The World Bank NEPAL DRM DEVELOPMENT POLICY CREDIT WITH CAT DDO (P166788) Program Information Document (PID) Concept Stage | Date Prepared/Updated: 05-Sep-2018| Report No: PIDC24518 Page 1 of 5 The World Bank NEPAL DRM DEVELOPMENT POLICY CREDIT WITH CAT DDO (P166788) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Project Name Parent Project ID (if any) Nepal P166788 NEPAL DRM DEVELOPMENT POLICY CREDIT WITH CAT DDO (P166788) Region Estimated Board Date Practice Area (Lead) Financing Instrument SOUTH ASIA Mar 28, 2019 Social, Urban, Rural and Development Policy Resilience Global Practice Financing Borrower(s) Implementing Agency Ministry of Finance Ministry of Home Affairs, Ministry of Health and Population Proposed Development Objective(s) To enhance the capacity of Nepal to manage the impacts of climate change and natural disasters including disease outbreaks. Financing (in US$, Millions) FIN_SUMM_PUB_TBL SUMMARY Total Financing 50.00 DETAILS -NewFin3 Total World Bank Group Financing 50.00 World Bank Lending 50.00 Decision The review did authorize the preparation to continue B. Introduction and Context Country Context 1. Nepal is highly vulnerable to a range of natural hazards, particularly earthquakes, flood, drought, and landslides. In the aftermath of the 2015 earthquakes, a total of 8,790 people lost their lives and more than 22,300 people were injured1 Approximately 725,000 houses, 2,656 Government buildings, and 30,000 classrooms were either completely or partially damaged. The country is drought prone as well as susceptible to floods and landslides. These hazards and the country’s high level of vulnerability make Nepal the second most vulnerable country in the world in terms of 1 Post Disaster Needs Assessment (PDNA), Government of Nepal (2015). Page 2 of 5 The World Bank NEPAL DRM DEVELOPMENT POLICY CREDIT WITH CAT DDO (P166788) mortality risk from two or more hazards.2 2. Nepal has been experiencing increased incidence of emerging diseases such as dengue, Japanese encephalitis, chikungunya, and leptospirosis in the recent years. They have a high potential of creating outbreaks with widespread morbidity and mortality. In fiscal year 2016-17, there were 41 major outbreaks including acute gastroenteritis, diarrhea, influenza, cholera, food poisoning, leptospirosis, scrub typhus, and dengue mushroom poisoning, affecting a total of 3,545 people with a fatality rate of 0.81 percent. The Scrub Typhus outbreak had the greatest morbidity. Mushroom poisoning had a high case fatality rate (45 percent).3 The Nepal Health Sector Strategy (2015-2020) recognizes the increasing threats from disasters and adverse effects of climate change, especially among poor and vulnerable groups, and highlights the urgent need to heighten its effort on emergency preparedness and response. 3. Macroeconomic Policy Framework: Despite several severe shocks in the past (conflict, unstable governments, earthquakes, trade disruptions, India’s demonetization and introduction of GST), Nepal’s macroeconomic fundamentals have remained sound. Relationship to CPF 4. This operation is consistent with the Country Partnership Framework (CPF) for Nepal FY19 –23, particularly, it responds to “Focus Area 3: Inclusion and Resilience�. Increasing the resilience of the country to shocks and climate impacts would enable more inclusive and sustainable growth, which is the over-arching Strategic Goal of the current CPF. The 2018 Systemic Country Diagnostic (SCD) identifies a number of challenges including exposure to external demand shocks from natural disasters and limited macroeconomic and fiscal space to deal with an external shock. C. Proposed Development Objective(s) 5. The overall objective is to enhance the capacity of Nepal to manage the impacts of climate change and natural disasters including disease outbreaks. Key Results 6. The main results expected for this operation are related to the areas of DRM, climate change and health, and address the need to (i) improve climate and disaster risk management institutional and regulatory framework, (ii) Integrate climate and disaster resilience in key sectors, and (iii) enhance human health crisis preparedness and response. D. Concept Description 7. This operation responds to the country’s need for disaster risk financing mechanisms to address the economic impact of adverse natural events including health-related shocks by providing: (i) immediate liquidity in the aftermath of natural disasters through a Disaster Risk Management (DRM) Development Policy Credit (DPC) Catastrophe Deferred Drawdown Option (Cat DDO), and (ii) access to the Pandemic Emergency Financing Facility (PEF) cash and insurance windows to ensure timely support to address disease outbreaks, before they reach pandemic proportions. 8. The proposed operation will be the first IDA Cat DDO-PEF in Nepal. This disaster risk financing product is consistent 2 Natural Disaster Hotspots, A Global Risk Analysis, The World Bank (2005) 3 Annual Report 2016/17. Department of Health Services, Ministry of Health and Population, Nepal. Page 3 of 5 The World Bank NEPAL DRM DEVELOPMENT POLICY CREDIT WITH CAT DDO (P166788) with the Bank’s emphasis on disaster prevention, as opposed to only disaster response. The country’s establishment of an adequate macroeconomic policy framework and the existence of a satisfactory DRM program make the Nepal eligible for the Cat DDO, and also eligible to benefit from the PEF as an IDA country. 9. Link between the Cat DDO and PEF: The Cat DDO has been designed to support response to natural disasters including health emergencies, and the PEF (a parallel financing within this operation) is designed to specifically support response to large-scale qualifying disease outbreaks through its insurance and cash windows. 10. The PDO takes into account Nepal’s fast development rate in the last two decades, the country’s proactive approach towards adverse natural events and climate change, and the recognition of increasing focus towards resilient and sustainable development. The PDO will be achieved by supporting policy reforms under the following three pillars: (i) Improving the climate and disaster risk management institutional and regulatory framework, (ii) Integrating climate and disaster resilience in key sectors, and (iii) Enhancing human health crisis preparedness and response. E. Poverty and Social Impacts and Environmental Aspects Poverty and Social Impacts 11. This operation supports the use of climate and disaster risk information to include and reach the most vulnerable populations. The implementation of key activities identified in Prior Action 2, will inform the decision-making process to increase the safety of vulnerable groups, such as the poor, women, and people with special needs. 12. This operation will lessen the economic and social disruption that countries have recently faced due to health� related shocks in the aftermath of disaster. This operation takes into account the importance to reducing the impact of public health�related emergencies by enhancing health crisis preparedness as well as the ability to scale-up response to health adverse events. Environmental Impacts 13. The prior actions selected for this operation are likely to have a positive and mainly indirect effect on Nepal’s environment, forests or other natural resources. Enhancing the government’s capacity to manage disaster will lead to preservation and sustenance of natural resources and the environment. Prior Actions will e.g.: (i) enable DRM authorities to better mitigate damage on environmental and natural resources during any type of disasters, and (ii) have a positive effect on natural resource and environmental management. . Page 4 of 5 The World Bank NEPAL DRM DEVELOPMENT POLICY CREDIT WITH CAT DDO (P166788) CONTACT POINT World Bank Armando Eduardo Guzman Escobar Senior Disaster Risk Management Specialist Borrower/Client/Recipient Ministry of Finance Mr. Shree Krishna Nepal Joint Secretary sknepal40@mof.gov.np Implementing Agencies Ministry of Home Affairs Indu Ghimire Joint Secretary ighimire027@gmail.com Ministry of Health and Population Dr. Pushpa Chaudhary Secretary deopushpa@gmail.com 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): Armando Eduardo Guzman Escobar Approved By APPROVALTBL Country Director: Faris H. Hadad-Zervos 06-Sep-2018 Page 5 of 5