FOR OFFICIAL USE ONLY Report No: PPIAF000060 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED THIRD ADDITIONAL CREDIT IN THE AMOUNT OF SDR 30.1 MILLION (US$40 MILLION EQUIVALENT) TO THE COMMONWEALTH OF DOMINCA FOR THE DISASTER VULNERABILITY REDUCTION PROJECT November 13, 2024 Urban, Resilience and Land Global Practice Latin America And Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER CURRENCY EQUIVALENTS (Exchange Rate Effective Novemebr 7, 2024) Eastern Caribbean Currency Unit = Dollar (EC$) EC$2.70= US$1 US$1= SDR 0.75095935 FISCAL YEAR January 1 - December 31 Regional Vice President: Carlos Felipe Jaramillo Regional Director: Maria Marcela Silva Country Director: Lilia Burunciuc Practice Manager: Federica Ranghieri Task Team Leader (s): Mary Elinor Boyer, Artessa Saldivar-Sali The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER ABBREVIATIONS AND ACRONYMS AF Additional Financing APL Adaptable Program Loan AM Accountability Mechanism CERC Contingent Emergency Response Component CREAD Climate Resilience Execution Agency of Dominica CSU Central Services Unit DA Designated Account DOWASCO Dominica Water and Sewerage Company DVRP Disaster Vulnerability Reduction Project ECR East Coast Road E&S Environmental and Social EHS Environmental, Health, and Safety EOT Extension of Time FM Financial Management GDP Gross Domestic Product GoCD Government of the Commonwealth of Dominica GRS Grievance Redress Service IDA International Development Association IFR Interim Financial Reports IPF Investment Project Financing IST Implementation Support Team MOPWPUDE Ministry of Public Works, Public Utilities and Digital Economy MTR Mid-Term Review ODM Office of Disaster Management PAD Project Appraisal Document PCU The Project Coordination Unit PDO Project Development Objective PIU Project Implementation Units PMU Project Management Unit PS Permanent Secretary QS Quantity Surveyor SDR Special Drawing Rights SORT Systematic Operations Risk-rating Tool VOC Vehicle Operating Costs VOT Value of Time WB World Bank EC$ Eastern Caribbean Dollar The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER TABLE OF CONTENTS I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING .................................................................1 II. DESCRIPTION OF ADDITIONAL FINANCING ...............................................................................................5 III. KEY RISKS ................................................................................................................................................8 IV. APPRAISAL SUMMARY .............................................................................................................................8 V. WORLD BANK GRIEVANCE REDRESS ....................................................................................................... 10 VI. PROPOSED CHANGES ............................................................................................................................. 10 VII. DETAILED CHANGE(S)............................................................................................................................. 11 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER @#&OPS~Doctype~OPS^dynamics@afaprbasicdata#doctemplate OPERATION INFORMATION BASIC DATA - MAIN Product Information - Third Phase Disaster Vuln.Reduction APL for Dominica (P129992) Operation ID Product/Financing Instrument P129992 Investment Project Financing (IPF) Task Team Leaders Mary Elinor Boyer, Artessa Saldivar-Sali Beneficiary Country/Countries Geographical Identifier Dominica Dominica Requesting Unit Responsible Unit LCC3C (451) ILCUR (9351) Approval Date Closing Date 13-May-2013 30-Jun-2025 Practice Area (Lead) Approval Fiscal year Urban, Resilience and Land 2014 Is there collaboration between Bank and IFC? No Original EA Category Current EA Category Partial Assessment (B) (PAD Approval Package-01 May 2014) Implementing Agency Ministry of Public Works, Public Utilities and Digital Economy IMPLEMENTATION MODALITIES – MAIN Situations of Urgent Need of Assistance or Capacity Constraints [ ] Fragile State(s) [ ] Fragile within a non-fragile Country [✓] Small State(s) [ ] Conflict [ ] Responding to Natural or Man-made Disaster i The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Other Situations [ ] Financial Intermediaries (FI) [✓] Series of Projects (SOP) [ ] Performance-Based Conditions (PBCs) [✓] Contingent Emergency Response Component (CERC) [ ] Alternative Procurement Arrangements (APA) [ ] Hands-on Expanded Implementation Support (HEIS) @#&OPS~Doctype~OPS^dynamics@afaproperationstatus#doctemplate OPERATION STATUS Development Objective (DO) Development Objective (Approved as part of Decision package on 30-Apr-2014) The objective of the Project is to reduce vulnerability to natural hazards and climate change impacts in Dominica through: (i) investment in resilient infrastructure, and (ii) improved hazard data collection and monitoring systems. Key Information from Last ISR Operation Ratings Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Undisbursed % Disbursed IBRD -- -- -- 0 IDA 60.80 53.44 4.79 91.78 Grants 21.00 20.94 0.06 99.71 @#&OPS~Doctype~OPS^dynamics@afaprprocessing#doctemplate BASIC DATA – ADDITIONAL FINANCING Additional Financing No. 4 Additional Financing Type The operation has incurred increased costs due to inflation, exchange rate changes, and factors that were not [✓ ] anticipated at appraisal (Cost-overrun) The operation has experienced shortfalls in co-financing, counterpart financing, or cost recovery that were [ ] anticipated at appraisal but did not materialize. (Financing gap) ii The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER [ ] Is this Additional Financing being used to replenish financing due to CERC or RRO activation? Expected Approval Date Review Type/Corporate Review Level 06-Dec-2024 Regular Decision Meeting (DM) Will consulting services be required? Is this an Urgent Need or Capacity Constraint request? No Yes IMPLEMENTATION MODALITIES – ADDITIONAL FINANCING Situations of Urgent Need of Assistance or Capacity Constraints [ ] Fragile State(s) [ ] Fragile within a non-fragile Country [✓] Small State(s) [ ] Conflict [ ] Responding to Natural or Man-made Disaster Other Situations [ ] Financial Intermediaries (FI) [✓] Series of Projects (SOP) [ ] Performance-Based Conditions (PBCs) [✓] Contingent Emergency Response Component (CERC) [ ] Alternative Procurement Arrangements (APA) [ ] Hands-on Expanded Implementation Support (HEIS) @#&OPS~Doctype~OPS^dynamics@afaprcostfinancing#doctemplate COSTS & FINANCING Summary (Total Financing in US$, Millions) Proposed Last Approved Additional Cancellation Total Total Operation Cost 70.50 54.68 0.00 125.18 Total Financing 83.30 41.88 0.00 125.18 Of which IBRD/IDA 60.80 40.00 0.00 100.80 Financing Gap -12.80 0.00 Financing Details (in US$, Millions) Proposed Source Last Approved Additional Cancellation Total iii The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Counterpart Funding 1.50 1.88 0.00 3.38 Borrower/Recipient 1.50 1.88 0.00 3.38 International Development 60.80 40.00 0.00 100.80 Association (IDA) IDA Credit 60.80 40.00 0.00 100.80 Trust Funds 21.00 0.00 0.00 21.00 Strategic Climate Fund 12.00 0.00 0.00 12.00 Grant Strategic Climate Fund 9.00 0.00 0.00 9.00 Credit Total Financing 83.30 41.88 0.00 125.18 IDA Resources (in US$, Millions)- Additional Financing Guarantee Credit Amount Grant Amount SML Amount Total Amount Amount National Performance-Based 100.80 0.00 0.00 0.00 100.80 Allocations (PBA) Total 100.80 0.00 0.00 0.00 100.80 @#&OPS~Doctype~OPS^dynamics@afaprsort#doctemplate iv The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER SYSTEMATIC OPERATIONS RISK- RATING TOOL (SORT) Last Approved Rating Risk Category Proposed Rating (ISR Seq. 021) Package - 24 Sep 2024 Political and Governance  Substantial  Substantial Macroeconomic  Moderate  Moderate Sector Strategies and Policies  Moderate  Moderate Technical Design of Project or Program  Moderate  Moderate Institutional Capacity for  Substantial  Substantial Implementation and Sustainability Fiduciary  Moderate  Substantial Environment and Social  Substantial  Substantial Stakeholders  Moderate  Moderate Overall  Substantial  Substantial @#&OPS~Doctype~OPS^dynamics@afaprclimate#doctemplate CLIMATE Climate Change and Disaster Screening Has this operation been screened for short-term and long-term climate change and disaster risks? Yes, it has been screened and the results are discussed in the