date of Appraisal Authorization June 15, 2005 Estimated Date of Board Approval October 4, 2005 1. Key development issues and rationale for Bank involvement Colombia is highly prone to natural disasters due to its location straddling the Andean mountain region and Pacific “belt of fire”, where high seismic potential combines with volcanic activity, steep slopes and torrential rainfalls. In the last 25 years, the country has suffered from six major earthquakes, three volcanic eruptions, major landslides and avalanches, and recurrent flooding. Laying over several seismic faults, Bogotá (Colombia’s capital city) is particularly exposed to earthquake, floods and landslides. With about seven million inhabitants, the city is by far Colombia’s largest concentration of risk. The potential for natural disasters, and the consequences of potential disasters continue to grow as the city expands. Recent modeling exercises funded with PHRD monies estimate that a major earthquake occurring in Bogotá could result in losses in excess of US$10 1 billion and would have serious repercussions on Colombia’s economy. Increasing understanding of the country’s exposure to natural disasters has led to a gradual change in the way the country deals with disaster risk shifting its emphasis from emergency response to a more comprehensive disaster risk management approach. Following the devastating earthquake of Popayan in 1983, the Government established the Sistema Nacional para la Atención y Prevencion de Desastres . In August of 1997 parliament passed the Law 400 , which established seismic resistant building standards for new construction and which established a timeline for the retrofitting key public facilities such as hospitals and fire stations that would be needed to provide critical services during and after emergencies. Under Law 715 of 2001, local governments are now allowed spend some of their revenue sharing funds on 1 A recent IADB study put this estimate of Possible Maximum Loss (PML) of a one in 200 year earthquake event at US$20 billion. Page 2 disaster prevention. Larger cities, such as Bogotá have established comprehensive systems for the management of disaster risk and have started large investment programs aimed at improving their resilience to adverse natural events. The Bank has been involved in disaster reconstruction for several decades and has is increasingly trying to focus its Borrowers’ attention to the need for more comprehensive disaster risk management approaches 2 . In particular, the Bank supported reconstruction in the coffee growing region of Colombia after a devastating earthquake on January 25, 1999 disbursing a total of US$ 318 million. This effort led to various initiatives aimed at supporting Colombia’s endeavor towards disaster risk mitigation and culminated with the preparation of the first phase of a Disaster Vulnerability Reduction Project APL to be presented to the Board this Fiscal Year. Because of its growing experience, the Bank can mobilize an extended network of external contacts, including other multilateral agencies and private industry, in all aspects of disaster mitigation, and reconstruction. The LCR Region has recently expanded the disaster mitigation agenda to include risk financing and insurance instruments. The aim of these tools is to develop a comprehensive risk management strategy and insure against catastrophic loss as part of a comprehensive risk management strategy. This strategy enjoys the support of the Hazard Management Unit and by the Finance Vice Presidency. The proposed project is the second phase of the three-phased Disaster Vulnerability Reduction project APL (DVRP-APL). The first phase focuses operations at the national level, while the second and third phases will focus on Bogotá and other municipalities respectively. 2. Proposed objective(s) The proposed project aims at reducing Bogotá’s exposure to human and economic losses in case of natural disaster through the implementation of risk mitigation activities and of a risk financing strategy. Together with the other phases of the DVRP-APL, the project will improve Colombia’s physical and fiscal resilience to disasters. The project specifically addresses three of the key sub- goals of the CAS: (a) maintaining macroeconomic fiscal adjustment: overall macroeconomic stability will benefit from better risk management in Colombia’s main city; (b) consolidating reform of the financial sector: the development of market-based financial risk transfer instruments should contribute to a deepening and strengthening of the financial sector, and; (c) making private participation work for the poor: Since the poorest portion of society typically lives in the most vulnerable areas, the poorest group will benefit directly from disaster risk reduction and financing. The purpose of this second phase under the DVRP-APL is to reduce the vulnerability of the Capital District of Bogotá to adverse natural events by strengthening its capacity to manage disaster risk and by reducing its exposure to key risks including earthquakes, floods, and landslides. By program completion, physical and financial vulnerability to adverse natural events should be measurably reduced in Bogotá. 2 For example, risk identification and risk reduction activities have been included in Bank-assisted disaster rehabilitation projects in Bolivia, Paraguay and Peru following the El Nino phenomenon in 1998/99 and disaster management projects in the Eastern Caribbean countries, Honduras and Nicaragua in 1999, 2001 and 2004. Page 3 3. Preliminary description As with the other phases under the APL, this phase will address the five lines of action outlined in the National Plan for Disaster Prevention and Management: (a) risk identification; (b) risk reduction; (c) institutional development; (d) risk awareness, and; (e) financial coverage of risk. Component A: Disaster Risk Identification and Monitoring This component would involve hazard mapping for key areas, as well as vulnerability and risk analysis of key assets, including hospitals and fire fighting stations. The component also includes the development and installation of hazard monitoring systems. Studies will be undertaken for hazard identification (e.g. floods, landslides, earthquakes), for vulnerability assessment (e.g. substandard housing and public buildings) and for risk assessment (e.g. probability of loss of life if vulnerability is not assessed). Component B: Risk Reduction The proposed activities under this component would be aimed at reducing existing and possible future risks through seismic mitigation (retrofitting of hospitals, fire stations, schools and day care centers); landslide mitigation (four schools and about 9,000 families living in areas vulnerable to landslides) and; flood mitigation (five schools). Component C: Institutional Development Component C would finance the provision of technical assistance to strengthen the capacity of the Central District of Bogotá in disaster risk management in general. This will include training and institutional strengthening for agencies part of the District Emergency System. The component will also include support to the Project Coordination Unit within the District Ministry of Finance. Component D: Risk Prevention and Awareness The component aims at increasing awareness for risk management needs at various levels of the educational system. The component will finance city-wide campaigns on risk awareness and emergency response by the fire department and other agencies. This will include the provision of emergency and risk management training to more than 300 educational institutions, the dissemination of information and some practical research on risk management issues. It will also finance the training of about 280 contractors in the retrofitting of houses to meet seismic resistant standards and in low-cost options for safe home construction and design. About 600 builders will also be trained in anti-seismic building techniques and basic concepts of building habitable dwellings. Component E: Financial Coverage of Risk This component would support the development of a strategy for the financial coverage of disaster risk in the District of Bogotá. The strategy will help establish a sustainable level of investment in risk mitigation; evaluate acceptable level of reserve for the coverage of high frequency events (e.g., floods and landslides); and develop a framework for the financing of catastrophic risk (e.g. earthquake), including the identification of possible sources of financing in case of a major event occurring in Bogotá. The component will also support studies for the cost- effective use of insurance as an ex ante risk financing instrument by the district. In addition, it Page 4 will support activities for the development of a private earthquake insurance market and promoting the use of insurance by private actors. 4. Safeguard policies that might apply [ X ] Environmental Assessment ( OP / BP 4.01) [ X ] Involuntary Resettlement ( OP / BP 4.12) The project triggers OP 4.01. The impacts, as described above, are not expected to be significant, nor irreversible. Cumulative and site-specific impacts will be analyzed prior to appraisal. Project intervention also triggers OP 4.12, the Resettlement Policy. An appropriate resettlement framework has been prepared for Bank review and clearance. The resettlement component aims to provide safe housing solutions for families living in high hazard risk-prone areas. 5. Tentative financing Source: ($m) BORROWER 120.0 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 80.0 Total 200.0 6. Contact point Contact: Francis Ghesquiere Title: Urban Specialist Tel: (202) 458-1964 Fax: (202) 522-3552 Email: fghesquiere@worldbank.org