Appraisal Document Where risks exist, have potential resilience-enhancing measures been identified in the appraisal document? No, significant risks were not identified Does this operation address specific risks, vulnerabilities, gaps or needs with respect to Climate Change that are identified in the SCD or the CPF? Yes Greenhouse Gas Emissions Accounting and Shadow Price of Carbon Gross Emissions Net Emissions (annual average, Net Emissions (economic lifetime, tCO2e) (economic lifetime, tCO2e/year) tCO2e) 0 0 0 Has the operation applied the Shadow Price of Carbon in the Economic Analysis? Not Applicable Explanation for Not Applicable v The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER N/A, AF only for cost overruns. POLICY COMPLIANCE Does the operation depart from the CPF in content or in other significant respects? No Does the operation require any waivers from Bank policies? No @#&OPS~Doctype~OPS^dynamics@afaprteam#doctemplate TEAM Core Team Name Role Specialization ADM Responsible? Mary Elinor Boyer Team Leader Yes Artessa Saldivar-Sali Team Leader No Financial Management Patrick Kabuya Yes Specialist Luciano Gutierres Procurement Specialist Yes Wuerzius Blandine Marie Wu Chebili Procurement Specialist No Gabriel Penaloza Procurement Specialist No Svetlana Khvostova Environmental Specialist Yes Elizabeth Joana Graybill Environmental Specialist No Do Nascimento Brito Chanelle La Verne Fingal Social Specialist Yes Jacqueline Beatriz Veloz Counsel No Lockward Escarlata Baza Nunez Counsel No Maria Pia Cravero Counsel No Angelica Calderon Procurement Team STEP Focal Point No Michael Fedak Team Member No Kristal Michael Ann Peters Team Member No vi The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Regie Benjamin Yokow Team Member No Ephson Joseph A. Gadek Team Member No Jean-Jacques Raoul Team Member No Delphine Alberta Hamilton Team Member No vii The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING A. Project Background 1. This Project Paper seeks approval of the Board of Executive Directors for a third additional financing (AF) to the Disaster Vulnerability Reduction Project for Dominica (DVRP, P129992) as requested by the Government of the Commonwealth of Dominica (GoCD) in a letter dated September 23, 2024. This AF3 is intended to address cost overruns associated with the East Coast Road (ECR) rehabilitation works, a key component of the DVRP. This AF would include a restructuring of the project to (i) extend the end-target dates for all indicators of the results framework (RF) to align with the current project closing date of June 30, 2025; (ii) add an indicator in the RF in line with the World Bank Corporate Scorecard; (iii) revise component costs; (iv) revise disbursement estimates to include this proposed AF; and (v) include editorial changes to project development outcome (PDO) that do not impact content. For Official Use Only 2. The DVRP was approved in May 2014, financed by an IDA Credit in the amount of US$17 million equivalent, a Strategic Climate Fund grant for US$12 million and a Strategic Climate Fund loan for US$9 million. 3. The project includes two AF and has undergone 4 restructurings as summarized below: (a) AF1 and Restructuring #1 approved in September 2018. An IDA Credit in the amount of US$31 million equivalent was provided to the project through this AF1. Following the passage of category 5 Hurricane Maria in 2018, which had devastating impacts on the road network in Dominica, the scope of work along the ECR under Component 1 was expanded to include the full rehabilitation, widening, and resurfacing of its entire 43.1 kilometers length to resilient standards, instead of only strengthening works at selected sites (as envisaged under the original financing). Further, this AF1 replenished funds disbursed during the activation of the Contingent Emergency Response Component (CERC) which had a US$1 million allocation, and which received US$7 million in supplemental allocation from other project components. The project restructuring extended the closing date by three years from June 30, 2020 to June 30, 2023. (b) AF2 approved in June 2020. This AF2 of US$12.8 million equivalent was intended to meet the financing gap due to escalating costs associated with the launch of ECR rehabilitation works. At that point of implementation of the road rehabilitation, the need for more slope stabilization works, retaining walls, and embankments along the road (to prevent river erosion) were identified as critical to ensure that the resilience objectives are met. As the allocated funds were insufficient for the corresponding construction cost estimate to rehabilitate and upgrade the entire length of 43.1 kilometers, the scope of the ECR length under rehabilitation was reduced from 43.1 to 30 kilometers. (c) Restructuring #2 approved in May 2023. This restructuring (i) extended the closing date by one year from June 30, 2023 to June 30, 2024; (ii) transferred the Project Coordination Unit (PCU) within the Ministry of Public Works, Public Utilities and Digital Economy (MoPWPUDE), rather than the Ministry of Environment and Kalinago Upliftment (MoEKU); and (iii) amended the results framework to introduce a Citizen Engagement indicator, and moderate the target of one intermediate outcome indicator on account of reduced activities due to cost overruns. (d) Restructuring #3 approved in May 2024. This restructuring extended the closing date by one year from June 30, 2024 to June 30, 2025, the current closing date. Page 1 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER 4. The current total financing for the project is US$81.8 million, of which IDA has financed US$60.8 million; Trust Funds US$21 million. As of October 21, 2024, 100 percent of the project financing is committed and US$74.38 million (94 percent) disbursed. This third AF is proposed to address the cost overruns associated with completing ECR works under Component 1 (Prevention and Adaptation Investments); and project management costs under Component 4 (Project Management). Investment activities under Component 1 and Component 2 (Capacity Building and Data Development, Hazard Risk Management and Evaluation) are complete, and Component 3 (Natural Disaster Response Investments) has not been activated since 2017. B. Project Status 5. The PDO is to reduce vulnerability to natural hazards and climate change impacts in Dominica through: (i) investment in resilient infrastructure, and (ii) improved hazard data collection and monitoring systems. Throughout the course of implementation, the PDO content has not changed, and remains relevant. For Official Use Only 6. Progress towards achievement of the PDO and overall Implementation Progress, as of the Implementation Status and Results Report of September 2024, are both rated Moderately Satisfactory. The following PDO indicators are all expected to be achieved by the closing date of June 30, 2025. (a) Direct project beneficiaries (Number) – 40,000 (current)/71,860 (end target) (b) ECR with a condition rating of good/excellent that is resilient to climate events (Percentage) – 60 (current)/100 (end target) (c) Households with access to improved water distribution and supply in project area (Number) – 2,200 (current)/2,200 (end target) (d) Relevant agencies enabled to make climate risk informed decision-making to reduce vulnerability to climate change (Number) – 11 (current)/10 (end target) 7. Of the seven intermediate result indicators, five are achieved or have exceeded their final targets. The remaining two indicators, which are related to the rehabilitation of the ECR, are expected to reach their targets by June 30, 2025. 8. Component-wise progress is provided below: 9. Component 1: Prevention and Adaptation Investments (US$62.93 million): The construction of water tanks has been completed and provided all intended beneficiaries with sustainable access to potable water. Interruptions in access to drinking water was devastating to Dominica’s recoveries after Hurricane Maria, and the water tanks provide vulnerability communities with strengthened resilience to disaster impacts. For the rehabilitation of the ECR, Lot 1 (10 kilometers) is 90 percent complete, pending signage and permanent guardrails. Lot 2 (20 kilometers) is 75 percent complete, with excavation and widening completed, drainage structures, retaining walls and bridges under construction. The contractor's latest work plan, submitted in August 2024, indicates that Lot 1 will be completed by December 2024, and Lot 2 is schedule for completion by May 2025. Both the GoCD and the Bank have reviewed and agreed on the timelines. Based on preliminary conversations with the community, the completed roadworks are deemed of high quality and have already started to reduce travel times, increase tourism traffic to the Kalinago Territory, and improve access toeconomic activity in and out of the communities connected by the ECR. Page 2 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Sub-Component Status Completed Comments Bridges 4 of 5 completed Construction of final bridge to be completed by May 30, 2025 Culverts 100% Lot 1, 95% Lot 2 Only 4 culverts remain unfinished Retaining Walls 95% Lot 1, 100% Lot 2 1 new retaining wall in Lot 1 Roadways 98% for Lot 1, 75% for Lot 2 Delays with water and power utilities coordination 10. Component 2: Capacity Building and Data Development, Hazard Risk Management and Evaluation (US$7.37 million): All activities have been completed, including (i) development and implementation of geospatial data platform Dominode; (ii) construction of a new meteorological services office; (iii) construction of a forestry nursery; (iv) procurement and installation of seismic monitoring system; (v) procurement and installation of hydrometeorological monitoring system; (vi) completion of nation-wide LIDAR survey; (vii) and national soil survey. The establishment of the hydromet monitoring system has allowed Dominica to provide real-time updates to heavy rainfall events, providing early warning to communities in potentially dangerous areas. The For Official Use Only establishment of Dominode has led the government to create its first GIS unit to support improved data collection and management for, among other things, risk-based decision making on climate resilient investments. 11. Component 3: Natural Disaster Response Investments (US$8.00 million): This component, activated after Tropical Storm Erika in 2015, disbursed US$1 million for emergency procurement and debris removal. It was again activated in 2017 after Hurricane Maria, and US$7 million was disbursed towards the Agricultural Emergency Response Grant (AERG) program which concluded in 2019. 12. Component 4: Project Management and Implementation Support (US$3.50 million): The Project Coordination Unit (PCU) staff have been integrated into the Central Services Unit (CSU), which reports to the Ministry of Finance. This offers shared fiduciary, safeguards, monitoring and evaluation, and communications support to WB project units. In order to operate fully until project completion, an additional allocation of US$50,165.00 to this component is proposed. 13. Mid-term Review (MTR): An MTR conducted in December 2017 concluded that there were no significant obstacles to achieving the PDO. The review found that subprojects under Components 1 and 2 were relevant and progressing well, and that project management and implementation arrangements were adequate. It also determined that the outcomes outlined in the results framework were attainable. The MTR acknowledged that delays in implementation were due to the impact of Tropical Storm Erika in 2015 and Hurricane Maria in 2017, as well as early challenges in understanding and complying with Bank procedures, justifying the extension of closing date by three years through the restructuring of September 2018. 14. The project's financial management (FM) performance continues to be satisfactory. The FM arrangements for the project remain unchanged and are deemed adequate. The project team has submitted acceptable interim financial reports (IFR) to date (for June 30, 2024) and audited financial statements for period ending December 31, 2023. The main remaining fiduciary risks include (a) challenges with managing the ECR contract, which heightens the risk of incorrect contract claims, and (b) potential errors in manually preparing project financial reports, since the Smart Stream accounting system used by the project lacks a module for generating these reports. The CSU is implementing appropriate measures to mitigate these risks. Page 3 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER 15. The GoCD has demonstrated its commitment to remedying shortcomings in procurement activities. It has strengthened contract management, as evidenced by the 'No Objection' request for the redesign of Pagua Bridge before the start of construction. The format was agreed to be adequate for other variations submitted to the Bank. Also, the CSU provided requested documents related to variation orders for this prior review contract based on the review conducted by the technical and financial audit firm. Consequently, procurement performance rating has improved from unsatisfactory to moderately unsatisfactory, and the CSU has agreed to an action plan for the remainder of the project to further improve the rating. The CSU has also agreed to an action plan to raise the overall safeguards compliance rating from moderately unsatisfactory to satisfactory that includes closing accidents, completing compensation payments and rectifying other environmental and social (E&S) issues at ECR worksite. C. Rationale for Additional Financing 16. Country Context: High winds, excessive rainfall, and hurricanes frequently impact Dominica’s vulnerable For Official Use Only populations and key economic sectors. In 2017, Hurricane Maria caused damage equivalent to 226 percent of GDP, and two years earlier, Tropical Storm Erika caused damages equal to 96 percent of GDP, including closing the main airport for roughly three months. The island's roads were covered by debris from flooding and trees, with visible landslides and embankment failures. 17. In response to these and other recurrent weather events, the GOCD has prioritized disaster risk management and climate change adaptation as key policy objectives. The Government is building a new airport with greater resilience to natural hazards, and the ECR is a prime access route for the new airport. Prior to the infrastructure works in the DVRP, measures to reduce flood risks were limited. Given the severe weather events which occurred during DVRP implementation, it was recognized that roadways and drainage must be improved to handle debris and water flows. Thus, Component 1 of the project was augmented to focus on improving the resilience of key routes and vulnerable assets to ensure rapid recovery of transport networks after future events. 18. In October 2023, the GoCD informed the WB that the ECR contract will not be completed within the contract ceiling, due to cost overruns resulting from contract variations that were not processed according to WB contract requirements. In adherence with WB recommendations, the GoCD contracted a firm to undertake a technical and financial audit of the ECR. Their final report indicated that the cost overruns were associated with necessary design and material changes to facilitate the intended quality and resilience of the road. The report also identified significant failures by both the GoCD and the ECR construction firm in adhering to contract conditions, managing contractual obligations, and overseeing financial management. 19. The WB has reviewed the audit firm’s findings and has also completed its own technical review of proposed contract variations. In principle, the variations under review are also deemed necessary to the resilience of the ECR, with remaining issues under discussion related to unit rates of steel and other materials. During the August 2024 mission, the WB recommended that an independent quantity surveyor (QS) be recruited to support negotiations on the terms of the variations under review. The GoCD has since amended and extended the contract of the audit firm to utilize the services of their qualified QS. 20. The rehabilitation of the ECR is vital to Dominica’s physical and socio-economic resilience. It serves as (i) an alternate route to the airport, (ii) access to tourist sites, and (iii) a transportation corridor for agricultural goods and the indigenous Kalinago community. Leaving the roadworks incomplete would pose ongoing risks and hardships to the surrounding communities, whose lives have already been disrupted by construction, and could increase their vulnerability to adverse weather affecting the exposed road surfaces, slopes, and river crossings. Page 4 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER 21. Without the AF, the project would likely close with an overall rating of moderately satisfactory, as the PDO indicators under Component 1 would only be partially met, achieving around 75 percent of the end target. This would not only impact the project’s contribution to improving climate resilience but also leave approximately 15 kilometers of the existing road unpaved, which could catalyze community grievances and E&S concerns. Additionally, failure to complete the Pagua Bridge would diminish the benefits of the rehabilitated roadways. 22. The Government and the WB have concluded that the project timeline applies sufficient pressure on the contractor to adhere to a rigorous yet feasible implementation schedule and completion of all works before June 2025. The contractor has provided a comprehensive work plan, detailing sequential activities and coordination with relevant public utility counterparts to prevent delays to critical path activities. II. DESCRIPTION OF ADDITIONAL FINANCING For Official Use Only A. Financing Details 23. The GoCD has requested US$40 million in AF through an IDA Credit for Component 1 and Component 4 to cover current and projected cost overruns for the ECR contract and project management, respectively. This includes, US$26 million mentioned above (para.22), as well as a percentage of the disputed variations, potential future variations, and other associated contract costs. Table 1 presents a summary of the project activities under the ECR contract and corresponding cost overrun to be met by the AF Table 1: Itemized list of projected cost overruns on the ECR Contract Total Cost Overrun Components & Activities Project Cost (Estimate) (Estimate) Component 1. Resilient Infrastructure Investments 1a. East Coast Road Original Contract Value 41,280,431 Insurances 2,328,675 2,328,675 Engineer Instructions 20,580 20,580 Adjustment of Provisional Sums - 5,008,600 -5,008,600 Variations (Agreed by DVRP) 26,016,989 26,016,989 Variations under review (estimate 25% will be approved) 3,567,047 3,567,047 Extension of time (EOT) 1,571,404 1,571,404 Forecasted Variations 7,002,599 7,002,599 Sub-total for Component 1 35,498,694 Sub-total for Component 1 With 15% VAT 40,823,498 40,823,498 Total contract cost 82,103,929 23. To date, US$37,674,332 in payments have been made to the civil works contractor (approximately 80 percent of the total contract value of US$47,159,991). Significant progress has been made in completing the ECR civil work and in the government’s stronger management of the contract in the last six months. Page 5 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER 24. The findings and recommendations of the Technical and Financial Audit, completed in October 2024 after a thorough review of the original contract documents, site records, and input from the government and the WB, serve as the foundation for determining the final contract cost. The Auditor collaborated closely with the Ministry of Public Works, Public Utilities and Digital Economy (MOPWPUDE) supervision team to create the report, which the Bank considers to be acceptable. B. Implementation Arrangements 25. Following the 2018 project restructuring, an Implementation Support Team (IST) was created to assist in the implementation of WB-funded projects and reporting to the Climate Resilience Execution Agency of Dominica (CREAD). The IST supported various emergency projects by providing expertise in procurement, financial management, and safeguards to PIUs in different ministries. It was staffed with a Portfolio Manager, Financial Manager, International Procurement Specialist, and Safeguards Advisor. From November 1, 2020, CREAD was tasked with overseeing the DVRP’s activities and acted as an agent for the MoEKU, handling decisions For Official Use Only affecting project outcomes, reviewing procurement documents, and coordinating communications. The PCU, with CREAD’s support, prepared the Annual Operating Plan and submitted regular reports, while CREAD provided executive summaries and met with the PS monthly. 26. In March 2022, the GoCD informed the Bank of its intention to establish the CSU, which would absorb and consolidate the staff of the various WB PIUs into one body. From 2022 to 2023 the FM Specialist, Environmental Safeguards Specialist, Social Safeguards Specialist, Administrative Assistant, and Archivist transitioned from the PIU to the CSU, with the MOPWPUDE providing technical oversight. 27. In August 2022, the GoCD terminated the services of the supervision firm for the ECR roadworks due to poor performance. Since then, the MOPWPUDE took over the supervision of the ECR roadworks, first with an interim supervision team approved by the WB, which was later approved as the permanent supervision team. While supervision improved under the MOPWPUDE, insufficient staffing of this supervision team lead to shortcomings in their supervision capacity. These shortcomings have mostly been resolved except for the Environmental and Social Safeguards position, which is currently vacant. To address this deficiency, the Environmental Specialist and the Social Safeguards Specialist of the CSU support the supervision team. The current MOPWPUDE Supervision Team comprises the Client’s/Engineer’s Representative, Resident Engineer, Senior Supervision Engineer, a Quantity Surveyor, and four Clerks of Works. CREAD was dissolved in February 2024 and no longer provides project support. 28. The GoCD has demonstrated responsiveness to evolving project needs by restructuring its implementation arrangements to improve oversight, accountability, and efficiency. These efforts have enhanced coordination, strengthened in-house capacities, and ensured that projects align with national goals. 29. The MOPWPUDE will continue to be the implementing agency for the DVRP with support from the CSU in project management. CREAD was dissolved in January 2024 and no longer provides support. The Bank will continue to provide intense implementation support to the DVRP, including in monitoring and evaluation, procurement oversight, financial management and environmental and social safeguard compliances. C. Disbursement Arrangements. 30. The CSU will use the existing designated account (DA) for DVRP to handle the eligible AF payments under DVRP. The disbursement methods include reimbursement, advance, and direct payment for the AF, the same as used in DVRP. Page 6 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER No change to the fund flow as defined in past disbursement arrangements, the disbursement categories and amount of the grant allocation are proposed in Table 2 below. Table 2. Disbursement Arrangement and Grant Allocation Category Amount of the Credit Percentage of Expenditures Allocated (US$) to be Financed (inclusive of Taxes) (1) Goods, works, non-consulting services, consulting services, 39,949,835.00 100% Training and Operating Costs for Part A of the Project (2) Goods, works, non-consulting services and consulting 0 100% services, Training and Operating Costs for Part B of the Project (3) Emergency Expenditures for Emergency Recovery and 0 100% Reconstruction Subprojects, including Cash Transfers or Grants, under Part C of the Project For Official Use Only (4) Goods, non-consulting services and consulting services, $50,165.00 100% Training and Operating Costs for Part D of the Project TOTAL AMOUNT $40,000,000.00 31. Readiness for the AF implementation. A rigorous yet feasible implementation timeline has been agreed with the contractor for completing all pending works before May 2025. Project funds are expected to be fully disbursed within the four-month disbursement grace period. D. RESTRUCTURING 32. Component-wise costs: With the AF3, the component-wise allocations are revised and indicated in Table 3 Table 3: Revised Component costs Component Original Allocation Revised Allocation [US$ million] (US$ million] Component 1: Prevention and Adaptation Investments 62.93 102.93 Component 2: Capacity Building and Data Development, 7.37 7.37 Hazard Risk Management and Evaluation Component 3: Natural Disaster Response Investments 1.00 8 Component 4: Project Management and 3.50 3.5 Implementation Support TOTAL AMOUNT 81.8 121.8 33. Results Framework: The end-target for all indicators of the results framework will be revised to June 30, 2025. A WB Corporate Scorecard indicator was added of; “Direct users that benefit from improved access to sustainable transport infrastructure and services (Number of people) (Number of women) (Number of youth).” 34. PDO: The phrase “The objective of the project is” was removed from the PDO. 35. Disbursement estimates: Disbursement estimates for the project are being revised to reflect the injection of US$40 million AF in project costs. Page 7 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER III. KEY RISKS 29. The overall risk is rated Substantial on account of similarly rated risks for political and governance, institutional capacity for implementation and sustainability, fiduciary, and environmental and social. Specific risks and mitigation measures are discussed in the following paragraphs. 30. Governance and Institutional capacity. Since Hurricane Maria, there has been strong political momentum and government ownership for projects that improve resilience in Dominica. However, there are several competing development priorities and government capacity is low due to the country’s small size and staff taking on multiple roles. The WB will continue work with the CSU and the MOPWPUDE to ensure that all project documentation is adequate. Dominica also has limited local labor capacity and lacks adequate systems to manage large-scale projects. The WB and CSU will play a key role in complementing the technical and project management capacity of the relevant ministries. Further, the WB will provide the necessary implementation support through the project For Official Use Only task team, including engineering and technical support to advise on contract management. 34. Fiduciary. The project requires strong FM and procurement support to manage the remaining ECR activities under the project. While FM has been rated as Moderate throughout the project's life due to adequate financial management arrangements, including reporting, procurement challenges remain substantial due to contract management weaknesses. The CSU has been addressing these challenges through staff reassignments, and the WB will continue to provide training support. 35. Environment and social. The nature of potential environmental impacts includes those typically associated with road rehabilitation or major maintenance, mainly landslides, soil stabilization and erosion control, debris management, and land and crop compensation. Past performance on the ECR contract has demonstrated that these risks are difficult to manage, but the CSU has been diligently following up with the ECR contractor to improve their performance in risk mitigation and compliance. IV. APPRAISAL SUMMARY A. Economic and Financial Analysis 36. The ECR investments are expected to create significant development impact, as these provide essential access to the eastern region of the country, an area with limited economic growth and home to the indigenous Kalinago people. Additionally, the ECR serves as an alternative route to the Airport Road, which is vital for connecting Melville Hall Airport to the capital. Investments in this project will prevent future disruptions along the ECR, ensuring they can function as an alternative route if key sections of the Airport Road are damaged. 37. Benefit- Cost Analysis (BCA). An economic analysis was conducted in 2018 to determine the economic viability of the ECR investments. Benefits were measured in terms of reductions in vehicle operating costs (VOC) and vehicle operating time (VOT). A Monte Carlo Simulation analysis was also performed to take into account the uncertainty in determining travel speed in existing and alternative routes, vehicle occupancy rate, and the number of days it takes to open roads to the public. Results showed that the ECR investments are economically viable. with benefit- to-cost ratio to range from 1.13 to 2.24, with an average of 1.64. 37. The economic analysis for ECR investments was updated in 2024 to consider the changes associated with the rehabilitation and upgrading of the ECR: (i) cost overrun amounting to a combined total amount of US$52.3 million Page 8 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER equivalent; (ii) reduction in rehabilitated road length from 43.3 kilometers to approximately 30 kilometers; and (iii) significant upgrade in road quality to comply with higher resilience standards to be able to withstand recurrent natural disaster risks and climate change using appropriate hydrological and geophysical information. Results show that the project remains economically viable even with cost overruns and a reduction in road length. The expected IRR, NPV, and B/C remain favorable at 10.17 percent, 1.96, and EC$247.18 million even when accounting for uncertainty. The project's benefits outweigh its costs, and the project is still likely to generate a good economic return of investments. 37. Cost effectiveness Analysis. The cost of road per kilometer is estimated at EC$$7.82 million (US$2.90 million). This is comparable to the cost of road per kilometer in Dominica, which is within the range from EC$$12.63 million (US$ 4.7 million) to EC$$19.33 million (US$7.16 million). See Annex 1 for the detailed economic analysis. B. Technical For Official Use Only 37. The proposed technical and contract variations have been evaluated and were found consistent with the short- and long-term objectives of the project and for the achievement of the PDO. The majority of the contract variations were proposed in order to improve the resilience of the road and surrounding community to flood and landslide risks. The project will continue to ensure that road and all related infrastructure are constructed to a standard that can withstand recurrent disaster risks and climate change by using appropriate hydrological and geophysical information. The project includes substantial slope and landslide stabilization, flood mitigation activities along the entire corridor, bridge protection and replacement, expansion of road width, and mitigation of river erosion along the road embankments. These interventions will minimize the risk of culvert/bridge failures, road subsidence, shoulder erosions, abutment scour, and overall structural and surface deterioration of pavements. The strengthening of the water distribution system will entail using concrete covers and ensuring proper compaction, drainage, and surfacing of adjoining access roads. C. Financial Management 38. The FM assessment of the September 2024 ISR noted that the FM systems of the parent project can continue to be used for the AF financed activities. D. Procurement 35. The assessment of the September 2024 ISR noted that the procurement systems of the parent project will continue to be used for the AF financed activities. While the rating remains Moderately Unsatisfactory, the CSU has already shown improvements in their diligence to strengthen contract management and submit contract variations for WB approval. E. Social (including Safeguards) 36. Grievances: The project maintains an effective grievance mechanism accessible to all stakeholders, managed by the Social Specialist who receives, logs, investigates, and proposes solutions to grievances. This mechanism will continue through the proposed AF. Of the 14 outstanding payments owed by the Contractor under the grievance mechanism, nine claims valued under EC$15,000 have been settled. For the remaining five, two require additional information from complainants, one is in progress, and two are scheduled for payment. Deadlines for these actions were established and recorded during the August 2024 mission. Outstanding issues regarding property access and flooding persist. The Contractor is addressing these on a case-by-case basis Page 9 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER 37. Consultations: Two consultations were held in June 2024. On June 6, a meeting in Lot 1 covered work progress, road safety, and community feedback, with a safety presentation by a GoCD Police Force member. The PIU agreed to an additional meeting in Lot 1 after the remaining works are completed. Contractor relations with communities have improved and should continue this positive trend throughout AF implementation. F. Environment (including Safeguards) 38. The most recent E&S Performance Rating for the parent project is Moderately Unsatisfactory. While the reduction in project risks is positive, there remain a number of outstanding EHS issues for which resolution by the roadworks contractor has been protracted. Fortunately, as ECR implementation has completed substantial parts of the works, EHS issues have been resolved and the remaining issues are residual with clear action plans for resolution. The Environmental and Social Safeguards Specialists of the CSU continue to work diligently, and the project team is satisfied with their performance. However, there have been period deficits in the EHS staffing of both the supervision team and the contractor’s workforce, and these shortfalls in manpower have had deleterious effects For Official Use Only on the project. The Contractor has agreed to fill their vacancy on Environment Safety officer with a qualified individual for the duration of the project. G. Corporate Commitments 39. A Paris Agreement assessment is not required as the AF3 is not supporting new activities. It was determined that the project did not need to seek a Gender Tag, as the initial project was envisioned before the corporate commitment, and the AF was not attributed to a change in scope. Citizen engagement has been monitored through addition of a citizen engagement results indicator in Restructuring 3, which has surpassed its target. V. WORLD BANK GRIEVANCE REDRESS H. Grievance Redress: Communities and individuals who believe that they are adversely affected by a project supported by the WB may submit complaints to existing project-level grievance mechanisms or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted to the AM at any time after concerns have been brought directly to the attention of Bank Management and after Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s GRS, visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, visit https://accountability.worldbank.org. @#&OPS~Doctype~OPS^dynamics@afaprproposedchanges#doctemplate Summary changes VI. PROPOSED CHANGES Operation Information Proposed Changes Operation Information Proposed Changes Development Objective Yes Loan Closing Date Extension No Results Yes Loan Cancellations No Page 10 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Disbursements Estimates Yes Reallocations No Components Yes Financial Management No EA Category No Procurement No Safeguard Policies Triggered No Institutional Arrangement No MFD/PCE No Implementation Schedule No Legal Covenants No Implementation Modalities No Conditions No Implementation Modalities No Disbursements Arrangements No For Official Use Only Clients No Beneficiary Countries No @#&OPS~Doctype~OPS^dynamics@afaprdetailedchanges#doctemplate VII. DETAILED CHANGE(S) DEVELOPMENT OBJECTIVE (DO) Development Objective Development Objective (Approved as part of Decision Package on 30-Apr-2014) The objective of the Project is to reduce vulnerability to natural hazards and climate change impacts in Dominica through: (i) investment in resilient infrastructure, and (ii) improved hazard data collection and monitoring systems. Proposed New Development Objective To reduce vulnerability to natural hazards and climate change impacts in Dominica through: (i) investment in resilient infrastructure, and (ii) improved hazard data collection and monitoring systems. COMPONENTS Last Approved Proposed Component Name Cost (USD) Action Component Name Cost (USD) Prevention and Adaptation Prevention and Adaptation 62,930,000.00 Revised 102,930,000.00 Investments Investments Capacity Building and Data Capacity Building and Data Development, Hazard Risk 7,370,000.00 No Change Development, Hazard Risk 7,370,000.00 Management and Management and Evaluation Evaluation Page 11 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Natural Disaster Response Natural Disaster Response 8,000,000.00 No Change 8,000,000.00 Investments Investments Project Management and Project Management and 5,000,000.00 Revised 3,500,000.00 Implementation Support Implementation Support TOTAL 83,300,000.00 121,800,000.00 COSTS & FINANCING Private Capital Facilitation Is this an MFD-Enabling Project (MFD-EP)? For Official Use Only Is this project Private Capital Enabling (PCE)? DISBURSEMENTS Operation Dates & Projection Details Reasons to change the full Disbursement date and/or the projection Additional Financing Implementation Start Date Operation Closing Date 01-May-2014 30-Jun-2025 Projected Date for Full Disbursement 30-Jun-2025 Expected Disbursements (in US $) (Absolute) Original Estimation at Preparation Actual Year Revised Estimation (Approval Package – 01 May 2014) FY2014 13,962.79 0.00 0.00 FY2015 570,513.58 526,737.37 753,544.33 FY2016 855,936.70 2,695,415.62 3,856,029.81 FY2017 1,466,900.79 1,770,165.57 2,532,378.08 FY2018 2,427,243.50 6,990,131.55 10,000,000.00 FY2019 3,433,372.29 3,310,355.79 4,735,756.00 FY2020 3,115,294.03 4,509,028.77 6,450,563.48 Page 12 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER FY2021 0.00 6,662,920.84 6,662,920.84 FY2022 0.00 5,742,806.99 8,215,592.15 FY2023 0.00 10,791,708.01 14,903,710.31 FY2024 0.00 16,267,345.60 16,267,345.62 FY2025 0.00 40,733,383.89 0.00 For Official Use Only Page 13 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER RESULTS COUNTRY: Dominica Third Phase Disaster Vuln.Reduction APL for Dominica @#&OPS~Doctype~OPS^dynamics@afaprresultframework#doctemplate Project Development Objective(s) To reduce vulnerability to natural hazards and climate change impacts in Dominica through: (i) investment in resilient infrastructure, and (ii) improved hazard data collection and monitoring systems. PDO Indicators by PDO Outcomes For Official Use Only Baseline Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Completion Period Reduce vulnerability to natural hazards and CC impacts through resilient infrastructure investment Revise Direct project beneficiaries (Number) Feb/2014 Sep/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 0.00 0.00 1,000.00 6,000.00 19,690.00 30,000.00 40,000.00 50,000.00 60,000.00 71,860.00 Rationale for Change Extended end date in last restructuring  ReviseFemale beneficiaries (Percentage) 0.00 0.00 49.00 49.00 49.00 49.00 49.00 49.00 49.00 49.00 49.00 Rationale for Change Extended end date in last restructuring  ReviseIndigenous Beneficiaries (Number) 0.00 0.00 0.00 0.00 20.00 45.00 500.00 1,000.00 1,500.00 2,145.00 2,145.00 Rationale for Change Extended end date in last restructuring New Direct users that benefit from improved access to sustainable transport infrastructure and services (Number of people) CRI Feb/2014 Jun/2025 0 71,860 Page 14 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER  NewDirect users that benefit from improved access to sustainable transport infrastructure and services - Female (Number of people) CRI Feb/2014 Jun/2025 0 35,930  NewDirect users that benefit from improved access to sustainable transport infrastructure and services - Youth (Number of people) CRI Feb/2014 Jun/2025 0 17,965 Revise Number of households with access to improved water distribution and supply in project area (Number) Feb/2014 Sep/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2024 Jun/2024 Jun/2024 Jun/2025 0.00 0.00 0.00 0.00 0.00 1,500.00 2,200.00 2,200.00 2,200.00 2,200.00 2,200.00 Rationale for Change Extended end date in last restructuring Revise Percentage of East Coast Roads with a condition rating of good/excellent that is resilient to climate events (Percentage) For Official Use Only Feb/2014 Sep/2017 Jun/2020 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2024 Jun/2024 Jun/2025 30.00 15.00 25.00 30.00 35.00 35.00 60.00 75.00 85.00 100.00 Rationale for Change Extended end date in last restructuring Reduce vulnerability to natural hazards and CC impacts through data collection/monitoring systems Revise Number of relevant agencies enabled to make climate risk informed decision-making to reduce vulnerability to climate change (Number) Feb/2014 Jun/2016 Jun/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 0.00 0.00 0.00 5.00 8.00 8.00 10.00 10.00 10.00 10.00 10.00 Rationale for Change Extended completion date to June 2025 in last restructuring Intermediate Results Indicators by Components Baseline Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Completion Period Revised Prevention and Adaptation Investments Revise Roads rehabilitated, Non-rural (Kilometers) Feb/2014 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 0.00 5.00 10.00 15.00 20.00 30.00 Page 15 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Rationale for Change extended completion date to June 2025 at last restructuring Revise Increased water storage capacity in project areas (Liter) Feb/2014 Jun/2016 Jun/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 0.00 0.00 0.00 0.00 0.00 1,100,000.00 1,600,000.00 1,600,000.00 1,600,000.00 1,600,000.00 1,600,000.00 Rationale for Change completion date to June 2025 at last restructuring Revise Number of consultation meetings held and documented to discuss and respond to beneficiary feedback to improve project implementation and monitoring. (Number) Dec/2021 Jun/2025 0.00 8.00 Rationale for Change completion date to June 2025 at last restructuring For Official Use Only Capacity Building and Data Development, Hazard Risk Management and Evaluation Number of Government officials trained in spatial data management and data analysis under the Project (Number) Feb/2014 Jun/2016 Jun/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 0.00 0.00 10.00 15.00 22.00 25.00 28.00 30.00 30.00 30.00 30.00 Number of Government ministries/agencies connected to a spatial data sharing platform (Number) Feb/2014 Jun/2016 Jun/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 0.00 3.00 6.00 8.00 8.00 10.00 10.00 10.00 10.00 10.00 10.00 LiDAR mapping of the entire country completed (Yes/No) Feb/2014 Jun/2016 Jun/2017 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 No No No No No No Yes Yes Yes Yes Yes Natural Disaster Response Investments Operations Manual for this component prepared to facilitate disbursement in the event of an emergency (Yes/No) Feb/2014 Jun/2017 Jun/2018 Jun/2018 Jun/2019 Jun/2020 Jun/2021 Jun/2022 Jun/2023 Jun/2024 Jun/2025 No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Page 16 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Monitoring & Evaluation Plan: PDO Indicators by PDO Outcome PDO Outcome Reduce vulnerability to natural hazards and CC impacts through resilient infrastructure investment Indicator Name Direct project beneficiaries (Number) Description Frequency Semi-annual Data source Semi Annual Progress Reports Methodology for Data Collection Determine number of individuals in project area Responsibility for Data Collection CSU with National Statistics Bureau Indicator Name Female beneficiaries (Percentage) Description Based on the assessment and definition of direct project beneficiaries, specify what percentage of the beneficiaries are female. Frequency Semi-annual Data source Semi Annual Progress Reports Methodology for Data Collection Determine number of individuals in project area and estimate percent female Responsibility for Data Collection CSU with National Statistics Bureau Indicator Name Indigenous Beneficiaries (Number) Description Based on the assessment and definition of direct project beneficiaries, specify what percentage of the beneficiaries are indigenous. Frequency Semi-annual Data source Ministry of Environment, Rural Modernisation, Kalinago Upliftment and Constituency Empowerment Methodology for Data Collection Determine number of individuals in project area and estimate percent indigenous based on demographic statistics Responsibility for Data Collection CSU with National Statistics Bureau Indicator Name Number of households with access to improved water distribution and supply in project area (Number) This Indicator was amended as part of the additional financing, being changed from “Number of households with uninterrupted water service in Description project area due to water shortage or hazard events” to its current form. The target has been met. Frequency Semi-annual Data source Semi Annual Progress Reports Methodology for Data Collection Estimate number of individuals able to acces water from the water tanks Responsibility for Data Collection CSU Indicator Name Percentage of East Coast Roads with a condition rating of good/excellent that is resilient to climate events (Percentage) Page 17 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER This Indicator was amended as part of the additional financing, being changed from “Number of days of interrupted traffic due to landslips, flooding and other climate-related events in project areas” to its current form. The current of 25 represents the current percentage of roads in Description good/excellent condition following emergency repair works undertaken on the East Coast Road (ECR) following Hurricane Maria. Following the complete rehabilitation of the ECR Frequency Semi-annual Data source Semi-annual Project Progress Reports; MoPW Supervision Reports Methodology for Data Collection Based on works completion, resilient condition rating only includes sctions that have been paved with completed drainage and slope stabilizaiton Responsibility for Data Collection CSU , MoPWDE PDO Outcome Reduce vulnerability to natural hazards and CC impacts through data collection/monitoring systems Indicator Name Number of relevant agencies enabled to make climate risk informed decision-making to reduce vulnerability to climate change (Number) Measurements of increased Government/agency capacity to understand, capture, and manage climate data as well as utilize hazard information for Description improved decision making and engineering analysis. Agencies will include MoPW, MoE, Planning, DOWASCO, and ODM This indicator aligns with PPCR Core Indicator 2: “Evidence of strengthened government capacity and coordination mechanism to mainstream climate resilience” Frequency Semi-annual Data source Semi-annual Project Progress Reports Methodology for Data Collection Track the number of indivuals taking part in Dominode or other related training Responsibility for Data Collection CSU, MoPWDE Page 18 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Monitoring & Evaluation Plan: Intermediate Results Indicators by Component Results Area Prevention and Adaptation Investments Indicator Name Roads rehabilitated, Non-rural (Kilometers) Kilometers of all non-rural roads reopened to motorized traffic, rehabilitated, or upgraded under the project. Non-rural roads are roads functionally classified in various countries as Trunk or Primary, Secondary or Link roads, or sometimes Tertiary roads. Typically, non-rural roads connect urban Description centers/towns/settlements of more than 5,000 inhabitants to each other or to higher classes of road, market towns and urban centers. Urban roads are included in non-rural roads. Frequency Semi-annual Data source Semi-annual Project Progress Reports; MoPW Supervision Reports Methodology for Data Collection Based on works completion, resilient condition rating only includes sctions that have been paved with completed drainage and slope stabilizaiton CSU; Ministry of Public Works, Energy and Ports; Dominica Water and Sewerage Authority; Ministry of Lands, Housing, Settlements & Water Resource Responsibility for Data Collection Management Indicator Name Increased water storage capacity in project areas (Liter) Description Measurement of the volume of water storage capacity in Project areas Frequency Semi-annual Data source Semi-annual Project Progress Reports; MoPW and DOWASCO Supervision Reports Methodology for Data Collection Total the capacity of the storage tanks by liters Responsibility for Data Collection CSU; Dominica Water and Sewerage Authority; Ministry of Lands, Housing, Settlements & Water Resource Management Number of consultation meetings held and documented to discuss and respond to beneficiary feedback to improve project implementation and Indicator Name monitoring. (Number) Description The PCU/CMU has committed to hold regular community meetings. Frequency Semi-annual Data source Semi-annual reports Methodology for Data Collection Total the number of community meetings held Responsibility for Data Collection CSU , MoPWDE Results Area Capacity Building and Data Development, Hazard Risk Management and Evaluation Indicator Name Number of Government officials trained in spatial data management and data analysis under the Project (Number) Measurement of increased national capacity to capture, manage and analyze hazard and climate risk data This indicator aligns with PPCR Core Description Indicators 2: “Evidence of strengthened government capacity and coordination mechanism to mainstream climate resilience” Page 19 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Frequency Data source Semi-annual Project Progress Reports; Inventory report of instrumentation/software installed Methodology for Data Collection Total the number of government officials taking part in Dominode, hydromet or seismic training. Responsibility for Data Collection CSU; Physical Planning Department Indicator Name Number of Government ministries/agencies connected to a spatial data sharing platform (Number) Measurement of increased national capacity to capture and manage hazard and climate risk data This indicator aligns with PPCR CoreIndicator 2: Description “Evidence of strengthened government capacity and coordination mechanism to mainstream climate resilience” Frequency Semi-annual Data source Semi-annual Project Progress Reports Methodology for Data Collection Total the number of entities that have access to Dominode Responsibility for Data Collection CSU; Physical Planning Department; ICT Indicator Name LiDAR mapping of the entire country completed (Yes/No) Measure of the successful completion of a high resolution topographic and bathymetric LiDAR model to support data management and analysis Description systems under the project This indicator aligns with PPCR core indicator 2 “Evidence of strengthened government capacity and coordination mechanism to mainstream climate resilience” Frequency Semi-annual Data source Semi-annual Project Progress Reports Methodology for Data Collection Determine whether LIDAR data is accessible Responsibility for Data Collection CSU; Ministry of Agriculture and Forestry; Ministry of Public Works Results Area Natural Disaster Response Investments Indicator Name Operations Manual for this component prepared to facilitate disbursement in the event of an emergency (Yes/No) Description Measure of the Government’s preparation plan in the event of an emergency including a list of vetted contractors, critical importsand priced supplies Frequency Semi-annual Data source Semi-annual Project Progress Reports Methodology for Data Collection Determine whether manual is accessible Responsibility for Data Collection CSU; Ministry of Finance; ODM Results Area Project Management and Implementation Support Page 20 The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Annex 1 Dominica Disaster Vulnerability Reduction Project Updated Economic Analysis 1. The project requested Additional Financing in the amount of US$31 million equivalent in 2018 to respond to the critical need to (i) upgrade the East Coast Roads (ECR) with a length of 43.3 kilometers; and (ii) strengthen the water distribution system1 and access roads for the West Coast Water Tanks to a standard that would ensure long-term vulnerability reduction to natural hazards and climate change impacts. 2. The ECR investments (representing 74 percent of the total project cost of US$110.5 million) are expected to create significant development impact, as these provide essential access to the eastern region of the country, an area with limited economic growth and home to the indigenous Kalinago people. Additionally, the ECR serves as an alternative route to the Airport Road, which is vital for connecting Melville Hall Airport to the capital. Investments in this project will prevent future disruptions along the ECR, ensuring they can function as an alternative route if key sections of the Airport Road are damaged. 3. Benefit-Cost Analysis. An economic analysis was conducted in 2018. Benefits were measured in terms of reductions in vehicle operating costs (VOC) and vehicle operating time (VOT). A Monte Carlo Simulation analysis was also performed to take into account the uncertainty in determining travel speed in existing and alternative routes, vehicle occupancy rate, and the number of days it takes to open roads to the public. The economic analysis was made over 20- year time frame with a discount rate of five percent. Results showed that the ECR investments were economically viable with benefit- to-cost (B/C) ratio to range from 1.13 to 2.24, with an average of 1.64. B/C Ratio Expected Value 1.64 Standard Deviation 0.18 Minimum 1.13 Maximum 2.24 Coefficient of Variance 0.11 4. In 2020, the project further sought Additional Financing amounting to US$12.8 million equivalent to cover the cost overrun associated with the construction of the ECR, which required the full rehabilitation, widening and resurfacing of the road to comply with resilience standards. Due to the insufficiency of funds, the Government of Dominica decided to divide the works into three phases to facilitate implementation. Phase 1 (30 kilometers), Phase 2 (4.5 kilometers), and Phase 3 (8.6 kilometers). The project is financing Phase 1 with two procurement lots (Lot 1= 10 kilometers and Lot 2= 20 kilometers). As of September 30, 2024, Lot 1 and Lot 2 reported physical progress of 90 percent and 75 percent, respectively. Lot 1 is scheduled to be completed by December 2024 while Lot 2 is planned to be completed by May 2025. In 2024, the Government requested Additional Financing 1 As of September 30, 2024, the construction of water tanks was already completed. Thus, it is excluded from this economic analysis. The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER amounting to US$40 million to cover additional current and projected cost overruns for the ECR contract. 5. Benefit-cost analysis. The economic analysis for the ECR investments was updated to consider the effects of the changes associated with the rehabilitation and upgrading of the East Coast Roads since 2018 including (i) cost overrun amounting to a combined total amount of US$52.8 million equivalent; (ii) reduction in road length from 43.3 kilometers to approximately 30 kilometers; and (iii) significant upgrade in road quality to comply with higher resilience standards to withstand recurrent risks from natural hazards and climate change using appropriate hydrological and geophysical information. 6. The economic analysis applied the same approach used during the first Additional Financing in 2018. Adjustments were made in the assumptions. The analysis used actual capital costs at the time these were incurred. Operation and maintenance cost is set at maximum of five percent of capital costs. The key assumptions and respective adjustments are presented in table 4.1 below. The key assumptions and respective adjustments are presented in the table below. Parameters Additional Financing/ Economic Analysis 2018 2024 Total Investment 86.2 235 Cost (EC$ millions) Total Road Length 43.1 30 (kilometers) Resilience Measures Did not include investments in slope Works included slope and landslide stabilization works, retaining walls, etc. stabilization, flood mitigation activities along the entire corridor, bridge replacement, expansion of road width, and mitigation of river erosion along the embankments. Annual O&M Cost 1-5% of capital investment cost 1-5% of capital investment cost Time Horizon 20 25 to account for higher resilience standards Benefit streams  Used reductions in vehicle No change operating time and costs  Used historical information of the number of days of closure of the ECR and the Airport Road due to natural hazards and estimated the traffic diverted to the ECR  Analysis was based on traffic count data obtained from the MoPWPUDE, which included Average Daily Traffic (ADT) and percentage of ADT by vehicle type. The ADT data were projected to estimate traffic by considering the growth (9%) of the country’s total vehicle stock. The World Bank Third Additional Financing to Disaster Vulnerability Reduction Project (P129992) PROJECT PAPER Discount rate 5% No change Disbursement 2 years 6 years to account for project period delays. Actual capital cost was used at the time it was incurred. 7. Results. The results of Monte Carlo simulation, which provides a range of possible outcomes for key metrics, are presented in Table 2 below:  The expected IRR from the simulation is approximately 10.17 percent, with a standard deviation of around 1.1 percent, indicating moderate variability in outcomes.  The expected B/C ratio is 1.96, indicating that the project is likely to be economically viable. The B/C ratio is greater than 1, suggesting that benefits exceed costs.  The expected NPV is EC$ 247.19 million, which is positive, indicating that the project is expected to generate value above its cost. The standard deviation of NPV is 62, showing the spread in possible outcomes, with a minimum NPV of EC$ 53.48 million and a maximum of EC$ 442.68 million. Internal Rate of B/C Ratio Net Present Value Return (IRR) (NPV, EC$ million) Expected Value 10.17% 1.96 247.18 Standard Deviation 1.1% 0.30 62.38 Minimum 6.34% 1.17 53.48 Maximum 13.24% 2.97 442.68 Coefficient of Variance 10.78% 15.55% 25.24% 8. The project remains economically viable even with the cost overruns and reduction in road length. The expected IRR and B/C ratio remains favorable and the NPV is still positive even when accounting for uncertainty. The project's benefits outweigh its costs, and the project remains likely to generate a good economic return of investments. 9. Cost effectiveness. The cost of road per kilometer is estimated at EC$ 7.8 million (USD (US$2.9 million). This is comparable to the cost of road per kilometer in Dominica, which is within the range from EC$ 12.63million (US$ 4.7 million) to EC$ 19.33 million (US$7.16 million).